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Humber Energy Estuary

Volume 605: debated on Tuesday 9 February 2016

Motion made, and Question proposed, That this House do now adjourn.—(Stephen Barclay.)

This is a timely debate on jobs and growth in the Humber energy estuary, as the estuary has been christened by many people, including many Ministers. The Minister herself has said that it is a key part of the northern powerhouse or, to be more precise, the northern energy powerhouse.

If I may, I will spend a minute or two on the background of the Humber and its importance to the offshore renewables sector. The Humber is ideally positioned geographically to serve the wind turbines that are located in the North sea. In recent years, the port of Grimsby has benefited from multimillion-pound investment connected with the renewables sector. That has included resources from the regional growth fund and has created hundreds of jobs.

Since the late 1990s, Able UK has acquired around 2,000 acres of land on and around the south bank of the Humber. The process was complex and involved multiple landowners. In 2008, the site was identified as a potential location for the emerging offshore wind sector. There followed a protracted and, it has to be said, frustrating process to achieve the required planning consents. North Lincolnshire Council, under the leadership of Baroness Redfern, whom it is good to see in the Public Gallery, has been fully supportive at every stage.

The protracted and exhaustive planning process culminated in the Transport Secretary giving consent in October 2014. Associated British Ports appealed, and there followed a hearing before a Joint Lords and Commons parliamentary Committee—chaired by you, Mr Deputy Speaker, among others—which wisely threw out the appeal.

This Government and the previous coalition Government have done a great deal to attract the renewables sector to the Humber and to establish the Humber as the energy estuary. They have created the largest enterprise zone in the country, supported to the tune of £11 million the establishment of the university technical college in Scunthorpe, and established the Humber local enterprise partnership with the specific remit of developing skills for the renewables sector.

I congratulate the hon. Gentleman on securing the debate. It is wonderful to see so much investment in our area. DONG Energy alone is spending some £1 billion a year on offshore wind in the Humber region. Does he agree that we have to ensure that young people in the local area have the opportunity to learn the skills of the trade and get the jobs that the renewables industry has to offer, and does he support the renewable energy skills fair that I am hosting in Grimsby on 25 February to help local young people get into the industry?

I congratulate the hon. Lady on organising her skills fair. Her intervention was timely, because I was just about to say that only last week, in a letter following my question to him on 27 January, the Prime Minister reminded me that

“another welcome development is the 19+ skills strategy that North East Lincolnshire Council is developing with support from the Humber LEP…through the Humber LEP Growth Deal we are investing nearly £4 million in a skills capital project”.

That will be based at the CATCH training facility at Stallingborough in my constituency. The Government have contributed £15 million towards infrastructure work at the Able UK site. Most notably, DONG Energy has benefited to the tune of billions of pounds from the contracts for difference that were agreed before the recent changes.

It is fair to say that many people have been sceptical about the benefits of wind power—that comes, in part, from opponents of onshore wind turbines—and my constituents are no different: the majority of them oppose onshore wind turbines. They have a positive view of the offshore sector, however, partly because of the positive media coverage in the area. The local media have repeatedly published very positive reports about the industry and the anticipated benefits. The Grimsby Telegraph produced an energy estuary supplement, in which you are pictured, Mr Deputy Speaker. It described the term “energy estuary” as a “worthy title”. It rightly pointed out that the Humber has, in reality, been the energy estuary for a century or more, with Immingham, by tonnage the largest port in the country, having a massive throughput of traffic connected with the energy industries. One reason for the port’s construction was to enable coal exports. More recently, coal imports have been vital to the economic success of the port, but for a host of reasons coal traffic has fallen dramatically in recent months, leading to recently announced redundancies. It is to be hoped that Associated British Ports can find replacement contracts in the near future. Its recent investment in facilities to handle biomass pellets is an indication of its continued investment in the port.

Another article in the estuary energy supplement was penned by Marcus Walker, the senior officer at North Lincolnshire Council who is responsible for handling the Able project. He said:

“The Humber Estuary is fast becoming the energy capital of Europe. The Government’s £100 billion offshore wind programme is the largest engineering project in the history of the UK and plans for Able Marine Energy Park…play a key part in helping create the energy clusters that we need to be able to compete with major manufacturers in mainland Europe.”

On that point about the energy capital, Grimsby has recently been named the renewable energy capital of England. Does the hon. Gentleman agree that the Humber is the obvious location for a national college for wind energy, and will he join me in calling on the Government to grant the Humber local enterprise partnership’s bid for the college?

It is perfectly true that, unfortunately, there was a misunderstanding and the LEP submission was too late. I certainly urge the Minister, if it is within her power, to grant an extension to the Humber LEP so that the college can be established in the obvious place for it.

I cannot think why my hon. Friend is shouting “Goole”, but to give him his due he has played a supportive role in all that we have done. Certainly, the MPs from the south bank—

Hang on a moment. Those MPs have always been united to establish the Able site, to complement the Siemens investment in Hull.

Stephen Savage, a leading local solicitor who serves on the Humber LEP board, states in the estuary energy supplement:

“The £450-million Energy Estuary scheme will create around 4,000 jobs and provide a new deep water port on the Humber”.

Were these people, all of whom were and are very close to events and are closely watching developments, all deceived or misled, because as yet the Able site remains fallow? They have all reached the conclusion that the wider Humber, and the Able site in particular, was going to be not just a secondary centre, but a real hub of activity, construction, assembly and all the support activities that would generate a growing and extensive supply chain.

I congratulate the hon. Gentleman, who is my constituency neighbour, on securing this very timely and important Adjournment debate. He has come to the nub of the issue. There is a great deal of expectation that the Government investment in the project will deliver manufacturing jobs on the Humber estuary. That is a matter of concern and we need it to be delivered.

The hon. Gentleman is absolutely right.

When the memorandum of understanding between Able and DONG was signed last summer, there was an indication that final agreements would follow, with last October as the target date. My understanding is that this memorandum was for DONG to establish an operational hub or installation port at the Able marine energy park. North Lincolnshire Council was under the impression that DONG had suggested that the Government should be involved in this exercise, and that an immediate priority was to secure a UK tower manufacturing facility. I hope that the Minister will be able to clarify that.

DONG had indicated that it requires the new quays, which are being constructed as part of the marine energy park, to be available by the first quarter of 2018. To meet that timescale, all the preparation, design and development work must begin almost immediately if the conditions of the planning consent are to be met, including restrictions and conditions linked to ecological compensation and mitigation.

Many of the negotiations were conducted by Peter Stephenson, the executive chairman of Able, and Joachim Steenstrup, the head of strategic supply chain at DONG. I understand that Able learned on 31 October that Mr Steenstrup had been dismissed.

In November and December, Ministers were good enough to meet me and other Members to discuss the situation. This all happened at a time when Tata Steel in Scunthorpe was reviewing its activities and announcing redundancies. The location of the steelworks just a few miles from the Able site had been an important part of the attraction of the south bank as a centre for turbine manufacturing.

It is worth putting it on the record at this point that the Government handled the situation at Scunthorpe extremely well and, along with North Lincolnshire Council, are putting together an excellent package of support, as well as plans for a sustainable steel industry in the town. The early statement from the Prime Minister, in which he made it clear that steel manufacturing at Scunthorpe would continue, was welcome, timely and crucial in giving confidence to the many people affected by the anticipated change of ownership.

The clear understanding of North Lincolnshire Council, the local enterprise partnership and just about everyone else is that the Able development will proceed. On 9 July last year, talking about the project and the £15 million from the regional growth fund, the northern powerhouse Minister, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Stockton South (James Wharton), said:

“As part of our long-term economic plan we’re determined to back business in the Humber and the Government’s £15 million infrastructure funding is helping kick-start development at the site that will help create 4,000 new jobs for local people.”

He continued by restating that:

“The Government is committed to backing offshore wind…This agreement will help the UK supply chain develop in key areas like towers manufacturing and ensure the UK remain market leaders in this sector.”

The leader of North Lincolnshire Council, Baroness Redfern, last week attended DONG Energy’s inauguration of Westermost Rough, which brought the Race Bank announcement. She said:

“This is fantastic news for North Lincolnshire and the Humber.”

She said that the Able marine energy park

“will deliver a state of the art purpose built facility—the largest in Europe. It is the UK’s best opportunity to attract a brand new offshore wind sector in the country and I am delighted that such a world leader like DONG have made this commitment.”

I hope that the Minister will confirm that DONG has made a long-term commitment to the south bank of the Humber. Baroness Redfern stated that the new university technical college in Scunthorpe

“will provide the right skills for the offshore sector and our major infrastructure improvements to support this development are almost complete. AMEP has the real potential to transform the economy across…North Lincolnshire”.

The chairman of the local enterprise partnership, Lord Haskins, added:

“The signing of the Memorandum of Understanding which holds out the prospect of Dong Energy becoming the first user at AMEP is a significant step forward… Attracting the interest of companies such as Dong endorses that we are the UK’s Energy Estuary with the Humber ports developing as a strong and growing national hub for the new offshore renewables industry.”

I hope that the Minister is in a position to make clear exactly where we are. Companies such as DONG have benefited greatly from the generosity of British taxpayers, particularly but not solely through the contracts for difference. DONG Energy has given the impression that it is committed to investing in the marine energy park to North Lincolnshire Council, local MPs, the local media and the Minister for Small Business, Industry and Enterprise, whom I can see nodding on the Front Bench. Such companies have benefited from the regional growth fund, the Government’s investment in the university technical college and the establishment of the enterprise zone. All that is very welcome, as is DONG Energy’s investment in northern Lincolnshire and the wider Humber region. Jobs exist that did not exist just a few years ago. However, with billions of pounds of taxpayers’ money already committed and the assurance that there is more to come, it is payback time for those companies. I hope that the Minister, who has been extremely helpful, supportive and robust in this matter, can provide some positive news in her response.

I congratulate my hon. Friend the Member for Cleethorpes (Martin Vickers) on securing this debate, as it gives me a fantastic opportunity to set out my vision for the growth and jobs that can flow from the UK offshore industry to the northern powerhouse and across the UK. I am delighted to see the hon. Members for Kingston upon Hull North (Diana Johnson), for Great Grimsby (Melanie Onn), and for Scunthorpe (Nic Dakin) in their places, as well as my hon. Friend the Member for Brigg and Goole (Andrew Percy).

This is an important area, and the Humber estuary has a long history as a driver of jobs and growth in the region, with roots dating back to the 13th century. It has played a key role in our energy infrastructure over many decades—indeed, my right hon. Friend the Minister for Small Business, Industry and Enterprise and I like to call it the northern energy powerhouse. It has played host to vital energy activities, including coal, and more recently offshore wind, not to mention all the other commodities that pass through the numerous ports on the estuary every day. Its location has enabled it to build industries around agriculture, construction, production and energy. My hon. Friend the Member for Cleethorpes is right to point out that it has the potential to deliver much-needed jobs and investment.

There has been a £75 million investment in the Humber international terminal at the port of Immingham, which is receiving some of the world’s largest shipments of biomass destined for Drax. That has the potential to increase to some 6 million tonnes per annum of pellets imported into the UK, becoming a hub for future business, including in the heat sector.

The Minister is right to mention the huge investment at Immingham in biomass that feeds Drax, which is a massive employer. With the use of coal stopping by 2025, will she commit that biomass will remain an option for energy generation into the future, and that Drax, which has several more units yet to be converted, will be able to bid for that? I have a new role as trade envoy to Canada, so does she recognise the potential growth in jobs in the Humber as a result sustainable biomass coming in from Canada via Immingham? [Interruption.]

My right hon. Friend the Minister for Small Business, Industry and Enterprise is asking whether we can carry my hon. Friend’s bags—I think that is a very good idea. I congratulate him on his new role as trade envoy, and assure him that we are doing what we can to try to secure the future for sustainable biomass, which is important.

We are all aware of the Siemens investment at the port of Hull. That £310 million investment will help to support the industries of the future, and is due to be completed by the end of this year. Of course, we could not talk about the Humber without mentioning Hull, which has been named as the UK City of Culture 2017. We all hope that that will leave a lasting legacy in Hull and the region, as has happened in previous cities.

All those achievements have seen the Humber become a key element of the northern powerhouse, but a key driver for growth in the region will be the offshore wind industry. There has been an incredible expansion in offshore wind which, as my hon. Friend the Member for Cleethorpes rightly pointed out, has been at the expense of bill payers in the UK. Much of that growth is off the east coast of England, generating clean power for hundreds of thousands of homes.

In November 2015, the Secretary of State for the Department of Energy and Climate Change set out our commitment to the future of the UK offshore industry, backed up by the pledge of three contract for difference auctions in this Parliament, provided that we get costs down. Those actions are part of what makes us the greenest Government ever. Alongside our support and commitment to offshore wind, this Government are determined to see higher levels of supply chain content in our energy infrastructure. Our objective is to have a strong, industrialised UK supply chain that delivers higher UK content in offshore projects, and proves its capability, increasing its capacity to win export orders.

On the supply chain and local content, this is a great opportunity for the Minister, and the Minister for Small Business, Industry and Enterprise who is sitting alongside her, to ensure that the procurement guidelines that the Government have put in place have leverage, and that the development is built with UK steel.

My right hon. Friend and I have spoken about that on a regular basis, and we will continue to work together to ensure that we maximise the procurement of UK content wherever we can. The Humber region has huge potential to contribute to growth in the UK supply chain. Just last week we saw DONG Energy secure financial approval to build what will be by far and away the biggest offshore wind farm in the world, with around 1.2 GW—enough to power 800,000 homes. By its own estimate that will create 2,000 jobs during construction, and 300 long-term permanent jobs in operations and maintenance.

The region has had success in realising many of these jobs already. Grimsby is fast becoming the centre of excellence for operations and maintenance activities for offshore wind farms in the North sea, with DONG, Centrica and E.ON having located their bases there. I enjoyed visiting the E.ON operations and maintenance facility with the hon. Member for Great Grimsby and my hon. Friend the Member for Cleethorpes when I was in the area to open the Humber Gateway wind farm last September. During that visit, I also went to see the site where Siemens is constructing its blade manufacturing facility and service centre at Green Port Hull, which will provide over 1,200 much-needed apprenticeships and skilled jobs in the local area when it opens later this year. I was particularly struck by the export capability of this new factory.

On that point about skills, and as I mentioned to the hon. Member for Cleethorpes (Martin Vickers) earlier, does the Minister agree there has never been a more opportune time to make sure the national college for wind energy is situated in the Humber estuary? Does she agree that we should all be working together to try to encourage the Government to support the local enterprise partnership in bringing the college to the Humber area?

As I think was pointed out to the hon. Lady, the application was slightly late but the Minister for Small Business, Industry and Enterprise is here. I will make sure that the hon. Lady’s lobbying is passed on to her team.

Will the Minister very kindly agree to have a meeting to discuss the national college for wind energy? The sticking point seems to be the Minister for Skills not being able to attend the meeting. As it is in the gift of the Department for Business, Innovation and Skills to agree to the name being given, even if it is privately financed, I wondered whether the Minister might have a word with her colleague to see if she can get him to the meeting too.

Absolutely. I am very happy to do that. As I said when we last spoke about this, I will be delighted to meet the hon. Lady.

Like my hon. Friend the Member for Cleethorpes, I want to see the Humber estuary achieve much more. I want developers to do more to share the economic benefits to be gained from building and operating offshore wind farms, and to share the gains of our new offshore wind policy. As he rightly said, it is payback time. I have instructed my officials to set up bilateral discussions with key offshore wind developers, such as DONG, SSE and Scottish Power. As I will make clear to them, the current round of projects provides a clear opportunity to stimulate further UK supply chain activities that will enable us to reap the rewards of our offshore wind leadership, both in terms of securing more jobs in the current projects and industrialising the supply chain. I want the UK to be exporting our technology and skills to projects in Europe and elsewhere. This is my ambition, and I want the Humber estuary to be at the forefront of that ambition.

What the Minister has just outlined is clearly good news. She has made rapid progress since our last discussions and I compliment her on that. Can she give a timeframe for that? It is critical that we move forward now. We have already lost quite a few months.

Yes, absolutely. I can tell my hon. Friend that it is a very top priority for me to have those meetings. We will be reconvening the offshore wind industry council in the near future and I want to have met each of the key developers before that meeting takes place.

On the Able marine energy park, I agree with my hon. Friend that the proposed facility is a significant opportunity to build on the successes in offshore wind and renewable energy more generally. It would be a fantastic addition to the UK offer. When it is completed, for example, it is well located to be a construction and staging facility, and could open up further port infrastructure facilities for the industry, as well as additional land for quayside supply chain investments. I encourage Able to continue to make the case for the facility, which has the potential to attract a range of developers.

As my hon. Friend pointed out, Able issued a press release on 9 July 2015 announcing the signing of a memorandum of understanding with DONG Energy, which committed to early stage talks on the project. Expectations are high that the facility would provide much-needed jobs. The recent announcement by DONG about Hornsea reaching a financial close last week is timely. I understand the importance of this project to my hon. Friend and to the UK. I therefore wrote and spoke to DONG seeking an update.

I am pleased to tell my hon. Friend the Member for Cleethorpes that DONG has replied saying that it continues to see AMEP as an as an important facility in the development of the offshore wind sector in the UK. DONG proposes to establish and lead a strategic joint industry and Government review to identify opportunities to develop the east coast as a UK construction and staging facility for the UK and European offshore wind industry. DONG would expect the AMEP facility to be a key consideration in this exercise, and I am pleased that DONG has appointed Benj Sykes, who co-chairs the Offshore Wind Industry Council with me, to lead that work. I shall shortly write to other developers regarding their participation in this review.

I am also pleased to say that DONG has told me that discussions on a UK tower manufacturer continue to progress well. To secure the first UK tower facility would be a major achievement, on which developers and the supply chain can continue to build. Let us be clear: the ability of the UK offshore industry to contribute to jobs and growth is a key part of what makes it an attractive industry. It is not the only one: climate change is one of the biggest challenges that we face, and it needs big technologies if we are to achieve our decarbonisation goals. Offshore wind offers one of those solutions.

Will the Minister confirm that she or her officials will have an input in those discussions, and not leave it entirely to the industry?

I can assure my hon. Friend that this interests me a great deal, and I shall certainly be involved.

When the Secretary of State set out the Government’s new direction for UK energy policy last November, she highlighted the challenge we face in making sure that energy remains the backbone of our economy while we transform to a low carbon system that is secure, affordable and clean. We want a consumer-led, competition-focused energy system that has energy security at its heart and delivers for families and businesses.

Britain is already the world leader in offshore wind, with over 5GW operational, which could double by the end of the decade, with the UK on track to reach around 10GW by 2020. That supports a growing installation, development and blade-manufacturing industry that employs about 14,000 people, but there is clearly potential for many excellent new careers. The Secretary of State has provided what the offshore wind industry has been asking for: clarity. She announced last November that the Government would hold three further contract for difference auctions in this Parliament, with the first due to take place by the end of 2016. If costs come down sufficiently, the UK could support up to another 10GW of new offshore wind in the 2020s, which is a doubling of capacity.

The offshore wind industry must do its part in return for being provided with such long-term clarity. The technology needs to move quickly to cost-competitiveness. There will be no blank cheques. A priority is the UK supply chain playing a full part in enabling the offshore wind industry to drive towards cost-competitiveness. The industry exemplifies what the Government are trying to achieve: creating jobs and apprenticeships, and working towards full employment while delivering our decarbonisation targets—but not at any price.

The Government have set their new energy policy direction. Offshore wind developers fully understand the importance of UK companies securing economic benefit from our programme of development, and they agree that it is not unreasonable to want to see UK companies competing for this work, as they can then use the home market as the perfect launch pad to export their capability and expertise.

In conclusion, the Government are fully committed to the continued growth of UK offshore wind and its supply chain, and to building on the success that the region is already seeing. I congratulate my hon. Friend the Member for Cleethorpes once again on raising this important issue.

Question put and agreed to.

House adjourned.