Energy Bill [ Lords ] (Tenth sitting)
Thursday 15th June 2023
(1 year, 5 months ago)
Public Bill CommitteesEnergy Act 2023 View all Energy Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 15 June 2023 - (15 Jun 2023)
The Committee divided: - Ayes: 6 / Noes: 7 - Question accordingly negatived.
The Chair
Before we begin, although officially Members have to go through me to take their jackets off, I am happy to say that everyone can have it off today—you all have my permission to remove your jackets. Hansard colleagues would be grateful if Members would email speaking notes to hansardnotes@parliament.uk. As usual, please switch electronic devices to silent. Tea and coffee are not permitted, but there is ample water.
Clause 221
Interpretation of Part 10
Question proposed, That the clause stand part of the Bill.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)
It is a pleasure to serve yet again under your chairmanship, Dr Huq. The clause—the final clause in part 10—simply sets out the interpretation of terms used in the clauses on the energy savings opportunity scheme, which we discussed at length on Tuesday. It also explains where provisions fall within devolved competence for the purposes of this part of the Bill.
Dr Alan Whitehead (Southampton, Test) (Lab)
Welcome to the Chair again, Dr Huq; it is a pleasure to serve under your chairmanship. The clause concerns just the interpretation of previous clauses—I am sure that they are great interpretations and will go down in history as such—and I have no comments on it.
Question put and agreed to.
Clause 221 accordingly ordered to stand part of the Bill.
Clause 222
General objective
Question proposed, That the clause stand part of the Bill.
Andrew Bowie
The clause marks the start of part 11, which concerns core fuel sector resilience. By “core fuels” we mean the essential liquid and gaseous fuels used for transport and other purposes, whether derived from crude oil or renewable transport fuels.
Ensuring resilience and security of supply for such fuels has become even more critical given the change that we are experiencing in the energy sector globally. Although renewable technologies are making inroads—electric cars, for example, are of growing importance—core fuels still account for more than 95% of the energy used for transport, and over 1.5 million households use heating oil or liquefied petroleum gas for heating. The Government are determined to reduce our dependence on fossil fuels, but that will take time, and it will be a challenging time for the industry.
Analysis by His Majesty’s Government has shown that there are already single points of failure in the fuel system that are critical to regional fuel supply, and those risks require better management. Recent events, such as covid-19, the tanker driver shortages of 2021 and protest activities at oil terminals, have demonstrated the level of risk to fuel supplies. It is therefore a responsible approach for the Government to take powers to ensure that fuel supplies remain secure.
Existing powers are available to Ministers under the Energy Act 1976; however, those are essentially reactive and may be used only when a disruption to fuel supplies is an actual or threatened emergency. The purpose of these measures is to enable us to mitigate risks before they develop into actual disruptions to supply.
Risk management is at the heart of these measures. Not all risks can be eliminated, but a resilient system is more likely to withstand shocks and to recover from them faster. The Government seek to strengthen the resilience of the sector, now and through the net zero transition, and to proactively minimise and address risks that could cause disruption to the supply of fuel.
Clause 223 provides clarification on the scope of the powers and who they can be applied to. The intention is to cover all the critical operators in the supply chain for core fuels, including refiners, infrastructure operators, suppliers, hauliers and wholesalers. The clause sets out which products are considered core fuels, including conventional transport fuels from oil—such as petrol, diesel and jet—heating oil, liquefied petroleum gas and renewable transport fuels.
Dr Whitehead
We have reached an important part of the Bill, concerning core fuel sector resilience. As the Minister stated, we need to ensure that our core fuel supplies are not cut or interrupted by external circumstances, that we have resilience in our supplies, and that we can be assured at all times that petroleum and so on is getting to and from refineries, and to where it is supposed to go. The Minister has reflected already on past disruption to fuel supplies, which hon. Members will recall. It is understandable that we wish to be assured that supplies are secure.
The Minister also stated that we have powers already to ensure that, where disruption takes place, action can be taken to secure resilience. However, these measures on the principle of core fuel resilience go further than that. As the Minister says, this is about trying to anticipate potential disruption and problems as far as core fuel sector resilience is concerned, and then providing the Government with powers to respond proactively, rather than reactively, to the anticipated issues.
I suggest that one needs to be very careful in how one drafts something for that purpose. I assume that what we do not want, although perhaps the Government do, is to get into the situation in the film “Minority Report”, quite a while ago, in which the lead actor, who happens to be Tom Cruise—not that I regularly watch Tom Cruise films—
Dr Whitehead
Oh, all right. We can have a debate about whether Tom Cruise makes good films or not, but I think the general consensus would be no. The point about that film is that he was, as I recall, a detective who had to go round anticipating crimes before they were committed. Indeed, he did not just anticipate crimes—I think my hon. Friend the Member for Bristol East is looking this up on her iPad—
Kerry McCarthy (Bristol East) (Lab)
I have no idea what you are talking about. I am not sure I have ever seen it.
Dr Whitehead
In that film, people were profiled in case they might commit crimes in later life, and they were arrested well before they could commit a crime, or because their profile suggested that they might do so in the future. That is the problem that we may come across with these clauses.
As we will unpack when we come to later clauses, the way the Bill is drafted puts the onus on suppliers and the owners of undertakings that relate to possible disruptions to do “anything”—that is the word in the Bill —to secure core sector resilience. As we will see, if the people in those sectors fail or fall short of doing “anything”, there are penalties: they can be imprisoned, and they can be fined at the discretion of the Secretary of State.
I am interested to hear what the Minister has to say about that, but it seems to me that that gets rather close to the “Minority Report” line about anticipating offences and, as it were, taking people out before they have committed an offence. Furthermore, it puts an enormous onus on the people carrying out those activities to do things that perhaps ought to be for the Government to undertake and enforce, as the Minister said earlier, at the time that a disruption takes place. It could be said that these clauses are about anticipatory activity. The Government quite properly have powers under previous environmental legislation to deal with disruption.
Clause 222 sets out the general objective for core fuel sector resilience and states that the Secretary of State’s functions must be exercised with a view to
“ensuring that economic activity in the United Kingdom is not adversely affected by disruptions to core fuel sector activities, and…reducing the risk of emergencies affecting fuel supplies.”
That is a very wide brief.
Andrew Bowie
I do not want to stray into Captain Mainwaring and Lance Corporal Jones territory, but I think we have been delving into the realms of fantasy. Just for the record, I should state that Tom Cruise is a fine actor and director. The “Top Gun” films, the “Mission: Impossible” series, “Jerry Maguire” and “Minority Report” are all excellent films that I enjoy watching, and Tom Cruise does a very good job acting in them.
The hon. Gentleman is right to mention the existing powers, but those are reactive; we are seeking to be proactive in order to mitigate the risk to the supply of fuel. Some of us—I was still at school—remember the fuel crisis of 1999 under the last Labour Government. Of course, we would not like to see anything like that happen again. There have been disruptions more recently, and we need to take action to mitigate them.
The power in part 11 allows the Government to regulate the sector, but the intention is to have an effective power to preserve fuel supply for end users. A narrower power would risk missing the next unexpected event, and we would end up with an extensive list of possible risks and actions, which we do not want. The hon. Gentleman is right to say that, in most circumstances, the sector acts voluntarily. However, we must remember that such companies are commercial entities and will always act in their interest. Therefore, it is the Government’s role to ensure that there is a protection in place nationally to support the supply of fuel and ensure that this essential service continues for the British people.
Question put and agreed to.
Clause 222 accordingly ordered to stand part of the Bill.
Clause 223 ordered to stand part of the Bill.
Clause 224
Directions to particular core fuel sector participants
Dr Whitehead
I beg to move amendment 116, in clause 224, page 191, line 17, at end insert—
“(9) The Secretary of State may not issue directions to core fuel sector participants that are in contravention of the Trade Union and Labour Relations (Consolidation) Act 1992.”
This amendment sets in legislation the need for the Secretary of State to act in accordance with the Trade Union and Labour Relations (Consolidation) Act 1992 when dealing with core fuel sector participants.
Dr Whitehead
The amendment is, I hope, germane to the general picture that I have painted of the purport of part 11, which places an onus on companies and those engaged in core fuel sector activity to undertake activity—quite often anticipatory activity—that will ensure that the Government’s aims for core fuel sector resilience are achieved.
We saw in clause 223 the range of activities that are envisaged as being covered by part 11: storing oil, handling oil, the carriage of oil or renewable transport fuel by sea or inland water, transporting oil by road or rail, conveying oil or fuel by pipes, processing or producing oil or renewable transport fuel, and so on. That covers a huge range of industrial concerns, companies and undertakings, and all those companies and undertakings will effectively be bound by clause 224. That means that those companies and undertakings can have directions given to them to do various things, on a substantial anticipatory basis, that are necessary for core fuel sector resilience.
Clause 224(4) states:
“If the Secretary of State considers that there is a significant risk of disruption to, or a failure of, continuity of supply of core fuels, the Secretary of State may direct a person to whom this section applies to do anything in relation to the person’s relevant activities or assets which the Secretary of State considers necessary or expedient for the purpose of…reducing the risk, or…reducing the potential adverse impact of the disruption or failure.”
That is not a very closely specified list of things that the participants in core fuel sector resilience—those people who are doing all those activities—may be directed to do. The Secretary of State can direct those companies to do “anything”.
The amendment seeks to clarify one particular area of what “anything” might mean. The clause could be construed as saying that, in doing “anything”, the Secretary of State could assume—again, on an anticipatory basis as far as core fuel sector resilience is concerned—that the companies concerned may or should start to infringe the rights of their employees in relation to employees’ activities in those companies. That is a pretty wide-ranging power. It suggests that, if it is thought that there might be disruption, the onus is on the companies to take actions that might infringe other established provisions in our legal system in order to carry out what the Secretary of State directs them to do in relation to resilience.
From the structure of the clause, it certainly looks as though the Secretary of State might assume—again, at arm’s length—that those companies could, for example, take actions in relation to their employees not because the employees had done something, but because they might do something in the future that affects core fuel sector resilience and therefore means that the companies would be in breach of the Secretary of State’s directions. Of course, the things that might be done include the company’s employees exercising their trade union rights. As we set out in our amendment, those rights are established by the Trade Union and Labour Relations (Consolidation) Act 1992, which governs and regulates the sort of actions that are reasonable for employees to undertake in respect of their trade union and workplace rights. We do not think they should be thrown away on the basis of an anticipatory direction requiring companies to do things in relation to the Secretary of State’s concerns about fuel sector resilience.
I can see the pretty good labour relations with those engaged in fuel sector resilience, which exist in most circumstances in the sector, turning into very bad relations if there is a sort of undefined onus on the companies, at the direction of the Secretary of State, to do something— anything—about something that may or may not happen. Even though there are rules and regulations governing the companies’ relations with their employees, the temptation—in fact, the rational response—will be for them to say to the trade union representatives, “We are going to make sure you cannot exercise your rights in our firm because we are worried that we might fall under this direction in the future.” If an employer were to do that, even though nothing had happened but something might happen in the future, that would be a guaranteed way to break down labour relations, and might quite possibly precipitate the sort of crisis that the Minister is seeking to deal with on an anticipatory basis.
It is therefore conceivable that the very existence of these arrangements could precipitate crises of fuel sector resilience rather than prevent them. I think all hon. Members would agree that we would not be very happy to have that on the statute book, so we want to add a clear understanding that the Secretary of State’s directions should not imply or direct that the companies should act in contravention of the 1992 Act. That is an attempt to clear up a little this series of very vague and far-reaching powers and arrangements.
The amendment would not, of course, impede the force of the Secretary of State’s directions to ensure that the companies involved in core fuel sector resilience are doing everything they can to ensure resilience, but it would framework the circumstances under which they and the Secretary of State act so that the anticipatory arrangements are within reasonable bounds. I am sure the Minister will see the force of the issue: we may conceivably make anticipatory arrangements into real arrangements if we are not careful about how we go about it. I therefore think that the amendment is a protection not just for those who are employed in core fuel sector resilience areas, but for their employers and for the Secretary of State, such that what the Secretary of State is anticipatorily doing has some clear boundaries as far as what that activity may mean.
Olivia Blake
It is a pleasure to serve under your chairship, Dr Huq. I should say that I am a member of the GMB union.
I rise to support the amendment, which is very reasonable and is an attempt to help the Minister. I am sure he will stand up and say that the Secretary of State would never knowingly try to give directions in contradiction to the measure that we have tabled, but the point of the amendment is to get that on the statute book and make it clear to the industry, and those who are employed in it, that that safety net would be there, because “anything” is a very broad word, as outlined by the shadow Minister, my hon. Friend the Member for Southampton, Test.
There have been great relationships within the industry for many years, and as it is such a critical industry when it comes to health and safety, the working rights of those employed in it are critical to maintaining that safety. I hope the Minister will look on the amendment kindly and understand the reasons for it.
Andrew Bowie
The powers in the clause are important to ensure resilience and address disruption in the core fuel sector. I thank the hon. Member for Southampton, Test for his amendment and reassure him, and the hon. Member for Sheffield, Hallam, that the powers are not intended to interfere with any rights to industrial action or any other employee rights. The Government have maintained a good working relationship with the industry over the years and aim to be aware of proposed industrial actions and to work collaboratively, as we have in the past, to understand the impact and potential mitigations for the risks that might arise.
Clause 224 enables directions to be issued for particular purposes only: to improve and maintain resilience, to restore continuity of supply or to reduce the risk or impact of a disruption. In a situation in which a proposed industrial action is assessed to cause a significant risk of disruption, the direction power could be used to ask core fuel sector participants to make contingency plans to mitigate the risk. It is not intended to cut across the rights in the legislation that the hon. Members have highlighted.
I emphasise that the Government will always seek a voluntary solution in the first instance before issuing a direction and, of course, we believe that industry participants will have a chance to make representations before a direction is made and to appeal a direction when issued. I therefore ask that the hon. Member withdraw his amendment.
Kerry McCarthy
Will the Minister clarify what he means by “industry participants”?
Andrew Bowie
Industry participants would be companies, the industry as a whole, trade union bodies and so on. They are absolutely part of the entire process and, of course, if any of them had an issue with the direction being issued, they would have the right to appeal such a decision.
Clause 224 gives the Secretary of State the power to issue directions for the purpose of maintaining or improving core fuel resilience or to recover from or reduce the risk of a disruption to continuity of core fuel supplies. The past few years have demonstrated that the resilience of the core fuel sector needs to improve significantly. We have seen queues at pumps and stock-outs at petrol stations more often than we should. The supply of fuel remains critical to the operation of the country’s economy and essential services.
The individual companies in the supply chain are flexible and manage their own risks. In extreme cases that are out of these companies’ control, it is likely that they can declare force majeure, meaning that because of the extenuating circumstance, they will not be held liable for their failure to perform contractual obligations. It is therefore crucial that the Government have the power to direct key players in the sector to take actions necessary to manage the risk of disruption to fuel supply that could arise.
The clause gives the Secretary of State the power to issue a person carrying on core fuel sector activities, or a facility owner in the core fuel supply sector, with a direction in three different circumstances. The first is to maintain or improve resilience. It is important to note that this power can be used only if the Secretary of State considers that insufficient progress has been made by the proposed recipient to take the steps necessary to address the issue.
A direction can also be issued to restore continuity of supply or to reduce a significant risk of disruption to supplies. Such directions can be issued without waiting for the sector to make progress voluntarily, given the impact that a disruption or significant risk might have on the public. A direction will be issued only if circumstances mean that it is not practicable to make regulations. That could be because of the urgency of the issue or because of the number of cases—if they are not sufficiently numerous to justify making regulations.
A direction can be issued only to persons carrying on core fuel sector activities in the course of a business with capacity in excess of 500,000 tonnes or to a facility owner if the facility has capacity in excess of 20,000 tonnes. That will cover refineries, terminals, pipeline operators and hauliers when a disruption associated with an individual company could have a significant impact on the continuity of supply of core fuels in our United Kingdom. The direction might be to take an action or to stop the recipient doing something that could have an adverse impact on the resilience of the sector. There is a requirement to provide written notice to the recipient and the reason for the direction, so the sector should be reassured that the recipient will be duly informed and will have the opportunity to make representations regarding such a decision.
The power is designed to cover a broad range of scenarios, because the range of conceivable risks is wide and inevitably uncertain. For that reason, we are unable to provide guidance as to the circumstances in which the power will be used. However, I emphasise that His Majesty’s Government intend to work with industry on a voluntary basis whenever possible and that the power can be considered as only a backstop power where a voluntary approach is not effective.
Clause 225 sets out the procedure to be followed before issuing a direction. The recipient of the direction must be given a written notice that sets out the proposed direction, the reason why the direction is being issued and when the direction is intended to come into effect. They will also get an opportunity to make written representations in respect of the proposed direction.
Given that directions will relate to sites covered by regulations for the control of major accident hazards, it is also appropriate that the relevant competent authorities —such as, in England, the Health and Safety Executive and the Environment Agency—are consulted to ensure that the direction does not inadvertently compromise safety. There is also provision to consult other persons whom the Secretary of State deems appropriate. The Secretary of State will consider any representations from the recipients, or those authorities, when deciding whether to issue the direction.
Clause 226 sets out the consequences for failing to comply with a direction. There could be severe impacts to the security of supply if there is non-compliance. It is therefore essential that there are criminal as well as civil sanctions to deter businesses from failing to comply. The offences set out in this clause are criminal offences and they serve as a deterrent measure so that they can provide credibility to the direction power.
The clause sets out both summary and indictable offences for either imprisonment or a fine, or both. The severity of the offence will determine whether it will be a summary conviction or a conviction on indictment. There has always been a history of compliance in the sector. Our hope is that the provisions will be a strong deterrent to future non-compliance and that businesses will realise that it is cheaper and more responsible to comply.
Dr Whitehead
I put what I hoped was a fairly reasoned case for amendment 116. I understand what the Minister has said about the circumstances in which directions would be given and the aim of working on a voluntary and collegiate basis with the industry and ensuring that things proceed, as far as possible, on a voluntary basis. However, the circumstances about which we are talking may tempt the Government to remove themselves from that principle. The Minister may say that is his aim, but I always think that we have to legislate for the worst circumstances, not the best.
It would be a good idea to have the requirement in the amendment in the part of the Bill that talks about directions. I am not particularly satisfied by what the Minister has said about how the clause will work generally and would like a Division on the amendment, because we want it on the record that we think it is important. It is not because we wish to undermine the Bill’s progress in any way, but the amendment relates particularly to what the Minister said about the circumstances under which he thinks directions should or should not be made. We may discuss some of those things in the debates on other clauses as they come up, but at this point I wish to press the amendment to a Division.
Question put, That the amendment be made.
Andrew Bowie
The aim of the clause is similar to that of the power of direction in clause 224, which is to maintain or improve core fuel resilience or to counteract a fuel-supply disruption or its potential adverse impact. The regulation-making power is designed to be used when a larger class or category of operators and owners need to be directed to take certain actions. The clause may also be used to direct action by smaller businesses and operators such as petrol stations.
Before making any regulations under the clause, the competent authorities for health and safety and environmental protection must be consulted. Subsection (8) sets out that regulations made under the clause will be subject to the affirmative procedure because the potential interference to businesses if the powers are used means that it is only reasonable that Parliament has a say on how the powers are exercised. The powers to make regulations can also make non-compliance with the regulations a criminal offence because of the potential impact of any failure to act. I therefore commend to the Committee this great clause of this great Bill.
Dr Whitehead
The clause further underlines what I said about this part as a whole. It relates to the powers of the Secretary of State to make regulations and to the circumstances in which those regulations may be made. As hon. Members will have read, subsection (4) states:
“If the Secretary of State considers that there is a significant risk of disruption to, or a failure of, continuity of supply of core fuels, the Secretary of State may by regulations require persons of a class or description specified in the regulations to do anything in relation to their relevant activities or assets which the Secretary of State considers necessary or expedient for the purpose of…reducing the risk, or…reducing the potential adverse impact of the disruption or failure.”
Once again, we have the word “anything”, which should trouble considerably hon. Members in Committee and, rather more so, the employees and companies involved in core fuel activity.
What discussions and consultations has the Minister had with the industry involved in the resilience of the core fuel sector? What was the response, formally or informally, to the provisions that the Secretary of State will be enabled to put in place under this clause? Did the sector react favourably or unfavourably to the clause? If it reacted unfavourably, was anything done about further discussion with the companies involved—or, by the way, the trade unions at those particular companies—to address such concerns?
If the Minister is proceeding without such a consultation, that rather calls into question what he has said in the past about the good relationship with the industry. Bearing in mind that the Minister and the Secretary of State are asking the industry to do some potentially onerous things—we cannot get more onerous than “anything”—it would be of relevance to the Committee to hear, whether now or in future, what employees and companies think about it. How easy do they think it will be possible to make arrangements that comply with the directions? After all, as we will come to, it is a question not just of their being subject to the directions, but of them actually going to prison if they do not get it entirely right—rather an important point for employers to consider when responding to the clause. If the Minister has useful information to convey to the Committee, that would be helpful to our considerations.
Andrew Bowie
Happily, the Government and the industry have ongoing positive relations, and open dialogue and discussion on multiple issues. The Secretary of State and the relevant Minister in the Department for Energy Security and Net Zero meet the sector regularly. We have conducted extensive discussions with the industry on the issue over several years. Indeed, as far back as 2017 there was a consultation on this matter, which had heavy industry engagement, so I hope that that allays the fears of the hon. Gentleman and sets his mind to rest.
Question put and agreed to.
Clause 227 accordingly ordered to stand part of the Bill.
Clause 228
Power to require information
Question proposed, That the clause stand part of the Bill.
Andrew Bowie
Clause 228 introduces a power for the Secretary of State to require information from individuals or companies in the core fuels supply sector. It will enable the Government to have an accurate picture regarding the resilience of the sector.
Currently, the Government rely on the sector to voluntarily provide the information necessary to assess, mitigate and respond to any disruption to the core fuels sector. Although most companies comply with requests, some do so only partially and there is a lack of consistency in the quality of some information collected. There is a risk that that leaves the Government unprepared and unable to assess a situation that might impact security of supply.
Clause 228 will apply to operators with throughput in excess of 1,000 tonnes, which encompasses the majority of key sector players. The type of information requested can vary given the circumstances. It may include information around site infrastructure, operations, supply capacity and volume supplied.
The notice to require information specifies the way that the information must be provided, ensuring that the quality of information provided is consistent. The Secretary of State must notify the proposed recipient of the notice in advance to allow them to make representations, and must consider any such representations before deciding whether to issue such a notice.
Clause 229 places a duty to report a notifiable incident and outlines a clear protocol for businesses to inform the Government, should they identify or suspect a potential risk of disruption. It is expected that businesses should be required to report only a notifiable incident relating to an incident that disrupts or causes failure to—or, indeed, creates a significant risk of the same—the continuity of supply of core fuels.
Guidance is currently being developed, following engagement with industry representatives, to set out the parameters for incident reporting. Examples of the sorts of incidents or risks that might be included are physical and operational issues with infrastructure, industrial action and insolvency. The duty is imposed on core fuel sector players with throughput in excess of 500,000 tonnes, such as refineries, major oil terminals and oil hauliers, but that list can be expanded through regulations.
Clause 229 also permits the Secretary of State to seek further information from the person who has reported the incident. That will aid the Government in identifying supply issues before they develop into emergency situations and in taking appropriate action when necessary. The Secretary of State must notify the proposed recipient of the notice in advance to allow them to make representations and must consider any such representations before deciding whether to issue a notice.
Clause 230 creates an offence where there has been a failure to comply with the requirement to provide information when notice has been given to do so. It also creates an offence when there has been a failure to report incidents and a failure to provide further information about a reported incident on request. The Secretary of State has the right to request information from the sector by written notice for the purpose of ensuring resilience. Failure to comply with those requirements without reasonable excuse means that an offence has been committed. Similarly to clause 226, the offences are criminal offences and are designed to act as a deterrent.
Clause 231 allows the Secretary of State by regulation to require information to be provided at specified intervals. The Government currently conduct periodic reviews of resilience in the system through a voluntary approach. The current reporting scheme does not provide sufficiently detailed information to allow the Government to understand fully the risks and capabilities of the sector, and the voluntary nature of the approach carries the risk that the industry could stop providing the information needed at any time, without notice.
The provision of information at specified intervals—for example, annually—will allow the Government to monitor the supply chain, anticipate pinch points in the system and identify any potential issues. The information provided will then be used by the Government to better monitor resilience and to support decision making in relation to determining whether further action, such as issuing a direction, should be taken. Much like other clauses in this part, there are powers to create criminal offences relating to non-compliance with any regulations.
Clause 232 sets out the circumstances in which the Secretary of State may disclose information provided under clauses 228, 229 or 231 to any Government Department or devolved Administration for the purposes of maintaining sector resilience or restoring a disrupted supply, or, if necessary, for the purpose of a criminal proceeding. The clause does not give the Government the right to contravene the Data Protection Act or certain limits under the Investigatory Powers Act 2016.
Clause 233 sets out that His Majesty’s Revenue and Customs has the power to disclose information to the Secretary of State solely for the purpose of facilitating the Secretary of State’s functions relating to core fuel sector resilience. HMRC currently collects data from core fuels operators on the volume of fuel sold to customers, which provides information on their market share and is important in the assessment of their resilience. The power would allow HMRC to disclose that information when needed for the purpose set out in the clause. That will help to ensure that the Department has a robust and reliable understanding of the state of fuel supply and resilience across the sector and can take appropriate action if needed.
The power is important in ensuring that the Government do not seek the same information from the sector twice, and helps to reduce any administrative burden imposed by His Majesty’s Government. It is also worth noting that protections are in place to prevent the disclosure of information if it breaches provisions under Data Protection Act and certain parts of the Investigatory Powers Act 2016. I commend the clauses to the Committee.
Dr Whitehead
I have no further comments on the clauses; we are happy for them to proceed.
Question put and agreed to.
Clause 228 accordingly ordered to stand part of the Bill.
Clauses 229 to 233 ordered to stand part of the Bill.
Clause 234
Appeal against notice or direction
Question proposed, That the clause stand part of the Bill.
Andrew Bowie
The clause sets out the appeal options available to a person who has been issued with either a notice under clause 224 or, under clauses 228 and 229 respectively, a notice to provide information or a notice to provide further information about a reported incident. I commend the clause to the Committee.
Dr Whitehead
I think I come under the category of “anyone else”, Dr Huq.
I may be wrong, but the clause appears to be about appeals against a notice or direction that relates not just to the immediate clauses we have discussed but in particular to clause 227, on the power to make regulations and, as I have said previously, direct
“persons of a class or description specified in the regulations to do anything in relation to their relevant activities”.
If we set that against clause 234, on the authority to undertake an appeal against a direction, it is noticeable that an
“appeal to the First-tier Tribunal against the direction or notice”
can be made on the ground that the decision is
“based on an error of fact...is wrong in law, or...is unfair or unreasonable”.
Does the Minister consider that the extremely vague wording of the requirement to do “anything” could give rise to a lot of income for lawyers, shall we say? Employers could go along to a tribunal and say, “We were required to do ‘anything’ but do not think that is particularly fair or reasonable under the circumstances, because we could not understand what ‘anything’ constituted.” Employers may be under a direction to do things that they are not clear about and, indeed, that could require them to do something they consider to be directly against the interests of the companies they run and, indeed, the broader question of good relations and so on in respect of energy sector resilience.
Andrew Bowie
I thank the hon. Gentleman for his question. His mention of lawyers of course brought to mind another very good Tom Cruise film: “A Few Good Men”. I believe that members of this Committee, unlike what was said in that film, can handle the truth. That is why I am pleased to say that the Government will ensure that any notice given to a person will be based on discussions with the company in question and give them time to make progress to resolve the issue. Given our preference for a voluntary approach, we do not expect a high number of directions in the first place.
Safeguards such as issuing a draft notification and seeking representations from the recipients before making a decision will ensure that decisions are not disproportionate, which I know the hon. Member for Southampton, Test is worried about, or unfair. For that reason, the number of appeals is expected to be extremely low.
Question put and agreed to.
Clause 234 accordingly ordered to stand part of the Bill.
Clause 235
False statements etc
Question proposed, That the clause stand part of the Bill.
Andrew Bowie
Clause 235 creates an offence of knowingly making a materially misleading or false statement when providing information or giving further information about a reported incident. It is important that the information received from the sector under the information powers is as accurate as it can be, given the potential detrimental impact of false information. If a business knowingly provides false or misleading information, that will be considered an offence, which is subject to criminal and/or civil penalties. That also applies to any other statement made to the Secretary of State under this part of the Bill.
Clause 236 sets out the scope of offences that can be made under the regulation powers and how they are punishable. Non-compliance with regulations such as those made under clauses 227 and 231 could seriously impact the Government’s ability to assure the continuity of fuel supply. Therefore, it is of the utmost importance to have the ability to create offences as a deterrent to potential future breaches.
Clause 237 sets out a requirement to seek the consent of the Secretary of State or the Director of Public Prosecutions in England and Wales before proceedings may be brought for offences under this part of the Bill. For Northern Ireland, there is a requirement to seek the consent of the Secretary of State or the Director of Public Prosecutions for Northern Ireland.
Clause 238 sets out that when an offence has been committed by a body corporate or a Scottish partnership with the consent or neglect of an officer or partner, the officer or partner will also be held to have committed an offence and can be prosecuted accordingly. That includes directors and managers, or people acting in that capacity. That will ensure that seniors are encouraging compliance and considering the impact of decisions, as they may be held accountable for non-compliance.
Question put and agreed to.
Clause 235 accordingly ordered to stand part of the Bill.
Clauses 236 to 238 ordered to stand part of the Bill.
Clause 239
Enforcement undertakings
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to consider that schedule 18 be the Eighteenth schedule to the Bill.
Andrew Bowie
The clause sets out the civil sanctions available to Government as an alternative to prosecution when the Secretary of State has reasonable grounds to suspect that one of the listed offences has been committed. Civil sanctions are effective in ensuring compliance, allow flexibility and are much more cost-effective for Government, industry and taxpayers.
The Government have had a consistently strong relationship with the sector, as I have said, and we do not expect compliance or support to diminish. Enforcement undertakings have been used successfully as a main form of enforcement by environment agencies and the Health and Safety Executive, so there is precedent. Given the impact of non-compliance, it is important to have these provisions as well as criminal sanctions, so that proportionality and severity can be assessed, and the right sanction applied.
Schedule 18 places an obligation on Government to have a procedure in place for entering into an enforcement undertaking. It encourages transparency on the part of the Government by requiring the procedure to be published so that both parties are clear on what is needed. It includes a process to make changes to the procedure and puts safeguards in place to ensure that consultation has been carried out before the changes are made and published. It allows variation of the terms of the enforcement undertaking provided that both parties agree in writing.
Schedule 18 also states that a compliance certificate must be issued when the Secretary of State is satisfied that there has been compliance with the undertaking, and it sets out the process for that. The Secretary of State may treat a person as having failed to comply with an undertaking and revoke any compliance certificate where inaccurate, incomplete or misleading information has been provided. A person has the power to appeal decisions regarding the refusal or revocation of compliance certificates on the grounds that the decision is based on an error of fact, wrong in law, unfair or unreasonable, or wrong for any other reason.
Dr Whitehead
I am a little puzzled by what the Minister has said previously about the extent to which there has been consultation and discussion with industry and employers in this area. The Committee needs to be clear that he is now advocating Ministers undertaking enforcement of directions that, as we have discussed, apparently have sanctions, certainly for conviction on indictment, of imprisonment for a term not exceeding two years—or 12 months in Scotland and six months in Northern Ireland, given the respective general limits in magistrates courts.
In other words, we are discussing sanctions on employers—one might say that is an interesting turnaround from sanctions on employees—that could lead to their being imprisoned for a time. That appears to be disproportionate to what is suggested as far as enforcement undertakings are concerned, in particular in view of the arrangements that we have already agreed on regarding the circumstances of a direction and the situation that an employer may or may not find him or herself in as far as trying to comply with those directions is concerned.
Certainly, were I an employer or a company engaged in this area, I might well say to the Minister or the Secretary of State: “Yes, we understand that you may be placing on us particular actions in relation to anticipated disruption, but we would be pretty unhappy if failure to comply with a direction, which might not be entirely in our own hands as a company, could result in us as the directors going to prison for two years.” I would not like that to be a consideration were I a director of such a company.
I am therefore a little surprised, because either those companies have perhaps not read the detail of the Bill—although this bit has been around long enough—or the Government simply have not drawn their attention to it, or consulted them, or discussed the circumstances under which such exist. Have the Government just conjured up these important undertakings and the penalties attached to them as a list in the Bill, or was it the result of iterative discussions with the industry as to what is and is not proportionate for the industry?
Andrew Bowie
I do not wish to go over the same ground in too much detail, but a consultation took place in 2017 and an open discussion and debate continues with the industry on this and many other issues. I know the hon. Gentleman speaks with the best of intentions, but he did mention the detail of the Bill, and it is in that detail that there is a choice to enforce either criminal offences or civil sanctions. In many cases, it is in the interests of both parties and the public to use civil penalties to guarantee enforcement, and that would be appropriate. However, there will be cases in which criminal offences are better for enforcement. The Department will consult on guidance and sanctions, which are also subject to parliamentary scrutiny after Royal Assent, so we will have another chance to debate this. The best way to avoid a sanction or, indeed, going to prison is not to break the law.
Dr Whitehead
That’s what Tom Cruise says. [Laughter.]
Question put and agreed to.
Clause 239 accordingly ordered to stand part of the Bill.
Schedule 18 agreed to.
Clause 240
Guidance: criminal and civil sanctions
Question proposed, That the clause stand part of the Bill.
Andrew Bowie
I have to say that I never thought we would be debating Tom Cruise at such length. Clause 240 sets out the Government’s duty to publish guidance on the criminal and civil sanctions associated with the offences listed in this part of the Bill. The purpose of the guidance is to set out the approach to enforcement for offences I set out earlier. The guidance will provide clarity and further information on how offences will be enforced and what actions the Secretary of State may take. The clause sets out the process that the Secretary of State must follow before they can publish guidance around criminal and civil sanctions. That includes consultation requirements and to lay a draft of the proposed guidance before both Houses of Parliament in line with clause 241.
Clause 241 states that the guidance cannot be issued until 40 days after the day on which it is laid in both Houses, or the later of the two days if laid in the Houses on different days. It is certainly not a “Mission: Impossible”.
Question put and agreed to.
Clause 240 accordingly ordered to stand part of the Bill.
Clause 241 ordered to stand part of the Bill.
Clause 242
Financial assistance for resilience and continuity purposes
Andrew Bowie
I beg to move amendment 22, in clause 242, page 203, line 35, leave out from beginning to “financial” in line 1 on page 204 and insert—
“The Secretary of State may, with the consent of the Treasury, provide”.
This amendment ensures consistency with the approach taken in clauses 103 and 134 in relation to powers to provide financial assistance. It does not alter the substantive effect of clause 242(1).
Andrew Bowie
The amendment ensures consistency with the approach taken in clauses 103 and 134 in relation to powers to provide financial assistance. Clause 242 sets out the financial assistance power, which is intended to be used when direct financial intervention is considered the most appropriate way to preserve resilience or secure continuity of core fuel supply. Such financial intervention is to be strictly for the resilience of the core fuel sector and for securing or maintaining the continuity of fuel supply, for which the Government currently do not have explicit powers.
Dr Whitehead
I hear what the Minister says. It is certainly a balanced approach that the power should be used only in exceptional circumstances, and is not a general bail-out or financial handout. I still have some residual concerns about the way the clause was originally worded. As a result of the amendment, it is to be worded marginally differently. The explanatory statement states that the amendment
“does not alter the substantive effect of clause 242(1).”
I am reminded of the following statement by an analytical philosopher whose name escapes me:
“A difference which makes no difference is no difference at all.”
I did not get a clear answer when we talked about clauses 103 and 134. The Minister moved an amendment to clause 103 to take out the words
“out of money provided by Parliament”,
leaving the clause to state that financial assistance may be provided in general. Is there a difference to clause 242 as a result of this similar amendment? If the Government may draw on moneys that have not been provided by Parliament for the purpose of financial assistance, where are they likely to come from, and what controls would Parliament have?
The present wording of clause 242 provides control, inasmuch as if moneys are provided by Parliament, Parliament has the ability to scrutinise and account for them. If removing that element of the clause gives rise to moneys provided not by Parliament but by, say, the Government of Kazakhstan, might that not worry us a little, or is there no need to worry because the Government’s ability to raise money by non-parliamentary means is tempered by other things?
Andrew Bowie
There is absolutely nothing for the hon. Gentleman to worry about. That is what I say in response to his question on parliamentary oversight and ensuring that there is scrutiny of where the money comes from. We are currently in the process of agreeing a protocol with the Energy Security and Net Zero Committee. We propose that the Secretary of State will write to the Chair of the Committee to notify them of instances where the Department has provided financial assistance under the power, so there will be parliamentary scrutiny throughout the process. I am reliably informed that this is a consistent point with respect to Bill drafting.
Amendment 22 agreed to.
Clause 242, as amended, ordered to stand part of the Bill.
Clause 243
Power to amend thresholds
Question proposed, That the clause stand part of the Bill.
Andrew Bowie
The clause contains a power for the Secretary of State to amend or modify the threshold for capacity in excess of which these measures can be applied. Capacity refers to the tonnage of oil that the operator has handled in the previous calendar year. This would not change the person to whom the powers under this part could apply.
The core fuel sector is dynamic, and our net zero goals may change the landscape of the sector in the future. We therefore need to future-proof the legislation to account for potential changes that may occur in the sector such that the thresholds may need to be changed over time. It is important to stress that any regulations made under the power are subject to the affirmative procedure.
Dr Whitehead
I have no particular comments on the clause, although my hon. Friend the Member for Bristol East has reminded me that the philosopher was William James.
The Chair
Fastest finger first—Kerry McCarthy.
Question put and agreed to.
Clause 243 accordingly ordered to stand part of the Bill.
Clause 244
Interpretation of Part 11
Question proposed, That the clause stand part of the Bill.
Andrew Bowie
The clause identifies several key terms that are used throughout part 11, and lets readers know which sections contain the corresponding definitions. It is therefore intended solely as an aid in interpretation.
Dr Whitehead
I have no comments other than that the word “anything” does not appear in the definitions. That is a minor observation.
Question put and agreed to.
Clause 244 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Joy Morrissey.)