All 16 Lords Chamber debates in the Lords on 14th May 2024

House of Lords

Tuesday 14th May 2024

(1 month, 1 week ago)

Lords Chamber
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Tuesday 14 May 2024
14:30
Prayers—read by the Lord Bishop of Leeds.

Prepayment Meters

Tuesday 14th May 2024

(1 month, 1 week ago)

Lords Chamber
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Question
14:36
Asked by
Lord Lennie Portrait Lord Lennie
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To ask His Majesty’s Government what steps they have taken to compensate individuals or households who have had pre-payment meters wrongly installed.

Lord Callanan Portrait The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
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My Lords, suppliers are responsible for paying compensation. It is paramount that customers affected by the involuntary installation of some prepayment meters receive compensation as soon as possible. Suppliers have so far carried out 150,000 assessments to ensure that those impacted get the compensation they deserve. Of those, around 2,500 customers have been identified as requiring compensation, and 1,502 payments worth £342,000 have been made so far. We engage with Ofgem regularly to ensure that suppliers compensate remaining customers promptly.

Lord Lennie Portrait Lord Lennie (Lab)
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I thank the Minister for that Answer. However, as he said, the assessment was carried out by the selfsame people who supplied the enforced prepayment meters in the first place. Does he not see that there is a potential conflict of interest here? Will he say whether the Government have arranged for any independent checks to show that these assessments are accurate and are not simply letting companies mark their own homework?

Lord Callanan Portrait Lord Callanan (Con)
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I understand the point the noble Lord is making, but that is the role of the independent regulator Ofgem. My Secretary of State and Minister Solloway have had regular meetings with suppliers directly and with Ofgem to ensure that they are doing the job correctly and that the assessments are being made correctly, but the noble Lord is right, and we are monitoring the situation closely.

Earl of Clancarty Portrait The Earl of Clancarty (CB)
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My Lords, energy companies will sometimes say that your meter needs to be replaced because it is too old. Of course, this can be used as a ruse to get a prepayment meter installed. Can the Minister say what authority any energy company has to demand that? Who really decides whether a meter is too old? Where does the responsibility lie for this—with property owners, landlords or tenants, who are paying the bills and are often the point of contact? If the Minister cannot answer this question now, I am happy for him to write to me.

Lord Callanan Portrait Lord Callanan (Con)
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Of course, if the customer is not in debt, it is their choice whether to have a prepayment meter. There are circumstances in which prepayment meters are fitted involuntarily—the consequences of the scandal that we saw last year are being closely monitored—but, in most cases where a customer is in credit and not in debt, it is their choice whether to accept a prepayment meter or, indeed, a smart meter.

Lord Teverson Portrait Lord Teverson (LD)
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My Lords, one of Ofgem’s new conditions for energy suppliers, now that they can start forcing prepayment meters again, is that they carry out internal audits to make sure they are complying with Ofgem’s new rules—that is, marking their own homework. Given the trauma to households of forced entry and the bad behaviour of the sector in the past, should Ofgem not get off its backside and instigate its own external audits?

Lord Callanan Portrait Lord Callanan (Con)
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My Lords, energy suppliers are not marking their own homework. Ofgem very closely monitors them. Not all suppliers have been given permission to restart involuntary installations. They have to put in place a strict code of conduct and make at least 10 attempts to contact the relevant customer. They have to put in place relevant prepayment plans and credit payment plans, if necessary, taking into account the customer’s ability to pay, and some prepayment forcible installs are banned completely in the case of vulnerable customers.

Lord Watts Portrait Lord Watts (Lab)
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My Lords, all the regulators seem to be failing the public. Is it because the Government do not want them to do the job properly, or are all our regulators incompetent?

Lord Callanan Portrait Lord Callanan (Con)
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I think that is a bit of broad generalisation, if the noble Lord will forgive me for that. The principle of independent regulators was established a number of years ago throughout many Governments. I think all of us will have our opinions on how good or bad independent regulators are—they sometimes absolve the political system from some blame; that is my personal criticism—but we put in place through legislation the system of independent regulators, and of course we need to keep an eye on how they are doing their job.

Lord Woodley Portrait Lord Woodley (Lab)
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Does the Minister agree that these energy companies are very fast in putting up their prices but very slow in paying compensation? Does he agree that pensioners and poor people should not be forced to put these meters into their homes if they do not want them?

Lord Callanan Portrait Lord Callanan (Con)
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Of course, I am pleased to tell the noble Lord that, since the height of bill rises, the price cap has come down by about 60%. So it is not true that prices are going up; they are coming down, although they are still at a historical high. As I said in response to a previous question, if the customer is not in debt, it is absolutely their choice what kind of meter they have.

Lord Porter of Spalding Portrait Lord Porter of Spalding (Con)
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On the basis of that answer, can my noble friend confirm for the public at large, so that there is no doubt, that any tenant who has occupied a property that had a bad credit history before the tenant moved in should have been entitled to have that meter swapped to a normal meter—and that any customer who has been kept on a prepayment meter against their will on the basis of a previous tenant’s history should not have had to suffer that and should be due compensation?

Lord Callanan Portrait Lord Callanan (Con)
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I think I would agree with the noble Lord’s point: of course you are not responsible for the debt of a previous tenant. The only qualification I would make on that is that, if it is a tenant, the landlord owns the property, so the choice of meter would be subject to the permission of the landlord as well.

Lord Porter of Spalding Portrait Lord Porter of Spalding (Con)
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That is strictly not true. The tenants in rented property are responsible for their own gas, electricity and water supplies; the landlord is not.

Lord Callanan Portrait Lord Callanan (Con)
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I am happy to hear the noble Lord’s clarification. If I am wrong on that, I will certainly write to him about it.

Lord Sahota Portrait Lord Sahota (Lab)
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My Lords, I represented one of the most deprived wards in my town for over 20 years. What I learned about these prepayment meters is that they are the bane of the lower-paid. Some of those people wanted them made illegal and to be taken out. Do the Government have any such plans?

Lord Callanan Portrait Lord Callanan (Con)
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No, we believe that some customers prefer to have prepayment meters, which enable them to manage their credits and debts responsibly. Some customers choose that; some prefer direct debit; some prefer to operate on a normal credit basis. All choices will remain available. As I said, if they are not in debt, it is the customers’ choice as to what payment method they use.

Lord Foulkes of Cumnock Portrait Lord Foulkes of Cumnock (Lab Co-op)
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My Lords, I have been away for a couple of weeks, and the answers on my return are no better than when I left. Can I give the Minister the opportunity to answer my noble friend’s question? Which organisation is doing best: Ofsted, keeping our education at a high level; Ofgem, causing problems for the consumers, not the suppliers, as we have heard; or Ofwat, for getting the rivers so polluted? Which is number one on his list?

Lord Callanan Portrait Lord Callanan (Con)
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Of course, the absence of the noble Lord has been a great loss to the House. While he may complain about the quality of some of the answers, some of us might take issue with the quality of some of the questions. The noble Lord is asking a very broad question about a whole range of regulators. I suppose I would say that perceptions of the quality of regulators may vary.

Fly-tipping

Tuesday 14th May 2024

(1 month, 1 week ago)

Lords Chamber
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Question
14:44
Asked by
Earl Russell Portrait Earl Russell
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To ask His Majesty’s Government what steps they are taking to reduce fly-tipping and its impacts on natural environments.

Lord Douglas-Miller Portrait The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Douglas-Miller) (Con)
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My Lords, I declare my interests as set out in the register. Fly-tipping and illegal dumping of waste blight our local communities and damage the environment. The Government have given the Environment Agency an extra £10 million a year to tackle waste crime, including illegal waste sites and large-scale illegal dumping, which is often perpetrated by organised crime syndicates. We are also helping councils to take tougher action on local fly-tipping by more than doubling the maximum on-the-spot fine and providing £1.2 million in grants, with a further £1 million to follow later this summer.

Earl Russell Portrait Earl Russell (LD)
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My Lords, large-scale criminal enterprise fly-tipping is out of control and increased by 13% between 2021 and 2022. In areas such as Hoads Wood it was reported that up to 30 trucks of illegal waste were dumped every day between July last year and January this year, with no effective action taken. Campaign groups estimate that it will now cost £10 million to clear up the waste. Will the Government commit to meeting the full costs of this clean-up and undertake a review into this specific case, to assess the resources and effectiveness of enforcement action against large-scale fly-tipping?

Lord Douglas-Miller Portrait Lord Douglas-Miller (Con)
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I completely agree with the noble Earl that the illegal dumping of waste at Hoads Wood is appalling, and a full criminal investigation is under way. I am unable to comment further on the details of that live investigation as I do not wish to prejudice potential enforcement action. However, I assure the House that the Government are determined to bring those responsible to account. Specifically on Hoads Wood, the Secretary of State has written to the chief executive of the Environment Agency, asking him to draw up delivery plans to ensure that appropriate action is taken to resolve this wholly unacceptable situation. As part of that, we will consider how best to support the clearance of waste from the site. The Environment Agency has powers to recover the cost of action to clear the waste from those responsible. The Secretary of State has also asked the chief executive of the Environment Agency to review the agency’s actions in relation to the site, including what lessons it and other agencies involved in the local partnership tackling this can learn.

Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering (Con)
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My Lords, will my noble friend commit to ensuring that prosecutions are indeed brought? Does he accept that, if matters are taken into the landowner’s own hands, this could be a very retrograde step? What conversations has he had with the Home Office and his department in this regard to ensure that prosecutions are brought and perpetrators brought to book?

Lord Douglas-Miller Portrait Lord Douglas-Miller (Con)
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The Government have put in a series of plans recently to assist councils with preparing the evidence to assist with prosecutions. Fly-tipping and illegal dumping is a serious crime and offenders can face a significant fine or a prison sentence. While sentencing is a matter for the independent courts, we have worked with the National Fly-tipping Prevention Group to produce a guide on how councils and others can build a robust case for prosecutions.

Lord Wigley Portrait Lord Wigley (PC)
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My Lords, does the Minister accept that one of the important factors that influences the degree of fly-tipping is the availability of regular, transparent and dependable systems for the collection of waste? Will he have a look at the high figures in Wales for recycling and see whether some lessons can be learnt for elsewhere?

Lord Douglas-Miller Portrait Lord Douglas-Miller (Con)
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I would be delighted to do that and undertake to do it.

Baroness Lampard Portrait Baroness Lampard (Con)
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My Lords, I declare my interest in a family farm business that bears an ever-increasing burden of having to clear up fly-tipped waste, particularly building waste—which recently included a most attractive bathroom suite left in an open meadow. Can the Minister say whether any consideration has been given to requiring waste carrier licensees to display some form of licence on their vehicles? Does the Minister agree that fly-tippers might be deterred from carrying and dumping waste if they and their illegal purpose were more easily identifiable because of the absence of a visible licence on their vehicle?

Lord Douglas-Miller Portrait Lord Douglas-Miller (Con)
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My noble friend makes an extremely good point and, under the new regulations that we are just about to bring out, we are looking at exactly how those permitted to use these regulations have to display the relevant permit, where they display it and how they advertise it, to make it much more clear to those using these facilities whether they are acting legally.

Lord Sikka Portrait Lord Sikka (Lab)
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My Lords, fly-tipping has increased because many councils do not have weekly refuse collection and charge people for taking items to the local refuse collection centres. A major reason behind this is that council spending power as funded by the Government fell in real terms by more than 50% between 2010-11 and 2020-21, and this has not been restored. What responsibility does the Minister accept for creating an environment for fly-tipping?

Lord Douglas-Miller Portrait Lord Douglas-Miller (Con)
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No, I do not recognise that at all. Defra grants have helped over 30 councils across the country to tackle fly-tipping at hotspots, such as by installing CCTV and putting up fencing. Further grants to support even more councils are due this summer. Furthermore, councils retain all income from fixed-penalty notices, the upper limit for which has recently been increased to £1,000, and this is ring- fenced for local enforcement and clean-up.

Lord Berkeley Portrait Lord Berkeley (Lab)
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My Lords, will the Government encourage those who have building waste to tip to put it into filling the potholes in the road? That would kill two birds with one stone.

Lord Douglas-Miller Portrait Lord Douglas-Miller (Con)
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That is a novel idea. I am certainly happy to take it away and consider it extremely carefully.

Lord Cromwell Portrait Lord Cromwell (CB)
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My Lords, the Minister told us earlier that the Government were going to tackle waste sites. I would love to know what that actually means. If it means clearing them up, it simply creates the space for more waste to be tipped. He also talked about on-the-spot fines. The essence of fly-tipping is that there is no one on the spot when you tip it.

None Portrait Noble Lords
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Oh!

Lord Cromwell Portrait Lord Cromwell (CB)
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That is not personal experience. I came across one fly-tipping incident where the offender had actually thrown down the parking ticket that was previously attached to their vehicle and had their number on it. When the police found this, they told me they were not going to take any action because the person whose vehicle it was would simply deny they were driving it.

Lord Douglas-Miller Portrait Lord Douglas-Miller (Con)
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The noble Lord raises a series of extremely good points. By the very nature of fly-tipping, as he rightly points out, it is extremely difficult to be in the right place at the right time when someone is doing it. I completely accept that there are limitations around this. However, the Government have introduced a number of new initiatives, such as the use of cameras, to help councils on this issue. It is very difficult to deal with it. To be honest, my personal view is that it is an education issue rather than an enforcement issue, but we are probably getting a little off topic.

Baroness Hayman of Ullock Portrait Baroness Hayman of Ullock (Lab)
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My Lords, the Minister has outlined some of the initiatives that the Government are bringing in to help combat this, which is clearly welcome, but recent figures show the number of fixed-penalty notices issued decreased by 19% and the number of court fines decreased by 17%. There is no point in bringing in new initiatives and increasing penalties if they are not used. Is the Minister satisfied that sufficient resources are supplied to local authorities and the police to ensure that fly-tippers are caught and properly punished?

Lord Douglas-Miller Portrait Lord Douglas-Miller (Con)
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The noble Baroness raises the issue that the previous noble Lord also raised. It is extremely difficult, by the very nature of the activity, to police it 100%. In his Anti-Social Behaviour Action Plan, the Prime Minister made it clear that councils should take a tougher approach to enforcement and make greater use of the fixed penalties available to them. We have also taken steps to encourage councils to issue more of these penalties by increasing transparency on their use, through the publication of annual enforcement league tables. Councils must also now invest the income from this in enforcement activity and clean-up.

Baroness Bakewell of Hardington Mandeville Portrait Baroness Bakewell of Hardington Mandeville (LD)
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My Lords, there has been discussion around the introduction of digital waste tracking by April 2025. This would make a huge difference to the amount of waste produced and dumped, and help to keep the countryside clear of waste pollutants. When is the SI covering digital waste tracking likely to be brought forward?

Lord Douglas-Miller Portrait Lord Douglas-Miller (Con)
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The noble Baroness is absolutely right about digital waste tracking, because it will reduce the ability of waste criminals to hide evidence of the mishandling of waste and will make it easier for authorities to identify waste dropping out of the system, which might indicate illegal activity, such as fly-tipping. Digital waste tracking records will be required when private waste management companies collect household waste. This should enable householders to check whether their waste has been disposed of properly. We are working towards the digital waste tracking service becoming mandatory from April 2025. Prior to the service being mandatory, there will be a period of public use when the service will be available for all to use on a voluntary basis.

Home Insulation

Tuesday 14th May 2024

(1 month, 1 week ago)

Lords Chamber
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Question
14:55
Asked by
Baroness Blake of Leeds Portrait Baroness Blake of Leeds
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To ask His Majesty’s Government what progress they have made towards delivering the Great British Insulation Scheme.

Lord Callanan Portrait The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
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My Lords, until the end of February 2024, provisionally, 7,506 measures had been installed in 6,238 households under GBIS. The Government are considering whether any legislative changes to GBIS are necessary, and any policy changes would be subject to public consultation, which we would aim to issue this summer. Changes would then be implemented through affirmative regulations.

Baroness Blake of Leeds Portrait Baroness Blake of Leeds (Lab)
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My Lords, even if the delivery of the Great British insulation scheme keeps pace with its most successful month to date, it will reach just 13% of its target of 300,000 homes by March 2026. The green homes grant was scrapped before it reached just 10% of the 600,000 homes it targeted. Meanwhile, insulation rates declined by 90% when the Government scrapped the successful programmes they inherited in 2013. The fact is that UK homes are some of the least well insulated in Europe. If the Government cannot make progress on delivery, have they considered giving devolved Governments and local authorities the power and resources they need to upgrade cold and draughty homes in their areas instead?

Lord Callanan Portrait Lord Callanan (Con)
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There were a number of questions there. In response to the noble Baroness’s last question, the majority of the schemes are currently delivered through local authorities. I absolutely concede that delivery through GBIS has been disappointing. I held a round table with the obligated energy suppliers in March to discuss possible changes and improvements to the system. We will have more to say on that shortly. But this is only one of a number of different energy-efficiency schemes. In the last year alone, we spent about £2.5 billion on improving insulation and upgrading the homes of the poorest members of society.

Earl Russell Portrait Earl Russell (LD)
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What actions have the Government taken to improve the energy efficiency of homes in the private rented sector to date, and what outcomes have been achieved? Does the Minister agree that it is imperative that we improve the take-up of home insulation schemes among the poorest households, which are often the hardest to reach?

Lord Callanan Portrait Lord Callanan (Con)
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I certainly do agree that we need to target the poorest households, which is precisely what we do under schemes such as the social housing decarbonisation fund and the energy company obligation. The noble Lord is also right to point out that the private rented sector is one of the most difficult sectors. But home insulation grants, ECO, et cetera, are often rolled out in PRS homes.

Lord Birt Portrait Lord Birt (CB)
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My Lords, insulation is plainly cost-saving, whatever form your heating takes, but it is particularly important in respect of heat pumps, powered as we know by expensive electricity. Does the Minister yet know when the Government will announce the long-promised rebalancing of the cost of electricity versus the cost of gas?

Lord Callanan Portrait Lord Callanan (Con)
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The noble Lord is absolutely right that, whatever form of heating you have, insulation is always a good thing, because you can use less of it. Rebalancing is obviously a particularly tricky political issue. We are currently looking at it and, although I cannot give the noble Lord a date yet, we hope to have a consultation on some proposals out shortly.

Baroness Whitaker Portrait Baroness Whitaker (Lab)
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As the noble Lord, Lord Birt, says, reaching net carbon zero requires the use of heat pumps, but they are too expensive for most people. Also, installers will not put them in flats even where there are suitable areas, such as the boiler next to the outside balcony, that can be used. What are the Government going to do about propelling installers into helping us reach net zero?

Lord Callanan Portrait Lord Callanan (Con)
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Installing a heat pump where you need an outside condenser unit is difficult in flats, but it is certainly not impossible. I am certainly not aware of any prohibition from installers on installing them in flats. If you have the available outside space, if it does not disturb your neighbours too much, and if planning requirements are specified, it is perfectly possible to install heat pumps in flats.

Lord Teverson Portrait Lord Teverson (LD)
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My Lords, in 2015, George Osborne, as Chancellor of the Exchequer, cancelled the zero carbon homes regulations that were supposed to come into force the next year. Since then, several hundred thousand houses have been built that are substandard in terms of insulation. Would it not have been a much better decision to have implemented the 2016 regulation, which would have stopped all this expenditure now on retrofitting?

Lord Callanan Portrait Lord Callanan (Con)
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The noble Lord is asking me to speculate on past Governments, some of which the Liberal Democrats were part of. I agree with the noble Lord that the future homes standard should be implemented as quickly as possible, and DLUHC assures me that the consultation is live at the moment and will be implemented next year.

Lord Brownlow of Shurlock Row Portrait Lord Brownlow of Shurlock Row (Con)
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My Lords, there is a growing need for this sort of endeavour. I am not sure whether the Minister is aware that, over in the United States, ChatGPT and other artificial intelligence is currently consuming 4% of America’s electricity generation. It is forecast that, by the end of this decade, six years away, it will be 20% to 25%. Are the Government making any plans to prepare for greater electrical generation in this country?

Lord Callanan Portrait Lord Callanan (Con)
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Indeed, my noble friend makes a very good point about the extent to which electricity usage will grow. Actually, the peak electricity usage in the UK occurred a number of years ago. We have actually been becoming more efficient in how we use electricity, with better lighting, et cetera. Clearly, if we move to more electric vehicles and more electrically powered heating, along with some of the circumstances that my noble friend outlines, electrical use will go up. We are spending many tens of billions of pounds on upgrading the electrical grid and rolling out increasing amounts of renewable: offshore wind, tidal, solar and so on. But in essence my noble friend is right that we need to plan for an electrical future.

Lord Howell of Guildford Portrait Lord Howell of Guildford (Con)
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My Lords, following on from that last question, my understanding is that, to have the all-electric, decarbonised, net-zero goal that we really want, we will have to produce and indeed consume about four or five times the present amount of electricity, from various sources. Here we are looking at an area that might reduce the growth of demand by some percentage—and the Minister mentioned the huge figure of some £2.5 billion. Can he give us some idea of what that percentage is? Will we use a quarter less electricity than otherwise, or half, or merely one-tenth? Can he give us a rough idea of where the money is going and what it is going to achieve?

Lord Callanan Portrait Lord Callanan (Con)
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I do not quite understand the noble Lord’s question. We will clearly use more electricity as we roll out more electric vehicles, the electrification of heating, et cetera—but we will use it in different ways. There are ways, for instance, in which we can do load spreading. One of the advantages of smart meters is that they allow people to consume electricity at different times and take advantage of different time-of-use tariffs, et cetera. So, as well as having particular peaks, we can also spread out those peaks over longer times of the day. There is a lot of demand management we can do, as well as increasing the amount of renewables we have on the grid, which we are doing.

Lord Whitty Portrait Lord Whitty (Lab)
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Further to the point made by the noble Lord, Lord Teverson, is the Minister at all confident that the standards for insulation are being met for all new build? Likewise, is he confident that they are being met where planning permission provides for refit? Because anecdotal evidence suggests that both are very low in achievement.

Lord Callanan Portrait Lord Callanan (Con)
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I think that the noble Lord is talking about the building regulations under future homes standard, which is what I was referring in response to the question from the noble Lord, Lord Teverson. They are responsibilities of DLUHC. I am not aware of any evidence that the standards are not being met —clearly, it is the responsibility of local councils to ensure that the building regulations are adhered to—but I am sure that we would be interested in any evidence that the noble Lord has that the regulations are not being adhered to.

Lord Forsyth of Drumlean Portrait Lord Forsyth of Drumlean (Con)
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My Lords, there are examples of firms persuading people to use foam and other cavity insulation systems that cause great damage to their property, thinking they are doing the right thing. What are the Government doing to prevent this being carried out?

Lord Callanan Portrait Lord Callanan (Con)
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The noble Lord makes a good point. Cavity wall insulation needs to be installed correctly. Under the Each Home Counts review, we instituted a system of trust mark licensing for contractors, so certainly under all government schemes any cavity wall insulation that is installed comes with a 25-year guarantee, with appropriate supplier protections and a quality mark guarantee as well.

Lord Harris of Haringey Portrait Lord Harris of Haringey (Lab)
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My Lords, what assessment has the Minister made of the report placed by his department on the government website last month saying that there were major problems with the supply chains necessary for the development of offshore supplies? What are the Government going to do about it?

Lord Callanan Portrait Lord Callanan (Con)
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When the noble Lord says “offshore supplies”, I presume he is referring to offshore wind production. I have not seen that particular report, but now the noble Lord has mentioned it, I will look at it. Supply chains in offshore wind are particularly important. In fact, yesterday in Grand Committee we debated a new regulation of supplier interest reforms that will give an additional payment to offshore wind providers to ensure that their supply chains are more appropriately located in the UK, with more domestic production, et cetera. For existing contracts for difference, they will need to produce a supply chain guarantee to show where the supply chain is and where it originates.

Hydrogen Energy

Tuesday 14th May 2024

(1 month, 1 week ago)

Lords Chamber
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Question
15:05
Asked by
Baroness Sheehan Portrait Baroness Sheehan
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To ask His Majesty’s Government what assessment they have made of the implications of their decision to cancel the pilot plan for a ‘hydrogen town’.

Lord Callanan Portrait The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
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It is me again, I am afraid.

We have decided not to progress work on a hydrogen town pilot until after a decision in 2026 on any potential role for hydrogen in heating. The Government carefully considered the implications of this decision and the alternative options. Heat pumps and heat networks will be the primary means of decarbonisation for the foreseeable future.

Baroness Sheehan Portrait Baroness Sheehan (LD)
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I start by congratulating the Minister on injecting a modicum of common sense into the myth that hydrogen could ever be a meaningful player in home heating. My Question was prompted by a conversation with the CEO of a heat battery company, who is having to postpone a decision to build a new factory until the Government can give a clear signal that the 2026 deadline for the hydrogen strategy review has gone. Will the Minister take this opportunity to give him that clarity, so that he and others can add to the 9% green growth seen last year in an otherwise stagnant economy?

Lord Callanan Portrait Lord Callanan (Con)
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I would be very interested in speaking to the noble Baroness’s contact in heat batteries; I have also met a number of heat battery manufacturers. For those who have not come across it, it is a great growth industry in the UK and a fantastic technology. There is one particularly good company up in Scotland that I visited recently. I am not sure what extra clarification we could provide that would help her contact. We have said—indeed, I said it in my Answer—that heat pumps, heat networks and electrification will be by far the vast majority of the decarbonisation of home heating in the UK. If hydrogen plays any role at all, it will be only a very tiny one.

Lord Naseby Portrait Lord Naseby (Con)
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My noble friend just stated that hydrogen is going to play a very minor role. How is it that, on the continent, hydrogen is playing an increasing role in the domestic markets there? Is he not aware that British Gas has done extensive testing, with varying mixes of hydrogen, and that so far all has gone well with those tests? Why now are His Majesty’s Government kicking hydrogen into the long grass and telling the British consumer that it is basically heat pumps or maybe electrification?

Lord Callanan Portrait Lord Callanan (Con)
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I hesitate to disagree with the noble Lord, but I think I will on this occasion. I would be interested to know where on the continent hydrogen is being rolled out, as he referred to. I am aware of one or two experimental schemes, but no widescale rollout. There is no question that it could work technically—indeed, two homes have been built in Gateshead as an experiment by Northern Gas Networks that currently are heated by hydrogen boilers and hydrogen hobs. Technically, it can work, although there are safety implications that we need to look at. The question we need to be answering is whether this is an efficient use of the country’s energy resources.

Viscount Stansgate Portrait Viscount Stansgate (Lab)
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My Lords, the Minister says that hydrogen might play only a minor role, but does he accept that, in the future, this country is possibly going to need a strategic reserve of energy to take account of the times when the wind does not blow and the sun does not shine, and that hydrogen might play an important part in the long-duration energy storage that we are going to need in this country? It could be a vital part of the country’s strategic energy future.

Lord Callanan Portrait Lord Callanan (Con)
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The noble Viscount is absolutely right. I am a huge advocate of hydrogen precisely because of its role in long-term energy storage in the circumstances that he outlined—when the wind does not blow and the sun does not shine. We were debating whether it has a viable use in home heating. I submit that electrification and heat pumps are a much more efficient way of heating homes.

Lord Howell of Guildford Portrait Lord Howell of Guildford (Con)
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My Lords, my noble friend seems to have to answer every question on these matters these days, and he has another one coming. My understanding is that green hydrogen can be manufactured—all you need is a wind turbine or two—and stored quite near consumer markets in cities and towns, and that it is very effective for trucks and big mobile users but not much use for domestic heating because you cannot get it through the distribution system. Is that a correct assessment? If so, does it put the hydrogen issue in perspective and remind us that we will need a lot more nuclear, and will have to rely on gas as well, to get anywhere near net zero?

Lord Callanan Portrait Lord Callanan (Con)
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There was a lot in that question. I agree that there are great potential uses of hydrogen in long-term energy storage, as the noble Viscount just mentioned, and in the decarbonisation of some aspects of rail transport and heavy goods vehicles—particularly for non-road mobile machinery, where there are no real electrification options, and we have a number of successful manufacturers in this country. The original premise of the noble Lord’s question is what the best method of home heating is. All the evidence and reports show that, even if it were technically possible to pipe hydrogen into domestic homes, electrification is a much more efficient option.

Baroness Northover Portrait Baroness Northover (LD)
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My Lords, the Minister is being very clear, perhaps clearer than his department has been. However, the fact that there is an assessment in 2026 still rather muddles things. His message—which is surely right—that a national hydrogen network is simply not the answer instead of gas boilers and that we need to encourage the take-up of heat pumps, on which we are massively behind most countries in Europe, needs to be clearly put over. At the same time, as the noble Viscount, the Royal Society and others have said, the Government should also be taking action on long-duration energy storage, but they seem not to be.

Lord Callanan Portrait Lord Callanan (Con)
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I am sorry to disagree with the noble Baroness, but we are taking action. We let the first 11 hydrogen electrolytic allocation contracts in what is called the HAR1 round last year. The HAR2 round for further electrolytic allocation is happening this year. We have produced business models for the transmission and storage of hydrogen. I disagree with her that there is no place for a hydrogen distribution network in the UK. There absolutely is a case for that —not for home heating but for industrial uses and some of the uses that the noble Lord mentioned. I disagree with her on the fundamentals of this. We are putting these things in place and we are one of the leading nations in Europe on the production and distribution of hydrogen.

Baroness Blake of Leeds Portrait Baroness Blake of Leeds (Lab)
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My Lords, the Government’s previous announcement on the cancellation of the hydrogen village trial in Redcar stated that it was delayed because

“the main source of hydrogen supply will not be available”.

With stakeholders and residents raising real concerns about the Government’s plans, for the sake of clarity, will the Minister inform the House why the decision was taken to postpone the hydrogen town pilot until after 2026?

Lord Callanan Portrait Lord Callanan (Con)
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It was not postponed—it was cancelled. I visited Redcar and met many of the residents and businesses in the town who were concerned. The noble Baroness is right that one of the principal reasons why the trial did not proceed was that the source of green hydrogen, which would have been produced locally to the trial, for various commercial reasons did not go ahead. We also have to take into account public opinion. We always said that this would depend on public acceptability, and it was increasingly obvious that many people—though not all—in the trial area were not prepared for the trial to go ahead.

Baroness Goldie Portrait Baroness Goldie (Con)
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My Lords, I have listened with great care to the responses from my noble friend the Minister. What are the implications of these responses for future grid hydrogen blending trials?

Lord Callanan Portrait Lord Callanan (Con)
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We have said that blending into the network can still go ahead. It is possible to put hydrogen into the existing gas mains at up to about 20% concentration. We have said that this can go ahead, because it provides an offtake of last resort for the electrolytic hydrogen producers, so that they have a market for it. Existing appliances will work perfectly satisfactorily, and this is a useful first step in rolling out hydrogen production and distribution across the country for all of the commercial and industrial uses that I mentioned.

Lord Whitty Portrait Lord Whitty (Lab)
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My Lords, in previous Questions the Minister and the Government have indicated that all strategic decisions on the use of hydrogen will be taken in 2026. Clearly, the decision on home heating has already been taken. Does the Minister intend to bring forward decisions on the strategic use of hydrogen in industrial and transport applications? If not, are we going to wait another couple of years and have things dribbled out, rather than take a strategic approach to the use of hydrogen, which the Government previously implied would be there in 2026?

Lord Callanan Portrait Lord Callanan (Con)
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I am sorry if I have given the noble Lord the wrong impression. We have already taken strategic decisions on the use of hydrogen. We are supporting the production of both electrolytic green and CCUS-enabled blue hydrogen. We are already rolling out the business models for the delivery of commercial-scale use of hydrogen, and we are one of the leading nations in Europe on doing that. The decision in 2026 would be on whether hydrogen has a role in domestic heating. The noble Lord is getting the issues confused.

Sea Fisheries (International Commission for the Conservation of Atlantic Tunas) (Amendment) (No. 2) Regulations 2024

Tuesday 14th May 2024

(1 month, 1 week ago)

Lords Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts
Motion to Approve
15:16
Moved by
Lord Douglas-Miller Portrait Lord Douglas-Miller
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That the draft Regulations laid before the House on 14 March be approved. Considered in Grand Committee on 7 May.

Motion agreed.

Schools (Mental Health Professionals) Bill [HL]

Order of Commitment discharged
Tuesday 14th May 2024

(1 month, 1 week ago)

Lords Chamber
Read Full debate Schools (Mental Health Professionals) Bill [HL] 2023-24 View all Schools (Mental Health Professionals) Bill [HL] 2023-24 Debates Read Hansard Text Watch Debate
Order of Commitment
15:17
Moved by
Baroness Tyler of Enfield Portrait Baroness Tyler of Enfield
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That the order of commitment be discharged.

Baroness Tyler of Enfield Portrait Baroness Tyler of Enfield (LD)
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My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.

Motion agreed.
Third Reading
Scottish and Welsh Legislative Consent granted.
15:17
Motion
Moved by
Lord Douglas-Miller Portrait Lord Douglas-Miller
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That the Bill do now pass.

Baroness Hoey Portrait Baroness Hoey (Non-Afl)
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My Lords, I assure noble Lords that I will not hold business up for very long. I particularly assure the noble Baroness, Lady Fookes, that I am very much in favour of the Bill. But it is very important that noble Lords understand that, while we may be patting our backs and saying that it is wonderful that we have gone ahead with banning the live export of animals for slaughter, this is not a United Kingdom Bill; it is a Great Britain Bill. Once again, Northern Ireland has been left out. It has been left out, of course, because Northern Ireland has been left in the European Union single market.

There will be more discussion of the repercussions of that on the Rwanda Act. Whatever you think of the Rwanda Act, it was meant to be a United Kingdom Act. As we saw yesterday, the High Court has now said that it is disapplied in Northern Ireland.

As far as this Bill is concerned, the noble Lord who has been taking it through has been extremely kind and helpful in trying to placate me and some others on this issue, making it clear that when animals move from Great Britain to Northern Ireland, they will have to stay for some time—30 days—before they can be moved over the border. Let us be honest: there is a frontier. The Republic of Ireland is a foreign country. Therefore, there would be no incentive for people to move animals to Northern Ireland in order to send them on to the Republic of Ireland.

Therefore, what concerns us is not that specific movement but the fact that there is no guarantee that animals from Northern Ireland, which are under no restriction whatever, will not be moved to the Republic of Ireland and then onwards on a long journey down to the south of Ireland and across the sea to France and then Morocco, with loads of sheep packed together. Yet we are saying that this is wonderful, that we have changed things and that leaving the European Union has allowed us to ban live exports. I just hope noble Lords realise that this is one of many provisions that now cannot be applied to Northern Ireland, because this Government have basically sold out Northern Ireland and left it under the European Union for so many regulations. Unless we wake up and start to realise that, this will be the very beginning of the end of the union of Great Britain and Northern Ireland.

Lord Empey Portrait Lord Empey (UUP)
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My Lords, I will make a couple of points. The Minister got Scottish and Welsh legislative consent for this legislation, but the Northern Ireland Assembly was not asked to give its consent, even though a lot of this area is devolved under existing legislation. The Minister went on to say that there would be potential repercussions to extending the ban to Northern Ireland—for example, under the terms of the trade and co-operation agreement. In effect, the issue here is: is this matter a policy choice or a legal necessity under the trade and co-operation agreement? It would be most helpful to get clarification.

As the noble Baroness, Lady Hoey, said, we had a very significant court decision yesterday. It was dismissed out of hand in the Safeguarding the Union document at paragraph 46, which made very clear that this was only a matter of trade. It specified—in black and white —that immigration would be excluded; that is what the Government said. It went on to say that those suggesting that there would be an issue with immigration were entirely wrong, and that all of the United Kingdom would be treated as an individual unit in the UK’s policy on immigration. We have not only a trade border up the Irish Sea but an immigration border and now an animal export border. Is it not time that people were told the truth, instead of being misled?

Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering (Con)
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My Lords, I thank my noble friend the Minister for his engagement during the passage of the Bill and for the letter he sent me, which I read this afternoon. I echo the concerns expressed by the noble Baroness opposite, because I raised the concerns expressed by the NFU and others that there is still a potential loophole that my noble friend and his department might like to address.

I press my noble friend on reaching a phytosanitary agreement with the EU, the absence of which has meant that poultry producers have lost £85 million in chicken exports to the EU. Poultry exports decreased in value by 69% in the first quarter of 2021. The additional costs and burdens that they had to meet amounted to £60 million in 2021 alone. Those costs are not met by the EU producers, as there are no border controls.

I applaud my noble friend for taking up the issue of labelling, which we discussed on Report. I urge him to ensure that, at the very least, consumers will be made aware that the food they might be about to purchase has been produced in an EU country or a third country and does not meet the standards imposed on our home producers.

Finally, I ask him to use his good offices to ensure that the potential of a first border control post on the EU continental mainland will be achieved at Hook of Holland, using and converting the equine facilities there. Can he use his good offices to ensure that the port of Harwich can be identified as a reciprocal port, to make sure that we have the possibility of a border post and that our food exports reach the EU in a timely and affordable manner? Can he also ensure that we have an SPS agreement with the EU at the earliest possible opportunity?

Baroness Bakewell of Hardington Mandeville Portrait Baroness Bakewell of Hardington Mandeville (LD)
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My Lords, we are at Third Reading; I will be brief and will not ask questions. I thank the Minister for his good humour and patience during the passage of this vital Bill, which had total cross-party support from the most ardent animal rights supporters in the Chamber. Although some of us might have preferred amendments, it was essential that the Bill pass without delay, and I congratulate the Minister on achieving its speedy passage.

Baroness Hayman of Ullock Portrait Baroness Hayman of Ullock (Lab)
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My Lords, as it is Third Reading and this is supposed to be formal, I shall be very brief and just say how delighted I am to see how swiftly the Bill has made its passage through both Houses. It is an important Bill that many of us have campaigned to see for many years, and I very much welcome it and thank all those who have been involved.

Lord Douglas-Miller Portrait The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Douglas-Miller) (Con)
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To be honest, that was a slightly longer list of questions than I was expecting at this stage.

First, I thank all those who have been so kind to support the Bill. I am acutely aware that an awful lot of individuals, Members of this House and the other place, members of the public and other organisations, have been campaigning for this Bill for a very long time, and I am delighted that we have got it to this stage. I am also acutely aware that there are some challenges in certain places where I have been unable to satisfy the noble Baroness, Lady Hoey, and the noble Lord, Lord Empey, on the specific details. However, I think that they are acutely aware that it is probably beyond my remit to address those issues. I have tried extremely hard through both individual engagement and the debates that we have had up to this stage to put the Bill in the position that I think we all want it to conclude on, which is one where it will pass.

Therefore, I feel sad that I cannot satisfy everybody in this space, but I genuinely believe that we can collectively be proud of this Bill, and it does exactly the right thing at this moment in time.

Bill passed.
Commons Reasons and Amendments
Northern Ireland Legislative Consent sought.
15:27
Motion A
Moved by
Viscount Camrose Portrait Viscount Camrose
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That this House do not insist on its Amendments 9 and 19, to which the Commons have disagreed for their Reason 19A.

19A: Because it is appropriate for the CMA to be required to act proportionately in relation to conduct requirements and pro-competition interventions.
Viscount Camrose Portrait The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Viscount Camrose) (Con)
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My Lords, I will also speak to Motions A1, B, B1, C, C1, C2 and D.

I start by thanking noble Lords for their constructive input and careful scrutiny during the passage of the Bill. We have created legislation that will drive innovation and deliver better outcomes for consumers across the UK by addressing barriers to competition in digital markets and tackling consumer rip-offs.

The Bill has been strengthened in many places in this House. However, today, I will speak to Motions A to D, which address amendments that remain to be agreed across the Bill. The Government ask that this House does not insist on the amendments rejected in the other place and that it agrees to the amendment proposed in lieu of changes proposed by noble Lords.

15:30
Noble Lords will be aware that the digital markets issues relate to amendments made in the other place. This House has debated those in detail, and I have had the pleasure to meet noble Lords to discuss them subsequently. The Government have made an important amendment in lieu in this area, which I will come to shortly. However, the other amendments, as made in the other place, strike the right balance between vigorously promoting competition in the interests of consumers and healthy challenge of the CMA’s decisions. I will take these in turn to discuss why we encourage the House not to insist on these amendments to revert the Bill to its original wording.
I will first speak to Motion A, relating to Amendments 9 and 19, tabled by the noble Lord, Lord Faulks. I am grateful for the noble Lord’s contributions and experience on this matter. It has been my pleasure to engage with him on his view that proportionality in this context would create a novel legal standard for appeals regarding the CMA’s decision to impose obligations. The CMA will have significant new powers and discretion under this ex ante regime and it is right that there are safe- guards which ensure that it designs its interventions proportionately. This will strengthen the UK’s position as one of the best places in the world to do business.
I hope that noble Lords on all sides can agree that overregulation is undesirable, and this threshold provides an important safeguard to prevent that. The Government expect that the courts and the Competition Appeal Tribunal, or CAT, will interpret proportionality by taking an approach consistent with their approach to proportionality in ECHR challenges. We also expect that ECHR considerations on proportionality will be directly relevant in most cases anyway.
Moving to Motion C, relating to Amendments 26 to 28, 31 and 32, on penalty appeals, tabled by the noble Lord, Lord Bassam, and the noble Baroness, Lady Jones of Whitchurch, I appreciate the concerns of noble Lords about the potential of full merits appeals to lead to what has been termed “bleed back” into regulatory decisions and we have reflected closely on previous case law on similar issues. Given the CMA’s ability to impose considerable fines, a merits-based approach will allow the CAT to take a more thorough view on whether any penalties have been properly applied.
Having considered the approach of the courts to appeals decisions in competition cases under similar legislative frameworks, the Government are confident that the courts will have no problem in finding that appeals on the merits relating to penalties must be restricted to challenges about the penalty itself and will not be extended to any earlier breach decisions. Appeals against all other digital markets decisions will be under judicial review principles. I hope that this provides reassurance to noble Lords that there is little risk of “bleed back”.
Lord Tyrie Portrait Lord Tyrie (Non-Afl)
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Does the Minister not agree that since, with a merits appeal, a fine could be reduced to nugatory amounts, that what would be considered equivalent to a full merits review of the substantive decision?

Viscount Camrose Portrait Viscount Camrose (Con)
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That would be in respect only of the fine itself. Any other element of the decision, such as the imposition of new conduct requirements or other actions taken to correct anti-competitive effects in the market, would stand and would have been standing throughout the appeal in any event.

I turn to Motion B, which addresses Amendments 12 and 13, on the countervailing benefits exemption, moved by the noble Baroness, Lady Jones of Whitchurch. The amendment looks to revert the clause back to its original wording of

“the conduct is indispensable ... to … those benefits”.

The Government’s revised wording, which replaces “indispensable”, does not change the effect of the clause. It still requires the same high threshold to be met and has the same safeguards. To qualify for the exemption, SMS firms must establish that all the criteria are met. There must be no other reasonable, practicable way to achieve the same benefits to consumers with a less anti-competitive effect. I hope that noble Lords feel reassured that the Government’s drafting maintains the same robust threshold and keeps consumers at the heart of the pro-competition regime.

Your Lordships will remember Amendment 38, tabled by my noble friend Lord Lansley, which sought to place in the Bill a 40-day timeframe for the Secretary of State’s approval of CMA guidance. The Government listened carefully to concerns led by my noble friend relating to a risk of delay in the digital markets regime. We are absolutely committed to getting this regime up and running to start fixing competition problems and deliver greater consumer benefit.

To reinforce this commitment, the Government have tabled Amendment 38A in lieu. This takes the spirit of my noble friend’s amendment and merely adjusts the time limit to working days to align with other timelines in the Bill. It also asks for reasons if guidance is not approved within the time limit. I hope that this provides reassurances to noble Lords about our commitment to the digital markets regime. I thank my noble friend for championing this matter in earlier debates and for his support for the amendment in lieu.

Once again, I thank noble Lords for their contributions during the Bill’s passage and I look forward to others during this debate. Across this House, we are all committed to making the DMCC Bill the best and most effective legislation it can be. I therefore invite noble Lords to agree the government Motions before them. I beg to move.

Motion A1 (as an amendment to Motion A)

Moved by
Lord Faulks Portrait Lord Faulks
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Leave out from “House” to end and insert “do insist on its Amendments 9 and 19.”

Lord Faulks Portrait Lord Faulks (Non-Afl)
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Many of your Lordships will be familiar with the arguments we have had on the Bill. The important point to stress is that there has been a general welcome of this legislation. I would also like to stress that a measure of cross-party co-operation was the hallmark of the scrutiny of the Bill during its passage through your Lordships’ House. Ministers and officials have given their time generously in meetings and have responded promptly and helpfully to the issues that scrutiny has thrown up.

At the heart of the Bill is the regulation of the internet in a way that should prevent market abuse, in particular by big tech. Helpful though the Government have been, they have not provided answers to some important questions, hence amendments being passing on Report. These have been sent back to us by the House of Commons without the Government—save in one respect—making concessions.

One of the areas that gave noble Lords particular concern is the inclusion of amendments in the House of Commons at a late stage, following lobbying of the Government by big tech. A prospective intervention by the regulator is unlikely to be welcomed by big tech companies and, given their enormous legal budgets, will inevitably be challenged. The change of wording from “appropriate” to “proportionate” will make such challenges easier. A reversion to the Bill’s original wording will help to restore balance, and it is hoped that the amendments in my name and those in the name of the noble Baroness, Lady Jones, on appeals against interventions, will achieve that. Our amendments on Motion C are intended to prevent a seepage of arguments on penalty, which involves a merits test, into the judicial review test, which applies to the intervention itself.

Why have the Government made this late change of “appropriate” to “proportionate”? They have been rather coy about this. There has been some waffle—I am afraid I must describe it as such—about increased clarity and the need for a regulator to act in a proportionate manner. That is quite so but, on further probing, the reasoning was revealed: it is intended to reflect the level of challenge derived from jurisprudence from the European Court of Human Rights and the CJEU, where human rights issues are engaged. I remain bewildered as to why big tech has human rights. This is not what the framers of the convention had in mind.

But if—and it is a big “if”—a convention right is engaged, proportionality is the test, or at least part of it. This is a much lower bar than the normal judicial review test. If the Bill remains unamended, this lower bar will apply to challenges whether or not a convention right is engaged. This is good news for big tech and its lawyers, but not for the Bill and its primary purpose.

I ask the Minister this specific question: if the convention right is engaged, proportionality comes into the analysis anyway, but what if a court were to decide that A1P1—the relevant “human right”—was not engaged? With the Bill unamended, proportionality would apply to a non-convention case, greatly to the advantage of big tech. Is my understanding correct?

It seems that big tech has got its way and that litigation wars can commence—a great pity, most specifically for the smaller players and for the ostensible rationale behind the legislation.

On Motion C1, the test for appeals on penalty is to be a merits-based one, rather than the higher bar that a judicial review standard would, or should, involve. The amendments before your Lordships’ House are intended to prevent seepage from one test to another. His Majesty’s Government say that the courts are well used, in different contexts, to applying different tests as part of an analysis. This is true—in theory. My concern is that if I were advising Meta or Google about an intervention and a consequent hefty fine—this is not an advertisement—it is inevitable that I would advise in favour of appealing both aspects of the intervention: against conviction and sentence, as it were.

It is relatively easy to insulate arguments in criminal cases. One question is, was the conviction unsafe? Another is, was the sentence too long? In the emerging world of internet regulation, however, it is likely to be far more difficult in practice. The question of whether an intervention was disproportionate—disproportionate to what?—will inevitably be closely allied to that of whether the penalty was excessive or disproportionate: another win for big tech, and a successful piece of lobbying on its part.

I look forward to words of reassurance from the Minister. In the meantime, I beg to move.

Lord Clement-Jones Portrait Lord Clement-Jones (LD)
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My Lords, I will speak to Motion B1 and briefly in support of other motions in this group.

Last December, at Second Reading, I said that we on these Benches want to see the Bill and the new competition and consumer powers make a real difference, but that they can do so only with some key changes. On Third Reading, I pointed out that we were already seeing big tech take an aggressive approach to the EU’s Digital Markets Act, and we therefore believed that the Bill needed to be more robust and that it was essential to retain the four key competition amendments passed on Report. That remains our position, and I echo the words of the noble Lord, Lord Faulks: that the degree of cross-party agreement has been quite exemplary.

As we heard on Report, noble Lords made four crucial amendments to Part 1 of the digital markets Bill: first, an amendment whereby, when the Competition and Markets Authority seeks approval of its guidance, the Secretary of State is required within 40 days to approve the guidance or to refuse to approve it and refer it back to the CMA; secondly, an amendment reverting the countervailing benefits exemption to the version originally in the Bill, which included the “indispensable” standard; thirdly, amendments reverting the requirement for the CMA’s conduct requirement and pro-competitive interventions to be “proportionate” back to “appropriate”; and fourthly, amendments reverting the appeals standard to judicial review for penalties.

We welcome the fact that the Government have proposed, through Motion D, Amendment 38A in lieu, which effectively achieves the same aims, ensuring that the approval of the CMA guidance by the Secretary of State does not unduly hold up the operationalisation of the new regime. However, the Government’s Motions A, B and C disagree with the other Lords amendments.

15:45
In Europe, where the Digital Markets Act is now in force, we have seen big tech gatekeepers frustrate enforcement by evading the spirit, and in some cases ignoring the letter, of the law. They continue to use their market power to twist their obligations under the Act to maintain their stranglehold. The amendments passed by the Lords and put forward today offer the solution to minimise the chance of this happening in the UK and to ensure that the CMA’s new powers are sufficiently robust to hold big tech to account.
As regards the countervailing benefits exemption—Motion B1 in my name—in the Commons on Report the Government moved away from requiring a big tech firm’s conduct to be “indispensable” to the realisation of consumer benefits to access the exemption. A new form of words was inserted:
“those benefits could not be realised without the conduct”.
The countervailing benefits Clause 29 in the Bill provides a defence to a designated strategic market status entity if it can show its actions provide consumer benefit. The House of Lords amendments were intended to reinstate the higher bar, which would have required the designated firm’s conduct to be “indispensable” to realise such consumer benefit. The “indispensable” standard is a well-understood concept in UK competition law, used in the Competition Act 1998. Nothing could give greater clarity than reinstating this wording, as the Lords amendments seek to do. It is likely that courts would interpret Parliament’s deliberate move away from an existing well-understood standard as intending to create a new, novel threshold. This inevitably will allow big tech firms greater scope to access the exemption and launch complex legal challenges.
The Government have claimed that the change was made to add “clarity”, and that the new wording maintains “the same high threshold”. In response to the concerns that the change in wording will make it easier for SMS firms to evade compliance or appeal, Minister Hollinrake in the Commons on consideration of Lords amendments stated:
“The revised wording about the countervailing benefits exemption did not change the effects of the clause and did not change the guidance in the explanatory notes”.—[Official Report, Commons, 30/4/24; col. 208.]
and that the position has not been materially changed in any way. But we need to query why, if the Government wish to maintain the same high standard but add clarity, they do not simply combine the “indispensable” standard with the new wording in the Bill. The current wording in the Explanatory Notes—that there are “similarities”—is far too weak. If the Government will not reinstate the “indispensable” wording, then the Minister today should clarify at the Dispatch Box and in the Bill’s Explanatory Notes that the “indispensable” standard and the new form of words—that
“those benefits could not be realised without the conduct”—
are equivalent.
None of this debate about wording is academic, as activity by big tech companies in the US and EU already shows. Back in December last year, on Second Reading of the Bill, the noble Viscount, Lord Camrose, used the example of privacy and security as a potential benefit to the user under Clause 29 as a countervailing benefit. He said:
“The firm could claim that the ban was to protect user security and privacy … the DMU would close its investigation only if the SMS firm provided sufficient evidence, such as an independent report from security experts”.—[Official Report, 5/12/23; col. 1450.]
There is already litigation running in the USA where Apple is seeking to justify its anti-competitive acts on the basis that it is justified in protecting the privacy and security of its users. In US v Apple this year, the Department of Justice has been explicit in saying that such justifications are spurious, and the real motivation is that of restricting competition. It would be extraordinarily unfortunate if the Minister’s language was referred to in subsequent litigation about the meaning of Clause 29 as being an indication of the Government’s support for the position adopted by Apple.
The view of the CMA will be crucial. Does the Minister expect the CMA to take the same attitude to security and privacy claims as they have in their Google privacy sandbox investigation—being sceptical of privacy claims and making clear that they are not a justification to allow unduly negative impacts on competition? The implementation of privacy sandbox has been delayed for some years globally because of the CMA’s intervention, protecting consumers from adverse impacts.
As regards the situation in the EU, 16 major trade associations and consumer organisations wrote to the Secretary of State on 24 April, saying:
“We have observed designated companies’ (‘gatekeeper’) efforts to frustrate enforcement of the EU’s Digital Markets Act … The solutions required to prevent this scenario being replicated in the UK are to keep grounds of appeal and challenge as narrow as possible; and preserve the latitude and efficiency with which the CMA can act. Consumers will not reap the benefits of the increased competition if the CMA’s work can be delayed by the designated companies”.
Noble Lords may have seen a recent piece in the Independent by the renowned business journalist, Chris Blackhurst, pointing out that we may become a competition regulatory outlier because:
“Other jurisdictions, including the US and EU, are moving hard against Big Tech, stepping up several gears in their drive to curb their growing dominance”.
Our fears and suspicions are widely shared outside this House. Are the Government in thrall to big tech? I hope the Minister can allay these fears today.
For the avoidance of doubt about the consequences if Motion B1 goes to a vote, we have received advice on these Benches from the Public Bill Office that, because the House has not considered the Government’s new wording in paragraph (c), alongside the indispensability test as inserted by Amendment 13, insisting on Amendment 13 but not Amendment 12 represents a new package of amendments. It is therefore the view of the clerks that any Motion would not risk double insistence in the Commons if the Lords agree to send back Amendment 13.
As regards proportionality, for all the reasons stated by the noble Lord, Lord Faulks, we support his Motion A1. The Bill originally required the CMA to ensure that its interventions were appropriate to the realisation of fair dealing, open choices or trust and transparency of objectives. In the Commons, the Government changed the requirement from “appropriate” to “proportionate”, as we have heard. As described by the noble Lord, Lord Faulks, while seemingly innocuous, this change will have a significant impact on the scope that big tech firms have to challenge CMA decisions under judicial review.
The Government have claimed that, even absent this specific requirement, the regulator would need to ensure that its interventions are proportionate because Article 1 of Protocol 1 to the European Convention on Human Rights would apply to interventions that affect the property rights of big tech firms. But, as the noble Lord has explained so clearly, courts are likely to interpret this as providing new, broader grounds for judicial review appeals of CMA decisions, and this will provide big tech firms with limitless legal budgets with even more scope to tie up the CMA in lengthy legal wrangling. The Bill should be returned to its original form in this area.
We also support Motion C2 regarding the appeal standard, which the noble Baroness, Lady Jones, will speak to. The Bill originally had judicial review as the appeal standard for all CMA decisions under Part 1, but in the Commons the Government moved to merits appeals for penalty decisions. This is dangerous, as it is ultimately the threat of fines that will incentivise big tech firms to comply with the CMA’s decisions. There is even greater danger that merits appeals on penalty decisions, as the noble Lord, Lord Faulks, has said, bleed back across the Bill into regulatory decisions, giving big tech firms greater scope to frustrate and challenge CMA decisions. Minister Kevin Hollinrake’s statement in the Commons that
“the Bill draws a clear distinction between infringement decisions and penalty decisions”.—[Official Report, Commons, 30/4/24; col. 188.]
does not eliminate the concern about the two bleeding into each other, especially if the two streams take place together in the same case. All this means that we should revert to the judicial review standard for penalty appeals as well.
Baroness Jones of Whitchurch Portrait Baroness Jones of Whitchurch (Lab)
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My Lords, I am pleased to support the Motions in the names of the noble Lords, Lord Faulks and Lord Clement-Jones. My Motion C2, which proposes Amendments 32B and 32C in lieu, is in this group.

Throughout the course of the Bill, we have been grateful to the Ministers for their engagement and willingness to reconsider its provisions. We are pleased with a number of concessions which have considerably strengthened the consumer protections within it.

However, the issues at the core of the Bill, which are the ones we are dealing with in this group, remain unresolved. This is the Bill that was meant to even out the balance of interests between the big tech companies and the challenger firms. We heard numerous examples of why this was necessary, why challenger firms were being squeezed out of the market and why the CMA needed to have new powers to create a fair and balanced regime. We originally had a Bill that did just that. This was before the big tech companies intervened and objected to the Government’s proposals. The new version we have in front of us now weighs the scales very much in their interests again.

In the Commons, Minister Kevin Hollinrake claimed that the Government had engaged significantly with both large tech companies and the challenger firms on these changes and that,

“all those cohorts are happy with where the Bill is today”.—[Official Report, Commons, 30/4/24; col. 178.]

I have to tell the noble Viscount the Minister that this simply is not the case. Many firms remain unhappy with the changes introduced to the original Bill and that they have not been matched by the necessary assurances on the practical and legal consequences that will follow, so our objective all along in framing our amendments was to make the Bill legally watertight, to take out ambiguity and to give the CMA the best chance of assessing and moderating the conduct of the tech companies deemed to have strategic market status.

We have been keen to use the wording that is already legally recognised and does not increase the scope for the lengthy, costly and often strategic legal cases which we sometimes see in this field, challenges which could be used delay or undermine the CMA’s attempts to level the playing field. Clarity has to be of the essence. We and the noble Lord, Lord Faulks, have amendments to Motion C, and he has eloquently raised the legal concerns which continue to concern us as well.

Our Amendments 32B and 32C address an area of ambiguity that may give lawyers an open door to revisit CMA decisions to impose a penalty when conduct requirements have been breached. This concern was also raised in the Commons debate. For example, Conservative MP John Penrose described the possible impact of the government changes, such that

“clever lawyers working for big tech firms may effectively be able to broaden the scope through clever use of legal techniques to prolong their attempts to walk backwards slowly and prevent justice from being done”.—[Official Report, Commons, 30/4/24; col. 188.]

I could not have put it any better myself. To address this concern, our amendment makes it clear that appeals on penalties in such cases cannot revisit the original decision, whether to impose conduct requirements or that such requirements have not been complied with. Rather than leaving it to ministerial assurances or non-binding additions to the Explanatory Notes, our amendments would make it absolutely clear that merits appeals on penalties are on only the amounts and other points of detail and not the CMA’s decision to act, something that colleagues have referred to as “bleed back” at previous stages. This amendment represents a compromise. We would have preferred a switch back to the use of judicial review on all aspects of appeals, as preferred by the CMA, but in the absence of such a concession I hope noble Lords will see the value of our proposals.

We are not convinced by the assurances offered in the Commons by Minister Hollinrake that the courts will understand how the rules should be applied; the noble Viscount the Minister repeated this today. As the noble Lord, Lord Faulks, ably demonstrated, there are conflicting legal views on this and few precedents on which we can rely. There is also a remaining concern that where a number of issues are dealt with by the CMA concurrently, the evidence may overlap, which would impact on a merits decision on appeals. Our amendments address these concerns. I hope the Minister sees the sense in our proposal. It merely reflects what the Government say they want to achieve, but which they are refusing to put in legislation. Challenger firms and other interested parties cannot grow and compete with warm words alone, so I give notice that I am minded to test the opinion of the House on this important issue.

The noble Lord, Lord Faulks, also made a compelling case on his Motion Al with regard to proportionality. We have debated this issue before; I do not need to repeat the arguments. We continue to believe that the original wording that the CMA’s conduct in regulating digital markets should be “appropriate” rather than “proportionate” sets the right standard. I hope the Minister will be able to confirm that the Explanatory Notes will be amended to make it clear that the use of “proportionate” is not intended to set a heightened standard for appeals grounds.

16:00
Finally, I am grateful to the noble Lord, Lord Clement- Jones, for setting out his case so clearly on countervailing benefits. Again, this is a helpful compromise wording, which seeks to combine our preferred wording on the “indispensable” standard—a well-understood concept in UK competition law—with the Government’s new wording, which they claim helps to provide clarity. If the Minister is not minded to accept that amendment, could he please not only assure the House of this today but agree to change the Explanatory Notes to make it clear that the “indispensable” standard of countervailing benefits is the same as the Government’s preferred wording that
“those benefits could not be realised without the conduct”?
If we are not able to make progress on this, and if the noble Lord, Lord Clement-Jones, wishes to test the opinion of the House, we will support him. I look forward to the Minister’s response on all these issues.
Viscount Camrose Portrait Viscount Camrose (Con)
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My Lords, I thank all noble Lords who have contributed to the debate today and, of course, throughout the development of this legislation. It has been a characteristically brilliant debate; I want to thank all noble Lords for their various and valuable views.

I turn first to the Motions tabled by the noble Lord, Lord Faulks, in relation to appeals and proportionality. I thank him for his continued engagement and constructive debate on these issues. We of course expect the CMA to behave in a proportionate manner at all times as it operates the digital market regime. However, today we are considering specifically the statutory requirement for proportionality in the Bill. We are making it clear that the DMU must design conduct requirements and PCIs to place as little burden as possible on firms, while still effectively addressing competition issues. The proposed amendments would not remove the reference to proportionality in Clause 21 and so, we feel, do not achieve their intended aim, but I shall set out the Government’s position on why proportionality is required.

On the question of the wording of “appropriate” versus “proportionate”, proportionality is a well-understood and precedented concept with a long history of case law. “Appropriate” would be a more subjective threshold, giving the CMA broader discretion. The Government’s position is that proportionality is the right threshold to be met in legislation due to the fact that it applies, in the vast majority of cases, because of ECHR considerations. It is the Government’s view that the same requirement for proportionality should apply whether or not ECHR rights are engaged.

As Article 1 of Protocol 1—A1P1—of the European Convention on Human Rights will apply to the vast majority of conduct requirements and PCIs imposed by the CMA, with the result that the courts will apply a proportionality requirement, we consider it important that it should be explicit that there is a statutory proportionality requirement for all conduct requirements and PCIs. We believe that proportionality should be considered beyond just those cases where A1P1 may apply, in particular when a conduct requirement or PCI would impact future contracts of an SMS firm.

The courts’ approach to proportionality in relation to consideration of ECHR rights has been set out by the Supreme Court, and we do not expect them to take a different approach here. Furthermore, the CAT will accord respect to the expert judgments of the regulator and will not seek to overturn its judgments lightly. I hope this answers the question put by the noble Lord, Lord Faulks.

On appeals, I thank noble Lords for their engagement on this matter, and in particular the noble Baroness, Lady Jones of Whitchurch, for setting out the rationale for her Amendments 32B and 32C, which seek to provide further clarity about where on the merits appeals apply. I want to be clear that the Government’s intention is that only penalty decisions will be appealable on the merits and that this should not extend to earlier decisions about whether an infringement occurred. I do not consider these amendments necessary, for the following reasons.

The Bill draws a clear distinction between penalty decisions and those about infringements, with these being covered by separate Clauses 89 and 103. There is a Court of Appeal precedent in BCL v BASF 2009 that, in considering a similar competition framework, draws a clear distinction between infringement decisions and penalty decisions. The Government consider that the CAT and the higher courts will have no difficulty in making this distinction for digital markets appeals to give effect to the legislation as drafted.

I now turn to the Motion tabled by the noble Lord, Lord Clement-Jones, in respect of the countervailing benefits exemption. I thank the noble Lord for his engagement with me and the Bill team on this important topic. The noble Lord has asked for clarification that the “indispensability” standard in Section 9 of the Competition Act 1998, and the wording,

“those benefits could not be realised without the conduct”,

are equivalent to each other. I want to be clear that the exemption within this regime and the exemption in Section 9 of the Competition Act 1998 are different. This is because they operate in wholly different contexts, with different criteria and processes. This would be the case however the exemption is worded in this Bill. That is why the Explanatory Notes refer to a “similar” exemption, because saying it is “equivalent” would be technically incorrect.

Having said that, the “indispensability” standard and the threshold of the Government’s wording,

“those benefits could not be realised without the conduct”,

are equally high. While the exemptions themselves are different, I hope I can reassure noble Lords that the Government’s view is that the standard—the height of the threshold—is, indeed, equivalent. The Government still believe that the clarity provided by simplifying the language provides greater certainty to all businesses, while ensuring that consumers get the best outcomes.

I thank the noble Lord, Lord Clement-Jones, for his question in relation to the Google privacy sandbox case. The CMA considers a range of consumer benefits under its existing consumer objective. This can include the privacy of consumers. It worked closely with the ICO to assess data privacy concerns in its Google privacy sandbox investigation and we expect it would take a similar approach under this regime.

I urge all noble Lords to consider carefully the Motions put forward by the Government and hope all Members will feel able—

Lord Clement-Jones Portrait Lord Clement-Jones (LD)
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Will the Government update the Explanatory Notes?

Viscount Camrose Portrait Viscount Camrose (Con)
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Indeed. In principle I am very happy to update the Explanatory Notes, but I need to engage with ministerial colleagues. However, I see no reason why that would not be possible.

Meanwhile, I hope all noble Lords will feel able to support the Government’s position.

Lord Pannick Portrait Lord Pannick (CB)
- Hansard - - - Excerpts

My Lords, before the Minister sits down, may I just press him on proportionality? I understand the argument to be that a proportionality test should be applied in this context even though it is not required in all cases by the European Convention on Human Rights. I see the Minister nodding. Will that now be the general position of the Government, because it is not the law in relation to judicial review generally that there is a proportionality test? If that is to the position of the Government, it would be a very significant development which some of us would welcome and some of us would not. I declare an interest, of course, as one of those lawyers referred to by the noble Baroness, Lady Jones, as looking to take advantage on behalf of their clients. It is a very real issue; how far does this go?

Viscount Camrose Portrait Viscount Camrose (Con)
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It goes only so far as its application to the Bill now. I am not aware of any further measures to take it into other Bills and would not expect to see any.

Lord Faulks Portrait Lord Faulks (Non-Afl)
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My Lords, I am grateful for the Minister’s response on that issue. I asked him the same question that I have asked throughout these proceedings—it is the same question posed by the noble Lord, Lord Pannick—and there does not seem, with great respect, to be an answer to it. The Minister has mostly allowed, to use a cricketing metaphor, the matter to go past the off stump without playing a shot. What really seems to be the position is that he says that proportionality will apply, even if the Human Rights Act or a convention right is not involved. But I think that, in answer to the noble Lord, Lord Pannick, the Minister is saying, “But only in the case of this Bill”. What that means is that big tech is getting a special privilege not afforded to any other litigant in any other context. I ask noble Lords, “Is that a good look?” I do not think that it is.

The Commons reason for preferring “proportionate” to “appropriate” reads as follows:

“Because it is appropriate for the CMA to be required to act proportionately in relation to conduct requirements and pro-competition interventions”.


I do not know whether that was supposed to be a joke, but it is profoundly unsatisfactory. The Government have missed a trick—or rather, they have succumbed to considerable pressure. I welcome the Bill because there is a great deal about it which is good. Having thought very carefully, and with considerable reluctance, I propose to withdraw my amendment.

Motion A1 withdrawn.
Motion A agreed.
Motion B
Moved by
Viscount Camrose Portrait Viscount Camrose
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That this House do not insist on its Amendments 12 and 13, to which the Commons have disagreed for their Reason 13A.

13A: Because it is clearer for proportionality to appear as a separate consideration in the countervailing benefits exemption.
Viscount Camrose Portrait Viscount Camrose (Con)
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My Lords, I have already spoken to Motion B. I beg to move.

Motion B1 (as an amendment to Motion B)

Lord Clement-Jones Portrait Lord Clement-Jones
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Tabled by

Leave out from “House” to end and insert “do not insist on its Amendment 12, to which the Commons have disagreed for their Reason 13A, and do insist on its Amendment 13.”

Lord Clement-Jones Portrait Lord Clement-Jones (LD)
- Hansard - - - Excerpts

My Lords, if this is not a non-parliamentary expression, I will say that the Minister has come within a gnat’s whisker of where we need to be. I rely on his assurances about Explanatory Notes, because they will be important, but I do not move Motion B1.

Motion B1 not moved.
Motion B agreed.
Motion C
Moved by
Viscount Camrose Portrait Viscount Camrose
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That this House do not insist on its Amendments 26, 27, 28, 31 and 32, to which the Commons have disagreed for their Reason 32A.

32A: Because it is appropriate for all appeals about the imposition of a penalty under Chapter 7 of Part 1 to be determined on the merits.
Viscount Camrose Portrait Viscount Camrose (Con)
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My Lords, I have already spoken to Motion C. I beg to move.

Motion C1 not moved.
Motion C2 (as an amendment to Motion C)
Baroness Jones of Whitchurch Portrait Baroness Jones of Whitchurch
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Moved by

At end insert “, and do propose Amendments 32B and 32C in lieu—

32B: Clause 89, page 55, line 20, at end insert— “(1A) Appeals (or parts of appeals) to a penalty imposed under section 85 (penalties for failure to comply with competition requirements) through the application of section 114 of the EA 2002 do not apply to— (a) the CMA’s original decision to impose the requirements as set out in section 85(2), or (b) the original finding that an undertaking has failed to comply with a conduct requirement as set out in section 85(3). (1B) Appeals (or parts of appeals) relating to the decisions listed in subsection (1A) must be determined in accordance with the requirement in section 103(4).”
32C: Clause 103, page 62, line 4, after “89(1)” insert “to (1B)””
Baroness Jones of Whitchurch Portrait Baroness Jones of Whitchurch (Lab)
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My Lords, the Minister said more or less that he agreed with our position but did not see the need for the amendments to be on the face of the Bill. The argument he gave was that the courts would have no difficulty in distinguishing the penalties from the earlier elements of the case—but, as we have already heard this afternoon, some of those legal disputes are just beginning. It is not as clear-cut as we would like, legally, and therefore we do feel the need for that clarification to be in the Bill. I therefore wish to test the opinion of the House on Motion C2.

16:13

Division 1

Ayes: 221


Labour: 121
Liberal Democrat: 59
Crossbench: 32
Non-affiliated: 5
Plaid Cymru: 2
Green Party: 1
Bishops: 1

Noes: 222


Conservative: 197
Crossbench: 11
Non-affiliated: 6
Democratic Unionist Party: 4
Bishops: 1
Ulster Unionist Party: 1
Labour: 1
Independent: 1

Motion C agreed.
16:25
Motion D
Moved by
Viscount Camrose Portrait Viscount Camrose
- Hansard - - - Excerpts

That this House do not insist on its Amendment 38, and do agree with the Commons in their Amendment 38A in lieu.

38A: Page 70, line 37, at end insert—
“(5) When the CMA seek the approval of the Secretary of State for guidance, the Secretary of State must— (a) approve the guidance, or
(b) give reasons to the CMA for not approving it.
(6) The Secretary of State must comply with subsection (5) before the end of the 30th working day after the day on which the CMA seek the Secretary of State’s approval.”
Motion D agreed.
Motion E
Moved by
Lord Offord of Garvel Portrait Lord Offord of Garvel
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That this House do not insist on its Amendment 104, to which the Commons have disagreed for their Reason 104A.

104A: Because protections for consumers in relation to secondary ticketing are adequately provided for under existing legislation (in particular Chapter 5 of Part 3 of the Consumer Rights Act 2015 and the Breaching of Limits on Ticket Sales Regulations 2018 (S.I. 2018/735)).
Lord Offord of Garvel Portrait The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Offord of Garvel) (Con)
- Hansard - - - Excerpts

My Lords, I too thank noble Lords for their constructive engagement and debate during the passage of this Bill and echo the remarks of my noble friend Lord Camrose on the importance of this legislation. Since noble Lords last discussed secondary ticketing, the Government have given further thought to addressing the concerns raised in both Houses. We still do not see the merit in more or duplicative regulation at this stage. Enforcement action using the existing rules has already resulted in jail sentences for two touts as well as a confiscation order of £6.1 million. We are also awaiting sentencing on four recent prosecutions later this month.

Crucially, there have been rapid changes in the ticketing market in the last few years. Greater use of app-based verification and staggered ticket releases mean that businesses in the primary market can, if they wish, easily manage secondary ticketing. However, it is evident that good practice must go further and wider. That is why the Government are committing to carry out a review of the ticketing market as a whole, including primary sellers, so that good practice can be spread further. The most recent review by the CMA examined only the secondary market, but it is our belief that seeking to address benefits and protections purely through action in the secondary market will not deliver the best outcomes for consumers. For this reason, the review will consider issues such as why some primary sellers seem to be more successful than others at getting tickets directly into the hands of genuine fans, and what we can learn from that. The review will take place over nine months, after which the Government will consider any appropriate further action.

The Department for Business and Trade is ready to work with DCMS and start the review as soon as possible after the Bill receives Royal Assent. We will welcome input, expertise and views from this House and the other place, as well as from venues, artists, promoters, ticket sellers and resellers, enforcers and consumers. I encourage noble Lords to back the Government’s review to ensure meaningful and evidence-based recommendations following its conclusion. I invite noble Lords to agree the Motion and I beg to move.

Motion E1 (as an amendment to Motion E)

Moved by
Lord Moynihan Portrait Lord Moynihan
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At end insert “, and do propose Amendment 104B in lieu—

104B: After Clause 308, insert the following new Clause—
“Secondary ticketing facilities
(1) After section 92 of the Consumer Rights Act 2015 insert—
“92A Requirements on secondary ticketing facilities
(1) A secondary ticketing facility must not—
(a) permit a trader or business to list tickets for resale unless the trader or business has provided evidence of proof of purchase to the ticketing facility, or evidence of title to the tickets offered for resale, or
(b) permit a reseller to sell more tickets to an event than they can legally purchase from the primary market.
(2) A secondary ticketing facility must ensure that the face value of any ticket listed for resale, and the trader or business’s name and trading address are clearly visible, in full, on the first page on which a purchaser can view the ticket.
(3) The Secretary of State may by regulations made by statutory instrument—
(a) add or amend conditions on secondary ticketing facilities,
(b) specify appropriate forms of proof of purchase for the purposes of subsection (1)(a), and
(c) specify the form or forms in which the name and trading address required under subsection (2) must be displayed.
(4) Regulations under subsection (3) may not revoke conditions on secondary ticketing facilities.
(5) Regulations under subsection (3) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”
(2) Within the period of nine months beginning with the day on which this Act is passed, the Secretary of State must lay before Parliament the outcomes of a review of the impact of subsection (1) on the operation of the secondary ticketing market.
(3) In preparing the review under subsection (2), the Secretary of State must consult—
(a) ticket sellers and resellers,
(b) artists and performers, or their representatives,
(c) consumers and representative organisations, and
(d) any other persons the Secretary of State deems appropriate.
(4) The review under subsection (2) may, if the Secretary of State deems it appropriate, consult on or specify new conditions to be placed on secondary ticketing facilities under the powers in section 92A of the Consumer Rights Act 2015.
(5) The obligation under subsection (2) may be met by a review begun before the passing of this Act.””
Lord Moynihan Portrait Lord Moynihan (Con)
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My Lords, I declare an interest in having been co-chair of the APPG on Ticket Abuse, my fellow co-chair being Sharon Hodgson MP. We worked together to protect sport fans and concert- goers from abuse in the secondary market for decades. I start by thanking my noble friend the Minister for the interest he has taken in the subject and for arranging the opportunity to talk through the issues concerned. I also stress the cross-party support and co-operation on this issue. I believe we have reached a degree of consensus about what we are trying to achieve with this amendment in lieu, and I hope we will continue, during the exchanges this afternoon, to reach agreement.

Put simply, this amendment covers two aspects: a review, as requested by the Government, which was the main outcome of the proceedings in another place; and two small but critical amendments. The first is that anybody should have to provide evidence of proof of purchase to the secondary market if they intend to sell tickets, just as you would in any other secondary market, which would avoid the extensive fraud in the UK under the current legislation. The second is to make sure that the trader’s name and the face value of the ticket listed for resale are clearly visible on the ticket. That would bring us up to date with modern technology and the changes in law and technology over the last 10 years.

16:30
As my noble friend the Minister mentioned, the Minister in the other place offered a review of the primary and secondary ticket markets, saying that
“we recognise the strength of feeling on this matter, which has been expressed by Members of the other place and in certain quarters of this House, so we commit today to undertaking a review of ticketing practices and how they impact on consumers”.—[Official Report, Commons, 30/4/24; col. 180.]
I think a further review is not needed at this time. When we debated this issue on the Consumer Rights Bill, the Government commissioned an independent inquiry undertaken by Professor Waterson. That led to yet another inquiry by the CMA, which reported under 1,000 days ago in a substantial document of some 60 pages. Its findings and recommendations, which are reflected in the two proposals in my amendment, came after nearly six years of detailed review, as opposed to the six months of further review that the Government are offering today. Another review would push us further down the road, while the world of sport and entertainment faces an exponential rise in the abuses caused by manipulation of the secondary market.
Astute Members of your Lordships’ House will have noted that, in a spirit of co-operation and progress, as I believe it is important for the House to accommodate as far as possible the wishes of another place, a further time-limited review has been placed in this amendment. However, the clerks have informed me that it has to be within the scope of Amendment 104, since the original amendment referred only to the secondary ticket facilities. It would be inconceivable if we did not consider the primary and secondary ticket markets in the terms of reference for the review, because they rely on each other. While a further review is unnecessary, the work of the primary market would in any event be a key aspect of any independent review since the two markets are inextricably linked. I am happy, in that context, to recommend a further review.
I am not against the secondary market and nothing in my amendment would impact the effective working of its transparent and legal operation. If you cannot go to an event, you should be able to sell back your ticket. Virtually every leading primary market supplier makes that possible. My amendment focuses on the much narrower abusive use of the secondary market—exactly the type of market that this House criminalised at the time of the Olympic Games in the legislation that we passed for London 2012. This market has become so corrosive that it has been completely criminalised in a number of countries, not least recently in Ireland, and this Chamber has criminalised it in football—although, as I will demonstrate, existing legislation is being circumvented by the likes of viagogo. My amendment is exclusively about the illegal, corrupt black market in evidence in parts of the secondary market. My minor but important changes are directly supported by the report and recommendations of the CMA, which we recognise as an expert in this area and which has been pushing hard for the sort of changes before your Lordships’ House today. This would make the life of modern-day ticket touts more difficult and protect the tens of thousands of consumers who are exposed to the criminality of the market on a daily basis.
Two examples were mentioned by my noble friend the Minister when the House last considered this amendment and sent it to another place. First, my noble friend said about Six Nations rugby that
“I go to Murrayfield and my ticket is a personal ticket with my name and seat number on it. If I am found to have sold it on to someone else at a higher price, I will lose any right to further tickets”.—[Official Report, 13/3/24; col. 2078.]
During our meeting last Thursday, I suggested that the officials who attended should go online, where they would see—in direct contravention of the terms and conditions of Scottish Rugby—viagogo already listing significant numbers of tickets for 2025’s Six Nations matches, including a game at Murrayfield, in flagrant breach of the terms and conditions of the Consumer Protection Act. Without my amendments, it is made more difficult for the Scottish Rugby Union to stop what could be fraudulent tickets.
All the listings on viagogo are from traders, and most appear to be advertised in breach of the Consumer Rights Act, since they fail to specify seat details. The locations they quote are general, such as “west section, upper tier”, “bronze” or “event restrictions”. The screen- grabs are all hidden behind CAPTCHA, which was originally meant to protect consumers but is widely used by viagogo and others to make it incredibly difficult for the casual buyer to locate.
The Minister is right when he says that the Scottish Rugby Union has strong terms and conditions in place to protect fans from exploitation. Scottish Rugby knows that the laws and regulations in place are not sufficiently comprehensive in stopping irresponsible secondary sites ignoring their terms and conditions to make a profit exclusively from their suppliers—the modern-day ticket touts using bots. Sadly, it happens more every month of every year.
The secondary market relies on suppliers. They become a preferred supplier by using bots: computer software that can store thousands of credit card details. When you or I go online to buy a ticket for a popular concert and add in our details, by the time we complete the request we are in a long queue. In the meantime, the modern-day tout—the preferred supplier—has swept the market and sold the tickets on to viagogo and others, which then have them up for sale on their websites before we even finish our application. If the preferred supplier cannot sweep the number of tickets he has promised to the secondary market, which ignores the promoter’s terms and conditions, he will forge them and deliver them all to the secondary market to retain his preferred supplier status. This amendment would require proof of purchase. Why would anyone not welcome rules and regulations being tightened up to protect consumers?
My noble friend the Minister used a second example relating to the opening of Euro 2024, the Scotland v Germany game, in Munich, saying that
“in that particular case I do not have a named ticket. Indeed, I was not able to get a ticket, and I have in fact accessed the secondary market—and I will not be able to tell your Lordships’ House until the day before whether those tickets are legal or not”.—[Official Report, 13/3/24; col. 2079.]
If I Google “Euro 2024 Germany v Scotland tickets”, the top sponsored results are the following websites: Live Football Tickets, Ticombo, viagogo and Seatsnet. All claim in their adverts that tickets are 100% guaranteed or 100% secure, and all too have very dubious operators. For example, Ticombo is owned and operated by Barlaup, the same person who failed to deliver over 20,000 tickets for the London 2012 Olympics, leaving the majority of victims without a refund. I told my noble friend the Minister that he had literally no idea who he was buying from or where he would be seated, and that he could well be handling stolen goods.
As well as breaching Section 166 of the Criminal Justice and Public Order Act 1994, these listings all breach UK consumer protection legislation by failing to provide seat or trader details and information about restrictions on use. The official event terms and conditions for Euro 2024 clearly state that resale for profit is not allowed, although you can resell for face value or transfer to another fan for personal use. This amendment in lieu recognises that the existing rules and legislation are not working effectively. It would add two provisions to make it more difficult to circumvent the law, which would help Scottish Rugby and Euro 2024 go after the scalpers and protect the consumers.
In my view, it is absolutely vital that we consider carefully the outcome of what the CMA has reviewed over nearly six years of detailed investigation, including its call to this House to implement new legislation to bring us up to speed with what is happening in the market. The CMA went further than requiring the secondary market to put face value, the business name and the trading addresses on the face of the tickets; it wants a licensing system. That may be required, but my amendment achieves the same result without the cost of that new system.
The CMA was simply asking for clear and coherent information on the ticket—and that is all I am asking the House for today. Yet my amendment has moved with the times. We are now 10 years on from the Consumer Rights Act. That time, when we first asked for this, was before the secondary market had the technology to hide behind icons and hyperlinks, requiring customers to dig interminably deeper into wormholes on their websites before they find the information that was then—and still often is—translated into a foreign language. This amendment seeks a clear requirement, requested from the CMA, that the reseller cannot sell more than they can legally purchase.
It is with a heavy heart that I say that, throughout the proceedings of this legislation, Ministers in both Houses, either on the record or in discussion with me, have not put forward one argument as to why the amendment would not work. I am in favour of a free market, but one that obeys the law. From time to time, we need to make a small amendment to update the law to avoid unscrupulous traders abusing it, as with hiding information behind near impenetrable icons. There is no difference between my noble friend the Minister saying that he is in favour of auction houses but will turn one blind eye to the provenance of what they are auctioning and another blind eye to the contract entered into between the seller and the auction house and him recommending exactly that in the secondary market by rejecting the amendment. All that we have had in response is that it is time for another review—and a nine-month review, not a nearly six-year review, to which we have not responded in law.
It is time to listen to the CMA and to protect the consumers. It is time to stop the many examples of people, genuinely thinking that they have acquired tickets from the secondary market, travelling with their families for a special occasion to a major pop concert or sporting event only to be turned away. The market is not operating as efficiently as it should be and there is deep corruption in many aspects of it, which would be addressed by the amendment. That is why the CMA has called for action on this and why we should protect the consumers. I beg to move.
Lord Clement-Jones Portrait Lord Clement-Jones (LD)
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My Lords, I support Motion E1 and pay fulsome tribute to the noble Lord, Lord Moynihan, for his expertise and tenacity. Thanks to his efforts and those of Sharon Hodgson MP, and after a long campaign with the All-Party Group on Ticket Abuse, we were able to include certain consumer protections in the ticketing market in the Consumer Rights Act 2015. The noble Lord’s amendment on Report sought to introduce additional regulatory requirements on secondary ticketing sites for proof of purchase, ticket limits and the provision of information on the face of tickets. That would have secured greater protection for consumers and avoided market exploitation, which is currently exponentially growing on platforms such as viagogo.

As we have heard, the Ministers—the noble Lord, Lord Offord, and the noble Viscount, Lord Camrose—in their letter of 1 May to noble Lords, offered a review that would take place over nine months, which would make recommendations for Ministers to consider. But that is simply not enough, as the noble Lord, Lord Moynihan, has demonstrated. The Minister, the noble Lord, Lord Offord, seems to believe from his own experience—unlike the rest of us—that everything is fine with the secondary market and that the answer to any problem lies in the hands of the primary ticket sellers. However, the noble Lord, Lord Moynihan, in his brilliantly expert way, demonstrated extremely cogently how that is absolutely not the case for the Minister’s favourite sports of rugby and football, where the secondary resellers are flagrantly breaking the law.

16:45
Furthermore, the Minister has used the examples both in debate and in correspondence—I thank him for taking the time to meet other noble Lords—of Ed Sheeran, Mumford & Sons, Iron Maiden and Glastonbury as putting in place restrictions on primary market sales to suggest that we should focus our attention on putting pressure on the organisers of these events to use existing legislation to prevent the unfair secondary market. However, apart from anything else, why is it solely the responsibility of artists and promoters to prevent secondary ticketing websites and their suppliers breaking the law? Surely they also deserve greater support. Most other artists do not have the resources to put in place these controls.
As the noble Lord, Lord Moynihan, said, all the UK’s main primary ticketing operators offer capped, consumer-friendly resale at the price originally paid or less. All can guarantee the tickets being resold. This model has become standard in the UK market, and such services are now widely publicised at venues. But the growth of this genuine consumer-to-consumer market is being held back by the black market of uncapped ticket resale.
By implementing this amendment in lieu, the Government have an opportunity to fix many of these issues in one fell swoop. It would ensure that touts could not resell vast quantities of criminally acquired tickets through websites such as viagogo, and fans could purchase tickets at face value as intended. After all, something along these lines, as the noble Lord explained, was proposed also by the CMA. We should support it.
Lord Leong Portrait Lord Leong (Lab)
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My Lords, I will speak to Motion E1 in the name of the noble Lord, Lord Moynihan. Like the noble Lord, Lord Clement-Jones, I thank him and my honourable friend the Member for Washington and Sunderland West for their relentless campaigning and enduring diligence on this issue.

The current system is not working. It is not strong enough to stop a shadowy oligopoly of parasites on talent: unscrupulous people who are profiteering from genuine fans who want to see their heroes perform live. Tickets for many high-profile events, which by their very nature are extremely limited in supply, are being resold for many times their face value. Genuine sports supporters and music fans are being ripped off.

I will give just one example. The original price of the most expensive seated tickets for Taylor Swift in Edinburgh next month was £194 each. I went online to book mine last night, dedicated Swiftie fan that I am, and the cheapest seated tickets with unrestricted views were more than £500 each for two together. The most expensive pairs were £3,646 each—more than 19 times the original price. If I were to buy them, I would wonder to whom that additional money, almost £7,000, was going. It is obviously not going to Taylor Swift—or Tay Tay, as we fans call her.

Sports clubs and artists pitch their prices at a level which they think is fair and which enables them to make a profit: a price that allows their fans to enjoy their work—often a special occasion that will be remembered for a lifetime. When they see their fans charged excessive prices, they are right to believe that their hard work, talent and reputations are being exploited. These excess profits are not going to those who have worked hard to develop sporting prowess or exceptional skills as a performer; they are going to unscrupulous organisations which are often difficult to track and prosecute and which are prepared to exploit existing loopholes and take risks by breaking the law, knowing that they are unlikely to be caught. Such organisations employ sophisticated technology to distort a necessarily restricted market. In his response on day 2 of our debate, on 13 March, the Minister argued his case for not accepting amendments on this issue. The noble Lord, Lord Moynihan, has, with characteristic persistence and diligence, convincingly rebutted those arguments and perhaps alerted the Minister, as he set out earlier, to just how easy it is to be misled, overcharged and ripped off by the various online sites which operate in the secondary market, perhaps even saving him from an expensive mistake the next time he chooses to see an international rugby or football match or even a pop concert.

The CMA made recommendations in relation to secondary ticketing that are covered by this amendment, as the noble Lord set out earlier. The first was to ensure that secondary tickets can be sold only with proof of purchase of the original ticket, to avoid speculative sales of tickets which may not have been bought and might not be provided—a recipe for rip-offs. The second was to limit the number of resales by a single reseller to the amount that can legally be purchased on the primary market. If a reseller is offering tickets in groups larger than this, that must indicate that the additional tickets have been misdescribed or misappropriated and potentially that the purchaser could unknowingly be receiving stolen goods. The amendment also requires that secondary sellers make the original face value of the ticket clearly visible to the purchaser. Subsection (3) of the new clause inserted by the amendment gives the Secretary of State powers to impose or amend conditions for resellers in response to further loopholes being found by resellers to get around these reasonable and legal restrictions, if any emerge in the future.

The second part of the amendment is equally important. It formalises the Government’s non-legislative commitment to undertake a review over the next nine months, as mentioned earlier by noble Lords. By the time that review finishes, the Consumer Rights Act 2015 will be 10 years old. It is already showing its age in the face of the rapid technological advances allowing unscrupulous companies to exploit fans and performers. The review will enable the Secretary of State to identify emerging risks—the unknown unknowns—and respond to rapidly changing technology as touts inevitably seek to exploit the loopholes of the future.

Every year, fans spend millions of pounds of their hard-earned money on these special occasions. It should not go to touts or resellers who exploit the system and play fast and loose with consumer law. The devil is in the detail here and it is also in delay. The time to act is now. The combined weight of the concerns and arguments of the noble Lord, Lord Moynihan, the CMA, the entertainment and sports industries, consumer groups and ordinary fans is difficult to resist. I am impressed by the Minister’s resolve in the face of this tsunami, but I hope that he will now support this amendment. If the noble Lord, Lord Moynihan, wishes to test the will of the House, we on this side will support him.

Lord Offord of Garvel Portrait Lord Offord of Garvel (Con)
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My Lords, I thank all noble Lords who have debated the topic of secondary ticketing today. It has been an interesting and constructive discussion on a very important topic.

Turning to Motion E1, tabled by my noble friend Lord Moynihan and regarding secondary ticketing, I thank the noble Lords, Lord Clement-Jones and Lord Leong, for their contributions. I also thank my noble friend for his thoughtful engagement on issues in the secondary ticketing market and his commitment to work with the Government on solutions. As he will know, following our meeting last week and engagement since then, we share many of these concerns—although we differ slightly in our judgment of the best means of addressing them.

This Government have already brought in extensive and successful legislative protections for consumers buying on the secondary ticketing market. These go above and beyond standard consumer rights and require both ticket resellers and platforms to provide ticket information to buyers.

It is appropriate to consider the amendment in Motion E1 in detail. Proposed new subsection (1)(a) requires that a platform seeks confirmation of proof of purchase or evidence of title before allowing a ticket to be listed. It does not set out what might satisfy such requirements, so this is likely to come down to a question of due diligence as a platform to be challenged.

Moreover, it is already a criminal offence, as unfair trading or fraud for traders, to offer for sale a product that cannot be legally sold. Recent prosecutions included breaches of the Fraud Act as part of their basis. Similarly, speculative selling is something that the CMA has sought to address through enforcement, because actions such as that mentioned in relation to the SRU—selling tickets not even issued yet—are not allowed under current law.

Proposed new subsection (1)(b) seeks to apply primary sale ticket limits to the secondary market but, having consulted primary agents, we feel that this is impractical. The number of tickets that a person can purchase depends on the event. It would be difficult for a platform to know what, if any, limits there were for each event, especially when tickets are sold through multiple primary agents.

Proposed new subsection (2) imposes requirements to make clearly visible information about the face value of the ticket, and the trader’s name and business address. Both these elements are already required by UK law; existing legislation requires this information to be “clear and comprehensible”. This is a clear general provision, its application in the circumstances being one for regulators and the courts. There is a greater risk of loopholes if certain practices are specifically provided for but others are not.

In his review, Professor Waterson recommended that enforcement action be taken to drive compliance. That has happened with CMA action, and we have seen successful prosecution of ticket touts, as evidenced by the case of R v Hunter and Smith, which resulted in prison sentences and financial confiscations. However, at that time, the CMA review did not look at the primary market.

During the passage of the Bill, we listened to arguments by noble Lords opposite about the merits of a review of the market as a whole, looking not just at what happens on the secondary market, but at how tickets flow from the primary market. We can better establish the practice and interventions that will deliver benefits and protections for consumers and support events going on in the UK.

I admire my noble friend Lord Moynihan’s dogged commitment to this issue. He wants to beef up the existing rules, but we already have extensive rules in this area. This issue will not be solved simply by adding more and more legislation; it will be solved by better implementation. We have started by radically boosting enforcement powers in Part 3; the next step is to understand how tickets move from primary sale to the secondary market, for different events, in different venues.

On that basis, I urge noble Lords to support the review that we have set out today, and to consider carefully the Motion put forward by the Government. I hope that all Members feel able to support our position.

Lord Moynihan Portrait Lord Moynihan (Con)
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My Lords, I thank noble Lords from across the House. We have covered the ground extensively again. I particularly thank the Minister; I think it is the first time, in the whole process, that he has engaged in the detail of the amendment while accepting with me the need to take action. If he had done that somewhat earlier in the process, we might have made progress, but it gives me significant confidence that he has done it today. We now have the opportunity to consider improving the wording, and we can do so by passing the Motion that is in front of your Lordships’ House. We will see whether we can take practical steps, rather than make an outright rejection, and a request, as happened in the other place, for a further six-month review.

I very much welcome what the Minister said, but I was not convinced, primarily because what he said was that we needed clear and comprehensible information on the front of the tickets, yet we do not have that. They are impenetrable because they are hidden behind icons, and that is the very purpose of the key amendment. Had he therefore accepted the principle, he would have accepted the amendment.

We have made significant progress today. We can and should continue this debate, so I ask noble Lords to support consumers, sports fans, and those attending major music events, against the corruption that currently exists. I do so with a strong belief that we can get this right and put into legislation in this country the necessary steps and protections to make life a lot easier for those—not just the two cases that have come to court—who night after night, throughout the United Kingdom, are turned away from major events because of the fraudulent abuse of the secondary market. With that in mind, I would like to test the will of the House.

17:00

Division 2

Ayes: 228


Labour: 124
Liberal Democrat: 59
Crossbench: 31
Non-affiliated: 7
Conservative: 3
Plaid Cymru: 2
Bishops: 1
Green Party: 1

Noes: 213


Conservative: 195
Crossbench: 6
Non-affiliated: 5
Democratic Unionist Party: 3
Ulster Unionist Party: 2
Labour: 1
Independent: 1

Lord Speaker’s Statement

Tuesday 14th May 2024

(1 month, 1 week ago)

Lords Chamber
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17:12
Baroness Watkins of Tavistock Portrait The Deputy Speaker (Baroness Watkins of Tavistock) (CB)
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My Lords, before I call the repeated Urgent Question, I should remind the House that part of the Lord Speaker’s role is to consider whether, in specific circumstances, it is appropriate to waive the sub judice rule, under which we do not debate cases that are before the courts.

A coroner’s inquest has been opened into some of the deaths at Her Majesty’s Prison Parc, and that case is therefore now sub judice. However, given the significant public interest in this matter, the Lord Speaker has decided to grant a waiver in respect of the inquest.

While noble Lords may refer to those deaths, it is important that they bear in mind that an inquest is ongoing, and that criminal or civil proceedings might be brought in future, and noble Lords should therefore exercise caution in their remarks. It is relevant to the Lord Speaker’s decision that a similar waiver was issued yesterday in the House of Commons.

Parc Prison

Tuesday 14th May 2024

(1 month, 1 week ago)

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Commons Urgent Question
17:13
Lord Bellamy Portrait The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bellamy) (Con)
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My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my right honourable friend Minister Argar to an Urgent Question in another place on the situation at HMP Parc. The Statement is as follows:

“Ensuring that our prisons are safe and secure for both prisoners and staff remains our priority. I extend my sincere condolences to the families and friends who have lost a loved one, and my gratitude to the staff at HMP/YOI Parc.

There have been nine adult deaths at HMP Parc since March 2024. It is important to note that these deaths are not all drug-related. However, four have so far been linked to substance misuse, with another potentially so. Any death in prison is thoroughly investigated by the Prisons and Probation Ombudsman and is subject to a coroner’s inquest. Until the results of these investigations are available, I must be a little careful not to pre-empt the detail of their findings or to comment on individual, identifiable cases, so there is a limit to what I can say with certainty.

I am able to say that we believe that the two deaths this month have not currently been linked to substance misuse. The deaths at HMP/YOI Parc should be considered in the wider context of the threat that synthetic opioids pose to His Majesty’s Prison and Probation Service, to those in our custody and, indeed, to the country more widely, recognising the broader societal issue.

Our work at the prison can provide vital learning as we respond to this challenge in custody and in the community, where I understand this challenge has also occurred. HMPPS and G4S, the prison operator, are working closely together, using the latest technologies, to gather intelligence on drug entry points and movements within the prison. There have been extensive searches of prisoners and staff, and any suspicious substances are tested on site with Rapiscan. Drug amnesties have been run to improve safety, and X-ray scanners are being used on entry to prison.

We have also expanded the use of naloxone at the prison, focusing on duty managers and night staff. In total, around 400 members of staff at HMP and YOI Parc are now trained to carry this drug during working hours. We also have specialist teams in HMPPS, including the substance misuse group and intelligence, supporting staff in the prison”.

17:15
Lord Ponsonby of Shulbrede Portrait Lord Ponsonby of Shulbrede (Lab)
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My Lords, I thank the Minister for repeating that Answer to the Urgent Question. It was only yesterday that the Minister was answering an Urgent Question at that Dispatch Box about overcrowding in our prisons, and it was less than a week ago that Wandsworth prison received an urgent notification from the chief inspector about its unsatisfactory regime. Drug abuse and drug deaths form a common theme, from HMP Parc to HMP Wandsworth and across the prison estate. That is notwithstanding that, as the Minister said, not all the deaths at HMP Parc were drug related. Nevertheless, a majority of them were. Recently, the prisons ombudsman issued a stark warning telling prisoners at HMP Parc to throw away their drugs immediately due to the severe risk that they posed to their health.

The number of drugs found in our prisons has surged. There have been more than 90,000 drug finds over the past five years, according to the latest figures. Synthetic opioids are becoming a growing problem as part of the overall increase in drug use in our prisons. Prison staff are being targeted to smuggle drugs into our prisons. More than 1,000 officers and staff were investigated in 2023 alone. Can the Minister outline what further steps the Government are taking to crack down on this route of smuggling?

One way to stop drugs getting into our prisons is through physical security measures, yet reports in the Times newspaper found that body scanners to detect drugs in another prison were not being staffed, or were being staffed in an absolutely minimal way. Does the Minister believe that body scanners should be put to better use?

The problem with illegal drugs in our prisons is endemic and growing. It requires a systematic, wide-ranging response to drive drugs out of prisons. Can the Minister update the House on what the Government are doing about prison security, mental health support, working with third-party providers in education and health and getting prisoners out of their cells so they can be engaged in purposeful activity? Of course, underpinning all this is the key role that the Probation Service must have in preventing reoffending. What is the Government’s strategy to reduce this endemic problem?

Lord Bellamy Portrait Lord Bellamy (Con)
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I thank the noble Lord for those questions, which are entirely relevant and reasonable. The Government and, indeed, the country must face the fact that we have a very considerable problem arising from the increased availability of synthetic opioids in the community. Noble Lords will be aware of how widespread this problem has been and still is in the United States, and we are now seeing that problem in this country. The difficulty is that such drugs are approximately 500 to 1,000 times stronger than heroin and it is particularly easy to overdose on them, so there is a very high risk of prisoners almost accidentally causing themselves great harm or even of giving rise to fatal incidents.

This is a very considerable challenge of which the Government are aware. We are redoubling our efforts to stop these drugs entering the prison, bearing in mind that, once the drugs are in the community—and they are in the local community in various areas around a number of prisons—that is not a very easy thing to do. Obviously, one must have searches—that must include staff searches, due to the risk that staff may be importuned to carry these drugs—as well as on-site drug testing. Handheld devices are particularly effective in this area and body scanners play an essential role. I agree with the noble Lord that body scanners should be fully manned. If they are not being fully manned, that must be addressed.

In addition to those measures, particularly at HMP Parc, drug amnesties have been used from time to time, especially recently, to persuade prisoners to surrender their drugs. There is a national operational response plan; I will not go into detail but it is supported by the national substance misuse delivery team. The use of intelligence in the local community to identify weak points—particularly, again, in relation to those who may be deliberately or inadvertently carrying drugs into prison—is also important.

I gather that HMP Parc is currently rated green/amber on the issue of security, which is not a bad rating in the circumstances. However, I fully agree with the noble Lord that we have to work as a society to combat this. I pay particular attribute to the Gwent Police, NHS Wales and the Welsh Government for their very close collaborative working on these tragic matters.

Lord Marks of Henley-on-Thames Portrait Lord Marks of Henley-on-Thames (LD)
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My Lords, deaths in custody are always a tragedy, and we join with the noble and learned Minister in extending our deep sympathy to the families and friends of the deceased.

Such deaths represent a failure of the prison system to keep prisoners in its care safe, so we need to take them very seriously indeed. I am not saying that the Government are not taking this seriously—the Minister’s answers show that they are—but with nine deaths in 10 weeks at one prison, Parc, the failure can properly be described as catastrophic. No one wishes to pre-empt the outcome of the coroner’s inquests, but it seems abundantly clear that a number of these deaths—at least four—were caused by the use of drugs, notably Spice. As the Minister pointed out, this is a significantly dangerous drug and capable of causing harm accidentally to prisoners who use it.

In a supplementary question in the other place, Stephen Crabb MP, himself a former Secretary of State for Wales, pointed out that there was evidence—of which we are all well aware—that the largest source of drugs entering prisons was staff, who were bringing them in. He asked why it was that staff were not routinely scanned for drugs. In answering, the Minister of State, Edward Argar MP, pointed out that we have body scanners for visitors—as the Minister here pointed out—and for others coming into prisons, as well as handheld detectors for use in the cells, but he did not address the direct question about the routine scanning of staff on entry. The noble and learned Minister mentioned the use of body scanners for staff but did not address that question either.

In the light of the serious and increasing effects of drug importation into prisons, is it not time for the MoJ to consider the routine scanning of staff on entry to prisons? I accept that that may not be popular with everyone, or with prison officers, as it may be said to betoken a lack of trust. However, as the Minister pointed out, the vast majority of prison staff are law-abiding and careful, and do not bring drugs into prison. Such staff have nothing to fear. What consideration is the MoJ giving to the routine scanning of staff on entry? Of course, it would have to be carefully and tactfully considered, after a period of consultation. Nevertheless, it seems to me that the time is now right to give that consideration, given the really serious effects of the drugs that we are now seeing imported into prisons, of which these are nine terrible examples.

Lord Bellamy Portrait Lord Bellamy (Con)
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My Lords, I again associate myself and the Government with the condolences we have already extended to the families of all those affected. We recognise that we are dealing with a very tragic situation.

On the noble Lord’s direct question about body scanners, the Government are considering all possible measures to reduce this problem. The issue of body scanners for all staff as a routine matter is clearly one that needs to be taken under advisement and given the most careful consideration. I think that is as far as I can go today.

I should add, in case your Lordships are wondering, that despite this very unusual situation at HMP Parc, the Government consider that the prison is fundamentally sound. It has more than 1,800 inmates. The youth offender institution, which is separate, is recognised as one of the best in the land. The prison has strengths in supporting, in particular, neurodiversity and autism; it has rehabilitation and resettlement functions, as well as a remand population. There are many positives, and I would not want to give the impression that everything at Parc is going wrong; it is not.

Lord Wigley Portrait Lord Wigley (PC)
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There have been no Back-Bench questions.

Baroness Watkins of Tavistock Portrait The Deputy Speaker (Baroness Watkins of Tavistock) (CB)
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I regret that, but unless I am advised otherwise, it was a 10-minute Question and it has been completed.

Lord Wigley Portrait Lord Wigley (PC)
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It is totally unsatisfactory that we are in this position. Normally, the 10 minutes kicks in after the Front-Benchers have spoken and there is an opportunity for Back-Benchers to ask questions. Why is that not the case now?

Baroness Watkins of Tavistock Portrait The Deputy Speaker (Baroness Watkins of Tavistock) (CB)
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I acknowledge that it appeared to be unsatisfactory. The guidance is absolutely clear that it is 10 minutes, and both Front-Bench spokesmen spent considerable time in asking their questions. There can be no further debate on the matter and we will continue with the other proceedings.

Russia

Tuesday 14th May 2024

(1 month, 1 week ago)

Lords Chamber
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Statement
The following Statement was made in the House of Commons on Wednesday 8 May.
“With permission, Mr Speaker, I would like to make a Statement to the House regarding measures that His Majesty’s Government will take in response to the reckless and dangerous activities of the Russian Government across Europe and now suspected here in the UK.
As was reported on Friday 26 April, five individuals have been charged in connection with an investigation into alleged offences under the National Security Act 2023, as part of a counterterrorism policing investigation. The offences relate to what was widely reported by the media as a suspected arson attack on a Ukraine-linked business in the UK. The Crown Prosecution Service has confirmed that the charges relate to alleged
‘hostile activity in the UK in order to benefit a foreign state—namely Russia’.
I pay tribute to our law enforcement agencies for their quick and professional work to ensure these charges were brought. They are the first charges to be brought under the new National Security Act. Measures that this Government brought forward and this House passed are already being used to keep our country safe.
I thank the emergency services who responded to the fire at a commercial property in London where the suspected activity took place. The charges are serious and it is only through good fortune that nobody was hurt. I reassure the House that public safety is of the utmost importance, which is why the law enforcement response has been quick and decisive.
As Members will appreciate, I must not say anything further on this specific case, or any related case, to avoid prejudicing the outcome of ongoing criminal proceedings. I ask the House to respect that and to avoid using the debate to add to speculation about the incident. It is vital that justice runs its course.
However, I wish to highlight to the House a pattern of suspected Russian activity that we are seeing across Europe. This is not the first time that we have uncovered malign activity in the UK that is seemingly linked to Russia in the past year. In September, five Bulgarian nationals were charged with conspiring to commit espionage activities in the UK on behalf of Russia. A sixth individual was later charged and legal proceedings against all six are ongoing.
There is a much broader pattern of Russian malign activities across Europe. These include: plans for sabotage activities against military aid for Ukraine in Germany and in Poland; espionage in Bulgaria and in Italy; cyberattacks and disinformation activities; air space violations; and GPS jamming with impact on civil aviation.
Over a number of years, we have witnessed Russia and its intelligence services engage in yet more open and brazen attempts to undermine our security, harm our people and interfere in our democracies. Such attempts involve Litvinenko, Georgia, Crimea, Salisbury, Ukraine and activities across Europe. Since the illegal invasion of Ukraine, the rhetoric, threats and accusations from Russia have only increased, as Putin seeks to justify the death and destruction that he has brought to the Ukrainian people. These activities bear all the hallmarks of a deliberate campaign by Russia designed to ‘bring the war home’ across Europe, and to undermine our collective resolve to support Ukraine in its fight. It will not work.
As the Prime Minister said in Poland last month, we are at a turning point for European security. With our allies, we will stand firm in the face of Russian threats to the UK and to our way of life. It is why, after Salisbury, we took measures with our partners to make Europe a harder operating environment for Russian intelligence services, including the expulsion of 23 undeclared Russian intelligence officers from the UK. It is also why the UK has announced the biggest strengthening of the UK’s national defence in a generation, with a fully funded plan to grow the defence budget to 2.5% of GDP by 2030.
The UK and our allies will not falter in our support for Ukraine, because it is existential to the security of Europe. This is why the Prime Minister has also announced an uplift in UK military aid to Ukraine, bringing it to £3 billion this year, and has committed to that level of support every year until the end of the decade, or longer if it is sadly still required. We have sanctioned more than 1,700 individuals, over 90% of the Russian banking sector, and more than 130 oligarchs and family members, with a combined net worth of £147 billion at the time of the invasion.
As of October, over £22 billion-worth of Russian assets were reported frozen as a result of UK sanctions. These assets can no longer be taken back to Russia to fund Putin’s war machine. We consider Russia’s campaign to undermine our support for Ukraine as unacceptable and it is destined to fail. We must wait for the ongoing criminal cases across Europe, including here in the UK, to conclude, but given these allegations, the Government will not wait to take further action to send a strong deterrence message to Russia and to further reduce the ability of the Russian intelligence services to threaten the UK. That is why today, in conjunction with my right honourable friend the Foreign Secretary, I am announcing a package of measures to make it clear to Russia that we will not tolerate such apparent escalations.
I can tell the House that we will: expel the Russian defence attaché, an undeclared military intelligence officer; remove diplomatic premises status from several Russian-owned properties in the UK, including Seacox House, a Russian-owned property in Sussex, and the trade and defence section in Highgate, which we believe have been used for intelligence purposes; and impose new restrictions on Russian diplomatic visas, including capping the length of time that Russian diplomats can spend in the UK.
The measures that we and our international partners have taken in recent years have already made the UK an extremely challenging operating environment for the Russian intelligence services. These further measures will serve only to strengthen our resilience to the Russian threat.
Our NATO allies share our view of Russia’s alleged behaviour, as seen in the North Atlantic Council statement of last week. Russia has failed to provide any explanation of these events. In the coming days, we should expect accusations of Russophobia, conspiracy theories and hysteria from the Russian Government. That is not new and the British people and the British Government will not fall for it and will not be taken for fools by Putin’s bots, trolls and lackeys.
Russia’s explanation was totally inadequate; our response will be resolute and firm.
Our message to Russia is clear: stop this illegal war; withdraw your troops from Ukraine; and cease your malign activities. I commend this Statement to the House”.
17:28
Lord Coaker Portrait Lord Coaker (Lab)
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My Lords, as I have said on behalf of His Majesty’s Opposition on a number of occasions, we will always work with the Government on matters of national security. All of us want to protect our country, our people and our democracy, and we will stand with our friends and allies across the world in order to do this. We join the Government in condemning Russian interference and hostile activity here in the UK and throughout Europe. There have been numerous examples of such activity, not least the current cases that we have seen and many others, as outlined by the Home Secretary in his Statement in the other place. We read consistently of such attacks in our newspapers.

We also remind everyone that we remain absolutely at one with the Government with respect to Ukraine and that should there be any change of government in the near future, there will be no change of policy at all. It is important for us all to recognise—and continue to recognise—that the defence of the UK starts in Ukraine, against the illegal invasion by Russia, but that there are also challenges and threats to our homeland security, so we support the measures that the Home Secretary outlined a few days ago in his Statement. It is in this spirit of cross-party support that I will make a number of further points and ask some questions of the Government.

Notwithstanding recent changes to the law, there remain questions about illicit Russian finance. Can the Minister reassure us about the priority that the Government are giving to this? What are the latest figures he has available that he can share with us about the amount of illicit Russian finance that the Government believe there to be and how much has so far been seized? As I say, there is continuing concern that we could and should be doing more.

Can the Minister outline what diplomatic response the Government expect from Russia? The Home Secretary said:

“We will always ensure that we protect our ability to have lines of communication with Russia … Routes for de-escalation”


and so on

“are very important … We will seek to maintain”

those lines

“even while we take these decisive actions”.—[Official Report, Commons, 8/5/24; col. 587.]

We all agree with that, so can the Minister say anything further on any diplomatic response one way or the other, notwithstanding the obvious difficulties with respect to that?

On the question of seizing Russian assets to fund reconstruction in Ukraine, a policy that the Government have said they support in principle, has this policy been progressed in any way? In the United States, more than 70 individuals have been charged with sanctions evasion and huge amounts of assets seized. Can the Minister give an equivalent figure for the UK? It is my understanding that no one has been charged. If so, can he explain whether any cases are ongoing and, if not, why not? It is also the case that we have still not had a full update on the scale of risks from golden visas. When can we expect that from the Government?

Finally, there can be no doubt that from Iranian-sponsored “kidnap and kill” threats to attacks on so-called dissidents, the repression of Hong Kong protesters outside the Chinese consulate in Manchester, Salisbury and many other examples on home soil in the UK, we have witnessed a fundamental shift in the threat landscape. State actors are targeting us in our own country, sometimes with the co-operation of serious and organised crime. Even in this Parliament, a parliamentary aide and more alleged spies have been charged, as we have recently seen in our papers, although with respect to China. How are the Government responding to this increased threat and supporting the amazing work of our police and intelligence agencies, which we all recognise?

This is one of the fundamental questions of our democracy today, so the co-ordination of that effort across government is of extreme importance. I wonder whether the Minister could say a little about that. We must not be found lacking in our response as we defend our hard-won freedoms, and that co-ordinated effort must be at the heart of it.

Lord Purvis of Tweed Portrait Lord Purvis of Tweed (LD)
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My Lords, I associate myself with many of the remarks of the noble Lord, Lord Coaker. I agree with what he said. These Benches also welcome the Statement repeat and support the Government’s actions. I too pay tribute to the security and intelligence services, which remain vigilant in keeping us safe from foreign malign activity. It is of course a very serious matter when we have to take action against so-called diplomats—those who are abusing not only the protections that diplomatic conventions afford them but their position within the United Kingdom—but actions have been necessary.

I note that the Home Secretary indicated in the Statement that this was the first legislation under the National Security Act on which the noble Lord, Lord Coaker, and I, along with my noble friend and others, worked closely with the Minister. He was very open and worked on a cross-party basis. When it comes to national security and keeping our country safe, we are of the view—I think the Minister agrees—that this is not a partisan issue, no matter what the Prime Minister may have said this week. I pay tribute to the Minister for his work on that, and it is rewarding to see that the measures we put in place on a cross-party basis have been activated. That demonstrates to any country around the world that government and Parliament are united in ensuring that our people will be safe.

As the noble Lord, Lord Coaker, indicated, we should of course expect a tit-for-tat response. What advice are His Majesty’s Government giving to the wide network of UK journalists and other nationals still operating in Russia in the genuine field of culture, trade and people-to-people relations? I have said repeatedly that our concern is not with the people-to-people relations between the UK and Russia but with the Putin regime. What vigilance will they therefore have to have, and what advice are the Government giving?

Concerning the wider issues on sanctions and assets, as indicated in the Statement, I think I have spoken to almost all the sanctions that Parliament has approved and that the Government have put in place. We support them all, of course, but unfortunately there are certain areas that are vulnerable to sanctions circumvention. What actions will the Government now take on those who are actively circumventing the sanctions cited within the Statement? This includes, for example, shadow fleets that ship the oil exports from Russia, which means that Russia is continuing to make a profit out of the war. It means those within metal trading and within the financial relationships that the UK has with the Gulf. When it comes to the assets, the Statement indicated that the £22 billion of assets that we have frozen is from October. That is six months ago so, as the noble Lord, Lord Coaker, asked, what is the live figure of the assets?

The Home Secretary said in response to questions in the House of Commons that

“no one has seized or liquidated Russian assets”.—[Official Report, Commons, 8/5/24; col. 588.]

But we know that that is not the case, and not just within those that Ukraine has. What is the exact legal blockage to the UK seizing assets that we have frozen? The Foreign Secretary replied to me in this Chamber a number of weeks ago that he was frustrated with the delays. What are the delays and why have the Government not presented legislation? If legislation is required to be passed, I am certain that the Front Benches will be supportive of that move and that it can be expedited through Parliament.

I was reading this week that the EU now has mechanisms in place to charge the interest of those frozen assets, with an estimate of up to €8 billion. One estimate of the £20 billion frozen by the UK Government could mean, depending on how it is invested, that it could accrue interest of up to £1 billion over this year. Why is that not being seized for immediate use?

Can the Minister confirm to me that the mechanisms the Government have put in place to allow for frozen assets to be sold to UK businesses or individuals can never be used for them to make a profit out of any frozen assets? I understand that the mechanisms will allow bodies to buy a frozen asset but not to sell it until it is unfrozen. But it could accrue interest, so I would be grateful if the Minister could indicate that that could never be the case.

Finally, given that we are likely to see further actions from the Putin regime—we see today’s very worrying news from the Georgian Parliament and we see it in the Balkans—and, as the noble Lord said, from the China regime, now is the time for the Government to give proactive briefings to Opposition Front Benches on likely or possible future threats. We had that when we were tackling the Daesh problem but we need it now when it comes to China and Russia, and I hope the Minister can respond positively to that point.

Lord Sharpe of Epsom Portrait The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
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I thank both noble Lords for their remarks. I will briefly outline a few highlights, as it were, from the Statement given by the Home Secretary last week, because it has been a few days and we need to tease out and probe a few important points. My right honourable friend the Home Secretary pointed out in the other place that the Prime Minister said in Poland last month that we are at a “turning point” for European security. With our allies, we will stand firm in the face of the Russian threat to the UK and our way of life—it is worth restating that for the record.

On the actions we have taken, as is well understood, we have expelled the Russian defence attaché, who was an undeclared military intelligence officer. We will remove diplomatic premises status from several Russian properties in the UK, including Seacox Heath, which is a Russian-owned property in Sussex, and the trade and defence section in Highgate. We believe they have been used for intelligence purposes. We are imposing new restrictions on Russian diplomatic visas, including capping the length of time Russian diplomats can spend in the UK.

As reported on Friday 26 April, five individuals have been charged in connection with an investigation into alleged offences under the National Security Act, which both noble Lords referred to. They rather pre-empted what I was going to say, because I obviously want to thank all noble Lords who were involved in the successful passage of what is proving to be critical legislation. It is a good example of working together, and it gives me an opportunity to thank the security services. This rather proves the point that there is co-ordinating action on behalf of the security services, the police, other government agencies and of course the Home Office, in dealing with the threats we all face. I am grateful to all the people who work so hard on our behalf in those various organisations.

I will go into the sanctions in a moment, but first I will repeat the headlines that my right honourable friend the Home Secretary mentioned in his speech. We have sanctioned over 1,700 individuals, over 90% of the Russian banking sector and over 130 oligarchs and family members, with a combined net worth of around £147 billion at the time of the invasion. As of October— I am not sure I can improve on an October figure at this point—over £22 billion of Russian assets were reported frozen as a result of UK sanctions. Those assets can no longer be taken back to Russia to fund the Putin war machine. Obviously, we consider Russia’s campaign to undermine our support unacceptable and destined to fail.

On the individuals who have been charged in connection with the investigation, and with others related to other countries that have subsequently occurred, the Crown Prosecution Service, in relation to the 26 April individuals, has confirmed that the charges relate to alleged hostile activity in the UK in order to benefit a foreign state—namely, Russia. Beyond that, I obviously cannot say very much, particularly as regards ongoing investigations.

Both noble Lords asked about illicit finance. We have swiftly implemented the strongest set of economic sanctions ever imposed against a G20 country. We have frozen over £22 billion of Russian assets under the sanctions regime, as I said, and the UK alone has sanctioned 2,000 individuals and entities under the Russian sanctions regime, over 1,700 of which have been sanctioned since Putin’s invasion. We have set up the combating kleptocracy cell in the National Crime Agency to target corrupt elites and their assets in the UK, ensuring that there is nowhere for this dirty Russian money to hide. The combating kleptocracy cell—CKC—can account for over 150 disruptions since the invasion of Ukraine, all of which demonstrably removed or reduced a criminal threat facing the UK.

I will digress briefly. The noble Lord, Lord Coaker, asked about golden visas. That scheme was closed in February 2022, following the recommendation of the Intelligence and Security Committee to review our approach to it. I have no further information about publication or anything else yet.

Returning to sanctions and what we are doing to enforce them in the UK, we are obviously committed to ensuring that they are robustly enforced and that potential breaches are investigated. Illustrating the co-ordinated approach, departments from across HMG—including the FCDO, the Treasury, OFSI, HMRC, the Home Office, DfT and the National Crime Agency—work together and with UK companies to ensure that sanctions are enforced. In August 2023, for example, HMRC fined a UK company £1 million in relation to the unlicensed trade of goods in breach of Russia sanctions. OFSI published an enforcement notice against Wise Payments Ltd, an FCA-regulated company, for breaching Russia sanctions by making funds available to a company owned or controlled by a designated person. So, firms should carefully consider what steps are appropriate to manage their sanctions risk exposure and take steps fully to address that risk. The Government have committed £50 million to support a new economic deterrence initiative to further boost our diplomatic and economic tools and improve sanctions implementation enforcement, as well as tackling sanctions evasion across the trade, transport and financial sectors.

On our collaboration with our international partners, we work closely with the G7, particularly the EU and the US, and we have stepped up our engagement with a range of third countries to highlight circumvention risk—the noble Lord, Lord Purvis, alluded to this—and support them to tackle this issue. That includes joint diplomatic outreach to countries where we see spikes in the trade of sanctioned goods with Russia. We are particularly focused on the goods published in the CHP list.

In recent months, we have sent joint delegations to the UAE, Kazakhstan, Uzbekistan, Kyrgyzstan, Georgia and Armenia, as well as having senior bilateral engagement with Turkey and Serbia, to highlight these risks and offer technical support. We have funded technical support sessions delivered by UK legal experts to business and government contacts in Armenia, Georgia, Uzbekistan and Kyrgyzstan to improve understanding of and compliance with the UK sanctions measures and regime. These efforts are paying off: a number of countries have announced concrete measures to reduce the risk of sanctioned goods reaching Russia. The latest trade data indicates a downward trend in direct exports of these items to Russia from countries of interest, including some that I mentioned.

On why we have yet to seize Russia’s assets, we remain committed to exploring all lawful routes to using Russian sovereign assets in support of Ukraine. We continue to drive ambition within the G7, which has agreed to consider this issue collectively. We continue to work at pace ahead of the G7 leaders’ summit. I commit to keeping the House updated on significant developments as appropriate. While G7 discussions continue, the UK has taken a number of steps domestically. We were the first to introduce legislation explicitly enabling us to keep sanctions in place until Russia pays for the damage it has caused. We are establishing a route by which sanctioned individuals can donate frozen funds for Ukrainian reconstruction, and we have introduced new powers to compel sanctioned individuals and entities to disclose assets they hold in the UK.

With noble Lords’ indulgence, I will address a slightly broader question which I have perhaps not been asked entirely: how we are combating Russia’s war economy. We have banned all known items found on the battlefield in Ukraine. We have banned dual-use and critical industry, aviation, defence and security goods. We have published a common high-priority items list—a list of 50 battlefield items that are important for Russia’s war effort—helping businesses identify the most critical items to focus their efforts on. This is degrading Russia’s military and high-tech industries. Production of the next-generation airborne early-warning and control aircraft has stalled due to a lack of foreign components, including semiconductors. Russia is therefore turning to other countries to supply these goods. We see reports of that in the newspapers, but I reassure noble Lords that the UK is very much leading on this work and delivering results.

On the tit-for-tat arrangement mentioned by both noble Lords, I of course cannot account for what Russia may or may not do. Regarding advice to UK residents, journalists and other interested parties in Russia, I have not looked at the recent Foreign Office advice, but I am sure it has been kept very much up to date on a regular basis. But obviously, I caution all journalists operating in Russia to be aware of the case of Evan Gershkovich, whom the Russians really should have released by now.

I think I have answered all the questions. I cannot commit to proactive briefings now, but I will certainly bear in mind what the noble Lord said and make sure it is understood in the department.

17:48
Lord Swire Portrait Lord Swire (Con)
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Will my noble friend the Minister clarify whether the UK is able to act unilaterally on sequestered Russian assets and does not have to operate within the G7 framework, or whether we have to act collectively? Secondly, with that in mind and given the involvement of the UK, can the Minister update the House on the progress of the sale of Chelsea and the £2.5 billion, which is much needed? We should not fool ourselves: the situation in Ukraine is extremely serious now. It needs all the help we can give, both materiel and, obviously, financial assistance. We need to move a little quicker than perhaps we have in the past.

Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Con)
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On the first part of my noble friend’s question, I do not know the precise answer to whether or not we can act unilaterally. I imagine that that is the case, but I would question whether it would have much utility. By definition, the threat is a global one and the co-ordinated response will be much more significant if we take it with our allies and friends than if we go it alone.

As for Chelsea, I cannot comment. I know that discussions are ongoing, but I do not know where they are.

Lord Austin of Dudley Portrait Lord Austin of Dudley (Non-Afl)
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Could the Minister update us on what the Government are doing to secure the release of Vladimir Kara-Murza, a British citizen incarcerated by Putin on trumped-up charges?

Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Con)
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I am afraid that I do not have information on that. I shall write to the noble Lord.

Lord Pickles Portrait Lord Pickles (Con)
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My Lords, on using Russian assets, there still remains the appalling war crime of 19,600 children who have been abducted by the Putin regime from their families in Ukraine, who have had no contact with them—and so far only 388 have been returned. Could we not offer help to those families, first, to trace where their children are and, secondly, in the form of financial help to get them back?

Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Con)
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My noble friend raises a poignant and pertinent issue. Of course, our sympathies go to the parents of those children. Is there much else that I can say? I am afraid that I do not think that there is, as regards financial help. I hear what my noble friend says, and it is obviously something that I shall take back to the department. I do not know whether it is an appropriate thing for the Home Office to deal with, but I shall make some more investigations and happily report back.

Committee (4th Day)
17:52
The Schedule: Exceptions
Amendment 27
Moved by
27: The Schedule, page 12, line 26, after “financial”, insert “risk, impact and”
Member’s explanatory statement
This amendment seeks to allow decision-makers in public bodies to consider the financial risk and impact associated with, for example, the delivery of contracted goods and services and the investments in the Local Government Pension Scheme, without falling foul of the prohibition.
Baroness Drake Portrait Baroness Drake (Lab)
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My Lords, in moving Amendment 27, I shall speak in support of Amendments 45 and 46A in this group.

Part 2 of the Schedule allows exceptions for certain types of consideration from the prohibition in Clause 1. Amendment 27 seeks to expand on those exceptions by adding financial risk and impact alongside financial value and practical utility as considerations that decision-makers can have regard to without violating the prohibition. This would allow considerations of material financial risk and impact when making investment decisions in the local government pension scheme and public procurement decisions without falling foul of the prohibition.

The current wording of the Bill, which explicitly accepts consideration of financial value but not consideration of financial risk and impact, leaves investment decisions informed by such considerations exposed to legal challenges, alleging that they are influenced by political or moral disapproval. The LGPS has no trustees, but it does have decision-makers who carry judiciary-like duties requiring consideration of financial risk and impact, as recognised by the Law Commission; government legislation; statutory guidance from the Secretary of State; the Financial Markets Law Committee; and the expectations of the Pensions Regulator. All investments and divestments have territorial considerations and country-specific factors.

The Minister advises that the Government intend the word “value” to cover financial risk and impact, but relying on the exception of consideration of financial value does not suffice to address the problem of the potential for legal challenge. Financial risk and impact encompass wider consideration for informed decision-making, particularly long-term investments held by pension schemes. Financial value, financial impact and financial risk are referenced by financial services and government legislation; they are related, but separate. Financial value is narrower, often linked to the price of an investment or asset reflecting market view at a point in time.

Considering material financial risk an impact inherent in any investment is fundamental to making informed decisions on the likelihood of achieving financial goals. The chilling effect of a widely drawn prohibition, the very narrow wording of the exceptions for certain considerations and the fear of legal uncertainty and litigation risk undermining the effective fulfilment of judiciary and public duties. Banning public bodies from imposing their own direct or indirect boycotts, disinvestment or sanctions campaigns may be a manifesto commitment, but the manner of its implementation should not give rise to legal uncertainty or perverse consequences when considered through the lens of the public good. Unfortunately, this Bill has those consequences.

Litigation risk will come not only from traditional domestic organisations that lobby for particular social or non-financial considerations to be embedded into LGPS decision-making. The real concern emerging is that the Bill opens up the potential for legal challenge from proxies for Governments abroad or bodies corporate with particular commercial interests in areas where no formal sanctions or other restrictions are in place. Such challenges may be made not in good faith but, rather, from the sectoral, commercial or national interest of those raising the challenge. Anyone under this Bill with sufficient interest could seek judicial review as to whether an investment decision, influenced by consideration of financial risk or impact, was influenced by political or moral disapproval. Similar reasoning applies to those who make procurement decisions in the interests of the taxpayer.

Explicitly accepting financial risk and impact considerations from the prohibition is necessary if decision-makers are to meet their current statutory obligations or duties to illustrate. The DWP’s recent Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 made it clear that decision-makers should cover the level of risk in relation to the intended investment of the assets. They are obliged to consider the risk in the investments in addition to their value.

The local government pensions scheme is a statutory occupational pension scheme, subject to Secretary of State oversight and statutory guidance. The Local Government Pension Scheme (Management and Investment of Funds) Regulations, which cover investment strategy statements, refer to and set requirement for both value and risk. Investment strategy must include how risks are assessed and managed. Following the Law Commission report, Fiduciary Duties of Investment Intermediaries, the Government introduced statutory guidance to require the LGPS to publish its policy on how social, environmental and corporate governance considerations are taken into account in the selection, non-selection, retention and realisation of investments and to consider any factors that are financially material to investment performance—considerations which Amendment 46A, in the name of my noble friend Lord Collins, rightly seeks to protect.

Indeed, recent guidance published by the DWP on its website advises decision-makers to

“integrate financially material ESG factors into their decisions”

on investment and stewardship

“and seek the best possible risk-adjusted returns for the duration of their investments”.

Regulation again requires the LGPS to have a policy on how it exercises stewardship. The Bill, by not excepting financial risk and impact considerations from the prohibition, exposes the scheme to litigation in exercising those stewardship duties, as a result of any statements, views, conversations, votes cast, et cetera, during the engagement with the companies that it invests in. That undermines effective stewardship activities.

18:00
My noble friend Lady Blackstone’s Amendment 45 addresses the impediment that the Bill places on the Local Government Pension Scheme in fulfilling its stewardship duties, and she is absolutely right to do so, because this is one of the perverse consequences of the Bill as drafted. The failure to except considerations of financial risk and impact could also complicate repatriation of local government funding to the UK under the Mansion House proposals, opening up challenges that investment decisions are influenced by political or moral disapproval.
The Government, through the Bill, by focusing on a broad definition of “public bodies” and a very narrow definition of exceptions to the prohibition, in order to catch as many boycott or disinvestment campaigns as possible, have failed to see the potentially perverse impacts on the Local Government Pension Scheme investments and public procurement decision-making, increasing the risk of bodies or persons seeking, for self-interested reasons, to argue that LGPS decision-makers have been influenced by political or moral disapproval. What could it mean for passive funds, for example, which the LGPS invests in? ESG—environmental, social and governance—fund providers often use Global Compact-type screens, which may now mean that they sift out companies in a way that falls foul of the Bill, due to the narrow drafting of exceptions.
Some passive funds have climate transition benchmarks. A company failing to reach the benchmark will inevitably have a territorial link but, without this amendment, uncertainty arises as to whether the Local Government Pension Scheme could invest in such ESG funds and whether billions need to be invested. I have not just dreamed up these concerns: there are people who hold concerns that the Bill will have that effect.
The Bill is before us. If the Government’s argument is that they intend their reference to “financial value” to include financial risk and impact, why not put it on the face of the Bill? Lots of people involved feel that leaves legal uncertainty. It just does not feel like good government when the management of approximately £360 billion of Local Government Pension Scheme assets is left to rely on a ministerial statement to mitigate legal uncertainty. The Secretary of State, Michael Gove, asserted in the Commons that
“there is no damage to the fiduciary duty”.—[Official Report, Commons, 25/10/23; col. 917.]
in this Bill. There is increasing concern abroad that that is simply not correct.
Lord Willetts Portrait Lord Willetts (Con)
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My Lords, I rise briefly to support the points made by the noble Baroness, Lady Drake, and to explain why I have put my name to her amendment. She makes a powerful case, and what I hope sways the Minister is that her case rests very much on the policies enunciated by the DWP and the Chancellor, who are very keen to see pension funds take a broader view of their responsibilities and take account of impact and risk. Indeed, the noble Baroness has cited specific DWP regulations which make it clear that risk is something distinct that it wants pension fund trustees to take account of. What she is proposing here is consistent with the wider direction of government policy about how pension fund trustees, particularly local government pension trustees, should see their responsibilities.

My understanding of the Government’s position is that actually “financial value” already captures all that and that the noble Baroness’s amendment, which I support, is therefore unnecessary. However, I must say that I think it is unlikely, given that so much effort has taken place in the Treasury and the DWP to use some other expressions going beyond “financial value” to capture the responsibilities of trustees, that anyone would automatically accept that the formulation currently in the Bill covers this wider meaning. If the Minister is right that it is the Government’s intention and it should have this wider implication, I do not see any difficulty in making that absolutely clear by accepting this amendment. I very much hope that in the spirit of constructive review and revision of legislation, without in any way challenging the fundamental electoral mandate behind it, this amendment is a proposal that the Government can accept. It is, indeed, entirely consistent with the direction of the Government’s own policies.

Lord Palmer of Childs Hill Portrait Lord Palmer of Childs Hill (LD)
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My Lords, I support Amendment 27. The Bill has effects that were not thought of in advance. Local government pension schemes and their administrators have one thought in mind, which is to protect the financial interests of the pensioners and of the funds, and this amendment just clarifies the financial aspects of that. The administrators should not be involved in any international political situation, but be there to look after the funds of the pensioners. Amendment 27 does exactly that in clarifying, which is all it is doing, what this aspect of the Bill does. Therefore, I support it from these Benches.

Baroness Altmann Portrait Baroness Altmann (Con)
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My Lords, I rise briefly to congratulate the noble Baroness, Lady Drake, on her amendment and the others in the group. I understand where they are coming from, but it seems to me that the Government’s argument that this issue is already encompassed in “financial impact” holds some sway. There are concerns that I understand, but I am not sure they are necessary. Indeed, sight should not be lost of the fact that all local government pension schemes are ultimately underwritten by the Government and taxpayers. If the stewardship of these assets were swayed by issues which the Government themselves might not be comfortable with, there are powerful reasons why that stewardship should not be swayed by the kind of considerations that the Bill seeks to ensure does not happen.

Political or moral disapproval is not the same as environmental, social and governance issues. If a board of trustees decided to boycott an investment because of the country in which it is located, based on judgments of that country which do not accord with the views of the elected Government, the duties incumbent on the Government in accordance with this Bill would be at risk. That someone might take legal action against trustees who decide that they do not wish to make certain investments because they make a political or moral judgment that is not in accordance with that of the elected Government could equally be argued the other way. Trustees, certainly local government trustees, should not be taking these decisions.

I believe that was the manifesto commitment. Private pension schemes are not part of government and therefore that is a different decision, but local authority pension assets are ultimately underwritten by government so, should there be concerns about material financial risk and impact, they ultimately rest on the Government’s underpinning them anyway. Given that, as my noble friend said, “financial value” already encompasses these issues, I am relaxed about the current wording of the Bill. I hope that noble Lords across the Committee, especially those who have worked so hard on pension issues and with whom I normally fully agree, will not be too uncomfortable with the explanations that I am trying to put forward for not using pension assets as a disguised tool for political or moral judgments in the way that could happen and which this Bill seeks to deter.

Baroness Janke Portrait Baroness Janke (LD)
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My Lords, I support the amendments in this group and will speak to Amendment 45, which I have signed. This amendment would remove “management” from the definition of a fund investment decision, allowing investors to carry out stewardship activities, including engagement and voting, without falling foul of the prohibition and enabling vexatious legal challenges.

Clause 12, on application of prohibitions, applies Clause 1 prohibitions to the LGPS. It includes acquisition, retention, management or disposal of assets in its definition of fund investment decision. However, advice from the LGPS identifies “management” as pension scheme stewardship—engagement with or seeking to influence the companies and sometimes Governments in which it invests and voting at annual general meetings. Without this amendment, local authorities would be open to legal challenge for statements made during engagement with the companies in which they invest or to votes against them at AGMs, should interested parties wish to argue that these were influenced by political or moral disapproval of a foreign state.

I hear the arguments put forward by the noble Baroness, Lady Altmann, but the breadth of the Bill means that there is an opportunity for interested parties to use the moral and political disapproval of a foreign state as a way of challenging decisions that they do not agree with. The concern is that many will choose to take that view—and the Bill allows them so to do—on risks, for example, connected with a company’s purchases from a certain market, such as the use of forced labour in China, or investment in fossil fuels, which are becoming more financially risky. These could all be interpreted as disapproval of a foreign state or moral or political disapproval and thereby attract interested parties to challenge via judicial review and the quasi-judicial review process introduced in Clause 5.

Furthermore, foreign Governments have large stakes in listed companies, so concerns about any aspects of those companies could be litigated on the basis that they were influenced by disapproval of a significant fellow investor. With such a threat of litigation, it is easy to see how advice and full and frank discussion of decisions could be severely restricted. Having been a member of a local government pension scheme, I understand the need for advisers to be able to give frank advice without fearing that their words may be used later in legal action.

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The Government require pension schemes to carry out stewardship. Without a change in the drafting, they will contradict their own statutory guidance on stewardship and pension schemes will be severely inhibited from carrying out that role. As they have acknowledged, without good stewardship, the LGPS will fall short of the highest standards of corporate governance and responsibility among the companies in which it invests. As a result, shareholder value—and, in turn, member benefits—will suffer.
As my noble friend Lord Palmer said, we also support Amendment 27, which includes risk and impact as one of the excepted considerations to be included in “financial and practical matters”. We agree that, if this is not included as an exemption, every investment decision will be open to legal challenge because all investment decisions must include risk and impact evaluation. The fiduciary duty of the LGPS is also affected, as this includes taking account of material financial risk when dealing with investments on behalf of others and exercising due care, skill and diligence when taking decisions on investment with the funds of scheme members. It is easy to see how, if this exception is not included, legal challenges could be mounted by interested parties when pension fund trustees are carrying out their duty to manage environmental, social and governmental risks when an investment decision goes against them, using the broad terms of the “moral or political disapproval of a foreign state” prohibitions in Clause 1.
Lord Thomas of Cwmgiedd Portrait Lord Thomas of Cwmgiedd (CB)
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My Lords, I will make three brief points from the view of a lawyer. An awful lot has been said very ably by previous speakers about the reasons why, particularly in relation to Amendment 27, there seems to be no disagreement. This has nothing to do with the politics of the Bill; it is to do with making certain that we make the lives of those who become members of the pension fund board acceptable. I do not want to say too much about the burdens of being on a board or being a trustee of a pension fund—I do not want to put people off—but we ought to legislate to make their life easier in an age where litigation risk is growing. This Bill adds to that litigation risk, which is the second factor that we should take into account. I will not go into Clause 5 now because we will come to it later, but we must take into account the extraordinary encouragement it gives to litigation.

Everyone seems agreed on the objective, particularly in Amendment 27, that financial risk and impact should be taken into account. It is baffling; it is bad legislation to rely on the words rather than to take two minutes to amend the Bill. I am sure this debate has cost more than the cost of putting the Bill right. It cannot possibly be about the parliamentary draftsmen’s pride. It is incomprehensible to me why we cannot put forward a short amendment to reduce litigation risk, make it more attractive to be a pension fund trustee and enable us all to go home a bit earlier.

Baroness Noakes Portrait Baroness Noakes (Con)
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My Lords, the noble Baroness, Lady Drake, explained her Amendment 27 with great clarity, but I am afraid that I do not agree with her analysis of the problem, nor do I agree with the analysis of the noble and learned Lord, Lord Thomas of Cwmgiedd, for reasons which I will now explain.

Financial matters have been my stock in trade for well over half a century, since I left university. I have been trying to work out what these additional words, “risk” and “impact”, would add to the concept of financial value. The term financial value is not a term of art in my world, the accountancy world, but I think that it means something along the lines of the worth of something expressed in money terms. What something is worth can mean what it is realised for in a market transaction, or what it is worth in terms of the financial benefits it is evaluated to or expected to bring. I believe that neither “risk” nor “impact” add anything to the meaning of financial value.

I start with risk. Risk will affect value, so any determination of what something would fetch in a market or what benefits it would bring would of course take account of the risks when doing the calculations of financial value. This is just 101 of calculating things in financial terms. That is effectively why the DWP documents refer to risk. They do not refer to documents about risk as an adjunct to financial value; they are just encouraging the identification of risks, because that is a normal part of a balanced evaluation. While I do not think that the word risk does any particular harm to the concept of financial value, I do not think that the word is necessary.

I have struggled a bit more with working out what financial impact means. The only thing I could come up with was something like the evaluation of the net costs or benefits to be obtained from what is being acquired, but I cannot see what financial impact adds to the meaning of financial value. In this case, it would be positively confusing to add financial impact alongside financial value, because it might encourage somebody to litigate on the basis that there was a difference between financial value and impact, as Parliament clearly meant something other than financial value by the concept of financial impact. That would be a failure on our part to create certainty in our legislation.

I would also like to comment on Amendment 46A, from the noble Lord, Lord Collins, which is in this group. I expect he will be speaking to it a little later. I could not understand why the noble Lord has chosen UN-related documents to refer to when trying to put what he calls “established investment principles” into the Bill. The UK Government have already announced a series of actions that they have implemented in relation to the UN guiding principles on business and human rights, much of it already in legislation and unaffected by the Bill. In response to those principles, the relevant parts of our legal system are already in place, and we do not need to refer to a UN document to get any further on investment principles; they have already been interpreted by the UK Government.

Furthermore, we already have a perfectly good Stewardship Code in the UK, issued by the Financial Reporting Council, which deals with ESG matters. I do not believe the Bill alters that at all, so long as ESG principles do not acquire a territorial dimension.

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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There was a little throwaway remark there: that ESG principles will not involve territorial matters. There are many examples where it could be quite a big influence.

Baroness Noakes Portrait Baroness Noakes (Con)
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The noble Lord picks me up when I used a bit of shorthand. I really mean the contents of Clause 1 and the moral disapproval in relation to territorial consideration. I was just trying to say that ESG principles are unaffected; they are in the UK system of corporate governance and stewardship, and they are unchanged by this Bill, except where those principles are used in the way described in Clause 1.

The UN principles of responsible investment are not even issued by a UN body: it is a private body that issues them. Those principles have no standing whatever in the UK, except to the extent that UK-based signatories sign up to them. In my view, it is a rather odd thing to be putting into the Bill to define investment principles.

The UN Human Rights Council, which owns this territory, is, like most of the UN, including the General Assembly, pretty anti-Israel. I have an underlying concern that using these UN-affiliated principles—to use a shorthand—is just another way of allowing divestment decisions in relation to Israel by the back door. I am sure that the noble Lord, Lord Collins, does not intend for that to be the effect of his amendment, but I have a fear that it will be the outcome of it.

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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When I speak to my amendment, I will make the case for it. I would actually put the noble Baroness’s arguments on their head: if the purpose of the Bill was to stop BDS campaigns, it should have been about that. Our problem—and my noble friend’s problem—is that it is going to be much broader in scope, and will include things that this Government want to achieve. That is why these amendments are quite important.

Baroness Noakes Portrait Baroness Noakes (Con)
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I accept that this goes beyond the narrow BDS campaign that has been focused on Israel. Nevertheless, it is a concern for a number of us that the Bill will be effective as regards its impact on actions by UK public authorities towards dealings with Israel, which is why I raised it.

To finish, my concern on this score was underlined by the action of the UN human rights special rapporteur on the Occupied Palestinian Territories. This person wrote to the Local Government Pension Scheme in 2021 with a “request for action”, which included divestment from companies that are involved in the Occupied Territories. Here we have someone associated with the UN Human Rights Council telling our Local Government Pension Scheme to carry out divestment activities. That is why this whole area is so concerning.

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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How does the noble Baroness think that that advice—I have not seen it—compares with the advice of her own Government in relation to the Occupied Territories?

Baroness Noakes Portrait Baroness Noakes (Con)
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I think we discussed this briefly on the previous day of Committee. The Government highlight the risks associated with dealings in relation to the Occupied Territories but do not call for divestment. Very explicitly, that is not the case.

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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Is not the noble Baroness making my point? It is a risk which the Government have highlighted in their own policy on the Occupied Territories. They are illegal, and have no legal status, and that investment could be at risk. The noble Baroness should make up her mind about what she is arguing.

Baroness Noakes Portrait Baroness Noakes (Con)
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The issue of risk is a separate issue, dealt with in the amendment of the noble Baroness, Lady Drake. I was talking about later amendments which seek to apply UN principles to local government pension schemes. This is a fairly large group, and I think we have got a little cross-wired on which issues affect which part.

To conclude, I know that the noble Lord, Lord Davies of Brixton, has tabled a stand-part debate on Clause 12, which is in this group. I hope he is not serious about taking local government pension schemes out of the Bill. The actions of the special rapporteur in our domestic affairs are proof enough that we need local government pension schemes firmly within the Bill.

Baroness Blackstone Portrait Baroness Blackstone (Lab)
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My Lords, I strongly support what my noble friend Lady Drake has put forward in her amendment and very much hope that the Government will respond positively to it and accept it.

I listened carefully to what the noble Baronesses, Lady Noakes and Lady Altmann, said. I know that their arguments were made sincerely, but I was surprised that they were somewhat complacent in brushing aside the arguments put by my noble friend. Amendment 45 in my name adds to the important points raised by my noble friend Lady Drake, the noble Lord, Lord Willetts, and other speakers on the fiduciary duties of local government pension funds and their ability to consider risk.

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The noble Baroness, Lady Janke, has already made important points on Amendment 45, so I will be brief and not repeat everything she said; I just want to reinforce them. The amendment is simple: it seeks to
“remove management from the definition of a fund investment decision”.
The term “management” is not defined in the Bill, but when the Minister kindly agreed to meet some of us, she confirmed that it embraces stewardship. As my noble friend Lady Drake said, stewardship must be pursued by pension funds in their engagement with and monitoring of their assets once their investments have been made. After all, circumstances might change, leading to new risks to those investments, such as serious threats to the environment.
A local government pension fund must also engage with the companies in which it invests for long periods after the initial investment was made, including by attending, participating in and speaking at their AGMs. Moreover, regulations for local government pension schemes require them to have a policy on stewardship—a point that I think the noble Lord, Lord Willetts, made. Indeed, the Government have made it absolutely clear in statutory guidance that they expect them to carry out stewardship and to sign up to the stewardship code, which is voluntary for other pension schemes.
Incidentally, I cannot entirely agree with the noble Baroness, Lady Altmann, that private pension funds should be treated completely differently from local government pension funds. Local government pension funds look after the pensions of millions of workers, not just in local government but in many other sectors. I am perplexed that she thinks they should be treated so differently from private pension schemes.
Unfortunately, Clause 12, by including prohibitions on management decisions as well as being inconsistent with regulations and guidance, could open up funds to litigation, as the noble and learned Lord, Lord Thomas, so eloquently outlined. Companies with a vested interest may dislike statements made to them by pension fund committees or votes against them—statements and votes pursued as part of the fund’s stewardship. The companies concerned may well argue that the funds were influenced by political or moral disapproval of foreign state conduct, whether that is true or not. Does the Minister accept that there should not be a statutory mechanism offering recipients of capital, companies, the chance to litigate against the provider of capital, pension funds, as a result of investor conversations carried out in good faith in pursuit of stewardship?
It is also the case that many foreign Governments have big stakes in listed companies, so any express concerns about those companies could be litigated on the basis that they were influenced by the disapproval of a substantial fellow investor. If pension schemes became open to legal challenge in the way that I have described, it would have a chilling effect on the high standards of corporate governance and corporate responsibilities, which the Government claim to support. I hope the Minister will therefore accept this simple amendment to allow proper stewardship by local government pension funds without the threat of litigation hanging over them.
Lord Hannay of Chiswick Portrait Lord Hannay of Chiswick (CB)
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My Lords, I will speak in support of the noble Baroness who has just spoken on Amendment 45, as well as Amendment 27 in the name of the noble Baroness, Lady Drake. As the noble Baroness, Lady Noakes, has eloquently drawn to the attention of the Committee, this is another of the points at which this legislation’s handling of Israel arises. The issue is the elision that has been made by the Government between the State of Israel and the Occupied Territories—the West Bank, the Golan Heights and east Jerusalem. Within the Occupied Territories there is a mass of illegal settlements, which the international community and the British Government regard as illegal. A whole rash of outposts have now been established from those settlements, which are also illegal. The elision between the State of Israel and the settlements is causing infinite trouble to this Bill, and I hope that the Minister will find some way to sort this out, because it really needs to be sorted out.

There is no disagreement, between the Government and those of us who wish to see this sorted out, about the settlements in the West Bank, Golan and east Jerusalem. We all agree that they are illegal under international law. I think we therefore agree—the Minister was very clear about this at Second Reading and when it came up in earlier amendments—that for British companies, pension funds or whatever else to invest in those illegal settlements, even unwittingly, would be to create an illegality. Presumably, the Government do not want a British company or a British pension fund to do that—and I hope that we would not want it either.

These amendments would make it somewhat easier for the bodies covered by the Bill to make sure that they were not being drawn into illegality in any way and thus acting in a way that would be contrary to government policy. I hope that the Minister will give careful consideration to the issue, because I am afraid that the elision between the State of Israel and the Occupied Territories is really damaging to the Bill’s prospects.

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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I have made no secret that this is a bad Bill that is badly drafted, and I spoke against it at Second Reading. In this debate, my suggestion that we should not agree Clause 12 is narrowly focused.

Local government pension schemes should be treated in exactly the same way as every other funded occupational pension scheme—the point made by my noble friend Lady Blackstone. I agree totally with the amendments tabled by my noble friends, and I certainly support their proposals, but my question is: do we need separate legislation to cover the local government pension schemes? My strong view is that we do not; the schemes should all be treated the same. They should come under the same rules as the fiduciary duties on trustees or committees —whoever is responsible for taking the decisions—and they should be the same across the board.

I tabled my clause stand part notice just to ask what the effect would be of not having this provision. Would it mean that I achieve my objective and that, should the provision be removed from the Bill, the local government pension schemes would be treated like other pension schemes? I suspect not. I suspect that I would need a more detailed amendment that would place local government pension schemes under the same responsibilities and law as occupational pension schemes more generally. That is my objective, and I hope that we can have this debate again on Report so that all pension schemes are treated the same.

I listened carefully to the remarks from the noble Baroness, Lady Altmann, but I think her argument fails. First, there are private employers whose employees are within the local government pension scheme. Equally, there are public bodies whose pension schemes are not covered by this legislation, most obviously the universities superannuation scheme. So the division between the sheep and the goats in this respect is arbitrary. There is no consistency about—

Baroness Altmann Portrait Baroness Altmann (Con)
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The noble Lord and I usually agree on so many pension issues—in fact, almost all of them. However, would he not agree that the fundamental difference between the local authority pension schemes and private schemes, or indeed the universities super- annuation scheme, is that the local authority pension schemes do not belong to the Pension Protection Fund and do not pay levies to it, and are therefore effectively underwritten by central government, not by local government? If a council goes bust, it is rather difficult to imagine that the burden of paying the pensions promised to local authority workers would not fall on government itself. That is indeed the reason why these schemes are not part of the Pension Protection Fund, and indeed do not pay any kind of levy. For me, that is a powerful reason—I would be grateful to hear the noble Lord’s view—why there should be a differentiation between those schemes and all other schemes. Typically, there is not, but that misses an important part of this debate.

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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I am afraid to say that it is not that simple. Technically, the history is that the funds established by local authorities to pay the pensions of their employees were there to protect the ratepayer rather than the members. That is the history of it, but I think we have moved on from that. Certainly, the members of these schemes believe that the money they have paid is there for their benefit. What would happen if a local government pension fund were unable to pay the benefits that were due is actually an open question. There is no explicit government guarantee for the local government pension scheme.

In addition, under the present provisions of the cost-sharing enforced by the Government on the Local Government Pension Scheme, it is the members who are the residual fund source of any shortfall in money. If there is a shortfall in the Local Government Pension Scheme, the contribution from the local authority is capped; it is the members who will lose out by having to pay higher contributions or seeing their benefits reduced. It is not a simple matter of “The Government will always make things good”. Initially, the members have to make things good. If the members cannot afford it, I suspect that it is right that the Government will step in—but that is not in the rules, so there is a contingent possibility there. So the situation is far less clear-cut than the sheep and goats I identified earlier.

Of course, this all comes about because technically, I think, under present law, the administration of the Local Government Pension Scheme comes under the aegis of a public body or public authority. I am not really sure what the difference is between the different terms under the Bill. But that is not how it is perceived by scheme members. They do not see their pension scheme as being a public authority, and we should respect that. As I say, my central thought is that local government pension schemes should be treated like all other occupational pension schemes.

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Lord Sentamu Portrait Lord Sentamu (CB)
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I want to ask a simple question. At the moment, all pensions are in many ways looked at by the Pensions Regulator. Does that regulator distinguish between the local authority pension scheme and the pension scheme for me—for the Church of England —when, as you say, if there is not enough money within that pension fund, the members have to put it in? Is there a difference? Does the Pensions Regulator ever say, “Well, this is a local authority and I am going to look at them differently because the Government may put in money and I think your analysis is the right one?” If the regulator does not, why are we making a difference here?

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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I thank the noble and right reverend Lord for his question. This comes up under group 5, where I have a lot to say about the role of the Pensions Regulator, but that comes under the issue of enforcement. Here I am just talking about the principle of how we should think about local government pension schemes. Whatever the legal niceties, my view is that they should be treated exactly like every other pension scheme.

My amendment at this stage is simply to ask: if we do not have Clause 12, does that mean that the same rules will apply to all pension schemes, including the Local Government Pension Scheme, or do I have to move a more difficult, technical amendment on Report in order to achieve that objective?

We have to remember that all pension scheme trustees are subject to the fiduciary responsibilities. In the remaining 30 seconds of my time, I think it is worth highlighting what the pensions officer of the Local Government Association said in evidence to the Public Bill Committee in the House of Commons. He said the association’s prime concern was the impact of these provisions—the way they will interfere with its fiduciary duties. He also mentioned the additional administrative costs that would be involved and having to deal with the inevitable legal challenges. So the LGA has those practical concerns. My belief is that we should just treat all schemes the same and that the trustees should be left to get on with their job of looking after their members’ money.

Lord Warner Portrait Lord Warner (CB)
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My Lords, I intervene very briefly as a person who benefits very considerably from a local government pension scheme; indeed, pretty much my whole income comes from one. One thing that always concerned me and colleagues who were in these schemes was that they were well run, that their management was good, that they were reliable and that our deferred income—which is what a pension scheme is using—was being looked after well. What I hear from these amendments that are being spoken to in this group is that we need to strengthen the Bill if we are to continue with well-run pension schemes.

I also rather agree with the point made by the noble Lord, Lord Davies of Brixton, that it is very difficult to see what the case is for treating public authority schemes separately from private schemes—but that is a debate for another part of the Bill.

Here we should really be accepting technical amendments endorsed by the noble and learned Lord, Lord Thomas, the noble Lord, Lord Willetts, and in particular the noble Baroness, Lady Drake, which it seems to me would improve the confidence of beneficiaries of these schemes that the reliable management of the schemes would not be damaged.

Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD)
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My Lords, I should declare an interest as a beneficiary of the university superannuation scheme. Can the Minister remind us how many times any local government pension fund has taken decisions on political and ethical grounds towards investment in particular foreign countries? The Explanatory Notes to the Bill give us a very small number of examples of where local government pension funds have discussed whether they should. We will come later to the question of whether we should ban discussions of these sorts in a free country, but that is different. I worry about whether we are having an enormous debate about something which has not happened in this country and is unlikely to happen in this country. It happens in the United States, and the American debate filters into this country. Particularly on the right in British politics we have an awful tendency to pick up American partisan politics and try to apply them over here, which I am deeply unhappy about. Is this a real problem or a manufactured, confected problem? If so, could we possibly leave it aside until some future date when it perhaps becomes a problem?

Baroness Janke Portrait Baroness Janke (LD)
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My Lords, I also belatedly declare my interest as a beneficiary of the Local Government Pension Scheme.

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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My Lords, the noble Lord, Lord Wallace, suggests that we are using the Bill to address a problem that has not happened, which prompts me to say that there are genuine concerns that it might happen. I come back to the point that I made in one of the interventions: the concern that we all have about this Bill is that its scope goes well beyond the concerns and the remedy in the manifesto. The noble and learned Lord, Lord Thomas, and my noble friend are quite right to point out the litigation risks.

My noble friend also raised what I have repeatedly said: that this legislation can have a chilling effect that we do not want. We have a Government making all kinds of guidance. On the local government pension funds, we have specific regulations. All pension funds have a fiduciary duty. Noble Lords have raised the point about the duties of people responsible for making these decisions. The Bill will make those duties even more complex. When things become even more complex, people avoid doing the right thing. That is one of the important considerations.

I want to repeat what my noble friend Lord Davies mentioned. Talking as an old-fashioned trade unionist, I say that members’ pensions and pension funds are their deferred wages, yet there is an idea that somehow those do not belong to them and are not their responsibility. Most of the members primarily want those funds protected for their future security. They do not want political and moral considerations to play a part. They want them to be covered by the points that my noble friend Lady Drake has mentioned. No matter what is said by the noble Baronesses, Lady Altmann and Lady Noakes, this could impact the ability of those responsible for managing these funds to make decisions that take into account risk and other considerations to protect those funds. That comes from the potential for them to be challenged.

I have read some of the briefings on this. The ESG point is quite an important one. Many funds and investment pools in local government pension schemes work individually and collectively to improve corporate behaviour and long-term value of the funds, including through engagement in shareholder action at their AGMs. This is reflected in the statutory guidance that my noble friends have been referring to about administrating authorities formulating a policy to deal with their stewardship responsibilities. It is likely that engagement of this type would be undermined by the Bill.

I again come back to the point made by the noble Baroness, Lady Noakes. When seeking to address behaviours by a company that involve significant financial, legal and reputational risk, there are many occasions when this will have geographical implications. We have seen, for example, the briefings on the use of tax havens by companies and the use of surveillance equipment. We have heard of the Uighur internment camps where bonded labour is encouraged by public authorities, particularly the kafala system. We will come on to another group on employment law, but the definition of the exceptions is very narrowly drawn in this Schedule. The Bill is unlikely to allow decision-makers to consider those behaviours.

It is unclear whether decision-makers in the LGPS could be accountable for screening selection decisions made by global equity funds where country-specific risks have been considered. That is an important point. My noble friend Lord Davies is absolutely right. As a trade unionist all my working life, I have seen the responsibilities of those who look after these pension funds. They should be common throughout. Why are we differentiating between local government workers and something beyond local government workers? Why should we have these different standards? It is really important that everyone who takes that responsibility of oversight, as a trustee or in management of the schemes, has those same principles of fiduciary duty and taking risks into account.

Baroness Altmann Portrait Baroness Altmann (Con)
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What is the noble Lord’s view, given this fundamental difference between local authority pension schemes and all other pension schemes except unfunded ones? They do not belong to the Pension Protection Fund, have no protection in that regard whatever and do not pay a levy to the Pension Protection Fund. Therefore, ultimately does he believe that these would not be and are not in any way underwritten by Government and Parliament? Why would they be excluded?

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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My noble friend Lord Davies responded to that point. The reality is that there is nothing explicitly guaranteeing them. The Pension Protection Fund is not that old. I remember companies going bust and shareholders and other people getting the money and workers losing their pensions. You have only to look at Mirror Group Newspapers to see what can happen there. We want a common duty and responsibility. This Bill undermines that. That is the point that my noble friend Lord Davies was making. It is also the point that my noble friend Lady Drake is making. There are common principles. We do not want the creation of uncertainty when trying to implement a manifesto decision. I have repeated my plea to the Minister to sit down with us and work out a better way of implementing this manifesto commitment. This Bill is not doing that job and I have yet to meet a member of the Conservative Party who believes that it does. We need to sort this out.

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We have an opportunity with these amendments. I will address the issues raised by the noble Baroness, Lady Noakes. I specifically raised issues concerning the UN’s Guiding Principles on Business and Human Rights partly because we had the Government’s response on this from their working party. As I have said before, the requirement to seek, prevent and mitigate adverse human rights impacts linked directly to their operation, products and services via the business relationships, should not have contributed to those impacts. This is what we are talking about in relation to impacts.
It is important to have a consistent approach to the advice we give. This comes back to a point that has been raised during consideration of a number of groups: we should not single out a country. That is why BDS is so wrong; we should not hold Israel to a different standard from other countries. But addressing that problem does not therefore mean that we can allow human rights and other abuses to be put lower down the agenda. That is what the Bill does and why we seek these changes.
I conclude by making a final plea to the noble Baroness: sit down with us and try to work out how we can address the manifesto commitment, without widening its scope and creating the legal uncertainty that inevitably leads to court cases. We do not know the outcome of those.
Baroness Neville-Rolfe Portrait The Minister of State, Cabinet Office (Baroness Neville- Rolfe) (Con)
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My Lords, I thank noble Lords for their thoughtful contributions today and for their engagement. I particularly thank the noble Baronesses, Lady Drake, Lady Janke and Lady Blackstone, and the noble Lords, Lord Shipley, Lord Willetts and Lord Hannay, who met me and officials to discuss the amendments a couple of weeks ago. During that meeting, noble Lords expressed their concerns regarding the financial and practical matters exception and the application of the Bill to the administering authorities of local government pension schemes. I sympathise with their ask for clarity in this area and I have taken some time to reflect on their comments. I will set out why, on balance, I think the Government’s drafting is sound on these points.

Before I address the amendments, I will set out why it is so important that the administering authorities of LGPSs are captured by the Bill. It is not a manufactured problem, as suggested by the noble Lord, Lord Wallace. Administering authorities come under frequent pressure from external pressure groups such as the Palestine Solidarity Campaign and the BDS movement to engage in BDS campaigns. We saw a notable example in 2021, when a UN special rapporteur wrote to the administering authorities of LGPSs demanding divestment from a number of Israeli companies. My noble friend Lady Noakes referred to this. The demands cited the LGPSs’ ability to play a transformational role.

We have also seen the BDS campaigners take credit for some decisions by administering authorities of LGPSs to divest from Israeli companies. For example, campaigners took credit for a decision by East Sussex Pension Fund to divest from an Israeli company.

Amendment 27, tabled by the noble Baroness, Lady Drake, would ensure that the ban does not hinder the ability of public authorities to consider financial risk and impact in their investments in a way that is influenced by moral or political disapproval of foreign state conduct. The Government agree with the policy intention of the noble Baroness’s amendment, and I acknowledge her expertise in this area.

However, having looked into the matter, we remain of the view that the Bill as drafted does not prevent public authorities being able to assess the financial and political risk of investments. The exception for considerations reasonably relevant to financial value and practical utility ensures that public authorities, including the administering authorities of LGPSs, will be able to make commercially viable decisions. This includes decisions to exclude investments if an assessment of the political and economic risks of an investment’s location could reasonably have an impact on the financial return of the investment.

I am grateful for the contributions of my noble friends Lady Altmann and Lady Noakes, and I confirm to the noble Baroness, Lady Drake, that

“financial value or practical utility”

captures considerations relevant to an investment’s long-term value and financial risk, not just its current value. I hope that my clarifying this on the Floor of the House provides the noble Baroness with reassurance.

Lord Warner Portrait Lord Warner (CB)
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I want to clarify something that the Minister just said. Does this mean that, if my local authority pension scheme, from which I benefit, decided that an investment in Israel was risky and put the members’ money at risk, it could disinvest because it was risky, but not for any other moral grounds? Is that still permitted under this legislation?

Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Con)
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I will cover that later in my response. There is a point about territoriality, which we will come on to address.

Additionally, the drafting of the guidance referenced in the speech from the noble Baroness, Lady Drake, does not change our view of the scope of this exception. I agree with my noble friend Lady Noakes’ assessment that the amendment could cause some confusion. If we were to accept it, it might raise questions about what considerations relevant to “financial value” and “practical utility” actually capture if they do not capture risk assessment.

I know that the noble Baroness will be disappointed that the Government are unable to accept her amendment, but we did not brush it aside and looked carefully at what she said at our helpful meeting. However, I hope that she is reassured by the Government’s position that the Bill’s current drafting adequately addresses her concerns, with that clarification.

Before I turn to other amendments, I will address the noble Baroness’s point about the impact of judicial review on LGPSs. I will provide a fuller response to the detail in the later group that was referred to in the debate. The Government believe that it is right that companies that have been the target of boycotts and divestment campaigns can challenge these decisions through the courts. There are safeguards in place to prevent undue or nuisance claims. None the less, the number of examples of administering authorities participating in BDS campaigns is relatively small; therefore, we do not anticipate a large burden on the courts.

Amendment 45, tabled by the noble Baroness, Lady Blackstone, would remove management decisions from the Bill’s definition of “fund investment decision”, with a view to ensuring that the ban does not apply to the stewardship activities of administering authorities of LGPSs. I confirm, as we agreed at our meeting, that stewardship activity would be an example of a management decision.

It is right that the ban applies to stewardship. Otherwise, administering authorities could, as part of the stewardship of their investments, ask companies in which they have invested to engage in boycotts and divestment campaigns. If this was allowed, campaigners would be emboldened to lobby local government pension funds to ask companies in which they invest to boycott and divest. These campaigns distract local administering authorities from their core duties and could contribute to community tensions. We believe that allowing this kind of activity would undermine the ban.

The Bill contains an exception to the ban for considerations that a decision-maker considers relevant to the financial value or practical utility of an investment. Therefore, it would not prevent public authorities asking companies in which they invest to consider matters that they consider may affect the long-term value of their investments.

I understand that the noble Baronesses, Lady Blackstone and Lady Janke, are concerned that this position conflicts with the Government’s wider policy on stewardship. We do not consider this to be the case. This is an extremely narrow Bill that will place restrictions only on the ability of the LGPSs’ administering authorities to make territorial considerations in their investment decisions that are influenced by moral or political disapproval of foreign state conduct. LGPSs’ administering authorities will still be able, through effective stewardship, to exert a positive influence on investee companies to promote strong governance, manage risk, increase accountability and drive improvements in the management of environmental, social and corporate governance issues.

Administering authorities are ultimately responsible for setting the investment strategy of their funds, having taken proper advice. This includes setting their asset allocations to achieve a diversified portfolio of investments which overall is suitable to meet liabilities, as well as setting their approach to responsible investment, in line with statutory guidance. The Bill will support administering authorities to remain focused on their core duties, protecting the long-term financial interests of beneficiaries.

Amendment 46A, tabled by the noble Lord, Lord Collins, would provide that a pension fund in scope of the ban can make territorial considerations influenced by moral or political disapproval of foreign state conduct when making decisions in line with certain investment guidelines published by the UN. The Bill will apply only to campaigns that target countries and territories specifically, and therefore will not prevent the adoption of ESG requirements that are not specific to a country, such as modern slavery requirements. For example, to address the point made by the noble Baroness, Lady Janke, the Bill will in no way prevent the LGPS administering authorities divesting from fossil fuels, as long as this policy is applied to all countries and territories consistently. Similarly, the Bill will not prevent the administering authorities divesting from companies implicated in human rights abuses, provided the policy is applied to all countries, rather than identifying particular countries or territories.

The Bill will not prevent LGPS administering authorities making a decision in line with guidelines published by the UN, as long as this does not entail the public authority having regard to a territorial consideration in a way that indicates moral or political disapproval of foreign state conduct. For example, the Bill will not prevent public authorities having a policy to comply with all UN sanctions or UN Security Council resolutions, as that is not a territorial consideration. However, the policy must be genuinely non-country specific—

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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Can the Minister specifically address the contribution from the noble Lord, Lord Hannay, in relation to territorial extent? I have in mind, because it was raised in other groups and discussions, companies that attempted to have factories or investments in the Occupied Territories and might then have withdrawn from those investments. I want her to focus on that. If a company decides that it will open a plant in the Occupied Territories and will not have the benefit of legal protection under international law, and it would be contrary to the advice the Government have given, and if a local government pension scheme then said, “Well, that company is putting our investment at risk and therefore we will disinvest”, would that be legal under the Bill?

Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Con)
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I can confirm that LGPSs will be allowed to divest from, say, the settlements or Israel if the sole reason is that the investment is financially risky. It is if it is caught by the flavour of the Bill that we run into a problem—