Draft Market Surveillance (Northern Ireland) Regulations 2021
(2 years, 12 months ago)
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The Chair
I remind hon. Members to sit in the places that are clearly marked. Masks should be worn unless you are speaking or exempt.
The Minister for Business, Energy and Clean Growth (Anne-Marie Trevelyan)
I beg to move,
That the Committee has considered the draft Market Surveillance (Northern Ireland) Regulations 2021.
It is a pleasure to serve under your chairmanship, Ms Rees. Members will appreciate the importance of protecting consumers through our robust and effective product safety and legal metrology systems, which are among the strongest in the world. The legislation will form part of our UK framework, maintaining consumer confidence that the goods they buy are safe.
The regulations implement in Northern Ireland the EU regulation on market surveillance and compliance of products 2019/1020, which comes into effect from 16 July; I will refer to the regulation as MSC. MSC replaces the market surveillance provisions for Northern Ireland in the predecessor regulation on accreditation and market surveillance, known as RAMS. It is included in annex 2 to the Northern Ireland protocol and accordingly the market surveillance and compliance of products regulation replaces that obligation under the protocol.
The statutory instrument that we are debating today implements a uniform set of regulatory powers to be available to market surveillance authorities that operate within Northern Ireland. It results in a few minor operational changes and a number of new traceability requirements for businesses placing products on the Northern Ireland market. This is necessary to avoid gaps and inconsistencies in regulatory powers when the RAMS provisions are repealed in Northern Ireland on 16 July. It is worth noting that RAMS, as it now forms part of our domestic law, continues to apply in Great Britain. However, the approach to enforcement is very similar in both regulations. It is risk based and proportionate.
The SI will ensure that consumers in Northern Ireland continue to be protected from potentially unsafe and non-compliant products, whether they are toys, cosmetics, lifts or machinery, via the UK’s robust product safety framework. The aim of the SI is to give market surveillance authorities the necessary regulatory powers to ensure that products are safe and compliant in Northern Ireland, as well as enabling them to take action as needed when unsafe or non-compliant products are discovered. It will also provide effective, appropriate and proportionate sanctions for breaches of those regulations.
Market surveillance authorities will monitor and, where appropriate, enforce the requirements of product safety law as outlined in the SI. If I may consider these areas in a little more detail, a range of regulatory powers are already available to market surveillance authorities across the current suite of product legislation, but they are not consistent. Through the SI, MSC will introduce a uniform set of regulatory powers consolidating and simplifying the powers already available to market surveillance authorities, making them expressly available in respect of a range of products to the extent that they are needed.
The powers set out in the SI are drawn from existing goods legislation, including the Consumer Rights Act 2015, the Health and Safety at Work (Northern Ireland) Order 1978 and the Consumer Protection Act 1987. That means that market surveillance authorities will have consistent access to the regulatory tools they already use and are familiar with, such as compliance and recall notices.
Sanctions for market surveillance offences are not new. The SI seeks to ensure that offences remain available to market surveillance authorities and contains offences relating to obstructing an investigation, for breaches of MSC and in respect of the withdrawal of products and recall notices. The offences under the SI will be heard in a magistrates court and will give rise to a maximum fine of up to level 5, which is currently £5,000, or up to level 3, which is £1,000, on a standard scale depending on the offence. There will be no provision for imprisonment. The offences available are expected to result in prosecutions in rare circumstances and only where necessary to protect consumers from non-safe products or address persistent or deliberate non-compliance. The inclusion of criminal offences within the legislation is consistent with existing UK-wide sanctions regimes for products and I can confirm that penalties for such offences are at the lower end of the range of penalties within that regime.
I would like to draw attention to a new requirement in article 4 of MSC. It requires businesses in some product sectors to have a person responsible for compliance established in the EU or Northern Ireland in order to place those products on the market in Northern Ireland or the EU. This person can be a manufacturer, an importer, an authorised representative or a fulfilment service. The requirement in article 4 is directly applicable and the SI provides enforcement mechanisms for a breach of that requirement. Most businesses supplying customers in Northern Ireland or the EU already have the appropriate arrangements in place.
On 11 June, my Department published guidance for businesses and market surveillance authorities on the operation of article 4. That will hopefully have answered the majority of questions that business may have had. My officials will continue to assist business organisations to ensure that MSC does not place a disproportionate burden on trade into Northern Ireland for those businesses that do not already have a person responsible for compliance, while ensuring that the product safety framework itself remains robust and effective. My Department will also offer training on MSC to all market surveillance authorities to support consistent understanding of its application across the regulatory landscape.
In summary, the regulations will implement a new aspect of market surveillance legislation, as required under the protocol, and ensure that there are no regulatory gaps in the area of product safety. It will ensure that consumers in Northern Ireland remain protected from potentially unsafe and non-compliant products, resulting in the maintenance throughout the UK of a cohesive and effective regulatory regime for manufactured products that will protect all UK customers, including those in Northern Ireland. I urge the Committee to approve the regulations.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
It is a great pleasure to serve under your chairship, Ms Rees. I thank the Minister for setting out what the regulations do, and I shall not attempt to repeat what she said.
The regulations introduce enforcement powers and offences that are necessary to give effect to the EU market surveillance regulation in Northern Ireland. As the explanatory memorandum says, they provide “for an effective” and
“proportionate…penalty regime for breaches of the Regulation.”
The EU’s new market surveillance regulation, which comes into effect on 16 July, is designed to provide greater protection to consumers in the face of the challenges posed by e-commerce. The intention is that, by extending compliance checks for products sold online, consumers can be assured that the products that they order online meet EU harmonised standards for health and safety. By virtue of the Northern Ireland protocol to the EU-UK trade and co-operation agreement, the market surveillance regulation is directly applicable in Northern Ireland, although certain provisions of the regulation require implementation in domestic legislation, which is what the regulations are designed to do.
Labour will not oppose the regulations, which are designed to provide greater protection to consumers in Northern Ireland and are required to meet the UK’s legal commitments under the EU-UK trade and co-operation agreement and the Northern Ireland protocol. However, I want to raise a small number of important issues on which I would welcome the Minister’s assurances.
First, it is clear that the implementation of the EU market surveillance regulation in Northern Ireland will have an impact on British businesses, especially those that sell their products online from Great Britain directly to consumers in Northern Ireland. As the Minister said, GB business will need an economic operator established in Northern Ireland for compliance activities if they want to sell goods into Northern Ireland. My right hon. Friend the Member for Wolverhampton South East (Mr McFadden) set out the situation very well in a debate on another statutory instrument when he said:
“Brexit was sold as being an end to red tape—nobody said it would be replaced with all this red, white and blue tape that we are debating today.”—[Official Report, Fifth Delegated Legislation Committee, 24 June 2021; c. 5.]
Given the additional obligations on British businesses that want to continue to sell their goods across this United Kingdom, will the Minister assure us that the Government will continue to provide all advice and guidance necessary to ensure that all British businesses are prepared for this new obligation when the regulation comes into force in less than two weeks? Targeted support might be required, and we will be watching carefully to ensure that businesses are not adversely affected by the changes after 16 July. Unfortunately, businesses have been affected adversely by an increase in bureaucracy and red tape, and in their complexity, as a consequence of the withdrawal agreement.
Secondly, the Government have suggested in guidance that the enforcement of the market surveillance regulation in Northern Ireland will be
“proportionate, risk-based and intelligence-led”,
minimising disruption to businesses. They go on to suggest that regulatory checks on goods entering Northern Ireland will continue to take place by exception, and only when there is a high level of risk. The Department for Business, Energy and Industrial Strategy says that goods going into Northern Ireland from Great Britain have a low risk profile and therefore will not be routinely subject to inspection, but given current tensions over the Northern Ireland protocol and uncertainties about its implementation, will the Minister clarify the extent to which that approach has been agreed with the European Union? Is there an agreement that goods arriving into Great Britain will not be routinely subject to regulatory checks?
We are in a bizarre situation when I have to even ask this question, but is the application of the market surveillance regulation in Northern Ireland a protocol commitment that the Government support, or a matter that they wish to reopen with the European Union? Businesses and consumers throughout the United Kingdom need and deserve clarity.
Anne-Marie Trevelyan
I thank the Committee for its consideration of the regulations and the hon. Member for her comments.
The measures amend the previous regulations from annex 2 of the protocol, so this is not a new set of frameworks. In a risk-based sense, as the hon. Member highlighted, they ensure that Northern Ireland regulators have the correct powers to deal with unsafe or non-compliant goods in a co-ordinated and coherent way. The regulations make that easier to deliver, and build on the existing product regime with which regulators and businesses are already familiar. They will provide continued robust protection for all UK consumers, ensuring that products are safe and compliant.
This uniform set of powers is designed to fit within existing product legislation that applies throughout the UK and includes criminal offences that can used by market surveillance authorities when required, although we expect those occasions to be very rare. The Government continue to engage closely with businesses and regulators regarding the introduction of the market surveillance regulation. We have published guidance for both and will continue to support them in the coming months. On that basis, I commend the regulations to the Committee.
Question put and agreed to.
Draft Local Elections (Northern Ireland) (Amendment) Order 2021
(2 years, 12 months ago)
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The Chair
Before we begin, I remind Members that we have moved to 1 metre social distancing. Members should continue to sit only in places that are clearly marked, and to wear masks when they are not speaking. The Hansard reporters would be grateful if Members could send their speaking notes to hansardnotes@ parliament.uk.
The Minister of State, Northern Ireland Office (Mr Robin Walker)
I beg to move,
That the Committee has considered the draft Local Elections (Northern Ireland) (Amendment) Order 2021.
This statutory instrument is about providing increased transparency in relation to the imprints on printed election campaign material. Imprints are the details that must by law be shown on campaign material at elections to show who is responsible for the production of the material. They help to ensure that there is transparency about who is campaigning—increasing strength and public trust in the democratic process—and that voters are informed about who is behind an electoral campaign. The printed material imprint regime in Northern Ireland is currently slightly different from, and not as comprehensive as, the rules on printed imprints in place in Great Britain.
The order is part of a wider package of measures that will ensure that there is a comprehensive paper imprint regime for candidates and parties in all elections in Northern Ireland. The current imprint regime in Northern Ireland is slightly different from and not quite as comprehensive as that in place in Great Britain, or for referendums across the whole of the UK. We do not believe that people in Northern Ireland deserve any less transparency for elections than those in the rest of the UK.
The order will not deliver the comprehensive cover that we are seeking on its own; it is one of two SIs needed to create a coherent regime. The pair of SIs consist of today’s order and a separate commencement order, which will be timed to come into force together. Together they will ensure that the paper imprint regime in Northern Ireland covers parties and candidates in all elections.
This order makes provision in relation to material printed for a specific candidate in local elections. The commencement order will bring into force other measures already on the statute book but not yet commenced for Northern Ireland, which will cover candidates in parliamentary and Assembly elections, and material in relation to parties in all Northern Ireland elections. Those changes will increase transparency and provide greater clarity for voters in relation to who is campaigning for, and supporting, candidates and parties in elections in Northern Ireland. I am sure that hon. Members will agree how important transparency is for our democratic process.
Let me explain why we are taking these steps now. The existing imprint regime in Northern Ireland has never been problematic, and I understand anecdotally that it is already common practice for this information to be included on Northern Ireland material. However, in recent years the Electoral Commission has highlighted the discrepancy between the legal regimes in Northern Ireland and Great Britain. We undertook to introduce the change when the legislative timetable allowed. It is important to understand that the principle underpinning the measure is ensuring greater transparency for voters. We accept that the Northern Ireland regime should be no less comprehensive than that of Great Britain. All voters, whether in Great Britain or Northern Ireland, should know the origin of election campaign material, who is printing it and on behalf of whom they are doing so.
I will therefore explain what we are changing. The existing regime for Northern Ireland provides that only the name and address of the printer must be included on Northern Ireland election material for candidates. That differs from the regime for Great Britain, which covers material for candidates and parties, and specifies that in addition to the name and address of the printer it must also include the name and address of the promoter of the material and the name and address of any person on behalf of whom the material is being published and who is not the promoter.
The promoter of the material is whoever caused the material to be published. That may be the candidate themselves, their agent or, in the case of a party, the party treasurer, another officer of the party or the party itself, as outlined in the Electoral Commission’s guidance on imprints. The format that imprints should take across the UK is subject to Electoral Commission guidelines. Although the commission does not take a view on the font of the imprint, that essential information should be clear and legible, so that it can be seen by potential voters. Although the commission provides guidance on those matters, it does not enforce the rules. Any concerns about non-compliance with the imprint regime should, as is the case currently, be reported to the police. I should mention that the penalties for non-compliance will not change, and the offender is liable on summary conviction for a fine of up to £5,000.
Members may have concerns that the addition of an address to election material could lead to the intimidation of a candidate, printer or promoter. It is, of course, vital for our democracy that individuals are able to engage in campaigning and elections without fear of intimidation. I want to be clear that a candidate, for example, is under no obligation to print their home address on any election material. The Electoral Commission provides guidance that the address provided does not need to be a home address. It may be a business address or even a PO box. The changes will therefore not risk intimidation for any candidate, and the existing law provides that printers must also include the details on election material that they produce.
Transparency and clarity are vital for our democratic system, and it is paramount that voters understand who is responsible for the production of electoral material for individuals and parties. I am happy to tell the Committee that the proposal to close the gap between the Northern Ireland and Great Britain paper imprints regimes is fully supported and welcomed by the Electoral Commission. I should also say that, as the measures in some respects relate to the publication of personal data, we have, as Members would expect, consulted the Information Commissioner’s Office, which has approved the draft order.
Members may be aware that when the order was debated in the Lords Committee last week there was universal agreement on the matter, and a strong feeling that these are important changes for ensuring that the people of Northern Ireland have the same level of transparency and clarity in elections as people in the rest of the UK.
Finally, it is of course the case that much of the election material now seen by voters does not take the slightly old-fashioned form of printed material. We will rightly be asked how the order addresses the transparency of the sources of political campaigning online and through digital media. The short answer is that it does not, and it was not intended to. The Government have consulted on digital imprints and have made clear our intention to introduce UK-wide legislation to address that issue. The SI is a measure to bring the Northern Ireland paper imprints regime into line with that of Great Britain. Digital imprints are a separate issue and will be subject to separate legislation contained in the Elections Bill, which I am pleased to confirm has been introduced to Parliament today.
As I have said, in order to provide a coherent regime for all Northern Ireland elections, changes to the paper imprint regime in Northern Ireland will be implemented by the order, which makes provision for election material for candidates in local elections. A separate commencement order will bring into force the rest of the provisions. We intend that the commencement order will be timed so that it comes into force on the same day as this SI. I hope that Members on both sides will agree that bringing the paper imprint regime in Northern Ireland into line with the more comprehensive one in Great Britain is a sensible and important step towards modernising elections in Northern Ireland, and I hope that they will support the order, which I commend to the Committee.
Louise Haigh (Sheffield, Heeley) (Lab)
We are very happy to support the SI, on the basis that, as the Minister outlined, it will bring greater transparency in relation to election material in Northern Ireland, and bring the regime into alignment with the rest of the UK. Given the assurances that he made on digital literature, I am happy to leave it there and offer our full support.
Financial Assistance to Industry
(2 years, 12 months ago)
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The Chair
Before we begin, I remind Members to observe social distancing and to sit only in places that are clearly marked. I also remind them that Mr Speaker has stated that masks should be worn in Committee. Hansard would be most grateful if Members sent their speaking notes by email to hansardnotes@parliament.uk.
We are debating for up to 90 minutes the content of the resolution that the House of Commons itself will be asked to pass without debate once the text of the resolution has been reported from this Committee.
The Minister for Business, Energy and Clean Growth (Anne-Marie Trevelyan)
I beg to move,
That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, grants to businesses to support the development of an electric vehicle supply chain in the UK, up to a limit of £388 million over four years.
The Prime Minister’s 10-point plan sets out our ambition to accelerate the shift to zero-emission vehicles. That will play an important role in driving down carbon dioxide emissions for net zero and improving the air quality in our cities and towns.
The UK is home to a successful automotive sector, which has one of the highest productivity levels of the major European automotive-producing nations. Currently, 149,000 people are employed in automotive manufacturing, with an estimated 278,000 jobs supported by the sector in the wider economy. Those jobs are spread across the UK, mostly outside London and the south-east, with significant clusters of activity in the west midlands, the north-east and Wales.
Globally, the automotive sector is going through a once-in-a-lifetime transformation and significant investment will be required to support the shift to electric vehicles. The UK needs to establish supply chains to source critical components and to continue to develop the new technology to deliver the transition. Investing in such areas offers a huge opportunity for the creation of new highly skilled jobs as we build back better following the significant challenges that the pandemic has posed for the automotive industry. There is significant opportunity for the UK to capture a share of the investment needed to make that happen, building on existing strengths in automotive research, development and manufacturing, and on wider capabilities such as chemicals, materials processing and refining, and electronics.
Without the new investment, there is a real risk that the sector will fall into decline, causing irreversible loss of jobs and activity in our industrial heartland. To maintain and grow our automotive sector, our aim is to create an internationally competitive electric-vehicle supply chain right here in the UK. Government have developed the automotive transformation fund, which supports both R&D and capital investment to focus on the commercialisation of strategically important technologies to enable production at scale. Securing investment in battery manufacturing and gigafactories is a priority, but the fund also targets investment in the upstream battery supply chain, motors, drives, power electronics and fuel cells.
The specific technologies and processes being targeted are based on extensive research into the vehicle value change, coupled with an analysis of UK strengths, capabilities and market trends. Demand for those key components is increasing rapidly as the transition to electric vehicles accelerates. Increasing production capacity will therefore help UK-based vehicle manufacturers to secure the supplies that they need. The ability to source from suppliers in the UK is also central to enabling UK businesses to meet the rules-of-origin requirements and to continue to benefit from tariff-free exports under the UK’s free trade agreements with important export markets. That will safeguard existing jobs in the automotive supply chain and create new ones, helping our established incumbent businesses to transform and attracting new investors.
Securing such investment will take concerted effort in the face of global competition. That is why the Government and their delivery partner, the Advanced Propulsion Centre, engage proactively with potential investors through the automotive transformation fund. Engagement is backed by extensive research into the UK’s competitive strengths and an understanding of key considerations for investors. The team also provides support and information on, for example, site availability, planning and energy supply; facilitates contact with other relevant stakeholders; and makes introductions to other businesses. We speak to vehicle manufacturers to better understand their requirements and which aspects of their supply chain they would most like to onshore. We use that information to inform our targeting and discussions with investors.
The automotive transformation fund is critical to our efforts to support the transformation of the automotive sector to a zero-emissions future. We are determined to ensure that the UK continues to be one of the most competitive locations in the world for automotive manufacturing. I commend the motion to the Committee.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
It is a pleasure to serve under your chairship, Mr Dowd. I thank the Minister for her opening remarks; I think it is very positive that two women are leading this debate. She gave a helpful and comprehensive introduction to the Government’s proposals and intentions, and to the role of the Advanced Propulsion Centre in this important endeavour.
The motion authorises support for the development of an electric vehicle supply chain to be delivered through the automotive transformation fund. This is part of the significant transformation of the automotive sector that we need as it makes its transition to zero-emission vehicles. We understand that this programme will support late-stage capital and R&D investments in the UK in strategically important technologies. The Minister outlined quite a lot of these, but it is important that this should cover a much wider area of technologies than batteries, including cells, battery management systems, electric machines, drives, integrated power, electronics, fuel cells and so on.
The Government’s intent is a step in the right direction, but the Opposition feel that we should be more ambitious and match it with other necessary support. It is correct to be ambitious on the importance of phasing out petrol and diesel vehicles by 2030—indeed, we called on the Government to do that—but high ambition must be matched by support from Government, as well as support for consumers and workers to navigate this transition successfully.
Domestic battery production is absolutely key to securing the future of the industry, which is why Britishvolt’s plans and Nissan’s expansion and announcement ofits gigafactory in Sunderland are very welcome. I pay tribute to local MPs, including my hon. Friends the Members for Washington and Sunderland West (Mrs Hodgson), for Sunderland Central (Julie Elliott) and for Houghton and Sunderland South (Bridget Phillipson), for the work they have done in support of Nissan. We certainly hope for further announcements from other companies.
Perhaps I should declare a small interest: I have been driving an electric vehicle for three years. We must do what we can when investing in electric vehicles to bring the price point down, to make electric vehicles more accessible more quickly for hundreds of thousands or millions more, so that it will start to be the transformation that we need. I pay tribute to the work of Hounslow Council and other councils across the country for putting more charging points on our streets, making shifting to electric vehicles a much more practical and realistic option for many busy families.
However, if we really want to win the race on EV production, the Opposition strongly believe that the Government need to step up far more actively. We are not the only ones. The Faraday Institution says the UK will need not only one or two but up to seven gigafactories by 2040. Professor David Greenwood, professor of advanced propulsion systems and chief executive officer of the Warwick Manufacturing Group’s high-value manufacturing catapult at the University of Warwick, told the Environmental Audit Committee earlier this month that
“if the UK is able to secure the supply chain for its own battery supply, there are tens of billions of pounds worth of value per year to be generated in the UK.”
In its recent report, “Full Throttle: Driving Automotive Competitiveness”, the Society of Motor Manufacturers and Traders asks for the Government to have a target for the production of 60 GWh of battery supply within the UK, which it suggests will support capacity to produce up to 1 million electric vehicles domestically. This kind of thinking and forward capacity building is what we need to make, buy and sell more in and from the UK.
When we look at what Governments in Germany, France, China and the US are doing, we can see that the global race for gigafactories is well and truly on. Germany, Sweden, Poland and Hungary are also developing battery manufacturing capability. The German Government, for example, are providing €1 billion, while France is investing €700 million as part of a Franco-German project to establish European battery cell production. The issue is particularly pressing for us in the UK because of the rules of origin that will be in place by 2027. We have heard surprisingly little, however, about the Government’s vision of how we will become global leaders in the automotive manufacturing and industry of the future. Will the Minister take this opportunity to tell us how we will match up to our ambitions and catch up with other countries?
We welcome the Government’s automotive transform- ation fund, Mr Dowd, but forgive us for being a little impatient and for calling on the Government to be willing to go further and faster. Some £500 million of funding for R&D and capital expenditure was allocated to the ATF over the next four years but the motion references £388 million for the capital funding allocation. Will the Minister clarify when the remaining expenditure will be brought forward? Will that be through another motion?
The £388 million to support battery manufacturing is a start, but I worry that it is not enough. That is why we have said that the Government should commit to helping to finance with further investment the creation of further additional gigafactories and their associated supply chains by 2025. That investment would signal the UK’s commitment to the industry and demonstrate that the Government recognised the urgency of acting now.
Labour has also set out why, alongside that, we must make electric vehicle ownership affordable. We have called for interest-free loans for new and used electric vehicles for those on low to middle incomes, removing the upfront cost barrier and trialling a national scrappage scheme. We would also make it easier for people to drive an electric vehicle wherever they live, accelerating the important roll-out of charging points on streets and targeting areas currently left out, such as Yorkshire, the north-west and many parts of the west midlands. We need an electric vehicle revolution in every part of the country to boost the car manufacturing industry, create jobs and make only zero-emission vehicles the option for all. For that, we need a strong domestic battery supply chain to remain competitive, build our position as a leading electric vehicle producer and sell to the world. We cannot afford to be in the slow lane. If the batteries are not made here, the danger is that the cars will not be either. We need to back our ambition with the policies that will fulfil that ambition.
The Climate Change Committee tells us that for a smooth transition to 2030, 48% of new sales need to be electric by 2023. To reach that level, we come back to the point that electric vehicles must be affordable for lower income families. That is why the Government should not be cutting the plug-in grant. On supply chains, the intended investment from the fund in the development of electric vehicle supply chain in the UK is important. That development requires strategic interventions—something on which the Government do not have the best track record.
We saw the cost of Government inaction at the historic Orb steelworks in Newport East. Orb was the UK’s only producer of high quality non-oriented electric steels—the steel used to build electric motors. But in 2020, it was mothballed and subsequently closed despite determined campaigning. The Government declined to support investment to keep the plant going, but it could have been an integral part of a new UK supply chain for electric vehicles. The Sindex consultancy has estimated that the decision to let the Orb close will cost the UK economy more than £1 billion over the next decade—pretty devastating, by all accounts. As a country, we cannot continue to make such huge strategic mistakes when it comes to our steel and manufacturing sectors.
Will the Minister also clarify the following final points? The 10-point plan, published last November, commits up to £1 billion to support the electrification of UK vehicles and their supply chains, but only £500 million is being announced in this Parliament. The industry is rightly asking when the next £500 million is planned, because there is a lead time for big investments and the ability to plan ahead to invest well. Will any of the support that has been announced be tied to companies’ investment in skills and human capital, so that that growth is more sustainable as we upskill our workforce and create local jobs? What is the social return, in terms of skills and employment, on these grants expected to be? What expectation do the Government have about how SMEs will get access to some of this support through supply chains, including BAME-led and women-led businesses that are often excluded?
This is an important strategic agenda and a vital step in accelerating the shift to zero-emission vehicles that we need to see. The areas I have raised are in the interest of being constructive, because Labour wants to ensure that everyone in the country can benefit from the electric vehicle revolution, instead of baking in unfairness. While it is right that the Government have said that the sale of new petrol and diesel cars will end, they are wrong to impose a massive transition on our manufacturers from Whitehall without integrated and full support. It is also important to think about the vehicles that small businesses rely on, such as light vans and small vans, and how they will also make the transition.
We do not want our automotive sector to lose out in the race to be a world leader in the electric vehicle market. Labour would back our manufacturers and our communities with proud histories in the industry, but we must not let history write that the Government were asleep at the wheel. They need to do more, and we will not stop calling for that.
Anne-Marie Trevelyan
May I thank the hon. Lady for her valuable contribution to the debate? On her last point, I completely agree on women-led businesses and how we make sure that we maximise all that latent potential. The green jobs taskforce, which has been running over the last few months, is about to publish its recommendations, and an area that I have discussed with its members at some length is the fact that they are not maximising the use of all the human capital available to them in terms of women. I hope very much that they will be able to put forward suggestions on how they will look to expand their staffing groups to make sure that they do, because I think there is room for much improvement in many sectors. I look forward to reading the report shortly.
To answer the point the hon. Lady made, the Prime Minister set out his 10-point plan last year with the £1 billion investment for the automotive transformation fund, of which £500 million is so far in the system—if that is the right way to describe it—and will set out in due course how the second half of that committed fund will roll out. We are committed to the continued success of the UK automotive sector. We are the fifth largest European car producer and we have one of the highest productivity levels among major European automotive-producing nations.
Investment in the automotive sector was £7.2 billion in 2019, which is nearly 22% of UK manufacturing investment, and I was thrilled to see Nissan’s commitment just last week to its move to electric vehicles and the work it is doing. It wants to stay because it knows—I speak as a north-east MP who is entirely biased—that its north-east workforce is fantastic, and the company would not in any way want to move away from that. On a personal level—I apologise—I was thrilled by that announcement, because many of my constituents work at Nissan, and this will expand not only that workforce and the vehicles they produce but the wider supply chain through the battery factory. It is very exciting news.
The automotive transformation fund will continue to be a really important programme to help us with the steadfast commitment that we have made to support the sector through its transition to electrification, and the intervention that we are discussing today will help to lay the foundations for that competitive and sustainable industry. We will continue to show our support as a Government to the automotive sector as it builds back better following the disruption caused by the covid pandemic last year, giving businesses the confidence to invest and innovate, creating skilled, well-paid gender-balanced—I hope—jobs across the country, and enabling our green industrial revolution to make progress at pace.
Question put and agreed to.
Draft Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021
(2 years, 12 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Before we begin, I remind Members to observe social distancing and to sit only in the places that are clearly marked. I also remind Members that Mr Speaker has stated that face coverings should be worn in Committee unless Members are speaking or they are exempt. Hansard colleagues would be grateful if Members could send their speaking notes to hansardnotes@ parliament.uk.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
I beg to move,
That the Committee has considered the draft Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021.
The draft regulations were laid before the House on 8 June. This House is leading the way on ensuring that climate change is tackled with our pension system. We are the first country in the G7 to legislate to reach net zero by 2050. We are leading the way on the environmental, social and governance reforms that will transform the way pensions are invested, and with the Pension Schemes Act 2021, which the House passed earlier this year, we have made massive strides. The key stride that we have made is that we have put what is called the Taskforce on Climate-related Financial Disclosure—the TCFD; a catchy title, I accept—into legislation. We are the first country in the entire world to do so, which is something that this Parliament and this country should be exceptionally proud of.
We did that because climate change is the defining issue of our time. Our response will determine not only the future health and prosperity of our world; it is also a major systemic financial risk and threat to the long-term sustainability of UK private pensions. That matters because we are talking about £2 trillion-worth of assets under management. All occupational pension schemes, irrespective of their size, structure or investment strategy, are exposed to climate-related risks. Those risks present a significant threat to the retirement outcomes of millions of savers and all our constituents.
It is therefore vital that we ensure that pension schemes, and their governance, are as robust as possible to withstand those risks in both the short and the longer term. The draft regulations deliver on the commitments set out in the Government’s green finance strategy, requiring large asset owners to disclose in line with the recommendations of the TCFD by 2022. The measures will see the UK become the first country in the world in which trustees of occupational pension schemes are statutorily required to consider, assess and report on the financial risks of climate change within their portfolios.
The draft regulations impose requirements on trustees of larger occupational pension schemes, authorised master trusts and, once established, authorised collective money purchase schemes—known as collective defined contribution schemes—to identify, assess and then manage climate-related risks and opportunities. That includes requirements relating to governance, strategy and risk management, and requirements to select and calculate climate-related metrics and to set and measure performance against targets. Trustees will be required both to meet the climate change governance requirements, which underpin the recommendations of the TCFD, and to report on how they have done so in line with the taskforce recommendations.
The largest schemes and authorised schemes will be captured from 1 October 2021. We have made massive efforts to ensure that this is in play and in law prior to COP26 in Glasgow. From 1 October 2022, the draft regulations will apply to more than 70% of pension assets and more than 80% of pension members. The impact of the draft regulations will be significant and transformative. By the end of 2023, the risks and opportunities that climate change poses to £1.33 trillion-worth of pension savings will be assessed and published for all to see. Critically, that develops a system of accountability that we have never had before, and trustees will be required to show how climate change is likely to affect their portfolio.
With respect, this is the most transformational piece of legislation because it puts the consumer back in charge of how their pension is spent, so I commend the draft regulations very strongly to the Committee.
Matt Rodda (Reading East) (Lab)
I would like to start by reflecting on the existential threat of climate change and the climate emergency. We are facing the most serious threat to humanity that we have ever seen. If allowed to carry on unchecked, the rate of temperature increase will dramatically change the world and will unleash a series of geological and environmental processes that will take us on an unsustainable trajectory to massive change to the climate.
So far, the Government’s response has been weak. The Prime Minister’s words have not been backed up by action on the scale that the emergency requires. The Government’s 10-point plan has failed to meet the scale of ambition needed. The Government are veering significantly off course to meet their legally binding 2050 net zero target. Quite simply, it is not good enough, yet it is all the more important in the year of COP26. The world is looking to the UK to show global leadership, but we must start at home if we are to do anything. We need credible action to increase the pace if we are to achieve the substantial majority of our emissions reductions by the end of this decade. That requires leadership, both at home and on the world stage.
A Labour Government will replace the Government’s piecemeal approach with a green new deal—a comprehensive plan for the transition to a low-carbon economy. Last week, after our questioning, it emerged that the Chancellor’s final report into the net zero review will be further delayed. The report was first due to be published in autumn 2020, and then in spring 2021. It has still not been published.
To show even further the scale of the slippage, last week the UK’s independent adviser on tackling climate change, the Climate Change Committee, which is headed by Lord Deben, a former Conservative Minister, revealed that the Treasury has not fully achieved a single one of the Committee’s 2020 recommendations. That is the context in which we are working.
I must move on to the scope for tackling climate change through pensions. It is worth noting—the Minister hinted at this—that it is a £1 trillion industry, with enormous potential to make real and lasting change and to protect us from the worst effects of climate change. Even on a tiny scale, a single pension has the ability—if invested properly—to take an amount of carbon out of the air equivalent to several cars being taken off the road. One individual person’s pension can make a difference. Imagine that scaled up across thousands or even millions of pensions. There is real potential to do some real good. The industry itself recognises that. The Path, a fund that advises on environmentally friendly investing, recently told the Financial Times that investing only a small amount in a more sustainable way could make a huge difference.
I want to reflect on the Pension Schemes Act and climate change, and putting those two parts together. When the Bill was introduced, instead of a net zero provision we saw no mention of net zero—a gaping hole that had to be dealt with on Second Reading. The Minister put a rather favourable gloss on that. The Government introduced amendments in Committee, which had to be strengthened through cross-party agreement and negotiation to ensure that trustees or managers had to take account of the Paris agreement and domestic targets such as net zero. Climate change was then mentioned for the first time in domestic pensions legislation. We should all be proud of that, but there is so much more to do.
I would like to stress that the Act could have gone a lot further. It could have been more ambitious but, sadly, the Government voted against the Labour amendment to allow regulators to mandate occupational schemes to develop an investment strategy aligned with net zero. Instead, we have this much less assertive statutory instrument in its place. Clearly, there remains a wide gap between the Government’s rhetoric and their actions on climate change, both in pensions and across a much wider field of policy.
Turning to the SI, I accept that it takes some steps forward. It sets out a duty on trustees and comes forward with a range of technical measures that are worthy in themselves. The SI has been consulted on and has wide-ranging support in the pensions industry and among stakeholders. However, many pensions firms and stakeholders want to go a lot further. To mention a few well-known names, Scottish Widows, Aviva, Nest, the BT pension scheme and some local government pension schemes have all signed up to Make My Money Matter, the green pensions charter that wishes to take things a lot further. It is clear that there is the will to do that among many players in the industry, who I have not been able to reference.
We have seen positive initiatives developed in other related sectors. I note, for example, that Mark Carney, the former Bank of England Governor, last week announced a taskforce on scaling voluntary carbon markets. I hope that colleagues will follow its progress and show the keen interest that it deserves.
Although the SI is worthy and necessary, I want to ask the Minister a series of questions that I hope he will respond to. First, does he really think that the Government are doing anywhere near enough to tackle climate change?
Matt Rodda
I hope he will address that question more formally later. Secondly, what more can we do together on a cross-party basis to help the pensions sector tackle this enormous problem? Thirdly, will he write to me to set out the Government’s next steps? It is all well and good dealing with the regulations coming from the Act, but there is much more to do.
To sum up, the country, and indeed the world, faces an enormous challenge. Government policy is failing to address that and, as their own former Minister said only last week in the Climate Change Committee, the Government are seriously off track. The official Opposition have challenged and pressed for more action, some of which has been forthcoming. Today’s SI is helpful, but we need to see much more.
Guy Opperman
I am surprised and rather disappointed by the hon. Gentleman’s speech, because today we should be celebrating how this country is leading the way in the world. I will not go on to half-past 6, although I am tempted to, but part of his speech featured the words, “the world is looking for the UK to show global leadership.” Being the first country in the world to introduce TCFD shows great global leadership. Being the first country in the G7 to legislate for net zero shows global leadership. Leading the way in the implementation and application of ESG shows global leadership. On that basis, I utterly reject what he says.
The hon. Gentleman then asked whether we were doing enough to combat climate change. The answer is that there is always more to do. No one disputes that. But this country, and particularly the Department for Work and Pensions, led by my right hon. Friend the Secretary of State for Work and Pensions, and a fantastic team of officials, is doing everything we can.
I want to deal briefly with a Labour amendment to the Pension Schemes Bill. I have great respect for the shadow Secretary of State and for his predecessor, the shadow Minister for Pensions. The shadow Minister for Pensions and I disagreed on nothing whatever except for the one amendment that he tabled, which was misguided and exceptionally foolish, and I told him so very robustly, and I told the shadow Secretary of State. Why? Because it would have induced immediate divestment. The hon. Member for Reading East has to grasp this: who does he think will formulate, produce, create and then actually deliver carbon capture and storage, hydrogen, the fuel cells that we need, and tidal power? It will not be Government. It will not be an organisation in BEIS, however worthy BEIS might be. It will be industry, and industry needs the support of capital and investors.
The moment we introduce mandatory net zero in the circumstances of that amendment, it would inevitably result in immediate divestment. All that would happen is that the pension scheme trustees will divest out of these particular stocks and into, say, tech stocks. Even if that was a good idea, which it is not in the prevailing circumstances, here is the problem: they do not then support the people who will be creating these things. So, yes, we need to continue with stewardship and voting in the many different ways that we are already doing, and TCFD is part of that, and continue to work with these organisations to ensure that they have the capacity to create the engines of change that we all want. I wholeheartedly reject that approach.
I mean no disrespect, but I will not write to the hon. Gentleman. I am happy to sit down with him and explain the individual parts of the SI, but I do not think there is much point in my writing to him until he accepts the fundamental principles. If he still stands by the argument that divestment is the way ahead, I suggest he goes away and speaks to the Pensions and Lifetime Savings Association and all the member organisations, who so comprehensively identified that that was a disastrous approach to fiduciary duty and trustee empowerment. There are companies and pension schemes that are genuinely navigating their way with net zero pledges by a particular time, but they are doing that once they have looked at their portfolios and worked with the companies they are investing in. We cannot suddenly mandate that everybody will do it by this particular date in this particular way, because the consequences of such actions will be foolhardy.
I believe there is genuine leadership. I want to thank the team behind TCFD: the Secretary of State, who has supported the process throughout; Mark Carney, whom I met in January last year prior to the pandemic; the special advisers; the various policy officials; the Bill team; and my private office. There are too many to thank, but I will mention Thérèse, Lauren Thomas, Lisa Rumbold, David Farrar, Matthew McPherson and George Greville Williams, who all deserve great credit for all that they have done to explain, articulate, draft and drive forward this piece of legislation, which is game changing, and the first in the world in place prior to COP. I respectfully commend the regulations to the Committee.
Question put and agreed to.