Draft Consumer Rights (Enforcement and Amendments) Order 2016
(7 years, 5 months ago)
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The Chair
I know that the Minister is unwell, so I will allow her, if she so wishes, to move the motion from a sedentary position.
The Parliamentary Under-Secretary of State for Health (Nicola Blackwood)
I beg to move,
That the Committee has considered the draft Consumer Rights (Enforcement and Amendments) Order 2016.
Thank you, Mr Davies. It is a pleasure to serve under your chairmanship, and I am very grateful for the Committee’s indulgence.
The Consumer Rights Act 2015, which came into force last year, simplifies UK consumer law, empowers consumers, improves consumer choice and drives competition. It provides clear rights for consumers when buying goods, services and digital content, and clear remedies so that consumers know what they are entitled to when things go wrong, and action can be taken where needed. It also provides enforcers such as trading standards offices with a set of updated powers to aid them in investigating potential breaches of law while ensuring that businesses have the relevant rights of appeal.
The order makes a number of small but essential amendments in relation to schedule 5 to the 2015 Act. It adds a number of pieces of legislation to the list in schedule 5 so that enforcers such as trading standards can access the updated investigatory powers in the schedule. The order will ensure that a comprehensive range of powers is available to enforce the Tobacco and Related Products Regulations 2016, which harmonise trading rules on how tobacco products are manufactured, produced and presented, and the Standardised Packaging of Tobacco Products Regulations 2015, which require cigarettes and roll-your-own tobacco to be packaged in a standard colour with a standard typeface.
The order also makes consequential amendments to two pieces of legislation to make them refer to the investigatory and enforcement powers contained in schedule 5. The legislation that the order affects is the London Local Authorities Act 2007, which tackles rogue traders by requiring mail-forwarding businesses in London to register with their local authority, and the Weights and Measures (Northern Ireland) Order 1981, which regulates the quantity of goods and measuring equipment used by traders.
The Government consider that the order provides for the application of the most modern suite of enforcement powers to those pieces of legislation. Importantly, it will allow trading standards offices to play their full part in enforcing new tobacco legislation introduced by the Government. In turn, it will continue to drive down smoking rates in this country. I therefore commend the order to the Committee.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
The order does not change anything that is already on the statute book; it just updates enforcement provisions, following the passing of the Consumer Rights Act 2015. We therefore welcome it and will not divide on it.
Enforcing the regulations and legislation relating to the sale, packaging and marketing of tobacco is incredibly important, especially as we are continuing down the road to becoming a smoke-free society. Currently, one in five adults smokes, and although the number has halved since 1974 we still have a long way to go before we can cheer and pat ourselves on the back for achieving that vision of a healthier society.
Over the years, important work has been done to reduce the prevalence of smoking in our society, including the ban on smoking in public places introduced by the previous Labour Government and some important measures introduced under the coalition Government, such as the standardised packaging of tobacco products, which the hon. Member for Battersea (Jane Ellison) spearheaded so valiantly. I know it is peculiar for a shadow Minister to be bipartisan, but the hon. Lady deserves credit for her work on this matter, especially on the previous tobacco control plan.
That brings me nicely to my last point. I cannot miss the opportunity to remind the Minister that we remain concerned that our work to reduce tobacco consumption in our society could stall if the new tobacco control plan is not introduced sooner, rather than later. I want to use this opportunity to ensure that it is at the forefront of the Minister’s mind—I am sure it is—and that she does not forget it over the Christmas break.
Nicola Blackwood
I thank the shadow Minister for her support and the spirit of bipartisanship in this festive season. The Government share her view that reducing variation in smoking, especially among vulnerable groups, is a top priority. That is exactly why we are working hard on the tobacco control plan to ensure that it is the best possible plan and that it delivers on its aims. I would be happy to update the House as soon as that is possible.
Consumers and businesses benefit from the Consumer Rights Act 2015 in all sectors. The Act was introduced to strengthen, simplify and modernise the law and to consolidate enforcement powers. It is right that the powers are applied to the specified legislation without further delay to provide legal certainty for enforcement authorities. Through that, we can see the benefits of the tobacco legislation that we have delivered and that has made us one of the leading countries in the world on tobacco enforcement. I commend the order to the Committee.
Question put and agreed to.
Draft Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2016
(7 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
I beg to move,
That the Committee has considered the draft Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2016.
The regulations will bring £3.6 billion of support to ratepayers in the 2017 revaluation, including help to 500,000 business owners with small properties. Taken together with the reforms to the small business rate relief introduced by the Chancellor, the 2017 revaluation will mean that nearly three quarters of businesses will see no change or a fall in their bills next year.
Business rates are the means by which businesses contribute to the cost of providing essential local services. They represent an increasingly important part of local council income, and by the end of this Parliament we will allow local government to keep 100% of all local business rates income. The design of this new finance system will shape the future of local government. Councils have been calling for a move away from dependence on central Government for decades.
However, as with all taxes, we must ensure that the business rate remains a fair, modern and fit-for-purpose tax. That is why we have reformed the business rate system. From April 2017, 600,000 small businesses will pay no business rates under the newly reformed small business rate relief system. A further 50,000 will benefit from up to 100% rate relief and another 250,000 smaller properties will pay rates based on the lower small business multiplier—a cut worth 2.5%. From next April we will reduce the small business multiplier from 48.4p in every pound of rateable value to 46.6p—the lowest multiplier since 2013—which will ensure that we do not raise any extra money from the revaluation.
For the largest businesses we are reducing the standard multiplier from 49.7p to 47.9p. From April 2020 taxes for all businesses paying rates will be cut through a switch in the annual indexation of business rates from the retail prices index to be consistent with the main measure of inflation, currently the consumer prices index. This represents a business rates cut every year from 2020, worth approximately £370 million in 2020-21 alone and growing significantly thereafter. Taken together, these reforms are worth £6.7 billion over the next five years. That is the biggest ever cut in business rates.
We are also modernising the tax to make it fit for the 21st century. We are ensuring that all businesses will be able to pay their business rates online and we are ending the overly complicated practice of local authorities issuing demands combining several years of bills. In future it will be simpler for businesses to understand and pay their bill.
Business rates are a property tax, so the amount that businesses are asked to pay depends on the value of their property. The rateable value of all properties is assessed independently by the Valuation Office Agency. Its assessment represents the annual rental value of the property; for most ratepayers it is based on actual rents paid by actual ratepayers. To ensure that rateable values are kept up to date, the Valuation Office Agency undertakes regular revaluations. The most recent revaluation takes effect from April 2017 and updates all rateable values based on the market at 1 April 2015. This has been a considerable exercise involving the valuation of more than 1.8 million properties, based on more than 300,000 rents collected and analysed by experienced chartered surveyors.
All valuations were published online on 30 September, giving ratepayers six months’ warning of their new assessments. An online rates calculator allows ratepayers to estimate their rates bill. We have funded local authorities to write to ratepayers alerting them to their revaluation and the online rates calculator. To date, 500,000 visits have been made on the website to check rates bills.
Overall, the revaluation does not raise any more or less in business rates. Indeed, nearly three quarters of businesses will see either no change or a fall in their bills next year, thanks to the business rates revaluation, with 600,000 businesses set to pay no business rates at all. The revaluation will reduce bills for all regions except London. Although many ratepayers in London will also see reductions, the results of the revaluation show that prime office and retail markets in inner London have seen rental values increase considerably over recent years, so it is right that they should pay more based on the accurate and updated values.
For the minority of businesses that face an increase, a £3.6 billion transitional relief scheme will ensure that no business is unfairly penalised. The regulations will implement that relief scheme for those ratepayers facing increases. London will benefit more from the transitional relief scheme than anywhere else in the country; in total, properties in London will benefit from transitional relief worth more than £1 billion during the scheme’s lifetime. More than 140,000 properties in London will benefit from transitional relief, of which more than 100,000 are small properties. We are providing the same transitional relief to small and medium-sized businesses as was provided at the previous revaluation in 2010, so the regulations will ensure that, before inflation, no small property will see an increase of more than 5% next year because of the revaluation.
The largest of businesses—those with a rateable value of more than £100,000—will face higher caps on increases as they are best placed to manage the impact of the revaluation. We listened to concerns raised during the consultation about the cap on increases for larger properties. In the final scheme, we have provided as much support to those properties as possible. We have reduced the cap on increases in year 1 for large properties from 45% to 42%, and in year 2 from 50% to 32%. That is the maximum change we can make while keeping the scheme revenue-neutral, which we are required to do by law.
The regulations have been finalised following consultation with ratepayers during the autumn, and the detailed regulations have been shared and discussed with experts in local government and the software companies that calculate bills. The transitional relief will be applied automatically to business rates bills for 1 April 2017. The regulations are just one part of a set of reforms that, from next April, will transform business rates. The revaluation will reduce bills for eight out of nine regions, supporting nearly three quarters of ratepayers. A £3.6 billion transitional relief scheme will support those facing increases, including £1 billion for London. Over the next five years, our wider reforms will deliver another £6.7 billion of help, proving that this Government are determined to help business and support growth.
Teresa Pearce (Erith and Thamesmead) (Lab)
It is a pleasure to serve under your chairmanship, Mr Owen.
The draft regulations set out the rules for the transitional relief scheme that will apply when the business rates revaluation comes into effect next year. Business rates are revalued roughly every five years. The most recent revaluation was carried out back in 2010, as has been mentioned, and it was based on values from 2008. Revaluations have a big impact on small businesses throughout the country. The transitional rate relief scheme is worth £3.4 billion, so it is only right that we properly review and scrutinise the proposals.
Business rates have been revalued for the first time in seven years. The new rate will come in at the beginning of April 2017. Although some businesses will get a rate cut as a result of the revaluation, others face rises. Some areas of the country will be affected more than others. The Institute for Fiscal Studies studied the latest business rates revaluation and found that there is a “growing divergence” in property prices throughout the country, and especially between the capital and the rest of the country. Because of the extortionate prices of property in the capital, London raises more from business rates, but businesses in London are often disproportionately affected. The revaluation will see the values in some parts of London jump by as much as 400%.
The Minister says that the revaluation is fair, but a whole host of organisations have come together to oppose the proposals. The Mayor of London, London Councils and 43 bodies representing retailers and businesses, such as the Federation of Small Businesses London and the New West End Company, have opposed the proposals. They have estimated that London businesses will have to pay £885 million more in total annually due to the revaluation. In fact, because of the proposals, they have called for a full review into the effectiveness of the business rates system. I heard what the Minister just said about how the regulations will benefit London and advantage, rather than disadvantage businesses. What literature and advice has gone out to businesses in London to ensure that they are aware of the situation?
Some industries are particularly badly affected. For instance, analysis from CVS shows that pubs across England and Wales will face a tax increase of £421 million in the five years after the revaluation. Some pub operators have estimated that they might need to increase prices by 30p a pint, and I am sure that none of us wants to see that. What advice has gone out to that industry to explain the transitional relief and the multiplier? The industry is scared about what will happen, but the Minister seemed to suggest that there will be a relief that operators can claim or automatically get.
A hike in business rates on the scale proposed by the Government could damage many businesses. That is why the transitional reliefs are so necessary. Local government has already severely suffered from brutal, devastating cuts to its funding. The Institute for Fiscal Studies has estimated that between 2010 and 2020, local government will have had its direct funding cut by 79%. Those cuts are often unfair, because they hit some of the councils with the greatest need the hardest. Nine of the 10 most deprived councils in England have had cuts higher than the national average.
On top of that, reforms to local government finance have increased reliance on council tax and business rates. Owing to the huge divergence in income-raising power from tax bases in different areas of the country, the measures could entrench regional inequality, which is having a drastic impact on local government services, including youth centres, museums and libraries. Many libraries have had to close and our social care system is teetering on the edge of crisis. Councils are having to prioritise efficiency savings over the health and happiness of their communities.
While the transitional relief scheme and the multiplier are an important system, they will not help to plug the enormous gap in local government finances. Although we do not oppose the statutory instrument, I would be grateful if the Minister could let the Committee know what thinking is going on regarding the long-term future of business rates. We see more and more that businesses exist in the digital economy, rather than on the high street, and if we are committed to funding local government—I am sure we all are—there needs to be a root-and-branch review of how that money is to be raised.
The Minister mentioned modernising business rates, but a tax on business properties in a digital age seems a bit 20th century. I would be grateful if he could let the Committee know whether there are any plans to bring the rates into the 21st century. It is fair to say that local government finance is complex, but it is vital, and I am more than happy to work with him to find a long-term, sustainable solution to the funding of local services that our constituents rely on. That problem has been ducked time and again, and I hope that he agrees that on our watch we must push to find a modern, long-term, sustainable solution.
Mr Jones
I will start my response to the hon. Lady by taking on the issue about London, which she spent an extensive amount of time raising. London is obviously an extremely important area in the context of the business rates revaluation. She did not mention it, but I am sure she would welcome the fact that there are eight regions—particularly parts of the midlands and the north of the country—that will see significant business rates reductions as a result of the revaluation.
With regard to London, while many ratepayers will see reductions, the results of the revaluation show that prime office and retail markets in inner London have seen significant rental value increases, as I mentioned in my opening comments. Those increases have been considerable over recent years. On that basis, it is right that they should pay more based on the accurate and updated valuations. As I have said, for those ratepayers facing increases, London will benefit more than anywhere else in the country from a transitional relief scheme. In total, properties in London will benefit from transitional relief worth over £1 billion during the life of the scheme. Over 140,000 properties in London will benefit from transitional relief, including 100,000 people running businesses that involve smaller properties.
The hon. Lady asked what information ratepayers have been given. Their local authorities have contacted them—we have paid and facilitated councils to do this—to tell them about the revaluation and, through that, ratepayers had an opportunity to go online and look at their business rates bill for 2017-18. We have given businesses a period of six months to adjust to those new bills.
The hon. Lady also mentioned pubs, which are an extremely important part of many of our communities, not just in London, but up and down the country. I am sure she will recognise that the sector is diverse. Many pubs have seen significant changes in what they offer customers since 2010—many now offer casual dining—and from that many have experienced significant turnover increases, which are reflected in rental and, therefore, rateable values for the revaluation. Many regions—and many properties in the pub sector—are also seeing business rates fall.
With regard to the approach to valuing pubs, which is unique, there is an approved guide for valuing pubs that relates to rents but also to fair maintainable trade. At the outset of the revaluation we consulted the five main bodies that represent the beer and pub sector, and the sector decided that the approved guide for the valuation of public houses should be continued following the 2017 revaluation.
The hon. Lady also mentioned local government finance. I can reassure her that we will make changes at the point of the 2017 business rates revaluation to ensure that councils are neither advantaged nor disadvantaged by that.
Question put and agreed to.
Emission Reductions and Low Carbon Investments
(7 years, 5 months ago)
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The Chair
I shall briefly outline the procedure for the Committee. First, a member of the European Scrutiny Committee may make a five-minute statement about that Committee’s decision to refer the documents for debate. The Minister will then make a statement of no more than 10 minutes. Questions to the Minister will follow. The total time available for the statement and the subsequent questions and answers is up to one hour. Once questions have ended, the Minister will move the motion on the Order Paper and debate will take place on that motion. We must conclude proceedings by 7 pm.
Does a member of the European Scrutiny Committee wish to make a brief explanatory statement?
Steve Double (St Austell and Newquay) (Con)
It is a pleasure to serve under your chairmanship, Mr Rosindell. It might help the Committee if I take a few minutes to explain the background to the document and the reasons why the European Scrutiny Committee recommended it for debate.
Since its introduction in 2005, the European Union emissions trading system has been a central component of EU and UK efforts to meet carbon reduction targets in a cost-effective and technologically neutral way, using tradeable permits that allow emissions of carbon dioxide. It was initially based primarily on allocation by member states, but the current phase, which covers 2013-20, introduced an EU-wide allowance system and an increased emphasis on auctioning allowances, rather than allocation.
Following the European Council’s agreement in October 2014 on a 2030 policy framework for climate change and energy, including a binding target to reduce EU greenhouse gas emissions by at least 40%, the European Commission advanced a proposal for a directive to give effect to that decision during phase IV of the ETS from 2021-30 and to make a number of other changes. Although the Government said that there were a number of detailed aspects that they wished to examine further, they had been pressing the Commission to produce proposals and therefore welcomed the document.
On 16 September, the European Scrutiny Committee took the view that the document was of some significance, given the importance of the ETS. It therefore had no hesitation in recommending it for debate in European Committee. Notwithstanding the outcome of the EU referendum on 23 June, it has since confirmed that view, on the grounds that the ETS is likely to impact the UK after 2020, irrespective of whether the UK is still an EU member state.
The EU’s 2030 policy framework involves separate reduction targets for sectors covered by the ETS and for the non-traded sector. Document 11483/16 seeks to deliver emissions reductions in the latter area by setting binding targets for 2030 for each member state. The Government see those proposals as likely to have a relatively limited additional policy impact on the UK, but since they complement the proposals for the EU ETS, the European Scrutiny Committee regards them as also relevant to the debate.
I look forward to hearing the Minister’s views on the issue and a lively debate.
The Chair
I remind the Committee that interventions are not allowed during the Minister’s opening statement.
The Minister for Climate Change and Industry (Mr Nick Hurd)
It is a pleasure to serve under your chairmanship, Mr Rosindell. I thank my hon. Friend the Member for St Austell and Newquay for a clear opening statement of intent on behalf of the European Scrutiny Committee. I, too, look forward to a lively debate on a very important subject.
I should start with something of an apology. Today the Department reviewed our processes for interacting with this Committee on this issue. I am not sure that we have demonstrated best practice in keeping the Committee up to date on the file. It has been complicated. When best to debate files is a difficult judgment call: too soon and there is not enough to discuss, as has certainly been the case on this issue—for long periods, absolutely nothing happened. On the other hand, sometimes things move quickly and the process may work against us, which is what we were arguing in this instance.
I am extremely happy to have this debate. As my hon. Friend the Member for St Austell and Newquay said, the emissions trading scheme matters for the UK. I argue that negotiating the reform of phase IV of the emissions trading scheme matters for us, our constituents and the businesses in our constituencies, whether or not we stay in the emissions trading scheme. That is the second point that I recognise in my hon. Friend’s opening remarks. We are clearly leaving the European Union, but we have not yet decided whether we will stay inside the EU emissions trading scheme or carve a different path.
The decision has not been taken—it is part of a wider set of issues and debates about disentangling ourselves from a complex web of agreements and relationships, and resetting our relationships—but we are clear in our mind that rolling up our sleeves and being a full, active participant in the negotiations is absolutely in our national interests.
If we stay in the EU emissions trading scheme, it is clearly in our interest to shape the rules of the mechanism, given its impact on our economy and the economic life of our partners and competitors. However, even if we decide to leave, it makes sense to take this opportunity to play whatever role we can in shaping the rules of an important mechanism—not least to ensure that our European partners and competitors play their full part in the global efforts on climate change. Given the impact for our competitors, it must make sense for the UK, which has arguably played more of a role than any other country in shaping the emissions trading scheme, to stay at the table.
We are in until we are out, and we are playing an active role in shaping this important mechanism so that it does what it was set up to do: be a technology-neutral, market-based platform to help European economies decarbonise at the lowest possible cost, particularly in relation to our power and heavy industrial sectors. That is what we set it up for. The debate matters, and this phase of reform matters whether or not we stay in the emissions trading scheme, which is why we are playing such an active role in the negotiations.
Finally, on our approach, I should say that we accept the case for reform. The emissions trading scheme has had some success in reducing emissions, and the mechanics, although complicated, broadly work, but there is a structural problem of imbalance in demand for and supply of allowance: in fact, there are an estimated 1.8 billion surplus allowances in the system. The concern that we share with many is that the overhang in the supply of allowances makes it hard to develop the stronger price signal needed to drive and incentivise the investments in low carbon technology that will be required if we are to have a solid chance of meeting our long-term carbon targets. I argue, representing a country that set a carbon price support due to concerns about the emissions trading scheme’s failure to deliver a strong price, that carbon price support has played an active role—possibly the key role—in ensuring that this country is moving off coal faster than any other.
Our reform focuses on four areas. The first is agreeing further action to take the surplus out of the system, keep the market liquid and deliver a more effective carbon price. The second is ensuring that industry sectors at risk of carbon leakage, where production moves abroad to an area with lower carbon prices, are adequately protected. The UK, along with France, continues to press for the allocation of free allowances to be targeted effectively to support those industries most at risk and avoid imposing unfair uniform reductions on all sectors.
The third area is reducing administrative burdens—there is still room to do that—by simplifying procedures where possible. Most notably, that should include increasing the scope for small operators to opt out of the main scheme. The final area is preserving the principle of fiscal sovereignty. The Commission’s proposals underline the importance of providing appropriate compensation to those industries affected by the indirect costs of EU ETS, but allow member states to choose how to do that, within state aid rules. Others have called for a more harmonised approach. For the UK, preserving our fiscal sovereignty in the final agreement will be of central importance and we continue to press that point.
Taken together, we believe these changes have the potential to put the ETS back on the path to effective delivery of the EU 2030 target, which in turn would contribute to the UK’s own domestic targets. I look forward to hearing the Committee’s perspective on those comments.
The Chair
We now have until 5.43 pm for questions to the Minister. May I remind Members that questions should be brief? It is open to a Member, subject to the discretion of the Chair, to ask related supplementary questions.
Dr Alan Whitehead (Southampton, Test) (Lab)
I note that the Minister has set out the UK’s position on phase IV of EU ETS in a document supplied for the Committee’s attention this afternoon. In that document, mention is made of the overhang of allowances that the Minister said will remain within EU ETS, but no mention is made of any Government position concerning what might be done about that overhang as we go into phase IV. Does the Minister any views on that and does he think there should be a Government position on it?
Mr Hurd
Yes, we do. What we have argued for is what is called a volume-based approach. This is our second crack at this issue. In the 2014 initiative, we were instrumental in setting up the market stability reserve, which is basically a mechanism for taking surplus allowances above a certain threshold out of the system.
What we suggest this time around, and it seems to be gathering some support, is that we should accelerate that process, in terms of both scale and time. As the hon. Gentleman will know from his deep experience of tracking the ETS, that is because the fundamental problem is a structural imbalance of demand and supply allowance. Our proposal is a volume-based approach, which is seeing whether can we accelerate the mechanisms for taking this surplus out of the system.
Dr Whitehead
I thank the Minister for that reply. However, the question of taking surpluses out can be done by means of the market stability reserve, which will be completely transported from phase III to phase IV, with all the surpluses, as things appear to stand at the moment. That means that, because the system is currently trading at about 200 million allowances below the capped level, there will be increased surpluses coming into phase IV, in addition to those in the market stability reserve and those carried over. The suggestion that might be put is that those should be forcibly retired in phase IV. Does the Minister have any views on that?
Mr Hurd
We are open to mechanisms and discussion about the how. The point that we are trying to make is that we need to accelerate the process of taking surplus allowances out. We think the MSR continues to be the right primary tool for doing that; the issue is the pace at which it is done. We are trying to gather support for doing that on a bigger scale at a faster pace.
Peter Grant (Glenrothes) (SNP)
I have questions on three different aspects of the Minister’s statement. With your permission, Chair, I will go through them all now, so the Minister can deal with them together.
First, the Minister has confirmed that no decision has been taken as yet as to whether the UK wants to be in or out of the emissions trading scheme after leaving the European Union. What are the implications for the UK’s future influence on the rules of the scheme if we decide to stay part of the scheme but not part of the European Union? We would not have a place on the Council of Ministers and so on when EU directives were being agreed.
Secondly, although—
Mr Hurd
I have explained the decision we have taken. As with many of the climate-related issues in relation to the EU—we have participated in negotiations about the burden-sharing regulation following the Paris agreement and this scheme—we have taken a view that while we are still a member of the European Union we will participate fully in these negotiations. Whatever we do in the future in terms of our ongoing relationship, these negotiations matter for our national interest. It is entirely right that we are at the table negotiating fully.
Our participation in these reform discussions has been welcomed, as far as I can see, by our European partners. There has been no resistance, and no suggestion at all that we are not in a position to influence the future. In fact, our participation is welcome—not least because most people recognise that we were one of the principal architects of the scheme and one of the thought leaders on how we can make the mechanism work in the future. Our participation is welcome, and our influence continues to be real.
Peter Grant
With respect, the Minister is describing what happens now, while the United Kingdom is still a full member of the European Union. Although the directive is intended to run until 2030, it will not be long before we have to start looking at updates, reviews and amendments; the next time the European Union looks at amendments to these regulations, it is likely that the United Kingdom will no longer be a member. Is there any process in place by which states that are not members of the European Union can have a say and, if necessary, a vote on any future revisions of the directive?
Mr Hurd
We are talking about negotiating the principal elements of the reform of the emissions trading scheme. As far as I can see—it is a fairly opaque process—that is due to be completed by the end of 2017. That is when the base of the agreement is likely to be reached, and work can then begin on underpinning the implementation. That is well within the Brexit timeframe. Our view, therefore, is that we should continue to be a very constructive, positive, inquisitive voice at the table to ensure that the next phase of the emissions trading scheme—I would argue that it is in one of the most critical phases in its history—is structured in the right way.
Dr Whitehead
Pursuant to whether we will be a member of the EU when the fourth phase comes into operation, the Minister of course knows that a number of non-EU members are already in the EU ETS. First, does he have a model in mind of what our relationship with the EU ETS might be, bearing in mind that there are already non-EU members in the EU ETS?
Secondly, does the Minister have any views on the recent announcement in the autumn statement that there is no definite commitment to extend our carbon floor price mechanism beyond 2020-21? As was said in the autumn statement, it is possible that the EU ETS level will coincide with our carbon price support in the middle of the next decade, which strongly implies a relationship, whether we are in the EU or not, between the EU ETS and our carbon price support mechanism.
Mr Hurd
The hon. Gentleman’s first question—he tempts me to allude to models that I might have in my mind—takes me into the territory of providing a running commentary, which would have career consequences that I am not prepared to contemplate. The point is fundamentally right: we are one of the principal architects of this system. It matters a lot, because at the moment the emissions trading scheme covers 50% of our emissions, and we have very serious long-term carbon targets, so getting it right and making it work more effectively is absolutely in our interests. We have an opportunity to do that by shaping these negotiations. Once we leave the European Union, there are options to think through. The hon. Gentleman is right that there are models whereby countries continue to participate in a scheme and influence the rules. However, we are categorically not at the point where we have got a clear view on that. We have to look at it in the round and think through what is in the national interest.
On the hon. Gentleman’s second point, he is entirely right to recognise the structural failure—if that is not too harsh a criticism—of the emissions trading scheme in setting a price for carbon that drives behaviour. We are now talking about €4 a tonne, and I do not think anyone is arguing that that is as powerful a driver of behaviour as we would like. This country took a unilateral decision to implement the carbon price support mechanism. In that context the carbon price signal and the emissions trading scheme matter a great deal to us because ultimately the objective should be to ensure the level playing field across Europe we want so that our industry remains super-competitive. That in large part underpins his point. The point I am trying to make is about why it is in our interests to ensure that the reform of phase IV of the emissions trading scheme is sufficiently ambitious in terms of taking out surplus allowances to give the opportunity to narrow the divergence between the carbon price in the UK and that across the EU.
Peter Grant
With reference to the 1.8 billion surplus allowances to which the Minister referred, simplistic economics theory of supply and demand suggests that supply is far too high and that we should cut it and reduce the overall emissions target for the whole of the EU. Is the fact that so many allowances are going spare an indication that the EU could be more ambitious in the targets it sets for others to reduce carbon emissions more quickly than we were doing previously?
Mr Hurd
That is a good question; let me break that down. On ambition, because we are talking about a cap and trade scheme, there is a debate about whether the level of ambition should be accelerated. The Council’s suggestion is that the current reduction of 1.7% a year should be escalated to 2.2%. There is a discussion about whether there should be more ambition, but I do not detect any real political traction behind that and therefore the focus of our energy—apart from on preserving fiscal sovereignty, pursuing simplicity and the other things I mentioned—is on gathering a coalition of the ambitious in terms of accelerating the withdrawal of surplus allowances from the system.
Peter Grant
My final question, I promise. As I look at the exchange of correspondence the Minister and his predecessor have had with the Chair of the European Scrutiny Committee, I note that his predecessor wrote on 23 November 2015, in agreeing to the request for the debate, that it would be better held in six or 12 months’ time once the shape of the new directive had become clearer. Almost exactly 12 months to the day, the Minister wrote to the Scrutiny Committee asking for scrutiny to be lifted because there was not time to hold a debate in the four weeks that remained before the Council decision. Can he see why that kind of behaviour causes members of the Scrutiny Committee and others to wonder how committed various Departments are to holding themselves properly to account and to parliamentary scrutiny? Will he explain why on 21 November neither he nor presumably his colleagues who set House business thought it would be possible to timetable a two or three-hour debate in the four weeks between then and the intended Council decision?
Mr Hurd
I opened with, in my experience, uncharacteristic candour on behalf of the Government in saying that I do not think our Department demonstrated best practice in that way. It is quite hard. We are having the debate 12 months after my right hon. Friend the Member for South Northamptonshire (Andrea Leadsom) made it quite clear that we were open to that. The situation has moved very slowly from one where there was frankly nothing to debate to one where under the Slovakian presidency everything was turbo-charged and moving fast. Our first instinct—I think a natural one—was to say that with things moving so fast perhaps we did not have time, but on reflection I am extremely glad we are having the debate.
I emphasise that I and the Department are aware of the importance of proper procedure, in terms of scrutiny clearance, not least in the present context. I have been candid about putting our hands up to say I am not sure we have demonstrated best practice; but we certainly intend to do so.
Jake Berry (Rossendale and Darwen) (Con)
What changes will the Minister seek with respect to the existing binary system for classifying carbon leakage as the negotiations proceed?
Mr Hurd
We have received many representations on that point, because it is highly emotive for a number of sectors. My hon. Friend may be aware that along with France we have argued for what is called a tiering system, based on the premise that if we are going to have free allocations in the system—and we are going to, for a period of time, as we manage the transition—those allowances should be targeted at those sectors that are clearly at most risk from carbon leakage based on their carbon intensity and what is called their trade intensity. Therefore we have simply been trying to assert the argument that free allowances should be targeted on those who need them most, rather than spreading the jam across the system. I should tell my hon. Friend that I think we are losing that argument.
Jake Berry
Will the Minister also explain his concerns in relation to sectors that are not liable for free allocations being at risk of a windfall profit and how that will affect UK industry protection?
Mr Hurd
There has been a clear suggestion in the past of over-generous allowances and windfall profits, and various bodies have tried to measure that and the value runs into large amounts of money. The emissions trading scheme is extremely complicated, not least because of the difficulty of ensuring fairness and transparency around the allocation of free allowances. Because we want the system to work and deliver what it was set up to do—which is to set a market-based mechanism that allows and incentivises low-cost abatement of carbon—we are hawkish in terms of making sure that the system is not gamed, and that it works effectively.
At the same time—and this is part of the complication, and, to be clear, I remind the Committee that I speak as the Minister for Climate Change and Industry in the Department for Business, Energy and Industrial Strategy —we have to listen to all voices. I had a round table last week with representatives of the power sector and industries which, in many cases, were arguing against each other. It is Government’s role to find a path through the various rocks on the road. I am not entirely sure that in the past the path has led to the outcome we want, but my hon. Friend will know that we must be extremely sensitive, particularly at this time, when various sectors of the economy are feeling vulnerable and uncertain, not least because of Brexit. Therefore they need as much visibility and certainty as possible. Those are just some of the compromises that the Government must think through and negotiate on behalf of the country.
The Chair
If no more Members wish to ask questions we will proceed to debate the motion.
Motion made, and question proposed,
That the Committee takes note of European Union Document No. 1 1065/15 and Addenda 1 to 3, a Proposal for a Council Directive amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments; welcomes the European Commission’s intention to reform the EU Emissions Trading System in line with the conclusions of the October 2014 European Council; and calls on the Government to continue to negotiate, in line with Cabinet-cleared positions, with the aim of agreeing a well-functioning and balanced System that is environmentally robust and supports cost-effective emissions reductions while preserving industrial competitiveness and promoting a level playing-field.—(Mr Nick Hurd.)
Dr Whitehead
We have had a good session, and the Minister was asked number of pertinent questions. They focused, first, on whether we are actually going to be there to influence the EU ETS in any way in the future, and, secondly, even if we are not there to influence it, on the extent to which it will continue to have a substantial influence on us, however it is sorted out in the absence of the UK as a member of the EU.
I suggested that it is worth examining the EU ETS’s structures in respect of the countries that fully participate in it but are not EU members. There are particular regulations relating to that, but those countries participate fully in the EU ETS and are not just observers at the table. They are bound by what happens in the ETS, but they are active participants in shaping it. I hope at the very least that, in our future relationship with the EU ETS, we aim to be a full member and sit round the table, even if we are not a member of the European Union, so that the fact that the development of the EU ETS reflects our country’s priorities for the decarbonisation of our industries and for climate change is fully taken into account.
The Minister made it clear that the Government’s aim in the discussions was to ensure that the allocations were retired or removed from the system at an accelerated pace. I very much concur with that aim, because we need to understand where the EU ETS stands at the moment and where it might position itself relative to our carbon price support mechanism in the future. We are coming to the end of phase III, but particularly because of the recession and crisis of 2008-09, the number of allowances that are being generated in the system—we have already achieved the targets that the EU ETS requires us to meet by the end of phase III—means, as I mentioned in questions, that we are not retiring or reducing allowances at the moment, but creating 200 million additional allowances before the end of phase III. The proposal for dealing with that—the market stability mechanism—effectively loads those allowances, which have been placed in quarantine, as it were, into the beginning of phase IV, in addition to the new allowances.
Unless we do something about rebasing where we start from in 2020, we have the prospect of a continuing overhang of emissions through the whole period of phase IV of the EU ETS. My first proposition, which I suggest the Government ought to look at in their continuing engagement with the outcome of this—although, as the Minister said, it will be on a vastly accelerated scale to that which was previously the case—is that the 2020 starting point for phase IV should be rephased so that it is based on actual emissions in 2020, rather than the trajectory that they have been on hitherto, which would mean that the 2020 figure did not reflect real emissions and therefore institutionalised the overhang of allowances in the system into the fourth phase.
This afternoon the Minister said that there is not a great deal of support for the linear reduction factor to rise from the proposed 2.2% per annum. Again, however, when it comes to attacking those outstanding allowances, some figure higher than 2.2% would be very helpful and important. Considering whether it could go up to something like 2.4% would be a useful addition to the fight to shape the EU ETS, so that it is fighting fit and combative over the next period, regarding what it is trying to do not only about the overall capping of emissions but having a reasonable price level for allowances. Of course, that is the big question over the next period—whether those allowances get that price, which can only be really achieved by the cap and those allowances decreasing, and their coming together to keep the price up to a good level.
I take the Minister’s point about energy-intensive industries and the aim during phase IV of reducing allocated allowances from 80%—I think—to 23%, and therefore concentrating those allowances particularly in relation to energy-intensive industries and making sure the carbon leakage is properly accounted for over the next phase. I fully support that.
However, the Government’s present position regarding what the EU ETS will look like in phase IV is not sufficient, particularly in the context of what we have said about the future of our own carbon price support system. It is not sufficient at the moment to secure that convergence, which is potentially so important regarding what we do about the future of our own carbon price support system.
We have two possible ways forward. We either commit ourselves now, at an early stage, to saying that we think the EU ETS, in whatever form it is going to be in, will have, a respectable-ish price for allowances, but because we will not have solved the overhang problem, we will never get to the right amount so that we can confidently say that our own carbon price support system will at any stage start to align with whatever that price is in the mid-2020s. In that case, we presumably need to say, “Well, we act now to secure our own carbon price support system for the long term and we take a decision on that fairly early”, or we press for proposals that are quite a bit more radical within the EU ETS, so that it can achieve that particular level.
To my mind, that means, first, that we need mechanisms that do rather more than the market stability reserve to retire allowances, and have them permanently retired and not quarantined for future reference—actually taken out of the system entirely over phase IV—and, secondly, that we have a realistic starting point for phase IV, so that it allows those retiring allowances to have maximum effect on price over the next period.
Without looking at those particular aspects of EU ETS over the next period, we will almost certainly have a level of crisis in EU ETS over the next decade similar to that we have at the moment, as that overhang of allowances takes its toll on the good intentions of EU ETS.
I would appreciate hearing any thoughts that the Minister has on that particular way of going about things, which I think is important. I know that he cannot say too much about this, but a small nod and a wink in the direction of saying that we are pretty committed to staying in the EU ETS, although we cannot actually say so right now, would be very helpful for future discussions.
Mr Hurd
For the record, I am neither nodding nor winking, but I thank the hon. Gentleman for a typically thoughtful and constructive response. He is probing exactly the right issues, which are the effectiveness of the cap and the right mechanisms for accelerating the withdrawal of allowances. Without effective action there, we are unlikely to get the robust price signal which he and I want, and which will drive the behaviour we want. I thank him for his constructive attitude to our approach to energy-intensive industries. It is a difficult balance to get right, but he and his colleagues know that we have done a lot over the years to try to protect our energy-intensive industries in this process while trying to ensure that they are fully incentivised to pursue energy efficiency and decarbonisation.
I addressed the hon. Gentleman’s point about the convergence with the carbon price floor in my comments. I simply say to him that we are open to ideas on the best mechanisms for accelerating the withdrawal of allowances from the system, but as a very experienced politician he will know that politics is the art of the possible, particularly in the European Union. We are trying to forge an agreement with 28 member states, and some of them take a very different view on the right levels of ambition and where their national interests lie. That reinforces my point about the need for the UK—we have consistently been a voice for ambition in this context—to be at the table and to continue to be in the business of forging coalitions of ambition.
It has been a helpful debate. I hope I have been clear on our objectives in the negotiation. We want to: maintain ambition in line with our carbon targets and an effective carbon price signal; protect industrial competitiveness where it is at risk; minimise administrative burdens; and protect our fiscal sovereignty. I hope that those four overall objectives for the negotiations meet with the Committee’s approval.
Question put and agreed to.
Europol
(7 years, 5 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Before we begin, it may be helpful if I remind Members of the procedure in a European Committee. The whole proceeding must conclude no later than two and a half hours after we start. I shall begin by calling a member of the European Scrutiny Committee to make a brief statement about that Committee’s decision to refer the documents for debate. I shall then call the Minister to make a statement, which will be followed by questions for up to an hour, although I have discretion to extend that by up to half an hour—if there is an appetite for it. The Committee will then debate the Government motion, and I shall put the question on that motion when the debate or the time available is exhausted—whichever comes first.
Does a member of the European Scrutiny Committee wish to make a brief explanatory statement about the decision to refer the documents to this Committee?
David Warburton (Somerton and Frome) (Con)
It is a pleasure to serve under your chairmanship, Mr Brady. Europol is at the forefront of the EU’s response to international crime and terrorism. As we know, it provides analytical and operational support to national law enforcement authorities in all 28 member states, enhancing their capacity to tackle cross-border security threats. The UK has participated in Europol since its creation in 1995. Although the coalition Government decided in 2014 to opt out of several EU police and criminal justice measures, they decided that the UK should remain part of Europol and opted back into the 2009 Council decision establishing Europol. They concluded that the UK’s continued participation in Europol would be more cost-effective than establishing a complex system of bilateral agreements and liaison networks with each member state and would enable the UK to maintain access to Europol’s cross-border data-sharing systems, analytical resources and expertise, and contribute to Europol’s forward-looking threat assessments, which set the agenda for EU action to combat serious organised crime and terrorism.
Despite that positive assessment of Europol, the coalition Government decided not to opt into the Commission’s proposed new Europol regulation in 2013. A new regulation is necessary as the Lisbon treaty requires Europol to be based on a regulation adopted jointly by the European Parliament. The Government feared that a strengthening of member states’ obligation to provide information to Europol and Europol’s right to request the initiation of a criminal investigation might undermine the operational independence of the police. The Government’s recommendation that the UK should not opt in was debated on the Floor of the House in July 2013. However, the Government made it clear that they wished to “remain part of Europol” and intended to
“play an active role in negotiations”.
The motion passed by the House stated that
“the UK should opt into the Regulation post-adoption, provided that Europol is not given the power to direct national law enforcement agencies to initiate investigations or share data that conflicts with national security.”—[Official Report, 15 July 2013; Vol. 566, c. 878-883.]
Following three years of negotiation, the new Europol regulation was adopted in May. This debate concerns the Government’s recommendation that the UK should opt in so it can participate fully in Europol when the regulation takes effect on 1 May next year. This is undoubtedly the most significant opt-in decision that the Government have taken since the referendum in June. If the Government’s decision not to opt into the Commission’s proposal in 2013 merited a debate on the Floor of the House, their decision to opt in now, shortly before they intend to trigger article 50 negotiations about the terms of the UK’s withdrawal from the EU, surely merits exposure and scrutiny in a debate on the Floor of the House. I therefore ask the Minister to explain why the Government have disregarded the European Scrutiny Committee’s clear recommendation that there should be such a debate.
The European Scrutiny Committee has asked the Minister to address several questions during this debate. Is he satisfied that the regulation contains sufficient safeguards to ensure the operational independence of the police? What impact will the jurisdiction of the European Court of Justice have on the ability of UK police forces to set their own operational priorities, and what views have UK law enforcement authorities expressed on the Government’s opt-in recommendation?
The European Scrutiny Committee also asks the Government to make clear the consequences of not opting in to the regulation. How great a risk is there that the UK will be ejected from Europol next May if it does not opt in before then? Will Denmark remain part of Europol, even though it cannot participate in the new regulation? Will the new regulation make it easier or harder for the UK to establish a close working relationship with Europol once it has left the EU?
The Secretary of State for Exiting the European Union told the House in October that the Government’s aim during Brexit negotiations would be
“to keep our justice and security arrangements at least as strong as they are.”—[Official Report, 10 October 2016; Vol. 615, c. 55.]
Does that mean that the Government will seek to preserve the access to Europol’s databases and analytical information once the UK has left the EU as it currently enjoys as a member and, if so, will that require a bespoke model of co-operation, beyond that envisaged in the regulation?
I thank the Minister for being here to answer those questions and I very much look forward to his response and to an informed and, I hope, lively debate.
The Chair
Before I call the Minister to make an opening statement, I remind the Committee that interventions are not permitted during the statement.
The Minister for Policing and the Fire Service (Brandon Lewis)
It is a pleasure to serve under your chairmanship, Mr Brady. I will take a few minutes to outline, and hopefully deal with, some of the issues that my hon. Friend the Member for Somerton and Frome has raised and then we will have time for questions about anything else.
We are in a modern interconnected world where organised crime is increasingly international and does not respect borders. In that context, we can hopefully all agree that Europol provides a valuable service to the UK, both within the EU and in collaboration with non-EU partners. After all, we must remember that the United States has a substantial partnership with Europol. Until exit negotiations are concluded, the UK obviously remains a full member of the EU, with all the rights and obligations that membership entails. We seek to opt into the new regulation in line with our right to do so as an EU member state, and that is part of “business as usual” activity while we remain an EU member.
Operationally, Europol is a vital tool in helping UK law enforcement agencies to co-ordinate investigations involving cross-border serious and organised crime, to keep our public safe. Opting in means that as long as we remain a member of the European Union we can continue to benefit from the co-operation and the operational advantages of being a member of Europol. We would not be able to do that as a non-participating member state. Not opting into the new measure while we remain in the EU could risk our being ejected from Europol, which would have serious consequences for our law enforcement operations.
As my hon. Friend rightly pointed out, this is not the first time that Parliament has examined the regulation. Many will recall the original opt-in debate in March 2013, and my hon. Friend is right that the general consensus at that time was that although we supported the overall aim and the objectives of Europol—and we made it clear that we did—certain elements of the draft text were not acceptable and the Government would not take the risk of opting into an unacceptable text. We had two main concerns about that text, first, that it would interfere with the operational independence of UK policing and, secondly, that it would increase the UK’s obligation to provide data to Europol, even when such provision conflicted with national security or endangered ongoing investigations or an individual’s safety. As such, we decided not to opt in at that point, at the start of negotiations, but we made it clear that a post-adoption opt-in would be considered, if we were able to address those concerns in negotiations.
During the negotiations, we worked hard with other EU members to do just that. The UK and like-minded member states successfully negotiated a much more balanced regulation, which maintains the status quo regarding Europol’s relationship with member states. That is explicitly set out in article 3 of the regulation:
“Europol shall not apply coercive measures in carrying out its tasks”,
clearly dealing with the first point. The Government believe that the new regulation defends national interest while allowing Europol to consolidate its position in supporting member states to combat serious cross-border crime and terrorism.
I will set out what the new legislation does. In broad terms, the new regulation maintains the existing relationship between member states and Europol while updating the way in which Europol operates and its relationship with the EU institutions. The new regulation expands Europol’s tasks in a number of positive ways. It sets out a clear mandate for the EU internet referrals unit, which is based at Europol and replicates the UK’s approach to tackling online terrorist propaganda. Importantly, it does not expand Europol’s work in a manner that would lead to competence issues.
The new regulation establishes a framework for joint investigative and operational actions between member states’ competent authorities, for example via joint investigation teams. The framework supports and strengthens the actions of member states. It also ensures that we retain control, as Europol would need our consent to undertake any actions in the UK. Europol’s capacity to undertake operational actions is likely to be helpful in regard to its role in tackling organised immigration crime via joint operational team Mare.
The new regulation formalises co-operation with EU bodies, and the provision of information and support to EU crisis management structures, such as for the migration crisis in the Mediterranean. It also clarifies the mandate of the existing European cybercrime centre as a centre
“of specialised expertise for combating certain types of crime”.
That is welcome, as we in the UK participate in the joint cybercrime action taskforce.
Much of the new legislation is about putting existing practice on a comprehensive legal footing. Europol’s remit remains squarely focused on enhancing law-enforcement co-operation between member states. As I have outlined, Europol’s actions remain fundamentally in support of member states, not the other way round, which means that Europol will continue to add value to UK law enforcement without in any way reducing national control of law enforcement-activity in the UK. I suspect that that is why every single police chief I have met throughout the country, along with the National Police Chiefs Council, has been explicit about their desire that we should ensure that we took the opportunity to opt in.
As I have set out, Europol is a vital tool to help UK law-enforcement agencies co-ordinate investigations in cross-border serious and organised crime. Our operational partners, such as the National Crime Agency, have made it clear that they value our continued membership of Europol while the UK remains in the EU. The deputy director-general of the National Crime Agency made that clear in his evidence to the EU Home Affairs Sub-Committee in October. The NPCC lead, Sara Thornton, has also been clear about that.
We cannot, however, ignore the fact that we are leaving the EU. My hon. Friend therefore asks a fair question: why opt into the new regulation now? Opting in means that, for as long as we remain a member of the EU, we can continue to benefit from the co-operation and operational advantages of being a member of Europol. Failure to opt into the new measure might risk our being ejected from Europol which, in my view, is something we should seek to avoid while we remain in the EU. My hon. Friend mentioned the experience of Denmark, but I might add that Denmark still has hurdles to overcome. Its situation is such that it does not have the full benefit, as we do, of being a member of Europol.
In practical terms, the measure will ensure that our liaison bureau at Europol is maintained and that law-enforcement agencies can continue to access Europol systems and intelligence. Our operational partners have made it clear that continued operational capabilities are crucial to keeping our people safe.
I should make it clear, however, that this does not represent the start of our exit negotiations. The issue before us is not how the UK will work with the EU after we leave; opting into the new regulation does, however, put us in the strongest possible position entering into negotiations. It signals our intention to continue practical law-enforcement co-operation with EU partners after we leave. It also means that we can negotiate the new model of co-operation, whatever form that may take, as active participants rather than outsiders trying to gain access to something.
In conclusion, the Government’s view is that opting into the regulation now is the sensible thing to do. The regulation as it stands means that remaining in Europol continues to be in the national interest while we are still in the EU. Opting in maintains operational continuity while the UK remains in the EU, and it helps support a smoother transition as and when we leave. Again, I want to stress that this decision is without prejudice to the discussions on the UK’s future relationship with Europol. The Home Office is exploring all options for co-operation once the UK has left the EU, but it is too early to speculate on what future arrangements may look like. This measure is about what is right for our country today.
The Chair
We now have until 5.35 pm for questions to the Minister. I remind Members that questions should be brief. It is open to Members, subject to my discretion, to ask related supplementary questions.
Kate Green (Stretford and Urmston) (Lab)
I very much welcome what the Minister has said. I absolutely appreciate that the position is for today while we remain full members of the European Union and it is not in any way a pre-judgment on how the negotiations to exit may take place. However, by opting in, how will our Europol systems and habits of operating and sharing intelligence and information on crimes that need to be dealt with on a cross-border basis, because they occur on a cross-border basis, be appropriately replicated and provided for after we leave the European Union? For example, is the Minister thinking of setting up shadow systems as a safety net for the post-Brexit world? If not, what other contingencies are the Government putting in place to ensure that today’s Europol protections that the Minister outlined are continued after we leave the European Union?
Brandon Lewis
The hon. Lady makes an important point. It is right to opt in at the moment. We have been working with Europol, a lead partner, for some considerable time. About 40% of everything that Europol does is linked to work that is either provided or requested by the United Kingdom. The hon. Lady tempts me to give a running commentary on our Brexit negotiations, but I will resist that temptation because we are at the start of negotiations, not the end. However, hon. Members and hon. Friends should bear in mind the fact that there are other countries that have partnership agreements with Europol. In fact, the United States has one of the biggest liaison offices. It is obviously not a member of the EU, but it has come to an agreement to work with Europol. It sees the benefit and has found a way to do that. Opting in now puts us in a strong position from which to be able to negotiate what is right for us when Brexit comes, but we will see how that goes in the negotiations.
Richard Arkless (Dumfries and Galloway) (SNP)
It is a pleasure to serve under your chairmanship, Mr Brady. I do not think you will have any call to cut me off early, as you were forced to do the last time I spoke before you.
Like the hon. Member for Somerton and Frome, we welcome the Minister’s announcement, and we appreciate his position in not giving a running commentary. However, it appears to be fairly clear, given the submissions made, that Europol is valued. It keeps us at the forefront; it enhances capacity. According to the Secretary of State for Exiting the European Union, justice and security arrangements should stay as they are. We have participated in Europol since its creation. Every police chief has made it clear that they want it. Can the Minister confirm that it is the Government’s position that we want to remain in Europol after we leave the European Union?
Brandon Lewis
The Home Secretary said on the Floor of the House that she did not think anybody voted in June to be less safe. It is important to do everything we can to ensure that all our residents are safe. It is important to work with our partners across Europe on cross-border issues, whether it is around terrorism, cybercrime or other forms of crime. It is important to work with our partners around the world to make sure we do everything we can to keep people safe. As tempting as it is to outline where we might be at the end of the negotiations, I will resist that temptation. As I said earlier, it is right that we opt in at the moment. Europol plays an important part for our law enforcement agencies and the security of this country. Countries that are not members of the EU have found positive ways to work with Europol. The other 27 countries that are members of the EU will want to continue with that, but that is part of the negotiations yet to come.
Motion made, and Question proposed,
That the Committee takes note of Unnumbered European Union Document, a Regulation (EU) 2016/794 of the European Parliament and of the Council of 11 May 2016 on the European Union Agency for Law Enforcement Cooperation (Europol) and replacing and repealing Council decisions 2009/371/JHA, 2009/934/JHA, 2009/935/JHA, 2009/936/JHA and 2009/968/JHA; endorses the Government's decision to opt in under Protocol 21 on the Position of the United Kingdom and Ireland in respect of the Area of Freedom, Security and Justice annexed to the EU Treaties; and supports the Government's assessment that Europol provides a valuable service to the UK and opting in would enable us to maintain our current access to the agency, until we leave the EU. —(Brandon Lewis.)
Lyn Brown (West Ham) (Lab)
It is a pleasure to serve under your chairmanship, Mr Brady. I am grateful for your clear explanation as to the process. I obviously needed that today and I am dead pleased that you are in the Chair.
The Minister did not answer the question about why we are not having this debate on the Floor of the House, which the Opposition would welcome. We have argued consistently that participating in Europol helps to keep Britain safe. It is a vital tool in the fight against terrorism and serious organised crime. Opting into Europol’s revised governance framework will allow Britain to continue to participate in Europol and strengthen Europol’s capacity to help to tackle serious crime. We therefore support the Government’s decision to opt in.
Europol’s role is to facilitate the rapid exchange of criminal intelligence and security information between EU member states. Europol supports more than 40,000 international criminal investigations each year, and many of those cases are vital to British security. In 2011, police were able to identify links between an investigation in Northern Ireland and an investigation in Portugal after basic checks of Europol systems. That led to a large investigation of a west African organised crime group operating across Europe, west Africa and south America. There have subsequently been 25 co-ordinated arrests and seizures across Europe, and that gang has been well and truly broken up.
In 2012, a law enforcement agency received intelligence regarding a threat against an individual’s life in another EU member state and a probable suspect in a third member state. Checks of Europol systems enabled the speedy identification both of the intended victim and of the potential suspect, and law enforcement authorities were able to take swift action and save a life.
If I go on much longer, our Whip is likely to pull me down, but those two small cases show that Europol co-operation means that criminals and terrorists cannot easily use European borders to evade the intelligence and oversight of law enforcement authorities. Europol is a vital tool for ensuring that national Governments, not international crime organisations, are in control. In May, the European Council and Parliament adopted a new set of regulations, which updates Europol’s governance structure, objectives and tasks and will take effect on 1 May 2017. Those regulations make some important changes, and I will briefly outline the benefits of those.
As we know, cybercrime is one of the greatest challenges that our police face. It pays no attention to national borders, and the activity of an individual in one country may have perilous consequences for citizens in another. The European cybercrime centre estimates that cybercrime costs EU member states €265 billion a year. The new regulations will make it easier for Europol to help member states tackle cybercrime by giving that centre a clear mandate as a Union centre of “specialised expertise for combating” crime. Similarly, the regulations give the EU internet referral unit a clear mandate to tackle online terrorist propaganda.
I stress that the regulations do not allow Europol to mandate national investigations. Article 4 of the regulations states:
“Europol shall not apply coercive measures in carrying out its tasks.”
Article 3 makes it clear that Europol “shall support” national security forces rather than lead them, and national Governments are not required to share data if they think that would threaten their “essential interests” or jeopardise current operations. Taken together, those measures preserve Europol’s status as an information and data-sharing hub rather than a supranational crime agency. Indeed, the European Scrutiny Committee concluded that it is
“satisfied that the outcome achieved respects the division of competences between Member States and EU institutions”.
Although the benefits of the changes that I have outlined are important, the nub of the issue is that the regulations bring about substantive changes to Europol’s governance arrangements. Having spoken to the House of Commons Library staff and studied the European Scrutiny Committee report, I understand that if we do not agree to the regulations, Britain’s participation in Europol could be called into question altogether. There is indeed a process for ejecting us, or anyone, from Europol if the Commission and Council agree that our opt-out renders co-operation inoperable.
Put plainly, we could find ourselves out of Europol by May next year when Brexit negotiations will only just have begun. Indeed, the Minister implied the same thing on the 14 November when he notified the European Scrutiny Committee of the Government’s intention to opt in:
“Opting in will maintain operational continuity for UK law enforcement ahead of exiting the EU…and that law enforcement agencies can continue to access Europol systems and intelligence.”
Given the enormous benefits that Europol participation brings to Britain, the Opposition would not want to bring about any risk of the UK being ejected from Europol on 1 May. We therefore support the Government’s decision to opt into the new regulations.
As I am sure the Committee will know, the current director of Europol is a British man called Rob Wainwright. He took over Europol after a career serving major British security institutions such as NCIS and the Serious Organised Crime Agency. His career shows how European co-operation allows for British influence to spread abroad. Director Wainwright tweeted that the Government’s decision to opt in is
“Good for Britain’s security, great for police co-operation in Europe.”
I agree entirely with Director Wainwright. International crime did not stop on 23 June 2016 and, sadly, the threat of international terrorism persists. That is why I want us to remain part of Europol if and when we leave the European Union, and I want Britain to continue to lead the way in furthering police co-operation across the continent.
Unfortunately, the Government cannot guarantee our continued participation in Europol after Brexit. The Secretary of State for Exiting the European Union has offered warm words about maintaining security arrangements. In fact, he said that he wants us to “maintain or even strengthen” co-operation, as we have heard, but when he has been pushed as to whether that means we will continue to be a member of Europol he has not been able to make that guarantee. Instead he told the House that the Government will seek to
“preserve the relationship with the European Union on security matters as best we can.”—[Official Report, 5 September 2016; Vol. 614, c. 45.]
James Berry (Kingston and Surbiton) (Con)
Does the hon. Lady agree that, whatever our Government want to do, the other 27 Governments would have to agree to our remaining in Europol? They would in fact have very good reason to do so, since we provide about 40% of the intelligence on which they rely. We are an extremely valuable and massive net contributor of the intelligence and information that they enjoy through their membership of Europol.
Lyn Brown
I am not going to disagree with the hon. Gentleman. I am not even going to play party politics with this. I am going to move on gently and seamlessly to say that I think that the Minister for Policing and the Fire Service is a competent and loyal advocate of Government policy, so I am sure he will say exactly the same thing as the hon. Gentleman. However, I must say that I do not find a pledge to do the “best we can” particularly reassuring when we are dealing with matters as fundamental as national security and the lives of British citizens.
I would press the Minister to go a bit further today, and say that preserving our security arrangements and maintaining British influence over security matters will be a top priority for the Government in their exit negotiations. I do not think that is too much to ask. Keeping citizens safe should always be the first priority of any Government. Europol and other forms of European security co-operation such as the European arrest warrant are vital tools to keep our citizens safe.
Whatever else the Government do in the negotiations, they must not leave us in a situation in which we fall out of Europol and start to co-operate less with our European partners on security matters. If that were to happen, the Government would be letting the British people down. Their ability to tackle crime and keep citizens safe would be diminished. The Government would be ceding control to serious criminals.
Richard Arkless
I will keep my comments brief. To be clear, we support the revised Europol co-operation framework and we acknowledge that it is to preserve membership of Europol at least until we leave the European Union.
To pick up on a point made by the Opposition, we not only think that it is vital to have the UK within the Europol regime, but it makes sense for the whole of Europe. Police Scotland and law-enforcement agencies in Scotland are given comfort, in the short term at least, that we continue to exchange the information that allows them to catch the bad guys. The solution is, however, only temporary, as has been alluded to.
Beyond leaving the European Union, it is unclear whether we will be in Europol and whether we will have the benefit of being able to exercise the European arrest warrant. I know that the Government do not want to give away their negotiating hand, but as I alluded to in my question, it is fairly clear what the Government’s position is. I welcome that, because it is good that the Government are making positive noises about staying in Europol beyond leaving the European Union. I sincerely hope that they take those comments and that sentiment into negotiations to ensure that the UK remains a member of Europol, because if it does not, as the hon. Member for West Ham rightly identified, we will be letting down people right across these islands.
Brandon Lewis
I have a couple of points to make. The hon. Member for West Ham rightly raised the issue about the Floor of the House—I hope this will answer the question of my hon. Friend the Member for Somerton and Frome as well. However, that does a disservice to this Committee, because any Member may attend and take part in it, so they have all had the opportunity to be present today, to ask questions and to join the debate. As we can see from the fact that I am making the closing speech, we have had discussion, questions and debate with plenty of time to spare within the allotted time. Members could have come to take part. I hope that that indicates that across the House—this is my view from speaking to Members informally—there is recognition of the importance of Europol. While we are full members of the European Union, opting in—with the negotiations we have managed to secure the changes, in particular on the coercive issue—is the right thing to do for this country.
I will pick up the hon. Member for West Ham on one minor matter. When she was paying me a kind compliment, I could feel a “but” coming, and there was a small “but” in there. She was talking about what happens if or when we leave the EU. I need to make it clear that there are no ifs or buts: we will leave the European Union, and our job is to ensure that we do so in the way that is best for the United Kingdom. Security is clearly a priority—one of our priorities to ensure that we keep our residents safe. At this point in time, while we are members of the EU, UK law-enforcement agencies must continue to benefit from and contribute to the work that Europol undertakes, without prejudging in any way, or without prejudice to, the negotiations that will go ahead in time.
The negotiations that have led us to where we are today, with this opt-in decision, are negotiations that have delivered a very good outcome for UK law enforcement and Europol more generally. Without doubt, the organisation is good and strong. As the hon. Lady said, the chief exec has great experience in the field. Without doubt, opting into the measure is in our country’s best interests, until such time as we will need a new agreement from our position outside the EU. For now, I commend the motion to the Committee.
Question put and agreed to.