Economic Crime and Corporate Transparency Bill (Fifteenth sitting)
Tuesday 22nd November 2022
(2 years ago)
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The Chair
With this it will be convenient to discuss that schedule 6 be the Sixth schedule to the Bill.
The Minister for Security (Tom Tugendhat)
It is a great privilege, as always, to be with you this morning, Mr Paisley, and to enjoy the possibility of conversing about the Proceeds of Crime Act 2002.
The clause introduces schedule 6 to the Bill, which amends the criminal confiscation powers contained in parts 2, 3 and 4 of the Proceeds of Crime Act 2002—known as POCA, not to me, but to some presumably—to make it easier for law enforcement agencies to seize, detain and recover cryptoassets in more circumstances than at present. Schedule 6 will amend the provisions in each of the three existing confiscation regimes that extend to England and Wales, Scotland, and Northern Ireland so that the measures apply in all parts of the United Kingdom. That is reflected in the three parts of schedule 6.
Key definitions in schedule 6, such as those of “cryptoasset” and “cryptoasset exchange provider”, are consistent with those used elsewhere in the Proceeds of Crime Act. The schedule includes powers to update those defined terms to ensure that the measures in the Bill can keep pace with the constantly evolving criminal use of cryptoassets, the rapidly changing nature of crypto technology as well as stay aligned with other legislation dealing with similar threats.
Stephen Kinnock (Aberavon) (Lab)
It is a great pleasure to serve under your chairship today, Mr Paisley. I take the opportunity to welcome the Minister to his place; I do not think that I have done so formally, although I might well have done informally. It is good to see him in his place.
I want to make some general comments about cryptocurrencies and about the clause and schedule 6. Broadly speaking, they have some positive aspects, but we also have some questions for the Minister, and I am sure that he will explain the position with his customary lucidity once I have sat down.
Cryptocurrencies and other digital assets are not new, but how they should be regulated is still very much an open question in the UK and internationally. The Government’s decision to expand the legal framework for asset recovery under the Proceeds of Crime Act is a positive development. For that to work, however, we need to be clear about what the legislation intends to achieve.
It is fair to say that the Government have sent mixed messages about their approach to regulating cryptoassets. On the one hand, they have acknowledged the need to tackle the use of cryptoassets for criminal purposes, hence the decision to extend the money laundering regulations to cryptoasset businesses, which has been under the supervision of the Financial Conduct Authority since January 2020. In the factsheet published alongside the Bill, the Government set out their view:
“Cryptoassets are now increasingly being used by criminals to move and launder the profits of various crimes including drugs, fraud, and money laundering. There is also an increased risk that cryptoassets are being exploited to raise and move funds for terrorist activities.”
On the other hand, earlier this year, the then Chancellor of the Exchequer, who is now the Prime Minister, said that it was his
“ambition to make the UK a global hub for cryptoasset technology”.
The then Economic Secretary to the Treasury echoed that, saying in a speech at the Innovate Finance global summit in April:
“If there is one message I want you to leave here today with, it is that the UK is open for business—open for crypto-businesses”;
and
“Because we want this country to be a global hub—the very best place in the world to start and scale crypto-companies.”
It concerns me that the Government do not seem to have made up their mind whether as a country we should value crypto firms and want to entice them to the UK, or whether we should recognise the ease with, and scale at which, criminal activity within crypto markets is allowed to happen and therefore should prioritise tightening regulation and enforcement by cracking down on the widespread use of such assets to defraud individuals and undermine our national security. Perhaps the Minister will shed some light on that strategic dilemma or ambiguity and on how the Government plan to reconcile those two apparently competing aims.
I do not want to pre-empt what the Minister will say, but I imagine that he will claim that it is possible to do both.
Stephen Kinnock
But is it not simply the case that we are not putting enough resources into the enforcement of laws and the policing of such markets? That is fundamental to achieving the regulatory aim of that side of the equation.
Crypto-expert Aidan Larkin recently told me how the US Government’s money laundering and asset recovery section brings in around $800 million a year in crypto-recovery alone, while the UK brings in close to nothing, because the UK Government fail to employ the handful of experts required simply to study the blockchains via things such as bitcoin analytics and to follow the illicit finance—“to follow the money”, as the saying goes. I cannot pretend to be an expert on the technical aspects of that, but it feels like a missed opportunity to go after illegal activity. We have surely reached a point in time when that could be self-funding, if we did it properly.
I am simply not convinced that the system for regulating cryptoassets is working as well as intended. Indeed, it is pretty telling that in response to written questions 86505 and 86504, which I tabled last week, the Minister admitted that none of the 200-plus crypto businesses operating without commission had been subject to any criminal or civil penalties.
As I mentioned, since January 2020 there has been a requirement for new businesses carrying on cryptoasset activity in the UK to register with the FCA. The requirement was extended to existing businesses the following year. The implementation of the register, however, has been beset by problems, not least of which is the fact that a very large number of the firms required to register have not done so. The FCA seems to have been unable to do much about that.
Only a couple of weeks ago, the Financial Times reported that only 16% of applications for registration have been approved by the FCA. The FCA has said that a large number of firms that failed to meet the conditions for registration have withdrawn their applications and that many of those appear to have carried on doing business without the requisite permission. Indeed, the FCA maintains a list of unauthorised cryptoasset businesses operating in the UK. As of last week, 245 firms were on that list. Will the Minister explain what is being done to prevent those 245 firms that operate outside the money laundering rules from scamming members of the public, facilitating money laundering or assisting the evasion of economic sanctions?
The Government have been aware for some time of problems involving the use of cryptoassets to defraud members of the public. In October 2018, the Government’s own Cryptoassets Taskforce published a report that identified advertising that misleads people deliberately, by overstating the potential gains from investing in such assets and downplaying the risks involved, as a significant problem for the Government to address. Only now, after four years, are new rules being introduced to expand the FCA’s remit to include consumer protection in relation to misleading financial promotions.
Despite that, however, a clear gap remains between the scale of criminal activity in the sector and the ability of the FCA and police forces to respond. In recent evidence provided to the Treasury Committee, Ian Taylor of the crypto trade body, CryptoUK, said that the recent collapse of high-profile crypto exchanges such as FTX could have been prevented had a stronger regulatory system been in place. Multiple witnesses testified to the Committee that, without additional staff with the right expertise, the FCA was unlikely to be able to regulate the crypto sector effectively.
Let me turn to the substance of the clause and schedule 6. It is clearly necessary for the law to be brought up to date to reflect the use of digital assets for criminal purposes. The clause and schedule amend the Proceeds of Crime Act 2002, to extend to intangible assets the same confiscation powers that are already used to recover physical assets like cash. That is an important first step, but in many ways the Bill leaves open more questions than it answers.
For instance, the Bill provides new powers to seize cryptoasset-related items, but the definition of those items is incredibly vague, encompassing any item of property that may provide access to some kind of information that could be relevant to an effort to seize a cryptoasset. Given the broad scope of the powers, alongside the related provisions on the destruction of confiscated property, we need more information from the Minister about how the powers are likely to be used in practice.
Alison Thewliss (Glasgow Central) (SNP)
I agree very much with what has been said from the Labour Front Bench. I ask the Minister about the interaction between this Bill and all the other Bills that are considering crypto at the moment, including the Online Safety Bill, which addresses some aspects of people being exposed online to financial crime. The Treasury Committee report on economic crime pushed quite strongly on having an aspect on economic crime in the Online Safety Bill, because it is important that people are not scammed online. To me and to many others, crypto seems very much a place where people do get scammed and lose all their money.
I draw the Committee’s attention to an interview by Henry Mance in the Financial Times yesterday with Stephen Diehl, who is very cynical about the crypto industry and its ability to rip people off. We have to be incredibly careful about the areas we are getting into; we are legislating for something that is moving very quickly. Given the number of Government amendment that will be made to the schedules in this part of the Bill, we need to think carefully about what we are putting in and whether it is suitable for seizing assets and for protecting people against crypto-related fraud more widely.
My other point is about expertise. I have talked an awful lot about the Government having expertise in various areas on the enforcement side, because if there is no expertise in enforcement, the laws that we are considering will just not be enforced. In our evidence session, Andy Gould said:
“We have been investigating cryptocurrency since 2015 or 2016. One of my sergeants has just been offered 200 grand to go to the private sector. We cannot compete with that. That is probably the biggest risk that we face within this area at the moment.”––[Official Report, Economic Crime and Corporate Transparency Public Bill Committee, 25 October 2022; c. 24, Q37.]
If the money is not there in policing to retain the expertise to prosecute crypto crimes and to make sure that the legislation works in practice, rather than just on paper, the Government will be very much behind the curve.
I add my hesitation on the messages the Government are giving out on regulating and encouraging and on cracking down on a sector that has the potential, as we have seen with the collapse last week, of losing an awful lot of people their money and of making some people an awful lot of money out of those who have lost it.
Tom Tugendhat
If I may, I will just give a quick explanation of what crypto is because there seems to be some misunderstanding. Crypto is both a technology and a financial instrument. The financial instrument element is only part of it. Allowing for crypto technology is basically allowing for mathematics. Passing laws against crypto is like passing laws against mathematics—we can try, but it is not going to work.
What the now Prime Minister was talking about was encouraging the mathematics, the algorithms and the technology to develop in this country to create the kind of industry and the kind of infrastructure that would allow the technological use of algorithms for the transfer, sometimes of wealth, sometimes of knowledge, sometimes of contractual obligations. That is what blockchain fundamentally is.
On top of the blockchain, there are various forms of currency. There are bitcoins, which are proof of work, and then there is ethereum, which is proof of stake. These are different kinds of technologies and different ways in which cryptoassets use the blockchains and the technology that has underwritten them.
Having regulation for the currency is not the same as having regulation for the underlying mathematics. We would not say that we have regulation for the economist in the same way that we have regulation for the bank—they are different things. The Government are doing the right thing. We recognise that there is technology, and supporting it; we recognise that there are financial instruments, and are looking to work with others to make sure that those financial instruments are regulated in a sensible way. Now, that is difficult: I will be honest. It is difficult because the technology and its use are changing remarkably. The hon. Member for Aberavon spoke about FTX. As he may know, other companies such as Celsius and Gemini have stopped trading in various different ways, as well. It is not just about one instrument. It is certainly arguable that FTX got into difficulties for reasons other than lack of regulation.
The hon. Member’s point about advertising is extremely valid. There is a real challenge. That is different—it does not quite relate to this element of the Bill. We are seeing increasing amounts of financial advertising online in different ways. I do not know how many members of the Committee have Instagram accounts, but the number of Instagram messages I get advertising foreign exchange trading is frankly bizarre.
Tom Tugendhat
I do not want to know what they advertise to the right hon. Gentleman. They don’t do it by pigeon.
The reality is that there are different ways in which people are trying to hack and attack, to steal from individuals in our country and around the world. That is why the work we are doing on the Joint Fraud Taskforce, which met yesterday, and on many other aspects of regulation, such as the Online Safety Bill, which the hon. Member for Glasgow Central quite rightly spoke about, is so important. The FCA has moved forward on many of those areas, in a sensible way, to balance the need of the technology to advance with the protection of society. It is certainly true that many people have lost a lot in recent weeks and months. I do not think anybody was under any great illusion, though, that cryptocurrencies were not a high-risk item, to put it politely. Anything worth about $1 10 years ago and $60,000 a few years later is probably not a stable currency. It may be many things, but it is probably not stable. It is now worth about $10,000 or so—
Tom Tugendhat
So, $13,000. That certainly speaks to the level of volatility. It has been up and down like a yo-yo in between times, so it is not exactly as though anybody would have been recommended it as an investment vehicle. I understand the hon. Lady’s points about online safety and fraud, and she is completely correct, but that is being addressed in different aspects of Government policy. What the Bill does is make sure that those assets that are held in cryptocurrency can be seized, as other assets can. It is certainly true that they are held in different ways, as the gentleman who is going through the waste dump in Wales is discovering. That means that seizing the assets needs a certain ambiguity in the legislation in order to keep it updated for the future. The Government have made a sensible series of suggestions to balance that need for advancing the technology and protecting consumers.
Stephen Kinnock
The Minister is being very generous. On that point about seizing the assets, will the Minister comment on the feedback that Aidan Larkin, an expert in this area, gave me, which is that in the United States money laundering and asset recovery measures bring in about $800 million per year? He says that we do not employ enough people doing block chain analytics. We are missing a big opportunity to generate revenue for the Exchequer.
Tom Tugendhat
I am delighted that the hon. Gentleman will now be supporting this element of the Bill, because that is exactly what it is for.
Stephen Kinnock
I thank the Minister for sitting down even before I had intervened.
Stephen Kinnock
It seems that this is an issue around resourcing and having the people in place—the handful of experts that we need to study the blockchains. Will the Minister assure the Committee that that resourcing will be provided?
Tom Tugendhat
I can assure the hon. Gentleman that the National Crime Agency, working alongside partners in places such as GCHQ, has enormous amounts of technology to look at cryptoassets in various different ways. The Bill—which I am delighted to hear the hon. Gentleman supports so enthusiastically—will indeed give the powers that he looks for.
Question put and agreed to.
Clause 141 accordingly ordered to stand part of the Bill.
Schedule 6 agreed to.
Clause 142
Cryptoassets: civil recovery
Tom Tugendhat
I beg to move amendment 121, in clause 142, page 125, line 18, at end insert—
“(2) It also contains related amendments.”.
This amendment provides for Schedule 7 (cryptoassets: civil recovery) to contain related amendments.
The Chair
With this it will be convenient to discuss Government amendments 51 to 64, 156, 157, 65 to 67 and 158 to 161.
Tom Tugendhat
This is a series of small wording and technical amendments that make no substantial changes to schedule 7, but simply ensure clarity and maintain consistency in the Bill’s drafting.
Stephen Kinnock
The use of enhanced powers to seize and detain digital assets, as set out in schedule 6, will be subject to a court order. Clause 142 and schedule 7 and the related Government amendments extend civil recovery powers, which may be used in the absence of a criminal conviction, to a range of organisations including the National Crime Agency, His Majesty’s Revenue and Customs and the Serious Fraud Office, in addition to police forces. It would be helpful if the Minister could explain how the Government will ensure that these enforcement powers will be used effectively in a way that avoids duplication of effort and ensures that there is a clear division of responsibilities of the different agencies. As I have said before, numerous additional powers are provided for in the Bill that require further clarification.
The Chair
Order. I encourage you to speak to amendment 121. We will come to the other amendments in the next group.
The Chair
I do not want to stop you in case you have something material to put on the record on amendment 121.
Stephen Kinnock
I have no substantial comment on the Government amendments. I should have made that clear. As the Minister says, these are technical amendments that do not have a huge amount of consequence.
I return to the issue of powers provided for in the Bill that require further clarification. I would be particularly grateful if the Minister could explain how the provisions enabling a digital asset to be converted into its equivalent value in cash might be used in practice.
In my view, there are other important issues in this area, which the Bill fails to address. I would be grateful if the Minister could set out what plans, if any, the Government have to update the asset confiscation powers we have been discussing and to extend the scope of the money laundering regulations to reflect technological developments such as non-fungible tokens and the use of digital works of art as a means of disguising illicit financial transactions.
Tom Tugendhat
I was rather under the impression that we had not voted on the amendment.
The Chair
We are not voting yet—we will be coming to a vote in a moment. It is for you to now conclude the debate.
Tom Tugendhat
It feels a bit sentence first, verdict afterwards, but all right.
The Chair
We have been doing it for thousands of years. Don’t worry—you will get used to it.
Tom Tugendhat
I have nothing further to add on that.
Amendment 121 agreed to.
Question proposed, That the clause, as amended, stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
That schedule 7 be the Seventh schedule to the Bill.
Government new clause 23—Cryptoassets: terrorism.
Government new schedule 1—Cryptoassets: terrorism.
I call the Minister to speak to clause 142 stand part, although that might seem a bit déjà vu for some folk now.
Tom Tugendhat
It is unusual to have the Opposition argument before the ministerial one—
Stephen Kinnock
I apologise for jumping the gun, but I thought we had already debated the group.
Tom Tugendhat
I am delighted to have had the position set out so clearly.
Perhaps it would be helpful if I answered some of the hon. Gentleman’s questions. The reality is that this part of the Bill is to allow law enforcement agencies to search for physical items linked to cryptoassets. As I said in answer to an earlier point, many of the assets are held in different ways. Therefore, seizing physical assets in order to link to cryptoassets is often necessary.
To use the proposed powers, officers will need reasonable grounds to suspect that the cryptoassets have been obtained through unlawful conduct or are intended for use in unlawful conduct. The powers to search for and detain assets are supplemented by powers to ultimately forfeit the cryptoassets where a magistrates court, or a sheriff court in Scotland, can be satisfied that they have been obtained through, or are intended for use in, unlawful conduct. The powers to seize or freeze and ultimately recover cryptoassets may be used irrespective of whether the asset holder has been convicted of a criminal offence. They are, therefore, an important tool for disrupting criminal activity.
Government new clause 23 and new schedule 1—which we have just heard the Opposition debate—mirror in counter-terrorist legislation the civil recovery powers in schedule 7 to the Bill by introducing new provisions into the Anti-terrorism, Crime and Security Act 2001 and the Terrorism Act 2000. That addresses a gap in existing counter-terrorism legislation and ensures that the UK’s world-leading counter-terrorism framework keeps pace with modern technology.
The creation of cryptoasset-specific civil forfeiture powers in both the Proceeds of Crime Act and counter-terrorism legislation will, importantly, mitigate the risk posed by those who cannot be prosecuted under the criminal system, but who use their proceeds stored as cryptoassets to perpetrate further criminality. Key definitions in the measures inserted by schedule 7 and new schedule 1 are in line with existing legislation and with schedule 6 to the Bill. Similarly, they include powers to update the defined terms and adapt the process for forfeiture of frozen cryptoassets, if needed. With that, I believe I have answered the Opposition’s questions before they were even asked.
Stephen Kinnock
The Opposition are concerned about enforcement. As the Minister and I have agreed throughout the debate, and as his ministerial colleague has frequently said, legislation without implementation is not worth the paper it is written on. There is little point in us passing a law that cannot or will not be enforced effectively. I am, and the Opposition are, genuinely concerned about the real risk in the proposals, partly because so much detail has yet to be made clear, but mostly because of the huge gap between what we expect of law enforcement and what resources the Government are prepared to put in.
As I said about the FCA, even the most basic requirement for cryptoasset firms to register is starting to appear unworkable. Will the Minister explain, if we cannot even get such businesses to register, how on earth will we ever be able to identify which ones are breaking the law, much less impose any penalties? I look forward to his clarification.
Tom Tugendhat
I am pleased that the hon. Gentleman is so supportive of the work of the NCA, because it, GCHQ and others have been working extremely hard on identifying the movement of cryptoassets around not just the UK, but wider areas and jurisdictions. That is enormously important for the element of seizure to which he is referring.
It is also important that the conversion powers that the hon. Gentleman spoke about are understood for what they are. A few moments ago, the hon. Member for Glasgow Central asked about market volatility. That is true at any point, including at moments of seizure. Therefore, in order to avoid market volatility at moments of seizure—particularly when assets have been taken, converted to crypto in order to be moved abroad and then seized—having control of those assets means that one needs to put them into cash in order to have a recoverable asset, so this provision is extremely sensible.
The new powers are modelled on existing powers that many law enforcement agencies use to disrupt criminal and terrorist networks. They exercise proportionality and investigatory powers that are absolutely necessary, and no more.
Question put and agreed to.
Clause 142, as amended, accordingly ordered to stand part of the Bill.
Schedule 7
Cryptoassets: civil recovery
Amendments made: 51, in schedule 7, page 206, line 42, leave out “Chapter” and insert “Part”.
This amendment makes a minor technical correction to inserted section 303Z42 of the Proceeds of Crime Act 2002, which relates to the procedure for applying for the forfeiture of cryptoassets.
Amendment 52, in schedule 7, page 206, leave out lines 45 to 47 and insert—
“(3) Where an application is made under section 303Z41 in relation to cryptoassets held in a crypto wallet that is subject to a crypto wallet freezing order—
(a) subsections (4) and (5) apply, and
(b) the crypto wallet freezing order is to continue to have effect until the time referred to in subsection (4)(b) or (5).”
This amendment amends inserted section 303Z42 of the Proceeds of Crime Act 2002 to provide that a crypto wallet freezing order continues to have effect until the end of any forfeiture proceedings started in respect of cryptoassets held in a crypto wallet that is subject to such a freezing order.
Amendment 53, in schedule 7, page 207, line 12, leave out “(4)” and insert “(4)(b)”.
This amendment is consequential on Amendment 52.
Amendment 54, in schedule 7, page 211, line 24, leave out from “applies” to end of line 28 and insert “—
(a) the magistrates’ court or sheriff decides—
(i) to make an order under section 303Z41(4) in relation to some but not all of the cryptoassets to which the application related, or
(ii) not to make an order under section 303Z41(4), or
(b) if the application is transferred in accordance with section 303Z45(1), the High Court or Court of Session decides—
(i) to make an order under section 303Z45(3) in relation to some but not all of the cryptoassets to which the application related, or
(ii) not to make an order under section 303Z45(3).”
This amendment provides that an application under inserted section 303Z46 of the Proceeds of Crime Act 2002 (continuation of crypto wallet freezing order pending appeal) may be made in circumstances where a forfeiture application under section 303Z41 of that Act is transferred in accordance with section 303Z45 of that Act to be heard by the High Court or the Court of Session.
Amendment 55, in schedule 7, page 211, line 31, leave out “(1)(a) or (b)” and insert “(1)”.
This amendment is consequential on Amendment 54.
Amendment 56, in schedule 7, page 211, line 37, leave out “under section 303Z47” and insert
“(whether under section 303Z47 or otherwise)”.
This amendment is consequential on Amendment 54.
Amendment 57, in schedule 7, page 211, line 39, leave out “(1)(a) or (b)” and insert “(1)”.
This amendment is consequential on Amendment 54.
Amendment 58, in schedule 7, page 213, line 2, leave out “with the approval of” and insert
“if the officer is a senior officer or is authorised to do so by”.
This amendment amends inserted section 303Z48 of the Proceeds of Crime Act 2002 to provide that an enforcement officer may destroy forfeited cryptoassets only if the officer is a senior officer or is authorised to do so by a senior officer.
Amendment 59, in schedule 7, page 214, line 44, after “may” insert “, subject to subsection (7A),”.
This amendment and Amendments 60 and 62 amend inserted section 303Z51 of the Proceeds of Crime Act 2002 to provide that cryptoassets may not be released under that section while forfeiture proceedings are ongoing in respect of those cryptoassets.
Amendment 60, in schedule 7, page 215, line 8, after “may” insert “, subject to subsection (7A),”.
See Amendment 59.
Amendment 61, in schedule 7, page 215, line 24, at end insert “or”.
This amendment makes a minor technical correction to the release condition in inserted section 303Z51(7) of the Proceeds of Crime Act 2002.
Amendment 62, in schedule 7, page 215, line 29, at end insert—
“(7A) If an application under section 303Z41 is made for the forfeiture of the cryptoassets, the cryptoassets are not to be released under this section until any proceedings in pursuance of the application (including any proceedings on appeal) are concluded.”
See Amendment 59.
Amendment 63, in schedule 7, page 226, line 18, after “cryptoassets” insert—
“, or of property which they represent,”.
This amendment amends inserted section 303Z63 of the Proceeds of Crime Act 2002 (converted cryptoassets: victims and other owners) to provide that the condition in subsection (5)(a) of that section is met where the applicant was deprived of cryptoassets or of property which those cryptoassets represent.
Amendment 64, in schedule 7, page 227, leave out lines 1 to 5 and insert—
“(a) if the conditions in this Chapter for the detention of the converted cryptoassets are no longer met, or”.
This amendment amends the release condition in inserted section 303Z63(8) of the Proceeds of Crime Act 2002 (converted cryptoassets: victims and other owners) to provide that the release condition is met where the court is satisfied that the conditions in Chapter 3F of Part 5 of that Act for detention of the converted cryptoassets are no longer met.
Amendment 156, in schedule 7, page 230, line 22, at end insert—
“Amendments to the Proceeds of Crime Act 2002
1A In section 2C(3A) of the Proceeds of Crime Act 2002 (prosecuting authorities), for ‘or 303Z19’ substitute ‘, 303Z19, 303Z53 or 303Z65’.
1B (1) Part 2 of the Proceeds of Crime Act 2002 (confiscation: England and Wales) is amended as follows.
(2) In section 7 (recoverable amount)—
(a) in subsection (4)(c), for ‘or 303Z14(4)’ substitute ‘, 303Z14(4), 303Z41(4), 303Z45(3) or 303Z60(4)’;
(b) in subsection (4)(d), after ‘303Q(1)’ insert ‘or 303Z44(1)’.
(3) In section 82 (free property)—
(a) in subsection (2)—
(i) in paragraph (ea), for ‘or 10Z2(3)’ substitute ‘, 10Z2(3), 10Z7AG(1), 10Z7BB(2), 10Z7CA(3), 10Z7CE(3) or 10Z7DG(3)’;
(ii) in paragraph (f), for ‘or 303Z14(4)’ substitute ‘, 303Z14(4), 303Z32(1), 303Z37(2), 303Z41(4), 303Z45(3) or 303Z60(4)’;
(b) in subsection (3)—
(i) after paragraph (b) insert—
(ii) in paragraph (c), after ‘303Q(1)’ insert ‘or 303Z44(1)’;
(iii) after paragraph (e) insert—
(iv) in paragraph (f), after ‘10I(1)’ insert ‘or 10Z7CD(1)’.
1C (1) Part 3 of the Proceeds of Crime Act 2002 (confiscation: Scotland) is amended as follows.
(2) In section 93 (recoverable amount)—
(a) in subsection (4)(c), for ‘or 303Z14(4)’ substitute ‘, 303Z14(4), 303Z41(4), 303Z45(3) or 303Z60(4)’;
(b) in subsection (4)(d), after ‘303Q(1)’ insert ‘or 303Z44(1)’.
(3) In section 148 (free property)—
(a) in subsection (2)—
(i) in paragraph (ea), for ‘or 10Z2(3)’ substitute ‘, 10Z2(3), 10Z7AG(1), 10Z7BB(2), 10Z7CA(3), 10Z7CE(3) or 10Z7DG(3)’;
(ii) in paragraph (f), for ‘or 303Z14(4)’ substitute ‘, 303Z14(4), 303Z32(1), 303Z37(2), 303Z41(4), 303Z45(3) or 303Z60(4)’;
(b) in subsection (3)—
(i) after paragraph (b) insert—
(ii) in paragraph (c), after ‘303Q(1)’ insert ‘or 303Z44(1)’;
(iii) after paragraph (e) insert—
(iv) in paragraph (f), after ‘10I(1)’ insert ‘or 10Z7CD(1)’.
1D (1) Part 4 of the Proceeds of Crime Act 2002 (confiscation: Northern Ireland) is amended as follows.
(2) In section 157 (recoverable amount)—
(a) in subsection (4)(c), for ‘or 303Z14(4)’ substitute ‘, 303Z14(4), 303Z41(4), 303Z45(3) or 303Z60(4)’;
(b) in subsection (4)(d), after ‘303Q(1)’ insert ‘or 303Z44(1)’.
(3) In section 230 (free property)—
(a) in subsection (2)—
(i) in paragraph (ea), for ‘or 10Z2(3)’ substitute ‘, 10Z2(3), 10Z7AG(1), 10Z7BB(2), 10Z7CA(3), 10Z7CE(3) or 10Z7DG(3)’;
(ii) in paragraph (f), for ‘or 303Z14(4)’ substitute ‘, 303Z14(4), 303Z32(1), 303Z37(2), 303Z41(4), 303Z45(3) or 303Z60(4)’;
(b) in subsection (3)—
(i) after paragraph (b) insert—
(ii) in paragraph (c), after ‘303Q(1)’ insert ‘or 303Z44(1)’;
(iii) after paragraph (e) insert—
(iv) in paragraph (f), after ‘10I(1)’ insert ‘or 10Z7CD(1)’.”
This amendment contains consequential and other amendments to Parts 1 to 4 of the Proceeds of Crime Act 2002 in relation to the civil recovery of cryptoassets.
Amendment 157, in schedule 7, page 230, line 24, at end insert—
“(1A) In section 278 (limit on recovery)—
(a) in subsection (7)(a), for ‘or 303Z14’ substitute ‘, 303Z14, 303Z41, 303Z45 or 303Z60’;
(b) after subsection (7A) insert—
‘(7B) If—
(a) an order is made under section 303Z44 instead of an order being made under section 303Z41 for the forfeiture of recoverable property, and
(b) the enforcement authority subsequently seeks a recovery order in respect of related property,
the order under section 303Z44 is to be treated for the purposes of this section as if it were a recovery order obtained by the enforcement authority in respect of the property that was the forfeitable property in relation to the order under section 303Z44.’”
This amendment contains a consequential amendment to section 278 of the Proceeds of Crime Act 2002 in relation to forfeited cryptoassets.
Amendment 65, in schedule 7, page 231, line 3, after “may” insert “, subject to subsection (7A),”.
This amendment and Amendments 66 and 67 amend inserted section 303Z17A of the Proceeds of Crime Act 2002 to provide that money may not be released under that section while forfeiture proceedings are ongoing in respect of the money.
Amendment 66, in schedule 7, page 231, line 13, after “may” insert “, subject to subsection (7A),”.
See Amendment 65.
Amendment 67, in schedule 7, page 231, leave out lines 25 to 36 and insert—
“(7) The release condition is met—
(a) in relation to money held in a frozen account, if the conditions for making an order under section 303Z3 in relation to the money are no longer met, or
(b) in relation to money held in a frozen account which is subject to an application for forfeiture under section 303Z14, if the court or sheriff decides not to make an order under that section in relation to the money.
(7A) Money is not to be released under this section—
(a) if an account forfeiture notice under section 303Z9 is given in respect of the money, until any proceedings in pursuance of the notice (including any proceedings on appeal) are concluded;
(b) if an application for its forfeiture under section 303Z14 is made, until any proceedings in pursuance of the application (including any proceedings on appeal) are concluded.”
See Amendment 65. This amendment also replaces the release condition in inserted section 303Z17A(7) of the Proceeds of Crime Act 2002 to include changes for consistency with equivalent provisions in Part 5 of that Act.
Amendment 158, in schedule 7, page 235, line 5, at end insert—
“(20A) In section 386 (production orders: supplementary), in subsection (3)(b), for ‘or a frozen funds investigation’ substitute ‘, a frozen funds investigation or a cryptoasset investigation’.”
This amendment contains a consequential amendment to section 386 of the Proceeds of Crime Act 2002 in relation to production orders and cryptoasset investigations.
Amendment 159, in schedule 7, page 236, line 11, at end insert—
“(30) In section 416 (other interpretative provisions), in subsection (1), after the entry for ‘confiscation investigation’ insert—
‘cryptoasset investigation: section 341(3D)’.”
This amendment contains a consequential amendment to section 416 of the Proceeds of Crime Act 2002 in relation to the meaning of “cryptoasset investigation” in Part 8 of that Act.
Amendment 160, in schedule 7, page 236, line 11, at end insert—
“3A In section 438 of the Proceeds of Crime Act 2002 (disclosure of information by certain authorities), in subsection (1)(f), for ‘or 3B’ substitute ‘, 3B, 3C, 3D, 3E or 3F’.
3B In section 441 of the Proceeds of Crime Act 2002 (disclosure of information by Lord Advocate and by Scottish Ministers)—
(a) in subsection (1), for ‘or 3A’ substitute ‘, 3A, 3C or 3F’;
(b) in subsection (2)(g), for ‘or 3B’ substitute ‘, 3B, 3C, 3D, 3E or 3F’.
3C In section 450 of the Proceeds of Crime Act 2002 (pseudonyms: Scotland), in subsection (1)(a), for ‘or a frozen funds investigation’ substitute ‘, a frozen funds investigation or a cryptoasset investigation’.
3D In section 453A of the Proceeds of Crime Act 2002 (certain offences in relation to financial investigators), in subsection (5), at the end of paragraph (dc) (before the ‘or’) insert—
‘(dd) section 303Z21 (powers to search for cryptoasset-related items);
(de) section 303Z26 (powers to seize cryptoasset-related items);
(df) section 303Z27 (powers to detain cryptoasset-related items);’.”
This amendment contains consequential amendments to Parts 10 and 12 of the Proceeds of Crime Act 2002. The amendments relate to the disclosure of information obtained during cryptoasset investigations, the use of pseudonyms during such investigations and offences against accredited financial investigators exercising powers in connection with such investigations.
Amendment 161, in schedule 7, page 236, line 21, at end insert—
“Amendments to the Civil Jurisdiction and Judgments Act 1982
5 (1) Section 18 of the Civil Jurisdiction and Judgments Act 1982 (enforcement of UK judgments in other parts of UK) is amended as follows.
(2) In subsection (2)(g), for ‘or a frozen funds investigation’ substitute ‘, a frozen funds investigation or a cryptoasset investigation’.
(3) In subsection (4ZB)—
(a) after paragraph (b) insert—
‘(ba) a crypto wallet freezing order made under section 303Z37 of that Act;
(bb) an order for the forfeiture of cryptoassets made under section 303Z41 or 303Z45 of that Act;’;
(b) after paragraph (d) insert—
‘(da) a crypto wallet freezing order made under paragraph 10Z7BB of that Schedule;
(db) an order for the forfeiture of cryptoassets made under paragraph 10Z7CA or 10Z7CE of that Schedule.’
(4) In subsection (5)(d)(i)—
(a) after ‘(a)’ insert ‘, (ba)’;
(b) for ‘or (c)’ substitute ‘, (c) or (da)’.”—(Tom Tugendhat.)
This amendment amends the Civil Jurisdiction and Judgments Act 1982 to include provision about the enforcement of certain cryptoasset-related orders in different parts of the UK.
Schedule 7, as amended, agreed to.
Clause 143
Money laundering: exiting and paying away exemptions
Question proposed, That the clause stand part of the Bill.
Tom Tugendhat
In a most unusual role, I shall start this time. Clauses 143 and 144 expand the types of case in which businesses can deal with clients’ property without first having to submit a defence against money laundering suspicious activity report—a so-called DAML. The changes will reduce nugatory regulatory burdens on businesses and help focus private sector and law enforcement resources on proactive, high-value activity, while removing disproportionate delays to businesses and customers.
A DAML effectively freezes a transaction until the UK Financial Intelligence Unit in the National Crime Agency—the UKFIU—decides to provide consent for the transaction to go ahead. Alternatively, the UKFIU could refuse it and pursue further investigation. If the UKFIU does not respond within seven working days, the business can assume that they have consent and proceed with the transaction. That means businesses regularly waiting seven working days before being able to proceed with a transaction. Businesses cannot inform customers that the delay is due to a DAML, as doing so may amount to a criminal offence.
The volume of DAMLs submitted by businesses to the UKFIU rose by 80% to 62,341 in the last year that data was available, which is creating a disproportionate burden on staff in the regulated sector, as well as in the NCA and wider law enforcement. The clauses will ensure that we are taking action to handle those rising volumes and that the DAML reporting system is used proportionally.
The exemption created by clause 143 will apply when a business in the anti-money laundering regulated sector ends a relationship with a customer and pays away any money or property suspected to be the proceeds of criminal conduct. The clause enables the business to pay back money or property under the value of £1,000 without first submitting a defence against money laundering suspicious activity report to the UKFIU and without committing a money laundering offence.
DAMLs below £1,000 are of limited value to law enforcement. That is because £1,000 is the minimum amount for law enforcement to pursue an account freezing order under the civil recovery provisions, and because of the need to prioritise higher volume cases. As a result, DAMLs below £1,000 are rarely refused consent by the UKFIU, but they place a burden on reporters to submit.
The exemption created by clause 144 will apply when a person carrying out business in the anti-money laundering regulated sector suspects that only part of their customer’s property is the proceeds of criminal conduct. The clause enables the business to allow the customer access to their property without the business committing one of the principal money laundering offences or first submitting a defence against money laundering suspicious activity report. This is provided that the conditions of the exemption are met, including the condition that, as a minimum, the value of the suspected criminal property in the account is withheld when allowing a customer access to their funds.
The Chair
Thank you, Minister. It is not unusual to start when your name is on the clause.
Stephen Kinnock
According to the Government’s impact assessment, the purpose of clauses 143 and 144, which expand the scope of exemptions from money laundering offences, is to reduce the number of ineffective defence against money laundering reports submitted to the NCA’s financial intelligence unit. It is worth bearing in mind that the purpose of the reporting system is to enable regulated firms to notify the FIU when they are asked by a client to make a financial transaction that may amount to a money laundering offence. The FIU has seven days to review the report, and if it turns out that there is a connection to money laundering, it can ensure that appropriate enforcement action is taken.
The reports can, and often do, serve as a valuable means of identifying criminal activity. The Government’s wish to reduce the number of DAML reports is understandable, but we must not throw the baby out with the bathwater. It is important for the Minister to explain to the Committee how those measures are sufficiently targeted that they reduce the number of unnecessary or unhelpful reports without causing a similar reduction in reports that might help to identify serious crime.
Clauses 143 and 144 provide exemptions from money laundering offences for certain transactions involving property worth less than £1,000, and in cases where some but not all of a client’s assets may involve criminal funds. I would be grateful if the Minister would explain the Government’s reasoning in setting the relevant thresholds at the specific levels provided for in those clauses.
I want to touch on a couple of broader points. The Government are right that the SARs process is in need of considerable reform. There are many steps the Government could take to improve the quality of reporting in addition to the measures set out in those clauses. For instance, the Solicitors Regulation Authority published a report last month in which it noted that, in two thirds of the reports it reviewed, the firms making the report did not include the glossary codes that enable the NCA to triage reports effectively and ensure an appropriate enforcement response. Additionally, the SRA found that as many as a quarter of the DAML reports it reviewed failed even to describe the criminal conduct that was suspected. Those findings are clear evidence that many law firms do not have an adequate level of understanding of the laws they are expected to help enforce. The same may well be true in other regulated sectors.
Will the Minister set out what steps the Government are taking to ensure that regulated firms have a better understanding of their obligations under the law, and how official guidance might be improved to help firms to submit better quality reports? I point out that significant improvements could be made to the speed and efficiency of the SARs process by making use of new and emerging technologies. If the FIU could use more cutting-edge software applications and algorithms to help identify the most serious crimes, it would go a long way towards addressing the problems that the Government seek to tackle. Perhaps the Minister might comment on the Government’s work in that area.
Tom Tugendhat
I am delighted to respond to that. The rising volume of DAMLs being submitted has already had an impact on effectiveness. That is welcome, in that businesses are taking their responsibilities extremely seriously, and the UKFIU is responding appropriately when it receives them. Although, as the hon. Member quite rightly says, technology can help, the reality is that there is still an awful lot of work to be done. That is why these provisions are so reasonable.
The provisions are reasonable because property or criminal funds worth less than £1,000 are already exempt from asset seizures in different circumstances. It makes absolute sense to have a restriction on that in the Bill and apply the same threshold to allow the UKFIU to target, as much as possible, those serious money laundering accusations and investigations appropriately—and, indeed, to arrest more criminals.
Stephen Kinnock
I thank the Minister for that response. Would he care to comment on the feedback from the Solicitors Regulation Authority, which points particularly at the fact that many of the firms doing the reports were not including key information such as glossary codes and sometimes did not even describe the criminal conduct that they suspected? Is there something more that could be done so that the information at source was in a better state? Does he think that the feedback from the SRA could be a good basis on which to achieve that?
Tom Tugendhat
I am sure that having data at source in as clean and fluent a fashion as possible, so that it is complete and allows investigation, is absolutely essential. I am sure that solicitors will feel the responsibility to do that. I am grateful to the hon. Gentleman for raising that point.
Question put and agreed to.
Clause 143 accordingly ordered to stand part of the Bill.
Clause 144 ordered to stand part of the Bill.
Clause 145
Information orders: money laundering
Question proposed, That the clause stand part of the Bill.
Tom Tugendhat
Clause 145 amends the existing information order power in the Proceeds of Crime Act 2002 to bolster the UKFIU intelligence-gathering powers. Clause 146 addresses a gap in counter-terrorism legislation by mirroring those in the Terrorism Act 2000. The clauses will align the UKFIU more closely with the international standards of the Financial Action Task Force, known as FATF—including to me, actually—and enable greater collaboration with international financial intelligence units. That aids public safety in the UK and overseas, and furthers the UK’s efforts to combat illicit financial flows entering the UK economy.
FATF is the international body devoted to developing and promoting policies to combat money laundering and terrorist financing. As a member, the UK agrees to promote FATF’s anti-money laundering standards, which are expressed in the form of recommendations. FATF, the global money laundering and terrorist financing watchdog, evaluated the UK in 2018 and rated it only “partially compliant”. That rating was affected by the UKFIU’s limited ability to conduct operational strategic analysis in cases where a business has not already submitted a suspicious activity report.
Clause 145 amends the existing information order power by removing the requirement for a preceding suspicious activity report, or SAR, before an application can be made to a magistrates or sheriff court. Clause 146 mirrors that for counter-terrorism legislation. The information order will compel business in the anti-money laundering regulated and terrorist financing regulated sectors to provide information about a customer or client. That information will enable the UKFIU to conduct its operational strategic analysis functions by proactively gathering financial intelligence rather than relying on the reporting sector to have submitted information already. Further, the clauses will enable the UKFIU to better assist international counterparts to gather information, for example, relating to sanctions evasion and maximising the effort to prevent terrorist finances from entering the UK’s economy.
The information sought under an information order is designed for intelligence purposes only. To ensure the power is used appropriately, a code of practice must be made by the Secretary of State. The person making the application must have had regard to the code of practice when applying to the court for an information order. The measure has been developed collaboratively with the UKFIU.
Stephen Kinnock
I thank the Minister for including the provisions in the Bill, which should make it easier for the NCA to access the information that it needs to gather intelligence and conduct analysis of the range of threats that we face from money laundering and terrorist financing. The provisions in the clauses should also help to ensure that the UK is able to provide more effective assistance to law enforcement bodies in other countries in response to requests for information.
Given that so much economic crime is inherently an issue that cuts across international borders, it is absolutely right for the Government to do all that they can to enforce the law within our own borders and to help Governments in our partner countries overseas to do the same.
Question put and agreed to.
Clause 145 accordingly ordered to stand part of the Bill.
Clause 146 ordered to stand part of the Bill.
Clause 147
Enhanced due diligence: designation of high-risk countries
Question proposed, That the clause stand part of the Bill.
Tom Tugendhat
The clause amends the Sanctions and Anti-Money Laundering Act 2018 to allow the Treasury to directly publish and amend the UK’s high-risk third countries list on gov.uk.
Under the 2017 money laundering regulations, businesses are required to conduct enhanced checks on business relationships and transactions with high-risk third countries. High-risk third countries are those identified by the Financial Action Task Force as having poor controls and significant shortcomings in their anti-money laundering and counter-terrorist financing regimes.
Currently, a statutory instrument needs to be laid several times a year to update the UK’s list each time the FATF’s own list is amended. The clause will allow for more rapid updates to the list, helping the UK to be even more responsive to evolving money laundering threats by ensuring that risks are communicated and mitigated by the regulated sector as soon as possible. By removing the need to introduce legislation for each update, the change will also ease pressures on ministerial and parliamentary time, thereby responding to Parliament’s call to streamline the process—very much like this Committee.
Stephen Kinnock
Clause 147 raises a number of concerns for us, which I hope the Minister will be able to address. It aims to change the procedure for updating the Treasury’s list of countries designated as high risk due to serious deficiencies in their anti-money laundering and counter-terrorist financing systems, which was established by the Sanctions and Anti-Money Laundering Act 2018. The clause will enable the Treasury to update the list directly, without the need for regulations, in effect removing the opportunity for Parliament to scrutinise any changes to the list.
During the passage of the 2018 Act, there was cross-party consensus on the need for any UK list of designated high-risk countries to reflect international standards, primarily by mirroring the lists maintained by the Financial Action Task Force. The problem with clause 147 is that it appears to enable the Treasury to make any future updates to the UK list, even in ways that diverge from the FATF lists, without any opportunity for Parliament to scrutinise or debate the proposals. Given the zeal for deregulation that we have often seen from the current Government, it takes no great stretch of the imagination to foresee a situation in which the Treasury determines that the FATF lists are unduly stringent and that certain countries and territories should be removed from the UK’s list of high-risk countries, even in cases where issues identified by the FATF remain unresolved.
Looking at the relevant impact assessment, it seems that the intention is to enable Ministers to update the list “more swiftly” when needed, thus making the UK’s list more “responsive” to emerging developments than is possible under the current system. But even if the aim is reasonable, the methods are questionable. For one thing, the 2018 Act stipulates that regulations updating the list of high-risk countries are subject to the affirmative procedure, under which Parliament is given the opportunity to retrospectively review changes that have already been made by the time the regulations are published. Together with the fact that updates are generally needed no more frequently than once every three months, this does not seem to place an undue burden on Ministers.
The changes made by clause 147 do not seem proportionate to any identifiable problem with the current system. The Opposition therefore strongly encourage the Minister and his colleagues to revisit the clause, on the basis that a convincing case for the need to remove Parliament’s oversight of this process has not been made.
Dame Margaret Hodge (Barking) (Lab)
I concur entirely with the remarks by my hon. Friend the Member for Aberavon, but I want to ask a couple of questions.
First, the Minister will know that we are considering how we can move from freezing the assets of people who are sanctioned to seizing them. One of the ways in which that could be facilitated, from the advice I have received from various non-governmental organisations and lawyers, is to have a sort of kleptocrats list. I wonder if he would take that idea away and, in considering the request for greater parliamentary oversight, look at whether we could designate particular jurisdictions as kleptocracies. All the advice I get indicates that that would make it easier to do the seizing as well as freezing. Of course, in relation to Ukraine, that would mean that some of the £18 billion that has been seized from Russia could be recommissioned and used to help us rebuild Ukraine.
Tom Tugendhat
The idea of a kleptocrats list is an interesting one. It is not one I have heard before. If the right hon. Lady will forgive me, I will look into it and respond to her in writing; I have not thought about the matter, so I will have to give it some thought.
The list of high-risk third countries is based on the FATF list, which, as the hon. Member for Aberavon knows, has provided the basis for all the statutory instruments that have passed with no objection or issue. This measure will not save much ministerial time, if any at all, but it will save parliamentary time. Given how hard-pressed Parliament is to debate so many issues, I think it is a reasonable provision. Given the alignment between the UK regime and the international FATF standards, that seems to be a pretty standard change.
On the question of debating other areas, there is often cause to debate other countries’ inclusion or exclusion from such lists, and the Treasury, the Foreign Office and other Departments and organisations often have views. I am not sure this is the Bill in which to do that; this Bill is simply about correcting a slight bump in the road and speeding up the process.
The Chair
I call Neil Kinnock—I beg your pardon, Stephen. People used to do that to me and they always got it wrong.
Stephen Kinnock
Don’t worry, Mr Paisley—we could probably exchange notes on that at great length.
I thank the Minister for those points. I recall his time as chair of the Foreign Affairs Committee, when he pushed relentlessly and convincingly for parliamentary scrutiny of a whole range of key issues and decisions. Given that parliamentary scrutiny was built into the 2018 Act, it seems difficult to justify its deliberate removal from the process by this Bill. It seems like it would be good to have those guard rails in place to avoid the risk of somebody in the Treasury deciding at some point that big decisions should be made without any parliamentary scrutiny at all. Does he not agree that this is a real missed opportunity?
Tom Tugendhat
No, I do not. I always found that when I wanted to get parliamentary scrutiny as Chair of a Committee, I managed to find ways to do that—often through debates, in which the hon. Gentleman was a wonderful speaker—and to change Government policy by using not only Parliament, but the media and other forms of pressure. There is a difference between seeking to change Government policy on various aspects of areas that should really be considered as wider policy, and seeking to implement these changes, which are, let us be honest, rather technical and not issues of major parliamentary debate.
Question put and agreed to.
Clause 147 accordingly ordered to stand part of the Bill.
Clause 148
Direct disclosures of information: no breach of obligation of confidence
Tom Tugendhat
I beg to move amendment 122, in clause 148, page 136, leave out lines 22 and 23 and insert—
“(1) The protections set out in subsection (1A) apply in relation to a disclosure made by a person (‘A’) to another person (‘B’) if—”.
This amendment and Amendments 125 and 135 provide that disclosures mentioned in clause 148(1) do not give rise to any civil liability, on the part of the person making the disclosure, to the person to whom the information disclosed relates. There is an exception for liabilities under the data protection legislation.
The Chair
With this it will be convenient to discuss the following:
Government amendments 123 to 135.
Clause stand part.
Government amendments 136 to 142.
Amendment 167, in clause 149, page 138, line 8, at end insert—
“(vi) a firm or individual carrying on statutory audit work or local audit work,
(vii) an individual appointed to act as an insolvency practitioner,
(viii) a firm or sole practitioner providing to other persons accountancy services, or providing material aid, or assistance or advice, in connection with the tax affairs of other persons, or
(ix) an auditor, external accountant or insolvency practitioner as defined in Section 11 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.”
This amendment includes accountants in various roles in the indirect information sharing provisions set out in clause 149, allowing them to pass on information regarding suspicious activity.
Government amendments 143 to 152.
Clauses 149 to 152 stand part.
Government amendments 153 to 155.
Clause 153 stand part.
That schedule 8 be the Eighth schedule to the Bill.
Tom Tugendhat
Large amounts of financial data flow through the United Kingdom every hour. The majority relate to entirely legitimate and proper activity; however, a small proportion involve criminal activity. As hon. Members heard from several witnesses to the Committee, the sharing of information regarding criminal activity between businesses is currently constrained by duties of confidentiality. These clauses and the associated Government amendments address that constraint.
Clause 148 enables direct disclosure of information between two businesses in the anti-money laundering regulated sector for the purposes of preventing, investigating and detecting economic crime, without a breach of their obligation of confidence to their customers.
Tom Tugendhat
I am glad to have support from further down the Treasury Bench.
To request information, a business must have reason to believe that the other business holds information that will, or may, assist in carrying out its relevant actions. Relevant actions include deciding whether further customer due diligence is needed, restricting access to products, or terminating a business relationship with the customer as a result of the additional information obtained.
Amendments 122 to 135 amend clause 148 to expand the provisions to offer protection from civil liability owed by the person sharing information to the person to whom the disclosure relates. As the Committee heard when UK Finance gave evidence, the banking sector maintains that without greater protection, information is unlikely to be shared, as doing so creates limited benefit in comparison with the risk of potential protracted and expensive litigation from customers. Greater use of the provisions will make it harder for criminals to exploit UK businesses. We have listened to the sector and tabled these amendments.
Clause 149 enables indirect information sharing by certain businesses via a third-party intermediary, on a similar basis to elements of clause 148. A business may share information about a current or former customer whom they have already decided to take action against due to an economic crime risk—or who would have been subject to that decision were they still a customer—either by terminating a business relationship or by refusing or restricting access to a product or service. The business must be satisfied that sharing the customer’s information will assist other businesses in carrying out their relevant actions. As with clause 148, the Government have tabled amendments 136 to 141 and 143 to 151 to disapply civil liability for a person who discloses such information.
Government amendments 142, 152 and 155 extend the scope of the indirect information-sharing provisions to cover large and very large accountancy and legal businesses. The benefit of bringing those businesses within the scope of the provision is that those firms have experience of dealing with high-risk clients. Criminals are known to exploit the information gaps that currently exist between businesses in these sectors, and encouraging further information sharing creates greater opportunities to prevent economic crime.
Clauses 148 and 149 do not disapply any liabilities arising under data protection legislation. The hon. Member for Feltham and Heston tabled amendment 167, which would expand clause 148 to include the accountancy sector. I hope that she is reassured that the Government amendments that I have just described achieve that objective.
Government amendments 153 and 154 make express provision for aiding, abetting, counselling and procuring in the definition of economic crime. Schedule 8 sets out the offences that are included in the definition of economic crime for the purposes of direct and indirect disclosures of information, the Law Society’s fining powers, and the objectives of regulators of legal services. The schedule is divided into common-law and statutory offences. No new offences are created by the Bill; the schedule has been included because there is no existing relevant definition of economic crime. The schedule is essential to provide clarity and certainty about the meaning of economic crime, in order for individuals, regulators and businesses to use the disclosure of information provisions effectively and to properly apply the new measures relating to legal services.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
It is a pleasure to serve under your chairship, Mr Paisley, and to speak to this rather large group. I thank the Minister for his comments, which I find reassuring. I will deliver my own remarks for the record, but his comments, particularly on our amendment 167, were helpful.
This important group of clauses and amendments relates to supporting disclosures to prevent, detect or investigate economic crime. The Minister is absolutely right about the concerns—raised by UK Finance specifically—that the clauses go a considerable way to addressing.
Clause 148 concerns direct disclosure of information and, as the Minister outlined, disapplies the duty of confidentiality owed by a business where the business making the disclosure knows the identity of the recipient and certain conditions—broadly outlined in subsection (1)—are met. The explanatory notes contain the example of a bank that identifies a transaction that it believes is irregular and wants further information from another party—perhaps more information on the identity of the payer or more clarity on the source of the funds. We understand why such information might be wanted and the importance of being able to get such clarity. In effect, clause 148, along with clause 149, about which I will say a few words separately, removes the civil liability for an institution in sharing that information with another entity for the purposes of detecting and preventing economic crime.
Given the concerns about the difficulties with information sharing, and the resistance that there has been to sharing information because of lack of clarity about the law or about where liability lies under data protection rules, these measures are welcome. They have perhaps taken longer to be introduced than we would have liked, but they are certainly welcome, and we hope that they will increase the detection of economic crime and reduce moves by those involved in it to seek to use our institutions to launder and hide money.
Although I welcome the removal of barriers to information sharing, I wonder whether the clauses give regulated sectors or actors so-called safe harbour as comprehensively as they might. Helena Wood of the Royal United Services Institute said in her evidence to the Committee:
“Although the provisions in the Bill will go some way towards increasing private-to-private information sharing and, in particular, the risk appetite in the banking sector, they really do not keep pace with the global standard. What we would like in the next economic crime plan”—
I think we are all hoping to see that soon; shortly is the word used in this Committee—
“is something much more ambitious. In many ways, I would say that while it is welcome, the Bill is a slight missed opportunity with regard to information sharing, given that it really does not push forward to this big data analytics model that others are moving towards.” ––[Official Report, Economic Crime and Corporate Transparency Public Bill Committee, 27 October 2022; c. 90, Q170.]
Tom Tugendhat
I am sorry to hear that the hon. Lady was considered a risk to public safety, a danger or a threat to the nation in any way. She is none of those things; she is a highly valued Member of this House and a friend to many of us. I can only imagine the unwisdom of whoever it was who decided to terminate a relationship with her. I hope that the decision is being reviewed and that the person is now enjoying a holiday on the Falkland Islands.
It is worth pointing out that the comparisons that this has with other jurisdictions should be looked at carefully. Not every jurisdiction has the same application of the ECHR, GDPR or various other constraints on sharing information and protecting privacy that the UK has. In the Netherlands, the transaction monitoring scheme has so far involved only the sharing of business data, so there are various different ways in which these applications are not exactly applicable. It is worth pointing out that, under the provisions, an individual’s right to a basic bank account, as established by the Payment Accounts Regulations 2015, is unaffected.
That means that affected individuals will be able to continue to access basic accounts, providing their account is not being used or has not been used for criminal activity, or that maintaining the account would breach any other legal obligations under the money laundering regulations. Moreover, the clause stipulates that before information is shared about a customer, the sharer must have taken action against the customer, or would have if they were still a customer. As a result, no one will have information shared unless the bank has already decided to take action against them or would have decided to do so.
We do not foresee a significant increase in the number of new individuals being denied access to services. Certainly, the hon. Lady’s comments about her constituent should be viewed in that context. However, if there are individual cases that she feels that I—or, indeed, my hon. Friend the Member for Thirsk and Malton—can help with, I would be very happy to look at them, as I am sure my hon. Friend would be as well.
The forms of redress that the hon. Lady raises are important. That is where going through the Information Commissioner’s Office or the Financial Ombudsman Service, depending on the nature of the complaint, is important. She raised many other questions, and although I will not be able to get to them right now, I will be happy to write to her on some of those individual items.
Seema Malhotra
I thank the Minister for his comments. If he is happy to write to me, I would be grateful for that. Can I clarify whether that will also cover some of the questions I raised about the expected timing of sharing information and the procedures for those who may have been caught up inadvertently? Procedurally, we need to understand how they can be dealt with. Rather than Ministers having to deal with individual cases, we want a mechanism that will make the system work fairly.
Tom Tugendhat
The hon. Member is making a perfectly reasonable point. I agree, and I will write to her about those timings so they are clearly on the record and we understand what is being asked and what the expected timeframes are.
It is also worth saying that the warning condition is more active because a business has already taken or would have taken a decision where a person is a customer. That is different from the request condition, where it is sharing in response to a specific request. The two are not quite identical, but I hope that answers the hon. Lady’s questions. I will write to her shortly.
Amendment 122 agreed to.
Amendments made: 123, in clause 148, page 136, line 24, leave out ‘to which’ and substitute ‘in circumstances where’.
This amendment and Amendments 124, 126, 127, 128 and 130 extend the power to expand the kinds of business in relation to which the provision can apply, so that it can describe attributes of the person as well as the business.
Amendment 124, in clause 148, page 136, line 25, leave out ‘to which’ and substitute ‘in circumstances where’.
See Member’s explanatory statement for Amendment 123.
Amendment 125, in clause 148, page 136, line 31, at end insert—
‘(1A) The protections are that, subject to subsection (9), the disclosure does not—
(a) give rise to a breach of any obligation of confidence owed by A, or
(b) give rise to any civil liability, on the part of A, to the person to whom the disclosed information relates.’
See Member’s explanatory statement for Amendment 122.
Amendment 126, in clause 148, page 136, line 32, leave out ‘to’.
See Member’s explanatory statement for Amendment 123.
Amendment 127, in clause 148, page 136, line 33, after ‘(a)’ insert ‘where the business carried on is’.
See Member’s explanatory statement for Amendment 123.
Amendment 128, in clause 148, page 136, line 34, leave out ‘business of a description prescribed’ and insert ‘in circumstances prescribed, in relation to the business or the person carrying it on,’.
See Member’s explanatory statement for Amendment 123.
Amendment 129, in clause 148, page 137, line 12, leave out ‘A’ and insert ‘The protections set out in subsection (7A) apply in relation to a’.
This amendment and Amendments 131, 133 and 135 provide that the disclosures mentioned in clause 148(7) do not give rise to any civil liability, on the part of the person making the disclosure, to the person to whom the information disclosed relates. There is an exception for liabilities under the data protection legislation.
Amendment 130, in clause 148, page 137, line 12, leave out ‘to which’ and substitute ‘in circumstances where’.
See Member’s explanatory statement for Amendment 123.
Amendment 131, in clause 148, page 137, line 14, leave out from ‘request’ to ‘R’ in line 15 and insert ‘if’.
See Member’s explanatory statement for Amendment 129.
Amendment 132, in clause 148, page 137, line 16, leave out ‘to which’ and substitute ‘in circumstances where’.
See Member’s explanatory statement for Amendment 123.
Amendment 133, in clause 148, page 137, line 19, at end insert—
‘(7A) The protections are that, subject to subsection (9), the disclosure does not—
(a) give rise to a breach of any obligation of confidence owed by R, or
(b) give rise to any civil liability, on the part of R, to the person to whom the disclosed information relates.’
See Member’s explanatory statement for Amendment 129.
Amendment 134, in clause 148, page 137, line 22, leave out from ‘applies,’ to the end of line 23 and insert ‘does not—
(a) give rise to a breach of any obligation of confidence owed by them, or
(b) give rise to any civil liability, on the part of R, to the person to whom the disclosed information relates.
This is subject to subsection (9).’
This amendment and Amendment 135 provide that use of information disclosed under clause 148(7) to enable a clause 148(1) disclosure to be made does not give rise to any a civil liability, on the part of the person making use of the information, to the person to whom the information relates. There is an exception for liabilities under the data protection legislation.
Amendment 135, in clause 148, page 137, line 25, after ‘contravene’ insert ‘, or prevents any civil liability arising under,’.—(Tom Tugendhat.)
See Member’s explanatory statement for Amendments 122, 129 and 134.
Clause 148, as amended, ordered to stand part of the Bill.
Clause 149
Indirect disclosure of information: no breach of obligation of confidence
Amendments made: 136, in clause 149, page 137, leave out lines 27 to 29 and insert—
‘(1) The protections set out in subsection (2A) apply in relation to a disclosure made by a person (“A”) to another person (“B”) if—’.
This amendment and Amendments 139 and 151 provide that the disclosures mentioned in clause 149(1) do not give rise to a civil liability on the part of the person making the disclosure, to the person to whom the information disclosed relates. There is an exception for liabilities under the data protection legislation.
Amendment 137, in clause 149, page 137, line 30, leave out ‘to which’ and substitute ‘in circumstances where’.
This amendment and Amendments 138, 140, 141, 142, 144 and 147 extend clause 149 disclosures so they apply in relation to persons with a large or very large UK revenue who carry on legal or accountancy services in the regulated sector.
Amendment 138, in clause 149, page 137, line 39, leave out ‘to which’ and substitute ‘in circumstances where’.
See Member’s explanatory statement for Amendment 137.
Amendment 139, in clause 149, page 138, line 1, at end insert—
‘(2A) The protections are that, subject to subsection (9), the disclosure does not—
(a) give rise to a breach of any obligation of confidence owed by A, or
(b) give rise to any civil liability, on the part of A, to the person to whom the disclosed information relates.’
See Member’s explanatory statement for Amendment 136.
Amendment 140, in clause 149, page 138, line 2, leave out ‘to’.
See Member’s explanatory statement for Amendment 137.
Amendment 141, in clause 149, page 138, line 3, after ‘(a)’ insert ‘where the business carried on is’.
See Member’s explanatory statement for Amendment 137.
Amendment 142, in clause 149, page 138, line 8, leave out from ‘provider,’ to ‘by regulations’ in line 9 and insert—
‘(aa) where—
(i) the business carried on is business in the regulated sector within paragraph 1(1)(l) or (n) of Schedule 9 to the Proceeds of Crime Act 2002 (accountancy or legal services), and
(ii) the UK revenue of the person carrying on the business is large or very large for the relevant financial year (see subsection (10)), and
(b) in circumstances prescribed, in relation to the business or the person carrying it on,’.
See Member’s explanatory statement for Amendment 137.
Amendment 143, in clause 149, page 138, line 11, leave out from ‘to B,’ to end of line 14 and insert
‘the protections set out in subsection (5A) apply in relation to a further disclosure of that information made by B to another person (“C”) if—’.
This amendment and Amendments 145 and 151 provide that the disclosures mentioned in clause 149(4) do not give rise to a civil liability, on the part of the person making the disclosure, to the person to whom the information disclosed relate. There is an exception for liabilities under the data protection legislation.
Amendment 144, in clause 149, page 138, line 15, leave out ‘to which’ and substitute ‘in circumstances where’.
See Member’s explanatory statement for Amendment 137.
Amendment 145, in clause 149, page 138, line 18, at end insert—
‘(5A) The protections are that, subject to subsection (9), the disclosure does not—
(a) give rise to a breach of any obligation of confidence owed by B, or
(b) give rise to any civil liability, on the part of B, to the person to whom the disclosed information relates.’
See Member’s explanatory statement for Amendment 143.
Amendment 146, in clause 149, page 138, line 22, leave out ‘A’ and insert
‘The protections set out in subsection (7A) apply in relation to a’.
This amendment and Amendments 148, 149 and 151 provide that the disclosures mentioned in clause 149(7) do not give rise to a civil liability, on the part of the person making the disclosure, to the person to whom the information disclosed relates. There is an exception for liabilities under the data protection legislation.
Amendment 147, in clause 149, page 138, line 22, leave out ‘to which’ and substitute ‘in circumstances where’.
See Member’s explanatory statement for Amendment 137.
Amendment 148, in clause 149, page 138, line 24, leave out from ‘person’ to ‘at’ in line 25 and insert ‘if’.
See Member’s explanatory statement for Amendment 146.
Amendment 149, in clause 149, page 138, line 28, at end insert—
‘(7A) The protections are that, subject to subsection (9), the disclosure does not—
(a) give rise to a breach of any obligation of confidence owed by R, or
(b) give rise to any civil liability, on the part of R, to the person to whom the disclosed information relates.’
See Member’s explanatory statement for Amendment 146.
Amendment 150, in clause 149, page 138, line 31, leave out from ‘applies,’ to end of line 32 and insert ‘does not—
(a) give rise to a breach of any obligation of confidence owed by them, or
(b) give rise to any civil liability, on their part, to the person to whom the disclosed information relates.
This is subject to subsection (9).’
This amendment and Amendment 151 provide that the use of information disclosure under clause 149(7) for the purposes of making a disclosure under clause 149(1) does not give rise to a civil liability, on the part of the person making use of the information, to the person to whom the information relates. There is an exception for liabilities under the data protection legislation.
Amendment 151, in clause 149, page 138, line 34, after ‘contravene’ insert ‘, or prevents any civil liability arising under,’.
See Member’s explanatory statements for Amendments 136, 143, 146 and 150.
Amendment 152, in clause 149, page 138, line 34, at end insert—
‘(10) In subsection (3)(aa) “relevant financial year”—
(a) for the purposes of subsection (1)(a), means the financial year immediately preceding that in which the disclosure by A is made;
(b) for the purposes of subsection (4)(a), means the financial year immediately preceding that in which the disclosure to C is made.
And, for the purposes of subsection (3)(aa), the question of whether a person’s UK revenue is large or very large for a particular financial year is to be determined in accordance with sections 55 to 57 of the Finance Act 2022 (calculation of UK revenue for the economic crime (anti-money laundering) levy).’—(Tom Tugendhat.)
This amendment include a definition of “relevant financial year” and explains how to determine if a person’s UK revenue is large or very large for the purposes of the new provision added by Amendment 142.
Clause 149, as amended, ordered to stand part of the Bill.
Clauses 150 to 152 ordered to stand part of the Bill.
Clause 153
Other defined terms in sections 148 to 151
Amendments made: 153, in clause 153, page 140, line 19, at end insert—
“(ba) constitutes aiding, abetting, counselling or procuring the commission of a listed offence, or”.
The amendment makes express provision about aiding, abetting, counselling and procuring in the definition of economic crime.
Amendment 154, in clause 153, page 140, line 21, after “(b)” insert “or (ba)”.
This amendment is consequential on Amendment 153.
Amendment 155, in clause 153, page 140, line 34, at end insert—
““financial year” means a period of 12 months ending with 31 March;”.—(Tom Tugendhat.)
This amendment adds a definition of “financial year” and is consequential on Amendment 152.
Clause 153, as amended, ordered to stand part of the Bill.
Schedule 8 agreed to.
Clause 154
Law Society: powers to fine in cases relating to economic crime
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clause 155 stand part.
Government new clause 47—Scottish Solicitors’ Discipline Tribunal: powers to fine in cases relating to economic crime.
Tom Tugendhat
His Majesty’s Government’s national risk assessment for 2020 assessed the legal services sector as being at high risk of exposure to money laundering. The crisis in Ukraine has highlighted that the sector is exposed to further-reaching risks, such as sanctions breaches. The Bill therefore contains measures that strengthen the legal sector’s response to economic crime.
Clause 154 removes the statutory limit on the Solicitors Regulation Authority’s financial penalty powers for disciplinary matters related to economic crime, as delegated by the Law Society. Currently, the SRA can direct a solicitor or traditional law firm to pay a penalty up to £25,000. The limit is set out in primary legislation and can be amended only by an order made by the Lord Chancellor. This measure will remove the need for the Lord Chancellor to make an order, thereby ensuring greater flexibility to, if required, amend penalty limits for disciplinary matters relating to economic crime.
New clause 47 gives the Scottish Solicitors’ Discipline Tribunal parity with England and Wales in respect of the fining powers available to it for economic crime-related solicitor misconduct. Currently, the SSDT may impose a maximum fine of £10,000. In comparison, the equivalent tribunal in England and Wales—the Solicitors Disciplinary Tribunal—has the power to impose an unlimited financial penalty. This change will provide the SSDT with fining powers that act as a proportionate deterrent against breaches of the rules and legislation related to economic crime, including offences linked to money laundering, terrorist financing and sanctions. The exercise of this power will be subject to the oversight of the Court of Session to ensure that the SSDT acts in an effective and proportionate way. The changes sought in clause 154 and new clause 47 are needed to ensure that the SRA and the SSDT have the enforcement tools required in the context of economic crime compliance.
Clause 155 enshrines in legislation the duty of legal services regulators to promote the prevention and detection of economic crime. Our legal sector is internationally renowned for its high standards of excellence and professional conduct. The vast majority of the sector is compliant with its economic crime duties. However, it is crucial that regulators have the right tools to effectively promote and monitor compliance. The clause puts it beyond doubt that it is the duty of legal services regulators to take appropriate action to ensure that their regulated communities comply with economic crime rules. It will give frontline regulators a clear basis for any supervision or enforcement action they may carry out to uphold the economic crime regime.
Stephen Kinnock
Clause 154 would lift the current statutory cap on the penalties that may be imposed by the Solicitors Regulation Authority, as delegated by the Law Society, for breaches of the law on economic crime. I am sure that Members on both sides will welcome the change if, as the Government argue in their impact assessment, it increases the deterrent effect of the financial penalties that may be levied for disciplinary matters. Although the Government provide limited evidence to support that claim, it is at least a reasonably logical conclusion.
However, the proposals raise a number of questions, principally around the degree to which clauses 154 and 155 reflect the input received from the sector in response to consultation earlier this year. Specifically, a number of serious concerns were expressed by the Solicitors Disciplinary Tribunal when the SRA consulted on planned increases to its powers to impose fines.
The tribunal argued that the SRA’s powers should be limited to imposing relatively low penalties for minor technical or administrative errors. It argued that increasing the maximum level of fines that the SRA could impose would erode transparency by preventing cases of serious misconduct from coming before a public hearing, which could also remove the scope for a detailed, publicly accessible explanation of any penalties, as is generally provided by the tribunal’s decisions under the current system. In summarising its concern, the tribunal argued that the diminution in the transparency of decision making and detailed reason would be in neither the public’s nor the profession’s interest.
It should be noted that those objections were raised, not in response to the proposed changes set out in this Bill, but in the context of the increase in the maximum level of financial penalties that the SRA may impose from £2,000 to £25,000, which came into effect in July. That change in itself begs a number of questions. In particular, can the Minister explain how many and what proportion of the fines imposed by the SRA since July have been at the £25,000 maximum? Could it not be argued that the Government have not provided enough time for the effectiveness of recent changes to be adequately assessed?
Can the Minister also set out the Government’s reasoning in lifting the cap on the SRA’s fining powers, with specific regard to the objections raised by the Solicitors Disciplinary Tribunal, and other stakeholders, around the transparency of the process?
Clause 155 would amend the Legal Services Act 2007 to set an additional objective for regulators in the legal sector to prevent economic crime. Given the objections that have been raised in the sector relating to clause 154, I would be grateful if the Minister provided further details of any consultation between his Department and providers of legal services, as well as the Legal Services Board, on this proposal.
Finally, it would be helpful if the Minister explained the rationale for the decision to set out, in this Bill, an explicit objective to prevent economic crime for providers of legal services, but not for other sectors covered by the money laundering regulations. The impact assessment sheds limited light on the Government’s thinking in this area, so any additional detail that the Minister could provide today would be welcome.
Alison Thewliss
My understanding is that the Law Society of Scotland has no particular objections to the amendments.
Tom Tugendhat
The hon. Member is asking about various of the different fining elements. Clearly, the fines discussion is a matter for the individual cases, and would be determined on a case-by-case basis, but I think that removing the cap, which, in modern terms, is actually relatively low—certainly, when compared with financial abuses and other forms of regulation—is entirely reasonable.
The Solicitors Regulation Authority does not, in any way, have any power to strike off a suspended solicitor, so the SDT remains an extremely important part of the disciplinary process. There are various different aspects at play here, but the proposals make good sense and are reasonable. I will happily write to the hon. Member on the issue he raised separately and come back to him about it later.
Stephen Kinnock
I thank the Minister for that clarification, and I am grateful for his offer to write with further details. On the point about using the Bill to prevent economic crime with respect to providers of legal services, but not for any other sector covered by the money laundering regulation, would he care to shed more light on the rationale for that decision?
Tom Tugendhat
The other sectors are already covered by the money laundering regulation. That element is focusing on legal services because that was a lacuna in the law.
Stephen Kinnock
I thank the Minister for that clarification. There is a broader scope to economic crime, not just a specific focus on money laundering, and that covers a wider range of aspects of economic crime, although there is an explicit objective in the Bill that it is limited to providers of legal services. I wonder why that broader scope will not be applied beyond the money laundering concerns.
Tom Tugendhat
The changes are being made and the new clause is important for exactly the reasons the hon. Gentleman has highlighted. The new clause will remove an obstacle with respect to the SRA exercising its judgment and punishing appropriately those who might be committing any number of different crimes, which I hope they will not be doing. The measure will give us a provision to enable us to deal with that. The reality is that much of the money laundering regulation has already been covered, along with different aspects of financial services. The proposals specifically address legal services and particular aspects. They are an important addition, and I am happy to support them.
Question put and agreed to.
Clause 154 accordingly ordered to stand part of the Bill.
Clauses 155 to 157 ordered to stand part of the Bill.
Clause 158
Power to make consequential provision
Question proposed, That the clause stand part of the Bill.
Tom Tugendhat
Indeed, and I am delighted to be called to speak to it.
The clause provides the Secretary of State with the power to make consequential amendments that arise from the Bill. The power is necessary to ensure that other provisions on the statute book properly reflect and refer to the provisions in the Bill once it is enacted and to ensure that there are no legislative inconsistencies. If regulations are made under the clause that do not amend primary legislation, they will be subject to the negative resolution procedure. If regulations are made under the clause that amend primary legislation, they will be subject to the affirmative resolution procedure. This, I hope, will provide the appropriate parliamentary scrutiny.
Seema Malhotra
I thank the Minister for his comments. May I clarify the process, Mr Paisley? In previous sittings, during each clause stand part debate the Minister has been called followed by the Opposition spokesperson. Perhaps that has had some variation, but it would be helpful to understand whether we need to do anything differently.
The Chair
No, nothing at all; it is just that the Minister did not indicate that he wished to speak. Members can speak at that point. Those clauses have been dealt with.
Seema Malhotra
I think that there was a slight misunderstanding, but we will move on.
Clause 158 confers on the Secretary of State a regulation-making power to make consequential amendments that arise from the Bill. I want to raise a general point: the Minister did speak to this, but perhaps he could say a little more about examples of where the Secretary of State might need to use the power. Perhaps it is written somewhere, but I am not fully clear whether any changes that come through secondary legislation to the Act itself—I think that is a Henry VIII power in this clause—would be taken through the affirmative procedure.
It has been a general theme of debate though our proceedings that we need to make sure that there is sufficient provision for the transparency, scrutiny and accountability of changes, as well as for accountability of the Secretary of State’s use of powers for the reporting that there should be on how well the provisions are working. The power to make consequential amendments comes at the end of the Bill in clause 158, but it is a Henry VIII power that means that amendments to primary legislation can be made. That is different from the power to make regulations under secondary legislation, which we have been debating.
The Government have said that the power is needed to ensure that other provisions on the statute book properly reflect and refer to provisions in the Bill once it is enacted. I want to be clear about what the scope of the use of this power would be, how it is intended and how it would be reported on. Would an affirmative or negative procedure be used to make any changes under this clause?
Dame Margaret Hodge
We have raised a number of amendments to the Bill during the course of consideration in Committee, many of which I consider to be technical and things that would improve the processes. All those amendments so far have been rejected. I wonder whether, rather than bringing us back at a later stage as the clause proposes, the Minister would undertake, together with his ministerial colleague, to look again at some of those amendments, which are really just practical, pragmatic amendments, with a view to bringing them back. Would he bring them back on Report?
Tom Tugendhat
I will answer the second question first, if I may. I am absolutely certain that my hon. Friend the Member for Thirsk and Malton and I will look with great interest at the suggestions that the right hon. Lady has made. As she knows, we share many similar ambitions. We will have a look at those suggestions with officials. Certainly, there are some that we think could improve the Bill—I do not think there is any great debate about that—and I will make sure that we keep her informed. Her contribution and help, not just today and on the Bill, have been enormous, and I pay enormous tribute to the work that she has done over many years in fighting money laundering and different forms of economic crime.
On this specific power, the hon. Member for Feltham and Heston raises a very important point, which is that the clause does give large consequential provision to the Government to change aspects of the Bill. I understand the concerns that she raises. The nature of the Bill, however, is that it has quite a consequential impact on other elements of legislation, as she herself has highlighted. Therefore there are knock-on elements that will no doubt require minor redrafting and changes at various different points as the Bill goes into law. I am afraid that is slightly the nature of these operations, as she understands extremely well. That is what this power is for.
It is worth saying that any significant or substantial changes that really do change the intent of the Bill should be brought back in primary legislation, because this is clearly a provision in order to enable the Bill to operate, not to change the intent that this House gives it.
Seema Malhotra
I thank the Minister for his comment, which puts that clarification on the record for successive generations of those who will sit in his seat—perhaps he will be promoted to higher office. It is important that that comment is on record, because we have to create legislation for not just today but tomorrow.
Tom Tugendhat
I beg to move amendment 43, in clause 159, page 144, line 21, at end insert—
“(ba) regulations under section (registration of qualifying Scottish partnerships), unless they are regulations under that section that only make provision that corresponds or is similar to provision made or capable of being made by a statutory instrument that is itself subject to annulment in pursuance of a resolution of either House of Parliament;”.
This provides for regulations under NC22 to be subject to the affirmative procedure unless they only make provision corresponding or similar to provision make by a statutory instrument that is itself subject to the negative procedure.
The Chair
With this it will be convenient to discuss Government new clause 22—Registration of qualifying Scottish partnerships.
Tom Tugendhat
Clause 159 provides that regulations made under the Bill are to be made by statutory instrument. The clause also sets outs the parliamentary procedure for how regulations under the Bill should be made, including situations in which legislation must be subject to the affirmative resolution procedure or the negative resolution procedure. The clause is a standard provision to enable regulations to give the intended effect to the measures in the Bill. It is necessary to ensure appropriate parliamentary scrutiny of such regulations.
Seema Malhotra
Clause 159 provides that regulations under the Bill are to be made by statutory instrument. To a large extent, we have had clarification that any subsequent changes will be made through the affirmative procedure in Parliament, enabling greater scrutiny and transparency over the Bill’s implementation. I am not sure if there is a list anywhere of all the regulation-making powers that have been specified in the Bill. I feel like there is probably a summary somewhere of all of those powers, and whether any are subject to the negative procedure. I think that would be a helpful review for the Committee to have.
New clause 22 allows regulations to be made about the registration of certain Scottish partnerships, and to apply law related to companies or limited partnerships. It will allow the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 to be amended or replaced in relation to those partnerships. We welcome the inclusion of amendment 43 alongside the new clause, which provides for regulations under new clause 22 to be subject to the affirmative procedure, unless they make provisions corresponding to provisions made by statutory instruments that are subject to the negative procedure. In light of my previous comments, I think it is healthy for us to clarify and have a clear summary of which are affirmative and which are negative, and the safeguards around them. That would ensure the transparency of regulation making subsequent to the passing of the Bill.
Kevin Hollinrake
It is a pleasure to speak with you in the Chair, Mr Paisley. I will speak briefly to amendment 43 and new clause 22, which are minor technical changes necessary due to the European Communities Act 1972 having been repealed. They give the Secretary of State the power to apply company or limited partnership law by regulations to Scottish qualifying partnerships, as well as to impose new requirements of Scottish qualifying partnerships not included in company or limited partnership law, such as identity verification. It allows the Government to retain the measures introduced by the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 in relation to SQPs and to amend them in the future. Provisions about the registration of Scottish qualifying partnerships exist in the 2017 regulations, made using powers under now repealed section 2(2) of the European Communities Act 1972.
That has two consequences. First, there is no existing power to amend the regulations, other than by an Act of Parliament. Secondly, if not replaced under section 1 of the proposed retained EU law Bill, the 2017 regulations will be revoked at the end of 2023. This power will allow us to keep the existing requirements on Scottish qualifying partnerships and to add new ones. Without the amendment and new clause, it will not be possible to extend key measures introduced via the Bill, such as identity verification, to Scottish qualifying partnerships, thereby creating a dangerous loophole. I hope that my explanation has provided further clarity.
It is clear that regulations made under the Bill may make consequential, supplementary, incidental, transitional or saving provisions and regulations under specified clauses must be subject to the affirmative resolution procedure. I am sure we can write to the hon. Lady to set out exactly what those situations are.
Alison Thewliss
I am glad to see any loopholes getting closed, even if the amendment is sneaking in at the end of the Bill. It is good to see it. As I have said at many points in Committee, enforcement needs to be laid down on all these things, because at the moment all things to do with Scottish partnerships are not being enforced. People are not being fined for not complying with the regulations. I hope that it will result in some tightening up and some fines being issued—and, if required, in some people being jailed for not complying with the regulations as set out.
Tom Tugendhat
My hon. Friend the Under-Secretary has spoken to a lot of the issues, so I will just list clauses covered by the affirmative resolutions briefly—the others will be negative. That will include regulations under clauses 33, 35, 140(1), 141 and schedule 6, on powers to amend certain definitions relating to cryptoassets, clause 142 and schedule 7, on powers to amend certain definitions relating to cryptoassets and then clauses 143, 148, 149, 153 and 158. I am happy to write to the hon. Lady so that she has those details.
Amendment 43 agreed to.
Clause 159, as amended, ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned.—(Scott Mann.)
UK Infrastructure Bank Bill [ Lords ] (First sitting)
Tuesday 22nd November 2022
(2 years ago)
Public Bill CommitteesRead Full debate UK Infrastructure Bank Act 2023 View all UK Infrastructure Bank Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 22 November 2022 - (22 Nov 2022)
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 10 / Noes: 6 - Question accordingly agreed to.
The Committee divided: - Ayes: 10 / Noes: 6 - Question accordingly agreed to.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Chair
I have a few preliminary reminders for the Committee. I will not make an autumn statement, though there are a lot of leaves about. Please switch electronic devices to silent. No food or drinks are permitted during sittings, except for the water provided. Hansard colleagues would be grateful if Members could email their speaking notes to hansardnotes@parliament.uk.
We will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication. I call the Minister to move the programme motion standing in his name, which was discussed yesterday by the Programming Sub-Committee for the Bill.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 22 November) meet at 2.00 pm on Tuesday 22 November;
(2) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Tuesday 22 November. —(Andrew Griffith.)
Resolved,
That subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Andrew Griffith.)
The Chair
Copies of written evidence that the Committee receives will be made available in the Committee Room, and circulated to Members by email.
We now begin line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room. It shows how the selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or a similar issue. Please note that decisions on amendments take place not in the order they are debated, but in the order they appear on the amendment paper. The selection and grouping list shows the order of debates. Decisions on each amendment are taken when we come to the clause to which it relates.
A Member who has put their name to the lead amendment in a group is called first. Other Members are then free to catch my eye to speak on all or any of the amendments within that group. A Member may speak more than once in a single debate. At the end of a debate on a group of amendments, I shall call the Member who moved the lead amendment again. Before they sit down, they will need to indicate if they wish to withdraw the amendment or seek a decision. If any Member wishes to press any other amendment in a group to a vote, they need to let me know.
Clause 1
The UK Infrastructure Bank
Question proposed, That the clause stand part of the Bill.
The Economic Secretary to the Treasury (Andrew Griffith)
It is a pleasure to serve under your chairmanship, Mr Davies. I thank Members for their work on the Committee this morning. Clause 1 is a technical clause that outlines that the company incorporated as the UK Infrastructure Bank will be referred to as “the Bank” for the purposes of the Bill, and links it in legislation to its company registration number. The clause is essential to ensure that the Bill refers to the correct legal entity. I recommend that it stand part.
Clause 1 ordered to stand part of the Bill.
Clause 2
Objectives and activities
Richard Fuller (North East Bedfordshire) (Con)
I beg to move amendment 10, in clause 2, page 1, line 14, at end insert
“, and
‘(c) to create long term financial returns to its shareholder(s).”
It is a pleasure to serve under your chairmanship, Mr Davies, and to be the first Member, other than the Minister, to speak. As hon. Members look down the amendment paper, they will see that I have tabled a number of amendments. It is such a pity that so few Labour Members have bothered to show up to the Committee on such an important issue. I always thought that the Labour party thought that it was important to invest in green technologies and to level up. Clearly, the absence of Labour Members shows that that is just a paper commitment, not a real one.
This is an important Bill. Of course, in a certain regard it formalises what is already extant; however, it is important that we, as Members of Parliament, ensure that we provide the right objectives and activities to which the board and directors of the UK Infrastructure Bank should subsequently pay attention. In that regard, I have tabled two amendments to clause 2: amendments 10 and 11. If it is convenient with you, Mr Davies, I shall also speak to amendment 11.
Richard Fuller
Amendment 10 would add paragraph (c) to subsection (3), with a requirement that bank objectives should include long-term return to shareholders. To be clear, the shareholders are UK taxpayers.
Amendment 11 would add paragraph (c) to subsection (6) on the importance of the bank having regard to its role in additionality. That refers to the role of the bank in using taxpayers’ money or the power of the UK Government’s balance sheet in attracting private capital.
Why are those two amendments so important? Let us be honest. Parliament passed the Climate Change Act 2019, containing the net-zero policy, which has the potential to waste billions of taxpayers’ money. It is a policy objective with no price tag attached. It is also the case that technologies are evolving, and economies of scale can be elusive.
The UK Infrastructure Bank mentioned three things in its strategic plan that it was interested in pursuing for investment. The first was the roll-out of electric vehicle charging points. Does any hon. Member, or the Minister, know how that can be done today economically? The second was the retrofit of buildings. Does any hon. Member know how that can be done, what the right technology would be and how it should be funded? Does the Minister know? The third was the scaling of storage technologies. Does anyone know the right technology to choose for that?
The answers to those questions are crucial, because we are going to devolve the decision making about how that taxpayers’ money is spent to the UK Infrastructure Bank. There are significant risks with those technologies, and the consequences for taxpayers’ money.
The bank talks a lot about its potential for crowding in money and private capital, but there is also great potential for crowding out private capital. It is very simple. We already have a significant amount of investor appetite in environmentally sound investments. The Minister has been very successful recently in his efforts with Solvency II to release potentially additional long-term, patient capital that can invest in the sorts of projects that the UK Infrastructure Bank seeks to invest in. What reassurance can we have that the UK Infrastructure Bank is doing the right thing by crowding in private capital, rather than by crowding out?
We also need to see a little more clarity from the bank about where it is going to sit on the spectrum of risk. I draw Committee members’ attention to page 26 in the UK Infrastructure Bank’s strategic plan. Under the heading “Barriers to private infrastructure investment”, it lists four segments for investing: R&D, emerging, high-growth and maturity. It then splatters itself over three of those four segments. What sort of focus for investing is that?
What does that tell us about how we should assess the way in which capital has been allocated according to risk? Should the bank be investing more in late-stage opportunities? Is the real risk that it should be investing at an earlier stage, to stimulate the growth of technologies after they have come out of research and development? It is not at all clear what the focus should be. That gets to the root of the question that I want to press the Minister on. How comfortable is he that we and the Government have control over how the bank will invest taxpayers’ money? Is he comfortable that there are sufficient constraints on the bank to prevent it from wandering off with its own sense of purpose? Should there be provisions in this Bill to tighten it a little further?
Finally, the reason for us to focus on this is the UK Infrastructure Bank itself says that it has a “triple bottom line”. Well amen to a Government body actually having a bottom line because too often public bodies do not even worry about the bottom line, but it has three: achieving policy objectives; crowding-in private capital; and generating a positive return. It is because they have stated three bottom lines, one of which was to generate a positive return, that I sought, under amendment 10, to add that to clause 2(3).
I finally make some reference to Government amendment 1, which relates to deleting references to
“the circular economy, and nature-based solutions”.
I am interested to hear what the Minister’s rationale for this is; maybe I can see a rationale but I want to hear if that is actually the Minister’s rationale. The principles of the circular economy and the principles of nature-based solutions have the merit of being quite specific in what is otherwise quite a general set of remits for the UK Infrastructure Bank. I guess that the Minister will say, “Well yes, that is right. However, there are lots of other things that it needs to focus on. If we pick those two, we should not pick others.” But I would be very interested to know the particular reasons why the Minister does not feel that those two should be included.
Finally, I note that Government amendment 2, which relates to everything I have said about the objectives around additionality and long-term returns for shareholders, would delete clause 2(6) completely. If so, I will obviously withdraw my amendment.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
Good morning, Mr Davies. It is a pleasure to serve under your chairship. Good morning to the rest of the Committee. I look forward to our debate today. I think that this will be a productive conversation. I also use this opportunity to formally congratulate the new Minister.
Before I turn to clause 2, I want to say in my opening remarks that Britain has so much potential, but right now we are facing—and I want to put this on record—a Tory economic crisis that is holding us back. To get our economy growing again, we will need to see investment in infrastructure projects and create highly-skilled, well-paid jobs and tackle climate change in a modern industrial strategy, working hand in hand with businesses.
I also want to put on record my reassurance to the hon. Member for North East Bedfordshire that Labour is well represented on these issues. Members will see that through our ideas and what we are proposing today, which will strengthen this Bill. Also, it is really important that we recognise that there has been a lost decade of broken Tory promises that have left much of the UK with second-rate infrastructure. That is why Labour supports strengthening the Bill, but much of the Bill as it stands relies on out-of-date thinking. That is why we are proposing amendments today.
Alec Shelbrooke (Elmet and Rothwell) (Con)
It is a pleasure to serve under your chairmanship, Mr Davies. In terms of investment in infrastructure, the last Labour Government did invest in hospitals and schools and, through the private finance initiative, left the country with bills that were 10 times the cost of building the hospitals. On reflection, does the hon. Lady believe that was a mistake?
The Chair
Order. We are in danger of drifting outside the scope of the amendment. Please do respond, but let us not have a general debate on this.
Abena Oppong-Asare
I thank the right hon. Member for Elmet and Rothwell for his comments. However, we have had a Tory Government for 12 years. We are in the middle of an economic crisis.
Abena Oppong-Asare
Inflation is at its highest point, but I do not want to be drawn into a discussion about that. I want to focus on the Bill and I want us all to have a mature conversation about it.
Clause 2 sets out the objectives and activities of the UK Infrastructure Bank. This is probably the meatiest part of the Bill, and I can see that we have several amendments to get through, so I want to make a start on that. Subsection (3) lays out the bank’s two objectives, which are to
“tackle climate change, including by supporting efforts to meet the target for 2050 set out in section 1 of the Climate Change Act 2008”
and
“to support regional and local economic growth.”
I welcome the bank’s first objective. With COP27, a climate conference that the Prime Minister had to be shamed into attending, ending just days ago, it is clear that there is still a way to go to ensure that our country’s emissions reach the targets enshrined in international law. I have to be honest: the Prime Minister does not get it. He is a fossil-fuel Prime Minister in a renewable age. His is a record of tax breaks for oil and gas giants and blocks on wind and solar power. It has left our energy bills higher and our country less secure. The UK Infrastructure Bank sets out to invest in projects that lower emissions, while the Government undermine those ambitions. It will be unsurprising to the Committee that Labour has no confidence that the Government will deliver the long-term investment that the country needs.
I also welcome the bank’s second objective. Labour wants to see prosperity shared and spread across the country, with the Government working in lockstep with businesses to produce the high-skilled jobs of the future—something that I will come to later. Amendment 10 would add a third objective for the bank:
“to create long term financial returns to its shareholder(s).”
Labour wants to see the bank succeed. There is a global race for the jobs and industries of the future that, under the Tories, we will not win. We know that investment in green jobs, improved rail and other transport and modern infrastructure, such as broadband, have the potential for large returns and will boost our economy. We want the bank to crowd in private sector investment and help to provide confidence for investors and businesses innovating in new technologies. We also want the bank to have the freedom to invest in projects based on their ability to tackle climate change and grow our economy.
Katherine Fletcher (South Ribble) (Con)
It is a pleasure to serve under your chairmanship, Mr Davies. I am grateful for the opportunity to intervene. As recent data shows, the UK has decarbonised fastest in the whole of the G20 since 2010. Does the hon. Lady agree that a huge amount of that has been done with the investment of both public and private capital in the mechanisms to achieve it? And there is our world-leading legislation for net zero and even our commitment to reduce fossil-fuel cars. The idea that we are behind in the race on this is really for the birds.
The Chair
Order. Before the shadow Minister responds, let me just say that we do need to keep within the scope of this amendment, about creating long-term financial returns to the shareholder. I appreciate that I have allowed a certain amount of flexibility, and I respect what you are saying, but could we try to focus on the amendment rather than clause 2 stand part, which we will come to?
Abena Oppong-Asare
I thank the hon. Member for South Ribble for her comments, but I do not fully agree with her, because I feel that the Government have not done enough. There has also been a cancellation of Northern Powerhouse Rail and a dismal failure to invest properly in renewable energy and to take decisions on nuclear; there has been a lack of strategy and planning. That has happened under this Tory Government in the last 12 years.
The Government’s track record does not provide much confidence. The Government set up the Green Investment Bank 10 years ago and sold it to a private equity group five years ago, with the Public Accounts Committee concluding that the Government had focused on
“how much money could be gained from the sale over the continued delivery of GIB’s green objective.”
We would not want to encourage a similar short-lived path—
The Chair
Order. Shadow Minister, I think you are straying off the point of the amendment, if I may say so.
Abena Oppong-Asare
I do not believe I am, Mr Davies. This is very relevant to the clause.
Abena Oppong-Asare
Yes. I am just going to wrap up, Mr Davies; thank you. We would not want to encourage a similar short-lived path for the UK Infrastructure Bank. To achieve its objectives, it needs to be a long-lasting institution that supports businesses and improves investor confidence. We have a different third objective in mind for the bank, and I will explain that in Committee later today.
Andrew Griffith
I thank all those who have contributed to this grouping. If I may, I will speak to clause 2, the Government amendments, and then the amendments in the name of—
The Chair
Order. You cannot do that. You must speak to amendment 10, and we will come to clause 2.
Andrew Griffith
Perfect, Mr Davies. My hon. Friend the Member for North East Bedfordshire is not only a distinguished predecessor of mine, but is a doughty champion for the interests of the taxpayer, and we commend him for that.
We have set out in the framework that the bank must already generate a financial return as part of the company’s operating principles. As set out in the UK Infrastructure Bank’s strategic plan, that has been set at an admirable 2.5% to 4% by the end of 2025-26. The bank, as my hon. Friend said, has a triple bottom line, including a positive financial return as a requirement across its investments.
Putting that target into law—I cannot believe that my hon. Friend is an advocate of writing everything into statute; the statute is often large enough as it is without embellishing it with additional Christmas trees of prescription—could create legal problems for the bank and undermine its core purpose, given that there might from time to time be reasons outside of its control why it cannot meet the target in relation to every investment.
Richard Fuller
My hon. Friend is right: not everything should be written into statute, but there ought to be more clarity. Can he provide a couple of points of clarity so that I may withdraw my amendment? On the bank’s target of 2.5% to 4% return, is that a real rate of return, and above what cost of capital? And if the chief executive and the directors do not achieve that rate of return, what will be the consequences for them?
Andrew Griffith
I will write to my hon. Friend on the calculation of that return. The UK Infrastructure Bank is subject to the full panoply of disclosures, sanctions and accountability, not just to this place, as is appropriate, but under the Companies Act 2006 under which it is constituted. I do not believe, therefore, that there is a deficiency in that. For that reason, notwithstanding the very understandable spirit with which my hon. Friend advocates his amendment, I hope he will consider withdrawing it.
Richard Fuller
Yes. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Abena Oppong-Asare
I beg to move amendment 17, in clause 2, page 1, line 14, at end insert—
“(c) to reduce economic inequalities within and between regions of the United Kingdom, and
(d) to improve productivity, pay, jobs, and living standards.”
This amendment clarifies that the Bank’s objective to support regional and local economic growth includes reducing economic inequalities within and between regions and improving productivity, pay, jobs, and living standards.
The Chair
With this it will be convenient to discuss amendment 18, in clause 2, page 1, line 14, at end insert
“, and
“(c) to support supply chain resilience and the United Kingdom’s industrial strategy”.
This amendment creates a third objective for the Bank to support UK supply chain resilience and industrial strategy.
Abena Oppong-Asare
As I have hinted, Labour Members believe that the bank’s objectives need expanding. My hon. Friend the Member for Ealing North will speak later about the bank’s climate objective and the ways in which it might achieve it. I will talk about the economic objective of the bank, which is to support regional and local economic growth. After a mini-Budget that crashed our economy and an autumn statement last week that papers over the cracks, the importance of that objective is as clear as day; but we believe in growth not for growth’s sake, but because it creates jobs and improves living standards. As a result of fairer choices, we could see our economy growing again, powered by the talent and effort of millions of working people and thousands of businesses.
Our amendment 17 would make it clear that the bank should support regional and local economic growth, both to reduce economic inequalities within and between the regions of the UK, and to improve productivity, pay, jobs, and living standards. In our constituencies we see the disparities between the regions. As it stands, the bank does not have to focus its investment on disadvantaged areas of the country that would most benefit from its support. The Prime Minister has boasted about moving money away from disadvantaged areas, and so-called levelling-up funds have so far funnelled money into Conservative constituencies, rather than focusing on areas that most need the support. On its own, therefore, clause 2(3)(b) is not a sufficient objective for the bank. It relies on the tired Conservative assumption that growth and prosperity will trickle down and be spread evenly, which we know is not true.
Amendment 17 is crucial to targeting the bank’s investments and ensuring that it creates lasting change. The Prime Minister, then Chancellor, argued in his strategic steer to the bank in March that it should support the Government’s ambition of addressing
“the deep spatial disparities across and within UK regions”.
Those are his words. I find it strange that when he outlined the bank’s objectives in the strategic steer, his description of the climate objective matched that in the Bill, but his description of the economic objective did not. He said that the bank’s objectives are to
“help tackle climate change, particularly meeting the government’s net zero emissions target by 2050”.
That all seems correct, and we can see it repeated near verbatim in clause 2(3)(a). However, in describing the second objective, the then Chancellor said that the bank should
“support regional and local economic growth through better connectedness, opportunities for new jobs and higher levels of productivity.”
That wording is not in the Bill. Will the Minister tell us whether the Government have abandoned those commitments? Why does the Bill include a watered-down version of that objective?
I note that in his letter yesterday, the Minister’s justification for Government amendment 2 was that
“with regards to the economic disparities component of”
clause 2(6),
“it could be overly restrictive where the Bank looks to invest in a deprived part of a relatively affluent region for example, as there are difficulties in drawing distinct boundaries on this issue.”
Before the Minister uses that as a reason to vote against our amendment 17, I hope that he will notice that the amendment has been worded specifically to avoid such restrictions: by addressing
“economic inequalities within and between regions of the United Kingdom”,
the bank will retain the freedom to target at any level. If their commitment still stands, I am sure that Conservatives will not oppose Labour’s efforts to put that in the Bill. The amendment would bring the Bill back into alignment with their stated objectives.
Amendment 18 would add a third objective for the bank:
“to support supply chain resilience and the United Kingdom’s industrial strategy”.
That seems reasonable. The Office for Budget Responsibility has said that the bank will have no effect on growth. With assets of 0.1% of GDP a year, the bank is dwarfed by its French and German counterparts, and the £12 billion of funding allocated over five years falls short of the £20 billion recommended by the National Infrastructure Commission. With their cancellation of Northern Powerhouse Rail and failed record on nuclear energy, the Government’s record on infrastructure is abysmal.
Labour has called for a strategic approach to infrastructure, and presented an industrial strategy that is based on evidence from around the world. Supported by the creation of a publicly owned Great British energy company, we would deliver self-sufficient renewable energy by doubling onshore wind, trebling solar and quadrupling offshore wind. We would create half a million jobs in renewable energy, and an additional half a million jobs by insulating 19 million homes over 10 years.
The importance of supply chain resilience has become particularly clear in the wake of the pandemic, and as concerns over energy security have come to the fore through the war in Ukraine. We are all concerned about it. We have an industrial strategy, and want the UK infrastructure bank to support and champion it. Our amendments 17 and 18 would clarify the objectives of the bank, and focus them on the challenges of the future.
David Linden (Glasgow East) (SNP)
Bore da, Mr Davies. It is a pleasure to serve under your chairmanship. Aside from one issue that I would split hairs about on amendment 17 —Scotland is not a region, but a nation, so the amendment should read “regions and nations of the United Kingdom”—I have another point to object to. The bank’s strategic objectives include tackling climate change, and it is vital that the Scottish Government’s climate change targets be reflected in the Bill, so I take a wee bit of issue with points made by the hon. Member for South Ribble about the UK’s “world-leading” climate change legislation; it legislates for net zero by 2050, whereas in Scotland it is 2045. I wanted to make that point on the record.
Given the significant overlap between the strategic objectives of the UK Infrastructure Bank and those of the Scottish National Investment Bank, a mechanism must be in place to ensure alignment on how the objectives are reached. I would be grateful if the Minister provided a little more clarity on that when he sums up. However, if His Majesty’s loyal Opposition intend to press the amendment to a vote, they can be assured of the support of the Scottish National party.
Alec Shelbrooke
On reducing economic and other inequalities between regions of the United Kingdom, I first make the point that if the bank is to be located in my home city of Leeds, in Yorkshire, and is to invest in the region, it follows that Northern Powerhouse Rail has not been cancelled.
I have risen to speak simply because an intervention on the Minister would have been too long. The Opposition parties almost seem to be tabling amendments for amendments’ sake. To state the obvious about the whole point of this policy, I do not, to use a phrase, need a weatherman to tell me when it is raining. The Infrastructure Bank will already do exactly what is in the amendments.
On the green industrial strategy, the reality is that a multi-billion-pound industry, with hundreds of thousands of jobs in the offshore wind industry, has been created since we came to power in 2010. It is simply mistaken to suggest otherwise. When we look at the track record of this Government over the past 12 years, there is much that I am exceptionally proud of. We have changed the energy strategy of this country. Sometimes, we produce well over 50% of our electricity through renewable means. All that has come about through investment in infrastructure.
I believe that amendments 17 and 18 were tabled simply to develop an argument with a weak foundation that does not stand up when we look at the physical outcomes from the past 12 years. I will finish with that—
Alec Shelbrooke
I will, because I like the hon. Member for Glasgow East, but I had wrapped up my comments.
David Linden
My stock in the SNP has just fallen through the floor. The hon. Gentleman said that we do not need a weatherman to tell us what the weather is outside, but over the past seven or eight weeks, the UK Government have flip-flopped on their policy on energy, and specifically on their fracking policy, in a major departure from the 2019 manifesto. Given the instability of the UK Government and the changes in various weather people, it might not be a bad thing to put something about this in the Bill.
Alec Shelbrooke
I am always grateful for the hon. Gentleman’s input. Personally, I believe we should get on with fracking, and I have licences in my constituency, but that is a decision for the local authority. Often with such plans, local authorities are far better placed to understand the needs and issues than people down in Westminster.
On the green industrial strategy and the increase in fossil fuels—I know we are straying slightly from the subject—the investment in the green strategy that is being made by this Government is clear to see, but we cannot let our fossil fuel supply fall off a cliff and disappear overnight, and send people’s bills through the roof. That strategy and this policy are a key plank in ensuring that we move towards where we all want to be, while ensuring that we have the investments and structures in place and are clear about the target we are aiming for. Fundamentally, this Government have a proud track record on this matter, and amendments 17 and 18 are surplus to requirements.
Andrew Griffith
The hon. Member for Erith and Thamesmead and the Opposition are as sincere in pursuing this amendment as they are wrong. They are adventurous in terms of scope, because they are trying to crowbar an entire—
David Linden
On a point of order, Mr Davies. I am sure the Minister is not at all suggesting that you have selected amendments that are out of scope for the Committee to vote on.
Andrew Griffith
My reference to “scope” related to the broad set of industrial policies laid out by the hon. Member for Erith and Thamesmead, not to the wording of the amendments.
The Chair
My comments were about the previous discussion. The shadow Minister was in scope on her amendments. I call the shadow Minister.
Abena Oppong-Asare
Thank you, Mr Davies, for allowing me to speak on this matter. I fundamentally disagree with the Minister’s comments. The amendments that Labour put forward are reasonable. In this climate, given the situation with covid and Russia, we know that things are different, particularly in terms of regional inequalities. The Prime Minister also talked about regional inequalities. We have all seen the speech he gave in Tunbridge Wells.
The Chair
Order. The hon. Lady will have the final word, but the issue is whether these amendments are in order. Obviously, they were selected for debate, and the Minister was speaking to them. I know his comments were about whether comments made were in order, but if he could make his speech, I will then call the hon. Lady to respond, and she can make similar points. I call the Minister.
Andrew Griffith
Thank you, Mr Davies. The Government think that the aim of reducing regional inequality is already implicit in the bank’s current objective. As my right hon. Friend the Member for Elmet and Rothwell reminded me, the bank was constituted in Leeds, rightly outside of the overheated south-east. A number of its early investments have already seen their capital deployed to some of the most left-behind parts of the United Kingdom. Our belief is that the objective of supporting regional and local growth provides a clear direction for the bank without being overly prescriptive, which I am sure nobody would want. The strategic steer by the Chancellor in March makes clear that the bank must focus on geographical inequality, with reference to the levelling-up White Paper, which the House will debate tomorrow. That is the right place to set out the Government’s strategic approach to levelling up, but that is best done on a portfolio basis rather than investment by investment, which is what the amendment implies.
Turning to the second part of the amendment, the bank’s framework document already includes, under its regional and local economy growth objective, achieving higher levels of productivity and providing opportunities for new jobs—something the hon. Member for Erith and Thamesmead talked about as an important output. We think it is more appropriate to have this requirement in the framework document rather than in legislation to minimise the legal risk across investments. I am sure that we can all agree that no one wants to create more work for lawyers.
Andrew Griffith
The right hon. Lady will have to talk to her Front Bench if that is the official policy, but I assure the Committee that it is not the policy of the Government.
Valerie Vaz
The point is that this is public money. The bank has to be accountable for it. Lawyers are the guardians of justice. It is not about making more money for lawyers. It is about interpreting legislation that is put through very quickly and not thought through. That is the basis of it.
Andrew Griffith
The hon. Lady makes a very fair point on the valiant role of lawyers in keeping us all to account. The alternative, of course, is legislation that is clear and allows the appropriate degree of discretion. The Government contend that that is what this is.
The amendments by the hon. Member for Erith and Thamesmead would include in the bank’s objectives the improvement of pay and living standards. Economic growth in the long run is closely linked to supporting productivity, income and employment and living standards. It is implicit in the bank’s objectives. Including the amendments would make the objectives too wide-ranging for an infrastructure bank, as it could focus on anything relating to pay or standards, for example training programmes or household appliances, which do not come under economic infrastructure. For these reasons, we consider it preferable to keep the statutory objectives as they are—a balance between clarity and flexibility—while instead providing further recommendations as to the bank’s targets and areas of focus via more flexible mechanisms such as the strategic steer, which can be updated from time to time.
Abena Oppong-Asare
I thank the Minister for his comments. We agree that the legislation needs to be clear, but I think our approach is very different. I do not want to repeat what I have already said, but I want to highlight that addressing economic inequalities, particularly between regions, is really important,. We think the amendments would help the bank retain its freedom while reaching targets at any level. For this reason, we will push the amendments to a vote.
Question put, That the amendment be made.
Andrew Griffith
I beg to move amendment 8, in clause 2, page 1, line 18, leave out “relevant”.
This amendment, and Amendment 9, would clarify that the Bank can provide loans to public authorities other than local authorities and Northern Ireland Departments (as well as to persons other than public authorities).
Andrew Griffith
The amendments broaden the definition of “public authority” used in relation to the bank’s capacity to lend. The drafting as is broadly meets the policy aims and would allow the bank to lend to local authorities and to the Northern Ireland Executive. However, given that primary legislation can be a blunt instrument, we do not want inadvertently and by implication to preclude the bank from investing in other public authorities. I hope that all members of Committee can agree on that.
Other public authorities could include existing public bodies, as well as new public bodies created in the future by local authorities or Government Departments.
Abena Oppong-Asare
I thank the Minister for his explanation of the amendments.
Clause 2(4) describes the activities of the bank, as the Minister explained, and sets out that in addition to funding private infrastructure projects, it can provide financial support to local government. Government amendment 8 seeks to clarify that the bank can provide loans to public authorities other than local authorities and Northern Ireland Departments. Amendment 9 to clause 10 would achieve the same purpose. It would clarify that the Bill considers public authorities to be local authorities, Northern Ireland Departments and any other person exercising functions of a public nature.
I am grateful to the Minister for his letter of yesterday that set out the reasons for the Government amendments, which we will not oppose.
Amendment 8 agreed to.
Andrew Griffith
I beg to move amendment 1, in clause 2, page 1, line 23, leave out from “includes” to “technologies” on line 24.
This amendment would remove the reference to “structures underpinning the circular economy, and nature-based solutions,” from the definition of “infrastructure”.
Andrew Griffith
The amendments would remove both the Lords amendments. Government amendment 1 would remove the addition of “nature-based solutions” and
“structures underpinning the circular economy”
from the definition of infrastructure. The bank has a broad mandate with flexibility to support a wide range of projects to help to tackle climate change and to support regional and local economic growth.
On nature-based solutions, earlier this year the Government conducted a review to consider the potential of broadening the bank’s objectives to include other areas such as improving UK natural capital. The review recognised the significant potential for increased use of nature-based and hybrid infrastructure solutions, including for the water sector, greenhouse gas removal and opportunities for the growth of ecosystems services markets. Those opportunities will be important to meet our objective to leverage private finance for nature recovery.
The outcome of the review was formally made clear to the bank and to the market through the Chancellor’s non-statutory strategic steer. As we discussed earlier, that is an alternative to writing everything in statute and is more flexible. That steer clearly laid out that nature-based solutions are in scope and are something that the bank should pursue. However, given that they are already part of the remit and are clearly covered within the non-exhaustive definition of infrastructure, we do not believe this language should be retained in the Bill.
Moving on to amendment 2, clause 2(6) focuses on improving
“productivity, pay, jobs and living standards”
and reducing geographic inequality. The effect of this subsection is to put a statutory duty on the bank to have regard to these two areas in relation to every potential investment that it considers, which would have significant impacts on the bank. On improving jobs specifically, we understand the intention of the provision and do not disagree with it as a general principle, but that is quite different from the individual investment evaluation.
Valerie Vaz
Those objectives are not set out in the Bill. Are they going to be in secondary legislation?
Andrew Griffith
As I have laid out, the Government’s position is that the steer to the bank, which is flexible and can be updated from time to time, rather than requiring primary legislation—it may be something the Labour party wishes to take advantage of in future—is a more agile and flexible way of guiding the bank as it seeks to achieve its objectives.
David Linden
Is the Minister therefore suggesting that that would only be within a policy framework rather than in the issuing of secondary legislation?
Andrew Griffith
The steer provided from time to time in the context of the wider oversight of the investment bank, under its statutory objectives—effectively, the interpretation layer—is the right place. We do not disagree with the principle, but we could sit here all day and think of various admirable principles that we would like to put into statute. It is the Government’s contention that the provision would over-fetter the discretion of the bank and that it is not the appropriate vehicle. I understand that we will debate this point a number of times as we go through the Bill. The Government want the bank to get on with its job. We want to give it the statutory clarity it needs and to allow Parliament and Government, from time to time, if they wish, to give the steer required.
James Murray (Ealing North) (Lab/Co-op)
It is a pleasure to serve on the Committee with you as Chair today, Mr Davies. As we know, clause 2 concerns the objectives and activities of the UK Infrastructure Bank. Subsection (5) seeks to define the infrastructure and makes reference to the
“structures underpinning the circular economy, and nature-based solutions”,
which reflects an amendment made in the Lords that Government amendment 1 seeks to remove. The Government’s opposition to this measure seems to run counter to subsection (3)(a), which defines tackling climate change as an objective of the bank. I note that the Government do not oppose this objective of the bank, but they do seem to reject its delivery. We naturally oppose the amendment, which highlights how the Government seem to be all talk but unwilling to follow through on solutions to the climate emergency.
The truth is that the Government and the newly appointed Prime Minister have a record of failure on investing in green infrastructure for our country and our economy. While we welcome the bank’s focus on tackling climate change, no matter how well it plays its part, the British people need a Government with an effective plan to make the investments in the jobs, homes and energy supplies of the future a reality.
Richard Fuller
The hon. Gentleman may point to conflict between taking out from subsection (5) the words
“structures underpinning the circular economy, and nature-based solutions”,
and the objective in subsection (3) about tackling climate change, but if he looks at subsection (5)(c), he will see that
“climate change (including the removal of greenhouse gases from the atmosphere)”
is retained. The amendment does not affect the Government’s commitments on climate change at all.
James Murray
I thank the hon. Gentleman for his intervention—it is a pleasure to speak with him once again following his brief tenure on the Government Front Bench. I am not quite sure from that intervention whether he supports our opposition to Government amendment 1. Perhaps we will see when we push it to a vote shortly.
Let me move on to Government amendment 2. It seeks to remove from the clause subsection (6), which was introduced by Labour in the Lords. Subsection (6) requires the bank to have regard to public interest when targeting investment that improves productivity, pay, jobs and living standards and reduces the economic disparities between the nations and regions of the United Kingdom. Sadly, it comes as no surprise to us that the Government wish to remove commitments to better pay and the reduction of economic disparities. My hon. Friend the Member for Erith and Thamesmead already set out clearly the importance of prioritising job creation and putting it in the Bill. We want all parts of the country to benefit from investment in green jobs for the future, along with improved rail and other transport services and other essential modern infrastructure, including broadband.
When it comes to supporting economic growth across the country—or levelling up, as the Government used to call it—words ring hollow unless people see change. That is why clause 2(6) is so important, as it seeks to ensure that the bank has regard to the first mission of the Government’s levelling-up White Paper when exercising its functions under the Bill. We oppose the amendment because we seek to hold the Government to account on their commitment to level up our country.
Question put, That the amendment be made.
Richard Fuller
I no longer wish to move amendment 11, because clause 2(6) has been removed.
Andrew Griffith
I beg to move amendment 3, in clause 2, page 2, line 16, at end insert—
“(7A) The Treasury must consult the appropriate national authority before making provision in regulations under subsection (7) that would be within the legislative competence of—
(a) the Scottish Parliament, if contained in an Act of that Parliament,
(b) Senedd Cymru, if contained in an Act of the Senedd, or
(c) the Northern Ireland Assembly, if contained in an Act of that Assembly made without the Secretary of State’s consent,
apart from provision that is merely incidental to, or consequential on, provision which would be outside that competence.”
This amendment would require the Treasury to consult the relevant devolved authority before making regulations under clause 2(7) that would contain provision within the legislative competence of the authority in question.
Andrew Griffith
This group concerns provisions that will, I hope, gladden the heart of the hon. Member for Glasgow East, because they add a duty to consult the devolved Administrations on the use of delegated legislative powers in the Bill, including the power to amend the bank’s activities or the definition of infrastructure, and to issue the strategic steer. The amendments come as a direct result of the positive engagement we have had with the DAs to date. They specifically address a concern raised that the Government would be legislating or acting in areas of devolved competence without an appropriate mechanism to engage with the DAs.
Stephen Flynn (Aberdeen South) (SNP)
I do not think we have any concerns about the UK Government consulting the Scottish Government in respect of their intended actions, but I think the key question is will they listen, and if the Scottish Government have any concerns, will they have a veto?
Andrew Griffith
These amendments are a proof positive of the Government having listened. If the hon. Member is so crushingly sceptical, perhaps he will oppose the amendments, which have been proffered following consultation with the DAs. It was never our intention to pursue these measures without an appropriate mechanism to engage with the DAs. That is why we are happy to bring forward these amendments today.
I would like to put on the record my gratitude to officials in Scotland, Northern Ireland and Wales for engaging so positively to date on the Bill. I think we all support the Bill’s ultimate objectives, and I am hopeful that it will secure a legislative consent motion from each of the devolved legislatures. I hope that hon. Members will support the amendments.
James Murray
Government amendment 3 concerns the consultation of appropriate national authorities when using statutory instruments to change regulations pertaining to the definition of infrastructure and the bank’s activities, as outlined in clause 2(7). If changing regulations under subsection (7) fell within the legislative competence of the Scottish Parliament, Senedd Cymru or the Northern Irish Assembly, the amendment would require the Treasury to consult the relevant devolved authority.
Similarly, Government amendment 4 would require the Treasury to consult the relevant devolved authority before including in a statement of strategic priorities for the bank matters within the legislative competence of the devolved authority.
Government amendment 6 simply defines “appropriate national authority” to mean the Scottish Ministers, the Welsh Ministers, or the Department for Infrastructure in Northern Ireland.
We are supportive of these amendments, as we are supportive of the Union. Labour recognises the very real importance of working closely with devolved Administrations, and we recognise the great work of Welsh Labour. Indeed, the Government could learn a thing or two from Welsh Labour, given its record for infrastructure investment. The Welsh infrastructure investment plan has already allocated more than £12 billion for key capital projects to transform and maintain the NHS estate, deliver 20,000 affordable homes and deliver rail infrastructure improvements.
Amendment 3 agreed to.
Question proposed, That the clause, as amended, stand part of the Bill.
Andrew Griffith
Clause 2 is of central importance to the policy remit in which the bank will operate. I think that is why we have heard so many different—sometimes contrasting—views about how prescriptive that remit should be. The clause sets out the bank’s objectives and activities, as well as an inclusive definition of infrastructure, which is central to its scope—it is the UK infrastructure bank, after all. The clause also creates delegated powers to enable the Treasury to change the bank’s activities or the definition of infrastructure using secondary legislation under the affirmative procedure, so Parliament will have its say. The bank’s objectives to help the Government meet their climate change ambitions and to support levelling up across the UK are currently set out in the framework document. Clause 2(3) puts those on a statutory footing, which we hope sends a signal to the market about the Government’s commitment to these policy aims and the bank’s central role in helping deliver them.
Katherine Fletcher
Studying Parliament as he does, the Minister will have paid attention to my campaign to be Transport Committee Chair, which was unfortunately unsuccessful last week. One point that I made repeatedly as part of that campaign was about the projects that are slightly too big for local authorities and slightly too small for the Department for Transport. The objectives, while hotly debated here, must be so prescriptive as to not allow the UK Infrastructure Bank to lend to local authorities for smaller but none the less important projects in local communities. Is that fair?
Andrew Griffith
My hon. Friend makes a very fair point. I will be happy to facilitate meetings between her— expert in transport as she is—and the infrastructure bank to get into some of those potential projects in more detail. She made a significant contribution as roads Minister.
Clause 2(5) sets out the definition of infrastructure. We have taken a power to amend the bank’s activities and the definition of infrastructure, using the affirmative procedure in both Houses. Across these different areas, clause 2 is the bedrock on which the bank will operate, and I commend it to the Committee.
James Murray
We know that after 12 years of low growth from the Conservatives there is a vital need to invest in the infrastructure of the future. Across the country, we need to invest in new transport, new digital infrastructure, new sources of energy that are sustainable and secure, and new high-quality jobs with decent pay. That is why we support the establishment of the UK Infrastructure Bank, and the Bill’s aim of putting it on a statutory footing.
We wanted the bank to address the deep economic inequalities across the country, which is why we sought to amend clause 2(3). My hon. Friend the Member for Erith and Thamesmead emphasised that, in supporting regional and local economic growth, the bank should reduce economic inequalities within and between regions of the United Kingdom to improve productivity, pay, jobs and living standards. In the same subsection, we wanted to add a third objective: for the bank to support supply chain resilience and the UK’s industrial strategy.
We wanted to retain two Lords amendments that strengthened the Bill: one that included the circular economy and nature-based solutions in the Bill’s definition of infrastructure, and one that Labour introduced to ensure that the Bill would focus on creating jobs and reducing economic inequalities. It is deeply disappointing that the Government have blocked those measures to make the UK Infrastructure Bank succeed and be fit for a modern, prosperous Britain. A Labour Government would deliver investment and loans in a way that supports the entire country, to meet the challenge of regional inequality and the commitments of our climate ambitions.
Question put and agreed to.
Clause 2, as amended, accordingly ordered to stand part of the Bill.
Clause 3
Strategic priorities and plans
Amendment made: 4, in clause 3, page 2, line 26, at end insert—
“(4A) The Treasury must consult the appropriate national authority about any provision which the Treasury proposes to include in a statement under this section and which concerns a subject matter provision about which would be within the legislative competence of—
(a) the Scottish Parliament, if contained in an Act of that Parliament,
(b) Senedd Cymru, if contained in an Act of the Senedd, or
(c) the Northern Ireland Assembly, if contained in an Act of that Assembly made without the Secretary of State’s consent.
(4B) The duty to consult imposed by subsection (4A) may be satisfied by consultation carried out before the passing of this Act.”—(Andrew Griffith.)
This amendment would require the Treasury to consult the relevant devolved authority before including in a statement of strategic priorities for the Bank any provision which the Treasury proposes to include in the statement and which concerns a subject matter within the legislative competence of the authority in question.
Question proposed, That the clause, as amended, stand part of the Bill.
Andrew Griffith
Clause 3 gives His Majesty’s Treasury the power to issue the bank with a strategic steer. We talked about that earlier as a mechanism by which the Government of the day can flexibly, and in an agile fashion, give the bank some direction. That steer will set out what, in the Government’s view, the bank should prioritise and focus its activities on. The strategic steer, and any revisions of it, will be required to be laid before Parliament.
The Chancellor issued the bank with its first strategic steer in March in order to inform the development of the bank’s inaugural strategic plan, which was published in June. That gave the opportunity to share an update on the Treasury’s interpretation of the bank’s strategic objectives and to clarify the definition of infrastructure that the bank should be working with. It highlighted the role that the bank can play in improving energy resilience, as well as setting out the outcome of the Treasury’s review of environmental objectives, confirming that there is significant scope in the bank’s existing objectives for it to invest in nature-based solutions.
We do not expect a steer to be issued more than once a Parliament, which will ensure that the bank has certainty in the long term to plan its investment strategy while keeping pace with Government priorities and ensuring policy alignment across infrastructure investment.
Richard Fuller
Can the Minister tell me whether the steer will include giving a bit more specificity to the UK Infrastructure Bank about where on the investment spectrum—emerging businesses, high-growth businesses, mature businesses—it should place the preponderance of its resources? Will the steer provide clarification from the Government to help the bank?
Andrew Griffith
The strategic steer is precisely an attempt to find the right balance between prescription—I understand that my hon. Friend does not seek that directly but wants to be able to command the bank to invest at particular points of the curve from time to time—and the bank’s being able to use its expertise and motivate its leadership by having a relatively broad set of parameters. We all understand that that is a careful balance, and we do not want to move it in either direction, but I agree with my hon. Friend that the strategic steer is a vehicle to achieve the purpose he seeks.
Richard Fuller
I do not mean to dwell too much on this issue, and I certainly do not want to irritate the Minister through my questioning, but I want to make the point that the skillsets required for the bank to be effective as an emerging-stage investor are different from those required for it to be an investor in a mature business or a high-growth business. My concern is that the bank will try to spread itself too thinly, particularly in the early stages.
Andrew Griffith
My hon. Friend makes a very wise and informed point. The UK Infrastructure Bank is not the only intervention that the Government make; the British Business Bank has a broad portfolio of ways to support the sector. I hope that between the two of them, with the strategic steer perhaps being used as a vehicle to align them, every outcome that my hon. Friend seeks can be properly covered. Again, he makes a strong point about confidence and capability, and about how we resource against different types of investment.
The bank is required under the clause to update its strategic plan to ensure that it reflects the changes when a strategic steer is issued, once per Parliament. That will ensure that the will of Parliament is satisfied within a reasonable timeframe. Given that the bank is ultimately owned by the Government and the taxpayer, it is right that we retain a power to issue the bank with a strategic steer to set out its priorities, which is why I support the clause.
Abena Oppong-Asare
I thank the Minister for his explanation of the clause, which lays out the bank’s strategic priorities and plans. It is largely administrative and requires the Treasury to prepare a statement of strategic priorities for the bank, which must be laid before Parliament and can be revised or replaced.
As the Minister said, the Chancellor—the now Prime Minister—put the strategic steer in place on 18 March. As I have already highlighted, the strategic steer included some plans that Labour do not oppose; indeed, we want to see some of them in the Bill, rather than in policy documents with ambiguous legal status. The Government must recognise that point, which is evidenced by the energy efficiency amendment that they introduced in the Lords. The Chancellor stated in the March strategic steer that
“I’d encourage you to prioritise opportunities that align with the government’s renewed focus on energy security. Examples of relevant opportunities may include helping to bring forward low carbon energy projects that accelerate the UK’s transition to clean energy and improve the energy efficiency of buildings and homes.”
It was rightly pointed out in the other place that the Bill did not include energy efficiency measures. In recognition of that, the Government introduced an amendment on energy efficiency, which Labour welcomed.
I anticipate that in much of the Committee’s proceedings, the Government will assure us that many of our asks are covered by the strategic steer or the framework document. However, if that is the case, will they put them in the Bill, as they did with energy efficiency? If they are firm commitments then they should be in the legislation itself. We are here to scrutinise the Bill, but so many key elements of it seem to be relegated to documents that are not amendable and are legally ambiguous. Labour does not oppose clause 3, but it would be useful if the Minister could clarify the legal status of the various documents that interact with the Bill.
I want to echo some of the comments made by the hon. Member for North East Bedfordshire. In terms of the skills required, I too am worried about the bank being spread thin. I appreciate that the Minister has made comments about competency and capability with respect to particular investments, but it is important that at this stage—while we can—we look at how we can clarify the legal status of the various documents that interact with the Bill.
Andrew Griffith
I thank the hon. Lady and I reiterate that, in general, our differences are to do not with outcome, but with process and how prescriptive one should be when putting things into legislation. Philosophically, the Conservative party does not think it is always right to be over-prescriptive; the objective is to provide a flexible and agile tool that can be responsive and deliver the outcomes that we seek. Passing laws in itself does not change the outcome.
Valerie Vaz
That is the whole reason we are here as legislators. I gently remind the Minister that it is important to put things in the Bill; otherwise, there is confusion and there are too many grey areas. The Minister does not want lawyers to get involved, but it is important to have clarity. That is the purpose of legislation. Does he agree?
Andrew Griffith
The hon. Member for Erith and Thamesmead asked me to clarify. Of course we do not put everything in legislation; that is just not the way that we work. As we have committed to doing on the strategic steer, we bring things to Parliament to provide the opportunity to debate and discuss them. How this will work will be laid down in the Bill itself. As I have explained, the strategic steer can be issued from time to time—once per Parliament. Its legal status is that the body itself must have regard to it and then respond by setting its own strategic plans.
Abena Oppong-Asare
I appreciate the time that the Minister has given me to intervene on this point. He said that we do not always put things down in legislation, but that has been done already with the energy efficiency measures. All I am saying is that if these are firm commitments, then I do not understand why they cannot be laid down in the Bill. That would avoid confusion at a later stage, and it is important that we get this right.
Andrew Griffith
I feel I have addressed this point a number of times. There is just a difference between us as to the degree to which we should embellish primary legislation, which is hard to change and inflexible to respond to circumstances. That remains the position in the House. If the hon. Member for Erith and Thamesmead and her party are successful in obtaining a majority in a future election, she will have the opportunity to provide the strategic steer, which I assure her the UK Infrastructure Bank will have regard to under this framework. Perhaps we can then reassemble, and she will have the opportunity to hang whichever baubles she would like to on this particular Christmas tree.
Question put and agreed to.
Clause 3, as amended, accordingly ordered to stand part of the Bill.
Clause 4
Directions
James Murray
I beg to move amendment 19, in clause 4, page 2, line 38, at end insert
“and any subsequent, consequential, or relevant correspondence between the Treasury and the Bank.”
This amendment increases transparency surrounding directions issued by the Treasury to the Bank.
I will briefly set out what the clause will do, because that context is necessary to understand what our amendment would do in turn. Clause 4 would grant the Treasury the power to give directions to the UK Infrastructure Bank about how to deliver on its objectives. Subsection (2) would require the bank to comply with those directions, but the Treasury would be unable to give those directions until it had consulted with the bank’s board of directors. The Treasury would be required to publish the directions as soon as practicable, and under an upcoming framework document the bank would have the right to publish a reservation notice in respect of the direction.
The bank has been described by the Government as operationally independent, but we know that the Treasury is the sole stakeholder in the bank. It is therefore possible for the Treasury to exert influence on the bank’s activities as a result of its ownership stake under the normal principles of company law. The Bill’s explanatory notes set out the Government’s position, stating:
“The Government’s policy is that such influence should be used sparingly in practice, and that the default position should be that the Bank is independent as regards its operations and investment decisions.”
Given that the Treasury is the sole stakeholder in the bank, however, we have concerns about the procedural transparency of the clause. We are conscious that the clause provides the procedural framework for the Government to direct the bank. As we have heard several times this morning, the Prime Minister’s infamous Tunbridge Wells speech indicates the need for an extra degree of caution.
The explanatory notes state that the Government’s use of influence will be constrained by the need
“to act rationally and proportionately”,
but the record of the Government causes us to have doubts. We therefore wish to enhance the safeguards in the Bill and ensure that the Government do not exert undue influence over the activity of the bank. Conservative Governments have recently rejected Treasury orthodoxy, and the bank may in future raise concerns about the direction of Government policy. As the bank is compelled to abide by directions given by the Treasury, it is important that we have a transparent process to allow for scrutiny in those circumstances. That is why we tabled amendment 19, which seeks to insert a requirement that
“any subsequent, consequential, or relevant correspondence between the Treasury and the Bank”
be made public. The purpose of the amendment is to increase transparency surrounding directions issued by the Treasury to the bank. It will simply require the Treasury to publish additional relevant correspondence between the Treasury and the bank, providing fuller context to any directions issued and enabling the proper scrutiny of investments made with public money.
Andrew Griffith
The hon. Member’s amendment is a solution in search of a problem. The bank is constituted with taxpayers’ money, for which Ministers are accountable to Parliament and to Select Committees, which have the power to compel information and witnesses. There is a strong degree of accountability, and it is entirely appropriate that Ministers, from whichever side of the House they may one day hail, have the ability to direct the bank as necessary, as part of the matrix of ministerial accountability. I therefore reject the amendment. The Government will not support it, simply because we consider it to be wholly unnecessary.
James Murray
I take no reassurance whatever from the Minister’s comments, so I will push this amendment to a vote.
Question put, That the amendment be made.
Andrew Griffith
Clause 4 contains a provision for His Majesty’s Treasury to issue the bank with a direction of a general or specific nature about how the bank is to deliver its statutory objectives. To address the concerns raised by the hon. Member for Ealing North, the bank must be consulted before any direction is given, and any direction given must then be published by the Treasury. Ministers are rightly accountable to Parliament for this bank, and for any element of risk to the Exchequer or taxpayer that its activities create. That is right, even though the bank will be operationally independent for its day-to-day operations and its own investment decisions.
It is therefore considered necessary and entirely appropriate that the Government have a reserved power to direct the bank about how it is to deliver its objectives. Without a power of direction in statute, His Majesty’s Treasury could still direct the bank; however, there would be situations where the board would refuse a direction if the power were not in statute, given directors’ obligations under the Companies Act 2006. The two things could conflict. The purpose of the clause is to clarify where that conflict could arise, and the power of direction in statute removes that potential.
I assure right hon. and hon. Members from both sides of the House that the Government expect to use the power infrequently. Constrained powers of direction are a relatively common feature of similar institutions, such as the British Business Bank and HMRC. I commend the clause to the Committee.
James Murray
I rise to speak briefly, as I set out our views on clause 4 more widely in the context of amendment 19, which I am disappointed that the Government chose to oppose. We were simply aiming to improve procedural transparency; it makes me wonder why the Government are so keen to avoid that being part of the Bill. Having lost that amendment, we will not be opposing the clause as it now stands.
Question put and agreed to.
Clause 4 accordingly ordered to stand part of the Bill.
Clause 5
Financial Assistance
Question proposed, That the clause stand part of the Bill.
Andrew Griffith
Clause 5 gives the Treasury the power to provide the bank with financial assistance to enable it to deliver on its objectives. Financial assistance is defined in clause 10 to include
“assistance provided by way of loan, guarantee, indemnity, participation in equity financing and any other kind of financial assistance”,
whether given on an actual or contingent basis. The bank has been operating on an interim basis so far, with £22 billion of capitalisation from the Treasury, using existing powers derived from the Infrastructure (Financial Assistance) Act 2012 and sections 50 and 51 of the United Kingdom Internal Market Act 2020. However, we believe that a specific spending power is important in ensuring that the bank is an enduring institution.
Normally, the bank borrows from the Debt Management Office through voted loans via the Treasury’s supply funding. However, subsection (2) will make it possible for the bank to receive money paid directly out of the National Loans Fund, with the terms and conditions and interest rates of any such loans being determined by the Treasury. This removes the need for the Treasury to act as an intermediary in lending money from the National Loans Fund, while still maintaining control over the terms and conditions of direct loans. That is consistent with the approach taken by the Green Investment Bank when that was established.
Clause 6 provides for the bank, each year, to provide to the Treasury a copy of its annual report and accounts, and for the Treasury to lay these before Parliament. This will ensure the direct accessibility of the accounts by Parliament. This is a common clause for arm’s length bodies; it was in the legislation for the Advance Research and Invention Agency, the Green Investment Bank and the Bank of England. We expect the bank to publish its annual report and accounts for 2021-22 before the end of this calendar year—I believe they will be laid in the immediate future. The annual report and accounts will cover, as is standard, the bank’s progress on its success criteria, which I am sure will be of interest to my hon. Friend the Member for North East Bedfordshire, including its key performance indicators, its compliance with financial services regulation and its financial accounts.
Abena Oppong-Asare
As the Minister highlighted, clause 5 concerns financial assistance to the bank and clause 6 concerns the bank’s annual accounts and reports. The Minister has already provided a detailed summary, so I am not going to repeat what he has said. As he mentioned, clause 5 allows for the Treasury to provide financial assistance to the bank for the purpose of helping the bank deliver its objectives. Clause 6 requires the bank’s directors to comply with section 441 of the Companies Act 2006, delivering the Treasury a copy of its accounts and reports each financial year. As the Minister has outlined already, such clauses are commonly used. These are clearly technical and administrative requirements, and we will not object to them.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clause 6 ordered to stand part of the Bill.
Clause 7
Directors: appointment and tenure
Richard Fuller
I beg to move amendment 12, clause 7, page 3, line 20, leave out “fourteen” and insert “eight”.
The Chair
With this it will be convenient to discuss amendment 13, clause 7, page 3, line 20, at end insert
“of which at least four must be non-executive directors”.
Richard Fuller
I am getting clear instructions from the Whip to be as brief as possible, so—[Interruption.] Not quite that brief. I draw hon. Members’ attention to clause 7(a). Clause 7 concerns the directors and 7(a) is about the number of directors; it says the bank is to have at least five and no more than 14 directors. It was that number 14 that caught my eye: it seems an extraordinarily large number of people to have on a board, and I do not believe that it is in accordance with corporate best practice.
Furthermore, there is no provision for the balance between executive and non-executive directors. It is a clear aspect of corporate governance that there should be a plurality and, often, a majority of non-executive directors. I want to probe the Government about why the number is 14, and why there is not more specificity about non-executive directors.
To back up my argument, I should say that the Minister will be aware that in the United States the average number of directors for the largest American corporations is between eight and 11, not 14. In its review of the FTSE 100 companies, Spencer Stuart said that the average board size is 10, and that 77% of boards are solely non-executive directors. The Minister will also be aware that the British Business Bank has nine directors, of whom four are non-executives and one is additional—he is a senior independent director. These are important points. There is a risk that the board could be full of people there to please—[Interruption.] He just told me to shush up.
Richard Fuller
No, I am not going to take an intervention. He just told me to sit down, but he can sit down while I finish making my speech.
Richard Fuller
The right hon. Lady is right about the potential here; I think I heard her use the word “cronies”. That is the concern—that with so many places the board will end up being stuffed full of people who have their own interests to play and that good governance will, as a consequence, be a victim of that large board membership.
David Linden
Unfortunately, I was unable to catch the eye of the hon. Member for North East Bedfordshire, but I do not necessarily disagree with much of what he is saying. I only hope that the idea would extend, for example, to reform of the House of Lords and even the size of the Cabinet of the UK Government, which I think is the biggest it has ever been. I am more than happy to agree with the hon. Gentleman. He can rest assured of my support if he chooses to push the amendment to a Division, but I think we need a degree of consistency if he is willing to pursue this line of argument.
James Murray
Amendment 12 seeks to limit the maximum number of directors on the board of the bank, moving it down from 14 to eight. Amendment 13 stipulates that at least four of the board members must be non-executive directors. We will be opposing amendment 12, as we believe that it is important for a range of views and expertise to be represented on the board of the bank. We believe that narrowing the board simply narrows the potential for diverse insight and ideas. As we will push for in amendment 20, which I will speak to shortly, we believe it is vital that there be a workers’ representative on the board. Narrowing the maximum figure reduces the board’s capacity to gain workers’ insight. On amendment 13, we will abstain.
Andrew Griffith
I thank my hon. Friend the Member for North East Bedfordshire for rightly raising the important subject of governance, which relates to the arms length body in scope today. It is a very important point when considering how we manage efficiency and the will of Parliament through arms-length bodies. While not disagreeing in principle, the Government will not be supporting amendments 12 or 13, but I would be very happy to engage with my hon. Friend to see if there is something practical we can do.
My concern is with reducing the maximum board size to eight in the UK governance structure under the combined code, which my hon. Friend may have views on as well. Unlike in the US, in the UK we have a large number of committees of boards—rather more than is the case in the US. The limit of eight may present the challenge of not being able to successfully staff and structure those committees. That would be a concern to me.
The amendment requiring non-executive directors to hold a majority on the board is sensible, but I believe that would be the objective of the organisation anyway, and it complies with the corporate governance code to have a majority of non-executive directors. I do not think we need a requirement in legislation, but it is something I am happy to explore with my hon. Friend to give him the comfort he seeks without us moving out of potential compliance. I would ask him to withdraw his amendment.
Richard Fuller
Well, Mr Davies, I am sorely tempted to push this to a vote, notwithstanding the comments from my hon. Friend the Minister. I understand his point and would ask that in his direction he would issues around governance. I am disappointed that Labour is not prepared to support my amendment. Therefore, rather than my valiant quest end in ignominious defeat, I beg to ask to withdraw the amendment.
Amendment, by leave, withdrawn.
Andrew Griffith)
I beg to move amendment 5, clause 7, page 3, line 23, at end insert—
“(ba) the Board is to appoint one or more directors to be responsible for ensuring that the Board considers the interests of the appropriate national authorities when making decisions;”
This amendment would require the Bank’s Board to include one or more directors with responsibility for ensuring that the Board considers the interests of the appropriate national authorities when making decisions.
The amendment sets out the requirement for UKIB’s board to appoint one or more directors to be responsible for ensuring that the interests of the devolved Administrations are considered in the board’s decision making. The work of the bank is UK-wide and it has already supported projects in each of the devolved Administrations. Given that Scotland, Wales and Northern Ireland have strong interests in infrastructure investment in their respective nations, we, the Government, are keen to ensure that UKIB considers their views throughout its strategy and decision-making, including board discussions.
David Linden
I would not necessarily oppose that argument, but I look forward to the day when the legislation can be updated to remove any representatives of the Scottish Parliament’s view, when Scotland takes its place as a rightful independent nation.
James Murray
I will speak only briefly to amendment 5, which requires the board of the bank to appoint one or more directors to be responsible for ensuring that the board considers the interests of the appropriate national authorities when making decisions. Labour will not oppose the amendment as we believe it is important that the interests of devolved authorities are taken into full consideration through the administration of the bank.
Amendment 5 agreed to.
James Murray
I beg to move amendment 20, clause 7, page 3, line 23, at end insert—
“(ba) at any time, the Bank is to have at least one non-executive director who is a representative of workers.”
This amendment ensures there is a workers’ representative on the board of the Bank.
As I mentioned earlier, Labour is concerned about the absence of a workers’ representative on the board of the bank, especially as much of the board consists of political appointees at the behest of the Chancellor.
We are committed to a strong partnership between industry, workers and the state. Having a workers’ representative on the board of the bank is important for good governance. The UK’s corporate governance code states that a company should have a combination of a director appointed from the workforce, a formal workforce advisory panel, or a designated non-executive director to facilitate engagement with the workforce. It also states, however, that if the board has not chosen one or more of those methods, it should explain what alternative arrangements are in place and why. In the absence of such an explanation, we have tabled amendment 20, which was originally moved in the Lords. We recognise arguments made in the Lords about how the Government’s framework document, to be published after Royal Assent, provides safeguards and protective measures, however that document is not legally binding. Sufficient questions have also already been raised about the activity of the bank to require explicit assurances in the Bill.
Richard Fuller
Could the hon. Gentleman clarify to whom the clause refers when it talks about workers? Is he referring to workers of the infrastructure bank, and is he calling for a board representative of them, because most of those people will be bankers? I am not so sure that Labour has always felt that the bankers are the most in need of representation in financial institutions. Or is he referring to workers of the investee company? If so, how would that be facilitated?
James Murray
I thank the hon. Gentleman for his remarks.
As I set out, the UK corporate governance code already has clear guidelines about the involvement of workforce in governance of boards. However, we have not had explicit assurances from the Government. We have tabled the amendment to push the Government on that. We need assurances that investments and loans made by the bank will be guided by the economic needs of the entire country. Investments made into tax havens pose a real risk to achieving that goal. Marcus Johns from the think-tank IPPR North has said that the use of tax havens
“hollows out our economy, keeps wages low, holds communities back, and enables money to be syphoned away into a globalised system of extraction”.
He argued that the bank
“must look seriously to prevent the use of tax havens and avoidance among the firms it supports.”
As the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), said, a Labour Government would support
“British industry, supply chains & support industrial strategy”,
and ensure that trade unions
“have access to workplaces”
and that all
“businesses & bodies receiving public money from the UK Infrastructure Bank…have a plan to create good jobs with decent conditions”.
We believe that only with a workers’ representative on the board will the bank have that critical perspective on job creation and succeed in being governed with the entirety of the UK’s economic prosperity in mind.
David Linden
I rise to indicate my support for amendment 20—[Interruption]—which I gather is also being given by Comrade Fuller on the other side of the Committee. It is very welcome that the Labour party, having recently departed from its relationship with trade unions and workers, is finally seeing the light and coming back to the idea that it ought to have a strong association with trade unions. The amendment probably could have been tidied up slightly, perhaps to include somebody from the Trades Union Congress, but on the broad thrust of the argument I very much support the idea that the Labour party is once again deciding to go back to its roots, rather than flirt too much with the policy of the right hon. and learned Member for Holborn and St Pancras (Keir Starmer).
Andrew Griffith
I shall strongly resist the temptation to debate the fundamental merits of workers on boards, overturning the existing system of UK corporate governance, or indeed the nationality of any particular worker. Why stop at one English worker when one could have representatives of workers from all the DAs?
In thoroughly opposing the amendment, I confirm that the bank will comply with the corporate governance code, which provides, as the hon. Member for Ealing North outlined, a number of options through which a company can achieve the desired representation. The bank has already designated Marianne Økland to take on the role of facilitating engagement with the workforce. That will be set out in the annual report when published. I ask, perhaps fruitlessly, the hon. Member not to waste the Committee’s time by pressing the amendment to a vote, given that the bank is complying with the existing UK corporate governance code.
James Murray
While I welcome the Minister’s assurance about the bank’s compliance with the UK corporate governance code, I am disappointed that he feels that a vote on worker representation on the board would be a waste of time. It is an issue of great importance to the Opposition, so we will press the amendment to a vote.
Question put, That the amendment be made.
Andrew Griffith
The clause sets out the core provisions on the make-up of, and appointment to, the bank’s board of directors. The clause requires that the board has a number of directors that is broadly consistent with comparable boards. It allows for the appointment of directors to have a spread of expertise across banking, infrastructure finance and climate change mitigation, as well as the appropriate balance between executive and non-executive directors. The clause sets out that the chair, chief executive officer and non-execs will be appointed by the Chancellor of the Exchequer.
All non-exec directors are recruited with reference to guidelines set out by the Office of the Commissioner for Public Appointments, and are being appointed based on the skills that they could bring to the board around the UKIB’s mandate. Throughout the process we have been conscious of the need to ensure a broad spread of expertise, as well as cognitive diversity. Finally, the clause contains provisions on the circumstances that would prohibit a person from continuing as a non-exec director, such as bankruptcy, or mental or physical incapacitation. I recommend that the clause stand part of the Bill.
James Murray
As the Minister outlined, clause 7 concerns the appointment and tenure of directors to the board of the bank. We note that it requires at least five but no more than 14 directors; that the board’s chair, chief executive officer and non-executive directors be appointed by the Chancellor of the Exchequer; that the tenure of non-executive directors not exceed four years; and that a person may not be appointed as non-executive director more than twice.
The clause also requires that a person ceases to be a non-executive director as soon as they cease to be a director by virtue of any provision of the Companies Act 2006, or are otherwise prohibited by law; they become bankrupt or their estate is sequestrated; a registered medical professional treating them provides the written opinion that that person is incapable of serving as a director due to physical or mental incapacity for more than three months; or the person has resigned from the position in accordance with the notification procedures of the bank. We recognise that the number of directors is broadly consistent with comparable boards, such as the Bank of England board. We also understand that the intention behind that is to provide flexibility and a wide spread of expertise.
Valerie Vaz
One of the difficulties is that the Bank of England does not have a spread across the regions. Does my hon. Friend not agree that we should have regional expertise as well, which is the whole point of levelling up all parts of the country?
James Murray
My right hon. Friend is right: it is critical that the bank considers regional inequalities in its mission, and we are very concerned that the Government opposed earlier amendments on having a commitment to tackle regional inequalities in the Bill. The fact that there is no reassurance that the board will have that in mind either causes further concern about what the bank’s mission will ultimately be.
James Murray
I am just drawing to a close.
We understand that the intention behind the composition of the board is to provide flexibility. Notwithstanding the important comments made by my right hon. Friend the Member for Walsall South, and our earlier comments about the lack of worker representation on the board, we will not oppose the clause.
Question put and agreed to.
Clause 7, as amended, accordingly ordered to stand part of the Bill.
Clause 8 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Andrew Stephenson.)
Retained EU Law (Revocation and Reform) Bill (Third sitting)
Tuesday 22nd November 2022
(2 years ago)
Public Bill CommitteesRead Full debate Retained EU Law (Revocation and Reform) Act 2023 View all Retained EU Law (Revocation and Reform) Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 22 November 2022 - (22 Nov 2022)
The Committee divided: - Ayes: 7 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 9 - Question accordingly negatived.
The Chair
We are now sitting in public and the proceedings are being broadcast. I have a few preliminary announcements. Hansard colleagues would be grateful if Members could email their speaking notes to hansardnotes@parliament.uk. Please switch electronic devices to silent. Tea and coffee are not allowed during sittings.
We now begin line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room. It shows how the selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or a similar issue. Please note that decisions on amendments do not take place in the order they are debated but in the order they appear on the amendment paper. The selection and grouping list shows the order of debates. Decisions on each amendment are taken when we come to the clause to which the amendment relates.
A Member who has put their name to the lead amendment in a group is called first. Other Members are then free to catch my eye to speak on all or any amendments within the group. A Member may speak more than once in a single debate. At the end of a debate on a group of amendments, I shall call the Member who moved the lead amendment again. Before they sit down, they will need to indicate whether they wish to withdraw the amendment or seek a decision. If any Member wishes to press any other amendment in a group to a vote, they need to let me know.
Clause 1
Sunset of EU-derived subordinate legislation and retained direct EU legislation
Brendan O’Hara (Argyll and Bute) (SNP)
I beg to move amendment 26, in clause 1, page 1, line 4, leave out “2023” and insert “2026”.
This amendment, together with Amendment 28, changes the date that the revocation of EU-derived subordinate legislation and retained direct EU legislation would take effect to the end of 2026.
The Chair
With this it will be convenient to discuss amendment 28, in clause 2, page 2, line 8, leave out “2023” and insert “2026”.
This amendment, together with Amendment 26, changes the date that the revocation of EU-derived subordinate legislation and retained direct EU legislation would take effect to the end of 2026.
Brendan O’Hara
It is a pleasure to see you in the Chair, Sir George. Amendments 26 and 28, tabled in my name and that of my hon. Friend the Member for Glenrothes, would change the date on which revocation would take effect from the end of 2023 to the end of 2026, essentially moving the date of the sunset clause by three years, from the totally unrealistic and unachievable to something that is still extremely challenging but is at least on the margins of the possible.
Before I address the amendments directly, it is worth pointing out that they have been tabled, like all the others, to try to make a thoroughly rotten Bill a little bit better, and should not be viewed in any way as we on the Opposition Benches giving any succour or support to the Bill. As we have said throughout its passage, the Bill is a dreadful piece of legislation that we will oppose at every step of the way, but if we can help to make it less awful, we will.
I have to begin by asking the Government why they are pushing ahead with the Bill. The architects are gone; it really belongs to another age, when the true believers were in charge, pushing the myth of the sunlit uplands of Brexit. We said it was rubbish then, and as we survey the wreckage of the UK economy post Brexit, it is demonstrable rubbish now. Why are the Government pushing ahead? We are in the middle of an economic crisis. People cannot heat their homes. Children are growing up in poverty. Food banks are being used by millions. Yet the Government are introducing arbitrary targets, which even if they could be achieved would consume just about every Government Department for the next 12 months, not just here but in Edinburgh, Cardiff and Belfast too. As the former senior civil servant in the Department for Environment, Food and Rural Affairs Jill Rutter told BBC Radio 4:
“If you look at my old department, they have about 500 pieces of law they need to look at…even if they worked every day to the end of 2023, they’d be reviewing whether they keep or allow to lapse a piece of law a day”.
At the moment, an eye-watering 3,800 pieces of EU legislation face the sunset clause on 31 December next year. On Second Reading a few weeks ago, that figure was considerably lower. In the intervening few weeks, no fewer than 1,400 other pieces of legislation have been discovered, and goodness knows how many more are yet to be identified. If the Bill passes unamended, all those will be added to the almost 4,000 existing pieces of legislation that will be sunsetted in 13 months’ time. Why on earth did the Government set such an arbitrary deadline for themselves? Why would they introduce a totally unnecessary cliff edge on such a vital piece of legislation about workers’ rights, environmental protections, food standards and so much more? It makes no sense whatsoever.
Peter Grant (Glenrothes) (SNP)
Like my hon. Friend, I have been puzzling over why the Government are so determined to die in a ditch over this 2023 date. Does he think it is because instead of admitting to the public that they made promises in 2019 they could not possibly keep— having realised that the promise in 2019 to get Brexit done was completely unrealistic—they are prepared to crash the economy in order to go into a 2024 election saying they have got Brexit done?
Brendan O’Hara
I look forward to hearing what the Government have to say by way of explanation. I agree with my hon. Friend. It makes absolutely no sense, unless the arbitrary deadline is purely ideologically driven and there to appease the true believers, who have now resumed languishing on the Back Benches.
In response to the sunset clause of the Bill, the Scottish warned that it
“carries an unacceptable risk that vital law, on which the smooth functioning of sectors of the economy and society depends, simply drops off the UK statute book.”
If the Government will not listen to us, perhaps they will take heed of the warning from the right hon. Member for Camborne and Redruth (George Eustice), who said that the Australia and New Zealand trade deals were so poor because of the Government’s self-imposed arbitrary targets. Of course, Members on the Government Benches will say that there are extensions available if they are applied for, but that ignores the fact that the relevant Departments still have to go through and identify at least 3,800 pieces of pertinent legislation, and then someone has to decide what happens next.
Even then, it is far from clear. Does the Secretary of State get to decide that an extension is allowed? Will a decision be made by the Cabinet or at a Cabinet Sub-Committee? Will a separate body be set up to specifically to examine which legislation can and cannot be granted an extension? Let us not forget that if this is not all done and dusted in 13 months, every piece of EU retained legislation will by default fall off the statute book, leaving huge holes in our domestic legislation.
Mr David Jones (Clwyd West) (Con)
Could the hon. Gentleman indicate whether he and his party are entirely happy with every aspect of EU retained law? If not, which aspects does he feel should be swept away?
Brendan O’Hara
The right hon. Gentleman misses the point. It is about a much wider area: the principle of sunsetting by the end of next year. It is a legal minefield. If we are determined to travel through it, let nobody come back in a year’s time and say, “We didn’t know”, because it is perfectly obvious. The case has been made perfectly clear; sunsetting by December 2023 is well-nigh impossible and will lead to huge dangers. It is a disaster waiting to happen. Today the Government have the chance to finally accept that the price of appeasing their true believers is a price too high. I urge them to accept our amendment.
Justin Madders (Ellesmere Port and Neston) (Lab)
It is a pleasure to see you in the Chair, Sir George. I will start by echoing the comments of the SNP spokesperson, the hon. Member for Argyll and Bute. We do not think the Bill is fit for purpose. We will try to help the Government to improve the Bill with the amendments we will be moving, but fundamentally we think its approach is flawed, not least the subject of this amendment—the unnecessary and entirely artificial cliff edge, which is driven by political considerations, not practical ones.
I have yet to hear any justification for the deadline of 31 December 2023, other than the belief—seemingly rooted in fantasy—that unless we free ourselves of the shackles of these regulations by that date, we can never prosper as a country. That is a fantasy, because whenever a Department is asked to identify which regulations it no longer wants, all we hear is silence. We are told that we must hurry along and free ourselves of the 2,400 or 3,800 regulations—or however many they turn out to be—that are holding us back. The best I have heard any Government Minister say so far is something about vacuum cleaner power, but given the chaos of the past few months I am not sure anyone can seriously say that the reason for our current economic mess is that we do not have sufficient control over our hoovers.
I do understand the need to have a finite date. I understand the importance of having a target to work towards, but the date has been plucked out of thin air, seemingly at random, and we should not accept it unless a compelling and rational case is put forward. The Regulatory Policy Committee has said that setting a deadline is not enough, and that a stronger argument is needed for choosing that particular date, and I agree. The truth is that there is no better reason for that date having been chosen than the Prime Minister of the day, or the week, being able to say, “We will have put an end to all unnecessary EU burdens by the end of next year”—never mind that the Government cannot tell us what those burdens are, or why the end of 2023 is better than the end of 2024, 2025 or 2026. What we can say for certain, though, is that there will not be sufficient capacity in the civil service for a genuinely effective appraisal of the regulations that the Bill seeks to remove. The case for the cliff edge is incredibly weak; the arguments for removing it and putting the date back are much stronger.
Let us look at the numbers for a moment—although, of course, the numbers are something of a moveable feast. If we accept the newspaper reports that 3,800 statutory instruments will come within the ambit of the Bill, and presume—because we have not heard anything to the contrary—that the Government want to keep the majority of them, more statutory instruments would need something doing to them as a result of the Bill than were passed in the whole of last year. Of course, we had many extra regulations in that year due to covid, and plenty of people think the scrutiny of those particular instruments was not at the required level, so even under the most generous interpretation, we are looking at possibly doubling from last year the number of statutory instruments, if everything is to be passed before the end of next year.
It will be in half the time, as well. Let us assume for now that the Government press on with the Bill—although there is still some doubt about that, I believe—and it gets to the Lords early next year. There will probably be a bit of to and fro, given the significant constitutional elements this legislation contains, so it will not get Royal Assent until well into the spring. At best, that gives the Government six, seven or eight months to restate all the laws that will be covered by the Bill, so will the Minister tell us how many extra staff each Department has been assigned to deal with the additional workload? Have they been given any deadlines to work to? As we know, the Financial Times reported on 27 October that the Minister’s Department, with 300 pieces of EU law, would need an extra 400 staff to review the body of retained EU law. What does that mean if we extrapolate it across the whole of Government? How many extra staff will be needed overall in anticipation of the Bill?
The Financial Times also reported that “Whitehall insiders”—I never quite know who those people are, but they obviously have sufficient insight to talk to the press—are saying that
“reviewing the majority of retained EU law by 2023 would present a massive bureaucratic burden. One senior Whitehall official estimated that between 1,000 and 1,500 statutory instruments would be required in order to convert retained EU law that was deemed necessary on to the UK statute book.”
No wonder the impact assessments are silent on the issue of the sunset date. The Regulatory Policy Committee has made clear that it believes the analysis of that sunset date is inadequate. I refer to a newspaper report in the Financial Times, which said that Government officials are considering whether to press ahead with the 2023 sunset clause. I do not know if that is news to the Minister, but it is hot off the press. According to the article, Government officials have said that the Prime Minister and the Business Secretary have “yet to decide whether to stick to the 2023 deadline or push it back.”
No. 10 said,
“It’s too early to say.”
I am afraid it is not too early to say because we are debating it right now. If the Government have plans to push back the sunset, it will be useful to hear. If the Minister is able to comment on that report when she responds, I would be obliged.
I remind the Committee what Mark Fenhalls of the Bar Council said in the evidence session:
“I am no expert in how much civil service time exists, but I would be astonished if it were remotely possible to cover but a fraction of this. I do not know why it is set up as anything other than a political problem.”––[Official Report, Retained EU Law (Revocation and Reform) Public Bill Committee, 8 November 2022; c. 28, Q56.]
That is the nub of the issue. This is a politically generated deadline that is going to cause problems, but if the Committee needs further persuasion, I also refer to the written evidence of the Bar Council, which raised the alarm when it said:
“The setting of an arbitrary, and in all the circumstances, impractical sunset date, with the consequent and entirely unnecessary risk of the disappearance of rules of critical importance to business, consumers, employees and the environment (some of which, due to their sheer numbers, may only be missed once lost) without adequate consideration or any consultation, and conferring an entirely unfettered and unscrutinised discretion to Ministers to disapply or delay the sunset provision or not; as well as the attendant risk of rushed replacement legislation”.
Eleonor Duhs also told us in the evidence session:
“In order to get the statute book ready for Brexit, which was in some ways a much more simple task than this, it took over two years and over 600 pieces of legislation. The reason I say it was a simpler task is that we were essentially making the statute book work without the co-operation framework of the EU. We were taking out references to the European Commission and replacing them with ‘Secretary of State’—that sort of thing. That was a much simpler task than what we have here, and that took over two and a half years.
A lot of areas also have several pieces of amending legislation… There may be huge policy changes under this legislation, and the end of 2023 is simply not a realistic timeframe for the process.”––[Official Report, Retained EU Law (Revocation and Reform) Public Bill Committee, 8 November 2022; c. 29, Q56.]
There is plenty of evidence of concern out there, indicating that we should look again at the sunset. If Members are reassured that there is departmental and civil service capacity to handle all that in the time required, perhaps they should also consider the scrutiny aspects of the sunset, and whether Parliament will be able to fulfil its role properly in the time available. As George Peretz said in the evidence session:
“the sunset clause does interrelate with the question of Minister’s powers. One of the problems with the effectiveness of parliamentary scrutiny is that although one hears that Parliament has powers—in some cases via the negative or affirmative resolution procedures—the background against which it is being asked to approve legislation means that if it votes against that legislation, the sunset clause will apply and regulations disappear completely, rather weakening Parliament’s ability to do anything.
To take an example, if Ministers decided to keep the working time rules but rewrite them to make them less favourable to employees, and came up with the new regulations in November 2023, those rewritten regulations would probably be introduced under the affirmative procedure. However, when the House of Commons voted on them, Ministers would say, ‘You may not like these revised regulations very much, but if you do not vote for them, the alternative is that we will not have any regulations at all.’ That weakens Parliament’s ability to control the exercise of ministerial power.”––[Official Report, Retained EU Law (Revocation and Reform) Public Bill Committee, 8 November 2022; c. 32, Q61.]
I do not want to be back here in a year’s time faced with a choice between accepting a reduction in the number of days of paid holiday that people are entitled to from, say, 28 to 10, and the alternative—people having no right to paid holiday at all—because we have been forced up to a precipice due to the timescale set out in the Bill. That is not Parliament taking back control.
I am not alone in my concerns. The Delegated Powers and Regulatory Reform Committee raised concerns about primary legislation and said that
“where little of the policy is included on the face of the bill”
but where Parliament is asked
“to pass primary legislation which is so insubstantial that it leaves the real operation of legislation to be decided by ministers”,
this reduces any parliamentary scrutiny to a bare minimum, and we are left only with
“delegated legislation which Parliament cannot amend but only accept or reject, with rejection being a rare occurrence and fraught with difficulty.”
That Committee further warned that
“the abuse of delegated powers is in effect an abuse of Parliament and an abuse of democracy”.
It is a shame that the former Secretary of State, the right hon. Member for North East Somerset (Mr Rees-Mogg), did not take his own advice on that issue before he drafted the Bill. When he was Leader of the House, in response to the Committee’s report into the frequent use of skeleton Bills during the period of the pandemic, he said that it did not
“necessarily provide a model example of how Parliament would like to see legislation brought forward”,
and that he would be
“encouraging them to minimise the use of delegated powers where possible”.
However, here we are today.
Finally, I will respond to the argument that there is already provision in the Bill to address the sunset. The problem is that that can apply to laws only if we know about them in the first place. There is also the prospect that we end up with a potpourri of sunset dates, because it could be any time between now and 2026. That just creates more uncertainty and confusion, and uncertainty for businesses that are trying to invest.
In conclusion, we support the amendments because 2023 is a deadline in search of a headline. It is not a serious proposition and it should be rejected. Parliament legislated, as we were preparing to leave the EU, to avoid a cliff edge. It seems illogical and reckless in the extreme to be now deliberately creating one when we are so close to the precipice.
Stella Creasy (Walthamstow) (Lab/Co-op)
It is a pleasure to serve under your chairmanship this morning, Sir George, as indeed I believe it will be throughout the Bill Committee. I am sure that we will have a wonderful and detailed discussion. Government Members are laughing about that idea. Maybe that is the irony about all of this, because, when we were told that Brexit should happen, it was about “taking back control” for this place. Well, let us give some control to this place in the proper scrutiny of this legislation. I support the comments of my Front Bench colleague, my hon. Friend the Member for Ellesmere Port and Neston, and of the hon. Members from further north than me—the hon. Members for Glenrothes and for Argyll and Bute—on these amendments.
Amendments 26 and 28 are critical. Let us start this debate by being absolutely clear; this Bill has nothing to do with Brexit. Brexit has happened. It may be continuing to cause many problems, but it has actually happened. However, the Bill is not what Brexit was about, because the Bill is a process and it has everything to do with a knee-jerk obsession with the idea that something with the word “Europe” in must be bad. That obsession will cause catastrophic devastation for our constituents, because the process that the Bill brings forward is incredibly destructive.
As my hon. Friend the Member for Ellesmere Port and Neston said, it is a deadline in search of a headline. That seems a rather poetic attempt to say something simpler, which is that nobody quite understands why the Government are doing it in this way. After all, when we look at the amendments that have been tabled, and at the evidence that has been given, not a single piece of evidence has been provided in support of this approach. That is a startling thing to recognise. Nobody knows why these particular laws are up for abolition, all in one go, apart from the fact that they contain “Europe” at some point in their titles.
That knee-jerk reaction is incredibly dangerous because it means that we will delete things that we did not even know were on the statute book, as things stand. Yesterday, I had the pleasure of serving in a Delegated Legislation Committee—I suspect that we will have thousands more if this legislation goes through—where the Ministers were not aware of the foundations of the laws that they were trying to amend. They were technical amendments, they said, to do with pollutants, rooted in European legislation.
Now, that is not a case for staying in the European Union; as I said, we have left. I would take up the challenge of the right hon. Member for Clwyd West, who talked about other laws we would want to change. Of course, there are laws we want to change in this place; nobody ever says that the statute book is the preserve of being correct, apart from Governments who are frightened of scrutiny.
The amendments have a simple, pragmatic basis: what this Government are trying to do is too big to do in one year. It is a very simple proposition, and we want to hold the Government accountable for the consequences of trying to delete everything all at once. One might look at the amendment paper and think that there are 50 ways to leave the European Union using this legislation, given all the different amendments that have been tabled. I prefer to think of Warren G, and his debate around “Regulate”, because this Bill is ultimately about the regulations that we have in this country—everyday rules that make such a massive difference to the people of this country.
I know we will come on to those, Sir George, so I will not test your patience by listing them, but that is why this sunset clause matters. When the Government are putting up for grabs people’s rights not just to a paid holiday or maternity rights, but to compensation, to not have cancer-causing chemicals in their cosmetics, to be able to watch the Olympics free of charge, or around compensation if they are artists—thousands and thousands of regulations that have been part of the social fabric of this country for generations—it is right to ask whether deleting all of them in one year, with no guarantee about what will come next, is the right way to approach the matter.
The debate we had yesterday in a Delegated Legislation Committee on the Persistent Organic Pollutants (Amendment) (EU Exit) Regulations 2022 was a classic example of what the folly is. Not only was it not clear to the Minister which amendments would be deleted by the legislation we are debating, which then underpinned the Statutory Instrument that the Minster was presenting, but she could not clarify what would come next. She made a strong case about the importance of protecting us and protecting against the ways in which pollutants might be used within the chemical industry, but if we do not amend the legislation, that case will fall in a year’s time—by the sheer fact that the very legislation which underpinned the proposals, the technical amendments the Minister was trying to make, will also fall, because the Government are deleting absolutely everything.
During the passage of the Bill, let no one say that the concerns being raised are about whether Brexit should have happened. Brexit is done. This is about the folly of hitting “delete”, “control” and “alt” at the same time—then hoping we can remember what was taken out and that in a single year everything can be replaced. Six hundred statutory instruments were introduced during the Brexit process and anyone who was here at the time—I know that not everyone was—will remember the hours we spent in Committee Rooms. Here we have five times the number in a single year.
Some may suggest that Members of Parliament are lazy, that they do not do very much. Some even suggest that Ministers—current or former—might have time to go into a jungle. I know, however, that no one thinks it really feasible that we will have 167 days of non-stop Delegated Legislation Committees, yet that is exactly what this legislation will require if we stick to this particular sunset clause for everything. At the moment, given the way in which the Bill is drafted, it does indeed cover everything—and that is without beginning the process of what we want to keep and what we want to get rid of. The point of all this is that there are things the Government want to change. Those of us who are democrats believe that the Government ought to set out what regulations they intend to remove, because that is what taking back control really meant. Again, if we have only one year in which people are to understand quite how the Government wish to change their rights to paid holiday, it seems not unreasonable to expect the Minister to give us some idea of the direction of travel before we hit delete—but, again, we have nothing.
The amendment is simply about setting a calmer course of action. I think we owe that to all our constituents. I do not think there is a single member of the Committee who in recent weeks and months has not dealt with constituents who are terrified about the status quo, terrified about what is happening now and worried whether they will get through Christmas. It is not unreasonable to say that our primary focus is stabilising the economy and we will not do anything that would undermine that. Whether someone is a passionate believer that Brexit still brings opportunities—and I say good luck to them, and also, “We all know of a good therapist”—or whether they were worried at the time that this was a high risk to take, recognition that the pace of change is best tackled in a measured and orderly fashion is something I am sure we can all agree on. The amendment is about the pace of change, not the change itself. It is about recognising that in an economy that is struggling, we cannot rip up every single regulation, not provide any clarity about what comes next in under a year, then expect Parliament to find the time to write all those regulations—or, indeed, to find all the regulations; we will come on to the question of whether we know about everything that is going to be deleted. Yesterday, Ministers from DEFRA certainly did not; and the Whips even suggested that it was a problem for the Department for Business, Energy and Industrial Strategy rather than for DEFRA. I am sure it was news to the Minister in that Committee that she is now responsible for persistent organic pollutants on top of everything else.
I urge Government Members not to see this as about stopping Brexit, because Brexit has happened; but, rather, to see this as the best course of action to show that Brexit could work for this country. That means taking a simple proposal about how best to look at the legislation and its rubric. If we are going to find 4,000 hours of parliamentary scrutiny for delegated legislation, what are Ministers not going to be able to do? If we are going to find the civil servants to be able to deal with all this legislation, what else are they not going to be able to do? Are we confident that the next year will not bring further crises that will require our time, effort and energy? Are we confident that what is happening in Europe right now will not lead to further challenges that we would be better off putting our time, effort and energy towards?
I know that Government Members want to believe that the amendments are about opposing Brexit, but they are about opposing chaos. Government Members will have to explain to people how we will find parliamentary time, let alone find all the regulations. I note that the Minister said she would tell us what other regulations would be affected after we had passed the legislation, which does not inspire massive confidence. If not today, I hope that Government Members will reflect, and perhaps use the opportunity of those press reports to urge a calmer course of action. I think that all our constituents would thank us for it at a later date.
Mr Marcus Fysh (Yeovil) (Con)
On a point of order, Sir George. The hon. Member for Walthamstow mentioned at the beginning of her speech that Government Members were laughing. That was not true. I wonder whether we could ask the Hansard Reporters to strike that from the record.
The Chair
Order. I am not responsible for any comments that the hon. Lady might make. I was not aware of anybody laughing, but that does not necessarily mean to say that they were not.
Lia Nici (Great Grimsby) (Con)
Further to that point of order, Sir George. I was hoping to make the exact same point. If it will not be stricken from the record, the Hansard Reporters should ensure that the comments of my hon. Friend the Member for Yeovil are noted.
The Chair
I am grateful to the hon. Lady, but I think I have already dealt with the point.
Stella Creasy
Further to that point of order, Sir George. I merely rise to clarify that if somebody had a twinkle in their eye, I would consider that to be laughing. It might not have been heard by everyone, but I did not mean to suggest that anybody does not think that this is a serious matter; it was merely a wry reflection on the challenge ahead of us. I hope that the rest of the Committee’s proceedings will follow in good spirit and humour accordingly.
The Chair
I think the hon. Lady is trying to restore the calm that she referred to in her speech. I am sure that she has done so.
The Minister for Industry and Investment Security (Ms Nusrat Ghani)
It is an honour to serve under your chairmanship, Sir George. I hope that, over the next few—or many—days, proceedings will be conducted as calmly as possible. To start on a friendly note, I wish the hon. Member for Ellesmere Port and Neston a happy birthday—the big five-0. Now he will not talk to me any more.
I reject amendments 26 and 28, which would change the sunset date from 2023, as well as the date to which the sunset may be extended under the extension power. I am grateful that, although amendment 26 is not appropriate for the Bill, some hon. Members who spoke in support of it at least acknowledged that a sunset will be a valuable tool in dealing with retained EU law. It was interesting to hear the hon. Member for Argyll and Bute, for whom I always have a huge amount of time, say that he will oppose every step of the Bill. Fundamentally, he is just opposing Brexit, and we really cannot rehash the same conversation over and over. The hon. Member for Walthamstow referred to Brexit as a process. This is part of the process, so we need to crack on. We need a sunset date, otherwise it will be 20-on-the-never-never.
Paul Blomfield (Sheffield Central) (Lab)
I, and I think a lot of Opposition Members, have some sympathy for the Minister in having to defend the indefensible—a piece of legacy legislation. Has she seen the report in the Financial Times this morning? Her boss is apparently briefing that the sunset clause is inappropriate for next December. His aides are saying:
“Grant thinks things should be done at a more sane pace”,
reflecting all the evidence that we have received. When will she put us out of our misery and acknowledge that the December 2023 sunset date is madness?
Ms Ghani
If I have to respond to every item in a newspaper, regardless of where it comes from, we will be here much longer than we are already committed to be. If the hon. Member gives me a few moments, I will explain why the sunset date matters. As he says, many people are concerned about the timelines in the Bill, but I assure the Committee that there is definitely not a cliff edge. I want to respond to allegations of a bureaucratic burden—although that would assume that we would never have any change. This process is not simple, but we are not in government to do simple things; that is the honest truth.
Paul Blomfield
The Minister says that work is taking place in every Department. The Government clearly have a lot concerning them at the moment and many priorities. What assessment has been made of the amount of civil service time that will be involved? We have seen many estimates of hundreds of civil servants having to be devoted solely to this work, so I assume that the Government have done an evaluation of the impact. Can the Minister share that with us?
Ms Ghani
Every time the Government put forward a piece of legislation, Government resources are focused on that piece of legislation to ensure that it is delivered. We have a Brexit Opportunities Unit in place as well. The assumption that resources are not moved around to get a piece of legislation through is slightly absurd. We understand that it is a piece of work that needs to be done, that it is a process and we have a deadline, but the work will be done.
Ms Ghani
If the hon. Member gives me a moment to expand a little more I can explain; I will then take interventions from the birthday boy. Officials have catalogued retained EU law across Government, which has been collated, as part of the cross-varietal substance review of retained EU law, into the dashboard that was published on 22 June. Crucially, powers in the Bill have been drafted to ensure that the current date is workable. The preservation power enables UK Ministers and devolved authorities to keep specific pieces of legislation that would otherwise be subject to sunset where the legislation meets a desired policy effect, without having fully to restate or otherwise amend the legislation.
The power to revoke or replace the compatibility power and the power to restate assimilated law will be available until 23 June 2026, while the power to update will be a continuous power. These powers have the ability to amend assimilated law once the sunset date has passed and retained EU law is no longer a legal category; that means that Departments can preserve their retained EU law so that it becomes assimilated law after the sunset date, and amend it further beyond that date if required. In addition, the Department for Business, Energy and Industrial Strategy will be working closely with other Government Departments, as well as devolved Governments, to ensure that appropriate actions are taken before the sunset date. Finally, the extension mechanism in clause 2 ensures that, should more time be required fully to review the changes needed to retained EU law, the sunset can be extended for specific provisions or descriptions of retained EU law until 23 June 2026.
Peter Grant
The Minister has tried heroically but unsuccessfully, I am afraid, to argue that this arbitrary deadline will not place enormous strain on a civil service that is already under enormous strain. Can she look at it from the opposite direction? Can she explain why it would be bad to set an absolute deadline of 2026? If Departments and Ministers are able to sort things out by the end of 2023, they can do so in a safe environment where they are not under pressure to get it done quickly, with the possible consequence that it would then be done wrong.
Ms Ghani
I simply do not recognise that the added burden means that the programme of work cannot be deliverable. I mentioned the fact that we have an ability to provide an extension, depending on what that piece of legislation is. What we do not want to do is undermine focus on delivering the bulk of the work by the sunset date that is in place at the moment.
Justin Madders
I am grateful for the Minister’s references to my special day, which will now be recorded forever more. She mentioned the Brexit opportunities team. Who is the Minister responsible for that team?
Ms Ghani
The Brexit opportunities team sits in BEIS and it works across Whitehall. This programme of work is being delivered with the team and across all Whitehall Departments as well; the focus of the work that is taking place is across Whitehall. Any anxiety that people are not working closely or collectively is for the birds. The fact that we have a deadline means that it focused everyone’s mind and attention.
Justin Madders
This is a very important piece of work, as the Minister has outlined. There must be a Minister who is responsible for it. Who is that? Who can we ask and speak to about this issue, because this is clearly a matter of important scrutiny?
Ms Ghani
I am not sure exactly what the hon. Member wants to speak about with regard to the Bill. I am here to perform my role and deliver this piece of legislation. We have a Secretary of State and we know that the Prime Minister is delivering on this piece of legislation as well. I am not sure what further contact the hon. Member needs.
Alongside amendment 26, amendment 28 would have very little impact, as clause 2 would still specify that 2026 was the maximum date that an extension could be set for. If we combined these amendments with amendment 29 or amendment 32, which we will debate later, that would result in the extension mechanism being able to extend specific provisions or descriptions of retained EU law beyond 31 December 2026. The extension power’s very nature is to mitigate any risks posed by the current sunset date. I recognise that, without an extension, there is a risk that Departments would not have sufficient time to perform the legislative and administrative procedures required for retained EU legislation in certain complex areas.
Stella Creasy
If we cannot play a game of “Guess Who?” as to who will then be responsible for the implementation of this legislation if it is passed, let me ask this. The Minister wrote to us to say that the Government were still scoping out which laws would be covered by it, so how can she be confident that everything is in place to cover the full gamut of what would be covered by this legislation if she cannot at this point tell us how many laws will be covered? It is a reasonable question to ask, is it not? How much work is there to be done? If the Minister cannot tell us now or at least confirm how many laws are covered, it is not unreasonable to worry that equally she cannot confirm that the Government have put in place the people and the processes to do it all within a year.
Ms Ghani
The dashboard is there to identify the pieces of legislation that need to be uncovered, but of course we will constantly look, constantly dig and constantly ask Departments to see what else is in place. I do not think it is unreasonable to ask Departments to explore what pieces of legislation are in place, which ones are valid, which ones have already come to the end of their lifespan and what more we need to do. I think it is really healthy to ask Departments, to ask across Whitehall, what further work needs to be done. That work will then continue, and on the anxiety over the sunset clause, we have the extension in place as well.
Combined, the amendments would thwart the Bill and retain REUL as a distinct category of law on the UK statute book. I therefore ask that the amendments be withdrawn or not pressed.
Brendan O’Hara
I thank the hon. Member for Walthamstow and the hon. Member for Ellesmere Port and Neston—and happy birthday! I am sure that he dreamed of spending his big day with us. Both Opposition colleagues made extremely convincing arguments that this work simply cannot be done in the timescale that has been laid out in the Bill. I think that nobody believes that it can be done in the timescale, because basic logic tells us that it cannot. Like the hon. Member for Sheffield Central, I have enormous sympathy for the Minister, who I think has been sent in, as he said, to defend the indefensible. I suspect that eventually, when the harsh reality dawns over Downing Street, which it appears to be doing, this will change, and I hope that it will change sooner rather than later. On that basis, I will not push our amendments to a Division. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Brendan O’Hara
I beg to move amendment 68, in clause 1, page 1, line 6, at end insert—
“(1A) Subsection (1) does not apply to an instrument, or a provision of an instrument, that—
(a) would be within the legislative competence of the Scottish Parliament if it were contained in an Act of the Scottish Parliament, or
(b) could be made in subordinate legislation by the Scottish Ministers, the First Minister or the Lord Advocate acting alone.”
This amendment restricts the automatic revocation or “sunsetting” of EU-derived subordinate legislation and retained direct EU legislation under Clause 1 of the Bill so that it does not apply to legislation that is within the legislative competence of the Scottish Parliament.
The Chair
With this it will be convenient to discuss amendment 21, in clause 23, page 22, line 23, leave out “Scotland”.
Brendan O’Hara
I rise to speak to the amendments tabled in my name and that of my hon. Friend the Member for Glenrothes, which would remove the sunsetting of EU legislation where it falls within the competence of the Scottish Parliament.
The amendments would mean that if, defying all logic, the Government are still determined to push ahead with the dangerous sunsetting of all EU legislation by 31 December next year, the Scottish Parliament could, in respect of areas that are wholly devolved, decide to keep relevant domestic legislation aligned to that of the European Union. That would mean that, in areas such as environmental health, food standards and animal welfare, the people of Scotland could continue to enjoy the high standards and protections that we have had as members of the European Union for almost five decades.
In his oral evidence to the Committee, Angus Robertson MSP suggested that it would be perfectly possible to draft the Bill
“in such a way that it did not apply to Scotland or Wales”
by limiting
“the scope of the Bill to non-devolved areas.”––[Official Report, Retained EU Law (Revocation and Reform) Public Bill Committee, 8 November 2022; c. 80, Q136.]
Why should it not be drafted in such a way? Let us never lose sight of the fact that this is not our Brexit. This is something that is being done to us by a Government we did not elect pursuing the hardest form of a policy that we overwhelmingly rejected. In the circumstances, it is perfectly reasonable to suggest that legislation that is the preserve of the Scottish Parliament be excluded from this one-size-fits-all approach.
Angus Robertson also told the Committee that the UK Government were still, even at this late stage, unable to tell Scottish Government Ministers exactly which areas of competence they consider devolved and which they intend to view as being reserved to this place. In his evidence, Charles Whitmore from the school of law and politics at Cardiff University warned our Committee that the Bill could lead to
“legal uncertainty, and that is compounded at the devolved level because our capacity constraints are probably more acute, so the time sensitivity is even greater”.––[Official Report, Retained EU Law (Revocation and Reform) Public Bill Committee, 8 November 2022; c. 85, Q141.]
As I said earlier, it might be the skewed priority of this Government to instruct Departments across Whitehall to prioritise this ill-conceived bonfire of retained EU law ahead of trying to mend the broken economy or lift people out of poverty, but that is certainly not the priority of the Scottish Government nor, I suspect, of the Welsh Government. Yet, as it stands, they will be forced to set aside valuable Government and parliamentary time to take part in this exercise, which will undermine the high standards and protections that people in Scotland have enjoyed and have quite rightly come to expect from European Union membership. Given that, I intend to press amendments 68 and 21 to a vote to ensure that the sunsetting of retained EU law does not apply in areas that are devolved.
Justin Madders
We have some sympathy with amendment 68. From what we can determine, it tries to equalise the approach to the current anomaly whereby under clause 1(2) the power to remove the sunset is granted both to Westminster and to devolved authorities, but the power to extend the sunset under clause 2(1) is just for Ministers in Westminster. I do not know the reasons for the difference in that approach.
I suggest that the evidence sessions did not reveal a particular state of readiness in the Scottish Parliament for the administrative burden that the Bill will leave it with. That is not, by the way, a criticism of the Scottish Parliament; it is a reflection of the timescales that we face. The current powers in the Bill leave the Scottish Parliament in a position in which it would have to remove the sunset entirely, whereas perhaps an option could be for it to extend the sunset for reasons of capacity. That would be a much more measured approach.
Peter Grant
My recollection, which may help the hon. Member on his first point, is that Angus Robertson said they had not had a chance to begin to quantify the amount of legislation. He was saying not that it was because there was not very much but because there was so much of it. Can the hon. Member be clear as to what Labour’s current position is? If a piece of retained EU law related exclusively to one of the devolved competences—either the Scottish Parliament, Senedd Cymru or the Northern Irish Assembly—is it Labour’s position that that retained law should be removed from the devolved legislatures only with their explicit consent, or does Labour support the Government, who think this Parliament can legislate away in fields of devolved competence without the consent of the devolved Administrations?
Justin Madders
I thank the hon. Member for his intervention. I think we start from the point that this should be a matter of logic. If an issue is within devolved competence, it should be for the devolved Administration to determine, but I wait to hear the Minister’s explanation for leaving that proposition to one side for the purposes of the Bill. We suspect the Government have done this because of the political imperative that Ministers will be able to say they have got rid of everything they do not want by the arbitrary deadline of 31 December 2023. If this amendment is accepted and it is something the Government accept is a valid argument, we would expect similar measures to come forward for Wales.
Another consideration is that we do not actually know at this stage which laws are within the competence of Scotland. We do not know which laws are covered, because there is no list anywhere. We just have the dashboard, but that does not give us any clues as to which pieces of regulation are considered to be within the devolved nations’ competence. Can the Minister justify the power to extend the sunset having to reside only in Westminster when it deals with matters of devolved competence? Can she also explain what the process will be in Government with the Brexit Opportunities Minister, when appointed, for identifying the laws that are within devolved competence, and the procedure to be followed for resolving any disputes about ownership of those pieces of legislation and which authority has competence?
Stella Creasy
This is a good example of the challenge we faced yesterday in the Delegated Legislation Committee on persistent organic pollutants, where it was not clear what legislation was covered by this Bill and what would be deleted and, therefore, whether it was worth rewriting any legislation. The Minister got into a tangle. We would be talking about such a tangle on a more widespread scale across our devolved Administrations.
I echo the point made about my Front-Bench colleague, my hon. Friend the Member for Ellesmere Port and Neston, about the importance of recognising our colleagues in the Senedd as well. That is the challenge with this legislation. Because we do not know the full extent of what it will do, we do not know how it will affect devolution. We do not know where the lines between devolved powers and powers held at Westminster will be drawn and what will be retained. These amendments reflect that. It is not unreasonable to ask Government Ministers to clarify how they see this all working.
One of the concerns over the last couple of years has been the fractures in devolution and the pressure we have put on our devolved Administrations in making the decision to leave the European Union. I would ask the Minister to set out not just why she thinks Westminster should supersede any of the devolved Administrations, but also what her plans would be, should in that subsequent, updated, rolling list of laws a piece of retained law come up that had perhaps not been previously identified but that is quite clearly about devolved powers. How would she look to manage that?
The Minister’s colleagues yesterday were rather intemperate, shall we say, when it was pointed out that they were passing a statutory instrument that rested on legislation that would no longer exist at the end of the next year, 50% of which had not yet been identified as being on the dashboard but was clearly part of the regulations the Government had put forward. How does the Minister feel that will affect our relationships across the United Kingdom and our ability to speak up for the Union if the Westminster Government puts Government Ministers across the devolved Assemblies and the Scottish Parliament in the same position for 4,000 pieces of legislation?
I hope the Minister will recognise that these amendments and concerns about devolution come, yet again, not from a desire to stop Brexit, because Brexit has happened, but from a desire to protect the Union and ensure that people in any part of the United Kingdom have confidence that Government Ministers know exactly what they are doing.
Ms Ghani
The Committee should reject the amendments, which would exempt devolved legislation within Scotland’s legislative competence from the sunset, and amend the territorial extent of the Bill so that it does not extend to Scotland. A sunset is the quickest and most effective way to accelerate the review of the majority of rules on the UK statute book by a specific date in the near future. That will incentivise genuine rule reform in a way that will work best for all parts of the UK.
The territorial scope of the Bill is UK-wide. It is therefore constitutionally appropriate that the sunset applies across all four sovereign nations in the UK. That approach is consistent with other EU exit legislation, and will enable the devolved Governments to make provisions for addressing retained EU law in areas of devolved competence. Every nation of the UK should have the opportunity to review the retained EU law and have the powers to reform the legislation in a way that is appropriate and best suited to its citizens and businesses. Nothing in the sunset provision affects the devolution settlement. It is not intended to restrict the competence of either the devolved legislatures or the devolved Governments.
Peter Grant
I put it to the Minister that rejecting the amendment very much affects the devolution settlement. It means that the priorities on which the Scottish, Welsh and Northern Ireland civil service work will no longer be those set by their democratically elected Parliaments and Governments, but the policies set by the UK Government. Angus Robertson made it clear that the Scottish Government believe that there will be a substantial burden of administration on the Scottish civil service. What gives Ministers in this Parliament the right to tell the Scottish civil service to do what they tell them to, not their elected Ministers?
Ms Ghani
I will continue.
A question was raised earlier, as the hon. Member raised just now, about a power grab. When using the powers under the Bill, the Government will use the appropriate mechanisms, such as the common frameworks, to engage with the devolved Governments. That will ensure that we are able to take account of the wider context and allow for joined-up decision making across the UK. If any disputes arise, we are committed to using the appropriate processes set out in the review of intergovernmental relations.
Nothing in the sunset provision affects the devolution settlement. It is not intended to restrict the competence of either the devolved legislatures or the devolved Governments; rather, it will enable the Scottish Government to make active decisions about the retained EU law within their devolved competence for the benefit of citizens and businesses throughout Scotland. I therefore ask the hon. Member for Argyll and Bute to withdraw the amendment.
Brendan O’Hara
It will come as no surprise to the Minister that I will not withdraw the amendment. I repeat that Scotland is having this done to us by a Government that we did not elect, pursuing a policy that we overwhelmingly rejected. My hon. Friend the Member for Glenrothes is right that the priorities of the Scottish Government will be dictated by the Government in Westminster. That flies in the face of the devolution settlement. I agree with the hon. Member for Ellesmere Port and Neston that, if a matter is within the devolved competence, it should be for the devolved Parliaments to decide whether they retain EU law and whether they sunset it. On that basis, I will press the amendment to a Division.
Question put, That the amendment be made.
Justin Madders
I beg to move amendment 90, in clause 1, page 1, line 6, at end insert—
“(1A) Schedule [the Definitive List] sets out a complete list of instruments to be revoked by subsection (1) (referred to as the ‘Definitive List’).
(1B) The Secretary of State must by regulation add all relevant instruments referred to in subsection (1), so far as they are known to the Secretary of State at that date, to the Definitive List within 14 days of the date of Royal Assent to this Act.”
The Chair
With this it will be convenient to discuss the following:
Amendment 91, in clause 1, page 1, line 7, leave out subsection (2) and insert—
“(2) Before 30 June 2023 a relevant national authority must consult such organisations as appear to it to be representative of interests substantially affected by the inclusion of an instrument in the Definitive List, and any other persons potentially affected as the relevant national authority considers appropriate.
(2A) Following the consultation referred to in subsection (2), where a relevant national authority considers it appropriate, it may by regulations made no later than 31 May 2023—
(a) add any EU-derived subordinate legislation or retained direct EU legislation to the Definitive List, or
(b) remove any EU-derived subordinate legislation or retained direct EU legislation from the Definitive List.
(2B) No later than 30 June 2023 the Secretary of State must publish and lay a report before Parliament setting out—
(a) a summary of the objectives and effect in law of each instrument listed in the Definitive List and of the legal consequences of its revocation;
(b) whether that instrument affords any protections for consumers, workers, businesses, the environment, or animal welfare, and, if so, whether and how that protection is to be continued when the instrument is revoked;
(c) any benefits which are expected to flow from the revocation of that instrument;
(d) the consultation undertaken as required by subsection (2), together with any representations received in the course of the consultation;
(e) the reason why the relevant national authority considers that it is appropriate to revoke the instrument having considered those representations;
(f) the likely effect of the revocation of that instrument on the operation of the Trade and Cooperation Agreement between the United Kingdom and the EU, and on UK exports of goods or services to the European Economic Area; and
(g) the likely effect of the revocation of that instrument on the operation of the Protocol on Ireland/Northern Ireland in the EU Withdrawal Agreement.
(2C) The Secretary of State must by regulations remove an instrument from the Definitive List following an order of either House of Parliament (or, as the case may be, the Scottish Parliament, Senedd Cymru, or the Northern Ireland Assembly) calling on the Secretary of State to remove that instrument from the Definitive List.
(2D) If the Secretary of State is required by subsection (2C) to make regulations removing any instrument from the Definitive List but the Secretary of State has either—
(a) not made such regulations, or
(b) has made such regulations but they will not come into force on or before 31 December 2023,
then such regulations will be deemed to have been made and to have come into force on 31 December 2023.”
New schedule 1—The Definitive List—
“This schedule sets out the Definitive List in accordance with section 1 of this Act.”
Justin Madders
I apologise in advance that this discussion will last longer than that on other amendments. We accept that these amendments would fundamentally change the nature of the Bill, but they would do so in such a way as to create greater transparency and accountability and ensure that Parliament was able to properly fulfil its role in relation to the regulations. I refer to the evidence of the Bar Council, which said:
“It is a matter of great public interest that, where it applies, REUL should be as certain as possible. It is also important as a matter of democratic principle—as well as ensuring that replacement legislation in areas of great importance to business and the wider public is effective in achieving its goals—that replacement legislation be carefully considered and properly scrutinised before it is enacted.”
We certainly agree with that as a starting proposition. It is clear that the Bill as currently drafted does none of those things. The first thing to do is to identify and agree on what is covered by the Bill, but I am afraid that has not been forthcoming so far. I am grateful to the Minister for writing to us on 11 November to set out her understanding of the position following reports in the Financial Times that another 1,000 or 1,400 laws that have been identified do not appear on the dashboard. The critical point, as she wrote in her letter in respect of further legislation that may be identified by the National Archives, is:
“This number has not yet been verified by the Government.”
We still do not know what the Bill covers.
The former Minister, the hon. Member for Watford (Dean Russell), told us in response to a written question on 24 October:
“The dashboard presents an authoritative, not comprehensive, catalogue of REUL. Therefore, there may be some legislation that is covered by clause 1 of the Bill that is not yet captured in the dashboard. The Government will continue to identify additional REUL and update the dashboard on a quarterly basis to reflect this.”
I am sure that I am not the only person struggling to understand how something can be authoritative but not comprehensive. The former Minister also told us in response to a written question on 21 October that
“we anticipate over 100 additional pieces of legislation will be added to the REUL dashboard.”
We now know that it may well be considerably more than that. Even if just 100 pieces of legislation are missing, that will make that dashboard neither authoritative nor comprehensive. In that same answer, the former Minister also told us:
“Government officials are currently working to quality assure this data and any amendments to the data will be reflected in an update of the dashboard this Autumn.”
The position is that the dashboard may be updated at some point in the not-too-distant future, but it is certainly not comprehensive or authoritative at the moment. With this Bill, we do not even know what we are allowing the Government to change.
As my hon. Friend the Member for Walthamstow told us in an evidence session, the Department for Environment, Food and Rural Affairs issued a ministerial correction to a written answer about the application of the Avian Influenza and Influenza of Avian Origin in Mammals (England) (No.2) Order 2006. Originally, it said that the order
“was not made under section 2(2) of the European Communities Act 1972, and therefore it does not fall within the scope of Clause 1 of the Retained EU Law (Revocation and Reform) Bill”,
but the ministerial correction confirmed that it did. Those actions hardly inspire confidence that that Department—or, indeed, any Department—has adequately identified the regulations that will be classified as retained EU law.
For good measure, the Marine Conservation Society has said that the Conservation of Offshore Marine Habitats and Species Regulations 2017, the Environmental Damage (Prevention and Remediation) (England) Regulations 2015, the REACH Enforcement Regulations 2008 and the Civil Aviation (Working Time) Regulations 2004 are all absent from the dashboard but are retained EU law.
Those are just a few of the known unknowns, so we find ourselves in the unacceptable position of setting up a framework for the removal of laws, but we do not know which laws it will apply to. It is now six and a half years since the country voted to leave the EU. Surely the Government should know by now which laws are EU-derived and which ones they want to junk. I will come to that later point in due course, because before we get to the substance of what the Government intend to do with the Bill, let us first have an agreed baseline for what is covered by it.
Peter Grant
I have a great deal of sympathy with amendment 90, but amendment 91 seems to be telling the devolved Administrations how to do their job. Does the hon. Gentleman not think that if we want to allow the devolved Administrations to decide whether to vote for a particular piece of retained EU law, we should also leave it to them to decide the process by which they do it?
Justin Madders
If the hon. Member does not think that doing proper consultations is the way the Scottish Parliament wants to go, that is a matter for him, but we would like consistency of approach across all Departments and nations of this United Kingdom. Subsections (2C) and (2D) in amendment 91 would effectively create a failsafe so that any attempts to frustrate the will of the devolved nations cannot be made by the inaction of a recalcitrant Secretary of State. I hope the hon. Member can at least take some reassurance from that—any exercises of the devolved nations would, under the amendment, be honoured by Westminster.
We have already heard arguments that some of these laws were not brought into force in a truly democratic manner. Therefore, they do not need the same level of scrutiny that would ordinarily be afforded to other laws passed by this Parliament. Frankly, I find that argument nonsense. It is like saying, “I object to my neighbour planting leylandii in their garden, so I am going to do exactly the same.” If the complaint is that the level of accountability and scrutiny was insufficient when the laws were brought in, surely those making that argument would want accountability and scrutiny when those laws are reviewed. Is taking back control not about us—this Parliament—having a fuller role in the legislative process?
As it happens, I do not accept that characterisation of how these laws were introduced in the first place. In its written evidence, the Bar Council said that
“the EU legislative process, whilst certainly capable of much improvement, contains a number of democratic checks and balances: for the vast bulk of EU subordinate legislation, the co-legislators, both of whom must adopt the final text by (normally weighted) majority, are the Council, comprised of elected Ministers from the Member States, and the European Parliament”,
which is democratically elected, of course, and whose membership included until 2020 Members who were democratically elected from the UK. It continues:
“Important Commission legislative proposals are preceded by impact assessments and so-called roadmaps, and often accompanied by Staff Working Documents, all publicly available and setting out the policy intent. In addition, public consultations and stakeholder meetings are frequent features of the process, whether concerning binding or non-binding measures.”
I do not know whether the criticisms of this process are about the quality of representation that we had over there. A number of former MEPs are now Members of these Houses of Parliament, and they all seem pretty capable people to me. Let us not forget that once the EU issued its directives, we in this place had the European Scrutiny Committee and other Select Committees to examine any proposals. It is simply wrong to say that our politicians, stakeholders and policymakers did not have ample opportunity to exert influence on the development of EU policy and secondary legislation.
There are many examples where EU legislation was supported, and even promoted, by the UK Government of the day. One example—I am sure you will remember this, Sir George—was the social chapter. That was clearly telegraphed by the Labour party as something it would introduce if it got into power back in the 1990s; it was in the manifesto. Of course, Labour won that election and those laws were introduced, including rights on parental leave and working hours. Nobody can say those rules were forced on us without our consent. It should therefore be a matter of agreement for everyone who wants to see democracy prosper that the replacement legislation under this Bill should be made by Parliament after proper consultation, public debate and scrutiny, not simply a ministerial decision—or, as the case may be, ministerial non-decision.
The best idea we have at the moment regarding how the Government intend to approach this mammoth task is a statement from Lord Frost, who said the policy intention was
“to amend, replace or repeal all retained EU law that is not right for the UK.”—[Official Report, House of Lords, 16 September 2021; Vol. 814, c. 1533.]
“Not right”—is that the best we can do? This centuries-old Parliament, taking a historic decision to wrestle back control from those unelected Brussels bureaucrats, finds itself in the ludicrous position of having another unelected person tell us that laws will be changed if they are “not right”. Surely the Minister can see that could mean absolutely anything. That is the equivalent of a dictator waking up one morning and saying, “I don’t think it’s right that people in my country are allowed to wear hats, so from today we will outlaw that.” Clearly that is an extreme example, but that is the consequence of having a Government who have the power to dispense with laws with no consultation or scrutiny because they do not think those laws are right. Surely as a Parliament we can do better than that. Surely we should hold ourselves to a high standard when we want to change legislation. We should not legislate on a whim, and Parliament should not hand powers to Ministers that enable them to do just that.
Stella Creasy
Government Members may find this incomprehensible, but at some point it is not inconceivable that they may be in opposition. When they are, and they are presented with a Government Bill and literally nobody knows the full extent of what it does, that will seem similarly incomprehensible. I know that many Government Members have never contemplated the wilderness of opposition. For other Members, such as myself, it is all that we have ever known—but we have never known a situation where to ask Ministers to set out what a piece of legislation covers is considered an inconvenience at best or offensive at worst. The amendment is about rectifying that—not to put Ministers on the spot, but because it is completely reasonable and rational in a democracy to expect to know what Parliament is being asked to do.
The fact that we have to state that—my colleague on the Front Bench, my hon. Friend the Member for Ellesmere Port and Neston, gave an admirably gentle and mild version of what I am about to say—is a reflection of the difficulties of a Government who are struggling on after 12 years and cannot explain themselves. Our constituents could look at the consequences of not knowing what the legislation does as either—in what I believe is the common parlance—cock-up or conspiracy. That is precisely what will happen if we do not know what laws will be covered. Yet the Minister has admitted that she does not know. She wants to tell us some time next year, after the legislation will apparently have passed through Parliament.
I do not know about you, Sir George, but I am pretty sure that the Netflix special is already being written, because there must be some conspiracy behind this. Why do the Government not want to tell us what laws they want to get rid of? After all, we have just been told that actually the Bill is all about Brexit. Those of us who think that this is a bad process and that Brexit could be done in 101 other ways are clearly mistaken. There must be a conspiracy at stake here. The true width of what is happening must be something that could rival “Designated Survivor”. The alternative—that the Government have put forward a Bill with a timetable and pace that mean they literally do not know what will happen next—is frankly disrespectful to our constituents. This amendment is about the confidence that the Government have in their own work. I turn again to the wondrous words of Warren G, when he said about being a regulator,
“you can’t be any geek off the street”.
Surely there must be some competency involved in this role. That competency is knowing what the legislation does. That is why with every other piece of legislation we have an impact assessment. It is not unreasonable for us as parliamentarians to ask for that. After all, we will have to justify it to our constituents—well, we Opposition Members will not, but those currently sitting in the glorious offices of Government will. They will have to explain to their constituents why they passed a piece of legislation while not realising what it would do. At this point in time, nobody in this House can explain what it will do. Nobody, as the Minister yesterday discovered, could explain what would replace it. Nobody in this room can tell us exactly what is on that list. It is indescribable.
I do not think that in 12 years—that makes me a grandee in Labour terms at this rate—I have ever seen a piece of legislation where we as the Opposition have to ask for the extent of its impact. I want to warn Government Members: some day this may well happen to them. I know that must seem a gross insult, but they too will want Governments who are able to explain what they are intending to do, even if they do not agree with it, because they would then be able to go and tell their constituents why they do not agree with it. It is a reasonable proposition.
Amendment 90 asks the Government to set out a comprehensive list of retained EU law. After all, it is on the face of the Bill that that is what this legislation does. I apologise, Sir George, because I am now laughing. I am laughing at the absurdity of our being at a point where we have to ask the Government to set out what they are going to do. There is the concept of an “authoritative but not comprehensive” list—those words are worthy not just of “Yes Minister” but of “Blackadder” in their pomposity and stupidity. It is stupidity because it is incredibly dangerous to give the Government powers that they do not know what they are going to do with. Let me be clear that I am talking about the stupidity of the legislation, not the people.
I am talking about stupidity in terms of accidental intent—the cock-up element of this, rather than conspiracy. That is what I fear most of all. A conspiracy means somebody at least has a plan. As I am sure we will come on to later, the conspiracy is that the Government intend to rip up thousands of rights that people have relied on, such as by ending people’s right to bank holidays, leaving them as an option, and ripping up maternity rights. After all, some of us in the House remember the Beecroft report well, so we know this is something Government have talked about before. That would be the conspiracy.
The cock-up is in creating a piece of legislation that deletes things and the Government then not realising they have deleted them until somebody comes forward to point it out. The statutory instrument I spoke to yesterday, which I really hope Ministers go and look at, was also about correcting deficiencies in how legislation was written. That is to say, things had been missed off. It happens, but asking the Government to set out clearly what legislation the Bill will amend—whether that be deleting, replacing or amending it—is not an unreasonable request. Our constituents should expect us to know what it is we are going to be legislating on.
On Second Reading, the previous Minister—not the Minister in front of us, to be clear—tried to claim that I should not be worried that this legislation would have an impact on airline safety, as that was a matter contained in primary legislation, so not subject to the sunset. In reality, we have now replaced that provision of civil aviation legislation with a range of secondary legislation, meaning precisely that airline safety is up for grabs and we will need to find time to rewrite that legislation.
If the Ministers responsible for this legislation do not themselves know its extent, how can we expect all those civil servants—who the Minister cannot clarify are working on this legislation—to know the full extent, let alone the colleagues she cannot name who are working on it? What will happen when a Minister is suddenly presented with a piece of legislation that has been abolished, which was not on the dashboard, not identified and not set out in the legislation? A Minister presented with that scenario will have no recourse—it will have happened, unless we pass amendments that give everybody clarity and confidence. It is not unreasonable to want to set out a workload for Government so that they know what they are doing.
Amendment 91 allows us to work out how the amendments happen. Again, I am laughing at the absurdity of our being in a position where we have to set out an understanding of how things might be changed and who we might want to talk to—perhaps industry experts. I am sure Government Members who stood on platforms where they supported things such as Beecroft have no problem with watering down the working time directive. I am sure they will tell us later when we come to debate that.
What about standards regulations—those incredibly technical but incredibly dull pieces of legislation that, if we are all honest, we have not spent a lot of time looking at, but we look to industry experts to be able to tell us about? How is it unreasonable to set out a process by which those people will be consulted? What have we got against experts in this country? Frankly, at this point in time, some expertise on legislation, given that the Government have to admit they do not know the full extent of the Bill, would be welcome.
In my 12 years as an MP, we have always expected to have impact assessments and to know roughly what is in scope in legislation. Clerks cannot tell us that because Clerks do not know the full extent of the legislation, because we do not have a full list. We keep coming back to the themes of the amendment, but we also have to recognise that removing the entire body of EU-based legislation at a stroke, without clarity about what replaces it, will also have a wider impact. It could impact on the TCA itself, because it could be considered to breach regulations that we put into the TCA to show that we were not going to reduce or water down rights in order to make sure we did not start a trade war. Again, setting out what laws are up for grabs would help mitigate that impact.
Government Members can be as blind as they like or as deaf to the idea that there could be any problem with passing a piece of legislation where we literally have no idea of what it covers. But mark my words, Sir George: if and when they find themselves in opposition, they will rue the day they set the precedent that it is possible for Government Ministers not only to have such sweeping powers, but not to be told what it is they can use those powers for.
The amendments are not unreasonable; I will wager that when the Bill comes to the House of Lords, if the Ministers today are adamant about turning down the amendments, we might see something similar. I hope that Members across the House will support them if only for the sanity of being able to remove the idea that there is some sort of conspiracy, and we can go back to expecting a common or garden cock-up in how legislation in this place is written.
In the meantime, I urge Government Members to support the amendments. If they cannot explain to their constituents what they are doing in Committee today, they certainly would not be able to explain it when we come to the election to decide which side of the House any of us sits on, and that will be a very testing moment indeed.
Ms Ghani
I ask hon. Members to reject amendments 90 and 91 as well as the introduction of new schedule 1. The amendments undermine the central sunset policy of clause 1 and the Bill as a whole. The sunset provision was drafted to incentivise Departments to review their retained EU legislation and actively make a decision on whether to preserve something. Amendment 90 creates the preservation of a default position and therefore removes the key impetus for reform. Allowing outdated retained EU laws to languish on our statute book where they do not work in the best interests of the UK is irresponsible.
The sunset is the backbone of the Bill as it accelerates reform and planning for future regulatory changes. Without it, the benefits and the potential to bolster economic growth might not be realised at all, as sunset ensures that a single cohesive domestic statute book will exist following the sunset deadline. We have already committed to abolishing retained EU laws that stifle growth and are not in the best interests of UK businesses and consumers. The sunset is our fulfilment of that commitment.
I want to quickly respond to some of the questions raised. I do not have a list of TV or Netflix programmes or movies to contrast my responses. To crush the conspiracy about the laws that have been recognised, I refer hon. Members to the dashboard, which has the retained EU laws available, collected as part of a cross-Government collaborative exercise. The process was led by the Brexit Opportunities Unit, and it is where retained EU law sits across over 300 policy areas and 21 sectors of the economy. Hopefully, that conspiracy theory can die very quickly.
Ms Ghani
If I make progress, maybe I will answer some of the hon. Gentleman’s questions.
A question was raised about whether this was the only account of retained EU law. Throughout the process of the retained EU law review, we have been working closely with the National Archives. There was a figure in the Financial Times, but we have yet to verify all those items. The number covers all existing legislation, but some of it may have already outdated itself as legislation has been updated.
On the question about management and cost, the retained EU law dashboard was built by officials from the Brexit Opportunities Unit and the Cabinet Office using the software Tableau. It was created with no additional cost to the Government. Hopefully, that covers some of the conspiracy theory about where the information is kept.
Ms Ghani
If I can continue, I will hopefully finish on some of the questions that were raised, such as the one about working with Parliament. We are committed to working collaboratively with Parliament to deliver the programme, as we did with our programme of statutory instruments for EU exit. I do not see why we cannot build on that approach as well.
The question was raised about international obligations. The UK Government are committed to ensuring that the necessary legislation is in place to uphold the UK’s international obligations, including the withdrawal agreement, the Northern Ireland protocol and the trade and co-operation agreement after the sunset date. The UK Government will make sure that the necessary legislation is in place to ensure the terms of the withdrawal agreement are upheld after the sunset date, including regarding citizens’ rights and the Northern Ireland protocol. The aim of the Bill is not to alter the rights of EU nationals, which are protected or eligible to be protected by the relevant citizens’ rights provisions contained within the withdrawal agreement.
I do not buy the Opposition argument that somehow we will take decisions that mean we have a different set of values to Brussels—lower standards, making our constituents less safe and taking away their rights. That is not who we are as elected officials. We are all working together in the same room and many Opposition Members know that we share the same values as they do. Scaring people that we are going to do something that takes away those rights is slightly absurd.
Clause 2 also allows for extensions to the sunset date for specified instruments or a specified description of retained EU legislation where we have plans to amend and reform but need slightly longer to do so. Everybody will recognise and welcome that. Introducing a schedule that requires a listing of all retained EU law to be revoked is unnecessarily burdensome and not a good use of civil service and parliamentary time when preservation would still be necessary.
Several hon. Members rose—
Justin Madders
Thank you, Sir George. I am happy to take interventions if any hon. Members wish to intervene.
Stella Creasy
I thank my hon. Friend for giving way. Given that we are debating whether Ministers are capable of scrutiny, not to take any questions rather proves the point. Does my hon. Friend agree with me that he has already set out a number of instances of regulations that are not on the dashboard? I wish to add the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment Regulations 2012. Is there a number for the regulations that are not currently on the dashboard that people can feel comfortable with? Is there a margin of error that the shadow Minister can set out, given that the Government will not answer that question? Or given that businesses want better rather than no regulation, is it not completely unreasonable not to know what is up for grabs?
Justin Madders
Businesses want certainty and, with this Bill, we are as far away from that as is possible. I do not know if there is going to be a margin of error. Indeed, I do not think there should be any margin for error when talking about legislation in this place. We should all know exactly what we are voting for and signing up for. At the moment, the Bill does none of those things. The Minister said that the amendments would undermine the Bill. Absolutely they would. They are intended to create some parliamentary scrutiny, which the Bill sorely lacks. The Minister also said that the Bill’s drafting aims to incentivise Departments to hurry along and decide which laws they want to retain, but I am afraid that if we are using legislation as a management tool for civil servants we are in a pretty poor place
Paul Blomfield
Does my hon. Friend agree that the purpose of a Public Bill Committee is to put legislation under scrutiny and that that process is enabled by Ministers answering questions? Does he further agree that the objective of the process we are involved in will not be served if the Minister refuses to take interventions?
Justin Madders
I thank my hon. Friend for his intervention. When a Bill is clear, and when the intention and the factual basis for proceeding are clear, it is not always necessary to have interventions, but when a Bill is as opaque and uncertain as this, it is important that the Government set out clearly their rationale for proceeding in such a way. No doubt those concerns will be picked up in the other place, where I hope they get more comprehensive answers.
Paul Blomfield
I understand the difficulties the Minister has in dealing with some of the questions, but on her specific point about it being too burdensome for civil servants to produce a list of laws, does my hon. Friend share my incredulity at her acceptance that undertaking a review and putting forward revised proposals, or indeed making a recommendation, to revoke all the laws is not too burdensome, although it is too difficult for the Government to list those laws?
Justin Madders
I agree. I, too, have sympathy for the Minister, who has been dealt a pretty poor hand, but the idea that we cannot get someone to cut and paste from the dashboard to the Bill is ludicrous.
Peter Grant
I note that the hon. Gentleman’s incredulity is almost as great as mine with respect to a Minister who a minute ago said that we can deal properly with 4,000 bits of legislation in just over a year, but then said that the Government cannot take stuff from their own dashboard and transpose it somewhere else.
Am I correct to think that, essentially, the purpose of the amendment is to give the Government some insurance cover to prevent them from revoking useful legislation by mistake? What does it say about the arrogance of a Government that they refuse to accept such an offer of help and prefer to see legislation that could have unintended damaging consequences, rather than simply having the humility to accept such a proposal, which they seem to reject purely because of where it comes from, rather than any benefit it might contain?
Justin Madders
I hope the Minister will learn that I always try to be helpful with my amendments. We are genuinely trying to get the Bill into some kind of shape whereby it might restore faith in parliamentary democracy. We will not be the ones to bear the consequences of accidental omissions; it will be our constituents. They will rightly ask, “What were you doing? Where were you when the Bill was passed?” It will be clear that we raised our concerns and pointed out the terrible potential consequences of not doing this correctly.
Stella Creasy
Can my hon. Friend have any confidence in the dashboard itself if Ministers are not prepared to put it on a statutory footing by at least listing the laws that are creating it? The Minister tells us to have confidence in the dashboard process, saying that it is a wonderful tool for people to be able to learn what is going on, but not so wonderful that it can be transplanted in legislation. Does my hon. Friend agree that that rather undermines any confidence that people might have in the dashboard, even as an authoritative if not comprehensive list of the legislation affected?
Justin Madders
I will use a hip-hop lyric in response, seeing as that is the road we are going down. LL Cool J once said
“you can’t gain or maintain…Unless you say my name”,
and that is the point of this amendment. We cannot actually say, scrutinise or understand the effect of the Bill if we do not have a comprehensive list. The Minister has said that the dashboard is the panacea for our criticism, concerns and, indeed, conspiracies about what is going on here, but when the Government themselves admit that the dashboard is not a full list of the laws, it cannot be acceptable or tenable that that is the basis on which they intend to proceed. We do not legislate in this place by website; we legislate by legislation, and the intention of the legislation should be clear.
I will pick up one other point that the Minister made. She said that we continue to support the values of the EU, even though we are leaving it. I am afraid that clause 5 does not do that; it specifically says that we will no longer be following the principles of EU law as we leave. I accept it is a legitimate position, but that is the fact of the matter. I appreciate that we have dealt with this matter to the nth degree, so I will finish by saying that I intend to push this amendment to a vote. We cannot have a situation where we do not know what legislation covers, where we do not what know what the Government intend to do with the legislation, or where the Government will not talk to anyone about what they intend to do with it.
We cannot have the Government changing the law on a whim; there must be proper accountability and scrutiny. We cannot have unaccountable Ministers changing the rules without reference to anyone else. That is not what taking back control was supposed to mean. I am afraid that says that the Government are not confident about their intentions and, frankly, that is a completely unacceptable situation, which this amendment would go some way to putting right.
Question put, That the amendment be made.
Brendan O’Hara
I beg to move amendment 22, in clause 1, page 1, line 9, at end insert—
“(2A) Subsection (1) does not apply unless a motion approving the revocation of any piece of legislation to be revoked has been passed by the House of Commons, the Scottish Parliament, Senedd Cymru and the Northern Ireland Assembly.”
The Chair
With this it will be convenient to discuss the following:
Amendment 23, in clause 15, page 17, line 4, at beginning insert “Subject to subsection (1A),”.
Amendment 24, in clause 15, page 17, line 5, at end insert—
“(1A) A Minister of the Crown may not make regulations under subsection (1) unless a motion approving the revocation of the secondary retained EU law has been passed by the House of Commons, the Scottish Parliament, Senedd Cymru and the Northern Ireland Assembly.
(1B) A motion under subsection (1A) must state the date on which the secondary retained EU law is to be repealed, and any regulations under subsection (1) which follow such a motion must provide for the revocation to take place on that date.”
Brendan O’Hara
The amendments are in my name and the name of my hon. Friend the Member for Glenrothes. I will be extremely brief. The purpose of these amendments is to recognise the fact that there are four Parliaments on these islands, and those Parliaments should be respected, so it should be the case that nothing can sunset, whether reserved or devolved, unless that is agreed to by the Scottish Parliament, Senedd Cymru and the Northern Ireland Assembly. We need to remind Committee members that Scotland and Northern Ireland completely rejected Brexit; only England and Wales supported it.
Had David Cameron been wise enough to accept a similar proposal to the one set out in the amendments—that is, had he said that the UK would not leave the European Union unless every constituent part of the UK agreed to that—we would not be in the boorach that we find ourselves in. I ask the Government to learn from their mistakes, and to accept that listening to and respecting the opinions of the Parliaments in the constituent parts of the United Kingdom might be a useful way to avoid yet another almighty mess. What is decided in this place will have a profound effect on the peoples across these islands. Heeding the views of their Parliaments, which represent the people of Scotland, Wales and Northern Ireland, would do nothing other than improve our democracy. For that reason, I urge the Government to accept amendments 22, 23 and 24.
Justin Madders
The amendments acknowledge that it should not be Ministers who get to decide which laws to keep and which to chop. The Bill gives the Government widespread executive powers to rewrite affected laws through statutory instruments that require little parliamentary scrutiny, and with no mandate from the voters. There has been no guidance on, or indication of, which laws Ministers consider to be outdated, and what improvements are intended to make them
“better suited to the UK.”
Any replacement for these rights would require little parliamentary scrutiny. Core workers’ rights, key environmental protections and important consumer rights are left in the gift of Ministers. I think we have made it clear that we do not think that is acceptable.
The refrain of those who advocated for Brexit was that we should take back control—“we” meaning the people we represent, not Ministers sitting in rooms on their own, answerable to nobody, and under no requirement to explain their actions or inaction. That is not the way to go. The Government cannot argue that the Bill brings sovereignty and democratic control back to the legislative process when it demolishes the role normally undertaken by Parliament.
Any meaningful attempt to increase democratic oversight would seek to address those fundamental flaws. Parliamentary safeguards exist precisely because Ministers might always be tempted to resist scrutiny from Parliament. Those safeguards are important, if only because scrutiny and debate prevent errors, omissions—we certainly feel that there may well be omissions—and mistakes. These are important matters that will impact our constituents’ lives, and the prosperity or otherwise of the nation for years to come. Should not any Government have the courage of their convictions and open up their decisions for parliamentary approval? Should not we have a say on whatever Government decide that they are letting themselves and their citizens in for?
The Civil Society Alliance has said that this Bill will further destabilise devolution arrangements at a time when tensions between devolved and central authorities are more challenging than ever, and that will undermine the UK’s democracy and constitution, as well as the role of devolved and central Parliaments. The alliance says that the Bill gives staggeringly broad delegated powers to repeal and replace parliamentary laws with policy that is subject to little or no democratic scrutiny and is introduced at an alarming pace. We have already made clear our position: we do not agree with this. No one, whether they voted remain or leave, would want that. For that reason, we think that the amendments have some merit.
Ms Ghani
I ask hon. Members to reject amendments 22 to 24. Amendment 22 would fundamentally undermine the principles of the Bill by requiring individual pieces of retained EU law to be approved by a motion in the House of Commons and all the devolved legislatures before the sunset could revoke them. Notwithstanding the issue with parliamentary time, this amendment would require the UK Government to seek consent from all the devolved legislatures before revoking any secondary retained EU law, irrespective of its devolution status or territorial extent. It seems that it would in effect give the devolved legislatures a veto over retained EU law in other parts of the UK, and is therefore highly inappropriate.
Amendments 23 and 24 would hinder the efficient removal of regulations that have been identified as beign outdated, unduly burdensome and not suitable for UK citizens and businesses. The intention in this Bill is not for the Government to take on the function of the devolved authorities; nor is the Bill a power grab. I therefore ask that the amendments be withdrawn or not pressed.
Brendan O'Hara
I am not remotely surprised by the Minister’s reply, but I gently ask her: who knows better than the parliamentarians representing people across these islands in Edinburgh, Cardiff and Belfast about what is best for them and the people who elected them? They can also provide expertise on the damage that unintended consequences can cause. How often in this Parliament have we made the case that on occasion—or often—the views of other parts of the United Kingdom have been overlooked or ignored by the Government, and that Government officials have been unaware of them?
This is about democracy. This is about giving the other Parliaments the right to say, “No, this will not work, and these are the reasons why.” Very recent history tells us that had we adopted such an approach only six or seven years ago, we would not be in the mess we are in. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Justin Madders
I beg to move amendment 73, in clause 1, page 1, line 9, at end insert—
“(2A) Subsection (1) does not apply to the following instruments—
(a) Management of Health and Safety at Work Regulations 1999,
(b) Children and Young Person Working Time Regulations 1933,
(c) Posted Workers (Enforcement of Employment Rights) Regulations 2020,
(d) Part Time Employees (Prevention of Less Favourable Treatment) Regulations 2000,
(e) Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002,
(f) Transfer of Undertakings (Protection of Employment) Regulations 2006,
(g) Information and Consultation of Employees Regulations 2004,
(h) Road Transport (Working Time) Regulations 2005,
(i) Working Time Regulations 1998,
(j) Agency Workers Regulations 2010,
(k) Maternity and Parental Leave etc Regulations 1999,
(l) Trade Secrets (Enforcement etc) Regulations 2018,
(m) The Health and Safety (Consultation with Employees) Regulations 1996, and
(n) Information and Consultation of Employees Regulations 2004.”
This amendment would exclude certain regulations which provide for workers’ protections from the sunset in subsection (1).
The Chair
With this it will be convenient to discuss the following:
Amendment 76, in clause 15, page 17, line 5, at end insert—
“(1A) Subsection (1) does not apply to the following instruments—
(a) Management of Health and Safety at Work Regulations 1999,
(b) Children and Young Person Working Time Regulations 1933,
(c) Posted Workers (Enforcement of Employment Rights) Regulations 2020,
(d) Part Time Employees (Prevention of Less Favourable Treatment) Regulations 2000,
(e) Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002,
(f) Transfer of Undertakings (Protection of Employment) Regulations 2006,
(g) Information and Consultation of Employees Regulations 2004,
(h) Road Transport (Working Time) Regulations 2005,
(i) Working Time Regulations 1998,
(j) Agency Workers Regulations 2010,
(k) Maternity and Parental Leave etc Regulations 1999,
(l) Trade Secrets (Enforcement etc) Regulations 2018,
(m) The Health and Safety (Consultation with Employees) Regulations 1996, and
(n) Information and Consultation of Employees Regulations 2004.”
This amendment would exclude certain legislation which provides for workers’ protections from the power to revoke without replacement in subsection (1).
Amendment 67, Clause 22, page 21, line 42, at end insert—
“(da) section [Workers’ rights];”
Amendment 60, in clause 22, page 22, line 19, at end insert—
“(d) any regulations made under section 2 of the European Communities Act 1972 which have the effect of conferring rights or protections on workers.”
New clause 4—Workers’ rights—
“The Secretary of State must by 1 January 2023 publish a list of any provision to which this Act applies which confers rights or protections on workers which has not been—
(a) subject to regulations under section 1(2),
(b) restated under section 12 or 13,
(c) replaced under section 15(2), or
(d) revoked under section 15(3) and replaced with alternative provision
as at 1 January 2023.”
Justin Madders
Amendment 73 provides that clauses 1 to 3 and the powers under clause 15 do not apply to the list of regulations set out in the amendment. Committee members with a keen eye will notice that they all relate to employment and workers’ rights. The amendment would remove them from the sunset clause and prevent further watering down by the Government. If the Committee is minded to support the amendments, we can all leave here today safe in the knowledge that we have done our bit to protect workers’ rights from deliberate action or careless inaction.
I will not go through the effect of every one of the regulations. Some will be more familiar to Members than others. They represent, as far as we can identify, all the major employment rights in the ambit of this Bill—rights that people enjoy every day.
Paid annual leave is one of the greatest achievements of the last Labour Government. Also included are the regulations that introduced daily and weekly working limits. For Members who are not aware, that arose from a concern about workers’ health and safety. The risk of working excessively long hours has been shown time and again. The regulations listed also include a worker’s right to a 20-minute break in a shift, a break from work each day, and a day off every week or two days off every 14 days. We should not jettison those minimum standards.
Other regulations in the list oblige employers to assess health and safety risks to their workers, and to keep that risk assessment up to date. Do we not think that everyone has a right to work in a safe environment, and that employers should take steps to ensure that?
There are other laws in the list that are well worth fighting for, such as the right of part-time and fixed-time workers to be treated, pro rata, similarly to permanent workers unless the employer can justify the different treatment. Agency workers have the right after 12 weeks to receive the same basic working and employment conditions as directly employed workers. There are rights to do with taking parental, paternity and maternity leave, and of course the right not to be subject to detriment or to be dismissed for having exercised such a right. Importantly, there is the right to return to the same job that the employee had before they went on maternity leave.
Employees have the important right to be consulted on health and safety, and to paid time off to carry out health and safety training and other duties. They also have the right to protection from discrimination or victimisation for carrying out health and safety duties.
Also included are rights under the TUPE regulations, which ensure that when one business buys another, there is reasonable certainty about which workers transfer to the new business, so that the purchaser knows which employers it is getting and, critically, workers know that they cannot be dismissed or have their terms and conditions chopped just because they are working for a new employer. How many times does the TUPE regulation get applied every year? I do not have a figure, but I expect that hundreds of thousands of people have their employment changed each year under TUPE. No one has ever come to me and said that they do not think that workers deserve the protections and consideration that those regulations provide.
Having a new boss creates uncertainty, as Government Members will no doubt appreciate after the past few months, so let us not add to it. Let us make it crystal clear that TUPE will stay. Imagine if someone was thinking of buying a business in 2023. How on earth would they know whether to proceed with the purchase if they did not know whether they were obliged to take on its employees? We have a stable, settled, well-understood framework of law that helps businesses to operate more efficiently, and this amendment seeks to retain that.
Retained EU Law (Revocation and Reform) Bill (Fourth sitting)
Tuesday 22nd November 2022
(2 years ago)
Public Bill CommitteesRead Full debate Retained EU Law (Revocation and Reform) Act 2023 View all Retained EU Law (Revocation and Reform) Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 22 November 2022 - (22 Nov 2022)
The Committee divided: - Ayes: 7 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 9 / Noes: 6 - Question accordingly agreed to.
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
The Chair
I remind the Committee that with this we are discussing the following:
Amendment 76, in clause 15, page 17, line 5, at end insert—
“(1A) Subsection (1) does not apply to the following instruments—
(a) Management of Health and Safety at Work Regulations 1999,
(b) Children and Young Person Working Time Regulations 1933,
(c) Posted Workers (Enforcement of Employment Rights) Regulations 2020,
(d) Part Time Employees (Prevention of Less Favourable Treatment) Regulations 2000,
(e) Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002,
(f) Transfer of Undertakings (Protection of Employment) Regulations 2006,
(g) Information and Consultation of Employees Regulations 2004,
(h) Road Transport (Working Time) Regulations 2005,
(i) Working Time Regulations 1998,
(j) Agency Workers Regulations 2010,
(k) Maternity and Parental Leave etc Regulations 1999,
(l) Trade Secrets (Enforcement etc) Regulations 2018,
(m) The Health and Safety (Consultation with Employees) Regulations 1996, and
(n) Information and Consultation of Employees Regulations 2004.”
This amendment would exclude certain legislation which provides for workers’ protections from the power to revoke without replacement in subsection (1).
Amendment 67, in clause 22, page 21, line 42, at end insert—
“(da) section [Workers’ rights];”
Amendment 60, in clause 22, page 22, line 19, at end insert—
“(d) any regulations made under section 2 of the European Communities Act 1972 which have the effect of conferring rights or protections on workers.”
New clause 4—Workers’ rights—
“The Secretary of State must by 1 January 2023 publish a list of any provision to which this Act applies which confers rights or protections on workers which has not been—
(a) subject to regulations under section 1(2),
(b) restated under section 12 or 13,
(c) replaced under section 15(2), or
(d) revoked under section 15(3) and replaced with alternative provision
as at 1 January 2023.”
Justin Madders (Ellesmere Port and Neston) (Lab)
It is a pleasure to see you in the Chair this afternoon, Sir George. Before our lunch break, I was talking about some of the important employment rights that derived from EU legislation.
Mr David Jones (Clwyd West) (Con)
I rather wondered why the hon. Gentleman was regaling us with this list of workers’ rights. Is he seriously suggesting that this Government would sweep away all those rights? If he is, does he not accept that that is scaremongering? Does he not agree that in many respects, workers’ rights in this country are far superior to those employed in many European countries?
Justin Madders
If the right hon. Member wants to give the public reassurance that there is no intention to sweep away the rights, this is the perfect opportunity to do so by voting for the amendments. I remind him that over the past 12 years the Government have doubled the qualifying period for unfair dismissal, introduced employment tribunal fees and cut down on consultation requirements for collective redundancies. The track record is a mixed one to say the least. A number of prominent Brexiteers have talked extensively about the need to reduce red tape and do away with employment rights, which I will discuss shortly.
If, as the right hon. Member says, there is no intention to remove employment rights, that is welcome news. It would be more welcome if the amendments were supported, because that would be consistent with the manifesto that Conservative Members stood on in 2019, which says on page 5 that
“we will legislate to ensure high standards of workers’ rights, environmental protection and consumer rights.”
This is the chance to legislate for that, starting with amendment 76 on workers’ rights.
Peter Grant (Glenrothes) (SNP)
I am possibly anticipating what will be said later, but for clarification will the hon. Member confirm that retaining all this EU legislation in domestic law does not in any way prevent the Government from deciding that they want to legislate for a greater level of workers’ rights or environmental protection than is currently the norm throughout Europe? They would only need to repeal this law if they intended to weaken those protections.
Justin Madders
The hon. Member is exactly right. If there is no intention to do away with these laws, the Government simply have to accept the amendment with no further question or debate about it. We will be very pleased to be able to report to our constituents that their rights are protected.
We are sceptical about some of the intentions of the Conservative party. The right hon. Member for North East Somerset (Mr Rees-Mogg), the architect of the Bill, has gone on the record with what can only be described as a Victorian attitude to workers’ rights, with such classic lines as “there is no moral right to annual leave.” There were reports in The Times only a couple of months ago that he was planning to scrap both the Working Time Regulations 1998 and the Agency Workers Regulations 2010. Amendment 76 would protect both measures, putting the issue beyond doubt. The Minister does not need to the follow the right hon. Member’s lead any more; she can act today to show that she is on the side of workers, that she understands the value and importance of workers’ rights and that she can do the right thing by supporting the amendment.
When discussing these amendments it is important to acknowledge that there will almost certainly be a disproportionate impact on women if these laws are scrapped, as many of them have been of great benefit to women in the workplace. Fifty years after this country legislated for equal pay between men and women we still have not quite got there. Women face far greater challenges of discrimination at work. Let us not make an unacceptable situation any worse by reducing some of the measures that protect them.
The Bill’s own impact assessment recognises that it contain threats to equality, particularly in paragraphs 11, 25 and 41. Unison has said that the Bill will
“deliberately wipe the slate clean and create confusion around the principle of precedent that UK common law is premised on. It places ideological principles above the lived, practical needs of the UK.”
Perhaps the Minister will tell us, as the right hon. Member for Clwyd West has already suggested, that we are being melodramatic, and that the Government do indeed intend to honour their manifesto commitments to improve workers’ rights. We know what we need to do if that is the case.
As I say, I am a little suspicious about what is going on with the Bill and why it has been drafted in such a way to squirrel away debate and discussion about workers’ rights. If the Government truly intended to maintain these rights, they could have put something in the Bill along the lines of the amendments from Labour or the SNP. Better still, as we have touched on, they could have done the Bill the other way round, so that we knew what was going to be removed. The fact that they have not done that raises concerns.
When the review of retained EU law commenced, Lord Frost said that the Government were in the position to ensure that retained EU law could be revoked, replaced, restated, updated and removed or amended to remove burdens. Of course, he could have added to those comments and said that, while we want to do that with retained European law, we respect and support workers’ rights and do not need to change them. Instead, we have the language of attack—of revocation, of removing burdens—not the language of a Government intent on upholding workers’ rights.
I urge Members to consider what the Minister’s colleague, the right hon. Member for Beverley and Holderness, said on Second Reading on the subject of workers’ rights:
“In line with the UK’s track record, we will seek to modernise our regulations, including on workers’ rights, ensuring that unnecessary burdens are minimised”.—[Official Report, 25 October 2022; Vol. 721, c. 252.]
I am not sure what he meant by “modernise”, given that the Government have yet to implement the vast majority of recommendations from the Taylor review that sought to bring in new regulations to protect workers in the gig economy, but it is the latter part of that sentence that I want to examine further.
We hear far too often from those on the right of politics that employment rights are an unnecessary burden on businesses. Of course, for many, the visceral hatred of workers’ rights was a huge motivating factor for wanting to leave the EU. However, I would say that workers’ rights are not a burden, but an essential ingredient of a civilised society. If we want our citizens to play an active role in the country moving forward and in future economic growth, our citizens have to be rewarded fairly and treated fairly. Security and respect at work are the cornerstone of any success we may have as a nation. A secure and happy workforce is a productive workforce. Giving people dignity, certainty and fairness in the workplace is not a burden on businesses, but is what good businesses want to do, what good businesses will see the fruits of, if they implement it properly, and what we as Members of this House should want to see in every workplace.
We view the Government’s approach to the amendment with scepticism. I urge all members of this Committee not to pass up the opportunity that this amendment gives them to say to those who may see the Bill as a chance to weaken workers’ rights that we are not going to let that happen: these rights are not up for grabs, they are non-negotiable and they will not be dumped at the end of 2023.
Stella Creasy (Walthamstow) (Lab/Co-op)
I know there was bated breath and anticipation as we returned this afternoon. I hope we have as joyous and entertaining a debate as we had this morning about such an important piece of legislation.
We are getting to the meat of the matter this afternoon, which is what the legislation will do and what the Government’s intention actually is. It is only fair for the Government to come clean on their intentions. They keep saying that those of us who are raising concerns are scaremongering, but it is our job to probe the Government. As much as the Minister might not like these questions, our constituents deserve better than vague pledges that the Government would not possibly do something that we know in the past this Government and its Members have tried precisely to do.
Let us start with workers’ rights. These amendments are about a perfectly reasonable parliamentary process of fleshing out the Government’s intentions. This morning, we heard that there is, of course, time for the replacement of all the legislation that will be deleted by the Bill. We heard that none of us should have any concerns about the timetable or process or persons unknown who will be responsible for this legislation. The reasons for our concerns are to do not with Brexit but with the content of the Bills that are going to be deleted. They are Bills and rights on which our constituents have depended for generations, and workers’ rights are an absolute case in point because they safeguard the right to a decent workplace and decent employers. Businesses do not want employment rights to be watered down. They want certainty so that they can get on with rebuilding their businesses in this difficult economic climate.
As we have seen in the responses that we have received, many businesses agree with the rights that the Bill puts at risk of deletion. The Working Time Regulations 1998 include the right to paid time off, including bank holidays. This is a very simple proposition for Conservative Members: if they do not vote with us to remove these laws from this Bill, they will put the right to a bank holiday up for deletion. The Government have been very clear that they will not provide any guarantees as to what will replace or amend any of the laws that they are deleting. If they join us, they will make things a lot clearer for our constituents.
It is not just about the working time directive. My hon. Friend the Member for Ellesmere Port and Neston said this morning that he was not sure how many people benefit from TUPE. I can tell him that 30,000 people a year benefit from TUPE protections, yet the Beecroft report suggested that TUPE legislation should be watered down. It is not unreasonable for those of us who have had concerns for many years about this Government’s approach to workers’ rights to be concerned that this Bill deletes TUPE in its entirety, which is something that Beecroft only dreamed of.
The Management of Health and Safety at Work Regulations 1999 protect, among other rights, the requirement for an employer to perform a risk assessment for all workers, and specify that that must include a risk assessment once an employee falls pregnant. If Conservative Members think that those rights should be protected, they should vote in favour of them today, send a clear message to their Government colleagues to remove the measure from the Bill and put beyond doubt the fact that it is reasonable to require an employer to carry out a risk assessment when an employee falls pregnant. We must protect health and safety regulations. Each year many of us commemorate those who have lost their lives in the workplace, but this Bill deletes important legislation at a stroke and Ministers have not given any assurances or details as to which regulations they will bring back in their entirety.
The children and young person working time regulations protect a child’s right to access education by preventing the employment of children. Ministers and Conservative Members will say that it is scaremongering to talk of sending children back down the mines or up a chimney, but that legislation was brought in precisely to protect children. Why on earth would we not want to put it beyond doubt that we want to keep those protections, unless the Government either want to water them down or abolish them altogether? Voting for the amendment would put that beyond doubt.
The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 ensure that millions of our constituents are not discriminated against in the workplace. It is predominantly women who are protected by those regulations. Nearly a fifth more women than men are on temporary contracts, and more than twice as many women are in part-time employment than men. When this Bill is enacted, the rights that they have relied on to protect them in the workplace will be dissolved at a stroke. It is not unreasonable for us to give them the comfort that those rights will remain by ensuring that they are not removed by the Bill.
The Maternity and Parental Leave etc. Regulations 1999 protect women in the workplace from unequal treatment on account of maternity leave, pregnancy or childbirth. We know that 50,000 women a year experience pregnancy discrimination, even with that legislation in place. Removing it and refusing to keep it will result in even more women experiencing pregnancy discrimination. That is a critical point. Nobody is suggesting that these laws are perfect or that they do not require amendment and should not change with the times we are in, but that does not mean that they should be abolished and that we should hope that a future Minister remembers that they were on the list and comes up with some proposals. The 50,000 women already experiencing pregnancy discrimination need to know that the law is going to move forwards, not backwards, and this Bill can only be a retrograde step.
Conservative Members should come clean to their constituents. If they do not think these rights are important, they should put them up for abolition and hope that Ministers will come forward with alternatives. They should be clear with their constituents, because we will hold every single Member in this House to account if they delete the right to have a bank holiday or not be discriminated against as a pregnant woman or new mother.
Stella Creasy
I can see the hon. Lady shaking her head—I am sure everyone can—but that is exactly what the legislation does. It is important to our constituents that we either do not deny that that is a possibility or we act to remove it. This amendment gives Conservative Members the ability to offer more than just words on this matter—to make a deed and ensure they protect the workers’ rights their constituents depend on.
We are very clear: if Government Members do not vote for this amendment, we will hold them to account and ensure that their constituents know that they voted to put those rights up for grabs with no guarantee that they will be protected. I can see Conservative Members smiling. Those smiles will not be smiles when our constituents ask why they put their rights into a process that will mangle them with 4,000 other pieces of legislation, with no guarantee that parliamentary time can be found and no guarantee of what it means for their employers. The right hon. Member for Clwyd West asked if it was scaremongering. It is not scaremongering. It is called accountability, and it is about time the Government listened to it.
Mr Jones
The hon. Lady will know that this Government have consistently improved the rights of workers. It is a process that has continued over the last 12 years since this party has been in Government. Frankly, it does her no credit at all to raise these concerns with probably very vulnerable people, who will now be concerned about what she has said. She will have to be accountable for what she has said.
Stella Creasy
I thank the right hon. Gentleman for his intervention. He was part of a Government who brought forward the Beecroft report, so I will take absolutely no lectures about frightening vulnerable people.
What I see before me is a piece of legislation that deletes those rights. That is beyond doubt. The question is whether they are going to be replaced. The right hon. Gentleman could argue that that is what Ministers have committed to. I am sure that is what the Minister will try to say—that we should not worry and that these rights will be replaced—but at this point in time when we are being asked to pass this legislation, there are no guarantees. There is nothing on the statute book. There have been no specific pledges on these rights.
We have a Government with a track record of seeking to try to delete and dilute rights. They were prevented from doing so by being members of the European Union at the time. Brexit has happened. Now the entire responsibility and onus on protecting those rights relies on Government Ministers and Members of Parliament holding the Government to account. That is exactly what we are doing today. Vulnerable people deserve to know the truth of what the outcome of this legislation will be.
Dr Luke Evans (Bosworth) (Con)
The hon. Lady is making a very good point about ensuring we have protections in place. Is she not missing the point and being slightly mischievous, because this is setting out a framework of how to deal with the problem, not the specifics? Those can still come later. She is right to argue that anyone in the House could make those changes, but the whole principle here is laying out the framework to enact these rights.
Stella Creasy
The hon. Gentleman comes so close, yet does not quite score his goal. He has said that it is about setting out a framework so these things could happen. There is no guarantee about what comes next. That is the challenge for his constituents. That is why the amendment puts in place what could come next by removing these particular rights from that process. The hon. Gentleman is right to say that it sets out a process. The point is what is the impact of that process. If he cannot read this legislation, he needs to read all the submissions we have had from people setting out their concerns.
Paul Blomfield (Sheffield Central) (Lab)
My hon. Friend is right in her response to the question of process. Does she agree that it was a previous Conservative Government—there have been so many—that set out a process in the withdrawal Act? That process was to embrace the principle of retained law so that we did not risk losing the rights and protections we had collectively agreed over 43 years and would then have the opportunity, as and when the chance arose or it would seem fit, to change or improve that law. That process would be set against the safety net of not losing what we already had. That was the process the Conservative Government put in place and which this Bill is now ripping apart.
Stella Creasy
My hon. Friend speaks with the experience and frustration of having seen this all before. That is the challenge. The hon. Member for Bosworth is relatively new to this experience, but many of us who have had to deal with this Government in its various incarnations over employment rights—and, indeed, over legislative processes—have seen the deterioration in their respect for and approach towards the parliamentary process, whereby Members could be confident about the Government’s direction of travel.
In this morning’s sitting I mentioned the words “cock-up” or “conspiracy”. A cock-up would be accidentally losing some of these pieces of legislation. That is why this amendment is so important: it sets out specifically all those pieces of legislation and provides a safety net. We could then have a sunrise approach to this legislation. If the Government wish to amend things, at least the legislation would be retained until it is amended. The conspiracy element comes from the previous experience of dealing with this Government, and the bemusement as to why Ministers and Back Benchers claim that we are scare-mongering, but refuse to give that commitment.
If the Minister will give a specific commitment today that every single one of those rights will be rewritten into UK legislation to give our constituents the same protection that they have now, I will happily support her, but she is not likely to do so. In that absence, it falls to all of us to make sure that our constituents—the vulnerable people we are concerned about—do not worry that their rights, precious as they are, are about to be abandoned. They have to hope that it is better to have a cock-up than a conspiracy, and that they might still be saved at some point, rather than that there is a deliberate attempt to reintroduce Beecroft by the back door—because that is what the Bill looks like, and that is what the amendment protects us against.
Brendan O’Hara (Argyll and Bute) (SNP)
I will speak to amendments 60, 67 and new clause 4, tabled in my name and that of my hon. Friend the Member for Glenrothes. The amendments would oblige the Secretary of State to publish a full list of workers’ rights that could be put at risk under this legislation by 1 January 2023. It is a pleasure to follow the hon. Members for Ellesmere Port and Neston, and for Walthamstow. I fully agree with everything they said. If they press their amendment to a Division, our support is guaranteed.
We have heard several times today that the Bill gives UK Government Ministers unprecedented powers to rewrite and replace huge swathes of domestic law, covering matters such as environmental protection, consumer rights, and of course those long-established, hard-won workers’ rights. The right hon. Member for Clwyd West, and indeed the Government generally, have been at pains throughout the passage of the Bill to say that there will be no diminution of workers’ rights, but given that they have failed to produce an accessible list of exactly what will stay and what will go as a result of the Bill, coupled with the fact that so many stakeholders see the Bill as the starter pistol for a deregulatory race to the bottom, they will fully understand the scepticism that exists not just here, but outside this place, over any promise that workers’ rights will be protected.
Although we have heard the Government’s vague promises that everything will be okay, and the reassuring words, “Trust us, we’ll see you okay”, that is not good enough. Workers across the country will fear that the Government are going down a one-way road towards deregulation that will certainly not benefit workers or protect their rights.
We heard in the oral evidence session that the trade unions are particularly sceptical about what the Government have planned for workers’ rights. They have serious concerns that, among those 3,800—so far—discovered pieces of legislation that are due to be sunsetted in 13 months’ time, there could be legislation covering annual leave entitlement, women returning to the workplace, the treatment of part-time workers, protection from dismissal, holiday pay, legislation on working hours, and rights to parental leave. As the hon. Member for Ellesmere Port and Neston said earlier, the fact that this legislation was the brainchild of, and initially piloted by, the right hon. Member for North East Somerset (Mr Rees-Mogg) sets alarm bells ringing—with some justification, given that back in 2013 he was quoted as saying,
“It is hard to believe that the right to paid holiday is an absolute moral right; it is something that comes about because of political pressure at the time”—[Official Report, 1 March 2013; Vol. 559, c. 605.]
If that is not evidence enough of the direction of travel—or, at least, the suggested direction of travel—in which this Government are heading, I do not know what is. The Government have to accept that they have a long way to go in addressing the concerns of the trade unions, who explained much of their fear was based on being unable to find out exactly which pieces of legislation will stay and which will go. Shantha David of Unison said that the dashboard is
“the most incomprehensible piece of equipment. You have to put in random words to try and identify whether certain pieces of legislation will remain or go.”––[Official Report, Retained EU Law (Revocation and Reform) Public Bill Committee, 8 November 2022; c. 58, Q91.]
It is a completely unsatisfactory position. All that new clause 4 would do is oblige the Government to provide trade unions, individuals and other organisations with a comprehensive list of every piece of employment legislation that could be impacted by the Bill. I do not think for a minute that that is too much to ask, or indeed too much to expect, the Government to provide. If the Government are serious and they want us to believe that the Bill will not put workers’ rights under threat, that is a very small and simple step to at least signal they are moving in the right direction.
The Minister for Industry and Investment Security (Ms Nusrat Ghani)
You will not be surprised to hear, Sir George, that I wish to reject amendments 73, 76, 67 and 60, and new clause 4. While the speeches were taking place, I was reflecting on the level of scrutiny we had when we were governed and subjugated by rules coming out of Europe. I do not recall transcripts from those meetings, or opportunities for Members elected to represent constituents and their businesses to get involved and offer up what they thought was needed for those businesses domestically. However, here we have an opportunity to assimilate, review and potentially improve rules and regulations, and to ensure that we are governed by rules that we enact here in the United Kingdom.
Peter Grant
I may be mistaken, but I distinctly remember being a member of the European Scrutiny Committee in this place for several years. The explicit job of that Committee was to scrutinise proposed EU legislation and to express whether it, on behalf of Parliament, was content for Ministers to either support that legislation or oppose it. It was not the fault of the European Union that very often that Committee had no teeth. It was certainly not the fault of the European Union that as often as not, Ministers ignored the views of that Committee. Is it not the case that the difficulties with parliamentary oversight of European legislation for the 40 years that we were in the EU were nothing to do with the failings of the European Union, and everything to do with the failings of scrutiny in this place?
Saqib Bhatti (Meriden) (Con)
Opposition Members keep telling us that they accept the result of the referendum and this is not about Brexit. Is it not the case that through this legislation we are taking back control and allowing Parliament to be the body that has the scrutiny mechanisms? Does the Minister have more faith in Parliament than Opposition Members do?
Paul Blomfield
I thank the Minister for giving way. On her point on the absence of scrutiny, did she not read the written evidence submitted by the Bar Council? In paragraph 12, it said:
“We also point to the very valuable work over the years of the House of Commons EU Scrutiny Select Committee and other Select Committees...UK ministers, politicians and officials, stakeholders and policy makers had ample opportunity to, and did, exert influence on the development of EU policy and secondary legislation...Indeed, in most cases, the EU legislation was supported, and even promoted, by the UK Government of the day.”
The idea that there was no scrutiny is nonsense, is it not?
Several hon. Members rose—
Ms Ghani
What I will make some progress now.
The Bill is enabling legislation. The measures in it, including the sunset, will allow UK Ministers, including those in the devolved Governments, to make decisions to review, amend or repeal retained EU law as they see fit. We have heard considerable contributions about which laws have moved down into UK law from the EU, making the assumption that we were never able to lay down rules and laws for our people in the UK, and that somehow we would get rid of all the high standards we have.
Let me point out some of the things that we have done, to let everyone know that we have pretty high standards when we are passing legislation. We have the highest minimum wage in Europe, which increased again on 1 April. UK workers are entitled to 5.6 weeks of annual leave, compared with the EU requirement of just four weeks. We provide a year of maternity leave, with the option to convert to shared parental leave to enable parents to share care, while the EU minimum maternity leave is just 14 weeks. The right to request flexible working for all employees was introduced to the UK in the early 2000s, while the EU agreed rules only recently and will offer the right to parents and carers only. The UK introduced two weeks’ paid paternity leave in 2003, while the EU has only recently legislated for that. Those facts show that we are very capable of ensuring good standards here in the UK.
Ms Ghani
I am moving forward. I will give way shortly.
The sunset is not intended to restrict decision making; rather, it will accelerate the review of REUL. The Bill will allow UK Ministers, including those in devolved Administrations, additional flexibility and discretion to make decisions in the best interests of their citizens. It is up to Departments and devolved Administrations what they will do on specific pieces of policy. The Bill creates the tools for Departments. Plans will be approved by a Minister of the Crown or the devolved authority where appropriate, and will be shared when ready, given that this is an iterative process that is still ongoing.
On the specifics policies listed in the amendment, the Government do not intend to remove any necessary equality law rights and protections. With the introduction of the Bill, the Health and Safety Executive is reviewing its retained EU law to consider how best to ensure that our regulatory frameworks continue to operate effectively, and to seek opportunities to modernise its regulations without reducing health and safety rights. The Government have no intention of abandoning our strong record on workers’ rights, having raised domestic standards over recent years to make them some of the highest in the world. Our high standards were never dependent on our membership of the EU. Indeed, the UK provides stronger protections for workers than required by EU law. I listed a few a moment ago.
Several hon. Members rose—
Ms Ghani
On new clause 4, it is right that the public should know how much legislation is derived from the EU and the progress that the Government are making to reform it. This is why on 22 June 2022 we published an authoritative public record of where REUL sits on the UK statute book in the form of the REUL dashboard on gov.uk, which catalogues more than 2,400 pieces of legislation derived from the EU. The information is there; asking that we cut and paste it somewhere else is slightly ridiculous and over-bureaucratic.
Ms Ghani
The Government have no intention of abandoning our strong record on workers’ rights, having raised domestic standards over recent years to make them some of the highest in the world.
The hon. Member for Walthamstow raised the issue of maternity rights. She has done a huge amount of work for women’s rights, as have I. I just find it incredibly unfortunate that both she and I have been defending and promoting women’s rights but that we might create an anxiety based on fiction and not on fact. The repeal of maternity rights is not and has never been Government policy. The high standards of maternity rights that I mentioned earlier have never been dependent on, or even mirrored, those of the EU; we have always gone a lot further.
Taking all that into account, I ask the hon. Member for Ellesmere Port and Neston to withdraw his amendment.
Justin Madders
I have quite a few things to say. First, the rehashing of the old arguments about a lack of scrutiny when the laws covered by the amendment were introduced is, as I said at length this morning, not correct. Even if people think that, the answer is certainly not to make it harder to scrutinise laws now.
Stella Creasy
Will my hon. Friend comment on the irony that the Minister has argued that we need to do this because we were never able to refuse a piece of legislation from the European Union, but at the same time is defending a piece of legislation that will not take back control to Parliament, but will give it to Ministers? Under the Bill, MPs will not be able to refuse or amend a piece of legislation that, like it or lump it, will come from No. 10 rather than Brussels. How is that taking back control?
Justin Madders
It is not taking back control, is it? Anyone who has read the Bill will understand that Parliament’s role will be severely restricted, and that is why the Opposition are worried about what will happen. The Minister cited a long list of measures that strengthened employment rights, many of them introduced under a Labour Government of course. Not all of them came from Europe—the minimum wage is not derived from European law. We want to see such rights protected.
I think the Minister is sincere in her desire to support equality, but her exact words were that there is no intention to remove any necessary equality law. I just question whose definition is used to decide what is necessary or unnecessary. What does that mean? That is why it is so important that we have a proper scrutiny process. If it is decided that no equality laws are unnecessary, they should be removed from the terms of the Bill all together.
Peter Grant
I will ask question that the Minister chose not to hear. The Bill runs to 37 pages, and we do not know how long the Government have taken to put it together, but we know that they had a month between First and Second Reading. In that time, at least 15 mistakes were identified in the Bill, because the Government themselves have tabled 15 amendments to correct mistakes in a Bill of 37 pages. The items of legislation subject to the hon. Gentleman’s amendment run to something like 360 pages. The legislation relating to this amendment alone is nearly 10 times as long as the Bill we are currently considering, yet the Government have so far identified 15 amendments that are required to the Bill. What confidence can we have that 360 pages of revoked legislation will have been properly gone through and assessed, and all properly put back into law in just over a year from now?
Justin Madders
We do not have a lot of confidence. The hon. Member is right to point out the amount of legislation to which just this amendment relates. We are trying to do the Government a favour by attempting to remove various legislation from the Bill. The Minister spoke about an over-bureaucratic process, and we can help with that by removing some regulations from the Bill so that they are retained in law. There is therefore no need to go through any bureaucratic exercise.
The Minister spoke about modernising health and safety law. To me, modernising can mean any number of things, and it does not always mean that law will be improved or rights increased. As we know, the Bill specifically prevents an increase in the legislative burden, and I think a lot of people may say that health and safety is a burden, although I certainly do not think it is; I think it is an absolute essential, but we know how it is characterised in some quarters.
I want to address head-on the claim that we are scaremongering, worrying people and causing anxiety by raising the issue. In order to remove such anxieties, the simple answer is to vote for the amendment, because then there would no question about those rights being protected.
Paul Blomfield
My hon. Friend is right. Had I had the opportunity to intervene on the Minister, and had she accepted my intervention, I would have asked why she failed to respond to the challenge from my hon. Friend the Member for Walthamstow to reassure the House simply by committing on the record that all the legislation listed in our amendments 73 and 76 would be replicated at least in full, and perhaps made better, and not lessened in any way whatsoever. As a starting point, the Minister could commit to put the legislation through before December 2023. Would my hon. Friend welcome that if the Minister were to intervene now to give that commitment?
Justin Madders
I guess that we are not going to get that assurance, and that shows why we were exactly right to table the amendment, and we will put it to a vote. I do not think that even Conservative Members when campaigning for election here put on their literature that they wanted to put workers’ rights at risk. I doubt the people of Grimsby, Orpington or Yeovil actually want to see a reduction in workers’ rights. It is time now to send out that clear message.
Justin Madders
It may be news to the hon. Lady, but we left some time ago. I find that intervention interesting, because it rather suggests that there is an intention to weaken some workers’ rights. We have concerns, and I am afraid that the debate has heightened them.
Stella Creasy
Does my hon. Friend agree that it is worth having concerns when not only do Government Members prioritise removing anything that includes the word “Europe”, but the Minister seems not to know the complete history of maternity and pregnancy discrimination legislation in this country? The European Union held the UK Government to account with the pregnant workers directive in the 1990s because the UK Government sought to water down the protection of women. I am sure that Government Members would support the legislation on maternity discrimination introduced by their colleague, the right hon. Member for Basingstoke (Dame Maria Miller), which sought to move things forward, but we have not seen progress on that from the Government.
Ministers seem not to be fully aware of the history of European legislation when it comes to maternity rights and pregnancy discrimination; there has been a lack of action in response to proposals from Government Members; and we now have a piece of legislation that deletes rules simply because they have the word “Europe” in, with no guarantee of what comes next. Given all that, we understand why organisations such as Pregnant Then Screwed are campaigning on maternity and pregnancy discrimination. It is happening now, under this Government, and the Government are doing very little about it.
Justin Madders
I thank my hon. Friend for her intervention. I think there was a question in there somewhere. I agree with the general point that the fight for equality does not stop. It is always ongoing, and we have to look forward and ask ourselves what kind of country we want to be now that we have left the European Union. Do we want stronger workplace rights? Do we want equality in the workplace? Do we want to end discrimination? If we agree with those things, and certainly the Opposition do, the way to guarantee that we at least maintain the status quo is to vote for the amendment. My constituents will be considerably poorer over the next few years as a result of the economic decisions made by the Government. I do not want them to be poorer in rights as well, and that is why I will press the amendment to a vote.
Brendan O’Hara
Very briefly on new clause 4, it is extremely disappointing that the Government have dismissed what I believe was an easy opportunity to show that they were listening to genuine concerns that have been brought before the Committee. The information may be out there, but the fact that it is so difficult to find and has been described as incomprehensible by a qualified solicitor acting on behalf of trade unions should raise some concerns within Government. It really is not good enough to say, “It’s there. You just have to find it.”
All Governments have a duty to make things as transparent as possible. Now that the Government have been alerted to the fact that the information is incomprehensible, their casual dismissal of such fears as ridiculous does not bode well for those in the Opposition and outside the Committee who think we are on a one-way track to deregulation and the diminution of workers’ rights.
Question put, That the amendment be made.
Alex Sobel (Leeds North West) (Lab/Co-op)
I beg to move amendment 74, in clause 1, page 1, line 9, at end insert—
“(2A) Subsection (1) does not apply to the following instruments—
(a) The REACH Regulation and the REACH Enforcement Regulations 2008,
(b) The Conservation of Habitats and Species Regulations 2017,
(c) The Conservation of Offshore Marine Habitats and Species Regulations 2017,
(d) The Urban Waste Water Treatment (England and Wales) Regulations 1994,
(e) The Water Resources (Control of Pollution) (Silage, Slurry and Agricultural Fuel Oil) (England) Regulations 2010,
(f) The Bathing Waters Regulations 2013,
(g) Water Environment (Water Framework Directive) (England and Wales) Regulations 2017,
(h) The Reduction and Prevention of Agricultural Diffuse Pollution (England) Regulations 2018 (also known as the Farming Rules for Water),
(i) The Marine Strategy Regulations 2010,
(j) The Marine Works (Environmental Impact Assessment) Regulations 2007,
(k) The Infrastructure Planning (Environmental Impact Assessment) Regulations 2017,
(l) The Plant Protection Products Regulations 1107/2009,
(m) The Sustainable Use Directive Regulation (EC) 396/2005,
(n) The National Emission Ceilings Regulations 2018,
(o) Invasive Alien Species (Enforcement and Permitting) Order (2019),
(p) Directive 2010/63 on the protection of animals used for scientific purposes,
(q) Directive 1999/74 laying down minimum standards for the protection of laying hens,
(r) Regulation 139/2013 laying down animal health conditions for imports of certain birds into the Union and the quarantine conditions thereof, and
(s) The Welfare of Animals (Transport) (England) Order 2006.”
This amendment would exclude certain legislation which provides for environmental protections from the sunset in subsection (1).
The Chair
With this it will be convenient to discuss amendment 77, in clause 15, page 17, line 5, at end insert—
“(1A) Subsection (1) does not apply to the following instruments—
(a) The REACH Regulation and the REACH Enforcement Regulations 2008,
(b) The Conservation of Habitats and Species Regulations 2017,
(c) The Conservation of Offshore Marine Habitats and Species Regulations 2017,
(d) The Urban Waste Water Treatment (England and Wales) Regulations 1994,
(e) The Water Resources (Control of Pollution) (Silage, Slurry and Agricultural Fuel Oil) (England) Regulations 2010,
(f) The Bathing Waters Regulations 2013,
(g) Water Environment (Water Framework Directive) (England and Wales) Regulations 2017,
(h) The Reduction and Prevention of Agricultural Diffuse Pollution (England) Regulations 2018 (also known as the Farming Rules for Water),
(i) The Marine Strategy Regulations 2010,
(j) The Marine Works (Environmental Impact Assessment) Regulations 2007,
(k) The Infrastructure Planning (Environmental Impact Assessment) Regulations 2017,
(l) The Plant Protection Products Regulations 1107/2009,
(m) The Sustainable Use Directive Regulation (EC) 396/2005,
(n) The National Emission Ceilings Regulations 2018,
(o) Invasive Alien Species (Enforcement and Permitting) Order (2019),
(p) Directive 2010/63 on the protection of animals used for scientific purposes,
(q) Directive 1999/74 laying down minimum standards for the protection of laying hens,
(r) Regulation 139/2013 laying down animal health conditions for imports of certain birds into the Union and the quarantine conditions thereof, and
(s) The Welfare of Animals (Transport) (England) Order 2006.”
This amendment would exclude certain legislation which provides for environmental protections from the power to revoke without replacement in subsection (1).
Alex Sobel
We now come to the impact of the Bill on laws that fall within the remit of the Department for Environment, Food and Rural Affairs. The Government’s dashboard lists only 570 laws that DEFRA identified as falling in scope of the Bill; that figure alone would make DEFRA the most heavily impacted Department in Government. However, we understand that DEFRA officials have privately revealed that more than 1,000 individual laws are at risk of being revoked by the Bill’s sunset clause. How do the Government plan to resource DEFRA to enable officials to properly examine each of these laws in the time remaining before the sunset sweeps them away?
The Department is already beset by delay and overwhelmed by consultation responses. The supposed Government priorities of environmental action and animal welfare are long past their due dates; on 31 October, for example, the Government missed a legal deadline to publish environmental targets. Instead of clogging up the entire Department with months of pointless work reviewing lists of laws that no one wants to drop, the Government should prioritise their environmental commitments in the Environment Act 2021 and the 25-year environment plan, including the actions and policies necessary to deliver nature’s recovery by 2030.
The sample of 19 laws listed in these amendments cover a vast range of important policy areas about which the public feel passionately. They include animal welfare, water quality, the treatment and discharge of sewage, the protection of wildlife, the safe use of chemicals and pesticides, the protection of human health from the impacts of air pollution, the use of animals in scientific testing and the prevention of the spread of animal diseases, such as the bird flu that is devastating poultry businesses and our precious wild bird populations. The regulations listed in amendments 74 and 77 should therefore be seen as a non-exhaustive list of the key examples of law that it is vital to retain to maintain standards. The regulations listed in the amendments represent some of the most prominent environmental protections, but many potentially vital but not always easily identifiable protections will remain at risk.
A definitive list of environmentally important measures does not exist. One could say that the Government have been naughty by nature, but I would not do that. However, we know that it is even more extensive than the comparable list of the retained EU law that provides critical protections for workers’ rights and conditions, which we have debated in relation to amendments 73 and 76. The inventory of workers’ rights legislation is shorter and more easily identified, so there are important differences between the three domains of rights and protections highlighted by our amendments.
The environmental retained EU laws covered by the Bill include major protections that we rely on for clean air, clean water and safe food, as well as providing crucial safeguards for a struggling natural world. Under the Bill, critical environmental protections face the prospect of being revoked without replacement or replaced by weaker regulations, because of the extremely limited time available to consider and draft workable replacements before the application of the sunset clause, and because of the lack of parliamentary oversight and public consultation—those are the focus of other amendments.
The Government have said that they are committed to maintaining environmental protections. For instance, the former Business Secretary, the right hon. Member for North East Somerset, said that
“the Government is committed to maintain all the environmental protections that currently exist and met a number of the environmental lobby groups to confirm this”.
I will go into a little more detail about how we believe the Bill will completely undermine those commitments and place at risk the safety of chemicals.
REACH stands for the registration, evaluation, authorisation and restriction of chemicals. Under the European Union (Withdrawal) Act 2018, the EU REACH regulation was brought into UK law on 1 January 2021 and is now known as UK REACH, but the UK and EU REACH regulations operate independently from each other. Most industries must therefore comply with both sets of regulations if they want to trade in both the UK and the EU. Furthermore, UK REACH regulates only chemicals placed on the market in GB, and, under the terms of the Northern Ireland protocol, EU REACH continues to apply in Northern Ireland.
The HSE website explains that REACH is
“a regulation that applies to the majority of chemical substances that are manufactured in or imported into Great Britain (GB)…This can be…A substance on its own…A substance in a mixture, for example ink or paint”
or a
“substance that makes up an ‘article’—an object that is produced with a special shape, surface or design, for example a car, furniture or clothes.”
The chemicals legislation in the amendments works closely with the 2008 classification, labelling and packaging of chemicals regulations, which are about the responsibility for identifying and communicating hazardous properties of chemicals. That legislation also works with other chemicals regulations listed on the Government dashboard, such as the Toys (Safety) Regulations 2011 and the Cosmetic Products Enforcement Regulations 2013, which restrict the use of certain chemicals in those products.
REACH places restrictions on the use of more than 2,000 harmful chemicals on which it has taken more than 13 years to legislate at EU level. That has helped to drive innovation in the development of safer alternatives and delivered considerable benefits for our health and environment. Lifting or weakening those restrictions could result in the import of everyday products—from sofas and paint to cosmetics and toys—that contain chemicals that are linked to cancer or affect intellectual development, and that are restricted in the EU but sold in other parts of the world.
The UK was one of the driving forces behind the creation of EU REACH in 2006. That was acknowledged during proceedings on the Environment Act by the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Taunton Deane (Rebecca Pow), who said that
“we were instrumental in designing the whole process in the first place, which we kicked off during our presidency in 1990.”––[Official Report, Environment Public Bill Committee, 19 November 2020; c. 598.]
Perhaps the Minister who is with us today will argue that revoking REACH would nevertheless realise Brexit opportunities. However, businesses are not asking for the revocation of REACH; quite the reverse.
Last week, the chief executive officer of the Chemical Industries Association said:
“We are not in the market for any regulatory bonfire”.
Far from helping to drive economic growth—that is the intention behind the Bill—throwing UK rules into doubt will create uncertainty and instability for businesses, and it will very likely deter investment. Businesses will essentially be left with three costly options: to comply with two regimes at once; to end exports to the EU; or to remain aligned to EU standards, in which case why attempt to deregulate UK REACH?
If Ministers think that the Bill is needed to provide the flexibility to adapt the regulations to a UK context, they seem not to realise that legislative powers for updating and adapting REACH for a UK context already exist under schedule 21 of the Environment Act. Those Environment Act powers include important safeguards for public health and the environment that the Government have not necessarily thought to include in the Bill. Furthermore, work to review and adapt REACH to a UK context has been ongoing pre and post EU exit. The Bill will pointlessly divert that work. For example, we are still waiting for a UK chemicals strategy, which was first promised in the 25-year environment plan more than four years ago.
Without a strategy, the various parallel Department for Environment, Food and Rural Affairs reviews lack strategic direction. A strategy is urgently needed to set out much-needed measures to improve the regulation to address our growing chemical pollution crisis. Why does REACH need the amending powers in the Bill, unless it is to deregulate and to lower standards? The hon. Member for Taunton Deane previously assured us that we would maintain
“high standards of protection for the environment, consumers and workers”
while having
“the autonomy to decide how best to achieve that for Great Britain.”––[Official Report, Environment Public Bill Committee, 19 November 2020; c. 598.]
The status quo in the Environment Act already does that, but the Bill could only be designed to usher in low environmental standards.
Labour tabled an amendment to provide a non-regression mechanism to schedule 21 powers in the Environment Bill. The response from the hon. Member for Taunton Deane was that there was no intention to regress. She pointed to proper safeguards in the powers to ensure that, including protected provisions
“that cannot be changed…relating to the fundamental principles of REACH”.––[Official Report, Environment Public Bill Committee, 19 November 2020; c. 598.]
Those principles include core principles of good chemicals regulation such as “no data, no market” and the precautionary principle. It is difficult not to see the “malign opportunities” that she rejected when she highlighted the safeguards in the powers two years ago. If the aim is a sensible review and updating of our laws, the Government should allow her Department to get on with it.
We already know that there is a serious lack of capacity and expertise in the HSE to do its job. That has resulted in declining safety standards on chemicals in the UK. A recent NAO review found that a lack of operational capacity and loss of data is having a negative impact on HSE’s ability to assess risks and carry out its work, and that it would not be able to achieve its long-term objectives unless that were addressed. How can the Government even contemplate piling even more work on to the HSE’s already overstretched workforce by requiring it to review and rewrite the retained EU law elements of our chemicals regulation?
On top of that, Ministers seem to completely ignore the additional burden on UK business. The pressure on HSE already results in UK REACH considering far fewer protections for health and the environment from harmful substances. For example, the UK has initiated only two restrictions on hazardous substances compared with the five that have been implemented in the EU since UK exit, and a further 20 are in the EU pipeline. Specifically, it has rejected 10 protections that have been targeted by its European counterpart. That includes a restriction on concentration limits for eight polycyclic aromatic hydrocarbons used as infill and in loose form in synthetic football pitches and playgrounds.
Alex Sobel
You will have to intervene if you want me to say it again. Those chemicals are linked to an increased cancer risk, putting our children’s health at risk.
The protective gap between the UK and the EU could become a chasm over the years ahead as the EU takes forward its chemicals strategy for sustainability. That is likely to result in the dumping of harmful chemical products on the UK market, with the divergence harming UK businesses.
There is a severe lack of chemical safety data. This is the central challenge of a separate, stand-alone system and it still has not been resolved. Deadlines for companies to submit vital safety data on the UK market are due to be put back for the second time, while the chemical safety database will not be complete for eight or nine years. The Government’s own latest figures estimate that the chemicals industry faces £2 billion of post-Brexit red tape—twice the cost of initial estimates. During proceedings on the Environment Act, Labour pushed for a minimum standard of protection under UK REACH. We have major concerns that the UK system is already considerably weaker than EU REACH, and the Secretary of State has taken sweeping powers to further reduce the level of protection for the public and environment from hazardous chemicals.
I will now turn much more briefly to other important environmental protections, a sample of which are listed in the amendments. The Government have been dragging their heels on protecting our animals for years, with lots of press releases but little action. Many of the animal welfare measures in the last Queen’s Speech were lifted directly from Labour’s animal welfare manifesto, but the Government have repeatedly stalled and delayed on taking through Parliament the limited selection that they have so far committed to, such as the missing-without-a-trace Animal Welfare (Kept Animals) Bill and the unkept promises to ban the imports of fur and foie gras.
We can have little confidence in this Government’s commitment to animal welfare. Their manifesto promised not to compromise on Britain’s high standards in trade deals, but the Australian trade deal and the precedent it has set risk bulldozing through our standards for animal welfare and environmental protections as well as impoverishing our farmers. As the Committee heard from David Bowles of the RSPCA, there are 44 individual pieces of animal welfare legislation that could be dropped or weakened because of the Bill.
Amendments 74 and 77 list an illustrative sample of just four of these: directive 2010/63 on the protection of animals used for scientific purposes; directive 1999/74 laying down minimum standards for the protection of laying hens; regulation 139/2013 laying down animal health conditions for imports of certain birds into the Union and the quarantine conditions thereof; and the Welfare of Animals (Transport) (England) Order 2006.
As we have explained, the whole purpose of the Bill is to weaken and reduce regulations that ideological purists in the Conservative party see as an irredeemable burden. However, directive 2010/63 sets standards for the accommodation and care of animals used for research, and lowering these standards would increase suffering among lab animals. Article 14 of the directive requires, where possible, animal experiments to be carried out under general or local anaesthesia. The removal of this requirement could greatly increase the pain and suffering of animals undergoing experiments.
Directive 1999/74 banned the use of barren cages for laying hens. Weakening it could change acceptable cage standards for laying hens, allowing the expansion of battery chicken farming through the back door. Regulation 139/2013 stops the importation of wild-caught birds for the pet trade. Its introduction across the EU in 2005 reduced the volume of wild bird trading to about 10% of its former level. In addition to increasing the risk of the importation of wild bird diseases such as avian flu, weakening the regulation could breathe new life into the trade in wild-caught birds, and renewed UK demand could provoke further devastation of wild bird populations in South America, Africa and Asia.
Finally, the Welfare of Animals (Transport) (England) Order 2006 set basic welfare conditions for the live transportation of animals. Weakening the order could see UK welfare standards for animal transportation fall below those of our neighbours in the EU. It would also mark the complete reversal of the UK Government’s plans to increase welfare standards in transportation following Brexit—already stalled through the halting of the Animal Welfare (Kept Animals) Bill.
I turn to the conservation of rare and endangered wildlife and the precious habitats inhabited by vulnerable species. The Conservation of Habitats and Species Regulations 2017 and the Conservation of Offshore Marine Habitats and Species Regulations 2017 include a crucial provision preventing any development that could adversely affect the integrity of our most precious nature sites. We have already seen this Government threaten our areas of outstanding natural beauty through scrapping protections when they fall in a so-called investment zone. Now, with this Bill, we face the prospect of a much more widespread weakening to allow unsustainable development to go ahead on or around important nature sites, even when it would cause damage to them. This damage could include more pollution reaching water habitats and the shrinking of terrestrial habitats. Nationally and internationally important nature sites on land and at sea in England, including Ashdown Forest, Braunton Burrows and Dogger Bank, will become more vulnerable.
Amendments 74 and 77 list the following laws that are part of the legal framework protecting our waterways from pollution: the Urban Waste Water Treatment (England and Wales) Regulations 1994; the Bathing Waters Regulations 2013; the Water Environment (Water Framework Directive) (England and Wales) Regulations 2017; the Water Resources (Control of Pollution) (Silage, Slurry and Agricultural Fuel Oil) (England) Regulations 2010; and the Reduction and Prevention of Agricultural Diffuse Pollution (England) Regulations 2018. Those regulations provide the legislative underpinning for efforts to protect and clean up our rivers.
The Urban Waste Water Treatment (England and Wales) Regulations 1994 are important for keeping up the pressure on water companies and developers to provide sufficient primary waste water infrastructure to meet the needs of urban areas, especially when they are growing. If those regulations end up weaker as a result of the Bill, there will be an increased risk of insufficiently treated waste water from urban areas spreading pollution across the fresh water network. Weakening the Water Environment (Water Framework Directive) (England and Wales) Regulations 2017 and the Bathing Water Regulations 2013 would undercut the measures that drive frontline organisations, especially water companies, to take holistic action to improve water quality.
Stella Creasy
I pay testament to my hon. Friend for working through that list, and for introducing us all to the concept of killer shrimp. I am sure that we will have nightmares about them, as we might about the legislation and the Committee sittings.
I hope that we can find common ground in Committee, because many of us have had to deal with the consequences of animal welfare legislation in our constituencies, particularly in relation to avian flu. As a local MP, I never thought that I would say regularly, “Don’t touch the ducks!” but that has become a refrain in my community because of problems we have had with avian botulism and avian flu. That is why I am convinced that it is important we parliamentarians should understand legislation—just as we should the Schleswig-Holstein question—and the intricacies and details of the negotiations behind the laws that protect us.
I see that Regulation (EU) No 139/2013, which lays down the animal health conditions governing the importation of birds and their quarantine conditions, is up for deletion under the Bill. I know, however, that in Bosworth last year, Wealden earlier this year, and recently in Clwyd West, members of the Committee had the same experience and I have of bird flu in their constituency. They know about the importance of the regulation. We recognise the concern that if that regulation is simply torn up and no commitment is made to it, the means of addressing that very live issue in our communities is at stake. Consider the work that is done to protect our bird life, our wildfowl and other wildlife. In particular, consider the avian influenza prevention zones, which have had an impact in many constituencies across the House. All that work is underpinned by that EU regulation, so the idea of deleting it when we have such a live issue with bird flu in the UK causes concern.
My hon. Friend the Member for Leeds North West referred to the National Emission Ceilings Regulations 2018. Many of us will have seen the horrific case this week of the child who died in a damp property, but we also remember Ella Kissi-Debrah’s death in February 2013, which was found to be caused by acute respiratory failure and severe asthma. As MPs we deal with such issues—damp, mould, air quality—and complaints about them daily. The retained European law has underpinned the regulations and standards to which we have held our local authorities and, indeed, our national Government. Nobody is saying that that is why we should not have left the EU—that has happened. We are simply saying that deleting laws on such live issues without making a commitment to replace them creates uncertainty at a time when our constituents are asking for action on air quality and avian flu.
Anyone who has been an MP for any length of time also knows that when animal welfare issues come up in the House, our inboxes explode. It is an old chestnut. The Bill deletes all the protections offered on animal welfare, and brings back something that I have not seen since I was a teenager—not terrible ’90s fringes or blue lipstick, but live animal exports. I never thought that we would have to debate that again in the House, because I thought that there was agreement that we would not see that practice return. The Bill, however, deletes the very laws that made that debate go away and made clear what we wanted to see as a country. The Minister may say to us that the Government have no plans to remove such laws, but at the moment, the only plan on the table is the plan to remove them. That is the challenge here.
My hon. Friend the Member for Leeds North West did an incredible job in setting out the range of laws at risk. Supporting the amendment would be the first step towards taking 3,500 laws, possibly more, that would need to be rewritten, off the table. There is common agreement. Perhaps I am naive, but I have yet to meet anyone in this place who wants to reinstate live animal exports, or battery farming for hens. Those are settled matters, and yet we will now have to find parliamentary time for them, unless we can pass the amendment and take those issues off the table.
I am sure that there were firm words among Ministers after the Statutory Instrument Committee that sat yesterday. My hon. Friend talked about REACH and the chemicals regulations. Those chemicals regulations, which were part of another piece of legislation, were not known to DEFRA officials. The Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Taunton Deane (Rebecca Pow) said she knew that at least 800 pieces of legislation were up for grabs, but what that means in terms of the ability to do business next year, let alone in the years to come, is questionable. Taking major pieces of legislation off the table, including some that are not on the dashboard but we know will be affected by the Bill, will make the Government’s life simpler.
I plead with the Government to see sense, if not for the ducks in my local park, Lloyd Park, which are struggling, then for the hens and sheep that were being exported when I was a mere 15-year-old. Involvement in politics was then just a glint in my eye, but I was getting up early to shout at the docks. Those issues are not contentious, because there is a commitment to animal welfare across the House. Why would we put them up for grabs? Why would we raise the prospect of reducing our standards, or having to spend parliamentary time to rewrite regulations on them? Why not take those regulations off the table and move on? The point of the amendments is to take off the table the things that we all thought were not contentious. I suspect that our environmental colleagues who are listening in will hear this loudly.
If the Government do not do this, they are sending a clear message that they want to put these issues up for grabs, revisit old arguments, and water down animal welfare and conservation regulations, with all the chaos that will come with that. So many laws such as planning laws rest on those regulations. That is quite apart from the fact that colleagues in DEFRA are having nightmares about the effect on those 800 laws.
I hope that the Minister will give us some more positive news. She did not really take up my offer to suss out which employment protections the Government will absolutely keep, so that my constituents could be confident in supporting her, but perhaps she will do so on the environmental protections, and will reassure us that the ducks are safe and the killer shrimps will be defeated.
Ms Ghani
Hon. Members will not be surprised to hear that I will reject amendments 74 and 77. It has been an absolute joy to hear a new shadow Minister, the hon. Member for Leeds North West, who shadows DEFRA. I have a couple of powerful responses to make to his points, but I will need time to go through them; as he knows, I am not a DEFRA Minister.
I do not understand why the Opposition are trying to create a huge amount of fear. Fundamentally, that comes from their standpoint of being part of the anti-Brexit brigade. We are simply trying to finally finish the process finally. As Members know, because I have said it many times, the Bill is enabling legislation. The measures in it, including the sunset, will provide for UK and devolved Ministers to make decisions to review, amend or repeal their REUL as they see fit. Where Ministers see fit, they have the power to preserve REUL that would otherwise be in scope of the sunset. That includes Ministers in the devolved Governments. There is no need to have specific exemptions. I am responding directly to amendments 74 and 77.
Secondary REUL that is outdated and no longer fit for purpose can be revoked or replaced. Such REUL can also be restated to maintain policy intent. As such, there is simply no need for any carve-outs for individual Departments, specific policy areas or sectors. REUL across all sectors of the economy in the UK is unfit for purpose, and it is right that it be reviewed and updated equally in all sectors and in the same timeframe.
A point was made about scrutiny. Departments will be expected to develop and deliver plans that outline their intention for each piece of retained EU law. The Brexit Opportunities Unit team will work with Departments to draw up those delivery plans and to ensure that the legislative process proceeds smoothly. The delivery plans will be subject to scrutiny via the internal Government or ministerial stock-take process. More information will follow, including on how to factor such processes into statutory instrument timetables.
There is no doubt that this is a considerable amount of work, but we do not enter politics or Government to be work-shy. The work will definitely be done. The sunset empowers all to think boldly about these regulations, and provides an impetus for Departments to remove unnecessary regulatory burdens.
Turning to amendment 77, the Bill will allow Departments to unleash innovation, and will propel growth across every area of our economy. The power in clause 15 to revoke or replace is an important, cross-cutting enabler of reform. Exempting regulations associated with environmental protections from the power will reduce the genuine reform that the Bill sets out to deliver. The UK is a world leader when it comes to environmental protection. In reviewing our retained EU law, we want to ensure that environmental law is fit for purpose and able to drive improved environmental outcomes. We remain committed to delivering on our legally binding target to halt nature’s decline by 2030. The Bill will not alter that. That is why we do not consider the proposed carve-out for environmental regulations to be necessary.
Alex Sobel
The Minister’s response reflects the scale of the task at DEFRA. Just last week, a question was asked of DEFRA on the topic of pesticide regulations. The Minister for Food, Farming and Fisheries responded:
“We are currently working through Defra’s REUL to identify the actions we intend to take before the sunset date.”
I think the scale of the task is reflective of what is before DEFRA. From what the Minister has said, I am looking forward to this huge army of new civil servants who are going to arrive in DEFRA and do all this work before December 2023. We are just trying to retain and carve out some of the most important pieces of legislation—the ones the public will be most concerned about in terms of the regulation that they see as protecting them in their everyday life.
Paul Blomfield
My hon. Friend will be aware that the former Secretary of State for DEFRA, the right hon. Member for Camborne and Redruth (George Eustice), bitterly fought the right hon. Member for North East Somerset (Mr Rees-Mogg) in Cabinet in opposition to the sunset clause, and was worried about the impact on the Department and its capacity to deliver on it. Does my hon. Friend think that is because the right hon. Member for Camborne and Redruth had real concerns, or is it, as the Minister suggested, because he was workshy?
Alex Sobel
It was interesting to see the proclamations by the right hon. Member for Camborne and Redruth on various aspects. I mentioned the Australia trade deal in my speech, and last week the right hon. Member was very derogatory about the terms of that trade deal for the UK and UK farmers. We are now hearing from him what really happened behind the scenes, and we are going to see an unfurling of some of the work that took place and the disagreements around the Cabinet table. I do not want to prejudge the speech of my hon. Friend the Member for Ellesmere Port and Neston, but we might hear about some of the consequences of the Government carrying on with this Bill. We might see some of the same commentary as that from the right hon. Member for Camborne and Redruth from other Members who have left ministerial offices. We have had a lot of churn recently, have we not?
Stella Creasy
Does my hon. Friend think this is also a live issue for current DEFRA Ministers? In the Delegated Legislation Committee yesterday on the Persistent Organic Pollutants (Amendment) (EU Exit) Regulations, the Minister was not able to say what would happen with them, given that the regulations are based on legislation that is not on the dashboard in some areas and on it in others. She could not give a commitment as to what would happen to those regulations post 2023. As DEFRA has most of the regulation, does he think that DEFRA Ministers probably have the most to offer in terms of understanding why taking some of these regulations off the rule book altogether would make life a lot simpler for them?
Alex Sobel
I do not want to rehash the debate we have already had, but we were talking about maybe as many as 500 or more regulations not currently on the dashboard, with effects that we cannot predict. I would not want to be a Minister in the Government staring down the line at that, but that is exactly what Ministers in DEFRA are doing, so they have my sympathy in that regard.
The 20 sets of regulations that we want to carve out represent a small fraction of the canon of DEFRA legislation that the Bill could sweep away at the end of next year or leave at risk of being weakened. Amendments 74 and 77 list only a tiny sample of the protections that could be swept away because of the reckless and incompetent approach the Government have chosen to take with this Bill. There are hundreds of items of retained environmental law, in a complex web sitting within and alongside domestic legislation, some with significant case law attached to them. The Minister is making the argument that the amendments are unnecessary, but I am looking to the future progress of the Bill and seeing how that will unfurl and how many of these Bills will potentially be swept away, whether by the present set of Ministers or those who might follow.
Question put, That the amendment be made.
Justin Madders
I beg to move amendment 75, in clause 1, page 1, line 9, at end insert—
“(2A) Subsection (1) does not apply to the following instruments—
(a) The Civil Aviation (Denied Boarding, Compensation and Assistance) Regulations 2005,
(b) Regulation (EC) No 1371/2007 of the European Parliament and of the Council of 23 October 2007 on rail passengers’ rights and obligations,
(c) The Consumer Rights (Payment Surcharges) Regulations 2012,
(d) The Electrical Equipment (Safety) Regulations 2016,
(e) The Toys (Safety) Regulations 2011,
(f) The Control of Asbestos Regulations 2012,
(g) The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015,
(h) The Cocoa and Chocolate Products (England) Regulations 2003,
(i) Commission Regulation (EU) No 748/2012 of 3 August 2012,
(j) The Representation of the People (England and Wales) Regulations 2001, and
(k) The Bauer [C-168/18] and Hampshire [C-17/17] judgements.”
This amendment would exclude certain retained EU law which provides for consumer protections from the sunset in subsection (1).
The Chair
With this it will be convenient to discuss amendment 78, in clause 15, page 17, line 5, at end insert—
“(1A) Subsection (1) does not apply to the following instruments—
(a) The Civil Aviation (Denied Boarding, Compensation and Assistance) Regulations 2005,
(b) Regulation (EC) No 1371/2007 of the European Parliament and of the Council of 23 October 2007 on rail passengers’ rights and obligations,
(c) The Consumer Rights (Payment Surcharges) Regulations 2012,
(d) The Electrical Equipment (Safety) Regulations 2016,
(e) The Toys (Safety) Regulations 2011,
(f) The Control of Asbestos Regulations 2012,
(g) The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015,
(h) The Cocoa and Chocolate Products (England) Regulations 2003,
(i) Commission Regulation (EU) No 748/2012 of 3 August 2012,
(j) The Representation of the People (England and Wales) Regulations 2001, and
(k) The Bauer [C-168/18] and Hampshire [C-17/17] judgements.”
This amendment would exclude certain legislation which provides for consumer protections from the power to revoke without replacement in subsection (1).
Justin Madders
Now that we are done with the forces of nature, I will take Government Members to the edge of panic again with more of what they will consider to be scaremongering—this time, about consumer rights. We are not trying to worry anyone; we are just trying to protect the rules that are already in place.
Amendment 75 prevents key consumer regulations and legislation from falling off a legislative cliff edge in a little over a year’s time, and amendment 78 removes them from the scope of the powers to revoke without replacement in section 15 of the Bill. To be clear, neither of the amendments is designed to tie the hands of the Government; in fact, they could be seen as doing the opposite. Leaving barely a year to process all the retained EU law could be seen in itself as tying the hands of the Government, although they seem very comfortable with that at the moment. The amendments remove the hard deadlines for these key pieces of legislation, preventing them from being removed without replacement or being watered down. That will free the Government to find ways to improve upon these rights in a considered manner, and—as was argued during the referendum campaign—make the most of our freedom to move beyond EU regulations to better and more appropriately protect consumers’ rights. I cannot see how Conservative Members could oppose these amendments, but I have a feeling that we may again be disappointed.
Paragraphs (a) to (k) of amendment 75 deal with only a fraction of the consumer rights that come under the scope of the Bill. However, these are some of the most important rights to our consumers and constituents, and their presence on the list of rights subject to the sunset date will no doubt cause unnecessary uncertainty. Taking a lead from my hon. Friend the Member for Leeds North West, I will go through some of the legislation we are seeking to protect—I will probably not take quite as long as he did, but I will do my best.
First, the Civil Aviation (Denied Boarding, Compensation and Assistance) Regulations 2005 enact EU regulations that uphold rights in the commercial aviation sector. Its provisions include the right to compensation when flights are cancelled or delayed or boarding is denied, and giving priority to passengers who have a disability. I ask the Minister: are those rights meaningless red tape? They are important protections for Britain’s air passengers and should be maintained, not under the threat of being sunsetted in a year’s time without any replacement.
Of course, it is not just the protection of air passengers’ rights that falls under that sunset date. Key protections for Britain’s rail passengers are also included in the retained law that implements regulation 1371/2007 of the European Parliament and the Council. It contains provisions that impact all aspects of taking a train in the UK, including, rather topically—I am sure many Members will be aware of this—stipulations on passengers’ right to receive compensation, and the amount of compensation they are entitled to, when a train is delayed or cancelled in the form of the Delay Repay system. That system is probably getting more visits than the Government’s retained law dashboard at the moment. The regulation also contains important rights to accessibility assistance at platforms and on train services, maintaining a lifeline for many of the people who rely on that form of transport. Why can the Government not accept that those rights should be retained?
Paragraphs (c), (d) and (e) of amendment 75 are all examples of how retained EU law protects the rights of our high street shoppers on a daily basis. The Consumer Rights (Payment Surcharges) Regulations 2012 prevent shops from imposing surcharges that go beyond the coverage of costs; the Electrical Equipment (Safety) Regulations 2016 are technical and sweeping, yet are crucial in protecting consumers from unsafe electrical equipment by setting standards for the testing of products and the voltages of appliances; and the Toys (Safety) Regulations 2011 impose minimum safety standards on products sold for children’s consumption.
The amendment does not only name consumer protections that maintain high-quality standards on products and services; it also deals with how to deal with disputes under the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015. Under those regulations, consumers have a clearer route for out-of-court settlements when they have a dispute over a product. In essence, they facilitate, through an impartial body, the ability to claim compensation. Given the amount of litigation that this Bill will generate, it is a good idea to continue to divert people away from the court process if an alternative is possible.
Stella Creasy
We come to a list of things that surely leads Members of different parties to think, “Of course we’re going to retain these pieces of legislation. Why even give it a second glance?” I am absolutely confident that Government Members will say to us, “Don’t scaremonger. Of course people will still be able to get compensation if their flight is delayed.” The trouble is that we do not have from the Government anything like a list of what will exist post 2023. That is the challenge, as these are probably the pieces of legislation that our constituents rely on most of all, because they deal with people’s everyday transactions. They are matters about which people get extremely agitated, because it feels incredibly unfair if someone’s flight is delayed or they suddenly discover that they have bought something that is faulty. People expect to be able to get redress as a matter of course.
In a former lifetime, I had the sheer joy of being the shadow consumer Minister. I encourage all Members to come shopping with me—if nothing else, most employers try to get me out of the shop quickly by offering a very good deal by the end of the transaction, because I was involved in writing the Consumer Rights Act 2015. These sorts of requirements shaped that piece of legislation, and they did so with good reason, because where is the partisan argument about the Electrical Equipment (Safety) Regulations 2016? We may disagree about the impact of workers’ rights on our economy—clearly, we do. Government Members did not want to save bank holidays, and that is their call, but surely we all agree that somebody should be able to plug in a toaster and not have it blow up or cause them harm, and that having regulations is not onerous but sets a level playing field. Most businesses, which are good actors, want to be confident that they will not be undercut by somebody selling faulty goods.
I know that the hon. Member for Bosworth will be relieved to hear that the regulations do not cover charging cables for phones and iPads—so they can play as much music as they like. However, they do cover whether goods are of a certain standard. Having goods of a certain standard is surely not something that we want to put up for grabs, because if we do, over the course of the next year—assuming that we find time for all the DEFRA pieces of legislation and for working out whether workers’ rights will be replaced or changed—we will then have to find time to deal with all these pieces of legislation.
Members may feel more strongly about some pieces of legislation than others. As I say, not being able to get a refund when someone has been mis-sold something, or has experienced a delay, is a cause of high concern for many people. Often, it is something that they will come to their Member of Parliament about, so I would not want to be the MP explaining that I had deleted people’s right to compensation and did not know what was going to come next. I would be giving a green light—unusually for some of these companies, because many of them operate with red lights.
Justin Madders
It just strikes me that the idea of someone coming to their Member of Parliament and saying, “This isn’t what we asked for, and we would like a refund,” is what we are dealing with in the Bill. I do not think that many people who voted to leave the European Union voted to remove all the laws that we are talking about.
Stella Creasy
I would certainly be happy to refer them to any consumer champion, because I think they would have a very strong case that they were not getting compensation in reasonable time and in a reasonable format, which is obviously what the Consumer Rights Act—it is a piece of UK legislation, but it echoes the requirements—does.
There are other things on the list, which is not comprehensive but is authoritative—after all, we have been told that that is acceptable—about the sorts of things that surely we should all want to put beyond doubt, such as when people’s pensions are at risk. We have all had cases in our constituencies of pensioners whose pensions were put at risk. They may have worked for companies that went bust, and now they need protection. I absolutely want to take up the challenge about not frightening vulnerable people. The pension protection fund itself would not disappear, because that is part of UK legislation, but the challenge is that the Bauer and Hampshire judgments set out what that fund can do. The issue is not that there would not be someone to whom we could refer our constituents, but let us be clear: if we delete the relevant legislation and do not replace it, that organisation will start to query what it can do to help our constituents. That may mean that they end up with a lower level of compensation.
It could be the same when it comes to people having their flight or train delayed. The Delay Repay claims have given most people a level of certainty and confidence about their travelling, and I think we all want to see that reinforced—we all think people should have a fair deal. Why would we therefore spend parliamentary time rewriting something that works? Why would we put up for grabs the amount that people can be charged for using a debit card, when many of our constituents are trying to use them to manage their finances because there is too much month at the end of their money? Why would we do that?
Why would we again put the content of chocolate up for grabs? Come on. We have seen what happened to Cadbury; we have all tasted the difference. Anyone here knows the limitations of Hershey. Yet here we are again, rewriting laws that we brought in to protect things so that consumers could have confidence and go about their business every day. That is the point about all this. It is not about leaving the EU; that has happened. It is not about an objection to leaving the EU; that debate has happened. It is about an objection to deleting laws we all agree on, and the waste of time that the legislation creates, especially in terms of consumer protection.
Again, I offer the hand of friendship to the Minister, although I am sure she will bite it off with glee at this point in the afternoon. If she can tell us precisely what will replace the regulations listed in the amendment, and commit that our constituents will retain the protection of those standards, she will have my support. That is the purpose of the amendments. If she can tell us what will happen to the Representation of the People (England and Wales) Regulations 2001, she will have our support, because people want that certainty. The parts of EU law to which the amendment relates refer to those bits of everyday life where people do not want the headache of uncertainty. I hope that the Minister will take up that offer, finally, as we consider the third list of regulations.
Now that we have been through some of the laws in question, I hope the Minister’s colleagues understand what is at stake. This might be a process, but we must remember the impact of it and the uncertainty that it creates. There is a risk that Ministers and MPs will sign off a piece of legislation only to find themselves having to explain to their constituents, “Ah yes, I was told that there wouldn’t be a dilution of your rights to compensation, but the Minister came forward with a change and, like with those pesky EU regulations I said I could not amend, the Minister has told me that I’ve got to like it or lump it.” Remember, the Bill does not offer any scope for amendment. I do not think Conservative Members would want to be in that constituency surgery explaining to somebody that, if they have been done over by Mastercard, they have been done over, or that their chocolate will have to taste bitter. That would be a bittersweet conversation.
Ms Ghani
I urge the Committee to reject amendments 75 and 78. The issue of scrutiny has come up again, and I find myself repeating that, as well as the dashboard, Departments will be expected to develop a delivery plan to outline their intention for each piece of retained EU law. I will try to go through each of the points raised to satisfy some of the questions.
A question was raised about electrical equipment and toy safety. Our current product safety framework is largely a mix of retained EU law, domestic law and industry standards. As a result, it can be complex and difficult to understand. The Government remain committed to protecting consumers from unsafe products being placed on the market now and in the future. Although the Bill is unlikely to give us the powers needed to implement a new framework, we hope that the powers in it will make it possible to amend or remove outdated EU-derived regulations and give us the ability to make some changes to reduce burdens for business.
Justin Madders
Can the Minister give us some examples of those outdated regulations?
Ms Ghani
That is the beauty of each Department putting together their delivery plan. Their own teams will be able to put forward the pieces of REUL that they will assimilate, update or remove. That is the beauty of the programme; it works across each Department.
A question was raised about consumer disputes. The Government are committed to a consumer rights framework that protects consumers and drives consumer confidence, while minimising unnecessary cost to business. Core consumer protections, as set out in the Consumer Rights Act 2015, remain unaffected by the REUL Bill. The Government will maintain their international commitments on consumer protection. We will bring forward proposals to address REUL that impacts consumer protection using the powers in the Bill or other available legislative instruments. The UK regime sets some of the highest standards of consumer protection in the world, and this will continue to be the case.
Ms Ghani
As I mentioned earlier, it is up to Departments and devolved Administrations as to what they would do on specific pieces of policy. The Bill creates the tools for Departments. Plans will be approved by a Minister of the Crown—I know that Opposition Members object to that—or a devolved authority where appropriate, and will be shared when ready, given that this is an iterative process that is still ongoing. I therefore ask the hon. Member for Ellesmere Port and Neston to withdraw the amendment.
Justin Madders
I think we got a real mix there of things that the Government intend to continue with, but also—I am particularly concerned about how this relates to the Bauer judgment—things that they do not wish to continue with. But the underlying theme, the stock answer or explanation, was that Departments will put forward their delivery plans in respect of these REULs in due course, and that simply is not good enough.
Stella Creasy
Given that the Minister would not let me intervene on her earlier, I want to clarify that she appeared to give us our first piece of evidence about what the Government intend to do with this Bill, when she said that they do not intend to continue with the Bauer and Hampshire judgments, which require pension protection funds to pay out half the value of people’s pension if their employer goes bust. Does my hon. Friend agree that we have finally seen, for the first time today, what the consequences of this legislation are? That is why we are all so worried: because protection for employees is being withdrawn by this Government. The Minister has just confirmed that—perhaps she wants to intervene to say that that is not the case, although that is what she said, and she does not look like she is about to get up. Does my hon. Friend therefore agree that at least now we have seen why we should all be so worried by this legislation?
Justin Madders
I thank my hon. Friend for that intervention. It has taken us perhaps five or six hours to get to that point. We now finally see why we are right to be concerned about this process, why it is important that we put in proper scrutiny safeguards, and why we want to see certain pieces of legislation exited from the Bill so that they are not lost. Pension protection is an important issue. My predecessor, the late Andrew Miller, did an awful lot in that regard when he represented Ellesmere Port and Neston. An awful lot of people in my constituency have benefited from the Pension Protection Fund. If we are to see a reduction, we will no doubt explore that with the relevant Department. For now, we will do our bit to protect these regulations and the others mentioned in the amendment by pressing it to a vote.
Question put, That the amendment be made.
Ms Ghani
I beg to move amendment 2, in clause 1, page 1, line 10, after “instrument” insert—
“, or a provision of an instrument,”.
This amendment and Amendment 3 provide that the revocation of a provision of an instrument does not affect any amendment made by the provision to any other enactment.
Ms Ghani
As hon. Members know from this morning, the clause is the backbone of the Bill, ensuring that EU-derived subordinate legislation and retained direct EU legislation will all be removed or reformed by 31 December 2023. Specifically, the amendment will ensure that the Bill’s sunset does not impact on amendments to primary legislation inserted by retained EU law that is now in scope of the sunset. As drafted, the Bill provides for that to be the case only where an entire instrument is revoked by the sunset. This Government amendment provides that the revocation of a particular provision of an instrument does not affect any amendment made by the provision to any other enactment. Sunsetting amendments to primary legislation is not our aim with the Bill. We clearly rule that out of the Bill’s scope. I ask the Committee to join me in voting for the amendment.
Turning to Government amendment 3, further clarity is required to ensure that, where the preservation power under clause 1(2) has been exercised, it is REUL as it exists at the time of the sunset that is preserved. Without amendment 3, there is a risk that modifications to a piece of REUL made after it has been preserved, but before the sunset date, would unintentionally be subject to the sunset. The amendment will ensure that the modification is also preserved. As such, it is minor and technical but ensures the necessary clarity that REUL is preserved as intended, with necessary amendments or restatements.
Peter Grant
The Government have admitted that, even before we decide on clause 1, three important parts of what the Minister described as a fundamentally important clause need to be amended, because the Government got it wrong. How can we be confident that, in less than a year, 4,000-plus statutory instruments will be amended, revoked or replaced without similar mistakes being identified when it is too late and the defective legislation is already in place, with no other choice but to amend them in a Public Bill Committee?
Ms Ghani
The hon. Gentleman might have been in Parliament longer than I have and might have sat on Committees longer than I have, but it is not unusual to amend pieces of legislation in Committee. I have known that in legislation from many Departments. It is not unusual; it is just the process that we are in.
Ms Ghani
Government amendment 4 clarifies the power to make transitional provisions for the sunset. Transitional provisions are provisions that regulate transition from the existing law to the law as it will be amended by the Bill. For instance, transitional provisions could be made to ensure that laws that fall away after the sunset will continue to apply to certain types of ongoing contracts after the sunset date if the contracts were entered into on the basis of those laws applying. Consequently, the amendment ensures consistency for businesses and citizens following the sunset’s effects. That is highly important, given the role the Bill will play as a key driver for growth. I trust that Committee Members will support consistency and growth for British business and citizens, and I ask them to support these amendments.
Justin Madders
I will not speak for long. Will the Minister explain what the procedure will be, particularly for dealing with amendments to regulations under Government amendment 4? That is important. I think I understood the Minister’s train of thought, but if she could explain what that process will be and what opportunity there will be for parliamentary scrutiny, I would be grateful.
Stella Creasy
The Minister is not allowing questions, so will she provide clarification? It is absolutely normal to have amendments to legislation, but it is not normal to delete all the legislation and then try to amend in a lacuna. Will she clarify whether she recognises that these amendments need to be put forward because the legislation, as currently drafted, is not correct? She will know of other legislation that has had to be drafted—indeed, statutory instruments have come forward. What provision—what backstop or safety net—is in place, should something be deleted and should a change need to be made by this legislation in that absence? Will that law remain on the statute book, or will we simply see potentially thousands of amendments needing to be made but no legislation to be amended? If the Minister could take questions, she could probably reassure all of us on these questions. I do not think they are unreasonable ones to ask—she has raised the point.
Peter Grant
Before the comments from the hon. Member for Walthamstow, the Minister thought she was winning the argument. She said that there was nothing unusual in legislation having to be amended by the Government in Committee. That is exactly the problem. It is not unusual; in fact, it is almost inevitable. It is happening so many times in this 23-clause Bill, which runs to 30-something pages, but we are expected to believe that anything up to 4,000 pieces of legislation can be wiped out and that they will all be properly and adequately replaced, when this Public Bill Committee stage, which is allowing the defects in the original Bill to be corrected, will be removed from all of them. That is why this is such a reckless and cavalier way to go about changing the laws of these islands. We are not talking about one or two pieces of secondary legislation being introduced to replace or amend what was there before. We are talking about thousands of pieces of legislation needing to be enacted to replace a blank set of paper—in order to replace complete anarchy. Does the Minister now understand that that is why, with the best will in the world, the civil servants will not get them all right? If we go ahead with clause 1 and the rest of the Bill, as the Minister insists, there will be defects in the legislation that is put in place. Bits will be missed out that no one wanted to miss out. Businesses will suffer as a result.
Ms Ghani
Another question about scrutiny. Thank goodness that we are having this debate and legislating in the UK, where there is an opportunity to scrutinise and have everything on record in Hansard.
Let me go through the process again. Departments will be expected to develop a delivery plan, which will outline their intention for each piece of retained EU law. They will be supported by the Brexit Opportunities Unit. There will be a huge amount of outreach and stock-take process in place. To go through the process further, the Bill will obviously go from here to Report stage and then to the House of Lords. There will be a huge amount of scrutiny throughout. Once the Bill receives Royal Assent, work on reform will continue in Departments. They will review their retained EU law, prioritise areas for reform and lay statutory instruments where appropriate. That process may include designing policy and services; conducting stakeholder consultations; drafting impact assessments; or supporting individuals who may be impacted by any such reform. That is the level of work that we always conduct when we are legislating.
On the question about the statutory instrument programme, and how the House will have sight, the Government recognise the significant role that Parliament has played in scrutinising instruments to date and are committed to ensuring the appropriate scrutiny of any legislation made under the delegated powers in the Bill. The Bill will follow the appropriate scrutiny procedures as it progresses through Parliament. It is right that we ensure that any reforms to retained EU legislation receive the proper scrutiny from the relevant legislatures and are subject to the proper processes for consultation and impact assessment.
Once the Bill receives Royal Assent, work on reform by Departments will continue. They will review their retained EU law, prioritise areas for reform and lay SIs before Parliament where appropriate. A sifting procedure has been included to ensure that Parliament can assess the suitability of the procedure used for SIs. Parliament can recommend stronger scrutiny procedures as needed. I hope that is thorough enough.
Peter Grant
I do not want to detain the Committee much longer, but I cannot support clause 1. It is not just about me not accepting that this Parliament has the right to take my people out of an international union that they voted to be part of. It is about the fact that even if we accept that there is no way back into the European Union—even if we accept that Brexit has to be a process of substantially distancing ourselves from it—this is not the right way to go about it.
It is perfectly possible, as others have said, to set up a process that allows retained EU law that gets in the way to be revoked, repealed or amended, but that allows good EU law to be maintained and adopted into domestic legislation, without running the risk of having to start from a blank sheet of paper and replace 40-years of legislation in the space of a few months.
The briefing paper to the late Queen’s Speech that the Government produced to set out the background to the Bill talked about using the Bill to assert the sovereignty of Parliament. Well, quite clearly, the Government do not understand that this Parliament never has exerted, and never will exert, sovereignty over the people of Scotland. If the Bill was to progress with clause 1 as it is, it would not be asserting the sovereignty of Parliament; it would be asserting the sovereignty of the Prime Minister and the Government Chief Whip. They will decide what goes in the legislation, they will decide who presents that legislation to Parliament and they will decide what Minister gets the boot if they do not support the necessary changes. That is not about the sovereignty of Parliament; it is about the sovereignty of the Executive—of the Prime Minister and Chief Whip in particular.
If we look at that briefing on the important aspects of the Bill, we see red flags all over the place because it is about short-circuiting the parliamentary process. The Government’s own assessment is that, if we were to take this retained EU law through a proper process of parliamentary scrutiny, it would take decades to get through. I am not necessarily saying that we should wait decades for the process to be completed. But taking a process of decades—by implication, that is 20 years at least—and squeezing it into a single year, and especially a single year when the Government are dealing with the impacts of the war in Ukraine, the after-effects of covid and the worst cost of living crisis in living memory, is not a responsible way for the Government to make legislation.
I will be opposing clause 1. If people believe that that will wreck the Bill, then this is a Bill that has to be wrecked. The Government have to be told to go back and bring forward a Bill that achieves what most Members in this House now seem to want, but that does so in a way that does not expose all of us—and those who elected us—to risks that we cannot yet even identify because they could come out of legislation that nobody here knows exists. It would be madness to repeal a piece of legislation that we do not even know is there.
Justin Madders
I beg to move amendment 72, in clause 2, page 2, line 5, leave out “Minister of the Crown” and insert “relevant national authority”.
This amendment provides devolved assemblies the power to make the decision to delay the sunset of legislation, and not just a Minister of the Crown.
The Chair
With this it will be convenient to discuss the following:
Amendment 31, in clause 2, page 2, line 8, at end insert—
“(1A) Subsection (1) has effect in relation to provision which is within the competence of the Scottish Ministers as if, after “A Minister of the Crown”, there were inserted “or the Scottish Ministers”.
(1B) A provision is within the devolved competence of the Scottish Ministers for the purposes of this section if—
(a) it would be within the legislative competence of the Scottish Parliament if it were contained in an Act of that Parliament, or
(b) it is provision which could be made in other subordinate legislation by the Scottish Ministers, the First Minister or the Lord Advocate acting alone.”
New clause 5—Extension of sunset to 2026 under section 1 by Scottish Ministers—
“(1) The Scottish Ministers may by regulations provide that section 1, as it applies in relation to a specified instrument or a specified description of legislation within section 1(1)(a) or (b), has effect as if the reference in section 1(1) to the end of 2023 were a reference to a later specified time.
(2) In subsection (1) “specified” means specified in the regulations.
(3) Regulations under subsection (1) may not specify a time later than the end of 23 June 2026.”
This amendment would give the Scottish Ministers a power to extend the sunset date for devolved retained EU law equivalent to that conferred on a Minister of the Crown by Clause 2 of the Bill.
New clause 6—Extension of sunset to 2029 under section 1 by Scottish Ministers—
“(1) The Scottish Ministers may by regulations provide that section 1, as it applies in relation to a specified instrument or a specified description of legislation within section 1(1)(a) or (b), has effect as if the reference in section 1(1) to the end of 2026 were a reference to a later specified time.
(2) In subsection (1) “specified” means specified in the regulations.
(3) Regulations under subsection (1) may not specify a time later than the end of 23 June 2029.”
This new clause confers a power on the Scottish Ministers to modify the date that the revocation of EU-derived subordinate legislation and retained direct EU legislation may take effect, to a date no later than 23 June 2029.
Justin Madders
I will not detain the Committee long. We have ventilated a lot of the arguments about amendment 72 already in relation to why the 2023 deadline —or cliff edge—is unacceptable. The amendment would give the power that UK Government Ministers feel able to retain for themselves to extend the cliff edge to 2026 to the devolved authorities. There is no reason why we should have a different approach in the devolved authorities from that of the UK Government. Again, when we get into questions of devolved competency, it is clearly appropriate that those provisions should apply to devolved nations as well. We have already discussed these issues at length so I will not detain the Committee any longer.
Brendan O’Hara
I shall speak to amendment 31, tabled in my name and that of my hon. Friend the Member for Glenrothes. The amendment is crucial and goes to the heart of the whole debate. It seeks to clarify exactly which provisions the UK Government consider devolved and would therefore fall under the competence of Scottish Ministers, and which provisions would be reserved to the UK Secretary of State.
When this place passed the Scotland Act 1998, it listed areas of competence that were reserved. Everything that was not on that list was considered to be devolved. Yet in terms of the Bill, and with particular reference to the Government’s published dashboard, remarkably we still do not know exactly which areas the UK Government regard as reserved and which they consider to be wholly devolved.
Of course, it could be argued with some justification that the United Kingdom Internal Market Act 2020 knowingly created that confusion, and deliberately blurred the hitherto clear lines of demarcation between powers that had been devolved and powers that were reserved. Prior to the passing of the 2020 Act, it had long been accepted that environmental health, food standards and animal welfare were wholly devolved to the Scottish Parliament, but since its passing we have seen a significant encroachment by the UK Government and Ministers into policy areas that hitherto have been wholly devolved. That not only goes completely against the spirit of devolution, but directly contravenes the Sewel convention, which in 2016 was given statutory footing in the 1998 Act.
As a result, the Bill, in tandem with the 2020 Act, threatens to further undermine the devolution settlement by giving primacy to UK law in areas that have been wholly devolved, meaning that legislation passed in the Scottish Parliament to keep us in lockstep with European Union regulations could be overruled by the Government in Westminster, so I have a number of questions for the Minister. If the Scottish Parliament decides that we will remain aligned to the European Union and re-ban the sale of chlorinated chicken, but this place decides that cheap imported chlorine-washed chicken is acceptable, will the Scottish Parliament have the power to stop lorryloads of chlorinated chicken crossing the border and appearing on our supermarket shelves—yes or no?
Similarly, should the UK agree a trade deal that allows the importation of hormone-injected meat, but the Scottish Parliament decides to protect Scottish consumers and farmers by adhering to the standards and protections that we have now, can the Minister guarantee that under the provisions of the Bill the Scottish Government will be able to prevent hormone-injected meat from reaching Scotland’s supermarkets—again, yes or no? If we decide to retain long-established best practice in the welfare and treatment of animals entering the food chain but Westminster chooses to deregulate, will she give a cast-iron guarantee that the Scottish Parliament will be able to stop animals whose provenance is unknown and whose welfare history is unaccounted for from entering the food chain—again, yes or no?
Under the terms of the devolution settlement, the answer to all those questions should be an unequivocal yes, but despite us and the Scottish Government asking several times, we have been unable to get those guarantees. That is why amendment 31 is vital. I would be enormously grateful if the Minister could give clear, precise and unambiguous answers to my questions.
Ms Ghani
I ask hon. Members to reject the amendments and new clauses. Amendments 72 and 31 seek to make the power to extend available to devolved authorities as well as Ministers of the Crown. That power, exercisable under clause 2, will allow Ministers of the Crown to extend the sunset for specified pieces and descriptions of in-scope REUL, both in reserved and devolved areas, up to 23 June 2026. We therefore do not consider it necessary for the power to be conferred on the devolved authorities.
Conferring the power on the devolved Governments would introduce additional legal complexity, as it may result in different pieces and descriptions of REUL expiring at different times in different jurisdictions in the UK, across both reserved and devolved policy areas. I am sure that hon. Members understand how that would create a lot of confusion. Ministers of the Crown will also have the ability to legislate to extend pieces or descriptions of retained EU legislation in areas of devolved competence on behalf of devolved Ministers. That is to minimise legal complexity across the jurisdictions, as previously described.
Turning to the new clauses, the Bill already includes an extension power in clause 2. There is no need for an additional extension power solely for Scottish Ministers. Moreover, new clause 6 would change the sunset extension date from 23 June 2026 to 23 June 2029, in effect allowing REUL and revoked direct EU legislation otherwise subject to the sunset date to remain on our statute book in some form until the end of the decade. We have every intention of completing this ambitious programme of REUL reform by 31 December 2023. However, we are aware that complex reforms sometimes take longer than expected, and we will need to consult on new regulatory frameworks that will work best for the UK.
Brendan O’Hara
Could the Minister clarify the answer she has given? I think she said that because of the confusion that could arise from different regulatory frameworks operating in different Parliaments and different jurisdictions, UK law will take primacy, and there would be nothing that the Scottish Government could do to prevent us from having chlorinated chicken, hormone-injected beef or animals of questionable provenance. I am not clear on that; I am looking for a simple yes or no.
Ms Ghani
Well, it was not a simple question, and it was full of contradictions. During debates on previous amendments, we have spoken to the high levels of animal welfare that we have here in the UK, and the level of scrutiny that will take place.
To the point that the hon. Gentleman raised, conferring the extension power on the devolved Governments would introduce additional legal complexity. Specifically, it might result in different pieces and descriptions of retained EU law expiring at multiple different times in different Administrations across the UK. Those pieces of retained EU law may cover a mix of reserved and devolved policy areas, and policy officials are still working through how the extension power will work in practice, but we are committed to working collaboratively with devolved officials. I am keen to discuss this policy as it progresses to ensure that the power works for all parts of the UK. The amendment would work against everything we are trying to achieve through the Bill, which is why I ask the hon. Member for Ellesmere Port and Neston to withdraw it.
Peter Grant
The Minister’s clarification in response to my hon. Friend the Member for Argyll and Bute’s questions has been about as clear as mud. On the basis of that response, I sincerely hope that my hon. Friend will stick to his guns, move his amendment and push it to a vote. Either the Minister genuinely does not get devolution, or she gets it and is trying to roll it back, because the whole point of devolution is the recognition that there are four distinct identities, at the very least—four distinct sets of needs and priorities—within the four nations of this Union. Arguably, England could be split into several autonomous regions as well if the people of those parts of England so desired.
I think the fault line is that the Minister continually expects the people of Scotland to be reassured when she says, “This is not what the Government intend to do with this new power. This is not what the Government intend to do with this new legislation.” I mean nothing personal against this particular Minister when I tell her that the people in Scotland do not trust this Government. The people in Scotland have never trusted a Tory Government and never will, so if the reassurance that the Minister wants to give my constituents and constituents of other colleagues in Scotland is “We promise you that although we’ve got this power, we will not do it to you”, that will not be enough. The one way to make that promise credible is to say, “We are so determined not to do this to you that we are not going to take the power that would allow us to do it. We are going to make a law that would prevent us from doing that.”
The Minister still has not answered my hon. Friend the Member for Argyll and Bute’s questions, so maybe I can ask them in a different way. Who does she believe should have the right to decide whether chlorine-washed chicken or hormone-injected beef should be allowed to be sold in shops in Scotland? Is that a decision that rightfully belongs with the Parliament of Scotland, or does it belong to this place?
Justin Madders
To follow on from what the hon. Member for Glenrothes has said, I think the Minister misunderstands the point of devolution if her main argument against these amendments is that we cannot have different deadlines and laws in different jurisdictions. The whole point of devolution is that each devolved nation is able to decide the laws that sit within its devolved competence. I will not push our amendment to a vote, but the answers we have received this evening are pretty inadequate.
Brendan O’Hara
We will press amendment 31 to a vote. I am far from satisfied with the answer that the Minister provided. We recognise that there is a power grab taking place and this Government are coming for the powers of our Parliament.
Shortly before Second Reading, I met the National Farmers Union Scotland in my constituency of Argyll and Bute. It recognises that this legislation is a potential death sentence for the Scottish agricultural sector. In rural areas, such as my constituency, the farmers require a hefty subsidy to manage the land, keep their lights on, provide employment and stem rural depopulation, while producing high-quality, high-value beef, lamb and dairy products. This legislation is a death sentence for Scottish agriculture.
Tomorrow morning I will again meet a delegation from the National Farmers Union Scotland here in Westminster, and I will be sorry to have to report to them that we have received no assurances whatsoever about the protections that this vital industry needs. That is why it is essential that we push amendment 31 to a vote.
Justin Madders
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 31, in clause 2, page 2, line 8, at end insert—
“(1A) Subsection (1) has effect in relation to provision which is within the competence of the Scottish Ministers as if, after “A Minister of the Crown”, there were inserted “or the Scottish Ministers”.
(1B) A provision is within the devolved competence of the Scottish Ministers for the purposes of this section if—
(a) it would be within the legislative competence of the Scottish Parliament if it were contained in an Act of that Parliament, or
(b) it is provision which could be made in other subordinate legislation by the Scottish Ministers, the First Minister or the Lord Advocate acting alone.”—(Brendan O’Hara.)
Question put, That the amendment be made.
Brendan O’Hara
I beg to move amendment 32, in clause 2, page 2, line 10, leave out subsection (3).
The Chair
With this, it will be convenient to discuss amendment 29, in clause 2, page 2, line 11, leave out “2026” and insert “2029”.
This amendment changes the date that the revocation of EU-derived subordinate legislation and retained direct EU legislation may be extended to, up to a final deadline of 23 June 2029.
Brendan O’Hara
The amendment is in my name and that of my hon. Friend the Member for Glenrothes. It seeks to extend the date at which revocation can take place to 23 June 2029.
As we have heard from many, many hon. Members, this Bill is a bad piece of legislation that has been badly drafted and ill conceived. As I have said, we will vote against it, as we have throughout this Bill Committee, and as we will again when it returns to the Floor of the House.
My hon. Friend the Member for Glenrothes has laid out in pretty thorough detail what a confused mess of a Bill this is, both in terms of what it is trying to achieve and how it has been so hurriedly thrown together. That is why we will soon get on to Government amendments that seek to correct basic mistakes. As my hon. Friend correctly pointed out a few moments ago, if there are that many mistakes in this legislation, goodness knows what is yet to appear and what will be missed in the coming 13 months if we are to stick to the insane timeline that the Government are working to.
Having said that we will oppose the Bill every step of the way, we feel duty-bound to highlight its most glaring deficiencies and to suggest amendments. If the Bill has to pass, it should do so in a form that does the least damage to the people who will have to live with its consequences.
It is in that spirit that we tabled amendments 32 and 29. Amendment 32 would remove clause 2(3) entirely, and amendment 29 would change the final deadline from 2026 to 23 June 2029. As we have heard many times today, arbitrary, self-imposed deadlines are rarely, if ever, useful. I again suggest, as many others have, that Government Members canvass the opinion of the right hon. Member for Camborne and Redruth on arbitrary, self-imposed deadlines.
The cliff edge makes no sense whatsoever. It appears to have been inserted into the Bill by the zealots who were then in charge of the ship, and were merrily steering it on to the rocks, as a way of preventing cooler, more rational heads from looking at the Bill and coming to the same conclusion as the rest of us: it is unworkable, ideologically driven madness. If the Bill is to work, there must be adequate time for its provisions to be put in place.
Surely all but the true believers will see the sense in the amendment. Although it would not improve the substance or intent of the Bill, it would allow for a far more reasonable timescale, and would ensure that mistakes are not made, or that when they are people are not left exposed, which will almost inevitably happen given the way the Bill is currently written; things will almost certainly be missed, and will fall off the statute book. I encourage the Minister to see this as a helpful amendment to a thoroughly rotten Bill. It is an attempt to make the Bill ever so slightly less unpalatable.
Ms Ghani
I ask hon. Members to reject amendments 32 and 29. In short, they delay and deny Brexit. As the hon. Member for Argyll and Bute has said himself, he opposes every step of the Bill. Amendment 32 would leave out clause 2(3), which would remove the extension mechanism’s deadline, and effectively allow retained EU law to be extended for ever more. Amendment 29 would push the date to 2029. Conservative Members are here to deliver Brexit, not to deny it. I therefore ask the hon. Member to withdraw his amendment.
Brendan O’Hara
I thank the Minister for her answer. As I have often said, it satisfies me not one jot, but I understand and was expecting that answer. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Joy Morrissey.)
Economic Crime and Corporate Transparency Bill (Sixteenth sitting)
Tuesday 22nd November 2022
(2 years ago)
Public Bill CommitteesRead Full debate Economic Crime and Corporate Transparency Act 2023 View all Economic Crime and Corporate Transparency Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 22 November 2022 - (22 Nov 2022)
The Minister for Security (Tom Tugendhat)
It is nice to see you this afternoon, Ms Elliott. I look forward to proceeding in order for some parts of this afternoon sitting.
Clause 160 details the Bill’s territorial extent. In preparing the Bill, both Ministers and officials have engaged extensively with their counterparts in the devolved Administrations to ensure that we tackle economic crime and strengthen corporate transparency across all of the United Kingdom. The measures in the Bill extend to England and Wales, Scotland, and Northern Ireland. Some of its provisions have a lesser extent, where they amend existing legislation that extends only to one or two different parts of the UK. In the opinion of the UK Government, the Bill makes some provision for areas within the devolved competence of Wales, Scotland and Northern Ireland. However, the Bill respects the devolution settlements and, where relevant, legislative consent motions are being sought from the devolved Administrations.
Clause 161 sets out procedural detail for the commencement of the Bill’s provisions. It stipulates the various dates when, and conditions under which, the various sections and subsections will come into force. The Secretary of State can make regulations that set the date for certain provisions to come into force. Different days may be appointed for different purposes. The Secretary of State can also make transitional or savings provisions for regulations made under certain clauses, as set out in the Bill. Any regulations made under the clause are to be made by statutory instrument.
Clause 162 establishes that the title of the Bill once it becomes an Act will be the Economic Crime and Corporate Transparency Act. The short title is a standard clause in any Bill.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
It is a pleasure to serve under your chairship, Ms Elliott.
I have a few limited remarks to make as we approach the end of clause-by-clause consideration and before we move on to new clauses. As the Minister said, clause 160 extends the Bill to England and Wales, Scotland, and Northern Ireland. I was grateful for his comments about liaison with the Scottish Parliament and the Welsh Senedd. There are obviously current challenges in respect of the Northern Ireland Executive. I would be grateful for some clarity about how the engagement with the devolved Administrations is going, because it has been a theme, certainly during the earlier debates. It is important that we can have confidence that all the issues that are being raised in our deliberations are coming into the Bill.
Clause 161 sets out when the Bill’s provisions will come into force. I am sure the Minister will want to give assurances that that will be no later than is absolutely necessary, bearing in mind the urgency of the measures. Clause 162 establishes the short title and we welcome it.
Tom Tugendhat
Different devolved Administrations have been contacted in different ways. Some of them have been written to, and I have sought conversations with some, although that has not always been achieved because of other people’s diaries as well as my own. The conversation is ongoing and, although I hope the Bill will be passed soon, it will have to continue because many things are going to change over the coming years.
Question put and agreed to.
Clause 160 accordingly ordered to stand part of the Bill.
Clauses 161 and 162 ordered to stand part of the Bill.
New Clause 1
Change of addresses of officers of overseas companies by registrar
“In section 1046 of the Companies Act 2006 (overseas companies: registration of particulars), after subsection (6) insert—
‘(6A) Where regulations under this section require an overseas company to deliver to the registrar for registration—
(a) a service address for an officer of the company, or
(b) the address of the principal office of an officer of the company,
the regulations may make provision corresponding or similar to any provision made by section 1097B or 1097C (rectification of register relating to service addresses or principal office addresses) or to provision that may be made by regulations made under that section.’”.—(Kevin Hollinrake.)
Where an overseas company is required to provide a service address or principal office address for a director or secretary, this new clause enables regulations to be made conferring power on the registrar to change the address if it does not meet the statutory requirements or is inaccurate.
Brought up, and read the First time.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)
I beg to move, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss the following:
Government new clause 2—Overseas companies: availability of material for public inspection etc.
Government new clause 3—Registered addresses of an overseas company.
Government new clause 4—Overseas companies: identity verification of directors.
Kevin Hollinrake
It is always a pleasure to serve with you in the Chair, Ms Elliott. Government new clauses 1 to 4 will introduce delegated powers allowing for the application of the Companies House reform measures elsewhere in the Bill to overseas companies registered in the UK. In this context, an overseas company is one that is incorporated overseas but that has a physical establishment or branch in the UK. Under long-standing provisions in the Companies Act 2006, that presence brings with it certain obligations to register information with Companies House.
New clauses 1 to 3 allow for the making of regulations requiring overseas companies that have established a physical presence in the UK to provide an appropriate address for the overseas company, their directors or other officers, to the same standard required of domestic companies incorporated here in the UK. The aim is the same—to ensure that addresses and email addresses on the companies register are accurate and that documents sent to them will reach the companies concerned or their officers.
New clause 4 allows the application, through regulations, of identity verification requirements to directors of overseas companies operating in the UK. Through that, the Government seek to ensure that companies governed by the laws of other jurisdictions that operate in the UK are subject to identity verification requirements that are introduced by the Bill and will apply to UK companies. Regulations under the power will include requiring the delivery of statements or other information to the registrar. They will also include exemptions from identity verification on national security grounds.
The application of identity verification obligations through secondary legislation will allow the Government to adapt ID verification requirements at speed. Overseas companies who operate within the UK are only within limited control of UK law. UK legislation affecting them therefore needs to adapt more quickly to their changing circumstances than primary legislation would allow for.
Seema Malhotra
It is a pleasure to speak to the new clauses. The Minister has outlined the rationale for them, which is to bring some of the rules around overseas companies more in line with some other changes being made in the Bill. We welcome that, but I have a few questions.
New clause 1 outlines that where an overseas company is required to provide a service address or principal office address for a director or secretary, regulations can be made conferring power on the registrar to change the address if it does not meet the statutory requirements or is inaccurate. Who might determine whether the address is inaccurate? Is the expectation that the registrar finds that out or is that just about if something happens to be found out by chance? Is there any more information on how the power might be used to determine that an address is inaccurate?
New clause 2 confers a regulation-making power to require overseas companies to register information. The new clause makes it clear that the regulations can provide for the information to be withheld from public inspection and can confer a discretion on the registrar. We have had similar debates in Committee already. We will keep coming back to the question of the use of powers and the reporting on the use of those powers, particularly where information may be withheld. Would this be an example of a new power on the withholding of information from public inspection where the number of times it is used ought to be reported on? That would not need to give away details about whom the power had applied to, but it would help give an overall view of how the powers in the Bill were being used.
Under new clause 3, new regulations would require overseas companies to provide and maintain an appropriate address and email address. Would those new regulations be subject to the affirmative procedure, assuming that they would be in secondary legislation rather than in the Bill? It was not fully clear to me whether some of these matters were included in the Bill or whether they were regulations to enable the measures to come in later. Will the Minister clarify that?
Kevin Hollinrake
I am happy to, and I thank the hon. Lady for her points. As we have said during similar discussions, the registrar will have access to information; most of the queries that she will follow up will have come through information received during the course of her duties. It does not make sense for Companies House to physically validate all addresses, but nevertheless information may well come to light through the registrar’s work or the requirement for other bodies to share information with her if they feel that inaccurate information is on the register. That is how we anticipate that information will come forward.
I will not revisit the issue of national security other than to say that the power will be used sparingly and that we do not know what we do not know, so it is important that we have a provision that might be necessary in future.
Regulations under new clause 4 will correspond to regulations applying to UK companies made and debated by Parliament under the affirmative procedure. The extension to overseas companies would therefore not require additional scrutiny by Parliament and the regulations will be subject to the negative procedure.
Question put and agreed to.
New clause 1 accordingly read a Second time, and added to the Bill.
New Clause 2
Overseas companies: availability of material for public inspection etc
“In section 1046 of the Companies Act 2006 (overseas companies: registration of particulars), after subsection (6A) (inserted by section (Change of addresses of officers of overseas companies by registrar) of this Act) insert—
‘(6B) Regulations under this section may include provision for information delivered to the registrar under the regulations to be withheld from public inspection.
(6C) The provision that may be made by regulations under this section includes provision conferring a discretion on the registrar.’”—(Kevin Hollinrake.)
Section 1046 of the Companies Act 2006 confers a regulation-making power to require overseas companies to register information. The new clause makes it clear that the regulations can provide for the information to be withheld from public inspection and that they can confer a discretion on the registrar.
Brought up, read the First and Second time, and added to the Bill.
New Clause 3
Registered addresses of an overseas company
“(1) The Companies Act 2006 is amended as follows.
(2) After section 1048 insert—
‘1048A Registered addresses of an overseas company
(1) The Secretary of State may by regulations make provision requiring an overseas company that is required to register particulars under section 1046 to deliver to the registrar for registration—
(a) a statement specifying an address in the United Kingdom that is an appropriate address for the company;
(b) a statement specifying an appropriate email address for the company.
(2) The regulations may include provision—
(a) allowing an overseas company to change the address or email address for the time being registered for it under the regulations;
(b) requiring an overseas company to ensure that the address or email address for the time being registered for it under the regulations is an appropriate address or appropriate email address.
(3) The regulations may include—
(a) provision for information contained in a statement specifying an appropriate email address to be withheld from public inspection;
(b) provision corresponding or similar to any provision made by section 1097A (rectification of register relating to a company’s registered office) or to provision that may be made by regulations made under that section.
(4) In this section—
“appropriate address” has the meaning given by section 86(2);
“appropriate email address” has the meaning given by section 88A(2).
(5) Regulations under this section are subject to negative resolution procedure.’
(3) In section 1139 (service of documents on company), for subsections (2) and (3) substitute—
‘(2) A document may be served on an overseas company whose particulars are registered under section 1046—
(a) by leaving it at, or sending it by post to, the company’s registered address, or
(b) by leaving it at, or sending it by post to, the registered address of any person resident in the United Kingdom who is authorised to accept service of documents on the company’s behalf.
(3) In subsection (2) “registered address”—
(a) in relation to the overseas company, means the address for the time being registered for the company under regulations under section 1048A(1)(a);
(b) in relation to a person other than the overseas company, means any address for the time being shown as a current address in relation to that person in the part of the register available for public inspection.’”—(Kevin Hollinrake.)
Regulations under this new clause can require an overseas company to provide and maintain an appropriate address and appropriate email address. Broadly speaking, an address is appropriate if documents sent there will reach the company.
Brought up, read the First and Second time, and added to the Bill.
New Clause 4
Overseas companies: identity verification of directors
“After section 1048A of the Companies Act 2006 (inserted by section (Registered addresses of overseas companies) of this Act) insert—
‘1048B Identity verification of directors
(1) This section applies in relation to an overseas company that is required to register particulars under section 1046.
(2) The Secretary of State may by regulations make provision for the purpose of ensuring that each individual who is a director of such a company—
(a) is an individual whose identity is verified (see section 1110A), or
(b) falls within any exemption from identity verification that may be provided for by the regulations.
(3) The regulations may include provision—
(a) requiring the delivery of statements or other information to the registrar;
(b) for statements or other information delivered to the registrar under the regulations to be withheld from public inspection;
(c) applying section 167M (prohibition on director acting unless ID verified), with or without modifications;
(d) applying section 1110D (exemption from identity verification: national security grounds), with or without modifications.
(4) Regulations under this section are subject to negative resolution procedure.’”—(Kevin Hollinrake.)
Regulations under this new clause can impose identity verification requirements on the directors of overseas companies, corresponding to the requirements introduced by the Bill for directors of UK companies.
Brought up, read the First and Second time, and added to the Bill.
New Clause 5
Rectification of register: service addresses
“(1) The Companies Act 2006 is amended as follows.
(2) After section 1097A insert—
‘1097B Rectification of register: service addresses
(1) The Secretary of State may by regulations make provision authorising or requiring the registrar to change a registered service address of a relevant person if satisfied that the address does not meet the requirements of section 1141(1) and (2).
(2) In this section—
“registered service address”, in relation to a relevant person, means the address for the time being shown in the register as the person’s current service address;
“relevant person” means—
(a) a director of a company that is not an overseas company,
(b) a secretary or one of the joint secretaries of a company that is not an overseas company, or
(c) a registrable person or registrable relevant legal entity in relation to a company (within the meanings given by section 790C).
(3) The regulations may authorise or require the address to be changed on the registrar’s own motion or on an application by another person.
(4) The regulations must provide for the change in the address to be effected by the registrar proceeding as if the company had given notice under section 167H, 279H or 790LC of the change.
(5) The regulations may make provision as to—
(a) who may make an application,
(b) the information to be included in and documents to accompany an application,
(c) the registrar requiring the company or an applicant to provide information for the purposes of determining anything under the regulations,
(d) the notice to be given of an application or that the registrar is considering the exercise of powers under the regulations,
(e) the notice to be given of any decision under the regulations,
(f) the period in which objections to an application may be made,
(g) how the registrar is to determine whether a registered service address meets the requirements of section 1141(1) and (2), including in particular the evidence, or descriptions of evidence, which the registrar may without further enquiry rely on to be satisfied that the address meets those requirements,
(h) the referral by the registrar of any question for determination by the court,
(i) the registrar requiring the company to provide an address to be registered as the relevant person’s service address,
(j) the nomination by the registrar of an address (a “default address”) to be registered as the relevant person’s service address (which need not meet the requirements of section 1141(1) and (2)),
(k) the period for which the default address is permitted to be the relevant person’s registered service address, and
(l) when the change of address takes effect and the consequences of registration of the change (including provision similar or corresponding to section 1140(5)).
(6) The provision made by virtue of subsection (5)(k) may in particular include provision creating summary offences punishable with a fine not exceeding level 3 on the standard scale or, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
(7) The regulations must confer a right on the company to appeal to the court against any decision to change the relevant person’s registered service address under the regulations.
(8) If the regulations enable a person to apply for a registered service address to be changed, they must also confer a right on the applicant to appeal to the court against a refusal of the application.
(9) On an appeal, the court must direct the registrar to register such address as the relevant person’s registered service address as the court considers appropriate in all the circumstances of the case.
(10) The regulations may make further provision about an appeal and in particular—
(a) provision about the time within which an appeal must be brought and the grounds on which an appeal may be brought;
(b) further provision about directions by virtue of subsection (9).
(11) The regulations may include such provision applying (including applying with modifications), amending or repealing an enactment contained in this Act as the Secretary of State considers necessary or expedient in consequence of any provision made by the regulations.
(12) Regulations under this section are subject to affirmative resolution procedure.’
(3) In section 1087 (material not available for public inspection), in subsection (1)(ga)—
‘(a) after “1097A” insert “, 1097B”;
(b) for “company registered office” substitute “registered office, service address”.’”—(Kevin Hollinrake.)
This new clause confers a regulation-making power to enable the registrar to change a person’s registered service address. It is based on section 1097A of the Companies Act 2006, which makes similar provision in relation to a company’s registered office.
Brought up, read the First and Second time, and added to the Bill.
The Chair
With this it will be convenient to discuss Government new clause 11—Power to amend disqualification in relation to relevant entities: NI.
Kevin Hollinrake
Through other provisions in this Bill, a disqualified individual is prevented from acting as a general partner of a limited partnership. However, that would only cover individuals who have been disqualified for their actions as directors in a company. We also need to be able to disqualify general partners for their actions within a limited partnership. Currently, that cannot be done because the Company Directors Disqualification Act 1986 applies only to directors of companies and other limited corporate entities such as building societies and NHS foundation trusts. We would like to ensure that general partners are subject to the same requirements as directors. New clauses 10 and 11 therefore provide powers to update the 1986 Act and the Company Directors Disqualification (Northern Ireland) Order 2002 to apply to limited partnerships, limited liability partnerships and Scottish partnerships.
Seema Malhotra
It is a pleasure to say a few words in support of new clauses 10 and 11. New clause 10 introduces new provisions allowing the Secretary of State to make regulations applying the Company Directors Disqualification Act to relevant entities. The new clause outlines that these relevant entities include limited partnerships and Scottish limited partnerships. New clause 11 has the same effect and applies the same principles to the context of Northern Ireland. We welcome the new clauses, especially given our calls in Committee to extend directors disqualification criteria to limited partnerships.
Kevin Hollinrake
I have nothing further to add.
Question put and agreed to.
New clause 10 accordingly read a Second time, and added to the Bill.
New Clause 11
Power to amend disqualification legislation in relation to relevant entities: NI
“(1) The Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I. 4)) is amended as follows.
(2) In Article 2(2) (interpretation), for the definition of ‘regulations’ substitute—
‘“regulations”, except in Articles 13D and 25D, means regulations made by the Department subject (except in Article 23(3)) to negative resolution;’.
(3) After Article 25C insert—
‘25D Power to amend application of Order in relation to relevant entities
(1) The Secretary of State may by regulations amend this Order for the purpose of applying, or modifying the application of, any of its provisions in relation to relevant entities.
(2) For that purpose, the regulations may in particular—
(a) extend the company disqualification conditions to include corresponding conditions relating to a relevant entity;
(b) limit the company disqualification conditions to remove conditions relating to a relevant entity;
(c) modify which company disqualification conditions can, in combination with each other, result in a person being disqualified under this Order;
(d) provide for any of the company disqualification conditions to result in or contribute to a person being disqualified from acting in a role or doing something in relation to a relevant entity.
(3) In this Article “the company disqualification conditions” means the conditions that can result in or contribute to a person being disqualified under this Order from acting in a role or doing something in relation to any entity.
(4) In this Article a “relevant entity” means—
(a) a limited partnership registered under the Limited Partnerships Act 1907;
(b) a limited liability partnership registered under the Limited Liability Partnerships Act 2000;
(c) a partnership, other than a limited partnership, that is—
(i) constituted under the law of Scotland, and
(ii) a qualifying partnership within the meaning given by regulation 3 of the Partnerships (Accounts) Regulations 2008.
(5) Regulations under this Article may make consequential, supplementary, incidental, transitional or saving provision.
(6) The provision which may be made by virtue of paragraph (5) includes provision amending provision made by or under either of the following, whenever passed or made—
(a) an Act;
(b) Northern Ireland legislation.
(7) Regulations under this Article are to be made by statutory instrument.
(8) A statutory instrument containing regulations under this Article may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.’”—(Kevin Hollinrake.)
This new clause allows the Secretary of State to make regulations applying the CDD(NI)O 2002 in relation to relevant entities, meaning that a person’s conduct in relation to relevant entities would lead to disqualification, and disqualifications in other circumstances would prohibit a person from acting in relation to relevant entities.
Brought up, read the First and Second time, and added to the Bill.
New Clause 12
Required information about overseas entities: address information
“In the following provisions of Schedule 1 to the Economic Crime (Transparency and Enforcement) Act 2022 (which refer to an entity’s registered or principal office) omit ‘registered or’—
paragraph 2(1)(c);
paragraph 5(1)(b);
paragraph 6(1)(d);
paragraph 7(1)(b).”—(Kevin Hollinrake.)
This new clause would mean that the required information that must be provided about an overseas entity, a corporate registrable beneficial owner or managing officer includes its principal office in all cases, rather than there being an option to provide its registered or principal office.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
Government new clause 13—Registration of information about land.
Government new clause 14—Registration of information about managing officers: age limits.
Government new clause 15—Registrable beneficial owners: cases involving trusts.
Government new clause 21—Enforcement of requirement to register: updated language about penalties etc.
Kevin Hollinrake
All the new clauses relate to the register of overseas entities. New clause 12 will mean that the required information that must be provided about an overseas entity, a corporate registrable beneficial owner or a managing officer will always include its principal office, rather than there merely being an option to provide its registered or principal office. The new clause will improve the quality of the information provided and align with the information required about other types of legal entities.
New clause 14 will ensure that overseas entities that provide the details of a managing officer who is under the age of 16, or who is a legal entity, must also provide details of a person who is more than 16 years old. This is to ensure that there is a person who can be contacted about the overseas entity, in addition to the relevant person who verified the information. It is possible that in jurisdictions outside the UK, individuals younger than 16 may be allowed to act as company directors, secretaries or equivalents. Directors of UK companies are required to be at least 16 years of age, so the new clause provides consistency by requiring the contact details of someone who is at least 16 years of age.
New clause 21 will update the language about penalties for non-compliance in section 34 of the Economic Crime (Transparency and Enforcement) Act 2022 to reflect changes made by the Judicial Review and Courts Act 2022. It will ensure consistency with the wording used in other clauses in the Bill.
New clause 13 will require overseas entities to include the title number for relevant interests in land that they hold in their application for registration, both when providing an update and when applying to be removed from the register. Overseas entities that are already registered will be required to provide this information when they next provide an update or, if sooner, when they apply to be removed from the register. The collection of this information will improve the effectiveness of the register and will help law enforcement agencies with their investigations. The information will not be made publicly available because the Government do not consider that to be appropriate, given privacy concerns.
Let me turn new clause 15. In advance of the launch of the register, the Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022 were made. Regulation 14 specified the circumstances in which a legal entity trustee is deemed to be
“subject to its own disclosure requirements”.
By virtue of a legal entity trustee being a registrable beneficial owner, the overseas entity must provide the required information about the trust and persons connected to it, such as beneficiaries, settlors and interested persons.
Dame Margaret Hodge (Barking) (Lab)
This is an issue for clarification, because it impacts on whether we move our new clause 59. Will the information that we are now going to get about trustees and beneficiaries be made public? Will it be open to the public in the same way as other information about beneficial owners is open to the public? I ask because that is what our new clause would achieve.
Kevin Hollinrake
I will deal with that, if I can, as I go through. Essentially, trusts are often there to protect the identity of vulnerable persons, so I am not sure that the provision will do what the right hon. Member wants to do in her new clause, but we can probably discuss that when we discuss her new clause.
Kevin Hollinrake
Without regulation 14, if the corporate trustee were not subject to its own disclosure requirements, the overseas entity would have to “look through” the legal entity trustee to find a registrable beneficial owner higher up the chain of ownership. But in the situations we are talking about it is information about the trust that is wanted, rather than information about the ownership or control of the legal entity trustee. Currently, regulation 14 therefore ensures that Companies House, His Majesty’s Revenue and Customs and law enforcement agencies receive the information about the trust and persons connected to it, which I think may be the point that the right hon. Member raises and which is much more useful to meet the aims of the register.
New clause 15 goes further by ensuring that a legal entity acting as a trustee is always a registrable beneficial owner whether or not it is “subject to its own disclosure requirements” and even if there is another registrable beneficial owner further down a chain of ownership. This maximises the transparency in respect of the involvement of a legal entity trust in a chain of ownership.
The provisions also provide a power to expand the description of persons who are registrable beneficial owners where the overseas entity is part of a chain of entities that includes a trustee. It is appropriate to have a power to expand the description, given that there may be complex arrangements that attempt to circumvent the requirements. The provisions revoke regulation 14 because it is no longer needed.
Seema Malhotra
It is a pleasure to make a few remarks on the new clauses which, certainly from the way the Minister has outlined them, are welcome, in that they require more information and transparency around overseas entities. We welcome all the new clauses in that regard. I do not propose to go through them—the Minister went through them in considerable detail—but I have a few comments.
On new clause 13—in fact, in relation to all the new clauses—we welcome the additional transparency. I make the point again that a particular reason for that is the large-scale abuse that we know has occurred and occurs through these rather opaque offshore corporate structures.
On new clause 14, it is welcome to have the threshold at 16 years old, but I want to clarify what that means. Can there technically be a managing officer who is under 16 but an individual who is over 16 and is a contact on their behalf? It would be helpful to know whether there could still technically be an officer who was 12, 13 or 14. It would be useful to have clarity on that.
On closing the potential loophole of beneficial owners avoiding scrutiny by acting as a trustee, it is important to have the information. I want to clarify whether it should be the same amount of information about those who have been avoiding scrutiny as trustees. Will that information be published so that third parties can search it and investigate for themselves?
Kevin Hollinrake
As I understand it, somebody under the age of 16 could be the managing officer, but we still require somebody over the age of 16 to be contactable. That is how we square that particular circle. It is not in our gift to legislate for how other jurisdictions describe directors of companies.
Forgive me, but I missed the hon. Lady’s second point. If she could restate it, I will try to address it.
Seema Malhotra
My second comment was about trustee information. New clause 15 expands the definition of “registrable beneficial owners” in part 1 of the Economic Crime (Transparency and Enforcement) Act 2022 in relation to an entity one of whose beneficial owners is a trustee, such that the beneficial owner may be included. There is also a power to expand that definition further. It looks like it is closing a potential loophole that enables beneficial owners to avoid scrutiny through acting as a trustee. The question was about whether the new information about trustees will also be published, whether there will be full transparency and whether it will be searchable by any interested parties.
Kevin Hollinrake
Okay. That was a similar point to the one made by the right hon. Member for Barking. No, we do not feel that is right. We do not believe that trust information should be made publicly available, given that trusts are often used to protect vulnerable people. I reassure the hon. Lady that that information will be shareable with HMRC, law enforcement and other persons with functions of a public nature once the relevant regulations have been made.
Question put and agreed to.
New clause 12 accordingly read a Second time, and added to the Bill.
New Clause 13
Registration of information about land
“In Schedule 1 to the Economic Crime (Transparency and Enforcement) Act 2022 (required information), in paragraph 2—
(a) in sub-paragraph (1), after paragraph (g) insert—
‘(h) if the entity is the registered proprietor of one or more qualifying estates in land in England and Wales, the title number of each of them;
(b) if the entity is the registered owner of one or more qualifying estates in Northern Ireland, the folio number in respect of each of them;
(c) if the entity is—
(i) entered as proprietor in the proprietorship section of the title sheet for one or more plots of land that are registered in the Land Register of Scotland, or
(ii) the tenant under one or more leases registered in the Land Register of Scotland,
the title number of the title sheet, in respect of each of them, in which the entity’s interest is registered.’;
(b) after sub-paragraph (2) insert—
‘(3) In sub-paragraph (1)(h)—
“registered proprietor”, in relation to a qualifying estate, means the person entered as proprietor of the estate in the register of title kept by the Chief Land Registrar;
“qualifying estate” has the meaning given by paragraph 1 of Schedule 4A to the Land Registration Act 2002.
(4) In sub-paragraph (1)(i)—
“registered owner”, in relation to a qualifying estate, means the person registered in the register kept under the Land Registration Act (Northern Ireland) 1970 (c. 18 (N.I.)) as the owner of the estate;
“qualifying estate” has the meaning given by paragraph 1 of Schedule 8A to the Land Registration Act (Northern Ireland) 1970.
(5) In sub-paragraph (1)(j)—
(a) “lease”, “plot of land” and “proprietor” have the meanings given by section 113(1) of the Land Registration etc. (Scotland) Act 2012;
(b) the reference to an entity’s being entered as proprietor in the proprietorship section of a title sheet is a reference to the name of the entity being so entered.’”—(Kevin Hollinrake.)
This new clause requires an overseas entity, when applying for registration in the register of overseas entities or providing an update, to include the title number etc for relevant interests in land held by it. For entities already registered, it will operate when they next provide an update.
Brought up, read the First and Second time, and added to the Bill.
New Clause 14
Registration of information about managing officers: age limits
“(1) Schedule 1 to the Economic Crime (Transparency and Enforcement) Act 2022 (applications: required information) is amended as follows.
(2) In paragraph 6(1), after paragraph (f) insert—
‘(g) if the officer is under the age of 16 years old, the name and contact details of an individual who is at least 16 years old and is willing to be contacted about the officer.’
(3) In paragraph 7(1), for paragraph (g) substitute—
‘(g) the name and contact details of an individual who is at least 16 years old and is willing to be contacted about the officer.’”—(Kevin Hollinrake.)
This new clause means that, where an application for registration as an overseas entity is required to provide details of a managing officer, there will be a requirement to include the name of an individual who is at least 16 years old and is willing to be contacted about the officer (unless the officer is an individual of at least that age).
Brought up, read the First and Second time, and added to the Bill.
New Clause 15
Registrable beneficial owners: cases involving trusts
“(1) Schedule 2 to the Economic Crime (Transparency and Enforcement) Act 2022 (registrable beneficial owners) is amended in accordance with subsections (2) to (5).
(2) In paragraph 3 (legal entities), in paragraph (b), after ‘(see Part 3)’ insert ‘or is a beneficial owner of the overseas entity by virtue of being a trustee’.
(3) In paragraph 8 (beneficial owners exempt from registration), after paragraph (b) insert—
‘(ba) the person is not a beneficial owner of the overseas entity by virtue of being a trustee,’.
(4) For the heading of Part 6 substitute ‘Powers to amend this Schedule’.
(5) Before paragraph 25 insert—
‘Expansion of meaning of “registrable beneficial owner” where trusts in view
24A (1) The Secretary of State may by regulations amend this Schedule so as to expand the description of persons who are registrable beneficial owners of an overseas entity in circumstances where the overseas entity is part of a chain of entities that includes a trustee.
(2) For these purposes an overseas entity is part of a chain of entities that includes a trustee if there is a legal entity which is a beneficial owner of it by virtue of being a trustee.
(3) Regulations under this paragraph are subject to the affirmative resolution procedure.
Power to amend thresholds etc’.
(6) Regulation 14 of the Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022 (S.I. 2022/870) (description of legal entity subject to its own disclosure requirements) is revoked.”—(Kevin Hollinrake.)
This new clause expands the definition of “registrable beneficial owner” in Part 1 of the Economic Crime (Transparency and Enforcement) Act 2022 in relation to an entity one of whose beneficial owners is a trustee. There is also a power to further expand the definition.
Brought up, read the First and Second time, and added to the Bill.
New Clause 16
Material unavailable for public inspection: verification information
“In section 16 of the Economic Crime (Transparency and Enforcement) Act 2022 (verification of registrable beneficial owners and managing officers), in subsection (2), after paragraph (c) insert—
‘(d) requiring the registrar not to make available for public inspection certain information delivered to the registrar by virtue of the regulations.’”—(Kevin Hollinrake.)
Section 16 of the Economic Crime (Transparency and Enforcement) Act 2022 confers power to make regulations about identity verification. This new clause allows the regulations to provide that information provided under the regulations is protected from public inspection.
Brought up, read the First and Second time, and added to the Bill.
New Clause 17
Material unavailable for public inspection
“For sections 22 to 24 of the Economic Crime (Transparency and Enforcement) Act 2022 substitute—
‘22 Material unavailable for inspection
(1) The following material must not, so far as it forms part of the register, be made available by the registrar for public inspection—
(a) so much of any application or other document delivered to the registrar under section 4, 7 or 9 as is required to contain—
(i) protected date of birth information;
(ii) protected residential address information;
(iii) protected trusts information;
(iv) the name or contact details of an individual provided for the purposes of section 4(1)(d), 7(1)(e) or 9(1)(f) or paragraph 6(1)(g) or 7(1)(g) of Schedule 1;
(v) an overseas entity’s email address (see paragraph 2(1)(e) of Schedule 1);
(vi) any title numbers or folio numbers in respect of land (see paragraph 2(1)(h), (i) and (j) of Schedule 1);
(b) any information that regulations under section 16 provide is not to be made available for public inspection;
(c) the following—
(i) any application or other document delivered to the registrar under regulations under section 25 (regulations protecting material), other than information provided by virtue of section 25(4);
(ii) any information which regulations under section 25 require not to be made available for public inspection;
(d) any application or other document delivered to the registrar under section 28 (administrative removal of material from the register);
(e) any court order under section 30 (rectification of the register under court order) that the court has directed under section 31 is not to be made available for public inspection;
(f) any statement delivered to the registrar by virtue of section 1067A(3) or (4) of the Companies Act 2006 (delivery of documents: identity verification requirements etc);
(g) any statement made in accordance with regulations made by virtue of section 1082(2)(c) of the Companies Act 2006 (statement of unique identifier);
(h) any document provided to the registrar under section 1092A of the Companies Act 2006 (power to require further information);
(i) any email address, identification code or password deriving from a document delivered for the purpose of authorising or facilitating electronic filing procedures or providing information by telephone;
(j) any record of the information contained in a document (or part of a document) mentioned in any of the previous paragraphs of this subsection;
(k) any other material excluded from public inspection by or under any other enactment.
(2) In this section—
“protected date of birth information” means information as to the day of the month (but not the month or year) on which an individual who is a registrable beneficial owner or managing officer of an overseas entity was born;
“protected residential address information” means information as to the usual residential address of an individual who is a registrable beneficial owner or managing officer of an overseas entity;
“protected trusts information” means the required information about a trust (see sections 4(3), 7(3) and (4) and 9(3) and (4).
(3) Information about a registrable beneficial owner or managing officer does not cease to be protected date of birth information or protected residential address information when they cease to be a registrable beneficial owner or managing officer.
(4) Where subsection (1), or a provision referred to in subsection (1), imposes a restriction by reference to material deriving from a particular description of document (or part of a document), that does not affect the availability for public inspection of the same information contained in material derived from another description of document (or part of a document) in relation to which no such restriction applies.
(5) The registrar need not retain material to which subsection (1) applies for longer than appears to the registrar reasonably necessary for the purposes for which the material was delivered to the registrar.
23 Disclosure of protected information
(1) The registrar must not disclose protected date of birth information, protected residential address information or protected trusts information unless—
(a) the disclosure is permitted by section 1110F of the Companies Act 2006 (general powers of disclosure by the registrar), or
(b) the information is required to be made available for public inspection (as a result of being contained in a document, part of a document, or record to which section 22(1) does not apply).
(2) In this section the following have the meaning given by section 22(2)—
“protected date of birth information”;
“protected residential address information”;
“protected trusts information”.’”—(Kevin Hollinrake.)
This new clause replicates for the register of overseas entities a number of changes made by the Bill in relation to companies. It also extends the list of information unavailable for public inspection.
Brought up, read the First and Second time, and added to the Bill.
New Clause 18
Protection of information
“For section 25 of the Economic Crime (Transparency and Enforcement) Act 2022 substitute—
‘25 Power to make regulations protecting material
(1) The Secretary of State may by regulations make provision requiring the registrar, on application—
(a) not to make available for public inspection any information on the register relating to an individual;
(b) to refrain from disclosing information on the register relating to an individual except in specified circumstances;
(c) not to make available for public inspection any address on the register that is not information to which paragraph (a) applies;
(d) to refrain from disclosing any such address except in specified circumstances.
(2) The regulations may make provision as to—
(a) who may make an application;
(b) the grounds on which an application may be made;
(c) the information to be included in and documents to accompany an application;
(d) the notice to be given of an application and of its outcome;
(e) how an application is to be determined;
(f) the duration of, and procedures for revoking, any restrictions on the making of information available for public inspection or its disclosure.
(3) Provision under subsection (2)(e) or (2)(f) may in particular—
(a) confer a discretion on the registrar;
(b) provide for a question to be referred to a person other than the registrar for the purposes of determining the application or revoking the restrictions.
(4) Regulations under subsection (1)(a) or (1)(c) may provide that information is not to be made unavailable for public inspection unless the person to whom it relates provides such alternative information as may be specified.
(5) The circumstances that may be specified under subsection (1)(b) or (d) by way of an exception to a restriction on disclosure include circumstances where the court has made an order, in accordance with the regulations, authorising disclosure.
(6) Regulations under subsection (1)(b) or (d) may not require the registrar to refrain from disclosing information under section 1110F of the Companies Act 2006 (general powers of disclosure by the registrar).
(7) Regulations under this section may impose a duty on the registrar to publish, in relation to such periods as may be specified—
(a) details of how many applications have been made under the regulations and how many of them have been allowed, and
(b) such other details in connection with applications under the regulations as may be specified in the regulations.
(8) Regulations under this section are subject to affirmative resolution procedure.’”—(Kevin Hollinrake.)
This new clause replicates for the register of overseas entities the provision made by clause 87 of the Bill in relation to companies.
Brought up, read the First and Second time, and added to the Bill.
New Clause 19
Resolving inconsistencies in the register
“(1) Section 27 of the Economic Crime (Transparency and Enforcement) Act 2022 (resolving inconsistencies in the register) is amended as follows.
(2) For subsections (1) and (2) substitute—
‘(1) Where it appears to the registrar that the information contained in a document delivered to the registrar by an overseas entity in connection with the register is inconsistent with other information contained in records kept by the registrar under section 1080 of the Companies Act 2006, the registrar may give notice to the overseas entity to which the document relates—
(a) stating in what respects the information contained in it appears to be inconsistent with other information in records kept by the registrar under section 1080 of the Companies Act 2006, and
(b) requiring the overseas entity, within the period of 14 days beginning with the date on which the notice is issued, to take all such steps as are reasonably open to it to resolve the inconsistency by delivering replacement or additional documents or in any other way.
(2) The notice must state the date on which it is issued.’
(3) In the heading, omit ‘in the register’.”—(Kevin Hollinrake.)
This new clause makes changes for the purpose of resolving inconsistencies in information relating to overseas entities that corresponds to the changes made by clause 81 of the Bill in relation to companies.
Brought up, read the First and Second time, and added to the Bill.
New Clause 20
Administrative removal of material from register
“(1) In the Economic Crime (Transparency and Enforcement) Act 2022—
(a) for section 28 substitute—
‘28 Administrative removal of material from the register
(1) The registrar may remove from the register anything that appears to the registrar to be—
(a) a document, or material derived from a document, accepted under section 1073 of the Companies Act 2006 (power to accept documents not meeting requirements for proper delivery), or
(b) unnecessary material as defined by section 1074 of the Companies Act 2006.
(2) The power to remove material from the register under this section may be exercised—
(a) on the registrar’s own motion, or
(b) on an application made in accordance with regulations under section 28A(2).
(3) The Secretary of State may by regulations provide that the registrar’s power to remove material from the register under this section following an application is limited to material of a description specified in the regulations.
(4) Regulations under this section are subject to the negative resolution procedure.
28A Further provision about removal of material from the register
(1) The Secretary of State must by regulations make provision for notice to be given in accordance with the regulations where material is removed from the register under section 28 otherwise than on an application.
(2) The Secretary of State must by regulations make provision in connection with the making and determination of applications for the removal of material from the register under section 28.
(3) The provision that may be made under subsection (2) includes provision as to—
(a) who may make an application,
(b) the information to be included in and documents to accompany an application,
(c) the notice to be given of an application and of its outcome,
(d) a period in which objections to an application may be made, and
(e) how an application is to be determined, including provision as to evidence that may be relied upon by the registrar for the purposes of satisfying the test in section 28(1).
(4) The provision that may be made by virtue of subsection (3)(e) includes provision as to circumstances in which—
(a) evidence is to be treated by the registrar as conclusive proof that the test in section 28(1) is met, and
(b) the power of removal must be exercised.
(5) Regulations under this section are subject to the negative resolution procedure.’;
(b) omit sections 29 and 29A (application to rectify register and resolution of discrepancies).
(2) In section 1073 of the Companies Act 2006 (power to accept documents not meeting requirements for proper delivery), in subsection (6)(a), after ‘section 1094A(1)’ (inserted by section 82 of this Act) insert—
‘or any corresponding provision of any other enactment’.”—(Kevin Hollinrake.)
This new clause replicates for the register of overseas entities the changes that clause 82 of the Bill makes in relation to the register of companies.
Brought up, read the First and Second time, and added to the Bill.
New Clause 21
Enforcement of requirement to register: updated language about penalties etc
“(1) The Economic Crime (Transparency and Enforcement) Act 2022 is amended as follows.
(2) In section 34 (power to require overseas entity to register if it owns certain land)—
(a) in subsection (4)(a), for ‘the maximum summary term for either-way offences’ substitute ‘a term not exceeding the general limit in a magistrates’ court’;
(b) omit subsection (5).
(3) In section 36 (meaning of ‘daily default fine’) after ‘applies for’ insert ‘the’.”—(Kevin Hollinrake.)
This new clause updates the penalty provision for the offence in section 34 of the Economic Crime (Transparency and Enforcement) Act 2022 to reflect changes made by the Judicial Review and Courts Act 2022. This ensures consistency with the language that clauses 136 and 137 introduce into the 2022 Act.
Brought up, read the First and Second time, and added to the Bill.
Ordered, That further consideration be now adjourned. —(Scott Mann.)
UK Infrastructure Bank Bill [ Lords ] (Second sitting)
Tuesday 22nd November 2022
(2 years ago)
Public Bill CommitteesRead Full debate UK Infrastructure Bank Act 2023 View all UK Infrastructure Bank Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 22 November 2022 - (22 Nov 2022)
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
Richard Fuller (North East Bedfordshire) (Con)
I beg to move amendment 14, in clause 9, page 4, line 14, at end insert—
“, and
(c) the effectiveness and scale of private and other third-party capital attracted to investments by the Bank.”
It is a particular pleasure to serve under your chairmanship, Mr Bone. Had you been with us this morning you would have witnessed a series of debates between the Minister, me and, on occasion, Opposition Members about the importance of the bank, with references to its ability to attract private capital from outside and to the importance of its achieving a financial return for its shareholders, who, I remind right hon. and hon. Members, are the taxpayers, through the choosing of the Government.
Amendment 14 relates to reviews of the bank’s effectiveness and impact. In previous discussions the Minister said—on balance, I think quite rightly—that there was sufficient power in the Government’s ability to provide a framework of strategic priorities and plans and, if necessary, to put directions in place for those objectives not to be included in the Bill. He said there was enough flexibility for the Government to provide a response by other means, which I accept.
In clause 9, however, we are trying to look at the bank’s effectiveness and impact. We are reviewing not just the bank’s homework but the directions provided by the Treasury and His Majesty’s Government over that period. That is underlined by subsection (1), which makes reference to “an independent person”. My amendment would amplify subsection (1)(b) by adding a specific provision on
“the effectiveness and scale of private and other third-party capital attracted to investments by the Bank.”
To reiterate some points that are relevant to the review —the hon. Member for Erith and Thamesmead has agreed with at least one of them, and perhaps more—there are concerns that the bank might spread itself too thinly with regard to where and how it might seek investments, all the way from early-stage investing, through growth capital, to mature investing. It is therefore important that the review by the independent person takes into consideration the efficiency of capital allocated between those various tasks or parts of the investing spectrum.
It is important that we understand the investment structures that are in place. What I have in mind—and I am interested to hear the Minister’s observations—is the fact that the bank is trying to attract external capital to achieve some of our climate change and levelling-up goals. For climate change goals, the backstop provider of the gap in any funding if the private sector does not provide, if we wish to achieve our policy objective, is the UK taxpayer. Right now, in the main Chamber Members are discussing the autumn statement. Members on both sides of the Committee are aware that we are pledging increases in taxation, expenditure and borrowing, notwithstanding additional pressures that achieving net zero will place on taxpayers. It is therefore crucial, if the bank is to play an effective role, that we are vigilant in understanding the burden left at the end of its efforts on the taxpayer, and we should seek to minimise it. My amendment seeks to put pressure on the independent person to look at that objective. Those are the main priorities of my amendment and I look forward to hearing the Minister’s response.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is a pleasure, Mr Bone, to serve under your chairship. It is an honour to follow the hon. Member for North East Bedfordshire. As he has highlighted, we have come to a substantial and key clause.
As the hon. Gentleman briefly stated, the clause sets out requirements for reviews of the bank’s effectiveness and impact. In particular, it states:
“The Chancellor must appoint an independent person to carry out reviews of…the effectiveness of the Bank in delivering its objectives, and…its impact in relation to climate change and regional and local economic growth (including the extent to which its investments in particular projects or types of projects have encouraged additional investment in those projects or types of project by the private sector).”
The independent person must share those reports with the Treasury, which must then publish the reports and lay a copy before Parliament. I welcome that there will be performance reviews of the bank. Given the importance of its objectives, it is right that its ability to meet its aims is evaluated. We will get to the frequency of the reports later. I am sure I do not need to reveal to Committee members that we think the current proposed frequencies are inadequate.
Amendment 14, tabled by the hon. Member for North East Bedfordshire, would add a third element to the reports: the independent person would have to consider the effectiveness and scale of private and other third-party capital attracted to investments by the bank. We have already discussed the concept of additionality—the idea that the bank should be adding value and crowding in private sector investment. Clause 9(1)(b) already makes reference to additional investment, so I am confident that that is already covered by the Bill.
The Economic Secretary to the Treasury (Andrew Griffith)
It is a pleasure to serve under your chairmanship, Mr Bone. I thank my hon. Friend the Member for North East Bedfordshire for his diligence in endeavouring to ensure that the Bill properly protects taxpayers’ interests and properly mobilises the private sector investment that the country depends on. I also thank him for trying his hardest to keep Ministers and this institution to account. I would never seek to do anything to discourage him.
However, in this case, I would like to join hands with the hon. Member for Erith and Thamesmead and, regrettably, confirm that it is my view that clause 9(1)(b), which already talks about the degree to which investments in particular projects or types of projects have encouraged additional investment in those projects or types of projects by the private sector, will go a long way to accomplishing what my hon. Friend wants. I am happy to write to him on what I consider to be the effectiveness of the clause and explore whether there is some value to be added in changing it, but it is my position, as it is that of the hon. Member for Erith and Thamesmead, that clause 9(1)(b) already does that.
My hon. Friend the Member for North East Bedfordshire should be reassured that the Government are setting up this institution with great foresight as to how we keep it accountable. The mere fact that we are legislating at its inception for an independent review to be carried out is a very progressive thing. We are trying to ensure that all our arm’s length bodies are as effective as possible. Speaking personally, I think it would be an innovation for every other arm’s length body to have to have independent reviews at frequent intervals.
I hope that my hon. Friend will agree that the wording of the Bill is already sufficiently broad to cover what he is seeking and accept my assurances to explore whether it should be changed, and that he will not press his amendment to a vote.
Richard Fuller
I appreciate the comments by the Opposition spokesperson and, of course, my hon. Friend the Minister. My concern about subsection (1)(b) is that the focus on the extent to which investments have attracted additional private sector investment is subordinate to the effectiveness, in terms of the impact on climate change and regional and local growth. That essentially means that if there is a project that is very strong on achieving climate change goals, the bank will be perfectly happy to pursue that, even at an extended cost to the taxpayer. I hope I have not got the Minister wrong.
Andrew Griffith
To clarify, I do not read it as being subordinate; it is merely clarificatory that that is within scope. I thought it might be useful to put that on the record.
Richard Fuller
That is very helpful. With that assurance from the Minister, I am happy to withdraw my amendment.
Amendment, by leave, withdrawn.
Abena Oppong-Asare
I beg to move amendment 23, in clause 9, page 4, line 14, at end insert—
“(c) the geographic spread of the businesses and bodies the Bank invests in, and
(d) the ownership of the businesses and bodies the Bank invests in.”.
This amendment requires reviews of the Bank’s effectiveness and impact to consider the location and ownership of the businesses and bodies it invests in.
It might be helpful if I give the background to the amendment. Labour wants to strengthen British industry, supply chains and our industrial strategy. That is why we have proposed amendment 23, which would require reviews of the bank to consider the geographic spread of the businesses and bodies that the bank invests in, and their ownership.
I was concerned to read research by Open Democracy that found that the bank has so far pledged nearly all its cash to firms with offshore owners, including some linked to tax havens and repressive regimes. That was an independent report, not carried out by my party, but by Open Democracy. We want the benefits of the UK Infrastructure Bank to be seen here in the UK, with home-grown renewables such as offshore wind, solar, nuclear, hydrogen and tidal power. We want to work with businesses to crowd in private funding and work with unions to ensure high-quality jobs. I am sure the whole Committee can agree on that.
We know that this could be a national enterprise. We have a world-leading offshore wind industry in Scotland and on the east coast, hydrogen in the north-west and Teesside, nuclear power in the south-east, and solar power in the south and midlands. That can only be realised if investment stays here in the UK. A lack of domestic champions has compromised our security and stalled progress.
Richard Fuller
Are the Opposition concerned that investments and co-investments in projects in the UK will come through funds that may be held in offshore trusts, or is the concern that the bank will be investing in projects offshore through offshore investment trusts?
Abena Oppong-Asare
The hon. Member asks an important question. I am sure that we agree that it is important to look at the geographical element of investments. This is not just a concern of Labour’s; the report I mentioned is by Open Democracy. Brilliant projects are taking place; I do not want to take anything away from them, but I want us to ensure that we are supporting businesses in the UK. That is really important. We all know from talking to our constituents that great investment could be used. That needs to be acknowledged, and that is why we tabled the amendment, which would ensure that reviews of the bank consider the geographic spread of the businesses that the bank invests in and their ownership.
Andrew Griffith
The Government do not support the amendment. The hon. Lady is quite right to raise the importance of the regional split, and we all aspire to higher standards of transparency in business investment. These investments will, of course, be highly transparent. We have talked before about the reporting to Parliament; we will talk later about the annual report and the frequency of reporting. I can assure the hon. Lady that it will not be possible to hide a physical investment in infrastructure. That is the very nature of the provisions. Where the bank has deployed its capital, and the nature of the investments, will be very transparent. Indeed, the report that she cites from Open Democracy rather proves that point. There is no deficiency of transparency if Open Democracy has been able fully to ascertain the ownership.
Abena Oppong-Asare
Open Democracy has done the research that the Government have not done to get that data. It spent significant time getting that data. It should not be left to organisations such as Open Democracy to get that information. That information should be easily accessible to us. This is taxpayers’ money, and I do not see how the amendment is unreasonable.
Andrew Griffith
I make the same point again. The fact is that the information is readily accessible in the public domain through Companies House. It will be accessible through the different mechanisms for holding the UK Infrastructure Bank to account. There is no desire to do anything other than ensure that Parliament and other public interest stakeholders can see precisely where the bank is deploying its capital. That is the very purpose of it. We can talk later about the annual report mechanism, which will include the disclosure of material information.
In respect of—
Andrew Griffith
I was going to say something helpful, but of course I will give way. Hopefully it will re-occur to me in a moment.
Nick Smith
I thank the Minister for giving way. I wonder whether he could talk a little more about why the report on the geographic spread of businesses would not be of value to our country. There was a very good National Audit Office report on the creation of the UK Infrastructure Bank published in June this year. One of its recommendations was that the bank should
“further develop its understanding of where infrastructure needs are greatest so that it routinely informs investment decisions and prioritises them.”
Surely such geographical reporting would help the bank with its work.
Andrew Griffith
The hon. Member sort of took the words out of my mouth. We will expect the UK Infrastructure Bank to make the regional nature of its investments clear. It has done so to date, and clearly it should do so going forward. Things that should happen do not necessarily need to be put into statute at every turn. There are lots of other ways of ensuring that the information is readily available.
Abena Oppong-Asare
I have no further comments, other than to urge Members to support our sensible amendment, which I think would benefit all our constituents across the country.
Question put, That the amendment be made.
Richard Fuller
I beg to move amendment 15, in clause 9, page 4, line 21, leave out from “Treasury” to end of line 22 and insert
“12 months and the second report within 24 months of the day on which this Act comes into force”.
The Chair
With this it will be convenient to discuss the following:
Amendment 21, in clause 9, page 4, line 21, leave out “7” and insert “4”.
This amendment requires an initial report of the Bank’s effectiveness to take place within 4 years after the Act comes into force, rather than the current 7.
Amendment 16, in clause 9, page 4, line 24, leave out “7” and insert “2”.
Amendment 22, in clause 9, page 4, line 24, leave out “7” and insert “5”.
This amendment requires reviews of the Bank’s effectiveness to take place every five years after the initial review, rather than the current 7.
Richard Fuller
One last time, Mr Bone.
This group, including my amendments 15 and 16, relates to the timing and frequency of reports that will be provided. My amendments focus on the start of the UK Infrastructure Bank’s existence. Essentially, my question is: does the Minister feel that there will be enough transparency and exposure around the bank as it sets up its guiding principles, begins its work, puts its board together and starts to put some flesh on the bones of its investment profile?
My concern is that we will be waiting a bit too long if we wait for seven years to have any influence at all on the way in which the bank is being structured and is moving. Will it be going in the right direction? Essentially, we will not know until the next decade, and that will be well on our way to the time at which Parliament has set the objective of achieving net zero.
Amendment 15 suggests that we should have a report within the first 12 months, and a second report after 24 months. Those two reports would provide independent understanding about what the board and the bank leadership itself are doing at such crucial stages. Amendment 16 tries to do something similar in clause 9(5). The Government propose that subsequent reports must be made every seven years, while my suggestion is that they should be every two years.
I am probably willing to concede to the Government that, after the first couple of years, my proposal would probably involve a bit too much oversight over the board. The board must be allowed to do its job, so someone looking over its shoulders every two years is probably a bit too much. I am therefore minded not to press that point, but I will be interested to hear the Government’s thinking, particularly on the first two reports.
Abena Oppong-Asare
I thank the hon. Member for North East Bedfordshire for his comments. I will speak briefly to amendments 21 and 22.
I share the hon. Member’s concerns, because the initial review of the bank will be published within seven years of the Bill coming into force, and subsequent reviews will be published at intervals of no more than seven years. Those timeframes are shocking, particularly given that the Government’s original intention was for the initial report to be published in 10 years’ time.
I point out to the Minister that the levelling up missions are due to be met by 2030 and the net zero target by 2050, so a review in seven years’ time would miss the first of those targets. I would be interested to hear from the Minister how, without that review, those targets will be met.
Amendment 21 would provide that the initial review would be published within four years of the Bill coming into force, while amendment 22 would see subsequent reviews published every five years. That would enable the bank to grow, improve and ensure that it is meeting its objectives. I noted that the hon. Member for North East Bedfordshire may not press his amendments, so hopefully he finds ours to be more appropriate.
Andrew Griffith
I thank both the well-meaning Members—my hon. Friend the Member for North East Bedfordshire and the hon. Member for Erith and Thamesmead—who seek to get the right interval of reviews, both in respect of the first and subsequent periods. The fact that both colleagues have ended up with different intervals suggests that this is not something that need be of doctrine or dogma.
Abena Oppong-Asare
I thank the Minister for pointing out that we have come up with different intervals, but I remind him that, obviously, the Government did that as well. Initially, they were looking to do the review every 10 years, but they have changed it to seven years, so there is scope to adapt and change, as under our amendments.
Andrew Griffith
There is indeed scope, but there is also interplay with other expected reviews to which the UK Investment Bank will be subject. While I oppose, fairly, all the amendments put forward, I undertake to come back on these points at subsequent stages.
Valerie Vaz (Walsall South) (Lab)
I understand that the Minister considers that hon. Members are being well meaning but, if I may say so—I do not know if this is parliamentary language, Mr Bone—that is a tad patronising. We are talking about transparency and ensuring that the bank, which is using public money, is going in the right direction. It should not be too difficult for the bank to come back and have a review in a much shorter time than seven years. Given that we have had three Prime Ministers in a year, we might see many Ministers in those seven years. This Minister may give us his undertaking, but he might not be in place throughout that period.
Andrew Griffith
I am not sure quite how to react to the right hon. Lady’s predictions about my expected tenure, but I dare say she is probably right in many respects. Let us try to get through the remainder of the afternoon before making any amendments. I certainly did not intend to patronise any colleagues.
We have to get this right. The most important thing is that the bank is equipped to deliver the outcomes that we seek by deploying its capital in pursuit of its statutory objectives. I do not want us to trip over a particular interval when, inevitably, a number of reviews will be ongoing. Whether the right hon. Lady likes it or not, the undertaking that I am going to give is to come back on this. The Government have already moved in respect of clause 9(5)—from 10 years to seven. I hear from Members on both sides of the Committee that there is concern that seven years is still too long, and I undertake to come back on that.
Abena Oppong-Asare
The Minister is being generous with his time. I appreciate that he will take this matter away, but I remind him of the bank’s core function: to help us to meet our climate change targets by 2050. Several Back Benchers have already mentioned that. I urge the Minister to review the situation, because if we are going to meet the targets, particularly the 2030 targets, seven years will be far too long. Our proposal seems reasonable, so it would be helpful if the Minister would consider it and write to me about it.
Andrew Griffith
That is effectively what I am doing. The key point is that this is a novel institution. It has a great deal of runway, and it also has an awful lot of operationalising and scaling to do over the immediate period. I hope that no one wants to subject the bank to an excess of reviews during that initial period, as that would inevitably detract from its resources. None of that takes us away from any of the accountability measures we have talked about. I will write to the hon. Lady with a determination, or an explanation, regarding whether we can substitute a different interval in clause 9(5).
David Linden (Glasgow East) (SNP)
As this is the first time I have spoken this afternoon, may I say that it is a pleasure to serve under your chairmanship, Mr Bone?
I want to pin the Minister down a little on what he means when he talks about coming back. Would that be coming back in the form of writing to the hon. Member for Erith and Thamesmead, or coming back during the Bill’s remaining stages? I want to clarify exactly what he means, because some of us have fallen foul of such behaviour by Ministers before.
Andrew Griffith
I am not sure what is the nefarious behaviour of which the hon. Member speaks. I have spoken about our wanting to get the review intervals right. I am talking about potentially proposing a different number as an amendment at a later stage of the Bill.
The Chair
Order. It might help if, when the Minister sends a reply to the shadow Minister, he sends it to the whole Committee.
Katherine Fletcher
It is a pleasure to serve under your chairmanship, Mr Bone—for the first time, I believe.
Recently, I was briefly the incumbent of the roads portfolio, which is obviously an important part of infrastructure. The average time from scheme idea to spades in the ground actually exceeds the seven years that is provided for in the Bill. While I am extremely sympathetic to the points made by my hon. Friend the Member for North East Bedfordshire about ensuring that we do not go too long without checking, I am also sympathetic to the idea that we need to be able to operationalise the schemes. Does the Minister agree that the key to getting the seven years down is the reform of planning legislation? We cannot guarantee an investment until the development consent orders are cleared.
Andrew Griffith
The Minister absolutely agrees that the key point is to make the institution effective in delivering its goals. The hon. Member for Erith and Thamesmead talked about net zero and the imperative to get on, decarbonise our economy and ensure that we have the infrastructure in place. All hon. Members are supporters of scrutiny and accountability, which is why we all trip over this period of seven years as potentially being a long period—it is longer than the tenure that any of us enjoy. That is precisely because there is a trade-off with operationalising and delivering objectives.
Nick Smith
I welcome the Minister’s undertaking to come back with a different date for the laying of a report before Parliament. It is the reporting to and scrutiny of Parliament that is important in this instance, not least because, these days, recent Parliaments have rarely run to four years, although that used to be the average for a Parliament. I hope that the Government will look at a date that will allow each Parliament in the realm to consider the work of the bank. In the very good NAO report that was published in June, as one of its key findings, it said that
“At the end of May 2022, the Bank had made five deals”.
Can the Minister update us on how many deals had been made by the bank up until, say, October this year?
Andrew Griffith
We are moving slightly away from the amendments, but I will write to all hon. Members with an update. The annual report is due to be published imminently; the hon. Member was not here this morning when I confirmed that I have signed off what I needed to do. I expect the report to be laid in the House of Commons Library in the coming days. Some 10 deals have been made so far but, because this is a subject of interest, we will ensure that everybody is aware of the deals and that we lay the annual report before the House as quickly as possible.
Andrew Griffith
If it is a choice, I will do it one final time. We will then move to the vote.
Richard Fuller
The Minister referred to coming back another time about clause 9(5). As my hon. Friend the Member for South Ribble said, when we are reviewing investments, a seven-year period, and perhaps longer, might be a reasonable period for consideration. As the hon. Member for Glasgow East said, there is logic to having a review every five years during a Parliament. To my mind, subsection (4) refers to the more essential period. Essentially, it says that we will not have our first report for seven years. My thought is that we need one more frequently than that. Will the Minister clarify whether he intends to come back to the Committee on not just subsection (5), as he said he would, but subsection (4)?
Andrew Griffith
With respect, these are quite different points. I do not intend to come back on subsection (4). There are many reviews. We should not confuse the additional process of bringing in an outside party and conducting an independent review. That is quite different from the normal regular accountability of publishing an annual report, disclosure, complying with the combined code, having good governance practices, the oversight of the Treasury Committee and any of the other ongoing reviews that the Government spawn all the time. This is a separate statutory independent review. It is an unusual but positive feature, and I do not propose to reopen the point, because that is the Government’s position. We thought about it, and it will take time for this entity to be operating at scale, when it is actually capable of providing a useful determination for the review.
Richard Fuller
I am looking expectantly across the room, but as I do not see any encouragement from Opposition Members, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 21, in clause 9, page 4, line 21, leave out “7” and insert “4”.—(Abena Oppong-Asare.)
This amendment requires an initial report of the Bank’s effectiveness to take place within 4 years after the Act comes into force, rather than the current 7.
Question put, That the amendment be made.
Andrew Griffith
Given the lively exchange of views about frequency, I think that members of the Committee are broadly familiar with the clause. The provision for regular independent and statutory reviews of the bank’s effectiveness in meeting its core objectives is important to ensure that it meets its objectives and delivers good value for the taxpayer. It is important that this is an independent review, independent of the bank itself and of HM Treasury. The review will look at the extent to which the bank has met its climate change and levelling-up objectives. In response to the points made by colleagues in the other place, it will also look at whether the bank has been suitably additional in the market. All of that is fundamental to the bank’s success.
We have talked about the review period. The statutory independent review will be in addition to the UKIB framework document, which will be reviewed after the Bill receives Royal Assent and at regular intervals thereafter, in addition to effectiveness reviews from the Cabinet Office, to which all public bodies are subject. The strategic review in 2024 will cover the general progress to date of the UKIB and its capital position, the implementation of the financial framework, the UKIB’s delegation limits and the return on equity. It will be additional to the financial framework, which will be reviewed from time to time after the strategic review. Given all of that and the debate about the period and my undertaking to come back on clause 9(5) and revisit what is the appropriate time, given colleagues’ concerns that seven years is too long, I recommend that the clause stand part of the Bill.
Abena Oppong-Asare
I am disappointed that the measures to strengthen clause 9 were not adopted. However, I welcome the fact that there will be reviews of the bank. Here and in the other place, concerns have been raised about the projects that the bank is financing, from their location to the level of additionality they provide. Reviews of the bank will certainly clear up the issues that need to resolved.
I hope that there will be opportunity for parliamentary scrutiny and discussion following report publications. I have noted—and I am sure the Minister is aware—that the Public Accounts Committee is currently conducting a review of the establishment of the UK Infrastructure Bank. It is a shame that the recommendations may not come early enough to influence the Bill, but its work demonstrates that the importance of evaluation. We have spoken about this topic at length today, so we will not oppose clause 9.
Question put and agreed to.
Clause 9 accordingly ordered to stand part of the Bill.
Amendments made: 6, in clause 10, page 4, line 32, at end insert—
““appropriate national authority” means—
(a) the Scottish Ministers,
(b) the Welsh Ministers, or
(c) the Department for Infrastructure in Northern Ireland.”
This amendment would define “appropriate national authority”.
Amendment 9, in clause 10, page 5, line 4, leave out the definition of “relevant public authorities” and insert—
““public authorities” means local authorities, Northern Ireland departments and any other person exercising functions of a public nature.”—(Andrew Griffith.)
See the explanatory statement for Amendment 8.
Clause 10
Interpretation
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendment 7.
Clause 11 stand part.
Andrew Griffith
I hope that this discussion is largely technical and not subject to controversy. Clause 10 sets out the definitions for various terms that are used in the Bill, such as financial assistance, local authority and relevant public authorities. Financial assistance is defined in a broadly similar way to the definition in other legislation, such as the Infrastructure (Financial Assistance) Act 2012, but also reflects the specific priorities of the bank. It is intended to be a broad and inclusive definition in line with the potential diversity of the bank’s investment activities.
The Bill contains provisions stating that the bank is able to provide loans to relevant public authorities, and the clause defines public authorities to include Northern Ireland Departments, as well as local authorities in England, Scotland and Wales, and district councils in Northern Ireland. That is indicative of our commitment that the bank should work to deliver collaboratively and UK-wide, taking into account different infrastructure financing landscapes.
Government amendment 7 is a privilege amendment, as is standard for a Bill that begins its passage in the Lords and concerns matters of public finance. A privilege amendment was passed; given the Bill is now in the Commons, I have tabled an amendment to remove it that is purely technical. Clause 11 confirms that the Bill extends to England, Wales, Scotland and Northern Ireland, and the point at which it will come into force, which will be two months after Royal Assent.
James Murray (Ealing North) (Lab/Co-op)
It is a privilege to serve under your chairmanship, Mr Bone, and to speak to this important but uncontroversial aspect of the Bill. As we have heard, clause 10 concerns interpretation. We do not oppose the definition of “activities”, “financial assistance”, “infrastructure”, “local authority”, “objectives” or “relevant public authorities”.
Clause 11 is a short clause concerning the extent and commencement of the Bill, as well as providing its short title. It stipulates that the Act extends to England, Wales, Scotland and Northern Ireland. The legislation comes into force two months after the date on which it is passed, and it is to be cited as the UK Infrastructure Bank Act 2022. Government amendment 7 simply removes the privilege amendment inserted by the Lords, and is a procedural necessity that we have no reason to oppose.
Question put and agreed to.
Clause 10, as amended, accordingly ordered to stand part of the Bill.
Clause 11
Extent, Commencement and short title
Amendment made: 7, in clause 11, page 5, line 11, leave out subsection (4).—(Andrew Griffith.)
This amendment would remove the privilege amendment inserted by the House of Lords.
Clause 11, as amended, ordered to stand part of the Bill.
New Clause 1
Businesses and bodies the Bank invests in
“(1) The Bank must publish an annual report setting out—
(a) the geographical spread of businesses and bodies it invests in, and
(b) the ownership of the businesses and bodies it invests in.
(2) The Bank must prepare and publish a “Good Jobs” plan for all businesses and bodies it invests in, which requires the business or body to improve productivity, pay, jobs and living standards.”—(Abena Oppong-Asare.)
This new clause ensures that the Bank considers the location and ownership of the businesses and bodies it invests in and only invests in businesses and bodies who create “Good Jobs” plans to improve productivity, pay, jobs and living standards.
Brought up, and read the First time.
Abena Oppong-Asare
I beg to move, that the clause be read a Second time.
New clause 1 supports amendment 23. It would require the bank to publish an annual report setting out the geographical spread of the businesses and bodies it invests in, and their ownership. To be clear, amendment 23 required the independent review, conducted over longer time frames, to consider those points. Our new clause requires the bank to report annually on those matters.
Subsection (2) of new clause 1 would require the bank to publish and invest in a good jobs plan for all businesses and bodies, which requires the business or body to improve productivity, pay, jobs and living standards. Before the Minister objects, I will say that the wording might be familiar to members of the Committee, particularly Conservative members, because it is the same wording they voted to remove from the Bill earlier in Committee. The wording will be familiar to Conservative Committee members because it is the first mission of the Government’s levelling-up agenda. Given their voting record in this Committee so far, I am not sure it is something they are committed to any more, but I am sure they can agree that they want the UK Infrastructure Bank to create highly-skilled, well-paid jobs in their constituencies and across the country. I know that constituents in Erith and Thamesmead want to see better job opportunities, whether for young people or older people who are looking to reskill and retrain.
As I said earlier, we do not believe in growth for growth’s sake. We believe in growth because it creates jobs and improves living standards. With fairer choices, we see our economy growing again, powered by the talent and effort of millions of working people and thousands of our businesses. Our new clause would ensure that the bank plays its part in its mission, creating new industries across the country and working hand in hand with businesses to create jobs for the future. Before the Committee concludes, I want to take the opportunity to make some closing remarks and thank some people.
The Chair
Order. That is normally done after we finish this bit. Points of order are normally done at the end.
Andrew Griffith
New clause 1 would oblige the bank to publish an annual report addressing the geographical spread and ownership of the bodies the bank invests in, as well as a good jobs plan for all businesses and bodies it invests in, which requires the business or body to improve productivity, pay, jobs and living standards. It is similar to amendment 23, which has fallen, although it would require reporting after the event rather than a review. Many of my earlier points about amendment 23 remain pertinent. The bank already reports on its investments and will publish a summary in its annual report and accounts. The bank is capturing data on location in its deal assessments and will consider how best to report publicly on location for future investments.
As discussed earlier, the nature of an infrastructure investment means that it is difficult to hide. They tend to be fairly visible and tangible and we would all be able to work out exactly where those millions of pounds of capital had been deployed. I reassure hon. Members that the bank is subject to freedom of information requests in the usual way, which I understand is a painless process by which one can readily find out information. [Interruption.] The legislation was not brought in by this Government, so if it is deficient, it is not on our watch.
Abena Oppong-Asare
The Minister says that it is open to individuals to put in freedom of information requests. I do not understand why the Minister would encourage that when our new clause would make things a lot easier and more transparent. It takes a lot of time to do the paperwork associated with FOI requests, so the new clause would save staff from having to do that extra admin work. In setting up the bank, why does the Minister want it to take on those extra responsibilities? It makes no sense.
Andrew Griffith
It remains my contention that it is simply not necessary for this barnacle to be adhered to this particular ship as it steams out on its levelling-up mission across the UK, taking us on the path to net zero.
David Linden
If I understand it correctly, the Minister’s objection to new clause 1 is that the bank would already be doing quite a lot of reporting anyway—by a nod of the head, he is acceding to that. If the Government oppose further reporting, I presume that they object to new clause 1 because they have undertaken an impact analysis of it. Could he place that impact assessment in the Library so that Members can see it, and perhaps the new clause could be brought back on Report?
Andrew Griffith
I remind the hon. Gentleman that this is not a Government new clause. If anyone wishes to conduct an impact assessment of it, they are very welcome to do so, but it was not tabled by the Government.
David Linden
Does that mean that the Minister is objecting to the new clause purely because it was tabled by the Opposition, rather than based on evidence?
Andrew Griffith
Our position has been very consistent. I understand that it may not be the position of the Opposition, and it is no worse for that. Our position is that statute is not the be-all and end-all. The most important thing is that we get this bank up and running, delivering on its outcomes, and that we do so in good fashion, with the minimum, not maximum, amount of extra statute.
The new clause contains two elements, so I will turn briefly to the other point nested in it, which is the good jobs plan. The bank is already committed to pursuing good environmental, social, resilience and governance policy. We do not feel that adding extra statutory requirements in this particular case is the right decision. The bank will be reporting on the number of jobs created as one of its key performance indicators and will be working up measures on productivity as well as setting out the impact of its assessments, on which we will all hold it to account. With that, I ask the Opposition to withdraw their new clause.
Abena Oppong-Asare
I am afraid that I will not be withdrawing the new clause. It is a sensible new clause and I urge all members of the Committee to support it, so I wish to push it to a vote.
Question put, That the clause be read a Second time.
Abena Oppong-Asare
On a point of order, Mr Bone. I thank all members of the Committee for our robust debate. I am sure that we agree through our different channels that we want the best for this Bill and for our constituents. I hope people take on board the fact that we have been making recommendations that we feel are best for the country.
I thank the Minister for answering our questions. I am disappointed that some of our amendments have been voted against, but I accept that the Minister is going to look at some of our recommendations on some clauses, in terms of the annual review. That is very important. Seven years is a very long time.
I thank the hon. Member for North East Bedfordshire for his detailed analysis and his amendments. I thank the Chairs of both sittings, Mr Davies and Mr Bone, who have guided the Committee with skill. At times, you have been very firm, but rightly so. I thank the Clerks, Amna Bokhari and Bethan Harding, who have been invaluable. I thank colleagues, including my hon. Friend the Member for Ealing North and our Whip, my hon. Friend the Member for Blaydon, and look forward to seeing what comes out of this next.
David Linden
Further to that point of order, Mr Bone. Following the remarks of the hon. Member for Erith and Thamesmead, I thank all hon. Members for their contributions, and you as Chair, Mr Bone, and the Clerks and the officials. I thank in particular the hon. Member for North East Bedfordshire. I think we knew it was unlikely that he would sacrifice his position in the governing party by voting against the Government, but his amendments were helpful in provoking discussion. I know that a number of my colleagues on Bill Committees this afternoon will not have the luxury of finishing at 3 o’clock. On that basis, I thank everybody present for the speedy way in which the Bill has passed through the House and look forward to the further stages and to any remaining t’s being crossed and i’s dotted.
Andrew Griffith
Further to that point of order, Mr Bone. I echo the comments of the hon. Member for Glasgow East and commend the hon. Member for Erith and Thamesmead for her graciousness and diligence. It is fully understood on this side of the Committee that Opposition Members do not have the same support as that provided to Ministers by officials. A great deal of diligence goes into preparing amendments and advocating them. The hon. Member for Ealing North is always a strong advocate for his party’s position. I thank my officials for their work in preparing and presenting the Bill. I thank you, Mr Bone, and your officers. I hope my colleagues will not mind me singling out my hon. Friend the Member for North East Bedfordshire for bringing a certain je ne sais quoi to proceedings, and for advancing his own cause.
Bill, as amended, to be reported.