Tuesday 17 March 2009
[Miss Anne Begg in the Chair]
UK Energy (Coal)
Motion made, and Question proposed, That the sitting be now adjourned.—(Barbara Keeley.)
It is a great privilege to be here this morning in front of you, Miss Begg, and some eminent colleagues. I declare a number of interests: I am the chair of the all-party coalfield communities group and of the clean coal coalition, and I am very proud to be a member of the Durham Colliery Mechanics Association.
Will my hon. Friend give way?
Does my hon. Friend acknowledge how highly predictable it is that not a single member of the Conservative party is present for the start of this debate? It just goes to show that on the 25th anniversary of the coal strike, the only miners that they are concerned about is our noble Friend—Lord Myners—the banking Minister.
I could not possibly comment, except to say that their absence is not unusual, because they have never shown any interest in coal, apart from when the issue was how to get rid of the coal industry and to destroy working-class organisations. If they do not attend today, it will show even more that they are not interested in what we are talking about. But this is not just about what has happened in the past; this is about the future for this country.
We live in very strange times. Everybody wants to be green and to have clean power, but, at the same time, everybody wants more power, more gadgets, fridges the size of wardrobes, air conditioning, ice for their drinks, and to drive 4x4s. There is huge demand, but, at the same time, resources are dwindling. Newcastle university supplied me with figures showing that production of oil and gas in the North sea reached its peak in about 1999. Global production is projected to peak between 2017 and 2021, and BP’s own estimate is that oil will have depleted by 2050 and gas by 2070.
So, we turn to nuclear. But building and decommissioning nuclear plants is very carbon-intensive, and even if we get everything right—including transportation, construction and decommissioning—about nuclear, and that is a big if, one thing that strikes me is that figures, again supplied by Newcastle university, show that there are estimated to be only 50 years’ worth of viable uranium reserves in stable countries—in Canada and Australia, in particular. Beyond that, we would damage other parts of the environment to get at uranium.
I am a big supporter of renewables and want a massive move towards such energy in this country, because that is the way to engage our young people in engineering and in the whole move forward. But, sadly, no matter what we put in place, be it wave power, artificial islands, turbines or bore holes, they will all be good and contribute but they will not contribute enough to fill the energy gap. On wind power, in particular, the coldest days in this country, when we need more power than ever, are the days when the wind does not blow, so what good is that to sustaining base load electricity production? The world is rising to the challenge, however. Jeep, in America, is developing electric Jeeps—big 4x4s—that can do about 90mph and 400 miles on eight gallons of petrol, so we know that we are in a different world from that we have been in for most of our lives. Hyundai is developing people carriers, and this country is developing electric Range Rovers, which could cut running costs by a projected 80 per cent.
The truth is, however, that we cannot fill the energy gap in this country unless we use coal. In my constituency, we are promoting the development of new types of technology. We are going into something that is talked about time and again in these debates—carbon capture and storage. One North East, the regional development agency, has given me a brief for this morning’s debate, and Members should listen to what we are putting forward in our area: a carbon grid and storage proposal on Teesside; £1.5 million of planned investment by Progressive Energy and Centrica in a 1 GW coal-fired gas station at Eston in the Tees valley; £2 billion of planned investment by RWE npower in a 2.4 GW power station on the site of the former Blyth power station in Northumberland; and the potential use of Rio Tinto Alcan’s plant at Lynemouth in Northumberland for retrofit solutions to get rid of stored carbon. That plant was fed for years by Lynemouth and Ellington collieries, which have both closed in the past two years as a direct result of the failure by the people who run those companies to invest properly and to keep them open at a time when we need them.
I congratulate the hon. Gentleman on bringing a most important subject to the attention of the House. He mentioned carbon capture and storage but moved on very quickly, although I am sure that he will return to the subject. Does he share my slight disappointment that although we could lead the world in that technology, our demonstration plant will not come on line until 2014 or, given how the Government have invested in it, become commercially viable until 2020? That is just too long, and I want it brought forward so that we can use the coal that we have in this country.
The hon. Gentleman may deal with this issue later, but does he agree that we must concentrate on—according to estimates that I have seen—the 300 years’ worth of coal that we have in this country? If carbon capture and storage were put forward seriously, it would safeguard this country, in terms of foreign security, let alone energy security, from the potentially disastrous consequences of depending on other countries for our energy supply.
I thank the hon. Gentleman for that intervention. That is one key issue to which I shall return. The change that I have seen in my short time as a Member relates to what happened last summer, when petrol prices got out of control across the world. It made people in this country, particularly Ministers, finally realise that what some of us had been saying for many years about coal was true. The Americans have also realised it, and they are going at it in a big way.
I come from an area with one of the world’s oldest coalfields, yet it is estimated that we have tapped only 25 per cent. of the north-east’s reserves, and that is why the north-east branch of the National Union of Mineworkers has asked the Government to support it in conducting feasibility studies of two drifts near Sunderland and near Amble in Northumberland. They could enable access to 400 million tonnes of proven reserves and create 7,000 jobs. The branch is working alongside One North East and north-east universities such as Durham and Newcastle and saying to us that if we are serious, the reserves are there and we need to go and get them, because they will give us long-term protection.
We need coal. It is a con that we do not burn coal in this country. We talked earlier, before Opposition colleagues arrived, about what happened 25 years ago when we stopped using British coal, but the truth is that we still burn half as much coal—65 million tonnes—as we did 20 years ago. During the past 12 years, we have imported 372 million tonnes of coal. In 1996, coal imports represented only about 26 per cent. of the total, but, by last year, they had gone up to 72 per cent.—a huge leap.
I do, and I shall come on to that. My hon. Friend will not be surprised to know that they are not very stable.
In 2007, we imported 43 million tonnes of coal, of which 22 million, more than half, came from Russia. Responding to a question that I raised, the Minister with responsibility for coal said that the value of those imports was £2.072 billion. So, we have exported more than £2 billion of our money to bring in foreign coal. The cost to our balance of payments has been a massive £2 billion, and our dependence on Russian coal is both startling and frightening. This whole debate is about how green we are, and it is not very green to transport millions of tonnes of coal halfway around the world.
The real scandal and even greater cost, however, is the human cost, because that coal is covered in blood. More than 5,000 deaths a year occur in the coal mines of China: four deaths for every million tonnes of coal that are mined. That is bad. But it is even worse in Ukraine, where the death rate is seven deaths per million tonnes. To put those figures into perspective, the last time the death rates in the UK industry were as high as those in China was in the 1920s, and we have to go back to the 1880s to find rates as high as those in Ukraine. Hon. Members should consider what life was like in the 1880s in the places that they represent, compared with now. That is what we are talking about. That is whywe are subsidising coal. We have done away withBritish Coal—the cleanest, safest coal industry in the world—and we are relying on cheap imports based on death and dying. There is blood on the coal; there is no doubt about it. We are doing this for cost.
I should like hon. Members to think about something tonight when they go home. On walking into their houses or flats, putting the light on, turning the television on and turning the heating up, and even putting the electric blanket on if it is cold, they should just think that tonight 20 Chinese miners will not be going home—not tonight; not ever again. That is the cost of importing coal into this country. There will be more deaths than that in Ukraine.
About 10 years ago there was a potential disaster at a mine called Quecreek in Somerset county, Pennsylvania. Guys were trapped underground in an air pocket and, thankfully, thanks to bore holes being drilled, they were rescued. But for three days the whole world held its breath. There were nine men involved. Twice that many will die in China today, on average.
If we were talking about importing leather footballs made by kids, perfumes that had been tested on animals or cheap T-shirts from sweatshops, we would say, “No, this is disgraceful.” But it is coal, so nobody cares. Well, somebody cares. I was approached by one of the boiler manufacturers this morning by e-mail, saying, “Do you think it’s wise to mention the true cost of importing coal?” I think it is wise; it is a moral question for our Government. We have to answer the question: “Are we happy to carry on burning coal that has been produced in that way?” It does not have to be like that. This country was like that. In the 1930s, a miner was killed every six hours in this country, but at the height of the mining industry in the 1970s and 80s, the numbers were down almost into single figures. Yes, mining will always be a dangerous occupation and people realise that, but with proper investment and technology it can be made much safer in every sense. That is the reality.
Does my hon. Friend recognise that the international markets are deaf to the cries of Chinese widows and Ukrainian orphans? All they look at is the imported cost per tonne, which has varied between £40, approximately, and £150 a tonne in recent years. UK coal mines need a price of about £50 a tonne even to give a moderate profit in respect of operations. How do we bridge that gap?
Should we try to bridge that gap? Should we be dictated to by companies that say that life is cheap? The last time I was in this Chamber, a number of colleagues were talking about the scandal of asbestos. This is exactly the same argument. We could have carried on using asbestos and we could have accepted that people kept getting killed. But we should not do that. We are a civilised nation and we should not be taking coal and getting it cheap from people who are exploiting others and letting them die. It is out of order.
People might say, “If we do not use coal from Russia and China, where are we going to get it from? We might carry on getting it from Colombia, where it is produced with child labour.” However, we could get it from this country. I want to read directly from a note that was prepared for my hon. Friend the Member for Midlothian (Mr. Hamilton) who was going to address a miners’ conference last year. He had asked for a brief on nuclear potential, which I shall read word for word:
“In 2006, the Coal Authority estimated that there were more than 600 million tonnes of coal in established and accessible UK reserves. Importantly, in British Coal’s 1992 annual report, it estimated that 190 billion tonnes of coal lay underneath the UK, of which 45 billion tonnes could be extracted using the then known techniques. Of course, a lot of progress has been made since. British Coal estimated that the pits then open—before the 1992 closures—had 1.1 billion tonnes in classified reserves that could be economically extracted. To put those estimates in context, total UK coal output between 1853 and 2006 was only 22.7 billion tonnes. That gives us some sense of what is left now—even after the whole industrial revolution and two world wars. Some 22.7 billion tonnes has been used since 1853, and the estimate is that 190 billion tonnes of coal lies underneath the UK”.
That is not Arthur Scargill or the National Union of Mineworkers speaking, but the Department responsible for the coal industry in this country.
I hope the hon. Gentleman will not mind my mentioning the fact that that is precisely why, in 1992, I was one of only four Conservative Members who voted against the pit closures. That represents the problem that we now have to face in terms of our ability to use that coal to secure our own country’s future.
I accept that the hon. Gentleman took the correct decision at that time. Sadly, overall we did not. Everybody who was involved at the time accepted the fact that we were closing mines that were potentially serious competitors, going forward. Those mines should have been protected.
It has been estimated that in the last 40 years in the north-east alone more than 500 million tonnes of coal has been sterilised by premature closures. Nationally, that figure is well in excess of 1 billion tonnes. That figure is for coal at less than 800 m deep, which is easily worked with today’s technology.
I congratulate my hon. Friend on securing this excellent Adjournment debate. I am sure that he is aware of the Welsh Affairs Committee report on energy, in which there is a strong recommendation that endorses all the points that he makes, particularly in relation to carbon capture technology. The report emphasises that to exploit this coal we need to invest not only in carbon capture technology, but in skills, including higher-level skills, and mining degrees. Has he undertaken any survey of what is available in terms of skills training across the UK and would he endorse my view that it is underdeveloped and needs to be focused on, particularly by the UK Government and the devolved Administrations?
That is a key question. The average age of miners in this country is 49 and the skills will be lost when they go. We have raised that issue with the Secretary of State and he is clear that, if we are going to have a mining industry, we have to look at the skills level. The truth is that the National Coal Board had some of the best training facilities anywhere in the world, which led to our having the safest, most technologically advanced coal industry in the world, as I said earlier. That is a major issue, whatever we choose to do.
We cannot close the energy gap without coal, wherever we get it from, and we must burn coal more cleanly, which means investing in carbon capture and storage. There is, as was mentioned earlier, a proposed demonstration project out for tender. But everyone in the industry who I speak to is saying, “When’s it going to happen and will it be enough? Is it going to be big enough.” One demonstration project will not show the way. We must get on as quickly as possible with demonstration projects. We should also give further support, particularly, as I have mentioned, to some of the initiatives in the north-east and certainly the positive one advanced by Yorkshire Forward, linking with Hatfield colliery in the Secretary of State’s constituency, which will allow the infrastructure that is already in place to bring oil and gas out of the North sea to be used to take carbon back out and store it under the North sea. We can lead the world on this if we get our act together; if we do not, we will be left behind.
I fully endorse what the hon. Gentleman says. A delegation from California that leads on these issues in the United States is in the UK and Brussels this week. I asked the delegates expressly whether the technology is available to develop the carbon capture and storage that they need and we need. They were clear that it is not about a lack of technology, but is a question of will: being willing to have the finance in the right place and having the priorities right.
The hon. Gentleman is correct. Everybody accepts that the technology will work. However, it has not been tested on the scale that we need. It all comes back to a discussion that we had before about where the investment is coming from. A private stakeholder in BP would probably say, “I don’t want you investing in clean coal and carbon capture. I want you to go out and exploit some more Chinese miners or get some cheap gas from somewhere else in the world and we will drag it round the world in tankers.” But as serious, legitimate people who are worried about the impact on our country in terms of stability, security, jobs and climate, we must say, “Sorry, but these things do not add up.” We must say to the investors that we as a Government will play our part, and we will not ask but insist that they do what is necessary, or we will not work with them.
Proposals for wind turbines in my constituency are complete rubbish. Vast subsidies are available, but Professor Dieter Helm and even Sir David King, chief scientific adviser to the former Prime Minister, say that wind turbines do not work well onshore. Money is being pumped into those ridiculous proposals, which will achieve nothing, when we could be putting it into the extremely important area that the hon. Gentleman is discussing in his very good speech.
I do not accept that wind turbines will do no good. I believe that they will not do as much good as some people preach. The huge carbon footprint involved in building and maintaining them is ignored, and that will probably be even worse with offshore turbines, but that does not mean that we should turn our back on them—
Neither onshore nor offshore wind turbines are the panacea that some people claim. My clear argument is that there is a key role for coal, but one process should not be set against another; they should all be used together.
We should exploit our reserves, including those in the vale of Belvoir, Margam in south Wales, south-west Scotland, and other proven areas throughout the country. I mentioned the reserves off the North sea coast and—I am sure that my hon. Friend the Member for Sherwood (Paddy Tipping) will pick this up—the Minister is aware of the trade unions’ request to help them to move strategically from Welbeck colliery to Harworth colliery to access 40 million tonnes of coal, and to keep hundreds of men in work. My understanding is that the current position of the Department of Energy and Climate Change is that it cannot get involved because of European legislation. I am sorry, but we must get involved and we must provide support.
Coal has been a key part of Fife life for generations, and never more king than in the kingdom of Fife. The connection between coalfields and communities in Fife has been broken in recent years. The last coal mine at Longannet closed in 2002, when there was a massive influx of commuters from Edinburgh, which changed the nature of the Fife community and the relationship with coalfields. That has had a significant impact on the coalfields’ viability and on the livelihoods of miners. I shall return to some of the issues involved.
There are few signs in Fife of its mining heritage. From the end of my road, I can see the Mary pit winding gear; there is a mining museum at Kinglassie; and at High Valleyfield there is a statue of mothers waiting for miners to return from the 1939 pit disaster. But those are the only connections to be seen in Fife, and that reflects the industry’s decline, which is one barrier that we must overcome if we are again to make coal central to the Fife economy. There have been applications for open-cast mines in recent years, which have faced vociferous opposition from people who have moved into the area. Unless we can re-establish that connection, we will not be able to exploit the resources under our feet.
Open-cast mining seems to be a separate issue north and south of the border. In England, particularly in the east midlands and north-west Leicestershire, open-casting is seen as the most environmentally despoiling and economically destructive of all mineral activities. The problem with the expansion of coal-fired generation is that the UK Coals of this world whisper into Ministers’ ears and—hey presto!—controversial applications are nodded through with weak environmental constraints imposed on them. Is that not the case in Scotland? It is not just middle-class people who have moved into an area who object; it is people who worked in pits that closed 10 or 15 years ago.
I think that that is true. It is not just middle-class people who move into such communities who object. People who have lived there for generations also object to open-cast mining. The companies have a huge responsibility to up their standards and to reduce the environmental impact on the communities in which they exploit the coal. If open-cast mining is to continue, they must address those issues. An application for an open-cast mine near Saline was approved by Fife council, but there is huge opposition from the people who live within 500 m of the site. The communities affected feel that the proposal has been foisted on them, so they are resentful. Down the road in Oakley, which is a former mining community, there is less resistance, because, I suspect, it has lived with coal for many years and does not see the negative impacts in the same way. The difference between the two communities is interesting. One is more tolerant of open-cast, but some people object because of the extra lorry movements and the dust and noise. A difference is emerging.
The mining companies must improve their standards substantially if we are to have more open-cast mining, but I want the coal beneath the ground in Fife to be exploited to the full, so that we can fill the gap between now and when renewables are up to speed, although mining could continue after that. We must ensure that we develop coal sustainably, which is why I am keen to see the development of carbon capture and storage technology. I endorse the comments of the hon. Member for Blaydon (Mr. Anderson) about the urgent need to implement the technology. The technology is supposed to be in place by 2014 and economically viable by 2020, but that is too long. There have already been delays, and the Minister has indicated that there will be an announcement not in 2009, but perhaps in 2010. Will that slip further away, and when will we get an announcement? Will the Minister tell us exactly when it will happen?
The hon. Gentleman, like me, will have been deeply moved by the compelling speech made by the hon. Member for Blaydon (Mr. Anderson), who referred extensively to carbon capture and storage. I want to reinforce the point that the technology exists. Almost four years ago, the then Select Committee on Science and Technology produced a report with evidence showing that political will and investment were required from the Government to get it moving. It is not something that we are discovering today, because the Select Committee said that nearly four years ago.
That is the case, and I am puzzled why progress has taken so long. There are schemes in other European countries, but I am not sure how fast they are developing. The year 2014 is being talked about for implementation, but I do not know whether that is slipping or whether there are financial or regulatory hold-ups. Why has it taken so long, and why will an announcement be delayed until 2010?
I am keen, for local reasons, for the technology to be developed, because Longannet power station on the west tip of Fife is the second-biggest coal-fired power station in the UK, and could be the winner of the competition. It has easy access to the North sea and to the storage pipework for when oil and gas have been extracted. It also has a community that supports its power station and is keen for it to continue. I am keen for Longannet to win the competition and to know when a decision will be made.
The hon. Gentleman has experience of coal-powered stations from his constituency interests, and I support everything that he has said about the case for coal. My experience from speaking to energy companies looking to build new coal-powered stations is that they believe that they will be reliant on foreign coal, because of its low sulphur content. Will the hon. Gentleman comment on that and on how we can ensure that the British coal industry has a strong future?
I shall come to locational charging in a second. We talked earlier about importing coal from Russia and China and the impact that that has on the people who exploit the coal in those countries. We do not have locational charging for the coal that comes from Russia or China. Why do we not have an extra charge for the importation of that coal from other countries, so that we can get some balance in the system and not compete on the lowest cost throughout the world? Ofgem does not have responsibility worldwide, so it will not implement such a scheme, but we need to consider the effect that importing cheap coal from other countries has on the industry in this country. That is why I would like to see some recognition of the cost of importing that coal—the transportation costs from other countries—so that we are not penalising mines in this country and over-supporting mines in other countries. We have hundreds of years of coal under our feet, and we need to consider exactly how we will exploit it sustainably for the future.
I am deeply concerned about locational charging in the United Kingdom. The crude formula exaggerates the impact of the costs of transmission of energy up and down the country. I am not necessarily against some form of transmission charge or locational charge, because we need to reflect the fact that energy is lost as it is transported down the line, but to have such an extreme formula, which penalises in an extreme form energy plants and emerging renewable power resources in Scotland, is unfortunate. It will restrict renewable energy resources and potentially hamper investment in new technology at Longannet and other power stations in Scotland.
I would like Ofgem to change the formula to reflect the fact that those power stations already exist and that we can invest in new technologies that have greater potential to allow the United Kingdom to be energy secure. If we continue the way we are going, we shall destroy the economic case for plants such as Longannet, and we will not have the supplies that we need in 10 or 15 years’ time, when we will be short of energy supplies before renewables are up and running at full speed and before we have been able to exploit new technology. I would like Ofgem to reflect on the exaggerated effect that the formula has on the plants that already exist in Scotland.
The figure for Longannet is staggering. It costs an additional £30 million to run Longannet power station because it is in Fife in Scotland as compared with Cornwall. It would be better to put it on a barge and ship it all the way down to Cornwall. It would be cheaper to run it on that basis than to continue to operate on the current basis—a super-barge would be needed to get it down there. It shows how farcical the situation is that a plant that already exists and that is the second-biggest coal-fired power station in the United Kingdom is penalised in such a way. It does not reflect the fact that the power station exists—it cannot just be knocked down and put somewhere else. I would like Ofgem to reflect on that and to have a much more sensible, balanced approach that does not penalise either renewables or plants such as Longannet in Scotland.
Let me return to carbon capture. Chris Davies, an MEP in the European Parliament, deserves credit for the work that he has done to secure, through the emissions trading scheme, about €9 billion-worth of funding for new carbon capture technology, which will boost the future of coal in the United Kingdom. That funding will ensure that we invest significant sums in developing the technology, which could be developed into something much more efficient at a later stage. I am pleased that significant sums will be invested in carbon capture technology by way of the emissions trading scheme through the European Parliament and the work of Chris Davies.
There is a farcical situation at Longannet, because the Scottish Environment Protection Agency does not allow the power station to burn the coal that remains within the ash. There is a company called ScotAsh that takes the ash from the power station and turns it into grouts and cements. The ash has coal in it, and the coal can be extracted, but SEPA does not allow the power station to burn it, because it is regarded as waste. That is a complete farce—a complete misreading of the regulations. I hope that SEPA reflects on that and allows Longannet and other power stations in Scotland to burn that coal, which is being wasted. Tonnes of coal are sitting around and cannot be exploited. They are currently treated as waste, which is a situation that should be changed. If we are to secure coal for the future, we need to ensure that we overcome those barriers. If we do not, we will not be able to fill the energy gap that is coming down the track very fast.
I congratulate my hon. Friend the Member for Blaydon (Mr. Anderson) on securing the debate, and I want to reinforce some of the points that he made. His central theme is that coal—particularly indigenous coal—is part of a balanced UK energy policy, and he is right to stress the importance of coal.
The only plant being built at the moment, save for renewables, is a new gas plant. I am concerned about the fact that the dash for gas continues. The Department’s own estimate suggests that a worst-case scenario is that by 2020, 80 per cent. of our electricity could be generated from gas, 90 per cent. of which could be imported from places such as Algeria and Russia. There are real issues about security of supply.
My hon. Friend also talked about the health and safety record in the coal industry and he is right to talk about blood on imported coal. I just add one caveat: after years in which there were no fatalities in the mining industry in the United Kingdom, there have now been several. That is a stark reminder of the fact that men still give their health and their lives to keep us warm.
May I back up what my good and hon. Friend has just said? Clearly, there are fatalities in the mining industry. I would never pretend that mining will ever be a safe job. The truth is, though, that the technologies that we use in this country are more advanced than those used in other countries. Even the US technologies were decades behind Britain’s, but the technologies in China and Russia are centuries behind.
I am sure that that is correct, but I just add the caveat to say that things have gone backwards rather than forwards.
Two challenges face the coal industry: the economy and the environment. I shall talk about both briefly. British miners are the most efficient in Europe. We ought to be backing them, not continuing to lay them off. There are immediate prospects for the UK deep coal industry. My hon. and learned Friend the Minister knows about the discussions on Harworth, where UK Coal is sounding new ground and looking for new reserves. I think that it will be successful. The difficulties are in funding that new development.
The company and the trade unions tell me that the cost of the development will be about £200 million. The Minister and his officials are well aware of that. Given the economic situation, the prospect of borrowing £200 million from the banks is remote, but there are other opportunities.
The European Investment Bank has been talked about. There have been initial discussions with the EIB, but they are not going well. The more support the Government can give UK Coal in its discussions with Europe, the better. Europe is not an obstacle in this; there have been subsidies from Europe in the past. Of course, the EIB lends on commercial terms. The more the Government can do to help, the better, but at the end of the day there may be difficulties with money from the EIB. That means that there needs to be a discussion—I know that there have been preliminary talks—about the notion of the Government acting as a guarantor in some way. We are serious about the fact that indigenous coal can help us with security of supply.
There need to be meaningful discussions with UK Coal about the prospect of underwriting. We are doing that in other industries, and the coal industry has a long tradition in that respect; indeed, the Minister is well aware of that because he represents a mining community and has been in direct discussions with UK Coal and the trade unions. We should at least consider such a proposal, and do so fairly quickly, because as my hon. Friend the Member for Blaydon said, the prospects at Welbeck are limited. Ideally, we should transfer the men who work there to the new Harworth prospects, because that would make sense.
My hon. Friend has mentioned that the Minister represents a mining area, and I believe that Daw Mill is in his constituency. The 600 men there produce well over 3 million tonnes of coal a year, so the pit is highly productive. Not all that far away, in north-east Leicestershire, there remain at least 800 million tonnes of coal, in what my hon. Friend the Member for Blaydon (Mr. Anderson) described as the vale of Belvoir coalfield. It is possible to provide the capital support that my hon. Friend the Member for Sherwood (Paddy Tipping) mentioned and to finish up with more secure, low-cost and high-quality coal from the coalfield that I mentioned. The Government could do more to support the growth of new mines in areas such as north-east Leicestershire.
My hon. Friend has been a long-term advocate of Asfordby and opposed its closure vigorously. The point is simple: we can have a demonstration and reopen Harworth colliery, which will give a signal that it is possible to pursue other, more difficult prospects.
The second issue that I want briefly to discuss, which has been the subject of much comment, is carbon capture and storage. I am told, although there are different estimates, that China opens one new coal-fired power station every week. It does not matter where carbon is emitted, however, because it will have consequences for us all. As has been said, it will be in all our interests if we can develop cleaner coal technologies, particularly carbon capture and storage. Again, the Government have a good record on that, although it is a slow record and one on which we need to improve.
The competition to develop a new prospect—a demonstration plant—is way behind schedule, but I am more concerned about where the funding for such developments is, because I have looked closely at the Department’s new budget and I cannot identify any such money in it. That causes real concern in the industry. The hon. Member for Dunfermline and West Fife (Willie Rennie) talked about the money available in the European Union, which might fund 10 to 12 projects, and the Government have just looked at the implications for carbon capture and storage readiness for new plants in the context of Kingsnorth.
I know that the Minister is aware of what I am about to say, and he is in discussions with colleagues about it, but I simply say to him that we need to introduce a new package to take coal into the future. That would include an announcement on the demonstration plant and an attempt to get money from Europe. At the end of the day, we want not one demonstration plant, but three or four—that should be our aim. What is more, we should be looking at pre-combustion as well as post-combustion. Both have a role to play.
I hope that the Government will introduce such a package shortly and make an announcement about Kingsnorth. If I worked for E.ON, the company that is developing Kingsnorth, I would have real concerns. Its application for consent has been stuck in the Department for many months. I understand the reasons why, but if we want to give a signal on the future of coal, we should make an announcement as part of the package that I described.
There is one other issue that we need to consider. The private sector will not be able to develop carbon capture and storage infrastructure by itself. My hon. Friend the Member for Blaydon talked about the Yorkshire Forward initiative. The initiative at Kingsnorth has the potential to encourage other companies to join the project. Ultimately, however, matters cannot be left simply to the private sector.
In an age when the Government have shown themselves to be more interventionist—particularly with the banks—there are opportunities for intervention. We can help Harworth immediately and the UK coal industry in the longer term. We can introduce carbon capture and storage in the UK, as we all want, and that will have the potential to be spread internationally.
This debate is incredibly important, and I pay tribute to Labour Members for how they have handled the issue. For many years, the issue of coal has remained under the surface. It has been there since I first came into the House, almost 25 years ago to the month. In my maiden speech, with the coal strike raging around the place, I made my point about the coal issue, which was controversial in a maiden speech.
Shortly after that, I went to a massive NUM strike meeting in Hanley park in Stoke-on-Trent. I walked in, jumped on the platform, took the microphone from Arthur Scargill and told him to lay off my miners. There were about 7,000 people in the park, and I thought that it was about time that he was given a bit of his own treatment. The reality was that he and others were intimidating the Union of Democratic Mineworkers in the Staffordshire pits, and that needed to be corrected.
Subsequently, however, I voted against my Government on the closure of the pits, under Michael—now Lord—Heseltine, with whom I had many meetings and many serious discussions and rows. It seemed to me that we were doing something that would have long-term consequences and that the whole policy was wrong. As a member of the European Scrutiny Committee, I also noticed that Germany was giving massive subsidies of the order of £4 billion a year, while our coal industry was suffering. However, the UK had these amazing resources, which it should have been developing.
I know that a lot of north-east miners went to Stoke-on-Trent. One thing that I did not touch on—I wanted to avoid discussing issues from 25 years ago and to look forward—is that the deal at the end of the strike involved the Government setting up a review body, but they specifically denied the people carrying out the reviews the right to look at the social consequences of closure. As a result, places such as Stoke-on-Trent, where I and others who have spoken come from, have suffered massively at a social level.
One reason why I am still vice-chairman of the all-party group on coalfield communities is that I really believe in it. I do not want to get too nostalgic, but when I was a young boy in Sheffield, I used to go to Woodhouse on the outskirts of the city to play cricket at Welbeck. I played cricket and rugger with miners—that is the environment I grew up in. I therefore have a strong sense not only of the social side of things, which the hon. Gentleman correctly mentioned, but of the economic consequences.
Everything that has been said about the reserves and carbon capture is on the record, and I do not need to repeat it. The Minister knows me quite well and he will forgive me for using quite strong language, but I condemn the Government for not really having got their act together on CCS. We have heard about Kingsnorth, and perhaps I can slightly modify what has been said and put it in an encouraging way by saying that we should really start pitching in to ensure that we move things forward.
Why should this be done by companies from abroad? We used to be at the forefront of coal technology, and we still have people with the ability to think about the matter and to do the research. The company E.ON is almost a case in point. It is alarming that we should effectively be in the hands of other countries when it comes to development. We ought to be developing our indigenous resources. We have the brains and the know-how, and we have the tradition. We should be doing it ourselves.
As my hon. Friend the Member for Wealden (Charles Hendry) knows, I have grave concerns about our being an integral part of the European Union energy policy. I have said why I was so much against the fact that the Germans had those unbelievable subsidies when we had none. It is all part of a package. Will the House please understand that, and that we are not being given anything, and never have been given anything, under the arrangements of the European Coal and Steel Community or subsequently, despite what was said by one MEP about the amount of money being put back through interventions? The fact is that many of those policies should be developed to ensure our indigenous security policy.
I mentioned earlier, and I repeat the fact, that this is also a foreign policy question. If we consider Gazprom and Mr. Schröder, and how these things are organised—we do not have time to go into all that today—we can see that it is a big landscape. Energy security lies at the heart of national security. We therefore need a proper balance. I do not mean that we should not co-operate with other countries in Europe; I am often misunderstood on that point. Co-operation is one thing, but to have a common energy policy through European government is another story. I must ask people to consider the fact that, for new coal technology and energy security, we need our own policy.
I and my party voted against the Lisbon treaty, which contains the European energy policy. I do not ask my hon. Friend to go into that today, but for heaven’s sake, my party should ensure that we look after ourselves. We should co-operate with other countries, and trade with them, but we should not allow the entire energy system ultimately to fall into the hands of subsidy and over-dependence on other countries—and a system of rule making that is governed by a Court of Justice, against which there is no effective appeal.
I feel strongly that this has been a first-class debate and I pay tribute to the hon. Member for Blaydon (Mr. Anderson). I was delighted to hear that he came from Stoke-on-Trent; I did not know that.
The hon. Gentleman may have heard a few of the stories about my past activities. The reality is that, in Madeley in my constituency, people were being intimidated. I did not come here only to talk about what happened 25 years ago, but it meant a lot to me then and it still means a great deal now.
I echo the remarks made today in congratulating my hon. Friend the Member for Blaydon (Mr. Anderson) on securing this debate.
The volatility of global energy markets has once again pushed the case for coal to the forefront. Twenty- five years ago, we could not have imagined that such a thing would ever occur. Although coal is an abundant source of energy—it is the fuel of choice in newly industrialised countries such as China and India, but without the environmental safeguards that we would expect—in Britain it is has been written off by all sides. Indeed, for many people, even those in my constituency of Islwyn in south Wales, which is a former mining area, people think that the debate belongs to a bygone era. That attitude does not reconcile itself with the fact that clean coal technology can give us a great new opportunity for using this wonderful source of energy.
In recent years, the volatility in global energy markets has made the case for clean coal technology even more powerful. That is why I believe that the pits in south Wales that closed many years ago may still have a vital role to play in providing Britain’s future energy needs. Aneurin Bevan once said:
“This island is made mainly of coal and surrounded by fish. Only an organising genius could produce a shortage of coal and fish at the same time.”
Even now those words still have relevance. It is complete madness to import billions of tonnes of coal from other countries, when we are sitting on an island of coal. It is those coal reserves that we should be using to meet our future energy needs. It is common sense that we should look to ourselves to help solve some of our energy needs. However, as my mother used to say when I was growing up, “Son, in life you will find that sense is not that common.”
Clean coal technology represents a massive opportunity not only to revive the coal industry and guarantee a market for coal, but to make us less reliant on energy from other countries—a point well made by the hon. Member for Stone (Mr. Cash). I welcome the fact that the Department for Innovation, Universities and Skills supports the Technology Strategy Board, which has done some research on the matter. The board has identified carbon abatement technologies as being a priority. It is supporting 11 projects to the value of more than £13 million. However, that is the tip of the iceberg. More needs to done, and we need to take a long-term approach to using coal in our energy policy. By a long-term approach, I do not mean a five-year strategy, but one of 20 or 30 years, if we are to recoup the benefits of clean coal technology.
Our long-term aim surely must be to attract long-term investment for the production of coal, through clean coal technology. Such a commitment would give confidence to those who are developing the technologies through the knowledge that the Government support them. My hon. Friend the Member for Sherwood (Paddy Tipping) referred to support from the European Union, which is important. I once borrowed £37 million from the European Investment Bank—[Interruption.] I paid it back; I do not owe it a penny. The EU is a source of support that we ought to exploit in such circumstances. We have the opportunity to become a world leader in the new technology, but for that to happen we will need investment. I am sure that we are all keen to hear the Minister’s response to the debate, because such a thing will not happen without investment and Government support; it is as simple as that.
At the end of the day, there will be all sorts of wonderful arguments for the environment and for clean coal technology, but without the political will, it simply cannot happen. If we invest in that way, we will have the chance to revitalise the coal industry, providing jobs and helping to improve the quality of our environment. I hope that my hon. and learned Friend the Minister will take the opportunity to give an assurance that the Government are with us on this matter.
When we reflect on what has happened during the past 25 years, with the commemorations of the end of the strike and so on, it would be a tragedy and a betrayal of those men and those communities that fought so hard for that industry and to keep the jobs that would keep their communities going—many were destroyed when the pits went—if we failed now to say, “Here is an opportunity to produce coal in a clean and safe way for our environment.” It is something that we owe; it is also something that we can bequeath to a new generation. At the end of the day, it is a political decision, and I look to our Government—a Labour Government—to answer that important call.
I sincerely congratulate the hon. Member for Blaydon (Mr. Anderson) on a timely debate. I hope that the Minister has paid heed, not least so that he can pass the message on to his colleague the Chancellor; as we come to the Budget, the Government could take positive and immediate action to respond to the debate.
I was born at about the same time as the hon. Member for Blaydon. Then, more than 85 per cent. of the country’s energy needs were met by the coal industry. The figure is now below 20 per cent. Like the hon. Member for Stone (Mr. Cash), I am not being wise after the event. I was a Member of the House when the Tory Government—Mr. Heseltine with the then Prime Minister’s support—were seeking hugely to reduce the size of the coal industry. My colleagues and I opposed that strategy, because we believed that it was short-sighted and inappropriate.
In those days, we were not thinking so much of CO2 emissions or environmental considerations. I was brought up in south Wales, and a large part of my younger days was spent there, so I also had clear emotional links with the coal communities and understood the importance of coal to their jobs. As my hon. Friend the Member for Dunfermline and West Fife (Willie Rennie) has argued, the coal industry has never been unwilling to adapt, respond or make itself appropriate to the modern generation. As we debate the future of the coal industry, we should debate the energy industry as a whole and understand the interrelationship between the two.
Last month, HSBC produced a very telling report on the extent to which many Governments and the European Union have taken the opportunity provided by the current global economic difficulties to use economic stimulus packages to advance new green technologies—the two obvious options being renewables and carbon capture and storage. The report states that the only places to have taken the opportunity to push renewables are South Korea, France, the European Union as a whole and the United States. The only ones to have done the same for carbon capture and storage are Canada, the United States and the European Union. The opportunity has not been taken to encourage further investment in renewables and the development of carbon capture and storage, both of which are hugely important, although I probably take a different view from the hon. Member for Stone on renewables. I hope that next month’s Budget will go down both those roads and that Britain’s fiscal stimulus strategy will commit to a reinvestment in the kitty for science and technology.
I intervened on the hon. Member for Blaydon to point out that yesterday, when the very high-powered delegation from California visited the UK, it became clear that this is not a question of the inability of the technology to deliver. I think that the delegation met Ministers, or will do so later this week—it is in Brussels today and tomorrow. Of course, the process must be a gradual one, and we need demonstration plants to test the technologies—there are various options. However, plenty of evidence on this subject is available already, including, not least, a very good publication written last year by the Green Alliance, with a forward by the right hon. Member for Derby, South (Margaret Beckett), entitled, “Last Chance for Coal: Making Carbon Capture and Storage a Reality”.
My party, at its formal, deliberative, decision-making conferences, has made it clear that we envisage a future role for coal. However, we take a pretty hard-line view on the necessity of carbon capture and storage, and the Minister will know that we do not think that the Government should permit a new generation of coal-fired power stations without that new technology. We welcome the fact, therefore, that the Government now appear to understand that need and that the Secretary of State for Energy and Climate Change has deferred the decision on the Kingsnorth application to ensure that E.ON understands it, too.
Last year, there was interesting speculation in the press that the Government had given in to E.ON, that they would not insist on any technology in advance and that they could live with retro-fitting. However, the situation now appears otherwise, judging from recent press coverage. On 2 March, a headline in The Guardian read, “Decision on new coal-fired plant delayed again”. The decision has been delayed until the autumn to ensure the right Government policy. I urge the Government to stand firm on these issues and to make it clear to E.ON and the rest that they must deliver a new generation of power stations with that new technology in place. That applies not only to Kingsnorth, but to other parts of the county, especially the midlands which has a significant interest in the matter, and potentially to Scotland, too. If the will is there, coal-fired power stations can come on stream with the new technology in place. However, we need that double commitment, and the Government must stand firm, although I do not doubt that there will be some tough negotiations with the industry.
Are the Liberal Democrats in favour of public subsidies for carbon capture and storage? The chief executive of E.ON will make a speech this week in which he will say that he will install a carbon capture project that will take care of all the emissions at Kingsnorth, but he is asking for a subsidy of £1 billion. What is their position on that?
We must be robust with the industry, which, of course, will always look to the Government for money. Industry companies have not done badly in recent years, relatively speaking, judging by their profit margins. My hon. Friend the Member for Twickenham (Dr. Cable) would probably take the same view as the Chancellor and say, “No. Look guys, you have to make this commitment.” Everybody, including the industry, has to play their part in ensuring that environmental and emissions targets are met. My party’s starting position is to say, “No thank you.” In this time of straitened public finances, for a company to tell us how much it needs and for us to finance it is not the appropriate response.
The hon. Gentleman has said that we might disagree on renewables. Does he agree that compared with some of the ridiculous onshore turbine proposals, such as that for Checkley in my constituency and others near the Shropshire border, subsidies would be better invested in clean coal technology on economic grounds alone? Such subsidies would have a much greater impact, so surely it makes sense to go down that route.
Our position is that, for energy security reasons—to start where the hon. Member for Blaydon began—coal has a hugely important part to play. That argument has been made around the Chamber. We believe that our strategy should be for an energy-independent Britain in an energy-independent Europe, although not to the extent that we cut ourselves off without interconnectors and any buying and selling. That has to be our strategy, not least to ensure that we help other countries towards energy independence and to ensure that we do not exploit other countries in the ways set out by the hon. Member for Blaydon. Furthermore, energy independence will give work to our people here.
I am seeking to clarify the position of the Liberal Democrats. I thought that I understood it, but it appears otherwise. The hon. Gentleman’s position seems to be that there should be no public subsidy for carbon capture and storage, and that no coal-fired power stations should be built without full carbon capture and storage being an integral part of that new build, despite the fact that there is no commercially viable project yet in place, on a substantial scale, anywhere in the world. Surely he is just saying that there should be an end to the coal industry. How can he make such a case?
I was asked by the hon. Member for Selby (Mr. Grogan) whether the Government should respond to the E.ON bid for £1 billion to support its scheme. I said that we should not just take a shopping list from a company wanting to develop a power station. The Americans, especially the Californians, are supporting strategically the science and technology investment, and I have hinted that the Minister could ask the Chancellor to include such an approach in the Budget fiscal stimulus package—strategic support for, and investment in, the science and technology. That support should not go to one company to help its power station through the planning stage.
I shall list my party’s priorities in order. The first is renewables, the capacity of which is huge—consider the States, the Danes and others across Europe. If we are not quick, we will lose many opportunities. As the Minister knows, we have a pretty precarious renewables industry, and if we are not careful it is likely to invest in the States and elsewhere. We need to keep the industry here and to develop it, because it has huge jobs and technology potential. In my view, Britain is very well placed.
To pick up the point made by the hon. Member for Stone, investment in renewables should be mainly for offshore wind and tidal technology off the coast of Scotland and down the north-east coast. Obviously, such investment is much less controversial offshore than onshore. It should be done locally, however, and, as the Minister would expect me to say, I believe that there is now the will and capacity for our cities and communities to say, “We are interested in developing renewable schemes and feeding them into the grid to service our communities.”
Our second priority should be energy efficiency, from which this country would benefit greatly. It would be in the interest of our whole strategy. The third priority is continued gas supply and the fourth is coal, if it has carbon capture and storage support. We are not there yet: the technology has not been tested and we do not yet have all the answers. However, it is clear to me, from all that I have read and heard from those in the industry, that if the money and support is provided, developing a new generation of coal, in that context, is the right approach. It would give the coal industry a future, retain an energy mix and allow us to do without the nuclear option.
My party and I see no need for this great rush to nuclear power. The Prime Minister is making a speech today about how we have to go down the nuclear road. Such a plan is expensive; it will not produce enough; it will be too late; and it is risky. If we are in a position to influence whoever is in power after the next election, we will make our views very clear. We will say no to nuclear and yes to renewables and to coal in a new, environmentally acceptable context.
May I begin with a sincere apology to you, Miss Begg, to the hon. Member for Blaydon (Mr. Anderson), and to the other hon. Members in the Chamber for not being here at the opening of the debate? This is one of two energy debates currently going on—the other is in a statutory Instrument Committee. Faced with the challenge of being in two places at the same time, I ended up being in neither place at the right time, and I apologise for that. I am particularly sorry, because the speech that the hon. Gentleman gave was a wonderful example of how such a debate should be carried out: it was extremely thoughtful, it looked back at history and it considered the future potential of coal.
The issue of coal has been one of the big dividing lines of political history. Now that there is a tremendous sense of unity, we can move forward together and agree on the important role of coal in the future. We can see a great opportunity for the UK coal mining industry, and we all hope that this is an area in which Britain can lead the world.
I also want to pay tribute to those who work in the mines. I fought two mining seats—Clackmannan and Mansfield. In fact, I nearly became the first Conservative Member of Parliament for Mansfield. I have incredible respect for those who, day in and day out, work in the mines, and I wish to put that firmly on record. Moreover, I want to thank them for the contribution that they have made to making this a very modern industry.
In the early 1980s, the average output per miner was about 375 tonnes per year; it is now 3,500 tonnes per year. That is an incredible contribution from the people working in the industry. I understand, too, why they often feel frustrated when we end up importing so much coal from elsewhere. We now import more coal from Russia than we produce domestically. As we have heard this morning, it is a matter of concern that more of that market is not being taken by British coal mining.
I should also like to have a brief word about surface mining, because that is an important contributor to this debate. It is an industry that has moved on incredibly in recent years. A year or so ago, I went to a surface mine in Ayrshire to see the way in which the miners backfill. No sooner have they taken out the coal, then they are back filling the mine, replanting it and recreating the scenery that was there before. Often the scenery is enhanced by the sustainability of the habitats. Therefore, we should recognise that this is an industry that has an important contribution to make.
As a nation, we heavily depend on coal for our energy security. Last year, coal accounted for 37 per cent. of our electricity output, and there were times when that percentage went up to 50 per cent. There is widespread agreement that coal should play an important part in our energy future.
I do not want to enter into controversy with my hon. Friend, but when we talk about energy security on this side of the Chamber, I hope that he understands that it is one thing to have the coal that belongs to the United Kingdom here and quite another to have it effectively developed by companies that come from outside. Combine that with dependence on a European energy policy, and it is not quite the kind of energy security that I have in mind. Perhaps I should leave it at that.
I thank my hon. Friend for his intervention and for his remarks earlier on as well. If we look to companies such as E.ON and RWE to invest in this area and build coal-fired facilities in this country, we should understand that they will not take out their investment. They will be keen to run their facilities and make the best return out of that investment that they can get. We should be willing to understand the role that international companies can play in this process.
None the less, there is a big challenge ahead. The large combustion plant directive 2001 means that by 2016 a third of our coal-fired generation capacity should be coming out of commission. That is a massive hole that needs to be filled. As the Minister appreciates, that could come rather sooner, as there are 20,000 maximum hours of generation capacity left. Some plants are getting through that at a very fast rate, and they could have used those 20,000 hours by 2012 or 2013. They have to make active decisions now on whether they spend £200 million to ensure that their plants will be compliant with the LCPD. Some within the industry say that we may need to seek a derogation from that, and I am interested to hear the Minister’s view on that. If a derogation is to be sought from the LCPD, businesses need to know that sooner rather than later. If they are spending millions and millions of pounds on something that ultimately will not be necessary, there will be significant arguments afterwards about whether they should be compensated for such payments.
I want to focus on carbon capture and storage. CCS is one of the most exciting technologies in the whole energy sector, and it is an area in which Britain should be leading. When the Government started talking about the matter three years ago, we were leading the world. However, in the time that we have been talking, other countries have been investing ahead of us. Germany now has a small plant working as does Alberta. Moreover, America, Australia, China and Abu Dhabi have such plants. Therefore, we have lost some of our lead, which is a matter of great concern. All of us who have spoken in this debate are giving the Minister a push and some encouragement to go further, to be braver and do a bit more to give Britain the leadership that it should have in this area.
It was very interesting to listen to the chief executive of Kingsnorth this week. We want to see three full-scale plants operating with carbon capture and storage. We would fund the cost of the CCS technology through the receipts that Britain will receive from the next round of the European Union emissions trading scheme, so funding is available. CCS technology is an entirely appropriate way of using the funding and it would give a huge boost to those who are considering taking forward the investment.
When I spoke to people involved in the sector, I found a tremendous sense of frustration. The companies involved want to move forward and do more. Companies such as Shell want to take advantage of their depleted gas fields. Within British universities, such as Imperial college and elsewhere, there are people with incredible academic ability who could make a massive contribution. However, what they are waiting for is the go-ahead from the Government. They want a real signal that we are moving forward and making changes in this area.
Inevitably, there will be aspects and matters that only the Government can provide, such as pipeline infrastructure. If every coal-fired power station is expected to put in place its own pipeline to its own sequestration facility, that will make them unaffordable. That is a natural role where the Government can take the lead. They should put in place an oversized pipeline so that others can tap into it. I commend the work that Yorkshire Forward has been doing in that regard, because it is exactly the kind of proactive, thoughtful work that we need.
Scoping work is not yet under way, so it will be a long time before we identify which of the depleted fields could potentially be used. Again, that is an area in which the Government could be moving further forward and faster. Moreover, such work should be tied to an emission performance standard, like the one in California. Like the hon. Member for North Southwark and Bermondsey (Simon Hughes), I had a meeting with the people from California yesterday. They see the standard as an integral part of driving change; people know what the level of emissions will be and that they will decline over time. As long as people have a secure outlook and they understand what is expected of them, they can invest to meet that standard; without that ability, the situation becomes more challenging.
We both had that opportunity yesterday. Does the hon. Gentleman accept that the opportunity for the Government to get their policy right will come later this year when the private Member’s Bill promoted by my right hon. Friend the Member for Ross, Skye and Lochaber (Mr. Kennedy) comes before the House? That Bill would allow an emissions trading limit or a cap, which would put in place the policy framework, the process and the structure.
That is a very interesting approach. Having the enabling legislation there with the detail to be sorted out in due course is a very constructive contribution towards this debate.
The right hon. Member for Islwyn (Mr. Touhig) is right to say that CCS will not happen without the political will, which is what we need more of at this stage. The Government have revolutionised the approach towards nuclear with the Office of Nuclear Development. They need to do the same with carbon capture and storage with an Office of Carbon Capture and Storage Development which looks at how to remove barriers and make this happen, rather than how we can make it more difficult.
We need greater clarity about where the Government stand on issues such as Kingsnorth. The Minister has said that
“the application of the full chain of CCS technology on a commercial-scale power station has not yet been demonstrated. Until the operation of the full chain of CCS in conjunction with a power station has been proven, it would not be prudent to require new coal plants to be fitted with CCS or to set a date by which this would be required.” —[Official Report, 17 November 2008; Vol. 164, c. 112W.]
Yet the Secretary of State, speaking at the launch of the film “The Age of Stupid” a couple of nights ago, said:
“I don’t think we should carry on building unabated coal fired power stations”.
We agree with him, but he and the Minister clearly disagree, so some clarity would be helpful. This has been an extremely helpful debate. Above all, I pay tribute to the hon. Member for Blaydon for the way he introduced it.
This is an important debate. I join colleagues in congratulating my hon. Friend the Member for Blaydon (Mr. Anderson) on securing it and on giving such a serious and powerful speech. It deserves a wide hearing, particularly what he said about the moral questions concerning imported coal and the need to ensure that we consider health and safety issues, as well as the case for developing a long-term strategy for coal in this country.
As someone who is proud to represent a constituency containing what is probably the most profitable coal mine in the UK—Daw Mill, which exceeded 3 million tonnes last year and is doing extremely well—I want the coal industry to have a long-term future that does not damage the environment. As in most debates about the role of coal in energy policy, especially UK-produced coal, contributions have been made from a number of standpoints. I particularly welcome the points of view raised by colleagues such as my hon. Friend the Member for Sherwood (Paddy Tipping) and the hon. Member for Stone (Mr. Cash), who has a record, unlike most Conservatives, of supporting the coal industry over a long period. His comments on the issue are perhaps regarded as having more credibility than those of most Conservatives.
The Government are committed to the future of coal as part of the UK’s energy mix. We want to ensure that it provides the flexibility that is key to energy. We have just had a cold snap, during which more than 50 per cent. of our electricity generation came from coal. Normally, it provides about a third, but when we need to expand our electricity supply quickly and flexibly to meet demand, we must rely on coal. It is an important asset for our energy generation. The lights would literally go off if we did not have coal. Renewables will play an increasingly important part, but the problem with renewables, which we cannot run away from, is intermittency. Unless that issue is addressed, we will have difficulty relying on renewables alone.
I want to ask the question that I put to the hon. Member for North Southwark and Bermondsey (Simon Hughes), who represents the Liberal Democrat party. Surely we should be shifting subsidy from renewables, which do not really work because of the intermittency that the Minister mentioned, to coal. Given the technology and the evidence that we have heard today, coal can and does work.
Coal can work, but renewables are also an essential part of a proper energy mix to provide long-term security for the energy supply in this country. We need renewables. We need to ensure that they are used, because they do not damage the environment as many other sorts of energy do. We need oil and gas at the moment. We are importing them increasingly because we are depleting the amounts available from the North sea. Oil and gas from the North sea will be available for decades more—they will not disappear overnight—but they are being depleted, which means that we are relying more on imports.
We therefore need to develop our other domestic energy sources. Nuclear is an invaluable base for the production of energy and electricity. It provides the base load that we will need in future. I must say to the Liberal Democrats that I do not believe that any energy policy for this country can be serious without a nuclear base load. Unless that is included, it is not a serious climate change policy.
We need a nuclear base load, but as it is a base load, it does not provide a high level of flexibility. We need renewables because they are no-carbon. We also need to ensure that we have enough flexibility to deal with varying demand, and that flexibility comes, at the moment, from coal. It also comes to some extent from gas, which also emits carbon, although not as much as coal.
We need coal for the long term, which is why we need to ensure that we put the case for coal. Those extremists from the green lobby who say that we should have no coal are proposing a recipe for turning the lights off. That is an unacceptable position. However, we also need to ensure that our coal industry does not damage the environment. Getting that balance right is essential.
My hon. Friend the Member for Blaydon rightly pointed out that deaths occur in coal production in a number of other countries. The destruction of the UK coal industry in the 1980s and early 1990s has made us over dependent on coal imports, often from countries where health and safety standards are poor. He is right to raise the point that we need to ask ourselves questions about that. We have vast coal reserves in this country. If we can get carbon capture and storage going properly on a commercial level, we can exploit the domestic resources in mines in our own country.
We must be aware of the destruction. The Baddesley, Coventry and Birch Coppice pits in my constituency all closed between 1987 and 1992. That was greatly destructive—thousands of jobs were lost in my area—and will be long remembered. We need to ensure that coal is included in the mix for our energy supply, but we must also ensure greater expansion of domestic coal production in this country.
My hon. Friend the Member for Sherwood raised points about Harworth in particular. I am watching closely the developments in UK Coal’s wish to expand there. I am keeping in close contact with sources from UK Coal, and we have offered to do what we can to encourage and support the work there. There are limits to what we can do, but UK Coal is aware of them and of our broad support.
There are opportunities for clean coal technologies. The Government accept that coal-fired generation must become cleaner. Although facilities exist in some areas, we need to improve the efficiency of coal extraction. CCS is the key deployment. We will shortly publish our response to the consultation “Towards Carbon Capture and Storage”. It will set out details of the implementation of our proposed carbon capture readiness policy, as well as further information about proposed measures for regulating the geological storage of carbon dioxide. We will also consult on what further regulation is required for us to keep coal as an option in our long-term future generation mix while meeting our long-term climate change targets. A decision on the application for a replacement coal-fired unit at Kingsnorth will follow the conclusion of both the carbon capture readiness consultation and the planned new consultation on a new framework for coal-fired power stations.
The UK has been lobbying for and has secured funding from the EU. I heard reference earlier in the debate to an MEP, whom I am afraid I had not heard of, who seemed to be claiming that he had secured it. I must tell hon. Members that—
This debate proves to be slightly more timely than I had anticipated—I must thank Mr. Speaker for selecting it for today—as a major report on dementia has been in the national papers this morning. In addition, Prince Charles will this afternoon address a debate on that subject, which will be one of the issues that I discuss in relation to residential and nursing care homes.
Care homes have not had a particularly popular image among the general public in the past. The view in the 1970s and 1980s was that they were places that one sent people to as a last resort. They were basically designed to bring profit rather than to provide proper care and services for elderly people. Indeed, my earliest experience of anyone running a care home was in the early 1970s, when I worked for a firm of architects in London, and one of the partners declared that he and his wife were buying a care home. His views about why they were doing it would not have given me any confidence that anyone I knew should reside there. I never spoke to his wife—I am sure that she had a rather different view—but he thought that it was going to be easy money.
In the 1980s, there was a vast expansion of care home provision. As in any industry in which there is vast expansion, not everyone who goes into it does so for the right reasons. By the end of the 1980s and early 1990s, the transition of hotels due to the decline of the tourism industry in the south-west led to the small port and fishing town of Teignmouth, where I live, having the highest number of care beds per head of population anywhere in Europe and therefore, I suspect, in the world.
Times have changed dramatically since then. The Governments of the 1980s and 1990s regulated harder, and we moved away from the easy option of moving people into care homes to a policy of caring for them in their own homes. The quality of care homes has increased dramatically. Those that might have been a little on the dodgy side in the past have struggled, so I am sure that few exist today. However, that does not mean that the care home sector gets an easy press—one has only to read the sort of headlines that are written about care homes in the newspapers: “Nurse who ran care home accused of murder after seven suspicious deaths” and “Illness kills half the residents at nursing home”. And, of course, The Times has run a care home campaign.
Most of the care homes that I visit in my constituency are not like that at all. They provide personal care of a high quality, and they care about the residents. The Minister shakes his head; I am not sure whether he disagrees or wants to intervene. Those care homes care about the people who reside in them, but that does not mean that there are no issues to address. They are concerned about how they can provide the high level of care that they seek to achieve.
The Government are pressing ahead with improvements. I am sure that the Minister will regale us later, given the opportunity, with all the improvements that have occurred in the past 10 years. I do not wish to steal his thunder, but let me give a few statistics. According to the 2007-08 report of the Commission for Social Care Inspection, in the past six years,
“there has been steady improvement in the overall performance of councils in addressing current policy requirements and in regulated care services meeting national minimum standards.”
It goes on to say:
“There have been some tentative steps to address the new personalisation agenda which have meant more people are able to control and choose their support through, for example, Direct Payments, Individual Budgets and good person-centred assistance…There are some outstanding examples of people’s lives being radically improved where they have been able to direct their own support, including those people with multiple and complex needs… However, councils are at an early stage in transforming social care and developments are patchy and vary between different groups of people.”
“People, whether they pay for their care or are publicly funded, are not always getting the individualised help that they need to make decisions about their support which in the long term can be costly to individuals, family carers, councils and the NHS.”
I know that a significant number of people do not like direct payment because they find it difficult, but that a number do when the services are there to be accessed. Like other MPs, I am sure, I have people coming to me saying, “Yes, I have the money, but there is no one I can buy the service from,” so giving them money is largely a waste of time, because there is nothing for them to spend it on to provide the relevant service.
I congratulate my hon. Friend on securing this timely debate, and I invite him to add a rural dimension to the problem regarding the availability of services. It is a patchy picture. Does he share my concern about the lack of elderly mentally infirm nursing places across much of rural Britain, and about the spectacle of families and relatives having to travel vast distances—sometimes hundreds of miles— to visit relatives who suffer from Alzheimer’s? Does he agree that that is not ultimately sustainable, and should not be?
It is not sustainable, and the situation is going to get worse, as I shall discuss later. It is very much a growing problem in our ageing population. The lack of specialist nurses comes out in Laing and Buisson’s report, which I shall discuss in a moment.
CSCI points out that in 2007-08, 1.75 million older people and people of working age used different social care services, and that £16.5 billion was spent on social care for adults. Other moneys provided through private expenditure and top-ups added up to a further £5.9 billion, so we are talking about fairly large sums of money, and even the Government projections predict higher figures. The university of Kent’s personal social services research unit says:
“The numbers of functionally disabled older people in England are projected to”
“from approximately 2.3 million in 2002 to approximately 4.6 million in 2041”.
“To keep pace with demographic pressures over the next 40 years, assuming unchanged rates of functional disability”—
that is a big if—
“residential and nursing home places would need to expand by around 115 per cent. and numbers of hours of home care by around 100 per cent. The numbers of staff working in social care for older people would need to increase by around 110 per cent. between 2002 and 2041”.
Also, expenditure for the same period
“would need to rise by around 325 per cent. in real terms…to meet demographic pressures and allow for real rises in care costs of 2 per cent. per year for both social care and health care.”
In the long term, that means that care expenditure would need to increase
“from 1.4 per cent. of gross domestic product in 2002…to 2.6 per cent. in 2041.”
I hope that the Minister has his crystal ball and will say what the Government are doing to lay the foundations for that necessary growth in residential care. If the Government are not certain that they want to believe university of Kent figures, Age Concern says that significant funding is required to meet our obligations to older people and that expenditure of £7 billion to £8 billion now should rise to £14 billion to £16 billion in 2026. That is a shorter time span, but it is still virtually a doubling of the figure of about 1 per cent. of GDP.
Not to miss out on the matter, the Joseph Rowntree Foundation has had its own research done, again by William Laing of Laing and Buisson. Laing states that about £540 million of extra funding is still needed in the system for local authorities to fund a modernised care home sector. Since that report, the Minister has announced £520 million of funding, but that is for different expenditure and is not the same expenditure that Laing and Buisson said was missing last September.
The care sector faces problems across the board. Before I get into the detail of private care homes and the problems that they face, I will mention charitable care homes. The Charity Commission wrote to me about this debate. It said that there are a number of issues, but that the key issues identified in its survey,
“which would affect care homes, were funding (whether full costs were paid by the public body and whether contracts were short term), independence (whether the charities felt that they could still take decisions independently), and mission drift, (whether the charities were being led by available funding, rather than their charitable objectives).”
Lack of funding is a key issue in relation to that.
I particularly thank the Local Government Association, which provided the most extensive brief for the debate, for its work on the matter. It has pointed out that there are currently 448,000 care home places in England and that 231,000 of those adults are financially supported by councils. If we consider how councils are paid, we will see that some of the 217,000 remaining places were the subject of a contract between councils and care homes to provide intermediate, respite care or other temporary placements. However, as I said, the majority of people arranged to pay for their own care.
Between 2006-07 and 2007-08, the unit cost paid by councils to care homes increased by an average of 7 per cent. However, there is a wide variation among councils and the type of care purchased. The greatest increase in unit cost was between 11 and 14 per cent., which went to care homes providing nursing care for those with physical or learning disabilities. Contracts and fees are a matter for local negotiation and councils with limited budgets—increasing by 1.2 per cent. in real terms over that period—need to negotiate fee levels carefully in relation to quality of care.
The Minister might wish to address how the rising fee levels and costs of care homes are not matched by Government grants to local authorities. That situation puts stress on social services departments. The Minister might say that that is new, but I can take him back to one of my earliest questions in the House when I asked the then Health Minister, who is now Secretary of State for Communities and Local Government, about a statement from the 15 social services departments in the south-west.
The directors of those 15 social services departments said that there was pressure on elderly care and that the budget constraints were such that their obligatory, legal duty to provide services for children meant that they were having to divert funding from elderly care to child care. That led to a lack of funding. At that point, I think that the estimate was £1 billion of underfunding. As I mentioned, the Joseph Rowntree Foundation has said that the figure has been reduced to about £500 million of underfunding, but there is still a big hole. That means that people are not necessarily getting the level of care that they feel they deserve, having worked all their lives.
We might not necessarily have much sympathy with care homes when we say that we want to improve standards and we expect them to improve the services that they offer, but care homes have their own problems. Some care homes improve services willingly and some do so while pointing out that having the additional funding to improve standards would be beneficial and appreciated. However, some care homes say that other problems have been created for them—for example, the bureaucracy that is put in their way and problems relating to employment issues. When the Government decided to crack down on immigration and change the rules, I doubt whether there was an MP with a care home in his constituency who did not find a care home worker on his doorstep saying that their work permit would not be renewed and that they would be sent back home to the Philippines or wherever.
Migrant workers comprise a significant proportion of the social care work force. The Association of Directors of Adult Social Services estimates that one in two care staff in London is a non-EU citizen. The Government published the shortage occupation list for tier 2 of the points-based immigration system in November 2008. The list contains skilled occupations where vacancies can be filled by migrant workers from outside the European economic area. The LGA welcome the fact that skilled senior care workers are included in the tier 2 list, but to be “skilled” requires that the individual must earn at least £8.80 an hour after deductions for accommodation, meals and so on. There is also a requirement for a national qualifications framework level 3 or above.
Martin Green, the chief executive of the English Community Care Association, has said:
“We cannot understand why skilled work riders and frozen fish cutters are deemed to be skilled workers without an attached required salary while senior care workers will in essence be prevented from entering the country to undertake the valued work that those currently here already do.”
Although people might say, “Yes, we recognise that this is a skill and accept that the qualifications are necessary,” the salary level being put with such jobs is causing problems in the care sector.
I ask the Minister to consider that if £8.80 is the requirement and that is based on the industry, why is it that those who run care homes—certainly those in my constituency and I believe those in other constituencies—will say that that figure is more than they are currently paying their European qualified staff for work? The amount seems to be set at an arbitrary level that is designed purely as a cut-off point to stop people coming into the UK or to be used as an excuse at a later date to remove care workers from the UK. I will come on to dementia in a moment because it is particularly important that there is not a continual change in care home staff who work in that area.
The LGA has questions about funding. It says that
“adult social care services are funded through a combination of central and local government funding”
and that total adult social care spending for 2008-09 was £13.78 billion. Of that figure, central Government general grant funding was £6.29 billion, specific grant funding was £2.15 billion and the contribution from local government £5.33 billion, which is approximately 20 per cent. of total council tax receipts. The Government are applying greater pressure and saying to councils, “You must limit your council tax increases.” However, as I said, council tax funds a service that increases in cost, in real terms, by 7 per cent. a year. That is rather more than the amount by which local authorities are being told that they are allowed to increase council tax and by which they are trying to increase it. Even greater pressures are being applied to local authorities. They are being told that they cannot raise the level of council tax—they are not allowed to increase the element that they control—but that the Government will not adequately increase funding for care. The people who will lose out are those in care, because, at the end of the day, we are squeezing the care homes.
The surveys clearly say that where there is poor care, the residents blame the low wages that some of the care homes have to pay because they are not funded to pay adequate wages. It is still true that people can earn more money at night stacking shelves in large supermarkets in my constituency than they can earn during the day caring for people in homes. Many young people will opt for the easy job in the evening rather than the job during the day.
I wish briefly to discuss Laing and Buisson’s report. I have not been able to see the detailed brief. Someone in my office went online to see whether the full report was available and found that apparently we have to pay £100 to see it. I assume that a copy will be available for Members in the Library and that we will be able at some point to read it without having to spend that money. It did not seem practical to pay £100 to read a thick wodge of a report all the way through this morning.
Some quotes from the report were put on the website, and there was also a stimulating discussion of the issue on Radio 4. The most telling point was that there is not enough training in the sector. A statistic from the radio programme—I have this as close as I could get it—is that only one third of the homes that are designated to care for Alzheimer’s patients are providing staff with the necessary specialist training. That is a severe condemnation of our current system.
As I said earlier when discussing other issues, there is improvement, but the Government need to grasp the report that will be published today, listen to the Alzheimer’s Research Trust debate this afternoon and come up with answers about how we can make further improvements. The Minister has already stated in his response to the report:
“The national dementia strategy will improve the quality of care in care homes.”
That quote was on a website this morning. That is fine. The strategy is there, and the 17 points are vital. We buy into them—no problem at all—but my purpose in going through all the funding arguments that I raised earlier is to say that, unless funding follows, the strategy is not worth the paper it is written on.
I beg the Minister to step up his argument with the Treasury that this issue should not be forgotten. Alzheimer’s is probably the disease that most of us fear getting. To most people, cancer is a big fear, but the idea that we could slowly lose our mental capacity puts dread into the hearts of most people. The issue must be fully and properly addressed.
The majority of care is done in the community—people are looked after in their home—but a significant number of people are in care homes, and there will be a substantial increase in the number who will need to go into them. Unless we start saying that the money will follow, those people will lose out.
I mentioned immigration policies. The Alzheimer’s Society website gives three principles for good-quality care. The third states:
“Staff caring for people with dementia should be trained in supporting people with dementia.”
As I said, that is not happening adequately at present. It goes on to state:
“Continuity of care, which allows relationships and trust to build up between the person with dementia and care staff, is also important.”
I would ask the Minister to come to south Devon to visit the care homes in my constituency, to look at the bonding between care workers and residents, and then to go back to the Home Office and ask the immigration officials whether it is really right, for the sake of the figures, to send those care workers home because care homes will not be able to pay them £8.80, and his colleagues in the Treasury will not provide the funding.
I would ask the Minister to think about the family who have grown reliant on and developed friendships with care workers, to look them in the eye and say, “Terribly sorry,” and then tell them that the person whom their mother or father has grown to depend on and with whom they have developed a relationship, the person who engages with their mother or father every day, who speaks to them and encourages them so that they are not left to rot—the worst that we could do for people with dementia—or left on the shelf but can have a reasonable quality of life, will be sent back to the Philippines, China or wherever. I ask the Minister to visit the care homes, speak to the people and then tell the Treasury and the Home Office that that is not good enough.
I am delighted to take part in this debate, and I, too, take particular interest in it. I have a 99-year-old father whose birthday we celebrated yesterday. He is looking forward to his 100th birthday and already has me organising for it. He is in a nice St. Monica Trust care home in Bristol, which is a model that many others could follow. Not every area offers such an opportunity.
I thank the hon. Member for Teignbridge (Richard Younger-Ross) for choosing this subject at this time. Besides my personal interest in it, I have several constituency cases, which the Minister knows something about and which I shall discuss with him in confidence. These things are difficult and we have to be careful about what we say.
To add to the list of events taking place today, the all-party group on dementia will be taking evidence on the future of dementia care, so it seems that the hon. Gentleman has hit the jackpot: there is every possible reason for today being a good day to debate residential and nursing care.
I agreed with nearly everything that the hon. Gentleman said. I probably err on the side of caution when criticising particular nursing and residential care homes. Some in my constituency have shut, and for good reason. Sadly, I have also lost some good care homes for various reasons, but I support the Government’s strategy and look forward to the care Green Paper, whose publication is imminent—no doubt my hon. Friend the Minister will say when it will be published.
We need that Green Paper, because anyone who is involved in this area needs to know what the Government’s direction of travel is, particularly in respect of funding to support the strategy. I believe that we all agree that nursing and residential care are underfunded, and that the time bomb that we face means that they will be ever more so. The trend is inevitable and relentless. We have moved on from the small, neighbourhood family-run care homes that started the process, long before Government became interested and when not that many people thought about going into care homes. I would argue strongly that many people who went into care homes did not need to; it was just perceived to be the best way to give care. We know otherwise now.
We have moved along the continuum to a much smaller number of larger care homes that are not necessarily locality based and many of which are in the not-for-profit area, as the hon. Gentleman said, but some of which are still private. There are now several different models and the state has begun to get involved again. Having in a sense washed its hands of the matter from the 1980s on, the state has had to recognise, because of the shortfall, that it cannot entirely leave its responsibilities.
Because of the changes, we have had to look quite hard at three key issues that always underwrite the social care we are debating. One is running costs, and certainly the cost of charging, which I know about very well. Another is location—as neighbourhood homes have gone, we have had to consider where people will go if they want to stay locally.
There are still good examples of local care homes, such as Uplands, run by Lynne Gardiner, in my constituency. That is an ideal location for people who have lived in the area and want to stay in the locality in the remaining years of their life. However, for every place with an Uplands, there are many other areas that have lost such locations.
The third issue, which the hon. Gentleman talked about, is staffing. I shall intertwine that into my short speech, because staffing is everything. We should also consider management. I think that we would all agree that a weakness in the area we are discussing is the fact that good managers are at a premium, and good managers who can be retained are at even more of a premium.
I know of some cases that I think are good examples of the problems. I hope that the Minister may want to examine not the particular cases, but the context that they give for understanding how the care sector operates. I call the first the Crystal Fountain case. It is a real-life case and I am still critical of the organisation.
Crystal Fountain care village was set up in my constituency. I believe that it got planning permission on the basis that it would provide a continuum of care from some bungalows and houses, with support, through more sheltered accommodation to, ultimately, a care home at the centre of the care village. Two years ago, having achieved planning permission, it announced that it was closing the care home, which is a purpose-built facility.
The residents, and certainly the relatives of the residents who remained there, were very disappointed, to put it mildly, because they felt that they had purchased their place on the basis of a continuum of care. The disappointing thing was that there was nothing that could be done about it. The company decided to charge individuals in the care home facility for every facet of the care on offer. That was clearly likely to mean that much more money could be made out of the individuals, but those people felt completely let down by the changed nature of the care. I suggest to my hon. Friend the Minister that we need to match planning and delivery to the eventual care outcome. Otherwise, we end up with a deficient number of care home places, which causes upset and removes any semblance of choice.
Another concern that I have is about the remnants of the outcomes of outsourcing stage 2 homes from the county councils, which always had the responsibility. That happened in the 1980s and we had a pretty bloody set of consequences in Gloucestershire. There was a takeover—in an in-house bid for an outsourcing contract, if that is not a contradiction in terms. Former social services staff ran an outfit called Coverage Care. The idea was that they would pay to take on remaining residents, but would rebuild and refurbish homes, and pay a bounty to the county council. It all ended in tears, but I will not go through the history of it.
Now, thankfully, a much better organisation—the Orders of St. John Care Trust—runs the homes. The old problems of homes in need of refurbishment remain, however. Where is the money to come from? The Orders of St. John has some ambitious plans, but I have now been talking to the trust for 18 months and there is not apparently a great deal of movement. That may be because of the market at the moment, but if there is a commitment to improving the quality of the care, we need to know where the funding will come from.
I am asking the Minister to help me with that dilemma. If the money is put in and is then reflected in increased fees, a quite difficult problem will result. Obviously, the self-funders will be the ones to pay for the increase. However, adult care—social services as was—must also make a commitment to make up the additional fees. That is problematic in the context we are discussing and such matters are not always as easy as they sound.
We want better quality, but we certainly want to know how it will be paid for. In my area, the cost of care has risen dramatically, which leads to unavoidable consequences. Sometimes, one wonders whether people who should be in care are not, because they do not want to pay. That can be a problem.
A county councillor on the executive in Devon, Sally Morgan, pointed out to me that people going into care have greater problems, and that only people with severe or critical needs are being placed in care by local authorities. If people have such needs, that leads to greater requirements and increases care home costs.
I agree. As a former county councillor, I remember going to what was effectively a rationing panel, although we did not call it that. It decided who went where and whether there was enough money for that provision. Then the issue arose about where the extra money was to come from if people’s needs increased dramatically once they were placed. To some extent, we were reliant on the homes effectively to subsidise some care, because there was never enough money to put in the pot.
The next area that I want to talk about is the inspection process. I am not critical per se of the idea of the Commission for Social Care Inspection. I dealt with several difficult cases during its previous incarnation, and I think that the inspection process must be independent and must be carried out in the way it is. I used to visit care homes as a county councillor; it was one of our responsibilities. We just took it on. We had no particular expertise, but it was important that we should try to do it to the best of our ability.
I welcome the setting up of CSCI, but the problem is that as we drive up standards, we drive some homes out of the marketplace. Even if they are not driven out directly—if some CSCI powers are not used carefully—what is written in the reports drives them out, because people are not encouraged to send their nearest and dearest to those homes.
I have talked to the Minister confidentially about the matter. I know of some cases in which inspections have been quite harsh and have quickly led to a legal process. My criticism is that there is not much room for negotiation. Once there is a bad report for a home with no stars, the legal process that gets under way and the quick progression to an independent tribunal give little room for manoeuvre. We must understand that we cannot have it both ways. If we want the homes at the cheaper end of the market, we cannot drive up the standards so that they cannot survive alongside the more expensive homes.
The hon. Gentleman is making an important point about the effect of the inspection regime under CSCI. Most of us agree that that is an important part of the process. He has pointed out the problem, but has not given an alternative that would assist in driving up quality. We all agree with the hon. Member for Teignbridge (Richard Younger-Ross) that we want a rise in quality in all care home provision in this country.
There is a role that must be filled in adult care and there are issues with how county councils or unitary authorities are inspected. The dilemma is whether to support homes that need assistance by putting resources into them or to support the more expensive homes, which tend to be run better, although I do not want to cast any aspersions. The dilemma is whether local authorities want those homes to survive and flourish. That is true of Gloucestershire, where the authority is taking legal action over the loss of one of its stars.
There is a huge role for local authorities, but my argument is about whether they can dispense that role as well as they could and should. When a legal process is entered into, the clock cannot be turned back easily. Homes that could stay in place and provide a valuable service are sadly driven out for all sorts of reasons.
My last point on the inspection process is that it is quite closed; everybody knows everybody else. With the best will in the world, care homes know their inspectors and the inspectors know the home’s background. That may not always be healthy.
Specialist homes have not been mentioned. We are talking mainly about older people, but care homes contain many other people with different disabilities. My worry is that when one discipline takes the lead, the other disciplines tend to hide from their funding responsibilities. If there is a health-led funding arrangement, adult and children’s care tend to hide from their funding responsibilities.
I am dealing with a sad case of somebody who is disabled from the neck down. He is in great need of educational help and is very bright, but he can receive no help to get to the local college where he could carry out a course of study. That is belittling for him and unfair. I hope that the Minister will say how we can get more joined-up thinking and action.
I will finish on a positive note. For the last 20 years, I have been involved in the Standish project, which hopes to turn a former hospital site into an integrated care setting. In future, there must be better partnership between the public, voluntary and private sectors to run genuine integrated care. There are good examples, such as Horsfall House in my constituency. Sylvia Morris and Chris Booth, a local GP, saw that there was no care home facility and so provided it. It offers a genuine continuum of care that provides for people who are fit and able but in need of TLC, through to those with care needs who need to be in an intensive setting. I believe that that is the future. The issue is how we get there and who will fund it.
We would all agree that there is a huge onus on the person who is being cared for and their relatives to provide the lion’s share of the funding, unless they are entirely reliant on the state. That can be unfair and can leave people with dilemmas about how much they are prepared to pay, where they are prepared to send their relative and who they are prepared to pay.
I am grateful for the opportunity to take part in this debate, Miss Begg. I congratulate my hon. Friend the Member for Teignbridge (Richard Younger-Ross) on requesting the debate and on being drawn out of the hat. It is serendipitous that the debate is taking place on a day when there is media focus on the subject. It deserves far more media coverage than it attracts, not only on the bad things and the problems, but on the positive elements. All too often, debates of this sort are couched in terms of old age being a problem and a ticking time bomb that will explode under our welfare state and make it impossible for us to provide dignity in old age. Such debates focus on the need to find funding.
I agree with one of the concluding remarks of the hon. Member for Stroud (Mr. Drew) on the need to see the development of care as a continuum. I will take that idea one step further. As human beings, we are more capable than any other species of controlling our lifecycle. The effectiveness with which we have extended our lifecycle over the last century is of great note. We must now look at how we can reinvent the lifecycle and redefine what we mean by old age.
In this debate about care home settings, we must recognise something that was missed in the early ’90s, was not understood in the mid-’90s and is just beginning to be understood now. Although providing more care in people’s homes and supporting independence through personalised budgets are essential in creating and supporting a wider lifecycle, a proportion of the population will need more intensive forms of care that are more appropriately provided in care home settings. The care homes of the last 30 years are not the ones that we will need in the next 30 years. Nevertheless, because of the ageing population, a substantial number of people will still need care homes, even if the proportion of those people is a smaller share of the population.
I agree with my hon. Friend the Member for Teignbridge that there are many good care homes. I have the privilege of visiting some in my constituency and seeing good caring practice. That practice is rightly driven by assiduous attention not to ticking boxes, but to the needs, wishes, wants and feelings of the people who live there because it is their home. That is an important point. He was right to highlight the growing demand for specialist residential care and for elderly mentally ill beds and facilities. In a way, we all hope to go through that part of the life journey, when we will be more out of sight and out of mind than at any other point in our lives.
I will touch briefly on standards, ask a few questions about dementia and the Government’s strategy, which is welcome, and speak about dignity in the context of the personal expense allowance, which is important and overlooked. Last Friday, I attended a breakfast seminar organised by Anchor, which is doing some good work on dignity. There was an American speaker from the Eden project called Dr. Bill Thomas. He spoke about the changed expectations that have come with the baby boomers, not just because they are beginning to contemplate their need for care, but because their parents are experiencing care now. Many baby boomers find it hard to accept the limited choices with which their parents have been presented. Dr. Thomas also underlined a point that the hon. Member for Stroud made—that leadership is the absolutely essential element in organisations, that it is needed to drive changes in culture and behaviour and to make the changes stick, and that the issue is not just about dry regulations on a page, but about how human beings interact.
One point that has struck me about the standards regime in the 12 years since the National Care Standards Commission has been in existence is that, on the knottiest issues, such as medication, nutrition and hygiene, care homes have become more and more like Sisyphus, pushing the rock to the top of the hill only for it to roll back down again. The Commission for Health and Social Care Inspection has documented that in reports and pointed to care homes that can improve their performance in medicine management one year, only for their standards in that area to fall back the following year. That is a fault in the system, and it has yet to be satisfactorily addressed.
When one looks more closely at issues such as medicine review in care homes, it is remarkable just how few visits GPs pay to care homes. I am particularly concerned about that. The number of visits is extraordinarily small, yet that is the population most at risk of poly-pharmacy, of becoming the victims of the inappropriate use of drugs and of suffering from the overuse of drugs. From the figures in parliamentary answers that I have received, however, it appears that GPs do not cross the threshold of care homes frequently enough to do the necessary medicine inspections and reviews that are a key part of appropriate practice.
One reason why care homes’ standards slip is changeover of staff. If we look at the figures, which I did not have time to discuss in my speech, we find that the turnover rate in the independent sector is almost 18 per cent.—17.9 per cent. If a care home has that turnover of staff all the time, it is difficult for the organisation to be consistent and to keep training the staff all to the same level.
My hon. Friend earlier drew attention to what Laing and Buisson identified—namely, fragmented training at specialist units in this country—and also rightly identified from that research the fact that many of those homes do not have formal training programmes. I hope that the Minister will say something reassuring about how the new inspection regime will ensure that that finding does not become a long-term trend.
The Minister knows that for some years, I have raised questions about the appropriateness of using anti-psychotic medication in care homes, and I was pleased last year when his predecessor, the hon. Member for Bury, South (Mr. Lewis), announced a review of their use in the draft dementia strategy. The terms of the review, as I understood them at the time, were not so much to ask whether change was needed, but to plan for change. Although the review was and is long overdue, it was and is welcome, because those drugs reduce people’s quality of life, increase costs due to the need to treat side effects and cut lives short.
It is surprising that we tolerate the continued use of drugs off licence for a purpose that a growing body of evidence suggests is not appropriate in the long term. We know, however, that 100,000 people are routinely prescribed them and, from academic studies, that perhaps as many as 23,000 people die prematurely because of their excessive and inappropriate use. I hope the Minister will state when we might see a light at the end of that tunnel—when we will see the action plan that will produce the necessary change to practice.
That brings us to the wider issue of dementia, its care management and the study that Laing and Buisson published today, identifying the training issues that we have already talked about. I want to ask the Minister about the dementia strategy, because it is not a national strategy. It is not a national must-do: it is not in the Department’s strategy framework as something that must be done; it is on the framework’s next tier as something to be decided locally. Local decision is generally a good thing, but, on the national strategy that the Minister has rightly advanced, I should like some clarity about timelines, because that is what my constituents expect.
I want to ask about the implementation programme board, which I understand has not met yet. I assume that it will have a monitoring role, even if it will not provide an overly disciplined and prescriptive framework, because that is not the Government’s intention. When will its terms of reference and membership be finalised? There is a meeting on 31 March of the other body that is responsible for such matters That must mean that the implementation programme board will not meet this month, and that yet another month will have gone by without the monitoring framework to drive the strategy forward having been published. It would be good to hear what the Minister has in mind.
[Mr. Edward O’Hara in the Chair ]
I shall touch briefly on nutrition. A couple of weeks ago, the hon. Member for Eddisbury (Mr. O’Brien), the official Opposition spokesperson, and I addressed a meeting organised by the British Association for Parenteral and Enteral Nutrition, which has conducted some very good research, demonstrating malnutrition’s burden on our taxes. The group has created a nutrition action plan, which the Minister is considering. Until he has done so, however, he is unable to confirm whether that group will be able to continue tackling malnutrition in a multi-agency way, so it would useful if he said whether he believes that it has done a good job and whether he will allow it to continue.
From written parliamentary answers, I am surprised that malnutrition data are not routinely reported to Ministers or senior officials, and that there is no regular auditing of the adequacy of data that are collected. It seems extraordinary that while we focus on obesity, we know that there is a £13 billion cost associated with malnutrition. Surely that should be addressed.
The hon. Gentleman has made an excellent point about nutrition and malnutrition, and he is well aware of how keenly I follow the issue. I am concerned as to whether the Government have had a chance to uprate their performance in producing statistics and to monitor the situation, because the issue has effectively been unnoticed by them for more than a couple of years. More recently, their publication of statistics was delayed and, although we have now managed to extract them, they did not come via the normal parliamentary channels. There is deep concern about malnutrition becoming a head-in-the-sand issue, rather than something that we should tackle now.
The hon. Gentleman is right to challenge the Minister. I am sure that the Minister will respond by demonstrating that his head is not in the sand, and that he is as anxious as all of us to ensure that we use the data that we have to deliver a strategy that bears down on the problem of malnutrition. I hope that he says that.
On the personal expense allowance, I asked a written parliamentary question of the Minister’s predecessor in January 2008 about whether he would undertake a consultation on the level and adequacy of the personal expense allowance, which is paid to people in care homes who are in receipt of a pension that they must forgo because of the rules for determining state support. They are left with £21.15 a week—just £3 a day—to cover the costs of toiletries and food, which are the little things that make the difference between being alive and having a life.
The question is whether the proposed 75p a week increase is sufficient to meet the needs and dignity of 250,000 vulnerable and frail adults who live in care homes throughout the country. I do not think that it is, and Age Concern and many others in the movement campaigning on this issue agree with me. Such groups feel a sense of betrayal, because they were offered a clear undertaking by the previous Minister, which was reaffirmed in June last year, as reported in Hansard, that there would be such a consultation, only to see that snatched away by the Minister who is here today.
The opportunity for the Minister to learn more about the views, experiences and feelings of those who have to live on £21.15 has been denied. I hope that, although it may be too late to address the increase from 1 April, the Minister might use the opportunity in the coming months to embark on that dialogue with people who have been lobbying him on this issue, so that we can have a more meaningful debate, a more meaningful consideration and a proper review of the personal expense allowance.
It is not only me and Age Concern who are concerned. In a report published on 4 March, the Joseph Rowntree Foundation identified the doubling of the personal expenses allowance as a way of giving more dignity to people in care homes supported by local authorities. That is right—it is a small price to pay for dignity. This is an important thing that we should be doing, and it is a great shame that the Minister has not done it. I hope that he will respond positively to that point and the others raised in this debate.
I congratulate my hon. Friend the Member for Teignbridge (Richard Younger-Ross) on securing this important and timely debate. How often have we said how important and timely this subject is? It is not only an enormously important subject for hon. Members, but an important and emotive subject for families throughout the country. More than 400,000 people are living in care homes in the United Kingdom. As all hon. Members know, and as has already been mentioned, with almost a quarter of the population estimated to reach pensionable age by 2032, we have to address this matter now.
I shall start by echoing some of the comments made by other hon. Members about the wonderful work that goes on. It is always important to say that. I echo comments made by the hon. Member for Stroud (Mr. Drew) about care homes in his constituency, and comments made by other hon. Members who have made it clear that there are wonderful examples of care homes in the public, private and voluntary sectors that are delivering excellent care. It is always important to say that and use those as real examples. Unfortunately, I am sure that I am not the only hon. Member who is sick of having to highlight the fact that too many care homes—perhaps a hard core of care homes—repeatedly fail to meet the basic standards of hygiene and infection control.
Only last week, a freedom of information request to the Commission for Social Care Inspection revealed that 169 homes in England had recorded major failures in unannounced inspections—28 of them on more than one occasion. Inspectors in those cases had found residents forced to wear coats because the homes were so cold and found homes that smelled of faeces and urine. One home had such appalling standards that inspectors issued a notice under the Police and Criminal Evidence Act 1984 to take photographic evidence of, for example, bags of used incontinence pads left outside attracting vermin, dining rooms with food stuck to chairs and walls, commode bowls and urine bottles left to soak in a bath and dirty razors that may have been shared by residents left in bathrooms. The research also uncovered one case where major failings had been noted, but CSCI does not appear to have returned to re-inspect the home for over two years. The inspection process has not been working adequately. Perhaps more worryingly, follow-ups are not necessarily happening. The inspections are identifying problems, but action is not being taken in respect of the follow-up.
I am sure that the Minister agrees that we must, regardless of the effect on the profitability of private homes, have basic minimum standards of care for hygiene, nutrition and malnutrition, as my hon. Friend the Member for Sutton and Cheam (Mr. Burstow) has mentioned—I pay tribute to him for his work leading on that issue—and for dignity and respect. It is vital that we have that. If homes cannot meet that standard, their business model is wrong. I have no qualms in saying that the worst homes should be shut down.
From 1 April, we are moving to the Care Quality Commission, which is currently consulting on standards and, specifically, on how it will enforce them. I am sure that all hon. Members agree that it is vital that the CQC uses the new powers to ensure that those key principles—those minimum standards—are adhered to. I ask the Minister to outline progress on that and what we can expect from 1 April.
My hon. Friend the Member for Teignbridge has already mentioned staff training. I am sure that we all agree that there are concerns that the stipulations on care staff are not adequate. The story today, in terms of the lack of specialist instruction with regard to people with dementia, as the findings of the research show, is that the training is “fragmented and ad hoc”. Clearly, under the remit of the national dementia strategy, which we have all welcomed as an important step forward, we need to move away from training being fragmented and ad hoc. Will the Minister give us his thoughts on that? He has made positive comments about the need for specialist dementia training in particular, but generally how will that lead to a much better national framework of training for people?
My hon. Friend the Member for Sutton and Cheam, who has highlighted this issue powerfully, made the point about the use of anti-psychotic drugs, which is a scandal in our care homes. As we thankfully move away from this practice—all hon. Members warmly welcome that direction of travel—we have to face up to the implications of doing so, which mean that there will be a need for better services for people with dementia and therefore for better staff training. That will put the situation in greater focus.
We had much discussion about the human rights loophole, which I am pleased was closed by amendments in the House of Lords that meant that people in private and voluntary care homes providing services to local authorities were covered again by the Human Rights Act 1998. I want to bring to the Minister’s attention self-funders, who are 40 per cent. of people in care homes. Some 115,000 self-funders—27 per cent. of care home residents—are still not covered by the Human Rights Act. The Government have said that that will be dealt with in the equality Bill, but I ask again for reassurance that that is going to happen and for the Minister to say when it will happen.
Funding is important. It is not possible to take this debate forward without a genuine commitment to funding, and we are all on tenterhooks waiting for the Government paper looking at that. I am sure that the Minister accepts the frustration felt by organisations about this having taken so long, because we still do not know what levels of funding we need. The simple reality is that the system is broke and it needs fixing more quickly than is currently suggested by the direction of travel.
The Minister may wish to criticise and make party political points about where money is coming from and realistic levels of funding, but the Liberal Democrats have committed in our manifesto for the next election to £2 billion of investment into the care system to pay for a personal care grant that would give a minimum standard of care—going back to that vital word—for everyone over 65 who is assessed as needing care.
The reality is that, at local authority level, we are seeing the narrowing of criteria and increasing problems with people not getting care that we all agree in principle that they need. I ask the Minister to bear that in mind. We hope that there will be a significant commitment to filling that funding gap.
Immigration is an important issue. One of the problems in care homes is not only recruiting staff, but retaining them. There is an unfortunate issue with the points-based immigration system. I support that system, because it is clearly a sensible way of dealing with immigration and the skill needs of this country, but is there a way to recategorise senior care workers in particular, so that they can work in care homes and plug the gap? That would be a big step forward.
This is an enormously important debate. We agree on an awful lot, and all hon. Members in the Chamber are passionate about people in care homes. I simply ask the Minister to take our points from this debate and to answer our questions. The issue will become even more pressing because of the numbers involved, so will he give as much positive news as possible today, particularly about standards and what will happen on 1 April when the Care Quality Commission comes into being? With only a few weeks to go, it would be great to hear about the positive changes that it will make.
I congratulate the hon. Member for Teignbridge (Richard Younger-Ross) on securing this important and timely debate. It has been important and timely for 11 years, and it will continue to be so, particularly when the Government publish their Green Paper. The hon. Gentleman covered the three main areas of funding, quality and work force, and touched on immigration issues. Given the regularity with which we have debated the matter, I will focus my comments on those issues.
We should not have to discuss the matter again today, because the Government have been promising to sort it out for 11 years. As far back as 1997, Tony Blair promised to end the practice of people selling their homes to fund their long-term care, but he rejected the findings of his own royal commission, and the Government have been accused of ducking the issue ever since by putting it in the “too difficult to deal with” box. The former Minister with responsibility for care services, the hon. Member for Bury, South (Mr. Lewis), had the temerity to suggest on 29 March last year that the Government have recognised that problem “belatedly”.
Instead of planning reform, the Government in their 2005 manifesto gave a commitment to continue to provide health care free in care homes. That is what happens anyway, and we all agree with it, so it was interesting to promise in a manifesto to maintain something that is not an issue. The current Prime Minister failed to address the matter in the Government’s latest spending round in 2007, despite the fact, which I acknowledge, that Health Ministers badgered the Treasury and raised expectations of a new settlement, which were later dashed.
The Liberal Democrats—the party of the hon. Gentleman who secured this debate—have not delivered when they have had the opportunity to do so in government in Scotland. It has been shown that their free personal care model from the last election is not without it is problems and costs. It is not free, because it does not cover hotel costs and so on. The hon. Member for Romsey (Sandra Gidley) used the word “dishonest” in this very Chamber; other hon. Members did not dare to use that word—
No, because the hon. Gentleman knows the point that I am making, and we have discussed it many times. It is vital to put it on the record that the current policy has been dropped, and that the pledge now is for a “care guarantee”, which he suggested would cost £2 billion. [Interruption.]
As has been said, the main point about the care guarantee is that it is important to understand absolutely what might be contained within such a guarantee and how it would interact with a localist agenda. The Minister took a slight intake of breath when that was mentioned. The important question is always where the money will come from, which is why we have these debates. It is a real challenge to find the funding for what we all want to be changed. We must all wrestle with that, and I am glad that the Liberal Democrats have moved from saying that it will come from efficiency savings—
No, I will not give way; I want to make my point. The hon. Member for North Norfolk (Norman Lamb) said last month that funding will come from savings on the identity card scheme, which we would also scrap. It is important to identify clearly and fully where the pots of money will come from to support the guarantee. The hon. Member for Sutton and Cheam (Mr. Burstow) has referred to that, so it is fair to continue to challenge that fundamental area of policy.
We have all hashed out funding models following the Wanless analysis, which is broadly the basis on which most people debate the matter. The debate circles around the partnership model, the limited liability model and the free personal care model from the Wanless report, as well as the national care fund, which the International Longevity Centre has proposed. Work has not been done on what a basic package of care would look like, what it would cost, how it would be flexed and what the overall uptake and cost are likely to be.
I fear that there has been a tactical approach—perhaps even a safety-first approach—by the political think-tanks, and the issues are not even party ones. I hope that the Green Paper will provide the Government with the opportunity to do that work, and I hope that the Minister will take the opportunity to confirm that it is happening.
The paucity of commissioned academic work does not bode well for the Green Paper. I was pleased to discover through parliamentary questions that the Government have
“commissioned two academic studies to inform the green paper process. The purpose of one piece of work, being undertaken by the personal social services research unit, is to make projections of likely future demand for long-term care and associated expenditure under a range of different funding scenarios. The other piece of work, undertaken by Les Mayhew of Cass Business School, concerns the financial products that could potentially support private contributions in a new care and support system.”—[Official Report, 23 February 2009; Vol. 488, c. 253W.]
“Inform” is an important and well-scripted word. I hope that the Minister will confirm that those pieces of work, paid for by taxpayers, will be published as soon as they are completed and that they will certainly be published alongside the Green Paper. I hope that that assurance will be forthcoming.
The Minister is aware that we often talk about the need for consensus, and it is important to consider that whether we are discussing a Turner-like model or whatever. I am well aware from informal discussions with my Liberal Democrat counterpart, the hon. Member for North Norfolk, and the Minister that not only should that consensus consist of a shared analysis, but the Opposition parties should be invited to a round table, because the present fear is the introduction of a policy that will put up dividing lines, which are so beloved of the Prime Minister.
On the impact of funding streams on care homes, we are rightly moving to a system in which funding follows the user in the form of individual budgets, direct payments and so on. Care homes will increasingly lose the security, and local authorities will increasingly lose the bargaining power, that comes from block purchasing. I hope that the Minister will touch on those issues in his response and certainly in the Green Paper. I have received an e-mail from Anne Marie Morris, of whom the hon. Member for Teignbridge is aware. I have only just realised that, because it says that she is from Newton Abbot, which I gather will be the new name of the hon. Gentleman’s constituency. She has written to say that there are big concerns about the change in the funding formula for care homes, which I think we all agree causes grave difficulty for people in care homes, because so often the service user must pick up the bill.
The hon. Gentleman talked about quality, which causes deep concern with the demise of the Commission for Social Care Inspection. One could rehearse the various arguments about what will happen to CSCI, but we all believe that the challenge for the future will be to ensure that the CQC continues to build on the good work of CSCI and does not let social care and social care inspection become a second-order issue within its overall work.
The hon. Gentleman rightly mentioned immigration and training pressures, the high turnover of staff—that was highlighted in the e-mail—and that the quality of the work force is vital. I hope that Dame Denise Platt’s recommendations, not least from her 2007 review of the status of social care, which have yet to be implemented by the Government, will be a deep influence for action by the Minister in the coming months. The litmus test for him will be to give as much of a clue as he can, in addressing the issues raised by the hon. Member for Teignbridge, about what the Green Paper is intended to cover and whether it will include costed options, so that we can at last have a conversation with the British public on this live and crucial issue.
First, I congratulate the hon. Member for Teignbridge (Richard Younger-Ross) on securing the debate. I thank him for raising a very important issue and for putting it on record at the beginning of his speech that external bodies have recognised that the Government are pressing forward with improvements across the board on support and the quality of care. I shall say more about that in a moment. I also thank hon. Members on both sides of the Chamber who have contributed to the debate. Hon. Members come to these debates with a lot of passion, because the subject often affects them, their families and, of course, their constituents. Those experiences inform our desire to do more and go further.
I shall take this opportunity to applaud the great efforts by regulators, such as CSCI, by care home providers, by nursing home providers, by people who provide domiciliary care and by staff, who have done a huge amount to raise standards in social care. I agree that there are still areas that are in need of improvement, but there has been continuous improvement in the quality of care since we introduced new regulatory arrangements in 2002.
By the way, today is world social work day. I mention that in case hon. Members were not aware of it. It is a good opportunity for all of us to recognise the central role that social workers play in supporting individuals, families and communities. They do a very difficult job. The values that underpin the role of social work are central to the values that underpin our society. That applies not least to our desire to pursue personalisation—ensuring that services, whether in a care home, nursing home or out in the community, are tailored to meet the needs of individuals.
This issue applies to adults of working age as well as older people. Sometimes debates about care focus only on older people. We know the pressures in that respect, and the demographics and so on, but I want also to emphasise—this relates particularly to the social care Green Paper—that we need a social care system for the 21st century that meets the care needs of working age adults with learning disabilities, physical disabilities and so on, as well as of older people who have retired.
Those challenges will not arise at some distant point in the future; they are with us now. The ageing population is one of the most profound social changes of our time. It is fantastic that we are all living longer—11 years longer on average than we were many years ago—but that makes demands of and puts pressure on our system, not least in respect of funding and quality of care. Building a consensus about the future of the care and support system presents a significant policy challenge not only for the UK Government but for every nation in the world that is grappling with it.
I agree with the hon. Member for Sutton and Cheam (Mr. Burstow) that an ageing society is not a decaying society. He is right to emphasise the positive aspects of becoming older. The fact that we are living healthier and more active lives, as well as longer lives, should be celebrated. I am talking about older people as active citizens, having more choice and control. However, when care needs arise, care has to be provided in a way that supports people to maintain that independence and to have that choice and control.
Before I talk about the detail, I want to emphasise, in relation to the social care Green Paper, that because of the pressures, the changing expectations and the transformation of social care that is going on today, we need a radical rethink of the care and support system. The Green Paper is the vehicle for that debate, and it will be published soon. That will be an opportunity for us to have these debates in the way in which the hon. Member for Eddisbury (Mr. O’Brien) has requested.
I want to put on record again the deferred payment scheme. People can go to their council and ask that they do not have to sell their home in their lifetime to pay for their residential care. They can defer that payment, if they approach their local authorities. That is an important point that the hon. Gentleman often misses out in his contributions.
Standards have been a key theme throughout the debate. The hon. Member for Leeds, North-West (Greg Mulholland) reminded us of the 169 homes that failed the inspection by CSCI. No one should have to experience what was described in a home. I agree with him about that. I will add, though, that although those 169 homes failing the inspection is unacceptable, it is good that 10,208 other care homes are not providing a service of that kind; they are providing a service that does meet the standard that we would expect.
The performance of care homes measured against all national minimum standards has shown improvements each year since those standards were introduced. In 2007-08, care homes for older people met on average 82 per cent. of the standards, compared with 72 per cent. in 2004-05, which is a big improvement. Care homes for younger adults met on average 85 per cent. of the national minimum standards, compared with 76 per cent. in 2004-05. We all recognise the work of CSCI and providers in bringing about those improvements. I am confident that the new Care Quality Commission, which the hon. Member for Teignbridge mentioned, will continue where CSCI left off.
I understood the point that my hon. Friend the Member for Stroud (Mr. Drew) made about inspection and the inspection process, but it is vital that we continue to drive forward and improve standards in our care system. In 2008, 82 per cent. of homes for older people met or exceeded the national minimum standard for hygiene and infection control, compared with 77 per cent. in 2006 and 66 per cent. in 2004, so work is going on and improvements are being made.
Current regulations require care homes to ensure that staff are adequately trained. Hon. Members have mentioned the key issue of training. The regulations and the registration requirements being prepared now will include similar provisions. The CQC, as a regulator, will have a role in inspecting against those, as well as enforcing compliance.
The hon. Member for Sutton and Cheam has mentioned the nutrition action plan. Nutrition is another element of care quality in homes. I have seen examples of excellent practice on nutrition, such as printing menus with pictures so that people can easily identify the food and then want to eat the food that they can see, but clearly more needs to be done. The nutrition action plan delivery board was launched by my predecessor, my hon. Friend the Member for Bury, South (Mr. Lewis). Its chair is Gordon Lishman. It has been meeting for the past year, and it is due to give me a full report in about a month’s time. I shall examine the report and make decisions on its findings.
Staffing issues have been raised. I appreciate the concerns about immigration, but I do not think that the new points-based system will mean that care home providers cannot recruit enough care workers. Our policy objective is to be more reliant on the domestic labour market.
I do not have time to give way; I apologise to the hon. Gentleman.
It will take time to improve local supply, so we are planning to produce a work force strategy for adult social care this spring. Part of the remit of that strategy will be to set out what the sector needs to do to attract, develop and retain a suitably shaped, skilled and qualified work force to fulfil our policy objectives on delivering personalised care. Much of that will mean recruiting from relatively untapped employment markets across existing communities. Delivery depends on activity at the local employer level, which will take time to work through the sector, but I assure the hon. Gentleman that we are on the case. As he will know, most care homes are private businesses, and they agree their terms and conditions of service with their staff, subject to national employment legislation. Of course, it was the current Government who introduced some of those national minimum standards, including the minimum wage and working time directives.
The hon. Member for Sutton and Cheam raised the question of the personal expenses allowance, which was a difficult decision. The question was where we should put our resources. The estimated cost of raising the allowance to £40 a week is £250 million a year. We chose to put £520 million a year into local authorities over the next three years. If we had reduced that by £250 million, it would have meant less money for local authorities to improve the quality of care in their areas, and they would not have had the resources to undertake the essential transformation of social care. The allowance is increased in line with average earnings, but that issue will form part of the debate on the social care Green Paper, because it is a fundamental part of the system that is in place to provide financial care and support for people in our communities.
The dementia strategy was mentioned. I do not have time to—
St. Helena (Airport)
I am pleased to have secured this debate on St. Helena and its transport links with the rest of the world. I welcome colleagues from different political parties who have come along to show their support for the people of the island.
When I put in for the debate, my intention was to press the Department for International Development to make a decision on building an airport on the island and to go ahead with this vital project. We now know that DFID has once again decided not to make a decision, but to put the issue out for yet more consultation, engage yet more consultants and spin things out until the turn of the year. No doubt the Minister will try to put a positive gloss on that, but, in reality, these events have more to do with trying to avoid a judicial review of the Department’s handling of the scheme.
DFID’s history on this project is shameful. It has used delaying tactics and done anything it can to avoid settling the issue of St. Helena’s transport links with the outside world—links that could mean life or death for any one of the thousands of British citizens on the island. Those people are British citizens because St. Helena is a UK overseas territory. Just because it is situated in the south Atlantic does not make those people less British, although it perhaps makes them more forgettable for DFID.
St. Helena is one of the most isolated places in the world. It is approximately 1,400 miles west of Namibia, 1,800 miles east of Brazil and 700 miles south of Ascension Island. The only way to get there is by ship, with the island being served by RMS St. Helena, the last Royal Mail ship still in service. This purpose-built ship was constructed in 1989 and is obviously towards the end of its operational life, rather than the start.
That raises the question of how to ensure that the islanders have reliable transport links in the future. Replacing the ship with another purpose-built vessel is possible, but expensive. The jetty at St. Helena would also require remedial work, but that, too, would be expensive. In addition, the islanders are concerned about that option because they remember what happened in 1999 when the current ship broke down, leaving them stranded until repairs had been made.
Let us be clear: if the supply ship breaks down, people and supplies, including vital medical drugs and equipment, cannot get to the island. It also means that islanders cannot leave, including those requiring urgent medical attention that is not available on the island. Even as I speak, the ship is on its way to the UK and will not return to the island until 11 April, but the shops have run out of potatoes.
The obvious answer—it has been obvious for a number of years—is to build an airport. Of course, there is the cost. Building an airport anywhere is an expensive undertaking, and building one on an island in the middle of the south Atlantic, with all the problems of supply, would not be cheap. Until recently, however, the Government supported building an airport. The Foreign and Commonwealth Office supported the project, and we can take it that the Ministry of Defence would welcome an additional landing strip for its air bridge to the Falkland Islands. Incidentally, those islands have fewer residents than St. Helena, but they have flourished thanks to British Government support.
No doubt the Minister will say that the recession provides a new context for delaying the airport project. Taken on its own, that argument might appear to have some worth, but this is at least the ninth year that DFID has appeared unwilling to give the project the go-ahead. Although the Government have continued to give British citizens at home commitments about infrastructure projects, this vital project for British citizens abroad is once more being delayed. Given the positive support, or acquiescence, elsewhere in the Government, it is not surprising that minds begin to wonder why DFID is the one Department of State that prefers to park the scheme. It will not say yes, but will not say no either.
The Government have accepted that overseas territories should be self-governing as far as possible, that they can remain UK overseas territory as long as they wish and that Britain will continue to fulfil its responsibilities to each territory, as set out in each constitution. Citizens of the overseas territories have also all been granted British citizenship and the rights that come with it. When DFID was set up, it was also recognised that the overseas territories would have first call on its funds. To my knowledge, no one in the Government has suggested that the relationship between the UK and the overseas territories should change or that the right of such territories to have first call on DFID funds has been rescinded.
St. Helena is an overseas territory and the islanders are British citizens. The island’s economy is weak and deteriorating, and life is becoming increasingly desperate for the population. The infrastructure is poor and not sufficient to realise the island’s potential or to sustain the population without subsidy. In 2007-08, the Government’s bilateral aid to the island was £17.5 million. In addition, the RMS St. Helena requires an annual subsidy of at least £3 million. The average salary is £4,500, with goods and food being more expensive than in the UK because of freight charges. Many people are forced to leave families and work abroad.
I thank my hon. Friend for securing this important debate. A number of the islanders have friends and family in the St. Helena community in this country; indeed, Swindon has the second largest number of people from that community. Would not an airway allow those people to visit their friends and family? At the moment, they are isolated from them.
My hon. Friend is correct. Indeed, one of our Doorkeepers in the House of Commons comes from St. Helena.
Since 2000—this very much illustrates my hon. Friend’s point—the population has fallen from approximately 7,000 to fewer than 4,000. As a result, more than 150 children and young adults are in informal foster care. The population increasingly comprises the elderly and children.
The health department has to select which seriously ill patients qualify for further care and treatment in Cape Town or the UK, and that practice will only increase with an ageing population. Access to medical supplies is poor. Residents rely on supplies delivered by RMS St. Helena. As we saw in 1999, when the ship broke down, the island is vulnerable.
I congratulate my hon. Friend on introducing the debate. Does she share my concern about the fact that the hospital has been unable to use a scanner for a number of months because of the difficulty in getting an engineer from Siemens—the company that provided the scanner—to look at it? That is another example of how the lack of access impacts on every walk of life, whether in health, education or the economy.
I entirely agree with my hon. Friend, who has had the opportunity to visit St. Helena, although many of us have not, because of the time it takes to get there. By contrast, the scanner in the hospital on the Falkland Islands, which I have visited, is state of the art. The hospital can scan patients and send the scans to Brazil for advice on what treatment to use. The fact that the scanner on St. Helena cannot be used is an indictment of the current situation.
Discussions about building an airport first took place in 1947, but the current project goes back nine years to 2000. Over those years, there have been many twists and turns, feasibility studies and consultants’ reports. I will not spend time discussing all that, suffice it to say that it does not reflect well on DFID’s ability to develop and implement projects.
The Government have already earmarked £234 million for the airport and associated infrastructure improvements. DFID has selected an airport contractor via competitive procurement and spent substantial amounts of taxpayers’ money in the process. The contractor—Impregilo—has already invested significantly and has a team on the island ready to start work. Significant inward investment is ready to go as soon as the airport scheme is given the go-ahead.
Shelco—the St. Helena Leisure Company—has been set up specifically to develop the leisure facilities to support the development of St. Helena’s economy. It has substantial investors in place to underwrite between £80 million and £100 million of investment. Shelco has acquired options on an area of St. Helena and the Oberoi group is its hotel partner. They propose creating low-volume, high-value tourism, including a six-star eco hotel. That is the local preference, and it was recommended in a UN report and supported by two DFID-commissioned reports. That would create jobs and future income for the island.
Developing St. Helena and building an airport would be in the UK’s strategic interests in the south Atlantic. It would substantially help the economies of other British overseas territories—the dependencies of Tristan da Cunha, Ascension and the Falkland Islands. Opening the island to low-volume, high-value tourism would create opportunities for new local business ventures.
The infrastructure and economy needed to support the influx of tourists would provide the many islanders working abroad with the opportunity to return to the island, which would help to generate a self-sustaining economy. That would enable the island gradually to reduce its financial dependence on the UK. We understand that the modelling undertaken by DFID economists shows that the airport is the best-value option to achieve the Government’s policy of creating a sustainable economy. I would be grateful if the Minister confirmed that that is the case.
It is not an overstatement to say that DFID’s recent decisions threaten the viability of the airport project. They also threaten the regeneration project put forward by Shelco. Impregilo, the preferred airport contractor, needs certainty. If that does not happen, DFID will lose the company, and the lengthy and expensive airport tendering process will have to start again. It is most unlikely, given its history, that other parties will come forward. The delay will exacerbate the difficulties faced by the islanders, who are already dealing, month by month, with economic decline.
Building an airport is the choice supported by the people of the island. In a 2001 public referendum, 72 per cent. of the islanders voted in favour. Without an airport, there are no positive prospects for St. Helena—nothing except continued, steady economic and social decline. At the same time, the UK taxpayers’ subsidy will be steadily climbing, but the people of St. Helena do not want UK handouts. As British citizens, they deserve—and need—the Government to take them seriously, and to support them in a way that will open up possibilities for developing their economy and securing their future.
The airport option would do that, and do so immediately. The stimulus to the economy once the project started would be substantial. These are dark economic days for most of the world. By keeping the long-standing promise to build an airport, we would stimulate recovery and hope in one of the poorest British areas of the world, and we would do so in a manner that created growth and self-sufficiency. The recession provides an additional reason to get on with the project, not a lame excuse to delay it further. At this late stage, I urge DFID to support St. Helena, agree to the building of the airport and invest in the future of the island.
I speak as chairman of the all-party group on St. Helena. If the Minister is not aware of the fact, I advise him that last week hon. Members and many of the Saints living in the United Kingdom presented a petition to 10 Downing street. We await a response with great interest. What we did not expect was the shameful ministerial statement, made yesterday and published this morning, to which the hon. Member for Sheffield, Heeley (Meg Munn) referred. I congratulate her on her measured speech, but this is not the first time that we have had an Adjournment debate about the island of St. Helena. The sense of betrayal cannot be understood, but if the Minister had been present last week, he would have witnessed it.
I offer the Minister an invitation. No Minister has ever visited the island. Royalty has been there, but no Ministers. If the Minister, or a member of his ministerial team, were to visit St. Helena, things could be seen at first hand. Perhaps the dead hand of the Treasury, rather than DFID, is involved. However, the only future for the island and its residents is the airfield, as was well set out by the hon. Lady. Such a betrayal—after all these years and when the contract was about to be let—is inexcusable.
There are Saints living here, and some keep Ascension Island and the Falklands going. Why are the Falklands and St. Helena treated so differently by Her Majesty’s Government? It is time that the airfield was built. Yesterday’s shameful act must quickly be rescinded. The Government should get on with the contract. The builders are ready to go in. They should be able to get on and do the job now.
My hon. Friend the Member for Sheffield, Heeley (Meg Munn) has instigated a timely debate on the important matter of air access to St. Helena.
I use my remarks today to present a wider perspective on the issues that have been raised and to elaborate a little on the statement that the Government made yesterday on how we wish to proceed. Although I have not had the experience of visiting the island myself, my immersion in the subject over recent months makes me feel almost as if I had been there. Because of the interest shown in the project, and expressed on both sides of the House, I feel rather as Napoleon must have at one time—that there is no getting away from St. Helena.
I want to reassure my hon. Friend that, at root, there is no difference between us on a long-term commitment to St. Helena. However, in facing the challenges before us today, the Government must be responsible and take stock if circumstances change to the extent that they have. That is what we are doing. That is why we announced the consultation exercise yesterday; we want to ensure that all views will have been heard when we come to decide on the way forward. I shall speak on that in more detail in a moment.
Hon. Members will be aware that on 8 December last year we announced that there would be a pause in negotiations over the St. Helena airport contract. We decided that it was necessary in the light of the changed economic climate, which has been changing for the worse for many months but which intensified quite dramatically in the autumn. The Government had a responsibility to take a step back and to review whether it was right to proceed with the project in such circumstances.
I hope that all hon. Members will agree that present circumstances present a very different setting from those of 2007, when the project was tendered for, and even more different from when the initial announcement was made in 2005. We have a responsibility to be absolutely sure that levels of expenditure that the project could incur remain appropriate. I met the Governor of St. Helena on his recent visit to the United Kingdom to explain how matters stand and to hear his views. I have also met Impregilo, the bidding company, to explain our position. I am, of course, aware of its decision to maintain the validity of its bid until the end of April. It is for the company to judge its response in the light of yesterday’s announcement, which presents a longer timeline before a final decision is made.
As my right hon. Friend the Secretary of State said recently, the present economic conditions are unlike any that we have seen for generations. The medium and long-term consequences are uncertain at present. However, those conditions significantly affect the Government’s ability to achieve all their international development objectives. Therefore, the reality is that we must revisit the choices before us, although we recognise the special place that our overseas territories have in our aid programme.
At this point, I should correct my hon. Friend—the overseas territories do not have first call on DFID’s funds per se, but first call for reasonable development needs. It must be seen in that wider context. Inevitably, part of the consideration is what is reasonable in the present circumstances. Other overseas territories are also experiencing difficulties in the current climate, and we must recognise those new pressures too when coming to a decision.
The impact of the crisis is being felt in the developing world already. Aid and private finance flows are already falling, remittances are dropping and demand for trade exports is slowing. It is estimated that by December 2010 about 90 million more people will be living on less than $1.25 a day, because of the financial crisis. Progress towards delivering the millennium development goals will slow significantly, and there is already evidence from Ethiopia, Bangladesh, India and Pakistan suggesting that the poor are taking their children out of school to save money.
Developing countries are being hit, and in different ways. The volume of our aid has been adversely affected by the sharp depreciation of sterling against most other currencies. Our UK aid pound is not going as far as it used to. Export markets are reducing and the level of world trade is falling for the first time in 25 years. Remittances sent by individuals back to developing countries are expected to fall by up to 6 per cent. this year alone. Capital flows to emerging economies are predicted to fall by 80 per cent. in 2009, compared with 2007 levels. The prospects, therefore, for millions of people in developing countries are changing rapidly for the worse.
That was made very clear at the outset, when I explained the position of the overseas territories, of which St. Helena is one.
The changes that I have described are already resulting in new demands on DFID’s budget. Countries need more help to adjust to these impacts, to produce contingency plans and to ramp up social protection systems. In Ethiopia, DFID has given £15 million for social protection to help to sustain the livelihoods of 7 million people.
I entirely understand the Minister’s concern about people in the developing world, with which I am sure that not one hon. Member here disagrees. However, the point that I and other hon. Members are making is that the cost of maintaining the current situation will be greater than that of building an airport. Our aim is to save money and to ensure that it is available for development elsewhere, not to pay more.
My hon. Friend makes a valid point about the potential for the airport to deliver the self-sufficiency outlined in the 2005 Atkins report. In the current climate, pausing and reviewing the situation makes good fiscal management. We are not turning our back on the people of St. Helena.
The future is very uncertain. We know neither the length and depth of the recession, nor its impact on developing countries, so it is incredibly important that DFID remains flexible and resilient, and able to move resources around and to adapt to shocks. It is also important to appreciate that the projected cost of the airport is of a level that makes it a significant factor in the consideration of our priorities.
Will the consultation bear in mind that the huge figure quoted in headlines would not be paid up front, but could be tranched over a number of years? It is important that the consultation considers that and other economic factors. For example, it will cost £10 million to fit RMS St. Helena with two new engines. Furthermore, it would be helpful if the Minister could indicate when we can expect a response from the consultation.
My hon. Friend makes a valid point, and I would hope that those listening will take on board his comments about what factors should be considered in the consultation. I shall come shortly to the time scale that we envisage, when I talk about the consultation in a little more detail.
I cannot go into detail about the tender estimates—it would be wrong to do so—but Members need to appreciate that we are contemplating a figure well above the one reported in the media recently of £100 million. Since we began, in 2005, the estimated cost of the project has grown more than threefold, which makes it a more finely balanced choice—even more so in the current conditions.
Absolutely. A feasibility study was carried out in 2005, and the maintenance of RMS St. Helena formed part of those considerations. I hope that that is borne out in the responses to the consultation exercise.
The consultation was announced yesterday. We will publish a consultation document by early next month, and much of the detail in which I imagine Members are interested will be set out there—I cannot go into the details too fully today. It will provide more information about the factors that we have to consider in reaching a decision, in particular the impact that the present economic difficulties have on the Department’s resources, and including the special position of the overseas territories. We are likely to indicate some options on access where views are particularly sought, including an airport and one or more ship options. We will also make it clear that it will be open to respondents to submit views on any relevant aspect of the access issue. It will be open to any interested party to respond, and we will ensure that a visit to the island is part of the exercise, which we will run in line with the Government’s code of conduct for holding public consultations.
People will ask, “What will this tell us that we do not already know?” I cannot prejudge the outcome of the consultation or what it might produce. However, we want to ensure that, before taking the final decision on the project, we are satisfied that we have all the information and views relevant to our decision, and that everyone with an interest in the matter is also satisfied that they have been able to put their perspective to us.
We have had consultations before. What is new about this consultation? Does the Minister not accept that the failure to provide an airfield means that the island’s economy will continue to decline, whereas an airfield would enable the island to be economically viable?
The economic conditions have changed. The whole world is grappling with that at the moment. It is only prudent to reflect on that change before coming to a final decision on the St. Helena airport contract.
In conclusion, I recognise that those who have followed the fortunes of this project will be frustrated with the current situation, but these are exceptional times. The challenges we face are also exceptional, and no one is immune from them. Although St. Helena is remote, its people are well aware of the gravity of the challenges being experienced by the UK and all other Governments around the world. I hope that there is a strong participation in the consultation. It is important to hear a representative view from the island and, of course, from islanders elsewhere, especially those living in the UK.
Car Park Charging (Richmond Park)
I look forward to giving my speech under your august chairmanship, Mr. O’Hara, and I would like to thank the Minister in advance for the time that she will take to respond to the concerns that I raise on behalf of my constituents.
Let me run through the background to today’s debate. Currently, there is no charge for parking a car in Richmond park. The park is next door to my constituency and used by thousands of my constituents, and by probably hundreds of thousands of Londoners and others who live outside London. For my local residents—and for me, as somebody who lives locally—it is a fantastic community facility enjoyed by many thousands of people. Many people live in Putney and Roehampton because of their proximity to wonderful parks such as Richmond park and also to Wimbledon common. When the Royal Parks Agency launched its consultation, which includes the proposals to introduce car park charging in Richmond park, many of my constituents contacted me because they were concerned about how such proposals would affect their ability to continue enjoying the park.
Let me now outline what is in the consultation document and what is being consulted on at the moment. The proposals include a car park charge of £1 an hour up to a maximum of £3 for a stay of three hours or more, and a six-hour limit on cars staying in the park or in a car park. I tabled some parliamentary questions to find out how much revenue such proposals would raise—in other words, how much people would have to fork out over the year. It was difficult to get any concrete answers from the Minister. I will table more parliamentary questions to try to get a better idea of how much the proposals might cost local residents who use the park most. I estimate that the figure could be about £500,000 of car park charging revenue.
Let us look at the basic charge referred to in the consultation document—£2 for a two-hour stay. If somebody walked their dog in the park every other day, they would have to pay a cost of £400 annually for using the park. For many of my constituents, that is unaffordable.
Aside from the fact that one of the Royal Parks Agency’s objectives is to increase income—it said that it achieved that last year—the reason why such a proposal has been made is to encourage people to get out of their cars. Everybody supports such an aim. In fact, many of my constituents cycle to the park. None the less, we have to ask ourselves whether transport options and alternatives are available for local people.
My hon. Friend started off by saying that not only the residents of Richmond and of my constituency have made representations on the matter, and her point about access to the park is extremely important. There is a perception that the ability to enjoy the park of people from a slightly wider area will be stifled while local people, who may be walking from a much closer area, will not be affected. The park is an amenity for people from a much wider area than the immediate locality.
My hon. Friend makes an excellent point. There are issues for people who live locally. One of the knock-on effects about which my constituents in Roehampton are concerned is that many people will try to avoid the charges by parking outside the park.
We are concerned that places such as Putney and Roehampton do not have the transport alternatives for people to get to the park, so they have to get in their car. I am delighted that the Royal Parks Agency has agreed to two pedestrian entrances from Roehampton. One will be from the Alton estate, which will be a fantastic facility for local people and everyone is pleased about it. However, it is not there yet, so people from Roehampton have to get in their cars or find a bus, although there is not much bus access from Roehampton to the park.
The second gate will be the Chohole gate. Again, people are delighted that that will be there, but it is not there yet. We may have to wait yet another one, two or even three years before those gates are in place. Therefore, at the moment, people find it hard to walk to the park from my local area.
The other key point is that public transport and bus alternatives to get to the park from places such as Putney and Roehampton are not good. Moreover, there are no buses in the park. If someone wanted to get from the perimeter of the park—say from Roehampton gate—to the heart of the park, which has a lot of facilities, they would have a good 15 to 20-minute walk. There is no bus that feeds people from Roehampton gate into the centre of the park.
I recognise that the consultation document has some exemptions, including the one for blue badge holders, but many people are elderly, less mobile and less able to use public transport, even if it is there. They need their car to get around and may not be eligible for a blue badge. I am sure that we all have constituents who write to us for a blue badge but do not get it. I am concerned about the impact of car park charges on those people. Even if we get good public transport, which we do not yet have, such people will still find it hard to use it.
Let me ask the Minister about the impact assessment that was pulled together to go alongside the consultation document. I then want to come on to the broader impact on my constituents if this proposal goes through. I cannot understand why some of the figures in the impact assessment are there. For example, the impact assessment has a one-off transition cost of £2.9 million, which it says will include investing in car parks, including pay and display machines and signage, yet the average annual cost is zero.
The impact assessment says:
“We estimate no net average annual cost and that the scheme would be self-financing.”
That has to be wrong. In fact, when I had an earlier meeting with the Royal Parks Agency, which I was pleased to get, it said that it probably was not correct. If it is correct, it is the ultimate double whammy. The taxpayer has to pay for a scheme to improve the car parks, which most people think is a good thing, but that scheme will do nothing other than pay for a load of parking wardens to patrol and enforce parking charges that people are not interested in or able to pay. That would seem to be the ultimate self-defeating approach.
Will the Minister take a clear look at the impact assessment and check whether the annual costs and benefits are correct? At the moment, the scheme has an average annual benefit of zero, which surely cannot be right.
Before my hon. Friend leaves the consultation, I wonder whether she is concerned about its legality. The consultation is potentially open to judicial review. I raise that because there was a proposal to put parking charges on a road across Wimbledon common. There was an absolute onus—as it was cited in a legal precedent, which I have failed to bring with me today—on the people undertaking the consultation to ensure that the consultation was not just of local people, but of a representative sample of wider users. The whole point about the loci of consultation is extremely important. If this consultation has gone only to local residents in my hon. Friend’s constituency and in Richmond, it will certainly be open to contest. I hope the Minister will address that issue.
My hon. Friend raises another excellent point. In fact, the consultation document has not been distributed at all to residents of my constituency. Information has been communicated through the Royal Parks Agency website and by contacting local Members of Parliament such as me, although my hon. Friend was not on the contact list, and other stakeholders.
It has been left to me, for example, to leaflet my local area to let residents know what is happening. When I was out leafleting in Roehampton a couple of weekends ago, I bumped into a local resident and explained what we were doing. She was unaware of the proposals under consultation. Is it right to do a consultation when the people who will be most affected by the car parking charges have not been contacted personally by the Royal Parks Agency? The communication process has been left to other people and local authorities. That does not seem to be a good way to ensure a broad-based response to a consultation.
I am concerned about two impacts. First, people will be affected—in particular, a lot of my constituents—because there is no good public transport to the park from Roehampton and Putney and because we do not have as many pedestrian entrances as other sides of the park. The plans will be unaffordable for frequent users. Ironically, the people who care most about the park will be the ones who have to pay the most for it. Dog walkers will be particularly hard hit, as will low-income families. At a time when families might be looking for free and affordable leisure options, they will find that the one option right on their doorstep, which we should be reaching out to encourage them to use, has suddenly become unaffordable.
The proposals will discourage families from using the park. Many families, especially young families, simply cannot all get on bikes and cycle there. I am sure that the Minister understands that travelling by car is often something that people do not want to do but must do to enjoy a family outing together. As I have said, the proposals will also hit the elderly and less mobile, many of whom do not qualify for a blue badge, but are not as fully mobile as the rest of us, who can simply get on a bike and cycle there.
My concern is that if we are not careful, Richmond park, the wonderful park on our doorstep, will end up being the preserve of the rich and the middle classes, and lower-income families and the elderly will simply be priced out. That is surely wrong. Surely, for the next generation, we must reduce the barriers to using fantastic parks such as Richmond park. Many of my constituents in Roehampton, including children, live in flats. They do not have gardens. The park is their outside space. There is a danger that if we introduce car park charging, they will get the message, “You can look, but you can’t touch. You can’t experience the park.”
One reason why I was so pleased to secure agreement to a pedestrian gate into the park from the Alton estate is that we should be doing everything we can for such communities to remove barriers to using the park. The more we can reach out to encourage all parts of our community to use the park, the better. Car park charging in Richmond park can go only in the reverse direction. I cannot see how that stacks up with the Government’s approach to museums, for example. They have been proactive in saying that we should remove charges that might prevent people from using museums because they cannot afford to do so.
Surely, in these days of caring about the environment, wanting people to understand how to care for it and trying to drive up recycling rates, ensuring that people can use the environment right there on their doorstep and encouraging them to do so has never been more important. I wait with interest to hear the Minister’s response. I know that I am not the only Member concerned about the issue. We all appreciate taking care of the parks environment, but clearly we need to find a balance, and I am concerned that that balance is not being struck.
I am grateful to the Minister for confirming that she is happy to meet me after the consultation and before she takes any final decision. That is much appreciated. I will certainly take her up on that offer.
I congratulate the hon. Member for Putney (Justine Greening) on securing this debate, and I am grateful to the hon. Member for Wimbledon (Stephen Hammond) for his contributions. I understand the concern felt by the hon. Members and their constituents about the issue.
London’s eight royal parks are among the city’s most beautiful and most used assets, enjoyed by more than 37 million people a year. They are places of relaxation, recreation and retreat as well as important conservation areas and habitats for wildlife. Richmond park, which attracts more than 2.3 million visitors a year, is particularly unusual and valuable in being designated a site of special scientific interest, a national nature reserve, a special area of conservation and a grade I listed landscape.
I am not, but I am sure there are some. If the hon. Lady wants me to, I will write to her about it.
Given all those attributes, it is understandable that managing the royal parks involves a careful balance between ecological and environmental responsibilities and the needs of different visitors: pedestrians, cyclists, dog walkers such as myself, horse riders such as my grandchildren, who ride in Richmond park, joggers and car drivers. Changes in how the royal parks are managed always elicit huge interest and comment. That is certainly the case in this instance. The Royal Parks Agency has received more than 800 responses to its consultation, and there are still six weeks to go.
I understand why the proposals have produced such a strong response. For the sake of clarity, it might be helpful if I set out exactly what is being proposed and why. I would like to make it clear that the parks themselves will still be free. To use the museum analogy, we keep museums and galleries free, but we cannot help people park in central London, as the cost would be prohibitive. However, we do provide many people with concessionary fares.
The consultation document, which was published on 30 January, seeks views on a range of changes to the regulations for royal parks, including the introduction of parking charges in Bushy and Richmond parks. The charges would be broadly similar to those levied in other parking areas in the locality and, most importantly, in three other royal parks: Greenwich park, Hyde park and Regent’s park. Parking charges were introduced in Greenwich and Hyde parks in 1994, and in Regent’s park in 2001. Broadly speaking, they are £2 a day during the week and £1.20 at the weekend, although Greenwich is cheaper.
The consultation is legal, because it has been widely advertised. There are signs in the park and advertisements in the local newspapers and in libraries, and it is on the website. We have contacted councillors, MPs and everyone we could think of.
I am listening to the Minister’s assurances about how wide the consultation has been. I accept, potentially, the difference between the laws relating to commons and to royal parks, but I would be grateful if she could explain, possibly in a letter, exactly who received the consultation document. As my hon. Friend the Member for Putney pointed out, I am a relatively close local stakeholder as a Member of Parliament, yet I received no document.
My apologies. I will explain it in a letter to both hon. Members. The Royal Parks Agency has made huge efforts. I have seen the list, although I do not have it here with me. As there is still some time to run before 1 May, I hope that hon. Members will do all that they can to encourage our constituents to respond.
I emphasise that those responses are important. I know that people sometimes wonder whether consultations are real—even I have felt like that at times—but I assure hon. Members that this consultation is real. When we have the responses, the Royal Parks Agency will carefully analyse them all before making recommendations to me. No decisions have been taken, nor will they be until officials and I have had a chance to consider the responses and weigh up the impact. I shall write to the hon. Lady about her points on the impact assessment, because I do not have a sufficiently detailed response here.
It would help if the Minister outlined the consultation process. Once it is finished and the range of feedback from constituents has gone to the Minister, will I, as a local MP, and other interested Members, have a chance to see that feedback before decisions are taken? One clear message that has come from my constituents is that many think it would be fairer to have a voluntary charge, and I think that the consultation will throw up a number of alternative proposals from residents on how to get a better balance. Will we have a chance to see the output of the consultation before the Minister takes her decision?
The Minister is being extraordinarily generous in giving way, and I am grateful for that. May I impress on her the importance of considering the geographical nature of responses, and seek her reassurance that she will do so? There is a need to assess what people from different areas are saying, and to balance that in the decision-making process.
That is a very fair point, and I thank the hon. Gentleman for making it.
It is always difficult to ask people to pay for something that has previously been free, and we do not want to put up barriers to people visiting Richmond and Bushy parks. However, we do, as the hon. Lady has said, want to start encouraging people to travel to and from the parks on foot, by bicycle or by bus rather than by car. At present, more than 90 per cent. of Richmond park’s visitors come by car, which leads to several million vehicle movements a year in the park.
Surely, the first response to that issue is to consider why that is the case. If the Minister did that, she would see that it is because transport links to the park are inadequate for local people to get there other than by car. It is a huge park, so anyone who wants to go to the centre would have to take a car.
The hon. Lady is partly right, but I am sure that, in looking into bus provision in other parts of her constituency, she will have run across the same problem that I have—sadly, the way in which buses are organised nowadays is to respond to demand rather than to anticipate demand. One way of ensuring that there is more demand is probably to put in parking charges. We are also looking into having a bus service go through the park, because, as she rightly says, only going to the park’s perimeters makes things difficult for some people. As a mother of five, I completely understand that it is convenient to travel by car. Obviously, people who are disabled or are blue badge holders will get their parking free, as usual.
Those millions of car movements are affecting the atmosphere and ambience of the park and causing congestion. They are also leading to a degradation of road surfaces and costly repairs. Car parking charges in parks are not exceptional. Indeed, Richmond and Bushy parks are the exception and not the rule. Out of the eight royal parks, five have parking, three of which have been charging for parking for several years. Many local authorities, public bodies and private facilities in the area also charge for parking.
I understand the concern about the effect that charges could have on the surrounding area and on parking in residential streets around the park, but we have to encourage public transport provision and ensure that we get public transport through the park. I am very happy to help the hon. Lady and other hon. Members with that. Several buses stop within walking distance of the park, but, having looked at the map, I agree with the hon. Lady that they tend to be clustered down in one area, so they are not practical or convenient for everyone. I understand that a number of respondents have raised transport as an issue, and we will take that into our considerations on whether to impose a charging regime.
We need to work with local authorities to improve bus services and to get them running through the park. The hon. Lady is probably aware that the Royal Parks Agency, working with partner organisations, has invested in cycle infrastructure in Richmond park, including by improving the Tamsin trail, introducing new paths and providing more bike racks—a sometimes overlooked necessity. Those changes have proved highly popular, and I am very glad about that because of how they relate to other agendas. People like me, who are definitely carrying rather too much weight, should be encouraged to cycle in parks such as Richmond.
On congestion in the surrounding streets, if we were to bring in a charging regime, I would expect the agency to work with local boroughs to help to mitigate that impact, including by allowing sufficient time to introduce any relevant measures locally.
On that point, is the Minister aware that one of the worst-affected areas in my constituency would be Roehampton, where the Alton estate is located? People on that estate would find it very difficult to pay for controlled parking in any form because of their income levels. I make the point again that, if charges are introduced, the policy can be successful only if it prices people out of the park, because we do not have good transport infrastructure. Surely it would be better to spend time working on improving transport infrastructure and routes to the park before charging people for behaviour that, in many cases, they will probably not be able to change.
I hope that they will be able to change some of it, but no decision has been taken yet, and that is the main issue that we will consider. We want to ensure that access to the park is not compromised and that people on low incomes continue to use it and to get its benefits, as they do in Greenwich, where there are parking charges, but where there has not been a drop in the park’s usage. If charges are introduced, we will be able to put in new, green parking surfaces with petrol interceptor drainage. That will help, because, currently, pollutants from cars are entering the soil.
Some people have suggested that this measure is being forced on the Royal Parks Agency by cuts in grants and aid, and demands that it raises more of its own revenue. It is true that it has been very successful in raising its income from about £3 million in 1997-98 to nearly £11 million some 10 years later. That has reduced its dependency on the public purse, which is a good thing, and has allowed it to invest in some of the wonderful aspects of the parks. I thank the hon. Lady for raising this issue and assure her that officials and I will take into account all the points that she has raised today.
On 2 April, leaders of Governments from around the world will gather in London. Between them, those leaders represent 85 per cent. of the world’s economic output, and they have rightly given themselves a bold agenda for the meeting. They have set themselves the tasks of stabilising financial markets, agreeing on how to support citizens through the recession, reforming and strengthening the global financial and economic system, putting the world economy back on track to growth, and addressing the needs of the world’s poorest countries. That is more than a day’s work, but, of course, work behind the summit has been going on for some time and will continue beyond it.
I suspect that the 2 April summit will be something of an audit on progress to date and will include a further push to deliver across a broad range of important priorities. The test of 2 April is not whether the fine detail will be signed up to in each of the five objectives that I have mentioned; it is whether there is agreement on, first, what needs to change; secondly, on the broad principles for how that change is to be met; and, finally, on the delivery mechanisms for ensuring that that change happens. Of course, a consensus across all of those points needs to be secured.
Out of the broad agenda that has been set for 2 April, I shall concentrate on international regulation. I welcome what the Chancellor said to the House yesterday in his statement on the Finance Ministers’ meeting, which will be held ahead of the 2 April meeting. He said that “there is significant consensus” that financial supervisory and regulatory regimes need to be strengthened both nationally and internationally. He went on to give some insight into the detailed areas beneath that. For example, he mentioned the need to address the issue of capital and liquidity rules and to devise countercyclical devices. He also mentioned the need to address the issue of capital adequacy. In fact, the list of the work that needs to be addressed under that broad heading is much longer. I rehearsed the full list in a previous Westminster Hall debate, and I do not intend to repeat it again today.
I make no apology for returning to my criticism of the Basel accords, which currently cover international banking regulation, and the philosophy that underpins them. I do not think that that philosophy has yet been abandoned, but it is now highly questionable. As the Minister knows, the Basel accords took years to write, but it has taken only a few months to demonstrate their woeful inadequacy. There are two main problems with them. First, they are reliant on internal risk basing, which means that the banks effectively define and measure their own exposure to risk. The banks also decide the extent to which the risk that they themselves have defined needs to be covered. That is first problem with the Basel accords, and it has been exposed by what has happened in the past six months or so.
The second problem is that the system applies to banks that are huge global institutions. It is worth pointing out that the capitalisation of some of the world’s largest banks will exceed the size of some of the countries represented around the G20 table. The system applies to global banks that are subject only to various national regulatory regimes. That is a serious imbalance, and it means that those individual national regimes cannot move far away from each other for fear of creating capital flight, whereby banks move to a more relaxed regulatory regime. The minimum guidelines necessary are therefore set to ensure that capital flight does not take place and yet the measures and definitions of risk that are used are in fact written by the banks themselves.
Although many years of labour were spent in trying to bring about the Basel agreement, it was dead on arrival. The agreement has now been overtaken by events, and it proved irrelevant due to the search for yield on the part of the banks. That led to the innovation that we have seen and the emergence of extremely complex forms of securitisation. The search for yield decreased the degree of transparency across the banking system and increased the amount of off-balance sheet activity. Ultimately, it led to a loss of control on the part of the boards, because, frankly, they did not understand what the people running the banks were doing with those fancy instruments. There has also been a loss of control on the part of the regulators, because they could not keep up with the degree and complexity of change that was taking place.
I am sure that the Minister is aware of the extent of the problem and I hope that he will agree that confidence in the Basel approach has, in fact, collapsed and that there is evidence that many individual country regulators are already abandoning the Basel guidelines and substituting rules of their own. That leaves a supervisory vacuum that must be filled by internationally agreed core standards for banking regulation. As I have said, I think that the Chancellor hinted strongly at that in his statement to the House yesterday, and I would welcome the Minister adding more insight into the Chancellor’s thinking.
It seems that there is a consensus that something needs to be done, but, ahead of 2 April, an argument is emerging about how it is to be done. I would be interested to know where the Government stand on that argument, which I shall now outline. Some people are now saying that Glass-Steagall legislation needs to be revived. That legislation was introduced in the United States in 1933 following the Wall street crash and the emergence of the great depression. It was introduced by the Roosevelt Administration to impose a separation between retail and investment banking, and it was designed to break up the extraordinary power of J. P. Morgan and to restore the power of federal government in terms of setting economic policy. However, the crucial technical change that the legislation made was to impose a clean break between retail banking on the one hand and investment banking on the other.
Since the repeal of Glass-Steagall legislation in the 1990s, some people are now saying, “Well, all we need to do is go back to that and that will solve the regulator problem.” I was astonished to read yesterday that Nigel Lawson has joined the camp of those suggesting that we revert to Glass-Steagall. In his article in the Financial Times he said:
“It is folly to allow core banks to be in a position where they can be brought down by exciting but highly risky investment banking activities.”
I find that a bizarre statement from the man who was Chancellor of the Exchequer in 1986. He presided over the big bang in the City of London, which allowed US investment banks effectively to take over the City and pollute the traditional banking structures, which had rested heavily on that previous separation. He is a strange convert to the cause.
As I have said, Glass-Steagall was repealed in the United States in the 1990s, just as we abolished all credit controls in the big bang of the 1980s. Although there are those who call for a full return to the original Glass-Steagall divide, in reality we cannot just turn the clock back. The infrastructure of the global banking system has become far too complex to revert to a divide that was designed in the 1930s. I do not think that such a divide could be designed now.
The question is what should we do. I am aware that Lord Turner has been asked by the Government to look at what can be done here in respect of the Financial Services Authority’s approach to banking regulation. I believe that he will make recommendations this week on an array of issues that are clearly central to this debate. I understand that he will have things to say about bank capital adequacy, the need to evolve countercyclical mechanisms, liquidity risk management, prudential regulation, the rating agencies, the originate-to-distribute model and the use of market-to-market accounting. All those issues should be on the agenda, and I look forward to what Lord Turner has to say when he reports later this week. The problem is that Lord Turner’s report and recommendations will be targeted at just one regulator—ours, the FSA—whereas the Government’s document, “The Road to the London Summit”, states that we need
“greater surveillance of the financial system as a whole. It is essential that the cross-border co-operation between national authorities is enhanced and that the international regulatory architecture is strengthened.”
There is consensus on the aspiration to tackle international regulation, which is, of course, fine, but is consensus on how that is to be achieved emerging? There is probably agreement on what not to do: try to write one supervisory rulebook for all the world’s banks, governed by and applied by a new world bank regulator. I do not think that that is achievable or even desirable, but nor do I think that today’s balkanised system of regulation—hundreds of different regulators trying to deal with a handful of global banks—can be allowed to continue.
The question as we move towards 2 April and the gathering in London—I would welcome the Minister’s comments on this—is how we will try to bring together, from our position in the chair of the conference, a desire to draft tougher banking regulation, which I believe all European Union states agree on, with a reluctance on the part of the United States to go down that route and some hesitation among G20 members with emerging banking and financial sectors that have an interest in offering bargain-basement regulation to banks that they suspect may be looking to move away from the tougher regimes that might emerge in Europe and possibly North America. I hope that 2 April will be able to resolve those basic points.
I am seeking from the Minister some insight into the Government’s thinking on those questions, but I always try not to pose questions without hinting at some possible answers, so I shall conclude with three ingredients that I think are necessary to ensure the kind of progress on 2 April that I would like to see.
First, we need agreement that the Basel system’s philosophy must be abandoned, and that the underlying principles of that approach just will not work in the post-2009 world. Secondly, there must be agreement to reintroduce Glass-Steagall-style regulation, but not Glass-Steagall itself. Glass-Steagall cannot be resurrected, but what could be achieved is agreement on where the worlds of retail and investment banking should stand separately from each other, so that we can limit future taxpayer exposure, remove some of the conflicts of interest and reduce complexity in the banking system. That should offer us an opportunity to create meaningful and effective banking regulation.
The third and final thing that needs to emerge from 2 April is a system for designing appropriate international regulation. As I have said, we cannot possibly imagine that there will be one super-regulator covering all the world’s banks—that is not realistic—but we might try to work towards something that replicates the general agreement on tariffs and trade. Perhaps we should aim for a general agreement on banking regulation which would have the same kind of recognition, authority and stature as the general agreement on tariffs and trade. That would leave it to individual countries to write the fine details of their banking regulatory codes in ways that suit their own markets, but it would also establish a common core set of minimum regulatory standards, which is missing from the context at the moment.
It would be a terrible thing to waste this crisis. I hope that my right hon. Friend the Minister can reassure us that our Government and the other 19 who get together around that table in a couple of weeks’ time understand that, so that when we look back on this crisis in international banking, we will see it as a turning point, not a lost opportunity.
I congratulate my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt) on securing this important and timely debate, and I welcome the opportunity to consider with him and the House the important matters that he raised.
I was at the meeting of G20 Finance Ministers and central bank governors on Saturday. It is certainly the case that discussions with our international counterparts and partners have never been more important or more urgent, but we have made some good progress.
We have seen that the crisis in the financial system has spread into the real economy and that every country is now affected. I visited several G20 countries to prepare for the 2 April summit. Last month, I went to Argentina, where I was told that, for some time, people had expected that they would be decoupled from the crisis. They did not have any sub-prime mortgages and their banks did not have much exposure to US banks. It seemed that the crisis would pass them by, but then, suddenly, their exports fell off a cliff late last year. By the time of my visit, it was clear that Argentina, too, was facing serious problems.
A group of African leaders was in the UK yesterday to meet the Prime Minister ahead of the G20 to underline their deep concern about how poverty in their countries will be impacted by the crisis, and the importance to them of the G20’s response. At the weekend meeting, evidence was provided by the International Monetary Fund that showed continuing uncertainty and weakness in confidence around the world.
At the weekend meeting, I was struck by the high degree of agreement among that disparate group of countries about the concerns that we all face. I believe that consensus is emerging on how we can act together. It is framed by the commitments in last year’s Washington declaration, which have been developed subsequently through intensive joint working by Finance Ministries, regulators and central banks. That now provides the basis for leaders at the summit on 2 April.
As my hon. Friend said, there is a firm, shared commitment to doing whatever is needed to return the world economy to growth. It emerged from the discussion that the highest priority is to stabilise the financial system. There is recognition that sustaining lending is fundamental to economic recovery. That very much highlights the concern that he paid most attention to: G20 Finance Ministers are committed to tackling the problems in the financial system head on, and they agreed at the weekend to a common set of principles for dealing with so-called impaired assets.
We agreed that the resources of the international financial institutions need to be substantially increased to safeguard capital flows to emerging markets and developing economies. Finance Ministers made an important commitment not to repeat the mistakes of the past and turn to protectionism as we act with determination to restore growth across all those areas. Instead, we reaffirmed our commitment to open trade and investment, which are essential if we are to end rather than worsen the global crisis.
My hon. Friend raised particularly important issues about regulation of the banking system. As he would expect, much of the weekend’s discussions focused on the question of financial stability, as we cannot fix the economy until we have fixed the banks. It is essential that, in the future, the boundaries of regulation capture all institutions, markets and instruments that could pose a risk to the economy. Over the weekend, we agreed recommendations on how that could be achieved. For example, the G20 committed that all hedge funds or their managers will need to be registered, and that regulation should guard not just against risks to the health of individual firms, but against threats to the stability of the system as a whole. My hon. Friend acknowledged that my right hon. Friend the Chancellor highlighted that in the House yesterday.
My hon. Friend has focused on questions of banks’ capital adequacy, and I agree that we need fundamental steps to strengthen bank capital adequacy, risk management and supervision. That means strengthening the internationally agreed Basel II regulatory capital framework.
In a number of respects, Basel II marks a significant improvement in prudential regulation of banks compared with what preceded it. In particular, it aims to assess more precisely regulatory capital charges in relation to risks. It has only recently been implemented and I do not think it is right to say that it is the cause of the current crisis; it is not even in place yet in the United States. I do not think that the answer is to abolish it. I accept that it needs to be significantly improved in the light of recent events. In particular, as agreed at the meeting of G20 Finance Ministers at the weekend, we must ensure that regulations dampen rather than amplify economic cycles, including by requiring banks to build buffers of resources during the good times, so that they are prepared for more difficult times.
I hear my right hon. Friend say that the Basel system should be improved, but, as I said, my main concern is that, between Basel I and Basel II, although the second was an improvement on the first, there was no departure from the underlying principle common to both—the internal risk-basing approach. That means, as far as I can find out, that there is no independent, objective body assessing the riskiness of any instruments in the banks, and no one independently assessing the degree to which that risk is covered off.
The banks, even with Basel II, are still making their own definition of risk and writing their own risk profiles. They are still measuring risk on their own. That is what got banks into a serious mess and there is nothing in Basel II that will help to overcome it. Unless that principle is departed from, the Basel system will not deliver the kind of regulatory supervision that is essential.
Let me say something about how this is working in practice. Basel II, and therefore internal models for credit risk capital, has been available only since the beginning of 2007, although market risk models were recognised before that for regulatory capital. It is certainly true that in many cases banks misjudged the risks, and there are significant questions about the degree of reliance that it is appropriate for regulators to place on internal models, as my hon. Friend said. Regulators and Finance Ministers are now considering questions such as the need to supplement Basel II domestically and internationally, for that reason. However, in the UK, internal risk models for UK banks are required to be approved for use by the Financial Services Authority. That external check is provided and required.
Internal risk rating is complemented in the Basel II framework, and indeed in EU law via the capital requirements directive, by a requirement for supervisors to undertake supervisory review of the bank’s risks and make appropriate adjustments as required. The framework also incorporates the third pillar, around disclosure of key supervisory requirements on a bank, to ensure market discipline. Thus, it is not entirely the case that the banks are left to get on with things.
I am not absolutely convinced about that. My right hon. Friend is entirely right to say that the FSA must look at and, in a sense, sign off the risk assessments that are produced by the banks and handed to it, but is that an equal contest? I do not see that there are the resources in the FSA to do the detailed analysis of the risk measurement that the banks have used to present their thesis. I sense that the FSA takes on trust a lot of what comes from the banks, with respect to their assessment of their own risk. That diminishes the degree to which this is an objective and independent control on the system. It still relies on information that has come from an internal risk-basing approach.
My hon. Friend was right to make the point earlier that Lord Turner will be reporting—I think that will happen tomorrow, and it will be interesting to hear what he has to say—but as he also said, rightly, the matter also needs to be considered at international level.
Among the topics that we talked about on Saturday, on which we were supported, was the development of supervisory colleges, bringing together regulators in a number of countries dealing with major international banks. The development of that system has much to offer us. Another important step that was taken just before the weekend was the expansion of the Financial Stability Forum to include all the members of the G20. I hope that, internationally, we shall have much better mechanisms for handling the relevant issues than we had in the past. I hope, too, that that will mean that we are in a stronger position. That is certainly the intention of everyone who was present on Saturday.
It is also important that we ensure that regulatory regimes do not act procyclically—a big concern in relation to Basel II—to exacerbate the current downturn, and that they manage the transition to a strengthened regulatory regime accordingly. Capital requirements should remain unchanged until recovery is assured. Finance Ministers agreed to set out proposals to strengthen international co-operation, with supervisory colleges and an early warning system comprising the IMF and the Financial Stability Forum.
I have mentioned the expansion of the forum, and many countries—Brazil, Korea and South Africa—had been calling for that for some time. It means that a critical international institution now encompasses a much wider range of interests and provides a better basis for crucial decisions on financial stability.
I hope my hon. Friend will feel that, at least institutionally, we are moving in the right direction and making sure that we have the institutional arrangements we need. It is essential, as we reform our regulatory arrangements, that we do not leave loopholes—several loopholes were exposed by what has happened in the past couple of years—and that our work to provide effective regulation, combat money laundering and prevent tax evasion should not be circumvented.
Finance Ministers agreed that the relevant international institutions should identify which jurisdictions are not complying with international standards on those matters and provide toolboxes of actions that can be taken in response. As I know my hon. Friend is aware, we have been building up pressure on that over recent weeks. The UK, alongside the US, France and Germany, has been very clear that we will not tolerate tax evasion and that we want to seize the London summit as an opportunity to enhance global co-operation on that.
There was, in the days leading up to Saturday’s meeting, a series of major announcements from countries that have not in the past been willing to comply with international standards on tax information exchange—Hong Kong, Singapore and Liechtenstein—culminating in the dramatic announcement by Switzerland last Friday. At the end of Saturday’s meeting at Horsham, the President of Switzerland confirmed in person to my right hon. Friend the Chancellor and to me that his Government had indeed taken that historic decision. I think we can be confident that that will lead to the provision of tax information that has not been available in the past.
Finally, I want to make the point that international financial institutions, which are vital to ensuring that the global economy works well, need to be reformed too, to bring them into line with a changing world. The G20 agreed that emerging and developing economies should have a greater voice. The reform of IMF quotas needs to be concluded by 2011, the heads of the international financial institutions should be appointed on an open, meritocratic basis, and there needs to be reform of the instruments through which the IMF can lend. In those ways, we want to overcome the problem of stigma that has been attached to IMF programmes in the past, to the extent that some countries feel it is politically impossible to contemplate approaching the fund.
I think that the conclusions I have outlined provide a comprehensive framework for getting the global economy back on track, including addressing the issues that my hon. Friend rightly raised.
Sitting adjourned without Question put (Standing Order No. 10(11)).