Wednesday 16 February 2011
[Mr Roger Gale in the Chair]
Economic Regeneration (Glasgow)
Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Goodwill.)
Thank you very much, Mr Gale. I am very pleased to speak here this morning. This is my first Westminster Hall debate since I was elected as a Member of Parliament at the last election, and I am pleased that the subject is my own city of Glasgow—the great city of Glasgow. I am sure that you will hear much of that this morning, Mr Gale.
Of course Glasgow is vital to the current economy of Scotland, and over the years it has also contributed a great deal to Scotland and the United Kingdom. Although Glasgow has suffered many setbacks and difficulties along the way, I argue that the city has fought to overcome them with significant success. It is important that we understand the key ingredients of that success and that we do not repeat the mistakes of the past. Instead, we must deepen and enhance the processes of regeneration, so that we can benefit from them in the future.
The second city of the empire, Glasgow inspires great pride and loyalty in its people: pride in the skills and contribution made by working people to the economy, and loyalty to a city famed for its humour and resilience. By 1870, Glasgow was producing more than half of Britain’s tonnage of shipping and a quarter of all the locomotives being built in the world. Of course, our interest in shipbuilding continues to this day, as I am sure Ministers know. In my constituency, Glasgow East, we had Parkhead forge, which was a powerhouse of the steel industry. It was one of the biggest steel employers in the world—at one point, it employed 30,000 people—and it made an enormous contribution to the war effort. The plant finally closed its doors in the 1980s.
I argue, with some regret, that that great contribution to Scotland’s economy has not been properly recognised or rewarded over the years. There is a real sense among Glaswegians that our work and contribution were used when times were good, but that we were abandoned when change was under way, and we cannot let that happen again. As a result of that abandonment, we were left with a legacy of ill health, high poverty and mass unemployment. That situation was particularly bad during the 1980s, when unemployment soared. There was a sharp decline in public services, urban decay set in and a cycle of worklessness and hopelessness became embedded in too many communities and too many families. The next generation worked hard to tackle that legacy through economic and social regeneration. As I mentioned at the beginning of my speech, there were many successes along the way. As a result of economic diversification and increased investment in infrastructure, health and education, Glasgow achieved a great deal.
More than 53,000 jobs were created in the city between 2000 and 2005, which was a growth rate of 32%. Between 1998 and 2001, the city’s financial services sector increased by 30%, and it is now one of Europe’s largest financial centres. In 2005, more than 17,000 new jobs were created. In 2006, private sector investment in the city reached £42 billion, which represented a 22% increase in such investment within a single year. That shift in Glasgow’s fortunes marked very significant progress and played a vital part in helping to change Glasgow’s image of economic decline and worklessness. In doing so, it inspired confidence in the people of Glasgow, and it inspired investors to have confidence in the city. Of course, it also demonstrated that the famous Glasgow resilience pays off.
A debate about regeneration is about not only the physical aspects of a place but its people. Glasgow has had a strong sense that the process of economic regeneration and the accompanying process of cultural renaissance that it experienced in the 1980s and 1990s should benefit all its citizens and not only those who were skilled and able to make the most of those opportunities. Too often, Glasgow was characterised as a city of two halves, and there was a real push to ensure that all the people of the city benefited from any regeneration process. Glasgow’s problems of ill health, poverty and deprivation were so deep-rooted that there needed to be a step change in how we tackled them. A vital ingredient was the regeneration of some of the most disadvantaged communities, a number of which are in the east end of Glasgow in my constituency. Long before the big society was ever heard of, Glasgow pioneered community development.
We are all aware of the mistakes that were made in the past when things were “done to” communities rather than “with them”, particularly in relation to housing. Economic regeneration is at its best when we work with people who have experienced the problems and have a vested interest in finding the solutions, rather than when we impose top-down reforms. That is best illustrated in the housing sector. Through housing stock transfer, the city has been able to bring additional major spend into housing investment. That process not only involved tenants in a completely new way but delivered a programme of sustainable housing in Glasgow. In my previous role as a Member of the Scottish Parliament, I was the Minister with responsibility for housing in different ministerial capacities, and I was substantially involved in housing stock transfer. If anyone wants to hear me talk for half an hour about housing stock transfer, I am very willing to oblige, but such talks are obviously not in great demand at the moment.
Given the challenges facing Glasgow, it is important to understand how we made progress. Glasgow city council was instrumental in building a lasting partnership with the private sector, a partnership which continues to this day. That partnership with the private sector will be the theme of my contribution to the debate, including how it is possible to get the public and private sectors to work together. My real fear is that that partnership is being jeopardised at the moment. The experience that we had in Glasgow of the partnership between public and private is relevant to the discussions of today and the priorities that we set.
In Glasgow, the private sector understood the need to invest in education and the benefits that it accrues from that investment. The private sector benefited enormously from the developments in housing and in particular from housing stock transfer. For example, the £1 billion investment by Glasgow Housing Association has seen unparalleled improvements in housing throughout the city. Perhaps the employment opportunities that arise from such housing investment are not properly understood, but in fact 4,000 people were directly employed between 2006 and 2010 as a result of the investment in housing in Glasgow. Nearly half those people were employed through community benefit clauses, which shows that public intervention works by creating sustainable employment. Of the 2,000 people who were employed through community benefit clauses, half of them were trainees or apprentices. Once again, that employment has had a real impact in the communities in which those people lived and worked.
We have experienced a bit of a jolt to the process of regeneration in Glasgow in recent years, since the Scottish National party came to power. I would argue that during that time the partnership approach to regeneration has been undermined. That is exemplified through the development of the Scottish Futures Trust. That trust was set up by the SNP Administration, and it was meant to be part of a new approach to raising private finance, allegedly for investment. However, it has failed to commission the building of a single new school, and funding for capital investment projects has fallen by £1 billion at the cost of 37,000 jobs in the construction industry.
The SNP Government have refused point blank to listen to the pleas of the business community in Glasgow, and as a result of that cut in capital investment and other cuts, the construction of school buildings has been scrapped and thousands of teachers and nurses have lost their jobs. The “Salmond slump”, as it is now termed in Scotland, has also seen the cancellation of vital capital infrastructure projects such as the Glasgow airport rail link. The cancellation of GARL has meant the loss of 1,300 jobs. For the first time in a long time, Glasgow unemployment figures have begun to fall behind those of England.
There is no doubt that the decline in investment under the SNP Administration has hit Glasgow hard. In my own constituency, the number of new or refurbished schools between 1999 and 2007 was 14, so we had 14 brand new or refurbished schools in the east end of Glasgow in that time. Since the SNP came to power, not one school in my constituency has been built or refurbished—there has been no investment at all in schools. Recently Glasgow city council has had more than its fair share of budget cuts, as the council itself will confirm. There has been a 3.6% budget cut, which is the highest cut for many years and above the national average.
Glasgow is battling on, and there are still regeneration projects that matter enormously. I want to refer to two of those projects that are of great importance—first, the Commonwealth games, and secondly the Clyde Gateway. The 2014 games will be an exciting occasion, and there was great celebration in Glasgow when we won them. It is an occasion to celebrate sport in a city famed for its sporting achievements. As the Member of Parliament for the great football team of Glasgow Celtic, I expect everyone to be aware of our great expertise on the football field, and I am sure that we will inspire interest in other sports when the Commonwealth games are held. It is, however, also an opportunity to foster economic regeneration, most particularly in areas of the city that still need rejuvenation. More than 9,000 businesses entered the bidding process for affiliated contracts and subcontracts, and it is expected that the games will create 1,000 jobs and stimulate £1 billion of infrastructure investment in Glasgow, most particularly addressing our urge to ensure that the most deprived areas benefit. In the east end of Glasgow the games are of great significance, so will the Minister, in his response, focus on the games? We could perhaps learn things from the UK’s experience with the Olympic games, and the UK Government could perhaps play a part in ensuring that the Commonwealth games are an important success.
The Clyde Gateway is another important development in the east end of Glasgow. It has been identified in the national planning framework as Scotland’s top regeneration project. It has the target of creating 21,000 jobs and 10,000 homes over two decades. It is vital to the success of Glasgow, but recently there have been some problems with its funding. The SNP Government have taken some action to address the concerns, but the role of Scottish Enterprise has, I think, been controversial in its support of the gateway. We cannot afford to let the project slip, and some of my hon. Friends will perhaps want to make more detailed reference in their contributions to the progress, or lack thereof. Hopefully, we can particularly focus on that in the coming months, as it is key to the regeneration of Glasgow. Both the Clyde Gateway and the Commonwealth games are important to regeneration, particularly as they have a focus on and locus in addressing the issue of deprived communities, as well as having a stake in Glasgow’s future.
Glasgow is, of course, facing the double whammy of a Tory-led Government—hon. Members will have expected me to move on to this topic. In debates such as this, I always want to be polite, so I will say this in the most generous personal terms, but I cannot resist making political criticisms and I hope that the Minister will take what I say in the tenor in which it is meant. We have seen some difficulties and challenges since the election of the new Government, including the cancellation of the future jobs fund, which was doing so much to tackle problems of unemployment and particularly of youth unemployment, where we were just beginning to grapple with some of the more deep-seated issues. We have seen the cuts in public expenditure, and we have heard from the Government that when cuts are made in public expenditure, the private sector will step in to fill that gap. I say assertively to the Government that that did not happen when the SNP cut expenditure. In fact, the business community put quite a different case in Glasgow, where it said that when public expenditure is used wisely, it can assist private sector development, and we have seen the details of that in Glasgow and the real success of the model.
We have also seen a raft of cuts in housing benefit, which has undermined that twin process of economic and social regeneration. I would be the first at the barricades saying that welfare reform is important, particularly because of the constituency that I represent. I was a great supporter of the welfare reforms introduced by the previous Labour Government, but how reform is done is critical. The number of people on incapacity benefit tripled under the previous Tory Government, but fell during the previous Labour one. It is concerning that this Government’s welfare reforms are perhaps undermining regeneration. A particular example is the Government’s decision to take away 10% of housing benefit from someone who has been on jobseeker’s allowance for a year. Even if that person is doing all that is required of them and is desperately looking for work, they will still lose their benefit. That not only has a harsh impact on the family but undermines housing-led regeneration, because it affects funding for housing associations in Glasgow, which would be a desperate setback for our city. In all honesty, such a punitive, nasty cut reminds Glaswegians of the bad old days. We have had the higher education cuts that have come through the block grant, and investment in education, particularly at university level, matters so much for a skilled work force, because it enables growth in key sectors such as life sciences and finance.
Centre stage in this discussion has to be unemployment. The numbers have been creeping back up in Glasgow, particularly with the real concerns about the retraction in the economy shown in the recent growth figures. In Glasgow in December, 15 claimants were chasing every vacancy—in my constituency, the figure was 25. That is deeply worrying for those individuals, families and communities, and it has an enormous impact in the city as a whole. It is all very well telling people that they must go back to work, but there are no jobs to go to, which cuts the feet from under the policy. We cannot have welfare to work if there is no work, and it is employment and the lack of it that lies at the heart of the regeneration debate.
For generation after generation, Glasgow has experienced surges in unemployment through profound economic shifts without the right action to protect its people and to get its economy back on its feet, and it looks as though we are experiencing that yet again. I have no doubt that the Government will respond by saying that it is all the fault of the previous Government, and that there is nothing else that has to be done apart from tightening our belts. That has been said to Glaswegians before, and it is has been proved very wrong indeed, many times. I argue very strongly that the people of Glasgow understand that the banking crisis was the fundamental cause of the recent economic experiences, and there is great resentment that that sector is not being made to contribute more to the solutions. Britain’s debt was among the lowest in the G7, and the Tories actually argued that we should perhaps have gone further in our plans for public expenditure. In reality, as Glasgow has shown, it is not “public sector investment bad,” as if that were somehow a drag on the economy that stifles private sector development; it is both the public and private sectors working together in partnership that is good and that matters.
I will draw my remarks to a close, and I thank hon. Members for attending the debate. One of the first demands that I had when I became a Member of Parliament came from Glasgow’s Evening Times, that other significant element of Glasgow life, which my hon. Friends know. The paper contacted me and insisted that my job here is to stand up for Glasgow and that I should make that one of my central claims, which is what I agreed to do—we always agree, I am sure, with the Evening Times. I will continue to do that, because it is our job here to highlight the city’s strength and potential.
People have many images and stereotypes of the city of Glasgow, and I never deny the problems that we face. I have hopefully done some work to try to deal with some of our city’s great difficulties, but it is also a city of great strength, promise and resource, and we have to learn from not only its problems but its great successes. I hope that the Minister will listen and will take back Glasgow’s message to the Government. That message is that they should think again about cuts in housing benefit in particular and that they should support our fight for jobs, particularly as we have seen the job crisis increase. They should recognise Glasgow’s contributions and work with us to support economic and social regeneration.
Four hon. Members on the Back Benches wish to participate in the debate. The Chair chooses to give preference, when possible, to Members who have written to Mr Speaker to indicate that they wish to take part, so I propose to call Mr Greatrex next. It might be for the convenience of Members if I also indicate that I shall then call Ms Swinson, Mr Bain and Mr Sarwar, in that order. If hon. Members would be good enough to confine their remarks to 10 minutes, that will enable me to call the Opposition Front-Bench spokesperson at 10.30 am.
I will endeavour to keep my remarks as brief as possible, so that other Members are able to make their points.
I congratulate my parliamentary neighbour, my hon. Friend the Member for Glasgow East (Margaret Curran), on securing this important debate. She rightly spoke of the history, character and legacy of the city of Glasgow and, importantly, of the city’s potential. I pay tribute to her and the other hon. Members who are standing up for the great city of Glasgow in this debate.
I speak as somebody who definitely does not represent a Glasgow constituency. My constituents who live closest to Glasgow are not slow to remind me that they live in the Royal Burgh of Rutherglen. They might have Glasgow postcodes and phone numbers, but the River Clyde forms a natural boundary between Rutherglen and the east of the city, although that natural boundary might not be respected in future by the Boundary Commission, depending on the outcome of deliberations elsewhere today. However, I suppose that that is a debate for a much later hour.
Although my constituency interest is not directly in Glasgow, the fact that my constituency neighbours Glasgow gives me a strong connection with the city across the river. The southernmost part of my constituency shares many characteristics with the east end of Glasgow, as described by my hon. Friend in her speech. Due to that connection, my constituency has a direct interest in the regeneration of Glasgow, particularly through the Clyde Gateway project, which she mentioned and I will discuss briefly.
I realise that the Minister will get both a geography and a history lesson during this debate. I hope that the Clyde Gateway is a fairly self-explanatory description of the regeneration area. It takes in the area to either side of the Clyde and east of the city, and includes the constituencies of my hon. Friends the Members for Glasgow Central (Anas Sarwar) and for Glasgow East on one side, and mine on the other. The Minister might be less familiar with the work of the Clyde Gateway urban regeneration company. I pay tribute to the work of Clyde Gateway, which has learned the lessons from sometimes less successful regeneration initiatives in other parts of the country. Clyde Gateway has actively involved and engaged communities since its establishment in late 2007, and its priorities have been led by what local communities say they need and want for the area.
It is fair to describe this as a once-in-a-lifetime chance to make a difference to some of the most deprived areas of Glasgow and South Lanarkshire. The opportunity has been created partly by the Glasgow bid for the Commonwealth games in 2014, as my hon. Friend mentioned, and partly by the construction of the final, missing section of the M74 from Cambuslang in my constituency to join the M8. The improved transport connection and legacy sports facilities from the games will make a massive difference to the area. At the same time, an opportunity is at stake to do much more in relation to housing, industry and jobs—not only construction work but sustainable long-term jobs.
So far, only some of those benefits have come to fruition in the form of improvements in and around Rutherglen station, the opening in the past few weeks of small business units in Stonelaw road in Rutherglen and an innovative arrangement with Campbell Construction Group to ensure that the construction jobs and training associated with the Clyde Gateway project are geared as far as possible towards local people.
The Clyde Gateway area on the side of the river that I represent has a long and proud industrial history, but history does not always get us far. It does not provide many jobs, keep local people in the communities where they want to live or help economic growth. Although the pits have long gone and the Cambuslang Hoover factory has been closed for several years—some of the physical structure is still around—the steel works continue. There is huge potential to help regenerate what was once and can again be a thriving economic base in my constituency.
The potential is clear. Thanks to the work of Clyde Gateway, public support exists and some of the first projects have been delivered. Visible progress has been made not just in Rutherglen but in Bridgeton on the other side of the river. The project has also gained the support of business organisations, Glasgow city and South Lanarkshire councils and, until recently, Scottish Enterprise, the regeneration agency in Scotland. Clyde Gateway has been an evolving success story, with huge potential and the support—at least in words—of Ministers in the devolved Administration in Edinburgh.
It was therefore of great concern when in January this year, without notice, consultation or explanation, Scottish Enterprise announced that the budget of Clyde Gateway and other URCs in Scotland would be cut by nearly half, which is well beyond the level anticipated or warned about and places in doubt the future of Clyde Gateway and its ability to deliver some key projects. Many people felt utterly betrayed, not by Clyde Gateway or by their local authorities, which were keeping to their side of the bargain as founders of the regeneration company, but by the crass actions of Scottish Enterprise.
The once-in-a-lifetime opportunity has been left cruelly in limbo by Scottish Enterprise. Last week, after pressure, John Swinney, the Finance Minister in Holyrood, managed to find the money to reinstate the sum cut from the budget for URCs for this year by creating an underspend elsewhere, a juggling act of the type I am sure Treasury Ministers are practising for March.
Clyde Gateway is still at the mercy of Scottish Enterprise. A week later, Scottish Enterprise has still not confirmed how much money will be redirected back into the projects to which it committed, nor what the long-term position is given its previous commitments to funding until 2016. Scottish Enterprise said in its business plan, published less than a year ago, that it will
“continue to work…to deliver national regeneration priorities”
such as Clyde Gateway, ring-fencing £12.5 million in 2011-12 and 2012-13 and maintaining funding until 2016.
As I am sure the Minister will understand, the continued ability to lever in private sector investment and commitment from potential employers depends on stability and confidence that plans will be delivered, not left in the lurch. It is not good enough that, although John Swinney was forced to restore the money cut from the budget, Scottish Enterprise has failed to explain what that will mean for Clyde Gateway next year. There is no sense of what the position will be in the further two years for which money was previously committed.
We have heard in this debate and will continue to hear about the importance of regeneration to many communities in Glasgow. Clyde Gateway covers one aspect of that regeneration in a specific area, but it is a crucial time for the east end of the city and the areas across the river in Shawfield and Rutherglen. If taken, this opportunity can make a difference to many people. If it is missed, they will be cruelly let down. The area has needed regeneration for far too long, as is obvious to anyone travelling through it. Progress has been made recently, creating hope, but there is now a danger that due to the twisted logic of Scottish Enterprise, the opportunity could be lost.
I realise that it is not the Minister’s direct responsibility, but I take this opportunity to place on the record my hope that Scottish Enterprise will do what it can to make clear its ongoing commitment to Clyde Gateway so that crucial capital projects can progress. Failure to do so will let down the communities in my constituency and other hon. Members’ in a shoddy and disgraceful way.
I congratulate the hon. Member for Glasgow East (Margaret Curran) on securing her first Westminster Hall debate on this very appropriate topic, and on how she introduced it. She is well known for being dedicated to her constituency and constituents, and she captured the city of Glasgow’s past and continuing energy.
Like that of the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), my constituency is just outside the city of Glasgow, although it does not have the same natural boundary. The town of Bearsden in my constituency is right next to Anniesland in Glasgow, and Bishopbriggs in East Dunbartonshire runs into Springburn in Glasgow. It is fair to say that people in the west of Scotland who live near the city are very aware of whether they are within Glasgow city boundaries, but the further away they live, the more solidarity they feel with Glasgow. As a student in London, I recall sometimes feeling like an outpost of the Glasgow tourist board. When I said that I was from Glasgow, people would say to me, “Oh, that’s a dirty, horrible industrial city,” and I found myself putting those myths straight.
Although Glasgow has a proud industrial heritage, it is also a city with stunning Victorian architecture—indeed, it was the UK city of architecture and design in 1999—and an exciting mix of culture. It was the European city of culture in 1990, which was in itself a great catalyst for regeneration, similar to that which we have seen in Liverpool recently. Glasgow is now very much a modern, vibrant and confident city, and people with an outdated view of it should visit in order to experience what it is like today. Many of my constituents work in Glasgow—the transport links are good—so the economic regeneration of the city is important for the health, well-being and prosperity of people living in East Dunbartonshire. Glasgow has a wide hinterland. It is very much the focal point for all of the west of Scotland in terms of economic activity, which covers everything in the region, from the bustling city centre to the tranquillity of the shores of Loch Lomond.
On regeneration, I want to touch upon a particular part of the hinterland, namely the town of Kirkintilloch in my constituency. It is celebrating its 800th anniversary as a burgh this year, and it is the focus of much regeneration. I think that the hon. Member for Rutherglen and Hamilton West will know a great deal about Kirkintilloch’s initiative from his previous work for East Dunbartonshire council. The initiative has brought together a multimillion pound regeneration package, including a new leisure centre, a new health centre and a newly opened link road, which, as well as alleviating some traffic problems, makes Kirkintilloch much more accessible to people travelling there from Glasgow. It has helped to regenerate the town, which certainly needed it—it is, perhaps, the part of my constituency that has been in most need of regeneration. That has been successful and much of it has now been completed.
The town has recently been allocated £361,000 for town centre regeneration from a Scottish Government fund. Therefore, although the hon. Lady has genuine criticisms of the Scottish Government, it is perhaps fair to say—particularly because no representative of the Scottish National Party is present—that the Government in Holyrood have done some things right. However, I agree with her complaint about the cancellation of the Glasgow airport rail link. I do not now fly to London—I take the train instead—but that was an important project that would have been helpful had it not been cut. Kirkintilloch has a great deal of heritage—as I have said, it is celebrating its 800th anniversary. The Forth and Clyde canal runs through it, and it has much Roman heritage. In fact, much of my constituency runs along the line of the Antonine wall, which not long ago became a world heritage site.
That brings me to the issue of economic regeneration and tourism. It is frustrating that we underperform in that area in the west of Scotland. One of Scotland’s biggest industries is tourism, but so many people I meet who say that they have visited Scotland have been only to Edinburgh and think that that is enough. We must and can do more to draw people across, even if it is only for a day trip, so that they do not just think, “We’ll go to Edinburgh.” After all, the two cities are only 45 minutes apart on the train, and the west of Scotland has a wealth of activities and things to offer people that they would not necessarily get in Edinburgh. We should be promoting that more.
As I have said, we have the world heritage site of the Antonine wall. We also have the west highland way, which is one of the world’s greatest long-distance walks and which starts in Milngavie in my constituency. We have not properly exploited its economic benefits. Obviously, there is a current economic benefit, but it could be so much greater. The recent opening of a tourist information centre in Milngavie was a welcome start to that process, but it speaks volumes that, until recently, this world-famous, long-distance walk did not even have a tourist point at its start. It has not been given the priority that it should have for many years.
Another reason why we should attract more people to Glasgow is that—if I may be slightly biased—we are a much friendlier city than Edinburgh has a reputation for being. I am sure that if people come, they will want to come back and become ambassadors. Those of us who represent the west of Scotland in this place and in other Parliaments have a responsibility to be ambassadors, as the Evening Times rightly told the hon. Lady. We need a renewed focus on tourism at all levels of government.
The 2014 Commonwealth games provide a great opportunity to sell Glasgow, and they are also clearly a huge boost for economic regeneration through the investment for building various facilities. We should make sure that there are good links—I understand that this is the case—between the teams preparing for 2012 and 2014, but we should also use the expertise of Manchester, which had such a successful Commonwealth games in 2002. Beyond the boundaries of the city, enlightened local authorities surrounding Glasgow have the opportunity to do what some of those surrounding Manchester did in 2002—own the Commonwealth games and use it for economic, educational and cultural benefit by linking up with countries that may want to base their training camps in those parts of the west of Scotland. They could also create much more meaningful links with local school projects and get the whole community involved. Moreover, the 2012 London Olympics and the 2014 Commonwealth games even have the potential to encourage some countries partaking in both games to base their training camp for 2012 in and around Glasgow and to return there in 2014, so there would be a relationship over several years.
This is a Westminster Hall debate, so there is a general spirit of consensus, which has been well noted this morning. I will end, however, on a slight note of discord. The hon. Lady is right that it is essential that the public and private sectors work together and that that can be successful. I take slight issue, however, with the suggestion that we have a low level of debt and that it is not a major problem. The fact that we have more than a trillion pounds of national debt is a threat to economic regeneration. The fact that we are spending £120 million every single day in debt interest almost makes me want to weep, because it makes me think about what else that £120 million could be spent on. We can all think of things in our constituencies that would promote regeneration and on which that money could be well spent, but at the moment it is, effectively, just dead money going on debt interest.
In the grand scheme of things, much needs to be done to promote economic regeneration in Glasgow and elsewhere, but I agree that tackling the deficit has to be a key part of that. If we do not do that, we will not have the environment that is essential for confident business growth, which will, ultimately, deliver the further improvements that we all want to see in Glasgow and elsewhere.
It is a pleasure to serve under your chairmanship again, Mr Gale, in this important debate on the Glasgow economy. I congratulate my hon. Friend the Member for Glasgow East (Margaret Curran) on securing the debate and on speaking with the experience of 12 years as a parliamentarian serving Glasgow, both in this House and the Scottish Parliament. She was also a champion for social justice when she was a Minister in a previous Scottish Executive.
It is clear that, prior to the global economic downturn in 2008, Glasgow was on the cusp of a real economic renaissance. Between 1998 and 2008, there were more Glaswegians in work than ever before, while 30,000 jobs were created in business services—a 60% increase—and more than 4,000 new jobs in the financial services sector. Glasgow experienced strong retail growth in that period, with 1,500 shops in the city centre, which even now generate £2.4 billion per year in retail sales turnover. Glasgow also extracts real economic benefit from tourism, as the hon. Member for East Dunbartonshire (Jo Swinson) has said. The current expansion in hotel capacity is key to attracting new events and to the hosting of a successful Commonwealth games in 2014.
Even in recent times, major companies have continued to invest in Glasgow’s biggest asset, its people, by announcing major recruitment programmes. In autumn 2010, Vertex, a provider of customer management outsourcing, announced plans to create 368 jobs, while 1,500 new jobs have been announced in the financial sector by Barclays, Santander, esure, Morgan Stanley and Odyssey Financial Technologies. There has also been a 75% increase in the leasing of office space in the city.
I would like to emphasise three points. First, investment in infrastructure is needed if Glasgow is to remain competitive in increasing its output in retail and business services. The particular priorities are upgrading Glasgow’s drainage and water catchment system to mitigate flood risks, and improving transport networks. There is an overwhelming case for constructing a high-speed rail network from London through the major English cities to Glasgow and Edinburgh at the earliest opportunity. That is worth £20 billion in economic benefits to both cities. The city council, the business community, the Scottish Council for Development and Industry, and Labour Members are concerned about the lack of momentum by the Department for Transport in initiating the necessary discussions with the Scottish Government on the planning and financial issues involved in the construction of high-speed track in Scotland. I hope that the Financial Secretary and the Secretary of State for Scotland will encourage the Secretary of State for Transport not to leave that essential work in the slow lane. The Scottish Government also need to play a central role in increasing capacity, principally between Glasgow airport and the city centre, through the reinstatement of capital funding for the Glasgow airport rail link, which has—as my hon. Friend pointed out—the potential to create 1,300 jobs in the west of Scotland. A further priority is the upgrade of major roads, such as the completion of the M74, because half of those who work in Glasgow live in constituencies outside the city’s boundaries—for example, that of the hon. Member for East Dunbartonshire.
Secondly, more has to be done to tackle Glasgow’s historic underperformance in labour productivity, particularly in the service sector. BAK Basel Economics benchmarked Glasgow against a group of 35 European cities, and Glasgow averaged an annual growth rate of 2.3% in productivity from 2000 to 2005, which puts it in the top 10 cities. However, Glasgow lay in 33rd place in relation to measures of labour productivity in 2005, which is relatively low in comparison with other major EU cities. Thirdly, Glasgow’s economy needs to diversify in order to take advantage of the expansion in the renewables sector, of our universities as centres of scientific and other research excellence, and of high-value-added manufacturing.
The life science community within the west of Scotland is home to 180 companies, including those in Nova park, Robroyston in my constituency. Those companies range from major pharmaceuticals, to diagnostics, therapeutics, medical devices, contract researchers and manufacturers, all of which jointly employ more than 80,000 people. However, continued business support from the Government is required to ensure that they flourish in the coming decade.
Glasgow is home to a quarter of the west of Scotland’s core energy sector businesses and many other energy sector supporting businesses. Research undertaken by the sustainable Glasgow initiative found that Glasgow currently emits around 4 million tonnes of CO2 per annum, which is linked to its energy use. The initiative proposes a series of measures to reduce those carbon emissions, such as renewable energy systems, fuel switching and energy management systems.
I am speaking as a Glasgow constituency Member rather than as an Opposition Front Bencher. I very much welcome what my hon. Friend has said. Does he agree that Glasgow is a perfect location for the new green investment bank proposed by the Government, given its track record not only in financial services, but in innovation and in having a connection with the renewable energy sector?
I am most grateful for that intervention. As on so many other matters, my hon. Friend anticipates the argument I was about to advance. She has pointed out why it is particularly regrettable that the creation of the green investment bank, which could kick-start many renewable energy projects in Glasgow, has been caught up in a game of Whitehall pass the parcel. As the Secretary of State for Business, Innovation and Skills revealed last week, plans for capitalisation are unlikely to be published before May at the earliest. It is still uncertain whether the green investment bank will have sufficient operational independence from the Treasury, and there is a wider need for capital for new innovatory business start-ups. In addition, there is a strong argument for investigating the case for a wider British investment bank.
The city council has identified low pay as an area requiring urgent attention. In 2006, the average Glaswegian earned 2% less than the UK average, but thanks to the adoption of a living wage policy—first of £7 an hour, but rising to £7.15 an hour this year—by 150 businesses that employ 50,000 people in Glasgow, average earnings are now 3% above the UK average.
It would not be fair to leave out the records of the Scottish and UK Governments in recent months on assisting Glasgow in developing a strategy for growth. I regret to say that Glasgow has not been particularly well served by either Government. The city council experienced a cut in funding of 3.6% from the Scottish Government, which was 1% more than previously indicated and is the worst financial settlement since 2007. Despite that, the city council has made job creation, particularly for young people, a priority. It has invested in the Commonwealth apprenticeship initiative, through which 241 companies took on 600 apprentices last year, and the Commonwealth jobs fund, which aims to create 1,000 jobs for young unemployed people across Glasgow through a £6,500 subsidy per job. That is open to every private and third-sector employer in the city.
However, it is clear that, at a UK level, the cut in capital and investment allowances is affecting manufacturing exporters and harming Glasgow business. The UK Government’s failure to continue the future jobs fund beyond the spring and the revelations this morning that fewer people will proceed through the Government’s work programme than under the initiatives of the previous Government add to concerns that the hard-earned progress on employment levels of the past 13 years will slip backwards. As my hon. Friend the Member for Glasgow East intimated in her remarks, incomes will also be damaged by the Government’s proposals on housing benefit, which it has been estimated will cost £10 million to £12 million a year in lost spending capacity by the poorest families and individuals in the city.
The Glasgow economy has the potential for continued growth in existing and new areas in the next decade, but it will require Government at all levels to exhibit a sustained and credible strategy for growth, rather than simply a plan for an over-hasty fiscal retrenchment that may cost jobs and damage Glasgow’s competitiveness.
I join my colleagues in congratulating my hon. Friend the Member for Glasgow East (Margaret Curran) on securing the debate. During 12 years as an elected Member of both this House and the Scottish Parliament, she has demonstrated her commitment to the city of Glasgow. I am delighted to stand side by side with her and every other Glasgow Member of Parliament to say that our first priority is and always will be to stand up for the great city of Glasgow, which we are all proud to be from and serve.
From the outset, it is important to recognise the huge amount of regeneration that has taken place in the city of Glasgow over the past 13 years. Within my constituency, we have seen tremendous regeneration next to the Clyde, involving the media Hub, the BBC, ITV, the Scottish Exhibition and Conference Centre development, the Clyde auditorium and the science centre. I am pleased to say that all that development is happening within my constituency. There has also been tremendous development in the city centre. Sauchiehall street and Buchanan street have the second highest footfall of any UK city centre, second only to Oxford street in London. There has also been a huge amount of housing regeneration right across the city. However, sadly, that has stalled through the recession and as a result of these difficult times.
As the hon. Member for East Dunbartonshire (Jo Swinson) rightly pointed out, the 2014 Commonwealth games will provide a great opportunity to sell Glasgow not only nationally but globally, and will bring opportunity for the east end of the city. It is important to recognise that Glasgow has had a tumultuous economic history, and that the growth and development seen in recent years is extremely fragile, particularly in such a tough economic climate. All hon. Members present today understand that regeneration is driven by economic growth, be it a particular area or the nation as a whole. The regeneration that Glasgow enjoyed under 13 years of a Labour Government is at threat at its roots as a result of inaction from the Scottish Government and a new UK Government policy. However, as with all development and regeneration, cutting off support too early means cutting the lifeline to projects, which will end before they have begun, squandering the initial investment and leaving communities back where they started.
Therefore, in spite of the current climate, it is important that we ask the Government to remember fragile areas such as Glasgow when they make cuts and choose where to invest. That includes cuts to initiatives such as employment zones, and investment in projects such as high-speed rail. The people of Glasgow have been forgotten in the past, when the closure of the shipyards left generations unemployed, and I hope this debate will help to ensure that Glasgow is not forgotten again.
It is important to remember that regeneration is not only about the physical development of new areas through Government and developers investing large amounts of capital, but giving renewed energy to existing systems and supporting the local economy and local people, so that Glasgow can regenerate itself from within. One way that the previous Government began to achieve that was by supporting unemployed people back into work—an essential step to bring growth back into deprived areas is to increase employment.
Despite investment in Glasgow in the last decade, which has improved prospects for thousands of people, the city still has one of the highest unemployment rates in Scotland and has been hit hard by the recession. The announcement by the Government that they will scrap the future jobs fund, which created more than 1,100 jobs for Glasgow and 15,500 jobs across Scotland, is devastating. The Government insist that their replacement back to work programme—when it eventually appears—will provide a more effective system for getting people back to work. However, in the news just yesterday, we heard that the number of people expected to benefit from the scheme in 2012-13 will be down by almost 300,000 on the number who benefited from the previous Government’s programme nationwide.
Labour’s employment zones, which were due to be scrapped six months before the new work programme, were also of great benefit to the city of Glasgow. I am pleased that the Government have done a U-turn on scrapping them six months before the new work programme had begun. It is a shame that it took Labour party pressure from the Opposition Benches and Glasgow Labour MPs having to fight with the Government to make them do that U-turn. The Government should have seen sense in the first place.
We have to recognise that with regeneration and unemployment, one size does not fit all. The Government need to demonstrate that they are paying attention to areas with serious long-term unemployment problems through plans to provide focused support to get people in those areas back to work, particularly given their plan to penalise the long-term unemployed with policies such as a 10% cut in their housing benefit.
Poverty and a lack of opportunity are huge problems in my constituency, and the cuts to regeneration projects such as the Glasgow airport rail link and the Clyde Gateway, coupled with cuts in employment programmes, only threaten to compound the situation. It is important to recognise that the people are willing to work, but jobs must be available for them to fill. It is the growth of Scottish business that will ultimately drive the creation of the economy that Glasgow requires to regenerate itself. Therefore, in addition to supporting work programmes and investing capital in Glasgow itself, the Government must be mindful of longer-term policy decisions that will affect Glasgow’s independent growth. That includes supporting Glasgow’s growing sectors and ensuring that it remains well connected.
The Glasgow to Edinburgh improvement project will go a long way toward supporting Glasgow’s growth by improving connectivity between the two cities, reducing travel times and costs to businesses, and creating one central hub. Although strengthening Scotland’s internal links is important, Glasgow will struggle to present itself as a viable place for start-ups, or to maintain a good environment for growth, if it is not adequately connected to the rest of the UK. The Scottish market alone is not large enough to support very large businesses, particularly those in manufacturing, and international businesses will require strong links with London and the rest of the UK market before they will be attracted to settling in Glasgow. That is why it is such a concern that the plans for High Speed 2 do not currently include an extension to Scotland. Under the present proposals, journey times between London and Glasgow will be reduced by only half an hour if High Speed 2 terminates in Manchester. With current proposals planned for completion as far off as 2025, that prompts the question of how long Glasgow, and indeed the rest of Scotland, will have to wait before they benefit from an adequate rail connection to the rest of the UK.
Britain is already behind our European counterparts in providing proper high-speed connections—the French TGV began operating more than 25 years ago. Scotland’s growth will be actively disadvantaged if there is not even a longer-term plan to link Scotland with the rest of Europe. When we add to that the recent announcement that British Midlands International is to stop its Glasgow to London service, we can understand the deep concerns the Scottish business community will have when it finds competing in the international market increasingly challenging. Both Glasgow and Edinburgh city councils have come together on this. I can assure you, Mr Gale, that Glasgow and Edinburgh do not come together on many issues, but they have on high-speed rail. Independent research conducted for both councils has shown that a high-speed link could be worth up to £7 billion to the Scottish economy. What Glasgow needs in order to grow is a long-term commitment from the Government that high-speed rail for Scotland is a top priority, and that they will endeavour to make it happen at the same time it happens for the north of England.
Glasgow is a vibrant city and a great place to live, and I wholeheartedly believe that it will continue to grow if we can create opportunities for the people living there. There is no real reason why, given the right support, Glasgow cannot become an economic hub in its own right and help to drive growth for the rest of Scotland. What Glasgow needs is continued commitment from the Government to ensure that those opportunities will begin to appear, and evidence to show that Glasgow has not been forgotten, as it sadly was in the past.
It is a pleasure to serve under your chairmanship, Mr Gale. I begin by congratulating my hon. Friend the Member for Glasgow East (Margaret Curran) on securing this debate, which is of crucial importance not only to Glasgow and to those who have a concern about and an interest in Scotland, but to the wider UK economy. I am pleased that she has been supported today by my hon. Friends the Members for Glasgow Central (Anas Sarwar), for Glasgow North East (Mr Bain) and for Rutherglen and Hamilton West (Tom Greatrex) and by my hon. Friend the Member for Glasgow North (Ann McKechin), the shadow Secretary of State for Scotland, who is speaking in a personal capacity today. I also very much welcome the contribution from the hon. Member for East Dunbartonshire (Jo Swinson).
What struck me about the debate is that my hon. Friends have made an important case that is applicable not only to Glasgow, but to many other parts of the UK. The key to economic growth and the success of local economies is partnership. It is about not only what government, the voluntary sector or individual entrepreneurial spirit can do, but the partnership that brings those things together. My hon. Friends have discussed national UK Government investment in Scotland, economic projects that link Scotland to other parts of the United Kingdom, the clear benefit that public expenditure brings to Scotland and how such public expenditure relates to the private and voluntary sectors and to the social progress of people who live and work in the great city of Glasgow and the surrounding community.
My hon. Friend the Member for Glasgow East began by pointing out that Scotland has a great manufacturing, cultural and social history, including shipbuilding, the automotive industry and football—one of Glasgow’s great exports is Kenny Dalglish, who has brought great success to my part of the world. The key point is that that manufacturing history and support is where we need to build that partnership for the future. What I have taken from the debate is the issue of partnership. Secondly—my hon. Friends have touched on this, and I shall return to it—a strategy for growth is needed that involves the public sector, looks at key infrastructure projects and helps to develop the voluntary and private sectors. There is also a need—this is key to where the Government are currently failing—for that strategy, that partnership, that development, and that active government to focus on social fairness. Even at a time when there are challenges with the deficit, which we have all recognised, the way in which the Government implement their deficit reduction strategy can, as my hon. Friends have touched on, damage social fairness and the social fabric of our communities.
That is particularly important because—I do not yet have the figures for Scotland—unemployment in the United Kingdom rose by 44,000 in the last month to 2.5 million people. Particularly worrying is the rise of 66,000 in youth unemployment, which has now risen to 965,000 people between the ages of 16 and 24, which makes a total unemployment rate of 7.9%. When the Labour Government left office in May last year, unemployment was starting to fall and there were signs of growth after a difficult period. Sadly, I have to report that unemployment will undoubtedly hit the city of Glasgow, as it will elsewhere in the United Kingdom.
My hon. Friends made the case that the Minister has to explain key policies that he has promulgated in the House and now has to follow. Those policies are having and will have a severe impact on Glasgow’s economy. We need to challenge them, as my hon. Friend the Member for Glasgow East has by securing this debate, and look at alternatives. We must ensure that however we tackle the deficit, which we need to do in part—the Minister knows that when I was a Labour Minister in the Home Office, the Department had plans to make £1.5 billion of savings, so it was something that we were planning to do. However, the scale, pace, depth and front-loading of this Government’s cuts are severely damaging communities in Glasgow and other parts of the UK.
The budgets for the devolved Administrations—this is key to my area, Wales—show that the capital budget, which impacts on housing, education and infrastructure in Glasgow and elsewhere, is being cut by the Government, and in Scotland that process is being supported by the unfair application of the cuts by the Scottish National party-led Government. The £3.4 billion of capital spending in 2010-11 that was planned by the Labour Government will be cut by this Government to £2.3 billion of capital spending in 2014-15. The cut is from £3.4 billion this year to £2.5 billion in 2011-12, which makes a £900 million cut in the capital programme.
My hon. Friend mentioned that her constituency has had no investment in schools thanks to the SNP Government in Scotland and that it faces difficult challenges in respect of housing and infrastructure. Those issues will be magnified tremendously by this Government’s £900 million cut to the Scottish Executive’s budget. Again, there are ways in which we can tackle deficit reduction, but that level of drop front-loaded in the first year will hit Glasgow and other parts of the UK extremely hard. The £900 million cut for Scotland will mean that the private sector, which is so dependent on recovery in Scotland, will suffer. It will be hit by not being able to create the jobs that would have met some of that capital expenditure demand. My hon. Friend pointed to real challenges in her contribution and was supported by other hon. Friends. The Minister needs to recognise that the front-loading will cause real difficulty. The cuts, which are too quick, will exacerbate unemployment, as we have seen with the rise today.
I am sorry that there is no one here from the SNP, but I do not wish to intrude on private grief. I represent a constituency in Wales. The nationalists in Wales, to give them their due, would have been here to argue their case if the debate had been on the economy of Cardiff or Swansea. I am sorry that we have not had a contribution from SNP MPs. They might have explained how they would implement the draconian cuts at a local level. Perhaps that is something that we will return to at a later date, perhaps even outside this Chamber. My hon. Friend may wish to raise this issue elsewhere and discuss the SNP’s lack of interest in this debate and in Glasgow.
The capital cuts and, indeed, the revenue cut, which, cumulatively, is a 7% reduction in real terms in the resource budgets of the Scottish Parliament, will impact heavily on the ability of Glasgow to weather what is still a difficult period coming out of a recession which, as my hon. Friend said, was not the fault of the people of Glasgow East, yet they are the very people who will have to bear the real hardships caused by public sector reductions and the Government’s social policies. The rise in VAT and cuts to housing benefit will be extremely difficult. The unfairness of those changes hit hardest the poorest people in Glasgow, whom my hon. Friend has represented for 12 years here and in the Scottish Parliament.
There are some good news stories which should not be forgotten in this debate. Hon. Friends from both sides of the Clyde have mentioned the Clyde Gateway project and the importance of progressing it. I want to support them from the Opposition Front Bench in their endeavours to influence not only the Scottish Executive but the Westminster Government to ensure that it is a success. The project embodies the partnership that my hon. Friends have discussed today. It has the potential to develop large areas of the east end of Glasgow plus Rutherglen and Shawfield in South Lanarkshire. It involves investment of more than £62 million between 2008 and 2011, with Scottish Enterprise hopefully bringing forward £42 million to 2016. It will lever in private sector investment of up to £1.5 billion for private development, which will create jobs and homes.
The project is symptomatic of why the Government’s approach to public spending is so wrong. The Clyde Gateway scheme shows that public-private partnership can create jobs, homes and social progress. It is not a one-size-fits-all scheme, in which the public sector appears to be the devil to all other aspects of society. The Government are committed to reducing the public sector, not only to reduce the deficit but because they do not like public spending and public investment as a whole.
I hope that the Minister will endorse and support the Clyde Gateway scheme, that the UK Government will give it succour, and that that will also apply to the 2014 Commonwealth games. As my hon. Friends have said, the games will be a key economic generator and will put the spotlight on Glasgow’s tourism potential. They will be a showcase for the great skills of the people of Glasgow and for the city’s great attributes. They will involve £1 billion of investment in infrastructure, 1,000 additional jobs and 15,000 volunteers—the big society will be alive in Glasgow, irrespective of any Conservative party initiatives, which mean, in effect, a small state. I hope that the Minister will touch on that proposal today, recognise that it will result in economic growth and development in Glasgow, and support it.
Despite those positives, the Government’s policies on public spending and also on social issues will damage the economy of Glasgow. My hon. Friend the Member for Glasgow East picked up on various points. Linking local housing allowance to the consumer prices index will result in lower income for people locally. The cut to housing benefit ignores the fact that, in an area with rising unemployment, long-term unemployed people who are trying their best to find work, who are going to interviews and sending out applications and who are turning up at the Jobcentre but are still unable to secure employment will face a reduction in their income.
My hon. Friend knows that if the people of Glasgow East find that they are unemployed and that their housing benefit has been cut, the money that they lose will not be spent in Glasgow. They will not be spending in local shops, supporting the local economy and voluntary organisations, or creating local jobs with that resource in the east end of Glasgow. We add poverty to poverty by taking unfair cuts forward.
Glasgow has a younger population compared with the rest of Scotland, and, sadly, youth unemployment will disproportionately hit that area hardest. The future jobs fund has been mentioned. It had the potential to create 200,000 full-time, paid jobs for young people up and down the country, and Glasgow would have had its share. There will be real problems in the future because of that cut.
I was pleased that my hon. Friend the Member for Glasgow North East mentioned the living wage campaign. That is a big society issue: companies, voluntary organisations and the council are agreeing to pay a living wage and working together because they recognise, without the Government telling them to be part of a big society, that they have a partnership interest in the future of Glasgow. Many of the challenges are self-evident, but the Government are adding to them by front-loading public expenditure cuts too fast and too deep. However, Glasgow has real positives for future growth, such as the Commonwealth games and the Clyde Gateway, which we should celebrate on a UK basis.
Another issue that has been mentioned today is tourism. I was struck by the strong representations to extend the high-speed rail link along the west coast main line from the current proposal, which would run from London to the west midlands and through to Manchester. I use that London to Glasgow main line, because I get off at Crewe and go west. There is an argument for looking at such investment over the long term, to ensure that we enhance the high-speed link.
My hon. Friends pleaded for serious consideration of developing new industries in Glasgow and made a strong case for the green investment bank to be placed in the city, growing the financial services sector not only in Edinburgh but in Glasgow. The growth and development of renewable energy projects, with the support that the UK Government can give, are real and positive things.
My hon. Friends and I came to the debate with severe criticisms of Government policy. While needing to tackle the deficit, the Government have gone too far, too fast. However, we can work with the UK Government on some real positives, as well as with the Scottish Executive which, hopefully, will be under the control of the Labour party after May this year. We could build on the strengths and the will of the people of Glasgow to develop their own future by attracting new businesses and visitors, and by ensuring that the success of the Commonwealth games showcases that great city to the rest of the United Kingdom.
I am grateful for the opportunity provided by today’s debate, which is the first that my hon. Friend the Member for Glasgow East has secured in Westminster Hall; I hope that it will be a success. I look forward to the Minister defending his draconian cuts but also, I hope, working with my colleagues to ensure that he can mitigate those cuts and develop a strategy for growth for Glasgow into the future.
I congratulate the hon. Member for Glasgow East (Margaret Curran) on securing the debate. She struck me as passionate about her city, its people and their prospects. I commend that, and it will serve her well in this place.
I have to disappoint the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), but I am not sure that I need much of a history or geography lesson about the city. I have visited Glasgow quite frequently, I have met businesses in Glasgow and I am going to Edinburgh next month. [Interruption.] I know there is some fraternal rivalry between the cities, but the hon. Member for Edinburgh East (Sheila Gilmore) is in her place representing Edinburgh and ensuring that the Glaswegians do not get everything their own way. I understand some of the challenges in the Scottish economy. Having been born and brought up in the north-east, I recognise from my own region some of the trends referred to by the hon. Members, such as the decline in shipbuilding, or in coal mining, as mentioned by the hon. Gentleman. I see strong parallels.
I congratulate other right hon. and hon. Members, including my hon. Friend the Member for East Dunbartonshire (Jo Swinson), on participating in the debate and making the case for their constituencies.
Before I turn to the main text of my contribution, let me deal with four areas mentioned by a range of speakers. First, it is vital for Glasgow to use the Commonwealth games as an opportunity for economic development. I note the job creation initiatives around the games. Some lessons could be learnt from the London Olympics, not only in the regeneration provided for east London but in how the games are a focal point for businesses to promote the benefits of London as a place of inward investment. I encourage people in Glasgow to work closely with the Olympic authorities in London to understand the opportunity to attract inward investment and to raise the profile of the city.
The Clyde Gateway, as with the spending for the Commonwealth games, is a devolved matter, for prioritisation by the Scottish Government, but I am sure that Scottish Enterprise will have heard the strong messages from this morning’s debate. However, if MPs and others from Glasgow wish to see funding devoted to that project, they must place pressure on the Scottish authorities.
I will raise with my right hon. Friend the Secretary of State for Transport the issues about the completion of High Speed 2, which affects a number of areas of the country not covered by the current route, such as the northern part of England as well as Scotland. I will ensure that he is aware of the concerns expressed.
On the green investment bank, I am afraid that Glasgow will have to join the queue of bidders for the headquarters. A number of parts of the country have made representations through their Members for the site of the headquarters. Green investment is a huge opportunity for economic growth and development. Existing skills in local communities or in the universities serving those areas can be used to promote renewable energy and green industries. The issue affects all parts of the country but, at the time of the Budget, my right hon. Friend the Chancellor of the Exchequer said that at least £250 million from the green investment bank will be spent in Scotland. We have not lost sight of the important role such investment can play in stimulating economic growth.
As pointed out by the hon. Member for Glasgow East, Glasgow was at the forefront of the industrial revolution and it remains one of the most important and innovative cities in the UK. It is Scotland’s largest urban economy, generating £13 billion gross value added each year and supporting 400,000 jobs. As we heard, the jobs are enjoyed by those living not only in Glasgow but in the surrounding areas, as part of the economy of the west of Scotland.
We want to work in partnership with the Scottish Government to promote our shared objective of increasing economic prosperity for all in Scotland and Glasgow. As mentioned, economic regeneration policies are largely a matter for the Scottish Government and their local authorities and agencies, which was evidenced by the criticism made by the hon. Lady of the Scottish National party Government. I am sure she will take every opportunity over the coming weeks to remind SNP Members of that and to question their non-attendance today.
Setting out the Government’s economic strategy and its impact on Scotland—in particular, Glasgow—will be helpful. We set out three strands last year: first, to reduce the deficit inherited from the previous Government; secondly, to increase economic growth, including by rebalancing the economy throughout all the countries and regions of the UK; and, thirdly, to promote fairness for all.
As my hon. Friend the Member for East Dunbartonshire rightly pointed out, we have a deficit to tackle and we are spending £120 million on interest every day—we spend more in interest than we do on schools. Clearly, we need to resolve that issue if we are to support economic growth, keep interest rates low and protect jobs in all parts of the UK.
The reality that the right hon. Member for Delyn (Mr Hanson) keeps trying to escape from—he and I have had many debates on such issues—is that the previous Government set out cuts starting from April this year that would have been only £2 billion less than the cuts we have outlined. When he talks about front-loading, he ought to think about the previous Government’s plans and acknowledge that the cuts this year are only £2 billion more than in the plans we inherited. All parts of the UK, including Scotland, must bear their share of the deficit reduction made necessary by what we inherited from the previous Government.
Funding for the Scottish Government in the spending review reflects the Government’s commitment to invest in infrastructure and to ensure that conditions for growth are in place throughout the UK. The spending review increased capital funding in the UK by £2 billion compared with June’s Budget plans, which is more than what the previous Government had set out as their capital plans for the new Parliament. I repeat, the right hon. Gentleman must be careful what he criticises: we have been more generous in our capital settlement than his Government had intended. We are keen to ensure that capital expenditure is used to protect projects with high, long-term economic value and that spending is focused on investment promoting economic growth, including in transport, science, regional growth, digital infrastructure and supporting the low-carbon economy. Glasgow MPs need to challenge the Scottish Government on how they will prioritise their budgets to deliver those objectives. These are devolved matters, and the Scottish Government are accountable for the priorities they set and how they respond to the needs of Scotland.
I take the point about devolved matters, and we do pursue those. Housing benefit, however, is a reserved matter. Will the Minister confirm whether the Government are going ahead with the 10% cut in housing benefit after a year to those receiving jobseeker’s allowance?
I will return to the issue of housing benefit in a moment. Let us be clear: the Scottish Government have not suffered disproportionate cuts. Funding has been determined by the Barnett formula in the usual way. The percentage of Scottish Government total reduction in departmental expenditure limits for 2014-15 is below the UK average—they are getting a better spending settlement than the rest of the UK. Public spending per head in Scotland is substantially above the UK average and is expected to remain so over the spending review period. The Scottish Government have benefited from substantial increases in spending since devolution.
If we are to promote strong and sustainable economic growth that is evenly shared across the country and between industries, we need to tackle the debt and deficit that we inherited. The Government are inviting businesses to take part in a fundamental review into what each area of Government is doing to address the barriers facing industry. They have already acted to remove barriers to growth, and the growth review announced last year set in train an intensive programme of work to drive forward action on the Government’s priority areas. That relentless focus on growth will continue to form the basis of the Government’s agenda for the rest of this Parliament. We started by focusing on planning, trade and inward investment, competition, regulation, access to finance and corporate governance.
The review will look at all sectors of the economy, but we have first identified six key sectors: advanced manufacturing; digital and creative industries; business and professional services; retail; construction; and health care and life sciences. Manufacturing is a strong part of the Scottish economy, and it has seen six consecutive quarters of growth. That is a helpful sign of the rebalancing of the economy.
As the Financial Secretary to the Treasury, financial services is my specialist topic, and the importance of financial services to Glasgow has been mentioned a couple of times during the debate. In 2009, I visited National Australia Bank at the Clydesdale branch in Glasgow and spoke to management and businesses from the west of Scotland. The financial sector is one of the most significant contributors to UK GDP and employment, and although London is the heart of that industry, there are important financial centres across the country, including in Glasgow. Financial services firms in Scotland account for 9% of total UK employment in the sector.
Financial services is one of the biggest employers in Glasgow. In 2008, 95,000 people were employed in financial services firms in Scotland, and many of those jobs were based in Glasgow. Major local employers include National Australia Group, which I referred to earlier, and Lloyds Banking Group. I know that Glasgow has recognised the potential role that financial services can play in a growing economy. The £750 million joint public-private venture investment in the international financial services district could bring an extra 20,000 jobs to the city.
We often think of the strong tradition of businesses that are based in Scotland, but we should not lose sight of the fact that many international financial services that we associate with Canary Wharf and the City have significant operations outside London. Morgan Stanley is in Glasgow, as are Deutsche Bank and Citibank. Those global businesses chose to locate some of their operations to Glasgow, which shows that the benefit of having London as a global financial services centre spreads beyond the boundaries of the square mile. We are doing as much as we can to ensure that the UK remains an attractive and competitive place for financial services to do business.
As well as measures for the financial services sector, we must ensure that the UK is a good place for inward investment. In the Budget we announced plans to reduce the rate of corporation tax from 28% to 24% over the next four years. We published a corporate tax road map that set out a significant programme of corporate tax reforms designed to restore the UK’s tax competitiveness, including reform of the controlled foreign company regime. The Government are responding to business concerns about the instability and unpredictability of the UK tax system while taking action where they can to improve the UK’s competitiveness. We will work with our partners in the Scottish Government and elsewhere to ensure that Scotland is an attractive place in which to do business.
Increasing fairness is a strand of our work, and that point was touched on by a number of hon. Members. We must be clear about the important reforms to welfare set out by the Government. I recognise that there is a degree of support for those reforms from Labour party Members, but we clearly need to improve work incentives and get more people into work. Too many people must make a decision about whether they can afford to go to work, or whether the system means that they are trapped on benefits. That is why my right hon. Friend the Secretary of State for Work and Pensions is setting out plans for the universal benefit, which will be introduced from 2016. It means that for new claimants, it will always be better to be in work than on benefits. That sends a positive signal that people should take employment opportunities and will be better off if they do. That is not just economically better off—significant social benefits flow from people being in work.
The future jobs fund was mentioned by a number of hon. Members, and it is a convenient soundbite to say that the fund has been scrapped. We should all recognise, however, that many of the jobs that were funded were temporary and many were in the public sector and did not represent good value for money. That is why we are bringing forward the Work programme that will strengthen support for those seeking to get into work.
The hon. Lady mentioned housing benefit. She will recognise—as do a number of her colleagues—that the bill for housing benefit increased significantly under the previous Government. There are some anomalies in how the system works and the way that it distorts incentives. That is why it is important to restructure housing benefit and engage in reforms. We recognise the challenges that that will create, which is why additional money has been set aside to help manage the transition.
The hon. Lady also spoke about defence and shipbuilding. She will know that some of the work on the new aircraft carriers is being done on the River Clyde, just as some is being done in Portsmouth just outside my constituency in the Vosper Thornycroft yard. The Astute class submarines will also be based in Scotland and there is a great deal of support for Glasgow from central Government. However, if we are to achieve the great goals of this Government to rebalance the economy, spread wealth and prosperity, create jobs and ensure that prosperity continues across the nation, not just in London and the greater south-east, difficult decisions have to be made. We must tackle the deficit and find ways to remove some of the barriers to growth in the UK. That is why the Government are committed to the growth review and to ensuring that we do as much as possible to remove the barriers to economic growth.
Having claimed part of Merseyside and north Wales, the right hon. Member for Delyn (Mr Hanson) spoke about the importance of partnership. It is important to recognise the way that Scottish local authorities have worked with the private sector on a number of initiatives to support economic growth. We need to see more such partnerships but we must also tackle some of the underlying issues that we inherited from the previous Government, including the deficit and the national debt. Alongside tackling those things, we must lay the foundations for increased prosperity across the whole United Kingdom.
Infrastructure Planning Commission
It is a pleasure to see you in the Chair again, Mr Gale. The Infrastructure Planning Commission is examining an application from an American waste company by the name of Covanta to build an incinerator masquerading as an energy-from-waste plant in my constituency. Each year, it will burn 585,000 tonnes of waste, which will be sourced from Bedfordshire, Buckinghamshire, Hertfordshire, Cambridgeshire and, frankly, anywhere in the country that will feed the incinerator. On the basis that what goes up must come down, it will do so on my constituents. We do not buy the argument that the fly ash and the emissions from the incinerator’s chimneys will be completely harmless, because the particles are too small to measure in the atmosphere. As it is too difficult to capture and measure the particles, it is not possible to say that what will be emitted from the incinerator will be harmless.
Not surprisingly, the proposal has met with furious opposition in my constituency. Constituents, campaign groups, local authorities and 24 town and parish councils—I can assure people that it is no mean feat for 24 town and parish councils to work together on one issue—are all burning the midnight oil preparing written submissions urging the IPC to reject this diabolical application for an incinerator.
The examination will run until 15 July and the IPC should reach its decision by 15 October. Before the IPC process existed, there would normally have been public examination, with cross-examination of witnesses. My constituents would have had the opportunity to express and make known their views, probably via a public inquiry. The Secretary of State used to take the final decision after having all the information in front of them and did not have to accept the recommendations made by the planning inquiry or the inspector, provided that they gave good reason. However, the previous Government’s Stalinist approach to that democratic process was the Planning Act 2008, which transferred the final decision to a new independent body—the Infrastructure Planning Commission.
Evidence is considered by the IPC primarily in writing, unless it chooses to hold an oral evidence session. Note the word “chooses”. The IPC chooses, not local people. Legally, the Secretary of State has no opportunity whatever to overturn the IPC’s decision. The IPC makes its decisions mainly on the basis of the relevant national policy statement. These statements are open to public consultation and to consideration by Select Committees before approval by the Secretary of State.
I congratulate my hon. Friend on securing the debate. Does she agree that wider issues are at stake? Not only on incinerators but on a number of different planning applications, it is vital that local people feel engaged and have had their say. Whatever the outcome might be, at least they have had their say and put their case. Does my hon. Friend agree that that is vital?
Absolutely. I will go into more detail about how undemocratic the IPC process is and how local people are completely excluded from the decision- making process for major infrastructure, whether that involves hospitals or whatever else being built in their area.
The national policy statements are open to public consultation. While still in draft form and before the relevant national policy statement has been designated by the Secretary of State, the IPC can still consider the evidence, but the Secretary of State will make the final decision. To date, the national policy statement remains in draft form. The Select Committee on Energy and Climate Change, of which I am a former member, has published its report on the six revised national policy statements. It has made 18 recommendations, the more important of which is about the timing of the statements. The Committee calls for the national policy statements not to be designated until the Localism Bill has been enacted, the abolition of the IPC has occurred and the national planning policy framework and national infrastructure plan are operational and harmonised with the electricity market reform process.
The IPC has published the following statements:
“If the NPSs which apply to a proposal are adopted before the point of decision making on a project, the IPC will make the decision.
If the relevant NPSs have not been adopted at the point of decision making on a project, the IPC will make a recommendation to the Secretary of State”.
I say to my right hon. Friend the Minister that this is a fundamental question. Given that the IPC hopes to conclude its own consultation by July and make a decision in October, will he please inform us on which date the national policy statements will be designated?
To date, my constituents have been forced into Kafkaesque engagement with a body that is to be abolished, with no certainty about whether the national policy statement guiding the IPC examination will be altered once the deadline for written submissions has passed. If the national policy statements are altered and designated after the existing public consultation period has passed, will the Minister agree that my constituents, after having digested a 7,400-page document, will have provided their submissions on the basis of documents that are no longer relevant and therefore the IPC process relating to the Covanta incinerator in my constituency must be abolished—scrapped—and begun again on the basis of the relevant designated documents? How can a process of public consultation exist if the information constituents are given is no longer relevant by the time the IPC makes its decision? My constituents will have been providing consultation responses based on one set of rules and the IPC will be making its decision based on another, which will enable the IPC to disregard completely the public consultation as it will no longer be relevant when the IPC makes its decision.
The consultation process as run by the IPC has been woeful and undemocratic. Either the Government are wide-eyed localist or they are not. The IPC is not and is at odds with present Government policy. On Monday 17 January, at 10 o’clock on a cold morning in Bedford, the IPC held a public hearing—nowhere near the community where the facility is to be placed. Guidance was given to my constituents not to instruct lawyers and not to take legal advice. However, when my constituents arrived at the public hearing, they found that both the local authorities and the IPC had brought their team of lawyers along with them. The atmosphere was, to say the least, intimidating as lawyers played legal ping-pong with one another. Only the bravest of my constituents felt able to stand up and contribute. They had been told before the hearing took place the issues they were not allowed to discuss. One of those was noise, which is actually one of the biggest considerations for my constituents.
The hon. Lady’s party and I opposed this whole process under the last Government. It is being played out exactly as we predicted—undemocratically; not taking into account local people’s views. Does she agree that whatever system is put in place, and whatever the policy statements or framework, it must take into account local views but must also be accountable to and amendable by Parliament?
I completely agree. I hope that when the IPC is abolished—the present Government have committed to abolishing it and bringing the functions in-house—the fact that the Secretary of State will have the final decision and that, hopefully, we will go back to the previous system of public engagement and inquiries means there will at least be a more democratic process. Of course, that will need to be discussed in Parliament, and I hope we will take a vote on it.
To return to that cold Monday morning in Bedford, only the bravest of my constituents, as I said, stood up to speak at the meeting. All left it feeling that they had not really had an opportunity to express their concerns about the proposal.
The application document my constituents had to plough through to submit objections was 7,400 pages long and was available online, so those who were not computer literate and did not have access to a computer were disadvantaged. There were a limited number of hard copies, but people had to pay hundreds of pounds for them and they were available only at certain locations. How is that democratic? The people who wanted to respond to the documents could not even get hold of them. Furthermore, constituents’ initial representations were limited to 500 words, but the document they were responding to was 7,400 pages long. Why is that? How can that be democratic?
Only a limited number of hard-copy registration forms were available to those who did not have access to a computer. People had to complete those forms to inform the IPC that they were going to object to or, indeed, support the proposals, although I imagine that most people wanted to object. Given the limited number of forms, however, those who wanted to let the IPC know that they were going to object could not even do that.
Those who made a submission online met a barrage of problems. For example, the registration process had a cut-off date. Once that date had passed, some people received e-mails telling them that they had not ticked a particular box on the very detailed form and that they had to resubmit the form, but the submission date had passed. It seemed that lots of tricks were employed to minimise the number of objections so that the IPC and Covanta could say that there was not that much public opposition.
The IPC timetable is very inflexible, short and tight. That is why people missed the registration point. If the timetable had not been so tight and inflexible, there might have been room for adjustments and amendments where people had, for example, made errors with e-mails, but there was absolutely none—everything was played according to the IPC’s rules, with absolutely no consideration given to the difficulties local people might have in engaging with this complicated and bureaucratic process.
An unelected official in the IPC or the Department for Communities and Local Government should not take a decision to impose a major infrastructure project on a local community when almost every man, woman and child is against it. The only representation those people have is via their elected representatives.
If, despite the objections of local people, the Government believe that it is vital in the national interest for an application to be approved, that judgment should be the responsibility of the Secretary of State in the relevant Department, and it should be reached only after a thorough examination of local people’s wishes. There should be a thorough examination of the application, and people should have the opportunity to attend meetings and make their feelings known. Of course, people in my constituency may absolutely support the current project, but I do not think that that is the case. The Secretary of State should halt the IPC process using the powers in the Planning Act, so that all participants can contribute to the process and so that a clear decision can be made.
The process of finalising the national policy statements, on which the IPC would base a decision, will prejudice the application if it is carried out at the same time as the application is being considered. A legal process cannot be deemed reasonable and fair if the goalposts are moved while it is being carried out. If the national policy statements are designated during the IPC examination process, any changes in the final versions will not be reflected in the process that has taken place up to that time.
At present, I and the residents of Mid Bedfordshire have no idea who will take the final decision or on what basis they will do so. If the national policy statements are not finalised before the Secretary of state makes a decision, any other matters taken into account in reaching the decision will not have been subject to examination. Any recommendation made by the IPC on the basis of the national policy statements should be disregarded because they lack democratic legitimacy. Furthermore, the IPC process relies on a limited number of rounds of written submissions, which does not allow detailed examination of the key issues that matter to local people.
Is the Minister aware that Mid Bedfordshire is largely flat? In fact, Bedfordshire is known for being flat until one reaches the Dunstable downs. The incinerator is to be in the centre of Marston vale, so it can be viewed from almost every vantage point in the constituency and will absolutely blight the view from all of them—it can be seen from every raised point from Ampthill park to the Millennium park.
Is the Minister also aware that the constituency proudly recycles more that 50% of its waste? Central Bedfordshire council has worked hard to educate and inform people about the importance of recycling. If the incinerator is granted planning permission, all that recycling, education and work will go to waste because everything will be fed into this monstrous machine.
As the hon. Member for Hayes and Harlington (John McDonnell) said, the Conservative party predicted this problem with the IPC. However, I am running out of time, so I would like to have a clear answer from the Minister on a number of points. When will the national policy statements be designated? If they are designated during the process taking place in my constituency, and after my constituents have made their submissions, does the Minister agree that the process should be stopped? My constituents will have made their submissions on the basis of information that is no longer relevant and considerations into which they will have had no input.
Will the Minister please understand that we are not talking about a group of nimbys in Mid Bedfordshire complaining about something that will affect just a few people? The geographical lay-out of my constituency means that everyone there is angry about this issue. Everybody is incensed about how dreadful this application is and about what a disaster it will be for Mid Bedfordshire if it goes through.
It is a pleasure to serve under your chairmanship, Mr Gale. I warmly congratulate my hon. Friend the Member for Mid Bedfordshire (Nadine Dorries) on securing the debate. She spoke with her characteristic passion in representing her constituents. They are fortunate to be represented by one of the most tenacious campaigners in the House. There is no cause that my hon. Friend takes up that she does not take up with verve, passion and the greatest tenacity. In recent months, she has worked hard to raise the profile of this issue in the House. She has organised rallies in Mid Bedfordshire; she has written to me; we have spoken in person; and she has raised her concerns at Prime Minister’s questions—she has taken the matter right to the top. Everyone should reflect on the vigour with which she pursues these matters.
I was pleased to see my hon. Friend the Member for Ilford North (Mr Scott) and the hon. Member for Hayes and Harlington (John McDonnell) in the Chamber. That shows that the process that the IPC was set up to operate under is a matter of cross-party concern. I hope that the Government will have the support of the whole House when it comes to abolishing the IPC in the Localism Bill, which is currently in Committee, but which will return to the Floor of the House on Report and Third Reading in a few weeks’ time. It is useful to know that the issue goes beyond my hon. Friend’s constituency.
I have listened carefully to my hon. Friend. For the reasons she set out, she will appreciate that it is not possible for me to comment on the merits of the incinerator. If the national policy statements are not designated before the decision is made, it would fall to the Secretary of State—that is shorthand for the ministerial team at the Department for Communities and Local Government—to determine the application. Given that today’s proceedings have a bearing on that process, it is important that I do not prejudice my view of the application. However, I have heard what my hon. Friend has said, and I will comment on each of her points. Let me take in turn the three general points that she made.
My hon. Friend argued that the decision on where a piece of infrastructure of national significance should be located should not be determined by an unelected body in defiance of local people’s wishes; I entirely agree. Projects such as major roads, reservoirs and power plants are essential to our health and well-being and to the nation’s economic future. They have a major influence on society’s impact on the environment, helping us reduce our dependence on fossil fuels and cut our carbon footprint. They form the legacy that we leave the next generation. It is right to have a regime to consider those major applications, which recognises their larger-than-local aspect.
It is worth observing that all the existing municipal incinerators in England contribute less in annual emissions than bonfire night—a single night. It is worth putting the matter in perspective. However, I believe that when the relevant decisions are made there should be—as there are not with the decisions of the IPC—elected Members who are accountable. Unfortunately, we have inherited from the previous Government a system in which, ludicrously, the final decisions about when and where major developments should take place are made by the IPC, an unelected quango that is unaccountable to the public. I mean no disrespect to the people who work there, who have been given a remit in legislation. They discharge that remit, I am sure, to the best of their ability, but they have been caught in a situation that is fundamentally undemocratic. That is an astonishing deficit of democracy, and the arrangement must go.
The point about bonfire night has been raised several times, almost as a smokescreen—if hon. Members will excuse the pun. The emissions from an incinerator are constant and daily—they continue day and night. The incinerator will burn for 24 hours a day. Bonfire night is one night of the year. We took evidence from Professor Paul Connett from America, the world’s leading authority on energy from waste. The emissions from the incineration are constant. Companies such as Covanta frequently breach their licences—the company is in court in the States at the moment. They frequently release toxic emissions into the air. I grant the Minister that if they kept to their licences and operated as they are supposed to, there might be merit in the bonfire night argument, but history shows that such incinerators do not operate as they are supposed to, because they break the law almost daily and release into the atmosphere emissions that they should not. The comparison with bonfire night cannot be made.
It is important that any facility that is or will be licensed, wherever it is, should stick to any terms and conditions of the licence. I am sure that Department of Energy and Climate Change Ministers, who are in charge, along with our colleagues in the Department for Environment, Food and Rural Affairs, of supervising those issues, will reflect on what my hon. Friend has said and try to ensure that there is the greatest possible confidence in the adherence to those conditions.
We are determined to introduce reforms in the Localism Bill. I look forward, as I am sure my hon. Friend does, to the day when it is passed. However, provided that the national policy statements on energy are designated as we expect, we anticipate that the application in question will be decided by the IPC alone, without the possibility of ministerial intervention. That is the system that we have been bequeathed. An observer might ask, as my hon. Friend does, why, if Ministers believe that there should be democratic accountability, they do not scrap the IPC and the regime under which the planning application was submitted. However strong the temptation may be, Ministers must obey the law.
The law is at odds with Government policy, but we live in a parliamentary democracy and cannot rule by decree. There have been recent examples relevant to that. I think my hon. Friend is familiar with the case of CALA Homes, concerning the revocation of the regional spatial strategies, in which the courts determined that however clear the Government’s intention to abolish those strategies, we need to go through the parliamentary process to abolish them, rather than anticipate that abolition. The courts were clear on that. The fact that we took the decision that resulted in the court case shows the Government’s desire to do as much as possible to implement our policy as quickly as possible, which is important. However, for good reasons we are required to go through the House to pass legislation. When it comes to abolishing not only the IPC but the current procedures for considering major infrastructure applications, that is what we must do. We are constrained in that way.
My hon. Friend raised concerns that the process of pre-consultation has been defective. I have listened to her carefully and will immediately take up with the IPC all the points that she made. It is crucial that consultation should be fair and open, so that people can give their views even in a system that we both agree is flawed. It should facilitate the meaningful involvement of all those who want to be involved in the process. It is important that local people should be able to be heard in person and demand an open hearing. The onus is also on any organisation that carries out a consultation to ensure that its electronic procedures are widely accessible and compatible with the systems that users are likely to have. Organisations should not have an inaccessible system, which they should design with users in mind. I shall immediately get in touch with the IPC on the points that my hon. Friend raised.
The Planning Act 2008 specifies, as my hon. Friend knows, a narrow range of conditions in which Ministers can take decisions out of the IPC’s hands, which is our difficulty. Those conditions include questions of national security and defence. Even if we wanted to stop the process, I do not believe the law would allow us to do so.
My hon. Friend raised an important point about the role of national policy statements and the likely timing of their designation. She knows, having served on the Select Committee on Energy and Climate Change, the reasons why it is crucial, when we face a prospective crisis in generating capacity, to get investment in that capacity. The nuclear programme is important to that. We have always said that we want to bring national planning policy statements to the House as quickly as possible.
My right hon. Friend the Secretary of State for Energy and Climate Change has not yet responded to the Select Committee, and it is for him to respond to its concerns about process, but it is the Government’s view that we should get on as soon as possible and allow Parliament the chance to ratify those statements in the interest of energy security and, indeed, investment in that important area of national life. However, there is clearly a possibility that the statements might not be designated, and then the decision in question would come to the Secretary of State. I do not want to raise my hon. Friend’s hopes and create an expectation that that will happen, because the opposite is to be expected. My right hon. Friend will respond to the Committee in due course.
We are in an unfortunate position. I commend my hon. Friend for the vigour with which she is pursuing the matter. She is right to make sure that her constituents’ voices are heard. Of course, even under the existing flawed system, the IPC has a duty to consider local people’s voices, and I shall, as I have said, pass on to it her comments about the process to date. It is worth pointing out that the IPC has not yet made a decision. I hope that the debate is an opportunity to explain to my hon. Friend’s constituents what I think she knows, being expert in the matter, about the constraints, and the requirements on the IPC for consultation and to share our frustration—we would rather not be in this world. I hope that the next time we discuss the issues, it will be after the passage of the Localism Bill, and that the IPC will be dead and buried and replaced by a system that my hon. Friend and I—and, I think, the hon. Member for Hayes and Harlington—want. That is a system in which major decisions of national importance are taken through a fast-track, streamlined procedure, with a Minister ultimately responsible to the House and, through the Government, to the nation, in charge of making the decisions.
Pubs (Planning Policy)
[Mrs Anne Main in the Chair]
I am pleased to have secured this important debate and to see once again some of my pub supporting and friendly colleagues, who come from both sides of the House. It is important to remember that the matter affects each and every one of us as constituency MPs. We are all doing our best to preserve and support the great British pub, a wonderful institution that is of considerable importance to our communities.
I am delighted once again to have the opportunity to be debating the subject with my hon. Friend the Minister, who is responsible for community pubs in his role at the Department for Communities and Local Government. I hope that, like me, he sees the debate as being part of a conversation between us and the all-party save the pub group, one that will continue during this Parliament. That conversation may sometimes happen here in Westminster Hall and sometimes in parliamentary or ministerial offices, but due to our genuine interest I hope that it will continue sometimes to happen in the pub.
We had a well-attended debate a few weeks ago, in which we heard that the British pub faces many problems. There is the problem of the pub codes of practice and their distortion of the beer tie; there is the problem of the supermarket ban, with unreasonably low prices and below-cost selling; and there is a problem with various aspects of regulation. All those factors cause real concern.
What is sometimes lost in our debates, perhaps deliberately so, is the one thing could save the British pub, almost at the stroke of a pen but certainly at the stroke of the parliamentary printing press as many of these problems are covered by secondary legislation, and that is to strengthen planning law to recognise the importance that pubs play in our communities. At the moment, that is not happening.
We are all aware of what successive Governments have done, and I make no criticism here. I pay tribute to the Minister’s predecessor, my right hon. Friend the Member for Wentworth and Dearne (John Healey), who also took a genuine interest in the subject. It is easy to say positive things about the importance of the pub, but until that is recognised in a meaningful way within the planning system, many of our efforts in trying to protect and save our local pubs will be wasted.
At the moment, we have the extraordinary situation that a free-standing pub—one that is clearly not connected to another building—that is not listed or in a conservation area and that has no other protection under planning law, can be demolished overnight. That can be done without planning permission, never mind consulting the community, something that my hon. Friend the Member for Selby and Ainsty (Nigel Adams) highlighted in his Protection of Local Services (Planning) Bill, a private Member’s Bill that was supported by the all–party group. I shall speak a little more about that later, and I am sure that my hon. Friend will want to contribute to the debate.
Similarly, it is perfectly legal under the planning system, overnight and without any consultation with the community, to turn the local pub into a Tesco, a betting shop, a restaurant or a café—businesses that do not have the same community function and that are not a community hub in the same way that a pub is.
Does my hon. Friend agree that large supermarket chains are using pub buildings as a way of getting around the regulations that require them to have permission for an additional store. Often the pubs are quite large, bigger than something that a supermarket would otherwise require permission for.
My hon. Friend is absolutely right. I call it predatory purchasing. The supermarkets deliberately target pubs because they are a soft touch. The Government have said that they want to be a pro-pub Government, and I am proud of that, but they also want to be a decentralising Government who believe in localism. As part of that, they will have to show that such things are not acceptable without the community being consulted. That is happening because the planning system is weak, and Tesco and the other supermarkets know that and exploit it.
The scandal goes on. Pubs are being closed every week that are not only viable in terms of making a profit, but are successful and profitable at the time of closure. Those closures often happen against the wishes of the small businessmen and women who run the pub and making a living from it. That is a scandal, and it must be stopped.
I congratulate the hon. Gentleman on securing this debate and on his ongoing work on the matter. Does he agree that an examination of the planning regulations and their potential weakness should extend to those bowling greens that are connected to pubs? Many are being sold off without consultation, leaving many bowlers with no place to practise their prize sport.
I congratulate my hon. Friend on securing this important debate. I give an example of the problem from my constituency. A successful pub was recently threatened with closure because a local housing charity had targeted it specifically for housing. Thankfully, the pub and the community won the day, and the pub was saved. The pub was targeted because the charity saw a loophole in the planning system. It must be closed. I thank my hon. Friend for raising the matter; it is an important point that we must press.
I thank my hon. Friend and near constituency neighbour. He is absolutely right. As with all successful pub closure campaigns, I congratulate him and his community on having the courage to fight that campaign. Sadly, given our weak planning laws, such campaigns are often not successful.
The Government have said that they will take action on restrictive covenants, which I warmly welcome. I am sure that the Minister will say a little more about the Government’s proposals, but I understand that a consultation will be held this year. I hope—I have no doubt—that it will lead to the abolition of this extraordinary practice, whereby the owner of a pub, whether it is a brewery or pub company, can slap on a covenant that says that it must never be a pub again, with the community having no say on the matter. It is absurd. It is anti-competitive and anti-community, and it must be outlawed.
I bring to the Minister’s attention one of the other many tricks used. I call it the restrictive covenant by the back door. My hon. Friend the Member for York Outer (Julian Sturdy) was lucky in his campaign, but we often see pub companies or individuals deliberately choosing to sell the pub for non-pub use even though they have received viable market-value offers from those who wish to continue running the pub and serving the community. There is nothing to stop that, but the effect is the same. The community loses its pub even when someone wants to buy it.
We have some wonderful small breweries, and some fabulous small pub companies are popping up, with real entrepreneurs taking on pubs throughout the country in small numbers. It would be a far greater number if the larger companies were not able to ignore offers from the community or other pub companies. That problem must be addressed. In Otley, in my constituency, there was a pub called The Woolpack, which had served the community for many years and had considerable historical merit. It was sold for non-pub use even though there were companies that wanted to buy it and run it as a pub. The decision to end that pub’s service to the community was entirely taken in the boardroom of a company, which must be wrong. Often, such decisions are made even when the company or individual who wants to continue to run the pub puts in a higher bid. That is because an organisation deliberately wants to shut that pub—in the same way as restrictive covenants—so as to lessen the competition for the other pubs that it may have in that area.
My hon. Friend hits on a key point. Very often, profitable pubs run into such a situation. Does he not agree that there are many pubs that are not economically viable, and, in some cases, they probably need to shut. The real scandal, however, is the closure of pubs that are profitable and could have a long-term future. The key issue is that local communities should have a say as to whether such buildings are razed to the ground.
I thank my hon. Friend and look forward to continuing to work with him on this issue. I know that our hon. Friend the Minister is listening to us. Let me be clear that no one is suggesting that those genuinely failed pubs—those pubs that cannot make a living and no longer have a community that wants them—should not change. No one is even suggesting that there should be significant barriers stopping their conversion or redevelopment. I want to make that absolutely clear to the Minister, and I hope to convince him that there are ways in which we can do that by, for example, putting halts in the planning process. My hon. Friend is right. There is only one way in which we can determine whether a community wants a pub and that is to ask the people who live in that community. Very few councils do that. As I will discuss later, the issue of viability is very often not established, or it is simply established because the current owner claims that the pub is unviable.
The Minister may say that pub campaigners can sometimes be a little over-sentimental. As a member of the save the pub group, I refute that charge. Why do we not say more about pubs also being small businesses that actually make an incredibly valuable contribution to the national economy, which is, of course, eroded every time a pub closes? The tax-take from those pubs is also eroded every time one closes. Pubs are small businesses, with an individual, a couple or a family earning a living and employing people in the local economy. The new economics foundation has suggested that twice as much as every pound spent in a pub goes directly to the local economy, compared with half of that for every pound spent in a supermarket. Often, as we have said before, supermarkets are replacing pubs.
I congratulate my hon. Friend on securing this debate. He hits on a very good point there. My local pub, The Coach and Horses, in Honley village has just reopened having been closed for three months. My hon. Friend was right to talk about the employment opportunities. The pub employs bar staff, the manager, the entertainment that it is bringing in on Friday and Saturday night, the cleaning staff and the catering staff. Whenever we hear about a small supermarket moving into an area, people always talk about the employment opportunities. We need to emphasise the employment opportunities that pubs can bring to rural villages and remote areas. I should like to congratulate my hon. Friend on making that point.
I thank my hon. Friend and fellow Yorkshire MP for making that point. It is easy for people in planning applications—I have seen it as I am sure have other hon. Members—to present the pub as something that is of the past and that is no longer wanted by communities. They deliberately ignore points such as employment opportunities. They suggest that a business that has served a community for 50 years or even 100 years and contributed to the economy should be replaced by a set of flats that will make a one-off profit for a business, or a supermarket that will do things in a different way. It is so important that we do not lose sight of that point.
Let me outline the framework for pubs in planning law and why, sadly, pubs have so little protection. Planning policy statement 4, which applies to villages and local centres—already it is rather ambiguous because there are pubs that are in areas that do not qualify—replaced planning policy statement 7. That was a change made by the previous Government in December 2009 and was a cause for concern. PPS 7 was stronger and made direct reference to supporting the retention of local facilities such as public houses. The new policy simply refers to planning applications affecting shops and leisure uses, including public houses or services in local centres.
The Government are thinking of replacing that planning policy statement with a new framework. I urge the Minister, who is a genuine supporter of pubs, to ensure that when that statement comes out it includes a direct reference to the importance of public houses so that councils can take that into account. Without such a reference, councils will not do that.
My hon. Friend will be aware that in a former life, I was on the planning panel of Leeds city council. That was exactly the problem that the panel faced with a pub in his constituency that was closed down. Does he not agree that to give councillors that extra power, such a reference is exactly what is needed in legislation?
I thank my hon. Friend and neighbour for that point. I was coming on to that exact case. To some extent he is right, but the unfortunate reality is that councils can, as things stand, adopt pro-pub planning policies. The scandal of that case is that Leeds city council did not even seem to realise that it could and should have adopted such a policy.
That is the case, yes, but there is another issue that relates to The Summercross pub in my constituency. I had a phone call from a legal officer at Leeds city council who said to me, “What is this Sustainable Communities Act and what relevance does it have to pubs?” Clearly, there is a large job to do in communicating with councils. Some councils are good—I will mention them in a minute—but some do not appreciate what is already there at the moment that could make a difference. Existing legislation does not go far enough, but if the guidance were clearer, it could make a difference.
Let me briefly relate the sad story of The Summercross pub, because it is a classic example of the problem here. The Summercross was one of my local pubs in Otley. It had been a pub since 1871 and it was the only pub of that name in the UK, so it represented a little bit of British history. It had gone through the usual story of changes of ownership and successive tenants. Every time the pub did well, the rent went up. Rather ominously, it was bought by a London-based developer, but the tenant who came in did a very good job of turning around the pub and making it successful and profitable again. It attracted the customers back by serving excellent local independent beer. However, a deal was struck over his head, initially without his and his wife’s knowledge, to sell the pub to a Leeds-based developer for a very large profit—something like £1 million for that one sale. The London-based developer, Phase 7 Properties, had bought the pub as a predatory purchase, seeing it as a potential development opportunity because of the weakness in planning law. Scandalously, the landlord and landlady were give a few weeks to clear out of The Summercross, which was their home as well as a small business, a community pub and a popular live music venue.
A campaign was launched to try to save The Summercross. However, the London-based developers, who went off with £1 million in their pockets after owning the pub for just two years, said, “Sorry guv, nothing to do with us any more. You’ve got to speak to Chartford Homes in Leeds.” Then Chartford Homes said, “Well, it’s nothing to do with us, because we didn’t close the pub, but actually now we want to build houses on it.”
Then a battle ensued. The community conducted a vigorous and well run campaign, and they managed to fight off the first planning application. They obtained figures to show that the pub was profitable and viable, and so the first application was kicked out. However Chartford Homes was cunning and, frankly, it had an awful lot of money—£1 million more than was clearly sensible—tied up in the pub. So it transferred the ownership, or at least proposed at that stage that the pub be taken over by a company called Westwood Care, its sister company with shared directors. Westwood Care then came back with the wonderful, cuddly proposal to turn this historic building into a care home.
Sadly, that proposal went to the plans panel of Leeds city council. What happened next fits exactly with what my hon. Friend the Member for Pudsey (Stuart Andrew) has talked about. The members of the plans panel in Leeds felt that they could not refuse that application in planning law. I am afraid that the main reason was that Leeds city council has no policies in place that recognise the importance of pubs, so it is Leeds city council’s fault that The Summercross closed.
The actions of Leeds city council can be compared with those of Bradford city council. Just up the road from Otley is Ben Rhydding, a suburb of Ilkley. Bradford city council stood by the community there and was prepared to take on the owner of the Wheatley, the local pub—in that case, it was Punch Taverns. The council won and the Wheatley is now a popular and thriving pub again. But Leeds city council is frankly clueless when it comes to the protection of pubs and planning policy, and it needs to address that failing.
It was incredibly frustrating during the planning process to hear the chair of that plans panel whispering to officers, “Pub viability is not a planning consideration, is it? We can’t consider that.” The chair also said, “The only planning protection policies that exist are to do with rural villages, aren’t they?” Both those statements are incorrect and both were made in what is supposed to be a quasi-legal setting.
Pub campaigners and other members of the local community in Otley saw planning officers present the developers’ own proposal. It was a PowerPoint presentation from the developers. The word that local people used when they saw that presentation was, “Corruption.” They said, “Surely this can’t be right? It’s corruption.” I said, “No, it isn’t corruption. There is no corruption there.” However, it is the farcical reality of the planning process, which means that a set of planning officers can present exactly what the developer wants to do and make some comments on it. And what does the community get? They get three minutes to make a few comments. I am afraid that the decision to close The Summercross ignored the reality that it was a profitable pub. The figures to that effect were presented. Instead, the members of the plans panel said, “There’s nothing we can do in planning law to stop that.” I am afraid that that sort of thing is happening up and down the country.
I want to issue a challenge to my hon. Friend the Minister today. I appreciate that this is a difficult issue in planning law. However, we all agree that there is some moral ownership of a local pub by the local community. Surely, if we believe in everything that we say, there must be such moral ownership. As my hon. Friend the Member for Selby and Ainsty has said, the community must have a right to have a say over the future of its local pub, especially when the pub is successful and, as in the case of The Summercross, other companies are knocking on the door and phoning me to say that they want to take on the pub but are unable to do so because of the grubby deals that have gone on between two developers behind the backs of the landlord and the local community.
The London-based developers, Phase 7 Properties Ltd, owned The Summercross and allowed a tenant to run it for two years. I do not think that it ever visited the pub themselves, which it had an agent to run. Does it have the complete right, as the legal owner of the building, to do what it wants over the heads of the community that, as I have said, must have some moral ownership? I say that it does not have that right. That situation must be recognised, in a realistic way, in the planning process.
It will not surprise my hon. Friend to know that I will discuss the Localism Bill very shortly. As my hon. Friend the Minister knows full well, because I have written to him about it already and will continue to do so, that Bill is a huge opportunity and the save the pub group must also see it in that way. It is a huge opportunity to address these issues that we and our local councillors face day by day. We find that our views, expressed as elected representatives and councillors, are rejected. Otley town council objected to the closure of The Summercross pub, but its objection was regarded by the plans panel as not being remotely of interest. So the Localism Bill is an opportunity, and I will go on to say that it is a positive thing but it needs to do an awful lot more.
There are other issues. One that I want to touch on briefly is the issue of pub interiors. I was very lucky and privileged to have been asked to launch the new book by the Campaign for Real Ale, “Yorkshire’s Real Heritage Pubs”, at the stunning Garden Gate pub in Hunslet, which is in Leeds. Frankly, that pub is only there because of the campaigns by Leeds CAMRA and other people, and because the wonderful Leeds Brewery has now taken the incredibly courageous decision to buy it and make it its fourth pub as it expands its portfolio. The Garden Gate pub is not in my constituency. It is in the constituency of the right hon. Member for Leeds Central (Hilary Benn). However, I am sure that the right hon. Gentleman and I would be delighted to take my hon. Friend the Minister there at some stage, because it is a stunning example of pub interior design that has been preserved.
The reality is that only 2% of pubs in Yorkshire and the Humber region retain their original interiors. Those pub interiors are part of our heritage. We would not see our castles or our stately homes being vandalised and demolished in that way. There has been some great work done by CAMRA and English Heritage, operating together, on this issue. However, there needs to be clearer advice from the Government, including from the Minister’s Department, about what councils can and should do in terms of listing pubs and about the criteria for listing pubs. Sometimes, even though something is clearly worth preserving, it does not actually tick the right boxes. I hope that that is another conversation that my hon. Friend the Minister and I can have, perhaps over a pint of Leeds Best in the Garden Gate or one of the many other pubs featured in CAMRA’s national and regional guides.
I have said that I would discuss the good councils as well as the bad, and it is incredibly important that I do so. My hon. Friend the Minister rightly said that councils have a key role. Neither I nor the other members of the save the pub group are saying that the Government can or should solve all those problems. I also want to make it clear that we are not saying that the Government should impose everything. As is suggested in the private Member’s Bill promoted by my hon. Friend the Member for Selby and Ainsty, it is more a case of giving local councillors the powers, so that they do not feel that they simply have to give the nod to plans that they know, in their heart of hearts, are wrong.
There are some very progressive councils. At the moment, 40% of councils make specific mention of retaining pubs in their local planning policies, which is impressive. In addition, 20% of councils do not specifically mention pubs but none the less have strong policies on protecting community facilities in general. However, 40% of councils are bad in terms of providing protection for pubs. They have no policy whatsoever that would assist communities to retain pubs. I am ashamed, and I hope that my hon. Friend the Member for Pudsey is also ashamed, that Leeds city council is indeed one of the 40% of councils that do not have policies to protect pubs. There are many examples around Leeds and the surrounding area of how the council has simply let things happen, and we have lost important community facilities as a result.
Merton borough council has a very positive policy on pubs:
“The Council will not permit the redevelopment or change of use of established public houses to other uses except where:
(i) The applicant can show that the public house is no longer economically viable
(ii) The applicant can show that reasonable attempts have been made to market the site as a public house [and]
(iii) There is alternative provision within the local area.”
The hon. Gentleman has mentioned on many occasions the lack of “viability” as being one of the criteria by which community pubs are allowed to close. Does he agree that there is a whole raft of legislation that should be enabled to ensure that, first, “viability” is enhanced and, secondly, that we do not hide behind “viability” as an excuse? For example, live music in pubs is known to increase takings by about 40% on average, and I hope that my recent “Rock the House” project goes some way to increasing awareness of that. However, does he agree that the Minister must consider the whole raft of licensing issues that go along with planning issues, to ensure that the concept of “viability” does not become something to hide behind?
I pay tribute to my hon. Friend for his work with “Rock the House”, which the all-party save the pub group formally backs. We look forward to working with him, and to getting as many MPs as possible behind that initiative. He is absolutely right that licensing is another issue and, as the Minister has cross-departmental responsibilities, I know that he will be having conversations with Ministers in all Departments that deal with pub-related issues. The licensing regime has certainly become over-bureaucratic and too expensive, and he and I strongly agree that some of the changes that were made a few years ago have been detrimental to the encouragement of live music. The wonderful annual Otley folk festival, which largely takes place in Otley’s public houses, is a celebration not only of folk music but of the public house, and is a great example of the harmony that is there.
Returning to the councils, Oxfordshire and Mid Sussex councils have positive policies, but it would help if the Government provided more guidance, perhaps on what the policies should say. At the end of my speech, I will challenge the Minister by saying that I hope that that can happen in the new national framework.
Now it is time to talk about the Localism Bill, which I am sure we all support, and which sounds like the sort of thing for which many of us have been campaigning for many years. It is the kind of thing that can, and surely must, be used to stop this scandal of profitable, successful pubs being closed against the wishes of the local community. Will it, though? I know that the Minister will talk about the proposed community right-to-buy scheme, and let me make it clear that the all-party group warmly welcomes that proposal and looks forward to considering its details and to working, hopefully, with the Minister and his team to ensure that the scheme works. Unfortunately, although the proposal is positive, it will not have a substantial effect in preventing closures of profitable and wanted pubs, first and simply because unless the Government finally get rid of the absurd loopholes, whereby a pub can be demolished or turned into a café, restaurant, betting shop, payday loan shop or supermarket without planning permission, a huge number of pubs will still be at the whim of the companies making those decisions. I therefore urge the Minister to close those gaps not only on demolition but on change of use, because otherwise there will not be many pubs for communities to try to buy.
Secondly, I think that the Minister has to accept that what is in the Bill is not a community right to buy; it is a right to try. I ask the Minister, again, to consider the model in Scotland, which contains a genuine right to buy. Here, there is a right to put together a bid, to trigger a delay—a moratorium—but there is not even genuine encouragement for the owners, let alone the obligation that I would like to see. Without that, how many communities will realistically be able to raise perhaps hundreds of thousands of pounds from share options, fundraising or local businesses, if at the end of that period—the length of which the Minister has not yet specified; CAMRA has suggested a very sensible six months—the owner might say, “Well, actually, I’m going to sell to Tesco anyway, for slightly more”? As we have already said, the pub company might want to get rid of the pub, because of competition between its pubs in the area. If the proposal is genuine, that issue has to be considered, because otherwise not many pubs will be saved and the closure of profitable pubs against the community’s wishes will not be prevented, which is surely something that the Minister and the Government want to prevent.
What should be done? I want to continue, and I want the save the pub group to continue, to be part of an ongoing dialogue with the Minister. We seek to help, as we were invited to do by the previous pubs Minister, the right hon. Member for Wentworth and Dearne (John Healey). We were happy to meet with him and his civil servants. Some of our proposals clearly need to be looked at, and they might not necessarily do what we think they will, but we want to work through them and be part of that conversation to get to the end result that I think we all want, which is to give viable, profitable pubs some protection in planning law.
So, what should be done? The Government have to commit to closing the loophole on demolition, and I have been encouraged by what the Minister has said. There have been positive conversations during the passage of the Protection of Local Services (Planning) Bill between him and my hon. Friend the Member for Selby and Ainsty, and also with me. I am encouraged that the Minister has suggested that he and the Government are minded to stop the scandal of pubs being demolished, but I have to use a phrase that has been used with me—do not be a half-a-job Harry. I know that the Minister would not want to be one, but if the demolition loophole is closed and nothing is done about people being able to continue to turn a pub into a Tesco, a betting shop or a restaurant overnight without planning permission, only a small gap will be plugged and the other scandal will not be stopped.
Given that an estimated 39 pubs a week are closing, and that CAMRA estimates that about a third of those are demolished, we have an urgent problem. I appreciate my hon. Friend’s support for my private Member’s Bill, but does he agree that the best route for offering protection for pubs would be for the Government to adopt an element of that Bill in the Localism Bill?
I absolutely agree. That is essential if the right to buy is not to appear tokenistic. I stress, however, that the issue is not only about demolition, and I urge the Minister to stop it being okay to turn the Red Lion or the White Swan into a Tesco, just because a deal is cooked up between a distant unaccountable pub company and Tesco headquarters. That cannot be right, because the community, never mind the small business person, has no say over whether it wants the pub to continue.
There is a separate use class order, A4, for pubs, bars and other licensed premises, but it is currently perfectly allowable to change that to one of various other use class orders—A1, A2 or A3, I think—and the Government could, very simply, stop those conversions without planning permission. I am not talking about when a pub is no longer viable or wanted and it might be a good idea to turn it into a solicitors office. All the Government have to do is to say that there are no conversions from A4 to anything without planning permission being obtained through the normal process. If the pub is no longer viable or wanted, it will change use within a reasonable and normal time period, as with all planning applications, but the community should at least have the right to comment.
I briefly wish to mention the wonderful work of Pub is the Hub and the Plunkett Foundation. No one suggests that it is possible for the Government to provide huge amounts of money to back up the community right-to-buy scheme, but there has to be better and clearer Government advice about the realities of setting up a community co-operative and putting a bid together.
I would be interested if the Minister told us what progress the asset transfer unit has made on coming up with a genuine package of guidance and support for communities that wish to do that.
My big idea, which I have shared with the Minister, is a moratorium. Imitation is the sincerest form of flattery, and I have taken the Government’s idea for a moratorium and extended it. It would be possible and desirable to have a moratorium before any permanent change of use or demolition. Six months would be a reasonable period and would allow us to see whether other companies or individuals wanted to buy the pub. It is a scandal that there are often companies knocking at the door that want to take on the pub, but they are simply not allowed to do so.
As the save the pub group has consistently said since its formation, two things should happen in this six-month period. First, there needs to be a genuine, independent community consultation, which must be carried out by the local authority, as the planning authority. Some developers put surveys through people’s doors with leading questions—we are all politicians, so we know about leading questions—and the answers are presented as the community’s view. People are asked, “Do you think Otley needs more care homes?” or “Do you think old people should have a good quality of life?”, and when they say yes, the developer says, “There you go. Everyone wants a care home instead of a pub.” There must be genuine consultation to establish the will of the local community and the need for the pub.
There should also be a proper, independent viability test of the pub. Some councils have the courage to carry out such tests, although it is mainly rural councils at the moment. In the case of The Summercross, the developers’ agents prepared a huge glossy document and presented it to the plans panel, saying that it proved that the pub was not viable. How can someone prove that a pub is not viable when it was trading profitably in the years before? That is absolutely absurd. There must be an independent viability study, which should, again, be carried out by the local authority, as the planning authority. There is also the CAMRA viability study, so a model exists, and I hope the Minister will consider suggesting it in guidance to local authorities when they put their policies in place. In that respect, I hope that Leeds city council and others will finally get round to doing that, so that 40% of councils are no longer without policies on pubs.
My moratorium could work in two ways. The Minister and I have discussed this, and I realise that he has views about how the moratorium could work, but I want to give him two other suggestions. The six-month moratorium could be part of the forthcoming national planning policy strategy, which could suggest what should happen in the case of conversions from A3. It could also be covered in supplementary guidance to councils that are putting together supplementary planning policies.
Another suggestion that I have already raised with the Minister, and which I know would take some work, would be to look at whether we need a separate definition of a community pub and whether such a definition is possible. We would need a proper study to see whether we could separate community pubs, which clearly have a community function, from a lot of bars and nightclubs, which do not. It would be exciting if that was possible, because it could lead to a different rateable value. As one of my colleagues said, community pubs sometimes, but often do not, get sufficient payback from their community work and the community role that they play.
I am delighted to support that point. All too often, the community pubs my hon. Friend is referring to are the last standing community facility in the local area. All too often when I am in an area, I will see the former post office, the former dairy and the former school house. It is right to separate community pubs from the rest of the trade because they have an additional role to play in the market.
I thank my hon. Friend. I hope that he will help me, CAMRA and the Institute for Public Policy Research, which is looking at this issue, to see whether that would be possible. Such a step would make it easier in planning law to do some of the things that we want. I hope the Minister and his team will seriously consider that point and that it will be part of the dialogue we have.
Even without such a change, it is possible, as I said, to require any change of use from A4 or any demolition to involve a moratorium that includes the three things I mentioned: allowing the pub to continue where there is a genuine business and making sure, if not requiring, that the genuine, independent market value be considered; holding community consultation; and carrying out a viability test.
Finally on the suggestions from me and the save the pub group, let me return to pub listings. We still have a few wonderful pub interiors, and I am glad to say that there are a number in London, which it is worth going to see. They are important to tourists, who will walk into a pub such as The Mitre and realise that such things are unique to this country. We should be proud of that.
I, too, received a copy of the wonderful book on Yorkshire’s heritage pubs, but was my hon. Friend, like me, not a little surprised that there were not more entries from Tadcaster, given that it is the most prominent brewing town in the country, as all Members present will agree? I hope that he will raise that with his friends at CAMRA the next time he sees them.
All I can say is that CAMRA has strict criteria. As my hon. Friend well knows, anyone travelling up the A1(M) will come to a sign pointing to Tadcaster one way and Otley the other. One is a famous pub town and the other is a hugely famous Yorkshire brewing and pub town. There are some synergies there, and it is probably appropriate for me to visit Tadcaster to see some of its pubs for myself.
As the Minister will know, councils have the power to compile local lists of historically important buildings. At the moment, however, that power is toothless because it affords no extra protection. Will the Minister find a way to ensure that buildings that are put on these local lists by the good councils that recognise the importance of pubs such as The Whitelocks in Leeds can be protected in the planning process? It is great to have them listed, but listing seems to achieve nothing in the planning process.
Those are the main recommendations that the save the pub group is making for now as part of the conversation we are having. We will have a lively debate about the right way forward, but there is one thing the Minister and the Government must not fall into the trap of doing. I sit on the coalition Government Benches and I support what the Government are trying to do. Like the Minister, I do not want more regulation, and I certainly do not want more regulation on pubs in the licensing system—in fact, I want to see less. However, it is quite wrong to suggest that giving communities the right to have a say over their local pubs and the important local services they provide is regulation, because it is not; it is simply about ensuring that there is a proper process to enable communities to have a say. That will not prevent pubs from being converted to alternative and positive uses when their days as a pub are numbered because of the area they are in or the local population.
I agree with the Minister that we want competition and a free market. As everyone in the pub trade and associated trades knows, however, there is no free market, because of the huge distorting impact of the fact that half the pubs in the country are owned by the largest pub companies, which tightly control prices and dictate rents. That is a separate issue, and the Government are looking at it. However, entrepreneurs—the up-and-coming small brewers and small pub companies—are delivering great pubs, but they are not getting access to the market because of the planning system. If the Minister wants genuine competition, as I do, he needs to make it much easier for not only communities but entrepreneurs to get their hands on pubs. At the moment the Government are not saying that.
Of course, the Minister will hear from the pub companies, developers and supermarkets, who want carte blanche to do what they want with the community’s pubs. They will tell him, “You must not do this; it is not in the spirit of the free market. It is anti-competitive. It is regulation.” It is not. The Government have a clear ideological choice. Do they really want to empower communities to have a say over local pubs, or do they want to back the developers, the giant pub companies and the supermarkets, to let them do whatever they like with their pubs? It is as stark as that. I know what I believe in as a localist, a decentraliser and a real fan of pubs, and I hope the Government will choose the right way.
The matter is linked, of course, to that of the big society, which is a huge issue. There has been a lot of coverage of the big society this week. People say it is a concept no one can disagree with: we want more power for communities, and local people doing things for themselves. The issue has been about the costs and whether it is affordable. However, much of the big society can happen without the Government spending a penny, and what I am talking about presents one opportunity for that. If the Government make the right, bold decisions they can stop the closure of profitable pubs happening against the wishes of communities. That surely is the big society at a local level.
I have a few questions for the Minister and, because this is a dialogue, I do not ask him to reply now.
I thank the hon. Gentleman for bringing this important debate to Westminster Hall, and for recognising the importance of Burton. As he says it is the home of beer and Britain’s No. 1 brewing town. He talks with some force—and I agree with what he says—about the need to protect our community pubs. Does he also recognise that many brewers and pub companies are trying to reverse the decline of pubs by opening new pubs every day of the week? Marstons in my constituency has just opened The Dapple Grey in Uttoxeter, which is thriving. I was in there a few days ago and it was heaving with people. We need to allow pubs to grow and flourish, and the hon. Gentleman’s viability test is the most important element of that.
I thank the hon. Gentleman. We work closely together, because the all-party save the pub group works closely with the all-party beer group, of which he is the vice-chairman, and we look forward to continuing with that. He is right to say that viability is a key issue. He is right to say that some pubs are opening; but sometimes that is used as an excuse to close other pubs that owners or pub companies want to dispose of because of their huge indebtedness, some of which they need to claw back to please their shareholders and foreign creditors.
The issue that the hon. Gentleman raised is important, but there was a case in Otley where a brand new pub opened—a wonderful little free house called the Old Cock—because it was not possible for Lee and Linda, who run it, to get one of the pubs owned by the pub company. They had to set a pub up in what used to be a café, and now offer a wonderful range of independent beers that they could not afford to buy through the pub company. That is why I say to the Minister that there is no free market or way to do that. The tragedy is that The Woolpack, which I have already mentioned, is a mere 50 yards from the Old Cock. If the system worked, Lee and Linda would have bought it, and would be operating that free house from its wonderful historic building. Instead, it has closed and is being converted. The Old Cock is a brand new pub. All I am saying is that we need to assess viability and first ask communities whether pubs are still wanted. That would answer all the problems that we agree exist.
As to my questions to the Minister, I want to nail him down—not today—on whether he agrees with, and whether he and the Government will commit to, the principle that no profitable and wanted pub should be permanently closed against the wish of the community, without that community having any chance of a say on its future. To me, that is the overriding fundamental principle that we must get to as a localist and decentralising Government—and, hopefully, a pro-pub Government. I also ask the Minister to provide an assurance today, if he can, that the Government are committed to extending planning control to cover the demolition of pubs, as he has suggested he is minded to do. Will he also seriously consider doing the obvious thing and making an A4 use class order subject to planning permission for any change of use? That would make a big difference and stop conversions to Tescos, betting shops, restaurants and cafés with no community right to consult.
Will the Minister consider that the forthcoming national policy framework should include not only the idea that retaining pubs is important—it must do that, and I am sure he will ensure that it does—but the idea of a six-month moratorium? That could say, as guidance rather than diktat, that there should be a six-month period to allow other people to buy the pub and allow for the viability test and the independent community consultation. Will he seriously consider strengthening the right to buy, at the very least to prevent an owner unreasonably refusing a bid from a community? Indeed, in my opinion that should also cover a bid from a small brewery such as Wharfebank brewery in my constituency, which has just taken on its first pub. Perhaps the Minister will consider that and work with us to try to strengthen it and make it meaningful, so that communities feel it is worth putting bids together.
When new schools are built, local authorities must put competition arrangements in place to allow different organisations to bid. Those that bid are given huge amounts of advice and support, to turn enthusiasm into a practical and credible bid. I should be interested to see what support could be offered to those in the community who want to defend the community pub, to turn their enthusiasm towards finding the considerable amounts of money and huge commitment that can be needed to make that a realistic dream.
Order. Before I ask Mr Mulholland to respond to that intervention, I remind the House that we should begin the winding-up speeches at about 3.30. Perhaps I may ask that the hon. Gentleman draw his remarks to a close. If no other hon. Member wants to speak—and no one has indicated a wish to do so—I want to call the shadow Minister at 3.30.
I am, Mrs Main, on my last question, as the Minister will be relieved to hear. I shall send him a copy of my questions, to be helpful.
My hon. Friend the Member for North Swindon (Justin Tomlinson) must be a mind-reader, because my very last question to the Minister was to be on exactly the point he raised. Does the Minister accept that the Government’s asset transfer unit needs to examine, and considerably expand, the support it offers to communities on the possibility of community buy-outs? That is essential, and if the Localism Bill is to bring about decentralisation, localism and the big society, it must happen. It would not cost a huge amount of money—which we cannot provide—but it can empower communities.
I appreciate your indulgence, Mrs Main, and that of the House. The subject is complicated and it needs to be considered as a whole. As I hope I have explained, there is often scant real protection—and there are many loopholes in it—for the great British pub that we all, including the Minister, purport to support and value. That must be changed. We must stop the scandal of profitable, wanted pubs being closed willy-nilly every week. I am delighted that the Minister, and the Prime Minister, have said that they want the Government to be pro-pub. I shall judge the Government on several issues: the reform of the beer tie, dealing with irresponsible pricing in supermarkets, licensing, regulation and a host of other things. Above all, if the Government are to be pro-pub and save pubs throughout the country, they must put the rhetoric into practice and say, “Yes; not only are pubs important but the planning system will say they are and will reflect that.” They must make sure that finally, communities will get a say when someone says that they want to close the local pub.
It is a great pleasure to serve under your chairmanship, Mrs Main. I congratulate the hon. Member for Leeds North West (Greg Mulholland) on securing this debate on an issue that is important and unites the House. I will start with a confession that I hope hon. Members will not hold against me: I am a teetotaller and rarely frequent local pubs. However, I recognise their importance and the central place that they occupy in many communities around our country. It is a matter of great concern that we have lost so many pubs in recent times and continue to lose them at an alarming rate. Between 25 and 40 pubs around the country close every week, which is a source of great concern.
The hon. Gentleman discussed the need for an ongoing conversation about the issue. It is clearly important to return to that as the new Government develop their policy on this and a range of other matters. I thank him for his work on the issue. Hopefully, his questions to the Minister and the ongoing campaign with which he is involved will have some impact on the Government and enable them to make policies that address the concerns that he outlined.
I share the hon. Gentleman’s concerns and was appalled by the scandalous examples that he gave of the sharp practice in which certain unscrupulous, well-heeled business people indulge, leading to the closure of all too many of our community pubs. He is right to say that a local pub is a small business that generates employment opportunities, particularly in the more remote communities in our country. Pubs are a valuable source of local employment.
I hope that hon. Members will forgive me for making a political point. I am concerned about the implications of the massive cuts that the coalition Government have agreed to implement. In particular, the cuts of up to 30% that local authorities face over the next four years, and cuts in other public services, will lead to the loss of almost 500,000 jobs in the public sector. According to research by PricewaterhouseCoopers, at least a further 500,000 in the private sector will lose their jobs as well.
Hon. Members are looking at me; they may be wondering what on earth that has to do with this debate. [Hon. Members: “Hear, hear!”] I will enlighten them: it has absolutely everything to do with it. If people do not have money in their pockets, the hospitality trade will inevitably suffer as a direct consequence. Not only the hospitality trade but the leisure trade and many other service industries will be detrimentally affected by the cuts supported by Government Members in the Chamber during debates on the comprehensive spending review and other spending matters.
I apologise for missing the beginning of this debate; unfortunately, I was in a Bill Committee, but I came as soon as I could. The hon. Gentleman is making a point about people not having money in their pockets. Is it not therefore even more important that we deal with below-cost selling of alcohol in supermarkets—
Thank you, Mrs Main. They will and they are. It is central to the future viability of pubs around the country that we recognise the implications of other decisions taken by the Government and the Members who vote for them.
Hon. Members have referred to the community right to buy. On the face of it, I have no difficulty with it—indeed, I think that it is probably a good thing and will be beneficial in certain circumstances—but when we scratch the surface, it is a little bit of a pig in a poke, is it not? No funding is attached to it. How will a deprived community where many are unemployed, have modest incomes from low-paid employment or are losing their jobs as a result of the cuts to which I referred be able to exercise the community right to buy if the people there do not have the wherewithal to do so?
Before the election, the Conservative party gave a commitment on the community right to buy that the community would be given the right of first refusal. As I understand it, that commitment has now been withdrawn. I would be interested to hear the Minister’s comments on that point.
The hon. Member for Staffordshire Moorlands (Karen Bradley) made a point about supermarkets. I take the Chair’s guidance that it was not directly related to the topic, but it is important to acknowledge that competition from supermarkets is having a detrimental impact on the viability of community pubs. Again, the Government have failed to take decisive action to tackle the minimum price. They should have gone somewhat further to address it.
The hon. Gentleman discussed the need to strengthen planning legislation. I agree absolutely, but he slightly contradicted himself in the latter part of his speech. In his conclusion, he said that more regulation was not required; I think he said, “We don’t want more regulation.” He will correct me if I am wrong, but he said that stronger planning powers are needed. I agree with him, but what is that if not greater regulation? I accept that regulation can be a force for good in certain circumstances, but over-regulation of the sector can be problematic and a barrier, as can set-up costs, and those issues need to be addressed. I support his aims, but there is perhaps a weakness in his argument. He might consider that, because I know that he feels strongly about the issue and has done a lot of good work to lead the charge on it.
I am also interested to hear the Minister’s comments about the regrettable decision to scrap the Labour Government’s proposed community-owned pubs support programme, which would have provided resources to enable communities to save community pubs from closure.
I was merely referring to the hon. Member for Leeds North West, who discussed the need to strengthen planning laws to give local authorities greater powers over the closure of community pubs. I support him on that. The point that I was making is that strengthening planning powers for local authorities amounts to greater regulation, so in certain circumstances, stronger regulation can be a force for good. It can be beneficial in helping promote the campaign that he is pursuing.
The community-owned pubs programme has been scrapped. The Government had set aside £3.3 million—not a huge sum, but significant—which would have gone a long way towards assisting many community pubs to remain open. The chief executive of the Plunkett Foundation, which was charged with administering the fund, said about the decision to scrap the programme:
“This is devastating news for each community that had hoped to save their local as a co-operative. The government has turned its back on communities that were looking to take more responsibility over their everyday lives.”
It seems that the Government propose to replace a meaningful Government initiative, which would have provided resources for practical action to save a considerable number of community pubs, with a mere information leaflet, which will be distributed to local communities. That is no substitute for a properly funded initiative that would have gone a long way in saving community pubs. That was a mistake, and I would be interested to hear the Minister’s comments on it. He is quoted as saying:
“"Pubs don’t want state handouts. The new government is to give local communities new powers to save local pubs.”
However, as I have already pointed out, the Government’s proposed power will be meaningful only in those communities that are relatively well heeled and that therefore have the wherewithal to provide the resources necessary to exercise a community right to buy.
I do not understand the hon. Gentleman’s intervention. I have already made the point that the previous Labour Government set up the community-owned pubs support programme, which his Government have scrapped. We did take positive action. I accept that too many pubs closed and that perhaps more could have been done. We can always do more, but we took appropriate steps and ensured that people in the public sector were in employment and that we kept unemployment lower than it would otherwise have been. As I have already said, unless people have unnecessary money in their pockets, the hospitality trade and community pubs will suffer as a direct consequence.
Thank you, Mrs Main. The reality is that we took action. On another point, we took the necessary steps to stop the economy going into a complete tailspin. I repeat the point that I have already made and make no apologies for doing so: people need income in their pockets from employment, and the measures that we took to keep unemployment lower than it would otherwise have been helped ensure that more pubs did not close. I regret to say that this Government’s measures have taken away the direct support by scrapping the community-owned pubs support programme. They are also introducing new powers that only relatively affluent communities will be able to utilise, and are taking economic decisions that will have a much bigger impact on the future viability of community pubs, because unemployment will certainly increase and many more pubs will close as a direct consequence.
I do not want to take up much more time, because that would eat into the time for the Minister’s wind-up speech.
I hope that the hon. Gentleman will forgive me for not knowing the names of pubs in Yorkshire. I am a Derby MP and, as I said at the outset of my contribution, I am teetotal and very rarely frequent pubs. Pub names are not one of my strong points. I could not even name too many pubs in Derby, but I recognise the central role that they play in the local community.
I will finish by addressing the comments made about the big society. The notion that, somehow, the nebulous concept of the big society will be the saviour of community pubs and that Ministers on the white charger of the big society will ride to the rescue is, in reality, a fantasy. In my view, the big society is nothing more than a 21st-century version of the Poor Law. If hon. Members view that as the way to protect community pubs, I am sorry but they will be sadly disappointed.
It is an absolute delight and pleasure to serve under you, Mrs Main. I also warmly welcome this debate and congratulate my hon. Friend the Member for Leeds North West (Greg Mulholland) on securing it, on the constructive way in which he made the case for assisting community pubs, and on the excellent work that he rightly does as part of the all-party save the pub group. I also pay tribute to my hon. Friend the Member for Burton (Andrew Griffiths) and the all-party beer group. All such groups and bodies are important players in the conversation that, as my hon. Friend the Member for Leeds North West has said, we are having, and I promise him that we will continue to have it. It is an important issue. I appreciated the seriousness with which a number of my hon. Friends intervened to raise examples to reinforce a number of my hon. Friend’s legitimate points.
I will say this as gently as I can, but the shadow Minister, the hon. Member for Derby North (Chris Williamson), may not have quite caught the mood of the debate to a nicety. It was not a partisan debate. If people want to play it along partisan lines, I can point out that, in 13 years of the previous Government, the situation developed, got worse and not much was done—an initiative 12 weeks before the general election was scant and shoddy recompense.
The hon. Gentleman did, however, remind me of a story about John Costello, the former Irish Prime Minister. He had lost a general election and was driving with his Attorney-General to the presidential palace to hand in his resignation. Their car had to stop at a crossroad, on to which a fight spilled out from a public house. Costello turned to his Attorney-General and said, “Do you know, I’ve never been in a pub in my life,” to which the Attorney-General replied, “Well, if you had, we might not be going to hand in our resignations now.”
I do not have to confess—I think it is well known—that I occasionally use a public house. I have certainly assisted my hon. Friend the Member for Burton in adding to the heaving numbers in a public house in Uttoxeter. I am conscious, from my own constituency as well as from my visits around the country since my appointment, that public houses are a key part of the community. We have vibrant pubs in villages, in suburban areas such as mine, and in inner-city areas, some of which I see when wearing my hat as the Minister with responsibility for the Thames Gateway.
Of course, as my hon. Friend the Member for Leeds North West has rightly said, changing circumstances mean that, because pubs are businesses as well as community assets, they will sometimes come under pressure and some will not be sustainable. I have mentioned the east end of London. I visited some old friends in Poplar, where demand for pubs has declined due to the change in the demographic of its population, so not all its pubs are likely to survive. It is important to recognise—I am grateful that my hon. Friend did—that we have to bring that balance into the equation. Equally, I think we have all come across the sort of cynical behaviour whereby viable public houses are sold, sometimes over the heads of the tenants, the landlords or the community. My hon. Friend has quoted a number of examples and, during a Localism Bill Committee sitting, I referred to one in my own constituency. The absentee landlord of The Broomwood pub, in Sevenoaks Way in Orpington, has deliberately run it down so that its value as an asset is diminished, in order then to seek planning permission to turn it into a McDonald’s. I am no more likely to frequent a McDonald’s than the shadow Minister is to frequent a pub. It would certainly not have been a good result for that community, and I think there is common ground between us on that point.
That can also be the case before a pub has even been built. In new developments—a lot of my constituency is new development—space is allocated in the master plan for a community pub. The developers deliberately do not sell it—as is the case with our local brewery, Arkell’s—and they then try to come back and say that the only demand is for additional housing.
My hon. Friend is right. I shall refer to some of the planning proposals we are seeking to make, which I hope will deal with some of those situations.
The Government are seeking to approach the matter against the background of recognising that there must be a sensible balance and that, of course, it is sometimes legitimate to regulate to protect community interests. However, we are also dealing with businesses that need to be kept viable and remain attractive for investment, so as my hon. Friend the Member for Leeds North West said, it is important that we deal with the matter in reasonable and proportionate way that does not build in inflexibilities that might discourage people from investing in the public house trades. We must get the balance right and I am grateful to my hon. Friend for his contribution to helping us do that. I would rather deal with the matter in a considered way than engage in grandstanding, because there are opportunities that will come to us.
Let me consider some of the points that were raised. It is worth saying that the current national policy—planning policy statement 4—is perhaps not used as fully as it could be. I accept that point, and outside this Chamber I will happily take up with my hon. Friend ways in which we can ensure that local authorities are made aware of their existing scope. For example, PPS4—planning for sustainable economic growth—asks local authorities proactively to plan and promote competitive town centre environments to support shop services and other things that have small-scale economic uses. That can be taken to include public houses. My hon. Friend indicated that some local authorities are doing that, and I applaud them for doing so. Some of the public houses we have referred to might be in conservation areas or might have a particular merit, such as listing and so on. There are other forms of protection.
When determining applications affecting premises such as pubs, current policy also enables local planning authorities to take into account the importance of the facility to the local community or the economic base in the area. However, I acknowledge that that is not doing enough to slow down the attrition rate of pubs. Therefore, we are determined to simplify the system. My hon. Friend is right: the national planning policy framework is the appropriate vehicle for doing that. Since the Town and Country Planning Act 1947, most planning policy has been dictated by guidance rather than through primary legislation, which has tended to be enabling. That is the route we intend to adopt.
We are committed to taking the existing protections that it is appropriate to continue with, simplifying them, amplifying them where appropriate and publishing a comprehensive, single, streamlined national planning policy framework. We are aiming to do that by April 2012. We will start to consult on that later this year, and I very much hope that my hon. Friends and the organisations in their constituencies concerned about the issue of planning and public houses will contribute to the consultation. That will also include planning for community and other leisure facilities. The linkage about encouraging live music, for example, that my hon. Friend the Member for Hove (Mike Weatherley) referred to, is absolutely right. That is why, separately, the Government are proposing to reform the licensing law to make it easier for live entertainment to take place without some of the bureaucratic licensing requirements, particularly in smaller venues. I hope that that will add to viability, which is an important consideration here.
Two matters are important in relation to the Localism Bill. First, we are introducing neighbourhood planning, which will give neighbourhood communities a greater chance to shape their area in planning terms. Communities will be able to set policies for the development of their area, subject to the constraint that what they say must be in general conformity with the overall strategic policies of the local authority’s development plan, and that it will be subject to the national policy set out in the NPPF I referred to. Within those constraints, communities will be able to say what sort of developments—within reason—are acceptable or not acceptable and where. That is an important tool, and I hope it will enable people to have greater protection.
Such an approach will also give communities greater flexibility in expanding. Sometimes that is right because, for example, there might be a demand for additional housing in a village area. Incremental growth is not easy to achieve under the current planning system, so there is a greater pressure to convert the use of a public house to housing. Our proposals will make it easier for a neighbourhood to expand organically and therefore, I hope, to still keep the public house in existence.
The Minister is aware that I have been concerned about these issues for some time. Will he say a little bit more about the legal status of the neighbourhood plan? He will be aware that The Oakdale Arms on Hermitage road, Tottenham is facing demolition in March, and there is real concern that the local community has not been involved.
We have already set out the proposals we are intending to make, and there should be a referendum—an independent check—to make sure that the neighbourhood plan, once it is in place, is in conformity with other policies and that there is support from the community. The details are available in a guide to neighbourhood planning, which is on the Department’s website. When the right hon. Gentleman has looked at that, perhaps other hon. Members who are interested in the matter will have the chance to look at it.
As well as neighbourhood planning, there is the community right to buy. That gives a fair chance for communities to bid to take over assets and facilities that are important to them. Community right to buy is triggered by assets being listed, so it is an important power for community groups to take the initiative to list them. I do not pooh-pooh the community right to buy, as the hon. Member for Derby North did. Potentially, it is a powerful tool, and there are good examples where it has already been taken on. We have published a consultation document setting out details of how that scheme works. It will be underpinned by regulations to deal with the process. That consultation ends on 3 May and as I said, I hope that hon. Members and interested groups will contribute to it. Some of the details that my hon. Friend the Member for Leeds North West fleshed out are exactly the sort of issues I promise him we want to take on board during the consultation.
I understand my hon. Friend’s point about the moratorium, and I would like to consider the matter in that context. The only query is whether too rigid a moratorium could itself create injustice in certain circumstances—for example, where the legitimate collapse of a business through commercial misfortune, as sometimes happens, triggers the need to realise assets quickly. It is about getting the balance right. I would not want to discourage people from investing in pubs, which might happen if they thought they could not always get their assets out again. However, there is more work that we can and will do on that.
On change of use, as was said, when used properly, there is already an ability to import viability into the test. Local authorities can remove committed development rights under the existing use classes order through what is called an article 4 direction. However, as part of our reform of planning policy, we intend to consult more generally on reform of the use classes order. Again, there is an opportunity for that conversation to continue. Similarly, as my hon. Friend says, we have announced a review into the use of covenants, which can be used to prevent a fair playing field for communities when public houses are sold on.
On the question of demolition, I pay tribute to my hon. Friend the Member for Selby and Ainsty (Nigel Adams) for his private Member’s Bill. In the past, demolition has been excluded, but we are prepared to look carefully with my hon. Friend and other hon. Members at whether there is some means by which we can, perhaps in the context of the community right to buy, extend planning control to the demolition of community assets. That might be a means by which we can achieve a proportionate solution. I hope the door is open to my hon. Friend in that regard.
I am sorry that there is no time for me to say more. However, I hope I have shown that we take the comments of my hon. Friend the Member for Leeds North West in the spirit in which they were intended. I congratulate him on what he has done. We will continue to have a conversation on those specific points.
Renewable Energy (The Humber)
It is a pleasure to serve under your chairmanship, Mrs Main.
I would like to begin by thanking the Minister, who has already provided a huge amount of support to the Humber MPs in our campaign to make the Humber a renewable energy centre. He is already aware of much of what I will say today and we are grateful for the support that he has given. There are a couple of issues on which we would like to pin the Minister down, in the best sense of the phrase, as we try to move our campaign forward.
The campaign has support across the Humber and I assure you, Mrs Main, that the absence of other Humber MPs is not due to lack of interest. My neighbour, the hon. Member for Scunthorpe (Nic Dakin), is at a Select Committee hearing outside Westminster today. My hon. Friend the Member for Beverley and Holderness (Mr Stuart) is away on parliamentary business, as is, I believe, the hon. Member for Great Grimsby (Austin Mitchell). However, this is a campaign that enjoys strong support across the banks of the Humber in north Lincolnshire and east Yorkshire. We are concerned primarily with doing what we can, as local MPs, with the support of our local councils and businesses, to ensure that we become a centre for offshore wind, and potentially a centre for wave and tidal power and other renewable energy opportunities, such as bioethanol. With your permission, Mrs Main—I have had contact with the Minister on this—my hon. Friend the Member for Cleethorpes (Martin Vickers) will speak for five minutes of my time.
Thank you, Mrs Main. I will focus most of my comments on wave and tidal technologies and the bioethanol industry.
I think that we all agree, across the House, that we want to ensure that the UK plays its part in the renewable energy sector and that we are not left behind as we have been in the past, particularly with onshore wind. Our campaign on renewable energy, as broad as it is, does not extend quite as far as onshore wind. The Minister is aware of our particular issues with onshore wind locally, but I just place them on the record again. As a country, however, we have missed the boat on manufacturing for onshore wind and we do not want to fall behind with the new technologies.
Why the Humber? Well, apart from the fact that everybody knows it is the best area in the UK in which to invest, has the best people and is potentially represented by some of the best people—I exclude myself from that; I talk of course of my neighbours—in the past 10 years the area has not made the progress it should have done, and as other parts of the country have. We lost private sector jobs in the past 10 years at a time when the economy was growing, and we remain one of the poorest parts of the UK. We have, however, a great deal going for us too: deep sea ports, plenty of land for development, an excellent motorway infrastructure that is not congested in the way that it is in other parts of the country, and a long history of manufacturing and manufacturing skills on which to build. As I mentioned, we also have strong support for this campaign from across the local area, including from some of our key stakeholders, MPs and councillors, but also from local newspapers. The Scunthorpe Telegraph, the Grimsby Telegraph and the Hull Daily Mail have been running their own campaign to support bringing more renewable energy projects to our area.
I congratulate my hon. Friend on securing the debate. On the matter of support, he also has plenty of support from Yorkshire MPs, myself included. Offshore wind is important for my inland constituency, so that we do not have to have onshore wind farms dotted all over the beautiful countryside of the Colne and Holme valleys. It is also important because David Brown Engineering in Lockwood, Huddersfield, has a major contract to make the gears for offshore wind turbines. Hopefully the Humber will also play an important part in cutting our carbon footprint, as part of the array of carbon capture and storage that may go into the North sea, and bring jobs. My hon. Friend has plenty of support not just in the Humber region, but across the whole of Yorkshire and the north of the country. Thank you for this debate.
I thank my hon. Friend for that glowing pledge of support for the Humber, and that demonstrates a point I will go on to talk about. The supply chain for this industry will not be limited to the Humber—it will benefit UK plc. There will be jobs through the development of the renewable sector across the whole of the UK in manufacturing. I know that he will be at the forefront of campaigning for those jobs to go to his constituency of Colne Valley.
What we seek from the Minister is continued support in selling the Humber—I know he has responsibilities for the whole of England—and England, internationally. We would also welcome support from the Government in terms of the pressure they can apply to ensure that once agreements have been made, as they have been with Siemens, there are no glitches in the system. I also seek clarity about the framework in which we are operating. I will turn to that point first, in relation to wave and tidal technologies.
In terms of R and D, the UK is at the forefront of these technologies and there are huge opportunities, not only because we are an island, but because of the skills we have. There are massive opportunities along the Humber, which is served by several other tidal rivers including the river Aire, which I live next to, the Ouse, the Trent, and what we call the Dutch river, but which is the Don to everybody else. It is estimated that marine power has the potential to bring approximately 10,000 jobs to the UK by 2020.
There is a project on the Humber at the moment, the Pulse Tidal project, which is one of those great British entrepreneurial technologies. It started in someone’s garage. After 10 years of working in someone’s garage, that has now developed into a machine that is operating on the Humber, just off Immingham dock. It was funded 50% by the Government and 50% by private funds, and has been operating successfully since 2009. It cost £2 million to build, but the beauty of the project is that it used Corus steel and is maintained by another local company, Humber Work Boats. The next step of the development is a commercial scale machine, rated at 1.2 MW, which will be installed by 2013. There the good news tails off a little. It is likely that the commercial scale machine will go to Scotland, because the renewable obligation certificate scheme is more generous there. In fact, Bob Smith the CEO of Pulse Tidal, tells me:
“The single biggest funding issue for us today is the market pull—at present there is nothing to incentivise investors to support a tidal power project in favour of a wind power project—they both receive 2 ROCs. Given that tidal is early in its development, comparable to wind about 15yr ago, it is more expensive than wind, and higher risk. Hence no investor would put money into tidal projects. With 5 ROCs in place for tidal, there is sufficient incentive to bring investors to the sector.”
I know that there is a review of that scheme, but will it consider the current disparity between England and Scotland? The scheme is currently in favour of Scotland and we are at a disadvantage, so will the review recognise that?
I hope the Minister will consider the need for extra support for these emerging technologies, so that we remain at the forefront. We have had all that R and D. We have successful projects up and running, but we risk losing them overseas and missing out, just as we did with onshore wind technology.
What are the Department’s plans for the longer-term capital support for this sector? The marine development fund is being phased out. Will that be replaced and what will be put in its place? There is a need for capital and revenue support to ensure that we do not miss out. I am sure that we will get that, because I know the Government are certainly committed, but we seek a clear commitment from the Government on the future of wave and tide.
I will be coming on to talk about that exact point. As with the wave and tidal technologies, where we have the skills base and the R and D, the same applies to bioethanol. I seek those commitments in relation to wave and tidal. My hon. Friend’s intervention moves me beautifully on to bioethanol.
The question, of course, is why bioethanol and why the Humber? My hon. Friend made the comments that I would have made about the petrochemical skills heritage in this country, so I shall not repeat them. We also have mandated targets for biofuels, so whatever people’s individual views about biofuels are, the reality is that if we do not produce them locally in the UK, and specifically in the Humber, they will be produced elsewhere, and the jobs will be elsewhere.
As with wind—and, potentially, wave and tide, if we are not careful—the UK has been lagging behind. In 2008, France had 15 operational plants, Germany had nine and the UK had one large and one small plant. There is huge potential: as with wave and tidal technologies, the predictions for the industry are impressive. It could be worth as much as £3.25 billion to the UK by 2020, and could employ some 14,500 people. There is huge potential, in the Humber in particular, for the reasons that I have outlined in respect of infrastructure.
Two plants are coming to the Humber: Vireol will be running an industrial-scale wheat-based production plant in Grimsby from 2013, which should produce about 44 million gallons of bioethanol a year. I am told that that is the equivalent—my science was never very good—
I congratulate my hon. Friend on securing this important debate. I add my support to his campaign for the Humber, especially as I am a big supporter of wave and tidal. He makes a key point about bioethanol: it will be a huge economic driver for our region if we get it right. However, I add a note of caution, and would like to know what he thinks about it. Commodity prices are growing rapidly at present—
It is an important point, and I will come to it. It is one of the criticisms—a misunderstanding, in my view—of what is actually happening. I shall first finish with the plants that are coming to the Humber. The effects of Vireol’s production of bioethanol will be the equivalent of taking 60,000 cars off the road, and Vivergo will produce at a plant in Saltend.
My hon. Friend knows that we have not only in the Humber region but across North Yorkshire—on his patch—some of the most productive agricultural land in the country, so there is huge potential locally to benefit from bioethanol production. The concern he raises is one that many people raise, which is that we are taking land that could be used to produce food to feed our cars instead. However, the process that will be used at the Vireol plant will produce as a by-product a high-quality animal feed, and there is a difference between biodiesel and bioethanol.
The global annual production of the big four oil seeds that are used for biodiesel is about 120 million tonnes. To meet our 2020 target, 24 million tonnes would have to be used for biodiesel. For bioethanol, it is 1.7 billion tonnes of the big three grains, of which only 60 million are needed to produce bioethanol. There is a prediction that the UK could increase its production volumes up to about 20 million tonnes. That could be done while ensuring food security, and, as I said, the wheat-based process that will be coming to the Humber produces a high-quality animal feed by-product, so it is a win-win situation. We already export wheat for animal feed or bioethanol production overseas.
I have two quick questions for the Minister on bioethanol—I am conscious of the time. What in particular will he do to continue to support this important sector, which has the potential to bring many jobs to our region? And when, specifically, will the Government renew the 2020 targets, which are for 10% of our fuel production, so that the bioethanol industry can continue to secure investment?
I have cut down as best I can. With that, and with your permission, Mrs Main, I would like to hand over to my hon. Friend the Member for Cleethorpes.
I congratulate my hon. Friend the Member for Brigg and Goole (Andrew Percy) on securing this timely debate. It has come at a time when north Lincolnshire, in particular, stands ready to take full advantage of the opportunities for jobs and growth. Many local companies, some of which were previously involved in similar activities such as supporting our offshore oil rigs, are well positioned to take full advantage of the development of offshore turbines. New training opportunities are being developed by local colleges, training providers and businesses, and there is massive public support following a particularly successful focus on the industry, which my hon. Friend mentioned, by local newspapers the Grimsby Telegraph and the Scunthorpe Telegraph.
My hon. Friend has articulated successfully the role that tidal and biofuels—
Sitting suspended for a Division in the House.
I was praising the Grimsby Telegraph and the Scunthorpe Telegraph, which is always a wise thing to do, especially as their reporter is present.
My hon. Friend the Member for Brigg and Goole has articulated the future impact of tidal, wave and biofuel energy, but I want to highlight the region’s potential for placing the Humber at the centre of the offshore wind sector, not only in the UK, but in Europe and globally.
The area is ideally located. The Immingham and Grimsby dock complex is the largest in the UK, measured by tonnage. Since the decline of the fishing industry, Grimsby dock has been seeking a new role, and offshore wind could be the vital opportunity. Only a few miles away, Scunthorpe has steel production, and everything possible must be done to ensure that the various contracts filter down to small businesses, many of which have been struggling in recent months.
The region has several examples of where short-term investment could result in long-term growth and regeneration. For example, the regional growth fund is currently reviewing proposals, made in association with North East Lincolnshire council, to modernise, improve and update port infrastructure, which would provide for the construction of tailor-made facilities for the offshore wind sector. Such improvements, requiring investment of £1.8 million, would lead to real improvements within a planned 12-month time frame and to several potentially major contracts being finalised, possibly resulting in the creation of hundreds of long-term, sustainable jobs. Such contracts would directly affect investment and job creation, arising from the emphasis and support given to the Humber region.
One of the most exciting developments is proposed by Able UK on a 300 hectares site close to East Halton and North Killingholme. It could make northern Lincolnshire the capital of the offshore wind industry and provide the potential for thousands of jobs over the next decade or so. Many of those jobs will come fairly soon with construction projects, and when linked to this country’s commitments to increase dramatically our environmentally friendly energy supplies, green technology has the potential to create many new opportunities.
The production of renewable electricity in the UK has been growing by 11% per year since 2000, and the offshore renewables industry has been gearing up for growth. The Crown Estate has announced the successful bidders for each of the nine round 3 offshore wind zones within UK waters, and that will occupy the industry for at least the next 10 years. It has been brought to my attention that there may be some delay to round 3, but I hope the Minister will allay those concerns in his reply. Opportunities for growth opened up to the area with the supply chain for the Humber gateway site—the Able UK development—and also with the massive round 3 Hornsea site that is within 12 miles of Hull. When finished, it could generate up to 14% of the UK’s total energy needs.
I urge the Minister to give a cast-iron guarantee that northern Lincolnshire and the Humber will receive Government support equal to that for other areas. Private enterprise stands ready to invest, but it cannot do it alone. We welcome the opportunities offered by port development grants, but the earlier we receive confirmation that the A160 into Immingham docks will be upgraded, the better. I appreciate that that is not within the Minister’s brief, but it is yet another opportunity for me to mention the issue.
There is also the seemingly never-ending debate about Humber bridge tolls. The Treasury review into the tolls is a major step forward, and we look forward to its conclusion later this year. If the labour market is to function freely in the renewables industry—and other industries—and allow local workers to take all opportunities available, we must consign the debate on tolls to history.
Potential investors and current stakeholders remain concerned about long-term financial commitments and the speed at which planning applications are implemented. In a report on the potential of the UK’s renewables sector, the offshore valuation group stated the requirement for new financing structures that complement the fundamental features of renewable energy infrastructure and are able to support the scale and speed of industrial growth. That is necessary to secure the UK as a centre for the global renewables industry.
So far, the Government have done a lot, which is greatly appreciated by local councils and other representatives from the industry. Nevertheless, we cannot do it alone. There is the possibility to create a great number of job opportunities in an area that has been in recession for too many years, and I urge the Minister to do everything in his power to help the area.
It is a privilege to serve under your chairmanship, Mrs Main, particularly on a subject that I know is dear to your heart. I congratulate my hon. Friend the Member for Brigg and Goole (Andrew Percy) on securing this debate and on returning to a theme that he has become accomplished in discussing in this House. He and my hon. Friend the Member for Cleethorpes (Martin Vickers) make a powerful duo, and they are eloquent and dedicated advocates for the interests of their constituencies. They have worked hard to create a broad coalition on both sides of the House and of the Humber, and to bring together the interests of the local authority, the business community and the political representation in the Greater Humber area. That will ensure that we take maximum advantage of the benefits that undoubtedly exist. Contributions from other hon. Friends concerning how such opportunities can benefit their constituencies have also been encouraging, and we have heard from my hon. Friend the Member for Colne Valley (Jason McCartney), and about the interest in bioethanol from my hon. Friends the Members for Hove (Mike Weatherley) and for York Outer (Julian Sturdy).
This is a timely debate because we are looking at the potential for a huge regeneration in parts of the country that have been badly affected by economic decline over many years. One of the most exciting aspects of the renewable sector is the potential that it brings for economic prosperity in areas that have suffered badly. We must put this debate in the national context. The Government are committed to a major roll-out of renewables, because we believe that it will help to secure our long-term energy interests, help tackle climate change and meet our renewable energy targets for 2020 and beyond. It will also deliver many green jobs across the United Kingdom, revitalising our manufacturing sector.
The 15% target for renewable energy by 2020 is challenging, but we are sure it is achievable. We are on track for the first interim target of 4% renewable energy by 2011-12, and we have 25 GW in the renewable electricity pipeline. We should look at the resources around us—we have heard about how such resources play out for the Humber. Around these islands we have 40% of Europe’s wind and some of the highest tidal reaches in the world. We are already global leaders in the offshore wind sector, with 1.3 GW of installed capacity.
This debate takes place against the background of the Government’s commitment to localism, and we expect communities that accept renewable energy developments to receive distinct and specific benefits. We have mentioned the localisation of business rates, and we are looking at other ways in which communities can benefit from hosting facilities on behalf of the wider national interest.
My hon. Friend the Member for Cleethorpes discussed offshore wind. The Carbon Trust has estimated that the offshore wind sector could create 70,000 jobs by 2020. Last week, I was delighted to announce the grant of consent for the Humber gateway offshore wind farm, which will generate enough clean electricity for 150,000 homes. We put in place the offshore wind developers forum specifically to identify barriers. We are determined to drive that process forward as fast as possible, identify potential barriers to investment and do what we can to ensure that they are dealt with and do not become insuperable. We still need an acceleration in deployment and technical advances to realise the potential of offshore wind.
UK manufacturing activity will be key to realising the economic potential offered by offshore wind across the whole supply chain, and I am confident that the offshore wind sector will grow substantially in the coming years. We are determined to avoid mistakes that we have seen in the past, where although our waters contain some of the largest offshore wind farms in the world, the jobs and contracts go to mainland Europe or the far east. In taking forward the next stage of offshore wind development, we must ensure that those jobs come to the United Kingdom.
We are the world’s leading market, and any company that is keen to invest in the offshore wind manufacturing chain should be looking at Britain. The contribution made by Siemens, and its determination to build in the UK, and the interest we are seeing from Gamesa, GE, Mitsubishi and other companies shows the extent to which Britain will be a global leader in this technology.
We are looking at making larger turbines than have been developed before. They need to be more reliable than those used for onshore wind, and to have deep foundations and undersea cabling. That means that they will be harder to transport than some of the turbines used for onshore wind, and there is a strong case for that manufacturing to be done locally to market.
I support the work that has been done on both sides of the Humber and, indeed, in other parts of the country to showcase the benefits of this technology for potential investors. It is also interesting to see the work that well-established local companies are doing to give themselves a new direction. For example, Cosalt, which was originally known as the Great Grimsby Coal, Salt and Tanning Company when it was founded back in 1873, now provides engineering, safety and inspection services to the wind energy sector. That typifies the economic development thinking in the area. There is no doubt that such activity should provide a major boost to the British economy, and there is every reason for us to hope that the ports along the Humber will be able to develop from that.
Of course, this issue is not just about wind power. One of the most exciting aspects is how the renewables sector brings together in specific locations a raft of different technologies and the contributions that they can make. Biomass is part of that. In 2009, biomass electricity provided 87% of total renewable generation in the Yorkshire and the Humber region. There is no doubt about the significance of the contribution that it can make.
My hon. Friends spoke about the importance of bioethanol and the leadership that Britain ought to be looking to establish in this sector. Bioethanol offers one of the few options in the short term for tackling greenhouse gas emissions and for meeting our renewable energy targets in the transport sector. We are considering the opportunities that can be provided through eligibility to benefit from the renewable transport fuel obligation and the renewables obligation. As my hon. Friend the Member for Brigg and Goole set out in opening the debate, we are looking at the renewables obligation, and this issue can be part of that process, although as he will understand, it is my colleagues in the Department for Transport who lead on those issues.
We are also committed to harnessing the benefits that a successful marine renewables sector can bring to the UK generally and, within that, to the Humber area. The schemes to which my hon. Friend referred show some of the thinking that is going on. This is a fast-moving sector. As he has said, the struggle is in getting things to a commercial scale. What we have seen in looking at the schemes that were in place already—the marine development fund and particularly the deployment fund—is that the bar was set too high to be relevant to the stage that the industry is currently at.
We have examined how we take the technology further and faster. Its development is an explicit written element in the coalition agreement, which is at the core of what we are trying to do in the Department of Energy and Climate Change. The benefits go well beyond providing us with secure, clean electricity, because there is an opportunity to build a new manufacturing sector in the UK, which will create new jobs and grow economic opportunities both at home and globally.
That will happen only if we ensure that we capitalise on the hard work that the sector is doing already and ensure that the right foundation is in place on which to build success. We have established a marine energy programme, and we now want to ensure that small, dynamic companies have every reason to stay in Britain by putting in place a network of marine energy parks around the UK. That will enable us to take forward the technology and ensure that those emerging companies want to develop in the UK, rather than, as we have seen too often in the past, taking their technologies elsewhere in the world.
We have brought forward the banding review for renewables obligation certificates by a full year, so that we can provide much greater certainty to investors. The difference between different parts of Britain—the difference between ROCs support in England and in Scotland—will feature in that, although of course the level at which support is set in Scotland is a matter for the Scottish Government and the same applies in Northern Ireland.
We can offer a real opportunity to take forward these technologies in this country. Our objective must be to remove barriers, to encourage investment and to ensure that we identify where the challenges are, so that the potential throughout this country can be achieved. This has been a short but important debate. The Humber has a very important contribution to make to the renewable energy future of this country, and I again pay tribute to the Members of Parliament who are representing the area for the determination and assiduity that they have brought to its cause.
I am grateful to Mr Speaker for offering me the opportunity to have this debate. At the outset, I need to declare that I have a mortgage with Northern Rock. I am privileged to be chair of the Co-operative party and one of the party’s 28 Labour/Co-op MPs. It is in that spirit and with their support, but from the Back Benches, that I have sought the debate.
Yesterday, as the Minister will recognise, was business as usual for banking. Barclays bank was carrying on as if Ministers had never been worried about its bonuses or its profits. This is also the week for yet another re-launch of the big society. It is a concept in crisis, unloved by many of the Minister’s colleagues and viewed with profound scepticism by many people in the charity world. What better time, then, for the Minister to offer up a vision—and, crucially, the action to back it up—of the big society that is not an excuse for an attack on public bodies and hard-working public servants, but that instead leads to real change in an area of the corporate world, financial services, where the whole country has wanted a change in culture and behaviour?
Despite a coalition commitment to help mutuals, thus far in financial services there has been little of note. Mutuals and financial mutuals in particular are proof that there is another way—that, important as the public and shareholder-led private sectors both are, there is a way to combine the best of both traditions, to drive enterprise, to foster ambition and to cherish community throughout our country. Financial mutuals, building societies, friendly societies and credit unions were not responsible for the global financial crisis. They do not have a culture of large dividends or excessive bonuses, and they have much more, surely, to offer, but astute Government regulation will be required to foster and encourage the sector.
Both my parties—the Co-operative party and our sister party, the Labour party—were right to call for the remutualisation of Northern Rock at the last election, and I urge the Minister now to set out clearly the Government’s position on that issue. The Banking (Special Provisions) Act 2008 allows state-owned banks to be converted into mutuals. That could be by sale, merger with an existing mutual or the creation of a new entity.
The long-term ownership solution for Northern Rock should take into account some key principles. Taxpayers should not be out of pocket as a result of the change. Hard-working families and small businesses should be protected. The institution that emerges should be secure and responsible and add to the financial stability of the UK economy. The new organisation should act in the long-term interests of its customers.
The hon. Gentleman knows that I share his interest in the promotion of mutuality. I am therefore a little disappointed by this being couched in Labour terms. Does he not think it would be helpful if the proposition put to the Minister were that there should be a proper review and examination of the opportunity of mutuality in relation to Northern Rock, rather than it being asserted to him that that is the only option? We should be examining it as fully as we examine any other option.
I end up at the same point as the hon. Gentleman, although I took a different journey to get to that point. I will come back, if I may, to the excellent work he has been doing in chairing the all-party inquiry into financial mutuals.
An expert think-tank based in the university of Oxford set out in September 2009 how and why Northern Rock could and should be remutualised, ensuring that its debt to the taxpayer was paid down, creating a stable financial services provider and constraining it from making the previous mistakes, while helping to secure a more competitive retail financial services market.
The next step, which the hon. Member for Cardiff North (Jonathan Evans) hinted at, would be a full feasibility study examining in detail the financial, governance and leadership issues in respect of a remutualisation. Will the Minister encourage such a feasibility study to be undertaken, either as a Green Paper examining the issues in all their complexity or, if the Treasury wants to maintain some distance, requiring UK Financial Instruments to do that instead? In short, will he now actively investigate the feasibility of the case for remutualisation?
In 2003, PA Consulting Group—not a body that one would naturally think of as being on the left—published an interesting analysis of the relationship between the profits of commercial banks and the market share of mutuals. In short, as mutuals gain market share—in other words, as competition between the various private banks and their mutual competitors increases—bank profits from the retail banking market come down. Potentially, that gives the Minister a significant opportunity to deal with the criticism that, under a Tory-led Treasury, it is business as usual for the banks; he can promote greater competition through the growing mutual sector.
The biggest advantage that mutuals can offer is their long-term view. They are not faced with the short-term need to secure profits. Indeed, Nationwide estimates that the mutual pricing benefit that it enjoyed between 1997 and 2007 because it did not have to put shareholders ahead of members totalled some £3.7 billion. New research, using the published accounts of six shareholder-owned insurers, shows that more than £2.2 billion was paid to shareholders in dividends. That is the dividend drag—the loss incurred by all who seek insurance as a result of buying from a business owned by shareholders. That helps to explain why mutuals, which do not suffer that drag, typically pay higher investment returns, provide better standards of service and pay more claims.
Treasury and Financial Services Authority orthodoxy appears to be that corporate form does not matter, but that what counts is what those various corporate bodies do for their consumers. Such a view is simplistic and not sufficiently considered to warrant the hands-off approach to corporate diversity that often appears to characterise the approach of the FSA and the Treasury. Let me be clear: I do not advocate a mutual-only way, but robust diversity is important in ensuring real competition and giving consumers a real series of options in the market.
New capital rules being introduced in the wake of the global financial crisis may give rise to insufficient care being given to protecting and increasing the remaining strength of the building society movement. The FSA’s new interpretation of the rules on capital may, over a number of years, bring about the end of friendly societies. Both sets of draft capital requirements could profoundly damage the competitiveness of financial mutuals, and they do not reflect the fundamental difference between financial mutuals that are run for members, and the basic banks or private insurers, which are run for shareholder gain.
The European capital requirements directive is designed to enable financial services businesses better to absorb losses following the introduction of the new Basel standards. I accept that that is an important part of the response to the global financial crisis; it focuses on improving the quantity and quality of capital, particularly what is called core tier 1 capital. Over the last 20 years, building societies’ capital reserves have been supplemented by permanent interest-bearing shares. However, they will not meet more demanding definitions for core tier 1 capital.
I recognise that building societies need to have access to new ways of securing capital that are permanent and that fully absorb losses. At the moment, the rules are being framed with only one type of corporate form in mind—the private bank. They do not recognise the fact that mutuals are structured and function differently, providing value to their customers over the medium and longer term. If building societies are forced to adopt plc-like capital, they will have to adopt plc-like behaviour. Building societies are trusted, safe and responsible precisely because they are not part of what “St Vince” calls the casino economy. Surely it would be a mistake to force upon them a new type of equity capital that would import excessive risk-taking.
I realise that there has been movement in the discussions between building societies and the Government on this matter, but I ask the Minister what progress has been made—and, just as important, what has he done personally to move things forward with his European counterparts?
There has been less progress in discussions with friendly societies. The FSA, revisiting its own rule book, seems hellbent on clinging to a piece of legal advice that has not been shared with the industry and which is at odds with every legal opinion that the industry has received. It seems to be based on a ministerial view from the mid-1990s that the then Minister publicly acknowledged was not intended for mutuals. Why cannot the FSA share its legal advice with the industry? If its motivation is that it does not want to damage friendly societies, why cannot a joint solution be found? If a solution cannot be found, mutual insurers would have to pay out a significant proportion of the capital held in their organisations; the consequence of that could be that they had little or no working capital and would have to shut up shop or demutualise.
I am grateful that Hector Sants attended the inquiry of the all-party group on building societies and financial mutuals, but frankly I doubt whether he has yet grasped the seriousness of the situation that friendly societies face as a result of his organisation’s proposal. Even now, I hope he will agree to an urgent review of the FSA’s legal advice and step up efforts to find a solution. If he does not, and if the Minister does not intervene, consumers will have less choice, plcs will take greater profits and customers will face higher charges. I would welcome the Minister’s response.
The Minister is responsible for ushering in changes to financial services regulations. They offer the opportunity to lock in a new requirement to champion corporate diversity and, crucially, new structures to ensure that we have people of sufficient calibre and status in the regulatory landscape to deal with building societies and friendly societies. Will the Minister support a requirement to promote corporate diversity in financial services when bringing forward the Bills to set out new arrangements for the City? What action is he taking to ensure that mutuals will be the responsibility of those high enough in the pecking order to make a difference when needed?
I turn to credit unions. The Minister will recognise that there is widespread concern about high interest rates for consumer credit and the activities of illegal loan sharks. I hope he realises the opportunity that properly managed credit unions can provide in meeting the needs of those wanting relatively small sums of money at affordable rates. Access to credit unions in the UK has been growing. For example, I understand that Wales has a credit union in every part of the country. That is not the case in England, although things have been slowly improving in recent years.
My hon. Friend may be aware that access to credit unions in Scotland has improved of late. I hope he will join me in paying tribute to Hamilton credit union, which is developing financial services for children and young people to help get them into the culture of saving, so that in future they will be more financially responsible.
I welcome the progress that has been made in Scotland, and particularly the work of the Hamilton credit union outlined by my hon. Friend. What action will the Minister take to champion the further growth of credit unions across the UK?
Mutuals make a vital difference by generating more competition in financial services, and they help to create more value for the consumer, as opposed to the shareholder. I look forward to the Minister’s response to my questions.
It is a pleasure, Mrs Main, to serve under your chairmanship for the first time.
I congratulate the hon. Member for Harrow West (Mr Thomas) on securing this debate. He roots his support for financial mutuals in the co-operative movement, which he represents in the House. Many on the Government Benches would see financial mutuals as a coming together of communities to meet the needs of their members, which may be an early articulation of the big society.
We should not forget the role that mutuals play in providing financial services. They hold about 20% of UK retail deposits, and provide financing for 17% of outstanding UK mortgages—including mine. They employ 70,000 people and half of the UK’s population are members of mutuals. The one member, one vote ownership model sets mutuals apart from their plc peers, as it enables them to focus solely on the needs of their members. It is unsurprising that mutuals frequently rank highly in surveys of customer satisfaction. As we know, many mutuals operate in areas of economic and social deprivation throughout the UK. They provide services that would be seen as sub-scale for big banks, including as the small loans offered by credit unions whose customers might otherwise turn to doorstep lenders.
The hon. Gentleman made an important point about access to credit unions. When I read the transcript of a recent debate on high-cost credit, I was struck by the fact that one of the challenges is to increase access to credit unions as an alternative to doorstep lenders. In a moment, I shall discuss some of the measures that we will take. It is the importance of mutuals and the choice and diversity that they provide that drives our commitment to see them thrive and prosper.
The causes of the financial crisis have been stated many times, and I do not intend to rehearse them here. None the less, it is important that we learn from the crisis and take steps to ensure that the same mistakes are not repeated in the future. The Government want to create a financial services sector that works differently and is driven by different values, which is why we are committed to implementing measures that will foster diversity in financial services, promote mutuals and create a more competitive banking industry.
The Government have established an Independent Commission on Banking to make recommendations on both structural and non-structural measures to change the banking system and promote stability and competition for the benefit of both consumers and businesses. A strong sustainable mutual sector, which has the ethos of working in the interests of members, can support that.
We must be realistic and recognise that the financial crisis and the subsequent economic climate have posed many challenges for mutuals. Those challenges include greater competition for retail deposits, more intensive supervision and tougher capital requirements. I do not apologise for the tougher regulatory environment that we are now in. Adapting to this new world has been, and remains, a key challenge for financial mutuals as well as for the whole financial services sector. The Government are keen to ensure that the legislative framework is in place to enable mutuals to fulfil their role.
There are number of changes to which we are committed to help create a more equal playing field in financial services. Let me turn now to the point about capital that the hon. Gentleman rightly raised. We are committed to achieving high capital standards across the financial sector, including for mutuals. At the same time, it is right that we have capital requirements that are appropriate for mutuals. The Government seek to address that issue in negotiations on the capital requirements directive. This is a matter that the Treasury and I take very seriously, and we are leading the debate on this in Europe to ensure that the specific nature of mutuals is taken into account while, at the same time, not compromising the quality of capital in the banking system. We expect a proposal from the Commission on that later in the year.
I say to the hon. Gentleman that one of the driving forces behind our reforms on capital is that we want to ensure that financial institutions never again turn cap in hand to the taxpayer for financial support in a financial crisis. That is why it is important that all deposit-taking institutions, regardless of their form of ownership, have access to loss-absorbing capital.
Capital is a key issue for mutual insurers, too, which is why the FSA is considering the use of with-profits funds. It will be publishing a consultation paper on that shortly. I do not want to pre-empt the proposals that have been made today, but having extolled the virtues of the mutual model, it is reasonable to expect that mutual with-profits policyholders should expect at least as favourable an outcome, if not a better outcome, than proprietary with-profits policyholders. It is important that mutual insurers ensure that they treat their with-profits policyholders fairly, too.
The hon. Member for Harrow West (Mr Thomas) alluded to the previous ministerial statement. He knows that it was a statement that I made, but it related to the position of stock-owned companies. It deliberately excluded the position of mutuals, because it was an assessment of what policyholders’ reasonable expectations were and it was based on previous experience. Those factors have been erased from the way in which the FSA has taken the matter forward, so will my hon. Friend agree to revisit that area?
My hon. Friend makes an important point and it is one that he and I discussed before this debate. His argument, which he has expressed publicly, is that his statement was not intended to be applied to all forms of with-profits funds. The FSA is aware of that view. None the less, it is important that this issue is treated very carefully. I am well aware that for many mutual insurers, their capital comes from with-profits funds. Without that with-profits fund, they would not be able to function in the way in which they do now. It is also fair to say that for a proprietary-owned business, the with-profits fund belongs to its policyholders. We have seen a number of firms go through a reattribution process in recognition of the fact that those funds belong to the members of that fund. There is a challenge there that we need to address and we need to be very careful about the impact of decisions on the ecology of the mutual insurer sector.
As I suggested in my remarks, the FSA’s position appears to be based on a particular legal opinion that it has secured. Will the Minister ask the FSA to revisit that legal opinion, bearing in mind that all the other legal opinions that the industry has received are at odds with that opinion? Will he also specifically ask the FSA to share that legal advice with the industry, as part of the process of trying to facilitate a solution?
The best route for resolving this is through the response to the consultation paper, which the FSA will publish later this year. It is for the FSA to decide whether or not it should disclose legal opinions, because it is an independent regulator. The consultation paper is an important way in which to resolve these issues.
I was talking about the need to create a modernised legislative framework for mutuals, and capital is part of that. The Government are also implementing legislation to allow mutuals to modernise the way in which they communicate with their members and to enable them to prosper. The Legislative Reform (Industrial and Provident Societies and Credit Unions) Order 2010 has been a long time coming. It will be re-laid before Parliament next month and will introduce many quite basic, yet far-reaching reforms that will enable credit unions to modernise and grow.
I know that my hon. Friend, as chairman of the all-party parliamentary group on credit unions, will have a great deal to say on this matter, but may I just finish my point? I may even be able to answer his intervention before he makes it.
One of the biggest changes will be to allow credit unions to admit corporate bodies to their membership. Those new members will be able to deposit in and borrow from their local credit union, which provides opportunities for investment and growth in communities. Alongside that, various deregulatory measures relax the rules on age limits for memberships, year-end dates and the ability to offer interest on deposits. These proposals should increase the appeal of local credit unions to the local community and increase their steadily expanding membership still further.
Many of us are waiting with excited anticipation for the legislative reform order. What expanded role does the Minister see credit unions potentially playing as a result of the changes in the legislative reform order both in a big society context and in encouraging enterprise because of being able to work with corporate bodies as well as individuals?
It would be a way for credit unions to make the greatest opportunity of this. We are trying to open up more possibilities for the financial and mutual sector through a number of our measures. I go back to the debate about capital. One of the challenges that I put to the building society sector and others is that if it had the opportunity to raise more capital, what would it do with it. How would it benefit more people as a consequence of having that flexibility? I say to my hon. Friend that corporate members could include charities and voluntary groups, and their deposits could help credit unions to expand their base, so that they can lend more to local communities. There is an opportunity there for the voluntary service to help expand that base. That will also help to create a much more viable credit union sector. Like me, my hon. Friend will have had conversations with Mark Lyonette, who wants to make sure that we move the credit union sector on to a much more stable and viable footing, enabling it to take deposits from others and pay interest on them.
That point about access to credit unions in Wales was made before the hon. Gentleman came into Westminster Hall for the debate. We need to learn the lessons. The Treasury is very open to new ideas and any thoughts that he has about why Wales has that degree of access to credit unions would be much appreciated.
We will also implement the Co-operative and Community Benefit Societies and Credit Unions Act 2010 once the legislative reform order comes into force. That will modernise the industrial and provident society name and the powers available to update the legislation in the future. Other reforms include a consultation on the use of electronic communications in the mutual sector. That consultation closed at the end of January, and we will lay an order shortly to enable mutual societies to have the option of using electronic communications to engage with their members, which would reduce their costs.
Before I go on to talk about the regulatory framework, let me address the issue of Northern Rock. That issue was raised in the Treasury Committee, and I am aware of the work that has been done on it by Kellogg college. There is a degree of elegant circularity about remutualising Northern Rock, given its antecedence. But of course the responsibility for managing the Government’s investment in Northern Rock rests with United Kingdom Financial Investments Ltd. UKFI gave evidence to the Select Committee, and if the hon. Member for Harrow West reads the transcript of that sitting, he will see that it is open to ideas about the remutualisation of Northern Rock. The principal objective of UKFI is to promote and create value for taxpayers from its management of our stakes in banks, but it also has to pay due regard to financial stability and act in a way that promotes competition. Clearly a remutualised Northern Rock might help it to do those things.
Before I give way to the hon. Gentleman, I will just say that the taxpayer has a £1.4 billion stake in Northern Rock, so any solution in terms of remutualisation would need to identify a clear way in which the taxpayer would receive a return on that investment. Furthermore, it is not clear how a large Government shareholding in a mutual would affect mutual status.
As I said in my opening remarks, I absolutely acknowledge the point about the taxpayers’ interest in Northern Rock. However, rather than just allowing the people at UKFI to sit there waiting for ideas, will he write to them and specifically ask them to conduct a feasibility study into the remutualisation of Northern Rock, addressing the taxpayer issue that he quite rightly mentioned as well as other wider issues? Will he take proactive action on this issue?
If the hon. Gentleman reads the transcript of the evidence given by UKFI to the Treasury Committee, he will know that remutualisation is very much on its agenda. In conjunction with Northern Rock, it is about to appoint advisers to advise it on the disposal process. I know that UKFI is looking at remutualisation. However, I have yet to see a proposal that demonstrates why remutualisation is in the interests of taxpayers. Nevertheless, we are open-minded on this issue, and we will wait to see a viable proposal emerge.
Regarding the regulatory framework for mutuals, we will bring Northern Ireland credit unions within the regulatory structure that is in place in the rest of Great Britain. That will enhance consumer protection and ensure that those credit unions become part of the Financial Services Compensation Scheme, which will enable their members to appeal to the Financial Ombudsman Service. It will also enable those credit unions to seek approval to enter new markets and therefore help them to grow. In addition, we are looking at the registration and regulation of industrial and provident societies as part of our review of the regulatory architecture. I know that that is a concern of the co-operative movement and we will seek views on it shortly.
The hon. Member for Harrow West raised the issue of an objective on diversity for the new regulatory structure. Again, that point has been raised with me before. My concern is to ensure that the new regulators, learning from the mistakes of the past, focus on what matters—confidence in financial services, and the stability and soundness of institutions. That should be their driving force and I do not think that an objective on diversity would fit within the new framework.
We want to see mutuals grow and thrive. We are introducing measures on legislative reform and new capital levels, and we are offering greater support to the mutual sector. Mutuals have a big role to play in the future development of financial services, and this Government are keen to do all we can to ensure that they continue to provide an important service to communities across the UK.
Question put and agreed to.