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15 Feb 2011 : Column 238WH—continued
We make no apology for saying that home ownership is at the core of people's housing aspirations, and it should be at the core of our policy. It is a good thing. It gives people responsibility for their own needs, financial security and confidence. I think that it is good that housing wealth now accounts for nearly half of all household wealth, up from about 25% in 1980. Some hon. Members have criticised the right to buy and related issues in this debate, but I do not apologise for the right to buy. In the 1980s, I was a parliamentary candidate twice in Dagenham, which had one of the largest housing estates in Europe. I thought that it was
utterly liberating for ordinary people-good hard-working families-to have the chance to own their home. Not everybody will always manage that aspiration, but we need to make sure that it is there, that we help people in that way, and that we also assist those who, for a number of reasons, will not be in a position to meet it.
Chris Williamson: Will the Minister concede that, although the right to buy was liberating and gave access to home ownership for people who perhaps previously would never have been able to aspire to it, the decision to prevent local authorities from building, or to make it difficult for them to build, alternative affordable accommodation contributed to the massive housing crisis with which we are confronted?
Robert Neill: Those decisions were very much of their time and in response to it. I am not sure how much that in itself contributed, but I accept that, in the current age, we need a flexible approach to giving local authorities and housing associations the ability to build as is appropriate. That is why we are where we are now. It does not undermine the thrust of a policy that I think was necessary at the time.
Mr Slaughter: The average price of a property in Hammersmith is now more than £500,000, and 40% of my constituents have incomes of less than £20,000. It will require quite a degree of flexibility if the Government's policy of prioritising home ownership is going to go ahead. They are just empty words, are they not?
Robert Neill: The hon. Gentleman is as specious as ever. I am sorry that he has managed to lower the tone of the debate, while his hon. Friend the Member for Islington North dealt with the issue in a serious fashion, as usual. The contrast between the two hon. Gentlemen is always instructive. Of course, as I have said, there will always be those who will not be able to own their own homes-the hon. Member for Derby North (Chris Williamson) rightly recognised that as well-so we need a policy that embraces that, but I shall not go down the route of point scoring which is so characteristic of the hon. Member for Hammersmith (Mr Slaughter). The fact is that it is by no means incompatible for us to encourage home ownership and also deal with those who, for a number of legitimate reasons, will never be in a position to own their own homes.
John McDonnell (Hayes and Harlington) (Lab): Will the Minister give way?
Robert Neill: The hon. Gentleman has only just arrived, but he is an old chum so I will happily give way to him.
John McDonnell: I apologise for being so late. I was discussing another issue with one of the Minister's ministerial colleagues and could not get here any sooner. Will he address an issue facing a number of us in London, particularly outer London, namely that of the growing number of homeless and rough sleepers? It is hitting the outer London boroughs on a scale that we have not experienced before. Inner London has had high numbers but the issue is beginning drastically to affect London boroughs as a result of the policies of housing suppliers in particular.
Robert Neill: It is worth looking at the fact that we are consulting on and overhauling the way in which rough sleepers are counted. We need to get a better and more complete picture of the issue, because the previous system did not do it effectively. It is also worth saying that, although there has been fluctuation, the current figures suggest that, overall, statutory homelessness remains at historically low levels. However, I accept the hon. Gentleman's point that we need always to press down on the issue. It is not an easy area to cover accurately, and I know that the Department will happily keep in touch with him on this serious and important issue.
To return to the point that I was addressing before the hon. Member for Hammersmith intervened, I accept that poor affordability and difficulties with affordability create a gap for aspiring first-time buyers, which is exactly the point made by the hon. Gentleman. Average house prices have increased, so we need to address that. I believe, however, that the way to do that is not necessarily through more and more intervention-although some intervention is always appropriate-but through giving communities control of development in their area and greater freedom, which is the reverse of what the hon. Gentleman was advocating. That is the way forward and I have more faith in the ability of Hammersmith and Fulham council than in that of the hon. Gentleman to tackle their area's housing needs.
The Government are determined to encourage local authorities, developers and housing associations to work together with communities to deliver the homes they need through schemes such as the new homes bonus, which is a powerful tool. The Government have set aside nearly £1 billion for that scheme over the period of the comprehensive spending review. In fact, hon. Members may want to look at the new homes bonus calculator on the Department's website, which shows how any particular local authority can benefit from it.
Mr Slaughter: Will the Minister give way?
Robert Neill: In a moment. I would like to make a point, if I may. In addition to that scheme, we are introducing the community right to build, which will streamline the arrangements where there is local support for neighbourhood planning. That is often thought of in terms of rural and parish areas, but there is no reason why it should not also apply to communities in London and our other great cities.
Yesterday, my Department, together with the Homes and Communities Agency, published the affordable homes framework. It sets out details on giving housing associations much more flexibility on rents and use of assets, for which they have been asking for some time. The key part of that is the new affordable rent model, which will be a constructive and useful tool that is expected to deliver up to 150,000 new affordable homes over the next four years. The old, rigid models did not always work. We need to be prepared to think more imaginatively.
Mr Slaughter:
I am grateful to the Minister for giving way. He is right that Hammersmith council knows how to co-operate with developers. The west Kensington development that I spoke about earlier is a joint venture between the council and Liberty International, which is one of the biggest property firms. It will see the demolition
of 750 good quality, newly modernised council homes, and the building of up to 8,000 luxury, high-rise, 30-storey blocks. Last year, the Minister said:
"Instead we want to see communities coming together to take responsibility for meeting their own housing ambitions...This is about giving communities real power and real influence."
In the community under discussion, however, 80% of the tenants do not want their homes demolished. They want the power from this Government to take over their homes in the way described by the hon. Member for Carshalton and Wallington (Tom Brake). Will the Minister support the tenants rather than the property developers who want to destroy their homes?
Robert Neill: As usual, the hon. Gentleman makes a serious issue simplistic. The Government are determined to make sure that those precise issues can be determined at a local level. He knows that it is probably not appropriate for Ministers, particularly in our Department, which has responsibility for oversight of the planning system, to comment on developments that might go through the planning process and end up being considered by our Department. It is appropriate to have a greater degree of nuance and flexibility in the system than was the case in the past, when rather rigid developments sometimes imposed unacceptable developments upon communities. The hon. Gentleman will, therefore, understand why I will not go down the same route as him.
The affordable homes framework is a bold initiative, and I believe that it will enable communities. It is also worth remembering that this Government are providing considerable funding towards the issues. We are investing more than £6.5 billion in housing, and we are investing considerable moneys in London, which has particular pressures that we all recognise and with which we seek to deal. That is why we are handing the Mayor of London the ability to take over the Homes and Communities Agency operations in London, so that he can align delivery more effectively with the strategic housing pot available, in co-operation with the London boroughs. That seems to us to be the right thing to do.
We need to address the issue of overcrowding. As the hon. Member for Islington North has rightly said, there a significant number of overcrowded households. Although that applies to the private sector, I would not seek always to run it down, because responsible private landlords have a key role. There are also some 258,000 overcrowded households in the social rented sector, while 430,000 households in that sector are under-occupied by two or more bedrooms. That is why it is wrong to rule out our proposal to look at issues such as flexible tenancy. In some cases, people's housing needs will change as their life histories progress, and it is sensible to give them the means to reflect that. It is not the right approach to have too rigid an adherence to subsidy based purely on bricks and mortar.
I have been generous with interventions, but I am running out of time, so I will write to hon. Members on the other specific and important points that they have raised.
Pupil Premium
12.29 pm
Mr Stewart Jackson (Peterborough) (Con): It is a delight to serve under your chairmanship for the first time, Mr Hollobone. I welcome the Minister to his place. I know from experience that he is absolutely committed to driving up educational standards and to rigour in all that we do in our schools.
This is an excellent opportunity to raise a hugely important issue that not only affects my constituency, but has national purchase. I am indebted to the officers of Peterborough city council-particularly Gary Perkins, head of school improvement, and Jonathan Lewis, assistant director of children's services-for the assistance they have given me in preparing for the debate. I am also indebted to the officers of Westminster city council for their assistance, research and comprehensive briefings.
For the avoidance of doubt, I would like to make it absolutely clear that my remarks are not a criticism of the pupil premium policy. I strongly welcome and endorse the policy and the fact that the coalition Government will be spending £625 million on free school meals for children in the next financial year. That is particularly aimed at children from lower socio-economic backgrounds, and such a policy is absolutely right. There will be £430 spent per pupil. The amount concerned will rise to £2.5 billion by 2014-15. Naturally, that will benefit my constituents who are in receipt of free school meals, as it will people across the country. That will be new funding on top of existing funding contained within the dedicated schools grant. This debate is not about criticising the pupil premium; it is about suggesting how it can be improved and enhanced to meet the challenges of particular circumstances in my constituency.
The free school meals indicator is a blunt instrument. I welcome the commitment given in the White Paper "The Importance of Teaching", which was published in November, to ensure that schools funding is transparent, logical and equitable. I also welcome the commitment to ensuring that a new national funding formula is "fair and managed properly". I am pleased that the Minister is undertaking to revisit the school funding formula and the fact a consultation will begin later this year, not least because the funding formula currently used is not based on current data. The formula is historical and misses some very acute issues in a relatively small number of local education authorities, including my own at Peterborough city council. I concede that the ethnic minority achievement grant, which is worth more than £200 million this year, has helped some local education authorities to cope with children who have English as an additional language and with minority ethnic new arrivals. However, as I will discuss later, I am concerned about the decision to incorporate that and other discrete funding streams into the dedicated schools grant.
I have read carefully the Department for Education consultation document published last year entitled "School funding settlement for 2011-12: the pupil premium and Dedicated Schools Grant", and I have to tell the Minister that I am not entirely convinced that
"Known eligibility for free school meals is the only pupil-level indicator...that we currently have."
Ministers should be rightly wary of including things such as tax credit receipts or social deprivation indices
into the premium. However, the small number of LEAs with significant numbers of English as an additional language pupils, particularly at primary level, should be taken into consideration in designing the post-2011-12 architecture of the pupil premium for reasons that I will now move on to.
It would be inappropriate to rehearse all the historical issues around large-scale migration from eastern Europe that my constituency has experienced during the past seven years since 2004. Suffice it to say that we have had to tailor our public services-housing, policing, health and education-to fit 20,000 new EU migrants who have come to Peterborough as a result of the 2004 European Union directive on free movement. That has obviously put some strain on the delivery of public services. In addition, there is a significant cohort of Pakistani heritage children in our schools who, for cultural reasons, come to primary school speaking largely Urdu, after being brought up by mothers, sisters and aunts. That is the cultural reality. If we combine that situation with the fact there are also low-skill, low-wage, indigenous white British families, there is a perfect storm of very difficult circumstances for primary schools to deal with.
In Peterborough, 30.5% of primary school pupils do not have English as their first language, which is 4,767 pupils. Almost 3,000 pupils in the secondary phase do not have English as their first language, which is around 22%. Overall, 26.5% of pupils on the school roll in the local education authority do not have English as their first language. Let us consider some significant examples. I pay tribute to Tim Smith, who is the head teacher at Beeches primary school in Craig street-the central ward of Peterborough-where six out of 528 pupils speak English as their first language. That is an enormous challenge-I will come on to this later-in terms of tailoring lessons and delivering a national curriculum, particularly key stage 2 of the standard assessment tests. Indeed, what alerted me to the seriousness of the matter in a concrete form was the fact that underachievement and poor education attainment were occurring not because our governors or teachers are below par or our children are particularly dense, which they are not, or our parents do not care, but simply because of the demographics-the social and economic profile-of my constituency and local education authority.
In December 2010, Peterborough was placed sixth from bottom in the key stage 2 results for SATs. That is not acceptable, because we are not a city that is particularly socially deprived when compared with many other parts of the country, for example, the north-west, Yorkshire and Humberside, and the north-east. Some 15% of our children have special educational needs compared with the national average of 1.4%, and Peterborough has an extremely high turnover rate of pupils-almost double the national average. Of the 2,103 pupils with key stage 2 results in 2010, 21% were not in the city at the start of their school life. A further 22%, or 455 pupils, who had foundation stage were no longer in the city to take their key stage 2 tests. Therefore, we have a massive problem with churn and children coming in and out of school. Often those are the same children who have English as an additional language. Hon. Members might be surprised
to learn that almost 900,000 children in England have English as an additional language. That lays bare the significant challenge we all have in dealing with the issue.
The problems are high levels of pupils with English as an additional language, minority ethnic new arrivals, non-standard entry and churn among those pupils and, of course, significant pockets of social deprivation in my constituency across all racial, religious and cultural groups. It would be unfair to place the blame on Peterborough city council. I have had my differences with the council from time to time and it has not always taken the issue on board with the alacrity and seriousness of purpose that it could have, for example, many years ago when I was raising the matter. However, the council is now trying to do its best to ameliorate a very difficult situation that is having an impact on my constituents and their children.
The council is doing its best to cope with the circumstances. An exemplar school in that respect is one of the largest in Peterborough: Fulbridge primary school. That school has a superb head teacher, Iain Erskine, who is coping with a school in which dozens of languages are spoken. Indeed, in the whole of the city of Peterborough, 94 separate languages are spoken across our schools. An Ofsted inspector recently stated:
"the local authority has been relentless in its pursuit of improvement."
We have a stark issue with attainment, as has been proven by the specific figures on English and maths. At the end of key stage 2, the proportion of English as an additional language pupils attaining national average levels in English is 19.3% lower than for those who speak English and, for maths, the figure is 11.9% lower. If anything, that situation got worse between 2009-10.
I will not go into minute detail about how resource-intensive those children are in terms of lesson planning, teacher training, and interfacing with pupils' parents, many of whom do not speak English. Culturally, those parents do not need to speak English-many are in low-wage, low-skill occupations where the need to speak English is not apparent. For example, even if Polish children, who are extremely good at science and mathematics and are generally very gifted, are up to speed in English and mathematics, when they go home there is no cultural pre-disposition to speak English. It is very difficult for them. Other children, whose parents are less skilled, from, say, Lithuania or the Czech republic, are in a situation where their parents' contract for packaging fruit or picking vegetables in the fields of south Lincolnshire, Cambridgeshire or Northamptonshire finishes after six months. They then leave their rented accommodation and withdraw the children from school, or they may go to another part of the UK. It is debilitating and resource-intensive to train teachers and to have the capacity to deliver real improvements and added value for those particular families.
I will return specifically to the pupil premium and to work by Westminster city council, in a very helpful briefing paper it prepared recently for the Minister for Immigration, my hon. Friend the Member for Ashford (Damian Green). The briefing paper makes it clear that the focus on pupil premium is
"too narrow and that multiple pressures caused by the needs of migrants (including deprivation, EAL and mobility factors) ought to be included for the Pupil Premium basis in the future."
Furthermore, the National Association for Language Development in the Curriculum, in response to the recent White Paper, argues:
"the Ethnic Minority Achievement Grant, should not be merged with the Direct Schools Grant (DSG) and that any changes should be postponed at least until the government has completed its review of the system of funding beyond 2011-12."
What are the solutions? As a loyal Conservative, I might be expected to say that money is not necessarily the only issue that solves every problem, but it will really help a local education authority such as Peterborough. Ministers need to think about the impact of the ethnic minority achievement grant, what it achieved, and how rolling it up with the dedicated schools grant could be a retrograde step in making sure that the people who need the most help-governors, teachers, parents and children, and a specific number of schools in a specific number of authorities-continue to receive that fiscal incentive to try to improve results and educational attainment. To give a few examples, a local education authority, such as Peterborough, that is facing such problems could recruit more qualified and experienced bilingual staff; run more English as a second language classes after school; engage with parents to encourage them to speak English and improve their own English to help their children; employ more teachers, as opposed to teaching assistants, with those skills; and develop specific language programmes, such as holiday boosters and catch-up programmes.
I support Westminster city council's advocacy-or at least I support the idea that it should be debated and discussed by Ministers-of a specific fund held in the Department for Education for new arrivals to the UK. It calls it a "cash passport" and makes the case that it is recognised that non-standard admissions and English as an additional language will not be reflected in the existing pupil premium funding. We need to look carefully at that.
In conclusion, I ask the Minister to look carefully and specifically at how the pupil premium regime can be ameliorated to assist children with English as an additional language when he looks at all the representations he receives from different organisations in the course of the consultation. It was important to have this debate to raise this issue. With all due respect to the Minister, he and colleagues have a lot on their plate with free schools and academy schools, and with taking on, to an extent, the vested interest of the producer and the teachers' unions. I am not entirely convinced that the issue that I have raised was necessarily on the political and administrative radar, so it was important to do so. I hope that either the Minister or our noble Friend Lord Hill will be able to meet a delegation from Peterborough local education authority in the near future to understand the key challenges facing our children in the city.
The Minister has made an excellent start in his post at the Department for Education. This is an issue of great significance and importance, and of pressing need. I hope that the Ministers will listen and will take forward policy that reflects the very difficult and acute circumstances in Peterborough and in other places. I look forward very much to the Minister's reply.
12.45 pm
The Minister of State, Department for Education (Mr Nick Gibb):
It is a pleasure to serve, I think for the second time, under your chairmanship, Mr Hollobone.
I congratulate my hon. Friend the Member for Peterborough (Mr Jackson) on securing today's important debate and on the way in which he presented his case. I know that my hon. Friend is a passionate advocate for his constituency and constituents, and also believes, as I do, in very high standards in our schools.
I understand his concern at the level of migration and the strain that it puts on his constituency, particularly in relation to the number of pupils who have English as an additional language. Between 2005 and 2010 there was a 59.6% rise in the number of pupils with English as an additional language in Peterborough. I can say immediately that I am very happy to meet my hon. Friend and a delegation from Peterborough city council to discuss the issues in more detail. Peterborough is, in fact, not one of the lowest-funded authorities in England. At £4,422 a pupil in 2010-11, the level of funding is slightly above the average figure in England of £4,398. That demonstrates, however, that even authorities with above-average funding can still have problems with the unfairness caused by the current system of school funding.
I certainly share my hon. Friend's concern with the previous Government's policy on migration. As a Government, we want to build a more integrated society, with greater equality of opportunity. That applies to adults as well as to children, and we are reviewing English language requirements across the immigration system to ensure that all those who come to the UK have the skills and language ability that they need to participate fully in society. We want to continue attracting and retaining the brightest and the best people who can make a real difference to economic growth. I agree, however, that unlimited migration places enormous pressures on public services, particularly schools, as my hon. Friend has outlined. The Government aim to reduce levels of net migration back to the levels of the 1990s and to achieve that we have already announced that we will introduce a limit on economic migration from April 2011.
My hon. Friend has set out the effect of migration on schools in Peterborough, the difficulties of coping with large number of pupils who do not have English as their first language, and the pressure on school places. It is important that children with English as an additional language should be given the support they need to improve their educational attainment and our policy is to encourage rapid English language acquisition to facilitate their integration. I know that the increase in pupil numbers, particularly in primary schools, is a major pressure in many areas of the country, and that the ethnic minority achievement grant has played an important part in recent years in helping to meet the additional needs of children with English as an additional language. Peterborough local authority received an EMAG allocation of £847,886 in 2009-10. The Department for Education is still finalising the figures for 2010-2011, but I can confirm that the final figures will be at least as much again. I understand the point that my hon. Friend made in his opening remarks, and the views of Peterborough city council, but it remains a key priority for the coalition Government that children with English as an additional language are supported.
As part of our school funding settlement for 2011-12, which we announced on 13 December 2010, we confirmed that to simplify the funding system we would be mainstreaming relevant grants, including EMAG, into
the dedicated schools grant from April 2011. Under the new arrangements, schools will be able to continue targeting pupils with English as an additional language for additional support, but they will also have the freedom to target other underperforming groups if they wish to do so. Local authorities will be free to retain a portion of the funding to run centralised EAL services and, where allocations are small enough not to warrant devolving the sums to schools, they can choose to retain the whole amount centrally. It is important to stress that the mainstreaming of EMAG funding is not about cutting costs. For 2011-12, funding per pupil, including mainstreamed grants, is being maintained at 2010-11 cash levels. The grant will be included in the money that goes to Peterborough city council, albeit not separately identified. The quantum of the grant will still be there and will still go to the council.
I know that Peterborough has seen significant increases in recent years in the proportion of children with English as an additional language. That is why the authority was awarded an exceptional circumstances grant of £979,000 in 2009-10. I can confirm that the figure will rise to £1.5 million for 2010-11. We will be mainstreaming the grant in the 2011-12 financial year based on the 2009-10 figure rather than the 2010-11 figure. Funding for 2011-12 will also be based on schools' actual pupil numbers in January 2011, which means that year-on-year increases in pupil numbers will be reflected in Peterborough's final funding allocation.
My hon. Friend suggested that we might use the pupil premium to address the issue of English as an additional language. We introduced the pupil premium to support the most disadvantaged pupils in schools, targeting extra funding specifically at those from the most deprived backgrounds to enable them to receive the support that they need to reach their potential, and to help schools reduce educational inequalities. For this year, as my hon. Friend said, the premium will be set at £625 million, which amounts to £430 of additional funding for every pupil from a deprived background. We have decided that the indicator used to reflect deprivation for 2011-12 will be known eligibility for free school meals. Poverty is the single biggest predictor of poor attainment at school, regardless of ethnicity or country of origin. I know that he believes free school meals to be a rather blunt tool for deciding eligibility, but the link between free school meal eligibility and underachievement is strong.
Mr Jackson: Does my hon. Friend concede, notwithstanding the laudable aim of using free school meals as an indicator for accessing money for children in the most need, that, in the case of east European migrants particularly and other migrant groups, there is a cultural predisposition against claiming free school meals? Therefore, some of the children who would most benefit from extra funding are not able to do so, and that obviously has an impact on the overall educational attainment in their school.
Mr Gibb: I understand my hon. Friend's point. Such points are made to us as we go through the consultation to assess what indicator to use. For example, some people argue that we should use "ever" free school meals, so that parents who have ever claimed free schools meals for their children within a period of six or so years should also be entitled, regardless of the fact that this year they no longer claim the benefit. We are considering what is the best indicator.
However, we believe that the best pupil level measure available for identifying and targeting underachievement is free school meals, or some component of it. We expect that more parents will apply for free school meals once it is made clear that pupils will attract additional funding for the school. Indeed, we are receiving reports even now that more parents are doing so, and we hope that that will help to solve the problem of under-claiming. The parents my hon. Friend referred to who do not claim for stigma reasons may well feel that they should claim because it helps the school more broadly if they do. It is our intention to extend the coverage of the pupil premium from 2012-13 onwards to pupils who have previously been known to be eligible for free school meals-as I just said, the ever free school meals indicator.
As my hon. Friend knows, we have concerns that the current funding system is unfair, illogical and opaque. The spend-plus system of allocating dedicated schools grant is currently based on historical accident and out-of-date assessments of need, and is inflexible in responding to change, as he knows from his constituency. That means that it is not able to adjust to reflect current needs in local authorities such as the high level of EAL needs in Peterborough. That is why we are committed to reviewing the underlying funding system so that schools with the same needs can receive similar levels of funding.
In our White Paper "The Importance of Teaching", we said that we would consult on developing and introducing a clear, transparent and fairer national funding formula based on the needs of pupils. We are already working to develop options for the future funding of schools, with the aim of consulting in late spring, as my hon. Friend said. The consultation is likely to cover the merits of a national funding formula, transitional arrangements and the factors to be included in such a formula. English as an additional language will certainly be a factor in the review and consultation. We need to consider how best to provide the necessary additional financial support to schools with such pupils, taking into account how the additional need decreases-for example, as a pupil becomes more proficient in English. My hon. Friend will appreciate that I obviously do not know the outcome of the review, but I hope that he will take in good faith a commitment from me to study carefully the issues that he has raised in the context of the school funding review and in our consultation later in the year.
Mr Philip Hollobone (in the Chair): I thank the hon. Member for Peterborough (Mr Jackson) and the Minister for taking part in the debate. We now move on to the next debate.
Holiday Accommodation
12.57 pm
Mr Mike Weir (Angus) (SNP): I am pleased to serve under your chairmanship again today, Mr Hollobone.
I represent a largely rural constituency which covers more than 2,000 sq km from the fertile coastal strip of seaside towns to the mountainous and sparsely populated glens. What all parts of Angus have in common is their beauty, which has made tourism an important and growing part of the local economy. The latest Office for National Statistics classification discloses that almost 10% of jobs in Angus in 2008-the last year for which I can find figures-are tourist-related, which is significantly above the national average of around 8%. As well as the more traditional holiday tourism, my constituency also attracts a significant number of visitors from the UK and overseas who are attracted by field sports. It will therefore be no surprise that I maintain an abiding interest in tourism development issues, which affect the economic development of Angus and the prosperity and well-being of my constituents.
I should say at the outset that I am not here simply to lambast the Government for their attitude to tourism. I took a great interest in the furnished holiday lettings relief and its impact on the self-catering sector, and campaigned hard against the ludicrous proposals put forward by the previous Labour Government. I acknowledge that the present Government have introduced new proposals which, although still not ideal, are a significant improvement on what had been proposed, and last week I submitted to the Treasury my third response to consultation on the issue in less than a year. I do, however, wish to concentrate on a proposal which I believe could cause serious damage to this vital industry: the Minister's proposal to do away with the current, widely recognised star rating scheme for holiday accommodation. He has suggested, in effect, that consumers instead look at private internet sites such as TripAdvisor.
I have pursued the matter through a series of parliamentary questions and have been somewhat perturbed by the answers, since it seems clear that the Government are moving towards self-assessment and feedback rather than the current star rating scheme. Incidentally, the Minister stated in one answer that tourism is a devolved matter for the Scottish Government. That is not the whole picture, at least at present, as VisitBritain is responsible for marketing tourism for the whole of the UK in significant parts of the world, including the crucial emerging markets of Brazil, China and India, under what I understand is referred to as the "quadrant model".
Many tourists coming to the UK will be looking for a holiday that covers several centres, including Scotland. Therefore, the current hard-won system, with all the national tourist boards and the Automobile Association co-operating in a similar star system, has a great deal of merit. Allied to that, such a system is common overseas, so visitors from other areas will be familiar with the concept and be able to recognise easily what type and standard of accommodation is available for consideration in all parts of the UK. In particular, visitors from the emerging markets that I have flagged up are unlikely to fly directly to Scotland, unless arriving via charter
arranged under an incentive scheme, or for a conference. In such limited cases, use of self-catering accommodation is extremely unlikely.
I cannot overstate how hard the tourist industry has worked to bring into being the common standard, which ensures that a three-star self-catering cottage will be of the same quality in Scotland, England and Wales. I cannot emphasise enough how much work was done by the tourist boards and the industry, which compromised on sometimes heartfelt positions for the greater good of the industry going forward. In a rolling programme, self-catering was the first sector to apply the common standard. Other sectors have now joined, but the self-catering common standard was the first to be reviewed as standards and visitors' expectations have moved on.
I consider the mooted scheme to be a serious error. The star-rating scheme has built up considerable trust and recognition over the years as a robust scheme that gives us a good idea of the standard of accommodation we are likely to encounter, based on an objective assessment by an independent body.
Anne Marie Morris (Newton Abbot) (Con): May I add to the hon. Gentleman's argument? Will he consider that, whatever system we have going forward, we need to make it less onerous? The very small businesses in my constituency certainly find the current scheme difficult. If someone has a bed and breakfast and a cottage, the two assessments are separate, so whatever scheme we have, may we make it simpler and more affordable?
Mr Weir: The hon. Lady makes a good point. As I will explain in my remarks, the new proposals will make the situation even worse for self-catering small businesses.
I accept that the current scheme is not perfect, and many hoteliers believe it too prescriptive, homogenising and sanitising accommodation with what some deride as its tick-box approach, which can penalise quirky, extraordinary or mould-breaking properties. Subscription to the scheme has been less extensive than was hoped, especially in England and, more particularly, in London. However, for all its limitations, it delivers an objective assessment based on published and transparent criteria. TripAdvisor and its like do not. Instead, individuals can register their views on holiday accommodation on a website, but their views are totally subjective and could be influenced by a huge number of the variables encountered.
The comedian Michael McIntyre has a funny routine based on someone using TripAdvisor to rate a holiday. Like all good comedy, it has a germ of truth. He notes that someone looking at the various comments on TripAdvisor is most likely to believe those that are bad. Indeed, often, only the disgruntled care to write up the experience-others simply do not bother.
Last year, I holidayed on the beautiful island of Seil, in self-catering accommodation found on the VisitScotland website and chosen on the basis of the star rating. My family and I had a great holiday, and we would thoroughly recommend it to anyone but, on returning home, with many things to do, writing a review on a website was the last thing on our minds. That is a danger for good properties.
That strikes to the very nature of the problem. There is absolutely no quality control over what may be posted on such sites. There is no effective way for the hotelier or holiday cottage provider to prevent someone with a
particular beef-perhaps they did not get on with them, perhaps they were unreasonable, or perhaps they were simply vindictive-from commenting on the website. Yet such a comment could have a serious impact on the business. If the Minister has any doubt about the capacity of rival tradesmen who have lost in legal disputes, or of the plain malicious, to pursue vendettas in acts of cyber-sabotage, he could do worse than consult the website www.ihatetripadvisor.org.uk.
While in theory the small business owner might have redress in law, few would have the resources to pursue such an action. Has the Minister looked at the jurisdiction section in the terms and conditions on www.tripadvisor.co.uk-in case he does not know the website address? If he does so, he will find:
"This Website is operated by a US entity and this Agreement is governed by the laws of the State of Massachusetts, USA. You hereby consent to the exclusive jurisdiction and venue of courts in Massachusetts, USA and stipulate to the fairness and convenience of proceedings in such courts for all disputes arising out of or relating to the use of this Website. You agree that all claims you may have against TripAdvisor arising from or relating to the Site must be heard and resolved in a court of competent subject matter jurisdiction located in the state of Massachusetts."
Despite the somewhat impenetrable English, that appears to give sole jurisdiction to the courts of the state of Massachusetts.
I am sure I am not alone in finding it strange that a Minister of the Crown will be recommending that consumers in the UK should consult, and that UK taxpaying accommodation providers should find themselves at the mercy of, an organisation that specifically seeks to exclude the writ of Her Majesty's courts, as a supplement to and eventual substitute for a state-sanctioned system of quality assurance. For a Government that pride themselves on reducing the burden on small businesses, that seems a curious tack to take.
Should the jurisdiction barrier be laboriously and expensively overcome, the hard-pressed business which seeks to obtain redress for defamation also runs up against a comprehensive disclaimer on the website:
"TripAdvisor takes no responsibility and assumes no liability for any Content posted, stored or uploaded by you or any third party, or for any loss or damage thereto, nor is TripAdvisor liable for any mistakes, defamation, slander, libel, omissions, falsehoods, obscenity, pornography or profanity you may encounter"-
which makes it sound much more interesting than it probably is.
TripAdvisor will retort that it makes provision for management responses, but experienced practitioners whom I have consulted advise that that can too easily fall into an entrenched argument of "He says" or "She says", from which there is no easy way out, and all in the public domain. Others have reported difficulties in accessing that right to reply, being told that any robust defence of the business breaches the user guidelines.
If that were not bad enough, there can be serious differences between how hotels and self-catering are treated on such sites. In a recent article in The Sunday Times, Adam Raphael, editor of The Good Hotel Guide, made the point:
"TripAdvisor, the best known hotel review site, carries millions of consumer reviews, but its usefulness is marred by its failure to screen out collusive and malicious reviews."
He freely admits to having an obvious interest in the matter but points out that, in preparing his publication, his team track every review sent to them and know who the writers are, where they are coming from and how sound their judgments are. Tellingly, he adds:
"When our readers disagree, we send an anonymous inspector to spend the night at the hotel or B&B, at our expense."
Adam Raphael also makes the point that TripAdvisor and similar sites have no idea who is writing reviews and make only a feeble attempt to check that they are genuine. He cites one response to a hotel's complaint that a critical report was planted by a competitor:
"Since reviews are posted by our members on an open forum, and we do not verify the information posted in this, we are unable to provide you with proof that this member reserved, stayed or actually visited [your] hotel."
Perhaps the final nail in the coffin was when TripAdvisor published a list of its top 25 hotels in the UK-one of which was, in fact, in administration and closed. That sets out the problem. Adam Raphael was looking at it from a different, commercial angle, but surely a star scheme administered by the national tourist agencies within the UK is the best way to ensure that tourists-whether domestic or from overseas-know what they are getting and can trust.
Bad as matters are for larger hotels, however, a much more serious situation could be faced by holiday lets in more rural areas such as mine in Angus, or that of the hon. Member for Newton Abbot (Anne Marie Morris) in the south-west. Just to show my inclusiveness and to demonstrate that this concern is not just a Scottish one, I made some inquiries as to how many English self-catering properties were listed on TripAdvisor. I thank the chief executive of the English Association of Self Catering Operators for doing the spadework.
The Minister might be interested to know that in the whole of England there are 3,706 such properties-in Devon only 239, in Cornwall 362, in Norfolk 76 and in Dorset 167. He might agree that those numbers are very small for some of the principal holiday destinations in England. Clearly, that is a small fraction of total self-catering accommodation in England. My understanding is that to get listed, a business has to pay to get on such a third-party site or hope that a client nominates them. As Adam Raphael notes in his article, that has already led to allegations that some hotels are offering inducements for good reviews on the sites.
The main point, and the thing that concerns me most, is that most self-catering accommodation would get very few reviews on such sites, unlike larger hotels, and therefore the impact of one unreasonable review would be far more detrimental to a small business. Will the Minister consider the difference between the accommodation types and the business models that they operate? A self-catering property that is let out for 25 weeks a year-fairly good going in the current market-might see 35 bookings made. If an average of three people visit per booking, that gives 75 people per property per year who might leave feedback on sites such as TripAdvisor. That includes children and close family members. Contrast that with a 10-bedroom hotel. According to the most recent annual UK occupancy survey for UK serviced accommodation, published in 2009, room occupancy averaged 58%. An average of two people per room would give 2,117 bookings and 4,234 visitor nights that could result in feedback on
sites such as TripAdvisor. Put simply, such sites do not work for self-catering. The allied system is called FlipKey, but it is expensive to use as there is no linked booking engine for self-catering to generate funding, as Expedia does for TripAdvisor. FlipKey take-up has been understandably low.
The internal systems in Scotland and the other nations of the UK are devolved, and I understand that VisitScotland is likely to continue offering a quality assurance scheme along the lines of the current star-rating scheme. It sees the scheme as offering opportunities rather than being a burden, and in answer to initial reports on the proposed changes it responded that Scotland's star-rating quality assurance scheme is recognised as a world leader. VisitScotland has recently signed a three-year contract with the Swedish agency for economic and regional growth to develop a quality assurance scheme for visitor attractions and the accommodation sector. It has worked with Namibia and South Africa on quality schemes, and is currently in discussion with Norway, Finland, Estonia and Swaziland.
A huge amount of effort has been put in over the years between VisitScotland, VisitWales and VisitEngland to produce a common standard for those visiting all parts of the UK and, in the case of foreign tourists, those encouraged by VisitBritain. If the Minister goes down the road of self-assessment, that will render the common standard meaningless and tourists will have to deal with at least two competing systems. At a time when we need to work together to encourage economic development in our rural economies-of which tourism is a vital part-that seems a backward step.
The chief executive of Farm Stay UK wrote to me yesterday:
"As we position the UK on the world stage with the Royal Wedding, the Olympic and Paralympic games and the Rugby World Cup, now is not the time to be pulling away from a quality initiative."
I would add the Commonwealth games in Glasgow to that list.
I will be interested to hear the Minister's response. I urge him to reconsider this matter before it is too late, and to meet with the chair of the Federation of National Self Catering Associations, and the CEO of Farm Stay UK, whom I am sure can put the case for the self-catering sector more forcefully than me.
1.13 pm
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (John Penrose): It is a pleasure to see you in the Chair, Mr Hollobone. I am delighted to respond to the hon. Member for Angus (Mr Weir) on this important issue, which has been slightly distorted in the public debate thus far, so I am glad for the opportunity to respond to his points and to set the record straight.
The hon. Gentleman has helped me by securing this debate-for which I thank him-and by kindly asking me a written parliamentary question, which I answered on 2 February. There were a number of associated questions, but one was specifically on this topic and I shall start by reading part of the answer that I gave him at the time. I hope it will provide answers to much of what he has spoken about today. I stated:
"We are not considering abolishing the schemes, but rather passing them over to be run by the industry itself instead."-[Official Report, 2 February 2011; Vol. 522, c. 819W.]
That is crucial because a large part-although not the entirety-of the hon. Gentleman's argument was based around the principle that we are scrapping the star-rating schemes. We are not. I made that clear to the hon. Gentleman in a written answer, and I am happy to repeat it now. I accept that star-rating schemes have a purpose and are valued and useful. That use has historically been strong, and it will continue in the future.
It is all very well for people to get over-excited about the wonders of the internet; it has many great things that it can provide for us all. However, many people are still not particularly comfortable using the internet or find it hard to afford-we talk about the digital divide-and those people need an alternative source of information. Trust has built up in star-rating schemes over time, and we would be foolish to abandon that.
Mr Weir: I understand what the Minister says, but will he clarify what that implies for the cost to small businesses-the point raised by the hon. Member for Newton Abbot? Is money being provided to the national tourist board-in England, in the Minister's case-to continue the scheme in its current forum? Are considerable increases in cost to the small holiday-letter expected, so that the scheme can continue?
John Penrose: As I am sure the hon. Gentleman knows, these schemes are typically run on a combined cost basis. At the moment, the Government provide a modest amount of funding through VisitEngland to pay for a small number of staff who are involved in administering the scheme in England. There is more than one scheme, such as that sponsored by the AA and various other organisations around the country. I was in the New Forest the other day visiting its impressive local tourism organisation. It has a New Forest accommodation rating scheme. In most cases, people typically pay a small sum to be part of such a scheme, and in the best-run ones, the sums paid by the participant are graded according to the size and type of accommodation provided. No one is suggesting that that system is due to change.
In this country we still have a system where Governments get involved in rating the quality of hotels and other kinds of holiday accommodation. I find that bizarre because we do not have-thank goodness-a Government rating system for cars or cornflakes or almost any other kind of consumer product. There is good reason for that, because in most fields of life we trust people to make up their minds based on good consumer information. It is important that people have good consumer information when booking a holiday or accommodation, but the emphasis should be on providing that information rather than on the Government saying, "We know what 'good' looks like." Anyone in the tourism industry would accept that the goalposts are moving fast, and there is a welcome proliferation of different kinds of accommodation for different niches. It is difficult for any star-rating system to keep up with that, particularly a state-mandated and sponsored system.
Mr Weir:
The 2008 report by the Select Committee on Culture, Media and Sport pointed out the importance of the star-rating system in driving up quality. At that
time, the Department listed the scheme as one of its great achievements. The Minister's arguments seem to turn that on its head.
John Penrose: I do not think they do. I have repeated something that I had already told the hon. Gentleman in a written answer: we are not planning to can the scheme; we plan to continue with it, but to allow the industry to take it over. I have spent the past five minutes explaining some of the strengths of such a scheme, but it is peculiar at the very least, and unusual compared with other industries, for such a scheme to be state sponsored.
I started by agreeing with the hon. Gentleman that star-rating schemes are an important part of a holidaymaker's assessment of where they want to go and stay. They are not the only thing, and increasingly there are other sources of information. I will come on to the different sources of information, including the hon. Gentleman's jeremiad against TripAdvisor and all its ills. Clearly, star-rating schemes have a place, but I find it bizarre that in a world where we have many star-rating systems other than the state-sponsored one, and where we do not have state-sponsored quality approval schemes for all sorts of other consumer goods, we somehow think it sensible and right for the Government to be the author and intermediary of something for hotels. That is a bizarre anomaly.
The hon. Gentleman went on to talk about some of the alternatives, saying that they also have flaws. I will come to that in a minute. It is important to realise that although star-rating schemes have their strengths and are a trusted brand in many cases, they also have their limitations. As I was beginning to point out, a welcome and increasing variety of accommodation is available. In the last 18 months to two years, across Britain as a whole we have seen a huge increase in the amount of self-catering accommodation that people are using for their holidays. There is also in the hotel sector an increasing proliferation of types of hotel-niche players of one kind or another. There are people providing green hotels, which have a very low carbon footprint and are environmentally sensitive; high-style boutique hotels; and everything in-between. That is to be welcomed, but it is extremely difficult to argue that one star-rating scheme can capture that breadth and richness.
It is quite instructive that we have only to think of the expectations that people have of what a typical three-star hotel will provide today compared with 10 or 15 years ago to illustrate how things have changed and will continue to change. The chances are that 10 or 15 years ago, people would have expected a reasonable hotel room to have a trouser press in the corner and a phone. Nowadays, whether or not people like the trouser press, they are much more likely to be concerned about whether there is wi-fi access. The fact that a great many people have mobile phones nowadays makes the phone relatively less important. All I am saying is that the criteria need to move with the times. The industry is reacting well and rapidly to reflect that diversification of market opportunities. It is extremely difficult to expect a single state-run star-rating scheme to keep up with all that, even though-let me agree with the hon. Gentleman once more, just for the sake of clarity-he and I both
accept that star-rating schemes are important. I am arguing about how we provide one, rather than whether they are a good thing.
Before I talk about some of the alternatives and whether TripAdvisor is the worst or best thing since sliced bread, I should pick the hon. Gentleman up on one other point. He began by acknowledging that tourism is a devolved matter, and he is absolutely right. For the sake of clarity, let me point out that VisitBritain is in charge of marketing Britain as a whole-as one would expect from the name-to the world outside to drive inbound foreign visitors to the UK. We are taking all sorts of measures to get it properly funded and make it able to do that in the most effective way possible in the next three or four years, because we have an amazing set of international events that will be attracting people to this country.
I am thinking of events such as the royal wedding, which is due very soon, but also, in 2012, we have the Queen's diamond jubilee and the Olympic and Paralympic games, plus the cultural Olympiad. In the years following, we have two different flavours of rugby World cup; we have another Ryder cup coming up in golf; and of course in Glasgow we have the Commonwealth games. There is a huge opportunity for us to sell the UK as a destination. Even if people are not coming here to see those events, they will probably be viewed by some of the largest TV audiences the planet has ever seen, so they present an unparalleled marketing opportunity in attracting people here in the years following the events, just because they liked what they saw on TV.
The hon. Gentleman is right to say that VisitBritain has that pan-Britain role. However, it is also worth pointing out that the decisions by Scotland, Wales or England on things such as a star-rating scheme are entirely local; they are fully devolved. Therefore, although I appreciate his remarks at the start of his speech, I gently say to him that a great deal of his concern about the star-rating schemes in Scotland must be directed to the Scottish Executive, rather than here. I do accept, however, that there is a point about consistency between the different nations.
Mr Weir: I am listening to what the Minister is saying but I rather fear he has missed my point. I fully accept that, internally, these things are devolved. Indeed, VisitScotland has made very clear its support for the existing scheme. However, that is not the argument. The point I was making about VisitBritain is that, given all the events that are coming up, most of the tourists will fly into London because Heathrow is the premier international airport and there are very few direct international flights to Scotland's airports-apart from certain destinations-particularly from many of the countries where VisitBritain operates. My concern is that if tourists come to the UK, they should be able to be assured that the type of starred accommodation available is similar throughout the various countries of the UK. I suspect that many of them will travel about a great deal while they are here. The worry is about breaking up a hard-won scheme that has taken many years to establish. If Scotland, Wales and Northern Ireland keep their schemes, as I think they probably will, and England goes its own way, there is a real danger of causing confusion and affecting important international tourism to the UK as a whole.
John Penrose: I take the hon. Gentleman's point, and I suppose the most reassuring response I can give is that the good news is that the tourism industry, both collectively and individually, is not stupid and understands the importance of common standards. He will understand that all the different existing schemes-I mentioned the AA scheme and the very local example that I saw in the New Forest-take notice of, and in many cases contribute to, a common set of standards, so there is a direct read-across between, for example, the AA scheme and others. That is clearly to the advantage of the entire tourism industry. Handing the English scheme back to the industry is very unlikely to endanger that, because it is clearly to its commercial advantage. I hope that that reassures the hon. Gentleman.
In the couple of minutes I have left, I shall move on to the hon. Gentleman's point about some of the alternatives. There was a long and impassioned section in the middle of his speech about the evils of TripAdvisor and all the things it gets wrong. For the sake of clarity, I point out that this Department and this Government do not hold a brief for TripAdvisor or anyone else like that at all. It would be entirely wrong of us to pretend that we did, or even to do so. TripAdvisor is the most commonly used such website in this country. It is used by people who are not stupid and who find what it says helpful-although I think many of them take what it says with a pinch of salt, because some of the reviews need to be viewed with a careful eye, for the reasons the hon. Gentleman laid out. However, there are plenty of alternatives, and many of those have very tight-and perhaps in some people's view, tighter-quality controls on the kinds of postings they allow. For example, many of them allow postings to be made only by people who have genuinely visited and stayed the night in the accommodation in question. Therefore, postings are made only by customers. They cannot be made by the people running the bed and breakfast down the road, who feel like posting something nasty even though they have not stayed in the accommodation. There are different ways of dealing with the quality control angle.
Websites of any kind that provide customer reviews live or die by the trust the British public place in those ratings. If someone visits such a site and thinks it is being spiked or generally misused, they are much less likely to go back to it. Therefore, there is a huge reputational risk for any websites that allow low-quality reviews to become too large a proportion of the total. For example, if, in the hon. Gentleman's view, TripAdvisor is getting it wrong too often and others are doing a better job, we would logically expect people to transfer their affections very quickly, given the rate at which things move in the digital world, from that website to another one. The hon. Gentleman is right to say that such websites are not perfect, and there are concerns about them, but there is an eminently sensible self-correcting mechanism whereby people can vote with their feet-or, in this case, with their mouse.
Mr Philip Hollobone (in the Chair): After that five-star debate, we move to a debate on funding for technology innovation in wave power.
Wave Power
1.29 pm
George Eustice (Camborne and Redruth) (Con): It is a pleasure to serve under your chairmanship, Mr Hollobone, in this important debate on the funding of wave-power innovation and technology.
Let me start by saying a little about the potential of this new industry. About 25% of all wave and tidal technology development is going on in this country. Our marine resource is second to none, and that is nowhere truer than in the south-west of England. The extraordinary resource around our coastline is backed up by lots of the skills and expertise that we need to develop the technology. The Carbon Trust has estimated that wave power could eventually meet 15% to 20% of our current power needs and that it might produce enough electricity over time to power 11 million homes. Furthermore, with the extraordinary development of this new energy resource comes a lot of economic potential. It is estimated that the industry could be worth £2 billion by 2050 and that it could create more than 16,000 jobs. Some estimates suggest that the wave and tidal power industries together might employ 10,000 by as early as 2020.
My constituency is home to the wave hub project, which is the first project of its kind anywhere in the world. It is the first time we will have a commercial-scale facility to test arrays of wave-power devices at deep-water locations. The project consists of a long cable 16 km off our coast at Hayle, with a plug anchored on the sea bed to take up to four arrays of devices for testing. Currently, the maximum power produced by each device is 4 or 5 MW, but it will be possible to expand capacity over time so that the wave hub could feed no less than 50 MW into the network. One company has already signed up to plug into the wave-power device. Ocean Power Technologies will test a commercial-scale version of its PowerBuoy system, which is one of the leading systems being developed.
My constituency is also home to the Peninsula Research Institute for Marine Renewable Energy, or PRIMaRE, to give it its short name. The institute is based at the Tremough campus near Falmouth. At the institute, academics from Exeter university and the Camborne School of Mines are doing a lot of important work, which is needed to support the development of wave-power technology. I visited last summer to see some of the work that is being done on moorings. The Cornish coast is famous for wrecking boats, and the sea can be quite choppy at times, so getting the strength of moorings for wave-powered devices just right is an important part of the development of wave power. PRIMaRE is also doing a lot of tests on new devices to see how each device works in commercial situations.
That brings me to a point about the importance of developing and funding technology innovation. The marine renewables deployment fund will be phased out in March 2011, although according to those in the industry, this £40 million fund was never very satisfactory. It was notoriously difficult to access; in fact, I am not sure whether anybody ever successfully accessed it. The reason is that one of the criteria stipulated that a device had to have been actively and successfully working in commercial situations for at least three months before
someone was eligible to apply for a grant. However, the key thing about wave-power technologies is that developers need support before that point; they need support before they get to the stage of keeping a device in the water for three months, not after they have achieved that extraordinary feat. Some estimates suggest that the cost of developing and deploying a commercial-scale device is in the region of £30 million, so developers need support much earlier in the process.
Some improvements were made under the marine renewables deployment fund, which was deliberately designed to come in a bit earlier. However, we now need to think carefully about how we move from the proving stage-testing small devices at the European Marine Energy Centre-to the stage of developing wave power on a much bigger scale.
Andrew George (St Ives) (LD): My hon. Friend is making a good case. In the previous Parliament, my constituency included the Hayle area, so I was involved in the development of the excellent project he is talking about. However, does he agree-I think he is coming to this-that if the project, which enjoys perfect conditions, is to become a commercial success, we need public sector support, such as renewables obligation certificates or other means, to bridge the gap between where it is now and where it needs to be?
George Eustice: Yes, I absolutely agree. Although the wave hub technically comes ashore at Hayle, my hon. Friend has told us once before that it is actually in St Ives waters, and we have both had discussions with representatives of the fishing industry, who have concerns about where the wave hub is located. However, I absolutely agree with my hon. Friend, and I was coming to the point he raises.
The Government have announced a review with the Technology Strategy Board. They have also announced the new idea of technology innovation centres. Those involved with the wave hub and the PRIMaRE institute at Tremough are keen to develop a TIC for offshore renewables in the south-west. What I want from the Minister today is some idea of the criteria that will be applied. We know that a technology innovation needs assessment-TINA, in the jargon of the trade-is being carried out for projects that want to put themselves forward for a TIC. I was recently pleased to hear the Minister repeat his pledge about trying to develop a marine energy park in the south-west, and there is no better place for that than Hayle. A lot of infrastructure improvements are being carried out on the north quay, and a small marine business park will be located near the wave hub project.
I am keen, however, to understand the criteria that will be applied. I am not a big fan of ring-fencing these budgets and pots of money. Some in the industry say that we should make x amount of the £200 million available for wave-power development, but it is much more important to apply the right criteria to determine where to allocate the funds. The marine renewables deployment fund failed because we were far too risk averse. The whole reason for having public subsidy and public investment in these areas is to bridge the gap between risk and potential. When it comes to wave
power, we have extraordinary potential, with a source of energy that could meet 15% or 20% of our energy needs. However, there is also a large risk in that it is much harder to develop devices to use out at sea in difficult conditions. As I said, it can cost up to £30 million to develop these technologies. The Government's role should be to come in and bridge that divide between risk and potential.
The second key point about the criteria is that they must look at what stage the development of the technology has reached. Those involved in wave power have just gone past the phase of testing devices in a tank in the laboratory and have moved to testing commercial-scale arrays, so the industry really needs some additional funds to help it make the next step. A lot of the other renewables industries that will be competing for the same funds are quite a bit further along the development road, and we should be making much tougher demands on them so that they start getting private sector investment. We should also remember that providing public sector investment can unleash a lot of additional private sector investment. The £100 million that the Government have already invested in wave power has brought in an additional £200 million of private sector investment. There is private sector money, but those concerned need to know that there is a commitment to develop things to the next stage.
Finally, geography is another factor to take into account in relation to the capacity to develop an industry, and I want to say a little about ROCs. In Scotland five ROCs per megawatt-hour are paid at the moment for wave power that is generated, but there is not the capacity on the grid to develop an industry there. We need to avoid a situation in which all the development of the industry takes place in Scotland, but in a few years we find that there is insufficient capacity in the grid to capitalise on the industry properly. It would be far better to develop the industry in the south-west where there is capacity on the grid to upscale and expand the industry.
I believe strongly that in addition to the right technology push we need the right support framework to create the pull conditions to enable the industry to go beyond the development stage. There is no doubt that the answer is to increase the number of ROCs that we pay on the commercial devices to five ROCs per megawatt-hour, so that we match Scotland. That would give a level playing field.
Andrew George: My hon. Friend has got to the nub of the biggest hurdle to taking the project forward. As the Government are reviewing the ROC regime it is clear that some intense negotiation is needed between the UK Government and the Scottish Executive, to give sense and sanity, and an even playing field across the border.
George Eustice: I agree with my hon. Friend. There was quite a bit of criticism of the decision by Scotland to go unilaterally for the five-ROC regime. Others in the industry say that perhaps five are not needed and perhaps three or four would be acceptable, but we need that level playing field, so that the people developing the technology can make rational judgments rather than just chasing those paying the highest amount of money.
We are clearly entering an era of energy needs in which there is no magic bullet. We shall need many different sources of energy to come on stream. The Minister once told me that wherever he goes, and whatever conference he attends, people say "This is the magic industry that is the future" whether it be biomass, anaerobic digestion, nuclear or something else. The truth is that we shall probably need a range of sources to supply our energy needs in the future. It is clear that wave power could be one of those important sources, but only if we are willing to back it to the next stage, to get it to a commercially viable situation.
Mr Philip Hollobone (in the Chair): With the permission of the hon. Member for Camborne and Redruth (George Eustice) and the Minister, I invite Mr Shannon to make a contribution, but I want to call the Minister at 1.45.
1.43 pm
Jim Shannon (Strangford) (DUP): Thank you, Mr Hollobone. I thank the hon. Member for Camborne and Redruth (George Eustice) for securing the debate. I want to make a couple of quick comments, as I understand that time is limited.
I fully support the points that the hon. Member for Camborne and Redruth made. There is wave and green energy creation in my constituency, at SeaGen at Portaferry, which is a very successful venture that took a lot of private enterprise spending as well as Government support. What discussions has the Minister had with the Minister of Enterprise, Trade and Investment in Northern Ireland, Arlene Foster? Have there been any discussions with her about how to introduce wave energy?
I am always concerned about the impact on the fishing industry, which the hon. Member for Camborne and Redruth alluded to in his speech-obviously the issue is of concern elsewhere, too. The fishing industry is not against wave energy but there is concern about and awareness of the need to maintain fishing stocks and fishing areas. I want to know what will happen in that regard.
We have European and Government targets for green energy, which we must meet. I am keen to support wave energy, and I keen that the Government should support it. I am also keen that something should be established to ensure that the fishing industry will not be disadvantaged. Wave energy is one of those on-tap resources of which we should take more advantage.
1.45 pm
The Minister of State, Department of Energy and Climate Change (Gregory Barker): I congratulate my hon. Friend the Member for Camborne and Redruth (George Eustice) on securing the debate today. My hon. Friend is already known as a champion of his constituency, but he is becoming an experienced and articulate advocate for the wave and marine industry generally, which has huge potential not only as an energy source but as an employer and generator of wealth, particularly in the south-west. As I hope I shall show, we see that as something with real potential for the south-west, and-as I am sure that the hon. Member for Strangford (Jim Shannon) will be delighted to hear-all around the British isles.
My hon. Friend the Member for Camborne and Redruth began by talking about his constituency, which is famous for, among other things, being the home of Wave Hub. That is a good example, as he pointed out, of how the UK is currently leading the world in the nascent industry of wave and tidal energy development. It is a unique facility, as he said-it is the only grid-connected facility where arrays of commercial-scale wave energy devices can be tested in a live hostile environment. It is an important asset as we develop the sector, and one that the UK Government take very seriously. Together with the other UK marine energy testing facilities-the European Marine Energy Centre in the Orkneys, and the onshore marine drive train testing facility, which is being developed at the National Marine Energy Centre in the north-east of England-it helps to provide Britain with a unique offer to the emerging sector, which is already helping to concentrate the global focus on our waters. I believe that a globally competitive opportunity is emerging.
I am glad to tell my hon. Friend, if he did not already know, that the Secretary of State will be visiting Wave Hub later this month as part of a visit to the south-west, to see how the commissioning of the facility is progressing. I look forward to getting an update from him, and I hope in due course to have the opportunity to visit Hayle myself. I assure my hon. Friend that I am personally committed to marine energy and that I share his level of ambition. Not only that, but the coalition Government, who are determined to be the greenest Government ever, are absolutely committed to harnessing the benefits that a successful marine renewables industry can bring to the UK. Support for the development of the sector is explicitly written into the fabric of the coalition agreement. I also assure my hon. Friend that I am committed to leading the way to ensuring that that commitment, unlike others made by previous Governments, will be realised.
There are real gains to be had from creating a successful and vibrant marine energy sector in the UK. If we can capitalise on our natural coastal resources, those gains will be manifold. Marine energy can certainly contribute to our renewable energy generation mix and help us meet our longer-term carbon saving targets, but the benefits go beyond that to providing us with secure, clean electricity, which enhances our energy security. Certainly, in our appreciation of marine energy we need to look more widely at the sector than through the prism of our relatively short-term and narrow 2020 carbon targets. We need to take on board, as a Department and across Government, the opportunity to build a new manufacturing sector in the UK. However, that should be seen in the context of the coalition's wider ambitions to rebalance the economy, recognising that among other renewable sectors it gives us the opportunity to create new jobs and more opportunities, both at home and globally.
We can capture that opportunity only if we capitalise on the hard work already done by that sector, ensuring that the right foundations and support are in place to build on its success. For too long, previous Governments have failed to provide the sector with a clearly articulated long-term vision of what they want to achieve in the marine energy sector. That needs to change, and we are determined to change it. That is why I have established the marine energy programme; and I want to create a
dynamic new cluster in the sector with the establishment of a network of marine energy parks around the UK. I hope that the first marine energy park will be in the south-west.
We clearly need to give greater focus to our marine efforts. I recently attended a meeting at No. 10 with Eric Schmidt of Google, chaired by the Chancellor. Out of that came a sense that we can learn a lot from the growth of other sectors that are based on scientific innovation, such as IT. The clustering of companies in silicon valley in the US was a key driver of that innovation and growth, because it fostered information sharing and competition and ultimately led to a reduction in investment risk, the fertilisation of new ideas and an increase in investor confidence.
Andrew George: I am most encouraged. I entirely endorse the Minister's saying that this Government should be the greenest Government ever and his commitment that, with this project, our country should lead the world in marine energy. That said, and with the £42 million investment in place and annual insurance for the project already being met, what can the Government do to ensure that wave devices are placed on that site? Ocean Power is the only company that proposes doing so, but we need more, and I believe that that needs Government commitment. What can the Government do to assist this project?
Gregory Barker: I shall endeavour to explain. The Government need to do a number of things.
Marine energy parks could draw together research and development, manufacturing and other sector expertise in one place to achieve that, not on an exclusive basis but as a hub with many spokes. In a number of locations around the UK that is already beginning to happen, and the building blocks for future marine energy parks are already beginning to form-for example, activity in and around the Pentland firth in Scotland, off the coast of Anglesey and in south-west England is creating exactly the right conditions for marine energy parks. As I have made clear, we see the south-west leading the way. It has the potential to be the first marine energy park, given its unique mix of renewable energy resource and home-grown academic, technical and industrial expertise in the sector.
At the first meeting of the UK Marine Energy Programme Board, which was held in Exeter last month, I set a challenge to stakeholders in the south-west and elsewhere to come forward with ideas on collectively creating a marine energy park that will be successful in attracting additional investment and helping to boost the UK's offer on marine energy. I look forward to working with those stakeholders and harvesting their ideas. However, my hon. Friend was absolutely right to say that public sector capital is only the beginning. We need to ensure the long-term growth of the industry, crowding in private sector capital and creating the conditions in which such capital will dwarf what the public sector can provide in these hard times. That is the real opportunity that we have to play for.
We still have a lot to do to achieve the level of deployment suggested by my hon. Friend the Member for St Ives (Andrew George), and he was right to press
the matter. Over the next three or four years, I want us to be talking about deployment and scaling up in real time. We need a big vision and clear leadership, but it really is rubber-on-the-road time when it comes to working collaboratively with the industry, so that we can make real progress on the ground and at sea. Marine energy has been a Cinderella industry for far too long, and we need a programme that will set out our vision and the key stepping stones for implementation. I hope that the Marine Energy Programme Board will help me during the next few months to marshal the various pieces needed to ensure an effective deployment programme.
Turning to energy market reform, feed-in tariffs and the renewables obligation, the message from the first Marine Energy Programme Board meeting in Exeter was clear. First, we need to focus on getting the right levels of revenue for the sector to attract investment. Secondly, investment in innovation to reduce risk is absolutely necessary. That investment must be pulled in and made available in the near future.
We are already consulting on whether to offer generators a choice of renewables obligation certificates or a new feed-in-tariff mechanism between 2013-14 and 2017, once the electricity markets review legislation is in place. That will give marine generators access to the new forms of FITs from the start, which will provide added certainty and a more stable revenue stream. It will be a while before the new FITs are in place, and the marine sector needs to be confident that appropriate support will be in place before then, so as to ensure that longer-term investments will be made.
The longer-term future of the sector is clearly tied up with the new FITs, but we shall deal with the immediate problem through the review of the current ROCs. The coalition Government acted immediately after coming into office to review the banding of ROCs. As a result, investors will have certainty about what support is available a full year earlier than previously planned, with a Government response this autumn and legislation in place on the new ROCs banding by April 2012.
I cannot prejudge what that review will say, but the message given by my hon. Friend the Member for Camborne and Redruth was echoed powerfully at the meeting in Exeter. I am well aware of what the industry needs in order to expand and go forward, but that clearly needs to be balanced by other factors and other demands for renewable subsidy, which is, in effect, what ROCs are. Evidence obtained from the marine industry will feed directly into the ROCs review, and I am taking a personal interest in it.
That brings me to technology. The history of the marine renewables deployment fund-the MRDF-and its failure to spend is well known, and my hon. Friend briefly cantered around that course. It is a real indictment of the previous Administration's failure to turn good will into good progress. The MRDF has been sitting on £50 million of the environmental transformation fund since it was created in 2005-as my hon. Friend said, the fund will close in a matter of weeks at the end of this financial year. That budget was allocated for the current spending review period, and the Department will have to make decisions over the allocation of new innovation funding. We secured more than £200 million of innovation funding in the comprehensive spending review; to date, we have allocated £60 million for ports
infrastructure, but there are other competing areas. However, we will listen carefully to the needs of the marine industry.
The development of criteria for technology innovation centres is being undertaken by the Department for Business, Innovation and Skills. However, my Department is working closely with our BIS colleagues to ensure that those criteria are effective, appropriate and sufficient to drive innovation and technology. Detailed proposals have yet to be developed, but an offshore-focused TIC would make a valuable contribution in moving the sector forward, and we are actively engaged with our colleagues in that dialogue.
One of the Britain's great strengths is its expertise in research and development. That is particularly true in
the marine energy sector. With the Minister for Universities and Science, I co-chair the low carbon innovation group, which brings together the key Government bodies that support low carbon innovation, which allows us to ensure that they act in concert. That group has been developing the technology innovation needs assessments referred to by my hon. Friend, and marine energy and bio-energy are part of that programme.
This is clearly an important time for the industry. I would like to give more detail, but time does not allow it.
2 pm
Sitting adjourned without Question put (Standing Order No. 10(11)).
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