Tuesday 24 July 2018
[James Gray in the Chair]
Office for Budget Responsibility
I beg to move,
That this House has considered the remit of the Office for Budget Responsibility.
It is always a pleasure to speak under your guidance, Mr Gray. I thank those who have turned up on the last day of Parliament before recess; I know that we are all keen to get back to our constituencies, but the opportunity to debate the remit of the Office for Budget Responsibility was evidently too good to turn down. Before I begin, I would like to acknowledge the OBR, the Congressional Budget Office and the CPB in the Netherlands, as well as the House of Commons Library, as the key sources of my speech.
Credibility has become an enormous problem in modern-day politics—the credibility of not only individual politicians but policies and the numbers in our political discourse. The old adage rings true: Members often use numbers as a drunk man would use a lamp post—as a prop, as opposed to for illumination. We need to get back to numbers helping to illuminate our debate. They should help to inform decision making to bring a degree of objectivity to our debate—in this Chamber and the main Chamber.
I will start by looking in depth at the OBR’s current powers, in order that Members better understand why I believe we should expand its remit. First, I want to provide a brief overview of what the OBR currently does. The OBR was created by the coalition Government in 2010 to provide independent, authoritative analysis of the UK’s public finances, on the back of the 2008 financial crash. It has five main roles, and I will look at each of them, starting with economic and fiscal forecasting.
Twice every year—for the Budget and for the spring statement—the OBR produces five-year forecasts of the economy and the public finances. Forecast details are set out in the “Economic and fiscal outlook”, while the annual “Forecast evaluation report” it publishes each autumn compares the forecasts to the subsequent out-turns and draws lessons for future forecasts. The forecasts also incorporate the impact of any tax and spending measures announced in the two statements by the Chancellor.
The OBR also has a responsibility to evaluate the Government’s performance against targets, using the public finance forecast to judge the Government’s performance against their fiscal and welfare spending targets. Furthermore, in the “Economic and fiscal outlook”, the OBR assesses whether there is a greater than 50% chance of hitting the targets under the current policy measures.
For example, in March 2014, the Government set a self-imposed cash limit on a subset of their social security and tax credit spending. In the 2016 autumn statement, the Government redefined the cap to apply only in 2021-22, preceded by a pathway to that fixed date. The charter for budget responsibility requires that the Government set a new welfare cap in the first Budget of a new Parliament, so the cap was adjusted in the 2017 autumn statement, which applied to 2022-23. It is the OBR’s responsibility to monitor the Government’s progress against that pathway and to assess in each “Economic and fiscal outlook” report whether they are on course to meet the cap in the target year.
The OBR’s annual “Welfare trends report” also examines the drivers of welfare spending, including elements inside and outside the cap. Those represent just some examples of how the OBR continues to monitor and evaluate the Government’s performance against their own targets.
I congratulate the hon. Gentleman on bringing this matter to Westminster Hall for consideration. Does he agree that the OBR’s team has withstood internal and external scrutiny and audits extremely well? There is certainly scope to expand its remit, to deliver a high level of accountability across the wider region. In other words, what the OBR does now could go further. Does the hon. Gentleman agree?
I agree, and I will go into more detail later on exactly how I propose the powers should be extended and how to move forward.
The OBR provides sustainability and balance sheet analysis, which assesses the long-term sustainability of the public finances. The OBR’s “Fiscal sustainability report” sets out long-term projections for different categories of spending, revenue and financial transactions, and assesses whether they imply a sustainable path for public sector debt. That has arguably been a particularly important metric as we have sought to make the public finances more manageable and sustainable after the financial crash in 2008. There was a kick there aimed at the last Labour Government, but I will resist that for now.
The “Fiscal sustainability report” also analyses the public sector’s balance sheet, using both conventional national accounts measures and the whole of Government accounts, prepared using commercial accounting principles. Since 2016, the “Fiscal sustainability report” has been published once every two years, reflecting the frequency with which the Office for National Statistics updates its population projections.
The OBR evaluates fiscal risks every two years by publishing a comprehensive review of the risks from the economy and financial system in its “Fiscal risks report”. The first was published in July 2017, and the OBR analysed tax revenues, public spending and the balance sheet and included a fiscal stress test. Furthermore, the OBR produces central forecasts and projections for the public finances, while the “Economic and fiscal outlook” and the “Fiscal sustainability report” include discussion of the risks—both upside and downside—to those forecasts and projections.
The whole of Government accounts provide further information on specific fiscal risks, notably contingent liabilities such as Government guarantees, and that is in the “Fiscal sustainability report”. As a member of the Public Accounts Committee, I have the joy of taking part in, and leading on, the inquiry into the whole of Government accounts. The Committee recognised the fine work of the Departments and the civil servants that pull together those accounts, which really are of a very high standard and are certainly world leading.
One recent OBR report is about probably the biggest challenge that we as a country face—our ageing population and the associated social and healthcare risks. I found that report very useful. Does my hon. Friend think that such activity is a good use of the OBR?
I do. That kind of objective analysis from the OBR could help to inform and shape some of our public debate. It could certainly make sure that policy debates in the House are informed by substantive, objective figures that would hopefully have cross-party support.
Finally, the OBR is responsible for scrutinising the Government’s tax and welfare policy costings, which it does at each Budget. The Government provide draft costings in the run-up to each statement, which are subjected to detailed scrutiny and challenge. The OBR also states in each “Economic and fiscal outlook” report and in the “Policy costings” document whether it endorses the Government’s published costings as reasonable central estimates and whether it would use them in its forecast. It also gives each costing an uncertainty rating, based on the data underpinning it, the complexity of the modelling involved and the possible behavioural impact of the policy.
Those five major roles all focus on the UK-wide public finances. However, the Government have also asked the OBR to forecast the receipts from taxes that they have devolved—or intend to devolve—to the devolved Administrations. It is therefore clear that the OBR already has an extensive remit, with a great deal of responsibilities, not only to deliver information to the Government, but to ensure accuracy so that that information is reliable enough that the Government can make acceptable fiscal decisions.
On the earlier point about the OBR’s performance, it has forecast, on average, within 0.3% accuracy of actual economic growth over the past seven years. While the exact accuracy in any given year has of course varied, the OBR has, to its credit, sustained an accurate reporting standard over a significant period of time. If anything, it has slightly underestimated economic growth in its predictions, showing a propensity for conservative estimates, which does it much credit. Indeed, the one outlier in its predictions is from 2013. For that year, it predicted a slowing of growth, but, in fact, thanks to the Conservative-led coalition Government’s policies, we experienced a 2.1% growth rate. It is worth noting that, without that outlier, the OBR has achieved accuracy to 0.1% in its predictions. That is a sound endorsement of its expertise.
Why do I believe that we should extend the OBR’s powers? First, it is worth remembering that independent budgetary offices are well established and well respected in other countries. In the Netherlands, the Bureau for Economy Policy Analysis, the CPB, has been in place since 1945. It is fully independent; it has its own legal mandate and an independent executive and advisory committee. Research is carried out on the CPB’s own initiative or at the request of the Government, Parliament, individual Members of Parliament, national trade unions or employers’ federations. It analyses the effects of current and future Government policies, and it is responsible for producing quarterly economic forecasts, as well as a spring forecast and a macroeconomic outlook, which is published alongside that country’s Budget in September. Taken as a whole, those forecasts provide a basis for extended socioeconomic decision making in the Netherlands.
The CPB analyses policy proposals, but also evaluates the effects of policy measures that have already been implemented. Since the early 1950s, the bureau has been analysing the costs and benefits of large infrastructure projects. It also conducts research in a wide range of areas, including, but not exclusively, the economic effects of ageing, globalisation, healthcare, education, the financial crisis and the regulation of markets.
Since 1986, the CPB has offered political parties an analysis of the economic effects of the policy proposals in their election manifestos. The plans of the participating parties are analysed identically, which offers voters a comprehensive tool for comparison of the parties and contributes to the transparency of the election process.
However, it was during a visit by the Public Accounts Committee to our American counterparts earlier this year that the idea of expanding the OBR’s remit came to me. During the visit, we learned about the Congressional Budget Office—a similar independent fiscal advisory organisation—based in Congress, in Washington DC. The CBO was created by the Congressional Budget and Impoundment Control Act 1974 as a non-partisan agency that produces independent analysis of budgetary and economic issues to support the congressional budget process. Interestingly, the CBO was based on the Californian Legislative Analyst’s Office, which manages the state budget in a non-partisan manner. To this day, the CBO provides analysis for state and local government where congressional committees report on legislation that applies to those levels of government.
The CBO’s mission is to help Congress to make effective budget and economic policy. The CBO discharges a number of key responsibilities, and I want to examine a few of them in greater depth. First, in broad practical terms, each year the agency’s economists and budget analysts produce reports and hundreds of cost estimates for proposed legislation. The CBO does not make policy recommendations; its reports and other instruments, which summarise the methodology underlying the analysis, help to inform policy decisions and the debates that subsequently take place in Congress.
If we look a little deeper into that, we see that among the CBO’s statutory requirements is the production of certain reports, the best known of which is the annual “Budget and Economic Outlook”. That report includes the CBO’s baseline budgetary and economic projections. The CBO is also required by law to produce a formal cost estimate for nearly every Bill approved by a full committee of either the House of Representatives or the Senate. Those cost estimates are only advisory. They can, but do not have to, be used to enforce budgetary rules or targets. Moreover, the CBO does not enforce such budgetary rules, although its work informs them; the budget committees enforce the rules. The power still lies with the politicians, but they are making much more informed choices.
It is important to remember that it is Congress that sets the CBO’s priorities; it is not the President, either of the major political parties or the CBO itself. However, I understand from conversations with counterparts in the United States that the CBO has become more open to the majority and minority leadership—both sides—in the House of Representatives and the Senate putting forward proposals to or making requests of the CBO. The CBO follows processes specified in statute or developed by the agency in concert with the budget committees and the congressional leadership. The CBO’s chief responsibility under what is known as the Budget Act is to help the budget committees with the matters under their jurisdiction.
For the CBO to be able to provide analysis to the breadth of recipients described, its analysis must be objective, impartial and non-partisan. The CBO achieves that by refusing to make any policy recommendations and by hiring people on the basis of their expertise and without regard to political affiliation. Analysts are required to conduct objective analysis, regardless of their own personal views. Strict rules to prevent employees from having financial conflicts of interest and to limit their political activities are enforced. That is in line with the requirements for our own civil service.
Importantly, the reports by the CBO are designed to reflect the full range of experts’ views, as it is required to present the likely consequences of proposals being considered by Congress. By their nature, the estimates are uncertain, but the estimates provided are in the middle of the distribution of potential outcomes. The CBO also undertakes a range of dynamic modelling. It will look not just at the impact of one policy and assume ceteris paribus that the rest of the world is held constant; it will also look at the impact that that one variable will have on other policies, to provide a more complete scenario forecast and recommendations to the various committees.
The hon. Gentleman is making a very interesting speech. When the Government here announce that they will put in place a particular measure—a tax relief, for example—and that it will raise such and such revenue or cost such and such, I am concerned that that number is not then properly checked to prove whether the measure did or did not. Does the CBO check policies afterwards to work out whether its forecasting was accurate?
I thank the hon. Lady for her question. I believe that the CBO does do that and I will certainly come back to her on that point. When we were looking at some of the benefits, tracking after legislation was also, I believe, in the remit of the CBO, but I am more than happy to write to the hon. Lady to confirm that. I agree that what she refers to is incredibly important. Just in the year that I have been in the House, I have seen the pace at which Westminster moves. Policies flare up in the House of Commons; there is an enormous amount of press and focus on them; and two months later, they are almost entirely forgotten. Having some recourse is essential. Of course, that does exist through the Public Accounts Committee—and, in America, through the similar budget review committees. That is usually where the costs and benefits analysis to check whether policies have worked takes place, so this may be one less task for the OBR. It could certainly help to provide some of the analysis, but that task would probably fall more within the remit, certainly in the United Kingdom, of the National Audit Office, as opposed to an extended OBR, so that we keep the division of labour.
I thank the hon. Gentleman for the very detailed, comprehensive speech that he is making. He has outlined clearly the issues in relation to this organisation; I just wonder whether he has given any thought to the idea that teamwork makes the dream work. Does he agree that there is a need to ensure that there is constant training of team members, so that the natural ingoing and outgoing nature of the job that they do does not affect the high standard of work being provided by the office? In other words, it is important that the staff are trained and kept up to date with all things that are happening in order for a good organisation to work better.
I do agree. As I have mentioned, a hallmark of the CBO is the high standard of staff it employs. That is based on their expertise and ensuring that the right people are hired for the right role and that training is maintained in the office as well, so that expertise is not lost with standard staff turnover.
The CBO maintains its objectivity through a rigorous system of checks and balances. All the CBO’s cost estimates and reports are reviewed internally for objectivity, analytical soundness, and clarity. That process involves many people at various levels in the agency. Analysts’ consultations with outside experts help them to hear all perspectives on an issue.
Furthermore, the CBO evolves as the needs of Congress evolve. It has remained true to its original mission, but, as legislation has grown more complex, it has found itself spending more time providing preliminary analysis and technical assistance during the drafting stage of laws. The CBO is being asked more often to prepare cost estimates for Bills that are heading for votes without being marked up by committees first.
I emphasise that the CBO is strictly non-partisan. It conducts objective, impartial analysis, and importantly that analysis is accepted among economists and, consequently, by both parties in Washington. The CBO has historically issued credible forecasts of the effects of both Democratic and Republican legislative proposals.
That brings me to the last thing that I want to propose for the OBR. It is crucial that the independence of the Congressional Budget Office is accepted and beyond reproach, because it monitors and marks the policies and proposals of not only the Government, but the opposition. The independence of the Office for Budget Responsibility is, I believe, beyond reproach, but it only monitors Government policies. The Budget Responsibility and National Audit Act 2011, which founded the OBR, states that where any UK Government policies are relevant to the performance of the OBR’s duty of examining and reporting on the sustainability of the public finances, the OBR
“may not consider what the effect of any alternative policies would be.”
That rules out analysing Opposition spending plans.
My proposal, therefore, is to extend the powers of the Office for Budget Responsibility to create a body that replicates the function of the CBO in the United States, providing independent analysis to hold spending commitments to account. The aim of my proposal is to extend the powers of the OBR, providing it with additional responsibility to assess, analyse and score every piece of legislation that goes through the Houses of Parliament for financial or fiscal impact. It will maintain its strict independence, making it acceptable on both sides of House, regardless of which party is in government.
The purpose of my proposal is to enable the OBR to provide independent information and analysis, in order to combat “fake news” and misinformation being circulated on Government and Opposition spending plans. Wild spending commitments have been made, particularly by Opposition parties in the past, for example over the abolition of tuition fees, with no responsibility to deliver while out of office and, therefore, no accountability.
Let us look at the Brexit debate. How much better could the debate have been had there been an independent body, such as the OBR, providing accurate analysis of the impact of the costs and opportunities of Brexit? It would have taken the pressure off the Government and given us analysis that would be accepted by all parties. We could then have debated how to make the best of Brexit—or not—rather than the endless debates we have had over bus-side promises, scaremongering over power grabs or whether the Brexit deal was sufficiently hard, soft or anywhere in between.
I do not know whether I am sufficiently qualified to project on to the OBR the conclusion it might come to. I am sure it would have provided additional food for thought, to contribute to the debate.
As I have already mentioned, other countries have long-established and well respected independent fiscal bodies, which provide analysis that is respected and accepted across the political spectrum. That allows the politicians to debate the substantive matter, not subjective opinion. Establishing an independent system of accountability will hold manifesto commitments to account before an election, making fiscal sustainability a manifesto premium, and negating the opposition’s ability to garner support through unsustainable spending commitments. In turn, this will allow us, as politicians, to focus our debates on the content and direction of our proposals without having to waste time debating the credibility of the figures.
This is not the first time that this proposal has been suggested. In March 2014, Robert Chote, the chairman of the OBR, recommended to the Treasury Committee in a hearing that opposition party policies should be costed by the OBR, in order to improve the quality of public debate. Mr Chote was confident that it was within the OBR’s capabilities, although not in its current remit, to review party manifestos for a general election, so long as the parties could agree the terms of reference. During that Treasury Committee hearing, Mr Chote said that he supported
“the OBR having a role in the costing of political parties’ manifestos in the run-up to an election”.
“if Parliament wishes us to go down this route then it does offer the prospect of improving the quality of policy development for individual parties and it potentially improves the quality of public debate”.
The then shadow Chancellor, Ed Balls, wrote to Mr Chote, asking the OBR to assess the Opposition’s manifesto pledges, while Danny Alexander of the Lib Dems—then Chief Secretary to the Treasury—also supported the proposal.
The New Statesman, hardly known as a Conservative party mouthpiece, wrote in 2015:
“Successful fiscal councils overseas demonstrate the need to balance responsibility with credibility. The Dutch CPB is an established part of the political landscape and plays an instrumental role in setting budgets and evaluating manifesto pledges. In the US, the Congressional Budget Office assesses alternative policy options for the government. The credibility of these institutions has been built over decades…evaluating manifestos should be the beginning of the OBR’s expanding set of responsibilities, not the end.”
Each piece of legislation put before the House, would, therefore, be scored, costed, and subjected to objective analysis and scenario planning, so that politicians can have a more informed debate. That would give us greater focus on smaller initiatives, many of which are announced in the House and passed within one news cycle. It would give us a better understanding of not only central Government funding, but devolved Government spending, so that we would always be clear about Barnett formula consequences and what direct funding is given to the different levels of devolved Administration throughout the United Kingdom. Finally, it would give us a more comprehensive view of our economic and fiscal outlook, so that politicians could have a more informed debate, hopefully leading to better decision-making.
There is something of a credibility crisis in politics just now. The public feel they cannot and do not trust politicians and the promises we make. That is why we should provide an independent, verified and reliable source for the figures we use in debates, one which all sides can agree on. The OBR already exists and has respect and esteem as an independent assessor of the Government, so why not extend that remit to cover all parties regardless of whether they are in Government or Opposition? There is clearly cross-party support for the proposal, as seen in my submission to the Backbench Business Committee. It would be a small but important step on the path back towards believability and reliability in our politics.
It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate my hon. Friend the Member for Ochil and South Perthshire (Luke Graham) on securing this important debate; the relatively small number of Members in the Chamber is disproportionate to its impact, and I know our colleagues are desperate to be here and talk about these things. This is one of the most interesting and important debates the House has had in the last few weeks, in either Chamber, because underneath its surface is a series of questions that we as politicians, on both the Opposition and the Government Benches, have about what we want the debate to be around finance, fiscal policy and monetary policy in the coming years, and how we ensure that that is underpinned with a series of structures that make those debates useful and helpful for those who seek to understand and, eventually, vote on them.
I welcome the main thrust of what my hon. Friend talked about in trying to ensure that the Office for Budget Responsibility—the structure that we have in place already—could be expanded, so that it gave an understanding and indication of the costings of the myriad Bills that are introduced, whoever puts them forward, in the white heat of an election campaign, however difficult that is. That would give the electorate an opportunity to stand back—if done correctly and appropriately—and understand what people and parties were suggesting, and how responsible and, in some cases, irresponsible, those parties were being about our future financial and economic health. We have seen, over several decades, across the world, an increasing move to independent structures, whether independent central banks or independent fiscal watchdogs. I think this is a natural extension of that trend, which I would welcome.
I have both non-partisan and partisan points to make, so I will get the non-partisan ones out of the way first, before the hon. Member for Oxford East (Anneliese Dodds) intervenes on me, as I am sure she probably will. These things are important for having an educated democracy. To understand where we are going as a country, how much we are spending and the opportunities that we are putting forward for our communities, the public have to have the information so as to understand the different choices being placed before them. It is an excellent idea to give people the tools to understand the implications of the policies that are being made—with the caveats, which I will come to and which my hon. Friend has explained.
We have myriad policies that sound brilliant in isolation, and it seems they should have been implemented decades ago. In isolation, that makes the Government look as if they have been mean or not cared about certain areas. There are often reasons, however, why policies are not implemented. There are reasons things are not necessarily a good idea, even though they look good on paper. There are opportunity costs to decisions that are made. If we can have a discussion about economics and implications, we will be stronger as a democracy.
That discussion must necessarily accept that the world is complicated. In politics, there is a tendency to simplify discussions, particularly about finance and fiscal policy, to a point where they become meaningless. We talk about billions, gaps and black holes in finances without understanding the economic implications and realities of the assumptions underneath them. Wherever we are on the ideological spectrum, it is important to improve the quality of debate about our finances and about where the Government—whoever is in government—seek to take them in future.
I welcome the proposal from that non-partisan perspective and from a partisan perspective, because if it had been in place in 2017, it would have blown apart the Labour manifesto, which was the biggest work of political fiction and fantasy I have seen in my lifetime. I say that not to annoy the hon. Member for Oxford East, but on the basis that on 12 May 2017 the Institute for Fiscal Studies said:
“This manifesto cannot be summed up in mere numbers.”
It also said that the tax measures were “highly uncertain”, that key elements of it were not explained, and that there was an inherent contradiction in borrowing more and seeking to reduce debt. I know that there is a way to do that, but the quantum of debt that the Labour party manifesto suggested was entirely unrealistic. If the Labour party had got in, and if I were not here today as one of the six Members of Parliament who gained a seat from it, we would be in a problematic economic and fiscal position.
No one assumes that the 2017 election was perfect on both sides. I accept the principle of what the hon. Lady says to some extent: we did not have a good economic debate in the 2017 election, and I hope proposals such as this will improve the quality and standard of future debates.
My underlying point, which is partisan but not party political, is that I am extremely concerned about the level of debt that western democracies have taken on over several decades—that is one of the reasons I am in politics. That debt is storing up huge challenges for our children and grandchildren in the coming decades.
Speaking about debt has gone out of fashion in the last couple of years; it has not been a central part of our discourse, as it was when we had a large deficit several years ago. It is a credit to the Government that that deficit has been brought down, but it has not been eliminated. On a daily basis, we still add costs and create debt for our children and the people who will be here in 30 years’ time. Although debt is less than it was eight years ago, we should never forget that it is still significant. Between 2002 and 2014, debt as a proportion of GDP rose in every western democracy in the G7. In some cases, that rise was minimal, but in others it was extremely large. Western democracies have a debt addiction that will be problematic in the long term.
As a country, we have moved from paying £30 billion annually in interest payments to paying nearly £50 billion in recent years, and that will only increase. The problem with paying £50 billion is that some of the conversations that we have here every week—about how much money we should put into the health service, the education system or welfare—would be much easier if we were not spending 8% of our budget on debt repayments to financial institutions elsewhere in the world, just so we can hold money that we spent many years ago and that cannot have any benefit today.
That £50 billion is the equivalent of building a hospital every four days, of employing thousands of nurses, doctors and other people in the public sector, or of significant cuts to income tax. The problem is that if we, as a representative western democracy, do not arrest our continued debt addiction, in 20, 30 or 40 years’ time, the figure will be £75 billion or £80 billion in real terms.
Many people have suggested that extending the remit for independent fiscal watchdogs, as my hon. Friend the Member for Ochil and South Perthshire has proposed, does not work, because it is ultimately impossible to model some of the underlying implications as there is an inevitable political bias in the assumptions that will be utilised to assess the activities, and because they might not be truly independent.
My hon. Friend also talked about the situation in 2014-2015, when the former shadow Chancellor suggested that the Office for Budget Responsibility look at Labour’s manifesto costings, but it did not have the capacity to do that. Those are all interesting points, and probably worthy of debates in themselves, but we have to decide whether we want to improve the quality of debate on financial and economic policies—and I do. The extension of the OBR’s remit would be a positive step in that direction.
Those watchdogs work and are useful, as my hon. Friend showed by talking about the Congressional Budget Office in America and institutions in several other countries around the world. I will point to two examples from Australia, where I have family; I am particularly interested in the political machinations there.
In 2007, the Liberal party, which I would closely ascribe to if I were in Australia, was moving out of office and the centre-left party was coming in under Kevin Rudd. In the heat of that election campaign, there was a big debate between John Howard, the Prime Minister, and Kevin Rudd, who would become Prime Minister, about financial and economic costings. The centre-right Government were trying to splurge to win an unprecedented fifth term in office, so they proposed approximately double the increase in spending that the centre left proposed.
I would naturally support my Liberal friends in Australia, but they were not proposing the right policies at the right time, and in doing so, they were not recognising the challenges of an overheating economy. Australia’s independent watchdog came along and said that the proposals would cause problems, which gave the mantle of economic credibility to the Labor party—something that is rarely done across the world.
Kevin Rudd is not a natural fellow traveller for me, but his biography says that
“barely 10 days out from voting day…we had won the all-important battle for fiscal credibility…the political dividends were reaped not only from a slew of Australian financial and economic commentators but from the international credit rating agencies too. Fitch stated that Australia would retain its AAA credit rating if Labor was elected”.
That is an example of why this kind of policy, and this kind of proposal, is really important.
If we fast-forward to the 2013 Australian election, Kevin Rudd was at the end of his second term as Prime Minister and was seeking to splurge to stay in office. In the white heat of the election campaign, his party put out a number of scare stories about why the incoming coalition Government were going to cut loads of things, cause huge economic problems and really affect the economy—the kind of thing that we hear quite regularly. The Australian published a book called “Triumph and Demise” by Paul Kelly, an eminent journalist in Australia, in which he said:
“In the second-last week of the campaign, the heads of Treasury and Finance issued a statement repudiating Labor’s claims”
on the costings of the coalition—the opposition. He continued:
“It was an unprecedented event, the biggest story of the campaign and a humiliation for Rudd as prime minister. Rudd had over-reached and been repudiated by his own advisers. The symbolism of a dying, dysfunctional and dishonest government was irresistible.”
I would not particularly like to have been in John Howard’s or Kevin Rudd’s shoes, but that demonstrates that if we get structures right and have an independent watchdog that can look and say, “This doesn’t work. This is wrong. These numbers are obscured,” that can improve the quality of debate and focus people on the underlying questions that are being asked.
However, that will only ever be useful if we, as politicians, and the country at large, recognise that statistics are not necessarily the be all and end all, that there is a wider context to be gained from them, and that we need to treat them with caution, as my hon. Friend outlined. But in principle, the extension of the OBR’s remit is extremely important. Although I recognise that there are challenges, if we are looking to take steps to improve the quality of debate—both within this place and without, in the wider community—we should seriously consider ideas such as this, which I welcome strongly.
It is a pleasure to serve under your chairmanship, Mr Gray.
I thank the hon. Member for Ochil and South Perthshire (Luke Graham) for securing this debate and the Backbench Business Committee for agreeing to it. I particularly thank the hon. Gentleman because his speech was not terribly partisan but just laid out the facts, which is important, and I will attempt to do the same.
First, I will give a bit of context about the Scottish Fiscal Commission and what it does, so that we are all aware of the situation regarding budgetary scrutiny in Scotland, and then I will talk about some of the things that the hon. Gentleman talked about.
The Scottish Fiscal Commission is structurally and operationally independent of the Scottish Government, and it produces robust forecasts about devolved revenues, spending and onshore GDP. The interesting thing about it is that because it was formed fairly recently, we can talk about how it was formed and the decisions that were made about it. When the Scottish Government proposed it and introduced the Bill to create it, they engaged with MSPs and the proposed commission to ensure that the strongest fiscal commission possible was created. In Scotland, we sought to learn from international experience in designing the legislative proposals, and we reflected on the work of the OECD and the International Monetary Fund.
The proposals for the Scottish Fiscal Commission recognised that there was not a one-size-fits-all model for fiscal councils. I think that is part of what we are discussing now; the debate is not so much about a one-size-fits-all model as about the best possible structure for a fiscal commission, given how the UK operates and how the UK Parliament operates, and about whether the hon. Gentleman’s proposals actually fit with the way our democracy works and make sense for us.
The Bill to create the Scottish Fiscal Commission expressly provided that it would not be subject to the direction or control of any member of the Scottish Government in performing its functions, and it would be directly accountable to the Scottish Parliament. The Bill also gave the commission the full freedom to determine how it scrutinised forecasts, and protected it from any actual or perceived direction or interference from the Government in carrying out that scrutiny. That is really important, and it is part of what we have discussed today, in terms of the genuine separation between the Government and fiscal forecasting. If we are to have what has been said is the position of the Congressional Budget Office and agreement from all parties that the Office for Budget Responsibility is non-partisan, we need that very clear separation; the OBR clearly needs to be an independent body.
It was interesting to hear about the situation in America and Australia in relation to how those countries’ fiscal commissions operate. However, it would be particularly useful—I am always suggesting this when policies or suggestions are put forward—to hear about countries in which these things do not work, so that we would be aware of any potential pitfalls before we make any decisions. It is always useful to consider how things operate differently in different countries—where these commissions work and where they do not work—so that the pros and cons can be assessed before any decision is made about any changes.
Regarding where things are different, it would be useful to look at other fiscal commissions to see whether their scrutiny works. Whatever any organisation does, there is an accusation of bias, and my particular concern about the OBR is that it would be difficult for it to be in a situation where it was not accused of being biased and that it would find it hard to find that middle ground, if you like. Generally, my view is that the right middle ground is when people on both sides are disagreeing with someone or something and saying that they are wrong—if that happens, they have probably found something there. That is certainly the position that most politicians find themselves in. However, it would be difficult for the OBR to prove that it can strike that balance.
The hon. Lady is making a very valid point. I just want to refer back to my speech, where I looked at some of the results of OBR forecasts. On average, when we take out the one outlier for 2013, the OBR is actually only 0.1% off, and that was the result of it working on a more conservative basis and underestimating growth. So perhaps we can let the facts speak for themselves, which will help to build credibility, both for the OBR and the Scottish Fiscal Commission, which she has mentioned—obviously, they already work together.
Absolutely. I am definitely not saying that extending the remit of the OBR is impossible; I am just suggesting that it would be a difficult task for the OBR, particularly if it was forecasting on the basis of individual policies, which it has not done to any great extent in the past. That would be a new place for the OBR to prove its worth and to prove it is non-partisan. However, as I say, I do not want to say that that is an impossible task; I am just suggesting that it is a difficult one and that the OBR would probably take time to find its feet in performing it.
Looking at individual policies and their wider impact would be a very good thing to do. We should consider the fact that we have had so many Finance Bills; even in my three years as an MP, the Finance Bills have kept coming and coming. In each of those Finance Bills, there are changes to legislation; sometimes there is new legislation, and sometimes there are changes to legislation. However, I do not feel that we have adequate information about exactly what the full impact of those changes to legislation will be.
For example, in the last few years, the Government have increased insurance premium tax, and there has not been particularly wide-ranging analysis—certainly not independent analysis—of the cost of that change. It is all well and good for the Association of British Insurers to produce a forecast of that cost, but I assume people would argue that such a forecast might be biased. Equally, it is all well and good for the UK Government to produce an analysis, but, again, people would assume that that analysis was biased.
So we have a situation where there is not an independent forecast of exactly what the cost of increasing insurance premium tax will be. If increasing insurance premium tax means that individuals could no longer afford to pay their insurance, might such individuals become homeless, and would the state have to step in to help them? If that happened, there would be an additional cost that was perhaps not accounted for in the Government’s forecast of how much additional revenue would be created. Consequently, looking in-depth at such policies would be very important.
Policies such as the bedroom tax could be considered. In considering the reduction in benefits for individuals who have an additional bedroom, we must ask what the resulting cost of that policy will be. It perhaps saves the Government money, because people will choose to downsize rather than live in properties that are too big for them. Actually, the evidence perhaps bears out that that does not happen nearly as much as the Government predicted it would. People would perhaps also have to move away from their communities and the support mechanisms they have around them, so there would be an additional cost for the state, as it would have to pay for the lack of support structures that those people have around them if they move. There are incredibly wide ramifications with some of the costs of such a change, so it would be good to have an organisation such as the OBR—if it could be proven to be independent in this regard—looking at the wide-ranging impacts of a policy and examining the draft clauses for the Finance Bill later this year.
I think there is a clause in the upcoming Finance Bill—I think it is clause 31 or clause 32—in relation to VAT interest accrual payments. Basically, the Government proposal is that Her Majesty’s Revenue and Customs will no longer pay interest on repayments that it is due to pay to VAT-paying organisations that have overpaid their VAT. I am not clear what the wider ramifications of that will be. Will it cause cash-flow problems for small businesses? I do not know, but for me to be reliant on the Government’s forecast on that issue would cause me some issues, because I would be concerned that the Government’s forecast might be biased.
As I have said already, I am similarly concerned that organisations with a vested interest might have a biased position in this regard. It would be very good to see an unbiased perspective on some of these proposals, particularly, as I mentioned, because of the number of Finance Bills there have been and the number of tweaks they have made to policies. I have yet to see a Finance Bill that has not made changes to benefits in kind for people who have vehicles for their work. Now, in the grand scheme of things, not that many people have vehicles for their work, but the fact that every single Finance Bill tweaks the legislation means that there was something wrong with the legislation in the first place, and it is also difficult for us to consider the potential ramifications, because we are not getting extensive information about these things.
Finally, I just want to highlight another issue. In my intervention earlier, I asked whether the policies the Government have put forward have produced the outcomes the Government said they would. I appreciate the point of view of the hon. Member for Ochil and South Perthshire, and the Public Accounts Committee does a huge amount of work, getting through an incredible amount of information and producing very good reports. Perhaps it is my feeling as an MP that I am not saying to the PAC, “How about you check out this tax relief and whether it has had the impact the Government said it would.” With some of the tax reliefs that have come through in the past, I have asked the Treasury, “Can you tell me whether this tax relief has made the saving, or had the additional cost, you suggested it would?” Generally, it comes back with, “Oh yes, we keep all reliefs under regular review,” but it does not provide me with the tangible information I would like so that I can be assured that the position the Government took, and the case they made, were the correct ones, so that, if they make a similar case in the future, we can agree or disagree with it. That is really important.
I still think there is an issue with the information the Government provide to the OBR, regarding not just the post-situation, after policies comes through, but before they come through. I want to read some statements from the OBR’s 2017 “Economic and fiscal outlook” and elsewhere:
“We asked the Government if it wished to provide any additional information on its current policies in respect of Brexit…it directed us to the Prime Minister’s Florence speech from September and a white paper on trade policy published in February.”
About the Brexit negotiations, it said:
“we still have no meaningful basis on which to form a judgment as to their final outcome and upon which we can then condition our forecast.”
It is all well and good to argue for the OBR to have a wider remit, and I am not opposed to the idea—it is interesting, and we should explore it further to see how it might work—but the OBR can make good forecasts only if it is provided with good information from the UK Government. I get that the UK Government have very much struggled to convince all their MPs to support any proposal on Brexit, but if the OBR had the flexibility to say, “This would be the fiscal outcome if the Government chose this path, and this would be the outcome if they chose this other path,” that would help parliamentarians make the correct decisions about how to go forward.
I was shocked when I read that 2017 Office for Budget Responsibility “Economic and fiscal outlook”, and as soon as I heard about this debate, I immediately thought of those words. It was as if the OBR was having to act with one hand tied behind its back, regarding forecasting. Whatever the situation, and whether or not the OBR is further reformed to look at specific policies—I am not opposed to that—we must ensure that the quality of information that the UK Government provide to the OBR to make good forecasts is better. They should provide as much information as possible, and if they cannot provide information on their policies, they should ensure that the OBR has the flexibility to make forecasts on two, or three, potential outcomes, so that parliamentarians, during the Budget, or any spending process, can make better decisions.
It is a pleasure to serve with you in the Chair, Mr Gray. I thank the hon. Member for Ochil and South Perthshire (Luke Graham) for securing the debate, as well as the Backbench Business Committee.
I am delighted that we are talking about the remit of the Office for Budget Responsibility. I strongly agree with the hon. Member for North East Derbyshire (Lee Rowley) that it is an important issue. I regret that we do not have many Members thronging the Chamber; the last time but one I was here was for the debate about safe standing for football grounds, and it is a shame that we do not have the huge numbers we had then. It is incredibly important to talk about the robustness of figures when it comes to budgeting. I have to say, if you will permit me, Mr Gray, that it is also a delight for me to be able to talk about Labour’s manifesto and spending plans. It feels like summer has come slightly early for the Labour party—perhaps not quite as early as the Prime Minister had hoped. Still, I am pleased to be able to cover those subjects, but I will do so briefly, Chair, so as not to strain the patience of those in the Chamber.
Labour, of course, supports the OBR. We have had a good summary and discussion here of its origins and its work, and Members have usefully referred to how it follows on from similar independent fiscal institutions in other countries, not least those in the Netherlands and the US. The hon. Member for Strangford (Jim Shannon), who is no longer in his place, rightly mentioned the significant expertise we have in our OBR, how it compares favourably with other parts of Government and how we need to ensure that we support the people who work there. I very much want to pay tribute to all their hard work.
The OBR’s analysis, particularly in recently years, has been enormously helpful, especially in performing the task—referred to briefly by some Members—of having a long-term perspective on Government spending and its potential impact on economic sustainability. Of course, it was the OBR that pointed out, at the time of the last spring statement, how projections for both GDP and productivity and investment growth are set to be lower than anticipated, thus counteracting, perhaps, some of the media coverage that has suggested that as a country we are out of the woods in some way. On the long-range issues, the OBR has suggested that much work needs to be done if we are to get our economy on to a more sustainable basis. I very much agree with the hon. Member for Ochil and South Perthshire’s praise for the OBR’s accuracy in that regard, even though the office sometimes has negative, or at least concerning, lessons to impart about the long-term economic sustainability of our country.
The OBR has been unafraid to speak some perhaps uncomfortable truths when necessary. There was much discussion of its role around the time of the last Budget, when the new stamp duty holiday policy was being introduced. The OBR was concerned to look at its potential impact on house prices. It was criticised for doing so, but it was absolutely right that it did.
The hon. Member for North East Derbyshire helpfully mentioned some of the trade-offs involved in policy making and suggested that we need more of a focus on those, particularly when assessing the economic impact of Government policies. I strongly agree that that issue needs to be much more explicit. We need a far better quality of debate in that regard, and the hon. Member for Aberdeen North (Kirsty Blackman) gave us some very good examples of where short-term savings appear to have been made in Government budgets but have long-term impacts, often not for central Government but for local government. In practice, debt has been transferred over recent central Governments to local governments, foundation trusts and other bodies. In many cases, the debt has not gone away; it is just in a different place, and we need a greater focus on that.
Above all, we need a far greater focus on our long-term productivity problems and the OBR has played an important part in encouraging evidence-based debate on the topic. In the long run, if we do not deal with our investment gap, which in Britain is far larger than in many comparable countries—our investment has not gone back to pre-crisis levels at the same speed as elsewhere—we will not have the capacity to raise sufficient Government revenue in the future. We have to deal with those issues quickly, and bodies such as the OBR help us to do that and perhaps to move beyond some of the sterile debates about making short-term savings that do not promote long-term sustainability.
Labour is such a strong supporter of the OBR that we agree with the hon. Member for Ochil and South Perthshire about an extended remit. The OBR has helpfully raised the salience of long-term challenges for the UK’s public finances due to demographic change—something the hon. Member for Henley (John Howell) usefully mentioned—but Labour Members feel that it could have a more expansive role when it comes to a long-term threat that is not sufficiently considered by the Government, that of climate change and environmental degradation, to which many experts, not least Lord Stern, have drawn attention. We ask the OBR to report in particular on the fiscal risks of climate change, which could include the impact of raised food costs, the costs of flooding, and lost productivity caused by extreme weather events.
The current Government may be sanguine about lost revenue; we saw just last week another Treasury Minister talking about the potential trade-offs between being able to move goods across borders in the event of a no-deal Brexit and potentially losing revenue by not being able to collect VAT. No study has been done on the potential impact of that. We have had nothing from the Government that spells that out, but we should have. We need transparency on such issues and on the short and long-term risks to the public finances, particularly in relation to, as I said, environmental damage.
Widening the OBR’s remit would go with the grain of developments in many other countries. The hon. Member for Aberdeen North rightly referred to the fact that we always need to look at international examples. She helpfully referred to some of the thinking that was done about the Scottish Fiscal Commission; other Members referred to that as well. I agree with her that negative lessons can often be particularly important—learning from what has not worked as well as what has. Certainly we can learn from the EU’s fiscal forecast and the countries that look more expansively at environmental matters.
Adding more of a focus on environmental matters to the OBR’s remit would go with the grain of what the Bank of England has been doing by incorporating a consideration of banks’ exposure to climate change-related risks and stranded assets as it regulates banks. It would echo the approach of many long-term investors who are increasingly considering environmental matters when it comes to assessing the promise of different investment opportunities. The OBR would probably be willing and happy to do something that would usefully build on its existing activity.
We also want to strengthen the independence of the OBR, requiring it to report to Parliament rather than merely to the Executive, as was helpfully mentioned by the hon. Member for Ochil and South Perthshire. That is the approach of the CBO in the US, and it could be usefully adopted here. It is not unusual for an independent fiscal institution to report to the legislature rather than the Executive, and it would aid the OBR to show that it is a truly independent evidence-based body that can have a real impact on policy making. It might also then lead to a greater salience of its reports at a political level and at the level of public discourse and debate as well, which would be a good thing.
There are many other areas where we need more data and analysis to truly assess the impact of economic decision making. One area that has come up frequently in recent Budgets concerns the lack of distributional analysis of Government economic decisions. I am pleased to see support for that from the hon. Members for Ochil and South Perthshire and for North East Derbyshire, who are nodding. The Department for Work and Pensions carries out such analyses frequently. The Treasury appears to do such analyses, but it does not report them publicly very often, which is a problem. The Government have a duty under the public sector equality duty to consider how their decisions affect people with protected characteristics, but at the time of a Budget, for example, we do not have that analysis in front of us, so we cannot examine the impact of policies on different groups, and it is very difficult for members of the public to assess the impact on them.
Recent policies have had very different impacts on different groups of people. If we look at changes to social security, the incomes of lone parents, particularly black and minority ethnic lone parents, have dropped substantially by up to around £9,000 in some cases, and that has not been made clear from Treasury analyses before Budgets. It is important to have a clearer handle on such impacts at the time when we actually vote on such measures.
On the point about greater evidence and analysis before economic decision making, the hon. Member for Aberdeen North rightly referred to the need for greater post hoc evaluation of economic decisions. She referred to the case of tax reliefs, which is something that I have worked on for some time. We rarely have post hoc evaluation of the impact of tax reliefs in the UK, which contrasts with the situation in many other countries. India has an annex to the Government Budget that covers tax reliefs, but we do not have that in the UK. There is a real contrast with how we assess spending decisions in terms of direct spending programmes as against foregone income in the form of tax expenditure. There is a huge gulf there and we need to deal with that. The OBR could play a part in that, and we should think about that for the future.
The Labour party’s position remains that the core role of the OBR should be to scrutinise the Government’s fiscal and economic plans, but it should do so in a more expansive and open manner than previously, as I have explained. An extension of its remit to cover party manifesto pledges might be warranted, but if it occurs it must be in concert with an extended remit to examine governmental spending commitments and it must be adequately resourced to enable it to fulfil that task. I am aware of the Dutch example that the hon. Member for Ochil and South Perthshire referred to. I was pleased to see him inter alia praising the role of trade unions in decision making, which was slightly unexpected but good to hear. We can usefully learn from the Dutch example and the extended remit to look at Government spending plans. We had an interesting discussion about the Australian situation that the hon. Member for North East Derbyshire mentioned.
The hon. Member for Ochil and South Perthshire referred to the CBO and its more extensive role in ongoing policy making—not just at Budget time; it looks at discrete policies on an ongoing basis. Before we talk about potentially extending the OBR’s remit in that manner, it is important to focus on the activities of the Treasury first. In many cases the Treasury should carry out analyses, anyway. There is the question of independence; I do not take that for granted. But in many policy areas we do not even get to the level of understanding what the Treasury analysis is, let alone then having that independent analysis as a guarantor.
I do not agree with the hon. Member for Aberdeen North on everything, but I did agree with her on Brexit. Internal analysis has been conducted within the Treasury, but it has been like trying to get blood out of a stone to allow Members, let alone the public, to see that analysis. If the Treasury were a little more open about its processes, we would be in a different situation and we could then consider whether there should be additional independent analysis, but let us have more open analysis from the Treasury first.
Some Members referred to Labour’s spending plans. I regret that the hon. Member for North East Derbyshire tried to wriggle out of my question about where his party’s spending plans were set out in pounds and pence. He spoke elegantly and eloquently, but he managed to wriggle out of it because his party failed to include any costings anywhere in its manifesto at the general election. As my right hon. Friend the Member for Hayes and Harlington (John McDonnell) has commented, the only numbers in the Conservative manifesto that we have been able to see are the page numbers. We have seen nothing about how different approaches to spending would be carried out. We have seen a similar approach continuing in Government. The huge elephant in the room in this discussion concerns plans for NHS spending. A commitment has been made to a huge boost to NHS spending, but we have no idea where the additional funding will come from. Initially there was a suggestion that it would come from a so-called Brexit dividend, but it does not appear from the current approach to Brexit that there will be any such dividend. We heard whispers about where the funding will come from, but they are just whispers.
In the context of the OBR, the problem is that we have just heard from some Members that the OBR’s remit should be extended to cover party political manifestos, and we have the Government making a huge spending commitment during its period in office, and yet no details have been provided for how the spending will arise. Many public servants are reading the tea leaves, not least those in the police, and assuming that the spending will come from cuts elsewhere. They are probably not wrong to do so.
Some Members referred to the discussion of Labour’s spending plans at the general election. It was possible to have that discussion because Labour had set out its spending plans in our grey book. I can see the hon. Member for North East Derbyshire smiling. He will smile even more when I provide him with some summer reading: Labour’s grey book, “Funding Britain’s Future”. It is very simple to read. I am sure other Members who are former accountants will find its layout very simple because it sets out on one side where more revenue will be derived and on the other side where expenditure will go. It is enormously simple to understand.
I look forward to that interesting summer read. Hopefully the hon. Lady will support my proposition that those figures would have even more credibility if an independent body could check them to ensure that the assumptions and figures featured in that document are credible, real figures and not socialist fantasy.
I absolutely will, Mr Gray. The hon. Gentleman suggested that the OBR’s remit could be extended to look at such figures. As I said, Labour is not against that. We might be interested in looking at that, but the figures have to be provided in the first place. Sadly that was not the case for his party at the last general election. I humbly suggest that as a first step towards that outcome, his party might follow mine and set out some of its spending. That would mean that we could have a discussion with other independent bodies in advance of an election, as occurred with Labour’s spending plans.
We had a useful, productive discussion with the Institute for Fiscal Studies, which looked into our assumptions. There were differences of view in relation to some areas of spending. For example, Labour suggested that it should not be assumed that removing the pay cap, which is something that we have committed to do for public sector workers, will be only a cost, because revenue would be positively affected by the additional national insurance that would arise from slightly higher wages. The IFS does not take that into account, so we had different assumptions on that. However, Labour wants to have that debate and discussion. To do that, we need to have the figures out there in the first place.
I thank the hon. Member for Ochil and South Perthshire again for securing the debate. I also thank all those in the Chamber and, particularly, those who work so hard for the OBR to ensure that we have an independent, unbiased assessment of our public finances. Finally, I wish everyone a very enjoyable summer.
Before I call the Minister, may I clarify something that has been worrying me throughout the debate? When I was brought up in the foothills, I remember those hills being called the “Ochils” as in “ochre”, rather than the “Ochils” as in “Och aye the noo”. Perhaps the hon. Member for Ochil and South Perthshire (Luke Graham), who led the debate, will clarify precisely how we pronounce the name of his constituency.
It is a pleasure to serve under your chairmanship, Mr Gray, and I thank my hon. Friend the Member for Ochil and South Perthshire (Luke Graham) for securing the debate. There are few issues on which I would like to end the parliamentary term more than the remit of the Office for Budget Responsibility. As we have heard from Members on both sides of the House, there is widespread agreement that the credibility of our fiscal framework matters and that the quality of our national debate on economics is extremely important—not just to the economy and the country, but to the sustainability of our democracy.
The Government are proud to have established the Office for Budget Responsibility in 2010. On behalf of the Treasury, I thank—as my hon. Friend did—its staff, its first chairman, Sir Alan Budd, and of course Robert Chote, who has taken the organisation forward since. Were he listening to the debate, as I am sure he is, he would take heart from the fact that hon. Members on both sides of the House have praised the organisation that he leads and agreed that it has managed, in a relatively short time, to establish itself as a credible and independent organisation. I hope that that continues in the years ahead under his leadership and that of whoever succeeds him.
We created the OBR in the context of the fiscal disaster that was the last Labour Government, as part of our mission to restore credibility to the public finances. Since 2010, we have gone a long way to turn things around, reducing the deficit by three quarters and reaching the point where our debt will begin to fall this year, but I do not begin to claim that we have reached the end of the story.
There is a great deal more to do, and, as we heard eloquently from my hon. Friend the Member for North East Derbyshire (Lee Rowley), we are still paying, as a country, £50 billion a year in interest payments. That fact alone demonstrates the importance of the OBR and of improving the quality of economic debate in this country. As my hon. Friend rightly pointed out, all democracies in the west have suffered in recent years from politicians over-promising at election times and at other moments. We need to ensure that we have fiscal credibility as a country to sustain our democracy.
We created the OBR specifically as an independent institution responsible for examining the sustainability of the public finances and ensuring that the UK maintain its credibility—something that was clearly in doubt back in 2010.
The British economy had just suffered a severe recession, and we inherited the largest peacetime deficit since the end of the second world war. Nothing exemplifies the situation with the public finances more than the note that was left on the desk in the Treasury office down the road saying that there was no money left.
The OBR produces the official economic and fiscal forecasts for the UK. It does not cost Government policies, but scrutinises and certifies costings initially prepared by the Treasury and other Departments to estimate their impact. That is an important point, to which I will return in a few moments. The OBR also provides detailed public reports, including the fiscal risk report every two years, which we have heard about, and the fiscal sustainability report, which was published last week and which keeps us at the frontier of fiscal management internationally and demonstrates our commitment to fiscal transparency and accountability. I am pleased that, as we heard in the debate, Scotland has followed suit and, since 2014, the role of the Scottish Fiscal Commission has been strengthening. That institution is in its relative infancy, but it appears to be building credibility and working to help keep Scottish finances in check.
The OBR has won international acclaim. Earlier this year, Kevin Page, in a paper for the Centre for Economic Policy Research, said:
“The OBR’s commitment to transparency is likely the gold standard in the IFI community.”
“The OBR deserves to be considered a leader among”
independent fiscal institutions
“for the transparency of its work and the credibility it derives”,
as we have heard from hon. Members. Protecting that credibility should be as much a priority for Parliament as it is for Government.
Since 2010, there have been a number of calls to expand the OBR’s remit, including proposals, as we have heard today, to report on distributional analysis, performance against child poverty targets, environmental matters and living standards. Each has merits, and deserves discussion and further thought. The OBR was deliberately set up to report on the sustainability of the public finances, and to date that is where we have let the matter settle. Asking the OBR to expand into areas beyond its core expertise and experience carries with it risks to its credibility. We need to consider that carefully before taking any such steps.
The OBR has also been called on to produce costings of policy proposals for Opposition parties. Again, we have heard about that today, and it has been raised by successive shadow Chancellors, including Ed Balls before the 2015 general election. Respected institutions such as the Institute for Fiscal Studies already perform that function well, and we should bear that in mind as we consider such proposals. As we heard from my hon. Friend the Member for Ochil and South Perthshire, the IFS recently exposed the folly of some of Labour’s proposed tax increases.
The hon. Lady shakes her head, but the IFS said that those would lead to taxes being raised to their highest in peacetime history. The IFS also questioned whether they would raise as much as the shadow Chancellor claimed, and said that they would hit working families hardest. We do not always need to rely on the OBR to twist the knife, as the IFS has certainly done so repeatedly.
May I respectfully ask how exactly the IFS was able to analyse the Conservative party’s policies, when there was no indication in its manifesto of how any of them would be funded? It appears slightly peculiar to pick on the small number of criticisms made by the IFS of some elements of Labour’s assumptions when no information whatever was provided by the Minister’s party.
I would not characterise the IFS’s criticisms of the Labour party’s manifesto as “small”. They were pretty fundamental; the remarks I have just described speak for themselves. The IFS did analyse the policies of the Conservative party in the lead-up to the last manifesto, but let us stick to the question before us today, and apologies to you, Mr Gray, for deviating from it.
A number of arguments have been made today for widening the remit of the OBR. Over previous years, such arguments have been looked at in some detail. Back in 2014, Robert Chote wrote in response to Andrew Tyrie, now Lord Tyrie, who at the time was Chair of the Treasury Committee, setting out his views on the matter. He said that, while some of those arguments undoubtedly had merit and deserved proper consideration by the Government and by Parliament, it was important that we consider
“the significant practical issues that would need to be addressed”.
Let me briefly set out some of those, which we would all need to consider.
My hon. Friend the Member for Ochil and South Perthshire referred to the US Congressional Budget Office. That is a good comparison, although the US system varies from our ours in a number of ways—in particular, Congressmen, Congresswomen and Senators have a much greater ability than Members of the House to initiate legislation that carries with it significant financial implications. However, it is worth considering the remit of the CBO, and its capacity.
The CBO undertakes analytical work in-house and has around 235 members of staff, with an annual budget of around $50 million. In comparison, the Office for Budget Responsibility has just 27 members of staff and costs us around £2.5 million. The OBR is clearly dwarfed in comparison. Although that is not in itself a reason not to proceed, we would have to consider the financial consequences of doing so.
The CBO is required by law to produce cost estimates for nearly every Bill approved by a full budget committee of either the House or the Senate, and produced 740 such formal costings last year, so a significant amount of work would be required. It is worth pointing out that the CBO does not—this is perhaps a more relevant comparison for some of the issues we have discussed this morning—evaluate the costings of candidates for Congress, or indeed of presidential candidates. Clearly, to increase the remit of the OBR would require it to have a significantly larger operation.
Undertaking Opposition costings as part of the parliamentary process would have important implications for the OBR and departmental resources in all Departments, including the Treasury, but the greatest impact would be felt were it to be involved in manifesto costings. The time that the OBR and Departments needed to produce costings would pose very particular difficulties during general elections, some of which are unplanned. It is difficult to see how parties could be afforded the customary flexibility in developing their manifestos until a relatively late stage in the election process, to reflect the public debate in the run-up to the election. Instead, they might have to submit detailed proposals two or three months ahead of a general election. Of course, we could consider that, but we would have to consider carefully the implications for the general election process and the way we have traditionally approached that.
The policies in scope for OBR costings also differ in type from the policies that have dominated the political debate. The detailed costing process at fiscal events covers only tax and welfare policies, which are clearly very important and a significant element of general elections, but are not all the issues reflected in a general election or all the policies in manifestos.
The other point to note is that the OBR does not produce the work in-house. It relies on detailed data produced for it by Departments, including the Treasury, which are then submitted to the OBR for scrutiny and analysis. As the hon. Member for Aberdeen North (Kirsty Blackman) said, the quality of the information is extremely important. Civil servants in Departments would be required to work through political parties’ manifestos and then provide high-quality approved data to the OBR, with which it could do its usual costings.
I do not think that the problems the Minister raises are insurmountable; they could be overcome. A concern that I perhaps should have mentioned in my speech is how the OBR decides which policies it will look at, and which it will not. It could be accused of bias if it looked only at Labour party policies, for example, and not very many Conservative party polices. If the OBR were to be expanded, I would like to see a public consultation on what its expanded remit should be and which policies it should therefore look at.
Were the OBR to see its remit extended, that would be a matter for Parliament. It would be debated extensively within Parliament.
To finish my point on civil servants, there is an important matter of principle here. Civil servants would have to undertake detailed costings and provide data on Opposition policies—we should all acknowledge that that would represent a significant constitutional development for the UK. We would have to be willing to do that in the knowledge of its consequences.
To answer other points raised in the debate, the OBR does, to some extent, look at the effectiveness of policies. For example, it re-costs policies at each fiscal event, and it looks again at tax policies that arose in previous fiscal events at each subsequent Budget. It does not evaluate the individual effectiveness of the policy, but evaluates only its fiscal consequences, although the National Audit Office and the Public Accounts Committee, as well as Select Committees, have the ability to do that—and do so, very well.
The hon. Member for Oxford East (Anneliese Dodds) raised a point about the OBR’s remit with regard to the environment. The Government are interested in how we can ensure that the Treasury takes account of climate change and other important factors. One example of our action is commissioning Professor Dieter Helm to carry out an important review for us and to take forward the idea, still in its infancy, of how we as a country could create natural capital accounts. We are very keen to work that through in the coming years.
This has been a helpful debate. It is important for Parliament to review the OBR at this moment. We have conducted two internal reviews in the Treasury, both of which concluded that the remit is sufficient. We do not intend to change it at present, but it has been helpful to hear views from a number of Members and we will of course give careful consideration to those views in the future.
I thank all colleagues for joining me to take part in this important debate. I take to heart some of the comments made by my hon. Friend the Member for North East Derbyshire (Lee Rowley), and the hon. Members for Aberdeen North (Kirsty Blackman) and for Oxford East (Anneliese Dodds).
We have seen that the performance of the OBR is not in dispute. It has established itself as an independent and credible body for scrutinising Government expenditure plans. The Minister referred to points made in the debate and said that, at the moment, the Government have no plans to take forward any proposal to expand the OBR’s remit. Any proposal has to be matched by political will. My purpose in introducing the debate was to raise some questions and shine some light on an area of policy that is perhaps a little less sexy than some others that get debated in the House of Commons.
I certainly hope that our next debate will be much better attended. As the Minister mentioned, the measures could be good things in themselves. They would cost more and require more resourcing, but if that were to lead to more informed debate and better law-making, that is a cost that the House and our constituents would be more than willing to pay.
Question put and agreed to.
That this House has considered the remit of the Office for Budget Responsibility.
Preston Park Train Services
I beg to move,
That this House has considered train services to and from Preston Park.
It is a pleasure to serve under your chairmanship, Mr Gray. I welcome the Minister and the hon. Member for Hove (Peter Kyle), who cares deeply about this issue and other subjects relating to rail services in Brighton and Hove. Today, the focus is on Preston Park.
This debate is sadly necessary because of the decimation—quite literally—of rail services at Preston Park station in Brighton. People travel from that very busy commuter station to London, and to the station to attend the many schools and the two sixth-form colleges in the area. The station also supports Brighton and Hove Albion—fans are shuttled to and from the station by buses located near it—and is essential for key events such as Brighton Pride and the marathon.
It therefore beggars belief that, following the introduction of the new timetable on 20 May, services have been slashed by about 30% at peak times. Cancellations on top of the devastated timetable have left Preston Park almost unusable. Even with the new timetable, since 16 July some 63% of Preston Park services have been either delayed or cancelled. Although cancellations appear to have been slightly improved, I hope the Minister will not suggest that people should be grateful that 37% of trains now run on time, compared with 29% after 20 May.
The ongoing fiasco is leading to dangerous overcrowding and distress. Preston Park commuters are at their wits’ end. It is no surprise to me, given the daily messages of distress that fill my inbox, that in just five days more than 1,000 people signed a petition, which I presented to the House of Commons last Tuesday, calling for the restoration of services. I have repeatedly raised my concerns with the Rail Minister, and he recently wrote to me in response. I want to take this opportunity to explain to him directly why his reply did not go down well with the constituents I sent it on to.
On the inadequacy of the new timetable, it has been explained to the Minister that the Gatwick Express to Victoria no longer stops at Preston Park, after having served the station for 10 years. There is not a reduced Gatwick Express service; the service no longer stops at Preston Park. People have bought annual season tickets with a huge premium to enable them to use Gatwick Express services from that station. They moved to that area to make their lives work with a commute to London, based on an understanding and an expectation that the service would be there. The Southern trains that have replaced the Gatwick Express start at Littlehampton, 11 stops before Preston Park, so by the time they reach Preston Park they are—unsurprisingly—crammed full.
The service cuts are causing massive distress and are ruining lives. These are just three quotes from my bulging inbox. The first person said:
“I commute from Preston Park to London Bridge...The trains are cancelled and delayed more than they run on time. I spend the (standing) journey fretting as I’m late for work. I spend the journey home fretting as my child has one parent, me, and I’m left stranded 70 miles away.”
The second person said:
“I would like to let you know about the severe difficulties I have experienced going from Preston Park to London Victoria and back for work. I pay nearly five and a half thousand pounds a year for a Gatwick Express service that no longer stops at Preston Park.”
Finally, the third person said:
“The train service from Preston Park is appalling with trains constantly cancelled. The ones that do are packed and often I am left sitting on a dirty floor.”
I am very grateful to the hon. Lady for securing this debate. I had the pleasure of speaking to one of her constituents today, who told me that the train he now regularly gets to London now is only four carriages long. The problem is not just that some trains do not stop at Preston Park, but that the ones that do stop have only four carriages, so many people cannot get on in the first place. Does she agree that, if the Government are going to prevent the Gatwick Express from stopping there, at the very least they should ensure that every train that stops there is 12 carriages long?
Of course I agree, but I do not want to concede yet that the Gatwick Express might not be restored. That is my big ask from today’s debate: we need those train services restored. The hon. Gentleman is absolutely right that it adds insult to injury, first, to see the Gatwick Express trains fly through Preston Park station pretty much empty and, secondly, to have four-car trains, which, as he says, are simply not enough. Somebody told me today that they had been commuting for 18 years through rail strikes and all kinds of problems, but this is the straw that broke the camel’s back and caused them to give up commuting and their work.
I have raised this issue with the Minister on many occasions. When he wrote to me on 12 July, he suggested that services to Victoria are better since the introduction of the new timetable:
“Before the timetable change, Preston Park received six services into Victoria in the morning peak made up of three Gatwick Express services and three Southern services. Following the timetable change, Preston Park now receives seven services into Victoria into the morning peak, all of which are Southern services.”
He ended the paragraph with a spectacularly out-of-touch comment:
“Scheduled journey times have in fact improved since the timetable change, with the average morning peak journey time being around a minute quicker.”
The purpose of the debate is to explain to the Minister again why his suggestion that Preston Park services to Victoria are more frequent and faster has gone down like a cup of cold sick with Preston Park commuters. When the seven trains he referred to are not cancelled, a large proportion are full on arrival. As I mentioned, they start at Littlehampton, 11 stops back, rather than at Brighton, just one stop back. I repeat that point, because I am not quite sure it is getting through. Trains are short formed, as the hon. Member for Hove identified, and often have only four carriages, making journeys extremely unpleasant, if commuters can even squeeze themselves on to the packed trains when they arrive.
Crucially, of the seven new services, one arrives in London after 9 am and two arrive after 9.30 am. Those times are too late for the large proportion of commuters. In place of six reliable peak trains to Victoria, three of which were Gatwick Express, we have effectively just four or five totally packed short-formed trains, and on top of that there are chronic cancellations and delays. I want to ensure that the Minister really understands why people who have paid in advance for the premium Gatwick service are incredibly angry and not at all satisfied with his letter.
The solution to the mess cannot be only to address the cancellations and delays, because the base timetable itself is unacceptable. The Minister is aware that Hassocks has four Gatwick Express trains an hour and Preston Park none. That simply does not make sense. The Gatwick Express sails by virtually empty while people who have paid a premium to catch it from Preston Park are making the journey backwards into Brighton to get it—a significant number of them drive to do so.
More than 40 people have replied to a post on the Preston Park train campaign Facebook page, saying that they now have to travel to other stations by car or via other means because the Gatwick Express service no longer runs. It urgently needs to be reinstated. There is no justification for removing the Gatwick Express from that incredibly busy city station while Hassocks, a small town, gets four Gatwick Express services an hour. Gatwick Express must be reinstated at Preston Park, and more trains need to start from Brighton, with enough carriages to meet demand. People have paid a huge amount of money to commute a relatively long way. They need to be able to get on the trains that arrive, and they need to be able to get a seat.
The Victoria service is not the only issue. London Bridge-St Pancras trains have been massively hit with a 43% cut in the morning and a 53% cut in evening peak time. Again, the Littlehampton issue in the morning makes those trains unusable, and in the evening it is complete carnage as none of the 53% fewer trains start from London Bridge, which leads to massive overcrowding. Trains often miss out London Bridge completely because more passengers cannot be fitted on, so the trains and platforms are a serious health and safety risk.
Added to that, there are massive gaps in the timetable to Preston Park, including a 1.5-hour gap between about 6 pm and 7.30 pm. That is a key commuting time, but if people miss the train—or, more likely, the train does not stop or is full—they have to wait 1.5 hours with no service at all. Preston Park commuters want more trains that start at London Bridge, as they used to. Commuters face packed trains when they arrive for boarding, so it is plain that there is demand.
The Minister’s 12 July letter to me showed that he is aware of the huge cuts to Thameslink services from Preston Park to London Bridge, Blackfriars and onwards. He simply said that, before the May timetable change, there were 12 morning peak services to those London stations, and that from 15 July there would be eight. He said that, for people going home, the numbers went from 15 trains before the May change to seven. He had two comments for those affected: first, that journey times are now quicker, and, secondly, that he expects Govia Thameslink Railway to keep the timetable under review.
Constituents are incredulous, as am I. Nearly half their services have been removed and the ones that remain are overcrowded, and telling people who cannot get on trains that the ones that do go are very slightly faster simply does not cut it. Vague assertions about expecting things to be reviewed are an appalling dereliction of duty. People are losing their jobs over this; they are missing family events, unable to pick up their children on time and looking at moving house. How bad does it have to get before the Government get a grip?
On the issue of demand, there are serious concerns that the footfall at this incredibly busy and vital station has not been accurately measured and taken account of. The Office of Rail and Road has produced statistics for Preston Park, but without barriers it is hard to know how many people are using that station. A lot of guesswork is going on. How confident is the Minister that he has a sound estimate of Preston Park numbers? It would be very interesting if he shared that estimate with us. Not only are there no barriers, so the number of people going through cannot be counted, but when commuters buy their season ticket they often designate Brighton, or even Hove, as their station of origin because it does not cost them any more to do that but it gives them greater flexibility.
I live near London Road station, another Brighton station, but my season ticket is for Brighton, because that allows me to use London Road or any surrounding station. Simply looking at the destination written on the season ticket will not make the Minister any wiser about the number of people using that station. I urge him to look at other ways of counting, perhaps manually if necessary, to demonstrate to him how busy the station is.
In response to the dire impact of the cancellations and delays that have come on top of the slashing of the base Preston Park timetable, the Minister is likely to talk about the new interim timetable of 15 July. However, from my inbox and just a glance at the Preston Park train campaign Facebook page, it becomes clear that that has not solved the problems. Indeed, the campaign analysed the new timetable and found that there are still severe cuts and the service remains, in commuters’ words, “catastrophically inferior”. The campaign explains that there are now even fewer trains or connections to the hub of Haywards Heath, making travel to all destinations more difficult and time consuming. At night, there is often only one Preston Park train an hour from Victoria; if trains are missed there are no timely connections at Haywards Heath or Brighton. My inbox is full. Last Thursday—19 July, after the new timetable came into effect—a constituent wrote to let me know:
“It has been consistently awful since I last wrote. Yesterday the 08.11 to Cambridge was cancelled without explanation so all passengers at Preston Park could do was watch as two Gatwick Expresses whizzed by. Getting home in the evening is still a game of chance.”
Even when passengers get on a train, their station might be skipped. Following such an infuriating experience at the end of last week, one constituent wrote:
“How do you expect people to be able to run lives, collect children, arrive for NHS, police, rail and other security shifts, be punctual for meetings, keep businesses viable?”
I would like to hear the Minister’s response. I must ask him, when he does answer, not to suggest that things are getting better on other bits of the network, as that is tantamount to saying that it is fine for Preston Park to be sacrificed in the interest of benefits somewhere else. It is not fine for my constituents to be sacrificed in that way.
Preston Park is considered a station for which the higher amount of one month’s season ticket cost can be claimed as compensation for recent disruption. However, that is only for those whose season tickets start at Preston Park and are valid for Thameslink services. As I mentioned, plenty of people have season tickets from Hove, Southern-only season tickets or other types of ticket. They will be left out of that compensation, even though they start their journey at Preston Park. I urge the Minister to find a way to ensure that they too are eligible for compensation. Passengers are often advised at rail offices to buy their season ticket in a way that is more flexible, not specifically for Preston Park. As a result of doing so, they will lose out.
Why should my constituent, who is a low-income freelance worker who visits London only two or three times a week, be left out of the compensation? Many different people—men and women—work part time, but a disproportionately large number of those who work part time are women, such as those who go back to work after maternity leave. Has the Minister considered that the season-ticket-only system of compensation he has devised is discriminatory, particularly since we do not yet have part-time season tickets in Brighton and Hove? It cannot be right for non-season ticket holders to be excluded; there is no principled basis for that.
This debate is not long enough for a discussion on the shambles of our fragmented and privatised railways, which should be reunited and put into public hands, but I will say something specific to the dog’s breakfast of the GTR franchise. As Ministers well know, the word “franchise” is utterly misleading in this case. GTR has a management contract and Ministers are meant to be overseeing it. The Rail Minister said last week:
“There is too much buck-passing, and we want to bring that to an end.”—[Official Report, 18 July 2018; Vol. 645, c. 417.]
I can only agree, but to follow that logic the Secretary of State himself should resign. If that is what was meant, I would certainly support it.
I want today’s debate to be a constructive demonstration of what real democracy looks like: hundreds of people contacting their MP, and getting together to campaign to seek resolution and accountability over something that is drastically affecting their everyday lives. A very large number of passengers want to hear the Minister’s response to their very reasonable demands, which include a reinstatement of Gatwick Express trains, for trains to and from Preston Park to have adequate capacity when passengers board, no gaps of more than 15 minutes in peak time services, investment in the stations and trains to be fit for commuting.
I end with a request for the Minister to provide solutions, not excuses. I want to hear that there will be an end to the ongoing Preston Park train nightmare.
It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing this important debate on rail services to and from Preston Park. She is a powerful champion for her constituents. This debate is the latest in a number of representations she has made to the Government on their behalf.
I certainly understand the frustration and immense distress that the hon. Lady’s constituents have experienced in recent weeks and months. The Government are alive to that and to all the concerns that she has raised on their behalf. They have not been well served by recent developments on the railways, and the Government are working hard to ensure that we see improvement for them, as a result of not just the timetable change introduced on 20 May but the interim timetable introduced on 15 July. Although there is still a considerable way to go, I hope that her constituents in Preston Park will have begun to see positive changes in the week or so that has passed since then. We will hold GTR to account for continued and accelerated improvement over the weeks to come.
The new timetable that came in on 15 July is by and large performing well so far. The last few days have certainly demonstrated that, but the Department for Transport is looking at this extremely carefully. We will hold the operator and its new chief executive to account for continued progress.
With respect to Preston Park, passengers should see some benefits, including a very significant reduction in on-the-day cancellations, which were an unfortunate and unwelcome feature of the aftermath of the introduction of the timetable on 20 May. On-the-day cancellations are sharply down. The public performance measure has improved considerable across Thameslink and Southern services from Preston Park. Although it is not yet where it needs to be, it is a significant improvement on where it was in the immediate aftermath of 20 May. The Thameslink Brighton main line is now more or less back to pre-20 May 2018 levels of performance. As I said, the Department is monitoring the rate of improvement by GTR and will hold it and its new chief executive to account in the coming weeks.
On compensation, the Government have said on many occasions that the disruption that Thameslink and Great Northern passengers have suffered is unacceptable. Compensation is part of the plan to put things right and to ensure that passengers have some redress for what they have experienced.
Under the scheme announced by the Government, passengers travelling from Brighton receive level 1 compensation, but those leaving from Hove receive level 2 compensation. They are one stop apart, they pay exactly the same for their tickets and their season tickets, and they leave from the same city, so does the Minister not think passengers leaving from Hove station are entitled to the higher level of compensation, which would fit what they pay for the service?
The hon. Gentleman has been a strong voice for his constituents in recent weeks—I have had almost as many conversations and meetings with him as I have had with the hon. Member for Brighton, Pavilion. It is obviously important that the Government focus on compensating first those passengers who have suffered the most disruption. That is the approach we took to the disruption of Southern services a year and a half ago, and we are taking a similar approach now.
That means we have created two categories of passenger. Category 1 passengers are those with a very heavy dependence on Thameslink or Great Northern services from their station. Passengers with a lesser dependence on those operators receive a lower level of compensation, reflecting the fact that they have an alternative means of getting to or from work, primarily. That explains the different approaches to passengers travelling from Preston Park and those travelling from the station the hon. Gentleman mentioned in his constituency.
The compensation scheme covers the period from 20 May 2018 to 28 July 2018, and it will go live in two waves. GTR will contact registered qualifying passengers proactively by the end of August before a web portal is opened for other passengers at a later date. As I said, that is identical to the system used for the Southern industrial action disruption about 18 months ago. Annual, monthly and weekly season ticket holders will all be eligible for up to one month, or four weeks, of the cost of their ticket. That is in addition to the standard Delay Repay compensation GTR passengers are entitled to after any 15-minute delay. That package was designed to compensate the worst affected passengers, who travel every day on season tickets bought in advance. Those who travel less frequently can claim Delay Repay compensation for the disruption they have experienced.
Will the Minister address the point that there are people who are not season ticket holders because they work part time? There are a lot of flexible workers in Brighton who do not necessarily go up to London every day but none the less need to be there on the days they do go. Simply saying, “Use Delay Repay,” does not address the fact that, as I understand it, if their train is cancelled rather than late, they cannot use Delay Repay. Will he look at ensuring that those part-time workers—particularly women—have some way of getting more compensation than he describes?
Let me correct the hon. Lady. Passengers are entitled to claim Delay Repay against cancelled services—that very much is possible. On her broader point about part-time workers and those who do not have season tickets but travel regularly, our priority has been to get compensation out fast using a model that was already up and running—namely, the model that was used for the Southern disruption of about 18 months ago. That was the best way for the Department to get compensation out quickly to the people most affected by the disruption. As the Secretary of State has said, we are looking carefully at the logistics and affordability of compensating other groups of passengers. The logistical challenges of doing so when there is not a season ticket to look at as evidence of regular travel to and from work should not be underestimated.
The Department has not just compensated affected passengers; it is also looking to ensure it learns all the lessons from what has happened, and it has commissioned two reviews into what went wrong with the implementation of the 20 May timetable. The independent Glaister review by the chair of the Office of Rail and Road is under way. That seeks to understand all the factors that led to the disruption following the timetable change. Within the Department, we have also started a hard review of the franchise to establish whether GTR has met, and continues to meet, its contractual obligations.
I turn to the core of the hon. Lady’s remarks: the pattern of services to and from Preston Park. I understand that some passengers would prefer to have the choice of travelling on either Gatwick Express or Southern services. However, the timetable change was designed specifically to bring about improved performance on Southern services, and having a regular and repeating pattern of services during the peaks is important to making that work. That is why Preston Park now receives a half-hourly Southern service rather than the mixture of Gatwick Express and Southern services it previously received.
Does the Minister not concede, though, that Preston Park passengers are worse off? Before, at least Southern trains started in Brighton—they were not already full—and passengers had the option of taking the Gatwick Express. The service they are now offered is massively worse. As I said, some trains arrive too late to be useful to commuters, no Gatwick Express trains stop at all, and the others start in Littlehampton and are full.
I certainly recognise the hon. Lady’s points about short formations and crowding on some Southern trains as the result of the knock-on impact on Southern of disruption elsewhere. Trains must have the capacity to meet demand, and GTR’s performance regime, which the Department monitors very closely, includes capacity and short formations. Where they happen, short formations are counted by the Department as a fail under the performance regime, which we keep under close scrutiny. However, the consistent calling pattern that results from moving to just Southern services rather than the mixture of Gatwick Express and Southern services is designed to bring about a more reliable and resilient service in the long term.
As I wrote in my letter to the hon. Lady, the frequency of services to Victoria has remained roughly the same compared with the pre-May timetable. Before 18 May, Preston Park received six services into Victoria in the morning peak, made up of three Gatwick Express services and three Southern services. Following the timetable change, services from Preston Park have increased—her constituents now receive seven services into Victoria in the morning peak, all of which are Southern services.
Let me finish this point. The hon. Lady complained that the journey time was just a minute quicker, but ultimately, when the service is up and running, that extra minute will be welcomed by passengers.
There is a similar picture in the evening peak, with the same number of services from Victoria to Preston Park as before the timetable change and a very similar average journey time. Although the request for another stop to be introduced on that service is reasonable, the service is already under significant pressure to maintain punctuality. Extra stops would increase that pressure and lead to additional delays, to the detriment of passengers using the service.
Turning to Thameslink, before the May timetable change Preston Park received eight services to Blackfriars and four to London Bridge in the morning peak. In the interim timetable, there are eight Thameslink services in the morning peak from Preston Park to London Bridge and Blackfriars, and onwards through the Thameslink core. Although, overall, that represents a loss of three Thameslink services compared with the pre-May timetable, it provides Preston Park with the same number of Blackfriars services and four additional London Bridge services. Before the May timetable change, there were six services from Blackfriars and nine from London Bridge in the evening peak. In the interim timetable, seven evening peak services make that journey. That provides an additional service from Blackfriars but two fewer services from London Bridge.
Journey times from Preston Park on Thameslink services are now quicker than they were before May. Once GTR has stabilised performance, it will reinstate the additional service in each peak that was removed as part of the interim timetable. In addition, the Littlehampton to Bedford service and the Brighton to Cambridge service are currently one train per hour, but the next wave of the Thameslink programme will bring one additional service on the Brighton to Cambridge route each hour all day, as well as additional services on the Littlehampton to Bedford route. That was originally planned for December 2018, but it will now be delivered once GTR has delivered the May timetable as planned.
I appreciate the hon. Lady’s constituents’ request for services to start from London Bridge. However, one of the key benefits of the Thameslink programme is that it provides passengers with direct services through London Bridge to Blackfriars, City Thameslink, Farringdon and St Pancras. In many cases, that provides an alternative route for passengers who would previously have changed at London Bridge to connect with the London underground.
No, I am going to conclude my remarks.
I expect GTR to keep the timetable under review to identify any particular pressures and make amendments as appropriate if they are possible. However, GTR will be able properly to assess the viability of the timetable only once it is performing reliably, and ensuring that happens is our overriding priority. I will ask for an update from GTR on its assessment of the performance of the interim timetable and its impact on Preston Park passengers ahead of the hon. Lady’s meeting with the operator on 23 August.
Motion lapsed (Standing Order No. 10(6)).
Wylfa Nuclear Power Project: Taxpayer Liability for Safety
[Mr Laurence Robertson in the Chair]
I beg to move,
That this House has considered taxpayer liability for safety at the Wylfa Nuclear power project.
It is a pleasure to serve under your chairmanship, Mr Robertson. I must say that when my alarm went off at 5.15 this morning, I was absolutely delighted to be getting up to travel here and deliver this speech. I am sure everyone else here in the Chamber is equally keen to be here, even though it is the last sitting day. I am equally sure that the power of my debating skills and the points I am going to raise will not only make the Minister ponder when she gives her response, but lead to changes in Government policy over the summer recess, so I look forward to some announcements when we come back.
To get to the main point of the debate, we must first look at the wider picture. We must look at the history and question why the Government are hellbent on new nuclear power stations and why the official Opposition appear to be in such unison with them. Nuclear energy was the future at one time; it was the low-carbon technology at a time when all other methods of generation apart from hydro were carbon based. However, while nuclear has been responsible for helping to keep the lights on for decades, keeping the lights on has come at a price.
We have a legacy of contamination, and the National Audit Office estimates that the clean-up will come in at £121 billion by 2020. The Magnox Swarf storage silo, in operation since 1964, contains waste sludge that is corrosive and radioactive, which is expected to pose a significant hazard until 2050. We have many more sites still to be decommissioned, which will lead to further increases in taxpayer burdens. According to Dr Paul Dorfman of the Energy Institute in London, the Nuclear Decommissioning Authority estimates that clean-up costs for the next 120 years will be in the region of £190 billion to £250 billion. That is some legacy to bequeath future generations.
On reflection, it is clear that the privatisation of the nuclear industry has proven to be another case of privatising the profits while renationalising the liabilities associated with the industry. We still do not know what to do with radioactive waste other than storage. We have a long-term problem looming because of the increasing volume of waste to be stored and managed, so why on earth do we want to create further liabilities with the proposed new power station at Wylfa?
We once thought asbestos was a wonderful heat-resistant product, but once we learned about the health risks associated with it, we stopped using it. Why, then, when we know the problems with nuclear, do we want to repeat the past mistakes associated with it? The UK Government tell us that we need more nuclear as a low-carbon means of energy generation, and Wylfa is one of eight sites proposed for a total programme of 13 new reactors. Yet renewables already provide a bigger proportion of electricity than nuclear within the UK, and in Scotland the divide between nuclear and renewables is even greater. While the nuclear process may be deemed to be low carbon, I suggest it is anything but green, given the toxic legacy I have already outlined.
Why do we want to commission more at exorbitant cost? The cliché is, “We need the baseload that nuclear provides,” but as far back as 2015, the chief executive of National Grid argued that the baseload concept was outdated. He added that large-scale nuclear reactors were also an outdated concept and that the future would be driven by
“demand side response and management”.
I will come on to Wylfa Newydd if I catch your eye in a moment, Mr Robertson. I just wanted to say that the statement that the hon. Gentleman read out from the previous chief executive of National Grid has been put to bed by the new one. Indeed, even the previous chief executive said that we needed centrally located energy sources, or baseload, to continue. The hon. Gentleman has taken a very small quote from a very long statement from a previous National Grid chief executive. Current National Grid policy is certainly that nuclear is strong baseload.
Clearly, we can both tear apart quotes, but the bottom line is that that is what the then chief executive of National Grid said. I was just going to come on to a quote from Dr Mark Diesendorf, of the University of New South Wales, in Australia. He stated that the assumption is
“that nuclear power is a reliable baseload supplier. In fact it’s no such thing. All nuclear power stations are subject to tripping out for safety reasons or technical faults. That means that a 3.2GW nuclear power station has to be matched by 3.2GW of expensive ‘spinning reserve’ that can be called in at a moment’s notice.”
He further states:
“The assumption that baseload power stations are necessary to provide a reliable supply of grid electricity has been disproven by both practical experience in electricity grids with high contributions from renewable energy, and by hourly computer simulations.”
Therefore, the argument that Wylfa and other stations are required to supply baseload is flawed.
On the point about baseload, does the hon. Gentleman not recognise that the whole point of managing a baseload with nuclear power stations and reactors is that they are organised to be taken offline in a scheduled programme of maintenance? In the case of Torness, it almost broke the world record for a continuous run of 495 days before being taken offline. Surely that is a huge achievement for engineers in Scotland?
The hon. Gentleman tried to worm in a compliment to engineers in Scotland at the end of his intervention. Of course I welcome the skills of engineers, including nuclear engineers—I have no doubt that the guys doing that work are highly skilled engineers. I still do not agree with the concept that the baseload is required from nuclear. If we think about Hinkley power station, we were originally told that, because of the baseload required, if it was not commissioned by December 2017, the lights would go out. We are way beyond that deadline, since Hinkley will not come on stream until closer to the end of this decade, and we are still managing our electricity supplies. There are ways to manage baseload through alternate supplies, which I will come on to.
The only other reasoning I can see for this headlong rush into more nuclear is the equally outdated concept of the UK being a world leader in a particular sector, but that will come about because of other countries pulling out of the nuclear sector. The US is not building new nuclear, Japan has changed tack and Germany has pledged to phase out new nuclear. It seems that the UK will be a world leader in propping up the nuclear sector for other countries. In a recent Westminster Hall debate on the nuclear sector deal, the hon. Member for Bolton West (Chris Green) stated that we should not be reliant on foreign countries for our energy, but with these new nuclear proposals, including Wylfa, that is exactly what we will still be: reliant on foreign countries for their expertise, knowledge and supply of goods.
I suggest that the UK might be the world leader in bad nuclear deals. Returning to Hinkley, we have a 35-year agreement at a strike rate of £92.50 per MWh, when offshore wind recently came in at a strike rate of £57.50 per MWh, and that £57.50 is only for a 15-year tenure. The Hinkley deal is so bad that it was criticised by the NAO as bad value for money. Part of the problem with Hinkley was the risk and the financial exposure to private investors, allied with the fact that the technology for the EPR, or European pressurised reactor, has still to be proven, with all existing EPR projects under construction still facing delays and cost overruns.
As investment in nuclear around the world falls, the UK has planning for 11 reactors on the go and two reactors under construction at Hinkley. In its latest report, released recently, the National Infrastructure Commission states that there should be a maximum of just one new nuclear contract signed before 2025 because of the reduced costs of renewables and the other emerging technologies, including the massive decrease in the cost of batteries. Its report also illustrates that, over the years, the cost of nuclear has not decreased, debunking another UK Government aspiration that continually commissioning new nuclear such as Wylfa will somehow reduce costs. Has the Minister assessed those comments, and will the Government provide a response to the report in due course?
Wylfa is also a different technology from Hinkley, and other proposed sites have yet further different technologies. It therefore stands to reason that, when employing those different technologies, the inherent price will not be brought down, because we will not benefit from repeat constructions and using the skills gained during one project on another. There will also be site-specific constraints and considerations.
This backdrop brings us directly back to the Wylfa proposals. Getting direct information from the Government remains difficult due to their claims of commercial confidentiality. However, the private developer, Hitachi, has clearly had difficulties with the costs and risks associated with the project, which has led to the suggestion of the Government taking a direct £5 billion stake. In principle, a direct Government stake in key infrastructure projects makes sense, as they can borrow more cheaply than private investors. However, in this case, it seems to be part of another, wider blank cheque-type agreement, with the Government desperate to get the project moving.
It is not only me using the blank cheque analogy. Will Gardiner, chief executive officer of Drax Group, said:
“I am not a fan of sweetheart deals, the government sitting down with Hitachi and writing them a cheque. That’s not good economics”.
On the economics, we have heard reported strike rate figures of £77.50 per megawatt-hour quoted for Wylfa. That reduced rate, compared with Hinkley’s, is on the back of the £5 billion stake. While the Government are trying to keep information under wraps, managing to learn anything is still a bit of a smoke-and-mirrors game.
Under the Paris and Brussels conventions, a nuclear operator is liable for any nuclear incidents. However, that liability is capped at €1.2 billion, which is way below the cost of a catastrophic incident—the Fukushima incident ran into the hundreds of billions of pounds—so the cap is arguably too low. Hitachi has already had two serious safety breaches in other nuclear developments, and was fined $2.7 million by the US Government for one of them. Apparently learning from that, Hitachi is resisting taking on liability for nuclear incidents at Wylfa. We do not know its exact proposal, but it marks a departure from current agreements, where the operator should be responsible for health and safety and attendant risks and liabilities.
The Times reports that Hitachi “won’t pay” for nuclear accidents at Wylfa, based on Nikkei reports that some of Hitachi’s directors wanted
“safeguards that reduce or eliminate Hitachi’s financial responsibility for accidents at the plant”.
It also marks a departure from the “polluter pays” principle. It is critical that the UK Government do not sign up to any such crazy proposals. I hope the Minister provides real clarity on this matter and does not hide behind commercial confidentiality.
We know the Prime Minister hit the pause button for Hinkley Point C to allow for a cost review. Despite that review, she somehow then caved in and accepted what the National Audit Office has subsequently confirmed is a bad deal. Why do the Government appear to be pulling out all the stops again to get Wylfa over the finishing line—by which I mean the agreeing of the contract? We know full well that the project will invariably end up over budget and delayed, just like every other ongoing nuclear project in the world.
Another argument in favour of Wylfa and other nuclear projects is the jobs they will create. I agree that these high-skilled jobs are vital for the localities with existing power stations, and I understand Members lobbying to maintain—or to create further—high-skilled jobs. However, those jobs should not come at any cost. Indeed, paragraph 23 of the Welsh Affairs Committee’s July 2016 report, “The Future of nuclear power in Wales”, explicitly states:
“We recommend that the Government negotiate a strike price for Wylfa Newydd below that agreed for Hinkley Point C and seek a price that would be competitive with renewable sources, such as on-shore wind. The Government should not continue with the project if the price is too high.”
It seems, based on that recommendation, that the Committee must by default be against this project continuing, as it clearly cannot be competitive compared with onshore wind. Has the Minister consulted the Committee on the recent developments in the likely cost of Wylfa?
I would not want to see job losses anywhere. I represent a deindustrialised constituency. Over the years, we have lost coal mining and many different manufacturing jobs. However, we can spend money more wisely to create jobs. Wylfa will cost up to £20 billion. The new nuclear legacy programme will cost circa £100 billion, and we have spent nearly £120 billion in decommissioning costs. Departing from civil nuclear projects, the successor programme to replace the Trident submarines will have whole-life costs of more than £200 billion, with future decommissioning costing up to £250 billion.
Those are astronomical sums of money, and we should be able to think how to spend them more wisely. We could have proper infrastructure investment and a targeted jobs and manufacturing strategy that would create more jobs and a more balanced economy, and we will not have the toxic legacy of nuclear. By the time Hinkley and Wylfa are constructed, with their anticipated 6 GW capacity, we could build something like 20 GW of offshore wind capacity. We know that the costs of batteries are plummeting, and renewable costs have also plummeted.
We should invest in carbon capture and storage. I welcome the Government’s latest report on CCS, but we should never have pulled the previous £1 billion allocation. How ridiculously small does that £1 billion seem compared with the costs of nuclear I have outlined? CCS will also allow for the decarbonisation of gas and biomass electricity generation and will open up the potential for a supply of zero-carbon fuel, in the form of hydrogen. However, each massive undertaking for nuclear is to the detriment of investment in renewables. When the Government give undertakings and risk guarantees for Wylfa, they reduce their scope to make similar guarantees for emerging technologies.
On jobs not coming at any cost, we also have to appreciate the potential health risks. As outlined by Dr Ian Fairlie, an independent consultant on radioactivity, the risks of leukaemia in nuclear workers are double those found in a 2005 study, and there is
“strong evidence of a dose-response relationship between cumulative, external, chronic, low-dose, exposures to radiation and leukaemia”.
He also states:
“When nuclear reactors are refueled, a 12-hour spike in radioactive emissions exposes local people to levels of radioactivity up to 500 times greater than during normal operation”.
He states in his blog that the research behind these findings is “impeccable”, as it was based on
“a huge study of over 300,000 nuclear workers adding up to over 8 million person years, thus ensuring its findings are statistically significant”.
I suggest we pay heed to such research.
As I have said, the cost legacy is bad enough, and we still do not have a solution to the long-term disposal of nuclear waste, so it is absolute folly to sign a deal in which the taxpayer takes on unlimited risk for a nuclear incident. This could prove to be the worst deal yet unless the Government change tack soon.
It is always a pleasure to serve under your chairmanship, Mr Robertson. On this last day of term, I welcome the opportunity to highlight the benefits to the economy of new nuclear power and low-cost carbon, and also to promote Wylfa Newydd, which is in my constituency. The hon. Member for Kilmarnock and Loudoun (Alan Brown) did not notify me that he would discuss it; I saw it on the Order Paper. I think it is custom to do so, but I will let it go for now, because I will have the opportunity to deal with many of the issues that he raises.
I recently wrote a booklet, called “Resetting the Energy Button”, for a number of reasons. Its purpose is to show how my constituency, the Isle of Anglesey, can play a major role in the move forward towards a low-carbon economy. Ynys Môn has a proud history of electricity generation. It has the natural resources, it has an experienced workforce and it very much mirrors the British Isles.
Will the hon. Gentleman be so kind as to send me a copy of his booklet? I am in need of some good holiday reading for the summer.
Absolutely. In fact, I will also send one to the Chair, because I know that he is interested in this subject. Indeed, I should send some to the entire Scottish National party group in the House. I will do that over the summer. That is a promise.
Many energy developers have recognised the potential of the Isle of Anglesey to contribute to this major investment not just in new nuclear, but in marine energy and other technologies. You will know, Mr Robertson, from the time that we have spent together in the House that I am pro-renewables, pro-nuclear and pro-energy efficiency. I see no contradiction in that: I think that all three are needed if we are to meet our climate change goals and reduce emissions.
In the decade from 2001—when I entered the House—to 2011, the House of Commons was moving towards consensus on this issue. That was important. I accept that it was not universal, but there was a view that we needed a rich and diverse energy mix and that new nuclear was part of that mix. I was very proud to vote for the Bill that became the Climate Change Act 2008, because that was very pioneering of the UK; we were the first nation to introduce such a law. However, to achieve the objective, we need rich, diverse energy. We need base-load, and I will argue with the hon. Member for Kilmarnock and Loudoun that nuclear does provide base-load. He talks about offline, but this is factored in. Base-load is important, as is the intermittent status of renewables and, in particular, wind. He talks about figures, but I point out to him that we have had a very hot period over the last 28 days, and wind energy, offshore wind, contributed just 3% for that period. The rest came from base-load such as nuclear; the nuclear percentage went up in that period. I am therefore arguing convincingly for both—that we have the intermittent energy that we need in hot periods, but also, when we have cold periods, that we have the full load that is provided by nuclear and renewables. We need that balance.
New safe nuclear generation started in my constituency in 1963. Indeed, my father worked on the construction of the first Wylfa power station. The hon. Member for Kilmarnock and Loudoun had family who were in the nuclear industry: he told us in a previous debate that his brother-in-law was. Many families, across the United Kingdom, have benefited from the high-skilled, long-term employment opportunities that nuclear offers. The nuclear power station in my area was opened in 1971 and it produced up until the date of closure, which initially was 2010; that was extended to 2015. We are talking about 44 years of generation. I mention the jobs issue, because many of my peers at school left school and worked in the nuclear industry at Wylfa for all their working lives. Very few other industries can offer the longevity of employment and quality of jobs that nuclear brings; indeed, jobs for life are very rare.
Construction jobs are also important. In the move forward to Wylfa B or Wylfa Newydd, as it is correctly known now, we see an important uptake of skills for nuclear engineers and apprentices, and many people are training for the construction jobs—plastering, building, welding and so on. That is hugely important for areas on the periphery of the United Kingdom, such as at Wylfa in my constituency and, indeed, in Scotland. Scotland has benefited from nuclear over many years and still does today; £1 billion of gross value added comes from the nuclear sector—the two power stations. I believe—I will take an intervention if I am wrong on this—that the life of the two nuclear power stations has been extended by the SNP Government. Safe generation of nuclear energy is hugely important in Scotland, Wales and England. If we did not have it, we would be importing nuclear at this time of year either from England into Scotland or from France into the United Kingdom.
The hon. Gentleman invited an intervention, and yes, he is correct: under the SNP Government, permission was given to extend the life of Hunterston B. Once an asset is there, if its life can be extended safely, we may as well do so. We will still have to deal with the toxic legacy at some point, but if we can make use of the asset in the meantime, we will do, so we are not absolutely blinkered.
I understand what the hon. Gentleman says, but there is very little logic in that. If it is safe nuclear generation, it is safe nuclear generation. I accept that numerous previous Governments, of all colours, have not dealt with the legacy of nuclear waste. That is a fact, and we need to deal with it. But with new nuclear, the cost of decommissioning and of waste will be factored into the cost, which the hon. Gentleman did not explain; he did not take that out. The proper arithmetic of generation, of decommissioning and of waste will be part of the deal.
I do not know what the deal will be, but I do know that there will be some 850 jobs for the 60-year life of the new nuclear power station on Anglesey. That is huge for the local, regional, Welsh and UK economy. I also know that, at the peak, there will be 8,500 construction jobs. Again, that is a big figure. We have managed big projects in the past. I am thinking of the building of the nuclear power stations at Wylfa and Trawsfynydd and, indeed, the hydro at the Port Dinorwic storage facility. We have in north-west Wales a good legacy of these jobs, and I look forward to this project. Importantly, we are on the third round of apprentices. By the time Wylfa comes on board, there will be some 700 apprentices who have been trained in the area. Again, those are high-skilled jobs. They have had the opportunity not just to train in this country; many have been over to Japan and had the lifetime experiences that go with that.
The nuclear power station Wylfa Newydd has the support of Welsh Government. It has the support of the local council, which is Plaid Cymru led; it has the support of the Plaid Cymru Assembly Member; and it has my support. It has cross-party political support. That is important because of its potential.
The hon. Member for Kilmarnock and Loudoun is absolutely right to talk about the cost to the taxpayer of nuclear and other technologies. I have supported in the House of Commons a number of subsidies—I do not consider “subsidy” to be a dirty word—for offshore wind. When the cost was more than £100 per megawatt-hour and some people were arguing that we should not be doing it, and that the cost was too much, I argued that by investing at that stage we would be able to bring costs down, and that has happened. It has happened with onshore wind, with renewables obligation certificates—ROCs—and with solar, and it can and will happen with new nuclear as well. As I have said, I support this because we need that boost.
As the Minister will know, I argued—but was unsuccessful—for the Swansea Bay barrage, because the same principle applies to marine energy. We need to invest now for the future and the price will come down. We need a special, ring-fenced costing for marine energy and I will certainly write to the Minister, to the Secretary of State for Business, Energy and Industrial Strategy and to the Chancellor of the Exchequer to get that into the autumn Budget, because it is important; we are missing an opportunity with marine.
What I am establishing here is that I am pro-nuclear and pro-renewables and that my judgment has been to invest in them all. That means public—taxpayer—liability initially. We can look at oil, gas and electricity. They were 100% supported by the state when they were nationalised industries, and many new stations that came on board were given that subsidy when they were producing energy.
The statement by the Secretary of State in the House of Commons on 4 June was an important step forward for Wylfa Newydd, for the nuclear industry and for British industry in general. As I said, I do not know the details, but I do know that the statement confirmed that Wylfa Newydd would produce some 6% of electricity going forward. Electrification of surface transport is the big challenge for this country, and that is in addition to the built environment. We need that low-carbon extra resource, which I know Wylfa Newydd can produce.
I do not know the details, but it has been confirmed that the model will be different and, as we see from reading the “Nuclear Sector Deal”, the cost will be less than that of Hinkley. That is for sure, because when the first array of offshore wind was produced and the cost was much higher, we argued that it would come down. The nuclear sector deal asks for a 30% reduction in costs, and that is an agreement between industry and Government. It is important that Wylfa Newydd will come in at a much lower cost than Hinkley; we will learn the lessons of Hinkley. The Hitachi deal involves private money, and Government money from the UK—we do not know how much, and I doubt that the Minister will be able to help us at this stage, because of commercial sensitivity—and, importantly, Japanese agencies and their Government will be supporting it.
I appreciate the hon. Gentleman saying that it is a different model. Does that mean that the costs cannot be compared directly to Hinkley? If the Government are taking on more liabilities and taking a stake in the project, we cannot just say, “Well, it costs less than Hinkley in terms of strike rate,” or whatever.
No, the important thing to remember is that this is proven technology. The reactors that will be used have been produced—four in the world—on time and on budget, and they are effective. That is the difference with the Hinkley model, which has not been used before, and the risk is therefore a lot less. I have been to Japan and seen this technology in place. I know there have been incidents in Japan, but a delegation from Anglesey did go there and see it.
Sadly, this debate is about ideology. It is not about a low-carbon future, but purely the dogma of the SNP, which wants to close down nuclear per se. It is using the Wylfa argument to do that. The SNP is absolutely wrong. I want to see a balanced, diverse energy mix. I want to see the case for new nuclear, new renewables, jobs and skills, and research and development, so that the UK can become a leader in tackling climate change.
In conclusion, I wish hon. Members a happy summer recess. If they really want to find out about Wylfa, they should come to Anglesey. It is a great place to work, as I have indicated, for many people who work in the industry and are associated with the industry. I can assure hon. Members that it is also a great place to live, and it would also be a good place for them to visit. I am proud that Anglesey is ahead of the game in pioneering energy development.
It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the hon. Member for Kilmarnock and Loudoun (Alan Brown) on securing this debate. This is an important and pressing issue for the UK, because, as we have heard, all of Britain’s currently operational nuclear reactors are due to go offline by 2030. So there is a pressing need to address this energy question.
In Scotland, the nuclear energy sector is worth £1 billion a year. Although 1,000 people are directly employed in Scotland’s two nuclear power stations, which have four advanced gas-cooled nuclear reactors installed, 12,000 people are indirectly employed, through a large supply chain encompassing engineering and design, which is a huge benefit to the Scottish economy. This is, therefore, a pressing policy issue for not only the whole UK but Scotland in particular.
I find it extremely dismaying that there is this dislike of nuclear power production, when the sector presents so much opportunity for Britain to re-establish a lead. After all, Britain was the world’s first generator of civil nuclear power. That is, unfortunately, an industrial lead that we have lost through lack of planning and lack of rigour in the 1990s. We can, hopefully, re-establish that lead with a bit of imagination and boldness.
I have the pleasure of serving on the council of the Institution of Engineers and Shipbuilders in Scotland. In 2015, we presented a lifetime achievement award to Sir Donald Miller, inducting him into the Scottish Engineering Hall of Fame. He is Britain’s foremost electrical engineer and was almost singlehandedly responsible for the design and development of Scotland’s entire post-war electrical generation and supply system.
I was interested to hear what Sir Donald Miller had to say about Scottish energy generation today. When he was presented with his award, he delivered a speech, which I feel is worth quoting at length. He mentioned that when he retired as chairman of the South of Scotland Electricity Board, which is now known as ScottishPower, in the early 1990s, he could take a great deal of satisfaction from the fact that
“we could claim to have one of the most secure and cost effective systems world-wide. Some 60% of our energy was from nuclear and with the hydro we could, incidentally, also claim to be one of the greenest systems with the lowest carbon emissions… The coal fired station at Longannet”—
which was recently decommissioned and was groundbreaking when it was built—
“was used mainly for back up and profitable exports to England for the benefit of Scottish consumers.
Today we see a very different picture. The decommissioning of our conventional generation is fast approaching”—
indeed, it has already approached—
“and yet there are no plans to replace the generating capacity at Longannet or the nuclear. Even more incomprehensible is that we shall, in a few years, be importing power for much of the time from the new nuclear station to be built just over the border in England at Sellafield. You may wonder just why Scotland (birthplace of so much engineering)”—
a pioneer of nuclear energy—
“should be importing power we could well generate here, exporting highly skilled jobs in the process. And moreover ending up with the least reliable and insecure electricity supply that we have seen for a hundred years. And this at a time when electricity has never been more important in the lifeblood of modern society.
We seem to be drifting into this situation with our eyes shut; just hoping it will be all right on the night. But with no electricity for twenty four hours (and perhaps even longer) it will seem a very long night indeed.
No engineer would set out to build a complex structure without a detailed plan and an electricity supply system is no different in this respect from a road network or an aircraft carrier. But there is no plan and nor is there any significant engineering input into the main decision making.”
That is a chilling statement, coming from someone of such repute, about the current state of Scotland’s energy system. That drives me to understand that there is an urgency here that we are not recognising but that we must address with imagination. The Scottish Government have been found utterly wanting for their lack of willingness to embrace new technologies when it comes to nuclear energy.
I have had the pleasure of twice visiting Torness nuclear power station, where the two advanced gas-cooled reactors are situated. The great tragedy of that advanced gas-cooled system is that the entire power station is limited by the life cycle of the reactor. The infrastructure around the reactors is highly modern. It is a great shame that, in 2030, infrastructure that could continue operating for many decades afterwards has to be closed and dismantled, because the reactors themselves cannot be moved and dismantled safely without that whole system being shut down.
Yet, there are emerging technologies that offer great opportunities, such as small modular reactors, which Britain will potentially pioneer, with Rolls-Royce in the foreground. I am hopeful that that is something that Scotland can look at and embrace. Not only can we secure the sector, which, as we know, is worth £1 billion and 12,000 jobs, but we can achieve so much if we are on the front foot. When I was working for BAE Systems at Govan shipyard, we looked at how we could develop and manufacture small modular reactors in the shipyard, thus sustaining not only nuclear supply, but our shipbuilding industry. There are huge opportunities for coastal locations.
I was pleased that the Government launched the nuclear sector deal in Trawsfynydd. Trawsfynydd is a decommissioned station, but it has the infrastructure in place, and it has a community that understands and accepts nuclear energy for the future. I believe that putting the two together will benefit those communities and the whole of the UK.
I thank my hon. Friend for that timely intervention. We have to think about this outside of these silos of energy generation. Although we want to decarbonise electricity in the UK, which is a laudable and vital aspiration, if we are to tackle the problem of climate change, it is critical that we recognise that nuclear has to be part of that mix.
Renewables, although we hope that they will eventually substitute all energy generation in the UK, are simply not mature enough, in terms of their reliability, to deliver output that is secure enough. The variability of wind is proving to be problematic. July’s wind energy is 40% lower compared with the same period last year. That is simply not sustainable enough for us to generate reliable energy sources in the UK. We have to look at other technologies, and nuclear presents an opportunity. We are not talking about rebuilding advanced gas-cooled reactors, which was a technology developed in the 1960s—it was advanced for the time, but is simply obsolete today. We are not talking about rebuilding that, with all the legacies of toxicity and problems with waste disposal that were mentioned, although I have to say that the advanced gas-cooled reactor fleet in the UK is a global benchmark for safety. I do not think there are any substantial risks associated with the advanced gas-cooled reactor fleet—it has had a tremendous safety record in the UK, which is a great triumph of British engineering.
We have to approach this with an industrial strategy; that is where we have to grip this. We are talking about shipbuilding and energy generation. All of those things can be linked to deliver a huge industrial and economic benefit for the UK.
The hon. Gentleman is talking about emerging technologies—if new nuclear is an emerging technology. I presume he would welcome investment in carbon capture and storage in Scotland, and investment in tidal. The Scottish Government are not saying no to nuclear and no to new technologies; they are going to welcome wider technologies that are completely renewable and that do not have the potential toxic legacy of nuclear.
That is an entirely legitimate point to make. We want to push on all fronts. We want Britain to be leading the world on all fronts. That requires investment in battery technology, where we have a huge disruptive opportunity. Let us push on that front. Let us push on carbon capture and storage. Again, the problem is that we have no rigorous industrial strategy. When I worked at Scottish Enterprise, for example, we watched Longannet drop off a cliff, with no plan for its succession and how it would be managed. As a result of that, we saw the collapse of Hunterston ore terminal in Ayrshire, which has now lost all its customers, because it was the input point for the transportation of coal to the power station.
Longannet collapsed because it was no longer economically viable, due to the amount Longannet had to pay to connect to the grid, which is all based on distance from the population of London. Does the hon. Gentleman accept, therefore, that that is a UK Government failure, not a Scottish Government failure?
The issue was a joint problem because we did not embrace the possibility of carbon capture and storage at Longannet. Nor, as the hon. Gentleman mentions, did we address the calculation system and the price charged for generation at Longannet—we have to address this issue on all fronts. Longannet was a failure because, ultimately, the jobs and industrial benefits were lost. As a result, we now have a large brownfield site that will cost a lot of money to clear up, for want of a proper succession plan and a proper strategy.
I urge all Governments to get a grip. I do not lay the blame on any one of them. I am describing the reality that faces the community and our country now, and it is about time we gripped it. I urge people to get together to sort it out. We have a lack of strategy in dealing with succession planning when it comes to closing down our nuclear fleet and also our conventional coal-fired fleet, so we have to address that. We must have a strategy. We have the opportunity.
Emerging technologies, such as the integral fast reactor, which is under development, will address the waste problem in nuclear. As Professor David MacKay, the chief scientist at the former Department of Energy and Climate Change, said, the reactor could supply all the UK’s energy needs for 500 years by consuming the UK’s existing stockpile of waste. That also addresses the decommissioning of the nuclear submarine fleet and the nuclear weapons at Aldermaston. It is a huge cycle that we have to address, and currently we are not gripping it.
We have a huge opportunity to embrace these technologies and use them as a basis for Britain to re-establish a global leadership position in civil nuclear energy that addresses the huge legacy of problems that we have had with nuclear. This is not about saying we can write nuclear off because the technology developed in the 1960s was flawed; it is about saying we are where we are and there are opportunities to utilise nuclear not only to deliver a low-carbon generation capability, but to address toxic waste issues. It is about developing, regenerating and manufacturing an advanced engineering base.
That is why I urge everyone to be open-minded when approaching the issue of new nuclear technologies in the UK and to look at new technologies that can benefit the Scottish and UK economies. That is how we and the trade unions are approaching it, and it is an entirely legitimate and open-minded approach. I am dismayed that the SNP will unconditionally block any potential exploitation of the opportunity in Scotland at Torness or Hunterston. That is a great tragedy for Scotland, a nation that has done so much to be a world leader in civil nuclear technology. I hope the SNP might look at those technologies and change their minds.
It is a pleasure to serve under your chairmanship today, Mr Robertson. It is less of a pleasure, however, to scrutinise the shoddy deal that taxpayers are being offered on the Wylfa power station. My hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) asked a serious question: why nuclear now that so many renewable energies are available? If we invested in them properly, we would see the renewable sector move into a new field, a new area of prosperity that would be more clean and bountiful, so why are we not investing in all the alternative clean energies as well? Why are we repeating the mistakes of the past? Asbestos was going to be a great new product, but now we live with the dangers and the costs it caused.
My hon. Friend stressed the line we were fed that without Hinkley coming on line in 2017 the lights will go out. The lights are on, the air conditioning is working overtime and Hinkley is still not contributing to that. The hon. Member for Ynys Môn (Albert Owen) said he had produced a booklet, which I really look forward to reading, that promotes nuclear and clean renewables. I hope it will be better than the booklet that was produced by the UK Government in the ’70s that said, “In case of nuclear attack, hide under a table.” [Laughter.] It said hide under a table or in the cupboard under the stairs. I remember reading it as a child and being pretty frightened.
I was born and raised on Anglesey. My children were born and raised on Anglesey. Safe nuclear generation has been with us for 40-odd years. That is the reality. Silly scaremongering about atomic power and nuclear bombs does not do justice to the spokesman for the SNP.
As I was born and raised within a short distance of Hunterston power station, I understand that people worked on building that station, but we are talking about power that can cause so much destruction that we cannot possibly comprehend it. I agree we need a balance, which is why I support wind, wave, tidal, solar and hydro as part of the mix. I want us to progress so that we do not need nuclear as part of the mix. That is the ideal situation that we should work towards.
The hon. Gentleman correctly highlighted job creation, but obviously the jobs are where the investment is. He highlighted the lack of support for the Swansea tidal bay, which is an absolute travesty by this Government. It was a great opportunity to invest in renewable energy and see where that could take us. How many jobs would that create in Swansea and how many within the supply chain around it?
The hon. Gentleman talks about a comparison with asbestos and the idea that nuclear energy generation is somehow inherently toxic. What does he say about the integral fast reactor or the small modular reactor technology that consumes nuclear and therefore solves the problem that he claims exists? That is surely to be welcomed and embraced.
As I said, we are working towards a mixture of renewable energy. Ideally, if we could do away with the potential dangers, we should do so. One can say that about absolutely any industry. The coal mining industry was a dangerous business. We always worked to minimise the dangers, which is what we should do in the case of nuclear energy. If we can do it with nuclear as part of the mix, that is what we should work towards. We should invest in new measures to see if we can attain that. We should learn the lessons of Hinkley, a point made by the hon. Member for Ynys Môn. I hope we will learn the lessons of Fukushima as well.
The hon. Member for Glasgow North East (Mr Sweeney) said that nuclear was once seen as the future in the United Kingdom. He is right: it was once seen as the future. It was also seen as the future in Germany and Japan, but they have moved on. Unless we want to be left behind in areas of technology, we have to move on as well.
Obviously the Germans decided to bite the bullet while they heavily invest in renewable energy. If we do not do the same thing, in five or 10 years from now they will be way ahead of us and we will look back and ask why we did not do that.
We should be alarmed at a report in The Times that states that Hitachi will refuse to pay its fair share for nuclear accidents at Wylfa, with directors supposedly wanting
“safeguards that reduce or eliminate Hitachi’s financial responsibility for accidents at the plant”.
This is the same company that has been accused of lying to the US Government by concealing flaws in one of its nuclear power plants. It is a company in which a whistleblower said after the Fukushima disaster:
“When the stakes are raised to such a height, a company will not do what is safe and what is legal.”
It is a company that may be expected to pay only €1.3 billion in the event of a nuclear incident, even if such a disaster costs the UK hundreds of billions in damages. Pursuing nuclear energy is a folly, as my hon. Friend the Member for Kilmarnock and Loudoun has clearly outlined. Like so much of its ideology, Tory thinking is stuck in the 1950s. UK Government policy on energy seems to be no different.
Support for renewable energy has been slashed while taxpayers are expected to foot the bill for truly eye-watering levels of funding for nuclear stations such as Wylfa. That is irresponsible and avoidable. I was always under the impression that the Tories were the party of small government and of making prudent financial decisions, or so they like to tell us. Yet they saddle the taxpayer with more and more and more debt. Wylfa is just another example of a poorly negotiated deal for the taxpayers that the UK Government are supposed to represent. Of course, that is only considering the immediate financial and environmental impact. It goes without saying that the UK Government, by committing to Wylfa, are burdening future generations with the toxic legacy and cost of nuclear waste. I can think of few greater impositions of a Government on the rights of an individual than that.
I recently read with interest that survivors of the Fukushima disaster visited Wales to warn against the building of new nuclear reactors. In their first-hand testimony they outlined the devastating impact that the disaster had on local agriculture, with some people still unable to return to their homes seven years after the incident. Is a serious nuclear incident likely at Wylfa? Perhaps not, but having the station at all makes it a possibility. Why take that risk when the operator of the station may not even be liable for costs in the event of an accident? Why take that risk when the company in question was forced to pay a fine in response to allegations that it had lied to US regulators over safety concerns? Why take that risk when other sources of energy are available? We need urgent reassurances regarding the contract—the costs, liabilities and environmental impact.
Finally, are the UK Government serious about developing an energy policy fit for the 21st century and beyond? If so, they should abandon their nuclear obsession and look to the Scottish Government for world-leading ideas on the best transition for our nations into being responsible producers of energy.
I thought I would break with convention and attempt, this afternoon, to address my remarks to the debate whose title we have before us. The debate is about taxpayer liability for safety at the Wylfa nuclear power project. The matter has been dealt with in passing by the hon. Member for Inverclyde (Ronnie Cowan) and my hon. Friend the Member for Glasgow North East (Mr Sweeney), as it featured in the wider canvas of what they said about nuclear power in general and about what is, I am afraid, an attitude of dislike for nuclear in any way, shape or form. Analytically, the proposed Wylfa plant comes into that overall definition and, therefore, it needed to be treated in that particular way.
That is in contrast, of course, to my hon. Friend the Member for Ynys Môn (Albert Owen). I have known him, and we have fought many energy battles side by side, for many years. I can attest to his strong support for and deep understanding of the role that renewable energy plays in our energy mix, alongside his support for nuclear power and, indeed, the potential nuclear power station in his constituency. He spoke eloquently on both those issues.
In responding to the debate, I want to concentrate on what one might say is a narrower issue, but which gets to the heart of what we are talking about in terms of new nuclear over the next period. I want to distinguish between support for new nuclear in principle, and sober, detailed analysis of what deals and arrangements might result from resetting the button, so to speak, or pushing the button for new nuclear deals. What is under that button when we push it?
The problem with the proposed new Wylfa plant is not that a terrible deal will necessarily lie ahead; it is that we just do not know at the moment what that deal might consist of. There are, however, indications from the Japanese press, which I of course must read in translation, although I am sure the translations are reasonably accurate. They tell us quite a few things about what a new deal for Wylfa might mean, including that it is possible that the UK Government have already signed a memorandum of understanding with Hitachi, and possibly the Japanese Government, on how a deal might proceed. They also talk about possible investment by the UK Government in a new Wylfa deal, and—this also appeared recently in the UK press—about what Hitachi says it may or may not do in relation to liability for safety incidents and nuclear accidents at the proposed plant: whether it will seek, as part of the deal to go ahead with the plant, to water down, or remove itself from, some of the liabilities it would otherwise expect to be subject to for nuclear accidents and nuclear safety matters.
I emphasise that those issues are suppositions in reports that are coming out. On 4 June, when the Secretary of State made a statement about the in-principle negotiations that were being entered into, and my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) asked whether
“Hitachi is seeking to ‘reduce or eliminate’ its financial responsibility for accidents”—[Official Report, 4 June 2018; Vol. 642, c. 78.]
he had nothing to say in response. Nor, indeed, had he anything to say about whether any deals had been entered into already, in principle or otherwise, and what the deals might look like. At the moment, we appear to have taken a step forward in agreeing to look at further activity in developing Wylfa, but what that would entail is shrouded in mystery. To my mind, that is not a good way to proceed with such arrangements. We need transparency from the word go, clear understandings of what is proposed, and the ability to analyse and look into the proposals as they proceed, not least for two reasons, which I shall put forward in a moment.
We are in a strange position, talking about an issue that we should, but do not, know quite a lot about—although the Government could tell us, but apparently will not at the moment. That may sometimes be for reasons of confidentiality, or because some of the reports are not accurate, or because the Government simply have not decided yet which way they will go. As to liability for safety in relation to the Wylfa nuclear project—the subject of the debate—it is certainly worrying that, if the reports are true, Hitachi may be seeking to downplay its possible liabilities as a way to continue with the negotiations, and might be looking to the UK Government to loosen the conditions on liability for nuclear accidents and nuclear safety as part of the process.
The reason that is particularly worrying is that, as the hon. Member for Kilmarnock and Loudoun (Alan Brown) mentioned in his opening comments, liability for nuclear accidents and nuclear safety is not something set out on a piece of paper in a box somewhere that can easily be negotiated away. It is actually defined by the Paris convention of 1960 and the Brussels convention of 1963. Those are updated by protocols through the EU, but the conventions are international, as such, and they provide some pretty clear lines about who is responsible for what, as far as safety and nuclear accidents are concerned. They place a strict liability on the operator—that is liability without having to prove fault, with exclusive liability of the operator. They limit the operator’s liability with respect to amount, time and the type of damage that is subject to compensation, and they place an obligation on the operator to cover that operator’s liability by insurance or other financial security.
Those principles have been drawn into UK law, most recently through some wonderful statutory instruments with which the Minister and I have become very familiar. A series of statutory instruments has been passed between 2016 and 2018, and a key one was passed in 2016. Essentially, that legislation was on bringing those protocols into UK law, together with the increased liability that doing that entailed.
I will not go into detail, but the 2016 secondary legislation essentially means that a substantial liability should be insurable, subject to liabilities over a certain level essentially being socialised through Government intervention if they exceed that total. There is a culmination principle of substantial liability and expected liability—underpinned not just by UK legislation, but by international convention—that applies to any nuclear power plant operating in this country.
That is perhaps the nub of this potential problem. If the UK Government were to discuss with Hitachi what could be done in loosening its liabilities for nuclear safety and nuclear accidents at the Wylfa plant, they could not do that by providing a little wayleave for Wylfa power station, and expect all other power station operators to continue according to the Paris and Brussels protocols. They would have to breach those protocols, and replace UK legislation in so doing, and would then need to make all liabilities for all nuclear power stations of a lower order. That seems to me very significant, given what the reports coming out of Japan say about what Hitachi will and will not do as far as nuclear accidents and nuclear safety are concerned.
I would be interested to hear whether the Minister thinks that the analysis I have presented is essentially where we should go regarding nuclear safety and nuclear accidents. If she does think that, and if she agrees that such action would reduce liability for nuclear power stations across the board, the suggestion that there should be any negotiation with Hitachi on liability for safety and nuclear accidents separate from everybody else should set serious alarm bells ringing.
Has Hitachi made any suggestions that it will not pay by way of insurance for nuclear accidents and safety at the Wylfa plant? What has the UK Government’s reaction been to that? How do the Government see those suggestions —if indeed they are real suggestions—folding into wider discussions about the plant in general?
I should not turn down the opportunity to mention some wider issues regarding the negotiations. As the hon. Member for Kilmarnock and Loudoun also said in his opening remarks, we need to be careful of simply assuming that if a deal for the Wylfa power plant comes forward and produces—apparently—a lower strike price than Hinkley, everyone will be out of the woods and that will be the end of the matter. That depends entirely on what other deals are brokered as to other aspects of investment and underpinning the project’s capital, and on any agreements about the nature of those capital assets that may be entered into as the project moves forward.
We heard in the Secretary of State’s statement that the Government are considering putting assets on a regulated asset base arrangement, possibly in the context of Wylfa or of other nuclear plants. We do not know exactly what the British Government have signed us up to or will sign us up to regarding investment in the new Wylfa plant, but let me explain my understanding of regulated assets as they relate to nuclear power stations—this is a possible model that could be carried out for successors to Hinkley C. Placing assets on a regulated asset basis would effectively mean that the taxpayer—the customer—would have the risk transferred to them before the plant was built. They would be paying an amount of money, which would be taken out of bills, to underwrite that risk as the plant developed.
Under the current arrangement, a strike price would be agreed after the plant had started production and the customer would then pay. We have argued, as have many others, that the amount the customer will pay in relation to Hinkley C will be about twice the prevailing price for electricity over the period, because of those strike price arrangements. If the strike price is reduced, but the customer then has another liability while the plant is being built, not only does that add up roughly to the original position, but the customer will be paying up front before any power has been produced. If there are cost overruns or delays in production, the customer will continue to pay for that while the plant is finalised.
The Government’s stated position is that they will not undertake any more levy liabilities before 2025—the new doctrine produced in the Treasury recently. Customers may well pay that money before 2025, if this power station goes ahead in the way suggested, and therefore incur levies in breach of the Government’s stated position.
There is a lot to think about regarding what might be the terms of these negotiations, and as I have said consistently in this debate and elsewhere, we are still substantially in the dark as to what those negotiations might be. We need not to be in the dark so that we can discuss those implications and between us ensure that, should there be a deal for Wylfa, it is not just a good deal that gets Wylfa online, but a good deal that gets Anglesey online, with its power plant and all the things that go with that. That point was mentioned by my hon. Friend the Member for Ynys Môn. It must also be a good deal that Members of the House can frank on the grounds that it is good for customers, good for safety and good for the future of the nuclear power industry. At present, we are a very long way from that, and we need a lot more light shone on this arrangement before we can be sure that we will get the deal that we need.
It is a pleasure to serve under your chairmanship this afternoon, Mr Robertson. While I have the floor, may I take a moment to thank the Clerks and those who work so hard across the House of Commons to ensure that these debates take place? I particularly thank the Hansard reporters who are a miracle of accuracy, regardless of the quality of the debate—I just wanted to put that on the record before we go off on our summer holidays, although as we know, none of us are going on holiday; we will all be working hard in our constituencies.
I thank the hon. Member for Kilmarnock and Loudoun (Alan Brown) for securing this debate. We have had important conversations today, including two very stirring speeches from the hon. Members for Ynys Môn (Albert Owen) and for Glasgow North East (Mr Sweeney). I could not have made the case better myself—I will not try to, because Members probably do not want to hear me talking about that—but a point was made about having an energy supply that is diverse, strong, reliable, low cost for consumers, low carbon and, crucially, able to create innovation for reinvestment in the UK and for export.
I pay tribute to the long experience of the hon. Member for Glasgow North East in the shipyard. As he will know, if we had thought more about export potential when making some industrial decisions in the past, we would not have lost those high-skilled jobs. To reassure him, I was at the Cammell Laird shipyard two weeks ago to help to launch Boaty McBoatface. It was wonderful to see what £200 million of Government investment in polar research has delivered for that shipyard—thousands of jobs have been created and it has been able to bid for large-scale projects again. I enjoyed the speeches.
I will try to address the specific questions about safety, incidents and long-term liabilities. The hon. Member for Ynys Môn made a powerful case about our heritage. We should all be proud that we are leaders in the global civilian nuclear community in terms of safety and regulation, which we have built up extremely well over the years.
In this country, we do not set energy policy on the basis of ideology but on the basis of the test that I have discussed, so we will not make the mistakes of countries such as Germany. Last year, I was at the Conference of the Parties in Bonn to debate climate change, and barges of brown coal were sailing past the COP site—putting two fingers up to those who believe in reducing emissions and getting coal off the grid.
We all like to look at our apps, and there is an excellent one that tells us about the energy mix in the last 24 hours. We have burned no coal, which is excellent, and we used a bit of wind, which made up about 6% of the energy supply. Of the rest, 25% was from nuclear, 50% was from combined-cycle gas plants, some was from biomass and some was from interconnectors.
Last year, for the first time since industrialisation, the country did not burn coal for energy generation, which was a huge milestone. The Minister talks about the huge industrial benefits and the benefits to the wider economy. Does she also recognise the benefits of the nuclear advanced manufacturing research centre in Rotherham, which has re-established large-scale casting capabilities in Sheffield—an industrial capability that had been lost in the UK?
The hon. Gentleman is absolutely right. I will make reference to the nuclear sector deal that invests in the small modular reactor technology that he talked about and that engages with the industry and its supply chain by investing in innovation and skills and by thinking about what we can generate and export in the UK. I also pay tribute to the organisation that he mentioned.
The Minister quoted the figure that 25% of electricity generated in the last 24 hours was from nuclear. In 2016, on average, nuclear supplied 21% of the energy mix, so 25% is not a huge variation and does not demonstrate the massive reliance that would mean we need to have nuclear forever.
The hon. Gentleman and I know, because we form a holy trinity of debating on energy matters with my friend, the hon. Member for Southampton, Test (Dr Whitehead), that we all look forward to that 100% renewable future, but the problems of intermittency and storage will not be solved in the near term. We will not make ideological decisions that will put up costs and restrict energy supply if we do not have to—and we do not have to, because we have one of the best and most diverse energy mixes in the world.
The hon. Gentleman is right, but we should start from where we are on energy policy. There is a role for further decarbonising gas to keep it in the mix, which is why I am keen to investigate, using excellent environmental standards, the potential contribution of onshore shale gas. [Interruption.] He is chuntering; he may not agree.
We have an independent regulator, the Office for Nuclear Regulation, which has scrutinised the proposed reactor design for Wylfa. The design has received design acceptance, which means that all regulators are satisfied that the reactor meets the regulatory expectations on safety, security and environmental protection at this stage of the process.
The hon. Member for Southampton, Test invited me to talk about the media reports—he is doing better than I am if he is reading the Japanese newspapers. I reassure him that any operator in the UK is required to obtain insurance to fulfil their financial responsibilities in the event of an accident, and as he referenced, international treaties, such as the Paris and Brussels conventions, provide the framework for the management of nuclear liability in the UK.
This deal will be no different. I emphasise that we are still going into negotiations and having conversations—we have not done the deal yet—but we are absolutely clear about the commitment to insurance for any form of accident. Not putting decommissioning liabilities on the taxpayer, as the hon. Member for Ynys Môn pointed out, is also part of those calculations. I agree with him that we did not think hard enough about that in the past; successive Governments had not worked out how to include those liabilities. We have learned, however, and we are moving forward with that.
Before the reactor can be built and operated, it will need a nuclear site licence. Wylfa will also always be subject to environmental permitting through Natural Resources Wales. A development consent order process that will run under the Planning Act 2008 will scrutinise the construction and operation proposals for the project.
The Energy Act 2008, passed by the Labour Government, introduced the funded decommissioning programme that moved the dial on who pays for decommissioning liabilities. It is now the case that all operators of new nuclear power stations are legally required to have secure financing arrangements in place to meet their full share of the costs of decommissioning and of waste management and disposal. We are absolutely committed to managing radioactive waste safely, responsibly and cost-effectively for the long term, but also to looking at other opportunities to reprocess some of that waste, as the hon. Member for Glasgow North East said. We will not repeat past mistakes where the taxpayer had to foot the bill for decommissioning.
There were some questions about liability in the event of an accident. I am happy to say that the last significant incident was the Windscale fire in 1957, and we are light years away from that plant in terms of nuclear operating technology and the safety regime that we operate. The Nuclear Installations Act 1965 makes the insurance that I mentioned a requirement, without which operators cannot operate. As the hon. Member for Southampton, Test mentioned, we also have legislation based on the Paris and Brussels conventions. If the total cost of claims ever exceeded €1.2 billion, a further €300 million would be provided by all contracting parties to the Brussels supplementary convention. Any further claims above that total would be met at Parliament’s discretion.
The only liability-based agreement with Hinkley Point relates to insurance failure, and the Government will provide an insurance product in the event that one cannot be obtained on the market. I am not in a position to comment on what might be the case with Wylfa, but I emphasise that the operator of the plant at Wylfa will have the same obligations as all other nuclear power stations and installations in the UK, and will be required to fulfil those obligations in the event of an incident.
Hon. Members have asked about what happens with the Brexit negotiations. Nuclear safety is and always will be our top priority. We will continue to apply the international standards on nuclear safety specified by the International Atomic Energy Agency irrespective of our future relationship with Euratom. I emphasise that we want a close association with Euratom: a new relationship that is broader and more comprehensive than any existing agreement between Euratom and a third country. The Nuclear Safeguards Act 2018 provides the reassurance of a backstop in the very unlikely event of any changes.
Alongside that, the UK is negotiating nuclear co-operation agreements to add to those already in place. On 4 May, we signed a bilateral NCA with the United States, and we have further arrangements with Japan, Canada and Australia that are also on track. Those relationships facilitate the sharing of best practice in terms of nuclear operations and liability management. As I said, we are considered to be a proud leader internationally in the field of nuclear safety and regulation.
Further investment will bring huge benefits through innovation. My right hon. Friend the Secretary of State travelled to Wales to launch the nuclear sector deal on 28 June, which was a fitting setting to underline how the nuclear industry provides economic opportunities across the UK, particularly in more remote areas, as we have heard from many hon. Members. The nuclear sector deal is worth more than £200 million. It focuses on innovation and skills, which we can then use to export, and by striking it we aim to ensure substantial cost reductions across the nuclear sector, to ensure that the sector can remain competitive with other low-carbon technologies, because I constantly have to balance all investments with the potential pressure on consumers’ bills.
It would be really helpful if the Minister were able to indicate, either today or very shortly, when she will be able to place on the record the shape of the negotiations on Wylfa—the main components of the negotiations, what has already been agreed in principle and what remains to be discussed. I do not know whether she can do that in the near future, but it would be helpful if she could indicate at an early stage when it might be possible.
I appreciate the hon. Gentleman’s desire for transparency, but obviously I cannot do that, because doing so would prejudice negotiations that are ongoing. He will know, based on his long experience, that there is an interplay of costs, of contracts for difference numbers, and of potential asks from the UK Government and from shareholders, and these negotiations are long and complicated.
Part of the challenge, if you like, with large-scale nuclear is that a very large, up-front cost is associated with it; it is a very capital-intensive investment, although one that we want to make for the reasons I have mentioned. However, the conversation that we had earlier was about small modular reactors, which require less up-front investment, have more flexibility and allow us to invest in multiple sites, which are reasons why such reactors are so attractive; they allow us to spread those up-front costs much more widely.
In conclusion, this debate has been a very good opportunity to emphasise again the value of nuclear in our energy mix; to reassure people in this House and elsewhere that the UK Government will not make energy policy based on ideology but will soberly assess the cost, the innovation, the carbon and the security as we go forward; to celebrate the fact that we have one of the most robust nuclear safety regimes in the world, including world-leading independent regulation; to note the fact that people are hungry to see the details of the Wylfa deal and I will make sure that my right hon. Friend the Secretary of State, who is of course conducting those negotiations on our behalf, is aware of that; and, essentially, to reassure the House and others that—as is the case with all other nuclear generation in the UK—Wylfa will be a safe source of energy and one that minimises any form of liability being borne by the taxpayer.
Thank you again, Mr Robertson, for your chairmanship today.
The hon. Member for Southampton, Test (Dr Whitehead) touched on this—some of what has been presented today is supposition based on information that we have been able to glean from the media, so it could be argued that this debate was premature. However, I wanted to get such supposition out in the public domain and challenge the Government on it.
We should not be learning things from the media, but that is what has been happening in the case of Wylfa. After the first speculation about the Government discussing financial arrangements about the tax on Wylfa, I tabled a parliamentary question. That was in mid-May, but I was not able to get a meaningful response because of commercial confidentiality. Eventually, the Government made a statement on 4 June. So, while we hear about checks and balances and scrutiny, in many ways we are denied that scrutiny because of the cloud of commercial confidentiality.
I welcome the fact that the Minister categorically stated that Wylfa will have the same obligations on accidents and liability as all other nuclear power stations and nuclear power operators, and I hope that proves to be the case in the final arrangements. However, I will contradict myself slightly by saying that I hope we do not get the sign-off on those final arrangements, because of what I have said about attitudes to nuclear. I also remind the Minister that the National Infrastructure Commission’s assessment was that there should only be one new nuclear deal by 2025; again, I look forward to the Government reflecting on that.
I thank all the hon. Members who have taken part in this debate and, like the Minister, I also thank the Clerks for their work and the Hansard reporters—particularly in my case, they have a real hard job and they do it well. It is amazing to pick up a copy of Hansard and suddenly think, “Oh, that makes me look coherent”, so they do a marvellous job. I hope that all other members of staff have a good recess, as well. And again, thanks to everyone who participated in the debate.
Question put and agreed to.
That this House has considered taxpayer liability for safety at the Wylfa Nuclear power project.
Rail Investment in the East Midlands
[Sir Graham Brady in the Chair]
I beg to move,
That this House has considered rail investment in the East Midlands.
There are some firsts today, Sir Graham—I am always dealing with firsts. This is my first time under your chairship, which is very much appreciated. I also did not know before now that we could start early, which is very exciting, and I shall avail myself of the extra minutes to illuminate my subject matter further. I have sought this debate for quite some time, so I am really excited to have got it under the wire before the recess.
I am not naturally a whinger or shroud-wearer, but I will say a little about how the east midlands is perhaps not doing as well in terms of rail investment as it could be. I will also outline some really specific and really effective schemes that, with Government support, would deliver better rates of growth in our region. They are credible, ambitious and deliverable schemes, so I am trying to build support for them, and securing this debate is part of doing that.
The east midlands is at the heart of the country’s strategic transport network; it is literally the crossroads of England. Given our growth potential and our good record in the east midlands of delivering big projects, people might think that we would be a prime target for rail investment. However, the latest Treasury statistics—indeed, pretty much everything in the Government’s data —show that we are way behind where we ought to be.
Our region does not secure enough public investment in rail; in fact, we are at the bottom of the pile. The latest statistics bear a brief airing: the east midlands has the lowest level of public expenditure on transport, in total and per head; it has the lowest level of public expenditure on rail of anywhere in the country, at just £70 per head, which is £703 per head less than London and £180 per head less than the national average; for rail investment and transport investment more generally, the east midlands is not only the lowest funded region, but it has actually seen a reduction in funding in recent years; and the east midlands has the lowest level of public expenditure on infrastructure projects, at £230 per head less than the national average and £350 per head less than the north-west. And those figures are not a one-year blip; this is a trend over a series of years. The east midlands has actually experienced a steady downward slide to the bottom of the league.
I believe in levelling up. I do not see this process as some sort of competition against “That London”, and if it was, we would not win it. That is not the point I am making. However, it was very hard for me—I pride myself on being a pretty even-tempered person—to see what happened in one week this time last year. Despite an exceptionally strong business case, we saw the cancellation of the electrification of the midlands main line between Kettering and Sheffield, which represented nearly £900 million of investment. That happened just a day or two before the announcement of upwards of £38 billion of investment for Crossrail 2, the case for which is not as strong. I certainly would not wish to unpick Crossrail 2, but the point is that it was very difficult to hear those announcements on successive days.
We feel under pressure from London and the south-east, but we also feel under pressure, Sir Graham, from your backyard. The northern powerhouse is a competitor too, and it has a significant head start already; it is £980 per head better off in terms of infrastructure investment than the east midlands. Even in terms of the midlands engine, which we are very keen to see succeed, there is a risk of that becoming the west midlands engine, as it is tilted towards Birmingham, which is already £500 per head better off than the east midlands in investment.
We have some real challenges, and perhaps we need to look at why. It is true that we do not have the high profile of cities such as Manchester and Birmingham, with their Metro Mayors, and perhaps we lack an obvious regional identity—that is something I get quite a lot, and I was told not so long ago that the east midlands is basically what is left after everywhere else is taken away, which is a little unkind. Perhaps we struggle to agree local priorities. Or perhaps it has been down to a lack of propositions—well, not any more. That is my key theme for the debate: there are clear proposals for rail investment, and I am confident the Minister will have seen the Midlands Connect and Transport for the East Midlands shared vision for the region, which has recently been discussed with the Secretary of State, and the east midlands declaration on infrastructure funding, signed by Sir John Peace, chairman of The Midlands Engine.
When I was first elected, I went out to speak to as many people as possible, and I asked the business community, and especially our local enterprise partnership, what they wanted from their MPs. I got a very clear message: agree a set of priorities between you and stick to them. Contradictory messages have not served us well in the region. The all-party parliamentary group on the east midlands, which the hon. Member for Amber Valley (Nigel Mills) and I co-chair, has sought to build that consensus, and this year we are focused on rail. I think that that cross-party approach has served us well and has developed a broad consensus. That is astute. Tenacity is important too, and we certainly will not lack for that.
I commend my hon. Friend’s work as co-chair of the all-party group. The point about cross-party working is incredibly important because there is a lot of consensus in the east midlands, particularly regarding the fact that we get £70 per head compared with £770 in London. We all understand the importance of the capital city, but that disparity really is stretching things too much. However, we are all being patient and trying to come together on the same priorities.
I am very grateful for that intervention. That is exactly right. This is not, dare I say it, an issue for just the current Government; it has been an issue for previous ones too. Our approach has to be one of consensus, and I think that that is how we will best get what we want. In thanking my neighbour to the east, I ought to reference my neighbour to the south, my hon. Friend the Member for Nottingham South (Lilian Greenwood). It might give the Minister some amusement to know that she is not with us because her Transport Committee currently has the Secretary of State in front of it. I suspect that the Minister will have a slightly easier time than the Secretary of State.
We should be an ideal investment opportunity because investment in the local economies that make up our region offers a great economic return—better in many business cases, in fact, than in other parts of the country. By increasing the proportion of national infrastructure spending in the east midlands, the Government will have a better chance of unlocking the private sector investment needed to revive and rebalance the UK economy. We need only look at the levels of gross value added—GVA—driven out for every pound of transport spend, to see how compelling the case is. That is one league table that the east midlands tops, showing our ability to deliver growth not only locally but nationally.
What am I seeking to raise with the Minister and perhaps secure his support for today? I have four things, the first of which is making the most of HS2. The east midlands has set out plans to use HS2 to drive up economic growth across the region, creating an additional 74,000 jobs and £4 billion of GVA by 2043. The region’s station at Toton will be the best connected HS2 station outside of London and will transform connectivity between the east midlands and Birmingham, Leeds, the north-east and Scotland, as well as London. We believe that HS2 can have a transformative impact on the east midlands; from the hub station at Toton and the Staveley infrastructure depot, to connecting Chesterfield to the HS2 network, there is an opportunity for the Government to invest in getting on with things and bringing them forward, starting HS2 services in 2020, three years early. Partially opening the hub station a little earlier in the next decade would stimulate growth earlier, unlocking the potential for 11,000 new jobs and radically improving connectivity between the east midlands and Birmingham. There is a real prize for us in HS2, and we can get on with it now. I know people think it is a bit of a long way away, but we can get on with it.
I congratulate the hon. Gentleman on securing this debate on a really important issue, particularly as regards getting the economic benefit from HS2. I want to flag, perhaps to the Minister, the opportunities that I and my hon. Friend the Member for Sherwood (Mark Spencer) have been talking about in terms of the Robin Hood line, and the social benefits of connecting villages up to jobs, the tourist economy and, in the long term, the HS2 hub at Chesterfield, giving deprived communities access to the big economic boost that the hon. Gentleman talks about.
The hon. Gentleman makes an excellent point. I am a big believer in our region’s future lying in the strength of HS2 and the logistics hubs that we can put around it and our airport. However, the hon. Gentleman’s community and mine will not benefit from that unless we can get there, and getting there cannot mean just going into the nearest big city and going out; we have to get there in other ways as well. I confess to enjoying a nice night out in Mansfield—a tasty night out, I would say—and I would definitely like to be able to get from Bulwell to Mansfield a bit more easily. However, I have picked up in dispatches that there might be a bit of a governmental wobble regarding HS2, especially its second phase, and I would be very interested to hear the Minister’s reflections on that.
The second priority is investment in the midland main line—you would expect me to say that, Sir Graham. We welcome the investment in upgrading the track and the signalling, but the importance of electrification should not be understated, as it is an opportunity to put really modern infrastructure in place for our region, make travel more comfortable, reduce running costs and carbon emissions, and improve air quality, journey times and efficiency. Electrification has an awful lot going for it.
As I said, the business case for between Kettering and Sheffield was really strong, and for it to be a casualty of cost overruns elsewhere is a real shame and a fundamentally flawed decision. That is not just my view or that of local business and council leaders; it is the view of the National Audit Office and the Transport Committee. But we are nothing if not pragmatic in our region. We appreciate that the rail franchise is now out to tender, and that it includes specification for bi-mode trains, so we must start in the world as it is, rather than the world as we want it to be. Let us make absolutely certain that whatever stock is procured for those lines can be converted to full electric mode in the future. Let us ensure that they can deliver on the journey time ambitions in both modes, and let us think about business growth. Our region is the international centre for rail engineering, so let us definitely ensure that those new trains are built in Derby.
Alongside that, in the spirit of pragmatism, let us think about the incremental electrification of the line. There is an opportunity to go bit by bit, and in time for the completion of HS2, so as not to risk losing one of the prizes of HS2 around speed. The Government have already committed to completing the section between Clay Cross and Sheffield in time for HS2. That will get us up to 62% of the line, so let us have a plan for the other 38%. I cannot help but think that we would save money by doing it properly, all in one go, but if it is incremental electrification, then let us have it, commit to it and plan for it, because it would progressively reduce the costs of running bi-modes on the line and release revenue to improve services elsewhere in the east midlands. Without electrification, it will also be more difficult to integrate HS2 into the existing rail network, so we really have to think about this and learn from mistakes elsewhere and from what has gone well in other countries.
The third priority is one I am particularly interested in. While waiting to start the debate, I saw the hon. Member for Walsall North (Eddie Hughes) come in, and I thought he was going to talk, as a west midlands Member, about east-west connections, but I see he is in his place as Parliamentary Private Secretary. Nevertheless, if he had intervened, I would have made what I think is a neat assumption—that it is of as much interest to my neighbours to go to Walsall as it is to go to Wallington. That east-west has to be as important as the north-south. Sometimes it feels like a radical act to state that not everything for us is about getting to and from London more quickly; we are just as interested in moving east and west. So let us address the complex rail infrastructure in Newark and press for major investment to reduce conflicts between the east coast main line, which goes at speed, and the much slower Lincoln to Nottingham rail traffic. Let us reinstate direct services between Leicester and Coventry, which are important players in The Midland Engine.
One of my key things to highlight today is this: Midland Connect has developed the midlands rail hub concept, which would significantly improve rail capacity between the east and west midlands. It is a cost-effective package, with an additional 24 trains per hour improving east-west connectivity. At the moment, it takes 69 minutes to go the 50 miles from Nottingham to Birmingham. As you may know, Sir Graham, I am pretty quick on my feet, and sometimes it feels like I could beat the train. I think we can do better than 50 miles in 69 minutes. The hub would also benefit links to the midlands’ two international airports, and to the south-west and south Wales, allowing for an additional 36 freight paths a day, carrying £22 billion of goods every year. That is a really sensible package of ideas and, again, I am interested in the Minister’s reflections.
Finally, when I am on my feet, I never miss an opportunity to talk about light rail. I am a proud Nottinghamian, so I punt for light rail at every opportunity. We are really proud of our tram system. We are proud that we are the least car-dependent city in the country outside London and that we have the best public transport outside London, but there is potential for us to go further, and it would be really positive to expand our network. Similarly, East Midlands airport is a key part of our local economy, but it is hard to get to from East Midlands Parkway, and local roads are snarled up with associated traffic. A light rail link could be the perfect solution.
We have talked a little about the past, but I want to focus on the future. In the east midlands we are practical and pragmatic. We are a can-do region, and that is reflected in Government statistics for employment growth and new business start-ups, but we can do much more. We want to work with the Government to boost investment in key rail and other transport projects that will release economic growth, to not just our own benefit, but that of the county as a whole.
It is a pleasure to serve under your chairmanship, Sir Graham, and I congratulate the hon. Member for Nottingham North (Alex Norris) on securing the debate. I commend him, alongside my hon. Friend the Member for Amber Valley (Nigel Mills) and the hon. Member for Nottingham East (Mr Leslie), for the work that they have been doing on the all-party parliamentary group on the east midlands, as well as my hon. Friend the Member for Mansfield (Ben Bradley), who is a bit further north of Nottingham. It is good to build cross-party links to ensure that the east midlands develops a coherent overall strategy for transport.
It is also a pleasure to have a chance to talk about the Government’s planned rail investment in the east midlands. I remind the House that we are in the process of undertaking the single biggest upgrade of the midlands main line since it was completed almost 150 years ago. Through more than £1.5 billion of investment, we will reduce peak-journey times, increase capacity for passengers and freight services, reduce the environmental impact of railway operations, and improve the experience of passengers travelling in the east midlands. Some of that work has already been completed. In February, passengers began using newly commissioned track and signalling between Kettering and Corby, increasing the capacity, speed and resilience of the railway between those two Northamptonshire towns.
Ambitious works to modernise and improve the railway at Derby station began on Sunday. That upgrade includes 17 kilometres of new track, 55 new signals, 79 sets of points and nine new overhead gantries. The current complex and inefficient track lay-out will be simplified, allowing for more direct train movements to and through the station. Ultimately, that will reduce journey times and improve reliability.
Works to extend electrification infrastructure from Bedford to Corby are also under way. We have also asked HS2 Limited to begin preparatory works for the future electrification of a 25-kilometre section of the midland main line from Clay Cross to Sheffield station. As the hon. Member for Nottingham North said, new bi-mode trains, to be delivered under the next east midlands franchise, will provide us with the flexibility to use electrification where it is affordable and delivers real passenger benefits.
Improvements for passengers, while vital, are not our sole focus. The midland main line programme will also provide more opportunities for freight. Stations and bridges between Kettering, Bedford and Corby are being reconstructed to accommodate larger shipping containers, creating more train paths for freight. The next east midlands franchise will exploit and build on those capabilities.
The recently published invitation to tender specifies an ambitious programme of benefits and improvements. Through the new franchise, connectivity between the east midlands and London will be significantly improved. Journey times between Nottingham and Sheffield and London will be reduced by up to 20 minutes in the peak, and there will be a brand new fleet of bi-mode trains from 2022.
When the scheme for electrification was cancelled this time last year, the Government went for bi-mode train technology, but the National Audit Office said that the train technology to deliver the benefits did not exist. Will the Minister reassure us that the bi-mode trains that he envisages are real and will deliver on the specifications that he hopes for?
Absolutely, and the decision means that passengers will benefit from the new trains sooner, and with less disruption, than had we gone ahead with plans to electrify the entire line. The upgrade of the midland main line will support much better journeys, faster journeys in the peak and more seats as a result of the new trains, with further improvements from 2022. Thanks to modern train technology—the bi-modes that we will procure—we will not need to electrify every part of the line to deliver better journeys.
The capacity of services will be increased throughout Lincolnshire, and between Derby and Crewe, and an additional train per hour will run from Corby to London St Pancras. Throughout the week, services will start earlier in the morning and end later in the evening, and more trains will operate on Sundays. Passengers will also benefit from high-quality wi-fi and mobile connectivity, both on trains and in stations. Smart ticketing options will be introduced for leisure and business journeys, including better value-for-money fares for passengers travelling regularly but on fewer than five days a week. The new franchise has specified exemplary passenger satisfaction targets for trains, stations, customer services and dealing with delays.
All those investments will radically improve rail services in the east midlands. However, our plans do not stop there. As we look to the future, we are working collaboratively with bodies such as East Midlands Councils and Midlands Connect to identify more areas where rail investment can unlock new potential in the region. To that end, the Government are supporting Midlands Connect with £12 million of funding to develop a transformational strategy to boost productivity and growth through transport investment.
A further £5 million has been provided to support the development of the proposed midlands rail hub that the hon. Member for Nottingham North mentioned, which seeks to provide a significant uplift in capacity and reduction in journey times between Nottingham, Leicester, Derby and Birmingham. The new east midlands rail hub at Toton will be one of the best connected stations in the region, providing new high-speed links to London, Birmingham, Chesterfield and Leeds. The station will also link to the existing network with routes to Nottingham, Derby and Leicester, connecting those cities in turn to HS2.
The Government’s commitment to continuously improving rail in the east midlands is evident, and the huge benefits that that will bring will be obvious. The measures that I have outlined will transform services across the breadth of one of England’s most dynamic regions.
Question put and agreed to.
I beg to move,
That this House has considered family hubs.
It is a genuine pleasure to serve under your chairmanship, Sir Graham, given your support for family life.
What exactly are family hubs? They are beginning to spring up across the country, and are being developed by innovative individuals and local authorities as a result of a fundamental rethink of how families can be better supported. The term is used in two main ways. First, it can mean a physical building in the heart of a local community, such as a former children’s centre, a sports centre or a school, where a range of providers of adult and children’s services from the public, private and voluntary sectors are based or co-ordinated. Crucially, it is a place where families can go for help and support, and where someone will have the answers. The Isle of Wight’s locality hubs, to which I will refer shortly, are examples.
Alternatively, the term can be used to refer to a virtual community service hub. For example, in Newcastle, networks of services are co-ordinated in an integrated way, perhaps in a single building that is not itself a hub.
The examples I will refer to today are physical hubs. The advantage of physical hubs is that families know that there is somewhere local to go, where joined-up services are clear for all to see and access without stigma. No family is without its challenges from time to time.
Why are some local authorities developing family hubs? According to Dr Samantha Callan,
“the lack of readily accessible family supports, along a spectrum of need, throughout the time children are dependent on their parents (0-19) means that life chances are often severely impaired and social care services are faced with unremittingly high numbers of children who are in need, on child protection plans and coming into care.”
The Children’s Commissioner for England, Anne Longfield OBE, who is very supportive of family hubs, rightly says in her child vulnerability report, published last month, that
“1.6 million children living in families with substantial complex needs have no established recognised form of additional support.”
She is increasingly frustrated that vulnerable children are
“let down by a system that doesn’t recognise or support them; a system that leaves these children and their families to fend for themselves until things have got out of hand and crisis hits”.
My experience of children’s centres is that they were not targeted, and the services they provided were completely wasted. How will my hon. Friend ensure that the hubs are targeted at the people who really need them, rather than at middle-class mothers who want to sit there or who take their children because they have other things to do?
One of the ways—I shall elaborate on this—is to ensure that the centres are grassroots-built, that they engage with the local community and that they involve not just the statutory services but voluntary community groups. Each family hub will therefore be different and tailored to the needs of the local community, much more than Sure Start services were.
Anne Longfield says that
“in expanding the range of support we offer to vulnerable children and their families, we can support many more children in a more efficient and effective way. This is about an approach that works with children and their families, to develop resilience, confidence and independence”.
She says that it is imperative that Government initiatives
“focus on expanding the provision of lower-level services which support children and families, making them routine to access”.
She says that some may simply need a “helping hand” but that
“for others it will be specialist support for them and their families.”
Family hubs can offer that range.
The broader need that Anne Longfield highlights explains why exclusively focusing on the Sure Start children’s centre nought-to-five model is no longer tenable. It is vital, if we are to give children the best start in life, that services are broader. However, we also need to address the massive challenges our country faces due to family instability. That is why family hubs are needed. Such challenges include children’s mental health issues and educational and employment under-attainment, as well as a range of other challenges that can be lifelong, including addiction, housing pressures, pressure on GP surgeries, loneliness in old age and many others.
Although family hubs are as yet few in number, they are already beginning to have a real impact. I understand that the early intervention provision on the Isle of Wight means that fewer children are being put on child protection plans. At Middlewich High School in my constituency, when students have special educational needs or disability or mental health challenges, the whole family is supported. After just a few years, the evidence shows the positive impact of family hubs on the emotional health and wellbeing of students. There has even been an improvement in GCSE results.
I will describe one family hub in detail to evidence the range of support that hubs can provide, but before I do so, I will set out my key asks of the Government. National Government, from the Prime Minister down and across ministerial briefs, must really get behind this initiative. They must champion family hubs in policy, promote best practice and provide a transformation fund to help to accelerate the development of family hubs across the country.
I will describe just one example from a number of family hubs, represented at a recent roundtable to showcase good practice that was held at 10 Downing Street. Family hubs are all different because they are created by and tailored to the local communities in which they sit. Chelmsford family hub opened in March and is located in Chelmsford library. The refurbishment was paid for by a £145,000 grant from the Arts Council and £171,000 from Chelmsford’s infrastructure levy fund. In its first two days of opening, more than 80 families received support from the Essex Child and Adult Wellbeing Service and library staff.
The Essex Child and Adult Wellbeing Service focuses on ensuring every child has the best possible start in life and on providing community services that are accessible and high quality, and that meet the identified needs of children, young people and families.
I am very interested in what the hon. Lady is saying. In my constituency, some church community organisations have a wrap-around service, like a family hub, that provides not only education, but clothing, food and breakfast in the morning, and deals with young people who have issues. Is that the sort of thing she is talking about?
Absolutely. A family hub could well be placed in a church environment. Indeed, a wonderful church community in my constituency—New Life church—provides a host of services for all ages, including a very effective job club.
Family hubs are at the heart of the services in Essex. The majority of services are delivered and co-ordinated from hubs. There is one in each district and, like the one at Chelmsford library, they are open for 50 hours a week. The hubs’ approach to family care is to look at a family’s strengths and then to work with the family, across all its services, aligning resources and focusing on prevention, early intervention and evidence-based practice. Working with families is so important.
At Chelmsford library, library staff, health and family support workers, and volunteers from other support agencies have come together to create a one-stop shop for free family services, including antenatal contact, parenting support, school readiness, school nursing, family health, substance misuse support, contraception advice, nutrition support, mental health support, smoking cessation, dental care, and SEN and disability support for young people up to 25. They work with an array of family support services, such as Citizens Advice, safer spaces, adult community learning and home start. Volunteers are proactively encouraged to play a role through peer support and by developing grassroots community groups to help to strengthen and build resilience in local communities.
Key features of that successful approach include a true integration of joined-up services and community engagement, the whole-family approach I mentioned and a flexible service that meets individual needs—the right type of support by the right person at the right time. Myriad outcomes are aspired to, including children and young people feeling safer; families being helped to improve parenting and children’s behaviour; better emotional wellbeing of mothers and children in the perinatal period and beyond; good lifestyle choices; more resilient families who can respond well to crises and cope with shocks; young people having strong attachment to at least one adult; and people being connected to and involved in their local community.
So many families are increasingly without the support structures we took for granted only a generation ago, and often live far away from relatives. The impact of family hubs cannot be overestimated. As Javed Khan, chief executive officer of Barnardo’s, said at our No. 10 roundtable, they should be
“at the heart of the domestic policy agenda”.
Family hubs could play a crucial role in fighting the “burning injustices” highlighted by the Prime Minister. Mr Khan also said:
“Our frontline experience strongly supports the proposition that early help for families is absolutely essential to build resilience and prevent more serious problems occurring later on. That’s why, in our 10 year strategy, our first of three aims is to create Stronger Families, alongside Safer Childhoods and Positive Futures. Amongst our 1000+ services, we have some great examples of Family Hubs. We all know that rising demand on safeguarding services and the care system, combined with tightened budgets, leave many local authorities without the means to invest in early support. Yet help for families is vital if we are going to break the cycle and step in when children are at serious risk of harm.”
Other family hubs, such as Woodland Academy Trust’s, help with job and career opportunities. That hub has introduced a character toolkit for children and young people and has established a number of local projects in conjunction with local faith groups. As the hon. Member for Upper Bann (David Simpson) mentioned, they can provide very strong community support. Westminster City Council plans to develop three hubs in collaboration with partner organisations, such as child and adolescent mental health services. I look forward to the launch of the family hub partnership in Westminster this November. We hope that there will be a ministerial presence there—ideally, the Secretary of State for Education.
The key aims of the Westminster hubs are just too many to mention, but they include identifying families with complex needs as early as possible, no matter which service they come into contact with; preventing family breakdown; preventing children from going into care and from entering the criminal justice system; helping parents to gain employment; providing access to first-line mental health support to reduce referrals to higher level, more costly interventions; and improving outcomes for children and young people across a range of health and wellbeing indicators. I hope that those descriptions bring home the tremendous potential that family hubs could have if they were sited in local communities right across our country.
The aspiration to support the creation of family hubs nationwide is one of the policy asks in the Manifesto to Strengthen Families, launched last September, which has the support of some 60 Conservative Back-Bench MPs, many other MPs and a large number of peers. I pay tribute to Dr Samantha Callan, whom I mentioned earlier, who has done so much work on how practical policies could be developed by Government to help to strengthen families. She is part of the team that worked on this manifesto, together with Lord Farmer—our representative in the Lords—and our executive director, David Burrowes and myself.
Key policy 6 of the manifesto states that the Government should
“encourage every local authority to work with voluntary and private sector partners to deliver Family Hubs… local ‘one stop shops’ offering families with children and young people, aged 0-19, early help to overcome difficulties and build stronger relationships…the Government should put in place a transformation fund and national task force to encourage Local Authorities to move towards this Family Hub model…that will particularly help children in need.”
The manifesto also states:
“Alongside physical Family Hubs, the Government should work with the Family Hub Movement to develop a virtual Family Hub offering online support and guidance that mirrors the depth and quality of NHS.gov and links families to local provision.”
I want to emphasise, however, that vocal and practical leadership is required from central Government significantly to accelerate the creation of family hubs and their roll-out across the country. We need Ministers and the Prime Minister to champion family hubs. We need this to be a key component of our domestic policy going forward. Backing that up with a transformation fund of £100 million over four years could provide a rocket boost by highlighting good practice and helping senior local authority staff across the country to reconfigure existing services to make them more holistic and co-ordinated. Focus should be on early intervention and prevention, as well as community self-help and developing missing services such as relationship support, which is too rarely available in the community.
Leadership from national Government to strengthen family life in our country is absolutely critical. The fiscal cost of addressing family breakdown, quite apart from the often lifelong pain and suffering of millions, has been estimated and oft-quoted in the House at around £50 billion, but that is a vast underestimate. The cost in terms of lost life potential and lost productivity is much more.
So much of that cost is borne, and so many of the related challenges are addressed, by a wide range of Departments: Education, Health, Justice, Work and Pensions, the Cabinet Office, Housing, Communities and Local Government, and even Defence. That is why our manifesto policy 1 asks for a Cabinet Minister to be appointed with responsibility for families. In the same way that one Cabinet Minister holds the equalities brief, another Secretary of State with a cross-Government brief, or one of the larger Departments such as DWP or Housing, Communities and Local Government, could bear named responsibility for families.
That Secretary of State would require an equivalent body to the Government Equalities Office—a dedicated budget and civil service team to prioritise and co-ordinate family policies across Government. That would also help to avoid the duplication of work that is becoming apparent across Departments and pots of money being allocated to address such challenges. There is serious risk that much good work across Government will not meet its objectives as effectively as it could because of the lack of integration and co-ordination across Departments, as well as the risk of duplication of manpower and money. That could be avoided if a Cabinet-level Minister responsible for families co-ordinated all that good work and more.
I mentioned that good work is being done across Government to strengthen families. Over the past year, our team that has worked on the Manifesto to Strengthen Families has been encouraged by the positive response to the manifesto not only from many Back-Bench colleagues, but from Ministers. We are delighted that the Ministry of Justice has fully adopted and is implementing Lord Farmer’s review on strengthening prisoners’ family ties, which reflects policy 18 of the manifesto.
We were also delighted by the announcement by Health Ministers of £6 million to help the children of alcoholics—a need referred to in policy 4 of the manifesto. Similarly, the budget of more than £90 million allocated to addressing the mental health crisis faced by young people was welcome, which we also referred to in our manifesto. However, our team has told the Schools Minister that if that funding is to be effectively used, it is critical that young people’s families are involved wherever possible to help to address their mental health needs. Engaging families and early intervention are absolutely essential to avoid the continued mental health challenges among young people in this and future generations.
Only last week, we welcomed the announcement by the Secretary of State for Education of greater emphasis on relationships education in the newly proposed relationships and sex education curriculum guidance. It includes that pupils learn about the characteristics of healthy relationships and the
“nature and importance of marriage for family life and bringing up children”—
an emphasis reflected in policy 3 and elsewhere in our manifesto.
We also welcome the statements by Ministers in both Houses on the manifesto policy suggestions, including family hubs. My hon. Friend the Member for Nuneaton (Mr Jones), when he was Under-Secretary of State for Communities and Local Government, said:
“I welcome the development of family hubs and we know that many areas are already moving towards this model of support for children and families.”—[Official Report, 30 October 2017; Vol. 630, c. 564.]
Earlier this month, the Under-Secretary of State for the School System, Lord Agnew, affirmed family hubs, saying of them and other strategies that the Government want
“to ensure that these innovations are recognised and shared, and we want to spread these successful approaches.”—[Official Report, House of Lords, 12 July 2018; Vol. 792, c. 959.]
Spreading the successful approach of the family hubs that are already up and running is important—indeed, it is urgent—hence the need for national Government support.
I have some short practical requests, which are examples of how the Government could support and help to promote family hubs. I understand capital clawback would need to be waived if the change of use of a former children’s centre were part of a local authority’s service redesign. Will the Government look at that? There should be a requirement for parents who are not in work but benefit from free childcare to spend at least one of those childcare sessions with their children in the hub to boost their own parenting confidence. Ofsted’s single inspection framework could specify that early help for families must show regard to the need for support for couples as well as parenting support, and DFE could signal its support for a major gear shift in the development of family hubs by adopting “hub language” and encouraging local authorities to redesign family support along the co-ordinated lines of family hubs.
The good news is that positive outcomes can be achieved quickly, as I outlined. The health and wellbeing work and engagement with families in Middlewich, where such outcomes are already being seen, has been led by an inspiring headteacher, Keith Simpson, who was appointed just six years ago. I read in this week’s edition of the local newspaper that he will be moving on. He has become deeply appreciated and respected in the Middlewich community, and has shown through his local leadership what a positive difference engaging with the whole family can make. I am sure I speak on behalf of the whole town when I say we wish him well with his move to Neston. Middlewich’s loss will be very much Neston’s gain, and he will leave a long-lasting legacy in many lives, particularly young ones.
Imagine the huge difference—the transformative impact —that could be made nationwide in just a few years by having a family hub in every community. Their positive, perhaps lifelong, impacts on individuals would ripple out into the community. Even the Chancellor has signalled his support for the concept, recognising the increased national productivity that may result.
The Under-Secretary of State for Education, who will respond to the debate, said recently that the Government have committed £8.5 million for councils to peer review one another to see what actually works in terms of outcomes for children. Will he confirm that that will include reviewing the effectiveness of family hubs? I know from a private meeting between him and our Manifesto for Strengthening Families team that he understands so much of what I have spoken about, so will he become a vocal champion for family hubs, press his Secretary of State to be so too, and in turn press the Prime Minister to take up the policy asks I outlined? It is not an exaggeration to say that this could be transformative for our nation.
Thank you, Sir Graham. It is a pleasure to speak in this debate. It is always an intense pleasure to follow the hon. Member for Congleton (Fiona Bruce). There is probably not a debate she leads that I am not at, and I suspect there is not a debate I lead that she does not attend. We have kindred interests, and this is one of them, so I informed her that I would put my name down to speak in support of what she does. I commend her on her hard work on families and relationships, and on the alcohol strategy and how we address that issue. She takes on nitty-gritty issues that are commonplace but very important, and I thank her for that.
I, too, am from a very close community where everyone knows everyone else. It is common for me to walk down the street and be able to name all the people I meet. That is probably because I am of a certain age, so I know lots of people. I know the parents, I know the children, and now I know the grandchildren—that is how life is. That is what my constituency is like, and I suspect it is what other Members’ constituencies are like. If we live long enough in an area, we get to know the area and its people, and we can name most of the people we meet on the street.
However, it is clear that we do not know all the troubles in people’s hearts, minds and lives, or the struggles they face daily. I recently read in one of my local papers, “Be kind to people—you do not know the struggle that lies behind that smile.” When I first opened my advice centre as a Member of the Northern Ireland Assembly, a lady gave me that quote, which I kept on the wall for a great many years until I redecorated the place. That is the thrust of what I have always said: “You’re never quite sure what troubles that person has. That smile just may hide the cataclysmic problems they face.” The problems I see in my office are the tip of the iceberg of what people face.
I will talk about family hubs from the perspective of the church groups in my constituency, because that is where family hubs come from. The hon. Lady knows that, as does my hon. Friend the Member for Upper Bann (David Simpson), and I hope at the end of the debate other Members will know it, too.
From illness to losing a job, from grief to unexplained depression—I have found that the number of people who look like they have no problems but in fact have depression has greatly increased over the years, and how to help them and get them beyond where they find themselves is probably one of the greatest issues I face in my constituency office—and from a life of plenty to a life of poverty, I am amazed by the difficulties that so many people face. We face them every week in my office. I am sure others do, too. I am thankful that so many people volunteer to help others face those difficulties.
I work closely with the local food bank and Christians Against Poverty group, which work out of the specially designated compassion centre at Thriving Life Church in Newtownards. I have had a very good relationship with that centre over the years. I helped it with its planning application when it moved to where it is now. It took over a car sales place and totally renovated it to make it a really good compassion centre—the name was chosen specially. The centre supports people who need short-term and long-term help, of whom there are many in my area. That food bank was one of the first to be established in Northern Ireland, and its impact has been great. There is also a clothing bank, groups for elderly and young people, a coffee shop and a breakfast club. The Church is very community-orientated. Clearly, its work is based on its beliefs and its faith, but it works with lots of single parents, and it is involved in charitable fundraising, too.
My area is second only to County Antrim, which contains Belfast, in terms of people’s need for three-day emergency food packages from food banks. The biggest cause for food bank referral in the Province is recorded as
“low income—benefits, not earning”.
I fill in forms with those categories when people come to see me, and I always ask whether they have no benefits, their benefits have been delayed, they have low income or they have been through relationship break-up, so I get a fair idea of what people experience. Low income accounts for 45% of referrals in Northern Ireland, and benefit delays and benefit changes, which each account for 12%, are also significant reasons for referral.
People need help, and that Church in particular helps to put food on the table and provides people with life-changing support to deal with debt and learn better money management, which is really important. The debt charity Christians Against Poverty reported that its clients had run up average debts of £4,500 on rent or utility bills, forcing them on to what the charity described as a “relentless financial tightrope” on which they juggle repayments and basic living costs, which leaves many acutely stressed and in deteriorating health. Lots of problems follow from the debts. What is important is helping people to learn to manage their money, stepping in and maybe even sorting out the repayments as well. In our office we have been personally involved with that and I know that the Church group has too.
The pressure of coping with low income and debt frequently triggers mental illness or exacerbates existing conditions, with more than one third of clients reporting that they had considered suicide and three quarters visiting a GP for debt-related problems. More than half were subsequently prescribed medication or therapy. We may see the physical outcome of the problems they present to us, but what we maybe do not see is the emotional and mental issues that are just underneath.
Families are under immense pressure and Churches are stepping into the breach. The local Elim Church in Newtownards runs a cancer care club that provides support, encouragement and a listening ear for those suffering from cancer or their families. I have been to those groups a couple of times to meet some of the people; it gives me a focus on the problems that people have. The Church also runs an addictions night, which brings in some of the local addicts, feeds them and tries to offer help. I have met those people over the years. They are good people who just need someone to guide, support and help them at a time when they are at their very lowest.
Scrabo Hall runs a women’s ministry to help vulnerable ladies and offer support, as well as youth work to give children an alternative place to safely hang out. There are kids’ Bible clubs galore right through the summer in the major town of Newtownards and across the whole Strangford constituency. We have a lot of Bible clubs where young people come in, and it perhaps gives parents a chance to get a wee break or respite.
It is not possible for me to highlight all of the services that are offered in our Church, all voluntary and all out of a love for families, and I want to thank all those who so sacrificially give of their time, energy and resources to help struggling families. It would also be remiss of me to forgo mentioning the tremendous work that is carried out in our community groups, which connect older people through craft clubs or tea dances and provide homework clubs as well as youth clubs. There are so many people—I ask each right hon. and hon. Member here to think for a second about the volunteers who do so much in our constituencies and provide those in need with a listening ear. Sometimes people just need someone to talk to, and it is important that they can always call in and know someone is there for them.
I will finish, because I am conscious of time and I want to give the hon. Member for Mansfield (Ben Bradley) a chance to make an equal contribution. Life is tough, and tougher still for struggling families; Churches and community groups are doing a good job, but they want to and could do more if they were better funded and had a larger support base. It is on us as individuals to do that. The family unit and family hubs are an essential component of a functioning community. Offering tax breaks is great, but not enough. We need support for working families, and that can only be done through targeted funding. I implore the Minister, who I know will be responsive to our comments and requests, to address that need and to help the sterling work that is already being done.
It is a pleasure as ever to serve under your chairmanship, Sir Graham. I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on securing this debate on a very important issue. I commend the work she has done and the passion she shows for strengthening families. I approach this debate from the point of view of my own passion for early years, primary schools and early intervention, particularly in vulnerable families and deprived communities, such as the many I see in my constituency.
In Mansfield, there is a high level of family breakdown, deprivation, domestic violence and other very concerning problems that particularly affect families. I am keen to ensure that we have the support services available to help those families, and I have been working with a number of local organisations in support of that. Family hubs are an excellent initiative to help the most vulnerable families by providing accessible early intervention and lifelong support. Often only a low level of support is required to keep families and individuals on the right path and to make them feel secure, but that preventive approach is the right one. Sometimes that is the aspect we miss across so many of our local services. We deal with crises when they happen, but often we do not deal with the early signs, and that prevention is arguably more important for a lot of people.
My hon. Friend mentioned duplication and lack of co-ordination. I seem to say this a lot about many different areas, but it seems that, across almost all our public services, whether health, social care, housing or regeneration—even bin collection—we are consistently battling with an increasingly complex array of different organisations with competing priorities, different budget pots and different agendas, with barriers being drawn between those services. I feel that is the result of decades of short-term fixes; over a long time, we have created new bodies and new organisations to deal with particular short-term issues, instead of looking at wholesale reform and change in services or local government, which probably needs to happen.
The challenge across all our services, particularly social services, youth services and similar preventive work, is collaboration. How do we bring those organisations together, overcome the barriers that have been built over decades and pool the resources? How do we get them to work toward shared goals? That is something that family hubs in particular can help to achieve.
Many vulnerable families have a wide range of needs across several different areas, such as mental health, addiction, parenting support programmes or low-level help, such as somebody to go and socialise with. There are a whole variety of challenges, and it is simpler for parents to have a range of services under one roof and to have different departments work as one team so that they communicate better, respond to local needs, catch the warning signs of problems earlier and deal with individuals in a more co-ordinated way.
That also builds trust between organisations and service users in a better way than if people are passed from pillar to post across different departments. Dealing with so many vulnerable individuals in my constituency, I find that trust is often the biggest challenge. People do not get themselves into a situation where their family is on the verge of homelessness if they have not been let down by people along the way, which breaks down trust.
As a councillor in Ashfield in a previous life, I saw at first hand the great benefits of the great work going on there, with cross-organisational collaboration targeting the most troubled families. The results have been amazing for the families and for the taxpayer. The New Cross teams, as they are known—their area, which is one of the most deprived in Ashfield, is called New Cross—target those families who might not always get picked out. Those families have been dealing with one department because there is rubbish on their lawn, with another department because their children are absent from school and with another department for something else, and the police are aware of them because of antisocial behaviour, but nobody looks at the whole picture. If we do that, it is clear that they are not able to support themselves and have a range of challenges.
When we bring services together under one roof in what is effectively a family hub, although without the premises, they work across different departments. The family has one point of contact, who can deal with all those services for them and take a holistic approach to supporting the whole family with a range of issues, instead of dealing with little bits in isolation.
Mansfield has some great examples of schools—such as Forest Town primary—with what is known as nurture provision, supporting the most vulnerable children at primary school. It is almost a school within a school, providing holistic care for those kids to help them engage with primary education early, so that when they are 15 or 16, they do not become the kids who are expelled and who have a whole range of different problems in their adolescence. The earlier we can get families access to that kind of support, the better.
We also have Sure Start centres, which provide useful services for expectant parents and young children. I am keen to protect all those programmes, as we need to, but bringing services together is helpful and helps to direct families locally. If they have one point of contact that they are made aware of early on, they always know where to go to get help.
The creation of family hubs would offer a greater level of service. There are opportunities to bring different services together under one roof and potentially to expand them, while saving money in many cases if authorities can work together, which, as I have said before, is often a big challenge. A number of organisations have called for the Government to review these services, and I wonder whether the Minister might touch on that, and particularly on youth services, Sure Start and so on, where local government finances are sometimes challenging for some of these non-statutory services.
Action for Children has called for a new vision for the future of early years services, starting with a review of early years support to understand the level of provision and the best practice that exists around the country. I support such a review as it would help local authorities to deliver the best care. As with anything, there are some councils, local authorities and services that have dealt with funding pressures in a much better way than others. For every bad example of services being lost, there is a great example of a council that has adapted and innovated, and to share that best practice and send it out from this place would be really positive.
Using funding effectively, catching problems early and preventing people from spiralling into a crisis that requires far more expensive and intensive intervention later on is really important for children and families across communities. Children need care and support, and vulnerable families often need assistance in providing that care, so I fully support my hon. Friend’s work on family hubs. I hope the Minister’s response will be positive as well.
It is a pleasure to serve under your chairmanship, Sir Graham. I congratulate the hon. Member for Congleton (Fiona Bruce) on securing the debate. It is a great pleasure to speak for the Opposition in what has been an interesting and wide-ranging discussion. I welcome the passion that the hon. Lady has shown in her commitment to families who are struggling against the odds, as well as her celebration of the innovation and determination of councils across the country to keep families at the centre of all they do.
I pay tribute to the hon. Members for Strangford (Jim Shannon) and for Upper Bann (David Simpson), who both focused on how faith groups can bring communities together. Our Muslim community in Batley and Spen certainly works incredibly hard in supporting families. I also pay tribute to the hon. Member for Mansfield (Ben Bradley) for his focus on the preventive approach to early intervention and the impact that it can have. I slightly take issue with the hon. Member for Henley (John Howell)—he is no longer in his place—who said that middle-class mums do not deserve the same attention and protection. They can have the same struggles as others, such as with breastfeeding or with their postpartum mental health.
I could not agree more. A struggling parent will struggle whatever their income.
As we have heard, the proposals for family hubs have come from Members from across the political spectrum. The mission statement from the hon. Member for Congleton is certainly commendable. It is to
“co-locate superb early years health and other services with help for parents with children across the age ranges”.
Many wish to see the hubs encompass other services, such as jobcentres and relationship advisers, along with more conventional children’s centres.
The potential merits and points of discussion about family hubs are more substantial than one could hope to fit into a single short speech, so I will look at the impact of Government policies on services that would be incorporated into them. First, it is important to acknowledge that we already have a highly successful model of support for families. It is robust, has been tested and is highly popular with families from all communities. It is called Sure Start.
Unfortunately, the number of Sure Start units and children’s centres have been in rapid decline in recent years. In the late ’90s and the noughties, Sure Start grew to become a staple of communities across our country, providing immeasurable educational, health and social support to millions. However, the respected and independent Sutton Trust tells us that 1,000 Sure Start centres have closed since 2010. Furthermore, Action for Children states that local authority spending on early years services has fallen by more than half since 2010.
We should therefore not look at family hubs in insolation. We must make sure that they retain a clear early years focus and a strong offer to families. It is in the early years that we see the fastest development of our brains and neurological pathways, so the right early years support can give children the best start in life and help to close the developmental gap between poorer children and their peers.
That is not to mention the serious health problems facing children, which are a growing concern. One in three primary school children in year 6 are either overweight or obese, and if the childhood obesity crisis is not tackled, half of all UK children will be obese or overweight by 2020. That problem is much worse in the most deprived areas. A quarter of five-year-olds in England suffer from tooth decay, making it the leading cause of hospital admissions for five to nine-year-olds. Around three children and young people in every classroom have a diagnosable mental health condition. No matter what the services are in local areas, it is clear that they certainly have their work cut out for them.
We believe that early years services have been cut to a shameful extent, and that the growing postcode lottery is completely unacceptable. All family hubs must keep the early years and children’s centres ethos very much at their heart.
One pressure on local authorities is that of the increasing acute needs, which is what we seek to tackle. As the Children’s Commissioner highlighted, the funding disparity is great. It costs £204,000 a year to house a child in a secure children’s home and £100,000 a year to house a teenager in a young offenders institution. However, behavioural problem support can be delivered in a group setting at an early stage for around £1,000 per child. We must do that early intervention. The pressures on local authorities are so huge—look at the kind of figures I quoted—that they inevitably impact on what they can do by way of earlier intervention.
I really do appreciate that intervention. I also read that report and found those numbers incredibly startling. It is common sense, is it not? Getting it right in the early years will be cost-effective. If a child is admitted to hospital to have their teeth out due to decay, that is costly for the NHS. Bringing dental health and similar schemes into early years provision might mean less of an impact on NHS budgets.
On early years, will the Minister provide a progress update on the consultation into children’s centres, and confirm whether work on that is ongoing and whether we should expect to see a published consultation? The consultation has been more than three years in the making and is on an incredibly important policy area. Will he please take this opportunity to give some transparency on the issue?
Lastly, Sir Graham, all that is left is for me to wish you, the Minister and all Members a peaceful and rewarding recess.
It is truly an honour and a privilege to serve under your chairmanship, Sir Graham. I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on securing this important debate, and I thank my hon. Friends the Members for Mansfield (Ben Bradley) and for Henley (John Howell) and the hon. Members for Strangford (Jim Shannon) and for Upper Bann (David Simpson) for contributing.
I am grateful for this opportunity to set out the Government’s position on supporting families so that no community is left behind. Social mobility is a priority for our Department, as it is across Government, and we welcome local initiatives that support families—particularly those who are disadvantaged. My hon. Friend the Member for Congleton called for a Cabinet-level Minister with the responsibility to ensure that family policy is prioritised and co-ordinated. I say to her that the Government are already committed to supporting families. That is why, as she knows, we introduced the family test in 2014 and continue to support its application to policy across government.
Let me just make some headway. I will come back to my hon. Friend if time permits, because I have a lot to say about this subject
We share a common view about the importance of effective local support for families. That is why the Government’s legislation and funding is designed to give local authorities the freedom to decide the best way to deliver their services, based on their understanding of their local needs and the character of their areas. My hon. Friend the Member for Mansfield mentioned that, for every council that is not doing well, there is a very good example of one that has done well for its families. We welcome the development of family hubs as a way to meet local need. We encourage local authorities to adopt the family hub approach, which aims to build stronger relationships and co-locate services, if they believe it would deliver improved outcomes for their areas.
We already know that many councils are moving toward that model of support, working with local statutory, voluntary—as the hon. Member for Strangford mentioned —community and private sector partners. When I was promoted to Minister, one of the first meetings I had was with Lord Farmer and the team that put together the manifesto. I have already promised my hon. Friend the Member for Congleton that I would visit a family hub in Essex and I still plan to do so.
What we are discussing today is how we can ensure that strong, effective local services provide effective support for families and children. I would like to take this opportunity to talk about the work that the Government are doing to deliver that. The strengthening families manifesto argues that Government should be working to put in place a nought-to-19 model across the country. We know others advocate for a sharper focus on younger children, proposing that children’s centres focus on a nought-to-two age range. The shadow Minister talked about that early intervention.
My view is that both of those models, depending on local circumstances, could work and provide much needed support to families, just as I am sure that there are other models that can work, too. Let me be clear, it is for local authorities to determine the model that they believe will work best for them, based on their area’s specific needs and on the history of local provision, local community circumstances and priorities.
We have provided £200 billion in this five-year review—this current spending round—to local government. Local government has increased spending on children services. Last year it spent £9.2 billion.
I recently visited Greater Manchester, where I met the Mayor, Andy Burnham. Greater Manchester, which includes 10 local authorities—as you, rightly, know, Sir Graham—is an excellent example of an area where powers and responsibilities have become more devolved, and the Mayor can take decisions in areas such as health. The Government’s role is to engage actively with the sector to find out what works and to support local areas to make the right decisions for their communities, which might include implementing family hubs.
That is why as part of the Department for Education’s social mobility action plan, “Unlocking Talent, Fulfilling Potential”, we announced an early years social mobility peer review programme, which my hon. Friend the Member for Congleton mentioned. We are partnering with the Local Government Association to deliver this initiative. Peer reviews will be led by multidisciplinary teams, and will support councils to identify actions and reforms to improve local outcomes in the early years. The programme will also look at what works, including the effective models for service provision, such as family hubs and children’s centres. That was something my hon. Friend called for in her speech. I think she is nodding away. I hope that she appreciates that that is an important part of this work.
I have asked my officials to ensure that the local government programme understands fully how the family hub model works and where the most effective practice is taking place. My officials would be happy to work with my hon. Friend the Member for Congleton to do that.
An example of how we are strengthening local delivery to support families is the reducing parental conflict programme, introduced by the Department for Work and Pensions. Good quality relationships between parents are critical for setting children up for life. Recent evidence has shown that children who are exposed to frequent, intense and poorly resolved conflict can experience a decline in their mental health and suffer poorer long-term outcomes. The reducing parental conflict programme, again, puts local areas at the heart of its delivery, helping them to embed parental conflict support into wider services for children and ensure evidence-based interventions are more widely available to improve children’s outcomes.
The troubled families programme is an excellent example of how central Government can work with local authorities to strengthen local services, drawing on evidence of what works, but allowing for the development of local solutions. My hon. Friend the Member for Mansfield mentioned a similar programme that he witnessed. I was in Islington and witnessed some of the cases there, where the troubled families programme was exactly the sort of programme needed. It aims to achieve significant and sustained improvement for up to 400,000 families—it started with 100,000—with multiple high-cost problems. The programme, delivered through local authorities and their partners, advocates a whole-family integrated approach across multiple services.
The programme’s focus on preventive services is already starting to show a positive impact in reducing demand on children’s social care. The emerging evaluation results show that, in families on the programme, six to 12 months after intervention, the proportion of children designated as children in need decreased by 14%, compared with the period just before the start of intervention. We know that many local areas have used programme funding to establish a family hub model, similar to that recommended by the strengthening families manifesto. Those hubs are being used to deliver their local programmes for complex families. Almost £1 billion has been committed to the programme from 2015 to 2020.
The hon. Member for Strangford talked about mental health. The Government’s Green Paper, “Transforming children and young people’s mental health provision”, announced ambitious proposals to provide earlier support for children and young people’s mental health. It recognises that secure attachment with a parent or carer is a protective factor for children and young people’s mental health, and commits to commissioning further research in that area. This includes supporting healthcare professionals to understand the importance of healthy, low-stress pregnancies and healthy childhoods, and increasing the capability of midwives to support women with perinatal mental health issues. We are also partnering with Public Health England, so that health visitors can do some work on speech and language therapy at the very early stage of intervention.
We are committed to incentivising every school and college to identify a designated senior lead for mental health, fund new mental health support teams, and trial a four-week waiting time for access to specialist NHS children and young people’s mental health services. The Green Paper consultation response, which we aim to publish imminently, will set out the next steps in implementing the Green Paper.
The shadow Minister asked about children’s centres. I have to say that rather than doing another consultation or review, let us look at where things are really working well. Take Newcastle or Staffordshire, for example, where the local authority has taken an active role to close some of the children’s centres but focus on outreach and keeping those children’s services where the most disadvantaged families need that help. We have looked at the six local authorities where the most children’s centres have closed. Out of the six, four are doing better in closing the development gap, one is about flat and the other is oscillating. I suggest to the shadow Minister that it is not about bricks and mortar. I do not want to make this into a party political debate.
I am grateful to my hon. Friend the Member for Congleton for securing the debate. The Government are clear about the importance of improving outcomes for children, particularly the most disadvantaged in our communities. I entirely agree that strong local services are essential, and it is important that we continue to encourage and learn from innovations such as family hubs, and ensure that leaders have the information they require to design and deliver the services that will best address local need.
We have the ability to look strategically at the whole country—the whole of England, certainly—and to disseminate best practice. That is one of the things I passionately believe in. The Government have a key role to play in ensuring we deliver for those families. Finally, I would like to say to my hon. Friend the Member for Congleton that I do not need to be in the Cabinet to champion families and the wellbeing of all of our families in our communities.
I thank the Minister for his response. I supplied him with a copy of my speech earlier, so I am pleased he has responded to some of the calls in it. Perhaps he can write to me on other calls to which he has not responded.
I take issue with the Minister about the family test. It has barely been applied in practice. I ask that he looks at the written questions that I have sent to every Department in the past few months, which evidence this. On the funding for children’s mental health, I note his comment about support teams being in every school, but unless they are properly trained to work with the families of the children they are helping, they will not be as effective as they need to be. I do not agree with the Minister that there is adequate co-ordination across Government on family support: it needs to be stronger. I am grateful that he is willing to be a champion of this and I look forward to him doing so in the future.
Finally, it is right that local authorities deliver these services, but national Government have the authority to rocket-boost action. That is what we are seeking, because that is not what has happened to date.
Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14)).