Sheila Gilmore: Clearly, the Government see tax planning as a perfectly rational and sensible reaction to tax changes. However, if a working couple who are about to lose £3,000 in tax credits make a sensible and rational decision to stop work because that will make them better off, will they be seen as merely making a sensible and rational decision, or will they be seen as lazy, as scroungers, and as people who prefer to watch daytime television than hold down a job? If they make that

22 Mar 2012 : Column 1027

decision, which is rational for them, the outcome will be wholly irrational for the Government, because it will cost the Government more if that family stop work.

I have still not had a satisfactory response from the Government to a question I asked in an earlier intervention. I also asked it of the Deputy Prime Minister earlier this week, because he is fond of telling us that Government can do two things at once. Why can we not retain the 50p tax rate and deal with tax avoidance? Apparently, in the previous year, when people were expecting more tax, they brought their income forward, so presumably this year, knowing that the measure has only a year to run, they will be able to put their income back to the following year so that they do not have to pay more. If we know that such things are happening, why are we unable to find a means of stopping it? Perhaps people’s incomes should be looked at over two or three years to ensure that they cannot engage in these blatant tax avoidance games, which many people on lower incomes cannot do.

When we had the discussions some months ago about bankers’ bonuses and executive pay, the Secretary of State for Business, Innovation and Skills told us, “Well, these people are paying 50% tax.” Either they are paying it or they are not. One moment we are told that we do not need to bother doing more about bonuses and high pay because the tax rate is dealing with it and the next we are told, “It’s not bringing anything in, so we shouldn’t bother.” There is a lot of smoke and mirrors.

It is clear from the Red Book and it is even clear from the Daily Mail—I am hardly a friend of that paper—that the Exchequer plans to forgo £3 billion in making this change to the tax rate. It hopes to get that back through people willingly paying more tax in various ways and through the relatively small amount that is expected from the changes in stamp duty.

Since May 2010, we have been told regularly by the Government that the way to achieve economic growth is to cut the public sector, which has been stifling the private sector, and then the private sector will spring to life and replace the jobs that are lost. Two years on, we are still asking where those jobs are. Yesterday at Prime Minister’s questions, the Prime Minister told us yet again how good it is that so many private sector jobs have been created. The figure that he used was 600,000, which was repeated a few minutes ago by the hon. Member for Mid Norfolk (George Freeman).

More than a year ago, we were told that 500,000 jobs had been created since the election. Many commentators have made it clear that most of those jobs were created in the first six months of the financial year that started in 2010, and that the likeliest cause for their creation was the previous Government’s economic stimulus. The Government cannot keep recycling the figures. The number of times that the Prime Minister has talked about those 500,000 jobs is incredible. I accept that it has gone up slightly and he is now talking about 600,000 jobs. He should get a prize for recycling, even if he does not get a prize for job creation. If those jobs were created as a result of the economic stimulus, the Government should look again at whether they should continue to rule out such a stimulus.

Do we even know that those private sector jobs are completely new jobs? In my city, there has been a lot of outsourcing and people have moved positions through tendering processes. For example, 2,000 care workers in

22 Mar 2012 : Column 1028

Edinburgh will now be in the private sector because of the decisions that the council has taken. No doubt those jobs will move from the public sector side of the equation to the private sector side, but they are not new jobs that are driving economic growth. Once again, this is smoke and mirrors and there is no economic growth. That is the important point. If we do not get jobs and growth, we will not get out of the recession.

Several hon. Members rose

Madam Deputy Speaker (Dawn Primarolo): Order. I intend to start the winding-up speeches at 5.40. That gives us eight minutes. Members can work out for themselves whether they will share the time or not.

5.33 pm

Christopher Pincher (Tamworth) (Con): I will certainly attempt to share the time, Madam Deputy Speaker.

Although it is a great pleasure to follow the hon. Member for Edinburgh East (Sheila Gilmore), I hope she does not mind me saying that the performance that I most enjoyed from her side of the House was that of the shadow Chancellor, whom Government Members think of with great affection. His performance reminded me of that of an ageing, end-of-the-pier show entertainer, rather like Archie Rice in the film “The Entertainer”, who was once a great character actor, but who, as he gets to the end of his career, has to reheat jokes to get more and more lame laughs. Members will remember that the last words of Archie Rice in “The Entertainer” were, “I’ve had enough.” That sums up our view of the shadow Chancellor.

I was at the Pickerings business breakfast in my constituency just a few days ago, where small and medium-sized enterprises, the engines of growth in my constituency, made three points to me: we need to deal with access to credit, we need to deal with the cost of business taxation, and we need to deal with the burden of bureaucracy that weighs them down. I will not go over the points that many hon. Members have made, but we have heard about the national loan guarantee scheme and Project Merlin, which is providing more money to businesses, allowing them to invest, create jobs and build growth. We have heard about the reduction in corporation tax from 26p to 24p, with a view to taking it to 22p and an aspiration to reduce it to 20p.

Mr Andrew Love (Edmonton) (Lab/Co-op): Will the hon. Gentleman give way?

Christopher Pincher: I will not, because I do not have much time.

The corporation tax reduction sends a message that this country and its businesses are open for business.

Angela Smith: Will the hon. Gentleman give way?

Christopher Pincher: No, the hon. Lady has had enough time to get herself into Hansard. I am not going to give way to her.

The reduction in corporation tax also sends a message to business that the Government are on its side and want it to create the jobs that pay the taxes that fund the public services we want and need. It is unfortunate that

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we have heard the shadow Chancellor today, and the shadow Chief Secretary bestriding the airwaves yesterday, saying that they would not have made the cut and would reintroduce corporation tax at 26p. What a message that sends to businesses in this country—that Labour has learned nothing and forgotten nothing from its mistakes. It does not want to kill the fatted calf; it wants to starve the entire herd.

I wish to give Ministers an important message about bureaucracy. Small and medium-sized enterprises have said to me that when they apply for a slice of the Government procurement pie, as the Government want them to do, they find the online application process time-consuming. For small businesses, time is a form of tax. I hope that my hon. Friend the Financial Secretary, who is in his place, will work with my right hon. Friend the Minister for the Cabinet Office continuously to streamline the process, with a view to reducing the time needed for initial online applications by just a few hours. That would help many small businesses apply for the slice of the Government procurement pie that we all know they need.

In the past, Chancellors have had a tin ear. Conservative Chancellors have made Budgets for accountants by accountants. The last Labour Government, after a reasonable start, began to write Budgets by spinners for spinners. It seems to me that Budgets should be made for the people. The Budget that we heard yesterday was an authentic Budget that spoke to the people. It spoke to the strivers, who want to get up, get on and make something of themselves. It spoke to the grafters, who are trying to build a business. It spoke to mums and dads who want their kids to grow up in a country that is free of crippling debt. It spoke to the aspirants, and I am happy to support it.

5.37 pm

Damian Collins (Folkestone and Hythe) (Con): We have heard a number of Members today say that the Government have no industrial strategy and no strategy for jobs. I say that they should make that argument to the people who will benefit from the £500 million investment in this country that GlaxoSmithKline announced this morning following the Budget; to the people who will benefit from the 2,000 jobs being created by Nissan in Sunderland and around the country with the support of Government money; or to the clients and employees of companies such as WPP, one of the world’s largest communications networks, which will headquarter in the UK under this Government’s new lower tax regime, instead of Dublin, to where it flew under the last Government.

The Government are setting out a bold and ambitious industrial strategy to bring jobs to this country in the sectors in which we will see the highest levels of growth. That is why I particularly welcome the announcements that the tax credit for production in the video games industry will be brought back and that the film tax credit, which a Conservative Government introduced in the 1990s, will be extended to sectors such as animation and high-end TV production.

It is ridiculous that Julian Fellowes’s new series “Titanic” has been filmed in Hungary, instead of in Belfast, where there is a film production studio in the shipyards where the original ship was built. That shows how our system

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has taken jobs and investment abroad instead of bringing them here. The changes will help big businesses, but also small animation companies such as Cognitive Media, which is based in Folkestone, in my constituency. It will help in the other creative clusters around the country where such jobs are providing necessary skills and employment. That is part of a strategy, with the Government supporting big investment in centres such as Tech City, where we will fulfil the Chancellor’s ambition to make Britain the technology capital of Europe and a leading player in the world. They will be a major driver for growth for our economy and new jobs in future.

I very much support the Government’s initiative to support the programme championed by Virgin to allow young people who want to set up their own business to borrow money to invest and start up on their own on the same terms as students can borrow money for tuition fees. That will be a great source of jobs for young people and give them the boost they need to get on to the job ladder.

5.40 pm

Mr Iain Wright (Hartlepool) (Lab): May I begin by wishing my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller) a very happy birthday? He does not look a day over 75, which is just as well, because he is only 63 tomorrow.

With the greatest respect to my hon. Friend, his is not the biggest birthday of the week. Today marks the birthday of my mother. I hope the whole House wishes her a happy birthday—[Hon. Members: “Happy birthday!”] She will not thank me for saying this, but my mother was born in 1948, so she is absolutely being hit by the Chancellor’s Budget provisions. She will lose out along with another 4.4 million pensioners. She has worked hard all her life, and still works hard, and will be penalised for it.

This has been an interesting and informative debate and I have enjoyed it immensely. My right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) mentioned regional pay, which is also a big concern to me as a fellow north-east MP, as did my hon. Friends the Members for Dumfries and Galloway (Mr Brown) and for Ellesmere Port and Neston. My hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) rightly mentioned the importance of youth unemployment, and his fellow Brummie and neighbour, my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), stood up fiercely for housing, if not for hairdressers. My hon. Friend the Member for Stockton North (Alex Cunningham) mentioned the importance of child poverty and my hon. Friend the Member for Stretford and Urmston (Kate Green) mentioned the importance of ensuring that we tackle female unemployment.

I was interested in the points made by the hon. Member for Bexleyheath and Crayford (Mr Evennett) on ensuring that the Budget provisions are fair and innovative. I agree with that. I want to ensure that work is incentivised, but he failed to mention the concept of fiscal drag, which will bring 300,000 people who are trying to work hard and do what is best into the higher tax rate.

I was also interested, as I always am, in the comments of the hon. Member for Solihull (Lorely Burt). It is interesting that she is an out-and-out apologist for the Government. She has a majority of 175, so it will be

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interesting to see how she explains the fairness of the Budget to the 20,082 pensioners in her constituency.

In the opening paragraph of the financial statement yesterday afternoon, the Chancellor said that the Budget

“unashamedly backs business…and…is on the side of aspiration”.

The Opposition would want such a Budget, but if only yesterday’s Budget backed responsible business, rebalanced the economy in favour of manufacturing, built on the progress made by the previous Government on new industries and jobs, and put in place an active Government industrial policy that emphasised the need for Government procurement to establish a level playing field for British companies. Sadly, we did not get that.

We agree with the Chancellor that

“We earn our way in the world if we stop being afraid to identify Britain’s strengths and reinforce them instead”.—[Official Report, 21 March 2012; Vol. 542, c. 793.]

We also agreed with him when he said in his Budget speech in 2011:

“Yes, we want the City of London to remain the world’s leading centre for financial services, but we should resolve that the rest of the country becomes a world leader in advanced manufacturing, life sciences, creative industries, business services, green energy and so much more.”—[Official Report, 23 March 2011; Vol. 525, c. 953-954.]

The problem is this: the Chancellor keeps saying these things—these important warm words—but does not do anything about them. It is little wonder that the Secretary of State for Business, Innovation and Skills was forced to write in his leaked letter to the Prime Minister that the Government had

“something…missing: a compelling vision of where the country is heading beyond sorting out the fiscal mess; and a clear and confident message about how we will earn our living in future”.

The fact of the matter is that the Budget is yet another missed opportunity by the Government to put in place the framework needed for a 21st century rebalanced economy. Terry Scuoler, chief executive of EEF, the manufacturers organisation, was right when he said last night:

“The Chancellor began positively by setting out his thoughts for a new economic model. But, by the end of his speech, the task of rebalancing our economy looked as daunting as ever.”

He added that the measures in the Budget

“fail to send a strong enough signal to growing manufacturers that now is the time to bring forward their investment plans and to do it here.”

Steve Radley, policy director of the EEF, reaffirmed this when he said:

“This year it doesn’t look as though we will be making…much progress to a new economic model because we are now looking at business investment driving much less of the economic growth”.

That is the key point of a Budget that is meant to be backing business.

In the 2010 Budget, the Chancellor forecast that business investment growth would be 10%, and 10.9% in 2013. Last year’s Budget downgraded this forecast to 8.9% in 2012 and 10.6% in 2013. But according to yesterday’s Red Book, business investment growth this year is not going to be 10% or 8.9% but 0.7%, and next year 6.4%, as my hon. Friend the Member for Glasgow North East (Mr Bain) so rightly said. What on earth is the Chancellor doing with the British economy that he instils so little confidence in the business community? At a time when companies are sitting on record cash

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piles—something like £750 billion—which could be used to invest and make the British economy more productive and more competitive, the Chancellor is failing to persuade them to invest in Britain now.

Business investment as a share of GDP has fallen sharply since this Government took office and is now, at less than 8% of GDP, at the lowest level for more than half a century. So much for yesterday being a Budget for business. It is little wonder that John Longworth, director general of the British Chambers of Commerce, has said that small and medium enterprises—the very bedrock of this country’s economy and the firms we need to nurture today to make them the big, successful global companies of tomorrow—will be disappointed that the Chancellor did not do more to boost confidence. An additional 1% cut in corporation tax does not make up for the 5.6% rise in business rates still going ahead next month, or for the lower allowances for capital investment and a lack of incentives to boost employment, particularly for young people.

There was nothing in the Budget on supply chain improvement, despite the fact that the Business Secretary, in his leaked letter, specifically argued that

“There is as yet little attention given to supply chain issues.”

With this Budget the Chancellor has once again shown how he is a roadblock to reform. He has missed an opportunity to make Britain more competitive and fairer, and to ensure our economy is more balanced and productive. His own Budget figures, backed up by the OBR, reveal that his tweaks and fiddling, his tinkering and meddling, his leaks and pre-announcements, will make little difference to Britain’s growth prospects and global competitiveness. This is in a month when the likes of Brazil are powering away from us in terms of competitiveness and the growth and size of their economy.

The Chancellor’s tax cuts for the privileged and most prosperous, paid for by tax increases for pensioners, reveal that he, the Prime Minister and the Deputy Prime Minister are looking after their own. The Chancellor’s favouring of Mayfair over Middlesbrough and Belgravia over Burnley, aided and abetted by his Liberal Democrat accessories, shows that he has the wrong values and the wrong priorities, and he is making the wrong decisions. What we—and, more importantly, Britain—needed was the Chancellor to make a Budget focused on growth, on long-term business support, on a modern industrial partnership between business and industry, and on fairness in tough times. He failed to deliver any of it.

5.48 pm

The Financial Secretary to the Treasury (Mr Mark Hoban): I am grateful for the opportunity to respond to this debate. Over the course of the last two days, debate has been wide-ranging and there have been 60 Back-Bench speeches. At the heart of the debate is the Government’s determination to restore the UK to prosperity. As hon. Members are already aware, it is because of the decisive action that this Government have taken since the June Budget of 2010 that we have secured and maintained the stability of the UK economy, sheltering it from the turbulence that undermines our nearest neighbours and securing record low market interest rates that support families and businesses across the UK. Stability is a vital precondition for growth, and this Budget builds on those solid foundations, safeguarding a stable economy,

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creating a fairer, more efficient and simpler tax system, and driving through the reforms to unleash the private sector enterprise and ambition that are critical to our recovery.

The Government are unashamedly committed to building a recovery through enterprise, private sector investment and exports. That is why John Cridland, the director general of the CBI, has said:

“The Chancellor has also painted a clearer vision of how the UK will earn its living in the future and, by seizing the opportunity to make sure our corporate tax system is more internationally competitive, he has sent a powerful signal to companies to invest, do business and create jobs in the UK.”

Kevin Green, the chief executive of the Recruitment and Employment Confederation, said:

“Changes to corporation tax will encourage businesses to invest in their workforce. Plus, in continuing and speeding up year-on-year reductions the Chancellor creates certainty for businesses, which is so important in encouraging growth.”

This commitment to building a recovery through enterprise, private sector investment and export will help to unwind the imbalances and distortions that the previous Government built up, expanded and ignored, to everyone’s cost.

We will not return to growth fuelled by unsustainable debt, irresponsible spending and over-reliance on one sector and one region. I would have thought that the hon. Member for Hartlepool (Mr Wright) would at least have recognised that when Labour was in office, despite the many billions of pounds spent on regional development agencies, the gap between the north and the south widened, not narrowed. That is the legacy that they left to this country. Rather than growth being dependent on debt-fuelled expansion, as in the Labour days, Britain will earn its way in the world. While the previous Government let the economy slip into a stupor of spending and competitive decay, we are reversing that decline and revitalising our ambition.

Mr Love: Will the Financial Secretary explain why, after feeding in all the numbers related to the Budget, the OBR did not make any changes to its growth forecasts for the coming years?

Mr Hoban: We face a challenge. The OBR has said, on this Budget and the autumn statement, that the scale of the problem we inherited from the previous Government was bigger than everyone thought. The scale of the boom was bigger and the scale of the bust was bigger. That is the legacy that we are tackling.

Critical to realising our goal are the far-reaching tax reforms that the Chancellor announced yesterday. We are committed to creating the most competitive tax system in the G20—a tax system that supports work, encourages growth and keeps our most successful businesses here in the UK. While the previous Government increased taxes on small businesses, we have cut the tax rate on small companies to 20%; while the previous Government wanted to increase national insurance on jobs, we have cut it; and while the previous Government sat idle as our competitiveness drained away, we have already taken action to reduce the headline rate of corporation tax to 23% by 2014, cutting one of the most important and growth-impeding taxes there is.

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As the Chancellor announced yesterday, we are going even further by cutting the rate of corporation tax to 22% by 2014—a headline rate of corporation tax dramatically lower than that of our competitors. It is the lowest in the G7 and the fourth lowest in the G20. It is a sign that we are open for business, an invitation for investment and a spur for prosperity and job creation across the economy. That is also why we are cutting the 50p rate of income tax—a rate higher than in the US, France, Italy and Germany, and a rate that damaged our competitiveness while raising nothing in additional revenue. From April next year, the top rate of tax will be 45%, which will restore our competitiveness and galvanise our private sector.

I turn briefly to what the Government are doing to help protect pensioners. I want to make it clear that the Government have taken action to help pensioners. We have taken action to protect the winter fuel allowance, free prescriptions and eye testing, free television licences and free bus passes, and our triple lock on state pension uprating means that the basic state pension is £120 a year higher than it would have been had the previous Government remained in office. The triple lock means that from next month, the state pension will increase by an extra £5.30 a week—in cash terms, the biggest increase in the state pension that we have seen. We are freezing the age-related allowance in cash terms, but no pensioner will pay more in tax. This measure simplifies the tax system, moving everyone towards a simple tax system, where everyone has the same allowance. Even taking into account the change in age-related allowances, everyone will be better off as a consequence of the increase in the basic state pension.

However, there are other things that we need to do to secure future economic growth. As a number of my hon. Friends have said, we need to lift the layers of stifling bureaucracy that serve to suffocate growth. For too long, businesses have been trapped by a web of bureaucratic cynicism and nimbyism. If we want our most innovative and entrepreneurial businesses to lead our economic recovery, we have to match their can-do attitude. That is why the Budget announced a fundamental overhaul of the planning system, replacing 1,000 pages of guidance with just 50, and introducing a presumption in favour of sustainable development and a new planning guarantee, so that no decision should take more than 12 months, including appeals.

However, if businesses are to seize the opportunities to grow, we have to ensure that they have the finance they need to feed their ambition. If we want businesses to take the risk to invest, hire new workers and take a leap into the export market, we need to ensure that they have access to finance. In particular, it is critical that we support smaller businesses, which provide more than 50% of private sector jobs and 30% of private sector investment and have the potential to become the global leaders of tomorrow. That is why the Chancellor launched the national loan guarantee scheme earlier this week, to give smaller businesses with a turnover of up to £50 million access to cheaper loans. Through the scheme, the Government will provide guarantees on unsecured bank borrowing, enabling banks to borrow at a cheaper rate and pass on the full benefit to their customers. We have provided £5 billion of guarantees in the initial phase, with up to £20 billion of guarantees available in total.

Mr Iain Wright: Will the Minister give way?

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Mr Hoban: It is this Government’s deficit-reduction strategy that has earned this country market credibility and low interest rates, and it is this Government who are ensuring that the full benefits of those low interest rates are passed on to businesses across the UK. Barclays, Santander, Lloyds and the Royal Bank of Scotland are already participating in the scheme—a new bank, Aldermore, has agreed to join in principle—helping thousands of small businesses across the UK. However, in addition to the national loan guarantee scheme, we are trying to broaden the range of sources of finance available to new businesses and tackle some of the issues in supply-chain financing, while also ensuring that other sources of finance are available to businesses. That is why we have launched the business finance partnership. I was delighted to see a large number of people coming forward to take part in the programme and ensure that more money is available to invest in small businesses. That is an important change to ensure that businesses are in a position to take advantage of the opportunities before us today.

Mr Wright: Will the Minister give way?

Mr Hoban: It is this Government who are committed to making Britain the best place to start, grow and finance a business. It is this Government who are putting the ingenuity, innovation and enterprise of people and businesses at the heart of our recovery. This Government are releasing our ambitions for a private sector recovery, through a competitive top rate of tax, one of the lowest rates of business tax in the world, an overhaul of cumbersome planning rules and bold action to ensure access to finance for businesses to lead investment and job creation across the country.

Mr Wright: Will the Minister give way?

Hon. Members: Give way!

Mr Hoban: Opposition Members had plenty of time to make their arguments. They should take responsibility for the problems that this country is having to deal with.

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They left behind the deficit that this Government are sorting out. They left behind an economy that needs repairing and restoring. It is this Government who will ensure that the British economy will earn its way out of its problems.

6 pm

The debate stood adjourned (Standing Order No. 9(3)).

Ordered, That the debate be resumed tomorrow.


Prevention of Development on Green Belt Land

6 pm

Mr Tobias Ellwood (Bournemouth East) (Con): I should like to present a petition, a copy of which has already been presented to No. 10 Downing street, from more than 1,000 residents of Bournemouth East who seek the protection of precious green belt land in the wards of Strouden, Throop and Muscliff from the proposed development of three Traveller sites. Residents believe that Bournemouth is already affected by overdevelopment, and that this would be an inappropriate use of much treasured green belt land and open space.

The petition states:

The Petition of residents of Bournemouth,

Declares that the Petitioners are opposed to the proposed development of three permanent sites for gypsies and travellers in Strouden, Throop and Muscliff; that the Petitioners believe that Bournemouth has already more than adequately contributed to Dorset’s housing numbers; and that this would be an inappropriate use of much treasured greenbelt land and open space.

The Petitioners therefore request that the House of Commons urges the Government to bring forward legislation to strengthen the powers of local Councils to allow them to prevent residential developments from being built on the greenbelt.

And the Petitioners remain, etc.


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Electricity Transmission (North Somerset)

Motion made, and Question proposed, That this House do now adjourn.—(Stephen Crabb.)

6.1 pm

Dr Liam Fox (North Somerset) (Con): Those who read the title of this debate might be tempted to think that it deals with a localised issue of interest only in North Somerset or the county of Somerset. That would be a major mistake. The issues at stake in this project are likely to be replicated across many other parts of the country, and the principles involved are universally applicable.

At the moment, there are some 22,000 high-voltage pylons carrying 7,000 km of overhead lines across England and Wales. National Grid, the monopoly provider of transmission infrastructure, is planning to build nearly 480 km of new overhead power lines at a cost of some £14 billion. That became an issue in our part of the west country in the autumn of 2009, when National Grid began what it termed a consultation on the installation of a new feed line with 400 kV of electricity to connect the proposed new Hinkley C nuclear power station to the national supply network at Avonmouth, a distance of some 57 km. The most direct route between the two points lies across a body of water, yet the debate centred entirely around a land route that would involve overhead transmission and new pylons. The concerns of local residents about the new 400 kV lines—the current lines carry about 132 kV—were exacerbated when they discovered that the new pylons would be around 150 feet high, and very much bulkier in design, thereby creating greater environmental impact. I will return to the question “When is a consultation not a consultation?” later.

Our experience has been mirrored by colleagues in other parts of the country, notably in Suffolk, and I would like to thank them publicly for the support that they have given us throughout our campaign. One of the biggest problems that we have faced has been the perceived inconsistency in National Grid’s arguments and in the figures it has provided. At a packed meeting in Nailsea in my constituency before the last general election, residents were first told that to lay the cables under the sea was not technically feasible. Then, when they challenged National Grid with the fact that it already owned three undersea cables, they were told that it would be too expensive.

We now have a further complication, in the welcome announcement by the Government of the south-west as the first marine energy park, which will utilise—guess what—undersea cabling. We are still unclear as to why subsea links of similar length should be suitable for Europe, for the New York-New Jersey link and for the Scotland-Wirral link, but not for us. National Grid and Scottish Power Transmission even put out a press release stating that

“the companies are working together to deliver a major project to build a 400 km high voltage circuit which will run predominantly under the sea from Scotland to England. The new circuit will enable the transfer of large volumes of energy from Scotland directly to England and Wales through subsea cables, bypassing the constraints of the existing transmission system.”

Tessa Munt (Wells) (LD): Is it not also the case that Steve Holliday, the chief executive of the National Grid, said in June 2009 that putting cables under the sea was a “no brainer”?

22 Mar 2012 : Column 1038

Dr Fox: That is indeed correct, but one of the problems we have had, as I mentioned, is that what we are told one day can be diametrically opposed to what we are told the next week. That has resulted in the local population’s loss of confidence in their dealings with National Grid.

There have been huge variations in the costs and estimates of alternatives. National Grid originally estimated that undergrounding power lines would cost between 10 and 20 times more than overhead lines. That does not fit with the evidence produced by groups such as the Campaign for the Protection of Rural England or even with National Grid’s own experience in London or Oxfordshire.

Some clarity was achieved earlier this year with the report from the Institution of Engineering and Technology and Parsons Brinckerhoff. That was a useful contribution to the public debate—well constructed, informative and indicative of the approach that National Grid should have taken from the outset if a meaningful public debate were genuinely sought. It provides better costings for the alternative technologies, and shows that the price differentials are much less than the public were originally led to believe.

However, the report’s remit relates purely to the tightly defined engineering costs. It does not take into account any analysis of the aesthetic, human or environmental impacts of the proposed new overhead lines. It scarcely covers the AC subsea option and does not give an equivalent level of detail for gas-insulated transmission lines as for overhead lines and underground cables. It does not sufficiently take into account whole life costs, or the public’s willingness to pay for undergrounding new and existing electricity transmission lines.

National Grid commissioned Brunswick to look into the public’s willingness to pay for these changes, and the research revealed widespread public ignorance about the percentage of an electricity bill that is attributable to transmission. Most consumers thought that about 10% of their bills as opposed to the actual figure of about 4% related to transmission. Ofgem commissioned further research from London Economics to look at the same data, and we currently await the results of research commissioned by National Grid from Accent.

Throughout the process, National Grid has told us that it is constrained in the actions it can take by Ofgem. My first question to the Minister, then, is: what representations, if any, has National Grid made to the Government, outlining concerns about these restrictions; and what freedoms from those constraints have been requested? What can the Government do to free National Grid from the perceived and well used excuse that it must use the “least-cost option”?

Meanwhile, back in North Somerset, many of the changes originally ruled out as impossible magically became part of the agenda for discussion, following public pressure. The 50-metre pylons, which caused such outrage, might be reduced to the current height by altering the design, although we have subsequently learned that that is limited by the ability of the new pylons to allow transmission lines to bend through more than 3°. We have been told that the 18 lines can be reduced to 12, and that the existing Western Power distribution—the pylons we currently have—might be removed to make way for the new pylons, rather than running in parallel as we were originally told had to be the case.

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Other concessions, such as the burying of cables for environmentally sensitive areas and places of greater housing density, have been brought forward. That is particularly important in relation to housing in the west of Nailsea, where those who bought housing close to the existing 132 kV lines might find themselves with housing blight and unknown health implications. I wonder how many National Grid executives or shareholders would choose to have their homes, or send their children to school, under the new 400 kV cables.

Let me return to the question of when a consultation is not a consultation. From the outset, it was the belief of residents in my constituency—particularly in Nailsea, Backwell, Yatton and the surrounding villages—that the alternatives represented were not real alternatives at all. We were offered a Hobson’s choice: we could either accept a transmission line that kept close to the current one, running around the western border of the town of Nailsea, or have another line that would totally destroy a nearby valley and produce widespread planning blight. To the great credit of the local community, nobody bought into the divide-and-rule tactics. To us, a consultation is not about the means of execution, but about whether we wish to be executed or not.

In this particular case, how do the Government define a consultation? Surely, all the aspects of all the schemes ought to be considered—their costs, advantages and drawbacks, whole-life characteristics, environmental impacts, potential health impacts and social costs, not least housing blight. What weight will ultimately be given to the consultation and the views of those affected? If 90% objected to these proposals, would they go ahead in any case? If so, why bother? If not, what level of public disquiet would be required to produce a change of policy? Under the proposed changes to planning law, how will the population be able to be satisfied that its voice has been heard in policy formulation? How can we be guaranteed transparency?

Tessa Munt: I wish to place on record that both Somerset county council and Sedgemoor district council believe that the consultation was deeply inadequate. There were more than 4,000 responses to the consultation from members of the local community—constituents of mine and of the right hon. Gentleman—which is far more responses than National Grid has received in any past consultation.

Dr Fox: The hon. Lady makes an important point. This issue is not simply about the consultation as it affects her constituency or mine: many people outside North Somerset and Somerset county will be wondering what precedent the decision on the Hinkley C transmission will set for future changes involving high-voltage lines elsewhere in the country. Many will be concerned that their options may be constrained, and that they may be railroaded into the wrong outcome on the wrong assumptions.

I shall now turn to the issue of the future of Hinkley C and where it fits into our broader energy policy. I have always been a supporter of nuclear energy on the basis that it makes a fundamental contribution to the nation’s energy security and guarantees a means of keeping the lights on if, for whatever reason, our imports of fossil fuels are interrupted. On balance, I remain very much of that view, but in light of the growing evidence of the abundance of natural gas worldwide and the massive

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potential for shale gas production, possibly including here in the United Kingdom, it is reasonable for us to pause and re-examine some of our energy policy assumptions. If the cost predictions we have made turn out to be wrong, and energy prices in the rest of the decade are lower than we anticipated, might there not be an unprecedented opportunity to overhaul our electricity transmission network without a significant impact on consumer prices? Indeed, consumers need to know what impact the options that are available will have on their electricity bills, so that they can make an informed decision in this debate. In other countries, notably Norway and Denmark, the decision has already been taken that any future transmission lines should be buried underground, and the development of new technology, such as gas-insulated transmission lines, offers a whole range of new possibilities.

On the Hinkley C project, we have already seen major changes to the original time scales. Initially we were told that the transmission lines had to be up and ready by 2015 for Hinkley’s operation in 2016. That has now slipped to the lines being ready in 2019 for Hinkley going live in 2021, assuming all is smooth in the Hinkley build and commissioning processes. The bottom line is that we may have more time than we thought, so why do we not use this time to pause for thought, examine all the evidence, consider all the possibilities and get it right?

Let me end by paying tribute to all those in Somerset, Suffolk and elsewhere who have campaigned with such tenacity and vision on this issue. In particular, campaign groups in Nailsea, Yatton, Backwell and Wraxall have shown extraordinary community solidarity against divide-and-rule tactics, using reason and persistence as their primary weapons. May I single out Wraxall and Failand parish council, Chris Ambrose, Hugh Pratt, Fiona Erleigh and Sue Turner, along with their respective groups, for the sterling service they have given to the community?

This coalition Government have put quality of life issues, a greener environmental agenda and long-term policy considerations at the forefront of policy making. A basic issue such as how we transmit our electricity and the considerations we give to our environment, to the well-being of future generations, to the implications for our tourist industry, the health of our people and our ability to welcome new and liberating technology can paint a vivid canvas of who we are and our ambitions for our country. The decisions we make today will have an impact for a generation or more. Technology has changed, public attitudes have changed and our priorities, not least the value we place on the physical environment around us, have changed. We now have an opportunity for public policy to change, and we should grasp that opportunity with relish.

6.16 pm

The Minister of State, Department of Energy and Climate Change (Charles Hendry): I thank my right hon. Friend the Member for North Somerset (Dr Fox) for securing a debate on this important issue. I am grateful that he has done so. I agree with him that the need for, and impact of, electricity transmission infrastructure is, inevitably, a complex and sensitive issue. So I welcome the opportunity to explain the need for upgrading the existing transmission network, and to clarify the approach to deciding where and how new infrastructure is delivered and how this

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relates to North Somerset, in particular. I hope that I can also reassure him that many of the changes he has been calling for are already being put in place by this Government.

The Government are committed to meeting the UK’s climate change targets and maintaining energy security. Achieving those combined objectives represents a major challenge. The United Kingdom is increasingly dependent on fossil fuel imports, leaving us much more exposed to risks from rising global demand, limitations on production, supply constraints and price volatility. At the same time, we expect to lose about a quarter of our existing electricity generation capacity by 2020, as old or more polluting generating plant closes.

My right hon. Friend rightly referred to the future costs of energy, and that is certainly an important consideration, however security of supply and reducing the carbon impact of generation are also important factors. That is why we need a mix of energy going forward. It is not for the Government to prescribe how much of each generation source is required, but we are setting the framework for delivering the appropriate energy mix through, for example, our proposals for electricity market reform.

I welcome my right hon. Friend’s support for nuclear generation. I wish to take the opportunity to reiterate its vital role in securing our energy future—we want it to be part of the future energy mix. The UK has everything to gain from being the No. 1 destination to invest in new nuclear. Nuclear is the cheapest low-carbon source of electricity around, so it keeps bills down and the lights on.

Tessa Munt rose

Charles Hendry: I will give way in a moment, but I want to respond to a further point raised by my right hon. Friend about the potential golden age for gas with shale gas emerging. For the United Kingdom, most of that gas would need to be imported, as our own resources decline. So we, too, need to look at how we can harness our own low-carbon electricity resources, such as nuclear and renewables. Putting off building new generation has got us into the mess we are in, where the previous Government identified that the lights could be going out around the end of this decade. We cannot afford to delay any longer in securing the investment in new capacity.

Tessa Munt: It is very kind of the Minister to give way. I am on record as being a little more resistant to nuclear power, mainly because of my concerns about the waste. I think that a number of community benefits could be put in place by companies such as EDF. They would be of much more significance to the community. Undergrounding or putting cables under the sea might be examples of that. I accept completely that I am not going to be able to stop Hinkley all on my own, but that is my point.

Madam Deputy Speaker (Dawn Primarolo): Order. The hon. Lady has gone very wide of the issue of electricity transmission into its generation. Perhaps the Minister could respond on the transmission question only.

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Charles Hendry: I will indeed, but the hon. Lady makes a relevant point in that when a nuclear plant is being proposed there is often strong local support, but that where transmission lines are proposed there tends to be much stronger local opposition. I think that ties in because it is all part of the security of the network that we need.

The existing electricity network will need to be substantially expanded to accommodate the new generation we require. That is particularly the case where new generation is located far from demand or where the existing infrastructure is insufficient. Developers of new generation need the reassurance that the network will be delivered in line with their project time scales so that they are able to generate electricity once their projects are completed. We should recognise that these are substantial long-term investments and that timely network delivery is crucial to these projects commencing.

My right hon. Friend referred to National Grid’s approach to engaging with local communities and its consideration of different network solutions. Before I address the issue of transmission lines in North Somerset it might be helpful for me to explain the wider approach for deciding upon new network infrastructure. Under the current regulatory framework, it is for network companies such as National Grid to submit proposals for new network infrastructure to the industry regulator, Ofgem, and the relevant planning authorities. Those proposals are based on a well-justified need case such as new generation connecting or maintaining a safe and secure network. The network companies also propose routes and types of infrastructure. In doing so they are required to make a balanced assessment of the benefits of reducing any adverse environmental and other impacts of new infrastructure against the costs and technical challenges of doing so following extensive consultation with stakeholders. Those requirements are set out in their licence obligations under the Electricity Acts to develop economic and efficient networks and to have regard to the preservation of amenity and the mitigation of the effects that their activities have on the natural beauty of the countryside.

My right hon. Friend asked about perceived regulatory constraints for network companies to propose alternative solutions. In addition to the legal requirements to consider the wider impacts of new network infrastructure, Ofgem published guidance, in March 2011, on how this should be taken into account. This clarifies that network companies are required to consider wider impacts and alternative solutions to overhead lines. In response to my right hon. Friend’s question on this point, this very much took into account the representations that the Government and National Grid had been making.

That regulatory approach is reinforced by the Government’s energy national policy statements, which set out the framework for factors to be considered when consenting to an infrastructure project of national significance. I emphasise to my right hon. Friend that we have changed those national policy statements from those we inherited specifically to take more account of these matters. They make it clear that for electricity networks, cost should not be the only factor in determining the type of transmission technology used and that proper consideration should be given to other feasible means of connection, including underground and subsea cables.

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Within the framework, National Grid published in September last year its new approach to building new transmission infrastructure. Using that approach, it will put greater emphasis on mitigating the visual impact of its new electricity lines, and will balance that consideration against the need to manage the impact on household bills. I hope that this more sensitive approach provides reassurance to those areas potentially affected by cables and pylons that alternatives to new overhead lines are considered very seriously. As the costs and technical difficulties vary so much from project to project, it is important that each one is assessed on a case-by-case basis to ensure that the right planning decision is taken each time. My right hon. Friend has already referred to different projects with quite different characteristics where subsea cabling has been proposed or deployed. Indeed, the recently announced project, which he mentioned, between Scotland and England is specifically to get around an onshore constraint, and therefore new ways of dealing with that had to be found.

The Government consider that the costs and benefits of undergrounding transmission lines are important issues that must be kept under review in the light of new information and evidence. That is why the Department of Energy and Climate Change arranged for an independent study, to which my right hon. Friend referred, to be carried out to give clarity on the practicality, whole-life costs and impacts of undergrounding and subsea cabling as alternatives to overhead lines. That report was published in January 2012, and its findings are generally consistent with the comparative costs that National Grid has quoted when evaluating options on current projects, including in North Somerset. The report should provide a useful reference point to inform the planning process.

My right hon. Friend identified some issues that were not being looked at, but as I hope I have explained, the Government have already put in place those other wider issues in the national policy statements.

My right hon. Friend raised the question of consultation and how the views of stakeholders on a range of impacts are taken into account. Let me reassure him that the impacts he mentioned are indeed taken into account in the decision-making process. However—I know that he will accept this—there is a balance to be struck between impacts and there is no simple formula that can be applied to produce the right decision. I know that my right hon. Friend will understand that from the decisions that he had to make as Defence Secretary.

Network companies must proactively explore new and alternative technologies to overhead lines. National Grid is currently exploring the development of gas insulated lines and it would be for it to consider whether the use of this technology was appropriate for any project. However, the issues involved with gas insulated lines are complex. For example, gas insulated lines are still an emerging technology and untested, and much more work needs to be done for longer, directly buried installations such as the Hinkley Point connection. There is currently no directly buried gas insulated circuit longer than 1 km in operation anywhere in the world.

The application for transmission infrastructure in North Somerset will be decided by the appropriate planning authorities, which may include Ministers. It would therefore be inappropriate for me to give a view on the particulars of those proposed developments.

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However, I do recognise from the issues raised in the House and elsewhere that many people feel very strongly about pylons and the impact they can have on the landscape. When announcing its preferred route corridor for the Hinkley connection, National Grid reported that it had received over 8,000 responses.

Effective consultation with local communities and other interested parties is a vital part of the planning and regulatory approval process. When making proposals for new infrastructure, National Grid has to demonstrate that alternatives have been considered and why its preferred option is justified. This must show that stakeholders have been engaged effectively.

My right hon. Friend spoke in detail about his experiences with the National Grid consultation process. I think it fair to say that the new planning process requiring greater engagement with stakeholders and examination of options before submitting a planning application has been a learning process for all participants and can be significantly improved as it goes further.

I am encouraged, however, by the greater stakeholder engagement and consideration being given by National Grid to alternatives over the past year or so. This is the behaviour that the new planning and regulatory frameworks require. Having announced its preferred route corridor for the Hinkley Point connection, National Grid is considering carefully the type of technology it will use for the connection. It has stated that many people want the cables put underground, as indeed my right hon. Friend has said, or under sea, and as it continues its consultation, it expects that the final plans will include some undergrounding as well as overhead lines.

I would like to thank my right hon. Friend and the hon. Member for Wells (Tessa Munt), who have participated in a valuable and important debate. Our challenge is to build a low-carbon economy based on an energy mix that meets our environmental targets and security of supply needs. This will require a substantial expansion in the transmission network to accommodate the required generation. Deciding where and how this infrastructure is delivered requires informed and balanced consideration of a number of factors including costs, environmental impact, and the needs of local communities and the country as a whole. The planning and regulatory approval processes for new transmission infrastructure require that stakeholders are consulted on these important decisions and their views demonstrably taken into account. This is happening now in North Somerset, where National Grid continues to undertake an extensive stakeholder engagement exercise on developing its proposals.

National Grid has expressed the desire to work with stakeholders to lessen the impact of any new infrastructure using mitigation measures such as woodland planting, placing cables underground or use of lower height pylons where appropriate. I strongly encourage those with an interest to engage with National Grid as it further develops its proposals.

This is an important issue to which I know the House will return, but I hope that I have been able to reassure my right hon. Friend that we have already been acting on the concerns that he has expressed.

Question put and agreed to.

6.29 pm

House adjourned.