Wednesday 16 January 2019
[Sir David Crausby in the Chair]
Taxation of Low-income Families
I beg to move,
That this House has considered taxation of low-income families.
It is a great pleasure to serve under your chairmanship, Sir David. As a Conservative and a Christian, I believe passionately in the importance of caring for those families who find themselves at the bottom of the income distribution. It is vital that there is a proper, decent safety net to enable families where the adults either are not in work or cannot work to have a decent standard of living, to live in proper homes and to have a proper income. At the same time, making work pay has been a priority for the Conservative and Conservative-led Governments since 2010. In this context, the effective marginal tax rate—the proportion of any additional £1 earned that one would lose in the form of tax, national insurance and lost benefits—is the key consideration.
If we look at a one-earner, two-parent family with two children, paying income tax and national insurance and in receipt of tax credits, we see that they face an effective marginal tax rate of 73%. That means that, as they look at the prospect of earning more, they will be confronted by the fact that they will get to keep only 27p from every additional £1 earned. If a 73% higher rate tax was introduced—I recall when it was well into the 80s; indeed, on unearned income it was 98% at one point—there would be an outcry from higher earning people and probably from the whole public. Yet that is the effective marginal rate of tax that we, though the system that we in Parliament are responsible for, expect low-income families to pay.
I congratulate the hon. Gentleman on securing the debate. This is an issue that I and many others have taken an interest in for a long time. Does he agree that, particularly for those who are on full-time low pay, or part-time pay, if we gradually moved toward a position where the first £15,000 per annum was tax-free and there was no requirement to pay national insurance contributions on it, that would be a huge incentive against the black economy, as well as promoting people’s getting out of the working tax credits system and into employment, to try to work their way up through the salary chain?
The hon. Gentleman makes an extremely important point. I shall refer to three reports today, but this one, “Make Work Pay: A New Agenda for Fairer Taxes” by the Centre for Policy Studies, suggests a tax and national insurance-free income of, I think, £12,000 a year, which is similar to what he suggests. I have a lot of sympathy for that. I would counsel against those who say that national insurance is a thing of the past and totally irrelevant; I believe in the importance of a social insurance contribution-based system, provided that it is progressive and proportionate, and I would not like to lose that, but I entirely agree with the principle of what he says.
Lest anyone wonder whether these high effective marginal tax rates are just an anomaly that, for some curious reason, only impacts one-earner, two-child families on 75% average wage, the point must be made that our high marginal rates are a problem for all family types: single parents, single-earner couples and dual-earner couples. One in three in-work families with dependants are likely to be facing high effective marginal rates. That is 2.5 million families—or 1.6 million couples—of whom 1 million are single earners, 600,000 are dual earners and 900,000 are single parents.
Put simply, any family paying tax and national insurance and receiving tax credits will be looking at an effective marginal tax rate of 73%. Families that, in addition to receiving tax credits, also receive housing benefit and council tax benefit will be looking at a marginal rate of 96%. Under universal credit, the 73% rate will increase slightly to 75%, but the 96% rate will come down to 80%. A 16% drop is significant, but an 80% effective marginal tax rate is still far too high. There is a lot that I would like to say about improvements that I would propose to universal credit, but that is a debate for another day.
Instead of encouraging aspiration, the combined impact of our tax and benefits system suffocates aspiration, trapping families in poverty. That is a burning social injustice that must be addressed. Much of the cause of our high effective marginal tax rates, particularly for single earner couples, is as a result of the introduction of independent taxation in 1990. Since then there has been little or no recognition of family responsibility in the tax system. Not recognising that responsibility in income tax, through a system such as elective joint taxation, has led to a tax arrangement that is anti- aspirational. It is interesting that the former Chancellor, Lord Lawson, wanted to include some kind of joint responsibility in the new system when it was introduced, but it was opposed by the then Prime Minister.
Families in poverty pay thousands of pounds of income tax, but then have to be supported by very inflated benefits, which offset the failure to recognise family responsibility but with the very costly downside of cripplingly high effective marginal tax rates that suffocate aspiration as the inflated benefits are withdrawn. In 2014 I co-authored a report with my hon. Friend the Member for Congleton (Fiona Bruce) and two other colleagues, “Holding the Centre: Social Stability and Social Capital”, which touched on many of the issues we are debating today, although not in such detail on this particular subject. As we noted in the report, many of the Government’s—all Governments’—most important goals rely on the contribution of families. However, too often that contribution is under-recognised and the impact of policy on these relationships ignored, under all Governments.
The report pointed out the vital role that family relationships play in our economic prosperity, wellbeing and the life of our children, as well as the cohesion and social stability of our nation, where growth and prosperity are underpinned by fairness, responsibility and community. The stability of marriage and supporting aspirational families are integral parts of the social capital of our country that leads to social stability and economic prosperity. A Government who draw on and nurture the wealth of our social capital, supporting families and strengthening relationships, can give people confidence about their future prospects and the ability and opportunity to see aspiration fulfilled.
These issues are vital, and therefore I note with pleasure that the Strengthening Families Manifesto group of Conservative MPs, led by my hon. Friend the Member for Congleton and by Mr David Burrowes, the former Member for Enfield, Southgate, has recently held an inquiry into making work pay for low-income families. The report was published this morning to coincide with this debate. My hon. Friend will outline in greater detail some of the report’s specific findings and recommendations. I underline the call in the report for the Chancellor to review formally the effective marginal tax rate for families, assessing the reasons why work does not pay for so many families and evaluating the possible solutions, with a particular focus on the tax system and the recognition of family responsibility.
I congratulate my hon. Friend on securing this important debate. Despite all the other things going on, this is hugely important. He mentioned a burning injustice—all our ears will have pricked up at that phrase and he is absolutely right. I and other colleagues signed a new clause to the Finance (No. 3) Bill, which was not selected for debate, but does he agree that this does not need an Act of Parliament for the Chancellor to review it, and that the Chancellor can still review it despite the fact that the new clause was not selected or debated and is not part of a formal Act of Parliament?
My hon. Friend is absolutely right, and that is why both the debate and that report are so important in showing the Chancellor that this issue is vital for many colleagues across the House.
I will finish with the fact that it is surely very telling that in 1990, just as independent taxation was introduced, far from 73%, the effective marginal tax on a one-earner family with two children on 75% of the average wage was just 34%, close to the average 33% effective marginal tax rate on such families today across the OECD as a whole. We are a total outlier in this respect, and in the wrong direction. If we managed without such aspiration-killing tax rates on working, low-income families in the past, we can and must do so again.
I very much hope that the Minister, for whom I have the highest regard, agrees and will tell us that the Chancellor is willing to review our marginal tax rates, as my hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson) mentioned, and bring forward strategies to gradually bring them in line—I realise this is a huge ask— with the OECD average over the years, so that we can become an aspirational economy once again.
I congratulate my hon. Friend the Member for Stafford (Jeremy Lefroy) not only on securing the debate but on the excellent way in which he touched on all the key concerns. We need to address what is surely one of the “burning injustices” that the Prime Minister referred to on the steps of 10 Downing Street. If there are any just-about-managing people, it is surely those striving to take their families off benefits, go into work and improve their families’ lives. We are particularly concerned about families with children.
Yet just as those people aspire to improve themselves, the system knocks and disincentivises them, as we have heard—the opposite of Conservatives encouraging aspiration. Effective marginal tax rates of 70%, 80% or even 90% surely cannot be sustained by a Conservative Government. However, this is not a new issue. We have sustained it. It has been known about for years. It has been eight years since the Conservatives entered Government and we have failed to address the matter.
For many of those years, CARE has held annual meetings about this issue and published annual reports on the taxation of families. I pay tribute to CARE for its assistance in the production of “Making Work Pay for Low-Income Families”, which, as my hon. Friend the Member for Stafford says, we are publishing today. It is being published by the Manifesto to Strengthen Families, the executive director of which is our highly respected former colleague, David Burrowes, and can be found on strengtheningfamiliesmanifesto.com.
I will give some examples that detail the complexity and show how low earners can end up paying such high effective marginal tax rates, losing so many of the benefits that they had once they start to earn. We need to change that. This example has been given by the Centre for Policy Studies, so we are not alone in raising this concern.
Imagine Jane, a 28-year-old single mother of one school-aged child. They live in Northampton. She receives benefits of £13,908 a year, comprising three elements: a standard allowance, a child element and a housing element. She starts work, earning £8,143.20 per annum. Her benefits are reduced by 63p for each additional pound she earns, which is the taper relief figure; interestingly, the CPS suggests reducing the universal credit taper rate to 50p as one solution. Jane’s effective marginal tax rate at this point is 63%. She then earns a little bit more, becoming liable to pay national insurance, putting her effective marginal tax rate up to 67%. She then earns a little bit more again, earning £12,850 a year—£1,000 over the current personal allowance rate—so is liable to pay income tax. Of that £1,000, she takes home just £251.60. She is being taxed at a 75% effective marginal tax rate. As my hon. Friend the Member for Stafford said, if that was the tax rate paid by multimillionaires on their highest earnings, there would be an outcry.
One aim of universal credit, which was intended to be simpler to understand, was to help ease the transition between welfare and work. It is certainly an improvement, but it has not solved the problem of people entering work and losing an average of 73% of their earnings, or even more. We appreciate that the Chancellor promised in his recent Budget to increase the work allowance by £1,000 a year, at a cost of £1.7 billion, which many of us asked for. However, that still leaves us with the problem that we have identified. Working claimants will lose most of the extra money that they earn when they increase their hours or progress in their jobs. It will just mean that they keep a little bit more of their money before they reach that point.
I remind colleagues that the Manifesto to Strengthen Families is supported by more than 60 Conservative parliamentarians; not a small group in our party. Some 20 of us tabled an amendment to the Finance Bill, which my hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson) referred to, and it was very much as a result of that amendment not being selected that we called for the debate. However, we had been working on an inquiry into this issue for some time, chaired by David Burrowes. We took evidence from several organisations, including the Child Poverty Action Group, the Resolution Foundation and Tax and the Family, which all indicated in their evidence that they share our concerns on this issue. I will touch on one or two of the reasons why we really need to address it.
As we heard from my hon. Friend the Member for Stafford, the British effective marginal tax rate of 73% is the highest anywhere in the developed world, where the average is 33%. However, it is not only the very low-paid who are affected. Our inquiry found that families with earnings that appear high can also be affected. For example, a single-income family with three children earning £21,000 and paying rent of £157 a week could this year have a marginal tax rate of, incredibly, 96%. That does not come down to 32% until income reaches £40,776. Where housing costs are greater, that 96% rate could be even higher. I appreciate that something may be done to look at this, as my hon. Friend the Member for Stafford said, but that is not enough.
I commend the hon. Lady for her continuing interest in this issue. Does she agree that its effect on middle or average-income families earning around £22,000 to £26,000 per year causes particular resentment among people in that category? They are the aspiring families who want to earn more and contribute more to society, and they feel that they are being penalised as they do so.
That is absolutely right. We outline in our report several reasons why this needs to be addressed. I will touch on four of them.
First, the hon. Gentleman is right that these arrangements are anti-aspirational. Secondly, we believe that they are illogical. While we as Conservatives celebrate the family—my hon. Friend the Member for Stafford said families are the bedrock of a strong, stable and flourishing society—we tax them as if they are individuals while at the same time operating a benefits system that views them as families.
Thirdly, the current arrangement is anti-choice. The best systems of independent taxation give couples the choice as to whether the two people are taxed independently or jointly. Fourthly, it appears judgmental. Any family in which the second earner is either not in work or earning less than their personal allowance will be hit hard and judged for that arrangement. My right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith) gave evidence to our inquiry and commented that we find ourselves in the peculiar situation of saying that we are not very judgmental, but being very judgmental at the same time. We are judgmental about couples who choose for only one spouse to work. The huge impact of that was underlined in evidence to us from the Child Poverty Action Group, which said that it looks like
“having a second earner in the labour market in Britain today is necessary to get oneself out of poverty”.
To some extent, we are telling parents staying at home to look after children or relatives that they are making the wrong choice, yet, as our report says, it is in the long-term interests of Government and society to have stable families in which children are nurtured and cared for to give them the best start in life, and if, in some situations, that means taking time out from work, particularly when children are under five, surely that should be encouraged and accommodated.
My hon. Friend makes the incredibly important point that this is certainly about children, but is also about carers. The enormous number of unpaid carers in this country do a massive amount for our country and society, but the current system does not help them, either.
That is absolutely right: they do indeed.
We talk about cripplingly high effective marginal tax rates, but actually it costs money to go out to work. Often, it costs money to clothe oneself for work and to travel to work, and it is more expensive if one has to buy lunch out, so some people will effectively earn nothing when they go to work. That cannot be right. As my hon. Friend has said, what is proposed will help different types of family: single parents, married couples and couples in which one person works or one person provides care for other members of the family. Work is good—we know that—but it costs, and it is outrageous that some of the poorest in our society face some of the highest tax rates. One of the highest priorities of the Conservative Government should be to tackle and solve this burning social injustice.
It is a pleasure to serve under your chairmanship, Sir David. I start by congratulating my hon. Friends the Members for Stafford (Jeremy Lefroy) and for Congleton (Fiona Bruce) on securing this debate and on the way they have introduced the subject. I very much welcome the report by the Strengthening Families Manifesto group that was published today and which we are here to debate.
There is no doubt that families are right at the heart of social justice. It is clearly understood that helping families to stay together and thrive together is not only good for them as families, which is obviously very important and at the heart of the issue, but good for our society as a whole and for our economy. I think it is understood that the ability of Government to help families to stay together may be limited, but the least that we should expect is that the Government do not place barriers in the way of helping and encouraging families to stay together. That is the issue that we are debating today.
We should, through our tax and benefits system, provide every possible opportunity for families to improve their finances through hard work—through taking a job, increasing their income, increasing their hours or taking a pay rise. Sadly, the situation that we have at the moment negates that and actually acts as a disincentive to couples taking on extra work or extra hours, because of the effective marginal tax rate by which they are then penalised. That issue was well presented by the previous speakers, so I will not go into the detail of it—it is a well-established problem—but it is clearly there for all to see.
The introduction of universal credit was very welcome and a huge step in the right direction.
I was going to intervene earlier, but I was enjoying the flow of the hon. Gentleman’s speech, so I decided to rest in my place. He makes an incredibly important point, and I commend the hon. Member for Stafford (Jeremy Lefroy) and all his colleagues for their sterling work. I do not think that anyone has said that the disincentive that we have heard about this morning is an intentional outcome of the over-simplification of our tax system, but if it is not intentional, we should resolve to solve it. Does the hon. Gentleman agree?
I very much welcome that intervention: the hon. Gentleman makes a powerful point. I do not believe for a minute that the Government set out with the intention of ending up in this position, in which families face effective marginal tax rates of 75% or 80%. No one intended that to be the case, but the hon. Gentleman is right to say that that is the situation and that, if that was not the intention, surely it is time to look at it and see what steps we can take to reverse and undo it.
As I said, the introduction of universal credit was a huge step in the right direction and very welcome. It is not perfect; it is not without its challenges, but I very much welcome the Government’s approach to the roll-out of universal credit—to take their time, learn, and adjust and amend as necessary. Fundamentally, universal credit is the right change to make to our benefits system, and I very much welcome the way the Government are rolling it out.
One purpose of universal credit was to ensure that work paid and to reduce the disincentive for people to take on extra work and lose benefits. I saw that myself, before coming to this place, as an employer. I am thinking of the number of times that I approached my staff to offer extra hours of work and they just said to me, “There’s no point, Steve, because I will lose tax credits. There is no point in me working longer and harder to be no better off—all I will be doing is giving the extra money to the taxman.” Universal credit has been a big positive step, a step in the right direction, to remove that disincentive, and that is hugely welcome, but we need to recognise that there is still a disincentive in the system. It has been highlighted and now is the time to address it.
I also hugely welcome the Government’s policy of increasing the personal allowance. That has taken many of the lowest-paid people in our country out of the tax system—out of paying tax—altogether. That has also been the right thing to do and is very welcome, but as we are saying, it does not undo the situation that we now have. Under the current arrangements, there are those who are paying marginal tax rates of 75% if they are homeowners, and 80% if they are renting, and on universal credit. We cannot expect people to be incentivised to take extra work if they will get to keep only 20p or 25p in the pound for the extra work that they take on.
I therefore very much welcome the report that has been published today. I urge the Government to consider it carefully and look at what can be done to review the current situation. I very much welcome the suggestion from my hon. Friend the Member for Stafford that we need to set as a target bringing the UK in line with the OECD average. It seems crazy for the United Kingdom, which is renowned around the world for the effectiveness and competitiveness of its tax system, to be so out of step with the average for the other developed countries. We should set a target that, in an achievable but relatively short space of time, we will seek to reverse the situation and bring ourselves back in step with the OECD average.
We need to change the mindset that the only way to tackle the problem is through the taper rate for universal credit. That will get us so far, and I am sure that any amendments that can be made in that respect would be welcome, but really we need to bring our tax and benefits systems into line with each other.
My hon. Friend makes the point well. Although changes to the taper rate will be welcome, they will go only so far. We need to change this system: in the benefits system, families are treated as families, yet in the tax system, people are treated as individuals. That is where the conflict comes. I would very much support any move to treat families as families in the tax system, by allowing some measure of transferrable tax allowance, which enables families to be seen as a whole rather than as individuals. We have the same situation with child benefit. It seems crazy to me that in the child benefit system taxpayers are treated as individuals rather than as families. That seems to be an anomaly we need to address.
I want to put my weight behind the point that this is not just about children. There are huge benefits that we can gain as a country by helping families to look after their elderly relatives and supporting them in the tax system. If we can do that by making some element of the personal tax allowance transferrable—for example, for a family that chooses that one of the taxpayers will stay at home, rather than work, in order to look after an elderly relative, who otherwise would put pressure on our adult social care system—it would be a huge, positive step. It would be better not only for that elderly person and that family, but for our adult social care system, which, as we all know, is under so much pressure at the moment. One answer to that pressure is to enable families to care for their elderly relatives much more, rather than just handing them over to the state and expecting the state to do it all. The Government would do well to consider that. I think it would make a huge, positive contribution to resolving the challenges we face.
I have huge respect for the Minister. When he entered the Chamber today, I was glad to see that he did not have his notes hanging out the top of his folder. I am sure he has been listening and will take a positive message from this debate back to the Chancellor of the Exchequer and the Treasury, and tell them that there is something we can look at here and take positive steps on, which would bring huge benefits to families across the country and to our economy.
It is a pleasure to serve under your chairmanship, Sir David. It is a pleasure to follow my hon. Friend the Member for St Austell and Newquay (Steve Double), who highlighted something of immense importance: the ability of a family member to be able to care, not only for children, but for elderly relatives and other members of the family who need that support. It is so important that the state and society recognise the importance of carers. We have to enable them to care without being under too much pressure, financial or otherwise.
I welcome this debate, introduced by my hon. Friend the Member for Stafford (Jeremy Lefroy), on the taxation of low-income families. I am delighted that the strengthening families manifesto has been published today. I believe that the family is the building block of society—the foundation on which society rests. Family is the source of our health, wealth and happiness. That may be contrary to what many people believe about Conservatives. People often see Conservatives as hyper-individualistic—it is all about the individual. However, I believe that the foundations of much Conservative philosophy and Conservative values rest on the importance of the family.
It is vital that the Government recognise in their policies that work pays. I will not go into the details, which my hon. Friend the Member for Congleton (Fiona Bruce) went through so effectively, about the impact that the tax system can have on a low-income family, especially someone earning 75% of the average wage—it can be such a disincentive to work. We ought to be looking at the advantages that having a good job and place of work can give to someone as a role model in the family. If we hinder their ability to take those additional hours and to be at work more, we are effectively denying people the opportunity to gain experience at work. They do not feel there is an incentive to work, so they do not get that experience.
That also sends a message to the employer. Employers want to invest in their workforce, to give more skills to the people in their company or organisation. However, if someone is working relatively few hours, there is less return on that investment. If someone can work more hours, they are more likely to secure training provided by that company. If someone has more experience and training, that individual may be able to get a promotion or a better position at work, or may have the opportunity to change companies and find a different position. That is a huge incentive. It has been mentioned that the current tax system crushes that aspiration. It is so important that we change that for this really important sector of society, to give those people an opportunity to aspire and improve themselves. That attitude and those values will then permeate through the family and the wider community.
The manifesto published today provides a huge opportunity for the Government to change their policy. With their ideas of making work pay and supporting families, the Government are sympathetic to that. I recognise the current economic challenge, with many demands on Government time and money, but given the return on this investment—the improvement in society—it is worth changing the taper and improving it for those low-income families.
My hon. Friend makes an important point about the money. These things do not come without a certain loss of revenue. Does he agree that one area to look at—it is interesting that the Centre for Policy Studies suggests that we look at this—is the higher-rate tax relief on pensions. As Members of Parliament we all declare an interest, because we are all taxed at the higher rate and all have pension contributions. That is given to people who already benefit from the 20% allowance and then there is another 20% on top of that. Although some restrictions have been introduced in recent years, that is an enormous cost to the Exchequer, to the benefit of people earning double or triple the national average wage.
My hon. Friend makes a superb point. It is a significant problem that apparent inconsistencies in the tax system give people who are already doing pretty well a further advantage, yet poorer people not do not receive that advantage. Looking more broadly at society, a few years ago there were riots in London and other cities around the country, and we are currently concerned about rising crime and the people causing those problems. We also have to look at how we can strengthen families, because I think that a certain societal cohesion comes from a strong family. That has so many other impacts across society. We may not immediately see income return, but in a stronger, healthier society the returns will be immense, not only for society, but for the Exchequer.
Before my hon. Friend closes, I want to put on the record my appreciation for what he has done. He was one of the hon. Members who took part in the inquiry, which produced this report. Very modestly, he has not made reference to that, but I thank him for his work.
I thank my hon. Friend for raising that. Behind the scenes in Parliament there is so much good work going on, much of which is cross-party, with different colleagues bringing different perspectives. During these difficult times in Parliament, it would be positive for people to reflect on the important work that goes on behind the scenes, influencing decision makers, much of which is on a cross-party basis.
It is a pleasure to speak in this debate under your chairmanship, Sir David. I pay tribute to my hon. Friend the Member for Stafford (Jeremy Lefroy) for opening it so well, to my hon. Friend the Member for Congleton (Fiona Bruce), who did so much to launch the report that we are considering today, and to my hon. Friend the Member for Bolton West (Chris Green), who was also part of that important work.
I will start by giving credit where credit is due, because it is always important to do that; it is both the polite and the correct thing to do. I therefore say to the Minister, who is a friend in these matters, that we need to put on the record our huge gratitude and appreciation for the 3.4 million jobs created under the Conservative-led Government since 2010. That is 3.4 million people who have the security of a monthly pay packet, who can look after their family, put food on the table and clothe their children. It is hugely important that that is recognised.
Consider youth unemployment rates around the world. I understand that in Greece youth unemployment is at 57%, and it is far higher in France and many other parts of the world. Our youth unemployment rate is a fantastic achievement. There has been a British jobs miracle since 2010 and we need to be hugely appreciative of it and not take it for granted. It has taken a lot of hard work and focus to create the environment in which businesses can flourish.
Universal credit has also been good, in getting rid of the pernicious effect of the old 16-hour rule. My hon. Friend the Member for St Austell and Newquay (Steve Double) talked about when he was an employer and he gave us the example of employees who did not want to work more than 16 hours a week, as it was not worth their while because they would be so penalised by the 16-hour rule. Universal credit has swept that away. Now, for every extra hour that people work, at least they get something more. Lastly, the increase in the personal allowance has been enormously welcome to the group of people we are talking about.
Many of us—certainly among Government Members, but I think across Parliament—understand the damage that high marginal rates of tax do in discouraging enterprise. Entrepreneurs do not have to set up businesses. It has to be worth their while to do so and if the odds are stacked against them, with regard to the returns they will make, they will not start up businesses. This Government understand that well, and because they do we have created this fantastic environment for businesses, which has created those 3.4 million jobs that I just mentioned. All credit is due to the Government for understanding that.
However, I say to the Minister that businesses do not just exist for their own right and for their own benefit; they exist to benefit society and to benefit their employees. Humans are not resources; they are the point of it all. Businesses are there to benefit their employees, and if we are trapping people in low-paid work, so that they cannot progress in the way that many of us here in Westminster Hall have been able to progress throughout our careers, that should be of acute concern to our friends in the Treasury. I am sure that point is not lost on the Minister.
I reiterate the point that, sadly, the United Kingdom is an outlier in this respect, because the marginal tax rate for a one-earner couple with two children on 75% of the average wage is 73%, which is more than twice the EU average of 22%. No other OECD country treats low-income working families as badly as the United Kingdom does, with regard to effective marginal tax rates and work incentives.
It is really important to put on the record that, notwithstanding all the good work that has been done since 2010, this area is unfinished business. I want the Minister to go back to the Treasury and impress on the Chancellor and his fellow Ministers, who I think have an appetite for this work and do get it, the need to say to officials that more work has to be done in this area, so that everyone can benefit from the fruits of their hard work throughout their working life.
The problem of high effective marginal tax rates does not just affect single earners. It affects a million of them, but we know that there are also 600,000 dual earners who are similarly affected and—really importantly— 900,000 single parents as well. So this is a problem for all types of family structure.
We are not calling for the abolition of independent taxation; I do not think that would be the right thing to do. However, I think it would be right to introduce an element of choice, because Government Members certainly believe that choice is a good thing. It gives flexibility, because families have different priorities and different needs at different stages of their lives. As has also been said before, we are in fact extremely judgmental, because the tax system is very prejudicial when only one member of a couple chooses to work and the other member chooses to care for children or frail elderly relatives.
I agree that this sense or understanding of the system being judgmental is a problem. Would it not be far better if the system, rather than judging one way or another way, had a far more neutral position, because that would enable individuals and families to make their own decisions?
Yes, I completely agree. I think that it comes back to choice and recognising that families face different challenges at different times of their lives, particularly regarding the needs of children, the frailties of elderly parents and so on. I hope that our social care reforms, which are forthcoming, will go some way towards addressing that situation, but the tax system absolutely has a huge role to play in addressing these important issues, which my hon. Friend quite rightly raises.
Effectively, what we are saying through the tax system is that, despite praising with warm words family members who choose to stay at home if they can make the financial choice to do so—not every family has members who can make that choice, but there are families in which one person makes the sacrifice to stay at home, to be with their children or to look after elderly relatives—we think they are making the wrong choice, because we penalise them for doing so; there is no recognition of what they do.
The Centre for Policy Studies, which was referred to earlier, has made a proposal that we should consider, which is to look at the transfer of unused personal allowances. The Child Poverty Action Group—the report that we are considering today looked across the political spectrum; I have great respect for CPAG—made some suggestions about perhaps increasing child benefit for children under five in lower income families. One way that we might be able to fund that—it is a golden rule with me that if anyone calls for an increase in expenditure, my next question is, “Where is the money coming from?”
I see that the Treasury Minister is nodding; let me give him a suggestion, as I have made a call on the public purse. At the moment, we give child benefit to families that have an income of £100,000, where both members of a couple are earning £50,000, whereas that stops at £62,000 when there is only one earner in a family. So there is £38,000 worth of income in respect of child benefit to play with.
The Minister will have to go back to the Treasury and get all his super-clever officials to run those figures through the Treasury modelling system, but there will be some money there that could perhaps be better targeted at child benefit or the transfer of unused personal allowances. We are not being prescriptive here; we want Ministers to go back and look carefully, and reflect carefully, on these matters.
In respect of the work that parents do within the home—looking after children, or looking after frail or elderly relatives—last October the Office for National Statistics said that unpaid household work had a value to the British economy of £1.24 trillion. That is a big figure, as the Minister will appreciate, and just some recognition of the good that is done to society by that work—the costs that are not accruing to the public purse because of it—would be welcome. I think that on average that work comes down to a value of £18,932 per person, which is a significant amount.
Are we therefore saying that some recognition by the Government of family in the tax system would go a long way towards changing the culture in our society, whereby we ought to value much more greatly that kind of work within the home, which is unpaid but provides so much benefit to society, economically as well as socially?
I agree with my hon. Friend, who makes an entirely reasonable request, and I will tell her why it is so reasonable: all our main economic competitors across the OECD do exactly what she suggests. It needs to be said a lot more often in this House that, as I said at the start of my contribution, we are an outlier in not doing this. We have taken for granted the fact that we have independent taxation that quite often ignores the second person in a family if they are not earning, which has led to some perverse consequences. I ask the Minister to go back to the Treasury and ask his officials to contact the economic councillors in British embassies around the OECD to get good data on how other countries do this, whether Finland, France or Germany. Let us look at what those countries do; let us look at how that increases the net take-home pay of lower income families; and let us look at the choices that it gives to those families, and at the overall satisfaction that is derived.
We have been talking about low-income families, and it is important to get on the record that the effects of high effective marginal tax rates can go quite high up the income scale. For example, a single-income family with three children paying rent of £157 a week has a marginal tax rate in 2018-19 of 96%, but that does not come down to 32% until income reaches £40,776. That might sound like a very high income, and for a lot of people it is, but for a person who lives in a high-cost housing area, that income disappears very fast. We need to remember that across large parts of the country, particularly those regions south of Birmingham in which many millions of our fellow citizens live, housing costs are extremely high, and that leaves a much smaller net take-home income for families to pay for all their needs with.
To repeat a point that was made earlier, in 1990 the effective marginal tax rate for a single-earner family on 75% of the average wage with two children in the UK was 34%. Today in the OECD it is 33%. Today in the UK it is 73%. We have diverged massively from our friends and competitors in the OECD since 1990, and I do not think that is because of some malicious plot in the Treasury; I think it has happened in spite of good policies.
We need to look at everything we can do to strengthen family life, because we know that strong families—healthy, supportive, committed, mutually respectful couple relationships—are the bedrock of our society. As a Government, we used to talk a lot about reducing the couple penalty; certainly when we were in opposition and preparing for Government, that was a significant objective. We have made some progress towards that, given what we have done through universal credit, but it is still a big issue, as all of us see week after week in our constituency surgeries. We sometimes speak to single mums who are on their own, who are not acknowledging their partner because of the loss of income that would entail. That is not a good state of affairs, because there exists a loving, respectful relationship in which mum and dad want to live together, but they are not doing so because they would be penalised. It is all very well for us to talk about people doing the right thing, but for a lot of our constituents that is not possible if they are hit in the pocket. That message needs to hit home.
I will conclude by coming back to the importance of family, which my hon. Friend the Member for Congleton has quite rightly pressed me on. I know that I am pushing at an open door, because I rechecked the excellent speech that the Chancellor made in Birmingham in October. When he listed the principles that inspire him as a politician, strong families and family stability were right up there. I think the Chancellor gets this—I think the whole Treasury team gets this—so I hope that when the Minister responds he will give us a commitment that he will go back to the Treasury, talk to the Chancellor, and do detailed preparatory work and study of other countries to look at how we can make some of these changes. We are not asking the Minister to come up with specific answers today, as we know there is a lot of detailed work to be done, but I hope he will give us an undertaking that he will go back to the Treasury and make sure this work gets underway.
I am grateful for your indulgence, Sir David, and apologise for not having been here at the beginning of the debate. I am proud to be associated with this study, and I have only two points to make. First, change is inevitable and constant, as Disraeli said, but not all change is for the better. In my lifetime, many things have changed for the better, but many have deteriorated, and perhaps the sharpest and most obvious deterioration has been the change in family life and the consequent alteration in communities. When I was brought up in a working-class community by working-class parents, that community was stable, law abiding and socially cohesive. It embedded in me strong values: to do the right thing, work hard, abide by the law, and care for other people.
If someone were to go to that council estate now, they would see a very different picture. They would see more lawlessness and more vandalism. They would see the parade of shops that was once there, which my mother used, long gone. Fundamentally and most starkly, they would see widespread family breakdown, and the wider effect of family breakdown is something that the Government need to recognise and use every lever at their disposal to do something about. It is no use politicians claiming that things will always and only get better, because they do not: society has changed for both good and ill simultaneously, and no Government of any party have dealt with this issue to the degree that they should have done.
We can use the tax system in exactly the way this report suggests, so my second point—mindful of your advice, Sir David, I will make only two—is that family, and particularly marriage, need to be supported in the tax system. The benefits system does so to some degree: as we have heard from various speakers, it recognises family responsibility. However, that is not matched by the tax system to the degree that it should be. I say to the Minister, who is my close friend and my right hon. Friend—which is quite a different matter—that he would stand proud among Treasury Ministers of this age and of all ages if he used the tax system to recognise family responsibility more effectively. With that brief contribution—some will say all too brief, Sir David, but I know you will not—I conclude my remarks.
It is a pleasure to see you in the Chair, Sir David. I must say that as a feminist, I feel as though I have fallen down some kind of vortex to the 1948 film “Every Girl Should Be Married” in this debate. I fundamentally disagree with many of the arguments that hon. Members have put forward so well; I respect their right to do so, but they have ignored the elephant in the room, which is that lots of the stresses and strains on our society are caused by austerity, not by whether people are married or not. That is a personal choice.
Tax is often thought of as a boring, dreaded thing—a duty to be avoided, something best left to stuffy men in suits. However, like all economic tools, tax is a mechanism that opens up opportunities to shape the kind of society we want to live in. It incentivises good behaviour and punishes what some would consider to be bad behaviour. The UK Government’s tax system remains quite a blunt tool with which to tackle income inequality. It is riddled with loopholes that benefit the wealthy, and according to figures from the Institute for Public Policy Research, the UK is the fifth most unequal country in Europe when it comes to income.
The tax system is very gendered. In its analysis of last year’s Budget, the Women’s Budget Group said that raising the income tax threshold is not a policy that helps women. It argues that 70% of those taken out of the higher rate of tax, and 73% of higher rate taxpayers who will benefit from raising the higher rate threshold, are men. We cannot claim that this will benefit women in any particular way, especially those in low-income jobs. According to the Joseph Rowntree Foundation, minimum household budgets have risen by about a third since 2008 for most types of household. Inflation is sky high, wages are being squeezed and a no-deal Brexit would see an additional 6.4% of lower incomes being spent on food. That is a penalty that most families cannot afford.
I mention families, because they are central to what many Members have talked about. The hon. Members for St Austell and Newquay (Steve Double), for South West Bedfordshire (Andrew Selous) and others have mentioned universal credit and the impact of the 16-hour rule. Figures from the Church of England show that a single mum with three kids, who is working 16 hours, would have to work 45 hours to make up for the cuts that the Conservative Government have made to the benefits system. What impact would a single mum working 45 hours have on family life? When is she actually going to see her kids? Who is going to tuck them into bed at night? That is not going to happen.
I have been working on a campaign for the removal of the two-child limit in the universal credit system, for which I would welcome hon. Members’ support, if they wish to give it. There was some movement from the Secretary of State last week, but it will still be in place for children born after 6 April 2017. The disincentive within the system is rife. Someone with two children who wants to get remarried, into another family, will lose out, because that will cause a change to benefits. If that person, once they have remarried, wants to have a child in that new family, they will not get the child element of universal credit, which is nearly £3,000. If any Government Member wants to speak to their colleagues in the Department for Work and Pensions and get them to get rid of this policy, that would be welcome, because it is a disincentive. If a family has four children, there is actually an incentive under this policy to separate and become two families with two children each, rather than one family with four children, thereby saving a huge amount of money. That needs to be removed from the universal credit system. If hon. Members are serious about it, they need to ask their colleagues in the DWP to do that.
Nobody mentioned the impact of the immigration system on families. I get many people coming to my surgeries who, because of the minimum income threshold in the immigration system, cannot bring a spouse to live here. I met a chap who is working two jobs at the moment, but cannot meet the threshold to bring his wife and his child over from another country. That is separating families. The number of Skype families out there, who are not being well served by this Government, who claim to support families, is an absolute scandal and we should do something about it. The stress of living in poverty probably contributes more to the break-up of families than anything else.
The report by Philip Alston, the United Nations special rapporteur on extreme poverty and human rights, which Conservative Members never want to mention, says:
“Families with two parents working full time at the national minimum wage”—
that is the Chancellor’s pretendy living wage, because it is not a living wage that anyone can live on—
“are still 11% short”—
“of the income needed to raise a child.”
There is no disagreement on these Benches that poverty leads to family breakdown, but in the impact assessment for the Child Poverty Act 2010, brought in by the last Labour Government, there was also a recognition that family breakdown leads to poverty. Does the hon. Lady accept that it is circular and that the one leads to the other, both ways?
I would accept the hon. Gentleman’s arguments far more if he would argue for an end to austerity, for an increase to low wages and for the minimum wage to be equalised. At the moment the thresholds for 16 and 17-year-olds and for 18 to 21-year-olds are very different. The gap between the lowest paid—those on the UK’s pretendy living wage—and the people at the top of the age threshold is increasing. It has got wider over the last three Budgets because increases at the top of the scale have not been met with increases at the bottom of the scale. It should be a fair wage for everybody. A 21-year-old parent does not get enough income in to support a family, and that will bring additional pressures to bear on what they can bring in and provide. People who have spoken today have entirely missed the point.
Treating families as a unit within the tax system, as often happens with universal credit, has been widely criticised by women’s organisations because it removes women’s agency. It also removes women’s ability to provide for their families. Under the universal credit system, a woman is disincentivised from leaving a relationship, because all the money goes to the man—the main earner in the household. I appreciate that the Secretary of State has said that she is looking at this issue, but it creates a risk. That also exists within the rape clause of the two-child policy, where the only way a woman can claim this vile clause is to leave the relationship. Women’s organisations across the board say that the most dangerous time for a woman is when she leaves a relationship; that is when she is most likely to be murdered. There is serious stuff about women’s place in this policy.
I was glad to hear that the hon. Member for South West Bedfordshire is not calling for the abolition of independent taxation. I am relieved about that. Individuals should be able to exist within the system by themselves, for a very serious reason, which leads on from my point about universal credit. Incentivising marriage is disincentivising separation. There may be very reasonable grounds for separation, particularly in cases of domestic abuse. The marriage allowance, which benefits the higher earner in a family—almost always the man, as I have laid out—exacerbates inequality. To take this to its logical conclusion, if a man assaults his partner, so she cannot go to work, or he prevents her from working through coercive control and financial control, which we know a lot more about and which the Government have said they want to tackle in the Domestic Abuse Bill, he effectively gets a tax break for doing so. That is why this should have no place in the taxation system. It is important that women have agency and are able to get money in. When money is taken away from women, that agency is removed, as well as their ability to look after themselves.
I had many more things I wanted to say about this policy. I had a whole speech written out about other things. We need to recognise that indirect taxation is also a huge issue. VAT disproportionately affects low-income families. According to the latest figures, those at the bottom end of the income distribution now pay nearly one third of their income in indirect taxes. The poorest fifth pay 31% in taxes such as VAT, alcohol and fuel duties, which is much higher than the 13% paid by the richest households. As I have been sitting here, I understand that the European Parliament has finally agreed to abolish the tampon tax. That is something that the UK Government have now delayed for almost four years. I hope that, now that the Minister has the green light that apparently the UK Government were waiting for, that tax on women will go as soon as possible.
While we can talk about taxes and marriage, the real elephant in the room is austerity and the cuts that have been made to women’s budgets. Women need to have agency; that is the most important thing for families across the UK.
It is a pleasure to see you in the chair, Sir David. I appreciate the opportunity to make some comments and I thank the right hon. Member for South Holland and The Deepings (Sir John Hayes), the hon. Members for Stafford (Jeremy Lefroy), for Congleton (Fiona Bruce), St Austell and Newquay (Steve Double), Bolton West (Chris Green) and for South West Bedfordshire (Andrew Selous), and the spokesperson for the Scottish National Party, the hon. Member for Glasgow Central (Alison Thewliss), for their contributions.
It is a pleasure to have been invited to the launch of a manifesto to strengthen family policies for a Conservative Government. I was not going to make comments about that, because I did not realise it was on the agenda today, but I will do so now, if I may, Sir David, with your indulgence. There were eight asks in the document, and I have time to comment on about four, which are all linked to the debate.
There is a reference to having a Minister for families. We had a Secretary of State for Children, Schools and Families, which David Cameron got rid of, so that idea of co-ordination went out of the window in 2010. I am pleased that Conservative Members now think that that was a good idea. Perhaps if they had kept that Secretary of State eight years ago, we might not be in the difficult position that we are in in relation to families.
The document refers to family hubs and how wonderful they are, and to children’s centres, but hundreds of children’s centres have been closed in the past eight years under austerity. It is all right to refer to family hubs and children’s centres, but they have gone by the dozen, week in, week out.
May I clarify the distinction between family hubs and children’s centres? Regarding family hubs, we are saying that we need to give holistic support to families as they bring up their children right through their childhood—not just from nought to five, but from nought to 19 and beyond.
Family hubs are designed to support not only people bringing up children but, as we have heard, people caring for elderly relatives and couples resolving difficulties in their marriage. It is a one-stop shop where families can go to get help for anything that they have difficulty with, from statutory agencies or from charities working together, much as people go to a citizens advice bureau in a wholly non-judgmental way. I am delighted that family hubs are springing up all over the country. Next month, there will be a major launch here in Westminster where Westminster City Council will promote family hubs.
The hon. Lady reinforces my point. To set up a family hub via charities or local authorities is fantastic—no one disputes the policy—but that has to be set in the context of austerity, as the hon. Member for Glasgow Central said.
My local authority has had a 50% cut in its funding, resulting in the potential closure of children’s centres, some nurseries and day centres. It is okay to talk about having a family hub or a children’s centre, but the resource is not there, because the Government have decided they will redirect their resources elsewhere. That is fine, but I am afraid that it is impossible to have both. A political choice has to be made, and has been made. The political choice that the Government have made is, de facto, to outsource the closing-down of many of those centres, fantastic community facilities and charities through cuts to local authorities.
The document talks about supporting mental health services, which face major cuts as a result of austerity. The Government have talked about parity of esteem time after time, but they have not done a great deal about it. They have come to that issue as a Johnny-come-lately.
Again, our report talks about mental health challenges. Those of us who support strengthening families believe that we need to strengthen families so we can help many children who, at an early stage of their life, could and do suffer mental health challenges because of relational difficulties in the family.
I am the patron of a children’s mental health charity in my constituency, and not long ago, I asked the former chief executive, who has now moved on, how many of the children that the charity is counselling, who can be as young as four years old, have mental health difficulties at least in part because of relational difficulties in their home environment. He looked at me and said, “Fiona, virtually all of them.” A key purpose of our manifesto is tackling the root cause of many young people’s mental health problems.
I am pleased that the hon. Lady made that intervention; she is reinforcing every point that I make as I go along. Again, the Government have decided to cut early intervention services year in, year out— I can say that because I worked in that area for many years. The hon. Lady is absolutely right that we have to start early, but if services for early intervention are cut and there is a lack of funding, the impact is the £48 billion from family dislocation that the report identifies.
No, because I have not got much time and I have given way several times. I have other points to make.
The manifesto is linked to the issue of taxation of families, but it is not just the fiscal issue that we have to identify—that is the problem; it is the wider determinants that go way beyond issues of taxation. The hon. Member for Stafford referred to the Christian background. I think it is in Matthew that Christ says,
“render to Caesar the things that are Caesar’s, and to God the things that are God’s”.
Effectively, he was saying, “Pay your taxes.” He is a fantastic role model for people who avoid paying their taxes. The bottom line is that a society can be cohesive only if everybody plays their part in it, whether through paying their taxes, charitable interventions or political inventions of the sort we make every day. That is what we have to do.
In the report, the hon. Member for Congleton talks about fathers being registered on birth certificates. That is fine, but an Office for National Statistics report on registration identified the fact that the vast majority of fathers are registered on birth certificates and that of those who are not, something like two thirds or a third are identified as being very much involved with the family. The idea that the registration of a father on a birth certificate will somehow solve some sort of problem is—I will not say laughable—only one element of the totality.
It will be, Sir David. The point that my hon. Friend the Member for Congleton (Fiona Bruce) was making was that if registrations take place in family centres, the fathers become more involved in what the family centre can provide.
Briefly, in the impact assessment of the Child Poverty Act 2010, which was introduced by the hon. Gentleman’s party when it was in government, there was a recognition that, although poverty leads to family breakdown, family breakdown also leads to poverty. Is that still the Labour party’s position?
We would reintroduce the targets that we set in relation to child poverty, which the hon. Gentleman’s Government got rid of. That is what is frustrating—Conservative Members are coming to us with all these ideas that the Labour party had for many years and which the Conservative party got rid of when it came to power. The Government got rid of all the things that hon. Members have been talking about and introduced austerity. They said, “Austerity is here. We’re all going to play our part. We’re all in the boat together,” but in reality, we are not.
Although I recognise many of the worthy points made by hon. Members, that worthiness has got to be put in place, not by mechanisms, but by everybody playing their part in society and paying their taxes, and by corporations not getting tax breaks or being able to avoid this, that and the other. The point that the hon. Member for Stafford makes about tax reliefs is fair; I will potentially look at them.
There is a complicated pattern, and on that basis, although I understand some of the points that the hon. Members for Congleton and for Stafford have made, I would say that actions speak louder than words. We need more action and fewer words.
It is a great pleasure to serve under your chairmanship, Sir David. I thank my hon. Friend the Member for Stafford (Jeremy Lefroy) for securing this debate and my hon. Friend the Member for Congleton (Fiona Bruce) for her insightful contribution. I also thank my hon. Friend the Member for Bolton West (Chris Green) for his involvement in the important report issued this morning. I can assure all present that it will be carefully digested by Ministers in the Treasury.
At the heart of the matter lies the issue of fairness in the taxation system and the way in which the benefits system operates in our country. Also at the heart lies the central point that many speakers have made this morning as to whether the tax and benefits system appropriately incentivises aspiration—a Conservative ideal—and effectively incentivises employment, including incentivising people to go out and get jobs. And of course there is the impact of all those matters on the crux of the issue, which is the social impact of these measures on the stability of the family unit. I, the Treasury and the Government more broadly certainly recognise that all those points are of critical importance. I am particularly proud that Conservative Members chose to secure this debate and were instrumental in producing such a thoughtful and detailed report. It is the Conservative party that believes most strongly and passionately in the issues that lie at the centre of the matters we are debating today.
Having accepted that the matters are important, I also accept the many examples given in the debate today on the way in which the system does not work effectively. The most important has been the very high level of marginal tax rates. Several examples were chosen of particular circumstances involving individuals and children and the make-up of families to illustrate that we can, under certain circumstances, have marginal tax rates as high as 73% or even beyond. I accept that that is deeply undesirable. That is not the same thing as suggesting that the entire system is broken. If we chose different examples we might get far lower marginal tax rates than those that have been rightly highlighted in the report and in the debate today. Indeed, the OECD has indicated that across the universe of low-income families in this country, we are above average when it comes to making sure that net income is received by those families. However, there will always be more to do, which is why this debate is important.
We should not overlook the fact that we have a very progressive tax system. Some 28% of all income tax is paid by the top 1% of earners. In the previous Budget, we met our manifesto commitment to increase the personal allowance to £12,500 one year early. It will come in next year and take millions of the lowest paid out of tax altogether. In case it is felt that only the lower paid face very large rates of marginal income tax, we must bear in mind that, under the current system, once someone earns beyond the large amount of £100,000, the personal allowance is tapered away at a rate of £1 for every £2 earned. At that point in the income distribution, wealthy people pay a marginal rate if we include national insurance of 63%. A necessarily complicated tax system, because it tries to do many things at the same time, throws up all sorts of deeply unsatisfactory anomalies. The complexities of the tax system and the interaction with the benefits system means a complicated challenge ahead.
Low tax matters. My hon. Friend the Member for South West Bedfordshire (Andrew Selous) put it eloquently. Low taxes matter for reasons other than fairness. They drive the economy, jobs and entrepreneurship. They make sure that we have, for example, halved the level of youth unemployment since 2010. He cited the very good example of Greece and other countries where they have taken a different way and have paid the consequences. The Government remain committed to lower taxes and to simplifying them to the extent possible and to making sure that the anomalies raised today are addressed.
On the benefits system, much has been said about universal credit. We all recognise that when the Labour party was in government, its benefits system was overly complicated. People had to go to the DWP, to the local housing authority and to HMRC to qualify for a variety of benefits, but we have simplified that to one benefit. When it comes to making work pay, which lies at the heart of many of the arguments, universal credit does exactly that. People no longer have the 16-hours-of-work cliff edge, beyond which they lose all their entitlement.
The point I was coming on to was the taper. In 2016, we announced a reduction in the taper rate from 65% to 63%. My hon. Friend the Member for Congleton called for it to be reduced further to 50%. That is a deeply desirable move if it can be achieved, but we must recognise the cost of doing so. The cost of having gone from 65% to 63% is £1.8 billion across the scorecard period. I do not have the figure to hand, but it would be absolutely enormous if we went to 50%. With great respect to Members, even the examples of where we could do more, such as tax relief on higher-rate pensions or the changes to child benefit and the way in which that might operate, would be dwarfed by any such move. We have to recognise, as my hon. Friend the Member for South West Bedfordshire explicitly did, the costs of making the changes that have been proposed.
The Conservative party introduced the national living wage. We should be enormously proud of that fact. It goes up by 4.9% in April, so those in full-time employment will take home £2,750 more than they did in 2010[Official Report, 31 January 2019, Vol. 653, c. 6MC.]. The marriage allowance is an example of exactly what the report calls for. Among the measures are a transferability of allowance to make provision for those who stay at home to look after children or elderly relatives. It transfers at a rate of 10%, provided the person is not a higher or additional-rate taxpayer. Once again, it is focused on the lowest paid in our society. We spent time reflecting on child support. We will spend £6 billion more per year by 2020, and we brought in tax-free childcare. If someone is on universal credit, they are able to claim back up to 85% of the cost of childcare.
In the remaining couple of minutes, I will respond directly to the overarching request made of me this morning, which is that I go back to the Treasury with the report and the comments made in this debate and look genuinely and deeply at the issues raised. I can give an unequivocal commitment to do precisely that because, despite what is going on in the House at the moment and the important vote tonight, certain things must continue uninterrupted. Our essential quest for social justice and the Conservative party’s commitment to the family and a society that is at ease and at one with itself, must not be diminished. The House has my commitment to do exactly as I have said. I will engage in the form that my hon. and right hon. Friends wish me to to make sure that we push forward on the important issues raised today.
I thank all Members for their contributions today. Extremely important points have been made. I thank the Minister for his commitment to look at this area, and I thank my hon. Friend the Member for Congleton (Fiona Bruce) for driving this forward, together with other colleagues here today. I also thank the hon. Member for Glasgow Central (Alison Thewliss) who made important points. I do not agree with all of them, but two need looking at, including the two-child limit, about which I have concerns. I am really pleased about the announcement made this week, but we need to go further. Secondly, I entirely agree with her on bringing families together. I have experience of that in my own constituency.
I also agree with the hon. Member for Bootle (Peter Dowd), who speaks for the Opposition. The Labour party did some extremely important things. Some were reversed, some maintained, and some I would like to see brought back. We need to go further. He is absolutely right: there is no monopoly of virtue or vice in this area in any party. We all have to work on this for the benefit of our constituents.
Question put and agreed to.
That this House has considered the taxation of low-income families.
Department for Work and Pensions: Members’ Representations
I beg to move,
That this House has considered representations by Members of Parliament to the Department for Work and Pensions on behalf of constituents.
It is a privilege to serve under your chairmanship, Sir David. I am grateful to have been allocated this debate. I wish to raise the serious and worsening effects that the practices and policies of the Department for Work and Pensions are having on those needing welfare support, and the ability of the advice sector and staff, including those in my office, to support claimants. I could raise numerous points, but I will focus on universal credit. I must praise the work of MPs, third-sector groups and the Work and Pensions Committee in exposing the unfolding catastrophe of universal credit, and repeatedly forcing the Government to rethink their approach. Universal credit’s three main objectives are to reduce poverty, to make work pay and to simplify benefits.
Why do I need to raise the serious and worsening effects of DWP practices and policies? Let us be clear: the challenges that our constituents face are immense. Since being elected, I have witnessed at first hand a Government Department that has been increasingly uncompromising and punishing of claimants. That has been ever so evident in the woeful implementation of universal credit and its callous roll-out.
I thank my hon. Friend for securing this significant debate. Does she agree that the five-week delay in universal credit is supporting people to get into debt rather than out of it, and that the Government should rethink how that is affecting the lives of real people?
My hon. Friend makes a valuable point, which I will come to later. I thank her for her contribution.
There is considerable anxiety among the 16,630 house- holds in Edmonton accessing at least one kind of social support that will be replaced by universal credit. By August 2018, around 2,750 households in Edmonton had been moved to the new system. Many of my constituents have reported multiple significant problems in dealing with universal credit, from understanding the new system, to the transition to universal credit, the excruciating application process, receiving payments, which are mainly late, and the ongoing support—in short, the entire system.
My constituents are not alone in their assessment of universal credit. The National Audit Office said that the universal credit programme was
“driven by an ambitious timescale”
“suffered from weak management, ineffective control and poor governance.”
According to the Child Poverty Action Group, difficulties with claiming universal credit mean that currently one in five applications fails.
A vulnerable constituent of mine made a claim for universal credit in July 2018. It was initially incorrectly refused, even though he had provided all the necessary documentation. Only after challenging the decision was his application accepted in September 2018. Despite the appeal being upheld, he did not receive any universal credit payments until December 2018—almost five months after his initial claim. Let that sink in: it was five months after the initial claim, and he was an extremely vulnerable person.
Does my hon. Friend agree that the bureaucracy facing claimants, including appeals, is too much to bear for people going through such difficulties, and that our constituency staff teams are constantly asked for help that they are unable to give?
My hon. Friend makes a valuable point. I will come on to the demand for the legal representation that vulnerable people need.
As I said, my constituent, who was a very vulnerable person, received his first payment five months after his initial claim, and that was only after the relentless persistence of my office. I cannot convey the hardship that my constituent went through in those five months. He was let down by a shoddy assessment of his application.
In areas such as Edmonton, with such high levels of inequality, the suffering has been more intense and more widespread. My role is to fight for equality for all. Achieving equality is not just the right thing to do; the evidence is clear that more equal societies are better, healthier and safer. Such societies have fewer health issues and social problems, are less internally divided, and are better able to sustain economic growth.
On 11 January this year, three single mums defeated the DWP at the High Court over issues with universal credit. They were missing out on hundreds of pounds a year because of the farcical way the DWP calculates income. Lord Justice Singh and Mr Justice Lewis ruled that the DWP had been wrongly interpreting the universal credit regulations. In their judgment, they described the universal credit income assessment process as “odd in the extreme”. Can the Minister confirm whether the Secretary of State will appeal that High Court judgment?
Universal credit is complicit in the Government’s punishing austerity policy, which has increased child poverty to 4 million and rising. The Institute for Fiscal Studies predicts a 7% rise in child poverty between 2015 and 2022. Some sources predict that, if policies remain the same, child poverty rates will reach as high as 40%. In a recent report, the UN special rapporteur on extreme poverty and human rights, Professor Philip Alston, expressed his dismay that one fifth of the UK population—14 million people—were living in poverty, 1.5 million of whom are destitute and unable to afford basic essentials. His report described the immense growth in food banks and the queues outside them, people sleeping rough on the streets, and the growth of homelessness. It is utterly unacceptable that in 2019 millions of people live without food security.
By continuing the roll-out of universal credit, the Government are making it clear that the human cost of austerity is not a priority for them. In recent days, DWP Ministers have been talking of extra funding for universal credit—£1.5 billion to help people by allowing advances of up to 100% on day one, if individuals require it. Let us be clear: that is not extra money in the pocket of those barely getting by; it is debt, pure and simple. The gap between legacy and universal credit payments means that claimants who take up advances start their claims in debt to the DWP. Advances only complicate the process and should not be necessary in the first place.
To make matters worse, the Citizens Advice reported that claimants on universal credit were more likely to have debt problems than those on the legacy system. However, DWP Ministers seem to think that saddling claimants with debt from the start of their claim is a solution to the problem of poor design. The Government pledged an extra £4.5 billion for universal credit across the next five years in the last Budget. However, the benefits freeze is set to continue until April 2020, and there is no guarantee that it will not continue after that, no matter what soundbites emerge from the Secretary of State. The IFS has also made it clear that there are welfare cuts still to come of more than £4 billion per year until 2022-23, which spells more and more insecurity for those who can least withstand it. The Government continue to flatter themselves about ending austerity, but unless they restore humanity into the welfare system, I can only determine that it is a soundbite exercise.
In Edmonton, we are seeing the continued grinding down of local support services and the continuing impoverishment of the constituents who I was sent here as a Member of Parliament to represent and serve. Serving their interests and seeking to aid them is my primary goal, but the scale of issues with accessing universal credit means that Members’ offices are overwhelmed with pleas for help. I have seen an increase in the volume of cases, a large proportion of which are complex and need legal and specialist representation that is harder and harder to find. As a consequence of the DWP’s policies and approach, and in the context of austerity, I—like other MPs—am approaching the point when it will be untenable to make adequate representations on behalf of my constituents.
A key obstacle that my constituents face in accessing universal credit is the overemphasis that the system places on digitisation. According to Neil Couling of the DWP, the system relies heavily on digitisation to process claims and, as a result, less than 1% of claimants lose out. I find that hard to believe, because the reality of digital skills in the UK paints a very different picture. According to the Office for National Statistics, one UK adult in 10 has never used the internet, one in five lacks basic digital skills and 20% of disabled adults have never used the internet. Even a DWP survey reported that 30% of UC recipients found the online process either “very difficult” or “fairly difficult”, while 43% said that they needed more support with setting up their claim. Ipsos MORI’s 2018 UK consumer digital index agreed with DWP findings that an estimated 1.2 million benefit claimants have low digital capability or no digital capability. At times, my staff have had to set up email accounts and give basic IT training to my constituents.
In short, the design of universal credit is fundamentally flawed. It systematically disadvantages or excludes the millions of people in the UK without good digital skills. The over-reliance on digitisation has meant more and more people coming to my office because of issues that they face with universal credit or that originate in problems with universal credit. Given that 30% of universal credit recipients found the online process either “very difficult” or “fairly difficult”, and 43% said that they needed more support with setting up their claim, will the Minister accept that it is time to stop and rethink the over-reliance on the digital process?
Without a doubt, the benefits process is complex for anyone. Consequently, the DWP has helplines available under the legacy system to enable claimants and advice staff to uncover problems and find a solution. However, no such comparable arrangement is in place for universal credit. A working single mother in my constituency faced considerable issues when dealing with universal credit. A mother of three dependent children, she was wrongly advised by her work coach to end her claim for tax credit and claim universal credit instead. Unfortunately, the work coach had not grasped that universal credit was not available to claimants in Enfield with three or more children until 2019. As a result, my constituent’s claim was terminated. Although she had taken steps to apply separately for tax credit, her claim could not be processed because she was deemed to fall within the reclaim period for universal credit. Having just started a new job, she was reliant on benefit income to tide her and her children over until her wage arrived, but she was left with nothing.
She tried to deal directly with the DWP but had no success. She came to my office, but my caseworkers, too, were frustrated in their efforts to solve the problem. DWP staff incorrectly informed us that all third-party enquiries, including representations from MPs, would need to be made via an online portal, which could take more than a month to process, irrespective of the urgency of the representations. It was only after my office escalated the matter to the Secretary of State and to senior personnel on multiple occasions that matters were eventually resolved.
Universal credit left my constituent and her children in poverty. That could have been avoided if there had been key escalation points in place that she or my office could have used throughout the process. When problems emerge, the structures to remedy them are not fit for purpose. For what has proved to be a difficult system, why not introduce an escalation process such as a well-staffed helpline for claimants, Members’ offices and the wider sector? Will the Minister commit to making such changes to the system?
At the moment, the soundbite of the DWP’s approach is to “learn and adapt.” That is the height of privileged detachment. Can the Department really be serious? What are spoken of as problems to be solved as they come up are real people’s lives. What is perceived as a learning opportunity for Ministers is devastation for my constituents. I ask the Minister not to turn a blind eye to these problems, but to look back at universal credit’s three main objectives: to reduce poverty, to make work pay and to simplify benefits. Rather than ploughing ahead, is it not time for the Department to overhaul the system?
Universal credit in its current form simply is not working; it is causing greater poverty, destitution and anxiety wherever it is rolled out. The Government need to commit to a root-and-branch review of universal credit. I look forward to the Minister’s reply.
It is a pleasure to serve under your chairmanship, Sir David. I pay genuine tribute to the hon. Member for Edmonton (Kate Osamor); although obviously I do not agree with all the points she made, it is clear from her time as an MP and formerly as a councillor, and from the issues she raised in her speech, that she is a passionate campaigner on the subject, particularly for vulnerable claimants in her constituency. I am not the Minister ultimately responsible for universal credit, which was the predominant focus of her speech, but part of my portfolio is to represent vulnerable claimants who go through the universal credit process, so I recognise some of the issues that she pointed up.
I will talk about some of the specific asks that have been addressed and on which there is much agreement, but first it is fair to remind hon. Members that there was cross-party support for the principle of universal credit: to offer personalised, tailored support. Stakeholders broadly support that principle. That does not mean that all is right, but we must not forget that legacy benefits were not the panacea of a utopian state in which everything was great. They were incredibly complicated, with six different benefits and three different agencies, and with the involvement of the DWP, Her Majesty’s Revenue and Customs, and local authorities. Frankly, anyone navigating them had to be a nuclear physicist, whether they were claimants, MPs or MPs’ staff members trying to support predominantly vulnerable claimants.
The figures bear out that point. We typically saw 700,000 claimants a year missing out on £2.4 billion of benefit support—about £280 each per month—that we had all voted to give them because we recognised that it was the right thing to do for those predominantly vulnerable claimants. There was a 90% tax rate for some claimants, and there were well-known problems with the cliff edges at 16, 24 and 30 hours. In our casework, we saw people who wanted to do the right thing and were trying to improve their opportunities in life, but the system was working against them. Universal credit was therefore introduced, as I said, broadly with cross-party support. It is right that we have looked at it all the way through as a test-and-learn, and that is why it is important that the hon. Member for Edmonton has raised her direct experiences and those of her office.
We have already made some significant improvements. We, rightly, made the changes to advance payments. Those payments were always there, but people had to know to ask and, unsurprisingly, very few people did. They are now, rightly, automatically part of the initial interview with the work coach and, unsurprisingly, the take-up rates of advance payments have significantly improved.
Initially, those payments were repaid over six months. That was, rightly, changed to 12 months, and then to 16 months. The repayment rate has also been reduced and we have strengthened the discretion to take into account particular hardships, to make sure we are not compounding a problem.
Those who are transferring over from legacy benefits, such as housing benefit, will get an additional two weeks-worth of housing benefit money, with no strings attached. That is additional money. As the regulations come forward, there will also be an additional two weeks for those on employment and support allowance, jobseeker’s allowance or income support, again with no strings attached. That is typically worth £237 on housing benefit and £200 on ESA, JSA or IS. Opposition Members often seek to oppose what the Government do, but this is something they should support.
We have scrapped the seven-day waiting period and strengthened the alternative payment arrangements, on housing costs direct to the landlord, for example. If a legacy claimant already had that provision, there will now be a presumption that we should have the conversation to see if that was the right arrangement. We have also looked at the frequency of payments, for those who have been used to a more frequent payment and might struggle with monthly payments.
There is the extra work allowance. We have made changes to the exemptions for the minimum income floor for self-employed claimants, and there are additional protections for those on severe disability premiums. But there is still more to do.
The advance payments are still a loan, which is a crucial point that my hon. Friend the Member for Edmonton (Kate Osamor) made. My question is this, however: those people who are being managed through their migration to universal credit will have protections, but those people who have naturally migrated—often, but not always, through change of circumstances—will not have those protections. What is the justification for that? Many of my constituents are worse off.
As the hon. Lady said, that is to do with change of circumstances. The transitional arrangements were put in place for those who were transferring as part of natural migration, and we have, rightly, confirmed that that number will be ring-fenced to just 10,000 this year, so we can have a real deep dive to look at the levels of support that are needed. I will come back to that in a moment.
On the wider point about why transitional arrangements were not put in, that is because it was recognised that there would be a change of circumstances. We are seeing that a lot of people benefit, and some go the other way, but overall we are now spending an additional £2 billion on the current benefits compared with the legacy benefits, before the extra money goes in. That is more money going to the people who need that help.
Let me turn to points where I think there is agreement. We talk about office casework. We all have busy offices and have to prioritise casework and supporting our constituencies. I am very proud to have been rated third out of 650 on theyworkforyou.com on helping constituents. I absolutely understand the importance of casework. One of my staff specialises in this area, has visited the jobcentre with me and talked to the partnership manager. We all have a partnership manager, who is the point of contact for escalating cases.
I know the hon. Member for Edmonton was due to visit the jobcentre in December 2017, and that that visit was cancelled. I encourage her and her staff to take part in such a visit. It is really important, and they are there to help. Where we have specific cases that do not seem right, there is an ability to escalate; MPs can talk to the senior people in the respective jobcentres and they can help take that forward.
I have a lot of sympathy with the point about digital by default. The principle was to mirror the world of work, because most workplaces now expect staff to have a reasonable level of digital engagement. However, that is not the case for all people. Not all people on universal credit will end up in work—even if that is their ultimate aim, not everybody is going to, and not everybody will do that overnight. We need to improve communication in order to advise about alternatives; claimants can access support via the telephone, face to face, or through home visits. We need to do better at promoting that and it is certainly something that I will continue to push on.
We also need to look at the issue of consent. One of the complications of the General Data Protection Regulation is that we now need implicit consent. I regularly meet stakeholders, particularly housing associations and local authorities, who say, “We represent many of your vulnerable claimants, and we want to help. We have the resource to help, and we have teams, but unless we know that one of the people that we are working with is about to be migrated or has come on to universal credit or is accessing an advance payment, how can we help?” We have got to find a way, and I think that should be done in the same way as with advance payments—through making asking for implicit consent an automatic part of the initial interview, in order to get those support organisations working with claimants. There is a resource there that wants to support claimants and we should be doing everything we can to match them up.
We made a significant announcement on putting citizens’ advice into every single jobcentre throughout the country. It will be an independent organisation, and we will cover the costs. That will start in April, and I welcome it. As part of the test-and-learn with the 10,000, I want to look closely at exactly how much time is available to vulnerable claimants. Is it enough or are there other things that could be done? I think we should look very carefully at that.
Actually, if somebody is in particular hardship, they can get access to money within a couple of hours, so that is an option. I am not sure how well that has been communicated, but that rule is in place for those who genuinely need it.
We should continue to work with stakeholders. I am very receptive to meeting stakeholders. Throughout the week I meet different groups that will often come and challenge the Government, and hold our feet to the coals. It is right for them to do that, because they are identifying issues. There are a number of cases where a stakeholder with particular expertise has then helped to rewrite and deliver our training. For example, on the very important issue of domestic abuse, I have been working very closely with Women’s Aid, Refuge and Mankind. They went over all the training documents and sat through a typical claimant’s experience to identify whether things are in place. We are looking to bring further improvements based on their expertise.
I am sorry that the hon. Lady was not a councillor. I was a councillor before, and I enjoyed it very much. I am sorry that she missed out on that opportunity. I did not pass judgment on the visit—I just said that it would be good if she could make that visit. As a Back-Bench Member, I personally benefited from such a visit.
I brought in a national helpline on personal independence payments when I was a disability Minister. The issue here is a little different. There were national, one-size-fits-all rules on PIP. Universal credit is personalised and tailored, and people need to speak, in effect, to the work coach. What is in place is a partnership manager in every single jobcentre who should be the MP’s point of contact. By coincidence, we recognised earlier this week that we suspect that not all MPs know who their partnership manager is. The Minister for Employment responsible for UC has committed to share that information and to make sure that we all have the details of those points of contact, because they are there to help.
Finally, to pick up on a few points, income inequality has fallen under this Government, having risen under the last Labour Government. The average income of the poorest fifth in this country is now up by £400 a year in real terms, while that of the richest fifth is down by £800. There are 1 million fewer people in absolute poverty, including 300,000 children. There is still much more to do. I pay tribute to the hon. Member for Edmonton and her wealth of experience; she gave a very constructive speech. I hope she can see that many of the points raised are ones that we are actively looking to address, and that is absolutely vital for all claimants and, in particular, for vulnerable claimants. I thank you, Sir David, for the opportunity to set out what the Government are doing.
Question put and agreed to.
British Bioethanol Industry
[Mike Gapes in the Chair]
I beg to move,
That this House has considered the future of the British bioethanol industry.
It is a pleasure to serve under your chairmanship, Mr Gapes, and it is good to have the opportunity to discuss the future of the British bioethanol industry when other matters today are focusing people’s minds. I am pleased to see so many hon. Members of different parties here to contribute to the debate.
The bioethanol industry is, regrettably, in a state of collapse. Should this collapse be complete, the industry is unlikely ever to come back again. We are at a seminal point in its life in the UK. I hope that we can convince the Minister to take, on behalf of the Government, the urgent steps needed to secure the future of this important industry. Should we lose it, there will be significant implications not only for the agricultural and transport sectors, but for the wider economy and the UK’s decarbonisation and renewable targets.
I particularly thank the hon. Member for Hereford and South Herefordshire (Jesse Norman), who unfortunately cannot be here to respond on behalf of the Government. He has agreed to meet the British bioethanol industry and me next week. Hopefully this debate will assist in setting out and examining the current issues, including the compelling case why his Department urgently needs to make E10 fuel mandatory at UK petrol stations. Next week’s meeting can get straight to how we can make that happen as soon as possible in 2019 in order to reverse the recent collapse in confidence, production and job losses and secure the future of this important industry.
Will the hon. Gentleman be willing to let Members who are here today know the outcome of his meeting with Ministers? I remember attending a meeting on the subject of E10 fuel, which I think he organised. I thought that quite a compelling case was made, and it would be interesting to have some feedback.
The Minister has agreed to meet MPs of different parties who have an interest, particularly a local interest. I would certainly be very keen to update the right hon. and learned Gentleman on the outcome of that meeting. Should he be available and want to join us, I am sure that would be possible.
I declare an interest as the owner of several older vehicles. Is the hon. Gentleman aware that the Government are right to be careful in introducing E10, which is not compatible with vehicles manufactured before 2000, so it is essential that E5 or less remains available?
Nobody is arguing that E5 should not be available. There was an excellent Radio 4 “File on 4” programme just before Christmas that featured Tony Wood, who runs a garage and owns 3 MGs. The reporter Simon Cox asked him about the impact of E10 fuel on older cars such as Wood’s MGBs:
“And if they brought in that E10 fuel, what effect—if any—do you think it could have on it?”
Mr Wood replied:
“Well, of course the jury is still out on that, because nobody really knows, but we’ve been running E5 for a number of years and there were stories when E5 came in of the sorts of effects it would have on your fuel hoses, but in real terms E5 has not proved to be much of a problem because most cars have already had their fuel lines changed at some point or another for more modern materials.”
Mr Cox then asked:
“So if the concern with bringing in E10 was the effect on old cars, it sounds like that doesn’t really stack up.”
Mr Wood replied:
“Well, in my opinion it’s probably less of an issue than it has been made out to be.”
Everybody would hope that that would be the case.
I am drawing on the expertise in that “File on 4” programme. Obviously, any serious issues need to be looked at properly. Nobody wants the introduction of a new fuel to have disadvantages for people. It is very important that E5 remains available, as the right hon. Gentleman indicated.
The British bioethanol industry is perhaps not as widely known as it should be, but it is something of a British success story. Over £1 billion has been invested in the past decade, allowing British workers using British-grown produce to produce British bioethanol to help fuel British vehicles and feed British livestock, while reducing the UK’s carbon footprint and putting fewer pollutants into the atmosphere.
Until very recently, the UK had two of Europe’s biggest bioethanol plants: Ensus created a state-of-the-art facility on Teesside with an initial £250 investment in 2010, and Vivergo Fuels created a £400 million plant in Hull in 2013. Both distilled locally grown wheat to produce bioethanol, with protein-rich animal feed created as a by-product. The Ensus plant could produce 400 million litres of ethanol a year, and Vivergo Fuels 420 million litres. Each employed over 100 people directly as well as supporting a further 6,000 supply-chain jobs, including farmers and hauliers. The UK also has a further plant in Norfolk owned by British Sugar, which can produce 70 million litres a year.
As the Minister is well aware, Vivergo announced in September that it was closing its plant in Hull, and Ensus announced that it was pausing production at its plant on Teesside in November. It is not an overstatement to say the industry has collapsed in only a matter of months, and its future is dependent on the Government taking urgent action on the introduction of E10.
I congratulate my hon. Friend on securing this debate, which is really important for Teesside and the south Durham area. I want to raise an issue about farming. The National Farmers Union has put out a report on the importance of bioethanol. My constituency covers 150 square miles and is an agricultural area of County Durham. Does my hon. Friend understand what the NFU has briefed on the implications of this for climate change? It could lead to 700,000 cars being taken off the road. We require an infrastructure that can secure that, especially in the agriculture industry, where we can grow the appropriate crops for this kind of industry to prosper. We are missing an opportunity should we not invest in it.
My hon. Friend makes the point very well and begins to answer the question from the hon. Member for Henley (John Howell) about the 700,000 cars that would be taken off the road if E10 were introduced, and on the impact on both air quality and carbon reduction. The bioethanol industry makes an important contribution to farming across the country.
In 2005, the Labour Government gave a very clear message to investors that they would support a substantial growth in demand for renewable fuels, announcing that 5% of petrol sold in the UK would come from renewable sources by 2010. The subsequent coalition and Conservative Governments retained these commitments. On the back of that, large scale investments of over £1 billion were made to ensure that the UK could produce high-quality and sustainable bioethanol to meet forecast demand. During the following decade the Government reduced target levels for renewable biofuels while addressing questions on the sustainability of biofuels. The installed capacity, which was put in place to meet the Government forecast of demand, was substantially higher than demand. Producers have suffered regular and sustained losses, which have led to recent plant closures. Higher demand has not materialised, because at present only E5 petrol with a 5% blend of bioethanol is available at British petrol stations, which is insufficient to support a viable British bioethanol industry as it currently exists.
There have been signals from the Department for Transport that suggested that E10 would be introduced imminently, giving the sector further false hope. The Department’s transport energy taskforce recommended lifting the blend level and reintroducing E10 in 2020. The industry interpreted that as meaning that the Government were fully behind it. Nearly four years on, the Government have still to act on that recommendation.
The Minister’s Department issued a consultation and call for evidence on E10 in June last year. The consultation closed in September, but the Department has yet to publish its response to the submissions. Unfortunately, the consultation did not propose to mandate the introduction of E10. Instead, it proposed the introduction of a protection grade requirement to ensure the continued availability of E5 petrol, representing 95% of all petrol sold today. If implemented, that may be a disincentive to move to E10.
Yes, it is competitive. It is probably slightly more expensive, but it is a very small expense. Most of the increase in expense would be from taxation.
The call for evidence on ideas to encourage the introduction of E10 was included in the consultation, but again that signalled only further discussion and delays. It is therefore not surprising that the industry appears finally to be losing faith. The Vivergo closure and the Ensus announcement demonstrate that jobs and investment in the bioethanol industry and the agricultural sector are hanging in the balance. When the Government announced the consultation, they said:
“This government is ambitiously seeking to reduce the UK’s reliance on imported fossil fuels and cut carbon emissions from transport. But drivers of older vehicles should not be hit hard in the pocket as a result”
of the introduction of E10.
On the cost, which the hon. Member for Upper Bann (David Simpson) mentioned, almost all cars built since 2000, and 95% of all cars on the road, are warranted to run on E10, and every new petrol car sold since 2011 is fully warranted to use E10, so about 5% of cars on the roads may have an issue. That includes classic cars, about which the right hon. Member for East Yorkshire (Sir Greg Knight) raised concerns. Any motorists uncomfortable with using a new fuel can always use the premium brands, which need to remain available.
When the fuel is introduced, the industry would be happy to work with the Department to support a public information campaign about E10, including a website with the compatibility details of all car makes and models. That information would also need to be provided at petrol pumps.
The cost of E10 would depend largely on tax levels. It is predicted that it would cost no more than 1p more per litre at the pump, or about £20 per day. Most of that is made up from taxation, rather than the additional cost. The Government could consider a reduction in vehicle excise duty to compensate for any small increase in running costs resulting from using the more premium fuel, so there is a way through this dilemma. There are straightforward solutions to the possible fuel price issue, but the Minister’s Department might be reluctant to introduce E10 due to concerns from a very small minority of motorists whose vehicles are not fully warranted to use E10. I hope that the Minister will clarify that.
On greenhouse gases, there are broader environmental issues to consider, as has been said. Transport represents 24% of total greenhouse gas emissions—higher than any other sector in the UK economy. It is 1.3% higher than it was in 2013. Bioethanol should be seen as a vital tool in helping to decrease those emissions. The UK is currently failing to reach its statutory targets on the amount of renewables used in transport, in line with the renewable energy directive and the UK’s Climate Change Act 2008. Bioethanol is one of the quickest, easiest and most cost-effective ways of meeting those targets. As has been said, the introduction of E10 would take the equivalent of 700,000 cars off the roads.
Up to its closure, Vivergo Fuels was working on projects with the University of Hull and Bangor University to explore the development of even more advanced biofuels, which would have delivered even greater environmental benefits. Ensus has been working with one of the winners of the Government’s advanced biofuel competition grants, Nova Pangea, to produce ethanol from biomass waste products. Unfortunately, the failure of the UK’s investments in first-generation bioethanol puts at serious risk further investments.
The introduction of E10 would also improve air quality by reducing particulates and carcinogens. In the light of the Environment Secretary’s recent announcements, it would make sense for E10 to be embraced. Benzene and butadiene emissions, both of which are highly carcinogenic, decrease with higher levels of ethanol blending in fuel. Additionally, the oxygen contained within ethanol helps the fuel to burn better and increases the efficiency of the engine, reducing the hydrocarbons that are released. E10 is clearly better for the environment than the current grades of petrol sold in the UK. The concerns over diesel have resulted in motorists moving back to petrol, and the growth in petrol hybrids means that addressing the carbon dioxide emissions from petrol cars is even more urgent.
Although a range of technologies, including electric cars, may play a complementary role in decarbonising transportation and improving air quality, the reality is that electric vehicles represent only a small percentage of overall car sales in the UK—currently around 6% of annual sales—and most are hybrid, so in the short to medium term bioethanol and E10 would make a significant contribution. To have the same environmental impact as the introduction of E10, we would need to replace 2 million petrol cars with electric vehicles immediately.
On foreign imports, the closure of the UK’s domestic production of bioethanol will mean a greater reliance in future on imports of bioethanol and soya bean meal, as a substitute for the high-protein co-product DDGS—distiller’s dried grain with solubles—animal feed, which is a by-product of the bioethanol process. Before its closure, Vivergo was the country’s largest single production site for animal feed. It delivered 500,000 tonnes of high-protein feed to more than 800 farms across the UK—enough for about 20% of the UK’s dairy herd. Incidentally, the fermentation process used at the Vivergo plant also made it the UK’s largest brewery.
Soya bean imports are already at about 1.8 million tonnes a year. The majority comes from non-EU countries, and therefore it is likely that it is from genetically modified crops. There will also be a negative impact on the domestic feed wheat market, as a valuable floor for farmers across the UK, which also enables a premium price in the north-east, will be removed. If Vivergo and Ensus were in full operation with mandatory E10, we would have a comprehensive bioethanol industry underpinning UK environmental progress and agricultural sustainability.
Without a British bioethanol industry, the UK will likely become increasingly reliant on imported bioethanol and bioethanol equivalents, predominantly using cooking oil, which is itself shipped many thousands of miles to the UK from China and the US. By contrast, Vivergo sourced its wheat an average of 34 miles from its plant in Hull, which supported sustainability by minimising transportation. The fact that more and more countries are starting to use their own wastes locally calls into question the long-term strategy of being very reliant on imported waste materials from across the planet to meet our decarbonising challenge. A greater reliance on imports will not just represent a missed economic opportunity.
Having addressed some of the clear economic and environmental benefits of introducing E10, I would like to reflect on where the UK sits in comparison with the rest of the world. E10 is already widely available across continental Europe, including in France, Germany, Belgium and Finland, and further afield in the USA, Australia, New Zealand and Brazil. In a real sense, the UK is lagging behind the rest of the world when it comes to the use of bioethanol-blended fuel. In some countries, including the USA and Brazil, much higher versions are available, including blends of up to 85%—E85—so the steps we are asking the Department to take are in no way radical or untested.
At a time of increasingly uncertain international trading circumstances, and in the context of leaving the European Union, E10 increases domestic supply for feed and fuel while lessening Britain’s reliance on foreign markets for both. The introduction of E10 would bring certainty to British businesses, investors and arable and dairy farmers, while supporting economic growth and securing thousands of existing high-skill, high-STEM jobs, and the creation of many hundreds more. Further research could make Britain a world leader in even cleaner and greener bioethanol.
The sustainability concerns over E10 are now resolved, and the renewable transport fuel obligation has resumed its trajectory and has doubled this year. Bioethanol is the cheapest means of meeting the renewable transport fuel obligation, but its contribution is constrained due to the fact that the UK has not yet introduced E10. Although a transition from E5 to E10 is regarded as inevitable and environmentally desirable, it has not yet happened, and the industry has endured years of delay. The DFT’s consultation process late last year did nothing to accelerate it and reassure the industry.
UK-produced bioethanol has excellent environmental credentials and makes an important contribution to the agricultural and food sectors. Without E10 in the British bioethanol industry, the UK will become even more reliant on imports of fuel, proteins and liquefied CO2, recent shortages of which, particularly during the World cup, have exposed the UK’s precarious supply position.
British motorists should have the freedom to make greener choices at the petrol pump. Any remaining concerns at the Department can be resolved and addressed with relatively simple solutions—getting the most polluting cars off our roads can only be a good thing. Many other major developed countries around the world either have already implemented E10 or plan to, and its introduction in the UK has been widely anticipated since 2013.
I urge the Government to now support the sector and mandate the introduction of E10 as a matter of urgency. If not, there is a real risk that the environmental and economic benefits, along with the significant investment and associated jobs created by the UK’s bioethanol industry, will be lost.
There is considerable interest in this debate. I hope that hon. Members will confine their remarks to approximately five minutes, so that everybody can speak. I intend to call the Front-Bench spokespeople at 3.30 pm, to allow them the 10 minutes each that they are allotted. I call Emma Hardy.
It is a real pleasure to serve under your chairmanship, Mr Gapes; I hope that this is the first of many such occasions. I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin) on securing the debate. Just before I came into the Chamber, I was talking to him and I said how tiring it is to feel constantly angry about things. I had just left the main Chamber, where people feel constantly angry. I do not want to get angry and frustrated, so I will settle for deep disappointment and upset instead.
This is significant. The Government’s failure to fulfil their promise on E10 is not just an environmental issue, although that is crucial, and neither is it just an economic issue, although it has sacrificed so many high-quality jobs in my constituency. If the Government do not keep their promises to business, how can businesses ever trust them again? What faith can businesses have that we want them to come to my constituency, to invest there, and to provide those good-quality jobs in future? Businesses need to know that the Government can be trusted when they promise that they are going to do something. My contribution to the debate will focus on the wider significance, which is about more than whether to have E10; it is about whether we need a Government who fulfil their promises to business, especially in the uncertain years ahead.
Vivergo closed—it announced that it was closing on 2 August—because the Government did not introduce E10 as they had promised. Vivergo closed its headquarters, which were in my constituency, and consolidated all its staff in the Saltend Chemicals Park in the east of Hull. The Government passed the RTFO in 2018, but they have continued to drag their heels on the introduction of E10. Mark Chesworth, the managing director of Vivergo, said that the closure was the Government’s fault, because the political indecision had a highly damaging impact on the business and its jobs, and left it vulnerable to changeable market conditions.
It is difficult to put across Vivergo’s significance in my local area. The day that it announced its multi-million pound operation was one of fantastic good news for the area. We want skilled jobs in the constituency. People celebrated and nearly all the local MPs from across the party went there for the photo call and to congratulate the company on opening the plant—it was seen as a good news day. Vivergo contributed money towards Hull’s bid to be city of culture, and to wider projects across the whole of Yorkshire. I am not just having a moan about something that affects my constituency; the Government need to understand that the closure’s significance reaches far wider than just my constituency.
We in Kingston upon Hull West and Hessle know that we need jobs perhaps more than other areas of the country. Some 7.9% of our population are claiming jobseeker’s allowance, which is more than double the UK average. A report by the Centre for Cities think-tank found that Hull has the lowest average wage in the country, at £376 a week. We want high-skilled and high-paid jobs such as those that Vivergo provided.
The wider impact hits beyond my constituency. As my hon. Friend the Member for Scunthorpe said, the plant bought 1.1 million tonnes of feed wheat, sourced from around 900 farms across the Yorkshire region. In all the time that I have been active in the Labour party, this is the first time that farmers from the constituencies of Conservative MPs have been so desperate to meet me and tell me their problems, because they do not feel that the party with which they usually associate themselves is listening to them on this issue. Vivergo supported 3,000 jobs—directly and indirectly—and its contribution to the local economy was £600 million.
As a local MP, I want skilled jobs, which is why I have pushed so hard and talked about Vivergo for such a long time. On 30 November 2017 I wrote to the Secretary of State for Transport on the matter, seeking clarification on the renewable transport fuels obligation. On 15 February 2018 I received a reply from the Minister of State, the hon. Member for Hereford and South Herefordshire (Jesse Norman), which committed to introducing the relevant changes in April 2018. I asked four questions about biofuels and the renewable transport fuels obligation on 8 December 2017. I asked two questions about excise duties and the way biofuels are taxed on 5 December 2017. I met Vivergo in Hull and in London on a number of occasions. The issue is not new to the Government; they cannot claim not to be fully aware of it.
I share the hon. Lady’s passion about this issue. She referred to questions she asked back in 2017. I think that the hon. Member for Scunthorpe (Nic Dakin) and I have seen three or four successive Ministers about the matter. I say to the Minister that one thing that we want to get from the debate is a positive route to making a decision, rather than keeping farmers, Vivergo workers and others hanging on.
The hon. Gentleman makes an excellent contribution. I am fully aware of how long the campaign has been going on and of how long people have been talking about the issue.
The incompetence, the lack of commitment, energy and dedication, and the dereliction of duty—hon. Members can add their own adjectives to describe the Government—has not only cost families in my constituency their jobs and incomes; the damage goes much further. The Government’s failure to fulfil their promise could damage future investment from other businesses in the area. It is therefore vital, for that reason and no other, that the Government keep their promise on E10 and take immediate action.
It is a pleasure to serve under your chairmanship for the first time, Mr Gapes. I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin) on securing this debate on an issue that affects my constituents and those of many hon. Members present.
As we have heard, the industry contributes £600 million to the UK economy every year. In response to targets on renewables announced by the Government over 10 years ago, over £1 billion was invested in the UK to create state-of-the-art bioethanol production facilities. Last year, the industry crumbled, and the UK’s two largest plants announced that they were either closing, in the case of Vivergo, or pausing production, in the case of Ensus, which has its headquarters in my constituency and its plant in Teesside.
I visited the plant shortly after I was elected as the Member of Parliament for Stockton South. Construction of the plant triggered about £60 million-worth of investments. Ensus is a job creator, and it also helps to support this country’s goal of reducing greenhouse gases produced by cars and other vehicles. Over 100 skilled workers from Teesside work on the plant, and Ensus supports a further 2,000 north-east jobs in the supply chain, mostly in farming and agriculture. I visited one of the farms in my constituency—where there are not many farms—that supplies the industry. Two thousand jobs are at risk because of the Government’s prevarication.
Ensus is a leading producer of bioethanol. We know that bioethanol is better for the environment and will reduce carbon emissions from transport. It is also well documented just how damaging such transport emissions are to air quality. The emissions damage people’s health and the environment. Air pollution causes heart and lung disease, and in parts of our towns and cities it is making the air not just toxic but deadly. For anything else found to be a contributing factor to 40,000 early deaths in this country, Parliament would have thrown everything including the kitchen sink at it, to do everything possible to fix it. Bioethanol is not a silver bullet to improve air quality, but if the Government backed E10 now, that would go some way towards reducing emissions, which would improve our environment and air quality.
Does the hon. Gentleman agree that the national message is important, and the Government should hear it? Environmental improvement requires green jobs to come through and green industry to be successful. The Government should encourage that and, in this particular case, to have E10 available in Britain is a no-brainer.
I thank the right hon. and learned Gentleman for making that point more eloquently than me. It is difficult to understand what the barriers to the introduction of E10 might be. Environmental improvement needs to happen through a series of incremental steps—there is no silver bullet—but this one seems to be a win-win.
The owners of Ensus have pointed the finger for the mothballing of their plant in Teesside squarely at the
“sluggish implementation of political objectives for reducing greenhouse gas emissions”.
Three years ago, the Department for Transport recommended doubling the amount of ethanol in fuel; three years later, we are still waiting for action. That means that the investment is paused. A huge plant is lying dormant, with workers on stand-by. Without the introduction of E10, bioethanol demand cannot increase above its current level and therefore cannot contribute to further decarbonising petrol. As a result, the future of the Ensus plant remains in question.
I therefore ask the Minister to address in her response how, if there is no demand, the Government plan to replace the jobs that Ensus provides? How long will she let the UK lag behind the likes of Germany, Australia, New Zealand, Canada and the USA, which already back E10? Is the Minister willing to do all that she can to improve air quality in this country, with E10 being one step towards that?
My constituents ask me to come down here to Westminster every week to vote for jobs in Teesside. I am also here to make the case for a fair deal for the north-east, to help boost investment in our region, and to support and protect the jobs of people on Teesside.
I thank the hon. Member for Scunthorpe (Nic Dakin) for securing the debate. He and I have a long friendship in this House: we both came here in 2010; we are both Leicester City football supporters—the last two matches have not been good for us, but we hope for better days, and we are still seventh in the league, which at the end of the day is not too bad—and, I am pleased to say, he raises many issues on which I fully and wholeheartedly support him, as I do on this occasion.
Over the years, many Members have endeavoured to pursue and promote this issue, including the hon. Gentleman. I thank them for those endeavours. We have a new Minister responsible for the subject in the Chamber, which I hope is a chance for a positive response. As other Members have done in their contributions and interventions, perhaps she will plot a way forward that can deliver what we have discussed.
I declare an interest as a member of the Ulster Farmers Union, a sister body of the National Farmers Union. I will make some short comments from the point of view of the farmers union. I am keen to see how we can all benefit from the promotion of the bioethanol industry sector across the whole of the United Kingdom of Great Britain and Northern Ireland, because if we all pursue the policy, we should all get the benefit.
E10 is a type of petrol that contains up to 10% bioethanol. At the moment, E5 is commonplace on UK forecourts, and it contains up to 5% renewable bioethanol. E10 and even higher grades of bioethanol blends are commonplace in other countries around the world, such as E25 in Brazil—Members might have seen correspondence on that in the papers recently.
E10 legislation would increase demand for UK-derived feed wheat through the increased production of bioethanol. That would decrease the surplus in exportable feed wheat and, in turn, increase the amount of the co-product DDGS, or distillers’ dried grains with solubles, received by the livestock sector as high-protein, high-quality feed. At full capacity, the bioethanol industry in the UK would utilise about 2 million tonnes of feed wheat, with about 50% of that intake returned as DDGS. That provides the opportunity to create 1 million tonnes of UK-derived, high-protein animal feed while offering more protection to arable and livestock farmers from the perils of global commodity markets.
When we look at the intricate detail of the proposition, there is a real possibility of deriving benefit in many sectors, and in many ways, from the development of bioethanol. It seems to me that it needs serious consideration. We therefore look to the Minister for a wholesome and full response.
I was heartened by the work of my local council and its recycling endeavours. As an easy-to-grasp illustration of what it had done, for example, it equated its work on increasing recycling and lessening waste to the number of cars taken off the road—it put it in simple language. The UK-wide introduction of E10 would be the equivalent of removing 700,000 cars from the roads, or 3 million tonnes of CO2. The information provided to me states that the roll-out of E10 would be the fastest and most effective way for the UK to reach its climate change targets, especially as E10 can be used in hybrid electric cars.
Successive Governments have encouraged people to purchase diesel vehicles, and now they tell them not to, so perhaps we have here a method of addressing that. I emphasise to the Minister and other hon. Members taking part in the debate that we need to spread the job opportunities that could come off the back of this industry across the whole of the United Kingdom. We need to encourage the farming sector, too, which has a key role to play. Will the Minister tell us what incentives, strategies or plans are in place to encourage farmers to look more at the bioethanol industry?
Ethanol reduces greenhouse gases emissions by up to 90% compared with conventional fossil fuels. Indeed, the Intergovernmental Panel on Climate Change called for a threefold increase in the use of biofuels in transport by 2030. That briefing went on to note that, at the COP24 summit, renewable ethanol was reported to be the largest contributor to progress in the transport sector, but I believe more can be done.
To conclude, I agree with the hon. Member for Scunthorpe. More needs to be done to understand how best to better use resources to live up to the environmental pledge that we have made, and how to make better use of those resources to benefit us all. It is all about benefiting us all, as well as climate change and addressing those issues. We should be pushing forward with great urgency. I thank the hon. Gentleman again for bringing this issue to the Floor of the House. The debate is much needed and much appreciated, and I look to the Minister to ascertain whether the matter will be acted on in the way that those in the debate wish it to be.
It is a pleasure to serve under your chairmanship, Mr Gapes. I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin) on securing the debate, and it is lovely to be in the Chamber to see three Labour Teesside MPs, as well as other Labour colleagues, leading the charge for farmers and of course jobs.
We have already heard that the bioethanol industry is worth about £1.5 billion to the UK economy annually and supports 6,000 jobs, including apprentices and graduate programmes. However, the industry has been hit by job losses. I will highlight briefly that measures can be taken—the Minister has already heard what they are—to protect jobs and to help growth in the industry, creating future jobs and helping my constituency.
I am sure fellow Members are aware of the thousands of jobs that have been lost around the country by the recent closure of Vivergo and the cuts at Ensus. Northern towns have been hit hardest by the closures, including my area. However, bioethanol is used in making E10 petrol, and legislating for the mandatory introduction of E10 would create jobs. It would also put stability into some of our communities where energy companies are based and be hugely beneficial for the environment. Indeed, many of my constituents have contacted me. Bioethanol is the last thing I expected my constituents to contact me about, but many of them did and they asked me to speak on their behalf today.
It was indeed—better than Brexit.
As we have already heard, legislating for E10 would bring us into line with other European countries, including Germany, France, Belgium and the Netherlands, and other countries much further afield such as Canada, Australia and New Zealand. Others have talked about the advantages of E10, which are numerous and clear and have been outlined very well by my hon. Friend the Member for Scunthorpe. I will reiterate some of the things he said.
Transport is the biggest offender when it comes to greenhouse gas emissions, contributing 28% of the UK’s total, but that figure can easily be reduced. With regards to emissions, in 2013, the use of biofuels was equivalent to taking hundreds of thousands of cars—some say as many as 1.35 million—off the road, and it is predicted that many more could come off the road as well.
E10 produces fewer carcinogens, lower particulate matter and fewer nitrogen oxides, and helps to improve air quality. The public health benefits are massive. All those things have a direct impact on my constituency, where there are seven farms. When people think of my constituency, they see industry and pipes and things, but it is quite rural and seven of my farms—I do not own them personally—sold their wheat to the Vivergo plant, which produced bioethanol, but has closed. The farmers were paid a £10 a tonne premium compared with what they would have got on the export market, so many of my constituents are losing money from the industry’s decline. They have to find new markets abroad, which are generally less stable for them because of currency fluctuations—we have had plenty of them of late—demand, and even Brexit.
The Navigator Seal Sands storage facility, where Ensus stores and redelivers its ethanol, is also in Stockton North, as are Intertek Cargo and analytical assessment branches that provide services to Ensus. In the neighbouring constituency of Middlesbrough, Stockton North employees are employed by a logistics organisation, AV Dawson, which provides supply chain services for the industry. So the people I represent have quite a stake in any decision by the Government to move to E10 and allow that industry to be redeveloped, with a tremendously positive impact on jobs and farmers’ income.
Mandating the use of E10, as we have already been told, would help us fulfil our commitment to the Climate Change Act 2008, in which the UK led the way in a legally binding 2050 target to reduce emissions by at least 80%. Furthermore, the EU renewable energy directive set a target for the UK to produce 15% of its energy from renewable sources by 2020.
The Government launched a consultation on E10 last summer and evidence was submitted on whether and how to best introduce E10 petrol. However, the consultation ended four months ago and still the Government have not stated whether they will support it. The perception is that the Government have been dragging their feet on this issue. For me, implementation of E10 is a no-brainer, as it is for others. Support for fuel with a higher bioethanol content is widespread, from farmers and car manufacturers to environmental campaigners and motorists. It is a puzzle to me why the Government have not made it mandatory at UK pumps before now.
The National Farmers Union also supports the call for E10 as it provides vital opportunities for thousands of farmers, including the seven in my constituency. Without the bioethanol industry, farmers who sell crops for bioethanol production would be forced to export their crops and they would lose, as I said earlier, £10 a tonne if they did that. There are plenty of reasons for the Government to stop dragging their feet and make a positive decision to benefit people in my constituency and further afield, and hundreds of jobs could be created in my constituency.
It is an honour to serve under your chairmanship, Mr Gapes. I thank my hon. Friend the Member for Scunthorpe (Nic Dakin) not only for securing this important debate, but for all his work over many years in championing the bioethanol industry in a cross-party manner.
My constituency of Redcar is home to the Ensus bioethanol refinery, which produces fuel-grade alcohol, animal feed, and carbon dioxide for the beer and fizzy drinks industry. In November, production was paused at the facility for the fourth time since 2011 owing to difficult market conditions. I stand here today to speak up for the employees of Ensus whose jobs now hang in the balance, unsure whether the pause is another temporary blip or a death knell for their industry. One hundred Ensus workers are waiting to hear whether they have a future in an industry that has a huge role to play in this country’s transition to a greener, more sustainable economy. The plant also supports around 2,000 jobs in the supply chain across the north of England, so many people are worried about what the future holds. I sincerely hope the Minister will be able to give them some reassurance.
The Government play an important role in shaping the direction of travel for growth industries as part of the industrial strategies that we hear so much about, but it is clear that the present difficulties that the sites face have come about because Whitehall has said one thing, but done another. It has been especially equivocal in supporting the greater use of bioethanol in fuels, which is the cause of many of the industry’s problems today. The dithering must stop and this next-generation industry must be supported to be the British—indeed, the Teesside—success story that it has the potential to be.
More than 10 years ago, the Government introduced targets to increase renewables, sending a signal to the bioethanol industry that it was time to invest in the capacity needed to deliver on those targets. Since then, more than £1 billion has been invested in state-of-the-art facilities by bioethanol companies. In 2015, when the Department for Transport’s taskforce recommended increasing fuel blend levels to 10%, a further signal was sent to the industry that the Government were fully behind the industry and many in the sector prepared for the future. However, more than three years later, the consultation has only just concluded and we are no further forward. Now the UK’s two largest plants, Ensus in my constituency and Vivergo in Hull—I pay tribute to my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy), whose excellent speech was full of passion and a commitment to fight for her constituents’ jobs—have announced they will either close or pause production, demonstrating how fragile the situation is. Jobs in the bioethanol industry and the closely connected agricultural sector hang in the balance. Under this Government, my constituency has already been forced to handle many industrial job losses—more than 3,000 when our steelworks closed—and I do not want to see another industry close its doors for good.
Some of the questions that we need to hear the Minister answer today—I remind her that employees are watching and listening closely—include how she plans to reverse the industry’s decline in 2019 and give it the support it needs. Will she commit to giving British bioethanol a future, or will the UK source it from abroad when domestic capacity is lost? As we have already heard today, there are wider implications for other renewable energy producers. Why would investors trust the Government’s word and put hundreds of millions of pounds into projects that we desperately need in this country, when, given the experience of the bioethanol project, they might later prove out of fashion with this Government? Certainty and stability is vital for business, and the sector is clear that that has to mean making E10 mandatory for fuel suppliers. Anything less will not provide sufficient confidence that the demand for E10 is there, and the facilities will close for good.
As my hon. Friend the Member for Sedgefield (Phil Wilson) mentioned, there is a concern for the agricultural sector, too, which produces the feed wheat for the industry and consumes the high protein animal feed co-produced by it. The two industries work hand in hand, serving as a stable and reliable co-dependent supply chain. We are not talking about backing E10 for the sake of the producers. We know there is a strong environmental case for introducing E10, reducing carbon emissions equivalent to the removal of 700,000 cars from Britain’s roads, and improving air quality by lowering carcinogens, particulate matter, hydrocarbons, and oxides of nitrogen. Given that transport is now the UK’s most polluting sector, accounting for 28% of the UK’s greenhouse gas emissions, we will not meet our climate change targets without getting to grips with the problem.
Since 2016, E10 has been the optimal reference fuel for all new cars, meaning some 3 million new vehicles are now ready to use it, and more than 95% of cars—those built since 2000—are warrantied for the use of E10, so there can be no concerns that our nation’s vehicles cannot cope with this blend.
This debate is extremely important today because we need the Government to recognise how vulnerable this British industry is, and we need urgent action on E10. I wrote to the Transport Secretary in October to ask for greater urgency in supporting E10. I have also asked many questions in Parliament, as have other colleagues here today, yet here we are with another consultation while jobs in the industry look more vulnerable by the day. Ensus employees in my constituency and people working across the industry and in the supply chain are waiting for reassurance that urgent action from the Government will be forthcoming. I hope to hear that from the Minister today.
It is a pleasure to serve under your chairmanship, Mr Gapes. I too congratulate the hon. Member for Scunthorpe (Nic Dakin) on bringing forward the debate, as well as on his work as chair of the all-party parliamentary group on British bioethanol. He has campaigned on the issue for a long time, and I commend him for that work.
The debate is clearly important for many hon. Members, given today’s turnout and considering everything else that is going on. There is a big debate on the motion of no confidence in the UK Government, yet six Members have intervened and there have been five Back-Bench speeches. That is testament to the importance of the subject and the Minister needs to take heed of that. I note that the six Members who intervened have not hung around to hear the Front-Bench speeches—perhaps I am not a draw in this debate—but they got their points on the record.
The hon. Member for Scunthorpe highlighted the critical state of the industry—the partial collapse that has already happened, the job losses to date, and the fact that it is four years since the Government seemed to be going down the route of making E10 mandatory. Obviously, real frustrations come with that situation. He made an excellent opening speech and raised the key issues. In discussing concerns about the effect on cars, he highlighted the fact that only 5% of cars now on the road are likely to have issues with E10, and confirmed that E5 would not have to be phased out but could remain as a fuel for classic cars. I like the suggestion that tax measures could be used to offset costs for people who might be affected. Considering how we treat classic cars for tax purposes at present, that seems a reasonable suggestion.
As always, we heard from the hon. Member for Strangford (Jim Shannon). All the other Members who spoke concentrated on direct jobs, but he focused on farming and the benefits to be gained for all. I do not think anyone could argue with that philosophy. The hon. Members for Stockton South (Dr Williams), for Stockton North (Alex Cunningham) and for Redcar (Anna Turley)—it is not the first time I have seen the Teesside Collective in action—rightly spoke about jobs in their constituencies, how important the financial hit taken by those constituencies is, and what it means for the wider UK economy. The hon. Member for Redcar mentioned that the area has suffered other job losses, and that it cannot afford to continue to suffer such losses. That is something else that the Minister needs to consider.
The way we understand the Teesside Collective—besides as my colleagues and myself—is as the organisation that has led the way on carbon capture and storage on Teesside. Of course we are hopeful that there will be an amazing plant there. Will the hon. Gentleman join me in commending the collective for the work it has done to secure the plant for Teesside?
I am more than happy to commend it for that. It is important work on an important environmental issue. When we think about it, that is what we are considering—environmental improvements with E10. Carbon capture and storage would certainly do likewise, and I hope that the work will reach its conclusion.
I am a member of the all-party British bioethanol group and have signed the pledge on E10. I urge any hon. Members who have not yet signed it to do so, and to show cross-party support. The hon. Member for Scunthorpe, talking about the future of the bioethanol industry, highlighted the critical stage that things have reached. We have heard about the job losses to date. Government action is required. It could be argued that there is an issue of vested business interests when the bioethanol industry campaigns for mandatory E10. However, as other hon. Members have pointed out, there are clear merits in the E10 proposals, so it makes no sense that the UK Government have been dragging their heels. I hope that the Minister will tell us today why they have done that so far, and what they will do to move things forward positively. She has listened to the speeches, but have she or the Government estimated how many jobs are at stake? How many could be created if Ensus were to get back up and running, and what would the long-term future be with respect to developing mandatory E10?
Transport accounts for approximately a quarter of energy demand, but it lags behind other energy sectors in carbon reduction measures. The bioethanol industry estimates that the introduction of E10 would deliver something equivalent to taking 700,000 cars off the roads, although, interestingly, the hon. Member for Stockton North gave an upper estimate of 1.35 million cars. Have the UK Government done any analysis of what introducing E10 would equate to, in relation to carbon reduction measures?
The hon. Member for Stockton North highlighted the fact that bioethanol blended with petrol reduces carcinogens and particulate matter and can reduce nitrogen oxide emissions, and commented on what that means for air quality. As a doctor, the hon. Member for Stockton South highlighted the medical issues associated with air quality, and we now know that 40,000 premature deaths a year arise from air quality issues. The UK Government have lost in the High Court three times in proceedings about their air quality plan, so what consideration have they given to the air quality benefits and the long-term impact on health of the mandatory introduction of E10?
Has the Minister considered the benefits of E10 that other countries have assessed? It accounts for 95% of petrol sales in the US and is the biggest selling petrol fuel in France, Belgium, Australia and Canada, among others, so it is commonplace in all the other developed countries. Why is the UK lagging behind? Cars are now designed to run on E10, so new cars running on E5 are running inefficiently. Why would we want that? It means greater fuel use and greater emissions. Let us get E10 and make today’s cars more efficient.
The Government may see electric vehicles as a decarbonisation silver bullet but, given that average sales of those vehicles still hover around the 1% bracket, we are a long way from the critical mass of electrical vehicle use that would make a huge difference to carbon reduction. If the Government will not invest enough to get electric vehicle uptake to that critical mass, they need to consider such transitional decarbonisation measures as mandatory E10 and liquefied petroleum gas.
One welcome UK Government measure is the staged increase in the renewable transport fuel obligation from 4.75% to 8.5%, from this month. It is therefore counterintuitive for them not to introduce E10 as a mandatory measure. I would like the Minister to comment on what seems to be disjointed thinking, and what the Department for Transport will do to rectify it.
Hon. Members have talked about the importance of E10 for jobs, air quality and the environment. Why would we want to rely on imports of biofuels in the future, when we could have a fantastic industry in the UK? I make the same plea that everyone else has made, to bring forward E10 as a mandatory measure.
It is a pleasure to serve under your chairmanship, Mr Gapes. I pay tribute to my hon. Friend the Member for Scunthorpe (Nic Dakin) for securing this important debate on an issue that he is committed to. He is a great champion of the biofuel industry.
As we have heard, the bioethanol industry contributes £600 million to the UK economy every year. Over the past 10 years there has been an investment of over £1 billion in bioethanol production facilities. When it comes to greenhouse gas emissions, transport is clearly the biggest offender, contributing 28% of the UK total, as well as contributing to air pollution, as we have heard. I am sure that we all agree that is a serious public health issue. Under the Government’s current plans we are not on course to meet our existing climate change targets under the Climate Change Act 2008. Indeed, last January the Committee on Climate Change warned the Government that their clean growth strategy does not go far enough and that urgent action is needed to meet our legally binding carbon reduction goals in the 2020s and by 2030. In June last year the CCC again warned the Government that we will not meet our targets unless they bring forward new policies such as the introduction of E10.
We know that bioethanol fuel is good for the environment, and that introducing E10 would be equivalent to taking 700,000 cars off the road. E10 petrol is already available in many western countries, such as France, Germany and Finland, and colleagues have also mentioned New Zealand, Australia and the United States. According to the Renewable Energy Association, the introduction of E10 in the UK would be equivalent to replacing 2 million petrol cars with fully electric vehicles. Does the Minister agree that the failure to mandate E10 will make achieving Government targets to source more of the UK’s energy needs from renewable sources more challenging?
Labour supports the growth and development of our renewables industry in order to support high-skill and high-wage jobs across the UK, particularly in the north of England, where colleagues have eloquently highlighted two major areas. The Government’s failure to support the UK bioethanol industry has led to the loss of around 1,000 skilled jobs. In September, Vivergo Fuels, which is the largest bioethanol producer in the UK, announced that it was ceasing production and moth- balling the plant based in east Yorkshire, which employed 150 people directly and indirectly supported 3,000 jobs. Here I will make a local plug because I know that my hon. Friend the Member for Kingston upon Hull East (Karl Turner)—he wanted to attend this debate but could not due to another commitment—raised that point with the Minister at the time. Vivergo was an official northern powerhouse partner, which perhaps tells us something about the Government’s commitment, or lack of it, to the north of England.
One factor leading to the closure of that plant was the Government dithering and delaying their decisions. Does the Minister have a plan for replacing those lost jobs? Does she think that the collapse of the bioethanol industry last year will deter investors from investing in the renewable energy sector? The industry has been calling on the Government to make E10 mandatory at UK pumps. The Government have said that they would like a market-led solution, but petrol companies have pointed out that without a mandate from the Government such a solution cannot be introduced.
The Government also recently closed a call for evidence, which probably means that we are at least another year away from any introduction of E10. I do not believe that the call for evidence will tell the Government anything they do not already know. Will the Minister say when the response to the DFT consultation that closed in September will finally be published? The Government’s lack of leadership and action has led to job losses and the collapse of a key industry. How does the Minister plan to reverse that collapse? Will she now listen to the industry and mandate E10? I look forward to hearing her response.
It is a pleasure to serve under your chairmanship, Mr Gapes, and I must get it out into the open that I am not the Minister responsible for roads, and neither have I been promoted to that position. Unfortunately, the Minister of State, Department for Transport, (Jesse Norman) is taking part in a debate on a statutory instrument, and I am doing my best to step in. I know it was a bit of a disappointment to one of our colleagues to find that I am not a he but a she.
I congratulate the hon. Member for Scunthorpe (Nic Dakin) on securing this debate. Low-carbon fuels such as bioethanol play, and will continue to play, an important role in meeting the UK’s carbon budgets. During this debate, and in parliamentary questions, Members with constituencies in and around Hull and Teesside have made clear the wider economic benefits of UK bioethanol production, and the environmental benefits of deploying bioethanol as a transport fuel. Some may consider that to be a niche matter, but the contributions we have heard today show that it is a nationwide issue.
I had not realised that there was a Teesside collective, but now I see how powerful that force is. I thank the hon. Members for Stockton North (Alex Cunningham), for Sedgefield (Phil Wilson), for Kingston upon Hull West and Hessle (Emma Hardy) and for Redcar (Anna Turley), and my hon. Friend the Member for Cleethorpes (Martin Vickers) for their passionate contributions and representations on behalf of the bioethanol industry and their constituencies. I believe that I will cover many of the issues that they raised, but if I do not address them all, the Minister of State will no doubt respond in writing.
The Government understand the potential benefits of the bioethanol sector, and we stressed the benefits of E10 when advancing draft legislation last year—legislation that doubled targets for the supply of renewable fuel between 2018 and 2020. That provided space for a roll-out of E10 should suppliers choose to deploy it. Concerns about not having a clear legal mandate for E10 are well understood by the Department. In September last year, we concluded a call for evidence on whether and how E10 might be introduced in the UK, and if introduced, how it could be done in a way that addresses the concerns of retailers, fuel suppliers and motorists. The Department has now analysed the responses to that consultation and hopes to publish the Government’s response soon. We are continuing to work with the bioethanol industry. Indeed, I understand that the Minister of State hopes soon to meet the hon. Member for Scunthorpe and representatives from the bioethanol industry, and I believe that a date for that has been set in the diary.
The Minister said that the Government hope to publish a response to the consultation soon, but that is not particularly helpful for people working in the industry who have a mothballed plant and are waiting for a Government decision on the future of their industry. Is there any possibility of the Minister being a little more specific about what “soon” might mean?
The hon. Gentleman spoke passionately about the Ensus plant in Wilton in his constituency. I cannot make that commitment here and now, but a meeting is due to take place—it is in the diary—and there will be further clarification after that. As has been said, that meeting will be open to all those who wish to attend. I cannot give that confirmation right now, but we are committed to working with the sector to ensure that the plants are open and running as soon as they can be.
Plant closures were discussed throughout the debate. The hon. Member for Kingston upon Hull West and Hessle made a very passionate contribution, but I must take her up on one point. I know that she wants this debate to be as respectful as possible, because we do not want to reflect what is happening in the main Chamber on all occasions. She mentioned a Government promise, but I would argue that it was never a promise—we must be clear if something is a Government intention and how that should be perceived, as it is very different from the word “promise”. We must ensure that we are honest in our contributions.
The words I was using were those of the industry, so if the Minister has an issue with a promise being made by the Government, perhaps she should take that up with the industries involved. There is no way that any industry would invest many millions of pounds on a mere suggestion that the Government might be interested in it in future, and if they had not been led to believe that it was indeed a Government promise.
An interpretation of how a Government may respond and a promise are two very different things. The Department is working closely with the sector and will do what it can to support it. We must ensure that we understand the difference between what is and is not a promise.
We heard passionate contributions about the bioethanol sector and businesses in Members’ constituencies, and the halting of bioethanol production at Vivergo Fuels and Ensus plants last year is saddening and regrettable for all those impacted. I understand the frustration of those calling on the Government to act quickly to mandate the introduction of E10.
That is an interesting way of responding to how the business environment is dealing with global issues beyond what the Government may or may not have intended to do, so I do not accept that point.
It is clear that UK producers of bioethanol from wheat have faced challenging market conditions, due in part to high wheat prices following a hot summer, and a low bioethanol price—that may in some way answer the hon. Gentleman’s question. However, it is by no means clear that an E10 mandate would address all the challenges that the UK bioethanol industry has faced. It is also clear that the introduction of E10 is not without barriers, including the need to take into account the concerns of a significant number of owners of vehicles that are not compatible with E10—that point was raised earlier in the debate. To be successful, it is vital that any introduction of E10 is backed by fuel suppliers and consumers alike.
Since its inception, the policy on biofuels in the UK has been complex and not without controversy. Immediately after the renewable transport fuel obligation scheme—RTFO—was set in law in 2007, the Gallagher review into the indirect effects of biofuel production was published. It became clear that to maintain faith in the emissions reductions achieved and to retain consumer buy-in, we would have to address the negative indirect effects of certain biofuels. To reward fuels that may perform worse than the fossil fuels they replace would have undermined the rationale of a scheme designed to reduce greenhouse gas emissions.
It was with those challenges in mind that the Department jointly established a transport energy taskforce with the Low Carbon Vehicle Partnership, to consider how biofuels can contribute to meeting our climate change commitments in the context of measures introduced to address the negative indirect impacts of some biofuels.
The Minister said a few minutes ago that some cars might not be compatible with E10 or even E5. Of course that is the case, but there are always alternatives at the petrol stations pump: diesel, fuel with bioethanol included or ordinary unleaded petrol. I cannot see that as the barrier that she described.
Indeed; that is why the consultation took place. As the hon. Gentleman knows, he can take up those issues further with the Minister of State, which is why we need to ensure that when we respond, we take into account all the issues raised in this debate.
The taskforce report to Government noted not only the potential benefits of E10 in helping the UK to meet our renewable energy targets, but the barriers and risks associated with its introduction, not least in respect of ensuring consumer acceptance. It is clear that UK suppliers, including of bioethanol, have made great progress in ensuring that renewable fuel delivers reductions in greenhouse gas emissions.
Since the RTFO was introduced in 2008, savings in greenhouse gas emissions have increased significantly from 46% to 70% in 2014-15. Latest data suggest that current biofuels provide an average 71% reduction in greenhouse gas emissions even when land use change impacts are included, but it has always been essential to evolve the policy on biofuel. That way, we maintain the integrity of the schemes that promote its use, such as the RTFO.
Following the work of the taskforce and building on the success of the RTFO, in September 2017, the Government set out a 15-year strategy for renewable transport fuels. The strategy established an investment platform to develop sustainable advanced fuels for automotive, aviation and road freight. I am proud to say that, as part of our strategy for renewable fuels, in March 2018, regulations were agreed that make the UK the first to set targets for renewables in transport beyond 2020, all the way to 2032; and the first and only country to set development fuel targets to drive a market for advanced low carbon fuels. For the first time, we have made aviation fuels eligible for reward under the RTFO. Our 15-year strategy for renewable transport fuels is designed to maximise the industrial opportunities to be gained for the UK while maintaining public confidence in the value of renewable fuels.
The hon. Member for Scunthorpe has previously shown support for increased biofuel supply targets in the 2018 regulations. He has also been clear in calling for a mandated introduction of E10. As I said, I am not in a position here and now to update colleagues on when we will publish a response to last year’s consultation on whether and how to introduce E10, but E10 is our main focus in the biofuels policy area. We are working hard to publish the Government response as soon as possible.
I understand that the Minister is not in a position today to tell us when the response will be published, but if I were the owner of a mothballed plant, probably trying to persuade my bank and investors, I would need some kind of certainty. Would the Minister pledge to write to us in the next week to give us a date on which the consultation response will be published, just to help the businesses that need certainty to make future decisions?
The hon. Gentleman once again champions the employers in his constituency very well. As I said, I do not believe that the time it has taken to ensure we make the right decision on E10 via the consultation is the only reason those businesses are in a challenging position. As I mentioned, a meeting is due to take place; that meeting will be the best time and place for a letter to be forwarded. The hon. Gentleman will be in the best place to challenge the Minister of State and get the responses he needs.
I am deeply frustrated that the consultation closed such a substantially long time ago. Can the Minister identify the barriers in the civil service and the ministerial process to getting a decision? In the light of today’s debate, was there not some kind of briefing, impetus or a rocket put under this urgent issue? Will the Minister confirm that, following this debate, a rocket is under it?
The Teesside massive, as I will call them, have no doubt put this issue back firmly on the Minister’s agenda, although no doubt it was already there. We always want to ensure that any consultation we undertake provides a good response to all involved—not just the sector providing the fuel but those putting the infrastructure in place and owners of classic or older cars.
There was mention of the impact on international roll-out. I was reflecting that the roll-outs in Europe have been quite mixed: in some places, they have done well and in others they have not fared as well as one might have assumed. We have to ensure that we get this right. I am hearing, and no doubt the Department is too, frustration at getting a response. That is why a meeting was agreed.
I am sure the Minister understands how frustrated everyone feels, including businesses. To go back to the central point of my speech, does the Minister not acknowledge that trust in the Government will be undermined, potentially undermining investment in areas such as ours, where it is desperately needed?
When Government make rash decisions that are not fully thought through, when a sector is involved, that further undermines trust in Government. That is why it is our responsibility to ensure that we get the right decision. Unfortunately, on occasion, that can take time. The hon. Lady’s frustration has no doubt been noted. It is absolutely right that if and when we roll out E10, we do so in a successful way, not least for EU bioethanol suppliers.
Given the barriers to introduction, it is right that we have taken time to learn from the experiences, good and bad, of the roll-out of E10 in other countries. If a decision were taken to mandate E10 further to last year’s call for evidence, we would also need to test the costs and benefits against firm proposals, ensuring that all those with an interest, including fuel retailers and motorists in particular, have an opportunity to submit evidence. If E10 is rolled out in future, the Government remain committed to ensuring that E5 remains available and that any introduction of E10 is well managed, with information on compatibility made available to vehicle owners.
I appreciate the Minister giving way—she is being extremely generous with her time. I want to pick up the point about costs. We know that the cost of ethanol is lower than oil; unfortunately, bioethanol is currently more highly taxed than petrol, which makes E10 fuels about 1p more expensive—about £20 per year for the average motorist. Tax incentives are extremely important to incentivise behaviour. Are the Government looking at tax incentives to encourage the roll-out?
The Government will be looking at all issues to ensure that, if a roll-out is suggested, it is an option favourable to those pulling into petrol stations. That is why it is interesting to learn what has happened in Europe. In France, I believe, the roll-out was more underwhelming than had been expected and in Germany it did not deliver the impacts that had been hoped, so it is important that we look at this closely.
The hon. Gentleman is trying to tease out a statement from me, when he knows that he has to wait for the consultation to get the response that he wants. I thank him for his tricky intervention, but he will have to wait for the consultation response to get the answer.
The Government agree that the aim must be to reduce emissions and that low carbon fuels must play a part. The regulations made last year introduced a greenhouse gas reduction obligation on suppliers and incentives for the development of fuels capable of delivering higher greenhouse gas emissions reductions. These allow us to reward low carbon fuels because of the emissions reductions they deliver. We have also made £20 million of match capital funding available under the future fuels for freight and flight competition. In the wider context, the Government have recently published two major strategies focused on combating climate change and improving the UK’s air quality. Our Road to Zero strategy sets out a clear pathway to zero emissions vehicles by 2050, and this week we have published our clean air strategy. The pathway is not just about driver behaviour and electrification. Low-carbon fuels will continue to play a vital role in reducing greenhouse gas emissions from the vehicle fleet.
The renewable transport fuel obligation, as amended last year, is expected to save nearly 85 million tonnes of CO2 over the 15-year period from 2018, which represents around a third of transport’s projected contribution to UK carbon budget savings during the 2020s. In achieving those savings there is an opportunity to increase the amount of bioethanol in petrol, from 5% today up to 10%.
The Under-Secretary is doing a grand job stonewalling on behalf of the Minister of State. If there is one message that we would ask to be taken back, it is that we desperately need a date and we need that certainty. Will she commit to go to the Minister and say, “Look, these guys are going to bash your door down if you do not actually make a decision and make it soon”?
That meeting is in place with the Teesside massive, as I am referencing them now. I completely understand the frustration about not having a date, but we need to make sure that we get this absolutely right. A meeting is a place and that can be raised directly with the Minister.
It is not agreed that there is conclusive evidence to show that switching from E5 to E10 will have a significant impact on air quality but I would like to assure Members that, as with all policy on low-carbon fuels, we will continue to assess our policies and support against the ambitious targets we have set to improve air quality and reduce carbon emissions.
If we were to mandate E10, it could give suppliers an opportunity to meet those carbon budget targets in a more cost-effective way. That is why the Department has consistently made clear its desire to work with industry in considering an E10 roll-out. The Government are mindful that rolling out E10 is a huge change to the UK petrol market. If such a roll-out were not managed well, it could impact on motorists across the UK. It is important that we prioritise consumer acceptance and ensure the vehicle fleet, consumers and retailers are ready. As was raised throughout the debate, that is a big responsibility for Government to undertake. We need to make sure that everybody is ready and any decision we make is not rushed.
I would like to thank everyone who contributed to the debate for taking the time to further inform our thinking on E10. I must not forget the intervention made by the hon. Member for Strangford (Jim Shannon).
Forgive me. I know that the hon. Gentleman has spoken very positively about the bioponics of E10. The bioponics will be accounted for in our response to the consultation when it is published.
I thank everyone for contributing to the debate. The use of biofuels is and will remain a challenging policy area. However, this must never stop us from finding the right balance between maximising the contribution that low-carbon fuels can make to reducing greenhouse gas emissions and taking into account the interests of consumers.
I thank all hon. Members who contributed to the debate. As the hon. Member for Kilmarnock and Loudoun (Alan Brown) pointed out, 11 Members contributed in speeches and interventions. I have underlined the importance of the industry for high-quality jobs, green jobs, farming, air quality and carbon reduction targets. It is a very important issue, which has been properly underlined.
I welcome the fact that in her conclusion the Minister said that she and the Government want to work with the industry to deliver an E10 roll-out, if that is what comes out of the consultation. I hope she heard my hon. Friend the Member for Redcar (Anna Turley), who asked her to take a rocket from the debate, so we can get a date and know what is happening. I look forward to meeting the Minister of State next week, with colleagues across the House and representatives of the British bioethanol industry. We will further the argument and hopefully get good responses from him, on behalf of the Government, so we can go forward effectively and make sure that the British bioethanol industry is one not only for now, but for the future, and will contribute significantly to what is happening.
Question put and agreed to.
That this House has considered the future of the British bioethanol industry.
Guildford Borough Council
[Mr Clive Betts in the Chair]
I beg to move,
That this House has considered Guildford Borough Council and its local plan.
I am delighted to have you here, Mr Betts—an expert in the very field we are discussing—and also the Minister. Some years back, I had the same sort of role that she has now, although I did not have the entourage behind me. I used to do debates such as this on my own; I think they were too embarrassed. I am very aware that the Minister cannot comment on the specific details of a local plan in her position, which is quasi-judicial. She must be broad and not specific in her replies. Given the time constraint, I intend to try to set the scene, but I will write to the Minister in the next few days with considerably more detail.
The Mole Valley constituency is not coterminous with Mole Valley District Council; the eastern wards of Guildford Borough Council are within my constituency. They are therefore covered by the Guildford council as regards planning, including the draft local plan. Local residents were consulted, as is standard for local authorities in developing their plan. The plan relating to some of the eastern wards involves massive—and I mean massive—loss of green-belt land. For many residents, the green belt was the basis of their desire to live in Mole Valley; it is what makes it attractive. Protests from individuals and groups, especially parish councils, was particularly vigorous, but it was also careful, constructive and thoughtful. In my opinion, the disregard for the views of those dissenters to the plan, and the manner of that disregard, during the progressive consultations by the council leadership was not good.
Of the land that makes up those wards, a significant majority is green belt or similar. Thanks to our robust planning rules, any development that takes place on that land cannot be of high density or particularly high rise. It is therefore only logical that, when Guildford Borough Council looks around for locations on which to develop, it should look first at brown-field sites, as it has done. It should look to offset increasing height and density with innovative design; the Minister and I know from our local government days that that is possible in some particularly difficult areas of inner London.
This Government, including, if I may say so, my hon. Friend the Minister, has made it clear that that should be the default approach to planning home development in local authority plans. Indeed, my right hon. Friend the Chancellor, who incidentally is a resident in one of the wards in question, recently highlighted the importance of this approach to English local authorities more broadly, not just this one. With that in mind, I am here to highlight the fact that Guildford Borough Council has produced a draft local plan that puts a full 59% of the proposed new development on green-belt land. On top of that, the council has also brought forward deeply concerning proposals for placing a large quantity of industrial land in the little village of Send, on top of a large increase in homes on green-belt land.
The main town for the borough of Guildford is, unsurprisingly, Guildford town. It is an ancient town; the archaeological footprint goes back to Roman days. Clearly, it is a place that must be protected, and it is, but around Guildford town and beyond there are brown-field sites, places of little ecological or historical worth, that could be utilised to meet the borough’s housing need. It is true that many of these sites appear in the local plan, but they are not being utilised in an innovative way that would best unlock their potential. I believe the council should look further at building higher and denser buildings, particularly around prime sites such as the railway stations, which would provide well-positioned, affordable homes to the younger generation of busy commuters in a busy commuter town.
My hon. Friend may be aware that Guildford has run into difficulties with many villages over the production of neighbourhood plans. My intervention is just to tell him that I too am aware of that, in my role as Government champion for neighbourhood planning, and I am dealing with the problem.
I thank my hon. Friend; I think Guildford council, with its behaviour and reputation, will keep him rather busy.
By definition, the surroundings of those villages cannot have a building of any significant height or density. The number of homes per acre of footprint must be low. I wish to concentrate on just two specific areas, the village of Send and the Wisley site, as examples of what this draft local plan would mean if implemented. Both feed on to the A3, which feeds to Guildford to the south, London to the north and the M25 via junction 10. The A3 is overloaded at peak times, and junction 10 is the worst junction on the M25 for delays, heavy traffic and accidents. In recognition of that, Highways England is proceeding through the rigmarole of extending and developing the junction. However, its work will merely enable the better management of the current traffic flow. I believe that Highways England has not factored in, or has not been able to factor in, the increase that would come from the developments proposed for Send and Wisley, and others. Neither Send nor Wisley has a railway station.
Those problems were a major factor in the rejection of the recent appeal to develop the Wisley site along the lines now suggested in the local plan. That rejection followed Guildford council’s refusal of an application by the owners and developers of the Wisley site. There was an appeal where, after a lengthy—I think it was five weeks—inquiry by the inspector, who endorsed Guildford council’s refusal, the decision was backed by the Secretary of State. The three main reasons for the Secretary of State’s refusal were damage to the green belt, lack of infrastructure and traffic overload. It was a sensible decision all round. I even applaud Guildford council for refusing the application. I ask the Minister, then, to imagine the general amazement when Guildford council did an unabashed and blatant volte-face and shamelessly put the Wisley plan back into its local plan, in spite of everything it has done and in spite of what the inspector and the Secretary of State had said.
There has been a long history of refusals on the site, predominantly on the grounds that the site is green belt and that development would cause considerable difficulties on local roads as well as the A3. The majority of those local roads are winding and narrow and there is no realistic hope that they could ever sensibly be expanded. They generally have no lighting and mostly no pavements, and the nature of the roads is not conducive to cycling—although that does not deter the packs of cyclists who go up and down the roads, particularly at the weekends. The Wisley site, if developed, would result in an isolated island of properties, which would need a full range of infrastructure purpose-built at great cost to make the site even remotely viable. In other words, it would end up as an urban island damaging a rural area.
The promoters behind the Wisley adventure are numerous and the links that bind them together are nothing if not convoluted. There appears to be a Russian influence behind the proposers. We know that, for example, the leader of Guildford Borough Council took a trip, or trips, to Russia with a councillor from the Vale of the White Horse, who was working with the Wisley owners. I understand that the reason for the visit was to encourage Russian development in the UK and presumably in Guildford, with an emphasis on Wisley. I understand the interest, because if Wisley is developed the investors stand to benefit considerably—given the sums of money involved, it may be more accurate to say enormously—but, of course, that is not a planning issue.
I will now briefly turn to the village of Send, which, like Wisley, has no railway station and thus also feeds traffic on to the A3. The village has a single two-way central road, with a number of minor roads branching off. The village is surrounded by green-belt land, with development limited to infill opportunities. The village has about 1,660 properties and a population of about 4,000. It is a village, although if Guildford council has its way, that will change.
The local plan proposes to increase housing in Send by 40% as a starter, with four new slip roads on to the overloaded A3. Additionally, Guildford Borough Council will dump 40% of the borough’s new industrial development on this little village. The overload is obvious.
I thank my hon. Friend the Minister for listening patiently as I outlined the threat these villages face. I hope she will now indulge me a little further as I gently remind her why the decision to build on green-belt land is so objectionable. Most obviously, it directly contradicts the Government’s policy. The national planning policy framework makes it absolutely clear that permanence is the central feature of the green belt, and that development on it can be sanctioned only in genuinely exceptional circumstances. My hon. Friend the Member for Grantham and Stamford (Nick Boles), when he was Under-Secretary of State for Communities and Local Government, wrote to me confirming that local housing need does not meet the threshold to be considered exceptional.
For all the problems that the development of these sites will create, I am perhaps most concerned about what would be lost. It is widely accepted that only the presence of the green belt has prevented runaway urban sprawl from London and preserved the unique, rural nature of areas such as my constituency. Remember, both sites are right on the edge of the M25 and right on the edge of what we consider to be the spread of London. I therefore resist in the strongest terms any action that undermines the integrity of the green belt, and I remind my hon. Friend the Minister that when that land is gone, it is gone forever, as she will know from our time working together in inner London.
In this context, the willingness of the Guildford Borough Council leadership to demolish so much green belt in these wards is deeply distressing to me and my constituents. It has been noted by some that both wards under threat are not currently represented by Conservative councillors, and have not been for some time. However, knowing the council leader as I do, I am quite sure that that was never a factor in his thinking. It is certainly not a planning issue.
At this stage of the inquiry into the local plan, my hon. Friend the Minister could make a number of moves, if she agrees with my concerns. She could call in all or parts of the plan, or she could direct modifications to it. At the very least, she could put the plan on hold while she and other experts look at the points that have been made.
In complex cases in my professional field it is routine to seek a second independent opinion. Perhaps the Minister could ask the inspector who sat for the five-week Wisley appeal and rejected the application if he could look at both these cases—particularly the Wisley application, because it is identical to that which he advised the Secretary of State to refuse.
It is a pleasure to serve under your chairmanship, Mr Betts. I draw Members’ attention to my entry in the Register of Ministers’ Financial Interests. Mr Betts, do you mind if I shuffle around a bit? Of course I should not have my back to the Chair, but I want to address my hon. Friend the Member for Mole Valley (Sir Paul Beresford) directly.
I congratulate my hon. Friend on securing this debate on local plans—particularly the draft Guildford local plan—and more specifically on the use and development of land within the green belt. I am grateful for the opportunity to speak on the subject and thank my hon. Friend for the interest he takes in housing, planning and green belt matters, and for bringing these important matters to the Government’s attention. I am also grateful for the opportunity to debate with my predecessor, as a Minister in a former incarnation of my Department, and former leader on Wandsworth Council.
It may come as a disappointment to my hon. Friend that I cannot comment on the specific details of the emerging Guildford local plan, although he mentioned that he already knows that. The Secretary of State has appointed an independent planning inspector to examine the plan, and at some point the Secretary of State may be called upon to act formally in relation to the plan. It is therefore important that he is seen to be acting impartially and allowing due process to run its course in the interests of all parties and the integrity of the planning system as a whole. However, I hope that my hon. Friend will find my contribution at least helpful.
I will start by talking about the importance of local plans in the round. The planning system should be genuinely plan-led, with up-to-date plans providing a framework for addressing the social, economic and environmental priorities for an area, which of course include housing need. Local plans are prepared in consultation with communities and play a key role in delivering needed development and infrastructure in the right places. Community participation is a vital part of accepting the development required to meet our housing needs.
Effectively engaging with communities throughout the process creates the best plans. Having an up-to-date plan in place is essential to planning for our housing requirements, providing clarity to communities and developers about where homes and supporting development should be built and where not, so that development is planned for, rather than the result of speculative planning applications. The Government are determined to build the homes our country needs and help more people get on the housing ladder. We are committed to delivering 300,000 homes a year by the mid-2020s through policies that aim to make better use of land and vacant buildings in order to provide the homes that communities need.
My hon. Friend raised a very good point about where it is appropriate to have higher density use—around railway stations or wherever. I am sure that point has been forcibly made to the planning inspector at those public meetings, and I am sure that, where appropriate, the planning inspector will take that on board.
I am always interested when planning inspectors ask nuanced, leading questions of local plans and answer them themselves at the same time. We await the planning inspector’s comments with interest.
As my hon. Friend correctly stated, the Guildford local plan is currently under examination, with further hearings due to be held on 12 and 13 February. That will give two more opportunities for people already involved in existing issues to make further comments and for the public to attend and listen. The resumed hearings will focus specifically on the implications of the 2016 household projections for objectively assessed need and the plan’s housing requirement. They will not be an opportunity to discuss matters already considered. Following the hearings, we expect the inspector’s report and recommendations to be published later this year. I encourage my hon. Friend and his constituents to study the findings of the examination at that point.
I reassure my hon. Friend of the robustness of local plan examinations. During an examination, an independent inspector appointed by the Secretary of State will robustly examine whether the plan has been prepared in line with relevant legal requirements. That includes the duty to co-operate with neighbouring authorities and whether it meets the tests of soundness contained within the national planning policy framework, including the extensive consultation requirements for involving local communities.
The inspector, in examining the plan against the tests of soundness, will consider, among other things, whether the plan is based on a sound strategy. In examining these matters, the inspector will take account of the evidence underpinning the plan, national planning policy and the views of all persons who made representations on the plan. I trust that reassures my hon. Friend that the examination of a plan is a thorough and robust process.
As the Guildford plan was submitted for examination before 24 January 2019, it will be examined against national planning policy set out in the 2012 national planning policy framework, including the rules on green belt development, which I will say a little bit more about later. The 2012 national planning policy framework maintains strong protections for the green belt and sets a very high bar for alterations to green-belt boundaries. It allows a local authority to use its local plan to secure necessary alterations to its green belt in “exceptional circumstances”. The Government do not list the exceptional circumstances, as they could vary greatly across the country. Instead, it is for plan makers, and the planning inspector at examination, to check that any change is fully justified. Each local authority is expected to plan to meet local housing need, in full if possible, over the plan period. The local authority then has to consider where to find land to fulfil that need. Only if it does not have enough suitable land because of other constraints and circumstances can a local authority consider a green-belt boundary change. That is the national policy position relevant to Guildford’s draft plan.
The revised national planning policy framework, published in July 2018, will apply to any plan submitted after 24 January 2019. In that framework, following consultation, we clarified the steps that a local authority needs to take to ensure that green-belt release is being proposed only in exceptional circumstances and is fully evidenced and justified. The new framework makes it clear that, in order for exceptional circumstances to exist, the local authority should be able to show that it has examined all other reasonable options for meeting its identified need for development. As I hope my hon. Friend will appreciate, there will therefore be more specific tests to demonstrate that exceptional circumstances exist. That will help examining inspectors to pick up on inadequate efforts to find land. It will still be up to inspectors to decide whether the level of evidence provided meets the exceptional circumstances test.
I again thank my hon. Friend the Member for Mole Valley for raising these important issues. He is aware that the Secretary of State has powers to intervene formally in a plan until it is adopted by an authority. However, we consider it important that the plan is allowed to run its full course and be tested properly first, before such action is considered. I strongly encourage my hon. Friend and his constituents to study the findings of the examination carefully when the inspector issues the final report later this year. I genuinely do thank my hon. Friend for his great interest in this matter. The green belt is precious to us all, as is housing for our children.
Question put and agreed to.
UN Climate Change Conference: Government Response
I beg to move,
That this House has considered the UK Government response to the UN climate change conference 2018.
It is a pleasure to serve under your chairmanship, Mr Betts. I thank all colleagues who are here for this important debate, particularly on a day such as this. I was disappointed that the Government felt it was not necessary to give an oral statement following their attendance at COP24. I am pleased that we have the opportunity today to debate and ask the Government the important questions about the action they are taking on climate change.
World leaders arrived at the UN climate talks in Katowice last month with a mandate to uphold the 2015 Paris agreement and respond with urgency to the climate crisis the world is facing. The Intergovernmental Panel on Climate Change report warned of the urgency of this crisis when it recently stated that we must act now to cut emissions in half and limit global warming to 1.5° within the next 12 years, or face catastrophic impacts of climate change.
Global temperatures have been rising for over a century, notably speeding up over the last few years, and are now the highest on record. We know that this causes negative impacts, such as melting of Arctic sea ice, rising sea levels, prolonged heatwaves and chaotic weather conditions. We know why. We release carbon dioxide into the atmosphere by burning fossil fuels for energy, farming, industry and transport, to name a few. These carbon emissions are causing the earth to warm faster.
I thank my hon. Friend for securing this important debate. According to the latest UN report, there will need to be a tripling of ambition globally to avoid more than 2° of warming, and a fivefold increase in ambition to avoid 1.5° of warming. Does my hon. Friend agree that the Minister should highlight what additional measures she is planning to ensure that the UK cuts its own emissions and, at the same time, what additional support the Government will give to developing countries around the world, so that they will meet their targets, too?
I congratulate the hon. Lady on bringing this debate to Westminster Hall. Hopefully, the Minister will respond to all the important issues that we are bringing forward. Does the hon. Lady agree that, with the UK on course to miss its carbon reduction targets and its legally binding target of 15% renewable energy by 2020, it is essential that the Government step up to the plate and ensure that we address this issue urgently? As the hon. Lady rightly says, all of us across the world will suffer.
Absolutely. During those two critical weeks of discussions in Katowice, we saw a distinct lack of political will to tackle climate change with anything like the urgency required. Predictably, countries such the United States and Saudi Arabia sought to deny the science, and routinely disrupted proceedings. However, far too many countries came unprepared to strengthen the international climate process and to agree to finance all targets, leaving us with gaping holes in the rulebook for meeting those targets. Unfortunately, the UK was one such country.
I thank my hon. Friend for securing this important debate. She talked about targets. Does she agree that if we are to meet our obligations under the Paris agreement, we have to aim for net-zero greenhouse emissions before 2050, and if we are serious about meeting that target, the Government must stop dragging their feet and legislate for that net-zero emissions target?
I completely agree with my hon. Friend on that important point, which I will address in my remarks. I hope the Government will respond adequately.
We saw that too many countries came unprepared to agree to those targets, leaving gaping holes in the rulebook. COP24 was a perfect opportunity to achieve two crucial objectives. First, it was a chance for nations to come together and take the deeply troubling recommendations of the IPCC special report on climate change seriously. Secondly, COP24 should have been used to strengthen the pledges in the 2015 Paris agreement, which experts agree is failing to deliver the action needed to meet its ambitious goals. The Paris agreement has us on course to live in a world of between 2.7° and 3.5° of global warming. Yet we are currently set to reach 3° and more.
The hon. Lady is giving a really powerful and eloquent speech, I am only disappointed that the debate has been given so little time. There are two nations that are already at 2°: Mongolia and Tibet. Mongolia is the size of Europe; Tibet is the size of western Europe. It is also where 49% of the world’s population get their water from. We are already seeing temperatures in excess of 2°. Does the hon. Lady agree that we have had enough time for talking and counting the clock down? We are talking about Brexit right now, but this should be the biggest issue and much more time should be given in the House for debate on this matter.
I completely agree with the hon. Gentleman. This is the biggest issue the world is facing right now. We have been given only a one-hour debate in Westminster Hall—we had to push for that; I am very disappointed that the Government did not make an oral statement in the Chamber.
Given the advice from the Energy and Climate Change Committee to the Minister on how to reach net-zero emissions, does my hon. Friend agree that we should have Government time on the Floor of the House to debate this issue more fully?
I completely agree with my hon. Friend. I hope that the Government will consider that very seriously. The lack of leadership from those with responsibility to prevent suffering from climate change, I believe, is shameful. This Tory Government have done little to show that they are serious. We have sat back and allowed other nations to water down our multilateral commitments, and Governments to kick the can down the road and push any concrete decisions on countries cutting emissions to 2020.
I entirely agree with the hon. Lady, but of course all nations, including this one, must do their bit to meet climate change. It is also important, however, not to run this country down. Is it not right to say that coal production and use is rising in India, Russia and Vietnam, but this country will phase it out by 2024? Is that not something to celebrate?
I echo what others have said about the importance of this debate. I am grateful that the hon. Lady secured it; a number of us tried to, but she was the one who succeeded and I am glad. On the point about the UK doing enough, is it not the case that it is easy to say, “We’re getting rid of coal, so we’re the good ones”, when in fact we are outsourcing our emissions to poorer countries? We benefit from our own consumption, but the emissions caused by that consumption are on the account of the exporting country—we should have consumption emissions, not just production emissions.
I absolutely agree with the hon. Lady: we should have those consumption emissions at home in the UK and we should examine what we do, and how we count and account for the emissions that we create.
We have allowed the wealthy Governments internationally to dodge their responsibility towards the poorer countries. At Katowice, climate finance was defined in such a loose way that there is no certainty that adequate finance will be provided to help smaller countries meet their climate obligations. We have allowed loopholes to continue, which the wealthier Governments will continue to exploit.
I have secured this debate to focus attention on the action that this Government must take if we are to prevent runaway climate change—not what sounds good, but what will actually lead to hard outcomes. It is striking that it took at teenager speaking at COP24 to bring some attention to what needs to happen.
In the Minister’s written statement following the conference, she claimed that the UK Government were championing the latest climate science, but where is the evidence? The UK Government’s ambition for a net-zero carbon cluster by 2040 sounds good, but how will we deliver it? The Government have stated that they will be on track to meet the net-zero target only after the fifth carbon budget in 2032, which means that without speedier action over a much shorter timeframe, between 2032 and 2045, achieving net zero by 2045 is not feasible.
Why should we be surprised? We are still on course to miss those international carbon reduction targets. What are the Tory Government doing about that? They have sold off the green investment bank. They have scrapped the Department of Energy and Climate Change. Levels of new low-carbon investment are lower than when they took office. Subsidies and support for tried-and-tested forms of renewable energy sources, such as onshore wind and solar, have been cut, which has put jobs and new low-carbon projects at risk.
My hon. Friend is making an excellent speech. On solar, she knows that the Government are slashing funding for solar energy, ending the feed-in tariffs for solar producers and proposing to end the exporting tariff. Does she agree that that approach has cost 12,000 jobs to date—including in Cardiff, her city and mine—and shows that the Government’s climate plan is not worth the paper it is written on?
My hon. Friend makes an excellent point. Those are the tried and tested technologies that we should absolutely be supporting if we are going to move our economy to a low or zero-carbon economy, which we need to do to prevent runaway climate change.
New projects such as the Swansea bay tidal lagoon are given short shrift and ignored, but fracking is still going ahead, even under our national parks—apart from in Wales and Scotland, of course. There was not a single mention of climate change in the 2018 autumn Budget. It seems that the Government simply do not see climate change as a priority.
Does my hon. Friend agree that the 25% cuts to the number of Foreign and Commonwealth Office staff dedicated to dealing with climate change further strengthen her argument that the Government are not taking tackling fossil fuels seriously?
My hon. Friend is making a powerful speech. Does she agree that climate change is an interlinked issue? We are asking our Government to make representations to the Trump Administration and others who tried to block proceedings at COP24, but we need to make sure that we emphasise to them that climate change is connected to issues such as immigration, which are at the fore in the Brexit debate here and in the US, where they are trying to build walls. If we do not help developing nations, such as the Maldives, Bangladesh and others, which will be partially or fully submerged, we will have even more immigration and desperation from the residents of those nations.
My hon. Friend makes an excellent point. Climate change affects everyone, everywhere. We in this country have a duty to protect those suffering and most at threat, including those on the frontline where those changes are taking place. That is climate justice and it is why adequate finance needed to be agreed at COP24.
To develop that point, I am the climate justice spokesperson for the Scottish National party and a member of the International Development Committee. The Committee recently visited Kenya and Ethiopia to see at first hand why migrants end up in refugee centres, some of them for 10 or 20 years. It is directly related to the climate.
I have two things to say to the Minister. First, a lot of funding that is distributed through the Department for International Development is short term, so the projects that are happening that aim to embrace renewables are small-scale and are for only one or two years, so things are not being developed systematically. Secondly, the World Bank cancelled all upstream oil and gas projects from 2019 so that there will be long-term sustainable renewable projects throughout the world. Unfortunately, the UK Government still fund upstream oil and gas projects throughout the developing world, which will be left with that legacy long into the future. Does the hon. Lady agree that steps need to be taken now?
That is a really important point. We need to make sure that adequate steps are taken in all areas of Government and that action is taken to reach out to communities that are suffering on the frontline where climate change is most urgent.
Climate change needs to be a priority. The Government do not see it as a priority, but that must change. We need climate policies and targets that will lead to urgent reductions in carbon emissions. First, we must get working on achieving net-zero emissions by 2045 immediately, not push it down the road. The technology and the infrastructure are there. The Government just need the political will to get moving on the fourth and fifth carbon budgets, and make climate change a priority. The UK was once a global leader on climate change. Let it be that again. The Climate Change Act 2008 was the world’s first legal framework to set binding carbon and emissions targets. It needs to continue to live up to that precedent.
The Minister needs to think more like the Welsh. A commitment to sustainable development has long been a distinctive feature of Welsh devolution. Before becoming a Member of Parliament, I was the specialist adviser for environment and climate change in the Welsh Labour Government, and I am proud of my work helping the Welsh Government to lead the way with a green growth agenda that provides an alternative model for business. Climate policies are entrenched in the Welsh legislative framework through the Well-being of Future Generations (Wales) Act 2015 and the Environment (Wales) Act 2016. A future generations commissioner has been appointed in Wales to ensure that that commitment is being delivered, which puts Wales above and beyond many Governments around the world, especially the UK Government. In Wales, a focus on low-carbon communities encourages communities to come forward with small-scale renewable energy schemes and changes to infrastructure and transport. That brings about change from the bottom up and hardwires the ability for our communities to be sustainable, which extends to the way that our housing is built and managed in Wales.
Across the UK, I want to see changes to our building regulations to ensure that we are building sustainable housing, which will make it cheaper and easier for everyone, and that there are energy efficiency targets. Action on fuel poverty in Wales has brought together outcomes on tackling climate change and on local skills training and jobs, and has helped to lift people out of fuel poverty. We need to see such policies across the whole UK, not just in Wales. That change to our economy will ensure that green growth is rooted in our businesses, our services and our communities.
Given the importance of European Union grants to green energy projects in Wales, does my hon. Friend agree that it would be good to have confirmation from the Minister today that those sorts of projects will be able to apply for funding from the new UK shared prosperity fund? We were hoping—we were told—that the public consultation would be open by last year, but it has not happened yet.
I thank my hon. Friend for her intervention. It would be good to hear from the Minister on that exact point.
In the light of yesterday’s Brexit vote, we need to keep in mind our role within the European Union and the importance of our being a full EU member. The EU has become the global environmental standard and regulation setter, and it has used its significant influence in trade to tackle climate change. Last year the EU announced that it would refuse to sign deals with countries that did not ratify the Paris climate agreement. That meant a huge shift in how the EU was perceived and in the action it is taking. Brexit also threatens to have hugely negative consequences for our climate action here in the UK. The loss of EU funding and leaving the EU emissions trading scheme would all mean a significant weakening of our ability to take action.
Will the hon. Lady accept an intervention on a factual point?
I know that the hon. Lady is extremely knowledgeable, so I am sure that she will be aware that since 2000 the UK’s reduction in carbon intensity is 60% higher than the EU’s. That is enshrined in domestic legislation. Therefore, I am sure that we will continue to overachieve relative to our EU partners. I would hate for this exceptionally important global debate to be narrowly focused on Brexit.
I thank the Minister for her intervention. I think that it is a wider point, and a very important one, to talk about the impact that Brexit will have on our domestic legislation here in the UK. For example, the loss of EU environmental legislation, which covers roughly half of the UK’s emissions reductions up to 2030, and losing our place as a key advocate of bold action within the EU, will demolish, at a single stroke, Britain’s role as a key player on climate change. We cannot solve this climate crisis as a single nation; climate change recognises no borders.
As I saw with my own eyes in the Arctic recently, climate change is already wreaking havoc on our world, our communities and those who need us most, and it is only set to get worse. It is time for the UK Government to face up to the imminent risks and show leadership. Our response to climate change will define us for years to come. It must be a bold part of the work of every single Government Department, leading the way from the top down to the bottom up. We are rapidly reaching crisis point, and we need to start acting like it.
Thank you very much indeed for that guidance, Mr Betts, and for your courtesy in calling me to speak. I am aware that I arrived a little late, but I was doing some media on the report on sustainable seas by the Environmental Audit Committee. I was over the road to do that, before running here through the rain.
May I begin, Mr Betts, by saying what a pleasure it is to serve under your chairmanship today, and to have such a brilliant and committed member of the Environmental Audit Committee as we have in my hon. Friend the Member for Cardiff North (Anna McMorrin)?
Safeguarding the future for the planet and for our children is one of the defining challenges of our generation. The climate change conference—COP24—was a real opportunity to take decisive action in this area. I will very quickly focus on the scale of the challenge, the solutions that are already available and, of course, the finance that we need to put behind any action.
I will start with the Arctic, which I and the rest of the Environmental Audit Committee visited last year. We saw for ourselves the unprecedented extreme weather that the Arctic faces. The climate is a closed system, so when we warm the ocean, the climate redistributes that heat through the winds, the currents and our weather. We are performing a giant experiment on ourselves, our planet and our oceans, and it really is a very dangerous experiment.
In 2018, the Arctic experienced its third winter heatwave in a row. During winter polar nights—so no sunshine—there were temperatures of 28°C in the Arctic this year. We know that the average temperature rise of 2°C disguises the extremes in temperature that we see at the North Pole. For example, a 1°C rise at the Equator means a 7°C rise at the North Pole, and the temperature in the Arctic has already risen by 5°C, which has huge impacts on the mammals that live there, and of course on the humans who live there, even down to the way that they build their houses.
In this country, we had the “Beast from the East” in March 2018. We were proud to launch our inquiry into UK heatwaves with the snow lying thick on the ground. The Committee Clerk turned to me and said, “Chair, nobody wants to give evidence about heatwaves when there’s snow lying on the ground”, and he was right. But we struggled through that and launched our heatwaves report in 35 °C of searing heat, and we had the hottest ever summer in England. These are extraordinary times. I was walking in the Peak District above Sheffield, Mr Betts, up Lost Lad hill, and I looked at the Derwent reservoir, which was only 75% full, and the village of Derwent and its church spire were now visible.
The world’s leading scientists have warned us that we have just 12 years to avoid devastating climate change. They gave us a report that spelled out the difference between a 2°C rise and a 1.5°C rise. Under a 2°C rise, we lose all the world’s coral reefs; under a 1.5°C rise, we lose “just” 90% of them. That shows the damage that is already baked into the best-case scenario. Of course, in the UK heatwaves raise the spectre of heat-related deaths, such as those in 2003, when there were 2,000 excess deaths in just 10 days. We have never known so much and we have never realised before just how much we have to do.
Our Committee produced a report on greening the finance system and we heard that the carbon bubble presents a huge systemic risk to our investments and our pensions. It presents liability risks, as oil and gas companies are potentially sued; some of them are being sued by the state of New York for some of the damaging issues that came with Storm Sandy. It presents physical risks to us, including the risk of tidal and coastal surge, and of course the transitional risk. If someone’s pension is invested in an oil and gas company and that company cannot get its reserves out of the ground without reaching 4°C, 5°C, or 6°C of warming, their pension is essentially valueless.
We need to move very quickly to green the financial system to avoid a carbon bubble bursting in an unmanaged way. We also need to move much more quickly to mobilise green finance into our economy: into solar, wind, and the new technology that we need.
The two tried and tested examples of carbon capture and storage come from nature: soils and forests. We conducted an inquiry into soils and globally the top foot of soils—the 30 cm of soil around the Earth—holds double the amount of carbon that is in the atmosphere, and more than all the carbon held by all the forests and the oceans combined.
Soils are absolutely critical and I am really glad that the Government signed up to the 4 parts per 1,000 initiative last year. What concerns me is that we do not have a route map to achieve that goal. We have got some great scientists in the UK; they know what the soil content has been over the last 50 years. We need to start paying farmers, through the common agricultural policy, or whatever succeeds it if we leave the European Union, to make sure that we measure, monitor and increase our soils’ carbon content.
I agree wholeheartedly with my hon. Friend the Member for Cardiff North about withdrawing the finance for feed-in tariffs and the difficulties that the green deal has had, including the problems that people have had with it, and the scrapping of the energy efficiency measures in our homes. If we want climate solutions, we must also have climate justice, which means keeping people warm and safe in their homes.
The climate conference was held in Katowice, a coalmining region of Poland. Can I make a bid that, if the UK holds the climate conference in 2020, we hold it in the coalmining region of Yorkshire, which is an example of how we can swiftly move to the new green economy and create jobs in the process? I am sure that Sheffield, Mr Betts, Wakefield and Leeds would be happy to argue the toss over who should win that bid.
Thank you, Mr Betts. I thank my hon. Friend the Member for Cardiff North (Anna McMorrin) for securing this debate. She is not just an excellent constituency MP; she is a leading voice on this issue, here and for the people of Wales, so it is great that she was able to secure this debate and make her speech. As my hon. Friend the Member for Wakefield (Mary Creagh) said, the IPCC has told us that we have 12 years to restrict global warming to 1.5°. It has already risen by 1° from pre-industrial levels. This nation was the first to industrialise, which we should be proud of; it was also the first nation to de-industrialise. Many of the comments the Minister made in her intervention relate to our early de-industrialisation and, obviously, our early industrialisation.
The Centre for Industrial Energy, Materials and Products—which includes researchers from the great University of Leeds—has shown that the UK will miss the fourth and fifth carbon budget targets, which are binding on us under law and are part of our agreements under the conference of the parties process. Those carbon budgets take us to 2032, and CIE-MAP has found that one of the five sectors of most concern was construction. What has happened in housing? When the Government came in in 2010, they scrapped the code for sustainable homes—something that would have kept us on track to meet our carbon budgets for housing. As my hon. Friend the Member for Cardiff Central (Jo Stevens) said, the feed-in tariff proposals take us further away from that target. We need to build low-carbon modular housing, and we need to take control of that process and not listen to the siren voices of the volume housing developers.
We need to look at vehicles—an area in which we are way behind. The Norwegians are talking about phasing out petrol and diesel by 2025, just six years from now. We are talking about a target of 2040, and we cannot even give a clear answer on whether we are going to ban hybrids; we can imagine lots of gaming of the rules if we allow hybrids to continue. On food and drink, the Germans have a plan for resource efficiency. We have no such plan; we are way behind. On clothing and textiles, the Government need to look at the Environmental Audit Committee’s report—its Chair, my hon. Friend the Member for Wakefield, is here, as are several other members of our Committee. That report arose from our sustainable fashion inquiry, and we found so much that could be done within the UK fashion industry and its main production facilities, which are abroad, to make fashion more sustainable. In electronics and appliances, we are not doing enough to drive down electricity use. There is no catching up here; there are no second chances. The Government have said that we will be net carbon zero by 2050, but if we do not do the right thing over the 12 or 13 years to 2032, we will not be able to catch up in the 18 years between 2032 and 2050. It will be game over for our global climate. Who wants that legacy hung around their neck?
Lastly, we are on track in energy production because coal-fired power stations are being scrapped. The industry itself has seen the future, and has already decommissioned or moved into biomass and other forms of energy production. However, if we think the solution is continued gas production—undertaking shale gas extraction in the United Kingdom—we will again fall behind our targets when we move into the fifth carbon budget. We cannot allow that to happen. We need to look at alternatives, including domestic solar, onshore and offshore wind, hydrogen, hydro, and obviously tidal lagoons, for which my hon. Friend the Member for Cardiff North is a great champion. If we do not do that, we will again be behind, and will not meet the legally binding targets that we must meet as a nation. The Government must do better. In the main Chamber, Members are debating confidence in the Government, and part of the reason for my lack of confidence in this Government is their failure to tackle the catastrophic climate change that we will face if we do not meet this challenge.
It is a pleasure to serve under your chairship, Mr Betts, and I again congratulate the hon. Member for Cardiff North (Anna McMorrin) on securing the debate. The UK has historically played a leading role in global climate negotiations; for example, it pressed for the 1.5° ambition in the 2015 Paris agreement. However, in the words of the former UK climate envoy, John Ashton,
“Rule one of diplomacy is, walk your talk: otherwise people stop listening”.
The tragedy is that in recent years, the global leadership role that the UK played on the international stage has been undermined by the systematic dismantling of climate policy at home. We have heard some of this already, but since 2010, Ministers have scrapped zero carbon homes; sold off the Green Investment Bank; made it almost impossible to build onshore wind farms; cut off support for solar power; made no progress on phasing out fossil fuel subsidies; gone all out for fracking, which is quite extraordinary given that that is a whole new fossil fuel industry; and in the area of energy efficiency, which is all too often a poor cousin in these debates, we are woefully behind on some targets—for example, retrofitting some of our most energy-inefficient homes. According to the Institute for Public Policy Research, we could be over 50 years late in getting that target sorted.
The impact of those failures is incredibly real, and we have heard from the Committee on Climate Change that once again, the UK is way off meeting its fourth and fifth carbon budgets. “With each delay,” it says,
“we stray further from the cost-effective path to the 2050 target.”
Beyond that, the sad truth is that even if all those policies were still active, it would not be enough. The problem is that our economy is built on the assumption that precious minerals, fresh air, clean water and rare species can magically regenerate themselves in an instant, and that somehow the Earth will expand to meet our ever-expanding use of resources. The reality is that we have stretched the planet beyond its limits and, without a bold reimagining of how our economy works, it will simply not be able to spring back into shape. The UN 1.5° report made clear that we need to cut emissions to net zero by the middle of this century, but the global economy is set to nearly triple in size during that same period. That makes the job of decarbonisation massively greater.
Greta Thunberg, a 15-year-old climate activist, told world leaders at COP24 in December that
“if solutions within the system are so impossible to find, maybe we should change the system itself.”
She was right. Of course, we need massive investment in renewable energy and energy efficiency and a new, clean public transport system, but we also need to think far more boldly about the way we integrate concerns about our natural world in the way we run our economy. Crucially, we need to limit the resources that we all use. Those in the global north who can radically reduce how much they consume and throw away must do so. We must find new and innovative ways to recycle and reuse materials; there is much talk of dematerialisation and decoupling from energy and consumption, but the truth is that there is no example anywhere in the world of absolute decoupling in anything like the timeframes that we will need if we are serious about getting off the collision course that we are currently on with the climate crisis. We have a huge job of work in front of us.
I am really grateful for this debate, and I want to add one last thing: my quick scan of Hansard suggests that over the past year, there has been only one debate in the main Chamber on climate change. That is not good enough. I hope that we can reinvigorate the all-party parliamentary climate change group, and I invite everyone at this debate to join that APPG so that we can be a bigger force in this place for better climate policy.
It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate the hon. Member for Cardiff North (Anna McMorrin) on securing this highly topical debate. She is an unswerving member of the Environmental Audit Committee, and I am always impressed by her knowledge, her astuteness and the way she expresses herself in that Committee, which is ably chaired by the hon. Member for Wakefield (Mary Creagh), who is also here today.
Some relevant points have been made by other speakers, particularly regarding missed targets and the UK Government’s lack of political will to face up to their responsibilities. Climate change should lie at the heart of every choice that those in power make, for those decisions affect every individual on our planet. We only have one planet—we cannot make any more—and we should be mindful of that every time we make a decision. In the face of the present climate emergency, the possibility of the UK’s 1970s status as the dirty man of Europe returning is becoming more distinct, and I am very fearful of that, as is everyone who attends the Environmental Audit Committee and other committees on climate change.
As has been mentioned, only in October last year the United Nations Intergovernmental Panel on Climate Change warned that we have 12 years to make the unprecedented and unparalleled changes needed to prevent global temperatures rising by above 1.5°C. Exceeding that by even half a degree risks global catastrophe, including floods, fires and famine.
Scotland has long been a leader in the fight against climate change, and we will continue to forge the way in tackling the crisis. The UK Government should look to us, and probably to Wales, for a successful holistic approach to what will be terrible blights on our community if we do not act. A decade ago, in 2009, Scotland set itself the world’s most ambitious greenhouse gas reduction target when the Scottish Parliament voted unanimously to cut the country’s emissions to 42% by 2020. The latest statistics show that we remain well on track to achieve that.
In 2012, Scotland established the world’s first climate justice fund, seeking to mitigate the damage caused by climate change on the world’s poorest communities. By 2021, £21 million will have been distributed through the fund, which is now supporting 11 projects in Malawi, Zambia, Tanzania and Rwanda. Before the United Nations climate change conference, the First Minister announced a further £200,000 for action to tackle climate change. That will be provided to the body supporting the implementation of the Paris agreement. As well as that, the decarbonisation of Scotland’s electricity sector and reductions in emissions from waste have seen us outperform the UK overall, as emissions continue to fall year on year to nearly half of 1990 levels.
Scotland is committed to achieving a substantial reduction in emissions as soon as possible. We have already reduced emissions by 49% compared with 1990. We have met our annual statutory targets for three years running, and are outperforming all countries in western Europe except Sweden. By 2030 we will have the equivalent of 50% heat, transport and electricity consumption supplied from renewable sources—achievable ambitions to do the right thing. A landmark Scottish energy efficiency programme was rolled out in 2018. We will phase out the need for petrol and diesel cars and vans by 2032 through an expansion of the vehicle charging network in urban and rural Scotland, investment in innovative solutions and, most importantly, leadership on procurement from the public sector.
The Scottish National party remains concerned about how climate change will be tackled after the UK’s departure from the EU. The UK Government must give—I hope to hear this from the Minister—clear assurances that there will be no reduction in standards and targets, or that appropriate powers will be devolved to the Scottish Parliament. That is the best solution. I look forward to the Minister’s comments on that very point.
It is clear that the consequences of climate change are environmental at first but can quickly become political and military. The long-term security implications of climate change must therefore be considered when forming defence policy. I look forward to encouraging more green business. It was a pleasure to help with the recently announced Scottish stock exchange plans. I was asked to further the awareness of the Bourse business development through my network of friends and companies that I know. The ethics and environmental and social impact objectives of the Euronext ambitions for long-term investment are sound corporate practice. That will open up excellent opportunities for all companies that wish to grow within Scotland.
I thank the Minister and hope that she has listened to what I have said. Mother Teresa always said, “If you want to change the world, you begin in your own little corner.” I believe that in Scotland we are doing that.
Thank you for your guidance during the debate, Mr Betts. I am delighted to congratulate my hon. Friend the Member for Cardiff North (Anna McMorrin), and indeed all my hon. Friends who have spoken so eloquently in the debate.
When the Minister responds, I am confident that she will remind the House that the Government was a progressive voice in Poland. That is true. Along with other members of the High Ambition Coalition, the UK pledged to step up our ambition by 2020. It is easy to be a progressive voice when what is needed is progressive action, but progressive action requires political will. Repeating a promise that every nation made in Paris three years ago does not show political will. What was needed in Katowice was a clear commitment to deliver on the ratchet process that Paris put in place.
The Minister and I have many political differences, but I say to her in all sincerity that if in a few minutes she were to rise and use the platform of this debate to pledge that the UK will reach net zero emissions before 2050, as Labour has committed to do, I would not play politics. I would welcome her announcement publicly, because it is the right thing to do. Of course, it is a pledge that must be backed by a coherent plan, but in my view it is necessary if we are to chart a way that is even remotely compatible with keeping below the 1.5°C threshold.
I also suggest to the Minister that she may care to reflect that there is also a very good political reason for her to make such a pledge. Failing to do so would make a mockery of her bid to host next year’s conference of the parties. Labour wholeheartedly supports holding COP 26 here in 2020, but as things stand we have serious reservations about whether the Government are up to the task.
We should look at the condition of the UK’s climate diplomacy team, which was referred to earlier. In 2009, under Labour, the Foreign and Commonwealth Office had an army of climate staff—277 strong. Seven subsequent years of Tory austerity halved that. Then the right hon. Member for Uxbridge and South Ruislip (Boris Johnson) became the Foreign Secretary, and the number of officials working full time on climate fell to just 55. I ask the Minister what discussions she has had with the current Foreign Secretary about restoring that workforce of climate diplomats.
Climate diplomacy matters now more than ever. At COP24, the US, Russia, Saudi Arabia and Kuwait refused to welcome the IPCC’s report. Our climate diplomats should have known that in advance and taken active steps against it. When they finally made their position public, our Government should have offered criticism. They did not, just as they did not when President Trump announced his decision to withdraw from the United Nations framework convention on climate change.
Leadership means speaking out. It also means acknowledging our responsibilities as the nation that ushered in the fossil fuel era. Rich nations like us have evaded calls to support the victims of loss and damage. Can the Minister tell the House what we, the fifth richest country in the world, are doing to address loss and damage in the most climate-vulnerable nations resulting from our addiction to fossil fuels? That would be climate diplomacy that could genuinely bring about change at a UK COP.
This year the Warsaw international mechanism for loss and damage is up for review. It is the perfect moment for the Government to make us the first developed nation to provide additional financial contributions to address loss and damage. The latest figures show that climate aid reached $70 billion in 2016—still short of the 2020 target of $100 billion, which COP24 agreed would rise from 2025.
Will the Minister provide an assurance that the UK will take on its fair share of that increase? Will she confirm that she has had discussions with the Chancellor or the Chief Secretary about how they will increase the UK’s contribution towards international climate finance in the next spending review? I am not asking for figures; I am simply asking whether those discussions have taken place in Government. If not, will she accept that they are a necessary precondition to any credible bid by the UK to hold the COP?
Of course, the last thing I want is a trade-off that reduces still further Government finance for tackling climate breakdown here at home. As has been said, investment in our low-carbon economy is at its lowest level in a decade, down 57% in 2017. Will the Minister acknowledge publicly that, according to the independent assessment of the Committee on Climate Change, her clean growth strategy does not get us back on course to meeting the fourth and fifth carbon budgets, and will she explain why, for all her protestation about the effectiveness of energy policy not being simply about how much money the Government spends, she still thinks that the 75% capital allowances for the fracking industry are a sensible use of public money?
I ask the Minister not whether she has read the IPCC report—for all our differences, I acknowledge that she is a diligent Minister and know that she will have done—but whether she will state publicly that she agrees with it. Will she explain to the House why, having read it, she can conclude that the Government’s current policies constitute a sensible response to the climate crisis that it outlines?
I cannot, because of the time.
We need radical, transformative action, and we need it now. The IPCC report demanded
“rapid, far-reaching and unprecedented changes in all aspects of society”—
a far cry from what the Government are offering.
Denial comes in two packages. I do not accuse the Government of denial of the science, but there is another sort: denial of what it will take to stop climate change. Among the many speeches by world leaders at COP24, I was most affected by the words of the 15-year-old Swedish girl, Greta Thunberg:
“We cannot solve a crisis without treating it as a crisis.”
Those are the words of the next generation. I hope that the Minister will heed them and act accordingly.