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11 July 2006 : Column 419WH—continued
“that arrangements for the collection of the licence fee are efficient, appropriate and proportionate”—
and I emphasise “proportionate.”
We intend that that requirement should give a clear steer to the trust to take a close interest in the TV licence arrangements and satisfy itself that they operate in a way that is efficient, yet without seeming unfair or oppressive to those who come into contact with the system. There is a careful balance to be struck. One the one hand, the BBC as enforcing authority has a responsibility to ensure that every address that should have a television licence has one. On the other hand, it should not turn its back on significant evidence of licence fee evasion, which currently runs at around £150 million each year in lost licence fee revenue, the cost of which is ultimately borne by those who pay their television licence fee.
My hon. Friend asked about performance. The BBC has so far been successful in reducing the evasion rate, which stood at an estimated 4.6 per cent. in March 2006—around one in 20 households, which is still staggering. That was, however, down from 7.8 per cent. in March 2001. The trend is downwards, which is significant in terms of the many tens of millions of pounds of revenue that would otherwise be lost to the BBC or which would constitute an extra cost to be borne by everybody else who legitimately pays their licence fee. Given both the scale of the problem and the amounts of money lost, it is correct that a rigorous approach should be taken to maintain and improve on that record.
On the other hand, efficiency and effectiveness should not be seen in isolation. The public have a right to be treated with respect and fairness. It is an absolute prerequisite that that should be seen to be the case in order to ensure long-term support for the licence fee system. I am aware that concern has been expressed about TV Licensing enforcement officers visiting people in their homes or expressing an intention to make such visits, particularly when the person in question has already indicated that he or she does not have a television. However, home visits are not a new practice to combat evasion. TV Licensing has long made a point of making home visits to selected addresses for which it receives a declaration that no television set is in use.
The BBC indicates that the underlying reason for the home visit policy is the scale of false declarations. To give an idea of what we are talking about, in 2004-05 more than 50 per cent. of declarations received by TV Licensing that no television was in use were false. For that reason, the BBC has a policy under which TV Licensing now visits all addresses for which it has received such a declaration. The purpose of the visit is to identify genuine non-users of televisions, so that subsequent contact with them can be minimised.
If one considers the volume of licence fee evasion—£150 million a year—and the fact that 50 per cent. of declarations that no set is in use are false, the case for a rigorous procedure to stop licence fee evasion is absolutely justifiable. The fact that the figures are coming down suggests that the policy is working. As I have said, however, it matters that the procedure is fair and proportionate.
TV Licensing officials may enter a person’s home only with that person’s consent or if authorised to do
so by a warrant issued by a magistrate, as my hon. Friend will understand. The BBC assures me that visits by inquiry officers follow a strict set of procedural instructions and take a matter of minutes. I understand that, following successful verification that no television is in use at the premises, the policy of TV Licensing is now to exclude the address from any further enquiries for an initial period of four years.
I also acknowledge the concerns about the tone of TV Licensing’s advertisements and letters of inquiry. Although the BBC has assured my officials that the contents of TV Licensing’s letters are not visible to a postman, it is clear that they come from TV Licensing, and I can understand that some recipients are unhappy about that. I also understand that it may sometimes appear that TV Licensing is out to pursue people who choose not to own a television set.
For the sake of clarity, it may be helpful to point out that an estimated 1.19 million households have a TV but no licence, as of March 2006. To give some perspective, that is twice the number of households with no television. In their duty to administer and enforce the television licensing system, the BBC and TV Licensing take the view that there is a clear obligation to all licence fee payers to investigate unlicensed addresses, to verify the status of the premises and establish whether a licence is indeed required.
I appreciate the need for TV Licensing to consider the individual’s privacy when corresponding, however. Although it is not for the Government to become involved in the day-to-day operation of the system, I will undertake to raise my hon. Friend’s concern about envelopes and logos with the BBC.
In conclusion, I hope that what I have said, especially my references to the obligations on the new BBC Trust in relation to the licensing system, will go some way to reassuring my hon. Friend that the Government are alert to the concerns that he has raised in this debate. We remain committed to the television licence fee as the basis for funding the BBC. That requires support for a collection and enforcement system that is efficient and effective; but that system must also be seen as fair and proportionate to those who come into contact with it.
Mr. Todd: I thank the Minister for his response, which has included some encouraging points, but the standard of administrative efficiency is poor. In the case of the 75-year-old to whom I referred, the letter to me said:
“We have found that a small number of addresses”—
I do not know what “small” might mean, bearing in mind the scale—
“have recently been sent a mailing in error. We had already been told that no TV Licences were needed”.
The difficulty is often with TV Licensing not logging what it already knows on its system.
Mr. Woodward: If one looks at efficiency, one must consider the scale of the evasion and the BBC’s success in driving it down. Evasion is a serious problem that costs all licence fee payers considerable amounts of money in order to support those who do not pay their fair share. However, I am prepared to raise some of the issues that my hon. Friend has mentioned with the BBC. I remind him of the contents of the new charter, specifically the section that relates to the collection of the licence fee now being the responsibility of the trust. I hope that the trust will listen carefully not only to my hon. Friend’s speech but to the Government’s reply.
China Clay Industry
1.30 pm
Matthew Taylor (Truro and St. Austell) (LD): I welcome the opportunity to have this urgent debate on the devastating news that has hit mid-Cornwall, and particularly the china clay community, not just about some 800 direct job losses in Imerys, but about the loss of as many knock-on jobs and, significantly, the fact that china clay will no longer compete in a major sector of the market against overseas competition. This is not outsourcing, which has been behind many job losses in the past, but a real loss at the centre of one of Britain’s most impoverished communities.
Mr. Colin Breed (South-East Cornwall) (LD): My hon. Friend is right. Some commentators believe that this problem is identified directly with the clay industry in a relatively small geographical area. In fact, it will have huge repercussions throughout my constituency, which is adjacent to my hon. Friend’s, and will go wider into other sectors of the Cornish economy, much of which is fragile and at a critical point.
Matthew Taylor: I agree. It is worth noting that this announcement has also led to the lowest morale that I can remember, not just in the clay industry, but in St. Austell and the wider community, including Fowey, Par docks and the other affected areas in my hon. Friend’s constituency. I hope that the Minister will be able to bring a glimmer of hope to that devastated community.
I do not intend to make any political complaint. It has been obvious for some years that there is a threat to the Cornish industry. Cheaply accessible reserves of clay are opening up in Brazil. Those are cheap not because of low labour rates, but because the clay deposits have already been washed out of the hard rock. I visited Brazil and saw that a digger and a lorry is all that is needed to produce clay there. Cornwall has been relatively protected because it is near the main paper markets and Brazil is a long way away. I shall return to that issue.
I thank the Minister’s colleagues at the Treasury, with whom I worked for some years to find a solution to the climate change levy, which has impacted on the clay industry. When I first raised that matter with Ministers in 2003, the levy had already taken £4 million out of the industry and raised energy costs alongside others that were already rising. The climate change levy was a clear threat to an industry in which 20 per cent. of costs are energy related and 80 to 90 per cent. of production is exported. I was pleased that Ministers acknowledged that the industry was potentially in the category that should have help with the climate change levy. There was a rather tortuous route to get help, but help has been put in place and, as a result, climate change levy costs for the industry have potentially been reduced by £1 million or so a year. The industry has also done a lot of work for itself, for example, by introducing combined heat and power plant before any grants from Government to do so and being innovative in reducing energy costs.
This is not a complaint about Government in any sense; it is a plea for help, particularly for Ministers to
understand the scale of the impact in a tightly defined community. Sadly, the work done with Treasury Ministers and others to get the reduction in costs has not been enough, given the pressures on the industry from energy costs that have risen through the roof.
Figures given to me by Imerys during a meeting on Thursday, when I also met trade unions and local councils, show that over a three-year period its energy costs have risen from £15 million to £40 million per annum. That is a huge hit by any standard and is compounded by the dollar exchange rate. The low value of the dollar has increased the competitiveness of clay from Brazil, where both production and sales are in dollars, meaning that it is cheap relative to Cornish-produced clay. All those factors have hit the industry hard and the only protection for Cornwall has been the cost of bringing clay from Brazil, which is around £35 a tonne.
It is a significant, although not huge, factor that paper-coating clays sell for $120 to $140 a tonne. Imerys is now pulling out of that market, because that product is highly energy intensive to produce and not so protected from shipping costs, because of its high value. Imerys is saying that it will concentrate on filler clays, which are low value—the opposite of what is happening generally in manufacturing and other goods markets in the UK—and by selling at roughly £70 a tonne, the £35 a tonne shipping costs and low energy costs significantly protect Cornwall’s clays relative to Brazil. However, the company is still on edge. Later on, I shall mention help that the Minister might be able to offer.
It is interesting to hear the trade unions, which I met privately, and workers in the company say that there is low morale and great unhappiness with this decision by a French-based company. Nevertheless, there is a degree of understanding of the pressures faced by the industry and the strategy that it is pursuing. I thought that my meeting with the company on Thursday was likely to be preparatory to a pull-out from Cornwall on a fairly short-term scale. Imerys is making some major investment to try to ensure that the filler clays will continue, which makes sense strategically, but we need to be aware that this industry will not be in Cornwall in the lifetimes of those alive and working in the industry now. There is a limit to how far the clay can be worked economically. Only three years ago, the company’s statements were talking about a 40-year life; it is now talking about 20 years-worth of reserves, even if things go well. They may last longer than that—there are potential new reserves to work—but the future for the industry is rapidly contracting in an area where there is little other employment. That situation should be viewed in the context of measures that the company says will cut its operating costs by nearly a third. These are drastic reductions.
The clay company has said that there are 1,850 directly employed jobs left. Some reduction is already going on from a previous round of cuts, but another 800 jobs are to go. The company also confirms, as does the council, that because it will no longer be operating in this sector, the present reductions are not like previous ones, when much work was being outsourced. In this case, the outsource suppliers will be losing jobs on a large scale as well. A minimum of 800 job losses
are expected on top of the ones already announced, so we are probably talking about a minimum of 1,600 jobs being directly affected by this decision.
Mr. Dan Rogerson (North Cornwall) (LD): I congratulate my hon. Friend on securing this debate and thank him for giving way. He mentioned the impact on the wider economy of mid-Cornwall and potentially the whole county. Does he agree that that will make it harder for the convergence funding that is coming to Cornwall to have an effect, given that the playing field has been lowered even further for people in mid-Cornwall, who will now have to work particularly hard to achieve any level of regeneration?
Matthew Taylor: Convergence funding is important. We in Cornwall are fortunate to have objective 1 funding, which is the highest level of European support. That has been matched by the Government. We are the only place in the UK poor enough to get convergence funding, but there is a still a question about the match funding. It is difficult for the Government to put that in place quickly, but we urgently require some reassurance on that convergence funding matching from Government, which is important and even more difficult to find, especially when yet another private sector employer—the biggest one in Cornwall—is contracting.
The net effect of the china clay job losses impacts on nearly 7 per cent. of jobs in the travel-to-work area. The concentration in the clay villages is massive. Taking into account the direct and indirect effect of the job cuts, more than one in three of the 3,700 working households in the clay villages can expect one of their members to lose full-time employment. One in five clay village household jobs will go directly with the Imerys job losses. Within the clay communities, the impact is absolutely enormous. We are talking about between 20 per cent. and one third of all the employment in villages that are among the most deprived communities anywhere in the country and where employment opportunities are extremely scarce and, indeed, employment land has been extremely scarce up to now because of the clay workings themselves.
To put this in context, the Imerys jobs are relatively well paid. The incomes average £23,000 a year in a borough where local incomes average only £18,500 a year, so they are some of the high-grade jobs. Despite the fact that they are sometimes relatively low skilled and they are certainly very specifically skilled, they are full-time, mainly male jobs in an area that has very little else and where other jobs in the community are worse paid.
A study conducted a few years ago—so the figures are a little out of date—in St. Dennis, which happens to be the village I live in, showed that the average household income there was only £6,000 a year. That is one of the larger clay villages, so these are very poor communities indeed. Thirty-two per cent. of people in Restormel borough as a whole—the communities that we are talking about are the poorest communities, so the figure for them is likely to be even higher—have no skills, compared with an average in the south-west of 26 per cent., so there is a major issue about skills as
well. The skills that people do have are mostly specifically orientated on clay communities.
The deprivation in these communities is among the greatest in the United Kingdom. We are talking about a community that is regarded as one of the poorest communities in Cornwall, which is poorer than anywhere else in England. We need to bear it in mind that the only really equivalent community is that in the Camborne-Redruth area, which lost its heavy engineering and is now the target of very high levels of Government support. If I can get one message across to the Minister, it will be that the fear in St. Austell and the clay villages is that we will end up in the same circumstances. Those of us from Cornwall remember the way in which the shops went from Camborne and the shops closed in Redruth—everything went. Only now, after huge investment, is the area showing signs of picking up.
In this case, we know that the clay industry will go over the next 10 or 20 years—whatever it will be—at best. We know that there are huge-scale job impacts now in villages that are best thought of as coal-mining villages—if the Minister is not familiar with clay villages, she should think of coal villages. We need the kind of support that coal villages received and we hope to receive it before the full impact is felt. The Minister may well say that at least this is not a closure; it is only a cutback. However, we know that closure will come in time, and right now the cutback is huge for what are very small communities.
The Minister may be aware of the closure at St. Mawgan on almost exactly the same time scale. RAF St. Mawgan is shutting. There, we are losing 920 military jobs and some 200 civilian jobs. It is the other half of the borough, but I know that many of those people are located in the clay villages, because it is that kind of employment. I meet all the time military staff working at RAF St. Mawgan and civilian staff. It is a relatively affordable area, a relatively low-cost area, so there will be an impact there, too. Some 670 indirect jobs associated with RAF St. Mawgan are also expected to go as part of the works happening.
We know that the Minister and other Departments will offer a package relating to training, skills and job seeking. That is one of the things that will come through the action force that will be set up. A taskforce involving the South West of England regional development agency, the Government office for the south-west, the county, the borough, the jobcentre and others is meeting now in St. Austell to consider the issue. I know that a lot of work will be going on, but if there are no jobs, there is a limit to what can be done. People cannot be retrained for jobs that do not exist.
In those terms, I also want to highlight the fact that Imerys is not the only clay company. In particular, Goonvean wrote to me only last year, expressing its concern about the impact of rising energy costs. I hope that we will not see the same effects on that company. It is a specialist company,—a niche supplier,—so it is a little more protected than Imerys. Nevertheless, there is an almost palpable concern that this issue runs right across the china clay industry at the moment.
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