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House of Commons

Thursday 1 December 2005

The House met at half-past Ten o'clock

PRAYERS

[Mr. Speaker in the Chair]

Oral Answers to Questions

TRADE AND INDUSTRY

The Secretary of State was asked—

Microgeneration

1. Mrs. Theresa Villiers (Chipping Barnet) (Con): If he will make a statement on his Department's policy on encouraging the use of microgeneration in UK households. [33373]

2. Colin Challen (Morley and Rothwell) (Lab): Whether he expects there to be a surplus or shortfall of funding at the end of the clear skies programme. [33375]

The Secretary of State for Trade and Industry (Alan   Johnson): The Government already encourage microgeneration in a variety of ways. For example, there is a 5 per cent. VAT level on most microgeneration technologies. We have provided £41 million of support for solar photovoltaic projects through the major PV demonstration programme and support for field trials. There is £12.5 million of support for household and community renewable energy schemes through the clear skies initiative; and £30 million of funding for a new low carbon buildings programme. We have also amended the renewables obligation to make it easier for microgenerators to claim renewables obligations certificates.

My Department is leading the development of a cross-Government strategy for the promotion of microgeneration. This strategy will be published by next April, in accordance with our commitment under the Energy Act 2004.

In relation to clear skies, I expect that all funding will be allocated by the time the programme ends in March 2006, but projects will have a further 12 months to be completed and actually to spend the money.

Mrs. Villiers: Despite the warm words of the Secretary of State, it is still clear that the take-up of microgeneration is minimal and that the market for it is still very underdeveloped. Will the right hon. Gentleman consider, in assessing the upcoming energy review, how, if the Government decide to go down the nuclear route, they will ensure that the nuclear industry does not
 
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effectively crowd out microgeneration and make it more difficult for investment in it? In particular, if the right hon. Gentleman decides to go—

Mr. Speaker: Order. Perhaps this is a matter for an Adjournment Debate. That would seem to be appropriate.

Alan Johnson: I agree with the hon. Lady's assessment that microgeneration is underdeveloped. Some of the reasons for that will be dealt with in our strategy, which we will publish next April. Much of it is about public awareness, some of it is about problems with planning and some of it is about connection with the grid.

As for the hon. Lady's question about nuclear energy, if the energy review went down that path, I do not think   that it would have any impact on the need to develop this particular area of microgeneration. Microgeneration is important in its own right, whatever we do in the rest of the energy mix.

Colin Challen: This being the season of good will and festive cheer, as well as reviews, will my right hon. Friend review the amount of money put into the low carbon building initiative, which year on year is quite a bit less than what was put into the programmes that it replaces? If my right hon. Friend is looking for somewhere to get the money, may I suggest that he dips into his Department's nuclear fusion research money, which is considerably more than that being given to the low carbon buildings initiative?

Alan Johnson: I suppose that as it is 1 December we can officially say that it is the season of good will, but it is not the season of distorting our figures—[Interruption]—as every other season of the year. My hon. Friend is wrong about this. I understand how passionately he feels about the matter, particularly photovoltaics. On average, under the low carbon buildings programme we shall be spending £9.5 million a year compared with £9.2 million average yearly spend since 2000 under the previous project. We have not diluted the amount of money that we are making available, although the use of grants is not the total picture in terms of how we can encourage greater use of microgeneration.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): From the Secretary of State's earlier responses it is obvious that he has recognised the true potential of micro-combined heat and power generation. Has he seen the recent report of the Society of British Gas Industries, which clearly shows that micro-CHP could, by 2015, generate enough power to reduce carbon dioxide emissions by 1.1 million tonnes per annum? Will the right hon. Gentleman take urgent action to ensure that the right regulatory framework is in place to enable that to happen?

Alan Johnson: I have seen that report, which is an important contribution to our strategy review. That strategy review, to which we made a commitment in the Energy Act 2004, was designed specifically to address these issues. I mentioned planning as a problem earlier. The report is an important contribution to the debate, and it is an area of legitimate concern on both sides of
 
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the House. We will try to ensure that planning regulations do not inhibit the growth of combined heat and power.

Dr. Alan Whitehead (Southampton, Test) (Lab): I congratulate my right hon. Friend on his Department's strong support for two private Members' Bills seeking to enhance the use of microgeneration to an enormous extent, one of which was unfortunately blocked by a maverick climate change denier on the Opposition Benches. If that block continues, is it my right hon. Friend's intention to find Government time to complete those Bills and place them on the statute book?

Alan Johnson: I reaffirm our support for the private Member's Bill tabled by my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz). As for how we could get around any blockage, that is a subject for others, such as the usual channels.

I see that my hon. Friend the Member for Edinburgh, North and Leith is present. His Bill contains important principles, and I am sure that it will be supported by Members in all parts of the House. I hope that the person responsible for blocking its passage will remove the blockage; if he does not, we shall have to consider other ways of dealing with it.

Mr. Bernard Jenkin (North Essex) (Con): The hon. Member for Southampton, Test (Dr. Whitehead) asked a pertinent question. It is in the Government's power to continue to pursue that Bill. Let us see whether they do so, or whether what we are hearing is just rhetoric. I do not support the action of my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) in blocking the Bill.

I agree with my hon. Friend the Member for Chipping Barnet (Mrs. Villiers). We have had stop-go policies for the clear skies programme, and the Office of the Deputy Prime Minister has been very obstructive in regard to constructive building regulations for microgeneration and micro-CHP, although we know that those processes have enormous potential for reducing carbon dioxide emissions. Why are the Government being so half-hearted about those programmes and that potential? Does their attitude not underline the fact that their entire energy policy is in a mess—which, of course, is why the Secretary of State has to have a review?

Alan Johnson: That is nonsense on stilts. On clear skies, we have a go-go policy. There is no gap. There used to be a gap of about four months between money going out and the receiving of, and responses to, bids. In this case there will be a five-month interval—so if there can be said to be a gap, it is a gap of only a month—between the end of the clear skies programme and the start of the new programme.

The hon. Gentleman should give some advice to his right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth). We shall be able to proceed with that private Member's Bill if it is not blocked by Conservative Members. I was pleased to hear what the hon. Gentleman said. Why should we delay and lose time? Why should the Government have to rethink the whole programme and go through the usual channels when a quiet word in the right hon. Gentleman's ear might allow us to proceed?
 
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WTO Meeting

3. Hugh Bayley (City of York) (Lab): If he will make a statement on the World Trade Organisation ministerial meeting in Hong Kong. [33377]

The Secretary of State for Trade and Industry (Alan Johnson): Her Majesty's Government remain committed to achieving an ambitious, pro-development outcome at the Hong Kong ministerial conference, which will allow conclusion of the Doha development agenda by the end of 2006. The draft text for the Hong Kong meeting was issued on 26 November by Pascal Lamy, the director general of the World Trade Organisation. He will consult Members further before the General Council meeting on 1 and 2 December. After that meeting, the text will be submitted for discussion by Ministers in Hong Kong.

Hugh Bayley: Despite the best efforts of Commissioner Mandelson, the European Union seems to have forgotten that this was meant to be a development round. Will our Government continue to press for overall cuts in European agriculture subsidies under the common agricultural policy?

Is my right hon. Friend aware of the World Bank's estimate that if only 2 per cent. of tariff lines were protected as especially sensitive products, Europeans would be able to protect virtually every product that poor countries want to export to us? Yet under the EU's predatory policy, 8 per cent. fall into that category. Will the Secretary of State ask the EU to reconsider?

Alan Johnson: My hon. Friend has raised an important point. It is difficult not to be pessimistic about our chances of making the progress that we would like to make in Hong Kong. We should have been in a far better position.

As my hon. Friend knows, there are now 149 countries in the WTO since the recent accession of Saudi Arabia. Each country has a vote and a veto. Our role as President of the European Union is to ensure that the European Union has a coherent voice that Commissioner Mandelson can use during the negotiations. It is a difficult task, but we know where we are in the United Kingdom. I believe that there is all-party support for making this truly a development round.

My hon. Friend made a crucial point about the percentage of sensitive products. Virtually any tariff can be imposed on such products, because they are sensitive to the countries involved. It is not just the World Bank but the United Kingdom, in our trade and development White Paper last year, that said that those should be limited to 2 per cent. The American offer is 1 per cent. and the European Union offer is 7 per cent.—but, to be fair to the Commissioner, I must add that one member state was vociferously arguing for 15 per cent. Those are problems, but we have to come through them. It is no good our lecturing other member states; we have to persuade them to go down that route, so that we can achieve a proper outcome to the Doha development round.
 
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Norman Lamb (North Norfolk) (LD): The Secretary of State has just highlighted the downplaying of expectations for Hong Kong, yet he will recall that the commitment at the G8 was for Hong Kong to be a success, not some later ministerial meeting next year, and for Hong Kong to set a date for ending subsidies and dumping. Having just returned from a Christian Aid funded visit to Ghana, I can say that the Government there are desperate to ensure that we end the scandal of dumping subsidised agricultural goods, which destroys their local markets. What precisely are the Government doing to achieve a decisive breakthrough in Europe, and to make the European process more transparent?

Alan Johnson: I am not accusing the hon. Gentleman of making political points, but let us put all the politicising to one side now. We have tried very hard, with all-party support, to use our presidency of the G8 and the EU to create some momentum leading up to Hong Kong. I cannot think of any initiative that we could have taken that we have not taken to try to get to that position. The G7 Finance Ministers are meeting this weekend, and at the instigation of the UK, Brazil and India will be there, so that the Finance Ministers can try to reach some solution. We were also at the Commonwealth conference last week. No stone has been left unturned as we try to get somewhere.

As for where we are now, and the important point that the hon. Gentleman raised about how we can make more progress, we have been instrumental in the production by the Commission of a development package. By and large, the G90 countries—the poorer countries—have not heard anything about their problems yet, because the negotiations have been stuck in an agricultural silo. The idea of a development package is to pick out an issue, such as cotton, or the least developed countries' right to export to all developed countries' markets free of tariffs, which already applies to the EU, but not to the United States and other developed countries. It is also to examine the issue of aid for trade, which is a subset of the WTO discussions, so that there is at least a discussion of the developing countries' agenda, rather than the continual and rather depressing concentration purely on agricultural issues.

Ann McKechin (Glasgow, North) (Lab): In that context, does my right hon. Friend agree that we also need to think about the NAMA—non-agricultural market access—side of the negotiations, and that we need to allow sufficient flexibility in any solution to those negotiations to allow the least developed countries to develop their own industrial bases?

Alan Johnson: I agree with my hon. Friend. The Commission says that if it is to have any chance of bringing the EU to a different position, not fixated on agriculture, it needs countries such as Brazil and India to start to move on industry. This is about agriculture, industry and services, but so far we have concentrated on agriculture alone. There is now a need for countries to start turning over cards—with conditional offers; they do not have to say that that is their final position—just to show European Union countries that there are huge advantages to be had. Everyone will gain from a
 
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successful conclusion; this is win, win. On industry and services there are huge gains to be made, not between developing and developed countries but among developed countries, if we open markets. My hon. Friend has raised an important point, which is crucial to the successful outcome of the round.

Mr. Laurence Robertson (Tewkesbury) (Con): Only last week we heard about another food crisis in Africa, this time in the republic of Niger. I support emergency aid and debt relief, but we have to move things on with reforms of tariff barriers and export subsidies. Will the Secretary of State ask his friends in the EU this: as the common agricultural policy has driven our farmers to near bankruptcy, made the British housewife pay more for food than she needs to and is damaging the third world, exactly who is it helping?

Alan Johnson: It would not be all that fruitful if I asked that question. The argument used in the EU is that common agricultural policy reform, in so far as it has already happened—it was a dramatic reform compared with the previous position—should be a bargaining chip at Doha. The rest of the world tends to say, "You would have done that anyway, so how can you argue for the virtue of such reform? You need to go further." I have to say that the vast majority of EU member states believe that we have gone far enough, and that it is now time for the industry to make a move; I am merely reflecting the views that we pick up on in our EU presidency role. One day there will have to be reform. My right hon. Friend the Secretary of State for Environment, Food and Rural Affairs achieved the breakthrough—at last—of a 36 per cent. cut in sugar subsidies, which have not been reformed for 40 years. So some movement has been secured there, at least, which will help us in Hong Kong.

Mr. Michael Clapham (Barnsley, West and Penistone) (Lab): Will my right hon. Friend consider getting on to the WTO agenda a worldwide asbestos ban? He may be aware that two or three years ago, the United Nations interim chemical review committee, which is part of the environmental programme, recommended that all asbestos be restricted because of dangers to health. However, we seem not to have made progress on this issue, and the way to do so is to get it on to the WTO agenda.

Alan Johnson: I certainly will give consideration to the important issue that my hon. Friend has raised. There is an environmental dimension to this trade round—we have got nowhere near talking about it yet—just as there is a trade facilitation aspect. Because we have got bogged down in considering a particular pillar of agriculture, we have not got on to these important issues, but I will turn my mind to how we can ensure that progress has been made on asbestos by the end of this round.

Mr. David Willetts (Havant) (Con): Does the Secretary of State accept that the European Union's agricultural tariffs are economic nonsense and morally indefensible? Is that not the starting-point that we should adopt as we go into the next round of the trade negotiations? I was very disappointed to discover that
 
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he is so pessimistic about the outcome. Why do we not enter into the negotiations in two weeks' time committed to removing the EU's agricultural tariffs? That is the single most positive thing that we could do to help the third world. Surely our presidency of the EU should not be about neutrality and chairmanship, but leadership.

Alan Johnson: On the first question, I agree entirely with the hon. Gentleman; indeed, my predecessor made that point in last year's White Paper on trade and development. We pointed out the hypocrisy of developed countries lecturing developing countries on removing their trade barriers, when we still hide behind protectionism, so we are sending out a very strong message. Developed countries have to dismantle protectionist policies and set a date—we think that it should be 2010—for the parallel elimination of all forms of export subsidy in agriculture.

On the question of negotiating a settlement, the gung-ho part of the hon. Gentleman's Havant constituency seems to have come to the fore; usually, he takes a thoughtful and reflective approach to these issues. Conservative Members will know, because their party held the EU presidency when in government, that the worst mistake that countries can make when holding the presidency is to push their own position from the presidential chair. If they do, nobody will follow them. Instead, they have to try to persuade other member states to their point of view. Lecturing the rest of Europe from the presidential chair and repeatedly telling them about the UK's position would be a disaster.

On the question of my being pessimistic, we will move mountains, as the Prime Minister said in his recent Guildhall speech. However, as I said in my first answer, the text has just been released—it should have been released last July—and it would be misleading, going into the Hong Kong meeting, to say that we are wildly optimistic. Of course, that does not mean that we should not complete this round successfully by the end of 2006. What it does mean is that we have to make a sober appraisal of where we are, and plan to ensure that this round is brought to a successful conclusion.

Mr. Willetts: May I press the Secretary of State on this matter? Since enlargement, a blocking minority of free-trade countries has existed in the EU. That is how the world has changed. I do not know why the EU still does things like imposing tariffs on Chinese textiles, when it should be organising the free traders. The Trade Commissioner will play a crucial role, so will the right hon. Gentleman have a word in his ear? Has the Secretary of State learned to love the commissioner yet? Will he tell him that Opposition Members could find a tiny place in our hearts for him if he went to Hong Kong committed to free trade?

Alan Johnson: There is love abounding in my heart for the Trade Commissioner, and there always has been. When it comes to his role, he must not be seen as a UK Commissioner. That is part of the problem: people who are a little paranoid about these matters see that the UK position is one of liberalisation, that the UK holds the presidency and that a UK national is Trade Commissioner. We—and the commissioner more than anyone else—must ensure that everyone has faith in our
 
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ability to operate within the EU mandate. We are committed to changing that mandate in respect of the CAP over the coming months and years. I think that it is inevitable that that regime will change, and that we have enough support to achieve that gradually. We do not have enough support to achieve it in time for Hong Kong, but I believe that we can bring the matter to a successful conclusion by the end of 2006.

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