Tuesday 28 April 2009
[Mrs. Joan Humble in the Chair]
Motion made, and Question proposed, That the sitting be now adjourned.—(Mark Tami.)
It is a great pleasure to debate this important issue under your guidance, Mrs. Humble.
Scotland has a proud history of energy production and of extracting the raw materials to make that production possible. Today, however—I say this from, dare I say it, a traditional viewpoint—the deep mines are all closed and we are left with open-cast and North sea oil. However, the challenges that we face have not diminished; indeed, they have grown.
Over recent years, we have all become attuned to the need for clean renewable energy, but I am very concerned that the major political parties have embraced that need too late. For too long, clean renewable energy was on the periphery of the UK’s objectives and, sadly, on the periphery of mainstream politics. As we all know, things are very different today, but we are still running to catch up and to get where we might have been if the concept had been incorporated into mainstream politics 10 or 20 years earlier.
I want to spend a few minutes on each of our generating opportunities, before talking a little about consumption. Scotland must have a diverse energy mix, because that will deliver jobs, investment and energy security, as well as tackling climate change. Never in living memory have jobs and investment been more important, and to deliver on them successfully, we must have diversity.
The current recession has shown us the dangers of a lack of diversity, and that applies not only to the financial sector. Our dependency on oil and gas had a major effect on energy price rises last year and could cause similar problems in the future if we fail to get our act together. The diversity that we need will bring about investment over a range of generating options and bring growth in jobs, which one sector alone cannot deliver in the same volume. With gas and even oil coming from potentially increasingly unstable areas, we must have cross-sector investment. With investment and job growth, we will deliver energy security to the UK economy.
Another lesson that we should learn from the recession is that there is, and will be, a range of pressures on UK businesses. We cannot allow rising energy prices to have a detrimental impact on our businesses, when we could take action to avoid such pressures. If pressures are allowed to develop, they will make our businesses uncompetitive and, as sure as night follows day, result in reduced investment and the loss of jobs.
It is also important for the domestic consumer that we can provide options that result in steady and affordable energy prices. We know only too well the impact of last year’s rising electricity and gas prices, which were caused by escalating oil prices on the international markets. That was outwith the control of our Government and, indeed, of any Government. That in itself tells us that we cannot be dependent on a single source for our energy output and that we must have a balanced mix. To achieve that, we must take positive action. We need to keep the lights on, but we need to do it in a way that delivers economic security, jobs, investment, stable pricing and energy security.
North sea oil will remain an important but, sadly, declining contributor to our energy mix in the coming years. Oil and gas are responsible for 23 per cent. of Scotland’s energy mix, but that will decline as oil plants are closed by 2016 in line with the European large combustion plant directive. Recognising that oil and gas still have a future, however, the Chancellor committed only last week to increasing the incentives to explore and extract from the North sea. He introduced incentives to encourage smaller fields to be brought into production, and those fields could deliver about 2 billion barrels of oil and gas that would otherwise have remained in place. Indeed, this is not the first Budget to offer such incentives. North sea oil has contributed to jobs, investment and energy security in the past, and it can play a role in promoting them in the future. For several reasons, however, it cannot do that alone and, indeed, it probably cannot even be the biggest contributor.
Coal makes up 25 per cent. of our energy mix, and many would argue that too little of that volume is made up of output from Scotland. The country has a long history of coal mining, and many of my relatives, including my father and grandfather, have paid the ultimate price for that tradition. Mining illnesses have claimed many lives, including that of my father, and disasters such as the Valleyfield disaster of 1939, in which my grandfather was killed, are, sadly, a reminder of the dangers of such employment. However, mines in my constituency at Clackmannan, Dollar, Fishcross, Castlebridge and nearby Manor Powis and Solsgirth have fed many a family for many a year. As difficult, challenging and dangerous as deep mining may appear to us, many people in my constituency would willingly resume working in a deep mine tomorrow if they were given the opportunity.
As an honorary Bevin boy, it would be remiss of me, while on the issue of coal mines, not to acknowledge the role played by those conscript miners during world war two. However, to return to the current day and, indeed, to look to the future, recent newspaper reports suggest that there is some possibility of Longannet—the last deep mine in Scotland to close—reopening at some point in the future, despite reports of flooding. Flooding led to closure in 2001, but that is another matter altogether.
The one thing that could provide a real future for coal is carbon capture. The carbon capture and storage project is a real opportunity for traditional fuels to be used as part of the energy mix. CCS will provide an opportunity to extract and burn the millions of tonnes of coal believed to be in Scotland in a clean and modern way, while providing jobs, investment and energy security. We may need to watch this space, but perhaps my hon. Friend the Minister can say a little more about the issue in her reply.
I am a supporter of what we might call renewables—wind and water in their various guises. Renewables account for about 14 per cent. of our energy mix, and that needs to rise. A Europe-wide target of 20 per cent. renewables by 2020 is to be encouraged, and the UK’s legally binding 34 per cent. reduction in carbon emissions by the same date maintains our position as a world leader in the fight against climate change. However, the UK and Scottish Executive emissions targets of an 80 per cent. reduction by 2050 will come about only with the delivery of a mix of generation, technology and continuous political will.
The commitment by the Department of Energy and Climate Change to 33 GW of onshore and offshore renewables by 2020 will grow the renewables sector, but it is also required to replace the 25 to 30 GW of conventional generation capacity that will be phased out by a similar date. Last week’s Budget provided more than £1.4 billion of extra targeted support for the low-carbon sector, on top of the measures announced last autumn. That means that £10.4 billion of additional investment will be pumped into the low-carbon and energy sectors over the next three years.
Was the hon. Gentleman able to identify anything in last week’s Budget that would assist the development of tidal stream and wave power generation, as distinct from offshore wind generation?
If the hon. Gentleman is a little patient, I will come to that in a moment or two.
However, renewables cannot do it all alone. By 2025, Scotland will need to replace all its non-renewable generation capacity, which currently provides 68 per cent. of our output. If that gap is not plugged, Scotland will become a net importer of energy, in contrast to its current position.
There is also planning. Before everybody jumps to their feet, I should say that I am talking about planning not for nuclear—I will come to that later—but for wind farms. There is a history, in the short existence of wind farm applications, of planning procedures being extended, and many applications ending up with the Scottish Executive on appeal. I do not advocate the blanket approval of such applications, just because they happen to be for wind farms. Some applications will be sound, and others not. However, the trend has been an extension in the time taken for determination. My constituency is situated in one of the major wind corridors in the country, and I fully understand that there must be a balanced approach, but, from the perspective of the renewables sector, the planning system has not delivered renewable options at the pace that many would have wanted. That reduces the likelihood of our having a credible renewables sector as an alternative towards a nuclear generating base.
I accept what the hon. Gentleman has said about the planning system, which has long been a bane in many such matters, but does he accept that the Scottish Government’s new planning framework will go some way towards dealing with some of the problems?
I am not quite clear what the hon. Gentleman is telling the Chamber. Does he think that the planning system itself is flawed and in need of improvement, or merely that there is a backlog that needs clearing but that there is no need for structural change to the system?
I am saying that the planning system to date has created a backlog, which has reduced the potential capability of onshore wind production. That has been a significant disappointment to the energy generators. There are steps that have been taken, and can and will be taken, to work those applications through the system, and in time they will go through the system, but because the industry has recognised that the decision-making process is not swift or clear, multiple applications have been made to test certain areas, even when it is likely that there is a favourable location elsewhere. That has happened because the process is so unpredictable and takes so long. We need a quicker and clearer decision-making process, so that the good onshore renewable facilities can be given the go-ahead more quickly than has happened in the past. That is not, I think, difficult to understand—I do not mean to be flippant. We need the people who have the challenge of taking the decisions to take those decisions. It comes down to the individual decision-making process in each of our local authorities.
I am a recent convert to nuclear—perhaps “convert” is too strong a word, but realism has kicked in. I have long had concerns about the safety and storage of nuclear waste, and on that basis I would prefer my electricity to be generated in some other manner that might be classified as safer, but I always said that if I were to become convinced that the lights were in danger of going out, I would see the sense of nuclear. That day has arrived—we do not have much of an option.
A new generation of 11 nuclear power plants is being planned for England and Wales. It will deliver a growing level of energy security and carbon output reductions, and it will involve the investment of £3 billion in every new plant. There are areas of Scotland that have a nuclear history and whose economies have been and are now being supported by that investment. The question is whether Scotland should be deprived of that level of investment and in turn fail to play its full part in future UK energy production. In the past, investment has had multiple benefits, bringing jobs and economic security, reducing carbon output, managing costs and delivering a level of energy security. Perhaps the Minister will comment on whether she feels that Scotland should be deprived of such investment and goals in the future.
I do not doubt there are risks with nuclear generation—there are risks in everything that we do—but there are risks without it, too. It is a balance of those risks that needs to be accepted by everyone today. There is a real worry that the Scottish Executive, using their control over planning laws, will restrict and influence the energy policy of the UK in a way that could damage Scotland, and indeed the UK, on many fronts. Perhaps my hon. Friend the Minister will comment on that.
Does my hon. Friend agree that it is outrageous that any Government can use an obscure planning rule to stop something in an area that wants to receive billions of pounds of investment in a new power station and which is already a nuclear power station area, when there is a company that wants to spend the money—not Government money, but its money—and increase our contribution to the national grid?
Does the hon. Gentleman see a slight contradiction in his argument? He argues that there should be changes for wind farms, but that nuclear is different. The Scottish Government are entitled to exercise their power under the electricity and planning legislation. Does he not see the contradiction?
No I do not, because what I have been saying about onshore wind generation is that the process has been too slow. I did not comment on whether the decisions have been right; I just said that the decision-making process has been too slow. My argument about nuclear and its impact on our energy policy is that, as I have said, we do not have an option. The point about the planning system and renewables is the time taken; the point about nuclear is not the time but the fact that a decision can be taken that will affect the energy policy, economic stability and energy security of the UK as a whole.
The 38 per cent. of electricity generation that nuclear is responsible for in Scotland cannot, no matter with what good intentions, be replaced in time by renewables. Indeed, the growing amount of renewables demands a significant amount of responsive back-up. If Scotland is to have a level of energy security in the future, play its full role as an energy provider in the UK and embrace investment and job opportunities, I do not see how current nuclear technology can be ignored.
The more diverse the sources of our energy production, the greater the challenges that will be placed on the grid infrastructure. The transmission access review carried out by Ofgem and the Department for Business, Enterprise and Regulatory Reform will support the more cost-effective and faster connection of renewables to the grid, but the fact that challenges remain can be demonstrated in the process involving the Beauly to Denny transmission line, which may have a negative impact on parts of my constituency. In addition, we must ensure that the distribution networks in our towns and cities are not subject to continued failure and breakdown. In my constituency in Alloa, there is sadly a history of supply breakdown. The last batch of multiple failures took place just days before Christmas, resulting in significant loss to retailers and businesses and disruption to domestic customers. I hope that Ofgem’s review of the compensation process and the interim report due in July will recognise that the current system fails in certain circumstances. Our network maintenance providers must be given the ability to recompense end users in a way commensurate with the frequency and impact of system failures. To do otherwise is grossly unfair.
Of course, generation demands are relevant to our consumption. We all want the lights to work when we turn on the switch, and we want to pay as low a cost as possible for that service. Last year—and even today—I received complaints about energy prices and I want to take every step possible to have those costs reduced for domestic and business users. Our industry has done a lot to reduce energy consumption in respect of the climate change levy, but we must be able to offer competitive prices for the worldwide market. We have learned that lesson in recent months, if indeed we needed to learn it at all.
Where there are built-in options, business can chop and change its consumption from gas to electricity to oil, but domestic consumers do not have that choice. We must try to ensure that energy costs for domestic end users are as low as possible, and that means having modern, efficient generating facilities. Through social policy, the Government can and do deliver targeted help to those most in need, such as the winter fuel allowance for pensioners. We must work hand in hand with that to improve the insulation of our existing housing stock. That will reduce consumption and benefit both individuals and the environment.
The biggest challenge is with our historical stock. New houses are being built to ever increasing energy efficiency demands, but we can and must go further. When I first entered the house building sector in 1974, the insulation requirements were laughable compared with today, and those houses, and others built decades and centuries ago, are our biggest consumption challenge. We must also see falls in energy market prices passed on to consumers, and I call on energy companies to make clear their forward plans for price reductions as a result of falling world demand and a reduction in raw material costs.
The problems identified in the Ofgem probe into energy retail markets must be addressed quickly, and I urge the Government to take action if the industry and Ofgem are unable or too slow to do so. Increased costs for power card users are not acceptable, and we must look beyond the tariffs to see all related charges. If legislation is required to rectify that wrong, I hope that the Government will act sooner rather than later—I am sure that they would have the support of many hon. Members. Social tariffs need expanding and must be made more accessible. I ask the Minister to leave no stone unturned to ensure that such tariffs are available to everyone in Scotland who is entitled to them.
Energy is vital for our existence. In the past, Scotland has played a valuable role in that sector. It does so in the present, and I urge the Minister to take steps to ensure that it continues to do so in the future. Scotland needs a balanced energy policy. This should not be a debate about nuclear power; it should be about a balanced energy policy in which nuclear can be a player.
I support the move towards clean coal and carbon capture technologies. That could see significant investment and job opportunities in Scotland, including in my constituency. Scottish Power, which is near to my constituency and that of the hon. Member for Dunfermline and West Fife (Willie Rennie), hopes to be the first in the UK to produce a large, fully operational carbon capture and storage system to be retrofitted to Longannet by 2014. If that technology delivers the goods, there will be a reduction in fossil fuel emissions of up to 90 per cent and a whole range of new options for Scotland will open up.
There are an estimated 50,000 fossil fuel plants in existence throughout the world. China and the USA are the leaders in that method of generation. That Scotland has an opportunity to be one of the pioneers in carbon capture and storage makes me very proud, and I hope that the Minister will do all that she can to secure the investment at Longannet, which could lead to a growth in exports of that technology to the massive economies of China and the USA.
I have no desire to see powers transferred from Holyrood back to Westminster, but I am concerned that a devolved Government could impact on a vital policy such as energy in an indirect manner, to an extent that could be damaging to energy production and the economic future of the UK.
Investment in renewables has struggled in the current economic downturn, but I applaud the actions of the Government, which could see more than £1 billion invested in turbines and infrastructure around Scotland’s coastline. The Scottish Council for Development and Industry claims that Scotland can generate 50,000 jobs in the energy sector over the next 15 years. I urge the Minister to leave no stone unturned to secure those jobs for Scotland and futures for my constituents and to deliver a cleaner, greener future for our children.
I am tempted to say, “Here we go again.” Looking round the room I see myself, the hon. Member for Orkney and Shetland (Mr. Carmichael), the hon. Member for Glasgow, North-West (John Robertson) and the Minister. We have all been round this course many times, in this Chamber, the House and the Scottish Affairs Committee. The hon. Member for Glasgow, North-West and I continue this debate in the Energy and Climate Change Committee.
When I saw the title of the debate, I hoped that we had moved on from the perennial argument over the construction of new nuclear power stations in Scotland. Alas, that has proved not to be the case. We have debated this subject on numerous occasions, and it will surprise nobody to hear that the Scottish National party and the Scottish Government do not accept the need for new nuclear power stations in Scotland. I have seen no evidence to make me change my mind on that, despite the best efforts of the hon. Member for Glasgow, North-West.
We oppose new nuclear power stations for various reasons, but there are other energy issues in Scotland. I will speak briefly on the nuclear issue before moving on to what I consider to be slightly more important matters. We do not need new nuclear power stations. Scotland has the potential to be the green powerhouse of Europe, and we should concentrate on creating a safer, greener Scotland by developing that full potential. Nuclear power is costly and has never lived up to the claims of its proponents. We all recall being told that it would be too cheap to meter—that has turned out to be a con. The budget of the Nuclear Decommissioning Agency is running away. At last count, it had reached at least £70 billion, and may now be as high as £90 billion. Before the reorganisation of Government Departments, it took up nearly half the budget of the Department for Business, Enterprise and Regulatory Reform. That was before the costs of disposal of waste from new stations were considered.
In Scotland, the decommissioning costs of Chapelcross are estimated to be at least £1.37 billion. The site will not be available for resale until 2018. At Dounreay the cost is almost £3 billion. Total costs in Scotland have reached £5.3 billion at current prices, and that is before the costs of Torness and Hunterston B are known.
When the Labour and Liberal Executive were in power in Scotland, they were opposed to nuclear power stations because they did not believe that the problem of waste disposal had been solved. That is still a problem—it has not been solved. The UK Government have simply decided to treat it as solved without having a disposal site, funding or a clear plan for what to do with existing waste, never mind the new waste.
The economics of nuclear power do not stack up. No stations anywhere in the world have been built without public subsidy; the newest station in Finland is running behind schedule and over cost. We are told that nuclear power could provide jobs in the future, but renewables can provide jobs now. We need those jobs now for a new, green, energy future.
The hon. Member for Ochil and South Perthshire (Gordon Banks) talked about economic security. Where is the economic security when the main builder of new power stations will be a company, the majority of which is owned by the French Government? The main substance needed for nuclear power is uranium. Perhaps we can get that from Australia and Canada now, but there is a limited supply. Some estimates say that there is no more than 40 years’ worth. After that, where do we get it from? We will have to go to Kazakhstan and other such places, which are hardly the most stable parts of the world. If we were worried about gas from Russia, why are we so relaxed about uranium from Kazakhstan?
Certainly not. We need to develop our own energy future. We currently have substantial amounts of North sea oil and gas, and a renewable future on which we should concentrate. Nuclear is a thing of the past and not the future. Moreover, we should consider its moral implications and its connection with weapons. We told Iran and North Korea that they could not have nuclear power because of what they might do with it.
Plainly, renewables, as a share of our energy generation, are increasing while nuclear is decreasing. I was much alarmed by the outrageous call of the hon. Member for Ochil and South Perthshire for the power of the Scottish Government to be removed. This is a matter for the Scottish Parliament, and it is part of the devolved solution and a matter for the Scottish people. A majority in the Scottish Parliament are opposed to nuclear power stations and they were elected by the Scottish people. It is up to the Scottish people to change the situation.
We believe that it would be wiser to invest the billions that would be required for new nuclear power stations in Scotland’s vast renewable potential. I appeal to hon. Members to get over their obsession with new nuclear and let us consider what we can agree on rather than raking over the embers of something that we are highly unlikely ever to agree on. On that basis, I should like to concentrate on some of the more positive aspects of electricity generation and consumption, and to highlight a few areas in which urgent action is needed.
As I indicated, Scotland has a huge potential for many forms of renewable energy. The Scottish Government are on target to exceed their aim of generating 31 per cent. of electricity demand from renewables by 2011, with capacity, which is either installed or consented to, exceeding 5 GW. They are determined to meet, and if possible exceed, the target of 50 per cent. by 2020 through a balanced mix of technologies. They also wish to continue working with European partners to look at better offshore grid connections, which are essential for the large-scale export of renewable energy.
The Scottish renewables obligation will give a much greater incentive to wind and wave technology, which has a huge potential for the future. In the spirit of co-operation that I am trying to engender, I also warmly welcome the recent announcement by the UK Government to extend the renewables obligation until 2037. That is very positive and gives us a potential to expand important energy sources. The Crown estate’s recent announcement of offshore wind licences also has the potential to increase our renewables. Some such licences may cover the firth of Tay in my own constituency. I await with interest the reaction to offshore wind given the problems that there have been with onshore wind. None the less, it is an area that we need to continue to develop.
The £13 million wave and tidal energy support scheme awarded grants to eight marine energy projects, and the Scottish Government have indicated that they intend to introduce, by June, the most generous support in the UK for commercially deployed and marine renewable energy projects on five renewables obligation certificates for wave and three for tidal. That is a real attempt to kick-start renewables and put in place all the renewable generation.
Moreover, we should not forget that we have North sea oil and gas. As the hon. Member for Glasgow, North-West well knows, the Energy and Climate Change Committee is currently considering the oil and gas industry. We have had some very interesting meetings on the subject which included a visit to Aberdeen. There is still an immense amount of oil and gas in the North sea, and potential development west of Shetland. The UK Government must consider that as part of a medium-term energy future. Changes in the Budget will help a little, but more needs to be done to ensure the development west of Shetland, which is a very difficult environment from which to extract oil and gas.
The future of the industry goes beyond that, however. The hon. Member for Ochil and South Perthshire talked about carbon capture and storage, but the North sea has huge potential. We have the undersea aquifers and the old oil and gas fields which have huge storage potential for carbon capture and storage. Moreover, in the North sea we have the skills, through the oil and gas industry, to develop CCS and offshore wind. The other week, I visited Petrofac, which has a facility in my constituency, to look at its offshore safety work. It said that it was getting increasing interest from those who wish to get involved in offshore wind and other offshore renewable projects, thus highlighting that there is the potential to develop our existing North sea industry.
I should also like to talk about carbon capture and storage. Again, in the new spirit of co-operation, I welcome the statement on the subject made by the Secretary of State for Energy and Climate Change. I am tempted to say that it is better late than never, because had the Government not pulled the rug from under the Peterhead project, we could have been well ahead with carbon capture and storage. As it happens, that project is now proceeding in Abu Dhabi. We are now, at last, considering movement with CCS. Obviously, Scotland has huge potential with the possible development at Longannet. At the moment, Longannet is the second largest coal-fired power station in Europe. The project that is being developed there, in a consortium led by Scottish Power, includes Aker Clean Carbon’s technology and Marathon Oil Corporation’s drilling and transportation expertise. It is one of the three bids that is going forward in the bid process and, if it is successful, it could be the world’s largest fully operational system on site by 2014, and that would go a great distance to putting Scotland at the forefront of carbon capture and storage and developing industry for the future.
The hon. Member for Ochil and South Perthshire made an important point about the number of coal-fired power stations throughout the world and the continuing development of them in China and India. Longannet will be a retrofitted carbon capture and storage facility, which is vital because we have to retrofit the existing stations if we are to reduce their emissions. It is no good looking only at carbon capture and storage for new build, it must be developed to retrofit existing stations so that we can move forward and drastically reduce our carbon emissions.
There are problems with CCS, however, which stem from the transmission grid. I have often talked about the need to strengthen the grid, particularly for the north of Scotland, to take the renewables into account. The regime is distance-based and that works against the development of renewable energy resources in Scotland as well as providing a disincentive to thermal-based generation. In effect, it is technology neutral, but any technology in the north of Scotland faces the same problems. It is high time that we moved from that to a charging model based on a flat rate—the so-called postal system. Each generator would pay the same for access into the grid. Such a system would go a long way towards helping the development of renewables and will enable us to meet the challenging targets that we are all signed up to—or that most of us are signed up to. National Grid is consulting the UK industry and generators for their views on the Scottish proposal, which I hope will move forward.
Will the hon. Gentleman explain his thinking? Why must we have only one transmission regime for every kind of generation? Does he accept that, if traditional fossil fuels are being used, locational charging, whereby there is a loss of energy in the transmission, makes sense, but that it does not make sense for renewable resources?
We are trying to get a balanced mix. We want to encourage as many types of renewable as possible. The hon. Gentleman talks about traditional sources, but CCS changes things. I will talk about that in a moment.
The current first-come-first-served access arrangements are indefensible, and I welcome the fact that the transmission access review group is looking at them. Hopefully, there will be changes to avoid the ridiculous situation in which people can be given connection dates many years in the future. We should consider a system that is based on the realistic possibility of access. If a project is tied up in the planning system for many years and is never likely to proceed, it is daft that it is able to have a connection consent when a project that has been through the system cannot. That needs to change.
Scottish Power has identified a problem with the CCS and the transmission system. At the moment, there are constraints on transmission under the British electricity trading and transmission arrangements. Generators in Scotland pay to be connected to, and to use, the Great Britain transmission system. Annually, such payments amount to 40 per cent. of the total transmission charges which, allowing for the fact that Scottish generation represents only 12 per cent. of total generation, means that Scottish generators contribute approximately £100 million per annum more than what would be a fair share. In return for the payments, generators are entitled to access and to use the transmission system to move their generated electricity to market. Consequently, when they cannot have full access to the system because of inadequate grid capacity, they should be entitled to compensation for the resulting loss—those payments are referred to as constraint payments.
Electricity generation in Scotland already exceeds the capacity of the network, and additional renewable generation in Scotland will exacerbate the situation. Neither National Grid nor Ofgem has taken sufficient steps to address the capacity shortfall, even though the problem has been known about since well before 2005. There is an ongoing programme of infrastructure reinforcement works to increase capacity, but it will be several years before the interconnector capacity between Scotland and England is sufficient to eliminate constraints. National Grid and Ofgem have nevertheless come forward with a new proposal that appears to target Scottish generators. They want to change the system of balancing costs so that constraint payments would effectively be charged back to the same generators, which is to say that generators would pay constraint charges for not being able to access the system, which seems bizarre in the extreme.
Setting artificial limits on the level of compensation that Scottish generators would receive, irrespective of the value that they provide to National Grid or of the losses incurred by generators, seems daft, but the problem is that the proposal seriously undermines confidence in investing in Scotland’s thermal and renewable energy sectors, including CCS, which is the point that I wished to make to the hon. Member for Orkney and Shetland. We are placing a great deal of faith in the future of CCS to meet our emission targets and we need to do everything possible to ensure that it happens. We cannot discriminate against existing and future Scottish generators—that calls into question the validity of the BETTA system. I appeal to the Minister to take the matter up with her colleagues at the Department of Energy and Climate Change, as I have with the Energy and Climate Change Minister, the hon. and learned Member for North Warwickshire (Mr. O'Brien), who has promised to meet me to discuss the matter. It is important that we get this right. There are many other problems, but we need to get on with CCS, which is one thing that will ensure energy for the future without the need to go down the nuclear route.
I should like to make one final point in response to what the hon. Member for Ochil and South Perthshire said on energy prices. We all quite rightly get many complaints about energy prices, and all politicians will struggle with the problem in the coming years. However, we need to balance energy prices with the need for investment in the grid and in new generation, and we must be realistic about it. We must ensure that those who have difficulty paying bills—those on low incomes or benefits—are given the maximum help in paying them, but I agree with the hon. Gentleman that we must also take steps to ensure that our housing stock is as energy efficient as possible. We must ensure that new build incorporates the highest standards of energy efficiency—new renewable energy such as photovoltaics or solar panels could help.
We should consider retrofitting our older housing stock, but there is a limit to what we can do. My house is a Victorian semi, and I have done all the easy things to insulate the house, but it has solid walls, so I cannot inject anything into them. I have a very well lagged loft and I have changed all the light bulbs, but there is a limit to what I can do.
As hon. Members who have served on the Business and Enterprise Committee and others will know, the interconnection of the European and UK markets is a serious issue, and it impacts on the price of our energy. It is not balanced. The European Commission is apparently trying to liberalise the market, although there has been little success to date. That needs to happen, because the operation of the Europe-UK interconnector impacts on Scotland.
Many things can be done in Scotland so that we have a clean, green energy future. I suspect that we will never agree on nuclear. I appeal to everyone to concentrate on the things on which we can agree, to push forward generation for the future and to ensure that we have that clean, green energy future for Scotland.
It is a pleasure to serve under your chairmanship, Mrs. Humble. I congratulate my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks) on his excellent speech. He hit all the right buttons and talked about everything, and his contribution was balanced. It was more balanced than that of the hon. Member for Angus (Mr. Weir). He told me earlier that this is like déjà vu all over again. He started off well, saying that we did not want to go into the usual nuclear argument, but then he went into it—for the next seven minutes or so.
The most important thing is how the needs and aspirations of the Scottish people are met. As Scottish politicians, we should do our best to meet those aspirations. I enjoyed the hon. Gentleman’s last comment. He said that we should talk only about things on which we agree but, unfortunately, that is not how life works. We want to talk about everything, which includes nuclear. Nuclear will bring a great deal to the party, and it will do a lot to meet the energy needs of the Scottish people at a time when it is needed.
The usual smoke screens have been produced as a way of arguing against nuclear—we heard that nuclear generators are bad people who produce horrible waste that we do not know what to do with. The Government will say what is happening on waste in the late autumn. I hope that the Scottish National party north of the border will accept what comes forth, and that we have a single repository for waste in this country. I hope that the party does not do anything silly and try to have a separate waste dump for nuclear waste in Scotland. How silly would that be? Then again, sillier things have come from that party in recent times.
It is no surprise that I will speak on nuclear energy. It would be remiss of me not to, as chair of the all-party group on nuclear energy. In May, Doosan Babcock, a business just across the river from me, will show off one of the first carbon capture trials in the country. Science is important. I believe that we have always excelled at it in this country, and that science is the most important thing in considering how we are to survive our future, whether in terms of climate change or of our existence in general.
Scientists tell me that no carbon capture facility anywhere in the world is up and running and supplying energy, and it is unlikely that one will be before 2025 at the very earliest, or more probably 2030. There will be trial sites, and we will try this and that to get a power station fitted, up and running and doing what we hope it will do—we hope that this country will make a lot of money selling energy to countries such as China, as my hon. Friend the Member for Ochil and South Perthshire mentioned—but it will not be part of our energy mix in the short term.
When I say “short term”, I am thinking particularly of the 2015 to 2020 bracket, when we will have a problem with our energy needs. At this moment in time, whether we like it or not, or whether we agree or disagree, we will have to consider gas to fulfil a lot of our needs, and we will have to import it from areas from which we do not particularly want to import it. That is my opinion. Although the Secretary of State for Energy and Climate Change said to me that he did not believe that we would have to go down that road, I believe that we will. The information coming to me from energy companies is that there will be a problem when we reach 2015. If we close our coal-fired and nuclear power stations, we will have a shortfall that cannot be met by renewables.
Core supply is the most important thing. Without it, the country does not run. Core supply is the base of electricity or energy needed to ensure that the country works. During the cold spell last winter, renewables in Scotland produced 0.01 per cent. of energy. That is not good enough. We cannot rely on renewables for our future energy needs. When it gets cold and the wind is not blowing, we will not have enough energy to supply our needs. That is a problem.
That is not to say that we should not invest in renewables. It is important that we do so, and that we consider venture capital and development in general. At the end of the day, as I said, that will be our survival. Where do we go next? How do we go on? If the hon. Member for Angus was right about excavation for uranium, which, unfortunately for him, is very small, then I say to him that we have not considered it in any great detail because what we have more than meets our needs. Like everything else, the more we need and the harder it becomes to find, the more we must consider different ways to do things and the more expensive it becomes. We understand all that, but at this time, the supply of uranium for the present and the foreseeable future, even considering the growth in nuclear energy, will meet everybody’s needs for some time to come. Perhaps my hon. Friend the Minister will comment on this, or at least pass on the message to the Minister of State, Department of Energy and Climate Change. I hope that the Government will consider reprocessing to make the fuel last longer and cut back on waste. I would like to see us go down that road.
I know that the hon. Member for Dunfermline and West Fife (Willie Rennie) is waiting to speak. There was quite a lot that I wanted to say, but I think that I have hit all the buttons that I wanted to hit. The most important is that we want to work with each other. The most important thing at the moment is that we do not argue about what kind of energy supply we want or need. I want to see investment in Scotland. I want the billions of pounds that other areas will receive to come north of the border.
In his speech yesterday, the First Minister discussed the possibility that 9,000 jobs could be lost north of the border as a result of the Budget. Building one nuclear power station would create 9,000 jobs. I can solve that problem for him; he can have those 9,000 jobs. I will even go further: let us have two nuclear power stations and create another 9,000 jobs. I believe that that electricity would be useful for the rest of the country. I believe that jobs north of the border would be very welcome, particularly at this time. I also believe that the people of Scotland deserve the best. We should give it to them.
I congratulate my neighbour, the hon. Member for Ochil and South Perthshire (Gordon Banks), on his excellent exposition of the case. It is a complicated subject. I am also grateful to the hon. Member for Angus (Mr. Weir) for the update on his housing renovations; it was particularly useful in a time-constrained debate. I will be coming to see his house soon to ensure that we benefit from them. I thank the hon. Member for Glasgow, North-West (John Robertson) for his brevity. Obviously, he believes passionately in nuclear. I do not, but he does, for which I commend him.
Fife has contributed significantly over the centuries with a single energy source: coal. We now have a wide range of sources, including biomass. There is a plant over at Leven, and two more are being developed at Longannet and Markinch. Council waste is being turned into combined heat and power. We have wind energy at Raith, and many other sites are being considered by planners. We also have underground coal gasification and methane extraction. From a single source, we have moved to a huge range of sources, which reflects the journey that the whole UK is making.
However, Fife has a particular contribution to make, which ties in with Longannet. Iberdrola, which owns Scottish Power, has indicated that if carbon capture and storage receives the go-ahead, it will make Longannet a centre of excellence. Iberdrola is a worldwide company with huge weight, resources and expertise. It is a world leader in wind power. If we can get it to contribute significantly to making Longannet a centre of excellence, we can tie that up with the energy park being developed over at Methil, and Fife could make a huge contribution to the UK’s energy future. I am keen to ensure that that happens.
CCS has a particular contribution to make, not only because it is a new technology that needs to be exploited to meet our energy needs but because the location includes the Forth valley, one of the biggest contributors to carbon emissions in the UK, with Grangemouth, Mossmorran, Cockenzie, Longannet and many other industrial sites. If we can make it work at Longannet, we could tap into those carbon emissions as well, so the potential is huge. There is easy access to the North sea and the aquifer that we heard about, which I understand could take almost all of Europe’s CO2 emissions. It is a massive aquifer that Fife has great potential to exploit. I am excited about the opportunities ahead, as well as the potential to exploit markets worldwide; we have heard about China and elsewhere. That is why retrofit is so important. It cannot just involve new build; there must be retrofit as well.
A few years ago, nobody was thinking about the next phase of coal-fired power stations, but there have been some interesting converts, including me, to that new technology. The other day, WWF said that
“if the govt wishes to demonstrate the technology”—
that is, CCS—
“on conventional power plants, then it is only sensible to use an existing station such as Longannet station in Scotland rather than building a new one.”
Who would have imagined that environmental organisations such as WWF would be advocating coal in such a short time, when they had been clear advocates against it in the past? I welcome that as a great opportunity.
We have heard a lot about transmission charging. We often hear that one part of Government has a policy contradicting another part of Government. It is frustrating, but we can understand why it happens. The problem is when the same arm of Government proposes opposite policies. Plants situated north of the border and furthest from the market are being penalised, but at the same time, Ministers are advocating nuclear and renewables north of the border, contrary to the first policy. The Government really need to get their line straight and work out whether they are in favour of increasing energy production and generation in Scotland.
That is why I cannot quite understand the argument that the hon. Members for Glasgow, North-West and for Ochil and South Perthshire were making. If they are in favour of nuclear, why are they not against Ofgem’s generating formula? I am sure that if we were to ask Ofgem, it would never say so publicly but it would say privately, “Why on earth are you even considering building new nuclear power stations in Scotland, because that is not where we want new energy generation? We want it south of the border, where the market is.” So the Government need to sort out whether or not they are in favour of generation in Scotland. Forget about renewables. Do the Government want more generation in Scotland, because Ofgem does not seem to be in favour of that option?
I will conclude with one final plea, which is that I hope that the Government will not allow the carbon capture and storage project to slip. There has been some delay already. We have heard about the plant up in the north-east of Scotland. However, even with the current carbon capture competition there has been some slippage. If we are really to exploit the worldwide potential for this technology, we need to ensure that we take advantage now and that we do not allow any slippage, any bureaucracy or any Administration to get in the way of something that could be hugely important for Scotland and the UK.
I welcome you to the Chair, Mrs. Humble. I congratulate the hon. Member for Ochil and South Perthshire (Gordon Banks) on securing this debate and on his contribution to it. I particularly commend him for framing the debate in such a way as to allow us to discuss not just generation but consumption—to discuss one element without the other would be essentially a sterile exercise. That has rather been the hallmark of many of the debates that the hon. Member for Angus (Mr. Weir) referred to and in which the hon. Gentleman, the hon. Member for Glasgow, North-West (John Robertson) and I have taken part since we entered the House.
If there has been a lack of debate on a subject, it has perhaps been on the potential for energy efficiency. The hon. Member for Ochil and South Perthshire touched on that subject during his remarks. None the less, we risk—at our peril—forgetting that energy efficiency is the real potential area for change within the energy market.
On the subject of energy consumption, there is one point that I have found increasingly coming to my desk through constituency surgeries, which is the quite outrageous sums that are charged by electricity supply companies to those constituents who rely on card meters. One woman came to my surgery just last week in Shetland and she told me that she is now paying in the region of £200 a month in electricity costs for a two-bedroom house in Shetland. For somebody who is on benefits, that is an outrageous proportion of her income to pay out. Certainly, it takes her well above the threshold of the 10 per cent. of a person’s income that is supposed to be the marker of fuel poverty. Bear in mind also that, almost without exception, the people who have card meters are the people who are on the lowest and most rigidly fixed incomes. They are the people who have no choice and who often tell me that they end up simply sitting in the dark with no lighting and no heat, just because they cannot afford to meet the costs that are being placed on them by energy companies. I sometimes wish that Ofgem would pursue those features of the market with the same vigour that it appears to apply to pursuing other features.
One of the reasons why we have had the full range of debates that the hon. Member for Angus referred to is the fact that, certainly since 2001 and probably in the four years before that, rarely has a year gone by in this House without there being a Government White Paper, a discussion document, a consultation, a strategy unit investigation, a draft Bill or a Bill on energy. The one thing that we never seem to get out of the Government in general and out of 10 Downing street in particular is a decision. That has been apparent from the way in which the debate has proceeded today.
In relation to the nuclear debate, the hon. Member for Ochil and South Perthshire said two things that caused me particular concern and I want to touch on them. He said that he was concerned about nuclear waste and that historically was why he had decided that he was not in favour of nuclear power. He now tells us that he has changed his mind, but he did not tell us that anything had changed with regard to the handling and management of nuclear waste. The fact of the matter is that, notwithstanding the efforts of the Government through the Committee on Radioactive Waste Management and other bodies, nothing has changed. The legitimate concerns that led him to conclude previously—before the Government changed their policy, of course—that nuclear was not the option to take still remain.
I am not theologically opposed to nuclear power; if I might say so. I am not doctrinally opposed to it. The reason that I am opposed to it is specifically the lack of openness and candour that the nuclear industry demonstrates with regard to the management of nuclear waste. If the hon. Member for Ochil and South Perthshire has had his concerns assuaged with regard to nuclear waste, I would suggest that he has been bought politically, if I can put it in a slightly pejorative way, rather too cheaply.
None the less, the hon. Gentleman seems to be sold on the idea that one particular avenue should be explored, to the exclusion of everything else. I must also say to him that I said “politically” bought, because I did not want to suggest that there was any element of corruption involved here. However, I must say that he was right to take the concerns about nuclear waste seriously. Nothing has changed with regard to that, so I do not see why his position has changed.
I will not give way to the hon. Gentleman as I am concerned about making some progress. Unlike other hon. Members, I must limit myself to nine minutes.
The hon. Member for Ochil and South Perthshire suggested that this issue should stimulate a reconsideration of the constitutional position with regard to the Scottish Government having power over the planning considerations under the Electricity Act 1989. I want to say that that view is fundamentally wrong-headed. We decide where powers lie constitutionally in this place and elsewhere on the basis of where they lie most appropriately. It was the decision of this House in 1997, and I think that it was the right decision, that that power over planning considerations should be vested in the Parliament and the Government in Scotland, and people should not start changing that situation simply because they do not like the decisions that have been taken.
The final concern that I have about the remarks of both the hon. Members for Ochil and South Perthshire and for Glasgow, North-West is that the hon. Members seem to confuse policies on job creation with policies on energy. We make our choices on energy according to energy considerations. If we see energy simply as a mechanism for generating more jobs, we risk making decisions that will not be in our own long-term strategic interests.
Other hon. Members have spoken about the distribution and transmission charging regimes, which is a subject that is near and dear to my heart. Again, I would just emphasise one point. To my mind, locational charging makes a substantial measure of sense, when we are talking about transmission losses where electricity has been generated by using fossil fuels. However, completely different considerations should apply when we are talking about electricity that is generated from renewables.
On the subject of gas, of course, not all gas comes into this country from the North sea. The potential now is for gas to come from the west of Shetland. That is the next untapped resource. Both from a constituency and strategic point of view, a substantial concern is that we have still not had the necessary decisions taken in Government to allow the full development of gas west of Shetland. I shall be interested to hear exactly what role the Minister’s Department has taken in that debate. I suspect it will not take her long to talk about that.
I am delighted to serve under your chairmanship today, Mrs. Humble. As my neighbour, you will, of course, know well the debate about gas storage and some of the other issues we have been discussing today. I congratulate the hon. Member for Ochil and South Perthshire (Gordon Banks) on initiating the debate. He made a measured and logical speech. I agreed with everything he said and cannot fault much of it. It was great that there was a lack of ideology, and a concern to solve the problems and face up to the growing energy crisis that could occur if we do not do anything. That is the type of adult attitude that I believe the major political parties are adopting. There is a consensus growing about what to do about the UK’s energy needs and, indeed, the security of supply.
It was interesting that the hon. Gentleman’s speech was followed by that of the hon. Member for Angus (Mr. Weir), who spoke a lot of sense until he moved on to the pre-prepared part of his speech, which included some of the Scottish National party’s mantras about Scotland being the green powerhouse of Europe. True to form, ideology crept into his comments about nuclear energy. I give credit to the Scottish National party; it has done a lot of work on the alternative to nuclear energy and it certainly knows a lot about the subject of renewables and the other areas of generation. If it could only apply that same level-headedness and competence to the subject of nuclear power and remove the ideology, it would join the consensus that recognises that this matter is about doing something by the time we get to the energy gap.
The issue of planning and its relation to UK energy policy cannot be avoided. Of course, I accept the nature of the devolved settlement. As a former Member of the Scottish Parliament, I understand the nuances that can occur and that one can use clever political games to abuse the system if one wishes to frustrate the will of the United Kingdom. I am a Unionist and I recognise that United Kingdom policy on certain issues belongs to this House. We sometimes have to take the rough with the smooth. I do not agree with a lot of the policy produced, but I am a Unionist and that means I stand for the United Kingdom remaining together.
The Scottish National party should not pretend that the majority of the population of Scotland are against nuclear power: Scottish Government figures show that 53 per cent. of Scots polled were in favour of nuclear energy. A party that received effectively 16 per cent. of the electorate’s vote in the last Scottish Parliament election certainly does not hold a large mandate to overrule the United Kingdom. In the interest of the Union, I ask that this island gets its energy policy right. We should not play petty politics with such policy areas, and that is why I urge the Scottish National party to remove ideology from its energy policy. We should question the issues of storage and safety, and talk about the proper areas of debate, but I do not think that ideology serves us well.
The hon. Member for Glasgow, North-West (John Robertson) gave a strong rallying cry for nuclear energy. Not surprisingly, he correctly raised the spectre of technology and how far carbon capture has gone. I used to work in the technology industry, and know that there is always the temptation to grasp the latest thing that comes along or is on the “Today” programme as if it is a silver bullet or the recipe for turning lead into gold. Time and again, we see that technologies do not always deliver the entire solution—in fact, they rarely do so. Often, such a focus can take the light off a current emerging technology. It is interesting that little is now talked about marine, tidal and wave technology. A few years ago, such technology was going to be the silver bullet to solve this problem.
When we introduce new technologies to the debate, we must be careful to recognise that technologies take years, not days, to develop, that they have to be proven and that they have rivals. If we invent carbon capture today, we think that the rest of the world might buy it. Well, that will not be the case if other countries’ Governments choose to invest in their home-made technologies, which might not be the same as ours. We must recognise that we have to have a mix not only of supply of electricity and generation but of past, present and future technologies. Let us not get too distracted by the future, because the gap is growing and time is running out.
The hon. Member for Dunfermline and West Fife (Willie Rennie) objected to nuclear power from an ideological point of view, but he also made some strong technological and environmental arguments. I respect his views on that. He made a strong, bold play for Fife to be the centre in respect of some of the renewables. As my father is from Leven, I support that in part. However, as a Member of Parliament for the north-west, Heysham nuclear power station is within a few minutes drive of me, so I hope that I will be forgiven for not putting all my eggs in the Fife basket.
The hon. Member for Orkney and Shetland (Mr. Carmichael) rightly made a point about consumption, which had not been mentioned before. The easiest thing that we can do today to help to close the energy gulf that might appear is to use less electricity and to use it more efficiently and wisely. It is a free hit for all of us to do that. The hon. Member for Angus pointed out the steps that he had taken—perhaps it would also help if the SNP spoke with a little less hot air. Consumption is not just a bit of the solution; it is almost half the solution. We need to bring that into the classrooms of our schools to the same extent that we bring in some of the fears surrounding other areas of science.
The Conservative party would like more to be done on decentralised electricity technology, combined heat and power, biomass, small and mid-size wind turbines, energy from waste generation, micro-hydro and solar. Barriers already in place prevent those type of generation from getting on to the grid. We need to adopt the feed-in tariff system that exists across other European countries. That system encourages such microgeneration and, indeed, helps decentralised technology to take advantage of the situation and not be blotted out by the established players in the power game.
Finally, there are the issues of affordability and justice in the system of tariffs. We would make it illegal for power companies to discriminate unfairly against consumers who have prepaid meters. It is thoroughly wrong for utility companies to do that. If we go to renewable or alternative energies, the last part of the equation is that there may be a cost impact on the consumer. We must not forget that people in fuel poverty might find it harder and harder to make the jump to energy that is supplied by technology.
I look forward to hearing what the Minister has to say. I believe that a consensus is building and that technology and the money invested in technology is starting to go in the right direction. However, we must not forget that, in the end, the issue is about having a mix. That means we have to put aside some of our ideology to ensure that the energy gap is closed because, as the hon. Member for Ochil and South Perthshire has correctly said, there is a danger that, one day, we will turn on the light switch and nothing will happen.
I welcome today’s debate, which was initiated by my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks). I also welcome the contributions of other hon. Members this morning. Although we have been around the track with the issue in the past, I think that we all believe it is essential to consider the matter—for the UK but, particularly, for Scotland.
As a number of hon. Members have pointed out, my hon. Friend advanced a well-balanced argument for the need for a balanced energy mix. The Government strongly believe that we require such a diverse energy mix for Scotland. In doing so, we acknowledge that we face two long-term energy challenges: first, tackling climate change and, secondly, dealing with energy security, both of which are global issues that require global solutions. However, there are also vast opportunities, and that has been mentioned by hon. Members on both sides of the Chamber during the debate.
Investment in energy will drive forward jobs and growth—potential growth that Scotland needs to harness and capitalise on, not only in the UK, but in the global market. Energy supply is an increasingly important part of any nation’s security, and we cannot become over-dependant on one source of energy. That is why we require a balanced energy policy that ensures that we can keep the lights on, maintain economic competitiveness and help to protect the environment. We need energy that is affordable, secure and sustainable, as my hon. Friend rightly pointed out.
My hon. Friend raised several issues that I would like to address briefly. He raised concerns about the need for the planning system to adapt to increasing applications for renewable energy. Those will not only be for wind energy, because we will increasingly see energy generation from combined heat and power, biomass and solar panels, as the hon. Member for Dunfermline and West Fife (Willie Rennie) mentioned. We will see an uptake in applications across a variety of fields, so it is important that planning systems are able to adapt and adjust to that demand to ensure we can increase our capacity rapidly in a short time.
Comments were made on nuclear energy and the planning system, and the Calman commission will look at that. The Marine and Coastal Access Bill represents an important new move forward in how we view policy frameworks and how planning fits within them. The hon. Member for Angus (Mr. Weir) made several interesting comments on his desire to see an expansion of the offshore grid. That is an interesting long-term idea, but it is important that we have the right framework in place. The Marine and Coastal Access Bill, on which we have worked closely with the Scottish Government, provides an interesting test case: the Scottish Government have agreed to work within a UK strategic framework but will have the planning powers that will work within that framework. I mention that as a way of suggesting that we should not regard matters that have already been settled in legislation as remaining in stone. We need to adapt and consider whether new developments in other legislation might point the way forward.
Last week the Chancellor delivered the world’s first carbon Budget, which included measures to address energy consumption, supply and efficiency, and it provided more than £1.4 billion of additional targeted support for the low-carbon sector. I welcome the stress that my hon. Friend the Member for Ochil and South Perthshire put on renewables. That Government investment is in addition to measures announced in autumn 2008, which means that around £10.4 billion of additional investment will be pumped into the low-carbon and energy sectors over the next three years, along with around £375 million to improve energy efficiency, which hon. Members have referred to.
We are still facing tough times in the coming years. Our European-wide target is for renewable energy to account for 20 per cent. of energy generation by 2020, and the UK share of that will be 15 per cent. At the same time, the infrastructure is getting old, as my hon. Friend the Member for Glasgow, North-West (John Robertson) rightly pointed out. All Scotland’s ageing conventional generation capacity will need to be replaced by 2020, and by 2025 Scotland will need to replace all its non-renewable generation capacity, which currently amounts to 68 per cent. Those are considerable challenges, so we should not rule out any forms of energy.
I was interested to note that the hon. Member for Angus said that Scotland does not need nuclear energy and went on to explain how we could export energy from wind power and other renewables to other parts of Europe. That view seems to be on the opposite side of the arguments. Investment will drive technology, which he said was the main reason for investing in offshore wind. I fully accept that, but he then said that the £5.3 billion was not an investment in nuclear power in Scotland, but a cost. Well, it would also be a cost if it were used to expand other forms of renewable energy or carbon capture. There are risks involved, as there are with all types of energy. It is about getting a balance of those risks, a point made by my hon. Friend the Member for Ochil and South Perthshire.
Several questions were asked on pricing, which I would like to touch on briefly. Over the past 10 years the UK has benefited from some of the lowest electricity and gas prices in Europe. The Government certainly want to ensure that we maintain pricing at a competitive level for both industry and consumers. That is why we have called on Ofgem to publish the wholesale and retail prices of energy quarterly so that we have greater transparency in future prices. That is also why we want an early resolution of Ofgem’s initial finding about the energy retail market and why we want energy companies to tackle issues about power cards and pricing. If it does not, we will certainly introduce legislation to tackle that problem, as we have already indicated. We have maintained and increased the winter fuel allowance this year and reached a voluntary agreement with the energy supply companies, which will spend an additional £225 million on reduced tariffs and other social programmes over the next three years.
With regard to transmission charges for the islands, which the hon. Member for Orkney and Shetland (Mr. Carmichael) mentioned, I can confirm that there will be an announcement on that shortly, and I have taken his concerns on board. He and other hon. Members also mentioned development west of Shetland, which we rightly consider to be important for the development of the energy sector in Scotland. The Secretary of State for Scotland is fully supportive of the west of Shetland taskforce and pilot, and has already discussed it with Total, which is running the pipeline from there. We continue to keep in contact on that, but obviously the Department of Energy and Climate Change is the lead Department. Members can be assured that we are fully supportive of that area.
The hon. Member for Dunfermline and West Fife rightly spoke about the potential for carbon capture and storage, which we believe offers exciting opportunities in Scotland and throughout the UK. As he will be aware, the project at Longannet is one of three in the current competition, and we expect an announcement on that later in the year. Significant developments are occurring in Scotland and we welcome the co-operation with the Scottish Government to develop that area further.
Scotland is rich in renewable energy sources. We can rely on our geography in tandem with our geology, and wind and tidal power will play their part. The foundations are firm: we have tripled the amount of renewable electricity generation since 2001 and are now the world’s leading country for offshore wind power. Our policy is geared to provide a stable, long-term climate for investment. However, let me be clear that neither wind energy nor nuclear energy can provide the flexibility needed to handle fluctuating electricity demand, a point to which my hon. Friend the Member for Glasgow, North-West rightly referred. Coal and gas will still play an important back-up role for the foreseeable future. It is interesting to note that in Denmark, which is currently Europe’s most wind-intensive state and has more than 6,000 turbines producing 19 per cent. of the country’s total electricity needs, not a single conventional power plant has been closed since 2002. That back-up power is still needed in our systems.
We certainly want to ensure that carbon capture and storage is successful because it could cut carbon emissions from coal by 90 per cent. The hon. Member for Angus made some comments on the Peterhead project, but we believe that it was important to have an open and transparent competition to choose which project to support. Both the UK and Scottish Governments are working closely on carbon capture and storage. We believe that, although it is scientifically possible, issues remain about its commercial potential, which is why we are not gambling our entire investment on only one energy supply.
In conclusion, as the 2007 White Paper made clear, a key plank of our energy strategy involves not only alternative sources of power, but the adoption of alternative forms of behaviour. Reducing consumption shows that the cheapest and cleanest unit of energy is the one not used, often referred to as the negawatt. Both before and in the Budget, the UK Government have introduced measures to address that, and our work through the Energy Saving Trust and the Carbon Trust has been helping businesses and householders for many years.
The world is moving to a low-carbon economy and we are determined that Scotland and the UK will not be left behind. The Budget underlined the desire for the UK to be in the vanguard of change, leading the way and putting UK business at the forefront to take full advantage of the emerging global opportunities presented by this historic shift. Scotland must now get the benefit of that growth and the jobs that will come from the energy revolution. That revolution is not restricted to renewables, but also includes clean fossil fuels and nuclear energy.
It is easy to become sentimental and emotional about the British pub—indeed, it is easy to become sentimental and emotional in the British pub—and get wrapped up in the images and clichés beloved of producers of soaps: the Rover’s Return, the Queen Vic, “Heartbeat”, the traditional village pub, and so on. Reality, though, is sometimes different. There are pubs and pubs: good pubs and others.
I recall a particularly sobering visit to a pub when out campaigning during a by-election in a constituency that shall remain nameless, but which, for the sake of argument, we will call Hodge Hill. Such was the intense demand for Lib-Dem literature on a hot day, my team felt it necessary to repair to a hostelry, parched and in need of refreshment. We identified a nearby pub, but we should have inferred something from the fact that the entrance had two swing doors, one with hardboard instead of glass and the other with neither glass nor hardboard. Our suspicions should have been confirmed by the sticking grip of the floorboards as we approached the bar and the baleful glance of the locals, which was somewhat reminiscent of “The League of Gentlemen”. The barmaid smoking behind the bar dismissed the thought of food ever being present as ridiculous and we sat on rickety chairs at a less than clean table with a chipped ashtray on it. We will draw a veil over the state of the toilets.
Reality is more diverse than we tend to recognise. It is said sometimes that the pub is a community asset, which is certainly true and, in many places, that is exactly what it functions as. But I visited, with the Select Committee, a part of Manchester where the pub was moved, with regeneration money, from the heart of a difficult sink estate to a nearby main road, simply to catch the passing trade and ensure a more varied mix of customer, so that not all of them were from the community. We Campaign for Real Ale types praise the controlled drinking atmosphere of the pub, particularly when criticising supermarket cut-price sales. I know of pubs in some particularly tough urban environments where the controlled environment is less than obvious.
I say all this as a preamble, because I accept that the pub economy is in dire trouble and that we need action and progress, but any debate will achieve nothing unless it is grounded in hard reality and is truly engaged with all the interests, including the owners of the pubs, and is not simply a rehearsal of mantras, slogans and received wisdom. We have to get real about the state of pubs, because despite Select Committee and all-party reports, industry studies and previous debates and despite some wise, sensible recommendations, from the industry’s point of view matters have got worse still. Pubs are continuing to close and sales are declining, whereas alcohol consumption is rocketing. The suggested causes are multiple and include supermarket competition, inappropriate taxation—there has been an emphasis on that recently in the run-up to the Budget—the smoking ban, which is mentioned by many publicans and the pub owners, the effects of economic recession and changing social habits. However, I want to concentrate primarily in my contribution on the industry’s self-inflicted wounds, which are a major cause of decline.
The area that is the easiest to address, but also the thing that the industry is least inclined to talk about is the tie: the economic model of the British pub, or at any rate 50 per cent. of them. Most publicans that I have surveyed bring that up as the big issue. It is what the Fair Pint Campaign and the Save the Pub group were set up to address, and they make a considerable amount of noise about it. It is a big issue across the piece.
Let us look at some stats. Some 40 pubs a week are closing: the figures change and it might not be precisely 40, but that is the latest figure that I have seen. A current figures shows that, annually, 32 per cent. of the tenants working for the biggest companies give up doing that. Beer on-sales are down by 10 per cent. Some 50 per cent. of pubs are owned by the biggest companies that have their roots in private equity. That has severe consequences, because it means that they run with £20 billion of debt to service, quite apart from any dividends or generous salaries that they may wish to pay their chief executive officers. For the two biggest companies, the debt is equivalent to a repayment of £750 million a year or having to find £50,000 per pub per year. That is the situation that the owners of 50 per cent. of British pubs are in.
I am delighted that the hon. Gentleman has brought this subject to the House. It is important to many of our constituents and to the fabric of our communities and our society as we know them. But who is to blame for the demise of the pub? Is it the Government, with their 2p tax escalator each year till 2012, which will be unfair and unhelpful, or is it the pub landlord companies, through their high rent and beer charges, or is it a bit of both? What should we do about it? Today we saw Whitbread’s profits go up considerably.
Clearly, taxation makes a difference. It is not the main subject of this debate, but were the taxation to be more benign, from the point of view of the companies, there is no guarantee that their saving would be passed on to the tenants and the industry as a whole and would not go on the repayment of outstanding loans.
I congratulate the hon. Gentleman on securing this debate. He will be aware of the Axe the Beer Tax campaign, about which I have had hundreds of e-mails and much of which I support. The point about taxation has to be read in context, because for the first 10 years or so of this Government the tax did not rise particularly in excess of inflation—I understand that that is not true of the last two to three years—but still pubs were closing at the present rate of perhaps 2,000 a year from a stock of 60,000 pubs. We shall lose the vast majority of our pubs in a generation if something is not done quickly.
That tends to reinforce my point, which is that taxation may not be the main issue. The evidence that the hon. Gentleman has put forward seems to underline that.
The repayment that the pub companies need to make to the people that they have originally borrowed from has to come from somewhere and it comes from high rents to tenants and from wholesale tied beer sales to tenants at extortionate prices—50 per cent. above the normal wholesale price. It also comes from other side-deals that are done and which saddle tenants, such as compulsory provision of other poor-value ancillary services, including accountancy and legal services. Examining that dispassionately as an economic model, it is unsustainable, unless we live in a time of buoyant increased leisure spending and in a world where people have few leisure choices but going to the pub. This analysis is not shared simply by people who care about or visit pubs, or by people who are passionately interested in beer, the social life of the pub or the pub tradition, but by hard-headed men of finance, be they teetotallers, drinkers or whatever, who see the current model as near suicidal in a strictly commercial sense. Talk in the boardroom is now coinciding with talk in the taproom.
My analysis is reinforced by my own experience, which I pick up anecdotally by talking to my local publicans. I meet really enterprising people, such as Adrian at The Falstaff in Southport, who struggled to escape a remote, unworkable accountancy arrangement that frankly profited no one, not even the owners of the pub, Scottish and Newcastle. Adrian would like to provide local beers, because he knows there is a demand for them. One of the Southport beers, Sands, has just won an award as the best beer in the north-west, but people have to leave Southport to get it, because Scottish and Newcastle forbid it to be provided in local hostelries. I meet people such as Darren Thomas and his wife Sharon, who tried to revive another pub called the Oasthouse, but were unsure as to brewery intentions. These stories are replicated across the piece. Tenants are struggling, not with taxation, per se, not with a lack of ideas and not always with the economic climate, but with the people who own the establishment that they are renting.
There is success in the pub industry in my neck of the woods, but it is more commonly found in the free houses, which seem to be doing reasonably well, and the chains, some of which are doing extremely well—managers are backed up with sound investment from the companies. Above all, I am seeing more and more enterprising, innovative tenants who are willing to take on the hard job of running a pub for relatively little reward but an extraordinary amount of energy and commitment. Those people are being hogtied by ridiculous wholesale charging and restrictive covenants that are ultimately in no one’s interest. That is the point that I want to emphasise. They end up dealing with remote organisations that own the establishment and with which they do not always have a good dialogue. Trying to contact Scottish and Newcastle about a pub is extraordinarily convoluted. There are precious few contact numbers on its website.
That is the situation, but there is hope of improvement. I do not want the pubcos to treat this as simply the usual thing that people such as me say. I recognise that the pubco debt will not go away, but the pubcos should not just listen to the debate and take it on the chin, because they are as exposed as any tenant. Their route to safety is not the old recipe—take the money and run, pay off debts, pay a dividend, take the profit and do not invest—but dropping the bad, old, introverted private equity habits with which they came into the business, and linking the boardroom with the taproom, engaging properly with tenants, communities and MPs, backing and supporting tenants who are innovative, enterprising and hard-working—plenty are still coming forward— investing in people, loosening up the supply chain, and producing a model that works. There will still be failures, lack of demand, unsuitable tenants, predatory supermarkets and so on, but what other option is on the table other than presiding over a rapidly declining business?
I am not counting on pubcos’ altruism or even good sense. I do not believe in my heart of hearts that they have as much freedom to act as I would like them to have. Private equity does not care about the village pub. It believes in the free market and cares about the bottom line—end of story. That is why the Government have a genuine role in the drama. They must act, and introduce new regulation, which is overdue. The Tories introduced the beer orders that got us into this fix and provided the opportunity for private equity to move in and take over the lion’s share of the industry. Regulation can get us out of that.
In an era when even public servants must bid competitively to keep their jobs, why should an arcane institution such as the tie persist? Frankly, it should have gone out with the corn laws. The regulatory environment can and should be changed, because it matters. Equally, in shepherding the pubcos into making the right choices, we must ensure that the planning environment does not encourage them to cut losses and move on by selling off pubs for conversion to flats and so on. If the Government provided the right planning regulations and regulatory regime—they have both those levers at their disposal—and gave the pubcos the right options, they might choose them. That would benefit the pubcos, the tenants and the communities that they serve, and provide a solution to the problem.
It is a great pleasure to make a brief contribution to this debate. I congratulate the hon. Member for Southport (Dr. Pugh) on initiating the debate and on presenting his case in such a measured way. I speak as chairman of the all-party beer group; it is a tough job, but someone must do it.
The only time that I appeared in the News of the World was when MPs’ expenses were published for the first time and, for no apparent reason, there was an unflattering picture of me on an inside page with the headline “Hard to swallow”. I think that I was illustrating all MPs’ expenses rather than just mine. One of my mentors told me that MPs should never be photographed with a pint of beer in their hand, but as chairman of the all-party group, that is a stricture that I am pleased to have ignored over the years.
I want to address the hon. Gentleman’s specific point about the structure of pub ownership and how it influences the market. He also alluded to many other issues, and it is worth putting on the record the fact that about half of our pubs are free houses or managed pubs, although the number is declining faster than the number of tenanted and leased pubs. It is worth mentioning in response to an intervention by my hon. Friend the Member for North-West Leicestershire (David Taylor) that the rate of decline is increasing massively, and has been for the past two or three years. A few years ago, a handful of pubs closed every week, but 35 or 40 now close weekly. Whatever the reason, the decline has increased rapidly in recent years.
Other factors are also at work. Half our pubs do not operate under the tied model, and they should not be neglected. Supermarket prices, taxation and other issues affect them particularly.
As my hon. Friend says, social change is obviously one issue. It was interesting that although the hon. Member for Southport did not call for the tie to be outlawed, he came close and said that it was an anachronism. Some people in the Fair Pint campaign say that that is the prime, if not the only cause of pub closures. It is on record that the all-party group is funded by about 70 breweries and pub companies, which have different views about the tie. I listen to people in the Fair Pint campaign. Some have their own economic interest and are very successful entrepreneurs. Part of their frustration is that they would like to be even more successful and have even more pubs, which they believe is a proper view. I try to listen to all economic interests, including the Fair Pint campaign, pub companies and brewers, and then make up my own mind. On some issues, such as smoking and minimum pricing, my view is different from those of large sections of the industry. There are as many views of the tie in the all-party group as there are members. One vice-chairman of the group has signed a motion calling for the tie to be abolished, but I do not agree and will explain why.
According to the facts, figures and statistics, it is not true that tenanted and leased pubs are closing at a faster rate than free houses and managed pubs. Indeed, some evidence suggests that it is the other way round, although I accept the hon. Gentleman’s point that that may mask a high turnover in many leased and tenanted pubs. According to industry analyst, A.C. Nielsen, last year’s prices were much the same. In managed pubs, the average price of a pint was £2.56, and in leased, tenanted and independent pubs it was £2.66. That evidence must be borne in mind.
I was about to say that the pricing figures do not reflect profitability. Nevertheless, it is important to consider those factors, if the contention is that the economic model is the main reason for the closure of pubs.
Another way of approaching the subject was reflected in the hon. Gentleman’s opening comments. The economic arrangement of vertical integration in the market has been investigated 19 times since 1966, and receives exemption by the EU, although that is up for renewal next year. There could be an imbalance of power in that relationship.
I declare an interest as a treasurer of the all-party save the pub group, whose founder, the hon. Member for Leeds, North-West (Greg Mulholland), is here today. My hon. Friend the Member for Selby (Mr. Grogan) is old enough to remember and perhaps to have been a drinker at the time of the Monopolies and Mergers Commission report in the early 1990s, which was blindly implemented by the then Conservative Government. Looking back, does he believe that that was a fundamental mistake that worsened the position? The Conservatives said that they would break up the monopolies of breweries, but in fact they passed over some of those monopolies to the pubcos.
I want to explore that in my remarks. There were many unintended consequences of the beer orders, and I am anxious that there should not be other unintended consequences, if we ban the tie completely. I shall examine some of the proposals for reform of the tie. CAMRA, to which the hon. Member for Southport has referred, does not support the complete abolition of the tie, for reasons that I shall come to. However, it thinks, for example, that there should be rights for guest beers, and it has made a number of other proposals. I have suggested to CAMRA, because it has doubts about the market, that if the Select Committee on Business and Enterprise, which is currently considering the matter, recommends that this market be examined, CAMRA should make a super-complaint to the Office of Fair Trading, which it has a right to do under the Competition Act 1998, to have the matter examined for the 20th time. It would be a tragedy if for the next year or half year we were waiting for the Government to respond to the Select Committee’s report, and many of the other issues that affect pubs were left on one side. That is one proposal.
The Association of Licensed Multiple Retailers has set up a committee to consider various clauses that could be inserted in the contracts between the pub companies and their lessees and tenants to make the situation fairer—to give long-term lessees the choice of paying a higher rent, which obviously would have to be determined in a fair way, and having a wider choice of supplies of beers, if they are willing to do that. That is another proposal. The Institute for Public Policy Research has reported to CAMRA and said that there should be a statutory code of conduct. A range of proposals are on the table and will be examined in the next year.
I do not want to take up too much time, because other hon. Members want to speak, but let me say why I do not think that the tie should be abolished and why I agree with the consumer body, CAMRA. First, the tie helps small brewers. I was once taken to the opera by a very big brewer. He took me to the opera for two reasons: to tell me that he certainly did not want minimum pricing and that he wanted the tie to go. Why did he want the tie to go? Many small, family brewers rely on the tie, because it gives them a guaranteed outlet for their beer supply and their markets. That is one reason why CAMRA does not want the tie to go. If we were completely to outlaw the tie as an economic model, an unintended consequence could be family brewers up and down the country going into liquidation and not being able to supply the pubs that they support. Sam Smith’s in Tadcaster in my constituency—Tadcaster is now the only town in England with three brewers—is an example of a family brewer. There are many others.
Punch Taverns and Enterprise Inns come in for much criticism. They are big players in the market, and it is right that people should hold them to account, but they provide a market for some small beers. One of the big changes in the pub and brewing market in recent years has been the rise of the micro-brewers, the small brewers. On a day when my right hon. Friend the Prime Minister may need a little encouragement because not everything is going right for him, let me point out that he was responsible for small brewers relief and that he created a market. In fact, we made him beer drinker of the year for that. He has not yet accepted his award, but perhaps like his predecessor going to accept the congressional medal of honour after he stepped down, we can look forward to his accepting it sometime in the future. Some pub companies and pubs tied to brewers provide a market for small ales, and some of the small independent brewers certainly do not want the tie to go.
The long lease, which is characteristic of the arrangements made by pub companies, has to be examined. It has to be properly regulated, whether that is on a statutory or voluntary basis. Let us look back to the time of the beer orders, as my hon. Friend the Member for North-West Leicestershire has done. The complaint then was that there was no economic arrangement whereby someone with a small amount of capital—£25,000 or £30,000—could get a long lease, which potentially they could sell on if they grew the business in the meantime. The only leases available were short-term tenancies with the brewers. I would hate it if the only people who could go into the pub business were those who could raise perhaps £250,000 in capital to buy a pub outright. That has to be watched as well.
I have taken too much time already, but let me just say this. The hon. Member for Southport has said that it is possible to be too sentimental about pubs, and I think that it is. It is possible to forget that many of them are still dynamic businesses that give many people without much capital but with a bit of entrepreneurial initiative—regardless of sex, creed or colour, by the way—the chance to make an impact on our national life and to make a success of themselves. However, there should be a bit of room for sentimentality as well. That is why pubs always excite such passion in the House and why I and many members of the all-party beer group want to examine this issue and propose measures that will help not only tenanted, leased pubs, but all pubs. As Hilaire Belloc reminded us a long time ago:
“When you have lost your inns…you will have lost the last of England.”
It is a pleasure to follow the hon. Member for Selby (Mr. Grogan), who is one of the world’s greatest experts on the subject that we are debating this morning. I congratulate the hon. Member for Southport (Dr. Pugh), who has a knack of choosing subjects for these debates that interest North-West Hampshire. His last one concerned further education colleges—indeed, both subjects are of great interest to students in my constituency.
Not all the problems that confront pubs are due to the tie. As hon. Members have mentioned, other factors include changing social and leisure patterns, the recession, the duty on alcohol, the regulatory burden, business rates and, crucially, competition from supermarkets, which also sell alcohol. Those broader issues were discussed at the beer summit, which I attended, on 4 March in Room 10. It was attended by an array of Ministers, who, as far as I can see, have so for been unable to respond to the issues debated there.
This debate is about the tie—ownership. I agree with the hon. Member for Selby that there are some benefits to the tie, in that those without the capital to buy a freehold can run a pub and have a stake in its success. There are many well-run tenanted pubs with happy tenants and customers. There is not inevitably a tension between pubco and tenant, in that the more beer that is sold, for example, the better both parties do. It is also argued that the tie brings stability to the sector and to British brewing, although I am not as yet convinced of that argument.
If we are considering the case for radical reform, some philosophical issues need to be addressed, particularly by those in my party, before we advocate that Government should intervene in a private contract, freely entered into by the two parties, and, indeed, before we advocate that Government should actively restructure an industry. That appears to be the view of the present Government. In a written answer on 9 February, the Minister stated:
“I have not met with Pubcos to discuss beer pricing. This is a commercial matter for the businesses concerned.”—[Official Report, 9 February 2009; Vol. 487, c. 1677W.]
Let me address the role of Government. The Government have intervened in landlord-tenant relationships for a very long time, where they believe that there is an imbalance. In residential contracts—for example, assured tenancies—there are clauses that the Government have insisted be there. In enfranchisement proposals for leaseholders, the Government have intervened in the relationship between a freeholder and a tenant and given that tenant certain rights that are perhaps relevant to this debate. People who live on mobile home parks have been given contractual rights by the Government that they could not get from the owner. On more commercial matters, the Government consulted in 2004 on removing the upward-only rent review clause in commercial leases.
I therefore see nothing sacrosanct about the tie that precludes the Government from intervening, if the case is made. Of course, the Government intervened back in the 1990s, as we have heard, to alter the structure of the industry in the name of competition, but pubcos now have the same grip on the industry that the three biggest brewers had then. If it was right for my party to intervene then, it is difficult to argue that it is not right to intervene now, if the case is made.
Agencies of the Government, such as the Office of Fair Trading, have taken an interest in pubs. In 2002, the OFT concluded that the tie had no major negative effects on the pub industry. In its 2004 report, the then Select Committee on Trade and Industry said:
“There is considerable scope for eliminating the root causes of such disputes”,
which arose from the tie. It concluded that
“if the industry does not show signs of accepting and complying with an adequate voluntary code then the Government should not hesitate to impose a statutory code on it.”
My views on the matter are subjective, and this is not something in which I specialise, but my understanding is that the root causes that the Select Committee mentioned in 2004 have not been eliminated and are still there.
I am influenced in that by two factors: a meeting that I attended earlier this month of licensees in Andover, nearly all of whom are pubco tenants; and what has happened to far too many pubs in my constituency, where a sequence of pubco tenants have simply been unable to make a go of their pub on the terms offered. On the first, I am grateful to Mr. Alex Gillies of the Station hotel in Andover for setting up the meeting. We covered a lot of ground, but there were two important concerns. One was the inability to buy beer as cheaply as people could buy it in supermarkets, after which they could consume it without supervision. Tenants are simply unable to compete effectively in the market for their prime products. Although I am not in favour of resale price maintenance, it is difficult for those of us who believe in competition, the marketplace and free trade to swallow such a significant restraint on trade.
The second issue is the uneven nature of the contract, which has been touched on. In one case, a tenant signed a lease on the basis of high turnover figures, without knowing that they had been preceded by a special offer. I will not repeat the points about the operation of the tie, but all the tenants whom I met had used solicitors, only subsequently to discover that small print in the contract was greatly to their disadvantage.
That brings me to my next point: I want to see greater stability in the industry. I see from the GMB union briefing that 32 per cent. of the Punch Taverns estate of 8,400 pubs changed hands in three years and that those that did changed hands twice on average. Too many tenanted village pubs in my constituency have a series of tenants, none of whom can make a go of the business. Tenants lose their savings, go bankrupt and become homeless or disappear, and the process starts all over again. Six months later, there is another failed business and another tenant. That is not good for the community or for the pubco.
I am interested in a more stable environment and a better business model. In the village of Ecchinswell, the villagers simply got fed up, and they bought the village pub, which is run by a not-for-profit company. I am a keen supporter of that solution, where the market has failed.
What should happen? I am not in favour of a ban on the tie, because that would be too dramatic, but it should be loosened, and we should move to a different business model over time. It would be better if we had more free houses where the publican owned the freehold, and I welcome the fact that the pubcos are selling, which shows that we are moving in the right direction. However, one licensee I talked to at the weekend said that his pub had been valued three years ago and that that was the value in the pubco books. He has offered a third of that price, which he believes is the pub’s going value. If his offer were accepted, it would have enormous consequences for the balance sheet of the pubco, whose asset values would fall.
We should encourage a change in the business model, as the hon. Member for Southport has suggested, because that would lead to a more stable and profitable industry. In an Adjournment debate on 26 March, which my hon. Friend the Member for Tewkesbury (Mr. Robertson) initiated, the Minister said:
“We need to consider the role of tied houses and other pub companies, which, through differential pricing and the rents charged, have an impact on landlords…I will discuss with colleagues in the Department for Business, Enterprise and Regulatory Reform how we can better understand the sector and provide help.”—[Official Report, 26 March 2009; Vol. 490, c. 551.]
We look forward to hearing at half-past 12 just what the Minister has been able to do.
As an interim measure, we should move towards obligatory clauses in leases, such as exist in other contracts. In the longer term, however, a combination of shareholder pressure on pubcos, pressure from the Select Committee, whose report we await, pressure from the House and the availability of finance to enable tenants to buy pubs might move us from where we are to a different structure and a more sustainable and stable pub industry.
I pay tribute to my hon. Friend the Member for Southport (Dr. Pugh) for calling this important debate. He is one of the people who has been speaking out about issues affecting pubs, including today’s subject. He has had the courage to speak out about something that many organisations do not want to have raised.
I want to start with a simple question: who owns the British pub? Morally the answer should surely be the community that it serves: the area or village, whether that is a rural village, town or suburb. Surely the moral ownership of a pub that might have been there for years—in some cases, indeed, hundreds of years—should be with the community, the area and the people living there. Legally, of course, apart from when a pub is the last one in a rural village, the community has virtually no say in the future of the pub.
What is the ideal pub? I echo the comments of the right hon. Member for North-West Hampshire (Sir George Young) that the ideal pub would surely be owned by the people who put in all the hours and run it to try to make it a success. It would also serve locally brewed beer, and, if it is a food pub, locally sourced food. There would be a genuine relationship between the business people and the people whom they serve in the community. A pub is much more than a business, but the sad reality is that in Britain today we could not be further from that situation.
The chairman of the new all-party save the pub group has presented an idealistic view, particularly with respect to rural areas. I represent a partly rural seat, and I believe that he represents a largely urban seat. When pubs are threatened, particularly in villages and sometimes on urban estates, does not a great deal of the welter of opposition and concern reaching MPs and others come from people who never go through the doorway of the pub in question? They have an emotional feeling that the pub should continue in their community, but they are not willing to sustain it in any commercial or social sense. Is that not the problem?
As the hon. Gentleman knows, one of the things that the save the pub group wants to do is encourage people to visit pubs. However, my answer to the hon. Gentleman is no; he has described a problem, but the problem that we are discussing today is ownership.
Who is closing pubs in this country? The bitter irony is that the vast majority of closures are being carried out by the very companies that protest loudly about the future of the British pub. I want to challenge a comment made by the hon. Member for Selby (Mr. Grogan), for whom I have huge respect as the chairman of the all-party group on beer—I am proud to be an executive committee member of that group—because the simple reality is that fictitious figures are being circulated. In any town in the country, one can see “To let” boards hanging from pubs. It is what is called churn or turnover. When a licensee leaves a pub we are, I am afraid, talking in almost every case now about the failure of a small business. Often that is accompanied by a story of human misery—sometimes tragedy. We cannot ignore that, yet the big pub companies will not tell us about it. We are told, “Oh, they are temporary closures. They are not real closures.”
We need to be clear that it is not free houses that are threatened. Of course, there are issues to be raised with respect to all pubs, and we all want to challenge the supermarkets on their low pricing and were disappointed by the duty decision last week. However, we must concentrate on the fact that, as has been said, the playing field is now, to an impossible extent, not level between the free houses and the tenanted pubs of some—I stress the word “some”—of the very large pub companies and the large and medium-sized brewers.
I apologise for missing the early part of the debate. I commend the hon. Gentleman on the report that he submitted—I know that others helped—to the Select Committee on Business and Enterprise. It is a very good report.
I have a friend who is a publican. I feel strongly about the fact that publicans cannot know the context in which the pubcos work. It is a completely one-way negotiation. I have gone through with her some of the problems of trying to get clarity about what the pubco expects of her; it is the greatest unfairness. I know that that features in the report, and perhaps the hon. Gentleman will say something about it.
I thank the hon. Gentleman for his comments, which I agree with, and for his help with the submission, which will, of course, be published when the Committee publishes its final report.
The simple reality is that, even since the 1986 beer orders, the situation regarding the tie—we must not be lazy, because we are not talking about one thing or one model—has changed out of all recognition. We no longer have the old paternalistic breweries that supported their tenants; we now have property-owning companies—that is what they are—that, frankly, have little interest in what happens to pubs in each area. If anyone says otherwise, why are some of the large companies slapping restrictive covenants on pubs as they close them, simply to prevent the properties ever being pubs that serve the community again? That is a scandal. Will the Minister say when the Government will legislate to prevent that? He will not find a single Member of the House who thinks that that is acceptable behaviour.
What has changed since 1986? It is a little bit like the situation with the banks. When times were good, sales were allowed to billow, and I am afraid that we saw some extremely irresponsible business practice. The large pub companies have taken on £20 billion of debt. To feed that debt—this is what we should be talking about, rather than whether there should be a tie—those pub companies are having to extract money from their pubs through unreasonably high beer prices and unreasonably high rent. Those things are not balanced.
The two large pub companies, Punch Taverns and Enterprise Inns, pay approximately £750 million per annum to bondholders and banks, much of which goes abroad, which is entirely unsustainable. To give a simple figure, servicing the debt costs £55,000 per pub in this country. That is a profound reason why pubs are closing. As my hon. Friend the Member for Southport has said, the model has become skewed. Servicing debt is what is closing pubs.
We must send the message that we absolutely need reform. We simply cannot take the excuses that come from those in the pubcos who say that their pubs are not closing when we can all see it happening. We cannot believe that such an enormous and unsustainable debt is not a great threat to the British pub, because it blatantly is. We must have reform.
As the hon. Member for Stroud (Mr. Drew) and the right hon. Member for North-West Hampshire have said, some of the contracts between companies and their tenants are outrageous. Every time somebody buys out—in other words, when they buy beer outside their contract—they are slapped with a huge, five-figure fine. Who polices that? The pub companies. Is there any right of appeal? No, there is not. Some contracts have clauses that force tenants to take on insurance. Although the upward-only rent reviews have gone—that was the only 2004 Select Committee recommendation that was acted on—we still have the retail prices index rent increases in annual agreements. There are countless examples. I am frankly amazed that some of the things in the contracts are legal in British and European law, and they need to be challenged. Will the Minister look at the matter closely? If those things are currently legal, they should not be.
There is no right of appeal for tenants in such situations and no right to independent arbitration. Those agreements must be changed in a series of ways, if they are not to continue leading to situations in which abuse takes place. That is a strong word, but people feel that they have been abused. Let me a quote a few of the many, many letters and e-mails that the all-party save the pub group has received. I will not name the pubs, because the large pub companies are astonishingly litigious. Those companies spit out solicitors’ letters as soon as anyone dares to criticise them, and I do not want to get tenants into trouble.
I received this letter from a pub in Essex:
“Enterprise Inns are a debt-ridden company. They have to tie their pubs and charge extortionate prices for their ale. They do not have any understanding of our businesses nor do they care…Something needs to be done. We are a very viable business, but it is being undermined by Enterprise for its greed. They should be assisting tenants, not hindering them. The sad thing is all we can do is fight them or walk away.”
A letter from a Punch pub in Watford said:
“Last week, a visiting publican, during a conversation, worked out that through my rent and beer purchases, Enterprise Inns makes over £260,000 a year out of my pub. He called it ‘obscene’. As I said, I make a living…Enterprise Inns and the tax man can make the fortune my customers think I am making.”
Here is a case from my own constituency:
“If I knew what Enterprise Inns were like, I would not have taken on one of their pubs and wasted all my life savings—it is disgusting.”
I could go on. The save the pub group has had countless letters and e-mails from all over the country saying exactly the same thing.
Something must be done. CAMRA believes that something should be done, and it has made it explicitly clear that the system of pub ownership created by the pub orders is closing community pubs. It wants to see the issue referred to the Office of Fair Trading. However, that is no good, because time is running out for pubs in all our constituencies up and down the country. Unless we have real reform and soon, we will lose thousands of pounds because of this business model. That is the simple reality, and I challenge the Minister to go away and consider the issue. We were very disappointed by the beer duty decision last week, and we will carry on campaigning to try to have that reversed. Nevertheless, I ask the Minister to consider this issue and to come back with proposals to replace the existing model, which, as my hon. Friend the Member for Southport has said, no longer works for tenants, pub customers or the debt-ridden companies themselves.
What I am concerned about is that the situation is closing pubs. We must have fair rent, transparent and independent rent reviews and an end to the grossly excessive prices that are charged to tenanted pubs. For example, Enterprise Inns has raised prices above the level of inflation over the past few years, and yet it has said how concerned it is about beer tax—as we all are. We must have real and serious reform. Simply referring this desperately important matter to the Office of Fair Trading would be to kick it into the long grass.
My challenge to the Government is to go away and consider some of the proposals on the table. For example, they should look at making the operation of the tie subject to a time limit, so tenants have the chance to opt out in a review after three years. We would be saying to pub companies and breweries, “If it is such a good model for the tenants, as you say it is, surely they will continue with the operation of the tie.”
If there were an opt-out, as my hon. Friend has said, what would happen to the tenants who were not in a position to go ahead and buy the pub? What would happen to the model? Is he suggesting that we change the whole model and have a different type of tie, or is he suggesting that we abolish the tie all together?
I am suggesting that a tied relationship could have a maximum length of operation after which there would be an opt-out for both sides. We have seen people tied in for many years. Many have lost their life savings and houses and have been pursued incredibly aggressively by some companies. There is no question but that we need a mandatory code of practice. How on earth can those people who are closing pubs—in some cases, they are abusing their tenants—be the ones who are considering how the industry should operate? We need restrictive covenants. One concern is about what happens if a number of those companies go to the wall, which is not out of the question considering the level of debt. I appreciate that this is not the responsibility of the Minister present today, but if we are serious about the community pub, we must enshrine it in planning law and give every community a right over its future. We cannot have pubs being closed to service debt or to deal with shareholders and bondholders who are abroad, but that is what is happening.
I speak as a signatory of early-day motion 1272, which proposes outlawing the tie. The hon. Gentleman wants substantial reforms; perhaps one that he might consider and find attractive would be for pubcos to have a maximum of only 1 or 2 per cent. of British pubs within their ownership. That would give protection to the medium-sized regional breweries that are struggling. Such breweries have a great deal to offer and do not operate in the way that has been colourfully described with reference to pubcos.
I thank the hon. Gentleman for that intervention and for his contribution to the Select Committee. As he knows, I would advocate that measure, because the concentration of ownership in a few companies is a bad thing and is closing pubs. On its own, however, it would not change things, because the model itself is wrong. One unfairly treated or exploited tenant is also an issue, and we must look at that.
The final recommendation, which I wish the Minister to take seriously, is that of giving tenants the right to buy at market rate. The right hon. Member for North-West Hampshire has already mentioned the absurdity that the big companies purportedly offer their pubs to their tenants. I will give one example from Otley where I live. A pub valued independently at approximately £450,000 was offered to the tenant for £1.2 million. That is what is happening, and that is why people cannot buy their pubs and serve their communities. I advocate that communities should be given the right and opportunity to buy a pub before it is closed.
To conclude, if we are serious about saving the great British pub—let us not make any bones about it; that is the situation that we face—we must reform an entirely unsustainable business model that leads to a skewed relationship, which in some cases borders on abuse. We must put more power in the hands of communities. We want to see more pubs owned by people and landlords, but we will not get that unless we address the market and the way in which it operates. It is time to put the British pub back in the hands of the British people.
As my neighbour in Gloucestershire, the hon. Member for Cheltenham (Martin Horwood), also wishes to speak, I would not dream of taking too long. I congratulate the hon. Member for Southport (Dr. Pugh) on securing this debate. It is a slight variation on the one that I secured before the Easter recess, which was about the future of pubs more generally. I requested that debate because of the figure of 39 pubs that are closing a week—I think that the hon. Gentleman said 40, but we shall not argue about that. Whichever number it is, it is very alarming. In that debate I tried to explore some of the reasons for the pub closures.
I will return to the pubco situation in a moment, but I do not think that we should let the Government off the hook as lightly as we seem willing to do. They have been well aware of the number of pubs that are closing. They increased the cost of alcohol last year and have done it again in the Budget. When they put VAT back up to 17.5 per cent.—as they surely will—the cost will go up yet again. They do not seem to be aware of what they are doing, and it is important to remember that. Then we have the supermarkets. I have nothing against supermarkets that sell alcohol as a loss leader. They sell it very cheaply and it is consumed very responsibly by some, and less responsibly by others. That is what the pubs must face. A number of other measures have caused the pubs to close on the back of that, and now that the Minister has returned I will say again that we should not let the Government off the hook. They are helping to close pubs and should not continue to do so through the taxation policy that they follow. They take almost £15 billion a year in taxation from the drinks industry, and they should not squeeze it any more than they already have.
Normally, when I stand up to speak in this place I have a particular point to make. I am not quite sure where I stand on pubcos, so one might ask, “Why bother speaking in the first place?” Well, in the couple of minutes that I have left, I want to say that we need to balance the debate a little more than it has been balanced today. I really come down on the side of my right hon. Friend the Member for North-West Hampshire (Sir George Young), who says that we should probably look at this issue a little more cautiously. I want to see the conclusions that the Select Committee reaches when it publishes the results of its inquiry. At the moment, I would not rush into abolishing the tie.
I am a regular patron of pubs and I have listened to many pub landlords who say, “We have got to get rid of the pubcos”. However, they all seem to rush towards the pubcos when they want to take the pubs on, and I wonder whether a strengthening of their position through their own actions might be a better way forward. I understand what my right hon. Friend says, which is that the Government can intervene in free markets, and he gave many examples where that has been the case; I understand that point. None the less, we really ought to be very careful on this issue. We all want to achieve the same thing, but I remember that the beer orders—I think that I am right in saying that they were introduced in 1989—did not achieve what they were meant to achieve. The last thing that I want to do is introduce further legislation—well-intended legislation, as most legislation is—and not solve the problem but actually make things worse. It is possible that we could do that.
We must look at all the considerations. For example, would it be better if companies simply rented out the premises and did not have an arrangement with regards to beer, or would that lead to rent being a lot higher than it is now? We have to consider all these elements before we rush to judgment on this issue.
I do not want to take up any more time; I know that the hon. Member for Cheltenham wishes to speak. However, I just want to urge a little caution about this issue. Yes, let us look at it extremely carefully. I am well aware of the complaints that are made against pubcos and I do not seek to represent pubcos at all. Nevertheless, I think that we should engage with pubcos to discuss the way forward.
I am a member of the all-party save the pub group and the all-party beer group. We have discussed these issues with licensees, but we should also discuss them with pubcos and see if there is not a better way forward before we rush towards introducing what could be inappropriate legislation.
I want to congratulate my hon. Friends the Members for Southport (Dr. Pugh) and for Leeds, North-West (Greg Mulholland), both of whom are proving to be great champions of the traditional British pub. It is also a pleasure to follow my neighbouring MP, the hon. Member for Tewkesbury (Mr. Robertson), and to see such good representation by Gloucestershire MPs from all three main parties in this debate.
We are losing 40 pubs a week in this country, or something of that order. That is a national crisis. It may not compare with climate change, global recession or even pandemic flu, but after we have spent all day contemplating those global catastrophes we need a pint and somewhere good to drink it in.
[Mr. Clive Betts in the Chair]
Unless we defend the British pub, that place to drink will not be available. These social and community hubs will continue to be lost. Furthermore, as other hon. Members have said, pubs are environments in which responsible drinking is naturally controlled, because landlords and bar staff keep an eye on people and there is also peer group pressure among drinkers in pubs that simply does not operate in the type of drinking environments that are starting to develop elsewhere. So pubs are an important weapon, if you like, in the war against binge drinking.
In the time that I have available to me, there are two issues to which I want to alert hon. Members. The first is planning. It is quite rightly said that not all pubs are closing because of the tie. The Greyhound pub in my constituency, which is a popular community pub and a viable business, is closing despite huge support from the community and unanimous opposition to its closure from the local council. It is closing because the private owner wants to increase the land value, presumably with a view to a potential sale. He has planning permission to convert the pub into flats. That planning permission was initially refused by the council, but the council’s decision was overturned on appeal by an inspector who spent a few minutes in the local area. It will be a tragedy for the local community if that pub closes.
The Sustainable Communities Act 2007 offered some hope that we might be able to counter such actions, but when we read the small print, we found that there was precious little that the local council could do to defend local pubs. We need to pay attention to that.
On the tie, my constituent Simon Daws runs the Royal Oak in Prestbury, in the constituency of my neighbour the hon. Member for Tewkesbury. Mr. Daws suggests a restricted form of tie that offers an interesting alternative. He suggests that the tie, if not abolished, could be reformed to guarantee a list of products—for instance, one draught ale, one draught lager, one bottled beer, one red wine, one whisky and so on—that the landlord could offer free of the tie.
The system would have the advantage of offering consumers more choice and presumably more competitive prices, and enable them, for instance, to support local beers from microbreweries. The licensees, as Mr. Daws says, would clearly
“see a margin increase in the Listed Products, benefiting profitability. They could source which ever product they chose, from wherever they chose. Fewer licensees would be on the breadline and more pubs would remain open.”
The brewers would retain a presence in the market, but they might have to stop subsidising supermarket sales in the off-trade from pub sales in the on-trade. That would have the knock-on benefit of discouraging the kind of pricing regime in supermarkets that we see as a major contributor to binge-drinking culture.
Clearly, the pub companies would not be completely enamoured of the proposal, but they would still retain by far the largest percentage of products on display on the bar. They would still have an interest in maintaining the pubs’ viability, but would be pressured into more competitive pricing. That is an entirely good thing, because within their doors, all such pubs are monopolies. As my hon. Friend the Member for Southport rightly said, in the end, our obligation is not to the shareholders of pub companies; it is to local communities. If we manage to achieve sensible reform of the tie, pubs will be more open and more attractive, offering a better range of drinks. They will be more connected to local communities and more competitive with the supermarkets. That offers a positive future. If we do not reform the tie, local communities will continue to lose their pubs and their heart.
Thank you, Mr. Betts, for showing leniency to my hon. Friend the Member for Cheltenham (Martin Horwood) in his interesting and worthwhile submission and suggestions. I congratulate my hon. Friend the Member for Southport (Dr. Pugh) and all those who have spoken in this debate. It has been an interesting and well-considered report from knowledgeable people.
I know that running pubs is tough, because I had a small pub company myself at one point in the late ’90s. Revolving-door tenancies have been referred to; interestingly, the situation was just the same then. Economic circumstances, changes resulting from the beer orders and changes to the whole culture and nature of British life, which used to embrace the pub to a far larger degree, were taking their toll at that time.
There is, or should be, a symbiotic relationship between the pubco and the tenant. If one fails, both fail. It should permit entrepreneurs who want to have a pub but cannot afford to buy one to use their entrepreneurial talent. There are four basic models of pub in the United Kingdom: managers, the free house, the tie and the lease. The benefit of the tie is purported to be vertical integration. The pubco should provide business support, and it gives a three to five-year contract. The quality of the business support can vary. The pubco maintains the property, but a tie is on the beer and often, although not always, on other drinks as well. That is open to negotiation between the company and the tenant.
I am grateful to my hon. Friend. Obviously, the situation will vary. The theme running through the debate is the perceived inequality in the relationship between the pub company, which seems to hold the cards, and the tenant. It has almost been portrayed as a David and Goliath relationship, but both have to benefit; otherwise, neither will.
I would disagree with my hon. Friend in that the failure of any pub must be a failure for the pub company, as well as a cost to it. However, I take his point and I am trying to be fair in dealing with the question of equality between the two groups.
On the lease, there is the longer-term benefit to the lessee, as well as greater security of tenure. There is also the tie on the beer, but the lessee is responsible for the building and for maintenance. There are also the benefits of assignment, which are one of the major issues on which tenants want greater security. Those benefits have largely been lost in recent years. Finally, industry representatives tell me that much of the pressure over the problems of the tie is coming from lessees rather than tied managers.
The Fair Pint campaign opposed the tie and wants pubs to be sold to licensees at fair prices. Could tenants afford £250,000 or £1 million to buy a pub? If not, rents would have to increase. Such proposals would also mean pubcos being split into the wholesaling and property businesses, and we have heard extensively about pubcos’ problems with property, which are putting pressure on their relationship with tenants. The proposals would also mean that landlords could buy beer on the free market, but the pubcos say that their big purchasing power would be lost. They also say that international brewers would benefit and fill the gap when UK brewers did not satisfy demand, but I am not entirely sure that I buy that argument. Who buys the brewers’ beer now? Surely, our existing market would be able to satisfy a differently structured pub sector. Finally, the chair of the all-party group on beer has talked about smaller breweries benefiting from the tie.
The problem is the imbalance in power, and I want to make a few suggestions about what could be done. A lot of the problem is the result of unskilled people moving into pubs without necessarily understanding what they are letting themselves in for. The pubcos should give people far more than the typical one week’s training, which is totally insufficient. It is in the interests of both parties that much more aware and trained people take on pub leases.
The Department for Business, Enterprise and Regulatory Reform has talked about ending upward-only rent reviews, and I understand that that is now in the code of practice and is being implemented. I hope that somebody has told the tenants, although I do not know whether they have. There should be transparent contracts, and small print should be outlawed. The code of conduct needs to ensure that that happens by providing for some form of due diligence.
The practice of restrictive covenants, which my hon. Friend the Member for Southport mentioned, must stop. The code of practice now gives a greater number of successful tenants the right to buy their pubs. Where a pub is being sold or closed, the tenant should have first right to buy.
We are in difficult economic times. We have the credit crunch, the beer tax, smoking and supermarkets: we can do something about supermarket under-pricing with a minimum pricing system. We are living in tough times. With the pubcos in so much property debt perhaps it is time to change the model; but that model will work only if both parties benefit.
There are more than 58,000 pubs in the UK, directly employing 600,000 people. The sector contributes approximately £28 billion to the UK economy. In addition to their economic importance, as the hon. Members for Southport (Dr. Pugh), for Selby (Mr. Grogan), for Leeds, North-West (Greg Mulholland) and for Cheltenham (Martin Horwood), my right hon. Friend the Member for North-West Hampshire (Sir George Young) and my hon. Friend the Member for Tewkesbury (Mr. Robertson) said in their own ways, pubs are often the centre of their communities. A third of UK adults socialise in a pub at least once a week and following the wholesale closure of our post offices in the past decade they are sometimes the last remaining amenity in small communities. All in all, the pub trade is very valuable to our country, so I congratulate the hon. Member for Southport on obtaining the debate.
In spite of the facts that I have just outlined, as the hon. Member for Selby and other hon. Members said, the number of operational pubs in the UK is in steep decline. The British Beer and Pub Association estimates that 39 close each week. If that trend continues, more than 7,500 pubs will shut by the end of 2012. That is one in eight British pubs. In the past 12 months alone more than 2,000 pubs have closed, with the loss of 20,000 jobs. Unsurprisingly the brewing industry is suffering too. Since 1997 there have been 37 major brewery closures and more than 5,000 job losses. That amounts to more than 25 per cent. of all brewing sector employees. I have just heard that in the last quarter beer sales were 8 per cent. down overall. That is 6.3 per cent. down in pubs and 11 per cent. down in supermarkets. In recent months the Conservatives have launched a campaign in support of the great British pub. Responsible pubs and considerate, informed, socially aware drinkers have a positive role to play in communities throughout the country, and our nation would be a great deal worse off without them.
Landlords, brewers and beer drinkers each have a slightly different view of what is driving the decline, but common issues frequently crop up. One of the most controversial, as the hon. Member for Southport pointed out, is the supply tie or beer tie. Approximately 30,000 British pubs are subject to some form of tie, and a further 9,000 are directly managed by, for instance, a retail chain. The remaining 18,000 are free houses. Pubcos and the BBPA are adamant that supply ties are fit for purpose. They argue that rents are often lower for tied tenants than for those operating a free house; that property maintenance usually remains the responsibility of the freeholder; and that taking on a tied pub offers a low-cost entry to a self-employed business. They also state that when a tie is in operation the pubco has a vested interest in the success of the pub.
Many tenants and campaigning organisations such as the Campaign for Real Ale argue the opposite, however. They believe that the large pubcos are so saddled with debt from freehold acquisitions of the past two decades that simply servicing it dictates that they place tremendous burdens on their tied tenants. The hon. Member for Leeds, North-West made that point very well in his call for more community holding of pubs. I should appreciate the Minister’s view on the anti-competitive practice of imposing restrictive covenants on pubs when the freehold is disposed of.
As several hon. Members stated in the debate, in 2004 the then Select Committee on Trade and Industry recommended that exclusive purchasing agreements—ties—are desirable only if, in broad terms, the benefits equal or outweigh the costs. To me that seems a sensible business proposition, but one that is very much determined by the individual tenant and lease. The hon. Member for Southport does a significant disservice to the innovation and competition brought into the sector by the previous Conservative Government, as my right hon. Friend the Member for North-West Hampshire explained. In 2000 the Office of Fair Trading undertook a review of the pub and brewing industry and decided that the market had undergone significant structural changes, with only about 15 per cent. of pubs now owned by brewers and large independent owners making substantial inroads into the market.
I understand what the hon. Gentleman is saying, but the point I was trying to make was that at that point—and it was not to be anticipated, but was an unintended consequence—because the purchasers were private equity houses, which borrowed the money, there was a huge dead weight cost on the industry, which had not been there before 2000.
I understand the hon. Gentleman’s point, but he will also appreciate that markets and models change. Big debt structures are not exactly flavour of the month in the City, so he will probably not see too many of them in the near future.
The review led to the repeal of the beer orders that regulated the ties. In 2005, the Competition Commission suggested that the OFT revisit the pub and brewery market and focus particularly on the impact of pubcos rather than just breweries, but after conducting a preliminary study, the OFT decided not to proceed with an investigation. Clearly, it is a matter for the OFT and the Competition Commission. At this stage, we should respect their judgment on the matter. As we have said on many occasions, legislation should be a last resort, not a first resort, especially when it has the potential to create a regulatory burden on business. The current economic situation renders that a particularly salient issue.
Equally, where it exists, uncompetitive practice is not sustainable in the long term. We are hopeful that the market will develop in a transparent and competitive manner and that pubcos and breweries will work hard to ensure that, when a tie forms part of a lease, it is appropriate, and that the tenant as well as the freeholder derives benefit from it. The hon. Member for Selby made a solid case on the issue, but I also accept that if regulation becomes necessary, we should act, as my right hon. Friend the Member for North-West Hampshire said. My hon. Friend the Member for Tewkesbury suggested a similarly cautious approach.
Modern pubs, whether tied or not, face other challenges. As my hon. Friend made clear, one such challenge is the Government alcohol taxation and the growing disparity between the price paid for a pint at the bar and the price paid at the checkout. According to the BBPA, 84 per cent. of pubs are small, family-run businesses. They may be owned by a parent firm, but their operation and cash flow is managed day to day by the publican and several staff. The BBPA argues that those small operations cannot simply absorb increasing tax and regulatory costs and that they must pass them on to consumers. By contrast, as my right hon. Friend the Member for North-West Hampshire pointed out, supermarkets are simply not burdened in the same way. Alcohol is frequently used as a loss leader to encourage consumers into stores.
It is wrong to pretend that the market for alcohol is entirely price dependent and that cost is the sole factor operating in the mind of a consumer when they decide whether to drink at the local pub or at home, but it is equally wrong to suggest that the price of alcohol has no impact on such decisions. We believe that setting a minimum price per unit of alcohol is not the way forward on the issue—at least not at this stage. It is too much of a blunt instrument. We should avoid penalising every responsible adult who simply likes the occasional quiet drink by inflating the price of all alcoholic products. That is why we propose using the tax system to help pubs and to target binge drinking. We are pressing for a revenue-neutral package of changes to alcohol taxation. The proposals would mean that tax would fall on some drinks, such as moderate strength beer, and that it would rise on some problem products, such as high-alcohol cider and alcopops.
We would also deal with irresponsible drinkers and premises by enforcing existing laws with greater energy and zeal and by encouraging more voluntary schemes. That would not only make our streets more pleasant, but result in lower costs for responsible pubs, whose insurance and security costs are high because of the behaviour of other establishments.
Unfortunately, the only Government response to the plight of pubs and alcohol-related disorder was to increase alcohol duty by 2 per cent. in the Budget last week. As the hon. Member for Southport said, tax increased significantly last year but, as the Government must realise, tax revenue fell by £17 million. There is certainly more to the issue than tax. However, that was just one component of Labour’s dishonest Budget. I challenge the Minister to deny that it is a tax on the many, not the few.
I congratulate the hon. Member for Southport (Dr. Pugh) on securing parliamentary time for the debate. I also congratulate my hon. Friends the Members for Selby (Mr. Grogan), for Stroud (Mr. Drew) and for North-West Leicestershire (David Taylor); the right hon. Member for North-West Hampshire (Sir George Young); and the hon. Members for Tewkesbury (Mr. Robertson), for Leeds, North-West (Greg Mulholland), for Cheltenham (Martin Horwood), for Castle Point (Bob Spink), for Solihull (Lorely Burt) and for Huntingdon (Mr. Djanogly) on their remarks.
The hon. Member for Huntingdon, in peddling the usual line from the Conservative Front Bench, once again failed to say what he and his party would do about taxation. If he is concerned about the increase in drinking duty levied in this Budget, how would he find the additional revenues?
Let me just say that the hon. Gentleman claimed that his package would be neutral, yet in the same breath he attacked the Government for increasing the duty by 2p. I recognise that he has his get-out clause. I hope that he will recognise that he has not been clear with the House about where the additional revenues would come from if he and his Front-Bench colleagues reduced the duty.
A previous debate on the subject was secured by the hon. Member for Tewkesbury, and the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Bradford, South (Mr. Sutcliffe), who is in his place ready for the next debate, replied for the Government on that occasion. Some of the issues considered in that debate have been raised again today. I accept, as do all parts of Government, that pubs have traditionally been at the heart of communities as places to meet and as the focal point for many local groups and activities, and that they are a hugely important source of employment.
I should mention the experience in my constituency, where a series of pubs have closed. Before the recession, pubs such as the Railway Inn, the Rayners and Matrix closed, perhaps, as the hon. Member for Cheltenham mentioned, because their landlords sought increased value and alternative uses for the sites.
Let me mention something that the right hon. Member for North-West Hampshire referenced: the meeting that took place on 4 March between five of my ministerial colleagues and Members of Parliament to hear concerns about the future of the pub trade. I would like to make it clear that the drinks industry also met my noble Friend Lord Mandelson and the Chancellor in the run-up to the Budget.
I accept that these are challenging times for the pub and hospitality sector, as is the case for a number of sectors during the economic downturn. As my hon. Friend the Member for Selby said, the pub sector has been looked at long and hard by various organisations and committees in recent years. Most recently, the all-party beer group held an inquiry on community pubs and made recommendations covering a broad spectrum of issues extending across a number of Departments. The Government’s response to that all-party group report is being finalised and will be available shortly. I hope that right hon. and hon. Members understand that I will not anticipate or pre-empt that response.
As the right hon. Member for North-West Hampshire mentioned, in 2004, the Trade and Industry Committee published a comprehensive report on pubcos and concluded that no one pubco held a dominant position in the market. The Committee referenced the fact that small brewers might be disadvantaged by the requirements set by pubcos and said that the cost of beer ties are usually balanced by the benefits available to tenants. It said that splitting the wholesaling and property functions of pubcos by removing the beer tie could lead to national brewers having a virtual monopoly on beer wholesaling, as before the beer orders. The Committee concluded that the British Beer and Pub Association code of practice should be updated.
The Committee made just one recommendation to Government, which was that a statutory code of practice for the sector should be imposed if the voluntary code was considered ineffective. The Government’s response was that we saw difficulties in imposing terms and conditions in an area subject to commercial arrangements and where existing legislation would not allow us to impose such a code. That view still holds, but I will reflect further on the ideas proposed today by hon. Members.
Hon. Members will know that ensuring that markets operate freely and, crucially, fairly is in general a matter for the independent competition authorities rather than Government, as the Enterprise Act 2002 removed competition decisions from Ministers and put them in the hands of the Office of Fair Trading and the Competition Commission.
The relationship between pub-owning companies and their tied tenants has been investigated by the OFT and the European Commission. All investigations have concluded that tied lease agreements do not raise competition concerns. To date, the Commission and European courts have decided that agreements between pubcos and their tied tenants do not foreclose the market to competing brewers, as pub chains buy their beer from a number of different sources.
I have seen reports suggesting that no pubco has more than 15 per cent. of public house ownership in the UK. As some hon. Members will remember, the Trade and Industry Committee concluded that the costs of beer ties are usually balanced by benefits available to tenants. Indeed, the hon. Member for Tewkesbury, during his Adjournment debate in the House on 26 March, identified the fact that only 14 per cent. of closures are of pubs owned by any of the top six pubcos. I understand further that in evidence to the current investigation by the Select Committee on Business and Enterprise, CAMRA said that the beer tie provides a low-cost entry to pub ownership, is beneficial for medium-sized family brewers, means that pubcos’ share in declining beer sales and prevents the domination of the market by the global brewers.
In that context, the Business and Enterprise Committee launched an inquiry to follow up the work of the Trade and Industry Committee. In revisiting the subject, the Committee is interested to know whether the conclusions from the 2004 report should stand. Hon. Members will recognise that the Government have yet to see the conclusions in the Committee’s report. It would be a foolish Minister who rushed in before having seen the recommendations of the Department’s Select Committee.
Can the Minister clarify the Government’s position? I totally accept that the tie passes all the usual competition hurdles, whether set by the EU or by the Competition Commission, but many Members around the Chamber have made a good case—a good prima facie case, anyway—for a degree of regulatory reform that may and probably will stop short of abolition of the tie. Is he saying that the Government’s current position is that they are not considering any regulatory reform that will affect the tie in any way?
I said earlier that I would reflect on the comments made about the tie by the hon. Gentleman and a number of other hon. Members. The current position is the same as that set out in the Government’s response to the 2004 Trade and Industry Committee report, but a number of hon. Members have suggested ideas and, as I said, I will reflect on them.
I was asked a couple of specific questions about planning issues by the hon. Members for Leeds, North-West and for Huntingdon. Considering the time remaining, I may have to write to both hon. Members about restrictive covenants and planning policy. We are talking to the industry and will talk to other stakeholders before a consultation on the future of the Competition Act 1998 (Land Agreements Exclusion and Revocation) Order 2004, which deals with restrictive covenants. I will write to the hon. Member for Leeds, North-West about the broader issue of planning law.
Listed Sporting Events
It gives me great pleasure to introduce the debate. Lord Liverpool, who was the longest serving Prime Minister of the 19th century, referred to the people’s pleasure. This morning’s debates—the one about pubs that we have just concluded and this one about the concept of listed sporting events that are available to all—relate to two modern-day people’s pleasures.
There is a link between those two debates. I invite hon. Members to look forward to the World cup in South Africa next summer, which is the first ever football World cup to be held in the continent of Africa. Every pub up and down the land—even the most marginal ones—will be able to put a television in the corner, so that everyone can enjoy the World cup. Restaurants throughout London will be able to install televisions, and different nationalities in our great capital city will be able to watch the game. Schools up and down the country will be able to put a telly in the corner and, if there is a big match, the children will be allowed to watch it. Old people will be able to watch the football at coffee mornings and people will be able to watch it in their homes. Rich or poor, young or old—everyone will be able to watch the football World cup.
We take that for granted, but that is the case because of the concept of listed events. I remind hon. Members that that concept survived by one vote in a House of Lords debate in 1996. We should never take that concept for granted. It is now being reviewed by the Government. I welcome that review, which is something that I have called for in Westminster Hall debates over the years. However, it is possibly not just because I was so persuasive that the review is taking place—I would like to think so, but I doubt that is the case. There are other agendas, to which I want to draw the House’s attention.
The hon. Gentleman is right to link the two matters. Does he perhaps think that Sky’s charging policies for private members and social clubs for sporting events has forced the issue forward? I hope that the Government will react to that. I congratulate him—
The issue to which the hon. Gentleman refers is something that the Minister is taking up and might talk about in his closing remarks.
I wish to warn the House and, indeed, football supporters up and down the country, that FIFA—the governing body of world football—has made it perfectly clear to Ministers and the Football Association authorities that if we want to get the World cup in 2018, we have to amend our listed events legislation and that we have to substantially de-list the World cup. Ministers and the FA authorities are under pressure, which is one—although not the only—reason why the listed events review has been brought forward.
In recent weeks, two events have not exactly changed my life, but have opened my eyes. For the first—and probably the only—time in my life I was invited to the royal box at Wembley. As chairman of the all-party group on Ukraine, I sat where Her Majesty sometimes sits to present trophies, which is also where the Minister or the Secretary of State sometimes sit, depending on the nature of the trophy being given. I had the opportunity to talk to all sorts of officials from the FA that evening. Department for Culture, Media and Sport dignitaries and others were there, and it was clear that they all wanted a substantial amount of the World cup to be de-listed to sugar the pill for FIFA and to try to get it to award us the World cup in 2018. I will come back to some of the comments made that evening in a moment.
I also took part in my first Downing street webchat last week. We have to be careful when sending e-mails to Downing street these days, but I took the risk. The webchat was moderated by David Davies—an exemplary figure who is chairing the free-to-air listed events review. Incidentally, I think it is no accident that he has an FA background. I tried to intervene during the webchat debate. Someone asked what assurances could be given that the FIFA World cup would remain a listed event and David replied that the finals tournament of the FIFA World cup is on the current list and that the 2010 and 2014 World cups will be free to air. He also said that it is his job to review those and other events beyond those dates. Various people intervened. I thought that there were perhaps thousands of people on the Downing street webchat and that was why I was not able to get in. Eventually, the same name came back twice and I tried to make another intervention. I tried to ask David, “Surely, it would be a travesty if we got the 2018 World cup and most people in our country were not able to watch it, despite the amount of public money that has gone into many of our football grounds?” Eventually, I got a brief acknowledgement on the webchat, but I was not able to make an intervention.
However, I think that it is fairly clear where the FA stands. I predict that, unless we have a very strong listed events committee, some time later this year David Davies will present a report to Ministers that argues for the partial de-listing of the World cup; the only matches that would be left on the list would be those involving the home nations and perhaps the semi-finals and final. If that recommendation does go to Ministers, it will be a big test of the Secretary of State for Culture, Media and Sport. Is he really a man of the people? Is his heart with the real football fans of this country, as he tells us it is? Can we be confident that he will keep the World cup on free-to-air TV, despite all the pressures that will be on him? I hope that the answers to those questions in those circumstances will be, “Yes”. However, as I say, there would be many pressures on him.
We already have the example of cricket. Some of us believe that the cricket authorities, because of the way that they have manipulated matters so that the game has gone on to satellite TV, have done irreparable damage to the grass roots of the game, such that many people no longer see cricket other than the odd highlights package. Is that not the real problem?
My hon. Friend makes a very good point. I shall come on to cricket in a moment, but it is absolutely certain that this year we will not see eight million people viewing the Ashes. However exciting the Ashes will be, the average viewing figures are likely to be about 300,000 to 500,000 people, and as a result we will lose out as a nation.
I want to return briefly to the World cup. The types of arguments that I have mentioned are those that will be made, perhaps by David Davies and certainly to him and to Ministers. People and organisations, including the FA, will argue that we need to liberate the rights, if you like, to get the best possible price, because we need to allow FIFA to spend money to encourage people in Africa and elsewhere to take up football. Well, when we look at FIFA’s accounts, that argument is really not credible. Perhaps FIFA does not have the best governance in the world, if we look at their accounts.
For example, FIFA sold the television rights for the 2002 and 2006 World cups to an organisation called ISL Worldwide, which collapsed in 2001 with debts of £153 million. A liquidator was appointed and he discovered that, over the previous 20 years, £70 million had been paid out in kickbacks, including payments to FIFA officials. FIFA then sparked a criminal investigation of its own, after it claimed to have discovered that ISL had withheld £50 million of its money. The case collapsed on the final day, when a defence lawyer produced a secret memo purporting to reveal that FIFA officials had known that the money was missing. The court said that FIFA knew more than it had told investigators and that its claims were not credible.
Incidentally, FIFA has just spent £120 million on its headquarters in Zurich and it has spent £5 million on 20 football centres in Africa. I very much hope that Ministers will not come to us and tell us that we need to de-list most of the World cup because we need to support football in Africa. Ministers may come to us—the FA will certainly come to us—and say, “Well, surely not all the football World cup should be listed, because it is not all an event of national significance? Cameroon against North Korea, to pick one game, is not really a game that is of national significance.” However, if we look back at the history of the World cup, North Korea in 1966 made a big impression on world football and Cameroon in the 1980s and 1990s also made a big impression, as the first major representative of Africa.
We should not be little Englanders about the listed events. An event such as the football World cup should continue to be listed in its entirety. ITV tells us its average viewing figure in the last World cup was 5.7 million viewers and that was for all games, despite the fact that not many of them featured the home nations.
One of the things that the listed events review is considering is the criteria for listed events. I think that there are one or two additions that could be made to those criteria, which would support the full continued listing of the World cup. At the moment, the criteria include the fact that the event has a “special national resonance”. I think that the criteria should include events that have a special national or international “resonance”. The criteria go on to say that
“it is an event which serves to unite the nation, a shared point on the national calendar.”
Perhaps we should add that it is an event that serves to unite the nation and the world, and that it is a shared point on the national and international calendar. That would strengthen the case for the World cup being listed.
I should now like to turn to cricket, which was mentioned by my hon. Friend the Member for Stroud (Mr. Drew). As he reminded us, this year is the Ashes series. In the last series, we lost the first test and won the second. We saw that iconic picture of Flintoff and Brett Lee hugging each other at the end of the game. We drew the third test and won the fourth. When we went to the Oval and all was at stake, the whole nation stopped because everyone could see the match on free-to-air TV. That will not be the case this year. The former chairman of the English Cricket Board, Lord McLaren, who did the gentleman’s deal with the then Secretary of State—now Lord Chris Smith—is disappointed because he expected some cricket to remain on free-to-air TV despite its de-listing. Although he says that he would not bring all Test match cricket back on to the A-list—the list that must be live on free-to-air TV—he has implied that he would bring back some of it. I suggest that the Ashes series is a prime candidate for listing.
The next two Ashes series have already been sold to BSkyB, which does a brilliant job covering cricket. The only problem is that many people in the country do not see it. If people cannot afford Sky TV, they will not be inspired to take up cricket because they will never see the sport. It is a national disappointment, if not a national tragedy, that because of the strength of the listed events legislation in Australia, the test matches this summer will be able to be watched live in Australia, but not here on free-to-air TV.
The ECB makes all sorts of claims about increased participation brought about by funding from the satellite deal. Clearly, there must be a balance; no one would dispute that. None the less, there is doubt about some of the ECB figures; it seems to be a matter of smoke and mirrors.
In a recent survey that asked south London youngsters what sport they would like to take up and see more facilities for, cricket came 21st. That reflects the fact that many people see no live cricket at all. The ECB gets more public money than any other sport. Possibly because Ministers have been defensive about the de-listing of cricket, they have not asked enough questions about whether enough money is going to the grass roots of the game. A lot of money is going to the counties, but, as I say, there is a lot of smoke and mirrors on the figures.
I should like to see the Ashes re-listed, and elements of the cricket World cup and the Twenty20 World cup. That would at least give a signal to the authorities that some cricket should be on free-to-air TV. There is a role for the terrestrial broadcasters, particularly the BBC, to step up to the mark if that happens and make credible bids. The BBC has a long tradition of covering a wide range of sports. I should also like to see it make some bid for county cricket. It is important that the BBC, as far as it is able, covers a full range of sports.
I move on to other sports that could be re-listed, additionally listed or put on to the A-list so long as there is a credible bid from terrestrial broadcasters. With regard to football, there is a case for listing the World cup qualifying matches and the European championship qualifying matches. The England home games are currently live on free-to-air TV, but there was controversy last year when many of the away games were not initially going to be on free-to-air TV. The three other home nations—Northern Ireland, Wales and Scotland—have no live coverage now. If Scotland does not qualify for the World cup, the Scottish people will never see their national team on live free-to-air TV. We all hope that they qualify and that the home nations do well next year. As in Germany, France and Italy, there is a strong case for listing those qualifying matches.
The last day of the Ryder cup is another possibility as no golf is currently listed. Perhaps we could have the last day of the Open golf championships, as that is not currently on the A-list. There may be others. Some rugby fans have mentioned that we rarely see highlights coverage of the British Lions abroad. I am not sure whether highlights are available for the current series, but usually throughout most of our nation they are not. That is a candidate for B-listing.
In summary, I am an unapologetic enthusiast, as I think most in our nation—and I hope our Government—are for intervening in the sports market and ensuring that there are events to unite the nation and bring us all together. It is something that we all want to talk about, no matter what our economic circumstances are in life. In the new digital era, a lot of people will never be able to afford a subscription or pay TV. A subscription to Sky Sports costs well over £400. As MPs we are lucky—we can see Sky Sports in our offices. Many of us subscribe to it and it does a marvellous job. However, it does not offer universal access, and the principle of listed events should go beyond the digital switchover.
In Australia, people are having a similar debate. They have a more comprehensive list than us, which includes about 30 different events across a range of sports. They see the digital switchover as an opportunity as there will be far more channels that meet the criteria to show a listed event that can be seen by 95 per cent. of the nation. I hope that the first thing the review does is confirm the principle of listed events. In particular, I hope that it will defend those events that are already listed. I hope that the Government and David Davies will surprise me and unambiguously defend the whole World cup to be on terrestrial free-to-air TV, so that in 2018, even if the Secretary of State is not Prime Minister and in the royal box by that point, he will be able to watch it at home with his children or in the pub.
There are many debates about sport on television, but I hope that there will be a proper debate about the pay TV market and whether it should be liberalised with more players encouraged into the market. The House should not lose sight of the fact that many people will never be players in the pay TV market. Our nation is stronger for the fact that everybody can watch events such as the World cup, whatever their economic circumstances, and can be inspired and marvel at great talent. Long may that be the situation.
It is a pleasure to serve under your chairmanship, Mr. Betts. As a member of the parliamentary football team, it is great that you are chairing this excellent debate.
I want to congratulate my hon. Friend the Member for Selby (Mr. Grogan) on securing this debate and on his ongoing commitment to free-to-air sports coverage. It is a pleasure to see my hon. Friend the Member for Stroud (Mr. Drew) and the hon. Member for Castle Point (Bob Spink) at this debate.
I am looking at the cost of Sky to pubs. I gave a commitment to my hon. Friend the Member for Selby to look at that issue, and I have a meeting scheduled with Sky to see whether we can do something to get a deal, particularly for smaller pubs and chains.
And clubs and social clubs as well. I will report back to the House once that meeting has taken place and we will see what happens.
My hon. Friend the Member for Selby is one of the strongest advocates of the listed events system and of the importance of having major sporting events on free-to-air television. He has actively sought the return of live test match cricket to the A-list of protected events. As we have heard, he sought to ensure that in the run-up to the 2010 FIFA World cup, home nation international football qualifying matches receive the same protection for free-to-air coverage.
He has raised concerns about the 2018 World cup bid. As he knows, the Government are committed to getting the World cup in 2018 as part of our decade of sport. We want to ensure that we continue with what will be a glorious decade of sport starting this year with the Twenty20 cricket world cup, and heading through to the Olympics in 2012, the Commonwealth games in 2014 and hopefully the rugby and soccer world cups. There will be other major sporting events as well. We are doing that, because we want the country to enjoy sport. We have committed ourselves to getting 2 million people involved in physical activity and sport by 2012. We are trying not only to get people away from their TV screens but actively on to football and other sports pitches.
My hon. Friend the Member for Selby makes a pertinent point about the passion and thrill that major sports engender, which we have all shared over many years. We all remember the great events that we have seen on TV, and he is right that such things—whether the World cup or other fantastic events—bring the nation together. I think that we call it a water cooler moment when people come together to share the highs and lows of great sporting endeavours. For me, it is also about seeing children re-enacting sporting events for weeks afterwards and talking about events that bind us together as a nation. That is why we have the listed events regime. When my right hon. Friend the Secretary of State for Culture, Media and Sport commissioned the independent review of free-to-air events last year, he said:
“Sports broadcasting is clearly one of the most powerful areas where that sense of community through television is most profoundly felt.”
As usual, my hon. Friend the Member for Selby tempted me down a number of routes, but he will know that we are in the middle of a review, and there are some issues on which I clearly do not want to comment, because we want to hear what the review has to say. However, he is right that the last review took place more than 10 years ago, when the Government recognised that the time was right to ensure that the listed events regime was fit for purpose in a digital age and to look again at whether the right events were protected by the free-to-air broadcast list.
As we have all seen, the broadcasting landscape has changed significantly since the last review in 1998. As my hon. Friend has said, the advent of digital technology has provided viewers with an increased choice of channels and an ever-growing number of ways to view and access sports events. Viewers’ attitudes to the way in which they consume premium content—particularly sports coverage—has also changed.
We needed to take account of those and other developments. At the end of last year, therefore, the Secretary of State announced his decision to set up an independent review of free-to-air events. David Davies was asked to lead the review, given his wealth of experience in the sport and broadcasting worlds—he was the former executive director of the Football Association. In January, nine further panel members were appointed to support him in his work. The Secretary of State selected those panel members on David Davies’s recommendation to provide a wide range of national, sporting, broadcasting and business perspectives. Clearly, we tried to ensure that there was a wealth of experience.
The advisory panel was tasked with reviewing three areas: the principle of having a list, the criteria against which events may be listed and the content of any list. To assist with its review, the advisory panel launched a public consultation on 8 April, which will run until 3 July. It might be helpful if I outline the process and set out the wide range of ways in which the panel will gauge the views of the general public and key stakeholders.
From the outset, the panel has recognised the importance of ensuring that its recommendations to the Secretary of State are informed by as wide a range of views as possible. In line with that approach, David Davies has written to a significant number of broadcasters, sports rights holders, governing bodies and interested parliamentarians to draw their attention to the consultation.
As part of the consultation process, the panel will also hold events in each of the nations, as well as focus group meetings and oral evidence sessions with key stakeholders throughout the UK. Indeed, as my hon. Friend the Member for Selby has said, David Davies held a webchat at No. 10 only last week to promote the review and seek views on the listed events regime. He took part eloquently in that debate and took the opportunity to raise certain issues, as he has done again today.
We will see what the reception is when we see the outcome of the recommendations. I hope that hon. Members see that there are many opportunities to respond to the consultation, and I encourage anybody with an interest in these important and emotive issues to do so.
The consultation also asks about the inclusion of non-sporting events, and it is important to remember that such events may also be listed. So far, the UK has listed only sporting events, reflecting our strong sporting heritage, but some European countries include non-sporting events in their lists, and the advisory panel will consider whether we should do likewise. I understand that David Davies has written to a number of cultural groups, particularly the Arts Council England, the Arts Council of Wales, the Arts Council of Northern Ireland and the Scottish Arts Council to seek their views.
The consultation closed in July, and when the panel has finished deliberating, it will prepare a report, with recommendations, for the Secretary of State. It will present that report to the Secretary of State in the second half of 2009. Importantly, the Secretary of State will then reach his own provisional conclusions and before taking a final decision will carry out statutory consultation with the broadcasting authorities and any affected rights holders in line with the requirements of the Broadcasting Act 1996. He will then announce his final decisions following conclusion of the statutory consultation.
I turn to some of the issues raised by my hon. Friend the Member for Selby. Through its initial work, the advisory panel is already well aware of my hon. Friend’s concerns, particularly those relating to test cricket and international football, which he addressed again today. I am sure that the panel knows his views. He should be reassured that the panel recognises that those issues will need to be comprehensively addressed as part of the independent review.
I shall give an example, in relation to cricket. David noted in his recent webchat that the panel will try to understand how the present situation relating to cricket coverage and the sale of cricket rights came about, and it will no doubt discuss those matters when it talks to the leadership of the England and Wales Cricket Board. My hon. Friend has said that the money from broadcasting goes into the grass roots of the game. He challenged some of the figures, but the board argues vehemently that the money is well used for the grass roots of the game, particularly the development of women’s cricket. The matter is contentious, but I am sure that the panel will consider in great detail what happened, how it happened and what the future should hold. It is important to recognise that the panel has not reached any conclusions about its recommendations. It is genuinely considering the evidence that is coming to it.
We are at an early stage, and it is important not to pre-empt the outcome of the panel’s report or its recommendations to the Secretary of State. I understand the strong concerns of my hon. Friend and Members of both Houses, because the matter has created a great deal of discussion.
In the time available, I want to make a passing reference to the debate about horse racing on TV and the emotions involved. That debate reflects where we are, and the need for investment to enable sports to continue and to develop, but bearing in mind people’s ability to see such sports. As we approach the Olympics and the decade of sport, we are trying to inspire people and to ensure that sports that are not normally given TV time—such as some of the smaller Olympic sports—are provided with it. We must ensure that that comes into the debate.
The crown jewels and listed events are important, but the promotion of sport is even more important to try to persuade more people to participate for the obvious health benefits. One has only to look at what happened following the Olympics and Paralympics in Beijing to see how those exploits inspired people across a wide range of sports.
The Government take sport seriously. The latest announcement of free swimming is a good example of Departments working together to try to promote sport and a more healthy attitude and lifestyle. Listed events are a key part of our discussions. I have no doubt that the panel will take great care in its work, and I hope to report back to the House in due course.
Thames Valley Probation Service
I am grateful for the opportunity to raise concerns about the Thames Valley probation service, and I hope that it will be possible for the hon. Member for Oxford, West and Abingdon (Dr. Harris), my constituency neighbour, to intervene.
For many of us, a continuing concern for a significant number of our constituents is the reality of fear of antisocial behaviour and crime. The probation service has an important role to play in the criminal justice system. Probation officers manage and supervise antisocial behaviour orders. They invariably manage offenders who have been given non-custodial community sentences and those who have been released from prison on parole. They also have an important role in supervising young offenders and, hopefully, in getting them into a position in which they do not reoffend. Indeed, surely one of the main objectives of the criminal justice system and/or the Ministry of Justice is to reduce reoffending.
Sadly, a large number of criminal offences are committed by people who have previously committed offences. The probation service is crucial in helping to reduce reoffending, both by managing and organising many of the non-custodial sentences and by supporting those who have custodial sentences when they come out of prison.
Last autumn, reports began to appear that the probation service, nationwide, was facing a cut of about 20 per cent. to its budget. In November last year, I wrote to the Secretary of State for Justice to tell him that
“it is a matter of very real concern that the Probation Service appears to be facing a cut of something like 20% in its budget. How can it possibly help in reducing re-offending if the numbers of front line staff working with offenders, or ex-offenders, are going to be seriously reduced?...This would seem to be a very false economy because all that is going to happen if one substantially reduces the number of probation workers, and those working in probation, is that more offenders will be sent to prison, which is far more costly and a far greater expense on your Department’s budget.”
Shortly after I wrote to the Secretary of State, a number of probation workers from the Banbury probation office came to see me at my constituency surgery with a representative of the National Association of Probation Officers. I was concerned to learn from them that the closure of the Banbury office had been proposed and that the service was going to move all the Banbury officers to Oxford. That struck me as a crazy idea. The whole point of probation officers working in towns such as Banbury is that they get to know the people with whom they work, their families and their circumstances. In that way, they are far better able to inform the courts when it comes to pre-sentencing reports, deal with any breaches of court orders and help those who are on probation or who are serving other non-custodial sentences, so that they do not reoffend. Such local understanding and contact will be lost if the Banbury probation office is closed and probation officers are transferred to Oxford.
Again, I wrote immediately to the Secretary of State, saying that I believed that the proposal was a crazy idea, and that if the Ministry of Justice is genuinely serious about efforts to reduce reoffending, it makes no sense to reduce the number of probation officers in that way, or to close the Banbury probation office and transfer all the officers to Oxford. I repeat the question that I asked back in December: what sort of criminal justice system do we have if it increases prison places and reduces the number of probation officers?
The proposal to close the Banbury probation office struck another raw nerve. My constituents in north Oxfordshire are getting rather tired of public services that we reasonably expect to be delivered in Banbury being closed and transferred to and consolidated in Oxford. Imagine my surprise when I was told that, notwithstanding what my constituents—the probation officers—told me at my surgery, the Thames Valley probation service had no proposals to close the Banbury office or to reduce the number of officers. It repeated those assertions to the editor of the Banbury Guardian when it, the local newspaper of record, tried to find out what was happening.
Therefore, in addition to my concerns about the substance of the policy, I have parallel concerns about the process. One consequence of the Government’s gross indebtedness and the Chancellor’s and the Prime Minister’s management of our economy in the past 10 years is that we now have the worst public finances since the war. Over the next two years, the Government will have to borrow some £350 billion—more than all Governments up to 1997—and the national debt will double to £1.4 trillion, which will inevitably result in cuts in public spending. Indeed, a number of sizeable cuts in capital spending after the next general election were announced in the Chancellor’s Budget last week. However, we need an honest, open and transparent debate on where such cuts might occur and what impact and effect they will have.
The response of the Thames Valley probation service last December that it had no proposals to close the Banbury probation office became all the more incredible when I learned shortly afterwards that both the chief executive of the local council—Cherwell district council—and the local area commander of the Thames Valley police had separately offered the probation service alternative accommodation in Banbury to try to keep a probation office presence in the town, so concerned were they, as leading members of the local crime and disorder reduction partnership, about the impact on local offender management if the Banbury probation office closed.
I was so concerned about the process being pursued by the Thames Valley probation service, which struck me as having absolutely no engagement with the broader community, not being transparent and, indeed, being wholly misleading, that I wrote again to the Secretary of State in early January, saying that I was somewhat surprised that the probation service’s “line to take” was that there were no plans to close its offices in Banbury. I said that
“if there are no proposals to close these offices, how is it that way before this matter was drawn to my attention by local Probation Officers, the Chief Executive of the District Council and local area Police Superintendent were so concerned about the future of offender management in Banbury they had both separately offered accommodation to the Thames Valley Probation Service to keep the offices in Banbury?”
I highlighted to the Secretary of State the fact that the probation service in north Oxfordshire was doing extremely good work on initiatives such as tackling prolific offenders, all of which will be undermined if probation officers are no longer based locally in the town.
All that fell on deaf ears. No one from the Thames Valley probation service and no Ministers in the Ministry of Justice were prepared to acknowledge what was being planned. Probation officers themselves have been put in an invidious position because, as I understand it, they were told that while they were in discussions with management about their future, they were unable to speak publicly.
In February, I was able to ask the Secretary of State an oral question in Justice questions. I shall repeat the exchange for the record. My original question on the Order Paper was:
“What services and policy initiatives will be affected by the funding settlement reached for his Department for 2009 to 2011.”
The Secretary of State responded:
“On 19 January, I published to Parliament the Ministry of Justice’s corporate plan. The plan is based on my Department’s four strategic objectives and sets out what we aim to achieve, how, and with what resources. Further details of the financial allocations are given in chapter 6 of the plan.”
My oral supplementary question to the Secretary of State was:
“Last year, the Secretary of State’s permanent secretary, Suma Chakrabarti, said to the Justice Committee that by December the Department would have a much better idea of what cuts it needed to make to live within its means. One assumes that that will result in some cuts in front-line services. Perhaps the Secretary of State could help the House by giving some indication of where those cuts are going to fall. Could he give me an undertaking that one of the cuts will not be the closure of the probation service office in Banbury, because that would be a very retrograde step for offender management in the north of Oxfordshire?”
Given the letters that I had written almost monthly in the previous months to the Secretary of State, that supplementary question could hardly have come as a surprise to him or his officials, who would have prepared his briefing for oral questions. The Secretary of State’s answer to me on that day was:
“The corporate plan makes it clear that we are indeed seeking some reductions and savings—that is on the record before Parliament—including a 5 per cent. real-terms reduction in our administration budget. However, we are seeking to do that principally by taking out back-office functions, by cutting down on what I think the House would regard as unnecessary spending, and by reducing the use of agency and contract staff. The whole purpose of this—the same is true, for example, overall in the National Offender Management Service—is to do our very best to ensure that front-line services are properly protected. There are always better ways of delivering front-line services. If the performance of the probation services are compared area to area and within areas, it is clear that there is not necessarily a connection between inputs in terms of resources and their outputs in terms of caseload and reductions in reoffending.”—[Official Report, 3 February 2009; Vol. 487, c. 692.]
Hon. Members will note that the Secretary of State completely evaded my question about the future of the probation office in Banbury. I do not believe that anyone could pretend that the Banbury probation office comes under the category of a “back-office function”, so imagine my surprise during the week before Easter, during the parliamentary recess, when I learned that the Thames Valley probation service had at last ‘fessed up to the fact that it intended to close the Banbury probation office and consolidate all the county’s probation services in Oxford. I wait with interest to learn how that retrograde step can conceivably be considered, using the Secretary of State’s answer to my oral question to ensure that front-line services are properly protected. The Government are removing front-line probation services from a large part of Oxfordshire, including from my constituency, and moving them to Oxford. This is a retrograde step on which there has been dissembling and misleading statements over a number of months.
Again, imagine my surprise when I received a letter, dated 2 April, signed jointly by the chair and chief officer of the Thames Valley probation service, which was not received in my office until the middle of the next week, giving just over a week’s notice of an invitation to meet for what it described as a
“frank and open discussion”
about the Thames Valley probation service’s reduced budget over the next few years and the proposed merger—as it put it—of its Oxfordshire field offices in a centralised service in Oxford. Mr. Fearn and Mr. Marshall’s letter concluded, somewhat ironically one might consider:
“We are keen to keep you fully informed about our plans for the future.”
Immediately I saw this letter, I wrote to Mr. Fearn, the chair of the Thames Valley probation service, to say that in the more than a quarter of a century that I have been a Member of Parliament, the process that the Thames Valley probation had conducted in recent months is one of the most dismal performances by a public body that I have ever come across. The Thames Valley probation service was fully aware last November that I and others were concerned about its proposals to close the Banbury probation offices. Why did it not engage with me and other parliamentary colleagues at that time? Why, at that time, did the probation service deny that there was any proposal to close the Banbury probation office?
Throughout the time that these proposals have been actively under discussion, there has been no attempt by the probation service to discuss the downgradings and closure proposals or to engage with local MPs. I am afraid that I have to say that there has been every attempt by Ministers centrally and the Thames Valley probation service locally to deny that any such proposals were in the offing. Those working in the probation service have been put in an almost impossible position, being unable to comment publicly on matters that I know, from my discussions with them, have caused them considerable personal and professional concern. Only once the decisions are effectively irreversible does the probation service decide that it is time to brief local MPs. That is not good enough. That is not a process that enhances respect or confidence in the quality of the decision making.
In a response to my letter, Mr. Fearn, the chair of the Thames Valley probation service, replied on 13 April, saying:
“We will continue to have probation staff in Banbury…we do intend to reduce the number of probation staff in Banbury but this will not happen until we have suitable alternative accommodation.”
That letter could only be read reasonably as seeking to indicate that this was a question not of the probation service closing its office in Banbury, but of simply moving it. The only difficulty with that approach is that on 24 April the Minister wrote to the hon. Member for Oxford, West and Abingdon, stating clearly and in terms that the
“consolidation of the vast majority of Oxfordshire probation premises in Oxford including the closure of the existing Banbury Office is considered to be the best solution…some local presence would also be retained in Banbury but on a much smaller scale”.
That “line to take” echoed entirely a letter from Phil Wheatley, the director general of the National Offender Management Service, the week before, on 16 April, in which he said that the
“consolidation of the vast majority of Oxfordshire probation premises in Oxford including the closure of the existing Banbury office, is considered to be the best solution.”
Let us not have any weasel words about this. The intention is to close the Banbury probation office. In reality, I suspect that we will only see probation officers in Banbury when the north Oxfordshire magistrates court is sitting and they need to attend. Clearly, there will not be any offender management taking place in Banbury. I am sure that a large number of my constituents, including not a few magistrates, will find somewhat risible the Minister’s assurances that the
“public transport routes to Oxford by bus, coach and train are good”.
I have arranged to meet Mr. Malcolm Fearn and Gerry Marshall, the chief probation officer, at their offices in Bicester on Friday week, on 8 May, and I shall be interested to hear what they have to say. But ultimately they have to deliver cuts imposed on them by Ministers. How will centralising the probation service in a single office for the whole of Oxfordshire assist offender management in the county? What sort of criminal justice system is it that, as announced by the Secretary of State yesterday, continually increases the number of prison places but is reducing the number of probation officers? What explanation does the Minister have for the fact that the machinery of government denied for months that any such proposals existed? Lastly, what will be done to ensure that the implementation of the changes will be monitored so that the probation service and Ministers can objectively advise in due course on their impact? I look forward to the Minister’s response.
I am grateful to the hon. Member for Banbury (Tony Baldry) for securing the debate and for allowing me, perhaps in exchange for the letters that he read from, to have two minutes of valuable time. I shall keep my remarks very brief because I know that the Minister will want to reply.
The problem that I have is related to what the hon. Gentleman was discussing. It is the relocation of the proposed consolidated probation offices to a building—well, not a building, but at the moment a shell of a building—called Trajan house, in Mill street. Of course the consolidation is controversial, as we have heard. That is not my issue, but if it does not go ahead, for the reasons that the hon. Gentleman gave, there will be an effect on the amount of space needed for a consolidated office. That raises the question whether the siting issue should be re-examined.
The main problem is the placing of the centre in a residential area at the end of a residential street, which is simply not appropriate. The third aspect is that there has been no consultation. The reason given is that there are no options to consult on, which leads me to my fourth point: why are there no options? Residents and I believe that the search could have been and still needs to be wider than the area that has been looked at. No one would describe the rail station in Oxford as being at the centre of the city centre; it is very much at the western edge, and a much wider area should be considered. It seems to me and members of the public that the issue has been rushed. There are also process issues about when, exactly, the option was determined.
I wanted to bring the matter to the Minister’s attention so that I could alert him to the fact that when something that I would claim was similar happened in Birmingham the Justice Secretary apologised in the Birmingham Mail on 7 December, admitting “we got it wrong” after being confronted by campaigners against a Birmingham probation centre. He said:
“We accept the handling of the re-location of the probation centre to this site has been appalling.
It has been dreadful and I’m sorry it happened this way.
We got it wrong and the probation centre is still learning lessons from this.”
I hope that the probation service will learn lessons. I accept that there are operational issues involved that are not for the Minister, but I think what happened shows that there are political and policy issues at stake.
There is a 1,000-name petition and I have had many letters, as, no doubt, has the Minister. The story has been in the national press and I have written to—and had replies from—the Thames Valley probation service, the National Offender Management Service and the Minister. I am grateful for the replies, which were civilised, as was the meeting that I had with the Thames Valley probation service. However, that did not solve the problem. Would the Minister be willing to meet me and local councillors—two well-regarded Labour city councillors and the last two in my constituency, who, the Minister should recognise, have an important interest in the issue—and residents? Will he meet us before any final decisions are made and leases are signed, so that we can put to him our concerns about the process and try to persuade him, and through him the probation service, to widen their search and look for other sites?
I am grateful to the hon. Members for Banbury (Tony Baldry) and for Oxford, West and Abingdon (Dr. Harris) for participating in the debate and raising the issues. I hope that I shall at least be able to discuss the issues and concerns in a civilised way, as the hon. Member for Oxford, West and Abingdon said, and reflect on some of the issues raised. I know that the chief officer and the chair of the probation board at Thames Valley will take a keen interest in the debate, read it and closely examine the issues, and there will be further discussion with both colleagues after the debate.
The hon. Member for Banbury has raised an important issue about the role of probation officers and the need for them to tackle the job of reducing reoffending. I am personally committed to our making sure that we have an integrated service between prison and probation, because probation officers are at the front line of reducing crime and preventing reoffending. I know that the hon. Gentleman accepts and understands that that is a key role and central to the work of probation staff. I want, not just in Thames Valley but throughout England and Wales, a probation service that is responsive to communities, outward-looking and focused on reducing crime and reoffending and tackling antisocial behaviour, and that works with the Prison Service as part of the National Offender Management Service to undertake its important role. That is why the Labour Government have increased probation funding by more than 70 per cent. over the past 12 years.
Because the hon. Member for Banbury made his points in the way that he did, I shall be slightly political. I doubt that an alternative Conservative Government would have put in that level of funding over that period of time. Dare I say that if there is a choice of Government in the next 12 months—as there ultimately has to be—the Opposition, who talk about austerity budgets, will not be putting the future funding that the Labour Government are committed to into the probation service.
On the funding for Thames Valley, last year its budget was £26.6 million for 2008-09. This year’s budget is £25.8 million for 2009-10. Yes, I accept that overall that is a reduction of some £800,000. However, the House needs to know that Thames Valley itself under-spent its budget last year by more than £300,000. If we take out special one-off grants for training and bonuses received by Thames Valley probation service, the deficit this year is around £159,000 over last year’s budget. I put it on the record that there is not a 20 per cent. reduction in the budget for the Thames Valley probation area this year.
We have not yet finalised the budgets for 2010-11, 2011-12 and 2012-13. Thames Valley probation has been given indicative budgets by NOMS, but prior to those two indicative budgets kicking in, two events will take place. One is the next comprehensive spending review round, which will be looked at in detail, and the other is the process of a general election, which we all face in the House, and what that will ultimately result in. It is important to put both issues that have been raised in context. For this year, on a £26 million budget, the budget for Thames Valley probation is around £159,000 less than last year. It is important to find efficiencies. All hon. Members will know that there are difficult financial circumstances. The probation service has to look at how to do things more efficiently—as does the Prison Service.
It is important that I now turn to the nub of the matter. The key issue raised by the hon. Member for Banbury, which has a knock-on effect for the hon. Member for Oxford, West and Abingdon, is the concern about how offender management services are delivered in Thames Valley and the role of facilities in both Banbury and Oxford. Having discussed the matter with Thames Valley, I understand that the proposal for the change in the Banbury office is a long-standing one and that it is not linked to the efficiency savings that it has to make this year. The £159,000 is not appropriate in relation to the costs of the Banbury office. Thames Valley has, for some time, been looking for alternative accommodation so that services can be centralised.
In relation to the points made by the hon. Member for Oxford, West and Abingdon, the key driver for the changes, as I understand them in relation to Thames Valley probation and Oxford, is the ending of the lease of the current Oxford offices. The confluence of those two issues means that Thames Valley probation has looked carefully at how it can provide an efficient and more cost-effective service that meets both needs. I should make it clear that I am not copping out of the decision-making process, but that these are executive responsibilities for the board and chair of the board of Thames Valley. I am accountable to the House for those decisions, but they are executive decisions.
Again, from discussion with Thames Valley, my understanding is that currently the case for the delivery of probation services in Oxfordshire is, to a great extent, centralised. Offenders resident in the Banbury area travel to Bicester or, in some cases, to Oxford. I understand from the board that offenders in Witney and the south and west of the county will travel to Banbury when Oxford is potentially a closer venue. The discussions about Banbury and Oxford relate to the confluence of issues: what we do with an expired lease and the need to try to provide a better service to offenders and their families in Oxford.
I recognise—and the hon. Member for Banbury has put this point clearly—that there is a need for Banbury residents to have services in Banbury. Again, I understand from the Thames Valley probation service that it wishes to maintain an offender management presence in Banbury for offenders who live there and in the immediate area. As a result of the points made by the chief executive of Cherwell borough council and the local police superintendent, it is considering alternative premises in collaboration with partner organisations.
I also understand from Thames Valley probation service that the Banbury office has a staff load of about 31 members. That will decrease to between eight and 15 members if the proposals proceed. The remaining officers will be transferred to other offices in Thames Valley, potentially including the Oxford office, to ensure a better service. I recognise that there is a debate on those issues. I hope that the hon. Members for Banbury and for Oxford, West and Abingdon can have discussions locally with the appropriate officers and officials.
To answer the direct question asked by the hon. Member for Oxford, West and Abingdon, I will certainly be happy to facilitate a meeting with local councillors and anybody else who wishes to bring a small delegation in the office of the Ministry of Justice. I will invite the chair and the chief officer of the probation board in Oxford and Thames Valley to meet us to discuss the issues. After his meeting a week on Friday, the hon. Member for Banbury can, if he wishes, facilitate a similar meeting with me. I am happy to attend.
We must encourage efficiency in the system. The board in Banbury and Thames Valley is responsible for such issues, but I believe that it is trying to implement positive performance for the probation board in that area. When I look at that performance, I see a probation board that certainly had difficulties two to three years ago and needed support from the centre to improve its performance over time. However, by the end of 2008 and going into 2009-10, it had made significant improvements. Community payback completions have risen by 21 per cent. in the past year. Domestic violence completions have nearly doubled in the same period. Successful programme completions have risen from 344 to 435. Drug treatment requirements have increased from 248 to 267. However, the acid test for the people of Banbury and Oxford is that crime has decreased in Thames Valley over the past 12 years, and particularly over the past year. Overall crime has fallen by 4 per cent. and domestic burglary by 14 per cent., although, sadly, theft of motor vehicles has risen by 6 per cent. Performance is strong.
As a Member of Parliament myself, I would expect a good liaison between probation boards and local MPs. That is important. I know from my preparation for this debate that the Thames Valley board has attempted to keep Members generally informed about its work. Perhaps after this debate the chair and chief officer will consider the importance of engaging with key stakeholders in the community on changes. Ultimately, as the hon. Gentleman knows, if changes cause difficulties, they end up on the desk of a Member of Parliament or a Minister. My parliamentary account is full of e-mails from the constituents of the hon. Member for Oxford, West and Abingdon. That is the nature of the business. Early engagement and discussion are important.
We have discussed real issues today. I am grateful to both hon. Members for raising them in the way that they have. This is not about finances, in my estimation; it is about organisational efficiency. I will meet both Members if they wish and ensure that the probation service engages with them to consider the outcome of the discussions.
Anti-racism (UN Conference)
I am pleased to be speaking on this important issue under your chairmanship, Mr. Betts. I secured this debate in order to assess the recent Durban review conference of the United Nations, which took place in Geneva. The background to the conference was that in 2001 the UN World Conference Against Racism was convened in Durban, South Africa. That conference in 2001 was plagued with problems, including high levels of hatred and anti-Semitism. The final outcome of the governmental conference was the Durban declaration and programme of action, which has formed the basis for further review.
Between 2007 and 2009, the Durban review process was meant to review the implementation by UN member states of national action plans to tackle racism, discrimination, xenophobia and related intolerance, in line with the programme of action. The process itself was entirely problematic. Unlike in 2001, when much of the hatred was subcontracted out by Governments to NGOs, the Durban review conference culminated in the first day address of the conference plenary by President Mahmoud Ahmadinejad of Iran.
The speech by Ahmadinejad was clearly an election rallying call, one that he doubtless needs because his own population has been turning on him from workers’ strikes against his failure to run the economy properly to anti-Palestinian worker protests. There is unhappiness at the levels of engagement overseas by the Iranian Government as opposed to their inability to look after domestic living standards—there is no question but that Ahmadinejad has domestic problems.
Why could that man dominate proceedings at a major UN anti-racism conference as a major Head of State speaking to the conference? In his speech, among other lines, he followed a narrative that he has used before in public. I quote an extract from his speech:
“Following World War Two…they sent migrants from Europe, the United States and other parts of the world in order to establish a totally racist government”.
He was referring, of course, to the establishment of the state of Israel, but even the most cursory look at history demonstrates that, in fact, the battles to create the state of Israel were for some years rather fiercely fought by Governments from the west, including our own Government, which was involved in something of a war situation in the period leading up to the establishment of Israel.
The essence of the racism of Ahmadinejad, in playing to his domestic audience, is to deny the rights of the Jewish people to self-determination; to move well beyond legitimate language and rhetoric; and to deny the holocaust, something that he was persuaded to drop, or not to do, in this particular UN speech. However, the critical issue is what is going on in the United Nations? Of course, the United Nations is, by definition, all member states.
The hon. Gentleman is one of the most assiduous Members of this House, and he is right to raise awareness of racism, which is simply evil. What is the UN doing to educate people and to promote education? Is it doing enough? Does the hon. Gentleman think that it could do more?
I thank the hon. Gentleman for his intervention. One of the things that the UN does is to promote holocaust education, although it is not taken up by many member states. Within the UN, there is a unit specifically geared to the promotion of holocaust education.
One of the interesting dilemmas and problems with the Durban conference, the Durban review process and the Geneva conference is that, in a conference looking at anti-racism, the problems in the run-up to the conference for several years and the problems in the conference itself were about racism, including overt racism. Such overt racism was exactly what was seen in the first Durban conference, when there was some of the most vile and vitriolic racism that one could ever imagine at any international conference. Therefore, it is well beyond irony that an initiative against racism should become a festival of hate and racism.
That poses dilemmas for democratic countries that have an ongoing proud record of standing up and doing things against racism, including ourselves, the United States and many other countries. Some chose to boycott the conference. Some did so early—the Canadians made a brave early refusal to participate, and I congratulate them on that. The United States, Australia, New Zealand, Germany and several other European countries withdrew on the eve of the conference, and I congratulate them on their stance. Others, led by the United Kingdom, chose to participate and attempt, with significant success, to influence the final declaration and keep it within the red lines of what is acceptable, so as to prevent a document being used around the world to further the aims of those who wish to use racism in the name of anti-racism.
Those Governments should be congratulated, not least because they, led by Britain, walked out when Ahmadinejad made his pronouncements. I do not intend in this short debate to discuss the whys and wherefores of which tactics should be used. I think that all three strategies—the early Canadian stance, the later stance taken by Germany, Austria and the United States, and the stance of the British, the Norwegians and others within the conference—have credit and merit. It would be a significant mistake to argue about the tactics that that wide array of democratic countries chose in trying to counter the hijacking of the UN’s work in anti-racism.
We need to think about why the UN got itself into that position in the first place, because it ought to be in the lead against all forms of racism, including, but not only, anti-Semitism. That is part of its ethos and why this country and others formed it in the aftermath of the second world war, because racism, xenophobia, and specifically anti-Semitism, had dominated the world agenda and led to that war. That was the genesis of the UN.
I hope that the Government, on the back of another problematic UN conference on anti-racism, are working with our democratic allies to look at how the UN repeatedly gets itself into such predictable problems as it did in Geneva, albeit to a much lesser extent than had happened at the original Durban conference, because of British and other governmental involvement.
Parliaments around the world have a strong desire to fight racism and anti-Semitism. In London only two months ago, we, along with the Foreign and Commonwealth Office, hosted the Inter-Parliamentary Coalition for Combating Anti-Semitism, of which I was a co-founder, bringing 42 countries from across the world together to establish the London declaration, which takes forward the work on how to combat anti-Semitism domestically and internationally. I am delighted that the Prime Minister, the Foreign Secretary and other senior Ministers have signed the declaration. This afternoon further senior Ministers, including the Leader of the House, will sign the declaration at 5 pm. The Liberal Democrat leadership have signed it, and we hope and anticipate that in the near future the Conservative party leadership will also find time in their busy schedules to sign it. Although they are not present today, I assure them that they will receive the same warm and good publicity received by Labour and Liberal politicians and, of course, by independents—I know that the hon. Member for Castle Point (Bob Spink) is a strong advocate of our work, a member of the all-party group against anti-Semitism and a backer of the London declaration. Throughout the world, parliamentarians are becoming increasingly involved in taking on contemporary anti-Semitism, alongside other forms of racism, but we must use that strength to ensure that international bodies, including not least the United Nations, take that into their work. How the UN interacts, which experts take forward its work on anti-racism, how it interacts with Parliaments and Governments, and how it carries out its peer review process of ensuring universal scrutiny of all UN member states are critical.
We must go further. The Organisation for Security and Co-operation in Europe has a much smaller remit than the United Nations in dealing with racism, xenophobia and anti-Semitism, but it has appointed special rapporteurs—until recently, Gert Weisskirchen was the special rapporteur on anti-Semitism from the German Bundestag—to work for the president in office to combat anti-Semitism and to take a lead. It has done likewise with Christianophobia and Islamophobia and appointed special rapporteurs. That is one model that could be considered, although I favour expanding the administration, bureaucracy and civil service of the United Nations with a unit with specific authority to take forward the UN’s work on anti-Semitism.
There is a unit for holocaust education, and its work, remit, budget and powers need to be expanded. It was not involved in the preparatory process for the conference, and it should have been. Holocaust education is a discrete and bespoke element of huge priority. Anti-Semitism is part of the genesis of the United Nations and should be at the core of its fabric rather than being brought in by Governments such as ours, the American Government, the German Government, the French Government and others who believe that it is an important domestic and international priority. Democracies in the UN should stand up when it comes to racism and anti-Semitism, and not allow non-democracies or people who would abuse democracy, such as Ahmadinejad, to steal and usurp the agenda, as has been done recently. That undermines the UN’s strength and the international efforts of Governments such as ours to combat the historic legacies and current realities of dealing with racism.
Finally, communities throughout the world that are directly impacted in their daily lives and their opportunities by the vileness and hatred of racism, including the Jewish community in this country, believe that the United Nations is not for them, because it will not take up their issues. We must counter that within the UN and in the way in which the United Kingdom Parliament and Government interact with the United Nations. That is a big challenge, and I hope that the Government will take it on, and that they will not only continue their good work domestically, but tackle the thorny issue of how the UN is failing to deal with racism and ensure not only that our voice is heard, but that our standards and ethics in dealing with racism become the UN’s work in practice in dealing with racism and anti-Semitism. I look forward to the Minister’s response.
I congratulate my hon. Friend the Member for Bassetlaw (John Mann) on securing this important and high-profile debate in such a timely fashion. I know that he is chair of the all-party group against anti-Semitism. Moreover, as we have all seen today, he is a powerful and articulate champion in the struggle against anti-Semitism, and long may he be so.
I should like to put it on record that the all-party group is both groundbreaking and unique. It sets the standard, and it clearly inspired the recent inter-parliamentary conference against anti-Semitism, which was actively supported by my right hon. and noble Friend Lord Malloch-Brown, the Minister with responsibility for human rights. I am pleased that the Foreign and Commonwealth Office was able to support both the conference itself and the follow-up to the all-party group’s inquiry. The Government fully support the aims of the declaration.
The Government are committed to fighting all forms of discrimination, racism and intolerance, which are unacceptable in all their forms, including anti-Semitism. We continue to develop policies and legislation to address such issues, both in the UK and globally. It is vital that we work with our partners to combat effectively the range of challenges that we face today.
My hon. Friend mentioned the range of responses to the Durban review conference and how the different reactions mesh together to have good effect. Let me deal with the issue of the UK’s engagement in the conference. We share the principal objective of the conference, which is to further the global fight against racism, and to review progress in that effort since 2001.
Millions of victims of racism around the world, as well as representatives from many organisations in the UK, expected us to show the political courage to address the issues, and not to leave the conference free for others to peddle their intolerance. The conference last week was the final stage of a long, tough and controversial multilateral negotiation. It was a very different conference from 2001. Non-governmental organisations from the Jewish community were better involved. Karen Pollock, chief executive of the Holocaust Education Trust, said:
“The environment was different. President Ahmadinejad apart, there has been none of the anti-Israeli rhetoric that characterised the conference then.”
Let me focus on two elements of the process, starting with the formal negotiations. My right hon. Friend the Foreign Secretary has explained in his written statement to the House today that the UK’s engagement in the review process always came with clear red lines. We made it equally clear that, if those red lines were crossed, we retained the option of withdrawing. Specifically, we said that we could not accept a repeat of the flagrant anti-Semitism seen in the Durban conference in 2001. In the outcome text, we would not accept any attempt to restrict freedom of expression, including through the concept of “defamation of religions”.
I am glad to say that the UK delegation was instrumental not only in securing our red lines, but in agreeing improved UN language on the issue of racism, which my hon. Friend said was so important. We secured language in the outcome document that stated that the holocaust must never be forgotten and that stressed the importance of the fight against anti-Semitism. We successfully kept out language that sought to single out Israel for criticism. The outcome document was adopted by consensus on 21 April, including by Iran. The document is a significant improvement on previous UN texts, including the 2001 Durban declaration and the programme of action.
I turn to the anti-Semitic rantings of the Iranian President. Some called on the United Kingdom to boycott the conference in expectation of such a statement, or to withdraw from the conference following the Iranian President’s intervention. The UK delegation, along with many others, left the conference hall once he started his abusive tirade. We were simply not prepared to leave unchallenged a description of Israel as a “racist state” founded on the “pretext of Jewish suffering”. Such a walk-out is not usual in international diplomacy and it sent a clear, strong message that such language is completely unacceptable, as is denial of the holocaust.
The Iranian President’s speech received international condemnation, including from the UN Secretary-General and the UN High Commissioner for Human Rights. The Foreign Secretary called the remarks
“offensive, inflammatory and utterly unacceptable”,
and said that they were
“all the more shocking and outrageous”
for having been made at the UN’s anti-racism conference. In his statement to the conference on 22 April, the British ambassador to the UN in Geneva explained that our delegation had left the hall not only in protest, but in solidarity—this is important—with those targeted by such hateful, anti-Semitic words. Such people include members of the British Jewish community, with whom we enjoyed a constructive relationship throughout the process of preparing for the review conference, and with whom we continue to enjoy a constructive relationship.
Walking out during the Iranian President’s statement sent a powerful message, as did our return to the hall to listen to those who sought to engage in a constructive effort to address the challenges of racism today. The reaction of many in the international community, coupled with a successful negotiated outcome document, means that the decision to stay at the conference was right, although it was not an easy option for us to take. I welcome Amnesty International’s call for those countries that did not participate in the conference nevertheless to support its outcome document.
My hon. Friend the Member for Bassetlaw rightly asked a number of questions about the UN’s role. The UN tackles racism in a range of ways, although there is always room to work within such a multilateral organisation to achieve further improvements. First, beyond the Durban conference, the UN has special rapporteurs on racism and religious intolerance to hold countries to account. Secondly, the Committee on the Elimination of Racial Discrimination makes detailed and regular assessments of states, laws and policies. Thirdly, the universal periodic review—the state-to-state peer review process—also covers racism.
I have heard my hon. Friend’s suggestion that we have a particular anti-Semitism unit, and I will raise that with the Minister responsible for human rights. Let me return to the conference, however, because it is important to reflect on it. The Iranian President’s intervention was undoubtedly an attempt to drive a wedge between nations and peoples. We cannot allow him to succeed, and the UN will continue to be an important vehicle for us in that respect. Where the Iranian President seeks to polarise opinion, we need to work doubly hard to bring people together around a single desire to take concrete steps to combat racism in all its forms, wherever it occurs. The long and painful conference process shows that we can make progress on even the most divisive issues. However, the controversy surrounding last week reminds us just how far we have to go and how important it is that we keep working to tackle such problems.
The focus on last week will sharpen still further the UN’s views and its commitment to going forward. As the UN High Commissioner for Human Rights said:
“The best riposte for this type of event is to reply and correct.”
He also said that the Iranian President’s statement clearly went against the long-standing UN position on equating Zionism with racism, which was adopted by the General Assembly. In addition, the UN Secretary-General said:
“I further stressed the need to look to the future, not to the past of divisiveness.”
We must all turn away from divisive messages in both form and substance. We must join hands and work together to achieve a constructive, substantive agenda to combat racism, racial discrimination, xenophobia and related intolerance. The Government remain committed to action against the scourge of racism in all its forms, including anti-Semitism, so that we can secure a fairer future for victims of discrimination around the world. My wish, my hope and our absolute intention is that the events of last week will focus us and the UN still further and that we will seek actions of the type that my hon. Friend the Member for Bassetlaw so rightly calls for.
Question put and agreed to.