Wednesday 28 April 2021
[Dame Angela Eagle in the Chair]
GKN Automotive Plant: Birmingham
Virtual participation in proceedings commenced (Order, 25 February).
[NB: [V] denotes a Member participating virtually.]
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I beg to move,
That this House has considered the proposed closure of GKN Automotive plant in Birmingham.
It is a pleasure to serve under your chairmanship, Dame Angela. I declare an interest as, for 47 years, a member of, first, the Transport and General Workers Union and then Unite, and ultimately its deputy general secretary.
Manufacturing matters to the success of the UK. Manufacturing, the genius of science and the national health service have seen more than 30 million people vaccinated against covid. Manufacturing will be key to recovery. Manufacturing—green manufacturing—is key to combating climate change. Manufacturing getting it right is key to the recovery of Brexit Britain. And manufacturing is key to levelling up.
Automotive is the jewel in the crown of British manufacturing, and key companies in the automotive supply chain exemplify that excellence. GKN is one of them. GKN has a remarkable history. The company goes back over 262 years. It made the cannonballs for the battle of Waterloo and built Spitfires for the battle of Britain. The Chester Road plant has been operational for more than 50 years. Historically, it made parts for the original Mini Cooper. Throughout its history, GKN has been central to iconic moments in British history and British culture. Today, it is a major supplier of drive shafts and prop shafts to the automotive industry, supplying almost every car manufacturer in the UK.
In 2018, GKN was subject to a hostile takeover by Melrose Industries, a City firm with a reputation for buying companies, breaking them up and selling them on. For example, in July 2008, Melrose acquired the FKI group, of which manufacturing firm Brush is part. Melrose began selling off parts of the group in 2009 and sold off about 15 businesses between 2009 and 2014. It implemented severe job cuts at the Brush plant in Loughborough, taking the number of employees from 1,200 down to 600, with a further 270 redundancies in 2018, and, in the process, moving production overseas and hollowing out a once great company. Today, global field service engineers still employed by Brush are balloting against fire and rehire pay cuts of up to £15,000.
In 2018, that chequered past mobilised the GKN workers, their union, Unite, and a cross-party group of MPs—I stress that it was a cross-party group—in opposition to the takeover to demand assurances from Melrose that there would be no repeat of that experience if it acquired GKN. In return, Melrose promised that it was “ambitious for GKN’s future” and wished to make it
“an engineering and manufacturing powerhouse…We are British and work in the national interest.”
Following a hard-fought campaign, Melrose then won the shareholder vote by 52% to 48%, with the support of the hedge funds being critical as they sold GKN short. In the years since the takeover there have been some job losses at GKN Chester Road. However, the workers’ union, Unite, had been in discussions with the company about investment in the plant, and GKN Chester Road appeared in good stead, ending furlough in July last year. It was producing, and then out of the blue in February this year the closure of the Chester Road plant was announced by GKN with the loss of 519 jobs, and twice that number in the supply chain. It is now clear—the company has acknowledged this—that it had been planning the closure of the site for two years, with no consultation whatever with the workers. Its intention now is to export production and jobs from Birmingham to Poland and France. The European sites will be the beneficiaries of the loss of 519 well-paid, skilled jobs in an area with twice the national unemployment rate. I often say about Erdington, “It may be rich in talent, but it is one of the poorest constituencies in the country.”
The consequences of closure will be grave, not least the human cost. I visited the site again two weeks ago. One worker in his late 20s has three kids, including two young children. His partner stays at home to raise their children and he is the only breadwinner in the family. The kids go to school locally. Their whole family life is based in Erdington. What will his young family do if the plant shuts? No other well-paid jobs in the area can replace his current job. Another worker in his mid-20s is a single parent with two young kids. His father and grandfather worked at the GKN plant, with 60 to 70 years’ experience working for GKN in the family. What will he do if the plant shuts?
There are also wider consequences for the British automotive industry. What happens to GKN in the coming months will be a litmus paper test for the Government’s commitment to stand up for the industry. On supply chain consequences, GKN supplies nearly every major car manufacturer in Britain with drive shafts and prop shafts. It is the only firm in Britain with the capability to fulfil the orders that it does. What will be the cost to British automotive of losing a British supplier to Europe, particularly as we emerge from the European Union?
On building up supply chain resilience, there is now a welcome and major debate raging about supply chain resilience and certainty. The continuity of supply chains during periods of disruption are vital, as the past 12 months have shown. It is crucial for the resilience and competitiveness of British automotive over its international rivals that we have British-made parts supplying British car plants. At a time when the debate is raging about onshoring jobs and production back to the UK, here we have a company that is offshoring. What will be the consequences for British automotive if we lose the domestic production capacity of such vital components? Do we really want to move from a just-in-time supply chain of a matter of hours to a supply chain four and five days long, stretching all the way to Poland?
Closure is also a threat to the Government’s global Britain agenda. Part of the Government’s agenda is that, post-Brexit, the UK must look to international markets beyond Europe. The Government have sought trade deals with the likes of Japan and Australia. Aside from the merits or demerits of such deals, to benefit from such free trade agreements UK carmakers such as Jaguar Land Rover need enough local content in their cars to qualify to avoid paying tariffs. A driveline or e-axle equates to 15% of an electric vehicle, a significant part of their value. If we lose GKN’s British-made parts, car makers such as JLR could face significant tariffs on the cars they export to international markets. That poses grave risks to the international competitiveness of the industry. What signal does that send about Britain as a place to do business? We run the serious risk of iconic British cars potentially not being considered British-made, because of the lack of local content in them. Surely that cannot be the global Britain that the Government advocate.
There is a potential solution. We must now act to protect the workers, British manufacturing and the national interest. The consultation between GKN and the workforce is ongoing. I pay tribute to the union convener at the plant, Frank Duffy, and his shop stewards and members, for the admirable leadership that they have shown throughout what has been a difficult period for them. They have my unending support and solidarity.
During the consultation process Melrose’s case for closure has crumbled under the weight of scrutiny from the union. Despite Melrose’s claims, the Chester Road site is not unprofitable, but its accounts have been unduly impacted by transfer pricing within the business, so that other plants appear more profitable. The estimated savings from closure have also been shown to be hugely inflated. It is now clear that modest investment in the plant would allow it to be more productive than GKN’s other European plants. It already is more productive than a number of them. Alternatives to closure must therefore now be assessed in good faith by Melrose. Unite, Frank, and Steve Turner the assistant general secretary have all worked tirelessly to develop a cast iron business case for the future of the Chester Road site and they now rightly expect the company to respond in good faith.
Part of their plan would make the Chester Road plant fit for the future of the electrification process in automotive, so that it can play its part in the transition to electric vehicles, by also manufacturing what are called electric drive units. The chief executive of Melrose, Simon Peckham, made a commitment before the Business, Energy and Industrial Strategy Committee in February to assess such alternatives to closure during the consultation with the workers. Melrose must now honour that commitment. In parallel, together with the workers’ union, Unite, I have had constructive discussions with the Secretary of State and the Minister responsible, Lord Grimstone. It is important that the Government now match words with action and show their resolve to protect GKN and its workers. All parties must play their part in finding alternatives to closure, and all options must be considered to save the 519 jobs, and for the continued prosperity of British automotive, which is so vital to the economy of the west midlands.
From what I have outlined today it is clear beyond doubt that the moral argument is on the side of the workers at GKN, but I am the first to recognise that ultimately what matters to save GKN Chester Road is the business argument. That is why it is so important that Melrose should fulfil its commitment to consider Unite’s alternative business case, and that the Government should also act to ensure that that happens, playing their part to the full at the next stages. The Government are not a powerless bystander in the situation. When the national interest is threatened in this way, by the harm that the loss of GKN would inflict on British automotive, it is incumbent on the Government to act swiftly and decisively. It would be churlish not to acknowledge that the early discussions have been positive, and what the Government do at the next stages will be crucial.
I want to end on a positive note, from my years in the trade union movement. People develop an instinct about when battles can be won or lost, and I am steadfast in my belief that, with good faith on all sides, disaster for 519 workers in Erdington can be avoided. I pay tribute to their strength and courage. I can guarantee that they, the workers, will do their utmost to save the plant from closure. They are the living embodiment of all that is great about this country and British manufacturing. We can walk around the floor, as I have many times, and see generation after generation—for 10, 15, 20, 30 or 40 years and more—serving this nation well. They are truly the best of Britain and the best of British manufacturing. It now falls on Melrose and the Government to match their courage to save thousands of British jobs and to act now to secure the future of the great GKN Automotive plant on Chester Road, Birmingham.
It is a pleasure to follow the hon. Member for Birmingham, Erdington (Jack Dromey) speaking up for a manufacturing facility in his constituency. He and I have a great deal in common. We are joint chairs of the all-party parliamentary manufacturing group and we both want to see a strong future for manufacturing in the UK. I am, like him, an MP in the west midlands, where automotive manufacture and the components used in automotive are a key part of our local economy.
I am also a member of the Business, Energy and Industrial Strategy Committee and was a member of it in the last Parliament when Melrose gave evidence on 6 March 2018 ahead of its acquisition of GKN. As the hon. Member said, Melrose also gave evidence to the Committee on 23 February this year. I support his interest in supporting manufacturing in the UK, but as a former business owner I believe there must be occasions when we, Government and broader society should respect the ability of business owners and managers to take the action they consider necessary—often difficult and challenging decisions—in the best interests of their company, and accept that those decisions are being taken for the right reasons.
When GKN came before the Select Committee ahead of Melrose’s acquisition, it is fair to say that there was a pretty strong challenge by my colleagues on Melrose’s plans for the future of GKN. There were questions to the three founders of Melrose amid concern that Melrose was attempting to buy the company on the cheap and then sell off individual bits. In that session, Melrose set out its reason for the acquisition, which was principally to improve a business that in recent years had been only poorly run. As a member of the Committee, I was able to ask the witnesses what their plans were for the long term and what reassurance they could give that they would not simply sell it off. Simon Peckham, the chief executive, said:
“We say we have a three to five-year strapline, and we have always said that.”
“We are quite happy to hold businesses for longer. We are quite happy to go back to our shareholders if necessary and say, ‘This is the wrong time to do something now. We will keep this business.’”
So there is evidence that where the business is right, they will keep it. I therefore asked:
“Could we be confident that in five or 10 years’ time the structure…would be broadly as it is today?”
Simon Peckham was straight. He said:
“No. We have said, between years 4 and 5, we will sit down and work out what the right thing to do is. I cannot give you a commitment about 10 years’ time, but we have set out very clearly in our offer document exactly what we mean.”
I also asked Mr Peckham about how the acquisition of GKN was in line with the Government’s industrial strategy. Mr Peckham replied:
“At the end of the day, we want to invest in R&D. We want to develop these businesses. We want to grow them. We want to improve them. We want to take a GKN business that we think is currently underperforming.”
He said that Melrose had access to the ability to raise finance
“to build GKN, if it is the right thing to do”.
“I accept we are not saying we are going to hold these assets for ever. We are not sitting in front of you misleading you.”
It is therefore clear that Melrose intended to acquire the business, have a look at it and see what it thought needed to be done.
Mr Peckham appeared before the Committee on 23 February this year—three years into its ownership of the business—for a session that was essentially about Brexit, but the opportunity was there for the Chair to ask a question about Erdington. Simon Peckham replied:
“Erdington is one of the difficult decisions that we were presented with. As well as the good stuff we do, when we inherited GKN it was basically a troubled business. Your Committee spent quite a long time talking to them about that and the profit warning they did at the time. As a business, it needed improvement.”
Additionally, he said:
“Let me turn to Erdington, because it is a difficult position. It is one of the difficult things. We have complied with the spirit and the word of every undertaking we gave, but we also said we would make difficult decisions from time to time. Unfortunately, Erdington is one of those.”
Ahead of that session, Melrose sent its “Briefing note: Melrose meeting its commitments”. That set out legally binding undertakings for five years to ensure that Melrose remained headquartered and listed in the UK, that the board would have a majority of UK residents, and that GKN Aerospace and Driveline businesses would retain the same rights to the GKN trademarks. Significantly, rightly or wrongly, there were no undertakings in relation to jobs, employment or sites of any of the GKN businesses.
It is important to consider the business environment since that acquisition took place. In the past 18 months, businesses have had to face the pandemic and the uncertainty of Brexit. There was a huge fall in car sales: the Society of Motor Manufacturers and Traders reported 2020 sales were down 30% ,with showrooms shut for several months. The biggest decline was in diesel cars, but petrol reduced, too, due to a fast growing switch to electric. That sector is not currently served by products from the Erdington factory. That must have played a part in Melrose’s decision to wind down the factory over the coming 18 months.
I have listened carefully and know very well the case made by the hon. Member for Birmingham, Erdington. I am keen to see a strong future for UK manufacturing. I share his concern about the loss of the facility and the impact on his constituents. However, to be fair to Melrose, it made its position pretty clear on acquisition. That was accepted by GKN’s shareholders. The challenging business environment has brought forward a difficult decision. I believe the company must be able to take the action it deems to be in its best interests, while honouring the commitments it has made.
I hope that the phased approach that Melrose proposes over the 18-month period will minimise any impact on those affected individually, and the broader area in Birmingham. I have heard from the hon. Gentleman some of the alternatives proposed for the facility, and I hope that they might provide the basis for retention of some activity there, perhaps under the Melrose ownership or the ownership of others. I very much look forward to hearing from the Minister what steps she may be able to take to assist in that regard.
It is a pleasure to serve under your chairmanship, Dame Angela. I congratulate my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) on securing this debate. I thank him for all he has done to secure the long-term sustainability of the GKN Birmingham plant and to support the 519 workers whose livelihoods are now under threat.
First, I should declare an interest. For 27 years I worked at the Vauxhall car plant at Ellesmere Port, before serving as the north-west regional secretary of Unite the union, of which I remain a member.
The automotive sector is truly the jewel in the crown of British manufacturing. It is deeply distressing to see its future thrown into jeopardy as a result of the pandemic, Brexit and a neglectful Government whose pledges to level up and build back better are worth less than the paper they are written on. We should be very clear: the closure of the plant is not an inevitability, as shop stewards of the plant have demonstrated in their two-part alternative plan. GKN Birmingham remains financially viable. With the right investment and direction, the plant can soon be returned to profitability by improving productivity and transitioning towards the production of parts that will be essential if the UK is to become a world leader in the electric vehicle revolution. The proposals are a testament to the expertise and imagination of workers on the shop floor, whose views are so often disregarded by management, but deserve serious consideration.
As my hon. Friend the Member for Birmingham, Erdington said, the alternative of shuttering the plant doors for good would devastate his constituency, which, like mine, already suffers some of the highest levels of deprivation and joblessness in the country.
The consequences of the plant’s closure would also be felt much more widely. The offshoring of a vital part of the automotive supply chain, and a loss of precious jobs, skills and infrastructure, would be a body blow to an industry struggling to recover from the worst year in its history. As a member of the International Trade Committee, I am acutely aware of how the pandemic dramatically exposed the vulnerabilities of international supply chains. Now, more than ever, we need to invest in domestic industry, and build up skills and well-paid jobs at home. That must begin with the Government investing in the future of Britain’s automotive industry at GKN Birmingham and Vauxhall’s car plant at Ellesmere Port.
When it comes to protecting a critical part of the supply chain at GKN, no option should be off the table, including part or whole state intervention or nationalisation, or any legislative measures that safeguard the plants from asset-stripping venture capitalists. If the Business Secretary fails to act now and make the crucial investment needed to allow the transition of plants like GKN and Vauxhall towards the production of electric vehicles and parts, it will not only condemn hundreds of jobs to the scrapheap, but fatally undermine the Government’s commitments to phasing out diesel and petrol vehicles, and achieving net zero emissions.
The Government face a major test—are they serious about levelling up left behind communities such as Birmingham, Erdington and Birkenhead, or is their pledge to deliver a green industrial revolution just another empty Tory promise? In Birkenhead and Wirral, thousands of jobs hang in the balance.
Thank you for accommodating me and allowing me to be here in person, Dame Angela. I congratulate my good and hon. Friend the Member for Birmingham, Erdington (Jack Dromey) on securing this debate, which is not just important for Birmingham and the west midlands, but is of national significance because of the nature of the issues. I declare an interest as a long-standing member of Unite the union and chair of the Unite group in Parliament.
My hon. Friend has described what Melrose is doing to the GKN automotive factory in Birmingham. Frankly, it is an absolute disgrace. Out of deference to the procedures of the House, we do not curse and use foul language, but what is happening to the loyal workforce at this plant is an outrage. Over 500 jobs—my hon. Friend says 519—many thousands of jobs in the supply chain, and more than 50 years of proud history at the site are in the firing line. If this plant is allowed to close, and I am looking here at the Minister—we do not want just warm words but definite actions—it will be a nail in the coffin of UK manufacturing. We look to the Government for a response and a reaction.
GKN is a living, breathing symbol of a great British company. It has been building critical equipment, including for the defence of the realm, for over 260 years. My hon. Friend mentioned that it was involved in building Spitfires, and cannon balls that were used by the British artillery at Waterloo. Surely that is a history worth defending and a future worth saving.
I express solidarity with Steve Turner, assistant general secretary of Unite, who has been involved in plans to save jobs at the plant and Frank Duffy, Unite convener there, and his members, who have fought valiantly and continue to fight. Despite company promises to build a “British manufacturing powerhouse”, many Members of Parliament, including my hon. Friend and others present, and the trade unions, warned what would happen when Melrose launched its hostile takeover bid three years ago. Sadly, despite the comments, made I am sure in good faith, of the hon. Member for Rugby (Mark Pawsey), those predictions have proved correct. I do not accept the argument that the plant is not viable. Melrose’s directors have been heavily criticised for excessive bonuses and profits. I will not quote a figure, but it is eye-watering.
It strikes me that there are some parallels with what has happened with the European super league, where an elite wring out value from an organisation—in this case, GKN. As we have heard, Melrose is already closing one factory in Birmingham, and now it wants to throw the other, on Chester Road, on the scrapheap with the intention of stripping it of its assets, because that is what asset strippers do: they buy companies cheap, break them up and sell them off, and they throw away what is left. I had some experience of it in the north-east many years ago with Helical Bar, a property company that bought up the capital assets that were sold off cheap from Aycliffe and Peterlee Development Corporation, then sold them off, making a huge profit for Michael Slade, the chief executive, and walked away without adding any value to the community or to the local economy.
The more than 500 skilled engineering jobs under threat at Birmingham are good jobs and part of the backbone of British manufacturing, but apparently they are not valuable to Melrose, because the company just wants to throw them away. However, these jobs are valuable to the workforce themselves—of course they are. They are valuable to the families who the workers support. They are valuable to the communities in the west midlands where the people live. They are valuable to the trade union. They are also valuable to the economy, to us here in this room; well, I hope they are. The question I put to the Minister is: if they are valuable, what are Ministers going to do to save them? What are they going to do to save British manufacturing, especially the automotive sector, as we shift rapidly to electric vehicles? I look forward to the Minister’s comments later in the debate.
The key issue with the GKN plant in Birmingham is whether it is viable, as my hon. Friend the Member for Birmingham, Erdington touched on. Unite the union has worked through the figures and looked at the numbers with independent experts that have been recognised by the company. They looked at whether it is viable, and at Melrose’s claim that, in fact, the plant has been losing money for several years. According to the information I have seen, this seems to be a case of what we would call creative accounting. It is called transfer pricing, where large companies that operate over several sites, often based in different countries, pretend the different sites are buying and selling from each other while building a product. In that way, they can say that some sites are theoretically profitable while others are loss-making, depending on what prices the company chooses to charge itself or elements of itself.
It seems to me that that is a fiction, and it is often used to reduce the tax paid in some countries because the profits made in another are higher. In reality, all the sites contribute to the value of the product made, and that is certainly the case with GKN in Birmingham. Melrose bosses think they can just get the work done cheaper in Poland and France, an appalling attitude for a company that promised the Business, Energy and Industrial Strategy Committee only a short time ago to build a British manufacturing powerhouse.
Unite has developed an alternative plan with the independent experts, and they make it clear that it is possible not only to make a profit on the site but to increase capacity by 50% and deliver annual savings of up to £8 million for GKN. Most importantly, this will save those valuable jobs and create more jobs for the future, but it seems that Melrose is only interested in short-term profit. We need the Government to make Melrose see that this is an offer it cannot refuse. That will mean support for the rapid shift to electric vehicles, which the factory is perfectly placed to take advantage of, as my hon. Friend said.
GKN Birmingham Chester Road produces Driveline components, including side shafts and prop shafts; small, specialist components. According to Unite, the e-axle, known as the eDrive, which is an existing GKN technology that was developed at its UK innovation centre, is a key product that can secure the Birmingham site’s long-term future, as well as the UK’s critical manufacturing capability. The demand for that product will only increase as we move towards full electrification, but Melrose must get serious about supporting its manufacturing base, and so must the Government.
When the company’s chief executive, Simon Peckham, gave evidence to the Business, Energy and Industrial Strategy Committee in February, he put the blame squarely on electric vehicles. He claimed that
“electrification is a threat to jobs as well as an opportunity to grow jobs.”
He also said:
“For GKN Automotive as a whole, electrification is an opportunity; unfortunately, for”
the Birmingham plant “it is not.” We do not accept that. The workers do not accept that, and nor does Unite.
The question is: do the Government accept that electrification will not be an opportunity for those highly skilled engineers, who make parts for top brands, including Jaguar Land Rover, Toyota, and Nissan in my part of the country? Are Ministers, who promised a British manufacturing powerhouse, prepared to let Melrose throw those jobs on the scrapheap? Are they giving up on those skilled workers at a time when they need support most of all? I hope the Minister will let us know when she responds to the debate, because we will not give up on them, and neither will their union. We will fight all the way, because we are fighting for the future of British manufacturing. It is a fight that we are determined to win, even if it takes strikes, protests and other ways to disrupt Melrose’s disgraceful plans. The battle for the Birmingham plant has only just begun.
It would be useful if the Minister let us know which side she is on. Is she on the side of the skilled, productive workers, or that of the short-term, greedy bosses? I imagine the whole country would like to know the answer, especially as we go into the local elections in May. I hope the Minister will tell us.
It is a pleasure to serve under your chairship, Dame Angela. I congratulate my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) on securing this extremely important debate. I am a Unite trade union member, and all of us in the Labour and trade union movement fully understand, particularly on International Workers’ Memorial Day, that an injury to one is an injury to all. That is why I am speaking in this debate as the Member of Parliament for Luton South, a constituency in my home town of Luton that has a long history of car and van manufacturing at the Vauxhall plant, which provides skilled jobs. I know how important those jobs are to our local economy and our communities’ livelihoods, so I send my solidarity to the workers at GKN in Erdington, whose jobs are at risk.
Manufacturing matters, and GKN is a vital strategic supplier to our automotive sector. It has the capacity to transition to new products for electric vehicles, as we have heard. That green capacity will be essential in the future for plants such as Vauxhall in Luton South. Since acquiring GKN, Melrose has sought to offshore manufacturing and transfer—
Order. Rachel, could you hold your microphone a bit closer? That is much easier for us to hear. When it is dangling, you are going very quiet. If you hold it closer to your mouth, that would be fantastic, because we will hear you much better.
I am very sorry, Dame Angela. Apologies for that.
Since acquiring GKN, Melrose has sought to offshore manufacturing and transfer successfully won contracts for UK work away from Birmingham. We know that it wants to offshore production to Poland and France to maximise profit, showing a total disregard for its loyal workers and the surrounding community. As my hon. Friend the Member for Birmingham, Erdington said, the GKN plant is based in an area where unemployment stands at 12.5%, which is significantly higher than the national average. The loss of 519 skilled jobs at the plant in the middle of a pandemic would devastate the community.
The closure of GKN would also have a hugely damaging impact on our domestic automotive supply chain. As we have seen with other forms of manufacturing during the pandemic, it is important to have a robust domestic supply chain. That is increasingly essential for the automotive sector, due to the new rules of origin requirements with regard to tariffs.
It is economically illiterate of the Government to allow the closure of GKN in Birmingham and the offshoring of production. The loss of GKN—a critically important tier 1 supply chain manufacturer—will have a knock-on impact across our automotive sector. What I and others here find astounding is Melrose’s lack of discussion with the workers’ trade union, Unite. Unite’s two-stage plan for the GKN plant, formed through work with shop stewards and independent experts, outlines how productivity can be improved with additional savings, followed by a plan to produce eDrive components for electric vehicles. Estimates suggest that would save more than Melrose’s proposal to close the plant in Erdington, as independent experts believe Melrose has underestimated the cost of relocation.
We need companies such as GKN with eDrive technology based in the UK to help facilitate the sector’s green transition. Demand is increasing for electric vehicle components, with global electric and plug-in hybrid cells expected to rise to 40 million vehicles annually by 2025. Expansion of the eDrive could secure the site’s long-term future and play a pivotal role in the UK industry’s critical manufacturing capability. The eDrive equates to 15% of electric vehicles, comparable to next generation batteries. By 2030, that is expected to increase and make a significant contribution for exporters to meet new rule-of-origin thresholds. The room for GKN’s expansion is there, ready and waiting, and may not only save jobs, but could create them in the long run.
If Melrose intends to push on with this decision, it poses a critical temperature test of the Government’s industrial strategy, because what is levelling up if it is not protecting, promoting and creating skilled, well-paid jobs that are rooted in communities across the UK? If the Government allow GKN Birmingham to close, it will undermine and further expose the UK automotive industry’s supply chain to risk.
The Government must intervene and work with all parties to prevent the closure of GKN in Birmingham, and preventing the closure must be part of a wide interventionist green strategy to transition the automotive sector, ahead of the 2030 ban on new petrol and diesel vehicles. We need an electric vehicle revolution that backs manufacturers and creates new jobs. The Government must lead this step change by creating new gigafactories, protecting and enhancing the domestic supply chain and making electric vehicle ownership affordable. The UK has the skills and capacity to be a global leader in the electric vehicle market, but the Government must create the foundations for the sector to flourish.
It is a pleasure to serve under your chairmanship, Dame Angela. I add my congratulations to my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) on securing this extremely important debate on the future of GKN, a vital employer in his constituency, in a vital industry for the UK economy. He is a really energetic champion for the communities he serves, as I know very well first hand, and he gave a passionate and important speech, which set out perfectly the issues before us today and, crucially, the alternative to closure. We have heard some excellent speeches today that also made those points very clearly. I declare that I, too, am a member of Unite the union, which I will be mentioning in my speech today.
I want to express my solidarity with the workers at the plant in Erdington and in the supply chain who are at risk of losing their jobs. Yesterday, I met Frank Duffy, the Unite convener. Like so many others working at the plant, he has decades of service. The announcement of closure earlier this year came as a devastating blow to him and hundreds of families across the region who have given their lives to GKN over the decades.
I put on the record my deep and profound concern about the decision by Melrose; I hope very much that it will think again. The decision flies in the face of assurances Melrose gave to the House via the BEIS Committee only three years ago. I heard what the hon. Member for Rugby (Mark Pawsey) had to say, but I disagree. This is what is wrong with corporate law and public policy in this country; it is about so much more than simply shareholder return—it is about UK plc. I will explain that a little more.
Let us be in no doubt, as tragic as the proposed closure would be for workers such as Frank, this issue is about so much more than this important and historic plant in Erdington. What is happening here is a canary in the coalmine for UK manufacturing, automotive and decent jobs that level up. How the Government respond is a huge test. Its significance cannot be overstated.
What kind of Government are they? Are they one that actively supports and, where necessary, intervenes in British industry; one that has a real and meaningful plan to transition to a green new deal in key sectors such as automotive; one in which global Britain leads the way in the development and production of new electric technologies, providing decent, high-paid jobs for the future; and one for which levelling up is about a lot more than rhetoric and piecemeal pots of cash handed out on mates’ rates? Or are they a Government—which I fear the Business Secretary wants them to be—who are unashamedly free market and laissez-faire, one in which people, place and opportunity are the fall guys for globalisation and free-market forces?
Ministers might talk the talk of sharing prosperity in every part of the country, of a global Britain, of championing manufacturing and of greening our economy, but what actions they take here will show whether they are actually prepared to walk the walk as well. Be in no doubt at all that we are in a high-stakes global race for green jobs, the technologies and the production capacity, a race in which Britain is being massively outgunned and outmanoeuvred by other countries prepared to invest and intervene on an unprecedented scale to ensure that their domestic industries and workers reap the gains of that new drive.
The status quo does not exist, as the GKN situation shows. Either we fight hard to retain the capacity, the jobs and the opportunities, or they go elsewhere. Let us not forget that GKN is a British company, now proposing to offshore its last UK automotive manufacturing base, against the commitments made by Melrose at the time. Do the Government think that Germany, France or even the US would allow the move of one of their key industrial businesses? Not a chance. This is a key test of Conservative industrial strategy—if indeed they have one.
The Government’s actions so far suggest that they do not believe in an active industrial strategy. They scrapped the Industrial Strategy Council. Through covid, they have had an aversion to sector support, and we have seen a rebranded plan for growth that does not appear to create any growth. There can be no growth for communities in Erdington and beyond if Ministers do not press the company to change course and to invest rather than close the plant.
There is an alternative here, as we have heard so well during this debate. Unite and the workforce, with industry experts, have developed a compelling alternative to closure, which involves an improved productivity plan and a major shift to new products for electric vehicles for their main customers, Jaguar Land Rover and Toyota—which, by the way, lead the way in electric and hybrid vehicles. GKN’s only remaining automotive plant specialises in technologies that are critical to the development and expansion of UK vehicle production—here, just in time, domestically produced, which would not get tied up in rules of origin and the new red tape that we are seeing.
Surely it is a no-brainer for a Government committed to British industry, to British car manufacturing and to Britain leading the way in electric vehicles to do whatever it takes to retain that capacity here in the UK. Or do they stand by and watch it move to Poland and France? This is the real test for this Government, and I really hope that it is one that they will not fail. Will the Minister tell us today, will her Government do what it takes and put pressure on the company thoroughly to explore the alternative business plan, or does she think that that is not her role?
This is also a test of what kind of economy the Government want post Brexit. We were promised the freedom to support and intervene in British industry, outside the EU and free of the constraints of state aid rules. What is the point of that freedom if it is not used? We were promised an economy that could be at the forefront of seizing new opportunities, not one in which key assets were being offshored back to the EU. We have the EU trade deal, but there are clearly issues with rules of origin and the fact that the Government’s much boasted tariff-free trade is anything but, particularly for manufacturers caught up in a web of more red tape and bureaucracy. There is no doubt that this is a factor here.
The planned closure of GKN is also a test for the kind of recovery and economy we want post-covid. If the pandemic has taught us anything about industry, it is that we need more than simply ingenuity and leading innovation; we also need domestic and resilient production capacity. We have seen that long supply chains are not resilient, and that the lack of domestic capacity is bad for our country. Automotive production is a delicate ecosystem—once one part of the system is gone, it weakens the entire thing.
That is why GKN is the canary here. If Ministers are going to follow through on creating a more resilient domestic manufacturing sector, they must protect the automotive supply chain. This plant is right next door to one of its main customers, JLR. The plant in Poland that will take over production if these plans go ahead is four and a half days away. We are seeing the impact of long supply chains already, where production at two of JLR’s plants has recently had to stop because of delays in importing microchips.
Furthermore, the economic hit we have taken during the pandemic—one of the worst in the G20—requires more intervention and stimulus to kick-start recovery and seize the opportunity of the green transition for a more productive, higher skilled, technology-driven economy. That simply will not happen by chance or by market forces. The costs and investment required are too high, and the infrastructure and skills needed would never be met by the private sector alone. All the while, our global competitors are pump-priming their recovery; just look at what is happening in the US under Biden.
The situation at GKN also tests whether the Government really do have a recovery plan, or if it is just more rhetoric. If the Government are serious about levelling up, then that has to be about safeguarding good, decent jobs in the midlands and across the country; investing in people and places; and ensuring we see a transition to green which is just and fair. Letting this plant close on the basis of short-term decisions by private equity flies in the face of levelling up.
This plant has a proud industrial heritage, with over 50 years’ history at the site. It is the only British automotive plant owned by GKN, but now it threatens its future. This is a UK company planning to close its only UK automotive plant and move the jobs overseas. Frankly, it is a disgrace. If the Government care about people and places and levelling up, then it starts with anchor industries and companies in places such as Erdington, where unemployment is twice the national average. The Government must stand up for workers in Erdington and across the country in the supply chain, not stand back and let vulture finance destroy jobs and decimate the proud history in this community.
This is also a test of the Government’s commitment to communities and places in levelling up. That is why we need deeds, not words. While the Government are high on ambition, they are low on action. Labour backs our automotive industry, and we have set out an ambitious three-point plan to safeguard the industry’s future through investment in gigafactories and measures to make owning an electric vehicle more affordable.
Make no mistake, the eyes of workers and voters across the midlands are on the future of GKN and our world-leading automotive sector. If the Government allow the plant to close on their watch, so many more jobs and businesses will be threatened going forward, from Vauxhall at Ellesmere Port to the production location of that iconic British car, the Mini, going electric. Many are watching to see whether or not the Government are really serious about their rhetoric. This is a big test for the Government, one that none of us want to see them fail. The consequences are too great.
It is a great pleasure to serve under your chairmanship, Dame Angela. I congratulate the hon. Member for Birmingham, Erdington (Jack Dromey) on securing this really important debate today. I have an awful lot of respect for him, as he knows. I agree with the hon. Member for Manchester Central (Lucy Powell) about the passion with which everybody has spoken in the debate. It has been absolutely crucial.
The hon. Member for Birmingham, Erdington is a long-standing advocate for the UK automotive sector and champion of the world-class automotive businesses in his constituency, including GKN and Jaguar Land Rover. The proposed closure of the GKN Automotive plant in Birmingham is deeply disappointing. I myself have a background in manufacturing of over 20 years, as the hon. Gentleman probably knows, and I feel a great connection to British industry—in fact, my great-uncle flew Spitfires, so I absolutely appreciate that aspect. I am really sympathetic to the difficulties associated with a situation such as this.
The Government are supporting manufacturing. “Build Back Better: our plan for growth” sets out the Government’s plans to drive growth and build on our competitive advantage through significant investment in infrastructure, skills and innovation. We will pursue growth levels in every part of the UK, enabling the transition to net zero and supporting our vision of a truly global Britain.
The proposed closure of the GKN plant was a great shock to the employees and will be hugely concerning for them and their families. The plant is part of the fabric of the local community, producing components, as we know, for vehicle makers including JLR, Nissan and Toyota. It is a really important part of the UK automotive sector, which provides 149,000 manufacturing jobs. There are examples of employees spending most of their lives at GKN, with some of them being there from the time they leave education until retirement. As we have heard, there are also people in their 20s with young families to support.
The Government are committed to doing what we can to save those high-skilled jobs. The Minister for Investment, Lord Grimstone, met with Liam Butterworth, chief executive of GKN Automotive, last month. That helped the Government to understand the rationale behind the proposed closure and explore options for securing a long-term, sustainable future for the Birmingham plant. At the meeting, welcome assurances were given that all viable alternatives to closure will be considered. Also, my right hon. Friend the Business Secretary and the Minister for Investment met with the hon. Member for Birmingham, Erdington and representatives of Unite the union regarding this issue last month. The mandatory employee consultation provides a platform for alternative proposals to closure to be presented. Unite has developed its sustain-and-transition proposal, and we encourage it to table the proposal formally with GKN if it has not already done so.
The hon. Members for Birmingham, Erdington and for Easington (Grahame Morris) referred to transfer pricing. We have been told by GKN that sales between its plants are carried out on commercial terms, and that is independently audited.
Ultimately, the future of the plant is a commercial decision for GKN management, but we stand ready to discuss viable alternative proposals with GKN management. That could involve investment in capital equipment or skills to stoke the plant’s competitiveness. In the event of closure, with production carefully wound down over the next 18 months, the priority will be to find new jobs for those people who lose their jobs. GKN has committed to supporting its employees through this difficult time. The Minister for Investment will follow that closely.
As we know, the Melrose takeover of GKN in 2018 faced considerable opposition, with cross-party calls for it to be blocked on national security grounds. The takeover was considered by the then Secretary of State fairly and impartially, in accordance with the legal powers provided through the Enterprise Act 2002. Under the 2002 Act, the Government have the power to intervene in mergers on public interest grounds. There are, however, strict and limited grounds for intervention. Ultimately, the review determined that there were no grounds for objecting to the deal. Melrose was required to make commitments to the Ministry of Defence to address matters relating to national security.
In March 2018, the then Business Secretary wrote to Simon Peckham, chief executive of Melrose Industries, setting out additional binding commitments that would be needed in the event that the takeover bid was successful. A copy of the letter and the response from Melrose are available in the House of Commons Library. As we have heard today, there are differing views on whether those commitments have been met. The legally binding post-offer undertakings made to the Takeover Panel are independently verified every six months by third party advisers. The advisers provide a report to the Takeover Panel confirming Melrose’s compliance.
As my hon. Friend the Member for Rugby (Mark Pawsey) said, these are challenging times for the automotive sector. In 2020, 920,000 cars were produced in the UK, which was 29% down on 2019 levels. Businesses across the automotive sector, including GKN, have had to restructure to maintain competitiveness.
The Government have stood shoulder to shoulder with businesses and workers to support them through these challenging times and have provided an unprecedented level of support, including the furlough scheme. That helped protect the income of around 60% of the automotive sector’s full-time employees when production was temporarily suspended last year. In addition, £4.6 billion of liquidity has been provided to the sector through the coronavirus loan scheme. The Government are committed to supporting the sector through these challenging times, so that it can exploit future opportunity.
The global automotive sector is undergoing significant change, as production shifts to zero-emission vehicles and supply chains are restructured to produce new technology. Modern developments in production plants are being accelerated and creating a once-in-a-lifetime investment opportunity for the United Kingdom. To be clear, this is not just about protecting the status quo and retaining the manufacturers that we have in the UK, including JLR, Nissan and Vauxhall, but about stimulating a high-tech market that cements our global position at the forefront of mobility.
The Government have announced £500 million of funding as part of a commitment of up to £1 billion over the next four years through the automotive transformation fund. That will help build, at pace and scale, an internationally competitive zero-emission vehicle supply chain in the United Kingdom, including in key regions where levelling up is crucial, such as the north-east, Wales and the west midlands, as highlighted so well by the hon. Member for Manchester Central.
The UK-EU trade and co-operation agreement provides a phased introduction of the rules of origin requirements for zero-emission vehicles. That was welcomed by the UK automotive sector as it allows manufacturers time to increase local content—an issue raised by the hon. Member for Birkenhead (Mick Whitley). GKN will be an important part of that future supply chain. It is developing cutting-edge vehicle technologies at its innovation centre in Abingdon. Securing investment in gigafactories is a priority to meet demands from UK-based vehicle makers. The Government are in advanced negotiations with several potential investors.
The Government are committed to ensuring that the UK continues to be one of the best locations in the world to research and develop the next generation of vehicle technologies and to manufacture zero-emission vehicles. GKN is at the forefront of these technological developments through its innovation centre in Abingdon. Our aim is that the Birmingham plant also continues to be at the heart of GKN’s manufacturing operations.
As I explained, the Government are ready to discuss alternative proposals that could include investments in capital equipment or in the skills needed to secure future vehicle technology. That would help provide long-term, secure jobs for the dedicated and skilled employees.
I thank all those who have spoken in what has been a powerful debate. We have heard about experiences from Luton to Birkenhead in traditional areas of engineering and motor manufacturing. My hon. Friend the Member for Easington (Grahame Morris) made a powerful contribution and pointed out that the four directors of Melrose have done rather well out of what has happened in the last three years.
Let me go straight to the heart of the matter. This is a great plant with a great history that must not now become history. That would be a betrayal of the workers concerned, but also a betrayal of the British national interest. As the shadow Minister, my hon. Friend the Member for Manchester Central (Lucy Powell), said and the Minister acknowledged, there are serious implications if the remaining domestic producer of vital components for the industry closes and we become dependent on supply chains from France, Poland and beyond. There are serious issues in terms of the British national interest.
It is fascinating that today, in its interesting report, the Covid Recovery Commission talks about
“the Great British Supply Chain”.
A fundamental rethink is under way in terms of vital strategic capabilities, and certainly the Chester Road plant is an absolutely vital strategic capability for companies such as Jaguar Land Rover and Toyota.
Crucially for the next stages, as a former trade unionist I always used to say that ultimately it is about getting to an outcome, a result, for the workers and for the country. That involves three parties. First is Unite, whose work on a well thought through and creative alternative I applaud. Let us be clear: it stands ready to have whatever discussions are necessary. In my experience, they can be difficult discussions, but Unite stands ready to play its part.
Second is Melrose. As I think has become widely known, I am not its greatest fan in terms of how it has conducted itself, but it has committed to looking at alternatives to closure and we must hold it to that commitment. Third is the role of Government to defend the British national interest and unashamedly recognise that the loss of 519 directly employed jobs and all those in the supply chain will have devastating consequences for the industry in the midlands in one of the poorest parts of our country.
The Minister has said some interesting and helpful things about our preparedness to look at a range of options for capital equipment and skills. These things always go in two phases. The second phase—God forbid—I never want to get to, and that is what happens if closure takes place and we have to pick up the pieces. Believe you me: it would be absolutely heartbreaking, were that to ever happen. The first phase is the one that we must concentrate on, so that the plant does not close and so that creative, well thought through alternatives are found and negotiated with assurances given. That is eminently achievable.
The Minister is right that we both have strong backgrounds in the world of work, and I have been involved, sadly, in many, many workplace closures over the years, some of which we have won, such as Rosyth Dockyard. I know what it takes to get to a result; it is eminently achievable. Forgive me if I stress this for one final time: the role of Government will be absolutely key in holding Melrose to its commitments. If they do that, it is possible for a plant with a great history to have a great future. If we meet the workers or talk to car industry executives, we come to recognise just how important this is. It would be utterly heartbreaking, and a betrayal of the British national interest, were the plant to close. That must never happen.
Question put and agreed to.
That this House has considered the proposed closure of GKN Automotive plant in Birmingham.
Redundancy Protection: Women and New Parents
I remind hon. Members that there have been some changes to normal practice to support the new hybrid arrangements. I remind Members participating or intervening virtually that they are visible at all times to each other and us in the Boothroyd Room. If Members attending virtually have any technical problems, they should email the Westminster Hall Clerks’ email address. Members attending physically should clean their spaces before they use them and as they leave the room. I also remind Members that Mr Speaker has stated that masks should be worn in Westminster Hall.
I beg to move,
That this House has considered extending redundancy protection for women and new parents.
It is a pleasure to serve under your chairship, Dame Angela, and to raise the important issue of extending redundancy protection for women and new parents.
Regrettably, as in so many areas where progress is needed, Scotland is being held back from taking action due to employment law being reserved to Westminster. Without power over employment law, Scotland is not able to legislate to protect women and new parents from discrimination and unfair redundancy. Scotland should not have to wait for Westminster to act to prevent widespread redundancy discrimination, and I look forward to the time when we do not have to do so.
However, despite the lack of progress to date, I acknowledge the work undertaken by many Members of this House on a cross-party basis and by organisations such as the Equality and Human Rights Commission, going back many years. In 2015, the commission published research that revealed that one in 20 new mothers are made redundant during pregnancy or maternity leave, or on their return to work. That shocking statistic reveals a disturbing level of disregard on the part of some employers for the needs of women, children and new families.
The following year, the Taylor review into modern working practices highlighted further research that confirmed that the majority of employers expressed a willingness to support pregnant women and new mothers. The report commented favourably on the finding that more than 80% of employers felt it was in their interest to support pregnant women and new mothers. However, women might be less enamoured with the finding that at least one in 10 employers, and possibly as many as one in five, are not willing to support pregnant women and new mothers.
The detailed findings show a disturbing level of acceptance among employers and managers that discrimination against women on the basis of their decision to bear children or their caring responsibilities is acceptable. All the following views were endorsed by at least a third of the employers and managers interviewed for the research:
“During recruitment, it is reasonable to ask women if they have young children”,
and about their plans to have young children;
“During recruitment, women should have to disclose whether they are pregnant”;
“Women should work for an organisation for at least a year before deciding to have children”;
“Women who become pregnant and new mothers in work are generally less interested in career progression than other employees”.
Many of those interviewed claimed to have seen at least one pregnant woman “take advantage” of their pregnancy, and regarded pregnancy as putting an “unnecessary cost burden” on the workplace—quite shocking. Given that those attitudes and views are widely held among employers and managers, is it any wonder that pregnant women and new mothers are so widely discriminated against in the workplace?
I am sure the Minister is familiar with the proverb, “It takes a village to raise a child”. It is 25 years since Hillary Clinton highlighted that, in our modern and highly urbanised society, the underlying premise of that proverb is perhaps truer now than it has ever been. Of course, children are vital to the future of our society and our economy, with declining birth rates, increasing life spans and ever-more dispersed families. Perhaps, whatever we might think in our ever-more digital world, we are collectively becoming more dependent on community networks and wider society than ever before.
How can those interrelationships and that long-term intergenerational benefit work, though, if the first thing that happens to an expectant woman or a new mother is that she loses her job and her family’s ability to raise a child is compromised? However, unfortunately, as the research shows, far too often that is indeed what happens, so I hope it is accepted by the UK Government that no one should have to fear losing their job because they become pregnant. Surely that must be a given.
Between employers and Governments, effective arrangements should be in place to support women and their families through the potentially life-changing process of pregnancy and child rearing. However, under current arrangements, women only have enhanced protection from redundancy until they return from maternity leave, and the evidence is that this protection is not working. All the protection means is that a woman on maternity leave can be made redundant, but must be offered an alternative job above anyone else being made redundant if another job exists, which can prove a very big caveat.
The current law does not stop employers using pregnancy as an excuse for a piece of cost-cutting, as demonstrated by the case of Jessica—which is not her real name. Jessica, whose case was disclosed by the campaign group Pregnant Then Screwed, had a well-paid job, became pregnant, and was made redundant on the day she was due to return from maternity leave. The day before she was due back, which was during lockdown, she received a text telling her to not go into the office, but to be available for a video call with a senior manager. During that call, she was told that she was being made redundant. She had been back at work for all of 30 minutes. She is convinced that the firm simply wanted to cut its staff budget, and by going on maternity leave, she had unknowingly self-selected for redundancy. What a way to treat a member of staff, and what a welcome to the world for her child, into a family now burdened by unaffordable debt and forced to move out of their home, and with a mother whose mental health and career are in tatters.
As an employee of the company, Jessica might have had some chance of arguing a case for discrimination, although the costs and hurdles associated with attempting this would, and do, put most people off trying. On the other hand, Mandy, whose case was highlighted by the Taylor review, had no chance of doing so, because legal protections in the UK are so heavily and deliberately weighted against workers who are not direct employees. Mandy had worked for a bank on a zero-hours contract for several months. However, when she informed her employer that she was pregnant, her hours were reduced to zero; in effect, she was summarily dismissed with no recourse. Mandy is one of those pregnant women and new mothers who have borne the brunt of the increasing casualisation of the UK workforce. She found out that employment status, whether as a direct employee, self-employed, or as a limb (b) worker, is important, because it dictates entitlement to some key maternity and parental rights. Those in the growing number of insecure forms of employment can find their rights greatly diminished, reducing or eliminating their entitlements to maternity and parental pay and leave, health and safety protection, time off for antenatal appointments, and rights to return to work.
The “Insecure Labour” report produced by Maternity Action in November 2020 spells out some of the implications of casualised or insecure work on women workers, and pregnant women and new mothers in particular. Heather Wakefield, chair of Maternity Action, said that the report
“paints a shocking picture, which requires swift and radical action by Government, employers and trade unions to halt the damaging impact of casualisation on the working lives and wellbeing of pregnant women and new mothers.”
Cases such as Jessica’s and Mandy’s are not isolated incidents, certainly not during the pandemic. Last summer, Pregnant Then Screwed conducted research involving almost 20,000 pregnant women and mothers. It found that 10% of pregnant women said that they had been made redundant, or expected to be in the next six months. More than half said that their pregnancy was a factor. Some 11% of women on maternity leave said they had been made redundant, or expected to be in the next six months, and more than 60% said that their maternity leave was a factor. Almost 13% of women who had recently returned from maternity leave said that they had been made redundant, or expected to be in the next six months. Two thirds said that their maternity leave was a factor.
Further research that Pregnant Then Screwed conducted in March and April of this year suggests that the situation is worse this year than it was last year. Surveying 16,000 pregnant women and mothers, it found that 30% believed they had experienced discrimination from their employer during the pandemic. Clearly, if the protection is not working as it should, that is something that should have been addressed long before now. The SNP has been pressing the UK Government to act to protect pregnant women and new mothers facing discrimination and unfair treatment in the workplace, yet five years on from the EHRC research, the UK Government have so far failed to take the necessary steps to prevent redundancy discrimination. Surely the UK Government would agree with the need to protect pregnant women and new mothers.
In 2016, the Women and Equalities Committee recommended the UK Government implement within the next two years additional redundancy protection throughout pregnancy and maternity leave and for six months afterwards. In 2017, in their response to the Committee, the Government indicated that the current position was “clearly unacceptable.” Yet, here we are—four years on and no further forward. Had the UK Government implemented reform within the timeframe proposed by the Committee, many women would have been spared unfair redundancy and discrimination prior to and in the aftermath of the pandemic.
In the absence of action by Government, last year the right hon. Member for Basingstoke (Mrs Miller) introduced a ten-minute rule Bill on pregnancy and maternity redundancy protection, which is still awaiting Second Reading. The Bill seeks to
“prohibit redundancy during pregnancy and maternity leave and for six months after the end of pregnancy or leave, except in specified circumstances; and for connected purposes”.
The SNP wholeheartedly supports the Bill. It is extremely disappointing that the UK Government have yet to put their weight behind it.
Earlier this year, Jamie Hepburn MSP, the Minister for Business, Fair Work and Skills in the Scottish Government, wrote to the Minister responding today, outlining the Scottish Government’s support for a range of reforms to support women and families, including extending redundancy protections for women and new parents. The letter makes clear the Scottish Government’s support for the Bill. It has also been endorsed by Maternity Action, which said that the Government should strengthen redundancy protections by immediately adopting the Bill as its own and expedite it into law.
Commenting on the current law, Rosalind Bragg, director of Maternity Action, said:
“The current law on redundancy and maternity is complex, poorly understood and difficult to enforce.”
She highlighted that women often find the person covering their maternity leave is kept on, while their role is made redundant, and described that as
“a classic case of unfair and unlawful redundancy”.
Maternity Action recognises that it may be impossible for pregnant women and new mothers to devote their energy and finances to pursuing employment tribunal claims, which is why it is important that the timescale for pursuing such claims is extended from three to six months.
Shamefully, due to the UK Government’s inaction on redundancy protection, women across the UK are facing a new wave of pregnancy discrimination and unfair redundancies as the furlough scheme winds down and employees try to return to their jobs. After years of the Government failing to deliver on their commitment to act, urgent legislation is now needed.
In April 2019, the UK Government accepted the need to extend redundancy protection for six months once the new mother has returned to work, afford the same protection to those taking adoption leave and extend redundancy protection for those returning from shared parental leave. It is now time for the UK Government to act and I look forward to seeing those proposals reflected in the Queen’s Speech on 11 May.
If the Minister is able, I am also keen to hear his thoughts and the Government’s plans to protect women and new parents in their employment in the context of the pandemic and the future of work. As we move out of the immediate crisis of the pandemic, some things are very clear. For instance, unfortunately, jobs and job security will be an issue and concern for many people. We cannot simply throw women and new parents on a jobs bonfire post pandemic. Employment protections, equality provisions and flexibility are all areas where, although in-roads have been made, they are not nearly enough. We must accept the need to go further.
Rather than aiming to go back to the old normal, the Government must consider fair work, the future of work, and what jobs and work will and should look like. All of us lose out when we restrict the talent pool by putting unnecessary barriers to work in front of women and new parents. An unthinking return to the same old, same old would be a real lost opportunity to do things differently and to take a lead on the employment policies and practices and structures that will make work possible for women, new parents and those with caring and other responsibilities. Things like the right to request flexible working from the start of a job would make a vast difference to many employees, and would support employers, too, in adopting the working practices and environments that will allow the talents of all employees to properly shine through.
I look forward to the Minister’s response on these and the other points that I have made today.
It is a pleasure to serve under your chairmanship, Dame Angela. I congratulate the hon. Member for East Renfrewshire (Kirsten Oswald) on securing today’s important debate on extending redundancy protections for women and new parents. I can assure her that simply going back to how things were, as she talks about, will not be the case, as I will outline. As we get through to the Employment Bill and further consultation and discussions with businesses and other groups, including Pregnant Then Screwed, I hope we will end up in a far better place to ensure that we can tackle some of those issues.
From the correspondence I receive as a constituency MP and as a Minister, I know what a crucial issue this is, and the pernicious effect that discrimination can have on both the immediate and the longer-term prospects of women in work. More generally, there is the drag that that can put on equality and productivity. Last month, the hon. Member for Glasgow Central (Alison Thewliss) brought a number of representative organisations to talk to me about the challenges that pregnant women and new mothers are facing as a result of covid, so I am aware of the many issues that some women face.
I will start by being crystal clear about two things. First, there can be absolutely no excuse for discrimination against pregnant women or women on maternity leave. There is no excuse for any form of discrimination; it is unlawful. It can have absolutely no place as we start to build back better after the pandemic. We cannot effectively level up if we continue to allow some groups to be treated poorly simply because of who or what they are.
Secondly, I will not hide from the fact that there is a real issue here. The research that we jointly funded with EHRC has been cited and makes for uncomfortable reading. It is worth reminding ourselves of some of the key findings. Around one in nine mothers reported that they were dismissed, made compulsorily redundant when others in their workplace were not, or treated so poorly that they felt that they had to leave their jobs.
I thank the hon. Member for East Renfrewshire (Kirsten Oswald) for setting the scene so well. From his comments, I understand the Minister is sympathetic to this issue. Overall, three in four mothers, 77%, said they had a negative or possibly discriminatory experience during pregnancy, maternity leave and/or return from maternity leave. They have an issue that needs to be addressed. I understand that the Government will respond in a positive way but even though the Government are indicating welcome measures, such as extension of time protection on return from maternity leave, there are wider aspects that need to be addressed, such as shared parental leave, and the stigma that still attaches to a father taking that essential leave. When the Minister makes his good points, will he also address that?
The hon. Gentleman is absolutely right. There are plenty of wider issues to be considered, including the right to request flexible working that we have heard about. Making that a default option is something we have talked about significantly and want to ensure is at the heart of the Employment Bill, when parliamentary time allows that to come forward.
We still need to do plenty of work with shared parental leave. We have collected a lot of data through the consultation as part of the formal evaluation of the shared parental leave and pay scheme. That will give us a fuller picture of how well the current system of parental leave and pay overall is working for parents and employers. Some of the examples that we hear time and again in the Chamber and Westminster Hall indicate that it is not working, so there is plenty more that we can do.
To return to the findings I was talking about before the hon. Gentleman’s intervention, if they are scaled up to the general population, it could mean as many as 54,000 mothers a year are losing their jobs, in many cases simply because they have had a child. Furthermore, our research found that one in five mothers said they had experienced harassment or negative comments related to pregnancy or flexible working from their employer or colleagues. If scaled up, again, to the general population, that could mean as many as 100,000 mothers having similar negative experiences. That can never be right.
The case for Government action is as clear as day. That is why we consulted on measures to improve redundancy protection for pregnant women and new parents. Following that consultation, the Government’s formal response said that we will: ensure the redundancy protection period applies from the point the employee informs the employer that she is pregnant; extend the redundancy protection period for six months once a new mother has returned to work; extend redundancy protection into a period of return to work for those taking adoption leave, following the same approach as the extended protection provided for those returning from maternity leave; and extend redundancy protection into a period of return to work for those taking shared parental leave. We have been clear that we will introduce these measures as soon as parliamentary time allows.
The ten-minute rule Bill from my right hon. Friend the Member for Basingstoke (Mrs Miller) was raised. I am aware of calls for us to do things differently. Indeed, I met my right hon. Friend and other colleagues to discuss her proposal, which follows aspects of the German approach, and my predecessors held similar meetings. It is not the objective that we disagree on but the means of achieving it, and even then we share a lot of common ground. The key difference is that the Government’s preferred approach retains and extends the current position of giving the pregnant woman or new parent preferential treatment so that, in effect, they are first in the queue for suitable remaining jobs in a redundancy situation. Others suggest removing the current framework and replacing it with a comprehensive redundancy band with some very limited exceptions so that, in effect, that a pregnant woman or new mother could only be made redundant when a business is closing down. The Government have not yet been convinced by that argument.
At its simplest, taking that approach could require employers to continue to employ people even when there is no work for them to do if the business continued to exist. That burden would fall particularly heavily on small businesses. That is why we continue to believe that extending the existing framework remains the right approach. We believe that we are more likely to promote the culture change we seek by placing a slightly more flexible requirement on employers for an extended period. The six-month extension of additional redundancy protection into a return-to-work period will provide a period of up to 27 months when pregnant women and new mothers will be first in the queue for suitable remaining jobs in a redundancy situation. I believe that will represent a considerable and significant step forward in redundancy protection for pregnant women and new mothers.
I have heard the arguments that there ought to be a role for state enforcement in redundancies involving a pregnant woman or new mother. We need to tread carefully when looking at state roles within those sort of areas. All redundancies should be fair, and it would not be rational to treat one group within the workplace any differently from another by giving them a different arbiter in the redundancy process. I appreciate the pressure and strain that the employment tribunal system is under and will be under owing to the covid pandemic, but none the less it has considerable strengths. For instance, it allows for careful consideration of employment disputes, which are often complex or may not be clear-cut, by those with appropriate expertise. Case law from employment tribunals allows our laws to evolve and develop to reflect changing working practices.
However, I am only too aware that improving redundancy protection only goes so far. The majority of employers report that it is in their interest to support pregnant women and those on maternity leave, with the main reasons being to increase staff retention and to create better morale among employees, but we know that many employers feel that women should declare up front during recruitment whether they are pregnant. EHRC and Department for Business, Innovation and Skills research back in 2016 put a figure of 70% on this. Further, the same research found that a quarter of employers felt that it was reasonable during recruitment to ask women about their plans to have children, so clearly there is some way to go.
Tackling the challenge of pregnancy and maternity discrimination will require action on many fronts. That is why we committed to set up an employer and family representative group, which I want to make recommendations on what improvements can be made to the information available to employers and families on pregnancy and maternity discrimination. Rather than focusing on the end of the process, redundancy, I want the group to look at earlier stages of the employment lifecycle, because we need to shift the whole focus of the debate on pregnancy and maternity discrimination so that employers get it right in the first place, rather than focusing only on what happens when things go wrong. I want the group to develop an action plan on the steps organisations can take to make it easier for pregnant women and new mothers to stay in work and for them to progress throughout their careers.
We are having final discussions with business and family representative groups. Indeed, only the week before last, Maternity Action wrote to the Secretary of State for Business, Energy and Industrial Strategy on behalf of a number of trade unions and family groups to set out views on areas that might usefully be covered. This discussion is therefore very much a live one, and I hope to be able to announce the group’s membership and first meeting date soon.
I congratulate once again the hon. Member for East Renfrewshire on securing this important debate and for keeping this issue in the public eye. I started off by talking about how most employers realise the value of investing in their workforce and supporting them throughout their career. There are clearly actions that we need to take and issues we must address, as she and the hon. Member for Strangford (Jim Shannon) outlined eloquently. I look forward to working with the taskforce, seeing what it has to offer, listening to further debates both in this place and in responding to it and tackling many of these issues, as parliamentary time allows.
Question put and agreed to.
British Meat and Dairy Products
[Ms Nusrat Ghani in the Chair]
I remind Members that there have been some changes in practice in order to support the new hybrid arrangements. Timings of debates have been amended to allow technical arrangements to be made for the next debate. There will also be suspensions between each debate. I remind Members participating physically and virtually that they must arrive for the start of the debate, and Members are expected to remain for the entire debate.
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Members attending physically who are in the later stages of the call list should use the seats in the public gallery and move on to the horseshoe when seats become available, but please sit where there are microphones functioning.
I beg to move,
That this House has considered British meat and dairy products.
It is a great pleasure to serve under your chairmanship, Ms Ghani. I am grateful to have secured this important debate at a time when there appears to be a growing disjoint between media coverage of farming and the reality of those of us who live among it. I hope as a baseline we can all agree that in order to survive we need to eat. In this country, we are fortunate that generally we can choose what we eat and where we buy it, albeit with factors such as price, availability and, especially, concern for the environment influencing our decisions.
Historically, there was far less choice in the food we consumed and our reliance on home-grown produce was significantly greater than it is today. If the pandemic has taught us one thing it is that it is good to be able to produce at home what we need, and we all need to eat. As a former fitness instructor, I know well how a healthy and nutritious diet is vital to ensuring that the body has the nutrients it needs not just to survive but to thrive. Those needs change at different points in our lives and according to our activity levels. If we are going to tackle climate change in a meaningful way, healthy bodies with healthy minds are best equipped to do that.
I am fortunate to represent North Devon, home to 475 NFU members, including 95 dairy farmers and 323 livestock farmers. I do not need to go far to find delicious, nutritious British food that comes from environmentally responsible sources. British meat and dairy are produced to some of the highest environmental and welfare standards in the world. Buying local can reduce the environmental footprint of our supply chains and incentivise sustainable farming. To take one example, according to the Government’s Climate Change Committee, greenhouse gas emissions from UK beef are about half the global average.
Since covid started, many of us have begun shopping more locally, and our local farmers have adapted and innovated to help their communities through the pandemic. In Croyde, in my constituency, the Heywood family have adapted their North Hole organic milk farm to sell through a vending machine to their local community. The milk is delicious and the vending-machine experience is a great way to link locals to their farm. Watching the fully robotic milking parlour is also an incredible experience. Those organic cows have a great life and their milk is highly nutritious. Dairy products contain high-quality protein, calcium, B vitamins, iodine and potassium. Dairy foods, such as milk, cheese and yogurt, are vital to bone health. Importantly, the greenhouse gas footprint of UK milk production is just 40% of the global average. There are 278 million dairy cows worldwide. If they were all as efficient as UK dairy cows, we would need only 76 million of them to produce the same amount of milk.
This week is Great British Beef Week, which this year is focused on recognising and highlighting British beef farmers and the work they do to support sustainable practices on their farms. Red meat is one of the richest sources of essential nutrients, such as iron, zinc and B vitamins, and a great protein source. It is also much lower in fat than it was 20 years ago. My local NFU chair, Daniel Balment, is the third generation on his beef and sheep farm near Brayford. Daniel maximises the grass that the farm grows well to convert to protein, as 65% of farmland in the UK is best suited to growing grass, rather than other crops. The UK climate is ideal for growing grass. Other crops could not be grown for food on many farms. That has to be factored in to maximising the output of our land.
Farmers have always been custodians of the countryside, and the Agriculture Act 2020 is potentially the biggest victory for nature and farming in a generation. Under the framework of public money for public goods, farmers will be paid according to the benefits they provide to the public—mostly environmental improvements—rather than on how much land they farm. Our British farmers are already committed to reducing their emissions and reaching net zero ahead of the Government’s 2050 deadline. This policy will go a long way towards supporting them.
Livestock provides us with healthy, fertile soil, beautiful landscapes—as my North Devon constituency is testament to—efficient water use, carbon sequestration, and unique, biodiverse wildlife habitats. The suggestion that reducing meat and dairy consumption is a solution to climate change is an oversimplification. As I said earlier, we all have to eat, and in general we choose what we eat. Much of the food on our supermarket shelves has travelled thousands of miles to get there and is not produced to as high a standard as it would be here in Great Britain. Many non-dairy or meat-free alternatives are shipped across the world to reach us, are less nutritious with less protein, are higher in saturated fat and are nowhere near as good for the environment as British meat and dairy. For example, products such as almond milk require 20 times more blue water—water from the normal water supply—than British dairy milk, which is much more reliant on green water from natural rainfall.
When choosing what to put in our shopping baskets—[Interruption.]
Sitting suspended for a Division in the House.
As I was saying, many non-dairy or meat-free alternatives are shipped across the world to reach us, and are nowhere near as good for the environment as British meat and dairy. Products such as almond milk require 20 times more blue water—from normal water supply—than British dairy milk, which is more reliant on green water, from natural rainfall. When choosing what to put in our shopping basket, we should look for the Red Tractor—the symbol of British farming. Buying locally and seasonally not only might give people a much better diet but will do significantly more to reduce emissions compared with the alternatives. We can all do our bit to work towards net zero, by buying local British produce to support our great British farmers.
I thank the hon. Member for North Devon (Selaine Saxby) for securing this debate as we mark Great British Beef Week. As a representative of a rural constituency, I am incredibly proud of the world-class produce our farmers supply to kitchen tables, restaurants, the food service industry and elsewhere. Using one of the most sustainable production methods in the world and of the highest standards, our farmers work night and day to ensure their produce is truly something to celebrate.
It is those standards on animal welfare, environmental protection and traceability that this Government must properly protect. As we look at future trade deals, those standards must not be sacrificed on the altar of free trade. That would be deeply unfair on our agrifood industry, and it would be against the will of the people who take confidence in the UK mark being on what we eat. The UK mark—the Union flag marking the safety and quality of produce—must become more prevalent, not least in the catering industry. We need to improve transparency in this regard to ensure the food in this sector is not swamped by cheap, sub-standard imports.
We must support the industry as new markets open up. That support must be in the form of a marketing drive, support for promotional activity and, most importantly, substantial investment in our production chain. Our processing sector needs the support of this Government to achieve more value-added product. Primary producers and processors need support for research and development to drive efficiency. We in Northern Ireland need this Government to support our devolved Administration to make this investment, to match the aggressive drive for market dominance from the Irish Republic.
It is vital for our industry right across the United Kingdom that this Government consign the protocol to the dustbin. The unacceptable impact on east-west trade must be corrected, to return to the free flow of goods and the integrity of our internal market that we enjoyed before the protocol was put in place. The additional costs of doing business and the unacceptable administrative burden now facing local companies and farms has to cease. The ability to trade in livestock across the Irish Sea without impediment must be rectified. It is beyond belief that any UK Government would accept such a situation within its own borders.
I again thank the hon. Member for North Devon for securing this debate and for allowing us to both celebrate and promote the needs of our farmers and our agrifood sector.
It is a great pleasure to speak in this debate, Ms Ghani. I thank my neighbour, my hon. Friend the Member for North Devon (Selaine Saxby), for securing the debate, because British meat and dairy products are a great asset to the whole country and to everybody who eats them. I can say that I have consumed a large quantity of both meat and dairy; hon. Members can see that a good live weight gain was achieved in the process. Joking apart, we sometimes forget the great part that meat and dairy farming plays in looking after the landscape and the grass. When we look at holding carbon in the soil, we sometimes forget how much carbon is held by permanent pasture.
It is a great pleasure to speak in this debate and to follow the hon. Member for Upper Bann (Carla Lockhart). She raised the interesting point that there is a problem at the moment with exporting from Scotland into Northern Ireland. Scotland should not have to export to Northern Ireland, as it is part of the United Kingdom. We heard evidence at the Select Committee on Environment, Food and Rural Affairs from Northern Irish farmers having problems getting sheep from Scotland, because they have been on winter keep since the end of last year and they are not yet able to go over to Northern Ireland. When they get to Northern Ireland, they have to have their tags removed and have another tag put in. I suggest that that is also an animal welfare issue that needs to be dealt with. I have great respect for the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Banbury (Victoria Prentis), who is here today, and for the Secretary of State, but we need to do more to rectify the trade situation between Scotland and the rest of the UK, including Wales, and Northern Ireland, so I look forward to that being sorted out.
We live in a world where, if we are not careful and if we do not value the great meat and dairy production in this country, we will land up importing a great deal more food. When we import food we have to analyse how it was produced, including looking at the water that was used across the world to produce it. Many countries probably cannot afford to have water taken away from them for the production of exports to this country.
One only has to look at the Brazils of this world to see that they are driving their beef cattle towards the Amazon, they are ploughing up the savannah and they are damaging the environment. We need to help the Brazilians to stop that process. Perhaps the President of Brazil, dare I say it, might have something to do with what is going on. We need to take this very seriously. We must not look for the cheapest product in the world when we import, because doing that does much to damage the environment. We produce our meat and dairy from grass, but we must be careful when we import proteins to help with that because some of that protein, especially the soya bean, is grown on deforested land or savannah. All of these things are important.
The number of Members here today shows that we think our production of both meat and dairy is important. We not only have great permanent pasture but good grass leys. The New Zealanders have done a lot of work on the digestibility of grass leys and different types of grass, which affects the amount of methane gas that animals produce while they are producing meat and milk. If a cow milks more efficiently and gives more litres of milk, the total amount of methane gas given off collectively is far less, as my hon. Friend the Member for North Devon said. With the production of beef, the more efficiently we can produce it, and the better the breeding, the quicker and faster that beef is produced, and again, the methane gas is far less.
We have to take production of agriculture very much in the round. I think it is very simplistic to say, “Stop eating meat, stop eating dairy—that will solve the problems of the world.” No, it won’t, actually, because the grassland in this country relies entirely on meat and milk production—that is the balance. I made the joke when I started that I am a product of eating much meat and much dairy, so for me to actually say this is almost unbelievable, but there could be an argument that sometimes we do not actually need to eat quite as much meat or quite as much dairy, and I would probably be the first to admit that. On the other hand, a balanced diet is so necessary. If we look at the research, an expectant mother, for example, is not always able to gain the right protein and nutrients without their vegetable or vegan diet being very expensive and diverse. Let us be sensible as we move forward. Meat and dairy play such an important role.
My final point is that this is linked to the countryside that we see and love. Grassland, heathland, moorland, and Exmoor—my constituency adjoins that of my hon. Friend the Member for North Devon through the Blackdown hills, a very small part of Exmoor—these are all areas of grassland and permanent pasture, and they are very beautiful and full of trees. All of those things are so essential. Do not forget that although it is beautiful that people can go and walk in and enjoy our landscape—we want to see more of that—it is not entirely a playground; it is also a production zone for producing good-quality food. If we combine the two, which I think we can do easily, food, farming and the countryside can all come together. I very much support my hon. Friend’s debate.
It is a pleasure to serve under your chairmanship, Ms Ghani. I congratulate the hon. Member for North Devon (Selaine Saxby) on securing this important and timely debate.
I do not think it is, strictly speaking, a declarable interest, but the House may be aware that I come from farming family. My family still farm on the south-east corner of Islay. My wife is a partner in a veterinary practice in Orkney, serving a diverse range of farming interests: beef and lamb production, and, sadly, a decreasing number of dairy farmers. I declare that interest with some pride; it contributes directly and indirectly to the Carmichael family mortgage payment every month.
Food production has always been at the heart of the local economies in Orkney and Shetland. The designation of Orkney beef and Shetland lamb as protected geographic indicators is an indication of that and, indeed, of the quality of the produce for which we have been responsible over the years. In recent decades, we have seen a growth in producers who have been able to add value in a blossoming food and drink sector, which, in turn, has fed into a growing visitor economy, so it remains as important to the northern isles today as it always has been.
In Orkney, we have a long history of producing finished cattle for Orkney beef. In Shetland, traditionally we produced cattle for the store market, but in recent years, by a bit of creativity and a lot of effort, local farmers in Shetland have also been able to produce finished cattle, which have been slaughtered for local consumption in our good, well operated local abattoir. It is an exemplar of how agriculture can feed into a rural or island economy such as ours. Crucial to that operation, however, is the existence and operation of a thriving network of local shops. My concern today is that many of those local shops are currently under threat.
We have had supermarkets in Shetland for decades, like everybody else—we have a big Tesco and a fairly big Co-op in Lerwick and a smaller but still sizeable Co-op in Brae—but recently the Co-op Group lodged applications for planning permission for two further Co-ops, which would be bigger operations, in communities in Scalloway and Sandwick, which are currently served by a variety of small, thriving local independent shops. Those shops are quite clear that if the applications are granted, the future for them looks to be pretty bleak. That network of rural shops, however, is absolutely critical to food production in the Northern Isles, and the farmers I spoke about, who now produce finished cattle for slaughter and sale in the local retail sector, will struggle if that network of local shops is not there.
One of the local shops that will be most directly affected told me last week that it reckons that it takes goods from no fewer than 80 different local suppliers, which are all small and medium-sized enterprises that will never sell in the same quantity to a big outlet such as the Co-op Group. We know, and the Co-op will tell us, that it takes from local producers to put local lines into its shops. That is true. However, the beef and lamb farmers and those food producers who add some value to our local products will tell us that the Co-op, like all supermarkets, will take their products, but only on its terms. Therefore, even if a product does end up on the shelf, the supermarket will determine the price, the quantity, the regularity of supply, the delivery and often even the labelling. The hard commercial reality is that these local suppliers cannot survive on the margins that the supermarkets give them, so the existence of that network of local shops is critical to the future viability of agriculture in Orkney and Shetland.
The Co-op does have a long tradition of being at the heart of highland and island communities, and I am sure I am not the only one who spent many happy—or not so happy—childhood evenings licking stamps to be put in the Co-op book for the dividend, but the Co-op Group today is a very different beast. It operates effectively in the same predatory manner as we would expect of any other supermarket, bearing down on suppliers in communities such as mine. It is a trail that many communities the length and breadth of the country have seen over the years, but for a company such as the Co-op Group that has always prided itself—and, dare I say it, marketed itself quite effectively—on being the supermarket that was somehow different, to have this change in its culture is unfortunate to say the very least. I hope that it understands the damage it risks doing to the delicate and complex economic ecosystem that communities such as ours rely on. Once an economic ecosystem such as that is lost, it can never be easily recreated.
I do not wish to hold the House, but I want to mention one other matter of supreme importance to the production of food in the Northern Isles: the ability to export it to other parts of Scotland and the United Kingdom. It comes to the point made by the hon. Member for Tiverton and Honiton (Neil Parish). The Scottish Government are currently undertaking a consultation on the transportation of animals within Scotland. For us, with a 12-hour journey from Shetland to Aberdeen, that could have very serious implications. Even the shorter journey from Orkney to Aberdeen would be severely affected. If, in the last year, we had operated under the wind speed and temperature restrictions that are currently under consultation by the Scottish Government, there would only have been two sailings allowed from Orkney to Aberdeen. It is the law of good intentions and unintended consequences in operation. The people who designed the system, which is currently regarded as being blue-chip, with industry-leading standards, were the farmers at the turn of the century, and they are the people who should be involved in the recreation of that system now.
It is a great pleasure to serve under your chairmanship, Ms Ghani. I congratulate my hon. Friend the Member for North Devon (Selaine Saxby) on securing this timely debate during Great British Beef Week. I draw attention to my declaration in the Register of Members’ Financial Interests, as one of the few practising farmers in the House.
The Cotswolds has one of the most sensitive landscapes in the country and I have always proudly championed British agriculture. As a farmer who grew up on my mother’s dairy farm, I know from first-hand experience how the UK produces some of the highest quality food produce of anywhere in the world, with exceptional animal welfare and environmental standards.
As Britain secures new trade deals, we have the opportunity to promote that high-quality meat and dairy produce across the world, produced by our innovative, environmentally friendly farmers. After 40 years of the European Union’s common agricultural policy, we can now pursue new trading relationships. It is an amazing opportunity to shape the future of our farming, promote our interests and meet the needs and ambitions of British consumers in the 21st century.
In 2020, meat and dairy products combined accounted for 2.2% of UK goods exports and 3.1% of all UK goods imports. The current trade deficit is found in all categories, apart from mutton and lamb, which has a trade surplus of £0.1 billion. We now import roughly 50% of all that we eat, down from 65% when I was a student. The UK is about 85% self-sufficient in dairy production and beef, but 98% self-sufficient when it comes to lamb. We need to work to a point where it is not just lamb that is in surplus, but where we are near self-sufficient in many more sectors.
What is the difference between our lamb and beef sectors? It could partly be better marketing of beef, which is usually a more expensive option in the supermarket. The deficit is something we want to change with our new trading arrangements. Beef exports from the UK last year came to £382 million, with growing markets in Hong Kong, Singapore, Peru and Canada. There is also growing demand in China for British pork, and in France for high-quality lamb produced in the Cotswolds.
British agriculture needs to increase and diversify its exports as much as it can in new international markets, after heavily relying on Europe. There is no reason why British food manufacturers cannot be innovative enough to create a wider range of products using British produce. That is especially the case for dairy-based products that are heavily imported, such as yoghurt and prepared desserts. That is unnecessary when we have such a strong dairy sector.
I urge farmers to take advantage of growing global markets. The Department for International Trade is launching a new mentoring programme, providing expert advice on trading internationally. Farmers in the UK are leading the world in finding innovative farming methods to farm in climate-change friendly ways, with the NFU pledging an ambitious net zero target by 2040.
The UK beef industry is one of the most sustainable in the world, with an extensive grass-based grazing system—not a cause of deforestation as in other countries, as my hon. Friend the Member for Tiverton and Honiton (Neil Parish) said. The Committee on Climate Change found that the UK beef industry emits around half the greenhouse gases compared with the global average.
As my hon. Friend the Member for North Devon said, there are 278 million dairy cows worldwide. If they were all managed as efficiently as UK dairy cows are, we could shrink that number to 76 million and still produce the same amount of milk throughout the world. Around 70% of the British herd is on grass, and 65% of UK farmland produces some of the most productive grass in the world. That protects the character and identity of the countryside and generates an important income for rural communities. In the Cotswolds, which I have the privilege to represent, the distinctive, attractive landscape would not be the same without the raising of livestock, including the production of high-quality lamb, much of which could be exported.
Here in the UK, there is nothing better for the environmentally-conscious consumer who wants a balanced diet than to buy British. Not only does buying fresh local produce reduce greenhouse emissions from transporting produce; in addition the produce will be sourced from farms with sustainability at the heart of their practices. It is good to see some retailers increasingly championing UK products. I know, because I did a lot of the shopping during the lockdown, that Waitrose and Aldi have led the way on supporting British farmers throughout the pandemic. I hope that other supermarket chains will be encouraged to follow their example.
In conclusion, farmers can now set their ambitions well beyond the UK into exciting new markets. As they expand, they will have our full support in doing so.
I congratulate the hon. Member for North Devon (Selaine Saxby) on setting the scene so well and giving us all an opportunity to participate. I am tempted to use a pun and say that I am pleased to have the opportunity to sow into the debate. I declare an interest as a member of the Ulster Farmers Union and as a landowner.
My constituency is a strong farming community, and all my neighbours are involved in the milk, sheep and other sectors of the farming industry. One of the major employers is a Lakeland Dairies factory. I am acutely aware of the challenges facing the sector. The fact that Northern Ireland faces additional challenges because of the insidious Northern Ireland protocol makes life on our side of the sea that wee bit more difficult. The hon. Member for Tiverton and Honiton (Neil Parish) mentioned that, and I am sure that other Members will. I must again highlight the need for the triggering of article 16 and an end to the hard border in the Irish sea. That would definitely do away with all the problems that we face at present.
I am part of the movement that believes we can and must do better with the stewardship of our environment. However, there are few who know more about cause and effect in the environment than the farmers who live it every day. I want to speak for the farmer, the person who looks after and manages the land—who lives on and loves the land, and whose very blood is in the land he farms every day. We are increasingly coming across a movement that seeks to blame the farming industry for environmental issues throughout the world. What it claims is simply not the case. When the total 460 million tonnes of UK greenhouse gas emissions are broken down, cattle and sheep account for 5.7%. The whole of UK agriculture was responsible for 10% of the UK’s total emissions. When grassland sequestration is taken into account the figure for cattle and sheep drops to 3.7%. Let us look at the reality of the stats. The farmer is clearly not to blame. It is time to work with the farming sector. I know that the Minister does that every day of her life and we represent those areas in dealing with the farmers in our constituencies, because we are there to support them.
The hon. Member for North Devon referred to figures on the efficiency of the dairy sector. They tell us all about how well the British farmer does his job. Our farmers know their responsibility, and they live it daily. I want to speak for the farmers in my constituency, and those elsewhere, and commend them for their industrious endeavours.
I read an interesting snippet in the National Farmers Union briefing. It was a statement by Dr Trevor Dines, a botanical specialist at Plantlife, on the publication of Plantlife research:
“Early succession habitats like hay meadows and permanent pastures, grazed by the right amount of livestock at the right time, can support an astonishing 770 species of wild flower and are crucibles of biodiversity.”
Wow—that is something for people to take the time to listen to, and I hope they will. It continued:
“Nearly 1,400 species of pollinators and other insects rely on species-rich grassland for their survival and they, in turn, support a myriad of bird and animal life. Re-creation of these open habitats must be seen as a priority as urgent as planting trees.”
That is what farmers say and what they and landlords do every day of their lives—365 days a year.
I chair the all-party parliamentary group for eggs, pigs and poultry, and the British Egg Industry Council set up a petition on change.org, to which there have been some 20,000 signatures. Supermarkets should use British eggs for foods made in Britain and stop importing eggs. Research shows that, although consumers put their trust in British supermarkets to sell safe products and be transparent about their sourcing, supermarkets continue to use a significant number of imported eggs in pre-prepared foods. I think it is time that we all bought British Lion eggs. I am old enough to remember that advert on TV—“Go to work on an egg”. Well, every day of my life, I go to work on two eggs. Seven days a week, I have two eggs for my breakfast. Incidentally, I have noticed in the Members’ Tea Room that many others in this House do too.
A survey of 3,000 British shoppers on their attitudes towards the use of eggs and egg ingredients by major retailers showed overwhelming support for the increased use of British eggs. That is why I am backing British farming, which has never been so important. The British egg industry is worth over £1.07 billion per year, and employs 23,000 people both directly and indirectly.
I will conclude on this Ms Ghani; you have been very kind to me. We need to keep this vibrant industry vibrant, and we in this House have a role to play, not in enforcing unattainable goals, but in supporting and rewarding best practice, which is standard practice in farms in every corner of my constituency, and indeed in every constituency throughout this great United Kingdom of Great Britain and Northern Ireland.
I congratulate my hon. Friend the Member for North Devon (Selaine Saxby) on securing this debate. Like her, I am fortunate to represent a large rural west country constituency, although mine is in God’s own county of Somerset. This debate gives me the opportunity to pay tribute to Somerset’s farming community and farmers in less fortunate areas.
This past year has presented farmers with unprecedented challenges. We all remember early in the pandemic seeing empty supermarket shelves, and many people feared that we were going to run out of food. Farmers rose to that challenge and enough food was produced to overcome the fears and meet the demand, and our shelves were fully restocked.
As I travel through the glorious Somerset countryside, it is impossible not to marvel at the contribution that farmers make to managing our landscape. The contribution that livestock and dairy farmers make to our environment is not fully appreciated. Meat and dairy production goes hand in hand with the sustainability of the landscape. British farmers lead the world in agricultural standards, animal welfare and sustainable farming practices.
This week is Great British Beef Week, and as the focus this year is on sustainability, we should remember that the greenhouse gas footprint of UK milk production is just 40% of the global average. British beef and dairy are fully on track to being carbon neutral by 2040.
The environmental contribution of livestock and dairy farming must not be overlooked, and neither must its enormous contribution to our rural economies, our way of life and brand Britain abroad, but the sector faces enormous challenges. Farmers are determined to grasp the opportunities of Brexit, but many say they face growing problems with exporting to the EU, in particular at the French border, where they are seeing outright inflexibility; they are not seeing the same at the approach to UK borders. I ask the Minister to explore and implement ways to ease exports to the EU, which is obviously our largest agricultural export market.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership—hard to say, and probably harder to put together—gives us a wealth of opportunity across the Asian, American and Australasian continents, with lucrative markets for our produce. That is great news for dairy producers, and producers of cheeses, in particular. I have some of the best in the world in my constituency, not least Wyke Farms, Barber’s, Montgomery cheddar and Godminster. The trade agreement gives them the opportunity to reach Canada and Australia. Producers can also send pork and poultry to Vietnam, beef to Japan and mutton to Malaysia. However, while Somerset’s farmers want trade partnerships, they do not want them at the expense of food standards, and I know there are concerns about any opening of the UK to cheaper, lower-quality imports.
The Government can do a little more to support farming in achieving net zero by 2040. Many farmers are now installing green energy plants to provide green electricity, but one farm in my patch tells me that the rating value of its green energy plant has doubled in a year, so I ask the Government to look at the rating system for green energy plants. We have to incentivise them and keep a level playing field, because certainty is a rare commodity in meat and dairy production, and over the past few years, of course, it has been harder than ever for the sector to have any kind of clarity. I hope the Government see that and continue to act in a way that smooths the path and gives our farmers clear sight of the future. The future is bright, but these are dark times, and we have to light the way with clarity.
It is a pleasure to serve under your chairmanship, Ms Ghani, and I thank my hon. Friend the Member for North Devon (Selaine Saxby) for having secured this afternoon’s debate. As the MP for Truro and Falmouth in Cornwall, it is unsurprising that farming plays a huge role for people in my constituency, and this is a great opportunity to stand up for our many hard-working farmers, farm workers and local supply chains.
It is not surprising that the English MPs in the room this afternoon are mostly south-west and west country MPs. The National Farmers’ Union states that the south-west’s livestock farms account for almost a third of all the dairy and beef farms in England, and over a fifth of all the sheep and lamb. British red meat and dairy has a great story to tell, and farmers can be very proud of having some of the highest welfare and environmental sustainability standards in the world. What is better to eat than Cornish cattle that has been grazing in the sea air on beautiful pastureland, making wonderful beef, clotted cream, and beautiful Cornish ice cream in Callestick, for example, near Perranporth in my constituency?
The UK has the fifth lowest use of on-farm antibiotics across the 31 European countries, beaten only by the Nordic countries, and that is due to their climate of cold and dry weather, which stops the bacteria from breeding and therefore reduces the demand for antibiotics. The amount of antibiotics used on UK farms reduced by 53% between 2014 and 2018. We really are leading the world in how we look after our animals, and in our welfare standards. A number of steps are being taken on farms that are done in the best interests of the animals, and are in line with expert advice and veterinary guidance. I also congratulate the UK meat and dairy industry on its work on tackling emissions—we have heard from various Members this afternoon how we have been doing that. British beef and lamb are among the most efficient and sustainable in the world, due to our extensive grass-based systems.
Livestock plays a key role in maintenance, as we have been hearing, and in the enhancement of wildlife habitats. Biodiversity would suffer hugely if the UK population became vegetarian and gave up meat. There are several examples of where livestock is critical to the life cycle of wildlife: for instance, the large blue butterfly, which breeds in warm and well-drained grassland. Livestock plays a key role in producing the suitable habitat through grazing, and if we gave up meat, suddenly that would not happen at all.
I am always encouraged when shoppers look to buy local, sustainably produced meat and dairy products, and most retailers are now increasingly sourcing British products to meet this demand. The UK is around 85% self-sufficient in dairy production, as we have heard, and 75% self-sufficient in beef production. Significantly, more than 11,000 dairy farmers and more than 23,600 beef and sheep producers in the UK are members of the Red Tractor scheme, and when shoppers buy British red meat and dairy products carrying the Red Tractor logo, they can be confident that those products are produced to world-leading environmental and animal welfare standards for the whole length of the food chain, from farm to packet. The supermarkets are starting to move in the right direction. We have a huge number of farm shops in Cornwall, of which I would like to mention a few in my constituency: Cusgarne near Truro, Curgurrell near Portscatho, and Trudgian in Probus. Not only do they buy local meat, so people can literally see the animals grazing in the fields before they buy meat for their family to consume; they also support smaller producers.
The Minister will not be surprised that I am making a call to ensure that the same encouragement and clout from Government goes into buying British fish—she knew I was going to say that. This has been a very difficult time for Cornish farmers and fishermen, who rely on their local outlets as well as on the supermarkets. Another hon. Member spoke about supermarket price points; it is really important that farmers and fishermen make a good living out of this. I am not—
It is a great pleasure to serve under your chairmanship for the first time, Ms Ghani. I congratulate my colleague and fellow south-west Great British Beef Week love-in leader, my hon. Friend the Member for North Devon (Selaine Saxby). I speak not as a rural MP standing up for his constituent farmers, but as an urban representative for the city of Gloucester and its 100,000 consumers, and as the Prime Minister’s trade envoy for much of south-east Asia and its regional organisation, the Association of Southeast Asian Nations. The two things come together very well.
I relate strongly to my hon. Friend’s calls to buy local. There can be no argument at all, at least among the six Gloucestershire MPs, that the finest beef is from Gloucester cattle—just as Single Gloucester cheese, made only from Gloucester cows, is one of our great cheeses. At this time of year, as all colleagues will know, a great round Single Gloucester cheese is normally to be found rolling down the steepest stopes of Coopers Edge in the great, globally renowned cheese-rolling competition pursued by 100-odd enthusiasts or lunatics. So yes, let us buy local and buy quality.
Let me focus on the export of British beef to south-east Asia in general and Indonesia in particular. Demand in Indonesia—a nation of 270 million people, predominantly Muslims—is growing by 7% a year, and 70% of the roughly £650 million-a-year market is imports, mostly from Australia and India, so there is an opportunity for us, but there are four questions. First, is there potential Indonesian demand for British beef? Secondly, is there potential export capacity here? Thirdly, is our halal certification process compatible with Indonesia’s legislation and approval process? Fourthly, is halal beef a sector that we want to pursue with other potential markets in Malaysia and the middle east? If that is all possible, we have an opportunity. We may need to pursue a free trade agreement to make our prices competitive with friendly Australian and Kiwi farmers.
As so often, these questions cross departmental boundaries, but the Department for Environment, Food and Rural Affairs and the Department for International Trade have worked closely on many issues. Today, in Great British Beef Week, I look forward to hearing the view of our excellent Minister on whether the enthusiasm and capacity of our farmers for halal beef exports are strong, and whether we can resolve the certification question.
It is a pleasure to serve under your chairmanship, Ms Ghani. I congratulate my hon. Friend the Member for North Devon (Selaine Saxby) on securing this excellent debate. I declare an interest: I married a farmer’s daughter, and most of my family on her side are farmers across Cornwall, the Isles of Scilly and—I say it quietly—even Devon. It is great to see so many colleagues from the south-west—we just about include my hon. Friend the Member for Gloucester (Richard Graham) in that. That representation reflects how important farming is to our communities and our economy across the south-west.
We should be proud of our livestock and dairy farmers, who not only produce some of the finest-quality produce to be found anywhere in the world, but maintain the highest animal welfare and environmental standards. It is no mean feat to operate at such high standards while producing food of such amazing quality for us to buy and consume. Cornwall is particularly renowned for its dairy—Rodda’s clotted cream, which is located in the Secretary of State’s constituency, and our amazing cheese —as well as for its beef, lamb and pork. Much of it goes to support our hospitality and tourism sector, and the quality of food available in Cornwall is one of the things driving our tourism sector. People want to come to Cornwall not only for our amazing beaches and countryside, but because of the amazing food we produce. Clearly, farmers have faced huge challenges in recent times, but they have faced those challenges head on, which just goes to show the resilience within our farming sector. It has managed to do that over the past year during the pandemic and has adapted to a rapidly changing market.
Regrettably, as has been reflected in the debate, farming is sometimes presented as part of the problem in protecting our environment, when in fact nothing could be further from the truth. British farming is among the most sustainable forms of farming anywhere in the world. Some of the facts and figures quoted by colleagues reflect that. Farmers are the custodians of our environment. They rely on our natural environment for everything that they do, so of course they want to protect it and care for it in the best possible way. Many of our farms are generational. Farms are passed down from one generation to another, so of course the farmers care for them because they want to be able to pass them on to their children and grandchildren.
Very often there is an unfair message that eating meat is a major contributor to emissions and carbon footprint, which is simply not true. Much of our farmland is suitable only for grazing livestock. We could not grow other food on it, and if we did not produce meat from that farmland, we would end up importing more food, which would increase the carbon footprint as well. There is much greater awareness today—it has increased over the past 12 months—of where our food comes from, which can only be a good thing. One thing I would like us to do with the new freedoms that we have since leaving the EU is to have better labelling of where our good British food comes from, and let us encourage everyone to buy as local as they possibly can.
It is a pleasure to serve under your chairmanship, Ms Ghani. I congratulate my hon. Friend the Member for North Devon (Selaine Saxby) on organising this debate. In the four minutes that I have I want to talk about agriculture on the Isle of Wight and then discuss with the Minister, through you, Ms Ghani, how we can use the Agriculture Act 2020 for the benefit of all of us, but very much for the Island.
I have noticed that a lot of us are talking about carbon and being responsible about animal rearing, but can we not use some of the incredible science in our country to breed cattle that produce less methane and—dare I say it?—pass wind less? Then we might have less of a carbon problem. I just put that out there. Perhaps the Minister will think about that. I am happy to suggest the Island for a pilot scheme. It would be great. We have lots of fresh air on the Island, anyway, and would have even more so with that idea.
The Island has a fantastic reputation for producing some of the best food in Britain, although, clearly, there is a lot of stiff competition. Briddlesford farm makes some of the best feta outside Greece. Calbourne Classics makes some of the best yoghurt in the country. I am yet to taste better fillet steak than that produced by Andrew Hodgson in the beautiful Bowcombe valley, and Queen Bower Dairy regularly produces fantastic soft cheeses and blue-veined cheeses. Isle of Wight tomatoes are very well known, to say nothing of all the lobster, crab and asparagus that we produce.
However, as the Minister knows, because she has been kind enough to discuss this with me, we have some issues. Living on an island, I perhaps share some concerns with the right hon. Member for Orkney and Shetland (Mr Carmichael). Orkney has an abattoir. we do not. Our abattoir closed down a couple of decades ago. To take cattle for slaughter is an extra £70 per head of cattle. I am therefore very interested in the mobile abattoir scheme that the Minister discussed. I know it is being used in Gloucestershire at the moment. We would be extremely interested in having that on the Island because it would be extremely useful and valuable and would help to create a circular economy so that not only could we have a more sustainable agriculture on the Island by reducing the costs of slaughter and potentially make it more competitive, but it would make it more competitive when sending to the mainland as well because of that Isle of Wight brand.
In a similar vein, we would be keen to explore the use of grants for other shared things for items on the Island such as tanker and extra milk storage facilities, new grain storage, central fertiliser storage, animal feed milling facilities, and box erectors. All those things can make Isle of Wight agriculture not only more profitable—that is almost the wrong word—but can add more value to what we do. We would potentially keep more profit on the Island. As various Members have said, when people go to a supermarket they buy stuff that may be produced here or elsewhere in the European Union. I share the calls for better food labelling, because I will always try to buy local if I can.
The more that we can produce a local economy, so that Gloucestershire becomes even more proud of its produce, likewise the Isle of Wight, Kent and Sussex, that is the way that we can help local agriculture, and almost compete among ourselves. We keep forgetting, as has been pointed out, we have some of the most extraordinary food production in the world. Sometimes we do ourselves down and think that something that comes from Italy or France is better, when often it is not. I hope it will continue to be the case that we can push and get more value for UK produce. I will leave it there, but I look forward to discussing these matters with the Minister in due course.
It is a pleasure to serve under your chairmanship, Ms Ghani. I congratulate the hon. Member for North Devon (Selaine Saxby) on securing today’s debate. As the Member for Angus, one of Scotland’s most productive areas, it is a pleasure to sum up for the SNP and to add the Scottish dimension to issues raised by Members from around these islands. In Great British Beef Week, let us all collectively acknowledge that there is no finer beef than Aberdeen Angus. I look forward to the Minister confirming that in her summing up.
I am fully signed up to supporting and promoting British produce, but I will not be dissuaded from highlighting the current challenges that our producers face. The challenges in the meat and dairy sector have their roots in last spring, when we should have seen the emergence of new demand. Instead, we saw the eruption of a global pandemic, which decimated the hospitality and food service sector overnight.
Efforts were made to ensure that domestic demand, which rose sharply, would take up surplus commercial supply but, in reality, commercial food packaging and products made it incompatible with retail distribution processes and consumer tastes. Where we saw a glut of T-bone and fillet steaks, consumers were at the same time rushing out to buy mince. It was not just carcass balance issues that affected our producers. It was cheese, milk and yogurt, in large commercial containers with limited outlet into retail.
It was against that crisis that many of us called for an extension to the transition period last year, also recognising that the transition period was really no such thing. The UK Government advertised to businesses to get ready for exiting the single market and customs union, but were pretty sketchy on exactly how they could get ready to do that. Without a meaningful transition period, a soft start, room for manoeuvre or margin for error, UK meat and dairy exporters were thrown off a bureaucratic and procedural cliff on 1 January.
The dairy industry was especially hard hit, with exports to the EU down 96%, with beef, lamb, mutton and chicken exports collectively losing £50 million in EU sales. Many hon. Members have talked about the opportunities to export to wider markets. That is great, but it should not come at the cost to existing markets. The Food and Drink Federation report has shown that Scottish exports have been hit hardest, down 16%, with Wales 3.9% and Northern Ireland 7%. The British Meat Processors Association Brexit-impact report insists that blaming that on teething problems is no longer credible, if it ever was.
Collateral damage threatens our producers and their suppliers. I recently met with the Agricultural Industries Confederation to discuss the challenges in the agri-supply sector. Exiting the EU was top of their list. New tariffs for importing molasses for livestock feed, caused by an error in the UK global tariff, mean that there is now a higher tariff here than in the EU, which is expected to add £1 million to £1.2 million in extra costs to UK producers, all undermining our competitiveness. DEFRA is aware of this but, to date, there is no resolution. Nor is there a DEFRA resolution to issues affecting processed animal protein and the export health certificates that are now required to export those products from GB to Northern Ireland. Perhaps the Minister might want to discuss that in her summing up. Staying with Northern Ireland, as the president of the Ulster Farmers Union, Victor Chestnutt, pointed out to the Environment, Food and Rural Affairs Committee last week, Stirling bull sales in Scotland are vital for pedigree breeding and exchanging genetics. In 2019, 120 bulls from 37 Northern Ireland exhibitors showed at Stirling; by 2021 just four bulls were exhibited at Stirling from three Northern Ireland exhibitors. That is because when Northern Ireland farmers take a bull to GB and it does not sell, they need to pay for six months of residency before they can take it back to Northern Ireland. That madness is a disaster for sales and for breeding, and it is also a problem for Carlisle sales.
I want to touch on a comment from James Withers, of Scotland Food and Drink, who said
“It’s become clear that the EU third country import system was never designed for a country on its doorstep, integrated into its supply chains, sending large volumes of highly perishable product and smaller, consolidated volumes. In the end, the industry and consumer here want to maintain standards so let’s agree to align with our EU partners. Otherwise, the rug will be pulled from a significant chunk of the £1.2 billion of annual Scottish food exports for little, if any, benefit.”
The UK Government have in its power to support our meat and dairy sector through the Brexit carnage. I fully commend the innovation and energy with which our meat and dairy producers feed our communities and contribute to our economy, but let us not uphold any notion that everything is going invariably well. It is not. Those producers and the wider supply chains rely on EU exports, but exporting meat and dairy to the EU and Northern Ireland is harder now than ever. Let us all at least acknowledge that.
It is a pleasure to serve with you in the Chair, Ms Ghani. I congratulate the hon. Member for North Devon (Selaine Saxby) on securing this timely debate. These are vital industries that are crucial to our food security, to tackling climate and nature emergencies. They proved remarkably resilient through the pandemic. I pay tribute to all those involved: farmers, processors, retailers and shop workers. But I think one or two contributions have been a touch rose-tinted, because it is really tough out there.
Last week, I joined the shadow Secretary of State, my hon. Friend the Member for Plymouth, Sutton and Devonport (Luke Pollard) in launching Labour’s rural review, on a family farm in Cambridgeshire. Thanks to the excellent organisation by the National Farmers Union, we heard from a real mix of farms. It is very hard out there. With the changes to farm support, it is obvious that some—perhaps many—will not survive. We have repeatedly warned that that is exactly what the Government’s Agricultural Act 2020, allied with the refusal to rule out undercutting through lower trade standard imports, was designed to do. We will fight that all the way. We are delighted to support Great British Beef Week.
I must point out just how interconnected but we still are with the European Union. EU countries have accounted for 70% of meat exports, 77% of dairy exports, as well as 83% of meat imports and 99% of dairy imports. Sadly, the rushed botched deal at the end of the year has left us facing really serious problems, not least in achieving carcase balance. The latest statistics from the Office for National Statistics show that exports of food and live animals were down about 31% on January and February 2020. In absolute value terms, exports of meat and meat preparations to the EU were particularly affected—down 52%. That is a systemic issue.
The British Meat Processors Association has warned that the industry is now facing a potential permanent loss of up to half of its exports. For dairy, exports remained at drastically low levels in February, according to recent figures published by the Agriculture and Horticulture Development Board. The figures, drawn from Her Majesty’s Revenue and Customs data, show trade with Europe down more than 90% for certain products compared with a year earlier. Cheese exports were down 75%, whey 83%, milk powder 86%, and butter exports were down 89%. Be in no doubt that it is tough for many. We know it is particularly hard for small independent producers. If it is hard to sell to the EU, meat and dairy farmers face a challenge to their incomes.
The Minister and I have been discussing changes to farm support for a long time. A new analysis by the Labour party shows that rural England stands to lose more than £255 million this year alone. That translates to as many as 9,500 agricultural jobs, and that will only get worse year on year. Of course, the schemes are still being designed, tested and piloted, as we have discussed on numerous occasions, but farmers are rightly concerned by the gap between the existing basic payment scheme being phased out and the environmental land management scheme. According to an analysis of DEFRA data by the Country Land and Business Association, 75% of farming enterprises are currently unprofitable without direct payments. According to a recent survey of landowners and farmers by the CLA, 76% fear that the new payments will not be sufficient.
It is hard to sell into the EU, support is being withdrawn and, frankly, British meat is still open to being undercut in trade deals. As we have repeatedly said, the Government should have put the protection of food and farming standards into law, but they have not. Without re-rehearsing the arguments made today, deals are currently being negotiated. UK campaign groups have raised repeated concerns over meat production in Australia and New Zealand, and the Government’s consultation on a prospective UK-Australia deal highlighted concerns about Australia’s farming practices, such as hormone injections in beef, excessive use of antibiotics in food production, high rates of food poisoning and lower standards of animal welfare, including continued use of sow stalls. Just last week, however, the Secretary of State for International Trade was lauding their high standards in the main Chamber. Frankly, it should be obvious that British farming will be sold out. The Trade and Agriculture Commission, which the Government conceded under pressure, has reported that there has been no response from the Government. Can the Minister tell us when we will get it, and will they adopt the recommended standards framework?
There is much more to be said, but let me move on to one of the potential solutions: public procurement. Supporting British farming means buying more British produce, which means looking at the public sector and the £2.4 billion a year spent on catering, and thinking about how more can be spent with British farmers. Government Buying Standards for Food and Catering Services, or GBSF, provide helpful guidelines, but these are not being applied in too many parts of our public services. That is hardly surprising, given the cost pressures that they face, but that is why leadership is required.
In such circumstances, who better to turn to than the EFRA Committee? As usual, its Chair, the hon. Member for Tiverton and Honiton (Neil Parish), made his thoughtful and well-considered contribution earlier, but the Committee’s recent report urged the Government to update their buying standards for food into the new decade, address outdated standards on nutrition and animal welfare, and close loopholes in the current rules. The report also expresses disappointment that the Government do not use the GBSF as a mechanism to promote buying British within the public sector, as is the norm within public bodies in countries such as France.
Let me say a word about two specific sectors. There is insufficient time to do justice to lamb and poultry, but there are a range of issues affecting dairy. We all hope that the new dairy code of conduct will be successful and ensure the fairness that many people feel has been lacking. We will be watching closely, but I fear that it may have to be revisited yet again. There are also workforce challenges. A recent survey by the Royal Association of British Dairy Farmers has revealed that almost one third of dairy farmers would consider leaving the industry due to a lack of labour, with 63% of dairy farmers struggling to recruit in the past five years. On their behalf, can I ask the Minister whether DEFRA is considering supporting the inclusion of dairy technicians in the next review of the Migratory Advisory Committee’s shortage of occupation list?
I turn now to the pig sector, which has had a really hard time. It is not all the fault of the Minister on this occasion—there is African swine fever in China, a surfeit of cheap pork in Europe and skyrocketing feed costs—but it is disappointing to hear that the percentage of British pork on the shelves has fallen in two of our major supermarkets, which is not helpful. Alarming figures suggest that specialist pig farms are expecting to see an 80% decline in average income between 2019-20 to 2020-21. The National Pig Association has described it as a perfect storm.
Some of the problems were indeed down to the post-Brexit export problems caused by the Government, but at its peak, a backlog of 100,000 pigs awaiting slaughter were housed in temporary accommodation on UK farms, which pushed up carcase weights and led to swingeing price discounts imposed by processers. I understand that the pig sector has approached the Government to call for sector-specific support, as was delivered to dairy farmers at the start of the pandemic, and I would be grateful to hear what consideration the Minister is giving to that request.
Let me finally mention our biggest challenge of all: climate and nature. We very much welcome the National Farmers Union’s commitment to reach net zero by 2040, and we want to see more support for farmers to reduce their emissions. That is why it is so important that we get ELM right and make it accessible in good time. British agriculture has to be on the front foot and continue to demonstrate positive progress. We will work with farmers to do anything that we can, and we recognise the efforts that are being made. Be it the dairy road map or Arla’s climate checks initiative, we can see people working hard throughout the farming and processing sector to get the advances that we all need.
There are indeed many paths to a sustainable future. A report from the Food, Farming and Countryside Commission in January made a powerful case for an agroecological approach that many will find attractive. Finally, we await part 2 of Henry Dimbleby’s report with keen interest. The country should not have gone without a food strategy for a decade. It will be fascinating to see how palatable the Government find his recommendations. Will the Minister tell us when we can expect it?
We believe that the meat and dairy industries, with the right support and help, will play a key role in achieving the necessary climate and nature targets in the future. I look forward to working with everyone in the industry to achieve that. I am delighted to have had the opportunity to take part in this important debate.
It is a great pleasure to serve under your chairmanship, Ms Ghani, and to take part in this debate secured by my hon. Friend the Member for North Devon (Selaine Saxby). British meat and dairy products have a really good reputation for quality, built on high animal welfare standards, strong environmental protections, traceability and sustainability. This Government will always support our farmers and producers, not only during Great British Beef Week.
It is great to be in a room full of such enthusiasts for their own local products. I will not, however, judge between Angus cattle and South Devon cattle, both of which we have kept at home. Other products are available and are kept by the farmers in the constituencies of those in this room. It is good to hear the enthusiasm in the room for buying local, buying sustainable and buying British. It is encouraging that, despite the challenges of the pandemic, and aside from the recent difficulties in the pig sector, generally our meat and dairy markets remain relatively strong, with good prices for milk, poultry, beef and especially lamb, which has been at 10-year highs since the beginning of this year.
I will not have time to respond to every issue raised, but I briefly mention the Chairman of the Select Committee, my hon. Friend the Member for Tiverton and Honiton (Neil Parish), who raised the problem of re-tagging animals moving from GB to NI. This is not required, as I am sure he knows, for animals going for slaughter only, but rather for breeding animals. We are aware of the burdens on those moving livestock and are working closely with the Department of Agriculture, Environment and Rural Affairs where we can to try to minimise those issues taking place at the moment.
We heard about a desire to buy British from many Members, and about the commitment that some of our supermarkets have shown to selling British-sourced meat and dairy products. I was grateful to be able to speak to many representatives from our supermarkets on a call last week, specifically, in fact, about pork. The right hon. Member for Orkney and Shetland (Mr Carmichael) made a thoughtful speech about the interrelationships in the rural supply chain. My hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory) was keen to support farm shops and, as ever, the fishing industry in her constituency in doing more direct selling to customers.
We are really ambitious, as a Government. We had a manifesto commitment that we want people at home and abroad lining up to buy British. We are working closely with the AHDB, and Members may have noticed that we had a number of successful campaigns during the pandemic, including Milk Your Moments, which is slightly more modern but just as good as that mentioned by the hon. Member for Strangford (Jim Shannon)—“Go to work on an egg”.
On trade, the successful conclusion of negotiations with the EU with a deal, ratified only yesterday, based on zero tariffs and zero quotas means that we can now develop new relationships with our trading partners in the EU and globally. We are keen to grow our markets through the Department for International Trade’s new Open Doors campaign and increased market support and help in this area. We have a great agreement with Japan, which opens the Japanese market to UK exports of lamb and beef for the first time in two decades.
It was good to hear the level of ambition from the Cotswolds, represented so ably by a farmer, my hon. Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown); from my hon. Friend the Member for Gloucester (Richard Graham), who spoke specifically about the Indonesian market—I will follow up with him directly on some of the points he raised; and from my hon. Friend the Member for Somerton and Frome (David Warburton), who particularly mentioned the cheese that he is keen to export.
The Government are clear, to reassure the hon. Member for Upper Bann (Carla Lockhart) and other Members, that we are not compromising on the UK’s high environmental protection, animal welfare and food safety standards. The strong British reputation for our food is the basis on which we intend to sell our produce, both at home and abroad.
On other points—my hon. Friend the Member for Isle of Wight (Bob Seely) mentioned the possibility of looking at a mobile abattoir scheme. I have spoken to him about that before, and am keen to do so again. We are piloting such a scheme, and look forward to learning from that and if it is appropriate to roll out more widely. A number of Members, including my hon. Friend the Member for St Austell and Newquay (Steve Double), spoke about labelling—an important issue for all the food we sell. We spent time this morning on a complicated Statutory Instrument on changes to labelling. We will talk more about that this year as we go into consultation on labelling, and I encourage him to get involved.
On the environment, the PM has declared that tackling climate change and preserving biodiversity is the UK’s number one foreign policy priority. He saw this first hand when he visited a livestock farm in Derbyshire last week. Achieving net zero for 2050 is an absolute priority for this Government. We were the first major economy to bring this target into law, and this is just the beginning. We acknowledge the ambition of the farming industry in this space, and have great examples of UK dairy companies and others leading the way on this. There is a great deal that the livestock sector can, and will do, to help move towards these ambitious targets.
As many Members have said, we have one of the most efficient and sustainable systems of livestock in the world. Reducing production of our own, increasingly carbon efficient products, and importing less carbon efficient products from overseas, is clearly not the solution. Nor is it sensible to import feeds grown in ways that are damaging to the global environment just to fit our targets—[Interruption.] I will not give way, I have a great deal to get through—I apologise. New feeds will be of a real benefit, and good work is being done to understand ruminant digestion and target both nutrition use and reduce methane emissions.
We must be honest about possible trade-offs with animal welfare when we have this debate. We need to do further work on the use of nitrogen fertilizers and nitrogen fixing mixes in grass. It was interesting to hear my hon. Friend the Member for Tiverton and Honiton talking passionately about herbal leys, which I would echo if I had longer. Carbon sequestered by hedgerows and on farm woodland can help meet our targets, though some of that will not be recognised for many years. It must be recognised that well-managed livestock provides huge benefits, such as supporting biodiversity, protecting the character of some of our most beautiful landscapes, and creating employment for rural communities. It provides important nutrition as well, and we must remember that food is at the heart of what we do. We recognise the delicate balance between these outcomes and the potential environmental trade-offs, and will ensure that decision making is evidence led, but takes into account the full sweep of trade-offs.
I need to let the hon. Lady finish the debate, but I will say briefly that, despite the views of the Opposition spokesman, the hon. Member for Cambridge (Daniel Zeichner), targeted support for our farmers is definitely the way to go. Paying people for public goods is a much better way of optimising the environmental solutions than merely sticking with CAP. Henry Dimbleby will report in July. We look forward to a major conversation across the country about buying British, buying local and buying sustainable, and all other aspects of food production, until the Government’s response in December to his report. This has been a great debate, and I thank hon. Members for taking part.
I thank the Minister for her response, and hon. and right hon. Members for their contributions. It is good to see widespread support for British meat and dairy farmers, as well as the Government’s environmental goals. The debate has recognised the importance of our global, as well as local markets for our fantastic British produce. I am sure today’s debate has whetted our appetites, and we cannot wait to dash out and buy something British for our evening meal.
Question put and agreed to.
That this House has considered British meat and dairy products.
Online Scams: Consumer Protection
I remind hon. Members that there have been some changes to normal practice in order to support the new hybrid arrangements. Members need to clean their spaces before they use them and before they leave the room. I also remind Members that Mr Speaker has stated that masks should be worn in Westminster Hall throughout the debate.
I beg to move,
That this House has considered protecting consumers from online scams.
It is a pleasure to serve under your chairmanship, Ms Ghani.
Last year, my constituents Mr and Mrs Biggs came to see me at one of my constituency surgeries. They were asking for my help because scammers had stolen £30,000 of their savings. How had that happened? Well, a friend of theirs had spotted an advert on Google for a bond that, when compared with other products on the market, seemed to offer a reasonable rate of return over a three-year period. They called the telephone line provided to discuss the product further. The bond was being offered by a reputable firm, Goldman Sachs, and it was advertised on Google, which presumably had done its due diligence before accepting the advert, so my constituents invested. Only it was not Goldman Sachs that they had invested with, and the bond did not exist. Instead, Mr and Mrs Biggs, like many people up and down the country, had become victims of a very convincing clone scam. They had transferred £30,000 into the bank account of the perpetrators of that scam.
Clone scams exploit people’s trust in reputable brands by carefully mimicking their websites and online presence and even researching and impersonating their sales managers. When they also carry the stamp of an advert, be that on Google, Facebook or any other online platform, many consumers believe that the platform carrying the advert has checked out the company that posted it and that therefore it is an official advert from the company in question. But the truth is that that is rarely the case, because online platforms currently have no legal obligations to protect users against fake or fraudulent content, and that is the primary issue that I would like to address in the debate today.
In the last 18 months, we have been living through a public health emergency, but the pandemic has also had a really profound effect on the way adversaries operate online. We have seen everything: nation state espionage on vaccine programmes, the spread of misinformation and a huge increase in online scams. We have seen fake personal protective equipment, and phishing sites posing as councils giving out covid grants, or sending fake messages about parcel deliveries to try to download software on to victims’ phones or to direct them to give their bank details to scammers. It shows how sophisticated the world of online scams has become, how fast criminals can adapt to new situations and how easy it is for people to be taken in.
Action Fraud figures show that, in the year to June 2020, 85% of all fraud was cyber-enabled. Reports of clone scams increased by nearly 30% between March and April—just in the space of a month—last year. Victims lost more than £78 million to clone scams in 2020. It is hard to put those sorts of figures in the context of individuals, but the average loss for victims is about £45,000. That could be the deposit for someone’s home, the money that they were saving to start their own business or expand it, or savings for retirement or to pass on to their children. But it is gone, and often with no compensation.
Fortunately, in the end, my constituents, Mr and Mrs Biggs, were compensated. That was not without a fight and the resulting stress and anxiety. Many other victims are not compensated. In 2018, The Telegraph, which has done some really excellent work on this issue, reported that, in the previous year, only 25% of the funds lost to authorised push payment or APP scams, in which the victim transfers money to the bank account of the criminal, were successfully returned to victims.
These figures are shocking, before we even take into account the immense psychological and emotional toll on victims and their families. Scammers take advantage of people’s fears, hopes and anxieties, and they motivate them to transfer large sums of money on this basis. Anyone who has helped a victim of these crimes knows how heart-wrenching the ordeal is for them. The feeling of anxiety and powerlessness experienced when pleading with banks and law enforcement to help recover life savings is a tremendous unseen harm caused by online scams.
Recent analysis by consumer champion Which? found that there are 300 to 350 fraud reports every week in which victims show signs of severe emotional distress. One such account from Which? details the case of an 80-year-old gentleman who could not sleep for weeks after losing his retirement savings to scammers. The person behind the scam pretended to be a real investment company, assuming the name of a real investment manager at that company, and ultimately stole £50,000 from the victim, even after he checked their credentials online.
This scam, like the others I have mentioned, began as an advert at the top of Google’s search results. TV, print and radio advertising are all governed by a comprehensive set of rules, yet very little exists to govern online advertising. The majority of people now go online to research and buy everything, from pensions to pet food, holidays to houses, shoes to savings products, but it is for each individual platform to decide what, if any, verification checks it wants to make on businesses taking out adverts on its service.
I do not mean to imply that platforms are doing nothing. Following ongoing discussions with the Financial Conduct Authority, Google, for example, has updated its financial services policy to make financial services advertisers subject to its business operations verification process. I followed the link that Google provided in its letter to the FCA to understand more about what the verification process entails. The policy states:
“Advertisers may be selected to complete business operations verification if, for example, the advertising behavior has been identified as unclear or their ad content is deemed as potentially misleading.
Advertisers whose accounts were suspended due to a violation of our Google Ads policies may also be requested to undergo business operations verification as part of the account suspension appeals and remediation process.
Advertisers who are required to complete business operations verification will be notified and given 21 days to submit the verification form. In certain circumstances, we may pause advertisers’ accounts immediately when business operations verification is initiated. This means that advertisers’ ads will not be able to serve until they are able to complete the program successfully.
Advertiser accounts may be paused if the advertiser’s business model is unclear and we suspect that their advertising or business practices may cause physical or monetary harm to users. Non-exhaustive examples include: misrepresenting yourself in your ad content; offering financial products or services under false pretences; or offering unauthorized customer support services on behalf of third parties.
Once the verification form is completed and reviewed by Google, advertiser’s accounts that do not meet the requirements of this verification program outlined below will be suspended with a 7 day notice period. Note that if any further clarification or information submitted to Google during this 7 day notice period is insufficient to verify the account, Google may suspend the account immediately.”
So, Google “may” carry out checks, or they may not. They “may” pause the adverts at the start of the verification process, or they may not. Advertisers “may” get 21 days leeway before proper checks are completed. Advertisers found not to meet the requirements of the verification process will have seven days to provide further information to verify the account. If they cannot provide that, Google “may” decide to suspend the account immediately, but presumably they also may not. I know politicians are often accused of using non-committal language and trying to evade a straight answer, but this is a masterclass. It might be time that we in this place send the strong signal that that approach is not enough to protect our constituents, who are definitely being scammed out of their life savings.
If a verification process is to be effective, it needs to take place before any adverts are served. Leaving them up for 21 days while checks are completed provides a free-for-all for scammers. An experiment undertaken last year by Which? shows why. It created a fake water brand, Remedii, and an accompanying online service offering pseudo health and hydration advice, called Natural Hydration. It advertised both using Facebook and Google. Which? reported that
“With barely any checking, Google promoted ads for our website and fake mineral water to users who searched for popular terms, such as ‘bottled water’. Our ads gained nearly 100,000 impressions over a month.”
That shows how fast fake ads can reach a wide audience. A lot of damage can be done in 21 days.
Just this week, in a user survey published by Which?, a third of victims who reported a fraudulent ad on Google said that the advert was not taken down by the search engine, while a quarter of victims who reported an advert on Facebook that resulted in them being scammed said the advert was not removed by the social media site. Those companies earn billions of pounds from advertising. Yesterday, Google’s parent company, Alphabet, reported record results, with a 163% increase in profits. Alphabet’s executives have attributed that rise to an increase in people using Google’s online services and interacting with their online adverts. I do not think it unreasonable to require those companies to spend some of their money on helping to protect people from the harm caused by fraudulent adverts, especially given that adverts are targeted at users based on their recent web activity and behaviour. Fraudulent ads, based on a user’s interests or concerns, are effectively pushed towards them by online platforms, which act as enablers for the scammers.
I will briefly tackle the issue of compensation for victims, which is, at the moment, a minefield. In my constituency, I have seen cases involving victims who have found it incredibly difficult to make their claim heard by their bank, prolonging the painful battle to recoup their losses. Those people are forced into a position in which the odds of a successful outcome are low, and they often emerge at the other end with a growing distrust for our regulatory system.
The Financial Ombudsman Service website puts it very clearly:
“When it comes to payments that customers have authorised themselves, the starting point at law is that their bank won’t be liable for the customer’s loss, even when it’s the result of a scam.”
We might say, “Fair enough. It is not the bank that’s at fault. They are merely acting on the instructions of their customer.” What about the companies who expose users to those fraudulent ads, however? Those companies actually target the adverts at users based on their interests, and make billions from doing so. Are we honestly saying they should have no liability, and that there should be no redress for users who are targeted with ads placed by criminals? How can that be fair?
We urgently need to tackle the issue of online financial harms. I asked the Home Secretary about this matter when she gave evidence to the Home Affairs Committee. She said:
“We are actually doing some work right now through the economic crime board that I chair with the Chancellor—I chaired it just last week. If you speak to many financial regulators and to the financial services sector, they are equally concerned about this. One of the key outcomes that we are now discussing and picking up across Government is: how are we going to make the online harms Bill much stronger, and how are we going to tackle many of these online advertising platforms that come up through search engines, social media and other forms of electronic communications?
We still have a way to go, but what I can say—and I am very grateful to colleagues in the Treasury on this as well—is that the level of focus and attention to this issue definitely means that it will be given a huge push, a significant push, because, quite frankly, economic crime is now becoming one of the most predominant challenges when it comes to law enforcement but also criminality.”
I could not agree with her more.
I would be grateful for an update from the Minister on how the Government propose to tackle the issue. Will financial harms become part of the online harms Bill as the FCA, the Financial Services Compensation Scheme and Which? are asking for it to be? If not, will she set out what they plan to do instead? In either case, can she go any further towards providing a timetable for action?
We have a really urgent problem affecting thousands of people every year. We must sort it quickly. I am confident that we can, because I know from knocking around the cyber-security industry for most of the past decade that the UK has always been a global leader in cyber-security and tackling cyber-crime. I have seen our strategy grow, mature and evolve as the threat has. Fraudulent online adverts are a real threat to all our constituents. It is not on the horizon; it is here already, and it has been for several years. The alarm bells are sounding, and the problem is growing, so let us grip it now and offer our constituents the protection they all deserve.
I congratulate the hon. Member for Rushcliffe (Ruth Edwards) on securing the debate and on the powerful case she made. The Pensions Scams Industry Group estimates that 40,000 people, like Mr and Mrs Biggs, were scammed out of pension savings in the five years after the introduction of the pension freedoms and lost £10 billion between them. As she explained, losing pension savings after a lifetime of work is a devastating experience, and she is right that most of the problem is online. In September, Aviva told the Work and Pensions Committee that in the previous six months—since the start of lockdown—it had identified 27 fake websites purporting to be Aviva trying to defraud pension-age customers of their investments.
As the hon. Member said, the Government have the chance to tackle this enormous problem in the forthcoming online safety Bill, but it appears, extraordinarily, that financial harms are to be carved out of it. I hope that the Minister can encourage us that that might be reconsidered. We have heard a separate announcement of a consultation on online advertising, but that covers only part of the problem. A call for evidence on online advertising closed a year ago, but as yet nothing at all seems to have come out of that, and asking us to wait for yet further consultation before anything is done would be hopeless. The FSCS, the FCA and, I understand, the Governor of the Bank of England are urging that scams should be included in the online safety Bill, so I hope the Minister can encourage us on that.
It is, as always, a pleasure to serve under your chairmanship, Ms Ghani, and a real pleasure to respond to the debate. I congratulate my hon. Friend the Member for Rushcliffe (Ruth Edwards) on securing a debate on this important subject. I am delighted that the right hon. Member for East Ham (Stephen Timms) was able to contribute as well. First, may I say that our sympathies are with Mr and Mrs Biggs? My hon. Friend articulated all too well the losses that they have suffered. They have had to endure a terrible experience that, sadly, is experienced by many people, and we heard from the right hon. Gentleman the scale of some of these frauds.
The Government absolutely recognise not only the scale and the impact that fraud can have and is having on victims, but the impact of bringing perpetrators to justice. According to the latest figures, fraud accounted for over a third of all estimated crime in the year ending September 2020 and, as my hon. Friend articulated all too well, behind the statistics there is the trail of misery that these losses can encompass. Victims suffer both financial loss and emotional harm. There can be consequences for their livelihoods, their homes and their families’ futures. We also know that the money that has been stolen from them can often go on to fund other serious and organised crimes.
As this year has demonstrated, more and more people are online at home, and we are acutely aware of the importance of staying safe in the virtual world. We are focusing the Government’s efforts on tackling fraud and online scams in three key areas: prevention; catching the criminals responsible; and supporting the victims of these despicable crimes.
Prevention involves not just victims, the industry and tech companies, but all of us. That is how we will be able to tackle these crimes. We must ensure the private and public sectors prioritise preventing these types of frauds. That is critical to preventing the harms that we have heard about and the economic damage to our businesses, and disrupting the organised criminals who perpetrate these crimes. To do that, the Government are taking steps to ensure that fewer people fall foul of these scams.
The National Cyber Security Centre has been at the forefront of that effort. Last year, it launched a new suspicious email reporting service, which makes it easier for the public to highlight suspicious emails and websites. The service has already led to more than 5.5 million reports, and more than 41,000 scams and 81,000 websites have been taken down.
Importantly, we also need to help the public spot these scams. We are working with banks and many other organisations to help people spot when a scam appears, a dodgy text message appears on their phone or an email appears in their inbox so that they can protect themselves. That is in addition to the wider work with the public and private sectors.
Last year, we launched a new gov.uk page to help keep the public safe online. I recommend it to colleagues, who can perhaps disseminate it through their constituencies. We know that, sadly, in the midst of the pandemic, with the enormous human cost that it has had for so many people, fraudsters are seeking to take advantage of even that. We have been working with partners from across law enforcement and health to track and mitigate the threat of fraud around the pandemic. That has included a series of public messaging campaigns to inform the public of fraudsters who are seeking to exploit the vaccine roll-out and tell them how we can all remain vigilant against such attempts.
We are working with industry to try to cut off these scams before they bear fruit on the internet. We have been leading work to develop bilateral fraud charters with our banking, telecommunications and accountancy partners. They will bring greater clarity, transparency and accountability to the actions that each sector will take to target harden their systems and protect their customers from fraud. An example of that is the specialist Dedicated Card and Payment Crime Unit, which is a police unit that targets and disrupts credit card fraud and demonstrates the collaboration between UK Finance, the City of London police, the Metropolitan police and the Home Office. It is also working to help online companies take advantage of its services, in particular on the pernicious ways fraudsters are opening up their fraud—for example, through the recruitment of young people to become money mules. There is another great piece of work with the telecoms companies, whereby if somebody receives a suspicious text, they can forward it to 7726, which will enable the telecoms companies to look at it and see whether it should be removed.
The response to online scams and all fraud demands a collaborative, innovative response to keep pace with the changing threat and new technologies. We continue to work closely with industry to drive progress.
My hon. Friend and the right hon. Gentleman understandably raised the landmark online safety Bill, and they asked whether fraud will be included in its scope. The new law will impose a duty of care on tech companies. Although some companies have taken positive steps already, the Government are clear that more needs to be done. In relation to the specificity of the online safety Bill, there are ongoing discussions.
Of course, what has been said in this debate will be listened to, and the concerns that have been raised will be reflected upon. However, in the more immediate term, my hon. Friend has chosen a timely moment in which to have this debate, because only tomorrow, my noble Friend Baroness Williams of Trafford, along with other ministerial colleagues, will meet with tech companies to discuss a voluntary set of principles for preventing fraud and protecting the public on their platforms. The Government are having productive—we hope—but also insistent conversations with the tech industry as to what it should be doing in order to protect members of the public. I listened to my hon. Friend’s deconstruction—I think that is a fair word—of Google’s policy with great interest, and I will commend it to my noble Friend the Baroness before she goes into tomorrow’s meeting.
We are committed to tackling the problem of online fraud, and are considering every possible approach, including legislative and non-legislative means. As has already been mentioned, the Department for Digital, Culture, Media and Sport is leading work on the online advertising programme, which will consider, among other things, the role of online advertising in perpetrating fraud. DCMS is also carrying out broader and longer-term efforts on digital identity and data protection, and as my hon. Friend has mentioned, in February this year, the Home Secretary chaired a meeting of the Economic Crime Strategic Board, which brought together people from across the public sector and industry. At that meeting, an ambitious new framework for a fraud action plan was agreed to drive forward and improve our collective response to these crimes. The full plan will be published later this year and will consider, among other things, how we can include all sectors to protect the public from fraud.
Law enforcement colleagues clearly play a crucial role in this subject, as do intelligence colleagues. We are considering all routes, including legislation, to give them the tools they need to go after fraudsters and protect those who are vulnerable to these harmful crimes. We have asked the Law Commission to review the existing corporate criminal liability laws for economic crime, including fraud, money laundering and false accounting, and we are hoping to hear from them next year. We will, of course, consider any findings that will benefit counter-fraud efforts, and we continue to work with regulators and industry to consider what more can be done.
However, as my hon. Friend has set out, this is about not just the financial impact on victims, but the emotional and other experiences that people have. We understand that reimbursement can be a key part of helping people deal with those experiences, and are working with the financial sector to ensure that as many victims as possible are either able to claim their money back, or are reimbursed. We are working particularly closely with the Treasury to explore what can be done to promote greater consistency across the sector. We are also working with national and local policing leads to support victims of these terrible crimes. The National Economic Crime Victim Care Unit, based within Action Fraud, is also supporting victims, helping them to recover and protect themselves against becoming victims again.
As this debate draws to a close, let me again thank my hon. Friend for having raised these important points in a timely manner. I very much appreciate the points that she and the right hon. Gentleman have made, both about tackling fraudsters and about supporting victims of these crimes. They have my assurance that the Government take these threats very seriously, and it is through working together and taking a collaborative approach—helping the public to understand where there may be a scam, but also working with tech companies to ensure that these adverts and other things that have been described are cut off at source—that we will help to stop these frauds from happening in the first place.
Question put and agreed to.
District Heat Networks
I remind hon. Members that there have been some changes to normal practice in order to support the hybrid arrangements. Members who are participating physically and virtually must be present at the beginning of the debate and stay for the entire debate. I remind Members who are participating virtually that they will be visible at all times, not just to each other, but to us in the Boothroyd Room. If Members have any technical problems, they should email the Westminster Hall Clerks’ email address. I ask Members who are attending physically to wear masks until they are speaking. I call Elliot Colburn to move the motion.
I beg to move,
That this House has considered district heat networks.
It is a pleasure to serve under your chairmanship for the first time in Westminster Hall, Ms Ghani. I am grateful to the Speaker’s Office for granting me this debate, as some of my Carshalton and Wallington residents, particularly those living in the New Mill Quarter development in Hackbridge, have been adversely affected by district heat networks. In my efforts to support them, I have encountered many issues.
For the benefit of the House, I should briefly explain what a district heat network is. They are designed to take energy from a local energy source and distribute it to consumers through a series of highly insulated pipes. A common source of the energy is incinerators or so-called energy-from-waste facilities, as their proponents like to call them. That is the model used in my constituency.
When the Lib Dems gleefully secured the incinerator in Beddington that they fought so hard to deliver, one of their most common arguments was that the waste heat from the incinerator would be used to heat local homes. The idea was that highly insulated pipes would be laid, water would be heated at an energy transfer station, using heat from the incinerator, and sent along the pipes to residents’ homes, providing a reliable and supposedly clean heating source at a reasonable price, all run by an arm’s length company called Sutton Decentralised Energy Network—SDEN—which is wholly owned by the council. The reality is a system that has been dogged with failure, residents being ripped off and the complete absence of any action or even empathy from the council. I will expand on that point later.
My central point is that this relatively new form of energy production is almost entirely unregulated. When residents have problems, they have very little in the way of consumer protections or rights. I hope I can persuade the Government to fix that. The Government have already launched a consultation into the networks, which I contributed to, and have made space for discussions about the networks in the design of the Green Heat Network Fund. The consultation describes the heat networks as “central heating for cities”. When someone’s central heating breaks down in a traditional home, one family is affected. When a heat network breaks down, the entire network is affected, impacting hundreds or even thousands of people. As the consultation states, a heat network
“avoids the need for individual heating solutions in every building.”
Therefore, it encounters problems that will impact every building jointly. That is why there needs to be greater consumer protection.
I want to draw focus on several key themes today. The first is reliability. There have been extended delays in the SDEN system going live, meaning residents were until last month being provided with heat by the back-up boilers, which have proven less than reliable. By my count, judging from the contact I have had with residents from New Mill Quarter, in the past year, there have been nearly 20 hot water or heating outages, including over the cold winter months, leaving people without hot water or heating and putting vulnerable people at risk. On two occasions since December, the hot water and heating blackouts have required a call-out from the London Fire Brigade due to problems in the back-up boiler room.
The situation is not confined to Hackbridge. The Department for Business, Energy and Industrial Strategy heat networks consumer survey of 2017 found that a greater proportion of heat network customers experience loss of heating compared with customers not served by these networks. A report by the Competition and Markets Authority showed reliability concerns as a consistent theme of customer complaints on heat networks, particularly citing unplanned interruptions.
I am guessing that most of us live in a home heated by a boiler. For those who do, breakdowns are a rare occurrence. For New Mill Quarter residents, they are very common. Even if those of us who live in a home heated by a boiler are dogged with problems, we can vote with our feet, and switch provider or change our system and replace the boiler. That option is not available to those living in a district heat network. Residents in Hackbridge were sold a system that they were told would be 100%, 24/7 reliable. There are marketing documents to prove that. [Interruption.]
Thank you, Ms Ghani.
In a public meeting that the council tried—and failed—to keep me out of, despite my calling for it in the first place, residents were told that they should have somehow known that 100% did not mean 100% and that, inevitably, there would be problems. During that same meeting, residents expressed how they could never get through to someone when an outage occurred, were never updated and had no recourse to compensation because there were no obligations on SDEN to do anything, due to lack of regulation. The meeting ended with residents very unhappy, having received no answers and a pitiful compensation offer that did not make up for the stress and concern caused by the constant outages. Nor was there any hope that things would get better; indeed, outages continued well after the meeting took place.
The second issue I want to address is customer satisfaction. Residents in New Mill Quarter experience higher than average heating bills. I conducted a survey of those residents to acquire evidence of their experience. Some 71% of residents told me that their bills were a lot higher than before they moved into New Mill Quarter; that figure rose to nearly 100% when including those who said their bills were somewhat higher.
The pricing structure of SDEN is split into two categories: a variable rate, which is the usual cost of daily rate and usage; and a standing charge, which covers maintenance and repairs. However, the New Mill Quarter Residents Association calculated that the pricing model that SDEN uses as a basis for its costs is nearly £3 million higher for the estate than the next available alternative over the contract term. I can hear the Liberal Democrats shrieking at me—incidentally, they were so keen to keep information about the pricing model quiet and out of the public eye that it took freedom of information requests and a ruling from the Information Commissioner to get that information out of them. They would say that the costs are high because they include things such as insurance and system maintenance, and that is something that we mere mortals who have a boiler must pay for separately. But the numbers just do not stack up. There is evidence to suggest that residents are being completely ripped off. Some residents are looking into private litigation, and I do not think it beyond the realms of possibility that the matter is investigated by a series of Government Departments. Things are that serious.
The overall customer satisfaction with district heat networks is also in question. I detailed the service issues on the estate, which I will not repeat. It is worth noting that, on average, district heat network customers have lower satisfaction rates than customers of more traditional forms of heating. Despite being used as a flagship example of a nation embracing heat networks, Sweden has the lowest heating satisfaction of all five European countries surveyed in a recent 2021 study. The country has a history of consumer distrust of district heating operators, due to fear of being taken advantage of in a natural monopoly.
Potentially one the harshest elements of the district heat network for residents in New Mill Quarter is the totally restrictive and monopolistic nature of the project. There are no boilers in the properties, so there is no ability to switch energy providers. SDEN is the only option. The fundamental market freedoms that have helped make our country thrive are being denied there, and elsewhere in other district heating networks. There is no incentive for SDEN to help reduce the high energy bills, because there is no threat of their customers switching providers.
New Mill Quarter residents are trapped in high energy bill contracts. When I asked residents as part of my survey if they would like to change providers, 91% said yes and the remaining 9% were unsure. Not a single person wanted to stick. When asked if they were aware of SDEN and the obligation to use it when they moved in to their new property, 35% of residents said that they were not, and 13% were unsure. It is clear that many residents were not aware that they would be trapped in the scheme before they moved in, and an overwhelming majority would support freedom in the market to choose.
I am a Conservative because I believe in the principles of the free market. Competition and choice have been shown consistently to drive down prices while driving up reliability. Monopolies have no incentive to do either, because there is no chance of their losing their customer base. Of course there are other natural monopolies in the UK, such as water, for example; but those negative impacts are mitigated through tough regulation including an industry regulator, and consumer protections.
The final point that I want to make about the networks, at least in Hackbridge, is that the project was doomed from the start, owing partly to a faulty business model. The freedom of information requests and Information Commissioner’s Office complaints have revealed that SDEN was built on the back of a complete fantasy in terms of its financial and business modelling. That is probably why the council worked so hard to keep it secret. SDEN is not making any money. In fact, it is in a dire financial situation, and residents are the ones being asked to pay the price. It is really an issue of the customer base.
SDEN is still, even now after all the problems, being touted as a massive success of the delusional, out-of-touch and uncaring Lib Dem-run council. We were told that the incinerator would mean a district heat network that would power potentially thousands of homes, even with the potential to retrofit existing properties to connect to it, giving residents a so-called greener energy alternative. In truth, that was never going to happen. The logistical nightmare of getting the pipes laid and the infrastructure in place even to heat the New Mill Quarter new build development, which is an estate of just over 800 homes, was cripplingly expensive. So it was only ever really going to be an option for new builds, and it only really happened in New Mill Quarter because as the crow flies from the estate to the incinerator there are no obstructions in the way, so laying the pipes was relatively easy.
However, it is not as if developers want to be connected in the first place. The council essentially had to strong-arm Barratt Homes into accepting SDEN and is now trying to force other developers in the borough to accept it too. On more than one occasion it has been caught with egg on its face because it failed to persuade others, including the local hospital, to become customers. That has caused real financial difficulty. Owing to the delays in getting connected and failure of the back-up boilers, in addition to failing to find new customers, the council has to foot the bill for the high gas consumption costs. That, in my opinion, offers a much better explanation for why residents’ bills are so high. It is not that hard to follow the money. The council has to pay a high cost for the gas and residents have high energy bills: put two and two together. Even now that the landfill gas engines at the incinerator site have been switched on, I have it on good authority that they are not enough to heat the homes in New Mill Quarter, so a lot of the work is still being done by back-up boilers. It is going to take yet another two years before the incinerator turbines come on line.
Looking to the future, even if the system was reliable, the incinerator was connected and working well, and prices were reasonable, it would not change the fact that the business model is still fatally flawed. There is something glaringly obvious coming down the line that I fear has been overlooked. That is the fact that the Government’s own resources and waste strategy calls for the phasing out of incinerators—or so-called energy from waste facilities—as a form of waste management, as we look further up the waste hierarchy. The less waste we produce and the more existing waste can be recycled or reused, the less necessary disposal through incineration becomes.
What happens then? The day will come when not enough waste will be produced to burn, and consequently power the heat networks. What, then, happens to the residents who get heat from them? The back-up boilers are not the answer, as has been demonstrated, because they cannot cope with the stress of maintaining an entire heat network. There can only possibly be two options. One is to import waste to keep the incinerator and the supply going, which means more vehicle movements and more pollution, and scrapping the fantasy that it is some kind of green alternative. The other is an expensive, time-consuming and in many cases potentially impossible retrofit of an alternative energy supply. The networks are not future-proofed at all and it may be 20 or 30 years away but the day will come when the failure to future-proof could lead to an even greater problem for residents down the line.
I have covered a lot of ground today, but I hope that I have demonstrated the seriousness of the problems facing New Mill Quarter residents, who feel ignored and abandoned by their ward councillors, the council at large and SDEN. SDEN’s problems are not unique, although I imagine some of the dodgy dealings might be. However, tougher regulation is clearly needed, as examples of what I have described can be found across the country. At the very least, consumers need to be given greater protections and there should be a regulator on a statutory footing, which must compel the pricing model to be on par with the market average. There should be a 24/7 helpline to report faults, a compensation package for every outage, the ability to escalate complaints to a higher organisation, and so on.
I also urge the Government to look at whether these monopolies are a good idea at all. The inability to choose a provider is not just unfair; we are also heading to a point where the source of energy might not even be available in a couple of decades. It is not fair of our generation to burden a future generation with tackling that problem. I urge the Government to let SDEN be a lesson in what not to do. Let us not resign residents in Hackbridge or anywhere else to this poor state of affairs.
It is a pleasure to serve under your chairmanship, Ms Ghani. In preparing for this afternoon’s debate, I looked back over my records and discovered that the first time I raised concerns about inadequate consumer protection for customers of district heat networks was in early 2016, a matter of months after I was first elected to this House.
In some ways, the situation has moved on significantly since that date. I recall at the time making the case for greater protection for heat network customers, only to be told by Ministers that statutory regulation would not be appropriate, and that it risked strangling an emerging industry with red tape. There is now at least a consensus that further regulation is required in this area.
I remember pressing the Competition and Markets Authority to open an area of investigation into the industry, only to be told it had no plans to do so. The CMA eventually carried out a market study that determined that many customers of privately operated communal heating schemes are not well served on price and service, and it recommended a statutory regime governing the regulation of heat networks.
Yet, taken in the round, there has been a tangible lack of progress when it comes to doing what is necessary to ensure that heat network customers are adequately protected. That should be a concern to each of us, but it should particularly concern the Government, not only because of their avowed aim to keep customer bills as low as possible, but because low levels of consumer confidence in heat networks, born of consistently poor service and expensive bills, will make it that much harder for the UK to decarbonise heat and reduce our overall greenhouse gas emissions.
In the time I have today, I do not intend to delve into the enormous challenge presented by the urgent need to decarbonise heat, and what more the Government must do to meet that challenge, not least because I know that my hon. Friend the Member for Southampton, Test (Dr Whitehead) will do so with his customary rigour and incisiveness when he responds from the Front Bench. I do want to make the point that we will struggle as a country to take the public with us when making the case for the benefits of large-scale heat network deployment if we continue to put off addressing the systemic problems in the sector.
It is true that for many customers, heat networks offer an efficient supply of heat and hot water, at prices that are close to or lower than other sources of supply, such as gas and electricity. I am sure the Minister will cite evidence indicating that the majority of customers are satisfied with their systems. However, it is beyond dispute that a significant minority of customers of privately owned heat network schemes, including thousands of my constituents, given the number of new build developments in my constituency, are still not getting a fair deal.
Whether it is unreasonably high tariffs; significant variation in unit prices and average bills, not only between schemes but between customers on the same scheme; significant month-by-month variation on standing charges, which are often incredibly high; a lack of transparency in billing; or frequent outages that are the result of sub-standard or poorly installed equipment, far too many heat network customers are being badly let down.
As a voluntary consumer protection scheme, the Heat Trust does a good job. It is a welcome development that a growing number of sites are registering with it, but the protection it affords to customers on such sites are inherently limited. Similarly, the process of attempting to secure redress by means of a complaint to the energy ombudsman is time-consuming, constrained by the fact that the service deems issues such as heat price increases to be commercial decisions that it cannot adjudicate on. Of course, that is not available to customers on sites that, for whatever reason, have not registered with the Heat Trust.
The simple fact is that neither the trust nor the ombudsman is a substitute for providing heat network customers with the same degree of protection that is afforded to gas and electricity customers by means of formal regulation of the sector.
I say to the Minister: no more delay. The heat markets framework consultation closed on 1 June last year, and we have heard nothing since. Every month that passes without legislative action means yet more expensive bills and continued poor service for heat network customers at the sharp end of industry practice, who cannot afford to wait another year or two for the Government to provide them with the protection that they deserve.
I fully appreciate the demands on the Minister’s time, but I urge her to give the matter greater priority and, subsequently to this debate, to forcefully make the case for bringing forward the necessary legislation to introduce a regulatory framework for the sector as early as possible in the next parliamentary Session. In the interim, will she look again at what more the Department might do to cajole reluctant suppliers and operators to register all their communal heating schemes with the Heat Trust?
It is a pleasure to speak in this debate with you as Chair, Ms Ghani.
This is not the first time that I have spoken in a Westminster Hall debate on district heat networks. Such technologies are important for bringing green energy into ordinary people’s homes and making Britain carbon-neutral as soon as possible. However, as we have heard, work needs to be done to ensure that district heat networks provide not only energy efficiency, but cost efficiency. District heating providers must be brought under the control not just of formal regulators, but of consumers.
The Catford Green area of my constituency is home to leaseholders, private renters and social tenants. All those residents are locked into a heating scheme that is more expensive and less functional than the standard heating system—they are paying more money for less energy. I am sure that all colleagues agree that that does not make sense, but they have no choice.
One constituent told me that he found out about the contract with E.ON only on the day he moved into the flat that he had just bought. Unable to shop around, he feels trapped in a contract that suits his building’s owners’ finances, rather than his own. Another constituent in the same estate told me that the nature of the contract meant that she could not opt out of bills when her flat was empty. She went travelling for a few months but still had to pay a minimum of £30 to £40 a month for energy that she did not consume. Catford Green residents have also reported frequent power outages with a lack of acknowledgment or compensation from E.ON. Again, that is not fair and not right.
District heat networks clearly need regulation. With an uncompetitive market, consumers are being overcharged for a low-quality service. The current Government position of relying on voluntary membership of the Heat Trust network cannot continue. Regulation must be enforced by the Government with exactly the same expectations that are placed on other parts of the energy industry, and the same consequences for breaching standards. There must be a cap on the standing charges that companies rack up, and greater transparency in pricing tariffs. Customer service must improve and customers such as my constituents in Catford Green must be listened to and respected.
Like me, the residents I spoke to are committed to reducing their environmental impact. They support the objectives of district heating, but their valid points about high costs and low standards must be addressed to ensure the effective progress of this innovative technology. It is not good enough for the Government to say that they will look at this; they must regulate the service. My residents deserve it, and so do the public.
It is a pleasure to serve under your chairmanship for the first time, Ms Ghani. You will be pleased to know that the word “resignation” does not appear once in my prepared notes.
I congratulate the hon. Member for Carshalton and Wallington (Elliot Colburn) on securing the debate; I should have realised that potentially it would relate to a constituency issue, rather than being a plug for district heating. He made his case well about the issues that his constituents are suffering, and there is no doubt that the Minister has to provide a robust response. We also heard from the hon. Members for Greenwich and Woolwich (Matthew Pennycook) and for Lewisham East (Janet Daby) about the need for a regulator and for consumer protections—that was certainly a theme common to all three speeches.
The hon. Member for Carshalton and Wallington highlighted the fact that energy from waste is causing a traffic movement issue. There is a proposed site next to my constituency where residents are concerned about movement and emissions. The point about there being no future-proofing is interesting, and it certainly seems that the local council has a lot of questions to answer. I must say that I was really shocked and surprised that it was not a Conservative council that the hon. Gentleman was laying into; he let slip at the end that it was a Lib Dem council.
Looking at the big picture for heating overall, we face conflicting problems when it comes to heating our homes. For too many people, fuel poverty is an issue, yet 85% of our homes rely on methane gas heating—a system that is cheaper than electricity and, for the most part, clearly very convenient, given that a boiler can be activated at leisure. That is illustrated by the fact that until it was recently overtaken by China, the UK was the biggest market for gas boilers in the world, but we know that cannot continue. We need to decarbonise, and we need plans, strategies and funding to get there.
The UK Government are good at soundbites and targets, but targets are meaningless without policies—for example, the target of 600,000 heat pump installations by the year 2028, from circa 20,000 a year right now. That means almost doubling the number every year from next year onwards. Without coherent policies and funding strategies to put that in place, it does not seem realistic, especially when we factor in that the installation cost for a full system is circa £15,000. Without grants or some sort of long-term route to market strategy, strong action is required for the Government to get heat pump installations in place.
The 10-point plan also has targets for carbon capture and storage from hydrogen production. We are still awaiting strategies for them, but district heating is not even mentioned in the document. In fact, district heating has not featured significantly enough in debates to date, which means today’s debate is very welcome. Looking forward, the reality is that if we are to decarbonise, we will have a rise in some form of district heating in some cases.
As far back as 2017, the then director of the Department for Business, Energy and Industrial Strategy stated that
“whatever you do you end up with 17-24 per cent district heating”,
so why does district heating lag behind in discussions and planning? It is quite clear that we need more of that. We need the heat and buildings decarbonisation strategy, as well as the Government’s net zero strategy. The Scottish Government published theirs in February 2021. If re-elected, the SNP pledged to decarbonise the heating of 1 million homes by 2030—over a third of the housing stock in Scotland—and all new homes and buildings from 2024 will use renewable or zero-emission heating. That is backed by a £1.6 billion investment plan.
Scotland is trying to reduce emissions and heating costs, and to fight fuel poverty. Compared with Westminster, we spend four times more per capita on energy efficiency, which is vital in reducing emissions. By contrast, the UK Government’s future homes standard involves eliminating the connection of new homes to the gas grid by 2025. That means that by 2024, something like 200,000 new homes will be connected to the gas grid and will then need retrofit measures in order to decarbonise at a later date.
That is not to say the UK Government have not made attempts to introduce a greater range of district heating. Some £320 million was allocated through the existing heat networks investment project, but that comes to an end in 2022, and two pilots—in Sheffield and Manchester—were pulled. What has been the extent of spend on district network creation to date? What lessons, if any, have been learned, including what we have heard today? What would the success of the green heat network fund look like, and how much of the green heat network’s £270 million is new money?
As we have heard clearly, the big issue for district heating is the fact that there is no regulator. This means that consumers in district heat networks have less security than traditional gas and electric consumers, and there is no ombudsman to receive complaints. That discourages consumers from connecting to the heat network. As we have heard, the ones who are connected have real issues trying to resolve matters.
Looking to Scotland again, the Scottish Government passed the Heat Networks (Scotland) Act in February 2021, which provides a regulatory framework to cover heat networks. What is the UK Government’s position on introducing a regulator or a regulatory framework for district heating? I hope the Minister can answer that. As the hon. Member for Greenwich and Woolwich said, the industry and the Heat Trust are trying to fill the gap with a voluntary standard, but at the end of the day it is voluntary. That belies the issue, so we need statutory protections.
We need to see greater investment in energy efficiency. What of the Tory manifesto’s £9.2 billion commitment? We need to see a coherent heat and building strategy that will deliver a suite of options. They will still need to include district heating, which the Committee on Climate Change reckons will account for 18% of heat in our homes going forward. That means ensuring a route to market for the capital cost and/or a Government funding plan.
It is interesting that the Association of Decentralised Heating estimates that energy bills for those in district heating is £100 cheaper compared with gas, so this could be a good tool for fighting fuel poverty. Again, clearly we need protections. As the hon. Member for Carshalton and Wallington said, we cannot have a closed shop where consumers start paying higher charges than they otherwise would need to.
As we look forward, there is plenty to be done. I look forward to the Minister’s response. With COP26 on the horizon, this should be our ideal platform to demonstrate a coherent, complementary heat decarbonisation strategy.
I congratulate the hon. Member for Carshalton and Wallington (Elliot Colburn) on securing the debate. Although such positions are not declarable on the Register of Members’ Financial Interests, I ought to say that I am a vice-president of the Association for Decentralised Energy, formerly the Combined Heat and Power Association. The position I hold reflects my long-standing interest in district heating and local energy schemes, which I have maintained throughout my time in Parliament, which is now a very long time. I will mention briefly in my comments my interest in these schemes and arrangements.
I was not sure what the thrust of the debate was going to be, but I anticipated that it would probably be about the concerns that some Members have expressed over time about circumstances relating to the operation of some, but by no means all, district heating schemes. Like my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook), I have expressed concerns about that, and I have put forward remedies for those concerns over a number of years in this House.
I think district heating will be an important part of our approach to the decarbonisation of heating. It certainly has a substantial part to play, under particular circumstances and in particular areas, in delivering low carbon heat reliably and satisfactorily to populations. At its heart, it is a system about networks, not about what goes into the networks. A variety of different forms of fuel can go into the network and deliver heat very efficiently. It is not just about taking heat from incinerators. It has much wider applications through heat engines or through low-carbon sources of energy that can be a part of a network. The network can adapt and change over time.
The efficient use of heat that this represents has been rolled out much more in other parts of Europe than has been the case in the UK. I visited Denmark a little while ago, which has more than 50% of its total heat provided by district heating schemes, and in Copenhagen it is about 90%. They are well-regulated schemes with a very low level of complaints and a very high level of delivery and efficiency, and they generate affordable heat in the process.
My city of Southampton now has five district heating schemes within the city boundary, including the nation’s only geothermally heated district heating scheme, which I often draw attention to. That demonstrates that the fuel types for heat schemes can be very different. Where the schemes are well run, there are few complaints and they continue to deliver affordable and, in this instance, low-carbon energy to the city.
That is one side of the coin. The other side is what happens with the schemes that already exist, and indeed have existed for a long time and have different forms of ownership and input. I am pleased that the Government have recently woken up to the potential of district heating. Through the green heat network fund and various other things, they will be providing money and support, mainly for local authority-based schemes, to bring forward district heating in the future, but I am well aware that the good schemes that may be brought about in the future are by no means the whole picture of district heating across the country. There are currently about 2,000 schemes in the country, which produce something like 2% of domestic, public sector and commercial heat demand, and supply just over 200,000 buildings and almost 2,000 commercial and public buildings across the UK.
As we have heard, a proportion of those 2,000 schemes are not well run at all, frankly, and for various reasons they have produced a bad deal for customers. Indeed, in some instances, because of the age of the system, there has not been any investment in the system and they are producing very inefficiently. In some instances, because of a frequent change in private ownership, they have simply been starved of the sort of investment they need to run at a good level, and there has not been the level of customer care that there should have been in the systems over the period. The points that hon. Members made about their local schemes are well founded. It is up to us to recognise that that is the case and to do something about it; otherwise, the next generation of district heating schemes, which will be essential, will not be well founded, as far as their operation is concerned, for the future.
The Government have sort of recognised over the years that that is a problem, but I am afraid they have not done very well by customers in those circumstances. Until relatively recently, they considered that regulation should not be statutory, as my hon. Friend the Member for Greenwich and Woolwich said, but that it should be entirely voluntary and done on the basis of an industry scheme. The 2013 paper “The future of heating: meeting the challenge” stated:
“The Government does not want to stop the growth of the sector through introducing unnecessary regulation. DECC is therefore initially seeking an industry-led scheme”.
Up to relatively recently, that was the position of the Government over a long period.
A heroic effort to do just that was introduced by the Combined Heat and Power Association, now the ADE, through the Heat Trust, which, in its own right, is a good scheme. Of course, as hon. Members have mentioned, it is entirely voluntary. If schemes do not want to join it, they do not have to—a lot have not. The redress is strictly limited to those people who are already likely to be the good guys in the first place, and not those that are, perhaps, the most egregious underperformers as far as the overall system is concerned.
Fair play to the Government, who have recognised that that system is not the right way to go about regulation for the future. In spring last year, we had the “Heat networks: building a market framework” consultation, which set out a scheme for universal regulation —not a perfect scheme, but a scheme nevertheless. We had that consultation, introduced last February and concluded last summer—and have heard nothing whatsoever since. There has been no Government response or discussion of how the very sketchy scheme set out in the original consultation could be improved and assured as a universal scheme, both retrospectively and prospectively, for district heating.
In the end, we only have one line on the subject in the energy White Paper:
“We intend to legislate in this Parliament for the regulation of heat networks to protect
consumers and reduce carbon emissions.”
That is a fine ambition, but hon. Members will notice that the proposal is to legislate in this Parliament on something that we do not know the content of because there has been no comeback from the consultation on what a scheme might be. Should we legislate in this Parliament, say at the very end, there will inevitably be a time lag in bringing a scheme to fruition, and we could be well into the end of this decade before we get the sort of regulation that we clearly need. I guess the Minister is going to make some considerable play of the fact that the Government intend to legislate, but, frankly, that really is not good enough. As I say, we do not know what this regulation will consist of, how universal it will be, what redress will be in it, how legally enforceable it will be and how it will shape new networks, or retrospectively encompass all existing networks.
Finally, a vague suggestion that we might legislate sometime in this Parliament, with a possibly extended implementation date, does not answer the issues that hon. Members have raised in any coherent and satisfying way. First, we need to get the response to the consultation out as soon as possible, so people are much clearer about what it is we might be considering, and if they think it is insufficient, they can talk about how better to deal with the issues mentioned in that regulation in a satisfactory and comprehensive way.
Secondly, we need a commitment from the Minister this afternoon that she will not just rest on the idea that there might be legislation some time in this Parliament, but that she will go away this afternoon and get writing that legislation—not personally, necessarily, but with the support of some of her colleagues and civil servants in BEIS— and get that through Parliament as quickly as possible. That means next year. I know the Minister is close to being a miracle worker in her position, but if she can achieve that over the next period she will certainly have my full support.
It is a pleasure to serve under your chairmanship, Ms Ghani. Let me begin by congratulating my hon. Friend the Member for Carshalton and Wallington (Elliot Colburn) on securing this really important debate. I also thank the hon. Members for Greenwich and Woolwich (Matthew Pennycook), for Lewisham East (Janet Daby) and for Kilmarnock and Loudoun (Alan Brown) for raising issues of concern in their own constituencies. As ever, I thank my friend the hon. Member for Southampton, Test (Dr Whitehead), who turns out to be an expert and an advocate on the subject of domestic heat networks—who knew? He was able to take us from Denmark to Southampton in demonstrating why they can and should be an important part of the mix. I thank to all colleagues for their contributions to the debate.
I was very sorry to hear of the troubles experienced by the constituents of my hon. Friend the Member for Carshalton and Wallington in the New Mill Quarter of his constituency. They have had really awful challenges with their district heat network. I sympathise with the difficulties that has clearly caused them all and it is profoundly disappointing to hear that their Lib Dem-run council has failed them all so very badly. I absolutely agree with the need for protections for heat network consumers. The experience of my hon. Friend’s constituents highlights the importance of the Government’s commitment to regulate the heat networks market within this Parliament.
Heat networks play and will continue to play an important part in assisting us to meet our net zero challenge. They will unlock larger-scale renewable and recovered heat sources, both energy from waste heat and heat from rivers and mines. It was interesting to hear about the geothermal heat source being used in Southampton. When deployed effectively, they can bring greater heat efficiency than individual gas boilers, lower costs for consumers and support local regeneration. However, we recognise that we need to regulate the market to ensure that those outcomes are real, for which protections for heat network consumers are needed.
As colleagues have highlighted, in 2017 the Government commissioned a survey to quantify consumer experiences with heat networks in England and Wales. The results showed that consumers connected to a heat network have generally received good service and were as satisfied as non-heat network customers, which makes the terrible experiences of those in New Mill Quarter all the more upsetting. The results of the survey also showed that, on average, a heat network consumer was likely to pay £100 less per year for heating and hot water compared with consumers on other utilities. Again, this makes it all the more shocking that my hon. Friend’s constituents have got such a raw deal from their Lib Dem council’s activities.
The Government also noted, however, a report by the Competition and Markets Authority in 2018, which showed that a significant minority of heat network consumers experienced high prices, frequent outages and a lack of transparency. Therefore, we committed to the Competition and Markets Authority’s recommendation of regulating the market and, last year, consulted on establishing a heat networks market framework.
The framework will include introducing consumer protection rules to combat cases of detriment, such as the outages being experienced by the residents of New Mill Quarter. We want heat network consumers to have comparable levels of service and protection to those using electricity and gas on individual contracts for their homes. As part of the market framework, we will introduce quality of service standards requiring notification periods for planned outages and compensation for all outages.
Consumers will have access to an independent redress scheme and a consumer advocacy body, which will provide a consumer helpline and priority services for consumers in vulnerable circumstances. The regulator will have powers to enforce price transparency, introduce guidance on fair pricing, set requirements on cost allocation and conduct investigations into heat networks where prices are disproportionately high. Finally, consumers will be provided with a minimum level of easily accessible information and guidance on heat networks at the pre-contractual stages of property transactions and during residency. There will be requirements on the provision of heat supply agreements and billing information.
We are preparing to introduce legislation to regulate the market, but, as colleagues have mentioned, there are some measures already in place to improve standards for heat network consumers. The Heat Trust provides an independent market-led voluntary standards scheme and consumers on heat networks registered to the Heat Trust benefit from terms of service similar to those in the gas and electricity markets. They can also access the energy ombudsman if they have a complaint against their heat supplier. In 2019, BEIS wrote an open letter to all heat network operators encouraging them to register their schemes with the Heat Trust and we continue to encourage schemes to sign up to raise standards now and to prepare for regulation.
If only I could do it tomorrow, but I think Prorogation would stop me. We have also supported the Heat Networks Industry Council in its work to establish the consumer protection agreement and the heat network emergency responders group in response to the covid-19 pandemic. We encourage heat suppliers to sign up to that agreement and we have written to signatories urging them to do more to tackle outages and improve compensation standards for those outages. Although these schemes have benefited many consumers, we recognise that regulation is needed to drive up consumer standards across the heat networks market. I therefore reiterate our commitment to that regulation today, but I am afraid that I cannot give a precise date.
The Government have introduced several schemes to support heat network deployment. Our heat networks investment project has made £320 million of capital funding available for investment in heat network projects through grants and loans in England and Wales. That will be succeeded by the green heat network fund in 2022, which will support and incentivise the use of low-carbon heat sources in heat networks. Both investment projects will ensure adequate consumer protection measures are in place by requiring projects to demonstrate Heat Trust or equivalent standards, which will ensure that taxpayers’ money supports only heat networks that deliver fair pricing and which are well designed, efficient systems.
Furthermore, we have been carrying out work on improving performance across a number of existing heat networks. That provides an evidence base for the development of the heat networks efficiency scheme, which will part-fund operational performance improvements and carbon emission reductions in existing systems. Further details will be announced later this year.
It is essential that heat network consumers are provided with clean and reliable heat at an affordable price. As such, we are developing the heat networks market framework that will place consumers at its heart, deliver sustained investment in the sector and maximise heat networks’ potential economic and environmental benefits. We committed in the energy White Paper to legislate for the market framework by the end of the Parliament.
We are working closely with the industry and consumer groups to ensure that regulation delivers positive outcomes for consumers, and we will shortly publish the Government’s response to last year’s consultation. I look forward to working with all colleagues on the proposals that we will bring forward. In the meantime, I wish my hon. Friend the Member for Carshalton and Wallington and his constituents well as they seek redress from their council, whose failure to meet the standards that residents could have reasonably expected is motivation indeed for the Government to get protections in place.
I thank the Minister for her response. It is really reassuring to hear that the Government have heard my concerns and those of colleagues across the House and will take action in the form of regulation. I look forward to working with her constructively to bring that about and get it on the statute book, because it is really needed. If heat networks are to form a big part of our heating for the future, they must be regulated and have consumer protections. At the moment, residents in New Mill Quarter can only dream of living under a heat network that lives up to the standards expected in a normal home, let alone those of an innovative scheme for the future. I am grateful to the Minister and look forward to working with her.
Question put and agreed to.
That this House has considered district heat networks.