House of Commons
Monday 18 January 2016
The House met at half-past Two o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
Defence and National Security (EU)
2. What assessment he has made of the potential effect of UK withdrawal from the EU on defence and national security. 
This Government believe we can and will succeed in reforming and renegotiating our relationship with the European Union. The cornerstone of our security, however, is NATO, while the EU plays a significant role in complementing NATO—for example, in imposing sanctions on Russia. Defence remains a sovereign issue.
The Prime Minister recently told us that he was
“in no doubt that for Britain the European question is not just a matter of economic security, but of national security too”.
Was he right or wrong?
The Prime Minister was quite right that our relationship with our European partners plays a very important role in defence.
Will my hon. Friend remind the hon. Member for Cambridge (Daniel Zeichner) how many times, in the 10 years since its inception, that the EU battle groups have actually been deployed?
The EU battle groups have not yet been deployed. The EU does have five significant common security and defence policy missions at the moment, complementing areas where NATO has chosen not to become involved.
Will the Minister comment on the impact of UK withdrawal from the EU on the Anglo-French military relationship? He will be aware that many joint programmes are under way. Are they likely to be affected if the EU pulled out of the EU?
I see no reason why they should be.
The Minister will have seen in the press at the weekend that yet another veteran is struggling to access the care that she deserves. On top of the King’s College report last week, does he agree that now is the time for the Government, after having put so much in, to undertake a radical reform and address the care required in the veterans sector?
I share my hon. Friend’s concern in this area. He may wish to put a question on that to the excellent Under-Secretary of State for Defence, my hon. and gallant Friend the Member for Milton Keynes North (Mark Lancaster), who has responsibility for veterans, shortly.
Well, he cannot do so now. The operative word is “shortly”, but how shortly remains to be seen. That is not in the mind of the hon. Member for Plymouth, Moor View (Johnny Mercer), nor at the moment in mine.
Will the Minister advise the House what impact a Brit exit, if there is one this year or next, would have on our armed services personnel currently in operations with the European Union overseas?
As far as I can see, none.
The Minister is quite right to remind the House that the cornerstone of our national security is our membership of NATO. Does he agree that if the British people vote to leave the European Union, as I hope they do, there is absolutely nothing to stop this country working with our European neighbours and co-operating on defence matters, should they choose to do so?
My hon. Friend is quite right. We all agree—in fact, both sides of the House used to agree—that the cornerstone of our defence is a nuclear-armed NATO. He is of course right in saying that, in any scenario, we will continue to co-operate with the other members of the EU, the majority of whom belong to NATO anyway.
I am glad to hear the Minister give his support to what the Prime Minister said about European co-operation. On that note, will he describe a single way in which less co-operation with our EU partners is going to increase our national security?
Nobody is suggesting less co-operation on defence matters with our European partners or anyone else.
It is all very well for the Minister to say that, but the Typhoon Eurofighter project is just one example of how working together with our European partners creates thousands of jobs, boosts exports and secures crucial sovereign capability. Will the Minister, who is supposed to be a member of a Government that are looking to boost the UK defence industry, give us an example of a single UK defence industry manufacturer that boosts the UK leaving the European Union at the moment?
The Typhoon, which the hon. Gentleman gives as an example of collaboration, was a collaboration between NATO countries. I am not sure that I fully followed the remainder of his question. It was something about defence manufacturers. Let us be clear: NATO, and not the EU, is the central plank of our defence policy.
Military Assistance (Ukraine)
3. What plans he has to increase military assistance to Ukraine. 
Our military training in Ukraine will continue throughout the year and we have plans to increase our footprint. I can announce today that we plan to gift a further 3,500 individual first aid kits to Ukraine’s armed forces. Our gift responds to a specific request from Ukraine and will be delivered in the spring.
Of course, when Ukraine gained independence, it voluntarily gave up the option of keeping nuclear weapons from the former Soviet Union. Aggression by Russia and destabilisation have been its sole reward. Following the NATO summit in Wales, British troops have been deployed in a training role in Ukraine. Will the Minister update us on the success in improving the training of the Ukrainian armed forces to make sure that they have a fair fight against Russian-backed aggression?
My hon. Friend is right to point out how our commitment to the continuous at-sea deterrence helps us to have influence. I assure him that we are on target for the training of 2,000 Ukrainian troops by the end of this financial year.
I am sure that the first aid kits are very welcome in Ukraine, but if we are serious about supporting Ukraine, which is under such pressure from the pernicious regime of President Putin in Russia, surely we should be doing much more visible work for it. For instance, we could tighten the sanctions on Russia. That is what it does not like and what has proven to be successful. We should tighten the sanctions week by week, month by month.
The hon. Gentleman will be aware that that is what we are doing. We have argued for sanctions through our work with NATO. We are doing much more than supplying first aid kits. We are doing a huge amount of capacity building in those armed forces. We have given them a huge amount of equipment, particularly to protect them from the cold weather in which they are operating. They are very grateful for that. We stand ready to assist them further and I will be visiting the country shortly.
Ukraine has been on the frontline of the expansionist agenda of Putin’s Russia, but it is not alone in that in eastern Europe. What assistance is the United Kingdom giving through NATO and the European Union to a number of countries, particularly the Baltic states, to combat the expansionism they face from Russia?
We do a huge amount of operational and practical work, such as on Baltic air policing. We have also been very active through our diplomatic channels, through both NATO and the EU, to hold Russia’s feet to the fire on these issues. Progress is being made. There has been recent progress, with fewer violations of the ceasefire. We will continue to act both practically and diplomatically.
4. What assessment he has made of progress in the international campaign against Daesh. 
12. What assessment he has made of progress towards defeating ISIL. 
I hope you will allow me, Mr Speaker, to formally welcome the new shadow Secretary of State and her team, and to regret the removal of their mainstream moderate predecessors, the hon. Members for Garston and Halewood (Maria Eagle) and for North Durham (Mr Jones).
In recent weeks, Kurdish forces have recaptured Sinjar and the Iraqi army is clearing the last pockets of Daesh resistance in Ramadi. In Syria, anti-Daesh forces have captured the Tishreen dam east of Raqqa. Air strikes, including by the UK, have inflicted significant damage on Daesh’s illicit oil industry, reducing its revenues by about 10%.
I am sure that the whole House will welcome what the Secretary of State said about the progress that has been made so far. Will he outline for the House whether any other measures are necessary to ensure that all members of the coalition intensify their efforts against Daesh?
On Wednesday I will meet my counterparts from Australia, Germany, France, Italy, the Netherlands and the United States to review the overall direction of the counter-Daesh campaign. We have made good headway in Iraq and Syria in recent weeks, but it is now time to discuss how to maximise the coalition effort and exploit the opportunities that arise from the setbacks that Daesh has suffered.
A major contributor to Daesh activities and capabilities on the ground is the foreign funding that it receives. Will the Secretary of State outline what measures the UK is taking to curb the foreign funding that Islamist groups such as Daesh receive? In particular, what pressure is he putting on Saudi Arabia and Qatar?
That issue is one of the keys to Daesh’s survival, and it is important that we maximise our efforts to cut off its sources of revenue, including internal sources, such as its access to oil revenues and the taxes that it imposes inside Syria and Mosul, and external sources, such as the flows that the hon. Lady has described. We will discuss that issue in a wider meeting later on with all members of the coalition, including the countries that she mentioned.
The Secretary of State will be aware of suggestions that part of the way to constrain Daesh is to use back-door diplomacy. Does he agree with Canon Andrew White of Baghdad, who said in an interview:
“You can’t negotiate with them. I have never said that about another group of people. These are really so different, so extreme, so radical, so evil”?
Does that put into context the suggestion from the Leader of the Opposition?
Like my hon. Friend, I was surprised to hear the suggestion that somehow one could negotiate with Daesh, or even that Daesh has some “strong points”. The House will recall that those strong points include the beheading of opponents, burning prisoners alive, throwing gays off buildings, enslaving young women, murdering innocent British tourists in Tunisia, and slaughtering young people on a night out in Paris. I fail to see any particular attraction.
For the benefit of the Secretary of State, I do not think that Daesh has any strong points, but I would argue with the Prime Minister’s central argument about there being 70,000 so-called freedom fighters ready to take on Daesh on the ground in Syria. On Tuesday at the Liaison Committee the Prime Minister still could not defend that figure. Can the Secretary of State do so today?
Yes I can because it is not my figure or that of the Prime Minister: it is an assessment produced by the Joint Intelligence Committee, independently of Ministers. I say gently that if the right hon. Gentleman does not think that there are that many freedom fighters in Syria, how does he think that the civil war has lasted for five years, given that the Syrian army is more than 200,000 strong? People have been fighting the Assad regime.
Does my right hon. Friend agree that a significant assault by ground forces, preferably local troops, is the only way to deal with Daesh in the longer term?
Yes. In the end, Daesh will only be prised out of cities such as Mosul in Iraq or Raqqa in Syria by local forces. We have already seen some success in the recovery of Baiji and Ramadi in Iraq, and I hope eventually we will see such success in other cities along the Tigris and the Euphrates. In the fullness of time I hope we will see similar action in Raqqa, but that does not mean that we should not now be getting on with a full deployment of airstrikes to deal with the infrastructure that supports Daesh.
I, too, welcome the hon. Member for Islington South and Finsbury (Emily Thornberry) to her place and wish her well in her new post. I know that we are in agreement on important areas of defence, and I look forward to working constructively with her and her team over the coming years.
Does the Secretary of State agree with the Prime Minister, who told the Liaison Committee last week that in the case of civilian casualties,
“if people make allegations we must look at them”?
We do an assessment after every British strike of the damage that has been caused, and check very carefully whether there are likely to have been casualties. Of course, that is taken into account in planning and approving the strike in the first place. It so happens that, in the first year and a bit of operations, we are not aware of any civilian casualties so far in our strikes in Iraq or more recently in Syria, but they are military operations—we do everything possible to reduce the risk of civilian casualties, but it is not possible to eliminate it entirely.
I thank the Secretary of State for that answer, but can he therefore confirm that the Ministry of Defence will accept evidence of civilian deaths from other sources outwith UK military personnel and local friendly forces? Will he assure the House that the evidence from highly credible organisations such as the Syrian Observatory for Human Rights, Airwars and the White Helmets—groups that work on the ground and that are very often the first people on the scene—will be considered when calculating civilian deaths in future?
Let me assure the hon. Gentleman that we will look at any evidence brought forward in open source reporting by other organisations in the assessment we make of each of the strikes in which our aircraft are involved. I have replied directly to one of the organisations he mentions—Airwars—pointing out that there is no particular evidence to back up the assessment it made in that particular case.
Will my right hon. Friend give the House an update on the military and non-military support that is now being provided to opposition fighters in Syria?
Along with other countries, we have been supplying non-lethal equipment to those fighters and we played a part in the initial training programme that was organised by the United States, and we remain ready to do so. In addition, we are working with those groups on a route to a political settlement in the talks that are now under way under the so-called Vienna process.
I thank the Secretary of State and the hon. Member for Argyll and Bute (Brendan O’Hara) for their generous welcome to this job. The Secretary of State has the honour of having perhaps the best job in Westminster. Mine is the second best. Hopefully we will change roles fairly soon. He can be assured that difficult questions will be asked and that we hope to work with the Government where we can for the sake of the security of people in Britain.
Senior military personnel have repeatedly warned that the RAF has been at full stretch, and that was even before the air strikes on Daesh began in Syria. A squadron of F-35s has only just been ordered, but will not come into service for several years. In the meantime, the air campaign against Daesh will be dependent on 40-year-old aircraft. Can the Secretary of State tell us how long he believes the air campaign can safely be maintained? What would happen if a new threat emerged? Would the RAF have capacity for any operations further than those to which the Government have already committed?
I thank the hon. Lady for her initial remarks. I note her ambition to move from the Opposition side of the House to the Government side, which was presumably shared by the two previous shadow Defence Secretaries that I have so far come across. Let me just say to her gently that a defence policy of nuclear submarines with no nuclear weapons, that regards Daesh as having “strong points”, and that wants to end the Falkland islanders’ right to self-determination, may be Labour’s defence policy, but it will never be Britain’s defence policy.
In respect of the hon. Lady’s question, the RAF is deploying a range of aircraft on Operation Shader in the middle east, including modern Typhoons and unmanned aircraft alongside the Tornados to which she referred. I can confirm that the RAF is well able to sustain that effort.
5. What assessment he has made of the effect on UK security and the economy of building four Successor ballistic missile submarines for the nuclear deterrent; and if he will make a statement. 
The nuclear deterrent is the cornerstone of the UK’s defence security policy. Maintaining continuous at-sea deterrence requires four ballistic nuclear submarines. The UK’s defence nuclear enterprise is gearing up to deliver the Successor replacement to the Vanguard class submarines. It will not only keep Britain safe but support over 30,000 jobs across the UK in England, Scotland, Wales and Northern Ireland. It makes a significant contribution to the UK economy.
Thirty thousand jobs! I thank my hon. Friend for his answer. Notwithstanding proposals for nuclear missile boats or submarines without nuclear missiles, does he not accept that there are something like 17,000 nuclear warheads around the world, with some possibly threatening us? What is my hon. Friend’s assessment of the likely risk to national security should we not proceed with the four missile submarines?
My hon. Friend is quite right to highlight the importance of the deterrent to our national security. We have seen—I think he was referring to comments made in the past 24 hours—the most extraordinary contortion emerging from the champagne socialist salons of Islington. The idea of spending tens of billions of pounds to build but not arm a strategic deterrent betrays the new kind of politics from the Labour leadership: a lurch back to the discredited unilateralism of the 1970s and a breathtaking lack of understanding about how to keep this country safe, with consequent threats both to national security and to tens of thousands of jobs across the UK.
Does the Minister agree that the issue is about not just the number of jobs involved in the Successor programme, but the high-skill nature of those jobs? Despite ill-informed comments from my own party at the weekend with regard to those jobs, does he also agree that we cannot simply turn them on and off like a tap when we need them?
I would like to add my tribute to the hon. Gentleman’s stalwart work, both on the Government Benches when he was a Defence Minister and on the Opposition Benches when he was a shadow Minister; it is a sorry state of affairs to see him sitting right at the back of the Back Benches today.
The hon. Gentleman is, of course, quite right to point out that this is a long-term endeavour: to design and build a nuclear-enabled submarine takes decades. This is a 35-year project from initial conception to commissioning. Those skills not only take a long time to develop; they cannot be switched on and off. They are at the very forefront of engineering capability in this country. Building a nuclear submarine is more difficult than sending a man to the moon.
19. In the light of the astonishing comments made yesterday by the Leader of the Opposition on having a submarine-based nuclear deterrent without actually have any deterrent involved, does my hon. Friend agree that in an increasingly uncertain world it is crucial to continue the decades-long consensus held on our nuclear deterrent? 
I am grateful to my hon. Friend for the considered way in which he made the point that this House is here to deliver national security to the United Kingdom as a whole. It is in all our interests to share a common objective to maintain, at the cornerstone of our defence, a continuous at-sea deterrence posture. We very much hope that, when it comes to a vote, colleagues from across the House will be able to recognise the consensus on this issue.
The replacement of the nuclear deterrent is, of course, a sovereign decision of the United Kingdom and its Parliament. However, deciding not to proceed would have repercussions across NATO. Will the Minister tell us what he feels the repercussions would be for NATO, and for Britain’s standing in NATO, should we decide not to go to maingate?
Our deterrent is a NATO asset, so the NATO alliance depends in part on our ability to make that asset available should the need arise. Our NATO allies are taking a very intense interest in the deliberations of this House and the hon. Lady is right to highlight that.
Does the Minister agree that all NATO countries are part of the NATO nuclear alliance, which is based on the three members who are in possession of weapons; and that to spend all the money on a nuclear deterrent, but not actually have one at the end, would be the worst option of all?
I have already indicated that I think it is completely farcical to spend tens of billions of pounds on a weapon that can never be used and therefore can never fulfil its deterrent objective. I completely agree with my hon. Friend.
In what circumstances does the Minister intend to use the nuclear deterrent?
I think this gets to the heart of the confusion that lies at the centre of Scottish nationalist party policy. The deterrent has been in use every single day—and night—for the last 53 years.
6. What support the armed forces provided for the response to recent flooding (a) in Lancashire and (b) elsewhere. 
Approximately 1,700 soldiers were mobilised to support the flood response efforts in Lancashire, Cumbria and Yorkshire. Additional support was provided by an RAF Chinook helicopter, a Royal Navy search-and-rescue Sea King helicopter and the use for temporary accommodation of Victoria barracks in Scotland. This was a tri-service response and included both regular and reserve forces. I am sure the whole House will want to join me in paying tribute to the tremendous effort of our armed forces and for the support they provided, especially over Christmas and the new year.
I associate myself with my hon. Friend’s comments about giving support to our armed forces, who provided a fantastic response to the Boxing day floods in Lancashire. Will she explain what further steps are being taken to ensure that the armed forces are held at a heightened state of readiness in case we see a return of the floods later this winter?
I thank my hon. Friend for his kind words about our armed forces, which afford me an opportunity to thank the public, too, for the great efforts they made to express their gratitude—largely in calorific form, I understand—to all of our armed forces. I assure my hon. Friend that we remain engaged with other Government Departments and with our network of regional liaison teams with local authorities, which is something we do permanently. The UK stand-by battalion remains at high readiness and we are able to provide further support very quickly if the need arises.
I witnessed for myself the crucial role that the services played during the floods over the Christmas period. Without their intervention, the situation would have been far more serious. The British Army and the rest of the forces were seen yet again at their best, despite being overstretched. In the light of the fact that the Army has been cut by 20,000 personnel in the last five years, that there is a 10.6% shortfall in the number of reservists, and that the civilian staff will be cut by 30% before the next election, will the Government explain how they can ensure being able to provide a comprehensive response to future national emergencies, let alone international crises?
I must correct the hon. Lady. It is not true that we have a shortfall in reservists; we are actually ahead of target in recruiting them. Close to 9,000 individuals have stepped forward in the last year alone, so we have a very strong pipeline in recruiting. We can give assurances to the British public up and down the country when such terrible events happen because we have taken the decision to invest in defence—in our kit and in our people—and keep our armed forces strong. That is how to reassure people. As we saw over the Christmas period, we were able to generate enormous numbers of people when the need arose in short order. They did a terrific job, and I think any suggestion to the contrary fails to take account of the facts.
May I start by thanking you, Mr Speaker? The feedback from the Beckfoot school students who attended the session you ran last week in my constituency has been universally positive, and I am most grateful to you for that.
I ask the Minister to pass on my sincere thanks and those of my constituents to the armed forces for their magnificent support for my constituents during the recent flooding. They came over Christmas at very short notice to help out on a whole range of tasks. They were a lifeline to many of my constituents, and we would all like to place on the record our sincere thanks for everything they did for so many people at that difficult time.
I thank my hon. Friend for his kind words. They will have been heard by those who went to his constituency, but I will also pass them on.
7. What steps he is taking to develop defence soft power and influence. 
8. What steps he is taking to develop defence soft power and influence. 
The strategic defence and security review made defence engagement a funded, core MOD task. We are building our capacity to address global security concerns at source by influencing partner countries. This includes strengthening the defence attaché network and developing a professional defence engagement career stream, to attract the very best. Furthermore, each Army adaptable brigade is now aligned to a specific region for training and influence purposes.
Will the Minister make a comment about increasing our security in the Baltic region in relation to soft power?
In the context of soft power, may I apologise on behalf of my right hon. Friend the Member for New Forest East (Dr Lewis), the Chair of the Defence Committee? My right hon. Friend cannot be here this afternoon because he is attending a memorial service for Lieutenant Commander David Balme, the hero who boarded U-110 during the war and got the code books and the Enigma machine out. They were then sent to Bletchley Park, which interests me because my parents met at Bletchley at that time. Lieutenant Commander Balme was a hero who probably shortened the war, and I hope that the Minister will pay tribute to him.
We are very conscious of the importance of the Baltics. Most of the ministerial team, including the Secretary of State and me, have been to visit them. My hon. Friend will be well aware of the air patrols and everything that we have done there, and of our programme of exercises.
As for Lieutenant Commander Balme, Churchill once famously said that the only campaign that kept him continuously awake at night was the convoy campaign in the western Atlantic. Without Bletchley Park, we would almost certainly have lost it.
As chair of the all-party group on the British Council, I am well aware of the importance of soft power. Does my hon. Friend agree that it is only through a continuing investment in both hard and soft power that we can continue to play a leading role in protecting the world order on which our security and prosperity very much depend?
My hon. Friend is quite right. We are sending training missions which are doing vital upstream work in a large number of countries, helping to deliver the environment that is needed to prevent future wars and conflicts.
What role does the Minister think human rights advisers have in developing our influence?
Human rights advisers do play a role. Specifically, the armed forces now contain a number of advisers who specialise in giving advice on gender matters, such as protecting women in conflict. One or two of them have put themselves very much in harm’s way by giving advice in dangerous theatres.
Since taking office in 2010, the Prime Minister has overseen the granting of more than £5.6 billion-worth of military licences to Saudi Arabia. Does that mean that he is exercising soft power or hard power?
We have one of the strictest regimes in the world for controlling exports. I would say that exporting to a key ally at a dangerous time in the middle east was smart power.
Additional Reservists (Recruitment)
9. What progress his Department has made towards meeting its targets for recruiting additional reservists. 
Our programme to grow the reserve forces remains on track, and has reversed many years of decline. Central to that is an improved offer, including better training, equipment and remuneration, and an improved experience for reservists. A total of 8,640 people joined the volunteer reserve in the 12 months to 1 December, a 46% increase on the number who joined during the equivalent period a year ago. Trained strength has risen to 26,560, well ahead of target.
In fact, the Government are still nearly 8,000 short of their target number of trained reservists, and the shockingly poor recruitment figures have started to improve only since the Government raised the age limits, allowing some recruits to join until they are in their mid-50s. The Major Projects Authority has judged the plans “unachievable”. Do the Government now accept that the Army has been cut too far and too fast?
I do not accept that. The Major Projects Authority report to which the hon. Lady referred is more than a year old, and the figure that she identified as the target—35,000 trained reservists—must be reached by April 2019. We are moving fast in that direction.
23. Given that the Self-build and Custom Housebuilding Act 2015 is now on the statute book, does my hon. Friend consider that one way to recruit additional reserves —and, indeed, other members of the armed forces—would be to create a help to build scheme, so that service families find it easier to obtain a piece of land and build a house? 
I will pass my hon. Friend’s ingenious idea to colleagues and we will look at it for him.
24. As the Government are still short of their target on trained reserves, does the Minister acknowledge the concerns raised by his hon. Friend the Member for Basildon and Billericay (Mr Baron), who has warned that these cuts are leading to severe capability gaps in our armed forces? 
We had to take some painful decisions when we took over in 2010 as part of the coalition Government, because the country was spending £4 for every £3 coming in. After the reshaping, we have now moved to a position where, despite there still being some tough decisions to take, this country has committed to spending 2% on defence and to a large expansion of its equipment programme.
My hon. Friend will recall his visit in June last year to a newly established reserve unit at D Company 4 Para at Edward Street in Rugby. Is he as pleased as I am to note that that unit is already beyond its section strength? In the past six months, 12 new reservists have started in Rugby alone. Does this not show that the offer to reservists is attractive?
Yes, it does. It was a huge privilege to be there for what was actually the re-inauguration of reserve paratroopers in Rugby, and, even more so, to have the opportunity to meet an Arnhem veteran there.
17. What impact have the changes to allowances and pay had on the reserves—and more importantly, on the regular forces? 
The largest changes in pay have actually been to reservists, where we have introduced holiday pay for the first time. We have also introduced a pension for the first time; it was previously only available to those who mobilised. I think it is fair to say that the changes in the regular pay arrangements, which are basically a simplification, have also gone down well.
May I thank the Minister for the recruiting we are allowed to do in Northern Ireland? Just under 7% of the reserve forces are from Northern Ireland, which represents 3% of the population. Might the Minister look at recruiting more from Northern Ireland, so we can carry on being the backbone of the armed services?
Northern Ireland has always been an excellent recruiting ground for both regulars and reservists, and I am conscious also of the fact that, beyond the statistics, as the hon. Gentleman mentions, a higher proportion of people from Northern Ireland have been mobilised than from any other part of the UK.
10. What recent representations he has received against replacing the independent nuclear deterrent. 
My Department regularly receives representations covering a wide range of views on defence matters, including the replacement of the independent nuclear deterrent.
North Korea recently announced that it had tested a hydrogen bomb and only yesterday boasted that it had the capacity to obliterate the United States. To what extent does my right hon. Friend think North Korea would be deterred in its nuclear ambition by the knowledge that somewhere below the surface of the East China sea an unarmed submarine was lurking?
First, let me strongly condemn the nuclear tests conducted by North Korea, which seriously threaten regional and international security. I can assure my right hon. Friend that this Government will not gamble with the long-term security of our citizens. We remain committed to maintaining an independent nuclear deterrent. The only thing a nuclear submarine without nuclear weapons is likely to deter is anybody who cares about our security from ever voting Labour again.
If the UK were to go down the route of decommissioning its warheads, in the so-called Japanese style, and then were to decide it needed to recommission them at some future point, is it the Government’s assessment that it could do so and remain compatible with the non-proliferation treaty?
First, let me make it clear that Japan does not have nuclear-powered submarines and does not have nuclear weapons, so talk of some Japanese option is entirely farcical. So far as the hon. Gentleman’s question is concerned, we have no intention of decommissioning.
Nigerian Armed Forces (Training)
11. What plans he has to increase training support to the Nigerian armed forces to help to tackle Boko Haram. 
We are fully committed to supporting Nigeria in its efforts to defeat Boko Haram. During his visit in December, the Secretary of State committed to a major increase in UK support to the Nigerian armed forces with the intent of more than doubling the number of British personnel deploying on training tasks in the coming year.
The strategic ties between the United Kingdom and Nigeria are of the first importance to our country. Will the Minister provide more details of the UK troop deployments she envisages over the next 12 months to assist Nigeria in combating terrorism?
We expect up to 300 military personnel to provide assistance over the forthcoming year, including 30 RAF personnel who have been deployed this month to deliver force protection and training to the Nigerian air force, and more than 35 personnel from the 2nd Battalion the Royal Anglian Regiment who will deploy later this month to train Nigerian personnel specifically to combat Boko Haram.
The Minister will be aware that Boko Haram operates not only in Nigeria but across the borders in the region. We have also seen Daesh and al-Qaeda-affiliated organisations coming down from the north. Given the horrific events in Burkina Faso over the weekend, will she tell us what support is being given to that country by the UK armed forces and what steps are being taken to co-ordinate action against Islamist violence across the region?
A huge effort is going on, not just from the UK but from our partners. We are doing a range of things, as well as maintaining bilateral relationships to build the capacity of those countries’ own armed forces. We provide a huge amount of training, particularly on the issue of winning peace and security, as well as providing practical support. We keep all this under review, but a huge amount of work is being done.
13. If he will make an assessment of the potential merits of using empty Ministry of Defence properties to house homeless veterans. 
Ministry of Defence housing supports serving members of the armed forces and their families. A margin of unoccupied properties is retained, but housing that is no longer needed is released. We provide significant support to facilitate the transition to civilian life, and we have allocated £40 million from LIBOR fines to support projects providing veterans with accommodation, including £8.5 million for Mike Jackson House.
Colchester is a garrison town, and we currently have a number of MOD properties standing vacant. Will the Minister meet me to discuss how some of those properties could be used for temporary accommodation for military veterans?
Approximately 10% of our service family accommodation is unoccupied, but we keep it at that level to ensure that we can cater for trickle postings and for people returning from overseas. I am not convinced that the use of service accommodation is a sustainable way of supporting veterans. However, there are a number of excellent projects around the country and I would be delighted to meet my hon. Friend to discuss how we might pursue them in Colchester.
20. Can the Minister advise the House on the Government’s support strategy for homeless veterans with comorbid substance use or mental health problems? What more can be done? 
We continue to provide support for veterans, particularly with their mental health. We have invested an awful lot of money in recent years, but we accept that the job is certainly not done. There has been a rise in mental health problems, both in society and in the armed forces, and this is something that we keep under constant review and are determined to tackle.
Of course it will be difficult for the Minister to respond to a question on supporting veterans, given that 30% of the MOD’S estate has been sold off. We are also concerned by the Government’s intention to lay off 30% of the MOD’S civilian workforce, which could include significant job losses at Defence Equipment and Support. At the same time, spending on buying in outside expertise has rocketed to some 30% of the DE&S budget. Does the Minister accept that further lay-offs will not only drive up extortionate consultancy costs but exacerbate the skills shortage that the Public Accounts Committee has identified as a key reason for the increases in the cost of military equipment overall?
No, I do not accept that, and I make absolutely no apology for continuing, as a result of our strategic defence and security review, to optimise our defence output.
14. What discussions he has had with his US counterpart on the cost, operational capacity and reliability of the F-35 programme. 
I had a successful bilateral meeting with Bob Work, the US Deputy Secretary of Defence, only last Friday, at which the F-35 programme came up. Aircraft costs are in line with estimates, operational capability is expanding and fleet reliability is improving as more aircraft come on stream and into the programme, and logistic support increases. The aircraft remains on schedule to meet our initial operating capability in December 2018.
I thank the Minister for his response. Will he reassure the House that he will not bring the current fleet of Tornado aircraft out of service until the F-35 has proven its operational reliability after several years of active service?
The outstanding air-to-ground capability of our Tornado squadrons is being steadily migrated on to the Typhoon platform initially. In November’s SDSR, we secured considerable investment in the RAF combat jet fleets, including the extension of our Tornado squadrons’ out-of-service date to 2018-19, an increase in our Typhoon fleet by two squadrons, and the extension of the Typhoon out-of-service date to 2040. In addition, we reaffirmed our commitment to acquiring a total of 138 F-35s during the life of the programme and buying more aircraft earlier, so that we have 24 F-35 Lightning IIs by 2023.
T1. If he will make a statement on his departmental responsibilities. 
My priorities are our operations against Daesh, which I will be reviewing with my counterparts later this week, and the implementation of the SDSR decisions, in order to increase the size and power of our armed forces to keep Britain safe.
I thank the Minister for his answer. With growing threats to our national security, I welcome this Government’s commitment to defence spending. What impact will the SDSR have on the future size and power of our armed forces? He may recall that I serve as patron to the Military Preparation College, which has a base in my constituency, and so I have a keen interest in the next generation of servicemen and women.
I recall both that and my visit to my hon. Friend’s constituency shortly before her election to this place. The commitment to increase the defence budget every year gives our armed forces certainty and stability. We are maintaining the size of the Army, and we are increasing the size of the Royal Navy, the RAF and the reserves. We will have more ships, more planes, more helicopters, more troops at readiness and better-equipped special forces to protect our people, to project our influence across the world and to promote our prosperity.
In the past few days, reports of the difficulties faced by veterans suffering from Gulf war syndrome have reminded us how important it is that we recognise the extraordinary sacrifices made by our men and women in uniform. We must ensure that our service people are not only properly rewarded while they are serving, but looked after properly when they leave. What sort of message does the Minister think it sends that the Government have chosen to freeze war pensions at a time when the basic state pension is to be protected by a triple lock and is set to rise by 2.9% this year?
The Government actually have a very good record on supporting veterans. Unlike what happened under the previous Government, in recent years we have seen major investment in mental health, veterans’ accommodation and veterans’ hearing. We have seen multimillion-pound investments in supporting our veterans—that was never done under the previous Government.
T2. I am sure the Minister will know that this year we are proud to mark the centenary of the Porton Down defence laboratory in my constituency. May I invite him to commend the work of Jonathan Lyle and his team, and to speculate on the challenges they may face in the next 100 years? 
I am grateful to my hon. Friend for reminding the House that this year we do celebrate 100 years of the outstanding research effort at Porton Down, which was first established in response to the threat from chemical weapons during the first world war. Last week, I reported to the House that we have just decided to make the Defence Science and Technology Laboratory an Executive agency, and I am looking forward to visiting next month, when I hope he will be able to join me to thank all the folk who do such a fantastic job there.
T6. The Brimstone missiles currently being dropped in Syria are estimated to cost in the region of £150,000 each. Given such a massive financial commitment, will the Minister assure the House that the costs of this campaign are being monitored and that a similar financial contribution will be made towards rebuilding Syria? 
The hon. Lady is right to identify the fact that precision munitions are costly, but I can reassure her that we are keeping a very close watch on stockpiles and ensuring that we have sufficient missiles in stock to meet our requirements. As the Prime Minister said in this House during the Syria debate, it is absolutely the Government’s intent to press for a rebuilding programme for Syria when this terrible civil war comes to an end.
T3. Cadet units across the country are keen to engage in target rifle shooting, and yet the rules surrounding transportation of rifles and ammunition make such participation all but impossible for schools and cadet units. Will the Secretary of State meet me and representatives of the National Rifle Association to discuss how we can get around those very difficult rules in a practical and safe manner? 
I would be delighted to meet my hon. Friend and the National Rifle Association. I should say though that, although handling youngsters on a rifle range is very skilled business, we cannot find any evidence from any of the four service organisations that there is a particularly acute shortage in that regard, although some individual cases have been brought to my attention. None the less I would be delighted to have the meeting that he suggests.
Commando Joe’s works in more than 500 schools across the country, placing veterans in classrooms to share skills and experiences with young people. Despite robust evidence of the success of its work, its Government funding is due to end in March this year, placing the organisation in jeopardy. Will the Secretary of State take representations on that and look at what can be done to allow this hugely important work to continue?
I would be delighted to meet the hon. Gentleman to discuss that matter and to see whether we can pursue it.
T4. Does the Secretary of State agree that any moves to weaken our commitment to an independent nuclear deterrent or to our leading role in NATO will make us less safe? 
Absolutely. Our independent nuclear deterrent is the ultimate guarantee of our, and indeed of NATO’s, security, and a necessary insurance in an increasingly dangerous and uncertain world. Our conventional and nuclear capabilities, underwritten by our commitment to spend 2% of GDP on defence, support our leading role in NATO, which remains at the heart of our defence. This Government will not put our security at risk.
T7. The armed forces are facing serious personnel shortages in some of the most crucial specialist trades, including nuclear engineers and flight technicians. Given that a great deal of the expertise is in the Ministry of Defence’s civilian workforce, which the Government plan to cut by 30%, will the Minister explain how the Government plan to ensure that operational capabilities are protected when those cuts go ahead? 
For particular pinch points in particular trades, there are ongoing programmes to ensure not only that we retain people, but that we recruit. We train up people, offer apprenticeships and allow people to move in from the private sector. Those principles are well established. We will also introduce into our armed forces more flexible working patterns to allow more of that to happen and to allow people to move from regular forces to reserve forces and into civilian contracts and then back into the armed forces. That is very much our direction of travel. For each trade, there is a particular plan, and that is going very well. In fact, this month we have started recruiting apprentices into nuclear engineering, with 35 starting this month.
T5. Will the Secretary of State explain what steps the Ministry of Defence is taking to release surplus land for housing? Will he also explain what progress the MOD has made in selling or renting the fire control centre at Waterbeach? 
As part of the Government’s prosperity agenda, the MOD is committed to releasing land for 55,000 housing units in this Parliament. I am delighted to announce that the first 12 sites will contribute some £500 million of land receipts, which will be reinvested into defence, and will provide more than 15,000 potential housing units. I will place a full list of sites in the Library of the House, and I have written to the MPs concerned. I expect to be in a position before the end of this year to provide further details, including a full list of sites affected. With regard to my hon. and learned Friend’s own constituency, I can confirm that the whole of the Waterbeach site has now been transferred to our civilian delivery partner.
Does the Secretary of State have any moral concerns about the sale of arms to Saudi Arabia, given its shocking record on human rights and the fact that Amnesty International and others have documented a clear risk of UK arms being used to breach international humanitarian law?
The United Kingdom has some of the strictest arms export criteria in the world, and where any of our arms are exported we are obviously concerned that their use should be in full compliance with international humanitarian law. That is something I discuss regularly with my counterpart, the deputy crown prince, the Defence Minister of Saudi Arabia, and my other colleagues.
T8. Can my right hon. Friend set out what support his Department is offering to soldiers and veterans who are still subject to legal claims purporting to relate to incidents that took place during the Iraq war? 
We take very seriously our duty to provide support for people who may be facing proceedings arising from their past service. We pay for independent legal advice in all such cases. I am extremely concerned at the number of claims now being brought on an industrial scale and we are considering steps to stem that flow, with options including restricting legal aid, limiting the time in which claims can be brought, and limiting the territorial application of the rights of those claimants.
I am convinced that Trident has a crucial role to play in the defence of our country, but the economic aspects are important as well and there is a huge group of workers throughout the country waiting with some anxiety to see whether or not Parliament is prepared to give final approval for the Successor programme. Will the Secretary of State give an assurance that he will not allow any unnecessary delay to get in the way of the need to bring the maingate proposals to the Floor of the House for debate and decision?
I can give the hon. Lady the assurance that she seeks. It takes more than 10 years to build one of those nuclear ballistic submarines and we need to get on and replace the existing Vanguard boats, which will become obsolescent towards the end of the 2020s. In the strategic defence review at the end of November we set out our commitment to replace all four boats, and I hope it will not be too long before Parliament is asked to endorse that commitment.
Despite his obvious differences with Russia over Crimea and Ukraine, will the Secretary of State give me an assurance that he will redouble efforts to engage with his Russian counterpart on fighting collaboratively against Daesh in Syria?
I am not currently engaged in any discussions with my Russian counterpart. The illegal annexation of Crimea in 2014 and Russia’s continuing support to separatists in eastern Ukraine do not allow a return to normal engagement. However, in the interests of air and maritime safety, I have authorised MOD officials to undertake limited military-to-military engagement with the Russians to ensure that our own airspace is properly protected.
Dalzell plate mill, Clydebridge quenching mill, the heavy sections at Scunthorpe and also Sheffield Forgemasters—the Secretary of State rightly said that the Government’s position is to maintain an independent nuclear deterrent, but will it be using British steel?
The hon. Gentleman will be interested in the statement relating to Government measures in connection with British steel that will immediately follow this Question Time. Clearly, we are keen to ensure that British manufacturers have an opportunity to compete for defence contracts with significant steel components, and that will continue to be the case.
Last Thursday I had the great pleasure of accompanying my hon. Friend the Minister for Defence Procurement when he visited the UK Defence Solutions Centre at Farnborough in my constituency. May I salute this innovation by my hon. Friend? The centre is doing fantastic work in assessing Britain’s defence needs as well as new technological opportunities, and in that context, will he give serious thought to continuing the Ministry of Defence’s support for Zephyr, the high-altitude record holder, which has fantastic surveillance capability, the technology for which my great and late friend Chris Kelleher did so much to develop?
The hon. Member for Aldershot (Sir Gerald Howarth) can now draw breath.
I am grateful to my hon. Friend for giving me the credit for establishing the UK Defence Solutions Centre, but I think it is only fair to the House, and indeed to my future career, if I place the credit where it is properly due: at the feet of my right hon. Friend the Secretary of State, in his former role. I enjoyed our visit to UKDSC last week. It is doing a great job in placing UK innovation at the heart of the defence industrial supply chain globally. I am sure that my hon. Friend will have noted that the strategic defence and security review referred to investing in a unique British capability for advanced high-altitude surveillance, which I know will be of interest to him.
How much do the Government currently estimate the replacement nuclear deterrent weapons system will cost, including the boats themselves, the missiles and the ongoing lifetime maintenance costs?
As we made crystal clear in the SDSR, we have recalculated the cost of manufacturing the four boats, which we now estimate will be £31 billion, and we have added a £10 billion contingency. We have no intention at this point of replacing the warheads; the decision on that will be taken later. Therefore, I urge the hon. Gentleman to focus on the £31 billion commitment for the submarines, plus the £10 billion contingency, as the cost that is relevant today.
With permission, Mr Speaker, I will make a statement on the steel sector. It is with regret that I find myself having to update the House on further job losses. This morning, Tata Steel announced plans to make over 1,000 redundancies across its UK strip business as part of its continuing restructuring plans. The proposals involve 750 job losses at Port Talbot, 200 redundancies in support functions at Llanwern, and 100 redundancies at steel mills in Trostre, Corby and Hartlepool. This will be a difficult time for all the workers and their families, and our thoughts must be with them. Our immediate focus will be on helping any workers who lose their jobs back into employment as quickly as possible. We will also continue to support the steel industry.
Given the United Kingdom’s devolution settlement, much of the support that can be offered in south Wales, both to the workers and to Tata Steel, will come from the Welsh Government, but the UK Government want to ensure that Port Talbot has a commercial and sustainable future. It is encouraging that the Welsh Government are to launch a taskforce this week—I believe that it is to meet for the first time on Wednesday—to support those affected by today’s announcement. We have offered our support to the chair of the taskforce, Edwina Hart, and we will continue to work with the Welsh Government. I welcome the commitment that the First Minister made today to work closely with the UK Government. I am confident that the Welsh Government will accede to our request to play a full part in the taskforce. I can assure hon. Members that we are also working closely with the Secretary of State for Wales—he is there today, which is why he is not in the House.
It is important to remember that the fundamental problem facing our steel industry is the fall in world prices, caused by the over-production and under-consumption of steel. We know, for example, that the price of slab has almost halved over the past 12 months, and that Tata has been losing £1 million a day as a result of the slump in prices. All that the industry has asked for—this includes the unions—is a level playing field, and that is what we are achieving. The Government have been working closely with Tata to do all we can to ensure a sustainable future for Tata Steel in the United Kingdom, both at Port Talbot and at Scunthorpe. We have offered our assistance to Tata as it seeks to find a buyer for its long products division. It is encouraging that it has announced that Greybull Capital is its preferred bidder. We remain in close contact with Tata as its commercial negotiations continue. The Government stand ready to play our part to help secure Scunthorpe’s long-term future.
Returning to today’s announcement, the same offer is there for Port Talbot. Tata is currently working with consultants to develop a plan to address the near-term competitiveness of its business at Port Talbot. We and the Welsh Government are in regular dialogue with Tata. This dialogue includes my right hon. Friend the Business Secretary, as well as my officials and, of course, me. While the future of Port Talbot must be commercially led, we will help where we can within the parameters of state aid rules. I want to make it absolutely clear that, in the words of the Prime Minister, we are unequivocal in saying that steel is a vital industry. This Government are determined that steel is produced not just at Scunthorpe but at Port Talbot, and that it has a sustainable future.
As I say, we are creating the level playing field that the industry has asked of us. It set out five asks when we had our steel summit back at the end of last year. On dealing with lower energy costs, in December we secured state aid approval to pay further compensation to energy-intensive industries, including steel, to include renewables policy costs. We have already paid about £60 million to the steel industry to help to mitigate the costs of existing energy policies. The new state approval will enable us now to extend the scope of compensation. It will go live tomorrow, enabling steel and other energy-intensive industries to apply. That will save the steel industry about £100 million over the financial year—roughly 30% of its energy bills—but we are going to go even further and exempt EIIs from most of these costs. Our support for these industries will save them hundreds of millions of pounds over the next five years.
The sector asked for flexibility over EU emissions regulations, and that is exactly what we have secured. Derogations for Port Talbot have already been agreed by Natural Resources Wales. The Environment Agency has accepted Tata Steel’s proposals for derogations for improving emissions from Scunthorpe, subject to a current public consultation. Once approved, this will give it a further six years to improve emission levels from the coke ovens. Both of Tata Steel’s major power plants have been included in the UK transitional plan that the UK has submitted to the European Union. This gives it until June 2020—a further four years—to meet the emission requirements. These actions will save the industry millions of pounds.
We have further updated and published, specifically and properly, new guidance about procurement, of which mention was made during Defence questions. We are the first country in the European Union to take advantage of and implement these new flexibilities, so social impact, job impact and staff safety can now be taken into account. In short, there is no excuse not to, and every reason to, buy British steel. Having just met the Aluminium Federation, I want to make it clear and put it on the record that those procurement rules include aluminium.
I have heard it said that the Government have blocked the reform of trade defence investigation, but they have not. I can assure the House that the Government have been acting decisively to safeguard the United Kingdom’s steel interests in Europe. In July last year, and again in November, we voted in favour of anti-dumping measures on certain steel imports. The United Kingdom lobbied successfully in support of industry calls for an investigation into imports of reinforcing steel bar. I hope that we will have an announcement soon on the result of those actions under the excellent leadership of the Business Secretary. The European Commission has taken this forward swiftly, including responding quickly to industry requests to register imports. The United Kingdom secured an extraordinary meeting of the EU’s Competitiveness Council and agreed faster action. Next month I will return to follow that up at a stakeholder conference where I will push for further progress.
The review of business rates in England will conclude this year. Of course, the Welsh Government, because this is devolved, have responsibility for business rates in Port Talbot and other parts of Tata’s workings in Wales.
We have seen today that the steel industry remains subject to unprecedented global pressures. While the immediate causes of these are beyond the Government’s control, I can assure the House that we continue to do all we can to help this industry, and we will stand by all the workers who face redundancy in south Wales and other parts of the United Kingdom.
It is welcome that the Government have come to this House to make a statement on steel rather than having to be dragged here, as they have been on so many other occasions, by urgent questions tabled by the Opposition. It is disappointing, given the seriousness of the issue, that the Secretary of State has not seen fit to make the statement himself, but I welcome the Minister for Small Business, Industry and Enterprise to her place.
I welcome the Minister’s intention to work closely with the Welsh Government to mitigate the effects of the job losses on local communities. I especially welcome the co-operation on business rates, but I note that the Government have taken no action on business rates in England.
Tata’s announcement of 1,050 job losses across Port Talbot, Llanwern, Trostre, Corby and Hartlepool is devastating news for all the workers, their families and the close-knit communities affected. Our hearts go out to them. This latest bombshell comes on top of job losses at Tata’s Newport plant last year, along with thousands of job losses across the sector in the UK, including the complete closure at Redcar.
At this time of crisis for the UK steel industry, all we seem to get from this Government is warm words but very little concrete action. In the three months since the Government convened the emergency steel summit last year, only one of the five asks raised with them has actually been delivered. Who would think that steel is the foundation of many of the UK’s most important manufacturing sectors, including aerospace, defence, automotive and construction? The existential threats facing it show no sign of abating, and yet the Government have been asleep at the wheel. They have not been tough enough with the Chinese or active enough with the European Union. They have made no concessions on the business rate system, which actively penalises those who invest in expensive infrastructure to improve productivity, and there is no sign that their technical change to procurement rules is making any difference in the award of Government contracts to help our domestic industry.
When are we going to get effective action from this Government and not just warm words? Countries such as China are engaging in ruthlessly uncompetitive practices that are destroying our steel industry. My right hon. Friend the Leader of the Opposition raised that directly with President Xi when we met him in October, and we have raised it with the Chinese at subsequent meetings.
The slow response in the EU to the tsunami of cheap Chinese steel, which is snuffing out our industrial base, is a disgrace. I made that point in no uncertain terms at a high-level meeting with representatives of the Commission in Brussels last week. They need to take action now and this Government should be leading the charge to reform EU trade defence instruments, but they are actually resisting reform to speed them up.
This country desperately needs an industrial strategy so that our steel industry can survive and thrive. The Chancellor once declared that Britain would be
“carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
But five years on there is a yawning gap between his rhetoric and the grim reality. Manufacturing exports have slumped and manufacturing output is still below its level of seven years ago. Whether on the deficit, debt, exports or manufacturing, the Chancellor has failed every test he set himself. Despite the fanfare and flurry of Government press releases, there is no substantive industrial strategy in sight. Is that any wonder when we have a Business Secretary who will not even let the phrase “industrial strategy” cross his lips? Because the Government will not do it, Labour will create an advisory board of experts from business, industry and the trade unions to lead work on the development of an industrial strategy for the UK.
What size of steel industry does the Minister regard as sustainable in the UK? When will the Government stop cosying up to China and confront its role in dumping cheap steel on UK markets? Will the Minister assure this House that the question of market economy status for China will not be resolved until it stops dumping cheap steel in the UK?
Why are the Government blocking the modernisation of EU trade defence instruments, which would deal with unfair trade before, not after, the damage is done to our domestic producers? Although there was welcome progress on the UK’s state aid application on the renewables obligation and feed-in tariffs, can the Minister confirm that until approval for its second application is received, it leaves some companies in the steel and other sectors without access to much needed compensation and still exposed to some 70% of climate change policy costs? When will there be any progress on business rates, which penalise new investment to increase productivity? When, in short, are the Government finally going to turn their warm words into real and urgent action to save our steel industry?
I am sorry the hon. Lady did not listen to what I said. While we are dealing with facts—actually, she was not dealing with facts—I remind the House that 68,000 people worked in the British steel industry in 1998; by 2010, that number had fallen to 33,000; and by 2014, it had risen to 35,000. It ill behoves Opposition Members, therefore, to lecture the Government about supporting the steel industry, which, I would contend, we have done more to support in the past few months than the last lot did in 13 years. It does not help anybody to make cheap political points—[Laughter.] It is so tempting, given the palpable nonsense coming from Labour.
The steel industry, including the unions, made five asks of us: energy costs—delivered; industrial emissions—delivered; procurement—delivered; dumping—delivered. [Hon. Members: “What?”] In July, for the first time, we voted to protect our steel industry. Such was the surprise of others sitting round the table that the EU officials went back to the UK delegation to check they had heard correctly, because never before had we voted to protect our steel industry. We did it again in November, and we have supported rebar, so we have delivered on that.
I confess—because I like to be honest with the House—that only on business rates have we not delivered. The review continues, and I hope, when it is finished, the Chancellor can say he will help all those who invest in plant and machinery so they are not penalised with higher business rates, which does seem rather perverse. Those arguments and discussions continue. I suggest, however, that we have done a good job in protecting our steel industry, and will continue to do so. We are not a party that has a problem and just sets up a committee; we are a Government who deliver and meet the demands and asks.
If I may, I will quickly deal with the allegation that we have been cosying up to China. Not at all: the Prime Minister was very frank with President Xi when he came over, and made our position clear. The EU will make the decision on market economy status. Yes, there is a good argument for our wanting China to have it, but we have also made it clear that if a country wants to be part of the game, it has to play by the rules. That seems a sensible approach.
People in Corby were concerned to hear the news about job losses this morning. My thoughts are with my constituents, and I will do everything I can to help all those affected. One question they have relates to Chinese dumping. What steps are Ministers taking to apply pressure on the EU to take the strongest possible line with the Chinese and to expedite these dumping investigations?
As I said, in July, and then again in November, we took that action for the first time. The Secretary of State went over to Brussels, and, as a result of his holding an emergency meeting, put pressure on the EU. We have already seen a big change in how China operates when it comes to dumping—it is not just from China, I should say; several other countries do it. China has taken action on rebar in a way not seen before, as a direct result of this Government’s work to protect our steel industry.
I thank the Minister for her statement and for giving me early sight of it. May I say how terribly sad these redundancies are, following on from the announcements last year, including the mothballing of Dalzell and Clydebridge? For our part, our solidarity and thoughts are with all those who face an uncertain future, wherever they are.
I welcome what the Minister said on derogations and procurement. I reiterate the fact that we have an exceptionally difficult trading environment for steel production, which is partly driven by the 645 million tonnes of excess supply this year. However, Chinese steel exports alone are likely to exceed 100 million tonnes this year. In that context, the governmental talks with the European Commission are vital. Will the Minister press for fast-tracking the investigation into Chinese steel exports?
At home, all Governments must support the workers and communities affected by all the announcements. In Scotland, the primary focus is on finding a viable future for Dalzell and Clydebridge, for which I understand there are serious interested parties. Will the UK Government be as positive and as forthcoming as possible, within the rules that apply, in support of any viable buyers for any of the plants?
May I briefly ask the Minister two specific questions? She said a number of things on energy costs that I welcome, but will her Department keep that under very close review to make sure that, should that be insufficient and additional help can be provided, such help is given at the earliest possible opportunity?
Secondly—this mirrors the shadow Secretary of State’s final point—the steel industry is vital, but it has suffered from the absence over decades of an industrial strategy. We discussed that in a debate last week. Will the Minister bring forward, or have her Government bring forward, a credible, coherent industrial and export strategy centred on steel at the earliest opportunity?
I thank the hon. Gentleman for his comments. It has absolutely been a pleasure to work with Fergus Ewing—I think that is the correct way to refer to him—with whom I have had such discussions. I of course fully back all efforts to sell Dalzell and Clydebridge, and I very much hope that a buyer can be found. Any support that the UK Government can give will be given.
The hon. Gentleman made good points about energy costs, but as he will know, the state aid rules are really strict when it comes to any support we give the steel industry. He talked about the future, but I would say this. One of the things we have done as a Government—this has never been done before—is to look at all the huge infrastructure projects that we are rightly putting together, at huge cost to the taxpayer. That includes HS2, for example. We have assessed the steel needs of all those projects, and we have given that assessment to the steel industry, so we are already doing that sort of work. We are looking not just at the next five, 10 or 15 years, but right the way down the track, if I may use that expression, at the sort of work the Government are doing to invest in our infrastructure, and we have put our steel requirements to the industry.
I know that this may sound a little emotional, but it is our absolute intention and we are absolutely determined that the steel used in HS2 will be made in this country. That is not just at Scunthorpe; we also want to ensure that there are blast furnaces in south Wales. That is our determination, and we are working towards it.
The Minister is right that the Government need to ensure that every penny of public money spent, directly or indirectly, on steel procurement should be spent on British steel. Is she now saying she has secured such changes in European law and rules that she can actually specify that all railway and construction steel paid for by Britain will be British? That is what I want.
I am amazed that my right hon. Friend, who I thought was a real free enterprise chap, takes such a view. [Hon. Members: “Oh!”] That is a gentle chide. We are two good friends who agree on many things.
The most important point is that we have changed the procurement rules. We are the first ever country in the EU to take advantage of doing so. There is now absolutely no excuse for any Government contract not to include buying British steel and, indeed, other metals such as aluminium.
I assure the Minister that the people of my constituency are listening carefully to what is being said today. I also assure her that there is palpable anger and frustration among my constituents. The claimed action on energy has still not been implemented. The claimed action on procurement amounts to so-called open advertising, while Hinkley Point has no British steel. The Government use the EU as an excuse for delay, while being China’s chief cheerleader in Europe.
Is it not clear to the Minister that urgent action to sustain a steel industry in Britain is of the highest national priority? No more excuses, dodges or delays. Will the Government confirm here and now that they will not support market economy status for China? Will the Government immediately establish a strong, long-term steel strategy with Tata and the unions? If they do that, there is a future; if they do not, there will be a wasteland.
Of course, this is all about all those men and women who work at Tata at Port Talbot and their families. Our thoughts are with them today. I pay tribute to some of the work that the hon. Gentleman has done. I met the leader of Port Talbot port and I hope that we can continue that discussion, because there is much that can be done.
I say to the hon. Gentleman that it would really help if we all worked together on this, because we all agree. I am not going to say what he said about China and market economy status at all. There is a good argument that it should have that status. [Interruption.] Yes, there is a good argument, but as I say, China has to show us that if it is in the game, it plays by the rules. It will be for the EU to look at all the evidence before it makes its decision on that.
Chinese steel manufacturers are offering added-value services such as steel polishing and finishing free of charge, making the UK steel industry and our businesses less competitive. Will my right hon. Friend outline what steps the Government are taking to support UK businesses in offering those added-value services?
I strongly suspect that it is quite a long list, so I undertake to write to my hon. Friend in full with exactly the detail that she wants. This Government absolutely get and understand business. We support British business, wherever it may be.
The job losses that have been announced today are a huge blow to communities across south Wales. Workers in Llanwern in my constituency are directly affected, as are the workers who were seconded to Port Talbot when the hot strip mill in Newport was mothballed last year. We are thinking of those workers today. Steelworkers have made huge sacrifices over the years and have done everything they can to help the company during these particularly tough times. Can the Government say, with hand on heart, that they have done the same? Despite what the Minister has said today, the industry and the unions say that the action has been far too slow.
I am in danger of repeating all the things that I have said about what we have done. Where I agree absolutely with the hon. Lady is that we must not forget Llanwern and the huge impact that this news will have. As she rightly says, it follows the mothballing last summer. I pay a huge tribute to all those who work in our steel industry. They are highly skilled, highly prized workers. I know that for many reasons, but I am always reminded of my visit to Redcar and of the whole workforce that worked at SSI. These are highly skilled people.
The final thing to say is that there is no debate about the fact that a large number of steelworkers have made considerable sacrifices. When I went to Scunthorpe, I met a group of workers who were represented beautifully and brilliantly by their excellent trade union leaders. It was striking that these men—the majority are men, so forgive me; it is striking that these men and women had taken pay cuts and made the ultimate sacrifices. This is a very sad day and that is not lost on us, but we are determined that steel will continue to be produced in south Wales and in Scunthorpe.
As one who was brought up in Sheffield, I ask the Minister whether she accepts that the deadly combination of EU energy law, EU subsidy law and EU dumping law means that, although the Government may want to achieve a solution to this problem, ultimately they cannot do so without leaving the European Union.
Here is a surprise: I do not agree with my hon. Friend’s analysis, or his conclusions. When the Secretary of State went over to Brussels and led the charge, I found in the conversations that I had with my equivalent Ministers throughout the EU that we had all come together. I think that by working together, we can assure the future of the steel industry not just in our country, but throughout the European Union.
The Minister has just invited us to believe that Europe offers an equivalent to her. You learn something new every day. Scunthorpe was mentioned, so let us hear from the fella. I call Mr Nic Dakin.
It is strange that Redcar did not meet the criteria for exceptional growth funds, but I am pleased the Minister has indicated that they will be used to assist the Greybull Capital interest in long products. The Foreign Secretary stood at that Dispatch Box and said that the Government will judge market economy status through “the prism of steel”. Will the Minister confirm that there will be no drawing back from that position?
I always try to be honest and helpful to the hon. Gentleman. I did not hear that comment from the Foreign Secretary, but I assure the hon. Gentleman that I will take it up with him. As he knows, we are working hard to secure the future of the blast furnaces at Scunthorpe, and we are determined that British steel will continue to be made in this country and that it has a sustainable future.
Today’s announcement will be a bitter blow to all communities affected, not least Port Talbot where relations between the unions and the Tata management have been excellent. My right hon. Friend mentioned that the Government will be participating in the taskforce that is to be assembled to address this issue. Can she confirm that the Department for Work and Pensions will be heavily involved so as to ensure, if at all possible, that those affected by redundancy will be redeployed?
I completely agree with my right hon. Friend and his analysis of the effects of these events throughout south Wales. It is not just the workers who face redundancy, because we know that this will have a huge impact on the local economy right the way through the supply chains. I assure him that we will work with the DWP in these circumstances, and it will send in almost emergency teams to start work now, before any compulsory redundancies are made. That work will be, and is being, done.
The Minister owned up to the failure to implement reform of business rates as part of the toxic package that the steel industry is confronting. Will she examine that issue and provide assurances that in advance of next year’s business rates proposals, the Government will consider putting in place a special package to give some relief to this beleaguered industry?
I did not say that we had failed—we have a review going on and it has not come to any conclusion. The hon. Gentleman must remember that in Wales business rates are devolved, and it is up to the Welsh Government whether they want, or can, do anything to assist Tata. Of course we will do everything that we can to support our steel industry, but always within the unfortunate confines of the state aid rules.
With all due respect, I do not think that the Minister answered the question from my hon. Friend the Member for Stone (Sir William Cash)—she just said that she disagreed with him. It seems to me clear that if we were not in the European Union, we could have acted differently and more quickly. Will she at least agree with that?
No, I am afraid I do not agree with that. I think we are better within a reformed European Union, and this is a good example of the benefits of our continuing membership of the EU.
Port Talbot and Trostre are situated within an EU tier 1 assisted area. What consideration has the UK Government made of a holiday for employer national insurance contributions to help Tata reduce its employment costs?
That is exactly the sort of conversation that I am more than happy to have with—I nearly said my right hon. Friend, but the hon. Gentleman might take exception to that. I am more than happy to discuss that issue with him.
Following the collapse of the Caparo group towards the end of last year across the west midlands and other parts of the country, the administrator PWC has been able to salvage a considerable amount of the business and secure local jobs, including in my constituency in Cradley Heath. Notwithstanding the action that the Minister has taken on steel, does she agree that serious questions need to be answered about the financial management of the Caparo group that led to its collapse in the first place?
Quite simply, I would not know but, again, I am more than happy to have that discussion with my hon. Friend because, if that is right, it is a very serious matter.
The people of Redcar and Teesside are still dealing with the repercussions of the tragedy of the loss of our steel-making facilities and our 175-year history of steel making. They will send their solidarity and their thoughts to the people of Port Talbot, Llanwern and other areas that have lost their jobs in the past few days.
The Minister has again refused today to acknowledge the impact that market economy status for China will have—it will destroy the future of British steel making because, in a sense, it will facilitate Chinese dumping. She says she has sorted that and ticked the box, but that is not the case. I urge her to think again about market economy status for China.
I listen to the hon. Lady’s arguments and it is always good to have that debate with her. I am not saying, “It’s all sorted on dumping,”—[Hon. Members: “Yes, you did!”] Well, we have ticked the box in terms of getting on and doing something about it, but no doubt the steel industry will raise more concerns. The industry raises its concerns with the EU but, for the first time—this is rich coming from the Opposition—we have voted in favour of taking that action, not just once but twice; and now we have rebar, so we are making good progress.
Does my hon. Friend agree that UK companies that want to export their products need to source the cheapest steel they can if they are to be competitive in the world market, and that, realistically, the UK steel sector will always struggle in the long term if foreign competitors can produce steel cheaper than we can?
If I may say this to my hon. Friend, one absolutely striking thing about the British steel industry is the quality of the product. That is one of the main reasons why people want to buy British steel—they know it is the best in the world.
It is many years since the steelworks in my constituency closed. Some would say that the local economy has never fully recovered. My constituents therefore understand well the fear and worry that will exist in the community in south Wales and elsewhere in the country after the news today. Will the Minister be clear with the House on exactly where the Government stand on the question of market economy status for China and how it relates to anti-dumping rules?
The Prime Minister has spoken about the fact that we think it could be good for China to have market economy status, but the decision will be made by the European Union. We take the view—I am repeating myself, but this is important—that, for China to get that status, it must show that it will play by the rules and provide the evidence that it is playing by the rules.
My right hon. Friend is absolutely right about the quality of British steel, but the quality of some imports leaves much to be desired. What work is being done on steel quality standards so that British steel can flourish both domestically and in export markets?
A number of companies—I am thinking, for example, of Celsa, a Cardiff-based company that I met—are keen to make the point about whether or not imports are of the same quality. Yes, we have looked at the standards. Sadly, we have not always made progress, because an independent body makes those decisions. It is not the job of the Government—unfortunately, we have no influence over it—but my hon. Friend makes an important point. It is one we advance all the time.
Job losses at Port Talbot and Trostre are devastating for the people and communities in south-west Wales. Many of my constituents in Neath who work at Port Talbot and Trostre will suffer. I endorse the words of my hon. Friend the Member for Aberavon (Stephen Kinnock) and ask again what urgent action the Government will take to help, apart from offering warm words.
I am not going to go through all the things we have done again, but I assure the hon. Lady that we will work with the Welsh Government. We have asked to be part of their taskforce and I very much hope that they will have the UK Government as part of it—it is very important.
I thank the Minister for all the work and support she is providing to all of us affected in Scunthorpe—it is really appreciated—and for her commitment to support the sale of the site to Greybull, which I and other local MPs will meet later this week. On the specific issue of support to those who have been affected by job losses thus far, £9 million has already come our way. One question that has come up at our local taskforce is: how much of that money can be used, and how flexibly, to support new jobs as well as current ones? If we make a representation to her on that, can she assure us of maximum flexibility so that the money can be used to create new jobs as well as supporting existing ones?
The short answer is yes—that will please you, Mr Speaker—but, as the hon. Member for Redcar (Anna Turley) knows, when I find out about any difficulties I do not mess about in getting them sorted. We do not want any nonsenses. My hon. Friend knows my door is always open, so we can sort things out.
The Minister has spoken about the state aid rules, yet the Italian Government have perfectly permissibly provided assistance to their steel industry on the basis that it constitutes environmental protection. My father worked in Llanwern steelworks for nearly 40 years and I know at first hand the sacrifices that so many steelworker families made over many years. Do they not deserve a Government who are willing to do so much more than this one?
I pay tribute to all those, including the grandfather of my hon. Friend the Member for Vale of Glamorgan (Alun Cairns) and, I think, my own great grandfather, who have worked in steelworks. None of these things matter. The important thing is to make this absolutely clear. We know the great value of all steelworkers. The hon. Gentleman asked me a question that I have now completely forgotten. [Hon. Members: “Italy.”] Italy—another huge myth. The Italian Government are in the process of selling their steel industry. We will see if there are any buyers.
I pay tribute to the Minister, as I am aware of the enormous personal effort she has put in to mitigate the impact of job losses. Will she reassure the House that the Government’s investment in retraining and reskilling workers will end up in the pockets of those workers, not of consultants or accountants?
Yes, absolutely. We know that in the past that has not always been the case. My hon. Friend and I come from coalfield areas, where there was always concern about whether taxpayers’ money in Government schemes was properly spent. I am hopeful—in fact, I am sure—that the money we made available for workers at Thoresby colliery will be properly spent. If it is not, I want to know about it and we will sort it out.
May I press the Minister? Will the Treasury find a way to provide the extra resources to the Welsh Government to reduce business rates at Tata? That would help to keep steel alive in south Wales.
They wanted that as part of their devolution settlement, of course. There is a good argument that if one gets what one asks for, one has to take the consequences. At the moment, however, no such request has been made. If a request is made, whatever it may be, we will always listen.
When I walked through the Crossrail tunnels with the Transport Committee, the bosses stressed the high level of British procurement as part of the project. Does the Minister agree that we can win hearts and minds on the HS2 project, which is worth billions and billions of pounds, by putting British steel at its heart?
Yes, absolutely. We are all hugely proud of the fact that Crossrail, a fantastic multibillion-pound project, has been built with British steel—and that is because it is the best.
My constituency is next door to Aberavon. Many of my workforce travel into Aberavon on the A48 to work and have done so for many years. There is a real risk that the critical mass of the steelworks in Port Talbot will be endangered by the job losses. May we have an assurance from the Minister that there will at least be interim relief in business rates? That is the big issue that will make or break the viability of the works and the jobs there.
That is a good argument, but not one to put at my door. This matter is the responsibility of the Welsh Government, because, as the hon. Lady knows, it is devolved. There is other work we could do: we have been discussing with Tata for a long time whether the land is being best used, and there is a lot of work we can do with the port to make it much more viable. We can look at other ways to ensure we make full use of the port by Port Talbot.
Today is a sad day for the south Wales steel industry, particularly in Port Talbot. Many of its steelworkers live in my constituency. Over the weekend, there has been quite a lot of rhetoric from the First Minister of Wales about the responsibility for recovery lying at Westminster. There are many economic levers in Cardiff Bay that could be used, in particular business rates, which have just been mentioned. Does the Minister agree that the First Minister would be better off employing his time by ensuring that those levers are used, rather than by engaging in tribal politics?
I completely agree with my hon. Friend. This is not a time to play party politics; it is a time for everybody to come together and do the best thing by Britain’s steel industry.
The Minister just said that there is no excuse not to buy and every reason to buy British steel, so what discussions has she had with her colleagues in the MOD about procuring British steel for defence contracts? In particular, has she discussed the future of Sheffield Forgemasters, which is vital if we are to procure a new generation of nuclear submarines?
The short answers are yes and yes. The value of Sheffield Forgemasters is not lost on anybody, especially those concerned about the future of our defence sector.
In an earlier answer, my right hon. Friend talked about playing by the rules and added that there was no reason why we could not use British steel. As I understand it, however, EU law means that my right hon. Friend cannot guarantee that. Is that not correct?
I do not think it is as simple as “cannot guarantee it”. We live in a free market economy. That means that anybody must be free to buy from whomsoever they feel will give them the best deal. My point is that when it comes to this Government’s own procurement rules and what can be done with taxpayers’ money, we have made those rules such as to provide no excuse for anybody not to buy British steel—and because it is so good, there is every reason why they should.
Although the measures announced by the Government are welcome, they are very limited. Does the Minister not accept that unless we tackle the issue of Chinese dumping, the whole future of the whole UK industry is at threat, and that the clock is ticking—we do not have much time left?
That is important, but it does not provide the answer. The price of steel has plummeted not just because of worldwide over-production, but because consumption of steel has not even reached where it was before the crisis. It is not as simple as merely dealing with Chinese dumping.
The Minister talks tough on procurement. Why, then, under the terms of the contract struck between this Government and EDF, are UK companies capable of producing the large forgings for the Hinkley Point reactor not being given the opportunity even to tender for the work? What independent evaluation has her Department undertaken of EDF’s assertion that there are no UK companies with the relevant experience?
My right hon. Friend the Secretary of State for Energy and Climate Change is hearing all of that, so she and I will discuss it and write to the hon. Gentleman.
I welcome the belated announcements of some support for the steel industry. When can we expect similar announcements of support for other parts of UK manufacturing?
As I say, the procurement rules apply not just to steel but to other metals. In fact, I think they apply to almost everything. I will need to go back and check all the way through that, but aluminium provides a very good example. Let us be absolutely clear: I am very proud of this Government’s and the last Government’s record. The fact that more than 2 million more people are in work—unfortunately, it is lost to most Labour Members—provides a proud record for this country.
The Minister provided details of the updated procurement guidance and, as my hon. Friend the Member for North Durham (Mr Jones) pointed out, said that there was no excuse not to buy and every reason to buy British steel. Of course, the ability for the industry to do so is constrained by the fact that its range of capabilities has been lost and limited to a great degree over the last few decades. In other words, British steel does not make the range of components and specialised range of steel products that it did years ago. What, then, are the Government going to do to support the industry, as we propose with Forgemasters, to secure investment and develop a new range of capabilities? We will not see high UK content in our infrastructure projects until that issue is addressed.
The hon. Lady may have made a good point, but I think that what is most important is that, in the face of an unprecedented crisis affecting the whole steel industry throughout the world, the Government are absolutely determined to secure—and have already started working to secure—the long-term sustainability of the ability to produce steel, both in Scunthorpe and in south Wales. Members can chunter on about what other European Union countries are doing, but we have examined the evidence, and there is a lot of mythology. This country has taken the action that is needed, and is saying clearly to Tata and Greybull, “We will help you to secure this deal in any way we can”, and to Tata at Port Talbot, “We will do everything we can to support you in your determination to continue to produce steel in south Wales.”
On the issue of anti-dumping, at a European level, why have the United Kingdom Government led a blocking minority at the Council of Ministers to prevent trade reform?
I am afraid that I just do not accept that. The Secretary of State has led the charge. He went over to Brussels, and he set up an emergency committee to look specifically at the problems facing the steel industry. I think that we are doing the right thing.
One of the most frustrating experiences for steelworkers in my constituency, throughout south Wales and throughout the United Kingdom, is knowing that the previous Government were warned again and again and again about the challenges facing the industry. The Minister has told us about the actions that she has taken in the last few months—many of which I welcome, as she knows—but can she say, hand on heart, that the previous steel Minister and the Chancellor did everything they could when they were warned again and again and again about the crisis?
Yes; and what I will say about my Department is “Thank goodness we have a Conservative Secretary of State.”
May I ask what the Minister’s assessment is of the optimum level for the strategic steel industry, especially in the light of her comments about wanting to use British steel for major UK infrastructure in the future?
As I said earlier, the Prime Minister has said that this is a vital industry, and we are absolutely determined to have a sustainable steel industry, producing steel in blast furnaces in Scunthorpe and south Wales.
Before Christmas, the OECD held a meeting about steel that the Chinese delegation refused to attend. Obviously, every other country’s representatives wanted to talk specifically about Chinese dumping.
What is the Government’s position on Chinese market economy status? Are they in favour of it, whether inside or outside the European Union, and whether or not China signs up to the emissions trading system agreement that was signed in Paris? Will the Minister please tell us how on earth we will have a manufacturing sector at all by the autumn—when the European Union will make a decision on MES—if China is allowed to dump with such abandon in the absence of any proper control, whether in this place or in the European Union?
As I have said, MES is a matter for the European Union, and as I have also said, we are broadly in favour of it, but we have made very clear that China will only get it if it proves that it can play by the rules.
The Minister cannot have it both ways. Eventually, as surely as night follows day, global consumption will increase, demand will increase, and the price of steel will increase. What assessment has the Department made of the long-term impact, not only on UK competitiveness but on our own domestic economic strategy, of this vital industry being so badly depleted?
What we do know is that if the Labour party is ever in charge of our country’s economy again, it will take us back to the brink of bankruptcy, as it did last time.
I am most grateful to the Minister and to colleagues.
Energy Bill [Lords]
I remind the House that I have certified clause 79 of the Energy Bill (Lords) under Standing Order No. 83J in relation to England and Wales. I further remind the House that that does not, repeat not, affect proceedings in the debate on Second Reading, or, indeed, in Committee or on Report. After the Report stage, I will consider the Bill again for certification, and, if required, the Legislative Grand Committee will be asked to consent to certified provisions.
I beg to move, That the Bill be now read a Second time.
This Government are focused on securing a better future for Britain. As the Chancellor set out to the House in his autumn statement:
“our job is to rebuild Britain...so that we leave to the next generation a stronger country than the one we inherited.”—[Official Report, 25 November 2015; Vol. 602, c. 1357.]
Achieving this vision for Britain means ensuring our energy security.
Our modern society simply could not function without the electricity, oil and gas we use to heat our homes, power our business and industry, and drive our transport system. The wellbeing of our economy and our citizens requires that the first priority of the Department of Energy and Climate Change should be energy security. But no responsible Government should take a risk on climate change either, because it is one of the greatest long-term threats to our economic security.
I will give way to the hon. Lady.
Order. Before the hon. Member for Wirral West (Margaret Greenwood) intervenes, I should have said to the House, in case people are waiting with bated breath, not least an hon. Member from Brighton, that the amendment, although orderly, has not been selected. I wanted to release the hon. Member for Brighton, Pavilion (Caroline Lucas) from her misery before we proceeded further. We took the view that there was adequate opportunity for her to dilate on these important matters, and I feel sure that she will not disappoint us in that, or any other, regard.
Underground coal gasification is an issue of major concern in my constituency, because Cluff Natural Resources has been granted a licence for the Dee estuary, which runs along the side of the constituency. In the Secretary of State’s speech of 18 November she announced the Government’s welcome intention to close coal by 2025 and restrict its use by 2023, commenting that coal is the most carbon-intensive fossil fuel, damages air quality and is simply not sustainable in the longer term. As the Government are proposing—
Order. This is a very long intervention. If the hon. Lady could come to her question and finish, that would be great.
As the Government are proposing to end burning coal in coal-fired stations above ground, will the Secretary of State now clarify their position on underground coal gasification, which involves burning coal underground?
I urge the hon. Lady to participate in the consultation we will be having shortly about the timing of the ending of coal. That would be an ideal opportunity for her to make her point on behalf of her constituents.
The historic agreement in Paris in December is a significant step forward towards reducing, on a global scale, the emissions that cause climate change. For the first time, nearly 200 countries have made a commitment to act together and to be held accountable. This agreement will help protect not just our environment, but our national and economic security.
Our national progress has been good to date, with greenhouse gas emissions down around 30% since 1990. Between 2010 and 2014 the UK’s greenhouse gas emissions fell by 15%, one of the biggest reductions in a single Parliament. Indeed, in 2014 we saw a reduction of 8%, the largest reduction measured in a single year. That is a fantastic achievement against the backdrop of an economy that grew at 2.9%. In June we will be setting the fifth carbon budget covering 2028 to 2032 and by the end of the year we will publish our new emissions reduction plan, on which we are already working with colleagues across Whitehall.
The emissions reduction plan will provide full details of our policy approach, but we already know where we will need to take more action: energy efficiency; a long-term framework for heat; emissions reduction in the industrial sector; and, of course, in transport, where progress has been slow. In all these areas we will need new thinking and we will work with academia and business to develop proper long-term plans.
Not being one who is too concerned about CO2, may I ask whether the Secretary of State can tell us how much of the reduction in our CO2 emissions is due to the fact that we are exporting jobs to other parts of the world, as we have just heard in the statement on steel?
I hope that the hon. Gentleman will take some comfort from the Paris agreement. Although the UK has possibly the most ambitious climate change targets in the world, the Paris agreement will go some way towards addressing the competitive issue that he has raised because other countries are also taking on obligations to reduce their carbon emissions. I specifically highlight China in that regard, which is now part of a global agreement for the first time.
As part of our action, the Government are focused on seeing through a long-term plan for secure, clean and affordable energy supplies for generations to come. The Bill delivers key manifesto commitments to achieve that objective. Over the next Parliament, that means ensuring that we continue to support investment in UK energy sources, including in the North sea. It also means continuing to support the deployment of new renewables so that we meet our objective of producing 30% of our electricity from renewable sources by 2020.
If the Secretary of State still intends to scrap the onshore wind subsidy, will she tell us whether she intends to promote a more expensive form of renewable energy or simply to miss our renewable energy targets? Will she confirm that according to the Department of Energy and Climate Change’s estimate of the annual savings as a result of her proposals on onshore wind subsidy, the savings in the lowest range will be just 30p a year?
The right hon. Gentleman asks me a false question. The fact is that we have to deliver on our manifesto commitments, which is why we will be ending onshore wind subsidies. However, we will still be making our target, which in 2012 we put at 11 to 13 GW by 2020. That is consistent with our progress on our renewable targets. In regard to the amount that will be saved through taking these actions, our lowest estimate is about £20 million a year and our highest is about £200 million a year. Those are significant sums, and I urge him not to discount them by making them sound quite so trivial.
Further to the point that has just been made by the hon. Member for East Antrim (Sammy Wilson), I do not agree with the way he put it but he made an important point, in a sense. The Minister is proudly talking about the way in which our emissions have come down, but if we take into account our consumption emissions—in other words, the emissions that are linked to our consumption patterns when we import things from places such as China—does she agree that our emissions have actually gone up? We must take some responsibility for those industries that we have outsourced to places like China while we enjoy the benefits of them here.
The hon. Lady should speak to the hon. Gentleman, who takes a slightly different view—
But what is the answer?
I will come back to the hon. Lady and say that she, too, should take comfort from the Paris agreement, which will oblige all countries to take action in this important area.
The other activities we are taking on in order to deliver on our low carbon future is to press ahead with a new fleet of nuclear power stations. We are also encouraging new gas-fired power stations so that we can end the use of coal for electricity generation by 2025.
Does the Minister accept that only 2.5% of world energy is created by nuclear power? If that were to rise to 15%, uranium ore would run out within 10 years. Given that 80% of fossil fuels cannot be exploited without breaching our climate change targets, does she accept that she is simply not doing enough on renewables?
I urge the hon. Gentleman to think carefully about the importance of striking a balance. However important we think renewables are—and we do—we need also to have absolutely secure base-loads so that there is never any risk to energy security. That is why this Government are so committed to delivering on nuclear.
Before the debate today, I checked and discovered that 1% of our power is currently being generated from wind, 30% from coal and 42% from gas. Does that not show us that the Secretary of State is right not to rely on all these renewables, because if she did, all the lights would go off?
I thank my right hon. Friend for that helpful comment. He is indeed right: it is absolutely essential that we have a secure base load while we deliver on our renewable targets as well.
Simply meeting the targets we have set ourselves is not sufficient if we are to secure energy security and decarbonisation. We have to achieve this in the most cost-effective way. Subsidies should be temporary, not part of a permanent business model. New, clean technologies will be sustainable at the scale we need only if they are cheap enough. We need to strike the right balance between supporting new technologies and, as costs come down, being tough on subsidies to keep bills as low as possible. We can only expect bill payers to support low carbon power as long as costs are controlled.
The Energy Bill is intended to enact our manifesto commitments in two key ways: first, by continuing to support the development of North sea oil and gas by implementing the recommendations of the review by Sir Ian Wood to establish the Oil and Gas Authority as an independent regulator and steward; and, secondly, by acting to control the costs of renewable energy by ending new subsidies for onshore wind and providing local people with the final say on new applications.
Several hon. Members rose—
I am going to make some progress on those two things and then I will take a further intervention.
The North sea oil and gas industry is still of huge strategic and economic importance to the United Kingdom. It has been the UK’s largest industrial investor for many decades, supporting hundreds of thousands of jobs, especially in Scotland. Since the 1970s, the industry has paid more than £300 billion in production taxes. In 2014, the UK continental shelf produced oil and gas equivalent to well over half the UK demand, but as the basin has matured, oil and gas has become more difficult and more expensive to access. That has been brought into sharp focus of late with the sudden and sustained fall in the oil price, which is putting considerable pressure on the industry to create a more competitive cost base and increase efficiency. As a result, 2014-15 saw falling revenues and falling investment—regrettably, we are also seeing job losses. In order to continue to attract investment and safeguard the future of this vital national asset, the Chancellor set out a significant package of tax reforms for the industry in the March 2015 Budget. We went further in the summer Budget, with measures expected to increase production by 15% by 2020. In the long term, a sustainable economic future for the North sea offshore industry will be achieved only if we can maximise oil and gas recovery. That is why the last Government set up the Wood review, and Sir Ian reported that with the right strategy in place, the recovery of North sea reserves can be boosted by an additional 3 billion to 4 billion barrels over the next 20 years.
Production increased in the North sea last year, which is welcome news at a time when most news for the industry is relatively bleak. Does the Secretary of State agree that the industry is at a point where it requires sustained support from this Government, which will require fiscal measures from her Chancellor in the coming Budget?
The hon. Gentleman is, of course, absolutely right to say that great progress has been made in reducing the cost of production already, and part of the intention of this Bill is to make sure that we can deliver further on that. I share his view that we need to give as much support as possible, but it is too early for me to comment now on whether the Treasury will be able to give that support. I know that this Government are committed to making sure that we continue to support those jobs and the industry.
Does the Secretary of State accept that the reason we have the massive deflation in oil prices, other than Saudi over-consumption, is fracking? The latest evidence shows that 5% of methane from fracking goes into the atmosphere, and methane is 83% worse than carbon dioxide in effecting climate change. Will she therefore hold negotiations with the United States about reducing this methane emission and put the brakes on fracking, so that we can actually lift the price of oil and have a more sustainable future?
I make two points to the hon. Gentleman. First, the reasons for the fall in the oil price are multiple and complex. I will not analyse them here now, but there is not, as he suggests, just one cause. Secondly, the US has considerably reduced its emissions because of fracking, which of course we welcome.
Any oil and gas demand that we do not meet ourselves through domestic production has to be met by imports, at significant extra cost to the economy. Industry and government share the same ambitions and are working closely together to manage the remaining resources effectively and efficiently. As we progressively decarbonise our economy, we will continue to need oil and gas for many decades to come. It is far better that the jobs and revenue are in the UK, offsetting imports where we can. Maximising economic recovery from the UK continental shelf must be part of a balanced plan for a diverse and progressively lower-carbon mix.
This Bill will complete the work started in the previous Parliament to implement fully the Wood review. Key to Sir lan’s recommendations is the establishment of the Oil and Gas Authority as an independent regulator with a clear and focused mandate to maximise economic recovery of UK petroleum. Clauses 1 to 76 formally establish the OGA as an independent regulator and steward, which would take the form of a Government-owned company, transferring regulatory powers and functions to the OGA, and giving it new powers to support maximising economic recovery.
The OGA will take forward the principle of maximising economic recovery, set out in Part 1A of the Petroleum Act 1998, with powers taken in the Infrastructure Act 2015. In November, I launched a consultation on the strategy for maximising economic recovery of offshore UK petroleum, which is central to the OGA’s future effectiveness. An amendment made in the other place, which we will try to overturn, seeks to broaden the principal objective, greatly expanding the scope of the OGA’s role and going far beyond the vision set out in the Wood review. In our view, and indeed in the view of the industry and the unions, diluting the focus of the OGA at this critical time is not the right way to proceed. The OGA should be focusing on maximising economic recovery, as that is what it has been set up to achieve. In the current difficult and challenging circumstances, nothing should distract from that vital task.
The OGA requires clarity on its objectives, and we intend to provide that. This Government are committed to the Climate Change Act 2008, and to our target to reduce emissions by 80% by 2050. We will see the Climate Change Act framework in practice this year when we set in law the fifth carbon budget. Amendments made in the other place seek to change how we count carbon for carbon budget purposes from the fifth budget onwards. Given that the work to set the fifth carbon budget is well under way, and has been for nearly a year, and although it is right to keep our accounting practices under review, now is not the right time to change. To do so now, this far into the process, would threaten serious delay. Therefore, we will seek to overturn those amendments.
Let me turn now to the delivery of the Government’s manifesto commitments to end new subsidies for onshore wind and to ensure that local people have the final say on where onshore wind is built. On 18 June, I set out to the House our intention to close the renewables obligation for new onshore wind in Great Britain from 1 April 2016, with a grace period available to those projects which, as of 18 June 2015, already have planning consent, an offer of grid connection and access to land rights. The provisions we made in the Energy Bill to achieve that were removed in the other place, and will be reintroduced.
There is no ambiguity on this matter, as it is a manifesto commitment. We signalled our thinking on ending new public subsidies for onshore wind long before the last election and put it before the British people in black and white. There are long-established and well understood conventions with regard to manifesto commitments and we will stand firm on them.
Onshore wind has deployed successfully to date and is projected to meet the planned range of 11 to 13GW by 2020. Without action, there is a risk of deploying beyond this range, potentially adding more costs to consumer bills and squeezing out opportunities for other renewables, such as offshore wind, to mature and bring down their costs. We have engaged widely on the June proposals, including with devolved Administrations, supply chain, investors and developers. It is important that Northern Ireland closes the renewables obligation to onshore wind on terms equivalent to those of Great Britain.
I thank the Minister for giving way again. Will she spell out the consequences for Northern Ireland should the Northern Ireland Executive decide to maintain the subsidies for longer than the period after 2016?
The hon. Gentleman raises an important point. It is my position that, if Northern Ireland chooses to provide additional support for onshore wind, the consumers in Northern Ireland, and not Great Britain, should bear the cost.
We must make strategic choices on where public money is directed, because we cannot afford to support every project and every technology regardless of its contribution to energy security, and regardless of the cost. We need to concentrate our support on where technology has the potential to deliver at the significant scale that we need for energy security and decarbonisation, and where, to be viable, we still need to see significant falls in costs for technology.
In that context, will my right hon. Friend clarify when the next contracts for difference round for these new advanced technologies will be held, and whether the widest possible range of those technologies will be suitable for that round?
My hon. Friend raises an important point. We have confirmed that there will be three new auctions for offshore wind. We are looking now at what would be included in that and the best way to drive down prices, because this Government are clear that that support will continue only as long as we continue to drive down prices, which is critical to looking after consumers.
The Bill will transfer consenting decisions about onshore wind to local authorities. On a technical point, can the Secretary of State confirm that in the case of Wales power will be handed to Welsh local authorities, not the Welsh Government?
The hon. Gentleman raises two points. We have said that we are devolving to local communities and that we are ending new subsidies, so it would currently be unlikely for a new onshore wind project to go ahead, but we have agreed to discuss with developers the prospect of onshore wind without subsidy if it has local community support. In respect of Wales, I will discuss with the Welsh Government the best way to deliver on the hon. Gentleman’s suggestion. Rest assured, the devolved Administrations are fully aware of the plans and now support them.
In pursuance of those strategic choices, we are pushing forward with proposals for low carbon base-load with a new fleet of nuclear power stations, and we are consulting on a closure date for coal and working to get new lower carbon gas-fired power stations built. Energy security must come first because it is the foundation of our future economic success, but that future must be low-carbon too, because climate change is one of the greatest long-term threats to our economic security. That low-carbon future cannot be achieved at any cost, because it is the hard-working families and businesses of Britain that are ultimately footing the bill.
North sea oil and gas production has helped us to fund our public services, such as the national health service, through the taxes it has generated which are worth hundreds of billions of pounds. It has improved our national security by reducing our dependence on imports from other countries. It has bettered our energy security by providing a reliable supply of gas and oil, fuels that will continue to play an important role in our energy mix, particularly for heating and transport, as we become a lower carbon economy. Crucially, the North sea also sustains hundreds of thousands of skilled jobs in Scotland and the north-east of England and in world-class supply chain businesses right across the country.
For these reasons there has been a cross-party consensus for some considerable time that we should do everything we can to protect those jobs and to continue to maximise investment in our North sea oil and gas industry. The incredibly tough economic conditions faced by businesses operating in the waters off our shores because of the major fall in the price of oil only underlines the need for parties across this House to work together to get on and implement the recommendations of the independent review produced by Sir Ian Wood.
The hon. Lady talks about the oil price. Does she agree with her hon. Friend the Member for Swansea West (Geraint Davies) that we should be trying to lobby the American Government to reduce shale output and increase the oil price?
One of the most important things we can do to help boost jobs and skills in the North sea is to have a long-term plan. I will say more about that as I make progress.
Does the shadow Minister agree that to a certain extent she is speaking with forked tongue? On the one hand she is saying that we have to decarbonise the economy, but on the other she is saying we have to increase the output of a carbon fuel—oil. Which is it? Does she want to decarbonise the economy or does she want people to buy oil?
Perhaps I can help the hon. Gentleman with that, as it is one of the things that he obviously struggles to understand. As we move towards a clean economy—there is widespread agreement in all parts of the House that that is a journey we must take—we need to think, too, about where we get our energy from in the short to medium term. There is no question about this—it is a fact that we will need to rely on oil and gas in the short to medium term. Because of that, the question that we face on all sides of the House is whether we import that oil and gas or generate our own.
Our view is that this transition must be made with due care and attention to the jobs, skills and investment we need in this country. It must also be made with due care for our environment, our health and our safety. That is a difficult thing to achieve. I very much welcome the fact that we are having this debate, but it seems to me that pitting the interests of the industry we currently have in the North sea against our interests in transitioning to a clean economy will not get us very far at all.
Does my hon. Friend therefore agree that, with regard to the need to convert to renewables in the long run, one of the dangers of a very low oil price, other than restricting margins in the oil industry, is crowding out investment in renewables, and that therefore the cost-effectiveness of investing in renewables now should not be engaged by the current spot price of oil in the marketplace?
My hon. Friend has made several comments, some of which I agree with and some of which I do not, but I think he is right to point out the very real problems created by the falling oil price, such as the economic conditions faced by businesses currently operating in the North sea. It is clearly in our national interests to move forward with the recommendations made by Sir Ian Wood. That is why we must move ahead with his proposals to establish the independence of the new Oil and Gas Authority, and why we support the Government’s steps to progress that plan. As the North sea enters a new, mature phase and as investment flows into decommissioning offshore installations, I hope that Ministers will do everything in their power to ensure that that work is completed using the skills and expertise held by workers in the yards of Fife and the north-east of England.
I commend the hon. Lady for her bipartisan approach to the Bill. She has talked about the Oil and Gas Authority, which of course will set fees for the services it provides, and the Secretary of State will be able to determine what those fees should be. Can the hon. Lady indicate at what level she thinks the Opposition would set those fees, and for how long?
I am grateful to the hon. Gentleman for that question, which the Secretary of State will have heard. I am sure that either she or the Minister of State will attempt to respond to it later in the debate.
It is clear that there are still substantial remaining oil and gas reserves in the North sea, and future investment must absolutely not be limited to decommissioning activities. We remain the second largest producer of oil in Europe, after Norway. There are 300 fields currently in production, and it has been estimated that as many as 20 billion barrels of oil and gas remain to be exploited in UK waters. Much of that is understood to be in hundreds of small and marginal fields, which are much more difficult and expensive to exploit, so it is important that the newly independent Oil and Gas Authority is able to maximise investment in those fields if we are to seize that potential. That will require strong powers to encourage collaboration within the industry, resolve disputes between firms, and drive greater efficiencies to make further extraction viable, including consideration of costs.
Does the hon. Lady also agree that it is not just a matter of extracting the remaining oil from around the United Kingdom but about the huge oil and gas support services industry, which does so much around the world, contributing to the balance of payments and to jobs in the United Kingdom?
Yes, I agree. In particular, the ripple effect of what we do now in relation to North sea oil and gas will be felt not just directly by the workforce employed there, but by the UK workforce as a whole and around the world.
The Wood review also noted that carbon capture and storage has the potential to be of huge benefit.
Is not the awful truth at the moment that, with oil at $29 a barrel, there will be practically no new investment in new projects in the North sea because it simply is not viable? What does the hon. Lady’s plan suggest on that?
We were keen to explore the future potential for the North sea for two reasons, one of which is the potential for the oil price to rise in future. While we have a rigged infrastructure worth a substantial amount of money still standing there, now is the time that we ought to explore the use to which we could put that infrastructure in the short term while trying to predict longer-term trends.
The fourth recommendation in the Wood review was that the Government need to work with industry to develop strategies in different areas, including for carbon capture and storage. Lord Deben, one of the Government’s own chief advisers on energy policy, argued that
“it would be very odd to produce legislation that did not allow specifically for the transportation and storage of greenhouse gases.”—[Official Report, House of Lords, 7 September 2015; Vol. 764, c. 1227.]
Lord Oxburgh, the former head of Shell, said:
“We need some kind of strategic framework within which private industry can operate in the CCS area.”—[Official Report, House of Lords, 19 October 2015; Vol. 765, c. 483.]
They are absolutely right. Some of the infrastructure in the North sea could be used to create an entirely new maritime industry with very many new jobs. This would also help us to realise the commitments on climate change that the Prime Minister and the Secretary of State recently agreed, rightly, at the Paris summit.
While the shadow Secretary of State may indeed be correct that there is an opportunity for a new industry, does she not agree that to include it in this Bill would be to put an unnecessary burden on the industry at a time when it is challenged in an international market?
The Wood review pointed to the need for the Oil and Gas Authority to be able to take a strategic view. It also pointed to the need for us collectively, including Government, to consider a long-term strategy for carbon capture and storage. In our view, unless the Oil and Gas Authority is tasked with considering the future of carbon capture and storage, it will not form part of the plan. As I said to the hon. Member for South Suffolk (James Cartlidge), now is the time that we ought to be considering what the long-term future of the North sea is. That simply cannot afford to wait. We also believe very strongly that this should not come at the cost of jobs in the North sea in the immediate term. However, we should not let our urgent need for short-term solutions preclude longer-term thinking. In future, CCS could become a huge new North sea asset. That is why we propose that consideration be given to the opportunities that exist to use North sea infrastructure for CCS where that is economically viable.
Unfortunately, since the Bill was discussed by peers in the autumn, resulting in the one now before us, the Chancellor took the reckless decision to axe the £1 billion fund that he had promised to support new CCS projects during the course of this Parliament. That is one of the clearest examples yet of how this Government are damaging confidence among the people we need to invest in this country’s energy system by once again chopping and changing energy policies without any notice. The mishandling of the Government’s CCS programme means that the public will most likely pay, as companies understandably seek to recover costs relating to the CCS projects in Yorkshire and Scotland that they progressed in good faith but that will now not proceed. That is why I have written to the head of the National Audit Office to ask that he launch an investigation so that we can fully understand the cost to the public of the Chancellor’s sudden decision. It is also why we will seek to amend the Bill to require the Secretary of State to bring forward a new carbon capture and storage strategy within a year.
There used to be consensus on this. The Prime Minister used to be a strong supporter of CCS too. Back in 2007, he said:
“even though in the UK we have the depleted oil and gas fields that are ideal for testing this technology, not a single pilot is yet taking place in Britain. We cannot afford this kind of delay.”
He was right then, and he is wrong now. The UN’s Intergovernmental Panel on Climate Change has stated that if we do not have CCS on a global scale, we are likely to see the costs of achieving targets on climate change being double what they would be otherwise. These targets may even be put out of reach entirely.
I am grateful to the hon. Lady for her generosity in giving way. Does she agree that there are a lot of opportunities for exporting CCS technology around the world and that they should be taken up?
I do agree with the hon. Gentleman. There is also an opportunity for us to make sure that the British workforce benefit from the skills to be gained from investing in that technology, so that we can export around the world not just the technology but the skills and knowledge of our workforce. That short and medium-term investment would be for our long-term gain, and it is important that we see it as such.
Experts at the Energy Technologies Institute have estimated that, without CCS, by 2020 the costs of reaching our climate targets could be in the order of £40 billion to £50 billion a year more than if CCS were deployed. Ruling out technologies that can cut the cost of low-carbon transition is bad news for bill payers and for taxpayers.
Does my hon. Friend agree that the debate about CCS should not be happening today because it should have been concluded at least half a decade or even a decade ago? We led the world in clean-coal technology for decades, but that is no longer the case because of the actions of the Conservative party. We should be doing it now, not talking about it.
I agree with my hon. Friend. I am not one who is keen to cast back into history to appoint blame, but what I will say to him and to the Secretary of State is that a 10-year promise was made not just to industries and companies, but to the communities that stood to benefit and to gain a huge amount from CCS. Given that the Government have announced £250 million of investment in a competition for nuclear small modular reactors, we seem to be creating a complete lack of confidence that any of the other schemes will proceed. Such decisions and the way in which they are taken damage our energy security, not just in the short term but in the long term. We have to give a signal that Britain is open for business, but the Chancellor’s decision has done precisely the opposite.
That brings me to the part of the Bill relating to wind farms. There was once a time when the Prime Minister was so keen on wind turbines that he even put one on the roof of his house. Now his Government are trying to legislate to close a scheme that has successfully driven investment into the cheapest low-carbon energy source available. Wind farms already provide power to more than 8 million homes in Britain, and once again it will be energy bill payers who pay the price for the Government’s short-term decision. The Institute for Public Policy Research has estimated that ruling out onshore wind farms and relying on other low-carbon technologies to achieve our energy targets could increase costs for bill payers to up to £3 billion through to 2030. There will also be a cost to jobs and growth in an important clean-energy industry.
There is one area on which we agree with the Government, and that is that wind farms should not be imposed on communities that do not want them. That is why we support the Government’s proposals to put local authorities in charge of approvals for such projects. Yet the reality is that the Government are using the Bill to try to block wind farms even where they enjoy strong local support, and they are taking powers away from local authorities in relation to other areas.
I am glad that the Labour party has effected a U-turn, because I argued for years under a Labour Government that imposing wind farms on communities against their will would lead to a backlash and to the project being brought to a halt. That is what has happened, so it is a bit late for the hon. Lady to say that she wants to listen to local communities. If we had listened to local communities all along, we could have had more onshore wind turbines where they were desired, rather than the backlash that has resulted in the current situation.
As the hon. Gentleman often reminded me when I served on his Select Committee, he is always right, and usually long before everybody else. We very much support the right of local communities to decide, but we do not understand why the Government do not. The real-time actions they are taking in this Bill will, in effect, block wind farms where there is strong local support for them. Moreover, the Government are taking exactly the opposite approach to fracking applications and seeking to deny local communities the right to decide what happens in their areas.
My right hon. Friend the Member for Wokingham (John Redwood) has pointed out that now onshore wind generates 1% of generating capacity. At most, when the wind is blowing, it is 7% or 8%. What percentage of our generating capacity would the hon. Lady like wind to supply? If it is significantly more than 8%, how would it be done without imposing wind farms on areas that do not want them?
First, the hon. Gentleman is wrong about the figures. Wind generates about 10% of our power. Secondly, there is no question but that we need to move towards a clean energy-driven economy. I think he accepts that case, as do two thirds of the British public, who said in a survey as recently as last September, in a poll of 2,000 adults conducted by ICM, that they would be very happy to have a wind farm operating within 2 miles of their house, if the local authority or community had power over how it was operated. That is one reason I have told the Government we should not seek to block wind farms where they enjoy strong local support, and that we support the right of local communities to decide where they are based.
It looks as though the Chancellor has decided to sacrifice jobs and investment to win personal support from Back Benchers with a particular obsession with wind farms. It is unacceptable, and we will do what we can to defend wind energy from ideological attacks. The Conservative party manifesto said nothing about retrospectively shutting down this existing scheme—it was clear it would stop new subsidies for wind energy, but this is not a new subsidy; it is an existing one.
Now that I have wound him up sufficiently, I will happily give way to the hon. Gentleman.
The hon. Lady was being quite consensual, so would she associate herself with the remarks of the former leader of her party, the right hon. Member for Doncaster North (Edward Miliband), who said that blocking turbines in local communities would amount to antisocial behaviour?
The key thing is that we take communities with us. We have to go to local communities and make the case for how we create jobs, provide energy stability, cut bills and take action on global warming. If we do not take communities with us, we will not do any of that. That is why, I say to Government Members, it is completely hypocritical to argue one thing in respect of wind farms and precisely the opposite when it comes to fracking applications. I hope the Secretary of State has heard me.
Nor does it make sense to claim that the change is about affordability, as Ministers have consistently argued, given that onshore wind farms are one of the cheapest options available to help us secure our power needs and that the Government are pressing ahead with much more expensive options. A Conservative Member asked about this earlier. The Secretary of State is yet to clarify —perhaps she can tell us today—whether subsidy-free onshore wind farms will be allowed to compete for contracts for difference. As with the Chancellor’s decisions on solar energy and carbon capture and storage, this is yet another example of the Government chopping and changing their energy policy to the detriment of investment in jobs, growth and our energy security.
More than anything, the energy sector as a whole needs stability and confidence to get on and invest. I particularly recognise the urgency of supporting our North sea oil and gas industry and that peers have improved the Bill significantly since the Government introduced it. For those reasons, I will support it on Second Reading, but I hope Ministers will engage constructively with the debate and our amendments in the weeks ahead.
It is a great pleasure to follow the hon. Member for Wigan (Lisa Nandy).
I rise to welcome the Bill. I particularly welcomed the original version, before noble Members got their hands on it and removed clause 60, which would have delivered on my party’s clear commitment to the electorate before the general election. We promised no new subsidies for onshore wind farms and to give local communities the final say on onshore wind farm applications. A failure to deliver that promise in its entirety would be a failure to balance the interests of onshore wind developers with those of hard-working families in my constituency and right across the country. I also welcome the strengthening of the Oil and Gas Authority’s powers to ensure that we make the most of our reserves.
Almost a year ago, I introduced the Onshore Wind Turbine Subsidies (Abolition) Bill. It had precisely the same objective as the original clause 60 of this Bill. I would like to think that my ten-minute rule Bill was a trailblazer for the Government’s Bill. I introduced my Bill because if we are to subsidise renewable energy sources, it is essential to support technologies that will produce power when we need it, not just when the wind blows. Given that one man’s subsidy is another man’s tax, it is crucial to make sure that when we spend money, we do so wisely.
Onshore wind farms generate below 20% of their stated maximum output for 20 weeks a year, and below 10% for nine weeks a year. That means that wind farms are, in effect, failing to reach maximum output capacity for more than half the year. On average, they exceed 90% of their rated output for only 17 hours a year. There is also a very significant issue about whether those wind farms will be able to reach such heady peaks when they are actually needed. Worse still, Britain’s wind farms are routinely paid large sums not to generate electricity—as much as £1 million each week in 2014. [Interruption.] Does the hon. Lady want to intervene?
First, the issue about being paid money when the power is not actually used is not unique to renewable power. [Interruption.] I am not going to engage with someone intervening from a sedentary position. My second point is that the hon. Gentleman does not seem to have heard of batteries or interconnectors, and does not seem to recognise that Germany is moving into renewables massively. He is in another century, while the rest of us have moved on.
I am in a century that backs our constituents and wants an effective energy sector that produces power when we actually need it.
I hear what the hon. Gentleman says about renewables, but is he not really making a case for a balanced energy policy? In the summer, there is a need to switch off some generation because of low demand. It is very expensive to do that for gas or nuclear power stations and then to bring them back online. Wind is actually cheapest, and we need such an intermittent energy source as part of the mix.
The hon. Gentleman makes a fair point, or at least it would be fair if it was accurate, which unfortunately it is not. Wind has to be backed up by fossil fuels, which makes no sense whatsoever. We must take into consideration the full system cost of wind.
Such payments, which are described as constraint payments, ultimately end up on consumer bills, meaning that the public are in effect subsidising the UK wind industry not to produce electricity. One really could not make it up.
When we get our coldest days in winter, they are usually days of no cloud and practically no wind, but that is exactly when we need maximum power.
My right hon. Friend makes a perfectly sound point. That is the case today, for example. I will be more generous to the wind industry: I think that 1.11% of power today is being generated by wind. We all know what happened in November, but I will come on to that a little later. We are becoming more reliant on intermittent renewables.
I live opposite a wind farm in my hon. Friend’s constituency. I do not blame him for not preventing it, because it was before his time. Many of the people who are in favour of wind farms are not surrounded by them as people in my constituency are. On the issue of renewable energy and its intermittent nature, does he not agree that one form of generation that we should be promoting more and that we know very well in our area is biomass, which not only supports thousands of jobs at Drax power station, but is a source that we can turn on and off at will?
My hon. Friend and neighbour is absolutely right. I applaud the work that Drax power station has done and I look forward to biomass generation going ahead at Lynemouth, which is under new ownership. It is a much cleaner fuel than coal. Indeed, it reduces emissions by about 80%. I would like the Government to get behind more biomass. I am sure that they will have an explanation for why there might be three pots for offshore wind, but I would like biomass to be able to fight on an even keel with the other technologies.
There is increasing dependence on offshore wind and solar. The situation is getting worse, not better. The nuclear stations, when built, will form part of the solution, but they cannot react to changes in demand or failures in supply anything like fast enough to keep the lights on. They can provide only base-load power, which is important but is not the answer to the intermittency problem.
The hon. Gentleman lectures us on intermittency, but one of the most serious aspects of the intermittency in the UK is our ageing nuclear power plants, which go offline continuously, with catastrophic effects on supply.
The hon. Gentleman makes a fair point. That is why we need the new stations to be built a bit sooner. If previous Governments had been a bit braver, we might not be in the situation that we are in now.
In the circumstances, is it wise to phase out all the coal in the system before sufficient gas and biomass have been deployed to make up the difference? I ask the Minister to restate the Government’s commitment that coal will be phased out of the system only after sufficient biomass and gas generation have been brought forward to make up the loss.
Does my hon. Friend accept that if we are to get the dirtiest of fuels off the grid and clean our atmosphere, we have to state that as an objective, as the Government have rightly done, because only after that signal will the investment come forward to replace it? If it will not definitely be phased out, why will people definitely invest?
That is a fair point from my hon. Friend, but we certainly need bridging technologies, because we will have a gap in which we could see days like those we saw in early November.
Will my hon. Friend give way?
I feel as generous as Santa Claus today, Madam Deputy Speaker.
I thank my hon. Friend for giving way. First, although we are aware that coal is the dirtiest form of generation, it employs an awful lot of people in our area for one thing. Secondly, does he agree that the real concern is that losing Drax, Eggborough and Ferrybridge will put us in a position where the lights go off? Woe betide any Government who preside over the lights going off. We need certainty that losing coal will not lead to that.
I totally agree. That is another great advertisement for sustainable biomass. We have paid for these assets—the Central Electricity Generating Board built these power stations—so let us sweat them for more decades. Biomass is the answer in the short term. Who knows? There might be other technologies that we could be using at them, such as hydrogen power. I am sure that there are the brains out there to find a way to use that resource.
Will the hon. Gentleman give way?
I will give way one more time if I am allowed, Madam Deputy Speaker.
Does the hon. Gentleman accept that another reason for keeping coal generation is that it is the cheapest form of electricity generation at present? Our competitors, for example Germany, are building new coal stations. When it comes to retaining jobs in the United Kingdom, we have to be cognisant of that.
I agree with the hon. Gentleman. It is tragic that we have sped up the demise of coal in this country. He will be aware that the last remaining deep coalmine was in my constituency. Unfortunately, it closed at the back end of last year.
I really need to move on, but I will give way to the hon. Gentleman because he is a grand fellow.
You’re absolutely right I’m a grand fellow!
If we are to put public subsidies into trying to keep the lights on, why not subsidise the coal industry? As the hon. Gentleman said, we will continue burning coal, but it is not dirty British coal, it is from places such as China, Ukraine and Colombia, where hundreds or thousands of men are dying every month or year. It is morally wrong to burn that coal and put British miners on the dole. That is completely wrong.
The hon. Gentleman is absolutely right, and if he was here at the back end of last year when we debated the closure of Kellingley colliery, he will have heard me very much echo his sentiments.
At the end of 2015 there were already 490 operational wind farms in the UK with an install capacity of 8.3 GW. The Government estimate that in 2015-16, £850 million of direct support will go towards funding onshore wind farms. A fraction of that sum could deliver reliable, low-carbon, cost-effective renewable electricity that can react to changes in demand if it were diverted to more and reliable renewables, such as sustainably sourced biomass. I use the words “direct support” on purpose because the £850 million refers only to subsidies that are paid to those wind farms. The inherent failings of wind farms must be compensated by someone, which comes at a cost. If there is a risk that the wind will stop blowing, National Grid must ensure that it has sufficient capacity to mitigate that risk.
If a wind farm has a load factor of 30%, National Grid must make provision for generation for the other 70% of the time. If the new wind farm has to be built deep within our beautiful countryside, or out at sea where it is more expensive, National Grid has to pay for new transmission lines. That all comes at a cost, and those costs are paid by all generators, not just the wind farm developers that caused the problem. It is yet another hidden subsidy for wind power.
The notification of inadequate system margin that occurred on 4 November was a prime example of a problem caused by a lack of conventional capacity, because on that very still day, the wind was not blowing and it could not make up that capacity, despite all our investment in wind power. All generators—and ultimately all consumers—had to pay for balancing actions that National Grid had to take, at a cost of £2,500 per megawatt-hour. That is something like 50 times the usual cost of power and—at least in part—that was because when we needed our costly wind capacity, it simply was not available.
I warmly welcome the commitment made by the Minister last week when, in a written response to a parliamentary question from the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), she promised that in the first half of 2016 the Government would publish research into those hidden costs, so that we can see the whole system costs of different renewable generation technologies, and that the findings will be used to inform policy decisions. I hope that is the first sign that future contracts for difference auctions will not simply unleash new waves of intermittent renewable technologies. More sensible, reliable renewable generation options are available to us, but the hangover from the previous Government and our coalition partner’s love affair with wind will suffocate those options unless we act.
Of course, the madness does not stop with the extra costs, because there is also a carbon problem. If a wind turbine has an availability of 30%, National Grid needs either a vast number of other wind turbines spread all over the place in the hope that the wind will be blowing somewhere, or—this is more likely—a gas or coal station on standby to generate the rest of the time. We therefore subsidise a wind turbine to push fossil fuels off the grid, while simultaneously subsidising a fossil fuel power station to stay online and generate carbon dioxide for more than half the time when the wind is not blowing—you could not make it up, Madam Deputy Speaker. The same is true for offshore wind farms, albeit they have slightly higher availability.
In conclusion, I recognise that the Conservative Government cannot make up for the mistakes of the past with retrospective action. A deal is a deal, and existing onshore wind is here to stay. We cannot reverse the insane situation in which we banked our energy security on the vagaries of the weather, but we can put an end to the madness. We can stop all new investment in onshore wind, as we have promised to do, and we can think much more carefully about the case for investing in other intermittent technologies.
That was an interesting contribution from the hon. Member for Selby and Ainsty (Nigel Adams). It was full of problems but not many solutions—the solution being a balanced energy market that allows flexibility. Probably the only thing I agree with him on is biomass. I also agree that a deal is a deal, but it is a shame that that has not been applied to onshore wind investors who have had deals scuppered because the goalposts have been moved.
I welcome the opportunity to speak on Second Reading of the Bill. It is important that we have finally got round to discussing it. It is nearly two years since the review of the UK continental shelf by Sir Ian Wood, which made a number of recommendations. As we have heard, it commanded, and still by and large commands, cross-party support, although there are problems with the details. I and some in the oil and gas industry have had a degree of frustration that progress has not been as swift as it could have been in fully establishing the Oil and Gas Authority, but the delay in introducing the Bill and the uncertainty that that has caused, particularly in respect of the grace periods for onshore wind, has been much more unhelpful.
Broadly speaking, the OGA is up and running and working effectively. The OGA and its head, Andy Samuel, enjoy tremendous respect and credibility within the oil and gas industry. It is beholden on all hon. Members to commend the work that has been done in setting it up. The team that is in place is impressive and is doing very well. The Bill will give them the full armoury of powers they require to ensure that the UK continental shelf thrives.
Scottish National party Members very much support the plans for the OGA in the Bill but—this will come as no surprise to the Secretary of State—we are not so keen on the onshore wind aspects. I am not required to explain the importance of the oil and gas sector to hon. Members. As has been said, it has generated in excess of £300 billion in tax revenue; 45 billion barrels of oil have been extracted, and potentially up to 24 billion are left; and it supports 360,000 jobs, with 36,000 directly involved.
Does the hon. Gentleman agree on these two things: first, that while we are burning oil and gas, it might as well be our own; and, secondly, that saying we are subsidising oil and gas simply because we tax it slightly less is a false narrative?
I agree very much with the hon. Gentleman. It strikes me that there are certain parallels with the coal conversation moments ago. That situation could come to pass if we do not support the North sea. We need to transition away from oil and gas, but that will take some time given the economics at play. If we are using oil and gas—we will be doing so for the foreseeable future—it might as well be ours. We might as well get the economic benefit of it, and we should certainly use that economic benefit to try to diversify and invest in other areas. The hon. Gentleman made the point on subsidies. The oil and gas sector is taxed very highly, and more highly than any other sector of which I am aware. It is taxed less than it was, but we probably require it to be taxed less if we are to see the benefit of the industry in future.
The OGA is vital to that future and it is hugely important that it is put on a firm footing. It must be given the regulatory powers it requires and the ability to engage fully with industry on access to infrastructure, plans for investment and so on. I very much support the Government in ensuring that the OGA continues to have a laser-like focus on maximising economic recovery, which is fundamental to that purpose. Over the years, there have been umpteen changes to oil and gas. It is in the nature of the industry, with its huge capacity to generate income, that the goalposts have changed substantially during that time, but I plead with all hon. Members not to change the goalposts again. The industry has been working for two years towards proposals on maximising economic recovery, which have universal buy-in and require that the OGA’s focus is not complicated.
Does the hon. Gentleman accept that the focus must be on economic regeneration, rather than further regulation? The industry, especially at this time, cannot afford more costly regulation.
I disagree. The absence of a strong regulator is where there have been significant problems in the oil and gas industry, in particular with access to infrastructure. The inability to get two parties with competing commercial interests to agree a deal on access to oil and gas infrastructure—a pipeline, for example—has meant that investment decisions have not been implemented. The industry needs a regulator that is hard-touch where required. I very much hope that the threat of sanctions from the OGA will in itself be enough, and that they will not be required. The OGA probably recognises that itself. Issuing sanctions left, right and centre would suggest that its soft skills, its influence and the buy-in the Wood review has brought forward, are not working effectively enough. Where there is no compliance or buy-in to the idea of maximising economic recovery, and where disagreements about access to infrastructure are inhibiting investment, the regulator should go in—and go in hard—to ensure that what everyone is supposed to be working towards is delivered.
The hon. Gentleman mentions, correctly, the need for a laser-like focus on maximising economic recovery as the objective of the Bill—and goodness knows we need it. Is it therefore his party’s position that the amendment in the House of Lords on carbon capture and storage is not necessary at this point, because it could risk reducing that laser-like focus?
Yes. I am coming on to that point now. I have spoken about carbon capture and storage many times and I will continue to do so. We fully support that. However, there is a requirement, which the shadow Secretary of State talked about, to have the review and the strategy in place before it can be imposed as one of the principal objectives of the OGA. If we dilute the core functions of the OGA, we distract from that attention. We should remember that the OGA and the Wood review come from a time when oil was over $100 a barrel. Those were the circumstances required to support the industry, which was going through difficult times, at a very high oil price. Those pressures are much higher today. I agree that we need to allow the OGA to bed in. Perhaps in future, once there is a strategy in place and it can be demonstrated that it has the support of the Government from both a financial and a strategic point of view, that might be something we want the OGA to do. At the moment, however, I think that is premature.
As I said, the Wood review comes from a time, two years’ ago, when oil was $110 or $115 a barrel. It is now $29 a barrel. The game has changed significantly. We have to accept that, while this is a vital step in supporting a vital industry, it will not be enough in and of itself. We need fiscal changes to the tax regime, particularly on incentives, and to review the tax level as a whole.
Immediately following the autumn statement, the Oil & Gas UK economics director, Mike Tholan, said:
“Since the last Budget, the oil price has declined further, and we must continue to do as much as we can to help boost confidence and encourage investment in the UK Continental Shelf. If the oil price continues to be lower for longer, there is little doubt that alongside industry’s own concerted effort to improve its efficiency, we will need to work with Treasury on additional measures, including revisiting the current headline tax rate—consistent with the government’s commitment to the sector’s tax rate falling over time.”
This issue clearly has to be approached through partnership between the UK Government and the Scottish Government. That being so, and given that the Scottish Government are about to get new tax-raising powers and that this is currently a real crisis for the key UK and Scottish strategic economy, will it be the policy of the Scottish Government to use those powers to raise funds to support the industry, if need be?
Frankly, I am not sure how income tax could be used to boost the oil and gas industry, but if the hon. Gentleman has any concrete suggestions—[Interruption.] On my understanding of the Scotland Act 2012 and of the progress made on tax-raising powers, I do not see how the Scottish Government would have the ability to do anything that would materially affect the fiscal regime. If the hon. Gentleman wishes to join us in calls for corporation tax for oil and gas revenues to be devolved to Holyrood—or, indeed, for full fiscal autonomy—he would be more than welcome to do so. The suggestion that the minimal powers devolved to Scotland for raising tax revenues and achieving economic objectives such as boosting the business environment could in some way be used to boost the oil and gas sector is, at best, naive.
The UK Government are not currently collecting any special North sea tax revenues because the oil price is so depressed. I might agree with the hon. Gentleman if reforms were made in the future, but will he give us an impression of the industry’s perspective in the area around his constituency on what will happen to jobs and investment at these oil price levels?
The oil industry is going through a difficult period, but there is a fair degree of resilience and optimism in these difficult times. A concerted effort is being made to show that it is not a sunset industry, and that it will work through what needs to be done. As was clear in the quote that I cited, the industry is making efforts to reduce costs. We in this Chamber can do nothing about the price of oil, but we can do something about the investment climate, which I think would be significantly enhanced with changes to the fiscal regime. Aberdeen is seeing job losses on a fairly sizeable scale, but it is probably still performing above average, and I certainly hope that it continues to do so.
The issue of tax revenues is not only about the supplementary charge in corporation tax or the petroleum revenue tax, because the full range of tax revenues needs to be factored in, including income tax, national insurance and the corporation tax paid by the supply companies. This is a major sector, and if we can invest in the skills and ensure that we bridge over what everyone agrees will be a temporary downturn in the oil price—how temporary is a matter on which I shall not speculate, because that could end up with my looking daft—that support will help.
Changing the tax regime would send a very powerful message to those looking at investment. If investment is not made in the UK continental shelf, because of the nature of the business the investment will be made in west Africa, Kazakhstan, Brazil or the gulf of Mexico. It is not a zero-sum game. Precisely because very little tax is being paid—unusually so—the Treasury is not banking on North sea oil to deal with what it needs to pay for, so it can afford to make the changes. The revenue forecasts for the next few years are low, and changing the regime now would make that viable. It would also send the clear message that this is a basin that is worth investing in. If there is investment, there are jobs, the skill base is maintained, and the supply chain is supported in a way that ensures that it can invest in and develop products not only for the North sea but for the global oil and gas industry, into which the United Kingdom supply chain—particularly around Aberdeen—is making great efforts to diversify.
I am very much in favour of the OGA’s establishment as an independent regulator. I am sure that, as we enter the next stage, there will be discussions about the nuts and bolts, but we want it to happen, and happen very soon.
Let me now move on to the closure of the renewables obligation. [Interruption.] Excuse me?
We thought that the hon. Gentleman was moving on to the closure of his speech.
I am sorry to disappoint the right hon. Gentleman. I will be brief, to a degree. I do not need to rehash the arguments about the closure of the renewables obligation, which is disproportionately affecting Scotland, because 70% of the wind farms that are in the pipeline would be there. I know that the Government have said that they want to try to reintroduce the closure in order to meet a manifesto commitment, but I urge them not to do so. If they do, we shall oppose the move.