Wednesday 19 November 2008
[Mr. Peter Atkinson in the Chair]
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Watts.]
I am grateful for this opportunity to discuss the Stern report, two years after its publication. I came to the subject when I was chairing a policy group. The globalisation and global poverty group was considering ways of trying to improve the lot of people in developing countries who live on a fraction of the money that we have in the developed world. We were conscious that climate change was likely to have a more adverse impact on them than on anyone else. Yet, by definition, people in those countries cannot be held to blame for carbon emissions, their emissions per head being a fraction of those in the developed world. However, they are likely to suffer most and are already experiencing climate change, which in many areas has had adverse consequences, but they have the greatest need to use energy to raise their living standards.
I accepted and took it for granted that we in the developed world should bear the brunt of the costs of mitigating climate change and helping people to adapt, and it was with that outlook that I opened the Stern report when it was published shortly before my report went to press. I opened it at the section on development. The first page says that studies show that the effect of global warming by the middle of this century could be to reduce crop yields in India by up to 70 per cent., and then gave more details. That rang a bell, because I had been examining agriculture in India and other developed countries. When I read the footnote, I found that, sure enough, it was a study that I had seen. It showed that the impact of climate change, if there was no adaptation, on one species of grain could be to reduce its yield by 70 per cent. It also showed that climate change could increase yields of other varieties of the same grain by up to 15 per cent., but that was not in the Stern report. When I read the footnote, it gave the exact source, but said that it assumed no change in behaviour.
That made me suspicious of the Stern report. It showed one side of the picture—the downside—but deliberately ignored the upside. I am not saying that the upside cancels out the downside, but that is not a proper way to approach the subject. In his review, Professor Stern makes much of the importance of the peer review process, but his report was not subjected to peer review, and it is time that it was, or at least to a common or garden review in the House.
I think I have found the reference to India in the Stern review—[Interruption.] It is on page 97 in my version. It refers to a recent study that predicts up to a 70 per cent. reduction in crop yields by the end of the century, but that is for groundnuts only. What about all the other crops?
It is, and that is why, if it had been subjected to peer review, it would not have been passed fit for publication.
My overall position on global warming is that, as a physicist—I studied physics at Cambridge—I am not one of those who deny that carbon dioxide emissions heat the planet. They do have that effect, although there is less certainty about how much the complex feedback effects that climate models seek to replicate may amplify the comparatively modest effect of increasing CO2 and other greenhouse gas emissions. None the less, in my view it is wise to take measures to prevent and to adapt to global warming, and it is sensible to try to assess the costs and benefits of action and inaction to ensure that we adopt the most cost-effective approach. I was hoping that the Stern report would help us in that process, but I am afraid that it does not offer us much help in the analysis of the science or the economics.
I shall begin with economics, because the review is by an economist and purports to be a review of the economics of climate change. Rather surprisingly, the economics, above all, have come in for most criticism. Professor Stern’s conclusion is that we can prevent or mitigate the impact of CO2 and other greenhouse gas emissions, that it will cost relatively little and that the cost of inaction far exceeds those of decarbonising the economy. In reaching that conclusion, however, he had to adopt several rather unusual assumptions, and he has been criticised for, among other things, using low discount rates and far-distant horizons, making high but unspecified estimates of the impact cost of global warming and low and optimistic assumptions about mitigation costs, and assuming that little adaptation takes place. Above all, his use of low discount rates was criticised. The report is not explicit about the rate that he uses, and that came out only in subsequent discussion and debate. It then emerged that his basic discount rate for future benefits from mitigating the impact of climate change is 1.4 per cent. per annum. That is far lower than that used by other people and in other circumstances. It has two unsatisfactory consequences.
First, as Professor Stern projects the benefits of mitigating global warming far into the distant and indefinite future, using a low discount rate gives great weight to supposed changes that will not occur until centuries ahead.
I congratulate the right hon. Gentleman on securing this debate on what we all agree is an important subject. Is it not possible to become overly technical about discount rates, and does the issue not boil down to the fact that if one cares a lot about the future one is prepared to do rather more to avert catastrophe, and if one does not care so much one is prepared to do rather less? We believe that it is right to do more.
The right hon. Gentleman is right to say that there is an ethical dimension. It is perhaps that dimension on which we in the House should focus and reach our own conclusions. I shall return to why Professor Stern uses those discount rates, and whether the right hon. Gentleman’s assumption that the matter is simple is true.
Professor Nordhaus said that if one uses the same methodology as Stern, one can calculate that half the benefits of mitigating climate change, which would be taken into consideration under his methodology of a low discount rate and far-distant horizons, will not occur until after 2800. Even if he uses higher discount rates and other scenarios, it is hundreds of years ahead. There is something rather vain about assuming that we know what the world will be like that far ahead.
A second consequence relates to the question that I have just been asked. Professor Stern is saying that if we do nothing, by the end of this century, people’s incomes will, on average, be 20 per cent. below what they would be if we were to stabilise greenhouse emissions to 450 to 550 parts per million between now and then. However, he is still assuming that people will have incomes that are a multiple of what we have now. He is saying that if we do nothing, people’s incomes will, for example, be four times what they are now. However, if we take strenuous and costly action, their incomes will be five times what they are now. In other words, we are being asked to make sacrifices now so that, in nearly a century’s time, our great-grandchildren will be five times richer than us—instead of only four times richer. When challenged about that, Lord Stern says, “Well, we could’ve used different assumptions that said we value the extra income from rich people far less than we value extra income from poor people now in the world. But, since we don’t believe in redistribution in the present, we shouldn’t believe in treating rich people differently in the future from poor people now.”
Labour Members who do believe in redistribution will find Lord Stern’s dismissal of normal discount rates even stranger than I do. The best analysis of these issues that I have found has been published by Friends of the Earth, which commissioned a report on the Stern review from Professor Ackerman. That is an excellent report. Clearly, Friends of the Earth’s sympathies lie with Professor Stern, and I am sure the attitudes, conclusions and political philosophy of Professor Ackerman are different from mine. However, he has produced an excellent report and I commend it to hon. Members because it is so objective and fair. It leaves one pretty free to make up one’s mind on the issues that he clarifies. Even he concludes that Stern’s methodology is open to criticism:
“A balanced conclusion might be that Stern demonstrates that 1.4 per cent. is among the plausible discount rates – and that such low rates have profoundly different implications from rates like 5-6 per cent., used in many other analyses.”
He acknowledges that such a rate is rather unusual—although it is plausible. However, it is important to note that it leads to different conclusions.
It is equally important to note that the Government have effectively repudiated the use of such a low discount rate. They published an impact assessment on the Climate Change Bill to inform the House during the debate on the Bill. Sadly, hon. Members chose not to refer to the impact assessment. Minister’s did not refer to it; it was not referred to in Committee, and it was not referred to in debates, other than by me. However, when I asked what discount rate the Government were using to assess, compare and contrast future costs and benefits, it emerged that they were using the standard Treasury discount rate of 3.5 per cent. a year, falling to 3 per cent. after, I think, 60 years. That is still far lower than the rate used by most people who do commercial feasibility studies. The Government failed to mention or address that fact during debates. However, the fact they are using a more normal discount rate leads them to a different assessment of the relative balance of costs and benefits from that reached by Professor Stern.
In the impact assessment, the Government refer to excluding transitional costs, which they put at between 1.3 and 2 per cent. of gross domestic product up to 2020, and excluding the effects of driving businesses away from this country to overseas, where they will continue to emit the same amount of carbon dioxide—although we will receive none of the economic revenues generated by them. The Government make the heroic assumption that industry adapts instantly and perfectly with full knowledge to use the best and most efficient technology to reduce carbon emissions. Even making such an assumption, the potential cost of this country meeting its former target of a 60 per cent. reduction in emissions is £205 billion. Yet the same report from the Government shows that the maximum benefit from reducing the amount of global warming via the programme enshrined in the Climate Change Bill is £110 billion.
In short, the potential costs are nearly twice the maximum benefits. That was when the target was still 60 per cent. When I asked the Government to update their estimate to take account of the fact that we were increasing emission targets by a third to 80 per cent., they said that they would do so only after the Bill has received Royal Assent. So, we are not to know the cost of what we have voted for until the measure is enshrined in law.
I have three questions for the Minister. First, does she stand by the discount rate used by her Government, or does she think that that rate was wrong and Professor Stern was right? Secondly, if they do stand by the discount rate that they used, why do they still quote the conclusions about the balance between costs and benefits in the Stern report and never mention the costs and benefits in their own impact assessment? Thirdly, when will we receive a revised impact assessment telling us how much additional cost and benefit we can expect as a result of increasing the emissions target from 60 to 80 per cent?
A lot hangs on this because, even if we accept Stern’s forecasts for global warming, there are three possible different strategies. In general, one would expect to use a balance of the three, but that balance will be determined by the analysis of costs and benefits. Those strategies are a straight reduction in emissions by setting targets for the country and particular sectors; helping the developed world adapt to aspects of climate change that affect it most directly, severely and adversely; and a massive programme of research into alternative ways of reducing emissions and generating energy in a carbon-free fashion. The way in which we distribute resources between those alternatives will depend heavily on how we discount future costs and benefits.
I would like to return to the science of the issue. I mentioned that I studied physics and natural sciences at Cambridge before studying economics. Subsequently, after I had left university, I also studied statistics. The fact that I have some knowledge of physics does not make me a climate scientist; it simply means that I can understand the basic physics that is involved. More importantly, I understand the scientific method. I and my generation were taught the Karl Popper approach to science, which is that one should constantly confront the prediction of our theories with the facts and if the two are not in accord, we should modify the theory. That is not the approach taken by Professor Stern or his disciples. His approach is not so much that of Karl Popper as that of the great German philosopher Hegel, who believed that it was possible to deduce all scientific truths from first principles. When his disciples pointed out to him that his theories were refuted by the facts, he replied, “So much the worse for the facts.”
That is the general approach taken by many of those who belong to the alarmist school of climate change—not least, Professor Stern himself. The simple fact is that, since the beginning of this century, the average global temperature has flatlined; indeed, over the past 18 months it has fallen back, and according to the satellite measurements of temperature, it is now basically back at the level it was in 1979, when such measurements started to be taken. Professor Stern ignores that and, throughout his report, refers to continual global warming. However, global warming has not continued. Even Adair Turner, who on all other topics is a model of objectivity, ignores recent developments when discussing climate change, in the section of his letter to the Treasury summarising recent developments. The facts show that the world has not been heating over the past decade. The response is, “So much the worse for the facts.” While we were passing the Climate Change Bill, based on the assumption that the world was becoming hotter, I mentioned in a point of order that it was snowing outside in October for the first time in 70 years. I was told that I should realise that exceptional cold was a consequence of global warming—so much the worse for the facts.
The recent period of global cooling does not itself disprove the greenhouse effect. The greenhouse effect is a scientific fact. Other things being equal, an increase in carbon dioxide and other greenhouse gases in the atmosphere will raise the temperature. However, the recent period of cooling does suggest that either manmade global warming may be smaller or that the impact of other factors may be greater than climate models have so far assumed. In those circumstances, the climate models should be adjusted; the facts should not be ignored.
The second aspect of the strange approach to science taken by Professor Stern is that he applies a one-way filter to new evidence. Even though he asserts that the science is settled, he accepts that it can change in the light of new evidence. Indeed, he says that since he published the report, lots of new evidence means that the situation is much more serious than he thought and we should raise our targets accordingly. The point about the one-way filter is that Professor Stern and his disciples will accept evidence of change only in one direction. A one-way filter is applied, so that only studies suggesting that the situation is more dire than we had previously believed may be cited. Where climate science is concerned, the theme song seems to be “Things can only get worser”.
It is right that we should publish, look at and examine any new evidence that shows that the situation is becoming worse. Equally, we should examine and take on board any evidence that shows that it is not or that the sensitivity of the climate to carbon dioxide emissions may be less than the models—certainly the most extreme models—have suggested, but that was not done in the Stern report and it has not been done by Lord Stern since.
I am grateful to my right hon. Friend for securing this long-overdue debate. Does he agree that there may be a message for the Government in the words of our right hon. Friend the Leader of the Opposition, who said yesterday:
“Politicians shouldn’t be stubborn and cling to beliefs if circumstances render them obsolete.”
That is absolutely correct. It was Lord Keynes who said:
“When the facts change, I change my mind. What do you do, sir?”
Well, if the facts suggest modification, not abandonment, of the quantitative assessment of global warming, we ought to modify our assessments accordingly. We hear a lot, rightly, about melting ice in the Arctic, but little or nothing about the increased ice cover in the Antarctic or, indeed, in the Arctic over the past year.
The third strange aspect of the scientific methodology adopted by Professor Stern and his disciples is that he believes that truth in science is determined by majority verdicts and once a majority has spoken, its verdict should not be questioned. I remember that, back in the 1930s, the German Government got 100 physicists together to sign a declaration stating that Einstein’s theory of relativity was false, to which Einstein replied: “If I was wrong, it would take only one scientist to prove it.” Science is not a question of adding up majorities. That is particularly true when one moves from science to statistical models, and this is the last aspect that I want to dwell on.
As I said, I accept the science of the greenhouse effect. Carbon dioxide and other greenhouse gases, not least water vapour, absorb outgoing infrared radiation and reflect it back to the earth, while allowing incoming radiation at higher wavelengths from the sun to pass through. That is the core greenhouse effect. It can be quantified mathematically. We know that a doubling of greenhouse gas emissions—CO2—would bring about a 1.2 to 1.3° change in the temperature of the climate by the direct impact of the greenhouse effect. There is little dispute about that. There is little dispute, either, that we have already had 0.7 of that 1.2°, because the effect is logarithmic; early increases in CO2 have a far bigger impact than later ones.
That is the science. Beyond that, one goes to statistical modelling. I used to do statistical modelling to try to fit models to complex economic systems in much the same way that the climate scientists try to fit complex models to the complex climate system. I know how difficult that is to do well, not because it is difficult to find a good fit between a model and reality, but because if there are many unknown parameters, it is all too easy. A famous mathematician said, “Give me four unknown parameters and I’ll make my model describe an elephant. Give me five and I’ll make it wave its trunk.” There are so many unknown parameters that it is very easy to fit a climate model to the data in the past, but very difficult to get it to predict accurately the future. I think that it was Milton Friedman who said, “There is only one perfect correlation that comes out of statistical analysis, and that is between the prejudices of the model builder and the conclusions his model incorporates.” That is true of many climate models, and it is time that we confronted the facts and asked the people who rely on those models to explain why they have not predicted, for example, the past decade of comparative temperature stability.
Equally, we should question those who deny the science and are critical of the models. I have noticed how some people on the sceptical wing of the argument who have always been very sceptical of the climate-alarmist prediction based on their models latched on to a recent German study that tried to explain the period of cooling or comparative stability that we have had and went on to predict cooling for another 15 years. We should be as sceptical of that as we are of other positions. We simply do not know to what extent the feedback mechanisms will amplify the basic modest impact of carbon dioxide emissions in reflecting heat back on to the earth.
I hope that we will hear from the Minister today the Government’s current views on the Stern report. Do they accept it as a valid analysis of the costs and benefits of taking action to mitigate climate change, or is it superseded by their own report? Do they have any explanation of why the science has not predicted recent developments? Are they undertaking work to adjust climate models and climate predictions in that regard? Are they reconsidering the balance of investment that we should make between mitigation, adaptation and research and development? Unless and until we receive answers to those questions, the Stern report will stand open to question and the Government will have to share the—
I am grateful to the right hon. Gentleman for giving way as he is bringing his remarks to a conclusion. Given what he has said, does he not accept that, given the catastrophic consequences of global warming, the precautionary and sensible thing to do is to act now to avert possible catastrophe—he may argue about how likely that is—because the consequences of not doing that means that it will be impossible to act effectively in future? In other words, should we not err on the safe side?
It is sensible to take out an insurance policy against global warming. We do not know how much of it there will be, but there will be some. We do not know how damaging the consequences will be, but beyond a certain point they will be negative. We do not know whether the consequences will be catastrophic, but a theoretical case suggests that, in certain circumstances, there could be major damage. However, that must be balanced against the costs. The route that we are offered might cost this generation more than it will save future generations. If we stop helping poor people to raise their living standards to our level, by concentrating on people who, in any case, have benefited from a century of growth, and try to achieve a yet bigger multiple of living standards higher than our own, that is not a sensible thing to do.
The Ackerman analysis that I mentioned is critical of Lord Stern’s attempts to try to find and cost large future damages and catastrophes. He cites a range of recent disasters and assumes that instead of being rare and random events, they will almost become the norm in the centuries ahead. However, the costs are hard to assess. For example, he puts the costs of Hurricane Katrina at £135 billion, but that loss of lives and property could have been prevented for a small amount, regardless of climate change—if indeed that had anything to do with Hurricane Katrina.
Our path is determined by an assessment of the costs and benefits. Although it is sensible to take out an insurance policy against future damage caused by global warming, it is foolish to take out such a policy if the premiums are greater than the value of what we seek to protect. The Government analysis says that the £205 billion premium that we could be required to pay to mitigate climate change is greater than the £110 billion of benefits which they assess will flow from that. We must answer these questions sensibly rather than sidestepping them. It is not enough to say that, because the facts are inconvenient and the questions difficult, so much the worse for the facts, we will not bother to answer the questions.
It has been fascinating listening to my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley). He is a voice of reason in a debate that increasingly has become an article of faith. The evidence in the Stern review relied heavily on the intergovernmental panel on climate change. I have read the bulk of both reports and I am aware of being in the presence of something similar to a secular religion with its articles of faith and its heretics. I do not classify myself as a heretic, but like my right hon. Friend I am always alerted by the absence of something in a report.
I am an amateur astronomer and chairman of the all-party group on astronomy. In a strictly amateur way, some of us have studied the phenomenon of climate change and global warming from a slightly different perspective. Some professional astronomers advance a theory that links fluctuations in terrestrial temperatures to variations in the sun’s magnetic field. That has nothing to do with sun spots as is sometimes thought—it is due to the influence of that magnetic fluctuation in the incidence of cosmic rays on the earth’s atmosphere, which in turn affects cloud cover. There is a correlation—which does not necessarily imply causation—between the fluctuations of the sun’s magnetic field and terrestrial temperatures in the past. I do not claim that as an explanation, but it is a theory that should at least have been addressed by the IPCC, rather than being entirely excluded.
All scientific theories are provisional, and as my right hon. Friend eloquently demonstrated, they must adapt in the presence of new facts. Alternative theories must be examined rationally. I do not find that approach in the IPCC’s report or in the Stern review that is based on it. Nevertheless, I believe that precautionary measures are appropriate, provided that they are proportionate and founded on reason.
I, too, have misgivings about the discount rate used by Stern. That has been well described by my right hon. Friend and I will not repeat his arguments. However, it is odd to use a discount rate of 0.1 per cent., which to my knowledge has never been used before by the Treasury. That figure is distorting against the use of higher and more normal discount rates, and it tips the argument in favour of present pain to try to ensure future benefits. In practice, it means that we would impose very high costs on poor people today in order to make rich people even richer in the future. That needs explanation.
Stern’s whole approach is market-based, and in that I do not disagree with him. However, it is puzzling because measures flowing from that type of argument do not seem to do the same thing. On 13 October, I attended a meeting of European Committee A, at which the Government brought forward European Union proposals for additional measures affecting passenger vehicles and manufacturers in the European Union. That was accompanied by an impact assessment—a cost-benefit analysis. The impact assessment asserted that the cost and benefits of the proposal could range from an estimated £2.5 billion benefit to an £11.1 billion loss at the other end of the spectrum. That is after taking account of the benefits of carbon dioxide reductions if the measures are implemented. There is an acknowledged mean cost of between £6 billion to £7 billion and yet the Government were advocating that we went ahead and accepted and enforced the regulations, which at that time were in draft form.
Even more puzzling is the fact that the Conservative party appeared to accept the EU regulations. Subsequent negotiations have taken place and the regulations have been slightly relaxed—at least, the time period to introduce them has been extended. That is no thanks to the British Government who took a much harder approach.
Following on from the Stern review, we are imposing on our economy and manufacturers acknowledged costs that outweigh the environmental benefits, and we are doing that in the middle of a recession. I am alarmed about the effect of that on fuel poverty and about the incentive for businesses in this country to migrate to other countries. We may meet our international carbon dioxide reduction target, but only by making the recession worse.
On top of that, we—that includes the Conservative party—have now accepted a new target for an 80 per cent. reduction in CO2 emissions by 2050, rather than 60 per cent. That will now include aviation and shipping. There is no way on earth that we will meet that target. I return again to the point that we must found our policy on reason and what is realistic and practicable, otherwise we will simply disillusion the public.
Does my right hon. Friend accept that one of the big flaws in the Stern report is that it does not engage with reality. On 23 October, in an article in The Guardian, Professor Stern wrote:
“we must…halt deforestation - the source of 20 per cent. of greenhouse gas emissions”,
but he did not say how that would be possible. Does not that same flaw run through the whole report?
I agree with my hon. Friend. It is an abuse of the political system to mandate impossible targets and policies. Instead of convincing the public, it will disillusion them.
The claim is sometimes made that a switch to green technologies and regulation as I have described will create enough jobs to replace those lost in the economy. Of course, any regulatory system that requires technology will produce visible jobs in research and technology as well as administration and enforcement, but if that process puts up prices elsewhere, jobs will be lost. Those might not be so visible, but they will be real nevertheless. Perhaps a good, simple example is the carbon capture and storage technology, which many believe—the Conservative party is mandating it—should be used for any new coal-fired generating stations. I accept that the technology, which is wholly untried, will create jobs. Scientists and technologists inventing the technology will receive grants, and building the plants, which will be more expensive, will involve higher costs and therefore require higher employment. However, because the plants will be more expensive, the electricity produced will cost more, which will put up prices, creating fuel poverty as well as higher costs for the whole of British industry.
A less visible, but still real loss of jobs will result elsewhere from rendering our economy less competitive. The argument, therefore, that we need not worry because we will create a new stream of employment is flawed. If we distort our economy in that way, we will move away from a market-based approach to wealth generation. Furthermore, by tying up capital expenditure, research grants and employment in one sector of the economy chosen by the Government, we will obviously produce less wealth and research and technology implementation in other areas, such as health, which might—in my view, probably would—create greater human welfare.
In all those ways, I urge the Government to revisit, at the very least, the underlying arguments brought forward by Stern and others and to found our future policies more on reason than faith. With those few words, I endorse the argument that my right hon. Friend has so ably enhanced in this short debate.
I am grateful, Mr. Atkinson, for the opportunity to speak in this debate, which I am pleased that my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) managed to secure.
I would like to say a word or two about my involvement in, and position on, the matter before us, which I have been looking into, on and off, for about 20 years. In 1989, I was asked to provide advice to the then Chancellor of the Exchequer on an interdepartmental report prepared by the then deputy chief economist, John Odling-Smee. That is what first alerted me, and I have followed the issue, particularly the economics of it, ever since.
The basic science is not in dispute, but there are two questions in that science. First, what temperature increase will result from any given increase in carbon concentrations? The scientists are not unanimous, and dispute is widespread in the scientific community. A Hamburg institute study of opinions, prepared by Professor Storch, is decisive on that point. Furthermore, Professor Lindzen—arguably the father of modern climate science—of the Massachusetts Institute of Technology, was asked to be the lead author of the 2001 science part of the report by the intergovernmental panel on climate change and has argued vigorously against the so-called consensus.
The second controversial question is about impacts, to which my right hon. Friend alluded. Throughout the area of science dealing with impacts, hot disputes are raging. For example, is it true, as is widely asserted, that a given increase in temperature will lead to an increase in malaria? That view can be found in many documents purporting to make the case for urgent cuts in carbon emissions, but most of the world’s leading malaria experts refute it. The same can be found on glaciation and the alleged increase in tropical storms. The world’s leading expert on the latter resigned in disgust from the IPCC process, I think because he felt that his science was being tampered with.
Recently, Professor Lindzen himself wrote a very interesting, thoughtful and accessible paper—I hope that this sort of material is getting to the Minister—entitled something like “Is Climate Change Any Longer About Science?”. He is worried that scientific method is being set aside in favour of what constitutes a campaign. My own tentative view is that some warming is happening and that—to put it in the language of climate scientists—there is probably an anthropogenic signal in the temperature record. The effects of further increases could be large. I hold that view very tentatively on the basis of what I have read. The key counter-argument was put by the right hon. Member for Oxford, East (Mr. Smith), who said that even if that is only a tentative view, what about catastrophic risk and the chance that we might shortly pass a tipping point? Was that his point?
However, the tipping point view is not supported by the IPCC, nor the lion’s share of experts in this field. That catastrophic risk needs to be set against other risks, such as the risk of nuclear proliferation, of being hit by an asteroid or of pandemics, all of which have their adherents, including some of the world’s leading scientists who argue that they are greater risks than climate change. From what I can tell, the Copenhagen group has concluded that climate change is not even high on the list of those catastrophic risks, but relatively low down.
Is my hon. Friend aware of remarks by Mike Hulme, the director of the Tyndall Centre for Climate Change Research in the United Kingdom, who said:
“The IPCC is not going to talk about tipping points; it’s not going to talk about five-metre rises in sea level; it’s not going to talk about the next ice age because the Gulf Stream collapses; and it’s going to have none of the economics of the Stern Review. It’s almost as if a credibility gap has emerged between what the British public thinks and what the international scientific community think…Over the last few years, a new environmental phenomenon has been constructed—the phenomenon of ‘catastrophic’ climate change. It seems that mere ‘climate change’ was not going to be bad enough, and so now it must be ‘catastrophic’ to be worthy of attention. The increasing use of this pejorative term—and its bedfellow qualifiers ‘chaotic’, ‘irreversible’, ‘rapid’—has altered the public discourse around climate change”.
No more authoritative voice need be listened to.
I have sat patiently and listened to some of this stuff, but misrepresenting the Tyndall Centre as climate change sceptics really takes the biscuit. When the IPCC does not include things such as the tipping points resulting from the melting of the Greenland and Antarctic ice sheet, the hon. Gentleman must be aware that that is because it has been conservatively trying to preserve consensus among the entire population of global scientists who are involved in the matter. It is not rejecting such a view; if anything it is more likely to include it at a later stage and then upgrade its projections.
A moment ago, I pointed out that a number of the world’s leading sceptics about the science—people considered to be the world leaders in their field—have resigned in disgust from the IPCC process. The hon. Gentleman is shaking his head in dissent, but those are facts. The IPCC has a team of officials who are trying to translate science into policy. There has been very widespread criticism of their attempts to do that. Many argue that they are hyping up the threats. Such a view can be found in the work of David Henderson. Ian Byatt has also done something on the matter. A good number of other top international people, including Professor Lindzen and a number of top climate scientists, have also come to the same conclusion.
Let me turn to the Stern report itself. Lord Stern came to the issue afresh in 2005. He told us that himself; he knew very little about it until then. His main conclusions—it must be borne in mind that he was never an environmental economist—contradict the lion’s share of the world’s finest minds who have considered the subject over the past quarter of a century. They have concluded that his work is “preposterous”, “incompetent” and “neither balanced nor credible”, and that it cannot be described as economic analysis and so on.
There is a wonderful passage in the Yale symposium in which Professor Mendelsohn addresses the issue directly in front of Lord Stern. Stern and his team of experts went out to Yale to a very interesting symposium, which provides essential reading for those who are interested in the economics of the issue.
“Just how powerful is this wizard”—
Professor Mendelsohn is saying that in front of Lord Stern, and the wizard is Nick himself—
“and what is his command of the truth? Is the Stern Review a complete revision of the economics of climate change”—
over the past 25 years—
“or is it merely smoke and mirrors? Is the Review substantive and authoritative or is it mostly hand waving?...I think the Report largely is the latter.”
So he said “smoke and mirrors”. That speech was made in front of the world’s leading experts in the field. Yet to my amazement and disappointment, the Government still cling to the Stern review as almost the sole justification for their policy. It is as if it has magical justificatory properties. They do that even if it means flatly contradicting themselves on discount rates, as my right hon. Friend pointed out. I have tabled a number of parliamentary questions myself to try to get answers about the discount rates that are being used. I have discovered that the Government are using different discount rates all over the shop, for projects that are justified on the grounds of climate change policy.
Far from bringing coherence to Government policy, the Stern review seems to have generated something bordering on chaos, a disorder that any cost-benefit analyst would abhor. What if the Stern review is wrong and what if Lord Stern is mistaken about any one of his highly tendentious assumptions and projections, the most important of which is the discount rate itself? Who will pay the price? The price will be paid by the poorest in the world who will be denied access to rescue from absolute poverty, and by the poorest in our society who will pay the most—as a proportion of their total income—for the higher energy prices that will result. The damage will be colossal if he is wrong.
Should we rely on a recondite economic theory radically to restructure global economic activity and put at risk the long-run economic growth—although we have a problem at the moment—that we have seen over the last quarter of a century as a result of globalisation and the prosperity that has come with it? That is what the Government seem to be bent on doing, and it is based on a theory that informs every aspect of policy. It is not just future policy that will be affected; we are paying the price right now. The TaxPayers Alliance suggests that something like 14 to 20 per cent. of current electricity prices reflect climate change policy. We have had the scandal of the emissions trading scheme, which has been a very expensive disaster.
In a previous debate, I have discussed, in some detail, the flaws in Lord Stern’s discounting theory. If a more plausible discount rate is used, Stern’s conclusions go into reverse. He would then need to argue for much more moderate early cuts in emissions than the crash programme of early cuts that he proposes. My own tentative view is that a more moderate programme, which is supported by the overwhelming majority of environmental economists around the world, is probably the right precautionary approach to take.
In response to the concerns that I expressed in that debate, I received a letter from the Minister that purported to rebut many of the critiques of Stern. The note itself struck me as deeply flawed, but to be sure I sent it to Professor Tol, one of the world’s leading experts, and Ian Little, the father of modern welfare economics and Nick Stern’s moral tutor at Oxford. Some months ago, they responded to me. They identified not only my concerns but a huge number of others. I will not detain the House by reading out so many of their disagreements with the Government’s three-page note. Their comments are so devastating that there is nothing left of it. They show that there is a complete misunderstanding by the Government’s own advisers of the Stern review itself. I am not surprised since the Stern review is so opaque and difficult to understand. Even the world’s leading experts took a couple of years to unpick it, so it is not surprising that they got it wrong. I will put both the note and the responses that I have had in the House of Commons Library, so that others can look at them.
We are in the realm of deep theory and of trying to understand something known as the Ramsey equation when discussing discounting. The fact that the Government’s own advisers have failed to understand the matter should act as a warning to us not completely to restructure the economy on the basis of what can only be described as a very small band of people, led by Nick Stern, who have convinced themselves that more conventional discounting methods are mistaken.
The Stern review, of course, is riddled with a host of other contradictions. A central assumption of it is that the social cost of carbon is greater than the market price. The theoretical object of the trading scheme is presumably to ration emissions until those exchangeable rations trade at a price that can then rise to match the social cost of carbon. What is the appropriate price? If one looks very carefully one can find it, hidden away in the Stern review: it is $85 per tonne of carbon equivalent. That is on page 323. That was subjected to vigorous scrutiny at the Yale symposium. There, Lord Stern, faced by those who are not bamboozled by his intellectual pyrotechnics, appeared to retreat. What he said at page 65 is worth quoting, as it is the core of Government policy:
that is the concept of the social cost of carbon—
“is a valuable one in analysis but much less as a guide to policy. That’s why in my presentation I didn’t lay a lot of emphasis on the social cost of carbon”.
That is a central plank of the argument. There are lots more like that. I shall allude to one more and then close.
There are already two Stern reports. The original Stern review, mark 1, suggests a reduction of 60 per cent. in carbon emissions. Less than three years later, mark 2 appeared, arguing for 80 per cent. cuts—an even more radical crash programme of proposed cuts. Yet on page 276 of the original report Lord Stern appears to disown what he subsequently came out with in the mark 2 report. He says:
“The lesson here is to avoid doing too much, too fast, and to pace the flow of mitigation appropriately.”
He continues by saying that
“great uncertainty remains as to the costs of very deep reductions. Digging down to emissions reductions of 60-80 per cent. or more relative to baseline will require progress in reducing emissions from...a number of areas where it is presently hard to envisage cost-effective approaches.”
I have one last remark with which to end. We will need to come back to the Stern review. The Government, and certainly the next Conservative Government, cannot possibly leave the issue and their policies to be based entirely on a report that has been so comprehensively rubbished by so many of the world’s leading experts. I know no precedent for the British Government to persist with such an approach, and I hope that they will reconsider.
It has been an interesting debate. I congratulate the right hon. Member for Hitchin and Harpenden (Mr. Lilley) on securing it; it is important. As a good Liberal, following the dictates of John Stuart Mill, I recognise that even if the whole of humanity is of one voice and one person dissents it is important to hear that person’s views. Particularly given the right hon. Gentleman’s background in economics and physics, it is important to listen to his reasoned arguments; and they were reasoned—slightly more than those of some of his right hon. and hon. Friends. Some of the remarks of the hon. Member for Chichester (Mr. Tyrie) and the right hon. Member for Wells (Mr. Heathcoat-Amory) misrepresented the Stern report extremely. If I may quote two examples, the right hon. Member for Wells said that no account was taken of solar intensity in the Stern report; but one need only read to page 26 before solar intensity is factored in.
I said nothing about that being in the Stern report. I was talking about the IPCC. Also, the point was nothing to do with solar intensity as regards heat or light; I was referring to the magnetic field and its fluctuations, and its effect on cosmic rays and therefore cloud formation. That is a completely different mechanism, which is not mentioned in the IPCC report even to refute it. That was my suspicion.
I think that the record may show that the right hon. Gentleman did refer to the Stern report in that context; but to suggest that Stern did not take account of the well known and well understood effects of solar radiation is to misrepresent him.
Reference has been made to Professor von Storch’s work. That also is specifically mentioned on page 6 of the Stern report. He mentions that it is superseded by subsequent and wider data sets that have been taken into account, for instance, by the US National Research Council, which in 2006, two years after von Storch, concluded that there is a high level of confidence that the global mean surface temperature during the past few decades is higher than it has been at any time over the preceding four centuries.
No, I am sorry; time is very short and Conservative Members overran slightly.
I agreed with some of the points made by the right hon. Member for Hitchin and Harpenden. He rightly emphasised the importance of global warming for people in poorer countries, and emphasised that they would be hit hardest first, which I entirely agree about. He acknowledged the truth of the greenhouse effect based on simple chemistry and physics—an important concession that not all his right hon. and hon. Friends make. However, he seemed to cast doubt on the fact of global warming, towards the end of his remarks, by looking only at data from very recent years. He will be aware that to take the data of one decade, let alone one or two years, is much less important than to look at the overall trend. I cannot believe that he really disputes data of the kind presented in the Stern report from the Hadley centre, based on Brohan and others. They show clearly that over the past 30 years global temperatures have risen rapidly and continuously at about 0.2° per decade, and that that brings the global mean temperature to what is probably at or near the warmest level reached in the current interglacial period, which began about 12,000 years ago. All the ten warmest years on record have occurred since 1990.
I have my criticisms of the Stern report, too, although they are rather different ones. It is over-optimistic in many respects. It is soundly based on IPCC data but, as I have mentioned in an intervention, the IPCC is itself quite conservative. In its search for consensus, it has ruled out impacts based on the melting of the Greenland and Antarctic ice sheets, which I think makes it over-optimistic. The text of the Stern report also highlights clearly the dangers of global warming above 2° C above pre-industrial levels and links those with high probability to an increase in concentration of CO2 in the atmosphere of more than 450 parts per million. However, it then concludes that a concentration much higher than that, of 550 parts per million, is in some way acceptable. I find that a strange discontinuity in the report.
I am aware of other criticisms. It was interesting that the right hon. Member for Hitchin and Harpenden commended the work of Professor Frank Ackerman to us. Unluckily for the right hon. Gentleman, I have read the work of Professor Ackerman and if the House will permit me, I shall quote at some length one of his criticisms of the Stern report. He states that
“the Stern Review and its well-researched background papers are consistent with IPCC and other reports. There is no hard evidence that Stern has exaggerated the extent of crisis. If there is a problem, it is in the opposite direction: on some important questions, Stern relied too heavily on existing economic research and models, including an analysis that gives low estimates of the probability and costs of catastrophic changes. While the text and diagrams of the Stern Review suggest that the risk of losing the Greenland ice sheet is noticeable at 2° of warming, and severe by 3°, the Stern economic model assumes no risk of catastrophic damages below a threshold that varies from 2° to 8°, with 5° the most common value. A model that took seriously the warnings about catastrophe in Stern’s text would reach even stronger conclusions about the need for immediate action to reduce emissions.”
I think that perhaps the right hon. Gentleman is being a little selective in quoting from Professor Ackerman.
In a sense, Lord Stern himself has now been added to the critics of the original Stern report. In a conference in April he referred to how he “underestimated the risks” and
“underestimated some of the effects”
“I think the damage associated with high temperature increases was underestimated.”
He went on:
“The damage risks are bigger than I would have argued. Things like the damages associated with five degree celsius temperature increases are enormous. We could not be precise about what would happen to the world, what it would look like, but we can say that it would be a transformation. The last time we had temperatures like that, we had a world of swampy forests.”
In other words, if he were writing the report now he would have been even clearer about the costs of inaction and would have set the costs even higher.
The right hon. Gentleman referred to a footnote on page 142, suggesting that some of the evidence on which some of Stern’s conclusions were based was a little weak, yet pages 140 to 142 show three pages of scientific references and data on which Stern based many of his conclusions. He took account of many consensus views, including that of the IPCC. Members who have suggested that Stern made rash or irrational conclusions underestimate the extent to which uncertainty and risk were carefully factored into his model. He actually takes a prudent view of risk. His model ran different scenarios a thousand times and averaged out the impact, so his view of uncertainty and risk is prudent and wise.
The right hon. Gentleman suggested that Stern’s economics were at fault, claiming that he used a very low discount rate that was far lower than that which people use in other circumstances. Of course, a different discount rate was used to factor in the effects of something that will have an impact not only for decades or centuries, but over millennia, and in relation to which the decisions taken now will critically affect the future outcome. He suggested that taking a future prediction of wealth in which people were only four times wealthier than they are now, rather than five times wealthier, was somehow rash, but that would be a 20 per cent. reduction in future gross domestic product, which would be an extraordinary economic cost, and not one that I am altogether sure the rest of his party would advocate.
Incidentally, the discount rate was also addressed by Professor Ackerman, who also concluded that Stern is broadly right. The discount rate is based on several factors, including the ethical factor that one values one’s great-granddaughter’s life as much as one’s own. Setting short-term economic advantage against the lives of future generations certainly suggests that the number for the so-called rate of pure time preference should be very low indeed—I think that Stern used 0.1 per cent. The other element of the discount rate is the assumed rate of economic growth. It now appears that Lord Stern, in assuming 1.4 per cent. growth, might have been rather optimistic.
I agree with the right hon. Gentleman about the Government’s inconsistent use of the discount rate, which I think has had a negative impact on decisions such as that relating to Heathrow, and I would like to repeat exactly the same question he asked about the use of the discount rate and where the Government now stand on it.
I will finish by giving one final conclusion from Professor Ackerman’s study. He claimed:
“A reasonable economic analysis of climate change requires a discount rate roughly as low as Stern's, in order to ‘see’ the future; a broad treatment of uncertainty, something like Stern's, to reflect current scientific knowledge of the problem; and rigorous examination of expected damages, which are likely to be even greater than Stern suggested. While no one is exactly right on every question, Stern is ‘much less wrong’ than most of his critics.”
I congratulate my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) on securing the debate and for the constructive and thoughtful way in which he introduced it. It is typical of him to bring to the debate the expertise that he has gained from some of the highest levels of government, which explains the respect people have for him. I do not want him to get the impression that I am about to agree with his speech in its entirety, or even in its majority, but it is important to put on record his background and the expertise he brings to the debate.
I certainly agree with him about the importance of rigorous assessment and with the Karl Popper approach to such things, which suggests that we will not carry public opinion if we are not open to challenges on the argument or to having a debate about the issues and the basis on which we introduce policy proposals. We can only carry public opinion if the public are convinced by the arguments, which is one reason why I tabled an amendment to the Energy Bill Committee proposing that customers should be shown the exact cost of the green element of their electricity on their bills. If they pay £80 or £90 a year, they should know what that green element is, so that they can have an informed debate about it, rather than feeling that some of the key information is being hidden from them.
We should not, however, use that ongoing debate as a reason to put off action. We are all, as politicians, on a journey, and where we start and end is different for each of us. I know that my right hon. Friend the Member for Hitchin and Harpenden, just a few years ago, was on the other side of the debate. He was one of the signatories of early-day motion 178, as many of us were, which stated that
“climate change is a threat to civilisation”
“the cross-party agreement in favour of major cuts in greenhouse gas emissions, and particularly in carbon dioxide emissions”,
and called for the introduction of a climate change Bill. My right hon. Friend’s position has moved as different arguments have been put forward, but at the same time many of us have moved in a different direction because of the evidence that we have seen.
I am persuaded that we have seen a non-linear increase in global temperatures, and I understand that scientists agree that, in the past 2,000 years, the world’s temperature has never been higher than it is today and that that increase cannot be explained by natural causes. I have seen good explanations for some of the contradictory evidence that has been put forward. My right hon. Friend the Member for Hitchin and Harpenden commented on snowfall, and snow is falling in Antarctica, rather than the ice that should be developing. Snow should not fall there, because the temperature should be so low that snowfall is impossible, so that is evidence that the temperature in Antarctica is rising.
We should be well aware of the contribution that man is making to that change. We contribute 26 billion tons of CO2 to the world’s atmosphere every year, half of which comes from energy generation. That figure is 100 times larger than the CO2 emission from volcanoes, which some people regard as an explanation for the rising levels of CO2 in the atmosphere. It cannot be good that we are producing so much CO2, and it should be our intention to try to reduce it.
My concern about the approach taken by my right hon. Friend the Member for Hitchin and Harpenden is that, although he delivered it in a balanced way, it could be used as a justification, not for doing less, but for doing nothing. If we want action to be taken, we need to move forward, and we cannot be put off taking action that needs to be taken early. While we have heard discussions this morning about the discount rates, the key message of the Stern report for me is that the highest cost of the damage resulting from doing nothing is significantly higher than the highest possible cost of mitigation. We return to the argument about insurance, and whether it is sensible to take up 1 per cent. insurance cover, just as we would to protect our homes from damage and fire, even though the risks are less than one in 100, and to take a similar approach to insurance for our planet and livelihoods and for those of our children and grandchildren.
I certainly subscribe to the precautionary principle. If people look back on this debate in 50 years’ time, which is unlikely, and if we were wrong about the evidence on climate change, they will say that we still did no harm to our world by trying to mitigate the effects of man’s emissions, but if they decide that we were right about the concerns, they will be very angry indeed that we did not take action when we had the chance. The consequences of inaction are enormous: there will be economic damage and massive extra costs in trying to put right the consequences of climate change. We will see population transfers as people move away from parts of the world that have become too hot, which will lead to conflict and the resultant huge human consequence. It will also lead to the spread of disease. We need only look at the introduction in the UK of bluetongue disease, which is carried by flies that simply would not have been able to live here several years ago, to see the consequences of climate change.
We should also see this as an opportunity. People talk about the costs of combating climate change, but every time I talk to business it says that this is one of the most exciting opportunities that it sees. We can even see that in the energy approach and in the contribution that solar power can make, for example, as a huge amount of expertise and genius is being put into bringing down the cost of solar power. Such action goes directly against the argument that my hon. Friend the Member for Chichester (Mr. Tyrie) made, as the implications of developing solar power for the poorest people on our planet are massive. We can use the power of the sun in the Sahara through concentrated solar power to make endless, cheap energy available to people in sub-Saharan Africa, and there is also scope for the desalination of water, which could make a fundament improvement to their quality of life.
No, I will not do so, because I have only one minute left. I hope that my hon. Friend will understand and that we can discuss this subsequently.
Moving away from hydrocarbons will give us greater price stability and security as well as greener energy. It is by relying continually on hydrocarbons that we end up with the problems of price instability and less security. We are on the verge of an incredible new age of innovation. Necessity is the mother of invention. The car companies are working to reinvent motor cars and to meet the challenges of powering them differently. Other work is being done on small things such as eliminating standby buttons because of the energy that they use. Typically, standby buttons, which were a matter of great debate a couple of years ago, now use less power for a period of weeks than it takes to boil a kettle once. Enormous work is being done to transform our world and how we live. This is an exciting opportunity. We should not be worried about going down the route that we are on, because business itself sees it as an amazing opportunity, and at the end of the day, we should be aware that the consequences for most of us of doing nothing are much greater than the consequences of taking action now.
I congratulate the right hon. Member for Hitchin and Harpenden (Mr. Lilley) on obtaining this debate, which has been absolutely fascinating. It is a pleasure to follow the hon. Member for Wealden (Charles Hendry), with whose speech I agree entirely.
We as a Government stand by the Stern review, which estimates that the costs and risks of not acting to tackle climate change will be equivalent to losing 5 to 20 per cent. of global GDP each year, now and for ever. In contrast, the costs of taking global action to avoid the worst impacts of climate change are expected to be only about 1 per cent. of global GDP by 2050. In response to the question that I was asked, the UK Government have undertaken subsequent analysis that confirms Stern’s estimates. The modelling shows that the cost of action will vary between 1 per cent. for a 550 parts per million stabilisation goal and 3 per cent. for a 450 parts per million stabilisation goal. The costs are significant—nobody disputes that—but we believe that they are manageable against the potentially catastrophic impacts of climate change.
I will not give way. I have so little time, and everyone else has spoken.
It is important to understand that Stern was producing an analysis not for the UK but for the world, and his arguments need to be understood from a global perspective. The Stern review sets out a framework for reducing emissions, and UK policy is fully in line with it, as highlighted in the Government’s response to the review published last year. First, we have put a price on carbon not only through emissions trading and taxation but implicitly through regulation. Secondly, we are implementing the right technology policy, including investing £400 million to support the commercialisation of low-carbon technologies between now and 2011. Thirdly, we are removing the barriers to behavioural change through measures such as the carbon emissions reduction target and the “Act on CO2”campaign.
However—this is an important point—the case for action does not rest on the Stern review alone. Indeed, the Government have been committed to the climate change agenda and emissions mitigation since 1997, well before the report was produced. The case for action has been demonstrated by overwhelming scientific evidence, notably that brought together by the intergovernmental panel on climate change and representing the consensus of thousands of scientists worldwide based on peer-reviewed research. That process, despite what has been said today, has been widely acclaimed as an example of comprehensive, thorough and fair assessment of a complex scientific problem.
We believe that the Stern review’s analysis and policy conclusions have stood up well to scrutiny. In particular, sensitivity analysis shows that Stern’s main conclusion that the costs of strong action are less than the costs of damage avoided and its policy implications about the need for rapid action are robust to a range of assumptions suggested by critics. The sensitivity work has been published and is available to download from the review’s website. I hope that the right hon. and hon. Gentlemen who have spoken in this debate will take the trouble to work through the responses to the various critics whom they have quoted.
I was asked about the different discount rates. There are two main reasons why Stern used a different discount rate to estimate the costs of climate change from that used, for example, by the Treasury in the Green Book. First, because the choice on whether to undertake global action on climate change involves large and irreversible intergenerational impacts, Stern concluded that it would not be ethically defensible to discount—that is, to attach less importance to—the impacts on future generations simply because they will have been born at a later point. Secondly, Stern did not apply a single fixed discount rate, as has been suggested, but varied it according to the prosperity of future generations in the different models used. That is because we should attach a greater value to the welfare of future generations who are relatively poor than to the welfare of those who are relatively rich.
Alternative approaches advocated by critics place very low values on future impacts, which means that they do not care about passing on far greater costs to future generations. The Government believe that the approach taken by Stern is appropriate and reflects how most people feel about the sort of world that we should leave to our children and grandchildren. Put simply, those who do not care about the future do not care about climate change. We care about the future, so we believe firmly that it is imperative to act on climate change, and to act now.
The right hon. Member for Hitchin and Harpenden referred to the impact assessment and made various criticisms, to which I shall respond. He correctly mentioned the benefits, which were calculated to be in the range of £82 billion to £110 billion, but there is significant uncertainty about costs in looking forward to 2050. He referred to costs of £205 billion, but did not mention that the range of costs was from £30 billion to £205 billion. The cost of £205 billion would arise only if there were no technological innovation beyond 2010. I believe that that is a conservative estimate based on an unrealistic scenario. There will be huge innovation and technological change, so arguably that estimate is far too conservative. The estimated costs also did not take account of the potential for international trading, which could significantly lower the costs of action, benefiting the UK as well as developing countries. Even for the most pessimistic cost scenario, which the right hon. Gentleman quoted, estimates are consistent with the Stern review findings that costs will be 1 per cent. of GDP, plus or minus 3 per cent., by 2050.
The right hon. Gentleman asked whether we would update our impact assessment. We plan to do so; the updated assessment will be done next month. It will draw on the new evidence from the Committee on Climate Change and new Government research and will be updated to incorporate the 80 per cent. reduction target and the move to include all greenhouse gases. The shadow Committee has already produced new evidence, which will be incorporated in the impact assessment, and its interim advice suggests that costs will be between 1 and 2 per cent. of GDP in 2050, in line with the Stern range.
We have also developed new evidence on the air quality impacts of action on climate change. Improvements in air quality resulting from meeting the 80 per cent. target will benefit us to the tune of £3 billion a year in 2050. Clearly, that needs to be taken into account, as does the method for valuing carbon, which is also under review. That is likely to increase significantly the valuation of the benefits of reductions delivered by the Climate Change Bill. A great deal of change will be taken into account, as will the advice of the shadow Committee.
Much was made of criticisms of the science. I think that they have been answered by the two previous speakers. We are absolutely convinced. I am a scientist myself, and if I had to weigh up the huge numbers of scientists and the IPPC’s peer review process against a few critics, I know where I would put my scientific trust. Temperature rises over the decade have indeed been small, but we must look at a much longer period. When we do so, we see that temperature rise is well under way, as are sea level rises. Climate change poses a real and terrible danger, so we need action to tackle it. We are demonstrating that resolve through the Climate Change Bill. It is in our interests to obtain a global agreement. That is the way to address the threats to this country and to the poorest people on the planet.
It is a pleasure, Mr. Atkinson, to have this debate under your chairmanship. It is also a pleasure to have the Under-Secretary of State for Defence, the hon. Member for North Durham (Mr. Jones) in his place. He is an experienced Minister, having served on the Select Committee on Defence. During his service on that Select Committee, he earned the reputation of being a forensic investigator. If nothing else, I simply ask today that he goes away from this debate and asks a series of detailed questions.
I start by paying tribute to Colour Sergeant Dura from the 2nd Battalion The Royal Gurkha Rifles, who unfortunately was killed in Afghanistan last weekend. I had the honour to serve with the 2nd Battalion The Royal Gurkha Rifles in Bosnia in 2001. Colour Sergeant Dura was a fearsome soldier and he will be sadly missed by the battalion.
It is absolutely right that I should pay tribute to the Royal Air Force and the service that it has provided in both Afghanistan and Iraq in supporting our troops. I intend to focus on the Harrier force in this debate—I have given the Minister advance warning that I intend to focus solely on the Joint Force Harrier—and it has been doing a sterling job, rightly earning a reputation as being very much the soldier’s friend in Afghanistan.
As someone who is serving on the RAF parliamentary scheme this year and who is due to be in theatre with the RAF shortly, I join my hon. Friend in paying tribute and saying thank you to the RAF for all that it is doing on behalf of our country overseas.
My hon. Friend is absolutely right; the RAF is doing a sterling job, as I have just said. In many ways, it is for that reason that I have called this debate today.
Of course, there are broader issues concerning the future of the Joint Force Harrier. The Royal Navy is very concerned about where the force is heading, its out-of-service date, the impact that that date may have on future air carriers, and so forth. However, that is very much a debate for another day. As I have already said, today I want to focus on the proposals to withdraw the Joint Force Harrier from Afghanistan from 1 April 2009. I believe that that proposed withdrawal is a very grave mistake and I question the motivation behind it, but I will come to that issue of motivation later.
The first obvious question to ask is: why are we due to withdraw the Joint Force Harrier from Afghanistan from next year? In answer to a parliamentary question, the Minister for the Armed Forces said that
“the Harrier force has been continuously operational in Afghanistan since November 2004 and has proven time and again its value in defending the lives of our troops, our allies and those they are there to protect.”
So far, I absolutely agree with that. He goes on:
“Mindful of the strain that this extended deployment has put upon the crews, their families and the wider role of Joint Force Harrier we have decided to withdraw the Harriers from Afghanistan and replace them with an equivalent force of Tornado GR4s.”—[Official Report, 17 November 2008; Vol. 483, c. 136W.]
It is the second half of that statement that I have concerns about. I now intend to go into some detail about those concerns, which are based on capability, finance, the impact on personnel, particularly in terms of the harmony guidelines, and also the impact that this deployment will have on air frames and the serviceability of the fleet in the long term, to show why I think that this deployment of Tornadoes is a mistake.
First, I want to address the issue of capability. A recurring theme in this debate will be the answers that I have received to parliamentary questions or, perhaps crucially, the answers that I have not received to parliamentary questions, because it is pretty clear that, if my questions had been answered, those answers would be distinctly unhelpful to the Ministry of Defence when it comes to determining the future role of the Harrier. After a series of parliamentary questions in which I asked what were the similar capabilities of the Harrier and the Tornado GR4, which is due to replace the Harrier, I was told that they have similar capabilities. Unfortunately, that is simply not true. I do not intend to go into great detail, but I will shortly be passing a document to the Minister on this subject.
For example, from a weapons point of view—I will not go into detail, as it would not be helpful in a public debate—of the six weapons systems that are carried on the Harrier, four cannot currently be carried on a Tornado. Indeed, one of the biggest impacts that we will see is on the degree of proportionality. The Tornado, which is due to replace the Harrier, seems very much to be an all or nothing option. Also, the Harrier has a series of close air support options fitted to it. In fact, of the eight specialist items on a Harrier for close air support, four will not be available for the Tornado.
To be fair, that gap is due to be filled in part, because about £40 million-worth of urgent operational requirements are due to be fitted to the Tornado to try to close that gap and to enable the Tornado to meet the theatre entry standards. I would be grateful if the Minister could confirm exactly how many of the Tornado GR4s will be fitted to theatre entry standard by 1 April and, crucially, whether all of those upgrades will be available from the first day of entry, because my understanding is that it may be some time—some months, in fact—before the gap has been filled completely. That will mean that we will be accepting quite a degree of risk when the Tornado first enters service in Afghanistan. There are other risks over in-flight refuelling, which it would be equally inappropriate to go into detail about. Indeed, there are also problems when it comes to take-off for Tornadoes in the sort of environment that exists in Afghanistan. I want to pass to the Minister the document that I am referring to, so that, when he replies, he can look at the details in it and at least confirm that I am correct in what I am saying.
There is another even more alarming area; indeed, it is deeply disturbing. I have been asking questions about the ground abort rate of Harriers in theatre. In layman’s terms, the ground abort rate is how often we call on an aircraft, whether a Tornado or a Harrier, which is then scrambled but, for some reason or another, simply does not get into the air. When I asked this question about ground abort rate, I was told that the information that I requested was not held centrally and could be provided only at disproportionate cost. I find that amazing, because I have those figures in front of me. They are held centrally and I am more than happy to pass them to the Minister in a second, at no cost whatsoever.
I will not go into the details of ground abort rates, but suffice to say that at the moment the Harrier is operating at a 0.34 per cent. ground abort rate. Therefore, only about four in every 1,000 times that we call on a Harrier to go on a mission in Afghanistan it cannot take off, because of some technical problem. By comparison, the Tornado GR4 is operating at a ground abort rate of 11.6 per cent. Therefore, more than one in 10 times that a Tornado is scrambled on operations, it simply fails to get off the ground. If that is the case, why are we replacing eight Harriers with eight Tornadoes? Why are we accepting that one in 10 times a Tornado will not get off the ground and therefore one in 10 times it will not get to serve our soldiers on the ground on the front line? Is the Minister really happy to take that risk? In fact, the ground abort rate for Tornadoes peaked last month at 12.7 per cent., so this problem is getting worse, not better. I would also like to pass this summary to the Minister, so that he can confirm or deny this information, which apparently is not held centrally.
So, from a capability point of view, I have tried to demonstrate that we are taking a severe risk in replacing the Harrier with the Tornado on the front line in Afghanistan. From a financial point of view, does it make sense financially to replace the Harrier with the Tornado? Let us look at where we are already, and this information comes from parliamentary questions that have been answered. So far, we have spent on the Harrier about £20 million on urgent operational requirements to improve its performance and potentially we have £42 million that we could spend on it. We have already spent £728 million on upgrading the Harrier to capability E, which was effectively to improve its performance specifically for roles in Afghanistan. We have also spent £112 million on the new Mk 107 engine, which is specifically designed to operate in hot climates. Therefore a total of £860 million has been spent on honing the Harrier’s performance for service in Afghanistan, and we have an average running cost of about £30 million.
Having spent all that money to get the Harrier to the level of performance that we desperately need in Afghanistan, why are we now withdrawing it? I have already mentioned that we have to spend at least £40 million on the Tornado under urgent operational requirements, just to get it to a very basic level. There will then be ongoing running costs of £31 million to keep the Tornado in theatre. The Minister will know that a National Audit Office report is being compiled, the results of which should be available in two or three weeks. They entirely undermine, from a financial point of view, the decision to replace the Harrier with the Tornado. It makes no financial sense whatever, but hon. Members need not take my word for that; they can take the NAO’s word for it when the report is published.
On personnel, much of the argument seems to be about the impact on pilots, their families and the joint force of the fact that the aircraft has been on continual operations since September 2004. I think that was the date given in a parliamentary answer. Harmony guidelines for the RAF are that people should be on operations for four months in 20. A simple ratio would be that we require 55 Harrier pilots to sustain having 11 pilots on operation at any one time. I have calculated that using a four-in-20 rule, so I have simply multiplied by five the number of Harrier pilots in theatre.
The pilots are the most restricted of the personnel. Engineers will almost never do four months on an operational tour. When the MOD talks about harmony breaches for the Harrier force, it is almost entirely to do with pilots, rather than the whole force, so we are talking about a small number of people. As a rule of thumb, the maximum tour length for a Harrier pilot on a front-line squadron is only three years. Within that three-year period, a pilot might do only two four-month tours.
Front-line squadrons at RAF Cottesmore have a total of 48 pilots, which is seven short of the 55 required to ensure that harmony guidelines are met. However, the extra seven are relatively easy to find, as the number does not include the force commander, the deputy force commander and the stan-eval—standards and evaluation—officer. Those three officers are additional pilots who are available within the Harrier force and all of whom go to theatre to fly. The further shortfall of four pilots is made up from the operational conversion unit at RAF Wittering, which does not deploy on operations as a squadron, and routinely supplies four of its 16 pilots to augment the operational force. Harmony is therefore being achieved, despite claims to the contrary.
I have asked, in a parliamentary question, how many pilots we need to maintain harmony with 11 in theatre, and it is fascinating that my question, again, magically remains unanswered. Even without the current seven-pilot mitigation, pilots would go from a four-month to a 4.8-month tour in 20, which would be an increase of only three to four weeks in their three-year maximum tour length. So, we are talking about a handful of people having an extra three weeks in theatre, but that seems to be the crux of the argument as to why the Harrier is being withdrawn. Is the Minister really basing the reasoning behind withdrawing the Harrier on those considerations?
Interestingly, the whole harmony question would be completely removed if only six aircraft were deployed. There were six initially, until a night capability was identified. Since then, other multinational air assets have entered the theatre, and it is questionable as to whether eight Harriers are required. I have asked a parliamentary question on that and am still due an answer. I realise, of course, that the answers will be unhelpful. Sometimes, we get parliamentary answers that are entirely wrong.
I asked a parliamentary question about how long the Harrier force had been
“deployed continuously on operations since the start of Operation Telic.”
The Minister for the Armed Forces replied:
“The Harrier force has never been deployed on Operation Telic.”—[Official Report, 17 November 2008; Vol. 483, c. 135W.]
It took me three minutes last night to go on to the RAF’s website and discover that 4 Squadron was deployed on Op Telic from February to May 2003. So, what is going on when the MOD is churning out answers that are incorrect when compared with its own website? It took me three minutes to discover that the information I was given was wrong and that Harriers have been on Op Telic. If that is the quality of information that the MOD is churning out, what sort of information is the Minister getting? It is outrageous.
I have outlined the reduction in capability that the introduction of the Tornado will bring to the theatre. Will the Minister tell me, with particular reference to the technical ground abort rates that I have given him, why, if the MOD is prepared to accept the risk of one in 10 Tornadoes not getting off the ground, it is not prepared to accept a reduction in the number of the considerably more reliable Harriers? That is a moot point, however, because we are already meeting harmony guidelines.
It is bizarre that after spending so much money upgrading the Harrier force to the standards required for Afghanistan, so that it is now relatively cheap to operate, we are not fully funding it. Why is the RAF doing that? Will the Minister explain? Ironically, and perhaps crucially, the money being spent on getting the Tornado up to theatre-entry standards and keeping it there could maintain a Harrier force that fully meets harmony guidelines in Afghanistan indefinitely, but the RAF chooses not to do that.
The RAF claims that because the Tornado fleet is bigger it will be easier to maintain harmony, but that is rubbish. The Tornado fleet is, in fact, two fleets—the GR4 and the F3. We have discovered, from the answer to a parliamentary question that my hon. Friend the Member for Woodspring (Dr. Fox) asked, that only 60 per cent. of the Tornado forward GR4 fleet are fit for purpose. How many of those will have met the theatre-entry standard by 1 April? Not many I fear.
On harmony, according to parliamentary answers, we have 11 air crew and 86 ground crew for the Harrier, giving a total of 97. When we replace the eight Harriers with eight Tornadoes, the numbers will be 24 air crew and 122 ground crew, so a like-for-like replacement equates to a 50 per cent. increase in manpower on the ground. The key argument seems to be the need to meet harmony guidelines, but we are about to send 50 per cent. more ground staff just to support those eight aircraft.
If anything requires an operational pause, it is the Tornado, because it has been on operations constantly for 18 years, since 16 January 1991. We are deploying it at enormous risk. If the Minister does not believe me, let me refer him to the Tornado GR4 integrated project team joint business agreement, which will be available to him. I refer him particularly to the risk log on page 3, which highlights 14 risks, 10 of which are high-impact, and all of which have a medium or high likelihood of occurring over our current problems within the Tornado fleet. It is outrageous that all that information simply is not being given to the Minister.
There is also an argument about the life span of the Harrier. As the Minister is probably aware, the prime factor that controls the Harrier out-of-service date is the original airframe flying hour life, which is a conservative estimate of 6,000 flying hours. When working out whether an out-of-service date for an aircraft type may be extended, one must first consider the residual airframe life that is available on each of the aircraft in the fleet and add them together to give a bucket of flying hours. The bucket of flying hours remaining for the Harrier would enable a two or three-year out-of-service date extension beyond 2018 to 2020 or 2021. The full five-year out-of-service date extension to 2023 that is so desperately needed by the Royal Navy is achieved by a small, 10 per cent. extension to the airframe flying hour life. That is more an engineering paperwork exercise than anything else. Ironically, the type of flying on Operation Herrick is less demanding on the airframe than the normal UK-based training flying, which tends to involve more aggressive flying, from an airframe perspective. Any arguments on that ground are therefore ridiculous.
Having discussed why we are pulling the Harrier out, and having given the Minister some information as to why the reasons are fictitious, I must ask why the RAF is so keen to withdraw it. I believe that the key lies, again, in an unanswered parliamentary question. I have asked the Secretary of State for Defence
“whether Harrier will be subject to a programme review in 2009 if it is withdrawn from Afghanistan (a) before and (b) after 1st April 2009.”
What does that actually mean? I am not going to draw the Minister into debates on Treasury cuts and the fact that the RAF is having to find ways to save money next year. A lot of money seems to be splashing around, but if the MOD needs more money, that is a point for him to argue with the Treasury. It is pretty clear that, if the Harrier stays in Afghanistan, it will not be subjected to the programme review. If, however, the Tornado is pulled out of Iraq—it soon will be, hopefully—what exactly is it going to do? It will not be on operations, and it will not have an operational role. I am assured that the RAF is concerned that, all of a sudden, the Tornado fleet is beginning to look exposed. It believes that, by ensuring that it has a role in Afghanistan, we can give the Tornado fleet and its future a degree of protection.
If we are potentially accepting all the capability loss that I have explained and coming up with arguments about harmony, simply because the RAF is concerned that it may take cuts to its Tornado fleet, that is outrageous. I shall not overplay my concerns, as I have limited experience of serving as a soldier in Afghanistan, but it is outrageous if we are prepared to take all the risks that I have outlined for that reason.
I ask the Minister to ask some detailed questions of his officials. I am convinced that he has not been given all the information that he needs to take an informed decision. If he were to say, “I have listened to what the hon. Gentleman has said, and I give him my assurance that I will go away now and ask those questions, to ensure that the decision is being made for the right reasons”, I would be happy with that. I have given him considerable detail about the matter. I am deeply concerned that there seems to be a culture in the MOD of not only giving inaccurate answers, but refusing to answer questions because the answers would not necessarily support the RAF’s decision to remove the fleet from Afghanistan.
We have only nine minutes left, so I shall finish. I ask the Minister to refer directly and specifically to the points that I have made.
I, too, would like to say what a privilege it is to serve under your chairmanship, Mr. Atkinson. I add my tribute to Colour Sergeant Krishnabahadur Dura, who was killed in Afghanistan over the weekend. I know that the hon. Member for North-East Milton Keynes (Mr. Lancaster) is very close to the Gurkha regiments, and if he speaks to them, will he pass on my heartfelt condolences and my pride at the job that the Gurkhas are doing in Afghanistan?
I congratulate the hon. Gentleman on securing the debate. It gives me an opportunity, in the limited time left to me, to pay tribute to the role of the RAF and the other forces in both Afghanistan and Iraq. I understand that he wishes to concentrate on Afghanistan. We ask a lot of our armed forces, and the tempo of the RAF’s operations is constantly under review. Conservative Members cannot have it both ways. They can hardly argue that we should reduce the tempo of operations and the pressure that we put on personnel, and then argue, as I think he did, that we should keep people in theatre for long periods.
The RAF’s contribution in Afghanistan is everything from heavy lift to the close air support that the hon. Gentleman mentioned. That support has been of great effect to UK and coalition forces. He has left me little time, and I shall not respond now to the document that he has passed to me, but I shall certainly respond to the specific points in it afterwards. I need to touch on some of the issues that he raised.
We cannot get away from the fact that we ask the RAF and our other armed forces to do a lot. There is pressure not just on them but on their families. It is easy to blame the MOD or the ministerial team, but the decisions in question are made by the RAF for clear operational reasons. Hon. Members need to be careful in such debates not to try to be armchair generals—or in this case an armchair air marshal—by second-guessing what commanders on the ground need. I wish to make it clear that the decision has not been taken because of anything to do with finance. The hon. Gentleman mentioned the future of the Harrier force, and I can only say that, like everything else in the MOD, it is under review. Decisions have not been taken on financial grounds; they were operational decisions on the ground.
The hon. Gentleman referred to the Tornado being of less capability than the Harrier. I have asked questions about that in preparation for the debate, which he was kind to give me an opportunity to do. In some ways the Tornado brings capabilities that the Harrier does not, such as the 27 mm cannon and the new RAPTOR imaging system—the reconnaissance airborne pod Tornado—which has been used very effectively in Iraq and, I am told, will be in Afghanistan as well. I accept that the two aircraft are different, but it is wrong to give the impression that we are somehow not providing our armed forces with the support that they need by putting Tornado there.
I can have it both ways, because I and other Ministers have to ensure that we provide what commanders on the ground ask for. It is wrong to suggest that Tornado is a poorer or cheaper option that will not provide the capability that is needed, or that it is somehow a cost-saving measure. It is not; I think that Harrier costs £30 million a year and Tornado will cost £31 million.
It is, but that shows the Government’s commitment to providing our armed forces with the equipment that they need. The hon. Gentleman rightly highlighted the money that has been spent on Harrier, but again, Conservative Members cannot have it both ways. They can hardly criticise the Government for not supporting our armed forces given that, in this case and others, urgent operational requirements have brought from Treasury reserves—not from the MOD budget—the capabilities that our commanders on the ground have asked for. He cannot say that Harrier is not needed, and it would be wrong of Ministers or of him to second-guess what commanders on the ground want.
The hon. Gentleman clearly has a good source of information—be it from a constituent or someone else. I am quite prepared to answer the points raised in the document that he has passed to me, but I find it sad that, if there are concerns among serving personnel, they cannot be articulated through the chain of command. I emphasise again that these are operational matters, and the MOD, the ministerial team and the Government more widely are committed to ensuring that our people on the ground have the support that they need. May I finally nail the point about the possibility of the Treasury asking for cuts? It is not about cuts; it is about providing what is actually needed.
The hon. Gentleman mentioned the effects of withdrawing Harrier on the airframe and on the individuals involved. We must recognise that we have been asking the Harrier to do a lot in Afghanistan, and that needs to be taken into account. We have also been asking a lot of the people there, and we must allow them recuperation with their families and home bases and recognise that they need to continue training. They cannot do that on operations.
On a point of order, Mr. Atkinson. May I simply ask that the Minister go away and correct the parliamentary record in the case of the answers that I have been given that I have said are wrong? I have demonstrated one of them to him, on 4 Squadron serving on Op Telic. Will he also write to me with answers to the questions that he has not answered?
Continental Rail Links
It is a pleasure to debate this important subject under your watchful eye and careful consideration for our well-being, Mr. Atkinson. I am pleased to extend my congratulations to the Minister on his position in the Department for Transport. He is a hard-working and decent Member of Parliament, and he thoroughly deserves his position.
I did not take part in the debates in the main Chamber last week about Heathrow airport, but I noticed that many of the hon. Members who did so referred to rail travel as the alternative to air travel, particularly for short-haul journeys. This debate is an important part of getting the detail right, so that we can genuinely say to people that the better alternative is to take a train rather than a plane.
By way of introduction, I would like to describe my experiences in the time that I have been an MP travelling between my Stafford constituency and London. In the 11 years in which I have been here, I have always done that journey by rail. Each time I travel from my constituency to London, I am interested in seeing how services are developing. I recall that back in 1997, when I was elected, several times my journey was seriously disrupted by things going wrong with the network. The top speed of the train was 110 mph, and a typical journey time was two and a quarter hours. Then came the £8 billion public investment to upgrade the west coast main line, and Virgin Trains invested in a new fleet of Pendolino tilting trains. For the past few years, I have experienced top speeds on the line of 125 mph and a journey time as short as 90 minutes.
I congratulate my hon. Friend on securing this debate. He will know that as I live at Uttoxeter, I have a choice of going to Stoke-on-Trent, Stafford or Derby. He is right in saying that travel via Stoke-on-Trent is much quicker than it used to be, but sometimes the trains on that route are overcrowded. Perhaps he would address that point. On the service from Derby to St. Pancras, we must try to improve the time if people are to reach London and beyond in a speedy fashion, but it is also important to ensure that connections from towns such as Burton-on-Trent to the Derby-to-London line are improved.
I am grateful to my hon. Friend. There are still gains to be made by tackling the last few bottlenecks on the network and by improving things such as signalling but, fundamentally, as we face the future from a position of success and growth in the railways, I shall argue that the problem is one of capacity and that we need to develop more lines, particularly high-speed lines. I hope that my hon. Friend will be with me when I make that argument.
From next month, the story of the journey from Stafford to London will get better still. With the new December timetable, which is a result of the great investment in the west coast main line, journeys will be even quicker. From December, many of my journeys will take one hour and 18 minutes, with no stops at all between Stafford and London. More trains will make the journey each day, and the first direct service of the day from Stafford will reach Euston 36 minutes earlier. In a remarkable stride forward, from 14 December, the weekend service will be as good as the improved standard weekday service in terms of frequency and journey times. We have not experienced that on the west coast main line in modern times.
I am sure that the hon. Gentleman is right about the weekend service improving, but that may not happen for at least another year. I believe that there will be blockades on the line for at least 35 of the 52 weekends post- 14 December. Does he see that as a problem for the introduction of the new service?
I would ask the hon. Gentleman to be a little cautious in speaking so generally. I specifically mentioned the route from Stafford to London. Many of the blockades that he is talking about will be well north of Stafford. It is true that we have taken a lot of pain in the past 12 months, as preparations are made for the new timetable in December, and we have witnessed considerable disruption and inconvenience for travellers at weekends. We will be glad to see the back of those problems after 14 December.
Alongside the improvements in rail services between Stafford and London, there has been an improvement in rail travel between London and the continent in the past 11 years. We have moved on a long way since the time that train travellers had to cross the channel on a boat, having built a tunnel to connect ourselves to the continent, but I still regard my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), who was then the Deputy Prime Minister, as a great hero for saving the channel tunnel rail link project. I remember that evening when he came to the House of Commons Chamber at 10 o’clock at night to make a statement about saving the private-sector project from financial oblivion with a helping hand from the Government. The new public-private partnership secured the link and gave us what we have today. At that time, the terminus in this country for those services was Waterloo, but at this time last year there was a move to St. Pancras station, when the line became known as High Speed 1.
High Speed 1 is a success as far as passenger traffic is concerned. The figures from Eurostar show that, in the first nine months of this year, Eurostar carried a total of 7 million travellers, up nearly 14 per cent. on last year. Ticket sales were up more than 17 per cent., at more than £521 million. That is the advert for Eurostar, but let us be practical and admit what a marvellous travel experience the journey from St. Pancras is. We begin at a station that has been brilliantly restored and modernised. The journey by high-speed rail service links St. Pancras with Ebbsfleet, Ashford, Paris, Brussels, Lille, Calais, Disneyland Paris, Avignon and the French Alps. Some journeys are incredibly good value. I checked the Eurostar website yesterday. A return to Paris or Brussels is possible for as little as £59 for adults and £49 for people under the age of 26.
The biggest difference from 11 years ago is that today there is growing public concern about climate change. People wonder about the best way to travel. Clearly, Eurostar now has a good story to tell: all journeys are carbon-neutral, and a journey between London and Paris or Brussels generates 10 times less carbon dioxide than an equivalent air flight. To celebrate the first anniversary of the move to St. Pancras, Eurostar issued a news release to announce that passenger numbers from the regions north of London have increased by as much as 150 per cent. in some cases, thanks to the introduction of through fares from more than 130 towns and cities. It is instructive to look at developments in different regions. There is a 100 per cent. increase in passenger numbers from the east midlands, Yorkshire and the north-east, whereas from Manchester and the west midlands, the growth is 50 per cent. The number of travellers from Scotland is up as well, but this time by one third.
Overall, those growth figures demonstrate that travellers are taking advantage of easier rail connections between domestic train operators and Eurostar services, with higher frequencies and better punctuality than regional air services. Again, to complete the Eurostar advert, with through fares booked on starting a journey, many of the train operating companies can offer return through fares from, for example, as little as £67 from Luton and £89 from Glasgow. Hon. Members can see the increased attraction for people of making those journeys. I should like to mention to the Minister a point of detail about making the journey from Stafford to the continent by train and ask what he can do to make it better than it is at present. Although I will focus on Stafford I am, hopefully, speaking for every passenger who wants to take a train from the west or north of London to the continent.
In October 1994, the then Secretary of State for Transport, John MacGregor, told Railtrack to put the infrastructure in place to allow rail services to operate from the regions to continental capitals:
“The Eurostar will speed passengers from the Midlands, the North and Scotland to the Continent with sleeper services also connecting the west country and Wales. These services help to ensure that the economic and social benefits are extended beyond London and the south east and offer daytime services beyond the national capital.”
We know that none of that happened. For many years, the sleeper trains sat on a siding and they were eventually flogged off. Of course, we do not have regional Eurostar services at all. Mr. MacGregor’s Department asked the first operators of the Eurostar services, which were called InterCapital and Regional Rail Ltd, to produce a report about developing regional Eurostar services. After the end of the Conservative Government, the Department produced a report called “Review of regional Eurostar services” on 13 December 1998, which stated that
“direct Regional Eurostars to destinations north of London are not commercially viable”.
Parliament was outraged and, on its behalf, the Environment, Transport and Regional Affairs Committee expressed rage in its report on that review dated 20 January 1999:
“The regions have been cheated. The acquiescence of Members of Parliament to the Channel Tunnel Act 1987 depended on the provision of regional services.”
My right hon. Friend the Member for Kingston upon Hull, East, the then Deputy Prime Minister, was also unhappy with the operator deciding whether the services should go ahead and asked for an independent review. A company called Arthur D. Little Ltd was set up and was asked to report back. Its report in February 2000 concluded:
“On purely financial grounds…Regional Eurostar would not be viable”.
There is a clue there that the priority at that time was affordability, rather than the broader issues, including environmental ones.
I am grateful to my hon. Friend for giving way and for the excellent contribution that he is making to this debate.
Even if we were to judge these services only on a financial or commercial basis, is it not the case that these projections were made at a time when people were expecting an era of cheap air travel, which is certainly relevant in respect of competition on routes from the regions and nations of the United Kingdom? Is that era not coming to an end? Does that not indicate that, even on a commercial basis, the case for direct services to the continent of Europe from various points north of London is stronger than ever?
I agree with my hon. Friend that the finances have changed completely in the past decade. In respect of climate change issues, the price of carbon will inevitably drive up the cost of flying and will make rail, by comparison, more competitive. My description of the increase in passenger numbers is the same across the country. The problem today is one of capacity, not of declining services. The finances are changing for rail and the position is different, which brings me neatly on to my next point.
On high-speed links in the UK, as I have said, the channel tunnel rail link was rather provocatively renamed High Speed 1, heralding the age of more high-speed links in this country. In 2004, the Strategic Rail Authority commissioned a report from Atkins about high-speed rail, which concluded that it was an attractive and viable project but that in order for it to go forward it would need strong support from the Government. I cannot help thinking that that phrase gives a clue about why the Little report in 2000 was not more positive. The Atkins report said that, depending on the route option, a high speed line
“is capable of relieving much of the crowding on competing rail routes. Similar improvements could also be secured by upgrading the existing strategic rail network, but HSL has the advantage of also being able to free capacity on the existing rail network that can be used to open up new local, regional or freight markets…We therefore conclude that there is a good transport case for HSL.”
“In economic terms, HSL has a positive case, generating a benefit: cost ratio of at least 1.4 to 11”.
That just shows the change by then, as my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) mentioned. The report continued that
“it is possible to improve this significantly by optimising the use of freed classic rail capacity and by fine-tuning the fare strategy.”
Finally, it states:
“On balance, therefore, there is a good business case for HSL and it is capable of delivering greater net benefits than other rail or highway schemes.”
That is quite an eye-opening conclusion.
Until the past few hours, there was political consensus on the need for high-speed rail. I am not sure whether that consensus still stands as far as the Official Opposition is concerned, given their reluctance to spend any money now. Perhaps we will get some clarification on that at the end of the debate.
Does the hon. Gentleman agree that substantial investment is needed and that there is a need to identify additional sources of funding? Has he considered a flight surcharge for domestic flights to fund a transport infrastructure fund that could be used to build the high-speed rail links that I think he is about to say we need everywhere and as soon as possible?
Before the hon. Gentleman intervenes on me to answer the point made by the hon. Member for Carshalton and Wallington (Tom Brake), I should like to say that I will wait and see what he says about the Conservatives’ position. I have seen the Conservative party inch towards being a supporter of new high-speed lines and I agree that we need to know that its commitment is not affected by its announcement yesterday not to continue even with Labour’s public spending plans.
I am delighted to tell the hon. Member for Stafford (Mr. Kidney), who secured this debate, and the hon. Member for Carshalton and Wallington (Tom Brake), who speaks for the Liberal Democrats, that there is only one party in the House that is not committed to high-speed rail—the governing party.
Well, I should be interested to hear if the Minister is going to change the view, because the then Secretary of State last year ruled it out explicitly. Perhaps the Minister will change the Government’s view today.
The governing party is the only party in the House that is not committed to high-speed rail. I am happy to make the commitment that the announcement made by the Conservative party in September—that it is committed to high-speed rail and to building it—remains.
As a Labour Member, I keenly support high-speed lines. I look forward to hearing the Minister’s contribution.
On the intervention by the hon. Member for Carshalton and Wallington, it is really a question of having an identified fund of money to pay for a particular project. He will know that the Treasury has, from time immemorial, never been keen on hypothecation, and it is difficult to get it to move. Personally, I think that there should be a lot of movement, particularly in the environmental scene, because a lot of the public would like to see another environmental project benefiting when they pay extra money for something. Although I do not accept the detail of the hon. Gentleman’s policy, I see the case for and the merit in some kind of ring-fencing of funds.
I have mentioned the Atkins report. Just to bring hon. Members up to date, the Eddington transport study was published in December 2006. At page 213, paragraph 4.194, it states:
“High-speed rail is likely to make the most effective contribution to environmental objectives where the scheme is developed to address existing or projected capacity constraints, increasing the probability of high demand and high load factors, and improving the economic and environmental returns.”
Some people read the Eddington report, overall, as being negative about high-speed rail. The Transport Select Committee wanted to ask Sir Rod Eddington about this. It interviewed him on 16 April 2007, when he explained that he thought that high-speed rail using established technology had a key role to play in Britain and that planning should start now. He is unequivocal in his support.
That challenge was taken up in June 2007 by Greengauge 21, a not-for-profit group, with its well-worked proposition for a High Speed 2. It proposed a high-speed line along the north-west corridor, which I would be pleased about because it would benefit Stafford, but I hasten to point out that there are other proposals, including one for a high-speed line paralleling the M1 motorway. The point is that workable proposals for more high-speed lines are already in existence. To pick up on the point made by the Conservative spokesman, the Government, in comparison, are still at an investigatory stage.
On solutions to the growing capacity challenge on the rail network, Network Rail is conducting a strategic review of the case for building new rail lines. It is considering five of Network Rail’s strategic routes north and west of London: Chiltern, east coast, west coast, Great Western and Midland main lines.
I am working my way towards the Government’s position, and it is coming soon, so perhaps the hon. Gentleman will contain himself for one more minute.
The Network Rail study recognises that by 2025 many lines will be full, especially those running to and from the north and west of London. The study will examine how we can meet the capacity challenge and find solutions, including possible new lines and high-speed rail links that are deliverable and affordable. The report will be complete next summer.
Network Rail has told me that it is sensible that, if we are to build new lines, they may as well be high speed. Network Rail is also part of the recently established national networks strategic group, chaired by my noble Friend and Minister of State at the Department for Transport, Lord Adonis. Among other things, that group is looking into high-speed rail links, and is due to report back next spring.
I come now to the experience of Mr. D’Arcy—not the character in Jane Austen's “Pride and Prejudice”, but my constituent, Mr. Gerald D’Arcy, who regularly travels by rail between Stafford and the continent using Eurostar services, which have been from St. Pancras for the past year. He readily accepts that his experience has been better this year than in the past, when his train from Stafford arrived at Euston and he had to haul his suitcase and hand luggage across London to Waterloo. Now, he just has to get to St. Pancras, which is also on the north side of London, as is Euston. He has tried the tube, but it is crowded and difficult with luggage, and there is still quite a lot of walking, especially at the King’s Cross-St. Pancras end, but at least he can buy an Oyster card in advance. He has tried taxis, but they are dearer and sometimes the wait has been longer than the walk would have taken. He has tried the bus, and there is a regular service from outside the front of Euston station, but there are no signs to indicate which bus to catch. He likes to pay all his travel costs in advance at Stafford railway station, but his plusbus ticket is valid in London only for a day ticket and not a return journey, and there are no railcard discounts or child fares available, although the latter point is not relevant to him. He has often tried walking, but the pavements, if not better or worse than in the rest of London, are uneven, and there are five junctions to cross with no special help for passengers walking from Euston to St. Pancras. I have done that walk, and I thoroughly agree with all that my constituent says about the journey. I wonder whether the Minister has walked that route. If not, will he consider doing so?
Will the Minister consider everything that I have said about the practical problems of making that short link between Euston and St. Pancras, and pull together the people who can make a difference—the rail companies obviously, the local authority, Transport for London, and his Department—to see whether they could make some modest improvements that would make a big difference to people who make regular journeys, so that they can cover their travels costs in advance and that there is a decent welcome at Euston with signs showing where to go, and make that walk a pleasurable experience instead of a slightly dangerous one? Perhaps a yellow-brick-road approach could guide people in their journey, so that it is a pleasant experience rather than an unpleasant one. That would be extremely easy, and could be done straight away.
Does the hon. Gentleman agree that that would also be a huge benefit for people coming to the UK as part of the Olympics? Clearly, they will use St. Pancras station, and may want to do a short walk or easy journey to Euston to go up north, or in other directions to appreciate the whole UK, not just London and the Olympics.
I agree, and I have made some short-term suggestions. Euston-St. Pancras is so near and yet so far for travellers. It is different for people from different parts of the country. For people from the east coast, the trains at least come into St. Pancras, so what I have said is not so relevant for them, although my hon. Friend the Member for Burton (Mrs. Dean) referred earlier to problems with congestion, timing and so on, which also need to be addressed. There are things that could be done in the medium and long term that would be improvements.
In the medium term, we would like passengers from Stafford to have direct access to St. Pancras or perhaps Stratford International. I have pursued that matter for quite a long time, and back on February 2007 the then Minister, my hon. Friend the Member for Glasgow, South (Mr. Harris) said the following in reply to my written question about a physical link between the west coast main line and what is now High Speed 1:
“A connection is being installed as part of the”
channel tunnel rail link
“section two works to provide access to the channel tunnel rail link from the west coast main line via the north London line.”—[Official Report, 27 February 2007; Vol. 457, c. 1229W.]
A House of Commons note on the channel tunnel rail link dated 30 June 2008 confirms that London and Continental Railways was contractually obliged at the outset to provide a physical link between the west coast main line and the channel tunnel rail link to be used by regional services, but, curiously, was not obliged to provide any services other than those between London and the channel tunnel. There could be a physical link, but at the moment there are no commitments that anyone will use it. Surely, with a stroke of the pen, the Minister could make a difference. Will he consider whether we can, at a reasonably early stage, have physical access by train to High Speed 1 for our journeys?
In the longer term, surely it is time to examine high speed rail across the country. I am particularly keen on the Greengauge 21 scheme. It would offer a connection between St. Pancras and Stratford International with the centre of Birmingham by high speed operation, which Greengauge 21 proposes should be High Speed 2. Both High Speed 1 and High Speed 2 would have direct contact with Heathrow airport, and there would be an extension of Eurostar services as a result to Birmingham and Manchester. All that would release capacity on the existing west coast main line for more commuter and freight services.
The Minister should be enthusiastic about such an approach, and I want to hear him say that that is what the Government are working towards. Is the hon. Member for Wimbledon (Stephen Hammond) barracking from a sedentary position?
I have taken a bit of time, but I think that other hon. Members are not here to make speeches. My last point is about freight. It tends at the moment not to go by high-speed rail, and quite a lot of continental freight goes by sea. However, if we built new lines, that would free up capacity on the existing network, so that freight could step in and use it, which would bring significant benefits to the rail freight industry.
I have some praise for the Government’s support in helping to link rail from the south of the country to the north. For example, from an early stage I have watched the development of the Terra Marique multi-purpose pontoon project, which is a seaborne link from the continent to the inland parts of Britain by the north sea and the channel and inland waterways. The Department promoted that from the start, and significantly funded it. In fact, anyone who was out on the Terrace three years ago would have seen the maiden voyage of the Terra Marique, because it came past to show itself off to us.
The Government are working well with British Ports to increase capacity at ports, and I was pleased that money has been given to establish links between ports and centres of population, such as linking Felixstowe and Southampton ports by improvement work on lines to the midlands. Of course, High Speed 1 is designed to carry freight as well as passenger traffic. Under legislation, the infrastructure managers are required to allow access to freight journeys. We have recently passed the Channel Tunnel Rail Link (Supplementary Provisions) Act 2008, which is partly a prelude to the Department selling off the state’s interests in High Speed 1—the infrastructure and its land interests. Some people are nervous that the sale might lead to a lack of control over the access that freight operators have through the tunnel. As the Minister moves towards having the entire High Speed 1 operation in the private sector, I hope we do not stifle growth and competition—for either passenger or freight. A number of passenger and freight operators would like to run trains through the tunnel to routes beyond London, and new entrants certainly ought to be able to expect fair competition with Eurostar.
On top of that, High Speed 1 is proposing to charge freight trains around £12 per train mile compared with £2.50 on the rest of the Network Rail network. By law, that is supposed to represent marginal cost, as required by the EU first railway package. I hope that the Minister is keeping a close eye on what is included in the calculation of the marginal cost, because as these rates stand, the lack of affordability will deter use of the line for freight—even though High Speed 1 offers some good capacity, especially at night.
I have also been told that there is the potential for high-speed freight. The consortium called Carex, which operates out of Charles de Gaulle airport in Paris, is developing high-speed parcel services between major airports and is interested in using High Speed l for access to British airports. The other issue in relation to freight travel is what the level of future demand is likely to be. According to a forecast made by MDS Transmodal on behalf of the Rail Freight Group and the Freight Transport Association, there will be a shortage of around 200 train paths a day for freight on the main routes north of London by 2030. That assumes there will be no additional passenger trains, which is not a likely outcome. So, either new freight lines or routes will have to be built, or new passenger lines will have to be constructed to leave capacity on the existing ones for freight growth. Otherwise, there will be no room for the growth in freight, which will mean that the demands of customers will not be met. More importantly, the demands and legitimate expectations of the British public for as much freight to be put on rail as possible will not be met. I hope that the Minister will say that freight is important and that future growth in demand will be catered for.
The best hope for an early decision on more high-speed rail links and the improvements that I would like to see in direct rail services to the continent is contained in the announcement made by the Secretary of State on 29 October in a written statement: Official Report, column 34WS. That statement is about the new national networks strategy group, which will be chaired by my noble Friend Lord Adonis. I know that the group has been widely welcomed by the rail sector. The European high-speed network is set to double in size to 5,700 miles by 2015 and open access will start in 2010, so it is surely imperative that the Government outline a longer-term vision for UK railways. We must not allow ourselves to be left behind by our European competitors. I ask the Minister to pass on to the noble Lord the suggestions and comments made in this debate, and I urge him to meet the Secretary of State’s deadline for reporting his group’s conclusions in the spring of next year.
Part of the beauty of St Pancras is the new statue of John Betjeman. I have described my right hon. Friend the Member for Kingston upon Hull, East, the former Deputy Prime Minister, as a hero of that line, so perhaps we could have a sculptured statue of him there eventually. I looked for a bit of support to back up my case from John Betjeman’s poetry, but I have been unsuccessful. I did, of course, find “From a Railway Carriage” by Robert Louis Stevenson:
“Faster than fairies, faster than witches,
Bridges and houses, hedges and ditches;”
and Auden’s “Night Mail”:
“This is the Night Mail crossing the border,
Bringing the cheque and the postal order”.
However, the best I could find for this debate from my hero John Betjeman was “Dilton Marsh Halt”, which ends:
“And when all the horrible roads are finally done for,
And there’s no more petrol left in the world to burn,
Here to the Halt from Salisbury and from Bristol
Steam trains will return.”
I hope for a bit better than that from the Minister, and I look forward to hearing what he has to say.
My hon. Friend the Member for Stafford (Mr. Kidney) has done a service to the House by bringing the wider debate on this issue to the attention of hon. Members. I congratulate him on the way in which he has enhanced the cultural standards of the debate with his poetic contribution. I am afraid that I will not be able to follow that.
My hon. Friend has also done us a great service by reminding us of the history of the proposals for links between the continent and those parts of Great Britain that are north of London. It is worth remembering that the issue has had an extremely chequered history. My hon. Friend reminded us that it was a promise of the previous Conservative Government to provide such through-links. That promise was not simply broken after a few years, it was broken at the start because those links were not provided when channel tunnel services started to operate.
For a while—this applies to the east coast, but it might have applied to other parts of the UK, too—there were some bizarre substitute services. I remember that shortly after 9 o’clock every day, a train left Edinburgh for London Waterloo. The train took about six hours to get there after it had meandered around the outskirts of London. Not surprisingly, many passengers found it much easier to go to King’s Cross and get the tube to Waterloo rather than use that service. The service not only took a long time to get to London, but, presumably because of some franchise arrangements under privatisation, it was not allowed to take passengers from intermediate stops en route. I saw people trying to get on the train who had assumed that they could perhaps go to Newcastle or York. They were turned away because the service was only allowed to be used by passengers going to Waterloo to connect with Eurostar services. As that train meandered through the east coast of Scotland and England and refused passengers en route, it was like some modern day version of the sealed train that took Lenin through Germany in 1917. Not surprisingly, it was not commercially successful and did not last long.
To rub salt into the wound, the rolling stock that has been purchased to allow through services from Scotland and Wales and the regions to the continent was eventually disposed of and used by Great North Eastern Railway for enhanced services to Leeds. That was obviously welcome for Leeds, but it certainly was not what was intended when the stock was first provided. This subject has had a chequered history and we now have the opportunities to try to set the record straight and repair the damage done by the neglect of the provision of these services for so long.
Clearly, the new channel tunnel terminus at St Pancras has increased the possibilities for people who are north of London to use services from St Pancras to the continent. As my hon. Friend pointed out, despite the extra inconvenience of changing trains, more and more people are using those services from places north of London. Certainly, great improvements in journey times are possible. I have travelled from Paris to London by train in under seven hours and from Brussels in under six and a half hours. That makes rail journeys to destinations on the continent much more competitive with air travel.
If we had direct services from the continent to destinations north of London, we could clearly do much more. We certainly now have the time and the opportunity to consider how those services could be introduced. Things could be done about that now. My hon. Friend quoted the previous Conservative Secretary of State for Transport’s comments on sleeper trains going from the north to the west and across to the continent of Europe. That is certainly something that could be introduced now. Because of the timings of journey start and finish points, people are now quite used to somewhat circuitous journeys to get to their destinations. There is no reason why sleeper trains could not run from Edinburgh and Glasgow, or points further north or south, to Brussels or Paris. That could be thought about now, and I hope that the Department is doing so.
As my hon. Friend pointed out, it was expected that there would be a link from the new channel tunnel link that would allow services to run further north along the west coast main line. That could provide services to Stafford, Birmingham, Manchester, Liverpool, Glasgow, Edinburgh and possibly further north. My hon. Friend the Minister might find great support for the suggestion that channel tunnel direct services could even run as far as Kirkcaldy! I am sure that that would find great approval at least in high levels of government. The potential exists for through services even now, and, as my hon. Friend has pointed out, at a time when there is greater awareness of the environmental consequences of flying, when, bluntly, flying and going through airports is becoming a less and less pleasant experience, and when air fares are clearly going to go up, the potential for such direct rail services, even with existing lines, should be seized on by the Government and transport industry.
The full potential of through services from points north of London to the continent will be realised at the point when we get high-speed services and lines running north of London. Various alternatives have been put forward, as my hon. Friend explained, and I do not want to go into all of them today. However, if there is a consensus and high-speed rail lines are on the agenda, I welcome that. I have been attending debates on the subject in Westminster Hall, and have been initiating them myself, for five or six years, as have other hon. Members, including some who are present today. If the mood is shifting in the direction of favouring a high-speed line, I welcome that, and I urge the Government to recognise the potential that that gives us not just to improve travel times and capacity in Great Britain, but to improve links to the continent of Europe.
As my hon. Friend pointed out when he quoted the Transport Secretary of the time when the channel tunnel link was being developed, there are strong economic, environmental and social reasons for direct services to be provided not just to London but to as many parts of Great Britain as possible. Those economic, environmental and social reasons are as strong as, perhaps stronger than, they were then. I urge the Government to listen to my hon. Friend’s call and to give us an indication that the Government will take the opportunities that exist to progress towards high-speed and direct rail links from north of London to the continent as soon as possible. We have seen what can be done about increasing customer numbers, even with the move to St. Pancras. How much more could we do with those direct links, and how much more again could we do if there were high-speed direct links?
I had not intended to take part in the debate, but the sheer style, verve and literary merit of my hon. Friend the Member for Stafford (Mr. Kidney), who opened the debate, prompted me to make a brief contribution. I do not think that he spoke just for his constituent Mr. D’Arcy, or just for Stafford. As he often does, he was speaking for England and indeed the entire United Kingdom in some of his remarks.
I want to follow up on something that was implicit in my hon. Friend’s opening remarks, when he stressed that high-speed rail, if properly developed in this country, could be a replacement for some air services. We must face that debate. He included Eurostar as an example, and 70 per cent. of the market between London and Paris is now high-speed trains, which have replaced many of the flights there. The airline market between Paris and Brussels has been completely eliminated because of the success of high-speed trains. Now it is not just Eurostar that has the potential to provide services between London and Paris, and so on; a consortium of Air France and KLM is looking to run train services on the High Speed 1 rail line between London and Paris. When airlines are thinking of getting into the rail market, that shows the potential for substitution. Some people have even suggested that of the 450,000 flights a year from Heathrow—I think that is the right figure—perhaps 100,000 could eventually have high-speed rail alternatives. If that is only half right, and it is a question not just of flights between London and Leeds and London and Manchester, but flights from the English regions to the continent, there is a real chance of rail replacement.
I speak as a proud Yorkshireman and have often had correspondence from businesses in Yorkshire saying that we must maintain the link to Heathrow. I have duly written off supporting the retention of an air link between Leeds Bradford airport and Heathrow. However, as time has gone on, I have reflected on whether that is the best that God’s own county can hope for—three flights a day to Heathrow, often circling Heathrow for many minutes, often late and often missing their onward connections. It would be far better if we had that high speed spur to Heathrow. Parts of Yorkshire would be 90 minutes or less away. Perhaps there could be an hourly service, or a 90-minute one. That would be a much better link for God’s own county to our major international airport.
It is disingenuous to say that there is no potential, or very little, for rail replacement of Heathrow air services. That, on all sorts of environmental as well as economic grounds, is the potential that we have before us. Also, if places in Yorkshire such as Robin Hood airport just outside Doncaster can be linked to London in less than 90 minutes, or perhaps 75 minutes, that will make them nearly as close to parts of London as Stansted is now. It could help. The high-speed network could mean that more long-haul destinations could be served from Birmingham, which would be just 45 minutes away from London on high-speed rail, from Yorkshire and potentially from Manchester, too. So there is a lot to be said for high-speed rail from the point of view of the regions—as a matter of both direct air links to the world and faster rail links to Heathrow and London.
In Yorkshire, we have looked on as a great deal of expenditure has been committed, rightly in my view, to Crossrail and the Olympics. High-speed rail is the project that the entire north of England looks to Parliament and the Government to back—and there is definitely a case for extending it to Scotland as well. It is the big capital project, equivalent to the Olympics or Crossrail, that could completely change the dynamics of our economies.
My hon. Friend talked about a statue at St. Pancras station. I think that he suggested such a statue should be of our former Deputy Prime Minister. I do not think that we should put aside the prospects of the Minister who is present today, who is a rising star and one of life’s political healers. The Government have a problem at the moment with the debate about Heathrow and the third runway. I am pleased that they have now begun—after, it must be admitted, a slow start in this Parliament, given that we had a manifesto commitment to high-speed rail—at least to begin to fulfil their commitment, and examine it. I, with my hon. Friend the Member for Stafford, hope that they will do that speedily.
We have also passed a new, faster and more efficient planning system. It seems to me that there is some merit in the early-day motion that bears my name, which has attracted support from across the House, and that we should use the opportunity of the next few months—I am not talking about years of delay—to examine airline policy and high-speed rail policy together, rationally and sensibly. I think that my hon. Friend the Minister is one of those people who could begin to forge a national consensus on the issue.
We are talking about our long-term transport strategy. We cannot afford to be divided in the House on this matter and make the possibility of changes to high-speed rail or airport policy dependent on the result of an election. We should get rid of the shackles of all the lobbying that has been going on for a third runway at Heathrow; those tactics remind me of the tactics used by those who lobbied for super-casinos, who thought that they just had to infiltrate the Department, get a few City lobbyists on board and persuade a few people at No. 10, and all would be well. Now we are seeing the beginnings of a debate in Parliament and there is a sense that all is not well. Members of Parliament, like the public, want the Government to reflect on their transport policy and the potential of high-speed rail, to consider high-speed rail together with airports and to use the time between now and the next general election to come up with a policy that can command the support of the House, and ensure that the statue at St. Pancras will be of the Minister.
May I start by congratulating the hon. Member for Stafford (Mr. Kidney) on securing the debate? He highlighted, among other things, past commitments to ensuring that Eurostar went a little further north than, first, Waterloo and then St. Pancras. He also highlighted the importance of improving freight facilities, to ensure that more, rather than less, of our freight is carried by rail. I shall not reflect on the matter of whom the statue might be—we will have to wait and see. Unfortunately, anything to do with rail infrastructure in this country takes a minimum of 10 to 15 years, so I do not think that any of us can second-guess of whom that statue might be.
I had time to reflect on the subject of our debate as I was standing on the overcrowded, delayed 08.10 train from Wallington to London Bridge this morning. I had further time to reflect as I was standing with about 500 other people, trying to get on to the tube at London Bridge. I happened to be standing next to a foreigner who turned around and said to me, “Is this normal?” I said “Look at the LED display board.” That board said that there was a good service on the Jubilee and Northern lines, so I had to reassure him: “Don’t worry, this is perfectly normal. This is how we travel in London.” He was, I am pleased to say, reassured by that information.
I would like to start by commenting on what various hon. Members have started with—the environmental benefits of high-speed rail. Hon. Members will be aware that Eurostar has commissioned some research. Clearly, it is not entirely independent on this matter and it has a certain interest, but that research showed that flying between London and Brussels, or between London and Paris generates 10 times more CO2 emissions than taking the Eurostar. We have heard that Eurostar is already carbon neutral, but it is seeking to reduce its emissions further, with a programme that it hopes will lead to a 25 per cent. reduction in carbon emissions by 2012. It also highlights the fact that the load factor on its services is very good, at about 60 per cent., which compares favourably with the load factor on some airlines at certain times of the day.
Eurostar is trying to highlight the fact that the potential environmental advantage is significant, but that at the moment the UK is failing to capitalise on a growing market for high-speed rail. In other European countries, because of the connectivity provided by the channel tunnel, there is potential to grow that market, but the UK is not really participating at present. A specific point that I would like to put to the Minister is whether his Department will carry out an assessment of how passengers shift from air to rail services when high-speed rail lines are introduced. From a parliamentary answer supplied to my hon. Friend the Member for Lewes (Norman Baker), I know that no specific assessment has been made of the shift in relation to French train services. It would be useful, and it would inform this debate, to see what happens when a large network is installed and how the shift from air to rail happens. I hope that that is something that the Government are willing to undertake.
Open-access railways for international passenger travel should start from 2010 onwards, and they offer the potential for much greater competition, with Eurostar having to compete on the present lines with other providers of high-speed rail services. I hope that the Minister will be able to clarify what the safety standards will be when the open-access railway is introduced in 2010. Whoever is going to compete in the market needs to know what those standards will be, otherwise they will not be in a position to compete effectively from 2010. There is a specific safety requirement for the channel tunnel with which they must comply.
As an aside, I would like the Minister to comment on whether the safety standards that apply in the channel tunnel are entirely necessary. I hesitate to say so, but on the Swiss railways, in mountain tunnels, which are longer than the channel tunnel, different safety standards are used. The Swiss do not have the same safety standards as those that apply in the channel tunnel, but they consider their railway to be safe. I do not know, but they may have achieved a less onerous way of ensuring safety. Will the Minister either comment on that or undertake to conduct research on whether the Swiss have found a more cost-effective system while maintaining safety standards.
Something else that the Government need to clarify, if we are to have open-access railways after 2010 and see a greater degree of competition in the provision of international rail services, is precisely what will happen to services that are using the channel tunnel. The fire took place a few months ago, and it is presumably too early to say what will come out of that, but will the Minister comment on whether is a case for stopping the open design of the HGV shuttles? Is that appropriate? Will he also comment on whether there is a need to consider some of the products and chemicals that go through the channel tunnel, and whether some of them should be sent via designated ferries, as a safer way of transporting them?
A number of hon. Members have commented on the integration issue in relation to Eurostar: how to integrate a train service coming from further north with the Eurostar going on to the continent. The Minister will be aware that there were plans to ensure that there was a single ticketing system to enable someone here in the UK—perhaps at the local station of the hon. Member for Stafford—to make a through booking; a ticket that took him from Stafford station right through to Moscow or Cologne, if he wanted to travel that way. I understand that that has fallen through. The complexity of creating a single ticketing system when, for instance, the age at which someone is a child on the German train system is different from the age under the rules that apply in the UK, has made it impossible. I hope that he can make some suggestions about how to encourage inter-country train travel; not just from the UK to France, but from the UK to beyond France and on to other destinations. How can one encourage that kind of travel when, unfortunately, a single ticketing system does not seem to be on the cards? There may be other things that can be done, such as making people aware of the connections that exist between, for example, Lille and other stations, between Brussels and Paris, and so on.
My final point is perhaps a parochial one. I know that hon. Members from further north will object to complaints about train services going to the south of the country. In the summer, my family and I used to take the train service from Waterloo straight through to Avignon, and we now take the service from St. Pancras to Avignon. For many people in the south-east, that has been a negative change, as time has been added to their journeys. We need to examine whether something can be done to speed up train services in London.
On that parochial point, the hon. Gentleman’s constituents and mine are on the same loop, which goes to St. Pancras. However, as a result of the Thameslink programme in 2015, our constituents will be forced to stop at Blackfriars. I hope that the Minister will take the point that of the 32 or so paths that go through Blackfriars and onwards and upwards, the only four that terminate at Blackfriars are from south-west London. I am sure that the hon. Gentleman will join me in urging the Minister to consider that. I know that his colleague, Lord Adonis, is considering it, and I have a meeting with him in the near future, but I hope that the Minister will be persuaded by the force of our arguments on that point for the people of south-west London.
I thank the hon. Gentleman for that very helpful intervention, and I echo entirely what he says. In fact, I am due to meet representatives of Network Rail—next week, I think—to discuss the issue, because a number of constituents have raised concerns about it.
The changes that I was talking about mean that at Waterloo some platforms are now available. Liberal Democrats want those platforms to be used for train services. We do not want them to be used to build shops on. With the credit crunch, it is possible that there will be less demand to build shops, so we may be able to invest for the long term in using the platforms for a combination of services, including local train services provided by South West Trains. My hon. Friend the Member for Kingston and Surbiton (Mr. Davey) has been pushing hard for that. Who knows? Perhaps in the future there will be the potential to run some Eurostar services back into Waterloo.
The need to increase capacity has been identified by a number of Members as the major issue across all parts of our network. The previous Rail Minister, the hon. Member for Glasgow, South (Mr. Harris), said that it would cost about £5 million to do the works outside Waterloo, yet it is costing us £500,000 a year to mothball those facilities. Does the hon. Member for Carshalton and Wallington (Tom Brake) share my surprise at what is happening?
Again, that is a telling point, and no doubt the Minister will provide an explanation—or he may struggle, but we will watch with interest to see what his response is. At Waterloo, there are platforms that could and should be used to provide train services—potentially a mix of local services provided by South West Trains and Eurostar services coming into the south, as they used to; that was their original destination. I hope that the Minister will provide some certainty on that point and say that platforms 21 to 25 will be used for train services, and they will not be lost and become the next major retail development in London, as that would be extremely regrettable.
There is now a degree of political consensus on the need for high-speed rail, but there is some uncertainty about how it will be funded, which is why I threw into the pot the idea of a surcharge on domestic flights to put money into a transport infrastructure fund that could be used to invest in high-speed rail. I shall listen carefully to the Minister and, depending on what he says, I may or may not support a campaign to erect a statue of him at St. Pancras station.
This has been a fascinating debate. I congratulate the hon. Member for Stafford (Mr. Kidney) on securing it and on introducing it in an all-inclusive way. I am referring both to his style and the points that he covered. Other contributions that we have heard have been interesting in terms of some of the omissions as well as some of the things that were included. The Liberal Democrat spokesman, the hon. Member for Carshalton and Wallington (Tom Brake), intervened on the hon. Member for Stafford to talk about economic plans announced by my party yesterday, then questioned the support for high-speed rail. However, the Government consistently tell us that his party wants to cut £20 billion from public expenditure, and, intriguingly, he did not announce how he would provide funding or continue to make that commitment.
I was also intrigued by the contribution from the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz), who made a number of good points, but he did not say whether he expects the Scottish Executive, of any political hue, to commit to building high-speed rail in Scotland. I am interested to know whether he thinks that that will be a policy of an Executive formed of his party or of any other hue.
I will respond to that invitation. Clearly, the hon. Gentleman would not expect me to make any commitments on behalf of the current and no doubt short-lived Scottish National party Government, but he should be aware that inter-city rail is still a reserved matter and therefore the responsibility of a UK Government in any respect.
That may be the stated position. Whether the current Administration in Scotland are short-lived or not, I know that they are holding a conference on high-speed rail in the near future and are inviting a number of UK experts. They are talking about delivering that package out of their own resources. As I said, the Administration may or may not be short-lived, but I am interested to see what happens.
Today’s debate is welcome, as the hon. Member for Stafford stated his support for the cause of high-speed rail and linking the UK to the continent. That may even be, in the near future, the policy of his Front-Bench team, who are currently the only Front-Bench team who have not been converted to that policy. When I was listening to the hon. Gentleman, I was somewhat surprised by his comments about the investigative nature of what the Government are doing at the moment. I was not sure whether the onus of what he was saying was that the bulk of the investigation was being done by Network Rail which, supposedly, is not an arm of the Department for Transport. I shall be interested to see whether the Minister chooses to clarify that point.
The reason why many of us suggest that the cross-party consensus to which the hon. Member for Carshalton and Wallington referred does not exist lies in some of the comments that we have heard from the Government. The previous Secretary of State, the right hon. Member for Bolton, West (Ruth Kelly), confirmed at column 739W of Hansard on 1 April 2008 that not one civil servant in the DFT was working on high-speed rail. She also dismissed the arguments for the environmental benefits of high-speed rail on 2 April; I refer hon. Members to column 852 of Hansard. Last year’s White Paper, “Delivering a Sustainable Railway”, which was her 30-year strategy for the railways—we all know that infrastructure planning is a long-term business—refused to consider any high-speed lines for 30 years, so although we have heard from various hon. Members about a potential consensus, at the moment we are waiting for the Government to join it.
It may be that today the Minister, who has a number of responsibilities, particularly on local networks, will alter the policy on national networks and that tomorrow his fellow Minister in another place will also alter that, but at the moment the Government’s position is clear. They have rubbished high-speed rail. When my party’s firm commitment was made at the end of September this year, the then Secretary of State described the proposals as “economically illiterate” and “hugely damaging” to the national interest. I cannot see how the Government can claim that they are part of a broad consensus to build high-speed rail and at the same time make such comments on the record.
The history of high-speed rail was set out with more eloquence than I can provide by the hon. Member for Stafford. I hoped that would start with the Orient Express boat trains of the 1930s, but none the less, his history was accurate. The opening of the magnificent new station at St. Pancras has brought an increasing demand for rail links to Europe. Last year, 9 million passengers travelled by rail to Europe. The first nine months of this year saw an increase of approximately 14 per cent. in travellers and, as has been mentioned, the number of travellers from Derbyshire has increased by 150 per cent. The number of travellers from Yorkshire—even if not everyone would agree with the hon. Member for Selby (Mr. Grogan) that it is God’s own county—has increased by 100 per cent. this year. That highlights the fact that, when rail journeys can be completed within four and a half hours, they compete favourably—if not extraordinarily well—with air travel. It is no surprise to see the demand from those areas rising, and that supports the argument that, if we had a more extensive high-speed rail network, demand would continue to rise.
The UK has 68 miles of high-speed rail linking London to the continent. If the Government’s current policy persists, there will be no advance on that and no plans to expand on the UK’s 0.007 per cent. share of the European high-speed rail network. Italy opened its first line in 1978 and France’s first TGV service began in 1981. Germany’s first high-speed intercity express opened in 1992, as did Spain’s. Sweden opened a high-speed link between the airport and central Stockholm in 1999. Turkey began building its high-speed network in 2003, and Portugal opened its first high-speed line in 2004. The UK lags significantly behind in the expansion of high-speed rail, even more so because—as many of us know—Europe lags behind the rest of the world. Japan had its first bullet train 35 years ago, and the regenerative impact of high-speed rail on the economy is well established.
The constituency of the hon. Member for Stafford is linked to the continent by rail, either down the west coast main line to Euston, St. Pancras and onwards, or via connections to Heathrow, where people can catch a flight. As the hon. Gentleman pointed out, the west coast main line is already overcrowded and will be full to capacity and able to take no more passengers by 2015. The benefits of new lines and a high-speed rail network across the United Kingdom, linking the hon. Gentleman’s constituency with Lille, through France into Spain or out to Milan are clear, not only because of the economic and environmental benefits, but because that would relieve capacity on the west coast main line. The hon. Gentleman eulogised the route from London to Birmingham and Manchester—I am not sure whether I heard him say Leeds, but that does not matter. There is a firm commitment from the Conservative party to build on that line.
Given the change of policy by the official Opposition yesterday, will the hon. Gentleman say whether he has since had a discussion with the leader of the Opposition, his right hon. Friend the Member for Witney (Mr. Cameron), confirming that those plans are still watertight?
I do not know whether or not the hon. Member for Carshalton and Wallington (Tom Brake) is an economic genius. However, at the moment, no economist can tell us exactly the shape of the recession or what the public finances will be like in 2015, when we propose that the railway be built. I have not had such a conversation with my right hon. Friend the Member for Witney (Mr. Cameron), but I do not need to. The Conservative party has made a firm commitment to start the process. That will be in our first term of government, which hopefully will be sooner rather than later. The process will involve a hybrid Bill, as outlined in our proposals. By 2015, after the first parliamentary term, we hope that we will be in a position to build that line. We estimate the build time to be between 2015 and 2027. That firm, unequivocal commitment remains, and is sustained. I hope that that clears up the matter for the hon. Gentleman. Yet again, he failed to reaffirm his commitment, but we shall not worry too much about that.
I am conscious of the time, as I know that the Minister wants to respond. The proposals by the Conservative party and by Greengauge 21, as well as the comments from a number of hon. Members about the benefits of high-speed rail, are broadly the first step. A high-speed rail network around the UK is advantageous, and it will enable people to travel around the UK and link it to the continent. It will provide shorter journey times, faster trains, improved reliability on dedicated lines and extra capacity, both on high-speed lines and by releasing capacity on conventional lines.
If we build a dedicated high-speed line linking London, Birmingham, Manchester and Leeds, that will clearly have an impact on the west coast main line which, as I have described, will be full to capacity by 2015. There will be huge benefits for a number of people, particularly the constituents of the hon. Member for Stafford. One could postulate the same thing for constituents in Milton Keynes, Macclesfield and so on.
The high-speed rail link will benefit capacity on the rest of the network, and it will also generate extra rail freight capacity. It is not insignificant that the Rail Freight Group has announced its support for high-speed rail. We need to improve the freight paths around the country, and a high-speed rail link would do so by allowing freight to travel on the high-speed rail link at non-busy times or through the night, and simply be creating extra capacity.
High-speed rail would provide a dramatic benefit for the economy. Any proposal of the sort put forward by Greengauge 21 or by the Conservative party would show the potential for a new central business centre in the north of England. Such a link would increase the prospects of Manchester and the north of coming into what has been recognised as the south-east growth zone of the economy. Better infrastructure would enhance the case for inward investment, and areas around high-speed rail constructions gain huge economic regenerative benefits. We can see that by looking at any number of the stations built in Japan.
Other contributors have dealt with the environmental benefits in more detail. However, Eurostar tells us that it emits a tenth of the carbon emissions of aircraft travelling between London and Paris. That is not by using the newer generation trains, but by using an existing energy mix and the available technology. Undoubtedly, part of that energy mix will be nuclear, but if we had a different energy mix and the new generation of trains, those carbon emissions might be even less. The hon. Member for Stafford concluded the announcement on 29 October that the national network strategy group was going to look at this matter. There are some people who, while welcoming that announcement, will wonder whether it is not another example of pushing policy into the long grass or to the right. All I want to hear from the Minister today is confirmation that the Government will join the cross-party consensus and agree to build a high-speed rail network in this country.
This wide-ranging debate has been excellently led by my hon. Friend the Member for Stafford (Mr. Kidney), and I congratulate him on securing it.
It might be helpful if I set out the background to some of the changes that we have made, which were not recognised by the hon. Member for Wimbledon (Stephen Hammond). It has been said that we are not committed to high-speed rail, but we have seen the introduction of the new High Speed 1 route and have invested £8.8 billion in the west coast main line, which has substantially changed travelling for many hundreds of thousands of people across the country. Promises made by former Secretaries of State in 1994 have to be supported by investment, as do any of our commitments. That investment was not there at the time, but is now—that has been the substantial difference under our tenure.
Since 1996, rail passenger kilometres and journeys have grown by more than 50 per cent. People are now travelling further by train than in any year since 1946. For the first time since 1961, more than 1 billion rail journeys were made in 2003-04, and, in each of the next three years, that number increased further. Not only passenger rail transport is growing: since 1996-97, the amount of freight moved has increased by 40 per cent.
One of the reasons why people are willing to use trains today is that rail performance has improved steadily over the past several years, against that background of investment, and punctuality and reliability are now at 90 per cent. However, if rail is to continue its revival, the Government must continue to invest in the industry’s needs. With the rail White Paper, published in July last year, we committed ourselves to making that investment, including the high-level output specification. Historically, the railways have lurched from funding crisis to funding crisis, to the detriment of passengers and our wider economy. With the White Paper, we have put it on a stable footing, under the scrutiny of the independent regulator, while delivering major, much-needed investment.
In setting out a clear and sustainable long-term strategy, the White Paper is the most positive statement on the growth and development of Britain’s railways in 50 years. It sets out our priorities in tackling capacity pinchpoints on the busiest sections and services in our urban areas and their supporting regions, and on inter-urban corridors and freight links to international gateways—the strategic economic priorities that Eddington identified. In the medium term, the focus is on measures that will enhance and make better use of our existing railway infrastructure and deliver visible benefits to users—for example, train and platform lengthening—rather than on committing to speculative step-change measures using unproven technologies.
My hon. Friend the Member for Burton (Mrs. Dean) mentioned overcrowding, which has been one of our priorities in delivering capacity improvements that will improve the travelling experience for that substantially increased number of passengers. We want the railway to have the capacity to handle double today’s freight and passenger traffic, to be even safer, more reliable and more efficient, to cater for a more diverse, affluent and demanding population and to meet its environmental potential by reducing its carbon footprint.
Through HLOS, the Government have set out, for the first time, the amount of money that they are committing to the railway between 2009 and 2014. Critically, it also sets out the expected returns on that substantial investment of £15 billion. Major projects, such as the £5.5 billion Thameslink scheme, the £600 million for the Birmingham New Street and Reading stations and improvements to track and infrastructure across the network, will help to meet those immediate and medium-term goals. Although the railway is safer than ever and reliability better than it has been for several years, despite the railway carrying more people and being used much more intensively, we have specified further improvements. By 2014, reliability will be 92 per cent.
My hon. Friend the Member for Stafford, and others, mentioned their personal experience of some of the improvements made on lines—for example, the speed of some trains has increased from 110 mph to 125 mph. The other week, I was with a Birmingham chamber of commerce, where it was recognised that the service between Birmingham and London is second to none and that the journey time has reduced substantially—by some 20 minutes. I recognise that the west coast main line upgrade has caused some upheaval to the travelling public, especially at weekends, but out of it will come a far more reliable, effective and efficient service.
My hon. Friend referred to rail links. I can confirm that they exist—for example, from King’s Cross, on the north London line, and on the west coast main line at Willesden. He also referred to open access to Eurotunnel, which has agreed lower rates for rail freight, and he will also know that English Welsh & Scottish Railway Ltd has started running new intermodal and automotive services by utilising that potential. In addition, in showing our support for rail freight—we want to see it grow substantially in the long term—we have agreed that British Railways Board will continue to pay the UK allocation of Eurotunnel’s fixed costs and to invest some £200 million in the development of the rail freight network.
I assure my hon. Friend that I shall draw Lord Adonis’s attention to this debate, and, to pick up on his concluding remarks, I promise that we have no intention of returning to steam trains. The success and growth of Eurostar patronage was well documented by statistics released in November, and we welcome those improvements.
My hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) referred to changes that he has observed and his desire for further such developments. Part of the £15 billion investment strategy will be to improve train times. Some 130 stations already have through ticketing, but of course that is a work in progress, and we will continue to introduce new technologies to take advantage of greater opportunities.
On the high-speed links—
Nuclear Industry Finance
This is a lamentable saga of a breakdown of parliamentary accountability on nuclear industry finances. It is a matter of the gravest importance, involving the most hazardous nuclear site in the country and huge sums of money. Initially, the contract was worth about £7 billion—£1 billion a year—but eventually it could cost up to £93 billion.
The Government have been bewitched by the pied piper of nuclear power, just three years after deciding that nuclear power was financially an unattractive prospect. They are now uncritically embracing it as a panacea. That might explain the disgraceful events that have taken place. It may also be a subterfuge to bury embarrassing news on the continuing saga and the enormous cost of the nuclear legacy, and also to disguise the fact that the Government are dumping a potential multi-billion pound liability on the taxpayer in a wholly unwarranted and possibly illegal new subsidy for the nuclear industry.
All hon. Members except two have been denied any chance of commenting on the policy, which is a parliamentary outrage. Early-day motion 2321, which was signed by more 30 hon. Members, asked for action on the matter.
On 14 July, my right hon. Friend the Member for Croydon, North (Malcolm Wicks)—I am delighted to say that he is in his position today—wrote to the Chairman of the Public Accounts Committee, and sent a copy to the Chairman of the Business, Enterprise and Regulatory Reform Committee, in which he set out the proposed arrangements for a public sector supported nuclear indemnity for the winner of the competition for the parent body organisation to take over the management of the massive Sellafield site. He inserted, inter alia:
“Given the low probability of a claim being brought, the Nuclear Decommissioning Authority has assessed that the benefits of engaging a contractor will far outweigh the small risk that the indemnity may be called on.”
He said, “small risk”. That is a key issue. The risk was so serious that the main contractor said publicly that without the indemnity his company would withdraw from this very lucrative contract. He said that it was not prepared to take on the insurance risk. The Minister’s letter also said:
“I am placing a copy of this letter and the Departmental Minute in the Library of the House.”
The Minister placed the letter in the Library, but not on 14 July. It appeared in the Library on 15 October —75 days after the final date on which hon. Members could object. As hon. Members have only two working weeks in which to comment on such departmental minutes, that effectively meant that no MP, other than the two Committee Chairmen, had sight of the minutes within the specified period. That alone should invalidate any subsequent attempt by Ministers to push ahead with the concluding transfer of the management contract for Sellafield. None the less, they concluded the contract on 6 October, the first day that Parliament resumed after the summer recess.
Yesterday, in our splendid debate on the feed-in tariff, I heard the Minister talking about how slowly Parliament moves on many desirable objectives. However, in the case of nuclear, the Government move with the speed of a striking cobra. When it comes to renewables, their actions are very similar to that of an arthritic sloth, yet speed was of the essence in this matter.
By coincidence, I tabled a detailed question to the Minister on 14 July. I asked him
“what recent communications or discussions (a) he, (b) other departmental Ministers and (c) officials, have had with (i) the Nuclear Decommissioning Authority and (ii) consortium applicants for the Sellafield decommissioning contract on the indemnification of the contract holder against claims arising from property damage, the cost to human health, or the cost of measures of reinstatement of any significantly impaired environment in the event of an on-site accident or other incident resulting in the dispersal of radioactive materials off-site.”
Therefore, the Department should have been well aware of my interest and possibly that of other hon. Members. The reply came back, which said, inter alia:
“It would not be viable for any of the bidders to proceed without an indemnity because any fee earning benefits of the contract would be overwhelmed”—
interesting choice of words—
“by the potential liabilities. The NDA has assessed that the benefits of engaging a new contractor far outweigh the remote risk that an indemnity might be called upon”—[Official Report, 14 July 2008; Vol. 479, c. 76W.]
The Minister chose not to inform me at that time—this was in July again—that he had written to the Chairmen of the two Select Committees and that he had not put the departmental minute in the Library. Perhaps the Minister could explain why that was the case.
I pursued my inquiries. I tabled a question on the insurance indemnification and asked what the financial value was of the insurance indemnity. The answer said:
“While the impact of any call on the proposed nuclear indemnity could be very high, there is an extremely small possibility only of the indemnity ever being used, and it is therefore not possible to put a meaningful financial value on the indemnity.”—[Official Report, 22 July 2008; Vol. 479, c. 1146W.]
May I gently suggest to the Department that the reason why it cannot put a value on the risk is not because the risk is small, but because the liability is enormous, given the cost of clearing up after any nuclear accident? Now, that responsibility is being put on the backs of taxpayers, because neither the contractor nor commercial insurers will accept the risk.
On 28 August, during the recess, I again wrote to the Secretary of State to find out what was happening with the PBO transfer. I said:
“When does the Government intend to place a similar departmental memorandum”—
to the one that accompanied the Drigg PBO transfer in February—
I also asked him whether he would place into the public domain
“all the correspondence”—
including letters, e-mails and memorandums—
“between ministers or officials in BERR and the NDA in regard to the indemnification for Sellafield.”
That has never been done. I ask the Minister to do that now.
In response to my further inquiries and to my point of order on 22 October, I received a further reply from the Minister. He talked about the schedule for evaluation of the PBO bids provided for the announcement of a preferred bidder on or around 11 July. He went on to talk about the rigour of the programme that had been carried out. He was not very convincing. The Minister also said that there was no scope for slippage in the contract, because it would cause problems if a new contractor had to be found for Sellafield.
The Department for Business, Enterprise and Regulatory Reform circumvented the usual procedures in place to inform Parliament, and privately wrote to the two Select Committee Chairmen instead, and failed to lodge the minute. On the same day as the Minister’s letter to me, 27 October, the Chairman of the Public Accounts Committee—a greatly respected senior MP—wrote to the Secretary of State saying that the guidance to Ministers in the manual “Managing Public Money” is unequivocal. He cited the relevant extract:
“It is essential to give Parliament prompt and timely notice of any significant commitments, including contingent liabilities into which the Government intends to enter.”
The Chairman also said that the Public Accounts Committee will feel that the period for objection should be reopened. That is the same view as that of those who signed the early-day motion.
I commend my hon. Friend’s forensic work on the issue and support his call for full and transparent accountability in respect of Sellafield, as well as for any financial support from taxpayers or consumers for future nuclear power, whether through subsidies or more covertly through indemnities or guarantees, none of which, on his evidence, would be in the public interest.
I am grateful for that intervention, and I agree entirely with the points made.
Things get even more worrying in the rest of the Secretary of State’s letter of 3 November. He admitted that hon. Members had not been informed due to “an administrative error”, but then went further, seemingly denying his own claim and—this is rather alarming—attempting to justify the strategy of circumventing appropriate parliamentary scrutiny. He said:
“‘Managing Public Money’ sets out two procedures for notifying an impending indemnity—notifying the House or writing to the Chairs of the relevant Committees. These are alternates.”
That is the letter that he wrote challenging the Chairman of the Public Accounts Committee.
I believe that what the Secretary of State said and his interpretation lay down a precedent for future policy. We must resist the idea that something of enormous cost and importance—a huge burden on taxpayers now and in the future—need not go through parliamentary scrutiny, but that one or two Select Committee Chairmen can place a tick on it. It is an extraordinary usurpation of the rights of parliamentarians to suggest it, but that is what he is saying:
“These are alternates. In this case we wrote to you”—
that is, to the Chairman of the Public Accounts Committee—
“instead of notifying the House, undertaking to withhold final approval to proceed”
until there was a reply.
Of course, there was a reply. The Chairman did not object, and so the process continued. The Secretary of State said:
“No objections were raised and you confirmed in your letter to Malcolm Wicks of 22 July…that you had no objection to the Department’s proposal”.
What about all the rest of us? Many of us did have objections. It was clear from the flow of parliamentary questions—I have quoted mine alone, but other people have been involved—that we had no opportunity whatever to object, because we did not know that the minute was there until 75 days after the period of objection. I am sure that hon. Members present will agree that that is an utterly unacceptable rationalisation of something that was at best a foul-up, but looks more like a cover-up.
I would like to draw attention to the question of risk and how serious it is. The Washington-led management consortium URS was reticent to take over the insurance for Sellafield because, as its representatives said in a public meeting, it is highly hazardous and a very dangerous nuclear site. Who says so? In October 2006, Justice Openshaw presided at the trial of British Nuclear Group for a processing accident at its Thorp site. His conclusion about the hazards of Sellafield was:
“By reason of its huge scale, its nature and its complexity Sellafield…is the most significant and potentially the most hazardous nuclear site in this country.”
Even the British Nuclear Group’s own board of inquiry report on the incident, which involved something called a feed clarification cell, stated:
“Given the history of such events so far, it seems likely that there will remain a significant chance of further plant failures occurring in the future”—
I stress this—
“even with comprehensive implementations”
of the report’s recommendations. BNG decided to change the system, but said that the risk was still there.
There are extraordinary statistics, including in the memorandum submitted to the Select Committee on Defence in January by the international nuclear safety expert Dr. Gordon Thompson, executive director of the Institute for Resource and Security Studies. He said that
“the B215 facility at Sellafield…houses 21 steel tanks”.
Sitting suspended for a Division in the House.
From the evidence given by Gordon Thompson, the nuclear specialist, to the Defence Committee, I want to give one example of the danger of Sellafield. He described the amount of high-level radioactive waste there as containing
“about 8 million Terabequerels…of caesium-137”.
He went on to say that, by comparison,
“the 1986 Chernobyl reactor accident released to the atmosphere about 90,000 TBq…of caesium-137”.
At the time of the Chernobyl accident, we were assured that it was a mild risk, and yet the sheep in north Wales that were contaminated 22 years ago are still under control orders now. To put it another way, there was 27 kg of caesium-137 at Chernobyl; there is 2,400 kg at Sellafield.
No doubt the company that took over these consortiums exercised due diligence before reaching the conclusions that it did. Hon. Members of all parties should collectively regard what has taken place since then as unacceptable, sharp and evasive practice in a modern parliamentary democracy.
I urge the Minister when he replies to put away any prepared notes that he has and just respond to these points: I ask him to commit Her Majesty’s Government to suspending the current contract between the Nuclear Commissioning Authority and the new USR Washington-led parent body organisation, or PBO; I ask him to look again at the subsidy that is being paid and to check that it is within European rules; I ask him to postpone the planned go-ahead on 24 November until such time as the House has had the opportunity to scrutinise in detail all the financial implications for taxpayers of this indemnification procedure; and I ask him to set up a fully independent examination of Sellafield’s risks and insurability.
Finally, the series of events that I have just described besmirches the good name of Parliament by contemptuously disregarding the rights of parliamentarians. The Government and the nuclear industry cannot bury the true cost of nuclear power. It is our responsibility to clear up that mess, but they must be open and transparent. In their plans for future nuclear operations, they have tended to disregard the vast cost of nuclear waste and, in this case, the insurance that is an essential part of that cost. I urge the Government and the nuclear industry to face up to their demons and ensure that the industry pays its full costs.
This issue arose as a result of an administrative error by a junior official in the Department for Business, Enterprise and Regulatory Reform. That official was told that the letter to the Chairman of the Public Accounts Committee on this matter needed to go in the Library. It did not go in the Library. When it was checked, some months later and after the parliamentary recess, whether that letter had gone in the Library, it was found that it had not gone in. On that day, that letter was put in the Library.
In the last 15 minutes or so, I have heard references to cover-up, to conspiracies and to contempt of Parliament, and I say this to my hon. Friend the Member for Newport, West (Paul Flynn): his concoction of conspiracy theory, innuendo and hyperbole has reached new heights in the House. It is the case that there was a minor error by a junior official, who should not be crucified for that error by my hon. Friend; that would be unworthy of my hon. Friend.
This happened within the Department. There was no requirement on the then Minister of State, my right hon. Friend the Member for Croydon, North (Malcolm Wicks), to place the letter in the Library. He took the view that that was necessary in order to be open about this matter. An error was made by a junior Department official—humans are fallible—but I expect better of the hon. Gentleman than to talk about cover-ups and conspiracy. This attempt to manufacture a mountain out of such a tiny molehill is ridiculous.
The idea that the letter was secret is complete nonsense; it is a farce. Letters to the Chairman of the Select Committee on Public Accounts are not secret documents. They belong to the Committee, and members of the Committee can see them and refer them to the press. Far from trying to mount some sort of cover-up, as my hon. Friend suggests, my right hon. Friend was trying to be open with the House of Commons and to make sure that Members knew what was going on. I utterly refute the allegations, innuendo and concoctions that my hon. Friend has put forward. It is unworthy of him, and I expected much more from him.
Will the Minister explain why the Members who were interested in this matter were not informed? There is a great deal more to this. The Department tried to blame the Library, saying that it had not told the truth. The Department also said, in a press release to the Western Mail, that the reason why it was done was that it was a rushed procedure and it did not have any time. The Department has been wholly consistent on that, but it has given two versions. The first is that it did not have time and had to rush things through, and the second is the one that the Minister is giving now, that there was a failure.
I am sorry that my hon. Friend believes that he should be specifically informed of such matters above other Members. The two people who were informed were those who were clearly in a position to get the letter. The Public Accounts Committee Chairman was to receive the letter and would therefore clearly be informed. The letter was put in the Library to make it available to anyone who wanted to read it.
If my hon. Friend has a long-term opposition to nuclear, that is fine. I have no problem with that. Many people in the House have long-term oppositions to nuclear, but they do not concoct stories, conspiracies and cover-ups out of nothing as he has done. I have seldom felt so worried by the way in which stories are made up out of nothing as when I was listening to him today. There has been a regrettable error, and the Department regrets that things were not done as they should have been. My right hon. Friend wanted things to be done properly and ordered them to be done. He took a decision, not because the procedure required him to, but because he wanted things to be done openly. My hon. Friend suggests that the opposite was the case, but he is simply wrong.
My hon. Friend accuses the Government of dumping liability on the public, but who on earth does he think owned those nuclear power stations? Does he think that they were somehow owned by a private company when they were created? They were owned by the public—he knows that. No liability is being dumped on anyone, secretly or otherwise; there is a public liability. The Nuclear Decommissioning Authority has been set up to deal with the public liabilities that we have as a country and as a Government. We are trying to deal with those liabilities in a sensible, coherent way, and to ensure that that is done openly and with full consultation. There has been widespread consultation on this matter. The idea that something is happening secretly is nonsensical, as this matter has been addressed in the blaze of publicity.
The nature of the indemnity is very clear. There is a legislative restriction, in terms of the Government’s liability, so that they are able to deal with those liabilities if an incident happens in the UK. Under the Paris and Brussels conventions, other countries have signed up to agreements on how nuclear incidents might be dealt with, but the United States is not a signatory to some of those. My hon. Friend says that we are failing to put a value on the indemnity, but what is the indemnity about? It concerns the remote possibility that, if an incident happened in the UK, an American court might take a view about a court fine or settlement over there.
All the companies that bid in the process said that they were quite to happy to undertake the task, but that they would not be responsible for a liability that some American or other court, which has not signed the Brussels and Paris conventions, might impose. The NDA therefore decided, quite properly and openly, that it would have to come forward with the indemnity. When that was done, my right hon. Friend wrote to the Public Accounts Committee, and that letter was to go into the Library. An administrative error, and nothing more, resulted in that not happening. The day that we found out that it had not happened, it was immediately corrected. That is what happened, and all the other claims do not add up to a hill of beans, if we are talking about hills and mountains.
I am gratified by the way in which my hon. and learned Friend is dissecting the incoherent concoction that has been put before him. Much has been said about the speed with which the process has been carried out, but does he agree that speed was of the essence? The regulator, the NDA and the Government all wanted the process to be addressed with speed, and speed was essential for operations at the Sellafield site to remain both smooth and safe.
That is the case. We had to undertake the process, for which negotiations and bids were received, and the letter of indemnity had to be agreed at the end of that process. As soon as it was agreed, it was decided that Parliament should be informed and that a copy of the letter to the Chairman should be put in the Library.
I want to make it clear that it is the Government’s responsibility to deal with and to pay for decommissioning and to clean up our historical civil nuclear liability. The NDA’s mission is therefore funded from the public purse, and is subject to parliamentary approval for expenditure and funding in the normal way. Since its creation, significant resources have been allocated to decommissioning. The NDA’s total spend was £2.4 billion in 2005-06, rising to £2.8 billion in 2007-08. Its budget for the next three years is set to rise to more than £8 billion, which is the largest amount ever spent on UK civil nuclear clean-up programmes over that sort of period.
The competition at the heart of this issue was also at the heart of the NDA’s mission to deliver fast, cost-effective clean-up. In March, the competition for the low-level waste facility near Drigg was completed, and the Sellafield competition is on course for completion on 24 November. I am letting my hon. Friend the Member for Newport, West know that. Those are significant milestones, and indemnity is a common feature in those sorts of commercial contracts.
In the case of the NDA’s estate, the decision whether to grant a nuclear or other form of indemnity to a contractor is a commercial matter for the NDA. It approaches each competition on a case-by-case basis. If giving indemnity represents good value for money, it will consider giving it on sensible commercial terms—I should like to emphasise that point.
I have given way already. It is about time that I set out my case to my hon. Friend, because I would like him to listen to one or two things. We have listened to his views at some length, so perhaps he would care to listen to some of my replies to his points.
In the UK, claims relating to third-party damage arising out of nuclear occurrence are exclusively regulated by the Nuclear Installations Act 1965, which implemented the principles long established in the Paris and Brussels conventions on third-party nuclear liability. The NIA restricts compensation claims to personal injury and property damage caused by a nuclear incident in the UK. It also excludes from making claims those who are not UK citizens or from other Paris and Brussels signatory states. The United States is not part of that arrangement.
Therefore, there is an extremely small risk—I emphasise that—of non-eligible victims taking their claims to courts elsewhere, possibly the country of the contractor, such as the United States. The NIA and the Paris convention place a financial cap on the liability of the operator, currently £140 million for standard sites, in return for the acceptance of strict and exclusive liability. Therefore, claimants do not have to prove fault, and all claims are channelled to the operator, not to his supply chains. However, any contractor whose home country is not party to the convention risks unlimited liability if an action is brought in courts in their country, for instance the US. Parties cannot obtain insurance against that. An indemnity was therefore considered appropriate against the risk of such claims arising from a nuclear incident that falls outside the protections of the Nuclear Installations Act and the Paris and Brussels conventions. There are no insurance facilities available for that risk.
I say to my hon. Friend that the matters in question have been dealt with appropriately. I apologise for the error of a junior official in the Department, and he was right to take us to task, but not in the way in which he did. He exaggerated, went way over the top in his condemnations and traduced my right hon. Friend who was seeking to be open with him and other Members, not, as he suggested, to form some sort of cover-up.
For the sake of the Minister, whom I welcome to his new role, I should like to state my position. I support the overall movement towards finding suitable employment for disabled people in an inclusive manner and a mainstream setting. However, we are where we are with the historic Remploy set-up. Many workers have been in a protected environment for so long that it is not realistic to expect them all to transfer to new work settings. One of the Remploy workers at Poole had been there for more than 40 years, and a further 10 had been there for between 20 and 35 years. There will always be scope for transitional arrangements and specialised training for both employers and employees.
I have been involved in discussions on the Poole Remploy factory since 2006. In May 2007, it was announced that the factory would be closed and the manufacturing of marine products, including lifejackets, transferred entirely to the Leven factory in Scotland. That was an unfortunate decision, because location-wise, Poole ticks all the boxes. It is close to existing markets, and with the Royal National Lifeboat Institution headquarters in Poole, there was an opportunity to generate many more orders through strong management and leadership. That could also have led to more efficiency in production and better profit margins.
The closure of the Poole factory was at least deferred when in November, the then Secretary of State, the right hon. Member for Neath (Mr. Hain), announced that there would be 15 fewer factory closures, and that the Poole factory would not be closed. For Poole, the challenge was great. New products had to be found and the subsidy per worker reduced to £9,000 by the end of this financial year. It was anticipated that there would be more scope for public procurement to generate additional work for Remploy factories. The Poole site was retained specifically to develop a plan for potential increases in business arising from the new regulations on public procurement. The stated aim was to supply local authorities in the south-west region.
The National Audit Office wrote to me and confirmed that the new public procurement regulations should allow local authorities greater opportunities to contract work to Remploy. I believe that 12 factories in total have the challenge of securing orders from public procurement, and I appreciate that that is at central Government as well as local government level. Indeed, there is already such public procurement by Departments. However, will the explain Minister whether any of those 12 factories has succeeded in getting public procurement from local authorities?
Throughout my tale of woe, I wish to place on record my thanks and admiration for the work of Gerry Starkey and Iain Anderson, Remploy employees who have worked very hard to secure the future of the Poole factory, and Lorraine Sheen, the trade union co-ordinator who returned to the factory to try to keep the show on the road. I also thank the Minister’s immediate predecessor, the right hon. Member for Stirling (Mrs. McGuire), who attended to my many questions with courtesy and was supportive throughout the past two and a half years.
Following the then Secretary of State’s statement in November 2007, I eventually received a letter from Remploy dated 25 January 2008, basically asking me to participate in a local champions group. I was more than willing to do so, as it was really just an extension of the support that I had already given the factory. The inaugural meeting was supposed to be in February, but despite my best efforts, it did not take place until 14 April. Before the first champions meeting had even taken place, as I said in a Westminster Hall debate in March, machinery was being removed from the Poole factory and the existing orders were coming to an end. Employees were offered increased redundancy pay.
There was uncertainty and bewilderment among the employees, because they did not even know what the new product was and because the factory was being run down. Many accepted a redundancy offer, even though it might not have been in their long-term best interests, as many of them had been at the factory a very long time and were unlikely to be able to adapt to mainstream work. I worry greatly that some of them are now isolated and just sitting at home. At the start of the process, the Poole factory had 43 supported workers. Now it has 19, with varying levels of disability. It used to buzz with activity and happiness, but in recent times it has been depressing to visit, with the remaining workers sitting around with little or nothing to do.
As a local champion, I made contact with an enormous range of organisations in Dorset: the primary care trusts, the police, the fire service, the health service, all the local councils at different levels, the local universities and colleges and the private sector—everybody I could think of. The initial response was really positive, showing a genuine desire to support the factory. The exception was Poole borough council, which did not send a representative to the inaugural champions group meeting. Early on, its chief executive expressed to me the view that it was cruel to the remaining workers to keep the factory open with no work, and that Remploy clearly had an agenda to close it as soon as possible. Some of the other councils have at least referred other business to Gerry Starkey, but no public procurement has been achieved.
Was the new beginning, with public procurement, just a myth? Is the Poole factory being deliberately closed by slow poison? If Poole borough council had given more support, would orders from other local authorities have followed? A reply that I received from the leader of Poole council stated:
“Both the Council and myself, along with many others, have supported the retention of the Remploy factory and the employment opportunities it provides within the Borough.”
Fine words, and indeed councillors from the ruling group joined the march in the town. However, it continued:
“As I know you are aware, the placing of Contracts by the Borough is strictly governed by law and our own Standing Orders.”
How do we interpret that? Maybe the standing orders could have been changed.
I insisted that a meeting take place between Poole borough council and Remploy in August, but as far as I know, there were no productive outcomes. Indeed, the previous Minister reported to me that Remploy had said that it had
“exhausted all local public sector prospects in Poole and Bournemouth as Remploy’s strenuous effort has resulted in no opportunity being offered for them to quote for any of their Local Public Sales services, other than the suggestion that Remploy could respond to tender invitations just like everyone else.”
A further question to the Minister is why the Poole factory was given the task of supplying local authorities in the south-west if it was not possible to have a route into public procurement which did not require entering a full tendering process. Obviously, the work had to be suitable for the work force, which placed a further limitation on seeking orders. I honestly do not know whether the failure to achieve orders from local authorities was because of Poole borough council’s lack of co-operation and support, because false hopes were raised by the so-called relaxation of the regulations for public procurement or because other bodies do not want to engage with Remploy because they have a low opinion of the national company. I hope that the Minister can throw some light on that.
In recent times, Gerry and Iain have been able to secure small orders from the private sector, and I was pleased to hear yesterday that the factory is at work doing electrical mechanical assembly. The employees have had some training in that, and there is enough work until Christmas. However, I received a letter from Alan Hill, Remploy’s director of enterprise businesses, dated 8 October. He writes that
“continued employment at Poole depends on winning new business and real evidence in the current financial year on reducing the loss per disabled employee to £10,400”—
a slight discrepancy, but not to worry. He continues:
“The site was retained in November 2007 in anticipation of increased business arising from new procurement regulations surrounding reserving contracts for supported factories.”
I agree with everything that my hon. Friend has said. Does she agree that local councils must be made aware of their obligations to tender for the high-quality products that are available at Remploy factories? Through the new public procurement procedures, they could themselves be saviours of those factories.
I thank my hon. Friend for his intervention. There must be scope for working with councils to understand why Remploy has not secured any orders whatsoever.
Mr. Hill goes on to state:
“The site has had little or no work for 6 months. The current loss per supported person at Poole is just over £24,500 per annum and the factory has lost £232,000 in the first 6 months of the year. Despite efforts by the local management and sales team we have not been able to secure large quantities of public sector procurement and we have therefore widened the search for opportunities to include the private sector also. Time is short and we are not receiving support from the stakeholders locally to help guarantee the future of the factory. I trust we can rely on you to use your best endeavours.”
He can rely on me, but I was so angry when I received that letter that I was determined to secure an Adjournment debate and make the matter public.
Is it surprising that the cost per employee is so high, given that work was taken away from the factory before there was any opportunity to get new work in its place. At least three months were wasted pursuing public procurement. That seems to have been a wild goose chase not of the local factory’s making but perhaps caused by central Government and Remploy nationally or by the Poole Conservative-controlled council’s failure to give the factory genuine support.
What other business would be operated in such a way? Who would take away the machinery and the product while they think what they might do in the future, employ sales managers to pursue something that seems impossible and then say that losses have risen? Private work is now being secured, and I have other leads which may prove productive; for example, a further meeting is planned with Bournemouth university shortly. However, we have to take on board the fact that we are now in a recession, which may or may not help to secure the type of work for which the factory is looking. There is definitely greater clarity about what can be achieved at a reasonable price and what is unrealistic for our factory.
I say “our factory” because I am passionate about its survival. It has been given an impossible task in the time allowed, given all the delays and lack of forward planning as to how it could get from the starting point to a new and sustainable future. Hard work has almost saved the day, but I suspect that more time is needed. I ask the Minister to consider the vulnerable work force, and how they have been treated over this period. They are not mere loss-makers on a balance sheet but real people who deserve better from the Government and Remploy.
I understand that the Minister cannot give a commitment today about extending the time period, but I would like him to keep in touch with Remploy and ensure that contact is maintained before any decision is made in March. That would be a first step. Clear monitoring and taking on board what a terrible time the workers in Poole have had are necessary. I was sent the report, “Remploy Review: Building on Success in 2008”, and I was heartened to read its positive case studies of individuals and Remploy factories, but it is interesting to note the references to public procurement. Bob Warner, the then chief executive, wrote:
“To make our own businesses successful we must secure more sales to the public sector. We have worked closely with the trade unions to expand sales, but we need continuing support from across the public sector if we are to achieve sustainability for the factory network.”
Those are fine words, but meanwhile Poole and the workers are suffering.
Alan Hill wrote:
“Selling more to the public sector is critical to Remploy’s five-year plan particularly as the final modernisation plan included a significantly higher sales target from the public sector to fund the retention of fifteen sites which were identified for closure in the original plan.”
Public procurement is vital for several Remploy factories. I myself have written to Government Departments, and if that helps other factories, I am delighted. There is a bit of a problem, as local authorities in my area could not quite grasp the idea that, if they placed an order, the work might not necessarily be completed in Poole. They did not seem to understand that Remploy is a family of factories that specialise in particular lines. Perhaps much more communication is needed.
I believe that there is a future for Remploy in Poole. The factory will be smaller and will probably move to a smaller site. At present, its site is very large. In normal times, it would yield a big return to Remploy. We must take on board the fact that, overall, 40 per cent. of the Remploy work force have mental health and learning difficulties. We have to look after them. I had a vision that we would have a training centre on the site, but I do not think that Remploy was ever very keen on that. There have been talks with existing suppliers of training opportunities but the conclusion is that nothing more is needed. I am not convinced.
There is a second battle after we have secured the future of the factory. I have in my constituency casework on at least three adults with autism or Asperger’s. I would like to tell the Minister a little about Sam, who is 23. He has never had a job. He is fed up with being sent off to voluntary placements. Sometimes he cannot access them easily because he does not drive. He wants a real job, and he wants to earn money. He has a girlfriend now. He told me that the adviser at Jobcentre Plus said, “Oh, we can’t place people with Asperger’s.” I know that there is a gap out there. That will be my next mission, once the future of the factory is secured, but, first and foremost, I want to ensure that disabled people in Dorset can really look forward to their future.
I congratulate the hon. Member for Mid-Dorset and North Poole (Annette Brooke) on securing this debate on Remploy and on matters that are important to her constituents. One can have no doubt about her passion and commitment for the people who work at the Remploy factory in Poole in her constituency. I pay tribute to her efforts to secure more work for the site. She referred to what she has been doing with Bournemouth university to help secure more orders for the factory.
Before I address the issue of Remploy and public procurement, it is important to put the debate in context. Many in the House will know that Remploy was established after the second world war to provide work for injured servicemen and women. The aim was to provide development and training through work to enable disabled workers to return to the mainstream employment market.
The combination of new technology and the most far-reaching programme of disability rights legislation in Europe means that we are better able to support disabled people in a mainstream environment and offer them a greater range of employment opportunities. However, I take the hon. Lady’s point about her constituent with Asperger’s and the advice from Jobcentre Plus. We need to grasp more readily the situation with regard to the benefits and the high level of skills that people on the autistic spectrum have.
I was talking today to officials who had been to America and seen people with Asperger’s operating in banks, doing data input work to a level of accuracy that few people could achieve. Those officials saw the benefits of employing such people, as initiated through a state scheme. The employer told our officials that, even if the state withdrew its scheme, which it has no plans to do, it would keep those employees because they are excellent. For example, they had no time off work and the employer saw the level of attendance at work rise throughout the department. Not only are those people excellent workers, but they are an excellent example. I am sorry to digress, but the hon. Lady makes an important point with some passion. I share her determination to see improvement in the situation, because it is relevant to this debate.
Some years ago, the Prime Minister’s strategy unit report, “Improving the Life Chances of Disabled People” gave a clear steer away from segregation of disabled people in sheltered factories through its recommendation that the Department
“should, from 2006 onwards, increase the flexibility of budgets within its current supported employment programmes away from programmes which fail to integrate disabled people in mainstream employment and into programmes which…assist disabled people to progress towards open employment; provide value for money; and fulfil the wider objective of social inclusion”,
which the hon. Lady supports, as she mentioned in her opening remarks. That view is shared not just by the hon. Lady, but by the vast majority of disabled people and their organisations.
If no action had been taken, the cost of Remploy’s factory provision would have continued to rise to £25,000 per person per year by 2013-14, forcing the Department’s annual contribution up to £165 million, some £55 million above the £111 million baseline. The hon. Lady mentioned the desire to reduce the costs to £9,000, which was contained in the original agreement that my right hon. Friend the Member for Neath (Mr. Hain) instituted. That is not to happen by March 2009. I do not know whether the hon. Lady knows that; perhaps she can indicate. The agreement always assumes a five-year programme to get to that level. Clearly, to go from £24,000 or £25,000 down to £9,000 within that time frame would not be achievable.
We have been drawing on and developing experience and the knowledge built up in the factory network. Remploy’s employment services are now able to support disabled people into sustainable jobs at a one-off cost of just over £3,500 and that accounts for three quarters of all progressions to unsupported open employment. So it can do it.
The Remploy board was asked to develop a five-year restructuring plan to modernise its business, avoid compulsory redundancies for Remploy’s disabled workers, support substantially larger numbers of disabled people into mainstream work and stay within a funding envelope of £555 million over the five years, to ensure that escalating costs do not put at risk funding for other Department for Work and Pensions programmes for disabled people, such as Access to Work and Pathways to Work. I am sure that both the hon. Lady and the hon. Member for Edinburgh, West (John Barrett) support those programmes. Any proposals by the board had to fully protect Remploy’s disabled employees from compulsory redundancy. In developing its plan, the Remploy board engaged with a wide range of stakeholders including trade unions, Members of Parliament, the devolved Administrations, disability charities and employer representatives.
Up until the modernisation of the company, Remploy employed about 5,000 disabled people at 83 factory sites. The hon. Lady has mentioned that. That number is down now to 54. The hon. Lady mentioned the review on that number and the 2,900 people.
I shall now discuss the public procurement debate. In his letter, my right hon. Friend the Member for Neath said to the general secretary of GMB, Paul Kenny, in 2007:
“Remploy’s modernisation proposals were dependent on extremely ambitious sales targets, including 130 per cent. increase in public procurement. To meet those targets will require a concerted effort on all sides—Government, management, trade unions, local MPs and other political representatives.”
That means all of us: all the above, basically. The UK pressed hard to secure a provision in the new European Union procurement directive, implemented from January 2006, to cover procurements from supported factories and businesses.
No, because I need to answer the points raised by the hon. Lady.
My right hon. Friend the Member for Neath wrote to Cabinet colleagues. The Prime Minister has urged all Ministers to do what they can in respect of their Departments exploring procurement. Hon. Members are all aware that most sites rely on local sales. But no factory makes an operating profit and all factories need more business. Some sites rely heavily on local procurement and are struggling to bring the work in. Remploy is now operating its manufacturing business against the backdrop of a difficult economic climate, as the hon. Lady said. Each Member of Parliament with a Remploy factory in their constituency faces a similar, difficult task in securing work for their factory.
The hon. Lady will be aware that we are organising a reception at which we will discuss the procurement programme and look at ways in which we can better secure procurement in a more co-ordinated way. My right hon. Friend the Member for Makerfield (Mr. McCartney) will be presenting some proposals. He has been in discussions with his regional development agency to see how we can join together all the regional development agencies to have a more co-ordinated approach to securing more public procurement. It seems to me, as the Minister coming in and looking afresh at this matter, that there has not been the necessary co-ordination. I have met the trade unions and management at the monitoring and implementation committee, which I chair, and that is the picture that has emerged for me. I have discussed the matter with my right hon. Friend and I hope that his proposals will provide a blueprint and further impetus for us to be able to better secure the work.
The hon. Lady mentioned that some local authorities are worthy and others are less so. She has some strong, harsh words for her borough council, and I am sure that it will have heard what she has said about its willingness to engage, as will the Remploy employees. It is a tall order, and I do not underestimate for a moment the task of bringing in 130 per cent., but it is certainly do-able. How many local authorities know that they do not have to tender for contracts that are under £70,000?
In my list of champions and at our meetings, I included representatives of the Government office for the south-west and the South West of England Regional Development Agency, but they sat back as though it were someone else’s job. How will the Minister make sure that local authorities are aware of their responsibilities, and that they can help?
The hon. Lady knows that I do not have a lever next to my desk in my ivory Whitehall tower, but between us we can do a better job. That needs better co-ordination of the effort to evangelise and persuade local authorities. She referred to examples of what she has been able to achieve, and she will be an expert in generating her own publicity in her community. If Bournemouth university is going to engage Remploy, hats off to it. I am sure that she will sing its praises from the rooftops of every tall building in Poole.
The approach should be on a number of fronts, and that is the wider public approach, but it needs to be more co-ordinated within the institutions and structures with which the Government have a relationship. I certainly commit myself to doing everything that I can to deliver on that task. It is a tough one, but everyone knew that when they signed up to it, because of the wider policy ambition of using our resources and getting people into mainstream employment.
I must conclude my comments because I am aware of the time, but I thank the hon. Lady for bringing to my attention the concerns of her constituents in the Remploy factory in Poole in the south-west, and I look forward to working with her and other factories to ensure that we secure more by way of public procurement. That is all we want to do. The target is ambitious, but we can go about it in a better way to obtain the work that is so desperately needed for those factories.
Question put and agreed to.
Adjourned accordingly at eleven minutes past Five o’clock.