6.17 pm
Mr Mark Spencer (Sherwood) (Con): I am delighted to have the opportunity to speak in this debate, which is very important for my constituents. When the energy bills land on their doormats, the impact on their household budgets is enormous. All Members will therefore recognise how high up the agenda this subject has to be.
We should take a moment to look at how we got into this position. GCSE economics tells us that demand and supply drive prices. If there is low supply and high demand, prices inevitably go up, and electricity prices have been rising by more than inflation for a long time now. That is because we as a nation have not addressed our electricity supply. We did not go to the trouble of building power stations when we should have done, but we cannot build a power station overnight. It takes a long time to get it through the planning process and to put the funding in place, and that process should have begun under the last Labour Government. We should now have been turning on nuclear power stations that could supply the base load to keep the lights on in this nation. We are having to pick up that difficult position and try to deal with it.
At the same time that was happening, our coal-fired power stations have been going downhill. They have not been upgraded and repaired. We are therefore now in a situation in which the renewables sector is not growing fast enough, the nuclear power stations have not been built, and our coal-fired power stations are about to come to the end of their natural life. Dealing with that will be an enormous problem, and the impact on consumers will be massive.
What are we going to do to deal with that? Credit is due to this Minister for starting to deal with some of the problems. He is trying to get the green deal moving so people can insulate their homes. He is trying to reduce their energy bills and educate them about how they can reduce their energy bills and consumption, and he is working with Ofgem to try to put pressure on the energy companies to reduce the tariffs so people’s bills can be squeezed lower. He has also addressed the need to build new power stations to get new electricity supplies on stream. This is not easy, because not only are energy bills increasing, but some of those new technologies are not very popular, certainly with my constituents. Some new technologies, such as anaerobic digestion, are palatable and people will tolerate them. However, people are not as enthused about wind turbines and they are certainly not enthused about energy recovery plants, such as the one proposed in my constituency at Bilsthorpe; people do not want incineration. I hope that the Minister will
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talk to his colleagues in the Department for Communities and Local Government and ask them to consider what they build and where they build it.
Lastly, I wish to mention one thing that will have a big impact on some specific constituencies: the loss of concessionary coal for consumers who used to work in the coal industry. The collapse of UK Coal means that they will lose their right to free coal. I hope that the Minister will take that on board and talk to the Treasury to try to support those people, because that will have a big impact on them as the winter draws in.
6.21 pm
Mr Mike Weir (Angus) (SNP): We must never forget that it has been estimated that for every 5% rise in energy prices a further 46,000 households go into fuel poverty. The Department’s own figures show that between 2010 and 2012 average domestic energy bills rose by an average of £250, with 78% of that increase resulting from higher gas prices and 22% from higher electricity prices. The escalation in energy prices cannot be looked at in isolation: just as energy bills are rising, so is the cost of road fuel, food and another essentials. Clearly, that has a serious impact on families, who cannot continue to absorb such large increases at a time when wages are, at best, static. I accept what the Secretary of State said about the energy companies having to make profits, but the issue is the amount of these profits and their substantial rise at a time when everybody else is having to tighten their belt. That needs to be examined more closely.
In the Energy Bill, the Government sought to take powers to implement the Prime Minister’s promise to put everyone on the lowest tariff, but, unfortunately, as I have said many times, the Bill does not seem to have that effect. The wording does not require the energy companies to put people on the lowest tariff, but only to make an offer, which may be lost in the mass of paper we receive from them already. I suspect that many people are still not on the cheapest tariff. Even these changes fail to do anything to help some of the poorest in our society, who have to rely on pre-payment meters. Someone on a direct debit tariff may be fine, but someone on a pre-payment meter will still be stuck on a higher tariff, as meters are generally on a higher tariff than someone paying by direct debit. If the Government are truly intent on ensuring that everyone has the lowest possible bills, they need to ensure not only that that applies within the type of contract that people already have, which is what is happening at the moment, but that people can move to a cheaper type of contract.
Particular problems are faced by those with pre-payment meters. It has always seemed to me slightly perverse that such meters are one of the few examples where consumers end up paying much more by paying cash in advance. The issue is important, and the Minister and I have debated it previously. Citizens Advice Scotland issued a report on energy recently, which showed that it had dealt with a massive number of people who had different energy issues. It said:
“The cases highlighted by bureaux regarding difficulty paying are more commonly with regards to prepayment meters recouping an unaffordable amount for arrears every time the consumer tops up”.
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The problem is that not only does the tariff tend to be higher—to be fair, many companies now fix it at their standard tariff—but it is higher than the tariffs that can be achieved by, for example, direct debit. That is coupled with the fact that many, but not all, of these people on pre-payment meters are put on them because they have a debt, part of which is recouped every time they top up the meter. Because this debt is added on, they are, in effect, pushed further into debt. The report cites the case of a single parent with two children who currently loses £7 towards the arrears every time she puts £10 in the meter—the remaining £3 is simply insufficient. That situation has to be dealt with.
The motion talks about putting those over 75 on the lowest tariff available, but the right hon. Member for Don Valley (Caroline Flint) talked about the difference in tariffs between companies and it seems to me that that will not really hit the problem. We used to have a higher winter fuel allowance for more elderly people. We cannot go back to that, but perhaps we should be telling the energy companies that we should have a standard tariff across all the companies especially for elderly people to ensure that every one of them gets the lowest tariff irrespective of the company they are with, without their having to go through them all and having to switch. That would be the simplest way to do it.
6.25 pm
Chris Heaton-Harris (Daventry) (Con): I found myself in an interesting position—and one that I am not used to—as I agreed with just about every word the Secretary of State said, probably because he veered well away from the thorny subject of renewables. That is the point that I shall concentrate on, following on from the speeches made by my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) and the hon. Member for East Antrim (Sammy Wilson).
Before I do, let me say one thing about people’s bills. I received a bill from EDF a few weeks ago and it was possibly the most complex document I have ever received through the post—it had day tariffs, night tariffs and prices that were so much per kilowatt-hour for this and for the first 20 of that. If people are to be expected to understand their electricity bills, simplification is required. I would welcome anything that points us in that direction.
Renewables, as my right hon. Friend the Member for Hitchin and Harpenden said, are the part of the debate that we in this House can affect. RWE npower issued a report in July on what will happen to energy prices in the United Kingdom in the coming years. It predicted all sorts of interesting things, but the commodity and production costs that make up 45% of an average bill will reduce by 2020 to 35% of an average bill as rising policy and transportation costs become more significant. Supplier costs—their cut, their profit—will remain about 16%, so where is the big increase? Transportation costs and the costs of updating the UK’s network of infrastructure to accommodate lower carbon and more distributed generation technologies are expected to add an extra £114 to the average domestic bill by 2020—a 124% increase on 2007 prices. That is the money for connecting turbines and other dispersed energy to the grid.
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Policy and regulation costs are expected to rise by 78% between 2013 and 2020. That is meant to pay for the low-carbon economy and significantly improve energy efficiency, as we have heard. Those are worthy aims but have huge costs attached. There are also huge costs for the consumer, who will end up paying for all those things. In 2011, National Grid produced a report entitled “Operating the Electricity Transmission Networks in 2020”. It talked about wind turbines and said that during periods of demand renewable generation output is likely not to be enough, but because it is a must-take resource, wind power will need to be constrained in some way.
The Daily Telegraph took a snapshot of energy produced by wind farms on a still day this summer. It showed that a host of payments had been made by National Grid to shut down wind turbines so that they would not overload the electricity supply system.
Albert Owen: Will the hon. Gentleman give way?
Chris Heaton-Harris: I will not give way; Mr Speaker would scowl at me like Speaker FitzRoy in the 1920s and ’30s. I do not want that to happen.
The constraint payments reached £7.5 million for the first three weeks of August. If people are really concerned about fuel poverty, they should think about this: the increased cost of electricity due to the renewables obligation in 2009 may have pushed about 100,000 households into fuel poverty, and the wind element was responsible for 40,000 to 50,000. That information is from the fuel poverty dataset for 2009 produced by DECC.
6.29 pm
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): The hon. Member for Angus (Mr Weir) made the point that when the Prime Minister announced the Energy Bill policies on the hoof at Prime Minister’s Question Time, he told us that he would legislate to put customers on the cheapest tariff. That promise was reduced to a promise to simplify the tariffs that energy companies offered. I am sure that everyone would welcome simplification as an important tool in enabling customers to make a choice between different companies, but simplification by itself does not reduce energy prices.
The simplification process now under way has in some cases led to people having to pay more for their energy, rather than less. I want to draw attention to those low users of energy, often those on low incomes, who are now worse off because of the insistence, as a result of the Ofgem review, on companies having both a standing charge and a unit rate. After years of trying to get standing charges reduced or abolished because they are particularly damaging for those on low incomes, we are now seeing pressure on companies to bring them back.
A constituent who contacted me was told by npower—this applies to other companies and is more the fault of Ofgem trying to implement Government policies—that if he spent less than £27 on gas and £12 on electricity a month, he would see an increase in his overall costs. Indeed, he has worked out his energy costs and found that his bill would rise by between 50% and 60% as a result. That is an example of how, bluntly, inventing policy on the hoof, not thinking it through and then
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attempting to deliver it is damaging constituents. That is just one example of where I think the Government have to monitor carefully the effects of the policies to standardise tariffs that are being implemented. They must also ensure that companies do not end up profiting as a result of the way in which the tariffs have been introduced.
As I said at the start of my speech, standardisation does not cut energy prices. There are clear examples—npower is not the only one—of customers now being worse off as a result of the way simplification has been put into effect. The Government need to review that straight away. We need to look at that to ensure that low energy users, particularly those on low incomes, do not lose out as a result of the Government’s policies.
6.32 pm
Jim Shannon (Strangford) (DUP): I congratulate the Opposition on bringing this matter before the House for consideration. In the minutes available, I want to focus on the latter part of the motion, specifically the reference to putting
“all over-75 year olds on the cheapest tariff.”
I suggest that we should go further and have a lower tariff for the over-75s. Everyday in my constituency office I see clearly the importance of addressing those issues, as other Members have indicated. I also see that the elderly people who come to my office have a clear decision to make between a bit of heat or something to eat. It is as simple as that.
I want to offer a Northern Ireland perspective. Northern Ireland’s biggest energy company, Power NI, increased its household electricity bills in July by 17.8%, which means that every household will have to pay, on average, an extra £90 a year. That might be an inconvenience for some, but the reality for some of our elderly people is that it will mean sacrificing a luxury or a basic item to cover the difference. It will mean a bit of heat or something to eat. That will be the clear decision for them.
I was horrified to learn from a press release on Age Sector Platform’s recent Belfast Pensioners Parliament that in 2012 the number of excess winter deaths in Northern Ireland was 496. All those people were over 65 years of age. The last time all excess winter deaths were older people was 14 years ago. It was high then, but in 2012 it was higher still. It is clear that older people are being hit hardest by the rising cost of energy and the reduction in their incomes. As other hon. Members have suggested, energy providers must ensure that our elderly are on the cheapest tariffs possible. Let us do something for those elderly people. By the way, I say for the benefit of all parties here that the elderly are consistently the people who vote. If they want to do something for their voters, I suggest they do something for the elderly.
Age UK estimates that 1.5 million people aged over 65 and living in rural areas in England are reliant on oil. In other parts of the UK reliance on oil is even higher: it accounts for 11% of households in Wales and 70% in Northern Ireland. The price of oil is prohibitive. Few elderly people can afford to fill their tanks, even with the winter fuel allowance, and therefore cannot heat their homes. It is little wonder, as the shadow Secretary of State said, that 24,000 people in the UK have died as a result of cold-related illnesses over the past year.
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We should contrast that with the profits shown over the latest period. I am not against a company making a profit—not for one second—but let us do something for the people who are hardest hit and need the money more. I saw in the Metro newspaper that the profits of the big six energy companies have shot up by 74% since 2009, dwarfing the 13% rise in inflation. British Gas, E.ON, EDF Energy, npower, Scottish Power and SSE have enjoyed a £3.3 billion surge in profits as households have been hit by a 29% rise in bills. Profits from these groups, which provide energy to 98% of homes, rose from £2.15 billion in 2009 to £2.2 billion in 2010, £3.87 billion in 2011 and £3.74 billion in 2012. Against that, the typical domestic dual fuel bill has risen to £1,420 a year compared with £1,100 in May 2010, according to the regulator Ofgem. Surely it is past time that we did the right thing by the most vulnerable—the elderly—and used some of the companies’ profit margins to provide affordable heating. The time has come for the Government to act.
6.35 pm
Sheila Gilmore (Edinburgh East) (Lab): During much of this debate, the consumer, particularly the consumer in fuel poverty, has not always had the attention they need.
Some of the systems that have been set up seem unduly complicated. When I first heard about the concept of the green deal, which preceded this Government—it was discussed under the previous Government—I wondered how we encourage people to put in the kind of long-term investment that will radically improve the energy efficiency of their homes. For many people, the pay-back time seemed too long. They took the view that they would probably be moving on and that their home might not be a permanent one—even if it eventually turned out to be so. The idea that people could get help through loans that could be secured to the property and pass from one household to another seemed to tackle some of those difficult problems.
One can always come up with a good concept, but the implementation is often where it becomes difficult. In this case, a good idea has been let down by a great deal of the detail. The interest rates are extremely high compared with other means that people might have of borrowing money. A lot of people appear to have been interested enough to seek an assessment, but having done so, concluded that the deal was not good enough and would not give them the kind of pay-back that would make it all worth while, and thought, therefore, “I won’t bother with it after all.” Unless there is yet to be a dramatic level of take-up, that is the pattern that has occurred. It is a pity that a good idea has been let down in this way. We should be looking at ways to improve things.
People are also finding it increasingly difficult to find out how to get their home better insulated and how to find out what sort of help is available. While it is absolutely right that energy companies should be expected to contribute to all that, whether the systems that are put in place actually work is another matter. Often the local authority is best placed to know where the problems are in their areas—where the types of housing are that need the most help. That is not just because councils are landlords. They know about all the other properties in the private rented sector where the problems are at their
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worst and where the difficulties lie. In my constituency, where a large proportion of the properties are tenements and flats, people face difficult issues about how to improve insulation.
We need to be able to reach such people directly. People are getting phone calls from organisations and are not even sure what they are, although some are quite legitimate. Residents have told me that when they get these phone calls they think that it is somebody trying to sell them something they do not need so they put the phone down. That is not the right way to do this. Local authorities should be getting the funding they need to help people, even if some of it comes from the energy companies. That will be the way to really engage people in this process.
6.39 pm
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): This has been a very important debate at a time when a cost-of-living crisis is hitting households all over our country. There have been many eloquent and powerful contributions and what we have heard paints a damning picture. We have heard that energy bills are soaring, profits for the big energy companies are sky-rocketing, energy efficiency is stalling and fuel poverty is deepening.
The Secretary of State, who, sadly, is no longer in his place, was more concerned with defending Ofgem and the energy companies, which is reflective of an out-of-touch Government who are failing to stand up for hard-working families who are struggling up and down this country.
I am not surprised that so many hon. Members have spoken about how their constituents are struggling to keep up with spiralling energy costs. My hon. Friend the Member for Glasgow North West (John Robertson) spoke passionately about the choice some of his constituents might face between heating, eating and paying rent. The hon. Member for Sherwood (Mr Spencer) mentioned his constituents’ anxiety when an energy bill drops through their letter box.
The average dual fuel bill has shot up by more than £300 since the Prime Minister entered Downing street. Back in May 2010 a typical household paid £1,105 a year; the figure now stands at £1,420—a 29% increase in a little over three years. The cost of gas and electricity is a serious concern for too many families, regardless of whether or not they are technically in fuel poverty. According to the consumer watchdog Which? 80% of people are worried about the rising cost of energy and rank it among their top financial headaches.
As people struggle to heat their homes, the energy giants are reaping ever greater profits. We saw over the summer how the big six energy companies have enjoyed a windfall of £3.3 billion in additional profits over the past three years, on top of the £2.2 billion profits they were already making. Of course, companies are allowed to make a profit. As the shadow Energy Secretary, my right hon. Friend the Member for Don Valley (Caroline Flint), said, the energy industry plays a tremendous and vital role in our economy and in keeping the lights on, but that does not mean that we should ignore the need to reform how our energy market works. We need real reform to break the dominance of the energy giants, create transparency and openness, and protect the public from being ripped off.
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As my hon. Friend the Member for Ynys Môn (Albert Owen) said, it is a real problem that we do not know exactly what the energy companies are making in profits. My right hon. Friend the Member for Don Valley referred to certain reports that show that the profits made on the supply side and those made on the generation side are massively different and we do not always see what they are.
The second of two Energy Bills is currently making its way through Parliament without any significant Government proposals to help bill payers. All that has been offered is a broken promise, repeated by the Prime Minister today, to put everyone on the cheapest tariff, which has proved impossible to deliver. When my right hon. Friend raised this issue in her speech, we heard lots of chuntering from Government Front Benchers but no interventions to share with the House exactly what the Government are doing. It simply will not pass as a real answer for how to reform our energy market. Even the cheapest tariff in an uncompetitive market will not be a good deal.
By contrast, today we have heard loudly and clearly what a Labour Government would do to fix our energy market. There are three key differences. We would open up the market and make it more transparent, and we would require energy companies to pool the power they generate and make it available to any retailer.
At this point it is important that I highlight the crucial differences between a pool that we would seek to introduce and that which was in operation previously. When the old pool was put in place, there were just two generators, which meant that they were able to exert disproportionate influence on the pool price. Today there are many more generators, so it would be much more difficult to do that. The old pool was also a one-way pool, which meant that only generators could place bids for how much they were prepared to sell their power for.
There is no reason why a new pool could not be a two-way pool, whereby both generators and suppliers place bids. That is how the Nord Pool works. The UK currently has two power exchanges where trades can take place: N2PX and APX. The volumes that are traded on the day-ahead exchanges are already increasing. If all generators and suppliers were required to trade 100% of their output and supply via those exchanges, it would have the same effect as introducing a pool.
We need a tough new watchdog that has the power to pass on price cuts to consumers when the wholesale cost of energy falls. That has been underlined by the report of the Energy and Climate Change Committee, “Energy Prices, Profits and Poverty”, which states clearly that “Ofgem is failing consumers”. It also states that it has proved
“unwilling to use the teeth it has.”
As my hon. Friend the Member for Ynys Môn highlighted, there are many problems for customers who are off grid. We believe that the new regulator should assume responsibility for off-grid customers.
The Select Committee report also points out that
“rising prices are exacerbating fuel poverty.”
Under the Government’s new definition, there are still nearly 2.4 million fuel-poor households. According to the Government’s own figures that were published last month, the gap between people’s fuel bills and what
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they can afford to pay has grown by £200 million over the past two years. That is an average of £494 for households that are struggling to meet their energy costs.
The hon. Member for Angus (Mr Weir) highlighted the problems for customers who have prepayment meters and the hon. Member for Strangford (Jim Shannon) highlighted the problems faced by his constituents, particularly older people, and the increase in excess winter deaths.
Ministers have admitted that the number of people in fuel poverty is expected to rise over the next two years. That is why it is such a scandal that the Government have halved the support for people in fuel poverty. The Labour party would help those who are most in need. That is why we would require companies to put all pensioners who are aged over 75 on to the cheapest tariff. That is the right thing to do because it is the oldest in our society who are the most vulnerable in cold winters.
We all know that if we get household energy efficiency right, it can reduce energy costs, create thousands of jobs and cut carbon emissions. However, the Government’s efforts to make our homes more energy-efficient are failing. I was not reassured by what the Secretary of State reportedly said at an event in the House last night. He told an audience that he knew the green deal would work because he could feel it in his bones. I do not know whether Members can recall any other Minister extolling the virtues of bones-based policy making, but the Opposition prefer to deal with the facts.
The most recent figures show that just 132 households have signed on the dotted line for a green deal plan since the scheme went live. That is disappointing enough, but the real wake-up call for Ministers should be the number of green deal assessments. The Opposition desperately want to see better insulated homes in our country. As my hon. Friend the Member for Edinburgh East (Sheila Gilmore) said, the green deal is not good enough. The green deal will not achieve the ambition that we all want to see unless the Government stop being so complacent, listen to what industry leaders are saying and tackle the problems with the scheme.
In conclusion, this is a motion for consumers. It speaks to the concerns of families across our country and clearly lays out what action we should be taking to make energy more affordable. It stands up for the people this Government like to claim they are on the side of. Today, they have an opportunity to prove it. I urge the Government and all Members to support our motion, and I commend it to the House.
6.49 pm
The Minister of State, Department of Energy and Climate Change (Gregory Barker): This has been an interesting and timely debate. As we head into the autumn, I know that colleagues across the Chamber share their constituents’ worries about the rising cost of living and the strain that energy costs in particular can put on tight family budgets. That is why the coalition is determined to do everything it can to help hard-working families with their energy bills.
Sitting here this afternoon listening to the Opposition Front Benchers, I could not help but recall the words of Marshal Talleyrand 200 years ago. When the ancien
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régime was briefly restored to the French throne after the defeat of Napoleon, Talleyrand famously said of the old, backward-looking, clapped out Bourbon royal family, “They learned nothing, and they have forgotten nothing.” Put another way, the old regime singularly failed to understand why they had been deposed by the people in the first place, or to learn from any of their previous mistakes.
Is that not just old Labour all over? Labour, which saw heating bills more than double during its time in government. Labour, which in 13 years of government allowed real competition in the market to shrivel. Labour, which in 1997 inherited a diverse range of 14 competing companies and turned them into the big six. Labour, which drove British energy into the ground and failed to build a single nuclear power station. Its record on renewables was little better. After 13 years in office, Labour left Britain third from the bottom of the European league table for deployed renewable energy. It was Labour that allowed the cost of its green energy programmes to spiral out of control but failed to take real steps to decarbonise the sector; Labour that, after 13 years in power, left office with nearly 5 million vulnerable people living in fuel poverty; and Labour that, in the last Parliament, saw fuel poverty rise in every single year of the now Leader of the Opposition’s tenure as Energy Secretary.
So what is the big idea that Labour has brought forward to the debate to help hard-pressed consumers? It has three ideas—hardly an energy revolution, but let me remind the House what they are. The first is to abolish the regulator that Labour created in 2000 and replace it with—yes, you’ve guessed it—another quango. It also wants to bring back the electricity pool, the same pool that it abolished back in 2001, and put all over-75s on the cheapest tariff—hardly a groundbreaking idea when we are already acting to do that, but for all consumers, not just the oldest 8%, so that all our constituents can benefit from a better deal.
I will not pretend to the House that there are easy answers, simple solutions or quick fixes to driving down fuel poverty, driving up competition in the sector or delivering a better, fairer deal for hard-pressed consumers. However, unlike the Labour Government’s drift, inertia and failure to deliver, the coalition has rolled up its sleeves and is making a real difference.
I want to spell out some of the bold, practical measures that the coalition is taking to help hard-working families, but before I do that I will address some of the important points that colleagues have made. We have heard from the hon. Members for Edinburgh North and Leith (Mark Lazarowicz) and for Strangford (Jim Shannon), my hon. Friend the Member for Daventry (Chris Heaton-Harris), the hon. Member for Angus (Mr Weir), my hon. Friend the Member for Sherwood (Mr Spencer), the hon. Member for Ynys Môn (Albert Owen), my hon. Friend the Member for Tamworth (Christopher Pincher), the hon. Members for East Antrim (Sammy Wilson) and for Glasgow North West (John Robertson), my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) and the hon. Member for Edinburgh East (Sheila Gilmore).
It was striking that not a single Labour Member spoke in favour of the Opposition’s proposal to abolish Ofgem, but two clearly disagreed with it. It was notable that my hon. Friend the Member for Sherwood made a
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thoughtful and constructive speech, and he was right to address both the causes of, and possible solutions to, our energy challenges. The hon. Member for Angus was also thoughtful, and I assure him that our simplification of tariffs is already having an impact. I also take on board his important points about prepaid meters.
I wholeheartedly agree with my hon. Friend the Member for Daventry about the need for bill simplification. We get it, and we are on it, but our entire grid is crumbling and requires big investment, whatever energy source we put into it. This year, onshore wind added just £9 to consumer energy bills. The hon. Member for Ynys Môn, the second Labour Member to disagree with Labour Front Benchers about abolishing Ofgem, made sound points about off-grid customers. We are looking carefully at the Committee report to which he contributed. My hon. Friend the Member for Tamworth spoke with great authority and gave a balanced approach to the complex issues we face.
The coalition does not have a magic wand, and Labour’s legacy of debt, deficit and economic failure casts a long shadow over all Departments. Despite the imperative of dealing with Labour’s debts, we are taking action and setting a new radical and ambitious energy agenda. Unlike under the previous Government, there have been two energy Bills in three years. The green deal might be in its infancy—I listened to the hon. Member for Edinburgh East—but it is already building a new market in energy efficiency, and bringing far greater competition to the market and new choices for consumers.
Caroline Lucas: Will the Minister give way?
Gregory Barker: The hon. Lady was not actually here for the debate. We are taking action to give more teeth to the regulator and compensate energy consumers who have been badly treated. We have embarked on radical market reform to unleash investment in modern clean energy, building our energy security that was so perilously ignored by Labour. We are also offering immediate help for our constituents. For example, Labour put the whole cost of the renewable heat incentive on to consumer bills. We have removed it, saving consumers £120 million a year collectively. Labour refused to cut solar feed-in tariffs, despite fixing them far too high. We took the tough decision to cut those tariffs. We were right, they were wrong. Solar deployment is up, costs are coming down, and the consumer is better off.
Luciana Berger: Will the Minister tell the House what the additional amount will be on all our bills from the Government’s miscalculation of the energy company obligation?
Gregory Barker: We have not miscalculated the ECO. It is coming very close indeed to the impact assessment that we published last year. I am happy to tell the House that costs of the ECO are continuing to come down, and we are seeing a number of technologies deployed far more cost effectively than under the poor Warm Front scheme that the Labour party put together, and which so many Members from around the House wrote to me to complain about. We are doing other things to help consumers. Our warm home discount means £135 this winter for more than 2 million poorer households.
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Mark Lazarowicz: Will the Minister give way?
Gregory Barker: No, I will not.
The winter fuel allowance is helping 12 million pensioners with up to £300 this winter. Cold weather payments have been permanently uprated to £25 per week, and the green deal ECO programme has already made more than 100,000 homes warmer and cheaper to heat and run. The first proper, independent, thoughtful review of our fuel poverty strategy for decades was completed this year. We are targeting finite resources at the most in need in the fairest, most cost-effective responsible way.
Where Labour shrunk the domestic energy market and presided over massive corporate consolidation, we are unleashing a decentralised energy revolution on new distributors of energy on an unprecedented scale— 2.5 GW of solar alone under this coalition. Community energy, distributed energy and heat networks—all are on the up. At the same time we have begun the first new nuclear programme in a generation. Our green investment bank, created by this coalition, is now up and running and transforming the energy investment landscape. No wonder Ernst and Young last week moved the UK from fifth to fourth in the global league table for renewables, and called the UK the best place in the world to invest in onshore wind.
Mr Alan Campbell (Tynemouth) (Lab): claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Main Question accordingly put.
The House divided:
Ayes 220, Noes 290.
Division No. 75]
[
6.59 pm
AYES
Abbott, Ms Diane
Abrahams, Debbie
Alexander, rh Mr Douglas
Ali, Rushanara
Allen, Mr Graham
Ashworth, Jonathan
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Barron, rh Mr Kevin
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blears, rh Hazel
Blenkinsop, Tom
Blomfield, Paul
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burnham, rh Andy
Byrne, rh Mr Liam
Campbell, Mr Alan
Caton, Martin
Chapman, Jenny
Clark, Katy
Clarke, rh Mr Tom
Coaker, Vernon
Coffey, Ann
Cooper, rh Yvette
Corbyn, Jeremy
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Sir Tony
Curran, Margaret
Danczuk, Simon
Darling, rh Mr Alistair
David, Wayne
Davidson, Mr Ian
Davies, Geraint
De Piero, Gloria
Dobbin, Jim
Dobson, rh Frank
Docherty, Thomas
Donaldson, rh Mr Jeffrey M.
Donohoe, Mr Brian H.
Doran, Mr Frank
Doughty, Stephen
Doyle, Gemma
Dugher, Michael
Durkan, Mark
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Efford, Clive
Elliott, Julie
Engel, Natascha
Esterson, Bill
Evans, Chris
Farrelly, Paul
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Flynn, Paul
Fovargue, Yvonne
Francis, Dr Hywel
Gardiner, Barry
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Goggins, rh Paul
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Griffith, Nia
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hanson, rh Mr David
Harman, rh Ms Harriet
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hoey, Kate
Hopkins, Kelvin
Hosie, Stewart
Howarth, rh Mr George
Hunt, Tristram
Irranca-Davies, Huw
James, Mrs Siân C.
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Jones, Graham
Jones, Helen
Jones, Mr Kevan
Jones, Susan Elan
Jowell, rh Dame Tessa
Keeley, Barbara
Kendall, Liz
Khan, rh Sadiq
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Leslie, Chris
Lewell-Buck, Mrs Emma
Long, Naomi
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
MacNeil, Mr Angus Brendan
Mactaggart, Fiona
Mahmood, Mr Khalid
Mahmood, Shabana
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McClymont, Gregg
McDonagh, Siobhain
McDonnell, John
McFadden, rh Mr Pat
McGovern, Alison
McGuire, rh Mrs Anne
McKechin, Ann
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Meale, Sir Alan
Mearns, Ian
Miliband, rh Edward
Miller, Andrew
Moon, Mrs Madeleine
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Munn, Meg
Murphy, rh Paul
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Onwurah, Chi
Owen, Albert
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reed, Mr Steve
Reynolds, Emma
Reynolds, Jonathan
Riordan, Mrs Linda
Robertson, Angus
Robertson, John
Rotheram, Steve
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sarwar, Anas
Sawford, Andy
Seabeck, Alison
Shannon, Jim
Sharma, Mr Virendra
Sheerman, Mr Barry
Sheridan, Jim
Shuker, Gavin
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Angela
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Straw, rh Mr Jack
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thomas, Mr Gareth
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
Vaz, rh Keith
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Watts, Mr Dave
Weir, Mr Mike
Whiteford, Dr Eilidh
Whitehead, Dr Alan
Williamson, Chris
Wilson, Phil
Winnick, Mr David
Winterton, rh Ms Rosie
Wood, Mike
Woodcock, John
Woodward, rh Mr Shaun
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Heidi Alexander
and
Nic Dakin
NOES
Afriyie, Adam
Aldous, Peter
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Sir Tony
Baldwin, Harriett
Barclay, Stephen
Barker, rh Gregory
Barwell, Gavin
Bebb, Guto
Bellingham, Mr Henry
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Birtwistle, Gordon
Blackwood, Nicola
Blunt, Mr Crispin
Boles, Nick
Bone, Mr Peter
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, Annette
Browne, Mr Jeremy
Buckland, Mr Robert
Burley, Mr Aidan
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, Alistair
Burt, Lorely
Byles, Dan
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, rh Mr Alistair
Carmichael, Neil
Carswell, Mr Douglas
Cash, Mr William
Chishti, Rehman
Chope, Mr Christopher
Clark, rh Greg
Clarke, rh Mr Kenneth
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Cox, Mr Geoffrey
Crabb, Stephen
Crouch, Tracey
Davey, rh Mr Edward
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davies, Philip
Davis, rh Mr David
de Bois, Nick
Dinenage, Caroline
Dorries, Nadine
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan, rh Mr Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Jonathan
Evennett, Mr David
Fabricant, Michael
Featherstone, Lynne
Field, Mark
Foster, rh Mr Don
Fox, rh Dr Liam
Francois, rh Mr Mark
Freeman, George
Freer, Mike
Fullbrook, Lorraine
Fuller, Richard
Garnier, Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Glen, John
Goldsmith, Zac
Goodwill, Mr Robert
Graham, Richard
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Greening, rh Justine
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Halfon, Robert
Hames, Duncan
Hammond, Stephen
Hancock, Matthew
Hands, Greg
Harper, Mr Mark
Harris, Rebecca
Hayes, rh Mr John
Heald, Oliver
Heath, Mr David
Heaton-Harris, Chris
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Horwood, Martin
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Hunt, rh Mr Jeremy
Huppert, Dr Julian
Hurd, Mr Nick
Jackson, Mr Stewart
James, Margot
Jenkin, Mr Bernard
Johnson, Gareth
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kawczynski, Daniel
Kelly, Chris
Kirby, Simon
Knight, rh Mr Greg
Kwarteng, Kwasi
Laing, Mrs Eleanor
Lamb, Norman
Lancaster, Mark
Lansley, rh Mr Andrew
Latham, Pauline
Laws, rh Mr David
Leadsom, Andrea
Lee, Dr Phillip
Lefroy, Jeremy
Leigh, Sir Edward
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, Dr Julian
Liddell-Grainger, Mr Ian
Lidington, rh Mr David
Lilley, rh Mr Peter
Lloyd, Stephen
Lord, Jonathan
Loughton, Tim
Luff, Peter
Lumley, Karen
Macleod, Mary
Main, Mrs Anne
Maude, rh Mr Francis
May, rh Mrs Theresa
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McPartland, Stephen
McVey, Esther
Menzies, Mark
Mercer, Patrick
Metcalfe, Stephen
Miller, rh Maria
Mills, Nigel
Milton, Anne
Mitchell, rh Mr Andrew
Mordaunt, Penny
Morgan, Nicky
Morris, Anne Marie
Morris, David
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Mundell, rh David
Murray, Sheryll
Murrison, Dr Andrew
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
Offord, Dr Matthew
Ollerenshaw, Eric
Paisley, Ian
Parish, Neil
Patel, Priti
Paterson, rh Mr Owen
Pawsey, Mark
Penrose, John
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Prisk, Mr Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Mr John
Reckless, Mark
Redwood, rh Mr John
Rees-Mogg, Jacob
Reevell, Simon
Reid, Mr Alan
Rifkind, rh Sir Malcolm
Robathan, rh Mr Andrew
Robertson, rh Hugh
Robertson, Mr Laurence
Rudd, Amber
Ruffley, Mr David
Russell, Sir Bob
Rutley, David
Sandys, Laura
Selous, Andrew
Sharma, Alok
Shelbrooke, Alec
Shepherd, Sir Richard
Simpson, Mr Keith
Skidmore, Chris
Smith, Miss Chloe
Smith, Henry
Smith, Julian
Soames, rh Nicholas
Soubry, Anna
Spelman, rh Mrs Caroline
Spencer, Mr Mark
Stanley, rh Sir John
Stephenson, Andrew
Stevenson, John
Stewart, Bob
Stewart, Rory
Streeter, Mr Gary
Stride, Mel
Stuart, Mr Graham
Stunell, rh Sir Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Tapsell, rh Sir Peter
Teather, Sarah
Thornton, Mike
Thurso, John
Timpson, Mr Edward
Tomlinson, Justin
Truss, Elizabeth
Turner, Mr Andrew
Tyrie, Mr Andrew
Uppal, Paul
Vara, Mr Shailesh
Vickers, Martin
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Webb, Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Willetts, rh Mr David
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Gavin
Wilson, Mr Rob
Wilson, Sammy
Wollaston, Dr Sarah
Wright, Jeremy
Wright, Simon
Young, rh Sir George
Zahawi, Nadhim
Tellers for the Noes:
Mr Robert Syms
and
Jenny Willott
Question accordingly negatived.
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4 Sep 2013 : Column 432
4 Sep 2013 : Column 433
4 Sep 2013 : Column 434
Business without Debate
European Union Documents
Motion made, and Question put forthwith (Standing Order No. 119(11)),
Financial Management and Audit
That this House takes note of European Union Document No. 12810/12 and Addenda 1 to 4, a Commission Report on Protection of the European Union’s financial interests: Fight against fraud—Annual Report 2011, Unnumbered European Document dated 12 November 2012, European Court of Auditors’ Annual Report concerning the financial year 2011, and Unnumbered European Document dated 12 November 2012, European Court of Auditors’ Annual Report on the Activities Funded by the Eighth, Ninth and Tenth European Development Funds (EDFs) in the financial year 2011; believes that it is unacceptable that the EU budget has been given a qualified audit by the EU oversight body, the Court of Auditors, every year for the past eighteen years; agrees with the Government that when domestic governments are facing severe fiscal constraints and making tough decisions on national spending, efficient spending of EU money in a targeted way is more vital than ever; supports the Government’s decision to oppose granting discharge to the EU budget for the second time; encourages the Government to continue to work with other like-minded Member States to put pressure on the Commission and other Member States to take their responsibility for managing EU funds more seriously and to push for clear steps to be taken towards much needed improvements to the quality of EU financial management; and supports the Government’s approach of ensuring, where possible, that the EU implements the recommendations relating to EDFs advocated by the European Court of Auditors.— (Mr Evennett.)
Delegated Legislation
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Social Security
That the draft Social Security, Child Support, Vaccine Damage and Other Payments (Decisions and Appeals) (Amendment) Regulations 2013, which were laid before this House on 11 June, be approved.—(Mr Evennett.)
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Prevention and Suppression of Terrorism
That the draft Protection of Freedoms Act 2012 (Guidance on the Making or Renewing of National Security Determinations) Order 2013, which was laid before this House on 24 June, be approved.—(Mr Evennett.)
4 Sep 2013 : Column 435
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Local Government
That the draft Local Elections (Ordinary Day of Elections in 2014) Order 2013, which was laid before this House on 26 June, be approved.—(Mr Evennett.)
4 Sep 2013 : Column 436
EU Directive 2007/46/EC
Motion made, and Question proposed, That this House do now adjourn.—(Mr Evennett.)
7.13 pm
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): On behalf of my constituents, I thank you for granting me this adjournment debate, Mr Speaker. I thank the Minister in advance for his response. I hope that we can achieve a positive outcome. I realise that this is a very specific topic. It is a technical and perhaps quite dry subject, and I doubt whether millions of people are at home, glued to BBC Parliament right now, but it is vital to small and medium-sized businesses whose working practices are now affected by this directive.
The issue that I want to raise and discuss is not the directive itself, which in principle I have no issue with and which does make sense. It will improve safety standards across Europe, and open up a wider market to UK manufacturers—both things that are, of course, advantageous. I want to focus on its implementation in the UK, which I believe could be done much better. In particular, I am very concerned that no further assessment or scrutiny has been carried out since the initial impact assessment back in 2009, just before the first part of the directive was due to come into effect. However, I do not simply want to criticise; I want to work with the Minister, to tackle some of the issues. I hope that the process can be made much easier for businesses in my constituency of Stalybridge and Hyde that have contacted me about it. I would like the Government to carry out another assessment on the directive now—this is paramount—before it is fully implemented next year, to address the issues that I will present this evening.
I have my own interest in this area. As vice-chair of the Associate Parliamentary Manufacturing Group, I work with colleagues across the House who share my passion for manufacturing. I have been keen to address this topic because it is hitting exactly the sort of businesses in my area that everyone wants to give more support to. I am talking about small and medium-sized manufacturing businesses, providing skilled, private sector jobs in the north of England.
Jim Shannon (Strangford) (DUP): Is this directive not another example of EU legislation adversely affecting small and medium businesses? Does the hon. Gentleman feel that if the Government do not act, there will be lay-offs and businesses closing?
Jonathan Reynolds: There is no doubt that my motivation in seeking this debate has been the news communicated to me about the impact that the implementation of the directive will have on businesses in my area. The goal of the directive is not a bad one, but if it is implemented incorrectly, there is no doubt that some manufacturers and some jobs might go.
The directive was introduced to ensure that automotive goods—including cars, vans, lorries, trailers, caravans and so on—meet a minimum EU-wide set of regulatory, technical and safety requirements. That is entirely understandable and a good thing, in terms of both safety and potentially opening up a bigger market for our manufacturers. However, the directive has meant that manufacturers have to do much more to ensure
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that their products meet the standard, drastically altering their previous processes. Instead of needing approval to work on a certain manufacturer’s product, businesses now need approvals for different vehicles from the same manufacturer, even though the differences between models might seem minor. In the original impact assessment, back in 2009, the previous Government had two options. They chose the right option by offering a lower-cost approval scheme to businesses that wish to sell only in the UK. I am pleased that the current Government stuck to that. However, four years later, more issues are appearing, which I shall now explain in more detail.
The first issue, unsurprisingly, is the increased costs that the directive has imposed on businesses. The number of approvals needed has spiked massively, and obtaining each type approval costs money. Whereas costs were managed by needing only a few approvals, with the new European Community whole vehicle type approval, as well as the number of approvals that come with it, costs have risen sharply and quickly. Many SMEs are struggling. I have heard reports of businesses that will either scale down the products that they offer or simply pack in altogether when the directive is fully implemented next year. That is not encouraging manufacturing—quite the opposite—and that should concern us all.
The staff hours involved in obtaining new approvals have also risen due to the complexity, the amount of new approvals needed and the length of the process to obtain just one approval. The Federation of Small Businesses has told me that its members feel that the process is confusing and burdensome. That is particularly true of SMEs, which find the paperwork—something that they have to go through every time they want to start work on a different product, even if the differences are fairly minor—demanding and discouraging. Other areas of the business then suffer, as staff are taken away from other roles to spend what they believe to be a disproportionately large amount of time on securing type approvals.
A lack of communication to businesses by Government and government authorities such as the Vehicle and Operator Services Agency and the Vehicle Certification Agency is another issue. Some businesses were not even aware of the initial impact assessment in 2009. They feel ill-informed and still in the dark about what is required from them and any help that they can receive. Businesses have told me that they feel abandoned. Some businesses have also told me about what they feel to be a lack of consistency, with the process frequently changing. One managing director described it as the “goalposts constantly being moved”. There is a lot of confusion and worry out there in the industry at the moment, which needs to be addressed.
Let me present the House with a case study from my constituency. This issue was brought to my attention by Truck Craft Bodies Ltd—a small to medium-sized business in Stalybridge. It is deeply concerned about the effect that the directive will have on its business once it is fully implemented and about the ability of such SMEs to survive. The business has told me that it has gone from simply needing one approval per manufacturer to needing up to 30 approvals for just one manufacturer.
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Like me, the company agrees with the premise of the directive, but it is particularly concerned about the resulting costs and increased staff hours. It is also unhappy about the lack of help and support on offer. The help that it could receive from organisations such as the Society of Motor Manufacturers and Traders has so far been inadequate. The Government should be speaking to companies such as Truck Craft Bodies. They are the ones in the field, and what they have to say on implementation is invaluable.
That leads me to my main point, which is the lack of scrutiny or assessment of the directive’s implementation since the initial impact assessment more than four years ago. I am concerned that as the date for full implementation—November 2014—looms closer, the answers to a number of questions are still not known, purely because of the lack of scrutiny. First, does the system provide value for money? The Vehicle Certification Agency is the UK’s designated approval authority, and it needs to be cost-effective for the businesses that use it. Secondly, do the Government know how the implementation of the scheme is going, given that no assessment has been carried out since 2009? Are the Government aware of the problems that are being experienced by many businesses? How will they address those issues and provide further help to businesses that need it? We need to know the answers to those questions if we are going to help the SMEs that are facing a testing and uncertain time.
The point of this debate, however, is not for me to stand here and criticise the Government. That would be unfair, especially on a matter that is so technical and complex. I want the debate to achieve positive outcomes and improvements, as my ultimate aim is to help businesses that are struggling and that are worried about the effect of the directive on their trade and their ability to survive. I have no doubt that the Minister shares that view. There are potential solutions to the problems that I have outlined so far, and I hope that the Minister will give them serious consideration.
Most importantly, I firmly believe that the Government need to carry out another impact assessment before the directive is fully implemented in 2014, and I call on the Minister to do that at the earliest opportunity. The lack of scrutiny so far worries me deeply. This cannot wait until after the full implementation of the directive; it needs to be done as soon as possible. If we wait until 2014, it will be too late, especially as some businesses are planning to stop their current operations once the directive comes into full effect, unless there are changes. An impact assessment now would help properly to identify the hurdles that businesses are facing because of the directive, and it would do so in far greater detail than I can describe in the debate today.
Carrying out a new, updated assessment now would have numerous benefits, and I hope that I can convince the Minister to do so. It would offer solutions and ways of dealing with the problems that the directive has caused to businesses, not to mention giving the Government an idea of how the directive’s implementation is going and an opportunity to improve it. Most importantly, it would involve the manufacturers and businesses. After all, they are the ones that are most affected; they currently feel abandoned and are not sure where to turn. This is of course their industry, and they are the ones that know it best. Overall, I believe that a new assessment should be carried out as soon as possible
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and definitely before full implementation. I sincerely hope that the Minister will give that suggestion some serious thought.
Certain specific suggestions are worthy of consideration. Indeed, any new assessment might come to similar conclusions. They include changes such as making the granting of licences easier. As previously mentioned, the VCA is the only body in the UK that can grant type approvals to SMEs that want to operate only in the UK. There is scope to funnel down the process, which at present appears top-heavy and cumbersome, to give manufacturers and businesses more involvement. That would take some of the work load off the VCA and run down costs on both sides. Businesses that I have spoken to are unhappy with the current process that the VCA operates. For example, the agency already has a lot of the information that manufacturers have to supply. The duplication that the companies have to undertake costs money and time, and seems unnecessary. Perhaps this has been overlooked, and it could be identified by a new, updated assessment.
Furthermore, a common complaint from the industry is that the support offered to it has been found wanting. Manufacturers feel left out of the loop and abandoned, and are unhappy with the general lack of communication about a matter that is so vital to their continued existence. The Government need to communicate their plans better. It is also imperative that the Government look at the UK system and make it as easy as possible for small and medium-sized businesses, in particular, to comply with the new regulations. The FSB supports that proposal and believes that that should happen.
Mr Speaker, I thank you once again for allowing this debate, and I look forward to the Minister’s response. I am sure that he and I both want the same thing: for manufacturing to thrive in the UK. The directive does not necessarily have to hinder manufacturing by firms such as Truck Craft Bodies. Improved safety and access to bigger markets are of course in everyone’s best interests. However, because the directive involves such a radical change from how manufacturers have previously operated, it is imperative that it should be monitored closely. That has not happened so far, as we have seen from the lack of any real assessment or scrutiny by the Government since the initial impact assessment in 2009. I sincerely hope that the Minister will take on board the suggestion to hold another assessment soon, before full implementation in 2014.
7.24 pm
The Parliamentary Under-Secretary of State for Transport (Stephen Hammond): I congratulate the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on securing this debate. He said in his opening remarks that he had a passion for manufacturing and for small and medium-sized enterprises, and he was generous enough to suggest that he suspected I shared those passions. He was right. He was also right that tonight’s debate provides an opportunity for us to discuss the effect on businesses of directive 2007/46/EC. I would like to thank him and his office for their assistance on some of the thoughts he might express tonight; I hope that my response will thus be more informed.
I am aware that the hon. Gentleman has recently asked a number of questions about this directive, so I am pleased to respond to this evening’s debate. Before
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I talk about the directive, it would be right and proper to reflect on the significant progress made by the UK automotive sector. This is explained in the automotive strategy that was published in July, which was the culmination of work led by the Automotive Council. It is very encouraging for all of us to note and learn that the UK car industry is currently vibrant, particularly at a time when other European markets face significant challenges.
The UK produced 1.58 million vehicles in 2012, with £6 billion of investment in the industry by vehicle manufacturers over the last two years. That is good news for the UK. Some challenges have been presented at ports, and I am pleased to help the industry overcome them. I am sure that the hon. Gentleman—and, indeed, the Associate Parliamentary Manufacturing Group—would welcome that.
I turn, if I may, to the matter in hand. Clearly, the hon. Gentleman is concerned that the directive could have a detrimental effect on businesses. Just as he set out his concerns, I shall set out exactly how I think on the issue and briefly explain what the directive is all about. It concerns the approval of new road vehicles at EU level. It covers new road vehicles with four or more wheels, and there is a mandatory obligation on the UK, as on all member states, to apply its provisions.
The directive was implemented in the UK on 29 April 2009 by the Road Vehicles (Approval) Regulations 2009, SI No. 717. The hon. Gentleman was right to point out that the key element of the directive was to establish a single European market for motor vehicles, meaning that a vehicle approved to pan-European standards can be registered anywhere within the European Union, without further testing or obstruction to placing it on the market anywhere within the EU. The dates of application depend on the vehicle category: it has already been implemented for most vehicles, and will be fully implemented in October 2014, as the hon. Gentleman rightly said, for the largest goods vehicles.
Approvals under the directive are available from member states’ approval authorities. In the UK, this means the Vehicle Certification Agency, supported by the Vehicle and Operator Services Agency and the Driver and Vehicle Agency in Northern Ireland. Approvals are enforced through the registration scheme operated by the Driver and Vehicle Licensing Agency. Only motor vehicles with the appropriate certificate can be registered for use in the UK. Manufacturers can choose whether to use the UK approval authority or one from another member state for the pan-European approval.
Approval of the directive is a regulatory simplification matter, as it avoids manufacturers having to comply with potentially 28 different sets of national regulations and requirements. On that basis, it was supported at the outset by the high-volume producers. Producers of specialist and low-volume vehicles are also covered by the small series or the individual approval schemes created by the Department. These are essential provisions and are key to helping overcome the burden of EU-wide rules for UK SMEs, and throughout the process the Department has always sought to provide clear advice and assistance to such companies. If the hon. Gentleman has evidence that companies, including SMEs, have not considered that to be the case, I shall be delighted to consider his representation.
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Prior to implementation, during 2007-08, officials worked closely with the various sectors affected by the new requirements. That included hosting, in conjunction with the Society of Motor Manufacturers and Traders, a road show involving 12 events around the United Kingdom to build engagement with industry.
At the time of the implementation of the national regulations, a full impact assessment was undertaken and published by the Department. Its objective was to determine how to implement the directive in a way that would minimise the burdens on UK businesses while maximising the safety and environmental benefits. Two options for implementation of the recast framework directive were assessed, the first being to implement only the pan-European scheme and to accept and issue only European approvals, and the second being to implement the pan-European scheme together with national schemes for small series approval and individual approvals.
A “small firms impact test” considered the financial and business implications for the companies. Some 250 SMEs were consulted as part of a telephone survey, and face-to-face interviews were conducted with 20 members of an overall group of 35 SMEs that had been carefully selected from the sub-sectors to provide a representative and balanced assessment. In addition, the Department sought the views of the Small Business Service and its successor, the Enterprise Directorate, in the Department for Business, Enterprise and Regulatory Reform, as well as the views of the Federation of Small Businesses and a number of other stakeholders.
The SMEs that were consulted advised the Department that type approval would be too onerous for some companies, and it was therefore important to have the option of national approval schemes. It was clear that the EU-wide scheme could have a fairly major adverse impact on SMEs, which are defined as businesses with fewer than 250 employees, so UK regulations were developed to incorporate option 2—the national approvals option—alongside the mandatory pan-European scheme.
I accept that, on the face of it, the provision of national schemes under option 2 would appear to be gold-plating, as it goes beyond the EU minimum. However, I agree with the hon. Gentleman that the last Government adopted the correct course of action, which the present Government have continued. It does have a beneficial impact on SMEs.
I have engaged in correspondence with the hon. Gentleman about Truck Craft Bodies Ltd and the effect that the directive has had on its business. As he will recall, I explained in a reply to him in May that the cost that the company had incurred for the approval of its vehicles was significantly less than the original estimate. I think he will accept the macro-point that the cost burden on UK business of accepting option 2 is significantly lower than the pan-European option would have been.
Officials at the VCA met representatives of Truck Craft Bodies Ltd on 8 November 2012. I believe that they have supported the company and helped it to prepare the relevant documentation for its product range. Two more other site visits were made to the company’s premises in April and May 2013 to carry out approval work. The company now has seven vehicle types approved, with a fee cost for work by VCA of less than £11,000. On the basis of its current rate of production, that
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indicates an average certification cost of £18 per vehicle over three years. It is worth noting that the VCA fees are set on a cost reimbursement basis, following the public consultation. That reflects the cost of providing the approval service to industry.
The hon. Gentleman made several comments about the impact assessment. I can assure him that the VCA does not request information that it already holds. Again, I make the offer that if he can produce evidence that the VCA has asked for information that he believes it already holds, I will be happy to consider that. However, we do not believe that the agency requests information it already holds. It is also true that every vehicle converter must have a commercial relationship with the original vehicle manufacturer, and there are competition and confidentiality issues if information supplied to one company is made freely available to another. That would have an impact on any decision to undertake a further impact assessment.
This is a matter that the wider motor industry and trade associations may wish to address, rather than have Government create more rules or regulations. The Department and its agencies continue to work with industry, both directly and through its trade bodies, to identify any matters where there is a lack of clarity in the application of regulations or a need for administrative adjustments.
It is important to recognise that the directive was finalised six years ago and the UK regulations were created four years ago, so the opportunity for any changes before the regulations are fully implemented is relatively minimal. However, the Government are not complacent about our commitment to removing unnecessary regulatory burdens, and if there is evidence that that is not happening I will instruct officials to redouble their efforts. Indeed, there will be a meeting between the VCA and the industry trade bodies to discuss that on 30 September.
The hon. Gentleman should also by now have received a reply from my colleagues at the Department for Business, Innovation and Skills about whether any funding was available to help mitigate the costs that Truck Craft Bodies Ltd has incurred. I understand that information has been provided on checking for possible sources of funding and on the business link helpline, which provides advice to those who wish to improve and grow their operations.
To summarise, under its European obligations the UK had to implement the directive. The Department worked towards doing that in a manner which offered a high level of consultation and of assurance in respect of safety and environmental aspects, while limiting the burdens on UK businesses. There is a long history of regulating certain aspects of safety and environmental protection on road vehicles to provide a level playing field for industry, and in order to protect consumers, road users and society in general.
I hope I have satisfactorily explained the Government’s position on the approval of new vehicles. I have invited the hon. Gentleman to write to me about any evidence he feels he has about any specific occasions, and I will be delighted to see it. We are aiming to limit the impact of the directive wherever possible. We are aiming to limit the burdens on industry, and I hope the hon.
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Gentleman will be reassured by what I have said, but if he has any further issues he wishes to raise, I will gladly respond to them.
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