Tuesday 24 January 2017
[Mr George Howarth in the Chair]
I beg to move,
That this House has considered the Midlands Engine.
It is a pleasure to serve under your chairmanship, Mr Howarth. I thank the Backbench Business Committee for granting this debate.
Some 105 Members represent the midlands region. We may not have all of them here this morning, but we are represented by quality if not quantity. The midlands is a major contributor to our national economy. It generates 13% of the UK’s gross value added and has enormous potential to be at the forefront of economic growth. The midlands engine initiative is therefore extremely welcome and necessary to develop a long-term strategy that works for business, the region and its people.
As I am sure we all know, the midlands is the biggest economic region in the UK outside London. It has a £210 billion economy and employs 4.6 million people. If we adopt the right approach, it will be well placed to build significantly on that, and that is what I hope to discuss this morning.
We have a rich industrial heritage going back to the industrial revolution; our constituencies are linked by a comprehensive canal structure that dates from the beginning of that time. Today’s economy is much more diverse, but our sense of regional identity remains strong and manufacturing continues to be an essential and vibrant sector. It is right for the midlands engine to pay tribute to that history and to use it as a foundation for the prosperity and growth to come.
In formulating the strategy, the first consideration is the extent to which powers should be devolved from the Department for Business, Energy and Industrial Strategy to the midlands engine, our local enterprise partnerships, our local authorities and the West Midlands combined authority, striking a balance between empowering the region and maintaining sufficient oversight of returns on investment.
It is good to see the Minister, who represents a Warwickshire seat, in his place. As I have told him, we could devote time to unitary authorities as part of this discussion, but we will save that debate for another day. Perhaps he will put a date in his diary.
The midlands is already an attractive proposition for business, but to improve the situation further more investment in infrastructure is absolutely essential.
I congratulate my hon. Friend on securing this important debate; he is a strong champion for our region as well as for his constituency. On infrastructure, I wonder whether he welcomes the tone of our Prime Minister towards the midlands engine. Although the announcement on infrastructure yesterday was largely to do with northern areas, there is a strategy paper on the way—and, crucially, LEP allocations to go with it.
It is great that the hon. Gentleman has secured this debate, and I congratulate him on it. The point about infrastructure spending is really important because there is a massive disparity between the amount of spending in the midlands and that in other parts of the country. Transport funding per capita in the west midlands is less than half that of Scotland and 40% of the level in London. In the midlands as a whole, which has 10 million people, we got a mere £1.72 billion spent on transport compared with London, whose population is smaller—it had £3.87 billion. Over a decade, £15 billion less has been spent on transport in the midlands than in other parts of the country.
The hon. Gentleman, like me, is obviously opposed to HS2. The only area of the midlands to benefit will probably be Birmingham and the surrounding area, but Coventry and Warwickshire, where he has a seat, will not necessarily benefit.
More importantly, whatever the negotiations in relation to Brexit are, we need the Minister to reassure us that regional aid will be replaced with another form of aid for the midlands. We do not want to lose out. When I was leader of Coventry City Council, we did not get regional aid; companies such as Nissan went to Sunderland instead, because that area got regional aid. That is a very important point.
I thank the hon. Gentleman for his intervention. He says, perhaps unkindly, that Birmingham might be the only place that benefits from HS2, but there has been a suggestion that only London will benefit. He is tempting me into a debate that is perhaps for another day.
Digital infrastructure is also part of our connectivity and a vital component today. That will increasingly be the case in the interests of the local economy. Each region has its own specialisms and needs, which means that it is necessary to make tailored decisions that will impact positively on each region. Midlands Connect has an important role in this, representing the transport partnership of the midlands engine with 28 local authorities, Network Rail, Highways England, Government and the business community working together. In addition, developing a skills base to match the demands of an ever-evolving business world is imperative. As such, aligning skills with regional business can be instrumental in boosting our economic growth.
The Government’s industrial strategy, which I was delighted to see launched yesterday through a statement in the House, is a policy I have spoken on at length before. I see the midlands engine as an important part of the broad approach. As the strategy develops, regional empowerment must be at its core so that the constituent parts of the UK reach their potential and the whole nation benefits.
As with the industrial strategy, the midlands engine must be underpinned by a focus on individuals and communities feeling a part of the policy. If each community understands how relevant the strategy is, that strategy will seem much closer to individual citizens than something such as a long-term economic plan. Individuals and communities can better understand the role that they can play in an industrial strategy.
I congratulate my hon. Friend on securing the debate. He will be pleased that I am steering clear of HS2; my thoughts are broadly in line with his, if not a little stronger.
One of the key industries for my constituents is the motor industry. Does my hon. Friend agree that it is important to support businesses that choose to locate themselves in north Warwickshire, such as Plastic Omnium, Sertec and the smaller businesses that play such a vital part in the supply chain and the local economy?
I worked for MG Rover and I know Plastic Omnium and its role in the supply chain. We are very proud to be home to Jaguar Land Rover in Warwickshire, and investing in the supply chain is just as important as investing in and supporting Jaguar Land Rover.
“The Midlands Engine for Growth: prospectus”, which was produced in 2015, saw 11 local enterprise partnerships join together to produce a vision for the region. I was particularly heartened to see manufacturing and engineering highlighted as the cornerstone of future success. As the co-chair of the all-party parliamentary group on manufacturing, I recognise how important it is to incentivise UK-based production, whether through new investment or reshoring.
Advanced manufacturing is a notable aspect of the midlands economy and can propel our competitiveness globally. As the prospectus identifies, advanced manufacturing is the bedrock of the region, employing more than 600,000 people and accounting for just less than 20% of the UK’s manufacturing output. It was good to visit Jaguar Land Rover with the Secretary of State for Business, Energy and Industrial Strategy on Friday, to see some of the technologies taking place there that will lead not only the region but the country, on a global level.
I welcome the Government’s support for the Catapult network. The high-value manufacturing Catapult has generated £15 of benefit to the economy for every £1 of funding. It cannot be said enough that research and development is key to our future success; it acts like a magnet for business and is the core of business and manufacturing. To lose our R and D facilities would be to endanger our manufacturing output, which is just beginning to recover. Other projects include the Energy Research Accelerator, where six world-class universities are working together with the support of £180 million of investment, as well as the energy systems Catapult, which is located in Birmingham.
Energy storage is an issue for the future and the midlands can be a driving force in developing those technologies. If we are serious about electric cars, which are the cars of the future, we need the batteries to power those cars. To be able to produce those batteries where the cars are manufactured—in Warwickshire, in the midlands, at Jaguar Land Rover—we need the power supplies to be able to make that happen.
I congratulate my hon. Friend on securing this important debate. He is making a very good speech. Would he agree that apprenticeships, which have been championed by the Government, have had a real effect on the midlands region? In particular, they have stopped our region from being at the bottom of the employment league table in Britain and have significantly increased the number of new businesses that are starting and growing in the west midlands.
I thank my right hon. Friend for that intervention. Apprenticeships are very much part of our future. I was also very fortunate to visit Warwickshire College with the Minister for Apprenticeships on Thursday. It was great to see how those young people are taking a totally different path for their future—one becoming more recognised for the skills that it will deliver—and to see them designing clays for cars and getting right into the process. Any encouragement we can give to make sure that business, schools and colleges are working together to increase the number and deliver on the 3 million apprenticeships that we need by 2020 can only be beneficial to our regional and national economy.
We need to have a thriving environment for innovation and tech. In my constituency, that includes the creative industries—the video games sector cluster is rapidly becoming the second or third-biggest cluster outside London. We need to create a framework in which such sectors can thrive, providing a flow of talent into the industry.
Developing a local identity on a regional level can be a catalyst for success. We have a proud tradition of manufacturing that we must build on, but other sectors can come to the fore and boost the region’s international prospects—in particular the creative and digital industries.
I hope that our strong academic base can continue to grow. The midlands is home to 25 universities and 50 further education colleges. Closing the skills gap across a variety of sectors is an integral part of the midlands engine and poses one of the greatest challenges ahead. Technological advances are shifting the needs of industry and we need to embrace the opportunities ahead, such as in Industry 4.0, and pinpoint areas that we need to strengthen, such as encouraging children to study science, technology, engineering and maths subjects. I note that the midlands engine prospectus highlighted proposals to create a network of regional science parks. I fully support efforts to push the midlands to the forefront of academic research in the UK, complementing our advanced manufacturing and technical skills base.
On a slightly negative point, productivity is a key challenge for the midlands—it is 10% lower than the national average. Improving infrastructure, as well as continued investment in science and research, could have a profound effect on reversing that figure.
In the autumn statement, the Chancellor announced that a midlands engine strategy was to be published, and I understand that more details will be provided in the coming weeks. Yesterday’s industrial strategy Green Paper pointed to places making their own unique contribution to driving national economic growth. Much has been made of the northern powerhouse and the regeneration of the north, which is an important goal, but I hope that the midlands engine can develop in parallel, working with other regions wherever prudent. We must continue to attract foreign investment, which will naturally happen as we strengthen our network of business, research and education.
Part of attracting foreign investment is connectivity through Birmingham Airport. As my hon. Friend is probably well aware, Birmingham Airport is, frankly, a couple of decades behind Manchester in many aspects at the moment, although it does have spare capacity. Would he support my call, and that of the hon. Member for Dudley North (Ian Austin), to devolve air passenger duty so that Birmingham Airport can compete on a level playing field as devolution moves forward?
I thank my hon. Friend for his intervention, which got a “Hear, hear!” from the other side of the Chamber. I suggest that those sorts of powers could be devolved; at the same time, if my hon. Friend could ask Birmingham Airport not to increase the number of flights over my constituency, that would reduce my postbag.
The important thing about Birmingham Airport, with its 12 million passengers last year, is that it contributes £1 billion a year to the regional economy. With HS2 on the way, expanding capacity at Birmingham would enable it to play a much bigger role as a global hub, increasing the region’s connectivity and enabling travellers and businesses to come to the midlands and local businesses to export much more easily.
The hon. Gentleman makes a valid point about the connectivity of our transport infrastructure. The airport issue, which could be contentious, deserves time for its own debate. Debates on the midlands engine and everything that will underpin that engine need to happen again and again. Just to discuss the issue this morning and then close the door would not serve any purpose.
My hon. Friend has been talking about Birmingham Airport. I would remind everybody that there are two airports in the midlands—there is East Midlands Airport as well. We need to make sure that there is connectivity across the whole of the midlands, not just the west midlands.
I just wish to follow up on the point made by the hon. Member for Erewash (Maggie Throup). East Midlands Airport is, of course, different from Birmingham Airport in that it is the second-largest freight airport in the country, which is hugely important for serving businesses across the whole region. Will the hon. Gentleman acknowledge that point?
I thank the hon. Lady for making it simple for me by asking me to acknowledge the point. I most certainly do.
As with the industrial strategy, it is important to provide measures to understand how the midlands engine initiative is succeeding. For example, to what extent do we need to boost foreign direct investment? How many apprenticeships are needed in the region? What is the required level of financial support for science and research? An office for industrial strategy could and should be created and held accountable for the progress made, including our region’s economic success.
The Green Paper sets out 10 pillars to boost the nation’s economy, from business growth and investment in infrastructure to clean energy and world-class research. The midlands engine touches on all those pillars and will benefit from the strategy. In turn, the region can play an instrumental role in our nation’s success.
It is a pleasure to serve under your chairmanship, Mr Howarth, and I congratulate the hon. Member for Warwick and Leamington (Chris White) on securing the debate. I am sure the Minister will enjoy the opportunity to talk about the Government’s industrial strategy, but I am afraid that most attention right now is probably focused on what is happening on the other side of Parliament Square. I will return to the significance of our relationship with the European Union later.
Outside this place, many people still ask what the midlands engine is. The answer is simple: we are the midlands engine—we being the many right hon. and hon. Members who stand up for their midlands constituencies in this place, and the entrepreneurs, innovators and grafters back at home. All of us are working harder than ever, together, to build our collective identity; to develop our competitive offer; to promote the midlands to the world; and to attract people to come to us to invest, to study, to work and to live. The midlands engine is not just a brand, an organisation or a place. It is all of us working together to show that when the midlands succeeds, Britain succeeds.
The assets of the midlands engine will be familiar to everyone, not only up and down the country but throughout the world—Range Rover, Rolls-Royce, JCB, Toyota and Boots are a few of the names that have made the midlands famous. What is great about all those assets is that their industrial evolution is constant as they reinvent themselves and their products to meet the demands of our ever-changing world.
No clearer evidence for midlands resilience and ability for reinvention exists than in my constituency. The site where thousands were once employed to manufacture Raleigh bicycles is now the University of Nottingham’s innovation park, where businesses and researchers work together on everything from satellite navigation, aerospace and sustainable energy technologies, to drive-chain engineering and sustainable chemistry. The city centre site where ibuprofen was discovered by Dr Stewart Adams is now one of the UK’s largest bioscience incubators, commercialising cutting-edge research. When I came through Nottingham yesterday, I saw that the brand-new BioCity Discovery Building is almost up and finished, showing how the sector is developing and growing.
None of that is new. As the hon. Member for Warwick and Leamington said, the midlands has been an engine for growth for centuries, and will be for centuries to come. The strong midlands DNA is rooted in our industrial heritage, which is reflected in our being the advanced manufacturing heartland of the nation, responsible for almost a quarter of the UK’s total manufacturing capability.
Two and a half centuries ago, new canals connected England’s major rivers, opening up the interior for the movement of raw materials and trade of finished goods. High Speed 2 can have that same transformative impact, with the potential to unlock huge economic benefits for the midlands and for the UK as a whole. To me, HS2 is a once-in-a-lifetime opportunity for us to transform Britain’s infrastructure, linking the cities of the midlands and the north with fast, frequent and reliable services, connecting people and places, businesses and workers, markets and customers, driving up growth and productivity, and expanding the life chances of more than 11 million people in the midlands engine region. HS2 is not about the much mocked 20 minutes off the journey time to London—although who would not want to have even better connections to one of the world’s mega-cities? It is about improved capacity and incredible connectivity within the midlands region.
The right hon. Gentleman is absolutely right. Phase 1 of HS2 in particular is about vitally needed extra capacity, although for phase 2 connectivity and journey-time savings are important. Cutting the journey time between Nottingham and Birmingham from a dawdling 1 hour and 13 minutes to only 36 minutes will make a real difference to the choices available to workers, businesses and investors. We should not downplay that.
HS2 can and must act as a spur to regeneration and job creation. The West Midlands combined authority’s growth strategy aims to add £14 billion to the economy and to create and support 100,000 jobs. The Curzon investment plan is designed to regenerate that area around the planned HS2 station. In the east midlands, councils, local enterprise partnerships and the East Midlands chamber of commerce are working together to develop ambitious but deliverable proposals for maximising the economic potential of a new HS2 and classic-rail hub station at Toton, not only for that immediate area, important though that is, but for the whole region.
The benefits of HS2 for the region will be fully realised only if they come alongside other transport improvements. I recognise the danger of my sounding like a broken record, but Conservative Cabinet Ministers came to the east midlands before the most recent elections promising to deliver our region’s top transport priority—the electrification of the midland main line—only then to pause it, unpause it, delay it by four years and now give the impression of wanting to scrap it altogether. That is not good enough. The midlands deserves 21st century infrastructure, and the Government must deliver on the promises they made to our region if we are to be ready for the global challenges ahead. I am sure the Minister understands the importance of the midland main line electrification to our region, so I hope he will speak to his Department for Transport colleagues and ask them to think again.
I remain optimistic about what the midlands has to offer and its ability to seize the coming opportunities. However, I cannot fail to sound a note of caution about the UK’s future relationship with the EU and the profound risks that that poses to the midlands engine. The midlands is the manufacturing heart of the UK, so the potential loss of tariff-free access to the single market and the potential imposition of customs controls would surely have a chilling effect on those businesses I mentioned. We know that Toyota is considering how it can survive in a post-Brexit UK. Boots tells me that it is deeply concerned about our being outside the European Medicines Agency. Our world-class universities are extremely worried about their ability to maintain their position in global league tables without access to the Horizon 2020 funding, and without the ability to recruit and retain the highest-calibre students and staff from around the world.
In the coming weeks and months, therefore, I will press the Government hard to ensure that they do not put obstacles in the way of the bright future that our region is heading towards.
Order. While we are on the subject, it might be of benefit to those present to know that the Supreme Court has ruled that an Act of Parliament will be necessary to trigger article 50. Whether that changes anything that the hon. Lady wishes to say, I do not know.
Thank you for that update, Mr Howarth, which I am sure is welcome to everyone who wants to both participate in this debate and follow what is happening outside.
I will not just take the Government to task on their approach to Brexit negotiations—we now know that we will have the opportunity to do that through legislation—but raise concerns about cuts to school funding. Those are hitting my constituency and will make it harder for us to close the skills gap, which is important to the success of the midlands engine.
Whatever the Government throw at us, we will find a way around or over it. Midlanders always do. They are very resourceful, and necessity was ever the mother of invention. When they are done working their way over and through all the obstacles, midlanders can enjoy everything else that our region has to offer, whether that is sport; art or literature; caves, canals or castles; theatre or music; or food or drink. My city of Nottingham alone, which is a city of literature and football—although our ice hockey team needs to expand its trophy cabinet at the moment—has everything from a two-star Michelin restaurant under a flyover to a castle that is not a castle but has been the rebellious heart of the country for centuries. That is just one corner of the midlands engine. No wonder we are what makes the country go.
It is a great pleasure to serve under your stewardship, Mr Howarth. I congratulate my hon. Friend the Member for Warwick and Leamington (Chris White) on securing this important debate.
As I come from Derby North, the success of the midlands engine is incredibly important to me. In 2015, the then Chancellor launched his vision for the midlands engine—this Government’s 15-year vision for our region to create an engine for growth in the United Kingdom. Everyone who attended that launch was excited by that plan’s potential benefits for the region: the creation of hundreds of thousands more jobs, the opening up of more trade routes around the globe, and overall improvements to the quality of life in the midlands. The plan envisages boosting our regional economy by £34 billion. We can reach that target, but to do so, we must come together and all sectors—public and private—must co-operate.
The midlands engine can be a vehicle to deliver policy to support the vision that we develop for a successful United Kingdom outside the EU. We have a strong offering in the midlands, which can deliver growth that is both balanced—by sector, geography and trade—and sustainable, in that it creates skilled, highly productive roles backed by private sector investment.
What are the opportunities? The midlands engine must focus on elements that give us competitive advantage, central to which is our expertise in key sectors, especially advanced manufacturing. We have a high density of original equipment manufacturers. In and around my constituency alone, we have Toyota, Rolls-Royce and Bombardier, and well-established supply chains that serve them all. Greater competitiveness in those supply chains will boost jobs and attract inward investment, and that is a key area where the policy we set here can have a real impact.
Our location has fantastic connectivity to the north and south. If we capitalise on that, we can be as good at moving things as we are at making them. My hon. Friend the Member for Erewash (Maggie Throup) and the hon. Member for Nottingham South (Lilian Greenwood) mentioned East Midlands Airport, which is the UK’s largest pure freight airport. Although east-west connectivity requires improvement, we hope that Midlands Connect’s work to inform road and rail infrastructure spending will start to address that. Affordable land is available for development, and our workforce has a heritage in manufacturing. In recent months, we have also seen companies looking to relocate from the EU to the midlands to be closer to their customers.
Importantly, our starting position is strong. According to East Midlands Chamber’s quarterly economic survey, east midlands businesses ended 2016 performing stronger than they had for six quarters, and businesses are already reporting revised investment plans and new overseas strategies to capitalise on forthcoming opportunities. However, with opportunities come challenges. We must work collectively to sell the midlands as one region, not continue to divide ourselves as representatives of the east or west. We need to ensure that the strengths and attributes of the whole midlands are brought to bear. The strategy also needs to have the private sector at its heart, shaping and informing activity.
Under this Government, the midlands has started to grow faster than the UK average outside London, and that trend must continue. Opening up the midlands to overseas investment, encouraging our small and medium-sized enterprises to export and showcasing the fantastic manufacturing and engineering firms that help drive our economy overseas are all steps we can support to make the vision of the midlands engine a reality, and to open the region to previously untouched markets.
Crucially, we must have an environment underpinning the midlands engine in which local people are educated and trained in skills that match needs.
As a west midlander, I completely agree with my hon. Friend that we should speak with one voice as one region. In that way we will do better. On skills, the Government’s agenda to deliver 3 million apprenticeships is to be commended. That is probably one of the biggest benefits for our region and manufacturing.
Absolutely. I was going to come to apprenticeships, which are significant in Derby North. We really need to look at having training and skills that match local employers’ needs. Our local enterprise partnerships outlined that as a key theme when they were consulted by the Government about plans for the engine. During my time as an MP, I have regularly heard concerns that more needs to be done to tailor skills to play to local strengths and boost our productivity. Brilliant work is being done in Derby to try to tackle that problem. For example, in response to the needs of businesses such as Rolls-Royce and Bombardier, the university in the city recently opened a new science, technology, engineering and maths building. Apprenticeship providers such as 3aaa are building initiatives to link employers, schools and apprenticeship providers to tailor skills. More needs to be done to support such initiatives if the midlands engine is to live up to its full potential.
Sir John Peace, chair of the midlands engine, said yesterday that
“playing to our strengths and enabling new sectors…will deliver the high wage, high skill economy of the future.”
We know what our strengths are in the midlands. We now need to ensure that they reach their full potential.
It is a great pleasure to serve under your chairmanship, Mr Howarth. I welcome this debate on the midlands engine, which my hon. Friend the Member for Warwick and Leamington (Chris White) secured. It is also a great pleasure to follow my hon. Friend the Member for Derby North (Amanda Solloway), who is a fellow east midlands MP.
This year, among other special dates, I am celebrating 30 years of living in the midlands. When I first moved there, I thought I would move on and not stay, but the midlands has offered me so much, both socially and from a work point of view, that I have stayed. I moved from Yorkshire as a result of a promotion. People tend to move further south as they move on in their careers, but the midlands has so much to offer, as we have heard from both west midlands and east midlands MPs, that more people need to hear about what we have in the midlands, and that is what we are doing today.
I thank my right hon. Friend for that. I do not want to offend anyone from Yorkshire who still lives there, but I am proud to say that I live in the midlands and represent a midlands seat. It is really important that we bang the drums and fight our corner to ensure that we get everything that we need to make the midlands a true engine for growth.
Just yesterday, the Green Paper on our new modern industrial strategy was published. Although I welcome that and its focus on skills and training, it would be remiss of me, as the representative of Erewash, not to stand up for traditional industries as well as new technologies. So many traditional industries are taking on board new technologies, and it is important that we combine those. I am proud to represent a constituency that still makes. Despite being called Nottingham lace, it is made in Ilkeston in Derbyshire—work that one out. It is still made on the traditional looms in historic mill buildings.
I am also proud to represent a constituency that proudly proclaims to those arriving at Long Eaton station that it is a UK centre of excellence for upholstery manufacture. We export sofas and chairs, and the upholstery is sold in some of the UK’s top stores; it can also be bought in some cheaper stores. Many seats that people sit on at home or in friends’ houses, and in hotels and public buildings, are made in Long Eaton. We must never forget that there are many traditional businesses that boost midlands growth.
Erewash is a place that provides a great example of how traditional and modern industry meet. Anyone driving through the constituency is likely to see storage yards full of concrete pipes and drains. Perhaps that seems strange, but I was delighted when a few weeks ago I officially opened a new “magic manhole” plant at Stanton Bonna, which will help to speed things up, provide consistent quality, and decrease waste. Interestingly, when the pipes leave my constituency we shall probably never see them again, because they go underground. Whether they are for new housing, industrial sites, Crossrail or—fingers crossed—HS2, those reinforced concrete pipes made in Erewash will form a critical part of construction in years to come.
As I have explained, Erewash already plays its part in the midlands engine; but I know it can go further. That is why I welcome the Government’s commitment to the area and their ambition to make the midlands a true engine for growth. We have heard about the west midlands, but I want to think about the east midlands. The commitment includes £250 million of investment funds providing access to finance for small and medium-sized enterprises. My constituency has many SMEs rather than huge employers, so that is important for Erewash. There is £60 million for the energy research accelerator, and some of it is going to the University of Nottingham, which is close to my constituency. Also, there is multimillion pound investment to make the most of the HS2 hubs in the west and east midlands; the east midland HS2 hub abuts my constituency. That brings me to the subject of skills, specialist STEM subjects, and engineering in particular.
HS2 and the HS2 hub create economic and employment opportunities for my constituency, but we need to make sure people have the right skills. We should also not forget the residents who will lose their homes and the businesses that will lose their premises to make way for the track, which will come right through my constituency. It is vital that they get timely and appropriate compensation, especially as many of them have lived in their homes for 30 or 40 years; some have lived in them all their lives.
To maximise the potential of HS2, residents need the right skills—including employees of flagship companies, some of which have already been mentioned, such as Rolls-Royce, Bombardier and Toyota. Businesses and the local economy can continue to be successful only if people and goods can get around, as has been mentioned, and if there is the right infrastructure. The road network across and around Erewash is already creaking at the seams. I welcome the benefits from the east midlands HS2 hub and the additional proposals for 2,000 new homes, with light industry, on a brownfield site in Stanton, but we need dramatically to improve the road network, and to bring it into the 21st century. Otherwise the area will become a huge car park, and that will not stimulate growth but stifle it. That is why I am calling for an additional motorway junction on the M1, to help ease current gridlock and keep Erewash moving well into the future.
We need the investment and commitment that the midlands engine brings, but we also need more joined-up thinking; and we need to make sure that no area is left behind. It must not revolve around the big cities—Birmingham in the west midlands, and Nottingham and Derby in the east midlands. Too often I get the feeling that my local enterprise partnership, D2N2, puts Erewash at the bottom of the list. We need to address that. The midlands engine must be maximised, as a strategy and an investment mechanism. We must nurture full collaboration between businesses and universities. It should be used as a vehicle to attract domestic and foreign investment, on top of what the Government have put in, if we are to have long-term, sustained economic growth across the whole of the midlands. We need to make sure that the midlands is a true engine for growth for the whole UK.
I thank the hon. Member for Warwick and Leamington (Chris White) for bringing this issue to our attention so that we can tease out some important issues. I declare an interest, of sorts. West Bromwich Albion FC beat Everton FC in the FA cup final on 18 May 1968 at Wembley, by scoring three minutes into extra time. It was a traumatic experience for an 11-year-old Evertonian. However, I hold no grudges against the midlands and I deny that I was psychologically scarred by the event, so my comments today should not be taken in that context.
I was pleased that the hon. Member for Warwick and Leamington dealt with a wide range of issues, including academic research, research and development in general, energy storage, matters affecting the creative industries, and the challenge of low productivity. Of course there is also the vexed question of the airport.
My hon. Friend the Member for Nottingham South (Lilian Greenwood) talked about the midlands engine being not a brand but the people, and an engine for growth. I fully concur with her view that when the midlands do well the UK does well. She also made crucial points about HS2 helping to transform Britain’s infrastructure, other transport investments in the area, and Brexit concerns. The hon. Member for Derby North (Amanda Solloway) talked about working together and playing to the region’s strengths, and of course the hon. Member for Erewash (Maggie Throup) talked about the need to stand up for traditional industries as well as new technologies. In that respect, when I sit on my sofa I will be reminded of her.
As a former leader of a council in the Liverpool city region I have, as the saying goes, been there, to some extent. I am pretty au fait with the difficult gestation period that comes with setting up the structures and mechanisms of a city region and the wider region; but it is about time, and long overdue. The dragging hand of Westminster and Whitehall on regional policy is a danger; that approach is well past its sell-by date. In fact, the centralisation from London has clearly left the other regions in a less favourable position than the south-east and London. That is not to say that I have any criticism of those regions. Quite the opposite—good luck to them. But it is time that other regions also got more attention. I think that that point has been raised today several times. The same thing has been true of successive Governments who over the decades have to an extent had a stranglehold on local government, leaving it passive and dependent. However, that is changing, and that failed approach cannot continue.
The “Midlands Engine for Growth” prospectus of 2015 mentions that the offshore wind market is worth up to £100 billion. In fact, as you know, Mr Howarth, in Liverpool bay, off the coast of my constituency, there is a large wind turbine field, which is growing exponentially with investment from, among others, DONG, a majority state-owned Danish company, and, if I remember rightly, some input from the city of Copenhagen. It is a pity that local government and regions in this country are not in a position to do the same. I am very concerned that the Government are ideologically opposed to such ventures even if they would be in the best interests of city regions such as Liverpool working collaboratively with city regions in the midlands, or combined authorities in the midlands. I am afraid there is a danger of there being many words but little action from the Government, with that ideology hidden in the small print.
Conversely, at the same time as the former Business Secretary, the now Secretary of State for Communities and Local Government, talked in the prospectus of freeing up local government and its partners to compete in the global market, he was interfering in their day-to-day affairs with the Trade Union Act 2016—which sought to micromanage local authority labour relations—with no recognition of any irony at all. Meanwhile, one of his predecessors at the Department for Communities and Local Government wanted to tell local authorities how to run off and on-street car parking arrangements. That state of mind has to be broken out of.
The consequences of the incapacity to deal with devolution in a significant way fall on and negatively affect people in the regions, such as the midlands. I am afraid that this rather petty, Lilliputian and prosaic interference reaffirms that the Government and Whitehall simply cannot let go; it is endemic, and it has to stop. Can anybody imagine the equivalent Secretary of State in Germany, France or Italy having the time or inclination to be bothered with such trivial interferences in the affairs of local government? I raise these issues simply for context. If the dead hand of Westminster continues to stifle innovation, imagination and entrepreneurship in the regions, and in the midlands in particular, because of a pathological inability to let things go, things will not change.
The Government set out their aims for the midlands machine in February 2015, which include raising the long-term growth rate of the midlands to at least that forecast for the whole UK, creating 300,000 extra jobs in the midlands, which is enormously welcome, creating a new skills matching service for local people and increasing the number of skilled apprenticeships, which others have referred to. They also include delivering £5.2 billion of investment in new transport infrastructure in the midlands, to which my hon. Friend the Member for Dudley North (Ian Austin) referred, and backing science and innovation, including by developing an Energy Research Accelerator through local universities. The Government also aim to support new technology in the automotive sector, to support the construction of 30,000 new homes and to make improvements to local education. The Opposition’s main concerns are how the Government will meet those targets and whether they are committed to fully funding them, particularly as our economy heads into a difficult period that will be defined by high inflation, a continued weakened pound and potentially flatlining tax receipts.
More specifically, the prospectus indicated that the midlands engine partnership would develop a £180 million fund of funds, utilising the European Union’s joint European resources for micro to medium enterprises programme, which combines European regional development funds with matched funding from the European Investment Bank. Will it still? Does the Chancellor’s slush fund, as I like to think of it, account for the loss of that money, and will it be put back into the midlands engine? My hon. Friend the Member for Coventry South (Mr Cunningham), who was here earlier, referred to that.
The Government’s aim for the midlands economy is to raise its long-term growth rate to at least that forecast for the UK. That target is based on the ability of the midlands to continue to grow at the same rate as between 1997 and 2013. There are a plethora of reasons why that is unlikely and, perhaps, overly-ambitious unless the Government pull their finger out and deal with many of the issues raised by hon. Members here today. As the prospectus says, the region’s gross value added is currently £222 billion annually, which is about 14.6% of the UK’s total economic output, and has grown by 30% in the past decade. With 24% of the 11.5 million population under the age of 20, the midlands clearly has the potential to offer a long-term, sustainable workforce. That has been referred to today in terms of skills. However, although the midlands accounts for 15.7% of all employed people, the average GVA per worker is lower than the national average.
In fact, the midlands has not been able to keep up with the north and the south-east in employment, investment and job creation. A Resolution Foundation report found that, prior to the financial crisis, employment in the west midlands city region stood at 66.7%, which was 3.2% below the city region average. It also found that, while the recovery from that crisis has seen the proportion of people in work nationally rising to record levels, the west midlands is still not back to where it was, with an employment rate of just 64.5%, compared with 71.6% across other city regions. Barring Solihull, each local authority in the west midlands has an employment rate below the average across the UK’s other city regions. That is important.
I am referring to Government statistics; I am happy to send them to the Minister. In the east midlands the situation is worse. I do not want to push on; I think we have to look at this in a constructive and positive fashion. If we are going to do that, the Government need to pull their finger out and get that midlands machine cranked up and going. Members across the Chamber have highlighted and indicated where that could be pushed and sustained. The hon. Member for Warwick and Leamington laid it out fairly clearly, but laying it out and practically putting it into effect are completely different things.
The reality is that the call to take back control that we heard during the referendum debate extends not only to the national level. It is not just about bringing back control—whatever that means—to the United Kingdom, it is about a demand from the regions for the Government to move aside to some degree and let them get on with wealth creation for all people, not just a chosen few. Andrew Bounds from the Financial Times made the point that so long as the Government control from the centre and focus so much attention on the south-east and London, the regions will not be able to move on.
The Government need to give the midlands—the home of the industrial revolution—its independence back, with powers to do the job that central Government are not capable of doing. Hon. Members have referred to the entrepreneurs, the businesses, the people who go to work and the families in the midlands and other regions as the people who deliver the wealth. Local people in the midlands are much more capable of doing the business, so to speak, than the Government will ever be. The Government have to free them up to do that. The sooner the Government stop paying lip service to regional devolvement, the better, because the 11.5 million people in the midlands deserve much better than they are getting from the Government. I exhort the Minister to push on with the midlands engine, not just in words but in practice.
It is a pleasure to serve under your chairmanship, Mr Howarth. I begin by thanking my hon. Friend the Member for Warwick and Leamington (Chris White) for calling this important debate. He brings a wealth of knowledge to the House, not only about the midlands but about manufacturing, from his role in chairing the all-party parliamentary group on manufacturing and from his experience in industry.
I am pleased to have the opportunity to set out the Government’s vision for the midlands engine. It has been a generally positive debate about the midlands, its strengths and the potential across the region. I very much like and have a great deal of time for the hon. Member for Bootle (Peter Dowd), but I was slightly disappointed by the tone of his comments. The Government are setting out on a serious path to deliver devolution across the country, and I do not recall the type of devolution happening in the midlands ever happening in any great way, shape or form under the last Labour Government. The mark of what the current Government are achieving is that 447,000 more people are in employment across the midlands now than in 2010, when the hon. Gentleman’s party left office.
As a proud midlander myself, I am passionate about the midlands and the role that it plays in our nation’s economy. The midlands’ success is vital to the UK’s economic wellbeing and to creating an economy that works for everyone. As we have heard from hon. Members, the midlands economy is built on a globally significant advanced manufacturing base. Last year, the midlands accounted for 23% of all English goods exports, with products going to more than 100 countries. Our transport manufacturing base includes international brands such as Jaguar Land Rover, Rolls-Royce, Toyota, Bombardier and JCB. In the MIRA innovation technology park, which borders my constituency, the likes of Aston Martin, Bosch, Changan and many other world-renowned companies continue to grow and innovate.
Our science and innovation capabilities speak for themselves. Warwick, Birmingham and Nottingham are all in the world’s top 150 universities. Those plus Leicester, Loughborough and Aston are in the UK’s top 50 universities. Hon. Members mentioned a number of other universities that are delivering excellence across our area.
That said, there are still challenges. Productivity is a key issue. GVA per capita in the midlands engine area is about 20% below the England average, and there is much more to be done to promote growth across the midlands. Just yesterday, we launched a Green Paper setting out our ambitions for the UK’s modern industrial strategy. Our aim is to improve living standards and economic growth by increasing productivity and ensuring that growth is spread across the whole country. This is a consultation, and we are asking people to tell us how we can best achieve our goals. Our industrial strategy will lay the foundations for a more prosperous and more equal Britain. Our focus is on improving productivity, rewarding hard-working people with higher wages and creating more opportunities for young people. Following the consultation, we intend to publish an industrial strategy White Paper in 2017. That will set out the plan for the long term.
The midlands engine is at the heart of our country and must be central to our approach. A key part of our vision is to spread growth across the UK economy, ensuring that the economy is working for everyone. Local partners have come together and formed a midlands engine partnership, which stretches from the Welsh border on one side of the country to the North sea on the other. The partnership is led by the internationally respected businessman Sir John Peace.
There has been very good progress. Under this Government, the midlands has been growing faster than the UK average, excluding London. Our support for the midlands includes the £392 million that we allocated to local enterprise partnerships in the midlands in the third round of growth deals, announced in the autumn statement. That is in addition to the first two rounds of growth deals, through which the midlands local enterprise partnerships will receive almost £1.5 billion.
The Government will publish a midlands engine strategy shortly. We are working with Departments across Government to set out the priorities for delivering the midlands engine. We will set out our plans to improve connectivity, employment, innovation and investment, which are all very important factors in improving the prosperity of people in the midlands and very important issues that have been raised by hon. Members throughout the debate.
We have of course already published a northern powerhouse strategy. The future of our economy is too important for this to be seen as a race between the northern powerhouse and the midlands engine. We are working with each area on its specific needs to ensure that all of the UK is economically strong.
Many of the Government’s existing initiatives are spreading growth and empowering local communities in the midlands. Our devolution deal for the West Midlands combined authority devolves significant powers, such as skills provision and funding. It includes a £1 billion investment fund and a £1.8 billion enterprise zone extension. My right hon. Friend the Chancellor made a commitment in the autumn statement in November that the Government will continue to work towards a second devolution deal with the West Midlands combined authority.
Our local growth fund has supported projects across the midlands. For example, the £20 million north-south rail and Coventry station scheme will improve passenger capacity and secure an increase in train service frequency between Coventry, Bedworth and my constituency of Nuneaton. There has also been support through city deals. In the Leicester and Leicestershire city deal, the advanced technology innovation centre received £2 million to create more space for high-technology jobs and businesses. That supports one of our largest science parks, where major companies include Caterpillar and E.ON.
As hon. Members have been keen to point out, many major routes and railways go through the midlands. Improving connectivity there has real benefits for the rest of our country, as well as significant benefits for local residents and businesses. Better transport connectivity allows businesses to grow and helps people to get to work. The midlands will be a major beneficiary of HS2 with various stations, but particularly at Toton in the east midlands and at Birmingham, as has been mentioned. The Government have recently committed to funding Midlands Connect to the end of this Parliament and have signalled our intent to see it established as a sub-national transport body. That will enable local partners to develop regional transport proposals for the midlands.
The Minister talks about the importance of HS2 to the region. That is important not just because of the transport connectivity and capacity improvements it will provide, but because the east midlands is the largest rail cluster in the world, and there is the obvious potential for us to benefit from it industrially. Will he say how, within the industrial strategy, he will ensure that HS2 procurement, including the £2.7 billion for new rolling stock, is used to boost our rail industry in the midlands region?
The hon. Lady asks a very good question. We have significant capacity in the midlands region in regard to rail infrastructure and the manufacturing base around it. I am sure she has already looked at the Green Paper released yesterday, which contains a section that relates to procurement. I urge her to contribute on the Green Paper. My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy has made it clear that he is keen to hear from right hon. and hon. Members in relation to development of the Green Paper and the reality of the White Paper. I encourage all colleagues to get involved in that process.
To elaborate on the potential of HS2, there is a lot of debate about speed. I say to hon. Members that speed is important and, if we are delivering a brand-new rail line, why would we not use up-to-date technology? The biggest wins, however, are in developing additional capacity and reliability. My constituency is on the west coast main line. Because there is very little if any capacity left on that line, there are perpetual reliability challenges. The situation should improve once we secure HS2.
Does the Minister agree that the benefits of HS2 stretch out not only to the building of railway carriages, but to environmental needs, namely trees? Trees along the HS2 route will be grown in my constituency even though, sadly, HS2 is quite a way away from it. That is an example of HS2 investment having a benefit across the whole of the midlands region.
My hon. Friend makes an extremely pertinent point. It is often said that only the places that have the hubs will benefit from HS2. It is certainly the case that there will be many related situations that we might not automatically think of—in my hon. Friend’s case that means the trees that will be grown in her constituency. As she says, that will have an important economic benefit to her constituency. I am sure there are many other examples we will be able to point to as that project moves forward.
A key component of the midlands engine is trade and investment. The Secretary of State for Communities and Local Government led the inaugural midlands engine trade mission to the US and Canada in September, and Sir John Peace led a second mission, in November, to China. The successes of those missions include £1.3 million of business secured, and a further £6.2 million of business expected over the next 12 months. To date, more than 70 companies have benefited from those missions.
Before I conclude, I want to pick up one or two more points, particularly on transport infrastructure. There was a suggestion that there was a significant lack of investment in transport infrastructure across the midlands. I reiterate that £5 billion of capital investment into new transport infrastructure is being made across the midlands. That includes upgrading sections of the M42, M5, M1 and M6 to four-lane smart motorways, and £2.7 billion for new trains on the east coast main line. In addition, a £55 billion investment is going into HS2. As hon. Members know, a significant amount of local funding is also being devolved across the region to our local enterprise partnerships.
We should not understate the importance of Birmingham Airport and East Midlands Airport to the midlands region. East Midlands Airport is at the forefront of freight and is the second busiest freight hub in the country. It is probably the biggest dedicated freight hub in the country. Birmingham Airport is now seeing significant passenger growth. As part of the regional growth fund made by the Government during the last Parliament, a significant project was undertaken to extend the runway at Birmingham Airport, including the diversion of the A45. As a subsequent benefit of that longer runway, Birmingham Airport is now able to serve longer-haul markets than it was, because it has that longer runway to support the long-range planes.
To conclude, I thank hon. Members for their thoughtful contributions. I know that all the Members who are here representing midlands seats bring a passion not only for the country, but for the midlands region. Many of the topics that have been mentioned—connectivity, enterprise, trade and investment—will be covered in our midlands engine strategy, and the midlands engine will have found the points made in this debate extremely helpful in its future work. We will continue to work with the midlands engine to respond to the challenges and opportunities set out in the industrial strategy and to develop its vision for making the midlands an important engine of growth.
Once again, I thank you for your chairmanship, Mr Howarth. I am grateful for the Minister’s response to the debate, and am also grateful for all the Members who were able to contribute. I agree with the Minister—one thing we share is our passion for the midlands. How we reach a consensus on a direction for the midlands will play a key role in how the strategy develops.
I cannot end this debate without mentioning that, in terms of vibrancy and desirability to live, Warwick district has just come top in the west midlands. That is possibly because we have the skills, we have low unemployment, we have the colleges and we have the great universities on our doorstep. I hope what we have in Warwick district is a microcosm of what we will be able to achieve in the midlands as a whole. I hope that, as the strategy develops into a White Paper, the debate will continue to ensure that we achieve the best we can for our constituents and the region as a whole.
Question put and agreed to.
That this House has considered the Midlands Engine.
UK Helicopter Industry
I beg to move,
That this House has considered the UK helicopter industry.
It is a pleasure to serve under your chairmanship, Mr Howarth. The helicopter industry is a strong existing centre of research, innovation and excellence on which we must build, using the tools emerging in the Government’s industrial strategy to secure our strategic ability to produce helicopters and other defence aerospace products. My constituency is absolutely central to that industry in the UK.
Yeovil has a long history of involvement; we have been making helicopters for many decades. Many will have heard of the company Westland Helicopters, known as Leonardo now that it is owned by the Italian Government-controlled firm Leonardo. It was initially involved in making fixed-wing aircraft, and has latterly focused more on helicopters. Our area takes great pride in the firm; pretty much everybody in my constituency is connected in some way to someone who has flown a Westland product, had a hand in making one or worked for a Westland supplier at some point in their life. It touches everybody.
It is also worth pointing out that my constituency contains the royal naval air station at Yeovilton, which flies a lot of those machines and has done for many decades. Soldiers and sailors in our armed forces know very well how important helicopters are to their safety on and around the battlefield. I particularly do not want to see a repeat of what happened in the Iraq war when armed serving officers essentially said that they did not have the battlefield helicopter support that they needed, which exposed them to unnecessary casualties from improvised explosive devices.
About 3,000 jobs in Yeovil depend directly on Leonardo, and there are more in the supply chain. It is a multi-billion-pound firm in terms of revenue generated a year, and the biggest Italian inward investment into the UK. It has an iconic set of products, including, over the years, the Westland Wessex, the Sea King, the Lynx, the Merlin and now the Wildcat. In all my dealings with the Italian management, they have shown themselves to be willing to invest more in the industry to support it. I would like our Government to step up and think about how we can make more of that good relationship with Italy.
I thank the hon. Gentleman for securing this important debate. The fact that there are not enough Members here to back it is not an indication of the interest in the subject. Does he agree that it is essential that the skills of our workforce are not wasted? The Minister must fulfil the Government’s obligations to source locally rather than outsource, and a clear message must be sent about the possibilities of producing in Britain, the importance of a skilled and expert workforce and opportunities for apprentices in Great Britain, here at home.
I absolutely agree with that sentiment. It is essential that we build on the highly skilled workforces in the UK. There is one in Yeovil, and I know that there are others within the industry in other parts of the UK. We have a great opportunity to construct a proper modern industrial strategy for turbo-charging skills development and apprenticeships.
The hon. Gentleman mentions the industrial strategy, but it makes no direct mention of this hugely important industry and the need for a stand-alone industry that produces helicopters. Will he call for a commitment—it would be great to hear one from the Minister—to a direct reference to that in the refreshed defence industrial strategy when it is announced? Will he also commit to working with everyone in Yeovil and nationally—this is a national issue as well—including Lord Ashdown, who retains a big interest in it?
Yes, absolutely. It is an important national industry, and I want to see it mentioned specifically within the industrial strategy. I have been working hard—I thank the Minister for her engagement with me over many months, since she was appointed, as well as the former Minister—on how we can make the industry a part of the industrial strategy. I welcome the support of everybody across the political spectrum to help the industry go from strength to strength.
The issue is about how we go forward. We have a strong local cluster in the Yeovil area, which at the moment can produce helicopters end to end, making all parts. I would like that to continue. There is a live issue involving the Wildcat airframe jigs, as anyone who has been following it will know. It is a relatively small issue within the overall scheme of the industry, but it is an important signal that we want to be able to manufacture helicopters end to end in the Yeovil area. It would give the community a lot of confidence that we mean business about ensuring that the industry is as strong as possible for the future. The question is how to preserve the industry and take it to the next level.
I believe that joined-up thinking and a clear plan for infrastructure and skills development is essential and should be promoted through the industrial strategy. It is about raising the competitiveness of the whole industry environment in the Yeovil area, and indeed in the south-west. The thing about competitiveness is that it is both an internal and an external matter. From an internal point of view, our local industries should focus, as they are doing, on continuously improving their competitiveness, but it also helps to have external players involved. Yeovil made a fundamental mistake some years ago by not inviting Ford to come and manufacture cars in the town. That would have been good to have as a discipline.
The issue is also about promoting innovation within the industrial strategy. I welcome the Government’s strategic partnering arrangement with Leonardo to consider developing its existing platforms as well as how we can make the products of the future, such as unmanned aerial vehicles, and all their potential technology spin-offs, including battery development and so on.
It is also very important to promote inward investment, and since I was elected I have tried to create a step change in the way the town thinks about such investment, and to get it to grab opportunities to diversify its industries. That is because Yeovil very much grew up as a company town. There was a time some years ago when out of 30,000 residents 10,000 were employed at the Westland site. That number has come down over the years to about 3,000 now, but Westland remains a very important player locally. Nevertheless, the more that we can try to diversify, the better health the industry will be in.
The UK helicopter industry has very serious competitive strengths, in design and engineering, and in specialties such as the manufacture of blades and gearboxes. In addition, Yeovil works closely with the Ministry of Defence client, and skills behind that work in areas such as certification, software design, materials and acoustic treatments, are available in the local supply chain and are second to none in the world.
There is a strategic imperative for an independent design and production capability to exist in the UK, and that inevitably entails some level of Government involvement as well as early, clear and efficient procurement that will take the whole business ecosystem into account. I welcome the focus on value for money within the MOD, but we also need to think quite holistically about the impact of different procurement decisions.
It is also very important within this context that we attempt to develop indigenous intellectual property. It is much better to develop our own products, because that is how the industry captures higher margins and secures higher living standards for the workforce and the population. Building to print, using other people’s designs and simply assembling products, is just not as good a business to be in. Indeed, it is almost a distraction from what the core endeavour of design and engineering should be, which is to create product opportunities and export opportunities. So, we must have early engagement with Her Majesty’s armed forces, to ensure that we are developing the capability that they want and need, while also making the platforms flexible for volume production at different levels of capability.
As I said before, there are opportunities to deepen relationships with Italy and the EU, and with US firms. There is a huge opportunity at the moment, for example, in service and support. There is the potential for Leonardo to work closely with Boeing, which I encourage and I would like the Government to try to encourage it too, because that could be a very good foundation for new product development to emerge from the excellent cash-flow opportunities.
There is a role for Government. We have seen some part of that in the strategic partnering arrangement and I would now like to see more joined-up thinking by the MOD, including in procurement, in addition to the support that can be given by both the Department for Business, Energy and Industrial Strategy, and the Department for International Trade. At times civil servants in different areas have not always known what other parts of the Government are doing.
I thank the hon. Gentleman for being so gracious in giving way again. Does he agree that there is also a need to have closer relationships between the helicopter manufacturers and those companies that provide the armaments for use on the helicopters, in other words companies such as Bombardier in Belfast? It is very important sometimes that we are in touch with the companies producing the technology as it is developed. Having heard her speeches in the past, I know that the Minister is well aware of that, but does he also feel that we need that closer co-operation between these armaments companies and the helicopter manufacturers?
I thank the hon. Member for his intervention and, yes, I absolutely agree that the industry needs to take a holistic view, in order to work with the MOD and other clients in the rest of the world, to see how we can optimise these matters.
I call on the Government to support my infrastructure-led industrial strategy plans for the Yeovil area, with broader input from the national work on industrial strategy. I would also like the Government to support the iAero hub, which is a proposal that came out of the county council and the local enterprise partnership. The idea is to network up all the aerospace technology firms in the south-west around a hub in Yeovil, with a dedicated facility in the town for manufacturing innovation. Leonardo wants to acquire land. The county council has committed to putting in some money, but we need more money for the LEP to come up with its piece and, eventually, we will need more money from the EU funding— £10 million—or whatever the successor to that EU funding is.
I would also like the Government to encourage the clustering around the Yeovil area and inward investment, which I mentioned earlier, and to help the companies to focus on transforming themselves into firms that can sell products around the world in volume, to enable them to take advantage of the very high quality products that are being produced in and around Yeovil.
I would also like the Government to support the Yeovil area as a centre of excellence and technological skills development, with an institute of technology as a step change in the local tertiary education offer. There is widespread industry support among the local tech firms for that idea, and I would like to take it forward.
I would also like to make sure that the prosperity agenda is implemented in Yeovil, to ensure that Boeing and Leonardo work together in the town to seize opportunities in service and support, and in their manufacturing supply chain.
I would like us to work more closely and creatively with Italy on mutual defence programmes, and I would love it if the Minister would find time in her busy schedule to visit Italy and meet the management of Leonardo and, potentially, some Italian politicians, to talk about the ways in which we can build on our relationship with Italy after Brexit and do even more to co-operate with Italy than we are doing now.
I would also like us to consider spending substantially more than 2% of our GDP on defence, to increase our defence capabilities with more personnel and more equipment, which will be needed given the enlarged role in global affairs that I see us having in the future. Clearly, in Europe there is a loss of confidence in America’s commitment to the NATO alliance. We should lead on that issue, and on ensuring that our friends and allies in Europe are confident that the NATO alliance will continue to matter in the future.
Last but not least, I would also like the Government to help to promote civil use of Yeovil-made Leonardo helicopters, which have an exemplary safety record. That is especially important given the low morale that currently exists among offshore platform workers, due to safety concerns about other fleets of helicopters.
To give the Minister ample time to reply to the debate, I will just summarise by saying that the Yeovil area presents huge opportunities to raise growth and export potential, and to help to drive up local and UK living standards. Its helicopter industry is the core of the UK’s strategic ability for the flexible production of crucial battlefield lift capability, and its companies are focused on delivering continuous improvement, innovation and value for money to military and civil clients, and they also make some of the safest and most capable aircraft available. So let us build on this existing centre of excellence and rotor speciality, using all the elements of the Government’s industrial strategy to drive growth, skills and innovation throughout the south-west.
It is a pleasure to serve under your chairmanship, Mr Howarth, this morning. I congratulate my hon. Friend the Member for Yeovil (Marcus Fysh) on securing this timely debate on the UK’s helicopter industry. He is absolutely right to raise this issue, which is important for his constituents, particularly given Yeovil’s long history of supporting our helicopter industry, which he highlighted. I welcome the opportunity to highlight to the House the work we are doing.
This is an ideal moment both to take stock and affirm that our armed forces are indeed the biggest customer of the UK helicopter industry, and to summarise some of the investment that the Government have made and continue to make in the industry. We have spent considerable sums over recent years investing in our helicopter capabilities for our armed forces, and much of that investment has been focused on Leonardo, with more than £1 billion spent on the development and manufacture of 62 Wildcat helicopters; some £800 million spent on delivering 30 Merlin mark 2 into service; and about £330 million being spent on developing the Merlin mark 4 upgrades across a 25-aircraft fleet. That investment is vital in ensuring that we have the helicopter capability we need for decades to come. The helicopters also need to be kept in tip-top condition and filled with the latest equipment.
On 9 January I was delighted to go to my hon. Friend’s constituency of Yeovil to announce a £271 million deal with Leonardo’s helicopter division to provide through-life support and training for Wildcat, which is one of the most advanced helicopters in the world. That will not only deliver a key capability for the Royal Navy and Army but will sustain 500 vital skilled jobs in the UK, most of which, as my hon. Friend has pointed out, are in the Yeovil area.
In addition, just last week I announced a £269 million contract with Lockheed Martin for the Crowsnest helicopter-based surveillance system. It will act as the eyes and ears of the Royal Navy’s ships, helping to keep our armed forces safe as they deploy around the world. The contract will also secure more than 200 highly skilled UK jobs, about 60 of which, I understand, are in the south-west—no doubt very close to, if not in, the Yeovil constituency. I reassure my hon. Friend that that and other commitments underpin our spending of more than 2% of our GDP on defence and security, which will be maintained for every year of this decade. The commitments are all part of the Government’s 10-year £178 billion plan to provide our armed forces with the battle-winning equipment they need.
Given that Leonardo’s helicopter division is based in Yeovil, my hon. Friend is especially interested in the helicopter element of that. Last year, we put in place a 10-year strategic partnering arrangement with Leonardo, building on the many decades of work we have done with the company. That arrangement is key to maintaining and improving cost-effective support for our helicopter fleets.
On my recent visit, I was briefed not only about the thousands of people employed directly by Leonardo’s helicopter division in Yeovil, but about the supply chain of companies, which my hon. Friend mentioned. I pay tribute to the 4,300 people who work at the royal naval air station—RNAS—Yeovilton, one of the Navy’s two principal airfields. More than one third of the UK’s military helicopter fleet is based in, and maintained from, Yeovil. The people working there will continue to support our Merlin and Wildcat helicopters for at least the next two decades. Indeed, the company will also support our current Apache fleet until they are retired. Put simply, it is clear that none of that world-leading capability would be possible without the expert work undertaken every day by the British helicopter industry, particularly by those working in my hon. Friend’s constituency.
The industrial strategy Green Paper, which was launched yesterday, has been mentioned. It signals the start of an extensive period of engagement with businesses, local leaders, local enterprise partnerships and other stakeholders right across the country, and offers an “open door” challenge to industry to come up with proposals that will transform and upgrade the sector. The consultation will provide a firm basis on which the Government can deliver a strategy that will drive growth and productivity for decades to come across all parts of the UK and all industries. The Ministry of Defence is fully engaged with the work, recognising as it does that the defence industry provides significant opportunities in many sectors and in all parts of the UK.
For defence in particular, as we outlined in the 2015 strategic defence and security review, we have a national security objective to promote UK prosperity, part of which includes a refresh of our defence industrial policy, which was mentioned by the hon. Member for Leeds North West (Greg Mulholland). That work is well under way, and an industry consultation has just been completed. I will take on board the representations I have received today regarding the opportunities that UK defence and security companies have to compete, grow and develop successfully in a global market. We want to use our defence spending to help the industry sustain vital skills, and to promote prosperity through developing the export potential of new equipment, including helicopters.
The industrial backdrop and each of the themes that have come up in this debate—skills, exports and new technologies—is as applicable to the helicopter industry as it is to any other. Those themes are already enshrined in our strategic partnering arrangement with Leonardo’s helicopter division, which was signed in July 2016. I take on board my hon. Friend’s invitation to go and mark the anniversary of that signing with our Italian colleagues and friends. We are already very engaged in working with Italy on the Typhoon aircraft as well.
The hon. Gentleman is right to re-emphasise that point. It was a pleasure to meet the apprentices employed in Yeovil by Leonardo’s helicopter division when I visited. I think I am right in saying that the armed forces are the biggest provider of apprenticeships. The defence industry partners we work with are also enormous providers, so we have a key role in that regard.
I want, briefly, to touch on exports and on how important they are to our work on helicopters at Leonardo in Yeovil. Leonardo has sold the Wildcat aircraft to South Korea and the Philippines, and continues to sell the Merlin to customers with demanding operational requirements. The contract I saw last week, for example, was for the search and rescue variant currently being manufactured for Norway. Those sales bring valued jobs and prosperity to the local region, and have contributed an average of more than £700 million a year to UK defence exports for the past five years—a truly remarkable sum. We are doing everything we can, building on the specialist skills of Government, our network of defence attachés in embassies around the world and our newly created Department for International Trade, where the Defence and Security Organisation resides. The latter provides specific export support to Leonardo, meeting regularly with the company and doing whatever it can to use Government resources to create a strategic export plan for the firm, with the aim of maximising civil and defence exports and producing an ongoing impact on UK prosperity.
My hon. Friend mentioned important initiatives such as iAero, which is being driven by leading south-west aerospace partners. Through the aerospace growth partnership, industry and Government have committed £3.9 billion to aerospace research to 2026, including on rotary wing, from which the UK helicopter industry will benefit. We are also co-funding a project with Leonardo to understand the potential of a rotary wing unmanned air system capability, which I had the privilege of witnessing at first hand in Benbecula last October.
My hon. Friend raised the matter of jigs and tooling for Wildcat held at the GKN premises in Yeovil. I can confirm that that is Ministry of Defence equipment but also that we have not yet been given a proposal by the industry about the next steps. We would expect to be able to make a decision by July, however, and I look forward to working with my hon. Friend closely during this time. That decision will take into account not only the specific proposal but the UK’s wider interests.
In conclusion, I emphasise how grateful I am that the outstanding skills and expertise of those employed on helicopter-related work in the UK, particularly in the south-west, are helping us to meet our ambitions and our commitment, ensuring that we continue to deliver cutting-edge, battle-winning capability for our armed forces in the UK for years to come.
Question put and agreed to.
UK Decarbonisation and Carbon Capture and Storage
[Mr Clive Betts in the Chair]
I beg to move,
That this House has considered UK decarbonisation and carbon capture and storage.
It is an honour to serve under your chairmanship, Mr Betts, and to have secured this debate. First, I declare an interest. Prior to coming to this place, I was Shell’s contract lead on the carbon capture and storage project at Peterhead. I moved the project from its previous format in Longannet. Further to that, I was on the CCS parliamentary advisory group working under Lord Oxburgh. It reported to the Secretary of State for Business, Energy and Industrial Strategy in September last year with the report, “Lowest Cost Decarbonisation for the UK: The Critical Role of CCS”. I therefore have great interest in the subject, and I commend all Members who have come forward to speak in the debate.
It is prudent to consider, at least summarily, the background against which the debate has been brought to the House. Since successfully winning a narrow majority, the Conservative Government have been rapidly drawing back from the previous coalition Government’s much-lauded green policies. Tony Juniper described it in his article in The Guardian on 24 July 2015 as
“an anti-environment ideology based on the view that ecological goals interfere with the market, increase costs and are against the interests of people.”
The cancellation of the ring-fenced £1 billion funding for the carbon capture and storage competition on 25 November 2015 is just one of a succession of cancellations of green policy initiatives and renewable programmes. Those cancellations include scrapping support for onshore wind; axing solar subsidies; removing the guaranteed level of renewables obligation subsidy for biomass; killing the flagship green homes scheme; privatising the green investment bank, which my hon. and learned Friend the Member for Edinburgh South West (Joanna Cherry) will discuss tomorrow; removing incentives to buy greener cars; abandoning the plan for zero-carbon homes; a U-turn to allow fracking on sites of special scientific interest; dropping the green targets; and—this is what triggered the CCS parliamentary advisory group’s report and, subsequently, this debate—scrapping the ring-fenced £1 billion of funding for the carbon capture and storage competition in November 2015.
With so much backtracking on green and renewable energy initiatives, the scrapping of that funding may not have been a shock to everyone. I forecasted it, but the industry, which was four years into the £1 billion competition, was shocked. Quite honestly, it virtually wiped out the industry in the UK in one fell swoop. Dr Luke Warren, chief executive of the Carbon Capture & Storage Association, said that the decision was
“just incredible. Only six months ago the government’s manifesto committed £1bn of funding for CCS…Moving the goalposts just at the time when a four-year competition is about to conclude is an appalling way to do business.”
What does that do for investor confidence? The litany of cancelled, diluted and abandoned renewable and green initiatives, as well as those within the energy industry as a whole, have virtually destroyed investor confidence in the UK energy sector. The third report of the 2015-16 Session by the Energy and Climate Change Committee, “Investor confidence in the UK energy sector”, was published on 23 February 2016. The Committee is chaired by my hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil), and the report identified six factors that combined to damage investor confidence in the UK. The fourth was:
“Policy inconsistency and contradictory approaches have sent mixed messages to the investment community”.
The report goes on to cite three specific examples, of which the third is
“emphasising the important role of gas while scrapping support for carbon capture and storage.”
Earlier in the same month, the same Committee released a report, “Future of carbon capture and storage in the UK”, which opened with the warning:
“Meeting the UK’s climate change commitments will be challenging if we do not apply carbon capture and storage (CCS) to new gas-fired power stations and to our energy intensive industries.”
It goes on to state that alternatives to CCS are likely to cost the UK more in the future to meet legally binding climate change targets as set out in the Climate Change Act 2008. The report went on to criticise the Government’s focus on investment in shale gas exploration and quoted the then Secretary of State for Energy and Climate Change as saying:
“In the next 10 years, it’s imperative that we get new gas-fired power stations built.”
The report concluded that
“the manner in which the carbon capture and storage competition was cancelled, weeks before the final bids were to be submitted and without any prior indication given to the relevant parties, was both disappointing and damaging to the relationship between Government and industry.”
There will be positive news for the Government on that later in my speech.
I congratulate the hon. Gentleman on securing the debate. The National Audit Office said that CCS is still proving costly. The Treasury pulled the funding away before there was an opportunity to prove whether or not it was going to be too costly. CCS would provide such a major boost to industries such as those on Teesside, which include cement, steel and fertilisers. Does he agree that it is about time the Government re-engage? They are seen as disengaged at the moment.
I completely agree with the hon. Gentleman. There are signs that the Government will be considering that. I look to the hon. Member for Waveney (Peter Aldous) and the Minister to confirm that they will consider that in their strategies. The hon. Member for Stockton North (Alex Cunningham) is absolutely right about investment in a key industry. When I was in the project in Peterhead, the technology was basic. We were capturing 90% of the carbon. With advances in technology, we will increase that, and with economies of scale and improved technologies, it will be cheaper. While the report understands the difficult balancing act that the Government face with public expenditure, the delay in bringing forward any plans to implement CCS in the UK while proceeding with fracking means we will not remain on the lowest-cost path to our statutory decarbonisation target.
What of forward planning? On 26 February 2016 in an interview in Utility Week, the chief executive of the Committee on Climate Change, Matthew Bell stated:
“We’ve been very clear that, with the 2050 target in mind, it is much less expensive to meet if we’re able to develop successfully CCS. The government needs to come up with a very credible plan on how it’s going to push forward with CCS.”
Bell says that, without such a plan, that investment in the power sector, at least on the more conventional generation front, could suffer. Gas is being pushed by the Government as the bridging fuel in the transition towards a low-carbon economy, although no new combined-cycle gas turbine power stations have been built in the UK in the past six years.
Acknowledging what is widely expected to happen as coal-fired power stations leave the energy system, Bell said:
“Between now and the early 2030s, gas could have an increasing and significant role”.
He also said:
“However, from some point in the 2030s, if you’re going to hit the 80 per cent gas target and don’t have CCS, then gas has to be virtually off the system…That would imply that during the course of the 2030s gas has to play a declining role – but there is a big ‘if’ there as that depends on CCS.”
Sitting suspended for a Division in the House.
Thank you, Mr Betts. I will continue with my quotation from Matthew Bell:
“We have a 15 to 20-year time horizon with reasonable certainty for the role of gas, then we have an uncertain period—is that enough for investors to decide to go ahead with their projects? There is a way of clarifying that uncertainty, and that is for the government to be clear on CCS.”
There is a consensus from watchdogs and experts alike. They agree that the Government have the opportunity to get this right. Getting it right, including carbon capture and storage, will be more economical for the UK in achieving our climate change targets, while simultaneously creating CCS as a leading, technologically advanced industry within the UK.
What of the costs of meeting our climate change commitments without CCS? The National Audit Office’s report of 20 January 2017, “Carbon capture and storage: the second competition for government support”, found that carbon capture and storage “formed an important part” of the Department for Business, Energy and Industrial Strategy’s role in reducing carbon dioxide emissions. The report goes on to state:
“Given its potential to decarbonise different sectors, many stakeholders still regard CCS as being critically important to the UK achieving its decarbonisation target. It is currently inconceivable that CCS projects will be developed without government support.”
That support would enable investment in CCS, creating a large-scale demonstration of CCS technical and commercial viability, and leading to further-improved CCS schemes in the UK and the development of CCS as a successful industry. Although the report is constrained by the very specific NAO brief, which was to assess how the Department ran the second competition before its cancellation, it is none the less unequivocal in its support for CCS as the least-cost route to decarbonisation.
What of the most detailed report focused on the determination of whether CCS offers the solution of lowest-cost decarbonisation? I am referring to “Lowest Cost Decarbonisation for the UK: The Critical Role of CCS”, which is cited as Oxburgh 2016, a report from the parliamentary advisory group on carbon capture and storage to the Secretary of State for Business, Energy and Industrial Strategy. The report was requested by the then Secretary of State for Energy and Climate Change, the right hon. Member for Hastings and Rye (Amber Rudd). Its terms of reference were to assess the potential contribution of CCS to cost-effective UK decarbonisation and to recommend accordingly to the Secretary of State by the end of summer 2016.
The report was delivered by Lord Oxburgh and his team in September 2016. The group comprised some of the most qualified and experienced representatives of politics, industry and academia. They did not carry out primary research but instead, given the substantial volume of work already published on the subject, focused on synthesising experience and knowledge into an optimum recommendation. They also considered walking away from CCS as an option.
The report found six core recommendations that are worth repeating in full:
“1. Establish a CCS Delivery Company…A newly formed and initially state-owned company tasked with delivering full-chain CCS for power at strategic hubs around the UK at or below £85/MWh on a baseload CfD equivalent basis. Formed of two linked but separately regulated companies: ‘PowerCo’ to deliver the power stations and ‘T&SCo’ to deliver the transport and storage infrastructure, the CCSDC will need c.£200-300m of funding over the coming 4-5 years.
2. Establish a system of economic regulation for CCS in the UK…The government will establish a system of economic regulation for CCS in the UK which is based on a regulated return approach. This will draw heavily on existing regulatory structures in the energy system and hence include: a CCS Power Contract based on the existing CfD or capacity contract to incentivise CCS for power…
3. Incentivise industrial CCS through Industrial Capture Contracts…The Industrial Capture Contract, will be funded by the UK government and will remunerate industry for capture and storage of their CO2. It will be a regulated contract which will have a higher price in the early period in order to deliver capital repayment in a timescale consistent with industry horizons…
4. Establish a Heat Transformation Group…The Heat Transformation Group will assess the least cost route to the decarbonisation of heat in the UK (comparing electricity and hydrogen) and complete the work needed to assess the chosen approach in detail. The HTG has a likely funding need of £70-90m.
5. Establish a CCS Certificate System”—
this is completely self-explanatory—
“Government will implement a CCS Certificate System for the certification of captured and stored CO2.
6. Establish a CCS Obligation System…Government will also implement a CCS Obligation from the late 2020s as a means of giving a long-term trajectory to the fossil fuel and CCS industries. This will put an obligation on fossil fuel suppliers to the UK to sequester a growing percentage of the CO2 associated with that supply.”
Climate change bodies, politicians and industry alike almost all agree that CCS is the optimum low-cost option for decarbonising the UK, but it is generally accepted that only Government intervention will stimulate it in the UK. I therefore ask the Minister please to consider carefully carbon capture and storage as part of the Government’s new, hands-on, interventionist industrial strategy for Britain.
What is the way forward? The way to a greener industrial future and lowest-cost decarbonisation for the UK without doubt includes carbon capture and storage. The proven technology continues to improve and we should not be frightened to embrace the new technologies that continue to spring up around CCS, such as Toshiba’s new 25-MW-gross electric turbine, the headline for which reads:
“Toshiba Ships Turbine for World’s First Direct-Fired Supercritical Oxy-Combustion CO2 Power Cycle Demonstration Plant to U.S.”.
That supercritical CO2 power-cycle system achieves the same level of generating efficiency as a combined-cycle power plant. It separates and collects CO2 at high pressure, eliminating the need for separate carbon capture equipment or processes, and secures full CO2 capture—I repeat: full CO2 capture—without any increase in the cost of electricity, using supercritical CO2 as a working fluid to generate low-cost electricity while eliminating emissions of nitrogen oxides and other pollutants. We must embrace such technology or risk falling further behind or completely missing out on a unique opportunity.
Where should we develop the first CCS project? We already have some shovel-ready projects.
I congratulate the hon. Gentleman on securing the debate. He is making some good points. Has he considered the impact that leaving the European Union might have on Britain’s ability to deliver on its climate change obligations? Previously, we looked towards a European-wide solution at the Paris climate change summit, so what more do we now need to do in Britain to meet those carbon-reduction obligations?
The hon. Gentleman makes a good point. Now that we have chosen this path for the country, I hope that Brexiteers and remainers alike will make the best fist of it and work collectively with our European neighbours for the best, but he is right that we should do more in Britain and should focus on that. His point is well made.
Again, I agree completely with the hon. Gentleman. Given the coal mining in Europe for power generation and having to deal with climate change, we certainly ought to look at that.
Shortly before the demise of the Department of Energy and Climate Change—it is now the Department for Business, Energy and Industrial Strategy—it commissioned a study from the Energy Technologies Institute to examine where CO2 clusters and commercially viable storage could be developed around the UK by 2030. The study identified five locations. Only one is deliverable right now, and I will spend a few moments describing how that so-called Acorn project could grow into a mighty oak tree of carbon capture, transport and storage.
To get a CO2 takeaway network to operate, we need to gather CO2 from multiple sources onshore and to transport it to the coast through a pipe and then through an offshore pipe to its carbon storage destination. St Fergus in north-east Scotland is the offshore oil industry equivalent of Clapham Junction. Many of the gathering pipes from the North sea bring oil and gas to landfall at St Fergus, which has a huge amount of pipeline infrastructure and processing equipment available. With the decline of North sea activity in certain fields, some of that equipment is no longer required.
Specifically, pipelines from St Fergus to the Atlantic and Goldeneye gas fields have now ceased hydrocarbons transport and are in fact scheduled to enter a decommissioning process. Onshore, three facilities service different offshore pipeline networks and produce about 400,000 tonnes per year of carbon dioxide, which at the moment is vented into the atmosphere. The Acorn project aims to capture and store that CO2. The SAGE—Scottish Area Gas Evacuation—plant is also in St Fergus but, given the time, I will move on to allow other Members the opportunity to speak.
What of the Government’s new industrial strategy? My colleague the hon. Member for Waveney will discuss that in more detail, so I will touch on it only lightly. Publication this month of the initial “Building our Industrial Strategy” Green Paper is the first step towards introducing a new, engaged Government-industry relationship, which is to be commended. The paper invites engagement and comment, and is most welcome. I urge the Minister to include CCS in the final strategy, and ask him to give assurances today that CCS will be considered carefully and implemented as one of the many steps into Britain’s new industrial future, which looks to both industrial development and a greener, cleaner industrial future for our children and our children’s children.
The summary of the key findings of the CCS parliamentary advisory group’s report states:
“CCS is essential for lowest cost decarbonisation
1. This report addresses the policy disconnect that arises between the previous Government’s cancellation of the…CCS …competition on grounds of cost and the advice it received from a number of independent policy bodies that CCS was an essential technology for least cost decarbonisation of the UK economy to meet international agreements (most recently Paris 2015).
2. The Committee on Climate Change…recently reported the additional costs of inaction on CCS for UK consumers to be £1-2bn per year in the 2020s, rising to £4-5bn per year in the 2040s…The group agrees carbon capture and storage is an essential component in delivering lowest cost decarbonisation across the whole UK economy.
CCS works and can be deployed quickly at scale…Current CCS technology and its supply chain are fit for purpose”—
as I said, CCS works are shovel-ready—
“UK action on CCS now will deliver lowest cost to the consumer. There is no justification for delay. Heavy costs will be imposed on current and future UK consumers by a continued failure to enact an effective CCS policy…Ample, safe and secure CO2 storage capacity is available offshore in the rocks deep beneath UK territorial waters and this represents the least cost form of storage at the scale required…CO2 re-use, such as enhanced oil recovery and the production of materials such as building products, already exists and should continue to be encouraged,”
but it will not be able to deal with the huge volume required to make a difference in meeting our climate change targets. The summary continues:
“The lowest cost CO2 storage solution for the UK at the scale required will be offshore geological storage in UK territorial waters. There is no reason to delay…
CCS in the power sector has an essential enabling role.
CCS has direct or indirect implications for the decarbonisation of all four of the major fossil fuel consuming sectors of the UK economy—industry, power, transport and heating. They need to be considered together so that synergies of a common infrastructure can be exploited…
With some 200TWh/year of new clean power generation needed in the UK system in the 2020s fossil fuels with CCS will play an important role as a cost competitive and potentially flexible power generation technology.
There is a widespread view that CCS has to be expensive. On the contrary, the high costs revealed by the earlier UK approaches reflected the design of these competitions, rather than the underlying costs of CCS itself.”
The poor design in the second CCS competition
“led to the lack of true competition and the imposition of risks on the private sector that it cannot take at reasonable cost for early full-chain”
development. The summary also states:
“Previous third party analysis by the CCS Cost Reduction Taskforce and for the Committee on Climate Change as well as analysis performed for this report show full-chain CCS costs at c.£85/MWh under the right circumstances. This report concludes that, under the right conditions as set out in this report, even the first CCS projects can compete on price with other forms of clean electricity.
To ensure that least cost CCS is developed when earlier approaches have foundered a CCS Delivery Company…should be established that will initially be government owned but could subsequently be privatised”
if the Government so wish. The summary continues:
“This company will have the responsibility of managing ‘full-chain’ risk and will be responsible for the progressive development of infrastructure focused on industrial hubs to which power stations and other emitters could deliver CO2 which, for a fee, will be pumped to appropriate storage.
The CCSDC will comprise two companies: ‘PowerCo’ tasked with delivering the anchor power projects at CCS hubs and ‘T&SCo’ tasked with delivering transport and storage infrastructure for all sources of CO2 at such hubs.”
It is clear that we must think and act more holistically about our energy needs and uses, and the inevitable effects of our behaviour on our planet. I hereby recommend that CCS be included in the Government’s new industrial strategy for the benefit of everyone in the UK now and in the future, as our children and our children’s children will be presented with our bill should we get this wrong again.
It is a pleasure to serve under your chairmanship, Mr Betts, and I will do my best. I congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on securing this debate, which comes at a particularly opportune time, following the publication yesterday of the Government’s Green Paper, “Building our Industrial Strategy”.
I served with the hon. Gentleman on the group chaired by the noble Lord Oxburgh, which published its report on the future of CCS last September. I commend the noble Lord on the way he chaired the group and for looking at all the evidence, seeking out all views and arriving at what I believe are sound and sensible recommendations that the Government should put into practice as soon as possible. It should be noted that the report has been welcomed globally and the noble Lord has been invited to such countries as Norway, Australia and Canada to talk about it.
The group’s membership was wide-ranging and cross-party, and included independent experts from the fields of industry and research. We heard from a wide range of witnesses who work in research and development, industry, and banking, as well as groups such as the Committee on Climate Change. We set out with no preconceived ideas about what our conclusions might be, mindful that the Government’s cancellation of the CCS competition on cost grounds might mean that CCS was a non-starter. We considered a wide range of evidence and concluded that CCS has a crucial role to play if the UK is to deliver the emissions reductions to which it is committed at the lowest possible cost to consumers and taxpayers.
I am grateful to my fellow co-chair of the all-party parliamentary group on CCS for giving way. CCS could be a game-changer for areas such as Teesside; it could drive investment and improve air quality. The Teesside Collective is showing great leadership on plans in that area. There are also plans for a large gas-fired power station, but those are being frustrated by a complicated planning process. Does the hon. Gentleman agree that the Government need to simplify that process while ensuring that plants are CCS-ready so that we can exploit them properly?
I agree that CCS has an important role to play in the regeneration of coastal communities and perhaps areas that have been forgotten over the last few years. That includes the area that the hon. Gentleman represents, many areas in Scotland and the area that I represent.
The report contains six recommendations for how CCS can perform that crucial role. I believe that we reached the right conclusions, for three reasons. First, the UK has made commitments, through the Climate Change Act 2008 and international agreements, to reduce carbon emissions. Those were most recently reconfirmed in Paris in autumn 2015. As a result, we have a duty to put in place measures that will enable us to get on with meeting those targets at the lowest possible cost to the country’s consumers and taxpayers.
It quickly became apparent to the group that we cannot get on with that without CCS. The great advantage of CCS is that it is a highly strategic technology that can deliver emissions reductions across many sectors, including, as we have heard, power generation, energy-intensive industries, heat and transport. It should also be pointed out that CCS has the potential to safely store 15% of current UK CO2 emissions by 2030 and up to 40% by 2050.
There is a cost associated with inaction on CCS. Last summer, the Committee on Climate Change highlighted that if we take no action on CCS, the cost to UK consumers will be £1 billion to £2 billion per annum in the 2020s, rising to £4 billion to £5 billion per annum in the 2040s.
I endorse all my hon. Friend’s points. Does the history of renewable energy not show that those who invest early not only reduce their carbon footprint much more rapidly, but save money downstream? It will become much more difficult to invest and much more expensive to the UK taxpayer if we leave this decision for five or 10 years.
I agree. There is a compelling case for us to get on with this now.
The second reason why CCS is important is cost. That was why the previous pilots failed. The Oxburgh report established that the high costs revealed by earlier approaches in the UK were attributable to the design of the competitions, not the underlying costs of CCS itself. Analysis by the CCS Reduction Task Force and for the Committee on Climate Change, which was confirmed by Lord Oxburgh’s group, showed that CCS can be delivered at approximately £85 per MWh. That is competitive with other large-scale low-carbon energies such as nuclear and offshore wind.
CCS also has what I regard as a unique selling point. Some people might say, “Why us? Why the UK? Let other countries, such as Norway, do the hard legwork to get the technology off the ground. We’ll join the party later.” Such comments are wrong and misplaced, and out of context with what Britain should be doing in this post-Brexit world. The UK has a unique selling point that means that we must be pioneers in the vanguard of the CCS movement. This USP—what unites me in my Waveney constituency in East Anglia with the hon. Members from Scotland and the north-east—is the North sea, the United Kingdom continental shelf, where we have our own large safe and secure CO2 storage vessel offshore in the rocks in this country’s territorial waters. As a result of the development of the oil and gas industry in the North sea over the past 50 years, the UK has developed an enormous expertise of experience that we can harness to deliver carbon capture and storage.
Yesterday the Government published their Green Paper, “Building our Industrial Strategy”. CCS and implementing the recommendations of the Oxburgh report fit well with the Government’s ambitions and directions of travel. When I go through the pillars underpinning the industrial strategy, CCS ticks all 10 boxes. If the Government accept the six Oxburgh recommendations, they will invest in science, research and particularly innovation. Investing in CCS goes hand in hand with developing skills, boosting science, technology, engineering and maths skills, and raising school levels and lagging areas. I could go through all 10, but I sense my time is pressing, Mr Betts, so I will cut to the chase—to the final pillar of creating the right institutions to bring together sectors and places.
The strategy states:
“We will consider the best structures to support people, industries and places.”
That is a ringing endorsement for the six Oxburgh report recommendations.
On that note, I will conclude. Lord Oxburgh has provided the right framework for an exciting new industry and now is the right time to invest in CCS.
I congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on securing this debate. His contribution was really good, technically sound and showed his background in the subject.
First, let me state that carbon capture and storage is an absolutely necessary component of the solution to our energy trilemma. It offers the opportunity to meet our emissions targets, provide energy security and take advantage of the natural resources and high-level skills of our nation. It is necessary because any conceivable energy future will require the burning of fossil fuels.
I encourage anyone who doubts the significant and important role that hydrocarbons will continue to play in meeting the UK’s energy needs to read Lord Oxburgh’s report. He concludes that to meet our heating needs we must continue to rely on natural gas, produce huge quantities of hydrogen gas or supply heat through electrification, which in turn would require new fossil fuel power stations. Any of those paths will produce large amounts of CO2 and will therefore require effective carbon capture technology to meet our environmental targets.
The main challenge in developing such essential technology is achieving value for money. As the recent National Audit Office report found, the Government’s carbon capture technology competitions did not offer that. I hope, however, that the Government accept that the technology is still necessary to meet our environmental targets and will commit to creating a more cost-effective approach to building the technology in the UK, rather than letting CCS innovation, research and expertise leave the UK and create jobs, investment and opportunities elsewhere—that the Government are willing to take on some of the risks of developing the new industry in order to reap the economic and environmental benefits down the line.
I hope that in designing a new CCS competition, the Minister will take on board the NAO report’s findings to improve clarity on the risks carried by projects and on the financing the Government are willing to commit to, as well as draw on the lessons learned through stakeholders. I also hope they will look closely at the work done by the Carbon Capture & Storage Association, which points to circumstances under which CCS technology can offer value for money—namely, the strike price of £85 per MWh recommended by the Lord Oxburgh report—from the start.
I am interested to hear what other options the Minister has considered for implementing CCS, such as the possibility of doing so as part of a business model that relies on utilising indigenous sources of hydrocarbons, such as gasified coal. In short, I hope that the Government continue to explore options for supporting this vital technology. I know there are Members from all parties who would support them in doing so.
Finally, I want to point to areas where carbon capture technology is already proving cost-effective. Carbon capture and utilisation technology captures CO2 produced by manufacturing plants or smaller generators and uses that CO2 to produce highly marketable green products. A British company, Carbon Clean Solutions, currently leads the world in this technology and, as I am sure the Minister is aware, has recently successfully implemented CCU technology on a commercial basis in Tuticorin, India. Carbon Clean Solutions has successfully managed to take the CO2 produced by a chemical plant and produced soda ash, which in turn can be used to make glass, paper and a range of other products. The fact that the soda ash produced is green means it can be sold on at a premium to companies attempting to reduce their environmental footprint.
It seems bizarre that such technology, developed by a British company in co-operation with British universities and in part funded by grants from the British Government, has not been helped to take root in Britain. Although I understand that the technology does not operate on nearly the same scale or offer the same environmental impact as larger CCS projects, it also has advantages. For example, the smaller scale of the project means a smaller risk for investors. Indeed, Carbon Clean Solutions believes it requires only a guarantee on initial investment to get started in Britain, and that in turn offers the Government the opportunity to learn lessons in carbon capture technology that can then be fed into the development of larger projects.
Although the nationwide impact of CCU technology may be small, such technology could help our energy-intensive industries to reduce their emissions and give them a competitive edge. Furthermore, much of the infrastructure needed for CCU is already in place in former and current industrial areas such as Teesside. If we were to look at this project in combination with decarbonising our economy by using the gas grid, we would see a multitude of potential options for the existing energy-intensive industries to take hold of and entrench their position and also develop new green industry. That is a particular advantage, given that the NAO report highlights the “lack of supporting infrastructure” as a major barrier to investment in larger CCS projects.
Electrification obviously implies a vast amount of capitalisation—in the trillions—and a lot of capital to begin to even touch the sides of electrifying our transport, but we are the one nation in the world that has a unique gas grid that we could utilise in combination with hydrogen gas and shale gas, and using blends within the gas grid to overcome those obstacles.
Will the Minister meet me and Mr Ani Sharma, the chief executive officer of Carbon Clean Solutions, to discuss the potential of his company’s technology and how the Government can help CCU technology to mirror its commercial success in India closer to home? Carbon capture and utilisation may not have the environmental impact that successful large CCS projects would, but it can act as a stepping stone to achieving those vital CCS projects that are the only way we will be able to move towards a decarbonised energy sector.
It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on securing this debate. The Government U-turns he outlined at the beginning, and current Government policy positions, suggest that they do not know their backside from their elbow. That is demonstrated not only by the shambolic handling of the CCS competition, but right across the energy sector. It is clear that there is not a coherent strategy in place that will deliver long-term decarbonisation targets, let alone a cost-efficient strategy.
The NAO report of the CCS competition lays bare that the Treasury and the then Department of Energy and Climate Change were not working together. It also shows that all Government Departments are always at the mercy of a Chancellor who is ideologically driven to cut costs and taxes and look for short-term hits. Spending more than £100 million on design costs and then cancelling the competition beggars belief. It is also astounding that, in the NAO report on the CCS competition, one of the two designs that had been progressed was not even compliant with competition rules, so a lot of money was spent for a non-compliant design. The Peterhead CCS scheme was compliant, but instead of going on and developing that and protecting jobs in the north-east, the UK Government chose to walk away. Unfortunately, to date they have walked away with nothing to show for our expenditure.
I accept that, at the moment, CCS is not a complete silver bullet. It is a developing technology and there are some possible risks associated with the long-term storage of the carbon dioxide. Equally, there are plants up and running in north America, and in terms of the financial risks, that is something I urge the Government to look at. They have already underwritten the Thames tideway tunnel to the value of nearly £5 billion at today’s prices. They also offered to underwrite £2 billion-worth of bonds for the Hinkley Point C project, not to mention the contract for difference guarantees that have been given for Hinkley, which in an NAO report last year had an upper estimate of nearly £30 billion, which is truly astronomical.
The Treasury, which spiked the CCS proposals, had no qualms about Hinkley, yet while CCS is a developing technology, so is the European pressurised reactor system proposed for Hinkley—its track record so far is that it has not been demonstrated to work, and costs continue to rise. The Hinkley strike price agreed in 2012 is the equivalent of £100 per MWh at 2015 prices, so it is pretty much along the lines of what is being talked about for CCS. The only difference is that Hinkley is a 35-year long-term deal, whereas for other low-carbon technologies we are looking at 15-year CfD prices.
If the Government are serious about decarbonisation and compliance with the fifth carbon budget, they need seriously to consider a number of energy sectors. First, they need to revisit the pulling of the renewables obligation funding, which again disproportionately affected Scotland. At the same time, they should look at the need for island-based turbines to be classed as offshore rather than onshore. They should be reviewing the rush for nuclear reactors and mini-reactors, which are also unproven, and should change the regulations that are prohibiting the development of electricity storage. The National Infrastructure Commission has estimated that lithium ion batteries now cost only 7% of their estimated 1990 cost. Pumped hydro storage is a proven technology, but Government regulations are limiting its expansion. I suggest reviewing the dash to frack if we are serious about decarbonisation.
It is a fact that investment in renewables is set to drop by 95% between 2017 and 2020 owing to Government policy, so it is no surprise that, in the Ernst & Young index on renewable energy attractiveness, the UK slipped from a ranking of seventh in 2014 to 14th by October 2016. Together with the possible sale of the UK Green Investment Bank to an overseas asset stripper, it is clear that the wrong message is going out to those who might invest in green energy. Even when it comes to tree planting, England achieved only a tenth of Scotland’s record in 2016; yet it is the Scottish National party Government who have increased their planting target. As to house building, approximately three in four houses built in Scotland are timber framed; that is closer to being carbon neutral and is more energy efficient. Only 9% of homes built in England in 2015 were timber framed, yet the Government White Paper on housing is unlikely to address that.
In conclusion, the Government must rethink their entire decarbonisation strategy, considering it across a number of Departments. The view of the Committee on Climate Change was that CCS has the potential to almost halve the cost of meeting the 2050 target for carbon dioxide reduction. It could support some remaining indigenous coal extraction in places such as my constituency. However, it also needs to be applied to gas electricity generation, given the role that that will play. In the National Needs Assessment report launched at the end of last year, it was estimated that CCS could reduce CO2 emissions by 40% by 2015, but there was a stress on the need for Government support. The Chief Secretary to the Treasury attended the launch of the report, so I hope the Government reflect on the findings. It strikes me that the Government have found £8.5 billion for corporation tax cuts, and £5 billion of capital gains tax and inheritance tax giveaways. It is time to plan for our future and give us all a green inheritance to look forward to.
It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on introducing the debate. I suspect he will quickly find that we are not on the same side, but it is important, especially in the week when the Government have launched their industrial strategy, to have serious debates in the House on current and future energy policy. Of course, no industrial strategy can sit in isolation from a realistic energy strategy.
The first point of contention I want to make is that we seem uncritically to have accepted the mantra that we must decarbonise energy production. I know people say we have the Paris agreement, climate change obligations and so on, but we also need to look behind the mantra to see what the term means and has meant, and how it currently affects households, industry and business in the United Kingdom. The old Department of Energy and Climate Change estimated that to decarbonise the electricity and energy industries effectively by 2040, we needed 40,000 offshore and 20,000 onshore wind turbines and a new fleet of nuclear power stations, and that all coal and gas use would have to be subject to carbon capture and storage. That would happen at enormous cost, and we have already seen the impact on fuel poverty.
According to the Scottish household survey, there was a 25% increase in the number of households in fuel poverty in Scotland between 2011 and 2013. In Northern Ireland, there was an increase of nearly 100%. Why? Fuel bills go up because we have decided we want to produce energy more expensively. That is the first thing we need to realise in the debate. Decarbonisation means significant costs to the economy. Of course, this is at a time when we are talking about becoming more globally competitive, and when China and India, which signed the Paris agreement, tell us that every year they will increase their CO2 by the amount of our total CO2 emissions.
I understand the hon. Gentleman’s frustration, but I see what we are doing as investment. Renewables, whether photovoltaic or wind-generated energy, have the capacity to be used, for example, in the creation of hydrogen gas. There is a future in which we could create gas at zero cost, with surplus renewable electricity for the consumer. In transport network terms, the ability to spread that around the country is vast. I see it as an investment that is expensive at the moment, but whose rewards we will reap if we stick to those commitments.
No. I only have seven minutes and I do not want to rule out my hon. Friend the Member for Strangford (Jim Shannon), or I will get in his bad books.
My second point is on the action required to do what is envisaged. As has been mentioned, part of the infrastructure is in place, and we may well be able to use redundant oil pipelines, but they must be linked to power stations, which must be where the centres of population are. I am fairly sure that we do not want to build power stations where most pipelines come ashore, unless we mean to build a huge infrastructure to distribute the power. Environmentalists have not cottoned on to the point that the plan is like fracking in reverse. Instead of fracking to get gas out of the ground, we will pump gas into the reservoirs, with all the same implications, according to environmentalists, for stability and leakage.
We in Northern Ireland are going through a constitutional crisis because of a botched energy scheme. I do not think that that warranted the outcome, but nevertheless we are living with it. I want to hear from the Minister about four things related to that. First, what will the cost be? Secondly, if there are costs involved, who pays them? Thirdly, what about the incentive structures? It is not lost on anybody that even some producers of traditional energy are now running after all of these green schemes. Why? Because the lucrative incentives increase their profits and fill their coffers—we saw that with the scheme in Northern Ireland. Fourthly, what kind of regulatory framework will be put in place?
The Government are right not to go ahead with the second exercise until they are sure of the answers to those questions. Even more fundamentally, they must ask whether the impact of decarbonising the economy on consumers, workers, industry and investment is worth it.
It is a pleasure to speak in the debate. I congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on raising the issue. I may have a slightly different opinion from my dear friend and colleague, my hon. Friend the Member for East Antrim (Sammy Wilson).
My hon. Friend may regret it, but it will not diminish our friendship in any way whatever. It is good to have a broad church of opinion within our party.
I will pose some questions because it is important to do so. Environmental issues are of great importance, so it is essential that our strategy is effective. I say to the Minister that I am not sure that we have managed to achieve all we could or should thus far. That is the question many have posed, including the hon. Member for Coatbridge, Chryston and Bellshill during his introduction.
It is opportune that we are having the debate on the back of the industrial strategy Green Paper announced by the Department for Business, Energy and Industrial Strategy yesterday. Many believe that the Department has not achieved value for money for its £100 million spend on the second competition for Government financial support for carbon capture and storage. Other hon. Members have said that there must be an investment to get a return, and that the return will justify the investment.
It is my understanding that CCS is a process to avoid the release of carbon dioxide into the atmosphere, and that it has the potential to help to meet the UK’s target for a reduction of CO2 emissions in both the power and industrial sectors, which is commendable. We have pledged to cut 1991-level emissions by 57% by 2030. While that is a great goal, how will we achieve it? Hon. Members have outlined potential job creation and the opportunities that will come if it is done in the right way. To achieve the goal is most certainly a challenge, given the untried nature of the technology.
I point out to the hon. Gentleman that the technology is truly tried and tested. The curious scheme in Northern Ireland aside, I would urge both hon. Members from Northern Ireland, who are my friends, to read the Oxburgh report and contrast the less than £85 per KWh that is achievable under this system with the Hinkley Point strike price of £92.50. Furthermore, the networks already exist. That is the attraction of having an existing infrastructure.
I will respond to the hon. Gentleman’s intervention during my comments. The future costs for the duration of the CCS project are unknown, and perhaps the figures do not add up on all of the lines.
Two projects that were shortlisted for the CCS process both failed to meet the proposal goals. The work done centrally by the Department in sustaining negotiations for the second competition for the project with its preferred bidders must be noted—a process is in place. The hon. Member for Coatbridge, Chryston and Bellshill has clearly outlined some of the evidence, and I will pose some questions on that. I can clearly say that I support the principle of what we are trying to achieve, but I wonder whether it can be achieved by that process. There are lessons to be learned, and hopefully valuable commercial knowledge and technical understanding of how to deploy the competition projects will have been gained, as he said. If we have that information, let us see how we can use it to further the project.
There are currently no examples of large-scale CCS projects in the UK, and only 16 operational projects worldwide. BEIS should maximize its expertise for future CCS strategies and put into practice the lessons it has learned—in other words, the evidence should be used for the betterment of delivering such projects. If and when CCS projects are self-sustaining and economically viable, we will see clean electricity from renewable sources, which we wish to see and are committed to trying to achieve. However, the sticking point is in the phrase “if and when”, meaning we could achieve those things “if and when” the Government and BEIS find a happy medium and the in-between. Hon. Members are often tasked with finding a balanced in-between or the correct way forward.
The substantial future benefit of the CCS process is to avoid the release of CO2, as several hon. Members have indicated. However, it is clear that there are serious problems and critical issues with such projects that we cannot ignore. As I have discussed, there are no large-scale examples of long-term storage projects in the UK, despite a series of UK Government and EU initiatives aimed at incentivising their development. It has been argued that CCS technology is too expensive to be commercially viable for private developers without Government support in the shape of a strike price. Government involvement is critical in taking this forward.
I am aware of the work carried out by the parliamentary advisory group on carbon capture and storage, which found that good design could make CCS affordable. However, I have reservations about the cost of CCS competitions to the taxpayer.
Does my hon. Friend agree that a high strike price will be paid for out of the pockets of every one of his constituents who consumes electricity? That is the big problem with schemes of this nature, for which there is a move away from cheap fossil fuels to dear renewable sources.
The Minister will take note of my hon. Friend’s comments and am sure will respond later.
We have seen not one but two failed voyages into the unknown of CCS projects, for which we have spent £168 million with no further resolutions and only lessons learned. We do not want this to be like the Mary Celeste— setting sail, getting nowhere and disappearing. It is my understanding that the cancelling of the second competition will impact on investors’ confidence, who in future may demand better conditions before engaging with the Government again, which will prove detrimental to the cost-effectiveness of future projects.
We do not want this to harm the future and where we are going. I feel strongly that both the Government and BEIS need success guaranteed in both financial and environmental areas before embarking on such voyages in the future, and as such I believe that every consideration must be given to how this particular project will help us to achieve our goals, and indeed whether it can do so.
It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on both securing the debate and leading it in such an informed and passionate way. He set out the key issues around CCS, the history and, more importantly, the way forward.
I will also focus more on the way forward, but it is beholden upon us to look back slightly. The cancellation of the £1 billion competition that would have benefited the White Rose project and the project at Peterhead was deeply regrettable, in respect of both the way it was done—the announcement was snuck out after the autumn statement with little or no forewarning to the companies involved—and, as the National Audit Office report shows, the colossal waste of money.
At the time, I said it was clear that the Government knew the cost of everything but the value of nothing: the cost was £100 million to save £1 billion or £900 million. However, as we have heard multiple sources suggest, delays to the project could cost consumers £1 billion to £2 billion per year in the 2020s, and up to £4 billion to £5 billion per year in the 2040s. Colossal amounts of money could have been saved; if we do not act now, that will be lost through the additional costs that consumers will have to bear.
With the honourable exception of the hon. Member for East Antrim (Sammy Wilson), most of us accept, although not unquestioningly, the requirement to decarbonise our energy system—that is, “energy” in its widest sense. We often focus purely on electricity, but as some hon. Members have mentioned, there are many cross-synergies among the different forms of energy. That is why carbon capture should be considered.
May I place on the record my commendation for the Oxburgh committee report—those who served on the committee and the chair in particular? It is an excellent report and, as we have heard from those who did serve, the work was done in a way that did not prejudge the outcome. The report was an open, honest and thorough analysis of the costs and benefits that CCS could bring, but it also left on the table the option of not progressing. It was produced in September 2016. As far as I am aware, the Government have yet to offer much in the way of a response. I hope that we will hear from the Minister his considerations and those of his Department on the report and how they are seeking to take it forward.
As has been mentioned, there are clear synergies with the Government’s industrial strategy. I am talking about the ability to tie in research and development and have a world-leading technology that we can develop here on these shores. As the hon. Members for Waveney (Peter Aldous) and for Middlesbrough South and East Cleveland (Tom Blenkinsop) mentioned, this technology feeds into the Government’s honest appraisal that they need to do more to boost economic growth outwith this city of London and the surrounding environments.
Carbon capture does that very well. It ties in neatly with existing and former industrial heartlands, as the hon. Member for Middlesbrough South and East Cleveland suggested. It provides the potential for existing industrial producers, which in many cases are venting pure CO2—that should not be happening in this day and age, but there is no mechanism for them to cease doing it—to maintain their competitive advantage. That is how we anchor these companies in constituencies such as the hon. Gentleman’s and in places such as Grangemouth in Scotland, where we have strong industrial hubs that can have a very bright future. They can continue to do what they are doing well now, but they can also develop new technologies into the future that the planet as a whole is going to need.
We had a degree of discussion about the clarity that will be required in terms of the process of leaving the EU. There are optimists and pessimists among us, and clarity will indeed be required. The plan of action has previously centred on European co-operation, be it the energy union, the emissions trading scheme or the united approach to the Paris talks. Whether that means that a singular approach by the UK could produce better results will probably depend on whether someone is a “glass half full” or a “glass half empty” sort of guy. I will err on the side of optimism. There is probably a degree more optimism in me following yesterday’s announcement on the industrial strategy that the Government understand and will take this issue seriously.
The key point is that, as the hon. Member for Waveney said, this features across all the key aspects of the industrial strategy and all the areas where we are struggling or perhaps are not doing as much as we can in terms of decarbonisation. We can look at heat, transport or electricity in isolation. We can look in isolation at what we do with energy-intensive industrial producers. Alternatively, we can look at those things in the round. If we look at them in the round and see how we can apply carbon capture to those technologies, we will find a much more affordable and viable way of decarbonising. Finding those synergies, finding the areas of expertise and developing the companies that have the knowledge to do this provides us with a real opportunity.
How do we go about doing that? The Oxburgh report and its various recommendations are the blueprint. The key take-away from that for me was that what we are discussing can be done and can be done affordably. It highlighted some of the failings of the previous approaches in basically outsourcing the risk entirely to those bidding into the competition. Breaking it up and allowing different companies, with different expertise, to join in the process in the area to which they are best suited will allow costs to be reduced, to an extent where we could see a contract for difference price of £85 per MWh, which is competitive with other forms of production.
In some ways, as my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) suggested, CCS could be more established and cheaper than what we are pursuing at Hinkley. That shows the urgent requirement for the technology to be included in the Government’s industrial strategy and emissions reduction plan; if we do not do that now, it will, as we have heard, get more expensive.
I have been in many a debate with the hon. Member for East Antrim in which his views on this issue have been expressed. I disagree with him from an ideological point of view, but also from a practical point of view. Yes, there are costs in relation to the infrastructure that will be required to decarbonise our power system, but to suggest that there are not costs from continuing to do what we are doing is simply not correct.
Is not there also a case in respect of fuel poverty? Improving insulation and taking other demand-side measures to reduce the demand for electricity is a very good thing in which to invest. It decarbonises, but it also saves people, particularly those on fixed incomes, money on their heating bills.
The hon. Gentleman is absolutely correct: the cheapest fuel that we will ever use is the fuel that we do not use at all. Investing in such measures will save money and reduce fuel poverty. The coal-fired power stations to which the hon. Member for East Antrim made reference will be coming off the system anyway. They will have to be replaced, and they will be replaced by something that will not come free. It will be expensive, but it can be expensive in a way that is good for the environment and good for our industrial base, or it can be expensive in terms of its fuel and its production and the cost to the environment.
There are two ways to go about this. We can be at the front of the queue; we can be a leader and we can have first-mover advantage. That protects our business, allows us to export and allows us to save money for our consumers and industrial producers. I hope that the Minister and the Government will take that course and back CCS for the long-term future of the UK and our energy industries.
I was going to say that the debate had been characterised by a mighty cross-party alliance in favour of CCS, which I heartily concur with, but obviously there is this afternoon one exception to that. I want briefly to address that exception: the hon. Member for East Antrim (Sammy Wilson).
The issue is basically about the imperative to decarbonise our energy supplies, and it is an unashamed imperative because we know that climate change is real and that, if we do not do anything about it, that will be disastrous overall, for us all. Indeed, we can go back, in terms of alternative costings, to the Stern report. Stern said that doing nothing on climate change would probably consume 5% of our GDP, whereas doing something about it might consume 1% of our GDP. It is a very substantial investment for the future and rather a good bargain overall, in terms of what we might put in and what we might get out.
Of course, the same applies, in the context of the energy sector, to CCS. The question is really how we decarbonise our energy supplies, using different potential scenarios, and what would happen if we did not take CCS into account as far as decarbonising our energy supplies was concerned. It is not that we cannot, but it is about the relative costs of doing that with different technologies. It is not me saying this: it is the Committee on Climate Change in setting out its scenarios for the fifth carbon budget, which, of course, the Government have now adopted as a way forward over the next period.
We have basically adopted a scenario for energy decarbonisation that has at its centre, and as part of that fifth carbon budget, that energy emissions should be below 100 grams of CO2 per kWh by about 2030. The Committee on Climate Change says that the investments we have at the moment give us an emissions intensity of about 250 grams of CO2 per kWh. If we close remaining coal-fired power stations and replace them with gas-fired generation in the short term, that would take emissions marginally further down to 190 grams of CO2 per kWh.
Of course, if all the existing nuclear power stations were also replaced by gas, and gas met new demand subsequently, emissions intensities would rise to over 300 grams of CO2 per kWh by 2030. The Committee on Climate Change goes on to say:
“Commercialisation programmes for CCS and offshore wind alongside lowest-cost investments in the 2020s in a mix of new nuclear, onshore wind, solar and offshore wind rather than expanding gas generation would bring emissions intensity down to below 100 gCO2/kWh.”
That is a very straightforward and exact road map for where we need to go in terms of energy decarbonisation.
Of course, if we did not have CCS in that scenario, we would have to do a lot of different things to replace what CCS would have done by physically taking the carbon dioxide out of the process and putting it into the ground. We would have to do something else to take that carbon dioxide out of the process. That could be a lot of additional energy efficiency or it could be a lot of new, different low-carbon plant.
We come to the question of what the alternative costs might be if we did not have CCS in the process. Indeed, the NAO report on the carbon capture and storage pilots, which hon. Members have mentioned this afternoon, clearly sets out that meeting the 2050 target for decarbonisation of our whole system, without CCS, would
“cost up to £30 billion more in the power sector alone”.
Hon. Members have mentioned what that means in terms of an annual basis, but that is the overall cost. Interestingly, the NAO cites where that particular figure comes from: of course, it came from the Department of Energy and Climate Change in 2015.
We are clear about the ends, but we are not currently clear about the means. That is where the scandalous cancellation of the two pilot projects—which, by the way, had already been included in those Committee on Climate Change estimates I just mentioned, so we are even further back from the starting line than we would otherwise have been—puts us in terms of having, at the moment, the possibility of ends.
We have agreed the fifth carbon budget. The Government are due to produce their low-carbon plan some day soon; I think it was supposed to be last year and then it was supposed to be this spring, but I see from the industrial strategy announcement yesterday that the target is now some time in 2017. I am interested to know from the Minister whether that low-carbon plan is going to be published in the early part of 2017, as I hope. If it is, I would be extremely surprised if it included no mention of the key role CCS will have to play in making that plan a reality. That is the truth of the matter: without CCS, it is very difficult to envisage a lot of the systems that we talk about in terms of low-carbon energy as a whole—not just low-carbon electricity—working very well.
My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) mentioned, among other things, the possible role that hydrogen might play in the future heat economy. Hydrogen can be made by electrolysis of spare electricity but it is more likely that, during the earlier period, it is going to be made using existing infrastructure by steam methane reformation. That gives us a potent fuel in terms of sorting out the decarbonisation of our heat structures, and possibly the substantial decarbonisation of our transport structures, but CO2 is a by-product that needs sequestering in the process, otherwise it is not low-carbon at all.
The essential role that carbon capture and storage will play across the board in our decarbonised, low-carbon energy economy is without question. The question is: what do we do about it? We have heard mention this afternoon of the estimable Oxburgh report, which was essentially commissioned by Government after the closing down of the pilot schemes. Without wishing to repeat some of the details of the Oxburgh report that have been mentioned this afternoon, I would say that the report does not talk about pilots and does not talk about ways of trying to introduce bits of CCS here and there. It talks about a very practical route forward, which is costed and relatively low-cost, for what Government need to do—exactly in line with what we think we are doing at the moment about industrial strategy and how we move that forward—to make carbon capture and storage a part of our energy landscape over the next period.
I commend anybody who has not read that report to look at exactly what it says. That is exactly what it does: it sets out how we move forward over the next period to integrate carbon capture and storage with various measures as part of our processes. I ask the Minister whether the Government intend to respond to the Oxburgh report in the near future. If they do intend to respond, what form is that response likely to take? I hope that when the Government decide to respond, they respond in a very positive way because that is what we need right now. Undoubtedly, we need to decarbonise radically. Undoubtedly, carbon capture and storage has to be a part of that decarbonisation. Setting out a way forward for making carbon capture and storage a reality in our energy firmament is, it seems to me, a very high priority for Government at the moment.
It is a delight to serve under your chairmanship, Mr Betts. I absolutely welcome this debate and congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on securing it and on his very interesting opening remarks. The hon. Gentleman is a strong proponent of carbon capture and storage—he has professional experience and expertise—and this has been a valuable discussion.
I will make some general statements before responding specifically to the concerns raised. We have not got much time, so I will have to move relatively quickly. As I am sure the House understands, the Government remain very committed to tackling climate change, and remain very committed to the Climate Change Act 2008 and the implications it has and will have for the coming decades. Climate change remains one of the most serious long-term risks to our economic and national security.
As a country, we have made great progress towards our goal. Indications are that UK emissions in 2015 were 38% lower than in 1990, and 4% below those in the year before. It is appropriate to recognise that, as well as to look ahead to the future to the emissions reduction plan, which we will publish in due course. I am happy to respond to the question from the hon. Member for Southampton, Test (Dr Whitehead). My colleague the Minister for Climate Change and Industry mentioned to the Business, Energy and Industrial Strategy Committee that that would be in the first quarter. I can do no better than echo his words.
As a Government, we remain committed to exploring all technologies that can support the process of decarbonisation, including carbon capture and storage. As has been recognised today, CCS has a wide range of potential applications in which it could contribute to the reduction of carbon in our environment. Those include not merely decarbonising heating and transport, but providing a pathway for low-carbon hydrogen and producing negative emissions when biomass is combined with CCS in power generation. CCS offers a wide array of potential strategic benefits. It has been rightly noted that it has the potential to help energy-intensive industries in this country to remain competitive.
I understand some of the concerns that were raised about the cancellation of the project last year. The project was absolutely not without benefits and, as the Committee recognised, there had been investments in front-end engineering and design. It was an ambitious scheme. Everyone in the Chamber believes that the Government should be ambitious in their expectations for climate change improvement and carbon reduction, so I think it is odd to criticise the Government’s ambition, when they have sought to be precisely that.
[Mr Philip Hollobone in the Chair]
The Government absolutely believe that CCS has a potential role in long-term decarbonisation, but it must be affordable. It is worth noting that we are not by any means the only country seeking to crack CCS from a cost perspective. Projects have been deployed, particularly in north America. However, the United States, Canada and Norway have all cancelled projects, so we are taking the time to look hard at CCS to see whether we can find a cost-effective pathway.
That does not mean we have not been investing in the meantime. As colleagues know, we have made a range of investments across the piece, including in Carbon Clean Solutions, which the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) mentioned—I would be delighted to meet him when officials can set it up—and in storage appraisal projects in the Northern Irish seas and the Summit Power CCS project at Grangemouth.
The Government continue to be very active. We commission research and provide support for innovation, and we remain engaged and seek to continue working with and learning from others, such as the United States, Canada and Norway. The hon. Member for Coatbridge, Chryston and Bellshill mentioned the Toshiba CCS plant in Texas. Officials have already met the promoters of that scheme and are contemplating visiting it when it is up and running to learn more as part of our overall picture. We remain part of a series of international initiatives designed to understand CCS better, and to learn from and deploy it as effectively as possible.
Therefore, we have not closed the door, by any means. Indeed, Lord Oxburgh was asked to set up and lead his parliamentary advisory group—I very much recognise the contributions made by Members in the Chamber towards it—precisely because we have not closed the door to CCS but are looking to use it, if possible, affordably and effectively. I put on record my thanks to Lord Oxburgh and the group’s members for their work.
On the specific issues raised by colleagues in the debate, I was invited by the hon. Member for Coatbridge, Chryston and Bellshill, who opened in the debate, to consider CCS as part of the industrial strategy. As I hope has been understood, we absolutely are doing that and will continue to do so.
My hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), who is no longer in his place, asked whether we, as a country, would be affected by Brexit in this regard. I point out that, as a country, we are a signatory to the Paris agreement independently of the EU as well as through it, and it is therefore far from clear that Brexit will make a difference.
The hon. Member for Stockton North (Alex Cunningham) is right that we need to get the EU emissions trading system correct. My hon. Friend the Member for Waveney (Peter Aldous), in a very eloquent speech about the offshore potential for the UK continental shelf, said that we must be pioneers in CCS, but I slightly disagree with him on that point. There is an honourable place for us as an early mover, but not necessarily a first mover, in CCS. Such people often reap the benefits in technology and cost without taking a lot of the additional risks. That is a perfectly honourable position for this country to be in.
Hon. Members spoke about the Oxburgh report. I point out to the hon. Member for Aberdeen South (Callum McCaig) that even that report contemplates very substantial capital expenditure of potentially more than £1 billion and perhaps even £2 billion, as well as the CfD. The hon. Member for East Antrim (Sammy Wilson) asked who pays for these things. Well, that would be the cost, and the payment would be borne respectively by taxpayers and bill payers. The incentive structures would have to be determined in future discussion, but there would be a CfD, and the framework regulation is something that Lord Oxburgh properly discussed.
I am sorry, I cannot take interventions because I am really short of time, but I hope I have at least addressed the core point the hon. Gentleman made.
Let us be clear: the Committee on Climate Change seems to be contemplating a contribution on CCS from this country until 2030. No one can predict the future, so it is not clear that we are behind schedule from its point of view. However, it is very important to recognise that even the Oxburgh report is not just about a CfD, but about a potentially substantial capital cost, which would fall on taxpayers.
My colleague the hon. Member for Strangford (Jim Shannon) raised an issue about cost and effectiveness and was absolutely right. The hon. Member for Middlesbrough South and East Cleveland asked about the NAO report. I absolutely assure him that it has been given—and is being given—a lot of scrutiny within my Department.
Let me quickly wind up my remarks in the time that remains. The Government are actively interested in and engaged with the question of CCS. I very much thank hon. Friends and hon. Members for their wide-ranging contributions to a fascinating debate. This is not an easy issue to crack, but we are focused. The Government will set out our approach in due course and use the opportunity offered by the debate to further inform our thinking.
I am delighted to see such excellent and almost comprehensive cross-party support for the inclusion of CCS in the Government’s commendable industrial strategy doctrine. Clearly, we are mostly on the same page, and I am sure the application from the hon. Member for East Antrim (Sammy Wilson) to work for the Trump Administration will be successful.
Although the Minister understands that the cost of developing CCS is an existing issue, I am sure he recognises that the cost of not developing and including it will be greater—that is well articulated in the report. None the less, he has undertaken to keep to climate change commitments, to publish the Government plan in quarter one of 2017, to publish details about decarbonisation across all sectors including CCS, and to consider the Toshiba option, which is to be highly commended. I very much look forward to developments in the near future.
I am delighted to see Lord Oxburgh in attendance and thank all hon. Members for their contributions. Finally, I thank you, Mr Hollobone, and all the staff who enabled the debate to take place.
Question put and agreed to.
That this House has considered UK decarbonisation and carbon capture and storage.
Leaving the EU: Funding for Northern Ireland
I beg to move,
That this House has considered the effect of the UK exiting the EU on EU funding for Northern Ireland.
I am very pleased to have secured this debate, Mr Hollobone. I welcome the fact that the Minister is here to respond on behalf of the Northern Ireland Office and that the shadow spokesperson, the hon. Member for Ealing North (Stephen Pound), is here. This is a momentous day in the history of the European Union; the declaration made—I am very glad to say—by the Supreme Court will enable parliamentary sovereignty to reign on this issue. That shows how important Parliament is in this matter.
I am here today to represent the majority of voters in South Down—67%—who voted to remain within the European Union, and the majority of voters in Northern Ireland—56%—who voted to remain. They do not want to see our local economy sacrificed to appease the anti-EU agendas of those with no connection to or no interest in Northern Ireland. I also rise to correct the glib “it’ll be all right on the night” hand-waving that some Ministers have offered when asked about the plan for Northern Ireland post-Brexit.
I mean no disrespect to the Minister responding to this debate when I say that some other Ministers, particularly from the Treasury, seem to have been so excited by the prospect of leaving the EU that they have neglected to familiarise themselves with the complex realities now facing the island of Ireland as a result of Brexit. I hope that highlighting the unique importance of EU funding to Northern Ireland will sharpen the Government’s thinking about precisely what their negotiating goals for Northern Ireland should be. I believe it to be of particular importance following the failure of Sinn Féin and the Democratic Unionist party to maintain an Executive who can represent Northern Ireland’s needs to the Prime Minister directly.
The European Union has been responsible for billions in investment in Northern Ireland over the past two decades—well in excess of what it would have received from ordinary Barnett formula consequentials. In the spirit of not re-fighting the referendum, I will not inundate those here with statistics on how much money the EU has provided over the years, although there are many. However, in the east border region alone, where my constituency is located, through Interreg VA, the EU is currently sponsoring projects to the value of €43.4 million, including €9.7 million for protected habitats and €15.9 million for a project intended to increase the proportion of small and medium-sized businesses working in cross-border research and reconciliation. In total, Northern Ireland was expected to draw down €3.5 billion in the period 2014 to 2020, including PEACE funding, Interreg funding and agricultural subsidies.
I hope that I have not stopped the hon. Lady in mid-flow. Does she accept that, according to all the analyses, by 2020 Northern Ireland would have become a net contributor to the EU and that the Westminster Government have already committed to ensuring that any EU-funded project will be honoured by them?
I do not agree with that contention. The hon. Gentleman should take on board that there was considerable cross-border funding, which is what I was referring to when speaking about PEACE funding and Interreg funding. As the name implies, PEACE funding comes from a special fund established at the European level to assist Northern Ireland with the legacy of the troubles. In fact, if I cast my memory back, the former Member for Foyle, John Hume, along with Dr Paisley and Mr Nicholson, a current MEP for Northern Ireland, came together with Jacques Delors to establish the PEACE funds for Northern Ireland.
It is good to hear the hon. Lady raising this debate, but does she agree that a lot of funding from Europe that will stop in 2020 helps us on cross-border issues that bring communities together, whether they involve Donegal working with Londonderry or Newry down on the border? It is absolutely vital to the peace process.
I thank the hon. Gentleman for that helpful intervention. I have mentioned the work of the east border region, of which South Down and its constituency council are part. Like other cross-border bodies, such as the Irish Central Border Area Network, those bodies bring people from north and south to work together effectively according to the issues that unite them rather than those that divide them. EU funding has been vital to that work.
I will make a little progress. I know that the hon. Member for North Antrim (Ian Paisley), who is sitting beside me, is anxious to intervene, but I will let him do so by and by. PEACE funding has helped support 6,000 victims and survivors through the Victims and Survivors Service. It has helped involve 350 schools in integrating education, meaning that 144,000 students and 2,100 teachers have participated in classrooms that mix children from nationalist and Unionist backgrounds. It helps fund work essential to building a truly shared society in Northern Ireland.
As an MP for a primarily rural constituency, I cannot fail to mention the £283 million a year that the EU has provided to our agricultural sector, which the Ulster Farmers Union has described as essential. Within Northern Ireland, EU rural development programmes have allocated €194 million to agri-environment-climate measures and €79 million to support areas facing natural constraints. All that has been put at risk by Brexit and those who supported it.
I do not necessarily agree. Money is pooled. It is about the pooling of sovereignty and moneys in the European Union, so it involves money from other European Union countries. I caution Members that there is absolutely no guarantee that we will get equivalent funding from the Treasury post-2020. Unfortunately, the Chancellor’s assurance that all EU funding will be guaranteed during the Brexit process is of little reassurance to the people of Northern Ireland.
First, we must remember that that assurance is merely political and could be reversed with a simple press release from No. 10. Nor would it be the first financial promise broken in the wake of Brexit. We all remember those red buses that said “£350 million for the NHS”, which disappeared like snow off the ditches before the final votes were even tallied. The fundamental issue for Northern Ireland is that the promise to match EU funding is grounded in the premise that we can break away from our important trading partners without hurting our already fragile economy.
Does the hon. Lady not also recognise that a fundamental economic issue for Northern Ireland is rebalancing the economy away from the public sector? Brexit provides an opportunity for a more outward-looking export-based economy and will help rebalance it.
Although I agree that we need to rebalance the economy in Northern Ireland, I do not think that it is valid to argue that we should do so by denying our access to 27 European countries’ important export markets, particularly at a time when it is difficult to secure export markets in south-east Asia.
I will not mince words or shy away from predicting the obvious: post-Brexit, the British Government will simply not be able to carry on as if it were business as usual. Despite the promises of the leave campaign, the only certainty that I foresee in the years post-Brexit is more and greater austerity as exporters, importers and employers take the hit of new tariffs and restrictions. The Chancellor indicated as much in a recent interview with the German media in which he made it clear that outside the single market, Britain will have to move away from the European social model to become something entirely different.
Are we really expected to believe that in the new social model that the Government are preparing, Northern Ireland’s structural and infrastructural funding will not be cut further? That is one absurdity too many, and the public in Northern Ireland will never buy it. The only way to protect PEACE and Interreg funding is to retain Northern Ireland’s eligibility for EU funding, whether in the north’s own right or by virtue of our relationship with the Irish Government. Even if funding could be guaranteed, I still want to impress on the Minister the importance of funding coming not only from the Irish or British Governments, but from the EU.
My hon. Friend is right to emphasise that EU funding for Northern Ireland is significant not only in terms of the quantum but in terms of the priorities and purposes that it is used for, because it has been able to reach parts and sectors that otherwise might not have been supported.
On the north-south issues, does my hon. Friend recognise that the north-south bodies established after the Good Friday agreement by and large discharge and dispense much of European funding, and that post-Brexit they will have to be considered for replacement? That will open up a significant element in the negotiations that are likely after the election.
I thank my hon. Friend for that very helpful and erudite intervention. He is absolutely right, because the Good Friday agreement was high-wired not only into human rights provisions but into membership and continued membership of the European Union. North-south bodies—I can think of Tourism Ireland, which is a special EU programme body, or Interrail Ireland—could be hollowed out as a result of Brexit, thereby dismantling not only those very bodies but the processes through which funding can be dispersed.
That funding comes directly from the EU. It has brought much wealth, much income and much upgrade to our local community sector and our local infrastructure; indeed, it has been vital in regard to infrastructure. The important point is that everybody works together, right across the community, for the benefit of all. That has been one of the compelling imperatives of the European Union’s involvement in the north of Ireland.
All these issues must be stabilised and joined up into a wider strategy that has buy-in from the Executive and society. Also, and again I say this with no disrespect to the capability of Front-Bench Ministers, no British Government—regardless of the size of their majority—will be able to provide Northern Ireland with the same level of political dependability as the EU can. Policy can change quickly here and commitments made by one Chancellor today can be scrapped by another Chancellor.
We need only observe how quickly British Government orthodoxy on the benefits of the EU has transformed into British Government orthodoxy on the UK’s need to enter the global market alone. We heard some of that today, in the statement by the Secretary of State for Exiting the European Union, and we have heard it for the last seven or eight months in this House. That kind of weathervane politics might be sustainable for a wealthy region such as the south-east, where a resilient private sector is well established and there is less difficulty in securing overseas investment, but in Northern Ireland, alas, both local businesses and international investors need to know that when a programme says it will run until 2020, in reality it will run until 2020.
In the last decade, foreign direct investment has been a great success story for Northern Ireland and our economy is beginning to reap the benefits. The Government should be under no illusions: that has been possible because of EU funding, its role in supporting many communities, and in many cases by the EU financially underwriting the process of regeneration. I have first-hand knowledge of that as a former Minister for Social Development with direct responsibility for urban regeneration, which relied on a complement of European funding. An example of that regeneration was the Peace bridge in the constituency of my hon. Friend the Member for Foyle (Mark Durkan).
A vote of confidence in Northern Ireland from the EU has led to votes of confidence from businesses across the world; be in no doubt about that. However, even if funding from the Treasury could match EU funding, both in scale and in reliability, there would still be questions about how the character of the projects being supported would change post-Brexit, because one of the stated aims of Interreg funding is to minimise the impact of economic and social borders within the European community. That is of huge importance to border areas such as South Down, which is in the county of Down, where decades of neglect by policy makers locked communities out of their fair share of economic progress.
I just need to look at what is happening with the southern relief road in Newry, which carries a lot of cross-border vehicular traffic from Warrenpoint port. That port is the fifth largest on the island of Ireland, one of the biggest ports in the UK and a prominent member of the British Ports Association. Warrenpoint exports and imports, and 46% of what it does comes from the south of Ireland and goes there. That process relies on European funding and so will the southern relief road, which is essential to get round the bottleneck of Newry, because that relief road is a Trans-European Transport Network.
A similar tourist project that will rely on European funding—indeed, it had already received European funding through Interreg—is the Narrow Water bridge project, an infrastructural project that brought communities in South Down and in County Louth together, as part of the peace dividend.
Outside the EU and with a British Government potentially relying on the votes of my Unionist colleagues to the right for support in the Commons, can we really be assured that future investment in the north will have the same ethos of cross-border integration? How will the increasing number of cross-border trade organisations continue to function? Does it mean the end for effective examples of co-operation, such as Tourism Ireland? That is why the European Union is important, because it is a “non-aligned” source of funding in Northern Ireland.
EU funding weakens those who would further divide the people of the north and strengthens those working towards integration and reconciliation. That has clearly been the value of Interreg and PEACE funding. Perhaps it also explains why the political parties of Northern Ireland took the positions they did ahead of the referendum. Ultimately, given that none of the Government’s 12 stated Brexit goals are incompatible with retaining the EU’s funding for Northern Ireland, why risk jeopardising the north’s economic regeneration by shifting the tectonic plates that it is founded on?
Recognising Northern Ireland’s unique constitutional settlement and the importance of the EU to that settlement would not require the British Government to compromise any commitments on either Brexit or the Union. Rather, recognition of the north’s unique constitutional position would serve as fulfilment of the principle of consent—a principle that the British Government accepted, along with the Irish Government, when all the parties in the north, except the Democratic Unionist party, signed up to the Good Friday agreement.
I am an Irish nationalist and I make no apologies for that. However, even as an Irish nationalist, I do not wish to see questions of identity in the north being further clouded and troubled by the injection of a new European dimension. Indeed, if the Prime Minister really is as committed to the Union as she claims, one must question why her Government would make the Unionist community in the north choose between their link with Britain and their membership of the world’s largest economic bloc.
The British Government must engage urgently with the Irish Government on establishing an arrangement whereby the north can maintain some form of that associate special status membership of the European Union. Ideally, trilateral work would occur, involving both Governments and the Northern Ireland Executive—if we had one—before article 50 is triggered, so that we could go to the rest of the EU with a concrete plan to preserve Northern Ireland’s special status. Given the EU’s historic support for the peace process, and the pride that Brussels rightly takes in its role in helping to bring about peace, I can only predict that such a measured plan would be well received.
The arbitrary timetable imposed by the British Prime Minister may not allow enough time for such a plan to be developed before article 50 is triggered, especially in light of the DUP and Sinn Féin collapsing the Assembly. Nevertheless, that is no excuse for the trilateral work to be put off for any longer.
I do not expect the Minister who is here today to be able to give me extensive reassurances on this issue, and I am well aware of the “omertà through clichés” that has been imposed on Government Ministers as we approach negotiations with the EU. However, I hope that he can feed back to his colleagues within Government the concerns that I have expressed, answer some of my questions, and provide me with further details in writing.
I also hope that the Northern Ireland Office will be fully included in the internal discussions that the Government are conducting, both in the Joint Ministerial Committee and at other levels, so that the institutional memory and experience of that Department is heard in the somewhat more gung-ho meeting rooms of other Departments.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for South Down (Ms Ritchie) on securing this opportunity to discuss a really important issue. I have to say that I approach the debate in a slightly more positive tone that she has. As a remain campaigner, I understand much of the passion in what has been articulated, but the people of the United Kingdom have spoken, the Prime Minister has clearly articulated where we are going as far as Brexit is concerned, and it is for us to make the best of that opportunity.
I agree with many of the sentiments expressed today. European funding in Northern Ireland, particularly of the PEACE programmes, has played a vital part in creating a more cohesive society and prosperous economy—
Because the peace process was mentioned regularly in the contributions of the hon. Member for South Down (Ms Ritchie) and others, I ask the Minister to reflect in his remarks, given this week’s experience and the scandalous events in north Belfast with the shooting of a police officer, that we should be responsible in the fears we portray, and that we should be careful and mindful about creating such a drastic circumstance and saying that leaving the European Union will have a fundamental impact on the peace process. That would be detrimental. It would be fearful and scaremongering and would not be in any of our interests if we wanted to make the best stab of leaving the EU.
I think we all agree that what happened the other day was absolutely outrageous and hope that the police officer recovers quickly and fully. I do not want to get into some of the rhetoric involved in the comments of the hon. Member for South Down, but I will say that there are a small number of idiots out there who seek to damage both our democracy and the peace that has been built. We all, I think, are resolved to pursue them and ensure that justice deals with them appropriately. I believe that the path of peace is embedded in the good people of Northern Ireland and the politicians. I have not met anyone who does not want to see a different path, and peace, and it is for us, as leaders, to ensure that we continue that path.
I nearly got to the end of the first page of my brief. It is right to say that Northern Ireland has benefited from the European structural and investment funds. The European regional development fund, which includes PEACE IV and the Interreg VA moneys, and the European social fund represent a significant financial commitment to Northern Ireland’s prosperity. As has already been mentioned, the Chancellor’s guarantee, which I will come to later, provides comfort to organisations in Northern Ireland and allows time for us to prepare and to consider what the future looks like in terms of the use of similar moneys to deliver similar outcomes.
I want to comment on the hon. Lady’s constituency, which encompasses the fishing ports of Ardglass and Kilkeel. From conversations I have had with her, I understand her particular concerns about EU funding in relation to the fishing community. The European maritime and fisheries fund is worth some €23.5 million to Northern Ireland in the period 2014-20, and it seeks to promote growth in that area. As part of our negotiations, it is important that we think about our relationship with our European partners and friends and about how we ensure that we support the some 800 people who are employed in that sector.
I want briefly to touch on the engagement that is going on and to try to give some reassurance to Members about the process, which enables not only Members of Parliament but Members of the Northern Ireland Assembly and the leadership there to engage, through the Joint Ministerial Committee, with other devolved bodies, to ensure that the Secretaries of State in each of the areas can articulate their concerns, in particular regarding the funding for PEACE and for securing community cohesion. That cross-border engagement and continued participation in the process is really important. As a conduit in that process, individual Members of Parliament are welcome to use that opportunity to ensure that they are transmitting messages, whether from business, the voluntary sector or academia.
Does the Minister accept that the debate is all a little bit yesterday, when we consider the comments by Ray Bassett, a former Republic of Ireland ambassador and official in the Department of Foreign Affairs and Trade, and the report by Dr Brian Murphy, Ralf Lissek and Dr Volker Treier to the German-Irish Chamber of Industry and Commerce, that Brexit means that Ireland’s two major trading partners will be outside the EU and that Ireland needs to get ahead of the game and leave along with the UK?
I understand the hon. Gentleman’s comments, but the point of this space—of parliamentary debate—is that individual parties can express their concerns and Ministers can understand them and respond appropriately. We are on a momentous journey, and concerns on both sides of the debate still need to be addressed and people need to be comforted. I said earlier that I was a remain campaigner, and there will be constituents who want to understand, whether they have a particular interest or it is about that passion for Europe in the past. So we create this space and it is important that people have the opportunity.
To pick up the theme already mentioned, we have to seize this as a positive opportunity. In the United Kingdom we have a border with the European Union that is against the place of Northern Ireland and that is a massive opportunity for us to seize. Despite all the challenges of understanding—
Sitting suspended for a Division in the House.
Just briefly. I appreciate the Minister giving way. On the point about our attitude and the optimism that we need, we all recognise that people have genuine concerns about the process, yet we must not talk down the Northern Ireland economy. We are trying to attract inward investment and to create some energy, enthusiasm and optimism for the opportunities of Brexit, which are what we must focus on.
I thank my hon. Friend for his intervention. He is right that we should be optimistic; we have lots of grounds to be so. At this moment in time, the economy has been completely transformed, and we can build on that. Whether in the tourism economy, manufacturing or agriculture, there is huge opportunity. Our highly skilled populace can add to that further growth.
To touch on the Chancellor’s guarantee, applications for funding secured before the autumn statement will continue through the negotiations period and afterwards. In particular, we guarantee common agricultural policy funding until 2020, which I know will be an important element for the constituency of the hon. Member for South Down, which includes a big rural community that is dependent on the farming industry.
A difficult election campaign is about to start and its tone is important. It will be set against the context of our decision to leave the European Union. There is huge opportunity to grow the economy of Northern Ireland and the rest of the United Kingdom. It is for us as leaders, whether here in Westminster or in the Assembly, to seize that opportunity. I reassure the hon. Lady that the Government’s intention is to ensure that we make the best of the decision we have made for the economy and the people of Northern Ireland.
Leaving the EU: Animal Welfare Standards in Farming
I beg to move,
That this House has considered animal welfare standards in farming after the UK leaves the EU.
It is a pleasure to open this debate under your chairmanship, Mr Hollobone. High standards of animal welfare are one of the key hallmarks of a civilised society. I take this opportunity to thank all the Chipping Barnet residents who regularly contact me about the issue, setting out their concerns. In this country, we have a long and proud tradition of protecting animals, often taking action many years before other countries follow our lead.
About 80% of our animal welfare rules are part of European law and are contained in more than 40 different pieces of legislation, including 18 on farm animals. Leaving the European Union gives us a range of choices in this House that we have not enjoyed in this country for more than 40 years. Brexit means that we have the chance to reaffirm our support for the highest standards of animal welfare. It also gives us the opportunity to consider ways to strengthen protection for animals as we design a new system of farm support to replace the common agricultural policy.
I warmly welcome the statement that the Secretary of State for Environment, Food and Rural Affairs made in October, saying that high standards of animal welfare should be one of the unique selling points of UK-produced food in the post-Brexit era. I would very much welcome the Minister confirming, when he arrives, that the Government’s plans for a great repeal Bill will see animal welfare standards maintained at a level at least as high as the one they are at today.
I congratulate my right hon. Friend on securing the debate. She is right to highlight that in theory the European Union upheld consistent standards of high animal welfare, but does she agree that sometimes there was not a level playing field? While British farmers were proud to abide by those standards, we saw battery cages going from Suffolk to Spain. At the very time that British farmers were introducing high standards, other farmers in Europe were not abiding by those standards.
My hon. Friend raises an entirely valid point. It takes me back to my days when I was a Member of the European Parliament. I consistently raised concerns about the inconsistent implementation and enforcement of animal welfare rules. As he points out, that often disadvantages UK farmers, who tend to take them far more seriously than their counterparts in some other countries.
I accept that retaining our current animal welfare standards does not mean that every dot and comma of EU law in this area needs to be set in stone. There may be legislative options that maintain prevailing standards but deliver the outcome in a more flexible way that better suits domestic circumstances. I hope we can all agree that the end result should be the retention and not the dilution of laws that safeguard farm animals in this country. Our goal for the future should be the further strengthening of that protection.
When the Secretary of State gave evidence to the Environment, Food and Rural Affairs Committee recently, she indicated that around two thirds of EU legislation could be rolled forward into UK law with only minor technical changes. That leaves around a third of laws within the Department for Environment, Food and Rural Affairs remit apparently needing more substantive change if they are to be retained after we leave the European Union. It would be useful to hear from the Minister which animal welfare provisions are expected to fall within that category. Will he indicate when the House will be given details on the practical changes that may be necessary to ensure that the protections they provide can be carried over into UK law after we leave the EU?
I was also struck, in the Prime Minister’s recent speech, that final decisions have not yet been taken on which of the powers that will return from Brussels will go to the devolved Administrations and which will stay within the remit of this place. Animal welfare, as colleagues will be aware, is generally a devolved matter, but in light of the Prime Minister’s speech, it would be useful if the Minister could give us an indication of the animal welfare decisions currently made in Europe that he expects to be devolved and the ones that might be retained at Westminster.
None of us in the Chamber should be in any doubt that the food and farming sector is one of the most important for our economy. It supports many thousands of jobs. I saw that for myself in Northern Ireland during my time there as Secretary of State. I met many farmers and businesses creating food of the very highest quality.
I warmly congratulate my right hon. Friend on securing this debate. With regards to the animal welfare standards of food production, would she agree that the introduction of CCTV in all slaughterhouses is an important part of that to ensure that some of the abuse that has been widely reported can be stopped, because those operators will understand that they are being monitored?
That is well worth considering. A number of constituents have contacted me about it. One has to be certain that there are effective ways of monitoring that CCTV, but we should give serious consideration to further strengthening animal welfare protection in that area.
A task ahead of us is to create a replacement in this country for the common agricultural policy. As we shape a new system of financial support, we have an opportunity to promote a new vision for agriculture, to help our farmers work in ways that restore natural resources in soils, promote biodiversity and maintain the rural environment in good shape for future generations. Continued financial support for agriculture is not just important for the rural economy and for food security. In my view, it is critical if we are to maintain high animal welfare standards.
There are methods that can keep the costs of maintaining animal welfare standards down to a reasonable level, but the reality is that, in many cases, humane forms of agriculture are likely to be more expensive than intensive, industrial production, so agricultural support payments will be needed into the foreseeable future to ensure that food produced with high welfare standards is not priced out of the market by cheaper, less compassionate alternatives.
With that in mind, I urge the Minister to ensure that animal welfare is an important consideration in future trade talks. We should not be afraid to ask those countries that wish to sell into our market to commit to acceptable standards of animal welfare. We would be constrained by World Trade Organisation rules, but my understanding is that it is possible to set standards for animal welfare and comply with WTO obligations as long as a consistent approach is taken to different countries. We all know that in trade negotiations, compromises and trade-offs occur, but the huge importance rightly placed by many people on animal welfare, including a number of my constituents in Chipping Barnet, means that our negotiators should not lightly trade away ethical concerns in exchange for perceived economic advantage in other sectors.
Quality, safety, traceability and compassionate treatment of animals should be at the heart of the UK’s post-Brexit brand for food and farming. I hope that we will see those themes running through the forthcoming Green Paper on this matter. Our new system of farm support should reward farmers who adopt higher welfare standards.
I hope the UK Government and the devolved Administrations consider the following four areas for reform to further strengthen farm animal welfare. Before I set them out, I want to pay tribute to the work of our farming sector. I am well aware that the majority of our farmers take this issue very seriously, and that our farming sector’s record compares well to anywhere else in the world. Many farmers I know go beyond their legal obligations to safeguard the welfare of their livestock, but there is still more to be done.
The first area of reform should be to phase out farrowing crates for pigs and replace them with free farrowing systems. As with sow stalls, which were banned some years ago, pigs about to give birth cannot turn around in those crates. Cramped conditions mean that the sow can barely move and there is not even enough room for her to lie down, much less carry out the nest-building behaviour normally seen in pigs about to give birth under more natural conditions.
I apologise for the late arrival—several of us were caught up thinking there would be a second vote.
Shockingly, two years after those stalls were banned on the grounds of cruelty, six EU countries were still using them unofficially. Our farmers are already being undercut under EU rules by countries that are not compliant with welfare standards.
My right hon. Friend is making a powerful speech. To add to that point, it is estimated that 70% of pork imports that come into the UK fall well below the standards of home-produced pork, as I am sure she is aware. Should we not also be shouting that loud and clear, not only from Parliament but right across the UK?
That is a concern. One of my worries is that so many consumers buy products that are not domestically produced and not subject to our animal welfare rules without recognising or realising the extent of the cruelty that sometimes goes into producing them. We need to look afresh once we leave the EU at the rules and transparency of production method labelling, because that may help to deal with the problem that my hon. Friend describes.
Secondly, our new system of financial support for agriculture should provide incentives for farmers to move away from industrial livestock production towards free range systems. I am particularly concerned that intensive indoor production of broiler chickens can involve tens of thousands of birds in a single shed, each with less floor space than the size of an A4 sheet of paper.
There is quite a lot of misunderstanding about floor space and broiler chickens. The average life of a broiler chicken is between 32 and 36 days. At what point is the floor space measured? Is it when that chicken is a tiny chick or when it is about to be taken away for slaughter? Obviously, the floor space is determined by the size of the chicken.
My hon. Friend makes a useful point. It is important that we bear those considerations in mind, but one of my concerns is that chickens raised in such conditions may lack exercise and be disturbed or trodden on while they are resting. Many thousands may die if ventilation systems fail. I also worry that chickens bred for fast growth have a higher than normal rate of leg deformity because their bones struggle to grow quickly enough to keep up with the weight that is put on them. The litter on the floor to absorb droppings is generally not cleared throughout a chicken’s entire lifetime, meaning that the air can become highly polluted with ammonia from droppings, which can lead to damage to the chicken’s eyes and respiratory system and cause painful burns on their legs and feet, heightening the risk of disease and infection.
I believe that Britain should be a pioneer of free range and pasture-led farming, and a world leader in the skilful management of such systems.
I appreciate the point that the right hon. Lady is trying to make, but does she agree that the vast majority of poultry farmers do not treat their animals like that? Poultry farming is an expertise and relies on the farmer being able to produce a bird that is healthy, wholesome and good for the British market. That is the main priority. Although it is right to make the points that she makes, they affect only a very small minority of farms.
I certainly agree that, happily, many farmers have far higher standards than the intensive means of production that I have been talking about.
One of our goals should be to end zero-grazing for dairy cows. Research by Compassion in World Farming indicates that as many as 20% of UK dairy cows rarely or never graze outside. I fear that industrial systems that keep cattle indoors all year round simply are not capable of delivering high welfare standards, no matter how well managed they are. Evidence suggests that it is essential for cows to be able to access pasture to engage in normal behaviour, including the exercise needed for bone and muscle development. A review of the scientific literature by the European Food Safety Authority concluded that cows that are not kept on pasture for at least part of the year were at increased risk of lameness and disease.
I come from a wet area of west Wales. Our dairy cows are largely indoors for half the year anyway, and they flourish and are sustained to a high welfare standard. I am not quite sure how my right hon. Friend’s proposal would work for the wet winter months when cattle are actually healthier if they are kept indoors.
I think everyone would accept that keeping cattle indoors for part of the year is not problematic. The concern that I am raising is industrial methods of production in which cattle are indoors all year and can never graze. My concern is not with the farming methods my hon. Friend describes.
Another cause for concern and a reason to discourage intensive farming methods is that they can lead to overuse of antibiotics to fend of diseases and infection caused by keeping animals in unnatural and overcrowded conditions, which compromise their health and immune responses. Antimicrobials are often given to whole herds or flocks of intensively-farmed animals via their feed and water. Antibiotic resistance should be viewed as one of the greatest challenges of our time. Unless we halt the trend of antibiotics growing gradually less able to protect us, we face the risk of a return to the pre-20th century situation where small injuries and minor operations routinely resulted in a fatal outcome. We must take action to prevent that disaster.
Admittedly, heavy use of antimicrobials in human medicine is probably the greatest cause of the problem, but there is important scientific evidence to show that regular prophylactic use of antimicrobials in farming contributes to the transfer of resistant bacteria to people. That has been acknowledged by the World Health Organisation, the European Medicines Agency and the European Food Safety Authority, and in the 2016 O’Neill report. That independent review, set up by the Government, called for a substantial reduction in the use of antimicrobials in farming as an important element of an effective strategy for combating resistance. Research shows that high stocking densities are a risk factor for the spread and development of infectious diseases, and such densities can allow rapid amplification of pathogens. As the O’Neill review put it:
“large numbers of animals living in close proximity…can act as a reservoir of resistance and accelerate its spread.”
Efforts to reduce overall antibiotic use in, for example, the poultry sector have had success, but other sectors such as pig farming have not taken such decisive action. Our goal should be higher-welfare farming where animals are kept healthy through good husbandry practices rather than routine antibiotic use.
Finally, I urge the Minister to bring an end to the export of live animals for slaughter. Everyone present for the debate will be well aware of the suffering that can be caused by long-distance transport of live animals. Once exported, animals can be in transit in crowded and stressful conditions for protracted periods. As we have heard, enforcement of welfare rules in Europe is patchy, which means that there is a risk that animals will suffer from extremes of temperature or be left without sufficient food, water or rest. We cannot always be confident even that welfare rules regulating slaughter in the country of destination will be complied with. Export from Northern Ireland to south of the border does not raise the same concerns, because the distances are generally short—it is essentially local transport, so any future ban should treat exports to the Republic of Ireland as equivalent to domestic ones and allow them to continue, as long as there is not evidence of immediate re-export.
I have been listening carefully, and it is fantastic that the right hon. Lady is looking for such care and welfare for animals. She will appreciate that Northern Ireland farms are very small, and that increasing costs will make things harder. Would there be a long consultative period in what she asks for, including sitting down with farmers to find out how to go about things? When it is wet in Wales or soaking in Fermanagh, we could find a solution.
Absolutely. There should be a long process before changes are made. However, I hope the hon. Gentleman will have noted from my speech that one of the tools at our disposal is positive incentives—ways of rewarding farmers whose welfare standards are high, when we allocate farm support payments. I am not always necessarily talking about changes in the rules or things of that nature. In certain situations we may use incentives rather than penalties. However, a change in the law to introduce a ban is justified in relation to live exports.
I appeal to the Minister to bring forward legislation to ban live export for slaughter or fattening that can take effect as soon as the UK leaves the EU. That trade is far smaller than it used to be. I believe it would have been banned years ago if that power had rested in Westminster rather than in Brussels. The referendum vote means that the House will soon have control over that decision once again. We should seize the opportunity to end that trade. Now is the time to press ahead and get it done. Many of my constituents would support it. I urge the Government to press ahead and do exactly that.
Order. This is an hour-long debate that will finish at 5.49 pm. The guideline limits for Front-Bench spokespeople are five minutes for the SNP and Her Majesty’s Opposition, and 10 minutes for the Minister, with the right hon. Member for Chipping Barnet (Mrs Villiers) having three minutes to sum up at the end. That means I have to call the first Front-Bench spokesperson no later than 5.26 pm. Five Members are seeking to catch my eye, and I am determined that each and every one of them should be able to speak. That means that hon. Members will have only three minutes each in which to speak.
It is a privilege to serve under your chairmanship, Mr Hollobone. I thank the right hon. Member for Chipping Barnet (Mrs Villiers) for bringing the debate. She spoke extremely eloquently on a number of points I had hoped to raise—I will no longer be able to do so with only three minutes in which to speak, but I thank her for getting to the heart of animal welfare and what needs to be done in future. I also thank my constituents in East Kilbride, Strathaven and Lesmahagow for, as always, placing animal welfare at the heart of my postbag every month, which shows that they are principled and empathic in all that they do.
Animal welfare is a devolved issue, and Brexit negotiations will therefore have a significant impact on what animal welfare protections are adapted, amended and brought to the Scottish Parliament. Will the Minister comment on that? We expect that the devolution of animal welfare legislation to the Scottish Parliament will continue. Furthermore, our rural economy benefits from a share of the £4 billion received in EU funding. Will he comment on funding for farmers and particularly Scottish farmers?
Animal welfare standards have to be at the heart of everything we do. Ensuring that our farming animal welfare is world class is something of which we can be extremely proud.
The zero-grazing of dairy cows was brought to my attention when I attended a meal with people from the dairy farming industry. I was told that cows prefer not to graze, as though they had been asked for their opinion on the matter. I was somewhat incredulous, as it seems wholly unnatural for a dairy cow to want to be cooped up all year round. I am aware of research that shows pasture-based cows have lower levels of lameness, hoof pathologies, hock lesions, mastitis, uterine disease and mortality than zero-grazed cows. We must adopt a pragmatic approach, as has been said, but I ask that those issues are taken into consideration, and that those animals have the very best welfare.
I do not have much time to speak about crates for sows, but I briefly say that I have written to the Scottish Government regarding CCTV in slaughterhouses. I believe coverage is at about 95% now across Scotland, but I urge them to do all they can to reach 100%.
I must declare my interest in farming in my constituency. Last week, I argued that Brexit presents opportunities as well as risks for farmers. We are now at liberty to replace the common agricultural policy with a policy that is tailored to suit the farms and farmers of this country—sustainable, profitable, high-welfare farming that is good for consumers, good for farm animals, good for the environment, good for farmers and good for Britain.
However, we must protect against the importing of meat that has been subject to lower welfare standards than our own, which threatens the livelihood of our farmers. We must ensure that we have appropriate restrictions on the importing of low-quality, low-welfare animals because it would be hypocritical to insist on high-welfare standards for our own farmers while financing low-welfare farming in other parts of the world. We saw the impact of the Irish horsemeat scandal on our industry, so we must ensure that food labelling reflects British farming’s commitment to higher standards—the red tractor needs to mean so much more.
Honest food-labelling standards can and should be implemented once we leave the EU to protect the reputation and high standards of our farmers. The problem is particularly difficult for caterers, especially with complex dishes. There is simply no space on a menu to list the origins of all components, so we need to find ways to help consumers determine the animal-welfare standards that we all desire.
Brexit provides many opportunities for British farming to take its rightful place at the forefront of world animal welfare standards, and for British farmers to be well rewarded for producing higher-quality food. Animal welfare standards must and will be kept at the highest levels in this country as we strive for the profitable, sustainable, high-welfare farming sector we all deserve.
I congratulate my right hon. Friend the Member for Chipping Barnet (Mrs Villiers) on securing the debate. Who would have thought we would be having a debate about this opportunity? It must have been the powerful oratory of my right hon. Friend, who played a leading part in the campaign.
I enter the debate with some trepidation, because I am not a farmer and do not have one farm in my constituency. However, I wish to pay tribute to Mrs Lorraine Platt and her supporters for all the work that she and others do for the Conservative Animal Welfare Foundation, of which I am a member. We very much want to end cages for hens, pig farrowing crates—my hon. Friend the Member for St Albans (Mrs Main) gave me another take on that—and long-distance live animal exports. We want to introduce mandatory closed circuit television in all slaughterhouses and a method-of-production labelling on how meat and dairy are reared, and we want a ban on routine use of antibiotics in farming.
Many of us were shocked at footage that became available on 17 January of a south Yorkshire slaughterhouse. On its online shop, consumers are told that the animals have been reared in an ethical and traditional manner, but the footage revealed nightmarish conditions for slaughter. In one clip, a severely distressed water buffalo struggled for his life by desperately attempting to jump out of a restraint box after witnessing other animals being slaughtered. Mandatory CCTV can act as a deterrent. It can be used to train staff in higher welfare standards and to allow an independent body to review those standards.
I very much agree with my hon. Friend the Member for North Herefordshire (Bill Wiggin) on labelling. The EU legislation covers mandatory labelling on the provenance of eggs and beef, the labelling of some poultry meats and the country of origin of certain meats. That, however, could be improved by introducing method-of-production labelling on how meat and dairy animals are reared, whether the intensive method or the slaughter method.
Yes, we are a nation of animal lovers. Some other countries criticise us for being silly about animals, but I certainly judge the civilisation of any country on how they treat animals. This is a real opportunity to improve the welfare of animals and how we treat animals on farms. I pay tribute to our farmers. One reason why I campaigned not to continue as a member of the European Union in the ’70s was that I thought the farmers got a raw deal. I am very happy that we are to leave the European Union. We will make a success of it.
I pay tribute to my right hon. Friend the Member for Chipping Barnet (Mrs Villiers) for securing the debate.
Brexit is a great opportunity for the UK to enforce more transparency for farm-to-fork traceability to enable British consumers to make more informed choices about what they are buying and what life an animal has had in the production of food. We should therefore focus on a thriving trade for our farmers, because they operate to some of the highest standards. As I pointed out in my intervention, standards for farrowing crates for sows have been flouted in other countries, whereas our farmers obey the rules.
We will have the opportunity to ban the export of certain live animals, such as the live transportation of horses, which I feel very strongly about. Brexit will allow us to protect endangered species from being transited through the UK, and to ban imports of wildlife trophies, body parts and extracts of bodies. It will allow us to have stronger regulation of animal testing and research, banning that which is causing severe suffering.
UK farmers must not be undermined by lower welfare production units operating abroad. It is vital that we get labelling right. I tried to have a debate on labelling. The EU labelling directive is so tortuous that many years are spent achieving little. The traffic lights system on some of our products was voluntary. Italy kicked up a huge stink because it did not want olive oil labelled as a high-fat product, because it felt that that was discriminatory. I think most of us are fully aware of what we are buying when we buy a bottle of oil or a pat of butter.
Leaving the EU will allow us to be able to take things into our own hands. It will allow us to limit the diseases that sometimes come across from other countries. The Schmallenberg virus, for example, is now widespread across much of the EU. It was not made a notifiable disease, despite Governments seeking to limit its spread. As a result, the US banned bovine semen exports from the EU, including from our significant UK export market, despite our stocks being less badly hit. The EU standing veterinary committee operates through a bureaucracy. With foot and mouth disease, its rules caused delayed response times and exacerbated the risk of spread.
We have many, many opportunities within the wildlife sector, the food production sector, the farming sector, the export sector and the labelling sector to take back control in this country and put our farmers at the forefront. We can stop hiding behind rules that are bent by the EU and stop cross-subsidising inefficient farmers in many EU countries that are operating at standards we would not allow in our country.
I welcome this timely debate. Time is short, but the very fact that so many Government Members are taking the matter seriously means that we will certainly have a great deal for farmers in this country post-Brexit.
There are many aspects of Brexit that we have not fully explored, and farming and the common agricultural policy is one of them. Some 15 million sheep, 9.8 million pigs and 2.6 million cattle were raised and slaughtered in the UK last year. There is always that perceived conflict between cheap food and decent animal husbandry, and I do not think it need be so; both can go hand in hand.
For too long, the EU has cast its shadow over British farming, and one area that has been affected more than many is abattoirs. The 1991 directive created huge changes in structural and procedural rules and in costs. Costs for small abattoirs rose by two and a half times. Not surprisingly, there were substantial closures. We can see that in the south-east, which is virtually devoid of abattoirs. The numbers speak for themselves. There were 495 pig abattoirs in 1990; there are just 130 today. That means huge transport distances, increasing costs and animals’ distress. Of course, increasing abattoir costs mean higher food costs.
The question of abattoirs leads me conveniently to live animal exports, which have been raised this afternoon. There were just 40,000 live sheep exports last year, out of 15 million sheep raised. Every single one of those passed through the small port of Ramsgate. I take this opportunity to thank the Conservative Animal Welfare Foundation, the RSPCA and Kent Action Against Live Exports, which has kept me fully informed about what is happening in Ramsgate.
I proposed a ten-minute rule Bill to change section 33 of the Harbours, Docks and Piers Clauses Act 1847 to allow the local port of Ramsgate, which is owned and run by Thanet District Council, to have discretion to stop the trade. The council faced a £5 million bill following its unilateral decision to close the port after a truly dreadful event that led to the euthanasia of a number of sheep on an overloaded lorry. Part of the High Court judgment referred to section 33 of the 1847 Act, but my ten-minute rule Bill was not supported by the Government for a good reason, which is that we were members of the European Union. We can change the legislation when we become an independent country in a couple of years’ time, but the High Court judge referred to article 35 of the treaty on the functioning of the European Union. Free trade rules, foisted upon us by the EU, do not allow us discretion in this area. I hope that that can now change, as we lead farming into Brexit.
I would be grateful to receive an assurance from the Minister that he is looking carefully at transport times. A maximum transport time of eight hours, which many have asked for, would solve the problem and stop live animal exports out of Ramsgate and any other affected harbour.
I congratulate the right hon. Member for Chipping Barnet (Mrs Villiers) on securing this debate and, indeed, on her excellent speech.
The UK Government’s plans for a hard Brexit, including taking all the nations of the UK out of the European single market—in Scotland’s case, against our will and against our interests—will not only inflict, in our view, catastrophic damage on Scotland’s agricultural sector but bring the serious possibility of damage to the welfare of farm animals. The Minister knows that the people of Scotland voted decisively to remain within the European Union and to continue to enjoy all the benefits and opportunities our membership provides. Short of continuing EU membership, we believe that full membership of the single market and the customs union is the best outcome, not only for Scotland but for each country of the UK, not least in respect of animal welfare standards. Outside the single market, within a UK that has isolated itself in the world, Scottish farmers would face the prospect of paying the same high tariffs that apply to countries outwith the EU such as Ghana or Mozambique, for example. That is hardly the preferential access we currently enjoy.
The consequences will be profound—much lower sales or much lower prices paid to our farmers and food producers. The potential loss of the animal welfare controls we currently have in place to protect both human health and animal health will make future trade agreements considerably more difficult to achieve. As my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) noted, if Scotland is forced to leave the EU, we would expect powers over animal welfare and protection to be fully devolved to Scotland to enable us to address this challenge.
EU regulatory regimes, enforcement, financial support and legislative frameworks help to protect workers and the environment, and create a level playing field. Beyond their importance for trade, regulatory regimes for food safety, animal health and plant health are essential for protecting Scotland’s consumers and environment, and enabling mutually beneficial technical and scientific co-operation. Most of the animal welfare legislation, regulatory controls and enforcement for which Scottish Ministers currently have policy responsibility is derived from EU legislation. The EU legislates on issues affecting the operation of the internal market and the free movement of animals. Indeed, Council directive 98/58/EC, on the protection of animals, is kept for farming purposes and provides general rules for the protection of animals.
However, on 4 January 2017 the Secretary of State for Environment, Food and Rural Affairs said:
“By cutting the red tape that comes out of Brussels, we will free our farmers to grow more, sell more and export more”.
Nothing could be further from the truth. Rolling back on animal welfare standards will create serious uncertainty for potential markets, as will the developing view that any legislation that has animal welfare at its heart might be further diluted by the UK Parliament. If the overriding Government policy becomes cheap food, animal welfare will suffer.
EU law is at the heart of our animal welfare regulations, which protect our animal health, our consumers and our environment. The UK leaving the European Union will mean the repatriation of EU competencies in agriculture, and Scotland’s devolution settlement must change to reflect that. Under no circumstances will we accept the use of exiting the EU as a pretext for centralising control in Westminster. Nor can there be any question of the UK Government attempting to reserve powers that are currently devolved to the Scottish Parliament. The future of Scotland’s agriculture, including animal welfare standards, must be determined in Scotland.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the right hon. Member for Chipping Barnet (Mrs Villiers) on securing the debate; she showed her real concern and passion through the knowledge she imparted to us today. The hon. Members for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), for North Herefordshire (Bill Wiggin), for Southend West (Sir David Amess), for St Albans (Mrs Main) and for South Thanet (Craig Mackinlay) all showed their real concerns about animal welfare and also imparted a lot of knowledge to us.
On this side of the Chamber, we want to see the legal standards set by the EU protected and enhanced even further post-Brexit. We owe a debt of gratitude to all those involved in farming and its associated industries for all they do to maintain high animal welfare standards across the UK. In 2013, the Department for Environment, Food and Rural Affairs reported that the UK was leading the way on animal welfare standards, banning the use of barren battery cages for egg-laying hens, veal cages for calves and sow stalls for pigs, all long before the EU outlawed them. British farmers have led by example, with 88,000 farmers part of red tractor assurance.
Although the Government have said that existing EU laws will be incorporated into domestic law through the great repeal Bill, the Secretary of State has indicated that there will be an opportunity for the Government to scrap the EU regulations that they do not like. The problem is that the Government could be drawn into a race to the bottom on animal welfare standards when negotiating trade deals with countries outside the EU that have much lower standards than ours. I hope that the Minister will be able to guarantee that the welfare of farm animals will not be used as a bargaining chip in any future trade negotiations.
I am most grateful to the hon. Lady for giving way. I have similar concerns about what happens if, as the hon. Member for Caithness, Sutherland and Easter Ross (Dr Monaghan) suggested, the powers are devolved. How can the hon. Lady see devolved Parliaments and Assemblies not using the powers as a bargaining chip to influence international deals that we may be trying to achieve for the benefit of the whole of the UK?
Upholding our standards must be paramount and we must stick firm. I hope that the Government do not try to water down any standards unilaterally.
When the Secretary of State addressed the Oxford farmers conference, she announced regulations that she would like to scrap, including the three-crop rule. If the public are to have confidence in any of the Government’s promises on animal welfare, we must be told what objective criteria the Secretary of State is using when she makes such announcements. I hope the Minister can tell us what the criteria are.
The desire for a ban on live animal exports has already been mentioned. I hope that we will get a full explanation from the Minister on what he hopes will happen on that, because it is so important.
A big area of concern is how inspection regimes and enforcement will be upheld after EU regulations no longer apply. Currently, we have a shortage of the suitably qualified veterinary staff who are needed to ensure that standards are being complied with. That shortage may be exacerbated by new restrictions on freedom of movement. What are the Government doing now about that skills shortage?
Our membership of the EU has been valuable to scientific and veterinary communities; it has provided cross-border access to research laboratories in other EU countries and the sharing of best practice on issues such as disease management. Those links have provided an important means of upholding high animal welfare standards. Will the Minister set out how those issues will be addressed in the negotiations and how he will ensure that those important links can be sustained after we leave the EU?
Does the Minister further acknowledge the need for certainty over future border controls? Will he commit to working closely with veterinary experts, as well as farmers, to ensure that that is addressed in the negotiations?
There is also a need for the Government to develop a new system of farming support to replace the common agricultural policy after 2020, which is an opportunity for the Government to design a system that actively provides incentives for farmers to deliver the highest possible animal welfare standards. Will the Minister say what is being considered?
Finally, will the Minister give a reassurance that DEFRA’s upcoming Green Paper on food and farming will have a strong emphasis on upholding and strengthening animal welfare? Farming is vital to our economy and the Government must give it safe passage through the Brexit deal.
Thank you, Mr Hollobone. I apologise for being late. I was given some unreliable intelligence from my Whips about the possibility of a second vote.
I congratulate my right hon. Friend the Member for Chipping Barnet (Mrs Villiers) on securing this important debate about the importance of animal welfare in farm policy once we leave the European Union. The debate about agricultural policy is often characterised by a tension between agricultural production on the one side and environmental outcomes on the other, and there is often antagonism between the two. Animal welfare, which is the third issue in this debate, is all too often overlooked, but it is of equal importance. The kindness and compassion that we show to animals that we raise for food are a hallmark of a civilised society.
I begin by paying tribute to the fantastic work of the Conservative Animal Welfare Foundation. My hon. Friends the Members for St Albans (Mrs Main) and for Southend West (Sir David Amess) have been actively involved in that group for many years, and they have done sterling work in the Conservative party. I also pay tribute to individuals such as Peter Stevenson of Compassion in World Farming, who for the best part of 20 years has been a calm and cogent voice of reason in this debate and provided really incisive analysis on some of these issues, and to the progress that groups such as the RSPCA have made to develop assurance schemes that have improved consumer transparency in this area.
The Government made two key manifesto commitments on farm animal welfare: first, to promote animal welfare in international trade negotiations, and secondly, to place greater emphasis on animal welfare in the design of agriculture policy. The Conservative party was the only one of the main parties to put such specific pledges about agriculture in its manifesto. I am heartened to see so many colleagues taking such an active interest in what is a manifesto commitment for this Government.
The UK has a good record on animal welfare. World Animal Protection rates the UK in the upper tier of its league, in joint first place alongside other countries. We led the way in calling for a ban on veal crates, bringing an end to battery cages for laying hens and banning sow stalls.
Several hon. Members—particularly the two Opposition Front Benchers, the hon. Members for Caithness, Sutherland and Easter Ross (Dr Monaghan) and for North Tyneside (Mary Glindon)—have raised the issue of regulation when we leave the European Union. It is the case that much of the current regulation relating to farm animal welfare and the welfare of animals at the time of slaughter is governed predominantly by EU law. I reassure hon. Members that nothing will change overnight. As the Prime Minister has pointed out, the great repeal Bill will, in the first instance, convert all existing EU law relating to animal welfare on to a legitimate UK legal basis, and we will be free to improve that legislation over time.
It is important that we do not have a “glass half empty” view and say, as some Members often do, “That means you’re going to have a race to the bottom and reduce standards.” There are areas where current EU standards are wanting and we may want to review things. For instance, the latest science raises some concerns about the very prescriptive nature of the gas mix that is used during the slaughter of pigs, and pigs’ aversion to that. There is an argument for revisiting the nature of that gas mixture. It will be easier for us to do that and to improve standards during slaughter once we are free from the European Union.
However, some things will change. The UK will regain its own seat at the World Organisation for Animal Health, or the OIE—an international body that promotes animal welfare standards. While we are in the European Union, it is literally unlawful for us to express an independent view without first getting permission from the European Commission. That will change when we become an independent country again; we will be free to make the case internationally for higher animal welfare standards and share some of our great scientific expertise to help other countries around the world raise their standards too.
Rothamsted in my constituency has been looking into bee decline. We often do not have a voice on scientific advancements such as those to do with neonicotinoids, sprays and pesticides, because our voice is subsumed in the EU voice. I would like our voice to be stronger.
My hon. Friend is right. I do not want to divert from this debate, but in all the international wildlife conventions, we will regain our voice, our voting rights and our seat at the table.
Most importantly, leaving the European Union gives us the opportunity to deliver the second manifesto commitment that I mentioned at the start of this debate, by placing animal welfare at the heart of the design of future agricultural policy. We should recognise that there are some limits to how far increased regulation can go. As a number of hon. Members have pointed out, there is no point raising standards here so high that we effectively end up exporting our industry to other countries because we have exposed producers here to unfair competition from countries with far lower animal welfare standards.
We are seriously considering the possibility of introducing incentives to encourage and support higher animal welfare standards and different approaches to animal husbandry that can reduce our reliance on antibiotics, improving animal health while delivering animal welfare outcomes. In the past couple of years, a number of countries have been doing interesting work in the area. Denmark has developed a voluntary three-tier system for its pig sector to reward producers who show commitment to higher animal welfare standards. The Dutch have a similar system called “the better life system”.
Germany is particularly interesting. It has something called the Tierwohl system, which financially rewards farmers who adopt standards of animal welfare that go above and beyond the regulatory minimum. I have had representations from organisations such as the RSPCA and others that would like us to explore similar options here in the UK. As part of our policy development, we are considering all those ideas. As I said earlier, we have a manifesto commitment to place greater emphasis on animal welfare in future policy.
I turn to a few of the points made by hon. Members. My right hon. Friend the Member for Chipping Barnet raised the issue of trade and the context of the World Trade Organisation. As a former Minister who understands the issues well, she will know that yes, there are WTO rules. There have been disputes about the degree to which reliance can be placed on animal welfare standards in trade negotiations, but equally, there are legal precedents and case law to support the use of ethical bans on certain practices and the reflection of animal welfare in trade agreements. I do not believe that anything along the lines that we would propose will cause any difficulty whatever with WTO rules.
My right hon. Friend mentioned farrowing crates. It is a complex issue. We led the way in banning sow stalls. I declare an interest: my brother has a pig farm, and raises a rare breed of outdoor pig. There is a danger of sows lying on their piglets; I put it to hon. Members that that is not great for the welfare of the piglet concerned. It is a genuine management challenge, and it is not straightforward. She also mentioned the possibility of offering incentives to encourage free-range systems and perhaps pasture-based grazing systems. Those are exactly the kinds of idea that we are at least willing to consider as part of our work.
Several hon. Members, including the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), raised the issue of zero grazing. There is some academic research showing that by a small margin, depending on the weather, cows prefer to be outdoors in pastures rather than housed indoors. More importantly—I used to run a farm where we had livestock—any farmer who has turned cattle out to grass in April and watched their reaction knows that cattle prefer grazing, all other things being equal.
My hon. Friend the Member for North Herefordshire (Bill Wiggin) raised trade, which I believe I have addressed. My hon. Friend the Member for South Thanet (Craig Mackinlay), a long-standing campaigner on the issue, mentioned live exports, as did others. While we are in the EU, it would be against free movement rules to place an ethical ban on the export of live animals, but once we leave the European Union, we will be free to do so, if that is the decision of the UK Government; there will be nothing to stand in our way. The only thing that I would say is that it is a little more complex than one might think in that we export breeding stock, pigs in particular, and that is a different issue. There are also matters to do with different animals travelling better than others. The area is complex, but certainly one that we would be free to look at after leaving the EU.
Finally, a number of hon. Members mentioned CCTV in slaughterhouses. A report by the Farm Animal Welfare Committee, which advises all the Administrations in the UK, highlighted some of the benefits of CCTV. Method-of-slaughter labelling, however, is contentious. The European Union did some research and we are waiting to see the next steps. We have always been clear that we do not rule out looking at some kind of labelling for method of production or slaughter, although again the issue is complex.
We have had a fantastic debate, with many interesting contributions. I hope that I have been able to reassure Members that the Government take the matter very seriously.
I thank all right hon. and hon. Members who have taken part in the debate, and the Minister for his reassurance on a number of the points that I made and for his strong support on behalf of the UK Government for the highest standards of animal welfare. As others have done, I also thank Compassion in World Farming, the RSPCA and the Conservative Animal Welfare Foundation for their helpful input to the debate.
I was very struck by something that my hon. Friend the Member for South Thanet (Craig Mackinlay) said. The sheer volume of animals reared and slaughtered in agriculture in this country and around the world demonstrates how important it is to pursue the highest standards of animal welfare. Anyone who takes animal welfare matters seriously must put the welfare of farm animals at the top of their priorities, not only because of that sheer volume of animals involved, but because we are all responsible as consumers of the products of the system. We all have a responsibility to work for production to take place in as ethical a way as possible.
I very much welcome the strong support that we have heard from all parties today for high standards of animal welfare, for the efforts that our farmers are already making on animal welfare and for ensuring that we do not see our farmers who apply animal welfare standards being undercut by cheap imports from jurisdictions that do not pursue the same level of ethical concern for animals. I welcome the debate and the reassurance that we have heard in response from the Minister.
Question put and agreed to.
That this House has considered animal welfare standards in farming after the UK leaves the EU.