Tuesday 6 January 2015
[Mr James Gray in the Chair]
Offshore Wind Developments
Motion made, and Question proposed, That the sitting be now adjourned.—(John Penrose.)
I am pleased to have secured this debate and thank the Backbench Business Committee for recommending it.
Developing the United Kingdom’s offshore wind resource would provide a significant supply of clean, secure energy. Scotland, of course, has huge potential to provide a large proportion of energy from this source. There are proposals for a number of wind farms around our coastline, including three off the coast of my Angus constituency. Between them, the projects off the coast of Angus alone could supply more than 2 GW of electricity.
In addition, developing this resource could create a significant domestic manufacturing and export industry. RenewableUK has estimated that employment in the offshore renewable industry can grow from the current 13,000 jobs to over 44,000 by 2023. The Centre for Economics and Business Research has found that investment in offshore wind will deliver £8.4 billion of gross annual value added to the UK economy by 2020 and that the sector could boost exports by £18 billion a year by 2030.
This is not purely projection. As part of electricity market reform, the Department of Energy and Climate Change established a final investment decision enabling process—a bit of a mouthful, but never mind—which enabled a number of projects to move forward with investment decisions, having been awarded early contracts for difference. This enabled five offshore projects totalling nearly 3.2 GW of capacity to come forward. On the back of this, there was a significant boost to the offshore supply chain when Siemens, the dominant supplier of offshore turbines in Europe, confirmed that it would proceed with a major manufacturing facility in Hull for its new offshore turbines. This was a clear demonstration of the direct link between visibility of deployment at scale and securing wider investment in the supply chain, and it demonstrates that this is not just a Scottish issue; it applies also to the north of England.
If we are serious about the re-industrialisation of the UK, the “march of the makers”, or whatever slogan one wants to use, we need to ensure that we actually invest to get these industrial developments built and producing.
Is the hon. Gentleman aware that in Northern Ireland, there was an application to explore having offshore wind farms on the County Down coast, but that fell foul of electricity regulation rules and did not fulfil the time requirements? Does he agree that that was a lost opportunity for economic investment?
I am not familiar with that case, but it sounds like it was. Offshore wind farms give the opportunity to provide not only clean energy, but employment. That is important for the hon. Lady’s area and mine, and for much of Scotland. That point was reinforced in a report from the think-tank Green Alliance, which found that CfDs form part of a strong new investment framework for offshore wind, but that a lack of clarity over post-2020 policy and funding
“is contributing to a shrinking of the offshore wind project pipeline”.
That seems to be the case in Northern Ireland, given what the hon. Lady said.
Clear decisions over future support for the sector will need to be taken in the early days of the next Parliament if the pipeline is to be sustained at levels necessary to support continued growth of the sector out to 2030. Specifically, the report finds that:
“The UK will need a minimum of 25GW of offshore wind by 2030, of which 10GW is projected to be in operation by 2020. Currently, 13GW of additional offshore wind projects are at an advanced stage of development, and a further 20GW have entered development.
Policy, regulation and funding challenges mean the pipeline is shrinking. 8.2GW of offshore wind projects were withdrawn in the 12 months to June 2014, with other projects since shelved. New projects must compete for government funding which will only be sufficient to deploy an additional 1.2GW in the five years up to 2020.
However greater policy stability could result in capital investment worth in the region of £1.8 billion a year between 2015-30 into the UK offshore wind supply chain, over three quarters of which is made up of small and medium sized UK companies.”
That shows the potential; at this stage, much of it is just potential.
Previously, of course, these developments were funded through the renewables obligation, under which developers built projects, gained accreditation and received a fixed sum on top of the market price. However, under the new system of contracts for difference introduced under the Energy Act 2013, projects must be developed to a point at which they have planning consent and a grid connection offer; then they can bid into a competitive allocation round to secure a contract for difference, which tops up the market price to a specified strike price.
I stress that this debate is not an attack on the change in the system. It is fair to say that most, if not all, parties in the House supported the change to contracts for difference.
Although I support the hon. Gentleman’s message on this subject, a number of businesses and others in my constituency are concerned about the cost of green energy, and believe that it is not properly regulated. Does he agree that we need proper regulation to make it more efficient, and so that more companies can use it?
Clearly, there is a balance to be struck between the interests of the bill payer and the interests of creating renewable energy. We all have to take that into account. My point is that as well as being clean, renewable energy also produces investment in industrial development and creates jobs. I agree that there is a balance to be struck. We must always bear in mind the impact on the bill payer of all these projects, and we must always seek value for money. The point that strikes that balance will vary over time.
I am sure that the hon. Gentleman will be gobsmacked to know that I do not agree. I will mention that later. No doubt, he will make his own points on that subject.
When I served on the Energy Bill Committee, I raised concerns about the changeover process from renewable obligations to the contract for difference regime. That seems to be part of the problem that we are experiencing. The renewables obligation comes to an end in 2017. The difficulty arises because of the way that the CfD process is being introduced, particularly in respect of whether and at what level funds will be available in future years.
Two developments off the shores of my constituency have a combined total of 1,234 MW and both are bidding in the first round of contracts for difference. The Government are currently considering that first round of CfDs, which are due to be allocated, I understand, around the end of March. Therein lies part of the difficulty. New projects have to bid for contracts for difference through a competitive auction process, and offshore wind projects will compete not only with each other for the budget, but against other renewable energy projects. Offshore wind has been grouped with wave, tidal, biomass, combined heat and power and Scottish island wind. There is a total budget for all these technologies of £235 million, which is split between £155 million for 2016-17 and £80 million from 2017-18.
RenewableUK has estimated that this would be enough to bring forward around 700 MW of capacity—just over half of what could be produced by the two developments off Angus alone, never mind any others that might be in the pipeline. RenewableUK has estimated that up to 3.5 GW of capacity could have entered into the current allocation round, and by the time of the second allocation round, expected towards the end of this year, the number could rise to over 9 GW.
I am told that the amount of money allocated to the first round, which is under way, is significantly less than the industry expected, and that is causing considerable unease in the industry. It can be seen from the figures I have quoted that there is no way all three Scottish entrants could achieve a CfD. Indeed, given that there will certainly be bids from other parts of the UK, there is no guarantee that any of them will get a contract at all. That leaves the industry facing a dilemma. As Gordon Edge, director of policy at RenewableUK, put it:
“There is enough money on the table for 700-800MW in this allocation round if all the money in the ‘less established’ pot goes to offshore wind”,
which he considered likely. He said:
“There are a number of large offshore wind projects coming forward that are significantly larger than this. Developers of those projects are left with the choice of carving out a piece of their development to fit—which is likely to make the economics more challenging—or sitting it out in the hope of a better opportunity later. If the budget for the next allocation round is the same as the first round, then less than 10 per cent of capacity we project will be eligible to bid can secure a CfD. It can take hundreds of millions of pounds to get offshore wind projects through consent, which is why the industry is getting very hot under the collar.”
There is a real danger that some developers will begin to consider whether they are prepared to continue to pump large sums of money into projects if there is not at least a real chance that they will secure a contract for difference.
I raised that issue with the Secretary of State at the last Department of Energy and Climate Change questions. I said:
“Many offshore wind developers have expressed concern that owing to the structure of the current contracts for difference allocation round, only one development will be given a CfD, imperilling many of the others. Can the Secretary of State give them any reassurance that there will be greater consideration of offshore wind in future CfD allocations?”
The Secretary of State responded:
“First, it is worth putting it on the record…that Britain leads the world in offshore wind”—
that is perhaps true, and is welcome—
“with more offshore wind farms installed than in the rest of the world combined. In the current round of CfD allocations—of course, it has not been completed yet, so I cannot talk about the details—we have ensured that we have sufficient allocation for offshore wind, but we have also ensured that the levy control framework includes further allocations for it, so that the consumer can benefit from dropping prices.”—[Official Report, 18 December 2014; Vol. 589, c. 1551-1552.]
The difficulty with that is that the allocations for future rounds are not clear, and that is causing a great deal of concern in the industry.
What the Secretary of State said is all very well, but there is no certainty about the future budget, because the Government are giving no market signals about what the budgets are likely to be in future allocation rounds, and in future years, and there is no visibility beyond the current delivery plan, which extends to 2018-19. That uncertainty will almost certainly lead to developers looking again at developments. Without the confidence that budgets will be available, it is impossible for them to assess the allocation risk, and that will act as a deterrent to investors. Uncertainty could increase the cost of development, rather than create the savings that the Government are looking for.
For those projects that are not successful in the current round or whose capacity is too large to be supported within the available budget—the only definite figures that are available are under the current budget—lack of foresight could increase uncertainty yet further. The industry has suggested that it needs clarity on the frequency of allocation rounds and foresight of at least two allocation budgets at any time. Will the Minister say whether the Department is considering or is prepared to consider that in the near future?
I congratulate the hon. Gentleman on securing the debate. Given that there are some technologies for which the Government are prepared to agree contracts for many decades into the future, does he agree that the Minister should indicate whether they will take a similar approach to renewables?
We are in danger of having a debate within a debate. I will return to the points I was making on offshore wind, although nuclear power does come into this to some extent. If we are serious about the long-term development of offshore wind, we need clear targets and commitments for developers and we need to ensure that we give certainty to support supply chain investment and development. That would undoubtedly also involve providing the necessary conditions for competition, innovation and cost reduction, all of which are supposed to be the Government’s aims. Instead, there are mixed messages on energy policy and continuing uncertainty. Strike prices are set only to 2018-19 and the levy control framework is set only to 2020. There is no real commitment to a decarbonisation target. RenewableUK described the 2020 deadline as being like a cliff edge, because of the uncertainty on what comes after.
Those points were also raised in the Green Alliance report I mentioned, which concluded:
“The research has identified five actions the next government should take to realise the industrial and decarbonisation potential of offshore wind:
1. Set a 2030 carbon intensity target for the electricity sector of 50gCO2/kWh”—
given the Government’s previous response to that, I am not holding my breath—
“2. Confirm the scale of funding available to support delivery of low carbon energy infrastructure during the 2020s under the Levy Control Framework.
3. Provide more certainty for low carbon generators by confirming the timing of funding allocation rounds for the rest of this decade.
4. Stabilise the supply chain by committing to minimum levels of offshore wind deployment in the 2020s (dependent on generators meeting cost targets).
5. Draw on international experience to derisk UK offshore wind development and ensure a robust pipeline during the 2020s.”
The hon. Member for Upper Bann (David Simpson) made a point about the impact on the bill payer, which we also have to take into account. We cannot say that we will just pump money into any sort of development, irrespective of the impact on bill payers. It is not necessarily about putting more money into offshore wind. As I have said, by investing in offshore wind, we get more than just clean energy; we get industrial investment, jobs and the economic regeneration that many of us are looking for in our areas. It is about certainty and giving the industry a clear signal that the huge amounts of money it is putting into developing these projects will not be wasted and that there is a plan beyond 2020 to ensure that these developments will come on stream, produce energy and increase industrial investment.
I congratulate the hon. Gentleman on securing this debate. Is another big issue not the cost to projects of connecting to the national grid? Many of these offshore wind developments need new infrastructure and the grid. The grid has a long-term forward plan. If we have short-term CfDs, short-term investment needed for consent and no guarantees of grid connection, the whole situation is even more uncertain than he is outlining.
The hon. Gentleman makes a good point. I have spoken on many occasions about the difficulties that grid connections pose for many renewable generators, particularly in more remote areas such as the north of Scotland. There are a huge number of issues in relation to that. To be fair, efforts are being made to address some of those problems with the proposals for new lines down the east and west coast of Scotland and various other connections, but those are long-term projects. They will not be done quickly. The point is also that although many of these offshore wind projects are looking for consents now, it will be several years before they come on stream. I understand that from getting a CfD, it can be up to three years before the first turbines are operating or in place. There is a long-term aspect, but it is not beyond the wit of regulators to bring the two together.
I understand what the hon. Gentleman is saying, but the point I am trying to make is that each of the individual projects will have to meet the cost of grid connection. It would be better to have the national infrastructure of the National Grid acting in the national interest by ensuring that the cost is spread across the country and not met just by the individual projects. A new grid connection costs hundreds of millions of pounds, which can in many cases make a bid uneconomic. That is my point.
Again, I do not disagree with the hon. Gentleman. He tempts me into a discussion about the postage stamp model of transmission charges, which is a similar issue, but I shall not go there because I am coming to a close and other people want to speak.
The industry also raised concerns about the levy control framework and called on the Government to address the political uncertainty about whether 2020 is a budgetary cliff edge. Offshore projects have a four to five-year horizon from being awarded a contract for difference to the commissioning of the first turbines. The industry is concerned that there is no clear indication about what will be available post 2020.
The Minister may say that it is difficult to give a clear indication about the future—indeed, we cannot be certain about what the Government will look like in six months, never mind six years—but giving some indication of the projected budgets and the intended direction of travel would go some way to addressing the industry’s concerns. Ministers have not been so reticent about nuclear energy. They have, in principle, agreed with EDF a contract for difference at Hinkley Point at a strike price of almost double the current wholesale price of electricity. That contract will last for 35 years—more than double the length for renewables. There seems to be a willingness to do more for nuclear than for offshore renewables, which provide a much better platform for clean energy and for the industrial regeneration that is required in many areas of our country.
It is a pleasure to serve under your chairmanship, Mr Gray. I thank the Backbench Business Committee for granting this debate, and I give special thanks to the hon. Member for Angus (Mr Weir) for playing a key role in securing it.
The offshore wind industry is an interest to me mainly due to the key role it can play in bringing jobs and prosperity to costal communities such as Lowestoft and Waveney, which I represent. With deference to my Scottish colleagues, the southern North sea is, in many respects, the best location for developing large-scale offshore wind farms. It has relatively shallow waters, the weather is more appropriate and it has the right environmental and geological conditions, so it is well suited for such developments. East Anglian companies have already played a key role in delivering the rounds 1 and 2 wind farms, such as Scroby Sands, Greater Gabbard, Thanet and Sheringham Shoal. Local businesses will be able to do even more if we fully realise the opportunities in round 3.
I do not dispute the fact that the southern North sea is excellent for wind, but I hope the hon. Gentleman is not going to set it against other development locations. There is huge potential in Scotland, which has a rather windy climate, although there are great challenges in some of the surrounding deep water. We must look at all potential locations and not just concentrate on one.
I fully agree, but we East Anglians tend to hide our light under a bushel. The full potential of the southern North sea has not been fully realised, so we need to raise our heads above the parapet. I do not want to be divisive as I compare different areas and energy technologies. I believe in a mixed economy.
There is the potential to do even more in round 3. Offshore wind can play a vital role in providing a low-carbon, secure energy supply. It can also create jobs regionally, as we regenerate coastal communities such as the one I represent, nationally—as the hon. Gentleman said, there is the potential to increase significantly the number of jobs from the current 13,000 to more than 44,000 by 2023—and internationally by boosting exports. People working in the oil and gas sector anywhere in the world will hear Suffolk and Norfolk accents, as well as Scottish accents. That is something we must repeat with the offshore wind industry.
A lot has been done since 2010 to deliver that success. The Government put in place a framework to give the industry a long-term, sustainable future. Siemens will be manufacturing turbines at Humberside, the green investment bank is playing an important role in leveraging in private sector capital and the Catapult in Glasgow is doing important work with the industry to drive down costs. The Government have placed the right emphasis on maximising the UK content in contracts to ensure that jobs are not exported. A planning regime for offshore wind has been put in place, which works efficiently and fairly, provided that developers are proactive and engage with local communities. Finally, the Government are pursuing local supply chain initiatives that will help local communities, such as the one I represent, to get the most from these opportunities. Lowestoft and Yarmouth now has an enterprise zone and assisted area status, and the two ports have been designated centres for offshore renewable engineering. That designation is applied around the country; it is a national strategy.
As a result of those initiatives, the UK remains on track to being the most important market in the global offshore wind sector, with more capacity installed than any other country and with the largest volumes projected by 2020. We are moving in the right direction.
Electricity market reform and the contracts for difference regime are at the centre of the framework. The Government are right to apply a budget to ensure that policy and energy costs are affordable. The CfD regime has three benefits. First, it de-risks investment in asset ownership. Secondly, the competitive allocation will drive cost reduction. Thirdly, it recognises the need to cap costs through the levy control framework.
The transition to contracts for difference has not been straightforward. With the benefit of hindsight, we can see that things should have been handled differently. First, too large a budget was given to the Final Investment Decision Enabling for Renewables contracts without ensuring competition or price reduction. Too many of the FIDER contracts were placed with the same developer, which created risk for the entire sector. Secondly, the budget for the first competitive CfD allocation was too low, although I welcome the increase in round 2 from £155 million to £235 million. That low budget surprised investors and supply chain companies and led to projects becoming less competitive. Unfortunately, it sent out the wrong signal to the market. Thirdly, the three-month delay in the 2014 allocation round was unhelpful in achieving the stable, predictable regulatory environment that we all seek. Fourthly, money appears to have been held back for future allocation rounds, which has caused the worry that the levy control framework budget may not be fully utilised. Finally, I am concerned that by not giving indications of the less established 2015 budget, further uncertainty has been created.
Those are the problems we face, but I make those comments with the benefit of hindsight. However, we must move on, and the Government must have regard to two issues. First, they must have consistent policies so investors, industrialists and developers know where they stand. Secondly, they must articulate a long-term vision for the industry beyond 2020. As the hon. Member for Angus said, the industry currently views 2020 as a budgetary cliff edge.
I have four suggestions on how we can provide certainty and a long-term vision. First, the current allocation round should be concluded as soon as possible. Secondly, details of the timing and budget for the 2015 and 2016 allocation rounds should be published as soon as possible. Thirdly, details of the levy control framework in the second delivery period post 2020 should likewise be published as soon as possible. Finally, the industry must be provided with a clearer picture of its potential long-term size and where the Government see it going. That could be achieved by setting a clear-cut tariff reduction trajectory for offshore wind post-2020 and moving to a narrower carbon intensity range.
Since 2010 a great deal has been achieved in laying down a framework that gives offshore wind a long-term future. The move to CfDs is the most challenging part of the framework. Things have gone wrong in the past, but if we get it right now the industry can realise its full potential and play a full role in bringing jobs and prosperity to coastal communities such as the ones that I represent.
Seven Back Benchers are trying to catch my eye and 40 minutes remain available to us. I am not at all keen on formal limits, but it might be sensible as a courtesy to one another to limit one’s speeches to about four or five minutes each, if possible.
Thank you, Mr Gray, and I will bear in mind your comments about the length of our speeches.
I congratulate the hon. Member for Angus (Mr Weir), and his colleagues who approached the Backbench Business Committee, on raising this important issue. It is important for all sorts of reasons, not least that renewables, onshore and offshore wind in particular, provide a secure energy source in the control of this country and do not lead to dependence on less secure sources elsewhere in the world. Recently, volatility in energy price markets has reminded us how prices go up and down and that when we depend on other countries, we are clearly less secure.
Wind is a form of energy production that, as has been emphasised, is clean and contributes to our commitment to reduce carbon emissions. It also provides real employment opportunities. The hon. Gentleman referred to potential developments off the coast of Angus. I am not sure which constituency they are off—that depends on the starting point—but although they are not off my constituency, it is certainly among those that could benefit from developing offshore wind power off the east coast of Scotland. I take on board the points made about the potential elsewhere in the North sea as well.
Some time ago, the major Spanish offshore wind turbine production company, Gamesa, proposed a major plant in my constituency that could have brought in excess of 1,000 jobs to our area and the south-east of Scotland. The proposal now seems very much up in the air, however, and one reason for that is uncertainty about the direction of Government policy, along with uncertainty arising from international pressures that are beyond our Government’s control.
A real problem is certainly the lack of consistency and long-term vision to which my colleague on the Environmental Audit Committee, the hon. Member for Waveney (Peter Aldous), referred. A clear message and vision on the Government’s part is essential; there needs to be a clear long-term policy. The long-term support mechanism, the levy control framework, is an important issue that needs to be addressed if we are to see more investment in the offshore wind sector.
Another issue is the small budget available for the newer technologies such as offshore wind and marine. The size of the budget restricts development in the offshore wind sector and has a knock-on effect on other, newer technologies. In my constituency, we had the recent bad news about the closure of the Pelamis wave turbine plant, adding to other problems in the wave energy sector throughout the UK. Among the many complicated reasons for the Pelamis decision was long-term uncertainty.
Another problem when the budget is so small is that the more established technologies are much more likely than the less established ones to get what money is available. In effect, the limited budget is more likely to go to offshore wind, and therefore less likely to go to other technologies such as marine renewables. That is another effect of having only a small budget for newer renewable technologies.
The hon. Gentleman is the second speaker to talk about the need for consistency. I am sure that is exactly what the industry wants and needs, but in an industry whose business model relies on large amounts of subsidy, Government interaction in the process is reasonable. The industry must understand that, despite the desire for consistency, the Government are entitled to do their best to bring prices down to a level closer to grid parity—something we would all like to see.
I do not disagree with some of what the hon. Gentleman says; in fact, he made a point I was about to make. I of course accept that we cannot subsidise any renewables technology at any price, simply because renewables are a good thing; but we also have to recognise that as such technologies develop and become more mature, the price reduces dramatically. We could end up in a vicious circle: if we do not support newer and initially more costly renewables technologies at the start, their price will never reduce and they will not become commercial, in relative terms, over a longer period. That comes back to the point about the need for long-term consistency and vision, and to the hon. Gentleman’s point about the Government’s approach.
Some renewables technologies will of course be more expensive initially. However, if we do not take up the immense opportunities available to develop them, nationally and internationally, other countries will do so and we will lose out. That is what happened with wind, when countries such as Denmark took over our position on engineering and exports. No doubt countries such as China will also take a leading role in renewables if we do not. What we have is a short-term strategy, not a long-term vision. I fully accept that the Government have taken some steps in the right direction, but they should do more. I hope the Minister will give a positive response to the suggestions made by the hon. Members for Angus and for Waveney, and others.
It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate the hon. Member for Angus (Mr Weir) on introducing the debate. There are constraints on the length of the speeches that we can make today, so I hope to expand on some of my remarks when I open the Second Reading debate on the Control of Offshore Wind Turbines Bill on Friday 16 January in the main Chamber.
Hon. Members who have spoken so far have shown themselves to be subsidy junkies. The problem is that the contracts for difference are a way of using taxpayers’ money to subsidise what is in essence an uneconomic activity. Given today’s oil prices, it is just as well that we—the British taxpayer and energy consumer—have not entered into contracts for difference with those engaged in exploration and production in the North sea. With the dramatic reductions in the price of oil and costs remaining much the same, such contracts would cost us an absolute fortune. Is that not the problem with the subsidy road down which the hon. Member for Angus wishes to take us?
There has been no mention of the economic context, the budget deficit or the burgeoning national debt, which continues to increase because we are running an unsustainable and unacceptable budget deficit. Common sense surely dictates that low-carbon energy should be provided at the minimum cost to the taxpayer and the energy consumer. We can get much cheaper low-carbon energy from nuclear than we can from offshore wind, so why are we investing in offshore wind? My hon. Friend the Member for Waveney (Peter Aldous) said that we were leading the world and investing in more offshore wind than anyone else, but is there not a reason to be slightly cautious? Why is no one else doing it? Because they see it as totally uneconomic and wasteful of resources.
On a recent visit to Denmark, I discussed with Danish politicians their offshore wind programme. They have cancelled any new development of offshore wind off the Danish coast because of their bad experiences. Their industry, however, enjoys the prospect of being able to benefit from United Kingdom subsidies, so that it can develop offshore wind off our islands; that is something that the Danes are no longer prepared to do off the coast of Denmark.
In my constituency a lot of jobs and prosperity are based on tourism. The proposal to construct up to 200 offshore wind turbines, each up to 200 metres high, has generated opposition from the people of Christchurch, Bournemouth, Poole and south Dorset the like of which I have never seen before. The development would be close to the shore in an area that would impact badly on the Jurassic coast world heritage site. Why is that development even being put forward? It is because of the subsidies; if there were no subsidies, it would not be happening.
There is a planning inquiry at the moment, and if the development is approved we will effectively be subsidising, through our taxes, a development that will impact badly on the Jurassic coast world heritage site. Yet at the same time we are saying, as Government policy, that we are prepared to invest in subsidies for a tunnel under Stonehenge to reduce the impact on that world heritage site. We might think that an inconsistency in Government policy, since we are prepared to used subsidies to exacerbate the impact on the environment in which the Jurassic coast world heritage site is situated.
I say to my hon. Friend the Member for Waveney—and I hope the Minister will respond to these points—that we should be looking at new technologies, so that we are not dependent on technology already developed by overseas competitors and can be world leaders. Wave and tidal power offer a much better prospect. If we are to put taxpayer-funded subsidies into renewables, that is a better sector in which to do so than offshore wind energy. In any event, it is also sensible to invest more in nuclear.
Just to be clear, is it the hon. Gentleman’s position that he is not in favour of greater subsidies for offshore wind but happy to see greater subsidies for other marine technologies? I support higher subsidies to allow those technologies to develop, but I am interested to hear what level of subsidy he is prepared to see given to them.
I am against all subsidies for offshore wind. If we are talking about the potential for the Government to engage in an industrial investment programme—the need to find jobs in new technologies has been spoken about this morning—from my experience in my constituency, there is a lot more to be said for investing in nuclear technology. Just before Christmas I visited an establishment in my constituency that is at the leading edge of nuclear technology. It has a fantastic record. If we have to put in subsidies, that is the sector in which we should do so, because subsidies for nuclear energy are far lower than the equivalent subsidies for offshore wind energy.
We have more than enough offshore wind provision already. I hope that the Minister will announce today that the Government will not put any more subsidies into that sector in future.
It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate the hon. Member for Angus (Mr Weir) on bringing this important issue before us. I had planned to commence my remarks by saying that it was a pleasure to see such consensus across the House on the importance of long-term planning for the offshore wind industry, but thankfully the hon. Member for Christchurch (Mr Chope) has shattered that consensus. I will not be following his line of thought on these issues, but he made an interesting contribution to the debate.
I would much rather support the views of the hon. Members for Angus and for Waveney (Peter Aldous) and those of my hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) on these matters. Over the past 20 years, I have watched the offshore wind industry develop greatly in my constituency, in north Wales and off Liverpool bay. Some magnificent projects have been supported by Government investment and support, by the granting of visionary planning applications and by partnership between Government and the private sector. Those projects help both to meet the future energy needs of the United Kingdom and to create a supply chain, employment and investment in local industries and skills in areas such as mine.
In north Wales there are some big projects, such as the £2 billion Gwynt y Môr offshore wind project, which reached its halfway point at the end of last year, with 81 of the 160 turbines having been developed. At Christmas, we had the helpful announcement that a further 75 new jobs will be established in both the Liverpool area and in north Wales through the extension of the Burbo Bank wind farm, which is being developed by DONG Energy off the Point of Ayr in my constituency.
As part of the ongoing debate on this issue, I have had representations from Vestas Offshore Wind, which employs a number of individuals in my constituency working out of Mostyn docks. It delivers wind farm equipment to offshore wind farms. An alternative energy park has been developed there from the old industries in my area, through investment and long-term planning.
It is important to recognise—this goes to the heart of what the hon. Member for Christchurch was saying—that the area to the north of my constituency is very much a tourist area. Developments in both sectors are complementary, not alternative. It is important both to secure investment in offshore wind energy and to continue to recognise the environmental impact on the tourist industry.
The right hon. Gentleman is talking about complementarity in tourist areas, such as the one that I represent. Does he agree that, in the private sector, site selection is very important, so as to avoid the type of problems that have occurred on a number of occasions when public opinion has mobilised and opposition has arisen to what are otherwise looked on as welcome developments?
The hon. Gentleman makes an important point. I will simply say that I will have been the Member of Parliament for my constituency for 23 years in April, and I have never had any strong representations about the massive investment in north Wales for the development of the offshore wind farms that are visible from the northern part of my constituency. That investment is important. It has helped to create employment and alternative energy sources.
I wanted to speak because the hon. Member for Angus made points that will be important for both the Minister today and, I hope, my hon. Friend the Member for Sunderland Central (Julie Elliott). The key thing that both should take from the debate is that whatever final budget is set, we need long-term stability, planning and investment decisions, so that we have a longer period for the immense amount of investment and planning needed to develop these types of sites.
Over the past 20 years I have reflected on the work in my constituency. Although there has been successful development, there is a story of missed opportunities. Siemens in Hull is now developing onshore manufacturing; Vestas, from my constituency, is developing manufacturing capacity on the Isle of Wight—a long way from my patch, but still in the UK. We were campaigning and arguing some 20 years ago for developments in manufacturing capacity to help support the development of the onshore and offshore wind energy industries throughout the whole country, and they have only now taken place. There have been missed opportunities, because the lack of certainty in the long-term commitment to onshore and offshore wind energy has meant that we have often imported manufacturing, rather than developing it locally.
RenewableUK has emphasised that as a minimum we need clarity on the frequency of allocation rounds, and foresight of at least two allocation budgets at any one particular time. We are not arguing for a 15-year or 20-year development, but we need to look at making early decisions on the 2015 allocation. I also suggest, particularly to my hon. Friend the Member for Sunderland Central, that we look, if we can, at a seven-to-eight-year period, beyond the next Parliament, so that decisions can be taken on investment. In that way, we can look at not just meeting our long-term alternative energy needs and supporting manufacturing, but how we can attract even more of the supply chain to the United Kingdom as part of a long-term commitment.
In my area, we have Vestas working at Mostyn and the North Hoyle wind farm, and we have the Burbo Bank and the Gwynt y Môr developments. That has all happened because the Government have made allocations and work has been undertaken. However, there is still more potential, not just in the north-west of England and the north of Wales, but in East Anglia, Scotland and elsewhere. We can develop an effective industry that meets our future energy needs, supports manufacturing and, whatever the budget constraints, provides certainty for investment decisions. We could and should be an international leader.
Happy new year to you, Mr Gray. I am pleased to have the opportunity to contribute to the debate. I am also grateful to the Backbench Business Committee for giving us time this morning to debate offshore renewables.
Like other hon. Members, I have a strong constituency interest in the development of offshore wind energy, in that one of the projects bidding for support in the first allocation round of contract for difference is based in the Moray firth, off the northern coast of Banffshire. Several of the ports along the Moray firth could benefit from the development of offshore renewables, with significant potential spin-offs for a wider supply chain bringing much-needed economic development to the area. I am sure other coastal communities also have the potential to benefit from such economic diversification, which is key to the future prosperity of such communities. In the north-east, there is also an understanding that the skills utilised in the offshore oil and gas sector are eminently transferrable to the offshore renewables industry, as well as a sense that we should grasp the opportunities to develop new and innovative technologies on our doorstep by building on our existing strengths.
Today’s debate takes place in the context of energy market reform. We should always remember that that is not only about keeping the lights on, bringing consumer prices under control and repairing a broken system, but about climate change and the need to reduce our greenhouse gas emissions and to mitigate, or adapt to, the effects of climate change that are already manifest.
I read recently that 2014 was the hottest year on record. We do not always notice that in Banff and Buchan, which is pretty cold, but we undoubtedly see the impact of a slightly warmer, slightly wetter climate and the effect of changing sea temperatures on our marine environment, with coastal erosion and increased landslips. And who could fail to notice the problems associated with increased flooding right across the UK? If we abdicate our responsibility to reduce emissions or pretend we can ignore climate change indefinitely—or at least for another decade or two—we are burying our heads in the sand. Environmental campaigners are fond of pointing out that the climate does not negotiate, and they are not wrong.
That is primarily why we need cleaner energy. However, we are also in the fortunate position of being able to take economic advantage of the opportunities renewable energy presents. Being in the vanguard of new technologies has the potentia1 to strengthen our manufacturing, our exports and our research base.
The hon. Lady’s argument is surely an argument in favour of investing in adaptations to ensure that the impact of climate change is not felt so severely—for example, on the coast. If we have coastal defences, we can defend ourselves better against the consequences of climate change.
The hon. Gentleman’s views on these issues are well articulated and well known, but we have to be a lot more ambitious. I do not want be shoring up our coastline—I would rather be preventing it from falling down in the first place. One way we can do that, and gain economic advantage, is by developing new, innovative technologies, which will have tremendous commercial potential if we develop them properly.
In that light, I am deeply disappointed that no decarbonisation target has been set for 2030. That is a real missed opportunity, and it undermines confidence in the Government’s commitment to the offshore renewables sector. The Government initially seemed much more ambitious about the development of offshore wind, and that raised a lot of expectations, leading to considerable investment from industry. Companies were actively encouraged to make bids for offshore developments, and they have invested hundreds of millions of pounds in bringing projects to consent.
However, the smoke signals from the Government have changed, and the goalposts have shifted somewhat since Ministers embarked on this journey. The budget announced last October for contract for difference bids was substantially lower than expected. The £235 million allocated for group 2 will support an estimated 700 to 800 MW of offshore wind capacity, which is a lot less even than some of the individual projects aim to generate.
I am not questioning the principle of a competitive element to the process, but the money available will, realistically, support only one—and possibly only part of one—of the seven projects in the frame. Given that companies will each have invested tens of millions of pounds just to get to this stage, the support on offer simply does not present sufficient incentives or prospects of success to encourage further development in the sector. I fear that the prospect of offshore wind on the Scottish coast is in real danger of withering on the vine.
It is important to point out that, under contract for difference, offshore projects will compete against not just each other, but other renewables projects, including more evolved technologies, such as onshore wind on the islands, which are now much cheaper and lower risk. Again, that is likely to jeopardise the development of a strong domestic renewables sector and supply chain.
I am concerned that the shifting goalposts, the mixed signals and the interminable delays that have characterised energy market reform are doing the UK considerable reputational damage in international markets, which will deter future investment. Those who feel they may have been led up the garden path this time will be reluctant to venture into our orbit again, which is not where we need to be in attracting investment. The Government need to send a signal that they remain committed to the offshore wind sector—if they are—and to let the sector know that there will be future allocations under contract for difference to make further investment viable.
I will not, because I am conscious of the time, and I want to make a couple of points before I conclude.
I well recall how the Government made the same short-sighted mistakes in the 1980s, when early, first-generation renewable energy technologies being developed in Scottish universities were starved of funding. That simply meant that the research moved to Europe and beyond and that other countries created the manufacturing jobs that could and should have benefited our economy.
There is a grave danger that if we pull the rug out from under the fledgling UK industry before it has had a chance to establish itself, the chance we have will pass us by. Others will harness the technology and steal a march on us. We need not to be content with what we have, but to realise that there is more wind to be harnessed if we go out into deeper waters. However, that takes investment, and it means risk, and we need to take that seriously.
I represent an area that still has a lot of manufacturing, and we are keen to benefit from what is happening. That would have long-term benefits in terms of creating a stronger, more stable and more resilient economy.
There has been some mention of the Government’s direction of travel—the enthusiasm for fracking and the rush towards new nuclear. Others have spoken about the costs at Hinkley Point, but it is worth pointing out that EU experts have said that those costs are actually much higher—about £25 billion. Professor Peter Strachan of Robert Gordon university points out:
“The deal involves paying twice the current price for electricity, with UK taxpayers and electricity consumers locked into a binding contract for an extraordinary 35 years.”
If we also consider the massive decommissioning costs involved, those figures put into context the £235 million available for offshore wind through contract for difference in the current round. Offshore wind developers seem to be scrabbling around for the crumbs.
If it is possible to make a 35-year commitment to support the nuclear industry, it seems short-sighted to have the offshore renewables sector lurching from year to year and round to round. Obviously, we are not comparing like with like, but we simply will not have a renewables sector if we do not give it more certainty and security to develop these ambitious technologies. I would like the Minister to use this opportunity to indicate the Government’s ongoing commitment to the sector.
Renewable energy is an important part of our energy mix, but we need to think long term if we are to realise its full potential. The cost of new technologies is likely to reduce over time. Contract for difference helps to encourage that investment, but we will achieve the added benefits only if we remain in the vanguard. The point has been made already, but it is worth saying again that a native renewables industry is critical to our long-term energy security.
Several Members have said that we lead on offshore renewables. If we want to stay in the lead, we need to harness the stronger winds further offshore. Let us not abandon our initial ambition, and let us ensure that we give our offshore wind energy sector the kick-start it needs to achieve real economic benefits for us.
Happy new year, Mr Gray. It is a pleasure to serve under your chairmanship. I thank the hon. Member for Angus (Mr Weir) and the Backbench Business Committee for this important debate.
I will try to carry out the difficult job of being a bridge between the anti-nuclear and anti-wind brigades in the debate, because I consistently support both forms of generation. I am pro-nuclear, pro-wind and renewables, and pro-energy efficiency. I see no contradiction in supporting all three if we are to achieve the goals of a long-term low-carbon economy, which is the way forward. We must be honest with the public when we talk about support mechanisms and subsidies. Each sector receives subsidies. The anti brigade say “Isn’t it terrible that the others get subsidies?” However, many of the technologies need to be upgraded, and some are new technologies, so they need Government support.
As a member of the Select Committee on Energy and Climate Change and the Committee that considered the Energy Act 2013 I supported electricity market reform. Any party in government over the relevant period would have needed to make progress on that. I agree with my right hon. Friend the Member for Delyn (Mr Hanson) that we need continuity and consensus when we talk about energy and long-term planning. We had that when the Government first came to power; and we had a sensible Energy Minister—I welcome the Minister to his place—but he was replaced by someone who was less pro-wind. He said in the Chamber that he supported it, but outside said he did not, following the line of many of the popular newspapers of the day. That is no way to make Government policy, and I think that the uncertainty has affected the future of development.
I want progress with—I hope—a change of Government this year, but also with consensus on energy policy, so that investors see certainty. During the Committee inquiry on energy market reform we spoke privately to businesses. They said that uncertainty and short-termism put them off investing in the United Kingdom. Those multinational companies will take their money anywhere development will happen. Visitors to Texas, where they have shale gas, will also see wind development there. Most countries are investing both in renewables and in either oil and gas, as in America, or nuclear where there is progress towards low carbon. I welcome the fact that my near neighbours the Irish Government now say that they cannot rule anything out, and are talking about new nuclear for the future.
I have been working closely with Labour colleagues in north Wales on the development of a low-carbon economy, not just for energy security, which is important, but for manufacturing and regional economic benefits. I have seen those benefits. The United Kingdom is an island economy, and I represent an island constituency. I want the maritime benefits not only of manufacturing, but of research and development and links with nearby universities. The university of Bangor, in the neighbouring constituency, has its ocean sciences faculty on Anglesey, and its research and development goes hand in hand with the development of offshore technologies. We need to make those links to get good quality jobs in the various regions of the United Kingdom. I support what is happening in Scotland in developing wind, and what is happening in east Anglia and elsewhere.
The United Kingdom is a small island that competes internationally, and we need to harness our resources, including wind, tide and waves, to maximise future benefits. That is why we need long-term vision, and policies to aid and abet it, to bring about top quality jobs—and the jobs in such industries are of top quality. There is a shipping company in my constituency called Turbine Transfers. It is international, operating across the world, and now makes purpose-built vessels for the offshore industry. It needs the certainty I have spoken of, so that it can build vessels to be crewed and maintained around our shores; that is the importance of offshore energy. With the electrification of our domestic system of surface transport—cars and railways—we will need low-carbon energy, and we need to focus on the long term. We have benefited in north Wales from taking such difficult decisions. I supported Gwynt y Môr when the Conservatives, in opposition, opposed it; but that development, to which the previous Government gave consent, is now a flagship policy of the Conservative Government. Such uncertainty and policy change is the reason for our lack of long-term investment. We need to move forward and get the quality jobs I have spoken about.
Hitachi is developing a nuclear power station in my constituency, which I fully support. I do not think that there is an either/or decision to be made over nuclear or renewables; I think we should have both. I have seen what skills have been developed over generations, and I want them to be transferable between different types of energy production. That is why I have been promoting Anglesey as an energy island—so that we can have a focus of attention and a centre of excellence, with links to universities, schools and technical colleges, to get the right skills base for the future, and high quality jobs. The hon. Member for Waveney (Peter Aldous) mentioned the accents to be heard when he travels around the world; and Welsh accents can be heard in energy development in Canada and elsewhere. I want to hear those accents back home, in a forward-looking industry where young people have opportunities to develop. Offshore wind, like oil and gas, has provided great opportunities for people in the United Kingdom, and we should keep those sectors in our country. That is why I support nuclear as well as wind and renewable energy.
I am worried about contracts for difference and the small pot for maritime development and renewables such as wave and wind. In 2001 when I entered the House, I was always being told that wave and tidal energy were about five to eight years away, and I am still told that now. We did not have the policy certainty that we could take advantage of, and we need that. I have been to see research and development in the Orkney islands, but things are not moving forward.
Finally—and this is the main reason for my taking part in the debate—I have seen abandoned projects in my area. The Rhiannon project was going to supply between 2 and 3 GW of energy in round 3, and the application for the consents was made. Hundreds of millions of pounds were spent, but the project was abandoned because, in my opinion, of uncertainty about the future. Of course, there was talk of technical difficulties, and as the hon. Member for Banff and Buchan (Dr Whiteford) said, there will be difficulties in future in deeper waters; but we need to plan for those. In future, there will be bigger projects, further offshore, harnessing energy more efficiently for the future. We need to take decisions now.
It is not a question of either nuclear or renewables. We need both if we are to move forward as a world leader. Nor is it a question of either tourism or energy development; we need both. My constituency is one of the most beautiful areas in the world, and tourism there has grown. We have a nuclear power station, we had early onshore wind, and now we have offshore wind development plans. The issue is Britain looking after its own interests with energy security, and attracting the high skill levels that the people of my area deserve.
As ever, it is a pleasure to serve under your chairmanship, Mr Gray. I wish you and all colleagues a happy new year. I congratulate the hon. Member for Angus (Mr Weir) and the Backbench Business Committee on bringing forward this important debate.
This will come as no surprise to those taking part in the debate—we talk about such things a lot, and I too was on the Committee that considered the Energy Act 2013 and have gone over the arguments at length many times—but I am pleased to have the opportunity, at this early stage in the new year, to reaffirm Labour’s commitment to cutting our carbon emissions by encouraging investment in clean energy through the system of contracts for difference. I want to make a few comments on some of the speeches. As my right hon. Friend the Member for Delyn (Mr Hanson) said, there is a broad consensus—barring the views of the hon. Member for Christchurch (Mr Chope), who has a slightly different view from ours. I, like some other right hon. and hon. Members, am committed both to renewables and to nuclear, which will both have an important part to play in the energy mix. We need both of them to reach our carbon emissions targets and negate the problems arising from climate change.
Many of the issues that have been raised are of concern to us—particularly the question of investment and security, and knowing the way forward. That has been raised with me in my capacity as an MP representing an area on the north-east coast, where many of the issues that have been discussed today are relevant, and where there is potential to benefit from development of the industry. Investors tell me that they want certainty. They want to know where we are going, and that there is a long-term plan. The decision cannot be one for four or five years. There is broad consensus, and much of what I want to say concerns that, but there are some issues.
Scotland, as we know, plays an important role in the UK’s clean energy generation. It is blessed with significant clean energy resources, including onshore and offshore wind, and wave and tidal energy have significant potential. Scotland’s leadership in clean energy is borne out in the funding that it receives from central Government. This year, having travelled many times north of the border in the referendum campaign—it is not that far from where I live—I have seen, as I have driven up towards Glasgow, hundreds and hundreds of onshore wind turbines, which I think are quite beautiful and add to the scenery on the drive. They are clearly a significant part of the economy north of the border.
Scotland currently benefits from a system in which resources from across the UK are pooled. Scotland hosts 8.3% of the UK population and around 9% of the energy bill consumer base from which we fund clean energy projects via the levy control framework. In 2012-13, Scotland received nearly a third of all renewable obligation certificates supporting renewable energy. Furthermore, Scotland will receive a significant proportion of the support given through feed-in tariffs, which in 2014-15 is projected to reach £817 million.
As has been said, the UK is a world leader in offshore wind, with as much installed capacity as the rest of the world combined. I see that as a positive for us, not a negative as the hon. Member for Christchurch sees it. It is therefore critical that we get the right structures and funding in place so that the cost of offshore wind continues to fall. To ensure that that happens and that the contract for difference allocation works for offshore wind, we need to boost the investment that drives cost reductions. We have seen the massive cost reductions that investment can bring in both solar and onshore wind.
Although Labour—and most parties, as the hon. Member for Angus said in his contribution—supported the Energy Bill as it progressed through Parliament, there were significant areas in which we were convinced that it needed to go further. I do not intend to précis our “Powering Britain” Green Paper, as I am quite confident that most people here have read it cover to cover. However, what was missing from the Energy Bill, in addition to reform of the wholesale or retail markets through which energy is traded, were policies to encourage further investment in clean energy. Labour is committed to setting a 2030 power sector decarbonisation target, which is supported by organisations as varied as the Committee on Climate Change, energy developers such as Siemens and Dong Energy and companies such as Asda, Sky and PepsiCo as a crucial tool to provide certainty and clarity to drive investment.
Labour will establish an energy security board. My right hon. Friend the Member for Delyn and my hon. Friend the Member for Ynys Môn (Albert Owen) mentioned long-term security. An energy security board will plan for and deliver on our energy needs for the future. We will give the green investment bank powers to borrow and leverage new investment. We are focused on looking beyond parliamentary terms and changes in Government to give stability for investors in the energy market.
I was listening carefully to the hon. Lady developing her point on Scotland. I thought that she was going to complete the point by mentioning the potential impact of independence, had it happened, on an environment in which one third of all subsidies are currently cross-border. I was wondering—
I take that guidance from the Chair, but I will say that we won the referendum.
Given this Government’s refusal to set a 2030 power sector decarbonisation target or allow the green investment bank to borrow, it is unsurprising that investment in renewable energy has fallen. Furthermore, according to the Environmental Audit Committee, investment in clean energy is running at half the level necessary if we are to meet our carbon emission reductions. It is also worth pointing out that the majority of renewable energy projects that have come online since May 2010 started under the last Labour Government.
The offshore wind industry certainly welcomed the increase in the budget for less established technologies from £155 million to £235 million, although it was somewhat tempered by the downward revision in the reference price. Can the Minister confirm that the downward revision will have a significant impact on how much capacity is feasible for the same amount of budget? Currently, approximately 5 GW of offshore wind is in operation or construction, and about another 3.2 GW has been given final investment decision contracts. Do the Government have a fixed ambition for offshore wind, either by 2020 or another date, and can it be assumed that that ambition has been reflected in the allocation funding pot? Does the Minister share the view of industry experts who have projected that the £235 million equates to approximately 800 MW, and is he satisfied with the Government’s ambition for offshore wind in this allocation round? Those questions reflect some of the concerns expressed by hon. Members in this debate.
This Government’s mixed messages and active hostility to onshore wind and solar PV, the cheapest large-scale clean energy technologies, have acted as significant blows to investment in all clean energy technologies. In the last few months, the UK slipped to seventh place on Ernst and Young’s attractiveness index for investment in renewable energy, and Ernst and Young labelled the Government’s
“policy tinkering and conflicting signals”
“too much for investors…to handle”.
Does the Minister accept that the Government’s mixed messages have damaged investment?
Although offshore wind remains an area in which the UK proudly leads the world, employing thousands of people and generating the clean energy that we need to meet our carbon emissions commitments, it is clear that costs will have to continue to fall, and allocation rounds should be designed to reflect that priority.
Mr Gray, I wish you and all other Members a happy new year. It is a pleasure to serve under your chairmanship. I congratulate the hon. Member for Angus (Mr Weir) on securing this debate through the Backbench Business Committee. I used to represent a similar part of Scotland in the Scottish Parliament, so I am well aware of the pressures and the demand for offshore wind in his part of the world. The north-east coast of Scotland is a beautiful part of the country.
What I am hearing in this debate is similar to what I heard in my previous work in aerospace. That industry had long lead times and required certainty, and that is also true of the renewable energy industry. There is a constant play-off between new investment in new technologies and mature and maturing technology elsewhere. The hon. Member for Edinburgh North and Leith (Mark Lazarowicz) made the point clearly that often there is a tension between maturer technologies and those seeking a fair audience, such as wave, solar or tidal energy. In my previous life before entering the House, in early 2003, I was part of a process of trying to get funding for tidal energy off Britain’s shores, and I remember being crowded out of the debate.
Decisions between investment in technologies and certainty are always subjective and never satisfy all, but we should not forget that more immature technologies are also helped elsewhere in Government through research and development tax credits, the patent box for matured technologies and other incentives in other parts of this Government’s business policy.
I hear loud and clear the point about having certainty when it comes to strategy, including certainty about what the British Government and Britain want for our energy mix and renewables obligations. Such certainty, and indeed a timetable, are important to investors. I point out to the hon. Member for Angus, however, that the Scottish National party does not add to that certainty by creating a debate about breaking up the United Kingdom.
Well, Mr Gray, certainty is important to the issue of contracts for difference, and to whether investors are willing to invest in the British energy generation market. That certainty is obviously undermined by the potential to break the market in two and deny Scots access to some of the contracts for difference funding based on the fact that the subsidisers—the bill payers of the United Kingdom—are spread throughout the whole population. It is important to make the point that we are all looking for certainty, and I venture to say that separation is not the way to encourage that.
As hon. Members will know, the Government will support low-carbon technologies in future through new contracts for difference, which we have debated today. The total amount of support that will be paid for by consumers is capped by the levy control framework. Support for projects, whether onshore or offshore, biomass or solar, will have to fit within the overall cap. We cannot worry about the standard of living of our constituents and the pressure on their bills on the one hand, and give a blank cheque to renewable projects, through their bills, on the other. We have to make sure that we balance that, which is why the cap for the current funding round is at £235 million for offshore wind generation. We need to ensure that we balance the need to get the investment in and the need to protect the people who are paying the subsidy—the bill payer.
Low-carbon electricity projects will compete at auction for the contracts, which will deliver new capacity much more cheaply than the previous arrangements. Recent studies have shown that compared with the renewables obligation scheme, the current scheme produced a difference of £19 per MW when it came to the pricing of this energy. That is important to recognise. It is estimated that the reforms to the electricity markets will mean that average annual household electricity bill will be around £41 lower over the period from 2014 to 2030 than if we decarbonised without making these changes.
As the CfD allocation round is ongoing, I cannot comment directly on what projects might have applied or who might be awarded a contract at the conclusion of the process. It is important that the Government are not directly involved in making those decisions. However, it might be useful to explain to Members the process of awarding these contracts.
Projects submitted applications to the National Grid, which is the electricity market reform delivery body, in October. National Grid assessed each application against the eligibility criteria. Any applicants judged as not meeting the criteria and therefore not qualified to participate were given the opportunity to appeal. Following the first appeal, National Grid has determined that at least one applicant has not qualified to participate in the auction. Those applicants have the opportunity to appeal to Ofgem, which they have done.
Ofgem is currently considering any appeals received and will take as much time as necessary to assess the appeal. However, the Secretary of State reserves the right to step in 30 days after Ofgem begins assessing the appeal and to direct National Grid to move to the auction process if the appeal has not been resolved. Once all appeals have been considered, National Grid will assess the value of all applications against the available applicable budget, taking into account technology pots, minima and maxima. If all the applicants can be satisfied within the budget, under the constraints of any minima and maxima, all the applicants will be allocated a CfD. If there is insufficient budget to satisfy all bids, or maximum constraints are exceeded, an auction will apply to the relevant bids and National Grid will invite those eligible applicants to submit sealed bids.
The timing of further stages in the allocation round depends on how long it takes Ofgem to process any appeals. If Ofgem takes 30 days, the auction notice is likely to be issued on 17 February and the sealed bid submission window will run between 18 and 24 February. National Grid would then notify the Low Carbon Contracts Company and applicants of the outcome of the allocation process on 18 March. The Low Carbon Contracts Company would then have 10 working days to prepare contracts and send them out for signature. Applicants would have a further 10 days to sign contracts, with the window for contract signature closing on 17 April for this round. If Ofgem processes the appeals sooner, all that will, of course, be brought forward. National Grid will continue to provide updates on timings as key milestones are met.
My right hon. Friends the Secretary of State for Energy and Climate Change and the Minister of State and I are aware that some offshore wind projects may end up disappointed at the end of the CfD allocation process and may need to wait for future rounds. It is not possible yet to say for certain which technologies will bid lowest and therefore win the auctions. However, if for example, offshore wind won the whole of the £235 million in the less established pot, that could lead to around 700 MW to 800 MW, depending on the clearing price, which answers the question from the hon. Member for Sunderland Central (Julie Elliott) about the assessment of how much it could do. I should point out that we are making a substantial amount of budget available in this autumn’s allocation of contracts, and we increased the budget for both pots over the summer.
The offshore wind pipeline is currently strong, and the Government have taken the decision to hold budget back for future CfD allocation rounds. A number of offshore wind projects are not eligible to bid in this round but could be eligible to bid in future rounds. We do not want to allocate the whole budget in one allocation round; we need funding available for projects that cannot participate this autumn, to avoid a boom-and-bust investment cycle.
It is important to recognise that we need to ensure that the industry is taking the subsidy and then continually trying to drive down the cost of its technologies and the overall cost of the projects. If it were just to take the subsidies and carry on at the same level, we would not be getting the bill payer good value for money. Whether the window is five years, as it is currently, or whether there is, as hon. Members wish, a longer time scale, I hear loud and clear the valid point that we should at least see how it progresses.
I also note that the Government have taken decisions to support much more offshore wind than any other country in the world. The UK has around 5 GW installed or under construction and another 3 GW of projects have early CfDs. We are well on the way to 10 GW by 2020. The challenge is now for the developers to demonstrate that they can bring the cost of offshore wind down and build a UK-based supply chain.
In answer to hon. Members’ points about the supply chain, I refer to my experience of aerospace. It is simply not good enough for a generator to bring over a turbine, stick a few things on it and say that it is made in the UK. When we talk about a desire for a proper supply chain, we are talking about a desire for a proper development of technologies, a skill base and the actual manufacturing. It is important that we do not all fall into the trap of claiming, if someone opens a park and assembles the final pieces, that that is some great final achievement. The challenge is to make sure that in 2020, the industry is in a good place to take advantage of opportunities.
I take on board, from all Members here—there are too many to list in a short time—that the loud and clear message is about certainty, time frame, technologies and strategy. I will make sure that my right hon. Friend the Secretary of State and the Treasury hear that loud and clear in the long term. However, we have a considerable amount of money still to allocate under the framework—up to £1 billion—and as soon as we can, we hope to inform the industry and the public.
In conclusion, I thank colleagues for bringing this issue to the House’s attention, and for the desire to recognise that offshore wind plays a real role in meeting our obligations on renewables. We are on track to meet those targets in 2020.
Late Stage Hepatitis C
I am sure that I speak for everyone present when I say that it is an honour to be before you, Mr Gray. Let me also say that if I could have chosen any Minister to respond to this debate, it would have been the Minister who is here, because her record in this field, as in many others, is exemplary. I am delighted to be able to raise these points in such company.
Hepatitis C is something that is still a mystery to a large number of people. Most people know that in the classical Greek, hepatitis refers to the fire in the blood, and it is considered to be one of those blood-borne diseases of which we know very little because of the multiplicity of presentations. In fact, hepatitis C, the subject of today’s debate, was originally referred to as hepatitis non-A or B, because nobody knew exactly what it was. However, we now know what it is, and it is a great tragedy that today 215,000 people are chronically affected by hepatitis C in the United Kingdom. Of that number, 160,000 are in England.
The majority of patients have become infected through exposure to contaminated blood in various ways. I know that some hon. Members present wish to raise the issue of blood contamination in the health service, but in many cases, where it comes from is not as significant today as where we are going with it. A whole range of issues lead to contraction of hepatitis C.
I am very pleased that my hon. Friend has obtained this debate. Unfortunately, my constituency has a high prevalence of hepatitis C. He mentioned contaminated blood —I know he wants to talk about other issues—and 30,000 people have been infected since the 1970s through contaminated NHS blood products. Perhaps, like me, he hopes that the Minister will say something about that and whether there will be a final settlement before the general election—whether something will finally be done to help those people who suffer from this disease through no fault of their own, but through negligence by Government.
I profoundly endorse my hon. Friend’s comments and I very much hope that what he refers to will be the outcome. It is a cruel irony if one presents at a hospital in search of good health, and ends up iller than when one went in. I certainly will refer to that later.
One of the highest levels of hepatitis C infection in this country is from injecting drugs. That is part of the stereotype, and it is the case that 49% of identified hepatitis C cases in England, 34% in Northern Ireland and 33% in Wales are from that source. There are significant public health risks of further transmission if hepatitis C is left untreated. This is the astonishing and terrifying aspect of hepatitis C, and if we achieve nothing else today, we can at least ventilate the issue and, I hope, bring it to the attention of a few more people in the country. Hepatitis C is one of the most sinister blood-borne diseases, in that it in effect lies dormant for 20 to 30 years in the blood. A person who lived a fairly rackety life in the 1960s may have no idea that they have been infected with hepatitis C. It may present itself 30 years later, when the symptoms of lassitude, fatigue, inexplicable tiredness lead the individual to go and see their medical practitioner; and it is a simple blood test—it does not require anything other than a spot of blood on a piece of paper—that reveals it. The sinister, long-standing, dormant nature of hepatitis C is something to which I wish to refer.
I congratulate my hon. Friend on securing an important debate. Does he agree that one problem that we face in tackling hepatitis C—he has outlined the scale of the problem; more than 200,000 people suffer from it—is the mixed messages coming from the Department of Health and, in particular, the information provided in an earlier debate in this Chamber by the Under-Secretary of State for Health, the hon. Member for Central Suffolk and North Ipswich (Dr Poulter), who said that hepatitis C is not curable when in fact, with appropriate treatments, the cure rates are between 80% and 95%?
One would almost think that my hon. Friend the Member for Easington (Grahame M. Morris) had had sight of my notes, because there will be, in a few moments, a section on that. The bullet point, my aide-mémoire, my prompt, is simply the two words “Good news”, because there is good news. One reason why we are having this debate is to tell people that there is a cure—a very successful rate of cure—but also to say that we need people to be able to access that and we need, above all, to have a plan.
Let me explain why I called for this debate. Many years ago, I had a private Member’s Bill on presumed consent for organ transplants. At that time, the then Secretary of State for Health, rather aggressively, said that it was not the business of the state to decide what happens to a person’s body after they have died. Lord Reid, as he now is, apologised to me afterwards for being quite aggressive, but one thing that it brought home to me was the difficulty of finding livers for transplant. Hepatitis C leads to cirrhosis of the liver in virtually every case, and in some cases that can then become acute liver failure, in which case one of the treatments would be a liver transplant. People think that is an easy solution when in fact it is not. As I discovered, livers for transplant are very difficult to get hold of—very hard to access.
Modern medical advances have opened up a completely new world. I will say more about that, and particularly the new therapies, in a moment, but there is still massive and widespread ignorance, and what I am asking the Minister for today is to have a plan for addressing that. I am reluctant, as is anybody, to give over-much credit to the Scottish Parliament, but on this occasion I have to say that the Scottish plan, the “Hepatitis C Action Plan for Scotland”, which is now six years old, does, if I may say so gently, represent a far more comprehensive and overarching strategy than we currently have in England.
I congratulate my hon. Friend on securing this very important debate. Does he agree that there is a large south Asian community living in the UK who, due to many cultural and other barriers, are not getting treatment? I was organising roadshows in London with the Hepatitis C Trust to raise awareness and to offer free testing. Does he agree that if the NHS and the Government take initiatives to promote free testing, people will be able to get an early diagnosis and, we hope, secure treatment?
I am more than delighted to give credit to the Hepatitis C Trust, which has done exceptionally good work—I have been to a number of its meetings—but also to my hon. Friend and neighbour in Ealing. His document, “The Challenge of Hepatitis C for the South Asian Community”, will be formally launched next week. I believe that the Minister has a copy; if not, I will provide her with one almost immediately. At that launch, the issues that my hon. Friend mentioned will be widely discussed and information widely circulated. It is important to realise why there is such a high prevalence of hepatitis C in the south Asian community. Bizarrely, it is a consequence of improved health provision in that area. There are parts of the world where there is virtually no formal, structured health provision and there is no hepatitis C or, if there is, it is a minute amount, brought in externally. In south Asia, the health service is increasing its outreach: more and more people are accessing it and making use of it. However, the medical advances are not keeping pace with the advances in sterile treatment and sterile methods prevailing in the rest of the world. So, bizarrely, although there is considerable health provision in south Asia, it is not quite there yet in terms of providing a sterile environment and avoiding transmission, whereas other parts of the world have not even reached that level.
My hon. Friend did so reluctantly, but he will, I know, join me in congratulating the Welsh Government on their work on the consent issue. The serious point was made earlier about those who suffered contamination in the NHS in the ’60s, ’70s and ’80s. Does he agree with me—the Minister may want to respond to this—that we need a UK-wide approach to the matter so that compensation can be achieved for those who have been suffering for decades as a result of that contamination?
I enthusiastically endorse the approach of the Welsh Assembly Government on the matter, and their efforts have been widely respected and appreciated. One of the things that I seek today is precisely such an overarching, UK-wide strategy. It is important to note that the United Kingdom is the only country in Europe that is showing an increase in liver disease. All the statistics indicate that cases of liver disease, particularly hepatitis C, will continue to increase until they peak in about 2030. It is hoped that in 2030 they will tail off, partly because if we backtrack 20 or 30 years to the turn of the century, people had a bit more knowledge and understanding. One hopes that debates such as this will extend that knowledge and information outwards.
On that point, I completely agree that we need an overarching national plan and strategy as in Wales and Scotland, but is there not an obligation on the health and wellbeing boards, as part of their joint strategic needs assessment? In my region, my constituency has the highest incidence of hepatitis C, which is often associated with high levels of poverty and deprivation, but less than half of the health and wellbeing boards in our region identify it as any sort of priority.
I knew my hon. Friend’s predecessor very well, and we discussed the matter at the time of my Bill on presumed consent. I entirely endorse my hon. Friend’s comments about the health issues that affect his constituency, and I will come to precisely that point later when I refer to clinical commissioning groups.
On the question of how lethal hepatitis C is, there are a range of brand new therapies, many of which are moving rapidly through the health system. Treatments such as daclatasvir and sofosbuvir provide shorter courses of orally administered treatment with fewer side effects than previous treatments. Traditionally, people with hepatitis C have tended to be given treatments such as interferon or ribavarin, which are partly injected intramuscularly and partly oral, and which have some pretty horrific side effects. I made it my business to go and speak to the practice nurse at the hospital across the river who deals with such cases and supervises the courses of treatment. I heard the rather chilling comment that the side effects of interferon included not only nausea, dizziness, sickness and fatigue but nightmares, depression and occasionally suicide.
We have moved on a great deal, and we are no longer talking about purely an interferon or ribavarin treatment. Modern treatments do not cause the awful problems of anaemia and skin reactions that the older treatments did. I give credit to companies such as Bristol-Myers Squibb and others that have undertaken groundbreaking work in the area. Treatment used to take 48 weeks, and it is incredibly difficult to work or even simply to endure while receiving the treatment. The treatment cycle for the new treatments lasts 12 to 14 weeks, which is quite incredible and much more attainable. We reckon that 10% of people who are HIV-positive also have hepatitis C, and the new course of treatment is particularly effective in those cases. Patients will almost certainly continue their course of treatment if it is shorter and less painful. I do not have time to go fully into the economic benefits of somebody being able to remain economically active while they have hepatitis C, but under the new treatments, there is absolutely no reason why a person should not continue in employment, providing a useful function and benefiting the state.
The real difficulty is late diagnosis. The benefits of early diagnosis to the NHS and to the patient are self-evident. If patients do not receive early treatment, we can see the occurrence of cirrhosis, liver cancer and even the need for transplants. If we could only address the issue of early diagnosis, it would be not only cost-effective but good for the humanity of the individual. That is one of the reasons why I am particularly pressing for early diagnosis.
I have mentioned hepatitis A, B and C, and within each of those are genotypes that have different characteristics. There tend to be four different genotypes within hepatitis C, which are known as 1, 2, 3 and 4. Genotype 1 is typically associated with intravenous drug users, and my hon. Friend the Member for Ealing, Southall referred at great length and with considerable knowledge to genotype 3 at the recent launch of the programme of treatment for the south Asian community. Bizarrely, genotype 1, which was supposed to be the hardest to treat, has turned out to be one of the easier to treat. However, genotype 3, of which the opposite was the impression, is becoming extremely hard to treat. That is one of the reasons why “The Challenge of Hepatitis C for the South Asian Community” is all the more important. One way to deal with hepatitis C is to wait until the symptoms present, but the symptoms are very difficult, because there is no typical symptom of someone who has liver disease. Most commonly, the symptoms will be things such as lassitude and fatigue, but there can be numerous other factors.
I have mentioned the hepatitis strategy in Scotland. The effect of that strategy has been to improve access to treatment from 10% to 20% through better integration among health care providers. Of course, I understand that there is a smaller population in Scotland. People often talk about the situation in the Republic of Ireland, which has a very good identification programme. The reason for that is that there is only one place in the entire Republic of Ireland where someone can get the test, which happens to be in the Dublin health district, so all the data are gathered in one place. In GB, the United Kingdom and England there are a multiplicity of areas, so it is harder to get hold of and keep such data.
That brings us to the hepatitis framework document. I am reluctant to criticise the Minister, even tangentially, because she is a good person. However, the document is a little bit overdue. I think we were promised it at the beginning of the year. I blame no one for that; the Government have other matters to deal with, and I know the Minister has been working extremely hard. I do not think anyone would disagree, however, that we are due that document.
There are a number of questions that I would like to raise as we flesh out the shape of that document. What exactly is the timetable for its presentation and implementation? Will there be targets in it? The previous documents have not contained targets. What about the role of the clinical commissioning groups? When the document was first mooted, CCGs were not the powerful agency they are now. There will be no point in having some sort of strategy if we do not address the questions of funding streams and co-commissioning. That will almost certainly happen, and we need to know where we are. We cannot revert to a situation whereby a particular area provides a particular course of treatment that is denied to someone in another area.
Who will be involved with the document? Perhaps it is an illness of politicians that we often take refuge in strategy when implementation becomes too difficult, but a working party can be a useful thing. As part of the Government’s strategy, will they consider the establishment of a working party, which might include the Association of the British Pharmaceutical Industry, Professor Graham Foster from Queen Mary, university of London—the pre-eminent diagnostician in the area—patients’ groups and the Hepatitis C Trust? I mentioned Bristol-Myers Squibb earlier, and I have no financial or other interests in the company, but I admire people who can produce good, life-saving products and I think that such people should be involved.
We need to have a strategy. I would like to suggest that, first of all, the strategy should improve outcomes for people with hepatitis C. That may seem obvious, but let us get it down on the record. We should improve the prevention strategy. We need to tell people that if they get a tattoo in Thailand, it is not enough that the needle and the syringe are clean if the bowl of ink is not. That happens to people. I will keep my shirt and jacket on, but if I did not, Members would see a large number of tattoos up and down my arms that were mostly inflicted on me in Hong Kong in the ’60s. At that time we did not consider the sterile nature of tattoos. People nowadays should be savvier, wiser and more aware, but we need to tell them.
Above all, we need early diagnosis and prompt treatment, which will not only save lives and money but improve the health of the nation. It will improve on an individual, collective and community basis. We have an opportunity, because there is a coming together of a whole range of different streams: advances in medical science, the recognition of the scale of the problem and the possibility of a solution. We are also in a fortunate position because the Minister is extremely sympathetic to this issue.
It is a pleasure to serve under your chairmanship, Mr Gray. I thank the hon. Member for Ealing North (Stephen Pound) for his kind words and congratulate him on securing this important debate. Hepatitis is a significant health issue that has been overshadowed by others for too long, in part because of many of the people who are most affected, so I welcome this opportunity to discuss it. In nine minutes I cannot possibly respond to all the points that have been made, so I will say straight away that I am going to put the issue of contaminated blood to one side as there will probably be another debate on that at some point. Work is ongoing with regard to previous problems with contaminated blood in the NHS. We are still awaiting the findings of Lord Penrose’s much delayed inquiry, which, as it addresses pre-devolution issues, is highly relevant. Nevertheless, I must put that issue to one side.
I cannot take an intervention on that point because I must deal with the rest of the debate.
On presumed consent, within the past year we have had two good, thorough debates in this Chamber on issues of organ donation and consent. It is a very interesting area of discussion. I am watching the Welsh experience with interest; I do not dismiss it, but it is very complex. I would be happy to debate it at any time with any Member because it is a topic to which I have given quite a lot of thought and consideration.
I pay tribute to the Hepatitis C Trust for its work. More recently, I have met the Hepatitis C Coalition, which has impressed on me with great force some of the issues that it wishes to see addressed—issues that were picked up by the hon. Member for Ealing North.
The NICE appraisal of the first of the new hep C therapies is due very soon, so this debate is timely. Understandably a lot of the focus is on the new therapies, but focus on prevention runs right through the NHS long-term strategy. That is highly relevant because if people are to be treated with good, new and expensive therapies, it is important to address issues such as re-infection rates and good public health prevention. Members should be in no doubt about the Government’s commitment, which I suspect would be shared by any Government, to reducing the big killers—the main reasons for premature mortality in our country—one of which is liver disease. We cannot tackle the big killers if we are not tackling hepatitis C. We are clear that the contribution that tackling hepatitis C can make to reducing current rates of end-stage liver disease is an important part of any premature mortality strategy.
I have read the transcript of the previous debate and dealt with some of the issues subsequently raised in correspondence, so there is no need to go over that again. I am well aware of the issue.
The single biggest risk group for hepatitis C is people who inject drugs, or have done so in the past. Public Health England estimates that such people comprise about 90% of all those infected in England. There are also high rates of hepatitis C among the prison population, which presents significant challenges for the NHS, particularly in terms of re-infection and changing risky behaviours. We obviously need to prioritise making the best possible treatment available to people who are suffering the worst ill health. From a public health perspective, the starting point must be prevention. Some of the new treatments will clearly be focused on people who are the most ill. Although it is right to focus on the exciting opportunities offered by new drugs and treatments, we must not lose sight of the fact that we have to make sustained progress on reducing infection in the first place. I therefore welcome the emphasis on prevention in NHS England’s five-year forward view.
Public Health England has been working with drug treatment services to improve health promotion resources for injecting drug users and those sharing needles, and to increase coverage of opiate substitution therapies and needle syringe exchange programmes. Joined-up drug treatment services commissioned by local authorities are important. We are very conscious of the need to raise the priority of hep C in local authorities and their joint strategic needs assessments—I note that it is mentioned in Ealing’s, but it is not mentioned by some authorities that face a significant challenge. That is one reason why, early this year, I will host a joint hepatitis C and tuberculosis summit with elected members from those local authorities with the highest rates of both diseases in England. The aim of the summit will be to explore how we can bring together different parts of local health systems with local authorities to control TB and hepatitis C rates in particular communities. Distinctly different communities are affected and need distinctly different approaches to tackling the problem.
As the hon. Member for Ealing North said, NHS England and Public Health England are working together on a framework. I apologise that it has been delayed, but it is due to be published this year and I will use this debate as an opportunity for another discussion about the timetable. Nevertheless, those bodies are working together very carefully on the framework, which will set high-level aims for the public health system towards the elimination of hepatitis C-related liver disease as a public health issue, with specific, time-bound objectives that feed into the overarching plan. I think that that deals with one of the issues raised earlier.
Clearly, the framework must have key targets, involve clinical commissioning groups and address co-commissioning. PHE has been working with a range of local partners—such as GPs, CCGs and NHS commissioning—to look at the rates of testing, diagnosis and treatment for people at risk of hepatitis C. That will be a core part of the framework. I will pick up the issue and write to Members when I have more detail on when we are going to publish the framework, but it will be very thorough, which is why it is taking a little longer to finalise.
In recent years, the Hepatitis C Trust has played an important role in piloting innovative ways of increasing testing rates through the use of a mobile testing van and pharmacy-based testing. We always underestimate what can be done in pharmacies, but I am very keen to make far more of what we can deliver through them. It is important that people can access early diagnosis. Those accessing drug treatment services should routinely be tested for hepatitis C, as recommended in NICE guidance. I welcome data from PHE that show increasing rates of testing. Nevertheless, we clearly must do more to ensure high levels of professional awareness about that.
PHE has also been working with NHS England and other commissioners to look more generally at how best to commission to meet the needs of patients with hepatitis C. For example, its work has included issuing extremely informative liver profiles to each local authority area, including information about hepatitis C. Every single local authority in England was sent the liver profile for its area, in the hope that that would provide the basis on which services could be planned. I urge Members to look at those profiles, and if any Member has not seen the one for their area, I would be happy to supply it.
Time is very much against me and I have not really had the chance to discuss the new therapies. We are very conscious of the potential that they offer, but I must also put on record the fact that there are existing therapies. They come with great challenges, as the hon. Member for Ealing North outlined, and they are also more difficult for people who struggle to access health care and keep to regular therapy programmes. We see great potential in some of the new therapies, but careful thought must be given to how they are delivered to patients. More than 700 patients have already been treated through the policy on access to new therapies for patients with liver failure, which has cost about £38 million, with specialist centres established to deliver early access around the country.
I am afraid that time has beaten me, as I thought it might given the interest in this subject, but I hope that I have given hon. Members the sense that we have real momentum, with the summit and the plan to come. I will write to them with further detail.
[Mrs Anne Main in the Chair]
I call John Pugh to speak on economic growth in coastal towns. After he has finished his speech, I will consider a limit of about four minutes per speaker. Ten Members have indicated that they wish to speak and, with interventions, that will probably eat up the time.
It is a pleasure to serve under your chairmanship, Mrs Main. I welcome the Under-Secretary of State for Communities and Local Government, the hon. Member for Portsmouth North (Penny Mordaunt) to this early opportunity to speak on her brief. She has made a most impressive start to her ministerial career, and I look forward to hearing what she has to say on the topic.
I have a long-standing interest in seaside resorts. Obviously, I represent Southport, which describes itself as a classic resort, but even before coming to the House I was involved, as a council leader, in the regeneration of the town. Developing by the sea is never an easy business. It is often controversial, because people have fixed ideas about what should happen, and it is often difficult. In my time, I have certainly experienced difficulties with developers, normally when they have gone bust halfway through schemes.
However, I am glad to say that for Southport, in the public realm, the process has been largely successful. We have had the benefit of objective 1 funding and Northwest Development Agency investment, and we had useful help from the Heritage Lottery Fund at various points. The pier was refurbished, the sea wall built and other developments made. We also had the advantage of an excellent chief executive at the time who provided good leadership.
When I came to this House, I naturally pressed for a spotlight to be put on the distinct problems of seaside resorts; now I do so on the Select Committee on Communities and Local Government. In the first instance, other Committee members resisted, thinking that the issue was not a high priority, but after a close vote on the forthcoming timetable I was supported by the then MP for Easington, John Cummings. Easington is not an obvious holiday destination—I think they dig more coal there than they do sand castles—but he supported my efforts. We had to call our report not “Seaside Towns”, which I would have preferred, but “Coastal Towns”.
We published that report during the last Parliament, and it was one of the most successful pieces of work done by that Select Committee. It was spoken about outside the House as well as inside. We had some difficulty persuading the Government of the time to take it seriously, but eventually they did, and they came up with the Sea Change fund to address specifically the issues of coastal towns.
The report started from the fair assumption that Britain has a lot of coast, and that it is economically important, but that many places have changed, and some have declined as leisure patterns have changed. We wanted to understand how individual resorts had responded. Our research at the time tended in many respects to work against the media stereotype of closed bed and breakfasts, hotels turned into benefit hostels, crumbling piers, high unemployment and the like. We found enormous variation in how coastal towns responded to their problems and challenges. Some clearly prospered; some declined; some were finding their way; some were marooned in time; some were happy to be marooned in time.
The key decider between successful and less successful resorts tended to be that those that were successful had a credible vision of their future and local leadership to deliver that vision. Those that were less successful kept with their problems. I was struck, for example, by the contrast between Margate, which at the time had different views about which way it should go, and Whitstable, which clearly wanted to make itself a gastronomic centre of Kent and was doing so successfully, offering a limited line but offering it very well.
None the less, there were some constant themes in most of our research. One was a lack of opportunity for young people; the exit of young people from tourist resorts is a common phenomenon. Another was poor connectivity: most resorts, necessarily, are at the end of a line or a road. There was an underfunding problem, and well-trained people were lacking in the leisure industry, which has often been a poor trainer. Changing expectations in the hotel and leisure industry did not help either. Also, wherever one went, many people wanted to retire to the coast, resulting in higher social services costs.
Does the hon. Gentleman agree that places such as Minehead, where Bourne Leisure runs Butlins, are absolutely seminal? He is right that many Victorian seaside towns have changed completely overnight. Does he therefore agree that places such as Butlins need the support of the local community to keep them there and should be getting more support than they do at the moment?
I am not necessarily in favour of public subsidy for Butlins, but I understand what the hon. Gentleman is driving at. As change sets in and resorts and what they offer need to be modified, there is clear scope for public as well as private investment.
Recently, Sheffield Hallam university, which helped a lot with the Committee’s original research, has revisited the issue. It has done a health check and published a useful report, “Seaside Towns in the Age of Austerity”, which I recommend to Members. It makes interesting reading. It is not always what one thinks it might be; in many respects it is counter-intuitive. Sheffield Hallam found that there is not a great deal to support the general picture of gloom and decline. We must dispel that lazy and far too simple narrative. It considered Office for National Statistics employment data, which presumably came via the Department for Work and Pensions, and concluded that in seaside towns, employment is stable and growing a bit, that coastal towns are still a huge economic driver and that more people work in what we might call the seaside industries, in the wider sense, than in telecoms, advertising, the motor industry, radio, TV, railways and farming. Given how much those particular businesses are debated in this place, we probably do not talk sufficiently about the economic contribution made by coastal towns.
According to that research, the tripper and overnight market accounts for about £8 billion of money churning through the system. It is also true to say, as I am sure hon. Members will in their contributions, that many places on the coast have a limited dependence on the tripper and tourist market. Historically, they have been much more diverse than we often imagine. Cars were made in Southport at one stage, albeit a very long time ago. According to current figures, only 9% of employment in Brighton comes from seaside-based industries in leisure; in Southport, it is 11%; in Hastings, which is slightly more isolated than Brighton, it is 6%. Many resorts rely more on small businessmen, the care sector, retirees, the Government, the NHS or, massively in the case of Brighton and Bournemouth, students.
As my hon. Friend is talking about Sussex, perhaps he will allow me to intervene on that point. The figure is probably even smaller for Newhaven. Does he also recognise that one of the strengths of coastal communities around the country these days is how they are taking advantage of the investment being made in renewable energy off the coast? There has been a particular renaissance in jobs in Newhaven, where hundreds of jobs have been created through the renewable energy industries. Does he share my disquiet at the knee-jerk reactions against renewable energy, which damage job prospects in our coastal communities?
I agree with my right hon. Friend. He illustrates the point that people who work in coastal towns do not invariably work in the leisure sector. In other words, the vulnerability of resorts to changing leisure trends differs. It can be minimal in some cases and almost total in others, for example those resorts founded around caravan parks and the like. We must also bear in mind that many resorts, for example Bournemouth, are big conurbations in themselves. If we take Greater Bournemouth as an area, it has a population almost equivalent to that of Liverpool.
One thing surprised me in the Hallam research and I will say a little about it. What the research picked up was, in part, a north-south divide as far as resorts are concerned. Hallam says that at the moment the towns doing best off the back of tourism are largely, but not invariably, in the south, and those doing worst are largely in the north; I note that the hon. Member for Blackpool South (Mr Marsden) is here in Westminster Hall today and Blackpool is an example that Hallam cited as one of the resorts that has been most hit by change in leisure trends. So there appears to be some sort of north-south divide—not exclusively, because obviously some areas along the Essex coast have taken a hit too. However, there is probably a different story to be told about those areas and their branding.
It is the upmarket south-coast resorts that are probably faring the best at the moment, and that links back to other areas of Government policy. One of the best ambitions of the coalition is to rebalance the economy, but as far as the north is concerned that has largely been seen as a matter of city deals. There is a logic in that, as cities are obviously crucial, but it can mean that resorts are overlooked. That is because cities in the north, as they develop, can compete in new ways against resorts. We have certainly seen that in my area. Manchester and Liverpool are now very active in the conference sector; in a sense, they have stolen business from places such as Blackpool.
Similarly, Liverpool’s retail expansion has undoubtedly damaged Southport’s more bespoke offer. Hotels and restaurants have massively proliferated in city centres so that their tourism, marketing and hotel offer has become qualitatively different from what it once was. City centres are now sold not as hubs of industry but as leisure destinations in their own right, and cities are better connected, and will be still better connected in the future, than many other areas. That is sometimes to the detriment of resorts. For example, electrification around Manchester may deprive me of a train from Southport to south Manchester. That would be excellent for people who want to get across the country, but it would not be helpful if they want to come to Southport for whatever reason.
That development would not be so bad were it not for the fact that in many parts of the north the key local decision makers do not focus on the coast at all. They tend to be very city-bound. For example, the Merseyside local enterprise partnership is dominated by Peel Holdings, which is legitimately concerned with developing its logistics business out of the docks and is not necessarily tasking itself, night and day, with encouraging tourism further up the coast. Also, the new money—if there is new money at all—tends come in via the cities and not through other routes. Although there is the coastal communities fund, and we are glad to have it, the per capita spend of that fund is a drop in the ocean compared with city deals.
It does not help that traditional council budgets and funding have been—let me put it this way—severely stressed. Many a council has done fairly obtuse things under those circumstances and cut first the activities that bring more people into their area, in order to concentrate on what they regard as their core business, which is often social services and the like; resorts have appreciable expenditure commitments in that regard. Alternatively, councils put up parking charges and drive people away. I have a particular crisis in my own constituency at the moment because the local council has decided to cut back on the iconic botanic gardens in Southport that bring people into the town, as a cheese-paring saving that will further damage the tourist industry.
In addition it does not help that, in an age of retail retrenchment, when chain stores are considering what to do about their retail offer, they look first at those towns that have a 180o catchment area and—whether or not they are populous—the chains use their models to decide that they will close branches in those towns first.
I am not here today just to complain, harass the Minister and ask for more and better things, although of course I will do all that. I accept that in an age of austerity coastal towns have to make their own weather; in Southport, we make our own weather and it is sunny all the time. However, we need to put Government coastal policy in the context of wider Government policy. We cannot ignore transport and the knock-on consequences of electrification, and think of coastal towns as a separate thing.
I take my hon. Friend’s point entirely. Surely, however, if anyone looks at the investment along the coastal line going through Dawlish, where we saw the tragedy of the line falling into the sea, they will see that that is exactly an example of where the Government have invested in a coastal community and committed to keeping a rail line going.
Yes—it probably took a disaster to engineer that level of investment, and we would not wish for that generally. However, I noticed that there is a good number of Members from northern resorts here in Westminster Hall and there is quite a clear issue at the moment with the Northern franchise and whether it will affect access to their resorts; I think that those Members will probably have something to say about that.
It is not just a question of infrastructure for resorts; it is also a question of infrastructure for ports, for example. I have Sharpness port in my constituency and I am campaigning for a bridge from that port to the Forest of Dean, to improve connectivity. Does my hon. Friend agree that that is the right direction of travel?
My fundamental point is that we need to connect up the various bits of Government policy. The Minister has to know what is happening, for example, to the marketing budgets of councils, given the constraints on council expenditure. There is a Culture, Media and Sport Committee hearing—I think it is today—that is receiving evidence on this issue, and I am sure that the Minister will pick up on that as well. We cannot roll out city deals without recognising the fact that they lead to a concentration of power, to some extent, away from resorts.
As the Hallam report says, there are a lot of us on the coast. There is a lot of employment on the coast and, frankly, with four months to go before the election we need to bear in mind the fact that there are a lot of voters there; 3.2 million is the number given in the Hallam report. There are things that we can get right ourselves, but we are also a huge under-appreciated asset outside London. Personally, I would like the Minister to have more power: to fight our corner on transport; to oblige the local enterprise partnerships to take more notice of their coastal towns; to protect and support marketing strategies in a time of council cuts; and perhaps even to lobby the Treasury for VAT cuts for in-bound tourism, as happens in some competitor countries.
We are not looking for a bail-out exercise; coastal towns are genuinely resilient and sustainable. They are also places where people want to live; we do not all want to live in flats in Manchester. The narrative of constant decline just does not hold; the first charter flights to Spain from the UK left more than 50 years ago and, frankly, by now we have got round to dealing with that. We are not a basket case. All we really need is a fair deal that is bolted properly into Government policy in all Departments. We are necessarily on the margins of Britain, but we do not want to be a marginal afterthought when it comes to Government policy.
It is a pleasure to follow the hon. Member for Southport (John Pugh). I agree with much of what he said and congratulate him on securing this important debate.
I, too, welcome the report from Sheffield Hallam university. My only quibble is that the press release accompanying it talks about seaside towns from Brighton to Bournemouth in the south and Scarborough to Southport in the north. Alliteration may have triumphed, but there are important seaside towns in the north-east and my comments will be based pretty much around them.
The report confirms that many seaside towns have weathered a severe economic storm pretty well, but they face an uncertain and difficult future. Only yesterday, the North East chamber of commerce reported that economic growth in the region is considerably slower than it was a year ago. At a time when many families are struggling to pay their food and energy bills, a holiday is a distant prospect for many. Seaside destinations abroad are certainly out of their reach; ironically, when seaside destinations in this country see an upturn, they would welcome those families.
My first observation is that where regeneration happens in my constituency, seaside towns are often well placed to provide jobs and attract visitors. They are often best when there is a partnership with local businesses that have a strong interest in their home town. However, local authorities are important as well. At a time of economic growth, it is important that resources are available to local councils so that they can make sure that regeneration continues.
Secondly, in my experience, regeneration always takes longer than expected, and certainly longer than one would want it to. Money therefore has to go in over a long period. Government should be prepared for that. Thirdly, economic success and regeneration in coastal and seaside towns depends as much on the spending power of residents as on that of visitors, so regeneration has to bear residents in mind. Whitley Bay, for example, is regenerating the iconic Spanish City. We are also regenerating the seafront, removing eyesores such as former hotels, providing new schools and redeveloping the Playhouse theatre, which is for people who live there as well as people who will want to visit.
The first concern that I put to the Minister is whether there will be sufficient economic growth, and whether it will feed through to public funding for regeneration projects over a long period. If we get back to a 1930s level of public spending, we will end up with a deteriorated public realm; we saw that as recently as the 1980s, and seaside towns bore the brunt of that. Whitley Bay is to lose its police station but retain a police presence. The police presence is more important in a town like that—it has an evening economy that is very expensive to organise and police—than it might be in other parts of the region.
My second concern is about employment. The report states that Whitley Bay has about 1,100 people, and Tynemouth has about 700, employed in tourism. That is 100 more in Tynemouth, where there has been considerable regeneration, but 400 fewer in Whitley Bay, where regeneration has been somewhat delayed. In the north-east we have problems with a relatively low-wage economy, zero hours and under-employment. If seaside towns depend on the spending power of residents as well as visitors, and we end up with a low-wage economy, seaside towns will continue to struggle. We also need better access to broadband.
I congratulate my hon. Friend the Member for Southport (John Pugh) on securing this debate. He made an excellent introductory speech, much of which I go along with.
Cleethorpes is, as I have said on many occasions, the premier resort of the east coast. Like most coastal communities, it is reliant both on seaside tourism and on the surrounding industrial base. In Cleethorpes, that is centred on Grimsby and Immingham. Traditionally, of course, the fishing industry was crucial. The Manchester, Sheffield and Lincolnshire Railway, which eventually became part of the Great Central railway, developed both the docks and Cleethorpes as a resort. It developed rail connections to the resort, which have always been crucial, particularly from south Yorkshire, which has always been the main catchment area.
It is often assumed that the British seaside tourist industry is in terminal decline. The buckets and spades have disappeared and been replaced by foreign package holidays. As was said earlier, cheap flights and package deals have been and gone, yet we still have a thriving seaside tourist industry. Nowadays, though, families tend to visit more frequently for shorter stays, rather than just once a year. This is an obvious choice for hard-working families. Up until the 1970s, trippers arrived in their thousands on rail excursions; sometimes there were 25 or 30 trains a day. Rail connections are still vital for the local economy, as the recent campaign to retain Cleethorpes to Manchester trains highlighted.
Having come through the years of decline, the resort has reinvented itself. The investments from Pleasure Island and Bourne Leisure, which operates the Thorpe Park complex, have played a major part in developing the resort for the 21st century. The recent opening of a new Premier Inn at Meridian Point shows that investors have confidence.
Of equal importance is the traditional side of the resort: amusement arcades and the beach. Fortunately, Cleethorpes is blessed with golden sands and other unique features, such as the Humberston Fitties. Time will not permit an explanation of the Humberston Fitties, but briefly it is a complex of unique chalets and bungalows. Unfortunately, North East Lincolnshire council is looking to dispose of the leaseholds, which, unless sufficient safeguards are put in place, could risk changing the whole character of that part of the resort.
At this point, it is appropriate to refer to the importance of industry, particularly the offshore industry and the renewables sector, which was mentioned earlier. Both are vital to the maintenance of the hotel and guest house businesses and many of the leisure businesses. Earlier this week, I spoke to one hotel that attributed 70% of its income to workers involved in the offshore industry.
Cleethorpes has seen many new business grow and the unemployment rate continues to fall. Indeed, it fell every month last year. Of course, viability is greatly dependent on the general state of the economy. This Government have done a great deal to support that, particularly through the regional growth fund and the coastal communities fund, which have helped various resorts.
In conclusion, the Minister will know that, prior to the last election, the Conservatives produced a document entitled “No longer the end of the line”. I hope that she will assure us that plans exist both in her Ministry and in the Conservative party to continue to boost our seaside towns. A little bit of pump-priming to support the private sector is all that we are asking for. I look to her to confirm that in her summing up.
I thank the hon. Member for Southport (John Pugh) for raising such an important topic, for outlining the case well and for giving us all an opportunity to contribute to this debate. I represent a constituency with a large coastal area—almost half of its border is coastal—so this debate is of tremendous importance to me.
The Northern Ireland composite economic index showed growth in our economy of 0.3% in the first quarter of 2014, and that was 1.2% up on the same period in 2013. That shows that there is growth, but growth does not always go through to the places where we want it. The hon. Gentleman outlined that growth needs to go to coastal communities as well. We would encourage that, and are keen to see that happen.
Coastal towns are not always seaside resorts; often, that has to be underlined. Many towns and villages in my constituency do not enjoy seasonal booms. Our coastline has many National Trust properties, which are popular with walkers and cyclists, and even those who are just after an ice cream or a bit of Portavogie scampi. These are things that people can enjoy. The restaurants along the coast obviously have locally caught fresh fish on the menu on all occasions, not fish imported by the boatload from Iceland and other parts of the world. That is one reason why our local restaurants are important.
I want quickly to mention growth in small coastal towns, which is very dependent on small and medium-sized businesses, rather than larger industries and companies coming to Belfast, for example.
Does my hon. Friend agree that while the amount of money in the coastal communities fund is welcome, we should encourage and expect the Minister to campaign for additional funding? Many want to see the development of our coastal resorts. I have five coastal towns in my constituency, and my hon. Friend has many in his. We need more than £500,000 coming to Northern Ireland to try to develop our industry.
I thank my hon. Friend for that. Clearly we are aware of the need for the coastal communities fund, which was set up in 2012 and has been extended to 2016. It aims to help seaside towns to achieve their economic potential, offer job opportunities and support local areas. I am delighted that many communities in my constituency will benefit directly from the fund. I am pleased that Portavogie harbour recently got funding of almost £1.5 million, which has enabled us to do more.
I represent a constituency that neighbours that of the hon. Gentleman. Does he agree that positive consideration needs to be given to a reduction in VAT on tourism for all the UK to ensure better economic growth in coastal communities?
I have supported a reduction in VAT for tourism since the beginning. The hon. Lady and I have worked on that with other Members. We passionately support that proposal, and we hope it is taken up.
The funding that went to Portavogie harbour enabled funding for local sports clubs, such as fishing and yachting clubs. It allowed for the repair of coastal promenades for tourist use. Since 2012, the Ards peninsula has been included in the Mourne coastal route, a scenic driving route that stretches across various parts of Northern Ireland, including my constituency and that of the hon. Lady. The area has become popular with cyclists, and there is a variety of cycling and walking routes. Those things have happened because of Government funding through community funds, but also because of the enterprise of those involved locally.
The peninsula has received some great news about the potential opening of two whiskey distilleries, which will be of much interest to many people. The growth of SMEs with Government support has enabled that to happen. We all know about Bushmills whiskey, but shortly people will know about two new famous brands on the market: the Echlinville distillery at Kircubbin and the new micro-distillery at Portaferry, both on the Ards peninsula. They will provide construction jobs initially, and long-term jobs—in the factory on the assembly line and the production line, in guided tours and in the restaurant and the coffee shop. There will even be a tasting room. There is a rumour that there is a long waiting list for the tasting room. I suspect that many people will want to know when that job becomes available, because they will want to be first in the queue. That is a long-term investment, further consolidating and boosting tourism up and down the Ards peninsula. Those things are happening because of the private enterprise of SMEs, with Government support.
In conclusion, it is all good news, but as Christian Guy, director of the Centre for Social Justice, said:
“Investment in our seaside towns is welcome, but this should be only the start. We need to boost skills, attract businesses, provide decent housing”—
there is much more to coastal communities than the beach and the shore—
“and encourage family stability. This would breathe new life into these towns—not just for visitors, but the people that live there.”
It is necessary to kick-start the process. Everything else falls into place once that has happened, because the process helps the local economy, local people and local business.
I congratulate my hon. Friend the Member for Southport (John Pugh) on securing this debate. To add to what he said, an important factor for coastal communities is their geography. They are 180° communities; they can only draw on the 180° market behind them. They are peripheral to the main centres of population. They can be end-of-the-line towns that have to create something for people to want to visit them; otherwise people go elsewhere. Coastal towns tend to have a similar demography: an older population with high welfare dependency. As has been said, the brightest and best tend to move way.
Historically, most of our coastal communities were based around fishing and a hinterland of agriculture. The railways came, and then came tourism. Social change came with the working man being given holidays. A number of our Victorian seaside resorts grew and grew. Then they became Meccas for retirement. After people had enjoyed a holiday in a coastal community, the idea of retiring to the seaside was attractive. Then came the invention of the jet engine and the package holiday, and that prime position for domestic primary holidays ended.
That has left our larger Victorian seaside resorts with a number of challenges. It is not a north-south divide; the divide is between some of the larger, old Victorian seaside resorts and the rest. Scarborough, Blackpool and Torbay have similar problems. There are towns on the south coast that tend to boom, but they are exceptions rather than the norm. The challenges that face us are that primary holidays are now taken overseas. Brands and chains have largely overtaken the family-owned small businesses that used to plough their profit back into the area. The profit from tourism now largely leaves the area. There has been welfare migration, partly as a consequence of the older hotels and guest houses converting to houses in multiple occupation and being available to rent, which has led to insecure employment, low incomes and rising social costs, but it is not all doom and gloom. There is a great future for our coastal communities.
The picture that my hon. Friend has painted could be replicated along the Essex coast, including in Clacton. Does he agree that the VAT campaign has to take in the whole country, including historical inland resorts, and not just coastal resorts?
There is a case for looking at the VAT rates in comparison to those in Europe. A competitive advantage is given to some European countries, and the Government need to look seriously at that.
Coastal communities have a great future. Most of them are in beautiful environments, and that can attract people to live and work there. They are areas that lend themselves to cultural activities and to creative and high-tech industries. They are entrepreneurial centres that often have a high percentage of small businesses. For example, 75% of all internet traffic in north America used to travel on equipment built in Paignton in my constituency by Nortel Networks. Unfortunately, the company went bust in 2001, but at its height in 2000, it employed more than 6,000 people. Wages lifted across the board, and tourism in the area increased because of the number of business people coming in. Out of its ashes, we now have a good embryonic high-tech sector that needs nurturing and support. That could lead to more sustainable full-time jobs.
The future is to diversify away from an over-dependence on one industry and to have a number of different industries supplying jobs, including tourism—whether that is niche tourism or more upmarket tourism—and that can only be helped by such things as a VAT reduction. My main request to the Government is not on VAT, because that will take some time, but for something quick. I ask them to increase the amount of money in the coastal communities fund by a significant amount by raiding a tiny percentage of the regional growth fund. As small coastal communities are full of small businesses, they cannot lever in the kind of private sector money that they need to compete fairly for regional growth funding. They just do not succeed in their bids for regional growth funding. The coastal communities fund, which is tailor-made for coastal communities, is the obvious way forward.
There are three things every coastal community needs: good skills to attract inward investors and to create jobs locally, better connectivity—I am grateful for the money that has gone into the Kingskerswell bypass in my constituency—and affordable housing.
I extend my congratulations to the hon. Member for Southport (John Pugh) on securing the debate. I have been honorary president of British Destinations for some years, and it was one of the sponsors of the Fothergill report. We have already heard some useful references to that report, which gave a balanced view of seaside areas. The issue, however, is what drives the economies of coastal and seaside towns. As my right hon. Friend the Member for Tynemouth (Mr Campbell) said, the key element must be the regeneration of the public realm and of infrastructure for residents and visitors, because if either category is not satisfied, the town will not flourish.
The CCF has been, and must be, an important element in providing support. However—the hon. Member for Southport was good enough to refer to this—it came two years after the Government had abandoned the Sea Change programme introduced by the previous Government, and after the future jobs fund, which produced about 4,000 jobs in seaside towns, and the coastal change pathfinder had been abandoned. Things come and go, therefore, but the CCF has been important.
As many Members have said, small business is vital for tourism and non-tourism, not just directly, but as part of a supply chain. In Blackpool, for example, procurement has been a key issue. Get Started, which the previous Government originally funded using local enterprise growth initiative funding and which now has funding from the regional development fund, has produced more than 1,000 new businesses over the past seven years, with sponsorship from Blackpool council. The Build Up initiative from Blackpool and The Fylde college has seen large numbers of people take up employment in construction.
There are other challenges we have to look at. Small businesses need apprentices. As the hon. Member for Torbay (Mr Sanders) said, they need appropriate support from funds such as the regional growth fund. The service sector also needs apprentices, although that sometimes gets lost in this process. Small businesses have been crucial in the South Shore area of Blackpool, which I and others have been trying to revive. We saw the effects of small businesses when we had small business Saturday last year. We had everything from the Lancashire Cheesecake Company, to a dolls collectables organisation, to a wool shop run by the local chair of the Federation of Small Businesses. Those are really important, but there must also be Government fiscal incentives for such things, which is why the Labour party’s promises to freeze and then to cut small business rates are important.
On structures, the regional development agencies did a lot to address some of the issues the hon. Member for Southport mentioned in relation to second-tier towns. The performance of the LEPs has been mixed; they could do much more, and we need to make changes. The direction of travel is for funding to move from Government to the LEPs across the piece, and it is important that we look at seaside and coastal towns in that context.
We must have decent economic drivers in seaside towns such as Blackpool. Small businesses need the regional bank proposals the Labour party has made in connection with a British investment bank. We need the Government to recognise the big issue of houses in multiple occupation and the unfairness of local government settlements, which has been spelled out since 2010, with skewed demography and pepper-pot deprivation not being recognised in funding.
Of course, it will never be easy for seaside towns to do everything they need to do. Using the funding it received from the previous Government, Blackpool has done an enormous amount with the tower and the Winter Gardens. Whoever is in government next, however, these processes should be an issue for all Departments, not just one. Embedding the interests of seaside and coastal towns across all Departments will be a key issue for whoever takes power in May.
Members have spoken with great passion about their constituencies, and I will certainly do the same. The coastal towns of Folkestone and Hythe are part of a coastal renaissance that is spread across east Kent. As the hon. Member for Southport (John Pugh) suggested, places such as Whitstable, Ramsgate and the Turner Contemporary centre in Margate are all examples of successful coastal regeneration.
We will never regenerate our coastal towns, however, if we feel sorry for them. We should feel proud of them, and we should make being a 180° town on the coast a virtue. Indeed, that is why towns are there—because being on the coast was seen as a virtue. These are places where people want to be, where they can enjoy themselves and where they can enjoy the high quality of life that comes from living near the sea.
Coastal towns have always been very creative, because they have had to compete. For those built on tourism, the tourism season in England, Wales and Northern Ireland does not last all year, and they have to have an out-of-season offer. In my constituency, one of the biggest employers is Saga, which provides financial services and holidays for the over-50s. It was started by one hotelier in Folkestone, Sidney De Haan, who offered out-of-season holidays to couples celebrating their silver and golden wedding anniversaries. It is now a multi-billion pound business, and it continues to employ a large number of people. That is an example of the creativity and ingenuity of coastal towns in stretching the holiday season and bringing in other types of investment.
I agree with other hon. Members that infrastructure is key, and there is no doubt that east Kent benefits massively from High Speed 1, which has brought journey times into St Pancras down to under an hour, greatly helping the regeneration of my constituency, bringing in new jobs and investment, and bringing in money and people from London.
The Government have certainly helped through the regional growth fund, and I know the Minister has been busy visiting lots of coastal communities around the country—she has certainly been to my constituency and others in east Kent. The fund has been helpful in targeting money at local businesses—not just traditional tourism businesses, but engineering firms and creative industries companies—helping them to grow, creating new jobs and providing better business infrastructure. That has been supported by excellent initiatives from the local authority, which has supported schemes in my constituency such as the Marsh Million fund for Romney Marsh, which helps small and micro-businesses to get started.
I ask the Minister to give favourable consideration in the next round to the local enterprise partnership bid from the South East local enterprise partnership, particularly in relation to support for the Folkestone seafront regeneration. Folkestone has embraced the need to have a new purpose. The town was originally born from fishing and farming. It then became a popular Victorian resort based on the railway. We now have good rail infrastructure, which is vital to the town’s future success, but the town’s new role as a hub for the creative industries, with a fantastic link almost directly into Tech City, is part of its future. Attracting business investment in this high-growth sector is important, and that is complemented by the creative industries’ natural role in attracting people interested in the arts and the outdoor space, and people looking to work in an alternative, different way while still being within striking distance of a main business centre. That is part of our plan, but we also want to link that growth and investment in the creative industries to education and training opportunities for young people so that investment in business today is linked to jobs in the future for young people.
The opportunities are there. The coast in east Kent has a bright future. We are on the edge of a genuine coastal regeneration but, as I said, the Government’s role in providing infrastructure investment through the growth funds and the LEPs to support that growth will be vital.
I have two coastal towns in my constituency: Prestatyn and Rhyl. Both are blessed with a built environment and a natural environment. The backdrop to both is an area of outstanding natural beauty—one of only three in Wales—and the Victorian poet Gerard Manley Hopkins spoke lyrically about both. Both towns are blessed with beaches, and the Victorian artist Cox painted Rhyl beach. Both also have a coastal footpath and are part of the Sustrans national cycleway. Prestatyn is at the northern end of Offa’s Dyke, and there are the Prestatyn Morfas—the marshes—which I helped to protect in the local development plan five years ago. Rhyl has a harbour, mudflats and a marine lake. Both towns have excellent natural and built environments.
The Prime Minister often slags off the Welsh Government for a lack of focus and investment, but let me just tell him what they are doing in Rhyl and Prestatyn. In Rhyl, they have spent £10 million on a new harbour. They are spending £12 million on new flood defences. In Prestatyn, they are carrying out a £4 million revamp of the Nova leisure centre and a £7 million revamp of the railway station. In Rhyl, they are having a £28 million new housing scheme. They are knocking down houses in multiple occupation, which are six storeys high, and building two-storey family accommodation, which will be put up for sale, changing the tenureship in the community.
In Rhyl, a £25 million new school was started in December, and there will possibly also be a £28 million new faith school. Some £22 million has been spent on the town’s first college, including a £6 million extension, and £6 million has been spent on a sixth-form college. Some £22 million is being spent on a new community hospital, and £5 million has been spent on a new clinic in the town’s West ward. That is what the Welsh public sector is doing in Rhyl and Prestatyn.
The private sector is also playing its part in investing in coastal towns in my area. The Apollo cinema—a £2.5 million investment. A new hotel in Rhyl—£5 million. A new bus station and railway station—£5 million. In Prestatyn, we have had a multi-million pound new shopping centre.
What are central Government doing for investment in my constituency’s coastal towns? Let me tell the House: 100 years after its opening in 1914 they are closing down the Army recruitment centre. In Rhyl they are closing the office of Her Majesty’s Revenue and Customs in Churton road and the family courts in Clwyd street, and they will either close or relocate the Crown post office in Water street. I believe that in Wales and in the coastal towns of my constituency we have the answer—a Welsh solution—to the UK problem of investment in seaside towns. In the past 50 years, the struggling areas—coal, steel, inner city and rural communities—have had billions of pounds put into them, and rightly, because they were struggling; but the long-term decline, politics aside, of coastal communities—[Interruption.]
The 40 or 50-year decline, especially of seaside bucket and spade communities, has not been addressed properly. In Wales it is now being addressed and I urge the Minister to take a look at the best practice in Wales, and at what Carwyn Jones, the First Minister, Edwina Hart, the Economics Minister, Huw Lewis, the Education Minister, and Carl Sargeant, the Floods Minister, are doing.
It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate my near neighbour—at least he is in Lancashire—the hon. Member for Southport (John Pugh), for introducing the debate, which is well attended. The debate is about coastal towns but let us not forget that between those are villages and hamlets, and the coastal community area, which is not just urban territory.
Fleetwood’s population is 26,000. I do not agree with the hon. Member for Vale of Clwyd (Chris Ruane) about the Government needing to learn much from Wales about investment. Five primary schools in Fleetwood have been completely refurbished at a cost of, I think, around £10 million. There is a brand new fire and emergency centre, and a £60 million-plus investment in a new sea wall to protect thousands of properties; that work is under way at present. The town has also had £1.5 million from the coastal communities fund for the front and for improvements to the Marine hall; and £2.4 million from the lottery fund, for improvements to the memorial park created in recognition of those who died in the 1914-18 war. The nautical college, one of the few left in the country that train people for the merchant marine, has been upgraded and become part of a new energy specialist college.
Putting politics aside, there are obviously still other pressures. Other hon. Members have talked about towns at the end of the line, and Fleetwood is one of the 10 biggest towns in the country that still do not have a main railway line connection. That went many years ago. The refurbishment of the tram line has finally been finished, but it comes to a full stop near where Fleetwood pier used to be. Unfortunately that caught fire a number of years ago, although how a concrete pier caught fire remains a mystery.
The key to Fleetwood in the past was not just attracting visitors. I am sure that many hon. Members realise that it centred on the fishing industry, which was huge. What we are left with at present, in the dilapidated docks—although there is a yachting marina and a great deal of yachting—are three boats out of the huge fleet that I remember from my childhood when I would spend holidays in Blackpool and go to Fleetwood to watch the ships come in. Around the fishing industry was a fish processing industry, however, and the skills have been maintained in family after family. Today, the fish processing industry in Fleetwood generates £135 million annually for the local economy, and employs more than 600 people.
I am taking part in the debate today to make an appeal in relation to a proposal from Wyre council, supported by Fleetwood town council, for which private sector funds are waiting as part of the regional growth fund, to fund what we call a new fish park—or a Billingsgate of the north. That will concentrate the fish processors and take them out of dilapidated buildings, and, as other hon. Members have said, build on the skills of smaller companies and enable them to expand. The proposal includes expanding the fish processing industry by more than 25%, and I hope that the Minister will carefully consider it, because it has the potential to bring significant improvement to Fleetwood.
I welcome what the Government have done in the past five years through significant investment. A great deal more is needed, and, with reference to the comments of my near neighbour the hon. Member for Blackpool South (Mr Marsden), I suggest that whichever party next has power, we may need a Minister for Coastal Communities to bring all the disparate parts of government together and build on the achievements of the present Government.
Happy new year to you, Mrs Main, and to hon. Members. I will in my speech bridge the gap between the different levels of government, because I have seen significant change in my coastal community, and I am one of the few MPs in this Parliament who represent a purely island community.
My constituency is surrounded by 125 miles of the most beautiful coastline in the United Kingdom. It is on the periphery only from the point of view of someone in London, Cardiff or the midlands, because it is the heart of the British isles. Its near neighbour is Ireland and Northern Ireland; Scotland is to its north and England is to its east and south. It is a gateway, and I agree with the hon. Member for Folkestone and Hythe (Damian Collins): we do not need to take a depressing view of coastal towns and communities. I represent coastal communities as well as the larger towns around the coast. They are gateways, set up when people brought goods through the ports, and they were strategically important to the United Kingdom. I still believe that they are strategically important to the whole United Kingdom and that that must continue.
Success in my area has been due to partnership working between local authorities. The Welsh Government have added a new dimension since 1999, and so have the UK Government and the European Union. We have had structural funds, and the EU identified the fact that many areas on its periphery—and on the periphery of Britain and of Wales—need special attention. I am not very proud of it, but we qualified in 1999 for objective 1 status because of deprivation in those coastal communities. On the map of Wales, the urban valleys experienced that depression, and so did west Wales. Those peripheral communities suffered and it was difficult for them to regenerate.
I am sure that we want to talk about coastal towns and not the EU, Mrs Main, but the funding has been hugely positive. We have had partnership working, and the need for the help was identified at European level, so I think that I want my community to be in Europe—and at its heart, as Anglesey is the heart of the British isles. I want it to benefit from being in Europe and the United Kingdom.
Objective 1 has been beneficial. There is greater flexibility in the new round of structural funds that coastal towns can take advantage of to regenerate communities for tourists and residents alike. Several hon. Members, including my hon. Friend the Member for Blackpool South (Mr Marsden), mentioned the importance of residents and not just visitors, although they are very welcome. I think it was my right hon. Friend the Member for Tynemouth (Mr Campbell) who talked about Scarborough; I went there this year, and if the weather is fine it is as good a place to go to as anywhere in continental Europe. There are some good places.
Some constituents of the hon. Member for Southport (John Pugh) go on short holidays to north Wales, and that is why the European dimension is important. The A55 expressway through Wales does not only link England and Wales; continental Europe sees it as a major transport link to the Republic of Ireland, on which we welcome many visitors through Wales. Wales should be seen not just as a transit area, but as a destination. I ask the Minister to consider the partnership working that can be developed. I work closely with Visit Wales, VisitBritain and my local authority, which has a Destination Anglesey project. That includes the overlooked tourism importance of local people staying in their area. They can go for weekends locally rather than away from the area.
Tourism is important and so is industry. It is not an either/or thing. Both can live side by side if there is proper planning, but planning is better if the big picture is considered, together with the advantages to be had from working in partnership with local authorities, the Welsh Government—in my case—the UK Government and the European Union, for the benefit of residents and visitors.
My sole aim in coming to this place is to promote my community as a place to work, live and visit. If we look at those things, coastal communities can be top of the league in the future and can thrive again as people’s first port of call. They can act as gateways for attracting new industries, new businesses and economic regeneration to the whole of the United Kingdom.
My constituency covers the part of the north Yorkshire coast that includes the vibrant town of Redcar and the pretty village of Marske. It is also the east end of the Tees valley city region. One issue for coastal areas such as mine is, as my hon. Friend the Member for Southport (John Pugh) said in his introductory remarks, identity and vision. Whether the coastal town wants to be a resort, a day trip leisure destination, a dormitory town or even an industrial centre has major consequences for planning its transport, regeneration, accommodation provision, business development, housing, the environment and so on. I see all that in my constituency. When I see a list of the issues that coastal towns have, I can usually identify with pretty well all of them.
Studies show that the most successful coastal towns have certain characteristics. They have an enterprise culture. Many are close to major population centres, which helps them to regenerate. They have good transport and communication links. The hon. Member for Folkestone and Hythe (Damian Collins) talked about the revival in Kent, and good transport links can turn coastal towns into dormitory towns; the Government should make that a policy target. Successful coastal towns have access to business opportunities and understand the wider area in which they sit.
Things have been improving in my area under the Government. The steel works have restarted in Redcar, and the Department for Environment, Food and Rural Affairs has invested £30 million in the seafront, which has provided a new promenade. We have had leisure investment. The Tees Valley local enterprise partnership has been active and successful. The regional growth fund has been pouring money into my area at a rate five times greater than under the old regional development agency. Many new industries are active, business formation is up 19% in the past year and we are about to get a new oil and gas college. I could go on. Unemployment is down by more than 35% since 2010.
I agree that we need to have aspiration, ambition and a positive outlook for our coastal towns. There is still a lot more to do in my area, in particular on entrepreneurship and skills development. In the last table I saw, Redcar and Cleveland had the lowest number of entrepreneurs per head in the country. That is certainly a target for our part of the coast. We also need to make our enterprise zone function. There was inertia after it was given to an outfit called Onsite, which was not enterprising and did not want to do anything.
I am optimistic about my area. There are various things that the Government need to do. They need to continue with the LEP model, which serves my part of the world extremely well, although I accept it may not do so everywhere. They must continue to support job creation in areas of the country, such as Redcar, where we have economic capacity—people, houses and school places—without the need for massive extra investment. It is sensible for the country to invest in those areas. They must give Tees valley the European money that it qualifies for. It has a status that results in a fair amount of money coming in, so let us keep it coming directly to the area.
We have benefited from the coastal communities fund. I ask the Government to look closely at favouring areas in which the licence income is generated. We have 27 turbines just off our beach, in addition to gas pipelines, cables and so on. That is where a lot of the coastal community money is generated, so let us make sure we get our fair share of it back again. We need an electrified rail line in the Tees valley and to Middlesbrough—
I add my congratulations to the hon. Member for Southport (John Pugh) on securing this debate.
Most of the contributions have focused on the enduring value and potential of coastal towns and the visitor economy. Furness is undoubtedly the most beautiful part of the Morecambe bay area, and there is enormous potential for the visitor economy to grow. Visitors to the Lake district can come to its beaches and use its Dock Museum as a rainy-day destination—unfortunately, it is no secret that it occasionally rains when people go walking in the Lakes. We should not forget the enormous potential of many of our coastal areas, including mine.
Sitting suspended for a Division in the House.
Where was I? Everyone remembers, I am sure.
I was talking about the industrial power of coastal towns. Barrow went from a mere hamlet to a shipbuilding powerhouse within a few short decades because of the mix of coal and iron and the town’s location by the sea, enabling it to grow. It is precisely the location of coastal towns that has often given them that industrial kick.
South Cumbria has amazing opportunities ahead. It has the combination of the new generation of nuclear submarines being built in Barrow shipyard—involving many thousands of the highest skilled jobs in manufacturing and engineering that exist anywhere in the country—new civil nuclear up the road, offshore wind growing apace, gas coming in and a cutting-edge biopharmaceutical plant being built by GlaxoSmithKline. Amazing things are happening, but we need to do more and Government need to work to ensure that the area’s true potential is reached. Critically, the many small businesses in the area should be able to become part of the supply chains of those giant groups, which has proved too difficult in the past.
We were delighted when Furness Enterprise’s bid to the coastal communities fund was fast-tracked back in June, because it was to provide support not only principally for small businesses, but for the tier 1 companies to develop local supply chains. We became increasingly worried when the bidding process dragged on and, before Christmas, Furness Enterprise announced that it would have to be wound up because the bid had not been achieved. I was so grateful to the Minister for agreeing to see me at such short notice before Christmas to discuss what was happening with the bid. She assured us that it remained live, despite the formal winding up of Furness Enterprise. We are absolutely clear that the capacity remains in the region. A number of us wrote to her over the Christmas break with assurances about what we believe to be the way forward for the bid. If the Minister has time when she responds, I would be grateful if she could tell us whether she has considered the bid and when she will be able to make an announcement about it.
I congratulate the hon. Member for Southport (John Pugh) on securing this important debate, which has generated a huge amount of interest throughout the country and the House. We have heard some interesting and diverse contributions about the range of issues facing our seaside towns and coastal communities.
I have heard that it is important for people to claim their area as the premier resort, whatever their part of the country, but I can tell everyone that the Boating lake at Corby is the premier resort in north Northamptonshire. We, however, are located at the centre of the country—not the centre of the British isles, as my hon. Friend the Member for Ynys Môn (Albert Owen) told us, but the centre of the mainland UK. We are therefore a centre of logistics and have all sorts of advantages from our location, although we are one of the furthest places from the seaside—it is two hours to Skegness and a little further to Hunstanton. However, the roads to the east coast and further afield are well travelled by Northamptonshire folk, and we have just as much of a love of the seaside and our coastal communities as has been shown by hon. Members from all across the country today.
In fact, when thinking ahead to this debate I thought of my experience just a few weeks ago in Cornwall. I visited some of its beautiful fishing villages, such as Port Isaac, Boscastle—famous, of course, for the flood there, which shows the importance of flood defences—and the now famous Padstow, known to some as “Padstein”; the culinary offer developed there has helped to regenerate that community. That shows us that coastal towns need a vision that goes beyond the core ingredients of an area and is developed into a vision of how to bring much wider economic benefits. For example, in Padstow there is now a cookery school, a huge amount of hotel accommodation and so on, and the community has really begun to develop.
Coastal communities are at different stages. The hon. Member for Southport characterised the types as those experiencing prosperity; those on a journey towards prosperity, and that are developing and regenerating—a journey common to many of the stories we have heard today—and those that still feel that, for a range of reasons, they face decline and so are looking for a way forward to make the most of the opportunities for their communities.
I went to Hastings recently to meet representatives of the local authority there and hear about the great work that, like many other local authorities across the country, it is doing to regenerate its area. I saw the historic pier being rebuilt and tasted a beautiful pint of Pier beer at the White Rock hotel. I also saw the interesting role the local authority is taking with its Grotbusters strategy to improve the built environment and get private landowners to improve premises, particularly on the beautiful seafront, and bring them up to standard. Local authorities can play an important role.
Government must also play an important role. We know that people like me from the midlands are often drawn to coastal communities for tourism and so perhaps are drawn to the most beautiful and picturesque parts of those communities. But there is a more mixed and complicated past, present and future for those communities, with issues of physical isolation, higher than average deprivation levels, inward migration of older people, large numbers of people passing through without settling, outward migration of young people—that has been referred to—and higher than average unemployment.
The hon. Gentleman mentioned Hastings, which was one of the places visited some years ago by the Select Committee of which I am a member. The people we met specifically mentioned that they did not see the revival of Hastings as necessarily being the same thing as the revival of the seaside industry. They were also thinking about IT and improved transport links, and did not necessarily put all their money on the seaside brand.
I understand the hon. Gentleman’s point. The thumbnail sketch given by my hon. Friend the Member for Barrow and Furness (John Woodcock) of the range of industries in his constituency shows that we would be wrong to think of seaside towns and coastal communities as having a future only in tourism; although that sector may offer something important to many communities, we need a much more rounded picture of the types of jobs that can be created and the industries that can thrive in our coastal communities.
Tourism is Britain’s fifth largest industry. It accounts for 9% of jobs, supports nearly 250,000 businesses and generates huge revenue for the UK economy—£134 billion—so it must be part of our strategy. But coastal communities have distinctive geography. They are often on the periphery, and many hon. Members discussed some of the challenges that that can bring. They can also be jumping-off points or transit points, as other hon. Members mentioned. They balance new businesses and technologies while trying to retain their tourist market. Seaside towns experience a particularly high proportion of poor-quality housing. It is important that we support renters. We must take real action to tackle the issues that arise from houses in multiple occupation, and give renters greater security.
The hon. Member for Southport mentioned the sea change programme, which drove cultural and creative regeneration in many places. He will know that this Government abolished that programme. That is a symbol of the way in which the Government have let down our seaside and coastal communities. My hon. Friend the Member for Blackpool South (Mr Marsden) was right to highlight the future jobs fund, which created nearly 4,000 jobs for young people in seaside towns. Its abolition was wrong and was particularly damaging at the time. The Government also abolished the coastal change pathfinder scheme to help coastal communities deal with the consequences of flooding.
I recognise that the Government have set up the coastal communities fund, which I am sure the Minister will refer to. The fund is welcome, but coastal communities need more than a grant of £50,000, welcome though that is. I agree absolutely with my right hon. Friend the Member for Tynemouth (Mr Campbell) that they need long-term commitment to regeneration. The example of the Welsh Government, which we heard from my hon. Friend the Member for Vale of Clwyd (Chris Ruane), is a powerful one. The commitment to a wide range of regeneration projects—the harbour, the natural environment, new housing, a new school, the railway station—is the kind of commitment that our coastal communities, including those across England, need from their Government.
In his introductory remarks the hon. Member for Southport said that we need to place the issues in a wider context, and he is right. He will know as well as any hon. Member the impact of the Government’s cuts on local authority funding and their unfair distribution across the country. The National Audit Office recently found that the Government will have reduced funding to local authorities by 37% in real terms between 2010-11 and 2015-16. It also found that those cuts have hit the most disadvantaged communities hardest.
That is a concern for coastal communities. Blackpool has faced a cut of 20.6%, as the hon. Gentleman will know. Plymouth faced a grant cut of 14.3%, and Hastings a cut of 10.7%. They will face even greater challenges in maintaining the kinds of services their communities need, but the spending power of councils such as Wokingham, Surrey Heath and Elmbridge, in the centre of our country, has been increased. People living in places such as Blackpool will not understand why the Government have made such unfair cuts to different parts of the country.
Does the hon. Gentleman recognise that there are constituencies such as mine, which has some of the highest levels of deprivation in the south-east, where the local authority has managed to find efficiency savings to deal with the cuts and has also cut council tax throughout this Parliament?
Local authorities up and down the country have done a fantastic job. In fact, Labour authorities, which have, on average, faced much higher cuts, deserve particular praise from hon. Members for trying to keep local services going in their communities and trying to protect those communities from the impact of the cuts. However, the cuts have been really unfairly distributed. Disadvantaged areas have been hit the most. There is higher than average deprivation in coastal communities, and a cursory look at the list of cuts that different areas have faced tells us that our coastal communities—particularly those that most need the Government’s support—have been hit hard by this Government.
There is an alternative. Councils need fair funding, help with longer term funding settlements so that they can plan ahead to protect services, and more devolution of power so that they can work with other public services locally to get the most out of every pound of public funding. We need to help every part of the country to succeed. I agree with hon. Members from all parties that our coastal communities need to be a key part of the deliberations of local enterprise partnerships—working with local authorities and the combined authorities that have been established in some areas and ought to be established more widely across the country—when they consider how to drive economic growth in all parts of the country. It is all well and good for the Chancellor to go to Greater Manchester and for the Government to talk a good game about city deals. We need county deals, too, and coastal community deals. That is what Labour will offer after the next election.
We need to integrate health and social care—that will be critical to many coastal communities, which have large retired and elderly populations. We can see from the news today of the worst NHS crisis in 10 years that doing that is vital. It matters to our coastal communities.
We also need to devolve powers on transport. Coastal communities are often at the end of the line; sometimes, as the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) said, they are not on the line at all. We need to give those communities the opportunity to look at how they can bring transport networks together, and how they regulate bus services in their area. We need to give young adults the opportunity to gain the skills they need to make the most of new jobs in the creative and cultural industries and the high-tech economies.
As my right hon. Friend the Member for Tynemouth rightly highlighted, we need to look at cost of living issues. We need to look at the use of zero-hours contracts in these areas and we need to raise the minimum wage. That is why people in these communities need a Labour Government. If people living in coastal communities do not have the money in their pockets, they cannot take advantage of Destination Anglesey and the “staycation” opportunities that we want to promote to allow local people to enjoy the communities on their doorstep.
I am conscious of the time, Mrs Main.
I think that all hon. Members who wanted to speak in the debate have done so, but if anyone wants to get on the record, I will be happy to take interventions. I thank the hon. Member for Southport (John Pugh) for securing the debate. He set the scene extremely well. I also thank all hon. Members who contributed. They have spoken eloquently and with pride about the economic challenges and opportunities that face their constituencies, and what needs to be done.
The Government are at one with hon. Members in wanting to see our coastal towns thrive and we are committed to making them better places to live, work and visit. Coastal communities are a major part of who we are as a nation. More than 11 million of us live in coastal areas, from major cities such as my own of Portsmouth to seaside villages.
As we have established in the debate, they face some unique challenges and the Government recognise that. That is why we are providing additional support for those challenges. Whether they be the transport challenges of being at the end of the line, the skills deficit or battling the elements, those communities need that additional support. However, as has come through in the debate, they also have unique opportunities, whether through their natural history or their tremendous heritage. They are also incredibly resilient, creative and adaptable communities. I have seen that as I have travelled around the country as the Minister. He also touched on what makes a success story in such areas: a clear vision for that area’s future, plugged into the wider area’s economic plans, with strong leadership and a dynamic local team to bring that to fruition.
The hon. Gentleman highlighted two important themes. First, as the Sheffield Hallam study showed, some places are faring better than others. While many resorts in the south-east and the south-west are doing well and showing solid growth in tourist employment, in some places—such as Blackpool—jobs in seaside tourism have decreased. That underlines the second theme: our coastal and seaside towns are not a uniform group. Each has its own unique and varied history and often different economic, social and physical circumstances. A locally tailored approach is needed, so it is vital that that is provided to let those communities thrive.
The Government’s response has been to give coastal communities the means to take control and act in the best interests of their local area. We have done that through a variety of tools and incentives, freedoms and flexibilities to help drive growth and create jobs, including the coastal communities fund; tax breaks; local enterprise partnerships; enterprise zones; city deals; the regional growth fund; transport spending, with £9 billion to date and £15 billion to come; investment in broadband infrastructure; the better care fund; sea defences; community rights through neighbourhood planning; and community asset transfer. We have also taken actions to cut red tape such as the marine and coastal concordat, which has had tremendous success in helping our ports.
As the hon. Gentleman said, we need to ensure that all of those measures work together, as opposed to being distinct items. They must pull together so that we can maximise the benefits for our communities.
I concur with what the Minister said, but does she think that the closure of the tax office, army recruitment centre and family courts in Rhyl and the possible closure of the Crown post office shows that the Government are working in the same direction with local government and the Welsh Government? Is that helping to regenerate or degenerate Rhyl?
If that is what the hon. Gentleman is reliant on to create jobs and not just economic growth, but quality of life in his area, he will be on a sticky wicket. The challenge in looking to the future is to put infrastructure in place to create jobs in sustainable new industries. That will mean change for many of our coastal communities but, from what I have seen, they are well placed for that, because they are incredibly adaptable.
What we need to ensure, through that long list that I just mentioned, is that these communities have investment. They need the opportunities to lever further funds, whether European or private sector, and to unlock the good will that exists though community asset transfers and other things. I encourage the hon. Gentleman to look at the many examples that have been mentioned today and to raise his ambition for his area.
I will touch on two items that I mentioned in the list. Local enterprise partnerships have been a tremendous success. They are well established as the bodies that are taking forth economic development. They are clearly evolving, but they have achieved a huge amount. About half of all LEPs are in coastal or estuary areas. As part of the growth deals in July, we committed more than £500 million to projects in coastal areas and in the autumn statement the Chancellor announced a further allocation of £1 billion of investment in the second round, and the bidding process is well under way for that. However, as the hon. Member for Southport said, we need to do more to ensure that coastal communities have a high profile in LEPs and that their projects, ideas and initiatives are well embedded in the local economic strategy. I will shortly make some announcements that will help to strengthen that, but we are already talking to LEPs about the importance of coastal communities and doing things in a more joined-up way.
Secondly, I want to touch on the coastal communities fund. The fund to date has provided £65 million in grants to 117 projects across the UK, attracted a further £103 million of other private and public sector funding and it is forecast to deliver just shy of 9,000 jobs, nearly 4,000 training places and apprenticeships and more than 400 new business start-ups. It has been a tremendous success.
I want to see that fund adapt, improve and grow. It must be embedded in the local economic strategy. We must also look at it in the round to unlock the further good will and funding that coastal communities fund projects could lever. I am encouraged by the number of hon. Members who spoke about successful projects in their areas. Indeed, the hon. Member for Barrow and Furness (John Woodcock), whom I thank for the time that he has spent with me, has a bid that is still live. I hope to make announcements on the next round of coastal communities funding shortly. He will understand that I cannot give him assurances, but his is a strong bid, as is that of my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw). We were encouraged by the helpful correspondence we received over Christmas, so I thank him for his role in that.
Our coastal towns are reinventing themselves. Government have provided all this help, but those communities are really the heroes here, whether it is Lowestoft, which is reinventing itself as a hub for clean technology, or Folkestone, which my hon. Friend the Member for Folkestone and Hythe (Damian Collins) spoke very eloquently about, with its tremendous input on creative industries. Whether it is sustainable fishing—[Interruption.]
For the benefit of everyone, I will sum up very quickly. I assure all hon. Members that the matters they have raised—having a higher profile for coastal communities with local enterprise partnerships, additional support for those with the biggest challenges, including those in the north, and continued support and investment—will come to pass. We should be optimistic about the future, and the only return to the 1930s will be in some beautifully renovated lidos. I thank all hon. Members, and particularly the hon. Member for Southport for securing the debate.
Sitting suspended for a Division in the House.
Phone and Broadband Coverage (Herefordshire)
It is a pleasure to serve under your chairmanship or chairladyship, Mrs Main.
As colleagues will understand, this is a very serious issue that affects vast numbers of our constituents. This is only a short debate, but I see from the serried ranks of Conservative MPs and, sadly, the absence of Labour MPs that at least on one side of the House, this is a matter of great importance. I will be delighted to take interventions, as Mrs Main said, but let me make some progress first, and then I will invite colleagues to express their views.
I came to this subject because I was concerned about the combined effects of a bad mobile signal, a bad broadband signal and a phone line that is not working well. We see that in Herefordshire. Just a few weeks ago, I surveyed more than 1,100 people living and working in my constituency on the issue of mobile not spots and—
If my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) will let me continue, I will flag up when I am ready for the odd intervention or two.
The overwhelming majority of the constituents whom I surveyed thought that this was a serious concern and were in favour of action to tackle partial mobile phone not spots. We welcome the work that has been done on that by the Department so far. The situation is exactly the same for businesses. When Herefordshire’s sustainable food and tourism partnership surveyed its members, 97.8% responded to say that they had specific concerns and problems.
However, this is just part of a bigger picture. The Government need to look not merely at the effects of bad mobile and broadband coverage individually, but at their compounded effect. That is further magnified where there are insecure energy supplies, as in rural areas such as mine.
A mobile phone service is a lifeline for many people in rural areas, especially as BT telephone boxes are being withdrawn. Utilities, emergency services, telemedicine, delivery companies and tourists all require and rely on mobile and wi-fi coverage. However, it is common for my constituents to have download speeds of 400 kilobits per second and upload speeds of 120k—barely better than the old 56k connection—on aluminium phone lines, which prevent any kind of easy upgrade.
Welsh Water has told me that bad mobile coverage affects
“our speed of response and efficiency”
in attempting to serve tens of thousands of local people.
Kingstone surgery in my constituency has such a bad signal that if BT Openreach does not make urgent repairs, it will be unable to upgrade its software, potentially affecting 4,200 patients.
One of the issues that my hon. Friend is rightly exploring affects both our areas. Much of the rural heartland that we represent cannot be reached by the outreach that BT is doing, and we will need extra funding for some of our areas. I expect that that is exactly what he is homing in on. Across Exmoor, Dartmoor and those places, we will need that funding, I would have thought.
I congratulate my hon. Friend on obtaining the debate, and may I join him in pressing for a longer debate? Clearly, the attendance at this debate shows that we need that. May I also echo my hon. Friend’s words about not spots? The Government are doing a great job nationally of rolling out 90% mobile and broadband coverage, but for the 10%, which is disproportionately in rural areas, we will need further help.
I thank my hon. Friend for those remarks, with which I concur. I would go further and suggest to colleagues that the ability to communicate is a fundamental freedom, protected in law, which underlies the very basis of human well-being and prosperity. In this digital age, people who are prevented from being able to use a phone or personal computer are in effect being stifled or gagged. They must be allowed the ability to send and receive information without impediment. In Herefordshire, it is not a matter of money; the system just is not available at any price, or at least at any price short of a satellite uplink.
My hon. Friend is making an excellent point. The situation is every bit as bad as he says, because if we cannot get proper broadband, we cannot get the boost to the mobile phone signal, either, so we are caught in a forked stick.
I absolutely concur with that, too. The point is that the Government need to take this seriously, not only as a matter of policy but as a matter of basic humanity and responsiveness to deep social needs.
Let me summarise the situation in Herefordshire. I will start with the mobile side. We have the fourth lowest overall population density in England and the greatest proportion of its population living in “very sparse” areas of any local authority in England. About 5% of Herefordshire by geographic area has no mobile phone coverage at all. As for partial not spots, according to Ofcom’s UK mobile services data for the year before last, nearly 40% of Herefordshire’s geographical area can receive a signal only from one or two operators. That is the highest incidence of partial not spots in England.
That directly damages public services. I mentioned Welsh Water. Even the Royal National College for the Blind, based in Hereford city, has said that its staff struggle to get a mobile signal when assisting their blind and partially sighted students. Everyone in this Chamber would agree that that is absolutely unacceptable.
I wonder whether my hon. Friend’s constituents in Herefordshire are as frustrated as mine in Nottinghamshire. The Government spent an enormous amount of money advertising the fact that broadband is coming, so when people find themselves in a not spot, that almost adds to the frustration that they feel.
That is certainly true. It is known in the literature as the tunnel effect. If we are sitting in a queue in a tunnel and the lane next to us starts moving, our initial feeling is optimism. If that lane then continues to move and we do not, that optimism can quickly turn to social frustration. I think that that is what we have seen in this case.
There are bright spots. I do not want to discourage colleagues from recognising that. We now have digital exchanges in Hereford city. We have a 3G femtocell in the village of Ewyas Harold. That just shows the power of this technology when it can be properly rolled out, because the people there are delighted with the progress. However, it has been extraordinarily difficult to achieve any real change.
The mobile infrastructure project, which the Department has very wisely and interestingly rolled out, is a case in point. When the sites to benefit from it were first announced, in July 2013, the ambition was for them to be acquired and built by 2015. That has now slipped to spring 2016. Ten sites were identified in the county of Herefordshire. To date, only two sites in the country—forget the county—have been delivered. That illustrates how difficult it is to achieve change.
Does my hon. Friend share the view of one or two of the mobile phone companies that the market has almost become too competitive, and that providers are being forced into the densely populated areas to chase a decreasing margin, which means that rural areas suffer?
That is an interesting line of thought, which I have not heard of. I wish it could be said that providers were competing for the custom of my constituents, but at the moment they are not making themselves available in any degree at all in many areas, which is why we have so many partial not spots. In any case, the mobile infrastructure project, which is such a worthwhile potential scheme, only targets basic 2G services. Why can we not put 3G and 4G services on those masts to provide a cost-effective universal broadband service?
May I bring the attention of my hon. Friend and the Minister to a further, more fundamental problem? Before we have even entered the next stage of roll-out, we in Cumbria already face a heartbreaking problem. Even with plans in place from the county council and BT to roll out, it looks as though inflexibility in extending funding will mean that we may not be able to push beyond March to September, and we may end up with £3 million unspent. There needs to be a big push in Herefordshire to ensure flexibility in funding. Without that, even the existing plans will fail.
I am grateful for that advice. On the fixed line side, the situation is almost as bad. I was delighted when, in the company of the Minister, we had a great summit in Herefordshire in July 2010 and shortly thereafter won one of the first four fast broadband pilots. That was a great moment for the county. I know that the Minister—on whose growing beard I congratulate him; he has succeeded in the beard-anuary bet—has been tireless in his work on the project, as has Herefordshire council. The whole thing has been delayed by the need to get EU clearances, by slow procurement and by very slow implementation by BT. As a result, my county is still, nearly five years later, one of the very worst places in the UK for fixed line internet speeds.
Dorset has a problem similar to that in Herefordshire. In the Select Committee on Environment, Food and Rural Affairs, we took evidence the other day from a senior director from BT, and from listening to him or reading the transcript we get the impression that all is dandy. Will the Minister put more pressure on BT to meet those targets? If we listen to BT, those targets are going to be met, but clearly they are not.
That is unfortunately true. BT lives in a Pollyanna-ish world in which all is for the best in this best of all possible internet worlds, but that is simply not the case in the real world. The truth of the matter is that more than half the wards in Herefordshire are in the bottom 25% of England and Wales for average download speed, and only one ward in the entire county is in the top half. House of Commons Library analysis shows that rural village wards in Herefordshire have substantially slower broadband speeds than average, which makes it difficult or impossible to use voice over internet as a substitute for the mobile phone signal that nobody receives in any case. Even some commercial premises in Hereford that were recently upgraded to digital exchanges do not have decent broadband coverage, which is simply unacceptable and a great depressant on local economic activity.
As we can see from the number of hon. Members present, that is not simply a problem in Herefordshire. Three of my constituents, Mark Dixon, John Ballantyne and John Gannon, have complained about inadequate broadband coverage in rural areas. Surely the Minister should address the wider issue of ensuring that there is superfast broadband to all homes throughout the United Kingdom.
I am grateful to my hon. Friend for that remark. If I listed all my constituents who are affected, it would take a full day and a half of debate. Difficulties with reliable mobile coverage have been compounded by poor service from BT Openreach. Its remit as a non-customer-facing organisation causes enormous problems for my constituents. It is nearly impossible for them, or even for my staff, to get hold of people at Openreach. It takes too long to get one of its engineers to site, and they are often unprepared for the challenges of work in rural locations. It is difficult even to get in touch with Openreach, because there is no mobile signal in the areas from which one might seek to contact it. In addition, no effort seems to be made to prioritise customers who might be vulnerable because of age, disability or the sheer remoteness of their homes.
I praise my hon. Friend for the timeliness of the debate. Does he agree that extreme weather conditions such as floods, ice and snow highlight the importance of good broadband and mobile phone coverage? In the last week, my rural communities in Marsden, Hade Edge, Scholes, Cinderhills, Wooldale, Golcar and many more places were left isolated because of the questionable gritting policy of my local Labour-run Kirklees council. My constituents really need good broadband and mobile phone coverage.
It is a shame that literally no Opposition Members, let alone a Front-Bench spokesman, have attended the debate. I absolutely concur with the issues that my hon. Friend has raised. Constituents of mine have pointed out that they have been unable to contact the emergency services in the case of road traffic accidents and emergencies because they cannot get a mobile signal. There is a serious issue about allowing the emergency services to do their work.
What is to be done? I entirely reject, as colleagues will have heard, the argument that mobile phone coverage is a luxury, or that extending it should not be a concern of Government. I am delighted that that idea has been rightly rejected by Ministers for the nonsense that it is. Mobile coverage is absolutely essential to our constituents’ economic and social well-being. As a practical matter, they have no real economic power to secure parity of treatment. Someone who lives in a partial not spot has no place to go. They cannot secure the coverage that they need, and they have no alternative that might give them any economic leverage. On the contrary, the status quo raises serious questions about the effectiveness of competition in the market for mobile phone services in many parts of the country.
I absolutely welcome the initiative of the Secretary of State in this area and the recent agreement reached by Government and the mobile network operators. I wish that they would take that a step further and press for wider roaming rights for our constituents. Areas such as Herefordshire with multiple communications problems should be prioritised for improved coverage in a manner that follows local needs, not industry lobbying.
I will seek a full debate on the Floor of the House of Commons on those issues. I will encourage all my colleagues who are present today, and the dozens of others who have expressed an interest in the matter, to come along and take part in that debate. I want to cover three or four specific issues in that debate: first, a full understanding by Government of the nature of the problem, namely the combined effects of poor mobile, broadband and voice coverage; secondly, the specific performance of BT Openreach as a monopoly supplier of network infrastructure, and its manifest inadequacies; thirdly, recognition by Government that failure of phone or electricity is more serious where mobile coverage is patchy, so BT Openreach and the utility companies should prioritise repairs to such areas; and, finally, I suggest that Ofcom needs to look at service contracts. Mobile customers who sign such contracts and find that their connection is much worse than expected should be able to leave them early and on non-punitive terms. [Interruption.] On that basis, and with a welcome to Labour colleagues who have just entered the Chamber, I conclude my remarks.
Before I call the Minister, I point out that we will finish at 16.52. On a point of clarification, although the hon. Gentleman is absolutely correct to say that there were no Labour Members present during the debate, it is not appropriate for a Labour shadow Minister to be here.
It is a pleasure to speak in this debate, Madam Chairman Ladyship, and I put on record your new title, which has been proposed by my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman). He is well known in the House as an expert on constitutional matters, so I will not take issue with him on that. As he noted in passing, this is the first outing of the beard, and it depresses me that it took him nine minutes and 42 seconds to mention it. Subject to the nature of the interventions that follow, the beard may or may not survive the week.
We are talking about a serious issue, so I will take a more serious tone from now on. I note that I have plenty of time to set out our position, and I will be happy to take any interventions from hon. Members should they wish to further the points they have made so eloquently throughout the debate. It is fair to say that, given the absence of Labour Members, we in the Government cannot be accused of gerrymandering in the way in which we are tackling broadband coverage. Clearly, it is doing very well in Labour-held constituencies.
Conservative Members understand that Government cash is limited so the Government should spend their money in the most efficient manner possible. Can the Minister explain to my constituents who cannot raise the funds to get broadband why the Government put a double-page, full-colour spread in the Daily Mail saying that broadband is coming? Would that money not have been better spent on actually connecting a dozen households in my constituency, rather than telling them that it might happen?
As a Minister I am also responsible for supporting the national and local press, so I am obviously in favour of anything that we can do to support the Daily Mail. The serious point behind that advert is that we are rolling out superfast broadband throughout the country as part of our rural broadband improvement programme. Although we are using public money to fund it, it is a co-investment with Openreach. One reason why we are doing it is that sometimes, broadband is not commercially viable, and one way to make it more viable is if more people take it up. We have noticed that, even in rural areas where people have cried out for broadband, they are not taking it up when it is there, so we want to encourage take-up. It is worth saying to my hon. Friends that the more people take up broadband, particularly under the rural broadband programme, the more money we will get back under the contracts we have negotiated with Openreach and therefore the more money we can invest in rural broadband.
Given his commitment to superfast broadband, will my hon. Friend the Minister absolutely confirm that we in Cumbria will not find that inflexibility from the Department for Communities and Local Government and too narrow an interpretation of European Union guidelines leads to us being unable to spend the money allocated to us, thereby leaving tens of thousands of my constituents without broadband coverage?
I absolutely take on board my hon. Friend’s point, which he made to me over the Christmas recess. I can confirm to him that my Secretary of State is in touch with the relevant Minister at DCLG. There is a technical point: European Union funds must be spent by the end of 2015. There is, therefore, a deadline by which such funds much be spent—currently March—to ensure that the time for spending them does not inadvertently overrun. We are making a confident case to DCLG that we can continue to spend the money throughout 2015 without any danger of spending it after the cut-off date at the end of 2015. My hon. Friend’s point is well made and the Department agrees. We are working hard with DCLG to come up with a solution because, when European money is on the table—I know that Government Members are all in favour of Europe—it is important that we spend it effectively on behalf of our constituents.
Does my hon. Friend the Minister agree that we must encourage not just the big players to get involved? There are smaller players such as County Broadband in my constituency, which is a local player that knows the local parishes very well. It is important to make room for some of the small players as well as the big ones, particularly when it comes to bidding for contracts.
My hon. Friend is quite right. I am pleased to say that some of the smaller players have participated in our latest fund, which is designed to ascertain the cost of getting broadband to the last 5%—the most expensive and difficult-to-reach premises. Of the eight contracts awarded, I think that almost all have gone to smaller players, which continue to play an important role in rural areas—for example, Gigaclear provides a first-class service to many of the villages in my constituency.
I draw attention to my entry in the Register of Members’ Financial Interests. In many ways, North Yorkshire is a bit like Herefordshire in its rurality. We have had great success: in some villages, take-up of superfast broadband has been 50%, and in one village it is at least 70%. Does the Minister agree that, for those people who are out of the way, in the 10% without coverage—
Sitting suspended for a Division in the House.
I am extremely grateful to the Minister for yet another chance. I have been asked by the Clerk to clarify my entry in the Register of Members’ Financial Interests; I am a director of two telecoms companies.
Returning to the point about the 10% of people who do not have broadband access, or who have access of less than 1 MB, does the Minister agree that rapid deployment is needed of alternative solutions, such as fibre to the remote node and wireless solutions, so that the people in that 10% can enjoy the benefits of superfast, as many of my constituents are already doing?
I agree with my hon. Friend, which is why we put together the £10 million fund. As I said, a number of private providers are trialling such technology. The trials are under way, and we will evaluate them shortly, which will influence phase 3 of our rural broadband programme. It is no secret that our ambition is to deliver superfast broadband to 100% of premises in the UK.
That is good news about take-up in Yorkshire. Before we leave that point, take-up in a lot of rural areas is as low as 18%. It is one thing for the Government to encourage people to take it up, but an 18% take-up rate for such a huge infrastructure project is tantamount to a failure. We must do better than just encouraging.
I do not really know how to answer that point. On the one hand, one hon. Member criticises me for putting adverts in newspapers to encourage the take-up of superfast broadband; on the other, another hon. Member asks me to do more to encourage it. We cannot order people to take up superfast broadband, but we can tell them that it is here. We can also make the point that we have some of the cheapest superfast broadband to be found anywhere, not only in Europe but around the world. I am used to hearing people say, as I am sure my hon. Friends are, that they can access much better broadband when they go to their holiday villa or the like, but what they do not say is how much it costs to access it. We have some of the cheapest broadband.
The Minister has talked about the third phase of the Department’s plans. Can he spend a second or two talking further about that? Also, does he recognise the point about the compounded effects of lack of service, and might that justify an allocation of more funding in the third round to rural areas such as the ones we have described?
To put phase 3 in context, during phase 1 we put £500 million on the table, along with local authorities and BT Openreach. That figure rose to £1.2 billion. We intend to reach 4 million premises; we have already reached 1.2 million, and will shortly have reached 1.5 million. We are passing 40,000 premises a week. We will do the last 3 million of those 4 million premises in the time that it took us to do the first 1 million. That was phase 1. Across Herefordshire and Gloucestershire, the area in which my hon. Friend’s constituency is located, the programme is worth about £45 million. About one third of premises in his constituency, or about 14,500, will get superfast broadband coverage as part of that programme.
In phase 2, we wanted to go from the 90% target we had set ourselves—we were open about that target—to 95%, which will give an additional 1,600 or so premises in my hon. Friend’s constituency access to superfast broadband. At the end of that phase, 42,000 premises in his constituency, or about 92%, will have superfast broadband.
Phase 3 initially involves a £10 million fund to do pilot projects in different parts of the country to trial the new technologies that my hon. Friend the Member for Selby and Ainsty (Nigel Adams) talked about, in order to evaluate the potential overall costs of getting to 100%. The figures on the back of an envelope were in the region of £1.5 billion to £2 billion, which is clearly an extraordinary amount of money, so we wanted to do work on the ground to evaluate how much it would actually cost.
I thank the Minister for his generosity, even with his beard. He is being kind in responding to the comments from colleagues, but he has not responded to one particular point raised by my hon. Friend the Member for Hereford and South Herefordshire, which concerned BT’s performance as a monopoly provider. My parents moved house recently, well before Christmas. They moved into a mobile phone not spot in Begbroke in my constituency, and applied for wi-fi. It was only put in place on Monday. That is an unacceptable level of service, and it is common. How will the Minister improve the level of service from BT?
I am aware of some of the problems Openreach has. It is recruiting some 1,500 additional engineers. My glass is always half full, so I praise Openreach for the work it has done. I visited some Openreach engineers working in my constituency over the Christmas period, when they were busily wiring up 360 of my constituents in the village of Steventon.
To sum up, we have the superfast broadband programme. We also have the mobile infrastructure project, and as my hon. Friend the Member for Hereford and South Herefordshire pointed out, there are 10 MIP sites in his constituency. It has been tough going, getting the MIP up and running, not least dealing with landlords. However, we are also upgrading the technology so that it can accommodate 3G and 4G as well. Of course, there is also the landmark deal that my hon. Friend referred to: we have negotiated with the mobile operators to provide 90% geographic coverage, which will get rid of two thirds of not spots. That was a deal done without the need for legislation and time-consuming consultation. Already, the mobile operators are committed to 98% coverage of premises, but 90% geographic coverage will make a significant difference to rural areas.
I must make it clear that, despite the rightly testing nature of some of the speeches of and questions put by my hon. Friends today, we are on the same side, in the sense that we absolutely recognise the needs of rural communities. That is why we started the superfast broadband programme, why we extended it to phase 2, why we are looking to extend it to phase 3, why we have put in place the MIP and why we have put together the deal with the mobile phone companies.
However, implementation is quite another matter. I absolutely hear the concerns of many of my hon. Friends about how, and the speed with which, these projects are being implemented. I assure them that the superfast broadband roll-out programme is now going very quickly indeed. The roll-out of 4G is the fastest anywhere in the western world, and we have put a rocket under the MIP as well.
I welcome this debate and the forthcoming Adjournment debate, and I look forward to my hon. Friend the Member for Hereford and South Herefordshire, who so ably secured this debate, having a debate in the main Chamber so that we can examine these issues in more detail. I apologise for the fractured nature of my speech. I wanted to take as many interventions as possible, but we have been interrupted by Commons business and the odd joke.
Carbon Price Support (Land Reclamation)
Thank you, Mrs Main, for calling me to speak. It is a pleasure to speak under your chairmanship today.
Before the demise in 2013 of the two principal operators—Scottish Coal and ATH—the East Ayrshire coalfield produced 25% of all UK surface/open-cast coal, and 50% of that produced in Scotland. Given the history of deep mining, the communities of East Ayrshire have a long standing commitment to the coal industry. So, when the companies went into liquidation, the effect on East Ayrshire was greater than on anywhere else in Scotland, with the resultant environmental dereliction across the coalfield communities of the area extending to almost 20 sq km of disturbed and unrestored land, including 22 voids, 16 of which were water-filled. To put that into some context, the whole of the City of Westminster is just under 21.5 sq km. That gives some indication of the huge extent of the problem in East Ayrshire.
In mid-2013, East Ayrshire council commissioned an independent assessment of the true cost of restoring the land to the level required under the original planning consents; that restoration work should, of course, have been carried out, but was not carried out. The cost was £161 million and Hargreaves has estimated that, as of today, in excess of £300 million of restoration work is required across Scotland. However, the bonds available to carry out such restoration work in East Ayrshire totalled just over £28 million, so clearly in that area alone there is an enormous funding gap. That is the legacy that these communities have been left with, through no fault of their own.
Before I go any further, I would like to say to the Minister that when his right hon. Friend the Secretary of State for Defence was an Energy Minister he was given a map showing the dereliction in East Ayrshire and he was completely shocked. To his credit, he immediately recognised the scale of the problem. So I invite the Minister who is here in Westminster Hall today to visit the area to see the devastation for himself.
At this point, I would also like to say that the Under-Secretary of State for Scotland, the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), has been involved in this issue from day one. His constituents are also affected and he has been extremely helpful throughout. No doubt he will wish to discuss this matter with the Minister himself, but I know that he also believes that it should be given urgent consideration.
This is not and should not be a party political matter, although I fear that we have the usual pattern of the Scottish Government seeking to point the finger at Westminster, to take the focus away from their responsibility in this area as far as funding is concerned. I previously secured a debate about the proposal for increased freight charges, which would have adversely affected the coal industry and cost jobs, and I am pleased to say that the Government listened to that argument.
I have also pressed the Government to return funding to Scotland from its contributions to the coal levy. From recent correspondence, we know that the Government do not see that as a possibility, arguing that the matter of restoration is devolved. That is true, but I do not see how it prevents a contribution being made from the coal levy, which Scotland has paid into. Equally, however, it is clear that the Scottish Government should also consider funding for restoration.
I congratulate the hon. Lady on bringing this topic to the House, and I sympathise with her for having to wrestle with the Scottish National party. However, I hope she recognises that of course this issue affects England as well. The Department for Business, Innovation and Skills has been quite supportive, but it is the Treasury where the real challenge lies. We need to get the Treasury to recognise that changing this situation can lead to regeneration of these coal tips and the creation of some nice country parks and other pleasant areas for our constituents.
Indeed, that is entirely true and I hope that the Minister, in his response, will refer to what can be done in that regard.
I am part of the coal taskforce that was set up by Scottish Government and I welcome the work being done by the various bodies involved, which I hope will go a long way towards ensuring that there is better regulation and financial insurance in the future, so that this situation can never happen again.
As I have outlined, however, the bottom line is that substantial funding is required, and so far it has not been forthcoming from the Scottish Government or from anywhere else. East Ayrshire council is working with the two current operators to ensure that restoration is maximised. So far, around 43% of the bond money has been achieved, and to date there has been a success rate of around 80% of the upper total values. However, it is vital to recognise that the remaining balance will be much more difficult to achieve and will undoubtedly result in much lower awards.
I congratulate my hon. Friend on securing this debate on an issue that also affects my constituency, which is also part of East Ayrshire. Does she agree that constituents in our local areas have indeed made a huge commitment to the coal industry over the years and now expect to see everyone—the Scottish Government, the UK Government and indeed the local authority—working together to find a solution? Also, does she agree that it would be very helpful indeed if the Minister would consult with his colleagues in the Treasury to see what solutions might be possible to ensure that the necessary funding is provided?
I thank my hon. Friend for that intervention and I totally agree with everything she said. I also thank her for the work she has been doing, alongside me, on this issue from the very beginning.
Even with the moneys now banked with the council, only restoration schemes of a greatly reduced quality will be delivered. Therefore, additional funding is vital and that is why the Hargreaves request for a technical change to extend the coal slurry carbon price support exemption to include coal derived from schemes supporting restoration projects is worthy of serious consideration.
It is not possible to over-emphasise the urgency of the situation that we face. The objective is to achieve remediation and the avoidance of long-term blight; already, the existing blight is getting worse with each passing month. The sites also present an ongoing health and safety risk. They are so large they cannot be effectively secured from trespass and they are dangerous places. Unstable head walls and extremely deep water bodies with vertical drop-offs make for dangerous playgrounds, and they are often quite close to villages and houses. I, for one, live in dread that an accident could occur at any time.
Recent wet winters have accelerated the rate of flooding of voids, making ultimate restoration longer, harder and more expensive. The longer we go on without a planned and properly funded restoration, the worse this will get, and in the meantime there are two restoration schemes progressing in East Ayrshire that are far from ideal. An early decision on this proposal would mean that abortive work might be avoided.
The Minister is only too aware that the coal industry is on a downward spiral at present, given the importing of cheaper coal, which will mean that in 12 to 18 months annual UK coal production will have fallen to less than 4 million tonnes, with no prospect of recovery in the immediate future. This can only lead to cessation of production thereafter, with no betterment of these legacy sites—and other sites—and indeed their potential abandonment a second time.
Of the 311 East Ayrshire people made redundant in 2013, 167 are now in employment, but these are not all within the coal sector and not all are within East Ayrshire. Depopulation of our rural areas continues. According to the Hargreaves proposal, we could see the legacy sites across the country all restored effectively to their original quality within a five-year period. Providing an incentive for an industry-led solution would make the difference in East Ayrshire in particular to the value of around £161 million, against less than £20 million at best recovered from bond moneys and a poor level of restoration not worthy of the name. For that five years there would be guaranteed employment of a local work force. Hargreaves estimates 1,000 plus indirect employees, but to be honest, in the position we are in, any and all employment opportunities are most welcome and badly needed.
Rightly, questions have been asked about the impact of such a proposal by the Scottish Opencast Communities Alliance and others. It is hardly surprising that people are suspicious of the motivations of operators, given how much we have been let down in the past and the way that our priority to bring jobs to the local area has undoubtedly been manipulated; for example, with planning extensions being applied for in the full knowledge that planning conditions would not be met. I bow to no one in the anger I feel about this and I will continue to seek justice for the community regarding those who were guilty of it. However, Hargreaves is not the culprit and thus far it has been the only show in town. If there is even a chance that this could provide a solution, I am willing to grab it with both hands.
There are those who think that no taxpayers’ money should be spent on clearing up the mess, that no funding should be directly applied, and that no tax incentive should be solely for restoration. In saying that, I am aware that if an exemption was applied to the completion of the restoration, this could be regarded as tax hypothecation, a practice not generally adopted by the Treasury. I welcome the Minister’s views on this.
I am clear about this. I have raised requests for funding from both the Scottish Government and here at Westminster from day one and I still do so today. However, in reality there are no clear alternative funding sources forthcoming, so I think we must look at each and every option. We must do so with the proviso that the bottom line for support of any kind is that there should be no opportunities for companies to profiteer, use any support to substitute for their ongoing restoration responsibilities or escape adherence to an upfront restoration plan with transparent and appropriate independent monitoring.
I refer the Minister to the position of Coalpro, which as he knows represents the majority of the UK coal producers. It supports any mechanism that assists in restoring both the sites left behind by former operators and the reputation of the responsible operators who remain and have continued to work in Scotland throughout this period of falling coal prices. Although opposed to the carbon price support mechanism, it is in favour of an exemption in the short term, if this would enable abandoned and orphaned former mine sites to be restored to beneficial future use. So the industry supports this, which is obviously very important.
According to Hargreaves, a targeted carbonyl sulfide exemption would have no overall impact on coal burn and CO2 production—only a small substitution effect, with imports from Russia and Columbia—and the measure would not overly profit or extend the life of the UK coal extractive industry, but would merely enable it to clear up its own mess before winding down. However, it would help maintain capacity for the next five years: a major benefit if the UK is to consider pursuit of carbon capture and storage projects.
The scheme would only relate to “orphaned” restoration liabilities, where owner and operator were bankrupt or liability has fallen back on the state, so there is no breach of the “polluter pays” principle, and the exemption would be limited to the amount of restoration coal necessary to make the scheme viable.
The proposal is that this is policed by the local authorities and the Coal Authority independently. There are plenty of examples of and precedents for using taxes to incentivise environmental benefits across a wide range of taxes, including low road tax on CO2-efficient cars; lower VAT rate for the supply and installation of energy saving materials; and recycled aggregates being exempt from aggregate tax levy. There are plenty of examples where tax has been used to promote restoration and remediation schemes, such as the obvious precedent that coal slurries have been exempt from carbon price support since 2013, with about 1 million tonnes per annum, which is about the same as the estimate for restoration coal. That exemption has worked well and has caused no ripples or issues in the markets. Most deep mine slurry ponds are already capped off: they are inert and present nothing like the environmental and health and safety risk presented by the orphan open-cast sites, so it seems a simple and logical extension.
The Minister will be interested to know that Hargreaves has received legal advice on competition law and state aid on restoration-related coal and will not be surprised to learn that it believes there are compelling arguments about why the proposal would not give rise to concerns about these matters. I do not have time to go into detail about that. In any case, this is clearly something the Government would wish to assess for themselves.
There are many questions from the community and the companies, and many questions that the Government would have to consider, but I do not have time to go into those in this short debate. My main purpose today is to emphasise the extent of the environmental and financial problem, the fact that it needs to be dealt with as a matter of urgency and the absence of any clear alternative, and to make a plea for this proposal to be considered seriously and as soon as possible. We have already lost another winter, but I am realistic: an announcement at the Budget—if not before—would be extremely welcome.
Although arguments continue about how this all came about in the first place—the negligence of the operators involved and the lack of monitoring by the planning authority and how they should be held to account—no one can argue that this should not be fixed, and fast. This is a national environmental disaster for Scotland, the extent of which has never been seen before. In the medium to longer term, this will take several years of concerted and focused effort, but big problems need big, bold, decisive and effective solutions. I hope the Minister will agree that this could potentially be the answer we have been looking for. I look forward to his response.
It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) on securing this debate on an important issue in her constituency and other surrounding constituencies. I know that this has been a significant concern since the 2013 failure of the two major open-cast operators in Scotland.
I recognise the enormous contribution made to the coal industry north of the border and its historically vital role in respect of the UK’s wider energy needs. Scotland has a proud deep-mining heritage, brought to an end in 2002, when flooding closed the last remaining deep mine. Since then, the torch has been carried for many years by a vibrant surface mining sector. However, over the last year and a half it has become all too apparent that operators of considerable significance within that sector have not been managing the full range of their responsibilities with the care and rigour that could reasonably be expected of them.
Healthy production levels had been masking a growing backlog of unfulfilled and inadequately underwritten restoration obligations. At the same time, it emerged that in some cases those tasked with monitoring the compliance of operators had fallen short in their duty of care towards open-cast mining communities. Against that backdrop of an industry making an important contribution to local economies where alternative job opportunities are often limited, it would appear that more weight was sometimes given to retention of employment than to ensuring that operators were properly keeping their houses in order. The root causes of the significant problems that have emerged as a result have been independently and comprehensively examined by a team led by the Scottish Government’s former chief planner, Jim Mackinnon. Its report, published in January last year, looked into the particular circumstances in east Ayrshire.
Since the events of April and May 2013, action has been taken. I pay tribute to my counterpart in the Scottish Government, Fergus Ewing, for the prompt action he took in establishing and convening the Scottish coal task force—as the hon. Lady said, many of these issues are devolved—which brings together a broad range of stakeholders including not only those affected by the industry’s collapse, but those in a position to mitigate some of the immediate impacts and offer solutions for the future. The task force has met seven times since May 2013 and has been a catalyst for positive action. Many of its members have worked hard in other forums, not only to address the employment and environmental consequences of the 2013 events, but to look at how safeguards can be put in place to ensure that the same circumstances do not arise again.
As I said in my speech, I am a member of the task force and I fully appreciate all the work that has been done, not least to try to prevent such things happening again. That does not, however, substitute for the amount of funding needed to deal with the problem. I have raised that point several times in meetings of the task force. It is the elephant in the room. We still do not get a positive answer. Does the Minister agree that we need to look at the funding situation?
Of course, I was going to come on to that point. Action has been taken and needs to be taken through the task force, especially on the employment side. We have to recognise the role that the industry continues to play and has to play in the future. As the hon. Lady said, in particular we have to recognise the role that Hargreaves plays and the significant commitment and investment in the Scottish sector that it made in stepping into the shoes of the failed companies. As she said, it is not the fault of Hargreaves. It is part of the solution and should be thanked for its continuing contribution, along with others, to local economies. Hargreaves provides 500 direct employment opportunities where there might have been none, had it not acted as a replacement for the companies that went bust.
Since the Minister’s appointment, he has built a long record of knowledge of and support for the coal industry, particularly in Nottinghamshire. Does he recognise that the industry can help itself if the Treasury assists in changing some of the tax laws around the carbon floor price? Can we assist him in lobbying Treasury Ministers and getting that message across to the Treasury?
I am glad my hon. Friend said that, because I was just about to come on to that issue. Carbon taxes bear down on carbon-producing industries, and that has an impact on coal, which is at the core of today’s debate. The carbon price floor policy sets out the future cost and the trajectory to 2030. We have brought that trajectory down in recognition of the impact on carbon-intensive industries. The carbon price floor is designed to drive the uptake of low-carbon investment.
The question of whether we should look for an exemption is at the core of the debate on the future. There are a number of different issues, including the question of whether using a tax offset to deal with what is essentially a problem of spending is the best solution. I am happy to meet with the hon. Lady, Treasury colleagues and the Under-Secretary of State for Scotland, my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), whom I spoke to this morning about this issue, in which he takes a close interest. There is also the vital question of value for taxpayers’ money. We are living in times when taxpayers’ money is scarce and there is not much money around.
I am listening closely to what the Minister is saying. If he thinks that a tax offset is not the correct solution, will he commit to exploring other solutions with Treasury colleagues, given that our constituents are left with these massive holes in the ground?
I am not ruling out a solution through tax; I am merely saying that there are several ways to tackle this problem. We should work in partnership with the Scottish Government in dealing with it, because the question of where liabilities fall is complex. We should also work in partnership with the local authorities involved, which have already put a huge effort into trying to resolve the situation. I propose that we work with the Scottish Government, local authorities, the Scotland Office and the Treasury. I am happy to set up that meeting with the Members here today to see whether we can find a policy solution that works and is technically feasible, whereby the financial issues can be resolved while being consistent with the need for value for money in public spending. Our estimate is that the tax proposal put forward by Hargreaves would cost the Exchequer a minimum of £200 million. Obviously, we would need to be convinced that it is the most effective way to address the issue.
I am thrilled to hear that another Member of the Opposition has been converted to the principle of the dynamic scoring of taxes. On whether a reduction in tax, which is essentially what the hon. Lady is calling for, would have a positive impact on the economy and would feed through positively, perhaps I can persuade her with some good old Scottish Adam Smith—that a low-tax economy is the way forward. However, it is not only the wider benefits for employment and the economy that have to be taken into consideration in the question of value for money; there is also the environmental impact of doing nothing and the question of how we resolve the legacy.
Two hundred million pounds is a lot of money, and there is not a lot of money around at the moment. The issue will require hard work and some lateral thinking. I suggest that the next step is to get together with different Departments in the UK Government and the Scottish Government, as well as local authorities and concerned MPs, to work with the UK Treasury, which I have met on this issue, to try to achieve some kind of resolution. Whether that is this specific proposal or a wider package that can be put together, we should look at all the options. We should work out on whom the liability falls. We should work with the industry and Hargreaves in particular—it plays an important role in this and in mining elsewhere, and I work closely with it—to try to achieve a resolution.
I give the hon. Lady this commitment: I will work towards that solution alongside Ministers in other Departments to see what we can do to resolve what is clearly an unhappy circumstance that has a big physical impact on her constituency, as well as on her constituents and those in neighbouring constituencies.
Question put and agreed to.