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House of Commons

Thursday 22 March 2007

The House met at half-past Ten o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions

Trade and Industry

The Secretary of State was asked—

Energy Policy

1. Mr. David Hamilton (Midlothian) (Lab): If he will make a statement on the cross-departmental co-ordination of energy policy. [128947]

The Secretary of State for Trade and Industry (Mr. Alistair Darling): My Department works with a wide range of organisations in relation to energy policy. It might be helpful if I inform the House that the energy White Paper will be published in May.

Mr. Hamilton: I thank the Secretary of State for that answer. First, may I welcome the Chancellor’s statement yesterday that moves will be made to help families caught in the fuel poverty trap? From the Scottish perspective—and for me as an ex-miner—it is also welcome that we are now moving forward on carbon capture and on setting up a plant in the UK. My right hon. Friend has announced that the energy White Paper will be published in May. Would it not be prudent to consider the possibility of cutting across all the Departments that deal with energy and set up an Energy Department?

Mr. Darling: My hon. Friend’s final suggestion is a matter for the Prime Minister, but let me respond to his earlier points. He is right to say that we have done a great deal to help families on low incomes who face rising fuel bills. Among the measures we announced yesterday were those to help improve the insulation and energy efficiency of homes, which will assist people to cut their fuel bills. My hon. Friend is also right about carbon capture: if we reduce the amount of carbon emitted from gas and coal-powered fire stations, that could enable Britain to become a world leader in essential technology.

Susan Kramer (Richmond Park) (LD): Yesterday afternoon, the Chancellor announced a £6 million boost in the budget for household renewable energy grants; that is welcome but modest. Yesterday evening, the Department of Trade and Industry issued a press release announcing a two-month suspension of the
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current programme. What does the Secretary of State have to say to the householders and businesses who were relying on the promised grants, and would he care to bridge the gap between rhetoric and reality?

Mr. Darling: Actually, the press releases were issued at the same time, and deliberately so. As the hon. Lady knows, there have been problems with the grants, because the current arrangement is unsatisfactory: at the beginning of each month we make grants available and they run out almost immediately. We have also found that about £5 million of claimed grants have not been spent. The industry knows that there are problems, and we do too. I am glad that the hon. Lady acknowledges that additional money is being made available, and I would like us to take the necessary time to get the scheme right so that we do not repeat past mistakes. Up until yesterday evening, the industry itself had said that we needed to have discussions with it to make sure that the scheme works satisfactorily. It is important that we get the revised scheme up and running. It is also important that the scheme should be time limited to encourage people to do what they can to make their homes more energy efficient and also less dependent on carbon sources of energy generation. The scheme will be in place, but it is better to get it right than again to rush into doing something and to repeat the mistakes that were made in the past.

Mrs. Joan Humble (Blackpool, North and Fleetwood) (Lab): As part of the Government’s energy policy, my right hon. Friend is rightly looking into renewable forms of energy and, increasingly, into offshore wind farms. What liaison is he having with the Department for Environment, Food and Rural Affairs so that the voice of the fishermen is heard as more wind farms are licensed, and what liaison is he having with the Department for Transport so that ferry routes are protected, because our seas are not empty and when wind farms are erected that has an impact on other industries?

Mr. Darling: That is true up to a point, but it is perfectly possible to set up offshore wind farms and at the same time meet fishermen’s concerns and make sure that those wind farms are not put in sea lanes. We have been doing that satisfactorily across the piece. Let me say, however, that especially at a time when we are concerned to get greener sources of energy, we need more renewables. It is all very well for people to say, “Yes, we agree with that,” but not if they then come along and object to every planning consent that is sought whether onshore or offshore—in other words, if they are in favour of measures, but not in their backyard. We cannot proceed on that basis. If we do so, we will not get more renewable forms of energy. It is also worth bearing in mind another point, in respect of which I am sorry that not a single Scottish National party Member is present. The fact that yesterday’s Budget revealed that the projected revenues from North sea oil have fallen dramatically means that—

Alan Duncan (Rutland and Melton) (Con): You taxed it.

Mr. Darling: Interestingly, investment has gone up following last year’s tax change. The oil industry knows
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that it is a mature field with limited available reserves, which is why the SNP’s policy, under which Scotland would be totally dependant on one very unpredictable source of revenue, would be absolute folly. As I have said, I am sorry that not a single Scottish National Member could be bothered to come along to today’s Question Time.

Charles Hendry (Wealden) (Con): The Secretary of State has had eight months since the energy review in which to prepare the White Paper. He tells us today that it will be published in May with the same certainty that he told us on an earlier occasion that it would be published in March. If he carries on like this, his Department will have been abolished before it gets to be published. Does he not understand that those postponements are delaying vital investment decisions in future generating capacity while investors wait for details about a cap-and-trade system, the future of renewable obligation certificates or ROCs, feed-in tariffs, the role of Ofgem and the whole future of the planning system? He cannot just blame that on the judicial decision to require better consultation, as there are many other outstanding issues. Does he not understand that our energy security requires that we have a Government who are prepared to act and lead rather than a Government who put off the difficult decisions?

Mr. Darling: That is a bit rich coming from a party that does not have a coherent energy policy. The hon. Gentleman will recall that following the judicial review I said that it was likely that the White Paper would be published in May, but that if I could publish it before Easter, I would. As there is precisely one week between now and the Easter recess, it is perhaps a statement of the obvious that it will not be possible to publish it next week, so I thought it helpful to tell the House that it will definitely be published in May.

On the hon. Gentleman’s substantive points, yes, I know that the industry wants a degree of certainty, but it is not possible to publish an energy White Paper without the consultation paper on nuclear alongside it, because nuclear is an important part of that consideration. I want to make sure that we get the nuclear consultation right, and I do not have the slightest doubt that there are those who will want a judicial review whatever we decide; some people are implacably against nuclear, come what may. However, I want to get these things right, and the overwhelming view in the industry is that it is important that we publish the two papers together, which I will certainly do.

Productivity Rates

2. Andrew Selous (South-West Bedfordshire) (Con): What assessment he has made of the effectiveness of his Department in raising UK productivity rates. [128948]

The Minister for Industry and the Regions (Margaret Hodge): I thank the hon. Gentleman for that very helpful question. The Chancellor’s excellent Budget statement yesterday spelled out our very successful record in delivering sustainable macro-economic stability and our equally successful performance in making effective micro-economic interventions to remove the barriers that prevent markets from functioning efficiently. That
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has enabled us to raise productivity rates and to enhance UK competitiveness. Since 1997, we have halved the previous gap in UK output per worker compared with France, and closed the gap in output per worker compared with Germany. The Department of Trade and Industry has played its part in stimulating competition and enterprise, enhancing flexibility, and promoting science, innovation and skills. We have provided the first-class stewardship of the economy that has helped to raise productivity rates, and that is something that only a Labour Government can do.

Andrew Selous: In order to boost our productivity to French and German levels and to provide the skills that our businesses are crying out for, will the Minister become the champion across Whitehall of the lost generation of 5 million adults who cannot read properly and the 7 million who cannot do basic maths? This is a vital issue on which a cross-departmental lead needs to be taken. May I ask that the DTI do some serious work on it?

Margaret Hodge: I agree with the hon. Gentleman that this is an important issue, which is why we have done something about. We have reduced the figure that we inherited—6 million adults with no basic skills—to the still far too high figure of 5 million. I agree entirely that we must continue to work to provide the basic skills, because it is high skills that will enhance our productivity rates. We in the DTI play our role across government in ensuring that we have the proper structures, programmes and interventions in place to do just that.

David Simpson (Upper Bann) (DUP): Last year, a DTI report stated that low business investment “hinders” productivity and growth. Yesterday, the Chancellor increased taxation on the small business sector. What are the Government doing to encourage investment in that sector across the United Kingdom?

Margaret Hodge: If the hon. Gentleman looks closely at yesterday’s Budget statement, he will find that we introduced a new annual investment allowance of £50,000 that will benefit small businesses in particular. He will also notice that we will increase the tax credit rates for research and development, particularly those for small businesses, so he has got it wrong in suggesting that yesterday’s Budget did not enhance our competitiveness and encourage investment in the small business sector.

Mr. Jim Cunningham (Coventry, South) (Lab): Would my right hon. Friend agree that the top productivity levels of the German economy still lag behind those of this country?

Margaret Hodge: I entirely agree that we are doing especially well in our management of the economy. The advantages that we have over the German economy are our flexible labour markets, our high investment in research and a strong academic base. The latter means that we have good innovations and we are getting better and better at translating those into products and services. The fact is that we have closed the productivity gap with Germany through our management of the macro-economy and other interventions to support productivity and we are being extremely successful.

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Justine Greening (Putney) (Con): I am sure that the Minister recognises that one aspect of productivity growth is skills investment in staff. Does she agree that at a time when we have 1 million people on jobseeker’s allowance, 1.5 million people saying that they want work and 2.7 million on incapacity benefit, the vast majority of whom also say that they want to work—a huge stock of people who would like jobs—it is ironic that we have invested nothing in skills, so that British industry has had to go across the world to pull in economic migrants to do jobs in this country? Does she agree that that is a real indictment of the Government’s policy?

Margaret Hodge: I have to say that people are living in two parallel worlds. There is the real world, of the real UK economy, with real performance and 2.6 million extra jobs; a massive investment in skills and education; a huge investment in our science base and research activity; and with an enormous investment in enterprise. Then there is another little world of Conservatives who promise either unaffordable spending commitments or unachievable tax cuts. I know whom the British people believe.

Mr. Mark Prisk (Hertford and Stortford) (Con): I welcome the Minister to planet earth. It is nice of her to join us this morning. I agree with her that improving our productivity is vital, but after 10 years and 11 Budgets filled with complex schemes and political tinkering, the truth is that our labour productivity, as we have heard, is still behind France and Germany and way behind the US. Is not the real issue the quality of business management and, as my hon. Friends have rightly said, poor labour skills? When will the Government focus on that rather than on cooking up over-complex short-term schemes? What does planet Minister say?

Margaret Hodge: The planet Opposition spokesperson has not seen or understood the impact of all the investment that we have made in skills over the past 10 years. I do not know which planet the hon. Gentleman lives on, but were he to look at the statistics—which are not produced in a party political way, but by the Office for National Statistics and others—he would see that the productivity gap between ourselves and France and Germany is closing. He would also see that we are the only country that is maintaining the same level of productivity in relation to the US as we had 10 years ago, although productivity in other European countries has declined. Were he to go around his own constituency, he would also notice that the investment in skills and education is raising standards and ensuring that British companies can perform effectively with the skills that we need.

Mr. Dennis Skinner (Bolsover) (Lab): Does the Minister agree that our unemployment levels are far below those in France and Germany? Will she also agree that the massive amount of enterprise that was a result of the coalfield plan that we introduced in 1997 has meant that unemployment in Barnsley, where every single pit was shut, is 2.8 per cent. or half the national average? In nearly every coalfield in south Yorkshire, north Derbyshire and other parts of the British coalfield area, the unemployment rate is below the
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national average. The result is that we have jobs in every pit yard in my constituency, even though every one of those pits was shut by the Tories when there were 4 million people out of work.

Margaret Hodge: My hon. Friend is absolutely right. Unemployment is at the lowest level for a very long time, while the employment rate is higher than it has ever been and much higher than the rate in all our competitor countries. Most importantly, it is this Government who have made the appropriate interventions to ensure that the benefits of stability and growth are enjoyed by all areas of the country and not just the richer ones. That is why employment rates are high in my hon. Friend’s constituency.

Steel Industry

3. Dr. Ashok Kumar (Middlesbrough, South and East Cleveland) (Lab): If he will make a statement on the future of the UK steel industry. [128949]

The Minister for Science and Innovation (Malcolm Wicks): Despite significant restructuring over the past 30 years, the UK steel industry remains a significant employer and an intensive research and development contributor to the UK economy. We believe that the investments, strategies and measures implemented in the sector provide a solid platform for the future prosperity of UK steel operations in a rapidly changing global landscape.

Dr. Kumar: Will my hon. Friend join me in welcoming the recent news that Tata Steel will take over the Corus iron and steel making company? What help and support will be given to Tata Steel to ensure that we have a strong manufacturing base on Teesside? Manufacturing is our bread and butter, as 3,000 jobs depend on it directly, and 30,000 indirectly.

Malcolm Wicks: My hon. Friend brings much professional expertise to this subject, and is a steely champion of that important industry. We are pleased that Tata has chosen to invest in the UK steel industry through its acquisition of Corus, and believe that that will lead to a fruitful and productive partnership. The Tata deal will provide access to low-cost raw materials, and to high-growth markets for products in which Corus has a particular strength. That will enable the company to compete on a global scale and thereby help secure the future of plant located in the UK. I look forward to having an early meeting with the leadership of Tata Steel.

Sir Nicholas Winterton (Macclesfield) (Con): While I accept that we are in a global trading situation, I do not share the views of the hon. Member for Middlesbrough, South and East Cleveland (Dr. Kumar). It is extremely dangerous that our strategic industries are being acquired by overseas interests. Corus is not the only one: more industries in this country have been acquired by overseas interests than is the case with virtually any other country in the EU or elsewhere in the world. Does the Minister accept that the remittances and profits are sent overseas and so do not benefit the UK Exchequer or taxpayer? Does he also agree that jobs can be transferred abroad extremely easily?

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Malcolm Wicks: That was a passionate onslaught on the reality of globalisation. We have had enough banter—some of it not very good—about real worlds this morning, but globalisation is here to stay. The important thing is that British industry should regard it as a challenge and not a crisis. We welcome inward investment and, just as British companies will take over companies in India and elsewhere, some of that business will go the other way. I am confident that the deal is a good one for the UK steel industry, and for jobs.

Mr. Iain Wright (Hartlepool) (Lab): In an era of globalisation, the ability to innovate is essential for the long-term sustainability of the UK steel industry. My hon. Friend the Minister will know that Hartlepool’s steel pipe mills are a good example of that innovation, as he opened one last year. However, price is also important, and sterling is nudging $2 this morning. I know that the problem is extraordinarily difficult, but what can my hon. Friend do to ensure that the UK steel industry remains competitive in the global economy?

Malcolm Wicks: I certainly remember opening that plant. I learned a great deal, and was very impressed by the R and D work going on there and by the sheer skill of the work force. Corus has invested a great deal in the steel industry, and I have no doubt that Tata will do the same. The general message is that we need to compete by adding value to the excellence of the goods and services produced in this country. The hon. Member for Macclesfield (Sir Nicholas Winterton) spoke of challenges in the global markets, but the inward investment by Tata augurs very well for the British steel industry and its highly skilled work force.

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