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Westminster Hall

Thursday 10 March 2016

[Joan Ryan in the Chair]

BT Broadband Provision: Local Businesses

1.30 pm

Helen Goodman (Bishop Auckland) (Lab): I beg to move,

That this House has considered BT broadband provision for local businesses.

It is a pleasure to see you in the Chair, Ms Ryan. The Minister and I have sparred on many occasions about the state of rural broadband. I have been away from this brief for 18 months, but now I am returning, as a constituency MP, because things have not improved as we had all hoped. I want to bring some stories from my constituency to public attention, because I cannot see how, apart from by doing that, we will exert any real pressure on BT, which I think is becoming more and more complacent.

The first big problem in my constituency was faced by an auctioneer called Addisons, which was located in Barnard Castle. Addisons had been there for decades and increasingly found that auctions needed to be conducted over the internet. It would get better prices if it could conduct auctions over the net, but the connection offered by BT was not fast enough for it to be able to do that, so the firm closed, with the loss of dozens of jobs.

Last autumn, William Smith, a firm that has been working in Barnard Castle since 1832, got in touch. In October 2014, it ordered a short haul data service, at a cost of £30,000 up front, with a subsequent monthly fee of £16,000. Let me explain in more detail the situation of this family-run company in my constituency. It had a place in the middle of town and then it wanted to operate a larger warehouse on the outskirts of Barnard Castle. To do that, it needed a new data link between the two sites. As I said, the firm went to BT in October 2014. It said to BT, “We’re building a new warehouse”—the warehouse cost £2 million—“and we need this data link so that we can use it. Without the data link, we can’t use the new warehouse and our staff can’t work effectively.”

Nine months later, nothing had happened, so the firm got in touch with its Member of Parliament and complained about that, reasonably enough. I thought, “Well, I used to be the shadow Minister. I know all the right people in BT; I know the public affairs people. I’m sure we’ll sort this one out in a trice.” I could not have been more wrong. We got in touch with the public affairs department. My staff were in almost weekly contact. We got in touch with the chairman of BT, Sir Michael Rake. Again, we made absolutely no progress.

I was very concerned because at one point we were not even getting responses from BT, so I asked the Minister to get in touch. The Minister got in touch, and the upshot of that is that the firm now has one of its links established, but it needs more links. The situation is rather complicated. It needs more capacity on the link, so we are still not there completely. The first section was

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completed on 29 February, 17 months after the firm paid its £30,000 up-front fee. That is not acceptable, and everyone knows that. However, that is not the only ongoing problem in my constituency. There is also a problem in Whorlton.

Anne Marie Morris (Newton Abbot) (Con): The hon. Lady is making an absolutely first-class point. Does she agree that the nub of this is that no priority or even equality of treatment has been given to the business community? In my rural constituency, there are businesses that can get absolutely nothing. We need parity between businesses and others in order to get businesses properly supported in terms of technology, IT support and broadband. Otherwise, productivity and the mission to increase productivity become, frankly, a dead duck.

Helen Goodman: The hon. Lady is absolutely right. I will detail my next case and then come on to the general issues that she raises, because I agree with her entirely.

In Whorlton, the Danshell Group has a care home for vulnerable people with learning disabilities. It paid an even higher fee, £100,000, for its links, because it is trying to help people to maintain contact with their families through Skype and it is using sophisticated technology in other ways to provide therapies for those people. It still does not have its connection.

When people are paying these very large sums of money and they get in touch with BT months before they want the connection, they should expect a decent level of service. One thing that struck me in the William Smith case was that every time we rang BT, there was a new problem: it had to go under the road; the fibre had to be blown; there needed to be a new duct here; there needed to be a new duct there. It became absolutely clear that at no point had the people in BT sat down and made a plan. They had not looked at what was needed and said, “Okay, if we’re going to achieve this by then, we need to do this on date A, this on date B and this on date C.” There was no plan. It was as if they were complete amateurs and had never done it before.

Damian Green (Ashford) (Con): To illustrate the hon. Lady’s point, which is about not so much the inability as the unwillingness of BT to acknowledge that it is a joined-up operation, I want to read out an email sent to a constituent of mine in the last couple of weeks by someone in the executive level complaints team at BT. My constituent had complained, not unreasonably, that he could get only 1 megabit. The email reads:

“Our suppliers (Openreach) are in charge of this network and they would not consider any request from the public to move lines or modify serving exchanges, with the view to simply improving broadband speeds.”

I cannot but take that apart. Openreach is not a supplier to BT; Openreach is part of BT. It is dishonest of BT to pretend that somehow Openreach is a separate operation. Also, that allows it to say, “I’m sorry. Just because the public ask for higher broadband speeds, you can’t expect us to provide them.” That is completely unsatisfactory.

Helen Goodman: The right hon. Gentleman is absolutely right, and his constituency of Ashford is not even particularly rural; it is not as if the company has to travel dozens or hundreds of miles to make the connections in his constituency. It seems to me that it has a particular

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problem with the small business sector and it has a problem the minute someone is outside one of the large urban areas. Further to the point made by the hon. Member for Newton Abbot (Anne Marie Morris), it is obvious that the benefits of good internet access are greater in rural areas than in big urban areas, because, as anyone with a rural or semi-rural constituency knows, vast amounts of resource go into transport and moving stuff and people around.

James Cartlidge (South Suffolk) (Con): I am sure that every hon. Member present is getting a feeling of déjà vu and agreeing with pretty much everything that the hon. Lady is saying. I have a similar case. Stoke by Nayland golf club in my constituency ended up doing a self-dig in March last year. It dug its own line, with the agreement of Openreach, after many months waiting for BT Openreach to come and put down a line. Recently, an engineer finally turned up, offering to put down a line. That company in my constituency had already dug into the ground itself. Does not that prove that there is a massive breakdown in communication between Openreach and whoever the actual supplier is?

Helen Goodman: The hon. Gentleman is absolutely right. Now, the Minister made a rather good speech yesterday in a similar debate, in which he said that BT was spending far too much time buying sporting rights and not enough dealing with the problems. He is right. BT needs to concentrate on the day job but it is not doing that. This infrastructure is vital to the country’s productivity.

Jo Churchill (Bury St Edmunds) (Con): My constituency is located slightly above that of my hon. Friend the Member for South Suffolk (James Cartlidge), and we have problems across the constituency. To further reinforce what the hon. Lady is saying, some companies in my constituency have now produced their own lines, and doing that cost a company I spoke to this morning, which has had the problem since last May, £6,000. That company can afford it, but that might not necessarily be the case for my small businesses or when there are issues of safety, such as when my farmers are involved.

One local business—this trumped everything I have seen—had its line, let’s just say, “reallocated”. The business line was not identifiable enough so it was reallocated to a homeowner. It took BT five to six weeks to figure out where the business line had gone and that it had redirected it. The gentleman in question was passed back and forth between line and broadband engineers. After a month, his broadband was reinstated. However, his connection speed was reduced by half. For the past three months, he has been forced to drive 25 miles to another office in Ipswich where he can access broadband. He identified the lack of supply and poor customer service as the two main obstacles to resolving his case. I would love to say that that example is isolated but it is not, and it has a real impact. The Minister knows, because I have seen him on many occasions, that the problem really affects my rural constituency.

Helen Goodman: It certainly does. The issue affects the hon. Lady’s constituents and the whole country. Our productivity is not rising as it is in the other G7 countries, and it has not been for eight years. Proper

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investment in infrastructure is one of the ways that we can get our productivity up, from which we will all benefit. When it works, it is really great.

There is a quarry in my constituency that has a very good website and, because of its website, it is able to sell stone to Spain because the Spanish people who are building the cathedral in Barcelona—the Sagrada Família—saw that the stone was the right colour. That is fantastic. When it works, it is brilliant, but it is not working often enough. The OECD and the International Monetary Fund say it; everybody says it. I really feel that the issue should take priority over some things, such as HS2, into which public money is about to be poured. If we could get the IT right, we might not need all the investment in transport, which is proving to be so controversial across the country.

Mike Weir (Angus) (SNP): I understand what the hon. Lady is saying but I am a bit reluctant to pour yet more public money into BT, which is not up to the job of doing this, frankly. The Government, the Scottish Government and many others have poured money into these schemes. It is high time that a multinational company such as BT, which operates a private monopoly, steps up to the plate and invests some funds in this.

Helen Goodman: The hon. Gentleman is right. BT is extremely profitable. The industry is, of course, regulated by Ofcom but there must be a question mark about whether it is using its resources as effectively as possible. It is clear that the rural areas are particularly disadvantaged.

Stuart Blair Donaldson (West Aberdeenshire and Kincardine) (SNP): The hon. Lady is making a fantastic speech. Like all other hon. Members who have contributed, I think we are all in the same boat. In my rural constituency, rural business parks and centres that are looking to expand and already have connections are finding it incredibly difficult just to connect an extra building. Does the hon. Lady agree that it is completely unacceptable that they have to wait months—sometimes going into years—for a simple extension to their existing line?

Helen Goodman: Yes, the hon. Gentleman is absolutely right and, in a way, that is rather similar to the William Smith example I gave. These are not one-off examples. The Countryside Alliance has pointed out that

“8% of premises in the UK (2.4 million) are connected to lines that are unable to receive broadband speeds above the proposed Universal Service Obligation of 10Mbit/s. Many of these are in rural areas, where about 48% of premises…are unable to receive speeds above 10Mbit/s.”

That is 1.5 million people in the countryside who are unable to receive those speeds.

We all know that the Minister is a very nice man. [Hon. Members: “Hear, hear.”] He has helped many of us—faute de mieux—with our particular cases. I agree with what he said yesterday. I think he is right, but I am not wholly sympathetic because he is being forced to intervene as if he were a Minister in a Soviet, centrally-planned economy, on a case-by-case basis. That is because the policy framework set up by this Government, in which I think he had some hand, has not worked properly, and that goes back to the point made by the hon. Member for Angus (Mike Weir).

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The Government made the areas for the contracts for the roll-out of broadband too small to be economic for any operators apart from BT to bid for them. That is why BT won all the contracts, maintains a monopoly, faces no competition, feels under no pressure and serves our constituents so badly. Everybody will probably welcome Ofcom’s proposals for changes to the governance of Openreach, particularly better standards of service to small businesses, and compensation when those standards are not met.

As well as keeping the pressure up on BT, which I want the Minister to do, we need him to talk to his colleagues in other Departments because the Government’s policy of digital by default is not serving rural communities very well. I had yet another complacent response from Treasury Ministers, saying that 98% of small and medium-sized enterprises submit their tax online. I bet that is only because they are not doing it at home because they go along to an accountant in a small town some way away and pay that person to do the submission online.

We have the same problem with the Rural Payments Agency. Once again, the Public Accounts Committee has had to look into the problem. I see that the Chair of the Select Committee on Environment, Food and Rural Affairs is in Westminster Hall this afternoon. He knows that the treatment of farmers by the Rural Payments Agency—expecting them to monitor their cattle movements and supply all the information online—is hopeless. I ask the Minister to go back to his colleagues to get some change of attitude from them.

Jo Churchill: I have been calling broadband access our fourth utility since I joined this place so I was interested last week when my right hon. Friend the Minister for Small Business, Industry and Enterprise also called it the fourth utility. As the hon. Member for Bishop Auckland (Helen Goodman) has said, it is interesting that although one Department is pushing for 100% coverage and a fourth utility, perhaps the joined-up thinking across Departments is not there.

Helen Goodman: The hon. Lady has put it beautifully.

Chris Davies (Brecon and Radnorshire) (Con): On behalf of the Chair of the Environment, Food and Rural Affairs Committee and as a member of that Committee, which interviewed the chief executive of the Rural Payments Agency yesterday, I hasten to add that although broadband is difficult for our farmers, it is not the only reason why the Rural Payments Agency is not delivering at the moment. I just want that on the record because I would hate the chief executive purely to blame broadband for the delay.

Helen Goodman: The hon. Gentleman is absolutely right. I have 1,000 sheep farmers in my constituency and I know that to be true.

I want proper service for the small businesses in my constituency, particularly at the Teesdale end, which has been ill-served up to now. There are general lessons to be learned for BT, for Openreach and for the Government, and I hope we can make some progress on those general lessons.

1.49 pm

Gordon Henderson (Sittingbourne and Sheppey) (Con): I congratulate the hon. Member for Bishop Auckland (Helen Goodman) on securing the debate. She highlighted

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an issue of concern to a number of businesses in my constituency. She is right, and there will be a sense of déjà vu, because she could have written my speech for me. As she said, the way in which BT treats its customers sometimes borders on the farcical, to the extent that I sometimes wonder how it survives. To demonstrate my point, I will highlight one case in which I have been involved for many months.

Neil Parish (Tiverton and Honiton) (Con): My hon. Friend asks how BT survives. Does he agree that it does so by having a virtual monopoly? There is no real competition out there, especially in rural areas, so it can treat its customers abysmally.

Gordon Henderson: I could not agree more. My hon. Friend is perfectly right, but even monopolies come a cropper eventually if they do not provide a service.

In my constituency I have a family-run company called Bennett Opie, which manufactures and supplies to the retail trade a range of pickles and preserves. If any hon. Member here likes pickled walnuts, no doubt they will have tried one of Bennett Opie’s products, because it is the only company in this country that makes pickled walnuts. Bennett Opie has two sites in Sittingbourne and, as in the example that the hon. Member for Bishop Auckland raised, it wanted to link those sites with an internal computer network. On 21 January 2015, it approached BT to find out the cost of installing a short -haul data services circuit—we both now know what one of those is.

Bennett Opie provided BT with the addresses of its two sites on 26 January 2015, and on 4 February it signed an agreement with BT. It was confirmed on 6 March that a survey for the work had been completed—all was going swimmingly for Bennett Opie. The company was then advised on 9 March that additional civil engineering work was needed at the first site. Bennett Opie signed a contract for that additional work on 13 March, because it was happy to pay. BT confirmed on 19 March that the civil works had been completed and advised of an end of May move between the two sites.

The broadband line was scheduled for installation at the first site on 25 March, but the installation failed. A month later, on 20 April, the broadband line was finally installed successfully at the first site. The full SHDS circuit was predicted to be installed on 22 May, but it failed. The end fibre at the second site was successfully terminated and tested on 26 May, and two days later, on 28 May, the end fibre at the first site was terminated and tested, but it failed. The full completion of the SHDS circuit was due on 29 May, but it failed and a fast track was applied to the order—Bennett Opie hoped that that would speed things up.

The list goes on and on, so I will pick out one or two more events from the subsequent period. BT notified Bennett Opie on 19 August that civil works, which were due to be completed, would be completed by the end of November, extending the installation almost to the end of 2015. On 14 September, BT advised Bennett Opie that plans for the works drawn up from the August site meeting had been submitted to Kent County Council with no response. Kent highways department, on behalf of Kent County Council, confirmed on 21 September that BT had not supplied it with drawings or plans. On 2 October, Kent highways confirmed misinformation and failings by BT relating to the location of works,

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the status of permits and the time needed for traffic management. In addition, Kent highways advised that the civil works had been rescheduled for 4 November.

On 18 November, BT provided a revised completion date of 27 November and provided details of the permit reference number for the works. Kent highways confirmed on 20 November that the permit number given to Bennett Opie by BT was for the civil works cancelled on 4 November and that BT had not applied for a replacement permit—I could not make this up.

I will skip a few entries. BT confirmed on 8 December that rod and rope engineers were on site and estimated that the tubing work would be completed by close of play that day—whoopee. On 9 December, BT confirmed that engineers were still working on the rod and rope task and that completion was expected that day. BT told Bennett Opie on 15 December that it could not complete the rod and rope task because traffic management was needed in order to access a manhole.

On 17 December, BT gave a traffic management survey date of 21 December, and on 22 December it provided Bennett Opie with details of four permit numbers for the job and confirmed that it would now take place on 18 January 2016, a year after the original agreement.

On 4 January, BT told Bennett Opie that Kent highways required night work to be done on the permit numbers quoted and that the work would slip to 8 February. Bennett Opie, quite understandably, contacted Kent highways, which confirmed that the permit numbers provided were wrong—two of them related to work due to take place in Brighton, which is some way from Sittingbourne, one did not exist on its system and the last was an incomplete number. On 18 January, workmen were observed working at night on the pavement outside the first site with a large reel of plastic tubing. Despite BT’s claim that two-way traffic signals were needed, the van simply parked on the pathway, a “keep right” sign was erected and a small barrier was put around the manhole. No other traffic management was used.

When Bennett Opie contacted Kent highways on 19 January, it confirmed that BT had requested full traffic light control; that the fibre tubing job was completed and ready for the fibre to be blown; that BT could have proceeded faster with the work due to the lack of traffic management actually needed or used; and that night work would not have been prevented during December, so the work could have been done then.

That comedy of errors is symptomatic of the way in which BT treats business customers, but of course it is no laughing matter for companies such as Bennett Opie, which lost business because of BT’s inefficiency. The good news is that Bennett Opie now has a working connection, 15 months after it signed its agreement with BT. As its chairman, Philip Opie, told me, the Great Eastern laid a transatlantic cable in 1865, and it took just one month. So much for the age of technology.

1.58 pm

Chris Davies (Brecon and Radnorshire) (Con): It is a pleasure to serve under your chairmanship, Ms Ryan. I congratulate the hon. Member for Bishop Auckland (Helen Goodman) on securing such an important debate. Broadband is an essential component of modern business life.

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As we are all aware, a connected business is a competitive business. Those who cannot connect are left behind in the global race, and we must not let our excellent local businesses fall into that trap. The hon. Lady’s constituency is in many ways similar to my own. Beautiful rolling countryside and rural communities litter the local area and, like me, she has many excellent rural businesses crying out for better broadband. I am delighted that she mentioned a local firm of auctioneers that is suffering. I spent 20 years in that profession before entering this place, so I sympathise enormously with those auctioneers and understand what they are going through.

As a rural constituency, Brecon and Radnorshire faces many challenges, to which I will return later. However, I feel that it is only right to begin by commending the Government for their commitment to the 10 megabits per second universal service obligation. We are often quick to criticise, but that commitment was welcomed across my constituency and will be a great comfort to local people.

I have spoken in many debates on broadband during my short time here in Parliament—

The Minister for Culture and the Digital Economy (Mr Edward Vaizey): So have I.

Chris Davies: And when I have spoken, the Minister has always answered at the end with a cheery smile and a great further commitment to rural broadband. However, I believe he would agree that even though he has always spoken well, there is still much more to do.

There are three main issues involved in providing adequate broadband to our rural businesses. The first is information. It is vital that our businesses have access to all the information they need to make an informed decision about their broadband needs. Many businesses that I speak to in my constituency tell me that they cannot get access to the speeds that they need, yet they are unaware of many of the options available to them. Often, few are aware of the possibility of ethernet connections, and many are put off by the extra costs involved, as might be expected. Others are still oblivious to the promise of satellite and wireless broadband, which could satisfy their requirements.

Businesses face a lot of noise about off-the-shelf products that hides alternative options that might benefit them. I therefore recommend that the Government do all that they can to ensure that our businesses are properly informed of all the options available. BT and other providers offer alternative services that might fulfil the needs of those local businesses.

James Cartlidge: Although information is key, does my hon. Friend not accept that sometimes there are physical reasons? With mobile reception, for instance, in some areas there are dips in the land or other factors that cause a “not spot” where there is no signal. I have good mobile signal where I live, and I use mobile broadband. Does my hon. Friend share my hope that the Minister is doing all he can to encourage further support for mobile phone signal as well as broadband in rural areas?

Chris Davies: I could not agree more with my hon. Friend, and I am sure the Minister will pick up that point when he sums up later.

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When I have spoken to BT and Openreach about the roll-out of broadband, they have outlined many of the challenges involved in getting broadband to local rural businesses. They have told me of challenges in assessing the infrastructure that they need to roll out superfast and ultrafast broadband, and the costs involved in doing so. Although I applaud the Government’s work in assisting the roll-out of broadband to rural communities, I ask that the same concern be given to the roll-out to rural businesses. I am informed that where it is economically not viable to provide broadband to an area, it is down to the local authorities to decide where to procure services. I therefore ask the Government to do all they can to pressure local councils and the Welsh Assembly Government to give the same consideration to business broadband as they do to local communities.

Finally, following on from my previous point, I ask the Minister to consider how we can bring together broadband provision for communities and businesses. It is not economically viable to provide broadband to large areas, such as those in my constituency in rural Wales and on the Welsh marches. Premises for both habitation and business are spread over vast geographical distances, which can make broadband provision extremely expensive. I therefore commend Openreach’s community fibre broadband partnerships, which offer communities the opportunity to part-fund the roll-out of broadband in their local area. The scheme is aimed at giving give local people and businesses the broadband provision they need. I encourage the Minister to take this opportunity to welcome the scheme, as it would help many of my constituents.

That said, the scheme involves challenges. Local communities and businesses have to fund it themselves, paying half up front when work starts and the remainder on completion. Many of my constituents who are local business owners are not able or willing to pay those costs up front. Costs for installation often run to tens of thousands of pounds, and many business owners are concerned that their cash flow will suffer as a result of extensive implementation costs. Will the Minister meet me to discuss alternative funding options, perhaps including a community loan scheme so that our rural businesses and communities can access the connections that they need while avoiding cash flow issues?

Connecting our businesses to broadband is essential in the modern age. Openreach and the Government are working tirelessly to connect our excellent British businesses, but there are significant challenges to provision in rural areas. I implore the Minister and BT not to forget about businesses in rural areas. The risks of doing so are high and detrimental to the rural economy. If rural businesses are forgotten, we could lose a significant portion of our important rural life as businesses seek to move to better-connected cities and towns. That would cost jobs and livelihoods, not to mention deplete our rural communities. My message is simple. I commend the Government for the roll-out thus far, but they must ensure that it happens across not just most of the UK but the whole UK.

2.6 pm

Neil Parish (Tiverton and Honiton) (Con): It is a great pleasure to serve under your chairmanship, Mrs Ryan. I thank the hon. Member for Bishop Auckland (Helen Goodman) for introducing this important debate. She has made some important points. It is nice to follow my

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hon. Friend the Member for Brecon and Radnorshire (Chris Davies), who made some good points about rural broadband in particular, including that the delivery of the single farm payment is not just about broadband but has a little to do with the Rural Payments Agency as well. It is lovely to see the Minister for Culture and the Digital Economy, my hon. Friend the Member for Wantage (Mr Vaizey) in his place. I know that he always enjoys my contributions to these debates, so I did not want to disappoint him in this one.

I congratulate the Government and local authorities on all the public money going into delivering broadband into rural areas, but—there is always a “but”—are we getting value for money out of BT? I know that the Minister works hard with BT, but we need to put even more pressure on it to deliver. The problem is that although we may get to 90% or 95%, the last 5% of people, by their very nature, are in the hardest areas to reach, and they are the ones who will put more and more pressure on the system. We see BT doing some areas or part of an area, stymieing anybody else who might come in to deliver broadband there and then not completing the whole area. BT must not only deliver, it must deliver across the whole area.

I also understand from meeting BT recently that it has now decided that it might have access to a satellite. That is marvellous, is it not? That technology has been around for a long time. I welcome the fact that BT is starting to consider different technologies, but BT has a major contract to deliver rural broadband across the country. It should not be thinking only now about rolling out such technologies; they should have been rolled out a long time ago. I have made that point to the Minister many times, and I do not apologise for making it to him again. If BT had more competition, somebody with a red-hot poker behind them—I will not say in what part of their anatomy, because that would be rude —they might actually get on with it. That is the problem that we have.

Jack Lopresti (Filton and Bradley Stoke) (Con): I apologise for cutting off my hon. Friend mid-flow, but as well as having technology and lots of taxpayers’ money, BT needs to get the fundamentals right. I moved offices in the summer, within a BT area in a business park. It was a fairly simple and rudimentary move, and my office went out of its way to ensure that the transfer went seamlessly as far as dates and times went, and got a special licence so we could access the property before we took possession. There were days of disruption to the phone line and the BT service, which inconvenienced my constituents and cost a lot of taxpayers’ money to put right, yet when I wrote a letter to Sir Michael Rake, the chairman of BT, on 5 August, I had no reply. Arrogance and aloofness will not be solved by taxpayers’ money.

Neil Parish: I could not agree with my hon. Friend more, because that is again symptomatic of the fact that although BT does not have a total monopoly, by its very size and scale it has a virtual monopoly. BT has played on that over the years and is still playing on it now. Hopefully the chairman of BT will hear my hon. Friend’s contribution today.

Jack Lopresti: Well, he did not get my letter, so I hope so.

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Neil Parish: Hopefully he will reply to my hon. Friend. Was that letter from 5 August?

Jack Lopresti: Yes.

Neil Parish: That really emphasises my point that competition is necessary.

I am also very disappointed that Openreach has not been detached from BT. BT has so much by having Openreach—it has so much of the cables, the infrastructure, the fibre optics and really everything across the country for delivery of broadband. So, BT holds all the aces. Is it truly giving other companies the opportunity to gain access to its infrastructure? I suspect not. It also has all sorts of fantastic lawyers and wonderful people around the place who make it very difficult for other companies to intervene, and that is the problem.

As the Minister knows, the second contract for delivering broadband across Devon and Somerset was not awarded because it was not value for money. Therefore, we are now going out again with a further contract. I hope there is a real competition for that. Although it is perhaps easier in some respects to deliver broadband across the whole of Devon and Somerset in one contract, if the contract is so big BT will probably be the only company to bid for it again. However, if we have smaller contracts, other companies can come in and deliver broadband across places such as the Blackdown hills and in villages such as Upottery and Ruishton—all those villages across the Blackdown hills and on to Exmoor, which are all difficult to reach. So I have still got many more people to be connected.

The point has been made by my hon. Friend the Member for Brecon and Radnorshire and others that broadband is the fourth utility and we really need it for all our rural businesses, including our farms. All of us in Westminster Hall today who represent constituencies with areas of rurality are amazed—are we not?—when we go around our constituencies and discover the types of businesses that are there. It is not just the farms. There might be businesses manufacturing or designing wings for Airbus, or other such things, where they would be least expected. However, the only way that those businesses can prosper is by ensuring that broadband is there and connected. Broadband is key.

I now turn to what happened recently in an area of my constituency at Dunkeswell and Luppitt—

Helen Goodman: Before the hon. Gentleman gives a specific example, could he enlighten us on the so-called “childish turf war” between the Government Digital Service, the Rural Payments Agency and the Department for Environment, Food and Rural Affairs, which meant the payments to farmers were down from 90% to under 40% at the end of December 2015? He might be able to tell us a little about that.

Neil Parish: I hope I will not be ruled out of order, because that is going a little off the topic of the debate. However, I can enlighten the hon. Lady. We had the head of the RPA in Parliament yesterday, and obviously what happened—to put it in layman’s terms—is that DEFRA created a system that was not entirely compatible with what the RPA was doing. We tried to drill down yesterday on the issue: at what stage did the head of the RPA realise that, and at what stage did he intervene?

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Was there a breakdown in communication? Was there a clash of personalities? Yes, there was; there is no doubt about that. The trouble is that whatever Department or whatever system was to blame it is the farmers who pay the price, because they are still waiting for that payment.

In fairness to the RPA, it has speeded up its operation. However, what we are mindful of is that we do not want this situation to carry on as things did in 2004, when the payments were bad for 2005, 2006 and 2007, and it took 10 years and more to put matters right. We want to make sure that within one year the situation is absolutely right. There are people farming on the commons, and other farmers. Why should they have to wait so long for their payment when the problems are down to others?

As I say, we had the head of the RPA in yesterday and he was trying to say, “Well, it’s this Department, or that Department or the other Department.” However, as the hon. Member for Bishop Auckland says, if the farmers are not getting their payment, they are not interested in which Government Department is failing. We must deliver.

Jo Churchill: Before my hon. Friend is asked to come back to the topic of the debate, may I just draw a comparison? No matter who is to blame—whether it is BT, or any other company or persons—the people who suffer are our businesses, and that is the point that we want to address here today. The Government are doing good work. Suffolk County Council is hitting its targets; indeed, it got an extra payment for doing that. But the key word that my hon. Friend used was “communication”. I had a very robust conversation on Monday with BT’s directors—in fact, it was incredibly robust—and I pointed out that if they cannot communicate with their customers, their businesses and so on, they should not call BT a communications company.

Neil Parish: I thank my hon. Friend for that intervention, which brings me back on track. She is right about communication, and I will say a little more about that in a minute.

The point that my hon. Friend also rightly makes is that broadband is absolutely essential for our businesses. If we have a car, a piece of machinery or anything else that is not working, we can swap that car or that piece of machinery for another make that delivers what we want it to deliver. The problem that our constituents have is that there is no other “make” out there that can necessarily deliver broadband. Again, that is why BT needs more competition and why it has to step up to the plate.

Despite all my rhetoric I am not actually anti-BT, but I want BT to deliver. I know that the Minister is working very hard on this issue. I have urged him before to apply his iron fist to make sure that BT delivers, because it is not our money—it is our taxpayers’ money. It does not matter whether it comes from Government or councils; in the end, it comes from our individual taxpayers, who are often the very same people who are not getting connected to broadband. Therefore, they have paid for broadband but they are not getting it, so they have a double whammy.

We have made that point this afternoon and I know that the Minister must probably think, “Oh, yet another debate on broadband.” But once people are connected

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to broadband we will not have these debates, because people will not be concerned. While these debates continue, naturally he must respect that.

My final point is about some businesses in Dunkeswell and Luppitt, which are the sites of old aerodromes. They could not access broadband for three weeks, because the exchange went down. Exchanges can go down, but I will now explain the compensation that those businesses have been offered. Many businesses in my constituency have been affected by poor internet and broadband speeds; some of them have had no internet at all for a lengthy time, which is unthinkable from day to day. Companies such as Assinder Turnham Ltd, a property and construction consultancy, Lynch Motor Company Ltd, Dolly Diamond, and Flymoore Aircraft Engineering were all without internet for as long as three weeks. I completely understand that a catastrophic fault at a BT exchange can and will happen from time to time, but when it happens, what is done to compensate and help the businesses that are left on their knees?

I will take Flymoore Aircraft Engineering as an example. It is a local business in my constituency that deals with aircraft respraying and engineering. It lost broadband from 25 January for three weeks. Flymoore could not do its VAT returns, and so spoke to Her Majesty’s Revenue and Customs. Flymoore asked BT for evidence to provide to HMRC, but was told that it would cost £10 to get something called a work report. This company was without broadband for three weeks, but it ended up paying BT for the lack of service. It could not pay its staff or order parts or supplies for aircraft, and it did not receive new orders for work and so lost vast amounts of money. Flymoore could not access the European Aviation Safety Authority’s website, which has all the mandatory legal requirements for aircraft safety. Because of that, it could not finish ongoing jobs. It could not access repair information or manuals online. It needed those instructions to physically carry out the maintenance on the aircraft.

At the very least, we would expect substantial compensation for the serious loss of business. Flymoore had a financial buffer to deal with market uncertainty, but virtually all of that has been wiped out, and the business is struggling financially. BT did not initially offer compensation, but Flymoore has since managed to get £25 in compensation and three months’ free internet. What sort of company offers that level of compensation? If there was competition in the marketplace, BT would have to offer proper compensation.

I will not go into all the details of the other businesses affected, but interestingly they have all been offered different amounts of compensation and different lengths of free internet access. There seems to be nothing in place to compensate for the types of losses that the businesses have had. It is not only about delivering broadband in the hardest hit areas, but about ensuring that when the broadband connection is there, it is constant. If it breaks down for a long period, those businesses need adequate compensation. What they have been offered is pathetic.

BT needs to step up to the plate, deliver broadband and compensate people when they do not receive it. My hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) gave us a huge catalogue of issues with a company trying for more than a year to

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get broadband onsite. We want, and we have, a dynamic economy, but we will only improve it further by having good delivery of broadband across the whole country.

2.22 pm

Mike Weir (Angus) (SNP): I am pleased to appear under your chairmanship this afternoon, Ms Ryan. I congratulate the hon. Member for Bishop Auckland (Helen Goodman) on securing this important debate.

As others have said, broadband is now an essential tool for business. I represent a mainly rural constituency, and there are two essential aspects to doing business in such an area in the modern world: broadband that allows businesses to reach a much wider market through the use of the internet, and a reliable universal delivery and uplift service. I have spoken in this place on many occasions about my concerns on the latter, given the privatisation of Royal Mail. I will not go into those concerns again, but will concentrate on the provision of broadband and the frankly huge problems that many local businesses have in acquiring and keeping a reliable service.

I should say that this is not an attack on the Government. I fully recognise that the UK Government, the Scottish Government, local authorities and Highlands and Islands Enterprise have put a substantial sum of money into projects to extend broadband coverage to all areas of the UK, but real problems remain, many of which lie at the door of BT, which effectively has a private monopoly on broadband provision in many areas.

I said that my constituency is rural, but it is not remote. The main Dundee to Aberdeen road runs through the heart of Angus. Fibre broadband is being installed in our towns and is making a real difference, but the problem is the urban-rural divide. People do not have to go far out of town to find that they are not getting any sort of reliable broadband, or indeed any service at all. Among the reasons for that are the antiquated nature of the infrastructure, the inability of small exchanges to cope with the demand for lines, the old copper lines that are still in use and the distance of customers from the exchanges. Broadband now needs to be seen as a universal obligation and, as the hon. Member for Bury St Edmunds (Jo Churchill) called it, the fourth utility. BT has a private monopoly. It is a huge multinational company that is in the process of taking over one of the major mobile companies—there is another story there about the “not spots” in many of our constituencies—but it must step up to the plate and ensure that it provides broadband service to our constituents.

The UK Government have brought in the universal service obligation, but that only commits to raising the internet speed to 10 megabits per second by the end of this Parliament, and that is not sufficient. There is also a concern in many areas of Scotland that the commitment promises only 95% coverage by population. Much of the remaining 5% will inevitably be in rural areas and, in particular, such areas as the highlands and islands of Scotland. Those are inevitably the most difficult areas to reach with broadband services.

As other Members have, I would like to illustrate the problems faced by local businesses with an example. My constituent Stephen Appleton has a business, Angus Horticulture Ltd, which is based in Guthrie. That is a rural part of my constituency, but it is not remote; it is

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situated between the main towns of Arbroath and Forfar. I was first contacted by Mr Appleton at the end of July last year. At that point he had been in the unsustainable position of trying to run his business without the ability to take and process incoming calls since 1 June, following the completion by BT Openreach of the contracted works at his premises.

Before contacting my office, Mr Appleton had tried to deal with the matter himself by taking it to the highest level in BT. He had been told that there were

“multiple sections of underground cable which are faulty and Traffic Management will be required to re attend to the fault further”.

It turned out, however, that despite the fact that there were multiple failures, the traffic management had been booked for only one day. It will come as no surprise to Members that that did not deal with the multiple faults that BT knew existed. He was then told that the site had to be re-surveyed by Lux, the company that hires out temporary traffic lights, because traffic management was required in different locations. I do not know about you, Ms Ryan, but I would have assumed that if BT knew there were multiple faults, it could have joined the dots and worked out that it would need to work at multiple locations, but apparently that was beyond BT.

Even before consulting my office, Mr Appleton had been dealing with the chairman and CEO of business at BT, who had previously prompted the well-named dig and auxiliary team. Mr Appleton believed that the complaint had been escalated to the highest level, but it appeared to have little effect. I took up the case with BT, but still the matter ground on. By 7 August, Mr Appleton reported that he was “haemorrhaging business”. Openreach had by this time acknowledged an entitlement to compensation, but Mr Appleton was in the surreal positon of being told that nothing could be done until service had been restored. One could have forgiven him for thinking he had strayed into a Kafka novel or a “Monty Python” sketch.

The delay in effecting repairs, despite the involvement of cohorts of BT and Openreach staff and engineers, was apparently down to the fact that the problem required traffic management. By early August, that had taken 10 weeks to organise, during the course of which BT had apparently lost the form, which caused huge delays. It appeared to be beyond the wit of BT Openreach to get engineers and traffic management in place simultaneously. A divert set up as a temporary measure also failed.

Finally, on 17 August, BT Openreach managed to get everyone together and fix the lines. Hallelujah! Three weeks later, the system was down again. That happened again in January, which apparently was a fault “further into the network”. That incident required another escalation to the director’s office before a repair was effected. On 1 March, Mr Appleton again contacted my office to say that the service had gone off. It came back on the next day, but was incredibly slow to non-existent.

As Members can tell from that timeline, the problem has been ongoing for nine months. That is a complete and utter scandal in an age when broadband is a vital component of the business environment, especially in rural areas.

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As other Members have said, broadband should be a true universal obligation. BT Openreach is effectively a private monopoly; the hon. Member for Tiverton and Honiton (Neil Parish) called it a virtual monopoly. There might be competition in major urban areas, but there is none in rural areas. There is nowhere else for people to go to get the service, so BT can treat customers as it likes. As Members on both sides of the Chamber have described, BT cares little for the effects on business of its complete incompetence in dealing speedily with repairs, and we have heard—this is true for my constituents, too—how BT blames the local authority and everybody else without taking on any blame itself.

The hon. Member for Bishop Auckland and others spoke about more money being put in, but the taxpayer has already paid BT Openreach a fortune for the broadband network. We should not be looking to punt in yet more taxpayers’ money; we should be telling BT that it has to earn the right to run the roll-out. It has an effective monopoly, so it must put in some of its own money. BT must step up to the plate and do what is necessary to ensure a reliable system for all consumers in the United Kingdom.

2.31 pm

Clive Efford (Eltham) (Lab): It is a pleasure to serve under your chairmanship for the first time, Ms Ryan. I congratulate my hon. Friend the Member for Bishop Auckland (Helen Goodman) on securing yet another debate on broadband. I am sure that the Minister needs no notes to respond to these debates.

We heard from a number of Members about the problems in their constituencies. In an intervention, the right hon. Member for Ashford (Damian Green) read out a response that suggested BT was trying to distance itself from Openreach, which is incredible. The hon. Member for South Suffolk (James Cartlidge) said that his constituents had dug their own channel in an effort to expedite the situation themselves. That is taking things to an extraordinary degree, but it shows the lack of service, particularly for people in rural areas, although I stress that the problems are not just in rural areas.

The hon. Member for Bury St Edmunds (Jo Churchill) illustrated very eloquently the chaos suffered by one business in her constituency. When the line was reallocated, the business lost its BT broadband connection. When it came back, the speed was reduced and the gentleman was forced to travel 25 miles to another office. The impact of something like that on a small business is difficult to measure.

The hon. Member for Sittingbourne and Sheppey (Gordon Henderson) read out a catalogue of failures over a long timeline. It is difficult to understand how BT can be so incompetent and fail in its duties so frequently. The hon. Member for Brecon and Radnorshire (Chris Davies) highlighted the problems for rural people and called for a truly national roll-out. The hon. Member for Tiverton and Honiton (Neil Parish) said that by definition the hardest-to-reach areas are in rural areas, and underlined that by discussing the ignominy of companies having to pay BT to get an explanation of BT’s failure so that they can get compensation. That is hard to stomach for small businesses.

The hon. Member for Filton and Bradley Stoke (Jack Lopresti) intervened to underline how arrogant and aloof BT is when it comes to the needs of people who

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are not receiving broadband, especially to businesses. That was also underlined by the hon. Member for Angus (Mike Weir), who discussed BT’s failure to carry out repairs. Because BT has a monopoly in his area, it does not respond readily to his constituents’ concerns.

The Federation of Small Businesses has referred to broadband as the fourth utility, as have many Members today. As broadband becomes ubiquitous and ever more vital for doing business, it becomes more important that businesses can access broadband. It is vital for all businesses, not just those in the digital economy. It is ludicrous that the Government have not been able to provide what has become the fourth utility for so many people.

The Government’s own broadband impact assessment states:

“It is now widely accepted that the availability and adoption of affordable broadband plays an important role in increasing productivity”,

and that access to faster broadband is worth £17 billion to the economy. It goes on to explain how better infrastructure increases productivity by

“supporting the development of new, more efficient, business models, enabling business process re-engineering to improve the efficiency and management of labour intensive jobs, and enabling increased international trade and collaborative innovation”.

Broadband also allows more people to work, or to work in different ways.

The failure to roll out broadband is increasing the problems for inner cities in the face of demands for public services and more infrastructure. A fully rolled out broadband infrastructure would mean that businesses could relocate, or more readily remain in rural areas to conduct their business. If, as the impact assessment shows, something is worth £17 billion to the economy, surely it is a false economy for the Government not to ensure that it is rolled out properly.

The European Commission set a target of universal broadband by 2013, yet we are still not there. When the Labour Government left office in 2010, they left behind a fully-funded plan for basic broadband to be delivered to all within two years, and superfast broadband to 90% by 2017. The remaining 10% would have been covered by mobile broadband. We are falling further and further behind our competitors. Australia, a huge landmass, is aiming for 100 megabits per second for 93% of premises by 2021; South Korea will have 1 gigabit by 2017; and Ireland has recently increased its average broadband speed by 10%. Yet in the last quarter, the average speed in the UK has fallen by 3.7%.

The coalition Government designed a fragmented and monopolistic superfast broadband roll-out that handed £1.7 billion of taxpayers’ money to one company to roll out broadband: BT. Four years later, many homes are still waiting. Incredibly, the Government have missed their targets on several occasions. In a Westminster Hall debate yesterday, the Minister raised several of his own frustrations with the service. We have debated broadband on 45 occasions in the past five years. The Minister has answered questions on the subject at every Culture, Media and Sport questions I can recall—a total of 63 times in the past five years. There has been a constant barrage of attacks from Members on both sides of the House about the quality of the service.

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The Minister said in yesterday’s debate: “Openreach must do better.”

Mr Vaizey: Yes, it must.

Clive Efford: He continued:

“As the Minister responsible, I find it particularly frustrating that I have to step in to sort out these problems.”

Mr Vaizey: I do.

Clive Efford: Well, there must be an enormous number of problems because quite a few have been mentioned today that he has not got around to. He went on:

“Why has Openreach not put in place a hit squad to deal with some of the more prominent complaints that come from MPs?”—[Official Report, 9 March 2016; Vol. 607, c. 139WH.]

Mr Vaizey: Yes, absolutely.

Joan Ryan (in the Chair): Order. Minister, will you address these points in a few moments when the hon. Gentleman sits down?

Clive Efford: Thank you, Ms Ryan. Why is that hit squad not in place?

Jo Churchill: Will the hon. Gentleman give way?

Clive Efford: I shall just finish my point. The Minister has been in post for nearly six years. Why, when he is answering a debate that he has responded to on 45 previous occasions, is he still asking why Openreach has not put in place a hit squad to deal with MPs’ complaints? Perhaps the hon. Member for Bury St Edmunds is going to tell us.

Jo Churchill: No, I am not going to tell the hon. Gentleman. I put that and another question to BT on Monday, and it replied that it now no longer uses agency workers to do the difficult work; it now uses its own people to do the work that needs programming, which should sort out the fact that it cannot programme that work to sort it out for the customers. It strikes me that a company of its size, which consistently fails and, by its own admission to me, has the wrong people doing the wrong job at the wrong time, needs some assistance in the rear end department.

Clive Efford: Again, the hon. Lady very eloquently illustrates one of the problems that we have with Openreach.

The Minister gave his own example:

“I dealt with a factory that had been built to be ready to open specifically on the basis of when Openreach was going to connect it, but Openreach was already a year behind schedule. That cost that factory many tens of thousands of pounds. It continues to baffle me why it cannot get its act together and sort out these prominent problems.”

It is beginning to baffle us why he cannot sort out these problems with Openreach.

“I had to intervene on new builds. When a housing development is being put together, one would have thought it was the most obvious thing in the world that the people buying the houses are likely to be relatively young and likely to have children, and therefore likely to want, in this day and age, fast broadband connections. However, it took me a year to 18 months to bang together the heads of BT and the house builders to get an agreement.”

Mr Vaizey: I will explain in a minute.

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Clive Efford: I sincerely hope you will. If it takes the Minister 18 months, imagine what it is like for constituency MPs.

The Minister was obviously in full flow, because he threw in one or two other items:

“I, for one, would love them to get rid of this landline rental charge that they put on our bills. They put on their adverts a nice, big, juicy low price for broadband, and then an asterisk and a line saying, ‘By the way, you’ll have to pay £25 a month for landline rental.’”

Is that a statement of policy, or just the Minister throwing something into the air?

Mr Vaizey: Ms Ryan, you quite rightly admonished me for trying to respond to the Opposition spokesman from a sedentary position, but it is frustrating. Yesterday, I joked that, because of the lack of an Opposition policy, I would give an Opposition speech, but I did not expect the Opposition spokesman literally to read it out word for word the next day. Can we perhaps hear what the Opposition propose?

Clive Efford: The hon. Gentleman is the Minister. If he wants to dodge the arguments by posing as an Opposition Member, fine, but that is to run up the white flag and admit defeat.

The Minister said:

“I hope that the Advertising Standards Authority will crack down on how providers advertise their speeds. At the moment, if only 10% of customers are receiving the advertised speed, in the eyes of the ASA that is supposed to be okay. I totally accept that the ASA does a good job—it is a great example of self-regulation—but it really needs to go further on that. In my humble opinion, at least 75% of people should be getting the speeds that the broadband providers are advertising.”—[Official Report, 9 March 2016; Vol. 607, c. 140WH.]

Is that another policy statement? He is the Minister, so he really should not put such things into speeches if he does not intend to deliver them.

The Minister derided the previous Labour Government’s commitment to provide 2 megabits per second by 2012, but the Government are not delivering that minimum standard. Superfast broadband is 24 megabits per second, but the Government have moved the goalposts several times on it. It was 90% by the end of 2015; then it was 90% by the end of 2016; then it was 95% by the end of 2016; and now it is 95% by the end of 2017. When the Select Committee on Environment, Food and Rural Affairs was conducting an investigation into rural broadband, BT told it:

“it is there or thereabouts. It may end up being in 2018”.

The Committee pointed out in its 2015 report on rural broadband that it is by no means certain that the Government will even meet the phase 2 target. BT let the cat out of the bag: the Government are really behind the times.

Let me finish by asking the Minister a few questions. Two weeks ago, we cautiously welcomed Ofcom’s strategic review of digital communications—a plan for sorting out the mess created by six years of failed policy—as a step in the right direction. It mainly proposed two things: allowing rivals to access BT’s ducts and poles to increase competition, and addressing the issues relating to service standards. Ofcom will introduce automatic compensation for customers and businesses when things go wrong. It is good news that broadband, landline and

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mobile customers will automatically receive refunds for any loss or reduction in service, which hon. Members have spoken about today. Openreach will be subject to tougher minimum requirements to repair those faults and install new lines more quickly. As hon. Members indicated, that is very welcome indeed.

What will the Minister do if those proposals are not met? How will he ensure that those targets are achieved? For example, Openreach might decide to fix easier and quicker faults at the expense of some of the ones that have been described today. Ofcom will introduce performance tables on quality of service to identify the best and worst operators on a range of performance measures so customers can shop around in confidence. Will the Minister tell us how he intends to ensure that that is achieved? How long does he think it will take for the market to become more competitive? What will he do if it does not work? Are all the measures still subject to further consultation and debate? Ofcom will need the Government’s political cover to make that happen, but the Secretary of State’s mind is currently elsewhere. Will the Minister assure us that addressing the issues that hon. Members raised this afternoon is a priority for him and his Department?

2.47 pm

The Minister for Culture and the Digital Economy (Mr Edward Vaizey): I am grateful for the opportunity to respond to this important debate under your chairmanship, Ms Ryan. I thank the hon. Member for Bishop Auckland (Helen Goodman) for securing it.

Halfway through the debate, I began to wonder whether we were taking part in a kind of Sport Relief charity function, because we had exactly the same debate yesterday. To deal with all hon. Members’ complaints about Openreach, I propose a 24-hour debateathon. I am particularly pleased that I am the last man standing.

Yesterday, we had the hon. Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr), who is not the Scottish National party’s Culture, Media and Sport spokesman, but its Environment, Food and Rural Affairs spokesman: he worked for a telecoms company for 20 years so the SNP sent him along. He has not made it today. We also had the official Opposition spokesman, the hon. Member for Newcastle upon Tyne Central (Chi Onwurah). She has not made it today; she sent the sports spokesman instead. But I am still here, still standing and happy to take questions.

This may not be a Sport Relief event, but it is a mass therapy session. Many hon. Friends and hon. Members came here to relieve themselves of the sheer frustration of having to deal with Openreach on behalf of their constituents. As I have said on many occasions—well, certainly yesterday—as a constituency MP, I also have to deal with that frustration.

The hon. Member for Eltham (Clive Efford) mentioned the example of a factory that I cited. I was, in fact, talking about a factory in the constituency of the hon. Member for Bishop Auckland—I had forgotten that she would be leading this debate. As she knows full well, I have been closely involved in trying to sort out that problem. There is no defending what happened to that factory. I am not here to defend it, because I do not work for Openreach. It is absolutely astonishing that a business would spend £30,000 up front with a supplier

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such as Openreach, build its warehouse based entirely on the belief that it was dealing with a reputable company that would deliver what had been contracted for, and then find—

Neil Parish: Will the Minister give way?

Mr Vaizey: No, I will not give way. My hon. Friend spoke at length on the issues and I am not giving way to him.

The company built a factory based entirely on the expectation that the service would be delivered, only to find that it was not delivered—Openreach said that it had a problem with blocked ducts. If people are paid £30,000 to deliver a business line, the least they can do is to get out there and look at the ducts, in particular if the order has come in six months before they are meant to deliver it. There is no defence.

I freely admit that it is frustrating to deal with such issues. I wonder sometimes how I could distract attention from them. In fact, I asked the Prime Minister the other day, “Can we have a referendum on something? I am suffering all these attacks from my colleagues, please can we have a referendum on something like our European membership as that might distract them for a few months before they come back to the issue?” But it has not distracted them—we are still debating Openreach’s failures.

The Opposition have contributed a great deal to telecoms and telecoms policy. I read this morning that one Opposition Member was fined £5,000 by the Information Commissioner for making 35,000 recorded calls urging people to nominate him as the London mayoral candidate, which he failed to achieve. But he has added to BT’s coffers!

We are still waiting for a broadband roll-out policy from Labour, but I am grateful to the hon. Member for Eltham for reminding us that Labour’s target was 90% superfast broadband by 2017, which we achieved by the end of 2015. So we are two years ahead of what Labour promised with its unfunded commitment when it was in government and before it left us with a wrecked economy and such long-term plans. I sometimes dream that Labour won the 2010 general election and that a Labour MP might now be having to stand in my place and explain why his Government had still not got to 90% and why they were still going to wait for two years to do so. We have never changed our targets; we will reach 95% by the end of 2017.

I sometimes dream, too, of the SNP being the official Opposition—I know I should not say that, because it is almost blasphemous, but the hon. Member for Berwickshire, Roxburgh and Selkirk yesterday was entirely reasonable in pointing out the complexities and difficulties of the programme. I also commend the hon. Member for Angus (Mike Weir) for the reasonable points he made today about the problem not necessarily being wholly a Government one.

I want to revise slightly what I said yesterday, because it is important to make two points. First, when I complain about Openreach’s customer service, I should also praise the thousands of people who work for Openreach. They do an extremely good job in difficult circumstances. They are probably dealing with quite antiquated systems, which have not been modernised, and certainly the engineers who do the work on the ground are formidable people—I have met a few of them, when they have been

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enabling cabinets in my constituency. They work in all weathers and often unpleasant conditions. I want to put on record my gratitude to the thousands of men and women who work for Openreach in delivering roll-out.

Secondly, there is a distinction between poor customer service by Openreach and the roll-out of superfast broadband. The roll-out is an engineering project. We like to give Openreach a hard time, but it was the only one that stepped up to the plate to bid properly for the contracts—it might well be thinking that it made a rod for its own back—and, in terms of the roll-out, Openreach has hit every target. My hon. Friend the Member for Tiverton and Honiton (Neil Parish) wondered earlier whether it was value for money: as he well knows, thanks to the clawback mechanisms in the contract, we have achieved £130 million. In fact, there is considerable underspend on the contract as well, so we will probably be able to use existing money to go further than 95%.

As far as I am concerned, Openreach is full of very good people doing a very good job, and the roll-out of infrastructure is going extremely well. In this debate, we are dealing with issues that I will not say are beyond my control, but that should be laid squarely at the door of Openreach. In yesterday’s debate I said that Openreach has the lowest levels of customer satisfaction, just below TalkTalk, according to Ofcom surveys. It is important to remember that no communications provider is perfect. I am sure that if we looked in our inboxes we would all find complaints from our constituents possibly about TalkTalk, Virgin, Sky or even some smaller companies providing business broadband. No company is perfect.

James Cartlidge: BT has a monopoly on that front. I have never had a complaint about any other company apart from BT.

Mr Vaizey: Well, I have, but perhaps I live in a different world.

Having said that, I find it frustrating that I am sometimes doing the job of the chief executive or directors of Openreach. I find it frustrating that I have to broker a deal between Openreach and house builders to provide what should be provided in any common sense view—when building a brand-new housing development, surely that is the time to lay brand-new technology that people will expect over the next 20 years. I find it frustrating that I have to deal with a legion of complaints that are the result, frankly, of bad management and bad customer service. I sometimes feel that someone in Openreach loathes me so much that they sent out a memo saying, “Please give me the address of every single MP’s office, so we can make sure that every time they try to get a phone line, it will take three months.” At least four MPs have complained about that to me.

Clive Efford: Given that the Government have provided so much money to BT Openreach, will the Minister accept that the proper checks and balances were not put in place to ensure that it delivered on its contractual obligations?

Mr Vaizey: No, I will not accept that, because the hon. Gentleman is missing the point I made earlier about the distinction to be made. The physical roll-out of infrastructure is going well, and more than 4 million homes that would not otherwise have got superfast

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broadband now have it. That job has been done extremely well. What frustrates me is the poor customer service, which I hear about again and again from my colleagues. That is why we have had two debates in two days. I am really trying to get the message to Openreach to sort that out.

Damian Green: I spent several years as the front person for the UK Border Agency, so I have every sympathy with the Minister having to be the front person for Openreach. Has he reflected on the policy implication? Even though the roll-out, in effect, of fibre to the cabinet has been a success—as he said—that is still not providing an adequate service for millions of households and businesses throughout the country. Therefore, at some stage, a Government will have to bite the bullet and say, “We actually need fibre to the premises, however expensive it will be.”

Mr Vaizey: My right hon. Friend is moving me on to the next stage of infrastructure roll-out of broadband, but I agree, whether that is fibre to premises or new technology such as G.fast. I have talked about the need for a gigabit Britain and, as far as I am concerned, we are reaching the end of the superfast broadband roll-out programme and now we need to look ahead. We are not complacent: we need to go for a gigabit Britain.

To make things easier for people to build such networks, we will reform the electronic communications code, so that laying fibre across land becomes cheaper; we will reform planning so that mobile operators—as mentioned by one of my hon. Friends—may build bigger masts to get better signals; and we will work with Ofcom on a digital communications review, which will open up BT’s poles and ducts. I completely agree with those who say

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that it is important to follow up and to ensure that the practical implementation of the regulations actually happens. The Secretary of State for Business, Innovation and Skills also announced a review of business broadband, which is at the very heart of what colleagues have been talking about.

Jo Churchill: Will the Minister bring domestic and business sides together, where possible? As he knows, the Home Builders Federation rolled out its programme in my constituency, in Woolpit. Businesses in that village cannot get adequate supply, which is crazy.

Mr Vaizey: I agree with my hon. Friend. That should form part of our business broadband review—that we need to put in place proper procedures to ensure, in particular when business parks are being built or extended, that communications providers know that and therefore use the opportunity to put in place the new technology that everyone wants to see. The infrastructure programme, however, is going well.

I should also mention that, in the digital communications review, Ofcom has proposals for automatic compensation to householders and businesses where communications providers fall down in what they are providing. I am extremely keen to see that implemented as soon as possible. So we will make it easier to build infrastructure and to use Openreach’s network, and we will bring in provisions to ensure that when Openreach and other communications providers fall down with consumers, consumers get compensated.

Question put and agreed to.


That this House has considered BT broadband provision for local businesses.

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Energy Intensive Industries

[Mr Christopher Chope in the Chair]

3 pm

Graham Evans (Weaver Vale) (Con): I beg to move,

That this House has considered energy intensive industries.

It is a privilege to serve under your chairmanship, Mr Chope.

Energy-intensive industries are defined in the 2000 EU regulations on pollution prevention and control and further directives as companies whose energy intensity is more than 3%. This means that their energy costs are at least 3% or more of their total production costs. However, it is important to note that the figure is often significantly higher than this. For example, electricity accounts for 70% of chlorine production costs at the INEOS Runcorn site in my constituency. The companies that tend to fall into this bracket come from a wide range of sectors, including chemicals, steel, paper, minerals, glass, ceramics, and industrial gases, among others.

Protecting the competitiveness of the UK’s foundation industries is vital to our long-term economic success. Energy-intensive industries account for 4% of the UK’s total gross value added, directly employing more than 200,000 people. These foundation industries are crucial to the success of other companies through their supply chains, meaning that the multiplier effect on economic growth and jobs is far greater. In a report for the CBI, Tata Chemicals estimated that for each direct job it creates, a further five jobs are created in the supply chain. These are often high skill, high wage jobs that are vital to the future prosperity of the UK economy.

Energy-intensive companies, much like other industries, draw competitive advantage from clustering. This is a result of the existence of a pool of specialised workers, the provision of specialised suppliers, and the rapid flow of industry-specific knowledge among firms. As a consequence, regional economies can often be heavily dependent on a small number of energy-intensive firms in the area. Because energy-intensive industries compete globally, their export success is critically dependent on secure and competitively priced energy supplies.

UK industrial energy prices are the most expensive in Europe: 75% higher than Germany; 45% higher than France; and nearly 80% higher than the EU average. Energy-intensive industries are typically paying between £80 to £90 per MWh for electricity. Of this, £14 is attributable to the cost of carbon through the EU emissions trading scheme and the carbon price floor.

A further £20 goes towards the cost of renewable subsidies, such as the renewables obligation and the feed-in tariff. The UK-only carbon price floor results in UK-based energy-intensive companies paying four times the cost of carbon paid by their continental competitors such as France or Germany. The Department for Business, Innovation and Skills has been paying compensation since 2014 to lessen the impact of the EU emissions trading scheme and the carbon price floor. This support is limited to 80% of the impact by EU state aid rules.

3.3 pm

Sitting suspended for a Division in the House.

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3.17 pm

On resuming

Graham Evans: I welcome the announcement in the autumn statement last year that energy-intensive industries will be exempt from the policy costs of the renewables obligation and feed-in tariffs, which will ensure that they have long-term certainty and remain competitive. Energy-intensives whose electricity costs exceed 20% or more of their gross value added are eligible for renewables compensation, capped at 85% of the impact by the EU state aid rules. However, I am concerned that energy-intensives that fail to meet the 20% criterion and therefore do not receive the compensation are often in direct competition with others that meet the criterion and do receive it. That puts some companies at a profound competitive disadvantage. Officials at the Department for Business, Innovation and Skills are exploring the feasibility of alternative options to support those companies, which is a welcome development. I look forward to the results of that.

I represent a constituency in Cheshire, where the energy-intensive chemical industries are of historic significance. INEOS Chlor and Tata Chemicals, among others, are significant employers of people in Runcorn and Northwich, and in the wider M56 corridor throughout Cheshire. Chemistry is the bedrock of manufacturing, and strong, competitive chemical industries underpin all great manufacturing nations in the developed world. The UK chemical and pharmaceutical industries have a strong record of manufacturing.

Kevin Hollinrake (Thirsk and Malton) (Con): Is my hon. Friend aware that the shale gas industry has revolutionised the fortunes of the chemicals industry in the US? According to PricewaterhouseCoopers 1 million jobs will be created in manufacturing by 2025 as a direct result of shale gas energy and associated chemical feedstocks.

Graham Evans: I am grateful to my hon. Friend, who has certainly made his mark on this place since he was elected. He is right; the east coast of America is an example of how countries can reinvent themselves as manufacturing nations.

The chemical industry is manufacturing’s No. 1 export earner, adding almost £9 billion to the UK’s GDP each year. More widely, the Royal Society of Chemistry claims that £222 billion of GDP and 5.1 million jobs are partially reliant on UK chemical research and the UK chemical industry. The industry faces the additional challenge of using energy supplies both as fuel and as feedstock. Supplies of North sea gas for use as feedstock and fuel are diminishing, meaning that there is increased reliance on less secure supplies of imported gas. The political realities in Russia and Ukraine, as well as in parts of the middle east, show in no uncertain terms the increasing importance of energy security in the coming years. We have only to look across the Atlantic to the east coast of America to see the impact on the chemical industry of lower energy prices and booming supply. Cheaper energy combined with cheaper feedstock and Government investment has kick-started the US chemicals industry, which has since attracted more than $100 billion in investment.

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As my hon. Friend the Member for Warrington South (David Mowat) pointed out in January, that success is a direct result of a cheaper economic model and a business case, and as my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) said in his excellent intervention, more than a million jobs have been created along the eastern seaboard of the US.

I want to talk about bricks—I am not talking about Brazil, Russia, India and China; I am referring to bricks and mortar. At the general election, almost every Member stood on a manifesto commitment to increase house building and home ownership. The English housing survey suggests that home ownership is increasing for the first time in a decade, which I am sure we all agree is fantastic news, but the inescapable fact is that if we want to build, we need bricks. The owner of Michelmersh, Britain’s fourth largest brick producer, estimates that Britain requires 2.2 billion bricks a year. The country is at full capacity, making 2 billion, with the rest made up of imports, largely from Germany.

The Federation of Master Builders’ state of trade survey highlighted the scale of the challenge. Two thirds of small and medium-sized enterprises face a two-month wait for new brick orders, almost a quarter are waiting for up to four months and 16% face a wait of between six and eight months. Arrangements for compensating energy-intensives such as brick makers are significantly more generous in countries such as Germany. Although the brick industry is starting to recover and reinvest in some of the kilns mothballed during the recession, that will place British firms at a distinct competitive disadvantage as the demand for bricks soars. An opportunity exists to address that and to help truly kick-start the brick making industry, to complement the burgeoning construction industry and get Britain building.

It is important to keep energy-intensive industries competitive in a global market, not just to safeguard them but to maintain a far wider range of UK industrial sectors. Our foundation industries make the raw materials that go into everything from clothing and medicine to buildings, vehicles and computers. Energy-intensive industries and the jobs associated with them are almost exclusively located outside of London, and they form a vital part of the northern powerhouse and regional growth and development.

By 2030, the world population will be 8.3 billion and 60% of the population will live in urban areas. There will be 2 billion cars on the road, and 50% more primary energy will be needed. Such huge challenges cannot be met without embracing energy-intensive industries. They are the building blocks on which manufacturing rests, and on which our future prosperity will be built.

3.23 pm

David Mowat (Warrington South) (Con): It is a pleasure to serve under you, Mr Chope. I congratulate my hon. Friend and neighbour the Member for Weaver Vale (Graham Evans) on securing the debate, which is the second this week on energy-intensive industries. We did ceramics earlier in the week, so we are giving it a bit of a go, and it is good that we are because we do not talk about it enough. As he said, there are something like 900,000 jobs in the industry and its supply chain and,

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by and large, those are well paid, good jobs that we do not want to lose, particularly by accident or through carelessness.

On my validation for speaking in the debate, I do not have a particularly major industry in my constituency, but at one time in my life I worked at the Port Talbot steelworks. I remember seeing the blast furnace at Port Talbot and I suggest that all BIS Ministers and shadow Ministers see a blast furnace—while they are still here—because they are a magnificent sight.

Kevin Brennan (Cardiff West) (Lab): While the hon. Gentleman is on that point, can I tell him that my father worked for more than 20 years at Llanwern just a few miles down the road from Port Talbot? I was fortunate enough to be employed there for six months as a young man and came in close proximity to a blast furnace. Unfortunately, at the time I was there, three workers were killed by a gas leak from one of the blast furnaces.

David Mowat: The shadow Minister has validated himself in the debate. They are a sight that will always be remembered—I will certainly always remember it. I did not spend six months there, but I did work there.

Many industries have Ministers in this place who are directly responsible for them. We have a Minister for the City or banks, a Minister for farming, a Minister for sport, a Minister for IT and digital, a Minister for arts and a Minister for small business. Those are all important segments, but there is no Minister for the foundation industries and I think that shows a little.

Let us recap on what we are talking about—ceramics and bricks, chemicals, steel and aluminium. I should have said that I am the chair of the all-party parliamentary group for the UK aluminium industry, which is an interesting group to chair because globally aluminium is a real growth industry. It is increasingly displacing ferrous and other metals in the car industry. It is actually a very green material that is light and strong and we are seeing it used more and more. In the UK, though, that industry, which used to have three primary smelting works, now has only one, and that one—in fact, it is in Scotland—is under consultation for closure.

That is not to say that the aluminium industry in the UK is in bad shape. We are going more into secondary processes, which are higher value processes and there is an element of logic in that, but it is a shame that we are losing the raw material-producing capability that is also at risk in other industries such as steel. I will reflect on some of the reasons for that. I will talk about two things: energy prices, as my hon. Friend did, and what we are doing to ourselves—it is nearly all to ourselves—in that regard; and some of the aspects of our position on market economy status vis-à-vis China. I would like clarification from the Minister on that. Others may also talk about that, because some bits of it are not clear to me.

The basic premise is that it is not possible for us as a country to have a march of the makers, with a resurgence in manufacturing—that is in the north by definition, because much of that is in the north—on the back of differentially higher energy prices vis-à-vis our neighbours, whether in Europe or in the United States. We are not talking about China; we are talking about differences in approach in Europe and, to a lesser extent, in the United States.

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In terms of energy, there are two sorts. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) talked about the gas industry in the United States and what that has done. This is not a debate about fracking other than to say that we sometimes talk about it as though it is a new industry and we are deciding whether it, and all that goes with it, will happen. The truth, of course, is that fracking has already happened—it has been going certainly for more than a decade—and it has transformed the United States’ eastern seaboard. Something like a million jobs have been created and the gas industry—gas is not just a raw material for energy but a feedstock for chemicals—in the United States has been transformed by it.

It is also worth reflecting that, as a result, the United States’ carbon emissions have massively come down, faster than any other country in the world. The United States did not sign up to Kyoto, but had they signed up they would have made their targets because of the displacement of coal by gas. All of us who are concerned about the environmental aspects of that need to reflect on that.

One of the interesting questions is: have the million jobs created in the United States affected us in the UK? Actually, yes, they have—only at the margin, but everything in all these industries happens at the margin. By and large, whole industries do not get moved; by and large, industries such as the one in Teesside are not closed down. What happens is that a decision is made about an individual process plant. It is now more cost-effective to put that plant in the United States than in Teesside, where it may have gone 10 years ago, because they are paying one third of the price for that gas there. Those of us who are taking opportunistic positions regarding fracking—whether it is INEOS in Grangemouth or elsewhere—need to reflect on what that means for the 900,000 workers in this industry.

Vis-à-vis the rest of Europe, our gas prices are not out of line; in fact, if anything, they are a little cheaper than much of the rest of Europe. Electricity prices in this country are broadly 80% higher than the European mean, as my hon. Friend the Member for Weaver Vale said. This morning, Germany and France were paying 4p per unit. Our energy-intensive industries are paying 9p per unit, and there are two components of that. One is the carbon price floor, which I am sure the shadow Minister will rightly address. That is a tax on manufacturing, and it is arguably a tax on the north. It is certainly not a tax that I like.

As well as the carbon price floor, which we have unilaterally imposed in this country, there is the renewables and climate change stuff that we continue to impose on this country unilaterally. I want to consider the massive differences between what we are doing on this and what others are doing—not the Chinese or the Indians, because it is quite reasonable that they do less than us as they have so far to catch up, but the rest of the EU.

One of the big myths about carbon policy is that it is the EU making us do all this stuff. There was a bit of that in some renewables directives, but by and large, that is not the case. By and large, nothing going on now in climate change policy—policy that we may or may not agree with—is caused by the EU. It is caused by us, by the Climate Change Act 2008 and the Committee on Climate Change.

The point that needs to be made—and the Minister and shadow Minister need to be cognisant of it—is that the 2008 Act has imposed on our industry the need to

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reduce carbon emissions by 80% over a 60-year period. The European submission to the Paris summit requires a change of 40% over 40 years. That is a lower gradient, and furthermore, it is easier to get a higher gradient to begin with. They are doing the easy bit at a much lower rate. If we take the UK out of the overall European submission to Paris, it means that—roughly speaking—they have signed up for an emission reduction rate of 50% to 60% lower than us. Either we are right or they are right, but it seems odd to me.

The reason for the difference is clear: in those countries, the people who run the foundation and heavy engineering industries have much more lobbying power with Government, perhaps as the banks do in our country. As a result, they look at the proposals and say, “We’re going to do what’s reasonable. We’re not going to bankrupt ourselves.” The trajectory of emission reduction to which the EU has signed up is 60% lower than the one we are giving ourselves in the UK. The EU has not even assigned that amount by country yet; it is just a total EU level. That should give us all pause for thought. Maybe we are right, maybe they are right, but our trajectories are certainly different.

The European emissions trading scheme was supposed to reduce carbon emissions. The European Parliament had a vote three or four years ago because the ETS did not set a high enough price for carbon. It implies a carbon price of €5 per tonne of CO2. The vote was to try to get that price up, but the Germans, the French and others would not agree to it. That is one reason that on Monday night, an Opposition amendment to the Energy Bill will advocate going further down the path of unilateral action here—in that case, because of the failure of the emissions trading scheme in Europe. If it were not so serious for the 900,000 people whose livelihoods we are talking about, it would almost be funny.

In terms of progress on emissions and climate change, a very good database called EDGAR—the Emission Database for Global Atmospheric Research—shows emissions per capita, per unit of GDP for all the countries in the world, and how they are moving and changing. It is worth reflecting that Austria, a relatively prosperous, affluent part of Europe, has increased its carbon emissions per head by 20% since 1990, while we have decreased ours by something like 15% or 20%. There is no consistency of approach, which is extraordinary.

We have talked in the past about the fact that countries such as Germany are building a new generation of coal power stations. Their renewables are not going up, but in fairness, they have done a lot on renewables in terms of emissions. However, Germany’s carbon emissions are one third higher than the UK’s per unit of GDP and about 30% higher per capita. We need to reflect on that and on the actions that we think it is necessary to take. I make the point again that either we are right or they are right, but for too long, we have listened to people’s words on this subject and not looked at their actions.

I asked the Committee on Climate Change at a meeting recently, “What about these industries? All other things being equal, if we decide that we wish to continue having the highest energy prices in Europe and so on, what does that mean for them?” One person on the committee said, “It’s about comparative economic advantage.” The theory of comparative economic advantage says that a developed economy should probably not be doing some of these things. The implication is that it is

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probably right to leave steel production behind and move into making aeroplanes and so on. That is the thinking in some parts of the Committee on Climate Change. Either parliamentarians wish to challenge that, or we accept it. At the moment, that is the consensus on action—I personally think it is wrong.

Kevin Brennan: The hon. Gentleman makes, as ever, an expert speech. That kind of thinking is wrong because whatever the economic theory of comparative advantage says—having taught it, I know what it says—it is ultimately in our country’s strategic interest to maintain a steel-making capacity. Does he agree?

David Mowat: I completely agree. That is precisely why that sort of thinking must not gain currency. However, let me be quite clear: it is out there.

I want this to be a debate and to talk about the facts, but that thinking is out there in parts of the Labour party as well. I have often reflected on why many Labour MPs who represent seats in the industrial north are less concerned about this issue than I would expect them to be. It is the same in Scotland. I think it is because there are almost two Labour parties. I do not want to get into a fight, but there are the guys who represent the big industrial communities and understand the issues, and then there is what I would call—I do not mean to be pejorative—the Primrose Hill branch of the party, which believes in cutting emissions at all costs at all times to show leadership to the world. Frankly, the consequences will be the consequences. That is what we should be talking about today.

It is important that the Front Benchers understand the points I have made and that unilateral action will take us to a place where we do not want to be. This is not only about energy-intensive industries. All industries use electricity—for example, the manufacturing industry uses electricity—with the possible exception of the banks, although even they need to put the lights on and get their computers to work.

Finally, I want to ask the Minister about market economy status and why the UK Government are apparently so keen to fight for that for the Chinese when we know what the implications are likely to be for this industry. I am looking for clarification, because when people lobby me and ask why we are doing this, I say, “Well, there must be other industries that benefit from China having market economy status.” I am interested to know whether she can tell us which industries on the other side of the coin will benefit, because my guess is that it will be financial services and banking. If that is the case, we should be clear and just say that, and that it is a decision we have made for the UK economy.

In summary, let me repeat these points. There will not be a march of the makers or if there is, it will be a march to the EU, to the USA and to China, if we continue to concede a massive gas price advantage to the United States and a massive electricity price advantage to the European Union, and if we are not careful about the issue of dumping in China. The Minister is not from the Department of Energy and Climate Change, so she may not be able to answer this question, but I also want to know why the UK is going unilaterally so much

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further than others and whether there is any chance of others following us in future, because it is very clear that they have not followed us yet.

3.41 pm

Margaret Ferrier (Rutherglen and Hamilton West) (SNP): It is a pleasure to serve under your chairmanship, Mr Chope. I congratulate the hon. Member for Weaver Vale (Graham Evans) on securing this important debate.

Support for energy-intensive industries is a matter that I care a great deal about. My hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) and I represent the two constituencies with Scotland’s remaining steel mills, and those are sadly at risk. I have worked hard since my election to fight to save our steel industry. Although the Clydebridge steel treatment mill employs far fewer people than mills in other constituencies, it is no less devastating when jobs are at risk and when such an iconic industry stands to be lost from the constituency.

As the steel industry transitions to lower-carbon forms of production, it deserves our support. When crisis hit in my constituency, First Minister Nicola Sturgeon moved swiftly to establish the Scottish steel taskforce. That has resulted in positive action to retain jobs and hopefully to save and protect this established industry. If an alternative operator takes over, production will be able to resume swiftly due to the Scottish Government’s steelworkers retention plan. Action has been taken on business rates, and in addition to new public procurement guidance on steel, the Scottish Government have released an ambitious and visionary new action plan entitled “A Manufacturing Future for Scotland.”

The Scottish Government’s decarbonisation of industry steering group promotes and co-ordinates action to support energy-intensive industries, such as the steel industry, in making the transition to lower-carbon forms of production.

Wendy Morton (Aldridge-Brownhills) (Con): The hon. Lady and I both sit on a newly formed all-party parliamentary group on ceramics. Does she agree that not only the steel industry but industries such as the ceramics industry face huge challenges? There are a number of firms in those industries in my constituency.

Margaret Ferrier: I thank the hon. Lady for that intervention, and I will come to ceramics later, if she will bear with me.

The Scottish Government’s steering group specifically helps them to deliver their emissions reductions under the EU emissions trading system and to meet legal obligations such as the UK climate change levy and the energy savings opportunity scheme.

It is clear that the Scottish Government are committed to protecting the steel industry as a key strategic asset in the Scottish economy, and on behalf of my constituents, I would like to put on record my sincere appreciation of that. The UK Government have gone some way, but there is still more to be done.

On the issue of ceramics, in addition to a very long-established steel mill, there is a brickworks in my constituency—Scotland’s only remaining clay brick company, in fact. Raeburn Brick is an established family- run business in Blantyre. Somewhere in the region of

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15% of the bricks used in Scotland are produced by Raeburn, which means that about 85% are imported from outside Scotland. Those figures might not mean much to others, but to me they show that there is a real opportunity for more domestic business.

Graham Evans: I was interested to hear the hon. Lady mention the figure of 15% being made by that family business. Does she have the figure for how much is imported from outside the United Kingdom?

Margaret Ferrier: The figure I have is that 85% of bricks are imported from outside Scotland, but I am not sure how many are within the UK or the EU. I can certainly get back to the hon. Gentleman about that.

If we are serious about long-term and sustainable economic growth, companies such as Raeburn need support. There is clearly room for the Scottish market to expand and reasons why it is being held back. The manufacturing sector is highly important, and I certainly do not wish to see Raeburn at risk, as the Tata steelworks at Clydebridge is. The ceramics industry is looking for a level playing field, just like the steel industry, and is calling for assistance and action on carbon emissions, energy costs and trade, as well as on the housing supply chain.

How do we support energy-intensive industries? I acknowledge and welcome the action that has been taken already. State aid clearance for the UK Government’s energy-intensive industries support package will go some way towards easing costs for those industries.

We need only look at Sweden, for example, to see that electricity prices in the UK are needlessly high. According to Eurostat, the statistical office of the European Union, Swedish industry pays only €0.067 per kilowatt-hour for electricity. In the UK, the figure is exactly double that. Sweden has decided that fracking is not economically viable and is also phasing out nuclear. Renewable energy in the form of hydropower is now the single large source of electricity in the country, and wind power production is growing at a phenomenal pace—it has more than quadrupled over the past six years. We must aspire to cleaner, lower-carbon, sustainable forms of energy if we want to support industry in the long term.

The Scottish renewables sector has massive potential. The waters surrounding Scotland have the potential to provide it with a sustainable, renewable energy source—they are estimated to account for up to 25% of Europe’s tidal power and 10% of its wave power, as well as about 25% of European offshore wind resource potential. That renewable potential is being impaired, however, by the regressive energy policies of the UK Government, who are cutting support for onshore wind and vital support for solar energy projects, and slashing hydro tariffs.

We have an opportunity to develop new, low-carbon products and services, both to accelerate economic recovery in the short term and to drive long-term, sustainable economic growth. In short, low carbon is an environmental and economic imperative.

David Mowat: It is interesting that the hon. Lady has chosen the example of Sweden, because along with France it has, as she says, the lowest electricity prices in Europe, but both are characterised by a very high proportion of nuclear power. That is the reason.

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Margaret Ferrier: I thank the hon. Gentleman for his intervention.

The hon. Member for Weaver Vale stated that energy-intensive industries are foundation industries. In the UK they account for 4% of gross value added and employ 200,000 people, who are highly skilled, high-wage and very important to the UK economy and especially to regional economies. He mentioned his concern about the 20% criterion, which leads to some companies being put at a disadvantage in direct competition.

The hon. Gentleman then spoke about chemicals. Tata and INEOS are significant employers with a strong manufacturing record. The industry is worth £9 billion to the UK economy and brings 5.1 million jobs—I hope I have got that right. Energy security is very important. The hon. Gentleman then mentioned bricks and the need for a commitment to house building in the UK. We need 2.2 billion bricks a year. Germany does better than the UK, so we need to look at that as the demand for bricks grows. I hope that the Minister will consider those points.

The hon. Member for Warrington South (David Mowat) mentioned that we do not want to lose jobs and spoke fondly of his time at Port Talbot. The hon. Member for Cardiff West (Kevin Brennan) also has fond memories of working in the industry.

Energy-intensive industries include not just steel and bricks but ceramics, chemicals and aluminium. As the hon. Member for Warrington South said, aluminium is a growth industry and a green material, but we are down to just one smelting capability, which apparently happens to be in Scotland. There is also a risk in the steel industry, and we must look at energy prices. He said that the gas industry in America is not new and has been going for more than a decade, but we must reflect on its environmental aspect. He said that China and India still have to catch up in their carbon policy.

The hon. Gentleman mentioned the difference between emissions in the UK and the EU—the EU seems to have signed up to a 50% to 60% lower emissions reduction than the UK. He then spoke about the emissions trading system and the failure to make progress on climate change. He mentioned Austria—it is interesting that its carbon emissions have increased. He asked the Minister who is right—are we going down the right road, or are other countries?

One comment that the hon. Gentleman made, if I picked it up correctly, was that Labour MPs in the north are less concerned about the issue. I am not sure whether I agree—perhaps I picked up on his comment incorrectly. I know that there are not many Labour Members in the Chamber today, but perhaps the Opposition spokesperson will be able to take that argument forward. Labour Members have certainly been strong advocates for the steel communities in the north.

David Mowat: I completely accept that. The point I was trying to make was that whenever we discuss climate policy, those MPs press for us to go further unilaterally, which is a little odd in the context of the industries and communities they represent. I completely accept that they care passionately about those industries.

Margaret Ferrier: I thank the hon. Gentleman for his intervention.

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Finally, the hon. Gentleman wanted to know which industries will benefit from China gaining market economy status. We have heard many times from the Minister why she feels it would be okay to give China market economy status, and I am sure she us will give that answer again at the end.

3.52 pm

Kevin Brennan (Cardiff West) (Lab): I congratulate the hon. Member for Weaver Vale (Graham Evans) on securing this debate. It was not so long ago that we debated similar issues in this Chamber, led by the hon. Member for Thirsk and Malton (Kevin Hollinrake), and we had similar discussions about some of the issues relating to energy-intensive industries, with a particular emphasis on fracking.

The hon. Member for Weaver Vale rightly pointed out how crucial these industries are to the foundation of our economy and to jobs in the supply chain particularly. They have a multiplier effect. Even from the basic statistics, we can extrapolate far beyond them to the ripple effects throughout our economy, often with good quality, high-skilled jobs.

The hon. Gentleman talked about the problem of energy prices in the UK and, as ever, gave a thoughtful and informative speech. He was followed by the hon. Member for Warrington South (David Mowat) who, in a way, put his finger on many of the fault lines. I will perhaps return to his comments about the Labour party in a moment, but until yesterday, none of us was sure which Department would respond to the debate. Only at the last moment did I find out that it would the Department for Business, Innovation and Skills instead of the Department of Energy and Climate Change. The information from official channels was that there was some question. That is not a criticism and I hope the Minister does not take exception, but it emphasises the fault line in this area that the hon. Gentleman explored in his comments about the tension in the appropriate desire for us to do something about climate change.

We have the Climate Change Act 2008, as the hon. Gentleman rightly pointed out, which was supported cross-party—not by everyone in the House obviously, but certainly by those on both Front Benches. It is an appropriate ambition. We want to save the planet from the possible consequences of not acting, but the tension arises from the need to make sure that in doing so we do not kill off our vital industries. The hon. Gentleman pointed out the tension, which exists not just in my party, but probably in the Conservative party to some extent. The fact that this debate was allocated late, with apparently some internal debate about who should take it, illustrates his point.

The hon. Gentleman’s speeches are always informative and educational for all of us. He brings a level of expertise that is sometimes unusual among elected Members. He would probably make a very fine Minister in this area if he received a call from No. 10. I have probably killed of any prospect of that by mentioning it, but it is without question. He always provides us with a challenge and food for thought in his remarks.

From time to time, people try to say that we should not talk politics in the House of Commons, which is vacuous as a statement. If one cannot talk politics in

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the House of Commons, where can one? The hon. Gentleman made a point about tension in the Labour party, which he said he had identified between some part of north London—

David Mowat: Primrose Hill.

Kevin Brennan: The Primrose Hill lot. I am not an expert on the areas of London. MPs from the north, Wales and other parts of the United Kingdom may be more au fait with the industries we are talking about. He may be right about that tension. All political parties are broad churches, including his own. There is a strand in his party of people who are extremely laissez-faire in their attitude to the economy and would take the view that if the steel industry cannot survive in the bitter winds of market forces, it is appropriate for it to suffer the consequences and to diminish and disappear. The emphasis is more on the comparative advantage that the UK has enjoyed in industries such as finance, banking and so on.

To an extent, both the hon. Gentleman and I want to see a broader and stronger consensus develop on the need for an industrial strategy, with a recognition that the Government have a serious role to play if we are to have a march of the makers. In recent years, I have felt that that political consensus was genuinely developing. I pay some credit to a previous Secretary of State for Business, Innovation, and Skills, Lord Mandelson, who came back from the European Union having had an epiphany of sorts while a European Commissioner. When he was a Trade and Industry Minister previously, I felt that he had displayed too much of that laissez-faire attitude towards British industry, but having seen other countries in the European Union and how they do things, he came back realising that it was vital for the British Government to take a much stronger interest in UK plc and particularly the high-skill, often energy-intensive industries that would genuinely help to rebalance our economy away from the unhealthy state that it had got into with too much reliance on the banking and finance industries.

We can perhaps create that stronger consensus in British politics, given the views that are shared among all parties across the House, to achieve a longer-term strategy for British industry.

David Mowat: I probably am a bit more laissez-faire than the hon. Gentleman. Having said that, I do understand that an industrial strategy is needed in some cases at some point. To the extent that the Government have got involved in these industries, however, it has been to impose—apparently without necessarily understanding that they were doing it—higher energy costs than their competitors in the EU. We have already intervened in an unhelpful way. That is really my concern.

Kevin Brennan: Indeed, and that was the central strand, obviously, of the hon. Gentleman’s remarks and why I described them as a challenge to us all. The points that he made provide deep food for thought about what is the best way forward to ensure that we fulfil our obligations in relation to climate change, but also have the kind of strategy that will make sure that these industries can be sustained and can prosper into the future, because of their importance to our economy.

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The hon. Gentleman went on to talk about market economy status for China. My view would chime with his remarks in that regard as well. I am interested to hear the Minister’s response to his question about the beneficiaries, and the request to be more overt about the anticipated beneficiaries of the UK’s support for market economy status for China. My fear is that if we roll over too easily on that subject—whoever the beneficiaries are—it could have extremely negative consequences for some of the industries that we are discussing.

At a time when Chinese steel is being sold at under cost price in European markets and in the UK, with the consequences that we all know about for British jobs and British industry, it seems extraordinary that we are going out of our way to be favourable towards market economy status for China, instead of perhaps using it as a bargaining lever when discussing the Chinese Government’s policy on the steel industry. It is 70% state owned after all, so one would have thought that the Chinese communist Government had some influence over it. I know that some of the consequences of that over-production are now being felt in China. At the recent congress of the Chinese communist party, it had to announce a reduction in steel making in many of those areas.

The hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) told us about energy intensive industries in Scotland. She mentioned tidal power, which leads me to ask the Minister whether she can give any update— I think I might know what the answer will be—on the Government’s proposals in relation to the Swansea bay tidal lagoon. That is a current issue—no pun intended—and I hope that she will be able to say something about it when she responds to the debate.

I do not want to detain hon. Members too long today, but we did receive a briefing ahead of the debate from EEF, the Manufacturers Organisation. It posed some questions, and it would be helpful if the Minister could respond to them, in the spirit of the debate that we are having today. I will outline the four challenges that it poses—that is probably the easiest thing to do—rather than repeating what has been said already.

EEF says:

“The Government should support industry’s calls for major changes to the proposed reforms of the EU Emissions Trading System (ETS) post 2020.”

I wonder what the Minister’s position is on that. EEF also says:

“Ministers must bring political pressure to bear on the EU Commission to approve the ‘second’ state aid application in relation to the EII compensation package without further delay.”

Again, I wonder what the Government’s response is to that challenge from EEF. It also says that in the Budget

“the Government should look to announce a scrapping or phasing out of the Carbon Price Floor.”

The hon. Member for Warrington South rightly mentioned that. EEF continues:

“At the very least we must see a commitment to continue the current freeze.”

EEF also says:

“Government must use the 2050 Roadmap project to devise a radical new approach to the decarbonisation of energy intensive industry. This must include a credible industrial carbon capture and storage (CCS) strategy and serious consideration of financial support for industry.”

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I do not want to detain hon. Members too much longer, but I wonder whether the Minister could respond to the points that EEF has helpfully provided to us for this debate.

4.5 pm

The Minister for Small Business, Industry and Enterprise (Anna Soubry): It is, as always, a pleasure to serve under your chairmanship, Mr Chope. I congratulate my hon. Friend the Member for Weaver Vale (Graham Evans) on securing the debate. This is an important issue and, as other hon. Members observed, it is not the first time this week that we have debated the subject, because we discussed the future of the ceramics industry on Tuesday.

I am a little confused about why the Opposition were confused about who was to respond to this debate, because we in BIS were in no doubt at all. EIIs are very much within our responsibility, so I was always going to be responding. I think that my hon. Friend the Member for Warrington South (David Mowat) said, “Do we have a Minister for energy-intensive industries?” He was berating the fact that we do not have one. I do not know whether it is good or bad news from his point of view—I hope he will be happy—but I am the relevant Minister, because I am the Minister for Small Business, Industry and Enterprise, and at the heart of that industrial brief are these great EIIs, these great manufacturing industries, which many would say form the absolute hard core of our economy, are certainly at the heart of our manufacturing sector and are incredibly important to our economy.

No one should be in any doubt as to the huge value that we place on the steel industry. I do not want to dwell too much on the steel industry, because I think we want to talk about other sectors, notably chemicals, but my right hon. Friend the Prime Minister has made it clear that steel is a vital industry. I obviously have repeated that. My right hon. Friend the Secretary of State has also repeated it. It is not just that it is a vital industry; in relation to steel production, not just the electric arc way of making steel but the blast furnaces, notably at Port Talbot and Scunthorpe, we have no doubt; we are determined to do everything that we can to secure their future.

Kevin Brennan: On a point of clarity, it is not a matter of being confused. The Minister may not realise this, because I do not think she has been a shadow Minister. How this works is that we receive a notification from the Government through the usual channels of who is speaking in a debate, and the information received from the Government said “To be confirmed”.

Anna Soubry: Well, I do not know. It does not really matter, does it? We were not in any doubt; we knew we were doing it. I knew I was doing it as soon as my hon. Friend the Member for Weaver Vale secured the debate and, as I said, I congratulate him on that.

As we know, our manufacturing industries face difficult times, and EIIs face those pressures perhaps more than most, given their considerable consumption of energy—something like 20% of all UK energy as heat. However, these sectors play an essential role in delivering the UK’s transition to a low-carbon economy, as well as contributing to economic growth and the rebalancing of the economy.

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My hon. Friend the Member for Weaver Vale used a different set of measures from the ones that I have, which were kindly supplied by my officials, but here are some facts. EIIs employ about 2% of the UK’s workforce and contribute an annual £50 billion to the economy, approximately 4% of the UK’s gross value added. With Inovyn and Tata Chemicals in my hon. Friend’s constituency, he will know at first hand the significant contribution that these industries make to our national and local economies and the impact that is felt by the local community and industry supply chains when sites reduce their operations.

I want to say a little about the chemicals sector. The Chemical Industries Association has pointed to real confidence in growth across the UK’s chemicals sector. Since 2010, the UK chemicals industry has seen the strongest growth of the major EU chemical producers, with the exception of France, and has grown more than twice as fast as UK manufacturing as a whole. That is the trajectory we want to retain and grow, particularly given the sector’s strategic importance in underpinning UK manufacturing and supplying raw materials and inputs to a range of sectors. I am happy to meet that group, as I do regularly, and I was delighted at our previous meeting to hear of the progress that the sector is making. I am not saying for one moment that there is not more to be done, and of course we know the problems with the high cost of energy, but I was delighted to hear about some of the progress on exports, for example. I am pleased that the sector has an excellent working relationship with UK Trade & Investment—it has a new form now. I am keen to ensure that we continue that strong working relationship and continue looking into increasing our contribution to exports.

It is a challenging time. There is a shift in the emerging economies from importers of chemicals to being producers and exporters. China accounts for roughly a third of the current global chemicals demand, but is expected to generate more than half the global demand growth for chemicals for the rest of the decade. As such, the Chinese economy has slowed down. It is still growing, but not quite as fast as we thought. That will have a greater impact on chemicals than perhaps any other sector.

With these economic backdrops, it becomes even more vital to create the right environment for maintaining manufacturing capacity and attracting new investment. I went to Brussels a few weeks ago for a summit on energy-intensive industries, where various representatives of those industries spoke without fear or favour, and very frankly. Their asks were interesting. They do not ask for any subsidies or for anything particularly special. All they ask for is a fair playing field so that they can compete in a difficult global situation. They just want that level playing field and I completely agree with them, which is why I will now turn to energy costs.

I pay tribute to the excellent speech of my hon. Friend the Member for Warrington South, who is becoming a delightful thorn in my side. I make no complaint if he hunts me down to come to every debate we have on this matter. He can continue to ask his questions, to make his points and to probe. I agree with much, although not all, of what he says. He made a point about getting the balance right and I absolutely agree with him about

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that. We want our children to inherit a world that is in a better state than the world we inherited from our parents, and that includes being cleaner and greener.

We have to get the balance right in our country by reducing our carbon emissions and playing our part in all that, but not at the expense of these vital manufacturing industries. It is difficult. It is not all about green taxes, if I can use that expression. Such is our concern in the Department for Business, Innovation and Skills that only today I spoke to one of my officials about the high cost of electricity. We talked about why, as my hon. Friend the Member for Warrington South explained, it is higher in this country than in Germany and France. One of the reasons, as well as the reasons my hon. Friend mentioned, is the higher cost of transmission. We want and need to look at that, and we will work with our colleagues in the Department of Energy and Climate Change to ensure that we are doing the right thing by industries throughout the UK.

I pay tribute to my right hon. Friend the Secretary of State for Energy and Climate Change because, in her, we have somebody who can combine these twin drivers: ensuring that we play our part in reducing carbon emissions and keeping our planet cleaner and greener; and, at the same time, not doing so at the price of undermining and having an adverse impact on our excellent manufacturing sector. I wanted to put that on the record and make it clear.

We understand the concerns about the need to compensate our EIIs. Of course, we have now won the compensation that had been long argued for and sought from the European Union for those EIIs that are particularly high consumers of energy. We have achieved that and we have gone further. From April next year, it is our intention to move from a compensation model to an exemption model. Instead of taking money away from industry only to give some of it back, which I always thought was a rather bizarre way to go about things, we are now doing the right thing, which is not to put those burdens on industry in the first place.

The exemption model means that the industries will no longer have to pay the renewables obligation and the small-scale feed-in tariff. However—and I am going to say it because it is true—that does not include all those industries that have a very high consumption of energy. Other schemes are being looked at. There is more work to be done in the EU, and we will continue to do that. Hon. Members can be sure that, in this Minister, they will always have a champion for great manufacturing industries, particularly the EIIs.

I will continue to do all I can, notably over in the EU where we are making great progress. I am one of those who firmly believes that we will be stronger, safer and better off remaining within the EU. I think a wind of change is blowing through it and I am proud of my Prime Minister for leading that change. I am drifting off so I will come swiftly back to this debate because it is important.