Tuesday 13 October 2009
[David Taylor in the Chair]
North Sea Oil and Gas Industry
Motion made, and Question proposed, That the sitting be now adjourned.—(Mr. Watts.)
I am delighted to have secured a debate on a very important subject that we do not discuss often enough in this Chamber. The oil and gas industry is one of the most important industries in the country. It employs about 450,000 people across the UK, 198,000 of them in Scotland, and it is estimated that, last year, the Treasury collected about £13 billion of tax revenue from the industry. Because of the collapse in the oil price, that figure is likely to fall—it is estimated that the revenue will be about £7 billion, but that is still about 2 per cent. of UK tax revenue, so the industry is hugely important in terms of both employment and our economy. Of course, there is also the benefit of producing our own oil and gas. Although we are now at the stage where we have to import some of it—we are not self-sufficient—the industry remains immensely important.
By its very nature, the oil and gas industry is dangerous, and over its nearly 50-year history there have been many deaths and serious injuries. Memorial services have become almost a tradition in Aberdeen—one that we could do without. Just over a year ago, I was fortunate enough to lead a debate in this Chamber to commemorate the 20th anniversary of the Piper Alpha disaster—the world’s worst offshore disaster, in which 167 men were killed. During that debate, the Minister’s predecessor, my right hon. Friend the Member for Stirling (Mrs. McGuire), gave an assurance that there would be a review of an important report produced by the Health and Safety Executive offshore safety division on the integrity of oil and gas assets in the North sea.
That report set out some very disturbing findings. Known as the “Key Programme 3—Asset Integrity Programme” or KP3 report, it followed targeted inspections by health and safety inspectors of about 100 offshore installations—approximately 40 per cent. of the total. All types of facilities, including fixed, manned and normally unattended installations, floating production, storage and offloading vessels and mobile drilling rigs, were part of the survey. The inspections were structured to cover all aspects of maintenance management, including the safety critical elements and plant—including computer programs—whose purpose is to prevent, control or mitigate major accident hazards. The report focused primarily on the maintenance management—the management systems and the processes that should ensure that safety critical elements are available when required. The main areas where the report raised concerns included asset integrity/process safety management systems—I am sorry that this is so technical, but it will not last long—as well as the physical state of the plant offshore; matters of significant concern with major hazard control measures; human resources and competence; leadership and management; and corporate and cross-industry co-operation and communication.
Some of the most worrying aspects of the report were the comments on management. For example, it found that there was poor understanding across the industry of the potential impact of degraded non-safety critical plant and utility systems on safety critical elements in the event of a major accident. According to the report, the role of asset integrity and the concept of barriers in major hazard risk control are not well understood. The report stated:
“Many senior managers are not making adequate use of integrity management data and are not giving ongoing maintenance sufficient priority.”
“the decline in integrity performance that started following the low oil price has not been effectively addressed and there appears to be an acceptance of this knowing that the assets are likely to be sold.”
Essentially, production facilities were being downgraded because they were expected to be sold on, so why spend the money? There were many other areas of concern, but I shall record one final one. The report stated that
“Declining standards in hardware”
“having an adverse impact on morale in the workforce.”
When the then Under-Secretary announced the review of the KP3 report in the Piper Alpha debate last July, she made it clear that the review would include
“focusing on industry leadership to create a stronger safety culture in which the involvement of the work force, including the industry’s trade unions, will be critical.”—[Official Report, 2 July 2008; Vol. 478, c. 251WH.]
That review has been carried out over the past year and was finally published in July. It is important to note that the oil industry accepted the original report’s findings and worked with the review team. Individual companies also worked hard to deal with many of the problems identified. It is therefore no surprise that the review, although not giving the industry a clean bill of health, recognised the progress that has been made. As a long-term observer of the oil and gas industry, I take the view that the KP3 process has been extremely useful.
Does my hon. Friend agree that, before the KP3 report was produced, the oil and gas industry tended to be reactive—it reacted when there was a disaster and put things in place afterward—but that the KP3 report succeeded in changing the emphasis to one of being proactive and encouraged the industry to identify risks and deal with them ahead of time, before they became something that might lead to a fatality?
I agree with my hon. Friend up to a point. I remember the same discussions following the Piper Alpha disaster, when the Cullen report was produced. That report encouraged the industry to be proactive. The evidence of the KP3 report is that we need an independent body such as the HSE to keep the industry on its toes. I would like to see a day when that is not necessary, but it is important to have that regulatory involvement.
Following on from that point, the other very useful thing about KP3 was that it brought minds back to asset integrity, because much of the safety effort had perhaps been diverted into the slightly easier area of improving the statistics on injuries and individual human safety methods. All of those are very important, but perhaps people’s attention had come off the target of asset integrity and the structures that were being used.
Again, that is correct. From the point of view of the industry, the report was a difficult one for it to swallow, but at the same time it has been extremely useful in helping the industry to refocus. That is what we all want. We need improved safety and we cannot have that without a properly effective safety culture and responsible regulation.
The whole KP3 process has highlighted serious deficiencies in the way in which the oil industry was operating and has helped to put in place processes that should ensure increased awareness among the managers and work force—the very point that my two colleagues have just made—of the importance of management of safety systems, the integrity of plant, and communications across the industry and across individual companies.
Fundamental weaknesses remain in key areas, however. Most of those relate to the industry’s culture, which is part of the history of the worldwide oil and gas industry. It is a difficult and dangerous industry that requires incredible skill and tenacity—not to forget shedloads of money—to achieve its objectives. A particular mindset is needed to be successful: quite a lot of the hunter-gatherer mentality goes into the search for oil. That mentality can produce positive results, as the success of the industry shows. The technical development of the UK offshore industry over the 40-plus years of its existence is nothing short of miraculous, and the impact is not restricted to the UK. The technologies developed in the harsh environment of the North sea, together with the skills of our work force, are exported to all parts of the globe, again to the benefit of the UK economy.
However, other aspects of the culture, particularly the territorial nature of oil companies, produce blind spots. Despite the KP3 process, a number of issues remain unresolved, one of the most important being hydrocarbon releases—unplanned releases of gas from offshore equipment. The Piper Alpha disaster was caused by a hydrocarbon release. Releases are categorised by the HSE as minor, significant or major. It is impossible to discuss hydrocarbon releases and the problems that they create without considering the offshore working systems, particularly the permit-to-work system. The KP3 report includes the annual statistics for significant and major releases since 1996-97. Releases in the significant and major categories have declined: major releases have plateaued at about four or five a year, although there were none in 2008-09, and significant releases plateaued at about 60 to 70 a year between 2005 and 2008. The hydrocarbon release that led to the Piper Alpha disaster was in the significant category, and we allow 60 or more such releases to occur every year.
Hydrocarbon releases are a major concern to everyone in the industry, but attempts to deal with them across the industry have had only limited success. Companies are totally wedded to their own systems. At the same time, more and more offshore work is being done by contracted labour, which has to become familiar with myriad different systems. On some platforms, operating companies have different systems from their contractors.
The trade union view is that the problems are created by lack of investment. The trade unions also question the way in which offshore operators investigate incidents, and particularly the failure on some platforms fully to involve the offshore safety committee. What is clear is that there is no common cause behind the high number of hydrocarbon releases. In most incidents, however, none of the events is unforeseeable. We know that we cannot afford to make mistakes, but the evidence in the statistics and the consequences is that we continue to do so.
The hon. Gentleman is making an important point about the industry’s collective wisdom and knowledge. Does he share my concern that the number of people with the experience to know where the safety risks are is declining because we have an ageing work force, which might lead to an increase in risk?
The KP3 report focuses on that issue, particularly in management where there is a turnover of staff. Given the nature and background of some of the oil companies, people often come into the UK from other countries to manage facilities. The right hon. Gentleman makes an important point.
We cannot afford to make mistakes. When we do, however, it is not for lack of tools, procedures or safety warnings and systems. Far too many people go to work on the wrong piece of equipment or take out the wrong part; there are recurrent near misses. Speaking to me recently, one industry representative likened offshore systems to a surgeon removing the wrong kidney—these things are that important. The Cullen report into the causes of the Piper Alpha disaster noted that a flange on a compressor was not replaced properly and that led to the gas release. We can see from the statistics that such things happen consistently.
Is the hon. Gentleman aware that a shut-off valve at the Calor Gas site on Canvey Island failed to operate properly, resulting in the release of 163 tonnes of liquefied petroleum gas into a densely populated residential area? A lot of the gas was released as an unconfined vapour cloud, which could have been catastrophic and could have made Buncefield look like bonfire. Does the hon. Gentleman share my concern that, a year on from that incident, Calor Gas has still not made itself available for interview under caution by the HSE, which is therefore still unable to report and to introduce the right safety measures to ensure that such things do not happen again?
I know only what I have read in the press about that release, but the hon. Gentleman is right. The problems are not confined to the offshore oil and gas industry. The incident that he mentioned occurred onshore, where the same safety systems need to be in place. I will come to that a little later. Regulation and compliance with the regulatory system are crucial. In that respect, I totally agree with him.
We all know that there is a problem—the proof is in the statistics—but what is missing is a sense of common purpose in dealing with it. Individual incidents are investigated and reported on, but no common approach or strategy emerges from such work. The reality is that there are far too many vested interests—mainly oil companies insisting on keeping their own procedures. Often, head office says that everyone must operate a system because it is the company system and part of the company’s identity.
We need a new approach by the industry. We need a completely different system and way of working, rather than a new computer system or any other whizz-bang technology. There needs to be a commitment from the whole industry to move to a new standard, along the same path and away from a single-company approach. Individual companies have erected a wall around their current practices. By refusing to be open and to recognise the risks and problems in the current arrangements, they are missing an opportunity to move the whole industry forward and to improve safety throughout the North sea.
A first step would be a proper analysis of the cost of the present system to the industry and individual companies, including the risks and consequences of the failure inherent in that system. That should be set against a more coherent process—one that is common across the North sea, but which would, of course, need to allow for a certain amount of individuality, because no two platforms are the same.
The hon. Gentleman raises an important point when he says that we should have common practices throughout the North sea, but he probably meant the UK sector of the North sea. Life for those working in the North sea would be greatly improved if more could be done to drive through a treaty with Norway to ensure that standards operate across boundaries. When equipment moves from one side of the North sea to the other, a whole different safety regime and culture applies, even within that one area.
I am an internationalist, and I can but hope, but the hon. Gentleman is right. One problem is that UK workers often move to Norway and vice versa. They also move to the Dutch, Danish and German sectors. We need to get the arrangements as close as we can, but of course I understand the different international aspects.
We also need a tougher approach from the HSE’s offshore safety division. I know from my conversations with inspectors that they would like to see improvements, and the KP3 report and the review give them the platform to move things forward.
One example that those on my side of the argument often throw at the industry, to pick up the hon. Gentleman’s point, is that companies in Norway do things better. What usually comes back at me from UK oil industry representatives is, “Yes, they have a common permit-to-work system in Norway, but it’s very similar to ours. In reality, our system is about 80 per cent. common content, and that’s where the Norwegians are.” That is what I am told, but I do not know whether it is accurate. Indeed, I do not think that anyone knows. As far as I am aware, no one has studied and compared the UK and Norwegian systems to see which is more efficient in terms of the cost and other aspects, safety being the priority. By the way, all the companies that fight off a common system in the UK sector happily work with one in Norway.
If we are serious about safety in the North sea, we have to tackle the problem of hydrocarbon releases, and the only way to do that is to examine a common permit-to-work system. When the Minister replies, I would be grateful if he addressed that issue and, in particular, fired the starting gun by asking the HSE to carry out a comparative study of the UK and Norwegian systems as they relate to the permit-to-work system, with a view to introducing a common permit system in the UK.
Another important issue—a poor aspect of the culture in the North sea industry—is the “not required back” system. The offshore installation manager on any offshore platform had the ability to sack someone on the spot, regardless of whether that person was employed by the company—the word “sack” is a bit strong, but people could be removed from the platform. I am delighted that the industry and the unions have reached an agreement on the issue, and I hope that that is one skeleton that will be well and truly buried. However, I am hearing disturbing reports from trade union officials about an increase in dismissals for minor breaches of health and safety requirements. I hope that the industry is not replacing one obnoxious working practice with another. The HSE needs to keep an eye on the matter, and the unions are gathering data and examples.
I want to move off the strictly offshore aspect and the production side of things, although I have spoken to the Minister’s officials, and he will expect me to say something about safety committees and safety representatives offshore. We need to change the system in that respect. There are strong aspects to the offshore system, which varies significantly from the onshore system. The most attractive part is the election of representatives, but the statutory exclusion of trade unions is a defect. We need a much more independent element, and I will address that issue on another occasion.
In this year, of all years, it is difficult to talk about safety in the North sea without mentioning the two helicopter crashes that have happened. I warned the Minister’s officials that I would raise the issue, and I know that it is not his departmental responsibility, but I should appreciate it if he would pass on my comments to his colleague in the Department for Transport.
If working on an offshore installation in the oil and gas industry is dangerous, so is getting to and from works. I have some figures that were compiled for me by Mr. Jim Ferguson, a journalist who works exclusively on aircraft—particularly helicopters. He has been monitoring the use of helicopters for more than 30 years, and the figures that he gave me are shocking. I am well aware from my own experience of the number of helicopter incidents that have happened, but looking again at the number of deaths I find that 98 passengers and 13 crew members have been killed in helicopter disasters on UK sector passenger flights since 1976. If search and rescue and training flights are added to that, it gives another 10 crew and four passengers. Thus the UK total of deaths in the North sea from helicopter crashes alone—and those do not figure in the offshore safety figures, because, of course, they are the responsibility of the Civil Aviation Authority, and not the HSE—is 23 crew and 102 passengers. According to Mr. Ferguson’s figures, in the whole of the north-west European continental shelf, 151 individuals and 40 crew have been killed in helicopter crashes. Those are shocking figures.
The vast majority of offshore workers are flown to their place of work by helicopter. Aberdeen airport is the busiest heliport in the world. On 18 February a Super Puma helicopter carrying two crew and 16 passengers crash landed in the sea a few miles from Peterhead. Thankfully the sea was calm, although visibility was poor. The crew were all rescued. Two questions arise from the incident. The first is about the use of personal location beacons. Those were introduced by BP when it inaugurated its jigsaw project, a new system of safety in the North sea, involving the use of helicopters and fast rescue craft. A key component was the individual personal location beacon issued to passengers, to be worn on the wrist like a wristwatch. Its use was welcomed widely by the work force and the hon. Member for West Aberdeenshire and Kincardine will remember a meeting that I organised here in the House of Commons with BP, trade unions and members of, in particular, the shipping industry in the North sea. When the unions heard the details of the personal location beacon they saw the advantages immediately and it helped to change their mind and change their attitude towards the jigsaw proposals.
As I said, the beacon is worn like a wristwatch and was welcomed widely by the work force. It made them feel more secure, as in an emergency it would send out a signal to rescue craft allowing rescue to be carried out much more quickly. However, when the helicopter crashed in February it was discovered that the signal from those personal location beacons interfered with the location beacons fitted on the helicopter life raft. When they detected another beacon in the area they automatically switched off. That has caused considerable concern in the industry. I shall not go through the concerns in detail. However, I was concerned that BP’s new system had gone through a long process of test and technical examination before it was introduced. It seemed to me that the problem should have been identified and dealt with at that time.
I tabled a question to the Secretary of State for Transport asking when the CAA had become aware of the problem. I was surprised to be told that it had become aware of it in 2003, during the jigsaw testing process. It did not deal with the issue at that time because
“such beacons are not part of an aircraft’s approved equipment and are treated in the same way as any other personal portable electronic device, such as mobile phones”.
That response seemed to me to be inadequate, particularly given the potential consequences that were shown in the accident on 18 February. If the CAA was aware of interference and that was not part of its remit, I would have expected it to notify those who were responsible. I gather that the CAA and HSE have regular liaison meetings, but the issue was not raised by the CAA until January this year, before the February crash. I understand there was some interference with the beacons on the helicopter because some passengers were fiddling with their watches. Normally a beacon is primed to go off automatically on hitting salt water. I have been on many helicopter visits offshore and it is a very boring journey, so I suspect that people were looking for entertainment. That incident triggered some interest from the CAA, whereas in 2003 when it discovered the problem there did not seem to be any interest. That is a serious concern. I hope that in the liaison meetings between the CAA and HSE some attempts will be made to secure improved liaison and communication.
The second issue that I want to raise is the time it took for rescue craft to reach the passengers. The first distress signal went out at 18.40 and the first rescue vessel did not arrive until 20.23. Visibility was poor and of course there was interference with the location beacons, but the wristwatch beacons were transmitting. The North sea is cold and it kills very quickly. Luckily all the passengers were in life rafts, and there were no deaths, but serious questions arise over a rescue that took nearly two hours, and no one has yet given an answer or tried to explain the reasons for that.
The second helicopter crash happened on 1 April and had much more serious consequences. All the men in the February crash survived. The helicopter was lost, of course: it sank to the sea bed and has now been recovered. The second crash involved the same type of helicopter, a Super Puma, but of a different vintage, and there were different reasons for the disaster. There was serious mechanical failure, and, again, I do not need to go into the details. The crash, coming a few weeks after a crash that everyone survived, devastated the north-east of Scotland. It came as a huge shock. As I implied earlier, deaths in the North sea are not unusual for us, but that was hard to bear, particularly given the circumstances. Sixteen men died on a Super Puma flight from the Miller field. All that we can say about that incident is that of course we still think about the relatives; but we must look ahead. One of the consequences that I am particularly pleased with is that the industry and the safety authorities immediately saw the need to examine very carefully all the issues affecting helicopter safety. None should be considered in isolation and the industry rightly took the initiative.
Oil and Gas UK, together with the safety authorities, and with the trade unions Unite and BALPA on board, set up a helicopter taskforce chaired by Mr. Bob Keiller, who is chief executive of an offshore service company, PSN. In my discussions with Bob he has made it absolutely clear, despite my pushing him as hard as I could, that he is not interested in the history and what happened in February; he is interested in dealing with the consequences and finding a way to improve safety to ensure that we minimise the risk from all helicopter flights. As I said earlier, virtually everyone who works offshore must travel by helicopter. It can be a frightening experience. Once when I was going off to the Forties field some years ago we hit a bank of fog and it took the pilot three attempts to get us on the helideck because of the fog. There was no radar at that time. To do that week in, week out is deeply unpleasant and of course it is terrifying for the families of the men who work offshore.
I met Bob Keiller last week to get an update, and in the months since the taskforce was set up it has made extraordinary progress. Particularly in this place and in government, we are used to progress having to go through all sorts of processes, hoops, somersaults and so on. However, in the short time since being set up after the helicopter disasters, there has been progress that I find mind-boggling under the circumstances. First, the modification to the Eurocopter, which includes improvements to the mechanical system, has been agreed. That is directly related to the April disaster.
I mentioned the difficult flight that I took. Radar has now been extended offshore. We have had helicopter flights for nearly 50 years, and we are now extending radar offshore. VHF radio has been extended offshore. There is an agreement across the industry, insisted on by the taskforce, that no one will be allow to fly without a survival suit in any non-emergency situation. Anyone who has been offshore will know that survival suits are compulsory most of the time, but apparently that was not being recognised.
With the co-operation of the CAA, plans have now been put together to improve helideck lighting. Those plans will be implemented later this year, and we will see proper, high-quality lighting on all helidecks. That will make landing, take-off, disembarkation and everything else much more efficient.
The Vantage system is to be improved. It is used to identify people going on to helicopters. Because people tend to work either two weeks on, two weeks off, or two weeks on, three weeks off, a person is not allowed to leave the platform unless their counterpart, who is doing the next shift, appears. If someone does not appear on a helicopter, the person who is hoping to go off has to stay, and someone else will take their place on the helicopter. The Vantage system, which should track everyone who is on a helicopter, missed those late changes, so that has been improved.
Finally—this is important—contact with concerned relatives in the event of an accident has been speeded up. When there is a serious accident offshore, relatives often find that they are given a number that they find difficult to get through to, and which is given long after there has been a public announcement. When the April helicopter crash occurred, I immediately got hold of a BBC journalist I know to find out what was going on. They knew everything before the police released the information to relatives. I think that that is wrong. The system has been speeded up and improved.
I am sorry I have taken so long, but this is an important issue. My final point is for all the statutory authorities—I am conscious that the room is full of officials from the HSE offshore safety division, and this is not meant as a criticism of them, but I think that everyone should look at how the helicopter taskforce has operated and carried out its tasks. It has forced people to change to fit in with its requirements and meet the new, improved safety conditions. There are lessons to be learned.
Offshore safety has improved dramatically since the Piper Alpha disaster. It had to, because the system was appalling. It has improved again since the KP3 report, but we cannot afford to rest on our laurels. The matter must constantly be addressed, and I congratulate the HSE on the KP3 report, on the initiative that it took and on its review. I hope to see more improvements coming from its proposals.
I congratulate the hon. Member for Aberdeen, North (Mr. Doran) on bringing this issue before the House today. As he said, it is important for us to keep learning lessons and keep the focus on safety. Incidents happen and lessons are learned, and then there is a period of calm, when perhaps people’s minds are taken off the ball. A debate such as this is a chance to focus again and remind everyone involved of how dangerous the situation is, and how important safety, and the culture of safety, is.
I must declare my entry in the Register of Members’ Interests related to the oil and gas industry. Like the hon. Gentleman, my key interest is that many of my constituents in West Aberdeenshire and Kincardine work within the North sea, or are relatives or friends of people who work there, and who want to see as safe an environment as possible.
The hon. Gentleman touched on the history of Piper Alpha. There was a sea change in the cultural approach, moving towards the case for safety, rather than the box-ticking approach. Looking at the comparisons with Norway, there is a concern that the Norwegian system is still more of a box-ticking approach than a safety case approach. Therefore, we must be careful when making any comparisons with Norway because people on the Norwegian side also have concerns about their safety culture. If we could get the best of both worlds, that would be excellent.
As the hon. Gentleman said, this industry is extremely important for employment and for the UK economy—something we sometimes underestimate, as so much of it is out of sight on a day-to-day basis. Anything that can be done to make the North sea more of a whole could improve operations within it. That is not only from a safety point of view. If people have to comply with different safety regimes, they face extra expenses each time they switch between different parts of the North sea. Near the middle of the North sea in the fields that straddle the sea, it is almost impossible to take a ship from one side of the field to the other, because there are such different safety regimes.
The KP3 report was a timely reminder of asset integrity, and as I said in my intervention, the industry was conscious that it had drifted into making safety an important part of the message, while again going towards the easier safety approach of slips, trips and falls, which are statistically more measurable and more high profile. It is easier to see that something is being done about them.
The hon. Gentleman made an important point about structural integrity and morale in the working environment. Especially during downturns, the industry thought that surface rust did not really matter as it was not an issue of structural integrity. However, if someone is working in a safety-critical environment and they see rusting equipment all around, that does not send the best message for morale or how they should approach their work as professionals. What starts off as surface rust can become more structural rust if no intervention is made, and later intervention becomes even more expensive and critical to safety. Asset integrity is crucial to avoiding a future Piper Alpha disaster, and the KP3 report was welcome. The review, and the fact that there has been progress is also welcome.
The hon. Gentleman mentioned the worldwide culture. We have something to contribute, because companies that operate in the North sea have taken safety lessons from there to other parts of the world and improved things. In the debate on Piper Alpha, I reminded the House about how the safety case used offshore had been brought onshore into the construction industry for the North sea, and resulted in major improvements. There are positives to be achieved from learning lessons.
One of the points highlighted by the KP3 report was the importance of industry learning from itself and sharing its experiences. The Energy and Climate Change Committee visited the rough gas storage platform before the recess. One of the first things that we were shown was a video of a major disaster, when there was a major release of hydrocarbons and a fire on board the platform. That dramatic and effective DVD of what had gone wrong seemed an effective way of getting the message across to other operators in the North sea, and of showing the lessons that had been learned from that experience. It was lucky that there was so much hydrocarbon release in a confined area that it did not become an explosive mixture—it became a major fire hazard rather than an explosive mixture. There was a useful message about safety, and a very brave coxswain from a lifeboat who was willing to share the problems that he had had in trying to get his lifeboat to start. His training had been on generic lifeboats, but when he got into the lifeboat that he was using on the platform, he did not know how to start it, and had to radio someone. In a more serious crisis, that could have been critical to safety. From that experience, the industry across the North sea can learn that people need specific training on the life raft that is found on the platform on which they are operating. That message has got across.
As the hon. Member for Aberdeen, North said, safety for the person operating in the North sea transcends just the platform and the journey to and from the platform. We had the tragedy in April and the less tragic incident involving helicopters in February. Relatives and friends are not interested in which authority is responsible for safety. People just want a safe environment from the moment they leave home to the moment they come back from work. The hon. Gentleman has highlighted just how safety-critical the helicopter journey is as part of that. Moreover, it is to be welcomed that the industry, through the taskforce, sees a responsibility across the piece. Again, that will help the interface between the CAA and the HSE.
The use of personal locators seems to indicate that when two people operate in isolation, they may not see the boundary between the safety case in each area. The fact is, however, that the beacons were known to have an interference problem. Helicopter pilots have always been worried about having them on the helicopter, and yet the industry does not seem to have engaged with them until this latest incident to solve the problem. Operators feel reassured by having their own locator in a wristwatch. If they end up in the sea they know that they will not have a long survival time. Wearing that wristwatch means that they will be located. It is very difficult to locate one individual in the North sea. The wristwatch beacon provides an extra reassurance for the worker. They know that in the event of a disaster, they have more chance of survival. I welcome the progress of the taskforce. It is important to gather together all the different players in the industry to come up with a common purpose of improving safety.
My right hon. Friend the Member for Gordon (Malcolm Bruce) made the point about the ageing work force and the importance of training and culture. As I said in the debate on Piper Alpha, OPITO, the Oil and Gas Academy, is based in my constituency, and it has a good track record of improving training and bringing training to the new individuals who work in the North sea. It would help such individuals if they did not have to gain their experience from another disaster. Instead, they should be mentored by the ageing work force, who can pass on how crucial the safety culture is and how dangerous an operating environment it is. If workers learn how much safer they will be if they operate properly, that will be another benefit for the North sea.
When all is said and done, there is still a lot of oil and gas in the North sea, and for all the economic and security supply reasons, we want to see as much of that produced as possible—but not at any price. Safety must be maintained. The economic and security supply driver is that we should be carrying on much more in the North sea. Yet many of the platforms and pipelines were not expected still to be operating. Now, however, it is hoped that they will be there much longer, which makes it even more important that we focus on this asset integrity.
Such work will require investment and expenditure. If we want to see a long life for the industry in the North sea, we need to ensure that we have a regime that does not say that the safest future for a particular platform or pipeline is to shut it down and decommission it early. We need an investment climate.
May I introduce a new dimension that will extend the life of the use of such assets? We have carbon capture and storage systems that are being developed, which will see us seeking to achieve a long-term geological storage of carbon in the voids under the sea. That will introduce possible additional use of the pipelines and additional safety issues.
The hon. Gentleman makes a very important point about the other future for the North sea and the important role that carbon capture will play in tackling our immediate problems of climate change. Again, that will require safety assessments and an effective safety regime. The crucial message is that we as a country have benefited enormously from what has happened in the North sea. The work has been provided by dedicated and loyal teams of people who have taken a lot of risks. They should not be taking unnecessary risks, and we owe it to them to ensure that they are provided with the safest possible environment. That means that we will benefit from the North sea, but not at any price.
I congratulate the hon. Member for Aberdeen, North (Mr. Doran) on securing this debate. I should like to testify to his unstinting work on the issues of North sea safety in which he is heavily engaged and interested. He was right to bring this matter to the House—he does so from time to time—and highlight both the problems and achievements. I should like to draw out some of those and reinforce what my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir R. Smith) also said.
According to Oil and Gas UK, my constituency of Gordon has more oil and gas jobs located in it and derived from it than any other constituency in the United Kingdom. Ironically, the figure is greater than the electorate. That arises from the fact that a number of the headquarters of the major operators and supply companies are located in the constituency; the jobs are not necessarily based there. We are talking about an industry that employs some 450,000 people across the UK. Taking into account the investment and operating expenditure and export and balance of payments benefit, the industry is worth something like £40 billion a year. It is a very important industry. It is ageing, but not decaying, and that is the crucial point. It is in everybody’s interest to ensure that the integrity of the equipment is maintained for its efficient and safe operation. In the context of the North sea, safety is everybody’s responsibility.
As we have heard from some of the contributions, there is a recognition that it is not an “us and them” approach; that everybody understands the importance of safety. However, everybody must continue to apply pressure to ensure that we have the maximum safety culture. We have not always done that, but there is a recognition now that that is what we must do. If we reflect on the matter, we will see that we have an industry that is international in its scope and reputation, and that has a growing export business. A disaster in the North sea would have significant implications for the credibility of that industry as well as cause huge worries and anxieties to the people who are engaged in it. If we do not have the right culture—of being at the absolute apex of safety consciousness—it will not just prejudice the lives and concerns of workers in the industry, which are absolutely central, but affect the economic performance and capacity of the industry in the long run. That is why all of us must be engaged across the whole piece.
I also happen to represent Aberdeen airport. Although I have been told by the airport manager that it is no longer the busiest heliport in the world, it is nevertheless very busy. It was the airport from which the Super Puma operated by Bond left and was returning to when it crashed. Four of the crew lived in my constituency. That incident reinforces the point for all of us in the north-east. We live daily with the knowledge that we are asking people to trust themselves to this highly risky environment. Collectively, we need to respond to the best of our ability. I want to reinforce the point that I made in my intervention to my hon. Friend the Member for West Aberdeenshire and Kincardine. All of us have been engaged in discussions about the future of the North sea and the work force. There is real concern that the work force is ageing. I do not mean that they are old, but they are approaching a time when they are likely to retire or leave the industry. With them will go a huge residue of cultural knowledge, wisdom and experience. We must ensure that there is a younger generation coming into the industry and that that knowledge, information and culture is transferred to them quickly and efficiently so that they are carried through to the next generation. We all know that there is a challenge to persuade people that this is an industry with a future. Those of us who are engaged in it every day see young people in the industry doing the most amazing jobs and taking on the most remarkable challenges. They want to tell others that this is an industry that has not only a fantastic past but a great future.
I want to reinforce that point, because there is a view among those who are not engaged in this industry on a day-to-day basis that somehow it is just fading into the sunset and that it is a declining industry. The number of times people say to me, “Well, you must be worried now that the oil is finished, what are you going to do next?” And yet the information that we have is twofold. First, there is probably nearly as much oil and gas still to be recovered from the UK sector as has already been recovered. Secondly, there is a huge export industry that we are supporting internationally, from the collective capacity and technical ability of companies that have derived their success from operations within the North sea.
It is important that we have a taxation and economic regime that gives confidence to the industry that we will continue to invest, because as the hon. Member for Aberdeen, North rightly pointed out, the integrity of the structures and their inherent safety depends significantly on continuing investment. We must ensure that that investment is stimulated, encouraged and—this is the important point—is made at a level that guarantees that we have the platforms and the installations that we deserve and need.
Key Programme 3 was a very good check and one that reinforced the safety case culture. It is the responsibility of the operators to ensure that their installations are safe, but it is also the responsibility of the Health and Safety Executive to test those operators all the time, in terms of establishing what is the safety culture and what is the operation of those safety cases on a day-to-day basis. It seems to me that KP3 was an extremely useful check.
Similarly useful is the helicopter taskforce, which is chaired by Bob Keiller, whose company is also located in my constituency, beside the airport. Indeed, if one visits his company and many others in the industry, before anything else is discussed they will give a safety briefing, which is not just about the building that they are in; it is part of the recognition that, before anybody goes anywhere in the industry, they should think about safety. I do not think that any of us would deny that that culture is much more sharply defined now than it probably was in the past.
What is clearly important is that we put in place at all levels all the mechanisms that are necessary to ensure that we can have confidence that this industry will invest for the future, will operate for the future, that the people who work in it will have an environment that is as safe as it can be, that its international image is one of high integrity in every sense and that it has a long-term future.
Helicopters are an obvious point of concern, but there is no other practical way to take crews on and off platforms. It is true that the investment in higher technology and automation over the years means that the number of people at any one time on a platform now is smaller than in the past. However, the number of people flying backwards and forwards to platforms is sometimes greater now than in the past, because those people have specialist roles to play.
In that context, after the last crash there was a discussion about what we would do with helicopters. Clearly, there were very many workers who said, “I am very uncomfortable about taking that journey out”. However, being the kind of people they are, they also say, “There isn’t actually any option, that is my job and I will have to accept it, take it on trust and hope that the accident was something that happens rarely and won’t happen again”. Nevertheless, I think that anybody can understand the atmosphere that would have been pervasive within the industry after that last crash. Therefore, we need to ensure that we have helicopters of the highest integrity and operation systems that are as thorough and rigid as they can be, in terms of maintenance and actual operation environment.
Of course, there has been some concern about the competition for helicopters. We have had separate debates in this House about the need for helicopters, for example in Afghanistan. I do not know whether the Minister will be able to comment, but we have concerns that there is some pressure on the numbers and availability of search and rescue helicopters. I hope that it is not true, but it has been suggested to me anecdotally that there are some people in the search and rescue business who are not sure that they can absolutely guarantee 24/7 cover around the UK coast. As I say, I hope that that is not true. I do not know if the Minister is able to give any reassurance on that issue or, if necessary, could write subsequently. It is important that, if there is a problem, we address it. Of course, that issue does not just concern the North sea; it concerns people operating in the industry, but it also concerns anybody else operating around the UK coast.
I believe that this is a very timely debate. It is important to stress that we have an industry here that has a very substantial past—I myself first went offshore in the North sea 36 years ago—and a very substantial future, whereby people will still be travelling offshore in the North sea in 36 years’ time. We must also ensure that this is an industry that operates to the highest standards internationally and that people see it as a beacon of high standards, so that they can be attracted to work in it because they know that the environment may not be 100 per cent. safe—nothing can ever be 100 per cent. safe—but is as safe as it can reasonably be and that safety is the paramount priority of everybody engaged in the industry.
I congratulate the hon. Member for Aberdeen, North (Mr. Doran) on securing this morning’s debate, and I welcome the contributions made by my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) and my right hon. Friend the Member for Gordon (Malcolm Bruce). I do not intend to repeat the many excellent points made by those Members; I just want to reinforce what I think are some of the main issues that have arisen from the debate.
Our debate this morning is certainly timely, given that the KP3 review was published in July and that this week is the first opportunity for right hon. and hon. Members to debate it. It is also good that progress has been made since the original report was published: remedial work has been done on serious problems, such as fire doors; there is a higher level of awareness about safety management and hazard risk control; and companies, despite the economic conditions, have continued to invest in training and hazard awareness.
It is true that there has also been progress, although perhaps not across the piece, on plant maintenance. As previous speakers have said, that will continue to be an issue, given the fact that the industry’s plants and equipment are ageing and are likely to remain in place for a number of years. It is also good that organisations are being more co-operative and are sharing evidence.
However, as the hon. Member for Aberdeen, North said, despite the fall in the number of people killed in the industry—except for the figures for those killed in helicopter crashes—the number of hydrocarbon incidents and releases has not changed in the past few years. Although the number is considerably lower than it was at the time of Piper Alpha, I understand that there were 21 major or significant hydrocarbon releases in the second quarter of this year. There were 74 such releases in 2007-08, 74 in 2006-07, and 73 in 2005-06. If there is one lesson that needs to be learned from those figures and the fact that Piper Alpha was caused by a significant hydrocarbon release, it is that we need to do something to improve those statistics.
I believe that it would be of benefit to both the UK and Norway if the Health and Safety Executive’s offshore division were to work with Norway’s Petroleum Safety Authority. For example, an issue identified by the Petroleum Safety Authority that has not been mentioned already this morning is the fact that, in the Norway sector last year, there were 350 instances of work-related hearing damage. The authority says:
“A continuing high number of hearing damage reports is an indication that personal protective equipment is an inefficient barrier”.
Perhaps that matter could be examined.
Until the hon. Member for Aberdeen, North stated it, I did not know how many people had been killed in incidents involving helicopters. Forty crew members and 150 passengers killed since 1976 are certainly considerable numbers. I agree with what my right hon. Friend the Member for Gordon said: in the current circumstances, there is probably no other easy way of getting people to the platforms. However, continuing efforts are needed to ensure that the equipment is maintained and performs to the highest safety levels.
As several right hon. and hon. Members have said, the matter of personal locator beacons illustrates the need for the Civil Aviation Authority and the HSE to work together. Clearly, although that issue of collaboration may now be in the process of being resolved, it was not being resolved until the helicopter incidents earlier this year occurred. I agree with my right hon. Friend the Member for Gordon about rescue times. In February, it took two hours for the helicopter to locate people in the sea. That is clearly too long. I realise that the Government are under pressure to put more helicopters in Afghanistan, but that must not happen at the expense of the 24-hour, seven-day cover provided around UK shores. I hope that the Minister can give us an assurance on that.
As has been said, the UK oil and gas industry contributes significantly to our economy and is likely to continue to do so. It is a major employer, particularly in Aberdeenshire. It is important that the health and safety issues raised by the KP3 report and review are kept in people’s minds and that there is no room for complacency.
I congratulate the hon. Member for Aberdeen, North (Mr. Doran) on securing the debate. He made the important point that this subject is not debated often enough; it is good that he has given us an opportunity to debate it. As he rightly says, it is of great importance to the safety of those who work in the industry, which employs hundreds of thousands of people in hundreds of installations, many offshore. The industry is of huge economic importance to the country, but the safety of the work force must be paramount.
The hazardous conditions in which such men work were brought home to us recently by the tragic crash of a Super Puma helicopter in the North sea on 2 April, in which, sadly, 16 lives were lost as the helicopter made its way to Aberdeen from one of the offshore platforms. Our thoughts must of course be with those who lost family and loved ones on that day. The hon. Gentleman gave us the background to that incident: not only had there been a similar incident some weeks before, in February—no lives were lost, but it was similar in other respects—but lives had been lost over the years in a number of other incidents involving helicopters.
I support the hon. Gentleman in the points that he made. I do not propose to go over all of them, but they were all well made, especially the points relating to the new helicopter taskforce set up by the UK offshore industry group. The taskforce has been meeting and performing a useful function, and he told us about some of the improvements made as a result. We are told:
“Its purpose is to act on behalf of the industry as a communications focal point for sharing information, advice and learning across the industry and with other stakeholders on matters arising from this and other helicopter accidents, including assisting with the implementation of any recommendations from the Air Accident Investigation Branch inquiries.”
Clearly, that is an important function. I am pleased that the hon. Gentleman mentioned it to the Minister, as it gives us the opportunity to ask the Government what their approach is to the taskforce. One imagines that the Government are one of the stakeholders described by the group. It will be interesting to hear from the Minister what role Departments, the Health and Safety Executive and the Civil Aviation Authority have played. It would also be interesting to hear what other steps the Government have taken to promote helicopter safety since the tragic incident in April. I support the points made about the need to have search and rescue helicopters available, and I hope the Minister will answer those as well.
On more general issues of North sea gas and oil safety, the hon. Member for Aberdeen, North was right to ask about the HSE’s review of key programme 3, which came about as a result of the KP3 report of November 2007 and was published in July. The review found
“evidence of good progress in addressing the issues identified by the KP3 work”
since November 2007, but in safety, of all fields, it is important to ensure that all issues are properly addressed, and it is clear from the review that some still need to be dealt with. I shall briefly highlight some of them, although there are others of importance.
The review made important points about asset integrity, saying that
“further progress in the management of asset integrity is required. The industry must also focus effort on greater reduction of significant hydrocarbon releases to build upon progress already made.”
Once again, I would like to hear from the Minister what the Government’s view is on that matter. Also, will he give us the most up-to-date figures on hydrocarbon releases, including the figures for April to June—the second quarter of this year—when there were apparently a number of significant hydrocarbon releases? The hon. Member for Aberdeen, North told us why it is so important that we bear down as much as possible on hydrocarbon releases.
The review made some points about corporate and cross-industry learning and communication, stating that
“more effort is required by the industry to break down barriers which are preventing more effective integration of the work of their independent verification bodies, and…concerns still exist over effective auditing and knowledge sharing within companies.”
Again, one wonders what impetus the Government have given to the promotion of that important knowledge-sharing function. Does the Minister wish to comment on that?
Finally, among a number of important points, the review mentioned work force involvement in controlling major accident hazards. The hon. Member for Aberdeen, North was right to deal with that important point. It would be good to know the Minister’s view on it, as the review said that further work was needed to develop work force involvement.
We must all be concerned about the safety of such a substantial and important work force. Safety must be paramount. We all remember the Piper Alpha tragedy of 21 years ago. The Government and all of us must play our part to ensure that there is no repeat of that tragedy, or indeed any tragedy at all, in this important field. We must do all we can and take all the time possible to bear down on the safety hazards that give rise to such incidents.
I congratulate my hon. Friend the Member for Aberdeen, North (Mr. Doran) on securing this important debate. It is important that we have the opportunity to explore the progress made on these key issues, and I think that the Chamber recognises his contribution to health and safety standards in the North sea and his campaigning both in and outside the House on those matters.
It is important that we remember those who have lost their lives, as all hon. Members have said. The communities of north-east Scotland take huge amounts of wealth and resource out of the North sea, both in oil and gas and, as I know from my previous portfolio, by fishing. However, we know what perils the sea holds for many. We know of the 167 lives lost in Piper Alpha and of the 16 individuals who died more recently. As my hon. Friend said, his community has felt all too often the tragedy of loss of life and its lasting effects. It is important that we remember that in our reflections on how to improve safety.
That brings me to key programme 3. On the 20th anniversary of the Piper Alpha disaster, my right hon. Friend the Secretary of State for Work and Pensions commissioned the Health and Safety Executive to review the UK offshore oil and gas industry’s progress on addressing the issues in the KP3 report on asset integrity. Hon. Members have referred to that today and my comments will concentrate on it.
Worryingly, even after 20 years of great attention being paid to health and safety issues, the report drew attention to a number of weaknesses, such as the offshore industry’s poor performance and a lack of progress on improving areas of asset integrity. This year’s KP3 review by the Health and Safety Executive found that the offshore industry leadership had responded well by allocating considerable resources to tackling the issues identified in the KP3 report.
The review found evidence that good progress had been made. KP3 and the review have raised awareness of the need for effective process safety management and major hazard risk controls. Good progress has been made on fabric and general plant maintenance, although ageing infrastructure means that that will be an ongoing challenge. Remedial work has taken place to rectify the serious causes for concern identified by KP3, such as fire doors and deluge systems. Leadership in asset integrity management is now firmly on the industry’s agenda and has been effectively promoted throughout the sector. The industry is now more open to sharing good practice in asset integrity.
Although the findings of the review were encouraging, the challenges are ongoing and should not be underestimated. Offshore infrastructure continues to get older and remedial work is yet to be completed in some areas. Momentum must continue to prevent the assets degrading to unacceptable levels. The HSE will maintain the momentum by ensuring that asset integrity is one of the four priorities in the offshore division’s plan of work. It will remain a key priority for interventions dealing with major hazard risk management, particularly in the light of the ageing infrastructure.
The KP3 review considered work force involvement, to which my hon. Friend referred. The Government recognise the important role that the work force and their representatives play on offshore installations, and the valuable contribution that they can make in managing major hazards offshore. The HSE gives a long-term commitment to promoting and facilitating work force involvement in its new strategy, which includes a specific goal dedicated to that. The work force are closest to the hazards and are often best placed to alert managers to problems and ways of improving safe practice. They have the benefit of an excellent network of safety representatives and committees covering all staffed installations. I commend their commitment and initiative, but that network can work effectively only in an atmosphere in which everyone is encouraged to have an open discussion on health and safety problems and solutions.
Such a culture was at the heart of the comments made by hon. Members. The review said that although there is increasing work force awareness of major hazard risks, improvements are required to strengthen the safety culture. My hon. Friend referred to the “not required back” system. In a recent HSE survey, one in 10 workers who responded said that they would fear losing their jobs if they raised health and safety issues. As he said, we must keep a close eye on that because such a culture is not conducive to the promotion of health and safety. People must not be afraid of losing their jobs if they raise legitimate concerns about their health and safety and that of their colleagues in such dangerous environments.
My hon. Friend also referred to the common permit to work. I agree that benefits could arise from the introduction of such a system, in particular for contracting employees. However, there are difficulties to overcome in implementing a common system offshore. The offshore regulations do not require a common permit to work system. The UK health and safety legislation regime uses goal setting and it encourages operators to develop fit-for-purpose systems. That approach has been successful in encouraging a diverse range of new entrant organisations into the UK offshore sector. Such organisations often have existing permit to work systems that work well for them. There is no evidence that forcing them to change to a common system would bring any safety benefits. Indeed, it might introduce additional hazards and overheads.
The most widespread permit to work system used in the North sea is the computerised integrated safe system of work, which is used by 60 to 75 per cent. of organisations. That is a capable system, but some small operators may not be able to justify the running costs for a single installation. The mandatory introduction of such a common computerised system could introduce additional hazards relating to the system’s initial operation and future development.
My hon. Friend raised doubt over the accuracy of the percentages for the UK and Norway, to which the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) also referred.
I spelled out how I and others see the system. The key point is that we do not know enough about the benefits or disbenefits of this or that system. I want the Minister and the HSE to investigate and to carry out a proper inquiry so that we can see what the advantages and disadvantages are.
My hon. Friend is right. The HSE takes this issue seriously and will shortly ask the advisory committee to consider what steps are needed to improve the use of permit to work systems in the North sea. That will be the first step. The committee will be asked to consider what further information, if any, is required to address the issue. That could include the consideration of future research needs. The HSE takes this matter seriously and will not disregard it. Further work must be undertaken.
I will now respond to the comments on personal locator beacons and helicopters. Given the recent incidents involving helicopters offshore, it is not surprising that the issue was raised in this debate. As hon. Members have said, helicopter travel is the principal means of transportation of personnel to and from offshore installations. Despite there being a good safety record, it still remains an important issue for duty holders and all those who travel offshore.
The regulatory responsibility for helicopter travel is shared between the HSE and the Civil Aviation Authority. As the right hon. Member for Gordon (Malcolm Bruce) mentioned, communities and workers who travel backwards and forwards are not concerned about the myriad organisations, but want to know that everything that should be done is being done by the powers that be. Each body has its area of expertise and they must work together. For example, the HSE enforces the requirement to provide a good prospect of rescue for individuals who enter the sea close to an offshore installation.
The HSE and the CAA have a memorandum of understanding that explains the roles and responsibilities of each, especially in areas of overlap. They meet on a regular basis to ensure that the memorandum of understanding remains up to date. The HSE and the CAA sit together on relevant groups and committees, and, when appropriate, they meet on a one-to-one basis to discuss relevant offshore helicopter safety issues and research matters. A good example of industry, the work force, the HSE and the CAA working together effectively was the contribution of the Oil and Gas UK personal locator beacon working group to addressing the issues related to personal locator beacons. I can report that a risk assessment exercise has been undertaken, which concluded that the future optimum arrangement would involve all beacons being of a similar power output and non-smart.
Agreement with the helicopter operators has also been reached, so that the Civil Aviation Authority will replace the smart beacons in life rafts with non-smart beacons. That work should be completed by the end of this year. Work is continuing on identifying a suitable non-smart PLB of similar power output to the aircraft beacons, which will be compatible with the personal protective equipment worn by helicopter passengers.
I am also pleased that progress has been made on tackling the inadvertent activation in flight problem. A series of environmental tests, which beacons will be required to pass, have been agreed with the CAA. Candidate beacons that are compatible with passenger personal protective equipment will be subjected to those tests over the next couple of months. Negotiations are also under way between Oil and Gas UK and the RAF to explore the possibility of the industry’s funding an upgrade to the RAF’s directional finding equipment in order to eliminate the potential difficulty with resolving multiple signals from non-smart beacons.
In concluding my remarks, I will attempt to address some of the issues raised by hon. Members. Concern has been expressed about helicopters and search and rescue in the wider context. Duty holders offshore do not rely on national search and recovery arrangements; they need to make their own arrangements. The HSE is not aware of any duty holder’s not being able to secure the helicopters, vessels or ships that they need for search and recovery activities.
As I have said, personal beacon locators make a valuable contribution to search and rescue. It is important that we get the technology right, so that if people are in the sea because of a crash, they can be located quickly. Reference has been made to the February accident when people were found within the time frame laid down in very difficult conditions. As has been said, visibility was poor and personal beacon locators were important to that operation. As I have said, it is important that we get the technology right. I hope to have given some reassurance to colleagues that all the relevant bodies in the industry are working together to ensure that we have a response in place. Colleagues do not need to be concerned about our capability in terms of search and rescue helicopters.
On the efforts of the industry and its determination to respond to this important review and the recommendations, as my hon. Friend the Member for Aberdeen, North said, it is important to note that oil prices have resulted in a reduction in the revenues coming into the industry. At a time when the finances are not as rich as they have been, demands on the industry are greater to ensure that it makes the resources available to guarantee that there is asset integrity and that health and safety is a priority. Health and safety needs to remain high in the order of priorities and the industry should spend the necessary resources at this time. As all hon. Members have said, the gas industry is crucial to the UK and its economy. We need to ensure that our health and safety standards are the highest in the world—not just for our workers, but, as has been said, to make the most of the industry’s opportunities to sell itself across the globe.
I welcome the industry’s commitment to continuing to invest in the important area of asset integrity. However, again as hon. Members have said, if we get this right, there is no reason why the industry should not enjoy a long, safe and prosperous future. This is not a dwindling industry; it has a long life ahead of it, and we need to ensure that we play a key role and take a keen interest in it.
Despite recent progress on health and safety, there is still room for improvement, especially as the industry is facing new challenges. As I have said, the current recession is increasing the pressures on North sea operators in a high-recovery cost environment. The Health and Safety Executive is aware of the potential for health and safety to be compromised in the current climate. It is actively monitoring the developing situation to ensure that standards and recent improvements in performance are maintained, and I hope that performance will continue to improve. Everyone, including employers and workers, has an important role in ensuring that that happens.
Finally, everyone here today recognises that the work force have a vital part to play in taking forward the recommendations of the KP 3 review. As all hon. Members have said, health and safety is everyone’s concern, and the role of the work force is central to that. The work force are truly the guardians of safety, but they must operate in a culture that promotes rather than discourages people’s raising awareness of health and safety—my hon. Friend mentioned concerns about that. We need to work together to introduce the procedures and systems that will support effective worker involvement offshore. As all hon. Members have said, there is no room for complacency. There has been considerable progress and a cultural change, but we are not there yet. We must continue to focus, work hard and ensure that the UK leads the world in health and safety in the oil and gas industry.
China and the West
May I welcome you to the Chair, Mr. Taylor? I often hear your interventions from the other side of the Chamber, but I hope that there will be slightly fewer interventions today than there normally are during the debates that I introduce on economic affairs. I shall speak in some detail about the implications for UK policy of relations between China and the west, and about the global economic implications of those relations in what is obviously a globally trading and highly integrated world economy.
The collapse of Lehman Brothers last September triggered an unravelling of the global economy so swift that its cause and scope was beyond the comprehension of not only a bewildered public but most politicians and financiers. Since that time, a huge number of jobs have been junked, global trade has slumped spectacularly and Governments across the globe have borrowed unimaginable sums to shore up our ailing economies. The implications are so colossal and, indeed, so long term that we do not know their true cost, and I suspect that we will not do so for a considerable time.
If we are to understand the broader reasons why that unravelling has occurred, we should examine the crucial relationship between the world’s biggest economy—the United States—and its eastern pretender, China. For many years, that relationship has driven globalisation, but it now has the potential to wound fatally that same project. For a decade or more, the United States—along with the UK—has pursued a model of growth based on debt-fuelled consumption, and the cash and cheap goods provided courtesy of China. Pursued to its limits, that relationship has become dangerously unbalanced, and the myth of its sustainability was brutally uncovered when the complicated financial mechanisms that had hitherto propped it up dramatically collapsed during the past year or so.
The consequences of that imbalance are not yet fully apparent and their impact is still difficult to predict. However, it seems certain that the change will be profound and troubling and that the west’s position in the world may never be the same again. In the 1970s and 1980s, Wall street received a number of breaks, which began with the dollar’s link with gold being broken by the Nixon Administration’s repudiation of Bretton Woods. Later, of course, when Ronald Reagan was President, he ended capital controls. The global bond market expanded and the US economy was liberalised, opening up American savings and pensions. With US pension funds ballooning, Wall street for the first time had access to a huge new source of finance, which it sought to invest to maximum value. Corporations were encouraged to invest globally, to exploit new markets and to demand the highest return for their shareholders, who were often ordinary American pension holders.
Alongside all that came a hollowing out of the US manufacturing industry as companies looked abroad for cheap goods and labour. Indeed, similar trends were afoot on these shores. By the mid-1980s, the American manufacturing sector was increasingly taking advantage of competitively priced, non-unionised foreign workers by moving much of its production abroad. That process only accelerated when the end of the cold war introduced millions more workers to the global economy. The working classes of America were invariably the losers of that deal, but politicians made the case that the benefits to the US would somehow outweigh their collective plight as new employment would be found in services, technology and the like. Workers would be reskilled and the vulnerable would be caught, in the short term at least, by the welfare system.
China was poised and ready to take advantage of those developments following decades of economic darkness, at least as far as the west was concerned, since the emergence of Chairman Mao in the 1940s. The more pragmatic regime of Deng Xiaoping adopted an open-door policy from the late 1970s. The country moved away from command socialism and concentrated on developing strategic industries with the global market very firmly in mind. The United States happily paved the way for further Chinese integration into the global economy, culminating in China’s eventual admission to the World Trade Organisation in 2001. That final step was partially aimed at shrinking the trade deficit between the two countries, but in reality that deficit has ballooned, especially in the past decade.
Whilst China did liberalise and open certain sections of its economy, it also kept the door closed to its domestic market. By casting aside the established rules of free trade, China became the overwhelming beneficiary of globalisation, exploiting western markets while reinforcing its own role at the centre of an increasingly powerful Asian market block. That powerful Asian market block will be the reality that we will all face. It will be a challenge, but should also present great opportunities in this country in the decades to come. China simultaneously built up its own internal market and service sector, accrued vast reserves and began to secure stakes in strategically important commodity corporations and those that agreed to transfer technological know-how.
By the late 1990s, the income of the average US citizen had begun to stagnate as the hollowing out of western economies continued apace. To disguise that somewhat unpalatable problem, politicians in the US and here in the UK, its most closely related economic cousin, eagerly took advantage of the low inflationary environment provided by cheap Asian labour. They turned to high consumption as an economic model, fuelled by debt, which was often racked up against Chinese reserves, in the private and public sector. With easy credit and cheap mortgages, US and UK individuals were able to borrow cash as never before, with a false perception of wealth embedded by access to cheap Chinese goods.
Meanwhile, financial services in the west thrived to manage the seemingly insatiable demand for new investment instruments. For politicians in America and China, the relationship between the countries seemed, for so long, to be a classic win-win situation. In the US, citizens could enjoy cheap money and cheap goods, while in China, the immature manufacturing sector boomed as hungry western markets were exploited. For sure, even in the late 1990s, there were some nagging doubts about the sustainability of that arrangement, but to rectify them would have caused short-term economic difficulties and would have got politicians in the west, who always have an eye on the electoral calendar, into hot water with angry voters. Furthermore, the United States was still in the driving seat and would be able to dictate the terms of that relationship with China—or so we thought.
Make no mistake: China will not emerge entirely unscathed from this global recession. A slump in demand has already led to extensive Chinese unemployment, and social upheaval may follow. Given that China relies so heavily on the healthy US consumer, it is conceivable that the unbalanced, overly dependent relationship may yet develop into a tight economic alliance. Nevertheless, China remains on a growth trajectory that seems likely to take its economy past that of the United States by 2050. The US Treasury and its ailing banks have without doubt been stabilised by Chinese loans and loans from other sovereign wealth funds from the middle east. The US market remains very dependent on cheap Chinese imports, and it is hard not to conclude that China holds most of the cards when negotiating the terms of its bargain with America. What is more, its ascendancy, and that of its near neighbour, India, may be just beginning.
Last year, as the financial system collapsed at a breathtaking rate, US and European banks and Governments quickly borrowed colossal sums to shore up their operations. That borrowing was largely funded by China’s vast surplus. In that way, a trend that was already in motion—a shift, as I always put it, of economic power eastwards—has been markedly accelerated. The legitimacy of western capitalism has always been bound up in the idea that it can best deliver prosperity to the masses, offering many millions a route to middle-income stability each year. But as jobs and money have been sucked eastwards, that mass prosperity, for the west at least, may no longer be guaranteed.
The wealth of the past two decades is increasingly being regarded as an illusion, and the competitive edge that the US and Europe might have had over China and India in services, technological development and scientific research might just as easily be taken from us. China is churning out millions of industrious, well-qualified engineering and technology graduates every year or two. As it controls stakes in so many western corporations, it is also able to transfer and copy intellectual wealth with ease. Soon the powerhouses of Asia could be undercutting western labour in not only manual but white-collar and the most highly qualified management positions.
I have visited China twice—three times if one includes my trip to Hong Kong in 2006—and I have seen at first hand how rapidly China has been able to transform itself. On my last trip, I led a delegation of local Chinese business folk from my constituency—Chinatown, in Soho, is, of course, in the Cities of London and Westminster—and we visited the two booming cities of Beijing and Shanghai. I was accompanied by half a dozen British-born business men from the London Chinatown Chinese Association.
During the first leg of our trip, we stayed in the Pudong district of Shanghai. Only 15 years ago, Pudong was just a handful of small farming villages, but it has since been swallowed up into the enormous Shanghai metropolis, and the Chinese have built from scratch a financial district that, in addition to having countless skyscrapers, is populated by 2.8 million people. Shanghai’s overall headcount is now about 20 million, which is three times the population of London, which is Europe’s biggest city.
Whilst out there, I also travelled on the Maglev train that links Pudong to Shanghai’s international airport. The technology for that electromagnetic train system dates back to the 1930s—it was a German invention—but it was adapted for commercial use only relatively recently. We smoothly travelled at some 430 kph, or 275 mph, on that state-of-the-art transport system. In all, the 21-mile journey took eight minutes from start to finish; one can just imagine the degree to which a Maglev link between the City of London and Heathrow would ease the strain of doing business here, although I suspect it would also mire us in the endless planning wrangles to which major infrastructure projects in the UK are subject.
During that visit, I also saw the sparkling, state-of-the-art dock development. That involved driving across the 20-mile Donghai bridge, which is the longest bridge across water in the world, but took a mere three years to build. The port, which has been developed on largely reclaimed land in the bay outside Shanghai, features acres of containers stacked up, literally, as far as the eye can see. It had been only a few years since my first trip to Beijing, but the change in China’s political capital was enormous, not least because that metropolis was, at that juncture, preparing for the 2008 Olympic spectacular. So, we can only imagine what China will achieve in the coming decade.
So, what will China do with the strong hand that it has now engineered? Many assume, perhaps naively, that along the path towards economic superpower status, China will inevitably become more open, democratic and western. We assume, in this country—or perhaps just hope—that it will abide by the western ideals that have shaped the world’s international institutions and laws in the past 60 or so years, and that it will perhaps play by our rules. But all those notions betray a fundamental misunderstanding of how China operates. Westerners have confused the material wealth brought by access to cheap credit and cheap goods as a physical demonstration of our superiority in the world. However, the debt accrued by the west has come at a cost, a cost that perhaps too many outsiders, certainly in the political class, do not fully appreciate, but that will become apparent in the decade ahead, in terms of both future economic health and, more importantly, global influence.
China has played, and continues to play, a patient game. Not for that country are the quick fixes and instant gratification inevitably pushed for by western democracies. Indeed, a more long-term strategy has been pursued, best illustrated by Deng Xiaoping’s 24-character strategy: observe calmly; secure opposition; cope with affairs calmly; hide the extent of our capacities; bide our time; maintain an assiduous low profile; never claim leadership; and make some contributions apparently from the sidelines. I believe that it is inconceivable that China will not now seek to exercise its muscle on the international, diplomatic and military stages as a result of the strong hand that has been quietly won economically in the past decade.
In fact, that power is already manifesting itself. Take, for instance, China’s refusal to condemn explicitly the nuclear ambitions of either Iran or North Korea. Look at its military action in Tibet, despite the international outcry, and the continued unease in Taiwan, of which, I suspect, we have heard only the first Act. The influence that China exercises across large swathes of commodity-rich Africa, from Sudan to Zimbabwe, is also apparent. Similarly, from the Caribbean to the south Pacific, it is systematically buying up influence at the United Nations among its smallest sovereign nations. I have seen with my own eyes the number of countries that only a few years ago recognised Taiwan but that now recognise the People’s Republic of China, and those countries are all individual voters in the UN. China is increasingly likely to reject US military, economic and humanitarian pressure, even when it is under Barack Obama’s leadership. It will have greater success in any future competition for resources and power and will be able to ignore the norms and rules, as we have set them, of the international community.
What does all that mean for the UK? I am interested to hear what the Minister will say, and I appreciate that his eyes are now slightly closer to home, following his latest promotion, on which I congratulate him, but I am sure that he will have some things to say about this matter, and no doubt his successor, when looking at Chinese affairs, will have this at the top of the agenda.
Curiously, now that the price of our national profligacy has been put into sharp focus, policy makers seem determined to return to business as usual. Further borrowing and the maintenance of historically high levels of public expenditure seem, I fear, the order of the day, as the Government seem reluctant to prepare voters for some very inconvenient truths. With typical impatience, the media are already beginning to ask when the recession will end, as they hunt for green shoots in every dark corner. The cold reality, however, is that we must accept that for too long this country has been living way beyond its means, riding a wave of abundant credit, low inflation and inflated house prices, which have combined to create a false hope of ever-rising living standards. As a medium-sized economy primarily reliant on a hitherto booming financial services industry, we shall remain vulnerable, I fear, for some time to come.
For those middle-income folk outside the gilded corridors of finance who are unwilling to accrue wealth largely via housing debt, the economic stagnation has became ever clearer well before the recession. Average salaries and wages have stagnated for almost a decade, a fact that has been disguised by the grossly inflated asset prices, particularly private housing. For younger people in particular, merit and hard work were no longer translating into secure, well-paid jobs and affordable homes. Despite this, I believe that the past 15 years will soon be regarded, and for some time to come, as having been the very best of times. The long, hard slog of a slow recovery will be difficult to swallow for a nation used to assuming that its debts would never be called in. British employees are owed nothing more than the Asian sweatshop worker, and even the graduate-level openings of tomorrow might equally be filled in the decades ahead by qualified and hard-working 20-somethings from the east.
A rapid return to sustainable economic growth cannot be taken for granted. Complacent hopes of British exceptionalism might not see us through. We might not have the money to cushion this blow, as we have had in the past, with a generous welfare system. In the short term, we need to take a long, hard look at the books and sharply pare down our spending commitments. In the longer term, we need to make a strategic decision on the direction of our economy: whether to gamble our future on the possible resurrection of the financial services industry alone, going it alone as some sort of beacon of dynamism, or whether to diversify our economy and, implausible as it might sound today, tie our future more firmly to Europe in the hope that our strength-in-numbers approach will shield us from the stiffest of economic competition from the east.
The City of London, which is in my constituency, is already acutely aware of the increasing influence and economic power of China and has been preparing for Chinese growth for some time. Over the past decade, the City of London corporation has actively sought to engage with the Chinese leadership and with Chinese regional governments and business leaders, particularly since China became a member of the WTO eight years ago. While much of the corporation’s work in China has been undertaken by representative offices in both Beijing and Shanghai, the City’s annual, high-level outward visits involve a significant role in advancing relations for visiting delegations. The City appreciates that the regular interaction with China’s economic decision makers is vital to London’s continued position as an international financial centre as it provides the City with an ongoing opportunity to influence the development of China’s financial sector. It is an approach that is already reaping dividends. China’s State Council has cited the City of London as a model for Shanghai. The willingness of both countries to engage openly and share expertise has resulted in a greater flow of trade, which benefits UK-based industries in financial services and those firms seeking to expand and grow in a developing market.
With emerging markets accounting for an increasing share of world growth, London knows that it can no longer act in isolation if it is to remain a leading financial centre. The City has therefore worked to foster a web of financial, educational and cultural connections with traditional financial centres, such as New York and Hong Kong, but also with Shanghai and Bombay. Under the umbrella of the memorandum of understanding between the City of London and Shanghai, the corporation has also developed a strong partnership with the Shanghai financial services office, which is tasked with developing Shanghai as a financial and maritime centre. That interaction provides a vital insight into the thinking of the Shanghai government and gives City firms attending round tables and meetings access to Chinese officials. It also allows the UK model to be better understood by China and helps UK firms to win business as the Chinese financial sector grows.
The corporation has also been supporting the Treasury’s economic and financial dialogue with China. That collective effort to assist UK firms, share UK expertise and reinforce with the Chinese authorities the fact that there is a two-way benefit of greater trade flows is vital to the success of many UK-based financial services firms, especially the large number seeking to expand in China. As a result, 13 of the 79 qualified foreign institutional investor licences available are held by UK companies, which is higher than for any other European country. UK firms have been sharing knowledge of the corporate bond market in order to reduce China’s reliance on the banking sector, and those UK banks will be well placed when foreign banks are allowed to underwrite corporate bonds.
Due to the work being done to link the UK financial services industry to China, the UK now runs an invisible trade surplus with China, in which the balance of trade is about 2:1 in Britain’s favour. That contrasts sharply with our visible trade balance, which runs 5:1 in China’s favour. UK banks now account for 10 per cent. of foreign banking in China, generating significant revenues for the UK. Our companies are heavily involved in Chinese markets for insurance, legal services and other professional services. For instance, PricewaterhouseCoopers, the global accountancy firm, is the leading firm in China, measured by fee revenue, followed by Ernst and Young, Deloitte and KPMG. Amid all the gloom and doom in the financial services industry, from our own shores and perhaps also from Wall street, there are some good news stories, and this has been one specifically important area, and I would be interested to hear what the Government will do to ensure that it continues to work in that fashion.
Thankfully, the City of London welcomes China’s increasing role in the global economy and regards it as not only a major opportunity for UK firms, but a way of influencing Chinese policy. China will remain a major exporter, but the City believes that Chinese leaders accept that a balanced economy also requires increasing domestic consumption. The UK-based financial services sector can play a crucial role in that and will feature prominently at the Shanghai Expo in 2010. By working in partnership with the Chinese Government and firms, the City of London Corporation seeks to derive maximum benefit for UK firms in mainland China, and from Chinese firms establishing operations in the UK and becoming part of the international financial centre that is the City.
The recent economic demise has never been outside the bounds of possibility. History is full of banking crises, burst bubbles and periods of economic darkness, but the breathtaking speed at which economic power will shift firmly to the east is new. The fundamental imbalance in the economic relationship between the United States and China will now either cause that relationship to implode, or problems will be prolonged and made more acute by a continued tsunami of debt. Either way, the coming decades are likely to be shaped by the emergence of an increasingly confident China that is keen to flex its muscle economically, politically, culturally and, in short order, I suspect, militarily. Others may wish to discuss further the military aspect. Understandably, given the constituency that I represent, my speech has focused more on matters economic and financial.
I believe and fear that the west’s hope that it can somehow assume continued dominance in the knowledge economy may prove optimistic. Within the next 20 years, it is quite likely that intellectual property rights as we know them, be it licensing, patents or copyright protection, which have underpinned the west’s competitive advantage, will undergo an overdue radical philosophical shake-up. An ever more assertive China will argue that traditional IP structures are no more than the west’s attempt to impose its own form of protectionism to suit its particular demographic.
We should not assume that the dominance of our values in determining global trade will remain unchecked. If there is to be a longer-term price for our collective indebtedness, I fear that it will be for the UK to watch, with increasing impotence, it become our turn to suffer as the rules of the global trading game are changed to our detriment. It is fundamentally for that reason that we need to get balance back in our economy and reduce the debt at the earliest opportunity.
I look forward to hearing what the Minister and other Members who wish to contribute to this debate have to say. As I said, the subject is rather wide-ranging, and I have perhaps focused unduly on matters financial and economic. I hope that others will feel that that they can speak openly about matters in respect of China that are closer to their heart.
I thank my hon. Friend the Member for Cities of London and Westminster (Mr. Field) for his initiative in calling this debate and congratulate him on the magnificent tour d’horizon that he gave just now, particularly in respect of economic relations between China and the west. It is perfectly reasonable that, as the Member who represents the City of London, he should do so.
Looking forward over the next 20 to 50 years, anyone who ignores the likelihood of China becoming an economic superpower, to use my hon. Friend’s expression, is ignoring some basic economic realities of the world’s history. If, 50 years from now, China and India between them—alongside the United States and, one presumes, some European influence as well—do not dominate the world’s economy, I would be extremely surprised. I do not have the figures to hand, but they are simply astonishing, particularly on information technology. I believe that I am right in saying off the top of my head that 400 million Chinese—some five times the entire population of Great Britain—currently own a mobile phone, 400,000 Chinese are actively blogging, and the number of personal computers is simply beyond the realms of imagination.
The fantastic developments in China in every kind of industry, often but not necessarily in partnership with western companies, are second to none. Anyone who looks at either Shanghai or Beijing, as my hon. Friend did, sees just from the quantity of pollution in the air how much industry there is in those gigantic cities. They are without question economic superpowers.
China’s membership of the World Trade Organisation is very much to be welcomed and gives a flavour of things to come, and the Chinese are to be congratulated on the enormous investment that they made in preparing for the Olympics last year. I recently saw with my own eyes the change in Beijing over the past 10 years, which is simply astonishing.
In all of that, it is vital that the UK, which is one of China’s most important trading partners, extends and harnesses economic and trading relationships—and we are doing so: things are going remarkably well. Some very good relationships have been developed between us and the Chinese over the past 20 years or so, and I am sure that that will continue over the next 20 years.
I wanted to take part in this debate to speak not about the economy, but about a fly in the ointment of good relations between us and the population of 1.2 billion in the People’s Republic of China. My comments result from a visit that Lord Alton, Lord Steel, the hon. Member for Sittingbourne and Sheppey (Derek Wyatt) and I made to China and, in particular, Tibet during the summer. I wish to touch on a couple of Tibetan issues, if I may.
One of the arguments that I advanced in meetings with senior Chinese officials in Beijing was that it seems extraordinary, at a time like this, with the economic potential that my hon. Friend described so well, that there should be visits from parliamentary delegations such as ours. Indeed, the previous week, the Minister of State, Foreign and Commonwealth Office, the hon. Member for Bury, South (Mr. Lewis), who I believe at the time was the Foreign Office Minister with responsibility for China—we are all slightly muddled as to which Minister has responsibility for which areas at the moment. I believe that I can correct my hon. Friend by saying that the Minister present here today—the Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Rhondda (Chris Bryant), whom I congratulate on his promotion—now has responsibility for China, unless I am much mistaken. If I am, he will no doubt clarify that later. We are all mistaken—we do not know who does what at the Foreign Office.
I beg your pardon, Mr. Taylor. I am being diverted from my subject.
My point was that our parliamentary delegation and the one the previous week, which included the Minister of State, headed to Tibet and Beijing for high-level discussions, and those meetings were dominated not by the potential for trade with China, nor by its economic influence in the world, but by the issue of an ageing, retired priest living in north India—namely, the Dalai Lama. Important as other issues are, that little issue of Tibet—a country whose population is some 2 million, compared with China’s population of 1.25 billion—has such overwhelming influence on our relations with the People’s Republic of China. We tried to make the argument to the senior Minister whom we met that it would surely be in China’s best interests to find some sensible solution to the difficulty of Tibet and the Dalai Lama, so that the effect on China’s relations with the rest of the world is removed.
It seemed to us that several things could be done. My hon. Friend the Member for Cities of London and Westminster mentioned in passing the military presence in Tibet, and we certainly saw plenty of evidence of that. Tibet was opened briefly for the visit of the Minister of State and for us, and then of course was closed again for the 60th anniversary of the foundation of the People’s Republic, but during our brief visit we certainly saw a significant military presence. There were many soldiers and vehicles and definite evidence of suppression of pro-Tibet or free Tibet feelings within Tibet.
We sought to raise with the Chinese in Tibet a large number of human rights issues, including absurdities such as Tibetan monks who put up a picture of the Dalai Lama being arrested for doing so and any Buddhist monk refusing to condemn the Dalai Lama being arrested. Such things are absurd. They are symptoms of a totalitarian state of the kind that we no longer see in western Europe.
We tried to argue to the Chinese authorities that suppressing pictures of the Dalai Lama was not dissimilar to our attempts to suppress the speaking voice of the Northern Ireland IRA. Do Members remember that we used to have pictures on television and actors reading out the words over the picture? Suppressing pictures of the Dalai Lama is an absurd thing to do. It calls attention to him and gives wrong messages.
We tried to develop with the Chinese a middle-way solution, to use the Dalai Lama’s expression. Lord Alton was particularly keen on the potential of looking at some parallel with Vatican City, where the Pope reigns supreme in an independent little parcel or palace in the middle of Italy.
There is a variety of different solutions and all sorts of ways that we could think about the situation. The first thing that has to happen is face-to-face negotiations between senior Chinese officials and the Dalai Lama himself. There is absolutely no point in having the Dalai Lama’s representatives; there must be face-to-face negotiations. Surely, then, the Chinese could find some kind of solution to the problem.
The all-party group produced a weighty document yesterday. I will not bore hon. Members with it this morning, but I recommend that people—officials in particular—have a look at it. We took forward some discussions with Chinese officials. As my hon. Friend mentioned briefly, I found that there was some degree of puzzlement about why the Chinese should allow Tibet to become such an important matter and such a big fly in the ointment. We have to ask why the Chinese built the railway on which the train in which we went from Xinang to Lhasa ran, which cost, along with the road, many billions of US dollars to build. The Chinese said, “Oh, it is to encourage tourism.” It really was not. There has not been all that much tourism in Tibet, particularly not when the borders are closed and visas are refused even to visiting ambassadors. I am not sure that it is to do with tourism. They said that it was to do with economic development in Tibet. If that was so, there are large parts of China where they could, today, be building railways. The notion that they built the railway simply for economic development in Tibet seems wrong. A glance at the map shows that Tibet lies somewhere between China and India, and I suspect that that probably has much more to do with it. The large number of troop movements that we saw on the trains, as we passed them on the way in, seems to suggest that it has more to do with the Chinese interest in Tibet.
All of that is worrying. I hope that Her Majesty’s Government begins to look at the matter as follows. This is an insignificant dispute, involving an ageing priest living in north India and the questions of who is in charge of Buddhism and what the exact meaning of “autonomy” is. The area is called the Tibet Autonomous Region and there is some dispute between the Dalai Lama, the Chinese and ourselves as to what autonomy is and what sort of autonomy Tibet should have. Is it the same as Scottish autonomy within the United Kingdom, for example, or the same as the Tamils might wish for in Sri Lanka? There are many different kinds of autonomies. Is it not extraordinary that such a detailed, historical matter of insignificance in the big picture of world events should be souring our relations, and those of western Europe and the United States, with the People’s Republic of China?
It seems to me that the officials to whom we spoke were beginning to accept that argument. I got the impression that they were slightly yawning and saying, “This is all very silly, can’t we talk about important matters?” Her Majesty’s Government ought to try to find a way of saying to the Chinese Government, “Let’s solve that one. Let’s move forward. Let’s think about your strategic reasons for the vast Chinese investment in Tibet. Let’s have a look at what our real relationships ought to be. Let’s find a way of solving a rather silly little problem in the big picture and move forward from here.”
I found it chilling, when we returned to our hotel in Beijing, on the way back to London, to be told as we tried to go for a walk along one of the main boulevards after Tiananmen square that we were not allowed to leave. Being British, I just ignored that and strolled out down said boulevard and no one seemed to object, although it could have caused an international incident had it gone wrong. We were told not to leave our hotel because of the rehearsal for the 60th anniversary parade through the centre of Beijing, for which the whole of the middle of Beijing was closed down, with all the population removed from it. This gave us a bird’s eye view of the military part of the parade—the whole parade was quite extraordinary—amounting to hundreds, perhaps thousands, of military vehicles, including intercontinental ballistic missiles, endless nuclear weapons and a vast array of military hardware redolent of the Soviet Union at the height of Soviet power. I found it slightly chilling that, at a time like this the Chinese should not, in this parade, focus on trade, industry or history, or on joyful peasants dancing in the streets, but on hundreds and thousands of vast pieces of military equipment parading. They did that to send a strong message to the west. It certainly sent a strong message to us.
I endorse the remarks made by my hon. Friend the Member for Cities of London and Westminster. There is more to China than the vast economic potential that we all know about. We have to think carefully about precisely what its military, diplomatic and international ambitions may be.
I congratulate the hon. Member for Cities of London and Westminster (Mr. Field) on securing the debate and opening it with such eloquence, setting out the economic challenges that the UK and other countries will face in the context of China’s growth and emergence as an economic powerhouse. It is an important subject and, as is often the way with 90-minute debates in Westminster Hall, we could spend much more time discussing it, because it has so many aspects. We have heard about the economic side and the hon. Member for North Wiltshire (Mr. Gray) has focused on Tibet.
The recent celebrations of the 60th anniversary of the People’s Republic of China were well publicised. I share the concern expressed by both hon. Members about the fact that China chose to celebrate with cruise missiles, unmanned drones and nuclear missile carriers, because those are not what most people would think of as the main symbol of their country’s pride. There is genuine concern about freedom of expression and the human rights situation in China, and I will touch on that in my remarks. However, it is important, when passing judgment on other countries, that we look to the difficulties that we face in our own country. It is particularly interesting to note that today The Guardian, a national newspaper, has effectively been gagged, preventing it from reporting on Parliament in relation to the Trafigura issue. It is important to recall that not everything is perfect here. However, it is also interesting to see how that matter has been taken up by the internet.
The hon. Member for North Wiltshire mentioned the huge number—in the thousands—of bloggers in China. Issues to do with freedom of expression in China will be dealt with by the increasing use of the internet. China spends a great deal of money trying to repress the internet, shutting down sites and so on: YouTube and a lot of other websites have had content from China removed from time to time. For example, if people in China google “Tiananmen square”, they get information about the history of the landmark and about visiting it as a tourist attraction, but they will not receive any news within that web search on the atrocities that happened there. Ultimately, however, although China tries to repress the internet, it will end up being a tool for opening up democracy within that country.
Obviously, the huge economic growth of China has brought with it much greater political influence. China is becoming increasingly important in many different diplomatic areas, including nuclear proliferation in North Korea and Iran and human rights issues in Burma, Sudan, Zimbabwe and Sri Lanka. The challenge for the UK is to work out how best to engage with China across a range of issues, not least climate change, where it has a crucial role to play. I welcome the Government’s strategy, published earlier this year, called “The UK and China: a Framework for Engagement.” I will pick out some points from that in my remarks.
If anything good has come out of the global recession—it is sometimes important to look for silver linings—it is unprecedented international co-operation on economic matters. That will be important as we face global challenges, including a transition to a low-carbon global economy as we approach peak oil, for example. The fact that the G7 has recently decided to make way for the G20 as a forum for global discussion is welcome. It is vital that we recognise the importance in such talks of the emerging economies of China, India and Brazil. China’s importance in the move from G7 to G20 is key. We need to go further and reform other international institutions, including the International Monetary Fund, to ensure that the realpolitik of the global environment is much better represented.
As the hon. Member for Cities of London and Westminster mentioned, there are differences in the structure of China’s economy versus the economies of the west. China’s saving rate in 2008 was more than half its gross domestic product. China requires a reduction in saving, but that is the opposite of what we need to do. It recognises that its people need to spend more to increase its stability. As it reforms its welfare state and health care systems, that will reduce the incentives for the Chinese to save so much of their income, which is in effect an insurance policy and safety net that they create for themselves.
The Chinese are having to change their mindset and culture with regard to their economic habits, and we need to do the same. The average adult in the UK owes more than £30,000. That personal debt is, as I am sure all hon. Members are aware, a huge burden that people are bearing within the difficulties of the recession. An essential task for the Government is to reform the regulation of credit and debt in the UK, so that it is no longer possible for people to get into such unsustainable personal debt. The hordes of junk mail that come through people’s letterboxes urging them to take on thousands and thousands of pounds more debt need to be curbed.
In the same way as the hon. Lady is arguing that the Government should have responsibility with regard to how much their debt builds up, surely consumers themselves have a responsibility to decide how much debt they should be taking on.
The hon. Gentleman is right to say that consumers, too, have a responsibility, although I argue that there is a role for financial education because it is difficult for people to take on that responsibility if they are not well informed about the different products available and what APR means. There needs to be much more information in a very accessible format within the formal education system at school, but people who have left education should also be able to access such advice. Yes, people need to take responsibility, but that does not let off the hook companies that act irresponsibly by lending more than people can repay and by having sky-high interest rates that are just unjustifiable.
I welcome your advice, Mr. Taylor, and shall return to the specifics of China.
China is becoming the biggest economy in the world, so we must ensure that we maximise the benefits for the UK. We are the top EU investor in China and it is right that that should continue to be the case. I welcome the Government’s stated aim to equip British people with a much better understanding of China and Chinese language skills. Will the Minister enlighten us about how the Government intend to do that? On my visit to China, I was struck by how huge the language barrier is, because of course it involves not just a language, but an entire alphabet and different symbols. I am not convinced that it is necessarily an easy language to learn. None the less, we should be encouraging that to be happening to build better relations economically and more widely.
Climate change is a crucial issue in our relations with China. China has quickly become the world’s biggest polluter, and we need to have its commitment at Copenhagen in December if we are to achieve a good deal. I was lucky to visit China last year with the Environmental Audit Committee. We were undertaking an inquiry into the international context of climate change post-Kyoto. I have to say that I was pleasantly surprised by the efforts that the Chinese were already making on that issue. They seemed to be truly committed to reducing emissions per yuan of GDP, which is very welcome, but the challenge that we face relates to the scale of the change taking place in China.
Industrial pollution was mentioned as a visible sign of that. I was struck by the huge motorways going through Beijing. They were eight lanes wide and absolutely gridlocked with the increase in traffic. The fact that hundreds of millions of Chinese are still without access to electricity means that, rightly, there is an incentive—an imperative—for the Chinese Government to improve living standards. However, the downside of that is that they are rapidly building more coal-fired power stations, so working with the Chinese on climate change is essential.
The subject of the debate is UK relations with China, and the UK does have a particular expertise in carbon capture and carbon sequestration, which BP has been leading, I think, in Scotland. Surely we should be using that technology as a means to enhance our relationship with China, because it has about 200 to 300 years-worth of coal, particularly dirty coal. Working with the Chinese, perhaps using that technology, we can help to enhance our relationship and improve the situation with regard to climate change.
The hon. Gentleman is right to say that technology transfer is a vital part of the relationship, although again, one of the things that surprised me when I visited China was how far ahead the Chinese already are on technology such as carbon capture and storage. We met a collaboration of seven different companies—I think that they are mainly state companies, even though they have different names—that had come together in China to work on CCS. Given the speed at which we are progressing on the issue in the UK, there is a real danger that the Chinese will get the technology up and running before we do, although obviously we should be ensuring that we share that knowledge and information because it is an essential piece of technology. As the hon. Gentleman rightly says, China has coal; it will want to ensure that it provides electricity and it will do that through dirty-coal-fired power stations. We must ensure that CCS technology can be retrofitted to them.
There are other things that we could learn from China on climate change. Its stimulus package announced last November involved huge investment of $90 billion a year for two years in high-speed rail. The Maglev technology used there has been mentioned, whereas high-speed rail in the UK is lagging far behind, although it would provide a much lower carbon alternative to domestic flights.
The Copenhagen conference is only weeks away. I am pleased that the Prime Minister has decided to attend; it is right that world leaders at the very top should be meeting. I say to the Minister that failure is simply not an option; the issue is far too important. We need to ensure that we get China, the world’s biggest polluter, on board.
Some human rights issues have already been raised. China is contributing huge amounts of development aid to developing countries, but that is often being used as a way to buy influence. The aid is being used in exchange for access to energy resources. Energy security seems to be driving a huge amount of what the Chinese do. That has resulted in quite a few problems in the international sphere when China has failed to use its influence to prevent human rights abuses—for example, in Sudan. I hope that the Government will continue to pressure China to use the leverage that it has in Sudan to end the support for the militias that are causing such destruction and committing so many awful atrocities in Darfur. It is vital that China, which has huge economic power, also uses its increasing political power. That is why the Government’s aim of encouraging China to define its interests more broadly, as outlined in the framework document, is absolutely right.
The hon. Member for North Wiltshire spoke about Tibet. I welcome the recent visit by the Minister of State, Foreign and Commonwealth Office, the hon. Member for Bury, South (Mr. Lewis), to Tibet and his article on The Guardian website about the general issue of human rights, including the assurance that
“This human rights deficit features prominently in our dialogue with China.”
It is important that while we recognise the economic and political power that China has, there remains a variety of issues on which its record is, from a civilised society’s point of view, unacceptable. We need to ensure that we—delicately and with the required balance—continue to raise those issues and encourage China to move.
A point that I forgot to mention in my speech is that when the Government slipped through this place—incidentally, without any formal ministerial statement—a change in policy with regard to Tibet, saying that Tibet was now understood to be a fully integrated part of the People’s Republic of China, some of us felt that the Government failed to use that sufficiently well as a lever to persuade the Chinese to address some of the human rights issues in Tibet. I hope that the recent visit by the Minister, who raised 19 individual human rights issues, is a portent of the Government taking a stronger line with the Chinese Government on human rights in the future.
The hon. Gentleman makes his point very well and I hope that the Minister will respond to those comments in his reply. I hope that that visit signals a renewed commitment to finding solutions to the many ongoing problems in Tibet.
I welcome the publication of the UK national strategy on relations with China. Clearly, it is vital that we build strong ties as China grows in influence politically and economically. In recent decades, Britain’s influence on the world stage has declined from what it was in the often-cited glory days. The best way for us to make our influence felt will often be to work closely with our EU partners and to be a strong voice in the EU. The Under-Secretary will be well aware of that, particularly given his new role, on which I congratulate him. Obviously, we have many points of contention with Chinese domestic and foreign policy, but we are increasingly learning to co-operate with each other on a wide range of issues from the economy to climate change. I look forward very much to hearing the Minister’s remarks.
Mr. Taylor, we normally tend to meet at the parliamentary breakfast club, so it is a great pleasure to serve under you. I warmly congratulate my hon. Friend the Member for Cities of London and Westminster (Mr. Field) on introducing this important debate. He spoke with a great deal of knowledge and he was very thoughtful. Although he rightly concentrated on the financial and business side—not least because of the constituency that he represents—he also ranged widely.
The debate is about the implications for UK policy of relations between China and the west, but colleagues have not mentioned the fact that there is no unified western approach towards China. That is hardly surprising because, despite our close relations with some EU colleagues, some Commonwealth countries and the United States of America, there are differences. There are political differences and there are differences because we compete with each other, often over economic relations.
As the debate was proceeding, I was reminded of my time as a fresh-faced undergraduate studying history 40-odd years ago. One special subject that we covered was China and the powers, and one of the books that we were invited to read was “The Arrow War” by a young, thrusting mandarin at the Foreign Office called Douglas Hurd. Listening to our tutors, I was conscious of the fact that we often had a very different world view from our Chinese friends, given our history and culture, as well as the influence of the Chinese Communist party. In meetings that I have been lucky enough to have with her excellency the Chinese ambassador, visiting Foreign Ministers from China and visiting party officials—this is not an exact analogy, and colleagues will say that I am trying to set up China in a certain way, but that is not what I intend—China has reminded me to an extent of pre-1914 Wilhelmine Germany. The Chinese are incredibly proud of what they have achieved, they are very conscious of their history and they are very conscious and fearful of chaos and disunity. Perhaps they overcompensate for that outlook, because many of their policies are based on it. My hon. Friend the Member for North Wiltshire (Mr. Gray) talked about military deployments towards Tibet, and a lot of China’s foreign and defence policy is based not only on Wilhelmine-style bravura, but on deep angst—a fear of chaos and of the fact that China could break up. That is not an excuse for us to pull our punches when we disagree with China, but it is behind a lot of the bravura.
I agree with my hon. Friend the Member for Cities of London and Westminster that the Chinese have a long-term strategic plan—that is how they think about things. The long-term strategic plan is to get themselves into a position where they have economic, military and political leverage. That does not mean to say that they want to fight large numbers of wars—I do not think that they do. However, they do want to get into the position that the old powers—Britain, France, Germany and the United States of America—were in during the 18th and 19th centuries and for most of the 20th century, and we should recognise that. In fact, we should inform the Chinese in our conversations with them that we know what they are about. They take a very hard-nosed and pragmatic view of finance, politics and military affairs.
I want to take up a point raised by the hon. Member for East Dunbartonshire (Jo Swinson), who speaks on behalf of the Liberal Democrats. When one talks to the Chinese, there is an innate contradiction in the fact that China is still a one-party state, although there are now elections in the Chinese Communist party, as the Chinese are fond of pointing out. As the hon. Lady said, however, China’s population—particularly its younger population—is at the cutting edge of interest in technology, the internet and everything else. The Chinese authorities therefore face a major problem in squaring the circle between very limited democracy and political participation by the population, major problems with large ethnic minorities and education. The younger generation of leaders is aware of that, but they do not as yet know how to deal with the issue, and we might be able to give them some advice in our talks with them.
I forgot to congratulate the Minister on his new ministerial responsibilities. I have been a shadow Minister since 2005, and every time I blink there is a new Foreign Office Minister in front of me. Baroness Kinnock is now the new Lord Malloch-Brown, with responsibilities for Africa, but she will presumably also speak on Europe in the Lords. The Minister—like 007—will continue to deal with the rest of the world, although he will also speak more formally on Europe. However, we welcome him to the debate.
Let me touch briefly on a number of other issues. Conservative Members fully support my hon. Friend the Member for Cities of London and Westminster. We have major national strategic interests in having good, close relations with China, but we should not be afraid to tell the Chinese—forcefully at times—when we disagree with them, because the Chinese do that to us. At times, they seem to think that we should pull our punches, but there is an equivalence. We should not necessarily be rude or denigrate the Chinese, but there are times in formal discussions when they should be made aware of our views. They will perhaps realise that the more they are drawn into international organisations. That may happen as a result of China’s membership of the G20 or of some of the contradictions that China will face as a member of the UN Security Council.
I want to touch briefly on four issues and four countries over which we have issues with the Chinese. The first, obviously, is Iran and nuclear proliferation. Iran is China’s third-largest supplier of oil and it is crucial to China’s economy. Earlier this year, China and Iran announced a $3.2 billion three-year natural gas deal. It is estimated that trade between the two countries rose from $400 million in 1994 to $29 billion in 2008. That means that relations between Iran and China are very close.
[Sir Nicholas Winterton in the Chair]
So far, the Chinese have been very reluctant to go along with any form of pressure or sanctions on Iran, but that is not to say that we do not need to continue to bring pressure and influence to bear on them. The Iranian regime might just listen—I put it no higher than that—to representations from China and Russia rather than to anything that we might say.
The second issue, which I shall merely mention, because the hon. Member for East Dunbartonshire has already discussed it, is the importance of China’s role in climate change. Whenever we talk to Chinese Government representatives about climate change, their usual answer is that they do not wish to be lectured about it by the west. We have been climate polluters for 200 years, and the Chinese sometimes find what we say a little rich. As my hon. Friend the Member for Braintree (Mr. Newmark) said, however, we may have a lot to offer the Chinese in specific technological areas.
I will not touch on the global economic crisis, because my hon. Friend the Member for Cities of London and Westminster made some good points about it.
The final specific point that I want to make—once again, this is a sensitive area, but we should put the matter on record—is that there is no doubt that as part of a strategic plan the Chinese Government are only too happy, and would see it as perfectly legitimate, to involve themselves in what we would now call economic and military espionage. That is part and parcel of leverage. There is a vast amount of evidence for that, particularly in the United States of America. The Chinese Government or Chinese companies, either indirectly or directly, by investing in western companies, have been involved in knowledge transfers—what we should call illegal knowledge transfers. They are only too well aware, from having watched the wars in Iraq and Afghanistan, that the old kinds of military conflicts are not likely to be relevant in the future, and therefore the Chinese military is heavily into thinking about ways of countering the kinds of advantages that the United States military has in asymmetrical warfare.
The Chinese watch that very closely, and, indeed, only recently I read a translated volume by some Chinese military officers who wished to perfect a system in which if they were ever involved in a crisis involving other countries—the book did not spell out which countries—they would be able literally to close down a power’s information technology. One thinks of that as the stuff of Hollywood blockbusters. I see the Minister frowning. I can just imagine him here in the 1930s, hearing about the idea that somehow or other mechanised units might go through the Ardennes. There would have been much tut-tutting from the Minister, saying that it was a physical impossibility. That is not a fantasy world at all. I believe that it is something into which the Chinese are putting vast investment. Once again, we should make it quite clear to them that we know what they are doing, and perhaps we should think about how we are to address it.
I want to touch on some specific countries, the first of which is Sri Lanka. In its war against the Tamils, Sri Lanka relied heavily on Chinese help—not only political but economic and military. China has a long-term interest in the development of Sri Lanka, and not least in acquiring a major naval base. In May 2009 China voted against a resolution by the UN Human Rights Council calling for an investigation into allegations of war crimes by both sides during the military conflict. Once again, that is an area in which we are in conflict with China. By “we” I mean, of course, the United States of America and most of our European allies as well. What discussions have the UK Government had with representatives of China about its support for the President of Sri Lanka? Have concerns about China’s actions at the United Nations been raised by UK officials? Given that the EU Commission will decide later this week—in fact in a few days, on 15 October—whether Sri Lanka can retain its generalised system of preferences plus trade concession, what assessment has been made of how effective that will be in persuading Sri Lanka to improve its record on human rights? Will Sri Lanka simply turn to countries such as China to support its textile industry?
Secondly, I want to mention Burma. China is Burma’s largest trading partner, and the country’s biggest source of foreign direct investment. China has repeatedly shielded Burma from action by the UN Security Council. How can China’s deep financial ties with the ruling military junta, in the form of diplomatic support, trade links and the sale of military hardware, be harnessed to ensure stability and economic development in the country? Last month the US Secretary of State, Hillary Clinton, announced that the US would enter into dialogue with the Burmese junta and would effectively consult and seek the help of countries such as India and China as part of its new policy. Did the US Administration discuss the formulation of their new policy with officials from the Foreign and Commonwealth Office? In June 2007 China hosted low-profile talks in Beijing between representatives of the United States and Burma. What can be done to persuade China to continue to pursue similar initiatives?
The hon. Member for East Dunbartonshire touched on the issue of Sudan and Darfur. China, as we know, has very close relations with Sudan and has invested heavily in the area. Once again, it has provided direct military support, including jet fighters, to the Sudanese Government. Have the UK Government urged the Obama Administration to make Sudan a priority in their discussions with China, given the sheer humanitarian horror that is going on there? What assessment has been made of China’s support for the implementation of the comprehensive peace agreement in Sudan? How closely are the special representatives from China and the UK working to ensure peace, stability and development in Sudan?
I have raised my questions not to try to trick the Minister—he is too good to be tricked, and he has some clever officials to provide him with briefing notes. I have raised them because we are directly involved in all those issues, which are raised time and again in Westminster Hall and the main Chamber of the House. Indeed, Mr. Speaker himself has taken a direct personal interest, particularly in Burma. It is right and proper that we should be seen to raise these questions, not in a hostile way, but so that, hopefully, the representatives of the Chinese embassy in London will see that they are being raised and are important to British parliamentarians. We do not see those questions as a way to destroy relations between China and the UK, but they are issues on which there is strong public feeling and opinion in the United States and western Europe.
I am grateful to my hon. Friend the Member for Cities of London and Westminster for raising this important debate. Our relations with China are very important. They should be frank and robust and British Governments, of whatever political party, and the Foreign Office and other Government Departments should attempt to have a long-term strategy towards China, just as China has a long-term strategy towards us.
It is a delight, as ever, to serve under your chairmanship, Sir Nicholas, although I disagree with you and think that it would have been rather nice if the hon. Member for Mid-Norfolk (Mr. Simpson) had spoken a little longer. It is always a delight to hear his pearls of wisdom, whether they are cast before swine or not.
I congratulate the hon. Member for Cities of London and Westminster (Mr. Field)—I would call him my hon. Friend, I think—on his comments and on securing the debate. It is very timely, and he did not so much take us on a tour d’horizon as give us a historical outlook. It was a succinct and prescient look at China’s relations with the west. As the hon. Member for Mid-Norfolk just said, it is difficult to assess quite what one means in speaking of China’s relations with the west, because the west is multifarious, but perhaps I shall come to those issues later.
I should apologise because I have something of a cold, which is the reason for the slightly odd sound of my voice. I am not sure whether it is a Peruvian cold, or a Venezuelan or Colombian one, but it came across the Atlantic with me last week. An anecdote may explain what I think our attitude should be in discussing this issue. I went to the theatre three or four years ago, and a couple there were having a ferocious row just in front of me. It ended with the woman turning to her husband and saying, “The worst of it is that you are so blasted patron-ising”. He turned to her, kissed her on the forehead and said, “It’s not ‘patron-ising’; it’s ‘pat-ronising’, my dear.” That is a true story; he was a brave man. I would merely say that I sometimes think, in particular in the case of countries that are distant from us and whose cultural expectations and understandings are different from ours, it is all too easy to seem patronising. Even with countries in Latin America it is easy for British diplomacy to seem heavy-handed, aggressive or neo-colonial. Iran sometimes feels the same, and in China, the least effective form of diplomacy will be one that feels as if a heavy stick is being wielded, or that is in any sense patronising.
The comments made by the hon. Member for Cities of London and Westminster about the global financial crisis and the changing role of China are important. We must see China as an ally, rather than a distant country that somehow or other we have to subjugate in discussions. That is certainly true economically for the UK, because the economic opportunities are very dramatic. In 2008, trade between the UK and China was up by 16 per cent. Exports to China grew by 25 per cent. The UK Trade & Investment presence in China is our largest presence in any market—that is important and as it should be. We have set ourselves a trade target of $60 billion by 2010, and we will achieve that only if we are able to proceed on the basis of alliance, friendship and economic co-operation, rather than through a more high-handed approach.
The hon. Gentleman raised one issue—intellectual property rights—about which I disagree with him. Clearly, there are different cultural understandings about how intellectual property should be looked at. Under the Napoleonic code, there is a different understanding of intellectual property rights compared with that found in British law. Through international organisations that are involved in intellectual property rights, we have managed to find a way of ensuring that those who develop ideas have a means of progressing to economic opportunity.
In the UK in the past we have been good at developing ideas but not so good at progressing them into the markets. That is one of the key points that Lord Mandelson has focused on and that we as a country need to focus on. I know that Adam Smith said that intellectual property rights should not really exist because copyright is a fake right, but I wholeheartedly disagree. I believe that those who have developed an image, an idea or a patent should have the security to develop it. Without that financial and economic opportunity, it is difficult to see how most people could secure the investment and the development of new ideas.
Nowhere is that more important than in health. The growing relationship between the UK and China on health issues is important on several different levels: first, in relation to intellectual property rights; secondly, in relation to dealing with some of the major illnesses that face the world, not least HIV/AIDS and tuberculosis, and also in terms of reaching development goals in other parts of the world.
The hon. Member for North Wiltshire (Mr. Gray), whom I consider a friend, having co-operated with him in the all-party group on the Army, referred to what he called “the fly in the ointment”—the issue of Tibet. On behalf of the Government, I would like to congratulate him, and the group that went to Tibet. It was an important part of British dialogue with China, which tried to enable China to understand better the concerns of people in this country and across the European Union. The European Union has tried to speak with a united voice on the issue, and by virtue of doing so, has been far more effective. I congratulate the hon. Gentleman, Lord Alton, Lord Steel and my hon. Friend the Member for Sittingbourne and Sheppey (Derek Wyatt).
The hon. Member for North Wiltshire mentioned the significant military presence in Tibet, and considered whether the suppression of pictures of the Dalai Lama made the situation worse. He wondered whether something similar to the Vatican City model would make more sense. He expressed incredulity about China’s bothering to make the issue so important that it becomes a fly in the ointment, not only in its relationship with this country, but with many other countries around the world.
That sense of perplexity is shared by Ministers and the Government. The Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Bury, South (Mr. Lewis), who is the Minister responsible for China, visited Tibet in that capacity to clear up the issue. He made many of the same points that were noted by the hon. Member for North Wiltshire and his friends when in Tibet, and he raised a series of issues to which I hope to return later.
The hon. Member for East Dunbartonshire (Jo Swinson) made several important points, and I am grateful to her for that. If she does not mind my saying so, I felt that she erred down a slightly Liberal Democrat line when she started comparing the case that is in The Guardian today—or not in it—with the repression of freedom of expression in China. I think that those who want to make a comparison between China and the “Chinese situation in the UK” are rather over-egging the pudding. [Interruption.] I see that she wants to over-egg her pudding even more, and I am happy to take an intervention.
I want to clarify my point. I was not saying that such matters happen here to the same extent as in China, but before we pass criticism on what happens elsewhere, as the Minister pointed out at the beginning of his speech, we need to look at our own situation and ensure that we deal with genuine problems in our country.
I think that freedom of expression is well advanced in this country. The significant difference is that the rule of law applies. I do not know anything about the individual case to which the hon. Lady refers. I tried to google it, and the Google that I use in this country has not been interfered with by the Government. In China, the Google search engine is rather different. I urge the hon. Lady not to be too Liberal Democrat about things in life—on the whole, it will make for a much easier and more sensible life. I think that I have carried the whole Chamber with me on that point.
The hon. Lady referred to reform of credit and debt in the UK and there was a bit of interplay about the responsibility of borrowers. My view is that we should already have stopped the use of credit card cheques, guaranteed loans and the rest of it, and I hope that we will move to do so soon.
On language skills, the Department for Children, Schools and Families has been conducting a major survey on teaching Chinese in schools in the UK, which is obviously very important. Currently, one in six secondary schools teach Mandarin, but only 1 per cent. of primary schools do so. The Foreign Office and the UK Government believe that Chinese needs to feature more prominently across the curriculum. Chinese history and geography should also be an important part of the curriculum if people are to have a full understanding of the world in which they are growing up.
A significant number of Chinese students come to the UK to study, and we are keen to foster that. In my responsibility for consular services, it is one of the areas where we need to do some work to ensure that the visa regime for those who come to study in the UK makes that possible, rather than impossible. That exchange of educational opportunities is important.
Let me reiterate the Minister’s words. There are some concerns from several providers, and a slight danger is that in the debate about immigration, it is easy to hit on numbers. One of the easiest ways of reducing headline numbers of migrants is to stop the educational programmes to which the Minister refers. He is absolutely right. We need to foster strong connections between some of the brightest and best from China, India and elsewhere overseas, not least because of the long-term benefits that that will bring this country. Those young Chinese people will often go back to their country, build up businesses, and hopefully become great ambassadors for ongoing trade between our country and China. That is the most important reason for ensuring as far as possible that the sort of work that the Minister is hopefully doing continues. We must make sure that our consular relations with regard to those student visas are as smooth as possible.
I could not make the point better than the hon. Gentleman. I would add only that the British Council has an important role to play—as does the World Service—in enhancing the reputation of Britain as a place in which to learn English and study other subjects.
The hon. Member for East Dunbartonshire referred to climate change, which I will discuss in a moment. In particular, she mentioned high-speed rail. When she next has an opportunity to speak to the hon. Member for Twickenham (Dr. Cable), who is the finance spokesman for the Liberal Democrats, I hope that she will reinforce the point that it is important to protect the electrification of the railway to Swansea, otherwise there would be an inconsistency of policy, and we would hate to see inconsistency in the Liberal Democrat position.
The hon. Lady and the hon. Member for Mid-Norfolk referred to relations with Sudan, which is obviously a vital issue. China should be playing a much more significant role in trying to bring about a peaceful resolution and a proper regard for human rights in Sudan. It has saddened us in recent years when China has used its veto in the UN Security Council not only in that regard but in relation to Burma and Zimbabwe. Human rights issues form a seamless garment. We cannot encourage human rights in one country and choose to ignore them in another just because we share a political outlook on other issues. Raising the issue of human rights is a key part of how we seek to progress British interests.
I think that my hearing is going because I thought that the hon. Member for Mid-Norfolk said that he was a fresh-faced undergraduate 14 years ago. [Interruption.] I just heard the Government Whip behind me cruelly say that it was more like 400 years ago. My eyesight is clearly as troubled as my chest. None the less, the hon. Gentleman made some interesting remarks about the respect for order and the fear of chaos and disunity that sometimes persist in Chinese cultural understandings. I suspect that the opening ceremony of the Olympics will be very different in the United Kingdom from the one that we saw last time, and that is entirely right and proper. We always need to protect those cultural differences.
The hon. Gentleman kindly welcomed me to my post and said that every time he blinks, there is a change of Minister. I am glad to guarantee him that I will remain in this post for the next six years.
The hon. Gentleman also referred to Iran and nuclear proliferation—I always find the word proliferation very difficult to say. He is absolutely right that China can play a vital role, especially over the next nine months, not only in relation to Iran but in trying to achieve a world with fewer nuclear weapons with safer fissile material and with a comprehensive test ban treaty. We were delighted with the role that China played following the second nuclear test that North Korea held. That showed that China has moved forward in the way in which it has chosen to play its role in the world. We hope that it will move in the same direction in relation to Iran—just as the Russians have in recent weeks.
The hon. Gentleman referred to illegal knowledge transfers as if that was a phrase that we all regularly use. It is not a phrase that I have used and it is not a concept that has ever, either legally or illegally, been transferred into my knowledge system. I take his point about economic and military espionage, and believe that that requires close consideration.
In relation to Sri Lanka, Burma and Sudan, it is vital that we maintain a strong and critical relationship with China to enable it to play a more significant role in standing up for human rights in areas where there are significant abuses. The way in which we take such a matter forward is sometimes misunderstood by the Chinese Government, but it is something from which we will not flinch.
The hon. Gentleman said that just as China has a long-term idea of where it wants to take its relationship with the west, it is important that we, too, have a long-term understanding. Earlier this year, I was delighted that the Government were able to produce a framework for engagement—that is the first time we have done that for any country—outlining how we see our relationship with China over the coming years. There are three pillars to the framework.
First, we must get the best for the UK from China’s growth. The hon. Member for Cities of London and Westminster referred to the importance of financial services in China. It is vital that we ensure that the investment that has already happened continues and that China sees the City of London as a crucial place in which to conduct its financial business around the world. It is also vital that China should reduce both its tariff and non-tariff barriers on a whole range of different areas. Obviously its membership of the World Trade Organisation is a significant step forward and one on which we wish to build.
In that context, let me stress the importance that the City of London Corporation has placed in recent years on ensuring that it has lord mayors—the big ambassadors for the City—who have strong Chinese experience. I refer here to people such as Sir David Brewer, Sir John Stuttaford and Sir David Lewis, all of whom have worked in China or Hong Kong for significant parts of their career. The fact that China, Hong Kong and various other territories in the region will be very important players should be borne in mind when considering lord mayors in the future.
I am thinking of the hon. Gentleman’s interventions on me as sub-paragraphs in my own speech because I entirely concur with everything that he is saying, which is all very depressing.
Let me add to the point about how we ensure that we get the most economic advantage for the UK out of China’s growth. We will have a British pavilion in the World Expo in Shanghai, which will make a significant contribution to ensuring that the Chinese have a keen understanding of what constitutes modern Britain and of the economic opportunities that we afford. The design by Heatherwick is very innovative. It will be an exciting part of the landscape in Shanghai and is growing apace. I am grateful for the private sector support from AstraZeneca, Barclays, BP, Diageo and GKN.
The second pillar of our framework to ensure that China emerges as a responsible global player plays into many of the issues that hon. Members have raised. I am talking about China’s support for the robust sanctions against North Korea following its second nuclear test, and its role in the “E3 plus 3” process in relation to Iran. As I said earlier, we regret the fact that in January 2007, it vetoed a resolution on Burma. Since then there have been significant developments in which China could have played a far greater role. I refer too to the position it took last July on Zimbabwe.
As for climate change, we have seen a significant move in recent days for which we are grateful. China has a national leading group on energy and climate change, which is chaired by the Chinese Premier, Wen. It has a national climate change programme dating from 2007, and in October the leading groups announced that China must incorporate addressing climate change and reducing the intensity of carbon dioxide emissions into national, economic and social development plans. China may be following such a policy for different reasons from our analysis of the need for a robust outcome in Copenhagen, but we will be working closely between now and Copenhagen to ensure that we reach a clear and robust agreement on the need to ensure that global temperatures do not rise 2° above the temperatures of 1990. Moreover, we must ensure that there is a global fund to help us protect the world around us. We also hope for an early conclusion of the Doha development round and we believe that China’s membership of the WTO should enable that rather than prevent it.
Finally, the third pillar is about promoting sustainable development, modernisation and internal reform in China. Whether it is on the death penalty, human rights in Tibet or more generally in China, we believe that constructive engagement with China as an economic ally and friend can go forward only when there is a wholehearted embracing of proper human rights.
I am grateful to the hon. Member for Cities of London and Westminster for raising these issues today. If there are any further issues that I have not addressed, I will reply to hon. Members in writing.
Agricultural Building Allowance
As ever, Sir Nicholas, it is a very great pleasure to serve under your chairmanship today. It is also a great pleasure to have the opportunity to debate an issue that is important to many of my constituents—obviously, those working in agriculture in particular—and to the constituents of many other Members. It is perhaps not the sexiest issue. It is a matter of some technicality and detail, but for farming businesses, many of which operate on exceptionally tight margins, it is one of great significance and indeed one that raises some quite fundamental questions of basic fairness.
First, I should place on record my gratitude for the fairly comprehensive briefings that I have received from the National Farmers Union and NFU Scotland, and indeed from a number of my constituents who have spoken to me about the subject. I am also informed in my wider thinking by the fact that I am a farmer’s son, born and brought up on a hill farm on Islay. At a time when we talk about a rising average age for farmers, which is germane to a matter that I will come on to later, I reflect that my own father is still hale and hearty at the age of 78, running a hill farm on Islay, assisted—indeed, encouraged—by my mother, who is 76. The remarkable thing about that is that it is not really in any way remarkable: my parents are by no means unusual for the age profile of those engaged in the more financially marginal agricultural activity.
On the agricultural building allowance, I have two main issues that I want to explore with the Minister today. The first is that the phasing out and eventual abolition of ABA brings with it a disincentive to invest in the type of investment that will be very important to the future sustainability of agriculture. Indeed, such investment is important not just to agriculture but to many rural communities, especially those in what are considered to be geographically remote or peripheral communities, because in many of those rural communities, if not most of them, agriculture lies at the very heart of the economy.
The second concern that I want to explore today is that the manner in which the Government are seeking to make the change is, in effect, retrospective. The Minister will no doubt explain why the Government have chosen to act in that way. I shall explore the question of retrospectivity, but the fact is that buildings were constructed by people making business and investment decisions with a legitimate expectation that ABA would be available to them over a 25-year period, but those people are now finding that the rug is being pulled out from underneath their feet. If the Minister were to say that the change would apply to buildings that are constructed from tomorrow, clearly the same arguments would not apply, but the fact is that many farmers have made business decisions based on what I term a legitimate expectation of the availability of ABA.
I was given a very good example of that situation at a constituency surgery by a constituent of mine from Shetland, about whom I have been in correspondence with the Minister. That constituent is Mr. Martin Burgess, who farms at Quendale. In 2000, he put up a new dairy unit—a building that obviously qualified for ABA—whose construction he funded by some borrowing. Obviously, there is a cost attached to that borrowing, and that cost is not always predictable, as we know. A significant factor in the decision that he took was the availability of ABA. He has made a calculation about his dairy unit—it is worth considering that calculation about one dairy unit in the south end of Shetland—that over the remainder of the 25-year period that the building would otherwise have been eligible for ABA, he will be some £42,000 worse off. For an agricultural operation in Shetland, even if that sum is spread over that period of time it is still a significant and substantial loss.
I have some questions for the Minister. Does he not accept that my constituent had that legitimate expectation and what justification can there be now for removing the certainty that my constituent needs to make future business decisions? If Mr. Burgess were to anticipate making a further construction of that type in the future, what reliance can he have on the availability of any tax arrangements that the Government may choose to put in place?
I think that there is a fairly broad political consensus in this House and in the country that the agricultural industry should be encouraged to invest, to meet our increased food requirements and to achieve the improved environmental and animal welfare standards that we now ask of our farmers. I say that because the margins are exceptionally tight in all agriculture, but in communities such as mine, especially in Shetland where there are exceptionally challenging climate conditions and very often the land is of rather poor quality, the margins become even tighter than those that would be expected in other parts of the country.
In part of the correspondence that I have had with the Minister on this issue, he has referred to other tax changes being available and perhaps we will touch on them at the end of this debate, if time allows. However, I must say that for many of the farmers and crofters in my constituency the benefits of those tax changes are largely illusory, because they are not earning an income that allows them to benefit from the tax changes that the Minister will no doubt outline.
Of course, farmers, like everybody else, are dependent on the whims and notions of the banking sector. In the past year to 18 months, I have had a fairly steady stream of agricultural constituents beating a path to my door to explain the difficulties that they have had with the renewal of overdraft facilities or obtaining new borrowing, which would allow them to make the investment in their business and the changes to it that we as politicians are always encouraging them to make, so that they can improve environmental practice and animal welfare standards, market their product better and go for a higher-quality product that would be available to niche markets, and add value to the products that they already have.
ABA has been with us in one form or another since 1945. Given that context, what I called the “legitimate expectation” of my constituents and farmers in general that it would continue is, I think, fairly well founded. However, the changes to ABA also have to be seen as being part of a tax basket. There are other taxation changes that have had a significant impact on farmers, for example, the increase in fuel duty. Of course, for agricultural vehicles there is a reduced rate for so-called “red diesel”, but not all of the vehicles that are owned and operated in relation to a farm are eligible for red diesel because some of them are used on the public road. Many farmers need larger vehicles such as pickups and 4x4s simply because of the terrain on which they work, but those are the very vehicles being clobbered, in the interests of dealing with their unsuitability for urban areas.
There are other, more technical issues. The treatment of rental income from land as unearned income, for example, has an impact. It means that farmers who rent out land are not eligible for many of the allowances that relate to income tax, capital gains tax and inheritance tax. I mention this because of the ageing profile of those engaged in farming, to return to my earlier point. The capital costs of entering agriculture are very high, so the obvious option for a lot of young people who want to enter farming is to lease land. The treatment of rental income from land as unearned income acts as a disincentive for those who own land to lease it out.
The picture that I am trying to paint for the Minister is one in which the decision on ABA is seen in its proper context. Although we as politicians and the Government in particular all say that we want to encourage growth and development in agriculture, it seems that just about everything else works to militate against it.
Some of the examples given to me by the NFU are stark, and I will take a few moments to share them with the House. The NFU offers the example of the UK poultry industry—an industry with which I have little acquaintance, as I have never had to work in it and it is not a large feature of our agriculture industry. The NFU says:
“The UK poultry industry will need to continue to invest significantly in new or upgraded buildings: in order to improve efficiency; to increase the amount of meat produced in line with Freedom Foods criteria, for example, and other more stringent welfare standards; to increase the production of free-range eggs; and to meet the future requirement for caged laying hens to be re-housed.”
That is the context in which poultry farmers operate. Those are exactly the changes that we politicians want them to make, but making those changes will require significant capital investment in agricultural buildings, which the Treasury now says it does not consider important. The NFU continues:
“In the dairy industry, if a farmer puts a roof over a yard in order to separate clean and dirty water and so reduce the volume of slurry for storage”,
as many farmers in nitrate vulnerable zones are required to do,
“the cost will not be able to be relieved for tax purposes against the profits of the business.”
There is also a fairly significant lack of appreciation in the Treasury of the nature of agricultural buildings and how they are used. The 2007 Budget report mentioned
“ensuring all depreciating assets receive allowances at two clear rates: 20 per cent and 10 per cent. Assets that appreciate, such as land and buildings, will not receive depreciation allowances.”
However, most of the assets that we are talking about when we discuss agricultural buildings have a fixed life span. Building a cattle court is not like building a house. Once built, a cattle court will depreciate over time. To equate the treatment of such buildings with other buildings and heritable property indicates a certain lack of understanding.
It has also been argued that tax relief can be given under depreciation of a building at the point when it is sold, but again, given the continuity that exists within the agricultural industry, the majority of agricultural buildings are not sold, so no relief is ever obtained. That was presumably the calculation made in 1945, when the allowance was introduced, and it is presumably the calculation made every year since then. What do the Minister and his officials think has changed to merit the change in the treatment of agricultural buildings?
I think that the changes will have a significant impact on many farmers, both those caught by retrospectivity and those planning future investment. The impact on the industry will be severe, and I cannot see the benefit for the Treasury and Her Majesty’s Revenue and Customs. What increase in tax gains does the Minister anticipate as a result of the changes?
Finally, we must consider where the changes will leave us. It must be remembered that our farmers are part of a common market within the European Union. What will this do to our competitiveness with regard to other countries? The research that I have carried out indicates that in France, Spain, the Netherlands, Denmark and the Republic of Ireland, relief broadly similar to ABA already exists. It is worth bearing in mind that our main competitors in the pork industry, which relies the most obviously on large agricultural buildings, come from Denmark and the Netherlands. Their farmers will be getting advantages from tax allowances; why will not ours?
I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on securing the debate. He set out clearly for the House the depth of his and his family’s commitment to the well-being of agriculture in the UK. It is good to hear about his parents’ continuing commitment on their farm. I welcome this opportunity to explain the principles behind the business tax reforms of 2008, which included the phased withdrawal of agricultural buildings allowance, but first I will give a bit of background on the history of the allowance to put it in context.
The agricultural buildings allowance, together with the industrial buildings allowance, was introduced in 1945 as part of post-war reconstruction in order to rebuild key sectors of the British economy: industry, for production and employment, and agriculture, in particular, to feed the country after the damage of the second world war. The IBA replaced the old mills and factories allowance, and the ABA replaced a special and even older relief for agricultural landowners under the old income from property legislation. The system lasted until 1986, when it was replaced by the current system, which is now being phased out and will end in 2011. Relief is given at 4 per cent. a year and qualifying costs are written off for tax purposes over 25 years. The buildings that qualified included barns, cowsheds, stables, farmhouses and cottages.
The withdrawal of the agricultural buildings allowance was part of a wider business tax reform announced in 2007, recognising that the rationale behind its introduction no longer applied. The allowances had become a selective and outdated subsidy, as I hope I will be able to persuade the hon. Gentleman—at least, I will have a go. To take one example, the allowance created a beneficial tax treatment for farmhouses but not for commercial office space or science parks. That selectivity inevitably distorted commercial decisions in a way that was clearly unhelpful.
I am grateful to the Minister for giving way. He is always generous in engaging in debate. He has chosen a narrow aspect of the ABA in housing. The significant impact of the changes will be on agricultural buildings such as cattle courts, pig houses and hen houses. Before he compares agriculture to other businesses, does he accept that there are much tighter margins in agriculture than in most businesses?
The question is why it is sensible to subsidise one kind of building in rural areas. Why should we subsidise agricultural buildings rather than commercial buildings or science parks? We have done that in the past and the evidence is that it distorts investment decisions in a way that is not in the interests of rural areas or communities. There is no economic sense in providing a selective tax subsidy for some buildings but not for others. The majority of commercial buildings in rural areas did not and do not receive allowances. The existence of allowances has distorted property decisions by providing tax relief that is not available for other purposes.
The ABA has long been recognised as imposing a significant compliance burden because the system is complicated. It featured in responses to the corporation tax reform consultation of 2002-05 and in the administrative burdens advisory board’s list of priority irritants in the tax system. To leave ABAs in place would have meant retaining that complexity for up to 25 years. There were therefore strong simplification arguments in favour of withdrawal.
It is important to consider the withdrawal of the allowance and the Government’s treatment of the agriculture sector in the context of the other forms of tax relief and Government support that are available. The Government and the devolved Administrations provide a range of direct support for agriculture. For example, farming in Scotland receives about £500 million in support from the Scottish Executive every year. The single farm payment is worth over £400 million a year, the less favoured areas support scheme more than £60 million a year and the Scottish beef calf scheme about £20 million a year. In June, the Scottish Cabinet Secretary announced increases in less favoured areas support scheme payments for the “fragile” and “very fragile” land categories—which equate broadly to the highlands and islands—of 19 per cent. for 2009 and 38 per cent. from 2010. Over two years, that should deliver an additional £15 million to active farmers in those regions. More broadly, the Scotland rural development programme budget is more than £1.5 billion for 2008-13. Such support is more appropriate than the rather ill-targeted tax relief that the allowances provided.
Some tax reliefs still exist, such as lower duty on diesel, which the hon. Gentleman mentioned, the agricultural inheritance tax and capital gains tax reliefs, the special averaging entitlements for calculating taxable profits and loss relief.
I want to return to the Minister’s point that the ABA is distorting decisions. The Government actions that I outlined, such as those on improving animal welfare standards and environmental standards, are also distorting decisions. We are forcing farmers into capital investment to make those changes. Surely that is the distortion that should be recognised in the tax system.
The measures that I have set out reflect those requirements and obligations.
The ABA forms only one element of the business tax treatment of agriculture. We must consider the rate of corporation tax and other capital allowances. A consideration of the overall business tax picture led the Government to announce a big package of reforms to business tax in Budget 2007. The ABA was only one plank of that. We set out the principles behind that package, the main features of which were a reduction in the main rate of corporation tax from 30 to 28 per cent., thus establishing the lowest corporation tax rate in the G7; enhancements to research and development tax credits; and a set of reforms to modernise and simplify the capital allowances system, including the abolition of ABAs and IBAs. That strong package of reforms is pro-growth and pro-investment. It has been estimated that it will add 0.2 percentage points per annum to investment above the trend rate and so strengthen the UK’s global competitiveness.
We recognised in Budget 2007 that businesses would need time to plan for the changes to business tax. Therefore, IBAs and ABAs are being phased out not overnight, but over a four-year period. For each year from 2008, a business’s entitlement to the allowances will be progressively reduced by one quarter. The allowances will ultimately be withdrawn in April 2011.
I am happy to check that figure, but I do not have it in front of me.
As part of the package, we introduced a new £50,000 annual investment allowance, which allows 95 per cent. of businesses to write off their expenditure on plant and machinery, other than cars, in the year in which it is made. Plant and machinery used on farms and in agricultural buildings will qualify for that allowance. It will provide a direct tax benefit to farmers for the tax year in which the money is spent.
To ensure that the agriculture sector is able to benefit from the full range of tax assistance that is available following the withdrawal of the ABA, Her Majesty’s Revenue and Customs has engaged proactively to help the agriculture industry to maximise its claims to plant and machinery capital allowances, and to the £50,000 annual investment allowance in particular. Pig farming is particularly equipment intensive, so HMRC is working on specialised guidance for the pig industry to explain what allowances are due and what types of expenditure qualify. HMRC wants to engage with the agriculture industry to ensure that it can make the most of the new arrangements. The guidance has been received positively by the National Farmers Union, to which the hon. Gentleman paid tribute, and the National Pig Association. HMRC is awaiting wider feedback before considering whether to expand the initiative, possibly by giving additional guidance to the agriculture sector more generally.
That work and the package of spending and tax measures demonstrates the Government’s continued support for the agriculture sector. That is further underlined by the new measures that were introduced in response to the downturn, such as increased funding for farm diversification, the development of micro-businesses, targeted support for the dairy sector and rural community broadband, which is of particular interest to me as the Minister responsible for Digital Britain.
The real benefit of the business tax reform package will be felt through its impact on business investment. It will benefit all sectors of the economy and increase the investment that will be important for economic recovery and long-term growth. This year, we introduced a first-year allowance that doubles the rate of tax relief on new business investment in plant and machinery, which will support about £50 billion of investment when the need for extra help is at its greatest. I commend the Government’s reforms, such as the simplification of capital allowances—including the ABA and IBA—the reduction of the main rate of corporation tax to the lowest ever level and the introduction of the annual investment allowance, which will provide the platform to encourage investment in the UK this year and for the future.
I am delighted to be serving under you yet again, Sir Nicholas. It seems slightly strange to go from farm building allowances to nuclear building. I am sure there is a synergy somewhere, but I cannot think what it is—perhaps we should have corporate breaks.
I am fortunate to have obtained this debate. The future of nuclear power is vital both to my constituency and to the whole of the United Kingdom. As a nation, it is no secret or surprise that we are running out of capacity to generate electricity. Our power plants are growing old and have to be replaced within the next seven years or the lights will start to go out—in other words, an urgent situation is looming.
My premise today is to try to urge the Government to hear that ticking clock and to recognise that we cannot afford any more delays and we must take action. In Bridgwater, nuclear power has been providing reliable electricity to the grid since 1970 through four reactors, two of which have been decommissioned at A station. B station, which has had a five-year extension, is now owned by EDF Energy. We know how well nuclear power works and, more important, how safe it is. We have a whole generation of local experts who are closely involved in the building and management of it and, as I said, the decommissioning of our first power station has taken place at Hinkley A.
Where I come from, there is an acute understanding of the technicalities. Bridgwater college is pioneering specialist training for the important task of decommissioning our ageing nuclear power stations. I would like to thank the Minister because, two days ago, we got the go-ahead to build the first nuclear academy in the United Kingdom at Bridgwater. I am grateful to Geoff Russell at the Learning and Skills Council, to the regional development agency and Harry Studholme, and, of course, to the principal of Bridgwater college, Fiona McMillan, and her team. That is fantastic news and I am sure that the Minister would agree that it is good for the country.
I shall ask the Minister for some advice and it would be delightful if we could get some straight answers. Some people say that one deals only with yokels in Somerset, but I would like to think that that is not true. The people of Bridgwater are listening and watching. They have a true attention to detail and a real knowledge of their subject. I am afraid the Minister cannot pull the wool over my constituents’ eyes. They have been interested in this matter for too long, and in Somerset, fudge and waffle do not come on to our agenda.
Hinkley Point is far from invisible. I do not know if the Minister has had a chance to come and see it, but it sits like a concrete castle overlooking the Bristol channel and dominates the skyline in one of the loveliest parts of this country. Hinkley Point has always provided valuable employment, but it has also attracted and bred considerable expertise. Some of the people who planned the very first reactor and went on site in 1959 still live nearby. They have seen Hinkley B, which is still operational, do its job equally well, and they may live to see the dawn of the latest generation of reactors at Hinkley C and D. However, that will happen only if the Government push for that and support it.
The plan is to construct a pair of new power stations—pressurised water reactors, which are tried, tested and, more important, used all over the world—that are capable of pumping out enough electricity to satisfy 4 million customers in the United Kingdom. I make no bones about it—this is a big-scale operation. The biggest civil building programme in the south-west to date is Hinkley A and B. The biggest civil programme of building in the south-west in the future will be Hinkley C and D, which will provide 700 permanent jobs per station. Many thousands of other jobs will be created to build it. The overall impact on our local economy has, of course, been totally positive. I am absolutely delighted to say that it has been good for us and will continue to be good for us.
The programme demands painstaking research, costly studies and a huge amount of essential consultation, so that everyone involved knows exactly what is involved and how to get it right. I suspect that if Her Majesty’s Government—I do not mean just this Government, but any Government—were solely responsible for doing it, the idea would never have got off the drawing board. However, as the Minister knows full well, the nuclear industry in this country goes about its task with enormous efficiency and, of course, attention to detail. Important geological surveys are going on right now, EDF is on site, there are holes everywhere and it is pushing for the information it needs to be able to submit an application.
The latest phase of consultation—the second round—involves public meetings in village halls and begins today. The company seeking to build Hinkley C is EDF Energy, which is France’s No. 1 power firm. It has already secured the land it needs and has spent months—actually, it seems more like years—discussing the small print with everyone. EDF has sent an absolutely fascinating detailed breakdown of what it wants to do at Hinkley. I will give it to the Minister at the end of the debate, because I cannot deal with it all in only a quarter of an hour.
There have been two other phases of public consultation. British Energy used to run both Hinkley A and B. Subsequently, it ran only Hinkley B, which has been taken over by EDF Energy, as the Minister is fully aware. It spent months asking for opinions about the matter and when EDF bought British Energy out, it began consultations of its own, which is absolutely right and proper—there are no problems with that. Schemes of such importance should never be pushed through on the quiet. No one would put up with that—I would not do so as an MP and neither do I expect my constituents to.
The consultation is far from over. Some 37 miles of cabling are required to get the electricity out of the new power station and on to the grid, so we need new pylons. The consultation is ongoing in relation to where those pylons should go. Unfortunately, the existing system, on which the National Grid has opened the consultation, must have new heavy-duty power lines that will go up to Avonmouth through a new switch system just outside Bridgwater. The patient work of seeking views is being undertaken by the National Grid and is ongoing. I am delighted to say that the local authorities most affected by the prospect of the new station are being kept fully informed by both the Government and EDF. In fact, so much information is out there, even a hermit crab could not get away with not hearing about what is going on.
So, what is the next step? This is where the debate might become awkward. Everybody accepts that it would be unfair to leave big planning decisions such as this to a local council. Somerset is the smallest district council in the United Kingdom and it knows that it could not cope—we accept that. We have a tripartite system between Sedgemoor district council, Somerset district and Somerset county council to ensure not only that we keep the Government informed, but that they keep us informed. We do have talented planners in our town halls, but the issues surrounding the building of a nuclear power station go much wider. Of course, Hinkley C raises local issues—for example, we need our councils to ensure that new roads are planned carefully. We desperately need a new road to bypass Bridgwater and that is one of the subjects on which EDF is in discussion.
Hinkley C is, of course, a national issue. The old planning system allowing major projects such as motorways and airport expansion to be considered by public inquiries has gone. On the face of it, that system seemed the fairest way to deal with such schemes as it gave everyone a say in front of a learned judge or appointee, who would then compile a report and leave the final yes or no to the Minister. The big downside to that way of doing things was time. Public inquiries too often became rambling and rowdy debates. The precise details could not be dealt with because so many activists wanted to argue the moral theories first. That is why years were wasted on the rights and wrongs of aviation, rather than the exact plans to expand Heathrow—and that is just one example. Such a situation is like a hijack—people think such inquiries will settle a planning question, but they end up being involved with a woolly argument that drags on for years and solves nothing. Of course, the only real winners in such a situation are the lawyers.
From bitter experience, I know a lot about the subject of planning. For my sins, I sat on the Parliamentary Committee set up to examine Crossrail, and I still bear the scars. It was an immensely controversial subject involving vast numbers of witnesses—or stakeholders as they are now called—and we were obliged to call them all. Some of the stakeholders wanted to waste time by bleating on about literally anything, including one lady who was worried about helicopter noises in tunnels. We listened and we heard, but we were still not sure of the arguments. That went on for two and a half years. It was very worrying that most of those people—and I do mean most—lived nowhere near the tunnels and would not have been affected by the proposed development at all, but felt that they had to have a say. My Committee colleagues were sorely tempted to drive stakes through the hearts of some of those people. However, that process did show that we had the ability to do the work by having a narrow remit, and we were not expected to come up with anything other than a yea or nay. It was not a big deal, but it was a lot more efficient than subjecting the whole thing to a public inquiry.
I understand why the Government want to alter the existing planning rules—I make no bones about that—but what they are introducing is not right. The idea is that huge projects such as Hinkley C will be placed before a brand new quango called the IPC, but this is too important to get wrong, and the Minister knows that. Eyes are beginning to glaze over, but let me assure people that the IPC is not to be confused with the IPCC —the Independent Police Complaints Commission—and neither is it to do with the International Publishing Corporation, the International Paralympic Committee, the international primary curriculum or international patent classifications. Those all have the same initials, and I am afraid that we have them here too. I suppose that Her Majesty’s Government is overusing those initials to create a quango that can be hidden among others.
In this case, the brand new IPC, which has been operational only since the start of October, stands for—it is quite a mouthful, and quite a job—the Infrastructure Planning Commission. The new system is meant to work in this way: a planning application for a new nuclear power station would have to be submitted to the IPC—I hope that the Minister will correct me if I am wrong—and applicants would be expected to demonstrate that they had consulted the community properly in advance. The IPC would then consult local authorities and other organisations before making a decision, which would take into account the Government’s national policy statement on nuclear power.
That all sounds clear and simple—I hope that everyone agrees—but one crucial aspect is missing. Imagine building a nuclear power station and forgetting to order the uranium, Sir Nicholas. You see, there is not yet a national policy statement on nuclear power. It does not exist; it has not been made. It cannot be nailed to a perch, or push up daisies, let alone go “Pretty Polly”. It is far less use than a dead parrot. It might be a good idea to have a national policy statement on nuclear power and a national policy statement on wind or wave power—and perhaps one on solar power too; I do not know—but the Government have not got around to making any national policy statements on these issues or anything else. As things stand, if EDF Energy submitted an application to the new IPC, the IPC would be quite unable to reach an effective decision.
I would not insult the Minister by trying to teach him to suck eggs, but I hope that he will not mind me reminding him just how expensive it is to build a nuclear power station. It will not come as any surprise to hear that it costs billions. EDF wants to build four such power stations in the UK, and it has already spent millions on planning and consultation, but it does not have a bottomless pit of money; nobody does. A few days ago, EDF said that it was considering selling its UK electricity distribution network to reduce £36 billion of debt. It is also looking for investors to take a 20 per cent. stake in its UK nuclear business. Two German companies are also in line to build a pair of nuclear power stations in the UK, but the word is that they are becoming impatient with the indecision of the Government and this country.
The Minister will know, as will you, Sir Nicholas, that delay costs money, and we are painfully aware of the rising price of energy. Indeed, Ofgem—another quango—estimates that the price of power could almost double in order to pay for the investment in nuclear and renewables. That is a bitter price to pay for not making up our minds in time. It takes seven years to build a power station. Hinkley B is due to end its productive life in 2016 unless it gets another five-year extension. Even if the Government were to give Hinkley C the go-ahead now, it would not be ready in time to replace the reactors that are going. I am afraid that the process of producing a national policy statement on nuclear power has “delay” written all over it.
The Government are bending over backwards to allow everybody a say—that is agreed—but the nation cannot afford a system that moves like a snail. The national policy statement has to be simpler. It is a device to stop people arguing about the merits of nuclear power. It needs to state: “We think nuclear power is clean, safe and obviously the way forward,” but we are still waiting. Only in the planning, and when the Government have nailed their colours to the mast, can we really start to tackle the applications. In the meantime Sir Michael Pitt, the chairman of the IPC, is picking up £234,000 a year—more than double what the Prime Minister gets.
I am not convinced that, even when the national policy statement eventually comes along, the IPC will be able to sanction new power stations without a series of battles and still more delay. It could easily get bogged down in legal challenges from judicial reviews in the High Court to a challenge—I should like the Minister to clarify this—in the European Court of Justice. That is partly because the IPC is an untried quango and because its decisions do not have to be ratified by this place or by Members. I believe—dare I say it, given that I do not want delays?—that that is wholly wrong.
I endorse the determination of my party to try to sort out the IPC, and I urge the Government to consider the issue as well. We are not going to hang on to national policy statements, but we are committed to putting the decision-making power back where it belongs. Public inquiries are good, but they are not the whole answer. Accountable decisions must be made quickly and fairly. My message today on the national policy statement is very straightforward: let us get going and let us sort this out. Let us make sure that we get the statement and that the building of Hinkley C and D can be undertaken as soon as possible.
Thank you, Sir Nicholas, for those kind words. It is a pleasure to see you in the Chair for this important debate. I congratulate the hon. Member for Bridgwater (Mr. Liddell-Grainger) on securing the debate. His clear enthusiasm for, and expertise and knowledge of, his subject is apparent; he is clearly keen to see progress on nuclear power. I take his lectures on how we must hurry up and speed along. It was not so long ago that his party’s policy on nuclear power was to put off any decision and to make it a last resort, so I suggest that the right party is in power to take the decisions with which he would agree.
I hope that the hon. Gentleman will not mind my saying that the Government’s policy is a little broader than simply focusing on nuclear, but of course I shall deal in some detail with his remarks on nuclear. We recognise the importance of having secure, reliable and affordable energy supplies for the UK. Alongside that challenge, we also face the challenge of tackling what could be cataclysmic climate change. It is important to us to have secure energy supplies and a just transition to a low-carbon future in which all our citizens have access to affordable energy sources.
Our strategy on ensuring a low-carbon Britain for the future is to encourage greater effort on energy efficiency. After all, what better way to reduce emissions than to reduce our consumption of energy? Reducing our need for energy would clearly support our desire for security of supply, and for those who have difficulty paying their bills, the more they can reduce those bills, the better. Alongside energy efficiency, there will be the trinity of more renewable energy, low-carbon nuclear and clean fossil fuels such as gas and coal.
If the hon. Gentleman does not mind, I should like to say a little about renewable energy and clean fossil fuels, although I will concentrate most of my remarks on nuclear power, as he has asked me to. Alongside the low-carbon transition plan that we published in July, we published strategies for low-carbon industry and transport and launched the UK’s renewable energy strategy. We are aiming for an ambitious sevenfold increase in the amount of energy in this country that is provided by renewable sources by 2020, compared with 2008. That will be the largest proportional increase in Europe and is therefore very ambitious, but we are fully committed to meeting that target.
Such an increase could provide about £100 billion-worth of investment opportunities and up to 500,000 jobs in the renewable energy sector. This year’s Budget announced £405 million to support the development of world-leading low-carbon energy and advanced green manufacturing in the UK, and we are starting to see progress already. The data from September 2009 show that on top of the 7 GW-worth of renewable electricity generation that is already in operation—to put that into context, all the onshore and offshore wind energy that was produced in this country last year provided power for 2 million UK homes—a further 2 GW-worth is under construction, another 9 GW-worth has planning permission and is awaiting construction, and more than 10 GW-worth more is going through the planning process. Those will all be connected to either the transmission or the distributed networks. The strategy relates not only to big electricity projects: over the summer we have been consulting on plans to introduce more support for small-scale electricity generation, which will provide financial rewards for people setting up renewable energy sources for their houses, businesses or community projects.
The hon. Gentleman passed by renewables, so I will leave out some comments that I would have liked to make about our support for research on the whole range of renewable energy sources, but I would not like him to think that our minds are closed to technologies for harnessing wave and tidal energy, hydrogen fuel cells or bioenergy. For the purpose of this debate, I will pass by those, but I remind him that, for the feed-in tariff for electricity support next year, we will be consulting towards the end of this year on a renewable heat incentive. That will be a big drive in the promotion of heat from renewable sources and for bioenergy and combined heat and power, and we hope to introduce that in April 2011.
I turn now to nuclear energy. Renewables alone will not meet our energy needs. Nuclear power is certainly a low-carbon, secure and reliable source of electricity generation, and our recent low-carbon transition plan outlines how nuclear power, alongside renewables and clean fossil fuels, has a crucial role to play in the UK’s future energy supply. The Government remain absolutely committed to our policy on nuclear new build and want to achieve a nuclear market that is considered one of the best in the world for nuclear investment and for companies working in our nuclear supply chain. In our recent transition plan we stated how nuclear energy, alongside a tenfold increase in renewables and clean coal, has a crucial role to play in achieving a low-carbon future to secure our energy supplies, and we are doing everything we can to facilitate new build of the type the hon. Gentleman is calling for.
The increasing politicisation of energy supplies is creating global economic uncertainly, so ensuring that we have a diverse energy mix is important to both price stability and energy security. As we set out in the nuclear White Paper, the Office for Nuclear Development is taking the necessary steps to establish the right policy framework and create the right conditions in the UK for investment in new nuclear power stations. The office will act to enable investment in the UK from the earliest possible date, with no cap on the amount of new build.
To follow through on those commitments, we are about to publish the national policy statement that the hon. Gentleman is so impatient to see—I have seen the drafts of the document and can assure him that it will be with us shortly. That is a key plank in the new planning system and will be available for consultation shortly and, crucially, for parliamentary approval later. We have legislated to ensure that developers put money aside from day one for the eventual clean-up of new build and we are working to implement Dr. Tim Stone’s recommendations on the nuclear regulatory environment.
All those steps are working. Energy companies have recently invested almost £13 billion, and EDF, as the hon. Gentleman mentioned, has invested by buying British Energy and the Nuclear Decommissioning Authority’s sites for £387 million. All that investment shows the market’s confidence in what is about to happen in this country. Taken together, the nuclear industry has so far announced plans for more than 12 GW of nuclear energy in the UK, which is more than currently exists. Our operators continue to estimate that electricity could be generated from new build by the end of 2017 or the beginning of 2018. Crucially, that time scale depends on every element being in place, not least the investment, but also the appropriate planning framework.
The hon. Gentleman has been critical in his remarks on the new Infrastructure Planning Commission, but I think that he is misguided to be so critical of a key plank in the system that will give investors the confidence to plan to build new plant in this country by the end of 2017. It is crucial that we get the planning environment right for those decisions. Our job is to work hard to create the right conditions for that investment, so we are well under way in taking steps to make new nuclear power stations a reality. We will publish the draft nuclear national policy statement for consultation. We have legislated to ensure developers put money aside from day one and are working to implement the recommendations Dr. Tim Stone made in his nuclear regulatory review. With my noble Friend and ministerial colleague, Lord Hunt of King’s Heath, we are looking at the proposed legislative restructuring of the regulatory framework. Those efforts are what will encourage investors to make those important decisions.
There are, after all, massive economic opportunities to be seized in this nuclear renaissance. The supply chain and skills base required to support a new build programme offers considerable opportunities for UK businesses and workers. The Government are working closely with the industry to raise awareness of those opportunities and to encourage investment. An expansion of nuclear energy in the UK will require thousands of people working in the sector. The challenge for the Government and the industry is to ensure that we have enough people with the right skills to build and operate new nuclear power stations.
As the hon. Gentleman was kind enough to give us credit for, we are working closely with Cogent, the sector skills council, with the National Skills Academy for Nuclear and with the industry to ensure that we have a clear and jointly shared understanding of the key skills priorities for the nuclear sector and how skills demand can be met. I have been following the progress of the proposal for an energy college in the hon. Gentleman’s constituency, which I am delighted to hear him report has now come to fruition. I wish that project well, because it is vital for the future skills training of the enterprise. Bridgwater college in his constituency is playing its part as one of the most successful further education colleges in the country. It is an associate member of the National Skills Academy for Nuclear and, in association with the university of Central Lancashire, offers a very positive foundation degree course in nuclear decommissioning, which is a good step forward for the future of the sector.
On a similar point—I wondered whether the hon. Gentleman would mention this, as he has certainly been a great advocate of the relationship between local authorities and EDF in getting planning right at local level—I am advised that EDF and the local authorities have now signed a planning performance agreement in relation to EDF’s potential planning application for a nominated site at Hinkley Point. That will help to ensure that both sides are clear on the advice and support required from a local authority and on when it will be delivered. That agreement does not pre-empt the decision by the IPC or the Government’s consultation on the nuclear policy statement. I hope that that reassures him on the points he raised.
I want to mention the role of coal. Neither wind nor nuclear, or even the two together, can provide the flexibility required to handle fluctuating energy demand, so coal will continue to play an important part in the energy mix. Keeping coal-fired generation helps the Government to deliver secure, reliable and affordable energy to homes and industry. Coal, like gas, is more flexible than nuclear energy and so can react quickly to changing demand, such as when other generating sources fail. Coal-fired power stations supply a third of our electricity over an average year, and that is in addition to coal’s role in providing energy for the manufacture of steel, chemicals, cement and for other industries. Nearly a third of the coal used for generation in the UK is locally produced, and UK coal producers believe that they can maintain production at that level for the foreseeable future. It is therefore very important that we are able to retain that flexibility for the future, and that means a clear role for coal, with carbon capture and storage in our future electricity mix.
Our strategy for moving towards the deployment of carbon capture and storage needs to bring together energy security and our climate change objectives, so we consulted on a framework for clean coal, which closed on 9 September. Under consideration are proposals to support up to four CCS demonstration projects in the UK and a requirement that any new coal-fired power station must demonstrate CCS on a substantial proportion of its capacity and retrofit 100 per cent. of capacity when the technology is proven. Taken together, the Government’s proposals for coal amount to the most environmentally ambitious of any country in the world.
The Government are committed to a market framework, regulated by Ofgem, that ensures that there is a good deal for consumers through a competitive market and that the significant investment needed across our whole energy infrastructure over the coming years is delivered.
I am grateful to the Minister for bringing his reply to an end.
We move on to the last Westminster Hall debate today, which is initiated by the right hon. Member for Makerfield (Mr. McCartney). When I came into this House, I was honoured to serve alongside his father, who was a respected Member of this House.
Thank you, Sir Nicholas, for remembering my father. I did not realise that you were so old. [Interruption.] How to win friends and influence people.
A few days ago it was the 10th anniversary of the death of my beloved only son, Hugh. Sadly, a few months later, a mother who I did not know at the time lost her son, Christopher. Christopher and Hugh had some things in common. They were both 23 when they died, both had suffered mental stress and drug addiction problems, both were born in the last quarter of the 20th century and should have lived on to have a full and fulfilling life in the 21st century. Sadly and tragically, their fates were sealed in lonely bedsit flats away from families who loved them dearly and continue to do so today.
But the similarities end there. Hugh died in Glasgow, where his death was properly and thoroughly investigated and he and his family were treated with dignity and respect. Christopher died in Paris, France, where the investigation was scant and his body and family were treated with utter disrespect.
In the next 15 to 20 minutes, my parliamentary colleagues and I will set out a harrowing tale of an unexplained death in mysterious circumstances, and unanswered questions. Christopher’s mother, Winnie, has campaigned courageously for nine years. She has refused to give up fighting to get to the truth of the circumstances of her beloved child’s death, and has sought truth and justice for him. It is the last thing that a parent can do for their child. Winnie and her daughters Karen and Sharon are here with us today.
How could officials in France, including the police and others, who could be parents themselves, treat Christopher as if he was worthless and of no consequence? How could whatever happened to end his short life be of no interest to them? Christopher’s death was a terrible tragedy, but what makes it so unbearable and unacceptable to Winnie is the tale of truth and justice denied by a system so insensitive that it could not even repatriate his remains with dignity and understanding. Instead, without permission, his body was probably used as a cadaver by medical authorities. It took his mother and family years to trace his withheld organs, including his brain and heart.
There was no serious police inquiry. It took just 55 minutes to investigate what could have been a murder and, in any event, was clearly a suspicious death. There was no interview of key French eye-witnesses, nor were witnesses traced or interviewed, with or without a French police caution.
The French said that the cause of death was alcohol poisoning, but the British say that it was not. Indeed, they said that Christopher would have passed a drink driving test in Britain. Then it was said that the cause of death could have been neglect, or pneumonia, but the French eye-witness, Alain Nesmon, said that it was murder and that he was there. Christopher’s courageous and loving mother, Winnie, and his brothers and sisters want the truth, which they believe lies with Alain Nesmon.
Nine years on, Winnie simply wants the British Government to persuade their French counterparts seriously to investigate this tragic death, and finally to test the allegation made by the eye-witness that her son was murdered. She needs answers before that key witness dies of the cancer from which he is suffering.
But it is not only the family who are on Christopher’s side in terms of securing justice and finding the simple truth behind his tragic death. The South Sefton coroner, Christopher Sumner, wrote a private letter to the Foreign Office in December 2003 in which he was scathing. He stated:
“I consider that the police investigation was cursory in the extreme. It gave the impression, rightly or wrongly, that the deceased, being a squatter, was of little significance.”
He then gets tougher:
“No forensic evidence appears to have been gathered. Little was done of an investigative nature.”
In another letter, the coroner went even further. He simply does not believe that Christopher could have died from alcohol poisoning. On 10 September 2004, he wrote:
“The post mortem conclusion refers to acute alcoholic poisoning with the ‘abundant ingestion of beer likely'. Such a conclusion is not borne out by the evidence.”
He states that the pathologists’ conclusions are based on
“assumption rather than hard fact.”
There are two even more shocking revelations. First, the coroner confirmed that the French police inquiry lasted just 55 minutes. Even more disturbing, he revealed evidence that Christopher’s body may have been found at 0500 hours, and that it took the police six hours to arrive at the scene. The coroner also revealed that Alain Nesmon was never questioned by the police despite the fact, which he was able to ascertain, that it was Nesmon who removed all of Christopher’s personal possessions, leaving only his birth certificate on his lifeless body.
In this short debate, to which other colleagues wish to make a contribution, it would be impossible to go into every aspect of the case or the role of the Foreign and Commonwealth Office. In advance of the debate, I wrote to the Foreign Secretary on 3 August and submitted to him a confidential background paper setting out all of the investigation painstakingly carried out by former “World in Action” investigator and award-winning broadcaster, Rob McLoughlin, the man who tracked down and interviewed Alain Nesmon not once but twice. On 18 August, I wrote again to the Foreign Secretary, having spoken to his officials. I asked him to instruct Sir Peter Westmacott, our ambassador in France, to start immediate discussions with the French authorities to ask them to order an urgent inquiry to open up and properly investigate the death of Christopher Traynor.
My notes on behalf of the family and my parliamentary colleagues run to 32 points of investigation or comment on the suspicious circumstances. I ask the Minister to respond to the report that I submitted to the Foreign Secretary and to advise of the outcome of the Foreign Office’s discussions with the French authorities. Secondly, would he agree to meet Winnie Traynor and her family, and my hon. Friends and me, to discuss in more detail the issues around Christopher’s death and the role of the Foreign Office, past, present and future, in this case?
In life, Christopher Traynor had no advantages. He was at times estranged from a family who wanted to shield him from brutal abuse outside the home but could not prevent him from running away from it and towards dark and dangerous substances that would isolate him from the people who loved him most. He pretended to himself and the world that he could cope, but his private letters portray another and more honest image. This was a barely literate young man trying to escape from a world which had hurt him and which he could neither cope with nor understand. Authority figures in England had damaged him and he would never hold trust in them again.
Christopher’s death may have seemed to others to be inevitable. He was clearly ill: he was carrying the symptoms of pneumonia, which probably needed basic treatment, but were they enough to kill him? Can we be sure that that was the case? He was moving in a shadowy and dangerous world where some in authority believe that life is cheap. He was attracting attention and befriending people who may have had little regard for him as they fought their own battles to survive.
Christopher may have been killed by neglect, but it could have been something far more sinister. His mother has to know the answer. In that Paris squat, he had no advantages and no one to help him. His mother wants to change that in death. While there is time—limited time—she wants the authorities on both sides of the English channel finally to allow him to rest in peace. She wants them to do one simple thing: discover what Alain Nesmon knows and test it by a proper and thorough police investigation in co-operation with the South Sefton coroner and Merseyside police.
Sir Nicholas, this is a harrowing tale. With your permission, may my hon. Friend the Member for Bootle (Mr. Benton) participate in this short debate?
Thank you, Sir Nicholas. I support everything that my right hon. Friend the Member for Makerfield (Mr. McCartney) said.
It has been a privilege, although that might sound like a strange word to use, for myself and Ann McCartney, a member of my staff, to be associated with the Traynor family, because they purvey a great sense of dignity in the light of all those harrowing circumstances that my right hon. Friend has described. Most of the issues and unanswered questions, which are too numerous to enumerate, have been mentioned, but there are still a lot more questions about this tragic death that need to be answered.
In supporting my right hon. Friend, I, too, urge my hon. Friend the Minister to speak to us and give us an opportunity to elaborate a bit more on the combined knowledge that we all have and to set up an inquiry, because the circumstances are horrifying. I have been in public life now for some 45 years and I find it difficult to think of a more poignant, tragic case than this, which the family has borne with great dignity.
It might be a mixture of spiritual and human factors, but one of the tragedies about death is always that it is a good thing to grieve. We often derive our comfort from grief in these circumstances. I do not need to tell hon. and right hon. Members that the more tragic the circumstances of a death, the more necessary it is to grieve properly and with dignity. Winnie Traynor and her family have not had that opportunity. I am making a plea today on their behalf, because Parliament, the Foreign Office and my hon. Friend the Minister have it in their power to move things on a bit, to coin a phrase. All we are seeking, at the end of the day, is the truth. We want the truth.
My right hon. Friend mentioned the coroner’s report, which is a key factor. The first responses that we had from the coroner early on were not too helpful, but it has all changed now and the dawn—the realisation of truth—is coming through and permeating. I want us, as a Government, to take this opportunity to get the full facts revealed to allow the Traynor family to grieve with dignity and with some notion of peace.
Sir Nicholas, I am delighted to sit under your chairmanship again today. I pay tribute not only to my right hon. Friend the Member for Makerfield (Mr. McCartney) and my hon. Friend the Member for Bootle (Mr. Benton), but to all those who have kept this case alive in Parliament and the media in an attempt to try to get justice for the family. I am particularly grateful to my hon. Friends the Members for Walthamstow (Mr. Gerrard) and for Liverpool, Walton (Mr. Kilfoyle) and to my right hon. Friend the Member for St. Helens, South (Mr. Woodward).
I pay tribute, too, as my right hon. Friend the Member for Makerfield did, to the family of Christopher Traynor. This was a tragic set of circumstances and a tragic culmination to a tragic period in his life. I wholeheartedly pay tribute to the work that his family has done. All those who work in the Foreign Office, including consular staff, fully understand the personal commitment that individuals have made to try to ensure that they get a full understanding of exactly what happened. I think that everybody in the consular service in the Foreign and Commonwealth Office accepts that questions remain unanswered on this issue. There is clearly a sharp distinction between what the French and British coroners said. There is a sharp distinction between what the police and prosecuting authorities in France and those in the United Kingdom consider to be the case. There are inconsistencies.
I welcome the Minister to his new, enhanced responsibilities in the FCO.
Although I am not making any comparisons between the two cases—they are entirely different—in the Michael Shields case the investigations that Merseyside police were able to carry out were crucial in enabling our right hon. Friend the Secretary of State for Justice to decide that there was sufficient new evidence to release him. But as my right hon. Friend the Member for Makerfield (Mr. McCartney) and my hon. Friend the Member for Bootle (Mr. Benton) have said, there is no co-operation forthcoming from the French police to Merseyside police. Will my hon. Friend the Minister encourage the French to co-operate fully with Merseyside police to see what help they can give in this situation?
I am not able to comment on the other case that my hon. Friend raised.
Incidentally, my right hon. Friend asked whether I would be happy to meet the family, Ministers and other hon. Members, and of course I am more than happy to do so, not least because there is probably further work that we can do to advance this issue. I will mention later some of the work that the embassy has done in Paris in the last couple of weeks, which may help us move in the right direction.
It is always difficult to force the police authorities in another country to do something that they do not want to do, especially if our authorities have criticised the work that an authority has done, because sometimes that authority will respond, saying, “We think we’ve done our job and there it is. We’re the legitimate authority in this country, not you, so you can’t tell us what to do.” So it is always difficult. Consular staff, who spend much of their time dealing with complicated issues, including child abductions, rapes and deaths in suspicious circumstances, are conscious always of the complexities of the relationship between police authorities in this country and those in another country.
Last week our embassy in Paris spoke to the deputy public prosecutor of Bobigny, the Paris suburb where Christopher Traynor’s case is being considered, who said that the French police could interview Monsieur Nesmon if a formal request was made by the UK authorities. However, the FCO is not, in their view, the correct authority. The request would have to come from Merseyside police, which so far has been reluctant to do so, on the basis that this was a French investigation. Sometimes one police department does not like to criticise the work of another one in another country, because it does not like being criticised back, and Merseyside police feels that it has no real, hard evidence that Christopher’s death was anything other than natural. However, the FCO consular staff will go back to Merseyside police on this, because if the authorities in France are saying that they would look at the matter again if Merseyside police asked them to do so, it would be odd for us not to do that.
The fact is that the coroner recorded an open verdict. That was important. He was critical not just of the investigation but of the evidence. There is no evidence that Christopher died of natural causes; it is an open verdict and therefore should be investigated as such.
Yes, but of course the difficulty with an open verdict is that one is not saying that there is therefore hard evidence of something other than a natural cause. I realise that this is a fine distinction, but this is the distinction that Merseyside police needs to address, because it must decide to make a request, as we believe it should, to the French police to interview Monsieur Nesmon.
The other alternative is available not to the Foreign Office but to the family. The deputy public prosecutor in Bobigny said that if the family were to write to her directly, she would consider any representation that they made. I will make sure that staff in my Department write to the family to ensure that they know precisely how they could go about that. The door is at least slightly open in the case of the public prosecutor in Bobigny.
I fully understand, of course, why Christopher’s family have been critical of the French authorities and, indeed, of our own consular service, the UK coroner, the international funeral directors and the UK police. I would say that there was a series of very unfortunate elements right from the beginning, including the fact that we found it very difficult to identify the right person as next of kin at the very beginning. We were put in touch with another Traynor, in Australia, who of course had absolutely nothing to do with Christopher, but we had no means of getting directly in touch with next of kin. Quite often, that is one of the most difficult things that consular staff have to deal with, but from the very beginning there has been a series of unfortunate moments that have made it very difficult for the family to have clear confidence in the processes in either the French system or the UK system. When, on top of that, the French system and the UK system have been at odds one with another, of course that has led to more confusion.
As I said, I am more than happy to meet the family and, if there is any further assistance that we can possibly give, I am happy to make that available. Our difficulty is that we are not able to command the French Government to command the French prosecuting authorities on how to proceed. The French prosecuting authorities have said that in the first instance they would need either a direct approach from the family or a direct approach from Merseyside police to be able to reopen the investigation and interview particular individuals.
I thank my hon. Friend for agreeing to meet the family. In my contribution to start this discussion, I made it absolutely clear that the coroner had written twice to the Foreign Office to express his extreme concerns about this issue. What is not clear is whether the Foreign Office did anything to take those forward. The reason why I raise that is that in the end the coroner has to rely on our posts abroad when dealing with deaths abroad. Therefore, it would be useful—certainly for the meeting if the Minister cannot do this now—to find out with some clarity whether those concerns, worries, indeed straightforward, simple allegations of failure in the investigation were simply filed away or were acted on. The reason why I ask him that is simple. His officials quite openly sent us a note showing that they had done a review of the file, and it stops dead in 2005, yet my hon. Friends and I have been in communication about this matter since then, including the fact that we asked for a meeting to be organised with Merseyside police and for the Foreign Office to offer its facilities to give Merseyside police a way of engaging with their counterparts in France.
So it is not simply a matter of saying here, “The coroner works in this box; Merseyside police operate in that box.” We need to get the boxes to work together, because without that, Christopher’s death will remain a mystery and it is important that it does not. He was a human being. He was somebody’s child—lonely, frustrated and concerned, as he had expressed days before he died. I therefore ask the Minister to think out of the box about what the Foreign Office is prepared to do in terms of resources to help us to get to the next stage, as outlined earlier.
Of course I fully sympathise with the tenor of what my right hon. Friend says, but I think he will accept that the one thing that a British Government cannot do is tell the British or French police authorities what to do. We can make representations, and we have done so. For that matter, the embassy was in touch with the public prosecutor only last week. On previous occasions, we have suggested ways in which the family could reopen the investigation by making approaches to the public prosecutor in France. I am not aware of whether they have or have not taken up those opportunities, but those avenues have been made available to them through the consular service that we provide. It would be wholly remiss of me, however, to suggest that it is possible for us to force the French authorities, or the British authorities for that matter, to take up an investigation if they choose not to do so. We simply do not have the power to do that and, to be honest, I do not believe that we should have it.
I am more than happy to speak to the family and to meet hon. Members.
The Minister is quite right to emphasise that he is not in a position to order the French to do anything, but there could surely be some kind of ministerial contact. We could use ministerial good offices on this side and on the French side and ask the French at the very least to consider reopening the case. That is quite different from trying to tell them what to do in such a case. A princess dies, and, quite understandably, we have investigation after investigation; a boy dies in a squat, and nobody seems to give a squat about what happened to him. It would be wholly remiss of Her Majesty’s Government not to exercise some discretion on behalf of this young man.
The honest truth is that consular staff have devoted a great deal of time to this and they have tried to provide all the support that they can. Sometimes, they are not able, and never would be able, to give all the support that families want, simply because there has been an enormous tragedy and the sense of loss and grief is impossible to assuage through consular action. I realise that my hon. Friend is trying to find a way for me gently to drop in a ministerial ear in Paris the suggestion that a Minister should force the public authorities in France to reopen the case. To do that, however, I would have to make a judgment on the rights and wrongs of the case, which I am simply not able to do. In addition, I would be asking the French authorities to do something that, were they to respond in kind and ask us to do it, would rightly make us angry. The separation of powers between the political system and the judiciary and the justice system is a very important principle, which I know that my right hon. Friend the Member for Makerfield shares.
There is still an avenue open if we can persuade the Merseyside police to ask the French authorities to reopen the case and interview Monsieur Nesmon. Another avenue is for the family to make a direct representation, and my staff in the consular section will be more than happy to help them with that. Those are the most likely ways for us to achieve the outcome that every member of consular services and the Foreign Office team, along with the family, wants. We want to know the truth about what happened and to make sure that there is justice for the Traynor family and that there is an opportunity to draw to a close a hideously tragic and difficult situation for the family and all those who have been involved.
I do not think that there is anything more I can add, other than to pay tribute to the family for the work and the campaign that they have kept up.
Question put and agreed to.