Tuesday 18 January 2022
[Esther McVey in the Chair]
Levelling Up: East of England
Before we begin, I remind hon. Members that they are expected to wear face coverings when they are not speaking in the debate. This is in line with current Government guidance and that of the House of Commons Commission. I also remind Members that they are asked by the House to have a covid lateral flow test before coming on to the parliamentary estate. Please give one another and members of staff space when seated and when entering and leaving the room.
I beg to move,
That this House has considered the matter of levelling up in the East of England.
It is a pleasure to serve under your chairmanship, Ms McVey. I thank the Backbench Business Committee for granting this debate. I am also grateful to the secretariat and supporters of the all-party parliamentary group for the east of England, which I co-chair with the hon. Member for Cambridge (Daniel Zeichner), for the research that they carried out ahead of the debate, including their October 2021 publication, “Achieving Sustainable and Inclusive Growth: The East of England Offer”.
The east of England, traditionally known as East Anglia, comprises the easternmost counties of the United Kingdom: Norfolk, Suffolk and Cambridgeshire, and also Essex, Bedfordshire and Hertfordshire. The western and southern boundaries of the region are somewhat porous, and some of those living in, say, south Essex, parts of Hertfordshire and parts of Bedfordshire may not view themselves as being part of the east of England. That said, it is great that those three counties are so well represented in this Chamber this morning. Although at times understated, East Anglians are welcoming people. There is no hard border to the region, as the Devil’s Dyke was never completed and ceased to function well over 1,100 years ago.
Levelling up is in many respects the Government’s signature tune. The Prime Minister first spoke of the need to level up across Britain in his first speech as Prime Minister on 24 July 2019. The policy was the cornerstone of the Conservative manifesto at the 2019 general election, and we now eagerly await publication of the levelling-up White Paper, which will set out the strategy as to how levelling up will be delivered.
I congratulate the hon. Gentleman and all his colleagues on their attendance. He mentioned the Prime Minister. The week before last, the Prime Minister stated, during Prime Minister’s questions, that the UK must
“get on with our job of levelling up across the whole of the UK, making sure that every part of this United Kingdom shares in our ambition to be a science superpower”.—[Official Report, 5 January 2022; Vol. 706, c. 19.]
Does the hon. Gentleman agree that consideration must also be given to the rest of the UK? In the north of England there will be £38 per head of population, and in Northern Ireland the money is even less. The aim must be to ensure that we all benefit—I think that the Prime Minister wants us all to benefit and that the hon. Gentleman wants that as well. Does he agree?
I wholeheartedly agree. Northern Ireland and the east of England have many things in common: Northern Ireland is the most western part of the United Kingdom, and I represent the most easterly constituency in the United Kingdom. Levelling up must go round the whole United Kingdom—north and south, but also, as we are hearing today, east and west.
The White Paper is long overdue, but I recognise that the once-in-a-generation challenge of covid-19 has diverted attention and I acknowledge that my hon. Friend the Minister and my right hon. Friend the Secretary of State for Levelling Up, Housing and Communities are still relatively new in office. Although we have yet to see the detail of the Government’s levelling-up policy, there are some early signs that the east of England might be overlooked. From my perspective, the purpose of this debate is to highlight that concern and to obtain from the Minister an assurance that that will not be the case—that our region will not be ignored and the needs of local people and local businesses will be fully and properly taken into account.
It is first necessary to set the scene as to what is happening in the east of England.
May I intervene before my hon. Friend moves on to broaden out his argument? He was talking about the east of England being overlooked in levelling up. Is there not an additional concern that, in the levelling-up agenda, the east of England will be seen as an area where more houses can be built and taxes can be raised to be spent elsewhere? Those two considerations are important parallel aspects of levelling up that affect the east of England, particularly constituencies in Bedfordshire.
I thank my hon. Friend for that intervention. He is right: if more housing is to be provided, the infrastructure to go with it needs to be provided. I will comment on that. I will also address the fact that the east of England is at the moment a net contributor to the Treasury, and if we do not invest in the east, there is a risk that we will destroy the goose that lays that golden egg.
At first glance, the east of England appears relatively prosperous, even though wages in many areas lag behind the national average. In 2019, the east of England accounted for 9% of the UK’s GDP, although it had a GDP per head below that of the UK as a whole. There are significant pockets of hidden deprivation, particularly in coastal communities, such as the Waveney constituency that I represent, and in rural areas. Those are often concealed, as they lie close to more affluent places.
My hon. Friend is making a powerful point, and I fully accept that coastal communities and some rural areas suffer from deprivation. However, new towns also have some of the most deprived wards in the east of England, particularly in and around Basildon. Levelling up is about levelling up opportunity, but it is also about levelling up those people’s own environments and communities, so that they stay there rather than feel that they have to escape their local communities.
I thank my hon. Friend for that intervention. Of course, he is right: one of the challenges we face is that, if we do not invest in those communities, there will be a brain drain from the region. It is for that reason that we need to invest in those regions. In that way, we will level up, and get rid of that migration from the region.
As I have said, the east of England is one of three net contributing regions to UK plc, and it should be emphasised that investment and support in our region will not only deliver levelling up but add to national prosperity. Much of the hidden deprivation is focused in coastal areas such as Lowestoft, where traditional industries such as fishing and manufacturing have declined over the past 40 years, although there is hope that fishing can play an important role in economic recovery through the Renaissance of the East Anglian Fisheries initiative. Kirkley, in Lowestoft, is the 26th most deprived ward in the country, and 10 of Lowestoft’s neighbourhoods fall within the 10% most deprived wards nationally. A 2019 study found that more than 12,000 people in Lowestoft and the rural area immediately to its north are affected by income deprivation. Some 20% of households in Lowestoft live on absolutely or relatively low incomes, and 21% of adults in the town have health issues that affect their activity, diminishing their participation in society, limiting their job opportunities and contributing to wellbeing issues. Finally, although 68% of adults in the town are economically active, 15.7% are in receipt of universal credit. That reflects the low-skilled and temporary nature of employment opportunities currently available.
It is also important to highlight one particular opportunity and one particular challenge in the east of England. The opportunity is presented by the UK’s net zero target, with East Anglia right at the forefront of the Government’s plans. Half of the UK’s offshore wind fleet will be anchored off our coast. There is the proposed Sizewell C nuclear power station, and there is the potential to retrofit the gas infrastructure, both in the southern North sea and on land via the Bacton gas terminal. Some 30% of the UK’s low-carbon electricity will in due course come through Suffolk alone. There is potential to completely transform the economy of the whole of coastal East Anglia, where many deep pockets of deprivation are found. To make the most of the opportunity from which the whole of the UK will benefit, the Government need to provide the necessary seedcorn funding. If that is done, we are not just talking about levelling up; we can provide a global exemplar as to how decarbonisation can be delivered to benefit local people and local communities.
A particular challenge that the region’s councils face is adult social care, because the east of England has a relatively elderly population. Following the comprehensive spending review and the provisional local government funding settlement, there is a real worry that one year of funding certainty is not enough. Councils need at least three years of certainty so that they can plan effectively and deliver services efficiently. There is a need for increased long-term funding for councils to close the funding gap that, by the end of 2022-23 for the east of England councils, will be in the order of £240 million. There is concern that the adult social care funding that has been provided is not enough and might not even cover the planned capital on care costs and changes to means testing. Councils face significant financial pressures owing to the rising costs of care, workforce pressures and national insurance uplifts.
I have highlighted the challenges that Lowestoft faces, but I should point out that the Government have responded positively and are currently making a significant investment in the town. Construction of the Gull Wing bridge and the Lowestoft flood defence scheme are well under way, and Lowestoft has secured a towns deal. Work on the projects is due to start later this year.
Does my hon. Friend agree that although we have infrastructure projects such as the bridge and so forth, when we talk about the anti-car debate in some of the towns, we must remember that some of our leafier suburbs do not benefit and we need transport infrastructure to keep our economy alive?
My hon. Friend is right that transport infrastructure is vital, and I will come on to that shortly.
Further afield from Lowestoft, the region will benefit from two freeports at Felixstowe and Harwich, as well as the Thames freeport. However, while we await the detail of the Government’s levelling-up proposals, there are some early warning signs that the needs of local communities in East Anglia might be overlooked, and there is a worry that we will not be able to realise the full potential of those projects for the benefit of local people and local businesses.
With regard to funding allocated in the comprehensive spending review, the east of England received the second lowest per capita spend of any region at £92 per head. Only London received less. The UK average is £184 per person, and in Yorkshire and the Humber the provision is £359 per head. In the first round of the levelling-up fund, the east of England secured £87 million. That is £13.88 per capita compared with a national average of £23.91 and £41.72 per capita in the east midlands.
There is also concern about the prioritisation of both the levelling-up fund and the community renewal fund. As I have mentioned, Lowestoft has deep pockets of deprivation, yet it is neither a priority 1 area for the levelling-up fund, nor a priority place in the community renewal fund. It is essential that that inequity is put right ahead of the next round of the levelling-up fund and the introduction of the UK shared prosperity fund.
There is also a worry that, notwithstanding opportunities in the east of England in such sectors as low carbon, agri-tech and life sciences, the Government are actively seeking to discourage Government spending on research and development in the east of England. In the Budget Red Book, the east of England is coupled with London and the south-east, which are very different from much of the region, as an area from which Government spending on R&D will be diverted and where it will be discouraged.
No debate on the east of England would be complete without highlighting the region’s infrastructure deficiencies in traditional modes of transport—road, rail and bus—and digital connectivity. In many ways, we are a victim of our own geography, which in other respects is one of the region’s unique selling points—a relatively dispersed population with relatively small urban centres, and a network of market towns and villages interspersed with attractive countryside—which serves not only as the breadbasket of the UK but as the home to many flourishing rural businesses. If that infrastructure, both old and new, is not upgraded, I fear that the region will not realise its full economic potential and it may be difficult for it to continue to be a net contributor to the Treasury’s coffers.
I will highlight five compelling reasons why we need to upgrade the region’s connectivity. First, the east of England, with 13 ports, including two freeports and four airports—Stansted, Luton, Southend and Norwich—is the UK’s international gateway. If we do not have good road and rail networks from these access points, through and out of the region, it is not just East Anglia that suffers—there will be a negative knock-on impact for the whole UK. Half of the UK’s containerised goods are moved through the region; 70% go to the north of England and support businesses and communities right across the UK. Air freight is critical to maintaining and growing the UK’s ability to trade globally. Stansted is the only London airport with the capacity and infrastructure to support increased demand for cargo aviation over the next 10 to 15 years.
East Anglia’s road and rail network is crucial to the smooth movement of these essential supplies coming into the UK, whether by sea or by air. Poor connections lead to slow, unreliable journeys adding delay and cost, which ultimately the consumer ends up paying for. For this reason, roads such as the A12, A14, A120 and A47 urgently need to be upgraded.
Secondly, linked to this, our railways need to be improved, to accelerate the shift of freight off the roads and improve services to London, to which many of the region’s residents commute. The upgrades at Haughley junction and Ely junction are long overdue. Thirdly, improved transport infrastructure is needed to tackle those pockets of coastal deprivation to which I have referred. Many of these communities have poor transport links without dual carriageway connectivity and with low-frequency train services.
I thank the hon. Gentleman for giving way and making such an excellent contribution to this debate. I notice that on transport infrastructure, he seems to be looking at a very 20th-century model, as if the climate crisis was not happening. Will he talk a little more about the kind of rapid transit systems that he envisages would take individuals off the roads in their cars and move them on to buses and trains, freeing up more of that road network system and helping the environment and ecological systems that are in place?
I thank the hon. Member for his intervention—he is right. As far as road investment is concerned, we have to make up for work that should have been done a long time ago. Rail network improvements are vital to the future, as he has mentioned. I have mentioned two junctions at Haughley and Ely; I could be greedy, we need Trowse in his constituency and Bow to improve the access to London as well. Those need to be addressed.
I will now briefly address the digital connectivity which is so vital to the future.
Before my hon. Friend moves on to the very important issue of digital connectivity, may I highlight the fact that in the south of Essex there are some proposals to consider a tram network? There is one very important road that he missed out of his list—the A127. It is not part of the national infrastructure, but it provides a vital route out of London down to Southend, through some of the busiest areas and areas that have the greatest opportunity to deliver the levelling-up agenda. I will just put those points on his radar.
I am grateful to my hon. Friend for doing so, and I apologise if my speech is somewhat focused on the east of East Anglia. He is quite right to highlight the challenges and opportunities in the south of the region.
Finally, I will say that full-fibre connectivity for all households and businesses is vital if East Anglia is to reach its full economic potential. There are projects to deliver that connectivity in many towns across the region, including Cityfibre’s £15 million investment in the network across Lowestoft. However, there is a concern that digital deserts may emerge in some rural areas, so it is vital that the Government’s Project Gigabit programme is ramped up and is fully comprehensive.
For East Anglia to realise its full economic potential and provide local people with the opportunity to work in the exciting new emerging industries, a skills revolution is needed. The Skills and Post-16 Education Bill provides the framework to deliver that revolution, but there is a concern that the region may again be bypassed.
Sizewell C is an enormous project, which can bring great benefits to Suffolk, Waveney and further afield. It is estimated that during the 12-year construction period, £2 billion will be put into the Suffolk economy. During that period there will be three apprenticeship cycles and 1,500 apprenticeships. There is an opportunity to leave an enduring legacy of knowledge and skills, which in the long term—once Sizewell C is completely constructed and becomes operational—can make Suffolk and Waveney a compelling location in which to set up and grow a business.
Sizewell C is exactly the sort of project that requires a gear change in training, which an institute of technology would help to deliver. However, the proposal from the University of Suffolk, East Coast College, the College of West Anglia and Norwich University of the Arts has not been successful in the institute of technology competition, in which the second wave of successful bids has just been announced. In the first two waves, 21 institutes of technology have been created, which provide comprehensive coverage across the country; and yes, there is one at South Essex College at Chelmsford, but there is a vacuum in the east. I will follow this matter up with the Minister for Higher and Further Education, my right hon. Friend the Member for Chippenham (Michelle Donelan), to find out why the bid for our area was rejected, but there is alarm that the necessary investment is not being made locally to ensure that the region fully benefits from the exciting opportunities that are emerging.
I have spoken for far too long; I must allow others their say. Generally, I am excited about the future economic prospects for East Anglia, as they provide the opportunity to reverse 40 years of economic decline in coastal communities such as Waveney. However, I have concerns that these issues are not fully taken into account in the emerging levelling-up strategy. In the east of England, it is crucial that the Government recognise the challenges faced in many coastal, rural and urban communities, and that they upgrade connectivity and invest in skills. If we do not do these things, we will not eliminate those deep pockets of deprivation, there will be a negative spin-off across the UK and the region’s ability to continue to be a net contributor to UK plc will be in peril. I hope that the Minister can allay these concerns in his summing-up.
We want to get to the Front-Bench spokespeople by just before 10.45 am—that is five minutes for the Opposition spokesman and 10 minutes for the Minister. We are well supported today, with lots of people wanting to speak, so there will be a limit of four minutes per speech.
I congratulate the hon. Member for Waveney (Peter Aldous) on securing the debate. His introduction has been very thorough, and I will not go over the same points. He and I work closely on the East of England all-party parliamentary group, which I thank for its work. I also thank those who have supported us and other all-party parliamentary groups, such as the APPG for the innovation corridor. We have been trying to keep the idea of the east alive.
Some of us have been involved in regional policy for many years, and I sadly recount that I attended my 35th annual regional Labour party conference at the end of last year. I am not sure whether that is cause for celebration or concern, but we have been thinking about this issue for a long time and have discussed it in Westminster Hall before. I looked back at the previous debate on the east of England, which was in April 2016 —during the referendum period, as I recall. The discussion at that time was about establishing a three-county system with an elected Mayor. It was introduced with enthusiasm by the then Minister but it died a death a few weeks later, as the Government fell. I gently suggest that slogans come and go and things come and go, but the regional issues stay with us for a very long time.
It is sometimes said that there is no such thing as the east, although the hon. Member for Waveney bravely defined it in the correct way. It is a question of regional identity. We know it is an odd construct sometimes, but I also think that what bring the east together most of all are our television regions—I do not say that just because Andrew Sinclair is sitting in the Public Gallery. It is the excellent work that is done by journalists such as Emma Hutchinson at ITV Anglia, Andrew at “Look East” and Deborah McGurran, and particularly by people such as Stewart White. I say that again in the context of the current debate: those people bring the region together in a way that very few others have managed to do.
I am happy to do so.
On the question of the funding issues, the difficulties and the relative lack of understanding of the challenges that face our region, I agree with the statistics that the hon. Member for Waveney presented. I would also point out that if we take the London effect out of the east, we very quickly see that our region is, by UK and European standards, not nearly as prosperous as some of the initial statistics suggest. I read the House of Commons Library briefing, and one would think it is all fine. Actually, it is not all fine; it is a much more complicated picture than that, but it is not necessarily an easy question to solve. I would also look back historically and reflect that at the end of the last Labour Government we had a Minister for the East of England—I make no secret of my ambition to be the next Barbara Follett.
I have four questions to put to the Minister. As he is not a regional Minister, he may well not be in a good position to answer them, but these are important issues. East West Rail and the Cambridge-Milton Keynes-Oxford arc are absolutely crucial. Without talking too much about my constituency of Cambridge, AstraZeneca’s Discovery Centre—a life sciences cluster that generates over £7 billion turnover and employs over 20,000 people—opened in November and is absolutely key. Can the Minister confirm that the project is on track, and that there is no question of any further delays?
Secondly, Ely junction, as the hon. Member for Waveney mentioned, is absolutely critical to unlocking the freight issues. My third point is that the West Anglia main line is absolutely key to improving links to our regional airport and gateway to the world, which is Stansted.
My final point is on bus funding. There is a critical point coming in the next few weeks, when the covid funding runs out. Bus operators are having to make decisions this week as to which routes will be cut. In my city of Cambridge, that is already happening. What is going on?
In conclusion, slogans may come and go but we need a proper regional policy. Scotland and Wales have the freedoms, but England is getting a rough deal.
I thank my hon. Friend the Member for Waveney (Peter Aldous) for securing such a fantastic debate and for setting out so many of the themes that many of us will champion in our remarks.
I will start by sharing a true story. Someone made a slip of the tongue in a conversation with me last week, when they referred to the Government’s flagship programme as “levelling up the north”. That is not that funny to an MP speaking in this debate and representing a constituency such as mine—North Norfolk—in the east of England. I had to stop them and explain that it is not about levelling up just the north. Levelling up is about the entire country, but it is so often perceived as not that. It is about equality throughout the UK, which is why I am delighted that in the east we are proposing to launch our own group to represent our region for the powerhouse that it is. As we heard from my hon. Friend the Member for Waveney, the east of England is already one of the most economically successful areas in the country. It is a net contributor to the Treasury—one of only three, as he said. So you might think, why are we standing here with this plea? Because we can do so much more for a small marginal investment. The gains in the east will be felt throughout the country.
I could say plenty on many of the subjects that have been mentioned, such as transport connectivity and the like, but in the time available I shall limit my thoughts to two sectors that would need only marginal investment to unleash their power across the area and help tackle the skill and labour shortages, already mentioned, that go hand in hand in so many of our constituencies, which are often rural and coastal.
North Norfolk has the highest age demographic in the country, as I have often said during my time in the House. As such, the opportunities to invest in people, specifically in medical and social care, are second to none. We are crying out for more carers, more nurses and more dentists—the son of a dentist is allowed to get away with saying that; I share that passion with my hon. Friend the Member for Waveney.
We also need more mental health practitioners. Could there be a better region, in a country that often shares those traits, for people to train and gain those valuable skills and apply them throughout the east? We should be investing in dental training facilities, alongside the University of East Anglia’s flagship medical training facilities. Is it right that anyone who wants to progress as a nurse has to travel, on what we know are not very good connectivity routes, all the way to Ipswich to further their career? The demand is enormous in our region and we need the investment to fill those plentiful jobs.
The same goes for green jobs. We have a third of the UK gas supply coming in at Bacton, a very rural area in my constituency. That is ripe for improvement with R&D research. Why should those jobs be going to Teesside? We have the skills, entrepreneurs, talent and young people who have their lives ahead of them. Those jobs must also come to the east—not to mention that we have the highest proliferation of wind turbines off my coast as well.
We need the Government to recognise that we have the demand, the people and the skills. Invest in the east and we will give a bigger bang for our buck than any other part of the country.
It is a pleasure to serve under your chairship, Ms McVey. I congratulate the hon. Member for Waveney (Peter Aldous) on securing this vital debate. I speak very much for the west of the eastern region.
Forgive the idiom, but there are more holes in the Government’s levelling-up strategy than in a block of Swiss cheese. Rather than improving living standards and changing lives, the reality is an extension of the underfunding that existed during the decade-long Tory austerity agenda. As has already been mentioned, it has been used to pit regions and nations against each other as they vie for a cut of limited funding.
The funding available in the levelling-up fund and the towns fund restricts communities’ ability to decide for themselves how to spend money, bring in investment and jobs and revive their towns. Instead, it empowers Ministers to decide from Whitehall which projects might receive funding. The Government’s spending review also failed to resemble a genuine plan to support areas neglected during austerity. We have already heard that the eastern region received the second-lowest per capita spend of any region. The east received £92 per person, compared with the UK average of £184. How can that be considered to be levelling up our region?
It is not hyperbole to say that continued underfunding, especially in deprived areas of Luton South that have suffered huge cuts to vital local services under the coalition and Conservative Governments, will only exacerbate inequalities in our communities. The Government’s various regeneration schemes do not come close to making up for the £15 billion of Conservative cuts to local government since 2010. Local councils have seen 60p in every £1 cut, resulting in almost all discretionary and preventive services being cut.
Against that backdrop, I was very happy to support Luton Council’s bid to the levelling-up fund and was pleased that it was successful, but let us be frank: £20 million in one-off capital project funding will be limited in making up for the more than £100 million stripped from Luton Council’s overall budget since 2010. In that context, the Bute Street car park redevelopment project that secured the levelling-up funding is fewer than 100 metres from our decrepit Luton town train station. How can the Government claim that they are levelling up communities when our Luton station is not fit for purpose? Its lack of accessibility marginalises many disabled and elderly people and young families from rail travel. While the station has been allocated long-awaited access for all funding, this hardly represents levelling up; it simply makes the decrepit station usable for many by putting in lifts. The gateway to our town should reflect the 21st-century town that we are. The station needs full redevelopment. A modern, accessible train station would play a critical role in truly regenerating our town, encouraging prosperity in our community through potential new investment and job creation.
Levelling up can only be considered a success if deprived areas receive investment and targeted policy initiatives that directly improve the living standards of all communities. It must be about people, not just projects. By that measure, levelling up cannot be considered as anything more than a hollow Tory strapline. My town, Luton, and our region, the east, still suffer shameful underfunding and inequality, with no sign of the Government proposing change on the scale needed.
It is a pleasure to serve under your chairmanship, Ms McVey. I congratulate my hon. Friend the Member for Waveney (Peter Aldous) on bringing this much-needed debate. Sometimes gratitude is in slightly short supply where the Government are concerned, so I start with a thanks before I come on to my shopping list, because the town of Houghton Regis in my constituency received £19.9 million for a new community wellbeing centre hub, which I am very pleased about. It is much needed. We have a new one in Dunstable, and the local authority just committed to a new one in Leighton Buzzard, so this completes the piece. I am extremely grateful.
An enormous number of new homes are being built in my area. Around 14,000 are going up—about 8,000 north of Houghton Regis and around 6,000 to the east of Leighton Buzzard. My particular concern, which I have raised repeatedly and will go on raising until we get a solution, is the need for infrastructure to come in at the same time as the new houses are built. I see a few nods—in fact, quite a lot—around the Chamber, because I think we all agree that that should be the case. I believe other European nations sometimes manage to do this a little bit better than we do. I think we all agree that that should happen, and I think every Government have been committed to its happening, but it has not happened under previous Governments and is not quite yet happening in the way it needs to.
I will just put a few figures from August 2021 on the record relating to the number of GPs per 10,000 registered patients in my area. In the three primary care networks in south Bedfordshire it is only 4.5. In the east of England it is 5.3, and in England as a whole it is 5.9. We are starting at a disadvantage and we have these 14,000 new houses coming on top. There is a serious amount of levelling up and catching up to do to make sure that all those residents can get to a doctor when they need to. The same is true for direct patient care roles. The full-time equivalent per 10,000 registered patients in the three primary care networks in my area, south Bedfordshire, is 1.6. For the east of England it is 2.9, and for England as a whole it is 2.3. South Bedfordshire is already at the bottom of the league in terms of the number of GPs and direct patient care roles per 10,000 patients, and all these new houses are coming. We really must do better.
If there is one thing that I want my hon. Friend the Minister to take back to his Department, it is that when the levelling-up White Paper comes out, if we do not have a solution to ensure that general practice capacity is installed at the same time as the new homes come up, I, for one, will not be happy. I will keep on raising this issue until we get a solution. We can do better as a country; we are a bright, capable country, it is within our power to do it and we need to do it.
In my last 40 seconds I will raise police funding, where we also need levelling up. Sometimes, I think that the Home Office views Bedfordshire as a sort of corn-chewing county out in the sticks somewhere. However, I am afraid that we are quite busy, in policing terms. We are the fourth-highest, nationally, for county lines. When Operation Venetic came out—the deciphering of the EncroChat criminal communications system—there were 26 packages for Bedfordshire, only 11 for Hertfordshire and none for Cambridgeshire. We are a busy police county, and we are surviving, I am afraid, on one-off grants. It all goes back to damping in 2004. We must amend the national funding formula to treat Bedfordshire police fairly.
It is a privilege to serve under your chairmanship, Ms McVey. I congratulate the hon. Member for Waveney (Peter Aldous) on securing this important debate.
The East of England Local Government Association has found that the region has been disadvantaged from the outset of the Government’s levelling-up programme, and it is not receiving its fair share. Just three of the region’s seven priority 1 geographical areas will receive funding, creating a risk that deprived areas in the region will be left out and left behind. I am deeply disappointed that my constituency is one of them.
The Government are yet to explain to my constituents in Kempston why its levelling-up funding bid, which had a strong economic and social case and would have contributed towards a much-needed new health hub, was rejected, while neighbouring Central Bedfordshire received £26.7 million, despite being among the least-deprived fifth of local authorities in the country.
Actions speak louder than words. This decision makes a mockery of the Government’s hollow levelling-up agenda, and it is yet another example of the Government ignoring the real needs of our towns. As a member of the newly named Levelling Up, Housing and Communities Committee, I know just how important it is that we revitalise our high streets and towns, particularly after the pandemic.
The failure of the funding formula for towns that really need funding demonstrates the problem of having a system of bidding for funds, rather than an ongoing, fairly divided allocation of money for our towns, which would allow us to plan a steady programme of improvements. The whole bids system appears arbitrary and opaque, and I am not alone in thinking that.
In July, the Business, Energy and Industrial Strategy Committee published its report, “Post-pandemic economic growth: Levelling-up”, describing the levelling-up policy initiatives and funding announced to date as “disjointed” and
“lacking any overall coherent strategic purpose”.
If the Government had ever been serious about their levelling-up agenda, they would have presented clear priorities, a road map and timeline for delivery, and robust metrics for measuring success, with routine reporting on progress. However, I have seen no evidence that it is any more than a slogan.
It is telling that, as the Prime Minister puts the whole machinery of government into saving his own bacon, the delayed White Paper to finally tell us what levelling up might mean in practical terms is part of his Operation Red Meat policy platform. It is desperate and undignified behaviour. If the White Paper emerges in the coming weeks, I hope that it will not have been thrown together in the way that yesterday’s announcements on the licence fee and migrant crossings obviously were. However, I suspect that, by then, the Prime Minister’s levelling-up agenda will be too little, too late.
I rise to strongly support the levelling-up agenda, in particular in the east of England. I strongly support the way in which my hon. Friend the Member for Waveney (Peter Aldous) put the case. He speaks for the east of England, for East Anglia and, indeed, for the east of East Anglia. Devil’s Dyke, which he mentioned, runs right through my constituency, and is best seen in between the two racecourses in Newmarket. In that sense, my West Suffolk constituency is absolutely at the heart of the east of England.
The east of England is a net contributor to the Treasury, but its GDP per head is below average. To pick up on a point that was very well made by the hon. Member for Cambridge (Daniel Zeichner), if one takes out London from the east of England, the figures look very different; indeed, if one takes out both Cambridge and London, the figures look more different still. The hon. Gentleman was modest—he represents undoubtedly the greatest economic powerhouse in the east of England.
We have heard from other Opposition Members a critique of the concept of levelling up, but all we have had are accusations; we have not had a constructive set of proposals. The point of levelling up is that the attitude that prevailed under the last Labour Government—that we enhance opportunity by helping people to move out of their areas—is being replaced by the principle of levelling up. Levelling up is about enhancing opportunity in an area and in a community. It turns on its head the principles that underpinned the last Labour Government.
The right hon. Gentleman made a point about people wanting to stay in their towns and the places where they live. However, under the last 10 years of this Government, the levelling-up agenda has meant that many people have been forced away because they cannot afford housing, particularly in towns such as Luton. We have to be careful here. Does the right hon. Gentleman agree?
I strongly agree with the need for more housing that people can afford, hence the increase in the level of house building from the record lows that we saw in the last couple of decades.
What does levelling up mean in practice? First, it means infrastructure, on which, again, I strongly support everything that my hon. Friend the Member for Waveney said. The improvement to the A14 shows that, in the east of England, we can do it—on time and under budget. That is a magnificent improvement scheme. The A11 needs continued improvement, as do the Fiveways junction and the A1307. The Ely junction scheme has been mentioned. We need to continue the railway from Cambridge to the coast and make sure that, on the Norwich to Cambridge and Ipswich to Cambridge lines, some trains continue directly all the way through to London.
I am not an expert on the A12, but I am sure that it is a wonderful road, and I am sure that my hon. Friend thinks it needs improving.
We also need support for enterprise, such as the very successful EpiCentre, in Haverhill, which benefits from being close to Cambridge but is much cheaper than Cambridge. A brilliant company called CodiKoat, for instance, is revolutionising antimicrobial and antiviral coatings. This expansion is necessary.
Finally, in addition to all those points, will the Minister address the need for devolution? Through devolution, we can help to level up. In Suffolk, there is support from the county council, the district councils and all the MPs. That devolution should include the devolution of health, because there is no greater levelling up than in health. By combining health and social care in a devolution deal, we can improve people’s lives as well as their economic prospects. That is what levelling up is all about.
It is a pleasure to serve under your chairmanship, Ms McVey. I thank my hon. Friend—I mean the hon. Member for Waveney (Peter Aldous). [Laughter.] I have often thought that the hon. Member is on the wrong side of the House; as a centrist, he would be far better over here on the Labour Benches, where I could berate him for his lack of ideological purity. None the less, he has brought this fantastic and important debate forward. Sorry—I will get him into trouble.
I want to make a few key points and observations, some of which I can pick up from the right hon. Member for West Suffolk (Matt Hancock). One of my appeals is that, when we talk about the regeneration of the east and investing in the east, we must not base that simply on 20th century infrastructure. We must recognise that we have an opportunity in the eastern region, which has been underfunded and under-resourced.
One of the reasons we are net contributors to the Treasury is probably that it spends so little on us in real terms. One of my appeals to the Minister is that we should take that weakness and use it as an opportunity so that we can jump over the failures of the 20th century—the pollution, the carbon, the ecological destruction—and move to a 21st century, sustainable, wellbeing-based economy with mass-transit systems. There may be a need at times to invest in roads, because road infrastructure is required, but let us ensure that we are not simply doing so because that is what we have always done. There is an opportunity to think about rail and public transport, and I think that is critical for the future.
I also want to talk about how devolution is done. I will quickly read an extract from an IPPR report on levelling up, which stated:
“Crucially, the competitive nature of existing devolution deals pitches areas against one another – making them race for increasingly small and centrally controlled pots of money. This has exposed disparities in terms of institutional capacity across local authorities: not all places have a history of cooperation, or indeed the resources, especially after over a decade of austerity, to enter good bids.”
Another area we need to look at is how levelling up is done. The key rule should be subsidiarity, meaning that powers to make decisions on key local political, economic and social issues should be closest to the people affected. Some Members have discussed this already. In my city of Norwich, which is obviously the cultural capital of the east, as most people will acknowledge, we have some cases where infrastructure is being done to us. The Wensum link is deeply unpopular across much of my city because of the ecological damage it will do to vast swathes of our ecosystem.
Yes, I do. The opposition to the Wensum link is more a cry for a decent public transport system instead of building yet more roads. The evidence shows that the more roads we build, the more cars and congestion we have. This has been happening for 50 years and I see no reason why that should change. We have an opportunity to make a real difference.
My city has the second worst social mobility in the country, and our city council has been the worst hit by central Government. The key thing when we are talking about devolution and levelling up is—I take this analogy from my time in the military—mission command. Basically, that means centralised intent with decentralised execution; the Government set the “what” and the local people do the “how”. If we can apply those principles and give people a real say in how they get to those objectives, we can make devolution work. In Norwich, we know what our priorities are. They often interlink with the Government’s priorities, but let us get there in our way. Give us the resources to do that. If we are given the opportunity, we will add to this country’s economic and wellbeing output, as will the rest of our region. I hope that the Minister listens to that.
I am grateful to my hon. Friend the Member for Waveney (Peter Aldous) for calling this debate. We have limited time, so, inevitably, all the high-falutin’ arguments that I was going to express have been ditched in favour of the shopping list. I apologise in advance for that.
So what are we talking about? I think levelling up is about investment. If I were to put my finger on it, I would say that it is about increasing productivity for the future so that we get the growth in the east of England that then pays for all the good stuff that everyone in the Chamber wants for our residents.
If we want to increase productivity in the east, the key element will be connectivity in all its forms. Levelling up is not really about north versus south, as it is often portrayed; really, it is about urban versus rural. In rural areas, we are under-served by the connectivity, both physical and digital, that is increasingly important in the developing economy.
That starts with mobile phone coverage. According to a relatively recent survey, 82% of calls by mobile phone in Norfolk are connected. That means that 18% failed. That is incredibly annoying and makes it much harder to undertake business as well as everyday life. I very much welcome the shared rural network project, but the 95% coverage that was promised by, I think, about 2030 is only for coverage outside buildings. That is fine if people are in the garden, but in rural areas where we have quite substantial buildings, typically of stone or brick construction, connectivity inside buildings is much worse. I invite the Government to look at that.
Superfast broadband is a huge opportunity, particularly for rural growth. Some 80% of rural businesses tell us that the single biggest thing that the Government can provide to improve their economic prospects is superfast broadband, so let us focus on that. As I said, the first priority is mobile phone coverage, and the second is superfast broadband. I welcome Project Gigabit and I celebrate the recent milestone of 50% coverage in the UK, but we need to go further, particularly in the east.
Not all connectivity is digital; we also need physical access to markets. I disagree with the hon. Member for Norwich South (Clive Lewis) about the western link road. We have created, essentially, an orbital route around Norwich, but rather like the situation with the M25 and the Thames, we have decided not to build the bridge. It is very damaging to connectivity, particularly for the north-east of the county getting access to the physical markets in the rest of the country—
The hon. Gentleman talks about a bridge over the Thames, but this is a massive road bulldozed through an ecologically sensitive area. There were options to go over the most ecologically sensitive parts, but they were a bit more expensive and were rejected. I think that point needs to be made.
I am grateful for the hon. Gentleman’s intervention. It is also a bridge over the River Wensum, as he knows. A consultation was undertaken and, taking that into account, the best route was reached. It deals with a huge amount of rat-running and links north Norfolk to the rest of the country.
In relation to the A47, I welcome the imminent work for the Tuddenham to Easton dualling, but what about the Acle Straight? What about linking Great Yarmouth to the rest of the country? That is overdue and much needed.
On rail, regularity of services is an issue. Norwich to London takes about two hours; London to Birmingham, which is a shorter distance, takes about 80 minutes. That has a huge impact on the economic potential of our part of the country. It is the same for the Ely junction and the Haughley narrows.
We need access to markets, and that means access to staff. We lose 50% of our graduates from Norfolk. We need to change that, and one thing that we have to look at is the quality of life in our community. That includes health and dental services. We have a real paucity of dental services in the county. It would assist the situation if we had a teaching facility at UEA. I have run out of time, so I will have to conclude at this point.
It is an honour to serve under your chairmanship, Ms McVey. I would like to thank the hon. Member behind me—pantomime season is over—my hon. Friend the Member for Waveney (Peter Aldous), for securing this incredibly important debate. Yes, the A12 is incredibly important. It is the road that comes to our area—it goes all the way up through Essex—and it is probably one of the worst roads in Britain. I therefore make the plea to whoever is listening that we need that road upgraded, and soon.
We think of the east of England as having wonderful rolling countryside and an incredibly powerful economy, and it does have a powerful economy, as we have heard today. We had this report, “Achieving Sustainable and Inclusive Growth: The East of England Offer”, which was our offer to Government and made the case that some of the most deprived areas in the country are in the east of England. That is despite the fact that Essex, my county, is an economic powerhouse.
Understandably, the Treasury thinks that the east can take care of itself. It can, to a great extent, but we all have issues in our own areas. As we have heard, the east of England received the lowest per capita spend of any region—£92 per person. It is clear that the east of England is not being levelled up as many other areas of the country are. Within the east, we have coastal areas that have intense issues, so if the east is not being levelled up fairly, the coastal areas within the east are suffering even more. The “east” is a deceptive catch-all term for that rich and leafy region.
The east not homogenous. We have far from common levels of wealth. In my constituency of Clacton, Jaywick is consistently and regularly, on many indices, the most deprived ward in the country. That not something I am proud of, and it is not something any of us can be proud of. My local council, Tendring District Council, is working hard and making great strides by purchasing land and building flood-proof houses. However, this problem has been stuck in the mud for so long, and we keep missing out on funding.
I realise that we are short of time, so my plea is: treat coastal areas as the data tells us—they are, in fact, in need of funding, as are many northern towns—and do not just lump us in with the richer parts of the east. When we talk about levelling up, it is vital that we talk about levelling up sideways, as well as up and down.
It is a pleasure to serve under your chairship, Ms McVey. I thank my hon. Friend the Member for Waveney (Peter Aldous) for bringing forward this vital debate. We are very lucky in the east of England to have the oldest town in the country, which of course is Ipswich, but we also have the second oldest town, which is Colchester, so I think we are quite lucky.
We have significant pockets of deprivation in the region, which has been referred to and that includes in Ipswich, but it is that mix of deprivation and potential that means East Anglia should be right at the forefront of a levelling-up agenda. I must say it is in among the most deprived parts of the town that I have the honour of representing that I have met the best people, and some of the most honest people with the best values and the strongest communities, but they do need investment in education, tackling crime and everything else.
My hon. Friend talks about pockets of deprivation. While individual projects can help levelling up, it is actually about lifting the whole area—the whole pocket—up by improving housing and education, which will keep people there and enable the whole area to improve.
I completely agree with my hon. Friend, which is why I think we need to balance the educational provision of technical skills and apprenticeships as well as academic education.
As for some good things that are happening on levelling-up in the east of England, particularly in relation to Ipswich, we have benefited from a £25 million town deal and 11 exciting projects, many of which relate to skills, which we know is at the heart of levelling up. Also, the freeport in Felixstowe, if done in the right way, could bring forward about 10,000 new jobs, so my constituents stand to benefit almost more than anybody else.
My hon. Friend the Member for Waveney has already mentioned the fact that we were unsuccessful in the institute of technology bid, which is very disappointing. It is also worth mentioning that we were not successful in becoming a pilot for the local skills improvement plan. That was slightly disappointing because we know there is probably nothing more important than skills for levelling up.
What do we need to tackle the levelling-up issue? First, we need to look at how we fund our core public services. Of course, things like the levelling-up fund and the town deal are important, but it is simply not right that when it comes to education, particularly special educational needs provision, and police funding, Suffolk gets an incredibly raw deal, and that has been the case for decades. The east of England does badly from a lot of those funding formulas, but I argue that Suffolk does particularly badly. I was pleased to support a recent letter to the Secretary of State for Education on special educational needs provision.
The Government need to go further and extend the good things they have already done in terms of the towns deal and freeports. I think they need to get fully behind the Felixstowe and Harwich freeport, which the Government are doing and should continue to do, but they need to look at how we fund our core public services. That means bringing forward things, such as the review of the police funding formula as soon as possible, and in terms of the levelling-up fund, being imaginative about the way in which it can be spent. I would be excited about the prospect of a grassroots sports club fund, because we know that clubs and grassroots sports are incredibly important for levelling up.
In terms of infrastructure, I echo the comments made by other hon. Members about Ely North junction. It has been promised for a very long time, but it keeps being delayed, and it is amazing how many things are linked to it. There is also Haughley junction, and the “Ipswich in 60” service is vital. Small things, such as the hourly Peterborough to Ipswich train, would also make a big difference to many of my constituents in getting about the region.
I simply say this: I have never thought the Government see levelling up as purely about the north and the midlands. That has never been my view, and there is a lot of evidence that that is not the case, but that is not to say that I do not think the Government could go further. If I was going to say one thing, it would be about the way in which we fund our core public services, because for too long Suffolk has got a raw deal.
It is a pleasure to serve under your chairship, Ms McVey. I congratulate my hon. Friend the Member for Waveney (Peter Aldous) on securing this important debate. He represents the most easterly constituency in the east of England, and I probably represent the region’s most westerly constituency, so there is a nice balance.
Levelling up is about being inclusive and making sure that people really are able to achieve the best of their opportunity. It is not always about money—my apologies if that is controversial. As a Conservative, I believe it is about empowering communities to help themselves as much as it is about giving them a ladder to raise themselves up. It is not just about business, but about education, health, transport, broadband—especially in rural areas such as mine—and high streets.
My constituency of South West Hertfordshire has great transport links, north to south, to London. As someone who commutes every day, the worry that I have is about the east-to-west transport links. If I were to go to the neighbouring constituency of Hemel Hempstead or Watford, it is a bit of a nightmare from where I live, whereas getting to London or Birmingham is relatively easy.
It is a real shame that one of my more affluent villages, Belsize, has a really poor mobile telephone signal as well as really poor broadband. During the global pandemic, when people were reliant on home deliveries and on communications that they were not normally used to, that became quite profound. One of my personal tasks and ambitions is to resolve these things over my parliamentary career. Levelling up is not always about spending money; it is actually about making communities viable for private sector businesses to get more involved.
As a former furniture retailer, I remain quite concerned about the level of usage of our high streets. I would argue that we have seen businesses with a real customer focus survive and prosper during the global pandemic, but I say to residents and communities up and down the country that if they value their high streets, they need to use them. It is all well and good using high streets during the global pandemic, but if people want to retain their local butcher or grocer, they need to use them in better times as well.
Healthcare remains a really big issue in my constituency. I have Watford General Hospital down in the south, and St Albans City Hospital to the east. Although I may not have an acute hospital in my constituency, healthcare remains a big issue because of my ageing population, and I look forward to hopefully having further conversations with the Secretary of State for Health and Social Care on how we ensure that we are able to offer first-class health provision, which is not necessarily always aligned with the big white elephant that a primary acute hospital may be regarded as.
Although my constituency of South West Hertfordshire is regarded as an affluent area, there is quite a large commuter population. About 10,000 people use public transport to get to work—that is quite a dated figure, and obviously from before the pandemic—which is a significantly higher number than the average in the east of England and nationally. Making sure that local transport provision is having an impact—while not necessarily being the most expensive—will ensure that people can stay in the community and do not have to resort to moving to more urbanised areas. I would argue that that is a better outcome for the community.
Right hon. and hon. Members have spoken about development. I represent a community that is 80% green belt, which remains a big issue, and I look forward to further discussions on what levelling up means for housing numbers and population growth post pandemic.
It is a pleasure to serve with you in the Chair, Ms McVey. I sincerely thank the hon. Member for Waveney (Peter Aldous) for securing the debate, and I thank the Backbench Business Committee for granting it.
I will confess that I love fielding debates for the Opposition in this place. No other parliamentary moment offers the chance to hear the hon. Member for Waveney talk in such depth and with such thoughtfulness to make his case. I was glad to be here and learn plenty from it, as I am sure the Minister did, although I have my own reflections. It set the tone for what has been a brilliant debate. He said at the beginning that his purpose was to highlight the possibility of the east of England being ignored by the levelling-up White Paper and to seek to avoid that. I suspect he managed that with aplomb, with the support of colleagues across party. His case was very well made.
As the hon. Member said, it has been two and half years since the Prime Minister spoke of the need to level up Britain. Two and half years later we are still waiting to find out what that means. It appears we may not have to wait too much longer. I hope the Minister will give us a little sneak preview among friends, including a sense of the timing, though I suspect he might wish to keep his powder dry, as might I to an extent. I might disappoint the right hon. Member for West Suffolk (Matt Hancock) who wants a detailed response and an alternative, but the Government will have to show their hand first. After all, we have waited two and half years. The case made around regional and local authority disparities is important. As the conversations on levelling up evolve, that will become even more important.
I will reflect on contributions from colleagues. My hon. Friend the Member for Cambridge (Daniel Zeichner), chair of the all-party parliamentary group on the East of England, made an important point about the London effect. We need to have that understanding at a regional, sub-regional and local authority level about how data can be skewed. So that, in trying to ensure that communities are not left behind—not a great phrase but we know what it means—we do not create a new collection of left-behind areas.
I share a lot of the frustrations of my hon. Friends the Members for Luton South (Rachel Hopkins), for Bedford (Mohammad Yasin) and for Norwich South (Clive Lewis) around how things have been done previously. It is sad, avoidable and reductive, and does not serve an agenda of trying to move the country forward together, that we seem to be constantly pitted against each other in bidding rounds, where some must be winners and others must be losers. The funding is one off, so maybe someone wins today and loses tomorrow, or vice versa. In reality, no community that has been funded through levelling-up programmes so far that is not worse off when losses to the local authority are taken into account. That test must be passed, and it must be a comprehensive settlement that everybody has a stake in.
I will reiterate a point made by colleagues of all persuasions. The Opposition do not accept the framing of levelling up as north versus south. That was a point made by the hon. Members for North Norfolk (Duncan Baker) and for Broadland (Jerome Mayhew). I represent one of the poorest communities in the country, based in the east midlands, and I hate the assumptions that come with that. That cuts both ways and I should not make assumptions about communities that might be better off according to their top lines. I should not assume that that is a place with streets paved with gold, with no social problems, challenges or pockets of deprivation. That is not what the evidence shows.
This is an all-regions approach, and the east of England is a study in that. Taken as a whole, looking at those top lines, the region is a net contributor, with an above average GDP growth rate over the past decade, which is forecast to continue, above average employment, below average unemployment and above average house prices. That would suggest that the east of England is fine and that levelling up should happen elsewhere. As we have heard, the reality is different. There is a different experience for those in the south of the region, which makes up the London commuter belt, while much of East Anglia would not. Even within those communities, there are pockets of deprivation.
We have heard that there are many areas that suffer high levels of deprivation. Those could be coastal communities, such as Lowestoft, referred to by the hon. Member for Waveney, Great Yarmouth just up the coast, and Clacton-on-Sea, as the hon. Member for Clacton (Giles Watling) mentioned, or they could be rural areas with associated challenges, such as Thetford, March and Wisbech, or parts of cities such as Peterborough and Norwich.
When the levelling-up White Paper is finally published, that nuanced understanding of regional variation will be one of the tests by which colleagues will judge it. However, the key point, which my hon. Friend the Member for Norwich South made in a couple of different contexts, is not just adopting the same approaches, because they will get the same outcomes. He made an important point about sustainability, saying that levelling up is not just about helping different communities to catch up on the same development model, because we know the impact that will have. That is profoundly true globally, and the question of how we support global development so that we do not just repeat the old models is a thorny question that we must address. However, it is true at home, too.
The East of England Local Government Association’s analysis of the autumn Budget was interesting, showing once again that 40% less—considerably less—was being made available for the east of England than for other areas. Of course, that was repeated in round one of the levelling-up fund bid, with just three of the seven of the region’s priority 1 projects having success. The EELGA is worried and says there is a clear risk that other deprived areas in the east of England will be left out and left behind, presumably on account of the wider region’s overall performance. Again, that creates a profound challenge, which applies across the region.
Transport is another key theme. I dare say that the Minister and I will participate in a lot of debates about different regions and different communities, which I very much look forward to, and transport will be a constant theme. It sometimes felt necessary to have an A to Z to follow things in this debate, but the sheer volume of A roads referred to was illustrative, telling us an awful lot about the natural geography and the infrastructure of the east of England, and about the challenges that come with that sort of road. The focus over the last year has been more on city region settlements, particularly around rail, but that focus alone clearly will not pass the overall test, because otherwise this becomes a long-running, self-perpetuating cycle.
The publication of the White Paper really ought to be the moment that that cycle is broken, because many rural and coastal communities—across the country, but particularly in the east of England—have faced significant challenges for a long time. As the hon. Member for Waveney said, over the past 40 years good jobs have left the region and not always been replaced, forcing young people to leave the area and seek opportunities elsewhere, taking their spending power away with them, which causes high streets to struggle, local institutions to decay and transport networks to close down. And so it goes, and so it goes. More of that decline just begets even more and more, until we break the cycle.
I will conclude there, because I know that colleagues will be keen that the long list of issues that have been put to the Minister are all comprehensively addressed, with a commitment today to addressing them. However, I will just say finally that in preparing for this debate, I thought that we were perhaps a couple of weeks—three or four weeks—too early, and timing is everything in politics, because we do not yet know what the Government will say on levelling up, I suspect that they may not quite know themselves yet what they will say. Actually, though, the timing for this debate was perfect, because the east of England offers an illustrative case of what has happened in the past, which we do not want to see repeated, and it is better for the Minister to hear that before the Government make their statement than it would be afterwards. I look forward to hearing his response to the debate.
It is a pleasure to serve under your chairmanship, Ms McVey.
I start by thanking my hon. Friend the Member for Waveney (Peter Aldous) for securing this important debate. He is a tireless—indeed, relentless—advocate, not just for his own constituency, but for the whole of the east of England.
I will address a huge bugbear of mine, which is the idea in the media that levelling up is about north and south. Recently, I was in Norwich—with the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Norwich North (Chloe Smith), and the hon. Member for Norwich South (Clive Lewis)—to visit an amazing new digital facility, which was part-funded by the towns fund. The first thing I said then was that the east of England is absolutely central to our vision for levelling up this country; indeed, the levelling-up agenda is for the whole of the UK. There was an intervention earlier by the hon. Member for Strangford (Jim Shannon), who is obviously part of the “greater” east of England, showing the cultural reach of the area. [Laughter.] The levelling-up agenda is an agenda for the whole UK, and the east of England is absolutely central to it, as I say.
Let me take on, right at the start of my speech, a question that my hon. Friend the Member for Waveney asked: the east of England will absolutely not be overlooked by the levelling-up agenda. Let me also take on, right at the start of my contribution, some of the other questions that were put. My hon. Friends the Members for South West Bedfordshire (Andrew Selous) and for South West Hertfordshire (Mr Mohindra) both talked about the challenges of growth in their areas, particularly in housing. We are absolutely conscious of those challenges in the fast-growing parts of the east of England and the need for infrastructure always to match that new housing development. That is a passion of mine and of my hon. Friends.
I will also take on the point made by my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) by saying that we absolutely do not regard the situation in the east of England as “job done”; there is a lot more to do. I say that because although the east of England has an economy with many strengths, it also has massive untapped potential that we must unleash, because the Government’s belief is that a more balanced economy is not just a fairer one but one that is stronger overall. If parts of the economy are overheating with sky-high house prices and people being unable to get on a train, and at the same time we have parts of the country crying out for investment, we can see the potential for a win-win that can benefit the country as a whole and make the economy stronger overall.
On the point that a lot of Members made about total public spending, it is completely fair for Opposition Members to talk about the difficult decisions we had to make in the coalition years. No one denies that they were difficult decisions, but it is also fair to flag that things have changed since then, particularly since 2019. From 2016-17 to 2020-21, total public spending in the east of England rose from £49.7 billion to £78.25 billion—a 57% increase. There is public funding, but we also need a different plan.
Levelling up is about four different things: growing the private sector and boosting living standards, particularly where they are lower; spreading opportunity and improving public services, particularly where they are lacking; restoring local pride—that je ne sais quoi—in important local institutions that mean so much to us all; and empowering local leaders and communities. There are no good examples around the world of places that have turned themselves round and taken it to the next level without strong local leadership, which is something that we are bringing to the east of England.
Levelling up is an idea that cannot be distilled into just one thing—there is no single magic bullet—but it fundamentally addresses the problem that, for too many people, geography has turned out to be destiny; where they are born and happen to live determines, and perhaps limits, their life chances.
At the moment the east of England finds itself on the wrong side of two averages, with qualification levels below the national average, as my hon. Friend the Member for Ipswich (Tom Hunt) pointed out, and the proportion of people aged 16 to 24 not in employment, education or training above the average. We have to address that. As everyone has said, addressing things at a regional level does not give us a sense of the huge differences within a region. As my hon. Friend the Member for Clacton (Giles Watling) pointed out, Jaywick in Essex is the most deprived place in the entire country. Other places, such as Great Yarmouth and Lowestoft, have great strengths, but at the same time there are significant challenges that we have to address. We absolutely must take that granular view.
As my hon. Friend the Member for Waveney pointed out, the east of England is one of only three regions in the whole country that makes a net contribution to the Exchequer, and that is a testament to the host of amazing companies and institutions that have built the east of England’s reputation as a powerhouse in fields such as life sciences, clean energy, agrifood and so on.
Over the last 18 months of incredible turbulence, we have done everything that we can to preserve the great strengths that we have already in the east of England, with financial support of £1.18 billion to help 100,000 businesses and more than 1 million individuals to preserve their livelihoods in the east of England. As we come out of the pandemic and have more good news about omicron, we can look forward to not just building back, but building back better and strengthening the underpinnings of the economy in the east of England.
One difference that a few colleagues have pointed out is the new Freeport East, centred on the port of Felixstowe, Harwich International port and Gateway 14. The freeport status will help the area to realise its potential of becoming a real energy capital for the UK, which my hon. Friend talked about. Meanwhile, the Thames freeport also opened its doors for business on 15 December, paving the way for a lot of new investment and growth in and around Thurrock.
We have talked about the different funding streams backing local opportunities. As a few people mentioned, the levelling-up fund is putting £87 million into a range of different local priorities, with transport upgrades in Bedfordshire, new science facilities in Peterborough, upgrades to the coastal attractions in Southend, and £20 million to help Great Yarmouth to recapitalise on its cultural heritage and the unique strength that it has in green energy. New money from the levelling-up fund could help to transform the fortunes of a town such as Luton, with new housing in the centre of town or the new community and business space. Those are important things to help turn around the fortunes of that town.
All these injections of cash are being complemented by our investments through the town deals and the lasting partnerships for enhanced growth. Some £280 million is going into the east of England through 12 town deals, including Norwich, Great Yarmouth, King’s Lynn, Ipswich, Harlow, Stevenage and Grays. At the same time we are putting £23 million into the east of England through the future high streets fund to help regenerate the high streets that have been battered by online shopping in places such as March, St Neots and Great Yarmouth. Through the community renewal fund, we aim to support at a local level the people in communities that are most in need by investing in their skills, their communities and their places. There are lots of different funding streams to try to build on those local strengths, while addressing the big infrastructure challenges that have been central to so many Members’ brilliant contributions.
In recent years, we have seen some really big road investments, such as the completion of the £1.5 billion upgrade to the A14, the dualling of the A11 and the new trains on the Greater Anglia franchise. Meanwhile, the lower Thames crossing, which forms part of the biggest investment in roads for a generation, will connect Essex to Kent via a road tunnel, supporting thousands of new jobs across both counties. We cannot stop there, which is why the Department for Transport is investing £73 million in the Gull Wing bridge, which has been mentioned, to link the northern and southern halves of Lowestoft, and to save commuters and families thousands of hours in an average year. In the western part of the region—there are, of course, huge difference across the east—£162 million is being provided for the A5 to M1 link road in Bedfordshire.
While we are upgrading the physical connectivity, which is hugely important for an area where often it feels surprisingly difficult to get to places that are not that far away, we are also focusing on digital connectivity. The east of England was provided with £233 million from the £5 billion Project Gigabit. We now have 60% of premises able to get gigabit-capable broadband, up from just 4% in 2019.
The incredible improvement in digital connectivity has been noticeable in the east, including almost all parts of my constituency, but we must complete the job. Will the Minister say a word about devolution? In his four elements of levelling up, the fourth was local leadership. In Suffolk, we have excellent local leadership under Matthew Hicks, the head of the county council. There is very strong support for a devolution deal, which will help to unleash the potential of Suffolk.
My right hon. Friend is totally right. I will just finish addressing the question from my hon. Friend the Member for Broadland (Jerome Mayhew): 4G is essential. Dropping calls are incredibly frustrating in rural areas, and the shared rural network will enhance connectivity across the east of England.
Let me turn to devolution and local leadership. While no single place got everything right in the pandemic, we saw the incredible importance and strength of local government. Around the country we have seen trailblazers such as Ben Houchen and Andy Street—amazing local leaders who, when properly empowered, can really change the fortunes of the area. We have already seen how deals such as the Cambridge and Peterborough devolution deal can be a way to tackle important local issues such as affordable housing in Cambridge.
Local leadership simultaneously gives places a champion—to be their strong voice and provide leadership—and a single point of accountability. County deals will be a core part of that, and they will look different in different places. A few years back we tried to bring devolution to a wider part of the east of England, but we can return to that. We have seen some impressive, joined-up bids from leaders in the east of England who are seeking county deals. Nothing, including the health issues raised by my right hon. Friend the Member for West Suffolk (Matt Hancock) and my hon. Friend the Member for North Norfolk (Duncan Baker), is off the table. That could be a big win for the devolution agenda. Those deals will bring together all the local partners to really strengthen them, with the powers and funding they need to turn things around in their areas.
There is a lot still to do to realise the full potential of the east of England. A lot of exciting change is already happening. By working together on a cross-party basis with all local leaders and MPs in the region, we can realise some of the incredible potential in the east of England.
We have had a comprehensive debate. I apologise if I took too long setting the scene. I would like to highlight some of the issues that have arisen. There has been great emphasis on bidding for capital projects, but improvement to our core funding—education, health and police—is vital. Likewise, on new housing, the infrastructure must come at the same time.
We heard from the hon. Member for Cambridge (Daniel Zeichner), my APPG co-chair, who mentioned the importance of noting that if we take out the London effect and the Cambridge effect, suddenly the east of England really does have challenges. I focused on coastal and rural deprivation, but there are deep pockets of deprivation in our urban centres that need to be addressed. On connectivity, there is no debate on East Anglia that does not highlight our poor infrastructure—both the deficiencies in the past, and looking to the future with that digital connectivity. On devolution, I liked what the hon. Member for Norwich South (Clive Lewis) said about the importance of centralised intent—
Motion lapsed (Standing Order No. 10(6)).
Covid-19: Small Businesses in Streatham
I beg to move,
That this House has considered support for small businesses in Streatham during the covid-19 outbreak.
It is a pleasure to serve under your chairpersonship, Ms McVey. I am glad to be introducing this debate on a vital issue in my constituency—an area that includes Brixton Hill, Clapham Common and Tulse Hill.
As we all know, small businesses are the backbone of our local economy, culture and community, and I recognise the enormous contribution that small and medium-sized enterprises make in Streatham and all over the UK. Whether it be corner shops and cafes that have had to work throughout the pandemic, or independent retailers and the self-employed who have been short-changed by the Government, they deserve support and recognition for the diverse range of services and support that they continue to provide to our communities. However, it is devastating that small businesses are likely to have seen their turnover plummet by more than half, and that freelance workers and the self-employed have been completely ignored by the Government and left with minimal financial support during the coronavirus pandemic. Almost 50 shops a day vanished from our UK high streets over the first six months of 2021, and Labour projections from October suggest that 263 businesses in Streatham alone are at risk of closure over the next three months. The situation is completely dire.
Members may know that Streatham was home to the UK’s first supermarket, and that Streatham High Road is the longest high street in Europe and home to a hub of creative and diverse small businesses, which is reflected through our thriving arts and culture scene. I always tell people that should an apocalypse come, my constituency is probably where they would want to be. We have the windmill at Brixton Hill, which was the last operational windmill in London; two operational beehives; and numerous community gardens, such as Railside gardens, Urban Growth and St Matthew’s gardens, which always produce the best in fruit and veg.
If vegan January has not quite hit, we also have London Smoke & Cure, which offers the very best in smoked and cured fish and meats. If the practicalities are not enough to convince people, we are also home to the Inkspot brewery, not to mention some of the finest craftspeople in the country. In Streatham, we grow, produce and sell locally. We also regularly host the Streatham Festival, the Streatham Food Festival and the Streatham Literature Festival, run by Jane Wroe-Wright and her tenacious team, and there has been an enthusiastic local campaign to reopen the historically listed Streatham Hill Theatre as a community arts hub.
Over the past two years, I have visited dozens of small businesses in Streatham to talk to owners and staff about the impact of the pandemic. Since the earliest phases of the pandemic, they have thrown themselves into the coronavirus response, fighting to keep their businesses open while demonstrating their sense of duty to the wider community. In Streatham, we saw independent coffee shops giving away free coffee to NHS workers, computer repair specialists offering to repair laptops at no cost, and local firms stepping up to laser-cut personal protective equipment to meet shortages in our care homes.
We have also seen some amazing and original initiatives get off the ground. Whether it is local people donating their used devices to disadvantaged school pupils, food banks managing to meet a 134% increase in demand or mutual aid groups springing up to help the community, we have seen people pull together and innovate. Time after time during this acute period of hardship, our small businesses have stepped up. However, the pandemic has meant that SMEs in my constituency and across the country have had to close their premises permanently due to the impact of declining footfall.
I commend the hon. Lady for securing the debate. I asked a question on this issue in the Chamber some time ago. All too often, we have heard of businesses across the United Kingdom having to close for isolation periods as there are not enough staff to keep them open, as she said. Does she agree that consideration should be given to a scheme whereby businesses with fewer than five members of staff, which we are referring to, are eligible for some sort of financial assistance should they have to close due to staff isolation, such as if staff have been a close contact of a covid case?
The hon. Member is absolutely right. I will make that point later. We have to do everything we can to support our small businesses.
Examples of business closures in Streatham include acclaimed live music and hospitality venue the Hideaway, where I and others across the city have spent many a good night out. This has been a major loss for the area—an independent venue at the heart of the community that for many years has been growing local and international music and comedy. Due to the number of lockdowns, the slow response for those in the night-time economy, and social distancing requirements, its business model was untenable. We also saw the closure of Fal Patel’s local convenience shop in Clapham Park and E & A Wates furniture shop on Mitcham Lane, which once undertook restoration work for the parliamentary estate during its 120-year history.
Many start-ups that would have grown to become high street businesses were unable to access any grants due to not having a high street premises, which has impacted the long-term economic growth of the area as our cafés, co-working spaces and performance spaces, and the buoyancy of our local business hubs, rely on the small enterprises of the daytime economy.
These are only some of the publicised closures within the constituency. It is fair to say that the demise of small businesses is so vast that we all personally know of someone in our local community who has lost out on their business during the pandemic; maybe it was a local restaurant, an appliance shop, a corner shop, a pub, a bar, a butcher, a baker, a greengrocer, a hairdresser—the list goes on.
It is a pleasure to serve under your chairmanship, Ms McVey. My hon. Friend is making a really good speech, outlining the many issues faced by businesses in Streatham. In my neighbouring constituency in Lambeth, we face a number of similar issues. She outlined that many businesses missed out. A number of those businesses also missed out on loans offered by the Government. To see the Government want to wipe away £4.3 billion of loans given to fraudsters is another kick in the teeth to those businesses that folded because they were not eligible for any support. Does my hon. Friend think that the Government should rethink that proposal?
I thank my hon. Friend for her intervention. She is absolutely right. The Government need to rethink that proposal because it is leading to the closure of high street businesses and small businesses. Let us not forget that, when these 50 businesses a day shut up shop across the country, that is 50 people a day, along with their families, who depend on their business as a primary source of income, now out of work. It is not only the economic value that is disappearing from our high streets; the wider cultural contributions that these businesses make to the community disappear too, all because Government support was inadequate.
Supporting business in my constituency and my hon. Friend’s constituency are Brixton business improvement district, This is Clapham BID and the mighty InStreatham BID headed by Louise Abbotts. Our BIDs have worked tirelessly over the past few years against a tide of transport issues and the growth of online sales to keep people going out and shopping locally. We cannot forget the impact this has had on their budgets and capability to continue sustaining our local businesses in the long term. Even before the pandemic began, small businesses found themselves on an uneven playing field, and the original form of Government relief saddled small businesses with further debt, offering them loans at high interest rates through commercial and retail lenders or effectively deferring their rent payments. At the start of the pandemic, these no-strings-attached loans were offered to companies registered in tax havens, yet uptake on small business loans remained low. The 2017 business rates revaluation meant that the average small shop would see a £3,663 hike over the next five years while supermarket chains would see 6% reductions. It cannot be fair that some independent businesses, such as small cafés, contribute to the taxman at a higher effective rate than big corporations and high street names. Business rates are a 20th-century system of taxation, yet we are already over a fifth of the way into this century. Four out of five retailers say they may have to close some locations without an urgent easing of the burden of business rates. Retail pays over the odds at the moment; it accounts for a quarter of the business rates bill while representing a mere 10% of economic output. The current system does not work for our local public services, as the funding of local councils is linked to rates revenue in an area, rather than local needs. We need a system that is fit for the 21st century.
There is an emerging economic consensus that the state has a role to play in helping the economy to function properly, although it is a role that the party of government seem reluctant to accept. In the early days of the pandemic I called on the Treasury to impose financial conditions on loans for big companies asking for state support. It is galling that it ignored this call, and instead gave no-strings support to companies that were registered in tax havens, paid out huge dividends to shareholders and paid CEOs and senior executives ridiculous compensation packages, in some cases while laying off their rank and file workforce—all while small businesses have languished.
While businesses were grateful for the little support they received during the covid-19 pandemic, it simply was not enough. More substantial support is desperately needed to fight the onslaught of rising costs in food, inflation, energy and the major recruitment crisis that Brexit and covid have created for business communities. The Government’s own figures suggest that we will see our household economy shrink by £1,250 per year because of their trade deal with the EU. It will not be the Amazons of the world or big Government contractors that feel this loss—it will be ordinary people and small independent businesses.
Figures that we have seen show that smaller businesses lack the infrastructure to respond to the challenges that Brexit has presented compared with larger companies. A recent survey by the British Chambers of Commerce found that half of small businesses are finding it harder to export to the EU. Due to the new complexities of the trading relationship, the Government set up a small and medium-enterprise fund offering grants to help our businesses overcome those challenges. However, this fund has rightfully been criticised for being too complex. At the end of last year, we saw a report from City A.M. on information from the cloud accounting provider FreeAgent that found over half of businesses experienced shrinking customer bases, while 43% were impacted by supply chain issues. Meanwhile, two in five SMEs said that their costs had increased since Brexit, particularly to import goods, while 16% suffered a shortage of talent as they are finding it harder to recruit staff. Nearly one in five SMEs have considered closing their business during Brexit and one in five did not think their business would survive Brexit.
The Government have been found wanting yet again; instead of looking forward and trying to alleviate these situations we are instead told to keep calm and carry on, as if Brexit has not impacted us. We can clearly see that it has. The Chancellor’s £1-billion hospitality support package has come too late. It is woefully short of what is needed to ensure the survival of our small businesses and was woefully slow to start, coming in on 22 December when plan B restrictions had already been in place for 19 days. It is estimated that during this period of no support, £4 billion in revenue was lost from the hospitality and leisure sector. When cases rose and the demand on our high streets slumped, small businesses were not getting the support they needed, and workers were being sent home without pay and their shifts cancelled.
During the festive period, local authorities stated that the detailed guidance for the grants was only issued on 30 December and updated on 12 January, when businesses were desperate for support to meet various costs at the end of last year. Both the Federation of Small Businesses and UK Hospitality criticised the Chancellor’s support package for being far too slow to help the most vulnerable hospitality businesses during the omicron surge. It is ridiculous for the Government to put March as the timeframe for the grants to be paid when businesses needed this support months ago.
My local business non-profit organisation, InStreatham BID, has stated:
“The grants are valued but won’t cover the cost of wage bills and food waste for that period of November and December which is usually what covers the costs for hospitality in the new year when things are naturally quieter.”
We should not have to drag the Government into supporting workers and businesses because Ministers are too preoccupied with who gets the top job to focus on the crisis at hand. Proper support packages should be announced alongside public health measures as and when they are needed. Streatham BID said:
“A £6,000 grant in no way compensates for the dramatic loss in trading hospitality businesses in particular are facing, and more important they can’t wait weeks for financial aid.”
This incoherence is exactly why small businesses are increasingly frustrated and want clearer and quicker decision making from this Government. Because the new omicron variant has hindered growth in retail, hospitality and leisure, a reduction in VAT or retaining the 5% VAT rate for hospitality is seriously needed. A business rates holiday applied until December 2022 and a reform of business taxation to level the playing field would be most helpful to businesses over the next 12 months.
We could also put in place flexible and targeted furlough throughout the ongoing pandemic—not just until the end of September—to help businesses to retain their staff. It would also be incredibly helpful during this period when many businesses have just recruited full staffing levels to sustain a busy Christmas period, only to be hit with cancellations in the region of 40% to 50% because restrictions were reintroduced. The TUC has stated that furlough needs to cover at least 80% of workers’ wages and that the Government must guarantee that no one who is furloughed is paid less than the minimum wage. That is exactly the type of furlough we need.
We also need decent sick pay that is paid at the real living wage and is available to everyone so that workers can afford to self-isolate when they need to. It has been insisted on by many hon. Members across the House over the past couple of years, but it is still being played around with by the Government as a short-term concession during a crisis, not a long-term employment right available in law.
The Government need to do more to step up and deliver the necessary support measures to the businesses of Streatham and those across the country and ensure the democratic, cultural and economic benefits of our small businesses. If the Government claim to be the party of business, why they are presiding over the decimation of our small businesses, which make up 99% of the total UK business population? It seems the unfortunate truth about coronavirus business measures is that the smaller the business, the smaller the Government’s concern for its survival.
The economic case for stronger Government intervention could not be clearer and the stakes could not be higher. The cost of bankrupt businesses, unemployed workers and lost tax revenue far outweighs the cost of acting now. Allowing small businesses to go bust is not only bad policy—risking a deeper recession and job losses—but deeply damaging to our local communities, which makes it all the more important for the Government to learn from mistakes so far and prioritise the survival of our small businesses.
It is a pleasure to serve under your chairmanship, Ms McVey. I am grateful for the opportunity to talk about this important issue. I congratulate the hon. Member for Streatham (Bell Ribeiro-Addy) on securing the debate and thank her neighbour, the hon. Member for Vauxhall (Florence Eshalomi), for her intervention.
The hon. Member for Streatham is right to raise the issues that she and her constituents see on a daily basis in Streatham and Lambeth as a whole; they are issues that we have seen across the country over the course of the coronavirus pandemic. There is no denying that the last two years have been difficult and variable. It has been necessary for businesses, people and communities alike to make quick changes to deal with the biggest public health emergency of our generation—one that we certainly hope never to see again—and that has caused issues, problems and difficulties.
I mourn every single business that is no longer in place, whether that is in Streatham, Vauxhall or North East Derbyshire, in my constituency or any other represented by the hon. Members present. I regret that anybody has lost their job and I wholeheartedly regret that businesses have not been able to focus on the things they are good at: building businesses and growth; ensuring that they can take on employees; innovating and finding new ways to do things that people and markets want. That is the problem that we have had over the last two years, but it is not a problem that we can wish away. The ultimate reality is that none of us had a choice about coronavirus; none of us have had a choice about omicron.
I thank the Minister for his response and for what he is going to say. I asked about those small businesses, perhaps with five staff members, in which, when one staff member has a positive test, they have to isolate and the business closes. Will the Minister and Government consider some scheme to help those small businesses, which I think the hon. Member for Streatham (Bell Ribeiro-Addy) and I are both keen to see assisted?
I am grateful for the hon. Gentleman’s intervention, and I completely appreciate the challenge that he gives to Government and the points that he makes. I know that the Government are looking at all times at what is the most appropriate kind of support for businesses and for communities as a whole. Although we hope—we pray—that we are moving into a new phase of living with the virus that allows businesses to get on with what they are doing, I know that the Government will review what is possible on a regular basis.
Although I congratulate the hon. Member for Streatham on the outline that she has given of her constituency, it will not surprise her that we disagree on a number of the points that she has made, and I will spend a few minutes on those. We disagree about the support that has been given. It is not reasonable to suggest that what the Government have done over the past two years does not demonstrate a level of commitment to our communities and to our businesses—small, medium and large—to try to get people through the most extraordinary time of our lives. We cannot simply suggest that £400 billion—nearly half of the United Kingdom’s annual spend in the years since I have been a Member of Parliament—is not a substantial amount of money and not unprecedented in our political lifetime, and beyond, as a response to a public health emergency. I do not think that under any circumstances that can be suggested to be minimal financial support.
Because the hon. Lady has quite rightly dealt specifically with Lambeth and Streatham, it is important to read into the record the amount of support that has been given to the area. I do so not because the support is perfect, not because there have not been challenges and not because lots of rules do not mean, inevitably, that unfortunately there are some businesses that can benefit but some businesses that cannot—one of the reasons I am in politics is in principle to try to reduce the number of rules, where that is possible—but because we need to recognise the amount of money and support that the Government have provided. We have provided 2,000 local restrictions support grants; 147 LRSG open grants; 399 restart grants; 4,000 retail, hospitality and leisure grant fund grants; 1,163 LRSG open allocations up to 28 March, and 10,000 LRSG closed allocations; restarts of nearly 1,700 grants, which is nearly £15 million in terms of spend; and nearly £10 million of additional restrictions grants.
I have information about literally dozens of additional grants for the Streatham constituency and for the Lambeth Council area. That demonstrates central Government’s level of commitment to ensuring that businesses can, where possible, get through an extraordinarily difficult time and are able to face the future with confidence.
I appreciate that the Minister has outlined some of the figures for Streatham and for Lambeth, which includes my Vauxhall constituency. However, does he appreciate that the nature of inner London boroughs such as Lambeth, which includes my constituency and that of my hon. Friend the Member for Streatham (Bell Ribeiro-Addy), means a number of businesses do not qualify for any support because of their high rateable values? A number of our constituents who work in self-employed businesses—the very same people who should be supporting these small businesses—have formed part of ExcludedUK. They did not receive any help whatsoever. Can the Minister address those points?
I am grateful to the hon. Lady for her intervention. I completely appreciate that there are businesses and individuals who, over the past 18 months, have not been able to secure the support that they wanted and felt they needed. In an ideal world, when making public policy we would perhaps spend literally years trying to design policies to ensure that the right level of rules were around them, but we simply did not have that time in the period in which we had to move. We had to move quickly and ensure that we got as much out there to as many people as possible. The Chancellor and others have explained the reasons why the rules were drawn in that way, and I think that most people accept that, although there were difficulties, a huge amount of work was done, notwithstanding some of the challenges that have been outlined.
The second area that I will touch on is a disagreement on the situation that faces us. I accept that there are challenges, but some of the surveys and economic data coming out of London demonstrate the resilience of London businesses, and the ability of small businesses and others, not just in Streatham but across the Greater London area as a whole, to move forward, build, achieve what they can, and look to the future with confidence. Although the situation is difficult, and we have been through extraordinarily difficult times, I gently take issue with the suggestion that it is dire. Ultimately, businesses are helping us to get through it. They are doing the work that they need to do to build the economy that we need in order to pay for the extraordinary amounts of spending that have happened, and the even larger amounts of spending that the hon. Member for Streatham wants, given some of her statements.
I hope that the Minister agrees that unprecedented times call for unprecedented measures. Although I appreciate what he says, and all the grants that he outlined, businesses in my community simply cannot access them for a variety of reasons. Will he commit to coming down to Streatham, talking to those businesses, seeing what the problem is and perhaps designing a solution that is better for all? We may even treat him to a complimentary beer if he is willing to come down.
I am grateful for the kind offer. I point out that the statistics that I used are actual grants that have been issued, actual money that has been paid, and actual businesses in and around Streatham and Lambeth that have received support. I will decline her very kind invitation for one reason. Although I am extremely proud to call north-east Derbyshire my home, and to represent my home area in this place, when I am in London I live in Lambeth, in the constituency of the hon. Member for Vauxhall; we occasionally see each other on the tube. I spend quite a bit of time down Streatham High Road, so I have some experience of running around Clapham Common, and an understanding of all the fantastic businesses in the hon. Ladies’ constituencies. I recognise that there have been difficulties, but I have also seen great opportunity in those areas.
As a resident at times of Lambeth, there is something that I would encourage those in local politics to do. When I walked out of my house in Brixton this morning, I walked past glass on the road that has been there for three months because it has not been swept up by Lambeth Council. I walked past a tree stump that has not been replaced in the three years I have worked there. I walked through a low traffic neighbourhood that the Labour party has put in, which is not really wanted by residents in my part of Brixton. I walked through an alleyway that is graffitied to an incredible extent, and which nobody has cleaned up in the past few months. I walked down to Brixton tube station to come here today, and it looks shabby. It has not been cleaned up and it has graffiti up and down the walls. If Lambeth Council wants to do something to helps its constituents and businesses, I hope that it will consider concentrating on its core services, which people who spend a lot of time in Lambeth, as I do, would appreciate.
None the less, I am genuinely grateful to both hon. Ladies, and particularly to the hon. Member for Streatham for the points that she raised and for highlighting the challenges. I do not deny that there are challenges, but I hope that she and her constituents will accept that during a period of unprecedented health crises, when we have had to do things that we neither expected nor wanted to do, the Government have provided an unprecedented level of support not just for small businesses but for businesses across Streatham, Lambeth, the Greater London area and the country as a whole, including my constituency. We will see what we can do in the weeks, months and years ahead, recognising that it looks as if, as we all hope, we are moving into a new phase of the pandemic in which we learn to live with it, and ensure that we allow businesses to get on with doing what they do well, which is to create wealth, jobs and the tax revenue that can provide the good public services that we all want. I wish the hon. Ladies’ constituents and businesses in Lambeth all the luck in the world in taking the great opportunities in front of them. I look forward to hopefully taking part in some of them as a resident of London.
Motion lapsed (Standing Order No. 10(6)).
Gas and Electricity Costs
[Sir Edward Leigh in the Chair]
I beg to move,
That this House has considered the cost of gas and electricity.
It is a pleasure to serve under your chairmanship, Sir Edward. Obviously, the debate is very dear to my heart, because I represent the part of the United Kingdom that every year seems to have the lowest temperature recorded in any community: the village of Altnaharra in Sutherland.
Much of what I am about say is blindingly obvious, but I want to roll out a few statistics. It is a fact that household electricity and gas bills are predicted to rise in April by around 45%. That would see the price cap reach £2,000 a year, or £165 a month. I would suggest that without Government intervention, this rise could take the total number of households in fuel poverty to no less than 6 million. The high level of global gas prices affects the whole economy; it does not impact only on energy retailers, suppliers and household customers. It could mean between a 1% and 2% inflationary increase across the whole UK economy, which would result in more than £10 billion a year in additional Government costs from indexing debt to pensions, salaries and other payments.
Some 33% of households in rural Scotland are in extreme poverty, with a further 9% in ordinary fuel poverty. That makes a total of 42%. The figure is even more acute in the far north and my constituency, where, as I have already said, temperatures are regularly the coldest in the United Kingdom.
I congratulate the hon. Gentleman on securing the debate. He is absolutely right about Altnaharra, and the fuel poverty that is shared by his constituency and mine. The UK Government talk about levelling up, but one of the best things that could be done in that regard would be to tackle the differences and inequities between distribution costs of the electricity network, as well as the transmission costs to generate. I note that our part of the world is a net generator and contributor of electricity, particularly to the grid.
My highland colleague makes a sage and wise point. [Interruption.]—with all due reference to my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael).
The figure that I have outlined compares with 24% of households living in poverty in the rest of Scotland, which is still a high figure. I believe that fuel poverty is a clear priority issue for remote rural constituencies but, overall, I would suggest that is an unacceptable blight across society.
My hon. Friend has talked eloquently about the hardship of fuel poverty experienced in rural Scotland, and particularly in the highlands. I want to talk about disabled people, who are also disproportionately suffering as a result of the energy crisis. They have higher energy costs because of the equipment that they often need for assisted living. Just living from day to day is simply more expensive for them, so does my hon. Friend agree that the Government should be putting in place additional support—similar to the warm home discount—for families of disabled children and for disabled people of working age?
My hon. Friend must be clairvoyant, because she has anticipated a point that I shall make in due course. I thank her for her intervention.
There are two major contributory factors to fuel poverty in Caithness, Sutherland and Easter Ross: the absence of mains gas supply to many properties, and the comparative price of electricity, which costs four to five times more than mains gas and domestic oil per unit. Both of these power sources are often used to heat things that we rely on—for instance, water. Rural and remote households are more exposed to rising household costs due to paying an extra premium.
I suggest that energy policy in the UK is fundamentally broken. Consider this: the highlands and islands, to which the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) referred, produce more than 300% of their electricity demand from renewable sources—we produce three times more than we use. We export the rest to other parts of the UK, but as the hon. Member pointed out, a highland or island household pays more per unit of electricity due to the transmission charging regime, which pushes up energy bills even further. This is fundamentally wrong. Root and branch reform is required to design a UK energy policy that is fit for the 21st century, and that, most importantly, puts consumers at its heart.
Turning to business, energy price hikes are having a serious impact on the viability of businesses in the far north and, indeed, across the UK. I will quote two examples. Sitting at the back of the Public Gallery, I witness today Mr Andrew Mackay, my constituent. He and his brother own three hotels in Caithness known as the Caithness Collection—excellent hotels. They are facing an annual increase in electricity costs from almost £77,000 to—can Members believe?—nearly £130,000, which is a 70% rise.
Also in Caithness, we have a local engineering company, JGC Engineering, which is owned by the Campbell family and makes excellent pieces of stainless steel for the nuclear and other industries. The company’s annual electricity bill runs into six figures. The owners have been forced—they had no choice; it was the best deal they could get—to sign a deal that, believe it or not, means an 80% increase in costs starting in March 2022. To enable sustainable economic growth and—to borrow an expression from Her Majesty’s Government—to level up the United Kingdom, it is imperative that measures are put in place to protect consumers and businesses from crippling energy costs.
Looking ahead at the UK’s future energy mix, it is crucial that investment in renewables is kept up to pace. However, I believe that the Government can also look seriously at novel solutions to age-old problems. In terms of nuclear power, small modular reactors, such as those being designed by Rolls-Royce, could provide districts with heating and electricity in areas where it is costly to receive utilities on the national grid.
This kind of out-of-the-box thinking could reduce the cost of gas and electricity, reduce reliance on fossil fuels, and ensure the economic future of areas that consider themselves left behind, such as Caithness.
A conversation with Rolls-Royce would be rewarding for the hon. Member. It is working up the proposals, but has some interesting thinking; I think we would be unwise not to take a good look at it.
Solutions do not stop there. Governments could soften the impact on consumers in the short term by providing loans up front to energy suppliers to cover the costs incurred from the significant rise in global wholesale prices for gas. I suggest constructively to the Minister that the Government could remove VAT from energy bills, or double and extend the warm home discount, taking £300 a year off the heating bills of around 7.5 million vulnerable households.
Her Majesty’s Government could introduce a new social tariff for those in fuel poverty—perhaps double the winter fuel allowance, giving up to £600 a year to 11.3 million elderly pensioners who currently face a £208 real-terms cut to their state pension next year, due to the Government’s decision to scrap the triple lock.
The Government could also implement a one-off windfall tax on oil and gas companies’ super-profits—the extra profits. This would not impact companies’ usual profits and thereby keep jobs secure, and would target the unprecedented extra profits that they have made in the last six months.
Does my hon. Friend agree there is also a role for the energy companies in all this? I suspect that he will have as many constituents as I do who, over the years, in order to compensate for the lack of access to mains gas, have taken other options, including storage heating and going on to tariffs such as “total heating total control”, which is now being used by SSE to keep their customers prisoner because it is impossible for them to switch. Does he join me in calling on companies such as SSE to treat their customers, who have been loyal for generations across the highlands and islands, rather better than that?
I have no hesitation in joining my right hon. Friend in making that plea. His points are well made.
I hope that in getting this debate under way today, we start a dialogue with energy companies, Her Majesty’s Government and all concerned parties—not least those people who stand to be faced with crippling debts. I think of a young mother I know, who lives in the village of Balintore in my constituency. She tells me that she has to budget absolutely to balance the books; it is just a few pounds between surviving and going into the red. She says to me that if the electricity bill or the cost of diesel for her car goes up, she is in trouble. To square the books, she would then have to cut down on her expenditure. In turn, that hits the local shops, the local chemist and so on, in the seaboard villages of my constituency. I hope there will be a dialogue.
There have been, in what I have said, a lot of “coulds”, “shoulds” and “woulds”. What we really need from the Government is real, urgent action. I would suggest that they have failed millions of hard-working families and thousands of pensioners, at a time when energy bills are going through the roof. At this stage, the nation is plummeting further into a fuel poverty crisis. As far as I can see, there seem to be no plans to tackle it, but I await the Minister’s comments with great interest and expectation. At the end of the day, old people, single parents and people on very limited incomes are wondering how the heck they will get through the next period, because we all dread getting into debt.
Members from across the House have put forward suggestions to the Government on how to stop this disaster in its tracks. I respectfully suggest to Her Majesty’s Government that we stop the dither and delay, get talking, and do something about it.
I thank the hon. Gentleman for securing this debate. It is a fact that all economies are facing an energy price rise, for international reasons. The hon. Member has not mentioned gas at all. No matter anyone’s views on gas, it will be part of our energy mix for a generation. I wonder if he might agree that we have been uniquely silly in diminishing our storage capacity, with the closure of the Rough field. Mother nature has given us a gift in this country: a lot of gas. No matter anyone’s view on the path to net zero, a super report by the House of Commons Library charts the reduction in our gas use over the years, and shows that we have reduced our gas capacity and production even faster, leading to imports. Does the hon. Member agree that it might be sensible to increase our domestic supply while gas is such an important part of our energy mix? That might give a longer-term solution to price volatility.
I will conclude in just a moment or two. I thank the hon. Member for his intervention. The bottom line is that if we care about the people I have mentioned, who are petrified of getting into fuel poverty, then we must look at all possible solutions. There will be a mix to the answer. I would not rule out anything that the hon. Member said. We will take a look at it.
Of course, if we get hydrogen production right, that also makes enormous sense, because it is absolutely neutral for the environment. Hydrogen is a gas, and we should be thinking about that as a possibility. I conclude my remarks there, Sir Edward. Thank you for your forbearance.
The cost of gas and electricity has been a real challenge for my constituents. Although the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) makes a good point about the rural communities in Scotland, it is not just in Scotland that this is a challenge.
Down in the south-west, we have one of the lowest-wage economies, a very high cost of living, and a disproportionate number of over-65s with complex comorbidities. Our economy depends heavily on hospitality and tourism, and that has been decimated. The hope for recovery over the Christmas period went with plan B.
The hon. Lady is making a very good speech and she is absolutely right—it is not just the north of Scotland that is affected, although I, like the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), would argue that that is where things are most acute.
House of Commons Library figures for all the neighbouring countries in north-west Europe show that 11.7% of people in the UK are living in relative poverty by the OECD’s definition, and of the 13 countries that were looked at, the Gini coefficient of inequality is highest in the UK. That puts this problem firmly in the Government’s ballpark; they really have to get to grips with it.
The hon. Gentleman makes a very fair point—this is a real problem. The hon. Member for Caithness, Sutherland and Easter Ross made the clear point that the answer and solution has to be found now.
I look at my constituents—indeed, I was on a telephone call just this morning—and I see that the food banks are doing great business. Increasingly, I am hearing that the people who are using them are not the usual attendees. We are in a state of crisis, which needs to be addressed right now. I have constituents—mostly pensioners—who are ringing my constituency office, and are very concerned. They are worried because of the cost of living and because of everything they hear about the energy costs that they will be facing.
For me, it is that uncertainty that is most challenging, because although the Government, to their credit, recognise the problem, the real issue is that to deal with that fear, we need an answer, a commitment and a solution. Looking at what we might or might not do in April is not soon enough. I am sure that even you, Sir Edward, will have looked at the barometer as you got up this morning. It is now that we are seeing minus temperatures. It is now that people need their heating at night. It is now that they need hot food.
Clearly, it is not the Government’s fault that there has been a global challenge in terms of energy prices. Indeed, they have risen to the challenge and recognised that security of domestic supply has to move further up the agenda. I welcome their investment—or promised investment—in more nuclear. But the real challenge is that despite all those good words and despite the concept of a price cap, which was effectively intended to protect consumers from very challenging prices, consumers are not being protected.
No scheme is perfect, but what happened here is that when it became clear that the prices meant that some of the smaller suppliers would go out of business, those customers were picked up by the bigger players but were inevitably put on the highest tariffs available. Those individuals, having done the right thing by seeking out good policies and good schemes, suddenly found themselves in the worst possible position. Then we hear—understandably, on one level—that the cap will not hold and that we expect that there will be an announcement on 7 February that it will increase substantially, as the hon. Member for Caithness, Sutherland and Easter Ross has already indicated—it will be an extra £700 per household, taking the average bill to £2,000. Suddenly energy costs will be going up 50% overnight.
When the Government set their energy retail market strategy for the 2020s, they set two objectives. The first was that there should be a sustainable retail market, whereby it was easy and rewarding to go green. However, that is not what is actually being delivered. Although they were well intended, many of the tariffs to try to encourage—to nudge, if you like—greener use have effectively pushed people further and further into fuel poverty.
The second objective was that all consumers would pay a fair price for their energy and would be protected from excess charges. Although I appreciate that those are charges for production rather than the other elements—the tax and the levies—it has all come together in a horrible, nightmarish mix, whereby, because of the global cost increase, the Government are now scrabbling to try to honour what I think was their intended commitment to make energy prices affordable by considering some of the things that they can move, which clearly will be taxes and levies, as opposed to some of the things that they cannot move, which include the global price of gas.
Therefore, for me, Government intervention is not optional. As has been said, the number of households in fuel poverty is increasing from 4 million to 6 million. That will affect a very large number of my constituents. The Government have a number of options. They can mix targeted initiatives and universal ones. The comment in the media is that the Government are uncomfortable about solutions that are more universal in nature.
This energy crisis—this energy cost—comes on top of a huge increase in the cost of living. We know from figures out today that people’s wages are not going up to meet those costs, and therefore it is not just the usual smaller percentage of the population that is suffering; it is actually a much larger percentage of the population. People at all levels make commitments, and they are struggling to meet them. They have to meet their mortgages; that is not negotiable. They have to pay their rent; that is not negotiable. Businesses have to pay business rates; that is not negotiable. To be reluctant to reduce, and to resist reducing, VAT from 5% to 0%—the most obvious, quickest and easiest universal solution—is perhaps a little disingenuous. It seems to me that at least 60% of the people who would benefit from that actually deserve it.
The other universal approach is what we do about universal levies. That is something that we will have to review, and we will have to look at how the burden can be moved to general taxation. We need to recognise that those levies are subject to a number of contracts, which means that they cannot be the first thing that the Government fix. None the less, they need to be in the bag of solutions.
The obvious targeted solution—I think that it is an “as well as” rather than an “instead of”—is expanding the warm home discount, changing the eligibility, taking it beyond winter and looking at how we might make it generally taxpayer funded rather than funded by those that contribute to it.
How are we going to pay for this? Of course, it is right that the Government consider that. A number of things have been looked at, including a windfall tax on the oil and energy industry. Only this morning, there have been suggestions that fraudulent covid payments claims, which the Government have committed to claw back and at the moment are estimated at £4.3 billion, would go a long way to covering the most urgent and easiest solution, which is to reduce VAT from 5% to 0%. The VAT bill that the Treasury would have to cover would be somewhere between £1.7 billion and £2 billion. Affordable is the wrong word, but it is the right thing to do, and it is entirely affordable given the likely income that the Government can expect as the economic forecast improves across the country—although, sadly, not in my constituency—and what they might get back from the covid claims.
Of course, the people who are most impacted are the ones who are most vulnerable: the over 65s on fixed incomes and those in poorly insulated houses, which is definitely the case in my constituency. Those people are the most important, but they are not the only ones. I ask the Government not just to look at this as a matter of money, but to ask what is the right thing to do. What is the timeframe in which they must act? It is now—it is cold now. I ask the Government not only to acknowledge that there is a problem but to put forward steps now, before the new cap is introduced—and certainly long before April.
It is a pleasure to serve under your chairship, Sir Edward. I reassure you that I will be brief. I congratulate my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing this urgent debate. In Bath, in north-east Somerset, more than 10% of households are already living in fuel poverty and, as we have heard, that is likely to increase dramatically.
The council is working hard to provide a local household support fund, with grants of £250 to help the least well off with their energy costs this winter but, again as we have heard, energy costs are likely to rise by about £600. That grant is something, but it is clearly not what is needed. Many more of my constituents are worried about their next heating bill. What have the Government done to protect them? They have scrapped the programmes to insulate our homes, which would have reduced bills long ago. They have cut universal credit and increased the UK’s dependence on imported gas, rather than investing in renewables: green energy homemade in the UK—something the Minister knows I keep saying in these debates. That is what should have happened a long time ago.
I hear reports that the Treasury is scrapping the energy company obligation scheme, which has been a powerful driver in reducing household emissions. The Government must not touch that scheme. Instead, they should double and extend the warm home discount, as has been said. It cannot be right that gas companies are profiting from record prices, way up from where they were last year, when millions cannot afford to heat their homes. The Liberal Democrats are calling for a one-off windfall tax on the profits of oil and gas firms, to fund support for those who are struggling. Seventy-one per cent. of people support that move, as do 75% of the Government’s own voters. Why are the Government not severely and sincerely looking at the proposal of a windfall tax on the profits of oil and gas companies?
We need a long-term plan to prevent another energy crisis. Where is the urgent plan for a long-term home insulation programme that will cut bills permanently? This is a particular challenge for my constituents in Bath. Bath and North East Somerset Council proposes that the Government require landlords to bring housing up to an agreed energy certification standard, and I urge the Minister to look at that. The Government’s heat and buildings strategy was a missed opportunity for real ambition in this area. We have one of the oldest, least energy-efficient housing stocks in Europe. It is an emergency, and the Government should finally treat it as such.
Liberal Democrats are committed to reducing most emissions by 2030, which means a massive expansion of renewables and the replacement of the gas grid. In the context of this debate, we all know that there are some energy companies leading the way. Companies such as E.ON pride themselves on the fact that nearly all of their electricity is generated from renewables, but the shocking fact is that, while the price of renewables falls continuously, the customers of E.ON and other renewable electricity companies will find that their electricity bills go up by just as much as those of customers who buy electricity from burning gas. I have asked E.ON directly—
The hon. Lady has a high number of listed properties in her constituency of Bath, as I have in mine. Sandwich is the oldest medieval town in the country. Has she considered how old buildings, which are listed or in conservation areas and structurally virtually impossible to insulate, can be dealt with in a way that is affordable or achievable?
I thank the hon. Gentleman for his intervention. We have had a debate on listed buildings and how we can help owners. It is complicated, but I do believe it is important that owners of listed buildings get proper support, including help from the council to change the structure of their buildings to make them more energy efficient.
As I said, it is shocking that those trying to do the right thing by buying from companies getting their electricity only from renewables are facing the same cost rises as those buying their energy from companies making electricity from burning gas. It is a massive failure of Government, who have set the terms of the wholesale market to ensure that everybody pays when gas prices go up, even if they do not use gas. That is shocking and unforgivable. The Government must urgently look into how this issue can be fixed now.
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing the debate.
People will die. Those are not my words; they are not the words of an Opposition politician. They are the words of Martin Lewis, who was voted the most trusted man in Britain. Heating bills are going up by more than £700 a year in April and they are likely to go up more in October. According to the Joseph Rowntree Foundation, 54% of single adults and 25% of single parents spend more than half their income on heating. That is simply not sustainable, especially when they are facing other increased costs. We are in one of the world’s richest economies, yet people are looking at the stark choice of eating or heating.
Wages are not keeping up with inflation, which in particular penalises low-income people, who spend much more of their income on essentials. The solution cannot be an increase in personal debt. Christians Against Poverty has reported a 41% increase in people requesting help from it in January, while searches for fuel help on the Citizens Advice website have gone up phenomenally. We have to find a way to deal with the debt crisis, but the first step is to deal with the fuel price increase. That is urgent. It has been caused by not only the higher wholesale prices, but the explosion and lack of regulation in new energy companies entering the market and offering low and unsustainable prices to switchers. That is supposed to increase competition, but it has always failed the most vulnerable and it penalises many who cannot or do not want to switch. We have to look at that.
What can we do? An immediate cut to VAT on fuel would be a quick fix to start. I agree that it is a blunt instrument, but it is easy, quick and would help a number of people. However, it cannot be the only measure. We need to increase the warm home discount and widen the eligibility for that scheme, and we need to fund it from a different source. It cannot be funded from a levy on all electricity bills, because that will penalise everybody again.
I agree that we have to look at greener and more sustainable means of producing electricity.
The hon. Lady is making an interesting speech. I want to pick up on an interesting point made by the hon. Member for Bath (Wera Hobhouse). At the moment, the UK consumes about 41.8 GWe. People can check that on their telephone apps quite easily. Some 16.9% of that electricity is from wind, but that figure could be greater. Wind has been supported by the Government’s contracts for difference. Is there not a question as to why wind is being bundled into those energy prices? Why, as the hon. Member for Bath suggested, are companies profiting by bundling it into energy prices, when it is actually supported by the Government? We all know that the marginal cost of producing wind energy is zero. Our wind energy output could be greater, had things been built on the Scottish islands with a minor bit of Government planning over the years.
We need to look at all the ways in which energy is produced and we need a mix of energy. We have to look at the green levy as well. At the moment it is a levy on all bills, so the poorest are paying the most.
We need to look at a social or below-cost tariff funded by the energy industry: each gas or electricity supplier should pay a sum into a central pot, based on the number of customers, which could then be redistributed to people in fuel poverty. We should not forget the people on prepayment meters; often, they are the poorest and have been in difficulty with their bills before. There is no way that people on prepayment meters should be paying the amounts they are paying for gas and electricity even now. There should be help and adequate protection for those people.
We have to accept that people should spend only a certain proportion of their income on energy. I am not saying where we should draw the line, but more than 10% is far too much—without even getting into the eye-watering figures we have heard from the Joseph Rowntree Foundation.
People on low incomes budget very carefully, but it is a bit like spinning plates—they pay one bill, they pay another bill, they look at the next bill. With the cost of electricity and gas forecast to increase so much, those plates will come crashing to the ground. That is why we need to act now to make sure that people are not, as one of my constituents said, out of their minds with worry. People need real help to keep the heating on, pay all their other bills and eat properly. If we are not careful, it will not only be free socks that energy companies offer; they will have to offer food parcels as well—ones that do not need heating up.
It is a pleasure to serve under your chairmanship, Sir Edward. You caught me off guard there; the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) just asked if I was next and I said, “No, I will be at the end.” However, I am pleased to participate at any stage.
I commend the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on setting the scene so well. It was a superb introduction, which I think we all endorse and support, because we understand the issues. I am pleased to be here to discuss this important matter. To say I have been contacted by a few constituents about gas and electricity prices would be an understatement. The emails to my office on this are legion, so it is great to be here to air the concerns that are important to the livelihoods of so many. I commend the hon. Member for Newton Abbot (Anne Marie Morris). We all know her position and what happened to her in the last week. In the debate in the Chamber on VAT, the hon. Lady felt constrained and supported a cut. We should put that on the record.
Soaring global gas prices are fuelling a domestic living crisis in the UK and could potentially have economy-wide implications. Energy bills are set to rise by up to £2,000 per year from April, which will be detrimental to those who are already in fuel poverty—people who need help and on whom I will focus. Recent statistic from National Energy Action reveal that an estimated 1.2 million to 1.5 million households across the UK will struggle to pay their electricity or gas bills. Those figures equate to almost the whole population of Northern Ireland, but are spread across the United Kingdom, which is just astonishing. The most vulnerable and those in poverty will be hit.
Back home in Northern Ireland in the past year, gas providers and all six electricity providers have increased their prices. In September, Firmus Energy announced that 50,000 people in its Greater Belfast network would see their gas price rise by a third. SSE Airtricity, which others have referred to, has increased its gas prices by 21.8%, which adds about £112 to the average household bill. Power NI announced that it will increase its electricity price for domestic customers by 21.4% from the start of this month. As we have seen in the press, prices for commercial businesses will also rise by as much as 30% to 40%. Some of the figures quoted by the hon. Member for Na h-Eileanan an Iar tell us just how important this matter is. The figures are truly astronomical and will have a significant impact on those who already struggle to make ends meet.
An emergency fuel payment has been introduced in Northern Ireland by the Minister for Communities, Deirdre Hargey, which I welcome. It is a £200 payment made through the Bryson Charitable Group for those who are vulnerable or in special circumstances and need help. We have taken some steps in Northern Ireland to make that happen. However, the Communities Minister and her respective counterpart in this House must take more of a lead, instead of leaving this responsibility solely to charities, which are doing their very best but need help from our Government to deal with the sheer volume of applications.
We must stand up for those who are directly affected. I stated in the debate on VAT on household bills that I support the green energy push as the only sustainable way forward, but at a time when there is a fuel crisis and pressure on those in financial distress, the £750 that has been referred to should be put on hold for a short term to help our constituents find a way forward. Viable ways to bring down prices must be considered. A plan needs to be put in place to assist those who need help. E3G suggests an extension and increase in winter fuel payments to support those on pension credit and low incomes.
The Minister knows I respect him, and he is always very capable and able to answer questions, but we need an indication of what we can do to help. No doubt all Members are hearing concerns about this issue. It is not about politics; it is about helping those who need it most. I look to the Minister and the Government for reassurance that more financial help will be considered.
It is the most vulnerable who will be most susceptible to gas, electricity and oil prices rising more than in other countries. Therefore, more needs to be done—this is an easy point to make, but it is a fact—to help those who need it most amid the rising electricity, gas and oil prices that we face now, and more so in the future. The hon. Member for Caithness, Sutherland and Easter Ross referred to new technology. Perhaps the Minister will say something about that. It is not his direct responsibility, but perhaps he could say how we might use new technology to reduce prices.
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing today’s timely and critical debate.
We should soon, hopefully, begin to see some economic recovery at the end of a very long couple of years. Unfortunately, there are too many people across the UK who cannot wait indefinitely for things to improve. The cost of living crisis is here, and it is not avoidable. When the price cap was reviewed and bills subsequently rose, I was contacted by many constituents who were worried about the impact it would have on their living costs. It came just at the time when the universal credit uplift was removed and furlough ended.
At the same time, the Government were struggling to keep on top of state pension claims, and vulnerable pensioners were waiting months for their first payment. There was nothing to address that in the Chancellor’s autumn Budget, and the national insurance hike was also missing from the announcement. It was not missing from the minds of taxpayers, though, particularly those on lower incomes, where every penny counts.
Next month we will hear from Ofgem, and its announcement that the price cap will rise once more come April will be no surprise. Recent projections estimate that household bills could rise by over £700 a year. In my constituency, that is almost the equivalent of the average monthly rent. It is almost an extra £59 added to bills each month. Some people might be privileged enough not to miss £59 a month, but they are few and far between. The average weekly family food shop is around £63. The average cost of sending one child to five after-school club sessions is £62. Are those the kinds of sacrifices the Government expect our constituents to make to keep the heating on?
A coalition of 25 charities, including Age UK and Save the Children, have warned that the rise could push the number of families living in fuel poverty from 4 million to a massive 6 million. That is 6 million households, not individuals, although if it were 6 million individuals it would not be acceptable either. Industry has warned that it might take from 18 months to three years for the energy crisis to resolve.
Has the hon. Lady experienced in her constituency an increase in the number of people who are referred to food banks, as the hon. Member for Newton Abbot described? I know I have in my constituency, where the figure is up by almost two thirds on this time last year. That indicates that there are real pressures on those who did not apply in the past, but are applying now.
The hon. Gentleman is absolutely right. I think we all find the rise in the use of food banks in our constituencies shocking. As the hon. Member for Newton Abbot (Anne Marie Morris) said earlier, people who would not normally have to attend a food bank who are having to do so now, so there definitely is a squeeze on people’s incomes.
These households cannot and should not have to wait up to three years for the energy crisis to resolve, so what is the solution? What can the Government realistically do? The answer does not lie in defunding the BBC, or in small changes to the universal credit taper rate. The only way to ease the burden on families up and down the UK is to tackle the energy price crisis in a pragmatic, meaningful way. Many options have been put forward to the Government, and I urge them in the strongest terms to please consider those options as a matter of urgency.
A reduction to the VAT rate on energy would provide some much needed breathing space for those who need it most. The Government are keen to keep repeating that, as an importer, we are held to the whims of the current market’s rapid and substantial levels of demand. To a great extent, that is true, but a VAT reduction is within the Treasury’s gift and should be given. A windfall tax on North sea oil and gas companies would also mean that it is not the most vulnerable paying the price for this unusually and regrettably high cost. After all, those companies are expected to report almost record-breaking profit levels for this financial year. They have unarguably benefitted considerably, whereas our constituents have suffered and will continue to do so. Suspending or reducing green levies on energy bills could help too, as could expanding the warm home discount, which many hon. Members have mentioned, or increasing universal credit.
Whatever route the Government decide to take, they must do something; it would be heartbreaking to hear the same stories from my constituents for another 18 months or three years when there are solutions, should the Government choose to implement them—I hope that they do.
I begin by thanking the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) for securing this debate, and for his excellent introduction to the issues involved. Our constituents are genuinely worried about their gas and electricity bills. In Scotland, 640,000 people —one in seven—find that their energy bills are unaffordable at the moment, and those bills are only going to rise. The energy crisis and the cost of energy have once again thrown into sharp relief the glaring inequalities in our society. Inflation is expected to rise to 6%, energy costs are doubling and the national insurance hike is about to kick in, so there is huge concern. Alongside and because of that, we face a debt time bomb as credit card lending jumped by 41% in recent months. Much of that borrowing was to pay for household essentials.
As things stand, 6 million people will slide into fuel poverty because of the rising cost of energy. That will impact on the wider economy, driving up the cost of food, goods and other services. As petrol prices increase, consumer prices will continue to rise, and at a faster rate. Alongside that, we can expect the cost of mortgage repayments to rise as well. We need Government action to tackle this. It is real, and it is crushing my constituents in North Ayrshire and Arran.
We have heard today about the need to cut VAT on energy bills and on the warm home discount, to offer some respite to those who are struggling right now. In 2016, the now Secretary of State for Levelling Up, Housing and Communities, the right hon. Member for Surrey Heath (Michael Gove), said:
“If we vote to leave the European Union, we can cut VAT on domestic fuel to zero and that would save households about £60 a year… that would help the poorest families most of all.”
Let us ask the Minister to do what his Government promised they could and would do. We need action on that.
It is time for the Government to listen to the calls to provide loans to energy companies, which are teetering on the brink, rule out a future rise in the energy price cap and reintroduce the £20 universal credit uplift. Households need help right now. The Scottish child payment could be replicated across the UK, and we could deliver a low-income energy payment, introduce a real living wage and raise the level of sick pay. There are a number of things that the Government could do to help families who are struggling right now.
We heard earlier that there are real, genuine and well-founded worries about cold-related morbidity this winter. In this day and age, in a state as rich as the UK, that is a cause for embarrassment and shame. Even the Secretary of State for Business, Energy and Industrial Strategy, the right hon. Member for Spelthorne (Kwasi Kwarteng), has admitted that it was a “mistake” to close off the storage sites, which the Government withdrew support from. Although these issues are global and there are many global factors at play, not having sufficient storage for energy leaves the UK much more exposed to price shocks than it needs to be. We have the lowest storage capacity in all of Europe—1% of all of Europe’s capacity. Any kind of protection we might have had from dramatic price shocks has been given away by this Government. That is really not acceptable.
The UK is going through this whole situation while suffering from the worst levels of poverty and inequality in north-west Europe; in-work poverty is at record levels this century. We really need to get a grip here and listen to our constituents’ problems. We need fundamental and radical measures to protect our constituents. Some have no idea how they are going to cope with the price rises hitting their doorsteps. We have heard about the differentials in energy transmission costs. Those need to be tackled, but when will they be? We need an equitable energy policy that works for all consumers, and I am really looking forward to hearing the Minister’s response.
It is a pleasure to serve under your chairmanship, Sir Edward. I start by congratulating my dear hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on bringing forward this important debate. I also commend the hon. Member for Newton Abbot (Anne Marie Morris), who this week has had the backbone to stand up for her constituents on the cost of living crisis, while the Prime Minister seems to have inadvertently misled himself as to whether or not he attended a party. That does rather stick in the throat and perhaps shows the priorities of this Government.
This issue really matters because it matters to millions. Like many, I have received emails from concerned constituents. One, Margaret, is desperately concerned. Some 3,000 people in Oxford West and Abingdon are already classed as being in fuel poverty, and she is concerned about how many more are going to succumb. She is right to be. Jessica, who lives literally 10 minutes down the road from Margaret, emailed me on the same day. She is already classed as being in fuel poverty. She is considered vulnerable by her energy supplier. She currently pays £85 a month for her energy and has been told that that is going to increase to £200 a month—she says that there is no way she can afford those kinds of prices. Dave, who is on £10 an hour, contacted me with a similar story and Jane, who is a pensioner, told me that when she looks at what she will have to pay, she knows that she simply does not have the money. I ask the Minister: what are these people meant to do?
I also welcome this debate and thank the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) for securing it. My constituency of Manchester, Gorton has long faced a fuel poverty crisis. In 2019, almost a quarter of families there were in fuel poverty; given current concerns about sky-rocketing fuel bills, the number will now undoubtedly be substantially higher. Does the hon. Member agree that this issue predates today’s cost of living crisis and that this Government have overseen a dramatic rise in fuel poverty without taking any of the action necessary to mitigate it?
I thank the hon. Gentleman for his intervention, and I absolutely agree. I am also deeply concerned that the problem will get worse over the next few weeks. We have only to read the emails or listen to the stories to be moved by them. Martin Lewis, who was mentioned earlier, dedicated an entire episode of his “Martin Lewis Money Show Live” to energy prices the other day. Afterwards, he tweeted that he was “near tears” after being unable to help a single mother, who had recently lost her partner, to afford her energy bills. He called on the Government to do more, and I agree with Martin.
The Minister will have heard many good suggestions today. My hon. Friend the Member for Caithness, Sutherland and Easter Ross mentioned cutting VAT on bills, a social tariff and an increase in the winter fuel allowance. Age UK has suggested a £50 one-off payment to those eligible for the cold weather payment and a doubling of household support. All those could work, and we have to ask the question: when are they going to come in? People are already hurting now.
There is also a secondary question, and a correct one: who is going to pay for it? Even more galling than all I have discussed is that after hearing all these stories of hardship and heartache, Gazprom announced a dividend of £179 million. Energy giants such as Gazprom are profiteering from the misfortunes of others. Frankly, the Government are complicit because they are letting them.
The hon. Lady mentions Gazprom and how the UK is in hock to such gas producers from outside the UK. If we cast our minds back, do we not see that a mistake of George Osborne’s penny-pinching, bean-counting style of five, six or seven years ago was his reluctance to use the climate change levy to invest in renewables to make us less dependent on energy from overseas and give us more renewable capacity, which could have been built here? For the sake of a few pennies, it was his argument—I disputed it at the time, when I was the Chair of the Energy and Climate Change Committee—that we should not do so. Now the customers of the UK are on the hook for hundreds and hundreds of pounds each and every year.
I could not agree more with the hon. Gentleman. It is for exactly that strategic reason that the Liberal Democrats are calling for a Robin Hood tax on the super-profits of oil and gas companies. This one-off levy would raise over £5 billion to support households in need of help. Surely that is the fairest way to help the worst off.
However, there is a wider geopolitical point. Gazprom, as we know, is owned by the Russian state, and Gazprom, at the behest of Putin, sent 25% less gas than before to Europe in the last year. We all know that Putin is playing politics with our energy prices, and that is making all of us and our constituents suffer. On one hand, the Government say they will not reward Russia for aggression; on the other hand, by doing nothing about the situation, they are allowing Putin to manipulate the energy market and he is being rewarded for it. We believe that instituting a Robin Hood tax would have many advantages, but one would be to send a powerful message to Putin in Moscow: “You cannot interfere with our energy market”.
Fundamentally—this comes to the point that the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) made—in the long term we need to wean this country, and indeed the entire world, off gas and oil altogether as soon as possible. That is why the answer to this problem is not to cut investment in green energy, as some have suggested. Whether it comes into general taxation or there is another way to fund it—that is the conversation that needs to be had—we need to increase investment in renewable energy, because to protect people now we need to think strategically in the medium and long term. The answer is to end our dependency on rogue states and protect the poorest in our communities.
We need to ensure that there is fairness in the system, and we know that all oil and gas companies have made enormous profits. My right hon. Friend the Member for Orkney and Shetland (Mr Carmichael) made the point earlier about customers who had been loyal to oil and gas companies but who now face high bills, when the companies themselves are profiteering. There are many reasons why a Robin Hood tax would work, but one is the geopolitical point that I am making today.
It is a pleasure, Sir Edward, to serve under your chairmanship.
As others have done, I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing this debate. He highlighted that the gas and electricity issue is a UK-wide one, but he also made relevant and pertinent points about just how much it affects rural Scotland, and in particular his own constituency. His illustration of the effect that it will have on his constituent who is sitting in the Public Gallery, and on an already struggling hospitality industry, was really stark. I hope that the Minister thought the same and pays heed to what was said.
I thank all other right hon. and hon. Members for their contributions. A clear theme seemed to come from all the contributions: basically, we have this cost-of-living crisis and the UK Government are doing nothing about it. The UK Government really need to start taking action.
The UK Government have sat back as household incomes have dropped in real terms by up to £1,200 and energy bills are sky-rocketing. We have had the broken promises about lower energy bills post Brexit, and yet when Labour proposed a 5% cut in VAT in last week’s Opposition day debate, we had the absurd situation of all the Tory Brexiter MPs questioning the validity of such a VAT cut and voting it down. That makes no sense to me, given the broken promises. As a couple of other Members have done, I pay tribute to the hon. Member for Newton Abbot (Anne Marie Morris), who followed the courage of her convictions and voted for something that her Prime Minister had promised us.
To return to the theme, without further action, a real crisis is looming—if it is not already upon us, if truth be told. As others have said, it is not credible for the cap to rise to approximately £2,000 per year in April. Previously, National Energy Action estimated there were 4.5 million fuel-poor households in the UK. When the October cap increased, that added a further 500,000. If the cap goes ahead in April as predicted, we will end up with 6 million fuel-poor households in the UK. That is a 33% increase in the number of fuel-poor households in two overnight increments. It is disgraceful, and something needs to be done to prevent it getting worse.
Worse, National Energy Action previously estimated that there are roughly 10,000 premature deaths a year arising from fuel poverty. How many more premature deaths are likely to occur, given the number of households that will be plunged further into fuel poverty? One cohort who have not been mentioned so far today are the terminally ill, who suffer badly from fuel poverty. I cannot think of anything more distressing than someone who wanted to spend the end of their life in a dignified way in their own home being forced, because of fuel poverty, to spend their final days in a hospice. It is distressing for them and for their family, and that is the real impact of fuel poverty.
A common theme has been the impact of a VAT holiday on fuel Bills, which it is estimated would save £80 a year, so on its own it is insufficient—it is hardly even a sticking plaster—but it could provide a small amount of help.
It is critical that the UK Government take proactive action to ensure that this cap rise is not passed on to consumers in April, so direct intervention is required. Some of that intervention could be in the form of loans, to smooth out the £2 billion of additional costs that are estimated to have arisen from the 28 energy companies that went bust in 2021—money that will otherwise be lumped on to consumers’ bills. Again, that is due to the failure of the Government and the regulator.
As others have said, a proper debate is required about the merits of different levies currently on our electricity bills, which contribute 23% of our bills, according to Ofgem. The reality is that these levies are a regressive tax and general taxation is much fairer. At the moment, the Government are putting out to tender the Contracts for Difference fourth allocation round, which commit £265 million per year for renewable energy projects. I am all in favour of that financial commitment, because we need more renewable energy, but again that money will be lumped directly on to our electricity bills, where it disproportionately affects lower income households and does not form part of a wider just transition.
Last week, the Nuclear Energy (Financing) Bill was considered on Report. The impact assessment for the Bill estimates the capital and financing costs to be as high as £63 billion for a new nuclear power station. Again, it is proposed that that will be added to our energy bills.
Does my hon. Friend agree that this Government, going back to 2015, have taken their eye off the ball? They have scrapped the Department of Energy and have lost focus on energy. Then they have had 10 years trying to do a smart meter roll-out, which has been bungled, depriving consumers of information about when they could get the best tariffs, which adds to the present problems. The Government have to own the responsibility of the trouble that UK consumers find themselves in at the moment.
I agree wholeheartedly that the Government have taken their eye off the ball. The previous Prime Minister, David Cameron, talked about cutting out all the “green crap”. That set back the renewable industry badly. Not only did they scrap the Department of Energy but, given that we now have a legally binding target of net zero by 2050, it beggars belief that there is not a stand-alone Department for energy and climate change, or for energy and net zero. The Government need to take responsibility on that.
I have a question on nuclear for the hon. Member for Caithness, Sutherland and Easter Ross on small modular reactors. Rolls-Royce is looking for something like £30 billion in capital costs to deliver 15 or 16 small modular reactors. Again, that is money that will be lumped on to our bills. With the financing on top, the costs are eye-watering. Nuclear is not a solution; renewable energy is the solution.
In terms of direct spending, the Treasury allocated £1.7 billion in the Budget for the development of Sizewell C. That is something like £60 from every household in Great Britain going towards a new nuclear station, instead of helping them pay their bills. That £1.7 billion could offset the cap for the estimated 3 million households that are eligible for the warm home discount this year, or completely fund a VAT holiday for one year for everybody. Under present policies, not only are the UK Government not doing anything; they are making things worse with their long-term planning. At the moment, costs will be added to energy bills, making things more difficult.
As the hon. Member for Caithness, Sutherland and Easter Ross said, people in the Scottish highlands not only have more challenging weather to deal with and risk being off the gas grid, which makes fuel immediately more expensive, but pay up to £400 more to heat their homes because they are on restricted meters—paying up to 4p more per unit of electricity. Why does the Minister think that it is fair that this surcharge is added to an area that is actually supplying energy to the rest of the UK?
Direct intervention could be paid for through a windfall tax on the Treasury. As our energy bills have increased, so have the VAT returns to the Treasury. As fuel prices have increased, the Treasury has raked in more money in fuel duty and VAT. The November Budget’s Red Book showed that, over the lifetime of this Parliament, North sea oil and gas revenues will contribute an extra £6 billion compared to what was predicted just in March 2021. The Treasury should unlock the extra money that it is getting from the North sea.
Yes. It is the broad shoulders of the UK working in the opposite way from the way in which we are always told it is supposed to work.
By contrast, the Scottish Government are doing their best while operating on a fixed budget. The hon. Member for Caithness, Sutherland and Easter Ross can at least tell his constituents in Scotland that they can benefit as follows. The Scottish Government’s child winter heating assistance, introduced in 2020, supports the families of around 14,000 of the most seriously disabled children and young people with automatic payments of £200 a year. Low income winter heating assistance, which will replace the UK Government’s cold weather payment, will give 400,000 low-income households a guaranteed £50 payment, instead of that “maybe” £25 payment.
There is an economic point here. The money that the hon. Gentleman is talking about, whichever level of Government is giving it to individuals or businesses to see them through all of this, is money that, as well as giving assurance and comfort, ultimately will be spent in shops and other businesses, and will boost local economies. I might suggest that the Government can then recoup that through corporation tax and other means.
I agree. People on lower incomes are the ones who spend all of their disposable income, and they spend it in local businesses and support local businesses. For families in Scotland, there is also the game-changing £20 a week Scottish child payment. As my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) said, that compares with the heartless £20 a week cut to universal credit by the UK Government. Again, that universal credit uplift was spent in local businesses. It was direct support.
It is absurd that Scotland has paid £375 billion of oil and gas revenues to the Exchequer and that it has been squandered over the years. There should have been an oil and gas fund, which would have provided an additional buffer that could have been used in this time of need. It is time that the UK Government take short-term action to deal with the cost of living crisis and energy crisis, but there needs to be a change in long-term planning, for a fair and equitable energy policy. Perhaps that is why Scotland needs independence, so that we can do things differently.
I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing the debate. I think the best way to sum up this afternoon’s debate is to call it a united front. I was going to say a cross-party united front, but the party that was going to be in that united front is now no longer in that party—the hon. Member for Newton Abbot (Anne Marie Morris) had the Whip removed for daring to say that there should be a VAT reduction on bills as a result of the energy crisis. I commiserate greatly with her. It is shameful that she has had the Whip withdrawn under these circumstances. I would have expected hundreds of her colleagues to vote with her on that occasion, because we all know that we have to do something urgently about the perfect storm in energy prices that is coming towards us. It is a perfect storm because it will be added to the ending of the universal credit uplift and other cost of living increases.
As my hon. Friend the Member for Makerfield (Yvonne Fovargue) eloquently put it, millions of people in this country are spinning plates every day to keep their bills, rent and other costs under control. To have a £600 increase in their bills coming their way very shortly—the decision may well be made within a couple of weeks—will inevitably cause those plates to come crashing down across millions of households. This is a crisis emergency that we absolutely have to tackle with equal emergency and resolution as the crisis unfolds.
Hon. Members have talked about both the causes of the crisis and the things that could be done about it. I acknowledge that one of the key bases of the crisis is the unprecedented increase in wholesale gas prices coming into the country, which has had a knock-on effect for electricity prices and bills. Of course, the crisis does not involve a spike in price; it is likely to be a price dome rather than a spike, and it will probably last a couple of years.
The Government are not responsible for that, but they are substantially responsible for making the crisis much worse, as a number of hon. Members have talked about. The Government have managed the retail markets with extraordinary negligence over recent years, allowing a large number of companies to come in and sell us gas and electricity, with no hedging and no serious support behind them. Some 28 of those companies have now gone bust, leaving the customer to pick up the bill, and not just for the transfers that they had to undertake.
About 4 million people have lost their supply and are having to transfer to other companies at the price cap, rather than at the prices they were previously charged, so there is an additional increase on their bills. The companies are potentially having to bear the costs, at about £100 per customer, for the carnage that has taken place with the energy companies that have gone bust and the cost of putting those companies into “supplier of last resort” arrangements.
The Government have also been negligent by allowing gas storage effectively to disappear in this country in 2016, putting us at risk, to a much greater extent, of volatility in the markets, as we have seen recently. There are a number of things that can be laid directly at the Government’s door for their stewardship of the energy economy over the last few years, in addition to what we know are the problems of world prices. That is a double reason why the Government have to act now to put right a number of the things that they have so negligently allowed to happen.
Many hon. Members have mentioned the idea of reducing VAT for an extended period while the crisis in gas prices runs through. That could easily be afforded because of the increase in VAT that the Government have received recently. A windfall tax on companies that have been supplying the gas is an important idea. After all, whether it is supplied to the UK from the UK sector, from the Norwegian sector or from liquefied natural gas, the price that it is sold for is the same in the end. International spot prices are the same, whatever the origin of the gas. That is why a number of companies supplying within the UK sector have made super-profits from this episode, and it is right that they should be subject to a windfall tax that can be clawed back for customers to reduce the level of prices that they are likely to pay.
Hon. Members mentioned increasing the level and extent of the warm home discount, which would be a particularly targeted way of ensuring that those who can least afford it—the real plate-spinners in our society—have an additional plate to spin in the shape of a much more generous warm home discount, and one that expands its range.
Will the hon. Member pick up on a point that I made? Customers who wanted to do the right thing and bought their energy from renewables only should not be subject to energy price rises when renewable prices are falling because energy supply companies can lump the prices together.
The hon. Lady has anticipated exactly what I will say in a moment. One of the wider issues about the energy crisis is how, regardless of where someone gets their energy from, what sources they get it from and who makes the energy, it is all delineated in gas prices eventually, so they pay what they would have done had they been a gas-to-electricity customer, even if they are not. Essentially, the whole market is now delineated—the wholesale market and the balancing market—around gas prices being the price-maker.
Hon. Members mentioned that the long-term issue is that we need to get off gas and go further on renewables, but—I put this straight at the Government’s door—we need urgently to reform the wholesale energy market and balancing market so that the market is not delineated in gas and it works in a way that properly reflects the increasingly dominant form of energy production that is renewables. Had we done that, although the gas price issue would have been considerable, it would not have been as damaging and as universal as it has been under the present circumstances.
I call on the Government to undertake measures that will take that terrible burden off the back of customers in the short term, ensuring that they are not subject, as they look to be at present, to the £600 or so increase that is likely to come their way in April, and indeed further increases that are likely to come their way as the price cap reflects the current price dome in gas.
I ask the Government to look seriously in the longer term at how the market has become so dependent on gas, how we have become so vulnerable to it, and how we can take measures to protect our industry and country from such volatility in the future by reorganising our market so that customers are substantially protected from it. This is an issue not just for domestic customers; it is a substantial issue for industry as well, which is groaning under the current price increases and, among other things, needs protection. I personally think that we need a price cap measure on volatile prices from outside the UK coming into the UK for industrial purposes, so that industry can have some certainty ahead of it regarding what prices it will pay for gas.
I hope that the Minister will have answers on all those issues. I know that the Government have been holding discussions with the industry about measures that might be taken, but the concern mentioned by hon. Members this afternoon is that nothing whatsoever has come out of that so far, and time is running out. The longer we do not know what we are going to do, the worse the crisis becomes. I hope the Minister can tell us what is to be done about this energy crisis.
I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing this important debate. We have heard from across the United Kingdom, from all nations, of constituents’ concerns about this issue, and rightly so, because this is of huge concern to all our constituents.
The recent rise in energy prices has been driven by the global increase in the price of wholesale gas, and the demand for gas that has grown as we and other nations recover from the covid-19 pandemic. Consequently, higher wholesale gas prices have been observed internationally throughout 2021 and into this year. In addition, greater liquified natural gas demand in Asia, upstream gas production, maintenance affecting supply and capacity during last summer, increased demand for gas in electricity generation, as we phase out coal, particularly in Europe, have also contributed to rising prices.
The first point I want to make is that that has not had an impact on our energy security, a point raised by my hon. Friend the Member for South Thanet (Craig Mackinlay) and others. The Government continue to work closely with Ofgem, the National Grid and other key industry organisations to monitor energy supply and demand. We remain confident that Great Britain’s energy security will be maintained. National Grid’s gas and electricity winter outlooks, published in October, indicate that there will be sufficient gas and electricity supply in all of its modelled supply and demand scenarios.
The first part is all about delivering renewables—
On the point about domestic security, the Minister will be aware that 5.6 % of the UK’s energy need, according to the GridCarbon app, comes from overseas. Does the Minister not think that, in the next round of CfDs, it should be paramount that the projects that could have happened over the past number of years, particularly in the Scottish islands, actually get under way, so that there is less reliance on the continent and Scandinavia for some of that energy?
That is exactly what we are doing. The new contract for difference auction that was launched in September is as big as the previous three auctions, when it comes to renewables. Our dependence on foreign gas is less than 20%. Our dependence on gas from Russia within that is less than 3% or 4%. That is action that we have already taken.
Our long-term strategy is about finding effective replacements for fossil fuels, which are reliable and do not expose us to the volatility of international commodity markets. We already have the world’s largest capacity in offshore wind, but we are not resting on our laurels, because we are going to quadruple that over the course of the next decade. That is all a major step towards delivering the Government’s increased ambition on renewables.
In answer to the hon. Member for Strangford (Jim Shannon) on new technology, it is both renewables and nuclear, to which I will turn briefly, which is a key plank in the Prime Minister’s 10-point plan in the energy White Paper and the legislation that is passing through the House of Commons. I will return in a moment to the comments from the hon. Member for Kilmarnock and Loudoun (Alan Brown).
In the brief time of six minutes available to me, I will answer some of the points raised. The hon. Member for Caithness, Sutherland and Easter Ross referred to his constituent, the businessman Andrew Mackay. I am happy to engage with the hon. Member on behalf of his constituent. Business bills tend to be set on long-term contracts, which give a certain insulation from volatile prices, at least until the point where the contract comes up for renewal.
On rural support, 15% of the energy company obligation—ECO3—must be delivered to households in rural areas. We consulted in the summer of last year on its successor scheme—ECO4—for delivering energy efficiency heating measures in off-grid homes in Scotland and Wales. We are already extending the warm home discount from about 2 million to 3 million households, from £140 to £150. It is worth pointing out, as the hon. Member for Kilmarnock and Loudoun knows well, that the warm home discount is not a zero-cost option. There are people who have to pay additional money on their bills to support recipients of the warm home discount, so it is not something that we can just take action on with the stroke of a pen, like the Labour motion last week—the trebling—without considering the consequences.
The hon. Member for Newton Abbot (Anne Marie Morris) is absolutely right on cost-of-living issues, but let us look at a lot of what is happening in this country. We have record figures for those in employment. We have the national living wage increase. We have beneficial changes in the universal credit taper rate and so on. All these things are providing support for people facing cost-of-living issues. I totally appreciate and am totally with the hon. Lady on the impact that energy bills may be having and will be having later this year. On levies and on the heat and buildings strategy, we said that we would publish a fairness and affordability call for evidence, which will set out the options to help rebalance electricity and gas prices and to support green choices, with a view to taking decisions in this year—2022.
The hon. Member for Bath (Wera Hobhouse) said that we are scrapping the ECO scheme. No—as I have already pointed out, we are moving from the ECO3 scheme to the ECO4 scheme. I guess, Sir Edward, technically you may describe that as scrapping it, but we see it as improving it and building on it. The hon. Lady called for a windfall tax. She praised German energy company E.ON for doing a great job, and it does do a great job, but she and other Members have to be careful when they call for a windfall tax while also praising those investing in the energy sector. She has to be mindful of what impact any windfall tax would have on those investment rates.
The hon. Member for Makerfield (Yvonne Fovargue) made a very moving speech about the situation for low-income households and prepayment customers. There are 4 million prepayment customers. Ofgem obviously put in place licensing conditions to protect prepayment customers at risk—particularly of self-disconnection—including dedicated helplines for prepayment meter customers. There is a lot of support in place, but the issue of PPM customers is something that we keep a very, very close eye on in the Department for Business, Energy and Industrial Strategy, and I know Ofgem does as well.
The hon. Member for Strangford (Jim Shannon) wanted an indication of what the Government are doing to help. We are doing a lot. We have in place winter fuel payments of between £100 and £300. I have already discussed the warm home discount. There are the cold weather payments. There is the £421 million household support fund. There is a lot of support. I say that while recognising Northern Ireland’s particular status as regards electricity. Obviously, a lot of that is devolved to the Northern Ireland Executive.
The hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) called for a VAT reduction. That is obviously, as she rightly pointed out, a matter for Her Majesty’s Treasury. It is not a very targeted way of supporting vulnerable customers. We heard from the hon. Member for North Ayrshire and Arran (Patricia Gibson). I do not think this is really the right place for a Brexit debate, but she said that leaving the EU allows us to cut VAT on domestic fuel. Her policy of rejoining the EU would surely negate that policy.
No. I have only two minutes left. The hon. Lady asked a question about storage, and I repeat that the current issue is not a question of supply. Storage helps if there are supply issues, but we have an issue relating to price. Storage does not protect, generally, from price shocks if the supply is secure, and I have already said that our supply is secure.
The hon. Member for Oxford West and Abingdon (Layla Moran) made an extraordinary speech, in which she said, I think, a windfall tax would be a powerful message to Moscow. I thought the intervention by the hon. Member for Kilmarnock and Loudoun slightly exposed that. If the hon. Member for Oxford West and Abingdon can show me how to design a windfall tax that would clobber Gazprom, I am all ears. Bearing in mind that our imports of gas from Russia are almost entirely liquefied natural gas and only less than a handful of percentage points, if the hon. Lady can show me how her Robin Hood tax would have an impact on Gazprom, I am all ears. We are not dependent on—she said “rogue states”. More than half of our gas imports come from Norway. I do not think anything she is proposing is going to protect us from rogue states.
The hon. Member for Kilmarnock and Loudoun made a number of familiar points on supplier of last resort costs. SoLR is there to protect customers when their energy supplier ceases to trade, so that they can transfer their account.
Okay, I will give him a few seconds, Sir Edward. On oil and gas and nuclear, I am constantly baffled by the SNP’s policy. It is anti-oil and gas. It is anti-nuclear. It is hard to know what it is actually in favour of in Scotland when it comes to supporting Scotland’s energy customers and energy suppliers. Finally, I note that we have not heard anything about Labour energy policy in the week since the party’s disastrous four-page, convoluted student union motion in the main Chamber last Tuesday. I thank everyone for participating in the debate, and I look forward to further engagement.
Taxation: Silage Film
I beg to move,
That this House has considered taxation of silage film.
I am grateful for the chance to raise these issues in debate. Before we begin, I am not seeking to question or doubt the merits of the plastic packaging tax, which I fully support, along with all efforts to make sure that as much plastic as possible that we use is recycled. My concern is shared by many colleagues, plastic manufacturers and farming industries: guidance was—I could say sneaked out—released by Her Majesty’s Revenue and Customs just before Christmas, and unexpectedly added silage film to the list of items caught by that tax. That was not a position that anyone expected. Industries had not prepared for that, and the costs will fall directly on farmers at a very difficult time for them.
My interest in this stems both from the fact that there is a collection of farmers in Amber Valley who use silage film and from the fact that I have a large employer who uses recycled plastic pellet to make, among other things, refuse sacks for the NHS and damp-proof membrane for construction products. The irony of the situation is that, in the years in which I have been an MP, the main problem that that business has had is securing enough plastic to wash at a different plant and recycle so that it can use it in its production process. The best source of plastic that it can get is silage film, which is being exported illegally as clean waste around the world, rather than being washed and recycled at home. Our enforcement bodies were not enforcing the law that was in place, so we are in a rather strange situation. The industry has been investing, and has been keen to recycle the film for years, and if we ended up by accident with a new tax that the Government introduced to try to encourage more plastic recycling it would stop the recycling of that film so we would end up in a worse position. I am sure that that is not what the Government intended.
I have four arguments for the Minister as to why the HMRC guidance should be corrected or withdrawn before 1 April. First, the primary purpose of silage film is not packaging—it is to ensure that harvested grass can be fermented into silage. Secondly, the purpose of the plastic packaging tax is to encourage the use of recycled material and increase the recycling of plastic material. Extending the charge to silage film will not generate more use of recycled material in the film, and will lead to less recycling of the film that is used. Thirdly, I am not sure that silage film falls within the definition of the measures that were introduced in the Finance Act 2021, so the guidance is incorrect and inconsistent with the law. Fourthly, I contend that this is seriously damaging for our farming industry at a difficult time, and would reduce its competitiveness against international rivals. All of those cases are strong reasons why the guidance, which appears to be out of sync with what had been planned, should be withdrawn.
The first case I should like to make is about the primary purpose of the silage film. I would not claim to be an expert on silage or its creation, but the information that I have had from the National Farmers Union, for which I am grateful, and from other farming bodies, is that the film is very specialised. It is very thin. Generally, contractors go on to farms and, in simple terms, mow the grass and wrap it in film so that is airtight and watertight, so that fermentation can take place and produce silage to feed animals through the winter. If that film is not airtight and watertight, the grass will rot and cannot be fed to animals. That is quite a technical process and the film is an expensive and highly specialised product. It cannot be any old plastic: it has to be a very thin film that is air and watertight, and that can survive being used to wrap on a farm in those conditions, rather than in a nice, safe factory setting.
The main aim of using that film is not simple wrapping or packaging to store the grass; there is a much greater purpose of converting the grass into something that can be used to feed animals through the winter. If that plastic does not fulfil that purpose, there will be no food for animals and we will have to import soya or other foods from around the world to get them through the winter.
I should declare that while I am not one, my family are farmers and have a plastic recycling business. I want to pick up on the point that my hon. Friend is eloquently making about the nub of the issue: silage wrap should not be classed as packaging but is integral to the grass fermentation process to make silage. Does he agree that our colleagues at the Treasury need to realise this very fine point so that legislation and taxation can be addressed accordingly?
I am grateful to my hon. Friend for making that point, with which I entirely agree. It is not a point that the Government have ever challenged in the past. Only last year, the Environment Agency published a paper on the positions and technical interpretations in respect of responsibility for packaging. On page 31, the document accepts that the primary function of silage wrap is producing the product. I accept that it is a different Government Department, but it has accepted that the primary function of silage wrap is to produce silage, not to package, store or protect it. The Minister may argue that that is a different Department and that it is not Treasury policy, but we are trying, on a cross-Government basis, to reduce the amount of plastic that is used and encourage the use of recycled plastic and of recycling. We have measures coming in to make the producer pay for the collection and recycling of their packaging material through the whole system. It seems bizarre that the Treasury, HMRC and the Department for Environment, Food and Rural Affairs have different definitions of what counts as packaging in that situation. People come under one set of rules but not the other, even though they are charging for similar sorts of things. I hope that we can achieve consistency across Government.
If the Minister is not convinced by that compelling argument for consistency across Government, I refer her to a 2018 HM Treasury consultation on tackling the plastic problem that concluded that silage film came into the category of non-packaging plastics. Even the Treasury has, in the past, accepted that silage film is not a packaging plastic. I therefore hope that there is no doubt that the primary purpose here is not simple packaging. Looking through the list of items that fall inside and outside this tax, one of the general themes is the primary purpose of the plastic. It is hard to see from that list why silage film has been treated inconsistently with other plastics that are excluded.
My second contention is that what has been done here is contrary to the policy intent. The guidance notes set out that the plastic packaging tax was designed to encourage to the use of recycled plastic instead of new plastic material in plastic packaging. In turn, the tax would create demand for recycled plastic and stimulate increased recycling and collection of plastic waste, diverting it from landfill or incineration. That is the Government’s own stated intent. Because of the very specialised nature of the film––which has to be incredibly thin, light-proof and waterproof, and capable of achieving those things when being used for wrapping in a farm setting––the industry and farming lobbying bodies are absolutely clear that there is no way any level of recycled plastic can be used in that film with current technology and achieve the effect needed for the fermentation of grass. No matter what this tax is from 1 April, there will not be any quantity of recycled plastic incorporated in the film, as that is not technologically possible at the moment. Therefore, including silage film in this tax will not generate increased use of recycled plastic; it will simply be a tax on farmers that they can barely afford to pay, given their current situation.
I am grateful to my hon. Friend for giving way, and for his well-researched and detailed speech. I should also declare an interest; although I am no longer a farmer, before I came to this place I was involved in farming, and silage is an integral part of farming across the United Kingdom.
I am here today to express the views of the National Farmers Union of Scotland, which has made many of the points that my hon. Friend has made today. On recycling, does he accept that agriculture accounts for only 3% of plastic use across the United Kingdom, that silage film is just a small proportion of that, and therefore that we are seemingly taking a sledgehammer to crack a very small nut here?
I am grateful to my hon. Friend and I agree with him.
I was trying to establish that levying this tax would not actually increase recycling, because silage film cannot include any recycled components. In fact, the tax may make the recycling situation worse, because there have long been efforts to get a collection scheme in place for this waste. It is obviously expensive to go and collect the film from every single farm; it becomes hugely dirty, and collecting it is not cheap.
In recent years, a voluntary scheme has been put in place to collect this plastic so that it can be recycled. That has a cost to farmers of about £60 a tonne. The impact of charging farmers £200 a tonne to get the plastic in the first place will be that they will not be able to afford the £60 a tonne for collection, so we will end up with lower levels of recycling; the farmers just will not pay for collection, so there will not be a collection and the plastic will not be recycled. Consequently, as a result of the tax, we will end up with less recycling of plastic than we have now.
I am sure that the Government’s sincere aim is to have more recycling of plastic. However, by far the best approach would be not to include this film in the taxation regime but instead to try to support the voluntary scheme, to get as much of this stuff collected as we can. It is actually very recyclable, making it very valuable; it can be recycled and reused in other products, including those made in my constituency.
My third argument was that silage film would not fall within the definitions set out in section 48 of the Finance Act 2021, which defines a “packaging component” as
“a product that is designed to be suitable for use…in the containment, protection, handling, delivery or presentation of goods at any stage in the supply chain of the goods from the producer of the goods to the user or consumer.”
What happens with silage film is that the grass and so on is mown and harvested in the field, and it is then wrapped in the field, stored on the farm and subsequently fed to the farmer’s animals in the winter season.
I am not sure whether it is possible to call grass that has been stored and fermented “goods”. It is not sold to anybody, it does not leave the farm, and there is no “supply chain” for it at all. It is not packaged to be moved, presented or anything else; it is basically just there to be fermented. Once it has fermented, the plastic is taken off and the silage, as it is now, is fed to the animals on that farm. I am not sure how it can be said that there is a “supply chain” for silage when the grass never leaves the farm. It therefore looks to me, on first principles, that the published guidance of Her Majesty’s Revenue and Customs is not consistent with the law that Parliament passed last year.
The irony, of course, is that the Government have had to introduce a statutory instrument—I think that it is S.I. 2021, No. 1417—to modify the law that we have introduced but that has not yet come into force, in order to try to be clear about what we intended to catch in this situation. I do not have any criticism of that. This is a whole new tax; we want to get it right, and it is more important for us to get it right than to be precious about not correcting our own law. I therefore fully support those changes.
However, the guidance note for the changes sets out, in paragraph 7.4:
“This is to ensure that the tax applies to products which are primarily packaging rather than products whose function as packaging is incidental to their main purpose”.
So the Government are introducing changes to section 48 of the Finance Act 2021 to exclude products whose primary purpose is not packaging; indeed, the packaging is
“incidental to their main purpose”.
Therefore, it seems entirely clear to me that what the Government have been trying to do in clarifying the law in that statutory instrument is exactly what I am arguing for silage film; I argue that it meets the definition in the guidance note of the sort of product that should not be caught by this tax.
It would be far better for all concerned if we clarified that now and had HMRC guidance that was, in my view, consistent with the law, rather than having to resort to litigation and tribunals to establish whether this tax should be collected. If that happened, we may end up with some manufacturers thinking that the tax was not due and not charging it, and some manufacturers taking the other view, and it may have to be resolved by the courts in a few years’ time. I would hope that we could get that clarified now, just over two months before the tax comes into force, so that we have certainty.
My final contention is about the impact of the tax on farmers at a difficult time for them. According to estimates, I think from the National Farmers Union or its Northern Irish counterpart, the £200 per tonne would increase the cost of silage film by roughly 10%—a cost that farmers’ rivals around the world, from where we import much meat, do not have to bear. That would be a blow to our farmers’ competitiveness against their international rivals. It would increase their cost base when they are already struggling, as many businesses are in the current economic climate. As I said, that is just a straight-through cost. There is no way of changing the formulation of silage film to avoid the cost by making it 30% recycled components. That cannot be done. It is just a straight cost for farmers, which is not what this tax was intended to achieve.
I therefore hope, on the basis of all of those arguments, that the Minister can give us some encouraging noises. It was never raised that silage film would be in the scope of the tax in any of the consultations, previous lists of products or discussions with the industry. I hope that the Minister can accept that adding it at a late stage was incorrect and was not appropriate. Its inclusion is inconsistent with the law, will not achieve the purpose of the tax and will be an unnecessary burden on farmers. I look forward to hearing her remarks.
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate my hon. Friend the Member for Amber Valley (Nigel Mills) on securing the debate and on his comments. I have listened carefully to what he has said. I share his expressed aim of ensuring that we get this tax right, and I very much appreciate the tone that he took.
As context to this debate and to the plastic packaging tax overall, I think that we can all agree that plastic waste is a significant and serious environmental threat, because plastics do not decompose. They can last centuries in landfill sites. With our commitment to reach net zero while driving jobs and growth, and our pledge, through the Environment Act 2021, to leave a better world for future generations and build back greener, the Government are determined to use our battle against pollution and climate change to make a positive difference to people’s lives and the wider economy. That is why we have been focused for some years on developing the right incentives, so that businesses can play their part in supporting us in the green economic transition.
That includes our introduction, back in 2015, of a 5p levy on single-use plastic bags, which led to a more than 95% drop in plastic carrier bag sales in England’s main supermarkets. Last year, we went even further, doubling the levy to 10p. As part of DEFRA’s 2018 resources and waste strategy and our 2019 manifesto, we said that we would introduce the tax on plastic packaging that we are discussing today. We estimate that the tax will lead to around 40% more recycled plastic being used in packaging in 2022-23, compared with current levels. Given that the use of new plastic in manufacturing generates more carbon than recycled plastic, we estimate the tax will save nearly 200,000 tonnes of carbon dioxide in the same year.
Turning specifically to how the tax relates to silage film, let me address the points that my hon. Friend made so logically. First, the design and structure of the plastic packaging tax reflects extensive stakeholder consultation, including two design consultations in 2019 and 2020 and three technical consultations on the legislation. Her Majesty’s Revenue and Customs has also established an industry working group made up of trade bodies and organisations, which was consulted on the finer detail of the policy, legislation and guidance. As part of that consultation work, Treasury and HMRC officials met Berry BPI, a plastic packaging manufacturer based in my hon. Friend’s constituency. There has been substantial consultation and engagement, so I was surprised to hear my hon. Friend say that the guidance comes as a surprise.
My hon. Friend talked about DEFRA’s producer responsibility obligations, which it is in the process of reforming. I am clear that, as he indicated, those obligations and the tax are different schemes with different sets of rules and objectives, and they use intentionally different definitions of packaging. The definition for the plastic packaging tax covers products designed to contain, protect, handle, deliver or present goods at any stage in the supply chain. Unlike DEFRA’s responsibility obligations, the tax includes goods that meet that definition even if they are used by an end user. That is in order to better achieve the objective of the tax, which is to reduce the environmental harm caused by plastic.
During silage season, large amounts of silage film are used by farmers throughout the country. I am sure hon. Members are aware of the quantity of plastic used; I see it in my own area of the countryside. As we attempt to reduce the use of non-recycled plastic and the amount of plastic overall that ends up in landfill, it is right and it makes sense for the Government to include the use of plastic for silage in the tax. Like cling film and plastic wraps, silage film meets the definition I outlined because it is suitable for use in the supply chain for the containment of silage, but it can also be used by farmers—the main end users—to make their own silage.
I fully appreciate my hon. Friend’s point, which I will come to in a second. There are two sides to this issue. On the one hand, silage film can be part of the supply chain; on the other, it can be used by farmers, as end users, to make their own silage by wrapping grass and other crops with the film. If the Government exempted silage wrap and similar items, such as pallet wrap and cling film, we would be shying away from dealing with the overall challenge posed by the use of plastic packaging. That would undermine the aim of this tax, which is to reduce the environmental harm caused by plastic. I do not for a moment dispute that the film is part of the process of turning grass into silage. However, that does not exempt it from falling within the definition for the tax.
That definition is targeted so that it does not include plastic packaging products that are essential for goods to be used, in contrast to products that are essential for goods to be manufactured. Therefore, products such as tea bags, coffee pods, inhalers and lighters are not taxable because the product contained by the packaging simply could not be used by the end user without the packaging. However, that is not the case for silage film.
The Minister has accepted that farmers cannot get silage without silage film. Grass cannot ferment without it. Should it therefore not fall under the heading of plastic packaging that is an integral part of the good? Simply put, it is needed to produce silage. The Minister briefly said that there had been wide consultation. Did any farming unions across the United Kingdom contribute to the consultation? If not, does that not suggest that they did not think they were affected by the change?
I am happy to get back to my hon. Friend on the conversations that have taken place with different sectors, including the agriculture sector, that were part of work done over the last couple of years on the introduction of the tax.
The definition is set such that it does not include plastic packaging products that are essential for goods to be used, such as coffee pods or asthma inhalers. However, where single-use plastic is required for something to be made, as is the case with silage, it does fall within the definition.
We are getting to a perverse situation where things such as coffee pods or perforated bags for boiling rice, which there is no need to use as rice can be cooked without the plastic and coffee can be made without single-use plastic pods, are exempt from the tax, yet silage film, which is an integral part of the process and which there is no way around using, falls within the tax. That is not achieving the objectives. It will seem bizarre to people that we exempt plastic coffee pods but not silage film. Plastic coffee pods cannot be drunk.
I gave examples of some specific products where the plastic is inherently part of the product—ink cartridges would be another. I recognise that there are some kinds of plastic that are harder to make using recycled plastics. One objective of the tax is to improve the rationale and incentives for the development of plastic packaging that uses more recycled plastic, and to make sure that more plastic is recycled and re-enters the supply chain. Although that will not necessarily happen immediately, it is part of shifting the incentives to encourage businesses to innovate and develop those products. We are already seeing that; as my hon. Friend the Member for Amber Valley knows, Berry BPI is already making great strides in producing high-quality recycled plastic that can be used for a variety of purposes, including agricultural purposes. I know that other businesses are working on this and, with the incentives, more will follow suit.
In conclusion, I reiterate that we have worked closely with manufacturers, importers, the devolved Administrations and others affected by this tax at every stage of its introduction. HMRC has been working closely with the industry, and that has informed the development of the categories of products that are in and out of scope of the tax. I assure hon. Members that HMRC and the Treasury are continuing those conversations and listening to industry. I am confident that by incentivising innovation and encouraging new ideas across our economy, including in agriculture, we will ultimately achieve huge benefits for the environment, nature and the world.
Question put and agreed to.
Covid-19: Forecasting and Modelling
I beg to move,
That this House has considered forecasting and modelling during covid-19.
It is a pleasure to speak under your chairmanship, Sir Edward. I speak not to bury science, but to praise it. During the covid pandemic, there has been some remarkable, wonderful science; I just question to what extent that includes the modelling and forecasts that have come from it. Thanks to some questionable modelling that was poorly presented and often misrepresented, never before has so much harm been done to so many by so few based on so little questionable and potentially flawed data.
I believe that the use of modelling is pretty much getting to be a national scandal. That is not just the fault of the modellers; it is how their work was interpreted by public health officials and the media—and yes, by politicians, including the Government, sadly. Modelling and forecasts were the ammunition that drove lockdown and created a climate of manipulated fear. I believe that that creation of fear was pretty despicable and unforgivable. I do not doubt that modelling is important or that there has been some good modelling, but too often it has been drowned out by hysterical forecasts. I am not, as Professor Ferguson implied, one of those with an “axe to grind”. I do, however, care about truth and believe that if someone influences policy, as the modellers and Imperial College London have done, they should be questioned. Frankly, they have not been questioned enough.
Above all, I want to understand why Government, parts of the media and the public health establishment became addicted to these doomsday scenarios, and then normalised them in our country with such depressing and upsetting consequences for many. I do not pretend to be an expert; I am not. I defended my own PhD at the end of last year, but it is not in epidemiology and I do not pretend to be particularly knowledgeable about that. But depending on time—I know others want to come in as well—I will quote from 13 academic papers and 22 articles authored by a total of approximately 100 academics.
This is a story of three scandals, and the first one took place 21 years ago. In 2001, we faced the foot and mouth emergency. We reacted drastically by slaughtering and burning millions of animals, and farmer suicides and bankruptcies followed. That policy was allegedly heavily influenced by Imperial College modelling and Professor Ferguson. Since foot and mouth, two peer-reviewed studies examined the method behind that particular madness. I quote from them now to show there are practical and ethical questions over modelling going back two decades.
In a 2006 paper, and I apologise for these wordy, long titles, titled “Use and abuse of mathematical models: an illustration from the 2001 foot and mouth disease epidemic in the United Kingdom”—they are not that catchy—the authors confirmed that Ferguson’s model
“probably had the most influence on early policy decisions”
“specifically, the introduction of the pre-emptive contiguous culling policy”.
That is the mass slaughter of animals near infected farms. The authors said that the consequences were “severe” and
“the models were not fit for the purpose of predicting the course of the epidemic”
—not a good start. They remain “unvalidated”. Their use was “imprudent” and amounted to
“the abuse of predictive models”.
Devastatingly, the authors wrote
“The UK experience provides a salutary warning of how models can be abused in the interests of scientific opportunism.”
It is difficult to find a more damning criticism of one group of scientists by another.
A 2011 paper, “Destructive tension: mathematics versus experience—the progress and control of the 2001 foot and mouth disease epidemic in Great Britain”—bit of a mouthful—by four academics said the models that supported the culling policy were “severely flawed” and based on flawed data with “highly improbable biological assumptions”. The models were
“at best, crude estimations that could not differentiate risk”.
That is not a very good “at best”. At worst, they were “inaccurate representations”.
Sadly, the paper said, impatience for results
“provided the opportunity for self-styled ‘experts’, including some veterinarians, biologists and mathematicians, to publicise unproven novel options.”
Some of the scientific work—some of it modelling, some of it not, with some modelling by Ferguson and some not—was cited as “unvalidated” and “severely flawed”, with inaccurate data on “highly improbable assumptions” leading to “scientific opportunism”. Is anybody reminded of anything more recent that would suggest the same?
I scroll forward 20 years. As with foot and mouth, with covid we had a nervous Government presented with doomsday scenarios by Imperial—the 500,000 dead prediction—that panicked them into a course of profound action with shocking outcomes. After the lockdown had gone ahead, Imperial publicised on 8 June a study by, I think, seven of them arguing the justification for lockdown. It claimed that non-pharmaceutical interventions saved more than 3 million lives in Europe. Effectively, Imperial marked its own homework and gave itself a big slap on the back.
That work is now being challenged. Because of time, I will quote only a small selection. In a paper entitled, “The effect of interventions on COVID-19”, 13 Swedish academics—Ferguson ain’t popular in Sweden, I can tell Members that much—said that the conclusions of the Imperial study were not justified and went beyond the data. Regensburg and Leibniz university academics directly refuted Imperial College in a paper entitled “The illusory effects of non-pharmaceutical interventions on COVID-19 in Europe”, which said that the authors of the Imperial study
“allege that non-pharmaceutical interventions imposed by 11 European countries saved millions of lives. We show that their methods involve circular reasoning. The purported effects are pure artefacts, which contradict the data. Moreover, we demonstrate that the United Kingdom’s lockdown was both superfluous and ineffective.”
I am not saying that this stuff is right; I am just saying that there is a growing body of work that is, frankly, taking apart Imperial’s. Remember, we spent £370 billion on lockdown that we will never get back. I could continue with other quotes, but I think Members get the flavour.
Moreover, a substantial number of other papers now question not Imperial per se but the worth generally of lockdowns. A pre-print article by four authors, “Effects of non-pharmaceutical interventions on COVID-19: A Tale of Three Models”, said:
“Claimed benefits of lockdown appear grossly exaggerated.”
In another paper, three authors found no clear, significant benefit of lockdowns on case growth in any country. Other papers continue that theme. I will quote one more, on adults living with kids. Remember: we shut schools because we were scared that kids would come home and infect older people, who would then die. This paper, in The BMJ, found
“no evidence of an increased risk of severe COVID-19 outcomes.”
We shut down society and schools just in case, doing extraordinary harm to people’s lives, especially young people. I am not a lockdown sceptic, as Ferguson casually describes some of his critics, but I am becoming so. Do you know why, Sir Edward? Because I read the evidence, and there is a growing body of it. In fact, there is one quote that I did not read out. There was a study of lots of countries that had lockdowns and lots that did not, and the data was inconclusive.
The third element of the scandal is the recent modelling. Swedish epidemiologists looked at Imperial’s work and compared it with their own experience. Chief epidemiologist Anders Tegnell said of Imperial’s work that
“the variables…were quite extreme…We were always quite doubtful”.
Former chief epidemiologist Johan Giesecke said Ferguson’s model was “almost hysterical”. In the House of Lords, Viscount Ridley talked of a huge discrepancy and flaws in the model and the modelling. John Ioannidis from Stanford University said that the “assumptions and estimates” seemed “substantially inflated”.
There was a second example last summer. In July 2021, the good Professor Ferguson predicted that hitting 100,000 cases was “almost inevitable”. He told the BBC that the real question was whether we got to double that or even higher. That is where the crystal ball starts to fail: we got nowhere near 200,000, and we got nowhere near 100,000. There was nothing inevitable about Professor Ferguson’s inevitability, and his crystal ball must have gone missing from the start. In The Times, he blamed the Euros for messing up his modelling because—shock horror—people went to pubs a lot to watch the games during the competition. When the tournament finished—shock horror—they did not. That seems to be the fundamental problem: where reality comes up against models, reality steamrollers them because models cannot cope with the complexity of real life. To pretend that they can and even that they are useful, when so many of them have proved not to be, is concerning.
Ferguson is only one of many people in Independent SAGE especially, but also SAGE, who did not cover themselves in glory. Raghib Ali—a friend of my hon. Friend the Member for Wycombe (Mr Baker), who I am delighted is present—is one of the heroes of covid. He noted that many left-wing SAGE members
“repeatedly made inaccurate forecasts overestimating infections”.
Very often, they were falsely described on the BBC.
I am grateful to my hon. Friend for mentioning my friend and constituent Raghib Ali, who has indeed been one of the absolute heroes of this pandemic—not only in his advice to us all, including online, but through his service in hospitals. I hope my hon. Friend will not mind my saying that I do not think any of us can speak for Raghib about his opinion of modelling, and I know my hon. Friend is not trying to.
I quite agree, and I thank my hon. Friend for that, but I am deeply grateful to Raghib and other people for speaking out. Just for the record, the communist Susan Michie, who is quoted quite often by the BBC, is not a medical doctor, a virologist or an epidemiologist. She is a health psychologist, so why on earth is she talking about epidemiology?
The third scandal took place this winter. Imperial, the London School of Hygiene and Tropical Medicine and others—I think they included Warwick—predicted 5,000 daily covid deaths, with 3,000 daily deaths as the best-case scenario. They were hopelessly inaccurate, and at this point the tide really begins to turn. Dr Clive Dix, a former vaccine taskforce head, said:
“It’s bad science, and I think they’re being irresponsible. They have a duty to reflect the true risks, but this just headline grabbing.”
As I say, the tide is turning. Oncology professor Angus Dalgleish describes Ferguson’s modelling as “lurid predictions” and “spectacularly wrong”. The great Carl Heneghan, another scientist who has emerged with great credit for his honesty and fairness of comment, says:
“it’s becoming clearer all that ministers see is the worst-case scenario”.
Professor Brendan Wren says:
“Dodgy data and flawed forecasts have become the hallmarks of much of the scientific establishment 2”—
what a damning quote!—
“which has traded almost exclusively in worst-case scenarios...this must stop now.”
I will wind up in the next two to three minutes—I will speak for no longer than 15 minutes because other people wish to get in, and I am always mindful of that. What is the result of all this? The result, as UCL’s Professor Francois Balloux notes, is a
“loss of trust in government and public institutions for crying wolf.”
That is just it. We have had hysterical forecasts, models taken out of context, and worst-case scenarios normalised.
In the Army, there is something called the most dangerous course of action, and there is something called the most likely course of action. To sum up in one sentence how we got this wrong, we have effectively taken the most dangerous course of action and collectively—the politicians, media, scientists and health professionals—presented that as the most likely course of action, but it was not. Why did politicians say, “Follow the science” as a way of shutting down debate, when we know that science is complex and that our outputs are dependent on our inputs? It was down to public-health types, whose defensive decision making would only ever cost other people’s jobs, other people’s health, other people’s sanity, other people’s education and other people’s life chances.
We know that the Opposition supported lockdown from the word go, but a little more opposing might have been helpful. The BBC and the Guardian have been salivating at state control and doomsday scenarios. Against this tsunami of hysteria and fear, thank God for The Spectator, The Telegraph and, yes, the Daily Mail for keeping alive freedom of speech and putting forward an alternative, which is now being increasingly scientifically vindicated. I accept that lockdown was understandable at first—I get that—but I believe the continuation of lockdown after that first summer was an increasingly flawed decision.
In wrapping up, I have some questions. To Professor Ferguson and the doomsday modellers: why are so many of your fellow academics disputing your work and your findings? To the BBC, as our state broadcaster: why did you so rarely challenge Ferguson, SAGE or Independent SAGE? Why did we misrepresent experts, and why did the BBC allow itself to become the propaganda arm of the lockdown state? To the Government: how could we have been so blinkered that we thought that following the science meant shutting down scientific debate? Why did we never use other datasets in contexts with the British people, or even in contexts in which these profound and enormous decisions were made? Why did we think that it was in our nation’s interests to create a grotesque sense of fear to manipulate behaviour? SAGE and Independent SAGE kept on getting it wrong. To the public health types, I quote from Professor Angus Dalgleish again:
“Flailing around, wallowing in hysteria, adopting impractical policies and subverting democracy, the Chief Medical Officer is out of his depth. He has to go if we are ever to escape this nightmare.”
He is not a journalist; he is an oncologist—a senior oncologist.
Twice in 20 years, we have made some pretty profound and significant errors of judgment, using modelling as a sort of glorified guesswork. I suggest respectfully to the Government that, after foot and mouth and covid, never again should they rely on dubious modelling, regardless of the source and regardless of the best intent. I am sure that Imperial and all these other people do the best that they can, and am very happy to state that publicly. However, why has so much of their work been described—and I will use the words of other academics—as “unvalidated”, “flawed”, “not fit for purpose”, “improbable”, “almost hysterical”, “overconfident”, “lurid”, “inflated”, “pessimistic”, “spectacularly wrong”, “fraudulent” and as “scientific opportunism”?
Thank you very much, Sir Edward. I begin by referring to the declarations that I have made in connection to the Covid Recovery Group.
I am a professional aerospace and software engineer—at least I was in my former life. I have an MSc in computer science, and am very interested in models. However, there is an old joke among engineers, which derives from a “Dilbert” cartoon, that the career goal of every engineer is not to be blamed for a major catastrophe. I wonder whether that spirit infuses not only expert advice but modelling in particular. We are all indebted to The Spectator for its data hub, which shows how data has worked out against models. As anyone can see by going to data.spectator.co.uk, it is the same story again and again: enormous great molehills of death projections, and underneath them the reality of much lower lines. I will leave it to people to look for themselves at the data, rather than trying to characterise the curves for Hansard.
There is a great deal to be done in terms of institutional reform of the way in which modelling is done and informs public policy. That is a very old problem; I found a great article in Foreign Affairs that goes back a long time, to the post-war era, about this problem. It is time we did something about it, through institutional reform. The situation is now perfectly plain: under the Public Health (Control of Disease) Act 1984, even our most basic liberties can be taken away with a stroke of a pen if a Minister has been shown sufficiently persuasive modelling—not even data—that tells them that there is trouble ahead.
I have put this on the record before, and I hope that my right hon. Friend the Prime Minister will not mind. Before we went into the 2020 lockdown, he called me; I was amazed to be at home and to have the Prime Minister of the UK call me. “Steve, I have been shown death projections—4,500 people a day and the hospitals overwhelmed.” I gave him two pieces of advice: “First, if you really believe that we are going to have 4,500 people a day die, you’d better do whatever it takes to prevent that from happening,” which is not advice that anyone would have expected me to give, but that is what I said, and, “Secondly, for goodness’ sake, go and challenge the advice—the data.”
That is why Carl Heneghan, Raghib Ali, Tim Spector and I, whether in person or virtually, were seen in Downing Street, and were there to challenge the data. By Monday, Carl Heneghan had taken the wheels off those death projections, by which the Prime Minister had, disgracefully, been bounced, using a leak, into the lockdown. That is absolutely no way to conduct public policy. However, the reason someone—we will not speculate who—bounced the Prime Minister is that they had been shown those terrifying death projections, which could not possibly be tolerated. Those projections were wrong.
It is monstrous that millions of people have been locked down—effectively under house arrest—have had their businesses destroyed and have had their children prevented from getting an education. Any of us who visit nursery schools meet children, two-year-olds, who have barely socialised. We cannot even begin to understand the effects on the rest of their lives. It is not the modellers’ fault, and I do not wish to condemn modellers. They are technical people, doing a job they are asked to do. We have to ask them to do a different and better job—one which does not leave them, like the old joke about engineers, afraid of being responsible for a major catastrophe.
As my friend Professor Roger Koppl said in his book “Expert Failure”, experts have all the incentives to be pessimistic because if they are pessimistic and events turn out better, they are not blamed. I am sorry: I am not blaming them personally, but I am blaming the whole system for allowing this to arise. The extraordinarily pessimistic models plus the bouncing of a Prime Minister did so much harm.
We need to conduct institutional reform. In relation to models, Mike Hearn, a very senior software engineer, has published a paper available on my website. It is a summary of methodological issues in epidemiology. There are about seven points—an extraordinary set of arguments: things such as poor characterisation, statistical uncertainty and so on, which I have no time to get into. The fundamental point is that we must now have an office of research integrity. The job of that office would be to demand—to insist—that the assumptions going into models and the nature of the models themselves were of a far higher quality.
Finally, to go back to an area of my own expertise, I encourage any software engineer to look at the model code that was released.
I think it should be in the Cabinet Office, because we see that scientific advice applies right across Government.
The code quality of the model that was released was really not fit for a hobbyist. The irony is that the universities that do modelling will overwhelmingly have computer science departments. For goodness’ sake, I say to modellers, go and talk to software engineers and produce good quality code. For goodness’ sake, stop using C++. People are using, as they so often do, the fastest computer programming language, but also the most sophisticated and dangerous. As a professional software engineer, the first thing I would say is, “Don’t use C++ if you don’t have to. Models don’t need to; they can run a bit slower. Use something where you can’t make the desperately poor quality coding errors that were in that released model code”. That is really inexcusable and fulfils all the prejudices of software engineers against scientists hacking out poor quality code not fit for hobbyists. As I think people can tell, I feel quite strongly about that, precisely because these poor modellers have had unacceptable burdens placed on them. All the incentives for them to be pessimistic can now be seen in the data. This all has to be changed with an office of research integrity.
I will try to be brief, Sir Edward. The hon. Member for Isle of Wight (Bob Seely) has raised a first-class, crucial issue. Clearly we cannot predict the future, but we can prepare for it. Traditional crisis management and risk management list the possible things that might happen and look at the severity and the likelihood, and based on that we produce a number of models. That is the old way of doing it.
The modern way of doing it, instead of creating models, is to create a playbook—a mechanism by which we can look at all the challenges that might face a country and at least put in place a mechanism for dealing with the crisis, whatever it is. Bizarrely, the US have taken that approach but, perhaps rather sadly and tragically, never used the playbook model that might have saved them.
We very much went down the model route and took out of our kit bag the one we had for flu. It was too rigid, did not fit and was too slow. The assumptions were not challenged; the real world evidence was not incorporated; and, worse, we limited how we looked at modelling absolutely to covid. We looked at the mortality of covid and the impact; we looked at the morbidity of covid and the impact, but we should have looked instead and as well at the impact of the crisis as a whole and the proposed solutions, including the lockdown and other restrictive measures, across the country, across society and across the economy.
We were told at the time—the Government were challenged on this—that it was too hard: we could not possibly do any modelling with regard to the mortality of lockdown and restrictions, the morbidity of lockdown and restrictions, or the economic impact. That was sadly relegated to second order, but we should never forget that there is a huge interaction between wealth and health.
The interconnectedness of the impacts of the steps that were taken was totally ignored. They were unexplored and unexplained for a good 12 months. So only today, as my hon. Friend the Member for Isle of Wight has articulated so clearly and eloquently, are we looking retrospectively at what happened. At last we are looking at the impact, not just on covid patients and those vulnerable to covid, but on those patients not subject to high risk for covid. We are looking at the impact on children’s life chances—not just on their education—as it is far more serious than just their education. We are beginning to look at the impact on society and communities and—at last—the economy. As my hon. Friend said, never again must we be faced with the question, “Did we unknowingly and unintentionally do more harm than good?”
Forecasting and modelling have a valuable place, but we must never forget that they are tools. Advisers advise; Ministers must ask for the right advice, the right variety of advice, and then decide. Never again should we hear, “We will just follow the science.”
I congratulate my hon. Friend the Member for Isle of Wight (Bob Seely) on securing this very important debate and making an excellent speech. I have no wish to repeat the brilliant research that he recited, but he did highlight the repeated failures of modelling throughout the pandemic, not just the modelling but how it is being used. The models have not been out by just a few per cent, as he said, but often by orders of magnitude. The way that the models have been used has had life-changing impacts on people across the country.
Before I was a politician, I was a science teacher. One of the joys of teaching science to teenagers is conducting practical experiments in the lab. Once the teacher has ensured that they are not going to burn down the lab, it is important to teach them how to conduct an experiment properly and write it up. The first thing is to create a hypothesis. They must write a statement of what they think will happen and why, using the scientific knowledge they have and some assumptions, then carry out the experiment, write up the research and, crucially, evaluate. They must look at the hypothesis and at what they have observed, and decide whether they match. If they do match, they go back to their assumptions and see why they were correct. If they do not match, if what has happened in the lab and been recorded does not match the hypothesis, they need to ask why—“What assumptions did I make that did not bear out in real life, that did not happen in the lab?”
It seems to me that those are the questions that have not been asked throughout this crisis. Perhaps we can understand why assumptions had to be made quickly the first time, for the first lockdown—assumptions that turned out not to be true. My hon. Friend said that perhaps we are repeating history of 20 years ago, and that there is not that excuse. However, during subsequent waves and restrictions, why were those assumptions not questioned? There were assumptions about how likely the different scenarios were, about people’s behaviour and fatality rates.
Even in December, when plan B was voted through, some of the assumptions could have been declared wrong in real time—the assumption that omicron was as severe as delta, and that the disease would escape the vaccine. Some of the figures were almost plucked out of the air and given no likelihood. Those assumptions should have been challenged earlier and we need to ask why.
I picked up on one assumption following an interview with Dr Pieter Streicher, a South African doctor. He suggested that SAGE models have always assumed that infection rates do not reach a peak until about 70% of the population have had the disease, whereas the real-world data suggest that the infection rates start to slow at around 30% of the population. That makes more sense from a social science point of view, because we know that people are not equally sociable.
Studies by sociologists such as Malcolm Gladwell, who wrote the best-selling “The Tipping Point”, describe the law of the few, where very few people are extremely sociable and pass on a virus, idea or whatever, to many people. Many more people do not socialise as much and are not as good at transmitting. Perhaps we should have looked a lot more at social science, at behaviour and people’s interactions, rather than pure virology and what might happen in a lab. Of course, we do not exist in labs and cannot model the interactions of human beings that easily.
The tragedy is that this was not a paper exercise. This is not an experiment that happened in a lab where one can go back and repeat until valid results are achieved. These models, and particularly the weight they have been given, have caused serious destruction of lives and livelihoods. Who was modelling the outcomes for education, child abuse and poverty? Who was modelling the impact on loneliness, despair and fear? We have to ask why those assumptions were not interrogated.
My hon. Friend the Member for Wycombe (Mr Baker) has made some excellent points about the need for institutional reform. I completely agree with him, but we also need to look at the impact on free speech. At the beginning of this crisis, the mainstream media took on the idea that lockdown was the only strategy.
My hon. Friend spoke earlier about the repeatability of scientific experiments with hypotheses. One of the reasons I talked about C++ is that by using multithreading, it is possible to end up with code that does not produce repeatable outputs. Does she agree that it is very important that when models are run, they produce consistent and coherent outputs that can be repeated?
I absolutely agree with my hon. Friend. I would have said to my students, “It is not a valid experiment if you cannot follow the same method, repeat the experiment and produce the same results. It is completely invalid if you cannot do that.” I am not a software engineer, so I take my hon. Friend’s word for it when it comes to the use of programming languages, but he is absolutely correct that the whole experiment is not valid if the results cannot be repeated.
Over just the past few months, there has been an opening up of debate that has moved from The Spectator into mainstream media, where people such as my hon. Friends present have been able to speak more freely about the problems and costs of lockdown, and have not suffered so much criticism—I hesitate to say “abuse”—in the media and on social media. To avoid this happening again, we need institutional change, but we also need to understand that these are not black-and-white issues. It is good, right and wise to question the data and the science, and to put just as much weight on people’s quality of life—the things that make life living—as on the number of people in hospital at one time for a particular disease.
It is a pleasure to see you in the Chair, Sir Edward, and to follow all my hon. Friends, who I note have usually been in a different Lobby from me on most coronavirus measures. I am sure the Minister will be grateful to have somebody speaking from the Government Benches who has been supporting the Government on coronavirus throughout.
However, I too have issues with modelling, which is why I chose to speak in today’s debate. I have more sympathy with modelling, and I will be offering some sort of partial defence and explanation of it in my remarks, because before I was an MP, I was a modeller myself—a software engineer. I wrote in Visual Basic.NET, which is nice and simple: engineers can see what the code does. I worked for bet365, and I used to write models that worked out the chance of somebody winning a tennis match, a team winning a baseball game, or whatever. I had some advantages that Neil Ferguson and these models do not have, in that there are many tennis matches, and I could repeat the model again and again and calibrate it. If I got my model wrong, there were people out there who would tell me that it was wrong by beating me and winning money off me, so my models got better and better.
The problem we have with covid is that we cannot repeat that exercise—there is no counterfactual. We have heard the phrase “marking your own homework”.
I am deeply impressed by all this stuff— I do not quite understand what my hon. Friends are talking about, but it sounds fantastic. However, there is a counterfactual. The counterfactual is when people say, “We are not going to follow the lockdown,” and hey presto! we do not get 3,000 or 5,000 deaths a day and all the people who predicted that are proved wrong. There is a counterfactual called real life.
I thank my hon. Friend for his point, and I accept it, but the problem is that none of these models model changes in human behaviour. We discussed this issue during our debate on the measures that we brought in before Christmas, and as I said at the time, the reality was that people were not going to the pub, the supermarket or anything because they were changing their behaviour in the face of the virus. If the models do not take that into account, they cannot know where the peak will be. The models show what would happen if nobody changed their behaviour at all, but of course, the reality is that people do. We have not got good enough at modelling that, because we do not know exactly how people change their behaviour.
As a tangential point, behavioural science has had a really bad pandemic. We were told that people would not stand for lockdowns, but—to the chagrin, I am sure, of many of my hon. Friends—people did stand for them. Looking at the polling, they were incredibly popular: they were incredibly damaging, as colleagues have said, but people were prepared to live with lockdowns for longer than the scientists thought they would. There was initially an attempt to time the lockdown, because people would not last for that long. In reality, that is not what happened, so behavioural science also has a lot to answer for as a result of the pandemic.
I think that models still have value. My biggest concern arising from the experience of the pandemic is the bad parameters that have gone into those models at times—I will refer to two particular examples.
The time when I was nearest to following my colleagues into the Lobby was the extension to freedom day in June, because on that day we had a session of the Science and Technology Committee, which has taken excellent evidence throughout; it has a session on reproducibility in science tomorrow, where we will also look at this sort of thing. On the day of that vote, I was questioning Susan Hopkins and we were considering vaccine effectiveness. Public Health England had just produced figures showing that the actual effectiveness against hospitalisation of the Pfizer vaccine was 96%, yet the model that we were being asked to rely on for the vote that day said it was 89%. Now, 89 to 96 may not sound like a huge difference, but it is the difference between 4% of people going to hospital and 11%, which is three times higher. It was ludicrous that that data was available on that day but had not yet been plugged into the models. As I said to my hon. Friend the Member for Penistone and Stocksbridge (Miriam Cates), that was one of the reasons that I said in the Chamber that the case was getting weaker and weaker, and that if the Government tried to push it back any further, I would join my colleagues in the Lobby on the next occasion.
The other case is with omicron. Just before Christmas, we had these models that basically assumed that omicron was as severe as delta. We already had some evidence from South Africa that it was not, and since then we have discovered that it was even better than we thought. That feeds into what my hon. Friend was saying about the total number of people who are susceptible. The fact that omicron has peaked early is not because people have changed their behaviour but because the susceptible population was not as big as we thought: more people had been exposed, more people have had asymptomatic disease. There are all those sorts of problems there.
More philosophically, my models when I worked for a bookmaker were about probabilities. Too often we focus on a single line and too often that has been the so-called worst-case scenario. Well, the worst-case scenario is very black indeed at all times, but Governments cannot work purely on a worst-case scenario; they have to come up with a reasonable percentile to work with, whether it is 95% or 90%. Obviously, it must be tempered by how bad the scenario would be for the country. The precautionary principle is important and we should take measures to protect against scenarios that have only a 5% chance of happening or indeed a 2% chance, but we should do that only if the insurance price that we pay––the premium for doing that––is worth paying. That comes down to the fact that not many economic models have been plugged in, as my hon. Friend the Member for Wycombe (Mr Baker) has repeatedly said in the Chamber and elsewhere throughout.
Any Government must try to predict the course of a pandemic to make sensible plans and I believe that the best tool for that is still modelling, but we must learn the lessons of this pandemic. We must learn from shortcomings such as the failure to understand human behaviour properly, the failure to make code open source so that other people can interrogate a model and change the parameters, and the failure to enter the right parameters and update the model at the moment politicians are being asked to vote on it. For all those reasons, I am grateful for today’s debate and look forward to hearing the Opposition spokespeople and the Minister. I thank my hon. Friend the Member for Wycombe for today’s debate.
Thank you for calling me, Sir Edward. My first thought is, thank goodness that health is devolved. It will surprise no one to learn that I will not be joining the libertarian pile-on against scientists led by people who, even in these circumstances in a Chamber this small, still do not use face coverings.
No, I will not. The libertarian right have had enough of a kick at the ball in this debate. [Interruption.] No, I will not give way. At least half of those who have spoken today are not wearing face coverings.
I know that it is customary at this point to thank the Member who secured the debate but, in a break from tradition, I will start by thanking the scientists––the analysts, the medical professionals, the health experts, the clinicians and everyone else who stopped what they were doing two years ago and dedicated their lives to trying to work out and predict where the global pandemic might go and the impact that it could have on us. Two years ago, when tasked with working out this brand-new virus, every step that they took was a step into the unknown. There was no textbook to chart the route of this pandemic and every decision that they took was a new decision. They knew that every piece of advice they gave could have serious consequences for the population. The pressure of doing real-time covid-19 analysis must have been enormous. I, for one, really appreciate that scientists erred on the side of caution in the midst of a global pandemic in which tens of thousands of people were dying when there were no vaccines or booster protection. To all the SAGE officials, scientists, medical staff and public health experts who have done a remarkable job in keeping us safe, I say a huge and unequivocal thank you.
We know and can accept that forecasting and modelling during a pandemic are not an exact science but based on the best available evidence and a series of scenarios, presented from the best to the worst case. As Professor Adam Kucharski of the London School of Hygiene and Tropical Medicine said,
“a model is a structured way of thinking about the dynamics of an epidemic. It allows us to take the knowledge we have, make some plausible assumptions based on that knowledge, then look at the logical implications of those assumptions.”
As the much-maligned Professor Ferguson told the Science and Technology Committee,
“Models can only be as reliable as the data that is feeding into them.”
Of course such models have their limitations. They are not forecasting modelling but mathematical projections based on the data available to modellers. If the tests are not being done, or tests are not being registered as positive, for example, the data modelling and forecasting can be affected. It is important to remember, however, that while the hon. Member for Isle of Wight (Bob Seely) was telling anyone who would listen that modelling predictions were a national scandal, Professor Chris Whitty was telling the Science and Technology Committee that
“a lot of the advice that I have given is not based on significant forward modelling. It is based on what has happened and what is observable.”
Advice on lockdown and other public health measures was given by SAGE and others on the basis of observable data, not on forecasting modelling alone. I put it to the hon. Member for Isle of Wight that he was quite wrong when he told GB News that
“So much of what’s happened since with…inhuman conditions that many of us struggled with”
“built on some really questionable science.”
Professor Whitty said clearly that he did not base his advice on that; rather, he based it on what he could see around him.
The primary purpose of modelling is simply to offer a sense of the impact of different restrictions. A report by researchers for the journal Nature found that the first lockdown saved up to 3 million lives in Europe, including 470,000 in the UK. The success of disease modelling was in predicting how many deaths there would have been if lockdown had not happened. SAGE officials, scientists and medical staff have done a remarkable job to keep us all safe, and many people across these islands owe their lives to them. I believe that the work that those people have done under enormous pressure should be applauded and appreciated, not undermined by the far-right libertarian Tories we have today.
Thank you, Sir Edward; it is a pleasure to serve under your chairship. I congratulate—I think—the hon. Member for Isle of Wight (Bob Seely) on securing the debate, because I welcome impartial and honest interrogation of the science, as well as decisions made over the last two years that have been important for our country. I also welcome extreme scepticism about some of the decisions made by the Government. This debate has not been an honest and independent inquiry into the science, however. It clearly comes with an ideological bent, so it has to be taken in that light.
I also begin by paying tribute to our public servants and Government scientists.
The hon. Lady said that we have made points that require an ideological bent. I invite her to look at what I said and identify at least three points that required any kind of ideological justification. Contrary to the point made by the hon. Member for Argyll and Bute (Brendan O'Hara), nothing that I said required libertarian political philosophy.
That was another speech. I have never been in a room with so many software engineers who are also MPs. I begin by paying tribute to our public servants, our Government scientists, epidemiologists, and the scientific community who have worked tirelessly and put everything on the line to keep the public safe. That is what they have been trying to do over the past two years: keep people safe and save lives—and they have. They have shouldered the fear, anguish and hope of an entire nation that was experiencing deep trauma. They have, magnificently, been prepared to put their head on the block, if needs be. I hope the Minister will agree with me that it is very disappointing to hear them come under attack today from certain colleagues, despite everything that they have done.
I would remind those who seek to attack SAGE and our Government scientists that, while they were looking forward, planning and working hard on the evidence of what the virus might throw at us next, it was freshers week in Downing Street. They are not the enemy here. In fact, had a bit more attention been paid to their models, had there been more modelling before the start of the pandemic and had more action been taken in February and March 2020, thousands of lives could have been saved. It is not modelling that is the intrinsic problem here—it is decision making.
Modelling is a hugely important tool for managing epidemics that is tried and tested, with constant efforts to improve it. I agree with earlier comments that there should be more models; there should be models about the impact on mental health, education, poverty and models to learn from other countries in order to inform our decisions. As Graham Medley, one member of SAGE, explains very clearly, models are not predictions and are not meant to be seen as such; they are the “what ifs” that can be used by Governments to inform decisions and guide them as to what they might need to prepare for, which should include the worst-case scenarios—that is a crucial distinction. Accurate predictions cannot be made with such an unpredictable virus, when individual behaviour is also unpredictable, so models and scenarios are the best tools to give us the parameters for the decisions that will be made. As Graham Medley said, SPI-M—the Scientific Pandemic Influenza Group on Modelling—the sub-committee of SAGE that he chairs, produced
“scenarios to inform government decisions, not to inform public understanding directly. They are not meant to be predictions of what will actually happen and a range of scenarios are presented to policymakers with numerous caveats and uncertainties emphasised.”
Who would want it any other way?
My question to the sceptical Members present here today is: what is the alternative? We need to have those parameters. The alternative is guessing without parameters and knowledge.
I am going to move on. I do not want another speech from the hon. Member, given the time constraints. I am waiting for the Minister to answer my questions.
The Public Administration and Constitutional Affairs Committee also had problems with the communication of the modelling. It is there that I might have some common ground with the hon. Members who have spoken earlier. The Committee said in its report last March that communication has not always been transparent enough, and accountabilities have been unclear. I agree with this. If the time is not taken carefully to explain what modelling actually is to the public and media, and instead room is allowed for scenarios to be interpreted as predictions, inevitably the practice of modelling and forecasting will be rubbished and scoffed at and Government scientists blamed as doom-mongers. Not communicating the data and models properly creates more uncertainty and misery for small businesses, who have been asked enough as it is, as we saw over the Christmas period.
No. The PACAC report makes it clear that no one in Government has taken responsibility for communicating the data. The report states:
“Ministerial accountability for ensuring decisions are underpinned by data has not been clear. Ministers have passed responsibility between the Cabinet Office and Department of Health and Social Care,”.
That is why, as a member of the shadow Cabinet, I am responding to this debate. There are questions about the use and communication of the data.
I want to come to why we needed to rely on modelling and forecasting. Significant mistakes made throughout the last 10 years of Conservative government are the problem. There could have been much better information, and we could have been much better informed, if there had been better pandemic and emergency preparedness.
I agree, Sir Edward. Labour invested in pandemic planning in the Civil Contingencies Act 2004, but the Tory Government did not continue that investment. Operation Winter Willow in 2007 involved 5,000 people from all walks of life simulating a pandemic. The need for PPE, PPE training and wide-ranging social and economic disruption was identified. The Labour Government, then led by Gordon Brown, made heavy investments in pandemic planning.
Cut to 2016, Operation Cygnus made 26 key recommendations about PPE, urgent and drastic improvements to the NHS, and the likely impact on care homes. Most of that was ignored. PPE training stopped, stocks were run down—much of it left to go out of date—and there were no gowns, visors, swabs or body bags at all. The UK pandemic plan was mothballed and we were unready for the pandemic. No wonder we had to rely so much on modelling and forecasting.
We could have been much more ready. The Cabinet Office should have stepped up to enable cross-departmental organisation, and organisation with the devolved authorities based on plans, informed by the results of exercises and earlier modelling, but it did not. I hope that the Minister will echo that, distance herself from some of the earlier comments and criticism of our scientific community and respond to the points about pandemic planning and what we can learn.
Finally, I know that the hon. Member for Isle of Wight (Bob Seely) has asked for an inquiry into modelling. I welcome the inclusion of that in the covid inquiry. I hope that the Government will launch that inquiry. They have appointed a chair, but that chair is waiting for the powers she needs to begin getting evidence from scientists, software engineers and everyone she needs to hear from.