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Westminster Hall

Tuesday 10 September 2013

[Mr George Howarth in the Chair]

Sexual Entertainment Licence Exemptions

Motion made, and Question proposed, That the sitting be now adjourned.—(Greg Hands.)

9.30 am

Stephen Gilbert (St Austell and Newquay) (LD): It is a pleasure to serve under your chairmanship this morning, Mr Howarth. I am grateful to the two other hon. Members who have joined me for this important debate.

I want to say first what the debate is not. This is not a debate that is led by prudish intolerance in relation to sexual entertainment. I have never been to a lap-dancing club, and my view is that real men do not buy women for entertainment, but, as a Liberal, I accept that if adults want to make such choices, that is up to them. The debate is about ensuring consistency in the application of the regulation of sexual entertainment on our high streets. It is about ensuring that performers in and patrons of sexual entertainment venues—lap-dancing clubs—are properly protected and that local communities are involved in the decision-making process about where and when such venues should operate.

The fundamental issue is simple. If a permanent lap-dancing club opens under the licensing regime adopted by the previous Government in the Licensing Act 2003 and the Policing and Crime Act 2009, the community is involved in making the decision and there would be significant safeguards in place for those who work in and visit the establishments. The 2009 Act, however, provides a specific exemption, stating that premises providing sexual entertainment on an infrequent basis—on no more than 11 occasions in a 12-month period—do not require a licence and, therefore, do not need to offer the same level of safeguards to performers and patrons. In Newquay, the exemption has led to lap-dancing nights being offered on that so-called occasional basis in direct competition to a licensed venue, but without any of the obligations that the licensed venue needs to meet.

For many years, I have had the pleasure of working closely with the people and businesses of Newquay to secure a future for the town that is sustainable and successful and to tackle some of the excesses of the night-time economy, which over recent years have blighted the town. To be clear, Newquay is a fantastic town. It sits within a stunning natural environment and has, over the decades, welcomed millions of visitors to enjoy its natural beauty and the entertainment that it has to offer. The town has been through many transformations, from a traditional fishing port and centre for the export of china clay, to being the surfing capital of Britain and a terrific, family-friendly visitor destination. Each time Newquay has reinvented itself, it has breathed new life into the streets and delivered new opportunities for the people who live, work and visit there.

Tourism is now one of the town’s primary industries and attracts a wide variety of visitors. The trade brings in much needed revenue for businesses in the town, which include hotels, bars, pubs, clubs, restaurants, surf

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hire shops, bakeries, designer-clothing outlets and the usual range of excursion and entertainment providers to be found in seaside resorts such as Newquay. Collectively, those businesses employ huge numbers of local people and provide year-round income. Over the past decade or so, however, the town has seen a rise in the number of sexual entertainment venues—or, in the jargon, SEVs— and at one point, Newquay, with a resident population of a little more than 20,000, had five lap-dancing licences in operation. The proliferation of lap-dancing venues within the town centre has been a major concern of local people for a number of years. Clearly, the venues were there to cater for the fivefold increase in population that occurs during the summer months. They have, however, attracted significant antisocial behaviour, as well as more serious crime and disorder.

The previous Government’s 2009 Policing and Crime Act helped to put the community back in control. The town council, Cornwall council, the Devon and Cornwall police, the fire brigade, determined local residents and I have worked effectively together to use the powers under that Act to reduce the number of venues to only one licensed SEV, and to ensure that performers in and patrons of such venues are protected. That has made a huge difference to the atmosphere in the town centre. Five years ago, many people told me that they felt scared to go into the town centre in the evening; families rightly complained about the ubiquity of sexualised images in the main street and on the roads leading to the town’s beaches. Working together, we representatives of the community have been able to address such concerns with great success.

Lap-dancing clubs are regulated by the local authority—in my case, Cornwall council—and they are subject to stringent requirements that protect patrons and performers, while allowing residents and community representatives a voice in the location of the venues. Cornwall council has adopted powers under the Local Government (Miscellaneous Provisions) Act 1982, as amended by the 2009 Act, in order to regulate sex shops, sex cinemas and sexual entertainment venues. The amended legislation delivers more power to local residents, giving them a much greater say in where SEV licences can be issued. It allows the local community to object to great effect when an application is made, based on whether the location is appropriate. The 2009 Act, however, also allows premises to hold the exact type of sexual entertainment that normally requires an SEV licence without a licence and without safeguards, if it is held less frequently than once a month. My understanding is that the exemption was designed to allow for one-off entertainment events, such as the attendance of a strippergram at a birthday party. Such provision was made with the best intentions, but there is a real risk that it is too broad and open to abuse.

One example concerns a site within Newquay, for which the owner had applied for a licence to become a permanent lap-dancing venue. During the application process, a considerable number of objections from local residents and businesses were received, and Cornwall council refused the licence. The venue in question, however, has now begun to operate sexual entertainment events under the exemption in the Act. This involves not the occasional strippergram but the operation of a full SEV during a whole 24-hour window once a month, with full nudity and none of the protections and safeguards that

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performers and patrons should rightly be able to expect. It cannot be right that, when a venue has been refused a lap-dancing licence by the local authority, following objections from local people and businesses, it can then flout the will of the community and its representatives and go ahead in offering sexual entertainment without any of the protections mentioned.

We are debating the matter today because it raises serious questions about how fair the exemption is for those businesses that comply with the full licensing requirements for SEVs. Such venues comply with a large number of conditions that regulate their business, which I will come to shortly, but the cost is substantial—not only the cost of complying with the regulations imposed by the licensing authority, but the cost of the application itself. What must an SEV licence holder think when a nearby property, which has failed in getting a licence, still proceeds to stage sexual entertainment in direct competition and without the relevant safeguards that the licence holder must fund?

The business environment in Newquay, as in many of our towns and cities, is a competitive one, with significant numbers chasing a limited market, so, logically, were an SEV to be surrounded by a number of highly competitive premises that have one owner, it might well be challenged by more than one of those infrequent, occasional events each month. In such a case, those who have sought to comply with the law would see little point in going through the licensing regime, and perhaps switch to less regular and unregulated sexual entertainment events. I do not wish to be alarmist, but it is not unreasonable to suggest that a town such as Newquay, which saw a surge in lap-dancing venues, but tackled the issue head-on and imposed significant restrictions, could again see a large rise in unregulated sexual entertainment events, all happening in spite of the wishes of the community, Parliament or the local council. That is wrong.

The hon. Member for Kingston upon Hull North (Diana Johnson) knows that the regulations covering SEVs are not light touch. They rightly impose stringent conditions for the protection of all those involved in sexual entertainment. Those conditions are stringent because there is so much at risk in sexual entertainment. It is of great concern to me that expansion of unregulated sexual entertainment could put vulnerable people at risk. SEV licences ensure that the impact on the surrounding area is limited.

Some people will always object to SEV licences being issued, regardless of where they are and what measures are put in place to protect the surrounding community, but the licensing regime introduced by the previous Government allows local authorities to introduce significant protection, and the use of occasional or infrequent exemptions within the 2009 Act undermine the previous Government’s intention. I hope that my hon. Friend the Minister will confirm the present Government’s intention to ensure that venues are properly regulated and managed, and that performers and patrons are properly protected. For example, an SEV licence will explicitly prohibit the soliciting of custom in the street and the general locality including, in Newquay’s case, the whole town. That anti-touting rule ensures that SEVs can operate within communities with minimal impact on other businesses, passing trade and house prices.

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That is particularly important in places such as Newquay that have strived in recent years to become more family-friendly resorts. Local businesses and residents have worked successfully and hard on that. My hon. Friend will be aware of initiatives such as Newquay Safe, which has brought together all stakeholders in the town to tackle anti-social behaviour and to reduce the cost of policing Newquay at the same time as reducing the amount of crime that is reported and recorded there. We have had significant success.

SEV licences require the interior of lap-dancing venues to be hidden from the street so that sexual entertainment events inside can be seen only by patrons and not by passers-by. If that requirement was not in place in places such as Newquay, the entertainment could be seen by anyone, from children on the way to the beach to pensioners on their way to local tea rooms. SEV licences place restrictions on advertising, and it is easy to understand why the regular holding of sexual entertainment events in unlicensed premises within the exemption might lead to images or advertisements that could damage an area’s reputation and put sexualised images in front of part of the population that simply does not want to see them.

Perhaps the most important provision in SEV licences is safeguards for the welfare of performers and patrons, which are exactly what the exemption does not provide. I think we all accept that lap dancing is an unusual and intimate environment, and the availability of alcohol at venues means that there is a significant danger that performers and patrons may find themselves in difficult situations. SEV licences include incredibly strict provisions to place the entertainer in the safest environment possible in the circumstances. That is achieved predominantly through a strict 3-foot rule that performers must remain at least 3 feet from patrons. That is an essential protection that reduces the risk of harassment or abuse of sexual entertainers and reduces the risk for patrons. Should even limited contact be allowed or suggested, the patron is at risk of allegations of a criminal act. With patrons and performers prohibited from touching each other by maintaining the 3-foot rule, there is a clear dividing line that affords safeguards to both parties.

All aspects of sexual entertainment must take place in open, supervised areas or in private in the presence of designated staff and under the umbrella of closed circuit television. SEV licences also require all restrictions to be enforced by designated supervisors or floor-walkers who must be fully trained and in such number to guarantee the safety of those inside the venue. If we are to have lap dancing in our towns and cities, the safeguards are vital to ensure that the experience is entertainment, not exploitation.

Venues operating within the exemptions of the 2009 Act need not adhere to those conditions. My local police superintendent, John Green, said:

“What has caused me concern is, as a consequence of the lack of regulation, the risk of harm and vulnerability issues for those girls at work at such an event.”

Superintendent Green went on to say of the lap-dancing nights that were held in Newquay under the exemption in the 2009 Act:

“Whilst the girls felt able to ‘look after themselves’, the general conduct, if held under the auspices of a SEV, would have breached almost all the conditions.”

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Those real concerns from the local police sit alongside the real concerns from town councillors and Cornwall councillors who have worked to ensure that if we have the industry in our towns and cities, it must be as safe and as properly managed as we can achieve. Sadly, it is conceivable that a sexual entertainer working in an unfamiliar venue that does not afford its patrons and performers the protection of having gone through the licensed SEV process could be subject to a serious sexual assault, and possibly even worse. We should not allow legislation that is easy to change to put any individual in harm’s way in that respect.

What can be done? My hon. Friend the Minister will be pleased to hear that much can be done. The exemption was made in good faith so its removal may seem to be excessive. However, it is entirely conceivable that occasional sexual entertainment events could simply be subject to the same stringent requirements of the sexual entertainment licence process. That would require minimal legislative effort because the existing law allows the relevant national authority to order, amend or repeal the exemption clause without new primary legislation. That is a key point. The Government could deliver that with minimal effort. My hon. Friend need not remove the infrequency clause altogether. He could simply ensure that when it is used it meets the standards of the nearest SEV licence that has been issued by the relevant local authority.

An alternative that Cornwall council’s licensing department has suggested is to look at a mechanism similar to temporary event notices that are in existence under the Licensing Act 2003. That would give the local authority and the police an opportunity to consider and to object when applications were made for venues for one-off or infrequent sexual entertainment. Such a regime could also require premises to meet certain criteria providing adequate protection for performers and patrons. Those who wanted to stage sexual entertainment at occasional venues would have to meet the requirements placed on more permanent venues, ensuring safeguards against sexual assault or false allegations being made. Crucially in that scenario, local authorities could comment on and even refuse an application if they thought it appropriate to do so, or to add further restrictions. That could restore the vital input of local residents when deciding when, where and in what way such events take place in their communities.

The problem is not just in Newquay. In major cities throughout the country the sexual entertainment industry is exploiting this loophole in the legislation and is moving underground. We want to avoid that at all costs. The Government have the opportunity to act early. The Minister could make a significant difference, and the problem could be sorted out long before whole towns are teeming with competing, unlicensed sexual events, before the views of whole communities on whether, where and how such establishments exist are sidelined, and before anyone is put in harm’s way. My request to my hon. Friend is that he undertakes to look at the matter urgently. A small step from the Government could make a significant difference.

9.49 am

Diana Johnson (Kingston upon Hull North) (Lab): It is a pleasure to serve under your chairmanship this morning, Mr Howarth. I congratulate the hon. Member for St Austell and Newquay (Stephen Gilbert) on securing

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this debate and on setting out so clearly the current provisions and the particular problems with them that he has found in his constituency. Like him, I have never visited the establishments we are discussing; it will be interesting to hear whether the Minister has.

Lap-dancing clubs are a relatively new phenomenon in the UK, with the first clubs opening in about 1995. It has taken quite some time to refine the regime for controlling their operation. As we have heard in today’s debate, various licensing regimes have not been able to stop the proliferation of lap-dancing clubs, which is now a genuine concern for members of the public.

Although I think we are all agreed that we do not want to ban such establishments, it is quite right that the licensing regime recognises their special nature and the problems that they cause to local communities. It is perfectly understandable that people have concerns about the opening of such establishments in their local areas.

Such establishments are a part of the sex industry, and there are a number of valid reasons why people object to their existence. We have heard today about some of the problems in Newquay. I think all hon. Members would agree that it is vital for communities to have their say if and when applications are made for such clubs to open.

When such clubs first appeared in the UK in about 1995, there was no specialist licensing regime. The opening of sex shops and sex cinemas required specialist licences from the council, which had a range of powers to limit the availability of such establishments. There was also a specialist category of licence for sex encounter establishments, but that legislation applied only to London at the time. In all cases, while councils were responsible for specialist sex licences, magistrates retained powers over alcohol licensing.

That dual licensing approach was ended, as we have heard, by the Licensing Act 2003, which aimed to bring all licences for premises selling alcohol under one regulatory framework, under the direction of the local authority and guided by the four principles of licensing. They are the prevention of crime and disorder; public safety; the prevention of public nuisance; and the protection of children from harm.

While the intentions behind the 2003 Act were good, its application caused problems. There seemed to be widespread confusion as to whether a premises needed to declare adult entertainment as an integral aspect of the application and whether a council could take a position on the opening of such venues in its licensing statement. Several communities found that they could not prevent such premises from opening, and the application of the four basic licensing criteria seemed to vary extensively in relation to the opening of such establishments.

At this point I would particularly like to pay tribute to the work of my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) and of the campaign group Object. They did fantastic work to raise awareness of the operation of the 2003 Act regarding lap-dancing clubs and suggested a way to control such venues.

In government, Labour listened to those concerns. We realised that the 2003 Act had given rise to unforeseen consequences, and we therefore changed the law. Changes to the control of lap-dancing clubs were introduced under the Policing and Crime Act 2009 by the then-Home Secretary Jacqui Smith, and we now have the present regime.

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Under the powers contained in the 2009 Act, councils could decide to designate strip clubs, lap-dancing clubs and other similar establishments as sexual entertainment venues. Those in turn were controlled under the Local Government (Miscellaneous Provisions) Act 1982, in a way similar to that suggested by my hon. Friend and supported by groups such as Object.

However, the new powers are adoptive, meaning that councils may adopt them if they choose to do so. If they choose not to, lap-dancing clubs will continue to be licensed by the 2003 Act. It would be helpful if the Minister could set out how many councils have adopted the new approach. It would be interesting to know, given that the legislation was framed to give councils an option of taking that route, whether the vast majority have chosen to do so.

If councils use their discretion and adopt the new powers, both the council and local residents will have a much greater say over the operation of lap-dancing clubs. It will mean that the operation of such clubs will have to be reviewed annually; allow local people to object to the opening of a club if it is deemed inappropriate for the character of an area; and, even without objections, allow a local authority to reject an application on the basis that it is inappropriate given the nature of an area. The powers also allow a local authority to set a limit on the number of lap-dancing clubs in an area; limit the opening of such clubs to specific areas; and impose a wider set of operating conditions than can be imposed under the 2003 Act.

As I have said, it is down to councils to decide whether they want to use those powers. I am pleased to see that a number of Labour councils have been at the forefront of using the powers to ensure that local residents get a say in controlling such nightclubs. In particular, I commend Swansea’s Labour-controlled council, which has conducted an extensive consultation and decided that the maximum number of lap-dancing clubs in its city should be zero, reflecting the wishes of residents. It was interesting to hear about the situation in Newquay, with the five lap-dancing clubs before the change in legislation reduced to one using those provisions.

On the issue of infrequency and the loophole in the legislation, the hon. Member for St Austell and Newquay has set out clearly what that means on the ground to local communities. He is not alone in raising those concerns about the exemption. I would like to pay tribute to the Fawcett Society in particular, which has been highlighting that issue over a few months.

I can appreciate hon. Members’ concerns about such venues. Not only is it a concern that such venues can operate outside the normal licensing regime that other establishments have to comply with, and circumvent the controls that councils would place on their operation if they were subject to a licence, but it is understandable that people will have concerns about having lap dancing going on in, say, their local pub. The fact that such premises could be normal pubs for most of the time only makes it even more inappropriate that they are able to host such entertainment once a month.

Labour thinks that the issue needs to be reviewed and would be happy to work with the Government on that. The hon. Gentleman has suggested some positive

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ways of addressing the problem. I would be grateful if the Minister could tell us whether local authorities are monitoring and keeping a record of the use of the exemption. Do the Government plan to review the issue?

I look forward to what the Minister says about the matter. I know that the Government are keen to reduce regulation and do not want to see bureaucracy placed in the way of businesses; I have heard the Minister talk at length about that. However, in the present case, is he satisfied that there is sufficient regulation? I know that in recent legislation, the Government have reduced the bureaucracy relating to obtaining temporary event licences. Would he like to pursue that route, as suggested by the hon. Member for St Austell and Newquay?

The Minister, who is responsible for all licensing policy, will recall that one of the central commitments of the alcohol strategy was to rebalance the licensing regime in favour of local communities. It seems that the flouting of provisions related to the licensing of lap-dancing clubs needs to be addressed by tilting the balance back to the local community. Indeed, not only was that general claim about giving the community more power contained in the alcohol strategy, but it was followed up by the launch of a consultation that was supposedly intended to

“introduce stronger powers for local areas to control the density of licensed premises”.

Of course, that was before Lynton Crosby seemed to get involved in the whole alcohol debate, so I have a feeling that we might not be hearing much more about the alcohol strategy that the Government are to pursue, but I would be grateful if the Minister could say something about whether he is still committed to the aims that were set out just a few months ago.

Any changes that the Government have made seem to fly in the face of the commitment to give more power back to local communities. I want to raise with the Minister the announcement from the Department for Communities and Local Government, which seems to involve local communities losing their right to object to a change of use under planning law and potentially making the opportunity more available to businesses to set up lap-dancing clubs. As I understand it, they could turn a restaurant into a lap-dancing club without having to go through the normal planning applications. Would the Minister like to comment on whether that is really allowing communities to have their say?

I pay tribute to my hon. Friend again, and to my right hon. Friend the Member for Leeds Central (Hilary Benn), for their work in relation to the “Save our High Streets” campaign, which has been so effective at highlighting the dangers of some of the Government changes, which could make the opening of lap-dancing clubs more likely. Labour is very serious about looking hard at what happened with the Licensing Act 2003 and the changes that were made more recently, and about ensuring that the law actually does what local communities want it to do. As I said, I am very willing to look, with the Minister, at ways in which we could work on a cross-party basis to ensure that that happens.

Could I deal with one other issue? I am referring to the women who work in lap-dancing clubs. Some women choose to become erotic dancers—they make that choice themselves—but, like in the rest of the sex industry,

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there are many people working in this part of it whose choice is not so free. We know that the sex industry is responsible for a great deal of human trafficking and modern-day slavery. The Government have spent a lot of time over the summer talking about the proposed Bill to deal with modern slavery. Any progress in that area would of course be welcomed by hon. Members on both sides of the House, but as always the detail is rather sketchy, particularly about the support for victims. Perhaps the Minister can use this opportunity today to explain how that Bill would fit with the licensing regime, what interface there would be with regard to licensed premises that are found to have women working in them who have not made that choice about entering employment in the sex industry, and how that would fit with any provisions in the modern slavery Bill.

Mr George Howarth (in the Chair): The debate can run until 11 o’clock—that time is available—but in the event that it does not, I will suspend the sitting until 11 o’clock.

10.3 am

The Minister of State, Home Department (Mr Jeremy Browne): Thank you, Mr Howarth, for that cautionary note of introduction. It is a pleasure to be guided by you.

I pay tribute to my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert) for the passionate and well-informed way in which he introduced this important debate. I had the opportunity recently to visit him in his constituency in Newquay and to see all the work that he is doing with people in the local community, volunteers, the police, the council and others on behalf of the residents of that town. It was extremely impressive for me, as a Home Office Minister, to see how hands-on my hon. Friend is in ensuring that the views of Newquay residents are well understood and acted on by the authorities in that town.

The subject that we are considering today is very specific, tightly drawn and important, particularly in areas that attract large numbers of visitors. My hon. Friend made the interesting point that the population of Newquay increases, he estimates, from 20,000 to about 100,000 over the summer. Other places in the country, particularly seaside towns, also experience that surge in visitors, which puts particular pressure on local services, and the demands of those visitors, in terms of the entertainment that they are interested in, can change the nature and character of a town during the peak visitor period compared with other times of the year. That has been a point of particular interest for my hon. Friend and, as I have said, he represents the interests of the people of Newquay extremely effectively, both in the House of Commons and in the immediate community when he is discharging his duties in Cornwall.

I want to take this opportunity to set out the legal framework for the licensing of sexual entertainment venues. My hon. Friend will be aware—indeed, he has spoken about this—of the legal framework for the licensing of such venues, which was most recently considered under the Policing and Crime Act 2009, which amended the Local Government (Miscellaneous Provisions) Act 1982. The 2009 Act inserted into the 1982 Act a new category of sex establishment called a “sexual entertainment venue”, which brought the licensing of lap-dancing and

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pole-dancing clubs and other similar venues under the regime set out in the 1982 Act. A “sexual entertainment venue” is defined as premises at which relevant entertainment is provided, or permitted to be provided, in front of a live audience for the financial gain of the organiser or entertainer. “Relevant entertainment” may take the form of a live performance or live display of nudity and must be

“of such a nature that, ignoring financial gain, it must reasonably be assumed to be provided solely or principally for the purpose of sexually stimulating any member of the audience”.

That is the way in which parliamentary draftsmen and civil servants have sought to define this form of entertainment.

The 2009 Act set out the fact that decisions on licensing applications are best made at local level. We have touched on that during this debate, and I must say to the hon. Member for Kingston upon Hull North (Diana Johnson), who speaks for the official Opposition, that it is our intention to try to empower local communities. I think that it is a difficult for her to criticise the Government for being insufficiently vigilant when it comes to empowering local communities when, at the same time, she constantly criticises us for not taking a more active role in imposing the will of central Government on those local communities and local councils.

Obviously, if we give local councils room for manoeuvre, some flexibility, and the discretion to make judgments about what is in the interests of the area that they serve, they may come to different conclusions. That is the essence of local democracy. If they were all obliged by central Government to do exactly the same, there would be no point in having local elections or local consultation, because there would be one single blueprint imposed by central Government. That is a reasonable political philosophy. People on the left tend to be in favour of standardisation and centralisation, but if someone is liberally inclined, as I am and I believe the Government are, they tend to take the view that people should be given greater discretion over how they live their life and that individuals and individual communities should enjoy a degree of autonomy to make decisions in their own interest. It is not the intention of central Government to steamroller every local council or to say that in every circumstance we know best. We want elected local councillors to make decisions that they think serve their community, listening closely to the people in that community, who elect them.

Local authorities can consider whether granting a licence for a lap-dancing club would be appropriate, having regard to the character of the area and the use to which other premises in the vicinity are put. We believe that that is the right approach. For example, a local authority may decide that it would be inappropriate to grant a licence for a lap-dancing club in a residential area or next door to a school. That remains the Government’s position: local areas are best suited to decide what is appropriate and manageable for their area, taking into account local characteristics and community concerns.

Diana Johnson: I am listening carefully to the Minister. Can he give us any idea of the number of local authorities that have decided to use the enabling provisions to adopt that approach?

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Mr Browne: I do not have the precise numbers for what has been done or not done by each local authority. The decision is for local authorities to make, which brings us back to the point that I made a moment ago: even if I had a list, the Government do not presume to tell local authorities what approach they should take as long as they act within the confines of the law, as drafted and enacted under the previous Government, who took the view that it was right to give local authorities some discretion. One could say that that was rather uncharacteristic, because the previous Government, particularly the previous Prime Minister, tended to manage things tightly from the centre. That is the position however, and this Government are inclined to take the view that local councils should make judgments that they believe to be wise on behalf of the local community. One council may take one approach and another council the opposite approach, but that does not mean that one is right and one is wrong; they might both be right, because the demands of the two different communities may be different.

There is a balance to be struck between licensing conditions that are rigorous and appropriate and imposing unnecessary bureaucratic burdens on legitimate businesses. The hon. Lady criticised me for my belief—and the Government’s belief—that we should not impose unnecessarily onerous burdens on business in a way that makes it less likely that they will create new prosperity and new jobs in their communities. I am pleased that under this Government well over 1 million new private-sector jobs have been created and the economy is beginning to turn a corner, despite the predictions of the official Opposition that at this stage we would have strongly rising unemployment and a flatlining economy. The official Opposition never seem to realise that the reason why the country is getting off its knees and back on its feet economically is because we have not followed their approach in government, which was a very regulatory, very prescriptive, very centralised approach, which—

Mr George Howarth (in the Chair): Order. The Minister is entering into an interesting discourse on the ideological framework behind all of this—I rather think we are heading towards John Stuart Mill—but he should confine his remarks to the matter in hand.

Mr Browne: Thank you for your guidance, Mr Howarth. That is an extremely flattering comparison with someone who is arguably the father of liberalism. I apologise; I was drawn down that path by the hon. Lady’s observations, but no doubt I strayed too far along it.

The Government want to ensure that the licensing conditions are rigorous and appropriate, but not so tightly prescribed that there is no room for flexibility or initiative or to respond to particular local demands. It is right that venues seeking to provide regular and frequent events of such nature are subject to tight and appropriate licensing conditions.

The specific exemptions to which my hon. Friend referred apply only, as he said, to those establishments that need not comply with the framework of regulations because they accord with three stipulations. First, there have not been more than 11 occasions on which relevant entertainment has been provided within 12 months.

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In other words, the exemption would not allow an establishment to put on such entertainment on a monthly basis over a year; it would need to be less frequent than that on average. Secondly, no such occasion lasts for more than 24 hours. It seems hard to imagine that an event of that type would last for more than 24 hours, but perhaps that shows a lack of imagination on my part, because that stipulation is in the legislation. Thirdly, no such occasion begins within the period of one month beginning from the end of any previous occasion. A person running such an establishment could not, for example, use their maximum quota of 11 exemptions on 11 consecutive Saturdays in the summer months. That would not be appropriate.

The exemptions are hard to abuse. They are narrow in range and represent intentionally limited circumstances. A venue cannot, for example, hold a regular event—even a monthly event—without falling foul of the regulations.

Stephen Gilbert: I remain grateful for the interest and the enthusiasm the Minister has shown in the debate and on his recent visit to Newquay. An owner may have more than one establishment in a town so, although the infrequency rules that he set out might apply to an owner with an individual establishment, does he accept that an owner with three or four establishments would effectively be able to run as many events as they liked over a period of time such as the summer?

Mr Browne: I am grateful for my hon. Friend’s intervention, because he makes an important point, which might not have been considered by Ministers and those drafting the legislation on their behalf in 2009. I shall come on to that point in a moment, because I want to address it head on. Before I do so, however, I shall complete what I was saying before his intervention.

The reason for the narrowly drawn exemptions is because the Government recognise the virtue in flexibility—interestingly, when the legislation was drafted the previous Government recognised this—as we want businesses and local communities to have discretion and room for manoeuvre. Whenever legislation of this type is drawn up, one-off occasions that may not have been envisaged by the House come to light, and it can be frustrating not to have flexibility built into the system for such circumstances. Exemptions were included because it was recognised that not all premises that provide “relevant entertainment” should be classed as sexual entertainment venues. It was argued during the passage of the 2009 Act that premises such as a pub hosting a one-off birthday party at which a strippergram has been booked, for example, should not require regulation in the same manner as lap-dancing clubs that offer entertainment every night, or even every week or month. Most people would recognise that distinction.

Premises that hold infrequent events continue to be regulated under the Licensing Act 2003. Hosting regular sexual entertainment without the relevant licence would represent a significant breach of licensing conditions, so there is a licensing framework, but it is not as prescriptive as that in the 2009 Act. The previous Government and this Government view that as the right balance to strike. However, we now get to the nub of the point made by my hon. Friend in his speech and in his intervention, which is whether it is possible for ingenious bar owners to use the exemptions in a way that gives

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them more scope to provide regular entertainment of a sexual nature than was envisaged by Ministers and Parliament when the legislation was introduced in 2009.

My hon. Friend said that an individual could own four or five venues in one town and put on a sexual entertainment evening every Saturday night through the summer season—May to September—at one of the venues, advertising it in the others. The individual could do that within the flexibility afforded to him or her by the 2009 Act, and could make a virtue to holiday makers of the entertainment being offered at the end of their week-long holiday, even promoting it as part of a series of activities across the four or five bars. If other people in the town who were running sexual entertainment evenings or events had straightforwardly registered and complied with the Act but did not seek to operate within the flexibility afforded, competition could be created between them and those complying with the Act but using the exemptions in a way that was not envisaged by Ministers and Parliament.

Perhaps such individuals’ behaviour is not as assiduous and deliberate as I have described, but it goes beyond the spirit of the exemptions. It happens in Newquay and, I suspect, in other parts of the country where large numbers of people go on holiday, particularly young visitors, including groups of young males—or in some cases perhaps not so young. In those places a judgment is made about the market for such entertainment.

I am happy to extend to my hon. Friend the offer of a meeting with officials and, subject to his discussion with them, perhaps a meeting with me as well, not to consider, for the reasons I and others have given, how to scrap the exemption, because we see virtue in flexibility—and there would be a risk of unintended consequences if we removed it altogether—but to discuss whether the flexibility is subject to abuse and there is scope to make changes so that it is exercised in line with the spirit of what Parliament intended when the legislation was enacted in 2009. I want to sound a cautionary note to my hon. Friend, as we need to see how this can best work in practice.

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The Government legislate and seek to introduce regulations the whole time, and there is pressure on the parliamentary timetable, so I cannot make my hon. Friend a specific offer this morning, but I recognise how well informed he is: he has raised a genuine concern, which is shared by many residents in Newquay, and no doubt in other parts of the country. We want a licensing regime that has flexibility but which is not abused. I am not saying that anyone is abusing it by breaking the law—but if they do so they should face the consequences—but that they are abusing it, not so brazenly, in respect of the spirit of the legislation. The safeguards that the previous Government sought to put in place to protect residents no longer have the intended effect.

As I say, I extend the offer, if my hon. Friend would like to accept it, to have such a meeting with officials, to explore a range of areas including whether there is potential for other licensing regimes or changes that the Government might consider to licensing more generally that could apply in these circumstances. We wish to ensure that communities receive the protection that they need and that local councils, acting on their behalf, are able to make decisions that people running sexual entertainment venues are required to respect and abide by, rather than bypass.

I thank you, Mr Howarth, for chairing the debate, and I thank the hon. Member for Kingston upon Hull North for her party’s interest in the issue which, I believe, reflects Parliament’s interest in ensuring that we have the right legislation. Most of all, I thank my hon. Friend for his assiduous service on behalf of his constituents. We look forward to hearing further representations as he strives so admirably to serve the people of Newquay in his capacity as their Member of Parliament.

Mr George Howarth (in the Chair): The debate has been dispatched with such efficiency that the sitting is now suspended until 11 o’clock.

10.27 am

Sitting suspended.

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Local Authority Pension Funds

11 am

Mark Field (Cities of London and Westminster) (Con): It is a pleasure, as ever, to serve under your chairmanship, Mr Howarth. It is nice to open this debate in a characteristically packed Westminster Hall.

This is an important debate, because whenever the broader public debate turns to the somewhat thorny subject of pension provision, a contrast inevitably tends to be drawn between those who enjoy generous public sector retirement packages and those who rely on rather more meagre contributions to a private sector pension. The former group is always accused of being insulated from the real world, its members living in a gold-plated retirement heaven for which the taxpayer foots the bill. Or so at least the characterisation goes, because most public sector funds are unfunded and are therefore paid out of general taxation, which is not the case for local government employees.

Across England and Wales, there are some 89 different local government pension funds that invest an overall sum in excess of £150 billion. Technically, those funds are backed by local government, but unlike the unfunded public sector schemes, the running of proper funds better recognises the costs of pension obligations and brings to bear a greater degree of financial discipline. The Government, however, think that the current scheme, with its myriad funds collectively paying out some £350 million in fees annually, is inefficient. They also believe that investment performance could be improved and that a higher level of accountability to local taxpayers should be introduced.

I understand that the Government’s preferred alternative is pooling, with independent funds fully merged to produce cost efficiencies and to open the possibility of investment in bulky, illiquid assets outside the scope of smaller funds. That alternative is not without risks and problems. Well funded schemes might, in effect, be bailing out less well funded schemes. With new bodies appointed to manage pooled funds, there would likely be less accountability and employer-employee representation. It is also a somewhat flawed assumption that larger investment funds will necessarily deliver better investment returns at a lower cost. Of course, there is a broad risk to all of us that politicians of whatever political colour might be tempted to use the large investment funds to pay for economically unsound infrastructure projects. Local council tax payers will end up footing the bill if we get that wrong.

That something needs to be done is not disputed. In running their own funds, local authorities are exposed to pressures to which other public sector employers are not subject. Rarely have public sector schemes been fully funded, which has not been problematic historically because, of course, benefits are paid out over many years. Furthermore, until the financial crisis hit in 2008, strong economic growth, positive investment returns and a rapidly growing public sector work force ensured a net positive cash flow into the local government pension scheme, which mitigated any risk of a benefit shortfall.

The outlook, however, has been deteriorating. In 2010 the average funding level for local authority schemes was about 80%, but many analysts expect that to fall to

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about 75% when the 2013 valuation is released, with the growth in cash deficits being of particular significance. There is concern that that could prove to be something of a long-term trend. Indeed, a 2012 report by the Office for Budget Responsibility estimated that by 2017 the public sector work force would have shrunk by some 710,000. Of course, a reduction in that number means fewer active scheme members. Also, many of those who are paying in are supplementing constrained household budgets by reducing their monthly pension contributions. Increased life expectancy also proves an additional pressure, as does the current investment climate and the impact of the financial crisis. Indeed, in the five-year period to the end of 2012, the local government pension scheme underperformed against the long-term return target assumed on its assets by an average of some 2.8%.

No one disputes that there are big challenges for those managing the local government pension scheme, and it is right that the Government are proactively considering ways to address those challenges. There is, however, growing concern among local authorities that we are rushing headlong at the wrong alternative, which risks unintended consequences. The Minister has in the past made clear his preference for a pooled scheme that would reduce management fees and result in greater collective investment power for councils, but there are considerable legal, compliance and investment issues that must be addressed when funds are consolidated. Governance can differ and the quality of portfolios obviously varies. Scheme maturity, cash-flow characteristics, investment strategies and deficit positions can all differ considerably. Addressing those issues will inevitably impose further costs, some of which will be borne by local council tax payers.

A local authority that has acted prudently by paying regularly into its pension fund and keeping salaries under control, for example, would likely be asked to contribute more to a pooled fund in order to plug a hole caused by a less prudent authority. A rise in council tax for that responsible authority would inevitably be required, with its residents effectively bailing out councils with historically poorer performing funds, which, at the very least, is democratically dubious. With £1 in every £5 of council tax currently being spent on employer contributions to the LGPS according to figures recently released by the TaxPayers Alliance, the implications for increased liability are clear.

It is also dangerous to assume that very large, pooled funds are necessarily better performing than smaller funds. In investment there are potential diseconomies, as well as economies, of scale. Monopoly providers, more concentrated risk and a lack of diversity may all end up being a significant drag on investment returns. Active managers understand that good investment opportunities are finite, and they will close strategies to new investors if additional inflows risk compromising returns for existing investors. Indeed, many of the best-performing LGPS funds in the long term have actually been the smallest. One such example, which is obviously close to my heart, is the City of London corporation’s investment returns. One might argue that the corporation has expertise close to hand, but none the less, the returns are significantly higher than the average of larger funds over the past three and five years. It is likely that the lower costs that could be gained from pooling are only a fraction of those investment returns.

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I will now address a specific London issue of which the Minister will be aware. The London Pensions Fund Authority, currently under the chairmanship of a former private equity specialist, Mr Edmund Truell, has been leading the charge in favour of consolidation and making known its interest in managing the pooled funds of the capital’s 32 local authorities and the City. I believe that bid is backed by the Mayor of London. The Minister will be aware that the bid has become a source of considerable concern among London councils, many of which believe that, if there is to be any merger of funds, it must be conducted by an organisation that better understands the LGPS and its sensitivities. Concerned authorities contend that the performance of the LPFA has been quite poor, and many feel that the LPFA simply has insufficient oversight, governance and representation. In that regard there is already a high level of accountability within the current system. Each administering authority is required to prepare a separate set of audited accounts that are fully accessible to local taxpayers. I wish to put those anxieties on the record, but they are not my primary concern.

Local authority pension holders and local taxpayers alike should be worried about the broader risk of any merged fund being subject to political interference. It might sound superficially attractive for London’s local politicians and Mayor to have access to a new pool of capital, which could support housing and other infrastructure projects across the city, but by the same token, how do we prevent that resource from possibly being subject to undue, partisan political influence? Much has been made of the Government’s desire to promote important infrastructure projects as a means of boosting growth, and I support that goal, but when such projects have stalled the finger has often been pointed at the lack of available private finance initiative funding or at the absence of investor appetite. However, investors tell me that, typically, the problem is not a dearth of available funds. There is, in fact, an enormous desire among large private sector investors to locate British projects in which to invest. The problem, as they see it, is the lack of sensible investment opportunities out there.

With politicians under increasing pressure to deliver sustainable growth, it is all too feasible that the economics will be rigged to justify the investment, with public pension funds siphoned into politicians’ pet projects or ones the private sector has deemed too risky—the High Speed 2 railway project springs to mind. Perhaps the Government are not cowed by the prospect of an unashamedly Tory Mayor digging into the public pension pot, but what if the incumbent Mayor looked and sounded a little more like Mr Ken Livingstone, the erstwhile Mayor? I am not suggesting that local government pension funds should not invest in public projects, but there is a significant risk that fund managers’ sound judgment will be clouded by meddling politicians seeking money for what prove to be uneconomic schemes.

The good news is that pooling is not the only way of making the efficiencies that are close to the Minister’s heart. Some local authorities are moving their funds into a form of joint working. As he will know, Cambridgeshire and Northamptonshire county councils have merged their pension fund administration operations, and the Society of London Treasurers is leading discussions on ways of pooling certain investments and securing a

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better arrangement for fees that are paid for investment opportunities where scale obviously plays a part. Local authorities that use collective investment vehicles can still use smaller-scale managers for other investment opportunities in a way that is appropriate for their funds.

Closer to home, one of my local authorities, the City of Westminster, works on a tri-borough basis with the royal borough of Kensington and Chelsea and the London borough of Hammersmith and Fulham. As a collective, they have managed to address a whole range of procurement issues—well beyond the issue of pensions—while improving resilience and developing staff expertise. Importantly for the three councils and for local ratepayers, there has been no merging of responsibility or loss of local control. When the team procures investment services, it can ask for a rate based on the combined amount of the three funds—about £2.3 billion of assets—instead of just one, so it can seek a more competitive arrangement and reduce management fees. The important point, however, is that funds can still consider other ideas individually if they are appropriate.

The tri-borough arrangement has so far worked well, and other boroughs and the Department for Communities and Local Government may wish to consider it. There are no legal obstacles or any requirements for primary legislation—other, perhaps, than the need for minor changes to regulations—so the implementation of such voluntary arrangements could be fairly swift, with summer 2014 identified as a potential start date for a pan-London co-operative scheme.

There is consensus among all the parties that change to the LGPS is necessary. However, it is likely the assumed benefits of pooling will not materialise for many years, if at all, or will be outweighed by the downsides I mentioned—time-consuming legislation, the expense of merging, potentially poorer returns and considerable conflicts of interest, which could see money siphoned into politicians’ pet projects. We are heading towards an election season, with local government elections in 2014 and a mayoral election in 2016, and this could be a high-profile part of the campaigning.

In debating this issue, we should not become preoccupied with duplicated management fees alone. Long-term returns, which quality management can deliver, will play a key part in reducing deficits and making the LGPS affordable and sustainable—coupled, of course, with a relentless focus on maintaining membership levels. In that regard, 20 London boroughs have voluntarily expressed their interest in joining a collective investment vehicle, which could deliver efficiency and value for money and be up and running in short order because it would not require legislation. Many local authorities, including those beyond the capital, have begun collaborative arrangements such as those between Northamptonshire and Cambridgeshire, and those arrangements should be given a chance to prove their worth.

The DCLG and the Mayor of London should not be distracted from the arguments against pooling by eyeing up a potential new pot of accessible gold for their infrastructure schemes. I very much hope the Treasury is not pressuring those two parties by suggesting that pooling pension funds and securitising their assets in that way is the only game in town if there are to be new infrastructure projects for the capital. If we lose focus in this debate, local government employees and the local council tax payer will pay the price.

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11.15 am

The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis): I thank my hon. Friend the Member for Cities of London and Westminster (Mark Field) for raising the important matter of the effectiveness and efficiency of the local government pension scheme. It is a hugely important issue for local government, as well as for taxpayers and beneficiaries of the scheme, and it is good to give it an airing. It often does not get the coverage it probably should, and I am disappointed Opposition Members are not here to discuss it.

My hon. Friend said the funded nature of the scheme ensures better financial discipline and recognition of the cost of pension obligations, and I thoroughly agree. Since taking responsibility for the scheme, I have been hugely impressed by the performance of many of the 89 individual pension fund authorities in England and Wales. I have been particularly impressed with the work some of them have been doing since we started this more public debate on working together. As my hon. Friend outlined, Northamptonshire, Cambridgeshire, authorities in London and others are looking at what they can achieve.

When I meet the schemes’ representatives, and when I speak at conferences, it seems that all the schemes share the view that we need to look at whether 89 is the right number or whether it should be lower. Equally, however, every one of them is clear that, even if the number is reduced, they should be one of those that remains, because they all claim to be the best fund in the land when I speak to them. I understand and appreciate that passion, but I have also seen enough data and evidence to be equally concerned by the mixed performance across the board, with inconsistency in investment performance and variation of fund management costs across the 89 funds.

That is not to say that the scheme as a whole is inefficient in any way, but I accept my hon. Friend’s point that there is room for improvement. That is why, on 21 June, I made a call for evidence on the scheme’s future structure. That call for evidence runs until the end of September, so I am sure my hon. Friend will forgive me if I say there is a limit to what I can say in response to his points. I appreciate he is seeking a firm and unequivocal response from the Government, and rightly so, but I am sure he recognises that it is important for me and the Government to keep an open mind during the call for evidence. It would, therefore, be inappropriate for me to express any determined preference or to give an indication of the Government’s position at this stage in the consultation process, but I will respond to some of my hon. Friend’s more general points and explain in more detail why I have made a call for evidence. I hope that will go some way towards answering some of his points.

Members will be familiar with the work of the public service pensions commission chaired by Lord Hutton of Furness. His final report, which was published in October 2011, made 27 recommendations, and one related directly to the local government pension scheme. In recommendation 23, Lord Hutton said:

“Central and local government should closely monitor the benefits associated with the current co-operative projects within the LGPS, with a view to encouraging the extension of this approach, if appropriate, across all local authorities.”

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I fully support the work being undertaken by the LGPS fund authorities on working in partnership in the way Lord Hutton envisaged, including in the areas my hon. Friend mentioned. I will continue to encourage and assist any initiative designed to offer better value for money for local authority employers and taxpayers.

We are asking the whole public sector to live within increasingly difficult financial constraints, and local government, as Members know, is no exception. Within the LGPS, between 1990 and 2012, the contributions paid by scheme employers as a proportion of total scheme income increased from 37% to 51%. The level of investment income going towards that cost has remained steady at around £3 billion, which means that, in percentage terms, it has actually decreased from 43% of total scheme income in 1999 to just 25% in 2012. It does not take a degree in rocket science to realise that costs are escalating at too fast a pace and that too much of that cost is falling to employers and taxpayers. The LGPS currently costs taxpayers £6 billion a year in employer contributions.

I can also report that the reform package agreed by Government for the LGPS will ensure that the cost of the new scheme to employers and taxpayers, when it is introduced in April, will not exceed 13% of pensionable pay. If, at future scheme valuations, that cap is exceeded, steps will be taken to recoup the excess cost, back to the agreed 13% cap.

There are, as has been noted, other costs associated with the scheme, which must be subject to rigorous examination—in particular the cost of scheme administration and fund management. For example, in the year ending March 2012, those costs were £127 million and £381 million respectively. I repeat my belief that there are many excellent fund authorities, both small and large, delivering first-class levels of service at a fair cost to the taxpayer, but we need to go further to ensure that every fund authority in England and Wales performs at the same high level that we know is possible, with none of the inconsistencies or variability that are so evident today. That is why I made the call for evidence on structural reform of the LGPS.

In taking that decision, I recognised that improving the efficiency and effectiveness of the current arrangements through collaborative and partnership working might result in a saving of some kind. Recent evidence from funds that have already formed partnership agreements suggests that that might be in the region of 10%, but it is open to question whether that range of savings will be enough, given the tight financial settlements that local authorities face in the time ahead. That is why I am determined to explore new and fresh ways of working, and why I have invited a wide range of interested parties to come back to me with ideas on how we can best take forward structural reform of the LGPS.

In his speech, my hon. Friend said that the Government’s preferred option was pooling, with independent funds merged to produce cost efficiencies. As I have said, I cannot comment today on the Government’s preferred option. As I said at the National Association of Pension Funds local authority conference in May, and repeated in the call for evidence, I am not ruling anything in or out. At the same conference, I made known my views on fund mergers. I made it clear that I am not wedded to the existing number of funds—89—in England and Wales, and that remains my view. I have also said on a

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number of occasions that I would not shy away from reducing the number of funds if that is what it takes to improve the efficiency and cost-effectiveness of the scheme. There is one thing I would rule out: it is almost certain that we would not be thinking about having one scheme. Apart from anything else, I know that the market would have strong views on that.

My hon. Friend went on to make the important point that, because of their size, some fund authorities do not have the staffing structure or resilience that some of their larger counterparts enjoy. Some fund authorities are experiencing recruitment and retention problems at a time when many long-standing and experienced staff have retired or are close to retirement. I suggest that one way of resolving those concerns would be to base the scheme around a smaller number of fund authorities, which, in time, could develop as centres of excellence in the way that my hon. Friend has outlined this morning. He gave examples of a couple of authorities that are moving that way already.

My hon. Friend raised some different options for change, including fund mergers, the pooling of funds or assets and collaborative working. I commend my hon. Friend for his thorough analysis of the potential pitfalls and I will of course ensure that his comments are taken on board. I invite him to come and see me at the end of the call for evidence, for another meeting to consider where we are, with a view to using some of his expertise to avoid such pitfalls. I assure him that I am happy to explore any alternatives and ideas if it can be shown that they could achieve the desired result of improved efficiency and better cost-effectiveness. That is why in the past few months I have happily kept my door open—and will continue to do so—to anyone in the sector with ideas for moving forward, and options for the scheme’s future.

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I share my hon. Friend’s view that we must guard against rushing headlong into a wrong alternative, risking unintended consequences. That is why, in the call for evidence, we invited comment on the specific question of data and, in particular, the type of data that are needed, so that we can better assess the current position of the scheme and the 89 individual fund authorities that administer it and manage its investments. I am sure that hon. Members will agree with me when I say that we must understand the problem before attempting to resolve it. We need a better analytical tool to determine what makes the difference between a bad pension fund and a good one, and better data to help us assess the size of fund that achieves optimal economies of scale.

Structural reform of the scheme will not be easy, and I do not underestimate the challenge that the Government have taken on, but I am determined to make progress as quickly as possible, for the benefit of the scheme, the beneficiaries, and the taxpayer. When the call for evidence has closed, on 27 September, we will work in conjunction with the Local Government Association to analyse the responses. We intend then to issue a consultation paper on the options for change very early in the new year. I hope that hon. Members will agree with me that the call for evidence on structural reform of the LGPS in England and Wales represents a key stage in the process of improving the efficiency and cost-effectiveness of the scheme and ensuring that it remains sustainable, affordable and fair to those who pay its costs.

11.25 am

Sitting suspended.

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Climate Change Act

[Katy Clark in the Chair]

2.30 pm

David T. C. Davies (Monmouth) (Con): Five years or so ago, with apparently irrefutable evidence that the Earth’s temperatures were rising out of control as a result of carbon dioxide emissions, the then Government, with support from left and right, passed the Climate Change Act 2008, which committed the Government to cutting emissions by 80% by 2050. In order to do that, the Act introduced a series of measures, a raft of extra taxes and a whole bureaucracy, which have made it ever more expensive for home owners and, just as importantly, businesses, particularly large manufacturing industries, to buy gas and electricity. That has had the perverse effect of making cheap forms of energy, such as coal and gas, expensive and subsidising expensive forms of energy, such as solar and wind, so that they can operate.

The 2008 Act was based on the belief that reducing CO2 emissions would reduce global temperatures, or at least stop the increase that was apparently going on at the time. Britain’s carbon dioxide emissions are actually tiny; they are about 1.6% of total world CO2 emissions, which I believe is less than China’s year-on-year increase. Furthermore, the Government have argued—I respect the Minister greatly, but I am afraid we will have to disagree rather a lot this afternoon—that the costs will not be that significant.

A few years ago, the phrase on everyone’s lips was “peak oil.” The greens were setting up transition towns all over the place and arguing that we should go back to weaving baskets and driving horses and carts, because we were about to run out of oil. The following week, the same people would be complaining about all the oil and gas that there was, which I thought at the time was a bit strange. In any case, the idea of peak oil was one that we all followed and, to me at least, it made a little bit of sense to try to develop our own forms of energy.

Finally, of course, there was an argument about energy security. We all accept that there are good reasons for wanting to have our own energy sources so that we do not have to rely on other people. An argument was proposed that developing our own solar, wind and biomass energy would be good from a security point of view.

Philip Davies (Shipley) (Con): I am delighted to be one of the four remaining MPs who voted against the Climate Change Act in the previous Parliament, all of whom are in the room today. Although my hon. Friend rightly wants to chastise the Government, does he acknowledge that the Act, which has done so much to add to people’s energy bills, was actually steered through Parliament by the right hon. Member for Doncaster North (Edward Miliband), who is now Leader of the Opposition? Does my hon. Friend also agree that the Labour party has played a huge part in increasing energy bills, and that it is no good for Labour Members to complain about fuel poverty when they have created so much of it?

David T. C. Davies: Indeed, I do agree. I am sorry that I was not a member of the famous five who voted against the Act in 2008, but I hope I will now do

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something to put that right. I am pleased to see my hon. Friend the Member for Chichester (Mr Tyrie) here, because he helped to steer the opposition to the Act at the time.

I must confess that I was one of those who accepted the arguments that were made—I supported the Act when it was passed. Of course, part 1 clearly states that the Act is open to amendment if the science changes or if significant developments in science become clear. I contend that, given what we now know about climate science, we have a strong argument for reconsidering the Act with a view to either revoking it completely or drastically amending it.

Mr Andrew Tyrie (Chichester) (Con): Does my hon. Friend agree that the Act is without doubt the most foolish piece of statute that any of us here is likely to see in Parliament? Does he further agree that the very principle of unilaterally re-embarking on a crash programme of carbon reduction can only have the effect of exporting our energy-intensive industries to places where they may emit more carbon, and that carbon reduction will have only a nugatory effect on the problem because, as he correctly states, the Chinese are increasing carbon emissions faster than we are succeeding in reducing them?

David T. C. Davies: I completely agree with my hon. Friend. He is jumping a little ahead of what I was going to say and has saved me the trouble of saying it, but he is absolutely right. It is ludicrous for us to embark on drastic reductions of carbon dioxide at huge cost to our manufacturing and other industries when nobody else will follow.

A lot has been said about how the science is settled and how anyone who denies the science is some sort of climate change denier, which is nonsense. The very last thing I want to do is to deny that the climate changes. In fact, the climate has been changing probably ever since the Earth was created 4.5 billion years ago. The real deniers are those who deny that change took place before about 300 years ago.

Philip Davies: I am very grateful to my hon. Friend for giving way. I promise not to interrupt him again.

Does my hon. Friend acknowledge that although the issue used to be called “global warming”, when the globe stopped warming the fanatics changed the name to “climate change” because nobody can ever deny that the climate changes? As he has just acknowledged, the climate always changes, and by changing the name they admitted that their previous hypothesis was wrong.

David T. C. Davies: My hon. Friend is absolutely correct.

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): I thank the hon. Gentleman for very kindly giving way so early in his speech. I know that I will have some minutes to speak at the end of the debate, but I want to ask him this question now. Why does he believe that 97% of more than 4,000 peer-reviewed studies by climate scientists over the past two years agree, first, that climate change is happening, and secondly, that it is man-made?

David T. C. Davies: First, as I have just said, climate change is happening, just as it has always happened. Secondly, we must consider the nature of what has been suggested is going on. Carbon dioxide is a warming

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gas—that is a scientific fact. There has been an increase in carbon dioxide in the atmosphere since we started industrialising—that is also a fact. Where I beg to differ is that it is not proven that the carbon dioxide that has gone into the atmosphere is responsible for the relatively small amount of warming that has taken place since industrialisation. The total amount of warming that we are talking about is some 0.8° C; it is a very small amount in the scheme of things.

When we started to industrialise, we were coming out of a very cool period known as the little ice age; it was so cold that the Thames used to freeze over and they used to have ice fairs on it. That is part of a pattern of cooling and warming that has been going on for several thousand years. We had a warm period during Roman times, and things became cooler again during the dark ages before becoming warmer during the mediaeval warm period. The temperature then became cooler before it started warming up again.

Some of the 0.8° rise has to be down to the fact that we were going to warm up whatever happened, because we were coming out of a cool period. Is the hon. Lady able to tell me how much of that 0.8° rise is a result of the natural warming that should have taken place? Perhaps she could also tell me why we cannot make a straightforward correlation between CO2 emissions and temperature. If she is right, as the amount of CO2 going into the atmosphere increases, temperatures ought to increase, but that is not what happened at all. We have seen increases and decreases. Temperatures went up in the first half of the last century, but after the second world war, as we industrialised and started to pour much larger amounts of CO2 into the atmosphere, temperatures went down again until, in the 1970s, everyone was predicting a forthcoming ice age. Temperatures then started to increase again until about 1997. Since then there has been absolutely no increase in temperature whatsoever, and that is with all the industrialisation going on in China and India.

Perhaps the hon. Lady can tell us—

Katy Clark (in the Chair): Order. I remind the hon. Gentleman that the hon. Member for Liverpool, Wavertree (Luciana Berger) is not here to answer his questions, and she will not be given an opportunity to do so by the Chair. I suggest that he does not direct all his questions at her.

David T. C. Davies: I appreciate that. I am picking on the hon. Member for Liverpool, Wavertree (Luciana Berger) because she intervened last. Perhaps somebody, somewhere—maybe the Minister—will be able to tell me why there has been no warming since 1997.

The Minister of State, Department of Energy and Climate Change (Gregory Barker): I do not want to enter into a ping-pong match, so I will try to hold myself in until the end. I have brought a helpful graphic with me, which I will pass to my hon. Friend. The graphic might answer some of his questions so that we can have some cool analysis in this debate.

David T. C. Davies: I also have a typical graph, and very worrying it is, too, because we see that over the past 150 years there has been a huge spike in temperatures, which would be enough to worry anyone—it got me

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going in 2008. The problem with it is that it does not take into account the fact that if one goes back 1,000 years, 2,000 years or 1 million years, one will see large increases and decreases in temperature and in the amount of CO2 in the atmosphere.

I was thinking the other day that we would need a graph going back at least 1 million years to get any idea of what is really going on. If we had one—1 million years is still only a fraction of the earth’s 4.5 billion-year history—we would see that most of the time, ice covered the northern part of the earth. We have been in an ice age for roughly 90,000 out of every 100,000 years. For 10,000 years, it would warm up, and then it would go back to being cold. We seem at the moment to be coming to the end of 10,000 or so years of relative warmth. It is an ice age that we should be worried about.

If we want to make policy based on graphs like this, we need to look at what is really going on. We need to go back 1 million years, and based on the scale of the graph that I have, we would need a graph 10 km long to get an idea. I did a 10 km race for charity on Sunday in Cardiff. It took me 42 minutes, which—I am not trying to brag—I am told is not bad for a 42-year-old. What has happened is as though I had run for every one of those 42 minutes past a graph showing peaks and troughs in temperature, and then looked at the last 3 cm and decided, based on that, to embark on a Government policy that would cost my country billions of pounds and thousands of jobs. That is absolute madness.

Dr Alan Whitehead (Southampton, Test) (Lab): I really do not know where to start with this flat-earth love-in. Does the hon. Gentleman accept the observations of the Met Office Hadley Centre, or is the Met Office in on the conspiracy? If it is not, the recent papers that it published considering anthropogenic warming globally over an extended period demonstrate clearly that recent changes in weather, and pauses and reductions in temperature increase, in no way affect the underlying issues of global warming. The Met Office is clear about that, and about the effect of the overall increase in anthropogenic carbon dioxide on the overall temperature systems of the world, as well as on the atmosphere, the oceans and the surface temperature of the world as a whole.

David T. C. Davies: No, I do not accept that at all. The Hadley Centre did everything possible to withhold its evidence and calculations from anyone who wanted to look at them independently.

Dr Whitehead: So they are in on the conspiracy.

David T. C. Davies: I am not going to answer an intervention made from a sedentary position, but I have made my point. It is absolutely disgraceful that Government-funded bodies have tried to withhold evidence from people who want to examine it independently. I have tabled written questions to the Met Office while this Minister has been in office. I have had to table and re-table them, because I have asked for graphs showing what the temperature increases will be, and the Met Office has hidden them as well as it can on its website, because it does not want to make it plain that there has been no increase in temperature since 1997.

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Maybe the Met Office should start explaining why its predictions are so wrong and why there has been no increase, despite the enormous amount of CO2 produced since then. Maybe it should tell us how much of the increase that has taken place resulted from natural warming as a consequence of leaving the little ice age.

Gregory Barker: Is my hon. Friend genuinely saying that he thinks the Met Office is a part of some conspiracy or has some hidden agenda? I have been to the Met Office and met the professionals there. They are distinguished people with excellent records. There is no uniform view on any single element of science; it deals with probabilities, and it changes. Is he genuinely saying that all those learned people are in on some conspiracy?

David T. C. Davies: What I am saying is that they are unable to answer basic questions. I am sure that the Minister will have put this question to them; he is a highly intelligent man. It must have occurred to him that it is a bit strange that there has been no increase in temperature since 1997, despite the predictions in the ’90s that it would rise every year. He must have asked about that, and I am sure that in his speech he will tell us what the Met Office said.

At the same time, I am sure the Minister will have asked the Met Office how much of that temperature increase was due to man-made global warming and how much was due to natural factors. I am sure that he will have concluded, based on the facts alone, that some of that increase in temperature must have been due to other, natural factors, and that he will want to tell us how much.

My problem with the Met Office is that its entire model seems to be based on the following premises: x amount of CO2 has entered the atmosphere; there has been an increase of nought-point-something degrees in temperature; therefore, that increase has been caused by the x amount of CO2. The Met Office has then gone on to conclude that a similar amount of CO2 put into the atmosphere will create a similar increase in temperature, which is absolutely unproven. There is no reason to assume that just because a certain amount of CO2 has caused a certain increase in temperature, a similar amount will cause a similar further increase. The Met Office has also assumed that the increases in temperature will cause all sorts of feedbacks that will create further increases. Its models are based on that theory, and it is unsound science.

Gregory Barker: Nobody suggests that the definitive evidence for climate change rests on incremental year-on-year temperature increases. One must look at trends when looking at the science. We are dealing with long-term trends. We are not dealing with weather; we are dealing with climate. Although my hon. Friend is right that there has been no substantial absolute year-on-year increase since the beginning of the century, the fact of the matter is that in terms of average global temperatures, the 1980s were significantly warmer than the 1970s, the 1990s were warmer than the 1980s and the years 2001 to 2010 were by far the warmest 10-year period on instrumental record since 1850. It was not the same

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year-on-year incremental, but taken across the decade, it was by far the warmest, and I have here the graph to prove it.

David T. C. Davies: The Minister is going back 150 years and showing me a graph. The point that I made earlier is that the graph would need to be 10 km long to give any real sense of what is going on with the climate. He himself said that we are not talking about weather; we are talking about climate. Climate is not something that goes on over a decade, or even 150 years. It takes place over millennia.

Gregory Barker: It dates from 1850 because that is when reliable instrument records date from. Obviously, there are data much further back, but I was dealing with instrumental scientific records.

David T. C. Davies: Absolutely, but one of the problems with the calculations made by the Met Office is that they use tree rings, ice samples and all sorts of other things to calculate what went on before 1850, but the Met Office is not prepared to use similar methods to calculate what has gone on since then. It has married up temperatures from weather stations with data predating them, and then tried to make similar comparisons. It does not work.

David Mowat (Warrington South) (Con): I hate even to semi-defend the Met Office, but my hon. Friend is talking with certainty as though the science were settled in his favour. Does he accept that due to physics, CO2 and water vapour increase temperature? What we do not know is how much. We have two effects: natural and man-made CO2. They interact. On his point about the last 12 or 15 years, it is true that there has been no warming. That is because warming is non-linear. One explanation could be that there is one chance in 15 of the models being right and that happening. That is not insignificant.

David T. C. Davies: There is another explanation, which is that they do not have a clue what they are doing. Based on the precautionary principle, perhaps we should not hobble the entire manufacturing industry in this country alone on the assumption that they have got it right. I accept my hon. Friend’s point about water vapour, which is important. Water vapour is a far more important warming gas than CO2, although neither is a pollutant. Without CO2, we would have none of the trees, plants and wildlife that the greens—and I, actually—love so much.

Graham Stringer (Blackley and Broughton) (Lab): Will the hon. Gentleman give way?

David T. C. Davies: I will give way one last time and then move on, because there are people in the Chamber from whom I would like to hear.

Graham Stringer: The hon. Gentleman need not rely on a conspiracy between the Hadley Centre and the Met Office. He should look at the Oxburgh report on the Hadley Centre and the work of Professor Jones, who leads the centre. He will find that Professor Kelly from Cambridge said that Professor Jones’s methodology is

“turning centuries of science on its head”.

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He also found, as the Oxburgh report found, that none of the work the Hadley Centre was doing under Professor Jones was replicable. As I understand science, one must be able to test it, so I hope the hon. Gentleman agrees that what Professor Jones was doing was not science but writing narrative.

David T. C. Davies: I am grateful for the intervention and agree 100%. We could argue a long time about the science, but even if the Minister does not accept anything that I am saying—although I hope that he will answer my questions at some point—for us to embark on a unilateral policy, without anyone else in the world following us, is surely folly.

Mr John Redwood (Wokingham) (Con): I am glad that my hon. Friend is moving on, because what worries me is our attacks on people’s energy bills—the poorest suffer most—and on British industry, because we have such penal energy policies. Tony Abbott recently won an important election victory in Australia saying that for him it was a referendum on the carbon tax, because he simply rejected dear energy for Australia. He was right about that for Australia, and should we not be doing the same here?

David T. C. Davies: I hope that a certain other Australian who works closely with our leader is taking note.

I have tabled a lot of questions to the Minister on the issue. In reply to one, he has said that by 2020 around 23% of household electricity bills will be as a result of climate change policy. I have also tabled questions to find out, thus far without success, how much of the NHS electricity bill goes to support wind and solar farms. Another of his answers, which I do not have to hand, suggests that every person in the country will be paying between £4,700 and £5,300 a year towards the Government’s climate change policies. We have embarked on a hugely expensive course of action, which no other country in the world shows any signs of following.

I am anxious about what those policies will do to manufacturing jobs. I spoke recently to people at Tata, which is a huge employer in Wales, and they said that the costs of electricity and labour in this country mean that they are thinking of relocating abroad. When they do, they will be taking the factories with them, which will still emit the same amount of CO2 globally, but the jobs will be elsewhere and the foreign exchange will be going out of the country instead of coming in.

Gregory Barker: Of course we have to be careful about the costs levied on industry, wherever those costs come from. My hon. Friend’s argument would hold more water, however, were it not for the fact that Germany, Europe’s manufacturing powerhouse, has increased its share of the global market in manufactured goods every single year since the beginning of the century—it has massively increased its global market share—and is at the same time the largest European producer of renewable energy. Germany produces far more renewable energy than the UK, and has paid more for it, because it was an early adopter.

Katy Clark (in the Chair): I remind the Minister that he will get the opportunity to respond at the end of the debate. This is supposed to be the time for Back Benchers.

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I also remind all Members that interventions are supposed to be brief. Every intervention so far has been lengthy, so perhaps any further ones could be shorter.

David T. C. Davies: I will take that as a hint, Ms Clark.

I know Germany extremely well, and the German politicians that I have spoken to about that think, in private, that it is barking. They will tell anyone that Germany has to buy in energy—nuclear power from France—because it simply cannot get enough from wind.

Barry Gardiner (Brent North) (Lab): The hon. Gentleman talked about our country legislating for this area and leading alone, but will he peruse the GLOBE International report on 33 countries, 32 of which are making what I would call progress—I am sure he would not—in the area? Britain is not doing things alone; 32 like-minded countries are passing legislation to similar effect.

David T. C. Davies: I look forward to hearing from the hon. Gentleman in a moment.

David Mowat: Germany’s global carbon emissions are 20% higher per capita and per unit of GDP than ours, and the reason is that, notwithstanding its renewables, it burns much more coal than we do. Germany is accelerating coal production in order to bring electricity prices down.

David T. C. Davies: I will perhaps draw my remarks to a close.

With all due respect to the Minister, one of the things that makes me most suspicious is the attitude of the greens themselves. We can offer ways of providing cheap and reliable forms of electricity without carbon. For example, nuclear power provides 70% of the electricity in France, but the greens do not want to know about nuclear power; as soon as anyone mentions nuclear power, they jump up and down in a rage. Fracking for gas has driven down not only energy prices in America but its carbon dioxide emissions. America is one of the few leading countries in the world to have reduced CO2 drastically, because it is fracking for gas, instead of getting coal. As a result, manufacturers are now looking to relocate to the United States of America. Surely that is something that the greens should be pleased about.

Zac Goldsmith (Richmond Park) (Con): Will my hon. Friend give way?

David T. C. Davies: Yes. I thought my hon. Friend might want to intervene on that point.

Zac Goldsmith: I have heard what my hon. Friend has said with interest. He has a history of support for nuclear power, but can he provide a single example from the past 20, 30 or 40 years of a nuclear power plant being built, anywhere in the world, without the use of public subsidies?

David T. C. Davies: I do not argue that nuclear is the cheapest form of electricity generation, but it does generate electricity without carbon dioxide emissions. A recent report by the Royal Academy of Engineering suggested that nuclear power was certainly cheaper

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than offshore wind and probably cheaper than onshore wind. No one is arguing that nuclear is the cheapest form of electricity. If we want cheap electricity, we can burn coal; we have loads of it in Wales. There is no problem getting cheap energy; the trick, to keep everyone happy, is cheap and reliable energy without carbon dioxide emissions. Nuclear is one way of achieving that, fracking and using gas is another, while yet another way might be a Severn barrage, although I am not sure whether the economic case stacks up. A barrage could certainly generate a large amount of the UK’s electricity without any carbon dioxide emissions, but what is the response of Friends of the Earth? They are all running around worried about natterjack toads. They are not living on the real planet.

With all due respect to the Minister—he is a Conservative, as I am, and he understands how the free market works—it makes no economic sense for him to be subsidising industries that are uneconomic and punishing industries that are economic. The Minister need not think that any of those policies will win him friends in the green lobby. Whatever he does—he could cut CO2 by 80%, 90% or 100%, but it would make no difference—those people are not his friends. They will never support him. They are the same ban-the-bomb, left-wing socialists whom we remember from the 1980s and 1990s, and they have reinvented themselves in this environmental guise, because it is about the only way in which they can impose their economic world view on an unwilling populace.

I hope that the Minister will put my questions to the Met Office, or give us answers today. I urge him, however, in the light of all the evidence that has come out about the lack of any change in temperature over the past 15 years, to think again about the Act and to revoke it, amend it and support home owners and British businesses.

Katy Clark (in the Chair): Six Back Benchers have indicated in advance that they wish to speak, so I am imposing a time limit of six minutes on speeches.

2.58 pm

Barry Gardiner (Brent North) (Lab): May I respond to the questions of the hon. Member for Monmouth (David T. C. Davies), first about temperatures over the past three decades? They have been warmer than all preceding decades since the 1850s, so the first decade of the 21st century has been the warmest on record. He also suggested that we look back beyond 150 years. Analysis of the paleoclimate archives indicates that in the northern hemisphere, for which we have the best data, the period from 1983 to 2012 was, according to the scientists, “very likely”—with a 90% or greater probability—the warmest 30-year period of the past 800 years. They have that fact with high confidence, but they also have it as “likely”—greater than 66% certainty—to be the warmest 30-year period of the past 1,400 years.

On 27 September, the Intergovernmental Panel on Climate Change will publish its fifth assessment report on the physical science basis for climate change. It is a piece of global collaboration between 259 authors from 39 countries. It will provide the most authoritative scientific understanding of what climate change is and why it is happening. It has been through an exhaustive

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multi-stage peer review process involving experts and Governments and, critically from the hon. Gentleman’s perspective, has been open to review by proclaimed sceptics. Already, however, the climate change deniers are lining up to rubbish it. This debate has been good humoured and there has been a lot of laughter at what the hon. Gentleman said. It has been clubbable, but we must begin to pay attention to the science.

I have read the draft summary of the report that has been made available to policy makers. Its 31 pages leave me in no doubt that the window of opportunity to limit global warming above pre-industrial levels to 2° C is about to close. The figure is important, because beyond that 2° threshold, the effects of climate change clearly begin to degrade the ability of our existing social and ecological systems to support human life. Indeed, the parties to the United Nations framework convention on climate change are now carrying out an urgent review of whether it might be necessary to limit the rise to just 1.5° C. That report will be concluded in 2015

The IPCC shows that since 1901, the average global surface temperature over both land and oceans has risen by 0.89° and since 1950 there has been a 0.6° rise. The report concludes with 95% confidence that most—more than 50%—of the global warming that has occurred in that 63-year period has been the result of human activities such as the burning of fossil fuels and deforestation.

Mr Redwood: Does the hon. Gentleman agree that before industrialisation, there was a lot of global warming and then global cooling? Can he tell us what caused the global warming before man generated CO2?

Barry Gardiner: I will not respond to the right hon. Gentleman’s question simply because of lack of time, but I assure him that there was of course global warming and global cooling. We are looking at anthropogenic global warming, which is what we must be concerned about. He will accept that if we go over that 2° threshold, it will have damaging repercussions for all of us.

As significant as the 2° threshold is the report’s conclusions about a budget of future greenhouse gas emissions. It concludes that to reduce the chance of breaching that 2° limit to just 1:3, the total cumulative amount of carbon that is emitted in the atmosphere as a result of human activity must be less than l,000 billion tonnes. Some people would say that a 1:3 chance of our planet going wrong is still far too high, but let us work out the implications of the numbers.

Mr Redwood: Is the hon. Gentleman saying that things that used to cause global warming no longer operate, and can he quantify the impact of non-human factors at the moment?

Barry Gardiner: No, because we are debating the Climate Change Act 2008, which specifically deals with anthropogenic global warming.

The scientists tell us that since the industrial revolution we have emitted between 460 billion and 630 billion of that l,000 billion tonnes. That means that we have parking space in the atmosphere for a maximum of only 540 billion tonnes of carbon if we are to stand a two-thirds chance of avoiding dangerous climate change. Annual global carbon emissions are approximately 32 billion tonnes. The maths is simple. We have less than

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17 years left before we bust our carbon budget, and that is on the rather optimistic assumption that annual global emissions do not rise before 2030.

In the face of that extraordinary scientific consensus, is the hon. Member for Monmouth seriously asking Parliament to consider downgrading the UK’s 2008 Act because of the costs it imposes in moving to a low-carbon economy? Let us examine what the report says about the consequences of failing to meet that budget.

Mr Mark Spencer (Sherwood) (Con): Will the hon. Gentleman give way?

Barry Gardiner: I will not give way because I have little time left.

The report considers four different models under different greenhouse gas concentrations over the rest of this century. It specifically states that even on the lowest concentration model it is likely—the probability is 66%—that in the 20 years to 2100 the sea level will be between 26 and 54 cm higher than during the same period to 2005. The report does not point out, but I will, that it is estimated that more than 1 billion people live in low-lying coastal regions around the globe. The effect on those populations of even a 1 metre rise would be wholesale dislocation of refugees. Besides the human tragedy, the estimated cost of the breaching the levees in New Orleans in 2005 is $250 billion. The hon. Member for Monmouth will therefore see that costs are involved in breaching that 2° threshold.

The report states specifically that as global temperatures rise, heat waves are likely—the probability is 90%—to increase, and extreme rainfall events will become more intense as well as more frequent in localised areas. The report does not point out, but I will, that 52,000 people in Europe died as a result of the heat wave in 2003. Besides that human cost, it caused damage of $15 billion in the farming, livestock and forestry industries as a result of drought, heat stress and fire.

The report also states specifically that it is virtually certain—the probability is 99%—that the resulting storage of carbon by the ocean will increase ocean acidification. The report does not point out, but I will, that the destruction of coral reef by ocean acidification would eliminate the essential spawning, nursery, breeding, and feeding grounds of up to 25% of the fish in the sea. Their total biodiversity value alone has been calculated at $5.5 billion a year.

The cost of inaction in the face of climate change is enormous, and the benefits of taking it seriously are that we will create new jobs and technologies that can drive our economy forward. In 2011, just 6% of our economy—the green economy—provided 25% of all growth in the UK. The idea that we can ignore climate change because the costs are too high can be suggested only by a man who is prepared to put his wallet on one side of the scales and his children on the other.

3.6 pm

Mr Peter Lilley (Hitchin and Harpenden) (Con): The hon. Member for Brent North (Barry Gardiner) based much of his contribution on what the Intergovernmental Panel on Climate Change said, but he ended by saying that the costs of action were far less than the benefits. That is not what the IPPC says. It says that analyses of

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the costs and benefits of mitigation indicate that they are broadly comparable in magnitude, so it could not establish an emissions pathway or stabilisation level at which the benefits exceeded the cost. The hon. Gentleman’s messianic certainty is not based on what the IPPC said.

Governments make their worst decisions when both sides are united for the simple reason that no one exercises the proper function of scrutiny, which is what happened in 2008. The passage of the Climate Change Bill was a perfect example, and the measure became the most expensive, most ambitious and most uncertainly based legislation that the House has introduced during my time in Parliament. It was introduced with no discussion of cost. I was the only person who considered the impact assessment before the debate, because the Table Office told me that I was the only person to have taken a copy of it. It showed that the likely cost of the then Government’s measures, based on their own figures, and even excluding transition costs and the cost of driving industry overseas, were twice the maximum benefit. That was not discussed at any stage during proceedings on the Bill, not even when, in a spasm of self-flagellation, the target for reducing CO2 was increased from the 60% on which the costing had been made to 80%.

When the Bill was enacted, the Government produced a revised estimate of the costs and doubled them, but were stunned when I pointed out that the costs had exceeded the benefits and raised the benefits tenfold. From almost nowhere, they found another £1 trillion of benefits that they had previously overlooked. I can claim to be the greatest benefactor of humanity ever known because I caused £1 trillion to come from nowhere. That provides an idea of the Alice-in-Wonderland world in which such calculations are performed.

The Bill was introduced after scant discussion of the feasibility of decarbonising by 80% in 40 years, yet every other transition from one fuel to another—from wind to coal, from coal to oil, from oil and gas to nuclear—has taken far longer or been much less complete over a similar period. All were driven by a step reduction in the cost of cheap fuel driving out a less reliable and more costly fuel. However, the Climate Change Act 2008 requires us to replace cheap fossil fuels with energy sources that are at least twice as expensive and less reliable, which will be difficult to do; it is like driving water uphill.

So far, we have replaced 4% of our energy sources with renewables, against our target of replacing 15% by 2020. In other words, we are just over a quarter of the way there, and one twentieth of the way to our 2050 target. Other things being equal, the extra cost of moving to renewables will be four times higher in 2020 and 20 times higher in 2050.

Steve Baker (Wycombe) (Con): I hope that my right hon. Friend will not mind if I congratulate him on making such a persuasive case for the repeal of the Act without even going near the science.

Mr Lilley: Yes, but I am just about to.

The Act was introduced with no consideration of the uncertainties. Projections from climate models were taken as if they were infallible. In 2007, just before the Act was introduced, the Met Office Hadley Centre said:

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“We are now using the system to predict changes out to 2014. By the end of this period, the global average temperature is expected to have risen by around 0.3° C compared to 2004, and half of the years after 2009 are predicted to be hotter than the current record hot year, 1998.”

As we know, the pause that was already well established in 2008 has continued since then. There has been no 0.3° C rise, and all the years since then have been cooler than 1998.

I asked the previous Government in 2006 how long the pause would have to continue before the Met Office amended its model to take the reality into account. They sent people from the Met Office to come and see me in my office, and we had an interesting discussion. However, the answer was—this answer is also in Hansard—that they would not alter the model, because the model is right. If the facts are rebutted then, in the words of Hegel, so much the worse for the facts. That has been people’s attitude about it all. It is not science, because it is not refutable.

That does not mean to say that the greenhouse effect does not exist; I am a physicist by training, and of course it exists. The question is: how big is it? If it is of a modest size and it has been offset over the past 15 years by natural variations, is it not possible that in the previous 20 years, when there was a rise in temperature, some of that was due to the opposite movement in natural factors, adding to and amplifying any minor global warming due to CO2?

Mr Redwood: Does my right hon. Friend agree with the point that I was trying to make earlier to the hon. Member for Brent North (Barry Gardiner), who seemed to be unwilling to consider it? If one wishes to establish the impact of human CO2, one needs to understand all the other factors driving climate change, which might be up or down, and be able to quantify them. Otherwise, one cannot calculate the human effect.

Mr Lilley: Absolutely. When people say that there is a scientific consensus that all or the majority of heating that has occurred over the recent decades is due to man-made emissions, there is in fact no such consensus. If one drills down into the questions people ask, one will see that the questions in the first study included, “Do you believe that man-made emissions contribute to warming?” Yes, I do. “Do you believe that that is largely due to CO2?” Yes, I do. However, that does not make me an alarmist, and it does not justify anyone else pretending that every scientist is an alarmist—they are not.

The Act is not just the most expensive, impractically ambitious and uncertainly based piece of legislation that I have ever known; it is unique in being legally binding and unilateral. No other country has followed us down that route. Since we went down that route, Canada and Japan have resiled from Kyoto, and Australia has just abandoned its carbon tax. It is time we looked critically at the Act, repealed or revised it, and do not allow ourselves to be slavishly, legally bound to continue doing something that no longer accords with the evidence or goes along with what the rest of the world is doing.

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3.14 pm

Sammy Wilson (East Antrim) (DUP): All reason and self-critical analysis go out of the window when people address this subject. When I was the Environment Minister in Northern Ireland, I refused to use some of the Department of Energy and Climate Change’s scary propaganda and adverts, and I was censured by the Assembly. When I pointed out to the mover of the censure motion that he had driven to the Assembly that morning in a 4x4 that did about 12 miles per gallon; that his mileage claim for the previous year would have taken him twice around the globe; and that his carbon footprint was enormous, he did not seem to see any irony in the fact that I did not believe what he believed about climate change and the man-made contribution to it, or in the fact that he was moving a motion against my position.

That is one of the problems. Even in today’s debate, we have exchanged the science, the figures and the graphs, but people still do not want to believe what they see before their eyes. I do not want to go into all the figures that have been given today, other than to say that, if the Minister talks about trends, is 150 years not a long enough trend? Yet the increase over 150 years is 0.8° C, even though masses of carbon has been put into the air. If we look at short-term trends—when the Climate Change Bill was passing through Parliament, we were told to look at the short term as well—over 10 years we have seen a 0.08° C increase, despite the fact that carbon emissions have gone up.

I do not want to get into the premise behind the issue; I want to get into the cost behind the policy. I started looking at the Treasury’s Budget 2013. The costs were never hidden; at least we were always told that there would be costs—£18 billion a year. Let us first look at the cost to industry. If we look through the Budget book, there are a number of costs. First, there is the carbon reduction commitment, which affects service and manufacturing industries. It costs more than £1 billion a year and rising. There is the carbon price floor, which wipes out—in fact, by more than double—the impact of the reduction in corporation tax this year. Over the life of this Parliament, it will take £4.4 billion away from industry. The climate change levy will cost £1.5 million this year. Put together, miscellaneous environmental levies will cost £6.7 billion this year, and that is only the cost to industry.

Steve Baker: Does the hon. Gentleman agree that one of the problems with speaking about such figures in these hallowed halls is that we have forgotten that £1.5 million is quite a lot of money?

Sammy Wilson: Yes.

Let us put the cost in terms of jobs in the steel mills that have left Scunthorpe, the aluminium works that have left Anglesey and the brickworks and chemical factories that have closed down. The European Union has warned that there will be—I love this euphemism—carbon leakage. That leakage amounts to millions of jobs in the chemical, fertiliser and other industries. That is the cost that we have to consider when we look at the 2008 Act. There is uncertainty behind it, yet there are real pressures on our economy.

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Mr Christopher Chope (Christchurch) (Con): Does the hon. Gentleman accept that the cost is not just financial but environmental? For example, the construction of the proposed Navitus bay wind farm off the south coast of Dorset will be an absolute excrescence. That is an additional cost as a result of the policies.

Sammy Wilson: I look at my own constituency of East Antrim. The Environmental Minister in Northern Ireland is one of the green zealots who want to see wind farms all around the place. Some of the most beautiful tourist areas are now being destroyed. We market Northern Ireland on its scenic beauty, yet we destroy it. Of course, that impact is unquantifiable.

Let us look at the cost to consumers. Last week in the Chamber we debated the cost of electricity to consumers. Taking DECC’s own figures on the impact of climate change policies on business electricity bills, bills will be up by 22% this year, 46% by 2020 and 66% by 2030.

Barry Gardiner: Will the hon. Gentleman give way?

Sammy Wilson: I have already used most of my time, so I do not want to give away any more time.

Domestic consumers’ electricity bills are up by 17% this year, and they will go up by 33% by 2020 and 41% by 2030, but we complain about fuel poverty. There is an almost schizophrenic approach to this question: on the one hand, we complain about the effects; on the other hand, we vigorously pursue a policy that produces those effects.

Every time we go on our holidays, we pay for climate change. Every time we pay our council tax bills, we pay for climate change. In 2007, £102 million was set aside for climate change advisers, climate change managers, carbon reduction advisers and so on, and the situation is probably far worse now. Whether we are paying our council tax or electricity bills, or looking at jobs, the impact is quite dramatic.

People say, “Oh, but the other side is that there are all these green jobs,” and that those jobs will somehow offset the problems. Actually, all the studies show that, for every green job, 2.2 jobs are lost in other sectors of the economy. Every green job created in Europe—this was in a European study—costs about €600,000, which is far more than jobs in other sectors. For the capital we have to invest to get one green job, we could get 4.8 jobs in the wider economy. The myth that green is somehow good for growth is not, therefore, backed up by the facts or even by reports from those who drive many of these polices.

I am glad that there is at least a wider debate about the issue. The one thing we know is that the general public have not been convinced; that is why there have been scare stories about food stocks running out, cities being submerged, 20-metre increases in tides and wildlife being wiped out. Indeed, Professor Schneider and Sir John Houghton both said we needed scare stories, because that is the only way to focus people on the issue. Of course, in their boldness, the likes of the Met Office and the BBC have given their scare stories far too short a time period, and they are now being proved wrong. It is okay if people say something will happen in 100 years, but if they say it will happen in 10 years, people will remember, and if it does not happen, the scare will not have much of an effect.

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Let me close with the words of the Chancellor, which I hope will prevail in Government policy. He has said that we make up less than 2% of the world’s carbon emissions, so we should not try to save the planet by putting business in our country at risk. That is why this is a good debate and why we need to keep pressing on this issue.

3.23 pm

David Mowat (Warrington South) (Con): Up until now, there have been two main groups in the debate: those who accept that man-made global warming is happening and, therefore, that we need the Climate Change Act; and those who repudiate the idea that it is happening and who think, therefore, that we do not need the Act. I am actually in a third set: I am prepared, on the balance of probabilities, to accept that man-made global warming is happening and needs to be addressed, but I have some severe reservations about the Act, and particularly about the thrust of climate policy in this country.

Why do I accept the science? First, I am ignorant. Frankly, there is too much certainty on both sides of the debate. I agree that the science is not settled, but Members on both sides of the debate talk as if they were more certain of everything than I am of anything. My ignorance on this issue leads me, under the precautionary principle—I have a degree in applied science, although that does not make me an expert—to accept that much of the balance of science, as has been correctly said, says that man-made global warming is happening.

Mr Spencer: Given that the whole House seems to accept that the climate is changing, does my hon. Friend feel it is legitimate to debate whether we should spend taxpayers’ money on renewable energy schemes or on mitigating the damage climate change could do to our communities?

David Mowat: That is a different matter, namely adaption. I have a lot of sympathy with that point, particularly given the world’s record in failing to get people to agree to act over the last decade or so. However, as my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) said, the science is clear: greenhouse gases and water vapour increase temperature, and other things do too. What we do not know, and what the whole debate in science is about, is the weight of those factors.

There are people, who are probably cleverer than anybody in this room, wrestling with that issue, and I do not intend to get into it, other than to say a couple of things. It is probably true that the temperature has not risen for the last 10 or 12 years. Does that, in itself, undermine the thrust of the science and the models? It does not. There will always be a probability of such things, given the noise in the data. However, the Minister or the Opposition Front-Bench speaker might like to tell us how many years of no warming we must have before we seriously question the models. At the very least, the fact that we have had so many years of small amounts of warming tends, under Bayesian probability theory, to take us to the lower end of the forecasts.

As I say, I accept the science. We have seen the Stern report, warts and all, and the costs involved. Parliament put in place the Climate Change Act and the 80% reduction to try to keep the temperature rise to 2° C by

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2100, and it was helped in that by five Budgets. There are some good things in the Act. First, it focuses on carbon, not renewables. EU legislation focuses almost entirely on renewables, which is why we are sucked into the false impression that countries such as Germany, which produces significantly more carbon per unit of GDP or per capita than us, are the good guys, who can burn coal and have renewables. Frankly, if a country wants to reduce carbon, it does not have renewables, it stops burning coal. So that is a good aspect of the Climate Change Act. The Act is also clear and hard to fudge. It is also inflexible, which is a strength and a weakness.

The issues I have with the Act are threefold. First, it is, broadly speaking, uncosted. Secondly, it is inflexible, and I will return to that in the light of some of the facts, which are changing. Thirdly, and most importantly—I disagree with the hon. Member for Brent North (Barry Gardiner) on this—it is, broadly speaking, unilateral: nobody else has put in place anything as stringent, and if I am wrong, I look forward to the Minister telling me so at the end.

On the Act being uncosted, it may well be right for the world to address the issue of climate change, but that does cause fuel poverty. That might be a price worth paying, although that case has not been made very much, and the Government might pursue it a little more. Of course, carbon leakage also means, at the margin, that we are losing jobs in some industries—particularly heavy industries in the north—because they rely heavily on power. It always strikes me as a little odd, at a time when we are trying to rebalance the economy, that we are putting manufacturing at a potential disadvantage, although that has not wholly happened yet, and we will see how things pan out.

Sammy Wilson: Does the hon. Gentleman accept that it is not just jobs in manufacturing that are being lost? For example, it is estimated that a medium-sized data processing company will pay £500,000 in tax under the carbon reduction commitment—a tax, of course, that the Government now keep, rather than recycling.

David Mowat: I do accept that, and that cost of £500,000 translates into jobs lost.

The real problem is that the Act is unilateral. It has been said that Britain produces 1.5% of the world’s emissions, which is about the amount China’s emissions increased by last year. The Act was predicated on the assumption that we would take a world leadership position in all this stuff and that the world would follow us. However, it increasingly appears that the world does not wish to follow us, and we are seeing that in a number of ways; there are words and there are actions. The Minister mentioned Germany, and I alluded earlier to its decision to abandon nuclear power, build dirty coal stations at great pace and to refuse to use carbon capture and storage technology, despite the fact that its carbon emissions are higher than ours.

Even more significant, however, is the fact that the EU has recently voted to abandon its emissions trading scheme.

Barry Gardiner rose—

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David Mowat: I have taken two interventions already.

That was an astonishing decision and it is a very worrying one, because there is no flexibility in our policy to respond to that.

I mentioned that the Act is inflexible. Lord Deben has just written to the Secretary of State, who requested that the climate change targets be changed, because the EU had failed to meet the 30% target that it had set for 2020. He wrote that the Act was “not premised” on the EU meeting its target by 2020, and that therefore that could not be the basis for changing the budget. So, in the end—just get on with it, guys.

What will happen? We could build something like one nuclear power station every three months for the next decade. If we could do that it would just about get us there, but we do not appear to be moving that quickly. A second possibility is that there will be no further global warming, just as there has been very little in the past decade, and on the balance of probabilities and the models the people at Massachusetts Institute of Technology who are studying the issue will begin to revise their view. I do not know. Thirdly, the lights could go out. Perhaps that is a price worth paying instead of having further gas stations and carbonisation. We have got our Act: let our lights go out. Fourthly, there could be some kind of industry and consumer revolution, as has happened in Germany. Whichever of those things happens—I think it is likely to be the last of them—it will happen in the next Parliament, and we shall be living in interesting times.

Katy Clark (in the Chair): We have only four minutes left for each of the remaining two Back-Bench speeches, so I suggest that Alan Whitehead may wish not to take interventions, so that both those speeches can be made.

3.31 pm

Dr Alan Whitehead (Southampton, Test) (Lab): It is difficult—certainly in four minutes—to know where to start. As has been said, if someone does not believe that climate change is happening, and believes that it is all conspiracy, they are hardly likely to believe that there should be a Climate Change Act or that it should affect either how people act in the economy, or how legislation proceeds—exactly as a businessman who believed the earth was flat would not sponsor a round-the-world yacht race.

I understand how far back we are going in the debate; but I think that, as far as where it is heading, it is based on a fundamental misunderstanding of what science does. There is no final, settled scientific position on climate change; nor is there such a settled position on virtually any other major issue in science. That is how science works. It is based on hypotheses and their refutation, and further hypotheses. As far as scientific hypotheses go, and as far as the debate in the scientific community is concerned, the idea that anthropogenic global warming is clearly producing substantial change in the climate—not the weather, but the climate—is, relatively, one of the most certain.

For example, there are continued debates about the nature of gravity. We are not certain how it works. There have at times been fluctuations in the gravitational field but I noticed hon. Members being careful to take account of gravity when they entered the Chamber and

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to keep their actions on the right side of science. That is what we need to do in relation to global warming. We shall shortly see from the IPCC fifth report that there is an overwhelming, if not complete, case for considering that substantial global warming not only happened through the industrialisation period, but is cumulatively in store for the world, as the result of anthropogenic activity.

It is incumbent on us to take note of that science, in relation to the questions of adaptation and mitigation. I do not say that we should opt for adaptation rather than mitigation. The Climate Change Act 2008 has stood the test of time since it was passed in informing our policies in that respect. The question of scrapping it now goes to the heart of what we, as legislators, are here to do. We must take account of what science says, and decide politically what to do about it. That is why it is essential to continue to support the Act, in deciding how to proceed with policy on energy and wider environmental issues.

That was the first part of what I wanted to say, but my four minutes are up. I hope that we shall continue to inform our policy on the basis of the science that is before us. To do otherwise would be to fly in the face of the problem that we know we shall have if we do not take action over a period.

3.36 pm

Graham Stringer (Blackley and Broughton) (Lab): I just want to make three simple points.

First, is the Act working in its own terms? I often think that that is the best way to approach arguments—not to start with one’s own premises, but to consider those of the opposition. The Act is supposed to be bringing down carbon dioxide. Is it doing that, or helping to do it? The facts are that since 1990, instead of producing an extra two parts per million of carbon dioxide in the atmosphere per year, we are producing three. In Europe, the production of carbon dioxide since 1990 is down by 15%, but consumption is up by 19%, so in fact more carbon dioxide is being put into the atmosphere as the result of activity in the European Union. To put the matter at its simplest, if there is a carbon tax in Europe—if we charge for carbon—and not in China or India or elsewhere in the world, we are giving those countries an export subsidy. If that were to be put down as a straightforward argument, or motion, in the House of Commons, no one would support it. To put things another way, the policy is one of deindustrialisation, as the hon. Member for East Antrim (Sammy Wilson) said.

Secondly, is the policy affordable—for the country, as well as for individuals? There is an excellent paper by Liberum Capital, which I would advise anyone to read, on capital markets in utilities, and particularly energy, in the next 15 years. The paper expresses a belief that there will be several critical points in the next 15 years when the lights may well go out. To take the analysis at its simplest, replacing the current energy-producing power plants would cost the country an extra £250 billion. I remember when £1 million was a lot of money, but £250 billion is, as a friend of mine used to say, a very lot of money, and capital markets cannot produce it—or are most unlikely to. I shall send the Minister the paper, if he would like to look at it. [Interruption.] I cannot

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give way. We have got ourselves into a policy of absolute minimum flexibility to deal with investment and changes elsewhere in the world.

Thirdly, I do not think political forums are the greatest place to discuss science; it is complicated, and I am a scientist by background. Many things have been said that would require further examination.

As a member of the Science and Technology Committee, I had a very close look at what was happening at the university of East Anglia and the two inquiries that went into it at the time. Looking at it closely, we see that there was not science going on there. There was a group of enthusiasts who were pretending to be scientists, because what they were doing was not testable. In terms of the critical things that were in the public domain, Muir Russell’s report did not ask the basic question about whether e-mails had been deleted in the university of East Anglia, and the Oxburgh report, which was supposed to look at the science, did not, but it did turn up the fact that they were not using the best statistical methods of analysis and they could not reproduce their work.

3.40 pm

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): It is a pleasure, as always, to serve under your chairmanship, Ms Clark. This has been a very revealing debate on a very important topic. Let me begin by congratulating the hon. Member for Monmouth (David T. C. Davies) on securing it, although I disagree with everything that he has said this afternoon. I am grateful for the opportunity to place on the record the Opposition’s position.

I am very proud to be speaking today in support of the Climate Change Act 2008, which was seminal legislation. Passing the first legally binding climate change target showed that Britain was serious about tackling one of the greatest challenges if not the greatest challenge that humanity has ever faced. Like my hon. Friend the Member for Brent North (Barry Gardiner), I am proud to belong to a party that took action to secure our planet for future generations when we were in government. I am prouder that Parliament passed the Act all but unanimously, with just five Members voting against it. I note that some of those five are in the room with us today. There was a clear cross-party political consensus that something needed to be done and a clear will to get on and do it, so I am saddened by the tone of parts of today’s debate. It reminds me of a film that was released just a few months after the 2008 Act became law. Many people in this room may have seen it. It was called “The Age of Stupid”. The plot is set in 2055 in a world savaged by the effects of global warming. It focuses on a lead character looking back to the beginning of the 21st century and wondering why we did not combat climate change when we had the chance. I am not sure whether the producers are planning a sequel, but at times I have felt as though certain speakers that we have heard today have been auditioning for a starring role. It is very disappointing that the hon. Member for Monmouth, who introduced the debate, is on record as describing the overwhelming scientific evidence and agreement on climate change as “codswallop”.

Let me spell out some basic facts; we have heard them reiterated by some Members taking part in the debate today. One hon. Member talked about an apparent

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plateau in world temperatures, but he neglected to mention the fact that the 12 warmest years on record have all come in the last 15 years. Since 2000, the UK has experienced its seven warmest years. Our average annual temperature has increased by about 1° Celsius since 1970. Last year, temperatures in some parts of our oceans were the highest ever and Arctic ice retreated to its smallest size on record.

I think that the Met Office is an organisation to be respected and I look at its reports very closely. Its record of global average surface temperature shows an increase of 0.6° C since 1950. I did not have an opportunity to intervene at the time, but there is research, including that published in Nature Geoscience in 2011, that shows that three quarters of the rise in average global temperatures since the 1950s is due to human activity.

A number of hon. Members referred to the UN Intergovernmental Panel on Climate Change, which is to deliver its fifth assessment report. As my hon. Friend the Member for Southampton, Test (Dr Whitehead) said, it is expected to report a 95% probability that the global warming that we have experienced since 1950 is man-made. I agree with my hon. Friend that we should take note of that report. It is compiled by 255 experts from 38 countries. The weight of evidence is extraordinary, so I am disappointed that that has not been reflected in some Members’ contributions this afternoon.

Back in 2008, the year in which the Climate Change Act was passed, the then Leader of the Opposition, who is now the Prime Minister, promised:

“We are not going to drop the environmental agenda in an economic downturn.”

He said that it was

“not ‘green’ or ‘growth’, but both.”

In the same year, the current Chancellor of the Exchequer talked about the “fierce urgency of now” and promised that the Treasury would lead in