25 Mar 2013 : Column 1429

(5) In sub-paragraph (1)(b) “outputs” has the meaning given by paragraph 148(9).

(6) For the purposes of sub-paragraph (1) it does not matter—

(a) if the quantity of the commodity is not the subject of an actual supply made to the operator of the station, or

(b) if the commodity’s availability for use in the station is subject to any condition.

(7) In this paragraph “CHPQA site”, in relation to a fully exempt combined heat and power station or a partly exempt combined heat and power station, means the site of the scheme in relation to which the station’s CHPQA certificate was issued.

24C (1) This paragraph applies if—

(a) a determination (“the initial determination”) is made under regulations falling within paragraph 24B(3) that—

(i) none of a quantity of a carbon price support rate commodity is, or

(ii) a proportion of such a quantity is not,

referable to the production of electricity,

(b) as a result of the initial determination, the quantity or proportion of a quantity is determined not to be the subject of a deemed supply under paragraph 24B, and

(c) it is later determined that, contrary to the initial determination, the quantity or proportion of a quantity—

(i) was referable to the production of electricity, and

(ii) accordingly, should have been determined to be the subject of a deemed supply under paragraph 24B.

(2) For the purposes of this Schedule—

(a) the operator of the station in question is deemed to make a taxable supply to himself of the quantity or proportion of a quantity, and

(b) the amount payable by way of levy on the deemed supply is the amount which would have been payable in relation to the quantity or proportion of a quantity had it been determined to be the subject of a deemed supply as mentioned in sub-paragraph (1)(c)(ii).

Power to make regulations giving effect to paragraphs 24A to 24C etc

24D (1) The Commissioners may by regulations make provision for giving effect to paragraphs 24A to 24C and 42A to 42D.

(2) Regulations under sub-paragraph (1) may, in particular, include provision—

(a) for determining whether a deemed supply under paragraph 24A or 24B is made;

(b) for determining the quantity of any commodity which is the subject of such a deemed supply;

(c) for determining whether paragraph 42C(2) applies in relation to a deemed supply under paragraph 24A or 24B and, if it does, the reduction in the relevant carbon price support rate.

(3) Regulations under sub-paragraph (1) may include—

(a) provision in respect of calculations, measurements, data and procedures to be made or used;

(b) provision that, so far as framed by reference to any document, is framed by reference to that document as from time to time in force.”

(19) After paragraph 38 insert—

“Deemed supplies under paragraph 24A, 24B, 24C or 42D

38A (1) A deemed supply under paragraph 24A or 24B is treated as taking place when the quantity of the commodity is brought onto, or arrives at, the site at which the station is situated or the CHPQA site of the station (as the case may be).

(2) A deemed supply under paragraph 24C or 42D is treated as taking place upon the later determination.”

(20) Paragraph 39 (regulations as to time of supply) is amended as follows.

25 Mar 2013 : Column 1430

(21) In sub-paragraph (1)(c) after “24” insert “, 24A, 24B, 24C, 42D”.

(22) In sub-paragraph (3) after “supply)” insert “and 38A”.

(23) In paragraph 42 (amount payable by way of levy) before sub-paragraph (2) insert—

“(1B) Sub-paragraph (1) does not apply to a deemed supply under paragraph 24A or 24B.”

(24) After paragraph 42 insert—

“42A (1) This paragraph applies to a deemed supply under paragraph 24A or 24B.

(2) The amount payable by way of levy on the deemed supply is the amount ascertained by applying the relevant carbon price support rate; and the levy payable on a fraction of a kilowatt hour, kilogram or gigajoule is that fraction of the levy payable on a kilowatt hour, kilogram or gigajoule.

(3) The carbon price support rates are as follows.

Carbon price support rate commodityCarbon price support rate

Any gas in a gaseous state that is of a kind supplied by a gas utility

£0.00091 per kilowatt hour

Any petroleum gas, or other gaseous hydrocarbon, in a liquid state

£0.01460 per kilogram

Any commodity falling within paragraph 3(1)(d) to (f)

£0.44264 per gigajoule

(4) Sub-paragraph (2) needs to be read with paragraphs 42B and 42C.

42B (1) This paragraph applies for the purposes of paragraph 42A(2) if the commodity deemed to be supplied is a quantity of a commodity falling within paragraph 3(1)(d) to (f).

(2) The number of gigajoules in the quantity supplied is to be determined by reference to the total gross calorific value of that quantity.

(3) Sub-paragraph (4) applies if there is included in that quantity any coal slurry taken from a slurry pit situated at the site of a coal mine (including a disused coal mine).

(4) The gross calorific value of the coal slurry is to be left out of account in determining the total gross calorific value of that quantity.

42C (1) Sub-paragraph (2) applies for the purposes of paragraph 42A(2) if, in the calendar year in which the deemed supply is treated as taking place, carbon capture and storage technology is operated in relation to carbon dioxide generated by the station in question in producing electricity.

(2) In relation to the deemed supply, only C% of the relevant carbon price support rate is to be applied (instead of the full rate).

(3) “C%” is 100% minus the station’s carbon capture percentage for the calendar year.

(4) The station’s “carbon capture percentage” for the calendar year is the percentage of the station’s generated carbon dioxide for that year which, through the operation of the carbon capture and storage technology, is—

(a) captured, and

(b) then disposed of by way of permanent storage.

(5) The station’s “generated carbon dioxide” for the calendar year is the amount of carbon dioxide generated in the year by the station from the use of carbon price support rate commodities in producing electricity.

(6) In this paragraph “carbon capture and storage technology” and “carbon dioxide” have the meaning given by section 7(3) and (4) of the Energy Act 2010.

(7) Sub-paragraph (8) applies for the purposes of sub-paragraph (4) in relation to any carbon dioxide if—

(a) the carbon dioxide is captured but then leaks out and therefore is not disposed of by way of permanent storage, but

(b) the leak does not occur—

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(i) on the land on which the station is situated,

(ii) on any other land under the control of the station’s owner or a person connected with the station’s owner, or

(iii) from any pipeline or other facility or installation which is operated by the station’s owner or a person connected with the station’s owner.

Section 1122 of the Corporation Tax Act 2010 (“connected” persons) applies for the purposes of paragraph (b).

(8) The carbon dioxide is to be treated as if it had been disposed of by way of permanent storage.

(9) If the percentage mentioned in sub-paragraph (4) is not a whole number, it is to be rounded to the nearest whole number (taking 0.5% as nearest to the next whole number).

42D (1) This paragraph applies if—

(a) an amount is determined to be payable by way of levy on a deemed supply of a quantity of a commodity under paragraph 24A or 24B, but

(b) it is later determined that that amount is too low.

(2) For the purposes of this Schedule—

(a) the person who made the deemed supply is deemed to make a further taxable supply to himself of the quantity of the commodity, and

(b) the amount payable by way of levy on that further deemed supply is—

(i) the total amount payable on the first deemed supply on the basis of the later determination mentioned in sub-paragraph (1)(b), less

(ii) the amount previously determined to be payable on the first deemed supply.”

(25) In paragraph 55 (notification of registrability) in sub-paragraph (1) after paragraph (a) insert—

“(aa) expects to be deemed to make a taxable supply to himself under paragraph 24A or 24B, or”.

(26) In paragraph 62 (tax credits) in sub-paragraph (1) after paragraph (b) insert—

“(ba) a quantity of a carbon price support rate commodity is the subject of a deemed supply under paragraph 24A or 24B but afterwards the quantity—

(i) is not used as mentioned in paragraph 24A(1)(b) or 24B(1)(b) (as the case may be), and

(ii) is removed from the site at which the station is situated or from the CHPQA site of the station (as the case may be);

(bb) after—

(i) a determination is made under regulations falling within paragraph 24B(3) that a quantity, or a proportion of a quantity, of a carbon price support rate commodity is referable to the production of electricity, and

(ii) it is accordingly determined that the quantity or proportion of a quantity is the subject of a deemed supply under paragraph 24B,

it is determined that the quantity or proportion of a quantity was not referable to the production of electricity;

(bc) after an amount is determined to be payable by way of levy on a deemed supply under paragraph 24A or 24B, it is determined that that amount is too high;”.

(27) In paragraph 146 (regulations) in sub-paragraph (3)—

(a) for “14(3),” substitute “5(2A), 14(2),”, and

(b) after “16,” insert “17(1B),”.

(28) In paragraph 147 (definitions)—

(a) at the appropriate places, insert—

““carbon price support rate commodity” means any taxable commodity other than electricity;”,

25 Mar 2013 : Column 1432

““CHPQA certificate” has the same meaning as in the Climate Change Levy (Combined Heat and Power Stations) Exemption Certificate Regulations 2001 (S.I. 2001/486);”,

““exempt unlicensed electricity supplier” has the meaning given by paragraph 152A;”,

““Great Britain” includes the territorial waters of the United Kingdom so far as adjacent to Great Britain;”,

““small generating station” has the meaning given by paragraph 152B;”, and

““stand-by generator” means a generating station which—

(a) is used to provide an emergency electricity supply to a building in the event of a failure of the building’s usual electricity supply, and

(b) is not used for any other purpose;”, and

(b) in the definition of “prescribed”—

(i) for “14(3),” substitute “5(2A), 14(2),”, and

(ii) after “16(3)” insert “, 17(1B)”.

(29) After paragraph 152 insert—

“Meaning of “exempt unlicensed electricity supplier”

152A (1) In this Schedule “exempt unlicensed electricity supplier” means a person—

(a) to whom an exemption from section 4(1)(c) of the Electricity Act 1989 (persons supplying electricity to premises) has been granted by an order under section 5 of that Act, or

(b) to whom an exemption from Article 8(1)(c) of the Electricity Supply (Northern Ireland) Order 1992 has been granted by an order under Article 9 of that Order,

except where the person is acting otherwise than for purposes connected with the carrying on of activities authorised by the exemption.

(2) Sub-paragraph (1) applies subject to—

(a) any direction under paragraph 151(1), and

(b) any regulations under paragraph 151(2).

Meaning of “small generating station”

152B (1) In this Schedule “small generating station” means a generating station the capacity of which for producing electricity is no more than 2 megawatts.

(2) Sub-paragraph (3) applies if a relevant station (“station X”) is one of a number of relevant stations which—

(a) are situated in the United Kingdom, and

(b) are owned by P or persons connected with P.

(3) In applying sub-paragraph (1) in relation to station X, the reference to the capacity of a generating station is to be read as a reference to the capacity of station X and all the other relevant stations mentioned in sub-paragraph (2) taken together.

(4) In sub-paragraphs (2) and (3) “relevant station” means a generating station which is neither an exempt CHP station nor a stand-by generator.

(5) For the purposes of sub-paragraph (2)(b)—

(a) “P” is the person who owns station X, and

(b) section 1122 of the Corporation Tax Act 2010 (“connected” persons) applies.

(6) Sub-paragraph (7) applies if the scheme in relation to which the CHPQA certificate of an exempt CHP station (“station Y”) is issued covers other exempt CHP stations as well.

(7) In applying sub-paragraph (1) in relation to station Y, the reference to the capacity of a generating station is to be read as a reference to the capacity of station Y and all the other exempt CHP stations mentioned in sub-paragraph (6) taken together.

(8) In this paragraph “exempt CHP station” means a fully exempt combined heat and power station or a partly exempt combined heat and power station.”

(30) Regulation 5 of the Climate Change Levy (Electricity and Gas) Regulations 2001 (S.I. 2001/1136) is amended as follows.

25 Mar 2013 : Column 1433

(31) In paragraph (1) for “paragraph 14(2) of the Act (exemption: certain supplies to electricity producers)” substitute “paragraphs 5(2A), 14(2) and 17(1B) of the Act (which contain references to exempt unlicensed electricity suppliers)”.

(32) In paragraph (2)(a) for “14(4)” substitute “152A(1)”.

(33) The amendments made by paragraphs (30) to (32) are to be treated as having been made by the Treasury under the powers to make regulations conferred by paragraphs 5(2A), 14(2) and 17(1B) of Schedule 6 to the Finance Act 2000.

(34) The amendments made by paragraphs (2) to (32) come into force on 26 March 2013.

(35) The amendments made by paragraphs (8) and (9) have effect for the purpose of determining if a supply of gas or electricity is exempt from levy where the gas or electricity is actually supplied on or after 1 April 2013.

“Gas” means gas in a gaseous state that is of a kind supplied by a gas utility.

(36) Those amendments are to have effect for the purpose of determining if any other supply is exempt from levy where the supply is treated as taking place on or after 1 April 2013.

(37) The amendments made by paragraphs (13) to (16) have effect for the purpose of determining if a supply of electricity is exempt from levy where the electricity is caused to be consumed on or after 1 April 2013.

(38) The amendment made by paragraph (18) has effect in relation to carbon price support rate commodities which are brought onto, or arrive at, sites on or after 1 April 2013.

And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

64. Bank levy (rates)

Resolved,

That provision (including provision having retrospective effect) may be made about bank levy rates.

65. Tax deductions for the bank levy and foreign bank levies

Resolved,

That provision (including provision having retrospective effect) may be made preventing deductions in respect of the bank levy and foreign bank levies when calculating liability to income tax or corporation tax.

66. General anti-abuse rule

Resolved,

That provision may be made for the purposes of counteracting tax advantages arising from tax arrangements that are abusive.

67. Trusts with vulnerable beneficiary

Resolved,

That provision may be made about trusts which have a vulnerable beneficiary.

68. Unauthorised unit trusts

Resolved,

That provision may be made about the trustees or unit holders of unit trust schemes which are not authorised unit trusts.

69. Residence and ordinary residence

Resolved,

That provision may be made—

25 Mar 2013 : Column 1434

(a) establishing a statutory residence test to determine whether individuals are UK resident for the purposes of income tax, capital gains tax and (where relevant) inheritance tax and corporation tax,

(b) imposing charges to income tax and capital gains tax on those who are temporarily non-resident, and

(c) removing or replacing rules relating to ordinary residence.

70. Overpayment relief

Resolved,

That provision may be made in connection with claims in respect of overpaid tax and excessive assessments.

71. Relief from tax (incidental and consequential charges)

Resolved,

That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) that may arise from provisions designed in general to afford relief from taxation.

PROCEDURE (FUTURE TAXATION)

Resolved,

That, notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills, any Finance Bill of the present Session may contain provision for the financial year 2015 for the rate of corporation tax on profits of companies, other than ring fence profits (within the meaning of section 276 of the Corporation Tax Act 2010), to be 20%.

PROCEDURE (FUTURE TAXATION)

Resolved,

That, notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills, any Finance Bill of the present Session may contain the following provisions taking effect in a future year—

(a) provision for corporation tax to be charged for the financial year 2014,

(b) provision about taxable benefits in respect of cars,

(c) provision about the standard lifetime allowance under Part 4 of the Finance Act 2004,

(d) provision about the annual allowance under that Part,

(e) provision about the standard rate of landfill tax,

(f) provision about the rates of climate change levy, and

(g) provision for and in connection with penalties for late filing, late payment and errors.

PROCEDURE (R&D EXPENDITURE CREDITS)

Resolved,

That, notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills, any Finance Bill of the present Session may contain provision for and in connection with the payment of credits to companies in respect of expenditure on research and development.

PROCEDURE (TELEVISION TAX CREDITS)

Resolved,

That, notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills, any Finance Bill of the present Session may contain

25 Mar 2013 : Column 1435

provision for tax credits to be paid to television production companies in respect of expenditure on television production activities.

PROCEDURE (VIDEO GAME TAX CREDITS)

Resolved,

That, notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills, any Finance Bill of the present Session may contain provision for tax credits to be paid to video game development companies in respect of expenditure on video game development activities.

PROCEDURE (DECOMMISSIONING RELIEF AGREEMENTS)

Resolved,

That, notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills, any Finance Bill of the present Session may contain provision authorising the payment out of money provided by Parliament of sums payable by the Treasury or a Minister of the Crown to a company in connection with the amount of tax relief obtained in respect of decommissioning expenditure incurred by it.

PROCEDURE (INTERNATIONAL AGREEMENTS TO IMPROVE TAX COMPLIANCE)

Resolved,

That, notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills, any Finance Bill of the present Session may make provision for the purposes of enabling effect to be given to international agreements relating to international tax compliance which are entered into by the Government of the United Kingdom.

PROCEDURE (PENALTY INSTEAD OF FORFEITURE OF LARGER SHIPS)

Resolved,

That, notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills, any Finance Bill of the present Session may contain provision about the imposition of penalties instead of forfeiture of larger ships for or in connection with offences under any enactment relating to customs or excise.

FINANCE (MONEY)

Queen’s recommendation signified.

Resolved,

That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise the payment out of money provided by Parliament of—

(a) sums incurred by the Commissioners for Her Majesty's Revenue and Customs in respect of the payment of credits to companies in respect of expenditure on research and development,

(b) sums payable by the Treasury or a Minister of the Crown to a company in connection with the amount of tax relief obtained in respect of decommissioning expenditure incurred by it, and

(c) sums payable by the Secretary of State by virtue of any provisions of the Act relating to vehicle excise and registration.

Ordered,

That a Bill be brought in upon the foregoing Resolutions;

That the Chairman of Ways and Means, The Prime Minister, The Deputy Prime Minister, Mr Chancellor of the Exchequer, Secretary Vince Cable, Secretary Iain

25 Mar 2013 : Column 1436

Duncan Smith, Secretary Eric Pickles, Danny Alexander, Greg Clark, Mr David Gauke and Sajid Javid bring in the Bill.

Finance (No. 2) Bill

Presentation and First Reading

Mr David Gauke accordingly presented a Bill to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 154).

Business without Debate

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Consumer Protection

That the draft Enterprise Act 2002 (Part 8 Domestic Infringements) Order 2013, which was laid before this House on 19 December 2012, be approved.—(Mr Evennett.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Constitutional Law

That the draft Scotland Act 2012 (Consequential Provisions) Order 2013, which was laid before this House on 10 January, be approved.—(Mr Evennett.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

International Immunities and Privileges

That the draft Global Growth Institute (Legal Capacities) Order 2013, which was laid before this House on 29 January, be approved. —(Mr Evennett.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Community Infrastructure Levy

That the draft Community Infrastructure Levy (Amendment) Regulations 2013, which were laid before this House on 14 February, be approved.—(Mr Evennett.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Town and Country Planning

That the draft Neighbourhood Planning (Referendums) (Amendment) Regulations 2013, which were laid before this House on 25 February, be approved.—(Mr Evennett.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

25 Mar 2013 : Column 1437

Church of England (General Synod) (Measures)

That the Clergy Discipline (Amendment) Measure (HC 1021), passed by the General Synod of the Church of England, which was laid before this House on 28 February, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.—(Sir Tony Baldry.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

That the Diocese in Europe Measure (HC 1020), passed by the General Synod of the Church of England, which was laid before this House on 28 February, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.—(Sir Tony Baldry.)

Question agreed to.

Business of the House

Ordered,

That, in respect of the Finance (No. 2) Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—(Mr Evennett.)

Parliamentary Privilege (Joint Committee)

Resolved,

That, notwithstanding the Resolution of this House of 3 December 2012, it be an instruction to the Joint Committee on Parliamentary Privilege that it should report by 28 June 2013. —(Mr Lansley.)

Administration

Ordered,

That Graham Evans be discharged from the Administration Committee and Nicholas Soames be added.—(Geoffrey Clifton-Brown, on behalf of the Committee of Selection.)

Petitions

Closure of Burnage Library (Manchester)

10.57 pm

Mr John Leech (Manchester, Withington) (LD): I rise to support and submit a petition on behalf of more than 2,500 Manchester residents opposed to the Labour council’s plans to close Burnage library in my constituency.

The petition states:

The Petition of a resident of the UK,

Declares that Manchester City Council has proposed to close Burnage Library; further that local residents are opposed to this decision and that the council should reverse its plans.

The Petitioner therefore requests that the House of Commons urges Manchester City Council to reverse its plans to close Burnage Library.

And the Petitioner remains, etc.

[P001168]

VAT on Toasted Sandwiches

10.58 pm

Mr Leech: I rise a second time to support and submit the “Toast the Tax” petition, on behalf of the tens of thousands of employees and customers of Subway—I suppose I ought to declare an interest, as someone who occasionally purchases stuff from Subway. The petitioners

25 Mar 2013 : Column 1438

are not asking the Government to revive plans for a pasty tax; they are simply asking for sandwich shop owners to be treated fairly.

The petition states:

The Petition of employees and customers of Subway,

Declares that VAT is being charged on toasted subs and sandwiches, further that as a result, the sandwich shop industry, which employs tens of thousands of hard-working people and supports thousands of small businesses, is now being placed under threat and that sandwich shop owners should be treated fairly.

The Petitioners therefore request that the House of Commons urges the Government to maintain its recent U-turn on pasties and additionally to remove or reduce the tax across the board, in line with our European neighbours.

And the Petitioners remain, etc.

[P001167]

Human Rights in India

10.59 pm

Chris Williamson (Derby North) (Lab): I was recently presented with a petition signed by some 2,000 residents of Derby—part of a wider petition numbering some 120,000 around the country—who are concerned about the lifting of the moratorium on the death penalty in India:

The Petition of residents of the United Kingdom,

Declares that the Petitioners believe that the UK Government, together with the UN and EU, should encourage the Indian Union to take immediate action to stop human rights abuses facing minorities in India and that India should sign and ratify the Rome Statute of the International Criminal Court and the UN Charter against torture and other cruel, inhumane or degrading treatment or punishment which encompasses the death penalty and thus India should abolish the death penalty as it is a cruel, inhumane or degrading form of punishment; further declares that the UK Government should campaign to stop Balwant Singh Rajoana’s death sentence and have him released from jail as he has served 17 years in custody and that the Indian Union should release all prisoners facing the same situation and those who have been imprisoned without trial.

The Petitioners therefore request that the House of Commons urges the Government to appeal to India for the above actions to be taken, and request that the Government bring these issues to light in the European Union and United Nations.

And the Petitioners remain, etc.

[P001169]

Changes to Welfare in Hartlepool

11.1 pm

Mr Iain Wright (Hartlepool) (Lab): I rise to present a petition from my constituency, initiated by the Manor Residents Association and signed by more than 1,000 people from Hartlepool who are concerned about the Government’s welfare reform policy in general and the introduction of the bedroom tax in particular.

The petition reads:

The Petition of residents of Hartlepool,

Declares that the Petitioners support the Manor Residents Association in their protest against Government legislation in the Welfare Reform Act 2012 which will result in a further stealth tax on residents and families who are already reeling from the effect of Government austerity measures; further that the Petitioners believe that the “bedroom tax”, introduced as part of the Welfare Reform Act 2012, will have a major impact on the health and well being of those who are most vulnerable and least well off in our

25 Mar 2013 : Column 1439

communities; further that this legislation ignores the needs of social housing tenants by introducing a tax designed to reduce Central Government expenditure; further that the Petitioners believe that the assertion that the legislation will encourage greater mobility within the rented sector and make better use of available housing stock flies in the face of common sense as there are already significant waiting lists for social housing in our towns and cities and that the notion that this legislation will enable families to come off benefits by downsizing is nonsensical when the reality is that families will be no better off than they are currently; further that, for many individuals on benefits, this will result in significant hardship, that stark choices such as feeding a family or keeping a roof over their heads will need to be made and that there will be an increase of homelessness amongst the most vulnerable in society.

The Petitioners therefore request that the House of Commons urges the Government to remove the “bedroom tax” on families.

And the Petitioners remain, etc.

[P001170]

25 Mar 2013 : Column 1440

Energy Intensive Industries

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

11.4 pm

Andy Sawford (Corby) (Lab/Co-op): I had not anticipated this number of Members attending the debate at this late hour. I am delighted to see them, as it shows the level of interest in this subject. Many other Members have raised the same issues, and there were some welcome announcements in the Budget last week, but I hope to press for more detail and more information on how this issue will impact on my particular constituency. If I am not able to take all the interventions that Members wish to make, I am sure they will understand.

Corby is a town built on steel: the steelworks and the tubeworks. In 1980 thousands of men were put on the dole, including my own dad, when Corby stopped making steel, but the tubeworks continued, and my granddad worked in the stores there. Today it is still incredibly important to our local economy. Six hundred and fifty people work there. These are good jobs that pay well, and in which people learn great skills. This year, Tata took on 13 apprentices at Corby. It dispatched 250 kilotons of tubes, and exported 40% of the product around the world. It contributes more widely to our local economy. I am told that there is a multiplier effect.

Sarah Champion (Rotherham) (Lab): As my hon. Friend knows, Tata Steel in Rotherham employs more than 2,000 people, and the effect that they have on the economy is considerable. That is why I think that the Government should introduce practical measures to support the industry.

Andy Sawford: My hon. Friend is right, and I know that she will continue to champion the steel industry in Rotherham. Steel is, of course, incredibly important to many communities around the country. I am particularly proud of Corby’s steel tubes, which can be found in Wembley stadium, in the Olympic park and in the millennium wheel. The red tubes can be found in buildings across the country.

I am pleased that, since becoming a Member of Parliament, I have been able to be active in the all-party parliamentary group for the steel and metal-related industry, which is chaired by my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) and supported by many other Members. I have also been involved with the trade unions, particularly Community but also Unite. Together, we are concerned about the impact of rising energy prices, both because of rising wholesale prices generally and because of European Union and United Kingdom Government policies, especially those that rightly seek to reduce carbon output but, in my view, have wrongly had an impact on a set of vital industries which we need as a nation, and which are part of our sustainable future.

I am not talking just about steel. We have world-class energy-intensive companies that make a huge contribution to our employment, tax revenues and exports. The Environmental Audit Committee estimates that energy-intensive industries account for 4% of gross value added, and employ 125,000 people in the United Kingdom. Concern is shared by a number of industries. The hon.

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Member for Rugby (Mark Pawsey) has expressed concern to me about the cement industry, and companies such as INEOS Chlor which are part of the Energy Intensive Users Group have given me helpful briefings.

Last week the ceramics industry was very much in the public eye when the Chancellor made announcements about it in his Budget statement. In my constituency, Morgan Technical Ceramics employs 200 people. It makes an incredible variety of products which are exported to more than 100 countries, but in the process it uses large amounts of gas, as do all ceramics manufacturers.

Three areas of climate policy are having a particular impact on industrial energy prices: tax, carbon prices and renewable subsidies. Of course, those apply in other European countries, but the United Kingdom Government have not listened to the calls from energy-intensive industries in the UK for help of the kind that the German and French Governments give their industries. That has two effects. First, it makes it very difficult for our companies to compete now, and secondly, when it comes to investment decisions and securing the long-term future of these industries, the global companies of which they are part are increasingly opting to move elsewhere. Morgan Ceramics, for example, tells me that it recently moved 300 jobs from the UK to France.

We have an urgent problem. Climate policies have added about 21% to current electricity prices, and the Energy Intensive Users Group estimates that the figure will rise to 58% by 2020. New extra climate-related taxes are likely to exceed current profits for many of our energy-intensive companies within the next few years, which means that their viability is in question in the medium term. Let me give two figures that illustrate the problem. The wholesale price of electricity in Germany in 2014 is forecast to be €40 per MWh, while the price in the UK is forecast to be €60 per MWh—and that is before taxes have been taken into account. That should be contrasted with the help that is being offered by Governments. The UK Government have provided a £250 million mitigation package to protect industry from the cost of the carbon prices floor and the EU emissions trading scheme. Of course, that mitigation is welcome, but the German Government are offering €5 billion in energy tax rebates to their energy-intensive industries, so we can immediately see that the concerns about a level playing field are very real.

Nic Dakin (Scunthorpe) (Lab): I congratulate my hon. Friend on securing this debate. In addition to that disadvantage, is there not also a lack of clarity about how much money will be available to support energy-intensive industries, and when? That certainty is needed to secure jobs into the future, as has been mentioned.

Andy Sawford: My hon. Friend is absolutely right. Like him, I am concerned about the lack of clarity, and particularly the time it has taken the Government to sort out the compensation package.

Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): My hon. Friend is being extremely generous in giving way, and it is fantastic that he has been able to secure this debate. Was he, like me, concerned to hear the Secretary of State for Business, Innovation and Skills admit to the Welsh Affairs Committee in January that the package was very slow in coming? He was

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almost admitting to a failure of his Department. Does my hon. Friend agree that the Business Secretary needs to do a lot more to push that along?

Andy Sawford: I was conflicted in preparing for this debate because, as so often with these things, the Ministers who are called to respond to the pressure we put on the Government are the very people who are listening and seeking to help. The Business Secretary has indeed acknowledged that progress has been slow. I was told in a ministerial reply on 25 February that the Government are analysing the responses to their consultation on the mitigation package, and are exploring the issue further. I hope the Minister will understand when I say that, given the vital importance of these industries, which employ 125,000 people, this uncertainty is not good enough and we need to hear the detail soon. I hope he can say when the Government will tell us how the mitigation package will work and explain the details.

The overall level of compensation is not adequate—neither the scale of financial compensation nor the duration of the scheme, which covers only the current spending review period. The Chancellor announced in last week’s Budget that there will be further support in the next spending round, which is welcome. However, on the long-term investment decisions, the scale and duration of support during the next spending round has not been made clear. Can the Minister give us further details today?

The Budget proposes a one-year extension to the current mitigation package, taking us through to 2015-16. Does that mean stretching the existing £250 million further, involving a thinner spread of money across the period, or will there be additional money? That was not made clear in the Red Book.

The announcement in the Budget of a 100% exemption from the climate change levy is good, and I am sure the Minister will remind us of that, but we must remember that it was already at 90%. The Chancellor made much of the specific exemption for the ceramics industry, which did not previously qualify for mitigation. That has been hugely welcomed and we should welcome it tonight. I pay particular tribute to my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt) for his campaign, in which I know other Members are involved. I hope the Minister will not mind me describing the situation in these terms, but all those measures put together look like a sticking plaster. He must acknowledge that our energy-intensive industries have a long-term problem, certainly a long-term challenge.

To secure the future of France’s energy-intensive industries, the French Government brokered the Exeltium deal, through which energy-intensives have signed long-term power supply deals for low-carbon energy. That is the kind of measure we need in the UK.

Ofgem has already raised concerns about a 2015 electricity supply crunch. We know there is a lack of gas reserves stored in this country, and gas prices are highly volatile. Last Friday, the Bacton interconnector failed for several hours. Prices opened at £1.25 per therm and rose to £1.50 during the day, which shows the huge volatility within the industry. The ceramics industry is concerned that it could be the first in line if there are gas shortages. If production has to be turned off with two hours’ notice, which is a risk, given the uncertainty of supply, that could seriously damage the kilns. In the

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long-term we need more storage and the requirement to use it through a public service obligation, as is common in other European countries, to ensure energy security and reduce price volatility.

I have spoken about the importance of our energy-intensive industries, and how vital they are to my constituency and many others around the country, so I urge the Minister to maintain an ongoing dialogue between the Government, industry and the trade unions, which have played a helpful role. Will he commit to visit my constituency to meet Tata, with me and work force representatives, and to visit Morgan Technical Ceramics so that we can discuss the issues for that industry in more detail?

Nia Griffith (Llanelli) (Lab): Does my hon. Friend recognise that many energy-intensive industries are keen to make significant investment, which will result in energy efficiency, but are hampered because the enhanced capital allowance system is not broad enough to encompass much of that investment and a lot of it is not eligible? Will he therefore join me in calling on the Government to re-examine this area to see whether they could expand the scope of enhanced capital allowances?

Andy Sawford: My hon. Friend makes an incredibly important point. I have received a great deal of helpful briefing from industries on how they hope to secure their industry for the long term, and I hope we will hear from the Minister about the enhanced capital allowances. If he would commit to visit my constituency, that would be incredibly welcome. I ask him to provide much more detail on the various measures that have been announced and how we might go further, so that when companies look at their operations in this country, as Tata regularly does, they can be confident that they will be able to operate in a viable way in the future because of the policies that we have advocated and that the Minister has acknowledged.

11.16 pm

The Minister of State, Department of Energy and Climate Change (Gregory Barker): I congratulate the hon. Member for Corby (Andy Sawford) on securing this important debate. Without, in any way, wishing to sound patronising, may I say that that was a very good speech, and for someone who has been in the House for only a few months, It certainly augurs well for his career.

Let me say at the outset that I would be delighted to visit Corby. I think there had been an invitation from his distinguished predecessor but it fell with the by-election. I would be happy to visit Corby, not least as the Minister with responsibility in the Department of Energy and Climate Change, but also, wearing my other hat in government, as the Minister for business engagement with India. I am a huge admirer of the extraordinary achievements of the Tata group. I regularly meet its people, from both the steel part and the other parts of the company, but I have not yet had the opportunity to visit the Corby steel plant, so I would be happy to explore how I can find a date to do so.

I welcome this debate, not least because our energy-intensive industries make an important contribution to the UK economy and it is vital to keep them competitive.

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These industries are also vital to regional economies, particularly because, as the hon. Gentleman pointed out, not only do they support jobs—good, well-paying, satisfying jobs that people can build careers on—but their products are important in the transition to a low-carbon economy. Some people might think it strange that, as the Minister with responsibility for tackling climate change, I have made a point of making the case for recognising the contribution that energy-intensive industries make to our economy and urging that they get special treatment, but I see no contradiction in that at all. I have made it clear since coming into this job in 2010 that we take the challenge of decarbonising the economy very seriously and are determined to deliver our commitments, in line with the Climate Change Act 2008, which was passed under the previous Government. However, we are equally clear that decarbonisation must not mean de-industrialisation. On the contrary, if we are going to build the low-carbon infrastructure—the renewable energy assets—that we need in the UK, we will need to bring forth a new age of engineering. There are huge opportunities, in not only steel, but a range of sectors that are necessarily energy-intensive. There are huge opportunities to become more energy-efficient, to drive innovation and to become more competitive, but these industries cannot subvert the laws of physics. There is only so much that many of them can do.

I was told when I first came into the job that those industries were not suffering in quite the way they suggested and that the playing field with Europe was not so uneven, but I was continually lobbied by a number of industries, not least the ceramics industry, which does a very good job, and decided that I would only get to the bottom of it if I went to Germany myself. It is no coincidence that Germany, which over the past decade has seen a massive increase in its share of the global market for manufactured goods, particularly those from advanced manufacturing, saw at the same time a massive deployment—probably the largest single deployment in Europe—of renewable energy. The two have gone neatly hand in hand, and Germany has managed much more effectively than we have to ensure a better balance of policy, supporting the deployment of renewables with the necessary subsidy to drive those nascent industries to cost competitiveness with their fossil fuel equivalents while being sufficiently differentiating in its approach to protect energy-intensive industries.

There is a fundamental difference, however. In Germany, as I found out, the burden of policy falls overwhelmingly on the consumer, not on industry. The balance is completely different from that in the UK. The hon. Gentleman rightly pointed out that €5 billion supports the energy-intensive industries in Germany, but replicating that model in full here would entail a considerable rise in consumer bills and I am sure that he would not advocate that.

We are constrained, particularly in light of the deficit we inherited and the absolute imperative of bringing down the national debt, but we are determined to be as flexible as possible. That is why when I came back from Germany—I went there with a number of major energy-intensive companies, visited the plants and spoke to German policy makers—I lobbied hard within Government to make the case for greater differentiation for the energy-intensives. That, along with the efforts of other colleagues, resulted in the £250 million package.

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This is a coalition Government who understand the imperative of supporting appropriately our energy-intensive industries, but I do not pretend that £250 million is the last word or is even enough in the longer term. The fact is that if we are to support our energy-intensive industries and watch those manufacturers grow, they will require more support. I have made it very clear that the £250 million is the first step in a longer term programme of support recognising the need for greater fiscal differentiation, but it must be aligned with our deficit reduction programme.

I cannot tell the hon. Gentleman the details from the Dispatch Box this evening, but I can reassure him that we will shortly announce the outcome of the BIS-led consultation on the £250 million package. That will include the technical details, including the emissions factors that he was seeking. We must also still obtain state-aid clearance from the EU for the carbon floor price consultation. In addition to that and the EU emissions trading scheme, we are seeking permission from the EU to begin to put the building blocks in place for a more German-style approach to the architecture. Following the consultation with stakeholders, which closed in December, we have been analysing responses to ensure that compensation is targeted at those industries that are most at risk of carbon leakage, subject to final state-aid approval. As I have said, we will publish those results shortly. As set out in the Energy Bill, we will introduce an exemption for energy-intensive industries from the costs of contracts for difference under electricity market reform, again subject to consultation and state-aid clearance.

In the Budget the Chancellor was able to go further and to take another step towards building a more differentiated package, with the announcement of an exemption for mineralogical and metallurgical processes from the climate change levy—the ceramics sector. That is allowed for under the energy taxation directive.

Jeremy Lefroy (Stafford) (Con): In Staffordshire, the news in last week’s Budget was received with great joy. The hon. Member for Stoke-on-Trent Central (Tristram Hunt), my hon. Friend the Member for Stone (Mr Cash) and many others have been fighting for the measure, but it was great news and well received.

Gregory Barker: I am glad to hear it. My hon. Friend’s representations played a part in the decision, but he is absolutely right; a number of hon. Members made the case. I have been to Stoke to see factories there and the challenges they face.

The measure will mitigate any competitive disadvantage that the UK mineralogical and metallurgical sectors face. It will help them to move to a more level playing field with their EU competitors. It also supports the Government’s growth agenda and our commitment to ensuring that manufacturing remains competitive during the shift to a low-carbon economy.

Industrial energy efficiency has a strong role to play. We cannot defy the laws of physics, but industrial energy efficiency represents a huge opportunity for UK plc to improve its international competitiveness. It is good for growth and competitiveness, and it drives our energy security. It is also key to managing costs and building margin growth. The Government are supporting industry to implement energy-efficiency measures that will help to reduce the impact of rising energy prices on industry.

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We recently published our energy-efficiency strategy, which sets out our commitment to seizing the energy-efficiency opportunity, accelerating the deployment of 21st-century energy-saving measures. We will do that by connecting energy-efficiency knowledge and technologies to finance, seeking strong returns; supporting energy-efficiency innovation; harnessing the power of improved energy-use information, driving its availability and disclosure; and encouraging collective action on this new and better information.

We recognise the need to minimise regulatory impacts on industry. We have taken steps to simplify our key schemes on energy efficiency and carbon reduction. We have taken measures to simplify climate change agreements, the carbon reduction commitment and the EU emissions trading scheme to remove overlaps and reduce administrative burdens. Actions we have taken include consulting on and simplifying climate change agreements and introducing an opt-out for the EU emissions trading scheme for small emitters and hospitals. We have consulted on a process for the simplification of the CRC and on new regulations to implement the EU emissions trading scheme in the UK from this year.

Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): The Minister is listing the many causes the Government are taking up on behalf of energy-intensive industries, but is there not a distinct lack of industrial activism? We are looking at significant structural contracts in Scotland and in Merseyside, but the British steel industry is losing out. In my area, we recently saw the loss of a potential carbon capture and storage project for Wilton, which would have added at least 30 years to existing infrastructure in the chemical industry there.

Gregory Barker: The hon. Gentleman is right to a certain extent. There are big challenges and we cannot turn around a supertanker in a short time. We have seen a consistent decline in manufacturing capacity in the past decade, and before then, but we are beginning to see a rebalancing of our economy. In the renewables sector, a great deal more of the equipment required, for example, for the massive expansion of offshore wind, has begun to be fabricated and manufactured in the UK, particularly along the east coast.

Tom Blenkinsop: I am grateful to the Minister for giving way again. On the issue of offshore wind, recently at Redcar contracts were promised with Tata Steel to provide the base structures and with TAG Energy Solutions in Billingham to provide the monopiles, but both lost out to foreign competitors. What are the Government doing proactively with industry to roll up their sleeves and get involved so that industry can win those contracts?

Gregory Barker: I can tell the hon. Gentleman that he is wrong about TAG; it has won a significant order, which was secured after a personal intervention by the Minister at the Dispatch Box. I spoke directly to the board in Germany, and intervened actively on industrial policy. I am therefore glad that he raised that issue, as TAG has a big manufacturing future ahead of it.

We accept that large energy-intensive industries in Europe benefit from tax rebates and other exemptions, which means that their prices are significantly lower than the average for their country. However, it is important

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to remember that many of the exemptions applied to those industries have distributional impacts. If industry does not pay them, other electricity consumers need to pay more. As the Minister responsible for fuel poverty, I have to bear in mind those distributional impacts and fairness for those who pick up the bill.

May I say something briefly about gas security, which is topical, particularly given what has appeared in the newspapers over the weekend and the cold snap that we are suffering? We are aware of industry concerns about current high gas prices and low storage stocks, but while high prices in a spike are uncomfortable, they are a sign that our market is working and that we are attracting the gas that we need through a diverse range of infrastructure. Price volatility is not something that we can completely remove, and nor should we seek to do so, from our market. It is the key mechanism that enables our market to balance efficiently at the lowest cost to consumers, and it incentivises investment in new infrastructure such as storage.

Our market is resilient to global events, and has spare import capacity built in. However, we take gas security and the risk of harmful gas spikes seriously, and we are

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determined to do more. We are working with Ofgem to review our market arrangements, to ensure that they continue to provide secure supplies to consumers at a fair price. At the same time, we are diversifying our energy mix to reduce our dependence on imported fossil fuels, and have put in place robust policies to cut energy demand.

In conclusion, I very much welcome this debate on energy-intensive industries. I commend the hon. Member for Corby on making a compelling case. He is right to hold the Government to account on this issue, but I can assure him that we take it absolutely seriously. We are determined to do more within the context of the difficult economic and fiscal situation that we inherited, but we recognise the benefits of acting now to ensure that we maintain these industries at the same time that we build a secure low-carbon future. Those policies are designed to deliver efficient, low-carbon, secure and affordable energy supplies.

Question put and agreed to.

11.33 pm

House adjourned.