The hon. Gentleman mentioned imported dental appliances. I agree that proper regulation is neededthat is something that we have considered before. The European Community medical devices directive is enforced in the UK by the Medicines and Healthcare products Regulatory Agency, and it meets that requirement. Under the directive, appliances prescribed by UK dentists from a laboratory outside the European Community must be approved by an authorised representative working in the UK. That representative could be a dental technician working in a laboratory registered under the directive or a registered dentist whoif satisfied with the quality of the applianceis required to issue a certificate of compliance with the directive.
However, to strengthen the requirement further, we have ensured that the new general dental service regulations require the contractors patient records to include the certificate of compliance for any dental appliance provided. That means that all the information about an appliance will be readily available for inspection by the PCT. So, if there are complaints, the mechanism exists to ensure that the PCT can examine what has been supplied and satisfy itself that the appliance meets the correct standards.
I intend that the effects of the reforms should be monitored. The hon. Gentleman mentioned the previous personal dental services pilots. The evidence from them was that, in some areas, overall activity lessened, which is why we have introduced measurement by UDA. That will allow us to ensure that any spare capacity is used to allow more people to have access to an NHS dentist and that activity is maintained. The evidence from the pilots showed a certain drop in activity at first, but as they progressed, activity increased, as I have described.
Mr. Leech: That is true, but activity levelled out over the period of the pilots, and over the full period of the pilots there was a significant overall decrease. Does the Minister agree that the figures from the recent May 2006 survey suggest that the new contract has not resolved the problems that appeared in the first few months of the pilot?
Ms Winterton: I do not agree. I do not believe that, as the new system to monitor activity beds down, there will be a vast falling off over time, because there is the ability to look at both the prescribing of appliances and the patient profile.
It is important to put all those things together and say that we should pay the dentist to look after the holistic needs of the patients, not just for each filling and so on. Dentists should look at the patient and decide what is best. If what is not clinically appropriate is prescribed, that is wrong. We should be prescribing what is clinically appropriate, including appliances. That, combined with the monitoring, through the UDA system, of the work that dentists are carrying out should ensure that the same number of appliances are prescribed.
However, I have been keen to monitor the effect of the reforms. That is why we have established an implementation group to ensure that the new commissioning objectives that we have set out are met. The Dental Laboratories Association is on that review group, which will be given information on prescribing
patterns since 1 April as soon as we have sufficient data to establish any trends. I am not sure what the hon. Gentleman was referring to in relation to Maywith the new contract coming in, there would not have been enough time to notice any difference by thenbut we expect to have something by September.
If the data show that dentists are not prescribing all the dental appliances for which their patients have a clinical need, we will be able to obtain further information from patient inspections conducted by the dental reference service, which is an important part of the protections that the hon. Gentleman seeks. The DRS is a team of experienced dentists who are charged with ensuring that NHS dental treatment is necessary and carried out to satisfactory standards.
Each year, DRS dentists examine more than 80,000 randomly selected patients. The DRS might be asked to target patients who have undergone extensive courses of treatment under band 2 to see whether an appliance such as a bridge or crown has been clinically indicated but not given, or patients in band 3 to ensure that an appliance has been appropriately prescribed.
That gives a measure whereby we can say whether there are any indications that the prescribing of appliances is not taking place as we think it should be. That is another measurethis time at the national levelto ensure a check. So, there is a check at the patient level, the PCT level and the national level.
Ms Winterton: As the hon. Gentleman will remember, I addressed that issue when I said that, overall, the reforms that we have put in place mean that, whereas previously there was no money left at the local level to replace dentists who left the NHS, that situation has been turned round. Investment in dentistry in the hon. Gentlemans constituency has increased by 23 per cent. over the past few years.
I hope that I have set out the safeguards that we have put in place, which the implementation review group will want to monitor closely. If there is any evidence of an inappropriate decline in the prescribing of dental appliances, we have the resources to investigate the problem and a forum for devising remedial action.
Mr. Martyn Jones (Clwyd, South) (Lab): I am grateful for the opportunity to debate this issue. First, congratulations are in order to the Department of Trade and Industry and the Government on giving such high priority to energy issues and the question of Britains future energy provision. In this era of increasing emissions and climate change, taking steps now to reduce the negative effects of our energy consumption has never been so important.
Today, I want to draw attention to an aspect of our energy policy that I believe has been overlooked and which has the potential to inflict serious damage on one of the greener industries in the UK. The renewables obligation, introduced in 2002, requires all commercial electricity suppliers to generate a specific and increasing proportion of their energy from renewable energy sources.
A supplier can demonstrate compliance with the obligation by the redemption of renewables obligation certificates, which are issued to accredited generators for each megawatt-hour of eligible generation. Alternatively, suppliers can pay a buy-out price, originally set at £30 per megawatt-hour but subsequently adjusted in accordance with the retail prices index. Renewables obligation certificates can be traded and provide a financial incentive for generators to reduce their dependence on fossil fuels. It is laudable that the renewables obligation is stimulating the growth of the renewable energy market and encouraging Britains more conventional electricity generators to consider alternative technologies and methods as well as contributing financially to their development. I understand that the renewables obligation has been particularly successful in driving the development of onshore wind technology.
An unintended consequence of the obligation and the financial support that it offers to electricity generators is that it threatens the survival of the UKs wood panel industry by introducing subsidised competition for the same timber resources that are the lifeblood of that industry. Panel producers use as raw material timber-based materials including sustainable forest products, sawmilling products such as chips and sawdust and post-consumer recycled wood to produce chipboard, oriented strand board and medium density fibreboard, or MDF, which, as you might remember, Mr. Cook, was popularised by the BBCs Changing Rooms in the DIY boom of the late 1990s. On the other hand, you might not remember.
Aside from DIY, the main markets for the industrys products are furniture production and construction, and with a turnover of more than £650 million the UKs eight manufacturing facilities produce nearly 3.5 million cu m annually. Together, UK wood panel manufacturers supply between 70 and 80 per cent. of our national market. It is a high-volume, capital-intensive industry, and it directly and indirectly employs about 7,000 people, several hundred of them in my constituency at Kronospan.
Next to the sawmill industry, wood panel manufacturers are the largest consumers of wood raw materials sourced from UK sustainable forestry and reprocess some 90 per cent. of available recycled wood into boards, promoting carbon storage while preventing a reusable resource from going to landfill. Those timber-based raw
materials are in greater demand than might be imagined since the introduction of the renewables obligation. Some UK generators have turned to the same timber products as a valuable source of biomass fuel. In fact, I was on a Welsh Affairs Committee visit in Aberthaw power station when we were considering energy in Wales, and I saw mounds of perfectly clean sawdust being burned in the power station, mixed with coal.
Other fossil fuels can also be used in conjunction with wood and sawdust. In return, the power stations get renewables obligation certificates that, as I described earlier, can be sold on to other electricity providers at a higher price than producing the electricity itself offers. It is a profitable way of generating electricity and the UK energy industry has caught on. The award of renewables obligation certificates to coal-firing generators has risen by 392 per cent. in the past two years and now represents one fifth of all certificates that have been issued.
The point is not the use of fuel, which has gone on since mankind inhabited caves, but the provision of financial support for the use of a raw material that is known to be essential for use in product manufacture by a generating technology that is not new and in which relatively little investment is required for co-firing. The issue, therefore, is about scale and the potential for wood-supply distortions as a consequence of co-fired power stations moving towards an increased use of UK-sourced wood.
One study funded by the Ministers Department shows that, with the aid of subsidy, co-fired power stations have acquired the potential to outbid the panel industry in the price that it can economically pay for its wood raw material. That potential also exists with purpose-built, biomass power stations, but to a lesser degree. Such competition has the effect of forcing up the price, which on the one hand may provide a needed benefit for forestry, but which equally erodes the competitiveness of wood processing industries.
The wood panel industry operates on low margins and is subject to significant foreign competition, so its ability to pay more for that resource is therefore limited. It is also struggling at the moment with energy prices, as are many energy-intensive industries. If the wood panel industry and, potentially, other wood-processing industries were to be forced out of business, the consequences for the forest-based supply industry and downstream users could be severe.
Timber supply is not something that can be quickly or easily increased. I am informed that on paper there should be more than enough wood available in the UK to supply both the existing industries and the developing wood fuel market. Much of the potential biomass is not, however, either economically or physically available due to ownership, terrain and infrastructure issues. Furthermore, most combustion plant is restrictive as to the specification of fuel that can be burned.
The statistics that we have on wood availability show that there is already tightness in the supply of sawmill product. As a consequence, price rises have been incurred and wood panel producers are reporting lower than average availability of small roundwood. In that context, it is worth noting that Drax Power, for instance, has been sourcing wood from the Kielder forest, a key source of supply for wood panel producers. There is little scope for the amount of wood types quoted earlier to expand in the present climate, and importing wood
for wood panel manufacturing is not an option. We will end up importing wood panels, to the detriment of our industry and our balance of payments.
I understand that co-firing has been supported in order to stimulate the development of the energy crop market, which is an extremely commendable aim but, unfortunately, to date it has been less than successful. In the absence of significant volumes of energy crop on the ground, and with questions being asked about the sustainability of importing biomass fuels for co-firing, what biomass fuel would generators turn to?
The wood panel industry fears that, as suggested by the terms of reference of the co-firing review, if co-firing were to be encouraged further to provide a greater contribution towards renewable energy objectives, the potential would be there for the rapid demise of the wood panel industry because there would be a period before sufficient energy crop was available when demand for timber would outstrip supply. It is an esoteric point, but it is essential that the Government grasp it because of the dire consequences for the industry if they do not.
I will not dwell on the environmental case, but although co-firing with biomass might be more environmentally sustainable than sole reliance on fossil fuels, it still pollutes more than alternative sustainable technologies. Co-firing is also extremely inefficient, with combustion efficiencies only 33 to 37 per cent. when co-fired with coal. Co-firing is marginally cleaner than reliance on fossil fuels, but not so green that UK energy policy can afford to turn the lights out on a responsible and environmentally conscious industry such as the wood panel industry.
On support mechanisms, the renewables obligation had an objective to support the development of new technologies, which is surely not a claim applicable to co-firing. Although it is understood that the RO has failed in a number of respects, I ask whether it is an appropriate mechanism for the support of co-firing, especially as the energy sector could receive substantial benefit from carbon credits awarded under the EU emissions-trading scheme. To compound the problem, in the future if the large combustion plant directive encourages co-fired power stations to convert to 100 per cent. biomass, demand for UK wood waste supplies could far outstrip supply. Without substantive action taken now, the wood panel industrys days are numbered.
The current strain placed on the wood fibre market could be alleviated considerably by reducing the general obligation for biomass combustion in co-firing, and at the same time removing barriers and further incentivising energy crops such as short-rotation coppice or miscanthus. More energy crops would mitigate against the potential crisis faced by the wood panel industry and further incentivise existing energy generators to convert to sustainable sources of biomass. It is clear that energy crops must be encouraged if energy generators and the wood panel industry are to co-exist.
There are a great many possible solutions to the problem that would allow the renewable energy sector and the wood panel industry to flourish alongside one another. Providing push incentives for the supply side of the equation as well as pull incentives is worthy of consideration. In terms of broader biomass policy, I am
told that many millions of tonnes of biomass currently go to landfill, and I wonder what consideration is being given to using that discarded material as a fuel.
As I said, one of the UKs leading wood panel manufacturers is based in my constituency. Kronospan employs 670 people in very good jobs and has the largest single site in the UK. In 1999, it won the Queens award for environmental achievement in industry and during the past five years improved its own energy efficiency by 20 per cent.
The impacts are beginning to be felt. Indeed, for the first time since the company has been at the sitesome 29 years, I believeit had to stop for four days over Christmas. Normally, it is a 365-day operation. Although there may be technical or other reasons why decisions may be made that some co-fired generators will not burn wood, there is no restriction in policy terms to prevent the scenarios that I have alluded to from occurring. Without a thorough examination of the issues and a review of the co-firing rules in the renewables obligation, the Ministers undertaking to minimise the potential for a negative impact on co-firing and other industries that use biomass as feedstock is not achievable, and the 670 jobs at Kronospan might well be lost, along with 6,500 others nationwide. That is as needless as it would be regrettable. What is most evident is that whatever the Government do, they cannot do nothing.
The Minister for Industry and the Regions (Margaret Hodge): I congratulate my hon. Friend the Member for Clwyd, South (Mr. Jones) on securing this debate on behalf of his constituents. I know that he has pursued the issue with great vigour and has had meetings with Ministers and officials in my Department about it.
The debate highlights the tensions and potential conflicts that can arise when we pursue priorities for energy policy and sustainability alongside what I have responsibility for, which is maintaining and encouraging the continuation and development of our manufacturing base. I shall try to respond to some of the issues that my hon. Friend raised, particularly the concerns that the wood panel sector has about the impact of co-firing on the cost of its raw materials. We must consider those issues in the context of the tension between our broader sustainability agenda and our manufacturing policy.
The wood panel industry is important. In preparing for the debate today, I learned a great deal about it. Its contribution is growing, because it provides a sustainable solution to many of our problems. Wood panels are used in a range of the Governments capital projects, whether housing, hospitals or schools, and as individual consumers we use wood panels in our homes. We therefore want to maintain the British base. The wood panel industry has undertaken a great deal of good work in modernising its construction methods, and we want to hold on to that. For example, it has been involved in initiatives such as prefabricated building modules for housing, which now make a considerable contribution to the housing market, accounting for an 8 per cent. share. The timber frame sector is helping to produce housing more quickly and at a better cost using the
engineered beams to which my hon. Friend referred, which are made from chip and oriented strand board and offer structural components that can compete directly with steel and concrete. That is all good stuff that we want to hang on to. Combined with chipboard decking, that offers an off-site manufactured flooring solution, which is becoming increasingly popular and is now the material of choice for carpeting, flooring, decking and shuttered applications, so a lot of good stuff is going on.
Let us consider the wood panel industry in the round. It makes a significant contribution to the United Kingdom economy. Its turnover is nearly £1 billion, with a gross added value of £275 million. My hon. Friend said that 7,000 people are employed in the industry; the figure that I have is 6,000, but the number of people involved is certainly substantial. We are conscious that increasingly the industry is having to compete. We import more than we exportwe import about £800 million worth of goods and we export £100 million of goods. That gives us some idea that the cost pressures arising from reasonable developments in sustainable energy can have a big impact and provide a genuine threat. I recognise that from what my hon. Friend has said.
Why are we in the present situation? Our drive to ensure a sustainable economy has led us to look for new ways in which to provide sustainable energy. We are striving to achieve not only a sustainable innovative and productive economy that delivers high levels of employment and manufacturing activity, but a society that promotes sustainable communities and personal well-being. We want that to be delivered in ways that protect and enhance the physical and natural environment and use our resources and energy as efficiently as possible. We need to reconcile those competing objectives and build them as interlinked ambitions.
Economic growth is obviously as vital today as it has always been, but we face new environmental challenges. They become particularly potent in the global world as many other countries expand their industries at a time when the global environment is struggling to cope with the impact of existing economic and manufacturing activity. In that context, undoubtedly our consumption of natural resources throughout the world is unsustainable. We need to be more far-sighted in respect of the solutions to the environmental challenges that we face.
In that context, recycling inevitably plays a major part in the solution. Wood is a versatile product. It has economic value; it is used in buildings, where the panel industry plays its part; and, when it is finished with, it can be recycled, re-used or burned and the energy recovered. In addition, the wood industry sustains jobs. We are therefore considering competing uses of jobs, wood as a source of sustainable energy and wood providing the products that we want and need.