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Volume 714: debated on Wednesday 18 May 2022

The Secretary of State was asked—

UK Shared Prosperity Fund

1. What recent discussions he has had with Cabinet colleagues on the impact of the UK Shared Prosperity Fund on regional inequality in Scotland. (900000)

Rangers, that great British football club, are in Seville tonight for the Europa league final. I hope that the whole House, including the hon. Member for Edinburgh South (Ian Murray), who is an avid Hearts fan, and the right hon. Member for Ross, Skye and Lochaber (Ian Blackford), who is an avid Hibs fan, will join me in wishing them a famous victory.

All areas in Scotland will receive an allocation of UKSPF via a needs-based funding formula. Local leaders are empowered to design their own interventions in line with the levelling up missions. We are determined to boost productivity, pay, jobs and living standards.

Will my right hon. Friend kindly explain how the allocation of SPF funding in Scotland and across the rest of the UK will help level up those communities more effectively than the previous structural funding?

The UK shared prosperity fund is a central pillar of our ambitious levelling-up agenda for places across Scotland and provides £212 million of new funding for local investment. Local partners have far greater flexibility than before. They can invest in priority areas and target funds where they are needed. Allocations are being made on a needs-based assessment, including a specifically tailored proportion for rural areas in Scotland.

Scotland has been short-changed by the loss of EU funding, leaving a 40% reduction in the funding that we would have received from the EU. It is not only the Scottish Government saying that but the Treasury Committee, the House of Lords Constitution Committee and Bloomberg, so there is clearly no levelling up. What steps has the Secretary of State taken to ensure that Scotland’s shortfall in funding is remedied, and remedied fast?

I seek to correct the hon. Lady: the funding is tapered with UK structural funds. EU structural funds and UK structural funds are tapered. We paid into EU funds, and the EU is still paying into Scotland and the rest of the United Kingdom, but the advantage of Brexit is that we now have control over that money and can decide how we spend it. The amount of money in total has not been reduced in any way.

For years, Ministers have assured organisations in receipt of EU structural funding that the UK shared prosperity fund would maintain that funding after Brexit. Finally, the Government published the details of their shared prosperity fund and, for organisations such as the world-leading European Marine Energy Centre based in Orkney, it was a brutal blow. The Government broke their promise. As a result, EMEC, a site that has tested more marine energy devices than any other in the world, now faces closure. What is the Secretary of State doing to ensure that his Cabinet colleagues keep their promise of matching the funding for EMEC and other Interreg projects in Scotland?

Discussions with EMEC are ongoing between my office, the Department for Business, Energy and Industrial Strategy and the Department for Levelling Up, Housing and Communities. We are making progress, but there is further progress to be made. To that end, I am happy to offer a face-to-face meeting with EMEC.

Future Defence Policy and the Armed Forces

2. What recent discussions he has had with Cabinet colleagues on future defence policy and the role of the armed forces in Scotland. (900001)

I have regular discussions with Cabinet colleagues and the Ministry of Defence. The integrated review sets out the Government’s ambitions for defence and foreign policy over the next decade. British armed forces personnel in Scotland play a crucial role in defending the whole of the United Kingdom and our allies, and will continue to do so.

For centuries, Scotland and the rest of the UK have had a united defence stance and military bond. Will my right hon. Friend outline what assessment his Department has made of the direct and indirect impacts, including economic, that Scotland benefits from as a result of being part of the United Kingdom?

The benefits are enormous. Scotland plays a crucial role in the defence of the UK and our NATO allies. The UK strategic bases in Scotland, RAF Lossiemouth and the UK’s nuclear deterrent at Faslane, serve to make the whole of the United Kingdom safer. The economic benefits for Scotland as a result of MOD investment are significant. MOD expenditure with industry and commerce in the last year alone totalled almost £2 billion. Defence investment in Scottish shipbuilding will see order books full until the 2030s. Construction is under way to deliver three cutting edge Type 26 frigates at BAE Systems in Govan, five Type 31 frigates at Babcock in Rosyth, and only this week the MOD awarded a £30 million contract to Babcock in Rosyth to maintain the Royal Navy’s two aircraft carriers, securing 300 jobs for the next 10 years.

The Secretary of State will know that the Scottish Affairs Committee, of which the hon. Member for Hastings and Rye (Sally-Ann Hart) is an assiduous member, is conducting a series of inquiries into defence in Scotland. One of the things the Committee has found in its almost concluded report on the military landscape in Scotland is that only 2.5% of total military spending is spent on Scottish small and medium-sized enterprises. What is the Secretary of State doing to ensure that situation is rectified?

The hon. Gentleman mentions SMEs. The bulk of the spending—literally billions of pounds, worth thousands of jobs—is with British Aerospace and Babcock.

The Secretary of State mentioned the awarding of the contract to Rosyth dockyard, securing 300 jobs in Rosyth, and the frigates and destroyers being built on the Clyde. Does he not agree with me that it is good that at least one of Scotland’s Governments can actually build ships that float?

I think my hon. Friend refers to ferries, and he is absolutely right. I think the ferries float. They just cannot seem to finish them or make them work, or find anything that gets close to resembling a ferry.

During the 2014 independence referendum, the Secretary of State’s Government promised that 12,500 armed forces personnel would be based in Scotland. The current figure is more than 25% below that 2014 promise. With the downward pressure on the armed forces across the board, when will his Government admit that they will never actually meet that target?

Recruitment remains healthy for young Scots, both as regulars and reservists. I am sure the new recruits in Scotland are absolutely buoyed by the First Minister’s new love of the nuclear alliance that is NATO.

Government’s Energy Security Strategy

3. What recent discussions he has had with Cabinet colleagues on the effect of the Government’s energy security strategy on Scotland. (900002)

13. What recent discussions he has had with Cabinet colleagues on the effect of the Government’s energy security strategy on Scotland. (900012)

Our recently published energy security strategy will ensure clean, affordable and secure power for generations to come. The strategy sets out how Great Britain will accelerate the deployment of wind, nuclear, solar and hydrogen, while continuing to support the production of domestic oil and gas in the near term.

Nuclear power has proven to be a safe, cleaner and more efficient source of energy. With the Government’s plans for new modular nuclear reactors, nuclear will play an important role in our energy mix and reduce household energy bills. Does my hon. Friend share my disappointment that the Scottish Government dug their heels in and refused to get behind the UK Government’s drive for greater nuclear energy capacity?

My hon. Friend makes a very important point. Nuclear energy is a safe, clean and reliable source of power and it will play an important role in the UK’s energy mix and transition. In particular, the new technology of small modular reactors offers huge opportunities. Scotland has a long tradition of nuclear power and we hope that the Scottish Government will be open-minded about working with us on it.

Putin’s illegal war in Ukraine has highlighted Europe’s dependence on Russian hydrocarbons. Does my hon. Friend agree that Scotland and her access to North sea oil and gas will play a crucial role in safeguarding the United Kingdom’s energy security as we transition to a greener future?

I agree that we must do all we can to end Europe’s dependence on Russian oil and gas. The North sea has a crucial role to play in that as we transition to cleaner energy sources in the longer run. The Government remain committed to the domestic offshore oil and gas sector, which will continue to keep people warm and strengthen the security of supply.

Scotland has a quarter of Europe’s marine energy potential, but generators in the north of Scotland are charged 15 times the rate to put electricity into the national grid. When will this team, supposedly defending Scotland’s interests, actually get that sorted?

As the hon. Lady knows, that is a matter for Ofgem, which is currently conducting a review into that.

Too often, key Scottish energy projects, such as the Acorn Project in the north-east, get overlooked by this UK Government. If we look further east, the port of Nigg will provide the UK’s only offshore wind turbine manufacturing facility. It is expanding to be a major energy hub, including green hydrogen production and floating offshore wind assembly. Will the Scottish Secretary and the Secretary of State for Business, Energy and Industrial Strategy visit the port of Nigg to see the massive opportunities there?

We are committed to developing the renewable energy sector in a whole range of ways. For example, I recently visited the CoRE—Community Renewable Energy—project in the hon. Gentleman’s constituency. We are funding that directly through the city and growth deal project. I am more than happy to visit Nigg and any other centre in Scotland that is developing that technology. We are standing four-square behind it.

Improving Union Connectivity

7. What steps he is taking with Cabinet colleagues to improve transport connectivity between Scotland and England. (900006)

8. What recent discussions he has had with Cabinet colleagues on improving Union connectivity. (900007)

The UK Government are carefully considering the recommendations set out in Sir Peter Hendy’s Union connectivity review. My hon. Friend Baroness Vere, the Minister responsible for Union connectivity, has discussed the UCR recommendations with Graeme Dey MSP, the former Scottish Government Transport Minister. Sadly, Mr Dey has since stepped down for health reasons. In February, we first requested a meeting with his replacement, Jenny Gilruth. We hope to meet Ms Gilruth as soon as her busy diary allows.

It is regrettable that the Scottish Government refuse to engage with the UK connectivity review. It is also notable that serious concerns remain, even now, about the award management and delivery of the Ferguson ferries contract. Does my right hon. Friend agree that the Scottish Government need to up their game in connecting UK residents?

Yes, and to clarify my hon. Friend’s point, the Scottish Government did refuse to engage with the Union connectivity review, in the form of Cabinet Secretary Michael Matheson telling his civil servants not to communicate with Sir Peter Hendy, so my hon. Friend makes a very good point. Scottish National party MPs are only too keen to tell us when the Scottish Government are doing well, how great they are and why the UK Government should follow suit. However, when it comes to ferry contracts, the SNP has shown startling incompetence: they are five years late in delivery and £150 million over budget. Despite the Scottish Government’s incompetence, this Government stand ready to work with them on improving transport links across the United Kingdom, because we believe that that is best for all.

I have taken the west coast main line a couple of times from Preston to Glasgow, which is a wonderful city. It hosted the busy COP26, with its wonderful work, and there is the space industry in Glasgow. However, the train line is absolutely vital. As part of my right hon. Friend’s Union connectivity review, will he make sure that travel from Preston and the other connecting stations to Glasgow is easier and better?

High Speed 2 will transform rail travel in this country. It will build opportunity and boost the economy through national regeneration and the widespread creation of jobs. HS2 will go to Preston from the moment that it opens for operation. That means that facilities at Preston will be upgraded, including a new platform that will also see a direct HS2 service from Birmingham, increasing the frequency of connections to the UK’s major economic centres.

Turning to the east, better connectivity strengthens the economy and strengthens opportunity—Labour’s twin ambitions for Scotland. With York having such a pivotal role on the whole network, what discussions is the Secretary of State having about investing in rail north of York to ensure that connectivity right into the heart of Scotland?

The hon. Lady and I share exactly the same ambition: faster rail to York, which will mean faster rail to Scotland.

Having spent a wonderful weekend in Glasgow and visited the wonderful Rowallan castle in the constituency of the hon. Member for Kilmarnock and Loudoun (Alan Brown) for a wedding, I completely agree that the scenery and tourism in Scotland should be enjoyed by everybody in the United Kingdom. Can my right hon. Friend confirm what discussions he has had with Ministers in the Department for Transport about enacting all the recommendations in Sir Peter’s review? Can he confirm a timeline for when that might be likely to occur?

The Prime Minister has welcomed—indeed, intends to accept—the proposals for the creation of UKNET, a strategic transport network spanning the entire United Kingdom. The funding that the UK Government have set aside will put us on the right path to developing the best infrastructure investment options to strengthen our main transport arteries for people and businesses across the United Kingdom.

The A68 is one of the main arteries for traffic crossing the border of England and Scotland, carrying thousands of vehicles each way every day. Many pass through the small village of Toft Hill in my constituency. In 2021, the Government finally announced that they would be providing funding to finally complete the much-awaited Toft Hill bypass—[Interruption]—improving the safety of roads for all users, including those travelling into England from Scotland. Does the Secretary of State agree that that demonstrates the Government’s commitment to bringing the nations of our UK together by ensuring that the infrastructure works not only for both nations, but for local communities?

I notice that my hon. Friend was being rudely interrupted, but what I think I picked up was that the A68 from Darlington to Midlothian is of great importance to cross-border transport connectivity between England and Scotland. I extend my congratulations to Durham County Council for its success in the levelling-up fund. The rerouting of the A68 at Toft Hill will create a new 1.6 km bypass away from the village centre, which I know my hon. Friend has been campaigning tirelessly for.

Will my right hon. Friend set out his assessment of the impact of devolution on Union connectivity?

Sir Peter Hendy noted in his final report that

“devolution has been good for transport”.

However, he identified that it has none the less led to

“a gap in UK-wide strategic transport planning that has resulted in cross-border schemes…seeming to be a lower priority than other schemes which may provide greater local benefit.”

Through the implementation of UKNET, we are committed to forging and strengthening transport bonds and creating a better-connected United Kingdom.

I do not think the Scottish Government need to take lessons in ferries from a Government who awarded a massive ferry contract to a company that did not even have a boat, but we will leave that to one side just now.

The Secretary of State was kind enough to mention my constituency colleague Jenny Gilruth. Jenny Gilruth has something in common with every single constituency MSP ever elected in Fife: she is not a Conservative. The Conservatives have never won a Scottish Parliament seat in Fife, and its last Conservative Member in this place lost his seat in 1987. In wards entirely within my constituency, the Conservatives managed one councillor, compared with eight from the SNP. Given the very clear expression of anti-Tory sentiment in Fife through the years, what makes the Secretary of State think that he knows Fife’s transport needs better than our local constituency MSP?

The hon. Gentleman misses the very important point that Ms Gilruth is the Transport Minister. We want Scotland’s two Governments to work together, and we believe that if the Scottish Government engage with us, we can work on ways to improve the highways for everyone.

I am here today in the House of Commons, but my heart is in Seville. I thank the Secretary of State for his contribution and wish Rangers, the most successful football club in the world, every success tonight.

In conjunction with his Cabinet colleagues, will he ensure that the connectivity review and levelling up lead to benefits right across the entirety of the United Kingdom?

That is absolutely our intention. I visited Belfast recently to have discussions about connectivity and how we can upgrade the A77 and the A75, and we now want to work with the Scottish Government to achieve that and many other improvements.

Cost of Living

We have regular discussions with the Scottish Government. The Chancellor has already announced £22 billion of support measures, including a tax cut for 2.4 million Scottish workers, worth more than £330 a year for a typical employee. We are committed to financially supporting Scotland. The record block grant of about £41 billion for the next three years enables the Scottish Government to take necessary steps.

While energy costs are skyrocketing under this Government, the Scottish Government are helping to decarbonise the heating of 1 million homes and saving families money while driving the net zero transition. At the same time, households are being hit by record fuel prices. Where they have powers, the Scottish Government are doing what they can by funding record investment in electric vehicle infrastructure and active travel, massively outstripping the UK Government. Why will this Government not match Scotland’s ambitions to drive the move to net zero and reduce living costs for families?

Let me point out to the hon. Gentleman that the measures to which he refers are in part possible because of the record funding that this Government are giving the Scottish Government. Let me also point to the measures that the Chancellor has announced to help with insulation, including the reduction in VAT on house-warming measures.

Let me first join the Secretary of State in wishing Rangers football club all the very best in Seville tonight—although I wish them no luck whatsoever for the Scottish cup final on Saturday, when they will play the famous Heart of Midlothian FC.

The Cabinet was asked for ideas on how to deal with the cost of living crisis. So far, we have had “Take on more hours”, “Get a better job”, “MOT your car every two years”, “Buy supermarket branded food”, and even “Learn to cook”, but all that the Chancellor has delivered is “Give taxpayers a loan of their own money to pay their bills.” Although oil and gas company profits are more than the combined increase in everyone’s energy bills, the Government are rejecting Labour’s plan to give all households up to £600 off their energy bills with a one-off windfall tax on those profits. Can the Minister tell us what the Scotland Office team’s contribution has been to these ideas, and which of those ludicrous ideas he favours the most?

I should begin by saying to the hon. Gentleman that the colour of my tie in no way diminishes my support for Rangers in Seville tonight.

As I have said, the Chancellor has already announced £22 billion of support. That includes 5p off a litre of fuel, £150 council tax rebates, and the hardship fund for local authorities, which gives support to the families experiencing the most difficulties. We have made it clear that the windfall tax to which the hon. Gentleman refers is not a simple solution to every problem—we have to think carefully about what it would mean for investment and jobs, and for our transition to clean energy—and the Chancellor made it clear yesterday that he wants the oil and gas companies to invest their profits in those schemes, and if they do not do so, no option is off the table.

That is simply not good enough from this Government. Inflation is at a 40-year high, but in reality, according to the Institute for Fiscal Studies this morning, it is much higher for most families. There is the weekly shop, the energy bill, petrol for the car, and taxes all rising to the extent that 150,000 more Scots cannot pay their bills, and today—in 2022—too many children are going to bed hungry or cold or both. The Chancellor keeps saying that he “stands ready to act”, but refuses to deliver an emergency Budget. His actions so far have raised taxes to their highest level in 70 years and dropped living standards by the largest amount since the 1950s.

Scotland has two Governments making decisions that are compounding the cost of living crisis. Can the Minister tell us what he is doing to get the Chancellor to act, if he is not acting now?

I should point out to the hon. Gentleman that the inflationary pressures are global, resulting from the pandemic, the war in Ukraine and other global supply chain problems. This is not an issue unique to the United Kingdom. I have already said that the Chancellor has delivered £22 billion of support for the people of this country; he is keeping a very close eye on the situation, and will intervene where necessary. I should also draw attention to his record during the pandemic, when he stepped in at the right points to support those people.

The Secretary of State for Environment, Food and Rural Affairs advised people in poverty to buy value products, the safeguarding Minister suggested that people should just work “more hours” or get a “better-paid job”, and the Chancellor said that it would be “silly” to help people struggling with the cost of living crisis. Does the Minister have any equally useless advice to add to that of his colleagues for the people facing destitution?

I have already pointed out that the Chancellor has given £22 billion-worth of support to the people of this country. He is keeping a close eye on the situation and will step in when necessary. If the hon. Lady is that concerned about the cost of living in Scotland, I would point out that her Government in Edinburgh have a higher tax rate than here in the rest of the UK.

Apart from the fact that that is not true, let me say that the Scottish Government have already spent over £1 billion mitigating the worst of Tory cuts. We are investing £770 million per year in the cost of living crisis, increasing Scottish benefits by 6%, doubling the Scottish child payment and mitigating the bedroom tax. Does the Minister not agree that it is about time his Department lifted a finger?

My Department is providing the Scottish Government with a record level of support—£41 billion. That is helping them to deliver the policies that the hon. Lady refers to. They might be able to do more if they had not wasted hundreds of millions of pounds on ferries that do not work, or on the First Minister’s independence revival tour of the United States.

Before we come to Prime Minister’s questions, I would like to point out the British Sign Language interpretation of the proceedings is available to watch on