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Westminster Hall

Wednesday 24 October 2012

[Sir Alan Meale in the Chair]

Offshore Wind Generation (North Wales)

Motion made and Question proposed, that the sitting be now adjourned.—(Mark Lancaster)

9.30 am

Albert Owen (Ynys Môn) (Lab): It is a pleasure to serve under your chairmanship, Sir Alan. I am pleased to sponsor this important debate, and I welcome the Minister. As I am a member of the Energy and Climate Change Committee, I am sure that he and I will be working together on many issues over the coming weeks and months. I pay tribute to his predecessor, the hon. Member for Wealden (Charles Hendry), a Minister who was respected by people right across the energy sector, from industrialists to environmentalists, and with whom I worked well. He visited north Wales, and came to see the Anglesey energy island concept, and I am sure that I will be inviting the new Minister to come along to see the progress that has been made.

I know that the new Minister will make his mark over the coming months. He has already given us a very entertaining performance, in his response to urgent questions last week, and we look forward to more of that style and, we hope, to some answers to questions. I am sure that he will have the opportunity today to answer some important questions pertaining to low-carbon energy in north Wales.

To be fair to the Minister, he has a chequered history when it comes to wind generation, and I hope that today he can clarify his position, together with that of the Government, and tell us whether wind generation now passes his two tests of economic and environmental sustainability. To be fair to him again, he sent us a letter only on Monday, outlining the Government’s support for renewables, which I presume includes wind generation. I am sure that he will be able to clarify the position on those things in his winding-up speech.

I want to make my own position absolutely crystal clear. I am pro-nuclear, pro-renewables, including wind generation, and pro-energy efficiency, and I have never seen any contradiction between those three things. We need all three if we are to reach the goals that we all want: energy security and the decarbonisation of industry.

Mark Tami (Alyn and Deeside) (Lab): I agree totally with my hon. Friend. Does he agree that in the past the argument has wrongly been seen as a choice between renewables—such as wind—and nuclear, when they are part of the same package?

Albert Owen: Yes, I absolutely agree. I am sure the Minister will acknowledge this later too: we should not be either/or; we need all the options. We need the base load that nuclear can provide, along with clean coal and gas, but we also need the flexibility that renewables give us, and I hope to develop that argument today.

As I say, I see no contradiction here. If we are to create the vibrant low-carbon economy that the UK wants, energy security, along with food security, is probably the most important challenge that this Government and

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Governments around the world will face in the future. North Wales is—I will argue that it can continue to be—a major contributor to a low-carbon future. My own constituency of Ynys Môn—the Isle of Anglesey—has been in the vanguard of nuclear generation for more than 40 years, and there are plans for a new replacement station at Wylfa. The island also has early wind farms, comprising of some 77 turbines—from the 1980s and 1990s—in the north of the island. There are plans for a tidal array at the Skerries, and footprints for two biomass plants, so no one can accuse my constituency and its people of not contributing to our energy needs or to the rich energy mix that we want in the future. I support the concept of Anglesey becoming Britain’s energy island, and I hope to invite—I am sure that I will formally invite —the Minister along to see the energy island programme and meet its director, John Idris Jones, and his team, to see how we can take this forward, with local government, local businesses and the Welsh and UK Governments working together.

Given what I have just said, I do not believe that I can be accused of being an “environmental Taliban”. The Chancellor likes to joke about such things, but he should not poke fun at people who want a balanced energy mix that includes renewables, as well as coal, gas and nuclear. Indeed, I do not understand why he made his remarks, because that is his Government’s policy. It was also the policy of the previous Government, so there has been consensus and continuity. Businesses and consumers tell me that they want clarity and continuity on energy policy, so that north Wales and the United Kingdom can become the centre of excellence that we want to see.

The purpose of this debate is to highlight the pros and cons, to focus the attention of Government, at all levels, on providing certainty for investment and to create the high skills and the low-carbon energy sector that can deliver in the future.

Ian Lucas (Wrexham) (Lab): I am delighted that my hon. Friend has secured this debate. He mentioned certainty, and uncertainty is the enemy of long-term investment. Does he agree that one of the problems with the present Government is the incoherence and uncertainty that is causing long-term investors such as Siemens to reconsider investment in the UK, because of the lack of clarity about Government policy?

Albert Owen: My hon. Friend is absolutely right. We have just come from a meeting of industrialists, and they highlighted that very point. The Aluminium Federation was present, and it said that international companies are considering pulling out of the UK because of uncertainty about the future. The Minister will be aware of that, and he will try to work with others to allay the fears and create the confidence needed for the future. It is not warm words that will heat our homes or drive industry, but action, and we need to see that.

Jim Shannon (Strangford) (DUP): I am grateful for the opportunity to be involved in this debate. The hon. Gentleman referred to jobs in Wales; other parts of the United Kingdom will also gain greatly. In my Northern Ireland constituency, Harland and Wolff will benefit from jobs that come from the wind turbines in Wales. There are benefits for the whole United Kingdom: is that what the hon. Gentleman is saying?

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Albert Owen: Certainly, and if the hon. Gentleman is patient I will lay out the benefits. I want to see a centre of excellence in north Wales, but the supply chain will involve the whole United Kingdom. There will be downstream jobs, and I want to see those jobs within the United Kingdom, rather than in continental Europe, for example. Large shipments can come into north Wales, the north of Ireland and the north of England from other parts of Europe. I want to see the skills base here in the United Kingdom developed and capable of maintaining highly skilled jobs. The hon. Gentleman need not fear. We are not being parochial; we are being very pro the United Kingdom.

North Wales has an abundance of resources. It has the natural resources that are needed for hydro and wind generation and, importantly, it has a skills base in many of its industries. The Minister is au fait with the skills agenda, and the skills in north Wales are transferable from the aerospace, car and other industries into the new exciting wind-generation and renewables agenda for the future.

Mark Tami: Does my hon. Friend agree that, although we have the skills base, if the certainty is not there or people do not see it, they will look for jobs in other sectors and that that will be a loss to the energy sector?

Albert Owen: My hon. Friend is right, and he echoes the remarks made by my hon. Friend the Member for Wrexham (Ian Lucas). We need that certainty, and we need stability and a strategy for the future, and I hope that the Minister will note that and address it in his remarks.

We have an important skills base in north Wales linked to colleges and universities. Coleg Menai in my constituency has adapted an energy centre, which is creating a skills base in construction. Many of those skills were lost over many years, so offshore wind is not only about generation, but about the construction and manufacturing jobs of the future. The colleges are linking up. The energy centre was created by the Welsh Government in conjunction with the Nuclear Decommissioning Authority and the local authority, and it works with local colleges to provide young people with those skills and to give them hope for the future.

As I am sure that the Minister knows, Anglesey was chosen by the Welsh Government as an energy enterprise zone, which is important for concentrating minds on north-west Wales and on north Wales in general. In north Wales, we have good universities at Glyndwr and Bangor and a number of good colleges, many of which are involved. Bangor university has a school of ocean science, which is a world leader in marine energy. So when I talk about wind and renewable energies, I am talking about not only manufacturing and construction, but future research and development and being world leaders in new technologies as they appear. The school of ocean science is a world leader in climate change patterns, too, and we have to merge those things to make the area a centre of excellence.

I will not duck the issue: wind energy is controversial, although offshore wind is less controversial than onshore wind. Offshore wind turbines are less obstructive than turbines on land, and their size and noise are mitigated by their distance from communities. Obviously, that brings its own challenge, but aesthetics is an issue for

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many people. When people talk about the technology, they are often in favour of wind generation, but when they talk about location, issues are raised and many people are opposed. The planning system—it is difficult for any Minister to tackle this—polarises people’s opinions. People have to be either for or against wind generation, and we do not have a mature dialogue on future needs and the benefits that wind generation can bring to local communities.

Wind is controversial, and I believe Anglesey has had its fair share of onshore wind development. Given the sheer size and scale of the new turbines, they are best placed out at sea. Residents on Anglesey are not nimbys in any way and want to be part of the future of wind generation, but wind turbines should be offshore because of their large scale.

I pay tribute to a group of residents on Anglesey who have campaigned against the ad hoc development of wind generation, which is a problem in many communities. The only beneficiaries of onshore wind are the landowners and/or developers, not the communities; whereas offshore wind will have a combined benefit for the larger community.

Glyn Davies (Montgomeryshire) (Con): The hon. Gentleman knows that the subject is close to my heart because of the impact on my constituency. Does he accept that the real issue is scale? Whether in Anglesey or Montgomeryshire, the issue is the sheer numbers. What has been proposed for my constituency is virtually a desecration of the area, as is simply the case with onshore wind. I welcome this opportunity to associate myself with his remarks, because he is also challenging the scale, which destroys areas.

Albert Owen: Yes, I agree. Aesthetics and scale are big issues that we need to address. I am not only concentrating on that problem but considering solutions for the future. We have an abundance of wind, which is a proven technology, but it has to be in the right place. As the hon. Gentleman says, the scale has to be right for the area. I will develop that point.

I support microgeneration, and it is sensible in rural areas that isolated properties, farms and working communities have a source of electricity and that any surplus goes to the grid, but I oppose large-scale onshore wind generation. I hope that I am putting that in its right context.

As a member of the Select Committee on Energy and Climate Change, I visited DONG Energy in Ramsgate and saw the scale of the London array and some of the areas down in the Thames estuary, where large-scale wind development has taken place. We flew over the developments to see their scale, and we took advantage of the opportunity to fly over the Olympic village when we came in to land in central London. The sheer scale needs to be close to a working port, and those ports need the necessary infrastructure.

Following decisions by the previous Labour Government, north Wales has great potential for offshore wind. Gwynt y Môr, which I think will be the largest site in Europe, is under construction by RWE npower and its partners. On completion, Gwynt y Môr will have an output of some 576 MW. Gwynt y Môr is close to the already-developed North Hoyle and Rhyl Flats offshore wind farms, which are a major hub for wind and renewable resources.

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Jim Shannon: I thank the hon. Gentleman for giving way again in this important debate. Will he indicate how councils and the Welsh Assembly came to terms with how offshore wind generation affects the fishing industry? Some locations in Northern Ireland are coming up shortly, and one of the great issues for us is how they will affect the fishing industry on the north coast of Antrim and in my constituency of Strangford. How did the Welsh Government address that issue to ensure that the fishing sector can continue?

Albert Owen: I cannot speak for the Welsh Government, but I can speak for myself. I am an ex-seafarer, so I understand some of the conditions at sea, and navigation is affected, as well as fishing. I respect that, but the consultations we have had in north Wales, and will have on future developments, contain important environmental impact studies. The marine environment is taken very seriously, and wind is sensitive. Oil is being drilled in the North sea, and I think wind generation is less intrusive than some of those projects. We have to get the balance right, but the impact has been taken seriously. If we are serious about developing renewable resources, we have to use them wisely. Wind is abundant in north-west Britain and north-east Northern Ireland, so we have to go ahead, but it is a sensitive issue.

As I was saying about Gwynt y Môr and the other already-developed offshore wind farms, the Celtic array is a round 3 Irish sea project, and I want to focus the Minister’s mind on that because of its sheer scale. As he may know, the Celtic array is a joint venture between Centrica and DONG Energy that will have the capacity to produce 2.2 GW and will service an estimated 1.7 million homes. The Celtic array will be located 19 km off the north-east coast of Anglesey, 34 km off the Isle of Man and very close to the coastlines of Northern Ireland and north-west England. Depending on the turbines that are chosen—this is important because technology is moving fast—there will be between 150 and 400 of them, and if the technology continues to develop in the same way, they might produce 6 MW each. So the turbines will be huge. The Celtic array includes array cables, export cables and substations located offshore, where they will be less intrusive. The connection to the grid, which is expected to be in Anglesey, will be made with a few cables, rather than the large amount of infrastructure that is needed for onshore in coastal areas that many people oppose.

Gwynt y Môr has already created jobs, and I want to highlight a number of them, because they represent a significant investment. Holyhead-based Turbine Transfers, which is a subsidiary of Holyhead Towing, has been awarded a £10 million contract to provide transfer vessels that will operate from the port of Mostyn in the constituency of my right hon. Friend the Member for Delyn (Mr Hanson). That is a local company with an international reputation founded by an entrepreneurial family, and it will benefit from the investment, which could bring more than £80 million and much-needed jobs to the Welsh economy.

Looking forward to the Celtic array, we need bigger infrastructure, bigger vessels and bigger port capacity. I will deal specifically with the port of Holyhead in my constituency, as it is the largest seaport on the western seaboard and, as a natural deep-water harbour, it has huge potential. I was disappointed by this Government’s

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decision, after the previous Chancellor’s announcement that £60 million would be set aside for essential port development so that—I stress this—United Kingdom ports could benefit. That was a missing link. We have manufacturing on land and generation offshore, but bringing them together needs port development, and the £60 million was set aside for that purpose. In October 2010, the coalition Government decided to make the moneys available to English ports only, with the Barnett consequential going to Wales and other nations of the United Kingdom. That put Wales at a serious disadvantage, because the consequential for the whole of Wales is about £3 million. Anybody who understands port development knows that that is a small drop in the ocean, so this seriously undermines Wales’s potential to develop.

The irony, reading the statement from the Department of Energy and Climate Change, is that much of the money allocated to English ports remains unspent. I ask the Minister, in his own joking manner, to pass it over to Wales as quickly as possible if he can. My serious point is that he should go back to Government, argue the case that the United Kingdom ports remain a reserved responsibility of the UK Government, get a grip on the situation and, from this Westminster Parliament, help Welsh ports. That is what we are here for: to represent the views of our Welsh constituents. We are losing out as a consequence of that decision, and it is unfair. As the new Secretary of State said in a response to me, if the Welsh Assembly Government were funding this, the money would have to be drawn from education and health budgets, which would be unfair. The money was originally intended for UK ports. UK ports are a reserved matter and this should be done fairly.

Glyn Davies: I have a great deal of sympathy with what the hon. Gentleman is saying, but on a point of clarity it is important to understand how the devolution settlement works and how Members such as me can help the cause by addressing the matter in the context of the constitutional position, so that we know what we can do, rather than just stating opinions.

Albert Owen: Constitutional issues have their place, but it is clear that ports are a reserved UK matter—I have worked with previous UK Governments on developing ports in my constituency—so the Government should take responsibility and treat all UK ports the same. We are not asking for anything extra in Wales; we are asking for a level playing field so that Welsh ports can develop and, importantly, benefit the whole United Kingdom. If the development goes ahead and north-west Wales has port infrastructure, that will help the energy needs of the whole United Kingdom.

I move briefly to tackle head-on some of the criticisms of wind energy. Intermittency is an issue. Just as we need base load electricity at peak times for industry and domestic use, we also have off-peak periods. If hon. Members can remember the long hot summers we used to have, we needed to cut off much of our electricity generation during those times. Wind is an excellent resource in that respect, because turbines can be switched off easily. It is both costly and difficult to turn off a gas-fired, coal-fired or nuclear power station. We need the flexibility that wind and other renewables give us for the future. Of course, on long, cold winter days when

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the wind is not blowing, we need base load at full capacity, but the other side of the coin appears when we have warm weather.

The economics of wind are also controversial. In response to the mini-inquiry by the Select Committee on Energy and Climate Change on the economics of wind power, DECC gave some interesting figures. Two large companies undertook research on DECC’s behalf, levelising the cost per megawatt-hour of the different technologies for producing electricity. Nuclear was by far the cheapest, but wind was considerably higher. I have the figures in front of me; they give costs looking forward to new technologies that may or may not develop in future. Nuclear costs £60 to £80 per MWh, compared with some £94 per MWh for onshore wind and £110 per MWh for offshore wind. Clean coal and gas using carbon capture and storage cost some £100 to £150 per MWh.

We need to develop those technologies to make them more efficient. Logically, if we can improve gas, coal and nuclear, we can improve our wind technology as well. I have seen some of the new turbines that are being developed. They run for longer, are more efficient and need less maintenance, so we can reduce costs.

Subsidy is not a dirty word to me. Most energy generation in most countries has had some form of subsidy, and emerging gas in this country was 100% subsidised by the taxpayer when it came into effect. I do not feel that we should not subsidise new technologies, although I think that the Government are right to move subsidy under the renewables obligation from onshore wind to offshore, now that onshore is established, to make offshore wind more competitive.

Ian Lucas: It is critical to emphasise, because it is not emphasised often enough, that the UK is in the vanguard of offshore wind technology. We must press forward with it. We need to consider the support and assistance given to companies such as Prysmian Cables in my constituency, which has created jobs as a result of the investment in offshore wind. That needs to be factored into the equation when we assess whether to invest further.

Albert Owen: My hon. Friend is absolutely right.

Moving on to the additional costs of renewables, one controversial point is the impact of renewable energy on household bills, and on business bills. We talk, rightly, about protecting the consumer, but a lot of British businesses are suffering from the high cost of energy. According to DECC’s estimate, as recently as 2011, public policies, including environmentally friendly subsidies to renewables, comprised about 7% of our bills. The Committee on Climate Change projects that costs might rise as much as 33% before 2020. Of that, two thirds will be contributed by the rising price of fossil fuels and one third by the cost of renewables. I want to put that in a proper context for the future. Yes, there is a cost in moving towards renewables, but there will also be a huge cost if we do not, given the rising price of fossil fuels.

As my hon. Friend the Member for Wrexham said, we must also consider the pluses of investing in wind generation and renewables. As he pointed out in his

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example, the socio-economic benefits to the north Wales region, and across the United Kingdom, would be huge. RenewableUK estimates that by 2022, the United Kingdom’s offshore wind industry will generate some £60 billion in gross value added, supporting some 45,000 jobs. Other estimates are even higher—as high as 0.4% of UK GDP and more than 90,000 jobs. That is the potential. This debate is about focusing attention on what has been achieved and on the potential for the future. Regions such as north Wales can benefit because of their natural resources, deep-water harbours and skills base.

The Celtic array project is not that far away, Minister, and we need to get this right. We need to get the port development right. We need to increase our skills base. We need stability, so that companies from all over the United Kingdom and beyond have the confidence to invest in our country. I support wind generation on the north Wales coast. It harnesses the benefits for the region. It will have benefits for the north of Ireland, the north-west of Britain and other parts of the United Kingdom, too. Governments at all levels need to work together. I urge the Minister, in the first few weeks in his job, to contact the Welsh Government—the First Minister is responsible for energy matters—and discuss these issues, so that Wales can have the benefits that it deserves for the future.

Wind energy is simply about turning wind into electricity, but we need to generate real jobs, too. We are on the right track—a few years of stable government has given investors what they need. There are concerns now, and I hope that the Minister will address them in his winding-up speech. I will allow other hon. Members their opportunity to discuss what I think is an exciting future, with north-west Wales playing a big part in the low-carbon economy that we all want to build, and the UK being a world leader in that economy.

10 am

Mr David Hanson (Delyn) (Lab): It is a pleasure to serve under your chairmanship, Sir Alan. I thank my hon. Friend the Member for Ynys Môn (Albert Owen) for bringing this agenda to the Chamber. It is extremely important to focus on how we grow wind energy in north Wales, and it is significant that every Labour MP representing constituencies in north Wales is here to lend their support to my hon. Friend.

Wind energy is significant for three reasons. First, it contributes to the green energy needs of our communities at a time of diminishing coal, gas and other resources. Secondly, it is an important engine of economic growth, as can be witnessed by what has happened in north Wales. Thirdly, there is a community benefit associated with economic and green developments that helps to regenerate other areas of our community in a positive way. I wish to speak briefly on all three points.

I am proud that the previous Labour Government generated, supported and encouraged the development of offshore wind farms in my part of the world. Wind farms were developed because the Department of Energy and Climate Change, and previous Departments with responsibility for energy, took an interest, campaigned strongly and worked with the Welsh Assembly Government to attract business. I seek an assurance from the Minister that there will be that level of commitment in the future.

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On the contribution to green energy needs, I place on the record two particular facts. The Rhyl Flats and North Hoyle developments will generate 240 MW of electricity, which is sufficient for the energy needs of 200,000 homes. The Gwynt y Môr development will provide 576 MW of electricity, which is sufficient for the energy needs of 400,000 homes. Those are significant developments. As my hon. Friend the Member for Ynys Môn mentioned, the Gwynt y Môr development is the largest of its kind in the United Kingdom, and it is approaching the size of major European developments. Those green energy needs are being met.

No more than 15 years ago, during the time I have been a Member of Parliament, there was a colliery at Point of Ayr in my constituency that employed 1,200 people, producing coal and material that was used for energy. The colliery is no longer there, people are not employed and coal is not produced, and yet not two miles from that site there is now the potential to create alternative energy using natural resources on a renewable basis—a positive development that we should be seeking to encourage.

As my hon. Friend the Member for Ynys Môn mentioned, green energy jobs are important contributors to the economy of north Wales—not just in Holyhead in his constituency, and not just in the development of the offshore wind farms themselves. Mostyn docks is in my constituency. In the past decade, the port of Mostyn has had to face significant challenges. It had a roll-on/roll-off ferry service to Northern Ireland. It supports the development of Airbus from the major economic factory in the constituency of my hon. Friend the Member for Alyn and Deeside (Mark Tami), where wings are made, produced and then exported via the docks.

In the past 10 to 15 years, the Mostyn dock development has diversified significantly to try to attract wind energy and enable the manufacture and construction of wind turbines. In the past few years, thanks to investment in offshore wind energy, the construction of six Irish sea offshore wind farms at North Hoyle, Burbo Bank, Robin Rigg, Rhyl Flats, Walney 1 and Walney 2 has led to a real expansion in the services provided at Mostyn docks. That is good news for the green energy sector and good news for employment in my constituency.

The Gwynt y Môr offshore wind development was mentioned earlier. That will now be based at the port of Mostyn in north Wales. The 160 turbines that will be installed offshore from north Wales will be assembled at the port of Mostyn in Flintshire. Mostyn will also benefit from the construction of an operations and maintenance base for the existing wind farms in Liverpool bay, North Hoyle, Rhyl Flats and, once complete, Gwynt y Môr.

In my constituency, where jobs in the old mining industry were lost, at least 100 long-term, skilled engineering jobs will be created in the port to staff the servicing of those facilities. On top of that, the actual construction of the facilities will see approximately 120 new jobs on site during the construction phase—a big boost to the local economy.

The £50 million lease and investment into port of Mostyn is Gwynt y Môr’s highest value long-term contract awarded to a company in Wales. That reinforces the company’s commitment to the port of Mostyn and investing in north Wales. It also underpins the work that the port of Mostyn is doing in exporting wings from the

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Airbus manufacturing site at Broughton in the constituency of my hon. Friend the Member for Alyn and Deeside. The port has had to diversify and bring in wind energy, but green energy is providing sufficient resource and employment to ensure that we can maintain development. As my hon. Friend knows, if the wings were not exported via Mostyn docks, and if that were the sole business, that would have a severe impact on the ability of Broughton to manufacture aircraft wings.

Mark Tami: I was about to make that very point. If Mostyn had been unable to expand into other areas, the whole cost would effectively have fallen on to Airbus, because that is the route that the A380 wings take. There would not be a feasible alternative route, and that would impinge on whether the work was at that factory.

Mr Hanson: Green energy supports the manufacturing, construction and development base at port of Mostyn, and that underpins not just the energy sector in north Wales, but a wide range of other manufacturing industries, too. The 100-plus new jobs will also contribute more spending into the economy in north Wales. There will be a big impact on the economic base of our area.

The third issue I mentioned is the community benefit. I am sure my hon. Friend the Member for Vale of Clwyd (Chris Ruane)—[Interruption.] We have just had a boundary review and we are trying to work out where the boundaries are. I am sure my hon. Friend will speak about community benefits as well, but Gwynt y Môr will invest £20 million in local communities over the lifetime of the contract. The Rhyl Flats community fund is investing resources in Conwy and Rhyl. The North Hoyle partnership has funds linked to Denbighshire coastal partnership, including money for my constituency, too.

Mark Tami: Does my right hon. Friend agree that, while that is very welcome, we still have a long way to go to catch up with countries such as France, which has areas that try to bid for these projects, whether nuclear power, wind or whatever, because there are great incentives—cheaper electricity, or some other payback? While there is some good stuff coming, we still have some way to go to get the issue moving.

Mr Hanson: I agree. This is a start, but it is a contributor to community benefits, which I want to spread wider than just the boroughs of Conwy and Denbighshire; boroughs in Flintshire in our area have an impact on economic activity in a negative as well as a positive way in respect of the development of wind farms.

Wind farms in north Wales are positive for the green economy, our local economy and the community. I have three requests to make of the Minister. First, I hope that he recognises, gives credit to and celebrates the fact that the industry is developing and flourishing in our area. I say that not to cause a political row between us, but to get consensus in the Chamber and with the Assembly on these matters.

The Secretary of State for Wales wrote a blog in 2009, when the Gwynt y Môr wind farm was being developed, under the headline, “Well done, Conwy”:

“I was extremely pleased and relieved to hear that Conwy County Councillors today resolved to seek counsel’s opinion on

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the merits of an application for judicial review of the decision to grant consent for the development of the proposed Gwynt y Môr wind farm.”

I could quote three or four other blogs from the Secretary of State, expressing a mild cynicism about the benefits of wind farms appearing in north Wales, including for its economy. I do not wish to cause the Minister any difficulty, but I genuinely want him to give words of comfort and encouragement and to say that his Government, of whom he and the Secretary of State are part, are committed to helping develop these industries in our area.

Albert Owen: My right hon. Friend is right to raise the issue of the Secretary of State’s previous remarks, although I am sure that the right hon. Gentleman is now in line with Government policy. The Secretary of State mentioned the negative impact that offshore wind farms would have on tourism. However, the opposite is the case, if anything. The chair of the association for north Wales tourism has said that the new development of Gwynt y Môr, and others, would not impact on tourism at all. So people who understand the industry are saying that there would be no negative impact as a result of offshore development in north Wales.

Mr Hanson: I am grateful for my hon. Friend’s intervention. I represent places such as Talacre and Gronant, at the north end of my constituency, where holiday activity goes on undiminished by the wind farms in those areas. I want to get recognition from the Minister that the Government are committed to helping develop these important industries.

Secondly, we need the Minister to provide certainty about certain matters, because that is important in the context of the forthcoming Energy Bill. For the moment, there is the question of long-term contracts for difference to support renewable and low-carbon energy, guaranteed by fixed prices for output. We need clarity from the Government on the allocation process for contracts for difference. We need the Government to give certainty to the industry about timetables, including on targets for decarbonisation, so that long-term investment by wind farm developers can be considered not just in the context of the previous Government or this Government, but of any future Government, who will have to make long-term financial decisions. Cross-party consensus on the need for developing this industry, if I can get it, will help give that certainty.

Thirdly, I want to throw into the mix the fact that at Mostyn docks and in the offshore developments, we are assembling material constructed and built elsewhere. The Swedes—the Scandinavians—are masters at the production of wind-farm technology. We have probably missed the chance now, although we in the previous Government pressed to do it. The Minister should cast an eye gently on what we can do to help encourage UK-based manufacture and development skills. It is great to assemble at Mostyn docks and to have the skills offshore, but ultimately we are missing a trick if we do not consider the potential for future manufacture and technology development in our country.

I ask the Minister for confidence and certainty, to look at manufacturing and to please help support this industry, which really does create jobs in our area.

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10.15 am

Glyn Davies (Montgomeryshire) (Con): I had not planned to speak, but the issue is of such incredible interest to me that I felt that I had to. I congratulate the hon. Member for Ynys Môn (Albert Owen) on securing such an important debate and on speaking for half an hour and uttering hardly a word with which I disagreed. That is something of an achievement.

I have always thought of myself as living in mid-Wales, so I am conscious that I am contributing to a debate that is about north Wales. However, if the new boundaries go through, my house will be in Denbigh and north Montgomeryshire, so I consider myself, as of yesterday, a potential north Walian, which allows me a degree of credibility in this debate.

I have had a particular interest in onshore wind since 2005 and people from all over Britain have written to me about it, including several from Ynys Môn, although I have written back to say that I am not the Member for Ynys Môn, so, clearly, I have not followed up all the issues. Because of that, I understand that the issue is not just for my constituency and perhaps slightly more widely in mid-Wales, but affects many other parts of Britain. A lot of people are writing from Scotland now, deeply concerned. I am concerned about the same issue and I want to contribute to the debate because I want the new Minister to know the sheer strength of feeling in certain parts of Britain about onshore wind.

Before 2005, I would have thought of myself as a supporter of renewable energy in all its forms; there was no issue for me. Indeed, in Montgomeryshire we had several onshore wind farms and I had not expressed any particular opposition to those, because if they are limited in number they do not have a huge impact on the environment. However, a plan for a scheme suddenly emerged from the Welsh Assembly Government, as they were called—they are now called the Welsh Government—that identified an area of mid-Wales to be designated for a huge development of a dedicated 400 kW line that would probably be about 35 miles long. That might be fine in some parts of the country, but this would go up a narrow valley, right into the heart of mid-Wales—my constituency—and because this is a dedicated line it inevitably means that there would be, depending on the size of the turbines, perhaps 500 to 700 turbines in a relatively small, beautiful area of Britain. There are five applications now, which it was announced yesterday are going to a joint appeal later on.

We have to be careful about considering developing onshore wind in beautiful parts of Britain. Huge damage could be caused for little benefit. I am concerned about, and want the Minister to look at, the aesthetic impact of onshore wind turbines in large scale and great density, because that should be a material consideration in how we deal with such developments. We should not just look at the figures, because we know that offshore wind, for example, is more expensive to develop than onshore wind.

By taking offshore wind seriously, we will stand a much better chance of bringing its cost down to where it becomes competitive with onshore wind.

Albert Owen: The hon. Gentleman mentioned the problem in his area, which I understand—I have debated the matter with him several times—but will he provide

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some solutions and talk about how his community is developing things such as biomass, geothermal and various other sources of energy, rather than just attacking the onshore wind developments? Can he come up with some solutions, because his area will need electricity in future and will need to generate its own electricity?

Glyn Davies: The hon. Gentleman is absolutely right. There are various alternatives coming through, and I would give support to all of them. Developing renewable energy and moving forward to meet climate change targets often involves intrusive developments, and we have to put up with them, but I am concerned about the scale of the project. We cannot afford to be overly balanced in our comments if we are talking about making an impact at British level. One issue dominates in most constituencies, but definitely for me, and I stick at it, repeating things again and again. The Minister will become sick of it; he has been in the job only for a while, but his predecessor must have been sick of me. Every chance I get, I shall hammer home the fact that the operation of one of our policies is destined to desecrate my constituency. My duty to my constituency is to try to stop it.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): I congratulate the hon. Member for Ynys Môn (Albert Owen) on securing the debate and apologise for being late, as I was attending a Bill Committee early this morning. I apologise, too, on behalf of my right hon. Friend the Member for Dwyfor Meirionnydd (Mr Llwyd), who has just had a knee operation and is out of action, and my hon. Friend the Member for Arfon (Hywel Williams), who is attending a Select Committee this morning.

I share the concerns of the hon. Member for Montgomeryshire (Glyn Davies) about technical advice note 8 and that policy needs to be revised. My biggest concern about TAN 8 and our planning process is that some developments are determined by the UK Government and some by the Welsh Government, based on the arbitrary level of 50 MW. I have two TAN 8 areas, one being area G in Brechfa, where there will be four or five different developments. They are all being determined individually, although the impact on people’s lives is cumulative. Should not all those developments be determined together, rather than individually?

Glyn Davies: That is a difficult intervention for me to respond to, although I will, because for several years I would have been supportive of the very point that he makes, which is about devolving responsibility for large-scale wind farms to the National Assembly. The reality, however, is that the policy and attitude in the Assembly and among the Welsh Government are such that I have said publicly that I would not support that policy now if I were to stand here for 100 years, simply because they are so determined to drive forward.

I was making a short speech, and Opposition Members have been looking at their watches, so I feel that I have contributed sufficiently. Thank you for the opportunity to speak, Sir Alan. I shall now allow others to contribute.

10.22 am

Susan Elan Jones (Clwyd South) (Lab): It is a great pleasure to serve under your chairmanship, Sir Alan, and to speak after my right hon. Friend the Member

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for Delyn (Mr Hanson) and the hon. Member for Montgomeryshire (Glyn Davies), who I am delighted is an honorary north Walian for the morning—that is excellent, we always welcome tourists.

I place on record my thanks to my hon. Friend the Member for Ynys Môn (Albert Owen) for securing this important debate. He follows in the footsteps of other great Welsh radicals such as Megan Lloyd George and Cledwyn Hughes in representing north Wales’s great island constituency. He is a great expert on energy with a passion for the low-carbon economy and a deep concern for how we can best meet the energy needs of our nation.

What has been encouraging this morning is to hear that we are not nimbys, that we support green energy and that we have a passion for low carbon throughout the UK but especially in our area of north Wales. We are passionate for the introduction of further renewable energy in the UK as a whole, including north Wales, and more wind energy, on and offshore, must be part of the mix. We in the House urgently need to support moves to encourage better, cleaner energy production, and it must be our task to promote the development of low-carbon energy in whatever way possible. If we are to do that sensibly and in a long-term and sustainable way, we must be careful about how energy policies are achieved and mindful of our choices when beginning new projects.

Let me share an example from my constituency, a proposal that even the writers of the most outlandish science fiction films could not have come up with. Imagine a designated area of outstanding national beauty—the Clwydian range and Dee valley—and then imagine plans for onshore wind turbines to be placed just outside it. That is the Mynydd Mynyllod wind farm proposal: 25 turbines, each 145 metres tall, at the foot of the Berwyn mountains. They would be placed in a non-TAN 8 area, an area not specifically designated for wind farms, and would each stand one and a half times the height of Big Ben.

It is encouraging to hear in the debate and throughout the House the support and the passion of the support for wind energy, but most Members would not therefore suggest, as a logical consequence, that wind farms can be sited absolutely everywhere—not, I suggest, at the side of Westminster abbey and perhaps not on the dome of St Paul’s cathedral or even on the humble and rather unremarkable piece of grass outside that is College green. Why therefore the double standard that allows turbines to be placed right by the Clwydian range and Dee valley area of outstanding national beauty? There is a great debate about whether wind turbines are beautiful—that is probably in the eye of beholder—but just as one would never place a large mural replicating Picasso next to Big Ben, it surely cannot be appropriate to site 25 wind turbines each of 475 feet on the outskirts of one of Wales’s and, indeed, Britain’s most beautiful natural areas, as evidenced by the AONB status.

To tackle climate change effectively, the Government need to harness intelligent, renewable forms of energy, and wind farms need to be part of the overall proposals to make such positive changes. Let us be creative and innovative, and look at better places for new developments and not simply site them without reference to their surroundings. The action group STEMM—Stop the Exploitation of Mynydd Mynyllod—rightly notes that

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the effect of the turbines at Mynydd Mynyllod would extend far beyond local residents, affecting visitor numbers, hotels and bed and breakfasts, and the numbers at local campsites and caravan parks, putting our precious and often precarious rural economy at risk. That is why hundreds of people have spoken out against the proposals and the recently added plans for further turbines in nearby Llandrillo. That is why I am pleased to support the campaign.

Jonathan Edwards: The First Minister of Wales—a member of the hon. Lady’s party—recently stated that he was in favour of full devolution of all energy powers. Last spring, I introduced a Bill to achieve that aim, but the hon. Lady and her colleagues marched through the No Lobby with the Tories. Where does she stand now?

Susan Elan Jones: I wondered whether the hon. Gentleman might be making his intervention to support Tal Michael in the North Wales police area, which seems to be a popular thing for his colleagues to do. The whole issue of energy is complex. Many of the major decisions will involve both Governments and we have to have that discussion, so what the First Minister has to say is worthy of debate. Let us have that discussion, because we will stand up for Wales, while the hon. Gentleman’s party will sell it down the river to a poorer future.

To return to my text, the great 19th century Welsh poet Ceiriog, who lived in another beautiful part of my constituency, wrote the famous poem “Aros Mae’r Mynyddoedd Mawr”, often translated as “Still the mighty mountains stand”. Those mountains of the Clwydian range stand and wait for all those who love and appreciate our uniquely beautiful landscape in north Wales. One thing I am pretty certain about, however, is that what they do not stand for is gigantic wind turbines, which, if situated there, would destroy the natural environment and profoundly alter the character and the economy of the area. The proposal needs to go back to the drawing board, and unless it is radically altered and more sensible geographical alternatives are considered, that is where it should stay.

10.28 am

Chris Ruane (Vale of Clwyd) (Lab): I congratulate my hon. Friend the Member for Ynys Môn (Albert Owen) on securing the debate. The six north Wales Labour Members who have been in attendance today met six weeks ago and decided to put in for the debate en bloc. My hon. Friend secured it, and we have come out in force today to support him. [Interruption.] As he correctly points out, it is his idea and his debate, so we are present to support him.

About nine years ago, I was approached by RWE npower renewables and asked to support the erection of 30 turbines off the coast of my constituency—the North Hoyle turbines. I looked at the situation, listened with care and agreed to support that. The company listened carefully. I asked it how many jobs would be created, and it said only seven in the first instance, most of which would be filled from Scotland, which has deep-water expertise. I asked it to connect with the coastal communities by putting together a fund. It was probably going to do

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that anyway, but it did so with style. It allocated £30,000 a year to Prestatyn and £30,000 a year to Rhyl. When the Rhyl Flats turbines were switched on just five or six miles down the coast, I again asked for funding for Rhyl and Prestatyn, but it said no. When I asked again, it said yes to Rhyl with an extra £15,000, but no to Prestatyn.

The company has connected with those coastal communities through those funds. The fund proposed for Gwynt y Môr is £19 million over 25 years, which is considerable. We live in a convergence area that was a European objective 1 area. I am asking RWE npower renewables whether that £19 million can be clean money to multiply up to perhaps £100 million as match funding for European structural funds. That could have a huge impact on the coastal communities, many of which, such as Rhyl, Prestatyn and Colwyn Bay, are suffering. The insolvency figures for last year came out on Monday, and five of the top towns for insolvency in the UK are seaside towns, two of them in my constituency. An investment of tens of millions of pounds over the next 10 or 20 years could have a big impact in those coastal communities. It has had an impact so far, and it will have an impact in future.

I turn to the politics. When I switched on the North Hoyle lights about six years ago, the Prime Minister, who was then Leader of the Opposition, was in north Wales at Llandudno for the Tory party conference. He referred to the turbines and called them giant bird blenders. We all know that he then went on to hug a husky at the north pole and said how important environmental credentials are for the Conservative party, but he was facing both ways at the same time, and that was echoed by his Tory Welsh Assembly Members. The Tory AM for Aberconwy, Janet Finch-Saunders, said that the Gwynt y Môr project will damage tourism in north Wales and is viable only with massive Government subsidies for renewables.

Political careers were built in north Wales on the back of opposition to offshore wind farms off the coast of north Wales, and it is interesting that the hon. Member for Aberconwy (Guto Bebb) and the Secretary of State for Wales, the right hon. Member for Clwyd West (Mr Jones) are not here today, because I believe that opposition to wind farms helped to build their political careers. That opposition continues at a high political level. The Chancellor referred to supporters of renewables as the “environmental Taliban”, comparing us with Taliban terrorists who shoot 14-year-old girls in the head for standing up for education. That is the level of debate, the terminology and the lexicon that is being used by leaders of the Tory party, and there is no escaping that. However, I make an honourable exception of councillors in Prestatyn in my constituency, many of whom were Conservatives, but stood up, supported wind farms, and went against the flow, and they should be commended for supporting the North Hoyle and Rhyl Flats wind farms.

I move on to a less party political point. Offshore wind farms will make a big difference in my community to tourism and job creation. If RWE npower renewables is tied in with our further education and higher education sectors in north Wales, that could make north Wales a world base for renewable energy, and we could exploit our expertise around the world. When countries are considering offshore renewables, north Wales and the north-west could be the first port of call.

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The vision for the future is exciting. The finance is available from the green investment bank and 20 other independent and private sector banks and from the European Investment Bank. The future is bright for renewables in north Wales, and I ask the Minister to respond positively and to go against his leadership and support Labour MPs in north Wales; and I ask MPs generally to ensure that renewable offshore wind is a key component of the British energy market.

10.34 am

Nia Griffith (Llanelli) (Lab): I congratulate my hon. Friend the Member for Ynys Môn (Albert Owen) on securing this important debate and, more importantly, on his unstinting efforts to develop a range of energy resources on Anglesey. He has made enormous efforts to harness its unique combination of resources and location to generate electricity and provide much-needed jobs. He recognises that it is never easy to attract new industry and jobs, but the problem is being exacerbated by the Government’s uncertainty and dithering, their lack of a clear industrial strategy, and their tendency to respond with knee-jerk reactions, instead of working with the industry.

My hon. Friend has recognised the unique potential of north Wales to provide energy for the future, whether using marine currents around the coast or the wind to generate electricity. North Wales is well provided with natural resources, which enables it to make a significant contribution to our energy needs while generating much-needed local jobs, using the skill base to which he referred.

The UK is extremely well endowed with wind resource. It certainly has the best resource in Europe, and some estimates suggest that the UK has 40% of Europe’s potential wind power. The north Wales coast certainly has its fair share. To make a success of that renewable energy potential, we need a Government who are wholeheartedly behind the industry, and what industry wants above all else is certainty, consistency and clarity. To make long-term investments, industry needs to know that the Government are not going to move the goal posts.

We understand why the Government make industry nervous. Last year, we saw the utterly disgraceful fiasco of the unilateral cuts in feed-in tariffs. People in the industry understood that the tariffs would be gradually tapered downwards, but, preposterously, the Government suddenly imposed a cut, even before the end of the consultation period, leaving businesses racing to install solar panels before deadlines; provoking difficulties in the supply chain, because manufacturers, fearful of being left with redundant stock, ran down production; and leaving out of pocket self-employed plumbers who had risen to the challenge of green energy and forked out on courses to train themselves up in installing solar panels. Housing associations across Wales were forced to abandon plans to provide solar panels that would have benefited local low-income households, and people lost confidence in what community projects would deliver That was all because the Government chose to push the industry over a series of cliff edges, instead of allowing it to progress down a gentle slope.

In the wake of the lack of consultation on feed-in tariffs, the Government, far from reassuring industry that they will consult properly with it in future, are doing

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the reverse. Not many people know that on the last day before we rose for the summer recess and, predictably, without any consultation, the Government sneaked out an announcement that they are abandoning the long-standing commitment that public consultations should normally last 12 weeks. It is outrageous to suggest that as little as two weeks, and sometimes no consultation at all, is appropriate for decisions that impact on industry, businesses, trade associations, unions, local government and the public.

So there it is, plain for all to see in black and white: the Government are abandoning any pretence at engagement and consultation. That really is a blow to far-sighted industrialists who want to work with the Government to deliver energy infrastructure. Will the Minister assure us that he intends to work with industry, and that he can influence his colleagues in the Department for Business, Innovation and Skills and in the Treasury to provide the certainty that we need for continued investment in offshore wind? We need to ensure not only that the huge investment that goes into offshore wind farms such as the Celtic array benefits the local work force with the work to construct and maintain the wind turbines, but that the conditions are right for the supply chain and the manufacture of components here in the UK. Unfortunately, there is a lack of clarity, and lack of a clear industrial strategy.

A fortnight ago, with other MPs and AMs from south-west Wales, I visited Port Talbot steel works, where Tata has invested £185 million to rebuild a blast furnace, and £55 million to create a gas-cooling system. During our discussion there, we were reminded that when Dr Karl-Ulrich Köhler, head of Tata Europe, had visited the plant in July, he called on the UK Government to take down obstacles to growth. Dr Köhler said that the £240 million investment in Wales showed the company’s commitment, but that Tata needs Ministers to help

“to remove obstacles that are in our way as far as competitiveness is concerned”.

One point Dr Köhler was referring to was the Government’s decision to impose an unrealistically high carbon floor price. That burden on energy-intensive industries is unique to the UK. It is bad enough ever to impose punitively high carbon floor prices on industry, but to do so when steel manufacturers are struggling to fill their order books, because many of their customers are caught up in the Government’s double-dip recession, is utterly stupid.

We all accept that it is difficult for manufacturing industry to compete with countries that have very cheap labour costs or low environmental standards, but the carbon floor price makes us uncompetitive even when compared with other European countries that have similar standards of living and similar environmental standards. The Government should be working with our fellow Europeans on reducing emissions to create a level playing field, not imposing a burden unique to the UK manufacturing sector.

It is all very well for the Department for Business, Innovation and Skills to claim that it has announced a £250 million package for energy-intensive industries, but that will be spread very thinly, and it would have been better if the Government had not imposed such a high carbon floor price in the first place. Karl-Ulrich Köhler also called on the Government to think about their supply chain more strategically—in other words,

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to ensure that we provide a domestic market for the steel that we produce. The challenge to the Government is what measures they can take to encourage maximum use of UK-manufactured components in the construction of offshore wind farms.

Colleagues in Tata have calculated that offshore wind turbines can use more than 1,000 tonnes of steel and typically use at least six different types of steel, but that some UK offshore wind developments have only 10% UK content, with all the major steel components being imported from outside Europe. Tata estimates that the UK market for offshore wind will be 4 million tonnes of steel by 2020, and through investments in the UK, Tata Steel has indicated a clear intention to be part of that market. All too often, however, new supply chains present a risk to developers, and they tend to prefer current suppliers in Germany and elsewhere, which means that the UK is nowhere near capturing the full economic benefit of those developments. We certainly do not want a repeat of what is happening in Scotland, where the Scottish National party Government are replacing the Forth road bridge at a cost of £790 million and the consortium building the bridge chose to use 37,000 tonnes of Chinese steel to be fabricated in China, Poland and Spain.

In 2011, the Minister’s predecessor said that in taking forward the next stage of offshore wind development we must ensure that the supply chain jobs come to the UK. Therefore, for continued investment in offshore wind and the supply chain, we really need to know that the new Energy Minister is on the side of industry. It is no secret that he has expended considerable energy campaigning against proposed wind farms in his Lincolnshire constituency, and that, back in 2009, he insisted on regional TV:

“Wind turbines are a terrible intrusion in our flat Fenland landscape. Renewable energy needs to pass the twin tests of environmental and economic sustainability and wind power fails on both counts.”

Is he opposed to all wind farms, or only those in his constituency?

How can I describe the attitude of the new Secretary of State for Wales towards wind farms? To call it lukewarm would be very generous indeed. His antipathy to Gwynt y Môr was referred to by my right hon. Friend the Member for Delyn (Mr Hanson), and the Secretary of State is well known for his scathing comments about the Welsh Government’s TAN 8. Back in 2006, he treated the Select Committee on Welsh Affairs to his views on the Rhyl Flats many times over. Now he has said that he wants to work with the Welsh Government, but he will do Wales no good at all if he greets potential investors in offshore wind with a lukewarm approach.

I hope that the new Energy Minister might now be converted to the cause and that he will go out with evangelical enthusiasm to convert our new Secretary of State for Wales. Sadly, however, with the Secretary of State for Environment, Food and Rural Affairs an advocate of shale gas fracking, and the Energy Minister and the Secretary of State for Wales both seemingly wind farm sceptics, potential low-carbon investors could be forgiven for thinking that the Government are boosting support for the oil and gas industry, throwing doubt on

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how much support there will be for renewables and undermining the Prime Minister’s pledge to be the greenest Government yet.

Small wonder that a fortnight ago we heard that major green businesses sent letters to Ministers. Siemens, Alstom UK, Mitsubishi Power Systems, Areva, Doosan, Gamesa and Vestas, which together employ 17,500 people in the UK energy sector, say that a lack of decision-making and threats to relax environmental targets have caused them to reassess the political risk of investing in the UK. It is serious stuff when such companies are threatening to go elsewhere and we could lose thousands of new jobs. It would be tragic if we lost new investment in renewables simply because the Government are not only dithering, but backtracking on their supposed commitment to a green agenda. In addition, more than 50 companies and non-governmental organisations, including Microsoft, Asda, EDF and Sky, released a similar letter demanding an end to uncertainty over the direction of the UK’s energy policy and the inclusion of a decarbonisation target in the upcoming energy Bill.

The Minister’s predecessor summarised what we need to do in his article for The Observer this weekend, when he said that

“our future can’t depend on gas alone… Energy security can only be delivered with a mix of technologies… Renewables harness the exceptional resources of these islands… Harnessing our low-carbon potential isn’t just right environmentally, but it is a central plank of energy security… But there isn’t much time left. Decisions on where to invest are being made now. Uncertainty and hostility would undermine the UK’s ability to secure the jobs and economic benefits from the supply chain for those new power plants. And if those companies walk away from the UK, it is a permanent loss and we all pay the price.”

To sum up, will the Minister confirm his unreserved support for the development of offshore wind in north Wales, and state whether those investments will enjoy the full support of his colleague, the new Secretary of State for Wales? Assuming that the mixed messages from his Government have not frightened companies off from investing in renewables in north Wales, will he also tell us what policies he will pursue to keep jobs in the supply chain in the UK—jobs in the steel industry and in the various components industries?

10.46 am

The Minister of State, Department of Energy and Climate Change (Mr John Hayes): I thank the hon. Member for Ynys Môn (Albert Owen) for drawing the House’s attention to this important matter and for securing the debate. His advocacy of the interests of his constituency is a model of good representation. When I entered the Chamber today and saw the array of his Welsh colleagues, I reflected for a moment on what the collective noun for a group of Welsh people is. I thought perhaps a “choir”, a “valley”, or a “Barry John”, but then, given my experience of Wales, I decided that it would be a “charm” of Welsh Members.

I will attempt to respond to the points raised in the short time available to me. The hon. Gentleman began by highlighting four points. He talked about the need for a viable energy mix, and he is right that to maintain energy security and build resilience into the system, we need a mixed range of energy generation. Renewables are an important part of that mix. He mentioned clarity—

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a point reflected by the hon. Member for Llanelli (Nia Griffith)—and certainty. The Energy Bill will provide precisely that.

If I were a more partisan man, I might say that the Energy Bill should have passed through the House long ago, because we have known for a long time that we need extra resources and to replace the generating resource. Indecision has characterised policy in the past, but let us put that to one side. We now have the chance for a Bill that provides just that clarity and certainty, and just the platform for investment that produces the kind of mixed array of energy generation sought by the hon. Member for Ynys Môn. He also spoke about skills, which are critical.

Albert Owen: I am grateful to the Minister for trying to charm Welsh Opposition Members. He mentioned the Energy Bill. I agree that for many decades there should have been greater investment in our infrastructure and that the dash for gas in the ’80s and ’90s was wrong. We are now back to square one, because the gas has run out. Will the Minister clearly tell the House when he expects the Bill to be laid before Parliament, and when we can start debating these issues? It is already a year and a half late, as the Government first announced it 18 months ago.

Mr Hayes: I expect it to be laid before Parliament next month, but it would be wrong for me to pitch above my pay grade. The Leader of the House will have a view about the parliamentary timetable, which will of course be agreed through the usual channels.

None the less, we anticipate that the Bill will be laid next month. I hope that we can get on with the business of scrutinising it carefully, ensuring that it is fit for purpose and that we have a largely consensual strategy based on a shared understanding of energy needs and a determination to develop a long-term view about what our energy future should look like. I do not think that there is much difference between the parties in the Chamber today about the fundamentals, but let me highlight some of the areas that need greater clarification—the sort of clarification that the hon. Member for Ynys Môn sought in his opening remarks. Before I do so, however, I want to deal with his point about skills.

The hon. Gentleman talked about the importance of skills in this mix, and he knows—indeed, he mentioned it—that the higher education and further education sectors, in Wales and elsewhere, are playing a key role in providing the skills that are necessary, particularly in the emerging technologies, to make the aim a reality and to provide the jobs that are desirable and the competences necessary to bring about the future that I describe.

The hon. Gentleman raises those issues against a background of change in his constituency; I am thinking of the closure of Wylfa and the associated closure of Anglesey Aluminium, but also of the great success that his constituency has enjoyed in respect of offshore wind. He makes the very important point that to provide secure, affordable, low-carbon energy resources, we have to face up to some of the challenges associated with the development of the offshore wind industry.

Let me be clear: offshore wind remains an important part of Government policy in meeting the objective of providing the mix that the hon. Gentleman suggested

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was essential, that we certainly believe is vital and that will be underpinned by the provisions of the Energy Bill. Offshore wind is one source of affordable energy. It provides a free and limitless domestic supply of fuel. We have a great deal of resource because we have shallow seas, consistent winds and an increasingly skilled work force who have experience of working offshore.

The challenge—this point was made by a number of hon. Members—is to ensure that the whole of our kingdom gets the most benefit from the investment. That is about the supply chain, I agree; as a direct result of the contribution from the hon. Member for Llanelli, I will look again at what measures we can put in place to ensure that we get maximum benefit, through the supply chain, from these important developments.

Furthermore, we need to provide absolute certainty for those who want to invest. Investment in this sector, because it is an emerging sector, is inevitably a matter that people will consider very carefully. It is not a long-established sector, with all that that means. The technology is relatively new. The scale necessary to drive down costs is only just beginning to emerge. Therefore, the commitment that the Government make to offshore wind is important in signalling to potential investors that they can consider this option without fear of a policy lurch or change.

That is another reason, by the way, why it is important to develop an energy strategy that is consensual—because, of course, policy can change when there is a change of Government or Minister. Governments do not last for ever, and Ministers sometimes last for even less time, so it is very important that a signal is sent out from the House and through what the Government say and do.

The hon. Member for Ynys Môn talked at length about some of the specific impacts on his constituency, but of course there is a specific impact across the whole of Wales. We have heard a great deal about the Gwynt y Môr wind turbine development, which is currently under construction. It has already helped to generate significant economic opportunities and create new jobs in Wales and more widely.

The port of Mostyn will serve as the operations and maintenance base throughout the life of that development. Turbine Transfers, which is based in Anglesey, as the hon. Gentleman knows, will supply transfer vessels and crew. It has already created, I think, 20 new jobs as a result. DRB Group, which is in the constituency of the hon. Member for Alyn and Deeside (Mark Tami), who also contributed to the debate, will provide crane units. Prysmian Cables in Wrexham won an order to provide cables worth some £15 million. Jones Bros of Ruthin won a multi-million pound contract for preparatory groundworks for the building of a substation. A little further south, Mabey Bridge in Chepstow won a contract to provide drill components.

We know that there is a significant supply-chain impact and that that has a real value in terms of jobs and skills, and we should understand the offshore wind industry in that way. This is not simply about the short-term benefits that may arise from a particular development; it is about building an infrastructure, in terms of supply, jobs and skills, that can benefit the whole of Wales and the whole of the kingdom.

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Let me say again that we understand that renewables are an important part of that mix and that offshore wind is part of that. However, there are questions to be asked—indeed, they have been asked in this debate by a number of hon. Members, who put their case very well.

Yes, the hon. Member for Ynys Môn is right to say—other hon. Members made this point, too—that costs should fall as scale grows. It is right that we see the support that we give this industry at its beginning as rather different from how it will compete subsequently. That is true across the energy marketplace, by the way. We need to move to a more market-responsive, more competitive energy marketplace, including in the area of renewables.

It is also right, as a number of hon. Members suggested, that community benefit needs to be at the heart of what we do. These things must not be imposed on communities, which must feel a sense of ownership and influence over where they are located. Community benefits need to be considered very seriously. I was delighted that the hon. Member for Vale of Clwyd (Chris Ruane) was able to secure such a benefit for his community. He was right to do so. We have a role to play in that as local constituency MPs. As a Government, we will also do what we can, as I have in the call for evidence on onshore wind. That obliges us to reconsider the benefits that communities attain from that kind of development.

Let me say a few words about onshore wind, because my hon. Friend the Member for Montgomeryshire (Glyn Davies) and the hon. Member for Clwyd South (Susan Elan Jones) raised that issue. I entirely agree that we must see it as being about aesthetics as well as utility. I regard it as almost extraordinary that people can stare at some monstrous concrete structure and tell me that it is beautiful. These are industrial structures. Placing them insensitively, in areas where there is large-scale and understandable opposition to them, has done immense damage to the debate about renewables. I think that we need to settle the onshore wind argument to get on the

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front foot and have a more positive debate about renewables—of the kind that we have had today. I think that we need a new paradigm in those terms. E. F. Schumacher, who wrote “Small is Beautiful”, a wonderful book, which I am sure you are familiar with, Sir Alan—

Albert Owen: Will the Minister give way?

Mr Hayes: I have only a minute.

Albert Owen: I will be brief.

Mr Hayes: If the hon. Gentleman is going to talk about Schumacher, fine.

Albert Owen: I am extremely grateful to the Minister for giving way, but I did ask the question initially about port development. Will he work with the Welsh Assembly Government and the port authority of Holyhead to maximise the potential of that port? Will he, as a Minister, come and see it—see the potential for himself?

Mr Hayes: How could I resist such an invitation?

Chris Ruane: Will the Minister call in at Rhyl on his way up there?

Mr Hayes: For a sumptuous Welsh lunch, which the hon. Gentleman will no doubt provide? Of course.

Schumacher said:

“Wisdom demands a new orientation of science and technology toward the organic, the gentle, the elegant and beautiful.”

I associate myself with those remarks. We need to understand the impact of industrial structures in rural communities, and to that end we need a different settlement on community ownership, community engagement and community benefit. However, let me be clear. The Government are firmly committed to the development of UK offshore wind resources. We understand their significance and value. The hon. Member for Ynys Môn has done us all a service in allowing this Chamber to consider that value and that significance in this short debate.

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Rail Freight Traffic

11 am

Sandra Osborne (Ayr, Carrick and Cumnock) (Lab): I apologise in advance, Sir Alan, because, as you can probably tell, I picked up a rotten cold over the weekend, so my accent is probably even less understandable to hon. Members than it normally is. I will do my best.

It is not possible for me to overemphasise the threat that the proposed swingeing increase in charges for access to the rail network poses to the coal industry. I appreciate that the Office of Rail Regulation is obliged to consult on track access charges ahead of the next contractual period, as has happened twice before, but the last time a rise was proposed—for 2009 to 2014—the ORR subsequently listened to responses from the coal and power industries and ended up cutting charges. It is all the more surprising then that it should now seek to raise charges to the coal industry by a massive 64%. It has proposed introducing an additional freight-specific track access charge to apply to electrical supply industry coal and spent nuclear only, which could increase the cost of Scottish coal delivered to English power stations by £4.50 a tonne.

Apart from causing a further switch from coal to gas and encouraging a modal switch from rail to road, the impact would be catastrophic for Scottish producers, who are already in a precarious position.

Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): Does my hon. Friend agree that it seems bizarre when the Government are talking about energy security that the effect of the charge is that we will be more likely to import coal, rather than using coal from our shores?

Sandra Osborne: I certainly do agree, and I intend to raise that point later in my speech.

The charge would exclude Scottish-produced coal from the English market, resulting in a reduction in output of up to £3 million tonnes a year and, as my hon. Friend said, its replacement by imports. More than 1,000 direct jobs will be lost in an area of already high unemployment, particularly in the west of Scotland. Even the threat of the proposal is constraining investment, and it is imperative that it is withdrawn immediately.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): I assure my hon. Friend that I can understand her Ayrshire accent perfectly well this morning, even though she has a cold. Does she agree that it is concerning that the ORR seems to be suggesting that the electricity coal industry can afford to pay the increases, when there are problems in the industry in Ayrshire and jobs are under threat?

Sandra Osborne: Yes, totally. I intend to cover that topic later in my speech.

We are only too aware that the charge is proposed in a context of revenue-raising efforts and cuts across the board. The Government seek to end what they regard as a subsidy to the power industry. I argue that the proposal is ill thought out, counter-productive, at odds with existing Government policy and amounts to a possibly fatal attack on the coal industry, especially in Scotland and my constituency.

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I will provide some background to the current position of the coal industry in Scotland. It is well publicised that coal mining in the UK is struggling. Contrary to the statements in the consultation documents about high international coal prices, the reality is that coal prices have fallen by some 30% so far this year. The recent trading announcements from a number of coal industry companies, which show an industry under severe financial pressures, reflect that. Margins are wafer thin and there have already been redundancies in Scotland, including in my constituency. Scottish Coal, for example, is consulting on 100 redundancies on top of a 10% cut in wages for the whole work force—hardly a thriving industry.

An increase of £4.50 a tonne in freight charges for supplies to England will lead to an immediate reduction in output, as high-ratio coals within existing sites are abandoned, with the possibility of some sites closing altogether. The suggested track charge increase could double the cost of coal transport from east Ayrshire to customers in England. That increase will impact heavily on the viability of coal operations in Scotland, with the very real prospect of mine closures. If operations involving the three companies in my constituency close, it will have a devastating impact on employment—direct and indirect.

We, of course, have already experienced the devastation of mine closures in our communities, so we know the results only too well. The area has never really recovered from the closure of deep mining in the ’80s, but open-cast mining has thrown us a lifeline, with well-paid jobs and community benefit. History has shown that local people are prepared to tolerate inconvenience and blight on their landscape, because they know how important the jobs are for every generation.

Cathy Jamieson: My hon. Friend has rightly identified that people have been prepared to accept the surface mining open-cast industry in many of our communities. Does she agree that that will be put at risk if coal is transferred back to the roads, rather than transported by rail?

Sandra Osborne: Yes, and some of the companies are not in a position to do that, even if they wanted to.

In 2012, 1,196 people are directly employed in open-cast mining in Scotland and 704 in east Ayrshire, which has the greatest number of coal sites in Scotland and the highest number employed in the industry. It produces more coal than any other area in Scotland and that is worth some £9.4 million to the local community. Following the decline of the deep mining sector and the devastation that followed, decline has set in and has been difficult to shift. The area has had consistently higher than average unemployment rates, population decline and trends of low economic activity and a high percentage of jobs in the public and retail sectors and areas of high relative deprivation. I am sure that the Minister gets the picture, but, if not, he is welcome to come to see for himself. The bottom line is that under no circumstances can we afford to lose the relatively secure, well-paid, private sector employment and input to the local community that the open-cast mines bring.

The consultation includes a range of suggested charge increases, but an increase of £4.50 a tonne is forecast. The consultation states that coal producers could absorb

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that increase in track charges, but no evidence base is presented to support the assertion and it appears to be just an arbitrary statement. Furthermore, the consultation proposes that the coal and the nuclear industries be singled out to be burdened with the increased track charges. A cynical view would be that the ORR sees those industries as a captive market without the ability to revert to road transport.

Mrs Anne McGuire (Stirling) (Lab): Does my hon. Friend accept that there has been an element of price stability in rail freight charges and that organisations and companies, such as Fergusson Group—one of the major suppliers of coal—in my constituency could not have factored in the massive price hike suggested in the consultation?

Sandra Osborne: Yes. The regulator has a duty to ensure that companies can anticipate what the price regime will be, so that they can plan.

Figures from the Department of Energy and Climate Change show that coal production in the UK was 17.9 million tonnes in 2011, and Scotland contributed 33% of that, as a part of supplying the UK’s coal-fed electricity generation needs. There are concerns that the consultation proposals are contrary to certain Government policies and, if implemented, could pose a serious threat to not only the coal industry, but the rail freight industry and, in particular, the viability of Scottish coal mines, as I said. Only a few minutes ago, the Freight Transport Association contacted me with its concerns about the potentially devastating impact on rail freight in Scotland.

Coal is a significant and essential component to electricity generation in the UK. It regularly contributes more than 50% of the electricity produced on a winter day and, quite commonly, 40% on a summer day. Against that background, requirements are also imposed by the large plant combustion directive, the industrial emissions directive and electricity market reform. Notwithstanding that, the key electricity market reform drivers are security of supply, affordability of electricity and decarbonisation.

The proposed increase in track charges will threaten the security of indigenous coal production if we accept that the result of such charges will be to shrink the coal market by 5% to 10%, as identified in the consultation. That would damage the secure industry base of coal-generated electricity capacity, which has been consistent at 40% to 50% of the total generation. Given the much longer haul from the mines in Scotland to the English power stations, the adverse consequences of the track charges will be disproportionately felt in Scotland compared with elsewhere in the UK.

On the affordability of electricity, the consultation assumes that the Scottish coal producers will absorb the increased costs. As previously stated, there is no evidence base for such an assumption, and the coal industry is currently under financial pressure. The additional costs will threaten mine viability, given the inevitable switch to gas by generators, and that will impact on price and the security of supply.

In the conclusion to the report “The impact of changes in access charges on the demand for coal”, the ORR consultants acknowledge the threat to Scottish-produced coal by the long-term impact of increased track charges

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on the development of future open-cast mines in Scotland. However, those concerns do not appear to have made it to the conclusions of the main consultation report. I can only assume that they believe that the Scottish coal industry and more than 1,000 Scottish jobs are expendable. What form of consultation was carried out by NERA—the ORR consultants—to allow the suggestion that the Scottish coal producers can bear the cost of any changes? The fact is that they cannot and will not absorb those extra costs.

The ORR charging regime could detrimentally affect employment and investment in Scotland’s mining sector and typically in economically deprived areas. Have the Scottish Government and relevant local authorities engaged with ORR to assess the potential effect, and will mitigation plans be drawn up should the proposals be implemented?

Would a 10% reduction—the reduction proposed by ORR for freight traffic—in passenger traffic be considered an acceptable result of increased track charges? If not, has ORR discriminated against the coal industry on the basis that it seems to be content to see a decline in real freight traffic?

Assuming a 5% to 10% reduction in UK coal production, there will be a requirement to increase the amount of coal that is imported, which will increase the carbon footprint in transport and probably increase carbon emissions. The transfer of environmental and social impacts overseas is of concern to the UK Government. The report “Securing the future—UK Government sustainable development strategy” states that environmental policy should encompass impacts outside the UK. It says that

“there would be little value in reducing environmental impacts within the UK if the result were merely to displace those impacts overseas.”

Those impacts would include the transport of raw materials into the UK. It is important that the UK makes the most of its indigenous coal assets and recognises that, apart from the important security of supply issue, a domestic minerals industry is the most sustainable way to supply the market.

In the market analysis section of the consultation, there is an acknowledgement that there could be a substantial reduction—up to 25%—in the demand for rail-hauled coal because

“there is scope for reductions in length of haul”.

As coal can only be mined where it exists, it appears to be a clear policy of the ORR to direct electricity generators to import coal via ports to achieve the shorter haul on rail that it alludes to in its analysis, rather than take indigenous UK coal. Owing to the substantially longer haul distances for Scottish mined coal to the English power stations, the track charge proposal can only be seen as a direct attack on the Scottish coal mines.

Furthermore, generators sourcing their coal from overseas will not be able to pass on any increased track charges to international coal producers. Despite all the crocodile tears that we have heard in the past couple of weeks, the only way in which those extra costs can be recovered is through increasing the price of electricity to the consumer. If there is a need substantially to increase coal imports, there is concern over whether there is enough rail-served deep port capacity to cope with the increase.

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Carbon capture and storage projects are due to start in 2014. The proposed increase in track charges could seriously damage the prospects of such projects before they start. That would threaten the ability of the UK to build up its indigenous capacity and to be self-sufficient with respect to energy supply. We all know that carbon capture and storage is the way forward for the coal industry in the longer term.

It is clear from the ORR-commissioned reports that a distance-related charge creates significant market distortion. How is that acceptable in competition terms? The Scottish industry has invested tens of millions over recent years. How could this fundamental change in charging policy by the ORR have been reasonably anticipated, and hence the risk of stranded investments avoided?

Has the ORR constructed an economic impact assessment on how the increase in charge would affect the Scottish mining industry, and how will such a charge affect the rural communities in my constitueny? We have already been thrown to the wolves once before.

The coal industry is heavily dependent on a healthy rail freight sector, and any potential threat to it is also a direct threat to the coal industry. The Rail Freight Group issued its initial response to the consultation in a letter to the chief executive of the ORR on 28 May 2012. I note the RFG’s comment about how the ORR chose to balance its duties and whether undue weight was given to the duty to have regard to the funds available to the Secretary of State, perhaps at the expense of the duty to promote the use of the railway for rail traffic, and the duty to enable companies to plan their businesses with reasonable assurance. That concern seems to be backed up with the apparent acceptance by the ORR within the consultation document that a 10% drop in coal-rail traffic as a result of increased track charges is acceptable, without any analysis of the potential impact on the rail freight industry or on the coal industry as an end user.

In a letter to me on 1 October, the Minister stated:

“the Government wishes to facilitate the continuing development of a competitive, efficient and dynamic private sector rail freight industry. We are committed to ensuring that policies and regulations should work to this end and should not create unnecessary transactional costs or other obstacles to the achievement of these objectives and future growth. In an industry where planning and operational decision-making are increasingly devolved, we would wish ORR to have regard to the importance of sustaining efficient and commercially predictable network-wide freight operations when they take decisions about access rights and charging structure.”

Although that may not have been the unequivocal response that I would have liked, it did raise my hopes that the Minister understood what the impact of these proposals would be if they were put into practice.

All my comments show that the consultation has been blinkered. It has not considered the wider strategic effect if the suggested track charges are implemented. The proposed track charge increase appears arbitrary and not supported by any evidence base, as is the comment that the coal industry would be able to absorb such costs. That leads on to the unacceptable conclusion that there will be a reduction of 5% to 10% in coal transport by rail, which is an odd position for the ORR to support, bearing in mind that it has a duty to promote rail use.

If those charges are implemented, they will affect the viability of the UK coal industry, especially in Scotland,

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with the resultant increase in imports and carbon footprint and loss of employment. The practical effect of the proposals is a direct attack on the coal industry in Scotland and the likely withholding of further investment in the industry. The proposal would also seem to be contrary to other Government policies of indigenous energy generation, security and affordability of supply, employment and sustainable development.

I hope that the Government will agree that the most appropriate way forward is the maintenance of the status quo in respect of the current charging regime. I look forward to the Minister’s response, and I apologise again for my slightly difficult throat.

11.19 am

The Minister of State, Department for Transport (Mr Simon Burns): Thank you, Sir Alan, for calling me to speak. It is a pleasure to serve under your chairmanship and I congratulate the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) on securing this debate. I think that all hon. Members taking part in it will join me in wishing her a speedy recovery from her affliction, although it did not seem to impinge in any way on her ability to make her case.

I also give the hon. Lady a commitment. I have just over 10 minutes in which to speak; if I do not deal with all the points she raised in her speech, I will write to her about them.

I will start by making two points that need to be made clear at the outset. First, the framework of charges for both freight and passenger operators is set independently of Government by the Office of Rail Regulation, which, as the hon. Lady knows, is the independent economic regulator for the railways in Great Britain. The ORR establishes the charging framework by means of a periodic review, which also establishes Network Rail’s outputs and funding.

Secondly, the proposals in the ORR’s consultation document are just that—proposals. The ORR has received a number of responses to those proposals, which it is now considering. I understand from the ORR that it intends to publish its decision on whether to introduce a freight-specific charge in its consultation conclusions document, which is to be published next month. I should reiterate that no decisions have been taken yet and that the ORR is aware of the concerns that have been raised by the hon. Lady, other hon. Members and other interested parties.

Given the fact that these are matters for the ORR, it follows that there is a limit to the extent to which it would be appropriate for me to make any comment on them. However, I can explain the steps the Government are taking to promote continuing growth in the rail freight industry.

We support the ORR’s plans to give the freight industry early assurance over the level of access charges by setting a cap on them. It is crucial to any industry’s forward planning that it has a clear indication of what its likely costs will be. The Government wish to facilitate the continuing development of a competitive, efficient and dynamic private sector rail freight industry. We are committed to ensuring that policies and regulations should work to that end and not create unnecessary transactional costs or other obstacles to the achievement of those objectives and future growth.

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Although the Department for Transport cannot direct the ORR, we can and do provide guidance on the overall approach that we see as the framework for the ORR’s activities, and we expect the ORR to take that guidance into account in its decision making. For example, in an industry where planning and operational decision making are increasingly devolved, we want the ORR to have regard for the importance of sustaining efficient and commercially predictable network-wide freight operations when it takes decisions about access rights and charging structures.

Of course, as the hon. Lady will realise, it is not only the Westminster Government who provide guidance to the ORR; the Scottish Government provide guidance too. Scottish Ministers have stated that they expect the ORR, in developing the track access charges arrangements for freight operators, to use a mechanism that recognises the impact that freight operators have on the network but maintains the attractiveness of rail to freight customers and is sufficiently adaptable to prevent the outputs of businesses in Scotland from becoming uncompetitive in their key markets.

The Government’s strategy for the railways was set out in the March 2012 Command Paper.

Sandra Osborne: Given all that the Minister has said about the position of the Government and of the Scottish Government, is he surprised that the ORR could even think of coming up with this proposal, which is so obviously going to be damaging?

Mr Burns: The hon. Lady makes a pertinent point, but I think that she is trying to tempt me. What I said at the beginning of my comments—and this is perfectly valid—is that the ORR has made a number of suggestions and proposals that have been put out to consultation and it will reach conclusions on the right way forward when it makes its announcement in November.

As always in consultation documents, there is a range of options to be considered, some of which will be adopted while others will be discarded. That is part of the consultation process and it is perfectly valid, provided that the ORR considers the responses to the consultation and any guidance and advice that the British Government, the Scottish Government or others give them.

I was referring to the March 2012 Command Paper before the hon. Lady’s intervention. It set out how our passenger and freight railways support the Government’s overall transport vision: by supporting economic growth; by facilitating business, commuting and leisure journeys; by providing a greener transport option than road and aviation; and by relieving congestion on our road network. Among other things, the Command Paper states that there is a strong case for Government to continue providing support for the rail freight industry, to create a level playing field.

The rail network transports approximately 90 million tonnes of goods per year. It is of strategic importance—rail freight delivers more than a quarter of the containerised food, clothes and white goods we use and delivers nearly all the coal for the nation’s electricity generation. It also invests heavily in the provision of its services; there has been about £1.5 billion of private sector investment in rail freight since 1995.

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The role of the rail network in the delivery of coal to the electricity supply industry should not be underestimated. In winter, coal-fired electricity generation regularly contributes more than half the country’s daily electricity needs, and even in summer it can commonly provide 40% of the supply.

I know that the Scottish coal producers play an important part in providing coal to power stations in England; more than 60% of their rail deliveries to the electricity supply industry are to English power stations. Clearly, the Scottish coal industry has a keen interest in the ORR consultation and in any determinations that could have an impact on its market, especially when about 78% of the UK power industry’s demand for coal burned by power stations is already met by imports rather than by domestic production—a point that the hon. Lady made very clearly in her speech.

There is a very delicate balancing act to be managed here, between trying on the one hand to ensure that Network Rail can recoup an appropriate share of the infrastructure management costs from the rail operators—the ORR’s proposals would be worth around £50 million a year in additional track access charges—and on the other hand trying to ensure that the charges on individual market sectors are not more than they can realistically absorb.

There are a number of elements to the charges that freight railway operators pay for access to the network: a capacity charge; a traction electricity charge; a fixed charge designed to recover the cost of freight-only lines; and the variable track usage charge that is the subject of this debate.

For the next funding control period starting in 2014, the ORR is proposing to replace the current freight fixed charge with a new charge designed to ensure that freight operators pay a contribution towards Network Rail’s fixed costs that are associated with rail freight. That charge would be levied on rail freight market sectors that have the ability to bear the charge.

The level of the charge, and the different sectors’ ability to pay it, is, as the hon. Lady knows, the basis for the ORR’s initial conclusions, which are at the heart of the consultation launched in May. Those initial conclusions suggest that the charges should be levied not only on electricity supply industry coal and the movement of spent nuclear fuels—as they are now—but on iron ore and other coal movements, and that these charges should be based on rail tonnage and possibly on distance travelled.

There is fierce competition in the logistics market, not only between the various freight operating companies but between the rail freight operators and the road haulage sector. It is also important to remember that whereas the rail sector is expected to pay all the external costs for its mode of transport—the cost of wear and tear on the infrastructure, and the cost of measures to mitigate environmental impacts—that is not currently the case for road transport.

That is one of the reasons why rail freight operators pay only a proportion of the track charges paid by franchised passenger operators. It is also one of the ways in which the Government have been seeking to level the playing field between road and rail. Moreover, it is worth bearing in mind that in control period 4, which covers the period from 2009 to 2014, rail freight benefited from a 29% reduction in its access charges.

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As I am now running out of time, I say again that I will write to the hon. Lady on the other points that I had wished to make in response to this debate. However, in conclusion I will just come back to the point that I made at the beginning. The ORR has made its proposals as part of a consultation exercise and it has received a large number of representations. As is the case with any consultation, the ORR will now consider the arguments that have been made in the representations that it has received, in order to review its proposals before it takes further steps.

I assure the hon. Lady that the ORR will give full consideration to all the representations it receives from a wide group of people—from hon. Members, the British Government, the Scottish Government and others—before it publishes its recommendations later this year.

Sir Alan Meale (in the Chair): I thank the Minister and hon. Members for their contributions to the debate. I particularly thank the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne), who secured the debate; I also wish her good health.

11.30 am

Sitting suspended.

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School Governors

[Mrs Anne Main in the Chair]

2.30 pm

Neil Carmichael (Stroud) (Con): It is a great pleasure and honour to serve under your chairmanship, Mrs Main. I also welcome the new Under-Secretary of State for Education, my hon. Friend the hon. Member for South West Norfolk (Elizabeth Truss). This might be her first performance as a Minister here—perhaps not. I am sure she will enjoy this one as much as she may have enjoyed the previous one. She has appeared before the Select Committee on Education and gave a fine performance. I am sure that we are in for a treat.

I asked for this debate because it concerns an important policy that should be deliberated. We need to think how we can adapt the role and recruitment of governors for the challenges ahead in the education system, which is still being reformed, quite rightly.

I want to thank all the governors who govern. We have nearly 300,000 possible governors; there are some vacancies at the moment. They meet regularly, often in relatively difficult circumstances, to deliberate on their schools and education policy. They must be thanked for all that they contribute to their communities and their schools. What I have to say about reforming governors and governance has nothing to do with the devotion of most governors to good practice and to the future of their individual schools.

Lord Hill of Oareford, one of the other Ministers in the Department for Education, said:

“The most important decision-making group in any school is the governing body… Governing bodies should set the overall strategic direction of a school, hold the head teacher to account and have a relentless focus on driving up standards but not get dragged into micromanaging the school or the minutiae of its day-to-day activities.”

Kevin Brennan (Cardiff West) (Lab): I congratulate the hon. Gentleman on securing the debate, and I echo his words on the efforts of school governors. What does he think of the Secretary of State for Education’s description of school governors in his speech last July? He described them as

“Local worthies who see being a governor as a badge of status, not a job of work”.

Neil Carmichael: Out of a total number of several hundred thousand governors, there are bound to be some who are not as good as others and some who are there for reasons not necessarily those that we would all expect or salute. As I said, we have to congratulate and thank all governors generally speaking but note that there are bound to be some who do not rise to the challenge.

I return to Lord Hill’s quotation because I shall address the debate in that spirit. I have been a governor—whether I am a local worthy is another matter—in total for about 20 years in various organisations, such as further education colleges and primary and secondary schools, so I do have some experience. I dealt with a difficult situation quite recently where governance had been judged inadequate and the future of the head

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teacher became an issue. I am no stranger to controversy in school governance, as well the more reasonable activities of a governor.

I managed to persuade the Education Committee to conduct a full-scale inquiry on school governance, and I see that a member of that Committee, my hon. Friend the Member for East Hampshire (Damian Hinds), is here. He will know that I was keen to do that, and I am pleased that we have an inquiry under way and that the first evidence session will take place in January.

I have also established an all-party group on school governance and leadership. The striking thing about that is that every time we have had a meeting we have had standing room only. There clearly is an appetite and interest in governance, governors and the policy around them. We have produced two publications: “Stronger Boards, Better Education” and “Who Governs the Governors?” We draw two significant conclusions from each of them. I will refer to the direction of travel in my remarks. The question of accountability is clearly at the core of who governs the governors. The question of skills versus stakeholders is clearly at the core of the quality of boards. I will set out those issues in more detail in due course.

As I have already said, there are a number of changes in the world of education, and the academies programme is clearly one of the most significant. It has significant implications for governance in several ways. I have referred to accountability, but the fact is that, as schools become more independent from local authorities, we should ask our governing system to fill the vacuum created. That is not an unfortunate vacuum—it is quite deliberate and quite right that schools are more independent and autonomous—but we must have a proper accountability system within schools.

Tristram Hunt (Stoke-on-Trent Central) (Lab): Might it not have been a good idea, rather than to have had the vacuum and then work out how to fill it, to build the capacity first, so that there was no vacuum to fill? Would that not be a more consistent and sensible way to make public policy?

Neil Carmichael: As I have already quoted Lord Hill’s view of governance and as the Education Act 2011 included reference to governance and talked about governors and the membership of governing bodies, that is on the agenda. I am simply saying that we need to think more about it now, but it has not been ignored. That is the key point. The context is the changing role of schools in terms of autonomy and accountability with implications for local authorities.

The next thing we should talk about is the role of Ofsted, which has a significant responsibility to check what governors are up to with regard to the performance of schools. The sad fact is that the chief inspector of schools, Michael Wilshaw, has said that 40% of governing bodies are satisfactory or inadequate. Therefore, 60% are doing a good job, but too many are not doing a good-enough job and some are doing a fairly poor job. We cannot have that because it is inconsistent with our objective of ensuring that all schools are good schools and, as part of that process, that governing bodies play their part.

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That brings me to the question of local authorities when schools start to fail. Are they acting quickly enough and do they take bold enough decisions? For example, do they introduce an interim executive board when necessary, or do they wait until it is too late? There is evidence that they do the latter. We need to test that out and be bold enough and courageous enough to admit it. I am pleased that the right hon. Member for Exeter (Mr Bradshaw) is nodding in agreement.

There is no defying the facts, which are that on occasion local authorities do not act swiftly enough. Interim executive boards are quite useful tools. The interesting thing is that when they are introduced they are swift at dealing with some of the problems that they encounter, largely because they have focused skills and are not stakeholder-oriented. They focus on how to make a school better. In my experience, putting in place interim executive boards has produced encouraging results. The kind of governing body that we should consider for all schools in the future should be more like an interim executive board and less like the kind of boards that we sometimes have, which are too big, too cumbersome and too focused on stakeholder situations.

Anne Marie Morris (Newton Abbot) (Con): The concept of a temporary executive board underlines the question of what exactly should be the role of the head teacher—we need clarity on this—which I had always thought to be executive, and the governing body, which I had always thought to be non-executive. In a sense, if we are talking about establishing an executive body, we must question whether the non-executive piece has done the right job. However, I am not sure whether we can equate the work of an executive temporary body with that of the governing body. I am interested to hear about the clarity that we will need between executive and non-executive bodies.

Neil Carmichael: That is an interesting question, but what I am trying to sketch out is the nature of the board itself. A board of 20 members and stakeholders, which effectively salutes the status quo and wants the status quo to be maintained, is a different thing from a smaller, more flexible and more responsive board that is charged with the task of improving the school. That is the distinction that I am trying to draw out, and we should have that in mind when we think about future governing bodies.

Dan Rogerson (North Cornwall) (LD): I congratulate the hon. Gentleman on securing this debate and on his work in the all-party group. It is encouraging that such issues are being discussed. I apologise, Mrs Main, that I will not be able to stay for the rest of the debate. We have a Minister appearing before the Environment, Food and Rural Affairs Committee, so I will have to disappear shortly.

On the potential conflict, or clash of ideas, between stakeholder and skills, does the hon. Gentleman not feel that it is possible to stick with some form of stakeholder model but look at how we can ensure that the balance of skills is there as well, so that we cover both perspectives?

Neil Carmichael: I thank the hon. Gentleman for his intervention. I hope that he will join the all-party parliamentary group, as we need to replace an officer who is leaving.

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Dan Rogerson: I have been contacted by Emma Knights from the National Governors Association, who has asked me to do that, and I have replied that I would be happy to do so. I might therefore see more of the hon. Gentleman in the future.

Neil Carmichael: I knew that the hon. Gentleman had been approached, which is why I felt at liberty to mention it and to encourage him to participate as vigorously as he obviously will. He is absolutely right about the stakeholder versus skills matter, but I believe that we need more skills and less emphasis on stakeholders. If we have too many stakeholders with vested interests, who are thinking about the status quo and not wanting to upset the apple cart, we are going down the route of not facing up to the big decisions. Governing bodies would be wiser to focus more on skills than on stakeholders, and that is the direction of travel that we should go in. The Government have already relaxed the rules about local authority governors, and we should go further and say, “Look, there is the emphasis on skills rather than the stakeholders.”

I have been the chairman of several governing bodies and a member of many, and I have seen stakeholders represent their groups and their communities extraordinarily well, but they do not necessarily ensure that the tough decisions are made in the school, and that is the distinction that I draw. I am grateful to the hon. Gentleman for putting the spotlight on that.

Rehman Chishti (Gillingham and Rainham) (Con): I congratulate my hon. Friend on securing this important debate. I agree with him about ensuring that governors who come on board have those skills, which they can use to hold the head teacher and the rest of the executive to account, but at the moment there are some 30,000 governor vacancies in the country. How do we go about filling them and ensuring that the people who are chosen have the right skills?

Neil Carmichael: That is a really good question, to which there are two answers. If you have everything corralled off into stakeholder groups, you are—are you not?—limiting the number of people who you can recruit. By definition, the pool is necessarily smaller. If you say that you must have parent governors or local authority governors—

Mrs Anne Main (in the Chair): Order. I have waited quite a while before saying anything, but may I now issue a gentle reminder to the hon. Gentleman? Quite a few hon. Members seem to be speaking directly to him rather than through the Chair. I have not had any input into this matter, so I advise the hon. Gentleman to direct his comments through the Chair.

Neil Carmichael: That is a really important point, Mrs Main. I am suitably chastened.

If a governing body is recruiting from a relatively small pool, it will, by definition, be harder to recruit. That is my first point. My second point is whether we need to have 20 people sitting around the table. Should we not be looking at smaller governing bodies?

Governing bodies should recruit people from outside the education field as well, because it is imperative that schools have a better relationship with businesses, thereby

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improving career opportunities for their pupils. Part of a governing body’s role is to provide an interface between the school and future employment and further and higher education.

Let me now focus on the role of the chairman and the need for them to be properly trained and, possibly, remunerated. If we want someone who is going to spend quality time with the head teacher and who is able and willing to challenge them and to support them when they are implementing necessary changes, we need someone who has the commitment, the appropriate professional skills and, if necessary, the reward. I want to put on the table now the idea that we should be remunerating people. This is not a new idea, and it has been advanced by others, not least the chief inspector at Ofsted, and we need to consider it very carefully.

Another element of the role of the chair is whether or not they have been formally assessed. We need to introduce a system in which assessment is rigorous. We do not want a few old friends gathering around for a cup of coffee, slapping one another on the back and saying, “Hey, you have done a really good job.”

The other key person in a governing body is the clerk, and they must be someone who is capable of taking notes, ensuring that meetings run properly and advising the governing body on its statutory responsibilities and any other legal implications of its actions. I have seen too many governing bodies struggle without such advice and make inappropriate and sometimes quite useless decisions.

An issue that I have already raised in relation to one of the reports is whether, when parents have lost confidence in the school governors, they should be able to dismiss the governors en masse. That would be a final accountability mechanism that was not necessarily used often, but which was an ultimate threat. Such a mechanism would ensure that governing bodies were mindful of the need to interface properly with the parent body.

Those issues are important with respect to the chair and other aspects. On the structure of governance, I want to focus on three areas. First, it would be sensible to think in terms of more federal structures for governing bodies. The evidence is—this certainly shows up in the academies programme—that where we have governing bodies looking after more than one school, the likelihood of outstanding schools being developed is much higher. That is a statistical fact and one that we need to note. However, it is also important that we bear it in mind that good schools can spread best practice to the schools that need to improve, and through a federal or a partnership model of governance, that might happen more often and more readily. It seems to me that that is a direction of travel that has already started with the academies programme, but it should be promoted.

Damian Hinds (East Hampshire) (Con): Does my hon. Friend think that with small rural schools, including primary schools, that sometimes have particular challenges in attracting sufficient governors, the model he described—a single governing body for multiple schools—could be especially important?

Neil Carmichael: I thank my hon. Friend for that very astute question, and the answer is an emphatic yes. I believe that smaller schools in rural areas would benefit

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from one good governing body running two or three schools, and we should also look at vertical models, by which I mean secondary schools with feeder schools and not just primary schools. To some extent, it is horses for courses, but we must put this idea on the agenda as a direction of travel to ensure that we get better governance for schools, including those that he mentioned.

Anne Marie Morris: I assume that in all this discussion my hon. Friend still recognises that there is a real value in the governors’ relationship with and understanding of the school. The point, probably, is to look at all the players and ensure that they all play their part appropriately, because it would be unfortunate if the governance structure became so dislocated that it became a form of Ofsted. I do not think that is what even my hon. Friend wishes to see.

Neil Carmichael: Absolutely, my hon. Friend is right. It is not wise to say that we will go in completely the opposite direction. There is a balance to be struck, which is that where there are neighbouring schools with common interests and common issues that would benefit from a federal or partnership model of governance, that model would be good and should be welcomed. However, where there is a school that clearly does not fit that description, that type of model would not work. It is up to governing bodies to think that matter through. I am simply saying that the federal or partnership model of governance is one that we should promote where it is useful and relevant.

The second aspect of structure that I want to talk about is size, which my hon. Friend the Member for East Hampshire touched on. In many cases, a governing body of 20 or more governors is simply unnecessary. Actually, such a body quite often ends up with just a core number of governors playing the decisive role, and once one of that core number goes the rest are bereft of the necessary skill and expertise, and the governing body can fall apart. That relates to the recruitment problem. As we have heard, about 30,000 governor posts are still vacant, so it would be wise to consider relaxing the rules on the size of governing bodies and having fewer, but more focused and more skills-orientated, governors on a governing body.

I have already talked about the importance of governors challenging head teachers. It is absolutely right that head teachers should be challenged, but they should be challenged constructively. However, it is also really important that we have governing bodies that govern strategically, focusing on the long-term interests of the school and its pupils. It is necessary to think in terms of formulating a governing body that genuinely has that capacity to be strategic—to think about the school plan and what it can do to push forward the aims and objectives of that plan, and any other plan that is appropriate. Those are three areas of structure that need to be considered.

Rehman Chishti: On the numbers, I hear my hon. Friend say that 20 governors is too many. Are we looking at around 10 or 12 as the appropriate figure, if those 10 or 12 governors have the skills and in-depth training to hold the head teacher and others to account?

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Neil Carmichael: In one of the publications that I referred to, the all-party group certainly came up with 12 as the ideal number. Having 12 governors means having a reasonably good chance of getting a good cross-section of skills, and there would also be a sensible way of dealing with succession planning, which also needs to be considered when we discuss governors and the future structure of governing bodies.

One thing that the all-party group has done is produce a list of 20 relevant questions for governors to ask themselves. We went through a fairly exhaustive process. We had lots of governors in one of the Committee Rooms of the House, talking about the questions that should be asked by governors. They are the questions that we want to encourage more governing bodies to ask of their head teachers and of themselves.

One of those questions is:

“Do we engage in good succession planning?”

Another is:

“Do we carry out a regular 360 review of the chair’s performance?”

Still another is:

“Does our strategic planning cycle drive the governing body’s activities and agenda setting?”

Obviously, there are loads of other questions, but formulating these questions—and, indeed, the other work of the all-party group—has been useful in sketching out ways in which governing bodies might like to consider testing themselves, because we need more rigorous self-assessment by governing bodies.

Members will be pleased to hear that I am nearly finished. I want to finish off by asking a few key questions that are relevant to this debate. The first is, how do we make school governors focus on school improvement, based on a proper understanding of data performance? That question is a combination of wanting to ensure that we have school governors who challenge the performance of the head teacher and who are able and willing to take tough and rigorous decisions, but who are also capable of understanding, analysing and drawing appropriate conclusions from the amazing amount of data and information that fly around.

I have already touched on the second question, but I will repeat it as a sort of finale: are the governing bodies that we have too unwieldy, how do we ensure that we move from a stakeholder situation towards a skills-based governing body, and can we enhance the professionalism of school governing bodies? I want to emphasise the idea of ensuring that the chairmen of governing bodies are properly trained, properly engaged by the head teacher—and vice versa—and remunerated in a way that is consistent with their responsibilities and with the skills that we need to recruit for such posts.

Rehman Chishti: Regarding skills and ability, local authorities such as mine set a minimum training requirement that governors have to do, linked to compulsory aspects of the overall training scheme. Does my hon. Friend agree that that type of training by certain local authorities, in partnership with governing bodies—for example, the partnership between my local authority and Medway governors—works well?

Neil Carmichael: Yes, I do. There are good examples of training schemes and the National Governors Association—a good organisation to which I pay tribute—

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also does a huge amount of good training work. However, we must ensure that governors and governing bodies recognise that there is a strong need for governors to be trained, because some governors seem to think that training is something that people do only if they are bored, not because it is necessary. We need to promote the training of governors.

We are engaged in a real set of reforms in the world of education, which is an opportunity to look at governors and governance in a way that reflects our understanding of the new autonomous and independent approach that schools should have, as well as the fact that we want to drive up standards, wherever it is necessary to do so. We want not to waste time, but to get on with things to ensure that we have the appropriate leadership, impetus and toolkits to deliver the job.

I am not being prescriptive. I am simply raising issues that should be on the agenda to inform our discussions on changes to school governance. We should at all times—this is an appeal to the Minister and her colleagues —mention governance, underline its importance, encourage people to become governors and recognise that school leadership through effective governance is what we need as part of the mechanism to ensure that our schools continue to improve.

3 pm

Mr Ben Bradshaw (Exeter) (Lab): Thank you, Mrs Main. May I preface my brief remarks by paying tribute to all our school governors? They do an incredible job, many of them in difficult circumstances. I can think of hardly any other role that anyone can play in our community that has more potential to help improve the life chances of our young people.

Two years ago, a friend of mine took over the chairmanship of a governing body in a difficult inner London primary school. He has spent most of his spare time in the past two years helping the head teacher to manage out under-performing staff. That school has transformed its performance in those two years, but it has not been a pleasant task. It has taken up a lot of time. He is not paid for it. He does it out of a sense of dedication and duty to the children in his community and their prospects.

I want to say a little about the importance of training for school governors, based on a recent story from my own constituency, which I have spoken to the Minister’s Secretary of State about on a number of occasions. One of my high schools in Exeter was on the brink of being given final approval for academy status, and it emerged that the head teacher at the school was paying himself more than the Prime Minister. He was employing his wife as his deputy, and some other family members were also employed at the school. What happened in the end, thanks to a freedom of information request from my local newspaper, was a call from me to the local authority to launch an inquiry. The local authority went into the school and carried out an inquiry—a thorough one. It recently reported and it was very shocking and damning.

I can summarise what went wrong at the school—I have had this experience before in schools that have gone wrong. There was a powerful—perhaps autocratic—head, who ran the school like a fiefdom and who had a rather cosy relationship with the chair of governors, who was, I think in this case, too weak. They basically

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made decisions together about the school—some of them against the rules, according to the report—and they froze out the rest of the governors.

I am not necessarily blaming the rest of the governors for their failure to ask more questions and to scrutinise more effectively. I think they could have done that, but one of the things that struck me when I looked into what went on at this school—I talked to not only the existing governors, but the staff, some of the new governors who have gone on to the governing body since the scandal broke, and some of the very good public servants at Devon county council who were responsible for supporting and training governors—was the lack of a requirement for governors to receive training.

I know that the Government and particularly the Minister do not like regulation. She does not want to ply schools with more responsibilities and duties. The Government are all about localism, autonomy and local decision making, but—I issue this warning in the gentlest possible way—with the Government’s policy driving towards more autonomy for schools, it is even more important that governors are properly trained because they will be assuming a much more significant role as a result of that autonomy. If a school comes under the umbrella of a local authority, at least the local authority still has a locus to intervene when something goes wrong, which is what happened in the case of the school in my constituency. If that school had already gone through the academy process and become an academy, the local authority would have had no means of intervention whatever. I am afraid it would have fallen to the Minister or her Secretary of State to intervene.

I suggest that the Minister and her Secretary of State are storing up all sorts of future potential problems for themselves by removing that level of local authority scrutiny. Given that that is the policy that they are set on and determined to implement, I urge her to at least consider the pleas from the very good public servants around the country who support governors and provide governor training. I urge her to listen to their appeals that the Government should consider making training for school governors mandatory. Since the scandal erupted, the school has invited the local authority trainers in. They are doing a great job. The governors are realising that there are lots of things they did not know about the job, but they do now.

At most schools in Devon the governors are given training, but there are others—most of them academies—that resent any interference and advice from the governor training bodies. Given that academies have no local democratic oversight, the only backstop is the Secretary of State, so it is more important than ever that governors are given the skills to do their job properly, exactly as the hon. Member for Stroud (Neil Carmichael) alluded to in his speech. If they are not given the skills, I predict that the Minister will see more scandals. There was another much worse scandal along similar lines in a school or schools in Lincoln. The Minister should seriously consider the impact of her policy and how important that makes it for governors to be properly trained.