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Annual Energy Statement

11.26 am

The Secretary of State for Energy and Climate Change (Mr Edward Davey): Today, I am laying before the House the annual energy statement, alongside the statutory security of supply report. This coalition Government are putting in place the most coherent, sustainable energy policy the United Kingdom has ever had. We are creating one of the most competitive and attractive electricity investment markets in the world; improving our energy security and affordability; and boosting home-grown clean energy, and providing jobs and economic growth in the process.

This ambitious energy and climate change policy is vital so that Britain can meet our significant challenges. The coalition Government inherited from the previous Administration an energy future with a huge, multi-billion pound black hole at its heart, which was the result of years of underinvestment, dithering and delay. So this Government are having to take the tough decisions others ducked to make sure that Britain’s lights do stay on. Everything we are doing has to ensure that we drive investment into the system, not scare it off or freeze it out. But, as I will make clear in this statement, energy security must go hand in hand with affordability.

So let me set out the robust plans we have to deliver affordable energy security. To deal with the problem of tightening electricity margins up to 2018, the Government have been working with National Grid and Ofgem to develop existing safeguards, in order to have more electricity available for the grid at peak times, including, if needed, through the use of power plants currently mothballed. We are introducing to Britain a capacity market to ensure that we attract the investment we need in new power stations. The first capacity market auction will take place next year—for delivery from the winter of 2018. In addition to those measures to keep the lights on, Britain now has a long-term strategy encapsulated in the Energy Bill. Over the summer, we published draft strike prices for renewable electricity under contracts for difference. Detailed proposals for the implementation of electricity market reform were published this month.

The fruits of bringing this greater predictability and certainty to investment are already showing. Latest estimates suggest that at least £35 billion has been invested in new electricity infrastructure since 2010, and much more is in the pipeline. In the past 12 months alone, we have provided consent for seven major energy infrastructure applications worth about £20 billion, with the capacity to generate electricity for more than 6 million homes. That, of course, included last week’s announcement that we have reached key commercial terms with EDF for the first new nuclear power station in a generation at Hinkley Point C. And there is more: through the Energy Bill’s final investment decision enabling programme, 23 applications for 26 investment contracts are currently being evaluated by the Department of Energy and Climate Change for a broad range of renewable technologies, including onshore wind, offshore wind and biomass projects.

Even though British households pay some of the lowest prices for gas and electricity in Europe, such facts are scant comfort to those who have seen energy prices rise considerably over the past 10 years. The main

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driver of these energy price rises has been rising wholesale energy costs, not social and environmental policy. But apportioning blame is also scant comfort to people who are struggling to make ends meet. That is why we have been taking action to help people and businesses struggling with their energy bills.

We have already introduced some help that is immediate. Two million vulnerable households will get £135 off their energy bill this winter, thanks to the Government’s warm home discount. Around 12.5 million pensioners will get the winter fuel payment—£200 for the under-80s and £300 for those over 80. And of course there are cold weather payments if needed, which last year delivered over £146 million to help cut bills for the most vulnerable.

This year we have added to these policies with more direct action. Our new big energy saving network is training 500 volunteers to go out into communities to help people get better deals from energy suppliers and reduce their energy bills. These volunteers will be fully supported. We know how much people in communities across the country rely on the post office network, so we will be working with the Post Office to raise the profile of the big energy saving network so that it can make the links with the elderly, the vulnerable and other cost-conscious families trying to make their budgets go further.

We have also brought together in one place all the advice from across Government—from the Department of Energy and Climate Change and the Department for Work and Pensions—and from charities such as Age UK and Citizens Advice. Today, I am writing to all Members of this House with information about this new guide so that they can share it with their constituents, to make sure they are getting all the help to which they are entitled.

But while such immediate help for consumers and companies is important, we need more permanent change if we are to keep bills down not just for 20 months, but for 20 years and beyond. The energy company obligation is delivering such permanent change by modernising our housing stock and making it cheaper to heat our homes. Some 230,000 low income households will be warmer this winter, thanks to energy efficiency measures already installed through the ECO.

Energy efficiency remains a central part of our strategy both to help the fuel poor and to deliver permanent energy savings, but the permanent energy change that we seek also needs more competitive markets. This, however, is not something that the Opposition understand, for the previous Government created the big six, and their irresponsible policies would only help the big six. In contrast, from day one, this coalition Government have been determined to take on the big six for consumers—[Interruption.] The Opposition do not like it. We have been taking on the big six for consumers with the stick of competition. We have done a lot, but as I will set out, we need to do more.

Already our measures to deregulate have seen a major growth in the number and size of independent energy suppliers. In 2011 there was no independent supplier with a customer base greater than 50,000. Now we have three independents with more than 100,000 customers, and a further eight companies have entered the market since May 2010. We have delivered a doubling of the number of independent energy suppliers offering competition to Labour’s big six, and already hundreds

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of thousands of people are benefiting, but we are doing more. We are backing Ofgem’s reforms to help consumers get better deals—market reforms to make sure that customers are on the lowest tariffs for them, are moved off poor value dead tariffs, and no longer face the complex web of hundreds of tariffs designed more to confuse than to compete.

Our reforms are ensuring that people are given clearer, more personalised information on their energy bills so that they can compare tariffs and switch more easily to save money. We are also promoting collective switching, particularly aiming to ensure that the more vulnerable get to benefit from the best deals on the market. Today, however, I am challenging the industry to deliver faster switching. If someone can change their broadband provider with a few clicks of the mouse, why should they not be able to do the same with their gas or electric? It should not take five weeks for the change to take effect; 24-hour switching is my ambition.

First Utility has been out in front with its target of reaching 24-hour switching. Now E.ON, SSE and Scottish Power and a number of independent suppliers, including Good Energy, Ovo and Co-operative Energy, have accepted my invitation for urgent talks over the next month on how we can dramatically speed up switching.

I want five-week switching to come down to one-week switching, and then I want to go faster still. Let us be clear that it will not happen overnight. We could announce 24-hour switching and then suppliers would say, “Okay, we’ll put up our prices to cover the cost”. That cannot and will not happen. I want to talk to suppliers who can agree to and deliver a plan to speed up the process of switching down to 24 hours, without increasing bills.

Companies that are interested in making things easier for customers to switch are invited to come and see me, in addition to the others that have already agreed to do so. Our preference is to do that jointly with suppliers, building on the good work of Energy UK, which has raised ambition on the issue across the industry, but we are prepared to take action, if required, to compel those who drag their heels.

I have also written to energy companies about direct debits. I share concerns that they might be holding on to significant credit balances when customers have overpaid through direct debits. I expect all suppliers to make every effort to return money to customers with closed accounts. I accept that that sometimes will not be possible, but, when it is not, my view is that credits should be applied directly to help the fuel poor and other vulnerable customers. The Minister of State, Department of Energy and Climate Change, my right hon. Friend the Member for Bexhill and Battle (Gregory Barker), will meet energy suppliers next week to discuss that question and that of the level of credit balances that energy companies are holding on to.

In our debates on energy bills, many have understandably asked whether competition is working in our energy markets. Although the coalition has already done a great deal to promote competition, we are ready to do more. As the Prime Minister announced last week, we now propose to introduce annual reviews of the state of competition in the energy markets. The first of the new competition assessments will be delivered by spring next year. The assessment will be undertaken by Ofgem,

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working closely with the Office of Fair Trading and the Competition and Markets Authority when it comes into being.

The exact metrics for the review will be a matter for the regulators but I will ask them to look in depth and across the energy sector at profits and prices, barriers to entry and consumer engagement. The Government have equipped the regulators with strong powers to deal with unjustified barriers to competition. If abuses are found they must be addressed.

We also need to ensure that the energy suppliers are open and honest about the profits they are making, so I have also asked Ofgem to deliver, again by spring next year, a full report on the transparency of the financial accounts of the energy companies and ways in which that could be improved, building on the work already completed by accountancy firm BDO.

Ofgem will publish its consultation on financial transparency this afternoon, but the public need to know that our reforms will have teeth and that companies that play outside the rules will be penalised and fined. With our Energy Bill, Ofgem now has powers to require energy companies to make compensation payments directly to consumers who have lost out, but today I want to go further. That is why I intend to consult on the introduction of criminal sanctions for anyone found manipulating energy markets and harming the consumer interest.

Ours is a record of delivery and action. As set out in the annual energy statement—[Interruption.]

Mr Speaker: Order. The remainder of the statement must be heard. Matters are not greatly assisted by the fact that the statement is over-long. Frankly, a blue pencil should have been deployed, as statements should take no longer than 10 minutes, but we must let the Secretary of State trundle towards his conclusion.

Mr Davey: I am concluding, Mr Speaker.

As set out in the annual statement, the Government are acting to help those most in need to keep warm this winter and ensure that everybody gets a better deal from the energy companies. We are also acting to deal with Labour’s energy crunch, filling in its energy black hole with home-grown energy and bringing stability and certainty to drive investment. That is our strategy for affordable energy security, a strategy to power the country, protect the planet and help keep bills affordable. I commend the statement to the House.

11.40 am

Caroline Flint (Don Valley) (Lab): Oh, dearie me. A coherent energy policy? I must say that I feel for the Secretary of State, because he has to deal with the fact that the Government’s energy policy is increasingly being made at the Dispatch Box by a Prime Minister who has completely lost the plot. I would like to thank him for early notice of his statement and its contents—on Sky, on the BBC’s “Watchdog” last night and on the “Today” programme this morning.

The Secretary of State was meant to be making the annual energy statement, but what we heard today would be better described as the annual excuses statement—excuses for why people’s bills are going up, excuses for why Ministers are doing nothing about it,

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and excuses for why each and every time they give the companies what they want and leave consumers to foot the bill.

The energy companies blame social and environmental obligations for their price rises, so the Prime Minister promises to roll them back. Threatened by Labour’s price freeze and plans to reset the energy market, suddenly the companies are clamouring for another review to kick the issue into the long grass. On Tuesday the chief executive of E.ON told the Energy and Climate Change Committee:

“I believe that we need to have a thorough Competition Commission investigation, supported by Ofgem, because they are the experts—they have been in the industry for a decade.”

Lo and behold, today the Government have given the energy companies what they want: their review, led by the very same regulator that has let them get away with ripping people off in the past.

Then, today, we heard the big announcement: encouraging people to switch from one company to another. But the truth is that no amount of tinkering with tariffs, telling people to shop around or, as the Prime Minister suggested, wearing another jumper will solve the real problem with Britain’s energy market, because even the cheapest tariff in a rigged market will still not be a good deal.

The proof of how weak and spineless the Government are when it comes to standing up to the energy companies is that only three weeks ago the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker) told the BBC that the idea that Government levies were responsible for bill rises was “nonsense”, but now, boxed in by a Prime Minister who is not willing to stand up to the energy companies and a Chancellor who is actively courting climate change deniers in his own party, the Government say that the levies are to blame.

It is interesting that the Secretary of State conspicuously did not talk about rolling back the green levies in his statement. The truth, of course, is that any obligation to support clean energy or improve energy efficiency must deliver value for money, but how is it possible that social and environmental obligations that, according to his Department’s own figures, make up only £113 of people’s bills can account for price rises of £400? Will he tell us which of the levies, 60% of which were introduced by his Government, he now wants to scrap? Is it the energy company obligation, at £47, the warm home discount, at £11, or the carbon price floor, at £5? Does he accept that, whether it is bill payers or taxpayers who pay, unless he deals with the way people have been overcharged, he is letting the companies off the hook?

As for the annual competition review, I remind the Secretary of State that there have been 17 investigations into the energy market since 2001. If he is today announcing the launch of a new annual review of competition in the energy market, what on earth has Ofgem been doing all this time, and what does he expect it to find out in the next 10 months that it has not discovered in the past 10 years? The last review by Ofgem, to which he gave his full backing, finished only in June. This is what he said at the time:

“I welcome the continued progress of Ofgem’s reform of the retail energy market…That’s why I am backing Ofgem’s reforms”.

The Minister of State, the right hon. Member for Bexhill and Battle, was even more effusive. He said:

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“It’s encouraging that Ofgem is going full-speed ahead with these crucial reforms to the retail energy market.”

Today we hear the Secretary of State saying that the Government will build on the BDO recommendations on reform of the energy market, but the truth is that Ofgem ignored BDO’s recommendations and the Government stood by it.

We do not need another review: we need action. We need action to freeze people’s energy bills and fix this broken market; to break up the big six by ring-fencing their generation from supply; to put an end to secret deals and require all electricity to be bought and sold via an open exchange; and to create a tough new watchdog with the power to force these companies to cut their prices when wholesale costs fall—which, I am pleased to tell the House, is now supported by the hon. Member for Westmorland and Lonsdale (Tim Farron), the president of the Secretary of State’s party. That is what real action looks like.

Today’s annual energy statement could not have come at a more important time. Energy prices are rising three times faster under this Government than the previous one, bills are up by £300, and the latest price rises will add another £100 this winter. For people in fuel poverty, the gap between their bills and what they can afford is at an all-time high, but for the companies, the mark-up between wholesale costs and the prices they charge grows ever wider. Fifty-seven households have had work done under the green deal and 7,000 workers in the insulation industry have lost their jobs. Investment in clean energy has halved, and the Government have legislated to stop any future Administration setting a decarbonisation target until 2016 at the earliest. Last year, the UK’s carbon emissions increased by more than any other country in the EU.

That is the Government’s record. As we learned from Age UK on Monday, what it means in reality is that 3 million elderly people will not be able to stay warm in their homes this winter. They want their bills frozen, not their homes. The question they want answered today is simple: why are this Government too weak to stand up to the energy companies?

Mr Davey: I thank the right hon. Lady for her response, in which there was clearly not a single apology to Britain for the black hole in energy security that the Labour party left from when it was in government.

The right hon. Lady talked a lot about Ofgem. Who created Ofgem? The Labour party. Who reformed Ofgem to make it stronger? The Leader of the Opposition. In attacking Ofgem, an independent regulator, she is attacking her own party leader’s record. We are reforming Ofgem; we have given it new, stronger powers. We have created a new regime in the Energy Bill, and there is new leadership. I believe that Ofgem can deliver on competition where the previous Government failed to deliver. We are not kicking competition into the long grass. I am determined that this first annual energy assessment on competition should deliver by next spring.

The right hon. Lady talked about levies. The question is whether levies should be on bills or on taxes, and we are looking at that issue. Interestingly, she referred to a figure of “only” £112. I hope that people noticed that, because her energy freeze will deliver only £120—we think. So she is admitting that her energy freeze is actually the con that we have been saying it is all along.

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I end by thanking the right hon. Lady for tabling an Opposition day debate on energy bills for next Wednesday. I want to debate energy with her every day of the week, because I want to expose Labour’s appalling record on energy and its appalling policies, which would feed into the big six that it created. Labour’s big six need competition, and we are up for it—Labour is not.

Several hon. Members rose

Mr Speaker: Order. A very large number of right hon. and hon. Members are seeking to catch my eye. I would like to accommodate the level of interest, but I remind the House that we have very important business to follow, and it is heavily subscribed. There is therefore a premium on economy, in which we will be led by Sir Robert Smith.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): I am delighted to welcome the fact that the Government support the Energy and Climate Change Committee’s call for a competition review and to press Ofgem on greater implementation of BDO’s recommendations on transparency. Will the Secretary of State confirm that the market reforms will end the exploitation of the inertia on the part of customers on existing tariffs, which leaves them languishing on uncompetitive tariffs?

Mr Davey: I thank my hon. Friend and the other members of the Committee, whose reports and their grilling of energy company executives have played a very important role and have showed the role that this House can play in holding those companies to account. Our competition reforms are aimed at helping people and preventing them from being stranded. That is what Ofgem’s reforms will do, but the Labour party does not support them, because it is so critical of Ofgem. I assure my hon. Friend that our aim is always to help the fuel-poor.

Glenda Jackson (Hampstead and Kilburn) (Lab): As the stick of competition, to which the Secretary of State referred, shattered at the first blow into less than matchwood, will he at least now attack the energy companies and dispel their canard that bills are rising so astronomically due to green taxes?

Mr Davey: I agree with the hon. Lady that the evidence that green taxes are pushing up bills is quite weak. They are a cost to bill payers—we should not deny that and we should look at it as we are looking at every single part of the bill.

I regret that the hon. Lady attacks competition, because that is the way we are going to deliver. People are benefiting from competition and making huge savings on their energy bills now, and the Labour party ought to support it.

Mr Tim Yeo (South Suffolk) (Con): I congratulate the Secretary of State on an excellent statement. Will he now consider the introduction of rising block tariffs to protect the poorest consumers against future price rises without any cost to the taxpayer and without damage

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to the prospects of urgently needed investment in new capacity, which would be the inevitable consequence of a Government-imposed price freeze?

Mr Davey: I am grateful for the hon. Gentleman’s question, which he also asked me when I appeared before the Select Committee a few months ago. I am afraid that my answer is the same: although rising block tariffs are attractive on one level, the problem is that low-income, high-user households—basically, large families on low incomes—would be hit by their introduction, so I do not think they would be the right move. We need to insulate their homes—that is the real way to help them get their energy bills down.

Several hon. Members rose—

Mr Speaker: Order. May I remind the House that Members who entered the Chamber after the start of the statement should not expect to be called?

Frank Dobson (Holborn and St Pancras) (Lab): Surely the Secretary of State understands that the public believe that the energy companies are giving Ministers, civil servants and Ofgem the runaround. Would it not be better if the public and pressure groups had access to the figures that clearly mesmerise officialdom and we applied freedom of information to the energy companies?

Mr Davey: I agree with the right hon. Gentleman on transparency. That is what I announced in my statement and it is why Ofgem is publishing a consultation on greater financial transparency—so that the accounts of these big energy companies can be properly exposed and we can see from where the profits are made.

Mr Christopher Chope (Christchurch) (Con): VAT on household energy bills is now yielding the Government about £500 million a year. Why do the Government not abolish VAT on household bills? If they say that they cannot because the European Union will not allow it, is that not another good reason for leaving the EU?

Mr Davey: I congratulate the hon. Gentleman on trying to bring Europe into this debate. I have to tell him that the European Union can help us bring down our energy bills. A proper single energy market in Europe, with better connections, would see prices go down.

Caroline Lucas (Brighton, Pavilion) (Green): If the Secretary of State was serious about helping the fuel-poor, surely he would be acting to make the UK housing stock far more energy efficient, which is the only permanent way to bring down bills, according to the Child Poverty Action Group, Age UK and many other charities that support proposals to recycle carbon tax revenue into energy efficiency. That would bring nine out of 10 homes out of fuel poverty, quadruple carbon savings and create up to 200,000 jobs, so why does the Secretary of State continue to ignore calls for such ambitious policies?

Mr Davey: We are introducing ambitious policies to help the fuel-poor and to retrofit the housing stock. As I have mentioned, under the energy company obligation, 230,000 low-income households have had energy-efficiency measures such as insulation installed this year.

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Charles Hendry (Wealden) (Con): Does my right hon. Friend agree that some of the levies on energy bills are particularly regressive, such as the energy company obligation and feed-in tariffs? People on low incomes still pay the charges, but it is often people who have much higher incomes who get the benefits. Will the review ensure that these important policies are delivered in the fairest way possible?

Mr Davey: My hon. Friend makes an important point. As we review the levies, and indeed the whole market, we must ensure that they work for the fuel-poor and the less well-off. I am particularly concerned, whether in the levy review or elsewhere, to ensure that we make competitive markets work for the poorest and most vulnerable in our society.

Dr Alan Whitehead (Southampton, Test) (Lab): The Secretary of State will know that yesterday one of his Ministers said that all green and energy efficiency levies would be included in the review and another Minister said that the renewables obligation, contracts for difference and feed-in tariffs would not be included. Which of his Ministers was right, and will he be writing to the Prime Minister to warn him of the perils of making up policy on the spot?

Mr Davey: The hon. Gentleman, who is very knowledgeable in this area, will have to await the outcome of the review. It will be announced at the autumn statement or before. He and his colleagues will hear the results of the review at that time.

Mr Tobias Ellwood (Bournemouth East) (Con): There has been an awful lot of talk about the six big energy companies. Will the Secretary of State explain how we ended up with six companies dominating the market, and what is being done to bring more suppliers into the market?

Mr Davey: My hon. Friend asks a very good question. In 2000, we had 17 energy companies—three generators and 14 suppliers. After that lot on the Opposition Benches reformed the market, we were down to six. We are increasing the number of suppliers and generators because our competition policy is working. We are prepared to go even further. That lot would reduce competition.

Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): Despite the Secretary of State’s unwillingness to take on the big six energy companies, will he commend the work of Labour-led Cardiff and Vale of Glamorgan councils, which have launched a collective buying scheme to bring down the prices offered by the energy companies, with the support of the Welsh Labour Government?

Mr Davey: I am glad that those councils have caught up. It was this Secretary of State and this Government who introduced the idea of collective switching and purchasing through “Cheaper Energy Together”. In all their 13 years, the Labour Government did not use the principle of co-operative purchasing to help people. They betrayed their principles of collective action—what a shower!

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Sir Tony Baldry (Banbury) (Con): When John Wakeham and I privatised the electricity industry in 1990, we left more than 20 distributors and suppliers of energy. How is it that we ended up with only six after the last Government? Is it not a bit rich for the Labour party, which opposed privatisation and competition at that time, to call for the breaking up of the big six that it created?

Mr Davey: My hon. Friend is absolutely right. The reason I want to keep debating energy is that the more that people understand the history of what has happened, the more they will realise that it is the Opposition who are to blame for the problems. They left a black hole in our energy supplies and prevented competition. We are putting that right.

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): The public will be appalled by the Secretary of State’s statement. He has announced a review that will report next spring and that will focus on switching. As my right hon. Friend the Member for Don Valley (Caroline Flint) said, the best deal in a broken market is not a good deal. When is the Secretary of State going to help the millions of households and businesses that will be crippled by huge energy bills this winter?

Mr Davey: The hon. Lady and her hon. Friends are doing their constituents a huge disservice. The truth is that people can get much better deals by switching. I was on “Watchdog” last night with Anne Robinson. She used three viewers as examples. They might have been the constituents of Opposition Members. One had saved £240, another had saved £400 and one person had saved nearly £950. The Labour party wants to take that option away from people.

Mr David Heath (Somerton and Frome) (LD): I was pleased to hear the Secretary of State mention credit balances. Is it not clear that many people who pay in instalments are overcharged as a matter of policy by the utility companies? It is bad enough banking with the banks, but I do not understand why we have to provide interest-free credit to electricity companies as well. When will the Secretary of State bring that to an end?

Mr Davey: My hon. Friend is right to raise that matter, which Ofgem is looking into. My right hon. Friend the Minister of State will meet a number of companies next week to consider the issue.

Yvonne Fovargue (Makerfield) (Lab): As stated yesterday, the recent uSwitch survey showed that on one or more occasion last winter 75% of people turned the heating off. As those over 75 are particularly vulnerable and least likely to switch supplier, will the Secretary of State back Labour’s plans to put all over-75s on the cheapest tariff automatically?

Mr Davey: We want to do more for those people, which is why we are pushing switching and collective switching. The hon. Lady has a distinguished record as a former chief executive of a citizens advice bureau, and I hope she would welcome our proposal for the big energy saving network. That is now operating, with the

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help of Citizens Advice, Age UK and National Energy Action, to help people in communities up and down the country get better deals.

David Mowat (Warrington South) (Con): During her remarks, the shadow Secretary of State said that she believes “secret deals” were being done by the big six—those were her words. If she has that evidence, it is clearly a cartel, which would result in a fine equal to turnover. In the case of Centrica that would be £20 billion. Does the Secretary of State agree that the right hon. Lady should put that evidence to the House—if she has it—and get that £20 billion?

Mr Davey: My hon. Friend makes a good point. If the right hon. Lady knows of secret information, I hope she will confirm that she has told the competition regulator so that it can be investigated. She is not very good at answering questions. I have asked her and her right hon. Friend the Leader of the Opposition questions about their policy, but we have not had a single answer.

Mr Mike Weir (Angus) (SNP): The Secretary of State made the point that much of the increase in bills has been due to increases in the wholesale price, particularly of gas, but many commentators, including Ofgem, have questioned whether that has been the case over the past year. What powers does the Secretary of State or Ofgem have to tackle the big six energy companies about their most recent rises, which do not appear to be driven by wholesale price increases?

Mr Davey: First, over a period it is absolutely clear that the wholesale price of gas has been pushing up bills, but there is a debate about whether in the past 12 months wholesale gas prices have gone up. If the hon. Gentleman looks at Ofgem’s clarification and the press release on its website, he will find that, depending on how it is measured, it admits that the wholesale price of gas has gone up by more than 8%.

Chris Heaton-Harris (Daventry) (Con): Will the Secretary of State acknowledge that for too long his Department’s drive for expensive and intermittent renewable energy has driven thousands into fuel poverty? Indeed, a former Secretary of State—now the Leader of the Opposition—said in this place in January 2010 that

“yes, there are upward pressures on energy bills, and that makes life difficult for people, including those in fuel poverty, but it is right that we go down the low-carbon energy route.”—[Official Report, 7 January 2010; Vol. 503, c. 269.]

Surely now is the right time to examine the level of green taxes and how they adversely affect the fuel poor.

Mr Davey: I have to say that the hon. Gentleman is wrong about that. We are trying to ensure we help the fuel-poor with effective policies such as the energy company obligation and the warm home discount. The support in the Energy Bill for green energy is a small part of the Bill—as he knows—and it is helping the country prepare for the ever higher gas prices we are likely to see. If we do not go green, there is a real danger we will expose consumers and our economy to high, volatile fossil fuel prices in the future. We must have a more sensible and diverse energy mix.

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Ian Lavery (Wansbeck) (Lab): Not one measure in the Secretary of State’s statement will prevent the projected death of 24,000 people as a result of the hikes in the cost of energy. At the same there is emerging evidence, which has been mentioned, about a hidden, protected, secret sort of cartel trading scheme whereby companies are buying from each other at above the wholesale price, and knocking that cost on to consumers. Can the Secretary of State say, hand on heart, that he is not aware of anything like that happening and putting a huge burden on the consumer with huge prices from the energy companies?

Mr Davey rose—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. We must have very short questions in order to try to get everyone in. I understand how important this is.



Mr Davey: We are helping the fuel-poor and people who have problems with their bills through, for example, the warm home discount, which takes £135 off bills. We are publishing a guide. I hope that the hon. Gentleman and every right hon. and hon. Member will use it to help their constituents.

The hon. Gentleman talks about the wholesale market. The previous Government did nothing on competition in the wholesale market; they made it worse. This Government, with Ofgem, which Labour Members want to abolish, are taking measures to ensure there is far more competition in the wholesale markets. That is how to prevent the big six and their vertical integration models from pushing up prices. The Liberal Democrats are the party of competition; Labour is the party of the big six.

Christopher Pincher (Tamworth) (Con): Most observers agree that, thanks to the previous Government’s omissions, we must invest a great deal of money—£110 billion—very quickly in our energy infrastructure. We want much of that money to come from the private sector. Does my right hon. Friend agree that another consequence of a price freeze would be that such private investment dried up, leaving the poor old taxpayer to foot the bill?

Mr Davey: My hon. Friend is absolutely right. There are many problems with Labour’s energy price freeze. First, it is a con because it will not help consumers. Secondly, it undermines competition. However, worst of all in many ways, it will kill the investment that we need both for green energy and to keep the lights on. People in the energy industry are saying that. The Leader of the Opposition has done one of the most irresponsible things ever done by a Leader of the Opposition.

Angela Smith (Penistone and Stocksbridge) (Lab): The Secretary of State has nothing to say today about the Chancellor’s imposition of the carbon floor price, which undermines the competitiveness of our energy-intensive industries, which are crucial to the development of a low-carbon economy. When will the Secretary of State bring urgency to bear before more jobs are lost?

Mr Davey: My right hon. Friend the Chancellor produced, some time ago, a £250 million package to help energy-intensive industries—[Interruption.] The

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hon. Lady should wait. The first part of that package— £113 million—has state aid clearance, and £12.5 million has been paid out after 60 applications were received.

Dan Byles (North Warwickshire) (Con): Does my right hon. Friend agree that Labour’s dishonest price con would help Labour’s big six by hitting smaller companies the hardest? It is not supported by the managing director of Ovo, and the chief executive of First Utility, which has just 195,000 customers, has said:

“Bluntly, it could put me under”.

Mr Davey: My hon. Friend is absolutely right. It is interesting that the Leader of the Opposition has switched to First Utility, the leaders of which say that his policies will put them out of business. That is how incoherent the Opposition are.

Mr Dennis Skinner (Bolsover) (Lab): The utilities were privatised between 20 and 25 years ago. They have had all that time to prove that they really are in competition, but plenty of evidence, especially the price increases in the past few weeks, indicates that they are acting like a cartel. That is what the Secretary of State ought to examine. That is why the public want us to have a price freeze when Labour gets in. He should have adopted that today. Secondly—this will almost certainly happen—he should take those utilities back into public ownership.

Mr Davey: Hon. Members were waiting for the hon. Gentleman’s last statement. I do not understand where Labour Members are on competition. They complain about cartels, but do not want to promote competition. If they are worried about cartels, they should join us and support what the Government have announced today.

Sarah Newton (Truro and Falmouth) (Con): The Government have done far more than the previous one for the people living in the greatest fuel poverty—those living off the mains gas grid. Will my right hon. Friend confirm that, as the reviews continue, we will continue remorselessly to pursue the aim of helping people in the greatest fuel poverty, including those who live off the mains gas grid?

Mr Davey: My hon. Friend is absolutely right. The previous Government failed to do anything for people who are off the gas grid. The Minister of State, Department of Energy and Climate Change, my right hon. Friend the Member for Sevenoaks (Michael Fallon), has been taking action, talking to the companies and the people affected. There is a new code of conduct and there are regular working group meetings. That is action, unlike what Labour did.

Barbara Keeley (Worsley and Eccles South) (Lab): May I take the Secretary of State back to the issue of older people, who we know do not switch suppliers? I met a constituent recently who was dreading his winter quarter bill of £300 for a bedsit. Labour plans to put all older people on to the cheapest tariff and to freeze prices. What will the Secretary of State do for those older people?

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Mr Davey: The hon. Lady should catch up, because the Ofgem reforms and the retail market review will put those people on the lowest tariff, which was backed by my right hon. Friend the Prime Minister. But she does have a point: some people are not using switching—not using the markets and competition—and some of them are older people. I take that issue seriously, and it is one of the reasons we want to use co-operative principles for collective switching, and why I am using third sector voluntary groups such as Citizens Advice and Age UK to deliver face-to-face advice to help exactly the people she is talking about.

Tessa Munt (Wells) (LD): The Secretary of State will agree that the best way to cut fuel bills is to improve the energy efficiency of households. Would he care to comment on the fact that two of the big six energy companies—npower and British Gas—blame the energy company obligation, a measure designed to help the fuel-poor to cut their bills, for the increase in prices next year?

Mr Davey: I have been rather bemused by some of the statements from the big six, especially on the environmental costs. Sometimes their numbers just do not add up. That is why we are calling for more transparency and we are acting on more transparency.

Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): When can we expect the full roll-out of the mitigation policies in relation to the Chancellor’s imposition of the carbon floor price? I say that because this week Tata has announced 500 job losses and Sembcorp, near my constituency in Teesside, has also announced redundancies. When can we expect those mitigation policies to be rolled out in full?

Mr Davey: We are having a lot of applications in for the £113 million package that we announced. Money is now going out of the door to help those companies. Another part of our package for energy-intensive industries is still subject to state aid clearance in Brussels. We are trying to secure that as quickly as possible so that we can get the money to those companies.

Mr Peter Bone (Wellingborough) (Con): The Secretary of State could become a national hero today if he announced the abolition of his Department so we would have no more silly green regulations and the savings could be passed on to the consumer.

Mr Davey: For a moment, I thought that my hon. Friend was going to ask me to tea with his wife. His manifesto, which he published a while back, not only wanted to abolish my Department but bring back hanging and a range of other things that I do not support.

Jim Fitzpatrick (Poplar and Limehouse) (Lab): While anything that the Secretary of State can do to rein in the energy companies is welcome, surely the only reason that we have this recent welcome flurry of activity is Labour’s energy freeze policy and the alternative suggestion from a former Prime Minister of a windfall tax.

Mr Davey: That is not correct. The energy statement is made every year, and we have been working on many of the proposals that have been announced today for many years. We are having to put right Labour’s failure.

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I am delighted that the Labour party has woken up to the fact that energy bills are hurting people, but Labour Members have not yet apologised for creating the big six, which have caused most of the problem.

Julian Sturdy (York Outer) (Con): My constituents will welcome the Secretary of State’s determination to ensure rigorous competition in the marketplace. However, the biggest driver of price volatility will be the security of our energy market—or lack of it. Can he assure me that the proper investment is going into that area? The lack of investment by the Labour party over 13 years in power is a disgrace.

Mr Davey: My hon. Friend makes an important point. If we do not have sufficient capacity, not only will that threaten security, but it will cause spikes in prices. The underinvestment that we had under the last Government has caused this problem, and we are having to run to catch up. We have seen £35 billion of investment since 2010, and we have a lot more investment in the pipeline. We have announced Hinkley Point C as the first nuclear reactor in a generation, but we will have to do more to put right the mess that Labour left us.

Nick Smith (Blaenau Gwent) (Lab): Wholesale costs are up 1.7% but bills for households will go up by 9%. Does the Secretary of State think that is fair?

Mr Davey: We would not want more competition in the market if we were happy with what is going on, but the hon. Gentleman’s figures are not right. It depends on how wholesale costs are defined in any one year. Ofgem says that on one definition they have gone up by more than 8%.

Charlie Elphicke (Dover) (Con): Does the Secretary of State accept that Labour’s big six are an oligopoly that appears to operate as a price-fixing cartel? Is it not time to break them up?

Mr Davey: We would not be asking for an annual competition assessment if we were not concerned to ensure more competition. My hon. Friend is right: we have faced a market created by the last Government who created the big six. We have already taken many measures that are working to get independent suppliers and generators, and our liquidity reforms with Ofgem will make a big difference in the forward markets.

Bill Esterson (Sefton Central) (Lab): A disabled pensioner couple summed up the views of many of my constituents when they told me that they pay more than £3,000 a year in electricity and gas, which will go up by another £300 after the price rises. My constituents would benefit from Labour’s plan to put all over-75s on the cheapest tariff. Why will the Secretary of State not do that?

Mr Davey: Again, the Labour party needs to understand that the retail market review in the Energy Bill will get people on the lowest tariff. I hope that the hon. Gentleman will read the new guide that we have published today because it is aimed at those who, like him, are talking to people like his constituents to ensure that they get the help that they need.

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Martin Vickers (Cleethorpes) (Con): My constituents will welcome the possible introduction of criminal sanctions if any company is found guilty of rigging the market. Although I note Ofgem’s powers of compensation, would it not be more appropriate if consumers were to benefit if price or market rigging were found? Can we take action to ensure that such money goes back into consumers’ bank accounts?

Mr Davey: The measures in the Energy Bill provide that, if an individual consumer has been done wrong by an energy company—mistreated or subjected to any other malpractice—the fine, thanks to this Government, will go to the consumer. The criminal sanctions I have referred to today would be applied for systemic anti-competitive practices or manipulation of the energy markets by an individual or company.

Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): One of my constituents took the Government’s advice and switched his supplier, but he found that after the initial attractive offer he was paying twice as much a month for his energy bills. He cannot switch back to his previous supplier because he is tied in to a minimum 12-month contract. He is now paying £60 a month more than he was previously. What will the Secretary of State’s proposals do for situations such as that?

Mr Davey: I cannot comment on the individual case or why the person decided to switch. If the hon. Gentleman’s constituent can show that he was mis-sold the switch, he can approach the regulator for redress.

Eric Ollerenshaw (Lancaster and Fleetwood) (Con): I congratulate the Secretary of State on finally making the decision on nuclear, something that we have not had for 13 years. We still have subsidies for wind and biomass, we are an island country, and there are practical schemes for tidal barrages on the Severn and on the Wyre at Fleetwood in my constituency, so is there any chance of a national policy on tidal energy?

Mr Davey: I have good news for my hon. Friend. We do have generous support for tidal energy and many tidal energy developers are coming forward with ideas, which we want to encourage.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): Wales is a net exporter of electricity—we are an electricity-generation-rich nation. Can the Secretary of State explain, therefore, why electricity prices in my country are among the highest in the British state?

Mr Davey: We are pleased that Wales is making such a contribution. That is good for the Welsh economy and Welsh jobs, and I hope that the hon. Gentleman supports the fact that our policies are ensuring that the energy industry is strong in Wales. He knows that distribution costs vary across the country, and it is not only Wales that has higher-than-average bills. Ofgem keeps the issue under review.

Duncan Hames (Chippenham) (LD): I am glad that the Secretary of State wants to make it easier for people to switch electricity suppliers. Will he also look at obstacles to switching suppliers of heating oil and LPG, which include tactics such as bills stating that tanks and

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cages outside homes do not belong to bill payers, which are designed to deter customers from switching? That would help those living off the gas grid.

Mr Davey: I am grateful for my hon. Friend’s question. The code of conduct, which the Minister of State with responsibility for energy, my right hon. Friend the Member for Sevenoaks (Michael Fallon), has negotiated, will stop that practice.

Nic Dakin (Scunthorpe) (Lab): Despite the Secretary of State’s answers to earlier questions, Tata Steel, which announced 340 job losses in my constituency this week, is still saying that the carbon floor tax, unilaterally introduced by the Chancellor, is putting its businesses in the UK at risk, compared with the rest of the European Union. Will the Secretary of Sate commit to working with the Business Secretary and the Chancellor to bring action forward rapidly to address that issue?

Mr Davey: I have to tell the hon. Gentleman that we have been working together closely and that is having an effect—we are succeeding. We want the state aid case for the carbon price floor compensation scheme to come out of Brussels. We are working hard to make that happen.

Damian Hinds (East Hampshire) (Con): There are 10,000 off-grid homes in my constituency. What more can be done to help my constituents to access good deals, including the ability to buy at times of year when the kerosene price is at least a bit lower?

Mr Davey: There are two things that can help my hon. Friend’s constituents and others like them; first, collective purchase. There are heating oil clubs where people come together to get better deals, and that is helping some people. Secondly, I hope that he is aware of the campaign being pushed by the Minister of State, my right hon. Friend the Member for Sevenoaks, to get people to buy early. If people buy early, they can get heating oil much cheaper than if they buy it later, in the winter months.

Mr Philip Hollobone (Kettering) (Con): Will the Secretary of State consider legislating for the re-separation of electricity generation from electricity supply, and gas production from gas supply, so that consumers can get the transparency they need in their bills, something Ofgem is not able to achieve?

Mr Davey: My hon. Friend should look at the Ofgem proposals, which have backing in the Energy Bill. They will make a big difference to those markets. I am keen to ensure that forward markets—not just the day-ahead market, but the six-month, 12-month and the two-year market—are far more liquid. We have an illiquid market and that is where the big six can exercise market power. The Government and Ofgem are tackling that. The Opposition are not.

Glyn Davies (Montgomeryshire) (Con): Will the Secretary of State explain how it can be fair that the most vulnerable people in my constituency in mid-Wales have to pay through their noses for their energy to provide massive subsidies to giant wealthy wind farm developers who,

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alongside National Grid, are intent on destroying the environment and landscape of mid-Wales where we live?

Mr Davey: My hon. Friend knows that I cannot comment on the planning application that relates to a lot of what he has just said. If he has constituents who have problems with fuel poverty, we have introduced the warm home discount, which takes £135 off their bills, and there are other measures. He should look at the guide that we are publishing today.

Mr Robert Buckland (South Swindon) (Con): On fuel poverty, is it not the case that, in the five years between 2004 and 2009, an extra 2.8 million people fell into fuel poverty? What further measures can we take to deal with this scourge of modern society?

Mr Davey: My hon. Friend is absolutely right. We are keenly focused on tackling fuel poverty through the energy company obligation and the warm home discount. Within the energy company obligation, there is the affordable warmth scheme. I have some good news: it is working an awful lot better than the warm front policy the Labour party introduced. It is more cost-effective and it is rolling out more quickly.

Robert Halfon (Harlow) (Con): As well as high energy bills, motorists continue to face high petrol bills, on average paying £1,700 a year to fill up the family car. Will my right hon. Friend extend the principles of competition transparency and extend criminal sanctions for manipulating the market to the oil companies that are ripping off the consumer, despite the excellent Government freeze in petrol duty?

Mr Davey: My hon. Friend invites me to trespass on to the responsibilities of another Secretary of State. I think that would be ill-advised, particularly as the Secretary of State for Transport has just taken his place on the Front Bench. My hon. Friend the Member for Harlow (Robert Halfon) may wish to ask him that question, but he is right to say that the Government have an excellent record on this.

Oliver Colvile (Plymouth, Sutton and Devonport) (Con): For 13 years, the Labour Government did little to deal with standing charges. Will my right hon. Friend tell me what impact standing charges have on pensioner fuel poverty, and will he ensure that they are included in the review?

Mr Davey: Ofgem’s retail market review looked at different approaches to standing charges, and there is a debate on them. However, there is a danger that taking them away will lead to a single unit price model—which some people think is better—that will hit low-income households that are high energy users. We therefore need to consider the full distributional consequences. We will keep these matters under review, as we should.

Neil Carmichael (Stroud) (Con): Increasing capacity is definitely the key to this problem. Ensuring, through the Energy Bill, that we have more competition is part of the story, but would that not be reinforced by

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strengthening the role of a single energy market to attract more investment and drive even more competition into the system?

Mr Davey: My hon. Friend is right. My right hon. Friend the Prime Minister has been pushing the case for the single energy market at the European Council. Recently, I hosted a meeting of energy Ministers from northern European countries—the northern European energy dialogue—to consider ways to have better interconnections in the northern European grid, which will encourage downward pressure on prices.

Bob Blackman (Harrow East) (Con): Thank you for the exercise, Mr Deputy Speaker. In the next five years, many of our power stations will close, therefore reducing supply. Will my right hon. Friend confirm how many power stations were built under the previous Government, and how many he plans to build under this Government?

Mr Davey: My hon. Friend makes a good point. I will not mention the number of power stations, but I can say that investment was far too low under the previous Labour Government. It is improving massively under this Government.

Mr Deputy Speaker (Mr Lindsay Hoyle): Last, but certainly not least, I call Andrew Percy.

Andrew Percy (Brigg and Goole) (Con): I can only assume it is because I am from Yorkshire, Mr Deputy Speaker.

The Energy Secretary rightly pointed out how Labour’s non-freeze con would cost jobs and investment. I and my hon. Friend the Member for Cleethorpes (Martin Vickers) heard from a local business—a big employer. We were told, with specific reference to Labour’s price freeze con, that it has lost a major contract. This is costing jobs and investment. The uncertainty that has been created in our energy market will not do anything for bills, but it will cost jobs.

Mr Davey: My hon. Friend is absolutely right, but I have to tell him that it is actually worse than he suggests. People from around the world who want to invest in the UK, and who welcome our strong policies to attract investment, are now worried because of the extra uncertainty created by the Leader of the Opposition and the Labour party. The Opposition’s policies are not just a con for consumers; they will undermine competition and are hitting investment and the economy. They should be ashamed.


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High Speed Rail (Preparation) Bill

Consideration of Bill, as amended in the Public Bill Committee

Clause 1

Preparatory expenditure

12.27 pm

Mrs Cheryl Gillan (Chesham and Amersham) (Con): I beg to move amendment 18, page 1, line 5, leave out ‘at least’.

Mr Speaker: With this it will be convenient to discuss the following:

Amendment 12, page 1, line 10, leave out ‘and’.

Amendment 13, page 1, line 11, after ‘Manchester’, add

‘and one or more towns or cities in Scotland’.

Amendment 28 , page 1, line 11, at end insert ‘Scottish destinations’.

Amendment 14, page 1, line 12, at end insert

‘, and any newly constructed railway lines, roads, airports and light railways’.

Government amendment 17.

Amendment 19, page 1, line 12, at end insert—

‘(c) extends substantially no further than Phases One and Two of the High Speed 2 network connecting the places set out in section 1(2)(a).’.

Amendment 23, in clause 3, page 2, line 27, leave out

‘comes into force on the day on which it is passed’

and insert

‘shall not come into force until the Secretary of State has published detailed proposals for the Government’s preferred route directly connecting the network with Heathrow airport, has consulted with those residents, local authorities and businesses which may be affected by this connecting route and has published measures to mitigate and compensate for the social, economic and environmental impact, of the line.’.

Mrs Gillan: I welcome to the Front Bench the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill). This is his first outing and it is good to see him in his place. I welcome the hon. Member for Wakefield (Mary Creagh) to her place on the Opposition Front Bench. It is good to have some authentic northern voices speaking on this subject, albeit from the Front Bench, so we probably know exactly what they are going to say. May I also welcome my right hon. Friend the Member for Chelmsford (Mr Burns) and, with your indulgence, Mr Deputy Speaker, thank him for the courtesy he showed towards me during his time in office? This is a difficult subject for me and, I think, it has proved a difficult subject, from time to time, for him.

Amendments 18, 12 and 13 relate to the Government’s commitment to Scotland. I tabled them in Committee, because I felt it was important to have something in the Bill that registered the verbal intentions, expressed by Ministers and others, eventually to take High Speed 2, if it is ever built, through to Scotland. It is ironic, and slightly odd, that clause 3(1) extends the scope of the Bill to England, Wales and Scotland, given that there is no mention of HS2 going to Scotland.

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If we have time, we will get on to the Barnett formula. Undoubtedly, there is precedent for the Government ensuring that Wales, Scotland and Northern Ireland get their fair share of the infrastructure spend that is being spent exclusively in England, and I believe there is already such a precedent regarding the money for HS2, but will the Minister confirm that?

Mr Charles Walker (Broxbourne) (Con): In drafting her amendments, did my right hon. Friend consider how to deliver extra passenger capacity to the east and west coast lines, but without the vast costs?

Mrs Gillan: My hon. Friend makes a good point. I am afraid that I do not have the resources to table an extensive list of amendments, and although I considered that, I dismissed it fairly rapidly. I just do not have the back-up and resource, on a project this large and complex, to keep up with the machinations of the Government, as they bring out 400 or 500 pages of information a couple of days before any crucial stage of the Bill—I am expecting the £50,000 environmental statement to arrive on our desks shortly.

Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): Obviously, I am as concerned as the right hon. Lady apparently is about high-speed links to Scotland, but is she seriously telling the House that if the Government were to announce that HS2 was going to Scotland, she would drop her opposition to it completely?

Mrs Gillan: No, not at all. I am not arguing that, but I have always been of the principle that if it is to be done, it is to be done properly. I am quite clear about my position—I do not want HS2 at all, but I also do not want a Bill to go through the House that does not reflect what I think the project should encompass, and indeed what the Bill itself states it encompasses.

Mr Jack Straw (Blackburn) (Lab): Would the right hon. Lady not accept that, on the current plans for phase 1 and 2, there will be a 45-minute reduction in journey times to Edinburgh?

Mrs Gillan: The right hon. Gentleman makes a good point, but the Government recently produced the new business case, and I believe that there is doubt over the timing used for Edinburgh to London. I have been informed by a commentator that they failed to take into account the new rolling stock and the existing time savings from improvements being made to the line. I stand to be corrected—perhaps the Minister can tell us—but I believe that there has been an error in the calculation.

I would like the Bill to refer to Scotland, because it is important that a definite intent be put in the Bill. It would send a good message to Scotland, at a time when we are trying to keep this United Kingdom together, in the teeth of opposition from the nationalist parties, and I think it should be in the Bill simply for that reason.

Eric Ollerenshaw (Lancaster and Fleetwood) (Con): I sympathise with the spirit of my right hon. Friend’s amendments, and obviously many of us who support HS2 hope it will go through to Glasgow and Edinburgh and cannot understand why we do not start building from there now. But be that as it may, I am a bit worried

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because her amendment 18 would remove the “at least”. I read “at least” to mean that HS2 could stop at more stations. Were we to accept her amendment 18 and then her amendment 13, which would add the words

“and one or more towns or cities in Scotland”,

it would leave out everything between Manchester and Glasgow as a potential stop on a high-speed line to Glasgow. That is my understanding of her amendments.

Mrs Gillan: My amendments are intended to probe the Government’s intention. I believe that they should have made provision to include more stops on the line. For example, I would have thought that between Manchester and elsewhere, there could have been other stops giving greater benefit to some of the areas that will be destroyed by the line.

I tabled an amendment in Committee, and it must have struck a chord, because the official Opposition have tabled something very similar, and I am delighted to say that the Government, in an attempt to hug the Opposition closer, have now signed up to it and it has become a Government amendment. I congratulate the shadow Secretary of State on her victory. One of the major problems is with the connectivity of HS2. If it is not fully connected and integrated into our transport system, it will be the white elephant that so many of us believe it will be.

Mr William Cash (Stone) (Con): I congratulate my right hon. Friend on tabling the amendment. It is not only the Opposition and the Government who need congratulating; she needs congratulating herself.

Mrs Gillan: That is most gratifying. I am glad that my hon. Friend has observed the first rule of politicians: one can never over-flatter another politician.

Connectivity is at the heart of some of the failures of this project. For example, it does not go to Heathrow; it does not connect properly with the channel tunnel rail link; indeed, it does not even go into the centres of the cities it is supposed to serve, whether Sheffield, Derby or Nottingham. All the time savings claimed by the Government come to nought if travellers have to make their way from outside the city centre, as I know will be the case for Sheffield. We need to ensure that if this is ever built, the connectivity is as good as it can be.

Damian Collins (Folkestone and Hythe) (Con): Does my right hon. Friend agree that HS1 has excellent connectivity with domestic services and that towns such as Folkestone and cities such as Canterbury have high-speed services even though they are not on the high-speed line?

Mrs Gillan: My hon. Friend the Member for North Thanet (Sir Roger Gale) is not in the Chamber, but I understand he feels that it is a work still in progress when it comes to bringing benefits to his constituency. I also gather, from studying the local economies around HS1, that there have been no additional benefits; indeed, there has possibly been some detraction from local economies.

Damian Collins: If my right hon. Friend looks at the unemployment statistics for east Kent, she will see that the rate is falling faster not only than the national

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average, but the average for the south-east of England, the most prosperous part of the country. The county council says it is impossible to talk of economic regeneration in east Kent without considering the benefits of HS1.

Mrs Gillan: I am very glad to hear that. I do not know how many years after the project this has become apparent. [Hon. Members: “Ten.”] Ten years; thank you.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): I want to reinforce something the right hon. Lady said about connectivity. A lot of people think that those of us who oppose HS2 are against connectivity and high-speed transportation. We are not. We want the right connectivity that will help all the towns and cities in this country to grow, but we do not want more of our country’s lifeblood being sucked down into London and the south.

Mrs Gillan: I thank the hon. Gentleman for that intervention. Of course, it echoed the words of Lord Mandelson, who really does know an awful lot about the genesis of this project. It certainly has that vampiric touch about it, as I think Members on both sides of the House can appreciate.

The Secretary of State for Transport (Mr Patrick McLoughlin): If HS2 is going to suck the lifeblood of the northern cities, as the hon. Member for Huddersfield (Mr Sheerman) suggests, why are the leaders of those northern cities, such as Sir Richard Leese and Albert Bore, the loudest demanders of this service?

Mrs Gillan: Oh simple, simple question, Secretary of State! What leader of any council of any political colour or persuasion would turn down the millions and millions of pounds being thrown at their areas? It would be completely stupid of them to do anything other than support it.

Mr Sheerman rose

Mrs Gillan: I give way to the hon. Gentleman one last time.

Mr Sheerman: The Secretary of State has commented following my intervention. I have talked to people in the big cities, and many of them have not read the six critical evaluations of the impact of HS2, and they certainly have not looked at the impact of high-speed rail on the provincial cities in France. It is sucking the lifeblood out of them and into the metropolitan area around Paris. We have also not been told on what grounds the local people here, who have not been given a referendum—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The hon. Gentleman should know better. This is his second or third intervention. Let us try to keep the debate calm and orderly, with short interventions.

Mrs Gillan: Thank you Mr Deputy Speaker.

David Mowat (Warrington South) (Con): Will my right hon. Friend give way?

31 Oct 2013 : Column 1116

Mrs Gillan: Yes, of course.

David Mowat: If it were true that better infrastructure for the north would suck the lifeblood out of the region, would it not be right to close the M6? Perhaps that strategy would make the north really prosperous.

Mrs Gillan: I am not going to dignify that intervention with an answer.

Dan Byles (North Warwickshire) (Con): I would like to draw the House’s attention to the Transport Committee’s detailed report on high-speed rail. It stated that

“only time will tell whether or not HS2 will, for example, help to rebalance the economy and reduce the north-south divide.”

It is a £50 billion project, yet we are told that “only time will tell” whether it will achieve its main aim.

Several hon. Members rose—

Mrs Gillan: I am not going to take any more interventions. I want to make sure that other colleagues are able to speak on this group of amendments, and as there are no knives, the longer we take on this group, the less time we will have for other important groups that deal with the economics of the railway line and with compensation.

Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op): Will the right hon. Lady give way?

Mrs Gillan: How can I resist the Chairman of the Transport Committee?

Mrs Ellman: I thank the right hon. Lady for giving way. Will she point out to the hon. Member for North Warwickshire (Dan Byles) that the Select Committee was very clear that High Speed 2 was the only way in which the necessary increased capacity could be obtained, and that in discussing the economic benefits, we also stated that economic development strategies were required to go with the provision of that extra capacity?

Mrs Gillan: I am grateful to the hon. Lady for that intervention.

A lot of people are saying that there is no alternative to HS2 if we are to solve the capacity problems, when in fact a large number of alternatives are emerging from numerous sources. Suggestions have been made by economic think-tanks and transport economists, including a recent proposal to revive the old grand central line. I fought against an ill-conceived plan to run freight on that line in the early 1990s when I was first elected to the House. That plan did not stack up economically, and we saw it off.

Amendment 19 would narrow the scope of the Bill, which, as currently drafted, could extend to all railway operations. I do not know whether it was the intention to cover not only HS2 but all other railway operations, but the drafting seems to be a bit sloppy. If the provisions are not confined to HS2, it will make a mockery of any limits placed on the costs that the taxpayer will have to face. The amendment attempts to limit this money Bill, and to limit the expenditure to HS2, in line with what

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I believe the Government intended. If the provision were to include Scotland, that would round up the whole package.

12.45 pm

You will correct me if I am wrong, Mr Deputy Speaker, but I believe that I will have a right of reply at the end of the debate on this group of amendments, given that I moved amendment 18. I want to let colleagues speak to the other amendments. I hope that the Minister will also comment on the effects of HS2 on the areas outside the towns that will be directly connected to the line. I am sure that colleagues in this House and the other place will be concerned by the KPMG report that came out as a result of a freedom of information request. It had not been published alongside the KPMG report that came from the Government. It showed that HS2 would have a negative economic effect on many areas of the country, and I am particularly worried about some of those areas. Will the Minister tell us which areas are involved? The House needs to have that information before we start making decisions on the largest infrastructure project since the second world war. We need to know the pros and cons. I am firmly on the con side, and I have tabled my amendments accordingly. I hope that the Minister will rise to the occasion. I am pleased he has accepted my earlier amendment through the route of the Opposition, and I look forward to hearing what he has to say.


Mrs Ellman: I rise to support amendment 17. I am a firm supporter of High Speed 2. The case for it is essentially one of capacity. It is entirely wrong to state, as some commentators have done recently, that the argument for capacity is something new that has been brought in only at this stage. That is simply not so. The report that the Transport Select Committee produced two years ago made it clear that the need for increased capacity formed the basis of the case for HS2.

Amendment 17 deals with linking HS2 to the rest of the transport network. It specifically mentions the need for it to link to roads and airports. It is important that it should not be seen as a development that is separate from the rest of the rail network or indeed from the rest of the transport network. I therefore welcome the amendment. It is unfortunate that, because no decision has been taken on the need for increased airport capacity in the south-east, no firm proposals on Heathrow have been finalised. That matter needs urgent attention. There is also an issue about freight. In Liverpool, for example, the expansion of the port is creating a need for more freight paths and better access for freight. That, too, needs attention. I welcome the amendment in that it draws attention to networks and connectivity.

Stephen Barclay (North East Cambridgeshire) (Con): In speaking to amendment 17, the hon. Lady is, in essence, setting out an early case for design changes. Can she confirm that the existing contingency in the spending envelope does not include provision for any such changes?

Mrs Ellman: The hon. Gentleman needs to direct such questions to HS2 itself. It is extremely important that all the financial aspects are fully considered. This specific amendment is to do with networks. The question of access to the high-speed network is critical, and that involves roads as well as other rail tracks.

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The case for HS2 is also based on increased economic benefit to the areas in which the railway stations are located, as well as the surrounding areas and the regions that they serve. The issue of freed capacity on the west coast main line as a result of phase 1, and on the east coast and midland main lines following phase 2, is critical. The strategic review states that there will be a £3 billion benefit from the use of freed capacity, and Network Rail has stated that more than 100 cities and towns could benefit.

James Morris (Halesowen and Rowley Regis) (Con): Those benefits will be crucial to areas such as Birmingham and the west midlands. One of the advantages of HS2 to the west midlands will be that it will free up capacity on the west coast main line and improve connectivity to regions such as the black country, part of which I represent.

Mrs Ellman: Indeed; the hon. Gentleman is absolutely correct. We must not look simply at the HS2 line itself; we must also consider how its connectivity to other lines and other parts of the transport network can be developed.

Dan Byles: If the principal benefit is now capacity rather than speed—this seems very much how the argument has moved—why not slow it down? If it is slowed down, we will no longer have the engineers I sit down with every week telling me, “We can’t go around Water Orton primary school because speed means it must be a straight line; we can’t go around ancient bluebell woods because speed means it must be a straight line.” If we slow it down, we will be able to avoid going over many of the sensitive areas on the route and perhaps even put in more stations.

Mrs Ellman: The strategic review and other studies indicate that alternatives have been looked at and rejected. Network Rail states that more than 100 cities and towns could benefit from this development. Named in the various reports are places including Watford, Milton Keynes, Rugby and Northampton, but many more are possible. There is also a need to increase capacity for freight, which is as important as passengers. About 20 new freight paths can be developed, but I would view that as the absolute minimum.

Mrs Gillan: I hear what the hon. Lady says about freight. How does she react to what Lord Berkeley said? He heads up the Rail Freight group and said that HS2 will in fact constrain freight because it does not link up properly with the existing network on the west coast main line and its northern end in phases 1 and 2? He should know, should he not?

Mrs Ellman: Lord Berkeley was pointing out issues of practical difficulty, but they can be worked on. Indeed, the purpose of this debate and subsequent debates is to identify where the problems are and to do something about them. No plans are finalised. We are talking about principles and strategies. It is essential to look at critical detail and to make changes where they are necessary. Debates such as this one are an integral part of that important process.

Mr Sheerman: I have great admiration for my hon. Friend as Chair of the Select Committee, but she knows the Department for Transport better than most people,

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and we have had from it a catalogue of confusion and chaos over the west coast franchise and now over the planning for HS2, as it has changed the priorities, rules and bases of all the assumptions. Is she confident that this HS2 project has been thoroughly prepared and that the grounds for it are absolutely perfect?

Mrs Ellman: It is essential to apply the necessary commercial expertise to this scheme—whether it be directly in the Department for Transport or in HS2 itself. I am encouraged by the new appointment of Sir David Higgins to lead this process. I think that will give people increased confidence, which is indeed necessary.

Andrew Bridgen (North West Leicestershire) (Con): If the hon. Lady is so convinced of the business case, will she explain why the Government are now on the fifth revision of the business case for HS2? Does she think this will be the last revision, or will there be another 25 over the next 25 years to justify the case? I simply cannot believe it: it is amazing that the project has gone up by £10 billion and the Government have now managed to find £10 billion-worth of supposed benefits. I put it to the hon. Lady that this is the biggest work of fiction since Enid Blyton.

Mrs Ellman: It is for Ministers to say why the business case has been reviewed so many times, but when the Transport Select Committee looked at the issue two years ago, it approved a high-speed line, but pointed to a number of critical areas where it was felt more work should be done, which included looking again at the business case. One reason for that was the valuation put on the time people spent travelling, when it was alleged they could not work. We thought that that was not a correct valuation and that it should be looked at again. We raised issues of environmental concern and said they should be looked at again, as we did with issues relating to economic impact, particularly the need to have economic development strategies as well as the essential rail travel links.

The Select Committee called for a review of the case, looking at those specific factors and stressing the importance of relevant and up-to-date information. We thought it would be absolutely wrong to use information that was not up to date and that ignored the concerns we had raised. The report supported the project in principle, but raised real concerns, which we said must be addressed before any final decision could be taken. Not all of those concerns have yet been addressed, but some of them have been, as we have discussed today.

Mr Sheerman: On that very point, my hon. Friend’s very good report was two years ago and since then many people have used it to do the very thing she asked to be done. The subsequent reports built on her report, however, show a very different picture. Is that not the problem?

Mrs Ellman: I do not know to which reports my hon. Friend refers, but there have been no comprehensive reports looking at the whole scheme. Some have looked at some aspects of it, but not at the up-to-date information, which was published only this week. I am not aware of

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any reports that have looked at that. I am sure that the Transport Committee will look again at the information, as we have it.

Julie Hilling (Bolton West) (Lab): Does my hon. Friend agree that the business case is not just about the financial case? Public transport is a public service, so we need to look at the need to run trains throughout the country. We should not be looking only at pound signs, but at the overall need for this service.

Mrs Ellman: I agree with my hon. Friend’s general point. It is important to assess individual aspects of the project, but we also need to look at the concept and what it is trying to achieve. It is about expanding essential infrastructure in this country. If we do not have vision and if we are not prepared to look ahead at the nation’s needs, we will lack the essential infrastructure needed for economic prosperity. It is essential, too, to look at the detail, which is why we called for a review of the cost-benefit ratio, for a review of the environmental and economic factors and for up-to-date information on the projections of capacity, for freight as well as passengers. The concept must not be lost in the vital necessity to look at the individual components and make an assessment of them.

Mr Roger Godsiff (Birmingham, Hall Green) (Lab): My hon. Friend is surely aware of the National Audit Office report on this subject, which referred to

“fragile numbers, out-of-date data and assumptions that do not reflect real life.”

What does she say to that?

Mrs Ellman: The strategic review produced this week provides the up-to-date information. When the previous reports, including the NAO report, were produced, that information was not available. It is necessary to examine the new information that has come forward and look at it very carefully indeed—and that is the up-to-date information. As I say, previous reports did not look at it.

Andrew Bridgen: The hon. Lady talks about looking at the detail, so let us look at the facts. This project started out at £20 billion; it has hit £50 billion; the Treasury is working on £73 billion—and it was all priced in 2011 money, with indexation of 3% on top of it. Is it going to go the same way as HS1, which started at £1.5 billion and finished up at £11 billion?

Mrs Ellman: Again, I think it is for the Minister to answer those questions. This specific amendment deals with networks. The hon. Gentleman raises an important issue about the costs and the contingencies and how they will be put together, but that is a matter for the Minister and for broader debate than for discussion on this specific amendment.

Graham Stringer (Blackley and Broughton) (Lab): When the Transport Select Committee went to France to look at the economic impact of high-speed rail, we found that there was a huge economic benefit in Lille and most other cities. The fact is that the Department for Transport assessments do not capture that economic benefit. Talking about people working on trains really

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misses the point about the economic impact and the economic benefit that will come from high-speed rail. Does my hon. Friend agree?

Mrs Ellman: I do agree. When the members of the Select Committee went to France and elsewhere in Europe to look at high-speed rail there, we were struck by the success of the system and by the enthusiasm with which it was greeted by people living in the areas that it served. Indeed, what struck us was they wanted more: more stops, more stations, more access to high-speed rail. That made a considerable impact on us.

1 pm

Mark Pawsey (Rugby) (Con): Does the hon. Lady think that the Spanish economy has benefited from Spain’s investment in high-speed rail?

Mrs Ellman: I am here to talk about the United Kingdom and an amendment concerning networks.

Rehman Chishti (Gillingham and Rainham) (Con): Does the hon. Lady agree with the comments of the hon. Member for Blackley and Broughton (Graham Stringer), which appeared in the Evening Standard yesterday? He said:

“The leadership have completely misjudged the mood both of the Parliamentary Labour Party and the party in the whole of the country.”

Mrs Ellman: I am a firm supporter of High Speed 2. I believe that it will increase capacity and create the infrastructure that is essential for the future of the nation.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): Rail infrastructure in Spain has been mentioned. Studies show that the economies of both Seville and Madrid have benefited from a high-speed line, although only Seville was expected to benefit.

Mrs Ellman: That is an important point.

Mrs Caroline Spelman (Meriden) (Con): I am sure that the Select Committee is aware of a contrasting example, namely the line between Le Mans and Tours. Le Mans invested in a local connection to the TGV route, and saw a tenfold increase in economic benefit compared with Tours, which had failed to do so. That underlines the importance of local connectivity.

Mrs Ellman: The right hon. Lady has drawn attention to the importance of connectivity and the importance of using the opportunities offered by high-speed rail to bring benefit to areas that are not on the line. That is an essential component. In the regions, a great deal of work has been done to assess what the benefit might be. Centro estimates that there will be an additional 22,000 jobs in the west midlands, while the Core Cities Group expects an additional 400,000.

Mr Jim Cunningham (Coventry South) (Lab): My hon. Friend speaks of the economic benefits for the midlands. Cities such as Coventry will certainly not benefit from this investment; indeed, the opposite will be the case.

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Mrs Ellman: I think it essential for HS2 to think about how it can assist areas that do not look as though they will benefit, such as Coventry. The current process—not just today’s debate, but the consultations that are taking place and the progress of the hybrid Bill—enables important points to be raised, such as the one raised just now by my hon. Friend. I am fully sympathetic to that.

Mr Clive Betts (Sheffield South East) (Lab): I am sure that my hon. Friend is aware of the tram-train pilot scheme which will begin in Sheffield in 2015, and which may lead to an excellent opportunity for trams to use under-utilised heavy rail track to connect wider city regions through high-speed rail stations. Will my hon. Friend encourage the Government to carry out a review? Indeed, the Select Committee itself might wish to look into the matter.

Mrs Ellman: That is an example of the kind of development that should be supported.

What concerns me is not that the principle of high-speed rail is not recognised—indeed, it is clear from what has been said by Members today that the importance of connectivity, in general and in relation to specific areas, is very well understood—but the possibility that it is not being pursued strongly enough at the national level to guarantee its consistent application throughout the country.

I referred earlier to initiatives taken in the west midlands and to statements made by the Core Cities Group, and I know that a great deal of work is being done in Manchester, but I am not sure that that is happening everywhere in the country, and I think it important for someone to take the lead. Of course work must be done in the regions. Elected Members and local businesses know their areas and are aware of the opportunities and the potential, but someone should be ensuring that the same is happening nationally, so that we do not miss out on the vital and perhaps unique opportunity to develop our network for the benefit of localities, regions, and indeed the country as a whole.

Mr Sheerman: When my hon. Friend’s Committee was considering HS2, she will have been made aware of the likely cost, which is estimated to be at least £80 billion. Should not the people who will be affected be allowed a vote? I agree with her about the northern hub, of which I am in favour, but if my local people had a vote, would they vote for all that money to be invested in this high-speed train? I do not think so.

Mrs Ellman: I do not accept the figure that my hon. Friend has given, but the people do, in fact, have a vote. They have a vote with which they can elect a Government by voting in Members of Parliament, and they have a vote with which they can elect members of local authorities—and I note that the leaders of the major local authorities in the north are speaking very loudly indeed in favour of this project.

Karen Lumley (Redditch) (Con): Does the hon. Lady agree that we should commend Labour-controlled and Conservative-controlled Worcestershire—my own authority —for their foresight in predicting the benefits of HS2?

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Mrs Ellman: I do agree. I think that that is an excellent example of what could be done. However, I want to be sure that such examples are being followed up nationally.

Frank Dobson (Holborn and St Pancras) (Lab): Let us assume that the Government’s £50 billion estimate is correct. That investment is expected to bring the greatest benefits to Birmingham, Nottingham, Sheffield, Leeds and Manchester: five cities. Does my hon. Friend think that if the £50 billion were broken up into nuggets of £10 billion, and if each city were offered that amount to promote its local economy, the five of them would decide to club together to pay for a high-speed rail link? [Laughter.]

Mrs Ellman: The whole point of major infrastructure is that it makes a major difference in connectivity across the country, which benefits all parts of the country. If that benefit is fragmented, it will not accrue.

I certainly support economic development in the regions, and I deplore the abolition of the regional development agencies, but I hope that the local enterprise partnerships—alone, working together, or working in transport cores—will ensure that economic benefit comes to their areas, and that the Government provide the support that will enable that effort to be private sector-led and succeed.

Steve McCabe (Birmingham, Selly Oak) (Lab): Obviously we are talking about a lot of money, but if it is true that the rail capacity of the three main north-south lines will be exhausted within about 15 years, what impact does my hon. Friend expect that to have on the economies of the cities north of London?

Mrs Ellman: My hon. Friend has made a crucial point, which goes to the nub of the matter. If those lines run out of capacity—which, indeed, they are rapidly doing—a grave blow will be dealt to the economies in the northern regions, in terms of passengers and freight. One of the reasons more freight cannot travel by rail now is the fact that no freight lines are available. High Speed 2 will solve that problem.

Meg Munn (Sheffield, Heeley) (Lab/Co-op): A railway line is for many decades, not just for the immediate future. When considering the whole issue of connectivity and networks, did the Committee think about the implications of a longer time scale rather than some of the much shorter ones that people are currently discussing?

Mrs Ellman: The Committee was very clear about the fact that this is about the future, and about long-term thinking. I strongly believe that while it is always essential to scrutinise spending, it is also essential to have vision. If we do not have vision, we do not have a future. I note that the aim of Lord Deighton’s taskforce is to maximise the economic benefit that can result from High Speed 2, but I am not sure whether that includes expanding connectivity and making the maximum use of freed lines, as well as more economic development issues. I ask the Minister to give us a response at the relevant time as to who, if anybody, is in charge of expanding connectivity and the opportunities offered by HS2 so the maximum economic benefit can be realised. HS2 is needed for capacity reasons, and it produces major

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economic development opportunities for most parts of the country, but they must be grasped, and unless somebody is in charge of making sure that happens, they will be squandered.

The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill): Of the amendments in this group, I was delighted to be able to add my name to amendment 17 tabled by the Labour Front-Bench team. That demonstrates the cross-party support and co-operation we will need to deliver this project, which is so vital to the future of our country. Indeed, when I offered to add my name, I was asked, “Would you like to go on first, Minister?” I said, “No, no; I wouldn’t want people to get the wrong idea.” Our intention has always been for this landmark project to be part of a truly connected and integrated transport system, and the amendment would ensure that any preparatory work needed to integrate HS2 with the rest of our transport infrastructure can be funded using the Bill’s expenditure powers.

Phases 1 and 2 of HS2 will directly link eight of Britain’s 10 largest cities, serving one in five of the UK population. HS2 will also connect to the existing rail network, so as soon as phase 1 is built, high-speed rail trains can start directly serving 28 cities in the UK.

I welcome the reference to “footpaths” and “cycleways” in amendment 17 tabled by the hon. Member for Wakefield (Mary Creagh), and I should point out that as part of the Government’s wider commitments to boosting cycling in the UK, in August 2013 the Prime Minister announced the commissioning of a feasibility study to explore how we might create a new cycleway that broadly follows the proposed HS2 corridor. Such routes would also be open to pedestrians—presumably this is a case of great minds thinking alike. The cycleway could provide cycling and walking routes for the public to enjoy, linking local communities and stations to the countryside and tourist destinations along the way, and benefiting those living along the HS2 route.

HS2 will be at the centre of an unprecedented level of investment in the nation’s transport infrastructure. From 2015-16 to 2020-21 the Government have committed £56 billion-worth of investment in road and rail, on top of the £16.5 billion investment in HS2. We are investing more than £6 billion in this Parliament and £12 billion in the next on road maintenance, enough to resurface 80% of the national road network and fill 19 million potholes each year.

Mrs Gillan: I am grateful to the Minister for confirming the billions of pounds the Department for Transport is going to spend over the next five or six years, but how does he respond to the National Audit Office, which has highlighted serious doubts over the ability and capacity of both the Department for Transport and its subsidiary company, HS2 Ltd, to deliver the project successfully? He is now claiming to have one of the largest infrastructure budgets of any Government Department, but the NAO does not think the Department is fit to run it.

Mr Goodwill: The Department has gained a lot of experience in managing big projects from projects such as Crossrail. Following the appointment of Sir David Higgins to head HS2 from January onwards I feel very confident indeed that we can deliver this project on budget and on time. Indeed, the budget is about £50 billion.

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Therefore, if rolling stock were excluded and nothing else was done with the Department’s budget, this project would be the equivalent of about 10 months of the Department’s total budget. That puts it into context.

We are adding 400 miles of capacity to our busiest motorways thanks to work scheduled in this Parliament and the next, and between 2014 and 2019 Network Rail has put forward plans to spend £37.5 billion on improvements to the railways. We are clearly not putting all our eggs in the HS2 basket, therefore—far from it, in fact.

HS2 will be integrated with the nation’s airports, with direct services to Manchester and Birmingham airports and a short connection to East Midlands airport from the east midlands hub station.

Mr Sheerman: What the Minister has just said is rather confusing, because the Howard Davies inquiry has not yet reported. We can get very lovey-dovey about HS2 in some regards, but there has been no love lost on the London airports question. When are we going to make up our minds about London airports, let alone the rail service to feed them?

1.15 pm

Mr Goodwill: The timetable for the Davies commission report is well known, and there will be an interim report in December. Whether or not we put the spur in from HS2 down to Heathrow, in the plans we have published there is already a connection through Old Oak common; there will be an 11-minute connection to Heathrow via the Crossrail service with up to eight services an hour. So Heathrow will have a connection whether or not we embark on the spur.

Karen Lumley: Does my hon. Friend agree, however, that a 38-minute journey time makes it easy to get from London to Birmingham international airport, which means that people in north London would not need to go to Heathrow?

Mr Goodwill: Indeed, that will increase choice for people who have the unfortunate experience in life of having to live in the south-east of England. It will give them more opportunities to visit the north and use airports up and down the country.

We need to ensure that we maximise the cumulative benefit of individual investments by ensuring they are all properly connected. I have to say that amendments 18 and 19 in the name of my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) slightly confuse me. Amendment 19 seeks to limit expenditure to projects under phases 1 and 2 of the Bill, which finishes in Leeds and Manchester, but amendment 18 says that there should be more connectivity in Scotland. There is a degree of contradiction in those two amendments.

David Mowat: My hon. Friend has just said that phase 2 finishes in Manchester, which indeed it does as far as the business case and the benefits statement KPMG produced are concerned, yet under phase 2 we are building a 40 km spur north of Manchester. I wonder about the logic of that, since there is a £1 billion cost with no benefit. Is that an under-run that the Minister could book at this point?

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Mr Goodwill: The trains do not stop at Manchester and Leeds; they keep going. In terms of the connectivity of this new system, it is important that we take traffic away from the existing rail network and allow more freight and passenger services so as to address the problem of the 5,000 people every weekday morning who are standing as they arrive at New Street in Birmingham. To address that problem we need to ensure we have the connectivity.

Limiting this legislation to a particular phase, or to particular phases, would simply mean that a further Bill would be required to be placed before Parliament to prepare for any potential future phase.

On Scotland, I would simply say that officials from the Scottish Government made clear during this Bill’s Committee stage that they are content with the Bill as it is, and see no need for the naming of any locations in Scotland. The critical point is that the network is defined as “at least” including the named locations in the Bill. Therefore, not including locations in Scotland will not be a barrier to high-speed rail extending there at some point in the future. The locations named are limited to those which have been named in public consultation documents issued by the Department.

Again I must stress that while some rolling stock will run exclusively on the high-speed network, so-called classic compatible gauge trains will run through to Glasgow and Edinburgh. These new trains are part of the £7.5 billion rolling stock investment in the project and their arrival in Scottish cities will demonstrate how HS2 will benefit Scotland at an early stage.

Mr MacNeil: Can the Minister confirm that once this rolling stock reaches Edinburgh it can go further north up to Aberdeen and cities in between?

Mr Goodwill: That will be for the railway companies to decide; it will be up to them to decide how best to utilise this stock. Obviously, the rolling stock will be rolled out as it is produced, but having trains arriving in Glasgow and Edinburgh at that early stage of the project will make a major contribution to helping to keep our kingdom united.

Lilian Greenwood (Nottingham South) (Lab): I wish to begin by welcoming the Under-Secretary of State for Transport, the hon. Member for Scarborough and Whitby (Mr Goodwill) to his place. I know that he has a strong personal interest in transport issues. Although I am sure we will disagree on many issues, I am glad that we have been able to reach agreement on a number of today’s amendments, and I look forward to our future debates.

Amendment 17 has its origins in the Bill’s Committee stage. Members on both sides of the House contributed to its development, after my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) moved an amendment requiring integration with other modes of transport. The Minister at the time, the right hon. Member for Chelmsford (Mr Burns), who is in his place, said that he was minded to accept it. We want people to have a real choice about how to travel, be it by rail, by car, on a bicycle or by walking. We especially want to make sure that active travel is an attractive option, because it has many huge benefits, including for health and tackling congestion. We want that to be

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encouraged, so we welcomed the move to have better integration. We warned, however, that any amendment should pay regard to walking, cycling and light railways, so I am pleased that those concerns have been addressed by this sensibly worded addition to the Bill—of course I would say that, because it stands partly in my name.

Light rail will play an important role in linking stations in Birmingham, the east midlands and Sheffield to the high-speed network. The importance of making conventional rail accessible to pedestrians and cyclists is now recognised across the country; we have seen increasingly that railways stations have been adapted in that respect. It is right to enshrine that objective in the legislation for HS2. It is a real achievement that both cycling and walking will now be acknowledged in the Bill on the same basis as other modes of travel. We need to acknowledge that when people make a journey they regard it as starting when they close their front door. Making that whole journey as seamless as possible—not just the train bit, but how they get to the railway station and how they progress at the end—is vital. We therefore welcome the approach that has been taken.

Amendment 17 is a good example of a Bill being improved through parliamentary scrutiny. Integration between high-speed rail and the conventional rail network will benefit communities far beyond the areas directly served, and we want to make sure that HS2 is fully accessible to everyone, irrespective of their mode of travel. I am happy to commend the amendment to the House.

Mr Sheerman: Given some predictions of the level of fare that might be charged on HS2, many people think it will be exclusively for very well-off business people and that ordinary people will not be able to use it.

Lilian Greenwood: I thank my hon. Friend for that. He is right to say that we cannot afford the new high-speed rail line to become a “rich man’s toy”, as a former Secretary of State put it. Clearly the new network must be available to everyone, and I am sure the Minister will confirm the view that the fares will be no greater than they are on the current network.

Mr Jim Cunningham: Has my hon. Friend taken into consideration the frequency of the trains on the west coast main line and what effects this new project will have on that?

Lilian Greenwood: The whole point of the project is to provide extra capacity, including on the west coast main line. Obviously, the detail of what timetables will be in place needs to be worked out, but we would hope that they will be able to provide additional services to many cities, including my hon. Friend’s city, and we will call for that.

Mr Goodwill: There will certainly be very good news for people in Shrewsbury and Blackpool, where operators are keen to provide services but cannot currently do so because of congestion on the existing network.

Lilian Greenwood: The Minister rightly talks about the capacity constraints we already face on the west

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coast main line, and it is vital that everyone in the country is consulted on how the additional capacity is used when it is created by the high-speed line.

Mark Pawsey: The hon. Lady has moved on to the question of capacity on the west coast main line. Does she accept that the heavy growth that took place on that line occurred immediately after the upgrade in 2008, and that since that upgrade the rates of increase have slowed tremendously and that, therefore, there could be additional capacity on the existing line? Does she also accept that we can create more capacity by having longer carriages, and by changing the mix between first and second class?

Lilian Greenwood: It is well known that on the west coast main line the additional capacity created by the upgrade is already starting to run out and that the line will be full. Of course we can create additional capacity on a train by converting some carriages from first class to standard class, but that does not create extra space on the line for additional trains. As the Minister acknowledged, places such as Shrewsbury and Blackpool want to have an additional direct service but cannot because the capacity is just not available. I am sure that the hon. Member for Rugby (Mark Pawsey) would like to have directed his question to the Minister.

Andrew Bridgen: Under freedom of information requests, we have discovered that the average spare capacity on the west coast main line is currently 40% and that demand at peak time actually increased by only 0.9% last year?

Lilian Greenwood: I am not sure why the hon. Gentleman did not address that to the Minister who is responsible for the railway. I feel like I have been given entire responsibility for it, although I would be happy if we swapped places. The point is that the capacity is not available at the times when people want to travel—at peak times—and that there is insufficient capacity for additional services and for freight, which is also vital.

Mrs Gillan: Some people who study this subject and take issue with the Government’s claims about capacity on the west coast main line say that much of that capacity could be improved by allowing Virgin Trains passengers in peak hours to get off at Milton Keynes—that currently does not happen. What is the hon. Lady’s opinion of that? What studies has she made of how that could relieve capacity problems in the future?

Lilian Greenwood: I am sure that many people who want to go to the north would not, for a minute, wish to get off at Milton Keynes. The fact is that there simply is not enough capacity. I am sure that people who live in Milton Keynes are looking forward to the extra capacity created by HS2 and the possibility of additional services, particularly for commuters, that that will free up on the west coast main line.

Let me now deal with the amendments relating to the links to Scotland. Labour has always supported the principle of bringing high-speed rail to Scotland, which is why the previous Labour Government set up HS2 Ltd to examine possible routes to Scotland. HS2 will bring real benefits, enabling faster journey times and adding to capacity on the main line routes to Scotland. We

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wanted to put those benefits in the Bill in Committee, but we were told by Transport Scotland that the Scottish Government opposed altering the Bill. It was therefore somewhat curious to see the Scottish National party tabling such amendments.

One purpose of the Bill is to provide a legal basis for future extensions of the high-speed network, providing that the economic case can be made for them. With the Government failing to keep the costs under control, we need to focus today on the HS2 network as planned. I would be interested to hear what work the Government are doing on the costs and benefits of extending the line. We have seen reports in the media that the Government are going to launch a feasibility study into extending the line to Scotland. I do not know whether the Minister would like to take this opportunity to intervene to confirm that and explain the timetable for the study.

Mr Goodwill: I always think it is a good idea not to try to run before we can walk; let us get to Birmingham and Manchester first. I am sure that we will be looking at extensions, but they are not at the top of my to-do list at the moment.

Lilian Greenwood: I thank the Minister for his response; clearly the media reports are wrong. It is ironic that the SNP should be proposing to take this line to Scotland, given that the one thing we can guarantee is that the SNP plans for separation would make the possibility of a high-speed line across the UK even less likely.

Mark Lazarowicz: One can excuse the Minister for not having this at the top of his to-do list only because he is new in his job. I have asked similar questions of previous Ministers over the past few months, so may I suggest to my hon. Friend that if it is not at the top of a Minister’s to-do list now, it should be pretty soon and that the Minister should be giving details of this study in the near future?

Lilian Greenwood: My hon. Friend is right. We will continue to press the Minister on the issue in the months ahead.

Mr MacNeil: The hon. Lady has made the same catastrophic mistake as the Minister in thinking that a transport project is the same as a political governance project. If that were true, High Speed 1 could have been construed by the Eurosceptics on the Government Benches as part of some major European integration project, and the high-speed line that is going through the Baltic countries up to Helsinki would be seen as some nation-unification project. It is not; it is a transport project. I encourage the hon. Lady not to make the same daft mistake as the Minister made earlier.

1.30 pm

Lilian Greenwood: I can assure the hon. Gentleman that we will not be making any of the same mistakes as the Minister.

Finally, I take the opportunity to comment on amendment 23 in the name of my hon. Friend the Member for Hayes and Harlington (John McDonnell). He has rightly introduced this amendment to advance his constituency and the interests of the people living there, but I am concerned that we would be straying

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into territory that is covered by the Davies commission. The Labour Front-Bench team share the frustration of those who want to see from the commission an earlier resolution of the issue of airport capacity. It was we who called for those cross-party talks, to which the Government somewhat belatedly agreed. Nevertheless, we are bound into the process and there can be no justification for delaying preparation work on this important project until after the election, when that commission is due to report.

We want to see the new high-speed line built without further delay. The whole country can benefit from the improved capacity and connectivity that it will bring. I am happy to see it fully integrated into the wider network and to support amendment 17.

Mr Simon Burns (Chelmsford) (Con): It is a pleasure to follow the hon. Member for Nottingham South (Lilian Greenwood). I confirm that I will support amendment 17. As she rightly said, it resulted from an idea put forward by the right hon. Member for Holborn and St Pancras (Frank Dobson) and my right hon. Friend the Member for Meriden (Mrs Spelman). If we are to have an integrated transport system, it is crucial that we do not link just high speed rail to the conventional lines, but take into account all the other forms of transportation to help people get from A to B.

It is particular pleasure to see the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), in his place and leading on the issue. It is an important issue and I know that he will do well on it, ably supported by officials at both the Department for Transport and High Speed 2.

I support amendment 17 and oppose amendment 18 and the amendments that flow from it. In many ways I have a feeling of déjà vu, because we had copious debates in Committee on the matter, and I never quite understood why so many people got certain parts of their apparel in such knots over the issue. It is clear from clause 1(2) that the Bill applies to

“railway lines connecting at least—

London,

Birmingham,

the East Midlands”

and so on. The whole point of the Bill and the purpose of getting it on to the statute book is to provide financing not of an actual project, but of the preparations for the project ad infinitum, because High Speed 2 need not necessarily stop at Leeds or Manchester. My right hon. Friend the Secretary of State for Transport made that plain in October last year, when he announced that he was going to set up an inquiry into the feasibility of a third phase to Scotland.

The Bill will allow the expenditure of money for the preparation of not only phases 1 and 2, but potentially phase 3, if there is one, a spur to south Wales, if a business case were made that it was needed, to the south-west or—a possibility closer, I suspect, to the heart of the distinguished Chair of the Transport Committee, the hon. Member for Liverpool, Riverside (Mrs Ellman)—all the way into Liverpool. The Bill grants the Government permission to spend the money on those preparations.

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The thought that there will not be full and proper consideration of the continuation of the project to Scotland at some point is bizarre. It is an obvious part of a viable rail network along the spine of the country for it to continue in time to Glasgow, Edinburgh and potentially—depending on the wishes of Government and the business case at the time—beyond that. That is what the Bill does.

Mrs Gillan: Will my right hon. Friend give way?

Mr Burns: I will give way to my right hon. Friend, then I will make progress.

Mrs Gillan: I am sorry that my right hon. Friend observed members of the Committee getting parts of their apparel in a twist. As I was not a member of the Committee, it obviously was not mine. He has outlined what so many critics beyond this place say of the Bill—that it is a blank cheque. Can he confirm that it is an open-ended financial commitment to spend any sum of money on any part of any preparation for any railway network anywhere in the country—the blank cheque that everybody dreads?

Mr Burns: My right hon. Friend is right—she was not on the Committee. It seemed as though she was, because she was in the Public Gallery the whole time, assiduously following our deliberations. I think I am right in saying, from memory, that we discussed a number of amendments that she tabled for that Committee which were moved by members of the Committee.

My right hon. Friend advances an argument, but repeating it does not mean it becomes more accurate. That argument is that the project has a blank cheque. It does not have a blank cheque. It is not a machine for printing money. There are very tight financial procedures in place to ensure that it does not exceed budget.

Before anyone asks how that can be considered a viable proposition, one should look at Crossrail, the largest engineering project in Europe at present, a multi-billion pound project. Owing to tight financial controls, it is on time and on budget, and I have every confidence that, with the mechanisms that have been put in place, that will be the case with HS2. I see figures quoted about what the project will cost which are from Alice in Wonderland. The cost is £42.6 billion, but that sum includes £14.4 billion of contingency funding, of which the vast majority, I am confident, will not be spent.

Several hon. Members rose

Mr Burns: I will give way to my hon. Friend the Member for Folkestone and Hythe (Damian Collins), then I will make progress, because a number of my hon. Friends want to speak in this time-limited debate.

Damian Collins: I am grateful to my right hon. Friend for giving way. Does he agree that there is a myth in this country that we cannot do big projects? Look at the success of Crossrail and the High Speed 1 line and compare that with the west coast main line upgrade, the kind of incremental project that some Members are keen on, which was four years late and 240% over budget.