Business, Energy and Industrial Strategy
The Secretary of State was asked—
The UK’s measurement of carbon emissions is considered among the best in the world, with a 97% accuracy rate. Indeed, our inventory of carbon emissions is among the world’s most comprehensive, covering all sectors of the economy. However, we are always looking to improve our accuracy in this area, and that work is guided by the National Inventory Steering Committee, which meets twice a year.
I hope that my right hon. Friend will also consider excellent the fact that we overachieved against our first carbon budget to 2012 and that we are on track to over-achieve by 5% and 4% respectively against our second and third carbon budgets. However, I am afraid that he is being his usual mischievous self in asking about the fourth carbon budget, which is something that I shall be talking more about when we launch our clean growth strategy, so he will have to be patient just a little bit longer.
The Minister’s response is simply not good enough. We have waited for report after report, and these carbon budgets have been delayed time and again. I know that we have had an unnecessary and uncosted election, but even the United Nations is saying that our air is not clean. It is time that the Government took this seriously, acted and told the House the exact figures.
I think the hon. Gentleman is showing the effect of our late sitting hours with his grumpiness. He should be celebrating the fact that Britain has led the world in decarbonising our economy, while growing the economy at a greater rate than any other G7 country. If he wants more affirmation, he should read the PwC report on that. What we have to do now is set out a very difficult and long-term plan to meet the fourth and fifth carbon budgets and to go beyond. As always, that requires all of us to support this difficult progress right across the economy. I hope that the hon. Gentleman will have a cup of coffee and cheer up.
The Minister is right to say that we have an excellent method of calculating our emissions, but she might have pointed out that other countries do not, and that the Intergovernmental Panel on Climate Change is currently preparing updated guidelines on how best to account for emissions. Will she confirm that, for that vital work to proceed, the UK Government will be one of those who increase their financial contribution to the IPCC to make good the shortfall left by President Trump’s decision to pull out of the Paris agreement? Does she also agree, now that the cost of offshore wind energy has fallen by a half in just two years, that those are the easiest emissions to calculate, because they are zero?
I hope that the hon. Gentleman will celebrate the fact that we entirely agree and have committed to increasing our contribution to the funding of that agency, directly as a result of the pull-out of the USA from the Paris agreement—although technically it cannot withdraw until 2020.
We welcome, accept and agree with Matthew Taylor’s ambition that all work in the UK should be fair and decent, with realistic scope for development and fulfilment. The report is comprehensive and detailed. We will give it the careful consideration it deserves, and we will respond in full later this year.
Taylor agreed that we needed to ensure that the self-employed were genuinely self-employed and to strengthen their rights. A Labour Government would shift the burden of proof, so that the law would assume that a worker was an employee unless the employer could prove otherwise. We would set up a dedicated commission to modernise the law on employment status. Why cannot this Government commit to real action like that?
Much of what the hon. Gentleman refers to is covered by Matthew Taylor in his report, and one of his recommendations that we will be following up with interest is that all workers should be informed of their status in writing by their employer before they start their work.
Has my hon. Friend looked at the working practices of the John Lewis Partnership—with which I no longer have any connection whatever—and seen the way in which it has people on its boards of management? Does she not believe that this is an important way to achieve worker involvement?
Will the Minister join me in welcoming the Supreme Court’s ruling that employment tribunal fees for workers are illegal? Will she now accept that it is the Government’s responsibility to end the use of bogus self-employment by companies that seek to avoid paying national insurance and giving workers the rights that they deserve? Will she commit to introducing the necessary legislative changes in this Parliament to give workers the rights that they need and to ensure that taxpayers get the tax revenue and national insurance that they deserve?
Indeed, what the hon. Lady refers to as bogus self-employment is one of the reasons why the Prime Minister appointed Matthew Taylor to review employment protection in the context of the modern economy. She raises some good points, and I trust her Committee will be investigating them. My Department will co-operate fully.
Productivity is a crucial part of our industrial strategy, as are good employee communications and practice. The union between Matthew Taylor’s report and the industrial strategy will focus very much on improving productivity as the basis of improving people’s earning power.
We need an economy that works for everyone. We are developing the industrial strategy to improve living standards and boost earning power, so that everyone in our country can share the benefits of our economic success.
With average weekly real earnings lower than they were in 2007 and with the Institute for Fiscal Studies saying that the flatlining of real wages is unprecedented since at least the end of the second world war, does the Minister accept that Britain needs a pay rise? What are Ministers doing to tackle this?
That is one of the reasons why the Government have introduced the national living wage, as a means of boosting the earning power of people at the lower end of the pay scale. I acknowledge that average earnings have been static over the past year, but it is important to recognise that people on the national minimum wage were given a 4% pay rise in April this year, and 1.3 million of those people have been taken out of paying income tax altogether.
It is almost comical; we would not even have a minimum wage if it were not for Labour Members. The Minister spoke about the Government’s industrial strategy, which she thinks will help to give people a pay rise, but that strategy is absolutely at odds with the current Brexit strategy. Will the Department have a word with the rest of the Government and commit to keeping our country in the single market?
I remind the hon. Lady that this Government’s policy is to be outward-facing and achieve the best trade deal possible with the European Union, but we have to bear in mind the concerns of my constituents and hers about immigration. That has to be tackled, and it is no use the Opposition running away from that. They cannot assume that we will be able to remain in the single market indefinitely and address people’s legitimate concerns about immigration.
Average weekly earnings in Kettering are typically 5% below the national average, so anything the Government can do to cut basic levels of tax is particularly important. Does my hon. Friend agree that, because we raised the income tax threshold from £6,500 a year in 2010 to £11,500 a year, basic rate taxpayers typically pay £1,000 a year less in income tax?
I very much agree with my hon. Friend’s point. I am sorry to hear about the situation with regard to earnings in Kettering, but I am sure that the Government’s commitment to improving skills and our target of 3 million apprenticeship places by 2020 will help the people of Kettering, as they will help people all over the country.
The Government’s pretendy living wage is not available to those under the age of 25. If a 25-year-old and 17-year-old start the same job on the same day, the 17-year-old will be paid £3.45 less than their older counterpart. When will the Government ensure that all workers receive a real living wage of £8.45 an hour?
I remind the hon. Lady that the Government set the national living wage, but only after consultation with the independent Low Pay Commission. It is the commission’s view that we need to have several levels of the national minimum wage because youth unemployment is persistently higher than unemployment among those above the age of 25. The policy is really to balance maximum earning power with maximum levels of employment.
According to the Governor of the Bank of England, Mark Carney, the last time wages were stagnant for so long was 150 years ago, when Gladstone was Prime Minister, Darwin was launching the theory of evolution and trade unions were illegal. Now we know from Library figures that, year on year, wages went up under the previous Labour Government and, year on year, wages have gone down under this Conservative Government. Is it not simply the truth that workers get a pay rise under Labour and a pay cut under the Tories?
I remind the hon. Gentleman that this Government are concerned not just about pay, but about employment. If we look at the record of the previous Labour Government—or, indeed, that of any Labour Government—we see that their record on employment is poor. The record of this Government is the maximum number of jobs, with more than 1 million new jobs created, which is an important point. If he wants to talk about anniversaries, let me say that this week is the 10th anniversary of the financial crisis, and I remind him of the deficit that this Government inherited following that crash.
The UK has a world-leading space sector. A quarter of the world’s satellites are either built in the UK or have major components from the UK. At the last European Space Agency ministerial in 2016, the Government agreed €1.4 billion of new funding for space programmes, and we have recently introduced the Space Industry Bill, which will enable UK firms to participate in a sector worth £25 billion.
I thank the Minister for his very encouraging answer. The tender for the next stage of the ground control segment of the Galileo programme, in which the UK has a leadership role, is currently live, so will he make sure that the European Commission’s request for UK-based companies to clarify how they will repatriate activities to the EU does not undermine them in winning contracts?
My hon. Friend raises an important point. British expertise has been absolutely fundamental to the development of the Galileo and Copernicus programmes. The “Collaboration on science and innovation” paper we published just last week made it clear that the UK would very much welcome an agreement to continue to collaborate with our European partners on major science, research and technology initiatives. My right hon. Friend the Secretary of State and I have made it clear that we want our companies and our universities to continue participating in key EU space programmes.
The ingenuity, expertise and experience of our UK space sector enables us to punch well above our weight and to collaborate globally in bodies such as CERN, ESA and many others that predate the EU. Does the Minister agree that we should continue fully to support the role that British companies play in both other European space agencies and the EU space programme?
My hon. Friend has great expertise in this area, through his association with the parliamentary space committee. I can reassure him, as I did a moment ago, that we are committed to continuing to collaborate closely with European countries to develop our space sector to the benefit of all those in employment in this sector in this country.
The Minister probably knows that precision engineering companies in Huddersfield are very much involved in the Mars probes and the space programme, but does he know that they are increasingly worried, as is the University of Huddersfield, about the future of partnerships across Europe and the funding from Europe that makes that exploration and the existence of those cutting-edge companies possible?
At the ESA ministerial council in December, the UK committed a record sum of €1.4 billion to ESA. We are committed to continuing to participate in ESA, which, as the hon. Gentleman knows, is not part of the EU but a separate organisation entirely. We see great value in continuing to participate in the programmes it administers.
The Minister is right to address the space sector. He will also be aware of issues within the aerospace sector, in particular at Bombardier. He will be aware of Boeing’s attempts to stop the contract and to add $30 million to every C Series plane coming out of Belfast. What is he doing to ensure that Bombardier’s contract is secured?
14. In my constituency of Chelmsford, more than 500 jobs at Teledyne e2v are directly involved in the space sector. We are making the cameras that will go on satellites out in space to see whether there is life on other planets. Will the Minister reassure my constituents that the UK’s ongoing contribution to the European Space Agency is being considered? (900797)
Absolutely; we are committed to our ongoing membership of the European Space Agency. As I said a second ago, we have just provided €1.4 billion of new funding for its programmes. Teledyne e2v in my hon. Friend’s constituency makes an important contribution to the success of the programmes that ESA is running.
I am delighted that my hon. Friend has asked that question, as we often hear that Britain does not make things anymore. In fact, Britain is the ninth largest manufacturing nation. The sector contributes £168 billion to the national economy and employs more than 2.5 million people directly, and its output has grown by 3.2% in real terms since 2010.
I thank the Minister for that very upbeat response. I, too, get frustrated when I hear people say that we do not make things in this country anymore. My constituency is living testimony to the fact that we do. We have world-leading, cutting-edge companies, particularly in the aerospace and defence industries, but also in other areas of engineering. Should we not paint a rosier picture, not least to help people who are leaving school decide to follow careers in manufacturing? We often forget that many valuable, excellent careers are available in manufacturing, and if we put forward a more rosy picture, people might be attracted into the industry.
I agree entirely. My hon. Friend makes a good case for manufacturers such as GE Aviation and Moog Industrial in his constituency. Productivity, which is the way we drive up earning power across the country, has increased three times faster in manufacturing than in the rest of the economy in the past 10 years. There is much more to do, which is why we have committed to the biggest increase in public science and innovation funding for nearly 40 years; invested nearly £300 million in the high-value manufacturing Catapult; brought forward almost 3 million apprenticeship starts, many of which are in these valuable industries; and increased the permanent level of the annual investment allowance almost tenfold, starting on 1 January last year. We want to help businesses export and thrive across the world, and to support them every step of the way.
The truth is that UK manufacturing capacity has languished at too low a level for many years. However, the depreciation of sterling to a more sensible parity has seen a number of companies, including Rolls-Royce and Nissan, boost their investment. Now that we are leaving the EU, will the Government look to use state aid and public procurement programmes to further boost British manufacturing?
The hon. Gentleman points to one of the impacts of the referendum result, which is that many industries have had a substantial currency tailwind, which has helped sectors such as aerospace and steel to deliver rather impressive results this year. He is right that we need to keep those sectors thriving. We need not only to get the most frictionless and wide-ranging trade deal that we can with the EU, but to export right across the world, where British goods and products are very well regarded.
Minister, 3,500 people in my constituency are employed in the manufacturing sector. Does she welcome the investment in Winsford by Tiger Trailers, a company with 200 employees that started three years ago, which plans to invest £22 million in a new building, doubling the size of its workforce, and exporting to Europe and elsewhere?
I am delighted to welcome, and indeed celebrate, that investment. There has been a series of such announcements in the automotive manufacturing sector—it has been confirmed that the electric Mini will be built in the UK. It is clear that British industry is investing, growing and thriving in the UK. We will do all we can to ensure that that continues.
Given the importance of the aerospace sector in manufacturing capacity and the rather non-committal reply to the hon. Member for Strangford (Jim Shannon), will the Government commit themselves to standing very firmly, alongside the Canadian Government, behind Bombardier and its workers in resisting bullying from Boeing and its friends in the United States Administration?
Electric and Autonomous Vehicles
Our industrial strategy capitalises on our strengths as we build the next generation of motor vehicles. On 25 July, we committed £246 million to the Faraday challenge to make Britain a centre for the development of battery storage. The following day, BMW announced that the new electric Mini will be built in Oxford.
As the fourth industrial revolution gathers pace, countries that embrace electric and autonomous vehicles will find it easier to move both people and products, reducing costs and boosting productivity. Will the Secretary of State continue to support such vehicles, as they drive our future economic growth and productivity?
I will indeed and I am grateful to my hon. Friend for his championing of those investments. We already have an outstanding reputation in the automotive sector through our leadership and investment in both electric and automated vehicles. Ford, for example, has announced that its European smart mobility research will be based in Britain, and Nissan is conducting its automated vehicle testing in the UK. Our code of practice for testing new technologies is globally recognised as the best in the world. We have a successful motor industry and we want it to be stronger still.
On 20 February, the Secretary of State said that he would release the famous letter to Nissan
“when it is no longer commercially confidential”. —[Official Report, 20 February 2017; Vol. 621, c. 784.]
Will he explain whether that will be in 2017, 2018, 2019, or sometime thereafter?
Yes, I will release the letter. The hon. Gentleman reminds us of the fact that the investment Nissan is making in Sunderland has secured 7,000 jobs on that site and nearly 50,000 jobs in the supply chain. It was a very welcome investment. We need to respect Nissan’s confidentiality, but I have made a commitment to the House that, when it no longer applies, I will certainly release the letter.
What discussions is the Secretary of State having with manufacturers on prolonging battery life as rapidly as possible, and on rolling out electricity charging points to ensure the existing points are working and not broken down, and that they become more readily available throughout the UK?
We are gaining international respect and attention, including from some of companies that have been mentioned, for our commitment to research and development of battery storage. That is why, through our industrial strategy, the Faraday challenge to make us the best in the world in battery storage is so important. The hon. Gentleman is absolutely right to mention charging points. We want to make it possible for people to plug in and charge their cars. We have over 11,000 publicly accessible charge points. That is the largest network in Europe, and we want to expand it further.
The British energy market is one of the most liquid and developed markets in the world, and it provides security through diversity of supply. We enjoy cordial links with the EU in this field and expect that to continue after EU exit.
Does the Minister accept that it is vital that we stay in the European internal energy market after Brexit in order to facilitate tariff-free trading of gas and electricity across borders, which we currently have? I know that the Department has been busy trying to find out why 20% of its staff have left without telling it why, according to a report in The Times, but when will the Government reply to the report by the Business, Energy and Industrial Strategy Committee, and when will they announce policy options in this crucial area?
As the hon. Lady will be aware, the Government are considering all aspects of their future relationship with the EU, including the arrangements for trading energy. Our priority is maintaining affordable, clean and secure energy supplies for businesses and households.
23. Two thirds of our energy will still come from oil and gas in 2035, so will the Minister join me in congratulating the economic report from Oil & Gas UK highlighting the renewed vote of confidence in the North sea shelf? Will he also make sure that the oil industry is at the heart of the Government’s industrial strategy? (900806)
I fully agree with my hon. Friend about the importance of the oil and gas industry, which supports more than 300,000 highly skilled jobs in regional centres of excellence across the UK. I understand from my recent visit to Aberdeen, where I was joined by him, that the sector is working on a compelling proposal for a deal, building on the unprecedented support we have already given to the industry, and I look forward to receiving it in the near future.
20. The UK is already a net importer of electricity. Post-Brexit, for the security of energy, the UK needs to maintain access to interconnectors and to remain part of the integrated energy market, as this provides tariff-free access to gas and electricity. Will the Minister confirm whether the UK will remain in the internal energy market post-Brexit? (900803)
I absolutely can confirm that maximum continuity of supply is very important to us. We have an excellent relationship with the EU on this, and it is the Government’s responsibility to make sure that it continues. I am sure that that will satisfy the hon. Gentleman.
It looks like membership of the internal energy market is not connected to single market membership but that membership of a couple of key industry and regulatory bodies, such as the Agency for the Co-operation of Energy Regulators and European Network Transmission Systems Operators and Council of European Energy Regulators, comes as a prerequisite. Has the Minister had any discussions with those organisations to see whether the UK can be a member when not a member of the EU?
As I am sure my hon. Friend is aware from his former membership of the then Energy and Climate Change Select Committee, we are talking all the time to these organisations, and our priority is to maintain the maximum continuity of supply that everyone in this country has been used to and will continue to enjoy.
Until now, the Government have put nuclear at the heart of their energy strategy, but their decision to leave Euratom puts at risk the security of markets, businesses and workers in the sector. Could this mean that the Secretary of State is finally wavering over his support for the over-budget and very late Hinkley Point?
I can confirm that the Secretary of State is very much in favour of the arrangements at Hinkley Point and that the Government are in favour of a mix of energy that includes nuclear and all its other sources. This has been very successful and ensured energy security and the continuity of supply that everybody enjoys.
I thank the hon. Gentleman for effectively congratulating the Government on the results of the recent auction for energy prices—I, too, was delighted that the cost of offshore wind effectively dropped by half. I also remind him, however, that energy has to remain a mix. Nuclear is part of that mix, and as with all mixes aimed at maintaining continuity of supply, some are more expensive and some are cheaper. What matters is the average price paid, and I think that Hinkley will turn out to be a really good deal for the taxpayer, as it involves no public funds upfront, which is very unusual for this kind of massive development.
I am a little concerned by the Minister’s reply to my hon. Friend the Member for Garston and Halewood (Maria Eagle). The Secretary of State specifically told the BEIS Select Committee in the spring that it was very much in Britain’s energy security interest to continue to participate in the internal energy market. Does the Minister agree with his own Secretary of State on this matter? If so, what action has he been taking to ensure that we can participate in that market after Brexit?
It is the job of the hon. Gentleman—the Opposition spokesman—to be concerned about everything that the Minister says. I fully accept that. In this particular case, however, I can but reiterate that maintaining continuity of supply is our first priority. That is what my right hon. Friend the Secretary of State says we must do, and that is what we shall do.
One of Britain’s greatest assets in competing in the global economy is our reputation for being a dependable place in which to do business. In our response to the recent Green Paper on corporate governance, we set out plans to build on those strengths through greater transparency and accountability to shareholders, employees and suppliers, and others with an interest in the long-term success of companies.
A myopic focus on short-term profit and share price in many British boardrooms damages the UK economy, leading to chronically low rates of business investment and the treatment of workers as units of production rather than human beings. Some respondents to the Green Paper suggested that long-term investors should be rewarded with stronger shareholder voting rights. Can the Secretary of State explain why the Government rejected that interesting proposal?
We consulted widely on the Green Paper, and the set of reforms that we are making has enjoyed broad support. We are proposing to extend the holding periods for long-term share incentives from three years to five years. I think the hon. Lady played some part in the introduction of the three-year periods, and I hope that she will welcome the extension. We are also making it a more explicit requirement of boards, including boards of directors, to reflect in their reports and accounts what they are doing for a wider range of stakeholders, not just the short-term issues. I hope the hon. Lady will welcome that as well.
Industrial Strategy Challenge Fund
The industrial strategy challenge fund will help to drive growth in all parts of the country by using research and development to position us well in global markets where Britain has particular strengths.
Can the Secretary of State explain why his challenge fund is directed at sectors that are dominated by an over-representation of men, while many of the professions in which females are over-represented face low investment, low skills, low pay and low productivity?
Our exchanges this morning show the potential and the strengths that we have in successful sectors such as the automotive, healthcare and medicine, and satellite and space sectors, in which we are creating very good jobs. However, my ambition and my Department’s ambition—which I hope the hon. Gentleman shares—is to increase the proportion of women and other groups who are under-represented in those industries, because there is talent there that we should be using, and part of our drive is to get the best talent into those world-beating industries.
A recent report produced by Sheffield Hallam University found that the challenge fund had too narrow a sectoral focus, which was disproportionately benefiting areas in the south-east at the expense of traditional manufacturing areas in, for instance, the west midlands. What elements of the fund will benefit areas such as mine?
I have not seen the report. I will look at it, but I think it is mistaken. The challenge fund includes, for example, the Faraday challenge, which I launched at the University of Birmingham along with many industrialists and academics from across the west midlands. It is proposed that the west midlands should be at the heart of the challenge. Investment in driverless cars, and in satellites and space, is taking place throughout the country. One of the big features of the challenge fund is that it reaches every part of the country, and, indeed, every part of the United Kingdom.
With Brexit uncertainty mounting, inflation rising, growth faltering, business confidence at a six-year low, and the euro at a record high—[Interruption.] I am sorry, but that is the truth. Our economy therefore needs action from this Government, but instead it is groundhog day, with the same money announced over and over again, which makes it back to the future for our regions, with, as my hon. Friend the Member for West Bromwich West (Mr Bailey) indicated, the challenge fund money being shown by Sheffield Hallam research to impact only 1% of the economy, overwhelmingly in the south-east. So will the Secretary of State stop prevaricating, do the right thing and tell us right now what level of regional growth he expects the challenge fund to deliver? Or does he not even know what success looks like any longer?
Talking of groundhog day, the hon. Lady talks complete nonsense. The industrial strategy challenge fund and the industrial strategy Green Paper have been widely welcomed in all parts of the country. After our exchanges, I will send the hon. Lady the support it has had from the north-east of England, of which she should be aware. This is something that has long been called for. I have listed the sectors that will benefit. As we are talking about manufacturing, in terms of her reflections on the state of confidence in the economy, the hon. Lady should know that the EEF last week reported record orders, record export orders, record employment and record investment intention. She should welcome that.
Small and Medium-sized Enterprises
12. To ask the Secretary of State what steps his Department is taking to support small and medium-sized enterprises. (900795)
British Business Bank programmes are supporting £3.4 billion of finance to almost 60,000 businesses. Growth hubs and the business support helpline provide information and guidance. In the hon. Lady’s area, the Liverpool city region growth hub has engaged and supported over 4,550 businesses, and I am leading a taskforce to identify opportunities to support SME growth.
The Government’s delay in giving out the business rate relief they announced in the spring Budget caused considerable suffering to thousands of businesses across the country. Measures such as the introduction of the staircase tax have also caused considerable tax increases for thousands of businesses across the country. Confidence has fallen back in the second quarter. The chairman of the Federation of Small Businesses has said—
The hon. Lady raises very important issues, and I have met the chairman of the FSB to discuss business rates. Some of her questions should really be directed to my right hon. Friend he Chancellor, but in the meantime let me say that there has been a cap on rates increases, and small business rate relief will mean that bills will not increase by more than £50 per month for the first year. There has also been a £300 million local authority fund to provide discretionary relief on business rates, and I would encourage the hon. Lady to pressurise her council for the full benefit thereof.
I agree with my hon. Friend: enterprise zones have for the most part been a huge success in attracting investment and providing new jobs. We will keep in mind any future growth in the number of enterprise zones; we do not currently have any plans, but they have been a success and we will keep them under review.
Industrial Strategy (Rural Areas)
Some of the biggest economic opportunities are in the rural parts of the United Kingdom, and I welcome the contribution of many rural representative groups to the development of our industrial strategy, including several organisations in Ayrshire.
Ayrshire has enormous industrial potential, including as a possible site for the medical manufacturing innovation centre and, of course, for the UK’s first spaceport, but for it to succeed and for local people to benefit and access those jobs we require wider infrastructure development. Ayrshire is not covered by a city deal, so will the Secretary of State speak to the Chancellor and back a full Ayrshire growth deal?
The hon. Lady knows that I have great enthusiasm for a deal in Ayrshire, and conversations around that are ongoing. I am sure that she will welcome the progress being made on the spaceport, which is important for Prestwick, and the £3.5 million support for the Halo project at the old Johnnie Walker bottling plant in Kilmarnock. A lot is being done in Ayrshire, but I would like that progress to continue.
My hon. Friend makes an excellent suggestion. There are particular opportunities for start-ups and smaller businesses to locate in rural areas, where premises may be more available than in towns. Clustering them together so that they can support each other is an excellent suggestion and I will take it forward.
Property Market Transparency
Knowing who ultimately owns and controls a company is crucial in the global fight against corruption, and the UK is leading by example. Our public register of company beneficial ownership went live in June 2016.
Renewable Energy and Carbon Budget Targets
As I have mentioned several times, the UK has led the world in introducing legally binding carbon budgets with cross-party support, and we have exceeded our budgets to date. We are also on track to exceed our ambition to generate 30% of our power from renewables by 2021—it is looking like we will deliver 35%. However, all that has not been done at the expense of economic growth and productivity. Indeed, yesterday’s PwC report says that Britain is leading the world in clean growth and is reducing emissions while growing the economy.
Millions of tonnes of wood pellets from clear felling biodiverse forests in the US, Canada and the Baltic states are burned to make electricity for the UK every year. In the light of clear evidence from the old Department—what used to be called the Department of Energy and Climate Change—that that results in carbon emissions at least equal to those of coal, will my hon. Friend reconsider the huge annual subsidies for large-scale, inefficient biomass electricity generation?
My hon. Friend’s question demonstrates his deep knowledge in this area, but I am happy to reassure him that my Department’s follow-up, which was published in February this year, to the biomass energy counterfactual study that he references showed that the UK’s imported biomass is both sustainable and carbon beneficial. Although there is a risk of non-sustainable practices, they are not happening thanks to our strict sustainability criteria, and we continue to monitor the situation, because we are determined to maintain our global reputation for clean growth.
19. Pope Francis warned yesterday that history will judge adversely politicians who do not act on climate change, so when will the Government heed his words and publish their long overdue report and fifth carbon budget emissions reduction plan? (900802)
Again, I refer back to the fact that politicians, led by the hon. Gentleman’s colleagues and with cross-party support, published in 2008 the world’s first legally binding plan to reduce emissions. We also led the world in the Paris agreement that out set long-term, binding targets for the rest of the world. He should be proud of what we have achieved in this House and should join us in spreading the word that the UK is a leader in clean growth. Given the results of yesterday’s auctions, there is no longer a trade-off to be made between the cost of energy production and clean growth. We can both decarbonise and grow the economy, and he should be jolly well proud of that.
Domestic Energy Price Cap
Ofgem has extensive powers that would allow it to establish a cap on household energy prices that cause consumer detriment. The Competition and Markets Authority identified a consumer detriment averaging £1.4 billion a year, which I expect Ofgem to take measures to eradicate.
I thank the Secretary of State for that clarification. Is it not pathetic of Ofgem to ask the Government to pass a law ordering it to impose an energy price cap when, as he says, it has the legal powers to do that already? Does that not show that Ofgem is miserably failing to stick up for energy customers? Will he therefore push Ofgem to grow a spine and introduce a cap without delay?
Ofgem has yet to respond to my request. I have the power to oblige Ofgem to put a cap in place. Doing that would seem excessive, and it would require primary legislation. Ofgem has those powers, so there is no need for that. That is why, faced with this huge detriment of £1.4 billion on average, I believe it is essential that Ofgem uses the powers that Parliament has given it to eradicate the detriment.
Over the last few weeks we have made significant progress across a number of the Department’s responsibilities. We have been discussing the first sector deal, which will involve the Government working alongside life sciences businesses to capitalise on our expert science and research base to make that industry even more competitive. Our reforms of corporate governance, which will ensure that businesses publish pay ratios between chief executives and staff, will help to maintain the UK’s reputation as a confident place in which to do business. We continue to invest in innovation throughout the country through the industrial strategy. In July, I announced the Faraday challenge, a £0.25 billion investment in battery technology in all parts of the country that will boost both research and development and job creation in the industry.
The Secretary of State knows that the concern for Ofgem, even though it has the power, is that energy companies would appeal to the CMA and frustrate the process. What he has not acknowledged today is that, under section 26 of the Energy Act 2010, he already has the power to introduce a price cap if one group of customers is treated less favourably than other customers by an energy supplier. Why does he not seek measures to introduce the power he already has?
Ofgem is the regulator, and it had a report from the Competition and Markets Authority saying that consumers are being ripped off to the tune of £1.4 billion a year. We have a regulator with powers given by Parliament, and those powers should be used. That is the challenge for Ofgem. I would be very surprised and very disappointed if any of the big six, knowing the objectivity of the CMA report, were to protest and appeal against such a determination.
T2. I know the ministerial team has been working hard on this, but the issue with sleep-in shifts, if it is not resolved, is that charities will have to close their doors and the people they support, including those with learning disabilities, will be left without care. Will the Minister update us on the progress on quantifying the back-pay liabilities of those charities and on when an appropriate solution will be delivered? (900810)
Social care providers play a vital role in supporting some of the most vulnerable people in our society, but workers in that sector should be paid fairly for the important work they do. The Government are working closely with providers and worker representatives to estimate the scale of any back-pay liabilities for sleep-in shifts, and we have temporarily suspended HMRC enforcement action while that work continues, and it is continuing as a matter of urgency.
On 27 June, the Secretary of State failed to confirm to me that he would legislate for a price cap to deliver to 17 million customers the £100 saving promised by the Prime Minister if Ofgem did not propose such a cap. On 3 July, Ofgem announced its plans, which fall short of the Prime Minister’s promise, and later stated that a cap is really a matter for Government legislation. I ask again, will the Government now legislate for a price cap to deliver the Prime Minister’s promise?
I am saddened that the Secretary of State is non-committal, because at the same time as we have rising prices, power distributors recently made an average yearly post-tax profit of 32%, paying out share dividends of £5.1 billion. For water, the situation is even worse, as over the past decade companies have made £18.8 billion in profits, paying out £18.1 billion of that as dividends, with Macquarie paying £1.6 billion in dividends alone, while Thames Water incurred £10.6 billion of debt, ran up a £260 million pensions deficit and paid no UK corporation tax. So I ask him: what are the Government’s plans to reform our broken utilities markets?
On the specific point of retail energy markets, a two-year investigation has been carried out by the CMA, and it is now for Ofgem to respond. I hope it will respond and eradicate that deficit; that is the test that Ofgem faces. We have made it clear that we will rule nothing out if it falls short, but I do not want to remove the obligation on it to respond in that way. I hope that the hon. Lady will welcome our intention to publish a consumer Green Paper and that she will contribute to it. This will look across the board—across other utilities as well—to see whether the existing regulatory arrangements are sufficient.
T3. The life sciences industry is worth £64 billion to the UK, and Sir John Bell’s report last week indicated how important manufacturing was. Will the Minister therefore join me in welcoming the opening of the cell and gene manufacturing unit and welcome further jobs in this industry in the east of England, particularly in my constituency? (900811)
We indeed welcome that. Medicines manufacturing is key, which is why we have launched a £146 million medicines manufacturing programme under the industry strategy challenge fund. That includes £12 million for expansion of the cell and gene therapy manufacturing centre. The other centres, a vaccines centre, a medicines manufacturing innovation centre and three advanced therapy centres, are open to competition and could be located anywhere in the country, including in the east of England.
T5. This week’s electricity grid connection deal would make the Cardiff tidal lagoon the UK’s largest renewable energy project, generating some of the cheapest power in the country, and it would be a big boost to Newport, but its potential can be realised only with the Government first backing the pilot project in Swansea bay. When will that happen? (900813)
I do understand the great interest in this matter. As the House knows, I am enthusiastic about renewable technologies, but we have an important responsibility to make sure that they proceed at a price that is reasonable for consumers, who pay through their bills. That is being assessed and I will report to the House when that assessment is finished.
T4. Although wind turbines play an important part in the nation’s energy mix, it is alleged that the quality of life and health of some rural residents is adversely affected by noise emissions. Are the current noise limits and recording methodologies sufficient—I am referring to low-frequency noise and infrasound—or should the methodologies be reviewed? (900812)
Interestingly, the overall balance of the existing peer-reviewed studies suggests that low-frequency sound and infrasound produced by wind turbines is not likely to affect human health significantly. I do, however, accept my hon. Friend’s premise that the potential impact on human health of these turbines is a topical issue, so it will attract further study, both in the UK and abroad, and we are monitoring that carefully.
T9. Will the Minister review the current arrangements for the distribution of the mineworkers pension surplus? I am sure it was never envisaged that the surplus would be so high, so is it not time to re-examine that, and seek to give more money to pensioners and beneficiaries? (900817)
I am aware of the issue and the representations being made on it. I am happy to meet the hon. Gentleman to explore what steps might be available, but he will be aware that pensions are, correctly, run at arm’s length from the Government, through an independent regulator and through the trustees, and so the Government’s ability to determine these things is very limited.
T6. Trading on the world’s markets as a free trade nation after 2019 will be a bit like swimming in the Serpentine on a winter’s morning: bracing and invigorating but a bit heart-stopping if one is not prepared. Will my right hon. Friend the Secretary of State explain how he is gearing up his entire Department to ensure that British industry no longer debates the rights or wrongs of staying in the EU or the single market but is fully prepared, and up-to-scratch with conferences, seminars and all the rest, to trade on the world’s markets? (900814)
My hon. Friend will be aware that my whole departmental team are very active, both in this country and overseas, in setting out the huge opportunities to build on this country’s strengths and be economically successful post-Brexit. I know that that work enjoys his full support.
The growth of new and renewable technologies presents a huge opportunity for the north-east economy but, given the continued uncertainty about the clean growth plan and our membership of and access to the single market, what are the Government doing to encourage business investment in this area?
We will publish the clean growth strategy very shortly, but it is not just a question of simple decarbonisation; we have to decarbonise right across the economy and maximise the economic opportunities for doing that throughout the UK. We also have to ensure that we are not putting a high energy-cost burden on consumers and business and that all parts of Government are committed to the strategy for the long term. When we are able to publish the plan, which will be very shortly, I look forward to debating the issue further with the hon. Lady.
T7. The results of yesterday’s renewables sector auction were very beneficial for my constituency. Will the Minister outline what further developments he has in mind to encourage and support the construction of turbines in the UK? How will we ensure, particularly in northern Lincolnshire, that the skills are there to meet the demands? (900815)
I congratulate my hon. Friend on the news about the funding for the offshore wind farm in his constituency. I assure him that it is our ambition to have a strong industrialised supply chain. We have had great progress in attracting investment—for example, the UK’s first offshore tower manufacturing facility in Scotland is providing the UK’s first towers. I am pleased to say that we are working well with the sector to deliver a sustainable UK-based supply chain under the industrial strategy.
Smulders in North Tyneside is a fine example of a company that is already advanced in its own low-carbon growth strategies. What direct support will the Minister give to businesses such as Smulders under the delayed clean growth plan?
I am sure that the hon. Lady will welcome the fact that we have made available more than £2 billion to support innovation and research and development in the sector. If a company in her constituency has specific projects that it would like to bring forward, I would be delighted to meet her to consider them.
T8. Now that it is autumn, many of our constituents are concerned about the cost of fuel and energy this winter. What can the Secretary of State say to reassure all our constituents that fuel and energy will be accessible for all this winter? (900816)
We still have in this country some of the lower energy prices in Europe, but the major energy companies’ increases for those on the standard variable tariffs are clearly unacceptable. The issue has been identified by Ofgem, which needs to take action to correct it.
Since the launch of the much heralded productivity plan 18 months ago, productivity has plummeted to pre-crash levels. Will the Secretary of State tell us which one part of that productivity plan he feels is responsible for the cataclysmic productivity figures we have today?
The hon. Gentleman is an intelligent fellow and knows that the route to building productivity in this country is to look to the long term to establish, in a serious way, a shared analysis and determination about what is to be done. On skills, for example, I hope he will share our view that by investing in technical education through the new T-levels and extending the hours for which people are educated, we are taking a step towards addressing what is a generational challenge for the UK economy.
More than eight out of 10 British manufacturers export elsewhere in the EU and tariffs or customs delays could have a negative impact. Will the Secretary of State confirm that the Government will seek to negotiate transitional relationships that maintain the economic benefits of the single market and customs union until a new relationship with the EU can be implemented?