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The Deputy Chairman of Committees (Baroness Fookes) (Con)
My Lords, I must make the usual announcement that, if there is a Division in the Chamber, this Committee will adjourn immediately and resume after 10 minutes.
Product Regulation and Metrology Bill [HL]
Wednesday 20th November 2024
(1 month, 1 week ago)
Grand CommitteeRead Full debate Product Regulation and Metrology Bill [HL] 2024-26 View all Product Regulation and Metrology Bill [HL] 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 18-I(b) Amendment for Grand Committee (Supplementary to the Marshalled List) - (20 Nov 2024)
Lord Sharpe of Epsom
Member’s explanatory statement
This amendment seeks to remove the broad powers granted to the Secretary of State under product regulations, when defining and regulating risks and determining what constitutes efficient or effective product operation.
Lord Sharpe of Epsom (Con)
My Lords, I will speak to Amendments 1 and 80 in my name, and to Amendment 133 in the name of the noble Lord, Lord Fox. As noble Lords will know, I was not present at Second Reading, having only just assumed this position. I hope that the Committee will indulge me if I range a little more freely than I would normally in my remarks on the amendments.
Amendment 1 is necessary because Clause 1 provides such broad powers for the Secretary of State on product regulations. The Delegated Powers and Regulatory Reform Committee regarded this clause and other clauses in the Bill as “skeleton legislation”. I thank the Minister for his letter dated 24 October detailing the Government’s position in answer to the committee’s original report, which was published on 15 October. But I note that the committee maintained its original position after an evidence session with Ministers on 16 October, which concluded that Clauses 1, 2, 3, 5, 6 and 9
“are inappropriate and should be removed from the Bill”.
His Majesty’s Official Opposition agree with the committee, and we reserve the right to return to this at later stages of the Bill. For now, I have tabled a series of amendments designed to elicit more information.
The committee rightly pointed out that Clause 1 confers considerable discretion to legislate in critical areas, such as product marketing, efficiency and accuracy, via statutory instruments. This amendment aims to address those concerns by ensuring that any regulatory powers in this space are appropriately balanced and subject to full legislative scrutiny. Clause 1 grants wide- ranging powers to the Secretary of State to make regulations through statutory instruments, SIs, a process with limited parliamentary oversight. Such discretion risks undermining democratic accountability, as SIs are not subject to the same level of scrutiny as primary legislation. Again, I think it is worth quoting the committee:
“skeleton legislation should only be used in the most exceptional circumstances and where no other approach would be reasonable to adopt”.
The report goes on to state that the Government are, in effect,
“asking Parliament to pass primary legislation which is so insubstantial that it leaves the real operation of the legislation to be decided by Ministers”.
On these Benches we argue that it is all so insubstantial, that the Bill could lead to regulations that significantly impact businesses and consumers without thorough debate or consultation. It is so insubstantial that it does not give businesses the certainty and predictability they need to thrive. It is so insubstantial that granting considerable discretionary powers could lead to frequent unpredictable changes in regulations, creating compliance challenges on a ministerial whim.
Removing this clause would promote stability and confidence, particularly for small and medium-sized enterprises, which may otherwise struggle to adapt to rapidly changing environments. Clause 1(1)(b) on
“ensuring that products operate efficiently or effectively”
is surely something that can best be left to market forces. Consumers are going to purchase products that work better than others, and this will incentivise producers to provide products that work well. Why is this the business of the state?
On Amendment 80, we see that there are similar issues. The Delegated Powers and Regulatory Reform Committee stated that Clause 5 is another example of skeleton legislation. Clause 5(2) confers sweeping powers to the Secretary of State to dictate the quantities in which goods may be marketed and the units of measurement used. We will return to this theme in later amendments. Granting such broad discretion risks bypassing parliamentary scrutiny and undermining democratic accountability. Decisions affecting trade, business practices and consumer choice should be subject to thorough debate, not delegated to ministerial regulations. The power to use metrology regulations to replace and repeal primary legislation merits a full explanation and compelling justification, but the memorandum fails to provide this—something that the Government admitted in the sixth report of the Delegated Powers and Regulatory Reform Committee on 30 October.
I thank the noble Lord, Lord Fox, for his Amendment 133, which requires that regulation must be referred to a Joint Committee of both Houses for review. The amendment aims to address a serious flaw in the Government’s approach to regulatory changes under this Bill. Specifically, it would ensure that regulations are subject to proper scrutiny by Parliament through a Joint Committee of both Houses, with further safeguards in place if significant departures from existing law are proposed.
By bypassing established mechanisms for scrutiny and relying heavily on statutory instruments, the Government exhibit a clear lack of respect for the legislative process and, indeed, the opinions of their own Attorney-General. As the Constitution Committee noted in its demolition of the Bill in its report on 18 October:
“We endorse the view of the Attorney General expressed at his recent Bingham Lecture on the rule of law: ‘[E]xcessive reliance on delegated powers, Henry VIII clauses, or skeleton legislation, upsets the proper balance between Parliament and the executive. This not only strikes at … rule of law values … but also at the cardinal principles of accessibility and legal certainty. In my view, the new Government offers an opportunity for a reset in the way that Government thinks about these issues. This means, in particular, a much sharper focus on whether taking delegated powers is justified in a given case, and more careful consideration of appropriate safeguards’”.
This amendment would restore Parliament’s rightful role in scrutinising significant legislative changes—“proper balance”, in the Attorney-General’s words—reaffirming its sovereignty and its duty to represent the interests of the people. In short, I agree with the Attorney-General. The fact that two committees have slated the Bill suggests that it is not justified, so we support this amendment. We think Clauses 1, 2, 3, 5, 6 and 9 should be junked. Does the Minister agree with his own Attorney-General? I beg to move.
The Deputy Chairman of Committees (Baroness Fookes) (Con)
If this amendment is agreed, I shall not be able to call Amendments 2 or 3 by reason of pre-emption.
Lord Anderson of Ipswich (CB)
My Lords, I support Amendment 133, to which the noble Lord, Lord Sharpe, has just spoken and to which I put my name. This evening’s inaugural Lord Judge memorial lecture in legal history will address the early modern practice of legislating by proclamation without Parliament. According to the advance publicity for the lecture, Professor Sir John Baker will say that this practice
“may be compared with those resulting from our ‘elective dictatorship’, Parliament having become an instrument whereby a modern Government can exercise more absolute power than that formerly attributed to the King’s prerogative”—
a point often made by the noble and learned Lord, Lord Judge, himself. The truth of those words is demonstrated by this Bill, about which the Constitution Committee remarked—with our customary understatement —that
“several powers in the Bill are widely drawn and could facilitate the making of law that goes beyond the updating of existing rules to involve the making of new policy”.
When the EU makes new policy, as it did with the general product safety regulation, which will come into force next month, the process is properly and appropriately democratic. A road map and a public consultation in 2020 were followed by a Commission proposal in 2021, the usual substantive reports by parliamentary committees, a provisional agreement between the Council and the Parliament, approval by COREPER and IMCO and, eventually, adoption of the GPSR by both Parliament and Council in 2023. The process was more extensive, but so is the end product. The GPSR contains a detailed list of factors to be taken into account when assessing the safety of products. It sets out the obligations of manufacturers, authorised representatives, importers, distributors and—a difficult one—online marketplaces. It outlines a traceability system and makes provision for market surveillance, reporting and recalls. Detailed powers, of course, are delegated to the Commission, but the guiding principles were decided on by the legislature at an appropriate level of detail for a legislature.
My point is not that we should or should not follow the substance of what the EU has done. It is that where such wide-ranging matters of policy are engaged, it is not appropriate for Parliament to abdicate its power to the Government as entirely as this Bill proposes to do. Matters that in Europe are decided upon by the Council and the Parliament are here reserved to unamendable and, in practice, unblockable statutory instruments under this Government as they were under the last.
The noble Lord, Lord Sharpe, like the Constitution Committee, quoted the Attorney-General’s recent Bingham Lecture, in which he criticised excessive reliance on skeleton legislation and expressed the view that,
“the new Government offers an opportunity for a reset”.
I believe that the Attorney-General has talked the talk with complete sincerity about this issue, but his words do not sit happily with this Bill. The practical question is how are we going to walk the walk? A comprehensive solution would be to adopt the Hansard Society’s proposals for a new system of delegated legislation, a concordat agreed between Parliament and government to reset the boundary between primary and delegated legislation, and a new Act of Parliament to ensure that Parliament can calibrate the level of scrutiny to the content of a statutory instrument.
Limiting ourselves to this Bill, two other solutions are possible, short of the wholesale omission of clauses that was recommended by both the Delegated Powers Committee and the Constitution Committee. The first would be to copy the amendments to what is now Section 14 of the retained EU law Act 2023, tabled in the names of the noble Lords, Lord McLaughlin and Lord Hamilton of Epsom, the noble and learned Lord, Lord Hope, and myself. These would have provided for a sifting committee of both Houses, or of the House of Commons, to identify proposed regulations that are particularly deserving of parliamentary attention, and for regulations falling into that category to be amendable by agreement of both Houses under a power modelled on Section 21 of the Civil Contingencies Act 2004. Those amendments were passed by large majorities in your Lordships’ House in May and June last year, with the support of Her Majesty’s Opposition, and drew support from all parties in the Commons before eventually falling at ping-pong.
The second solution, proposed by the noble Lord, Lord Fox, in his Amendment 133, is, by comparison, gentle indeed, and if the noble Lord were a fast bowler, he might describe it as a loosener. No power of amendment is claimed for Parliament. A joint sifting committee would simply have the authority to refer a statutory instrument to a process requiring parliamentary approval if the regulations made a substantive change to the law, or if they had not been consulted upon. A substitute for European levels of democratic engagement I am afraid it is not but a pragmatic improvement to the Bill it is, and I look forward to seeing whether the Minister sees merit in it or whether, as I fear, this is an issue to which we will have to return with renewed energy on Report.
Baroness Crawley (Lab)
My Lords it is a pleasure to follow the noble Lord, Lord Anderson of Ipswich. I have an amendment in this group, Amendment 126, which I shall speak to. It is in my name and those of the noble Earl, Lord Lindsay, who cannot be in his place today, and the noble Lord, Lord Foster of Bath, reflecting its cross-party support. It requires the Secretary of State to conduct,
“appropriate consultation on draft regulations made under this Act”.
Like other amendments in this group, it is all about more effective scrutiny processes for this Bill. As it stands, this enabling Bill allocates significant powers to the Secretary of State—too many, according to the Delegated Powers and Regulatory Reform Committee and the Constitution Committee.
As this is the first time I am speaking in Committee on the Bill, I say that I support it and the need for it to improve the safety of UK consumers, as do most consumer-facing organisations in this country. However, the Bill, to put it mildly, has received a pounding from the Delegated Powers Committee and the Constitution Committee. I quote paragraph 36 of the Delegated Powers and Regulatory Reform Committee report. It states:
“We consider that … the Government have failed to provide a convincing justification for the inclusion of skeleton clauses in the Bill that give Ministers such wide powers to re-write in regulations the substance of the regulatory regime for products”.
Lord Jackson of Peterborough (Con)
My Lords, it is a pleasure to have the opportunity to speak in Committee. I begin by apologising on behalf of my noble friend Lady Lawlor, who is detained on a train. I am somewhat at a disadvantage in reading her notes but, naturally, I support the sentiments contained in what would have been her speech. I also begin by putting on record my thanks to the noble Lord, Lord Leong, for being prepared to debate and discuss these issues since Second Reading, his willingness to correspond with noble Lords on key issues, for holding a meeting with his officials, which was much appreciated, and substantially corresponding with my noble friend Lord Frost.
I am going to take the easy part first, which is to speak to my Amendment 33. I think it is apposite to look at the broader context of the Bill, bearing in mind the admonition that we should not repeat Second Reading remarks. All the amendments that I, my noble friend on the Front Bench and other noble Lords are moving today are in the context of the Bill, which is an extremely wide-ranging Bill that gives significant sweeping powers to Ministers. For instance, the UK in a Changing Europe document published just last week, its UK-EU Regulatory Divergence Tracker, makes the very pertinent point that the Bill
“is a very significant legislative change, with the government giving itself a broad power to proactively align with EU regulations … The exact range of regulations in scope is ambiguous, but it is evidently broad, with the bill’s explanatory notes referencing product safety, as well as emerging sectors like online marketplaces”.
With that in mind, and the skeleton nature of the legislation, as deprecated by my noble friend Lord Sharpe, we need to see my amendment in that context. Clause 2(3)(h) is the most egregious example of the potential issue at the heart of the Bill, which is that even existing provision in primary legislation may be replaced by provision in regulations. Many parts of the Bill, particularly in Clauses 1 and 2, are unfettered by any requirement for consultation, for criteria to be met or for meaningful preconditions to be satisfied. Indeed, the Bill clearly cuts across the guidance for departments that the Delegated Powers and Regulatory Reform Committee provided in its report of 15 October. My noble friend referred earlier to skeleton legislation, as well as the excoriating reports of the DPRRC and the Constitution Committee.
I remind noble Lords that this subsection relates to categories of
“persons on whom product regulations may impose product requirements”—
with all the caveats that we must accept that secondary legislation cannot, by convention, be amended. That leads us to a broader problem with the Bill in many clauses, particularly this one, which is that we have a double whammy. In the use of ministerial fiat, there is in effect no proper scrutiny in our Parliament and no proper oversight, because statutory instruments are very unlikely to be amended. Therefore, given that we have no fora in which to look at the details of the regulatory regime and the statutory instruments that will arise from the Bill—we no longer have a European Scrutiny Committee in the other place and we do not have a similar body in this House; we have a European Affairs Committee, which has a much wider remit—not only will we not be able to exercise that proper scrutiny but, having left the European Union, should we decide to shadow or dynamically align with regulations we will have no input on their effect but will effectively be cutting and pasting them into our domestic legislation.
In effect, we will have no mechanisms for scrutiny should we agree these clauses. We do not know the methodology by which a value judgment is made on the efficacy of any of these regulations on alignment. We have no measurement of criteria and no way to monitor or review the regulations at present, because there is no effective consultation process at the front end. For those reasons, I urge the Minister to look carefully at my amendment. It is not far reaching; it would specifically removes paragraph (h).
With that in mind, and for reasons of time, I am not particularly predisposed to go into detail on my noble friend Lady Lawlor’s amendments, other than to say that her Amendment 8 seems extremely sensible. Given the nature of the Bill and the wide-ranging powers that Ministers are seeking to exercise, potentially across vast swathes of our economy, a de facto sunset clause, after a modest period, would test the effects of a government intervention in terms of its environmental and economic impact, and particularly—regarding what I said earlier—its political and constitutional impact. It is an eminently sensible and straightforward amendment, and I would be surprised if such a measure were arbitrarily repudiated by the Minister and the Government.
Lord Jackson of Peterborough (Con)
I thank noble Lords for their forbearance as I was rudely interrupted by democracy.
I was somewhat remiss earlier for not also congratulating my noble friend on his position as Front-Bench spokesman for our party, so I welcome him, and I hope he will forgive me for that.
As I was saying, I believe that the amendment tabled by my noble friend Lady Lawlor should receive the support of all sides of the Committee because it seeks to ensure that there is proper, informed parliamentary scrutiny and approval in respect of Clause 1, which is a very wide-ranging clause; other noble Lords will no doubt wish to enunciate those issues later on. As the clock is against us, I will just finish by observing that I wholly support Amendment 128 in this group, tabled by my noble friend Lord Frost, which I have signed, and Amendments 80 and 81 on metrology and pints, tabled by my noble friend Lord Sharpe.
I will just finish briefly on Amendments 40 and 41 tabled by my noble friend Lady Lawlor. Again, these go to the heart of the necessity to see the Bill, and particularly Clauses 1 and 2, within the broader context of a quite seismic shift of government policy. Indeed, the think tank UK in a Changing Europe, in its press release last week launching the latest quarter 3 regulatory divergence tracker, makes the quite bold claim, which I think is correct, that this Government are seeking a much closer relationship with the European Union by increased convergence and reducing any capacity for divergence, either deliberately or as a sin of omission. Whether you think that is right or not, that issue has to be looked at in detail by the legislature—both the other place and your Lordships’ House. On that basis, I support my noble friend Lady Lawlor’s amendment, which would insert “constitutional” into the Bill, because of the wider governance and constitutional issues arising from a Bill that some have described as Chequers 2.0 in legislative form—I know that some of my noble friends might not agree with that.
Finally, Amendment 41 would enable a review of the impact and effects of Clause 2 and the powers therein to be laid before Parliament, focusing specifically on how the decisions made by Ministers and the regulations laid have impacted business and commerce in this country and trade across the world, particularly with the European Union.
On that basis, I ask the Minister to look kindly on supporting those amendments. None of them is radical and none of them seeks to undermine the integral nature of what the Bill is hoping to achieve, but they are sensible additions that will hopefully improve the Bill in the course of its passage through this House and the other place.
Baroness Ritchie of Downpatrick (Lab)
My Lords, I welcome this landmark Bill, and I welcome my noble friend the Minister and the noble Lord, Lord Sharpe, to their Front-Bench positions. I firmly believe that the Bill protects consumer rights. However, I declare an interest as a member of the Secondary Legislation Scrutiny Committee, which scrutinises statutory instruments. In that respect, I refer to the amendment in the names of my noble friend Lady Crawley, the noble Earl, Lord Lindsay, and the noble Lord, Lord Foster of Bath, which would require the Secretary of State to conduct appropriate consultation on draft regulations under the Act.
It is vital that we set out as we mean to go on. One criticism that our committee had of many of the statutory instruments is the lack of proper consultation, as well as inadequate memorandums and impact assessments. This amendment in the name of my noble friend Lady Crawley is timely, and I urge my noble friends on the Front Bench to accept it. More effective scrutiny processes are required in legislation to ensure that the policy decisions made with the powers set out in the Bill can be effectively scrutinised as products and marketplaces evolve, particularly those that will evolve online. It is important that consumers are totally protected.
The noble Lord, Lord Jackson, referred to relationships with the EU. I hope that the Government are successful in resetting that relationship and that there is a closer relationship with the EU, because it is important not only for trade but for society and economic growth—and it is good for wider relations in this part of our global world.
Lord Frost (Con)
I shall speak briefly to my Amendment 128. I begin, like others, by congratulating my noble friend Lord Sharpe on his role.
My amendment is only a small one, and it is overwhelmed by the pretty savage surgery proposed in other amendments tabled by other noble Lords—a surgery that is well merited, on the basis of what we have seen so far. I shall save my substantive remarks on my main concerns about the Bill until the fourth group, where most of my amendments lie. I share the concerns about constitutional and democratic process expressed by other noble Lords so far. I would probably not go so far as the noble Lord, Lord Anderson, in advocating a very complex, process-heavy and corporatist EU-type process for the Bill, because I believe that speed and simplicity in legislation are also advantageous —but certainly, if any of the Bill survives, we need some sort of serious scrutiny-sifting process to make it work.
My Amendment 128 is just one tiny part of this. It would ensure that, if Clause 2 survived at all, the powers under Clause 2(7) would be exercised—if they were exercised—under the affirmative procedure. That, however, is really a minor part, when we look at some of the other proposals on the table. Nevertheless, I hope that the Minister will reflect, and I look forward to hearing his thoughts.
Lord Goodman of Wycombe (Con)
My Lords, I congratulate my noble friend Lord Sharpe on his appointment. I support his Amendment 1 and apologise for not having had the opportunity to be present at Second Reading, but I am a member of the Delegated Powers Committee and thought that I would make a few points that arise from our report.
I join my noble friend Lord Jackson in thanking the Minister warmly for the courtesy that he has shown us and the time that he has spared us over the past few weeks. When the Minister came to the Select Committee, I got the short—or long—straw and was given the questions to ask about European alignment or divergence, so I went back over the Second Reading debate. I have no intention of repeating the arguments there but, essentially, I saw that my noble friends Lord Jackson of Peterborough, Lady Lawlor and Lord Frost all suggested that the Government had a policy of alignment, while it was suggested by some on the Government Benches and Cross Benches that it would be better to have a policy of alignment rather than one of divergence.
I note in passing that UK in a Changing Europe has now produced a report which suggests that the Government are moving towards some form of alignment. If I heard the noble Lord, Lord Livermore, correctly in the Chamber during Oral Questions, that seemed to be the general flavour of his answers. My concern is not to get into the policy issue. It is simply to make the point that the Minister may be correct that the Government have no intention of having a policy of either alignment or divergence, but will simply take each regulatory decision as it comes. Even so, Ministers and policy can change.
What we have run across here is, as my noble friend Lord Jackson said, a gap in scrutiny that has arisen since we left the European Union and now that Bill Cash’s committee in the Commons, which used to examine European legislation, is no longer present. I say this in no spirit of party-political animus. After all, my party has been in government for a period since Brexit and has not corrected the position, but the Government now in office have a chance to correct it.
It might be worth quoting, as I close, what the committee said in conclusion about the powers that the Government propose to take under the Bill. It said boldly:
“In our view, the delegation to Ministers of law-making powers in this Bill involves legislative power shifting to an unacceptable extent from the democratically appointed legislature to the Executive”.
We need some form of being able to scrutinise the decisions that a whole series of regulations may make, as well as to debate and decide whether they represent a policy of alignment or divergence, and to probe the matter. The solutions may lie in the ideas floated by the noble Lord, Lord Anderson, a few moments ago or elsewhere, but there clearly is a gap. The committee has been concerned about similar gaps in legislation ever since it produced its Democracy Denied? report in 2021.
The Earl of Lytton (CB)
My Lords, I too was unable to be at Second Reading, so this is my first occasion to make comment. I preface my further remarks by thanking the noble Lord, Lord Leong, for his courtesy and for arranging what I can describe only as a very impressive array of his officials and Bill team members—much better than I think I really deserve.
I have spent nearly 50 years in practice as a chartered surveyor and a lot of that time has been involved in construction. I will not dwell on things that will come up later, on Amendment 46 in my name, but construction is one of the areas where there is an absolute fog of commercial relationships over products, their use and their assembly, which it seems important to raise at this juncture. It is a fog of commercial relationships, collateral warranties, responsibilities, product substitution, legislation and oversight of one sort or another—or a lack of it, as the case may be. Of course, the whole question of building safety has been very much in the news recently.
Turning to the report of the Select Committee on this Bill, I am taken by the comments of the noble Baroness, Lady Crawley, because she gets to the nub of the issue about consumer safety. Who are we doing this for? That must ultimately be the focus. Looking at the mural at the far end of the Room and noting Moses handing down the tablets, I get a sort of 10 commandments moment here, but I am not going to bore the Committee with 10 of them because I have only eight.
First, items should be of merchantable quality. There has to be a duty of care, especially to end users: those whom one can expect to have to use them in real life. Those who put them together may be a stage on the way but they are not the end user. Secondly, they have to be fit for the purpose stated, including their durability. Thirdly, they have to be correctly and comprehensively described, without descriptions that mislead or confuse. Fourthly, they have to be adequately and independently tested, and assessed for their purposes as intended—and where have we seen that fall down?
Fifthly, they have to be installed or assembled as recommended for their intended application, and there needs to be a clear audit trail for how that happens. The more complicated and risk-sensitive the outcome is—I suspect that in the case of buildings and construction, particularly residential buildings, that is a very high risk if you get it wrong—then it has to be assessed accordingly. Sixthly, there has to be adequacy of oversight. That is fundamental. Seventhly, there has to be effective enforcement, with clear responsibilities and duties and a means of making sure that that can be checked and regularly revisited. Finally, there have to be consequences for infractions and culpable non-observance, in the same way as there were some years ago for health and safety at work. A regime of strict liability with consequences at corporate and director level sharpened up everybody’s act no end and produced a substantial improvement in casualty and death rates, particularly in construction.
That is the analysis that should be involved in dealing with this Bill. If you have a paving Bill, you have to make clear rules. We still have the 10 commandments with us. What is it about “Thou shalt not bear false witness” that is not understood? These things have to be durable, they have to survive changes in political tone and international relationships, and they have to survive scrutiny at the level that the noble Lord, Lord Anderson of Ipswich, will be familiar with; that is, of the courts and of people who are experts in examining these things.
At this stage, it is relevant to talk about these many amendments—I broadly support the thrust of what they are doing—and set them in the context of getting the simple arithmetic right because if we drill down too much into the detail, we will try to second-guess what a Secretary of State may try to do somewhere down the line when the circumstances are different. If we can get those core principles right, this will endure and be of genuine benefit and use for future generations.
Lord Fox (LD)
My Lords, I join the cavalcade of congratulations to the noble Lord, Lord Sharpe, on his new role. We on these Benches look forward to working constructively with him; having witnessed what he did on at least one other Bill when I was opposite him, there is lots of room for us to build on that and work with him.
This is a Grand Committee but I will try to avoid grandstanding. I just want to lay out a modus operandi, if you like, from these Benches for how we shall take this Committee stage. Like the noble Baroness, Lady Crawley, and others, we do not need convincing that this legislation is necessary. That is the starting point. We believe that this is an important Bill but we are disappointed—as I am sure the Committee has already heard and will hear again—about the choice of such skeletal, paving legislation to deliver it.
Like the relevant committees of your Lordships’ House, we believe that the balance leans toward the secondary legislation route far more than it should. I will not use the same socio-religious language that the noble Earl, Lord Lytton, just used; I will use guard- rails rather than commandments. There need to be guard-rails in this legislation. There are other issues around alignment, which will come up mostly in the fourth group of amendments, but the bulk of our discussions will be on guard-rails—that is, what guidance should be in the legislation so that, when secondary legislation comes, it has some sense of purpose around what we are seeking to achieve. That will be our approach.
I shall now speak to Amendments 113 and 133; I thank the noble Lords, Lord Sharpe and Lord Anderson, for their support. I should say that, in a debate on a different Bill, the noble Lord, Lord Anderson, described me as a nuisance. Now, he has described me as a softie. I am not sure that I shall welcome his support in future, but the point is that we are trying to find a middle way. In a sense, I agree with some of what the noble Lords, Lord Frost and Lord Anderson, said: we are somewhere in the middle with the amendment, so perhaps we are finding the right place for it.
As we have heard, the Delegated Powers and Regulatory Reform Committee was very clear about this Bill; I have chosen different quotes from everybody else, thank heavens. The committee said:
“We recognise the need for this Bill to delegate some legislative powers”.
So do we. It continued:
“However … skeleton legislation should only be used in the most exceptional circumstances and where no other approach would be reasonable to adopt. This is because … it ‘signifies an exceptional shift in power from Parliament to the executive and entails the Government, in effect, asking Parliament to pass primary legislation which is so insubstantial that it leaves the real operation of the legislation to be decided by Ministers’”.
That is the guard-rail I was talking about.
We had this debate so many times in the previous Parliament. In a sense, it is disappointing that we are having it again. The DPRRC said that
“the Bill provides for almost all of the substance of product regulation and metrology to be provided for by Ministers in regulations under the new powers, and little or nothing to be settled under the fuller Parliamentary scrutiny given to Bill provisions”.
The DPRRC said that it remained concerned, and we have heard about those concerns, that
“so little of the policy is included in this skeleton Bill and so much is instead left to delegated legislation which will be subject to a much lower level of Parliamentary scrutiny”.
We know that, and have debated it many times. In some cases, some might say that it gets almost no real, meaningful parliamentary scrutiny, as long as statutory instruments cannot be amended. As the committee said:
“Parliament will be unable to amend that delegated legislation and the only options available to both Houses will be to accept it or reject it”.
We know that rejection, essentially, never happens.
We have also heard that the scope of these powers is not constrained by any requirements for consultation, for criteria to be met or for meaningful preconditions to be satisfied. That is why I am proposing Amendment 133, with the noble Lords’ support. I will say a little more about that shortly.
Lord Jackson of Peterborough (Con)
Is the noble Lord aware of the letter dated 28 October from the Minister, Justin Madders, of the other place, to the noble Lord, Lord McLoughlin, the chairman of the DPRRC, on these specific issues? It says:
“We recognise the Committee’s concerns that the powers in the Bill to amend or repeal primary legislation may appear as though we are intending to replace existing primary legislation with secondary legislation and accept that we should have given more provenance to the fact that our intentions are limited and specific and the powers in the Bill are limited accordingly”.
Does the noble Lord not think it unprecedented for a Minister to write about a Bill that is before this House?
Lord Fox (LD)
I am not a student of parliamentary history, so I do not know if it is an unprecedented letter, but that was a helpful intervention, and I thank the noble Lord for that.
Baroness Crawley (Lab)
I believe that the sentence that was just read out was in the report from the Government to the Delegated Powers Committee as well. It is not unprecedented is what I am saying.
Lord Fox (LD)
My Lords, I feel that I am standing in the middle of a perfectly good debate between the noble Baroness and the noble Lord. Perhaps we can reconcile it in some other way.
Lord Fox (LD)
If they find themselves in the same Division Lobby, but that is rather unlikely.
For this reason—the reason that I spoke of some time ago—I am proposing Amendment 113, which seeks to remove Clause 9(4) from the Bill. In the view of the committee and of your Lordships, this is the main offending clause, as it essentially grants Ministers unlimited powers. That is why we are proposing that amendment.
Amendment 133 harks back to an amendment for which many of the Minister’s colleagues and of those on these Benches voted during the passage of the Retained EU Law (Revocation and Reform) Bill, as it is very similar to an amendment that was tabled then. It is relatively self-explanatory, and it was explained even better by the noble Lord, Lord Anderson. I suggest that it imports some sensible consultation into the secondary legislation process without overburdening that process.
That may be the Minister’s response. He may say that this is bureaucratic and a lengthy process, to which I would say, to some extent, “So what?” This legislation does not have to be a breathless process; it is supposed to get it right. Many of your Lordships will have witnessed statutory instruments that come back to correct previous statutory instruments. I know of one case when we got into three or possibly four statutory instruments before we were presented with something that was acceptable. A bit of time, consultation and reflection gives us a chance to make regulation that is better and achieves what is intended.
I do not think this is an overwhelming process; it is about careful, purposeful regulation and proper consultation during that process. To an extent, that goes some way to dealing with some of the issues in the amendments tabled by the noble Baroness, Lady Lawlor—who has now made it from her transport system to her place—in fact in a rather more inclusive way, covering large portions of the Bill.
I will speak briefly to Amendment 132, also in my name, which I do not believe is controversial. Again, it continues the theme of the retained EU law Bill. As memory serves, one of the last things your Lordships did when sending that Bill back in the previous Parliament was to add a reporting requirement, so I suspect that there may not be much argument on either side of this against having a window on what is going on in the regulatory process. Indeed, it should provide a platform for us to have a discussion on a regular basis about the effectiveness and necessity of regulation, which I am sure many noble Lords would welcome.
My noble friend Lord Foster will not speak but has deputed me to speak on his behalf, which is a great honour and responsibility. He also signed Amendment 126 in the name of the noble Baroness, Lady Crawley. Amendment 129 in the name of my noble friend would ensure that an amendment that he will bring to the Committee later would be subject to the affirmative procedure. Like me, I think my noble friend would like to say that we do not think that the affirmative procedure is an adequate scrutiny measure, but it is marginally better than nothing.
Amendment 33 in the name of the noble Lord, Lord Jackson, makes an interesting point. I would like to hear from the Minister about who and what they are seeking to address in Clause 2(3)(h), because it is very broad. What level of specificity should we expect, or is there none?
To close, there are substantive amendments in this group, and I suggest that Amendments 113 and 133 are two that should find their way forward with the Government’s help.
Lord Lucas (Con)
My Lords, we have been here before. When the Schools Bill was in front of us, I was very happily lined up next to Lord Judge in saying that this would not do, and I find myself in the same position today. We have a job to do in the House of Lords; it is the proper scrutiny of legislation. This Bill seeks to avoid that. Either the Bill needs to wait and rewrite itself in rather more detail when the Government know what they want to do, or we need some such provision as has been suggested by the noble Lord, Lord Anderson and others to allow us a proper view of what will actually happen under this legislation. I very much hope that the Government will rethink, in one direction or the other.
Lord Leong (Lab)
My Lords, I join noble Lords in congratulating the noble Lord, Lord Sharpe, on his appointment. I look forward to working with him in the years ahead.
I thank all noble Lords for speaking on this group. Noble Lords across the Committee have raised a number of important issues relating to scrutiny. I reassure them, up front, that this Government take very seriously the importance of scrutiny, in particular facilitating parliamentary consideration of government proposals. However, we believe overall that the Bill strikes the right balance on the need for proper consideration of the important issues and the technical nature of many product regulations.
I start with Amendment 132. The noble Lord, Lord Fox, has proposed the publishing of impact assessments of affirmative regulations laid every six months after the Bill’s implementation. The impact of any new regulations will be fully considered through the development of proportionate impact analysis. The Better Regulation Framework, as most noble Lords know, is the system that the Government use to manage the flow of regulation and understand its impacts. In line with the Better Regulation Framework, for regulations where significant impacts are anticipated —above £10 million per year—full impact assessments will be published. For regulations with lower anticipated impacts, a proportionate de minimis assessment impact analysis will be completed. These assessments will, as a matter of course, consider the impact of regulations on small and medium-sized enterprises. Therefore, the laudable sentiment behind these amendments is already covered.
A number of the amendments relate to the use of the affirmative procedure. There exists a process for scrutinising secondary legislation that will operate under this Bill, including by scrutinising committees. I recognise the Bill’s delegated powers have raised questions, including from the Delegated Powers and Regulatory Reform Committee, which the Parliamentary Under-Secretary of State for Employment Rights, Minister Madders, and I appeared before in October. I remind noble Lords that the DPRRC stated and admitted in that evidence session that it saw the need for powers. The Government take seriously the recommendations of the DPRRC, and I plead mea culpa—we put our hands up that we should have been much clearer and could have done more to explain the reasons for the approach taken in this Bill.
The noble Lord, Lord Sharpe, asked about the Attorney-General’s speech at the Bingham lecture. He is a fine lawyer and is a good friend of mine. I listen to him all the time. But he said in his speech that this Bill does not exceed excessive powers. Product regulation is very technical, and we have ensured the that the Bill allows for appropriate parliamentary scrutiny, enabling this House to play the crucial role of scrutinising legislation. Existing secondary legislation runs to over 2,500 pages and covers everything from consumer products, such as toys and cosmetics to heavy industrial products like pressure equipment. We intend to use the Bill’s delegated powers to make targeted changes, on a case-by-case basis, to update and build on the large and well-established existing framework.
I should like to reassure all noble Lords on the specific point around EU law. The appropriate scrutiny procedure is provided by Clause 11, which applies the draft affirmative procedure to various regulations, including those making provision for a power of entry, creating a criminal offence or amending primary legislation, which will need to be debated and approved by Parliament before being implemented.
I turn to Amendment 133, in the name of the noble Lord, Lord Fox. This proposes a sifting mechanism whereby all regulations are preconsidered by a joint committee of both Houses. While we understand the need for oversight, a bespoke joint committee approach could cause delays. In addition, there is already a parliamentary process for statutory instruments made under specific Acts of constitutional significance where sifting is applied to ensure appropriate scrutiny. We do not consider that such a process is proportionate or necessary under this Bill, where regulations will often relate to routine minor technical changes—for example, a change in chemical content in cosmetics or toys.
I turn to the amendments of the noble Baroness, Lady Lawlor—
Lord Fox (LD)
I think the Minister is trying to have it both ways. On the one hand, this committee is so long-winded that important and breathless regulation could not be made and, on the other hand, the regulations will be so small and insignificant that this committee does not need to observe them. It is either one thing or the other—and if there are emergency regulations, I am sure that we can put in place a process to necessarily short circuit and get that before your Lordships’ House quickly. So, the idea that somehow this would hold up vital regulation that that the country is waiting for overnight is something of an overstatement of the process of regulatory development.
Lord Leong (Lab)
I said earlier that we will look at this on a case-by-case basis. Some regulations will relate to very minor technical changes, so it really would be taking up too much parliamentary time for that, whereas other regulations may need a full scrutiny, and we will have avenues for that.
On the amendments from the noble Baroness, Lady Lawlor, although parliamentary oversight is crucial, requiring the sunsetting and renewal of regulations under Clause 1 would create legislative gaps and undermine regulatory certainty. This is particularly for essential product regulations that protect consumers or for products where their design, production and installation may take over a year. Ensuring consumer safety is a constant, ongoing concern. We also have to ensure that businesses have certainty. Having a sunset clause will not give certainty to businesses.
As I have explained, these are also highly technical regulations, covering matters as detailed as the formulae for measuring outdoor noise, for example, and I am not sure it would be a good use of parliamentary time to re-examine such specific matters on an annual basis.
Similarly, Amendments 40, 41, and 131 from the noble Baroness, Lady Lawlor, ensure that regulations incorporating EU law will be subject to parliamentary debate, with consideration of constitutional impacts. As Members of the House will be aware, a duty to assess the impacts of any new legislation on trade between Northern Ireland and Great Britain already exists, and the responsible Minister must make a statement considering any impacts on trade between Northern Ireland and the UK internal market. To provide additional assurances, it is considered that the powers set out in Clause 5(2) provide a proportionate and appropriate parliamentary scrutiny process, where the regulations will often be highly technical and routine in nature.
Noble Lords, including those on the DPRRC, have questioned the Government’s intentions as regards consultation on changes made under the Bill’s powers. Amendment 126, tabled by my noble friend Lady Crawley, for example, proposes to establish a duty for the Secretary of State to publish regulations in draft form, and consult such persons as the Secretary of State considers appropriate.
I fully appreciate the importance of consultation and industry engagement. My department and the Department for Business and Trade have excellent relationships with industry and consumer groups and will continue to engage regularly with any stakeholders before changes are introduced. Indeed, we currently have two calls for evidence in circulation seeking stakeholder input, one on the introduction across the UK of a common charger for all our mobile phones and other portable electrical and electronic devices, and the other on measuring noise from outdoor equipment.
We have not included a statutory consultation requirement to allow for proportionate engagement with industry and consumer groups depending on the significance of the changes. This ensures agility in responding to emerging risks or market developments to protect UK consumers, as mentioned by the noble Earl, Lord Lytton. But I give a firm commitment to noble Lords that the Secretary of State will engage and consult with relevant stakeholders before legislating.
Amendment 33, in the name of the noble Lord, Lord Jackson, and mentioned by the noble Lord, Lord Fox, refers to supply chains involved in products and the extent we need to regulate them. This can be complex, and it is important that we get it right.
Clause 2(3) sets out examples of the persons on whom product regulations may be imposed. However, this is not always clear. Depending on the nature of the product or its supply chain, product regulations may need to cover a whole variety of other actors involved in a product journey. For example, our regulations on the safety of lifts need to cover the people involved in their installation as well as their manufacture, and regulations on recreational craft cover private importers in addition to the usual supply chain actors.
We also need to ensure that rapidly changing business models cannot be exploited, allowing bad actors to exploit good business by defining themselves out of regulation. For this reason, Clause 2(3) is an inclusive list, not an exhaustive list, of persons on whom regulations can be imposed. Clause 2(3)(h) further clarifies that regulations can apply to anyone carrying out activities in relation to a product.
Lord Fox (LD)
My Lords, I beg your Lordships’ leave, and I apologise to the noble Lord, Lord Jackson, for taking over his amendment here, but the wording of Clause 2(3)(h) is
“any other person carrying out activities”.
All the other items refer to the activity of the sale and marketing of that product. This does not refer to it but any person carrying out activities unspecified. For example, if I were repairing a product, would I be in the scope of the Bill? I could be, but I do not think that that is the purpose of the Bill. There needs to be some modification of that language—I think the noble Lord, Lord Jackson, is shrewd in putting that up—which focuses on the development and marketing of the product. Otherwise, it is any person doing anything to it.
Lord Leong (Lab)
I thank the noble Lord for that point. As I see it, it is the whole manufacturing of the product itself. For example, 3D printers are getting cheaper and cheaper on the market, and anyone can make anything from a 3D printer. So we need a regulation that covers someone who sells the printer, someone who supplies the plastic that goes into the printer and whoever makes that. Unless the noble Lord is mistaken, perhaps I and officials could have a private conversation with him and the noble Lord, Lord Jackson.
Lord Leong (Lab)
To conclude, I hope that I have been able to provide assurances on all these matters and I assure noble Lords that the Government have carefully considered—
Lord Deben (Con)
Before the noble Lord sits down, I am very much in favour of most of the Bill, but this bit is very difficult. I have been around a long time, and I have known Minister after Minister explain that things are too technical for us to have proper parliamentary scrutiny, and I heard it again today. The fact is that there is some real concern, even from those of us who are, in general terms, in favour—I hope it gets as near to parity with the rest of Europe, which is our biggest market—as we want to be sure that Parliament has a say, but I am not sure that the Minister has given us a very good answer. Saying that it is very technical is the oldest story that civil servants have given Ministers since we have had civil servants and Ministers.
Lord Leong (Lab)
I thank the noble Lord for that. If it helps, I have gone through some of our 150-odd existing product safety regulations—not all of them—and their technical nature includes scientific calculation and all kinds of other technical input. Are we saying that we want this in every instance of primary legislation? I think not. If noble Lords think that we should have every technical aspect in all primary legislation, we need to have a different debate entirely, but for this, for technical reasons, we need delegated legislation to ensure that we update the regulations.
Lord Jackson of Peterborough (Con)
I do not want to labour the point, but it is either feast or famine. We are being told by the Government that we cannot legislate everything to the nth degree, so we should just trust them on the secondary legislation—the permissive delegated legislation and statutory instruments. But then, with the paragraph that is the subject of my amendment, we are going to the nth degree of granularity and technical finesse while not actually, as it happens, defining what “activities” mean. Activities could mean looking at a product, by which you would therefore be caught by the regulations.
I gently say to the Minister that the substantive clause is not undermined by the removal of this paragraph, and he should seriously think about that.
Lord Leong (Lab)
I thank the noble Lord for that. I shall take it away and speak to officials about this, but the purpose of the Bill is not to be too prescriptive, so that we cover most of the activities that can be described by various stages of production.
I want to conclude, if I may. I hope that I have been able to provide reassurance on all these matters and have assured noble Lords that the Government have carefully considered the importance of parliamentary scrutiny and sought to strike a careful balance. I therefore respectfully ask that the amendment is withdrawn.
Lord Sharpe of Epsom (Con)
My Lords, I do not really have very much to say. I am partially reassured by what the Minister has tried to say, but we will have to study the contents of this debate, which has been fascinating and wide-ranging. It was remiss of me not to have thanked the Minister earlier for his engagement and that of his team, and I apologise. We reserve the right to come back to this, but I beg leave to withdraw the amendment.
Lord Foster of Bath
Lord Foster of Bath (LD)
My Lords, I begin by thanking the Minister for his willingness to engage with all noble Lords who have shown an interest in this Bill, and I thank his team for the support and help that they have given. I congratulate the noble Lord, Lord Sharpe, on his new role.
We have frequently described this Bill as being skeletal. In the two amendments that I am proposing, Amendments 2 and 27, I am offering some flesh to put on the bones of that skeleton. I am acutely aware that many of the regulations that will arise from the Bill will look at products in isolation, but there are many cases whereby products are intended for use when they are installed within some system or other, and it is usually an electrical system.
Amendment 2 suggests that, when considering the safety of a product, we should take into account, where relevant, its installation. Amendment 27 argues that, when the product is installed into a system, the system as a whole, including the product, should require third-party certification.
Let us take as an example something that is happening up and down the country at the moment—the installation of EV charging points, more often than not in individual homes. They are installed by electricians who, under current regulations, register the circuit and the changes made to the consumer unit, but who do not have to register the EV charging point itself. That means that the certification body is not tracking where those charge points are, not informing local building control and not doing any inspection or assessment of the charge points to ensure that they are compliant with building regulations or safety.
Lord Sandhurst (Con)
My Lords, I begin by saying that, like others, I am grateful to the Minister for the time he gave to meeting me. However, the fact remains that our concerns about the Bill have not been assuaged. There are fundamental flaws, as others have said. We do not disagree with the aims of the Bill in general terms; the problem is that we just do not know what the specific policies are. We do not know what route will be taken to address the issues that may arise. It is simply too vague. There will be no opportunity for consultation on, or challenge to, the policies or regulations: policies will be produced by the Minister and that will be that. We know that policies should be in the Bill.
I thank the noble Lord, Lord Foster, for his thoughtful amendments and his commitment to addressing the significant issues raised by Clauses 1 and 2. These electronic developments, such as lithium-ion batteries and so on, are serious issues; they certainly need to be addressed. However, these amendments relate to Clauses 1 and 2, which have been identified by the Delegated Powers and Regulatory Reform Committee and the Constitution Committee as fit only for complete removal from the Bill, for the reasons set out in their reports. Those committees have strongly criticised these clauses because they lack substance and give excessive discretion to Ministers; as I said at Second Reading, this is a Henry VIII Bill par excellence.
We must therefore now be told—we are still waiting—in much more detail what direction the Government think we should take on the matters of substance and importance that the Bill addresses. Ministers are to be empowered to legislate by statutory instrument on matters that are really important for businesses on the receiving end and for consumers, also on the receiving end—or not, if nothing is done—such as marketing, product regulation and metrology. Here in Parliament, we have been given no clear framework or policy direction.
The Delegated Powers and Regulatory Reform Committee’s detailed report of 15 October, which of course came after Second Reading and after substantive objections had been raised by me and others, stated that the skeleton clauses, which include but are not limited to Clauses 1 and 2,
“contain almost no substance about the marketing and use of products but instead give Ministers very broad powers which confer considerable discretion to legislate in that area by statutory instrument”.
On 16 October, the same committee held an evidence session at which it discussed these concerns with the noble Lord, Lord Leong; Justin Madders MP, the Minister in the other place; Helen Le Mottee, deputy director legal for products, business and better regulation; and Tony Thomas, deputy director for product safety policy. The committee said:
“In the evidence session, the Ministers and their officials provided helpful additional information about … the existing legislation that could be amended by regulations made under the powers that the Bill confers; and … the need for the Bill to confer regulation-making powers that would allow detailed and technical provision to be tailored for different types of products and would give Ministers the flexibility to respond quickly and effectively to rapid technological changes and product safety concerns … That additional information could helpfully have been included in the Delegated Powers Memorandum provided by the Department for Business and Trade”.
The committee recognised the need for the Bill to delegate some legislative powers—I think we all understand that that is necessary. However, the committee stood by and repeated the essence of its 15 October first report, notwithstanding the improvement of approach. It said that
“skeleton legislation should only be used in the most exceptional circumstances”—
and we are not there; this is not Covid. We are not in another emergency situation—
“and where no other approach would be reasonable to adopt”.
That, it explained—and I make no apology for repeating this—
“signifies an exceptional shift in power from Parliament to the executive and entails the Government, in effect, asking Parliament to pass primary legislation which is so insubstantial that it leaves the real operation of the legislation to be decided by Ministers”.
Frankly, I say, if they do it with this Bill, they will do it with all future legislation. There was enough fuss in the last Parliament about what those on this side were doing, and now we are going straight down that route and extending it into the distance. As the committee said, the Government
“needs to explain why the Bill provides for almost all of the substance of product regulation and metrology to be provided for by Ministers in regulations under the new powers, and little or nothing to be settled under the fuller Parliamentary scrutiny given to Bill provisions”.
Without clear boundaries or principles, these powers could allow Ministers to fundamentally alter product regulation, metrology standards and even consumer protections with little notice or prior consultation. They can just do what they like if a Minister fancies it or a civil servant has a bee in his bonnet—I mean nothing personal about the civil servants sitting there. I think your Lordships all understand what I have in mind. People have idées fixes, their opportunity comes along, off they go and Parliament will be able to do absolutely nothing about it. This risks creating legal uncertainty, regulatory overreach and a chilling effect on business, stakeholders and consumers.
Clauses 1 and 2 as they stand must, we say, be either significantly revised or removed entirely, as recommended by both committees of which we have already heard rather a lot. Failing such improvements, we on this side of the House will move for the offending clauses to be removed on Report. The Government should understand that.
Lord Leong (Lab)
My Lords, before I address Amendments 2 and 27 tabled by the noble Lord, Lord Foster, I need to make a clarification. The Attorney-General made a general comment about excessive reliance on delegated legislation; he did not comment on this Bill. We certainly do not believe this Bill contains excessive reliance on delegated legislation.
Lord Foster of Bath (LD)
My Lords, I almost want to say that the Minister doth protest too much. We have been given a whole range of examples that he says illustrate that it might be that they will take installation into account. It seems to me that there is a much simpler solution: to accept my amendment and put it in the Bill, since that is what he almost implies he wants to achieve. Clearly, we will have further deliberations. In the meantime, I beg leave to withdraw my amendment.
Member’s explanatory statement
The Amendment ensures that regulations relating to the marketing of use of products in the UK may have the purpose of ensuring that products are safe.
Lord Fox (LD)
My Lords, Amendment 3 is part of group 3, which focuses on the safety of marketed products; we are focusing now on safety. In a sense, the debate on the previous group of amendments demonstrated why the skeletal nature of the Bill needs flushing out. Alongside the amendments tabled by the noble Lord, Lord Sharpe, and my noble friend Lord Foster, I hope we can investigate a little how we can flesh out the Bill on the subjects of health, safety and the environment.
Both Amendment 3 and Amendment 95, which is also in my name, seek to add some purpose to the Bill so that future regulations will be within the guard-rails we talked about earlier. Amendment 3 would simply insert safety as an objective for achievement for the regulations caused by the Bill. There are two purposes to this amendment: one is to try to ensure that, in future, the products regulated are safe, and the other is to allow the Minister to explain how reducing or mitigating risk works in the context of product safety. It seems to me that there is a glaring difference between the two, and I look forward to the Minister explaining how this legislation came to be written in this way.
Clause 1(4) goes on to define risk with language that implores the concept of safety, which is of course helpful. However, under the terms of Clause 1 as currently drafted, any danger to the health or safety of a person—or a domestic animal; the Minister knows that I am keen to know which animals are domestic and which are not, and why non-domestic animals should be subject to danger when domestic animals are not—needs only to be reduced, because Clause 1(1) comes before Clause 1(4). Surely the objective should be to eliminate risk.
If I was selling a trapeze kit for a seven year-old that was 30 feet from the ground, I could of course say that I had reduced the risk by including a mattress to put underneath it, but is this safe, and has sufficient mitigation been observed? I understand that there is no such thing as absolute safety. However, I contend that, if the purpose of the Bill is, first and foremost, risk reduction or mitigation rather than safety, it is pitching the objective of regulations too low. I hope that is an understandable albeit rather complex explanation as to why I am moving this amendment.
Amendment 95 also focuses on safety. It simply spells out some considerations for future regulations made under the Act—namely, that they
“must have regard for consumer safety and wellbeing, and environmental sustainability”.
How could anybody object to those aspirations? Looking forward, we could leave it there and deal with the second part of this amendment in a different way. We will certainly come back to some of this in other groups but, at this point, I chose to add the specific issue of the disposal of chemicals and lithium-ion products because disposal is an important part of—
The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)
My Lords, the noble Lord, Lord Fox, was in full flow. He may resume on Amendment 3.
Lord Fox (LD)
My Lords, I was not in full flight; I was merely jogging along the runway.
I have talked to Amendment 3 already. Amendment 95 also focuses on safety, and simply spells out some considerations for future regulations to be made under the Act—namely, that they must have regard for consumer safety and well-being, and environmental sustainability. As I said before, how could anybody disagree with that comforting thought?
Looking forward, we could leave it there and deal with the second part of the amendment in a different way, but I chose to add some specific points around the disposal of chemicals and of lithium-ion products. Given that this is Committee, I want to probe the Minister on how he regards the issue of disposal within the context of the Bill, which is why I included those parts. In a sense, there are two ways of looking at Amendment 95. One is the writing in of an undertaking that consumer safety, well-being and environmental sustainability will be a key part of future regulation. The other is to understand a little more how the Government regard disposal. There will be other times when bits of this are debated, but I am clear in my mind that we must consider the end of life of products that this Bill will eventually regulate. The hardest part of that is what happens to chemicals and batteries.
I hope the Minister will agree, but I fear he may suggest that this should be managed through regulation that we have not yet seen. It would be helpful at least to understand how the Government would go about these things. Regulation is where details lie. I come back to the idea that we need guard-rails to indicate how regulation will be developed and otherwise. That is what we would expect in primary legislation. The principles, in this case for the safety of marketed products, should be set out in primary legislation. I beg to move.
Lord Foster of Bath (LD)
My Lords, I support my noble friend’s amendment and the amendment that is still to be debated by the noble Lord, Lord Sharpe. The amendment that I propose is to strengthen and future-proof the Government’s ability to identify and respond to high-risk products on the UK market. It proposes a clear mechanism to flag high-risk products and then requires them to be subject to additional safety measures. Such products would have to be, for example, conformity assessed by a UK-approved body and marked with subsequent CE and UKCA marking.
The concept of high-risk products with special requirements applying to them is not new. Animals and animal products imported into the UK are classified under the border target operating model as low, medium or high risk. Each of those categories, including the high-risk category, has different requirements before entry to the UK is allowed. As noble Lords will be aware, fireworks, heavy machinery and some types of medical devices are already recognised and labelled as high risk. However, outside these types of products, the situation is less clear and, at present, far too discretionary. It may well be that the Government have plans for a clearer, less discretionary framework approach. But given the skeletal nature of the Bill, as we discussed in the first group of amendments, and given the limitations of consultation on secondary legislation, it seems that Parliament will have little say in what emerges in this area.
My amendment provides an opportunity for Parliament to have a say in clarifying and strengthening arrangements around high-risk products. It goes beyond that because it provides a way forward by making use of the fairly recently developed product safety risk assessment methodology, along with other logical approaches that are clearly listed within the amendment.
I will use the proposed way forward by illustrating it in reference to the area of lithium-ion batteries yet again, particularly in the respect of their use in e-scooters and e-bikes, which I have spoken about on a number of occasions. Many other examples could have been used to make my case.
Last month, a batch of imported e-bike chargers, intended for use with GIN e-bikes, was rejected at the border and destroyed by customs officials. According to the Office for Product Safety & Standards, the products presented
“a high risk of fire and explosion”
because of the poor build quality of the transformer and concerns about the fuse used, and the products did not meet the requirements of the Supply of Machinery (Safety) Regulations 2008 or the Plugs and Sockets etc. (Safety) Regulations 1994 and were therefore rejected and destroyed.
Frankly, however welcome this intervention was—and it certainly was—it does not happen all the time. Just a couple of months earlier, the UK cycling sector, including industry trade bodies, e-bike brands, bike shops and charities, joined forces in an e-bike-positive campaign to boost knowledge of e-bike battery safety, helping the public to safely buy, charge and ride them. The e-bike industry is also developing a new scheme to highlight reputable, high-quality brands that thoroughly safety test their e-cycles and batteries. This suggests to me that the industry itself is currently having to act in the absence of clear regulations in respect of high-risk products in this sector. Recent figures sadly show the loss of life and property caused by e-bike and e-scooter fires, clearly showing that the current arrangements are simply not working.
Indeed, lithium-ion batteries in e-bikes and e-scooters are a textbook example of a high-risk product. Prone to catastrophic failure from poor manufacturing or improper use, they can, as we have heard on many occasions in your Lordships’ House, explode and catch fire, posing significant danger. ITV News has found that, in the past two years, e-bike fires have increased by 204%; Electrical Safety First found that over 180 constituencies have experienced an e-bike or e-scooter fire; the London Fire Brigade warned that e-bike and e-scooter fires are the capital’s fastest-growing fire risk and are responding to an associated incident once every two days; and, sadly, earlier this month, two people lost their lives in an e-bike fire in Coventry.
The charity Electrical Safety First has been campaigning for e-bike and e-scooter batteries and their associated chargers to be classified as high-risk and require third-party certification. Its campaign, which I have been supporting for a number of years, now has the support of around 100 major national stakeholders, from fire brigades to Which?, and over 500 parish and local councils, among many others supporting it. This amendment would meet those demands.
I sought to make the case with reference to lithium-ion batteries, but, of course, we must address all existing and future high-risk product safety issues. The Bill must set down robust precedents for the identification of safety risks coming down the line, given the ever-increasing developments in technology and consumer behaviour. I hope that this amendment achieves this by allowing the Government quickly to identify high-risk products and set subsequent additional safety regulations. Above all, it ensures that we have consistency, rather than the lack of consistency in the current arrangements.
Lord Jackson of Peterborough (Con)
My Lords, I support the amendment of the noble Lord, Lord Foster of Bath, and my noble friend’s amendment but I want to press the Minister briefly, because one of the key rationales for Clause 1 is to improve safety dynamically. I think we would all agree with that. Obviously, mention is made of the toy safety regime in the United Kingdom and in the European Union, as well as lithium batteries, artificial intelligence et cetera.
May I press the Minister on a genuine question? I have not found a rationale for why the only Schedule to the Bill excludes so many products not covered by the Bill’s potential regulations. It excludes:
“Plants, fruit and fungi … Feeding stuff”,
food generally and animal by-products, aircraft, military equipment and “Medicines and medical devices”. Maybe the Minister could say a little about which value judgments and what empirical data have been used to exclude those products from consideration in the Bill, perhaps seen through the prism of safety.
Lord Sandhurst (Con)
My Lords, I will speak to Amendment 10, in the name of my noble friend Lord Sharpe of Epsom, which seeks to delete Clause 1(4). It is worth looking at that subsection. It says:
“For the purposes of this Act, a product presents a risk if, when used for the purpose for which it is intended or under conditions which can reasonably be foreseen, it could … endanger the health or safety of persons”
or of domestic animals—I paraphrase—
“property (including the operability of other products), or … cause, or be susceptible to, electromagnetic disturbance”.
That is a bit beyond my knowledge grade.
I looked at this provision and it really is very broad. Where does it end? We say that the provision must be removed because it provides excessively broad powers to the Secretary of State to address things we simply know nothing about. It comes, of course, under the skeleton legislation; I have already made my points about the problems with that.
The definition of risk here has the potential to be so expansive that nearly any product, except an aircraft or certain other things which my noble friend has just identified, could be construed as presenting a risk under certain circumstances. A motor car can be perfectly safe and wonderfully designed but, if driven too fast or just badly in some other way, it will of course endanger life. That happens every other day. The same applies to a whole raft of mechanical tools and instruments—anything one wants to think about. If misused, they will cause danger.
If we have at some time in the future a Government who feel very strongly about something which, at the moment, none of us object to, they will be able to address that by secondary legislation, which will not be ultra vires—outside the scope of the legislation. It can do almost anything. We can all think of almost anything that we use at home, such as a power drill or a stepladder. If you misuse and fall off that, you break your skull. It could be motor cars or anything. This is absolutely absurd and far too broad.
If the Government want to legislate to say that motor cars must have a speed restriction, or must have brakes which do this or that, they should do that with specific regulation under specific legislation directed at that target, because Parliament has said, “We’ve had far too many accidents of this sort. We’ve got to address it”. That is the normal process we have as society develops, but a clause of this sort is just extraordinary. It really is Brave New World stuff.
Our complaint is simply that the broad scope of this definition could, in future, empower regulators to impose unnecessary restrictions on products where the risks are minimal or purely hypothetical—and certainly not within the scope of the imaginations of those of us in this Room—because somebody comes along, or a Government come along, in five years’ time and decides that they want to deal with it. Rather than having an embarrassing and difficult debate in Parliament, the Minister just has his way. That is not how we proceed in this country. We are a parliamentary democracy under, as we have been told, the rule of law. We would suggest that the Government have already attacked businesses, high-street retailers and farmers. Will these relentless, unidentified attacks on businesses ever stop? This provision, like others, risks creating legal uncertainty and regulatory overreach. We really must put a stop to it.
I say again that Clauses 1 and 2, as they stand, must be significantly revised or removed entirely, or the promise remains that we will move for them to be removed on Report.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, it is a pleasure to respond to this particularly interesting debate. I, too, welcome the noble Lord, Lord Sharpe, to his new position. I must say, the noble Lords, Lord Sharpe and Lord Sandhurst, seem to have undergone a conversion, certainly since the former’s time in the Department for Business. I have not been able yet to count the number of regulations in primary legislation that the noble Lord took through but, given that he was a Home Office Minister and given the Home Office’s—how shall I put it?—productive record in producing legislation in Parliament, I hasten to suggest that it was quite a few.
Clearly, behind that is an important consideration about the shape of the Bill and why we need a regulation-making power. On the other hand, the Government would say to noble Lords that the intention is to use those regulations proportionately on the back of the policy consultation that has just taken place. We see here, in a sense, a tension between those noble Lords who wish to make sure that the legislation covers areas of concern—we have heard about the areas of concern for the noble Lords, Lord Foster and Lord Fox—and those noble Lords who feel that the regulation, or the power given here to Ministers through regulation, goes too wide. Clearly, a balance needs to be drawn.
Lord Fox (LD)
There is no dichotomy. We do think that the powers are too wide but part of what we want to do is channel those powers by making the sort of suggestions to which the Minister just referred.
Lord Hunt of Kings Heath (Lab)
I was hoping to assure the noble Lord that the way the Bill is constructed should give him comfort in relation both to the issues he has raised around safety and to the comments of the noble Lord, Lord Foster. Clearly, we think that consumer safety is very important. It is central to the Bill and a key component of our product regulation.
The Bill as drafted seeks to uphold a high standard of consumer protection and guarantees that the risks associated with products are minimised; Clause 118 provides for this. Although some products have risks that may be reduced through improvements to the design or clear warnings, others may be so dangerous that they should never be allowed to be sold in the first place. Baby self-feeding pillows are an example of this. They were recalled by the Office for Product Safety & Standards in 2022 due to the fact that the risks they presented could not be mitigated.
The noble Lord, Lord Fox, referred to Clause 1(1)(a), which refers to “reducing or mitigating risks”. We believe that that wording puts safety at the heart of the Bill while permitting regulations to acknowledge the wider spectrum of risk. This concept of a wider spectrum of risk covers the point that the noble Lord was trying to make.
That really is the same response as the one to Amendment 10, in the name of the noble Lord, Lord Sharpe, to which the noble Lord, Lord Sandhurst, referred—essentially, how the Bill explains the term “risk”. My noble friend Lord Leong explained how the Bill puts product safety, and reducing the risks associated with it, at its heart. That includes risks to the health and safety of persons, and Clause 10 makes it clear that “health” can refer to the physical or mental health of a person.
I understand what the noble Lord, Lord Sandhurst, was saying. He was concerned about the wide scope of the Bill, particularly Clause 1(4). However, in a sense, we have to capture in the Bill a definition wide enough to allow us to deal with some of the circumstances that noble Lords have raised. The aim is to be comprehensive but also proportionate. The noble Lord said that the Minister could just do this willy-nilly, but the fact is that regulations have to go through Parliament. He knows that in your Lordships’ House, one Member, even on a statutory instrument under the negative procedure, can ensure that a debate takes place. To come back to the words he used, at the very least for Ministers that can be a challenging and extensive process. A regulation will not be produced without full consultation as well. I would therefore argue that this is not an overweening power of the Executive; it is a sensible balance whereby we try to set out a broad enough definition to cover the kind of risks that noble Lords are concerned about. However, because it has to go through a parliamentary process and a consultation process before that, there are sufficient safeguards to ensure that any future Government or Ministers are not overriding in the way that the noble Lord suggested.
Clause 1(4) also ensures that damage to property is also included within the meaning of risk, meaning that regulations made under the Bill can be made for the purposes of mitigating risks to property, including the operability of other products. I can say to the noble Lord, Lord Fox, therefore, that the Bill captures the spectrum of risks that products may present to the health and safety of people and their property.
I also emphasise that not every element of our product safety framework is focused entirely on safety in the traditional sense. Our current regulatory framework covers a wide range of topics. This includes the use of radio spectrum, the ergonomics of protective gear and noise emissions from some outdoor machinery, such as concrete breakers and lawn-mowers. A number of our existing regulations, such as those covering fireworks and pressure equipment, also cover risks to domestic animals. By the way, I point out to the noble Lord, Lord Fox, that that is why domestic animals are mentioned in the clause; it is also for this reason that we cover the interoperability of products and their susceptibility to electromagnetic disturbance, along with the risks to domestic animals, as I said.
Amendment 7, in the name of the noble Lord, Lord Foster, would create in the Bill a category of high-risk products where regulations can apply across the board. He worries that the Bill is too discretionary. I understand where he is coming from.
Lord Foster of Bath (LD)
Just for absolute clarity, I did not say that the Bill was too discretionary; I said that the current arrangements were too discretionary and I want a change from that situation.
Lord Hunt of Kings Heath (Lab)
I am sorry if I misinterpreted what the noble Lord said, but I get his drift. We believe that the operation of our current product regulation framework already recognises the point that he made.
Lord Foster of Bath (LD)
I apologise but I am not quite sure what the Minister’s concern about my amendment therefore is. It specifically suggests that we put into the Bill a power for the Secretary of State to choose to bring forward regulations that will enable the classification of high-risk products in the way that he has just described. They are all included, including the recently developed framework, as possible ways of doing that within the amendment. I genuinely do not understand the Minister’s argument. I am giving an opportunity for clarity—so that in all circumstances there is an opportunity to use that framework.
Lord Hunt of Kings Heath (Lab)
If the noble Lord will let me explain, Clauses 1 and 11 grant powers to make regulations relating to product safety for a range of purposes, general or specific. The Government have set out in their response to the product safety review our intention in the months ahead to begin a process of sector reviews. They will consider whether any changes are needed to our existing regulation of higher-risk products to reflect modern challenges, such as those that the noble Lord has pointed out in two speeches this afternoon. We will also consider whether updates to the GPSR are necessary to ensure that cross-cutting and emerging risks are properly addressed, particularly where products fall outside current sector-specific rules.
Furthermore, in December 2022, the Office for Product Safety & Standards developed a product safety risk assessment methodology for GB regulators to use with non-compliant products. The methodology requires consideration of the tolerability of the risk identified. Where a risk is intolerable, a regulator can act robustly in relation to risks that may have a low possibility of occurring, but where, if they did, the outcome would be disastrous. A noteworthy example is the effort made by the Office for Product Safety & Standards to protect young people from the dangers of ingesting small, powerful magnets.
In Amendment 95 the noble Lord, Lord Fox, makes the sensible point that safe disposal can be a key part of protecting consumers and businesses. Clause 1(5) makes clear that regulations can cover safe disposal of products. We will consider whether particular products need specific regulation in this area on a case-by-case basis.
On the disposal of batteries specifically, the Government are committed to cracking down on waste as we move toward a circular economy. We shall have a discussion on the circular economy—I was going to say “in a few minutes”, but that might be a little hopeful. We are reviewing and propose to consult on reforms to UK batteries regulation before setting out our next steps.
Finally, regarding the question from the noble Lord, Lord Jackson, on the Schedule to the Bill, the things mentioned in the exclusions are covered by separate legislation. It is as simple as that.
Lord Jackson of Peterborough (Con)
I am grateful for the Minister’s indulgence; I have a straightforward question regarding Amendment 7 in the name of the noble Lord, Lord Foster. The Minister has answered it thoroughly but I still do not understand. What else would the Government be doing, in looking at the efficacy of product safety, that is not already in the amendment? Surely the noble Lord’s amendment merely formalises actions with regard to product safety that the Government themselves would do in analysing what they need to do to protect consumers. I cannot understand the Minister’s resistance to at least being a bit more emollient towards what seems to me quite a sensible amendment.
Lord Hunt of Kings Heath (Lab)
My Lords, I think that is surprising support from the noble Lord, Lord Foster. This is an iterative process in Committee, and we are certainly always prepared to look at suggestions put forward. My response is simply that we think the Bill as it stands, and the reviews that will take place, cover the points he raises. The Attorney-General’s advice also suggests that we should not unnecessarily add to legislation, but we will give it some consideration.
Lord Fox (LD)
My Lords, as a fox, I take the subject of wild animals somewhat to heart. To some extent the Minister has covered my concerns, particularly around disposal, which is important, so I beg leave to withdraw Amendment 3.
Lord Frost
Member’s explanatory statement
This amendment removes from the Bill a broadly-drawn power to align with EU environmental regulation.
Lord Frost (Con)
My Lords, in moving Amendment 4, I will also speak to my Amendments 6, 15, 36, 37 and 42. I thank the Minister for the constructive exchanges we have had in the previous two or three weeks, both face to face and in writing.
Lord Frost (Con)
My Lords, I will pick up where I left off. I was about to note that my six amendments in this group have a substantive purpose and, I guess, a probing, clarificatory purpose. I will begin with the substantive. My amendments are separate, but they all stem from the same broad thought, and they are designed to deal with the fact that the powers in the Bill give Ministers the ability to make regulations for products in the UK, or GB, in a range of areas defined by simple reference to existing EU laws; and, beyond that, to provide for those regulations to evolve dynamically —that is, when the EU changes its law, that change feeds through into our regulations.
Personally, I am not and have never been a purist in this area. I do not think it is necessary for GB to have its own defined sets of rules on every single thing, with the UKCA designation that covers everything—unless, of course, we were to drop the current approach to regulation entirely, which was, after all, developed in the last few decades under an EU law framework, and revert to a more traditional, common-law, objectives-based framework. That is possibly a step too far for the time being. Given that, it makes sense to look at other standards and whether they work for us. In practice, that is what happens now, in a limited way. For example, we recognise the CE marking for the EU while sometimes having the UKCA marking or our own rules in parallel, but there are two problems with this.
First, I do not see why that possibility of recognising other standards should be limited to EU law only. Of course, I do not really agree with the thrust of Amendment 17 in this group, which we are about to discuss, which would require alignment with EU law. We may want to use other standards from other territories with less prescriptive regulatory frameworks, and we may want to allow goods with different standards from more than one place to compete on our market to make the country open to the best standards globally. That is the first problem the Bill presents.
Secondly, I do not really think it is right for us in this Parliament to subcontract our lawmaking to another body. It must be clear what the law of this country is at any given moment; it must be properly on our books. It is not good enough to say to the question “What is the law on product X?” that the answer is whatever EU regulation number whatever says it is today. My amendments are designed to deal with these points, and I take them in logical, not numerical, order.
Amendment 4 deletes Clause 1(2). I propose this really to explore why it is necessary, in a Bill specifically on product regulation, to include the ability to import large areas of EU environmental law. I can see that it might be convenient, but the same could be said of lots of other areas too. If there is a more specific and persuasive explanation, I would be interested to hear it from the Minister.
The Deputy Chairman of Committees (Baroness Newlove) (Con)
My Lords, I must inform the Committee that, if Amendment 4 is agreed to, I cannot call Amendment 6 by reason of pre-emption.
Lord Russell of Liverpool (CB)
My Lords, I will speak to Amendments 17 and 127 in my name. I also would like to congratulate the noble Lord, Lord Sharpe, on moving from the calm waters of the Home Office to the much more exciting waters of his new role. I hope he will enjoy the turbulence that will be created, not least perhaps by this group of amendments.
I have tabled this quite deliberately with a cross-party group representing the three principal parties across the House. This is designed, frankly, to try to drain the politics and emotion from this particular issue. The Government have made it quite clear that their primary driver for this Bill is to encourage economic growth and, above all, sustained investment. Having spent 31 years serving all kinds of businesses, including some of the largest companies in the world, as a headhunter, I know that one thing companies hate above all is uncertainty. For the last few years, many of our businesses have lived in a state of more or less continuous uncertainty, which they are not very happy about. That partly reflects our economy not moving as fast as it should and levels of investment which are at the bottom of the league table against our primary competitors.
The recent attempts, since midnight on 31 January 2020, to try to create our own system of regulation have been repeatedly underwhelming. I suspect they have been extremely expensive. I do not know whether the Minister will ever be able to find out quite how much the UKCA exercise has cost. I suspect if he managed to get the noble Lord, Lord Callanan, into a bar and plied him with enough drink—possibly Scotch whisky—he might find out. I suspect it was a considerable and rather embarrassing sum.
That has created a state of uncertainty. This Bill gives us a change to try to calm the situation down. Above all, what I want to do, and what I persuade and implore all noble Lords to do, is to drain the emotional and ideological swamp around some of these issues, and to get away from arguments which, frankly, most businesses have very little time or respect for—however important they may seem to the people for whom it is important—about sovereignty and rule-taking, and all those things. Most businesses are as interested in those issues as the general public is in your Lordships’ House and what goes on here. Most of them have no idea at all and have very little interest. Frankly, that is the same attitude that most businesses have to some of the wrangling that has gone on around these issues. Above all, they want certainty.
To start, I quote the head of trade policy at the British Chambers of Commerce, Mr William Bain, on the Bill:
“We would encourage the Government to bring forward an indication of the policy it intends to follow under the bill in terms of whether it would be the default that there would be alignment with relevant EU measures in scope of this or whether they will look at it on a case-by-case basis. But the BCC in its report and surveys and evidence has the data from our members to say that they think for traded goods, having as much alignment as possible is beneficial for trade with the EU”.
Other bodies, such as the Engineering and Machinery Alliance, said the same. CHEM Trust said the same on chemicals and REACH. I think I can rely on the noble Baroness, Lady Bennett, to weigh in on the environment, and we have already touched on some sensitivities about trade with Northern Ireland and trying not to upset the Windsor agreement and the DUP any more—it seems to be in a state of habitual disarray and alarm, which I do not want to exaggerate.
Secondly, the Government themselves, in their Explanatory Notes on the Bill, say that it is
“ensuring that the law can be updated to allow a means of recognising new or updated EU product requirements”
including CE marking, where appropriate,
“with the intention of preventing additional costs for businesses and provide regulatory stability”.
At this point, I return to the theme of Scotch whisky. I thought it was interesting to find a paper from the Scotch Whisky Association, with which certain noble Lords may be familiar. It says that business certainty and consistency by transposing EU market legislation of relevance to Scotch whisky in the UK is of extreme importance and that:
“A pragmatic, non-disruptive transition will be fundamental”.
We are looking for a Bill that gives the degree of certainty that business is craving and looking for. The result of the recent election in the United States of America is a cause of some alarm for some businesses, with perhaps increased uncertainty. I would not be surprised if the President-elect does not again hold out the prospect of a glittering trade deal between us and the United States. I suspect it might never be forthcoming or, if it is, the price we would pay would certainly benefit America first and us last.
The amendments that we are putting forward are in no way, shape or form driven by ideology; they are driven by business pragmatism. I also point out that the Government recently published an industrial strategy Green Paper, from which I quote:
“This government believes it is our role to provide the certainty that inspires confidence, allowing businesses to plan not just for the next year, but for the next 10 years and beyond”.
In essence, this is what we are trying to encourage the Government to articulate during the passage of this Bill, in such a way that business will not have to read between the lines to understand what the Government understand, as it is straight up there—either in the Bill or in comments made at the Dispatch Box that make the Government’s hopes and intentions very clear.
I gently remind some of those who might perhaps take issue with these amendments that it was the new leader of the Conservative Party, in her previous role as a Cabinet Minister, who effectively blew the whistle more than once on some of the attempts by her party to put in place a variety of measures to try to replace some issues that affect trade and regulation with the UK. She found disfavour with some members of her own party for doing so, but I would be interested to know whether the noble Lords who find fault with these amendments have spoken to the new leader of their party to see what her view of this is.
I will finish by firing some questions at the Minister. They are mainly aimed at the Bill team, because I do not expect an immediate answer, but I would be grateful if the noble Lord could come back to us in writing.
First, what calculations have been made by the Government of the impact of divergence in product standards from the EU going forward on our exports and our imports?
Secondly, what engagement have the Government had with industry on the impact of aligning with the EU on product regulation? I know from a meeting that the noble Lord, Lord Kirkhope, and I had, thanks to the Minister, with him and the Bill team that there has been considerable engagement throughout the past year with all kinds of areas of business. It would be helpful to know how extensive that was and what level of detail it was able to go into.
Lord Kirkhope of Harrogate (Con)
My Lords, I rise with no emotion in my voice—because, as noble Lords will appreciate, to be a Government Whip under Margaret Thatcher and John Major one had to leave emotion aside—to support Amendments 17 and 127, which bear my name. In doing so, I first want to speak to Amendments 6, 9, 15, 36, 37, 39 and 42. Obviously, I am against those amendments because they would fundamentally alter the purpose and practical operation of the Bill. If the aim of these amendments is to damage British businesses and our competitiveness on the world stage, noble Lords promoting them should say so. They should also be open with this Committee. If these amendments are simply a product of opposition to the EU or anything associated with the word “Europe”, they should make that absolutely clear.
This raises a critical question: who benefits from this approach? It is not British businesses. Our industries require clarity, predictability and coherence to thrive in competitive global markets. These amendments risk creating a fragmented system where businesses face the burden of navigating multiple and potentially conflicting regulatory frameworks. The UK has a proud history of robust safety and environmental protections. These amendments focus on what are termed “foreign laws”, without any clear guiding principle, and risk creating uncertainty about the quality and safety of products in the UK market. The outcome would be confusion for manufacturers, exporters and regulators alike. These amendments also prohibit the use of some dynamic alignment, a valuable tool for ensuring that our regulations remain relevant and competitive in an ever-evolving global market.
The European Union remains our largest trading partner. Its product regulations set a widely recognised global benchmark. Dynamic alignment allows us to align with the EU when it is in our interest to do so, ensuring that our businesses can access those markets while reducing additional costs or barriers. Denying this flexibility would leave the UK with an outdated and rigid regulatory framework to the detriment of businesses, workers and consumers alike. This introduces a potential free-for-all of standards with little clarity on how decisions would be made or who would be consulted. It is not the framework we need to build confidence in our regulatory system at home or abroad. These amendments represent a step backwards. They prioritise an abstract notion of flexibility over the real-world needs of businesses, consumers and our economy. They threaten to create a chaotic, fragmented regulatory environment that would disadvantage British industry and weaken our position in global trade.
I support the amendments I referred to that bear my name. I believe they offer a practical and balanced approach to regulating products in the United Kingdom. They would provide clarity for businesses by establishing alignment with EU product standards as the default position while, of course, maintaining the flexibility to diverge where clear benefits can be demonstrated. The EU remains our largest trading partner, as I have said, and its regulatory standards often set the tone for international markets. Aligning with those standards simplifies trade not only within Europe but globally; many third countries recognise those rules, and British businesses benefit from this de facto international benchmark. Diverging from EU standards risks isolating our industries, as I have said, and placing UK businesses at a competitive disadvantage.
The financial case for these amendments is equally clear. Without regulatory alignment, businesses face the double burden of not only having to navigate two distinct sets of standards but it not being bureaucratic. It is expensive: the Government’s impact assessment has shown that duplicating conformity assessments alone could cost businesses up to £1.6 billion over the next decade. There are many small and medium-sized enterprises that we should be particularly concerned about. These costs are insurmountable and may even deter them from exporting altogether. Our amendments would mitigate those risks by creating a framework of consistency and certainty.
I welcome the decision by the previous Government— my Government—to extend the recognition of CE marking indefinitely. This amendment would build on that precedent, turning an ad hoc decision into clear, predictable policy.
It has already been referred to but I draw your Lordships’ attention to the situation in Northern Ireland, where alignment with EU product standards is already a reality under the Windsor Framework. This approach would complement the Windsor Framework, ensuring that businesses operating across Great Britain and Northern Ireland have a consistent regulatory environment; reducing friction and confusion; and avoiding separate rules governing different parts of our country. I am sure noble Lords agree that that is desirable.
Our amendments are pro-business, pro-trade and pro-consumer. They reflect the realities of our interconnected world and would ensure that the UK remains an attractive place to invest, trade and innovate.
Lord Browne of Ladyton (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Kirkhope. Tempted as I am to follow his lead and comment on some of the other amendments in this group—other than the ones I put my name to, that is—I shall resist that temptation. My intention is to speak to Amendment 17 only and, even then, in a restricted way.
Before I do so, I join others in congratulating the noble Lord, Lord Sharpe, on his new appointment. He and I have debated consistently and for a period a number of issues; I will miss those opportunities because it is unlikely that I will be back in this space, in policy terms, in future.
I do not intend to rehearse in any detail the arguments that have already been made. I just want to emphasise why this amendment is squarely consonant with the aims of this Bill and will increase our agility in providing British businesses with a greater degree of certainty. As my noble friend the Minister outlined at Second Reading, the Bill aims to underpin the UK’s position at the forefront of international trade and enable the recognition of EU product requirements where it is in the UK’s interests to do so. It is precisely in that spirit that I added my name to Amendment 17; in the short time I will detain the Committee for, I shall attempt to explain why I believe that this provision will smooth our path to accomplishing these goals. Perhaps most importantly, the Bill in general—and Amendment 17 in particular—aims to move beyond the wrangling consequent upon Brexit and to provide our businesses and industrial sector with the certainty they need and crave.
I have had occasion in other contexts to make the case that regulatory certainty does not diminish our economic strength but is a prerequisite for those businesses on which our economic strength depends. The certainty that Amendment 17 would provide will not inhibit economic animal spirits but will allow businesses to plan and co-ordinate their commercial activity with the same confidence that their competitors in the EU and elsewhere currently enjoy. It is for that reason that the 50,000 businesses represented by the British Chambers of Commerce, and those businesses belonging to the Engineering and Machinery Alliance, support the policy of dynamic alignment, which would be instituted by the adoption of this amendment. We have tried the inverse of this approach and ought to have learned the lessons.
The brave new world of a UK-only system for the regulation of goods and products was widely disregarded by domestic businesses, who overwhelmingly chose to continue to conform with the CE mark because it allowed them access to an exponentially larger market. Indeed, the previous Government’s own regulatory impact assessment in this area showed that some overseas suppliers stated their intention to limit product supply to GB if CE was no longer recognised. Overall, the then Government’s best estimate was that around 18,500 UK manufacturers were involved in affected industries and that the average annual value of all manufactured goods imported into the UK subject to UKCA or CE requirements was £110 billion, with around half of these imports from the EU. In 2019, products that were subject to UK or CE requirements represented around a quarter of all UK-imported goods. As we have heard, the previous Government’s own impact assessments of duplicative conformity and labour time, to which the noble Lord, Lord Kirkwood, drew our attention, estimated total costs of up to £1.6 billion over the next decade. As your Lordships’ Committee is aware, in May 2024, after repeatedly extending the deadline to transition to the UKCA, the UK Government admitted defeat and indefinitely extended the recognition of CE goods in GB markets.
As I said at Second Reading, I have lost track of the number of Conservative Ministers I have seen in my 27 years in Parliament announcing their determination to kindle a bonfire of regulations, to take an axe to red tape, or some similarly strenuous deregulation measure. If that really is their desire, there are few things better calculated than this amendment to obviate the need for business to undertake rigorous conformity assessments and, consequently, smooth the path for frictionless trade. As such, this amendment preserves the intentions of the Bill to update our regulations according to a calculus of national self-interest, giving our businesses regulatory certainty while still allowing us to diverge from EU regulations when it is to our advantage.
At the risk of repeating an element of my remarks from Second Reading, we have seen a parallel scenario emerge in respect of our chemical regulations. The last Government decided to leave REACH, the EU’s body dictating the registration, evaluation, authorisation and restriction of chemicals regulations, to set up a parallel organisation. Since then, we have not adopted a single registered restriction on a harmful substance, compared with 10 new protections offered by EU regulation, including on harmful microplastics deliberately added to products. While REACH has regulated PFAS in the EU, not a single river or water body in England is in good chemical health. Since we left REACH, the EU has initiated 23 risk assessments related to harmful substances, while we have initiated just three. It may be that this is a function of a more vibrant, freebooting approach, or that we have superior data or a more effective methodology, but I fear it may just be that our duplicate body has simply proven less effective, which in turn imperils the safety of people in this country.
Lord Jackson of Peterborough (Con)
My Lords, I rise to support the amendment in my name and primarily that of my noble friend Lord Frost, particularly Amendment 4. It would not be fruitful to relitigate the Brexit wars, and certainly, those of us who have tabled these amendments do not wish to do so. We are looking at this Bill and its proposals. It is notable to remember that it is not the Government who are moving Amendment 17 and its consequent later amendment, but other noble Lords.
I shall just specifically talk about the amendment to Clause 1(2). It is actually quite a loose and opaque concept to talk about tabling an amendment to the Bill which talks about mitigating or reducing the “environmental impact of products”, because there is quite a degree of confusion about that specific phrase. There is also a significant question as to why there is a specific carve-out for this in the Bill. My noble friend Lord Frost raised this issue specifically with the Minister, the noble Lord, Lord Leong, in his letter of 16 October, and asked why it was necessary to have a separate provision to deal with this. My concern about this clause is that there is the prospect, if it remains in the Bill, not only that we may replicate very narrowly drawn product safety regulations as regards the environment, but that, due to mission creep, it can develop a lot of other particular areas. That may be music to the ears of the noble Baroness who represents the Greens, but it may extend to a supply chain’s due diligence, or to vehicle standards, artificial intelligence or deforestation. Those are all very wide areas where there would be a significant impact from what looks like a pretty innocuous clause. Therefore, I would like the Minister to address that particular issue, because it is very important.
To go back to the clause that is referenced in the amendment from my noble friend Lord Kirkhope of Harrogate and the noble Lord, Lord Russell, I am not sure that they have been witnessing the same situation with the regulatory regime and this Labour Government since 4 July. We are already seeing de facto alignment. We are seeing alignment on a common charger for electrical devices, the vote to leave the energy charter treaty and rules on organic pet food. We are seeing delayed divergence on Section 6 of the retained EU law Act, which is about paying due regard to European Court of Justice decisions vis-à-vis the UK courts; recognition of CE-marked construction products; the suspension of mandatory recycling labels; changes and delays to the implementation of the Windsor Framework; delays to the border target operating model; regulation on deforestation-free products delayed; and entry and exit schemes delayed.
The idea that this Government are presiding over a mass large-scale divergence is completely not the case. For a speech that was meant to take the political heat out of the debate, I think it was quite a political speech by the noble Lord, partly relitigating the long battles over Brexit we had. I do not think it is an ignoble aim for us, in laying these amendments in Committee, to make a point about the geopolitical changes in the United States with the election of President-elect Trump and the focus on deregulation and fewer and more flexible regulations. There are economic difficulties in the European Union, particularly in Germany, which has had some significant encumbrances in terms of all manner of economic data. To tie our regulatory regime to just one market—the European Union, where we have no control, no say and no voice—in a Bill in which there are huge numbers of Henry VIII and discretionary powers to be exercised by Ministers that are effectively unamendable is a risk. That is the risk, and it is the risk of this amendment.
The fundamental flaw of this amendment is that it is asymmetrical and unbalanced. My noble friend Lord Kirkhope used the word balanced. I do not think it is balanced; it is incongruous because there is an inherent presumption—a requirement in this amendment —for us to accept dynamic alignment. At least the noble Lord, Lord Browne of Ladyton, was honest that it is dynamic alignment. It is Chequers 2.0. In this amendment, we are being asked to support Chequers enunciated in primary legislation. I believe that is wrong.
The reason I think that there is a flaw and that it is incongruous is that if noble Lords look at Amendment 17, in subsection (3) of the proposed new clause there is a requirement to lay a statement before Parliament within 14 days about why a decision not to replicate EU law under proposed new subsection (2) is necessary. Funnily enough, there is not a similar requirement to lay a statement if it is decided to diverge from European Union regulations. I say to my noble friend and the noble Lord, Lord Russell, that the amendment would have been a lot stronger and a lot more robust to criticism by this side and perhaps even Ministers if that had been in the amendment. It is not, and for that reason it is a regrettable amendment. It seeks to tie us to a shrinking market which, by dollar denomination, will be about 14% of world trade within the next 10 or 12 years. That is not something we can put in the Bill. For that reason, I will not support it.
Lord Russell of Liverpool (CB)
I shall quickly respond to the noble Lord. One of the reasons why I asked the Minister for some detail about the breadth and depth of the consultation his department has had with business was to find out what business really thinks. I would say, in riposte to the noble Lord, that the key thing that should drive decisions on whether we align with the European Union or any other jurisdiction should primarily be what business is telling the Government. Businesses have a far better idea of the economic state, presently and potentially, of the markets they do business with. In fact, they have a much better idea than either Ministers or civil servants. From my point of view of trying to speak on behalf of business, listening to them on what they think should be the priority would seem the sensible thing to do.
Baroness Lawlor (Con)
My Lords, I thank the Minister for his generous allocation of time the other day to discuss some of the issues; I am very grateful for that and to his officials. I apologise for missing the debate on group 1 because of train delays for hours, but I rise now because my Amendment 6 cannot be called if Amendment 4 is agreed. I will speak to Amendment 9, which would disallow regulations that disadvantage the UK under its trade treaties. I will highlight the CPTPP and the UK’s main bilateral trade agreements with Australia and New Zealand. I support Amendments 15 and 37 in the name of my noble friend Lord Frost, and I add my Amendment 39 to prevent dynamic alignment with the EU.
The aim of these amendments is to ensure that the UK can help shape and promote free trade globally to the benefit of free trade under a rules-based agreement at international level. That is inconsistent with locking the UK into the EU’s protectionist arrangements, even on a case-by-case basis, I fear. They are different; they are under code-based legal systems and they are shaped by different legal thinking from that underpinning UK law, which is more pro-entrepreneurial and innovation-open. I do not believe we should saddle UK producers and consumers with the cost of complex EU protectionist law rather than be open to the best and most similar arrangements elsewhere—foreign laws—or our own laws that can benefit our economy.
I shall give an example of what I mean by protectionist and inward-looking EU law and then look at how it affects growth figures and jobs; I disagree with noble Lords who suggest otherwise. One illustration comes from the EU’s digital commerce and AI sector. The damage was annotated in a September 2024 study, Rules Without End: EU’s Reluctance to Let Go of Regulation, by two EU-friendly economists, Guinea and du Roy. They concluded that,
“the EU rulebook added 562 new pages and 511 new articles on Data & Privacy; as well as 271 new pages and 247 new articles on E-commerce and Consumer Protection”,
amounting to nearly 2,500 new restrictions for data and privacy and 1,200 for e-commerce and consumer protection. The cost was highlighted former MEP Luis Garicano, who concluded that this coincided with a 50% drop in the number of new apps coming onto the market. Meanwhile, the report said, a study by the Bank of Spain,
“found that each additional regulatory provision was associated with a 0.7 percent decline in the employment rate of the affected sector”.
Other noble Lords with whom I disagree have tried to draw our attention to employment rates. The Ernst & Young investment monitor for 2024 indicated that the UK had the largest number of jobs created by FDI in 2023. The UK was at 52,000, France was at 40,000 and Germany was at 14,000. Project numbers in the UK were increasing; in France and Germany, they were falling.
The other indicator to which I would like to draw your Lordships’ attention—I hope the Minister will look sympathetically on these amendments—is GDP share. The EU’s declining share of global GDP is mirrored in its recent growth figures. Whereas UK growth in the year ending June 2024 was 0.7%—yes, that is disappointing—the eurozone’s was behind that, despite having three G7 members among its number. In the third quarter—that is, since June—figures for UK growth are up by 0.5% and the eurozone’s by a disappointing 0.2%. For those reasons, there is a strong economic case for not locking us into the EU’s protectionist arrangements. Despite the best will in the world in Brussels to move out of them, the EU seems to get stymied each time by ever greater protection, as these studies suggest.
Baroness Bennett of Manor Castle (GP)
My Lords, with the explicit kind invitation of the noble Lord, Lord Russell, I rise to provide an environmental perspective and broadly support Amendments 17 and 127. Since it is the first time I have spoken in Committee, I welcome the noble Lord, Lord Sharpe, to his new role. Given the range of subjects I cover, we have discussed many things before and we will have new subjects to cover. I also apologise to the Minister: I was aware of the long time that he devoted to consultation; like the noble Baroness, Lady Lawlor, however, transport interfered with my attendance. There is a lot of it around, I am afraid.
I will comment broadly on the amendments introduced by the noble Lord, Lord Frost, and others on this side of the Committee. I am not in favour of all those amendments. I suspect it will not surprise many people to hear that but I suggest respectfully to the noble Lord that he might be picking the wrong battlefield when it comes to tethered bottle tops. I am not sure that being the noble Lord in favour of litter is something that he would like to adopt, given that if you look, for example, at a marine conservation study from 2023, bottle tops were the third most littered item found on beaches. Indeed, the NGO Seas At Risk found it was the third most common plastic item in the seas, causing damage to wildlife. So I suggest a small, practical and sensible measure. If the noble Lord is finding it difficult to manage these new bottle tops, there is a TikToker whose handle is @andreilifehack. He has 8 million followers and a neat little trick of how to manage a tethered bottle top. I should be happy to share that link with the noble Lord.
Like the noble Lord, Lord Russell, I am going to take a moderate, practical approach to this. Picking up the point he made about the advantages to businesses, we particularly look at small and medium enterprises in the UK, which have suffered enormously and lost a huge amount of trade following Brexit. Regulatory confusion and uncertainty does not help them, whereas larger businesses may be able to cope. The certainty that his amendment could help to provide would be useful to those small and medium-sized enterprises.
Picking up on environmental health and, indeed, more broadly, the one-health aspect of this and being pragmatic—the noble Lord, Lord Browne of Ladyton, focused on chemical regulation and as the noble Lord, Lord Fox, has amendments on that later in the Bill, I am not going to get into the detail of that now—harmful chemicals and industrial processes are damaging public health in the UK. We have huge problems. The noble Lord, Lord Browne, referred to the state of our rivers, then there is air pollution and the contamination levels in our food. All these things have big impacts on public as well as environmental health. Again being pragmatic and thinking about the fact that both the two largest parties in your Lordships’ House often reflect on the number of people who are not in employment because of ill health and who are not contributing to the economy as a result, taking steps to improve public health, and environmental health as part of that, is an extremely pragmatic step. As the noble Lord, Lord Browne, said, we are trailing significantly behind the EU in important areas of that.
I said I would be brief, so I will stop there because I have more to say on these areas in the next group.
Lord Fox (LD)
As noble Lords can probably imagine, I have been looking forward to this group for ages, and I thank noble Lords for not disappointing. I put my name to Amendments 17 and 127 in the name of the noble Lord, Lord Russell, and tabled my own Amendment 94. I think the valedictory remarks made by the noble Lord, Lord Browne, about leaving this Bill may have been premature because Amendment 16, which is group 9, explicitly deals with the REACH issue, which I know he is so passionate about. I would like him to join me in probing the REACH elements of this, so I hope he can put off his exit from the Bill.
The Prime Minister, the Chancellor and others have stated that they wish to re-engage with our largest market, which is the EU. Their aim, and our aim on these Benches, is to remove friction to make life easier for British business. Thereby costs will be kept to a minimum, markets will be more accessible and growth, which we all agree is vital for our future, can be more easily achieved. I was delighted today when the Treasury spokesperson, the noble Lord, Lord Livermore, endorsed the role of this Bill in helping the Government make those moves to re-engage with the EU. It was reassuring that he sees the importance of this Bill in that process. That is a very good mark to put on what we are doing.
We heard some excellent speeches from the noble Lords, Lord Russell, Lord Browne and Lord Kirkhope, in favour of the amendment tabled by the noble Lord, Lord Russell. The UK Government are introducing legislation to guide the future regulation of standards for thousands of products when they are sold in the UK market. It should go without saying that creating different standards for UK businesses hoping to sell in both the UK and the EU works counter to this. Consistent standards that apply across both markets will give business the ability and certainty to sell in both those markets.
Never mind the dolphins. The noble Lord, Lord Frost, brought up the issue of tethered bottle tops. As far as I am aware, there is no regulation in this country to require tethered bottle tops. The reason we have them is because business knows how costly it would be to have two forms of a drink being sold in one market here and one market there. Business understands, even if some noble Lords do not, the true cost of having two different regulations. When it can do without them, it does, and the one it chooses is that of the biggest market, which is very rarely in the United Kingdom.
This legislation is an opportunity for the Government, if they move in the right direction, to reduce the red tape and the bureaucracy that the current version of Brexit has created for British business. We should be under no illusion that Brexit has made it much harder for businesses to export into the European Union.
The wording of this amendment does not bind the hands of Government. As noble Lords have observed, there is absolutely the opportunity to diverge and move away from the regulations in the European Union, if that is to the advantage of the United Kingdom. This is a common-sense amendment that provides regulatory certainty for UK businesses by requiring a default of alignment with EU regulations and a process for parliamentary scrutiny, if or when Ministers determine that divergence from such regulation would be in the best interests of the UK. That is what business tells us it wants—and I hope that the questions that the noble Lord, Lord Russell, asked will continue with that. It also seems to be what the public wants. A poll published today in the i newspaper says that when people were asked where was more important to Britain economically, 57% opted for Europe, with 34% opting for the US, for example. There are lots of good reasons for the Government to support these amendments, because they provide a foundation for economic growth by ensuring that businesses can plan and invest with confidence about where the regulatory regime is going and what kind of regulations are going to apply in the United Kingdom.
Before I come very briefly to Amendment 94, unlike the noble Lord, Lord Browne, I could not help but be lured into addressing some of the comments made by the noble Lords seated just behind me. The comments of the noble Lord, Lord Jackson, were very interesting. His comments about the environment and how appropriate it is to take into consideration things such as deforestation were interesting, and I shall be interested to see whether the Opposition Front Bench endorse the comments that he made, or whether they will distance themselves from them—because I think that is quite important.
Lord Jackson of Peterborough (Con)
For someone who is usually very astute, who listens to my views and is very kind in saying that they are interesting, I think that the noble Lord may have got the proverbial wrong end of the stick. I was not making a value judgment on whether it was appropriate to put environmental standards in this Bill. The substantive kernel of my comments was that it was unclear as to what the definition of environmental standards was—it was not saying that they were good or bad for things such as deforestation.
Lord Fox (LD)
I may have misunderstood—I shall certainly look at Hansard afterwards. But it would be useful for the Opposition Front Bench to explain where they sit in that regard.
I always listen to the noble Baroness, Lady Lawlor, carefully, but I was confused on a couple of issues that she used as examples. The first example was a very long discussion of digital regulation in the European Union—but digital regulation is not a part of this Bill. The second example was the CPTPP, which we all know is not designed to have mutually enforced standards—standards are not a part of the CPTPP, so I am not sure how this Bill reflects on that at all. This is probably a conversation that we can have outwith this debate, because I am speaking to the point—the point being that we can have trade deals with all sorts of places, multilateral and bilateral, with or without taking into consideration alignment with the EU. However, we cannot have trade in the EU if we do not have the right regulations. That is the point on which I wanted to end, in that regard.
I turn briefly to Amendment 94, which is simply a probing amendment to understand how the Government will monitor and approach the developing international standards. To some extent we have heard about issues around whether we should adopt those standards, but we should certainly understand them—that is my thing—and we should know what standards are governing the products that are coming into our country and how they relate to our standards. Clearly, we are importing a lot of things from a lot of places that are not in the EU, from around the world, and we really need to understand under what level of governance those international standards are maintaining the sorts of things that we care about within product regulation.
To close, the noble Lord, Lord Russell, has done this Committee a great service in tabling his amendments; I am very pleased to be one of their co-signatories.
Baroness Lawlor (Con)
May I clarify something? I specified that e-commerce was part of this study, in line with other digital arrangements. Many producers sell their goods through e-commerce.
Lord Sharpe of Epsom (Con)
My Lords, before I start, I thank all noble Lords, who have been incredibly generous to me this afternoon and this evening. I am immensely flattered.
I say to the noble Lord, Lord Hunt of Kings Heath, that, having been on the wrong end of a couple of punishment beatings by the Secondary Legislation Scrutiny Committee, I am a changed man. I have seen the light. I am reformed. I urge the Government to follow my lead and reform themselves.
This has been a most interesting debate. I thank all noble Lords for introducing their amendments and points of view with such admirable clarity. I thank in particular my noble friends Lord Frost and Lady Lawlor for their amendments. I have signed Amendments 4, 9, 15 and 42; I will explain why.
These amendments would ensure that we maintain our competitiveness on the global stage without being governed solely by EU standards. Amendment 4 seeks to remove a broadly drawn power that allows the Secretary of State to align UK product regulations with EU environmental laws. The provision, as currently drafted, could potentially lead to extensive regulatory alignment on environmental standards without proper parliamentary scrutiny or oversight. I am sorry to harp on about this but the Delegated Powers and Regulatory Reform Committee has expressed significant concerns about this clause, stating that it grants
“Ministers maximum flexibility to choose the direction that the law will take”.
Specifically, the committee warned that this could allow Ministers to align UK law “completely” with EU regulations, even when that may not be in the best interests of the UK or its regulatory framework. Through an overreliance on EU standards, we risk locking ourselves into a regulatory framework that does not necessarily reflect our national interests; of course, we acknowledge that it also might.
Amendment 6 in the name of my noble friend Lady Lawlor and Amendments 15, 36, 37 and 42 in the name of my noble friend Lord Frost are critical for positioning the UK as a global leader in product regulation and consumer protection. They would allow the UK to benefit from the best practices in product safety and environmental regulation from across the world, including from the US, Canada, Japan and other advanced economies. By allowing broader access to international standards, we would ensure that the UK can adapt to global trends and provide consumers with high-quality products. There should be no reason for the Government to oppose such an amendment—unless they are looking for dynamic alignment with the EU.
Amendment 15 is an excellent amendment that would ensure that the UK’s trade agreements with key partners are not undermined by regulations introduced under Clause 1. Those agreements represent some of the most dynamic and rapidly growing economies in the world; ensuring that we do not disadvantage our position with these treaties is crucial to the future growth and success of our global trade. This amendment is about maintaining and strengthening the UK’s competitiveness on the global stage.
The countries involved in these trade agreements, such as those in the CPTPP, are the fastest-growing economies in the world. In ensuring that regulations do not undermine our standing in these markets, the UK is better positioned to take advantage of these growing economies. If we align rigidly with Europe in this way—this is not an ideological point but a practical one—we risk missing opportunities in these markets, where growth is happening at a much faster pace than in the EU.
My noble friends Lord Jackson and Lady Lawlor hinted at this, and I also looked at some of the figures. To put things into perspective on the US versus the EU, in 1982, US and European Union GDPs were broadly similar. However, fast forward to today and the US’s economy is now roughly 45% larger than the EU’s, both in nominal terms and on a per capita basis. Those figures are from the World Bank. Purchasing power parity in the US is 38% larger than in the EU. The US has outpaced the EU significantly in its economic growth. I am not saying that this is due solely to differing regulatory regimes—of course it is not. These numbers encapsulate many varying factors, but it cannot be denied that regulation plays a major part in economic development. The simple conclusion is not that we should slavishly align with the US, just that we should retain flexibility.
The argument is clear: the EU is not the only partner with which the UK should align. We are seeing stronger growth opportunities in markets such as the US, Japan and Australia, with countries that are part of key trade agreements such as the CPTPP and in other areas. Given that the Government have talked extensively about boosting the UK’s growth prospects post Brexit—arguments with which we wholeheartedly agree—it is difficult to understand why they would not support an amendment that protects the UK’s position in these high-growth markets.
If the UK is to remain competitive, it must have the flexibility—which I do not believe is an abstract notion, as claimed by my noble friend Lord Kirkhope—to engage with the most dynamic global markets, rather than being rigidly shackled solely to the EU. There is no logical reason to oppose this amendment, unless there is an ideological fixation on aligning solely with the EU.
This amendment gives the UK the flexibility to take advantage of the best international practices without being locked into EU-centric frameworks that might not be in our best interests in the long term. I urge the Government to accept Amendment 15 in the name of my noble friend Lord Frost.
I will speak briefly on Amendment 17. I have great respect for the arguments made by all its proponents—my noble friend Lord Kirkhope, the noble Lords, Lord Russell, Lord Browne and Lord Fox, and others. In fact, I agree with their reasons for proposing the amendment, but it is perfectly reasonable to arrive at different conclusions. I agree with the noble Baroness, Lady Ritchie, who is no longer in her place but who, in an earlier debate, said that we should reset our relationship with the EU. Of course we should but, for the reasons that I have outlined, this is the wrong way to do it.
I oppose Amendment 17, which proposes to replicate EU law in relation to relevant product regulations. The notion of mandating such alignment with EU regulations post Brexit is not only inappropriate but, we believe, detrimental to the UK’s ability to independently shape its regulatory future. The amendment, by insisting on replicating EU law as the default position, undermines the very essence of the UK’s independence post Brexit. It will inevitably involve importing aspects of EU law that do not suit this country’s future. The entire purpose of leaving the European Union was to take control of our laws, regulations and trade policies. This amendment would force us to retain EU regulatory alignment, unless Ministers could justify divergence—a process that still places undue reliance on the EU framework. Our focus should be on maximising global competitiveness and exploring new trade opportunities, not tying ourselves to EU standards that might not be in our best interests while also accepting that they might.
Finally, I reassure the noble Lord, Lord Russell, that the new leader of the Opposition is well aware of what we are doing. I urge the Government to accept the amendments that I have signed, as I believe they are pro-business, pro-trade and pro-consumer.
Lord Leong (Lab)
I thank noble Lords and the noble Baroness for their amendments in this group. Products in the scope of the Bill are used by every person in this country, covering nearly all manufactured products. We estimate that at least 300,000 UK businesses, employing several million employees, with an estimated market turnover of £490 billion, must adhere to product safety legislation.
The product safety review call for evidence in 2020 and 2021 received something like 158 responses; 126 responses were received in response to the product safety review consultation in 2023; 53 engagement events were held, reaching about 400 stakeholders; and, throughout last year, my department undertook 46 round tables with more than 300 stakeholders, both domestically and internationally. I want to set the picture so that all noble Lords know that we undertook reviews before the Bill was brought to Parliament.
Many businesses and consumer organisations support the Bill, seeing it as a common-sense approach to ensuring that the existing body of product regulation is fit for purpose in the face of technological and other changes. I emphasise again that the Government have been very clear that the UK will not rejoin the EU single market, customs union or freedom of movement. It is important to reset our relations with our nearest friends and neighbours, but that does not mean a return to the arrangements of the past.
Let us not forget that the bulk of UK product regulation is derived from EU law. This is precisely the reason the legislation explicitly references that jurisdiction and not others. If the UK makes a sovereign decision to mirror EU provisions, the Bill provides the mechanism and flexibility, on a case-by-case basis, to do so. This would avoid primary legislation each time technical changes are needed and would increase the certainty that businesses are crying out for. I hope noble Lords will support this pragmatic approach.
However, it is not our default position that we will mirror EU requirements. The Government will be guided by the needs of businesses and consumers, which may differ. Nothing in the Bill prevents the UK diverging from EU requirements. The Government’s approach, whether to mirror or diverge, will be driven by evidence, subject to industry engagement, as discussed earlier in group 1, and support our mission to drive economic growth and provide consistency and certainty to businesses.
I turn to the amendment by the noble Lord, Lord Russell. The Bill provides powers that will give the UK greater flexibility in setting and updating its own product-related rules. It also enables the UK to choose to recognise relevant EU product requirements where it is in the interest of our businesses and consumers to do so. The Government have strong relationships with stakeholders, including industry, trade associations and consumer groups, and will continue to engage with them before any regulatory changes are brought to this House.
Amendment 4 proposes removing the powers in the Bill that would allow us to update regulations that address the environmental impact of products where similar provision exists in EU law. Amendment 6 proposes broadening these powers to update UK regulations to mirror any international jurisdiction. The noble Lord, Lord Jackson, talked about environmental impact, and I thank the noble Baroness, Lady Bennett, for her contribution which leaves me with very little to say here, except that many products are required to meet multiple product regulations, including those which may address the environmental impact of products.
As I have noted, most UK product legislation is derived from EU law. The powers in Clause 1(2) are intended to be used in limited circumstances where there is a corresponding or similar provision in EU product regulations for the purpose of reducing or mitigating the environmental impact of products. This ensures that the power could be exercised to create regulatory certainty and manage changes to EU rules we recognise.
This power is limited in this way as we do not wish to create powers to regulate on wider environmental objectives. This already exists, for example, under the Environment Act. Clause 1(2) in no way obliges the UK to recognise or to mirror EU provisions. We have been clear that such decisions will be taken on a case-by-case basis and subject to parliamentary scrutiny.
Lord Frost (Con)
My Lords, it has been a very interesting debate, even though it may have had a slightly retro feel to those who lived through it all in 2019 and 2020.
I have a couple of quick points. On Amendment 37, if it is genuinely the Government’s view that this clause is not intended to and does not give the power to create ambulatory references, it seems we agree on substance—but maybe it could be clearer in the Bill.
On my question about the Windsor Framework, I gently suggest that the Minister has not quite answered the point. It is not about mirroring in GB; it is about goods that are able to circulate in Northern Ireland and therefore can circulate in the rest of the UK without further ado. I would appreciate it if that could be clarified further. I will not prolong this debate, even though I suspect we will return to this on Report. I beg leave to withdraw my amendment.
“(2) The Secretary of State may also by regulations make provision, in relation to the marketing or use of products in the United Kingdom, for the purpose of—(a) reducing or mitigating the environmental impact of products;(b) promoting sustainable production and consumption;(c) advancing circular economy principles;(d) meeting or exceeding environmental standards set by relevant EU law or other international best practices.”Member’s explanatory statement
This amendment expressly allows the government to exceed EU environmental standards, and adds circular economy principles to the face of the Bill.
Baroness Bennett of Manor Castle (GP)
My Lords, in moving Amendment 5 I will also speak to Amendments 28, 30, 50, 115 and 125, which are in my name and that of the noble Lord, Lord Fox. I am very aware of the time and the risk of a vote being called, so I am abbreviating this on the understanding that we may be able to have discussions later.
In the interests of time I did not speak on the first group, but the noble Lord, Lord Fox, spoke about this Bill—rather than being a framework Bill or one that is filled with Henry VIII powers—as providing guard-rails. Many will see the amendments in this group as providing a set of environmental guard-rails. The noble Lord, Lord Sandhurst, said that the Bill needed policy direction, and that is essentially what these amendments do.
I take the Minister’s point about there being a level of detail that is not appropriate to include in legislation rather than regulation. I spent this morning with Westminster Forum Projects talking about deposit return schemes and extended producer responsibility. I learned about RAM—recyclability assessment methodology. Those are things that certainly need to be in the regulations, but they need to be the guard-rails here.
These amendments will be classed as environmental amendments, but they are also amendments about things such as the right to repair and tackling utterly unnecessary planned obsolescence, which is deeply costly to consumers. These are also amendments that start to address the cost of living crisis and are real principles for people today. I was going to go through the amendments in considerable detail, but the arguments for right to repair and against planned obsolescence are really obvious so, given the time, I will address just the circular economy elements, which run as a line through these amendments.
It is worth saying that the environmental improvement plan contains a target to reduce residual waste, excluding construction waste, to 437 kilogrammes per capita by 2028, but in 2022 this figure stood at 558.8 kilogrammes. That was only 2.8% down on 2019. In three years, that was all the progress that had been made towards the target of circularity, which is only three years away.
The noble Lord, Lord Frost, who is no longer in his place, was talking about EU rules on deforestation. In 2021, UK consumption was associated with 30,000 hectares of deforestation, with all the climate and nature impacts that we understand. If we look at the climate aspect, the treatment and disposal of waste resources is separately responsible for 5% of all UK greenhouse gas emissions. The cost of that treatment and disposal of waste is borne very often by the public, when actually a few companies are profiting from the production.
I briefly mention, because I promised to do so, that the noble Earl, Lord Lytton, who is unable to be with us for this group, wanted to stress the importance of construction. Although it is excluded from that waste target, there are difficulties because so many problems with, and failures of, design are happening in construction. We all know about the safety impacts but they also have huge environmental impacts—and cost impacts, about which many of us know from working with builders.
In the interests of time, I shall stop there. I beg to move Amendment 5.
Lord Fox (LD)
My Lords, I will speak very briefly on Amendments 30, 115 and 125, which are in my name. As the noble Baroness, Lady Bennett, observed, they are designed to produce guard-rails that significantly strengthen the environmental and sustainability part of the Bill. It seems inconceivable to me that legislation of this kind would not carry these requirements.
Amendment 30, which is the substantive one, would add new subsection (2A) to Clause 2 in order to ensure that future regulations under the Act include provisions that relate to environmental impact assessments, the circular economy and granting consumers the right to repair products. On the latter, despite attempts, the tendency is to continue to find products manufactured with increasingly complex modules that defy cost-effective repair or sensible re-use, which should be an important part of the future economy. This amendment does not dot “i”s or cross “t”s, because that is the role of the actual regulation, but it sets a standard that we should be looking at for the regulation process. That is it; I could go into more detail, but I do not think I have to.
Amendments 115 and 125 are definitions that would help explain what we mean by “circular economy” and “right to repair”. I hope that His Majesty’s Government will find some sympathy with all of this group and find a wording. I am not proud about my words; I am sure that the noble Baroness, Lady Bennett, is the same. Let us find a way of putting these proposals into primary legislation because these are really important issues.
Lord Sharpe of Epsom (Con)
My Lords, I will be brief. I thank the noble Baroness, Lady Bennett, for introducing this group. I assure her and the noble Lord, Lord Fox, that we on these Benches want to see a bright future for our green and pleasant land. That said, we have some concerns about these amendments.
The first relates to the themes that the Committee has been exploring throughout this session. The Bill confers, as we have discussed at length, extensive Henry VIII powers on the Secretary of State. These amendments are broadly drawn and, we feel, have considerable holes in them. Given the wide Henry VIII powers conferred on the Secretary of State, it is not hard to imagine a world where a crazed zealot occupies the position of Secretary of State—it is not hard to think of those, is it?—and decides to apply these provisions in extreme ways without any scrutiny. We really should not lay ourselves open to that. These decisions should be subject to democratic scrutiny. Opinions will be sure to differ on the definitions of some of the phrases in these things. That is not to say they are wrong; it is just that opinions can, and will, differ.
My second point is that we are concerned that the amendments would impose significant costs on businesses. They will stifle competition and harm growth; obviously, this comes at a time when businesses are grappling with significant challenges. Although the proposals appear virtuous on the surface, in practice, they represent an unnecessary and impractical burden on businesses and consumers. That comes at a time when the country needs growth—a point that has obviously been acknowledged by the Government.
These amendments would create additional regulatory burdens, which would hamper industries already struggling with economic headwinds. I also note—I will expand on this theme in later debates—that the market is already supplying many of the solutions sought through these amendments. We believe that, for the many businesses —especially small and medium-sized enterprises—that are already struggling due to various factors, the cost of compliance with these rigid requirements could be devastating. It is not just businesses that will be affected because, of course, those costs will be passed on to consumers. Before any amendments in this group can be considered, surely we must assess the potential unintended consequences for businesses and consumers.
We have a strong record of delivering improvements for our environment but we on these Benches are clear that we should avoid overburdensome regulation on businesses. That said, informing consumer choice is an important component of efficient markets so, notwithstanding our objections, Amendments 28 and 30 in the name of the noble Lord, Lord Fox, have some merit. He is channelling his Orange Book foundations here. Overall, we would not support these amendments, for the reasons that I have outlined.
Lord Hunt of Kings Heath (Lab)
My Lords, it has been an interesting mini debate and I am grateful to the noble Baroness, Lady Bennett, and the noble Lord, Lord Fox, for their amendments. I want to remark on the miraculous conversion to regulatory purity of the noble Lord, Lord Sharpe. I can only refer to Luke, chapter 15, which states that
“joy shall be in heaven over one sinner that repenteth, more than over 90 and nine just persons, which need no repentance”.
I am not a crazed zealot but perhaps in my case, with due acknowledgement to St Augustine, “Oh Lord, make me regulatory pure, but not quite yet.”
We have encapsulated a very interesting debate because I think we all accept the really important point raised by the noble Baroness, Lady Bennett, and the noble Lord, Lord Fox. On the other hand, there are issues about the wording of the amendment and the unintended consequences, alongside the fact that we believe that current legislation allows us to do what both the noble Lord and the noble Baroness would require us to do.
Amendments 30, 115 and 125 are intended to reduce waste. They promote recyclability, repair and reuse of products, and seek to mandate that all product regulations made under the Bill would require an environmental impact assessment and provisions related to the right to repair and the circular economy. Amendment 50 of the noble Baroness, Lady Bennett, seeks to achieve similar by making it a requirement that regulations made under the Bill include provisions to promote circular economy principles. The noble Baroness’s amendment then goes a step further, requiring the Secretary of State to issue guidance on such principles within 12 months, and to review and update that guidance at least once every three years.
Under the duty set out in the Environment Act 2021, Ministers and policymakers must already consider the environmental impact of all new government policies. I certainly empathise with the whole concept of the circular economy, on which both the noble Baroness, Lady Bennett, and the noble Lord, Lord Fox, spoke with such eloquence. The Secretary of State for the Environment, Food and Rural Affairs has set the reduction of waste by moving to a circular economy as one of Defra’s top five priorities. In fact, the Secretary of State has convened a small ministerial group on the circular economy and asked his department to work with experts from industry and academia to develop a circular economy strategy. I will feed this debate and noble Lords’ contributions into the ministerial task force.
I understand the importance of the right to repair. The product regulations made under the Bill will cover many types of products, some of which may be inappropriate to repair. That is really part of the point; for instance, cosmetics is one example—the point that the noble Lord, Lord Sharpe, made. The Ecodesign for Energy-Related Products and Energy Information Regulations 2021 introduced measures including requirements for repairability for the first time in Great Britain. Those regulations contribute towards circular economy objectives by increasing the lifespan, maintenance and waste handling of energy-related products. Our aim is to introduce further right to repair measures when regulating individual products under the ecodesign for energy-related products regulations, where appropriate. That is probably the best way in which to approach it, rather than putting a generic requirement in this piece of legislation.
With regard to Amendments 5 and 28, I reassure noble Lords that the provisions in the Bill do not prevent the UK introducing new environmental regulations. Should we wish to set out broader regulations that exceed or differ from EU rules, we already have powers under other legislation to introduce wider environmental protection rules.
I understand the desire of noble Lords to have something in the Bill in relation to these important issues, but there is a problem of imposing requirements where they cannot reasonably be met or duplicate existing policies. I know that is not the intention, but we think that would be the effect of the amendments before us. We clearly want to avoid conflicting or duplicating regulations. In essence, we agree with the principles put forward by the noble Lord and the noble Baroness. We think we are covered by existing legislation and regulations, but I am grateful to them for bringing them forward.
Baroness Bennett of Manor Castle (GP)
My Lords, I thank the Minister for his response and noble Lords who have taken part in this time-constrained debate. I take some encouragement from the expressions of at least general support. Like the noble Lord, Lord Fox, I look forward to further discussions with the Minister on this issue. That is part of the reason why I tabled a number of amendments taking different approaches and going into different parts of the Bill because of the different ways of approaching it. We are very open to anything that might put in some kind of guard-rail.
If I may say so, the Minister gave a classic Civil Service response: “But it is covered by other legislation”. I point him to the figures I cited about how little progress has been made on waste reduction towards a target that is only three years away. What we are doing now is clearly not enough, and it is not working.
We are talking about the product regulation Bill, and on the point about right to repair and cosmetics, there are obviously different rules to be applied to different products. That is true of any Bill that covers product regulation.
I wish briefly to pick up the points made the noble Lord, Lord Sharpe, who suggested that these amendments might produce a further burden on consumers. If consumers found that their fridge lasted longer, for the kind of period that fridges used to last, that would be not a burden but a considerable advantage. If they were able to fix their mobile phone instead of having to pay a multinational company a large sum of money for a new one, that would certainly not be a burden on consumers. It would perhaps be a rebalancing of the Government acting in the interests of consumers rather than those of giant multinational producers.
We can see clearly that this is a debate that will continue, but in the meantime, I beg leave to withdraw Amendment 5.
Lord Hunt of Kings Heath (Lab)
My Lords, I say at once that I pay due regard to the Civil Service and the advice I receive, but these are the words of Ministers. There is a judgment here that you do not want to add legislation where you already have it. The point the noble Baroness makes is that the legislation is not being used effectively. The whole point of the Secretary of State for the Environment, Food and Rural Affairs’s task force is to look at the progress we are making and to refocus in relation to the circular economy. I hope the noble Baroness will not think that this is a damp squib of an answer because we take what she says very seriously. Of course, we will be happy to meet her and the noble Lord, Lord Fox, to discuss this important matter further.
Lord Sharpe of Epsom (Con)
My Lords, I reassure the noble Baroness that my fridge is more than 20 years old, and I have a very good mobile-phone repairer.
Baroness Bennett of Manor Castle (GP)
I guess the noble Lord has chosen his products well and been extraordinarily lucky. I am afraid some of my fridges have not lasted anything like so long.
House of Lords
Oaths and Affirmations
Wales: Coal Tip Safety
(1 month, 1 week ago)
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Baroness Smith of Llanfaes
To ask His Majesty’s Government what recent meetings they have had with Welsh Government Ministers regarding coal tip safety.
Baroness Anderson of Stoke-on-Trent (Lab)
The Secretary of State for Wales has regular discussions with the First Minister of Wales on a range of topics, including matters related to coal tip safety. The Government are committed to resetting the relationship with the Welsh Government, based on trust and mutual respect. That was evident in the Budget last month, where we allocated £25 million to the Welsh Government for essential work to keep disused coal tips maintained and safe.
Baroness Smith of Llanfaes (PC)
I thank the Minister for her Answer. Coal tips are a legacy in Wales of our mining past, and that pre-dates devolution. There are more than 2,500 disused coal tips in Wales, and 10% of those pose a risk to communities and infrastructure. Your Lordships will remember the Aberfan disaster, a tragedy that was caused by ignored warnings about safety, neglect, and a lack of investment. For those living literally in the shadow of coal tips, we must not let history repeat itself. The announced £25 million that the Minister just noted is far short of the £600 million required to make those sites safe. Would I be correct in saying that the funding covers only the inspection and initial maintenance? If so, do His Majesty’s Government accept their moral and financial responsibility to fully fund the necessary remediation?
Baroness Anderson of Stoke-on-Trent (Lab)
I thank the noble Baroness for her question, but I will have to disagree with some of it. The reality is that the £25 million announced in last month’s Budget is a demonstration of a Welsh Labour Government working hand in hand with a Westminster Labour Government. It is in addition to the £44.4 million that the Welsh Government have spent on coal tip safety, which is what this is about, over the last three years. The £600 million that has been referred to relates to the remediation and regeneration of the sites. That is a different conversation, separate to the ongoing maintenance of coal tip safety, and those conversations are ongoing with the Welsh Government.
Lord Anderson of Swansea (Lab)
My Lords, since the tragedy of Aberfan in 1966, one of the great successes in Wales has been the greening, removing and making safe of those coal tips. Apart from the very helpful amount in the Budget, have the Government been able to offer anything else to allay the concerns of the Welsh Government?
Baroness Anderson of Stoke-on-Trent (Lab)
I thank my noble friend. This £25 million, for which the Welsh Government asked for years but did not receive from the last Government, is a demonstration of us working to support the Welsh Government and the people of Wales. The £25 million is about the safety and security of the tips and ongoing maintenance. We will continue to work with the Welsh Government to ensure that the regeneration of these sites remains an ongoing discussion and delivery for the Welsh Government and for the Labour Government in this country.
Baroness Finlay of Llandaff (CB)
My Lords, in memory of Mansel Aylward, who, as a medical student, was the person who crawled into the school only to discover that the children were all dead, as was the teacher, what research is being undertaken now to look at more effective ways of monitoring the coal tips? With the change in climate, we have ever-increasing rainstorms and the water flow, which was partly responsible, is creating a greater, not lesser, danger in those valleys, where the memory of what happened in Aberfan remains as sharp today as it ever was.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I am the granddaughter of a miner and appreciate everything that the noble Baroness just said, especially about the impact of Aberfan, which we remember every year on the anniversary. Our hearts and prayers go out to the families and we can only imagine their ongoing grief. I reassure your Lordships’ House that the coal tips are currently safe—this work is to ensure their ongoing safety and maintenance. New technologies will be at the forefront of this, and I was delighted to see reports only this week that new satellite technology is now being used to analyse the coal tips to make sure that we are securing all those that we believe to be currently safe and those where we are most concerned.
Lord Boateng (Lab)
Would the Minister be good enough to take the time to commend the work of the Aberfan Memorial Charity? Its members have found the time, amid all they have to do to commemorate that terrible event, to work with the Grenfell Tower community and the Grenfell Tower Memorial Commission, which I have the honour of co-chairing, so that we can support each other at a time when, all too often, people feel neglected and forgotten.
Baroness Anderson of Stoke-on-Trent (Lab)
I put on record our thanks to the noble Lord for the work he has done with the Grenfell survivors and their families. There is nothing more painful than tragedy in the form of Grenfell or Aberfan. In terms of moving on and dealing with that level of grief, supporting each other and others gives a vehicle and a voice. I am —I would not say delighted—proud to be able to put on record our thanks to both the Aberfan community and the Grenfell survivors’ groups which are continuing to ensure that this never happens again.
Lord Brownlow of Shurlock Row (Con)
My Lords, I apologise to your Lordships but this is a subject new to me so perhaps the Minister could help me. The £600 million she refers to is for regeneration and the £25 million and the £44 million from the Welsh Senedd is for ongoing safety and maintenance. What is the actual figure to ensure the safety of the pits referenced in this Question so that we do not have a repeat of disasters past?
Baroness Anderson of Stoke-on-Trent (Lab)
I apologise for the confusion. The funding commitments are £44.5 million in the last three years from the Welsh Government and £25 million now from the British Government. The £500 million to £600 million the noble Baroness referred to is an aspirational number for future investment in remedial and regeneration works. It does not exist.
Lord Wigley (PC)
My Lords, if it transpires that, after the expenditure of the £25 million, and possibly £40 million, which the Minister said the Welsh Government were putting into the pot, a need is identified for substantially more urgent expenditure to guarantee safety, will more money be forthcoming?
Baroness Anderson of Stoke-on-Trent (Lab)
This is not a one-off conversation. We have regular conversations with the Welsh Government related to coal tip safety. This is an ongoing debate, and we have given this money because it is a national safety issue. We will continue to work with the Welsh Government to ensure that people in Wales are safe.
Baroness Bloomfield of Hinton Waldrist (Con)
I too remember the Aberfan disaster, and my own childhood worries that the completely blameless hill behind my Welsh primary school might collapse on to my school one day, so I welcome the way in which the Government have listened to campaigners on coal tip safety, and the measures in the Budget—building, as they did, on our work as part of the joint task force. It is a good start. May I ask for the indulgence of the Minister, in the spirit of listening to campaigners for measures to increase investment in Wales: will she commit to helping to find new funding from the UK Government to make the M4 corridor around Newport a reality?
Baroness Anderson of Stoke-on-Trent (Lab)
I thank the noble Baroness for her question—I think. Obviously, I do not have a response to that, but I will speak to Transport Ministers and come back to her.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, I understand that our Labour Government have given a boost to the Mineworkers’ Pension Scheme, but I do not seem to have read much about it in the newspapers. I wonder whether the Minister could give us more details.
Baroness Anderson of Stoke-on-Trent (Lab)
As someone who campaigned on this issue in the other place, I was delighted that in the first Labour Budget for 15 years we announced that the Mineworkers’ Pension Scheme will receive an uplift of 32% for pensioners—an average of £29 per week, or £1,506 per year—which was funded from the scheme, but the previous Government refused to allow the trustees to move forward in that way. It is a welcome move for many thousands of people up and down the country.
Baroness Gale (Lab)
Will the Minister join me in congratulating the Chancellor on giving the £25 million, just for next year? I believe that is the first tranche, and that there will be more to come. I am so pleased that this Government have recognised the need to provide the money so that we can have safe coal tips, certainly where I live. I am from the Rhondda Valley, surrounded by coal tips, and there is still a danger, as we saw only a few years ago in Tylorstown, when the coal tip slipped. Thankfully, no one was harmed. I am so pleased that the Chancellor has agreed to pay the money, knowing that the Welsh Government on their own cannot deliver the funding for that need. Will the Minister confirm that this will be continuous now—it is not just for next year but for years to come?
Baroness Anderson of Stoke-on-Trent (Lab)
I agree with my noble friend. This is a matter of keeping people safe. We have touched on Aberfan, and the impact that had on communities and on many people around your Lordships’ House. The subject of future funding will be raised in the spending review, and I look forward to those discussions with my noble friends in the Treasury.
Counter-Extremism Strategy
(1 month, 1 week ago)
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Lord Goodman of Wycombe
To ask His Majesty’s Government what progress they have made with their review of the counter-extremism strategy announced in August.
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
The counter-extremism review has now concluded. My right honourable friend the Home Secretary is considering the recommendations made and will provide a further update to the House in due course. Countering extremism in all its forms, and protecting the public, remain key priorities for the Government.
Lord Goodman of Wycombe (Con)
I am grateful to the Minister for that Answer. Robin Simcox, the Government’s Commissioner for Countering Extremism, draws a distinction between Islam, one of the three great Abrahamic faiths, and Islamist extremism, which he describes as
“the key threat I am confronted with”,
and therefore a threat to all of us. Do the Government agree with their Commissioner for Countering Extremism?
Lord Hanson of Flint (Lab)
I am grateful to the noble Lord for his Question and for the way he put it. The Commissioner for Countering Extremism makes recommendations to the Government, and we will consider all those recommendations in due course. There is a range of threats from the extreme right, from Islamist terrorism and from other forms of terrorism, and there is a real danger that people are radicalised in ways that are new to the next generation. We keep all things under review. The Government are cognisant of the fact that there are many threats, and the one that the noble Lord mentioned is very high on the list.
Baroness Uddin (Non-Afl)
My Lords, in the last year there has been a 38% rise in attacks against Muslims, and a 33% rise in attacks against people who are Jewish—anti-Semitic and Islamophobic attacks. Will the Government ensure that in their search for solutions to eradicate extremism, leading figures are careful in the language they use and that schools are not unduly targeting young children for early indications of radicalisation?
Lord Hanson of Flint (Lab)
The Government condemn all attacks against all communities, because people have a right to live their lives according to their own beliefs and religious outlooks. We will certainly look to protect all communities. In fact, the Government have allocated resources to support particularly vulnerable places such as mosques and synagogues. We intend to ensure that we prevent radicalisation, and that means a wide-ranging Prevent programme, but we are sensitive to the fact that we do not wish to stigmatise people at a very young age.
Baroness Doocey (LD)
My Lords, counterterrorism police say there is a clear link between extremism and domestic abuse, not helped by the amount of misogyny that young men are watching online. With one woman in the UK killed by a man every three days, will the Government commit to looking again at the Law Commission’s recommendations on hate crime to better protect women and girls?
Lord Hanson of Flint (Lab)
My honourable friend Jess Phillips is the Minister for Safeguarding and Violence against Women and Girls, and she is currently drawing up a range of strategies. If there is a link—and I am not aware of one at this Dispatch Box today—between the issues the noble Baroness has raised, that will form part of my honourable friend’s strategy. I hope the noble Baroness will rest assured that addressing domestic violence and the perpetrators of it is at the forefront of the Government’s agenda, and we plan to halve violence against women and girls during the course of this Parliament.
Lord Ahmad of Wimbledon (Con)
My Lords, as a former Minister for Countering Extremism at the Home Office and subsequently at the FCDO, I wrestled with the issue of co-ordination between those two departments on what I would term imported extremism. The clear message that needs to be sent internationally is to stop extremism at source. What measures will be included in the review to ensure that those seeking to come to our shores are prevented from doing so in the first place?
Lord Hanson of Flint (Lab)
I will take that as a representation on the outcome of the review, because I cannot comment on the review today. There are two aspects to extremism, the first of which is an external threat, so the Government have to be cognisant of individuals. That is why we have watch lists, security services and advice looking at potential threats from abroad. Equally, the strategy will be concerned with radicalisation at home—not just people from communities that relate to the faith of Islam, but people who might well be radicalised online by a range of sources, from outside the UK or from inside. Counter-extremism is about looking at the total envelope, at home and abroad, and the Government will focus on that when the review’s recommendations are brought forward.
Lord Beamish (Lab)
My Lords, the ISC, in its report on right-wing extremism, highlighted the issue of young men, in particular, being attracted by right-wing extremism online. Will my noble friend outline what the Government are doing to ensure that platforms take down content that is leading to the radicalisation of some young people?
Lord Hanson of Flint (Lab)
Again, my noble friend tempts me to produce the outline of the review’s conclusions. But we genuinely take this issue seriously. When I was a Member of Parliament, a constituent of mine in a small village in north Wales was badly attacked and injured by someone with a machete who was radicalised by Nazi philosophy online. That radicalisation is extremely important, and we need to look at how we build up the stability of individuals to resist that radicalisation and, as my noble friend said, stop that radicalisation at source. If it comes from outside this country, we need to take effective action through the security services and others to close it down. I will give my noble friend further information once the review is complete.
Lord Davies of Gower (Con)
Following on from the last question, what steps are being taken to address the growing threat of online radicalisation, particularly among young people, and to hold tech platforms accountable for extremist content? In the context of online radicalisation, how are this Government ensuring effective co-ordination between departments, including the Home Office, the Department for Education and the Ministry of Justice, in delivering the counter-extremism strategy?
Lord Hanson of Flint (Lab)
I am grateful for the question and the way in which the noble Lord put it. Again, I am slightly constrained in outlining the conclusions of the review before it has been completed. But let me say to him that online extremism and online radicalisation, whatever forum they come from, are extremely important issues and will be a focus of government. Going back to the point my noble friend made earlier, we have to look at a cross-government strategy on this; what happens in communities through local government departments, for example, is as important in preventing radicalisation as what the Home Office and the security services do, and we need to be aware of that. When the conclusions are published and my right honourable friend the Home Secretary has announced and opined on them, I will be able to report back to this House in more detail.
Baroness Fox of Buckley (Non-Afl)
My Lords, I am sure that Ministers and Members on the Government Benches remember the election in July fondly. But lest we forget, it was marred by ugly episodes of intimidation and harassment. Can the Minister update us on promises from the Home Secretary to specifically investigate, for example, the openly anti-Semitic supporters and red paint-wielding pro-Palestine activists hounding and abusing candidates and canvassers alike? In the context of attempts to use fear to distort election results, can the Minister outline which of the recommendations for safeguarding democracy in the review by the noble Lord, Lord Walney, will be enacted, and when?
Lord Hanson of Flint (Lab)
There is a Defending Democracy Taskforce comprising a number of Ministers, led by my honourable friend Dan Jarvis, the Minister with responsibility for security and counterterrorism. It is reviewing a range of issues and working across government to ensure that the integrity of elections is maintained. By “integrity” I mean elections being free of interference from abroad and from intimidation at home. I hope that will help satisfy the noble Baroness.
The Lord Bishop of Chichester
My Lords, I thank the Minister for his and his department’s ongoing support for all faith communities that face extreme behaviour and attacks on their buildings and property. Will the Minister update the House on what material His Majesty’s Government are preparing in response to Martyn’s law, and how they plan to communicate clear and easily understood advice for small volunteer groups, including faith groups, many of which struggle with the demands of administration and compliance?
Lord Hanson of Flint (Lab)
I am grateful to the right reverend Prelate for his question. Martyn’s law has been considered by and has cleared the House of Commons, and the issues he raises have been debated there. I expect it to come before this House in relatively short order, probably—without breaking confidences—in the next three months. There will then be opportunities to explore that, but we are cognisant that the purpose of the measure is to ensure the safety of the public. It has to be balanced with the safety and response of the communities that organise events in those halls and other facilities. On his first point, the Government will continue to provide funding in order to offer protection to synagogues and other religious buildings where threats are visible and real.
Satellites: Adverse Effects on Astronomy
(1 month, 1 week ago)
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Viscount Stansgate
To ask His Majesty’s Government what action they are taking to protect the work of astronomy from the adverse effects of large numbers of satellites.
Viscount Stansgate (Lab)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. The updated register of interests will show that I am a member of the All-Party Parliamentary Group for Dark Skies.
The Minister of State, Department for Science, Innovation and Technology (Lord Vallance of Balham) (Lab)
The Government recognise the importance of mitigating the adverse effects of satellites on astronomy. At this year’s United Nations Committee on the Peaceful Uses of Outer Space, the UK played a key role in securing an agenda item on dark and quiet skies, focused on protecting optical and radio astronomy. The Government work with astronomers and industry to develop mitigation strategies, and remain committed to international collaboration on this issue.
Viscount Stansgate (Lab)
My Lords, I thank my noble friend for that Answer. This is a complex area because the sky is being filled with thousands of satellites —around 28,000 are currently going around the earth—and they interfere with astronomy in both the radio and the optical wavelengths. Mr Elon Musk personally controls two-thirds of all the active satellites going around the earth, having launched his 7,000th satellite this autumn, and he has plans for 34,000 more. Against this backdrop, can my noble friend the Minister be confident that major international astronomical facilities—such as the Square Kilometre Array, which is based in South Africa and Australia and is headquartered at Jodrell Bank here in the UK—can undertake their work without serious interference from large satellite constellations? If not, what can the Government try to do to mitigate this interference by working with satellite operators, astronomers and international partners?
Lord Vallance of Balham (Lab)
I thank my noble friend for the question. There is a 10% increase, year on year, in light pollution from land, and there is a substantial increase in the problem of radio and light interference from satellites, as my noble friend says. The number of satellites circulating was about 2,000 in 2019, but it is now well over 10,000 and projected to go very much higher. Because of that, we have pushed to get this very item discussed next year by the scientific and technical committee, which is a sub-committee of the Committee on the Peaceful Uses of Outer Space, to try to make sure that there is an international approach to reducing the problem, including mitigation strategies for satellites that will be put up.
Lord Lancaster of Kimbolton (Con)
My Lords, the UK space sector is worth over £20 billion and employs about 50,000 people. The UK launched its first space strategy in September 2021, and the noble Viscount may be concerned to learn that the first point of its 10-point plan is to dominate the European satellite industry. Do the Government still support the space strategy published in 2021, or do they intend to review it?
Lord Vallance of Balham (Lab)
The cost of launch has come down by something like 95%. The UK remains committed to getting a launch and remains committed to the space strategy as laid out.
Lord Clement-Jones (LD)
My Lords, in that National Space Strategy, the previous Government focused on encouraging lower earth orbit satellites, which are increasingly contributing to the loss of dark skies, as we have heard. Will this Government focus on incentives for the development of higher-orbit satellites, such as geostationary satellites, particularly the micro versions, of which far fewer are needed? They offer the best cost economics, compared to LEO systems, and have a lower impact on the night sky.
Lord Vallance of Balham (Lab)
The noble Lord makes an extremely important point about the size of satellites, which is one of the problems with the interference from both radio and optical imaging. The smaller satellites, which the UK is extremely good at making, will become an increasing part of the solution. On orbit, we have a commitment to low orbit through the OneWeb approach—where there are about 700 in low orbit—and to higher orbit where it is appropriate to do so.
Lord Cromwell (CB)
My Lords, the global space industry is said to be worth about $500 billion. As we launch more and more material into space, which is largely unregulated, the orbits around this planet are getting clogged with blizzards of flying junk. A single bolt took out a French satellite not long ago. Does the Minister agree with me that the environment around our planet is every bit as important as the environment on our planet? Will he commit to raising public awareness of this underappreciated tragedy?
Lord Vallance of Balham (Lab)
My Lords, the question about the number of things circulating in space and the implications of that is very important indeed. The number of satellites projected to be launched by 2030 could be as high as 400,000, with estimates ranging from 50,000 to 400,000. This is a very big issue. The amount of space debris is increasing as well, which also contributes to the problem. The UK promotes the sustainable use of space and there is a range of initiatives, from regulation and standards to research, space observation and monitoring capabilities, as well as technologies for active debris removal and in-orbit servicing to try to make things last longer, all of which we will continue, along with the notion of satellite refuelling. This is a growing problem and one that we have raised with the United Nations body and will continue to do so.
Lord Harris of Haringey (Lab)
My Lords, I refer to my interests in the register as chair of the National Preparedness Commission. As an economy, we are increasingly reliant on positioning, navigation and timing signals from satellites in space. The Minister participated in the event organised by the Royal Institute of Navigation this morning, which I also spoke at. Could he share with us the Government’s plans around the vulnerability that our national economy and all our businesses will face if there is disruption to PNT signals, either because of space junk or solar activity, or malign activity by another nation? How well prepared are we to deal with those issues?
Lord Vallance of Balham (Lab)
This is a critical question. The Royal Institute of Navigation has recently—in fact, today—launched a paper on how to prepare for this. It is something that all critical national infrastructure will be urged to look at, to have a plan for what would happen in the event of GPS failure. There is a longer-term question about the alternatives to space-based navigation and there is active work going on in the UK on terrestrial approaches, including the use of quantum systems to try to get a robust secondary approach to PNT.
Viscount Camrose (Con)
My Lords, now that over 70 nations have their own space agency, how will the Government pursue the widest and most effective possible international co-operation in support of Astra Carta’s aim,
“to care for the infinite wonders of the universe”?
Lord Vallance of Balham (Lab)
There is a series of international collaborations in place. We are a member of the European Space Agency. A large proportion of the £1.9 billion of the UK Space Agency money goes to the European Space Agency and our collaborators there. We also spend through the MoD and through UKRI. We are members of the UN bodies that deal with the question of a sustainable space sector and space environment. The space environment is increasingly important and needs attention. We will continue to raise this question at the UN bodies.
The Earl of Devon (CB)
My Lords, what steps are the Government taking to ensure that we retain access to independent satellite launch capacity in the light of SpaceX’s close relationship with the next US Administration and the recent challenges at the Cornwall spaceport?
Lord Vallance of Balham (Lab)
The next UK launches are planned from Scotland, and several operators, including Orbex, Skyrora, and RFA are targeting orbital launches in 2025-26. The launch date depends on a range of factors, including technical readiness of launch operations, but we believe that we have a particularly important launch site which leads directly to polar orbit, which is of particular importance.
Lord Hamilton of Epsom (Con)
My Lords, I am very interested in the cost of satellites coming down quite so dramatically. Is this something to do with the private sector producing satellites much more cheaply than NASA used to do as a state-owned organisation?
Lord Vallance of Balham (Lab)
Launch has decreased in cost dramatically and so have satellites. A large part of the reduction in satellite cost has been the advent of small satellites. Surrey Satellite Technology, among others in the UK, has been particularly important in developing those technologies. That was a spin-out from the University of Surrey, and has led the way in producing much cheaper satellites. Multiple satellites can therefore be launched with one launch. That has been a very important change in the system.
Exports to the European Union
(1 month, 1 week ago)
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Lord Londesborough
To ask His Majesty’s Government, following the speech of the Governor of the Bank of England at Mansion House, what measures they are taking to increase the export of goods to the European Union.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, in his Mansion House speech, the Governor of the Bank of England observed that Brexit has weighed on the UK economy, particularly in goods trade. The previous Government’s Brexit deal imposed new trade barriers on business and, according to the Office for Budget Responsibility, permanently reduced GDP by 4%. That is why the Government are committed to resetting our relationship with the European Union, to strengthen ties and to tackle barriers to trade.
Lord Londesborough (CB)
My Lords, I thank the Minister for his response, and indeed for not mentioning that black hole—which is perhaps surprising, since the latest figures from the ONS show that our goods exports to the EU have fallen from £175 billion in 2018 to £153 billion last year, which is a drop of £22 billion. Not only that, our goods exports to the rest of the world over those same five years have fallen from £184 billion to £162 billion—yes, another £22 billion black hole. Does he therefore agree that these figures demonstrate a deeper-rooted weakness in our goods trading performance rather than simply Brexit being to blame?
Lord Livermore (Lab)
I thank the noble Lord for his Question and for mentioning the £22 billion black hole. He is absolutely right to point to the consequences of the previous Government’s ill-conceived Brexit deal. It imposed new trade barriers on business equivalent to a 13% increase in tariffs for manufacturing and a 20% increase in tariffs for services. As a result, the Office for Budget Responsibility has found that the overall trade intensity will be 15% lower than if the UK had remained in the EU. Specifically, goods exports to the EU have fallen significantly, down 19%—or £42 billion—compared with 2018. Of course, he also raises the correct point that we must increase our trade right around the world, because increasing trade is good for increasing growth.
Lord Reid of Cardowan (Lab)
Has my noble friend the Minister had the opportunity in his very busy day to read the article in the Financial Times this morning by the very perceptive commentator Janan Ganesh? He pointed out that, 10 years ago—long before the black hole was observed—we in the United Kingdom stood at the crux of three interlapping economic relationships: the United States, China and the European Union. We were in a formidable position. Since then, we have lost two and are possibly about to lose the third. Does that not make it all the more imperative that we start to rebuild those relationships, starting with the European Union?
Lord Livermore (Lab)
I agree 100% with my noble friend. I have not had the opportunity to read that article yet, but I absolutely will on his recommendation. He is right that the strength of those relationships is vital. As the Chancellor said in her recent Mansion House speech, we
“will always do what is in our national interest for our economy, for our businesses and for the British people”.
As she also said, the European Union is by far our biggest trading partner.
Lord Brownlow of Shurlock Row (Con)
My Lords, it is very good to hear from the Minister about maybe pivoting to a closer relationship with the European Union. What does he think the new Administration in the United States should take from that inference, given the prospective trade and tariff war with that country?
Lord Livermore (Lab)
In the recent Mansion House speech, the Chancellor said that we will always stand up for
“free and open trade, especially with our most economically important partners. That includes the United States”,
obviously—it is one of our most important destinations for financial services trade, for example—and that there is great
“potential for us to deepen our economic relationship on areas such as emerging technologies”.
Lord Fox (LD)
My Lords, renewing—or rekindling—the relationship with Europe is very important. Does the Minister agree that one of the ways to make that harder is for UK product regulation to diverge from EU product regulation? Can the Minister confirm that we will work hard on the Product Regulation and Metrology Bill to make sure that we have an avenue to stay close to that EU market?
Lord Livermore (Lab)
I agree with much of what the noble Lord says and agree wholeheartedly with the sentiment behind his question.
The Earl of Clancarty (CB)
My Lords, what is the timetable is for addressing these concerns? The creative industries have been hit particularly hard by Brexit, losing revenue in trade with Europe on daily basis. There is, or should be, a real urgency about this.
Lord Livermore (Lab)
I completely agree with the noble Earl. The creative industries, along with many others in our country, have been hit particularly hard by Brexit. We have identified the creative industries as part of the EU reset, identifying touring visas in particular as one of the priorities. The Prime Minister met with the President of the European Commission in Brussels on 2 October, and they have agreed to strengthen the relationship between the EU and the UK, putting it on a more solid and stable footing. We will now work with the EU to identify areas where we can strengthen co-operation for mutual benefit. Obviously, we recognise that delivering new agreements will take time, but we are ambitious, have clear priorities and want to move forward at pace.
Lord Sharpe of Epsom (Con)
My Lords, what precise steps are the Government taking to increase the number of trade agreements with non-EU countries, such as those that the previous Government negotiated including of course with the CPTPP, which noble Lords will be aware represents the fastest-growing economic region in the world?
Lord Livermore (Lab)
As the noble Lord knows, we have acceded to that partnership already. At the G20 this week, the Prime Minister spoke about reopening negotiations with India. In the spring, the Government will publish a trade strategy, in part to reset our relationship with the EU, but also to support more small businesses to export and remove barriers to trade right around the world.
Lord Watts (Lab)
My Lords, the last Government wrecked the economy and our relationship with our biggest trading partner, all on the back of the idea that there were loads of trade deals out there to be done. They failed to do them, and those that they did damaged the farming industry in the UK.
Lord Livermore (Lab)
I agree with some of my noble friend’s sentiment; I am not entirely sure what the question is. However, it is important to recognise the significance of the EU to our trade. Four of our top five export markets are in the EU, and eight out of the top 10. The EU accounts for nearly 50% of our trade; total trade with EU is worth over £800 billion and 41% of total exports go to the EU.
Baroness Kramer (LD)
My Lords, will the Minister confirm that part of our loss of trade to the global world outside the EU has been because, since Brexit, we can no longer guarantee to meet European standards for products, and because going through European supply chains was usually our entry point to meet final clients for independent exports? Both those routes have now been damaged.
Lord Livermore (Lab)
As so often on this topic, I agree with the noble Baroness. According to the Resolution Foundation, the previous Government’s Brexit deal imposed new trade barriers on business equivalent to a 13% increase in tariffs for manufacturing and a 20% increase for services. Reducing those trade barriers is a key priority for our European reset.
Lord Inglewood (Non-Afl)
My Lords, does the Minister recognise that the current arrangements for exporting to the EU bear disproportionately on small and medium-sized enterprises? Will, therefore, a priority in their negotiations be to reduce those, to stimulate that bit of the economy?
Lord Livermore (Lab)
The noble Lord is absolutely correct. As I mentioned a short while ago, in the spring the Government will publish a trade strategy to help reset our relationship with the EU, and a key part of it will be providing more support to small businesses to help them export and particularly to remove some of the barriers that they face to trade with the European Union.
Baroness Hoey (Non-Afl)
My Lords, in any renewing of relationships with the European Union, does the Minister agree that top of that list should be to get back control of our own country—in other words getting Northern Ireland to be part of the United Kingdom and getting rid of the Windsor Framework?
Lord Livermore (Lab)
We remain committed to implementing the Windsor Framework and to protecting the UK internal market.
European Forest Institute (Immunities and Privileges) Order 2024
(1 month, 1 week ago)
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Baroness Chapman of Darlington
That the draft Order laid before the House on 15 May be approved.
Considered in Grand Committee on 13 November.
Persistent Organic Pollutants (Amendment) Regulations 2024
(1 month, 1 week ago)
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Baroness Hayman of Ullock
That the draft Regulations laid before the House on 8 and 23 October be approved.
Relevant document: 6th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the second instrument). Considered in Grand Committee on 13 November.
Building Societies Act 1986 (Modifications) Order 2024
Baroness Blake of Leeds
That the draft Order laid before the House on 14 October be approved.
Considered in Grand Committee on 18 November.
Aviation Safety (Amendment) Regulations 2024
(1 month, 1 week ago)
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Lord Hendy of Richmond Hill
That the draft Regulations laid before the House on 23 October be approved.
Relevant document: 6th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 18 November.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, I beg to move the Motion standing in my name on the Order Paper.
Lord Trefgarne (Con)
I apologise if I did not make myself clear, but I am hoping to have a chance to talk about these regulations on another occasion. Is that possible?
Lord Hendy of Richmond Hill (Lab)
My Lords, this lengthy and comprehensive statutory instrument was debated on Monday in Grand Committee and approved. This afternoon is the appropriate opportunity to move this Motion.
Jailing of Hong Kong Pro-democracy Activists
(1 month, 1 week ago)
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Lord Callanan (Con)
My Lords, the jailing of 45 pro- democracy campaigners in Hong Kong is a serious blow to the freedoms of the people of Hong Kong. The fact that this happened only 24 hours after the Prime Minister cosied up to President Xi is particularly concerning. I welcome that the Prime Minister publicly raised the issue of Jimmy Lai, but did he also raise all these other cases where the verdicts were, at that time, imminent?
China has flagrantly ignored the Sino-British declaration in respect to Hong Kong, and it continues to flout international law in the South China Sea. Therefore, given that China has an observable track record of violating such international agreements and given that Mauritius was the first African country to sign an FTA with China, why does the Minister not believe that China is easily capable of similarly disregarding the agreement handing over sovereignty of the Chagos Islands and therefore establishing a competing base on one of the neighbouring islands to Diego Garcia?
The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office (Baroness Chapman of Darlington) (Lab)
I was not expecting Chagos this afternoon, I have to say. We have discussed the issue around Chagos and the treaty we have with Mauritius at length. As the noble Lord knows, Mauritius is a close ally of India and the UK, and the treaty will be subject to scrutiny in this House, so I hope that the concerns he raises about Mauritius somehow being susceptible to something around China can be responded to during that process.
The noble Lord is right, though, to draw attention to the fact that the UK Prime Minister met President Xi at the G20 in Brazil in the last few days and rightly raised the case of Jimmy Lai. Noble Lords can see the footage of that exchange for themselves, and they can reach their own conclusions about how it went.
On the 45 who were sentenced under the NSL, we are opposed to the NSL. We see this as in breach of the agreement that we reached with China in respect of Hong Kong; we are deeply concerned about what has happened. The 45 people were exercising their right to political expression and have now been imprisoned for it, and we oppose this.
Lord Purvis of Tweed (LD)
My Lords, after meeting President Xi, our Prime Minister said that he wanted to see more trade with China, notwithstanding the fact that the UK has a trade deficit in goods with China of over £25 billion. The previous Government refused to even countenance the suspension of some trade preferences from China in the UK economy if there were significant human rights abuses. In opposition, the noble Lord, Lord Collins, and I were at one in calling for a statutory human rights and trade policy. Can the Minister state that it is still the intention of the Government to ensure that human rights can trigger suspension of certain trade preferences from China if there are significant human rights abuses?
Baroness Chapman of Darlington (Lab)
As the noble Lord knows, we keep these things under constant review. We are deeply concerned about what has happened, not just in recent days in Hong Kong with the sentencing but about wider issues that I know he and my noble friend Lord Collins will have worked on together in the past. We have made quite strong statements at ministerial level in the last few days on these issues, and we will continue to do so as appropriate.
Lord Alton of Liverpool (CB)
My Lords, 1,800 pro- democracy activists are in prison in Hong Kong, including the British national, Jimmy Lai. Even yesterday, he was interrogated in the Hong Kong courts, including being asked about a visit to your Lordships’ House. Given the situation that they find themselves in, why did the Prime Minister decline, according to a Guardian report this morning, on two occasions during the G20 summit to condemn the decision to extend the sentences on the 45?
Will the noble Baroness repudiate reports that a deal has been offered between the British Government and Xi Jinping to remove the sanctions on British parliamentarians—there are seven of us—in exchange for removing sanctions on those responsible for genocide in Xinjiang? Surely that would be morally reprehensible and something that we should never countenance.
Baroness Chapman of Darlington (Lab)
My Lords, I will double-check, but I know of no such arrangement and I would be very surprised if that were the case. As he knows, we do not comment on sanction designations before they take place, and I would be very surprised if we would comment on something like that. I will check and get back to the noble Lord if I am wrong, but I would be very surprised if that report was in any way accurate.
Lord Garnier (Con)
My Lords, in the other place, the Minister’s right honourable friend said at the end of her Answer that the United Kingdom Government will always stand up for the people of Hong Kong. Could the Minister explain what she meant by that?
Baroness Chapman of Darlington (Lab)
My Lords, I was among the people in the other place who called for the BNO passport holders to be given the rights that they have, and we will continue to do that. That is one way in which we stand up for the people of Hong Kong. The other way is through using our voice when we can. The view that this Government take—and I appreciate that this is a different take on this from that which the previous Government had—is that, through some engagement, we might be better able to effect the kind of change that we would all wish to see.
Lord Howell of Guildford (Con)
My Lords, I do not think that this is a party point at all. It all seems a bit defensive. Has not the noble Lord, Lord Purvis, got a point? We find all the time the Chinese trying to undermine our democracy by various subterranean or covert arrangements inside this country and in many other parts of the world, including most of the Commonwealth. Can we not at least be reassured that we are using the same degree of ingenuity to undermine completely false claims by the Chinese, particularly where they are flouting United Nations directives themselves? Can we establish that, while we have to trade and work on climate issues with the Chinese—you cannot just cancel them—nevertheless, we will be absolutely determined to hold them to the rule of law, which if they undermine they will pay the price for?
Baroness Chapman of Darlington (Lab)
I agree with the gist of what the noble Lord has just said. He is right to point out that we have concerns with China on issues of human rights, and we raise them; we seek opportunities to do so. We do have a trade relationship with China and we also have global challenges on climate, health and other issues. It is in our best interests to co-operate and collaborate with China, but we will compete when we need to and we will not shy away from challenging when that is right as well.
Lord Deben (Con)
My Lords, does the Minister accept that, in Opposition, the present Government pressed the previous Government to take steps of a trade kind when we had human rights situations of this kind? Now, in government, she has not given us an undertaking that she will do in power what she tried to get others to do when she was not in power.
Baroness Chapman of Darlington (Lab)
No, I do not agree with that. I would point out that this Government are taking a very different approach to China in many ways. The previous Government had what at best could be described as a passive approach, where criticisms were made here in the UK but there was very little engagement to speak of, especially not on a ministerial level. We are taking a different approach; we are having a review of China which is going to go across Whitehall, so noble Lords can expect to see a different tone from this Government. I do not know whether this new approach is going to have the effect that we would all wish to see on human rights—nobody could know that—but I am confident that our approach has a far better chance of achieving a good relationship, where we are able to be heard and have the conversations we need to have at the right level, with the effect that we wish to see.
Lord Ahmad of Wimbledon (Con)
My Lords, I am saddened by the Minister’s response, because she will recall that the previous Government took a very robust stance when it came to the issues of human rights, particularly the situation in Xinjiang. She will also recall that it was the previous Government who took action on sanctioning what was happening in Xinjiang. The previous Government also took action in leading the way at the UN and at the human rights committee with other countries and building a coalition. So I ask the noble Baroness to reflect on her remarks, because the previous Government was pretty robust when it came to these issues.
Baroness Chapman of Darlington (Lab)
I do accept that. The noble Lord is completely right. He will recall that we supported the previous Government in all those endeavours. The difference is that this Government are attempting to engage in a different way, at a different level. Noble Lords can have a view on whether that is something that they welcome or that they think will ultimately be futile. But this Government’s position is that it is right to engage and to try. However, I wholeheartedly accept the points that he made about the work that the last Government did and I want noble Lords to know that we supported those measures at every step and called for some of them.
Passenger Railway Services (Public Ownership) Bill
Wednesday 20th November 2024
(1 month, 1 week ago)
Lords ChamberRead Full debate Passenger Railway Services (Public Ownership) Act 2024 View all Passenger Railway Services (Public Ownership) Act 2024 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 50-I Marshalled list for Consideration of Commons Reasons - (20 Nov 2024)
16:41 - Division on Motion A1 (as an amendment to Motion A) - Ayes: 210 / Noes: 213 - Motion A1 disagreed.
Lord Hendy of Richmond Hill
That this House do not insist on its Amendment 1, to which the Commons have disagreed for their Reason 1A.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, in moving Motion A I will speak also to Motion B. I am grateful for the collaboration and engagement up to this point on the Bill, which is a critical step towards our manifesto commitment of reforming our fragmented railway system. This system has cost taxpayers and passengers dearly in huge fees paid to private operators and in the delays, cancellations, overcrowding and poor service that passengers have endured for far too long. There is a strong public desire for public ownership. In September, a YouGov survey found that 66% of people nationally agreed that railway operations should be run by the public sector and only 12% favoured private operation. I hope that the House can agree that we need to pass this Bill and move on to the critical work of the next one.
Motion A is about the purpose clause proposed by the noble Lords, Lord Gascoigne and Lord Moylan. I completely agree that public ownership and wider reform should be guided by a clear purpose, with users of the railway placed at the heart of that purpose. Turning specifically to Motion A1, tabled by the noble Lord, Lord Gascoigne, I was disappointed to see that the noble Lords were insisting on this, despite the overwhelming majority against it in the other place. This is not in keeping with the collaborative approach that I hoped we were taking to the Bill in this House—and quite an unusual approach for this House to take as well.
The Government have already set out the purpose of public ownership and wider reform in our policy document Getting Britain Moving. This identified six objectives. People can see what they are and can hold the Government to account on delivering against them. These objectives are already at the heart of our decision-making. For example, my right honourable friend the Secretary of State and I have met the worst-performing train operating companies and their Network Rail counterparts and have demanded that they do better for passengers, right now. We have brought to an end long-running industrial disputes that inflicted misery on passengers. We have convened Network Rail and train operators to work together to tackle overcrowding at Euston and provide a better service for passengers. We have made new commitments about accessibility, following debates in this House, and we have pledged to increase transparency by publishing train performance data at stations. So there is no need to place a purpose on the face of the Bill—especially one that tells only part of the story.
I also remind noble Lords that during the previous Government’s 14 years in office, they never felt the need to legislate to impose this new statutory purpose on the Secretary of State, either in relation to the privatised railway or to the train operations that they chose to keep in public ownership for years—one now for six years—with no sign of a plan to return them to the private sector. However, I agree with noble Lords on all sides of the House that we must ensure that the future Great British Railways will have a clear purpose. In consulting on our wider reform plans, we will restate our objectives for the railway and its purpose. I assure noble Lords that delivering a reliable, punctual train services will be a prominent part of that purpose, as it already is.
I urge the House to support Motion A for two reasons. First, the purpose clause is unnecessary: we have already set out our objectives for the railway; we are already acting to achieve those objectives; and we are ready to be held to account for whether or not we deliver against them. Secondly, we will ensure that we set out a similarly clear purpose for Great British Railways in the forthcoming consultation.
Regarding Motion B, this House will be aware that Amendment 2 was rejected in the other place on the grounds of financial privilege. The Government understand the calls for the worst-performing services to be brought into public ownership first. But Amendment 2 was not the right approach. Its effect would be to delay the transfer of services into public ownership and so require taxpayers to continue to foot the bill for millions of pounds in fees for longer than necessary. Instead, the Government’s approach is the right one, and I am grateful to the noble Baroness, Lady Randerson, and her noble friends for recognising this in previous debates.
We have made it clear that where the contracts we have inherited from the previous Government allow it, we will bring failing operators’ services into public ownership as soon as we can. There is sufficient flexibility in the existing contract expiry dates to allow us to do that without overwhelming the public sector operator. Beyond that, we will bring services in-house as existing contracts end. This will avoid paying compensation for early termination and will avoid delaying the benefits of public ownership, as Amendment 2 would have done.
I urge the House to support Motion B so that the Government can get on with delivering the benefits of public ownership in accordance with the very clear mandate on which they were elected. I beg to move.
Motion A1 (as an amendment to Motion A)
Lord Gascoigne
Leave out from “House” to end and insert “do insist on its Amendment 1”
Lord Gascoigne (Con)
Despite what the Minister just said at the Dispatch Box, I genuinely thank him for the collaborative approach with which I thought we had been dealing with each other. I thank all those who supported this amendment previously. I am also grateful to the Minister’s officials for the advice they have given and for all the words the Minister has just said. I thank the Liberal Democrats for their consistent support for the amendments throughout the Bill’s passage so far.
So that everyone is aware, this amendment is to set out at the outset a clear explanation of what the Bill does: putting passengers front and centre and improving rail services. As I have said previously, this is not a trap, it does not cost anything, and it does not kill the Bill nor tie it down in bureaucracy. It is what the Labour Party itself has said, both in opposition and in government, the Bill will do. It is, as the Minister says, what the people want and expect. This has been said at the Dispatch Box in both Houses.
Omitting the purpose clause makes one question what the Bill is for. After all, some have said that the Bill as a whole is merely about the delivery of nationalisation for purely ideological reasons, with no drive for further reform until the further legislation appears. I am saddened that, purely for cost reasons, we seem to be allowing the continuation of the worst-performing services. This purpose clause makes it clear that the Bill is not being driven by ideological reasons and brings it back to focus everyone’s minds on what it is for—the passengers.
When we replace one franchise with another, who or what is holding the successor to account? What does that entity do with this new-found power? Surely there needs to be something that says that the country expects things to get better or, at the very least, to not get any worse. As I said before, it is needed because under the Bill a Secretary of State has to make a judgment on whether or not to extend an existing franchise. We need a purpose clause to be clear about what the Secretary of State’s overriding desire should be.
I have sought at various stages to set out why this clause is needed, and will briefly respond to the Government’s arguments against this. Yesterday in the other place, the Secretary of State said that the Government are already improving the railways, or that there has been “progress”, as she described it, saying:
“I am more than happy to reassure the House that improving the performance of the railways is at the top of my priority list”.
However, she immediately went on to say that this amendment was
“misleading and potentially harmful, because it picks out improving the performance of passenger rail services as the sole purpose of the Bill”.
How on earth can you say that the Government are already delivering the purpose clause and then immediately go on to say that it is harmful? If that was not enough, the Secretary of State then deployed the age-old ripcord language, saying:
“Improving performance is of course a vital objective, but it is certainly not the only one”.—[Official Report, Commons, 19/11/24; col. 181.]
So in one statement alone, over the course of literally minutes, the Secretary of State said that the Government are improving the service but that it is misleading and harmful to say that they are doing so; despite that, though, they are doing it and a bunch of other things too, but they cannot support the amendment. It feels a bit like Dr Jekyll and Mr Hyde. What is the Government’s position? Are they improving the service or are they against it? Are they delivering the clause already or is it misleading? Is it harmful, yet the Government are doing it? I could ask much else besides.
Baroness Randerson (LD)
My Lords, I do not follow the Government’s logic so far. They accepted our amendment, in the names of my noble friend Lady Brinton and others across the House, on disability access and the equality issue. That was and is a hugely challenging issue for the railway and for the Government, and a very expensive one to fulfil. Yet they reject this simple statement, which, as the noble Lord, Lord Gascoigne, just pointed out, is simply a statement of purpose.
We are very grateful to the Minister for the discussions and for the way he has moved to address our concerns. But, as the Government have said, nationalisation is not a silver bullet. Across the world, there are examples of both publicly and privately owned railways that provide an excellent service. Unlike both the Labour Party and the Conservative Party, we on these Benches judge a railway not by its ownership but by its efficiency: how good a service provided to passengers is and putting passengers at the heart of things, always. Incidentally, we welcome the Conservative Party’s new-found enthusiasm for passenger efficiency.
This amendment would make it clear that the primary —but not the only—purpose of the Bill is to improve passenger railway services. This should be a statement of the obvious, so I am mystified as to why there is any debate about incorporating it in the Bill. I am also concerned about the points the Secretary of State made in the other place yesterday. It is unrealistic to assert that you can interpret the amendment, specifically the words
“improve the performance of passenger railway services”,
as meaning that the Secretary of State could decide to run fewer services on time, which is, in essence, what she said. I add that if the Government are not happy with the precise wording, because they believe it could be misinterpreted and misused, they could, of course, have offered to amend it.
We would have preferred the issues of ownership to be more closely linked with improvements, passenger standards and other key issues that need to change if we are to have a robust 21st-century rail service. The Government, in our view, have therefore put the vehicle ahead of the delivery. However, we accept that they have a mandate; we accept that there is more than one way to deliver these improvements. We will be listening carefully to the Minister’s response, and I hope that he will be able to be more persuasive than the Secretary of State, because his expertise and reputation are always taken very seriously in this House. If he is able, today, to commit the Government to improvements to passenger services at the core of future legislation, at the core of the responsibility of the Secretary of State, we will be able to support the Government. Passengers desperately need to see improvements, having had a decline in service for so many years under the previous Government. So let us get that commitment on the record; let us get it in legislation, if possible, as soon as possible, so that the work can start.
Very briefly on Motion B, we acknowledge the primacy of the other place on financial issues, but we hope that the Government will continue to apply the flexibility that current legislation affords them so that they will not, unnecessarily rapidly, bring to an end very successful franchises.
Lord Moylan (Con)
My Lords, I shall endeavour to be brief. I repeat what other noble Lords have said in expressing my gratitude to the Minister, as I mentioned at Third Reading and when the Bill passed, for his courtesy and collaboration in our debates on the Bill.
The Government’s problem is this: they wish to reform the railways. There is a great deal of support in your Lordships’ House, across all parties, and generally among the public for a reform of the railways. We would like to discuss what the Government are going to do on a number of issues. Had they brought forward the measure in this Bill as part of a large and comprehensive Bill introducing those reforms to the railways, we would have had the opportunity to have those discussions. We would have been able to discuss, for example, the role of freight, and the tension between the priority given to passenger services and freight services that inevitably exists in a constrained system. We would have had the chance to discuss the continuation of open access and competition on the railways. We could have discussed the devolution of the operation of train services to regional and local authorities, such as exists in London and might exist in other parts of the country. We would have been able to do all those things as part of a comprehensive reform Bill.
But the Government have decided not to bring forward a comprehensive reform Bill, of which this is part; they have decided to take this step first—that is, to seize control of the train operating companies—and the great Bill of reform is promised for the future. The Government say that it will be brought forward within 12 to 18 months—that is a challenging target. As I have said, tediously, in the past, over and over again, even after that Bill has gone through its parliamentary process and passed, it will still take several years for it to be implemented.
Lord Liddle (Lab)
My Lords, I agree that there is a substantial degree of consensus on the need for reform, which the previous Conservative Government started five years ago with the Williams review. However, when we came into office, we found that a very partial Bill had been prepared which did not cover all of the issues that needed to be included in a railway reform Bill. It is the neglect of his previous Administration that has led to this situation.
Lord Moylan (Con)
I am not here to defend the previous Government, and I was not making a tedious trivial party-political point when I said that. I will say that I suspect the previous Government were dilatory and slow in bringing forward a massive reform of the railways because it is a very complicated business, and that goes to my point: I doubt this Government will be able to bring forward a Bill within 12 to 18 months precisely because of that complexity. Because of this large gap in time, through the passage of this legislation we are creating a new situation for the railways that could endure for four to six years, with no sense of accountability or purpose that the Government have, because the answer on everything that we wish to discuss —freight, open access, devolution—has been, “We can’t discuss it now; we can’t tell you anything now; you have to trust us”, just like the Government said “Trust us” to the pensioners, to the farmers and to large businesses that are landed with business rates.
The truth of the matter is that we do not see why we should trust the Government. That is without any disrespect to the Minister, but he is just one person and, like all of us, fragile and frail. We cannot build an entire railway system and entrust it to the Government on the strength of one particular Minister because of his noted, genuine and respected skills. We need to know what the standard will be to which we can hold the Government accountable during this new and quite lengthy period.
The objective of the purpose clause is not to set an objective for the railway, as the Minister has sometimes said; it is to set an objective for this Bill, and the Bill is about seizing control of passenger railway services. All we are saying is that the standard we expect to be set is that the purpose is the improvement of passenger services. If we cannot see those improvements then at least we would have a standard to which we could hold the Government to account, and that should be in the Bill. Warm words butter no parsnips. They are nothing to which we can hold the Government accountable. So, if my noble friend Lord Gascoigne chooses to press his amendment to a Division, we on this side will support him.
I turn to Motion B. I do not think the Government realise how helpful Motion B was intended to be to them. It is after all one of those rules in life that, if something is doing well today, it is likely that tomorrow it will not be doing so well, and vice versa. What are the Government now holding out as a practical prospect? They are going to move ahead, and one of the first franchises they are going to take control of is Greater Anglia, one of the best performing and most popular. What is likely to happen to Greater Anglia? Just by random chance, it will start to deteriorate and the Government’s programme of nationalisation will be damaged in the public eye as a result, whereas if they had seized control of Avanti, which is what we were guiding them towards through Motion B, then some improvement would have carried them forward and shown how well nationalisation was working. So we were trying to be helpful to the Government, but the Commons has claimed financial privilege on this issue and, as far as we are concerned, we give way.
On Motion A, I am sorry to hear the noble Baroness, Lady Randerson, say she is going to trust the Government. She will be joining a long queue of people who have trusted the Government, but I fear she will be disappointed. But that is enough for now.
Lord Snape (Lab)
My Lords, it is always a pleasure to follow the noble Lord, Lord Moylan, and I congratulate him on another polished speech. It ought to be well polished—he has made it at least four times during the passage of this particular legislation. He has not said anything new; we have cantered around the same course about Avanti trains and the future of the railway system.
This is a small Bill designed to create an overall body to be responsible for running the railway system. It was an idea conceived by the party opposite.
Lord Moylan (Con)
With respect, this Bill does not do that. If this Bill created Great British Railways, that would be another story altogether. This Bill does not create a body; it simply is the Government seizing control of existing railway companies.
Lord Snape (Lab)
That is absolute nonsense. This Bill is designed to implement a body, as a result of an inquiry into the railway system set up by the party opposite. Indeed, that party was so impressed when in government by the Williams report that the then Secretary of State for Transport, Grant Shapps, added his name to it. He did not actually do anything about implementing it because the backwoodsmen opposite felt it was a bit too much like nationalisation to have an overarching body responsible for the railway system.
We could have disposed of this particular amendment late at night during the course of the Committee stage of the Bill, but the noble Lord who leads for the Opposition refused to sit after 10 pm. There might have been a good reason for it—perhaps it was past the bedtime of the noble Lord, Lord Gascoigne, or the equivalent, but he and his party were not prepared for a proper debate on this issue, and they still are not.
Lord Moylan (Con)
My Lords, the amendment which we did not debate late at night was about the management of the railways in London; it had nothing whatever to do with what the noble Lord says. I see him giggle in the corner now; he knows he is having fun at the House’s expense.
The fact is that this Bill does not do what the noble Lord says it does. The other fact is that the Williams review did not envisage the nationalisation of train operating services in this country but rather the use of the private sector on what is referred to as a concession basis, rather than a franchise basis, the technical differences between which I shall not bore the House with now.
Lord Snape (Lab)
My Lords, I am neither giggling, nor am I in a corner. I find the noble Lord’s contribution to be as specious and inaccurate as most of the contributions he has made during the course of this debate. He keeps repeating the same tedious stuff.
Lord Snape (Lab)
If the noble Lord, Lord Gascoigne, who I have clashed with a couple of times in this Chamber, wishes to intervene, he should indicate and of course I will give way to him. It seems he does not wish to indicate. In that case, I would be obliged if he sat down and listened just for once.
Lord Snape (Lab)
And perhaps learned; that is another point.
The fact is that these are delaying tactics by the party opposite. I am amazed that the Liberal Party should want to be associated with this amendment. It is contrary to custom and practice in this place—not that I am a great one for adhering to the rules, necessarily.
This is a meaningless amendment, putting a duty on the Secretary of State which he already has. What Secretary of State wants to do anything other than improve the railway system? I mean, he did not always succeed, though it might have been well-meant during the time of the party opposite, but certainly the Secretary of State’s intention at that time—at any time—would be to improve the railway system. It really is not necessary to add such a clause to this Bill. I would be grateful if my noble friend treated it with the contempt it deserved.
Lord Hendy of Richmond Hill (Lab)
I thank all noble Lords who have taken part in this debate. I will address just a few points.
I very much agree with the noble Lord, Lord Moylan, and his description of the previous Government as being dilatory. It is six and half years since the timetable went wrong in the north-west of England and on Thameslink, in May 2018, and nothing really has been done. The railway is suffering and its passengers are suffering, and something needs to be done about it. I have referred to this before but, at some speed, we will be consulting shortly about the content of the wider Bill to reform the railway. I think that differentiates this Government and the speed at which they choose to operate.
On Motion A, I want there to be no doubt that this Government will undertake reform with a clear purpose and direction. As published in Getting Britain Moving, our objectives are set and are more ambitious and wide-ranging than the proposed purpose clause. We want to see reliability, affordability, efficiency, quality, accessibility and safe travel as the DNA of our railways—the foundational values that drive reform and deliver on what passengers expect. Public ownership will be the first step in ensuring better services, by placing the passenger front and centre as we rebuild public confidence, trust and pride in our railway.
I listened carefully to the noble Baroness, Lady Randerson, on the commitment that passengers should be at the core of the future of the railway. In that respect, the wider railways Bill is a different matter. It will establish Great British Railways as a new body at arm’s length from government, which will not be directly accountable to the electorate in the same way as the Government are. In that context, it is essential that the railways Bill should clearly set out two things.
The first of those is the functions of Great British Railways—what it is actually going to do. The second is what Great British Railways is supposed to achieve by exercising those functions—in other words, its purpose. I can absolutely confirm to your Lordships’ House today that the forthcoming railways Bill will set out both of those things, and that delivering improvements for passengers and maintaining high standards of performance will be a crucial part of its purpose. I will be more than happy to engage with the noble Baroness on how we express that in the Bill.
I urge your Lordships’ House to support the Government’s Motion A and to reject the amendment in Motion A1, tabled by the noble Lord, Lord Gascoigne, for two reasons. First, it is unnecessary, because the Government have already set out our objectives for the railway, we are already acting to achieve those objectives, and we are ready to be held to account on whether we deliver against them as we transfer the services to public ownership under this Bill. Secondly, as I have just assured the House, we will ensure that the railways Bill sets out a clear purpose for Great British Railways.
With regard to Motion B, the Government simply cannot accept an amendment that would delay reform, therefore going against the wishes of the electorate, and which would place additional cost on the taxpayer. We will use every tool at our disposal to resolve poor performance, including contractual termination rights, where they are triggered.
On the Bill itself, public ownership is not only the will of the voters but the right step towards bringing an end to years of fragmentation. Tens of millions of pounds in fees will be saved each year due to public ownership and, with the new direction and focus that this Government are now providing, current in-house operations are already seeing a reduction in cancellations. The evidence that public ownership is the way forward is clear.
On top of this, poorly performing train operators are being held to account, as I described earlier, and with Great British Railways coming further down the line, this Government have shown that we are serious about reform. None the less, improvements are needed now, and the Bill starts that process.
Lord Gascoigne (Con)
My Lords, I thank everyone who spoke in this brief debate, particularly the two Opposition Front-Benchers. I thank the noble Baroness, Lady Randerson, for Lib Dem support up to now; I hope that will continue. I am especially grateful to my very good friend, the noble Lord, Lord Snape. It is always a pleasure to hear from him. Before I came into this House, I was told repeatedly that everyone is very friendly, very compassionate, very polite and respectful. Yet, there we are.
Lord Gascoigne (Con)
No, I am okay, thank you.
This debate is about the Bill; it is not about an individual on the Front Bench, in the form of the Minister, whom I still consider to be a very good friend and who, I can confess, drove his own bus at my wedding—our history goes back a long way and I hope our friendship will continue after today. This is not about an individual and it is not even about trust. I do not think we should be trusting people to do something when we now have an opportunity to put it in the Bill. The Minister just repeated the line, “We are already doing this”, so I ask the question: why not put it in?
On the point made by the noble Lord, Lord Liddle, I cede the ground to my noble friend on the Front Bench. This is not about my party in government either. Trust me, I could wax lyrical—I say this to my boss on the Front Bench, the Opposition Chief Whip—about all the things I wish that my party had done in government, but it is not about that either. It is not about what we did; it is about what this Bill is going to do. It is Labour’s own language, and in the absence of anything more, I do not believe, despite what the noble Baroness, Lady Randerson, thinks, that we should be in a situation just of trust: there needs to be accountability. For that, I would like to test the opinion of the House.
Lord Hendy of Richmond Hill
That this House do not insist on its Amendment 2, to which the Commons have disagreed for their Reason 2A.
Lord Hendy of Richmond Hill (Lab)
My Lords, I have already spoken to Motion B. I beg to move.
Water (Special Measures) Bill [HL]
Wednesday 20th November 2024
(1 month, 1 week ago)
Lords ChamberRead Full debate Water (Special Measures) Bill [HL] 2024-26 View all Water (Special Measures) Bill [HL] 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 45-I(a) Amendment for Report (Supplementary to the Marshalled List) - (19 Nov 2024)
18:09 - Division on Amendment 2 - Ayes: 279 / Noes: 136 - Amendment 2 agreed.
18:50 - Division on Amendment 10 - Ayes: 82 / Noes: 172 - Amendment 10 disagreed.
19:03 - Division on Amendment 11 - Ayes: 140 / Noes: 117 - Amendment 11 agreed.
21:20 - Division on Amendment 51 - Ayes: 36 / Noes: 89 - Amendment 51 disagreed.
The Duke of Wellington
Member’s explanatory statement
This amendment, in conjunction with another amendment in the Duke of Wellington’s name to clause 1, seeks to ensure that undertakers take into consideration the views of environmental groups alongside the views of consumers.
The Duke of Wellington (CB)
My Lords, I am honoured to be the first person to speak at the Report stage of this very good Bill. As I have said, I realise that this is not Second Reading, but I repeat my support for the Bill. I have already indicated to the Minister that I wish only to try to improve it in certain small respects.
In this group I have four amendments—Amendments 1, 5, and 6—and I have added my name to Amendment 7. I have tabled Amendment 1 because the history of the last 35 years shows that the environmental voice in decision-making has been insufficient. One has to admit that considerable damage has been done, at least to the aquatic environment, in the 35 years since the water companies were privatised. Mrs Thatcher, Prime Minister at the time, believed that privatising the water companies would in fact help the environment because there would be more investment from the private sector than if they had remained in public ownership. But I have to say that in that respect, she was wrong.
It was difficult at the time to imagine quite how the water companies would structure themselves financially in order to take out of the industry much in way of high interest payments and dividends. All I seek to do in Amendment 1 is to balance the consumer voice with a stronger environmental voice. I am grateful to the Minister for the several meetings I have had with her on this matter. I think that Ministers are broadly sympathetic to what I am trying to achieve in this amendment, but as is so often the case with Ministers, they prefer their own wording to any amendment that is proposed. I would like, however, to continue this theme because it is important. Amendments 1 and 5 in effect go together. We should ensure that the environmental voice is stronger in all future decision-making.
It is worth reminding the House what the Bill says. It requires relevant undertakers—the water companies—to
“have arrangements in place for involving consumers in decisions”.
Fine, although I think it should be consumers “and environmentalists”. On the same page, at line 41, the Bill refers to
“a requirement for persons representing the views of consumers”—
I have added “and environmentalists”—
“to be members of a board, committee or a panel”,
or whatever the body may be. That is basically my point, and I hope that Members will consider it very carefully and agree that it is important to increase that voice.
Amendment 6, which is mine, and Amendment 7, in the name of the noble Lord, Lord Remnant, to which I have added my name, make a completely different point. I have served on a number of boards where sectional interests have been represented, and in my experience, it almost always leads to difficulties in decision-making and therefore reduces the effectiveness of the board.
I am very much in favour of a sectional interest, such as consumers or environmentalists, being strongly represented in a panel or similar body. In Committee, I tabled an amendment suggesting that it should also be a requirement that the chief executive of the company in question be required to meet regularly with such panels. That would be a very much better way for consumer and environmental interests to be heard strongly, and they would be more likely to have influence over the recommendations of the chief executive to the board.
Lord Remnant (Con)
My Lords, I declare an interest as having been a non-executive director of Severn Trent, the largest of the listed water companies, for eight years between 2014 and 2022. I chaired the board’s remuneration committee for that time.
I thank the Minister for taking the time to meet me last week to discuss my concerns about key aspects of this Bill. I am only sorry that her apparent sympathy for at least some of my arguments has not translated into accepting any of my amendments. I have three amendments in this first group. I will be as brief as I can, but each addresses a completely separate issue.
I will take them in order. My first is Amendment 4. New Section 35B(2)(a) addresses performance-related pay. The rules will set standards that companies will have to meet in a financial year in order to be able to make awards of performance-related pay to chief executives and directors for that year. However, the Bill extends the scope of this section, in new subsection (5)(c), to holders of such other description of role with the water company as Ofwat may specify.
My Amendment 4 would remove this extended application to individuals below board level. This extension will be difficult to implement in practice, as different water companies will have individuals described differently by title and role. Nor would such an extension be consistent with general remuneration under the corporate governance rules for listed companies, which do not extend to individuals below board level. If we wish to attract and support the next generation of leaders in this vital industry from middle management, this will not be achieved by extending these restrictive remuneration practices to them.
As the noble Duke, the Duke of Wellington, has just said, those in this House are better qualified than Ofwat in certain aspects, and this is one of them: to decide on how far down the management chain these rules should apply. My amendment draws the appropriate and proportionate line in balancing the objectives of the Bill with the interests of those most directly impacted by it.
I appreciate that Ofwat is consulting on the scope of the Bill and its application to individuals. It asserts that it is minded to apply the rule to any executive director who is a member of the regulated company board in receipt of performance-related pay, because that is where ultimate accountability and leadership responsibilities lie. I look forward to the Minister’s response to my concerns in tabling this amendment. In particular, I would be interested to know whether she agrees with Ofwat’s current stance that only executive directors should be brought within the scope of the performance-related pay prohibition, and, if so, whether she will communicate that view to Ofwat.
Amendment 7 is my second amendment and very much relates to what the noble Duke, the Duke of Wellington, has just been talking about: the duty for water companies to have arrangements in place to involve consumers in decisions. New subsection (6) in Clause 1 allows this in regard for
“persons representing the views of consumers to be members of a board, committee or panel”,
as we have heard. My amendment adds a sentence which ensures that it is for the boards of water companies, not Ofwat—for very much the reasons that the noble Duke raised—to decide on which of those three forums best suits their own requirements. I am grateful to him for adding his name to this amendment, and I agree with all his arguments in support of it and his own amendment. The Minister commented at Second Reading that it always pains her to disagree with him on anything, so I am working on the assumption that she will wish to spare herself further agony by accepting this amendment. I fully support strengthening the voice of consumers. This can be achieved in a number of different ways, as the Bill accepts, but each company in the sector is best placed to judge what is most appropriate for its own circumstances.
I was surprised to read in the Explanatory Notes to the Bill, in the overview prepared by Defra, that one of its provisions is to
“ensure consumer representation on water company boards”.
I should be grateful, when the Minister responds, if she could confirm that this is not indeed the position of the Government, irrespective of the choices which this Bill purports to give and the consultation exercise to be conducted by Ofwat.
There should be no highly prescriptive one-size-fits-all approach. Those best equipped to represent consumer interest may not wish to, or be equipped to, sit on corporate boards, with all the responsibilities and liabilities that entails. For Ofwat even to be given the option of this route risks alienating such experts and losing completely their valuable contribution. Nowhere in its consultation document does Ofwat point to the disadvantages of consumers sitting on boards, to which I have drawn your Lordships’ attention. I am therefore concerned that prospective respondents to the consultation may be being given an unbalanced view of the options.
We should not give Ofwat the power to require companies to appoint representatives of the consumer interest to their boards. Maybe some companies would opt for this route, but equally they may feel that stakeholder interest would be better served through the mechanism of panels or committees. My amendment would ensure that it was the boards of water companies which made that decision, not Ofwat. It would be helpful if the Minister, in her reply, could confirm not only that all identified options are, in reality, properly on the table, but that she recognises the disadvantages of board representation in this regard, which would represent a very suboptimal solution.
My final amendment in this group is Amendment 10. Clause 1(4) provides that the rules about performance-related pay can be applied in respect of the financial year beginning 1 April 2024 and for subsequent years. In effect, they can be applied retroactively. My amendment would change that date from 2024 to 2025 so that they would first be applied from the financial year beginning 1 April 2025. If we do something today, we believe that the law applying to it should be the law enforced today, not tomorrow’s backward adjustment of it. I would argue that the application of these rules retroactively is even more egregious.
One might at least expect your Lordships to know precisely what it is that they are passing and the resultant retrospective impact, but that is not the case. We are delegating the power to make such rules under this legislation to a third party, Ofwat, and I have already expressed severe reservations about its expertise in doing so, given that this is outside the core competence of an economic regulator. We know not what the rules will be, how they will be applied and what impact they will have. Further, it is not intended that they be subject to further scrutiny by this House before being brought into force, as I say, with retrospective effect.
The retroactive application of rules yet to be drafted will undermine investment and increase the cost of capital, raising prices for consumers. Over the next five years, the sector needs to raise £20 billion of new finance, much of it equity, to deliver the largest investment programme in the sector’s history. Investors are already nervous and can earn better returns in other sectors and in other countries. We need to provide confidence that the UK is open for business. Retrospective action destroys that by creating uncertainty about how their investments will be treated.
It will undermine new talent and the sector clearly needs talented individuals to deliver the amount of improvement we all want. Retroactive changes of this sort will undermine employees’ trust in a career. Why choose water when other sectors do not face this risk? If we cannot attract the best people into the water sector, we will not see best performance.
This Water (Special Measures) Bill is designed to drive better future performance. It is too late to change performance by applying rules to a year when two-thirds of it is already over. The water sector is characterised by assets, with 100-year asset lives and performance challenges that require multiyear investment programmes. That is what we should be concentrating on and incentivising management to achieve, not changing the rules of the game retrospectively as punishment for perceived failings. Many noble Lords, including the Minister herself, have made the point that not all water companies are the same—there are good ones and bad ones. I am concerned that the effect of these rules, when drawn up, will draw no such distinction.
Amendment 10 is about as simple as it gets. It requires the replacement of the number 4 with the number 5 so that the performance-related pay provisions come into effect for the beginning of the next financial year, 1 April 2025, and not the beginning of the current financial year, 1 April 2024. Can the noble Baroness confirm whether these rules are intended to apply to three-year LTIPs, not only those beginning in 2024 but also those beginning as far back as 2022 and 2023, of which 2024 is a part? Her reply on this will be important to me. I urge the Minister to accept this amendment. If she does not, I am minded to test the opinion of the House.
Lord Cromwell (CB)
I will speak to Amendment 2 in my name, and I am most grateful to the noble Baroness, Lady Jones of Moulsecoomb, and the noble Lords, Lord Roborough and Lord Sikka, for adding their names to it. I will speak also to Amendment 8 in my name, and again I am most grateful to the noble Baroness, Lady Jones of Moulsecoomb, for adding her name to this amendment. Finally, I am sincerely thankful to the Minister and her officials for discussing with me these amendments and the two other amendments in my name, which will come up later.
Probably the most fundamental failure in our water industry is that the regulator either did not understand or was unwilling to investigate sufficiently the financial structuring of the water companies: how these structures and indebtedness were altered over time beyond all recognition from the original enterprises, and what the risks and impacts would be. If anyone is in any doubt about the results, they need only look at Thames Water, which is now all but drowning in fetid pools of ever more expensive debt, adding to its existing £16 billion of net debt so as to limp along from day to day and racking up huge future interest liabilities in addition to the principal £3 billion it is seeking.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I thank the Minister for her time over the period between Committee and now. I shall speak first to my Amendment 9, which deals with performance-related pay and, more specifically, with bonuses paid to CEOs and directors of water companies. Performance-related pay should be related specifically to how well the water company has carried out its functions, having regard to the environmental targets it has been set. These are likely to relate to the number of illegal sewage spills that have occurred in the preceding 12 months.
During the last year—and especially during the general election campaign—the issue of sewage overflows was in the news almost daily. We saw the outrage of local residents at the state of their streams, rivers and lakes due to sewage spills—many occurred when there had not been any heavy rain. I will not go through the arguments, which have been well rehearsed in this Chamber. What I and my colleagues on these Benches are looking for is a reassurance from the Minister that where a category 1 and/or a category 2 pollution incident has occurred, the management of the offending water company—including the CEO, directors and senior officers involved in decisions in respect of controlling pollution—will be prevented from receiving any bonus or other performance-related pay enhancement to their basic salaries. It is unacceptable to the public for those in a very senior position in sewage and water companies to be rewarded over and above their normal salary for allowing sewage and other pollution to take place and not to have taken any steps to rectify the situation in a reasonable timeframe.
On Amendments 1 and 5 in the name of the noble Duke, the Duke of Wellington, environment groups have expertise to give to the water industry, but they should sit on boards. Consumers would also have a voice on boards. On our Benches are Peers who have in the past sat on water boards and contributed positively to their debates. This is a good and positive way forward. We support environmental groups and consumers being on boards and not being sidelined.
Amendments 2 and 8 from the noble Lord, Lord Cromwell, are about reporting. Amendment 2 would set up annual reporting on financial restructuring, including debt levels. This would seem a sensible way to ensure that the sewage and water company was aware of its business. However, Amendment 8 would involve others in the work of the authority, which is likely to become a bureaucratic nightmare. I have in a previous life sat on such bodies and found them to be unproductive and ineffective—I am sorry. Expectations of the civil society representatives will be high, sometimes with little understanding or knowledge of just how long it can take to implement what may often seem like a trivial matter.
Amendments 4, 7 and 10, from the noble Lord, Lord Remnant, do not align with our Amendment 9 and therefore we do not support them. However, I am conscious that whatever penalties the Bill hands out to directors and CEOs of water companies, they have to be proportionate, or it will be difficult to recruit people with the necessary expertise to sit on the boards of sewage and water companies.
Amendments 11 and 58 from the noble Lord, Lord Roborough, would introduce an SI into the legal framework. SIs are a favourite tool of Governments to get the detail of legislation in place. They tend to get somewhat divorced from the original Act that they refer to, but the timeline proposed here should mean that the original Act will still be fresh in peoples’ minds.
Amendment 57 from the noble Lord, Lord Sikka, is, I fear, unworkable. I know from previous debates that he and the noble Baroness, Lady Jones of Moulsecoomb, would prefer to be debating the renationalisation of water and sewage companies.
Baroness Bakewell of Hardington Mandeville (LD)
The Government have indicated that this is not going to happen. The amendment is an attempt to bring forward a different model of governance. The proposal is for 25% of board members to be chosen by local authorities. Local authorities are struggling with social care, looked-after children, education and people with learning disabilities. They certainly do not need this added to their “to do” list.
I look forward to the Minister’s response to this group of amendments, particularly Amendment 9.
Lord Sikka (Lab)
My Lords, Amendment 57 is highly workable, because it advances democracy and public accountability of the regulatory bodies. As we have it now, the regulators of the water industry have failed the people, mainly because they are too close to the very interests that they need to regulate and far removed from the welfare of employees, customers and citizens, who bear the ultimate cost of regulatory failure. I am pretty sure that the Government will soon be asking customers to chip in more money to restructure water companies and taxpayers to pay more to reconstruct them. That is just one part of the cost which people will bear.
All regulatory bodies need to be guided by effective watchdogs and guide dogs, but Ofwat has neither any watchdog nor any guide dog; it just seems to be running loose and doing whatever it wishes. There is no mechanism for preventing capture of water regulators. The executives of Ofwat pass through revolving doors and join the water companies with dizzying speed and great regularity, undermining the independence of the regulatory bodies. Regulatory bodies must be seen to be independent rather than just claim that they are independent. At the moment, a director of Ofwat, a former Conservative Minister, is spearheading a campaign that would make it harder for consumers to sue water companies that breach legal sewage limits. Should a regulator be doing that—or should it be more even-handed between the regulated and consumers?
Baroness Jones of Moulsecoomb (GP)
My Lords, I thank the Minister for having listened not just to Members of your Lordships’ House but to the thousands of campaigners, because the amendments tabled in her name are actually of great value. However, I feel they do not go far enough, and a lot of people—though probably not those here—might agree with me.
I have co-signed two amendments in the name of the noble Lord, Lord Cromwell, and one in the name of the noble Lord, Lord Sikka. I will vote for them if any of them are put to the vote. There are lots of other helpful amendments, but those three are the most useful.
I cannot help but feel that, if we were talking about benefit claimants who had behaved in the way that water companies have, we would not just slap them on the wrist in the way that we have the water companies; we would crack down on them, claw back the money and take them to court. The water companies have got off so lightly in this whole process. That really does not seem fair to bill payers or to taxpayers.
Amendment 2 goes to the heart of the issue. Water companies have been ripping us off with financial engineering, and I do not think that the Government’s action plan will resolve this. The water companies have been saying that they invest all the bill payers’ money in infrastructure, but they then take out loans and pay themselves dividends. With this legislation—even with the amendments—the Government are missing the opportunity to crack down on predatory capitalism.
Lord Roborough (Con)
My Lords, I thank the Minister yet again for her engagement at every stage of the Bill’s progress and for the significant improvements that have been made to it as a result. I will speak to my Amendments 11 and 58, to Amendments 4, 7 and 10 in the name of my noble friend Lord Remnant, and to Amendment 2 in the name of the noble Lord, Lord Cromwell.
Amendment 11 is a simple amendment that would give the Secretary of State greater influence over the drafting of the rules on remuneration and governance. We all know that it is the Government who will be held to account in this House and across the country for their record on water quality and pollution reduction. It seems only right that Ministers should have the ability to shape these rules. Indeed, given the importance of getting them right, Amendment 11 would make the regulations subject to the affirmative procedure for statutory instruments, giving Parliament its own role in approving these rules. I intend to test the opinion of the House on this, depending on the Minister’s answer.
Amendment 58 relates to limits on water company borrowing. I will not reiterate the arguments I made in Committee and, having listened to the Government’s concerns about the possible impact of a hard statutory limit on current negotiations between the sector and prospective investors, I have tabled an altered amendment here on Report.
It is clear to His Majesty’s Opposition that water companies have failed to take a sustainable approach to borrowing, and the current safeguards are insufficient. The amendment simply gives the Secretary of State the power to make regulations under the affirmative procedure for secondary legislation, limiting water company flexibility and returns to shareholders when leverage becomes excessive. I am most grateful to the noble Lord, Lord Sikka, for stating the current leverage ratios of the industry, and I agree with many of his comments, if not his amendment.
Nothing in the amendment forces the Government to do anything; we are merely seeking to give them the tools they need to deliver an effective limit on water company borrowing, given the inability of the regulator to do so historically. The Minister will no doubt tell us that borrowing will be considered in the wider review of the water sector, and we welcome this. However, in the meantime, Ministers need tools to take appropriate action now. If the Government do not feel that a borrowing limit is necessary, nothing in the clause requires them to act, but we on these Benches feel that it would be a missed opportunity to let the Bill pass without giving Ministers powers that they may need to ensure that water company borrowing is at sustainable levels while we await the conclusion of the Government’s review. Subject to the response of the Minister, I am also minded to test the opinion of the House on Amendment 58.
The amendments in the name of my noble friend Lord Remnant, which we spoke positively of in Committee, have a great deal of merit. They would ensure that board members are the individuals subject to the rules on remuneration and governance, as well as preventing consumers being inadvertently subject to these rules and other penalties as members of a water company’s board. This can be left to the company to decide.
Amendment 2 in the name of the noble Lord, Lord Cromwell, to which I am also a signatory, complements my Amendment 58 on water company borrowing. Greater clarity on water companies’ financial engineering is important. Should he seek to test the opinion of the House, we would support his amendment.
Finally, following the Minister’s constructive response, I did not bring back an amendment on the requirement to provide training to employees on their specific legal obligations within the water industry both before and after the implementation of the Bill. I would be most grateful if she could confirm that the Environment Agency will give guidance to the industry on how employees will be informed of these legal obligations.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, I am very pleased to be back in the Chamber, continuing to debate a very important piece of legislation. I once again thank all noble Lords for their interest in the Bill and their constructive engagement. We may not always agree— I may not always be able to accept amendments—but it has been very useful to have good, constructive discussions, which have helped to inform the amendments. Before I start my response, and before I forget, I confirm what the noble Lord, Lord Roborough, asked in his last question.
Amendments 1 and 5 in the name of the noble Duke, the Duke of Wellington, consider the views of environmental groups. I fully support his intention to increase the voice of environmental experts and company decision-making processes. However, we do not feel that these are necessary amendments to the Bill, and I shall explain why.
Environmental issues are already a key consideration in company decision-making. Water companies have a range of environmental obligations that they are required to meet, from ammonia limits to phosphorus reductions, and actions related to those obligations. If they break the law, regulators must enforce against them. Ensuring that these obligations are properly met is why we are giving the commission the opportunity to do a full review of regulation.
I agree that we need a step change from water companies. I remind noble Lords that, after only seven days in office, the Government called in all water companies to negotiate and require them to update their articles of association—the fundamental rules that govern each company—in order to make the interests of customers and the environment a primary and fundamental objective. These updates will place customers and the environment at the heart of business decisions, and we expect the majority of companies to have updated their articles of association by the end of the year.
Lord Remnant (Con)
I apologise for interrupting the Minister; I do not mean any discourtesy. I thank her for clarifying that the provisions relate to the time from 1 April 2024. Despite what she has said, I am still concerned about the retrospective element. My understanding is that that would affect the bonus arrangements for the year from 1 April 2024 to 1 April 2025 and would also impact the three-year LTIP arrangements entered into on 1 April 2024 for the following three years. But it will not impact LTIP arrangements entered into as long ago as 2022 or 2023 but which still have the financial year beginning in 2024 as part of those three years. From what the Minister has said, my understanding is that the retrospective element will not go so far back as to apply to LTIP arrangements entered into in 2022 and 2023. If she could confirm that, I would be much happier.
Baroness Hayman of Ullock (Lab)
Just to reiterate, Ofwat will look closely at the impact this will have on long-term incentive plans. I cannot give the noble Lord any firm detail on the specific question he asks, because Ofwat is currently looking at this. Perhaps this is something we could pick up so that I can understand his specific concerns in more detail, and we can feed those into Ofwat’s current discussions. At the moment I cannot give him any more firm information than I have already given. If the noble Lord wants to continue this discussion so that I can feed it back to Ofwat, I shall be happy to do so. I do not know what else I can offer at the moment, because I cannot give the noble Lord a firm answer.
I am going over time, but I shall look quickly at what else I need to say. Amendment 11, in the name of the noble Lord, Lord Roborough, would ensure that Ofwat’s rules on remuneration and governance came into force within six months of Royal Assent. Ofwat will be responsible for developing and implementing those rules but, as the Secretary of State will already be consulted through the process, we do not believe there is a need for a statutory instrument to be laid to bring the rules into effect.
We think that allowing Ofwat to set rules in this way, rather than through legislation, will enable those standards to be more easily amended where it is appropriate to do so in the future. I hope that that reassures the noble Lord. Ofwat does intend to implement the first set of rules following its statutory consultation, so this is not something that is going to drag on. We are keen for the rules to be in place as soon as possible after Royal Assent.
Amendment 57, in the name of my noble friend Lord Sikka, is about involvement in Ofwat’s board. We believe that it is the responsibility of Ofwat to determine who is on its board and who has voting rights for board meetings. There are already a number of ways in which consumers can feed into Ofwat’s regulatory work.
Finally, Amendment 58, in the name of the noble Lord, Lord Roborough, is about water company borrowing. At sensible levels, debt can be an appropriate way to fund investment for essential infrastructure in the longer term. Ofwat is already taking steps to monitor debt levels as part of its report on financial resilience. Companies will need to access additional debt and equity to support the price review 2024 investment programme. I do, however, agree with the noble Lord that more can be done to ensure that debt levels are more closely monitored in future, and I would like to reassure him that, as he expected, that the independent commission will look at this.
Following our meeting, I also know that the noble Lord understands that this is a critical point in time for the water industry and its investors, and we have previously discussed the importance of ensuring that we do not jeopardise water companies’ ability to secure investment before Ofwat’s final determinations are made at the end of this year. Today, Barclays reported in the Times on the deterioration in investor sentiment following the publication of the draft determinations.
I therefore trust that the noble Lord, Lord Roborough, is reassured that the Government take this issue very seriously, and that he and other noble Lords understand that introducing further rules on borrowing through this Bill is not appropriate for the water industry at this time. That is what I want to stress—“at this time”.
I have run out of time, but I thank noble Lords. This has been a long group and a lot has been discussed. I hope that they will feel able not to press their amendments.
The Duke of Wellington (CB)
My Lords, I am still certain in my own mind that the environmental voice needs to be louder in decision-making in this industry in future. I was considerably reassured by the Minister explaining how environmental considerations are central to so much of the current structure; however, one has to admit that, in practice, that has not been very evident.
I must admit that I became a bit concerned when the Minister was commenting on Amendments 6 and 7 and board representation. She emphasised more than once the importance of the consumer voice on boards, panels and committees, and she never mentioned the environmental voice. I must say that I then slightly worried about the reassurances I had previously received from her. However, one has to be pragmatic about these things. I think that my amendment is important, and I am grateful to the Liberal Democrats for apparently being prepared to support it. I noticed that the Conservatives, the Official Opposition, did not comment on it and therefore, with great regret, I beg leave to withdraw the amendment.
Lord Cromwell
“(d) requiring a relevant undertaker to report not less than annually to the Authority on actual or planned financial structuring or restructuring of the undertaker, including debt levels, commercial strategy and any associated risks, including to the long-term sustainability of the undertaking.”Member’s explanatory statement
The amendment requires that financial engineering becomes a regular focus area for timely reporting in order to assist in regulators’ understanding and alert them in good time to risks or distortions in a water company.
Lord Cromwell (CB)
I very much appreciate the Minister’s comments, but as she will expect, I am unable to agree. She said that Ofwat is closely monitoring water company finances. Well, we are nearing panto season and all I can say is, “Oh no it isn’t!” I have had numerous meetings with Ofwat in committee and frankly, I do not think it even really understood them. What is required by this amendment is a potentially very short report that simply outlines what financial restructuring has happened and what new debt has been taken on. It is a modest but vital amendment to make transparent the financial engineering and prevent the shenanigans of the past. I therefore wish to test the opinion of the House.
“(iia) meeting relevant standards issued under the Flood and Water Management Act 2010, in particular the standards in Schedule 3 (sustainable drainage),”
Baroness McIntosh of Pickering (Con)
My Lords, I am grateful to have the opportunity to return to these amendments and to thank the Minister and the Bill team, and indeed the noble Baroness, Lady Taylor of Stevenage, for the very useful, albeit inconclusive, meeting that we had,
Amendment 3 is really a prelude to setting out the basis of Amendment 43, on which, depending on the response I get from the Minister, I may be tempted seriously to test the opinion of the House. Amendment 3 sets out that the relevant standards in the Flood and Water Management Act 2010, particularly as set out in Schedule 3, “Sustainable Drainage”, be part of this Bill. In her summing up when this was debated in Committee, she thought that these standards were contained not in the 2010 Act but in a different Act. I beg to disagree. I think she has tabled an amendment, which we will come to later, asking for Ofwat to have regard to climate change. If it is going to have regard to that, I firmly believe that it should have regard to other environmental standards.
The reason I would like to return to Schedule 3 and the important question of sustainable drains is that the Bill, in its current form, is seriously flawed in this one respect. While rightfully holding companies to account on aspects of finance and other responsibilities, it fails to address the fundamental issue that leads to flooding from new developments. If the Bill remains drafted, it will allow rainwater to continue entering public sewers and mix with sewage at times of excessive flooding. This sewage and rainwater will enter existing developments, causing a public health hazard with raw sewage coming into people’s homes. I believe— I know others across your Lordships’ House agree—that it is totally unacceptable to continue to have rainwater mixing with sewage in the public sewers in this way.
There is general contentment that the Government seem to have met their manifesto commitment in this Bill, but sadly they are not focusing—they are reneging —on their responsibilities as regards parts of wastewater. Without my Amendments 3 and 43, the Bill remains defective. Amendment 43 is totally benign. It simply asks what progress there will have been in six months’ time towards implementing Schedule 3 to the Flood and Water Management Act 2010, calling for an end to the automatic right to connect, and adapting sustainable drains to be built as a mandatory requirement for all new developments. In Committee, I was delighted that my noble friend Lord Blencathra from the Front Bench supported this amendment and asked the Minister to consider bringing tougher flood mitigation duties forward for water companies on Report.
These amendments, and Amendment 43 in particular, provide vital flood mitigation measures that received cross-party support during the passage of the Flood and Water Management Act 2010. I am grateful to my noble friend from the Front Bench for lending his support to this amendment yesterday, and I request that the House give it fair wind. As I say, it is not asking for implementation, which would not be in keeping with this Bill, and I know the Minister will respond to this little debate by saying that the Government are looking at a future piece of legislation that will flow from the commission, which I think all noble Lords are grateful that they are setting up.
I would like to press the Minister on one point that she raised in her response to the debate that we had on these amendments in Committee. She said:
“The issue we have is that it also impacts directly on development and developers, which is why the Government are currently working with the Ministry of Housing, Communities and Local Government to assess how best to implement their ambitions on sustainable drainage, while also being mindful of the cumulative impact of the new regulatory burdens on the development sector. At this stage, I do not want to pre-empt the outcome of that process”.—[Official Report, 28/10/24; col. 1009.]
When the Minister and her colleagues sat on this side of the House, she was in favour of Schedule 3 and the immediate implementation of mandatory sustainable drains on all major new developments. I ask her in the most positive spirit: what has changed? Why now are they reneging on their duty, as a new Government with a big majority, to allow households to be free from the fear of having rainwater mixing with raw sewage and entering combined sewers with the potential of coming into their homes? I am not alone in calling for this to come into effect; both the Climate Change Committee and the National Infrastructure Commission have recommended that significant progress be made in addressing surface water flood risk, with the latter recommending that Schedule 3 be implemented.
Managing water both around and from new developments is central to reducing flood risk and the amount of water entering sewers. The Bill is also flawed in not addressing the issue of surface water run-off from highways, which we also discussed in that meeting, and I agree with the Minister and her colleague the noble Baroness, Lady Taylor, that this should take place in the planning Bill coming forward. But this Bill is the right place in which to ask the Minister to report in six months’ time on what progress has been made as a consequence of the Bill towards implementing that vital measure of Schedule 3, which is an integral part of the Flood and Water Management Act 2010.
I look forward to hearing a debate from other noble Lords, but I will listen very carefully to what the Minister says, particularly what she meant by “cumulative impact”. I may well test the opinion of the House.
Baroness Browning (Con)
My Lords, I rise briefly to support my noble friend Lady McIntosh of Pickering. The Minister will be aware that, both at Second Reading and in Committee, I raised matters of capacity where sewage and rainwater mix—run-off from roofs, roads or wherever. In Committee, I quoted some case law that shows that the capacity of the sewers to cope with both should already be taken into consideration. I hope that, when she responds, she will assure us that she has asked for that case law to be investigated, because it may well be helpful in this case.
Earl Russell (LD)
My Lords, I will briefly speak to this group of two amendments on the implementation of Schedule 3 to the Flood and Water Management Act 2010 to promote sustainable urban drainage systems, tabled by the noble Baroness, Lady McIntosh. Amendment 3 seeks to include the standards issued under that schedule in the guidance produced by Ofwat in relation to performance pay. Amendment 43 requires the Secretary of State to lay a report on the effect of the Bill on the implementation of Schedule 3 to that Act within six months of the passing of the Bill before us. I will speak to both amendments together, as, in the main, they are about the same issue: the implementation of Schedule 3.
We on these Benches are broadly in support of the noble Baroness, Lady McIntosh, and we welcome her continued commitment to this particular area of policy. Of course, if we could roll back the clock and start again, we would all ensure that all housing had sustainable drainage designed in and built as standard. That option is obviously not available to us, but these amendments seek to ensure that all housing developments are built with sustainable drainage methods going forward.
We should all use grey water to flush our toilets and water our gardens, and, as a society, we need to make sure that surface water and rainwater are collected, stored and used, so that they do not mix with the foul water from toilets and overflows and overfill our antiquated sewerage systems.
In the face of climate change and even more extreme forms of weather, we need to do more to reduce the use of water and to slow any unessential abstraction of it from our rivers and streams. Planning authorities should not grant new housing planning permission unless proper systems are in place to reuse rainwater, separate it from the foul water and build attenuation ponds to collect surplus rainwater. There are two ends to this problem, and it seems like 99% of what we do is dealing with the bad end rather than with the preventive stuff at the other end. Of course, nature solutions are one option for dealing with these issues. Is anything in the Minister’s Amendment 42 on nature-based solutions helpful to the noble Baroness, Lady McIntosh, and her amendment? Perhaps there is nothing, but perhaps there are some connections between the two.
Do the Government still intend to push on in the new year on a consultation on how we could revise these regulations, with the aim of increasing water reuse?
As this is the only contribution I will make to this debate, I will take a moment to thank the Minister and her team for the constructive way she has engaged with all of us across the House on the Bill, and for bringing forward many government amendments that have sought to address concerns raised across the Chamber.
Baroness Altmann (Non-Afl)
I apologise to the House for not having been able to participate in previous stages. I will briefly support the noble Baroness, Lady McIntosh, and these amendments. How come the Government, when in opposition, supported introducing mandatory sustainable drains in major new developments but now seem not to wish to do so? If no drains, soakaways or culverts are constructed to take the excess, flood-water will go into combined sewers, potentially then bubbling up and leaving sewage in housing developments. This causes a health hazard by flooding homes with sewage.
The amendment asks simply for a report on how developers have implemented Schedule 3 to the Flood and Water Management Act 2010. There was cross-party support for that in this House, and I hope the Minister can reassure us or find a way to meet the concern of the noble Baroness, Lady McIntosh.
Lord Roborough (Con)
My Lords, I thank my noble friend Lady McIntosh of Pickering for moving this amendment. In Committee, we discussed the implementation of the provisions of Schedule 3 to the Flood and Water Management Act 2010. As my noble friend has said previously, the last Government accepted the recommendation of a sustainable drainage systems review to implement Schedule 3. We share my noble friend’s concerns about the impact of additional run-off from developments. If the Government seek to deliver the homes we need for the next generation and to drive the economic growth they promised, we need to get sustainable drainage right.
Although I understand that the Government have concerns about whether these amendments should be in the Bill and which department should be responsible for this policy area, I hope they will listen carefully to my noble friend Lady McIntosh’s concerns and be able to reassure her. However, I am sorry to disappoint my noble friend, but we will not be able to support Amendment 43.
Baroness Hayman of Ullock (Lab)
I thank the noble Baroness, Lady McIntosh of Pickering, for continuing to raise this important issue, and for tabling her Amendments 3 and 43, which speak to the implementation of Schedule 3. I thank her for her passion and persistence on this matter—she has never let it drop, which is important because this stalled 14 years ago. I also thank her for taking the time to meet me and my noble friend Lady Taylor of Stevenage, the Minister in MHCLG, to discuss this matter in some detail and to look at how we can improve delivery.
On Amendment 3, the standards introduced under Schedule 3 would be designed specifically for relevant approval bodies to use when determining applications for sustainable drainage. As I am sure the noble Baroness is aware, such applications would be submitted mainly by developers, not water companies—obviously, for SUDS, that is who implements the developments. Because of that, the Government do not consider Schedule 3 standards to be appropriate to use when we are establishing the rules on remuneration of pay prohibitions. That is why we cannot accept the noble Baroness’s amendment.
Amendment 43 is the important, indeed critical amendment in this group. As I have previously said, the Government are strongly committed to requiring standardised SUDS in new developments. We are not looking to renege or backtrack in any way. We are committed to this; it is about the most effective method of delivery.
There are specific outcomes that the Government want to achieve. We want to see an increase in quantity, with more SUDS being built, but we need to see better design qualities that do what we want them to do. We need effective adoption and maintenance, to ensure the new SUDS being built are long-term and keep their quality for the long-term. We need an increase in sustainable drainage in more developments. We need to ensure that, when we are improving the design, they are designed to cope with our changing climate; that is critical, as we are seeing more and more water, often followed by drought, which compounds a lot of the problems. We need to make sure that anything we bring in delivers wider water infrastructure benefits by reducing the levels of rainwater entering sewers, which noble Baronesses have mentioned, and helps improve water quality, while enabling economic growth and delivering the biodiversity and amenity benefits that we need.
Surface water run-off was mentioned by a number of noble Lords. It is important that we look at how we tackle all aspects of drainage and surface water. The noble Baroness, Lady Browning, mentioned her house in Devon. We live in a very old stone-built house in Cumbria. Our house has also flooded in the past. There is much that we need to work on in this area. I am also very aware that there are occasions when new build, if not done properly, can have a knock-on effect on houses that have never flooded before. There is a big picture question in the planning system around how we approach this and tackle it most effectively.
While I am on the subject of surface water, the noble Earl asked about the amendments coming up on nature-based solutions. That is absolutely part of the package of how we tackle this going forward. He asked whether all the areas that we are looking at will continue to be input into the review. Anything we have discussed here that is still outstanding or of concern will absolutely be looked at and will be within the scope of the review going forward.
Having said all of this—the noble Baroness knows this because we discussed it with the noble Baroness, Lady Taylor of Stevenage—we believe that our ambition for SUDS delivery can be achieved in different ways. It can be achieved through improving the current planning-led approach, and using powers through that route, or by commencing Schedule 3 to the Flood and Water Management Act 2010, as the noble Baroness requested. If we are going to get this to work in the most effective way possible, and get the kinds of results that we need, we need to work hand-in-glove with the MHCLG. Ultimately, this is about development and developers, and getting them to make the right kind of connections and drainage decisions in new developments.
As we discussed, we are looking at planning reforms that can deliver improved sustainable drainage. The National Planning Policy Framework is out for consultation at the moment, until the end of the year. We have asked specific questions around SUDS, from Defra, in that consultation. If noble Lords are interested in inputting to that, it is currently open for consultation.
The MHCLG is looking at the best approach to this, through the NPPF consultation, and there is going to be planning and infrastructure legislation coming up. That is why we cannot accept the amendment at the moment. There are a number of delivery paths. We want to deliver this and we want to deliver it well, so we need to get the delivery path correct. That is why we are unable to accept the amendment of the noble Baroness.
Baroness McIntosh of Pickering (Con)
Before the Minister sits down, she failed to respond on the case study on capacity and on the cumulative impact. I am afraid that in this Bill the Minister is making water companies liable and responsible for something that the developers are responsible for by not putting SUDS in place. That is just not acceptable.
Baroness Hayman of Ullock
I do not quite understand the last point of the noble Baroness. On the basis that it comes through planning, the whole point is that it then becomes the developers’ responsibility and not that of the water companies.
On the case study, I will definitely take that back to the Department. I am very happy to do that—I am sorry that I forgot to answer that question. Obviously it was picked up from the previous debate, but I will raise it and see where we are with that. I am very happy to write to the noble Baroness about what is happening, if that helps.
Baroness Browning (Con)
I am very grateful to the Minister, but without labouring the point, the case law showed that there is sufficient legislation now for capacity to be an important key point of planning decisions. It could save an awful lot of work going down the track if that were there, but it is simply unused. If that is the case, it is simply a matter of ensuring that it is enforced or that local authorities and planning departments can use it. That could save an awful lot of time.
Baroness Hayman of Ullock (Lab)
The noble Baroness makes an extremely important point. I am more than happy to pick this up, look at it and write to her on how we propose to move forward. I am so sorry: the noble Baroness, Lady McIntosh, asked another question, but I cannot remember what it was.
Baroness McIntosh of Pickering (Con)
It was on cumulative impact. I quoted what the noble Baroness had said about the cumulative impact on development, and I am trying to understand why we are delaying implementing Schedule 3. What is the cumulative impact and regulatory burden that the noble Baroness is so concerned about?
Baroness Hayman of Ullock (Lab)
The main issue, for me, is to look at how we get developers to implement what we need them to be implementing as far as sustainable drainage is concerned. We know that that is the right way forward and we have said that we want to increase it. When we are working with developers, we need to get them to want to do this, to be part of moving forward in the planning system and to improve drainage systems on the basis that, ultimately, it helps everybody when it comes to flooding and sewage overflows.
Clearly, there is a cumulative impact if you are developing in an area that already has a lot of development. We already know that there are issues around this. We need to get it right, so we need to consider the cumulative impact when SUDS are being designed. I have said that we want to improve design, to make sure that it is effective and works for the long term. As part of that, we also need to look at how it is managed. It is all part of that.
Developments do not just get built and then that is it, they are on their own. As I said, there are areas—certainly near where I live—where development has taken place and the cumulative impact on the other developments nearby has been negative; it has not been good. We need to ensure that we consider that, so we make sure that any systems we bring in will work properly.
Baroness McIntosh of Pickering (Con)
From the Minister’s last remarks, we are in fact saying the same thing. All I am asking the noble Baroness to put into this Bill is the requirement to report in six months’ time on where we are on the implementation of SUDS. So, if the Government have decided that they do not want to go down the SUDS path and want to go down the planning path, she will know that within six months. I do not intend to press Amendment 3 to a vote, but I would like to test the opinion of the House on Amendment 43, which will come later.
Lord Remnant
Member’s explanatory statement
This amendment ensures that the provisions about performance-related pay do not have retroactive effect.
Lord Remnant (Con)
My Lords, I heard what the Minister had to say, but I have to say that I believe that the retrospective effect of this legislation is not appropriate —all the more so if it is going to impact on remuneration arrangements that were put in place as long ago as 2022-23. I would like to test the House’s opinion.
Lord Roborough
“(5) The first rules issued under section 35B of the Water Industry Act 1991 (as inserted by subsection (3)) must be published by the Authority within six months of this Act coming into force and provided to the Secretary of State and do not take effect until the Secretary of State has made regulations made by statutory instrument to bring them into effect.(6) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
Lord Roborough (Con)
My Lords, as I said previously in Committee, consultation with the Secretary of State, as described in the Bill and again by the Minister today, is simply not enough to ensure accountability of this rule-making power, so I would like to test the opinion of the House on my amendment.
Baroness Hayman of Ullock
Member's explanatory statement
This amendment moves the provisions about pollution incident reduction plans to a different part of the Water Industry Act 1991, in consequence of the Minister’s subsequent amendments extending Clause 2 to the water supply network.
Baroness Hayman of Ullock (Lab)
My Lords, in Committee noble Lords across the House made it clear that, although they were supportive of the new requirement for water companies to produce annual pollution incident reduction plans, they wanted further assurances that the measures in the plans would be duly implemented. I have listened carefully to the points raised in Committee and to the views shared on this issue during a number of very constructive meetings with several noble Lords, including the noble Lord, Lord Roborough, the noble Duke, the Duke of Wellington, and the noble Baronesses, Lady Jones of Moulsecoomb and Lady Bakewell, among others, and I thank them for their time and consideration.
The noble Lord, Lord Roborough, asked for further explanation as to why we believe annual reporting is more appropriate than more regular reporting for pollution incident reduction plans. The measures in these plans are typically programmes of ongoing maintenance that will need to continue on an ongoing basis. Examples include regular cleaning of wet wells at sewage pumping stations to remove detritus that could lead to blockages or replacing rising main sewage pipes. We want companies’ focus to be on delivering the measures they have set out in their plans rather than on preparing reports for publication to talk about delivery. More regular reports also may lead to a focus on the wrong metrics to show progress for progress’s sake rather than the work necessary to reduce pollution incidents.
In response to the noble Lord, Lord Roborough, and other noble Lords, I am pleased to propose a group of amendments to enhance and strengthen Clause 2 of the Bill. I turn first to Amendments 12, 13, 14, 16, 17, 18, 22, 25, 27 and 31, all tabled in my name, which will expand the scope of pollution incident reduction plans to encompass water supply system-related incidents. The noble Baroness, Lady Bakewell of Hardington Mandeville, specifically raised this in Committee when she tabled an amendment which would require that water-only companies as well as water and sewerage companies produce pollution incident reduction plans. She made very persuasive points which we listened to carefully and, on reflection, we agree that including water supply incidents in scope would strengthen these plans. While pollution incidents attributable to the water supply system are less frequent than incidents attributable to the sewerage system, they have the potential to be equally serious. I thank the noble Baroness for drawing our attention to this in Committee. Such incidents could include a burst clean-water main leading to erosion and then silt pollution in the watercourse or the addition of chlorinated or fluorinated water into the watercourse.
The amendments tabled in my name will mean that water companies will have a duty to develop and publish measures to reduce pollution incidents attributable to the water supply system as well as the sewerage system. This duty will apply to all relevant companies, including water-only companies as well as water and sewerage undertakers. We believe this will support the overall intent of Clause 2 in further reducing the frequency and impact of pollution incidents from the water sector. I once again thank the noble Baroness, Lady Bakewell of Hardington Mandeville, and all who spoke in support of this topic in Committee for their constructive approach.
I now move to Amendments 29, 34 and 35, also tabled in my name. These amendments create personal liability for chief executives to ensure that pollution incident reduction plans are published and implemented in line with the requirements set out in the Bill. A key aim of this Bill has been to hold water company executives to account for pollution caused by the water industry. As a core part of their role, water company executives should be acting to minimise pollution incidents and ensuring that their infrastructure is fit for purpose and resilient to pressure, including from climate change and population growth.
This is why Clause 1 of the Bill will enable Ofwat to ban bonuses for executives when water companies fail to meet environmental standards. But we want to build on this by making chief executives personally liable for the production of pollution incident reduction plans. This will mirror the personal liability which accompanies the duty for directors of a company to publish accounts and a company report under the Companies Act 2006. This will emphasise that minimising pollution incidents is a central aspect of a water company chief executive’s role. Under this group of amendments, the chief executive must personally ensure that the company produces a plan each year which meets all legal requirements. The chief executive must also personally approve the plan before it is published.
If the company fails to publish a compliant plan by the deadline each year, the chief executive—as well as the company—will have committed an offence. The regulator will be able to prosecute against this offence and, if the courts find the chief executive guilty, they will issue a fine.
To ensure that this measure is proportionate, imprisonment will not be available as a sanction. Furthermore, we have provided a defence to ensure that chief executives are not penalised if non-compliance arises due to circumstances that are—I emphasise—genuinely out of their control.
Through bringing forward these amendments, we will ensure that the production and publication of pollution incident reduction plans is overseen at the highest level, reflecting the importance of water companies bringing forward measures to meaningfully reduce pollution incidents.
I turn now to Amendments 19, 32 and 37, tabled in my name. In Committee, noble Lords made it clear that they wanted to see a clearer mechanism to ensure that water companies implemented their pollution incident reduction plans. We have listened very carefully and now propose a group of amendments to further ensure that companies implement the measures in their plans.
However, before I describe these amendments, I would like to recap why we do not think imposing a direct duty for water companies to implement the plans—as is proposed in Amendment 15A, tabled by the noble Lord, Lord Roborough—is helpful. First, at present, it is rightly the responsibility of companies to produce these plans and to decide the steps they will take to reduce pollution incidents. A direct duty to implement the measures in the plans could therefore result in companies setting enforceable duties for themselves. This would create a confused regulatory system, which could ultimately make it more challenging for the regulators to enforce legal requirements for pollution reduction.
For example, regulators would need to disentangle measures that water companies have put in their plans from pre-existing regulatory duties. This could make investigations and enforcement action more challenging and add complexity and confusion to the regulatory system.
Secondly, a direct duty may inadvertently reduce companies’ ambition. To manage the risk of enforcement, companies might be persuaded to make a commitment only when highly confident they could deliver.
Thirdly, this direct duty may force companies to continue implementing measures, even when they have realised it is not the most effective way to reduce pollution incidents. Companies should have the flexibility to learn and iteratively improve their approach. Sometimes, this may mean companies ceasing implementation of a specific measure and taking a different approach. Therefore, we do not think it is appropriate to create a legal duty for water companies to implement the measures they have set out in their plans.
I will now turn to the government amendments themselves and explain how they will ensure that water companies reduce pollution incidents and are held to account for delivery of their plans. First, this group of amendments introduces a duty for companies to produce an implementation report alongside their annual plans. Companies will be required to set out where they have and have not implemented the measures they planned to implement in the preceding year. Companies must then set out the reasons for any failure to implement their plans and the steps they are taking to avoid similar failures in the future.
This will create a high level of transparency, enabling the public and regulators to scrutinise the extent to which companies have implemented their plans. Requiring companies to set out the steps they are taking to avoid similar failures in the future will ensure that companies cannot continue to make the same excuse year after year.
Secondly, we are also amending the Bill to ensure that the environmental regulators take into account companies’ track records in implementing their plans when undertaking regulatory activities. This means that the regulator will consider the extent to which the company has implemented its plan when considering its enforcement response to a pollution incident, or when planning its schedule of investigations. This may well mean that a company will face more severe enforcement action for a pollution incident if it has failed to sufficiently implement those plans.
I hope the House will agree that, collectively, these amendments represent a significant strengthening of the Bill, and will ensure that companies are firmly held to account for implementing the measures outlined in their pollution incident reduction plans.
I will conclude by speaking to Amendments 15, 20, 21, 23, 24, 28, 30, 33, 36, 38, 60 and 63. I am delighted to move this suite of amendments to extend the application of the provisions introduced by Clause 2 of the Bill to Wales. Upon reviewing the requirements imposed by Clause 2 of the Bill, the Welsh Government and Natural Resources Wales have requested that Clause 2 be extended to apply in Wales. This was announced by the Deputy First Minister on 16 October and these amendments seek to deliver on that request.
I look forward to continuing to work collaboratively with our counterparts in Wales, and indeed with all of the devolved Governments, to tackle shared problems relating to the water industry and water quality more broadly.
I once again thank all noble Lords for their thoughtful contributions and input to discussions around the new requirement to produce pollution incident reduction plans, and hope that noble Lords agree that these amendments will significantly improve and strengthen this new requirement. I move that these amendments form part of the Bill.
Baroness Parminter (LD)
On behalf of these Benches, I thank the Minister for listening to the cross-House comments made on the pollution incident reduction plans in Committee. The whole House welcomes the fact that the Government are bringing forward these plans. They can be an important contribution to dealing with the sewage crisis which we have seen for too long; water companies have let the public down.
On that point, it was a disgrace in the last week to see that United Utilities—which has been so responsible for all the sewage pollution that has gone into Windermere, as we referred to in Committee—has increased its dividend to shareholders. It is an absolute disgrace, so these measures cannot come soon enough.
We thank the Minister for listening to the very real concerns we had on two fronts: first, that water companies were excluded from the provisions in the way that water and sewerage companies were not. Although they are a smaller number of the 16 and may be proportionally less important, they are still very important. We thank the Minister for that.
On a slightly broader point, we hear what the Government said on not accepting the amendment proposed in Committee, about adding “and implement” into the Bill, which I see that the noble Lord, Lord Roborough, has brought back today. We are satisfied with the numerous amendments the Government have brought forward to address the two main points: first, that the plans will have to be annually and publicly reported, so we can see what the companies are doing. As the Minister made very clear, it is not just what they have done; they have to make absolutely clear what they have not done and what they are going to do about it, so that we the public—and indeed the regulators—can hold them to account.
The second point, which the Government have moved on significantly—which we very much welcome—is that the chief executives have become personally liable for the production of both the plans and the reports and have some legally binding responsibility which can translate into sanctions, which we believe are strong enough. We thank the Government for bringing forward these pollution incident reduction plans and for listening so constructively to the comments which were made. This is a major improvement to the Bill.
Lord Roborough (Con)
My Lords, I fully echo the noble Baroness, Lady Parminter, in thanking the Minister both for her engagement during the Bill’s progress and also, specifically, for listening to the House on the implementation of the pollution incident reduction plans. We also welcome these government amendments.
I tabled Amendment 15A simply as a reminder of how understanding and accommodating the Government have been. This was originally tabled by the noble Baroness, Lady Bakewell of Hardington Mandeville, in Committee. As I said then, we would have tabled it ourselves had she not been so swift with her pen. It is crucial that pollution incident reduction plans are more than a wish list, and actually have real obligations for implementation.
We are most grateful to the Minister for listening to this House and creating a structure for making water companies responsible for implementing these plans and reporting on that implementation. The Minister explained clearly the issues around that responsibility, relating to interference with the other statutory obligations of those companies, and we are very pleased that she and her officials were able to design a methodology that would work.
We agree that making the CEO of the relevant undertaker responsible for signing off the plan and liable for its implementation creates significant incentives to ensure that these pollution incident reduction plans will be implemented. I thank the Minister, yet again, for her further explanation of why annual reporting is appropriate in this instance, and I accept that. We on these Benches are supportive of these government amendments and I will not press my amendment.
Baroness Hayman of Ullock (Lab)
My Lords, I thank all noble Lords who contributed to this group, and in particular I thank the noble Baroness, Lady Parminter, and the noble Lord, Lord Roborough, for their support for the government amendments. Our amendments will ensure that water companies develop robust and comprehensive pollution incident reduction plans and will also guarantee that they are held accountable for delivering the measures outlined in the plans. Once again, I thank noble Lords for helping the Government to improve the Bill in this respect, and I look forward to working with them as the Bill progresses. I beg to move.
Baroness Hayman of Ullock
““Pollution incident reduction plans
205A Duty to prepare and publish plans”Member's explanatory statement
This amendment is consequential on the Minister’s previous amendment.
Member's explanatory statement
This is one of a group of amendments extending Clause 2 so that it covers the water supply network as well as the sewerage network.
Member's explanatory statement
This is one of a group of amendments extending Clause 2 to Wales.
Baroness Hayman of Ullock
Member's explanatory statement
This is one of a group of amendments extending Clause 2 so that it covers the water supply network as well as the sewerage network.
Member's explanatory statement
This is one of a group of amendments extending Clause 2 so that it covers the water supply network as well as the sewerage network.
Member's explanatory statement
This is one of a group of amendments extending Clause 2 so that it covers the water supply network as well as the sewerage network.
Member's explanatory statement
This amendment removes provision superseded by the Minister’s amendment at page 5, line 38.
Member's explanatory statement
This is one of a group of amendments extending Clause 2 to Wales.
Member's explanatory statement
This is one of a group of amendments extending Clause 2 to Wales.
Member's explanatory statement
This is one of a group of amendments extending Clause 2 so that it covers the water supply network as well as the sewerage network.
Member's explanatory statement
This is one of a group of amendments extending Clause 2 to Wales.
Member's explanatory statement
This is one of a group of amendments extending Clause 2 to Wales.
“(7A) A pollution incident reduction plan must include, or be published with, a statement by the chief executive of the undertaker that the chief executive has personally approved the plan.”Member's explanatory statement
This amendment requires a pollution incident reduction plan to be approved by the chief executive of the undertaker in question.
“(7A) Before preparing a pollution incident reduction plan, a sewerage undertaker must consult with farmers, local authorities, developers and others to identify natural flood prevention solutions to prevent pollution incidents.”Member's explanatory statement
This amendment would require consideration of opportunities to retain water through natural solutions to prevent sewage mixing in combined sewers with excess rainfall, causing pollution incidents.
Baroness McIntosh of Pickering (Con)
My Lords, I am delighted to have the opportunity to open on this very interesting group of amendments, and to speak to my Amendment 26. At the risk of having a love-in with the Minister and the Government, following on from the last group, I would like to commend her and her Bill team for listening to the debate we had on similar amendments in Committee. To be honest, the reason I tabled this amendment is that we discussed this issue very briefly when we met with the Minister and the noble Baroness, Lady Taylor, but I did not realise that I had not seen the text of the amendments the Government were submitting. I applaud and commend her Amendment 42 and others in this group; I will leave those who are moving those amendments to speak to them.
I have just a few words to say on Amendment 26 and the Pickering pilot scheme, with which I was associated in its latter stages and the success of which I still monitor very closely. Since we have had the Pickering scheme, the dam and the planting of the trees, Yorkshire Water and the Duchy of Lancaster have put some money in, and Pickering Town Council has agreed to maintain some of the work that has been done. I take the noble Baroness’s point, made at the conclusion of the second group, about the importance of the maintenance of sustainable systems going forward. I would like to think that that was a role model.
The one defect of that scheme was that there was no private finance, apart from Yorkshire Water, and I hope that other models will look to retain that going forward. It also had money from the Environment Agency, North Yorkshire Council and Ryedale District Council, as was. As I said, it is a role model that I hope other projects will follow. It has meant that Pickering Beck has not flooded Pickering or downstream since that time. I therefore commend the amendment to the House, although I shall not be pressing it because I favour the Government’s Amendment 42 in this regard. It would allow an opportunity to retain water through natural solutions in order to prevent sewage mixing and combining with excess rainfall, causing pollution incidents.
I hope that when the Minister responds, she will highlight how, as I have set out in Amendment 26, she would expect a sewerage undertaker to consult with Parliament, local authorities, developers and others to identify such natural flood-prevention solutions. If all the parties work together going forward, this will be very important work of the water commission, looking at a catchment management system that someone has to take control of. I commend Amendment 26 and I look forward to listening to others speak to their amendments. I beg to move.
Baroness Willis of Summertown (CB)
My Lords, I will speak to government Amendment 48. I am extremely grateful to the Government for bringing forward this amendment, which reflects the substance of the amendment that I and others brought forward in Committee, and I am happy to support it by putting my name to it. That debate showed that there was a clear case for Ofwat doing more on environmental issues, and I thank the Minister and her officials for their extremely productive approach, openness in meetings and willingness to work together to address these concerns. I am really pleased that we now have on the face of the Bill a new duty for Ofwat to have regard to the need to contribute to our climate change and environmental targets when exercising its functions. It is so critical that this is factored into decision-making, so that opportunities to contribute to these targets are not missed or deprioritised.
While I am grateful for the progress we have made in seeking to redress the imbalance, it would have been preferable to have a stronger duty than “have regard to”. I know the reasons for using this language, but my previous wording, which would have obligated Ofwat to
“take all reasonable steps to contribute to”
our climate and nature targets, would have provided a stronger obligation without caveats. Therefore, I very much hope that the progress we have made today is just the start of wider changes to ensure better environmental outcomes in our water industry. Perhaps the Minister can confirm that the question of how Ofwat will balance environmental duties and deal with the related trade-offs with other economic and consumer objectives will be looked at in detail as part of the water commission’s work.
I also want to raise the important issue of adaptation. My original amendment contained an additional limb which was intended to ensure that adapting to the current or predicted impacts of climate change, as identified in the most recent report of the Climate Change Committee, would also be part of Ofwat’s remit when exercising its functions. In discussions, the Minister said that adaptation is covered by the resilience strategic priority. However, this does not directly link back to current Adaptation Committee reports. I hope this too will be examined by the water commission, because in spite of having the resilience objective, this has not so far led to the new reservoirs we urgently need for housing and drought resilience. More clearly does need to happen, and I would be grateful for any assurances the Minister can give regarding adaptation.
I also welcome government Amendment 42. I hope that this will be a step forward in increasing the use of and spend on nature-based solutions, and lead to their greater and more systematic use to address adaptation issues such as flooding and drought.
Amendment 44, in the name of my noble friend Lady Boycott—who sends her apologies—is the same as the one tabled in Committee. It addresses the very real issue of water companies not being transparent with environmental data, and specifically does three things. First, subsection (1) would provide statutory underpinning to the Fish Legal case, making it beyond challenge that water companies are, and will remain, public authorities for the purposes of the Environmental Information Regulations 2004. This is necessary because, if it is not in legislation, its overturning by a future ruling remains a distinct possibility.
Secondly, proposed new subsection (2) would cut through the delaying tactics and refusals by water companies to make it clear that effluent and wastewater treatment data must, as a minimum, be proactively published by water companies. The water companies will be required by law to publish it up front, without anyone having to ask. This would be consistent with the expectation of transparency that we are setting though the Bill.
Thirdly, proposed new subsection (3) would amend the appeal and enforcement provisions in the 2004 regulations to allow members of the public to complain directly to the Information Commissioner about data not being proactively published—which they cannot at present.
In Committee, in response to this amendment, the Minister said that, while the Government supported the principle of transparency, these
“specific proposals duplicate pre-existing provisions and would create practical difficulties”.—[Official Report, 30/10/24; col. 1186.]
However, we have looked, we cannot find these pre-existing provisions and we do not understand what the practical difficulties would be. All we are asking is for sewerage undertakers to publish data that they hold and which, under the Environmental Information Regulations 2004, they are meant to publish but do not because the regulations are effectively unenforceable.
Noble Lords and the Minister may have seen over the weekend an article in the Observer, which has already been mentioned, about precisely this issue. United Utilities has been fighting a legal challenge that has been brought upon it to not give the public access to environmental data on its—to be generous—“potential” pollution of Lake Windermere. First, it claimed that the phosphorus data was not environmental information, then that it was internal communication. Obviously, this is environmental. ICO agrees and has said that it should be published—but still it has not been.
In this example, we can see that some sewerage companies will not behave in the public interest unless forced to do so. In this amendment, we have an opportunity to address these refusals to be transparent. It would go some way to removing their supposed legal defence, forcing them to co-operate. I really hope that the Minister can get behind this today, as the only thing that will help here is words in statute. If there are specific concerns with the drafting, we would welcome her amending it at Third Reading.
In conclusion, I reiterate my thanks to the Minister and her team. We have made important progress for climate and nature in this Bill and we will start to see delivery of better outcomes for our precious river and coastal ecosystems.
Baroness Jones of Moulsecoomb (GP)
My Lords, my Amendment 49 puts a clear and unambiguous environmental duty on Ofwat. It gives the authority a primary duty to protect the environment. I am well aware that the Government probably will come round to the Greens’ way of thinking in 10 or 15 years and that perhaps this side of the Chamber might come round to our way of thinking in 25 or 30 years, but we have to care now about our environment and our planet. What we have passed so far, although very welcome, is just not enough.
As the noble Baroness, Lady Willis, said, natural flood management is proving to be a cost-effective way of reducing flood risk, far cheaper than traditional construction involving lots of concrete. Water companies should be investing in these nature-based solutions to reduce the infrastructure cost of handling service water run-off, because every litre of water that soaks into the ground is a litre of water that does not flood into the water treatment system.
I have two requests of the Minister. Will the government amendments now provide a baseline so the Minister can take forward a piece of work to expand the use of natural flood management, especially where it is significantly cheaper than other methods? Secondly, will the Government please put these climate and nature amendments on the face of their Bills at drafting stage, rather than having to amend them down the line?
Lord Gascoigne (Con)
My Lords, it is always an absolute pleasure to follow the noble Baroness. I was going to call her “my noble friend”—but not quite yet. I am delighted to speak to my Amendment 55. I am grateful to my noble friend Lord Roborough, who has also signed the amendment, and I thank all noble Lords who spoke to this in Committee.
Like so many other noble Lords today, I join in the great “love-in” for the Minister. All I will say, speaking from experience, is “Enjoy it while it lasts”. I pay tribute to the Minister and the officials who have engaged with me over the last few days since we last met. Echoing words that have already been said, looking back to where we were in Committee on this amendment, and on nature and the environment as a whole, the Government have listened and moved quite a lot. Collectively, we pushed, and the Government have listened. I think a lot of this comes down to the Minister, who cares about it and gets it.
Baroness Parminter (LD)
My Lords, as the noble Baroness, Lady McIntosh of Pickering said, this is an interesting group of amendments and we on these Benches welcome them. I do not wish to replicate what has been said but I have a few reflections.
Government Amendment 48, so ably spoken to by the noble Baroness, Lady Willis of Summertown, is extremely welcome. It could go further, but we on these Benches welcome it. We accept that the Bill is an interim measure and that the independent water commission is just that: independent. Nevertheless, it is important that the Government at this point in time are making a marker in the sand that the regulator should have greater regard for climate and environmental targets. That is extremely important and is the additional reason why on these Benches we welcome it.
Amendment 44 was introduced by the noble Baroness, Lady Willis of Summertown, on behalf of the noble Baroness, Lady Boycott. You would expect that we on these Benches, as Liberal Democrats and liberals, would welcome anything that enables local people to have more say on decisions that affect their lives, particularly the environment and climate decisions, because we know that, if they get involved and are caring about their environment, they will help protect it better. So we think that this is an extremely welcome amendment and we look forward to hearing what the Minister has to say in her response.
On the final group of amendments, on nature-based solutions, which we participated in in Committee, I think there is broad agreement. Everybody understands that we need water companies to look less at concrete and far more at green solutions. Government Amendment 42 is extremely welcome. The only point that I would make echoes that made by the noble Lord, Lord Gascoigne, when introducing his Amendment 55: there is an area where it could have gone a bit further. The noble Lord’s amendment talks powerfully about water storage and flood prevention; the Government’s amendment is welcome, but it excludes that. We on these Benches would like to hear a little more about how the Government see themselves taking that forward —mindful that it is not in their amendment. Having said that, we welcome these amendments.
Lord Roborough (Con)
My Lords, I thank my noble friend Lady McIntosh of Pickering for moving the first amendment in this group. I shall speak to my noble friend Lord Gascoigne’s Amendment 55 as well as government Amendments 42 and 48.
Amendment 55 is a powerful, concise amendment, and I congratulate my noble friend Lord Gascoigne on his commitment to, and passion for, making the case for nature-based solutions within the water industry. My noble friend’s amendment has two parts— both are important for the future of nature-based solutions in the water sector. The first would require water companies to give due consideration to nature-based solutions for meeting their statutory obligations. The second would prevent the regulator blocking the use of nature-based solutions.
The Minister has two amendments in this group that make significant additions to the Bill around the use of nature-based solutions. Amendment 42 requires undertakers to explain the contribution from nature-based solutions. Amendment 48 is a broad amendment that could also contribute towards nature-based solutions being used for their wider benefit to nature restoration. I am most grateful to the Minister for her constructive engagement on my noble friend Lord Gascoigne’s amendment, and for these government amendments. It is clear from these discussions that the Minister cares deeply about nature recovery.
However, I ask the Minister to clarify the approach taken by Ofwat to the use of nature-based solutions within the water and sewage industry. I am aware that £2 billion of investment is included within the draft determinations. However, we on these Benches wish to be reassured that, where suitable and at no additional cost to consumers, further nature-based investment is possible within this determination and beyond. To echo my noble friend Lord Gascoigne and the noble Baroness, Lady Parminter, we would also like reassurance that nature-based solutions will be used not just in drainage and sewerage but throughout the water supply and treatment network, including catchment restoration for flood prevention, drought mitigation and water quality.
I am sympathetic to the intentions of Amendment 26 in the name of my noble friend Lady McIntosh of Pickering. This would appear to be captured within our Amendment 55 as a specific case but also potentially within the government amendments. The water companies are perfectly positioned to stimulate nature restoration at scale and without using the public purse. We welcome these government amendments and look forward to the Minister explaining how impactful she believes they will be.
Baroness Hayman of Ullock (Lab)
My Lords, I again thank noble Lords for the discussion on this group, for their amendments and for the thoughtful consideration that we have had since Committee on these issues regarding the environmental duties of water companies and the regulators.
Amendment 26 tabled by the noble Baroness, Lady McIntosh of Pickering, and Amendment 55 by the noble Lord, Lord Gascoigne, would require water companies to consider further opportunities to use nature-based solutions. I thank noble Lords for meeting me to discuss these amendments and nature-based solutions more broadly.
One thing the Government are clear about on these amendments is that water companies need to be encouraged to increase their use of nature-based solutions. In line with that, I am very pleased to see that Ofwat has proposed an allowance of over £2 billion for investment in nature-based solutions in the draft determinations at price review 2024. Alongside this, Ofwat has been clear, publicly, that it remains open to companies to identify where additional nature-based solutions can be delivered. We very much support this approach.
The noble Baroness, Lady McIntosh, and the noble Lord, Lord Roborough, mentioned the catchment approach. Again, that is something we are very supportive of. If we are to make a real difference in our water quality, and our approaches to our waterways, we need a whole-catchment approach.
Ofwat’s £200 million innovation fund aims to grow the water sector’s capacity to innovate. Since 2020, the fund has awarded funding to 93 collaborative projects where water companies work with different sectors to solve the water sector’s biggest challenges. The main- streaming nature-based solutions to deliver greater value project is one example that is working to overcome barriers to the adoption of nature-based solutions.
What I am trying to get across is that the nature-based solutions the Government are supporting are not just about what is in the Bill; it goes much broader than that. That is important, because we need to look at this approach right across the board. I hope that helps to reassure noble Lords and answer some of their questions.
The regulators have, for example, recently approved several new and innovative nature-based solutions. One example is the use of sustainable drainage systems in Mansfield to manage flood risk. That is a £76 million scheme and includes over 20,000 sustainable additions to the built environment in the area, including rain gardens, planters and permeable paving, creating the equivalent of 23 Olympic-size swimming pools of storage and protecting 90,000 people from flood risk. Again, this is about much more than just what is in the Bill. There is further funding proposed for nature-based solutions alongside this—for example, reed beds and wetlands—and the Government are also supporting water companies trialling nature-based solutions for groundwater-induced storm overflows. There is a lot of work going on in this area.
Having said that, we recognise the strong support in this House for the Government to do more to ensure greater use of nature-based solutions across drainage and sewerage systems specifically. I am therefore pleased to table Amendments 42, 61 and 64, which require sewerage undertakers in England and Wales to address how nature-based solutions have, or will, contribute to the resilience and development of their network within their drainage and sewerage management plans. I thank noble Lords who have expressed their support for these amendments today.
Drainage and sewerage management plans are the key planning mechanism for the entirety of the sewerage undertakers’ wastewater network. This new requirement will ensure that water companies consider the use of nature-based solutions at the very start of the investment planning process. In this way, they embed solutions into delivery.
We intend to commence this new requirement very quickly—two months after Royal Assent—and it will apply also in respect of the next round of drainage and sewerage management plans, which will be published ahead of the 2029 water price review. Sewerage undertakers will need to demonstrate that they have addressed the use of nature-based solutions in their draft, and final, drainage and sewage management plans and will be held to account if they fail to do so, because there is no point in bringing forward amendments if they are not going to be delivered as swiftly and as effectively as possible.
The noble Baroness, Lady Willis, asked whether the review would look at things such as adaptation and further environmental matters around reservoirs. Absolutely: the review has a very broad scope in these areas. I remind the House that in our manifesto we pledged to build new reservoirs, because we know how critical they are.
I hope that noble Lords agree that these government amendments will support the future exploration, development and delivery of nature-based solutions by adding this requirement into existing planning frameworks.
I turn to Amendment 44, in the name of the noble Baroness, Lady Boycott. I thank the noble Baroness, Lady Willis, for introducing it on her behalf. It looks to improve public access to real time and operational water company data. I will explain why the Government do not support the amendment; I had a discussion with the noble Baroness, Lady Boycott, about this. I know that the noble Baroness has questioned this, but we believe the amendment would duplicate existing requirements for transparency from water companies.
Baroness McIntosh of Pickering (Con)
My Lords, I thank the Minister for summing up what has been an excellent debate and I thank all those who spoke. The noble Baroness, Lady Willis of Summertown, spoke not only to her own amendment but to that of the noble Baroness, Lady Boycott, very eloquently indeed. The noble Baroness, Lady Jones of Moulsecoomb— I call her my noble friend—spoke to her amendment with familiar passion, as did my noble friend Lord Gascoigne, following the excellent work he did in Committee. The noble Baroness, Lady Parminter, speaks with great authority on these issues. I also thank my noble friend Lord Roborough for his contribution.
The mood of the House is very much to support the government amendments. I congratulate the Minister and the Bill team on the work they have done in this regard, and on being in listening mode to those around the House. I have just a couple of thoughts. I think we are all committed to storage, which has been the success of the Pickering pilot scheme. It is not far from Cumbria; I hope those who live further afield, across the border in Lancashire, might come to see the excellent work we did. There is an outstanding problem on storage, with the Reservoirs Act 1975, as to when it becomes a reservoir. The de minimis rules need to be addressed. If the water commission can look at that, it would be very welcome indeed. With the greatest will in the world, it is difficult to have storage if it is then said to be a reservoir, but the farmers, golf clubs or whatever do not have the means to maintain it.
In addition to all the funds the Minister mentioned, I urge her and her department to look at how ELMS can work with water companies—I know that United Utilities and Yorkshire Water have a good record in this regard—to come up with nature-based water solutions on farmland. That would be very welcome indeed. With those few remarks, I beg leave to withdraw Amendment 26.
Baroness Hayman of Ullock
Member’s explanatory statement
This is one of a group of amendments extending Clause 2 so that it covers the water supply network as well as the sewerage network.
““appropriate agency” means—(a) the Environment Agency, in relation to relevant undertakers whose areas are wholly or mainly in England, and(b) the NRBW, in relation to relevant undertakers whose areas are wholly or mainly in Wales;”Member’s explanatory statement
This is one of a group of amendments extending Clause 2 to Wales.
““chief executive” , in relation to an undertaker, means an employee of the undertaker who, alone or jointly with one or more others, is responsible under the immediate authority of the board of directors for the conduct of the whole of the business of the undertaker;”Member’s explanatory statement
This amendment defines “chief executive” for the purpose of the Minister’s amendments at page 5, line 29 and page 6, line 1.
““the Minister” means—(a) the Secretary of State, in relation to relevant undertakers whose areas are wholly or mainly in England, and(b) the Welsh Ministers, in relation to relevant undertakers whose areas are wholly or mainly in Wales;”Member’s explanatory statement
This is one of a group of amendments extending Clause 2 to Wales.
““system” , in relation to a relevant undertaker, means—(a) in the case of a water undertaker, its supply system within the meaning of Chapter 1A of Part 2 (see section 17B); (b) in the case of a sewerage undertaker, its sewerage system within the meaning of that Chapter (see section 17BA(7)).(10) In the case of a relevant undertaker that is both a water undertaker and a sewerage undertaker, the duty in subsection (1) is to be discharged in respect of both of its systems in a single plan.”Member’s explanatory statement
This is one of a group of amendments extending Clause 2 so that it covers the water supply network as well as the sewerage network.
“94EAA Implementation reports(1) A relevant undertaker must, together with each pollution incident reduction plan that it publishes (except the first), publish an implementation report.(2) An implementation report is a report containing the undertaker’s assessment of—(a) the extent to which it succeeded in implementing the planned measures during the preceding calendar year, and(b) to the extent that it failed to implement those measures during that year—(i) the reasons for that failure, and(ii) how the undertaker intends to avoid repeating that failure in respect of any measures in its current plan that are the same as, or similar to, those in respect of which the failure occurred.(3) In subsection (2), “the planned measures”, in relation to an undertaker and a calendar year, means the measures set out in its previous pollution incident reduction plans so far as they were (according to those plans) likely to be implemented in that year.(4) Subsections (6), (7) and (7A) of section 94EA apply in relation to implementation reports as they apply in relation to pollution incident reduction plans.”Member’s explanatory statement
This amendment requires water and sewerage undertakers to publish annual reports on their implementation of previous pollution incident reduction plans.
“(1) The duties of a relevant undertaker under sections 94EA(1) and 94EAA(1) are enforceable by the appropriate agency.”Member’s explanatory statement
This amendment is consequential on the Minister’s amendments extending Clause so that it covers the water supply network, the Minister’s amendment at page 5, line 38, and the Minister’s amendments extending Clause 2 to Wales.
“(2) If a relevant undertaker fails to comply with its duty under section 94EA(1) or 94EAA(1)—(a) the undertaker commits an offence, and(b) the chief executive of the undertaker commits an offence, subject to subsection (2A).(2A) It is a defence for the chief executive to prove that they took all reasonable steps to avoid the failure.(2B) A person who commits an offence under this section is liable, on summary conviction or conviction on indictment, to a fine.”Member’s explanatory statement
This amendment makes the chief executive of an undertaker liable if the undertaker fails to comply with the new duties about pollution incident reduction plans, unless the chief executive has taken all reasonable steps to ensure compliance.
Member’s explanatory statement
This amendment is consequential on the Minister’s previous amendment.
Member’s explanatory statement
This amendment is consequential on the Minister’s amendments extending Clause 2 to Wales.
“(4) Where, in deciding how to exercise its functions in relation to a relevant undertaker, the appropriate agency has regard to the record of the undertaker in complying with its legal obligations concerning pollution, it must also have regard to the record of the undertaker in implementing measures set out in its pollution incident reduction plans.”Member’s explanatory statement
This amendment requires the Environment Agency and the Natural Resources Body for Wales to have regard to the record of undertakers in implementing their pollution incident reduction plans when deciding how to exercise regulatory functions.
“(4) In this section, “appropriate agency” and “chief executive” have the meanings given by section 94EA(9).”Member’s explanatory statement
This amendment is consequential on the Minister’s amendments extending Clause 2 to Wales and the Minister’s amendment at page 6, line 1.
Lord Cromwell
“(e) the date by which an explanation of reasons why the discharge occurred is expected to be made publicly available.”
Lord Cromwell (CB)
My Lords, I shall speak to both Amendments 39 and 40 in my name. I am grateful for the kind support of the noble Baroness, Lady Browning, on Amendment 39 and of the noble Baroness, Lady Jones of Moulsecoomb, on Amendments 39 and 40.
I am told that Amendment 39 is unwelcome because it is hard to determine when explanations can be expected. As the Minister knows, my catchphrase in Committee was “modest and proportionate”. I think that this very small amendment is modest and proportionate, but it is my further understanding from discussions that management plans will, once a year, give explanations of such discharges as part of their pollution plans. With numerous discharges happening across the year, that annual document will be a mighty task to compile and to read through. More importantly, it seems that people living with the discharges might have to wait 12 months or more simply to find out why a discharge has occurred and, presumably, what has been done to deal with it and prevent a recurrence. This invites not only discontent but accusations that nothing is being done and that people are being kept in the dark. Can the Minister take this away and see whether a government amendment can do better in addressing the concerns and rights to information of the public?
Amendment 40 in my name is essentially about trying to get information all in one place so that anybody from the public can access it. Since tabling this amendment, I have been advised by the Minister that Water UK, the body that represents the water companies, is to create a map of discharges that can be accessed by the public. That is very welcome, but unless the mapping is presented and run in a comprehensive and timely way, is sufficiently detailed to provide meaningful information and is periodically assessed for its quality of delivery, it will be of little use.
I have a number of questions which I would be very grateful if the Minister can address, either from the Dispatch Box or by letter. There are six of them—brace yourselves. Can the Minister clarify what information exactly this map will show? When will it be up and running? At that start date, will all future discharges be shown in close to real time? Who will have the responsibility for ensuring that Water UK receives the necessary information in real time? What will be the penalties for failure to supply the information and doing so in good time? Who will have the responsibility for auditing the online mapping performance of Water UK over time? Somebody needs to watch the watchers to ensure that this potentially rather colourful and enjoyable map is accurate, sufficiently detailed and up to date in real time.
Baroness Jones of Moulsecoomb (GP)
I support these amendments. It is obvious that the public have a right to know when sewage is being dumped. Would the noble Duke, the Duke of Wellington, like to speak to his amendment first? If not, I shall carry on.
The water companies have this as real-time data and there is no reason why they cannot publish it in real time so that the public know whether the waterways are clean enough to swim in, paddle in, kayak in or even let their dogs run in. I simply do not understand why the water companies cannot provide that information. Well, I do know why—they will fight this tooth and nail because the true level of leaks of sewage discharges is so ridiculously high.
Lord Cromwell (CB)
I thank the noble Baroness for supporting my amendment. To be clear, it requires an explanation of why the discharge has occurred, not that it has. The Minister pointed out that that might take quite a long time to establish.
Baroness Jones of Moulsecoomb
In that case, the noble Lord’s amendment is not radical enough for me, but I hope it passes anyway.
The Duke of Wellington (CB)
I speak to Amendment 41 in my name. It makes a simple point that I hope will find sympathy with the Minister and other Members.
I well remember, as other Members may, that during the passage of the Environment Act three years ago, there was a major spill by Thames Water somewhere in the London area. The excuse given at the time was a power failure. I remember thinking that that really was not a very good excuse. Those in charge of any infrastructure installation surely should have sufficient emergency generator capacity in place and maintained so that, should there be a power failure for an essential activity, it can be covered for a while. Clearly, if the power failure lasts for a day or two, the generator capacity will probably not have sufficient fuel to run that long—I understand that. Nevertheless, it seems too easy a let-out for a sewerage undertaker to be able to excuse an emergency discharge of any sort simply on account of a power failure.
I have therefore put down this amendment and hope that the Minister can assure me that water companies are required to have sufficient generator capacity in place and to keep it maintained so that they cannot simply say that there was a power failure and the generator did not work. That is just not good enough. I hope to get reassurance from the Minister about this; it is an important point, because otherwise we are giving too easy a let-out to the water companies.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, Amendments 39 and 40 in the name of the noble Lord, Lord Cromwell, relate to the publication of data on sewage overflows in a form that is readily accessible to the public. The public are concerned about sewage spills, and they want to know when and where they are occurring. They also want to know what is being done about preventing further spills in their area. The amendments help to redress the current balance on availability of information.
Amendment 41 in the name of the noble Duke, the Duke of Wellington, relates to the failure of electricity supply which affects a sewage overflow outlet. I agree completely with the noble Duke. If an overflow outlet is reliant on an inefficient electricity supply, it is up to the undertaker to work with the electricity company to ensure that it is fit for purpose. The electricity supplier, similarly, will know when there is going to be a planned outage and should notify the undertaker in advance so that alternative arrangements can be made. If the electricity supply which serves an overflow outlet is inclined to break down, the undertaker should plan to have a generator on standby, as the noble Duke said, to take over when the electricity supply is down. This is common sense, and I look forward to the Minister’s comments.
Lord Roborough (Con)
My Lords, first an apology: in my excitement in the last group on the government amendments, I forgot to refer to my register of interests, including as a landowner across a number of river catchments and an investor in several natural capital-related technology companies.
I thank the noble Lord, Lord Cromwell, for moving his amendment. I recognise how hard he has worked to improve the Bill, in consultation with the Government. We agree with the spirit of his Amendments 39 and 40 in that we also want more transparency from water companies on pollution incidents. This is an important principle that runs through the Bill, and I hope that the Government will listen to the noble Lord’s argument and seek to strengthen transparency in the water sector where this is appropriate.
I also thank the noble Duke, the Duke of Wellington, for his Amendment 41. While we do not agree with it, we do agree that water companies should take some and more responsibility for the resilience of their power supplies. I would be interested to hear what the Minister can offer in reassurance.
Baroness Hayman of Ullock (Lab)
I thank the noble Lord, Lord Cromwell, and the noble Duke, the Duke of Wellington, for tabling their Amendments 39, 40 and 41, which speak to the publication of data from monitoring networks and emergency outflow permits. I also thank the noble Lord and the noble Duke for the time they took to meet with me between Committee and Report to discuss these topics and the wider industry that they were concerned about.
Amendment 39 in the name of the noble Lord, Lord Cromwell, was supported by the noble Baronesses, Lady Browning and Lady Jones of Moulsecoomb. We agree that it is essential for companies and the regulators to have a clear understanding of the cause of discharges from emergency overflows. That information is important to ensure that the regulators can assess the compliance of emergency overflows and for companies to invest in the right improvements to prevent discharges from reoccurring.
It is important to note that all discharges from emergency overflows should be reported as pollution incidents. Once the Environment Agency has been notified of a pollution incident, it will request follow-up information as to the cause of the incident and any remedial action being taken.
For some discharges, establishing the cause may be straightforward. However, for more complex or more serious incidents it may take longer to identify the cause. When more serious incidents occur, the Environment Agency may need to complete on-site visits and investigations into the cause of the discharges. Since it will not necessarily be known at the time of the incident occurring how long these investigations will take, it is not practical to set a date by which the cause will be identified.
Furthermore, Clause 2 will also require companies to provide information on the causes of pollution incidents annually, as the noble Lord referred to from our discussions, as part of their pollution incident reduction plans. That is to ensure that water companies are transparent about the causes of pollution incidents and the measures they have taken to reduce the likelihood of further incidents.
Requiring water companies to publish a date by which they would inform the public of the cause of an individual discharge would likely result in water companies either rushing investigations to meet an arbitrary deadline or setting themselves lengthy timelines that they know would be achievable. Following our discussions and what I have said now, I hope that the noble Lord understands why we consider the amendment unnecessary and that he will be content to withdraw it. I am of course always happy to discuss matters with him further.
Lord Cromwell (CB)
I am sympathetic to the reasoning given, but will the Minister take on board that this means the citizenry may not know for a year why there was a spillage in their area?
Baroness Hayman of Ullock (Lab)
I am happy to take that on board and back to the team for further discussion.
I turn to Amendment 40, also in the name of the noble Lord, Lord Cromwell, and supported by the noble Baroness, Lady Jones of Moulsecoomb. I thank him for proposing it, as the Government agree that it is important that water companies make information about emergency overflow discharges as easy to access as possible.
Clause 3 explicitly states that information on discharges from emergency overflows will need to be both readily accessible and understandable to the public. That duty will be enforceable by Ofwat, which will be able to access the underpinning raw data from emergency overflows to inform its enforcement responsibilities under the Water Industry Act.
Water companies have already begun to publish information on storm overflow discharges in near real time, ahead of the Water Industry Act duty coming into force in January next year. Furthermore, Water UK, in collaboration with water companies, is shortly due to publish a new centralised map of storm overflows—as referred to by the noble Lord from our discussions—which is designed to present real-time discharge data from all storm overflows in England on one website. I am sure that he will be delighted to hear that we are making good progress on this. The Minister for Water received a demonstration of the website only yesterday, and the Government understand that it is due to be published shortly.
A similar approach is intended to be followed for monitoring data for emergency overflows to meet Clause 3 requirements. In addition, if needed, guidance could be issued from the Government or the regulator to the sector to further support the implementation of the emergency overflow publishing duty. Therefore, since the industry is already planning to centralise data on sewage discharges on one website, the Government do not believe that an amendment to mandate publication on a centralised website is necessary.
The noble Lord asked a number of very specific questions. If I have not answered any of them, I am happy to come back to him in writing with more detail.
Amendment 41 is in the name of the noble Duke, the Duke of Wellington. I thank him for raising this important issue. The Government are clear that emergency overflows should be used only as an absolute last resort. We are talking about emergency overflows here, not storm overflows. Emergency overflows are different from storm overflows. They operate in response to an emergency event at a sewage pumping station, whereas storm overflows are designed to operate in combined sewer systems during heavy storm events. Discharges from emergency overflows should therefore only occur in much more limited circumstances.
As previously explained, environmental permits for emergency overflows already require companies to put in place strict protection measures to prevent, as far as possible, discharges due to power failure. That can include back-up generators or duplicate power supplies.
The Environment Agency will consider enforcement action if a company operates an emergency overflow and it can be proven that the discharge could have been avoided if the company had complied with the protection measures set out in its permits. Electrical power failure is an acceptable reason to discharge only when it is fully—I repeat, fully—outside the water company’s control and not due to any failure on its part to maintain protection measures.
The unintended impact of the amendment could be that we fail to provide for discharges that are outside a company’s control and that are necessary to protect upstream homes from flooding—for example, if a back-up generator failed or did not last long enough. For these reasons, we do not believe this amendment is necessary and are concerned about the unintended consequences.
Having said that, I appreciate that the noble Duke feels strongly on this point, so I extend an invitation to him that I hope he will take me up on. I offer him to join me on a visit to see some of the overflows in person, to enable him to look at the varied scale and types of infrastructure and protections that are already in place, to help him understand and, I hope, to put his mind at rest. I am sure that the noble Duke has never had an invitation from a noble Baroness to look at a sewage plant before and that this is an exciting first for him.
I once again thank noble Lords for their constructive engagement on the important matters of data transparency across water industry monitoring networks and the permitting of emergency overflows.
Lord Cromwell (CB)
The Minister is right that I am delighted to hear about the centralised provision of information, and I eagerly anticipate her reply to my six questions. I am bitterly disappointed that I have not also been invited to go with her to a sewage farm. What has the noble Duke got that I have not? I do not know and I do not want to know. Anyway, I wish them joy. I thank the Minister, and I beg leave to withdraw the amendment.
Baroness Hayman of Ullock
“Nature-based solutionsIn section 94A(3) of the Water Industry Act 1991 (matters to be addressed in drainage and sewerage management plans), after paragraph (e) insert—“(ea) the use that is to be made of nature-based solutions, technologies and facilities within the undertaker’s drainage system and sewerage system,”.”Member's explanatory statement
This amendment requires a sewerage undertaker’s drainage and sewerage management plan to explain the intended contribution of nature-based solutions, technologies and facilities.
The Duke of Wellington
Member's explanatory statement
This amendment would add Ofwat as a relevant agency with the obligation to impose a fixed monetary penalty on a water company in respect of a specified offence.
The Duke of Wellington (CB)
My Lords, Amendment 45, the related Amendment 47 in my name and, in a sense, the intervening Amendment 46 from the noble Baroness, Lady Bakewell, all seek in essence the same purpose—namely, to ensure that any fines imposed on the water industry, either by the Environment Agency or by Ofwat, remain within the environmental protection regime and do not go to the Treasury.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, the noble Duke, the Duke of Wellington, has set out the case for this group of amendments with his usual clarity and passion for sorting out the obligations which Ofwat needs to impose.
The money collected from fines from sewerage and water companies needs more clarity over its destination. At the moment, it would appear that the money from fines imposed by Ofwat does not go back into ensuring that investment occurs to correct the defects which allowed sewage spills in the first place. Much of the money from fines goes into the Treasury coffers and supports other government departments. This is not what the public want. They want the money from fines to go into making good inadequate and out of date sewerage systems and helping to create new reservoirs. A transparent and obvious way to achieve this is to set up a water restoration fund. This group of amendments requires all fines for environmental offences to be ring-fenced for this fund.
I understand that the Treasury is not in favour of this as it is hypothecation. I understand where it is coming from. However, it is necessary, due to the appalling performance of the water industry, for the public to be able to see just where the money from fines is going and how it is being used to improve the service they are paying for in their water and sewerage bills. We are, therefore, very keen to see such a fund set up without delay. There are undoubtedly going to be large fines coming down the line which water companies will have to pay. These fines cannot just evaporate into the ether so that customers cannot see what is being done with the money. Restoring public confidence in the water and sewerage industry is key to moving forward and a water restoration fund is a vital element of achieving this.
Lord Roborough (Con)
My Lords, I thank the noble Duke, the Duke of Wellington, for introducing this group. I also take the opportunity to thank him for his tireless commitment to clearing up the water industry. I have no doubt that the fact that we are considering this Bill in this Chamber at this time owes much to his hard work.
In government, we made progress on work to ensure that fines charged to water companies would be reinvested into the infrastructure of the water sector to reduce pollution and tackle flood risks. Given the very clear concern of the public about the health of our rivers, lakes and beaches and the impact of pollution, it seems only right that the proceeds of fines levied on water companies should be invested in tackling pollution, so we support the spirit of Amendments 46 and 47 in principle.
While there is clearly disagreement on how best to achieve the goal of reinvesting the funds raised through fines on water companies, we hope the Minister will listen to the concerns of the noble Baroness, Lady Bakewell of Hardington Mandeville, and the noble Duke, the Duke of Wellington, and ensure that proceeds from water company fines are reinvested in the sector.
Baroness Hayman of Ullock (Lab)
I thank noble Lords for their suggested amendments and the points raised in relation to penalties and the water restoration fund.
First, I will talk to Amendment 45, tabled by the noble Duke, the Duke of Wellington. While I acknowledge the intention behind this amendment, which seeks to strengthen Ofwat’s enforcement powers, we do not believe that automatic penalties are appropriate for the obligations which Ofwat is responsible for enforcing. Ofwat’s role as the economic regulator is distinct from the role of environmental regulators and from the permitting regime for environmental activities. Offences that may be subject to automatic penalties and outlined on the face of the Bill, such as pollution control, abstraction, impounding and drought, fall within the remit of the Environment Agency and Natural Resources Wales. Extending the enforcement of these areas to Ofwat would therefore duplicate the responsibilities of the regulators and create more complexity in the current system.
Furthermore, Ofwat’s investigation and enforcement activities relate largely to breaches of core licence conditions, which are highly complex matters that are not fixed to singular assets or permits but rather systemic failings right across the company’s operations. Investigations often require significant and detailed evidence to be gathered, potentially from a number of sites, to establish whether a breach has occurred. This can take months to conclude and does not lend itself to an automatic penalty.
Ofwat has existing appropriate powers to impose financial penalties. For example, the Water Industry Act 1991 enables Ofwat to take enforcement action, including imposing financial penalties on companies if they are in breach of their statutory duties or licence conditions.
Finally, I remind the House that the independent commission will consider the roles and responsibilities of the water industry regulators and how we can ensure our regulators operate as effectively as possible. This is something that may be discussed in some depth by the commission. The Government will therefore not accept this amendment, but I hope the noble Duke feels reassured on the points about automatic penalties.
I will take Amendments 46 and 47, tabled by the noble Baroness, Lady Bakewell of Hardington Mandeville, and by the noble Duke, the Duke of Wellington, together. I very much appreciate the intention behind the amendments, but we do not believe it is necessary to define a mechanism for spending the money received through fines in law. A water restoration fund was launched in April this year, and this arrangement does not require legislation. As we have heard, the water restoration fund serves as a mechanism to direct water company fines and penalties into water environment improvement projects. We feel that defining a water restoration fund in law would instil inflexibilities regarding the scope of the fines available to include within the fund and how the money gathered from fines could be spent. We believe that retaining flexibility is important to ensure funding programmes deliver value for money.
As for the devolved elements of the noble Duke’s amendment, water is a devolved policy area, so it is for the Welsh Government to determine the extent to which a water restoration fund should apply in Wales.
What has come across in the debate, and what came across strongly in Committee, is the recognition that investment in the water industry will be absolutely critical to improving the existing poor standards. The Government are continuing to work with His Majesty’s Treasury on the continued reinvestment of water company fines and penalties in water environment improvement. We are working with the Treasury on this specific issue because we recognise its importance. As this is ongoing work and discussion, we will not be able to accept the amendments today. I thank noble Lords for the debate, and hope that they have been reassured by my comments.
The Duke of Wellington (CB)
My Lords, I thank the Minister for that explanation. The point of Amendment 45 was only that I was advised by the Public Bill Office that I had to table it to make Amendment 47 make sense—parliamentary drafting not being one of my specialities. However, the underlying point, which I share completely with the noble Baroness, Lady Bakewell, is that we want to see all the fines levied on the water industry reinvested in ensuring improvements to the clean water environment. That is what we are all trying to do. I suspect that the Minister would support that, in theory, and I wish her well with her discussions with His Majesty’s Treasury. I therefore beg leave to withdraw the amendment.
Baroness Hayman of Ullock
“Requirement for Ofwat to have regard to climate change etcIn section 2 of the Water Industry Act 1991—(a) after subsection (4) insert—“(4A) In exercising or performing any such power or duty in accordance with those provisions, the Authority must also have regard to the need to contribute towards achieving compliance by the Secretary of State with the relevant environmental target duties, where the Authority considers that exercise or performance to be relevant to the making of such a contribution.(4B) The “relevant environmental target duties” means—(a) the duty in section 1 of the Climate Change Act 2008 (UK net zero emissions target), and(b) so far as the exercise or performance concerned relates to appointment areas wholly or mainly in England, the duty in section 5 of the Environment Act 2021 (other environmental targets);and for that purpose an “appointment area” is an area for which an appointment is held under Chapter 1 of Part 2.”;(b) in each of subsections (6A), (6B) and (7), for “(4)” substitute “(4A)”.”Member's explanatory statement
This new Clause requires Ofwat to have regard to the need to contribute to the achievement of Secretary of State’s targets on climate change and other environmental matters where relevant to its functions.
Lord Remnant
Member's explanatory statement
This amendment ensures that compliant companies in the sector are not required to render financial assistance to recover SAO losses caused by another company under special administration.
Lord Remnant (Con)
My Lords, under the special administration orders part of the Bill, relating to the insolvency of water companies, Clause 10 gives the Secretary of State the power to modify the licence of a water company in administration or solvency to recover from its customers any shortfall in costs incurred by the Government in such a situation.
My amendment addresses subsection (4) of the new section to be inserted by this clause, which allows the Government also to recover those costs not just from the company in administration but from any other compliant company, and its consumers, in the sector. My amendment would simply remove this extended unjustifiable right of recourse.
This subsection surely cannot be fair. It would force good companies and their blameless customers to bail out failed companies. Would anybody seriously suggest that, if Sainsbury’s got into financial difficulties, it should be bailed out by Tesco’s customers and shareholders? I think not.
To take a potential live example, were Thames Water to find itself in special administration, if you require customers of Northumbrian Water, at the other end of the country, and other companies to fund SAR losses, the Government are protecting hedge funds and other speculators who are now buying Thames debt at big discounts. It is the debt and equity investors in Thames who should pay for these losses in the form of lower proceeds from any eventual sale. Why should a retired police officer in Yorkshire or a hard-working nurse in Cornwall lose out to a hedge fund owner in New York trying to make a quick return?
I tabled the same amendment in Committee and felt it necessary to bring it forward again because the Minister did not address my concerns at that stage. She covered the circumstances surrounding the introduction of the special administration regime itself rather than justifying the extended right of recourse to other compliant companies in the sector. She said there was a high bar for the introduction of such a regime, that the Government do not expect to have to use this power and that any intervention would be considered very seriously and as a last resort.
As we speak, there are two companies in the sector renegotiating their debts: Thames Water and Southern Water. In theory, either could result in administration or insolvency, which may or may not involve the provision of financial assistance by the Secretary of State and the recovery of any shortfall under Clause 10. The Minister will be much better appraised of these situations than I am, so I derive some comfort from her assurance, armed with that knowledge, that the Government do not expect to have to use this power to recover losses from companies affected. Can she not, however, be more categorical than that, by saying that, even if the powers afforded to the Secretary of State under Clause 10 were to be invoked, they would not be used to recover cost shortfalls from other, blameless companies in the sector, and their customers?
Far more straightforward, however, would be for the Government to accept that any suggestion of collective punishment for the financial ways of others should be rejected, and for the Government to accept my amendment and remove this wide and, I argue, unjustified recourse across the sector. I look forward to listening to my noble friend Lord Roborough on his Amendment 51, which immediately follows. Clearly, if Clause 10 is removed in its entirety, that would satisfy my concerns. I beg to move.
Baroness Jones of Moulsecoomb (GP)
My Lords, I have three amendments of my own in this group and I have co-signed Amendment 56 in the name of the noble Lord, Lord Sikka.
I spoke earlier about the Government’s plans not being strong enough to get a grip on these out-of-control water companies. The amendments in this group, including my Amendments 53, 54 and 59, are illustrative of what could be put in place to really force the water companies to clean up their act. There does not seem to be any protection whatever at the moment against a water company simply going through the special administration process and then hiking bills up on the other side. The moral hazard is obvious.
I am going to take my amendments out of order, and noble Lords will see why. My Amendment 54 would create a special administration process for environmental failures, such as persistent sewage dumping. I do not understand why only financial failure should lead to special administration, when a much bigger failure is the sheer amount of sewage pumped into our rivers and on to our beaches. Thames Water, for example, will come out of special administration still in private hands, but with the bulk of the debt paid off by higher bills. My amendment would change this by giving the special administrator the power to write off the bulk of the debt where it has been used to pay for dividends and where the company has failed to deliver the investment to fix the sewage system. Those powers are not in the current rules and the Government have the chance to change that. Otherwise, we will reward the failures and greed of companies such as Thames Water and will be blamed for it.
I will take my Amendments 53 and 59 together only because I would actually have liked to press them to a vote. They are two amendments I care about very much, on issues that I think the general population cares about very much, and it staggered me that there has not been more support for them in your Lordships’ House. I thank the noble Lord, Lord Sikka, for supporting me: it is two Greens and him who have proposed this.
Essentially, my Amendment 53 would prevent water companies being bailed out by either the public purse or via consumers’ water bills. This is because I am quite suspicious that the whole Bill is a tactic to support the water companies, at vast expense to bill payers and eventually to taxpayers. I simply do not understand why profits are privatised but losses are not. We, the public, pay for the losses but do not get the profits.
My Amendment 59 would require the Government to conduct a full assessment of the costs of bringing water companies into public ownership. So much of the public ownership debate is dismissed based on dubious industry figures about how expensive it would be. These conveniently miss the fact that some of these companies are now distressed assets facing bankruptcy. I at least ask the Treasury to do a proper costings exercise which discounts the fact that water company valuations are based on expectations that taxpayers or bill payers will underwrite the future profits of the water companies. Given the total failure of water privatisation, the Government need to seriously plan to bring water back into public ownership. The public are crying out for it, and it would actually be good value for money. The first step towards that is to work out the real costs rather than regurgitating figures from a biased industry.
It will be a race against time whether we can pass this Bill before Thames Water fails. All the experts agree that Thames Water is going to collapse, so why are the Government not taking it into special administration immediately? My genuine fear is that this Government will find themselves in a political storm over the big rise in water bills to finance a new private company taking over. The Government would have three regrets: first, that they did not refuse a bailout; secondly, that they did not listen to the public and change the powers of the special administrator to write off shareholder-accredited debts; and thirdly, that they ruled out public ownership as an option and boxed themselves into a corner. I deeply regret this aspect of the Bill, and I wish there were support in your Lordships’ House for no bailout and public ownership.
Lord Sikka (Lab)
My Lords, I rise to speak in support of Amendments 53 and 56, with some trepidation. At 4 pm today my heart soared, because the Railway Minister said that government policy was to bring these monopolies into public ownership. But by 5 pm the Minister—the noble Baroness, Lady Hayman of Ullock—said no, and that water companies must remain in private hands. It is nearly 9 pm now, so I do not know whether the policy has changed again. It would be interesting to know.
Water companies and shareholders and lenders have extracted vast sums of money, and under no circumstances must they be bailed out. We are now almost reaching the endgame and maybe the beginning of a new chapter in water companies. Thames Water is an interesting case. All nine of its shareholders have declared the company to be a basket case and are refusing to invest, after extracting billions of pounds in dividends and inflicting massive, real-term price hikes on customers. The value of those shares has been written off; the value of debt has also taken a haircut in the marketplace.
The interesting thing is that Thames Water is now going to borrow more money, which does not make any sense; I do not know how the Government have made any sense of it. Thames Water already has a debt of about £18 billion, and its gearing, as I said earlier, is already over 80%, compared to Ofwat’s idealised ratio of 15%. Thames Water is now negotiating a £3.5 billion new loan at 9.75% for two and a half years. This new loan will require it to pay £800 million over two and a half years, with interest and various fees, to intermediaries, after which it will also have to repay the loan of £3 billion. That is £3.8 billion—which it will probably try to recover from customers. It has 16 million customers, so that works out at a charge of £95 per customer simply to service this debt. This simply is not viable. There would be riots in the streets if water companies went ahead and squeezed the customers even more. It is simply and utterly unacceptable.
The company will continue to discharge tonnes of sewage in the rivers. Water leaks will still go unplugged. We are talking about not just investment in infrastructure; Thames Water has also neglected other investments such as investment in IT. Some of its IT systems date back to the 1980s and are obsolete. According to whistleblowers, some of its essential systems still use Lotus Notes software from the 1980s and 1990s, which cannot be updated any more.
Thames Water will run out of cash soon and will inevitably pass to its lenders. But that will not solve the problem either, because the lenders, as the new equity holders, would still want a massive return on their investment, so we are back to the territory of massive new bill hikes. The Government’s delay and dithering are not helping to clarify the situation. They need to bring this company into public ownership. Private equity and hedge funds are lurking—they are the new hyenas ready to feed on the carcass of Thames Water and grab whatever assets it has left. I have been told that they are especially after land. They are counting on some kind of government bailout so that the value of their investment soars.
Thames Water is not alone. The same scenario is being repeated at Southern Water. The Minister said today that Ofwat’s approval is needed to pay dividends, so it is interesting that today Severn Water declared six-months profits, which have nearly tripled in six months, and has increased its dividends from 46.74p per share to 48.6p per share. It would be interesting to know when Ofwat approved this. Can we have some public evidence to show that Ofwat approved this higher rate of dividend?
It is a matter of concern to me and others that the Bill enables the Secretary of State to dip into the public purse and also levy massive charges on customers to restructure the companies. That is effectively a bailout by another name. Through this process, the Government may possibly write off the debts of these companies and possibly take on the liabilities and costs associated with cleaning rivers, seas and lakes. So there is nothing of any value in this for the customers at all, because they will end up paying more and the citizens will end up paying more as well. The bottom line is that public money should not be used to bail out any of these investors, whether they are lenders or shareholders. Hopefully, the Minister will give that commitment.
I tabled Amendment 56 previously, but I got some strange responses so I want to return to it. In any civilised society, a key requirement is that all businesses, especially those that control services essential for life, must be operated by organisations that are law-abiding, ethical and responsible. But none of that applies to water companies. The whole industry is controlled by organisations with criminal convictions galore. It is not one or two, and it is not that somebody forgot something or perhaps there was an innocent oversight. There are 1,109 criminal convictions, and there is not a single water company without a criminal conviction.
This is the result of deliberate planning in company boardrooms: the directors decided to violate laws, lie and cheat. The field of these convictions is led by United Utilities, with 205; Thames Water has 187 convictions; and South West Water has 174. None has shown any sign of mending their ways; if they had, these convictions would have stopped years ago, but they continue. Just last month, the BBC reported that United Utilities dumped more than 140 million litres of raw sewage into Windermere between 2021 and 2023—at that time, it was not permitted to do so. A BBC investigation found that illegal discharges had been taking place for more than three years—far longer than the discharges in the four months the company retrospectively reported. In other words, it lied.
There is no effective fit and proper person test in the UK to decide whether somebody ought to be allowed to run or control a water company or a wastewater disposal service. If there were, none of these companies would pass it. But, rather than punishing companies engaged in criminal activity, successive Governments have protected them. They ask people, year after year, to hand more money to these organisations, which obviously continue with their pattern of behaviour.
Baroness Anderson of Stoke-on-Trent (Lab)
The noble Lord has reached the time limit.
Lord Sikka (Lab)
Sorry, I did not realise. I was just beginning to enjoy that.
Just to finish off—not long to go now—the question is: why should these criminals be allowed to remain in charge? These things are not minor infractions. Last time we debated this, the Minister said that there were
“significant consequences for a company’s investors. Investors would not have the confidence to invest money if the special administration regime could be triggered without allowing a company to rectify any performance issues”.—[Official Report, 4/11/24; col. 1373.]
That is, again, a very strange argument that we should allow criminals to continue because somehow it might upset the market. On that basis, it would open the doors to criminal activities everywhere—
Baroness Anderson of Stoke-on-Trent (Lab)
I am so sorry, but we have reached time. Thank you.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, this is the last group of amendments. The noble Lord, Lord Remnant, has introduced Amendment 50 on recovering costs from water companies. The noble Lord, Lord Roborough, has Amendments 51 and 52 to leave out Clauses 10 and 11. We did not support these amendments in Committee and have not reconsidered our view.
The noble Baroness, Lady Jones of Moulsecoomb, has spoken to Amendments 53, 54 and 59, dealing with water companies that have been taken into special administration. Under Amendment 53, 50% to 100% of the debts of the company would be cancelled. Under Amendment 54, the Secretary of State would place a water company into special measures for breach of environmental conditions. Amendment 59 requires an assessment of costs to bring water companies back into public ownership. Although the noble Baroness, Lady Jones, is very articulate and passionate, I am afraid we are not able to support these amendments.
Amendment 56 in the name of Lord Sikka, to which he has spoken very eloquently, seeks to prevent companies from operating where they have criminal convictions in a five-year period. I have listened to the noble Lord’s arguments on this amendment and will listen carefully to the Minister’s response, but at the moment I am not convinced of the efficacy of Amendment 56.
Lord Roborough (Con)
My Lords, I shall speak to my Amendments 51 and 52, which seek to leave out Clauses 10 and 11 from this Bill. These would also have the effect of rendering unnecessary Amendment 50 of my noble friend Lord Remnant.
Our concern on these Benches is that the consumers are left as the providers of funding of last resort to the water industry. In the event of a company going into special administration and there being losses incurred by the Government, these clauses allow the Secretary of State to recover those losses by putting consumer bills up above the levels that have been determined by Ofwat—not just customers of that undertaker but also of others.
This does not seem fair or just. Surely the ultimate responsibility resides with the Government who created the system of regulation that must have failed in this scenario. I intend to test the opinion of the House on my amendment; we do not believe that the Government should grant themselves this power.
I would also like to briefly address Amendment 53 in the name of the noble Baroness, Lady Jones of Moulsecoomb. We on these Benches agree with her that a bailout of creditors or shareholders by the Government would be completely wrong. It is not for the Government to make professional or retail investors whole when their investments have gone wrong. However, we are unconvinced that this amendment needs to be in the Bill, given that there does not appear to be any mechanism where the Government could be called on to bail out investors. Perhaps the Minister can reassure the House that this is the case.
Baroness Hayman of Ullock (Lab)
I thank all noble Lords for the constructive discussion on the important topic of ownership and management structures of water companies. I turn first to Amendment 50, tabled by the noble Lord, Lord Remnant. I understand his concern about the aspect of the clause that allows for socialisation of shortfall recovery. We had some discussion around that, as he mentioned. However, I reassure him again that this element is necessary for the shortfall recovery power to function effectively and safeguard the interests of taxpayers and water customers.
We do not expect to have to use this power—the noble Lord mentioned that we had talked about this—and I stress that it would be utilised only if it were not possible to recover all the funding provided by Government over the course of a special administration; that is, in the event of a shortfall. It is only at that point that Ministers would decide whether to exercise the shortfall recovery power. Water sector stakeholders, including the Consumer Council for Water, would be consulted about any decision to exercise the power. It is therefore not entered into lightly.
All water customers benefit from the use of a special administration regime, as it ensures that services continue in the event that a water company fails. This power already exists within special administration regime frameworks for other essential service sectors, such as energy, where there is a well-established principle of socialising these costs across the sector.
The noble Lord, Lord Remnant, asked specifically about why we think the powers are needed, so I will provide an example. There may be an occasion where government funding, provided during a special administration regime, contributes towards water sector infrastructure—such as a reservoir—that goes on to benefit several different water companies. In other cases, a particularly small water company, with a limited number of customers, may enter special administration. In this scenario, it is vital that a decision can be made about recovering a shortfall from more than one company, to ensure fair allocation of costs and to prevent customers of a single, small company facing unmanageably huge bill increases.
In all scenarios, a failure to deal with a shortfall fairly, or to prevent impacts unduly falling on a single company, risks increasing the cost of capital for the whole sector. This is because investors will price in the risks of excessive shortfall costs falling on a single company. The ability to recover a shortfall from multiple companies is therefore necessary both to ensure that it is possible to recover government funding in the event of a shortfall and to safeguard the sector from any wider cost impacts. I reiterate that we see it as very unlikely that this will ever happen. For this reason, the Government will not accept the amendment.
I turn next to Amendment 53 tabled by the noble Baroness, Lady Jones of Moulsecoomb. While I thank her for her engagement on this clause, the Government must reject this amendment because it would jeopardise the main purpose of the water special administration regime, which is to ensure the continuation of water and sewerage functions in the event of a water company insolvency or failure.
The role of the special administrator, once appointed, does not include a power to cancel debt, so does not serve to bail out water company creditors or shareholders. When a water company exits from special administration, via either a rescue or a transfer, the special administrator determines the level of repayment to creditors in accordance with the statutory order of priority. The level of repayment that creditors and shareholders may expect will be in accordance with the order of repayment clearly set out in statute. Any power to cancel debts outside of a restructuring plan agreed as part of a special administration, or a scheme where there is built-in court supervision, would be a material departure from long-established insolvency principles of fairness and treating creditors equally according to their rights. I hope that the noble Baroness understands why the Government must therefore reject this amendment.
I will turn next to Amendment 54, also tabled by the noble Baroness, and Amendment 56 tabled by my noble friend Lord Sikka. He mentioned dividends. I assure him that Ofwat is able to stop the payment of dividends if they would risk the company’s financial resilience, and can take enforcement action against water companies that do not link dividend payments to performance. I just wanted to make that point clear.
Amendments 54 and 56 are already covered by the existing legal framework for insolvency and special administration regimes. The noble Baroness, Lady Jones, specifically asked why a SAR can be used in only financial circumstances. However, that is not the case. A water company can already be placed in special administration on performance grounds where it is in such serious breach of its principal statutory duties, or an enforcement order, that it is inappropriate for the company to retain its licence. Both the amendments would limit the powers of the Secretary of State and Ofwat by forcing their hand to take specific action, thereby limiting their ability to respond appropriately to individual situations. As part of an application to the court for a special administration on performance grounds, the Secretary of State and Ofwat must consider all aspects of a company’s performance and enforcement record, including its record of criminal convictions. Under the current framework, a company must take actions to address performance issues, including those involved with poor performance. Any failure to do so would form part of any assessment by the Secretary of State, or Ofwat, of the appropriateness of that special administration in the first place. Special administration must be a last resort, and proportional and appropriate to the circumstances. An automatic threshold for special administration, such as outlined in these amendments, would limit the ability of the Government or regulators to act. It would also likely undermine the confidence of actual and potential investors, and bring instability to the wider sector.
The Government are already taking action to strengthen the regulatory system through the recently launched independent commission into the water sector and its regulation. The regulators’ roles and responsibilities, including on enforcement, will be reviewed as part of this. We expect that recommendations from this review will form the basis of future legislation. The rigid approach in these amendments would prevent the Secretary of State from exercising their powers to respond to the details of individual cases. For this reason, the Government will not accept these amendments. However, I hope that noble Lords are reassured by my explanation.
Regarding Amendment 59 tabled by the noble Lady, Baroness Jones of Moulsecoomb, I have already spoken at length about the costs of nationalising the water sector. It would require a fair price to be paid to shareholders and debt holders. This would come to over £90 billion. I know that noble Lords have disputed this figure, but it is based on Ofwat’s regulatory capital value figures for 2024. I have also spoken about the benefits—or lack thereof—of nationalisation.
Research commissioned by the Consumer Council for Water, an independent organisation that represents customer interests, found that a substantial change to the industry and company ownership would not address the main problems experienced. We also see a variety of ownership models in the UK and internationally, with clear mixed performance. For these reasons, the Government have been clear that nationalisation is not on the table.
Baroness Jones of Moulsecoomb (GP)
As the noble Lord, Lord Sikka, said, it is okay for the railways but not for water. If it were within the remit, at least we could get some accurate figures. At the moment we do not have accurate figures. Also, a recent poll said that 82% of the general public would like water out of private hands and in public ownership again. That means that this Government are going against the grain.
Baroness Hayman of Ullock (Lab)
I appreciate what the noble Baroness is saying, but the Government are clear: nationalisation is not going to be within the scope and we are not going to change our position on that. I think we are just going to have to agree to disagree on this matter.
Moving on, the noble Lord, Lord Roborough, tabled Amendments 51 and 52. The special administration regime is not new to the water sector and, as I have mentioned, it is normal practice in the provision of public services. SARs exist for a variety of other sectors, including energy, transport and financial services. Although Governments have had the power to place water companies into special administration for over three decades, it is important that we regularly update legislation to reflect the modernisation of law and experiences across other sectors. There is a high bar for the imposition of a special administration regime and we want to make it clear that the Government and Ofwat will always act to protect consumers as a priority.
However, if a SAR occurs, government funding would be required to cover the costs of a special administration, including both operational and capital expenditure—for example, for ensuring that statutory environmental obligations were met as well as paying the cost of the special administrator. I reiterate that we expect most of these costs to be recouped either through the proceeds of a sale or through the repayments agreed as part of a rescue at the end of a SAR. If there are insufficient funds to cover repaying government, there is a risk of a funding shortfall. The Defra Secretary of State does not currently have the power to require this shortfall to be repaid. This is unlike in other sectors, such as energy, where the relevant Secretary of State has flexible powers to recover a shortfall in funding.
The introduction of the mechanism is required to ensure that the costs of any water industry SAR could be recovered appropriately, in line with special administration regimes in other regulated sectors. Without this power there is a risk that, in the event of a shortfall, taxpayers’ money would be lost. The Government are clear that any intervention that would increase customer bills would always be considered very seriously and used only as a last resort. I hope noble Lords agree that this power is therefore essential to protect taxpayers’ money in the event of a SAR and I move that these clauses stand part of the Bill.
Lord Remnant (Con)
My Lords, the hour is late, so I will be brief. I thank everybody who has participated in our discussion of this group of amendments, and in particular my noble friend Lord Roborough for his support. There is clearly a lot of interest in the special administration regime and the costs arising from it, particularly in the allocation of those costs, and I compliment the noble Baroness, Lady Jones of Moulsecoomb, and the noble Lord, Lord Sikka, who have spoken with their normal passion and dogged determination on these issues.
I thank the Minister for her patience and considered response on all these issues. I do not necessarily agree with all the points she has made, particularly on the cost of capital. I am not sure that it would be raised more in instances that she is referring to, rather than the industry having this spectre of having costs allocated to the compliant companies in respect of losses incurred elsewhere. But I thank her anyhow. I am sorry that she has not been able to accept my amendment, but I beg leave to withdraw it.
Lord Roborough
Member’s explanatory statement
This amendment would prevent consumers in England from being charged higher water bills to cover any losses incurred by the Government as a result of the Secretary of State’s decision to make a special administration order.
Lord Roborough (Con)
My Lords, the Minister said that His Majesty’s Government do not expect to use these powers in Clause 10. I struggle to believe that any noble Lord listening to the noble Baroness describe socialising these losses across consumers can feel comfortable, however unlikely it is. If the clause is not to be used, I would like to test the opinion of the House on whether it should stand part.
Baroness Hayman of Ullock
Member's explanatory statement
This amendment is consequential on the Minister’s amendments extending Clause 2 to Wales.
“(d) section (Nature-based solutions), so far as relating to undertakers whose areas are wholly or mainly in England;”Member's explanatory statement
This amendment provides for the commencement by regulations in England of the Minister’s new Clause after Clause 3.
“(d) section (Requirement for Ofwat to have regard to climate change etc), so far as relating to powers or duties exercised or performed in relation to appointment areas (within the meaning of the subsection (4B) inserted by the section) wholly or mainly in England.”Member's explanatory statement
This amendment provides for the commencement by regulations in England of the Minister’s new Clause before Clause 8.
“(aa) section 2 (pollution incident reduction plans), so far as relating to undertakers whose areas are wholly or mainly in Wales;”Member's explanatory statement
This amendment is consequential on the Minister’s amendments extending Clause 2 to Wales.
“(c) section (Nature-based solutions), so far as relating to undertakers whose areas are wholly or mainly in Wales;”Member's explanatory statement
This amendment provides for the commencement by regulations in Wales of the Minister’s new Clause after Clause 3.
“(c) section (Requirement for Ofwat to have regard to climate change etc), so far as relating to powers or duties exercised or performed in relation to appointment areas (within the meaning of the subsection (4B) inserted by the section) wholly or mainly in Wales.”Member's explanatory statement
This amendment provides for the commencement by regulations in Wales of the Minister’s new Clause before Clause 8.
National Youth Strategy
Lord Parkinson of Whitley Bay (Con)
My Lords, I am sure that noble Lords across your Lordship’s House can agree that the youth sector, like the young people whose interests it champions, inspires us all with the energy and dynamism with which it does its work, and that we must do all we can to protect its future. The Conservatives, in government, had a proud record of supporting and listening to young people. Their interests were at the heart of our £500 million funding for the national youth guarantee, which expanded access to clubs and activities for 11 to 18 year-olds. Their interests were also at the centre of the £1.3 billion that we invested in sports programmes and facilities across the United Kingdom.
Although we on these Benches welcome the Government’s vision for a national youth strategy, and look forward to scrutinising the measures once there is more substance to that, we must express some confusion at the content and tone of this announcement. The Government say that they are placing young people front and centre. The Secretary of State said in her Statement in another place that the strategy will give young people more “chances and choices” and will
“put them at the heart of government”,
and yet there is not much in this Statement that improves the chances and choices of young people. I fear that our nation’s youth might share my perplexity at the mixed messages they are getting from their Government.
Scrapping the National Citizen Service, which was started to great acclaim by my noble friend Lord Cameron of Chipping Norton, most certainly does not give young people more choices; it restricts them. The National Citizen Service has, over 13 years, given more than 750,000 young people the opportunity to broaden their horizons, engage with their compatriots from a wide variety of backgrounds and different parts of the country, and play their full part in shaping our society. If the Government truly want to put young people at the heart of government, why have they scrapped a scheme based on the premise of putting the needs of young people first?
This human interaction and drawing of people from a diverse range of backgrounds is at the heart of the brilliant work that the National Citizen Service has done for more than a decade. I was confused by the logic as it appeared in the Secretary of State’s Statement; maybe the Minister can shed more light on it. In the section in which the Secretary of State talks about scrapping the National Citizen Service, she talks about the growth in Facebook, X and TikTok users that has happened since its creation. Surely, in an age when there are more social media and young people are spending more of their time online, it is all the more important that they should take part in schemes such as the National Citizen Service, which brings them together in real life to learn about the lives of their fellow country men and women who are drawn from different backgrounds.
UK Youth summarised the views of the sector neatly when it said that the Statement was deeply unsettling. As noble Lords will be aware, the National Citizen Service funded countless projects throughout the country. The specific structure of the programme ensured that funds were widely distributed to grass-roots organisations. These include, among others, London Youth, Children North East, the YMCA, which we talked about in our debate last week on the implications of the Budget for cultural organisations and charities, and the EFL trust, which is a charity that helps drive young people through the football talent pipeline. I find it slightly strange that the Government are taking a Bill through your Lordships’ House that seeks to improve the sustainability of English football and the future of the sport at the same time as they are pulling funding from charities that help support the grass roots of the beautiful game.
Do the Government have any plans to replace lost funding for schemes such as the ones I have mentioned and the many more that could be mentioned? If so, could the Minister or the Government clarify these as soon as possible? The closure of the National Citizen Service, coupled with the reduction in funding for cadets and the lack of replacement for the youth investment fund, all lead to a cut worth millions of pounds to youth organisations. Does the Minister believe that His Majesty’s Government are truly expanding the chances and choices of young people when the evidence we have been provided with today, in the Budget and in the weeks since, indicates the very opposite?
Lord Addington (LD)
My Lord, we come rather belatedly to discuss this Statement. I do not know whether it is the longest wait I have ever had between a Statement taking place in another place and it being discussed here, but it is certainly a contender.
Many of the points I have about youth services are about how we will assess the future of a scheme. One of the problems I have found with youth-focused activity is that it fails to take into account one very important factor about those who use it: they grow up. Things tend to drop off a cliff at the age of 18: you are in a project, which is great, but then it ends. There does not seem to be any coherent strategy for getting people involved in voluntary sector work or any activity as they become adults.
Sport is a classic one for this: a wonderful project gets hundreds of children running around, but what happens when they get to 18? I have asked this on numerous occasions. I will not mention the groups I have done this with, but many of them celebrate their success, but when I ask, “What happens when you get to 18?”, they reply, “What do you mean?”. Some young people become coaches, but an 18 year-old football coach is of no use to an amateur football side; they just will not be able to do it.
How will we start to integrate this into the other sectors of adult society? If we are using it as a tool and a structure that goes with it, I have a little more hope for what is coming next. But I hope we will be told how the Government will assess successful projects, what help they will get in identifying them and how they will integrate them into the voluntary sector of adult life. I would like to hear something about that from this Government. If we invest in this type of work, we must have a flow through. Certain national organisations thrive on this interaction. Are we getting some structure and guidance on how to do it better?
When it comes to pressure on young people, let us face it, all teenagers have a habit of being misunderstood and sitting in darkened rooms. We did in our day, but unfortunately now they are accompanied by the internet and its pressures, so they sit in darkened rooms talking to fictitious people and reinforcing their own often self-imposed misery. If the Government can look at how we break through that, with some positive action and guidance, I would be incredibly impressed.
How will we go about this? Any youth service has to bear in mind two things: how to get in and assess it, and how to exit it with a positive result. I look forward to hearing from the Government what assessment they have made.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, I thank the noble Lords, Lord Parkinson and Lord Addington, for their contributions. I hope that my comments can answer some of their questions before we move on to wider questions from your Lordships.
We have an opportunity to rebuild a bright, successful future for this generation, giving them choices and chances, including the chance for them to shape policy that relates to their lives. Coming into government, as the Secretary of State said in the other place, we found that there was no youth strategy and no consistent youth voice across government. It is very difficult to target funding without a strategic approach, and this is what we intend to deliver, working with young people.
I know that all noble Lords would agree that young people are critical to our nation’s success. They have high aspirations—they believe in their power, and so do we, but they also face significant challenges. They have experienced a global pandemic, the rise of new technology and social media, climate anxiety and an increase in mental health issues and loneliness. We desperately need a new path forward for young people. We are committed to having a proper national conversation about how to empower them, ensure that they have trusted adults in their lives and provide them with great opportunities to achieve and thrive. We want to support them in navigating an ever-changing world. We will do so by launching the co-production of a national youth strategy with young people in the driving seat. The strategy will outline a long-term vision for young people, better co-ordinating youth policy and ensuring that we are more than the sum of our parts. We will publish this strategy within a year. It will better co-ordinate youth services as well as moving away from one-size-fits-all approaches from the Government, bringing power back to young people in their communities and rebuilding a thriving and sustainable sector.
We know that this is ambitious, and that is exactly what we want to be. We will start with a series of youth-led engagements in the coming months and will set up a group of young co-producers who will inform key decisions on the design of the strategy, providing expertise and insight from their lived experience.
As the Secretary of State for Culture, Media and Sport observed in the House of Commons last week, change is important to move forward. That can mean making difficult decisions, which is why we will wind down the National Citizen Service programme from the end of the financial year. We will also close the trust when parliamentary time allows, and all necessary processes will be followed, including engagement with Parliament and His Majesty the King. We stand ready to support the NCS during this period of transition and have a team within DCMS supporting this process. I know that this is a difficult decision for many of the people involved and for those who have taken part over the years. I express my gratitude to each and every staff member and young person who has contributed to the NCS trust and its programmes over the years. We are grateful for their commitment to supporting young people, helping them build meaningful connections and pushing themselves out of their comfort zone.
I also thank many noble Lords who have played a role within the trust over the years. We will work closely with the NCS trust to ensure an orderly transition from the end of the NCS programme to what comes next.
The new strategy will enable us to better target funding and services where they are most needed. While we develop the strategy, we will focus on transforming our work and supporting our youth sector through the transition. As a starting point, the Government intend to strengthen the relationship with local government by launching the local youth transformation pilot, which will build back capacity and improve local youth offers with young people at the heart of local services.
In addition, we will allocate over £85 million of capital funding in the places where it is most needed, including launching the new £26 million better youth spaces fund for youth clubs to buy new equipment and do renovations. The Government have also announced the allocation of £100 million of the next tranche of dormant assets funding to youth outcomes, and we can expect further details on the focus and distribution of this funding in due course. By working across government, civil society and business, we will make sure that everyone is focused on the common goal of better supporting and empowering young people in England.
The noble Lord, Lord Parkinson, asked about grass-roots sport. The Government are acting to support more people to get access through delivery of the multisport grassroots facilities programme in 2024-25. In the Autumn Budget, the Government confirmed continued support for elite and grass-roots sport by investing in multi-use facilities, and further details will be confirmed in due course.
The noble Lord, Lord Addington, asked about what happens at 18. I think that point is slightly outside the scope of this strategy, but I appreciate the need for us to look at how people can transition, be active citizens and be active in sport beyond that. I will speak to Minister Peacock about the point that the noble Lord has raised, as he did during the debate on football governance. It is a useful point for us to explore.
The overall package of support for young people lays the foundations for a transition towards a future in which young people will be empowered to succeed. I welcome views from across the House on the content of the Statement and on the priorities for our youth strategy. I look forward to discussing this issue further in due course.
Baroness Kennedy of Cradley (Lab)
My Lords, I welcome the announcement that we are creating a new strategy, particularly the fact that young people themselves will be central to its design. Young people today face profound, complex challenges and a world very different from a decade ago, and it is right that they are driving forward the changes that are central to their future. I ask the Minister for more detail on exactly what their involvement will look like and what it will entail.
Baroness Twycross (Lab)
I thank my noble friend for that question. It is important to us that the strategy is a co-production. We will set up a youth advisory board as well as running a series of youth-led round tables. There will be a wide consultation, reaching and engaging young people across the country through surveys and focus groups.
On top of that, the UK Youth Parliament is DCMS’s key mechanism for engaging with young people and ensuring that their voices are heard in policy and decision making. I know that a number of noble Lords here are particularly interested in the work of the Youth Parliament, so I will just note that it is Parliament Week.
The Earl of Effingham (Con)
My Lords, the Statement says that young people today
“are at the sharp end of a revolution in social media”
and that there are now one in five young people with a mental health problem. The research shows that everything points to social media and smartphones. At the moment, I understand we are just giving guidance that smartphones should be banned in schools. My question for the Minister is simple: when are we going to legislate so that smartphones are banned? They must be a huge distraction and they should not be in the classroom.
Baroness Twycross (Lab)
I refer the noble Earl to the debate on precisely this issue in your Lordships’ House next Thursday. I think that question will be explored in a lot of detail in that debate.
Baroness Bennett of Manor Castle (GP)
My Lords, my question follows on from that of the noble Baroness, Lady Kennedy, and is really about process. I very much welcome from the Green Party perspective the youth involvement, and the people who are most affected by this having a say. However, I must note that it is a pity that the Government are not immediately pushing forward with votes at 16, which would give young people a much stronger say immediately and directly in our democracy.
Is the process of co-production envisaged to be a deliberative democracy process, and not one where people are asked surveys, with just the usual suspects coming forward? Are we going to see a truly representative group of young people, from around the country, making sure that it is not too focused on the south-east? Will there be people from different social backgrounds and different groups? Will disabled young people be specifically represented? Will they have a chance to deliberate and talk, and to meet perhaps with Ministers? Will this be a long-term iterative process, rather than yet another survey or “consultation”, which really has acquired something of a bad name?
Baroness Twycross (Lab)
The noble Baroness asked about the precise process, and we will get far more details on this in due course. The co-production model is intended to reach young people and children from across the spectrum. We know that disadvantaged young people are much less likely to access enriching activities, and we want to ensure that we target the consultation and our resources towards making sure that all young people have an opportunity to take part, whether that is in the co-production or the activities once they are subsequently rolled out.
Baroness Thornton (Lab)
My Lords, I would like to address the issue of why we are taking this Statement so late in the evening, and the remarks of the noble Lord, Lord Addington. My understanding—I know that my noble friend on the Front Bench is too polite to say this—is that this was arranged so that the noble Lord, Lord Cameron, could be here to defend what is presumably the jewel in his crown. If that is not the case, I maybe was misinformed.
I am surprised to hear those on the Bench opposite asking questions such as the noble Lord did in his opening remarks, especially since, in 2021, the previous Government made cuts of £135 million after the Evaluation Task Force shared its concern about the impact and value of the NCS. They were a Government who introduced and oversaw huge cuts to local authority youth funding, leading to the closure of huge numbers of youth facilities—in contrast, it has to be said, with the achievements of the previous Labour Government with Sure Start, which transformed the future of a generation of children and was then dumped by the noble Lord’s Government. Given that the noble Lord and his Government oversaw sweeping cuts to this programme, does my noble friend the Minister agree that we do not need to take any lessons from those on the Opposition Benches about supporting the future of young people? Can my noble friend say what the timeline is for publishing and implementing the strategy?
Baroness Twycross (Lab)
On the initial point of not taking lessons from His Majesty’s Opposition, I think it is fair to say that, on this side, we have been quite impressed by how quickly they have developed amnesia about the last 14 years.
The National Citizen Service provided 1 million young people with opportunities, and in 2024-25 it received £52 million in government funding. We believe that, if we develop an overarching government strategy on youth, we will allow more young people and children to access activities that will enrich their lives and help them build their future. That is why the report that will emerge from the consultation will be entitled, “Today’s Youth, Tomorrow’s Nation”. These people are our future and it is really important that we target the funding we have to the absolute maximum.
Baroness Young of Old Scone (Lab)
My Lords, could the Minister give her view on the importance of local authorities in this strategy? My experience at local level is that they can be a hugely powerful linchpin in the network of local services and engagement opportunities for young people. They really bring it to where they are, engaging with schools, youth services and sporting opportunities. Can the Minister give us a feel for how local authorities will figure in this strategy, and how they will be consulted in its formation?
Baroness Twycross (Lab)
Local authorities are an absolutely key partner in the development of any strategy. From my perspective, one of the key things is to look at how their youth funding has fallen over the previous 14 years. Local authorities’ youth funding in England fell by 73% under the previous Government. This Government have started to help restore that funding, but there is a correlation—I have been told it is not a causation but a correlation—between areas where funding for youth centres has been cut, and rises in anti-social behaviour.
Baroness Bennett of Manor Castle (GP)
My Lords, following on from the question asked by the noble Baroness, Lady Young, and given the hour and the sparsely occupied Benches, in many areas—I can think of many that I have visited—the closure of a large number of facilities, particularly local authority facilities, has been picked up by local community groups, social enterprises and local organisations. They have, for example, occupied the adventure playground that was closed and set up their own arrangements, often operating with very scarce resources and relying on huge amounts of voluntary effort. Can the Minister assure me that the Government will make sure that the new youth strategy fits in with the voluntary community efforts that are already operating, rather than a whole new broom sweeping in and dumping down on communities, possibly sweeping aside those valiant voluntary efforts that have kept things going in such difficult conditions of austerity?
Baroness Twycross (Lab)
For the purposes of brevity, I shall just say yes.
Lord Parkinson of Whitley Bay (Con)
My Lords, as there are a few moments left, may I ask the Minister about something that her right honourable friend the Secretary of State for Science, Innovation and Technology said which has been reported in the papers today? He said that he was open-minded about a ban on under 16 year-olds being on social media. His statement made a big play about the injurious effects of social media on young people, saying that they are at the sharp end of a revolution in social media. Is that under active consideration by the Government? How does the Minister think that tallies with their commitment to give 16 year-olds the vote? Will they be able to exercise their democratic rights at 16 if they have not had the opportunity to engage with political debate and political discourse on social media, as they presently can?
Baroness Twycross (Lab)
The noble Lord makes an interesting point, particularly about votes at 16. I neglected to respond to the noble Baroness’s point on that subject. We anticipate, and plan to introduce, votes at 16 before the next election, when parliamentary time allows. We are exploring all the issues in relation to social media and so forth, and I will write to him with a fuller response on that.