Wednesday 20 October 2021
[Geraint Davies in the Chair]
AUKUS: Impact on Anglo-Chinese Relations
Before we begin, I encourage hon. Members to wear masks when they are not speaking, in line with current Government and House of Commons Commission guidance. Please also give each other and members of staff space when seated and when entering or leaving the room. Daniel Kawczynski will move the motion.
I beg to move,
That this House has considered the impact of the AUKUS pact on Anglo-Chinese relations.
It is a pleasure to serve under your chairmanship, Mr Davies. I am pleased to have secured this debate on AUKUS, the new British naval alliance with Australia and the United States, which will play a pivotal role in maintaining peace and security in the Indo-Pacific region.
There is no doubt in my mind that both Russia and China are threats to the United Kingdom. Make no mistake: Russia and China are both grave threats to freedom, to the western world in particular and to true democracy in general. The discussion is not about whether they are a threat but about the type of threat they present and the degree to which they endanger us.
Russia’s threat is predominantly cyber, but China’s threat is much larger: it is multidimensional, complex, far reaching and interconnected. China’s threat is based in economics and logistics, including manufacturing, supply chain and minerals. We have spent 18 months suffering the reality of that, and we must now recalibrate our investment and trade policy in order not to be so over-dependent on China in the future.
I started asking questions of our own Government about the situation in the South China sea on 4 January 2016—nearly six years ago. I asked the Foreign Office—the then Foreign Secretary was Mr Hammond—and the reply came from Hugo Swire. I asked what the United Kingdom Government’s attitude was on the situation in the South China sea. This is the first time in my 16-year career that I pay tribute to the BBC, but having watched a BBC documentary on the situation in the South China sea, which very clearly highlighted the extraordinary situation in which China is stealing hundreds of atolls from neighbouring countries, pouring concrete on them and turning them into giant military installations, I asked the British Government what their view was. The answer came back:
“The UK takes no position on the sovereignty of the Spratly Islands or other disputed features in the South China Sea.”
That was a serious mistake by the Conservative Government at that time.
Under Mr Cameron and Mr Osborne, we had a policy of maximum engagement with China in order to safeguard and protect the massive, multibillion pound investments that it was pouring into our country—conveniently overlooking the growing and increasing human rights abuses that were taking place in China and China’s nefarious conduct in the region.
Of course, as a permanent member of the UN Security Council, we expect China to be a strong country, to have a strong military and to have a capability sufficient to defend her national interests. However, during the course of the debate, I will share with hon. Members the extent of China’s recent hostile activities towards her smaller, more vulnerable neighbours—activities that go beyond those UN Security Council responsibilities. China is starting to look like a large regional power attempting to bully and subjugate its neighbours. Who are those countries? Vietnam, the Philippines, Brunei and Malaysia. Remember those names and the significance of those countries to the United Kingdom, not only historically but from a trading perspective today—Vietnam, the Philippines, Brunei, Malaysia.
As I have outlined, China has stolen hundreds of those atolls from each of those four nations, pouring concrete on to them, turning them into military outposts and trying to take control of the whole South China sea. Just think about the significance of that statement. We rightly admonish Russia about what it is doing in the Kerch strait, restricting the access of Ukrainian ships to the sea of Azov. That is a walk in the park compared with what is going on in the South China sea.
Let us not forget that 60% of global maritime trade goes through the South China sea—$5.3 trillion of trade passes through that waterway. China is attempting to take control of all of it and to restrict the movement of international shipping in order for China to have the confidence of stretching its empire that much further south, so being able to control the region that much better.
I pay tribute to our own Navy, which has been at the very forefront of pursuing freedom-of-navigation exercises through the South China sea. I dread to think what would have happened by now had the United Kingdom had not taken such a pivotal role in ensuring that our ships were at the forefront of protecting the right of passage through that waterway.
I want to come on to outline why I am concerned about China. Some people might accuse me of being anti-Chinese or slightly hysterical about the threat emanating from China, but let me give some evidence for why I think that China is becoming an increasing threat. I have already been warned by various Chinese publications here in the United Kingdom that I am on a watch list and that if I continue to speak out and scrutinise Anglo-Chinese relations, I will be the next Tory MP to be put on China’s sanctions list. If so, I will scrutinise China even more, because—I want the Chinese ambassador to know this—the British way is not to be bullied and intimidated.
We are all British parliamentarians, and we have a duty and responsibility in this House to challenge our own Government and our Government’s policy towards China in a sensible, pragmatic and democratic way. If this debate pushed me into being sanctioned, I for one will not relent from that ongoing scrutiny of my own Government and their conduct towards China.
I am impressed with the force of what my hon. Friend has said so far. As one of the seven parliamentarians who wears the badge of honour of having been sanctioned by the Chinese Government, we would be delighted to welcome him to our numbers and to present him physically with a badge for that extraordinary honour, which has been bestowed on us counterproductively by the Chinese Communist party.
I agree with everything my hon. Friend has said. He has not yet touched on the question of Taiwan. Filling in atolls with cement is a serious breach of international law and we should be concerned about it; the constant flying over by Chinese jets into Taiwanese airspace, which has accelerated recently, is a much more aggressive, bellicose and worrying act. Does he agree and will he mention that in his comments?
I was aware that my hon. Friend was one of those esteemed colleagues to have been sanctioned already by the Chinese Communist regime, and it would be an honour to serve alongside him with that accolade. Yes, of course I will be coming on to Taiwan. He anticipated that key issue, which I intend to raise. Some of us Conservative MPs enjoy regular meetings with the Taiwanese ambassador at his embassy, where we listen to Taiwan’s perspective, and I appreciate doing that.
My hon. Friend also mentioned the word “communist”. Of the 365 elected at the last election, I am the sole Conservative MP who was born in a communist country, so I know what communism is. I used to go back to communist Poland to see my beloved grandfather in the 1980s, when martial law was in place and General Jaruzelski—the Soviet puppet who was controlling Poland—was running the show, so I know what the communists are and I know what they are capable of. Let us not forget that under the veneer of China’s highly flourishing capitalist society, there beats the heart of a rigid communist politburo that seeks to control its own people in a way that is completely unacceptable, and is unimaginable here in the United Kingdom.
Yes, to answer my hon. Friend, the former Japanese ambassador came to my office to highlight to me personally the ongoing and increasing violations of Japanese airspace by many Chinese planes, deliberately invading that airspace and testing the Japanese resolve. My hon. Friend also highlighted Taiwan, and I will take a moment to pay tribute to the President of Taiwan, Tsai Ing-wen. That lady has demonstrated a huge amount of courage, fortitude and bravery in how she has stood up for the people of Taiwan, and she is not prepared to be bullied by China. In terms of size, it is like comparing a mouse with a lion: Taiwan is tiny and has microscopic military resources compared with communist China, yet it is determined to maintain its independence and fulfil the wishes of the representatives who have been democratically elected by the Taiwanese people.
We must stand by the Taiwanese people. This is the equivalent of what was going on in central and eastern Europe under communism, and it was Margaret Thatcher coming to the Gdansk shipyards in 1987 and 1988 that gave the succour to Lech Wałęsa to carry on, despite all the odds that were stacked against him. He said that in a television interview: “The communists came this close to destroying Solidarity. We were about to give up, but it was the help and solidarity that came from Britain, particularly Margaret Thatcher, and the resources that were sent from Britain to help us in our struggle for freedom and democracy that gave us the will to carry on and ultimately bring communism down.” As my hon. Friends will know, when that domino effect of communist regimes crumbling started in 1989, it started in Warsaw, the city of my birth.
My hon. Friend the Minister is doing a splendid job in her new position at the Foreign, Commonwealth and Development Office—I watch her international trips and the statements that she makes, and I have every confidence in her. However, as a Minister in the Foreign Office, she will know that the Chinese have recently been shooting and killing Indian soldiers on their border with India. China is getting into an increasing number of border disputes with India, and of course, my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton), my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), and others have been at the forefront of highlighting the suppression of the Uyghurs in western China.
From everything that my hon. Friend the Member for East Worthing and Shoreham and his colleagues have said, I am sure that he will agree with me—he must intervene if he does not—that what is happening to the Uyghurs is equivalent to ethnic cleansing. The Chinese Communist Government are trying to ethnically cleanse millions of people from western China in order to be able to control that territory, and if we are going to turn a blind eye to that sort of activity—ethnic cleansing on an industrial scale—what is the point of our having stood up to Serbia and the other countries in 1991?
My hon. Friend is being very generous. The only thing I disagree with is that it is not just ethnic cleansing; it is genocide, and of course, this House has voted to acknowledge the genocide that is still going on in Xinjiang province against the Uyghur people. It is not just the Uyghur people, either: this has been happening against the Tibetans since 1959, and is starting to happen in Hong Kong as well. The Chinese Communist party has form and needs to be called out, so I am glad my hon. Friend is contributing to that today.
I completely agree with my hon. Friend. In fact, I was being rather contrite and measured in referring to the policy as ethnic cleansing. He is of course correct, and I will utilise his word: what is going on in western China is genocide.
I will repeat what our Government, the Prime Minister and others have said. I saw something in the media this week. The Prime Minister said we must not discount Chinese investment in our country. I understand we are in a precarious economic situation. I understand that it is tempting to accept tens or hundreds of billions of dollars from China, but, as I will come on to say, China has a 1,000-year strategy to control global economies, and we must not fall into the trap.
Again, I agree with my hon. Friend. I am old enough to remember the agreement that Margaret Thatcher signed in December 1984. In that meticulous agreement that we entered into with the Chinese, my understanding is that we did not have to give up all the territory, but we did it for one country, two systems, and China has completely trashed that agreement—not after 100 or 200 years, but just a few short decades—and it has been put in the bin. The most heartbreaking thing that I heard the other day was a young man from Hong Kong who said to me, “We have come to expect and we have acclimatised ourselves to smelling tear gas on our streets on a daily basis.” The Chinese intend to do everything possible to snuff out and destroy the embryonic stages of a democratic movement in Hong Kong. Yes, we have a responsibility to the Uyghurs and to our other partners in the comprehensive and progressive agreement for trans-Pacific partnership, which we will be joining, but—goodness me—we have no greater responsibility to anybody in that region than we do to the people of Hong Kong who have stood with us and fought with us for generations.
If an MP has the temerity to challenge the dangerous conduct of China, they will, as I have said, be put on a sanctions list. I am extremely pleased that Mr Speaker has now banned the Chinese ambassador from entering this House. It is extraordinary that the ambassador from a fellow permanent member of the United Nations Security Council cannot step into this building. I applaud the courage and bravery of our Speaker. It is intolerable for us to allow the Chinese ambassador into this building while hon. Friends such as my hon. Friend the Member for East Worthing and Shoreham is put on the sanctions list and is threatened, bullied and intimidated. What signal would we send to the Chinese if we allowed the Chinese ambassador to come here and enjoy our receptions and debates, and have the privilege of being able to lobby Members of Parliament, when our own colleagues are being sanctioned?
I now come to AUKUS, which is the purpose of this debate.
Well, I am a politician, Mr Davies. You have to give me some leeway to give you a brief synopsis up front. Thank you for your patient indulgence.
With regard to AUKUS, we need to celebrate. I am having this debate because I want to send a copy of it to all of my members in Shrewsbury. I rang my association chairman—we have about 500 members in the Shrewsbury Conservative Association—and I have asked for a copy to be sent to all of my members because I think we ought to celebrate the signing of AUKUS. It is extraordinary how little coverage it has received in the press and that the United Kingdom is the only European country that has been asked to join this extraordinary military-naval pact with America and the United States of America.
Forgive me—Australia. I would describe AUKUS as historical allies joining forces again, reinforcing their military bonds, tempered over the heat of many conflicts. The USA, UK and Australia have come together to confront emerging threats. The three of us had to intervene during the second world war to prevent the Japanese empire causing chaos and instability in the region. Now again, I am afraid, those three countries have to come together, in advance of seeing the threat of the Chinese hurtling towards us and other important countries.
Although China was not named in the joint statement, the implication was clear in the opening paragraph:
“we resolve to deepen diplomatic, security and defense cooperation in the Indo-Pacific region”.
Artificial intelligence, quantum technology, cyber-warfare, long-range strike capabilities and a nuclear component are primary areas covered by the pact. It may be noted that in all those areas there is direct competition between China and the United States of America for supremacy.
One person who knew how to deal with the Chinese was the great Singapore statesman, Lee Kuan Yew. Many people told me ahead of this debate to listen again to that great man and how he managed to protect his tiny microstate of Singapore, despite all adversity and threats. I have been watching some of Lee Kuan Yew’s speeches, both in Singapore and in London during his many visits to our capital city. I would like to share with colleagues one thing he said that particularly struck me. He decried the British leaving Singapore in 1971. We had military bases there and he foresaw the dangers ahead of the British leaving.
Hon. Friends and colleagues will know that in 1971 we were going through a period of economic malaise and—how shall I put it?—a lack of self-belief and political courage, and introspection. That is why, under Ted Heath and Mr Wilson, we made those catastrophic mistakes of short-termism, yet again. Remember that the Chinese have a 1000-year strategy. Here there was short-termism, a lack of self-belief and a lack of understanding and appreciation of our reputation in the region from key allies. That led us to leave Singapore in 1971. I hope AUKUS is the prelude to a wider security pact with more countries, and potentially more negotiated British naval bases in countries in the region.
Let us take a moment to recognise and appreciate the extraordinary privilege and prestige that we have as the only European nation with a permanent naval base in the Arabian sea. The Minister will be very cognisant of that. That naval base in Bahrain plays a critical role in maintaining peace between Iran and Saudi Arabia, the two protagonists in that region. Can you imagine, Mr Davies, what would happen in the Arabian gulf if the British did not have a presence in Bahrain? I hope that what we are doing in the Arabian gulf will be replicated in the Indo-Pacific region. AUKUS is the embryo—the prelude—to that.
Mr Davies, you will be pleased to know that I am coming towards the conclusion of my statement. I will refer briefly to the CPTPP. I campaigned for Brexit and I am very proud that my constituency of Shrewsbury voted for Brexit. Now that we have left the European Union, an organisation that is shrinking every day as a percentage of global population and output, we have the opportunity to join the CPTPP, a $9 trillion market in exactly the same region in which AUKUS will operate. It is an economic partnership of 14 countries that, combined, are much larger than the European Union and growing, rather than shrinking, like the European Union.
Let me read out the statement I prepared earlier about why we must now marry our military responsibilities in AUKUS with our forthcoming membership of the CPTPP, and how there must be a unique synergy in tying these two projects together. We can send countries all the arms and armaments we like, but it will mean nothing if China strangle them economically. No one can fly a war plane if they cannot afford the fuel to feed it. China is fighting an economic battle that requires an economic response.
As mentioned, we have ready allies in the region who are more than willing and able to provide support in countering the Chinese. Vietnam and Indonesia, in particular, have the capability to meet our economic needs and those of our allies, in the same way that China can. There are few, if any, restrictions on what countries such as Vietnam can do, relative to what China can do.
I do not know about hon. Members here, but I have very important, large institutions in Shrewsbury—I will not embarrass them now—both in the public and private sectors, who have approached me to say, “We are worried and concerned about our over-dependence on Chinese investment. They are pouring resources into our institutions and are slowly, but inextricably, trying to take control of them. What do we do, Mr Kawczynski?”
The answer to this is the CPTPP. I say to my constituents, “If you need investment from Asia or the far east, please be aware that we applied to join the CPTPP on 1 February 2021 and that negotiations started on 1 June. When we finally agree to be the first ever European country to join the CPTPP, then that free trade scenario will afford us and be the catalyst for a potential massive recalibration of the investments that we accept in this country, and in the exports and imports that we have with China versus the other 14 countries, in particular countries such as Vietnam.”
I would like to ask the Minister, what can the Chinese provide us with that the Vietnamese cannot? I would rather give my money to the Vietnamese, the Singaporeans, the Malaysians, the Indonesians, the Indians, the Japanese and the Australians. All these countries are friendly nations who have nothing but good intentions towards the United Kingdom. What is the purpose of continuing to pour money into China, with this massive dependency on imports from that country?
Finally, Mr Davies, may I make one important last point about Diego Garcia, the British Indian Ocean Territory? In 2018, the Foreign Office asked me to visit the British Indian Ocean Territory, a chain of approximately 30 or 40 islands in the middle of the Indian ocean. What I saw there was absolutely breathtaking and mind-boggling. I have never seen such vast naval and air force installations in my life. This is a critical base that has already been used for wars in the middle east, for supplies, logistics and all the rest of it. We have just entered into an AUKUS military alliance with America and Australia, and yet Mauritius is trying to take these islands from us through the United Nations.
I want hon. Members to know, and this is one of the reasons I keep tabling written parliamentary questions on this issue, that when we gave Mauritius her independence in 1965, it was made abundantly clear—I have read the treaty documents many times—Mauritius would have her independence but would not have control over the British Indian Ocean Territory, which is literally hundreds and hundreds of miles away from it. Hon. Members will know that the British Indian Ocean Territory is actually much closer to the Maldives than it is to Mauritius, yet Mauritius is taking us through every conceivable route at the United Nations to steal—I use that word deliberately—these islands from us. I will also use parliamentary privilege to say that I would not be surprised if the French were not using their influence with the Mauritius Government to facilitate this action, because who do we think would have a naval base in the British Indian Ocean Territory if it was not controlled by Britain but taken over by Mauritius?
May I congratulate my hon. Friend on an outstanding speech? Indeed, it is one of the most outstanding speeches that I have heard in this Chamber in my time in Parliament. I will just inform my hon. Friend and the House that when I was a shadow Foreign Office Minister I studied the issue of the Diego Garcian people. When we gave Mauritius independence, they were fully compensated—the families were fully compensated. The wise ones invested and now have houses; the unwise ones spent all the money. There was then a further round of compensation, because it was deemed that they had not been given enough, so they have been fully compensated for any familial ties that they might have had to Diego Garcia.
I thank my hon. Friend for that intervention. Not surprisingly, I completely concur with everything he has just stated. I would also say to him that in addition to the treaty—the Minister will know about this—we gave Mauritius £4 million as final settlement. Hon. Members will remember how much £4 million was in 1965. Mauritius took that money. Now, 50 years on, Mauritius is trying to overturn—
Sorry, forgive me—I had to get in the British Indian Ocean Territory, because I would argue that it is a critical part of the AUKUS strategy.
My final comment is an appeal to the Minister, which I have briefed her officials about. When she replies to me to say that we will never give up the British Indian Ocean Territory until we no longer have a military requirement for these islands, may I ask her to change her view? It should never be the case that we will hand these islands back, even in the very rare circumstances that there is no further military requirement for them. They are part and parcel of, and intrinsic to, our long-term strategy of AUKUS and bringing Britain back into the Indo-Pacific, to ensure that we use our position on the UN Security Council and our military might to help our new economic partners in the CPTPP and beyond to maintain peace and stability in this crucial part of the world.
Thank you, Mr Davies; it is a pleasure to speak in this debate, on a topic that I have some interest in. First, may I congratulate the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) on securing this debate on the AUKUS path and on putting forward a very comprehensive summary to introduce it?
I am also very pleased to see the Minister in her place. I think she and I came into the House at the same time. I have watched her progress and I am very pleased to see her here; I think this may be her first Westminster Hall debate as a Minister. If it is, we are very pleased to have her here to answer our concerns, which I am very sure will happen.
I must say that when I first learned about the agreement that we have struck with our allies—which will see the three countries collaborate on new nuclear-powered submarines for the Royal Australian Navy and work together on areas such as cyber and artificial intelligence—I was pleased. Indeed, I was ecstatic. I am very supportive of and encouraged by that pact, and I put that on record when the Prime Minister came to the Chamber to make those comments.
I understand that this is not the work of a one-day or two-day event, but the culmination of much work contained in the integrated review of security, defence, development and foreign policy, which highlighted the need for the Indo-Pacific alignment. The tilt is necessary because, as our Prime Minister said, the region is critical to our economy, our security and our global ambition to support open societies, so the AUKUS pact is one we need. We cannot do this on our own, even though we have historical influence in the area. It is a partnership that involves Australia and the USA. Japan and other countries will no doubt also be a partner to that, as I think it is something we can grow and do more with.
Our Commonwealth sibling, Australia, has been clear about the need in this area. Our increased actions in the region have indicated our seriousness and our dedication to it. We have increased naval exercises in the South China sea over the past few years: HMS Albion conducted a US-style freedom of navigation operation by the Paracel islands in August 2018, and in early 2019 the Royal Navy conducted two joint military exercises with the US navy in the South China sea. I understand that more of those will take place in the next months. That co-operative working has been beneficial, and the AUKUS pact is a natural enhancement of those ties and relationships, so I totally and absolutely support it and see the benefits, not only for us, but for the world, in what we are doing.
As the Library briefing puts it:
“The AUKUS submarine deal is concerned solely with naval nuclear propulsion. It does not involve the transfer of nuclear weapons to Australia. As such, AUKUS does not contravene the Nuclear Non-Proliferation Treaty (NPT). Nor does it contravene the or the South Pacific Nuclear Free Zone Treaty.”
The deal has been done in a way that enhances our relationship and our partnership. New Zealand, which is a signatory to that treaty and has a long-standing anti-nuclear stance, has already stated that Australia’s new nuclear submarines will not be permitted in its territorial waters, so let us be clear about what is happening and what we are trying to do.
The remit is clear and, to be completely honest, the reaction of the Chinese Government would suggest that, rather than there being nothing to see here, there is something to see and they are at pains to ensure that we do not see it ourselves. Chinese influence reaches across the world, as the hon. Member for Shrewsbury and Atcham has outlined; it is not just here and in the far east, but everywhere—every country in Africa. I remember when I went to Kenya with the Armed Forces Parliamentary Scheme, some four or five years ago. Who was building the roads in Kenya that we drove on? China. It has built its relationship across every country; it goes in and makes partnerships with all the Governments, and then has access to all their mineral supplies and strips them of all those things. That is influence that we had, and those are important issues for us.
I have spoken about the atrocities against the Uyghurs in China, which both the hon. Gentleman and the hon. Member for East Worthing and Shoreham (Tim Loughton) referred to, for many years. The first time I highlighted them was during a debate on International Human Rights Day, just before Christmas 2015. In the years since, the world has become more aware of the atrocities carried out against those people, and yet those actions have not ceased—if anything, they have become more barbaric.
The AUKUS pact is so important to combat the issues happening in China and the persecution of the Uyghurs—the word genocide has been used, but it is clear to me that ethnic cleansing has taken place against them, and every person here has spoken on that in past debates. Christians are also persecuted in China, and there are examples of churches burned or demolished, people put in prison for their beliefs or denied access to jobs, education and health. We have also spoken about the Falun Gong in many debates. They are a people with a specific religious belief—a very gentle people, but a people who have suffered commercial harvesting of organs among their people. Again, that report was made here some time ago in London, condemning China in the eyes of the world for what it has done.
Those things concern us greatly and make us all the more aware of what is taking place and the need to underline the vital importance of the AUKUS pact. China is a nation that sneers at our belief system; they will hold themselves only to their own standards, as if they are the only ones that really matter—as if the rest of the world does not have standards. Well, yes we do, and our standards are much better than what they have—that is a fact. They dare to say that what we are doing is not acceptable.
The outcome of this is that we are feeling the impact of China’s economic influence. What the hon. Member for Shrewsbury and Atcham said about the price of containers is really important. This stuff is coming to Northern Ireland and coming to the UK; I can tell hon. Members from the experience of my own constituents that a container of goods from China that used to cost £3,000 now costs £15,000. It is time for the world to look elsewhere for the products they buy. The AUKUS pact is so important because it underlines these issues for us.
As the hon. Member said, I fully support Taiwan; again, the AUKUS pact will also address this issue. I read in the paper that the USA is to supply 60 F-16 fighters to Taiwan, which has asked for them as a matter of urgency. It is time these things were in place and that our support for Taiwan was on record—our military manoeuvres will be part of that as well. Today’s paper suggested that the pension funds should look at other ways of investing their money—not in Chinese properties or businesses but in other companies that are not involved—so there are lots of things we can do.
Today’s debate is about the AUKUS pact. I finish with this. How do we deal with this? Do we back off and say that we accept the treatment of the Uyghur Muslims, the Christians or the Falun Gong, if China will play nice with us again? Will we look the other way if they ask us to? Will we dissolve our pact with like-minded allies? The answer, quite simply, is no; that can never happen. It will never happen. We must build our relationships, but on reasonable terms, and we will not be bullied. I welcome the AUKUS pact and this debate today. I welcome the message it sends. I support the Government, the Prime Minister and the Minister here today on this particular journey, and I thank the hon. Member for Shrewsbury and Atcham for bringing forward this debate.
Thank you, Mr Davies, for allowing me to take part in this debate. I would like to thank the Minister; she and I have not always agreed on everything, but we have moved on, and I am glad to see her here. I give sincere congratulations to my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski); his was one of the highest-quality speeches that I have heard in this Chamber. This is an incredibly important debate, and I am sorry that it is so thinly attended.
You have given me about six minutes, Mr Davies, so I will motor on, but I want to make one or two important points that were not in my speech, but that arise from what my hon. Friend the Member for Shrewsbury and Atcham said. Perhaps the most important thing he said was that now that we have freed ourselves from the straitjacket of European Union trading arrangements, we need to participate fully in the Indo-Pacific tilt and its trading arrangements. He is quite right that it is one of the fastest-growing regions in the world. It is certainly growing much faster than the European Union, which is, if anything, retrenching in terms of percentage of world GDP; he is 100% right on that. I hope we succeed in our CPTPP negotiations. He is also 100% right to talk about naval bases. Ironically, that is exactly what the Chinese are doing; they are expanding their naval bases those in Sri Lanka and Djibouti being just two examples. China is doing exactly what he urges us to do. At Diego Garcia and Guam there are two very significant American bases, which will be maintained at full strength.
My hon. Friend is also right to say that we should reduce our dependency on Chinese investment in this country. Unprecedentedly in my 29-year parliamentary career, I have called for an urgent question. It is on the Chinese purchase of Newport Wafer Fab. It makes our highly sophisticated microchips, which are extremely difficult to make; we have some of the world’s best technology, and we are selling it to the Chinese. These microchips are the basis of every piece of electronic equipment. It was crazy to allow this, and I still appeal to the Minister to look at this again, because it was not very sensible.
I have been actively engaged with members of the Chinese Government at the most senior levels for the last 20 years or so. I am also deputy chairman of the all-party parliamentary China group, so I can claim to have some insight into the Chinese psychology. What one really needs to look into is: what is the psychology driving China when it takes an action? How will it react to this trilateral security pact? Since 2010, the relationship between the UK and China has been pragmatic and often mutually beneficial. For example, the UK was the first western nation to join the Asian Infrastructure Investment Bank. It is still one of the largest foreign countries trading renminbi. I think we have to be pragmatic. I do not think we should cut off our trade with China; I just think we should diversify it.
I totally agree with Members who have mentioned the serious human rights violations in China, which we in the UK abhor and rightly express our concerns about directly with China. That does not mean that we should not be friends with the Chinese on a people-to-people level; nor should it prevent our Governments from having responsible dialogue. China is too big and strategically important not to engage with. The message I want to leave this House with is that if we stop engaging with China, we stop having any influence with it. It is absolutely essential to engage, and we have done throughout history. We have engaged with people whom we do not like and do not approve of. We do not approve of their human rights violations, but we still engage with them. That is what we ought to be doing with the Chinese.
The People’s Republic is extremely strategic and long-term in its thinking—as my hon. Friend the Member for Shrewsbury and Atcham said, it has a 1,000-year strategy. When it sets out to achieve something, it invariably does. I would like my hon. Friend to focus on this line: while it might protest about AUKUS publicly, privately it will respect the fact that the west is standing up to its imperial ambitions. There is no doubt that China wants to become the dominant superpower in the world in regards to political, economic and military influence. We must accept that, but that does not mean we should stop dealing with it. We need to find a sensible way to work with China.
The Chinese are spending huge amounts of money on upgrading their submarine, space and ballistic missile capabilities. According to the Financial Times, in August they tested a nuclear-capable hypersonic missile, apparently to the surprise of the US and western intelligence. Why it was a surprise, I do not know, because we have known for several years that they have been trying to develop these weapons. Such demonstrations show the advanced capabilities of China’s modernised military.
We have witnessed the deterioration in Australian-Chinese relations and the bullying attitude to Australia over trade, which, of course, has spurred Australia on to spend a significant amount of its GDP upgrading its submarine capability to a nuclear-powered capability, so that it can spend more time at sea, hopefully undetected.
I fully welcome the AUKUS pact. I think it is the right thing to do. Hopefully, the UK as well as the US will take part in the production and technology of those submarines. AUKUS has been, to many, a bold step. We are pushing our global Britain credentials with a bigger role in the Indo-Pacific region. Importantly, as my hon. Friend says, we are working closely with our allies—something talked about in the integrated review. He mentioned the number of countries in the CPTPP partnership. One important country he did not mention, and which I would like to mention on the record, is South Korea. We have a trading agreement, and a good relationship, with it. It is one of those countries north of the South China sea that is also troubled by Chinese incursion.
There are still many areas that require productive and sensible China-Anglo dialogue. COP26 is an important milestone for the future of the UK’s climate change agenda and ambition. The UK produces around 1.1% of the world’s emissions, whereas China emits around 28% and accounts for almost two thirds of the growth in emissions since 2000. Clearly, we can set a good example to other countries to decarbonise more quickly and make a real difference to climate change, but we need alliances with other countries, so that they can do the same. We need China to come on board with that agenda. Any fallout over AUKUS will have consequences for other matters, as I have demonstrated with COP26, but I would like to think that it is of benefit to both the UK and China to continue with a constructive dialogue.
While we will always have our differences, and I do not hesitate to articulate our views vociferously to the Chinese when I talk to them, particularly over human rights, overall it is in both sides’ interests to have a realistic but frank dialogue in the future. The idea of breaking off all dialogue with China, as some would advocate, is simply cutting off our nose to spite our face. Worse still, as I have said, we would lose the chance to influence Chinese thinking on issues such as climate change.
This has been an important debate. I hope that my right hon. Friend the Minister will be able to take something from it: that while we want to stand up to China, we want to have a dialogue with it; that its human rights activities are unacceptable; and that we should start to reduce our reliance on Chinese investment.
Thank you very much, Mr Davies. This is my first Westminster Hall debate, and is one of the very few debates in which I have spoken since I was elected to Parliament in December 2019, because I am a PMP: a pandemic Member of Parliament. To concur with the hon. Member for Strangford (Jim Shannon), it is great to see the Minister in her place, and I congratulate her on having one of the most important jobs in Government. It is also great to see Opposition Members here.
I will start by responding briefly to a few points raised by my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), before making a short speech—in brevity, there is wit. Having lived in China for over a decade, I always find it slightly misguided to put Russia and China in the same category, but that has become a habit in western rhetoric in recent years. When one is on the ground in each of those countries, one sees very different dynamics in play. In China, there is a real belief that today can be better than yesterday, and that tomorrow will be even better. On a personal level, many of the values of its people can be very similar to ours. Parents there want the best for their kids, which is why we have around 200,000 students from China in the UK. There is a fixation on prosperity over everything else—one does not always get that in Russia.
There was a lot of chat about threats from China, but there is a huge amount of opportunity to be gained from working and collaborating closely with China in a whole host of areas—for example, on climate change, COP26 and what comes after it. Unlike many of my Conservative hon. Friends, I have not given up on China yet. Like my hon. Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown), I still think we can influence China’s direction. However, we will not do so if we stand on the sidelines, hector and use an overly hawkish tone.
The reality of the 20th century was that the United States existed and one had to work with it; one could not just ignore the United States and operate with Canada, Mexico or whoever else. The same applies to China in the 21st century. We should closely navigate a balance between the opportunities and the threats in this bilateral relationship.
A point was made about China’s diplomacy with different countries and how countries have been pushing back. There is truth in what my hon. Friend the Member for Shrewsbury and Atcham said, but it is more of a mixed bag. Developing countries across the belt and road, for example, have quite positive views of China’s impact on them. I call on our Chinese counterparts to work a bit harder on the diplomatic front, because the wolf warrior diplomacy that we have seen over the last two years is not helpful when it comes to trying to have—to borrow a Chinese phrase—a harmonious relationship.
My hon. Friend the Member for Shrewsbury and Atcham referred to China as a communist country, but anyone who has studied China, and wannabe Sinologists like me, often wonder whether it is. Is it communist, Confucianist, or more Marxist than Leninist? On China’s Leninism, my hon. Friend said something that chimed with me when he spoke of the Politburo and its influence on society. There is an argument that Leninism, along with state capitalism, might explain China better than communism or any other label.
Lastly, I want to respond to my hon. Friend’s fantastic point about Lee Kuan Yew, in Singapore. What the west needs is its own version of Lee Kuan Yew. He was one of the most successful politicians of the last century, from any country, and was able to lead Singapore—a country of between 5 million and 7 million people—I am looking over at the officials for the exact figure; perhaps they can get it from Wikipedia. Singapore has done a fantastic job of navigating relations between the east and west, and there is much to learn from that.
My daughter is half Chinese and half Ulster Scots—I am looking at the hon. Member for Strangford (Jim Shannon)—as her father is from the lovely county of Antrim. That is a very special mixture. China does not always sneer at the west, to use the hon. Member’s words; in fact, part of its success over the last 30 or 40 years is that it has learned so much from us. That is why it has sent hundreds of thousands of students to the west, and why its cityscapes can look so similar to those in the United States. The problem sometimes is that the US and China are so similar: they both want to be No. 1. They want to compete with one another; their people are very ambitious. There is much to learn from both the east and west, and much to gain from China and the UK working closely together.
We can see that from the members of the Chinese diaspora living in the United Kingdom. They are among the highest-performing students at primary school, secondary school and university. They have some of the highest incomes of any ethnic group, and some of the lowest levels of mental illness and crime, when we compare them to many countries with recorded labels. Those on the eastern and western fronts can learn from each other, politically and culturally.
I am conscious that I have roughly one minute left, Mr Davies. We need to be cautious about using words such as “adversary”, because I do not think that China has previously taken the UK to be an adversary. It has not seen us as the enemy, and I say that having lived there for 13 years. The Chinese people’s opinion and perspective of the UK is that it is among the best of the 200 countries around the world. Looking at the British Council statistics from last year, only France and Germany usually outshine us. There is an awful amount of good will towards us from the Chinese people, and we should not obfuscate that. We should be cautious about the words we use.
I will close on the issue of Sinophobia. I am cautious about AUKUS. It is an interesting development, and the jury is still out on the extent to which it could feed into a security dilemma or bring more peace to the region. From the UK perspective, my worry is that the increasing narrative vis-à-vis China—one of negativity—is having an adverse impact on Chinese, east Asian and south-east Asian communities in our country. Thank you very much for the time today, Mr Davies. I look forward to following up with colleagues after the debate.
It is a pleasure to serve under your chairmanship, Mr Davies. As this is the first time I have spoken in Parliament since the tragic and senseless loss of our parliamentary colleague, Sir David Amess, I wish to put on record my own deep personal sorrow and condolences to his family for his loss.
I congratulate the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) on securing the debate. It is an important issue, and there is no doubt about his passion for the subject and for defending the AUKUS deal. There is also no doubt about his clear and persistent disdain for the EU, which came through very strongly in his words. The hon. Gentleman made some very important points about the behaviour of China that I agree with, particularly on its human rights record. Before I get to the substance of my speech, I would say that nobody should ever be bullied or intimidated about speaking out on these issues. That is just not acceptable under any circumstances.
AUKUS is directed against an increasingly aggressive China, but it has had the short-term effect of triggering one of the worst inter-ally crises in living memory. The fallout with France that ensued in the aftermath of the AUKUS deal announcement only plays into the hands of the Chinese. The French Foreign Minister was quoted as saying that the UK was engaging in its usual opportunism, which was why they did not recall the UK ambassador alongside the US and Australian ambassadors.
Maintaining unity with European allies and demonstrating military co-operation are not mutually exclusive. The French should have been involved at each and every stage of this pact’s development even if, ultimately, they would not play a leading role. This UK Government have squandered unity with key European allies who have existing, established presences in the Indo-Pacific area—namely the French—just for membership in this pact.
Common challenges are better faced when countries can trust each other, and that has never been more pertinent than in this case. Diplomatic duplicity and misleading allies is foolish at any time, and cannot contain China—if that is indeed the objective of the UK Government, apart from burning diplomatic bridges between the UK and France by giving Australia access to sensitive technology in the form of nuclear-powered submarines. I must say that our view, unlike that of the hon. Member for Strangford (Jim Shannon), is that this is tacitly encouraging nuclear proliferation, which we in the Scottish National party are morally, economically, environmentally and strategically against.
Despite the passionate defence from the hon. Member for Shrewsbury and Atcham, the AUKUS pact is indicative of UK fears that its status has diminished and is threatened by China. Better decisions will be made here in Westminster only when the UK embraces the fact that it is a middle power. Reluctance to accept that is leading to all kinds of fallout, as we have seen played out on the world stage.
I would question what the hon. Gentleman says about nuclear proliferation. If these submarines were going to carry nuclear weapons, he would possibly have a case, but these are only nuclear-powered submarines, and nuclear power is a relatively well-known technology that is certainly not covered by the treaties.
The hon. Gentleman would make that point, and that would be his defence; I would expect him to do that. However, the fact is that there will be nuclear weapons—nuclear-powered submarines—patrolling as a result of the deal. That is a matter of fact.
Australia has been under pressure since its Prime Minister called for an independent investigation into the origins of covid-19 in China. As we have heard, China has already imposed huge tariffs and restrictions on Australian exports, including wine, beef and barley, and banned coal imports outright. However, that Chinese aggression abroad is only matched by its aggression at home. There have been deadly skirmishes on the Indo-Chinese border. There is the appalling genocidal treatment of the Uyghur Muslims, the ongoing militarisation of the South China sea, military aircraft incursions into Taiwanese airspace, the widespread persecution of the Christians and the Falun Gong, and increased intimidation of the groups in inner Mongolia and Tibet. China has also trashed the Sino-British agreement, and stripped away residual rights of Hongkongers.
In part, this deal seems to message that the international community will not allow aggressive behaviour to go unchecked. Unfortunately, in reality, the posture of this Tory Government towards China remains ambiguous. Although China is described as a “systemic competitor” in this year’s integrated review, there have been several statements confirming that the UK does not want diplomatic tensions to undermine economic relations with Beijing, and that this is merely a war of words.
For instance, the Deputy Prime Minister stated in a leaked message to civil servants that the UK
“ought to be trading liberally around the world”,
regardless of whether our commercial partners comply with human rights standards. That was reiterated by the Foreign Secretary when questioned on this very leak at the recent Tory party conference. Perhaps the Minister might want to clarify her own view.
For the time being, it appears that UK-China relations will be binary and played out on two different levels—one diplomatic and the other economic. China regards the AUKUS pact and in many ways the phrase global Britain as confirmation of the UK standing on the side of the United States in a new cold war between Washington and Beijing. China also believes that a declining Britain does not have the capabilities to become an influential player in the Indo-Pacific region. Some have argued that the UK role in this alliance, in particular, is merely that of a third wheel. There are questions about whether this lack of meaningfulness is worth the provocation it has caused.
If this is an attempt by the UK to forge a meaningful security role post-Brexit, it is not that. More effort should be made to begin talks of a UK-EU defence and security deal. It underlines the reality that, after promises of taking control, the UK’s foreign and security policy is now ultimately decided in Washington.
I must pick the hon. Gentleman up on the important point raised by my hon. Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown). Those submarines are powered by nuclear power; they do not have nuclear weapons on them. Bearing in mind that the hon. Gentleman said how strongly the SNP thinks about reducing carbon, surely it is more appropriate to have submarines powered by nuclear rather than diesel. Does he not understand that?
I was going to before I took the intervention, Mr Davies. I will move as swiftly as I can towards the conclusion of my comments. The fact is that using nuclear power anywhere—on a submarine or elsewhere—means there is residual environmental waste that will go on for many half-lives. To have nuclear-powered submarines patrolling is not a solution to an environmental issue. That is a preposterous position.
The UK remains outside the Quad and the ongoing stately voyage of HMS Queen Elizabeth in the South China sea is more symbolic than substantive. The deployment has been noted for not carrying enough aircraft and for depending on US and Dutch escort vessels.
There are still questions to be answered about what the UK will get out of the partnership. The UK is clearly not going to be building the submarines after the mess it made of the latest Astute class hunter-killer boats that it cannot even scrap. That comes back to the point made by the hon. Member for Shrewsbury and Atcham. It cannot even scrap the nuclear subs that we see as rusting hulks left to degrade in the water at Rosyth.
There have been vague references to wider co-operation in areas such as artificial intelligence, but the only specific programmes mentioned, such as those to supply the Australians with Tomahawks, joint air-to-surface standoff missiles, and long-range anti-ship missiles, concern American weapons systems. Perhaps the Minister can detail what is actually agreed.
The French Foreign Minister has already suggested that the UK is just the fifth wheel on the carriage. More broadly, the main issue is what this co-operation will do. Will it impede China’s intentions in the regions? A little perhaps, but not significantly. There was not much in terms of strategic commitments. Instead, there were lots of theatrics, a statement of intent and a promise of new submarines in 20 years’ time. That is no substitute for a joined-up, long-term strategy, decided between the US, UK, the EU and other like-minded partners. China’s long-term challenge will not be met by submarines alone.
Finally, it is right to be concerned about the ability to engage China on climate change. It is still unclear whether Xi Jinping will attend COP26. It would be a great deficit if he were not there because of decisions made at Westminster. Planetary health cannot suffer as a result of this.
It is a pleasure to serve under your chairship, Mr Davies. I would also like to thank the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) for securing this important debate on a crucial matter.
Hon. Members will recognise that we live in an increasingly uncertain world. Liberal democracy is no longer the only show in town. In fact, a study for the University of Gothenburg showed that for the first time since 2001, democracies are outnumbered by authoritarian regimes. That was before the coup in Burma and the Taliban’s advances in Afghanistan.
We are duty bound to respond to the world as it is, not how we would like it to be. The UK and its allies therefore need to wise up, not to provoke and inflame tensions, but to deter aggressive and bellicose behaviour that threatens British interests and those of our allies and our liberal democratic values.
It is in that spirit that Labour Front Benchers welcome AUKUS and its increased defence co-operation with our allies. Australia and the US are two of our closest security partners, and sharing resources and intelligence and co-ordinating with democratic allies should always make Britain safer. However, this partnership will only make Britain safer if the UK Government enter into the agreement with a view to AUKUS complementing the defence and security responsibilities we already share with a large number of our other allies. The Labour party supports AUKUS, but we must be absolutely clear that it should not create a perception that we are turning our backs on our other democratic partners and allies. The UK Government must therefore make clear to the other two members of the Five Eyes partnership, Canada and New Zealand, that we value those relationships, and that AUKUS will enhance, rather than diminish, the work of the Five Eyes.
Even more critically, we must re-assert our unwavering commitment to NATO and the European security partnerships that are of such fundamental importance to the security of the British people. It was therefore troubling to see the way in which AUKUS was announced: in a cack-handed manner, without our European partners being properly informed or consulted. It seems that we disposed with the diplomatic norms that are expected of a close ally. The conduct around the deal has caused considerable damage to relations with France, much of which should have been foreseen and could have been avoided. Diplomatic rows that allow NATO to be weakened do not serve our interests, but play directly into the hands of others. France is a crucial NATO ally: for example, British and French soldiers are currently serving side by side in Mali to counter terrorism and support UN peacekeeping. The world is crying out for the UK to get back to its long-established role as an alliance builder, yet for every relationship this Conservative Government try to strengthen, they tend to damage another. This is not the way to go about international relations, or to run a proud and influential country such as ours.
To be clear, it is the Labour party’s view that it absolutely makes sense to develop our political and economic ties in the Indo-Pacific. We support building deeper partnerships across the region, particularly with its democratic Governments, but this Government are tilting—or, more accurately, lurching—because they are unbalanced, because they lack the anchor of a strong and effective relationship with Europe. While the UK lacks that anchor, we continue to risk the threat of increasingly powerful headwinds blowing us off course. It is therefore critical that this AUKUS arrangement does not mean resources being redirected from Europe to the Indo-Pacific, and that it strengthens our NATO alliance and other strategic partnerships.
The Government must stop setting up false binaries. We need an alliance-based foreign policy that strengthens our ties with Europe, our ties with the democratic countries of the Indo-Pacific, and the transatlantic relationship. It is not either/or that is the basis of a successful alliance-based foreign policy, but both/and. Can the Minister make a firm commitment today that her Government will maintain that same level of resources and engagement with NATO in the decades ahead? Can she also be clear about how she intends to rebuild those critical relationships, most notably with France?
With the AUKUS partnership going ahead, it is of course vital that Britain gets its fair share of the economic benefits. Jobs and investment simply must come to the UK, and the Government must put the interests of British workers front and centre during this 18-month proposal period. Will the Minister outline how in the eyes of her Government, UK businesses, communities and workers stand to benefit from the AUKUS programme in tangible terms?
Given the sensitivities involved in sharing nuclear technology, it is important for the deal to be pursued in a way that is consistent with all our international obligations. The Government must ensure that AUKUS meets all our commitments under the nuclear non-proliferation treaty and adheres to relevant International Atomic Energy Agency safeguards. Clearly, we recognise that Australia has no intention whatever to acquire nuclear weapons, nor does AUKUS enable that in any way. However, questions have been asked about the use of highly enriched uranium as a component of the deal, because of the precedent that might be set that other countries might seek to take advantage of, given that UK and US nuclear submarines operate using such uranium. Will the Minister therefore confirm whether the intention is to use a submarine design that requires highly enriched uranium and, if so, whether that material will be supplied from the UK?
More broadly, AUKUS should be matched by stronger efforts to support nuclear non-proliferation arms control and multilateral disarmament. The global non-proliferation architecture has come under increasing strain in recent years. Ministers have been bystanders, publicly doing and saying nothing. Before, the UK was a leader of global efforts to promote multilateral disarmament. It is high time for us to rediscover leadership of the issue.
AUKUS has been billed as wider co-operation between the UK, the US and Australia beyond the collaboration on submarines, but there has been precious little detail about what that will involve. How do the Government intend to make the partnership meaningful in other areas, in particular on broader technological co-operation?
The wider context of the agreement is the threat to an open and secure Asia-Pacific region. China’s recent actions pose risks to UK interests and to our allies. China’s increasingly aggressive stance threatens a stable trading environment, democracy, human rights and the rule of law. It is important to address those risks. We have seen increased tension in the region, threats to freedom of navigation, efforts to undermine international law in the South China sea and completely unreasonable economic and diplomatic pressure applied to Australia simply for calling for an international inquiry into the origins of covid-19.
China’s aggression towards Taiwan is deeply troubling. We have seen a big increase in the number of Chinese fighter jets and bombers buzzing Taiwan’s air defence identification zone in a clear attempt to intimidate Taiwan’s democratically elected leaders. The country in the region that is destabilising the status quo is China—let us be in no doubt about that—so China’s calls about other countries destabilising the status quo are deeply ironic. Those moves raise tension in the region and create the risk of an accident or miscalculation that could have dire consequences. The UK Government and our allies need to make it clear to the Chinese Government that such actions are dangerous and counterproductive.
AUKUS is not about provoking China, but about deepening co-operation between like-minded allies who share a commitment to each other’s security and a vision of a peaceful and open Indo-Pacific region. After the Government’s failed “golden era” approach, the UK must now ensure that the new arrangement increases rather than decreases our ability to influence China. The Labour party will take a strong, clear-eyed and consistent approach, seeking to co-operate with China where we can on issues such as climate change and global health, while standing firm in defence of human rights, freedom and security. On security, we believe that AUKUS in tandem with NATO can play an important role in rebalancing a relationship that, under consecutive Conservative Governments, became far too weighted in favour of Beijing, to the detriment of the British people.
Before I call the Minister, may I mention that David Amess was an esteemed member of the Panel of Chairs, who chaired these sorts of debates? He is sadly missed and fondly remembered by all members of the panel—by all of us as friends. I wanted to put that on the record.
Thank you, Mr Davies. You are absolutely right that David Amess will be sorely missed by everyone in the House. I, too, put on the record my sincerest condolences to his family. We are thinking of them at this really difficult time.
It is a pleasure to serve under your chairmanship, Mr Davies, and I am grateful to my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) for securing the debate. I am also grateful to Members across the House for this wide-ranging discussion on such an important matter.
I will pick up the point made by my hon. Friend the Member for Bolton North East (Mark Logan), whose first time it is in Westminster Hall. This is my first time in Westminster Hall for about three years—I think I secured a debate on a very different subject, which I had to have cancelled when I was appointed to the Whips Office. As I say, it has been a wide-ranging debate, and I want to be clear at the outset that AUKUS will help to support peace and stability in the Indo-Pacific region. It is not aimed at any one country. As many Members have mentioned, the defence and security relationship between the UK and Australia, as with the United States, is long-standing. Both are trusted allies with whom we share a vision for the world. For more than 70 years we have worked together, along with other allies, to protect our shared values and to promote security and prosperity. The formation of AUKUS recommits us to that vision.
A number of Members have mentioned the non-proliferation treaty, and there have been some claims that AUKUS will lead to nuclear proliferation, undermining the nuclear non-proliferation treaty and fuelling an arms race. I can assure hon. Members that AUKUS will do no such thing. The programme will be consistent with our international obligations under the nuclear non-proliferation treaty, which we, like the US, take extremely seriously. Australia remains committed to its obligations as a non-nuclear weapons state, including to the International Atomic Energy Agency. Australia has impeccable non-proliferation credentials, and it has made it clear that it does not and will not seek to procure or manufacture nuclear weapons. Australia is committed to the highest safeguarding standards, to ensure the safety and security of nuclear material and technology.
I turn to the integrated review and the wider Indo-Pacific tilt. The integrated review underlined the UK’s commitment to diplomatic security and economic engagement across the Indo-Pacific region. By 2030, the Indo-Pacific will represent more than 40% of global GDP. I returned at the weekend from a tour of the Philippines, Singapore and Japan, in my first visit to the region as Minister for Asia. I saw at first hand the enthusiasm of our Indo-Pacific partners for greater UK engagement. The deployment of the UK carrier strike group is an embodiment of our commitment to the region’s security, and I had the pleasure of visiting HMS Queen Elizabeth in Singapore. I eventually got on board the aircraft carrier. I remember visiting it when it was being built in Scotland, I think in late 2015—I had to go to Singapore to get back on to the aircraft carrier. I was able to discuss our commitment to the region’s security with Commodore Steve Moorhouse, the commander of the carrier strike group.
We have recently become a dialogue partner of the Association of Southeast Asian Nations and applied to join CPTPP, as my hon. Friend the Member for Shrewsbury and Atcham mentioned. CPTTP membership is a key part of the Government’s plan to position the UK at the centre of a network of modern free trade deals that supports jobs and drives economic growth. AUKUS is further demonstration of our long-term commitment to the Indo-Pacific region, helping to build closer and deeper partnerships. It is on that basis that we will have further collaboration, which will help to enhance our joint capabilities and operations. The UK has a range of enduring security interests in the Indo-Pacific and many important defence relationships, and AUKUS will supplement them.
The hon. Member for Aberavon (Stephen Kinnock) mentioned NATO. The UK and US are already leading members of NATO, the world’s most important defence alliance. The work done by AUKUS will support our shared goals in new regions. AUKUS is good for NATO and good for Euro-Atlantic security. As the Prime Minister said in his statement to the House, the UK’s commitment to NATO is “absolutely unshakeable”. That in no way affects our commitment to European security or to NATO.
A number of Members mentioned Taiwan and the recent tensions in the Taiwan strait.
I am struggling for time, as I need to give my hon. Friend the Member for Shrewsbury and Atcham time at the end.
We are clear that the numerous Chinese military flights in recent weeks near Taiwan are not conducive to peace and stability in the region. We need a peaceful resolution through constructive dialogue by the people on both sides of the Taiwan strait. We have no diplomatic relations with Taiwan but a strong unofficial relationship based on dynamic commercial, education and cultural ties. We support Taiwan’s participation in international organisations where statehood is not a prerequisite. We are also committed to defending the UN convention on the law of the sea in the South China sea. In September 2020, my predecessor set out our legal analysis on the South China sea in full to Parliament for the first time. We objected to Chinese claims that we consider inconsistent with UNCLOS, which we have reiterated in subsequent statements.
I will turn briefly to UK-France relations, which was mentioned by both Front-Bench speakers. We have a long-standing security and defence relationship with France. We are close NATO allies and have an excellent history of operational co-operation. The Defence Secretary spoke to his French counterpart before the announcement. We will continue to consult each other daily on international defence and security arrangements.
Turning to China, as the integrated review made clear, China’s increasing power and international assertiveness is likely to be the most significant geopolitical factor of the 2020s. As G20 members with permanent seats on the UN Security Council, we must work together, from increasing trade and rebuilding the global economy to co-operation in science innovation. Co-operation with China will be vital to tackle transnational challenges, particularly climate change and biodiversity loss. But as we engage, we will not sacrifice our values or national security. China is an authoritarian state with different values from the UK. The Government consistently take action to hold China to its international obligations and commitments, including responding robustly to its human rights violations in Xinjiang and its breach of the Sino-British joint declaration in Hong Kong. We will continue to speak and take action to promote our values and protect our national security. Working with international partners, we have imposed sanctions in respect of Xinjiang and led joint action at the United Nations, while continuing to build our domestic resilience.
I am conscious of time, as I want to give my hon. Friend a couple of minutes to wind up. AUKUS opens a new chapter in Britain’s friendship with one of our closest allies. The project will help safeguard the security of the Indo-Pacific, and make the world a safer place.
I thank the Minister for her comments. Since 2014, China has launched more submarines, warships, major amphibious vessels and auxiliaries than the total number of ships currently serving in the navies of the UK, Germany, India, Spain and Taiwan combined. France lost out in the initial setting up of AUKUS simply because it had the wrong commercial solution for Australia and the United Kingdom had the right one.
I am grateful to hon. Members who have participated. My only concern is that some Opposition parties appear, certainly in my eyes, to be promoting French commercial interests rather than those of the United Kingdom.
Question put and agreed to.
That this House has considered the impact of the AUKUS pact on Anglo-Chinese Relations.
Before we begin, I encourage Members to wear masks when they are not speaking, in line with current Government guidance and that of the House of Commons Commission. Please give each other and members of staff space when seated and when entering or leaving the room.
I beg to move,
That this House has considered the future impact of artificial intelligence on the economy and society.
It is a pleasure to serve under your chairmanship, Mr Davies. I called for this debate because artificial intelligence will very soon affect every aspect of our lives. The past demonstrates that everyone will willingly allow this to happen—just look at the rise of the internet algorithm. We willingly hand over our data, enabling service providers to produce complex algorithms that sell us more products and get us to click on specific websites. The question cannot be whether we stop the rise of AI; it should be whether it can be effectively regulated. Naturally, I was pleased that the Government published their national AI strategy last month, which at least began the conversation about how we can manage this technology so that it benefits our economy, workforce and society.
Let me give some examples, starting with the driverless car. We must realise that it will probably not be long before insurance companies acknowledge that fewer accidents will occur than in man-driven vehicles. Furthermore, research suggests that advances in technology will enable X-rays directed by AI to diagnose cancer far more quickly and far more accurately than the best of our consultants.
While some of these technologies may seem far off, they have already taken over many unskilled low-paid jobs. After all, it was not that long ago that we ordered McDonald’s coffee in person. Then, one day we were met with a giant screen. Personally, knowing full well the implications of that over time, I deliberately went to the counter and ordered my coffee in person to protect people’s jobs. I did so until one day when the counter was not manned and a nice lady stood next to the giant iPad and said, “Come on. Use this.” Now, every time I go to McDonald’s, I use the giant screen. The nice lady has gone. That is the crux of the issue. AI technology is often introduced to aid the pre-existing workforce. Yet, just like McDonald’s, managers eventually realise that their workforce can be replaced wholesale, and the AI technology is what is left—doing what humans were doing, but doing it better.
Let us take another example: mowing the lawn. While many people find gardening a chore, our desire to keep pristine gardens means that the gardening and landscape business can employ 160,000 people. Yet, as those people retire they are likely to be replaced by artificial intelligence technology as it becomes more capable, because employers will not be liable to provide sickness pay or holidays. AI can cut grass; how long before it can cut hedges and pick soft fruits?
Throughout covid, we have seen the classroom change too. Am I saying that we should remove the teacher? Of course not, but with the rise of AI will we always need teaching assistants, administrative staff or examination boards? I do not know the answer, but it is essential that we start asking these questions.
It is important to have a debate on this subject and Westminster Hall is a great place to have it. UK GDP could be up to 10.3% higher by 2030 because of artificial intelligence and its impacts from consumption-side product enhancements, and more importantly as a result of widening consumer choice and making available more affordable bespoke goods. Does the hon. Gentleman agree that it is time that the Government, especially the Minister, backed the AI brokers by ensuring that there is a skilled workforce? There is a workforce to be formed out of AI, and that is what we should be focusing on.
I thank the hon. Member for that intervention and I will come on to exactly those points later.
I do not think that a red wall Conservative can ever make a speech without mentioning Brexit and trade deals. In light of Brexit, AI will probably be more utilised than ever before to move goods across borders. In warfare, too, the rise of drones to maintain and expand our geopolitical influence is already apparent, yet drone technology is already being used in combination with AI and we see armies across the world, from France to Russia, using AI-controlled drones in conflicts.
Let me reflect briefly on the Departments that could be affected by the examples that I have given: Transport; Health; Work and Pensions; the Department for Business, Energy and Industrial Strategy; Education; the Department for Environment, Food and Rural Affairs; the Department for International Trade; and the Treasury. It is quite a list. So, what is the problem? Well, it is what I want to highlight today, so that, as parliamentarians and as a Government, we can start to have a frank and honest discussion on this issue.
First and perhaps most worryingly, the rise of AI technology is likely to decimate people’s jobs. I have heard it said, “Well, people have threatened that before,” and looking at the unemployment figures we see that Britain had some of the lowest unemployment figures ever before the pandemic. However, this new AI revolution will be different from the industrial revolution when it comes to employment.
As a result of the massive expansion of AI in many sectors, AI will affect many people’s lives and pretty much every job sector. AI will infiltrate everything, everywhere. And just as with internet algorithms, we will all be willing participants. Will it happen overnight? No. It will take time. As I have already alluded to, there has been increasing use of AI for many years. However, the gradual rise of this technology means that policy makers, the Government and the public are not aware of its creeping challenges. Little by little, we as a society are becoming more dependent on it, and little by little it is making life’s many tasks more manageable.
So, which jobs will be affected and—more importantly —when? Let us start with jobs in call centres and fast food restaurants, as well as driving jobs, which, yes, means every taxi driver, every delivery driver and every HGV driver. In total, that amounts to over 600,000 people. Warehouse workers, shop assistants, postal workers, parking attendants—the figure for all those jobs is over 3 million people. If that was it and the list did not expand further into security, education, health and defence, I am confident that a forward-thinking Conservative Government could manage such economic stresses. Yet even when we are discussing the jobs that are most at risk, we must remember that employees in such jobs are often younger people, so our young people’s future is most at risk. One of my biggest beliefs is that the devil makes work for idle hands and the worst idle hands are young ones. A young person with no job often believes that they have no value. Although that is not true by any stretch of the imagination, we cannot have an entirely new generation of young people thinking it about themselves.
I am sure that many people who are interested in this subject are fully aware of the game Go and the experiment to see whether AlphaGo, an AI programme, could beat a renowned Go player, Lee Sedol. For those people who do not know, Go is apparently one of the hardest games in the world to play, with an almost infinite number of moves and, most importantly, no real patterns for AI to follow. Consequently, many people were amazed that AI won the first three games. Personally, I never doubted that it would. Yet what struck me was Lee Sodol’s reaction. When he lost the third game, it seemed to destroy him. To me, he looked empty—a person with no value. Now, if an educated man of that calibre can be made to feel worthless because of the abilities of an AI programme, we can imagine what future generations trying to enter the workforce may feel like as a result of AI.
Lee Sodol won the fourth game, which brought his pride back, despite the fact that he then lost the fifth game. It should also be mentioned that AlphaGo went on to beat every other competitor while playing them all at the same time. To me, that proves not only the infinite capability of AI, but the damage that it may do to individuals, unless we look ahead and consider ways in which we can use AI while still keeping people feeling valued within our workforce.
That brings me to the national AI strategy. Pillar 1 of the strategy, “Investing in the long-term needs of the AI ecosystem,” talks extensively about the lack of AI skills within the economy. An AI Council survey found that only 18% of 413 respondents from the fields of academia, business and the public sector believed that there was sufficient provision of training and development in AI skills for our workforce. Clearly, there is an AI skills shortage.
However, while the strategy mentions the “Skills for Jobs” White Paper, published in January this year, and states that it will work to ensure businesses have the necessary skills to utilise AI technology through the skills value chain, it offers little in acknowledging the huge problem before us. The industries I have mentioned employ nearly 4 million people, most of whose jobs are to be made essentially redundant in the coming years. A reskilling scheme from the Department for Education, here and there, will not tackle the issue at hand and ensure that millions of individuals, many of whom we currently consider skilled workers, will not become unemployed over the course of this century.
If we have learned anything about the levelling-up agenda, it is that people in places such as Don Valley want to have jobs that provide value and meaning to their lives. Let there be no mistake: unless we sufficiently equip huge numbers of our workforce over the coming years, many will never secure work, let alone skilled, meaningful work. Getting this right is key to the Government maximising the impact of their levelling-up agenda. A good start may be establishing a new college in Don Valley that specialises in coding. I say to the Minister, let our economic revolution begin in Doncaster.
That is the employment issue covered, but if AI touches every aspect of our lives, then why not the democratic process itself? We recognise that individuals, myself especially, are not infallible. MPs make mistakes, and Governments too. People sometimes initially vote against what seems to be their own interest, yet despite this we accept that democracy is the best form of Government or, as Churchill said,
“democracy is the worst form of government—except for all the others”.
If we accept that AI can apparently make more efficient decisions, what role does that leave for MPs and even for the ordinary voter?
AI challenges how the state should be run, what the public wants or what piece of AI technology it believes is most efficient. I welcome that the Government have committed to a strategy to work with international partners on shaping international norms and standards relating to AI, which puts the shared values of freedom, fairness and democracy at the heart of the development of this technology. Can the Minister let the House know exactly how democracy will be underpinned through such work? Can he inform those listening to the debate what work is currently being done with the Foreign, Commonwealth and Development Office to come to an internationally binding agreement that ensures artificial intelligence will not be developed in a way that will subvert the democratic process?
It is important that we begin these discussions now, because the rise of AI is inevitable. We cannot stop it and history teaches us that every move to oppose the rise of technology is doomed. That is why we had an industrial revolution, while the Luddites became a mere footnote. AI is already here and both hostile countries and our allies are using it. Therefore, we must engage with this technology if we are to maintain our position as a leading world economy. It is fantastic news that the Government have begun to think about balancing regulation with innovation in the national AI strategy, yet we need to do much more if we are to avoid facing severe societal and economic destruction as a result of this emerging new technology.
I finish by stating that I know this debate is difficult for the Minister. I will be the first to admit that I do not have the answers to the problems posed, but I look forward to working with the Minister and stakeholders in order to fully utilise the benefits of AI, as well as mitigate its inevitable effects. The Minister will no doubt agree that it is important for us to recover from covid, with the entire global economy in mind. In the light of that, we must work with our international partners, just as we have done to beat covid, to work on regulation of AI so our democratic way of life is preserved.
In conclusion, when it comes to AI, I first ask the Minister and the Department to continue to embrace this technology and work with businesses to ensure there is adequate research and development investment in this industry. Secondly, I stress to the Minister how important it is to integrate AI within the levelling-up agenda. The Government should therefore plan ahead so that young people in places such as Don Valley get the technical skills at college to build artificial intelligence programmes in the future. Lastly, while embracing AI, the Government should be wary of its potential to cause disruption within society and should mitigate any negative effects of this emerging technology.
It is a great pleasure to serve under your chairmanship, Mr Davies; to be back on the Front Bench to make the case for science and technology in this country; and to respond to my hon. Friend the Member for Don Valley (Nick Fletcher), who has done his constituency and constituents a service by raising these important issues, and in exactly the spirit of our late and lamented colleague, Sir David Amess. We need in this place constituency MPs who speak for the fears, worries, anxieties and concerns of their constituencies, as my hon. Friend eloquently has. I hope to address some, if not all, of the points he made. I reassure him that they were well made and well heard and are important to the Government as we set out our plans for the UK to be an AI powerhouse.
I am framing my new role as Minister for Science, Research and Innovation around two key projects. First is the mission to be a science superpower. In many ways we already are, but we need to maintain that to be able to grow a modern, innovative, prosperous and high-skilled economy. Secondly, crucially, is to ensure that, off the back of the pandemic, the opportunities created by Brexit and debt challenges owing to the global financial crisis and the pandemic itself, we build a much more innovative, productive, high-skilled and competitive economy by harnessing technology and innovation, to make the UK an innovation nation.
Fundamental to my mission is to make sure that the benefits currently enjoyed—not only, but heavily—in the golden triangle are spread so that we can build clusters of new sectors, new jobs, new companies and new technologies all around this country. That means not only in Scotland, Northern Ireland and Wales, strengthening the Union, but in constituencies such as mine, which is not 40 miles from Cambridge but feels 100 years away, and like my hon. Friend’s, which hear of this technology revolution but do not see the opportunities on their own doorstep. I am grateful to my hon. Friend for so fluently raising these issues.
Of course, we already use AI across whole rafts of our society and economy to huge public benefit. I have seen, through my own career and as the former Minister for Life Sciences, the incredible power of AI software in looking at genomic and phenotypic records and very quickly—in a way that no number of scientists on their own could—identifying opportunities for new drug discovery or targeting drugs at the right patients, which has huge benefits for patient safety. In cyber-security, AI is right on the frontline of our ability to counter some quite mischievous and dark forces, in terms of both national security and economic fraud. AI already plays a crucial role for the environment. For example, in agritech, using AI with satellite data helps to identify where to apply chemicals in isolated parts of a field; rather than spraying a whole crop or field, AI identifies, by field patterns and visual optics, where chemicals need to be applied. In fact, the use of AI in plant genomics allows us to develop a whole raft of drought and disease- resistant crops, helping sustainable development.
In air traffic control, thankfully, huge computing power is applied to ensure that planes never bump into each other; it is important to have pilots when there is an emergency, but actually the AI at the heart of our electronic air traffic control system is keeping us all safe. AI is also used in other ways, including in the gaming sector, which is a huge driver of innovation and opportunities in this country, often rather below the horizon. I dare say that there is probably a cluster of games entrepreneurs in Don Valley. The gaming industry in this country is huge and drives a lot of innovation in AI that then has applications in healthcare and broader industry.
My hon. Friend raises an important point about public trust and confidence. I am positive about the importance of this technology for creating opportunities and jobs but, crucially, the public must be with us, and they must have confidence in our regulatory framework. I am glad that he referred to the report of the taskforce on innovation, growth and regulatory reform, which I led with my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith). In that report, we argue that leaving the EU presents an opportunity for the UK not to race to the bottom but actually to race to the top: to set values-based regulation for innovation that reflects the values of the people of this country.
In a whole raft of new technology sectors, the world is grappling with how to regulate: AI, autonomous vehicles, nutraceuticals, functional foods, clinical trials and digital health. We are respected internationally as a setter of standards. As my hon. Friend made clear, standards must be embedded in the values that go with the Union Jack around the world. If we can regulate with values in a way that supports innovation, I am very confident that his constituents will benefit.
That goes right to the heart of the Prime Minister and the Chancellor’s historic commitment—it is the first time in my life that I have heard such a strong commitment from Conservative leaders—to end the low-wage economy that is reliant on overseas labour. The only way to do that is by harnessing innovation to create a more productive, more competitive economy. That is the way to raise the living standards of all of our constituents—my hon. Friend’s and mine. Having heard the Chancellor and the Prime Minister announce that groundbreaking commitment at party conference, I am not sure that it has yet sunk in: that the Conservative party is absolutely determined to raise the living standards of people around the country, to raise wages and to move on from a 40 or 50-year cycle of economic boom based on very cheap labour. That is good news for my hon. Friend’s constituents as well as mine.
The computing revolution led to huge fears that we would see the automation of everything and mass redundancy, but in fact the UK has become a huge global software and computing power, creating hundreds of thousands of jobs. I am confident that, if we deal with the issues that my hon. Friend raised and get the regulation and skills environment right, we will similarly become a powerhouse for new AI industries.
I will deal with the important points that my hon. Friend raised on skills, public trust, levelling up and ensuring that these technologies create jobs all around the country, values and security. In fact, I will go this afternoon to the Pacific Future Forum in Portsmouth to join leaders from the economies of the Association of Southeast Asian Nations. There I will highlight the UK’s commitment, through our global science superpower mission, to an international framework for the safe use of AI and to using our collective liberal democratic economic heft and values to ensure that the west is developing these technologies without inadvertently leaving ourselves open to dark forces.
I will summarise where we stand and why this is such an opportunity. At the moment, the UK ranks—believe it or not—third in the world in terms of the development and deployment of AI technologies, behind only the USA and China. That is an extraordinary global advantage. AI is going to be as transformational as computing, and we are currently in bronze position in the Olympic medal table. We have a huge lead. It is important that we do not drop that lead, and that we build on it to create a prosperous economy. A third of Europe’s AI companies are here in the UK, which is twice as many as any other European country. We are also third in the world for AI investment, behind only the US and China, attracting twice as much venture capital investment into AI companies as France or Germany. We are in a very strong place in the global race to harness AI.
I turn to the points my hon. Friend made on skills, because they are very important and the Government take them seriously. Since the AI sector deal that we launched in 2018, we have been making concerted efforts to improve the skills pipeline, not just to ensure that those vital high-technology skills are there for industry but to ensure that all—his constituents and mine—have an opportunity to participate in this economy. That is why we have increasingly focused on reskilling and upskilling: so that, where there is a level of displacement, there is redeployment rather than unemployment.
That is why, through the Office for Artificial Intelligence and the Office for Students, we have funded 2,500 more postgraduate conversion courses. Those include courses particularly for students with a background not in science, technology, engineering or maths and students with a near-STEM background. There are also 1,000 scholarships for people from under-represented backgrounds, particularly women, black and disabled students. Those courses are available across the UK and, as my hon. Friend referenced, Sheffield Hallam University within the Sheffield city region is leading in this, and is one of the universities delivering those courses, which are hugely popular with students. I see that no Opposition Members are present, but Government Members will be pleased to remember that at the recent Conservative party conference the Chancellor announced that the programme will be doubled, creating 2,000 more scholarships.
South Yorkshire is quite a powerhouse in AI, with Sheffield University. There are 16 sectors for doctoral training in AI across the country, of which Sheffield is one, training 1,000 more PhDs. There is the Sheffield centre specialising in speech and language technologies—an area where the university has long pre-eminence. Like so much of the UK, South Yorkshire is in the process of reinventing itself and its economy, and I have every confidence that it will do it as well as everywhere else, not least because of Sheffield Robotics, a leading company and employer in that region.
Sheffield’s advanced manufacturing research centre currently offers more than 300 apprenticeship places to local jobseekers in the AI sector, so there is a lot to be proud of and confident of in the region. We are also seeing applications of AI at the Centre for Child Health Technology in Sheffield as part of the Olympic Legacy Park, where AI is being put to use to assist clinicians in identifying tumours via scanning. In the national AI strategy, the Government committed to supporting the National Centre for Computing Education to ensure that there is a wider reach and access to AI courses for people all around the country.
My hon. Friend mentioned the importance of the Government gripping this matter strategically, and I want to reassure him on that. The Council for Science and Technology wrote to the then Prime Minister in 2013 to advise on what it called the coming age of algorithms and the need for new research to look into these matters. The Government created the Alan Turing Institute, which is now the national hub of expertise on AI and data science. Following the independent AI review in 2017, we created the Office for AI and now the independent AI Council.
We also announced at the time the Centre for Data Ethics and Innovation, which is really important and goes to the heart of some of my hon. Friend’s concerns. If we are to lead in harnessing these new technologies we need to lead in regulation based on values and ethics, and reflect them as he did in his speech. I am very pleased that the Centre for Data Ethics and Innovation was a recommendation from the Royal Society and the British Academy in their separate data governance report. Earlier this year, to improve public discourse on AI the CDEI engaged widely with the public and published its findings in June. We are committed to trying to grow that conversation. It recommended that the Government develop a standard for transparency on algorithms in the public sector, which I am delighted to say is work now close to completion. We have to lead this through the public sector as well as the private. That, again, speaks to the importance of values.
The international dimension is vital. I reassure my hon. Friend that in my first four weeks I have already chaired meetings with other western democracies on the importance of research security, because AI can be used for industrial espionage and intellectual property theft. It is an issue that we take very seriously, and I am jointly responsible with the Under-Secretary of State for Digital, Culture, Media and Sport, my hon. Friend the Member for Croydon South (Chris Philp), for the Office for AI, which develops a cross-Government approach. As my hon. Friend the Member for Don Valley referenced, the national AI strategy sets all that out.
We have required regulators such as the Information Commissioner’s Office, the Competition and Markets Authority, the Financial Conduct Authority and Ofcom to specifically consider the risks and benefits of AI within their sectors. Earlier this year, through the CDEI and the Office for Artificial Intelligence we set out with other regulators a project to remedy skills gaps in terms of knowledge of AI in the regulatory landscape. Every regulator will need to think about how it uses AI, and the risks of AI in its sector. Internationally, we have set up the Global Partnership on AI, the first multi-lateral forum, and we co-chair the data working group. The UK is playing a leading role in international discussions on AI ethics and potential regulations, including at the Council of Europe, UNESCO and the OECD, which is partly why I am going to the Pacific Future Forum this afternoon.
Time is against me, but I hope that I have addressed some of my hon. Friend’s points, and reassured him that we take them very seriously. We will harness the benefits of the technology to create those hundreds of thousands of jobs only if we bring the public with us, which we are committed to doing.
Question put and agreed to.
Access to Cash
[Mrs Maria Miller in the Chair]
I beg to move,
That this House has considered access to cash.
It is a pleasure to serve under your chairship, Mrs Miller. Given recent events, I feel it is important to take a moment to pay tribute to our wonderful colleague, Sir David Amess, who was a regular contributor to Westminster Hall debates. His presence here will forever be missed.
I am pleased to have secured this debate, particularly as our ability to physically access cash has been restricted as we continue to tackle coronavirus, and given the recent increase to the contactless card spending limit from £45 to £100.
I come to this debate with a specific constituency interest in mind. One of the jewels in the Pontypridd crown is the Royal Mint, based in Llantrisant. It is a major local employer, and I must give its tourist attraction, the Royal Mint Experience, a quick plug. The Royal Mint is the manufacturer of UK coins, and is not directly involved in policy on the use of cash, but it is a key contributor to ensuring that certain skills, and the capability to circulate coins, still exist in this country. I was joined there by the Under-Secretary of State for Wales, the hon. Member for Monmouth (David T. C. Davies), only a few months ago; we struck coins, and met young people on the kickstart scheme. I will, however, try to refrain from reminding the Minister that despite all the country’s coins being made in my constituency, we sadly see precious little money in return from the Government. Perhaps that is a matter to be discussed another time.
Instead, I will focus on the sad, widespread repercussions of reduced cash flow, which is having a major impact on high streets up and down the country. Many have been hit by multiple bank closures, including in my constituency of Pontypridd and across Caerphilly. Banks not only provide vital services for a huge range of community groups, but are often the epicentre of our high streets, and are vital in encouraging local trade and footfall for surrounding businesses.
In West Dunbartonshire, we have seen a huge decrease in the number of banks, and I congratulate the hon. Member on making that point. Do they agree that if we are moving to a cashless society, that cannot happen in a vacuum, and that the Government must step up to ensure that people have access to cash in local communities?
I completely agree. It is vital that the Government step up to ensure that this transition to a cashless society—if that is where we are heading, which seems to be the case—is made quickly. I will return to this point later, but I must begin by placing on the record my gratitude to all the organisations that have supported me and my team in preparing for this debate, notably the team at the LINK group, who have assisted with many of the stats I will refer to; I am particularly grateful to them for their expertise. In addition, Cardtronics found time to advise us on the potential repercussions of losing more and more free-to-use ATMs, for which I am thankful.
Put simply, when it comes to how we access and spend cash, it is clear that our habits as a nation are changing. In my household, physical cash is essentially non-existent, and I often actively avoid carrying cash. In a world where tools such as Apple Pay mean that I can pay with my phone, my watch, or even just my face, carrying a large amount of cash seems to add an element of risk, and it ultimately feels largely unnecessary.
This stands in stark contrast to my attitude towards cash when I was growing up. I still remember the genuine thrill I felt as a youngster when I received what I suppose would be considered a wage for completing my household chores. That £3 per week felt like my ticket to freedom, and I loved to collect my pounds and pennies in my piggy bank, all to be spent, no doubt, in one go on something like Bliss magazine, the latest Tamagotchi or Steps’ latest single. This fondness and nostalgia for the Great British pound is widespread. According to the access to cash review interim report, “Is Britain ready to go cashless?”, despite the increasing use of cards and electronic payments, approximately 8 million people, which is 17% of the country, said that cash feels like an economic necessity.
For me, years down the line, I have changed not only my spending habits, but my attitude to cash. What was once seen as an exciting physical representation of my earnings is now something I tend to actively avoid. However, I recognise that plenty of people feel completely differently, with many preferring to use cash for security or cash management reasons. It is important to acknowledge that when we talk about access to cash, acceptance of cash is part of that debate as well. That is where the marked difference between the needs of those living in my semi-rural constituency of Pontypridd and those in inner-city dwellings becomes even more obvious.
In London, it is not uncommon for businesses to be entirely cashless. That is in stark contrast with the many small businesses in my community that rely on cash payments, due to the cost or impracticalities of accepting card transactions. I am pleased that there appears to be widespread support for the preservation of free-to-use ATMs, which are vital for protecting access to cash.
I congratulate my hon. Friend, neighbour and fellow Taff-Ely MP on securing this debate. She will know that I have spent many years working on this issue.
Our constituencies are similar in geography. The UK Government’s response is to say that people will have a cashpoint within a kilometre. I know my hon. Friend’s constituency well, and she knows mine well. Mine has ranges of mountains and hills, and there is often only one road coming into and out of a valley. The reality is that although “a kilometre” is a measure of distance, it can feel vastly different to constituents depending on how they travel, and whether they are relying on bus or train services to access cash. The Government need to understand that this is not just an issue in cities, where transport is free-flowing and connectivity is often very good. In seats like ours, there can be huge differences in how people can access cash.
I completely agree. My hon. Friend is absolutely right to make that point. In constituencies such as ours, we are not exactly talking about a kilometre as the crow flies. People would need to travel on several buses or walk a much greater distance to reach a free-to-use ATM.
Many Members before me, including the hon. Member for North Ayrshire and Arran (Patricia Gibson) and the hon. Member for Blackpool North and Cleveleys (Paul Maynard) to name but two, have been particularly vocal in their support for free-to-use ATMs. Thanks to LINK and UK Finance, we know that ATMs remain the most popular way of withdrawing cash—about 93% of cash withdrawals take place at a cash machine. There are 53,500 ATMs in the UK, 12,500 of which are pay-to-use. Only 41,000 are free to use. Some 94% of cash withdrawals are free of charge, but it will come as no surprise that cash withdrawals have dropped significantly. Coronavirus has undoubtedly expedited the move towards a cashless society.
As of August 2021, ATM usage is down a whopping 45% on pre-pandemic levels. This worrying trend impacts us all, but we can all agree that it is the elderly and the most vulnerable who are likely to be most impacted. Some groups of people may be nervous about using technology and may fear the potential cyber-security repercussions of using contactless payment systems. Others may struggle to remember their personal identification number, or may simply not have the form of identification available to set up a complex banking service.
I was also shocked to learn from the Treasury Committee report on increasing financial inclusion that there are still around 1 million people in the UK without a bank account. Some older, lower-income households rely on cash to budget because of a lack of access to online banking. In the conversations about the importance of cash and access to cash, we must acknowledge the clear regional divides that still persist. For example, here in London, 75% of card usage is now contactless, yet parts of my constituency simply do not have the broadband infrastructure to support contactless payments. The lack of investment in basic infrastructure means that many businesses in my area, through no fault of their own, are restricted in their ability to expand or develop. Our country is likely to follow the path taken by our friends in the European Union, notably Sweden, and become increasingly cashless to keep up with modernising in a global economy, but that modernisation cannot come at the expense of some of our most vulnerable groups, with communities and regions being left behind once more.
Perhaps I can encourage my hon. Friend to pay tribute to the community credit unions that have branches, and that actively encourage people to bring cash in and that help them to take cash out. Does she agree that community credit unions need more support from the Government to expand their networks and offer more services, so that they are even more attractive?
I completely agree. In my constituency we have Dragonsavers, a vital service for local community groups, and the Welsh Labour Government are looking to set up Banc Cambria, so that we have banks on our high streets. They are looking at where it would be feasible to open branches.
While it is rare for me to have reason to doubly praise the Government, I am pleased to see that the plans outlined by the Treasury earlier this year suggest that people should not have to travel beyond a reasonable distance of around 1 km to withdraw or deposit cash. Such commitments are vital to the survival of cash circulation in this country, but as has been mentioned, only if the local geography of our towns and cities across the UK are taken into account when considering that 1 km radius.
For hon. Members not familiar with the south Wales valleys, my hon. Friend the Member for Ogmore (Chris Elmore) and I can assure them that our hills and beautiful valleys are not for the faint-hearted. These geographical barriers cannot be ignored when factoring in access to cash for community members, both now and in future. I therefore hope to hear from the Minister exactly how the Treasury plans to safeguard those vital services, particularly for those living in rural and semi-rural constituencies such as mine.
There is some hope, though. As hon. Members will be aware, LINK is a not-for-profit with a strong public interest remit that runs the UK’s largest free-to-use cash machine network. Instead of owning and operating those machines, LINK’s job is to ensure that every community has free access to cash by paying commercial incentives to ATM operators to put free machines where they are needed.
Indeed, after representations from a number of residents, I was thrilled to see LINK secure a new ATM at the village store in Efail Isaf in my constituency. The ATM is now secured for a minimum of five years, and it will go a long way to helping those in our area. For two years, LINK has invited communities to request free-to-use ATMs such as this one, and in that time it has installed more than 70 of them in response to local demand, alongside a year-long trial that saw LINK working with partners to develop a new way of accessing cash, by allowing consumers to withdraw cash over the counter from participating retailers.
I am pleased to see innovative steps being taken to secure access to cash for all those who need it. What will be essential, however, is maintaining those fantastic services. I truly believe the Government must act on the recommendations recently produced by Cardtronics and the Federation of Small Businesses, which ask Her Majesty’s Treasury to mandate bank membership of LINK in order to protect its fantastic withdrawing and free-to-use ATM delivery schemes.
In addition to my very real concerns about the impact of a potentially cashless society on certain populations, this conversation must also address the many logistical challenges and concerns around the largely inevitable shift to a cashless world. We need a long-term solution, whereas I fear the Treasury is currently in denial about the fact that we seem to be heading at a record pace for an almost wholly cashless society.
Speaking of the work of Cardtronics, one of the recommendations to the Government on protecting cash is that we should protect cash acceptance in our businesses. Does the hon. Lady agree that that is something the Government needs to consider?
I completely agree. For many businesses in my seat in Pontypridd—in the market, for example, we have some brilliant stores—it is not feasible to take cards. We are talking about an average transaction of £1 for Welsh cakes from our great Welsh cake shops, for example; it just is not feasible for a business to take card payments when they are charged for those. It would massively reduce their profits and make their business completely unviable.
Steps can now be put in place to ease the shift to a cashless society. We have seen neighbouring countries switch their entire currency; while I am very reluctant to turn this into a debate on the euro, in fear of somehow reigniting the Brexit debate, if other nations have managed such a transition, we should be able to follow suit. With that in mind, I hope the Government’s promised access to cash Bill will include some form of commitment to setting up a regulatory body to ensure a smooth transition. That regulator could work with different interest groups, infrastructure providers and charities such as Age UK to support those most impacted through this transition period.
Of course, this recommendation has been well researched, notably by Natalie Ceeney, who chaired the initial access to cash review. I hope to hear more from the Minister on the issue, along with a timeline on when we can expect the legislation to come forward to the House.
My final point concerns the worrying trend of bank closures that we are seeing up and down the country. While I fully recognise that the Treasury is unable to interfere in decisions made by private corporations to remove their presence from the high street, we must acknowledge the devastating impact that those closures have on the availability of, and people’s access to, cash.
In preparation for this debate, I spoke to a number of people living in my area who have sadly been impacted by decisions made by both Lloyds TSB and HSBC to withdraw three branches from my constituency. While not all banking services relate to the process of depositing or withdrawing cash, it is undeniably those basic services that are the most missed when a bank chooses to leave the high street. With the role of the post office ever changing, it has been quite a confusing time for many residents in my area, who have felt forced to shift their ordinary banking practices as a consequence of these closures. With this in mind, I am particularly interested to know what plans the Government have to improve the availability of deposit-taking facilities across the county; I hope the Minister will refer to this in his remarks.
Ultimately, we need to see this promised access to cash Bill sooner rather than later; the big changes are happening in our communities right now. People across the country are already being negatively impacted, and I fear many more will be excluded unless action is rapidly taken. The Government have made a start, and I commend them on their commitment to preserving access to cash, but they need to follow through with specific action to protect those constituents of ours who fall into potentially vulnerable categories. I look forward to hearing from the Minster, and hearing what hon. Members have to say on this important issue. Diolch.
It is a pleasure to serve under your chairmanship again, Mrs Miller, and I congratulate the hon. Member for Pontypridd (Alex Davies-Jones)—I hope I have said that correctly—who is also a friend.
Access to cash is a massive challenge for the next few years. Although our use of electronic payments via card or mobile phone has increased, and although almost all shops now accept non-cash payments—a move accelerated by the pandemic—there is still a large minority of people, particularly older people, who cannot access electronic payments. According to the Library, in the constituency of Hyndburn, we have gone from having 15 local units in 2015 to just five in 2021. To get more information about the scale of this problem in Hyndburn and Haslingden, I put out a physical banking survey in the town of Haslingden, which recently lost a bank branch, and an online survey in the town of Hyndburn. We have also recently lost our Barclays branch in Accrington.
The results were informative. First, I had a 20% response rate, which many Members will know is a huge return on any survey. This confirmed that this was a real issue that people felt very strongly about. Secondly, and perhaps unsurprisingly, there was an age difference; 80% of respondents who did not have easy access to an ATM were of the older generation—aged 56 or above. In general, the older the respondent, the more they found access to cash was limited. Similarly, 46% of respondents to my survey did not use online banking, and more than three quarters of that group were aged 66 and over. Most interestingly given the context of the debate, an overwhelmingly large proportion of respondents said the biggest improvement to banking services that they would like to see in the area was not only access to cash, but access to ATMs that did not charge. This is an important point to remember.
Is my hon. Friend aware of the research by NatWest showing that many people who use paid-for ATMs are go further to use them than they would if they used free-to-use ATMs? Does she agree that more research is needed as to why people are heading for paid-for ATMs when they do not need to?
I agree with my hon. Friend, who knows about this issue across Lancashire and in constituencies such as mine; I was not aware of the research conducted but agree that more is needed. It is not enough to simply map where the nearest ATM is; we need to ensure that everyone has access to free-to-use ATMs that do not disadvantage those who cannot afford to pay a fee.
If I may ask for the patience of my colleagues, I would like to drill down into the numbers and look at how people responded to the survey. I asked, “Do you have easy access to an ATM near your home?” About 60% of people said no, or “only somewhat.” When asked to explain, the majority of those who said “only somewhat” had access only to fee-charging ATMs. If I were to take this survey further and drill down into much tighter geographic areas, I would bet that the more rural an area, the less able to access cash people are. In some ways the conclusion is obvious: the fewer the people, the fewer the cash machines. If, over the ATM map, we layer a map of fee-charging cash machines, it becomes obvious that the more rural an area, the more likely that people will not only struggle to access cash, but will have to pay for it as well.
I also met with Cardtronics, and will briefly mention what it suggests. It states that the Government must protect ATMs:
“ATMs are the only sustainable national infrastructure that can maintain free access to cash 24/7 and must be protected through independent calculation of the interchange fee paid to ATM providers.”
It also says that the Government must protect key schemes:
“Membership of LINK and the Post Office banking framework should be made mandatory for banks to ensure these schemes are protected to ensure access to cash”.
It says that the Government must protect cash acceptance. There is a huge opportunity to work with local post offices, which would go a long way towards solving this problem and ensuring that all our constituents have easy access to cash.
It is pleasure to serve under your chairmanship, Mrs Miller. I congratulate my hon. Friend the Member for Pontypridd (Alex Davies-Jones) on securing the debate.
Cash may no longer be king, but it is still pretty royally used. Its use did drop during the pandemic, but NatWest says that cash use is now at 75% of pre-covid levels. There were 35 million separate cards used to withdraw cash in August. The average adult withdrew £1,500 in 2020.
After the last debate, I received two letters. I received one from an older lady, who said that the online she had ever used was a washing line, and she certainly did not want to know any more about it. I also had a letter from a young mum who relied on cash. She said that she used cash so that she did not overspend: she could not spend any more than she had in her purse.
People worry about safety and security. What happens if connectivity drops? What about the security of the physical card, particularly with the £100 limit? What about internet scams, fraud or card details being stolen? Some 15% of people still prefer cash to budget when shopping, and 28% worry about fraud risks. Post offices can help, but, with post office closures and the difficulty of getting people to take on post offices, they are not the answer any more.
As we have heard, it is also about where you can spend your money. The pandemic has led to more refusals. There was an attitude that cash is a bit dirty, and that was used as an excuse. In June, almost one in five people had cash refused by a business, and the majority of businesses said refusals were due to covid. We have to get away from that attitude. People still want to pay with cash: 81% want a range of payment options, including cash, and 24% would not shop at a business that did not take cash. It is vital to keep that choice. I commend the Which? cash pledge campaign to encourage businesses to sign up to accepting cash.
We cannot move to a two-tier society in which some people have the choice of any shop and others have their choice restricted. It is no good having cash available if the only local shop one can reach does not accept it. If cash acceptance is not going to be voluntary, we need legislation. I would like to know when the result of the White Paper consultation will be published. Is there a role for the Financial Conduct Authority in ensuring access? Although 90% of people will have access within 1 km, what about the 10% who will not? Who ensures that access? We need the legislation as well.
It is more and more urgent. Every day it becomes more difficult to row back. While cashlessness might suit many people, we cannot leave people behind. We cannot railroad them into accepting something that does not suit their needs. We cannot sleepwalk into a cashless society. As the song goes,
“you don’t know what you got til it’s gone”.
It is a pleasure to serve under your chairmanship, Mrs Miller. I congratulate the hon. Member for Pontypridd (Alex Davies-Jones) on securing a debate on what has probably been my favourite subject in my time in Parliament. As a member of the LINK Consumer Council, it is a subject that I am interested in. One hon. Member described at great length what LINK is, so I do not need to repeat that, thank goodness.
Hon. Members have described at some length how the use of cash is important to the most vulnerable in our society. I will quote one survey, which is from the organisation Which?, which found that two in five people reported being unable to pay with cash at a shop and did not have another payment method. Two in 10 people in that situation could not buy the medicine that they needed. That should surely show us why it is important to protect access to cash as a source of spending power and to insist on the acceptance of cash by shops, as the hon. Member for Makerfield (Yvonne Fovargue) said.
Back in December 2020, my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) and I were at a slightly less well-attended debate to talk about this issue. We urged Ministers and the industry to move rapidly towards addressing it. Rarely, I am going to praise a Minister—shock, horror—and say they have moved at some pace, both the industry and Government, by conducting the consultation we have heard about.
Industry bodies such as UK Finance, as well as Natalie Ceeney, who has been mentioned by the hon. Member for Pontypridd, and the banks themselves have worked hard, looking at what will best address the challenges that we face. The main project they have identified is called a shared banking hub. There is one in Cambuslang in Scotland and one not far from Southend, if it is worth observing, in Rochford. Both of those have worked extremely well. Banks have come together, shared premises and the consumers have loved it. It has moved the debate on from closing bank branches to how to provide more access to financial services.
We are now reaching the crunch moment. You may not be aware of it, Mrs Miller, but right now in the darkened corridors of the City of London, banks are discussing how to make access to cash happen, and they are going to resolve all these issues by early December. I say to the banks, they have to put up or shut up. They have to roll up their sleeves, dot the i’s and cross the t’s, overcome the commercial nerves and stop jockeying for commercial positions. They should not get lost in an alphabet soup of ACAG, JACSG and WDSG, and should stop the arbitrary waffling, focus on shared branches—what level, how many and how they are going to pay for it.
The investment that shared branches would require would be a tiny fraction of their turnover. They have no excuse. They have been discussing this for more than two years. If they do not resolve these issues, the likes of me will be baying for their blood. I will demand financial penalties commensurate with the investment that is forgone. We need to change now. I have seen in my constituency that they know the legislation is coming. They are shutting branches as we speak. There should be a compulsory moratorium on all bank branch closures from 1 January 2022 until the point at which that legislation takes effect. The banks have no further excuses. We have been on this issue for long enough. The time has come. We have solutions out there; we know what will work; we know the legislation is coming; we know that the FCA is the best vehicle to oversee it. Get on with it.
It is a pleasure to serve under your chairmanship, Mrs Miller. I congratulate the hon. Member for Pontypridd (Alex Davies-Jones) on a highly informed and amusing contribution.
I am going to make two points. It is very simple: all of us need cash. As some right hon. and hon. Members know, my wife is disabled. When I go away on a Sunday or Monday—or possibly on a Tuesday, in a good week—to come here, she gets on okay by herself during the week. One thing she always asks me to do is get cash. On the days before I leave to come south, I have to go to the cash machine and get out £70 or £80. That is how life is; she needs that money.
In recent weeks, we heard the sickening announcement that Virgin Money is going to close its branch in Wick. That leaves one bank in the big royal burgh of Wick, Caithness. It is a sickening litany of closures in what I think is the furthest constituency from London on the British mainland. I listened with amusement to the idea of 1 km. Hon. members from Wales are correct that the mountains do get in the way. In the entire county of Sutherland, a geographical area of 5,250 sq km, we have only one branch in Golspie. That is the nature of the problem. My constituents are sick and tired of it. Each time they hear the news again, there is a sadness about the whole issue.
However, in fairness to the Government, good experimental work has been done. Trials have been carried out with idea of banking at post office hubs, which have been well received. I say to the Minister and the Government, push on, forge ahead with those hubs. Some of the remoter constituencies in England, Wales, the and the highlands and other parts of Scotland, such as the constituency of the right hon. Member for Dumfries and Galloway (Mr Jack), would be the perfect places to experiment with those hubs, because rurality militates against access to cash.
I have one final point, and I will be brief, Mrs Miller, to help you. I am going to repeat slightly a speech I made yesterday about post office closures. I talked about a fishing village called Balintore in Easter Ross. The local shop said, “We can’t work with the post office any longer. It’ll have to go.” The community, particularly the hall committee of the Seaboard Memorial Hall, got together and talked to the post office. Hey presto, we have a post office back in the village, although it will be temporary.
My final message to the Minister and the Government is that they should work as closely as they can with the communities that are involved, because very often they will come up with an innovative suggestion, even down to basic routes for mobile banks, the best times to visit communities, and the best ways to get such hubs up and running. I speak with passion because, on behalf of my constituents, I am so heartily sick of seeing my vast constituency drained of access to cash.
It is a great pleasure to serve under your chairmanship, Mrs Miller, and to take part in another debate on access to cash. I commend the hon. Member for Pontypridd (Alex Davies-Jones) not just for securing the debate, but for setting out the issues. I also commend my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) for his passion on this issue, which he has pursued relentlessly in Parliament and with the Minister. The Minister has always offered good grace and helpful engagement, but as my hon. Friend intimated, we are at the crunch point and need action.
In her contribution, the hon. Member for Makerfield (Yvonne Fovargue) touched on something that the Minister and I have not always agreed on. I feel that the Government have not done enough to convey the message that cash is safe. During the covid crisis, cash was no less safe than using a PIN pad and terminal. The Bank of England and many other international authorities confirmed that, and I do not think a clear enough message was given out that cash was safe. We also know that many retailers and other service providers have just used covid as an excuse to move to cashless payments, rather than there being some safety or security issue.
As we have discussed, the issues of acceptance and access are interlinked. Of course, the third key issue is the ability to deposit cash, which remains incredibly important for many voluntary and smaller organisations. To give an example from my local community, people do not go to coffee mornings, when they are allowed again, with their iPhones.
Indeed I do, and I think the hon. Member for Pontypridd made those comments in her opening remarks. We have to have the three elements: access, acceptance and the ability to deposit. Like the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), I have a very large constituency—in fact, it is the largest constituency in the United Kingdom outside the highlands—where many of these issues of rurality are to the fore, so the issue of the 1 km within a rural context has to be properly addressed. We also have to have a better understanding of how engagement with post offices will work.
I remain very concerned about the post office network. I recently had four post office closures in significant communities, because a well-known retailer decided that it would no longer have post offices within its premises. Just glibly saying that the post office has a role might be right, but it is not as simple as that. We need to understand the basis on which it will underpin the availability of cash. I welcome the progress since the last debate, and I hope that we can achieve the same level of progress in the coming weeks, with a response to the White Paper and an understanding of the timescale. As my hon. Friend the Member for Blackpool North and Cleveleys said about the crunch, the banks have to put up or shut up. If they do not put up, we have to take the necessary action here in Parliament.
It is a pleasure to serve under your chairship, Mrs Miller. On behalf of many of my Slough constituents, I am extremely grateful to my hon. Friend the Member for Pontypridd (Alex Davies-Jones) for ensuring that this issue has been given time for debate in Parliament.
Like many hon. Members in Westminster Hall today, I am here simply to ask that people still have a choice; there is simply no reason why cash and card payments cannot co-exist. We cannot have a two-tier society, excluding those who through personal choice or necessity use cash, particularly because that can impact the most vulnerable.
Indeed, in 2019 the independent access to cash review found that those more likely to use cash than cards tended to be on a lower income and less likely to have digital access. They tended to be older adults; people with certain physical or mental health problems; those who are financially excluded, for example those who are homeless, so could not gain access to a debit card; people living in addresses with poor digital connectivity; or people living in areas where local shops do not take card payments. Eliminating cash from our society is akin to abandoning these groups of people and with that action it is already becoming more difficult to use cash, because facilities to withdraw cash are depleting in number.
In Slough alone, much to the consternation of many of my constituents, we have lost over 20 ATM or cashpoint machines since 2018, and in the last nine years in the south-east of England we have lost nearly 600 bank and building society branches. Research has shown that about a quarter of customers have a preference for cash, primarily for budgeting and control purposes, but also to avoid the discomfort and security risks that they associate with card and contactless payments. That shows that although there are certainly people who need to use cash, there are plenty of people who simply prefer to use it.
Who can blame them? The Financial Conduct Authority has shown that between April 2018 and the end of that year there were 302 major IT failings that caused a multitude of problems for card customers. Security breaches and cyber-attacks on banks have become increasingly common, and many people have legitimate concerns about privacy and data sharing linked to their card usage. An immense amount of data is held on every transaction that we make: the amount; when we make a payment; what websites we visit; and what type of purchases we make. All of that reveals a great deal about our whereabouts, lifestyle, financial means and much more, and it is used to fine-tune marketing for customers by holding a vast array of data on their financial behaviour. That is why many people detest and fear living in a Big Brother society, where their every move virtually is being tracked.
Today, I ask the Minister for his plan and the active steps he will take to halt this trend. Will he say whether he will act on the recommendations of the access to cash review to guarantee access to cash wherever someone lives or works; to ensure that cash is accepted; to take steps to make cash sustainable for longer; and to treat cash as its own system, with a joined-up regulatory approach?
It is a pleasure to serve with you in the Chair, Mrs Miller.
It is also a pleasure to participate in this debate this afternoon and, as others have done, I congratulate the hon. Member for Pontypridd (Alex Davies-Jones) on securing it. The debate is on a topic that comes up very frequently in conversations I have with local residents in surgeries in my constituency. In a rural area such as the Scottish Borders, the recent closures of the TSB banks in Hawick and Kelso and the planned closure of Virgin Money in Galashiels mean that for some residents their nearest physical bank branch is miles away in Edinburgh—and when I say “miles away” I mean 50 miles away, which is totally unacceptable. I can very much relate to the earlier comments by the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) regarding the impact of bank closures on rural communities, such as those in many parts of Scotland.
That local picture mirrors a national trend. It is estimated that there were over 13,000 bank and building society branches in 2012, but by March 2020 that figure had dropped dramatically to only 8,000.
I congratulate the hon. Member for Pontypridd (Alex Davies-Jones) on securing this important debate. My hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont) is quite right to refer to bank branches. In my own high street in Prestatyn, over the last five years the number of ATMs has dropped from six to zero, due to the closure of bank branches. Does he agree that incentivising local businesses to host ATMs is one possible way forward?
I am grateful for that important point, with which I absolutely agree. It is important for local business that hosting cashpoints is cost effective. I am aware of a number of businesses that have tried to host cash machines, but it has turned out not to be a financially viable option for them.
Although cash use understandably decreased during the pandemic, that should not be a reason to move away from cash completely, and banks should certainly not use it as a reason to close local branches. I have seen at first hand that many local residents and businesses in my constituency use and rely on the vital services that their bank branches offer. Too often, large banking firms present evidence of reduced footfall as a justification for closure, but those figures do not reflect the fact that those vital bank branches provide services to customers week in, week out.
People often to prefer to deal with other people, face to face, and that is compounded by a lack of confidence in using online services as an alternative. Other constituents face difficulties in accessing online banking. For some local businesses, poor connectivity makes card payment machines unreliable, and residents who face connectivity problems cannot rely on the broadband service to access secure banking services. The SNP Scottish Government’s botched roll-out of the R100 scheme has simply compounded matters for many residents in local communities, but that is a longer debate for another day.
Amid the closure of local branches, I welcome that the UK Government have ensured that customers can use banking services across the network of more than 11,000 post office branches. Nevertheless, post offices do not provide the full range of services that bank branches can, including financial advice and planning, as well as privacy, which is clearly important for many residents. I totally share the concerns of my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) about the suitability of the post office to provide alternative services.
To conclude, I again congratulate the hon. Member for Pontypridd on bringing this important debate. I welcome the UK Government’s commitment to protecting access to cash, complemented by initiatives to tackle digital exclusion. There will always be a place for using cash, so maintaining access to the financial services that support my constituents in the Scottish Borders must be an absolute priority for the Government.
I pay tribute to my hon. Friend the Member for Pontypridd (Alex Davies-Jones) for securing the debate and for the way she introduced it. I, too, think that banks should be mandated to stay as members of LINK, and that the pressure on banks relating to costs and to their desire to maximise profits, which has led to so many bank branches closing, is unlikely to dissipate any time soon unless Ministers take action.
The hon. Member for Blackpool North and Cleveleys (Paul Maynard) referred to a big meeting that is taking place in the City, but I fear that it will not lead to a whole slew of new bank branches opening. In fact, the pressure on banks to continue the programme of closures means that we will continue to live with it unless Ministers take action. The right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) mentioned post office closures. I fear that those are the beginning of a pattern of closures that Royal Mail is also likely to engage in unless there is ministerial pressure to bring about a change of heart. The ability to withdraw and deposit cash is absolutely what makes the bank closures important. If Ministers will not mandate banks and post offices to maintain existing numbers of bank branches, it will undoubtedly become much harder for people to use cash.
I will use my remaining time to drill down into and encourage the Minister to look at one potential solution: community credit unions. Although they recognise the cost of community branches having a physical presence in their community, they have made a deliberate policy decision to go ahead and set up branches. Unless those credit unions can be helped to expand and offer a wider range of products, they too will face difficult cost pressures.
I know that the Minister is committed to bringing forward legislation to allow some expansion of credit union services, and I welcome that. It would be good to hear that the timescale for that to happen was being sped up. From what I gather, it is a set of changes that, welcome as they are, are not yet ambitious enough. I therefore gently encourage him to consider a more specific programme to encourage a whole range of commercial and public sector organisations to encourage people to join their local community credit union. Why not establish with employers, for the first time, a right to save: the right of the employee to go to the employer and say, “I want to save a small sum of money”—however small—“through a payroll deduction service”—perhaps with a credit union that the employer has sat down with and chosen—“and in that both help myself to be more financially resilient, and help my credit union and my community to grow and offer the services that are necessary”?
I congratulate the hon. Member for Pontypridd (Alex Davies-Jones) on bringing forward this debate.
Of course, most of us still want access to cash. For some, it is still their preferred method to manage their incomes and their outgoings; for many, it is still something they use—less frequently, but it is still required. I read with interest this morning on the BBC that:
“People are taking out more money when they visit ATMs, with the average amount climbing more than £10 to just under £80 in the last two years.”
My immediate thought was, “Cash is making a comeback,” but the next line said:
“But they’re using cash machines 40% less than before and withdrawing £44 a month less.”
I thought, “Is this because there are fewer ATMs? When people find one, are they taking out more money, so that they do not run out before they find another one that is working and is free to use?” However, Nick Quin, head of financial inclusion at LINK, has said:
“Covid has turbocharged the switch to digital”.
While cash usage is down in every constituency in the country, some have seen a 20% drop, while others have seen a drop of as much of 60% over the same time. Different parts of the UK are moving at different rates. It comes as no surprise that the most deprived areas of the country are likely to be using more cash than the wealthiest. Some 5 million people still rely on cash, and as we have heard, and 1 million people do not have a bank account. The average adult withdrew £1,500 in 2020. Cash will remain an important part of life for many people for a long time to come. That is reflected in the UK Government statement that they are
“preserving the long established, traditional services like cash that are integral to people’s lives.”
However, the reality is somewhat different. Access to cash is getting harder.
In my constituency of Inverclyde, the number of free-to-use ATMs has dropped from 87 to 68 in three years. Across Scotland, there has been a 16% reduction, which is compounded by the loss of 400 bank and building society branches, a 34% reduction—which in truth leaves me none the wiser, because I do not know what we are doing as a society. Are we working towards a cashless society? Is it the UK Government’s belief that we are moving towards a cashless society? If so, what is their timescale?
I have a number of issues with a cashless society that have to be addressed. For it to work, we require technology that is robust, secure and available 24/7. Currently, it is not. Only last Saturday, mid-way through preparing a meal for friends, I realised that I was missing a key ingredient. I went to my local convenience store, and there on the front door it said, “Cash only”, with a sign on the ATM saying, “Out of order”. By good luck rather design, I had a fiver in my wallet, and my Nigella Lawson fish curry was a huge success. Cash saved my curry, but what if we had relied on entirely on cashless transactions? What if there was a serious situation, where somebody had to pay a bill to stop the electricity being cut off or needed to pay for a taxi, bus or train to get to a loved one in distress, and cash was a thing of the past and the technology had been compromised?
What I am looking for from the UK Government is a destination and a plan. I remember when we transitioned from old money to decimal. It was a perfectly natural thing for me—as a very young child—but I had to try to explain to my gran, who was used to 12 pence to shilling and 20 shillings to the pound, that, from 240 pennies in a pound, there was now going to be 100. “Where’s my other 140 pennies?” She was baffled by this. To handle these concerns, there was a UK-wide advertising campaign to explain where we were going, what it would mean and how we would get there. If people’s fears are to be allayed and those that require cash are not left behind in a two-tier system, we need to look at a hybrid system that accommodates cash and electronic transfers. To make it work we need a strategy that encompasses a network of ATMs on the high street and in convenience stores with post office services and bank counter services. We need cash without purchase and banking hubs that serve our communities.
Will the hon. Gentleman give way?
I am sorry, but I do not have time. Most importantly, the roles of each part of the system need to be clearly defined so that they complement each other, and when technology fails there must be a safety net to ensure that people can still top up their meters, purchase food and access public transport.
It is a pleasure to serve under your chairship, Mrs Miller. I congratulate my hon. Friend the Member for Pontypridd (Alex Davies-Jones) on securing this important debate.
We have heard much about how the pandemic has accelerated the trend in consumers moving away from using cash and towards digital payments, but cash is still critical for many people and local small businesses. If someone is on a low income, has a physical or mental health problem, is financially excluded, has poor digital connectivity, struggles with budgeting or lives in areas where local shops do not take cards, they will be disadvantaged by the continued reduction in access to cash.
Cash appears to have declined less in constituencies with higher deprivation, such as mine, during the pandemic. Protecting cash is an important sticking plaster. While total reliance on cash is due to wider structural issues such as a lack of digital access—whether that is due to a lack of physical devices or data or due to language—if that access continues to decline, vulnerable people will be at risk of being left further behind.
Between 2018 and 2019, the number of free-to-use ATMs fell by 13%, and the number of pay-to-use machines rose by 38%. According to LINK, in Luton South the number of free-to-use ATMs has reduced by 30% in three years from 140 to 98, with the total number of ATMs reducing by 16%. We cannot allow the creation of cash deserts where consumers cannot access cash. The Treasury’s 2019 access to cash review found that 47% of the population would find it problematic if there was no cash in society.
Finally, there is the issue of managing personal finances and the huge increase in personal debt. I have heard much about that from the Luton citizens advice bureau and from the debt advisers who work in the Salvation Army in Luton South. People who are pushed into using cards, digital or contactless find it less easy to manage their money, particularly if they are on low incomes or are vulnerable, as I have already said. They trip into increasing their personal debt. Perhaps the Minister will tell us what analysis has been done on the decrease in cash use and the increase in the preference for digital, and on the impact of the increase to £100 in contactless payments? What impact has there been on rising personal debt? I thank my hon. Friend for securing this debate.
It is a pleasure to serve under your chairship, Mrs Miller. I congratulate my hon. Friend the Member for Pontypridd (Alex Davies-Jones) on securing this important debate at a time when access to cash is becoming increasingly limited. I thank many organisations who have campaigned on the issue, including Disability Stockport, the GMB union and Cardtronics for their informative briefings. The hon. Member for Motherwell and Wishaw (Marion Fellows) tabled an early-day motion in July this year on this matter and I was pleased to add my name to it.
We are experiencing a long-term decline in cash usage in our country. While those with the right technology see many benefits, vulnerable consumers such as older adults, those on low incomes and the digitally excluded often depend on cash to help with budgeting, and they are experiencing an access-to-cash crisis. In the past three years my constituency of Stockport has seen a 24% drop in free-to-use ATMs as a result of a reduction in the fees that banks pay to ATM providers, making an increasing number of machines unviable. That has led to many of my constituents facing an acute cash problem, including those with physical impairments.
That is why the chief executive of Disability Stockport, Mr McMahon, wrote to me recently to set out how the issue has an impact on so many people. He informed me that, although disabled people readily recognise the need to introduce new ideas and embrace the benefits that modern technology may bring, they are also understandably wary as previous changes have resulted in greater exclusion from services, with many describing them as
“inaccessible or just plain impossible”.
For example, Disability Stockport cites an example from earlier this month of a couple in their 80s who asked the charity for help with downloading ID and other information just to apply to the council for their path to be altered. The charity also notes the challenge caused by the speed of change, which often happens at a pace faster than elderly or disabled people’s ability to adjust. That inevitably results in a situation whereby, when alternative options are unavailable, a large number of people end up being disenfranchised. I urge the Minister to consider all those with physical impairments or limited access before introducing any changes. In addition, considerations must be made of vulnerable individuals whose specific disability may make them more susceptible to fraud or financial abuse.
Simply put, the systems that dispense cash should be retained for as long as people require them—however small a minority they become. I urge the Government to protect access to cash and review forthcoming legislation, which is likely to focus on protecting a bare minimum level of access as opposed to maintaining standards at a level that all consumers want.
It is a pleasure to serve under your chairmanship, Mrs Miller. I congratulate my hon. Friend the Member for Pontypridd (Alex Davies-Jones) on securing today’s important debate. As we have heard, we could all be forgiven for thinking that we do not need cash any more, particularly with the onset of technology, such as online banking, contactless payments and Apple Pay. Technology is convenient in helping some people organise their budgets and pay their bills, but we must not assume that it is convenient for everyone. We should be mindful that a lack of access to cash can cause real issues—for some people, it can be detrimental to their quality of life. As we make advances in technology, it is essential that we do not leave people behind and I fear there is a real danger of doing so.
In the communities of Merthyr Tydfil and Rhymney, which I am proud to represent, access to cash is important. I am sure there are many similar geographically isolated communities and people who use services in these communities every day. These services include the corner shop, paying for doorstep milk deliveries, the window cleaner, the bakery that delivers bread door-to-door, or the local social club or pub. The list goes on, and many of these services rely solely on cash.
Over the last two years, I, along with many other Members here, have been working with LINK to identify isolated communities that did not have access to a free-to-use cash machine and as a result were unfairly paying a fee to withdraw their money. As a result of this work, at the latter end of 2019, LINK provided two additional cash machines in two isolated communities in my constituency: Bedlinog and New Tredegar. During the past two years, these two machines have distributed over £2 million to local people without charging withdrawal fees, saving local people thousands of pounds and with the majority of that money spent locally. Much of that time has been during the pandemic and that confined people to local areas, but even so this clearly demonstrates how communities rely on cash.
Access to cash is hugely important and we urgently need to focus on it given the number of banks and post offices that have closed in recent years. When the banks closed, residents were told not to worry as they would still have banking services and access to cash at post offices, but in some communities the post offices were the next to close. I had this very issue in the community of Treharris, where they have been without a post office for over two and a half years. We need a joined-up approach.
Finally, only a week ago I spoke to an elderly constituent who made the change—although she was not very happy about it—from having her state pension at the post office to having it paid into her bank account. Despite this, she still withdraws her pension amount from the bank every week as she relies heavily on the cash for her weekly budgeting, and she told me that she simply could not cope any other way. It is clear that we need action. I hope the Minister will give us reassurance and some indication of how the Government will address this issue in the forthcoming legislation.
I begin by thanking the hon. Member for Pontypridd (Alex Davies-Jones) for bringing this debate forward. I share her sincere and passionately held views on the issue; I and many other Members have participated in access to cash debates on umpteen occasions. Despite the huge consensus on what we need to do and what the problems are, I do not see much change, but we all agree that we need direct Government intervention to halt the decline of cash and to protect access to cash for our communities. I echo the words of the hon. Member for Blackpool North and Cleveleys (Paul Maynard): we need to just “get on with it”.
The access to cash Bill will be an important piece of legislation, but we need to see it. Covid has placed our cash infrastructure in an even more precarious situation. We need clear protections for the future of cash payments which, as we have heard, are so important to so many people, including those who simply do not have the option to pay by card and those who simply want to pay by cash for budgeting or other reasons. As my hon. Friend the Member for Inverclyde (Ronnie Cowan) reminded us, more than 5 million people still rely on cash, and that must not be forgotten. Cash transactions are very important for many people, and will remain so for considerable time to come. We have heard as much from every single Member who has spoken today.
Alongside that is the loss of free-to-use ATM cash withdrawals. We know that withdrawals from cash machines dropped significantly at the height of the covid pandemic. My fear, which I know is shared by Members around the Chamber, is that that will feed further closures of free cash machines across our communities. Increasingly, ATMs are charging for access to cash, and I am afraid that the situation is becoming normalised.
I just want to make this point. To help address the situation, we need to make sure that banks pay their fair share so that their customers can get free access to cash. By cutting the interchange fee, banks have saved £120 million, but the financial brunt is being borne by those who live in less affluent communities. That is a disgrace. The more affluent the area in which someone lives, the less likely that they will be required to access their own cash through an ATM. That is unjustifiable by whatever measure we care to use. It is another example of banks expecting others to pay for the so-called service that they want to provide. They do not properly renumerate post offices for taking over basic banking, which they have abandoned in so many of our communities, nor do they properly renumerate the ATM providers.
A pattern is emerging and the banks need to explain themselves. It seems to me that they are simply not fulfilling any social obligation or any duty of care either to those to whom they expect to provide a service or to those that provide that service on their behalf. If the access to cash Bill is to make any real difference, it must hold them to account for their responsibilities.
Of course, it is welcome that the Financial Conduct Authority is to oversee access to cash and provide analysis of what needs to be done where in order to support it. The issue has become more critical because banks have left gaps in our provision. As a result, our sub-postmasters need more financial support. Banks need to stop taking them for granted, given the essential role that they play in our communities, doing the job that banks are no longer interested in doing. It is worth remembering that throughout the pandemic, post offices continued to serve our communities and we relied on them then, as we do now. Many banks closed their doors during the pandemic. So much is expected of our post offices, but sub-postmasters are leaving the service because they are under so much financial pressure. Many are simply shutting up shop, as it is much more challenging to make a living now.
Sadly, post offices have been systematically run down over the years by successive Governments. I remember the 2000s, when the previous Labour Government stripped post offices of many of their functions. Then, in 2008 it was announced that 2,500 small and rural post offices would have to close, with Scotland disproportionately hit with 600 closures, six of which were in my constituency of North Ayrshire and Arran. Since then there have been so many bank closures that seven towns in my constituency—Kilbirnie, Kilwinning, West Kilbride, Stevenston, Ardrossan, Dalry and Beith—have no bank at all.
Now we have an access to cash crisis, with sub-postmasters expected to do so much of the heavy lifting without being properly paid to do so. The threats to our cash infrastructure, with the banks abandoning our towns, with sub-postmasters under intolerable financial pressure, with free access to cash being increasingly difficult to find and with many being increasingly locked out of paying by cash, mean that urgent action is needed if we are to protect our financial infrastructure and ensure that we have a society where financial inclusion matters.
The situation is critical, and the contents of the access to cash Bill will be the crossroads where the Government have a real opportunity to step in to do something to stop the decline. I think we can all agree on what needs to be done, but we need to start with the banks and their responsibility to communities and consumers. I look forward to the Minister’s telling us more today about the meaningful actions he expects the access to cash Bill to provide and when we can get sight of it. The future of our financial infrastructure depends on that Bill, so its content will determine the future of cash.
It is a pleasure to serve under your chairship, Mrs Miller. I congratulate my hon. Friend the Member for Pontypridd (Alex Davies-Jones) on securing the debate and thank all Members who have contributed. It is clear how keenly the issue is felt by so many of our constituents up and down the country.
My hon. Friends the Members for Pontypridd, for Ogmore (Chris Elmore), for Harrow West (Gareth Thomas), for Makerfield (Yvonne Fovargue), for Stockport (Navendu Mishra), for Slough (Mr Dhesi), for Merthyr Tydfil and Rhymney (Gerald Jones) and for Luton South (Rachel Hopkins) and the hon. Member for Hyndburn (Sara Britcliffe) all spoke about how important access to cash is for the most vulnerable in their communities. They also talked about how many small businesses still rely on cash, especially in areas with poor broadband. We heard from colleagues across the Chamber who represent both urban and rural constituencies, so we know that the issue affects a wide range of areas, although clearly, as we have heard, there are specific issues in rural areas.
The pandemic has brought many changes to our lives. In some cases it has sped up trends that were already occurring. It has accelerated the move away from cash to online purchasing and contactless payments. That has put pressure on the cash system and contributed to a decline in the use of cash to make payments. Withdrawals from cash machines are more than 40% lower than pre-pandemic levels. For many people, this is a shift that they are embracing as digital payments bring greater control and convenience. We in the Labour party support innovation in payments and a thriving FinTech industry. We want UK businesses to create jobs and wealth in the sector, but we do not want a drift towards a cashless society with no thought of the consequences for social inclusion or national resilience.
For the low-paid, older people and those in remote communities, the shift away from cash brings challenges. As has been mentioned, a significant range of evidence shows that many people remain reliant on cash and vulnerable to the rapid changes in this area. That has been evidenced in the debate, particularly by the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), who talked about his constituency. FCA research shows that 5 million adults use cash for most of their purchases. The Bank of England found that 1.2 million adults in the UK did not have bank accounts, and an analysis in Which? showed that one in six people have struggled with the shift towards cashless payment as a result of the pandemic. Lower-income households and those that do not have or cannot use the internet are much more likely to depend on cash.
There is evidence that during the pandemic, cash use declined less in constituencies with higher deprivation. The access to cash survey carried out a few years ago estimated that 70% of the population would still need cash in the future. Even as technology changes and advances, there is an important duty to maintain an easy-access and free-to-use cash network. We believe that is essential because we do not want to see a proportion of society cut off from full participation in society, unable to access goods and services. We also believe that it is important not to force small businesses to go cashless simply because it becomes too inconvenient and troublesome to work with cash.
There are also important resilience arguments for maintaining a cash network. The covid pandemic exposed weaknesses in our national resilience regarding personal protective equipment and ventilator capacity. We do not know what the next crisis will be. It could be a cyber-attack or some sort of technological breakdown—in those circumstances, cash would be essential. That is why it is important not to drift towards a cashless society without thinking through the consequences. Too often, we have seen banks rush to close branches without recognising the impact on the local community. At the same time, the number of free-to-use ATMs fell by 13% between 2018 and 2019, while the number of pay-to-use machines went up. Many of those pay-to-use machines are in deprived communities.
The Government promised legislation on the issue as far back as March 2020, but the consultation was not published until July 2021. We have also seen changes to allow cashback without purchase and access to cash pilots to show how banking hubs could work. The Government say they are analysing the responses to the consultation, and I look forward to their response in due course. However, I have a number of questions for the Minister on the issues raised today.
First, what do the Government actually mean by access to cash? Does the Minister accept that it must be about more than limited-hours access through local shops, and that it must include both ATMs and either branches or bank hubs, where people can transact business and deposit cash? Do the Government believe that access to cash includes face-to-face services? Labour believes that we need a comprehensive ATM and branch network, because access to cash is about not only withdrawing cash, but being able to deposit cash, for small businesses, as raised by some of my colleagues.
Secondly, do the Government believe that competition law should change to allow banks to co-operate in banking hubs, rather than leaving towns and villages with no banks at all? Thirdly, what are the Government doing to ensure that the agreement between the Post Office and banks continues, so that people can access banking services through the Post Office? Finally, on the Government consultation, when does the clock stop on what comprehensive coverage looks like? Legislation was first promised in March 2020; thousands of ATMs and hundreds of bank branches have closed since then. The Association of Convenience Stores says the clock should stop at that time. The consultation was launched in July 2021, but there have been more closures since then. Legislation will most likely be introduced next year, and there will be even more closures by then. When will the Government declare a moment to say what comprehensive coverage looks like, and that we are not going backwards from there?
I hope the Minister will be able to answer those questions shortly. However, most importantly, I hope that the Government will recognise that now is the time for action. If they delay for much longer, the most vulnerable in our society will be left behind. I think we all agree that that should not be allowed to happen.
What a pleasure it is to serve under your chairmanship, Mrs Miller. I commend the hon. Member for Pontypridd (Alex Davies-Jones) for her speech and for securing the debate. She set out many of the core issues and gave a very fair assessment of them, which was echoed by the 13 speeches from Back-Bench Members and three interventions that we have heard this afternoon.
I have been the Minister for this issue for quite a long time, and I very much feel the urgency in resolving it while I am still around. I appreciate having the opportunity to update hon. Members on the Government’s efforts to protect cash and, in particular, the recent consultation on legislation to do exactly that.
As a number of colleagues said, many people still rely on cash and the infrastructure that delivers it. It is changing rapidly, but we need to recognise that it is an imperative for everyone’s daily life. That is especially the case for more vulnerable groups, be it in Pontypridd or in my constituency of Salisbury. Just today, we have seen more bank branches close, including one in Amesbury in my constituency. My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) once again showed his encyclopedic understanding and depth of knowledge and powerfully expressed the urgency with which we must address the matter.
During the pandemic, there was evidence of access to cash being stretched. However, I am pleased that the Treasury was able to work closely with financial regulators, such as the FCA, and industry to maintain that access while protecting the safety of staff and customers. The vast majority of people were able to get hold of the cash they needed throughout the pandemic. Indeed, the share of the UK population who lost access to a source of cash within three miles during spring 2020 never exceeded 0.1%. In this conversation, I have always been very aware of the fact that—as the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), with whom I have met separately, said—we have to deal with a very wide range of constituency interests, with very urban constituencies and very sparsely populated constituencies. That guides me as I contemplate what next to bring forward from the Government’s perspective.
With the closure of many high-street bank branches, many communities are finding it hard to get essential access to physical money. A pilot post office bank hub in Cambuslang, in my constituency, provides face-to-face services for customers. Would the Minister agree that the scheme could be rolled out UK-wide?
I am very grateful to the hon. Lady for raising that point. I visited her constituency last Thursday and saw that facility first hand, and I will say a little bit about it in a moment. It was a great example of banks coming together and working with the Post Office to find a practical solution—one that many colleagues in the Chamber have raised in previous debates.
We are in a strong position to build on our success in meeting the needs of local communities across the country over the long term. Access to cash across the UK remains extensive. Over the last year, the Financial Conduct Authority and the Payment Systems Regulator have undertaken important work to map cash access points across the UK. That has shown that access remains comprehensive, even though it is evolving. As of the first quarter of this year, more than 95% of the population were within two kilometres of a free cash withdrawal point. I would say to the hon. Member for Pontypridd that, as of August 2021, Pontypridd itself had 76 ATMs, 50 of which were free to use.
However, we are in no way complacent about access to cash. I recognise that we need a range of solutions. We understand that cash remains important for millions of people across the UK. That means that we have a responsibility to protect the cash system and ensure that it is sustainable. That means two things: being innovative in the provision of cash while ensuring that we maintain sufficient coverage.
The Government have already taken decisive action in a number of ways to support the widespread availability of cashback without a purchase from shops and other businesses, including legislative changes as part of the Financial Services Act 2021. That is a significant step change, and the industry is really on board with it. We have already seen the success of cashback without a purchase as part of the community access to cash pilots, which are trialling bespoke cash access solutions across a number of areas.
The hon. Member for Harrow West (Gareth Thomas) raised the issue of the role of credit unions. On my visit to Glasgow last week, I was pleased to meet with Glasgow Credit Union and discuss some of the legislative changes required to allow them to expand the provision of services. The notion of a bespoke solution in individual communities is very much uppermost in my mind as we move forward. It was great to hear how well received those pilots have been by the local community in Cambuslang, where I visited the post office bank hub pilot and saw at first hand the impact that innovative industry solutions can have. The hub is a post office counter service, and different bank representatives come there on different days. When a customer’s bank representative is not there, other representatives can also help them.
I am delighted by the industry’s announcement that, following the Government’s changes to the law, cashback without a purchase will be rolled out to thousands of shops over the coming months. When it comes to ATMs, LINK, which, as a number of hon. Members have mentioned, runs the UK’s largest ATM network, remains committed to protecting the broad geographic spread of free-to-use ATMs, and it is held to account against that commitment by the Payment Systems Regulator. The Government also continue to fully support the post office banking framework agreement, which allows 95% of business and 99% of personal banking customers to deposit cheques, check their balance and withdraw and deposit cash at the nation’s 11,500 post office branches. The Access to Banking standard and FCA guidance force the banks to look at their mitigation responsibilities to maintain face-to-face banking services in situations where branches close.
On top of that, the Government are doing more. As several hon. Members have mentioned this afternoon, we have been developing new legislation that will enable us to protect cash over the long term. The most recent step in that process was the consultation on proposed legislation, which closed less than a month ago, on 23 September. That consultation was designed with a simple principle in mind: finding that crucial balance between supporting the use of cash and embedding flexibility as the cash landscape continues to evolve.
At the most fundamental level, that has meant setting out proposals for new laws to ensure that people need to travel only reasonable distances to pay in or take out cash. Through our actions to date and these proposals, we seek to support the continued use of cash in people’s daily lives, including supporting local businesses in continuing to accept cash. The consultation also set out proposals on what sort of organisation should be within scope of legislation to ensure that industry, especially banks, continues to play a key role in supplying cash, be it through their own branches or through funding customer transactions at ATMs or post office counters.
It is crucial, of course, that any legislation is coupled with appropriate regulatory oversight, and that has been another important aspect of the consultation. We want regulators to have appropriate powers and responsibilities, but without imposing unnecessary burdens on businesses. We believe that the FCA is best placed to play the leading role in holding firms to account on access to cash, so that the needs of consumers and businesses are met.
The Government also intend the Payment Systems Regulator and the Bank of England to maintain their existing functions regarding retail cash. As I mentioned earlier, the co-ordinated actions by the FCA, PSR and the Bank of England on cash as part of the covid-19 response have shown that co-operation between the regulators at both strategic and operational levels works well.
For all that the Government are doing to preserve access to cash, it is also worth acknowledging that the trend away from the use of cash towards cards and other digital payments has been both significant and accelerating over the past 18 months. That brings with it many opportunities, such as the potential for cheaper and more tailored payments, as set out in the Government’s recent response to the payments landscape review call for evidence, which was running in parallel.
It is important that digital connectivity is in place to help individuals and businesses to seize those opportunities, as has been mentioned by many hon. Members this afternoon. That is just one of the reasons why the Government are striving to ensure that no one is left behind in the transition to digital. To improve digital connectivity, the Government’s £5 billion Project Gigabit is helping to deliver lightning-fast, reliable broadband, including in Wales and therefore in towns such as Pontypridd.
We are working with industry to target a minimum of 85% gigabit-capable coverage by 2025, and will seek to accelerate roll-out further to get as close to 100% as possible. Action is also being taken to improve mobile connectivity in rural areas, recognising the challenges of getting to that complete coverage. The Government are providing £510 million for the shared rural network, and by 2025 that will expand 4G mobile coverage to 95% of the UK.
Out of respect for the hon. Member for Pontypridd, I looked into what is happening in Wales. The shared rural network programme is helping to reduce partial mobile phone notspots in Wales, and in the South Wales Central area, where her constituency is located, 4G coverage from all four operators will increase from 82% to 90% by the end of the programme.
Our consultation on proposed legislation closed on 23 September and the Government will set out the next steps in due course. I hope hon. Members will understand that it was only three and a half to four weeks ago, but I acknowledge the urgency that has been expressed this afternoon. I take it to heart, and I recognise the determination to get this done as quickly as possible.
I also acknowledge the recognition by my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) of the imperative for banks to come forward with proposals. The Government are always open to constructive suggestions from the banks as to what they wish to do in the meantime, but I cannot say much more at this stage. What I will say is that the Government remain absolutely determined and committed to legislate to ensure that people have access to cash over the long term. In doing so, we need to strike a balance between, on the one hand, being open to innovation and, on the other, ensuring that people are not financially excluded by losing access to cash. That is what we will do.
I sincerely thank Members for their thoughtful and constructive advice and contributions, and I can assure them that I will continue to work with Members from across the House. I do not see this as a partisan matter at all. I will continue to hear from them and to work with them to come up with an enduring solution next year and beyond.
It has been a complete pleasure to take part in today’s debate. We have had a broad range of speakers from across the House, all showing a consensual approach to the importance of preserving access to cash. As the Minister alluded to, it is indeed a rarity for debates held in this place to be so consensual, and this is not a party political issue. I hope that we can continue to capitalise on that consensus going forward.
I said at the beginning of the debate that I recognise the impact that coronavirus has had on people’s desire to carry, accept and access cash, and I really believe that we are living in changing times, where modernisation is key. Many of my comments focused on the impact of reduced cash circulation in the context of the individual, but a number of Members have rightly raised issues around the difficulties of businesses that carry cash. With bank closures on the rise, as mentioned by my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare), cashing up at the end of the day may no longer be the simple task it once was for a small business. Small, independent businesses have been hit the hardest throughout the pandemic, and we must now ensure that we prioritise them going forward.
With that in mind, I very much welcome the comments from the Minister on the urgency to resolve the problems that we have raised today. I also welcome his commitment that no one will be left behind in the digital connectivity roll-out—a promise on which I will ensure he is held to account. I hope he recognises that although good progress has been made on the access to cash Bill, it needs to be accompanied by a real-life approach to supporting people through what is inevitably a transition to a cashless society. That will need very close attention if we are to support our must vulnerable populations.
The Minister’s comments will help us to move in the right direction, and I am grateful for that. I look forward to seeing his promises enacted in future legislation put forward by the Government.
Question put and agreed to.
That this House has considered access to cash.
Yemen: Humanitarian Situation
I beg to move,
That this House has considered the humanitarian situation in Yemen.
It is a pleasure to serve under your chairpersonship, Mrs Miller. [Interruption.] Sorry, let me find my notes—I just had a little rush to change seats.
I am very grateful. I do not think that my hon. Friend knows how important this debate is to me. Having been born in Aden, and now seeing it war-torn in such a way, I am extremely concerned about what is going on there. I would like to return, at some stage, and I feel that, with the help of Martin Griffiths, the penholder, we can possibly find a road to peace. Does my hon. Friend agree?
Very much so. I will come to that in more detail further on in my speech.
As the chair of Labour Friends of Yemen and a long-time advocate for peace in the country, I am pleased to have secured this important debate. I will preface it by saying that it is impossible to detach the humanitarian crisis from the ongoing civil war in Yemen. Until there is a lasting peace in the country, it is impossible to see how the large-scale intervention required to redress the humanitarian crisis can be delivered.
I start by reminding the House of the sheer scale of the humanitarian situation in Yemen. Aid agencies line up with statistics that are so stark that it is devastating that the global community has not done more to protect innocent lives. Last month marked seven years since the start of the Yemen civil war—a conflict that has created what the UN has labelled
“The worst humanitarian crisis in the world”.
The already bleak situation in the country has been made worse over the past 20 months, as violence has escalated, torrential rains have caused flooding and we have seen a locust infestation, a fuel crisis, covid-19 and the devaluation of the rial. In its latest update, the UN Office for the Coordination of Humanitarian Affairs estimated that there are 20.7 million people in need, including 12 million in acute need. The agency has warned that, without additional resources, yet more people could fall into the acute need category.
I spoke to the hon. Lady beforehand, and I congratulate her on bringing this issue forward—it is very close to my heart as well. It has been seven years since the war in Yemen broke out and, as she said, it is the worst humanitarian crisis in the world. Just recently, 155 Houthi rebels were killed by the Saudi Arabia-led coalition, as the battle for Marib in northern Yemen intensifies due to its being rich in oil. Does the hon. Lady agree that it is finally time for the United Kingdom to step in and insist on investigating war crimes, given the recent news that the UN Human Rights Council voted against renewing the body’s mandate for investigating war crimes in Yemen? It is basically saying, “Saudi Arabia, you can do whatever you like in Yemen, and no one can touch you.” It is absolutely outrageous, is it not?
I thank the hon. Member for his intervention. He is absolutely right to say that. This has been flagged up over and over again with international communities. We did, in fact, visit the French Assembly, where other MPs from across Europe also tried to have a go at this. The time has come when action must be taken, or there will be no Yemen left, and no Yemeni people.
It is estimated that 4 million people have been displaced. Rather than showing any signs of improvement, the crisis grows grimmer with every passing month. OCHA has also estimated that the conflict and humanitarian crisis have caused an estimated 233,000 deaths. Those are mostly due not to the conflict itself but to indirect causes, such as a lack of food and a deterioration in the health service infrastructure. That does not include the country’s covid-19 deaths, which are very likely to be higher than the official statistics.
The war has created an environment that has allowed a multitude of disasters to take root. The country’s health infrastructure has been significantly damaged; half of its health facilities are no longer functioning, and those that are lack equipment as basic as masks and gloves. Many healthcare workers and teachers, who I will touch on further in a moment, have not taken a regular salary in years.
In that context, diseases such as cholera and typhoid have been allowed to run rampant: the UN has estimated that there have been more than 2.5 million cases of cholera in the country, with more than 4,000 deaths. Famine is widespread, with more than half of Yemenis not having enough to eat, and a quarter of Yemenis, including 2 million children, are suffering from malnutrition.
The problems have been made worse by natural disasters such as widespread flooding. The worst flood in a generation hit just as covid arrived in the country in spring 2020. It impacted on more than 100,000 people. Furthermore, the flooding season often brings with it the risk of a cholera outbreak. The Centre for Disaster Philanthropy stated that the outbreak that occurred during the rainy season in 2019 was the second worst outbreak in global history. It is still not officially under control.
I draw particular attention to the impact of all that on children. UNICEF stated that the country has become a “living hell for children”, with the damage to schools and hospitals severely limiting access to education and health services, robbing children of their futures. In July, UNICEF gave a stark warning that the number of children facing disruption to their education could rise to 6 million.
The report UNICEF published alongside that headline figure makes clear the devastating impact of the conflict on those children. It explains that the consequences of such a significant disruption to children’s education will be severe, now and in the future. Children are vulnerable to being forced into child labour or recruited as fighters, with more than 3,600 recruited in the past six years, and girls are forced into child marriages. Those children are being trapped in a cycle of poverty and unfulfilled potential.
Of those teachers who are able to teach, 170,000, or two thirds, are not receiving a regular salary. Perhaps most devastating of all, since March 2015 there have been 231 attacks on schools in Yemen, killing innocent children and reducing schools to piles of rubble. That brings into question the shameful logic of the member states of the UN Human Rights Council earlier this month—I will touch on that further in a moment.
The rights of children to learn must be a top priority. Education is the most powerful tool to combat inequality, poverty and deprivation. The Government must reaffirm their commitment to that and, at the most senior levels, push to end attacks on schools, ensure salaries for teachers and allow international support for long-term education programmes.
I want to touch on the decision made just last week by the UN Human Rights Council. I welcome the UK’s decision to back the Dutch motion to renew the independent investigators’ mandate for another two years to monitor atrocities in the conflict. Unfortunately, the motion was defeated, due to the opposition of a bloc led by Russia. Without that oversight, a real concern is that bombings of schools and civilian sites will increase. The decision has been criticised by humanitarian charities around the world, including Save the Children, which called it a “devastating blow” for the people of Yemen. The Minister will be as disappointed as I am. I strongly encourage him to ensure that the Government make their concerns known in the strongest possible terms.
My hon. Friend is making an excellent speech. Does she agree that an environmental and humanitarian disaster is also about to happen because of the abandoned oil tanker that fell into Houthi hands? If not addressed by the UN Security Council, it could cause devastation across the whole region, plunging yet more people into starvation and famine, and having other impacts. A year ago, I wrote to the Minister asking him take the lead. I hope that he will do so—he has not yet—and that he will take the lead on this as penholders with the UN Security Council.
I thank my hon. Friend for making that good point. I, too, made representations to the Minister when we learnt that news in the west. We are all very worried about the impact on the entire region should the tanker be allowed to decay and presumably become a massive danger to the populations in that area.
Given the wide-ranging impact of this humanitarian crisis, it is frankly unfathomable that the UK has cut its aid to Yemen. It flies in the face of the ever increasing challenges that face an ever increasing number of Yemenis. Cutting this vital lifeline has cost lives and will continue to do so. Will the Minister tell us whether there has been an assessment to determine the impact the cuts have had and will continue to have on the ongoing suffering in Yemen?
The Minister has said that the aid funding that has been announced will be a floor, not a ceiling. If there is a country where the Government could make good on those words, Yemen is it. If funding remains at the level announced, there will be a staggering 59% cut from the amount spent in the 2020-21 budget. I invite the Minister to update the House on exactly how much funding will be allocated this year. Human suffering is of such a scale that the Government must do more both to push for lasting peace and to save lives in the meantime. As the UN Security Council penholder on Yemen, we have a significant role to play in bringing about peace.
Since the bombing of Yemen began, the public value of arms contracts between the UK and Saudi Arabia has totalled £6.5 billion. International aid to those in need of humanitarian relief is cut, while arms companies continue to profit from the war. Does my hon. Friend agree that the situation is intolerable and demands a threefold response? First, there has to be an immediate increase in aid. Secondly, we have to stop the arms trade with Saudi Arabia. Lastly, we need to find a peaceful, long-term resolution to bring an end to this conflict through intervention by the international community.
My hon. Friend has made nearly all my points—I am sure the Minister has heard them loud and clear and will address them in his speech.
In response to an urgent question in February, the Minister said he could not commit to a suggestion from the Chair of the Defence Committee to offer to host a UN summit to look at the political options. Has the Minister given that suggestion any further consideration?
Those of us who take an interest in Yemen often get a sense of déjà vu when listening to the Minister’s responses. We are well aware that the Government believe the only way to bring an end to the conflict is through a political settlement. However, the UN special envoy, Martin Griffiths, has said that the end of the conflict and humanitarian crisis is not in sight. If that is the case, it is a dereliction of our duty as a forward-thinking, global Britain to cut aid funding as more and more Yemeni lives and livelihoods are destroyed. I urge the Government to take a fresh look at the situation in Yemen and commit to doing whatever can possibly be done to secure a lasting peace for the people of Yemen.
It is a pleasure to serve with you in the Chair, Mrs Miller. I am grateful to the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss) for securing this important debate. The situation in Yemen is beyond despair. As the hon. Lady rightly said, it remains the world’s largest humanitarian crisis, with two thirds of Yemenis—more than 20 million people—requiring some form of humanitarian assistance.
The crisis results from a perfect storm of poverty, war and economic collapse, and has been exacerbated by the covid-19 pandemic. It is clear that any sustainable solution can only really begin when the conflict comes to an end. The hon. Lady says that it is not the first time I have said that, but it is true none the less. That is why the UK Government are working and have worked with countries in the region and the wider international community to bring about peace, as well as playing our part in directly addressing the humanitarian suffering. Today, in response to the various questions, I will give an overview of the work we have done and are doing.
I thank my hon. Friend the Member for Sheffield, Brightside and Hillsborough (Gill Furniss) for securing this debate, but like all of us, I wish we did not have to be here. Can the Minister give us more information, because unless there is a political solution, this will be going on for another seven years? It seems that there is a real unwillingness on the part of the main players to come round the table. Can he give us any hope that the UK and UN interventions will make that meeting happen, so that we can negotiate peace in the near future?
I know that the hon. Lady and other Members in the Chamber and elsewhere take a very close interest in this issue. She and I have discussed it both formally and informally. I wish that I could give her the certainty that she asks for. The sad truth of the matter is that at this point, I am not able to do so. However, we will continue to work with partners in the region, including those who are directly involved in the conflict, and indeed, when the opportunity arises, directly with representatives of the Houthis themselves. That channel has been denied to us recently, but we will nevertheless continue to work with anyone and everyone we feel can help to bring about peace in Yemen, so that the real work of rebuilding the country and its society can start in earnest.
In terms of humanitarian support, the UK Government have been one of the largest donors since the crisis began, having contributed more than £1 billion in aid. We pledged £87 million this year and have already distributed 85% of it. While I am conscious that our contribution this year is smaller than in previous years, for reasons the House is very familiar with, the importance of the timely distribution of our aid cannot be overstated. Despite financial pressures at home, we remain of the largest donors to the UN appeal.
Our funding this year will provide at least 1.6 million people with access to clean drinking water. It will support 400 clinics to offer primary healthcare and it will feed 240,000 of the most vulnerable Yemenis every month. We are working with partners to ensure that priority is given to those suffering the most from food insecurity, to marginalised communities and vulnerable displaced people, and to those living in conflict-affected areas.
Sadly yet predictably, the conflict has been particularly hard on women and girls. Reports of gender-based violence have risen significantly since the conflict began. That is totally unacceptable, and it is why we are co-hosting the international gender co-ordination group with the Netherlands later this month to boost international efforts to tackle gender-based violence. To improve the life chances of newborns and young mothers, we have funded UNICEF to provide over 2 million pregnant women and new mothers with nutrition counselling and education since 2018, and we expect to support more women with reproductive health services over the next year. Since 2018, we have helped 85,000 women receive trained medical support during childbirth, and we expect to support 50,000 more by March 2022.
I and other Ministers have made it clear that the reduction in official development assistance spending is driven by the worst economic crisis this country has faced in 300 years. Luckily— no, not luckily; thankfully—because of our world-class vaccine roll-out programme, our economic recovery seems to be working at pace. We have the fastest recovery among our G7 partners. Hopefully that will mean we are able to recover to the 0.7% level, which we are committed to returning to as soon as possible. Unfortunately, I am not able to give an accurate prediction of the future trajectory of the UK economy and, therefore, cannot give the hon. Lady a specific point in time. It remains our aim and commitment to return to 0.7% as soon as the economic conditions allow.
I thank the Minister for his attention to this subject. Could I ask a double-headed question? I am sorry, but time is obviously limited. What accountability is there to ensure the money is actually going to where it should go, and when was the last time the Minister spoke to Martin Griffiths?
To answer the second question first, I speak with Martin quite regularly. I cannot remember the precise date on which I last spoke to him, but he and I have an excellent working relationship, and we speak quite regularly.
With regard to accountability, we take the prevention of aid diversion incredibly seriously. We probably have one of the most robust donor frameworks, and we always ensure that where possible, we minimise aid diversion, because we know—particularly in areas of conflict—that diverted aid can go to reinforce the conflict, rather than to humanitarian aid. Work is ongoing in this area, as it is in all others.
I am sure the Minister is aware that Martin Griffiths is no longer the UN penholder, but he is, of course, the co-ordinator for UN humanitarian relief. Will the Minister detail whether he has had a meeting or conversation with Hans Grundberg, who is the new UN penholder?
As I say, Martin’s role has changed, but he is still an influential player. I spoke with Hans shortly after his appointment.
To further expand on the point that the right hon. Member for Walsall South made, to ensure that humanitarian spending is effective, we channel our support through organisations with a strong record of delivery and fund the independent monitoring of our own programmes. Ministers and officials co-ordinate closely with other donors, the UN and non-governmental organisations to maximise the effectiveness of the global response and improve access to, and conditions in, Yemen. For example, in August, I had discussions with David Gressly, the UN resident humanitarian co-ordinator for Yemen, and I stressed that UK aid must not be diverted from those in need. At the UN General Assembly, the Minister of State, Foreign, Commonwealth and Development Office, my right hon. Friend the Member for Cannock Chase (Amanda Milling) recently urged parties to allow humanitarian access across the country in accordance with the principles of international law.
Aid alone, however, will not solve the crisis facing Yemen and Yemenis. We are working with the US, Saudi Arabia and the United Arab Emirates through the economic quad to help support the stabilisation of Yemen’s economic crisis, as well as through the joint economic programmes of the Foreign, Commonwealth and Development Office and the United States Agency for International Development. We are providing technical support to the Central Bank of Yemen on foreign exchange and reserve management, as well as technical advice to the Yemeni Prime Minister’s executive bureau to deliver much-needed economic reform. We are also working closely with the International Monetary Fund and the World Bank to provide development finance that can help alleviate Yemen’s hard currency crisis, which is driving depreciation of the Yemeni rial in Government-held areas.
The hon. Member for Cardiff North (Anna McMorrin), my former opposite number, has mentioned the Safer oil tanker and the environmental impacts, as well as the catastrophic economic impacts, that it has created. She is right to highlight it; she is wrong to say that the UK is not doing enough. If I remember rightly, she wrote to me in September 2020, exactly two months after I raised this issue, so I can assure her that the Government and I are very alive to it. Indeed, I brought it up when I had a face-to-face meeting with a representative of the Houthis during my trip to Oman in October 2020, highlighting the importance of allowing access to that ship and for repairs or transfers to take place.
I appreciate the Minister’s answer on this issue. Can he tell me what access the UN is going to have to that ship following that conversation? As we know, four times as many tonnes of oil are on it as were on the Exxon Valdez, which would lead to a catastrophic disaster if it leaked.
I am precluded by time from going into the detail for which the hon. Member strives, but I have written extensively on that issue and can forward her links to the various statements and calls for international co-operation that I have made, including directly with the Houthis, which I would like to think have played a part in some access to that ship being allowed—but nowhere near as much as is deserved. I hope right hon. and hon. Members will forgive me, but I am conscious that we are tight on time and I want to get through a number of important points before we finish.
The conflict has been punctuated by reports of violations of human rights and international humanitarian law. The UK Government condemn all violations, including the denial of humanitarian access and the recruitment and use of child soldiers. We monitor, collate and analyse such reports and support the UN-led verification of them, as well as the production of the UN Secretary General’s reports on human rights and children affected by armed conflict.
Accountability is key. The UK regrets that the mandate of the group of eminent experts on Yemen was not recently renewed in the UN Human Rights Council. The group provided crucial reporting on human rights in Yemen. The UK Government urge all parties to respect international humanitarian and human rights law, and we are working to secure a political solution that creates the conditions for legitimate government to improve the protection of human rights.
As I said at the start of my speech, covid-19 has compounded an already dire crisis. It continues to rip through the country, with reports of overwhelmed intensive care units in both Sana’a and Aden. In the last financial year, the UK provided £30 million to mitigate the impact of covid-19 in Yemen, which helped boost the resilience of the primary healthcare system. COVAX has allocated 2.3 million vaccine doses to Yemen, thanks in significant part to the UK’s £548 million donation and ongoing support. We are discussing vaccination roll-out with the World Health Organisation and other partners and are working to ensure equitable access across the whole country.
As I said at the outset, the key to solving Yemen’s humanitarian crisis is ending the conflict and negotiating a political settlement that holds. As I said earlier, I spoke to the incoming UN special envoy Hans Grundberg in August to offer the UK Government’s continued support for his work to bring the parties to the negotiating table. We will do all that we can to support those efforts, including as the UN Security Council lead on Yemen.
Although the conflict and humanitarian crisis in Yemen do not get the media attention they deserve, the UK Government are nevertheless working doggedly to alleviate the suffering of the Yemeni people, and we are using our diplomatic and humanitarian expertise to do so. We continue to be one of the top donors to the UN-led response, but we know that the only way to end the humanitarian crisis in the long term is a peaceful settlement to the conflict. That is why we have played and will continue to play a leading role in moving the peace process forward and supporting the work of UN special envoy Hans Grundberg.
Question put and agreed to.
Carbon Capture and Storage
I beg to move,
That this House has considered carbon capture and storage.
It is an honour to serve under your chairmanship, Mrs Miller. Two decades ago, when I was environment editor of The Times, a report came across my desk of a new-fangled concept called carbon capture and storage—CCS. I phoned an environment group, whose blushes I will spare, and asked them what they thought. They took a big pause, and then said, “We don’t like it.” I asked them why they did not like it. They said, “Not sure.” A few months later I wrote another article on carbon capture and storage; I phoned the same environment group and asked what they thought. They said, “We’ve worked out why we don’t like it now.”
Carbon capture and storage, more trendily and officially now known as carbon capture, usage and storage, is often seen as a surreal, “Dr Strangelove” type of technology that mad scientists and big businesses have concocted. However, the truth is that carbon capture and storage is natural; it is what nature has been doing for 3.5 billion years. When life on Earth started, the amount of carbon dioxide in the atmosphere was about 4,000 parts per million. First bacteria, then multicellular organisms and then plants started sucking up the carbon dioxide in the atmosphere and burying it. Life sucked trillions of tonnes of CO2 out of the atmosphere and stuck it under ground as coal, as natural gas, as oil, and as carboniferous rocks such as limestone and chalk—the Grand Canyon and the white cliffs of Dover are made of rocks created by life out of the carbon in the atmosphere and then buried underground. Nature has continuously captured carbon dioxide in the atmosphere and stores it temporarily in the biosphere as plant and animal matter, and stores it permanently in the geosphere. [Interruption.]
Order. The Division bell has rung. I understand there might be up to five Divisions. If we can reconvene here as quickly as possible after the final Division, I will start the debate again when we are quorate. I urge Mr Browne to be in his seat quickly after the final Division. It will probably be about an hour.
Sitting suspended for Divisions in the House.
I will resume where I finished, if I remember rightly. I was saying that nature has continuously captured carbon dioxide in the atmosphere and stored it temporarily in the biosphere and permanently in the geosphere. The process has continued for billions of years, and the amount of atmospheric carbon dioxide fell steadily to 200 parts per million about 20,000 years ago, which was a staggering 95% drop. However, atmospheric carbon dioxide started rising again. By the start of the industrial revolution, it had crept up to 280 parts per million, but in the last century we have reversed natural carbon capture and storage at an astonishing rate as we have dug up the fossil fuels and cut down the trees and stuck the carbon within them back into the atmosphere. Atmospheric carbon dioxide is now at about 420 parts per million—a jump of about 50% in a geological blink of the eye.
The last 10,000 years—the Holocene period in which we live—has been remarkably benign from a climate point of view. Steady, moderate temperatures have allowed human civilisation to flourish, but we are now undoing that. The whole point of the net zero mission is to stop carbon dioxide levels rising further so that we can keep our benign environment.
We can and should promote natural carbon capture and storage. We should plant more trees, restore peatlands and increase the carbon-rich organic content in soil. However, there is only so much land that we can plant with trees, so that can only ever be a small part of the solution. What we are talking about today is therefore industrial carbon capture and storage.
Many people in the environment movement are worried about industrial carbon capture and storage, and some are outright opposed. As chair of the all-party parliamentary group on the environment, I think that those fears need to be taken seriously. We can all agree that we should do CCS only if it is robust and locks away carbon away permanently. Otherwise, there is literally no point. The overriding fear is that CCS will create a moral hazard that means we will give up on other ways to get to net zero, but the UK and other Governments are totally committed to getting to net zero by the middle of the century and there is no scenario in which CCS can get us to net zero on its own. Whatever we do with CCS, we must increase renewable energy production, move to electric vehicles and phase out coal power and gas boilers. That is already happening, as we have seen with the announcements this week.
What CCS can do is enable us to transition to net zero more quickly and at far lower economic cost. Do not just take my word for it: the UN’s Intergovernmental Panel on Climate Change and the UK’s Climate Change Committee both see carbon capture and storage as essential for reaching net zero. The CCC’s sixth climate budget declared that CCS was a necessity, not an option, and that the UK needs to capture between 75 million and 180 million tonnes of carbon dioxide a year by 2050, starting off with 22 million tonnes by early 2030, which is just nine years away.
CCS is currently the only technology we know of that can significantly decarbonise industries such as steel, cement, glass and chemicals. Unless we go back to the middle ages, we will still need those industries, and only CCS can ensure that we get to net zero without forcing those industries overseas, which would just export our pollution and lose us jobs. CCS can help produce low-carbon hydrogen that can power carbon-neutral boats, trucks and trains, and other industrial processes. CCS can also cut the cost of getting to net zero, which is an issue of rising political concern. The International Energy Agency has estimated that the cost of tackling climate change will be 70% higher without CCS.
There are various offshoots of CCS. The normal CCS will not reduce the amount of carbon dioxide in the atmosphere; it will just dramatically slow down the increase. But there are technologies that will reduce the level of carbon dioxide in the atmosphere: greenhouse gas removal. Biomass energy with carbon capture and storage—BECCS—is one being piloted by Drax, and direct air capture is another. Greenhouse gas removal could help mop up residual emissions that are otherwise impossible to eliminate, but BECCS has become controversial in the environment movement partly because of concerns about how sustainable it is to grow the biomass. That must be addressed. There is also concern about the carbon accounting from BECCS: when we import biomass from other countries, we are taking credit for carbon captured in another country. That is a valid criticism, but it is an argument about adjusting our carbon figures rather than giving up on BECCS.
Last year, I hosted virtually the global launch of the Coalition for Negative Emissions, bringing together stakeholders from around the world who are interested in removing greenhouse gases. The potential impact is enormous, particularly if economies of scale mean that the costs of removing a tonne of carbon dioxide come down. I therefore welcome the Government’s announcement yesterday, in the net zero strategy, that they will target greenhouse gas removal of 10 million tonnes a year by 2030, and that they will amend the Climate Change Act 2008 to include engineered CO2 removals. That might be controversial among some environmental groups, but it is simply irrational and unscientific to include CO2 molecules removed from the atmosphere by a tree but not those removed by humans.
I have participated in many debates on CCS, and normally at this stage someone says that we should not support it because it is an unproven technology, but that is not true. The science is actually quite straightforward: it is stripping carbon dioxide out of the emissions from power plants and factories, liquifying it, transporting it by pipeline or boat, and then storing it. Most aspects of this are already done. For example, there are already 8,000 km of pipeline carrying CO2 around the US for industrial use.
The storage point is more complex. It needs to be stored permanently, and the preferred place to do that is in geological formations, up to 3 km below the surface of the earth. One such perfect place to do that is under the North sea, where natural gas and oil have been stored by nature safely for millions of years without leaking out. Again, this is not untried technology. The first commercial CCS site in the world was opened in 1996, some 25 years ago, at the Sleipner gas field between Norway and Scotland. Since then, it has been taking 1 million tonnes of CO2 out of emissions every year and sticking it a kilometre underground. That single CCS plant has reduced Norway’s greenhouse gas emissions by 3%, compared to what they would otherwise have been. That site is monitored closely and there has been no leakage. The Global CCS Institute, a US think-tank, now reports there are 26 operating CCS facilities worldwide in the US, China, Australia, the middle east, Canada and Europe.
However, it is true that CCS is untried and untested technology in the UK. We do not have CCS yet— we have fallen behind. That is why I welcome the announcement yesterday that the Government are pushing ahead with two new CCS clusters at HyNet North West and the east coast cluster. I look forward to hearing more from the Minister and colleagues about that.
There are lots of very powerful reasons why the UK should lead on CCS. The UK has a particular national advantage when it comes to CCS, and CCS could bring particular benefits to the UK. Our oil and gas industry means we already have the skills and infrastructure to develop CCS. As gas and oil extraction declines, CCS can take over. It is estimated that rolling out CCS will save 50,000 jobs in industries such as steel, cement, chemicals, ceramics and glass, and CCS can become a sector in its own right, creating 10,000 more jobs. The ideal locations for these jobs would be in the former industrial heartlands of north-east Scotland, Teesside, Humberside, south Wales and Merseyside. There could be no better example of levelling up.
We have the natural geological features. We have as much carbon storage capacity underground as the rest of the EU combined. Many European countries will not be able to do their own CCS, as they have neither the geology nor the industry, and this creates a huge export opportunity for the UK, capturing carbon dioxide and burying it underground on behalf of other countries. The UK is not doing any CCS yet, but we are almost uniquely positioned to be a CCS superpower.
The creation of a CCS industry is not going to happen by itself. We have companies that can develop CCS, but they have no financial incentive to do it. They are not going to invest billions of pounds only to find out there is no possibility of generating revenue. What they need is a predictable, long-term regime that makes CCS commercially viable, and that is the lesson from Sleipner in Norway. That was not built as a loss-making experiment; it was the result of a commercial decision by the Norwegian state oil company, now Equinor, to avoid paying carbon taxes by burying the carbon instead.
In the UK, we know how to set up regimes to nurture the creation of a new industry. We did it with offshore wind power. By setting up the contracts for difference regime, the Government facilitated the creation of a world-leading power industry that has worked better than almost anyone dared to dream. Costs have fallen so much that it has become competitive and wind now produces more electricity than any other source.
The good news is that this Government are committed to CCS, more than any previous Government, and I strongly commend them for it. They underlined their commitments in last year’s 10-point plan for climate change, promising to invest £1 billion a year in the technology. They reinforced that commitment yesterday with the announcement that they are moving ahead with support for the first two CCS clusters. They also raised their ambition, which was a surprise to me, saying they wanted to capture 20 million or 30 million tonnes of CO2, up from just 10 million tonnes, which was the previous announcement, bringing the amount in line with what the Committee on Climate Change says is needed.
This is all welcome news, but it would not be much of a debate if I just said that the Government are doing everything perfectly. Indeed, I have some asks, although the announcements yesterday address some of them. My first ask is simply this: please keep calm and carry on. In 2007 and 2012, the Government launched competitions for CCS, but in both cases they subsequently cancelled them. That was so damaging to confidence in the industry. Such a stop-start approach risks repeating the mistakes of nuclear. Where once we were a world leader in nuclear power, successive Government wavering over decades meant that we ended up dependent on other countries. On CCS, will the Government please have the courage of their convictions?
My second ask is that the Government support CCS in next week’s spending review. Given yesterday’s announcement, I presume that that is a foregone conclusion. The Carbon Capture and Storage Association states that its members can reach the 10-milion tonne removal target for a maximum cost of £1.2 billion a year—that target has now gone up to 20 million tonnes, so the big question is whether it can still be done for £1.2 billion. That is about one quarter of the peak annual subsidy that launched the wind power industry, so as economies of scale kick in for renewables and as subsidies decline, they can be redirected to CCS.
My third ask is that the Government produce a long-term financial structure for the industry, so that companies can invest with certainty. That is the biggest ask of the industry. The levy control framework was a huge success for offshore wind, largely because it gave companies a 10-year funding horizon, within which they knew the revenues that they could make. That gave companies the confidence to invest at scale.
Yesterday, the Government announced the industrial decarbonisation and hydrogen revenue support or IDHRS scheme. That is very welcome, but I understand that it is only for the current spending review period and that the first two CCS clusters announced yesterday will not be operational within that time. Therefore, I would welcome confirmation of how the Government will ensure that CCS clusters have sustainable revenue once they are operational. If the CCS funding is subject to three-year spending review horizons, rather than a 10-year horizon, businesses will be reluctant to invest in the sector as much as they otherwise would. The Government should give CCS the same long-term certainty that they previously gave wind power.
My fourth ask is that the Government should set out a long-term vision for the development of CCS—we had a taste of that yesterday—for it to become a fully competitive, financially sustainable sector. That is a vision that would go above and beyond the clusters it would initially fund. To reap the full benefits of CCS, practice needs to be embedded across industry and the country. The Government need to establish a fully functioning market for carbon in the UK now that we have left the European emissions trading scheme.
My fifth ask is about the need for independent monitoring of the CCS clusters that go ahead. Environmental groups will rightly be looking like hawks for signs of any leakage of CO2 out of the ground, or for game-playing by the industry. CCS companies cannot be allowed to mark their own homework. We also need clarity on the Track-2 process as soon as possible, to keep up momentum in the industry. I also urge the Government to look at the 1 GW hydrogen target as a minimum, because industry feels that it could do far more than that, which would be welcome.
Finally, I have a request to make of environmental groups. We all agree that tackling climate change is the most important challenge we face. Yes, they must hold Government and industry to account, but for all our sakes they should please not start campaigning against CCS itself. Let the debate be driven by science, not other motives. Rather, they should work with the Government and industry to ensure that CCS plays the vital role in getting to net zero that the IPCC and CCC expect of it.
The Government are committed to supporting CCS. They must now ensure that the UK is no longer left behind, but can reap all the environmental and economic benefits of becoming a CCS superpower. We did it with wind power and we can do it with CCS. We can deliver another great green success.
It is a pleasure to serve under your chairmanship, Mrs Miller. I congratulate the hon. Member for South Cambridgeshire (Anthony Browne) on securing this extremely important debate. I was trying to find something to disagree with him on, and I struggled to do so.
I am absolutely delighted, with my Teesside and Humber colleagues, that we will be at the forefront of Britain’s carbon capture, utilisation and storage plans as part of the east coast cluster. I have long made the case that Teesside should be the home of the first cluster, because it offers the best opportunity to decarbonise industry of anywhere in the UK. With the east coast cluster, as everybody now knows, almost 50% of the carbon emissions in the UK could be removed.
I set up the all-party parliamentary group on carbon capture, utilisation and storage about seven years ago, when it was not exactly fashionable to talk about it. We wanted to ensure that the Government recognised the importance of CCUS in achieving net zero. To her credit, the former Energy Minister Claire Perry got on board, but she was badly let down by her Government and the then Chancellor, George Osborne, who at the stroke of a pen the night before Budget day set the industry back several years. Had he not stripped away £1 billion pounds of funding that dark day, we would already have a maturing carbon capture and storage industry and a much cleaner environment.
However, we are where we are, and we need to get on with the job. The east coast cluster will make huge inroads in cutting emissions, and I am extremely pleased about the economic possibilities that the cluster presents for our area. We cannot afford for the Government to let us down again; we must ensure that this time we get the project over the line. There is simply no time left. Industries are already struggling and if further action is not taken soon, they will be unable to continue and we will fail to meet our environmental targets.
Earlier today I attended an energy-intensive industries roundtable on energy prices and listened to Debbie Baker from CF Fertilisers—the company in my constituency that found itself at the centre of the recent carbon dioxide crisis. It has huge energy costs, huge gas transportation costs and huge carbon costs as well. It desperately needs the Government to take action in those areas. I hope that the Minister will recognise that it will take a wee while before we get the CCUS infrastructure in place, so it is critical that other action is taken in the shorter term to ensure that we do not lose companies such as CF Fertilisers and those in other energy-intensive industries in my area and across the country.
The hon. Member for South Cambridgeshire talked about keeping calm and carrying on, and that is critical. He covered the issue of spending and the need for the right funding regime, and I agree with him on that. I hope that the Minister will take some time to outline how the funding mechanism will work to give us that clarity. I am pleased with what the Government are doing. I will not get many pats on the back from some colleagues for saying that, but I am pleased because it will make a difference for Teesside. I hope that the Government will ensure they deliver on that this time.
It is a pleasure to serve under your chairmanship, Mrs Miller. I congratulate my hon. Friend the Member for South Cambridgeshire (Anthony Browne) on securing and leading this important debate, shining a spotlight on the exciting prospects posed by carbon capture. This new technology will play a vital role in tackling climate change and reaching our net zero target by 2050.
The Government have already invested heavily in ensuring that carbon capture is used across the country. That is abundantly clear in Tees Valley, and I am grateful to the hon. Member for Stockton North (Alex Cunningham) for welcoming the Government’s steps there. Only yesterday, it was announced that the east coast cluster has been selected by Ministers to develop carbon capture facilities. I was delighted to learn that Net Zero Teesside, which will be based at Teesworks, will receive a share of the £1 billion carbon capture and storage infrastructure fund. That will enable the creation of the new common infrastructure needed to transport CO2 from industrial plants across Teesside to secure offshore storage in the southern North sea.
Championed by our phenomenal local mayor, Ben Houchen, and spearheaded by local industry, the carbon capture cluster will remove 50% of the UK’s industrial cluster CO2 emissions and support our national energy transition to achieve our net zero target. The project will capture 10 million tonnes of carbon—the equivalent of that produced by 3 million homes, while creating 25,000 skilled jobs by 2050 in a variety of sectors from construction to low-carbon technology. It is essential that the Government continue to invest in exciting technology to achieve their 2050 net zero target, and I welcome the steps already being taken in Teesside.
The support of the Government is immense and I am grateful for it. However, we cannot ignore the vital role that the private sector will play in assisting our energy transition. In Darlington, we have the excellent Cummins engine manufacturer, which will continue to build on Darlington’s proud engineering history as it develops a hydrogen engine. With £14.6 million of Government-backed funding through the Brunel project, the carbon-free engine will revolutionise our road haulage sector and stop 11 million tonnes of carbon going into the atmosphere.
I am grateful to the hon. Gentleman for giving way. My father worked for the Cummins engine company for 40-odd years. That was almost next door to the Cleveland Bridge & Engineering Company, which has now gone to the wall. Does he agree that that was a great sadness, and that the Government let the company down?
I am grateful for that intervention. Having worked extensively with the administrators, local government and the unions in respect of Cleveland Bridge, I assure the hon. Gentleman that every step that could have been taken to save that business was taken.
In conclusion, Darlington and the wider Tees Valley were there at the beginning of the first industrial revolution. Once again, we are centre stage in the clean, green revolution as we stride towards net zero, which carbon capture is central to.
Thank you very much for chairing this meeting, Mrs Miller, and huge thanks to the hon. Member for South Cambridgeshire (Anthony Browne) for securing the debate. I have to agree with my colleague, the hon. Member for Stockton North (Alex Cunningham)—the hon. Member for South Cambridgeshire made a number of excellent points. I would only disagree with one, and that is the number of jobs he said would be created as a result of carbon capture and storage. In fact, it was a drastic underestimation, given that the Scottish cluster would support an average of 15,000 jobs a year to 2050—many of which are direct jobs, with a number of indirect jobs—and that is an average. That is a significant number of jobs that would be supported by just that one project.
It was decided yesterday that the Scottish cluster will be a reserve cluster, rather than one that will be progressed in track 1. That is hugely disappointing. As the hon. Gentleman noted, successive UK Governments have previously pulled the rug out from under carbon capture and storage. What was done to us in relation to Peterhead makes this feel like another kick in the teeth, particularly when the Government have been clear that the Scottish Acorn cluster project has met all the criteria for going ahead. It is just an arbitrary decision that only two are going ahead, rather than three.
The Scottish cluster is ready to go. We can make the track 1 timetable. The Government have accepted that we meet all the criteria. I do not understand why the Government have taken this decision in the face of the Climate Change Committee’s recommendations about how much carbon capture is needed to meet our climate change obligations, or even in order to meet the Government’s own climate change obligations.
I have been working alongside Acorn and Pale Blue Dot for a significant number of years. This morning, I spoke with poor Charlie, who works at Acorn, who must be fed up of seeing my face on Zoom meetings and in person, because we have met so often over such a number of years. I have been and continue to be a champion of the Scottish cluster for many good reasons. It has the potential to capture 60% of the UK Government’s 2030 targets. It is forecast to deliver 1.3 gigawatts of low-carbon hydrogen by 2030. Under the existing memorandums of understanding, it has a diverse group of 10 CO2 customers, which meet more than 60% of the Government’s target. It will also reliably unlock 30% of the UK’s CO2 storage resource, which is absolutely huge.
I see absolutely no reason why the Government have chosen only two clusters. I am not criticising the fact that the Government are finally proceeding with CCS—I think that is great. However, it seems so arbitrary and deeply unfair that the Scottish one has been put in reserve, given that it is ready and given that we can progress it right now. I would love the Minister to answer why the Government have chosen to progress only two and, if they continue to progress only two and not move to three, how they will meet the storage obligations. How will they meet the carbon capture suggestions made by the Climate Change Committee, which the UK Government have said they will do? How will they meet those targets if they do not progress the Scottish cluster?
It is a pleasure to serve under your chairmanship, Mrs Miller. I am grateful for the opportunity to speak in this debate on carbon capture and storage, which follows the truly fantastic news that the UK’s first decarbonised industrial cluster—the east coast cluster—will be based in Teesside in the north-east. The cluster will provide the region with more than 25,000 jobs by 2050 and bring in upwards of £2 billion in investment. 9,000 jobs will be created in construction alone.
The ECC is further evidence that the UK’s transition to cleaner, greener energy will breathe new life into post-industrial towns such as Hartlepool, thereby transforming the north-east into a shining beacon of innovation and modernisation.
It is undeniable that carbon capture and storage, which has the potential to halve the cost of achieving net zero by 2050, will be crucial to ensuring that the UK meets its commitments on climate change. Furthermore, CCS is capable of producing hydrogen, which is the fuel of the future, with near zero greenhouse gas emissions. My Teesside colleagues present will know that my enthusiasm for hydrogen is one of the many reasons why I have been fighting so hard, both here in Parliament and in my constituency, for a new nuclear reactor for Hartlepool power station, beyond the current plans for decommissioning in 2024. Just as we cannot achieve net zero by 2050 without carbon capture and storage, we cannot do it without nuclear.
As a proud Brexiteer and the Member of Parliament for a constituency that voted by nearly 70% in favour of voting the European Union, it is truly wonderful to see the UK bolstering its status as a world leader in so many areas, including the transition away from fossil fuels in favour of new and exciting green technologies such as carbon capture and storage. I know that my constituents in Hartlepool stand ready to play their part in bringing about a bright British future following our departure from the EU.
It is particularly appropriate that Teesside and the wider north-east should be at the forefront of cutting-edge technologies such as carbon capture and storage. It was in the north-east that Britain’s first industrial revolution was smelted by great inventors and innovators such as George Stephenson, Robert Stevenson, William Armstrong and Joseph Swan. Just as the industriousness, enterprising spirit and ingenuity of the north-east drove economic growth and productivity in the 18th and 19th centuries, my constituents, and those of my Teesside colleagues, will do so once again by participating fully and boldly in the new green industrial revolution.
It is a pleasure to serve under your chairmanship, Mrs Miller.
It is in all our interests to stop climate chaos, and we must work together globally and nationally to find and implement adequate solutions. Carbon capture, utilisation and storage—CCUS—is the new big buzzword. As global warming is caused by emissions of carbon dioxide, a logical solution is clearly to capture the damaging gas. However, not all proposals are as sustainable in the long term as they seem. The Government have a clear favourite: to capture the CO2 that is produced by burning fossil fuels, and to store it back in the Earth’s rock. It would allow Britain to continue extracting fossil fuels, burning them and pumping the carbon dioxide back into the seabed, where it is out of sight. That would be easy and very convenient for the existing fossil fuel industry, but not so fast. At best, it would not add to the carbon dioxide in the atmosphere. The question is: why not put all the much-needed investment into renewable energy, which is really where the future lies?
I thank the hon. Lady for that intervention, because it is always the argument that certain things are too expensive. All sorts of renewable energy production projects, including the use of tidal energy, have been rejected because they are too expensive. There is only so much investment that the Government can make, which we understand. Why not put it into renewable energies, rather than putting it into projects that keep the fossil fuel industry going? The Government should make it clear that the aim has to be to keep fossil fuels in the ground. They should do that now and support the development of renewable alternatives of power. It cannot be business as usual for the fossil fuel industry.
However, there are more ambitious ideas that involve the capture of CO2 that is already in the atmosphere. It would mean that we remove some of the carbon dioxide that is sitting like an invisible film around our atmosphere. The Minister will know that such technology is called direct air capture. It, too, is not very well developed yet, but it seems to be a far more future-proofed direction to go for any Government. It is the way both to reduce carbon dioxide in the atmosphere and to produce a gas that can be used to make the replacement for fossil fuels.
One of the possibilities is to combine CO2 and carbon monoxide with green hydrogen and produce a synthetic fuel that could be used in aeroplanes. I have made that point to the aviation Minister, and I hope the Government are listening. The technology has been thought of by a number of universities, among them the University of Leeds. This synthetic fuel behaves in similar ways to traditional aircraft fuel and can even be mixed with it. It would be one solution for aviation to become net zero.
Any of these new technologies will need to overcome many hurdles and need millions in investment, but they exist and they open up the possibility of a truly circular economy that will be much more future proof. I urge the Government to look beyond short-term fixes to keep the fossil fuel industry going and to look at CCUS for negative or carbon-zero emissions as one of the great opportunities for getting to net zero.
The Government need a clear vision for the long-term future of the planet. They must be clear that fossil fuel extraction and consumption will become the past not just as late as 2050, but long before that. Carbon capture to keep the fossil fuel industry going would be the wrong decision. We need long-term, good strategic decisions from the Government.
I congratulate my hon. Friend the Member for South Cambridgeshire (Anthony Browne) on securing such an important debate.
I start by welcoming the announcements made yesterday in the net zero strategy, which set out the UK’s plan for carbon capture and storage. Like my hon. Friend the Member for Hartlepool (Jill Mortimer), I am delighted that the east coast cluster has been chosen as a track 1 cluster that will benefit from the Government’s carbon capture and storage infrastructure funds over the coming years. I also pass on my congratulations to the University of Sheffield Advanced Manufacturing Research Centre, a partner in that bid.
The UK has committed to net zero by 2050, and we have become the first major economy in the world to pass legislation to reach such a target. The Government are right that we cannot reach that target by emissions reductions alone, so carbon capture and storage is vital to reducing our net output of greenhouse gases. It is simply impossible for many of our major industries to eliminate carbon emissions with current technology and energy use.
The Humber region is one of our most important industrial areas, but it emits 12.4 megatonnes of carbon a year, or 40% of the UK’s industrial emissions. These industries are vital to our economy and our security, as well as to jobs and livelihoods. While of course the Government should support and encourage industries such as steel to reduce emissions, we must be realistic about what is achievable. That is why projects such as Zero Carbon Humber, which has the potential to absorb 50% of the industrial cluster’s carbon dioxide emissions, are so important. This is a brilliant opportunity for UK industry, and with Government investment the commercial barriers to using our geological reservoirs for carbon storage can now be overcome.
In addition, the deployment of carbon capture and storage can deliver support for tens of thousands of new jobs, as many hon. Members have said. Not only is that good news for existing industries, but it offers huge potential for new ones. One of the key requirements for reaching net zero is to reduce our reliance on petrol and diesel cars and increase the use of electric vehicles. It is good news that £1 billion has been invested in Nissan’s plant in Sunderland, which aims to produce new generation all-electric vehicles in the not-too-distant future.
However, as things stand, we do not have the capability to produce all the components of electric vehicle batteries here in the UK, making us reliant on other countries—particularly China and the US—for elements of the manufacturing process. Not only is that a supply chain risk, but it means that we are missing out on the opportunity to add an enormous amount of value here in the UK.
James Durrans & Sons, a brilliant carbon engineering business in my Penistone and Stocksbridge constituency, has a long history of cutting-edge manufacturing and success all over the world. The company has ambitions to develop a new facility for high-temperature graphitisation that would enable the UK to produce 30,000 tonnes of anode-grade synthetic graphite a year for electric car batteries. Europe’s only producer of needle coke, the starting material, is the Phillips 66 plant on the Humber, but we currently sell the coke abroad for graphitisation and reimport it for seven or eight times the value.
If James Durrans & Sons is successful—I urge the Minister to pursue Government support for this important investment—we could complete the EV battery production process here in the UK, securing our supply chain and, of course, adding value and creating jobs. However, like many high carbon-based industries, the project relies on the ability to capture and store the greenhouse gases produced.
That is why it is such good news for James Durrans & Sons and many other innovative companies that carbon capture is now a realistic prospect in the short term. As my hon. Friend the Member for South Cambridgeshire said, a science-based approach to carbon capture must be taken, so I am delighted that the Government have signalled such strong support for it. That is great news for our industries and for net zero.
It is a pleasure to serve under your chairmanship, Mrs Miller. I, too, congratulate the hon. Member for South Cambridgeshire (Anthony Browne) on securing the debate, which is timely in the light of yesterday’s announcement about which CCS clusters the UK Government will progress.
The anger and disappointment about the snubbing of the Scottish cluster will not go away any time soon. Although the Government previously stated that they would give the go-ahead only to two clusters, it should be noted that Teesside and Humber were originally two separate clusters that have now combined on the east coast. Yesterday’s decisions effectively progress three clusters, then, so why not do the same for the Scottish one as well?
The Minister tried to portray our analysis as Scotland versus the north of England, but let me be clear: we want the other clusters to progress. We just think the Scottish cluster is ideally placed to be progressed at the same time. We know, given that the Scottish cluster met the technical aspects, yesterday’s decision was a nakedly political one, targeted at the red wall constituencies in England. Given that HyNet also covers north Wales, we have a so-called UK Government who advance projects in England and Wales but who snub Scotland.
It is illogical not to progress the Scottish cluster at this stage. The shipping and infrastructure proposals for Peterhead port, for example, were intended to facilitate the importing of carbon dioxide from outside Scotland, so the Scottish cluster can actually help other areas of the UK to decarbonise. Will the Minister advise why that aspect alone did not ensure that the Scottish cluster was given priority status?
Is the Minister aware that the Scottish cluster also includes Project Cavendish, which allows for hydrogen production in the south-east of England, not far from London? That London connection should be enough to make this UK Government think again on that decision. It is obvious, looking at what the Scottish cluster will achieve, that it should be given support now. Scotland has a world-leading target of net zero by 2020 and of cutting cut emissions by 75% by 2030. That interim target is now at risk because of the UK Government’s decision.
For the avoidance of doubt, the Scottish cluster will, if progressed, do the following. It will capture 25 megatonnes of carbon dioxide by 2030. It will tackle Scotland’s biggest two carbon dioxide emitters—Ineos at Grangemouth and the Peterhead gas station. And it will facilitate the production of blue hydrogen, as part of the clear pathway to green hydrogen. The UK Government talk glibly of leading the world on hydrogen, but they are quickly falling behind. If given the go-ahead, the Scottish cluster could deliver 1.3GW of hydrogen by 2030, which is more than a quarter of the UK and Scottish Governments’ 5GW production target.
The Scottish cluster also incorporates Storegga’s direct air capture proposals—technology that the UK could lead the world on and use as an effective offsetting methodology. The Scottish cluster also unlocks—again, on its own—30% of the UK’s carbon dioxide storage resource. That statistic should be sufficient for the cluster to be a No. 1 priority. Of course, it also best placed because it utilises existing oil and gas infrastructure. It could create more than 20,000 jobs by 2030—jobs that will facilitate a just transition and utilise the expertise built up in the north-east of Scotland.
When those factors are considered, it is obvious that the UK Government should be prioritising and backing the Scottish cluster now. Can the Minister explain if the decision was made solely by the Department for Business, Energy and Industrial Strategy, and if so, why is it not proceeding as a track 1 project? Or is this like the 2015 decision, when the Treasury intervened and pulled the plug in Peterhead? Bizarrely, yesterday, the Minister kept bragging about having visited Aberdeen last week and being well received. Has he spoken to industry following yesterday’s decision, and if so, what was their feedback, and did he apologise to them for not progressing Acorn?
As we have heard, the Committee on Climate Change and the International Energy Agency both state that carbon capture, utilisation and storage is practical for achieving net zero. The Committee on Climate Change says that progress in the UK will help lead the way elsewhere. That is why multiple projects need to be progressed in the here and now. It is the only way the Government can get on track for net zero and decarbonisation in the electricity system by 2035.
On net zero, the Minister needs to listen to the calls for a ring-fenced pot of money for the contracts for difference auction round 4 for wave and tidal to allow this industry to scale up and continue leading the world. I conclude by saying that the Scottish north-east Tories should hang their heads in shame at the Scottish cluster being overlooked. The Minister should apologise. I look forward to him hopefully admitting that he will reverse the decision and progress the Scottish cluster as a priority.
I congratulate the hon. Member for South Cambridgeshire (Anthony Browne) on securing this debate and the exemplary way he put forward the case for carbon capture and storage—a case that has many other articulate exponents on both sides of the Chamber as well as him. My hon. Friend the Member for Stockton North (Alex Cunningham) particularly comes to mind. He has championed the cluster, CCS and all that goes with it over many years, and he is, I think, substantially responsible for the moves forward in CCS.
We do not need to spend much time clarifying among ourselves that the case for CCS is overwhelming. We are, after all, moving to a net-zero target. In this context “net” is a very important word. To achieve the net-zero target, we have to concentrate on not only keeping minerals and energy and such in the ground, but putting stuff back into the ground, and we have to think of methods of doing that, because there will be a carbon overhang in 2040, 2050 or whenever. The methods of doing that include growing trees and direct air capture, which has been mentioned, though that has to go in the ground as well. Other methods are CCS and bioenergy with carbon capture and storage, which involves attaching CCS to an already relatively low-carbon method of producing power, thereby making it net carbon-negative.
CCS is important across all these fields and the industry as a whole. It is not just a question of the power sector. Most heavy and energy-intensive industries will need CCS if they are to have lower-carbon processes; they have processes besides power production that produce a lot of carbon. It is important across the board. I was indeed pleased to hear in the statement yesterday that the north-east cluster and HyNet had secured strong backing for going ahead with precisely that combination of activity—with providing CCS for industry, or with providing the proper transport for CCS and then sequestration. It is important to recognise that there are a number of different components to CCS.
As the hon. Member for South Cambridgeshire said, this is not an experimental technique that we need to do a lot more work on. We know how it works. We know what we have to do and where we have to put CO2. The North sea, for example, has capacity to take 78 billion tonnes of CO2—200 years’ worth of the country’s CO2 emissions. We know where it is going. As I have said, I have seen a full-chain CCS plant in operation at Boundary Dam in Saskatchewan, Canada. It captures the emissions it transports and sequesters them. What it does with the sequestered CO2 is a matter for another debate. The system works really well and is complete. We should be aiming to get whole systems working together in those industrial clusters in the north-east and the north-west, so that everything works well for the benefit of industry, hydrogen production and low-carbon heavy industrial activities.
It is perverse that the Acorn Project has been designated as first reserve—whatever that means—in this process. I do not understand how a first reserve is meant to come in if the first two clusters do not work very well, or change their minds and decide that they do not want to do it. It is clear to me that we need to go with three, and that the Acorn Project should be one of them.
I want to emphasise that we are no longer in the chamber of discussion on CCS. We are in the chamber of action, and we need to apply that to as many things as possible, as soon as possible, in this country. In that context, I want to ask the Minister very briefly—
Very briefly indeed, Mrs Miller. What is the status of the various support measures that will be introduced for CCS? I have perused carefully the various updates on the design of the CCS infrastructure fund and the business models, but it seems to me that there is no clear line on the exact support to be offered to the different CCS sectors that I have talked about. There may be a contract for difference, for example, for heavy industry. That will need to be led by a 10-year plan, with a levy control framework or similar, but that is not in place.
Let me start by congratulating my hon. Friend the Member for South Cambridgeshire (Anthony Browne) on securing this important debate, and I thank all Members who have spoken.
We have already made huge progress in this country on decarbonising the electricity sector. In 2019, greenhouse gas emissions from electricity generation were down 13% on 2018 levels and were 72% lower than 1990 levels. Earlier this month, the plan to decarbonise the UK’s electricity system in its entirety by 2035 was confirmed by the Prime Minister and the Secretary of State, to help boost the country’s efforts to achieve its net zero ambitions.
Carbon capture, usage and storage has a key role to play in decarbonising the electricity system, but its role in supporting our ambitions to reach net zero by 2050 goes further than that. The industrial decarbonisation strategy, which we have already launched, marks the beginning of a process that will see wide deployment of key abatement technologies across industry. CCUS is, obviously, one of those key abatement technologies. It will be vital as we make this transition—something that is already acknowledged in our world-leading North sea transition deal, signed earlier this year.
The Climate Change Committee has described CCUS as a necessity, not an option, for the transition to net zero. We agree, and that is why in the Prime Minister’s 10-point plan for a green industrial revolution we set out to establish CCUS in at least two industrial sites by the mid-2020s and a further two by 2030 at the latest. CCUS is vital to transforming sectors such as steel—as was ably demonstrated by my hon. Friend the Member for Penistone and Stocksbridge (Miriam Cates)—cement, chemicals and other energy-intensive industries that lack viable alternatives to achieve decarbonisation. This summer we published the UK’s first ever hydrogen strategy, and we are moving forward quickly.
The net zero strategy, which was published yesterday, confirmed that the Government will set up a new revenue mechanism called the industrial decarbonisation and hydrogen revenue support scheme to fund industrial carbon capture and hydrogen projects, and to provide long-term certainty for private sector investment. The scheme will initially commit to awarding up to £100 million of contracts in 2023, and we will announce a funding envelope in 2022 that will enable us to award the first contracts to CCUS-enabled hydrogen. That was one of the key questions asked by my hon. Friend the Member for South Cambridgeshire. It will provide the certainty required to deploy CCUS at pace and at scale and will form part of a package of Government support, which will include the industrial decarbonisation and hydrogen revenue support fund and the £240 million net zero hydrogen fund.
To deliver our ambitions, we launched the phase 1 CCUS cluster sequencing process in May this year. Its aim was to provisionally sequence those clusters that are most suited to deployment in the mid-2020s. As we announced yesterday, following the phase 1 assessment, we have identified HyNet and the east coast cluster as track 1 clusters for the mid-2020s, with the Scottish Acorn cluster as a reserve cluster—I will explain what that means in a moment. This puts those places—Teesside, the Humber, Merseyside, north Wales and the north-east of Scotland—among the potential early super-places that will be transformed over the next decade. The track 1 clusters will be taken forward into negotiations, as the start of a process to determine their support under the Government’s CCUS programme. Those negotiations will allow us to confirm whether the clusters are affordable for Government, as well as whether they represent value for money for both the energy consumer and the taxpayer, prior to making final funding decisions.
For the Acorn Project—the Scottish cluster—we will continue our engagement to ensure that it can continue its development and planning. This means that if the Government choose to discontinue engagement with a cluster in track 1, we will engage with this reserve cluster instead. That decision was made following a transparent, objective and expert-led assessment process.
I repeat my thanks to the Minister for his commitment yesterday to meet with me later this week to discuss the evaluation criteria in more detail, particularly as they refer to the Acorn Project. As he referred to earlier, the Prime Minister said in his written statement yesterday that
“The UK Prime Minister’s 10 Point Plan established a commitment to deploy CCUS in a minimum of two industrial clusters by the mid-2020s, and four by 2030 at the latest.”
The Scottish cluster is a reserve cluster that met the eligibility criteria and, we are told, performed well against the evaluation criteria. Will my right hon. Friend the Minister confirm that that status puts the Scottish cluster in a prime position to benefit from any acceleration of the programme that might be considered?
I thank my hon. Friend for that intervention. We have been absolutely clear that the Acorn Scottish cluster is a reserve cluster, and we also have the existing commitment to have four clusters by the year 2030. Being a reserve in track 1 in no way prejudices a cluster’s position in track 2—in fact, it rather enhances it—so I will leave my hon. Friend to draw a conclusion from what I am saying without prejudicing proper process. I think that cluster is well placed.
I will deal with the points raised by the hon. Members for the Scottish National party before taking further interventions. As I say, this was a transparent process. We looked at the five criteria: deliverability, emissions reduction potential, economic benefits, cost considerations, and learning and innovation. Scoring was informed by robust, expert-led scrutiny of the cluster submissions, and the clusters selected to be sequenced as track 1 were those with the highest combined weighted score across the criteria.
Turning to the points raised during the debate, I praise my hon. Friend the Member for South Cambridgeshire, first of all for his excellent introduction. I know he likes his history and his science, and he gave us a masterclass in both. He has been combining the two from the first time he took a call on this topic while on The Times news desk. He is right about the potential for the UK to be a CCUS superpower, given the UK’s geology, geography and economy, and the interaction between those three things. I also thank him for praising this Government for being more committed than any other.
We had a collection of fantastic contributions from Teesside to South Yorkshire. My hon. Friend the Member for Darlington (Peter Gibson) praised the proposal and the role of the private sector. We heard from my hon. Friend the Member for Hartlepool (Jill Mortimer); my very first ministerial visit in this new job was to Hartlepool. We also heard from my hon. Friend the Member for Penistone and Stocksbridge, who I have already mentioned.
The hon. Member for Stockton North (Alex Cunningham) has been full of praise for the Government decision. He is right that Teesside is delighted. Other Members have referred to Ben Houchen, the Teesside Mayor, who said:
“This project would create thousands of jobs and put Teesside at the forefront of the new green industrial revolution.”
May I correct the hon. Gentleman on one thing, though? It is popular in UK politics to kick George Osborne, but I have to correct the hon. Gentleman, who said that Claire Perry’s proposal was thwarted by George Osborne. I checked back, and Claire Perry became Energy Minister on 12 June 2017, a full year after George Osborne ceased to be Chancellor of the Exchequer.
I can check back, and I can check with George, but I think the hon. Gentleman’s dates are not correct.
On the points raised by the Scottish National party Members, there was quite a bit of heat about this yesterday, and I really dislike the implication that the UK is making a political decision to favour one place in this country as compared with any other. This has been a transparent process, and we set out the criteria. They called it an arbitrary decision, and it definitely was not. We have been full of praise for the Acorn Project and we remain absolutely committed to track 2. The commitment is to two such projects by the mid-2020s and four by 2030.
Finally, the Carbon Capture and Storage Association called yesterday’s announcement “amazing news”.
I thank the Minister for his clarification on various points, particularly on my key question about the future funding envelope, which he said would be announced next year. I very much look forward to that announcement.
I am blushing slightly, because everyone sung the praises not only of my introduction but of carbon capture and storage. Almost everyone, with one slight exception, the hon. Member for Bath (Wera Hobhouse)—
Basically, there is cross-party agreement that we need to move ahead with carbon capture and storage and the Government are doing a good job on that. This is one area where the House can come together and promote this whole agenda.
Question put and agreed to.
That this House has considered carbon capture and storage.