Tuesday 13 July 2010
[Mr Mike Hancock in the Chair]
Offshore Energy Industry
Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Vara.)
I am delighted to have this debate and to speak under your chairmanship, Mr Hancock. As I hope my contribution will make clear, the debate is about one of the most vital sectors of the UK economy, in terms of both securing our deficit reduction and growing the private sector. It is fair to say that in the House a relatively small number of hon. Members engage in detail with the sector, but it is hugely important to the British economy and I am grateful to those hon. Members who are present. I understand that a number of hon. Members have the first sittings of Select Committees in Parliament this morning, which may make it difficult for them to stay for the whole debate. I completely understand if that is the case. Being the Chairman of a Select Committee, I have had the luxury and indulgence of being able to secure a timing that is compatible with this debate.
I have been associated with UK oil and gas developments for nearly 40 years, since 1971, when I became the research and information officer with NESDA—the North East Scotland Development Authority. At that time, exploration was in its infancy. The Montrose field was discovered, and in the autumn of 1971 BP announced the successful testing of the first commercial well for what became the Forties field. After that, Aberdeen went into boom mode as the UK scrambled to get the maximum production out of the North sea, while the Organisation of Petroleum Exporting Countries asserted itself, squeezed supplies and forced up prices across the world. Field after field was brought on-stream. That boom continued until the oil price collapsed in the late 1980s and then there was a sharp and painful downturn.
However, for all of the past 40 years, despite ups and downs, the offshore industry has made a huge contribution to the UK economy. That continues to be the case. We shall be at another key point of development over the next two or three years, when how we deal with the industry as it changes and as other industries associated with it come on-stream will determine precisely how much of a contribution it will make to the UK economy over the next 40 years. There is the development of the renewables industry, which shares much of the same technology as the offshore oil and gas industry. They can complement each other and compete.
Among those who are not well acquainted with the offshore energy industry, there is a presumption that oil and gas are in sharp decline and little recognition of the crossover between oil and gas and renewable energy. In Oil & Gas UK’s latest economic report, there is a clear indication of a huge industry with a long-term future. Domestic oil and gas production was 2.4 million barrels of oil equivalent a day in 2009. That is equivalent to 94% of the UK’s oil needs and 68% of our gas requirements. With sustained investment, that level of production will decline slowly, at about 5% per annum, although even that may level off if we get the right type of investment. The position is that 39.5 billion barrels of oil equivalent have been produced, with between 15 billion and 24 billion barrels of oil equivalent of recoverable reserves remaining.
Capital investment, which had declined, is now rising again towards an estimated £6 billion or more. Indeed, the industry’s total spend in 2009 is estimated at £12.3 billion. With the oil price rising, tax paid in the current year is expected to rise to £9.4 billion—a 45% increase, based on an oil price of $78 a barrel. On top of that, the balance of payments benefited to the tune of £27 billion, and there is £5 billion of exports—a figure that is growing. Altogether, the industry sustained 440,000 jobs across the UK.
It is important to put the figures on the record, because too often people do not appreciate how huge the industry is and how important it is not just to the north-east of Scotland, but to the whole United Kingdom.
I congratulate my right hon. Friend on raising this subject for debate. He is making a vital point. In the north-east of Scotland, we are probably aware of just how vital the industry is to jobs and investment there. What is important is getting the message across to the rest of the United Kingdom about what a success story the industry is. He has touched on the industry’s export potential. The vital point that he is developing is that, with the right encouragement and investment, there is a long-term future for many more jobs for the whole of the United Kingdom. That will be the case if the Government can get the policies right to encourage companies to locate in the north-east of Scotland.
It was a long intervention but an appreciated one, because it reinforces the point. Exactly as my hon. Friend says, we who represent the north-east of Scotland know and understand the industry. Generally when it is debated in the House, we are the only people who turn up, along with one or two others, yet the industry accounts for more than 20% of all UK industrial investment. There are much better attended debates on industries whose economic impact is far less than that of this industry, so I make no apology whatever for stressing its importance and for bringing it to the attention of the House and the Minister. I know that the Minister understands these issues and I hope that his response to the debate will demonstrate that.
We have a huge amount of technical innovation to enhance the recovery of our existing reserves, to operate in more difficult areas and to squeeze more oil and gas out of the existing reserves that we have found and, at the same time, to adapt the technology to be able to install offshore wind farms and provide for electrical transmission and possibly other marine renewable energy. This is one of the industries that could help to grow the private sector and grow the recovery of the UK economy if it is handled correctly. It is my contention, and the purpose of asking for the debate was to say, that the economic and Exchequer revenue potential of this sector for the UK economy is massive, and if it is not properly handled, significant future benefits could be put at risk.
Let me be clear. Aberdeen and the north-east of Scotland have welcomed the offshore industry and built up a critical mass of innovation and global activity. It is estimated that more than 1,000 companies are based in our area.
I suspect that the right hon. Gentleman was coming on to this point, but Aberdeen and the north-east of Scotland excel not only in the technical expertise but in the intellectual expertise necessary for an energy industry—not just oil and gas. The crucial part that is played by both universities in Aberdeen—Aberdeen university and Robert Gordon university, in my constituency—is very important to the future well-being of the whole area.
I am grateful to the hon. Lady because that is a very welcome and pertinent point. There is a critical mass; there is almost a buzz around Aberdeen among those who are engaged in the industry, because they are at the cutting edge of global technology and innovation. Companies have developed in the area to service activity on the UK continental shelf, but what they have learned in the process of doing that is of so high a standard—we are talking about world-class standards—that many companies are now exporting much, and in some cases the majority, of their output all over the world. That is why we have £5 billion-plus of exports, and that figure is rising quite sharply.
A synergy and value are being added by that dynamic critical mass. Engineers, technicians and certainly academics based in the north-east of Scotland travel all over the world, winning business and servicing the offshore industry. Aberdeen is the world’s leading centre for innovative sea technology. It is a good story and I do not want anyone to suggest that my concerns are about anything other than saying that the north-east of Scotland welcomes this industry, is open for business and has a very dynamic relationship with it, but we need to keep it and to build on it.
I want now to address offshore infrastructure, which is the purpose of the debate. Over the past 40 years, platforms, subsea completions, offshore loading systems and pipelines have been installed all over the North sea, but many of the fields that they originally served have declined, and Brent crude, the North sea’s oil price benchmark, may soon be a thing of the past. BP has sold its interest in the Forties field to Apache, and operations and developments have transferred across the acreage. New, smaller fields are being developed, and they require creative engineering and access to the existing infrastructure to make them viable.
I know that the Department fully understands Oil & Gas UK’s assertion that the North sea’s future lies in exploiting smaller, marginal and technically challenging reserves, the majority of which will not support stand-alone infrastructure, and I am sure that that is why the Department has established the infrastructure code of practice, but there is concern in some quarters about how the code works in practice, and that is borne out by Endeavour International’s request for the Government to arbitrate on its pricing dispute. The other problem is that the older infrastructure was, by definition, developed by the majors—the bigger companies—but is now required by smaller companies. In negotiating terms, there can be an imbalance between the parties, which the Department needs to address to ensure that we achieve optimum use.
I, for one, am pleased that the Government have explicitly recognised the need for a stable and fair fiscal regime for the industry, not least because I and my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) were instrumental in getting a commitment on that into our party’s manifesto, and the Minister may well have done the same with his party’s manifesto. I am also pleased that a greater understanding has developed between the Treasury and the industry in recent years, and the hon. Member for Aberdeen South (Miss Begg), in her capacity as the chair of the all-party group on the oil and gas industry, has arranged one or two useful briefings with Her Majesty’s Revenue and Customs to give us an insight into how that understanding actually works.
I therefore accept that there is a recognition of the need to balance the desire for short-term tax revenues and the long-term prospects offered by future investment. In simple terms, however, the tax regime can influence investment positively or negatively and therefore—I will return to this—alter the potential revenue profile. Centrica, for example, has said that it has expertise in developing tight gas, but that because that is generally found in larger fields, development does not qualify for new-field allowance or any other allowances, which delays investment, prejudicing security of supply and revenue. Perhaps the Minister can comment on whether his Department or the Treasury are in any way active in addressing that issue.
There is also concern, or at least debate, about the future of the petroleum revenue tax and how it might impact on abandonment and decommissioning, which could be carried out prematurely and in contradiction of the decommissioning code of practice. There is discussion—certainly in the industry—about the scope for PRT buy-out, which has an upside and a downside from the Treasury’s point of view in that it could provide the Treasury with an early cash flow, but only in exchange for future liabilities, and that is a fine balance. Again, it would be interesting to know whether the Minister or the Department have a view on that.
The Secretary of State visited the All-Energy exhibition during his first week in office and saw for himself the growing engagement in offshore technology and the crossover between oil and gas and renewables. That crossover has potentially useful synergies for manufacturing and installations, but it could, as the industry recently said, also create competition between the sectors, which could cause cost inflation, especially if there are significant infrastructure constraints. That could make marginal investments unprofitable and squeeze them out altogether. The core of my concern is that constraints on infrastructure—offshore or onshore—could prejudice investment and cost us jobs, revenue and economic benefits.
Indeed, RenewableUK sent in a contribution this morning making the same point. E.ON states:
“having the right infrastructure in place to accommodate these vessels is essential for making the UK the place for carrying out installation works, when other ports in continental Europe could carry out the same function.”
There is real concern that installation work for UK North sea offshore energy could be carried out by continental ports and that a lot of the support work associated with that installation could therefore be transferred to companies based on the continent. That is one of the concerns that needs to be addressed.
E.ON also said:
“One of the key requirements at port is space for the storage and pre-assembly of foundations and wind turbine parts and port authorities need to see a clear commitment from Government to offshore wind in order to have confidence to invest in these types of facilities.”
The Chancellor of the Exchequer indicated that there would be £60 million of grants to develop port facilities. Can the Minister give us any more information about that in his reply? E.ON’s point was not only that Government money may contribute to ensuring that these things happen, but that private money will be invested in ports provided that there is confidence that the level of activity justifies that investment.
Concern has been expressed about how the infrastructure for offshore wind can be developed. One argument that has been put to me is that developers would like more control over access to infrastructure—for example, designing and constructing it, before transferring it. There is concern that, if the infrastructure is owned by somebody other than the developer, that could lead to delays and make investment calculations more complicated.
There seems to be universal opposition to the bureaucratic confusion between the Department of Energy and Climate Change and the Crown Estate, which are responsible for licensing the sea bed for offshore renewable energy. The Minister expressed his view on the issue in opposition, although I do not know whether he or his Department still hold to that view. My question is simply what prospects there are of DECC becoming the sole licensing agency. The industry is certainly asking for it to take on that role. To anticipate the counter-argument, I accept entirely that the interests of the fishing industry and other commercial maritime interests need to be taken into account, but I, for one, see no reason why DECC could not be trusted to take on such a role.
The story today is as follows. Offshore oil and gas is in a mature phase and has a more challenging and fragmented role than in the past. Properly handled, however, it will make a huge contribution to the UK’s energy supply, investment, our balance of payments and jobs, as well as to deficit reduction and economic recovery. At the same time, we have a growing, new offshore renewable energy industry, which shares some of the same technologies and therefore offers diversification. The industry is already heading for a £2 billion turnover and it has the potential to grow, more than taking up any slack that might emerge in the oil and gas sector. As I said, competition between those sectors could be inflationary despite the obvious synergies. For example, it could cause cost inflation in terms of offshore vessels, because there are nothing like enough vessels to meet the challenge of further developing the North sea, and the same could apply to subsea equipment. All that could prejudice marginal investments so that they do not happen at all.
Ideally, companies operating in the northern North sea would prefer to base their operations in the UK, with north-east Scotland as the preferred location for many of their activities. I completely accept that it might not concern the UK Government if pressure in the north-east leads to development elsewhere in the UK, but Ministers should be concerned if that pressure leads to development elsewhere in the world, whether in Europe or further afield. My concern is that costs and operating difficulties could lose the UK investment altogether, and it is important that UK Ministers understand the problems that north-east Scotland faces, so that we can give these crucial industries the infrastructure that they are entitled to expect.
I turn now to an issue that is not the direct responsibility of the Minister’s Department, although it should concern him. Compared with other energy centres around the world, Aberdeen does not live up to its role as Europe’s offshore energy capital. As one correspondent put it:
“Rail connections are poor and, if anything, in decline. Road to the north is very poor. Air needs sustaining and key connections improved.”
The Aberdeen western peripheral route, which will provide a bypass around the city from the north and north-west, faces delays and uncertainty over funding, but it is essential to the city’s functioning and future credibility. Aberdeen City and Shire Economic Future, which seeks to promote the optimum development of the UK economy, is looking for ways to secure the energy industry’s long-term future, anchoring the industry in our region. It is also promoting a development corridor between Aberdeen and Peterhead called Energetica and hopes to attract a range of energy-related developments.
Anyone who knows the geography of Aberdeen will appreciate that its viability depends on the completion of the bypass and the A90 dual carriageway to the north. Further improvements to the A96 Aberdeen to Inverness route are also required, including to the notorious bottleneck at Inveramsay bridge, where the trunk road passes under a railway; single-file traffic is controlled by traffic lights at that point, and large vehicles are diverted along a B road. Much has been promised, but nothing has been done to resolve the problem.
At the same time, the proposed commuter rail service between Inverurie and Stonehaven—it has always been presented as a complement to the bypass; it is not just a road but a transport solution—has made no progress, not even in relation to the simple job of providing a station at Kintore, a community that has quadrupled in size over the past 10 years. However, although rail investments in recent years have far exceeded the business plan, conservative predictions continue to be used to justify resisting a commitment to further development.
The right hon. Gentleman is right that the north-east, and particularly Aberdeen, has been waiting for a long time for a western peripheral route. Thanks to the last Labour-Lib Dem Administration in the Scottish Parliament, it was finally agreed that it should be built, but almost 10 years later we are still waiting. Not even a centimetre of tarmac has been laid, despite the spending of £100 million. The lack of a western peripheral road and of Crossrail is a double stranglehold. One would help deal with traffic congestion and both would be excellent, but we have neither.
I completely agree. I urge the Minister to listen to this part of the debate. I can anticipate his reply. His brief will say that they are matters for the devolved authorities and local authorities. Indeed they are, but if for whatever reason those authorities are not able to deliver that infrastructure, it is UK Departments that will lose the economic benefit and the tax revenues. It is important that joined-up government engages in this, and I have some practical suggestions and questions for the Minister. I hope that he will not think, “Ah, this is the bit where I just offload it to the devolved Administration.” It is much more serious than that. I am deliberately not trying to pin blame. I simply observe that these vital investments, which are crucial to the dynamic operation of the city of Aberdeen to deal with the next 40 years of development, are not happening. It is important that the Government understand that, and that they are engaged.
Twenty years ago, I was successful in securing the reopening of Dyce station, which has proved a great success. Indeed, trains are so overcrowded that one cannot board them at that station for safety reasons. The problem is that, while the station remained closed, the airport terminal was moved to the other side of the airport, so that vital link is no longer there. The airport has had investment, but for an energy centre of Aberdeen’s importance the range of services and flight links is limited, and the ground links fall far short of what is needed, as those who get stuck there at 5 o’clock will know.
I see the Minister nodding. He has been in that situation and will understand.
The two local authorities that serve the north-east of Scotland are struggling to deliver essential services on funding levels well below those of other Scottish authorities, but the latter do not face the same pressures. Both authorities receive grant aid at well below 90% of the Scottish average, despite having the fastest population growth in Scotland—indeed, compared with some parts of Scotland, the only population growth. Aberdeen city businesses pay around £150 million in business rates and receive back only half of that. Although Aberdeenshire is a net beneficiary, the overall grant allocation is a significant net loss.
It is important for the Minister to be aware that in the 1970s, when the scramble to develop the North sea was under way, local authorities in the north-east of Scotland received extra rate support for five years to enable them to meet the infrastructure needs of the growing industry. It was a special one-off recognition of the pressure that they were under. I suggest that something similar may be required now if we are to deliver people’s hopes and expectations for the next 40 years.
The population of the region has grown by around 50,000 over the past 40 years and it is projected to grow by a further 50,000 in the next 15 years. Unemployment is low and incomes are high. People may say, “You’ve got low unemployment and high incomes. What’s your problem?” The problem is that that income does not stay in the area. Taxes go to the Exchequer and business rates go to the Scottish Parliament, and we are dependent on grant support coming back to the area. Unfortunately, that does not happen enough—we do not have sufficient resources. Because of those pressures, housing costs are high, as are the costs of recruiting and retaining key people.
A substantial section of the British economy, for which the Minister and the Treasury are responsible, could be the biggest losers if we do not get it right. I shall give some statistics. If we lose only 1% of the forecast potential average development over the next few years, it would cost us £74 million a year in tax revenue, £270 million a year on the balance of payments, £50 million in exports, £60 million in investment, £60 million in operational spending and 4,400 jobs. If we lost 5%, it would cost us £480 million each year in tax revenue, £1,350 million on the balance of payments, £250 million in exports every year, £300 million in investment and £300 million in operating costs, and 22,000 jobs. I hope that those figures reinforce the fact that a small shortfall could result in us losing a substantial amount of revenue.
I therefore ask three things of the Minister. First, will he engage with the Treasury over the fossil fuel levy attributable to Scotland? The Economic Secretary has confirmed that the Government are committed to reviewing the
“control and use of accumulated and future revenues from the levy”.
I suggest that it would be appropriate for a substantial proportion of that to be allocated to infrastructure support in the north-east of Scotland, specifically to support the offshore renewable industry. I make no bones about it. It would help both oil and gas and renewables. That would be an appropriate use of the money, both now and in future.
Secondly, I remind the Minister that, through an Act of Parliament, Shetland and Orkney secured a share of the continuing revenues based on the flow through their respective oil terminals. No such provision was made, or sought, for the north-east of Scotland, probably because it did not expect to be so badly squeezed by the funding arrangements as they are. That is despite the area being a major landfall for oil and gas. I do not know how many pipelines cross my constituency, but it is probably into double figures. It is also the most important land base for offshore operations.
I therefore suggest that some consideration be given to the tiniest share of revenue from the oil and gas industry being earmarked for infrastructure. That would pay dividends by ensuring maximum long-term revenue. That may sound like a bid for new money, although there is a way of presenting it that would not. However, I return to the debate within the industry about the possibility of PRT buy-outs, which could create a cash-flow windfall for the Treasury. If the Government were minded to consider it, that bonus could support a small infrastructure fund.
Thirdly, given representations made during the debate by other hon. Members, I hope that the Minister will engage constructively with Ministers in the Scottish Administration. If they fail to support essential infrastructure in the north-east, it will prejudice not only the Scottish economy but the entire UK economy. In order to deliver that investment, it is therefore legitimate for the Government to have a partnership with the Scottish Government. So far, they have failed to so. I am trying hard not to be too political about it, but the facts are as the hon. Member for Aberdeen South made clear. Although promises have been made, delivery has not been achieved, and that is a real anxiety for the industry and its confidence in future investment.
The north-east of Scotland is a key economic region for the UK. It delivers far above its weight for its small population, but for it to continue to be a driver of growth for such a large chunk of the UK economy, it needs recognition and support. It suffers from relative remoteness. I meet too many people in Scotland, let alone in England, who tell me that they have never been to Aberdeen, and they have a very warped idea of what it is about. In some ways, the dynamism of the north-east of Scotland is perhaps Britain’s best kept secret. There are not 500,000 people anywhere in the United Kingdom who contribute so much economically. Indeed we have statistics to show that the contribution per capita of the north-east of Scotland is the highest of any region in Europe, and I am not sure whether that is fully recognised or acknowledged in the way in which it is treated by Government at all levels.
I know the Minister, and I believe that he understands much of what I am saying. He certainly knows Aberdeen, and Aberdeen knows and respects him. I look to him to ensure that the whole Government recognise the importance of the issue and act accordingly. I have tried to identify not just the problems but some possible solutions. I have tried to emphasise that if we do not get this right, it is the UK Government and the UK economy that stand to lose the most. We in the north-east of Scotland can proudly say that we have made an enormous contribution to the whole of the UK over the past 40 years, and the right decisions taken now can ensure that we will do that for the next 40 years. I hope that the Minister will understand that this is not just an opportunity for a local press release, but a serious debate where there is real and genuine concern within the industry that, if these issues are not addressed, a substantial amount of investment in the UK economy could be lost.
I congratulate my neighbour—I was about to say my right hon. Friend but that would have been a mistake, given his recent political aberration—the right hon. Member for Gordon (Malcolm Bruce) on putting such a strong case. I do not demur from anything that he said. It is important to put out the message that the future for the oil and gas industry is positive. As he rightly says, there is a view that there is a sharp decline in North sea oil and gas, but that is not the case. The decline is shallow and slow, and it is in all our interests to ensure that it remains so. At the same time, the oil industry in Aberdeen is changing its profile, as it has been doing for some years. All of us who represent the area, including the right hon. Gentleman, travel between Aberdeen and London every week, usually by plane, and we see people who travel to every part of the globe. The subsea industry, which is based mainly in Aberdeen but has important centres in Teesside and Southampton, now wins about 60% of worldwide contracts in subsea technology. It is playing a huge part in the rescue operation in the gulf of Mexico. That is the future: exporting our technology and skills, but maintaining our important pace in the North sea.
Before my hon. Friend gets into the main body of his remarks, and given that he has just touched on the gulf of Mexico disaster, does he share my concern about the information that has come out in written answers—not from the Minister’s Department, but from Work and Pensions Minister with responsibility for the Health and Safety Executive—that Transocean, the operators of the rig at the heart of the gulf of Mexico disaster, has seen some 100 safety incidents in the past three years on its 10 UK rigs? Does not that indicate that the health and safety inspection of those 10 rigs in the UK needs to be speeded up?
My hon. Friend, while representing the well-known oil province of Harrow West, has done a huge amount of important work in this area. He makes a valuable point, and I will say a little about the problems in the drilling industry because it is the last area in the North sea with a frontier mentality. The rest of the industry has made great progress, but I am afraid that the drillers are still in John Wayne territory.
Most of the key economic points and very strong regional points have already been made by the right hon. Member for Gordon, but as this is an industry that both he and I have spent much of our parliamentary life working with, examining and considering, there are three crucial areas of infrastructure that I want to discuss: the kit that is in the North sea—the platforms, the pipelines, the wells and the vessels that service the industry—the people in the industry, because they are a key part of the infrastructure; and the Government at every level. I shall try not to duplicate any of the right hon. Gentleman’s points, but if I do, I hope that they will reinforce what he said.
As I said, we have a huge amount of infrastructure in the North sea. Most of it is ageing and needs to be carefully maintained, but that does not always happen. One of the key problems in the North sea oil and gas industry is the fact that the price of the product is based on worldwide prices and we have no control over it. I remember a time in the mid-1980s when the price dropped almost overnight from $32 a barrel to $8. The North sea industry was devastated. Virtually every job and every piece of investment stopped, and the price stayed low for quite a while. I have always put the fact that I was elected as a Labour MP in a constituency that had always, apart from one occasion in the 1960s, been a Conservative seat down to the fact that the then Government were being punished for that collapse in the oil prices. It had a huge impact, as some 50,000 jobs were lost overnight.
The problems continued into the late 1980s and early 1990s, and then we saw a price rise. In the late 1990s, however, there was another drop in the price. Recently, the price rocketed, going up to slightly more than $100 a barrel two or three years ago. We have now achieved a degree of stability—and tax stability, I hope—with the price standing at about $75 a barrel, which is good for the industry. The money should be in place to ensure that assets are properly maintained.
I raise that point because at certain points over the life of the industry—the last 40-odd years—there were times when the infrastructure was not properly maintained. The classic case is the Piper Alpha disaster, which had its 22nd anniversary last week. If we consider the history of the particular platform that led to the disaster, which was well spelled out in the Cullen report, it is quite clear that a lack of maintenance was one of the key issues. There was a whole host of issues including a water deluge system in which none of the valves worked because they had become clogged up with gunge, and a lack of a proper permit-to-work system. Once the people in the oil industry got over the shock that a disaster on that scale could happen on the platforms that they had built, they said that it could have happened to any one of at least a dozen platforms—many platforms were in the same condition. However, good things come out of every disaster, and the good thing in this case was that the Cullen report established a safety system that is now the template for safety in not just the oil and gas industry, but the rest of industry. It set a goal-setting system rather than a tick-box system, and we have made progress.
It is important to record that over the past four or five years, there have been some difficulties. I have spoken both in this Chamber and in the main Chamber about the KP3 report, which was an attempt by the Health and Safety Executive offshore division to look at the integrity of our assets in the North sea. The report found that the industry was wanting. It identified some very serious problems to which the industry was forced to respond. I will not go through the detail of the report now, as I have done so before and it is not necessary to do so again now, but it is important to record that the industry responded well, as the review that was carried out a couple of years later showed.
There are still difficulties, however. The HSE recently released figures showing that a significant number of enforcement notices were still being issued. A total of 446 safety regulations have been broken by more than 30 companies since 2006. Some of those breaches of safety regulations were minor, but I know that some were not so minor.
The period covered by those figures includes the period when the KP3 report was being put together. Nevertheless, we need to keep underlining and reinforcing the importance of the safety regime to ensure that the industry continues to maintain our assets in the North sea. The health and safety of the work force is crucial. We saw the devastating effect of the Piper Alpha disaster on not only the companies involved, but the whole industry. The same thing is now happening in the gulf of Mexico. There is nothing quite as expensive as an accident. It is extremely important that we remember that maintenance is cheap compared with the cost of an accident.
There are huge opportunities in the industry. The right hon. Member for Gordon rightly talked about the spin-off benefits for the renewables industry, and it is important that we recognise the value of those benefits. I do not think that a renewables industry on the scale that we need will be possible without strong Government support, so I hope that this Government will continue to give the support that was provided by the previous Government. The same goes for other sectors related to the North sea sector, such as carbon capture and storage. The production of a commercial working product in that sector will also require significant Government support.
In addition, we have the huge opportunity of the west of Shetland project—in fact, there is not one such project but a number of projects. Those projects will become much more feasible because of the support that was given through the tax system by the previous Government to the Laggan project, which I hope the current Government will continue. The pipeline that will be built as part of the project will be the key part of the infrastructure that will make many other projects possible, so it is important that Government support continues.
I want to move on to discuss the people involved in the industry. The work force in the North sea are highly skilled, but there are still huge skills shortages. The work force is also ageing. Although it took the industry a long time, it now has an established oil and gas training school: the offshore petroleum industry training organisation based in Portlethen, which is just south of Aberdeen. OPITO has probably become the benchmark for safety regimes, training and safety, and other related skills in the whole world. There is not an oil regime in the world with which OPITO is not involved. It sets safety standards and provides the support that is necessary for companies, particularly those operating in the more remote parts of the world such as the west of Africa and Asia, to have proper, modern safety systems, as well as other systems that support the industry.
We must remember that the North sea is a very dangerous area. While the right hon. Member for Gordon was speaking, I quickly drew up a list of disasters—and they were disasters—in the North sea: the Alexander Kielland disaster; the Piper Alpha disaster; the Ocean Odyssey disaster; the Brent Alpha disaster; and the helicopter disasters, including the Chinook disaster, the Cormorant disaster, the Morecambe bay helicopter crash and the Super Puma disaster in April 2009. They caused huge loss of life across the board.
Safety has improved immeasurably since the Piper Alpha disaster, however, and the industry has made a huge improvement in safety, including by working through its agency, Step Change. Recently, it has also recognised the importance of the work force.
Does the hon. Gentleman acknowledge that one of the reductions in safety has been due to greater automation of offshore activity? That greater automation has meant that more of the industry’s activity is supported onshore, but that has actually increased the pressure on the onshore infrastructure for the very same reason.
The right hon. Gentleman is absolutely right. Nevertheless, there are many reasons for the improvements in safety that have occurred. I think that the most important reason has been the dramatic change in the industry’s attitude. We must constantly be vigilant, which is why we depend on the HSE. Its KP3 report was a wake-up call. The safety of working on platforms has certainly improved dramatically, although there are still issues about helicopters.
The oil and gas industry has realised the importance of engagement with the work force. A key part of the HSE’s review of the KP3 report was a careful examination of worker involvement in the North sea oil and gas industry, which involved working with both the industry and the unions.
A huge step forward was taken when the industry set up its helicopter task group to look at the Super Puma helicopter disaster 15 months ago. Three trade union officials from Aberdeen were involved in that task group, which examined a lot more than the accident itself. It looked at the causes of the accident, worked out what the problems were, reached conclusions and made recommendations. In addition, it looked at issues that had concerned people such as the right hon. Member for Gordon and me for years.
For example, there was concern about the lack of radar in the North sea oil and gas industry. When the Minister was about to make an offshore trip—I know that it was not his first such trip—I told him one of my scary stories about trying to get on to an oil platform in very thick fog in the middle of the North sea. It took us three attempts to get on to the platform. That was not the best experience of my life, but the people who work in the North sea have to make such trips every week when they go out to the platforms and then come back in. However, progress will be made, such as by providing radar and improving the lighting on platforms. The helicopter task group went much further than looking only at the Super Puma disaster and I think that everybody in the industry welcomed the report that it produced. In addition, the Oil Spill Prevention and Response Advisory Group has been set up to tackle the consequences for the North Sea, if there are any, of an oil spill similar to the one that is happening now in the gulf of Mexico. The trade unions are involved in OSPRAG, too.
The Minister cheered me up immensely two or three weeks ago after we had heard the statement from the Secretary of State for Energy and Climate Change on the oil spill in the gulf of Mexico and the action that he was taking in relation to the North sea. After that statement, the Minister said to me, “I’m going up to Aberdeen next week and I’d like to meet the trade unions.” I must say that after the 20-odd years—with a slight break in the middle—that I have been a Member of Parliament, a Conservative Minister saying such a thing shows that there has been a change everywhere. If this Government recognise the importance of the trade unions, particularly in the area of North sea safety, I welcome that wholeheartedly. I know that the Minister had a good meeting with trade union officials in Aberdeen.
The other key part of the infrastructure is the Government. I have seen a massive change in the Government’s approach to the industry. When I was first elected to Parliament in 1987, there was a Department of Energy, which was responsible for both production and safety. However, it was quite clear that the Department did not work, and I must say that we did not need the Piper Alpha disaster to tell us that, although it underlined the fact in spades. Of course, one of the key recommendations of Lord Cullen’s inquiry into the Piper Alpha disaster was that responsibility for checking safety should be passed to the HSE.
At that time, I was appointed to the Front Bench as part of the then shadow Energy team with responsibility for the oil and gas industry. I spent four years shadowing two Ministers: Peter Morrison and Colin Moynihan. Given that and subsequent experience, I have no doubt that the Government in those days saw the industry as a cash cow for raising money, which was one reason why the focus on safety was not as strong as it should have been.
When my party was elected to government in 1997, I do not think that the position changed—the attitude was the same. I remember many battles with Treasury Ministers in 1997 and 1998 when they were reviewing oil taxation and seriously considering increasing the tax on the oil industry. A windfall tax had been levied on the banks, which some of us cheered, and similar measures were being proposed for the oil industry. Those of us who were involved in that campaign recognised that the industry had gone through a sustained period of low prices and that increasing taxes would be the wrong thing to do.
Thankfully, the then Chancellor, who was one of the most dyed-in-the-wool proponents of the tax—I remember a difficult meeting with him—ultimately accepted that we were right, and a Government review decided that the tax regime should not be changed. The tax was increased when prices improved and again, if I remember correctly, during the next Parliament. However, the industry’s position was much more secure by that time, and it was recognised during the 1990s that taking money out of the North sea was wrong.
One result of that, as the right hon. Member for Gordon mentioned, was that the Revenue became more involved in the oil industry task group pilot. That was a fundamental change, because at the time the Treasury saw itself as completely separate from the industry. It had some knowledge of how the industry operated, but did not concern itself with the day-to-day stuff. Sending an observer from Her Majesty’s Revenue and Customs to the pilot meetings fundamentally changed the Government’s attitude to the oil and gas industry. It is now accepted that it is crucial to encourage inward investment in the North sea and to consider how the oil companies spend their money. The right hon. Gentleman rightly discussed the significant sums that will, we hope, be invested this year and next year in the North sea, and the revenue benefit to the Government as a result of that investment.
It is crucial that we continue to bring in new blood. The right hon. Gentleman mentioned Apache, which had never been in the North sea, having concentrated mainly on America and the middle east. Apache came over and bought the massive Forties field. It made it work and is now a major player. When BP was not prepared to invest any more, Apache made things work.
Another crucial thing that the previous Government did was to improve tax reliefs for new entrants to drilling. Before that, drilling, exploration and appraisal costs were allowable only against previous profits. If a company had no previous profits because it had not been in the North sea, it got no tax relief.
I hope that the important changes that have been made, mainly in the past 10 years, will be carried forward by this Government. It is important that we continue to encourage investment in infrastructure and in new fields, although they tend to be smaller. We must also ensure that we encourage new entrants to the North sea, and the tax regime is fundamental in that respect.
I will briefly raise two burning issues that do not get a lot of attention. The first is that we still have a skills problem. A major factor is that we depend hugely on immigrant labour in the North sea. In the main, such immigrants are highly skilled. Two or three years ago, I spoke to a major company that had brought 1,500 skilled engineers over from the Philippines. They had not come as cheap labour; they were essential to the company’s summer maintenance programme. Agreements were reached with the union to pay them the rate for the job, and after it was completed, they went back to the Philippines to do their normal jobs. However, I am hearing about more and more problems in my surgery, although they have nothing to do with the new Government as they have been building up for some years. The smaller companies in the supply chain are finding it particularly difficult to bring people in, while the universities have the same problem. Two universities now operate worldwide to bring in students, particularly from Africa—the students take a first degree in Nigeria or Ghana and then come to Aberdeen to do their master’s degree—but now even Government-sponsored students are finding it difficult to enter the country. That is a serious problem.
Finally—I have probably spoken for a lot longer than I should have—although the Department of Energy and Climate Change is now responsible for the energy industry, who looks after the oil and gas industry as a business? There is a sense in the industry that it has been abandoned by the Department for Business, Innovation and Skills, previously the Department of Trade and Industry, and that the Government are no longer focusing on the industry as a business. Will the Minister say a little about that that important issue, which relates to not the industry’s place in the energy industry, but its status as a business like any other?
It is a pleasure to serve under your chairmanship, Mr Hancock, and to listen to a debate by Members of Parliament who clearly know a great deal about the industry. That includes the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), the right hon. Member for Gordon (Malcolm Bruce), whom I congratulate on securing this debate, and my hon. Friends the Members for Aberdeen South (Miss Begg), for Aberdeen North (Mr Doran) and for Harrow West (Mr Thomas).
It is vital that the Government give a clear direction to the offshore industries. Given the huge amounts of capital investment required and the long time frames within which the industries work, they need uncertainty like they need a hole in the head. Although I am sure that many people were greatly heartened by the Minister’s assertion last week that the Government will provide leadership on such issues, I suspect that the fears likely to have been inspired by the coalition agreement have not been allayed sufficiently. I remind him that the agreement says specifically that the parties share a conviction that the days of big government are over. These are exactly the circumstances in which we need big government to give direction. Since the coalition was formed, a number of uncertainties have arisen in relation to infrastructure for the offshore industry. In my contribution, I hope to clear up some of those uncertainties by asking several questions.
The economic downturn hurt our oil and gas industry, which already faced high costs, low prices and a lack of cheap credit. In January this year, my right hon. Friend the Member for Edinburgh South West (Mr Darling) extended tax relief worth up to £160 million a field to fields west of Shetland. His announcement came at the same time as the announcement of the 26th offshore oil and gas licensing round. I am pleased that the UK North sea oil industry is once again attracting investment, as we heard from hon. Members’ contributions. That is reflected in a great increase in the number of bids made during the licensing round.
In its report last summer, the Select Committee on Energy and Climate Change highlighted the difficulties in accessing infrastructure that some smaller companies experience. The difficulties came to a head when Endeavour International sought arbitration from the Secretary of State regarding the charges levied by Nexen for access to the gas transportation infrastructure. What progress has the Department of Energy and Climate Change made in finding a more equitable solution to that problem?
After the explosion of the Piper Alpha rig in the North sea in 1988, which resulted in 167 fatalities, the UK’s regulatory regime was tightened. I listened with great interest to the highly knowledgeable contribution of my hon. Friend the Member for Aberdeen North and his account of the day-to-day realities of working in the North sea. I was also greatly interested to hear what a contribution the trade union movement has made to ensuring the safety of the work force.
Since the disasters, licensing and health and safety have been separated in the UK. In light of the Deepwater Horizon spill, I understand that the US will now adopt a similar model. Despite our already robust regulatory regime, the disaster in the gulf of Mexico must give us pause for thought in the development of deep waters off the west coast of Shetland. I welcome the Secretary of State’s decision to increase inspections, which seems sensible. Will the Minister tell us when those increased inspections are likely to commence and will he explain the apparent contradiction between an increased regulatory regime and what was promised by his manifesto? The Conservative party promised to streamline government in its manifesto. I would welcome his comments on the following Conservative party quote:
“We will offer exploration companies a simpler, clearer and more transparent licensing process.”
That is question No. 3.
The UK is the leader in offshore wind capacity. Given that only a few countries have more than 3 GW of offshore wind power, the amount of wind power we have is amazing. The annual amount of offshore wind power generated will soon explode, which shows the huge increase in the proportion of wind in our energy mix. The development of the offshore wind industry has been made possible by the leadership and vision of the previous Government. I obviously hope that such leadership and vision will continue under the new Government.
The contribution of public money and the renewables obligation have ensured the fast development of the industry. In the 2009 Budget, £50 million of funding was made available for the testing of offshore wind facilities and £15 million was provided to the new renewable energy centre in Northumberland to test wind turbine blades. Just this month, the Secretary of State reconfirmed the previous Government’s decision to grant £5 million to Siemens Wind Power. In the March 2010 Budget, the Labour Government also announced a £60 million competition to help ports to develop, to which the right hon. Member for Gordon referred. We wanted ports to have the capacity to help to drag out to sea massive, heavy windmill towers for the turbines to sit on. The amount of money offered might not have been large, but it was of sufficient size to be an important signal, and General Electric and Siemens quickly declared that they would be investing £200 million in the UK’s offshore wind industry. On 15 June, the Minister announced that the ports competition was under review. Will he commit to the level of investment proposed by Labour or is he prepared to risk driving away such investment?
In the case of offshore wind generation, a loss of investor confidence would be an absolute tragedy because, according to the Select Committee on Energy and Climate Change, it is the only low-carbon technology that is ready for large-scale deployment now. Perhaps another way of asking question four is this: what plans does the Minister have for offshore wind infrastructure and for port development? In the energy security debate last week, the Minister was kind enough to agree that the renewables obligation has helped to expand the UK’s offshore wind capacity. Will the Minister commit himself today to continuing with our commitment to renewables obligation certificates?
I would also like the Minister’s help with the offshore grid and how that will develop, because it is particularly important to the infrastructure for offshore industry. The offshore wind industry and network industry are awaiting Ofgem’s decision about what the offshore transmission regime will look like. I understand that the Minister’s party has a different emphasis in terms of how the competitive tenders should be administered. I certainly hope that there will be no undue delay while the coalition decides what to do. An announcement on the offshore grid was expected at the end of June. Does the Minister know what the hold-up is, and when will the industry know what will happen to such a vital part of its infrastructure?
Of course, the offshore grid connects to the onshore grid. We hope that the onshore grid will become a smart grid, which we hope will be informed by smart meters. I would like to ask the Minister a number of questions about smart meters and his ambition to put a smart meter in every home by 2017—not 2016 as promised in the manifesto. I have what I would call a number of sub-questions to question six. How does the Minister expect to install smart meters in every home in the country? How many staff will be required and, if he wants all smart meters to be put in by 2017, when is the process likely to start? Given that the Digital Britain programme will ensure that all hard-to-reach homes are linked by 2012, will he link in that programme with the smart meters installation programme?
The thrust of my remarks is that there are a number of questions about this aspect of Government policy. My biggest and most important point is that we could clarify many of those questions if the Government were to publish their energy national policy statement. I understand that a consultation on that statement finished in February. Is the statement likely to be radically different from the one that was to be published by the previous Government? Is that the reason for the delay or is there another reason why there might be some delay in the statement being published? The industry needs to have some certainty about what has been happening. Perhaps the Minister is reconsidering the Lib Dem manifesto.
Is the Minister considering making a commitment to investing £400 million in refurbishing the shipyards in the north of England and Scotland, so that they can manufacture wind turbines and marine renewables? I understand that that is a commitment of one of the parties in the coalition. If there is a hold-up in publishing the statement, perhaps it is because he is reconsidering that aspect of policy.
It is a pleasure to serve under your chairmanship this morning, Mr Hancock. We have had an extremely valuable debate. I congratulate my right hon. Friend the Member for Gordon (Malcolm Bruce) on securing it, raising a wide range of issues and bringing his expertise to the debate. The hon. Member for Aberdeen North (Mr Doran) also brought his expertise to the discussion. I hope that I can give further reassurance and encouragement to them that this is not a partisan issue. I want to work on the subject using the relevant expertise wherever it is found—on both sides of the House and all sides of the industry—to ensure that we can achieve the best possible outcome for this crucial sector of our economy.
My right hon. Friend has rightly understood my reaction to some of his points, particularly those about Scottish infrastructure issues. He will know from the respect agenda that we are committed to working closely with the Scottish Government and Executive to ensure that we do not seek to influence their decisions on those issues, which are devolved. I also reassure him that we are very keen indeed to have a holistic approach to those matters. I have already had an initial discussion with the First Minister and I hope to have a further conversation with him in the next few weeks about how we can most constructively work together in those areas.
That is what the industry is looking for: a seamless Government approach across Departments and different bodies. We will try to ensure that we bring the best endeavours and approach that we possibly can to securing further investment in the sector. From my time as Opposition spokesman on these matters, I hope I have managed to gain some understanding of the issues facing the industry. I assure hon. Members again that I intend to be a regular visitor to Aberdeen. If my right hon. Friend or any of his hon. colleagues feel at any point that I am not talking to the right sections of the industry, I ask him to let me know. I want to ensure that I have as comprehensive a grasp as possible of the issues involved and, as I say, I want to work constructively with those who have great expertise from working in this area.
In initiating the debate, my right hon. Friend spoke about how crucial the sector is to the whole of the UK economy. Although indigenous production is declining, our oil and gas reserves remain a key element of our energy mix. On the reassurance that the hon. Member for Aberdeen North was looking for, there are a number of key pillars of energy policy without which we cannot have energy security—for example, the commitment to the North sea and the development of the UK continental shelf. Nuclear without subsidy is also in that mix, as are coal with carbon capture and renewables.
All those factors are part of a balanced energy policy. I certainly hope to reassure my right hon. Friend that there is every intention of identifying the issues that will help to drive forward investment in the North sea. We will do what is necessary to bring the skills and investment to Britain, because I am very much aware that the companies that are looking to invest are overwhelmingly international. When they consider international opportunities, there is no predisposition for them to come to the United Kingdom. We have to make the strongest possible case for why they should come here instead of taking the many other opportunities that exist around the world.
As my right hon. Friend said, 350,000 jobs in the UK depend on the industry, and a further 100,000 in the supply chain’s thriving export business, with an annual expenditure of about £12 billion. The industry, therefore, makes an extraordinary contribution to the economy. We see no dilemma, however, in the absolute necessity of moving to a low-carbon economy and the desire to get the best out of our indigenous hydrocarbon reserves. That is essential to our energy security and our national prosperity, and particularly to the prosperity of the north-east of Scotland. We will, therefore, work closely with the industry to see what is necessary to encourage further investment in exploration, development and production, while maintaining high standards of management and minimising environmental impacts.
Over recent years, an important role has been played by PILOT, the organisation set up to maintain the dialogue between Government and industry in this area. It has put in place many initiatives to help us to extend the life of the basin, and has significantly contributed to the security of the UK’s energy supply and balance of payments, but we are now looking at how to take that relationship forward. I want to look more at a road map for the future, rather than at setting targets. I am nervous about targets because they tend to be set sufficiently far ahead that nobody is accountable for how they are delivered. I would therefore rather have a more specific road map for what we are jointly expected to do as industry and Government, to try to make this an attractive environment.
I am also keen to broaden involvement in PILOT, to include people from all aspects of the industry. The hon. Member for Aberdeen North talked about the subsea sector, which is an absolutely critical part of the Aberdeen and north-east Scotland economy and an absolutely wonderful example of British engineering and skills providing incredible global leadership in many of these areas. I want to ensure, therefore, that PILOT contains the full range of expertise that is there, and I am also considering how we can increase the regularity of the meetings. As they are currently six months apart, I have a slight tendency to think that there can be a gap before too much is done, and a panic before the next meeting. I want to get a rather more established flow of activity. The guiding principle has to be trying to remove barriers to investment. Where we see barriers to investment, we—with the industry and my parliamentary colleagues—will actively try to remove those barriers, to make this a very attractive place in which to invest.
Many things were done under the previous Government, and historically, to make this an attractive area. We have flexibility in our licensing system to attract the widest possible range of players. The hon. Member for Islington South and Finsbury (Emily Thornberry) asked about the commitment that we made about licensing in our manifesto. That was nothing to do with safety issues. It responded to a concern within the industry about how long the licensing process takes, and considers whether there are ways, taking account of the safety and environmental issues, in which we can tell investors rather more rapidly than at present what the outcome of each licensing regime will be. It is certainly encouraging that the latest round received the greatest number of applications since the first round in 1964, and we hope to be in a position to award licences later this year.
The fallow initiative, put in place by the Department of Energy and Climate Change, continues to encourage companies that are not actively working on blocks or licences to relinquish them so that other companies can be given opportunities to exploit them. To ensure maximum production efficiency from North sea fields, the Department has a stewardship process, which is an annual review in which DECC works with the fields’ owners and looks at individual field performance with the aim of maximising economic recovery and enhancing production levels wherever possible.
We are also considering the whole issue of infrastructure, which has come through very strongly in the contributions to the debate. It is a key part of the coalition agreement. We want to work to improve on that, and we have said that we will consider legislating in that area. I would always prefer that we work through voluntary agreements wherever we can, but we have to recognise that the voluntary agreements in this area involve one party that has overwhelming strength because it owns the infrastructure and essentially has a monopolistic position, and a much smaller company that wishes to have access. We therefore need to find a better way of making that voluntary arrangement work, as I think it often does in other countries, or we will consider taking extra powers to deliver the greater access to the infrastructure that we think will be necessary.
It is absolutely clear that many of the fields now being looked at are more marginal ones, and therefore we will not necessarily be able to attract the huge international oil companies but rather smaller specialist companies, which nevertheless have fantastic records of technological expertise and safety. We therefore have to ensure that the regime is appropriate for those smaller companies.
Several questions have been asked about the fiscal situation. As my right hon. Friend the Member for Gordon will be aware, those are always matters for the Treasury, which rightly guards its leadership on such issues very carefully. I can certainly tell him, however, that there have already between discussions between the Prime Minister, the Chancellor and the Scottish Executive about the fossil fuel levy. We understand the requests that there should be a higher ability to draw down funding from that levy and the Treasury is considering the issues with an open mind.
Allowing for the respect agenda, does the Minister not agree that it would be beneficial, before any agreement were concluded, to have a clear understanding, at least in broad terms, of how the money was likely to be used? To put it at its crudest, the purpose would not be fulfilled if the money were simply to disappear into the block and not benefit the support for the offshore renewables industry in the north-east of Scotland.
My understanding is that that is the case that has been put to the Treasury by the Scottish Executive, and that they want access to more of that funding to facilitate such investment. Clearly, these are details that have to be sorted out, but I am very encouraged indeed that the Treasury is keen to approach that with an open mind.
As I say, there is much devil in the detail in these matters and the Treasury is taking forward the discussions. I am, however, encouraged by the approach taken in general.
About 45% of all the UK’s oil and gas-related jobs are in Scotland, and many, as we have heard, are in Aberdeen. I know from my own experience how committed that work force is. I was there most recently just a few weeks ago, and went through the helicopter training exercise. They decided that they should not yet dunk me in the water, that perhaps I was too new a Minister. I am not sure that any Minister has gone through the dunking process, and I have made a rather rash commitment to be the first. It is incredibly important that as policy makers we understand how the industry addresses these issues, and, as far as we are concerned, there should be no short cuts on safety. The visit brought home the great measures that have been put in place since the helicopter tragedies, to ensure that we have the toughest safety standards in the helicopter transportation that operates there. I went out to the Beryl platform, which I was particularly keen to see because it is an old platform still operated by its original operators, but drilling again for new reserves. It is a very good example of how, after some decades of operation, there is still much life and activity.
We travelled nearly 200 miles from Aberdeen airport to the rig, passing over two structures that had human life on them, and the very often incredible isolation and the bravery of the people who work there also came home to me very clearly. I travelled out there on a nice June day, when there was a little ripple in the water, and I cannot imagine what it would be like in a cold February gale. The landing spot for the helicopter looked small enough in those conditions. The hon. Member for Aberdeen North talked about making several attempts to land when he went out there some time ago. It really brings home to us the courage, the expertise and the global skill set that we have in the North sea, something to which we should always pay tribute.
I am certainly always willing to talk to the trade unions on these matters. Safety is not an issue for industry versus workers. There is a great recognition that for the industry, it is absolutely critical for everybody, every business and every organisation working with it. I will always be keen to find reasons to talk to the people who represent that work force.
Our approach to North sea regulation is among the most robust in the world, and our record there is strong, but the tragedy in the gulf of Mexico has to give us pause for thought. As we move into deeper waters west of Scotland, there is every reason to increase our vigilance. We have announced that we will double the number of annual inspections and increase by one half the number of inspectors. There is the inevitable time span before they are recruited, but the process is already under way.
Right hon. and hon. Members should be in no doubt that, if there is evidence from the reviews of the gulf of Mexico tragedy that requires us again to improve security and health and safety measures, we will do so. We are determined that the safety regime in the North sea will be the toughest operating anywhere. I am pleased that we will do that in partnership with the industry. The Oil Spill Prevention and Response Advisory Group is an industry-led initiative that does critical work in looking at these issues, just as it looked at the measures necessary to improve safety after the tragedies involving helicopters. We are very much in debt to it for its leadership in ensuring that we introduce measures in this area. Again, I welcome the role that the trade unions play in ensuring that workers’ voices are heard and represented.
There has been discussion about other ways in which the North sea can be a global centre for international excellence in energy infrastructure. Foremost among those will be offshore wind. We recognise that the United Kingdom is now a global leader in offshore wind, but much needs to be done if we are to meet the targets that have been set. The aspirations are high, and a great deal more has to happen if we are to get the right investment and infrastructure in place to achieve them. Some £15 billion of new investment is required in transmission assets to connect offshore wind farms to the onshore grid.
I am determined that we roll out the programme in a more structured way. Again, the Government want an approach that focuses on the problems, so we will look at where there are barriers to investment. We see working constructively and jointly with the industry as the best way to get around those issues.
My right hon. Friend spoke about the need for more ships, which are critical to this work. With the number of ships available in the world at present, we simply cannot put in place the number of turbines necessary to meet the aspirations. Grid infrastructure and connectivity will be fundamental to that.
The hon. Member for Islington South and Finsbury asked why the announcement has been delayed. There was every opportunity for the previous Government to make an announcement. Not only was there a little letter in a drawer which said that there was no money left, but there was a big pile of paper labelled, “Too difficult to think about.” There is a range of complexities, and different views from different sectors of the industry. We have been actively looking at the full range of grid and transmission issues with a view to announcing a decision in the near future. We absolutely understand that these are critical issues for the industry, and we are determined to give early clarity.
We are trying to ensure that we have cohesion across the whole range of issues relating to the grid, including the offshore transmission system, transmission access and transmission charging, which is particularly critical as far as Scotland is concerned. I want to ensure that we have a complete response to all the issues involved as we try to move forward in this area. The hon. Lady will not have to wait much longer. I understand that the industry attaches a great deal of importance to the sector, and this is very much at the top of the list of things that we are seeking to resolve.
Questions were asked about the ports project. It has not been suspended or cancelled, but, within the framework of the comprehensive spending review, we are trying to ensure that all such major projects are handled in the most sensible and constructive way, to deliver the best response and to make the best use of taxpayers’ money. We are committed to taking the work forward, but it will be handled within the network of the comprehensive spending review.
We will also be looking at how we take forward work on carbon capture and storage, which offers many partnership opportunities. Some of the most extraordinary academic work on CCS in the world is being carried out in Scottish universities. People such as Professor Jon Gibbins and Professor Stuart Hazeldine at the university of Edinburgh are doing wonderful work to ensure that we lead the world in that technology. I want to work closely with them in ensuring that we make the best and strongest case for Britain in that respect.
There was a question about the working relationship with the Crown Estate. We believe that the regime is working at present. There is clearly a difference between the role of the Crown Estate as the landlord and the role of the Government who, as the regulator, are able to issue licences. If there is evidence that the regime is not working, we will certainly look at how the matter can be addressed.
The hon. Member for Islington South and Finsbury asked about our continuing commitment to renewables obligation certificates. We have said that we are looking at introducing feed-in tariffs. We indicated prior to the election that there is a strong case for using feed-in tariffs for the third round of offshore wind because investors have told us that that would be more attractive. We have also been told that feed-in tariffs would be more attractive for marine technologies, so we are looking at the most appropriate balance between the renewables obligation and feed-in tariffs to see how we can best stimulate investment. At the core of all that we are doing is a desire to make this the most attractive place to invest in energy infrastructure, and that applies to oil and gas, nuclear, coal with carbon capture and renewables.
The debate has touched on many critical issues, and there is an overwhelming sense on both sides of the House that the industry will continue to make an enormous contribution to the British economy. The North sea sector is sometimes seen as an old industry, but it is, in fact, a ground-breaking industry in the development and application of technology. Probably only space travel has the same level of involvement.
Let us look at what is happening in the gulf of Mexico at present, where BP is drilling down 18,000 feet below the surface of the water, through perhaps 13,000 feet of rock. It intends to intersect a pipe that is just a few inches across in order to stop the flow of oil from the well. We should pay tribute to it for the work that it is doing and the cap that it appears to be putting in place successfully. The technology involved is extraordinary.
In all our debates about the industry, we should see it as an industry of the future which has an extraordinarily important role to play. I can say to right hon. and hon. Members who have spoken this morning that, even though I may be a Conservative Member of Parliament from the south-east of England, I have an absolute commitment to being a champion of the industry. I want to visit Aberdeen regularly and know about all aspects of the industry. I want to know the industry and the trade union sides, and to work with both of them to deliver the best possible outcomes for investment. We have an absolute national interest in ensuring that we secure the best from our indigenous resources.
We have had an outstanding debate this morning, which has raised many critical issues. I look forward to working closely over the coming months and years with right hon. and hon. Members, who have great expertise in the sector, and with the companies and people in their constituencies who work in this sector and deliver so much in terms of our energy security.
Thank you, Minister. I thank all those Members who have taken part in the debate for the courtesy that they have shown to the Chair and for their indulgence of each other. I wish you much luck with your dunking exercise, Mr Hendry. I hope that the safety procedures are all in place when you do it, by the way. I am sure that the whole House would regret any mishap. Do not forget the wet suit.
As we are now all in place, we can move on to the next debate. Before we do so, several Members have indicated that they want to take part. I want to try to get as many in as possible, so I ask that interventions be short and to the point, and that replies be quick as well. I ask for the indulgence of the Minister and the Opposition spokesman: could they give me an indication at some stage of how long they will want to speak so that I can ensure that we can get in as many people as possible?
As ever, it is a pleasure to server under your chairmanship, Mr Hancock.
I am mindful that a number of colleagues have approached me to say that they are keen to speak in the debate—that is an indication of how serious the Government’s recent proposals are—so I do not propose to go into detailed background about housing benefit. The Minister, along with my hon. Friend the Member for Westminster North (Ms Buck), is one of the most expert Members of Parliament on this subject. None of us need a history lesson on housing benefit, and I hope that the Minister will focus on answering the serious points that we all need to raise.
The cap on housing benefit levels that was announced in the Budget is devastating for London and for Londoners. Only four London boroughs are completely unaffected. I do not have time to go into some important general issues to do with the provision of affordable housing, so I will instead focus on the impacts in relation to housing benefit in Hackney and more widely.
In addition to the cap on benefit levels, we will see an impact due to the local housing allowance level being limited to the 30th percentile of a local reference rent. There will also be a devastating impact due to the perverse proposal to impose a 10% cut in benefit for those who are unemployed for more than a year, which will be particularly hard for young people aged 18 to 24, who are among those hit by the highest levels of unemployment. That is a particular concern of organisations such as Catch22, which is a charity that works with young people.
More than 650,000 homes are rented in the private sector in London, so this subject touches the lives of many people. More than a third of those homes are rented to families who receive the local housing allowance. High rents in London are not a new phenomenon and are driven largely by a housing shortage. Figures provided by London Councils show that when the local housing allowance was introduced in 2008, the rent charge for three-bedroom properties in central London was £700, which is twice the level of the proposed cap. Looking further back to 2005, the then local reference rent, which excluded the top end of the market, recorded the rental market as follows: £435 a week for two-bedroom properties; £546 a week for three-bedroom properties; and £625 a week for four-bedroom properties, all of which are above the cap recently proposed—some seven years later. It seems that the Government are making decisions without looking at any evidence or at history. The lack of affordable alternatives in London meant that the previous Government’s desire to achieve a reduction in rents through the introduction of the local housing allowance was not fulfilled, because local housing allowance rates have risen as they chase the ever-increasing level of rent in the wider market.
According to a parliamentary answer, 14,000 households will be affected by the changes. The Minister has acknowledged the impact. We need him to tell us what measures will ameliorate those changes, if the Government go ahead with them. I should like the Minister to explain that figure and to say how the private rented housing market will be able to cope with the likely upheaval that it suggests. In addition, he needs to address the impact on families at a human level.
There is an assumption that people will be able to move to lower-price properties, but the pace and scale of change will present a challenge in that regard, even without the huge impact that there will be on children and families, and on low-paid workers. It is important to ask where that low-rent property will be available. It will not be available in my constituency. Will my constituents be forced to move to the borough of Barking and Dagenham, which is no doubt delightful, but not convenient for work and schools for my constituents with Hackney connections? The impact, including the social impact, on those few boroughs that will be unaffected could be huge.
For those listening to this debate who are not aware of the situation or are not from London, I point out that all central London boroughs are affected, including that covered by my constituency and that of my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott)—the whole of Hackney—as well as Barnet, Brent, Ealing, Haringey, Hounslow, Lambeth, Merton, Richmond and Wandsworth. The changes will have a particular impact in London.
It is interesting that the Government have professed their intention to get rid of the Minister for London. That is all very well, but I believe that there is a spokesman—or spokesperson—for London. However, I wonder whether the hon. Member for Wimbledon (Stephen Hammond) has been asleep on the job because it seems that this measure has been advanced without any understanding of its wider impact, particularly in London, which is the driver of our economy. The Mayor of London has also written to the Government to outline his concern.
Does not the hon. Lady accept that the level of housing benefit—and how it is set—affects the rental market? The National Landlords Association has said:
“Landlords will have to look at their profit and loss and decide how much they can afford to cut their rents by.”
The hon. Lady will have seen examples in the Evening Standard last night of properties being rented at almost double the market value to housing benefit tenants.
The hon. Gentleman brings me nicely to my next point, and I shall deal with his second point in a moment. Let me be clear that I am not saying that all is perfect with housing benefit, as the Minister, from his previous incarnation as an academic in this area, knows all too well. Although I have been unable to source the reference, I believe that the current Leader of House famously said, “Let housing benefit take the strain,” when a previous Government made changes following which social housing rents increased.
Does my hon. Friend agree that there are grave perils in establishing a policy that affects one million claimants on the basis of what we know for a fact are some 30 extreme cases of the kind quoted by the hon. Member for North East Hertfordshire (Mr Heald)?
I agree. We must not lose sight of the majority of our constituents. Good law is not made on the basis of rare exceptions.
The hon. Member for North East Hertfordshire (Mr Heald) raised an interesting point about housing benefit levels in the private rented sector. Some private landlords have been in touch with me to say that they are concerned that they will no longer wish to rent to anybody who is either in receipt of benefit or likely to be. Given the current economic situation, the group of people who are likely to be in receipt of housing benefit will grow, because many people could be affected over the next few years. We heard yesterday about cuts to the NHS, and job losses are coming from all directions. That will mean that for many people in the private rented sector who want stay in their home and their community, the only option will be to look to housing benefit to take the strain.
There is an interesting divide in the Chamber—not on party lines, but on London and rest of the country lines. Those of us who represent London see the reality of the situation. Yes, the housing benefit bill has increased, but tinkering in such a way is not the solution. The subsidy needs reform, but it is flexible, and that flexibility is useful. In the current climate, with job losses looming, we tinker with such flexibility at our peril. If wholesale reform was being proposed, we might want to look at that, but at the moment we are talking about tinkering with the system in a way that damages London.
One reason why that has not worked is housing shortages. However, the self-denying ordinance that I set out at the beginning of my speech means that I cannot talk about wider issues.
Flexibility is important, but it is being abused by the Government, who are proposing changes overnight that might be in place from this autumn—I look to the Minister to give me guidance about that. People who have signed a six-month tenancy or a tenancy with a six-month break clause, for example, will have little option but to fund that shortfall somehow, as I shall address in more detail in a moment.
There is also a proposal to link housing benefit to consumer price index inflation, which will have a big impact on tenants and landlords. Research by Shelter has shown that CPI increased by 15% between 1999 and 2007, while there was a 44% increase in average rents. Had the local housing allowance been set to increase in line with CPI in 1999, it would now be 20% below the level needed to rent the average property. Whichever way the cut is made, people on low incomes—those people are often working—or on benefits are expected to fund the shortfall from their income to stay living in their own homes.
The impact on children and families is pertinent in my constituency, because some 22% of residents are under 16 and a lot of families need homes. People often come to my surgery because they are unable to access social housing. They are advised that they should look at what can be provided in the private rented sector, and I am sure that colleagues are in a similar position. More than one million children—a third of them in London—are living in overcrowded conditions. The cap will only exacerbate that problem because families will be forced to move into smaller, cheaper properties, and perhaps to push out their teenage children as they get older so that they can afford the rent.
I need to touch on a problem in the north of Hackney—not in my constituency, but in that of my hon. Friend the Member for Hackney North and Stoke Newington—where orthodox Jewish families will be severely hit. Such families typically have more than four children, and many of them live in the private rented sector, so the limit on benefit will have a devastating impact. The council and social landlords in Hackney will be unable to take the strain, so I need answers from the Minister on how councils will be supported in dealing with that.
Of the nearly 40,000 people in Hackney currently in receipt of housing benefit, just over 9,000 live in the private rented sector. Two thirds are in receipt of benefit, but one third are working tenants, many of whom would like to continue to work but, as a result of the proposals, will find a serious shortfall between their rent and the benefit provided for it, and will have very little income to make up the difference. In the three bands for the broad rental market areas that operate in my constituency—inner east, inner north and London central—all properties with more than two bedrooms are above the Government’s proposed cap. That is ludicrous. It means that those in Hackney living in a two, three or four-bedroom property—or a larger property—will have nowhere to go. They could go out of Hackney, but there are not many boroughs they could go to. I am not entirely clear how the Government propose to ensure that people can stay living in London—and, crucially, working in London and supporting its economy—because many people need that benefit to subsidise their rent so that they are able to live locally to their jobs.
There was some agitation behind me, Mr Hancock, and I thought that my hon. Friend wanted to intervene.
We must also consider the annual reductions in housing benefit payments. I can see why the Government see that as appealing from the point of view of money, but the impact on those affected is enormous—1,642 claimants will be affected by the bedroom size proposals in my borough alone, which is devastating. Shelter has kindly done some research that shows that the average three-bedroom household in inner-east London, which is a band in my constituency, will need to find an additional £35 a week to keep a roof over their heads. I do not know how people on the minimum wage or benefits can do that. For example, how will a pensioner surviving on £98 a week find that additional £35? Perhaps they would not be in a three-bedroom property, but they would still have to find some extra money. How will someone on the minimum wage—£218 a week—find that additional money?
Almost half of local housing allowance claimants already have shortfalls of almost £100 a month. Shelter is concerned, as am I, that the cuts could push many households over the edge. I have great faith in the Minister, because he is an expert in the area, and he has a great opportunity to do something positive for housing benefit. I hope that he is not a fig leaf for the coalition’s proposals, that he will genuinely look at the problems that the proposals throw up, and that he will come back with solutions that will, at best, ameliorate those problems, or delay them while better work is done to lessen the impact.
It is rare to have a Minister who is an expert. Governments often seem to conspire to put people in office who do not know much about their subject, but in this case we have a Minister who knows what he is talking about and can make a difference. I urge him to look into the matter with all vigour. I would also like him to answer some specific questions. What is the timetable for the welfare reform Bill, and are there any plans for the implementation of its measures, should the House pass it? Were it to go through the House in the autumn at a fast pace, when would the measures be brought in?
Will the Minister look at the following matters, which would not require primary legislation through that Bill: the reduction from the median to the 30th percentile for claimants of local housing allowance; the cap for each property size; the increase in discretionary housing payment, which I will touch on in a moment; and the change to non-dependent deductions? The Government can change the rules with a stroke of the pen, as we saw in the Budget, but that stroke of the pen devastates my constituents and many others. Is the Minister planning to consult on that, because we have seen very little consultation? We have not even seen an impact assessment. Rather than having evidence-based policy, for which the Government parties pressed when they were in opposition, it seems that policy is being made before information is provided to back it up. That is not the right way to go about things, and I hope that an impact assessment will soon be forthcoming.
I must mention the discretionary housing payment in the short time I have left. The Chartered Institute of Housing has conducted an analysis that shows that the suggested additional £40 million, which to the average man or woman might sound like a lot of money, does not go very far. If it is spent solely on making up the shortfall in rents due to the proposed drop, it would support only 4% of claimants facing the drop from the 50th to the 30th percentile for one year. It is just not enough. I do not know what will happen in my borough when people turn up to the housing office looking for alternatives, having been kicked out of their private rented properties. The borough will find it difficult to deal with the private landlords with whom it already has relationships, because they will not be keen to take people on and there will not be enough social housing. I hope that the Minister will address that point.
I am confused about some of the proposals and hope that the Minister can clarify them for me. I have already mentioned the welfare reform Bill, but what is the timetable for the more general changes and for the publication of an impact assessment, and what will that impact assessment cover? What is the rationale behind the proposals? We see a Government who are joined up in their coalition, and we have talked a lot about joined-up government over the past 13 years. As a former Minister, I am aware of the challenges that that presents, but to see such a disjoint in one Department is quite extraordinary. On one hand the Secretary of State is telling social housing tenants, “Move for the work and travel around,” and on the other hand private rental tenants are being forced to move, not necessarily to where the work is, but to poorer, cheaper places. It would therefore be helpful to hear the rationale behind the proposals. Will the Minister be candid and explain what discussion he, as an expert on the matter, has had with the Secretary of State?
What transitional arrangements will be in place for affected families? Will the change be sudden, because at the moment it seems that there will be no such arrangements? What support will councils be given, particularly with regard to discretionary housing payments? What will be the impact more generally on housing needs teams, which are already stretched? What conversations has the Minister held with the Department for Communities and Local Government?
If the Government’s apparent theory is backed by action and we see an influx of tenants seeking cheaper properties, certain boroughs will be particularly badly affected, so what support will there be for those boroughs? My colleagues, undoubtedly, will want to refer to that concern. Will the Minister share with us any analysis of an impact assessment on the private rented sector? I am not sure whether that will come in the impact assessment that has been proposed, but I have already heard landlords say that they will not rent to people on benefits. Will he tell us candidly what the chances are that we will make any difference by banging the drum about that in the debate? Have the Government made up their mind? Is that the style of the new Government, or is the Minister genuinely listening?
The Conservative Mayor of London and the Labour chair of London Councils have joined together—in the spirit of coalition government, I suppose—and have written to the Government to point out the error that they have made. In seeking to grab a headline and make a saving, the Government will have a huge impact on our capital. I do not claim that housing benefit is perfect, but to change it in such a way is just not the way to proceed. Where is the voice for London in the Government? I hope that the Minister will hear what we are saying today, as many London Members are present to hammer home our points. On this occasion, I agree with Boris, which is not something that I expect to say regularly. At least we have some voice for London through him and through Mayor Jules Pipe, who chairs London Councils.
In the past, Westminster council sold homes to discourage poor people from living in the area. Now we see a Secretary of State colluding in that by depriving lower-income households of the opportunity to live in whole swathes of London, unless they qualify for social housing. We can draw our own conclusions about what is happening, and you, Mr Hancock, are experienced enough for me not to have to lay it out. The quiet man is roaring in his own way, and it is our constituents and London’s economy that will suffer.
I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing the debate. We have worked together on a problem in our communities concerning the Crown Estate, along with the right hon. Member for Holborn and St Pancras (Frank Dobson), and will continue to do so. I have significant sympathy with some of her concerns, particularly those that relate to London. I fear that elements of the proposals are similar to those adopted by previous Governments, of all colours, and that there is a lack of understanding on specific issues that affect the capital and that an entirely nationwide approach cannot necessarily focus on. Many people will argue that if we remove the opportunity of central London life for the unemployed or the poor, we risk losing the fundamental character of the inner city and perhaps ghettoising the outer capital where families would inevitably be placed.
A housing benefit cap is not about driving people out of London; it is about bringing rents back into the real world, and saying that a system that pays for accommodation that is well out of the reach of ordinary taxpayers is wrong. That system is largely absurd. It has been broken, and become more absurd as time goes by. I am not focusing on Daily Mail articles that appear day by day, because we all know that those exceptions do not prove the rule. None the less, they reflect some of the reality as well as the anger felt by many people who take responsibility for their lives and do not have a lot of children and then throw themselves on the mercy of the state through housing benefit or subsidised housing. There must be fairness.
London will continue to have vibrant estates, and its housing association properties and relatively cheap private sector offering will probably come within the reach of many ordinary workers when the artificially raised rents that have in part been caused by the housing benefit system fall. The issue is not just about the regulated rents of recent years, but goes back some years. There is no doubt that some rents have been artificially raised over the last few years because private landlords have known what they can get away with. That has led to some of the current absurdities.
On that specific point, is the hon. Gentleman aware of the proportion of private sector tenancies in London where a claimant is on housing benefit? He is making the point that the market is distorted by housing benefit, yet housing benefit claimants make up only a small proportion of total private sector leasing, so why should that be the case?
It distorts the overall price level that landlords—often absentee landlords, of which there are far more—reckon they can get away with. That has a distorting effect on the rest of the free market in this area.
Westminster city council—my local authority and the hon. Lady’s—supports the cap even though the announced changes are estimated in the worst case scenario to cost local authorities some £8.1 million this year. That reflects another element of the absurdity: the expense of long-term temporary accommodation contracts that the council was encouraged to enter into under the previous cap regime.
Does the hon. Gentleman agree that two years ago, when the Labour Government proposed changes to the broad market rental area that would have impacted on Westminster, the council not only opposed that and asked us to lobby against it, but said that it would seek judicial review?
I do. The hon. Lady and I have done work and spoken in debates here over many years, but it is absurd that there is a massive incentive for local authorities to work within that system, and that they will lose a significant amount because of the cap system.
The local connection guidelines must change because, again, there is a phenomenal incentive for people to come to London, particularly central London. It is understandable that people from established communities abroad would want to be in central London, and I share some of the concerns of Opposition Members about tampering with ideas about local connections. However, in relation to the requirement on a local authority to provide housing, it has been suggested that we consider a three-year period instead of the existing six months out of 12. There is no doubt that central London remains an extremely attractive place in which to live, and it is important to ensure that only families most in need of temporary accommodation are here.
I understand the knock-on effects—I see the hon. Member for West Ham (Lyn Brown) shaking her head. I understand that part of the difficulty is that wherever the boundary is drawn the knock-on effect will mean that in Barking, Dagenham, Newham and so on there will be many more people, and that is equally a wrong way forward to a large extent. I hope that we will implement the caps for new claimants with immediate effect, because nothing would be worse than having too long a gap, such that there would be an incentive for people to enter into long-term contracts before the cap comes into effect.
I appreciate that many hon. Members want to speak, but I want to provide a bit of balance. I am broadly supportive of what the Government are trying to do, but they must consider seriously the specific problems in London, which I am sure will be articulated elsewhere.
It is only right to put another side of the story. A housing provider in my constituency—St Mungo’s—is dedicated to providing a recovery solution for homeless people, and I have worked closely with it during my time as an MP. We know that finding employment must be part of homeless people’s recovery. St Mungo’s welcomes the Government’s promise of further support for those who live a long way from the labour market. The people it works with have many problems, which have contributed to their joblessness and homelessness. It is worried about the announcement that jobseeker’s allowance claimants will have their housing allowance cut by 10% if they have not found jobs within a year.
Many Conservative Members welcome the review of the housing benefit system, because its flaws have become glaringly obvious to those of us who frequently deal with housing cases. I probably speak for all London Members when I say that housing and immigration are the two biggest elements of our work load. Given the great financial straits facing our country, the case for reform is more compelling, but I share the concern of the hon. Member for Hackney South and Shoreditch, and I hope that the Minister will respond to it. Urgent as the need for reform is, there must be proper consultation and an emphasis on the issues particular to the capital. I fear that if we do not change the system, we risk undermining the most compelling aspect of the case for reform, which is that the measures must be primarily about fairness, with hard work rewarded and the truly vulnerable protected.
It is pleasure to follow the hon. Member for Cities of London and Westminster (Mr Field), and my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) who has laid out as a basis for the debate the numbers and figures. I will not reiterate what has already been established.
What I find most shocking about the Government’s proposals is that the previous Conservative Government laid out a lesson of precisely what not to do, and the present Government are intent on repeating what happened last time. The suggestion that if people are decanted from the centre of London it can thrive is absurd. The services on which we are all dependent in the city are dependent on people who work extremely hard, not unusually for the minimum wage. They will certainly never be able to afford to buy a property in London and are finding it almost impossible to rent an affordable property in London. One of my most recent constituency cases involves a man with four in his family. He earns £361 a week and his rent is £351 a week. How is that family supposed to survive?
I want to revert to my opening statement about history being rerun. Last time there was a Conservative Government, they decanted people to seaside resorts, which experienced difficulties because those people had no employment and nothing to do, and that became an increasing tragedy. This Government have said that they are committed to families. I would argue about their definition of what constitutes a family, but the basis of that argument is that children thrive best in a stable family environment. The proposal for housing benefit will destroy families.
I revert again to my history lesson. What happened was that families were placed in absolutely appalling bed-and-breakfast conditions. That will happen again, because local authorities still have a statutory duty to put a roof over the heads of children. They may either put families into bed-and-breakfast accommodation, or they may attempt to take the children into care. Will someone tell me precisely how much we will save if thousands of children are taken into local authority care and their parents are left to wander the streets? We will see an increase in the sort of homelessness that I thought so shocked all political parties that they would never allow such a situation to arise again. But it will arise again, because the Government are trying to sell to the British electorate the argument—we heard it not in harsh terms, but it has been presented by the Government—that the majority of people who claim benefit, particularly housing benefit, are scroungers and wastrels who do not want to work and are battening on the backs of the majority of hard-working British people who do not claim housing benefit. That is simply not the case. There are people who work all the hours that God sends and are still dependent on housing benefit in order to house their families.
I hope that the Minister will reply to all the questions put to him by my hon. Friend the Member for Hackney South and Shoreditch. This policy is a monstrous rush towards what I believe will be the creation of serious social damage to some of the most vulnerable people in our society. I have already mentioned children, but there are a number of pensioners in my constituency who are dependent on housing benefit. If their homes are taken away, where will they live? Many of them do not have families who can house them. Are we going to put them into a residential home? Are we going back to the good old days of the Poor Law, where a husband and wife could be separated and put in separate buildings? I know that sounds fanciful, but if the Government’s policy is carried through as they propose, I do not believe that it is extreme to see that happening.
I have not mentioned those people who claim housing benefit because they are disabled. Such disability may not always be physical; it could be a mental disability. The policy must be rethought. The Government claim to be hard but fair none the less, and they have a duty to ensure that their approach to this issue is fair.
Lastly, on landlords, I will not be the only Member of the House who has received a briefing from a landlords association that wants to see its properties turned into houses in multiple occupation. My local authority—along with every local authority in central London, I think—has instituted policies to prevent that from happening, because properties are needed that can house more than just one individual. In my constituency, we need to house larger families, and the housing stock available at the moment is utterly inadequate. The bottom line is that we as a nation should be building more homes, but the Government have put a total block on the funding available to the Homes and Communities Agency to build more properties, so that is apparently not going to happen. That is a long-term issue, but in the short term the Government must rethink this scandalous and disgraceful policy because it punishes the most vulnerable people most harshly.
I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing this debate. This is not just a London problem. Most, if not all, housing policy for Wales is devolved to the Welsh Assembly Government, with the obvious exception of housing benefit. The current system of housing provision clearly fails to provide for the warm, dry, clean spaces that most people would like to live in—MPs have recently had the experience of looking for rented properties—and that has been the case for decades. I do not want to enter into a history lesson, but I became interested in housing in the ’70s and ’80s, and there is a clear contrast between housing policy in the ’40s, ’50s, ’60s and ’70s, and recent policy with its emphasis on profits, ownership and selling off assets.
There are particular circumstances in Wales. In my part of Wales, the question of housing is exacerbated by the huge number of second homes. In my constituency around Caernarfon there are enough empty properties to rehouse every homeless person and nearly everybody who lives in substandard housing. However, those houses stand empty.
The Welsh Assembly Government have been trying to do something about that problem, and in the last Parliament a legislative competence order on housing was discussed. Three Conservative MPs on the Welsh Affairs Committee turned up expressly to vote the order down—I see that they are not present in the Chamber today. They took the opportunity to vote down that provision, and the transfer of powers over this vital issue to the Welsh Assembly Government was blocked. There has now been a U-turn. The Welsh Assembly Government lack overall control over housing benefit and work on only part of the jigsaw. They work effectively and have a well-thought-out policy, but the part of housing provision that is a mess—housing benefit—is controlled from this place.
If we are to reduce the housing benefit bill in the long term, we must plan to provide proper homes of a good standard to the people who need them, and not depend on the vagaries of the market. We must build more affordable homes, and in Wales we must change the VAT system so that houses that are clearly substandard are brought up to a proper standard. VAT is charged on repairs to houses whereas it is not charged on new build. In Wales, we need to devolve power so that the Welsh Assembly Government can take full control of the issue. My question to the Minister is this: what discussions on housing benefit took place with the Welsh Assembly Government before the announcement of this policy?
It seems a long time since the Budget, and this policy on housing was probably the worst of a number of shocks on that day, particularly for London MPs. We have had time to reflect, and we have seen a pattern of announcements. If we look at the announcement about Building Schools for the Future last week, or that about the NHS yesterday, we see a systematic attack on the welfare state, and major changes that are being done without consultation or advice. To my mind, that looks like the legal definition of recklessness—we are either giving no thought to the consequences of our actions, or we are giving thought to those consequences, but pressing on regardless. I would be interested to know whether the Minister has given this policy any thought. He has a reputation for doing that.
I do not know whether this degree of recklessness is the new politics, or whether the Conservatives expect the Liberal Democrats to hold them back. There is little sign of that at present given the rather slavish and shameless way in which the Liberal Democrats adhere to those policies, which are attacks on the poorest communities in this country. I hope that the Minister will speak not only on behalf of the Government, but on behalf of his party to explain how he can defend his actions. He would be well advised to take advice.
Citizens Advice has produced an excellent brief for this debate that claims that there will be a marked increase in poverty, debt, rent arrears and homelessness, as well as negative impacts on family relationships. The National Housing Federation has estimated that homelessness will rise by 200,000. I feel most strongly about the fact that this policy will destroy mixed communities in London. We are proud of those communities, and not only poorer people but better-off people enjoy living in places such as Shepherd’s Bush, Hammersmith and many other areas in London. Such areas have a uniqueness that is not found in many other countries in that people of all backgrounds, incomes, races and religions live together harmoniously. This policy is destroying that. It is just one way in which the Conservative party has sought to destroy the communities that I represent, but is a particularly pernicious way that will lead to the return of Rachmanism in London. It will lead to appalling housing conditions being promoted by the Government, which is something that I hoped never to see in this country. I congratulate my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) on securing this debate. As she said, this policy is full of contradictions and is driving out those people who can get work and who, to a large extent, do work in London.
Given the limited time available I will not repeat what my hon. Friend the Member for Hampstead and Kilburn (Glenda Jackson) has said, but there is a myth that people in receipt of housing benefit are scroungers and that they are staying out of work. Shelter stated:
“The vast majority of housing benefit claimants are either pensioners, those with disabilities, people caring for a relative or hardworking people on low incomes, and only 1 in 8 people who receive housing benefit is unemployed.”
There is a myth that housing benefit is generous, although half of people who receive it pay an average of £23 a week towards their rent. There is a myth that people are living in luxury. We know the stories that Tory central office plants in the Evening Standard, which is frankly a disgraceful way to pillory the millions of people who are reliant in some degree on housing benefit in this country. At present, the level of accommodation is low.
The biggest myth of all is that people choose to live in that way. Almost everybody I know who receives housing benefit would prefer to have a secure or assured tenancy in an affordable home. To give some figures, the director of finance of Hammersmith and Fulham council estimated that initially the cap would mean 750 families being unable to afford to live in the borough—I suspect many more once we have taken into account other factors, such as the six different changes. The cap alone means thousands of people not being able to live where their families live, where they have grown up, where their work is or where their children go to school. In comparison, in the past two years the Conservative council has given planning consent for only four new affordable rented homes, although even that scheme is in doubt.
Do not blame the people who are receiving housing benefit for the problem. I blame Conservative councils in particular, but also Liberal Democrat ones. [Interruption.] My hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) agrees about the Liberal Democrats. Those councils have singularly failed through the planning process and their own means to build affordable homes in London over the past five years. What I find particularly pernicious—
I do not think that I have time—I would like to, but it would be unfair on other people.
A degree of trickery and blackmail is used by Conservative councils and, I am sure, Liberal Democrat ones—I have to include them now—to force people into the private sector. They say, “Give up your tenancy in order to get more space. If you want your families to live in more than a one-bedroom flat, move into the private sector.” I have such cases every week in my surgery. I now have to inform those people that if they do so, not only will they be in an insecure tenancy, but in a year’s time their rent will be capped and they will be forced to move out of the area altogether. They simply do not know that.
I praise the campaign that Inside Housing magazine is running on the issue, and I praise the efforts of many London MPs, but the policy needs a rethink even at this stage. The Minister needs to go back and look at the implications, which he clearly has not yet done.
Average earners in this country—taxpayers—take home £374 a week. Is the hon. Member for Hammersmith (Mr Slaughter) seriously arguing that they should chip in so that £2,000 a week can be spent through housing benefit for a family? He needs to wake up. The fact is that the housing market for rentals is affected by the level of housing benefit and the housing allowance. In Wolverhampton, 75% of the rental market is housing allowance. The maximum amount that can be claimed for a four-bedroom property is £693 a month and—guess what?—that is what they all go on the market at.
I will give way in a moment, but first I wish to mention Blackpool. The effect of the local broad rental market area, which takes in surrounding areas such as Fylde, has been to put up all the rents in the centre of Blackpool. There are other examples, including one in yesterday’s Evening Standard showing that housing benefit rents are higher than ordinary rents. The National Landlords Association states that the effect of the change will be landlords looking at their profit and loss and deciding by how much they can afford to reduce their rents. The fact is that housing benefit and the rental market are intertwined and it is ridiculous to say otherwise.
Does the hon. Gentleman agree that those on the lowest incomes pay most in income tax, as a percentage of their income, rather than those on higher incomes? The idea that these measures are somehow unfair to taxpayers is completely misguided.
I am grateful, Mr Hancock. Other people would like to contribute to the debate but will probably find it impossible.
I want to make it absolutely clear that the hon. Member for North East Hertfordshire (Mr Heald) is talking about one case that has been cited in the Daily Mail, The Mail on Sunday or wherever. In Newham, in London, the rent for a five-bedroom house is £350 a week, not the ludicrous amounts that the hon. Gentleman is talking about. Perhaps he will focus his remarks on the real world, rather than the world of Notting Hill.
The hon. Lady must recognise what has happened to the housing benefit budget. It has gone up in a decade from £14 billion to £21 billion, and has been pushed there the whole time. When the Work and Pensions Committee looked at the issue before the election, some people were seriously arguing that we should remove the five-bedroom cap so that someone could get a seven-bedroom house on housing benefit—there is no end to it. Someone needs to speak up for the ordinary taxpayer.
What about large families? The hon. Member for Hampstead and Kilburn (Glenda Jackson) talked about that issue in Hampstead. If ordinary working people want to have a large family, that is their individual choice, and it probably means that if they are not subsidised to a huge extent, they will be a bit more crowded and cannot live in the part of London in which they want to live. People with large families need to be more realistic about the way of the world.
I want to raise the issue of the impact that this policy will have on my community in the London borough of Barking and Dagenham. Our borough has lower local housing allowance rates than the proposed cap for all but the largest properties, so only five families will be adversely affected by it, although I must add that larger families tend to be the poorer families and that the impact will be felt over time. However, that figure can be compared with the 4,592 families—some 85%—who will be over the cap in Westminster, the 2,345 in Kensington and Chelsea, the 2,360 in Brent and the 1,688 in Hackney.
We do not need to be rocket scientists to work out what will happen in practice: families will move out of the inner London boroughs to places such as Barking and Dagenham, where there will then be greater pressure on housing. Let me set out what the impact of that will be. Our borough does not have enough decent housing for local people at a price that people can afford. We have more than 11,000 people on our waiting list. Everyone in the Chamber knows the impact that a lack of affordable housing can have on people’s anger, and therefore the rise of the extreme right, and we have been grappling with that problem. I ask the Minister to think about the impact of what he is doing by moving people across the capital, and what that will mean for social cohesion, which he must care about.
There is intellectual illiteracy among some Government Members. Rents have gone up in the private sector not because of housing benefit, but because of a lack of affordable housing. Both Labour and Conservative Governments have not built enough social housing. Making housing rents in the private sector less affordable for poor families—if there are no council or housing association homes available—means that people are forced into bed-and-breakfast accommodation or back on to the streets, which will cost the taxpayer very much more than private sector housing.
I will not give way, because loads of people wish to speak. I am not being discourteous, but do not want to be unfair to Members.
I have two other issues to raise. I am concerned about the changes to the local housing allowance. The current level of 50% of market rates is to go down to 30%, which again will disproportionately affect the largest families, who tend to be the poorest. In Barking and Dagenham, it will mean that the poorest large families will be more than £23 a week worse off. I do not believe in castrating the parents of such families to prevent them from having children. In a civilised society, our prime duty is to be fair and to look after the children of families in greatest need.
The Government also intend that, from 2013, families who have been on jobseeker’s allowance for more than 12 months will find their housing benefit cut. That will have a terrible impact on the poorest families in the community. In my borough, one in five private tenants is a JSA claimant. They tend to be people of working age, but as rents go up, the costs of being in work increase, which forces people into joblessness.
I passionately ask the Minister whether he has considered the impact of his proposed changes on social cohesion in communities across London such as mine. If so, how will he respond to the challenges that he is creating? Will he reconsider the caps to prevent such dislocation across the capital, or is the policy just another bit of political gerrymandering, as we had with the Conservative Government in the 1980s? With his background, how can he justify hitting the poorest people first? How does the cap fit with fairness? Why punish people rather than supporting them out of poverty? The Government’s proposition is ill thought out. We all want to reform housing benefit, but not in this way.
Order. I intend to call Damian Hinds next, and then Karen Buck and Caroline Lucas. The winding-up speeches will start at 12.10 pm. Both the Minister and the Opposition spokesperson have agreed to speak for 10 minutes each, which I hope that we can respect. We can still get five more speakers in if we play the game.
Most of us agree with the hon. Member for Hackney South and Shoreditch (Meg Hillier) that there will be difficulties for some families following the changes. It would be faintly ridiculous to have a debate in which people on one side were saying that taking money from a benefit would have an impact, but people on the other side were saying that it would not. Of course there will be an impact, and not just in London, although London is particularly affected. Many other areas will be affected, including my constituency of East Hampshire.
Most of us wish that the changes were not necessary. We wish that we were not where we are—but we are. A budget of £21 billion is bound to be examined. The question is how we proceed, and the trick is not just to cut but to try to reform and redesign in a way that smoothes off the roughest edges, that does not introduce perverse incentives, and that attempts to keep rents down. The right hon. Member for Barking (Margaret Hodge) shouted out that saying that this measure will do that is an assertion, not a fact, but it is also a basic economic law. If we take a large part of the macro-market—it does not have to be the majority of the market or all of it—and impose a limit, that will have an impact on the overall price.
The point that I really want to make is somewhat broader, however. I realise that Opposition Members would like the structural deficit that they ran up to be last week’s or last month’s debate, and now want to move on to a debate about cuts and pretend that it is a different topic altogether. In the first debate, they say, “Oh yes, we did go a little bit far in running up debts, but the real problem was caused by the bankers and the global recession,” but that glosses over the fact that we were so economically ill prepared for what came. They deliberately confuse the cyclical deficit with the structural deficit and deliberately confuse the annual deficit with the accumulated debt, thus trying to discombobulate the public. By the way, they say that they had a plan to deal with the situation, but they only ever talk about the total, and never about the individual line items that make up that total.
In the second debate, Opposition Members move on to a discussion about cuts, and for every individual line item that the present Government have to cut, they find fault with that particular approach without offering a realistic alternative. We cannot have those two separate debates. They are not separate debates, because the deficit and how it is dealt with are two sides of the same coin.
Let us be clear that with a deficit of such a size, we cannot talk only about cutting unproductive programmes and waste. We will also have to cut things that we want but simply cannot afford. If people are to be able to do the things that they want to do, they have to do the things that they must do well and responsibly, yet by running up the deficit, that is precisely what the previous Government did not do.
Many hon. Members who supported the previous Government want to see the debate in terms of so-called ideological cuts. I have seen how eager they are to suggest that there is some zeal on the part of Government Members to make such cuts because we have a strange, ill-defined antipathy towards helping people. Of course, that is nonsense. The reality is that we are trying urgently to save money—money that we do not have and never had—in the best way possible.
This is rightly a sensitive subject. As I said at the start of my speech, there will be hardship and hard cases as a result of the changes, which is why I was encouraged to learn of the increase in the discretionary housing benefit fund. I hope that that will help to mitigate some of the effects. Overall, however, given the fiscal situation that the Government have been bequeathed, I think that the changes are right and that they strike about the right balance. They cannot be considered in isolation. We must remember that people throughout society are being asked—have to be asked—to make sacrifices. I think that the changes will be seen as fair. My question is this: what representations has the Minister received from Opposition Members on how else to make cuts of a similar overall quantum in the housing benefit budget?
William Beveridge deferred any strategy for dealing with housing costs on the ground that that could not be done while there were still significant regional variations. To paraphrase Lloyd Bentsen’s famous comment to Dan Quayle when Dan Quayle compared himself to Kennedy, “George Osborne, you are no William Beveridge.”
Our problem is that we have had a 30-year policy of shifting expenditure from the construction of affordable housing to the housing benefit budget. That includes, I have to say, decisions made by the Labour Government, which I did not agree with at the time. We are dealing with that now in the worst possible way.
Four categories of people are involved. There is a very small number of very extreme cases, which the Labour Government were planning to deal with through taking out the most expensive properties at the top of the market in the local housing allowance calculation, which was a reasonable one. We will not support such cases, but we have to have a sensible strategy for dealing with those extremes. I do not think that any Labour Member would disagree that pumping billions of pounds of taxpayers’ money into the pockets of private landlords is an insane way to go about a housing policy, but what is proposed is more insane.
I say that because of the other three categories. One is pensioners who never expected to be on housing benefit but who, many years into their private tenancy, as the rents have gone up, have found themselves caught. The second is people in the private rented sector who were working but who have lost their jobs or whose incomes have gone down and who now find that they have to claim housing benefit, possibly for a transitional period. The third category is people—families in many cases—in priority need, who either could not access social housing or were deliberately placed in the accommodation that we are talking about by local authorities. All three categories but certainly categories one and three are made up of very vulnerable people.
I have a few questions for the Minister and I would be grateful if he confirmed that he will write to all hon. Members with replies to these questions and those asked in the excellent opening speech by my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier). Can he confirm that placing homeless households in private rented accommodation was a deliberate policy of local authorities and Government, and remains so? Is he aware of how many households have been either directed to or maintained in private lettings over the past five years as a deliberate housing policy?
What proportion of households making applications and accepted by local authorities as homeless had as the main reason for their homelessness acceptance the end of an assured shorthold tenancy? I believe that it is the majority of cases; it is the main driver of homelessness.
If a household is in priority need and faces a reduction in housing benefit below the rent payable, will the local authority continue to have a homelessness duty to it? How many private tenants on housing benefit currently face a shortfall between local housing allowance and the rent charged, and what is the average amount? Hon. Friends have cited some figures. Shelter has come up with the figure of 50% of all housing benefit claimants and cited the figure of £100.
What assessment has the Department made of the numbers overall and broken down by different categories—pensioners, families with children and those of working age—and by local authority area for additional homelessness applications that are expected as a result of the policy? What assessment is being undertaken of the implications for local authorities of the movement of substantial numbers of families with children, pensioner households and others, referred to by my right hon. Friend the Member for Barking (Margaret Hodge)? I am thinking in particular of the capacity to provide school places and the implications for children’s services and adult services of dealing with large numbers of people with additional needs in a very short time scale.
Is it the Government’s intention to introduce new legislation to change the homelessness duty? What discussions are being held with local authorities about changes to the homelessness duty and the local connection criterion? Is the Minister confident that local authorities that will be the recipients of large numbers of people moved as a consequence of housing benefit changes are content to receive additional large numbers of low-income and, often, vulnerable households? What discussions have been held between the Department for Work and Pensions and the Department for Communities and Local Government about the introduction of new homelessness legislation to accommodate that difference? Will the forthcoming impact assessment indicate the Government’s confidence as to the availability of additional private rented sector housing at the reduced local housing allowance levels in all areas? What assessment has been made of the market capacity and ability to reduce rent levels?
I have a number of other questions, but I shall write to the Minister because other hon. Members want to speak. I am absolutely confident that the Department does not realise the full gravity of what is proposed.
I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing the debate.
The Government’s housing benefit proposals demonstrate beyond doubt that they are intent on pursuing plans that overwhelmingly penalise the poor—forget any nice words about our being in this together. As many housing charities predict, the proposals will make thousands of people homeless, as cuts to housing benefit combine with increased repossessions and higher unemployment. It is an absolute scandal that that should happen in one of the richest countries in the world in the 21st century—what a damning judgment on what was supposed to be a new politics.
I am deeply concerned about the impact in my constituency. We have heard a lot about London, and understandably so, but I reiterate that many areas, particularly beyond London’s periphery, are also suffering a huge amount. In Brighton, Pavilion, for example, someone would have to earn more than £50,000 a year to buy an average-priced house. No wonder that nearly 10,000 households are on the waiting list for affordable housing in the Brighton and Hove area. At current rates, that list will take more than eight years to clear.
The increase in housing benefit bills over recent years is not, as the Government would have us believe, the result of some epidemic of scroungers, but, as others have said, of the considerable growth in the number of people who are being forced into the private rented sector, where rents are almost double those in social housing. Again in my own constituency, the private rented sector makes up about 21% of the housing sector, which is much higher than average. My surgeries are full of people who are already struggling to pay rent and to find alternatives to cramped, overcrowded and overpriced accommodation, and the Government’s plans can only make that worse.
If we are to reduce the housing benefit bill in the long term, we should be building more affordable housing, which should, of course, be green, decent and fuel-efficient housing. We need a reduction in VAT on repairs to encourage people to put older properties to better use and we need to support people in bringing empty properties into use. We also need to support housing co-ops and other forms of affordable housing.
In the meantime, however, the Government’s proposals will simply make the situation worse. Particularly pernicious are the proposals to reduce the percentile of local market rents used to calculate LHA from the median to the 30th percentile and to cap the maximum LHA payable for each property size. Those reforms will lead to a significant reduction in the amount of LHA received by every claimant, exacerbating widespread problems with rent shortfalls and increasing barriers to accessing accommodation. As a result, swathes of London and the south-east will simply become unaffordable for people on LHA, which is likely to push them into debt, eviction and homelessness. Behind the statistics, it is important to remember the individual families many of us see in our surgeries, whose hopes and aspirations are being wrecked every day. The Government’s proposals will simply make things worse.
We are short of time, so I will make one final point. The hon. Member for East Hampshire (Damian Hinds) talked about increasing discretionary housing payments, or the DHP budget, as an additional safety net to support the thousands of claimants who will face shortfalls once the cuts to LHA are introduced. Let us remember, however, that the Chartered Institute of Housing has undertaken analysis showing that if the additional £40 million is spent solely on making up the shortfall in rents due to the proposed drop, it will support just 4% of the claimants facing the drop from the 50th to the 30th percentile for a year.
If that were not enough, from April 2013, receipt of full housing benefit for claimants who can be expected to look for work will be time limited to 12 months and then reduced by 10%. Attaching sanctions to housing benefit is an extremely unfair way of trying to help into work claimants who could work. Indeed, after the Budget, I have to ask where the jobs are that we expect these people to find. In the context of rising unemployment, it is hugely unjust to penalise people who cannot find work, and the Government’s proposals will simply lead to an even greater increase in poverty.
Let me finish with some questions. What kind of transitional protection measures will be in place for the people affected by the Government’s proposals? Have the Government considered the knock-on costs for local authorities and the knock-on effects on the private rented sector? Finally, to reiterate an earlier point, what is the point of an impact assessment that is produced after the proposals?
Thank you very much. Before I call the last Back-Bench speaker, I apologise to everyone who wanted to speak but whom I could not get in. The last speaker is Emily Thornberry. It would be helpful, Emily, if you could remember that we have given an undertaking to start the winding-up speeches at 12.10 pm.
Much more than I could possibly have hoped for, although I have to say that most of my speech will appear on my website.
[Mr Gary Streeter in the Chair]
In some areas of the country—my constituency is an obvious example—there is a serious mismatch between earnings and housing costs. The average worker in my constituency earns £20,000 a year and pays tax on that. The average rent for a two-bedroom flat in inner north London, which is not the most expensive part of my constituency, is more than £17,000 a year. That leaves an average working parent with less than £60 a week for food, clothes, travel and council tax. It is clear, therefore, that there has to be some form of intervention in areas where the rent is so high. Either we build more affordable housing—I am sure that everyone here knows and agrees that that is exactly what we should do with the money—or we intervene to subsidise rents and put people in the private market.
This lack of building has been a problem not only over the past 13 years. Does the hon. Lady not recognise, however, that there has to be some sharing of the blame? During the past 13 years of the Labour Government, there was no substantial building, and that is the nub of the problem, particularly in central London.
Many of us in the Chamber have been major campaigners on that issue, and I know that the hon. Gentleman is, too. I was completely outraged that the Lib Dem council in my area, which was in power for 10 years, built only one flat for social rented housing for every seven new flats that were built, which is completely inappropriate in a constituency such as mine, given the needs that it has.
Of the 850 Islington families in flats with two or more bedrooms who are claiming LHA, or housing benefit in the case of private landlords, more than half—more than 500 families—will lose benefits under the new capping rules, and some will lose more than £100 a week. Where will they go? Is there room for them in Thornbury and Yate? Will they move into cars? Where do the Government expect them to go when they lose all that money? They certainly will not be able to keep their flats.
To make an obvious point, expecting housing benefit claimants to live in the cheapest 30% of private rented flats will cause real hardship in areas such as London, where housing is already in short supply. The differential between the median and the 30th percentile might be small in some areas. For example, in central Lancashire—perhaps in Thornbury and Yate—there is less than £6 difference between a two-bedroom flat on the median and one on the 30th percentile, and people can get a family home for less than £120 a week. However, in my constituency, in Islington, the difference between the median and the 30th percentile for a two-bedroom flat is £40 a week—the difference between £330 and £290 a week. Where will people get that money? What will happen? It is fundamentally unfair to expect claimants in my constituency to make up a housing benefit gap of £40 a week when claimants elsewhere will be expected to find only £6 a week.
Does my hon. Friend agree that officialdom clearly accepts that the cap is not fair? It suggests a cap of £340 for a three-bedroom flat, whereas the Independent Parliamentary Standards Authority allows Members from outside London £340 for a one-bedroom flat. We are being told that the going rate for a three-bedroom flat is the same as that for a single-bedroom flat.
On a much less serious level, the representations that London MPs are making about the money that we need to run offices rely on exactly the same argument that we are putting today on behalf of the poorest and most vulnerable of our constituents. Although we all need help, they need it a great deal more.
It is unfair to expect all private tenants to compete for the cheapest properties, because private landlords will simply take the easiest families, rather than the difficult kids or the people on unemployment benefit. Where will the other families go? Will they live in cars?
I am appalled by the suggestion that the long-term unemployed should have their housing benefit cut by 10%. I am sorry to sound like a stuck record, but the effect of a 10% cut on families in London will be much more than that on families in Bradford. A 10% cut in benefit may mean £25 a week for someone in a one-bedroom flat in London, but it will be £8.60 in Bradford. It is not fair, and it is not right. The rules will affect a large number of people in the most deprived areas of London. At the moment, 1,200 Islington residents get jobseeker’s allowance or incapacity benefit for more than a year. What will they do to make up for the loss of that benefit? The idea is that they are on jobseeker’s allowance because they want to be—that they are malingerers and do not want to work. I invite the Minister —and, indeed, his boss—to come to some of my surgeries to see the reality of how people live in London.
We should build more affordable housing, provide sensible pathways to work and support families through child tax credits and child benefit. Yes, it is social engineering, but it is positive and sustainable.
May I say what a pleasure it is, Mr Streeter, to serve under your chairmanship? I congratulate my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) on securing this extremely important debate.
Of course, everyone agrees on the need to tackle high rents and high payments. It is clearly not right to pay people more than £1,000 a week for housing benefit. That is why, in his March Budget, my right hon. Friend the Member for Edinburgh South West (Mr Darling) took measures to strip out the top rents; that will save the taxpayer £50 million. Before considering the current Budget measures, I have one question for the Minister: will he abolish the £15 excess as well as introducing the raft of measures included in the Red Book?
It seems to me that the coalition Government have used the small number of exceptionally high benefit payments as a ruse to cut housing benefit across the land. The truth is that only 100 households in the entire country receive housing benefit of more than £1,000 a week. In the social sector the average payment is £72 a week, and in the private rented sector it is £106.
Over the last month, the Minister has refused to answer virtually all parliamentary questions about the number of people who will lose and by how much. I see that he looks puzzled, but even yesterday he refused to answer 36 parliamentary questions. I am not sure whether he does not know how many people will be affected and what the losses will be, or he is embarrassed. I am not sure, either, which is worse.
Did Department for Work and Pensions Ministers take decisions without proper analysis? Were they ambushed by the Treasury, as we suspect? Is that why Ministers are delaying giving us the information until 23 July—in 10 days’ time? How very convenient for them. The Chief Secretary to the Treasury has refused to release data that would have allowed people to analyse the impact of the housing benefit changes. That is despite the coalition agreement saying that data will be released so that we have proper transparency.
The Minister is Pensions Minister. Is he going to tell us today how the housing benefit cuts will affect the 1.5 million old-age pensioners who now receive housing benefit? Will he confirm that, in addition to the London problems that were so eloquently described by my colleagues, more than 1 million people will lose at least £500 a year? With the help of Citizens Advice, we have discovered what the cuts will be in other parts of the country. In some places, they will be huge. A single person on the lowest shared room rate in Durham will lose £700. A single person in a one-bedroom flat in St Helens will lose £800. People in four-bedroom accommodation in Nottingham will lose £1,100. Those figures are disgraceful.
It is quite wrong for the Government to have produced distribution figures in the Red Book that completely ignore the impact on housing benefit. The rents that people are expected to survive upon in the provinces are completely ridiculous. In central Lancashire, the single-room rate is down to £44 a week. In Hull, the one-bedroom rate is down to £67 a week. In Chesterfield, a family needing four bedrooms is expected to find accommodation for £138 a week. As hon. Members have said, the abolition of the housing benefit rate for five-bedroom properties will be particularly bad for large families. What will the impact be on the various ethnic and religious groups? It will clearly be discriminatory. We know that child poverty is bad for ethnic minorities and large families. It just got a whole lot worse.
I turn to the benefit cap. My hon. Friend the Member for Hackney South and Shoreditch has not been describing the problems of people who want to live in Mayfair, but the problems of people in an ordinary part of London. The Minister must explain how it will impact on work incentives. How does he expect people to travel to jobs such as cleaning our offices or working in hotels in central London? Is he trying to reproduce the apartheid conditions seen in cities elsewhere? Certainly he is not supporting mixed communities. The way to address work incentives is not to cut benefits, but to introduce run-ons and fixed-period payments—things that we were asked to do by Crisis and Shelter and others in the voluntary sector that work with the homeless. Things will get even worse in 2012-13, when the local housing allowance switches to a consumer prices index link. The benefit will then be completely disconnected from rent levels. Had that been done in 1999, by now people would be suffering a further 20% shortfall.
Will the Minister tell us what the effect will be on families? How many will have to move? What will the effect be on homelessness? What will the effect be on the number of families in bed-and-breakfast accommodation? What will the effect be on the availability of private rented accommodation? What have the responses been of private landlords to the Government? As many hon. Members have asked, what transitional arrangements will the Government introduce?
The Government have also announced a number of measures that will particularly affect the social sector. Deductions for non-dependence, as projected by the Chartered Institute of Housing, will impact on 170,000 people, who will all lose more than £900 a year. Typically, they are people whose children are aged between 16 and 24. Another measure that will affect the social sector is the proposal to limit working-age entitlements to reflect the size of family. According to the Chartered Institute of Housing, that could affect 180,000 people, to the tune of £2,300 a year. Will the Minister tell us whether he proposes that these deductions will be made when people’s partnerships break up? Will we see women with children being forced to move because the partner has left the home? None of the social implications of the measures have been considered.
Perhaps the most vicious measure is the cutting of benefits by 10% after a claimant has been unemployed for 12 months. What possible rationale can there be for punishing the victims of the recession? Does the Minister not realise that, in London, eight people are chasing every vacancy? That cut is happening at the same time as a cut in support for those who are unemployed. It is pointlessly punitive. The CIH estimates that, overall, the measure will affect between 231,000 and 375,000 people by between £400 and £580 a year.
Has the Minister thought through the impact on lone parents? Forcing mothers of five-year-olds onto JSA will, by the Government’s own estimate—it was published in the Budget policy assumptions document—result in only 10% of lone parents getting jobs within a year. That will leave 135,000 lone parents facing housing benefit cuts in 2013-14. That is utterly appalling.
The final little sop—to increase the discretionary housing payments by £40 million—is totally inadequate. It will not deal with the hardships caused by taking £1.8 billion out of the housing benefit budget. I hope the Minister will give us some answers, and that he will undertake to rethink these draconian measures.
This is the first time that I have had the pleasure to serve under your chairmanship, Mr Streeter. I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on raising this important issue and on giving a number of hon. Members, particularly but not exclusively from the London area, the chance to air their views, which they have done effectively.
I have been advised not to run through a whole history of housing benefit because we do not have enough time. However, I will set out some of the thinking behind the reforms. The housing benefit bill has been rising inexorably: in the past five years, we have seen a 50% real rise in the bill when the numbers have gone up by less than 20%. With £1 billion added each year, it does not take long before we are talking about serious money. The question is this: do we stand by and watch that or do we allow our constituents, who are on low wages and paying tax out of their low wages, to have a voice in this debate? A number of hon. Members said that the taxpayers’ perspective relates not just to the well-off but to low earners as well. As the hon. Member for Brighton, Pavilion (Caroline Lucas) said, if we consider the whole tax burden, the tax impact on low earners is quite substantial.
What we cannot do is to continue to pay out blank cheques to private landlords—this is a blank cheque not to tenants but to private landlords. Rents have been going up and the state has been a passive observer. The housing market has demanded cash from us and we have simply handed it over. Then it has demanded more and we have handed it over again.
Not at the moment. I will take some interventions, but first I want to set the scene.
If we do not have a blank cheque, what do we do? What is a legitimate way to say that someone who takes a low-paid job typically chooses a rent around the 30th percentile? That number has not been plucked from the sky. If someone takes a low-paid job, they do not have an unlimited choice about where they live. They cannot live in as big a house as they would like. They are constrained in where they live. Why should our constituents who take a low-paid job with all the associated uncertainties and who have to restrict their housing choice be in a worse position than those—I do not use the words “scroungers” or “apartheid”, which have come from the Opposition Benches—who are, for example, unemployed? There is an issue about social justice.
The Minister is confusing things. In my constituency, people do not have a choice. To afford anything, they need the housing benefit top-up. That is because rent levels and the demand for property are high. If landlords do not rent to people on benefit, there will be plenty of people in the private sector who do not need benefit who will take those homes.
Clearly, there is a differential impact in different parts of London; I do not dispute that for a second. Taking London as a whole, just a little under a third of properties will be available within the caps. Obviously, the figure will vary from area to area, and there are particular issues that affect central inner London.
I will carry on just for now, because I want to respond to as much of the debate as I can.
The question is, how can we appropriately look at this matter? Some of the figures that have been quoted for losers assume that nothing changes and that people will go on living exactly where they are living and making the same choices, but the whole point of the reform is to have an influence on the housing market, and to try to do something about escalating rents.
I will not. I want to respond to the debate in the short time that is available to me. If we allow rents to go on rising as they are doing, how can we expect people to find the work that will enable them to pay those exorbitant rents? There are not the jobs that will enable people to afford to pay those rents. If we can do something about the rents that landlords charge, more people will find it worth working. At the moment, people get no return for work.
No, I will not give way. I said that I wanted to respond to the debate. [Interruption.] I am trying to respond. If I give way, I will not have time to do that.
The issue of the discretionary housing benefit was raised. We are tripling the budget; it is £20 million now and it will be £60 million in a couple of years’ time. If we spread that thinly across the country, it will not go far, which is why, when we are allocating discretionary housing benefit we will have particular regard for the places in the country and the local housing markets where the changes will have the most impact. I am sure that the constituents of many hon. Members here today will see a bigger share of the money because of the points that have been raised. That is part of the answer to the question that was raised about transitional measures. Local authorities will consider on a case-by-case basis individuals who have been severely affected by our measures and for whom moving would be most disruptive, and, in those extreme cases, provide assistance.
The hon. Member for Hackney South and Shoreditch asked about timing. It is important that I place it on the record that I need to make some corrections. Nothing happens this autumn; nothing will change until next April. We have to put regulations through the Social Security Advisory Committee, so there will be a process of consultation on the regulations. The regulations will be laid before Parliament in October or November. There will then be a further six months before anything changes. As she rightly said, those are the changes that will go through secondary legislation. Some of the longer-term changes will require primary legislation, so there will be a further process of scrutiny and consultation.
I want to address some of the specific issues raised. The hon. Lady raised the issue of the rent levels relevant to the cap in her constituency. I understand that the broad rental market for inner east London is significant. I have looked at the figures for one-bed, two-bed, three-bed and four-bed properties at the 30th percentile in her constituency, and they are all at or below the cap. I am happy to supply her with the figures.
We have had many contributions to the debate. The extraordinary word “apartheid” was used and we heard about vast numbers of people criss-crossing London. There has been an awful lot of overstatement about the actual impact of the changes, particularly given that three out of 10 private rented properties will still be available after the change within the cap.
The issue of pensioners was raised. There was some suggestion that elderly people would be particularly adversely affected. I hope that the Chamber will recall that the local housing allowance that we have been talking about today, which is used in the private rented sector, applies only to 80,000 pensioners the length and breadth of Britain. [Interruption.] There was some implication that millions of pensioners would be affected by our measures. We are talking about only a tiny number of pensioners across Britain, and many of them live in regulated tenancies, which will be protected in any case.
No, I will not. Hon. Members have asked about the impact assessment, statistics and parliamentary questions. The impact assessment will be published on 23 July. There was some suggestion that that had something to do with the timing of this debate. We do not control the timing of these debates.
We are publishing on 23 July to give us time to prepare the detailed statistics that the House wants to see. We know the aggregate impact, but the House wants some fine detail. I can tell the Chamber that the impact assessment will include the impact on groups at a national level, broad rental market areas, bedroom category, the availability of accommodation by broad rental market area, the households affected by caps by local authority and by Government office region, the households affected by moving to the 30th percentile and the distribution of local housing allowance and housing benefit award by case load and by housing benefit award intervals. Rather than drip-feed incomplete information, we want to give the Chamber comprehensive detailed information before the House rises for the summer recess.
One thing that is usually said in such debates is that people on housing benefit will not be able to find anywhere to rent. We have all come across anecdotal examples of that. Occasionally, landlords will not rent to people on housing benefit. [Interruption.] I hate to bring the facts to bear in this debate, but since November 2008 the number of private sector tenants on housing benefit has not fallen. It has risen by 400,000. If private landlords are not willing to rent to people on housing benefit, how come there are 400,000 more of them doing it?
I refer back to my first question, which the Minister has not had time to answer. The majority of increase, according to the Department for Communities and Local Government, is in households that are placed in private rented accommodation by local authorities. That is why they have been able to access it, and they will no longer be able to access it in whole swathes of the country including London.
As the hon. Lady knows—she is exceptionally knowledgeable about such matters—what is important is how the market responds to these changed incentives. If everything carries on as it is now, the reforms will have failed. We want an impact on the rental market so that we can end the situation in which people have huge rents paid for by the taxpayer that they cannot afford from the jobs they get.
New Nuclear Power Stations
I am very grateful to have this chance to talk about an issue that of course affects my constituency enormously, as you know Mr Streeter.
The future of nuclear power is vital to my constituency and to the whole of the United Kingdom. That is why I am very grateful to have the chance to debate the issue today and I am delighted that my hon. Friend the Minister is here to respond to the debate.
It is no secret that we are running out of capacity to generate electricity. Existing nuclear stations are growing old and they must be replaced within the next seven years or—to be blunt—the lights will start going out. We cannot afford any more delays and I am afraid that, as a nation, we must take decisive action now.
The previous time I raised these matters in Westminster Hall, which was nine months ago, there was a different Government and many attitudes were different from those that exist now. Today I hope that I am preaching to the converted about the necessities and advantages of nuclear power.
In Bridgwater, nuclear power has provided reliable electricity to the grid since 1970 through the four reactors of the A and B stations, two of which, at the A station, have now been decommissioned. The B station has been given a five-year extension and is now owned by EDF Energy. We know that nuclear power works very well and is safe. We have a whole generation of local experts closely involved in the building, management and decommissioning of stations. Last October, we got the go-ahead to create the first nuclear academy in the United Kingdom at Bridgwater college. So there are many positive factors about nuclear power.
Of course, Hinkley Point is far from invisible—nuclear power stations cannot really be hidden. The existing station sits like a concrete castle overlooking the Bristol channel and dominates the skyline in one of the loveliest parts of this country. The plan is to construct a pair of new pressurised water reactors. Such reactors are tried, trusted and used safely all over the world. Two new reactors could pump out enough power to satisfy 4 million customers in the United Kingdom.
I make absolutely no bones about it—this is a massive operation. It will be the biggest ever civil engineering operation in the south-west. It will create 900 permanent jobs and roughly 5,000 people will be needed just to build the new plant. EDF Energy commissioned research into how the work would help the local economy. It estimates that £100 million will be spent every year during the building work and roughly £40 million a year will be spent thereafter, but I ask the Minister—is that enough?
Naturally, we welcome the concept of the new development. Of course we want to have the automatic boost to the local economy that building anything that big would bring, and yes, we need the contractors earning good salaries and spending their money in local shops. Bridgwater is an industrial town and we are very keen on business.
However, as a community, we have every right to ask for something more substantial in return. A nuclear power station is not like a supermarket. It is a gigantic piece of industrial machinery and the new development in my constituency would be slap-bang in the middle of some of England’s loveliest countryside. A fair slice of compensation ought to be in order. Some of it could come in the form of old-fashioned folding money, which would be nice. Some of it could be invested in the local community with sensible, joined-up thinking, which would be nicer still.
Just a few moments ago, I mentioned the nuclear academy at Bridgwater college. Bridgwater college is a remarkable college run by dedicated people who deserve to be at the heart of the work, training the new generation of nuclear experts. You don’t get owt for nowt. Bridgwater college put in the backwork, time and commitment to secure its place in the south-west hub for all nuclear skills training, as part of the nuclear skills academy. It is great to have the college, I am very proud of all its achievements and it has proved its worth, time and again, under the leadership of Fiona McMillan.
As the Minister will be all too aware, spending on education is in the spotlight, not just locally but nationally. Last week, the announcement about the Building Schools for the Future programme dealt a heavy blow in my area; I will come on to the reasoning behind that announcement shortly. We understand the pressures, we know that we must be prudent and we know that the BSF programme was not always very well organised, but Bridgwater college did an excellent job, in the same way that industry in Bridgwater does an excellent job. It produced sensible plans and everybody agreed to them.
Take it from me—cutting back on schools in Bridgwater now or in the future is not the answer to anything. That is especially true because of what we are going to do locally. Cutting back is not the answer if we want to encourage a new generation of professionals, which we must have. It is not the answer if we want to have home-grown nuclear experts, and it is not the answer if, as a Government, we want to have joined-up policy.
Our local schools were ready to sign the relevant documents on the very day that my right hon. Friend the Secretary of State for Education made his announcement about the BSF programme. Millions of pounds had been invested and a lot of it had come from the nuclear industry. Some of the building work had already begun and it made perfect sense to carry on.
How many other areas are about to build a huge new nuclear power station? How many other areas were as ready as we were with their plans for schools? Other areas were not ready.
I congratulate the hon. Gentleman on securing this debate. I would say that my area is ready. As with the nuclear power station in his constituency, Wylfa nuclear power station in my constituency has been decommissioned and a new build is happening on-site.
Does the hon. Gentleman agree that the skills that he is talking about are long-term skills to provide a job for life, that they are transferrable throughout the whole energy sector and that they are vital for the “green deal” that this Government are talking about?
I totally agree with the hon. Gentleman and his point is well made. I think that the proposals for Wylfa are in phase 2 of the proposals for nuclear power. He makes a good point.
As I was saying, the decision about the BSF programme does not add up. These schools in my area were due to be refurbished and built under the private finance initiative system. It was absolutely right that there should have been public investment in a local economy as good as ours.
Later today, I have an appointment to see the Secretary of State for Education and I intend to leave him in no uncertainty about what his announcement means for the programmes in my area that we are now looking at. However, I first want to offer my hon. Friend the Minister a few ideas that might help his thinking and that of his colleagues.
To build a new nuclear power station requires a reliable operating company, a shedload of money, a sensitive planning system and, perhaps above all, the ability to think outside the box. Deciding to put up a power station today means that we are planning for the next 60 to 150 years. It is ridiculous and completely unfair to see such things in terms of the conventional five-year life span of any Parliament. If we do not get this decision right now, we will be blamed by our children, by our grandchildren and, in the case of nuclear, by our great-grandchildren.
Therefore, I am afraid to say that cheeseparing on education with one hand while trying to nurture a skills academy with the other hand does not make sense to me or to anybody else. Everyone agrees that there is still a national deficit—we know that there is—and that there is a real need to be careful with the precious financial resources that we have. Equally, however, everybody knows that there are several ways to skin a cat.
Why will the Government not examine the possibility of using a proportion of the very substantial business rates that EDF Energy will have to pay to meet some of the extra needs of the community? It is not such an outlandish idea and it was mooted publicly just a few days ago by the Minister of State, Department for Communities and Local Government, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), who is the Minister with responsibility for decentralisation. He suggested that some major developments should be allowed to take the lion’s share of local business rates for the first six years of their existence. In terms of EDF Energy, that would mean a very healthy sum indeed to pay back to the community; it could amount to £40 million a year.
One might say that such a proposal is a form of legalised bribery and it sounds like an un-British way of going about things. However, there are quite a few solid examples of community funds that were deliberately established to compensate local people in the wake of major developments.
I am sure that my hon. Friend the Minister knows about the Shetland Charitable Trust, which was set up in 1974 when the huge oil terminal at Sullom Voe was built. Shetland council wanted to claw back money from the oil companies to help to compensate fishermen and because it felt that Sullom Voe was an ugly and unnecessary development. However, little councils do not have any power. Parliament pushed through the Zetland County Council Act 1974 to give Shetland council some muscle. The council now has £200 million in the bank and it shells out up to £13 million every year on special community projects. Sullom Voe is nothing like as heavily populated as Bridgwater and West Somerset. We would like a lot more money because, as the advert says, “We’re worth it”.
Another example is Cumbria, home to Sellafield, a nuclear establishment with even more history than Hinkley. The area is covered by Copeland district council, which negotiated a special deal with the Government in 2007 to get compensation for the inconvenience of looking after the nation’s low-level nuclear waste. As the Minister knows, the deal involved the Nuclear Decommissioning Authority paying £10 million up front plus £1.5 million for every year of waste storage. In addition, the parish of Drigg and Carleton gets an extra £50,000 compensation a year for the next 60 years. That is seriously big money, given that only 600 people live there.
I know of many possible ways to spend such sums in and around Hinkley, in both our district council areas. One facility that we lack, for example, is a decent road that bypasses heavily populated areas and goes straight to the power plant. That is not a luxury; it is an absolute necessity given the huge number of lorries required during the plant’s building phase, which will go on for seven years. It is possible to construct a direct link. I congratulate one of my constituents, an engineer named Alan Beasley, who has worked extremely hard to identify a feasible route that would upset the fewest number of people in the area.
We do not yet know what such a scheme might cost, but there are other local sources of money. The Minister might consider having a chat with some of our honourable colleagues about schemes that he could scrap. For instance, the £20 million earmarked for our schools will be used for something else, but £20 million is available next door. The Environment Agency is about to flood the Steart peninsula, which is about 600 yards from the plant at Hinkley. Flooding the peninsula will cost £20 million and is being done to tick boxes in Europe. The official reason is that the flood defences are too old and expensive to keep. Why can we not use that money to help with the nuclear project? The actual reason for the flooding of the peninsula is that regulations and directives on the conservation of wild birds and natural habitats are more important than human beings. I do not think that that is fair. We are all in favour of our feathered friends living happily ever after in the wetlands, but we cannot afford to fork out £20 million for the privilege. If the choice is a genuinely environmental one, a relief road will offer more real environmental benefits than obeying European directives to the last letter.
Like any nuclear power station, Hinkley is a national issue, not just a local one. Our creaking planning system is feeling the strain. The previous Government introduced a wildly extravagant quango called the Infrastructure Planning Commission, where EDF’s plans might have gone for judgment. The new Government have scrapped the IPC and intend to let the Planning Inspectorate take on the task of helping to decide Hinkley’s future. That may look like swapping one quango for another, but if I understand correctly, there will be one fewer quango. However, the complications involved in altering the planning process might lead to more delay, which would not be healthy.
More or less everyone agrees that the bad old days are gone when major projects such as motorways and airports were considered by public inquiries. Good riddance to them. Public inquiries rambled on too long and often failed to reach any definite conclusions. 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 on exact plans to expand Heathrow.
Having got rid of the IPC, the Government’s current idea is to let Ministers, advised by the Planning Inspectorate, make the final decision, and perhaps to hold a narrow public inquiry if it is really necessary. However, as far as I can see, the essential ingredient is a national policy statement on nuclear energy, to be ratified by Parliament. Without that, nothing can proceed. I am sorry to say that in July 2010, nine months after I first asked a question about it, we are still here pleading for a national policy statement. Can we please have it soon?
Since I have devoted so much of my speech to money, I ask the Minister to consider another glaring omission from the planning process. France builds nuclear power stations wherever it chooses because landowners and local communities queue up to claim the generous compensation packages on offer. Perhaps it is no accident that EDF Energy, the firm that wants to build Hinkley C and D, is a French company. In my neck of the woods, furious rows are going on about plans to build wind farms. That is not surprising, as the operators are offering pain but no gain to those who happen to live under one. However, in Spain, Denmark and Germany, significant local benefits are built into the fabric of all wind power projects. The companies involved often pay substantial local taxes. All that we have is a woolly voluntary system.
I believe that this Government genuinely want to reform planning for the better, but decent compensation is part and parcel of good planning. I ask the Minister to remember that Hinkley is vital for the nation, and to make it worth while to Somerset to build it.
It is a great pleasure and privilege to serve under your chairmanship, Mr Streeter. I thank my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger) for securing the debate and leading it with his normal approach of combining passion, vigour, commitment and enthusiasm with addressing the issues directly. He is absolutely right that this is a long-term decision, and we must see it in that context. Our decisions on nuclear will be some of the most important taken on energy policy by this Government. We therefore attach great importance to how those decisions are made and realise that they must pass the test of time.
My hon. Friend is also right to remind us that we are discussing national issues. A development such as Hinkley is of national significance, and it will play an important role in our future electricity generation, if it goes ahead. I totally accept the background to his argument. He raised several issues during his speech that do not relate directly to the work of my Department. I am pleased that he is meeting the Secretary of State this afternoon to discuss Building Schools for the Future and I will be interested to know the outcome. However, I am keen to set out clearly the approach of my Department and the Government to the building of new nuclear.
We set out a clear plan for nuclear in the coalition agreement. We are committed to allowing the construction of new nuclear plants, subject to the normal planning process for major projects and the fact that they should be without public subsidy. We will continue to take forward the national policy statement and the process through Parliament.
New nuclear has a clear role in the energy mix, but we are certainly alive to many people’s concerns about the costs of such activities, so we are absolutely clear that there should be no public subsidy. In that respect, our position is broadly the same as the previous Government’s. It is for private sector energy companies to construct, operate and decommission plants, but it is for the Government to ensure that there is appropriate safety, security and environmental regulation.
We will ensure that the taxpayer is protected now and in the future from such costs. Operators will be required by law from the outset to set aside money to pay for long-term waste management costs. Having considered various possible subsidy issues, we will ensure that the taxpayer is protected. I am encouraged that despite those restrictions, which are some of the toughest in the world, Britain is nevertheless the most exciting place in Europe—perhaps in the world—for the construction of new nuclear plants. Many companies are keen to invest on that basis.
We are also committed to removing barriers to investment. The work of the Office for Nuclear Development has been fundamental to that, as has the nuclear development forum, which considers how to address the practical issues that can present challenges. On that basis, we will drive forward work on planning, regulatory justification, the generic design assessment and waste and decommissioning financing arrangements. The Government are required to undertake regulatory justification. We will take a decision after we have finished considering responses to the recent public consultation on how best to proceed.
On waste and decommissioning financing, we must redouble our efforts to deliver a framework for dealing with the costs that protects the taxpayer and provides both taxpayers and operators with clarity. The consultations on the fixed unit price and waste handling regulations have closed. We are now considering our responses carefully and will respond in due course.
I know that, to the companies proposing plans for reactor designs, the process for the generic design assessment is fundamental. I am encouraged by the nuclear installations inspectorate’s recent comments that it is on course to conclude by June 2011. The Environment Agency is consulting on its preliminary findings.
We have also indicated that there needs to be reform of the nuclear regulator, which must be structured and equipped to meet current and future challenges. In its role as a nuclear regulator, the Health and Safety Executive has responded to those challenges, but I am persuaded that reform is needed to meet the specific challenges of the sector. I want an effective, efficient and independent nuclear regulator to ensure that we have transparency and accountability. Those are some of the big national issues that we have to take into account as we consider how the programme moves forward.
I want to pick up on my hon. Friend’s concerns about the planning system. We have said that we are determined to reform the planning system. The changes made by the previous Government addressed some of the issues about the speed of the process, which they were right to identify, as applications and considerations could sometimes go on for years. They put in place a process to deal with that, but it did not have democratic accountability.
We have decided that national policy statements should continue to be an integral part of the process, but that they will be subject to a substantive vote in Parliament. That will give national policy statements greater democratic legitimacy and reduce the risk of judicial review. Following the consultation on the national policy statements, we were required to take account of the public meetings and the thousands of submissions that were received, which we are currently considering. I assure my hon. Friend that we will set out our further consideration on the NPSs as soon as we can, because we understand how significant the matter is to all those involved in the sector.
My hon. Friend also correctly identified the changes that we intend to make to the Infrastructure Planning Commission. Again, we thought that that organisation lacked democratic legitimacy. The changes will mean that the back-office function and the analytical work carried out on individual applications will be done by a dedicated unit—the major infrastructure planning unit—which will come under the Planning Inspectorate. Instead of the unit’s recommendations going to a competent but, nevertheless, unelected quango, they will go to the Secretary of State.
For those who are concerned about the time scales, I can give a clear assurance that there will be an obligation on the Secretary of State to make a decision within the same time scale under which the IPC would have proceeded, so there will be no delays. Critically, an application under the transitional arrangements will continue under the same jurisdiction in which it started. There is no risk that an application made under the current system will have to be started again from scratch when the changes come into place. We want to make sure that people who are investing know there will be certainty about the time scale in which the process will move forward.
My hon. Friend also talked about business rates. It is proper to debate the wider issue of whether allowing some business rates and new business activities generally to be kept locally is a good way of encouraging local authorities to stimulate business activities in their areas. On energy issues—this picks up on the final part of his speech—we have said that we are keen to build a new relationship between energy installations and the communities that host them. If a community is hosting something such as a wind farm on behalf of the wider interest and not purely for the benefit of that community, it is reasonable to find ways of recognising that.
We want to find new ways of achieving shared ownership so that direct funding returns come into a local community. We also want to consider how the business rates that become payable as a result of that development can be maintained locally for the first few years. We are in discussions with our colleagues in the Department for Communities and Local Government to see how broadly based that approach can be, because if that same approach were to be applied to a nuclear power facility, as my hon. Friend said, many tens of millions of pounds would come into the local community, which would make a significant contribution towards the infrastructure and educational changes that might be necessary. I am holding continuing discussions with my colleagues in the DCLG on that basis, and we understand the need for early clarity.
On the specific application at Hinkley Point, EDF is carrying out consultations in preparation for submitting a planning application. Realistically, we think that nothing will come forward until this winter or next year, by which time we would expect the national policy statements to have gone through the parliamentary approval process. Given the legal constraints on those issues, I hope that my hon. Friend will understand that there is a limit to what I can say at this stage. We have found the consultation process extremely helpful in understanding the wider picture and the views of local communities and national organisations.
The Minister is being as helpful as he can. On the planning issues, he indicated earlier that when the recommendation is made to the Secretary of State, the same time frame that existed under the old system, which did not get a chance to develop, will be used. Will he indicate roughly what period that will involve? If the companies and developers are going to submit this autumn, when is the unit likely to make its recommendation to the Secretary of State, and how long will the Secretary of State take?
A consultation process is ongoing. The expectation of the IPC was three months, and we will be looking at the same sort of period. We will be able to provide further clarity in due course. The other advantage of our approach is that it reduces the risk of judicial review. If someone who is accountable to Parliament—someone who can be called before Select Committees, or who can attend debates in Westminster Hall and elsewhere—has responsibility for a decision, it can clearly be shown that that has received greater democratic scrutiny and it is therefore more robust.
My hon. Friend the Member for Bridgwater and West Somerset also rightly mentioned nuclear waste. We must focus clearly on how we manage the new generation of nuclear waste and spent fuel, as well as the legacy issues. When the Secretary of State and I visited Sellafield recently, we were both struck by the magnitude of the challenge facing the Nuclear Decommissioning Authority. It has put in place significant measures to try to deal with nuclear waste and we now have a system that addresses the magnitude of that challenge. However, we must also ensure that measures are in place to deal with the safe disposal of the new waste that will be generated as a result of a new-build programme.
On the hosting of installations, we have been encouraged to note that three local communities in Cumbria have come forward. We are certainly keen to know whether other communities wish to come forward, because we are absolutely committed to a voluntarist approach. The process will not work if it involves the Government saying to a community, in a national lottery style, “It’s going to be you.” The local community must buy into the process, be keen to participate and understand the benefit that it would get from hosting a facility. It has been instructive to see how that has been done elsewhere. A couple of years ago, I went to Sweden to look at how it is carrying out such a process. Two communities were bidding against each other to host a facility because they could see the benefits. It is clear to us that that will be an important part of the process as we go forward.
We recognise that if we are to stimulate the sort of investment that my hon. Friend talked about, further signals to the market will be necessary. There is a great deal that we can do to remove regulatory burdens and streamline the process. However, at the same time, we recognise that there needs to be greater clarity about the carbon price. I am therefore pleased that my right hon. Friend the Chancellor announced in his recent Budget that a consultation on the carbon price will take place this autumn, with a view to setting a floor price. Investors need to know what carbon price they will be paying when these plants come online. It is important to state that such a measure is not a subsidy for nuclear, because we believe that the carbon floor price will drive investment in all low-carbon technologies—nuclear, coal with carbon capture, and renewable technologies. That is one of the most important decisions we will make during this Parliament for the sector.
Finally, I shall mention some of the education issues. It is clear that the people who currently work in the nuclear industry are part of an ageing work force—some 80% of today’s industry work force will retire by 2024. Those people have fantastic skill sets and an enormous amount to contribute to the industry, but we must do more to bring a new generation of people into the sector. I am pleased that there have been collaborative projects—for example involving the nuclear advanced manufacturing research centre, to which the Government have committed more than £33 million. That will help to ensure that we take forward opportunities and bring business into the UK supply chain, which we consider to be an important part of the issue. My hon. Friend mentioned the facilities at Bridgwater college. I am glad that it will receive more than £4 million to launch the south-west energy skills centre, which is a specialist nuclear skills training centre. I am also encouraged that EDF already trains about 2,500 people a year nearby at Barnwood, which shows some of the commitment that it is bringing to the sector.
In conclusion, this could be one of the most important energy and industrial sectors for Britain. My hon. Friend is right to say that it is a national issue that needs to be treated as a national challenge and opportunity. I hope that what I have said reassures him of the seriousness with which we are addressing the matter.
I am grateful to have secured this debate, and to be here under your chairmanship, Mr Streeter. I welcome the new Minister to his post. I hope he hears what I am saying—I welcome the new Minister to his post.
Sarika Watkins-Singh is a young Welsh Punjabi Sikh. In November 2007, as a 14-year-old, she was excluded from Aberdare girls school in my constituency, for refusing to remove the kara, a steel bangle that she wore as an integral part of her Sikh religion. The headmistress had told Sarika that she was not permitted to attend the school wearing the kara, and tried teaching her in isolation, away from her friends and fellow pupils. However, Sarika rightly and bravely continued to argue that she should be allowed to wear the kara, and so the headmistress excluded her from the school.
This has been a sad case from the start, because all that was needed was a bit of common sense and not much more than a cursory understanding of the law. I told the school, first privately and then publicly, that it was making a mistake, and that its action represented a considerable injustice to the young girl. I told the school that if it persisted it would cost it money. I met Sarika and her mother and tried to speak to governors of the school. I spoke to colleagues here in the House of Commons and was told that the civil liberties organisation, Liberty, had already become involved. It seemed clear to me that the school’s action contravened the Race Relations Act 1976, the Equality Act 2006 and the Human Rights Act 1998. I urged the school and its governors to think again, and to act in the interests of good race relations. Unfortunately, the school stubbornly stuck to its position.
Sarika, showing courage and determination far beyond her years, continued to stand up for her right to practise her religion and exhibit her Sikh identity, and she pursued a legal case against the school through judicial review. Of course, she won her case, just as I had predicted. The High Court found that the school had indirectly discriminated against Sarika on the grounds of race, contrary to the Race Relations Act, and on the grounds of religion under the Equality Act. As the constituency MP, I repeatedly warned the school and the governors that they should uphold the law and not waste public money on the case. My advice was simply ignored.
In the aftermath of the legal case, it seemed to me that the school had some big questions to answer. It was obvious from the start that the school would lose the legal case but it stubbornly went ahead with fighting it, at, I suspect, considerable expense to local taxpayers. I then asked, on behalf of my constituents, how much the legal case had cost the school and from where the money to pay for it would come: would it come from the school’s budget—the budget to pay for school books, teachers and resources for the pupils’ education—or had the local authority agreed to provide other public money to support a foolish and unwinnable case? I also wanted to know how the decision to fight the case had been reached. Obviously, I am not a lawyer, but it seemed pretty clear that the school would lose. What legal advice, therefore, had enabled the school and its governors to come to their ill-informed decision to defend their position? The school is, of course, a public authority for the purposes of the Freedom of Information Act 2000, and so under that Act I requested that information—and more—of the school’s governing body.
I am sorry that this is a lengthy list of events, but it is important to put it on the record. In brief, I first wrote to the chair of governors on 20 February 2008. Following exchanges of letters, it was clear that I was not getting answers on what public money was being spent on the case. I therefore notified the school in March 2008 that I intended to make requests under the Freedom of Information Act. I wrote again to the school on 15 May 2008, requesting that an internal review be conducted, a step required of me before I made any complaint to the Information Commissioner. After the school refused my request, I contacted the Information Commissioner on 29 July 2008, requesting answers to my questions. I also sent a copy of the letter to the school.
I received a reply from the Information Commissioner on 11 September 2008, recommending that the school issue me with an internal review decision within 20 days. The school replied on 16 September 2008, stating that the internal review
“had been delayed by the intervening court case and school holidays”.
It said that my requested review would therefore take place on 24 September 2008. On 23 October 2008, I was notified by the clerk to the governing body that the only answer that the school would disclose was that the judicial review claim had, to date, cost the school £76,699.40.
Following the legal case, I began a fresh request for information in March 2009, by which time there was a new chair of governors. I requested the information and the school ignored my letter. I wrote again on 16 April 2009, and the school denied having received my first letter. The chair of governors then acknowledged the copy that I sent to them of my letter, but was not able to provide any of the information. I replied to him in May 2009, suggesting that we extend the deadline by another 20 days. The school then replied on 27 May 2009, refusing to provide the information, but not giving appropriate reasons in line with the Freedom of Information Act. I wrote to the school on 9 June 2009 asking it to conduct an internal review of its decision to refuse to provide the information. The school replied on 6 July 2009, sticking to its decision to refuse to provide the information. I wrote to the Information Commissioner on 15 July 2009, initiating a complaint under the Freedom of Information Act. The Information Commissioner’s Office wrote to the school on 7 October 2009, and the chair of the governing body wrote to me on 8 October, disclosing that the costs in relation to the judicial review had escalated to £170,000.
The Information Commissioner had given the school until 4 November 2009 to provide a copy of the disputed—withheld—information and to give any further arguments it had for withholding information. On 23 November 2009 the Information Commissioner said:
“Unfortunately, the authority initially struggled to understand the role of the Information Commissioner’s Office (the ICO) as regulator of the Freedom of Information Act 2000…I am however pleased to confirm that it now has a full understanding of our role and is working towards providing a full response by the 7th December 2009”.
Three weeks later, the Information Commissioner wrote again, saying that, unfortunately, despite her assurances in her letter of 23 November 2009 that the authority now had a full understanding,
“it appears that the Authority still does not fully understand the role of the ICO. The Commissioner has today therefore issued an Information Notice to the Authority…compelling a Public Authority to provide the Commissioner with a copy of the disputed (withheld) information. The Authority has 30 days…from the date of the Notice to comply. Failure to comply may result in the Commissioner making written certification of this fact to the High Court…I do however hope that this will not prove necessary”.
We are now in July 2010, and I am still being sent around in circles. I believe that the school fully understood the situation but was still playing for time. In a letter dated 19 January 2010, the Information Commissioner told me that the 30-day deadline for a response from the school had passed. The ICO said that it was writing to the governing body again, giving it a further 14 days to respond, and thanked me for my continued patience. My patience has now run out.
On 20 January, the ICO said that the matter had been passed to the Information Commissioner’s solicitors because the school had appealed to the First-tier Tribunal (Information Rights). The ICO informed me on 27 April that it had decided to cancel the first information notice, and that it had written on two further occasions to request the information from the school, but that the information remained outstanding.
In my letter of 17 May, I asked why the original information notice dated 17 December 2009 had been cancelled. I was told that it was on the advice of the ICO’s legal team, because—it is worth emphasising this—the governing body of Aberdare girls school had complained that the notice was addressed to Aberdare girls school rather than to the governing body of Aberdare girls school. The ICO admitted that that was an error and sincerely apologised for it, but clearly this is just another excuse by the school for yet further delay.
The ICO issued a second information notice in May 2010, but the school appealed to the First-tier Tribunal (Information Rights) on 27 May. In a further letter on 27 May, the ICO stated that it cannot make further progress in the investigation of my complaint until the tribunal makes a decision.
More than two years on, that is where the case sits now. I am told by the ICO that further progress cannot be made with the investigation of my complaint until the tribunal has ruled on the appeal, and that that is likely to be some months away. In effect, the school has run rings around the law to avoid explaining how much money has been wasted on a stupid, ill-considered action to defend the indefensible.
The Campaign for Freedom of Information published a report in July last year about delays in investigating freedom of information complaints. Its survey showed long delays in the processing of such complaints. The report states:
“The severe delays described here are sufficiently serious and widespread to undermine the FOI Act’s effectiveness and public confidence in it.”
That is very much my view.
I am aware that the ICO’s annual report will be published tomorrow. Perhaps the Minister might be able to say something about that. However, whatever the deficiencies in the ICO or the law, the advent of the Freedom of Information Act should be celebrated. It was one of the triumphs of the Labour Government, and it enables us, the public, to subject public authorities to the kind of scrutiny that was never possible before. It gives us access to all the inconvenient and embarrassing bits of information that some public authorities would rather not disclose.
However, public confidence and the effectiveness of the Act are being undermined by the difficulty in pursuing complaints against authorities that refuse to release information that the Act requires them to release. The problem is that it is just too easy for public authorities to obstruct the process. If they ignore enough letters, miss enough deadlines and pretend that they do not really know what is happening and why, they will be able successfully to evade an information request for a long enough period to diminish the detrimental impact, reduce embarrassment and avoid the accountability that release of the information would cause. In this case, a possible reorganisation in the near future of the school concerned means that accountability can be brushed under the carpet because it suits the authority concerned.
I assure the House that I will not let this case rest until the truth—the whole truth—comes out, and those who are responsible for what has been done to their community and for impoverishing the resources of the school are named. Their actions have been irresponsible and a disgrace. Deadlines must be more strictly enforced. A reply being required within 20 days should mean that failure to provide a reply in that time is a breach of the Act and subject to sanction, and failure to release information that is required under the Act should also be a breach of the Act and subject to sanction.
The Sarika Singh case received national news attention. It led on the “News at Ten” and made the headlines in many newspapers. It was a long and arduous case for a courageous 14-year-old schoolgirl to go through, and it was an important and contentious case for my constituents. It established important precedents for schools throughout the country in respect of respecting pupils’ rights to give expression to their religion. The public have a right to know how the governing body of Aberdare girls school came to its decision to pursue the legal case and, in particular, how much public money was spent.
Yesterday, I received an addition to my vast file of correspondence on the subject. I received a letter from the commissioner, which states:
“I very much regret that this case is taking such a long time to resolve. You may know that the public authority in the case is strongly resisting my Office’s investigation. Most unusually, I have had to resort to the Information Notice procedure to secure cooperation and both Notices have themselves been appealed…This case is most untypical of Freedom of Information Act casework undertaken by my office.”
The case has cost the school at least £170,000, but I do not yet know whether that is the full extent of it. The final figure is yet to be revealed—it may well be much more. As an elected representative, I have asked questions of the school and its governing body on behalf of the public. All the information is held by the school, and none of it is difficult to provide. I believe that the reasons for non-disclosure have been to shield those who are responsible from the disapproval of the public for reasons that they may now regret.
I congratulate the right hon. Member for Cynon Valley (Ann Clwyd) on securing this debate on a matter that I am sure will be of interest to many hon. Members because of its wider impact. I thank her for working with the Justice Department in preparation for the debate and would like to say up front how much I admire her determination in this case to seek transparency from a public body as provided for by the law.
The Government are committed to enhancing transparency, as was made clear by the coalition agreement. We are already making available a wide range of information in line with the agreement. For example, the Treasury’s combined online information system, or COINS, database on UK Government expenditure, which was provided by Government Departments, has been published at www.data.gov.uk. The website also has information about special advisers working in Government Departments, as well as the numbers of staff, consultants, contractors and agency staff working in Departments, agencies and non-departmental public bodies.
That is just the start. Much more information will be made available over the coming weeks and months to increase transparency and accountability in the public sector. Of course, proactively making information available forms just one part of our commitment. Ensuring the effective operation of the Freedom of Information Act is also key to transparent and accountable government. It is vital that the public be able to request information that is of interest to them directly from public authorities, and that that is provided where it is in the public interest to do so. But the buck does not stop with the public authority. It is equally important that the Act be enforced in a robust and timely manner by the Information Commissioner. The same applies in relation to the other legislation that the commissioner has responsibility for, such as the Data Protection Act 1998.
The issue of robust and timely regulation is the focus of this debate. The right hon. Lady is right to be alert to the challenges that continue to be posed by the maintenance of a robust and efficient FOI regime. However, I hope that she will understand that it would be inappropriate for me to comment on the specific case at the heart of this debate, as it is ongoing and is the subject of an appeal to the First-Tier Tribunal General Regulatory Chamber.
The right hon. Lady has made plain her feelings about the situation. She is correct to identify delays in processing requests at the Information Commissioner’s Office, which were highlighted in the report published in July 2009 by the Campaign for Freedom of Information, as she mentioned. She also noted that the original information notice was wrongly issued due to ICO error, but that she has received an apology from the ICO in relation to that.
The CFI report highlighted a catalogue of delays based on an analysis of almost 500 decision notices issued by the Information Commissioner’s Office between 1 October 2007 and 31 March 2009. The report calculated that it took an average of 19.7 months to issue a decision notice and stated that it took between one and two years to issue a decision notice in 46% of cases. In one quarter of cases, it took between two and three years to issue a decision notice. Although those figures say nothing of the many cases that were resolved informally, without recourse to a decision notice over the period, it was still a pretty damning picture. However, very significant progress has and is still being made to rectify that situation.
The current Information Commissioner, Christopher Graham, took up office in June 2009, just before the Campaign for Freedom of Information published its report. Following his appointment, Mr Graham recognised the impact that the backlog of cases has had on the performance of his office and announced his intention to
“put a shock through the”
The clearance of the backlog of FOI cases was identified as one of his top priorities. I am pleased to say that he has made significant progress in clearing the backlog of old FOI cases that he inherited. In the first three months of 2010 alone, for instance, more than 1,000 cases were closed; the number of cases over one year old was halved; and the average age of cases fell by 34%. Those impressive results have continued. Between 1 April 2009 and 1 April 2010, the number of cases more than two years old fell by 91% and the number of cases more than one year old fell by 72%. That is a very significant achievement, of which Mr Graham and his staff can be justifiably proud, especially in the face of rising demands for the ICO’s services. However, both Mr Graham and the Ministry of Justice recognise that there is no room for complacency. Efforts to maintain and improve the level of performance must be maintained.
The commissioner will publish his annual report tomorrow, as the right hon. Lady said. Although she will understand that I cannot disclose its contents today, I have no doubt that she will be encouraged by the progress that it will show.
The current economic climate is, of course, extremely challenging, but the Government are committed to providing the ICO with the best deal possible to maintain its progress and to fulfil its vital role. I have to say that this is not just about money; it is also about people and expertise. I am sure that the right hon. Lady will be interested to know that three experienced caseworkers have been seconded from central Government, helping to cut through the ICO’s backlog.
The commissioner has made great strides to improve the efficiency of his operation to provide increasing value for money. That is evidenced in the remarkable increase in case clearance that I have just mentioned. The programme of work is holistic and ongoing and includes a fresh look at all processes; the integration of FOI and data protection staff to achieve greater flexibility in the ICO’s resources; the introduction of a triage system for casework; greater emphasis on the informal resolution of cases; the production of more concise decision notices; and increasing the numbers of staff authorised to sign off formal decisions.
Of course, the speed with which requests are dealt with is only one part of the picture. An effective commissioner must have sufficient enforcement powers to hand to perform his role—a point made strongly by the right hon. Lady—including the power to require a public authority to provide him with information through an information notice, and a power to require a public authority to take a particular course of action, through an enforcement notice. The commissioner has stated that he will readily use those powers against public authorities and has increasingly done so. It is worth bearing it in mind that non-compliance with either an information or enforcement notice from the commissioner is a criminal offence. That has been key to ensuring greater compliance from recalcitrant authorities. However, in a democratic society, it is only right that a public authority has a right of appeal against such notices and the FOI Act provides for that.
Sometimes the process can feel frustratingly slow for those trying to access information. The right hon. Lady knows how it feels, as she said during her long description of what she had to go through. I understand that she wanted to put the process on the record so that we can learn from what happened in her situation. However, we should not allow frustration to override the right of public authorities and requesters to challenge decisions where they think they have a right to do so.
Debates such as these prompt us to reconsider whether the ICO’s powers of enforcement and public authorities’ right of appeal are appropriate, fair and balanced. I can assure the right hon. Lady that we will keep returning to the matter, because it is of central importance in ensuring that both individuals and organisations can exercise the rights that we want them to have. Any unnecessary obstacles, such as delays, must be—and are being—tackled to make sure that personal data are protected and that information that should be released is released as quickly and efficiently as possible.
It is important that we continue to support the commissioner, as his work is at the heart of the Government’s transparency agenda. The commissioner will publish his annual report tomorrow and the right hon. Lady will have the opportunity to see it. I am sure that she will be pleased to note the steps that the Government have already taken and will continue to take to make more information available to the public, shedding light on public affairs, from the corridors of Whitehall to the meeting rooms of borough councils and local schools.
The right hon. Lady specifically asked me to say whether the commissioner has enough power to regulate the freedom of information regime effectively. We believe that, as things stand, that is so. The powers are there. The commissioner can issue information notices, which require public authorities to provide the information requested, and can issue enforcement notices that do not require an initial complaint to be made to the ICO. One can technically start off with an enforcement notice straight away, if it is appropriate. It is a criminal offence not to comply with those notices, and if public bodies do not comply the commissioner can refer the matter to the courts to be dealt with as contempt of court.
Under section 49 of the Freedom of Information Act, the commissioner presents annual reports to Parliament, as will happen tomorrow, on the exercising of his functions and can lay further reports as he sees fit. Those reports can raise criticisms of public bodies’ handling of FOI. Furthermore, under schedule 3, if the commissioner reasonably suspects that public bodies are failing to comply with any of the requirements of the Act, he can seek a warrant from a circuit judge, granting the ICO the right to inspect premises, seize information and retain it for as long as necessary, unless it is under cover of legal privilege.
Minor Injuries Services (Devizes)
I am grateful to you, Mr Streeter, for chairing the debate. I believe that your constituency is also devoid of minor injuries units, so you might pay particular attention to the debate. I am also grateful to colleagues, including my hon. Friend the Member for North Swindon (Justin Tomlinson), for taking time out of their hectic schedules to attend. I am grateful to my hon. Friend the Member for Hexham (Guy Opperman), who, as many will know, worked selflessly on the judicial review that resulted from the shutdown of services at Savernake hospital. If I had a pound for every time I was told during my selection campaign, “If Guy Opperman was standing, you would not stand a chance,” I would be a very rich woman today. Thankfully, we have both made it to this place and can campaign together on this and other important topics.
I am also especially grateful to the Minister for attending, as I know that the launch of his team’s momentous proposals yesterday means that he must have an extremely long “to do” list. I would also like to mention briefly my local paper, the Gazette and Herald, which is a tireless campaigner against the loss of our local health services, as well as the hundreds of other individuals in the constituency who have protested, petitioned, written letters, held meetings and tried their best to roll back the tide of closure and service erosion.
I want to mention briefly the DASH2 group—Devizes Action to Save Our Hospital—and the new Devizes health matters forum, which was set up only this month to try to resolve the impasse we have reached. I will also mention the CASH group—Community Action for Savernake Hospital—which fought long and hard to keep open the day hospital and the minor injuries unit at Savernake hospital in Marlborough. That hospital was completely rebuilt in 2005 under a PFI contract that will cost taxpayers almost £70 million over 25 years, but the services at its core—the day hospital and the minor injuries unit—closed less than a year after it reopened. The hospital now hosts a multitude of services completely unrelated to local health care, such as the eating disorders clinic for patients of the Oxfordshire and Buckinghamshire mental health partnership, while Wiltshire primary care trust scrambles to pay its unitary charges.
For my constituency, which is the 25th largest in England by land area and home to more than 91,000 people, the past 13 years of NHS management has meant multiple top-down initiatives, a continual reshuffling of priorities and the management of local health services by quangos. The result is clear: a slow and steady erosion of our local health services, despite the protests of clinicians, patients and politicians. Let me refresh people’s memories of what we have lost. In the Devizes hospital, the UNICEF award-winning maternity unit, the in-patients’ facilities, the minor injuries services and now the X-ray department have all gone. In Marlborough, the day hospital, the maternity unit, the minor injuries facilities and now 50% of in-patient beds have also gone. That pattern has been replicated throughout the rest of Wiltshire as services have been farmed out to neighbourhood or community teams—they can deliver good outcomes in some cases, but not all—or concentrated in larger hospitals in Swindon, Bath and Salisbury.
In January 2007, Wiltshire PCT set out its vision for services in the now infamous document “Reforming community services in Wiltshire”, which announced the closure of minor injuries units in Devizes and Marlborough and the axing of a host of other services, which was driven in large part by the burgeoning financial deficit that the PCT had inherited after the merger of three other organisations. In my view, the loss of reliable local minor injuries services was the most keenly felt of all the changes. My constituents literally have nowhere to go locally if they suffer a fall, cut, wound or some type of minor trauma. Nurse practitioner-led minor injuries units had served the constituency well for years. They were well used, cost-effective in comparison with sending patients to far more high-spec accident and emergency departments, and extremely popular. Indeed, with the exception of the head of the PCT, I could find no one—literally not one person—who though that it was a good decision to close those minor injuries units and ask people to travel instead to Trowbridge, Chippenham, the Great Western hospital or a walk-in centre in Swindon, the Royal United hospital in Bath or Salisbury district hospital.
My constituency ranks among the 20 lowest by population density in England, with only 20 people per hectare. Members who have visited Devizes—I hope that many will—will know that there are almost no dual carriageways, no railway connections between our major towns and few direct bus services. As a result, there are extended journey times, which is particularly problematic for families or individuals without full-time access to private transport, who account for 25% of the people in Devizes.
I thank my hon. Friend for giving way in this crucial debate that she has secured for Wiltshire residents. I want to highlight a concern that supports her specific point about public transport. When the Great Western hospital in Swindon was set up in my constituency, there was an emphasis on green travel, so there was a limit on parking provision. The residents of Devizes who are sent to Swindon almost invariable come by car, and there simply is not adequate parking provision.
I thank my hon. Friend for that important point. We have built hospitals following the sound principle of encouraging local travel and walk-ins, but the major service review forgot that most bus services do not run to the existing services from the places where minor injuries services used to be provided. In fact, it is impossible to take a bus from Marlborough to any of the six suggested units for minor injuries services.
I was interested to learn what the current PCT guidance recommends, so last night I phoned NHS Direct and asked what I was to do if I had a bad cut and lived in Pewsey, which, as many will know, is in the centre of my constituency and, as home to around 4,000 people, one of the largest villages in the area. I was advised to go to Swindon hospital’s A and E unit, which is considered to be a journey of only 16 miles. However, as we know, the concept of “as the crow flies” does not give a good indication of distance in rural constituencies. In fact, a simple search on Google maps reveals that that journey takes between 38 and 46 minutes by private car, which is far too long for a mother of a child with a bleeding head wound, or the carer of an older person with a fracture that needs immediate attention.
Let us consider the journey that the residents of Honeystreet, a lovely village in the heart of my constituency, would be advised to take to get to the nearest service. By private car, it would take them 37 minutes to get to Chippenham hospital, or 40 minutes to Trowbridge hospital. In fact, there is only one other constituency with a lower population density and no minor injuries provision: South West Norfolk. Most of the other spread-out rural constituencies are blessed with more than one such unit. Indeed, they trumpet their facilities as being appropriate for populations in a rural area. North Devon has four units, Rutland and Melton has three, and the nearby constituency of The Cotswolds also has three units. Those constituencies all have population densities that are similar to or slightly lower than that of Devizes.
We might all be asking how the situation has arisen. I submit that it is because decisions about our local health care have been taken by decision makers who were unelected and unaccountable, and often uninterested in the local consequences of their actions. It was not because they were bad, malicious or unintelligent—there are many good and dedicated health care professionals in the PCT—but because the whole system rewarded top-down compliance with central Government diktat and ignored the needs and wishes of the population. Indeed, when I went to see the head of Wiltshire PCT only last week about the proposals in the White Paper that we have heard about, he said that he had no intention of reopening the minor injuries units that we have lost and that there was no case for doing so. I would like the Minister’s opinion of whether a case can be made for those services.
I would like to cite four facts to frame the debate. The population in my constituency, as is the case across much of rural Britain, continues to grow. There is a population flow from the cities to the villages and hamlets of the UK. The population in my constituency has increased by 5% since the turn of the decade. Indeed, part of the support for the redevelopment of Savernake hospital resulted from the prediction of 20% population growth in the Swindon area.
The Alberti report “Emergency Access”, which was published by the NHS in 2006, suggested that it was better clinically and more cost-effective to send patients out of A and E departments and into local urgent care centres where more nurses, paramedics and nurse-led emergency care practitioners could be used to treat them. I am grateful to the PCT for providing data showing that, in the past year, there have been 17,086 attendances by patients registered in my constituency at the minor injuries units in Trowbridge and Chippenham, and the A and E departments in Salisbury and Bath. As I have already stated, the journeys that people have to take to access those facilities are unacceptable. The cost of providing the services at the current tariff is £1.352 million.
With our new localism agenda, and given the cost that the PCT is paying for minor injury services for my constituents, surely a business case could be made for restarting a minor injury service in the constituency, as long as the total cost was below the current tariff. Some doctors in Devizes and Marlborough have expressed an interest in restarting the service and having it delivered by nurse practitioners located in their practices. Premises are certainly available in which the service could be located, including the half-empty and shuttered Savernake hospital.
Will the Minister tell us how, in the light of our NHS reforms, we can move the process forward? The current PCT, which will be in existence for at least another two and a half years, has no interest in recommissioning the service, so can we go around it in the interim period and use sustainable communities legislation, for example, to get back those services that we so desperately need?
I commend the hon. Lady on securing the debate. Some years ago, when the closures first happened, we petitioned Wiltshire county council’s health overview and scrutiny committee to intervene on our behalf. I will be grateful if the Minister indicates whether it had a role to play in standing up for the residents, constituents and patients who have written to the hon. Lady and me. Melksham in my constituency has lost its minor injury unit, and it was far closer to her constituents than the one in Chippenham.
I thank the hon. Gentleman for that excellent point. It is interesting that a subtopic of the debate is the PCT’s failure to deliver a new primary care centre in Devizes, which was promised as part of the quid pro quo when the closure announcements were made. When I suggested last week that perhaps the time had come to rip up the original plans that seem to be stymieing progress, return to the drawing board and ask whether we can deliver a hospital in Devizes under the current constraints, I was referred back to the council’s overview and scrutiny committee, which clearly has an important role to play in defining the services that we need for our local community. Will the Minister say whether, instead of waiting until 2013, we can submit pilot proposals to the national commissioning body when it is up and running and start to make progress, for example by looking for voluntary sector partners to begin a pilot programme?
There are few things that unite all the people in my constituency, but the feeling that we have been short-changed by our PCT and the NHS over the past 13 years is almost universal. I am sure that we are all united in welcoming the exciting proposals that the Secretary of State announced yesterday, and I know that the ideas of equality, excellence and liberating the NHS, and the possibility of getting back some of our minor injury services, make my pulse beat a little faster.
I congratulate my hon. Friend the Member for Devizes (Claire Perry) on securing this important debate. I know that local health services are a top priority for her and that she campaigned vigorously before coming to the House, and has done so since, as we have heard today, on behalf of her constituents to ensure that she obtains the best health care provision for the people she so ably represents. I admire her dedication and determination in fighting that battle for her constituents. I pay tribute to the NHS staff in Devizes and throughout Wiltshire for the excellent care and dedication that they provide day in, day out when looking after my hon. Friend’s constituents and those of other hon. Members in the county.
My hon. Friend is aware that my right hon. Friend the Secretary of State has launched our White Paper on liberating the national health service. It is our vision for freeing the NHS from the shackles of politicians and bureaucrats in Whitehall, giving power to people locally, and working with clinicians and general practitioners to provide those services that local communities in Devizes, Wiltshire and the country need. It is a vision for making the NHS more accountable to patients, whether my hon. Friend’s constituents in Devizes or people elsewhere. We want to free staff from excessive bureaucracy and top-down control. We want patients to be at the heart of everything that the NHS does and we want local people to have more choice and control than they have ever had and a greater say in their treatment, their needs and their health requirements. People in Devizes and the other small towns and villages that my hon. Friend mentioned will be in charge of making decisions about their care and provision of health requirements.
My hon. Friend has outlined the strength of feeling in her constituency for local minor injury services, and the support for the NHS generally. The minor injury units for Devizes and Marlborough at Savernake community hospital closed in September 2007, and my hon. Friend and her constituents were, understandably, disappointed at the decision, and have been frustrated by the difficulties and delays that have resulted from it. I am aware that people living in different parts of her constituency access different minor injury units, including those at the community hospitals at Trowbridge, Chippenham, Andover and Newbury, and that minor injury treatment continues to be available at the A and E departments in the acute hospitals in Salisbury, Bath and Swindon. As my hon. Friend rightly said, transport access causes problems for some of her constituents. I have considerable sympathy with the points she made about that.
I am also aware that my hon. Friend’s constituency covers a large rural area. She gave some interesting figures and comparisons with other rural constituencies when making her point so powerfully. I understand her desire for local minor injury units that are accessible as quickly as possible to her constituents. But I must be frank with her. Given where we are at the moment and the processes that have taken place in her county and constituency on reconfiguration of services, I am unable to ask the NHS to open previously conceded processes, or to halt those that have passed the point of no return. I know that that will disappoint my hon. Friend, but I am afraid that at the moment we are where we are because of previous decisions and the degree to which they are in process.
My hon. Friend asked what could be done, and whether pilot schemes could be introduced as a forerunner to the abolition of PCTs in 2013, and she suggested other ways of working with outside interests. I want to give her as clear a steer as possible, and unfortunately, until the PCTs are closed and cease to exist in 2013, due processes and proper procedures must be adopted to move forward. Until they are phased out from 2013, the PCTs will continue to have the same responsibilities that they have now for the provision and commissioning of health care in the areas for which they are responsible, including Wiltshire.
I pay tribute to my hon. Friend the Member for Devizes (Claire Perry) for carrying on the work that we have all been doing for a considerable period on hospitals in Wiltshire. I spent three years of my life trying to keep them open. The Minister is saying that in reality, whatever the situation, despite the Health Secretary saying in 2007 that clinical need should justify closure, despite this being fundamentally an accounting measure, and despite decisions apparently not being reviewed before 2013, people are desperate for a hospital to reopen that is pre-existing, prepaid and sitting there—
I am grateful for my hon. Friend’s intervention and I fully appreciate his frustration at the situation. I also appreciate the greater frustration of my hon. Friend the Member for Devizes, because her constituency is directly affected by the issue that we are discussing. I repeat: we are where we are. We have a vision of a health service that works from the bottom up rather than the top down. However, until the changes occur, we are in a straitjacket because of procedures currently in place that have to be adopted.
Before the intervention by my hon. Friend the Member for Hexham (Guy Opperman), I was responding to the question from my hon. Friend the Member for Devizes about the way forward. I hope to give her a glimmer of hope and I will give her some advice about how I see the situation, both as a constituency MP and as a Minister. As long as we are in what is effectively an interim period since the publication of yesterday’s White Paper, with the PCTs still commissioning services and having the lead role, I advise her to continue her spirited and dedicated campaign to get what she seeks for her constituents. She should continue seeking to persuade the PCT, local clinicians, GPs and the local community to stay onside in the desire to establish a minor injuries unit, and ensure that the other care services she mentioned are instigated for her constituents. At the moment, that route is the only way forward because the PCTs are the commissioning agents.
I urge my hon. Friend to continue her campaign in the hope that during the interim period over the next three years, she will see a change of heart if that is possible. If it is not possible, when the changes come in, she should use the new system to seek to persuade those in charge of reconfigurations and the provision of services to reinstate the services that she so passionately and rightly believes are needed and deserved by her constituents. That is my advice. It may not be as palatable as she would hope, but I know that she will appreciate and understand that under current circumstances, we have not yet changed the system. That vision was announced yesterday and it is a vision for the future.
By 2013, if we get our ducks in a row, get our clinicians onside and our draft contracts drawn up, will we be able to present that business plan—in whatever forum we are in—to the national commissioning body and have some chance of success? Is there hope that within a three-year period before the next election we might get those services back under a new contract commissioned by the central body?
Obviously, I cannot give a commitment that my hon. Friend would be successful. I wish her well in her endeavours, but it is not for me to prejudge what might happen. She is certainly right that if she puts all her ducks in a row—as she put it—with a business plan for what she believes her constituents need, she can present it to the national commissioning board and to GP consortiums in her area. Everybody will then work together, and make an overwhelming case for what my hon. Friend wants to see delivered for the local people of Devizes and her constituency.
As my hon. Friend will accept, “The times they are a-changin’”. The Government’s approach is different from the top-down approach taken by the previous Government. We believe that local decision making is essential to improve outcomes for patients and drive up quality. We will do more than just talk about pushing power to the local level; as the Secretary of State’s White Paper shows, we are going to do it and make the dream a reality. That will be of considerable help to my hon. Friend in her campaign.
Given my hon. Friend’s experiences during her ongoing battle, she will agree that we must move away from having Whitehall dictate how care should be delivered in Devizes, Westbury or any other town or village in Wiltshire. We believe that change must be driven from the bottom up, and that the patient must be the heart of health care provision. The patient must be put first; their interests and quality of health care is the No. 1 priority, not the decisions, ramifications and shenanigans of politicians and civil servants.
In future, all service changes must be led by clinicians and patients, not driven by Ministers such as me, or civil servants from the Department of Health. Only then will the NHS achieve the quality improvements that we all want to see.
In his search for local accountability in decision making, it would be helpful if the Minister advised hon. Members where in the process the public’s demand for these services will be heard. Is there a role for locally elected politicians to secure influence in determining outcomes through the health overview and scrutiny committees of our local councils?
If the hon. Gentleman refers to current arrangements, he will no doubt be aware that in late May, the Secretary of State announced changes to the criteria that need to be taken into account in any reconfigurations currently under way—providing that those reconfigurations are not so far advanced that it would be impossible to reverse them—and any future reconfigurations. The main priorities include taking into account the views of local people, clinicians and GPs and ensuring that health care is relevant for the local area.
If the hon. Gentleman is asking what will happen after the changes in the White Paper, let me say that once the PCTs are wound down and abolished, there will be a transfer of powers to the national commissioning board and all that flows downwards from that. Provision and responsibility for the commissioning and delivery of health care in a local area will be linked to local authorities, and accountability will be through local authority input with locally elected representatives. Public health is currently dealt with through the input from the primary local authority level in each area. That is where the accountability will be. The predominant point is that because one must have a locally driven health service, the wishes of the patient—not only in their individual care but in the requirements of the local community—must be fundamental to the decision about units or configurations. I hope that the hon. Gentleman and my hon. Friend are reassured by that.
In conclusion, I once again pay tribute to my hon. Friend for her commitment and dedication in fighting so hard for her constituents, not only before the election but afterwards. She has been in the House for about eight weeks, and she has already made her mark fighting for her constituents on the issue that she promised, during those long days in April, to take to Westminster. She is now in Westminster and has brought the issue to the debate today. I have every confidence that she will continue to use the means available to her in the House to pursue her agenda, and that she will mobilise support in her constituency to ensure that the issue does not go away. She will be determined to get what she believes to be the best health care for her community, and I wish her every success.
Sitting adjourned without Question put (Standing Order No. 10(11)).