Economies of the UK Islands — [Andrew Rosindell in the Chair]

– in Westminster Hall at 9:30 am on 9th May 2018.

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Photo of Alan Mak Alan Mak Conservative, Havant 9:30 am, 9th May 2018

I beg to move,

That this House
has considered the economies of the UK islands.

It is a pleasure to serve under your chairmanship, Mr Rosindell. I thank the Speaker’s Office for granting this debate, the Minister for coming to respond and all right hon. and hon. Members for joining me. In particular, I thank my hon. Friend Mr Seely for the important role he has played in instigating and securing this debate, and in launching the all-party parliamentary group for UK islands, of which I am proud to be a founding member.

Island geography has played a pivotal role in shaping Britain’s history, and has contributed to the culture, society, institutions and economy that we enjoy today. Similarly, the smaller islands that are part of the UK also have their unique history, communities and economic structures, stemming from their own geography. Nearly every aspect of life on these islands, including their economies, is impacted on in some way by their geography. The debate is about showcasing and celebrating the economic strengths of our islands, highlighting the challenges they face and exploring how central and local government can help our islands get fit for the future. We are all islanders in one form or another and we should work together to protect and enhance these extraordinary communities and their economies.

Within my constituency, Havant, I have the honour of representing more than 17,000 residents on Hayling Island, one of Britain’s most successful inhabited islands. The island has a fascinating history dating back to the iron age, stretching through the 11th century, the salt production industry and serving as a location for a mock invasion in preparation for the D-day landings. As important as Hayling’s remarkable past are the exciting possibilities for its economic future. Northney, West Town, Eastoke, Sea Front and Mengham all boast an array of strong, independent businesses. Some of these are small, such as the Hayling Island Bookshop, reputed to be the smallest independent bookshop in Britain. It was a finalist in the parliamentary best small shops awards. There are others, such as Bentley Walker, which started life as an electrical goods shop and has now diversified into a provider of satellite-based internet technologies, serving customers around the world. Others, such as Northney Ice Cream, the Coastguard Café and the Seaside Florist, are family-owned. All of these Hayling businesses and others have their own character. While owners and employers are always eager to help the local community, they also give the island its distinctive welcoming character and a strong sense of community, engendering a strong sense of loyalty among local residents.

That warmth has made Hayling a great place to visit and helped it to build a strong visitor economy. The tourism industry is worth more than £160 million to the Havant and Hayling area each year. Hayling’s beaches are award-winning; the three main beaches of the island have won both the European blue flag and the Keep Britain Tidy group’s seaside award flag for cleanliness and management. Eastoke Corner beach has been awarded a blue flag for more than two decades, attracting visitors from each of the three busy holiday parks across the island, which are also key employers.

Beyond the beaches, the island’s sailing clubs also bring in visitors who enjoy our natural environment. The annual Virgin kitesurfing festival also attracts thousands of water sports enthusiasts from around the world. The island’s remarkably low crime rate makes it a safe place for business to start and grow. The coastal and semi-rural nature of the island lends itself to the establishment of new businesses set up by local entrepreneurs such as John Geden, who established Sinah Common Honey. Each jar of honey is said to derive from nectar from more than 1 million flowers. Hayling’s rich rural environment provides a sustainable, natural dimension to Hayling’s economy. As of March 2018, only 115 of Hayling’s 17,573 residents were claiming unemployment benefits of any kind—just 1.2% of the population, compared with the English average of 2.1%.

Although Hayling’s unique geography is a source of economic strength and community spirit, the island and others around the UK also face unique challenges. There is a consistent need on Hayling Island and other islands across the UK to work harder to create sustainable and attractive employment opportunities for our residents, especially younger residents and school leavers. Any dip in opportunities for younger generations carries with it potentially destabilising knock-on effects for our wider economy. A brain drain, even a temporary one, can mean that our local businesses struggle to hire workers. The 2011 census indicated that there were 4,060 people living on Hayling Island who worked elsewhere, out of a working population of 9,934. Just under half our working residents commute off the island via a single road bridge most days of the week.

It is absolutely crucial that we equip all our islanders, especially our young people, with the skills to succeed in the economy of today and that of the future. I therefore welcome the fact that four of Hayling’s schools, Mill Rythe Infant School, Mengham Infant and Junior Schools and Hayling College are rated as good by Ofsted, with Mill Rythe Junior School rated as outstanding. As with many coastal communities, however, we still have pockets of deprivation and underachievement that hold back our economic potential and productivity.

Although schools across the whole Havant constituency, including Hayling Island, receive higher than the national average in per-pupil funding, I believe that the Government’s new national funding formula can do more to help pupils who suffer from the most extreme forms of deprivation, particularly in coastal communities. I have met the Minister for School Standards and the new Secretary of State for Education on several occasions to lobby them on this issue. I hope the Exchequer Secretary shares my desire to ensure that every young islander gets the best start in life so that they can contribute effectively to our economy in the future.

The other challenge our island economy faces is the over-exposure of our business community to changes in the island’s service infrastructure. We live in an age of digitisation, as I have emphasised in my other work this House on the economic opportunities of the fourth industrial revolution. As online banking increases, footfall in local banks will inevitably fall. This has led to the closure of Mengham’s NatWest and Barclays branches on Hayling, and I am sure other hon. Members face similar situations in their constituencies.

Although residents on the mainland can mitigate the closures by driving to a nearby branch that remains open, Hayling only had one branch of each main bank. In recent years, closures have forced many residents to travel to the mainland using the single road with increasing regularity. I am aware that this has been touched on and tackled elsewhere through the access to banking protocol, the Griggs review and the access to banking standard, and is ultimately a commercial decision beyond the Government’s control, but I want to raise it to emphasise the heightened sensitivity of the economies of the UK’s islands to changes in the economic infrastructure—they impact on us severely.

Public transport is key to a vibrant economy within an island as large as Hayling—transport between the island and the mainland, and in neighbouring areas, such as Portsmouth. Any diminution in service has a disproportionate impact on island communities for residents and visitors alike, especially on islands such as Hayling, which are both coastal and semi-rural. The Hayling ferry, for example, is a valued community resource that also helps the island economically. The ferry’s owners and operators are putting together a business plan to make it commercially viable in the long term, working with local councillors—something I support. I hope that my hon. Friend the Minister will join me in wishing them every success as they seek to secure a long-term solution to ensure that we have a positive local impact from the ferry. Road infrastructure is equally vital. High-quality road networks are important, particularly as new housing is proposed on Hayling Island to meet local demands. Digital, structural and economic services are vital to the economic wellbeing of our island.

We live in a world of unparalleled opportunity thanks to technological innovation and a host of businesses are now footloose thanks to the advent of the internet and online shopping. On Hayling Island, 96.9% of premises can receive superfast broadband, set against a UK average of 93.5%. We are fortunate to be close to the mainland with a strong digital infrastructure, but I know that many islands are not so fortunate. With services such as banking increasingly moving online, fast download speeds are essential. That should be an area in which the Government can support island communities.

I commend the Government’s efforts to date to support island communities. In 2011, the Government established the coastal communities fund and since then, four funding rounds have been completed, awarding a combined total of £173 million. Only 9% of that funding, however, has been awarded to projects based on islands, and 70% of that has been allocated to islands in Scotland. I do not begrudge any of the funds that have gone to those recipients. Instead, I seek to highlight our collective and continued need for sustained development and support for the UK’s islands, including Hayling Island.

In March 2015, the then Department for Communities and Local Government established coastal community teams in order to encourage,

“sustainable economic development and regeneration in coastal towns.”

Each of the 146 coastal community teams that have been established were awarded £10,000, yet only three were exclusively based on islands. I am delighted that one, the south Hayling Island coastal community team, was based on Hayling Island.

Although the coastal communities fund was established with the aim of providing funding to create sustainable economic growth and jobs, it has become largely project-focused rather than addressing the structural, systemic and strategic challenges faced by UK islands. Consequently, I hope the Minister and the Government will consider expanding or complementing the coastal communities fund so that it can provide stronger strategic and structural support to the economies of UK islands. The reformed fund would be exclusively available to island communities, such as Hayling Island, to apply for.

Photo of Bob Seely Bob Seely Conservative, Isle of Wight

I thank my hon. Friend for securing the debate. I strongly support the proposal, and I am glad that he is raising it with the Minister, because one of the problems is that islands are sometimes too small for the Treasury to be interested in as economic enterprise zones, which we need on the Isle of Wight and in the Medina valley specifically. With an enlarged coastal communities fund, perhaps one that looked specifically at driving economic regeneration, relatively small sums of money could make a great deal of difference and would go down very well.

Photo of Alan Mak Alan Mak Conservative, Havant

I thank my hon. Friend for that sound intervention and again for his role in securing the debate. I entirely agree with his points. As I was saying, a reformed coastal communities fund would be incredibly important to coastal communities such as Hayling Island and his constituency. It would be exclusively available to island communities to apply for to help them to meet the specific and unique challenges they face as a result of their specific and unique geography. As I mentioned in my opening remarks, those challenges include an oversensitivity to changes in local infrastructure, expensive or sometimes congested transport connections to the mainland, a skills gap and a need to support local, independent businesses, all of which could hamper economic growth if not addressed.

In conclusion, we are all islanders. Britain and its satellite islands are a beacon to the world of how innovative, welcoming and economically successful islands can be. After all, the UK is one of the largest and most successful island economies in the world. However, to make our island economies sustainable and resilient, on Hayling Island and beyond, we must help to tackle the systemic and structural challenges they face. I hope that central and local government will play their part. By doing this, we can ensure that islanders across the UK enjoy the bright economic future they deserve, and that they not only are fit for the future, but get to the future first.

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Northern Ireland) 9:42 am, 9th May 2018

It is a pleasure to serve under your chairmanship, Mr Rosindell. I, too, congratulate Alan Mak on securing the debate. It is a rare and welcome opportunity to discuss island issues. The hon. Gentleman said that we are all islanders. I am doubly blessed in that regard, because I am an islander by birth—I was born and brought up on Islay, off the west coast—and I am an islander by choice, having raised my family with my wife in Orkney. I have represented Orkney and Shetland here since 2001.

It is worth reflecting on what it means to be an islander and to live in an island community. Island communities are special places. Being an islander changes the way people see the world. One of my great bugbears is hearing people talk about insularity, meaning that islanders are somehow inward-looking. In fact, islanders are much more outward-looking, because they are dependent on their links with the rest of the world in a way that people in the larger conurbations on the mainland take for granted. To be an islander is not to be insular, however much that might offend the classicists, but to lead a different sort of life in a modern and connected world.

We are often excluded. Hon. Members have heard me speak before on the subject of all too often being excluded from or charged extra for deliveries that people in towns and cities take for granted. However, I do not want this speech to be a constant litany of the problems that island communities face. If nothing else, I hope the Minister takes away from the debate an understanding that our island communities have challenges, as every community in the country does, but we offer opportunities for the Government as well. Island communities can contribute in a whole range of ways to the work of Government, be it in Westminster, Holyrood or wherever else.

Many of the issues that we face as island communities are shared in common with communities across the whole country. Brexit is probably the dominant issue that I hear about when I speak to businesses in my communities. Orkney is a predominantly agricultural community and Shetland is a predominantly fishing-based community, where fishing still makes up about one third of the local economy. The shape of our future relationship with Europe—particularly in relation to the fishing industry and whether we will continue to have a relationship with Brussels and a common policy on fisheries, and the shape of future agricultural support, which is guaranteed only to 2022—is a big issue for our economy.

That highlights one of the biggest problems. As can be seen from the number of hon. Members present, there are not that many island communities in this country and we do not have that high a level of population, so we often fall off the end of the table because we need a slightly different provision and our island needs are not always understood. We are the most vulnerable to the law of unintended consequences.

Post-Brexit, as we move to reformed agricultural and fisheries policies, there are real opportunities to design them in a way that will work for farmers and fisherman across the whole country, and to build into them the flexibility that we have been denied over the years, which has been enormously detrimental to our fleet and the fishing industry.

The economic profile of most island communities is not dissimilar from that of Orkney and Shetland. We have an economy of predominantly locally grown small and medium-sized enterprises. For islands, as for all small communities, that is a good thing with real opportunities. It allows us to keep a lot of the money that we raise and spend within the island community.

The modern economy in our island communities, however, is a lot more than the farmers and fishermen that hon. Members might instinctively think of. In my constituency, I have several growing and successful software engineering companies. They offer well-paid and attractive employment opportunities to younger people who may have been away for higher education and want to return.

There is a role for Government, not just in terms of the economic development and growth of those companies, but in terms of the provision of infrastructure. One of the main hindrances to the economy in my constituency is the continuing poor level of broadband and mobile phone connectivity. The latter is slowly improving, but as the rest of the country looks towards 5G, most of my constituents can still only dream of 3G or 4G.

A different approach from the Government to rolling out that sort of infrastructure could be transformative for us. If we said to the big corporates such as BT, “Of course you can get a licence to roll out the next generation in Glasgow, Edinburgh, Manchester, London, Birmingham or wherever else, but you have to start at the periphery and work your way in,” that would mean that, instead of constantly playing catch-up and always following on, as a community with the opportunity to benefit most from that sort of innovation, we could be at the cutting edge.

In recent years, one of the most important parts of our local economy, on both Orkney and Shetland, has been the growth of tourism. We have gone from the days when bed and breakfast was provided by a few farmers’ wives to supplement their farming income to a position now where tourism is a significant part of our local economy. Obviously, it is part of an economy that is enormously vulnerable to outside influences, for example currency fluctuations. Also, terrorism and the attractiveness of our country as a whole will have a very long tail by the time that they reach Orkney and Shetland.

Tourism is also an industry that has big seasonal variations. People work long hours during the summer months but will perhaps just keep their businesses ticking over in the winter. Now, if somebody is in receipt of tax credits, for example, such big fluctuations of income throughout the financial year can be occasionally enormously problematic. Again, that is another example of the way in which the decisions made at the centre, which might work very well for 95% of people, can cause real difficulties in the way that they affect the remainder. When we hear about something benefiting the 95%, those of us who are islanders know that we will inevitably be largely among the remaining 5%.

The biggest opportunity for islands to contribute to our future wealth and prosperity in this country comes from the development of renewable energy. The first generation of wind turbines was tested in a prototype on Burgar Hill in Evie, in Orkney. Ever since then, those of us within the isles have been enthusiastic in our promotion of the next generation of electricity and energy development.

The development of wave and tidal power brings another opportunity. It is still very much in its infancy, but again it would require just a little bit of tweaking to make the regulation and the development funding work. Development money for wave and tidal power sits in a pot for developing technologies, alongside offshore wind. It is pretty well accepted that offshore wind is no longer a developing technology but is now a fairly mature technology. However, as a consequence of that development and the way in which the price of offshore wind has fallen, the full funding for developing technologies is then scooped up by offshore wind and the money that should be there to help wave and tidal power to develop is simply taken by offshore wind.

I do not begrudge offshore wind a penny of that money, but some dedicated pot of development funding for wave and tidal power would be of transformative benefit to the industry, and it would certainly be of enormous economic benefit to the island communities that I represent. Predominantly, though, it would allow us to contribute to the rest of the country.

We are not looking for any special favours or special treatment. We are not even looking for extra money from the coastal communities fund, although people should remember that that money came from the Crown Estate’s marine estate, and so we have contributed plenty to that fund over the years, through our fish farms, marinas and piers. We just want the opportunity to be allowed to contribute to the rest of the country to the fullest extent that we possibly can, and in that way we can all understand that through good times and bad we will share the risks and the opportunities.

Photo of Bob Seely Bob Seely Conservative, Isle of Wight 9:54 am, 9th May 2018

Thank you, Mr Rosindell; it is a pleasure to serve under your chairmanship.

I also thank my hon. Friend Alan Mak for securing this debate and for being part of the all-party parliamentary group for UK Islands. His presence here is very welcome and he spoke very eloquently about the needs of Hayling Island; once upon a time, when I was very young, I visited it and I remember how lovely it was. I also thank Mr Carmichael for his contribution: it is always good to hear of the experiences of other islands.

As we know, this is not a debate about places such as the Channel Islands and the Isle of Man, which are Crown dependencies. This debate is about islands that are fully within the governance of the United Kingdom, but clearly they have physical characteristics that make them islands and give them distinct traits. Indeed, our islands are unique and special places, and to represent my island is a passion and a privilege, which I am incredibly grateful for. I love being here, but I would not want to represent anywhere other than the Isle of Wight.

Islands are, by definition, at the fringes of our nation, but they also help to define us, and they have a special place in our geography and culture. However, my argument to the Minister who is here today—I am very grateful for his presence—is that islands do not always get their fair share, because they are overlooked. In the case of my island and my constituency—the Isle of Wight—that is especially true.

By way of example, the Scottish islands get the Scottish islands needs allowance, or SINA, which comes from the Scottish Government. So they get the Barnett formula money, which is generous, and on top of that they get the SINA. If I remember correctly and have my facts right—I am sure the right hon. Member for Orkney and Shetland will correct me if I am wrong—the Western Isles, Orkney and Shetland get an extra £6 million a year through SINA, in acknowledgement of the fact that supplying Government services on islands tends to cost more than it does on the mainland. The Isle of Wight gets none of that money, despite the fact that we have a population four times bigger than that of the Western Isles, for example, and two, three or four times bigger than that of Orkney, Shetland and other islands.

So we do not get our fair share, and when it comes to “fair” funding we are unfairly funded. The central reason for that is simple: it is the Solent. Government funding systems are not designed to deal with isolation by water. The rural isolation grant and the rural farming grants are all predicated on a sense of isolation, but isolation on land and not isolation by water. One of the arguments that I am trying to make, and I have already made it to the Minister’s colleagues in other Departments, is that a fair funding formula needs to take into account isolation by water.

I have gone straight into the meat of my speech; I will now go backwards a little bit. We are very much open for business on the Isle of Wight; we are trying to attract new businesses to the island; and our regeneration team and our council have a very ambitious programme, which I absolutely support, and I will work hand in glove with them.

In fact, we have a unique scientific heritage. Marconi set up the first experimental wireless station off the south coast of the island, on St Catherine’s Down, which, by the way, is one of the sunniest places in Britain; seaplanes were built by Saunders-Roe in East Cowes; and we have major employers and a cluster of defence, composite and high-tech industries, including companies such as Gurit, BAE Systems, GKN, which is now part of Melrose, and Vestas. Indeed, a high percentage of the world’s large offshore turbine blades are made on the Isle of Wight at the Vestas factory. Vestas is doing great work on the island, and I thank it, as I do all employers, for its presence. So we are very much home to high-tech businesses that are at the cutting edge of their industries.

As I have said, however, there is a problem with providing Government services on the island. A University of Portsmouth 2015 study said that the extra costs of providing Government services on the Isle of Wight were £6.4 million a year, because of the costs of being an island. The university broke that figure down into three: first, the cost of self-sufficiency, because of the lack of spill-over of public goods provision; second, what it called an “island premium”, which is the additional cost of conducting business on and with islands, which the right hon. Member for Orkney and Shetland will know about; and thirdly, the sense of dislocation, which is the physical and perceived separation from the mainland and which could come from providing services to a smaller population and a smaller market.

I will give an example. At care homes, there was a clear mistake that we are rectifying. Elderly folks were put into care homes earlier than on the mainland, yet our care homes were costing more than the mainland because of the lack of competition between them. To some extent, another issue was their high quality. The cost was pushing additional burden on to our adult social care costs, which skewed our funding so that we could not spend the money on infrastructure to provide jobs and on a jobs agenda. That is absolutely vital in keeping our youngsters on the Island, which helps make us the vibrant and successful community that we are, and which we are building on as well.

In those three different ways—full self-sufficiency, the island premium and dislocation—there is an extra cost for Government services on the Isle of Wight. That has been estimated, in an academically rigid, peer-reviewed article, to be £6.4 million a year, and that does not include other factors that I would like to bring to the attention of the Minister. One of those is the Green Book estimate. Green Book estimates are the terms and references for Government investment, and they do not work for the Island because we are physically isolated. We cannot do the things that work for Southampton, Portsmouth or, indeed, for Havant, because we are physically separated. The Green Book estimates process counts against the Isle of Wight in providing infrastructure.

I have mentioned separation by water in terms of the rural isolation grant. For farming grants, things are prejudiced against us because we are in the wealthy south-east. In many ways, we get all the downside of being part of the wealthy south-east—we do not get that extra support as we are seen to be in the wealthiest area of the country— when in many ways our economy is similar to that of west Devon or Cornwall. There is some tourism, some culture, farming and little clusters of high-tech industry. Whereas lovely places such as Cornwall get money thrown at them through EU grants and Government support, we have had very little of that.

The amount of money we would ask for from central Government to make the Island even more of a success is really very small. I would love to sit down and have that conversation with the Minister in greater detail. The answer is not devolution, because the housing system sadly does not work for us, and we will be arguing why we are an exception. We want a modest, tailored package of support that recognises that we are an island. That £6 million extra in fair funding would be of benefit for the council, and would recognise that because we are an island, we need an A&E and a maternity unit, because someone cannot give birth on a helicopter going to the mainland, and the ambulance cannot wait for four hours to get the ferry overnight. Our funding in health services and many other things is skewed by the fact that we are an island, and that is not recognised.

We have many little clusters of excellence. Our tourism economy is significantly improving. We will very soon have one of the best broadband services in the world. Thanks to our wonderful local company, WightFibre, and the Department for Digital, Culture, Media and Sport—I thank them very much indeed—we are getting significant sums of money so that we will get ultra-superfast broadband for five out of six houses on the Island. If someone has a broadband business, the place they want to be is not London, Old Street, Moorgate or Brighton, but Cowes or Newport, where they will get broadband speeds comparable with Singapore. What I need to do, working with colleagues in the council, is determine how we get the other one sixth of houses in the more rural and very rural areas linked up to that as well, so that people can have Singapore broadband speeds in their little farmhouse in Newtown Creek, Brighstone, Chale or wherever.

Most importantly, education is critical to our future. It is improving and is becoming a success story. We probably need to work on restructuring our sixth forms, but most importantly, I would like to have a conversation with the Treasury and the relevant Ministers about getting significantly more higher education to the Isle of Wight, specifically a university campus. I would like that to be in Newport as part of our critical Newport harbour redevelopment. It may be that it goes elsewhere. Higher education would clearly lead to much higher levels of higher education, but it would also drive our software businesses, which the right hon. Member for Orkney and Shetland spoke about, and other key investments.

We have also won special status from the Arts Council, and we are building a much stronger cultural offer for tourism, education, aspiration and, critically, regeneration. It is important for the Minister to be aware of that. I would love to have a conversation with him about our farming and small businesses. I am having a conversation with the Minister for Agriculture, Fisheries and Food, my hon. Friend George Eustice about mobile slaughtermen. Once we leave the European Union, we will be too small to have an abattoir, yet our field structure on the Island is perfectly suited to animal husbandry, and we are very keen to support local food production, which is good for multiple reasons, over and above employment.

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Northern Ireland)

I understand exactly what the hon. Gentleman says when he talks about the Island being too small to have an abattoir—we have the same issue in the Northern Isles—but I suggest that is not actually the case. The Isle of Wight is surely too small to have an abattoir only in the way we regulate and manage abattoirs currently. A more sensitive system of regulation would surely allow a good business there.

Photo of Bob Seely Bob Seely Conservative, Isle of Wight

The right hon. Gentleman makes a very good point, and I am happy to take that correction. Post-Brexit, we need to change the rules for farming so that we have smaller abattoirs or mobile slaughtermen who can kill animals humanely on the farm to allow them to go into the human food chain in a way that does not exist at the moment.

Finally, I would like to have a conversation with the relevant Minister in due course about BAE and the need to have a complex radar technology demonstrator in Cowes. If we wish to keep radar technology in this country for the next 50 years—there is a critical national interest in doing so—the only realistic place to have it is where the aircraft carriers, the Type 45 and all the Royal Navy warships are made, which is in West Cowes at the BAE plant. I want to bring together BAE and Government to have that conversation. We are talking about small sums of money—£5 million, £10 million or £15 million—to secure a complex radar technology demonstrator, so that we can keep those high-tech jobs and high-tech knowledge on the Island. I will wind-up now, Mr Rosindell. I apologise; I have taken a touch too long.

The Island is a success story, but I do not believe the Government have engaged with us enough over the past 10 to 20 years to maximise our success in building a new economy and an advanced education system, doing all the things we need to do regarding our infrastructure, such as our broadband and all the high-tech jobs, and making the Island the economic success story that it is. I reinforce the point about the coastal communities fund and the importance of the Treasury spending a little time and effort to understand islands, their unique circumstances and the amounts of money—very small in the great scheme of things—that could help drive enterprise and economic progress. More than anything, I want my constituency, the wonderful Isle of Wight, to contribute economically, rather than being a place that gets handouts from central Government because we say we are poor and do not have this or that. With a bit of help from the Treasury and the Government, and greater integration and support, we can drive our success story further.

Photo of Bill Grant Bill Grant Conservative, Ayr, Carrick and Cumnock 10:08 am, 9th May 2018

It is a pleasure to serve under your chairmanship, Mr Rosindell. I congratulate my hon. Friend Alan Mak on securing this important debate on islands of the United Kingdom. Island economies are particularly important to Scotland, which boasts almost 800 islands around its coastline. In 2011, some 93 permanently inhabited islands were recorded, and between them they host almost 2% of the Scottish population. That gives Scotland by far the largest number of inhabited islands in the United Kingdom.

I had the privilege of being the senior fire officer in Argyll and Bute for some five years. I pay tribute to the islanders who provide the personnel for the volunteer units and retained fire stations that serve those communities. They are very much on their own; getting support to them can prove almost impossible. I commend the men and women who support their fire service. At the time I was there, the island populations varied from around 100-plus on Coll and Colonsay to more than 3,000 on the island of lslay, which was mentioned earlier. To complement the population, Islay has eight distilleries, which are a great employer. As somebody said, there are no bad whiskies; some are just better than others. A neighbouring island is Jura, where we also have a distillery that produces a lovely whisky that bears the name of the island.

Tourism, food and accommodation figure strongly in many island economies, along with traditional incomes from crofting, farming, fishing, and, in some cases, fish farming. Mr Carmichael suggested there might be opportunities post-Brexit to adjust the system to assist the communities further. They really need that assistance. Oil and gas are players in a number of island economies mainly to the north of Scotland. Tiree, which is quite breezy, off the west coast of Scotland, is the most fantastic place in the United Kingdom for windsurfers.

In my time visiting the west coast islands, the provision of fire cover, education and medical services was a constant challenge just to secure the right people for the posts. The additional cost of providing those services is recognised and factored into the Barnett formula under the sparsity factor. May I commend the Scottish Government for the introduction of the road equivalent tariff, which, in conjunction with the ferry operator, Caledonian MacBrayne, has generated additional tourist traffic that in most cases—although perhaps not in all cases—must be welcomed?

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Northern Ireland)

My constituents would not forgive me if I were to allow this opportunity to pass. I must point out that in the northern isles, despite a raft of promises over the years, we are still to see the reduced fares promised by the road equivalent tariff.

Photo of Bill Grant Bill Grant Conservative, Ayr, Carrick and Cumnock

I fully accept the right hon. Gentleman’s intervention. I hope that those endeavours will bear fruit and be recognised. I think that the NorthLink Ferries services do not attract the same support.

We also host the world’s last seagoing paddle steamer, the Waverley, based in Glasgow. She is a wonderful way to do what we say in Scotland is a trip “Doon the Watter” that takes people to various islands such as Arran and Cumbrae, which I am sure we will hear about later. It is a great opportunity to see the wonderful west coast. She also plies her trade off season down here in the Thames.

Photo of Bob Seely Bob Seely Conservative, Isle of Wight

She has also spent much of her time on the Isle of Wight, where she was very welcome.

Photo of Bill Grant Bill Grant Conservative, Ayr, Carrick and Cumnock

I thank my hon. Friend for bringing that to my attention. I am sorry for missing out the Isle of Wight. The Waverley is a wonderful asset to the nation and is the world’s last seagoing paddle steamer, supported by a charity and the nation.

Though uninhabited, Ailsa Craig is an island that sits off my constituency in the Firth of Clyde and plays host as a bird sanctuary to gulls, guillemots and puffins. Most importantly, it provides the granite for the best curling stones in the world, hand-crafted by Kays of Mauchline in Ayrshire. When we see curling on television, the curling stone almost certainly originated from the island of Ailsa Craig.

It is important to note in this debate that island communities in Scotland and across the United Kingdom are diverse. No two islands are the same, and although they often face a similar set of economic challenges, they each have their own unique circumstances: for example, population. Scotland has four islands with populations above the 10,000 mark, and those islands’ economies have different needs from the many Scottish islands with populations below 100. In the case of many of those smaller communities, probably the most pressing economic issue requires acting to prevent depopulation and working to secure the long-term future of those communities. Retaining young people on the islands to give them continued vibrancy is important.

The population of Scotland’s islands increased by about 4% between 2001 and 2011. That is a welcome development that I hope will continue and even accelerate over the coming decades. In many cases it is very challenging to sustain island populations. Although Scotland’s four largest islands recorded an increase in that period, it is sad to note that communities of fewer than 50 inhabitants still experience, in general terms, the risk of a drop-off in population numbers. When we talk about the economies of the islands, therefore, we must be sure to include all the islands and not just the larger and identifiable ones such as the Isle of Wight.

Scotland’s small island communities are some of the most unique and beautiful places in the entire United Kingdom, and it is important that their future is secured as well as possible. Scottish islands of all sizes have great economic potential, and both the Scottish and UK Governments need to work together to ensure that that potential is fulfilled. The right level of investment and support, as mentioned earlier, is needed across the islands, but particularly in areas such as transport, fuel costs and maintaining the vital links that give islanders access to the basic services that people on the mainland simply take for granted.

Connectivity is vital for Scotland’s remote islands. For island communities as well as other rural and remote areas, broadband is necessary to ensure that the communities’ economies do not get left behind. I hope that the UK Government’s welcome intervention in the broadband roll-out in Scotland will deliver results sooner rather than later.

As was mentioned before, 4G and 5G connectivity are vital to local economies across the United Kingdom, and island communities are no different. If our islands keep pace in terms of mobile connectivity, they have a better chance of keeping pace economically, which is essential for a vibrant future for the islands. The Islands (Scotland) Bill, which is currently going through the Scottish Parliament, will be judged on the outcomes it produces, and I hope that islanders will not be disappointed. Our islands, of all sizes, can and should have a bright future ahead of them.

Finally, if anyone is minded to secure a tranquil, peaceful holiday, they would do well to visit a Scottish island.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs) 10:16 am, 9th May 2018

I am very happy to speak in this debate today, and I sincerely thank Alan Mak for securing it. I also thank him for the celebratory tone with which he introduced the debate on our beautiful islands right across the United Kingdom and for recognising the unique challenges that our islands face, despite the many attractions that they offer both residents and visitors. Our islands are indeed beautiful, but, as we have heard today, they can be quite fragile, too, and deserve special and separate consideration, so I am delighted to contribute today as I have the honour of representing the beautiful islands of Cumbrae and Arran.

Our islands not only face unique challenges, but share common challenges. I want to say a few words about the comments made so far. The hon. Member for Havant painted a beautiful picture of the island of Hayling, which he has made me think about visiting because he painted such an idyllic picture of it. We have also heard about the beautiful islands of Orkney and Shetland and the Isle of Wight. We had a round-up from Bill Grant. I took a photograph surreptitiously as he paid tribute to the Scottish Government. Although the photograph will not have sound on it, it will be a moment captured in time as he went out of his way to pay tribute to the Scottish Government.

I represent the isle of Cumbrae, whose main population centre is the town of Millport. There are few people who grow up in the west of Scotland who do not have a childhood memory of cycling round Millport and this lovely island just off the seaside town of Largs, which I also have the privilege of representing. Cumbrae is a mere hop, skip and a jump from Largs. It offers the beauty and tranquillity of island life while being extremely accessible and a short ferry ride away. In the height of summer there are 40 sailings each way per day to the Isle of Cumbrae. People flock there not only for the beautiful scenery, but to visit the £4.2 million education facility, the Field Studies Council, which was built in partnership with the Scottish Government and has attracted visitors and scholars from across Europe, if not the world.

The Isle of Arran is a little more remote and offers towering mountains and luscious rolling landscape that can, in the right light, simply take your breath away. I mention such things not only for the sake of it, because it is such a nice thing to discuss, but because both islands enjoy a huge influx of visitors, especially, although not only, in the high season.

The hon. Member for Ayr, Carrick and Cumnock mentioned the road equivalent tariff, whereby ferry fares are set on the basis of the cost of travelling an equivalent distance by road, including a fixed element to keep fares sustainable and to cover fixed costs such as infrastructure. RET was introduced to the island of Arran in October 2014. I hope that my setting out the benefits of RET will help the Minister as he deliberates about how to stimulate island economies and help them to grow.

Mr Carmichael expressed some disappointment that Orkney and Shetland appear not to benefit from those advantages. He will be aware that the Minister for Transport in Scotland announced that RET would be rolled out to Orkney and Shetland in the first half of 2018. That announcement was very much welcomed by his colleagues Tavish Scott and Liam McArthur. I am sure that the right hon. Gentleman will also, when he has time to reflect, wish to welcome the announcement.

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Northern Ireland)

I am on the record as welcoming the good intentions; I am just frustrated that, almost 11 years since the same opportunities were given to communities in the Western Isles, we still have not seen a single penny piece in the Northern Isles. Surely, the hon. Lady understands why our communities are so frustrated by the decisions taken by her Government in Edinburgh.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs)

As I said, I understand the right hon. Gentleman’s frustration, because we all want to fight for our constituents and secure for them whatever advantages we can as soon as possible. He will also remember that I said that the Isle of Arran got RET in 2014. From what he said, that was a considerable distance behind the first roll-out. The fact is that the roll-out is a process and a programme. Obviously, the islands that are not at the front of the queue will be frustrated and impatient, as they should be. The fact is that RET—as I suppose his frustration suggests—is a huge benefit to island communities, and any island would be mad not to want to secure those advantages as soon as could be arranged.

The object of road equivalent tariff is to increase demand for ferry services by making ferry travel much more affordable and more accessible, to increase tourism and to enhance the local and wider national economy. That is why the right hon. Member for Orkney and Shetland, the hon. Member for Ayr, Carrick and Cumnock and I are so excited about it. In order to be as helpful to the Minister as I can—I always try to be helpful to my colleagues—I intend to paint a brief picture to show him the positive impact that road equivalent tariff can have, in case it is something that he wants to consider rolling out in the rest of the UK. It helps to offset some, though not all, of the challenges that are faced by island communities, which we have heard a wee bit about today.

In the case of Arran routes, such as the Brodick to Ardrossan route and the route between Claonaig and Lochranza, stimulation of the economy has certainly been achieved. Arran’s economy—if you can believe this, Mr Rosindell—has grown by 10%, which is a faster rate of growth even than China. That is something to prize, and it can perhaps be best explained by the price of the Ardrossan to Brodick route tumbling by a massive 46% for foot passengers, with a 64% reduction for cars being transported on that route. That comes at a cost of a mere £2.4 million a year to the Scottish Government.

I will set out the advantages that RET has brought in practical terms to the island. Analysis carried out by Transport Scotland has concluded that RET has significantly increased resident ferry travel across all journey purposes, and increased the demand for ferry services. In addition, the number of tourists has increased substantially, with the season extended from Easter and peak summer to the equivalent of the whole summer timetable. RET has enhanced the island-hopping tourist market with neighbouring islands. The Scottish Government are investing £1.8 million a year to support RET for the route between Cumbrae and Bute.

We know that job markets on islands can be challenging and fragile—we have heard a bit about that today. For Arran businesses, the impact of RET has been extremely positive, with increases cited in footfall and turnover. The tourism sector has accrued the greatest benefits, with hotels, guest houses, campsites, golf courses and visitor attractions all highlighting the positive impact of RET.

Interestingly, RET has been particularly beneficial to the more remote areas of the island of Arran, particularly on the west coast. That is surely down to the increased numbers of visitors availing themselves of the opportunity to bring their cars on to the island at a much reduced cost, and exploring the farther reaches of the island, beyond Brodick and Lamlash. It is heartening to see a new £10 million distillery on Arran, and major expansion of the Auchrannie hotel and spa, which will enhance any visitor experience. RET has also allowed those who live outwith the island to take up jobs that have been challenging to fill, as students or seasonal workers can sometimes fill them. There is even a scarcity of staff to fill the increasing demand for workers in the hospitality industry, demonstrating the success of RET for the island.

Of course, there is no denying that RET has posed challenges for some businesses in the retail sector, because they are becoming increasingly exposed to competition with the mainland. However, studies show that the overwhelming consensus is that there has been a very positive impact on the island in terms of social, cultural and economic opportunities.

We know that connectivity is key, and that is very true of broadband connectivity for our islands. The Arran Economic Group reported last year that, based on cabinet installations, more than 90% of households and businesses now have access to superfast broadband, with take-up on Arran and Cumbrae at around 41%. There have been particular issues with the area of Machrie on Arran, but progress is being made.

We have heard some remarks about connectivity, regarding broadband and mobile phone signals. It is true that that is an issue, but as I always say to constituents when they raise such matters with me, the connectivity of broadband and mobile signal on this very estate sometimes compares to some of the difficulties that people have on the island of Arran and other outlying areas in our coastal communities. The broadband and mobile phone signal on this estate is sometimes, as you will be aware, Mr Rosindell, absolutely shocking. The fact that we have that problem in the middle of London, in the middle of the parliamentary estate, shows the scale of the challenges that our island communities face.

Arran also suffers from the lack of affordable housing. That is a challenge for future economic growth on the island, since it has an impact on the working-age population. One barrier is that 22% of homes on Arran are second homes, with a further 59 empty homes identified. We need to find ways of offsetting those issues, alongside plans to build new affordable homes on Arran. The Scottish Government have helped to fund 96 new homes in partnership working. That is a start, but clearly there is much more work to be done. The Scottish Government are investing £2.2 million on Cumbrae for amenity housing, but there is no room for complacency. Affordable housing remains a big challenge.

We know that there are pressures on Scotland’s budget. I was quite bewildered by the comments made by Mr Seely. He is standing up for his constituents, which is exactly what he is supposed to do, but I flinched when he called the Barnett formula “generous”, given that Scotland’s resource budget was cut by £211 million this year and will be cut by £538 million next year. I am sure that he wants more resources for the Isle of Wight, but I do not think that describing the Barnett formula as generous is the way to do that.

Photo of Bob Seely Bob Seely Conservative, Isle of Wight

Will the hon. Lady admit that Scottish islands get two things that the Isle of Wight does not: the Barnett formula—whether or not she describes it as generous—and the Scottish islands needs allowance? They are twice as generously funded as the Isle of Wight.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs)

The islands do not benefit from the Barnett formula; Scotland is allocated funding through the Barnett formula. I cannot describe it as generous. I do not believe for one minute that the hon. Gentleman is wrong to fight for his constituents, but comparing their funding unfavourably with any funding formula for Scotland is the wrong way to go. One thing that the islands in Scotland benefit from that the Isle of Wight perhaps does not is the priority that the Government give them. That might be a way forward.

There are clear challenges. Our island communities matter to us, as of course they should. As the hon. Member for Ayr, Carrick and Cumnock mentioned, the SNP Government in Scotland has brought forward the Islands (Scotland) Bill, which seeks to build better national and local economic frameworks for island development and their unique needs. It seeks to ensure that any legislation that is passed will be “island-proofed” to make sure that islands are taken into consideration and not forgotten about. That will help our island communities to become more sustainable and vibrant as they face the future—something that we all wish to see. I hope the Minister will reflect on the benefits of RET and will investigate the provisions of the Islands (Scotland) Bill, and perhaps use that as a way of improving the lives, experiences and economies of the islands across the UK.

I end by urging all Members who are here today—and those who are not, but who have the good fortune to listen to the debate—to pay a visit to the beautiful islands of Cumbrae and Arran, where they will find the scenery breathtaking and the communities warm and welcoming. Like so many previous visitors, they will find that they wish to return again and again.

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury 10:30 am, 9th May 2018

It is a privilege to serve under your stewardship, Mr Rosindell. I congratulate Alan Mak on securing this debate and bringing the issue to the House to chew over—it is very important. The contributions from Mr Seely, Mr Carmichael and Bill Grant indicate the complexity, diversity and multifaceted aspects that this issue throws up. It must be seen in the context of the type of islands that we have in this country—from the Isle of Wight, with its 140,000-odd population, right through to some of the inhabited Scottish islands, which have perhaps five or six inhabitants. It is not quite as simple as saying that an island is an island is an island.

There is also the diversity of economic activities on our islands. The hon. Member for Ayr, Carrick and Cumnock talked about windsurfing, and I also got the impression that he has tasted whisky. I look forward to hearing his experiences of windsurfing—if not seeing the photographs—next time we debate.

As the hon. Member for Havant mentioned, one of the greatest problems faced by the economies of UK islands is poor infrastructure. The rising cost of transport for people who live on UK islands clearly has a knock-on effect on jobs, suppliers and the population, as many young adults are choosing to leave their island homes in favour of finding work in the rest of the country.

Another challenge is the higher levels of unemployment; the unemployment rate on many islands is well above the national average. The Isle of Sheppey’s unemployment rate stands at 2.6%, while those on the Scottish islands of Arran and Bute are 3.8% and 4.1% respectively. As has been discussed, many islands are tourist destinations, which means that a large amount of the work is seasonal. In the past, that might have been less of a challenge, but with weather becoming increasingly unpredictable due to global warming, it is much harder for those economies to plan and scale. It is not necessarily a major factor at this point, but it is a factor. In relation to the grouse—I mean gross, though grouse is very appropriate for Scotland—the gross household disposable income on UK islands is lower for workers in the Orkney Islands, the Isle of Wight, the Western Isles and Anglesey than for those in much of the rest of the United Kingdom.

Given the increasingly technological nature of advanced economies, the hon. Members for Isle of Wight and for North Ayrshire and Arran (Patricia Gibson) have quite rightly pointed out the vast differences in broadband connectivity and speeds between parts of the UK and the islands. That has a huge impact on island economies, particularly on the number of small businesses that operate remotely. Naturally, many UK island economies suffer from having less resources, which hon. Members have mentioned, and have a heavy reliance on a limited number of supply chains, which leads to the UK’s island populations paying more for goods and services. When combined with lower-than-average incomes, higher costs of household essentials are a key factor in driving poverty levels.

All those issues have been outlined with clarity by Members from across the House. We have had the analysis of the symptoms, but I am not sure we have had the practical things we can all do to help those communities—I hope the Minister will address that. It falls on me, as Opposition spokesperson, to refer to the elephant in the room: eight years of austerity. Many areas have suffered disproportionately from that because of the lack of investment in those communities, where they have struggled.

Let me take a couple of examples. I understand that Canvey Island has an independence party, with eight or nine councillors. I am not quite sure whether they are going to get to a referendum—but perhaps we should not go there, or talk about customs unions or single markets, as I am sure we have enough trouble with that at the moment. Canvey Island sits in the borough of Castle Point in Essex, a local authority that has seen nearly £1 million of Government grant disappear. Reports now suggest that Castle Point will be running a million-pound deficit in three years’ time.

Perhaps we should turn to Hayling Island, which the hon. Member for Havant mentioned and knows well, as it is in his constituency and covered by Havant Borough Council. A couple of months ago, his local paper, the Portsmouth News, reported that the local authority had been forced to increase council tax by the maximum of 3%. The local population will have to pay that—a population that, as the hon. Gentleman said, are already stressing and straining. Why might a Conservative council feel the need to increase taxes on the good people of Havant and the island of Hayling? It faces a £1.2 million reduction in central Government support as a direct result of the Government’s policies. There is no way to duck that particular issue. The council leader, when describing the measures being taken to try to rescue some services said,

“We didn’t want to go down this route but we had no option”.

The council faces a significant reduction in central Government funding through the revenue support grant, which in 2016-17 was £1.4 million, is now £290,000 and from 2019-20 will be zero. That is a factor in the issues that the hon. Gentleman raised.

These are not isolated examples. If we consider any of the local authorities of the islands mentioned in this debate, the story is the same—deep and pernicious cuts that threaten the very existence of some of them.

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Northern Ireland)

Of course reductions in public expenditure are difficult for island communities, as they are everywhere. The real difficulty that they face is not just the amount of money that they have to spend, but the fact that so much of it comes with strings attached and local authorities are given so little discretion over how to spend the money that they have. What island communities need more than anything else is the ability to make decisions for themselves.

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury

I agree with the right hon. Gentleman, and his point feeds into the whole question of devolution within nations. Whether we like it or not, there is centralisation down here in Whitehall and Westminster. That is not a criticism, as it happens in all parties. In the past, I have called it—forgive the phrase, Mr Rosindell—the anal retention down here. It is not particularly helpful or productive. Local communities know their areas best and it is best for communities to get on and use their discretion, within as wide a parameter as possible, to provide services in their areas. They tend to know best.

Given how these local economies are often heavily reliant upon the public sector, following major structural changes to the economy of the last four decades, it is little surprise that some communities are under stress. The hon. Member for Havant referred to commercial practicalities. Sometimes, they will close down banks, pubs and other services. Do we permit that to happen, or do we do something to ameliorate it? It is sometimes the Government’s job to help and to intervene—not to direct or do too much, but to go in and help communities where such services are the lifeblood. In 10 or 15 years’ time, we will all be concerned that such services have de facto closed down, and we will ask what we could have done to support them.

Some islands are getting increasingly desperate about the way things are. All joking aside, some people on Canvey Island want independence because they do not feel they are getting the deal they should be getting. That underlines the point that the right hon. Member for Orkney and Shetland made about devolution and about local communities being able to run themselves where possible.

It is important that the Government begin to invest in the UK island economies and engage with their populations. Whether that means the Isle of Wight or a small island off the Scottish coast, that has to happen. It could mean investing to stimulate employment opportunities on UK islands, as the increasingly unpredictable cycle of seasonal work is clearly not enough to sustain island economies. Anglesey and Orkney have demonstrated that investment in renewable energy can deliver sustainable jobs and put the UK on the path to energy security, as the right hon. Gentleman said. The Government have to stop being blinkered; they must look at these issues and at how they can work with communities.

The Opposition have some transformative proposals, such as our plan for a coastal communities fund—a policy we have been consulting on since the election, and which we will begin to outline in due course. I believe it will address some of the issues that the hon. Member for Havant raised, deliver investment in a number of UK island economies and hopefully bring them back from the brink. In our grey book, “Funding Britain’s Future”, we set out an immediate increase in local government funding while we review council tax and business rates. That in itself will not prevent some communities from going over the edge, but we have to send them the message that we are here to help and support them, and that we will do everything we can to ensure they continue so that we maintain the diversity of our country. I am sure the hon. Gentleman will welcome that injection of investment into his community.

We need a radical rethink to help communities that feel under pressure, left behind and under threat. Tinkering at the edges is not good enough, and will not help island communities, in their diversity, to succeed.

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary 10:43 am, 9th May 2018

It is appropriate that you are in the Chair, Mr Rosindell, as you are Parliament’s greatest champion of a different type of island: our overseas territories and Crown dependencies.

I thank my hon. Friend Alan Mak for raising this important issue and for enabling a range of Members from across the House, representing all parts of the United Kingdom, to participate and give a complete tour of the British Isles. One thing we have learned today is that, although the British Isles are a great archipelago of more than 6,000 large and small islands and isles, relatively few of our constituents live on them, and we are perhaps less appreciative of them than we should be. Perhaps more than at any other point in our history, we are disconnected from our coast and our coastal communities. The Government are keen to change that and to ensure coastal communities and islands are properly represented. Today’s debate is an important part of that.

We want to raise productivity, living standards and economic growth in all parts of the United Kingdom, and of course islands and island communities are an essential part of that. Members representing the Isle of Wight, Hayling Island, Orkney and Shetland, Cumbrae, Arran and others have told the stories of their communities, many of which have been very positive. An important part of what we have heard today is that, although living on an island can cause problems, to which the Government, at a national or a local level, must respond, there are also opportunities for economic growth. Wonderful benefits can come from living in communities that are close and, as Mr Carmichael said, can be very outward-facing to the rest of the world.

We appreciate that the barriers to growth can include a lack of opportunity—which can be a barrier to social mobility—poor connectivity and relatively high costs for transport, public service delivery and goods in the private sector. Although living on an island has many benefits and wonderful opportunities, which anyone who has grown up on one no doubt always lives with, the mainland can exert a strong gravitational pull, particularly to the young, and can at times lead to a drain of talent and youth. However, we have heard today about a number of islands whose populations are rising, which is very positive indeed.

Many of the barriers that island communities face are obviously a natural consequence of their geography and are common to all. Crudely, there are three types of island within the British Isles. The Isle of Wight is unique, in that it has a very large population—more than 130,000 people—and no bridge linking it with the mainland. I will turn to its specific demands in a moment.

The islands in the second category are mostly in Scotland, but there are a few off England, such as the Isles of Scilly. The populations of those islands, such as those represented by the right hon. Member for Orkney and Shetland, can still be substantial. They have no bridge to the mainland, and their remoteness poses particular problems, which require solutions, although they have smaller populations than the Isle of Wight.

Third are the islands, such as Hayling Island, that are connected to the mainland by roads. I do not want to diminish the challenges and issues they face, but they have commonalities with rural areas of the United Kingdom that have issues relating to remoteness. They are, to an extent, different from the islands that are separated from the mainland and do not have road links. I will address each of the three types. I apologise that this is a crude way of dissecting the issue, but it is at least a lens through which to look at it.

My hon. Friend Mr Seely talked about the challenges and the opportunities of the Isle of Wight, which has a substantial population and no road connection to the mainland. The Government must think carefully about how we can assist it in delivering public services and ensuring its economy continues to grow. With the exception of the Isles of Scilly, it is unique—in England, at least—and we need to think about that when preparing new formulas for schools, local government, policing and other matters. I want to consider that with my hon. Friend in the future. I will talk about some of those issues in the time available to me.

A common thread for the Isle of Wight and all the other islands we have discussed today is digital. Although they are somewhat—at times, very—remote, the opportunities presented by the new economy are huge. They can help us break down some of the barriers and enable those islands to be highly connected to the rest of the world. We heard about new broadband opportunities in Newport, and I am sure there are other examples elsewhere in the British Isles.

We are focused on improving digital infrastructure on the Isle of Wight, in particular. It is clearly a critical part of life today. The Government are investing some £1 billion to ensure our digital infrastructure is fit for the future. I believe that the Isle of Wight was one of the first areas to benefit from the £400 million digital infrastructure investment fund. That was when investors Infracapital channelled some of the allocation into WightFibre to help to roll out full-fibre broadband to more than 50,000 homes, to some of which my hon. Friend the Member for Isle of Wight might have referred in his speech. Alongside that, Infracapital will invest £35 million of its own money to fund the expansion of the company’s infrastructure across the Isle of Wight. That is very positive and shows what we can do working together—although of course there is more work to be done.

On transport, roads are another vital part of the Isle of Wight’s infrastructure. From 2013 the Government will provide up to £477 million to Isle of Wight Council for a highways maintenance project through a private finance initiative that is under way. That will allow the council to carry out vital improvements and maintenance to local roads over a 25-year period.

We also recognise that transport to our islands must be adequate. That was not really touched on in my hon. Friend’s remarks, but having spoken to his predecessor in the past I know of concerns about the Isle of Wight ferry. Such concerns are no doubt common in other islands served by a single ferry company. The Competition and Markets Authority is aware of those concerns, which I expressed in my first meeting with the new CMA chief executive, Andrea Coscelli. The CMA is independent and the decision to take forward any investigation is its alone—the Government have no levers to direct the CMA as to which investigations it should choose, but I have raised the matter with him and know he is fully aware of it.

Photo of Bob Seely Bob Seely Conservative, Isle of Wight

I did not mention the ferries in my speech because I wanted to talk more broadly about the economy, but the relevant authorities are well aware that I would be keen to call for another investigation. However, I am not doing so at the moment because the new transport board on the Island is trying to work constructively with our ferry companies. I want to give that a chance to work first—for Wightlink, Red Funnel and Hovertravel to work together more closely and to be more supportive of the Island, driving our economy and being part of the solution, rather than part of the problem. That is why nothing is happening at the moment, but there is that option.

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary

I thank my hon. Friend for his constructive approach. I suggest that he engage with the CMA if he wishes to take anything forward.

Schools do not fall directly within my remit at the Treasury, but in advance of the debate I reviewed the performance of Isle of Wight schools. I appreciate that in some cases there are some long-standing difficulties. The new national funding formula will help to address that challenge. Under the new formula, the Isle of Wight stands to gain up to 3.2% for its schools, which represents an increase of £2.2 million, or £140 per pupil. Clearly the new formula’s interest in sparsity of population will help in some island cases, but not in all because some islands are relatively densely populated. In certain parts of the Isle of Wight, however, that sparsity provision will help—I believe two primary schools will be eligible for funding in that respect. Certainly the specific challenges of the Isle of Wight need to be considered in future funding formulations.

I shall turn briefly to the comments of the right hon. Member for Orkney and Shetland and to those islands that fall into the category of remote, or very remote, and without any of the direct transport links of a road bridge. Clearly, such islands require careful consideration by central Government. We shall work as constructively as possible with the Scottish Government in areas where we can collaborate. When the right hon. Gentleman was in Government, he created the 2014 island framework to encourage the UK Government to work closely with the islands around Scotland. We would like to see such initiatives continue.

The Government also recognise the issues with broadband, and we want to do what we can to assist in Scotland. For example, more than £50 million of the superfast broadband programme went to the Scottish highlands and islands to provide access to download speeds of at least 24 megabits per second. Recently, we announced the winners of phase 1 of the £25 million 5G testbed competition. That includes £4.3 million for the 5G RuralFirst testbed, which will be based primarily in the Orkney Islands.

As far as possible, we continue to support North sea oil and gas through continued Treasury investment, and a strong and stable fiscal framework for the oil and gas industry, most recently with the announcement of the transferable tax history, which has been widely welcomed by the industry. I take on board the comments of the right hon. Gentleman with respect to renewables and the essential role that they play, and will continue to play, in the future of islands such as the Orkneys and Shetlands. I shall take away his suggestion about wave and tidal funding.

Finally, on islands connected to the mainland by road, the most prominent one we heard about today was Hayling Island, which sounded like a wonderful place. I would love to visit the bookshop or the ferry and, on a day like today, we would all like to be on an island such as Hayling. Many of the issues raised by my hon. Friend the Member for Havant are common in other rural areas elsewhere in the United Kingdom, and we are concerned about them. We are, for example, making further investment in roads. We have launched the large local majors programme, which is potentially transformative for market towns and smaller communities that require significant road investment projects. I encourage my hon. Friend to take that up with the Department for Transport, if applicable.

We are also aware of bank closures, which have been widely debated in the House and are common to a number of communities throughout the United Kingdom, although I appreciate that in islands the effect can be greater than elsewhere. The schools funding formula will help many island communities, as it will in my hon. Friend’s constituency, and we would like to see that taken forward. Since 2012 the coastal communities fund has invested £174 million in projects focused on economic development, growing and regenerating coastal areas. The Isles of Scilly have benefited from the fund, as did the Hayling coastal community team in 2015, from £10,000. Funding round 5 is now open, with £40 million available to spend from April 2019 until the end of March 2021.

Photo of Robert Jenrick Robert Jenrick The Exchequer Secretary

In a moment if possible, but I am conscious of time.

I encourage all Members present to take advantage of that fund, where applicable, feeding into it and putting in their applications as soon as possible. From the Treasury’s perspective, I shall continue to work with my colleagues at the Ministry of Housing, Communities and Local Government as we proceed to consider what the next stage of the fund will be. I shall ensure that the comments about islands we have heard today are fed into that process. I would like to work with my hon. Friends the Members for Isle of Wight and for Havant to ensure that the next iteration of the fund takes on those views and works for coastal communities.

I thank all colleagues who have attended the debate to discuss these matters. We are very committed to taking this agenda forward and to ensuring that island communities have the funding and support they require to have vibrant communities and economies. Over the course of the year, whether in making decisions about applications to the coastal communities fund or in shaping the UK shared prosperity fund—that is an important discussion to be had in Parliament over the year to come, and I again encourage hon. Members representing coastal communities to take it seriously and engage in it—we shall continue, I hope, to display our commitment to the islands of the British Isles and their communities.

Photo of Alan Mak Alan Mak Conservative, Havant 10:58 am, 9th May 2018

We have had a very good and wide-ranging debate. I thank all right hon. and hon. Members for contributing. Mr Carmichael was right to highlight the opportunities and strengths of islands in addition to the challenges. In an excellent speech, my hon. Friend Mr Seely emphasised what special and unique places our islands are. My hon. Friend Bill Grant gave us an excellent perspective from Scotland, and I commend him for his service as a fire officer on Argyll and Bute.

I thank the Minister for his thoughtful response and his commitments, on behalf of the Government, to increase productivity and living standards on all the islands of the United Kingdom, including Hayling Island. I would very much welcome his visiting my constituency. I thank both Opposition spokespeople for their responses, Patricia Gibson in particular. She, too, is welcome on Hayling Island anytime. Thank you, Mr Rosindell, for chairing the debate.

To conclude, we are all islanders and must all work together to ensure that all the islands of the United Kingdom, whether large or small, have a bright economic future. I am glad that the House, through this debate, has committed to ensuring just that.

Question put and agreed to.

Resolved,

That this House
has considered the economies of the UK islands.

Photo of Andrew Rosindell Andrew Rosindell Conservative, Romford

Order. The sitting is suspended for three minutes to allow broadcasting to switch their feeds to facilitate simultaneous transmission.

Sitting suspended.