Employment Rights Bill (Nineteeth sitting)
Tuesday 14th January 2025
(1 month, 1 week ago)
Public Bill CommitteesEmployment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 January 2025 - (14 Jan 2025)
The Chair
Will everyone please ensure that all their electronic devices are turned off or switched to silent mode? We will now continue line-by-line consideration of the Bill. The grouping and selection list for today’s sittings is available in the room and on the parliamentary website. I remind hon. Members about the rules on declarations of interest, as set out in the code of conduct.
Schedule 6
Consequential amendments relating to Part 5
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
I beg to move amendment 183, in schedule 6, page 135, line 6, leave out “‘Secretary of State’.” and insert
“‘Gangmasters and Labour Abuse Authority or the Secretary of State’.”
This amendment would ensure that section 12(2) of the Gangmasters (Licensing) Act 2004, which makes it an offence for a person to be in possession or control of a “relevant document” that is false or has been improperly obtained with the intention of inducing someone to believe that the person has a licence under that Act, continues to apply in respect of documents issued by the Gangmasters and Labour Abuse Authority in connection with a licence before its abolition.
It is a pleasure to see you in the Chair this morning, Mr Mundell. As is customary, I refer to my declaration of interests and to the Register of Members’ Financial Interests.
The amendment is essential to upholding legal continuity and to preventing any ambiguity or loopholes in enforcement. It will ensure that provisions under the Gangmasters (Licensing) Act 2004 remain enforceable. Without the amendment, there is a risk that any improper conduct in relation to documents issued before the abolition of the Gangmasters and Labour Abuse Authority could fall outside the scope of enforcement.
Fraudulent licences have been used to exploit vulnerable workers and to mislead employers, particularly in industries such as agriculture and food processing. The amendment will strengthen deterrence against document fraud and ensure that enforcement agencies retain the tools that they need to protect workers effectively.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship once more, Mr Mundell.
As the Minister has outlined, Government amendment 183 will ensure that section 12(2) of the Gangmasters (Licensing) Act 2004, which makes it an offence for a person to be in possession or control of a relevant document that is false or has been improperly obtained with the intention of inducing someone to believe that the person has a licence under the Act, continues to apply in respect of documents issued by the Gangmasters and Labour Abuse Authority in connection with a licence before its abolition.
Clause 109 will abolish the Gangmasters and Labour Abuse Authority, a non-departmental public body that investigates reports of worker exploitation and illegal activity such as human trafficking, forced labour and illegal labour provision, as well as making offences under the National Minimum Wage Act 1998 and the Employment Agencies Act 1973. Significantly, the Gangmasters and Labour Abuse Authority also issues licences to employment agencies, labour providers or gangmasters who provide workers in the sectors of agriculture, horticulture, shellfish gathering and any associated processing or packaging. That is important work; we do not in any way, shape or form deviate from that.
The Government amendment will rightly ensure that providing false licences remains an offence, including where that was identified before the Bill receives Royal Assent and becomes an Act at some point this year, but I would like to be reassured about the work of the Gangmasters and Labour Abuse Authority in connection with the provisions of the Bill. For example, what will happen to the staff at the authority once it has been abolished? The Bill provides for the transfer of staff, property rights and liabilities to the Secretary of State. Does the Secretary of State envisage redundancies or envisage that the same staff will continue to do the same work under a different ultimate authority? Will the reorganisation lead to any disruption? I think we all accept that any change will bring with it some level of disruption, but how can the disruption be minimised?
Likewise, the amendment appears to ensure continuity with existing legislation once the Bill has passed. I will be grateful if the Minister can confirm that that is the case. If any new powers are being taken, please could they be explained?
Steve Darling (Torbay) (LD)
It is a pleasure to serve under your chairmanship, Mr Mundell. I welcome the clarity offered by the Government in the amendment.
Sir Ashley Fox (Bridgwater) (Con)
It is a pleasure to serve under your chairmanship, Mr Mundell.
The amendment will ensure that the provisions of section 12(2) of the Gangmasters (Licensing) Act 2004 remain effective even in the context of the changes proposed in the Bill. Section 12(2) will make it a criminal offence for an individual to be in possession or control of a relevant document that is false, is forged or has been improperly obtained with the intention of deceiving others into believing that the individual holds a valid licence under the Act. It is essential that that provision continues to apply to documents issued by the Gangmasters and Labour Abuse Authority before its abolition, ensuring that any fraudulent documents issued before the GLAA is dissolved can still result in prosecution. Maintaining that provision is crucial to preventing exploitation and ensuring that individuals and businesses cannot evade accountability with fraudulent documentation.
Clause 109 proposes to abolish the Gangmasters and Labour Abuse Authority, which plays a significant role in tackling issues such as labour exploitation, human trafficking and forced labour in certain sectors. The dissolution of the GLAA marks a significant shift in how those matters will be managed. Given the importance of its work, the transition raises important questions about how those responsibilities will be carried forward under the new structures set out by the Bill. The GLAA has played a vital role in regulating the labour market in high-risk industries, so the Government’s proposal to abolish it must be accompanied by a clear plan to ensure continuity of its crucial work.
The GLAA is a non-departmental public body that has been responsible for investigating and addressing serious forms of worker exploitation such as human trafficking, forced labour and illegal labour practices. Additionally, it monitors compliance with regulations under the National Minimum Wage Act and the Employment Agencies Act. By issuing licences to employment agencies, labour providers and gangmasters in high-risk sectors, including agriculture, horticulture, shellfish gathering and associated processing and packaging, the GLAA has been instrumental in safeguarding vulnerable workers and preventing exploitation.
Chris Murray (Edinburgh East and Musselburgh) (Lab)
For the four years before I was elected to this place, I worked in Scotland on combating human trafficking and labour exploitation, and I did a lot of work with the GLAA. Quite properly, the hon. Gentleman lists the industries with which it was associated, such as shellfish, agriculture and horticulture. Although the GLAA was set up to address those things, in Scotland we had only one member of staff inspecting all that coastline and all that land, and the authority was not really equipped or able to do the job that it was set up to do.
Having reflected on how the GLAA has operated and on its lack of power and capacity—that is absolutely not a comment on the ability of the staff, who are severely overworked—and given the scale of the crisis, I would argue that it is appropriate to look at how effective the GLAA is and then bolster that by putting it into a fair work agency, rather than having a very small group of people unable to deal with the task that they face. Things like labour exploitation and human trafficking have not gone down as a result of the GLAA, which tells us that we do need to revisit and restructure the organisation.
Sir Ashley Fox
The hon. Member makes a number of valuable points. The proposed removal of the GLAA raises concerns about how its important functions will be handled. It is imperative that a robust alternative structure be put in place to address those critical issues and to continue protecting workers’ rights and preventing exploitation.
The GLAA’s work is crucial in specific sectors in which workers are at a heightened risk of exploitation. They include agriculture, horticulture, shellfish gathering and the associated processing and packaging industries. Such sectors often rely on seasonal or temporary labour, which makes workers more vulnerable to abuse. The GLAA has been tasked with ensuring that employment agencies and gangmasters in those areas are properly licensed and comply with legal and ethical standards. Without a continued effective regulatory body, there is a risk that workers in those sectors could face greater vulnerability to exploitation. The amendment ensures that even after the GLAA is abolished, protections relating to fraudulent licences remain in place to help to prevent future abuses in those critical sectors.
Although the amendment will rightly ensure that the offence of providing false licences will continue, including for cases identified prior to the passage of the Bill, there remains a need for reassurance about the future of the GLAA’s core responsibilities. The work of the GLAA in investigating and responding to incidents of worker exploitation is vital. As the Bill progresses, it is crucial that there is a clear and publicly communicated plan for transferring and maintaining those functions under the new framework. The question remains of how those critical duties will be continued effectively under the new system. What mechanisms are in place to ensure that the same level of oversight and enforcement will be maintained without compromising workers’ protections?
One significant issue that arises from the abolition of the GLAA is the future of its staff. The Bill stipulates that staff, property, rights and liabilities will be transferred to the Secretary of State. However, there is a need for further clarity on the fate of staff members, who have been dedicated to the GLAA’s mission. Will there be redundancies, or will staff members be reassigned to continue their work under a new authority such as the fair work agency? In the latter case, it will be essential to understand how that transition will be managed. Will those staff members continue to do the same work, or will there be changes to their roles? Furthermore, will the reorganisation cause any disruption to the ongoing work of tackling labour exploitation and illegal labour practices? Minimising disruption in that process is crucial to ensure that there is no gap in the important regulatory and enforcement work carried out by the GLAA.
Government amendment 183 appears to be designed to ensure that existing legislation, particularly in relation to worker protections and the regulation of labour providers, continues to apply once the Bill passes. It would have been reassuring to have confirmation that the intention behind the amendment is to maintain the existing legal framework and obligations. The continuity of those provisions is critical to ensuring that workers remain protected and that the work of tackling exploitation and human trafficking continues without interruption. I would be grateful for the Minister’s confirmation that the amendment will ensure that the key elements of existing legislation remain in force.
Finally, if the Bill introduces any new powers, it is important that the need for those powers be fully explained and understood. The amendment and the Bill more broadly implement changes that could have significant implications both for employers and for their employees. It would be helpful to have clarification on whether the new powers will be used to expand the role of the Secretary of State or the fair work agency in monitoring and regulating sectors previously overseen by the GLAA. How will those new powers affect existing regulations? What safeguards will be in place to ensure that they are used appropriately and effectively?
Justin Madders
That was quite a lengthy debate for a technical amendment. This amendment to schedule 6 will ensure continuity of function, which was one of the main points that the shadow Minister and the hon. Member for Bridgwater made. We are alive to their concern that there is a hole through which provisions can fall: there are a number of amendments to make sure that there is continuity of legal force and in the ability to carry out the functions of the predecessor authorities.
Both hon. Members asked about redundancies. It is premature to talk about operational matters of that nature. The impact assessment is being carried out on the basis of the existing budgets of the relevant agencies. No reduction in staff members is anticipated, but as we move forward, efficiencies and duplications may become apparent when the agencies are merged, which may lead to other changes to the way in which matters are carried out, and those will clearly be dealt with.
There was a concern that the reorganisation could lead to disruption, which is certainly not our intention. We expect the agencies to be able to continue to carry out existing investigations—indeed, many of the amendments are being made with that in mind to ensure that continuity is preserved. I remind Opposition Members that the purpose of the fair work agency is to ensure that intelligence is shared and resources are pooled so that we can be more effective in our labour market abuse enforcement mechanisms. That has been widely supported across the entire group of stakeholders.
In terms of oversight, there will be an advisory board, reports and strategies and the Secretary of State will be answerable to Parliament for the work of the fair work agency. We will no doubt return to that on a number of occasions as the detail is fleshed out. I commend the amendments to the Committee.
Amendment 183 agreed to.
Amendments made: 102, in schedule 6, page 137, line 13, at end insert—
“(3A) In the italic heading before paragraph 10, omit “of Authority”.”
This amendment makes a minor drafting correction.
Amendment 103, in schedule 6, page 137, line 15, leave out “the heading and”.—(Justin Madders.)
This is consequential on amendment 102.
Justin Madders
I beg to move amendment 104, in schedule 6, page 140, line 26, leave out “and (4)” and insert “, (4), (8) and (9)”.
This amendment, and amendments 105 and 106, make further minor amendments of section 114B of the Police and Criminal Evidence Act 1984 as a result of the replacement of labour abuse prevention officers by enforcement officers under Part 5 of the Bill.
Justin Madders
Schedule 6 outlines consequential amendments to other legislation and will ensure consistency with the provisions introduced by the Bill. It will also ensure that our legislative framework is cohesive and functional.
The amendments will make essential technical adjustments to section 114B of the Police and Criminal Evidence Act 1984 to reflect the replacement of labour abuse prevention officers with enforcement officers, as defined in part 5 of the Bill. They will update references, revise definitions and ensure consistency between this Bill and existing legislation. The amendments will avoid confusion and ensure that our statutory framework functions effectively. I commend these minor technical amendments to the Committee.
Greg Smith
I am grateful to the Minister for explaining these further minor amendments to section 114B of the Police and Criminal Evidence Act, being made as a result of the replacement of labour abuse prevention officers with enforcement officers under part 5 of the Bill. The amendments are another consequence of centralising the different enforcement agencies that operate under the auspices of the fair work agency.
I would be grateful to have the Minister’s reassurance that all current enforcement work will still be able to be carried out to the same standard during the period of reorganisation. In the previous debate, he indicated that he did not expect disruption; I gently put it to him that that is probably on the optimistic end of the scale. No matter the good intention behind any reorganisation, or the will, endless planning and everything that goes into it from a lot of good people putting in a lot of hard work, the reality is that any reorganisation can cause disruption, either in its own right or through unexpected events.
I will give a parallel closer to home. In my constituency, Buckinghamshire unitary council was created to go live just as the pandemic was starting. Four district councils and a county council were put together at the point at which we were all sent home, so everyone was working from home and having to rise to a local authority’s duties to put in place resilience measures to support people through the pandemic.
Sir Ashley Fox
Amendments 104 to 106 propose minor but necessary changes to section 114B of the Police and Criminal Evidence Act 1984, arising from the changes introduced under part 5 of the Bill, particularly the replacement of labour abuse prevention officers by enforcement officers. The intention behind the change is to streamline and update the regulatory framework in response to the restructuring of enforcement roles. By introducing enforcement officers under the new structure, the Government aim to enhance the effectiveness of labour abuse prevention while ensuring that there is no gap in oversight and enforcement. These minor amendments are crucial to align existing legislation with the nearly structured responsibilities and authority of enforcement officers, who will now take on the duties previously held by labour abuse prevention officers.
The centralisation of enforcement agencies under the fair work agency is part of a broader effort to centralise and co-ordinate the various enforcement agencies that currently operate. By bringing the enforcement bodies together under a single umbrella, the Government aim to create a more co-ordinated, efficient and consistent approach to tackling labour abuses and ensuring that workers’ rights are upheld across different sectors. The centralisation process is designed to improve the effectiveness of enforcement and simplify the regulatory landscape for both businesses and workers, but as we move through the reorganisation period, it is essential that all enforcement activities continue to be carried out seamlessly, without any disruption or decrease in the standard of oversight. That is particularly important as the new system is put in place, as workers rely on enforcement mechanisms to protect their rights.
I seek reassurance on the continuity of enforcement standards during the reorganisation. Given the significant structural changes involved, I ask the Minister to assure me that all current enforcement work will continue to be carried out to the same high standard during the transition period. The centralisation of enforcement agencies is a significant undertaking, and it is vital that the effectiveness of enforcement operations is not compromised during the restructuring process. Workers and businesses must be confident that the protections afforded by the existing enforcement framework will remain intact, and that enforcement officers will have the tools, resources and authority that they need to address breaches of the law effectively. I would appreciate clarification on how the Government plan to ensure that no enforcement gaps occur during the reorganisation, and that current and future enforcement work will be conducted at the same high level of competence.
Justin Madders
It seems we have a little double act developing on the Opposition Front Bench. It reminds me a little bit of Waldorf and Statler, without the puns. Both the hon. Member for Mid Buckinghamshire and the hon. Member for Bridgwater sought similar and important assurances that the work of the agencies would be able to be carried out effectively during this period of transition. I note what the hon. Member for Mid Buckinghamshire mentioned about the Mid Buckinghamshire reorganisation.
Justin Madders
All of Buckinghamshire, yes—with the hon. Member right in the middle where he truly belongs. I do recall that the previous Government decided to set up the UK Health Security Agency in the middle of the pandemic, which was a challenging time to do that. It has been shown that the people doing the job day to day can continue to do it while the institutional reform carries on, making it more likely that they will be effective in carrying out their work through the sharing of resources, evidence and expertise, as well as, hopefully, a more unified approach to enforcement. Clearly, we want those doing the day-to-day work to be able to carry on doing that and a number of these amendments enable them to do that. We hope that, as the agency forms and more joint working is developed, they will become more effective.
Amendment 104 agreed to.
Amendments made: 105, in schedule 6, page 140, line 26, at end insert—
‘(4A) In subsection (10), for “Any other” substitute “A”.’
See the explanatory statement for amendment 104.
Amendment 106, in schedule 6, page 140, line 27, leave out sub-paragraph (5) and insert—
‘(5) For subsection (11) substitute—
“(11) In this section—
“enforcement officer” has the meaning given by section 72(3)
of the Employment Rights Act 2025;
“labour market offence” has the same meaning as in Part 5 of that Act (see section 112(1) of that Act).”’—(Justin Madders.)
See the explanatory statement for amendment 104.
Justin Madders
I beg to move amendment 184, in schedule 6, page 141, line 7, at end insert—
“Employment Tribunals Act 1996
70A In section 19A of the Employment Tribunals Act 1996 (conciliation: recovery of sums payable under settlements), omit subsection (10A).”
This amendment provides for a minor consequential amendment relating to Part 5 of the Bill.
Justin Madders
Schedule 6 makes consequential amendments to existing legislation to ensure consistency with the new provisions introduced by the Bill. The amendments make essential technical adjustments to the Employment Tribunals Act 1996 and the Small Business, Enterprise and Employment Act 2015, updating references and ensuring consistency between the Bill and existing legislation.
Government amendment 184 omits section 19A(10A) of the Employment Tribunals Act 1996, which makes provision for the disclosure of settlement terms to an enforcement officer appointed under section 37M of the same Act. Section 37M is repealed by the Bill, as it has been superseded by the new provisions of the Bill on the appointment of fair work agency officers. Clauses 98 and 99(1) of the Bill provide gateways for the disclosure of information to fair work agency officers. Government amendment 184 repeals section 19A(10A), as the provision is no longer required in the light of the new provisions introduced by the Bill. Government amendment 188 is consequential to Government amendment 184. The amendment prevents confusion and ensures our statutory framework continues to function effectively.
Greg Smith
For the next part of the double act —I will casually ignore the Minister’s comparison—I will speak to Government amendments 184 and 188. Amendment 184 is a minor amendment relating to part 5 of the Bill and amendment 188 is consequential on amendment 184. As the Minister said, amendment 184 removes section 19A(10A) of the Employment Tribunals Act 1996. Section 19A concerns the
“recovery of sums payable under settlements”
and subsection (10A) provides that the court may make provision as to the time within which an application to the county court for a declaration under subsection (4) is to be made. Subsection (4) states:
“A settlement sum is not recoverable under subsection (3) if—
(a) the person by whom it is payable applies for a declaration that the sum would not be recoverable from him under the general law of contract, and
(b) that declaration is made.”
Notwithstanding the Minister’s explanation, it is still not entirely clear to the Committee, or indeed to the whole House, why it is necessary to delete subsection (10A) from the Employment Tribunals Act 1996. I am sure there is a very convoluted reason for it out there somewhere, but it seems to us that the will of the Government in putting this legislation before Parliament does not need that deletion in order to function. I would be grateful if the Minister gave a fuller explanation of the need for that deletion in his summing-up.
Sir Ashley Fox
Amendment 184 proposes the removal of subsection (10A) from section 19A of the Employment Tribunals Act 1996, which deals with the recovery of sums payment under settlements, specifically addressing situations in which a party seeks a declaration from the court regarding the recoverability of a settlement sum.
Under subsection (10A), the court has the discretion to make provisions regarding the timeframe within which an application must be made to the county court for a declaration under subsection (4). Subsection (4) essentially provides that a settlement sum will not be recoverable if the person liable to pay the sum seeks a declaration from the court that, under general contract law, the sum is not recoverable from them. The removal of subsection (10A) raises important questions about the implications of the timing and procedure of such applications.
Given that the removal of subsection (10A) may have significant consequences for how significant settlement sums are handled and claims are processed in the future, will the Minister explain why this provision is being deleted? Understanding the reasoning behind the change is important for assessing its potential impact on workers and employers. Will the removal of this provision simplify the process for parties seeking a declaration regarding the recoverability of settlement sums or will it introduce new challenges or delays in the legal process? Furthermore, how will this change affect the ability of individuals to seek a fair resolution in cases where disputes over settlement sums arise? Clarification from the Minister on these points would be appreciated as it would help ensure that stakeholders fully understand the intended effects.
Justin Madders
Hopefully, I can put Opposition Members’ minds at rest about the need for the amendment. It is about simplifying the legislative framework. Section 19A(10A) of the 1996 Act is about disclosure of settlement terms to enforcement officers who are appointed under section 37M of that Act. As that is now being repealed by and superseded by the provisions in this Bill, particularly clauses 98 and 99, that provision is no longer required in the 1996 Act. That is why it is being removed; the current arrangements remain in place, but they will all be in one place, in this Bill. We hope that will provide clarity and certainty for those who wish to avail themselves of the rights and obligations under this legislation.
Amendment 184 agreed to.
Justin Madders
I beg to move amendment 185, in schedule 6, page 141, line 33, leave out from “2025)” to end of line 2 on page 142 and insert
“acting in the exercise of functions conferred on them by virtue of section 114B of the Police and Criminal Evidence Act 1984;”;”.
This amendment is consequential on amendment 186.
Justin Madders
The amendments make essential adjustments to the Employment Rights Bill ensuring that there is a process for appropriate oversight of police powers used by officers within the fair work agency. There will be a subsection of enforcement officers within the fair work agency who will be able to use police powers under the Police and Criminal Evidence Act. It is important that there is appropriate oversight of officers using these powers as part of their investigations.
This is not a new power. Currently, Labour abuse prevention officers within the Gangmasters and Labour Abuse Authority are able to use these Police and Criminal Evidence Act powers. Any complaints or allegations of misconduct are investigated by the Independent Office for Police Conduct, thereby ensuring that enforcement officers use their powers responsibly and within legal boundaries. The amendments ensure that the existing oversight arrangements with the IOPC can continue with the fair work agency on abolition of the GLAA. On that note, I hope the Committee will accept amendments 185, 186 and 187.
Greg Smith
I am grateful for the Minister’s brief explanation of Government amendments 185 to 187, which enable the Secretary of State to make regulations enabling the director general of the Independent Office for Police Conduct to deal with complaints and misconduct relating to enforcement officers who exercise police powers. Amendments 186 and 187 allow the Secretary of State to make regulations to deal with complaints. Misconduct relating to enforcement officers created by the Bill who exercise the powers in amendment 185 is consequential to amendments 186 and 187. Amendment 186 states that the Secretary of State
“may make regulations conferring functions on the Director General in relation to enforcement officers acting in the exercise of functions conferred on them by virtue of section 114B of the Police and Criminal Evidence Act 1984.”
Can the Minister provide examples of the sorts of functions it is envisaged the Secretary of State will confer by regulations and how those powers will be used? Probably more significant to this debate and to give us the full picture, will the Independent Office for Police Conduct be granted greater powers to investigate misconduct claims? Will it have additional sanctions compared to that which it is already able to impose? If so, what are they and what will be the resourcing implications for the Independent Office for Police Conduct to take on oversight of the reorganisation?
We can all accept that many elements of the public sector are incredibly stretched. Whenever any reorganisation comes about or there is a need to oversee new bodies, there will be a resource implication. No matter how well intentioned the provisions of the Bill and the three amendments are, there will be a resource implication, even if it is a minor one. It is important that the Government acknowledge that and make a clear, unambiguous commitment to the resourcing of the Independent Office for Police Conduct to take on oversight of the reorganisation and future enforcement officers and their functions.
Sir Ashley Fox
Amendments 186 and 187 propose important changes that would grant the Secretary of State the power to make regulations enabling the director general of the Independent Office for Police Conduct to handle complaints and misconduct related to enforcement officers who exercise police powers. This would involve granting the IOPC the authority to oversee complaints regarding enforcement officers as they carry out their duties, particularly when acting within the scope of the powers given to them under section 114B of the Police and Criminal Evidence Act 1984.
Amendment 185 is consequential to those changes, ensuring that the necessary legislative framework aligns with the proposed regulations. Specifically, amendment 186 outlines that the Secretary of State will have the authority to make regulations that will confer specific functions on the director general of the IOPC. Those functions would relate to enforcement officers when they exercise powers granted to them through section 114B of the 1984 Act, which provides enforcement officers with certain powers, and this amendment ensures that there are appropriate mechanisms in place to address any complaints or allegations of misconduct arising from their use of these powers.
I would be grateful if the Minister provided further clarification on the scope of these regulations. Specifically, it would be helpful to understand what types of function the Secretary of State is likely to impose on the director general of the IOPC. For instance, will the regulations specify procedures for investigating complaints, the methods of oversight, or protocols for handling disciplinary actions against enforcement officers? What types of misconduct or complaint are anticipated to fall within this framework? Moreover, how do the Government envisage the IOPC’s role evolving, with the additional responsibility for overseeing enforcement officers under these amendments?
Understanding the intended use of these powers will help stakeholders anticipate the practical effects of these changes and their potential impacts on enforcement officers’ accountability. A key concern is whether the IOPC will be granted greater powers under this proposed framework. The IOPC’s current remit covers complaints and misconduct relating to police officers, but the introduction of enforcement officers who possess police powers raises important questions about whether the IOPC will have the authority to investigate misconduct claims against those officers in a similarly robust manner. Will the IOPC be granted expanded investigatory powers to ensure that complaints involving enforcement officers are handled thoroughly and impartially?
Additionally, will the IOPC have the authority to impose sanctions on enforcement officers found to have committed misconduct? If sanctions are available, it would be useful to understand what types of action the IOPC could take, such as recommending disciplinary measures, issuing fines or referring cases for criminal prosecution.
Providing clarity on the scope of the IOPC’s powers in relation to enforcement officers will be crucial for ensuring that those officers remain accountable for their actions while exercising their police powers.
Justin Madders
I am grateful to Opposition Members for raising those questions. I can reassure them that this is not about creating new powers, either for enforcement officers or for the IOPC. It is about transferring the existing responsibility that the IOPC has for designated officers with police-style powers to the fair work agency. The discussions have been on the basis that there would not be any additional resource implications for the IOPC. Obviously, if that were to change in due course, when the fair work agency is under way, there would be discussions about that. It is simply about the existing powers under section 114B of the Police and Criminal Evidence Act being applicable to the enforcement officers of the fair work agency on exactly the same basis as they are now. I hope that that has put Opposition Members’ minds at rest. On that note, I commend the amendments to the Committee. ‘Employment Rights Act 2025 section 90 labour market enforcement order labour market offence within the meaning of Part 5 of that Act.’”
Amendment 185 agreed to.
Amendments made: 187, in schedule 6, page 142, line 3, after “(3)” insert “—
(i) after paragraph (bc) insert—
‘(bca) any regulations under section 26CA of this Act (enforcement officers appointed under Employment Rights Act 2025);’;
(ii)”.
See the explanatory statement for amendment 186.
Amendment 186, in schedule 6, page 142, line 3, at end insert—
“(2A) After section 26C insert—
‘26CA Enforcement officers appointed under Employment Rights Act 2025
(1) The Secretary of State may make regulations conferring functions on the Director General in relation to enforcement officers acting in the exercise of functions conferred on them by virtue of section 114B of the Police and Criminal Evidence Act 1984.
(2) In this section “enforcement officer” means a person appointed by the Secretary of State under section 72 of the Employment Rights Act 2025.
(3) Regulations under this section may, in particular—
(a) apply (with or without modifications), or make provision similar to, any provision of or made under this Part;
(b) make provision for payment by the Secretary of State to, or in respect of, the Office or in respect of the Director General.
(4) The Director General and the Parliamentary Commissioner for Administration may jointly investigate a matter in relation to which—
(a) the Director General has functions by virtue of this section, and
(b) the Parliamentary Commissioner for Administration has functions by virtue of the Parliamentary Commissioner Act 1967.
(5) The Secretary of State or an enforcement officer may disclose information to the Director General, or to a person acting on the Director General’s behalf, for the purposes of the exercise by the Director General, or by any person acting on the Director General’s behalf, of a relevant complaints function.
(6) The Director General and the Parliamentary Commissioner for Administration may disclose information to each other for the purposes of the exercise of a function—
(a) by virtue of this section, or
(b) under the Parliamentary Commissioner Act 1967.
(7) Regulations under this section may, in particular, make—
(a) further provision about the disclosure of information under subsection (5) or (6);
(b) provision about the further disclosure of information that has been so disclosed.
(8) A disclosure of information authorised by this section does not breach—
(a) any obligation of confidence owed by the person making the disclosure, or
(b) any other restriction on the disclosure of information (however imposed).
(9) But this section does not authorise a disclosure of information that—
(a) would contravene the data protection legislation (but in determining whether a disclosure would do so, the power conferred by this section is to be taken into account), or
(b) is prohibited by any of Parts 1 to 7 or Chapter 1 of Part 9 of the Investigatory Powers Act 2016.
(10) In this section—
“the data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act);
“relevant complaints function” means a function in relation to the exercise of functions by enforcement officers.’”
This amendment and amendment 187 would enable the Secretary of State to make regulations enabling the Director General of the Independent Office for Police Conduct to deal with complaints and misconduct relating to enforcement officers who are exercising police powers.
Amendment 188, in schedule 6, page 143, line 19, leave out “subsection” and insert “subsections (4) and”.
This amendment is consequential on amendment 184.
Amendment 189, in schedule 6, page 144, line 10, at end insert—
“Sentencing Act 2020
92A In section 379(1) of the Sentencing Act 2020 (other behaviour orders etc), after the entry for the Northern Ireland Troubles (Legacy and Reconciliation) Act 2023 insert—
—(Justin Madders.)
This amendment makes a consequential amendment to the Sentencing Act 2020 to include labour market enforcement orders in the list of orders that may be made on conviction by a criminal court but are not dealt with in that Act.
Justin Madders
I beg to move amendment 190, in schedule 6, page 144, line 10, at end insert—
“Police, Crime, Sentencing and Courts Act 2022
92B In Part 2 of Schedule 3 to the Police, Crime, Sentencing and Courts Act 2022 (extraction of information from electronic devices: authorised persons in relation to all purposes within section 37), after the entry relating to section 15 of the Gangmasters (Licensing) Act 2004 insert—
‘A person who is an enforcement officer for the purposes of Part 5 of the Employment Rights Act 2025.’”
This amendment would authorise enforcement officers under Part 5 of the Bill to exercise the powers conferred by section 37 of the Police, Crime, Sentencing and Courts Act 2022 to extract information stored on electronic devices for the purposes of, among other things, criminal investigations.
Government amendment 190 is another technical amendment to ensure continuity and effectiveness of the enforcement power under section 37 of the Police, Crime, Sentencing and Courts Act 2022. The Bill provides the building blocks for us to set up the fair work agency, which involves transferring enforcement functions that are currently split between multiple bodies, including the Gangmasters and Labour Abuse Authority. The GLAA office currently exercises its power across the UK under section 37 of the 2022 Act. Without this amendment, enforcement officers in England, Wales and Scotland would not have access to critical investigatory powers under that Act. Only officers enforcing the Gangmasters (Licensing) Act 2004 in Northern Ireland would retain those powers, creating an unjustifiable enforcement gap.
Investigations increasingly rely on access to electronic data, such as payroll records and communication logs. Excluding fair work agency officers from these powers would severely hinder their ability to obtain critical information, leaving them ill-equipped to tackle non-compliance and labour exploitation effectively.
The amendment ensures that enforcement powers remain consistent across England, Wales, Scotland and Northern Ireland, aligning with the policy aim of the fair work agency to deliver robust and uniform enforcement. Fair work agency officers would exercise the section 37 power in relation to labour market offences. That expands the scope of the power, as currently the power is exercised by GLAA officers only in connection with enforcement of the 2004 Act.
This amendment would mean that the power is used by fair work agency officers to enforce the broader range of legislation under their remit, which means that the power could be exercised in relation to any labour market offence, instead of just offences under the 2004 Act. That will prevent any disparity in enforcement capabilities that could undermine efforts to protect vulnerable workers and uphold compliance.
This amendment corrects a minor technical oversight during the drafting process, ensuring that the legislation accurately reflects operational needs. It aligns with the overarching policy intention to ensure that there is no reduction in enforcement capability as enforcement bodies transfer into the fair work agency, and it directly addresses concerns and strengthens the Bill’s overall effectiveness. In conclusion, this amendment is essential to prevent enforcement gaps, ensure parity across jurisdictions, and equip enforcement officers with the tools that they need to combat exploitation in the modern economy.
Greg Smith
As the Minister outlined in his opening remarks, Government amendment 190 would authorise enforcement officers, under part 5 of the Bill, to exercise the powers conferred by section 37 of the Police, Crime, Sentencing and Courts Act 2022 to extract information stored on electronic devices for the purposes of, among other things, criminal investigations.
As I understand it, the power conferred by section 37 of the 2022 Act may be exercised only for the purposes of preventing, detecting, investigating or prosecuting crime; helping to locate a missing person; or protecting a child or at-risk adult from neglect or physical, mental or emotional harm. How often does the Minister envisage that that power would be needed when enforcing employment law?
It is a very important power in the cases that I have outlined—not least for the critical work of protecting children and at-risk adults from neglect or physical, mental or emotional harm—but, I repeat, how often does the Minister envisage that it will be needed in employment law? What safeguards will be in place to prevent an inappropriate or intrusive use of the power? It seems an odd fit in this Bill.
Those matters are all rightly—I have double underlined that word—covered in other parts of legislation and enforced daily by the police and other agencies. His Majesty’s loyal Opposition salute everyone involved in the prevention of harm and the prosecution of its perpetrators, but I repeat that the power seems an odd fit with this Bill.
Nick Timothy (West Suffolk) (Con)
Government amendment 190 seeks to amend the Police, Crime, Sentencing and Courts Act 2022 by extending the powers conferred by section 37 of that Act to enforcement officers for the purposes of part 5 of this Bill. Section 37 of the 2022 Act allows the authorities to extract information shared on electronic devices for the purposes, among other things, of criminal investigations. I have some familiarity with these issues from my time working with the police, security and intelligence agencies and other public bodies with investigatory responsibilities when I worked in the Home Office between 2010 and 2015. Then, we were confronted with the danger that changing technology meant that the ability of these important public agencies to access the communications data necessary for their work was diminishing. That was because the nature of the way we communicate was changing from conventional phone calls and written material to internet-based communication. That obviously included methods such as messaging services like WhatsApp and Signal but also messaging within other apps like Facebook or even within online gaming systems.
Sir Ashley Fox
The amendment would grant enforcement officers, under part 5 of the Bill, the authority to exercise the powers outlined in section 37 of the Police, Crime, Sentencing and Courts Act 2022. Specifically, it would enable those officers to extract information from electronic devices in certain circumstances. Of course, everyone now carries one of those electronic devices.
The amendment is designed to support enforcement officers in carrying out their duties, including the investigation and enforcement of employment laws, particularly in cases that may involve criminal activities, such as exploitation, trafficking or financial misconduct. The ability to access electronic devices and retrieve relevant data will aid in gathering evidence and conducting thorough investigations, especially when digital evidence is critical to uncovering illegal practices.
To clarify the scope of that power, section 37 of the 2022 Act limits the use of the power to specific purposes. The powers can be exercised for the following objectives: preventing crime, which could include investigating cases of worker exploitation, trafficking or other forms of criminal behaviour related to employment law; detecting criminal activity, such as fraudulent schemes or illegal practices by employers; investigating crimes, especially where there is a digital trail or evidence related to labour abuse, fraud or similar issues that could be crucial to the case; prosecuting crime and ensuring that the evidence gathered can be used in legal proceedings to hold perpetrators accountable; locating missing persons, which could be relevant in situations involving forced labour or human trafficking; and protecting vulnerable individuals, such as children or at-risk adults, from harm, including neglect or physical, mental or emotional abuse in the workplace.
Those strict conditions are in place to ensure that the powers are used appropriately and only when there is a legitimate and necessary reason to extract information from electronic devices. While that power can be extremely valuable in investigating serious crimes, it is important to consider how often such powers will be needed when enforcing employment law specifically. The nature of employment law enforcement does not always require the same level of investigation into criminal activities as, for example, police work or national security investigations. Thus, I would appreciate an insight from the Minister regarding the frequency with which the power is likely to be used in the enforcement of employment laws. Is the power expected to be a routine tool, or will it be reserved for exceptional circumstances where there is significant evidence suggesting the need for such an intrusive measure?
Additionally, it is crucial to ensure that safeguards are in place to prevent any inappropriate or intrusive use of the power. Given the sensitivity of extracting data from electronic devices, there is a need for strict guidelines and oversight to ensure that the power is not abused. How will the Government ensure that the power is used proportionately and responsibly? What measures will be put in place to prevent overreach and protect the privacy of individuals who are not involved in criminal activity? For example, will there be a requirement for judicial authorisation before enforcement officers can access private data? Will there be any independent oversight to review the use of these powers and prevent misuse?
I would be grateful if the Minister outlined the safeguards and controls that will be implemented to ensure that the power is not used excessively or for purposes outside its intended scope. Furthermore, what will the procedures be for ensuring accountability and transparency in the use of this power?
Justin Madders
The shadow Minister and the hon. Member for Bridgwater asked me the “how long is a piece of string?” question—that is, how often the powers will be used. The best thing I can do is to come back to both of them with how often they have been used in recent times because, of course, there is an existing power with the Gangmasters and Labour Abuse Authority.
I was asked various questions about the use of powers, oversight and so on. Clauses 78 and 79 set out the powers that officers have. As we have discussed, we expect that these things will be the culmination of an ongoing dialogue between a particular business and the fair work agency. When there is non-compliance, these powers can be used as a last resort. Clause 83 sets out some of the oversight provisions.
Nick Timothy
Government amendment 190 is about the powers in section 37 of the Police, Crime, Sentencing and Courts Act 2022, which relate to the voluntary provision of a device for an enforcement officer to access. If there is not agreement, I am not sure what arises. The Minister just said that the proposal is about dealing with a situation whereby a negotiation between the fair work agency and the company has not led to a resolution. What happens if there is not agreement?
Justin Madders
As I said, if there is not agreement, the provisions in clauses 78, 79 and 83, which we debated last week, will come into play.
On the existing framework, the powers that we have set out are already in use. The Bill will make them available to all enforcement officers. They will be used only by people who have sufficient training and oversight within the organisation.
I was asked whether the code of practice will be updated. We are engaging with the Home Office on that. That is something that needs to be considered, given that the agency is being formed.
The hon. Member for West Suffolk was right to ask about proportionality. We do not see that there will be any change in how the system works on an operational basis as a result of these amendments. They really are about transposing the existing powers and safeguards into the Bill.
Amendment 190 agreed to.
Question proposed, That the schedule, as amended, be the Sixth schedule to the Bill.
Justin Madders
Part 5 of the Bill lays the groundwork for the creation of the fair work agency. It involves abolishing the Gangmasters and Labour Abuse Authority and the Director of Labour Market Enforcement, and transferring their functions to the Secretary of State.
Schedule 6 sets out consequential amendments that we are making to various Acts of Parliament as a result of these reforms. Part 1 of the schedule covers the consequential amendments to existing powers under relevant pieces of labour market legislation. Part 2 sets out the changes required to other Acts. The schedule is necessary to deliver a functioning and cohesive statute book and to deliver the policy intention of upgrading enforcement of workers’ rights.
Greg Smith
Through this morning’s debate on the 10 Government amendments to schedule 6, most of the points about the schedule have been well aired. As we consider whether it should fully stand part of the Bill, however, I genuinely believe that a number of questions posed—in particular by my hon. Friends the Members for West Suffolk and for Bridgwater—on the practicalities of the transfer of some of the powers have not been adequately addressed during the debate by the Minister.
We do not challenge or seek to undermine in any way, shape or form the intention of the schedule. I appreciate the Minister’s willingness to write to me on a couple of the points I made, and I accept the good faith in which that offer was made, but any transition involves some disruption. That is simply a fact of life, and I think that the Government would do well, given the good intent of what the schedule seeks to do, to reassure not just the Committee, but the whole House and the country at large, that that disruption will in fact be minimised and practical steps taken to make that the case.
Fundamentally, however, His Majesty’s loyal Opposition understand and accept the necessity of the schedule. We just think that some unanswered questions remain.
Steve Darling
I echo the shadow Minister, who sits to my right—in more ways than one. Definitely, further clarity from the Minister would be welcome.
Justin Madders
I understand what the Opposition Members are saying. They seek reassurance that there will be no disruption to the good work that goes on already, and clearly, that is our intent. We will keep a close eye on how this works when the Bill has passed and received Royal Assent. A lot of the operational questions that have been asked will emerge during that time. Whether the hon. Member for Mid Buckinghamshire remains my shadow—either of us could of course be moved on at any point—it would be perfectly reasonable for us to keep the Opposition updated on operational decisions and how the fair work agency emerges. There will of course be further parliamentary opportunities for scrutiny as more detail emerges.
Question put and agreed to.
Schedule 6, as amended, accordingly agreed to.
Schedule 7
Transitional and saving provision relating to Part 5
Justin Madders
I beg to move amendment 191, in schedule 7, page 146, line 19, after “by” insert “or in relation to”.
This amendment and amendment 192 ensure that things done in relation to existing enforcement officers, for example, before the coming into force of Part 5 of the Bill continue to have effect as if done in relation to the Secretary of State.
The Chair
With this it will be convenient to discuss Government amendments 192, 197 and 200.
Justin Madders
The schedule sets out transitional and savings provisions. It ensures a smooth changeover from the existing enforcement framework to the new provisions introduced by the Bill. That is of course important because it makes our legislative framework cohesive and functional.
Government amendment 191 is a necessary technical provision to ensure that the transition of enforcement responsibilities under part 5 of the Bill is well ordered. By clarifying that actions taken not just “by” but “in relation” to enforcement officers will continue to have effect as if done in relation to the Secretary of State, we are safeguarding a continuity in enforcement processes and ensuring no disruption to ongoing cases or decisions, which I am sure Members will be relieved to hear.
Government amendment 192 makes a consequential change to align with Government amendment 191, and Government amendments 197 and 200 make minor drafting changes in schedule 7. They do not affect the substance of the Bill, but they improve its clarity and accuracy. I hope that hon. Members will support what I imagine are uncontroversial amendments and support achieving the aim of ensuring continuity and cohesiveness as we move forward. On that note, I commend the amendments to the Committee.
Greg Smith
Government amendments 191 and 192 ensure that things done “in relation to” existing enforcement officers—for example, before part 5 of the Bill comes into force—continue to have effect as if done “in relation to” the Secretary of State. I fully accept that Government amendments 197 and 200 make minor drafting changes, which look as though they ensure legal continuity—that would be the case, based on the Minister’s opening remarks—and therefore seem sensible, given the policy direction.
I can conclude my comments on the amendments only by asking the usual question, which I have asked many times in Committee and fear I will ask a few more times during the debate over the remainder of today, Thursday and next Tuesday: should the amendments have been included in the Bill on its introduction? This is yet another example of why it is foolish to rush anything, particularly getting a Bill out in 100 days and its consideration in Committee.
Sir Ashley Fox
Government amendments 191 and 192 are designed to ensure legal continuity for actions and decisions made regarding existing enforcement officers prior to the implementation of part 5 of the Bill. They stipulate that any actions or procedures carried out “in relation to” enforcement officers before the new provisions come into force, such as appointments, disciplinary actions or administrative functions, will continue to have the same legal effect as if they had been made “in relation to” the Secretary of State. That is important, because it prevents any disruption or confusion in the legal standing of prior actions, ensuring that they are not rendered ineffective by the changes introduced by the Bill. Essentially, the amendments provide a mechanism to ensure that the transition to the new legal framework does not invalidate or interfere with prior administrative or operational activities.
The rationale behind the amendments is straightforward: it is legal continuity. As enforcement officers are brought under a new regulatory framework, it is crucial that past actions related to their roles, such as those conducted before the Bill takes effect, are preserved and do not need to be revisited or re-executed under the new provisions. That ensures that there is no disruption in the functioning of enforcement operations and that any ongoing matters involving enforcement officers continue seamlessly under the authority of the Secretary of State. The amendments clarify that past decisions and procedures will be treated as if they were made under the authority of the new system, which will help to avoid any potential legal challenges or confusion.
Amendments 197 and 200 involve relatively minor drafting changes. Although the specifics of those changes may not substantially alter the substance of the Bill, they are important for clarity, consistency and precision in the text. These types of amendments typically address technical issues, such as language inconsistencies, ambiguities or minor adjustments to improve the readability and legal accuracy of the provisions. Although they do not represent major shifts in policy, such amendments are crucial in ensuring that the Bill’s provisions are clear, unambiguous and legally sound. Even small drafting changes play an important role in improving the overall functionality and effectiveness of the legislation.
Amendments 197 and 200 help to fine-tune the Bill’s language, ensuring that there are no interpretive uncertainties that could arise during its application. By addressing potential issues in the drafting, the amendments help to streamline the implementation process and reduce the risk of legal challenges or confusion in future interpretations of the law.
Taken together, the amendments—particularly amendments 191 and 192—help to ensure that there is no legal disruption when the provisions in part 5 of the Bill come into effect. That is an essential part of the legislative process, as it guarantees that previous actions remain valid and that transition to a new regulatory framework is smooth. In addition, the minor drafting changes provided by amendments 197 and 200 contribute to legal clarity, ensuring that the Bill’s language is precise and consistent, which will help to avoid any future complications in the application of the law.
Although these changes are reasonable and sensible, in the light of the Bill’s policy objectives, it is worth noting that they should ideally have been included at the time of the Bill’s introduction. The legal continuity ensured by amendments 191 and 192, as well as the technical refinements in amendments 197 and 200, could have been addressed earlier in the drafting process, to ensure that the Bill was as comprehensive and clear as possible from the outset. None the less, these changes at this stage still serve to enhance the legal robustness and practical application of the Bill, which will ultimately contribute to more effective enforcement and smoother implementation.
Justin Madders
I think both Opposition Members who spoke were supportive of the amendments, although they raised legitimate questions about why they were necessary. As the shadow Minister pointed out, we had an ambitious timetable—a manifesto commitment—to issue the Bill within 100 days. Even when Bills are many years in gestation, there are often amendments in Committee to clarify issues, and to ensure that the Bill does what it says on the tin and is legally coherent. These amendments are an example of that process. I am sure Members appreciate how important it is that the amendments are passed, so that we can ensure that everything carries on and is as effective as possible.
Amendment 191 agreed to.
Amendment made: 192, in schedule 7, page 146, line 24, after “by” insert “or in relation to”.—(Justin Madders.)
See the explanatory statement for amendment 191.
Justin Madders
I beg to move amendment 193, schedule 7, page 147, line 2, at end insert—
“( ) an officer acting for the purposes of Part 2A of the Employment Tribunals Act 1996;”
The effect of this amendment is that the transitional provision in paragraph 6 of Schedule 7 to the Bill would apply in relation to officers acting for the purposes of Part 2A of the Employment Tribunals Act 1996 (which relates to the enforcement of employment tribunal awards). The functions of such officers are being transferred to the Secretary of State by the Bill.
Justin Madders
Government amendment 193 makes transitional provision in relation to the transfer of functions of officers acting for the purposes of part 2A of the Employment Tribunals Act 1996 to the Secretary of State. That transitional provision will ensure that anything done by those officers acting for the purposes of part 2A of that Act, relating to enforcement of financial awards by employment tribunals, will continue to have effect. As such, the amendment allows for the continuity of enforcing employment rights once the Bill has passed.
Amendment 194 facilitates a minor drafting change as a consequence of Government amendment 195. Amendment 195 ensures that officers of the Gangmasters and Labour Abuse Authority, acting under any enactment other than the Gangmasters (Licensing) Act 2004, are within the scope of schedule 7. That ensures that things done by them before commencement of the Bill continue to have effect after commencement. I am sure hon. Members will appreciate that the effect of the amendments is solely to ensure that the legislation is clear and unambiguous and that any activity will continue on that basis.
Greg Smith
Government amendment 193 ensures that the transitional provision in paragraph 6 of schedule 7 would apply in relation to officers acting for the purposes of part 2A of the Employment Tribunals Act 1996, which relates to the enforcement of employment tribunal awards. The function of such officers is being transferred to the Secretary of State by the Bill. Amendments 194 and 195 are similar to some of the amendments in the previous group—I fully accept that these are minor drafting changes.
Overall, the changes introduced by this group look as though they ensure legal continuity so that the fair work agency can act as the enforcement authority. That seems sensible, given the policy direction behind the Employment Rights Bill that has been outlined by the Minister and the wider Government. However, I ask again for updates on ensuring the effectiveness of the enforcement of employment law during the period of transition, and about the processes that will be put in place to minimise disruption for businesses, which we have spoken about at length earlier, and to ensure effective enforcement. Again, it is hard to envisage why this set of amendments were not considered at first publication of the Bill; they seem entirely sensible, but it is a mystery why they were lacking the first time round.
Sir Ashley Fox
Amendment 193 addresses the need for a seamless transition in the enforcement of employment tribunal awards. It specifically ensures that the transitional provision in paragraph 6 of schedule 7 to the Bill will apply to officers acting under part 2A of the 1996 Act, which governs the enforcement of employment tribunal awards. This is an important step as the enforcement of the tribunal awards will now fall under the responsibility of the Secretary of State, as stipulated in the Bill. By making the provision, the amendment ensures that the functions previously handled by officers enforcing tribunal awards will continue smoothly during the transition, even as the legal authority for enforcement shifts.
The inclusion of the amendment is crucial for legal continuity. It guarantees that actions taken by officers acting under the 1996 Act will still have legal effect even as their functions are transferred to the Secretary of State and the fair work agency. The amendment essentially ensures that any ongoing enforcement activities related to employment tribunal awards remain valid, preventing legal confusion or disruption during the reorganisation. It also ensures that the change in responsibility from individual enforcement officers to the Secretary of State does not cause any delay or interruption in enforcement actions. This will help to maintain confidence in the process, both for workers seeking to enforce their tribunal awards and businesses affected by these decisions.
Justin Madders
Opposition Members raise the same point as before about why we have had to introduce this amendment now. I refer the shadow Minister to my previous comments on that matter; no doubt I may do so again.
Both Opposition Members have rightly raised the concern about ensuring continuity when the body is instigated. Clearly, what we would expect and hope is that the day-to-day operations of enforcement officers on the ground are not impinged or affected by the creation of the agency. The Bill and a number of amendments are about ensuring that their functions continue smoothly.
Amendment 193 agreed to.
Amendments made: 194, in schedule 7, page 147, leave out line 6.
See the explanatory statement for amendment 195.
Amendment 195, in schedule 7, page 147, line 11, at end insert—
“( ) an officer of the Gangmasters and Labour Abuse Authority acting for the purposes of any other enactment.”—(Justin Madders.)
This amendment and amendment 194 make a minor drafting change.
Justin Madders
I beg to move amendment 196, in schedule 7, page 147, line 11, at end insert—
“(4A) Sub-paragraphs (1) to (3) are subject to the remaining provisions of this Schedule (and see also section 114, which confers power to make transitional or saving provision).”
This amendment makes it clear that the general provision in paragraph 6 of Schedule 7 is subject to any more specific provision in that Schedule.
Justin Madders
Amendment 196 will ensure that there is a smooth transition in the frameworks. Amendment 198 is a transitional provision ensuring that anything done by a labour abuse prevention officer before the abolition of the GLAA continues to have effect as if done under the fair work agency. Amendment 199 is another transitional provision for warrants that have been granted under the Gangmasters (Licensing) Act 2004, but not yet executed. It allows those warrants to have the same effect as before. It is a continuation of the amendments we have debated this morning, ensuring that enforcement officers have continuity when delivering their functions.
Greg Smith
Amendment 196 makes it clear that the general provision in paragraph 6 of schedule 7 is subject to any more specific provision in that schedule. Amendment 198 makes transitional provision to ensure that things done by or in relation to labour abuse prevention officers before the abolition of the Gangmasters and Labour Abuse Authority continue to have effect as if done by or in relation to enforcement officers granted the equivalent powers under section 114B of the Police and Criminal Evidence Act 1984.
Amendment 199 makes transitional provision in relation to warrants under section 17 of the Gangmasters (Licensing) Act, which is being re-enacted for England, Wales and Scotland, with some changes, through clause 83. In particular, proposed new paragraph 7C of schedule 7 of the Bill provides that, where a warrant issued under section 17 of the 2004 Act has not yet been executed, the warrant is treated as if issued under clause 83, but any changes introduced by the Bill that would not have applied if the warrant had been executed under section 17 —in particular the additional requirements in part 3 of new schedule 1—are disapplied.
On the face of it, these are sensible amendments to make sure that nothing falls through the cracks as enforcement functions transfer to the fair work agency. A number of Government amendments of this nature have been considered by the Committee. This set of amendments therefore leaves me slightly nervous, not about the intention, but about whether anything else has been missed. I would appreciate the Minister’s reassurance on that point.
Sir Ashley Fox
Amendment 196 seeks to clarify the applicability of general and specific provisions and the relationship between the general provision outlined in paragraph 6 of schedule 7 and any more specific provision within that schedule. The amendment ensures that, in the event of a conflict or overlap between general and specific provisions, the more detailed or specific provisions will take precedence. This is an important measure for maintaining legal clarity and consistency in the application of the Bill. By prioritising specific provisions where applicable, the amendment prevents any unintended gaps or inconsistencies in the legal framework, ensuring that enforcement activities and related actions are governed by the most precise and relevant rules.
Amendment 198 introduces a transitional provision designed to ensure that actions taken by or in relation to labour abuse prevention officers prior to the abolition of the Gangmasters and Labour Abuse Authority will continue to be recognised as valid. Specifically, it ensures that any activities, decisions or functions performed by those officers before the GLAA’s dissolution will have the same legal effect as if they had been carried out by or in relation to enforcement officers who have been granted equivalent powers under section 114B of the Police and Criminal Evidence Act 1984. This is critical because it provides a seamless transition as enforcement responsibilities are transferred, making certain that actions taken by the GLAA’s officers before the abolition of the agency are not rendered void or ineffective.
The amendment is vital for legal continuity. It guarantees that there will be no disruption in enforcement activities during the transition period. Officers who previously worked under the authority of the GLAA, particularly those involved in tackling labour abuse, will carry out their roles without interruption, as their actions will be treated as if undertaken by enforcement officers with the equivalent legal powers. The measure strengthens the overall framework for worker protection and labour abuse prevention, ensuring that the enforcement of relevant laws continues smoothly as the responsibility shifts to new authorities.
Amendment 199 focuses on the transitional provision for warrants issued under section 17 of the 2004 Act, which is being re-enacted in a revised form as clause 83 of the Bill. The amendment introduces new paragraph 7C, which addresses the scenario where a warrant issued under section 17 has not yet been executed at the time of the change. In such cases, the warrant will be treated as if it were issued under the new provisions in clause 83, but with a critical distinction. Any changes introduced by the Bill that would not have applied under section 17, such as the additional requirements in part three of new schedule 1, will be disapplied.
The purpose of the amendment is to ensure that any ongoing enforcement actions involving warrants issued under the old regime are not hindered or invalidated by the transition to the new framework. By allowing the warrants to be treated as though they were issued under the new clause, the amendment facilitates a smoother enforcement process and reduces the risk of legal challenges or procedural delays. This is an important safeguard for the enforcement of labour laws and ensures that the power to execute warrants continues without disruption, regardless of the legislative changes.
Justin Madders
I sense that the Opposition Members are supportive of the amendments. The shadow Minister challenged me on whether there will be any more minor or consequential amendments. I cannot give him an absolute guarantee on that; it is always an iterative process when Bills are issued; we take notice of what stakeholders say in their feedback, as well as other Government Departments. Of course, it is important that we get these things done before the Bill becomes law, by which time it is too late. I hope the Committee is reassured that there is an ongoing process to ensure that there is certainty and coherence in the legislation as we prepare for Report.
Amendment 196 agreed to.
Amendments made: 197, in schedule 7, page 147, line 25, after “repeal” insert “of that provision”.
This amendment makes a minor drafting change.
Amendment 198, in schedule 7, page 147, line 27, at end insert—
“Labour abuse prevention officers
7A (1) Anything which—
(a) was done by or in relation to a labour abuse prevention officer in, or in connection with, the exercise of a function conferred on the officer by virtue of section 114B of the Police and Criminal Evidence Act 1984 (“PACE”), and
(b) is in effect immediately before the day on which paragraph 67 of Schedule 6 comes into force (“the relevant day”),
has effect, on and after that day, as if done by or in relation to a relevant enforcement officer.
(2) Anything which—
(a) relates to a function conferred on a labour abuse prevention officer by virtue of section 114B of PACE, and
(b) immediately before the relevant day, is in the process of being done by or in relation to such an officer,
may be continued, on and after that day, by or in relation to a relevant enforcement officer.
(3) In this paragraph—
“labour abuse prevention officer” has the meaning given by section 114B of PACE (as that section had effect immediately before the relevant day);
“relevant enforcement officer” , in relation to a function conferred by virtue of section 114B of PACE, means an enforcement officer on whom that function is conferred by virtue of that section (as it has effect on and after the relevant day).”
This amendment makes transitional provision to ensure that things done by or in relation to labour abuse prevention officers before the abolition of the Gangmasters and Labour Abuse Authority continue to have effect as if done by or in relation to enforcement officers granted the equivalent powers under the Police and Criminal Evidence Act 1984 by virtue of section 114B of that Act.
Amendment 199, in schedule 7, page 147, line 27, at end insert—
“Warrants
7B (1) This paragraph applies to an application for a warrant under section 17 of the Gangmasters (Licensing) Act 2004 (“the 2004 Act”) which—
(a) is made in England and Wales or Scotland before the day on which paragraph 42 of Schedule 6 comes into force, and
(b) is not determined or withdrawn before that day.
(2) The application is to be treated, on and after that day, as an application made by an enforcement officer for a warrant under section 83 of this Act.
7C (1) This paragraph applies to a warrant under section 17 of the 2004 Act which—
(a) is issued under that section before the day on which paragraph 42 of Schedule 6 comes into force, and
(b) is not executed before that day.
(2) The warrant is to be treated for the purposes of section 83 of this Act as if it had been issued under that section.
(3) That section applies in relation to the warrant as if—
(a) in subsection (4)(a) , after “bring” there were inserted “any persons or”, and
(b) after subsection (4) there were inserted—
“(4A)On leaving any premises which an enforcement officer is authorised to enter by a warrant under this section, the officer must, if the premises are unoccupied or the occupier is temporarily absent, leave the premises as effectively secured against trespassers as the officer found them.”
(4) Section (Warrants) and Schedule (Warrants under Part 5: further provision) do not apply in relation to the warrant.”
This amendment makes transitional provision in relation to warrants under section 17 of the Gangmasters (Licensing) Act 2004, which is being re-enacted for England and Wales and Scotland (with some changes) as clause 83. In particular, new paragraph 7C provides that, where a warrant issued under section 17 has not yet been executed, the warrant is treated as if issued under clause 83, but any changes introduced by the Bill which would not have applied if the warrant had been executed under section 17 (in particular, the additional requirements in Part 3 of NS1) are disapplied.
Amendment 200, in schedule 7, page 147, line 40, leave out “that person” and insert “the enforcing authority”.—(Justin Madders.)
This amendment makes a minor drafting change.
Justin Madders
I beg to move amendment 201, in schedule 7, page 148, line 16, at end insert—
“8A “(1) This paragraph applies to information which—
(a) was obtained in the course of—
(i) exercising the powers conferred by section 9 of the Employment Agencies Act 1973 (“the 1973 Act”), or
(ii) exercising powers by virtue of section 26(1) of the Immigration Act 2016, and
(b) immediately before the coming into force of paragraph 2 of Schedule 6, is held by an officer acting for the purposes of the 1973 Act.
(2) On the coming into force of that paragraph, information to which this paragraph applies vests in the Secretary of State.”
See the explanatory statement for Amendment 202.
Justin Madders
Existing enforcement bodies will have obtained information prior to the creation of the fair work agency. This information may be needed by the Secretary of State once part 5 of the Bill comes into force. Schedule 7 therefore provides for transitional and saving provisions to enable that. Amendments 201 and 202 provide that information obtained by officers acting under existing legislation prior to the coming into force of part 5 of the Bill, and which is held by the Secretary of State, can be used or disclosed in accordance with clause 98.
Greg Smith
Amendments 201 and 202 provide that information that was obtained before the coming into force of part 5 of the Bill by officers acting under existing legislation and is held by the Secretary of State can be used or disclosed by the Secretary of State in accordance with clause 98. These are sensible amendments on the face of it, to make sure nothing falls through the cracks as the enforcement functions transfer to the fair work agency—very similar to the previous set of amendments that we have just considered. It is part of a continuing theme of amendments of this nature that we as a Committee are being asked to consider.
I heard the Minister’s response to the previous debate about this being an iterative process and about the need to listen and best understand concerns or practical points raised by those being asked to prepare for and ultimately do this work. It remains a legitimate point of nervousness that there will be more such cracks that need repairing as part of this Bill. Accepting the Minister’s good faith in his explanation on the previous set of amendments, I put on record that we remain a little nervous that more cracks will need that legislative repair as the Bill goes forward.
We urge the Government to get on at pace with the conversations necessary to ensure that they have best understood where any further edits may be required—preferably before Report stage in the House of Commons, but if it does have to bleed into the time when the Bill goes to the other place, so be it. However, I think it would a far more satisfactory position if we were able to consider at our end of the building any further amendments that may be required before we ask their lordships to consider the Bill.
Sir Ashley Fox
Government amendments 201 and 202 are designed to address a key aspect of the transition process under the Bill. Specifically, they are designed such that any information that was obtained prior to the coming into force of part 5 of the Bill by officers operating under existing legislation and is currently held by the Secretary of State, can still be used or disclosed in accordance with the provisions outlined in clause 98 of the Bill.
That is crucial because, as enforcement functions transfer to the fair work agency, there needs to be continuity in how information is handled. By allowing the Secretary of State to continue using and disclosing this information under the new framework, the amendments ensure that no critical data or intelligence gathered under the previous system is lost or becomes unusable during the transition.
This provision is particularly important for maintaining continuity in enforcement activities. The information collected by officers acting under earlier laws may be vital for ongoing investigations or enforcement actions. For instance, data about businesses that are non-compliant with labour laws, or evidence of potential worker exploitation, could be crucial for future legal proceedings or further investigations.
Mr Peter Bedford (Mid Leicestershire) (Con)
Does my hon. Friend agree that it would have been better and more efficient for the Bill to come before the House in a more final version, which may have put at ease many of us with concerns about the cracks that may still exist?
Sir Ashley Fox
My hon. Friend makes a valuable point. The reason that the Bill is in such poor condition is that the Labour party was under a political obligation to its trade union friends to bring it forward within 100 days. Had it waited a month or two, we would not have needed such detailed scrutiny and so many Government amendments. Occasionally one hears a tut or a groan from Government Members as we try to scrutinise the Bill, but really it is entirely the Government’s fault for bringing forward such a poorly drafted piece of legislation.
As I was saying, without amendments 201 and 202, confusion or legal obstacles could prevent the use of such information, creating gaps in the enforcement process. By making it clear that the Secretary of State has the authority to use and disclose such information under clause 98, the amendments ensure that the enforcement process remains uninterrupted, effective and legally coherent.
Overall, the amendments are sensible and necessary to guarantee that nothing falls through the cracks as the responsibilities for enforcing labour laws transition from existing structures to the fair work agency. As the Bill centralises enforcement functions, it is essential that any information collected under the old system remains accessible and usable by the new agency. That is particularly important given the potential impact on ongoing investigations, compliance checks and prosecutions. By ensuring that previously collected information can still be used effectively, the amendments will help to prevent disruptions or delays in enforcement, safeguarding both workers and businesses.
It is worth noting that the transition to a new enforcement structure can often be fraught with challenges. The Bill will alter not only the bodies responsible for enforcement, but the way in which information and data are managed. The amendments will help address the practical aspects of the transition, ensuring that the fair work agency has the resources and information it needs to continue performing its duties effectively. In doing so, they will create a smoother handover of powers and responsibilities from the previous enforcement regime to the new framework.
Throughout the Committee’s proceedings, we have debated many Government amendments of a similar nature. Amendments 201 and 202 are necessary to fine-tune the Bill and ensure that all aspects of the transition are fully addressed, but the sheer volume of amendments at this stage leaves me with some concern, as it suggests that the Bill may not have fully accounted for all the transitional issues at the outset, and there may still be elements that have not been addressed. Given the complexity of centralising such a significant portion of the enforcement process, it is natural to be cautious about whether any areas may have been overlooked. While these amendments are clearly intended to provide clarity and ensure continuity, the volume of amendments suggests that there may still be unanswered questions or unforeseen gaps in the transition process, which leaves me somewhat nervous that issues may have been missed in the initial drafting of the Bill. We have certainly seen that happen often enough thus far. It is crucial that all challenges or concerns relating to the transfer of enforcement powers are adequately addressed before the Bill passes. As such, I believe it is important to consider whether there are any outstanding issues that might affect the long-term success of the transition.
Given the number of amendments and the complexity of the transition, I would appreciate the Minister’s reassurance that there is a comprehensive understanding of the full scope of the changes and that no essential elements have been left unaddressed. Are the Government confident that all necessary steps have been taken to ensure a smooth and effective transition? In particular, can the Minister assure us that the fair work agency will be fully equipped to handle its new responsibilities, including that it will be able to utilise critical information from the prior enforcement system without any disruptions? I would also like to hear about the monitoring processes that will be in place to oversee the transition period and ensure that any unforeseen issues are quickly addressed, which is vital for maintaining business confidence and worker protections throughout the period of change.
While the amendments are crucial for ensuring that enforcement activities continue smoothly during the transition, they should ideally have been made earlier in the process to avoid the need for these later clarifications. Having a more comprehensive and cohesive framework in place at the outset would have reduced uncertainty and provided greater assurance to all parties involved. Never-theless, the amendments go a long way to addressing the issues that could arise during the handover of enforcement responsibilities, and ensuring that the transition to the fair work agency will be as smooth and effective as possible.
Justin Madders
The shadow Minister asked whether it is our intention to have the Bill shipshape before we send it to the other place. That is absolutely our intention, and the amendments that have been debated today are part of that.
The criticism from the hon. Member for Bridgwater about the number of Government amendments has been noted. It was important that we kept to our manifesto commitment to issue the Bill within 100 days, but I have to say that when I was an Opposition Member I do not think I ever sat on a Bill Committee where the Government did not introduce their own amendments. If he is able to come up with some examples, I would be delighted to hear from him. I am afraid he will probably have to sit on a few more Bill Committees, and he will see that that is perfectly normal in the way these things work. After a Bill is published, it has more eyes on it; other stakeholders, Government Departments and agencies get to see it, and they offer views and feedback. It is right that we take account of those views and make what are often technical and minor amendments to make sure that the Bill has the intended legal effect.
The hon. Member asked whether any other essential elements have been omitted. The amendments we are debating are about ensuring that the fair work agency is functioning and effective from Royal Assent. I cannot give him a guarantee that there will not be other things that come out, but we have been doing a considerable amount of work, as can be seen by the number of amendments, to make sure that the Bill will be fully operational and that there will be no effect on the day-to-day running of the work of the enforcement officers and the creation of the fair work agency.
Amendment 201 agreed to.
Amendment made: 202, in schedule 7, page 148, line 19, leave out from “to” to end of line 20 and insert “—
(a) any information which the Secretary of State obtains by virtue of paragraph 8A;
(b) any information which, immediately before the coming into force of paragraph 20 of Schedule 6, the Secretary of State holds by virtue of section 15(2) of the National Minimum Wage Act 1998;
(c) any information which, immediately before the coming into force of paragraph 21 of that Schedule, the Secretary of State holds by virtue of section 16(2) of that Act;
(d) any information which the Secretary of State obtains by virtue of a property transfer scheme under paragraph 2 of this Schedule.”—(Justin Madders.)
This amendment and Amendment 201 would provide that information which was obtained before the coming into force of Part 5 of the Bill by officers acting under existing legislation and is held by the Secretary of State can be used or disclosed by the Secretary of State in accordance with clause 98.
Justin Madders
I beg to move amendment 203, in schedule 7, page 148, line 20, at end insert—
“9A The repeal of section 9 of the Employment Agencies Act 1973 (inspection) by paragraph 3 of Schedule 6 does not prevent the use in evidence against a person, in criminal proceedings taking place on or after the day on which that repeal comes into force, of a statement made before that day by the person in compliance with a requirement under that section (subject to subsection (2B) of that section).”
Section 9(3) of the Employment Agencies Act 1973 provides that a statement made by a person in compliance with a requirement made under that section to provide information may be used in evidence in criminal proceedings against the person. This amendment enables such a statement to be used in criminal proceedings taking place after the repeal of section 9 by the Bill.
Schedule 7 sets out transitional and savings provisions ensuring a smooth changeover from the existing enforcement framework to the new provisions. That is important, as Members have debated at length already. Amendment 203 addresses the repeal of section 9 of the Employment Agencies Act 1973 and the evidentiary treatment of statements obtained under that provision. The amendment will ensure that such statements can continue to be used in criminal proceedings post repeal, subject to existing protections against self-incrimination under section 9(2B). This is a targeted, proportionate and necessary amendment, which safeguards the integrity of enforcement proceedings during a period of legislative transition. On that basis, I commend the amendment to the Committee.
Greg Smith
As the Minister outlined, Government amendment 203 relates to section 9 of the Employment Agencies Act 1973, which provides that a statement made by a person in compliance with a requirement under that section to provide information may be used in evidence in criminal proceedings against the person. The amendment enables such a statement to be used in criminal proceedings taking place after the repeal of section 9 by the Bill.
Similar to the previous two groups of amendments we have considered, this is a sensible amendment to make sure that nothing falls through the cracks as enforcement functions transfer to the fair work agency. It is all part of a continuing theme, and the points that I made in the previous debate apply as much to amendment 203 as they did to the previous amendments.
I understand what the Minister said about every Bill being subject, during its passage, to a number of technical amendments by Governments of all different political compositions. I gently it put back to him that this Bill seems to have had an extremely high number of technical Government amendments, and that all tracks back to the unnecessary speed with which it was presented to Parliament.
Government amendment 204 contains transitional provision to ensure that once the functions of the Gangmasters and Labour Abuse Authority under the Modern Slavery Act 2015—
Sir Ashley Fox
Government amendment 203 seeks to address an important transitional issue arising from the repeal of section 9 of the Employment Agencies Act 1973 by the Bill. Section 9 currently stipulates that a statement made by an individual in compliance with a requirement to provide information under that section may be used as evidence in criminal proceedings against them. The amendment ensures that any statements made under the provisions of section 9 prior to its repeal can still be used in criminal proceedings that occur after the repeal takes effect.
The amendment is a necessary adjustment to maintain the integrity of the legal process. It will ensure that evidence obtained while section 9 was in effect remains valid and admissible in criminal cases, even after the section’s formal removal from the statute. Without the amendment, there could be ambiguity and potential legal challenges regarding the admissibility of evidence, which could undermine ongoing enforcement efforts and hinder the administration of justice. By making this provision, the Government ensure that no gaps are created in the legal framework, preserving continuity and clarity in the application of the law.
As we transition enforcement functions to the fair work agency, such amendments are vital to ensure the process is as seamless as possible. The purpose of amendment 203, and others like it, is to safeguard that critical aspects of the previous legal framework remain intact, even as the functions are reassigned or modified under the Bill. The changeover to the fair work agency is a significant shift, and these amendments are an important step in maintaining enforcement consistency. Given the complexity of transferring powers and responsibilities between agencies, the amendments ensure that no legal actions or evidence will fall through the cracks during the transition. They will ensure that enforcement remains robust, and that any evidence gathered or actions taken before the changeover still hold legal weight under the new system.
Although the adjustments are sensible and necessary, the number of Government amendments made in Committee leaves me with some concern about whether every possible issue has been addressed. The amendments we have seen so far have been well intentioned and critical for ensuring legal continuity, but I would appreciate the Minister’s reassurance that nothing has been overlooked in this important process.
As we know, the task of realigning enforcement powers can be complex, and with numerous provisions being amended or repealed, the risk of something slipping through the cracks is a valid concern. Opposition Members are asking for clarity that even with these detailed and helpful amendments, the transition to the fair work agency will not inadvertently create gaps or unintended consequences. I urge the Minister to provide additional assurances that all potential legal or procedural pitfalls have been anticipated, and that the Government have taken every necessary step to guarantee that the work of enforcement officers and the legal process will continue without interruption. Although the amendments are certainly a step in the right direction, we must remain vigilant to ensure that the full scope of the transition is properly managed and that the system continues to protect the rights of workers effectively.
Justin Madders
I believe I have already addressed the concerns raised by the hon. Member for Bridgwater on several occasions this morning, although I take his points.
Amendment 203 agreed to.
Justin Madders
I beg to move amendment 204, in schedule 7, page 148, line 28, at end insert—
“10A (1) Where—
(a) a slavery and trafficking prevention order requires a person to notify the Gangmasters and Labour Abuse Authority in accordance with section 19 of the Modern Slavery Act 2015 (“the 2015 Act”), and
(b) immediately before the day on which paragraph 53 of Schedule 6 comes into force, that requirement has not been complied with,
that requirement has effect, on and after that day, as a requirement to notify the Secretary of State.
(2) On and after the coming into force of paragraph 54 of Schedule 6, the reference in section 20(2)(g) of the 2015 Act (as amended by that paragraph) to a slavery and trafficking prevention order made on an application under section 15 of that Act by the Secretary of State includes a reference to such an order made on an application under that section by the Gangmasters and Labour Abuse Authority.
(3) In this paragraph “slavery and trafficking prevention order” has the same meaning as in the 2015 Act.
10B (1) Where—
(a) a slavery and trafficking risk order requires a person to notify the Gangmasters and Labour Abuse Authority in accordance with section 26 of the Modern Slavery Act 2015 (“the 2015 Act”), and
(b) immediately before the day on which paragraph 56 of Schedule 6 comes into force, that requirement has not been complied with,
that requirement has effect, on and after that day, as a requirement to notify the Secretary of State.
(2) On and after the coming into force of paragraph 57 of Schedule 6, the reference in section 27(2)(g) of the 2015 Act (as amended by that paragraph) to a slavery and trafficking risk order made on an application under section 23 of that Act by the Secretary of State includes a reference to such an order made on an application under that section by the Gangmasters and Labour Abuse Authority.
(3) In this paragraph “slavery and trafficking risk order” has the same meaning as in the 2015 Act.”
This amendment contains transitional provision to ensure that, once the functions of the Gangmasters and Labour Abuse Authority under the Modern Slavery Act 2015 have been transferred to the Secretary of State, that Act continues to operate as intended.
The amendment is essential to ensure the seamless and effective operation of the Modern Slavery Act 2015 during the transition of functions from the Gangmasters and Labour Abuse Authority to the Secretary of State. At its core, it is about continuity and clarity. Slavery and trafficking prevention and risk orders are critical tools in the fight against modern slavery. They impose important requirements on individuals for the purpose of protecting people from being victims of modern slavery, including requirements to notify enforcement authorities, and those obligations must remain enforceable.
Without the amendment, there is a clear risk that existing legal obligations could become unclear, creating loopholes for offenders to exploit. The amendment ensures that notification requirements transfer seamlessly to the Secretary of State, safeguarding our ability to hold individuals accountable and protect victims of exploitation. It also ensures that where an application is made to vary, renew or discharge a slavery and trafficking order, the courts can treat orders originally made by the GLAA as if they had been made by the Secretary of State. That provides legal certainty for courts, enforcement agencies and affected individuals alike.
This is a technical but vital amendment that protects the integrity of the legal framework and ensures continuity.
Greg Smith
Apologies for my premature comments on amendment 204, Mr Mundell; I accidently believed it had been grouped with the previous amendment.
Amendment 204 contains transitional provision to ensure that, once the functions of the Gangmasters and Labour Abuse Authority under the Modern Slavery Act 2015 have been transferred to the Secretary of State, that Act continues to operate as intended. I would be grateful for the Minister’s assessment of how the creation of the fair work agency will allow for more effective identification and prevention of modern slavery offences. As we debate the amendment, it is important that we are fully appraised of the detail and the assessment that the Minister, the wider Department for Business and Trade and the Government have made. This is an important matter that all Committee members, and Members of the wider House of Commons, take incredibly seriously, and I urge the Minister to do so.
Tobacco and Vapes Bill (Fifth sitting)
Tuesday 14th January 2025
(1 month, 1 week ago)
Public Bill CommitteesTobacco and Vapes Bill 2024-26 View all Tobacco and Vapes Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 January 2025 - (14 Jan 2025)
The Chair
I remind the Committee that with this we are considering the following:
New clause 3—Age verification policy—
“(1) A person commits an offence if the person—
(a) carries on a tobacco, herbal smoking product, vaping product or nicotine product business, and
(b) fails to operate an age verification policy in respect of premises at which the person carries on the tobacco, herbal smoking product, vaping product or nicotine product business.
(2) Subsection (1) does not apply to premises (‘the business premises’) from which—
(a) tobacco products, herbal smoking products, cigarette papers, vaping products or nicotine products are, in pursuance of a sale, despatched for delivery to different premises, and
(b) no other tobacco, herbal smoking product, vaping product or nicotine product business is carried on from the business premises.
(3) Before the specified date, an ‘age verification policy’ is a policy that steps are to be taken to establish the age of a person attempting to buy a tobacco product, cigarette papers, a vaping product or a nicotine product on the premises (the ‘customer’) if it appears to the person selling the tobacco product, cigarette papers, vaping product or nicotine product that the customer may be under the age of 25 (or such older age as may be specified in the policy).
(4) After the specified date, an ‘age verification policy’—
(a) in relation to a tobacco business or herbal smoking product business, is a policy that steps are to be taken to establish the age of a person attempting to buy a tobacco product, cigarette papers, herbal smoking product or cigarette papers on the premises (the ‘customer’) if it appears to the person selling the tobacco product, cigarette papers, herbal smoking product or cigarette papers that the customer may have been born on or after 1 January 2009 (or such earlier date as may be specified in the policy);
(b) in relation to a vaping product business or nicotine product business, is a policy that steps are to be taken to establish the age of a person attempting to buy a vaping product, or a nicotine product, on the premises (the ‘customer’) if it appears to the person selling the product that the customer may be under the age of 25 (or such older age as may be specified in the policy).
(5) In relation to times before the end of 2033, the reference in subsection (4)(a) to the customer being born on or after 1 January 2009 (or such earlier date as may be specified in the policy) has effect as a reference to the customer being under the age of 25 (or such older age as may be specified in the policy).
(6) The appropriate national authority may by regulations amend the age specified in subsection (3) or (4)(b).
(7) The appropriate national authority may publish guidance on matters relating to age verification policies, including, in particular, guidance about—
(a) steps that should be taken to establish a customer’s age,
(b) documents that may be shown to the person selling a tobacco product, cigarette papers, herbal smoking product, vaping product or nicotine product as evidence of a customer’s age,
(c) training that should be undertaken by the person selling the tobacco product, cigarette papers, herbal smoking product, vaping product or nicotine product,
(d) the form and content of notices that should be displayed in the premises,
(e) the form and content of records that should be maintained in relation to an age verification policy.
(8) A person who carries on a tobacco, herbal smoking product, vaping product or nicotine product business must have regard to guidance published under subsection (7) when operating an age verification policy.
(9) A person guilty of an offence under subsection (1) is liable on summary conviction to a fine not exceeding level 2 on the standard scale.
(10) Regulations under subsection (6) are subject to the affirmative resolution procedure.
(11) In this section—‘the appropriate national authority’ means—
(a) in relation to England, the Secretary of State, and
(b) in relation to Wales, the Welsh Ministers,
‘herbal smoking product business’ means a business involving the sale of herbal smoking products by retail,
‘nicotine product business’ means a business involving the sale of nicotine products by retail,
‘the specified date’ is 1 January 2027,
‘tobacco business’ means a business involving the sale of tobacco products by retail,
‘tobacco, herbal smoking product or vaping product business’ means a business which involves any one or more of the following—
(a) a tobacco business,
(b) a herbal smoking product business, or
(c) a vaping product business,
‘vaping product business’ means a business involving the sale of vaping products by retail.”
This new clause introduces a requirement on businesses to operate an age verification policy covering steps to be taken to establish the age of persons attempting to buy tobacco, herbal smoking, vaping/ nicotine products, or cigarette papers. It reflects provisions in place in Scotland to be amended by the Bill.
Amendment 68, in clause 50, page 25, line 38, at end insert—
“(2A) In section 4A (Sale of nicotine vapour products to persons under 18) insert—
(a) in subsection (5), at end insert ‘, save if it is a first offence.’
(b) after subsection (5) insert—
‘(5A) A person who has admitted guilt of a first offence under subsection (1) is liable on summary conviction to a fine not exceeding level 3 on the standard scale or to a recorded police warning.’”
This amendment prevents penalties for a first offence pertaining to the sale of nicotine vapour products to persons under 18 in Scotland being a fine not beyond level 3 and provides for a discretionary recorded police warning.
Amendment 69, in clause 50, page 26, line 26, at end insert—
“(ba) in subsection (7), at end insert ‘, save if it is a first offence.’
(bb) after subsection (7) insert—
‘ (7A) A person who has admitted guilt of a first offence under subsection (1) is liable to a fine not exceeding level 2 on the standard scale or a recorded police warning.’”
This amendment prevents penalties for a first offence pertaining to a failure to operate an age verification policy in Scotland being a fine not beyond level 2 and provides for a discretionary recorded police warning.
Clause 50 stand part.
Clause 68 stand part.
The Parliamentary Under-Secretary of State for Health and Social Care (Andrew Gwynne)
Before we were rudely disturbed by the weekend—I hope that all Members had a good one—we were coming to the conclusion of the debate on this grouping. I thank all hon. Members for their valuable contributions to discussions last week; I will continue to respond to the outstanding points raised in the previous sitting.
On the Windsor framework, we are proud to say that the Bill is UK-wide and has been developed in partnership, in full, with the Scottish Government, Welsh Government and Northern Ireland Executive. This Government, and I hope this House, intend the smoke-free generation policy to apply to all four nations.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
I have a quick question for the Minister about some of his answers last week about the clause. He said that tobacco products would include bongs, and was quite passionate about that. But clause 48, which is meant to be read in relation to clause 1, defines “tobacco product” as something that contains tobacco. I have seen bongs made of glass, ceramics and various other things, but I have never seen one that contains tobacco. It is certainly easy to make one that does not contain tobacco. I am therefore interested in why the Minister believes that the Bill equates bongs and tobacco products.
Andrew Gwynne
I am grateful to the shadow Minister for that. We will come on to those issues in more detail when we eventually reach those clauses, which given the rate of progress so far may be in the early hours of tomorrow morning, if Members decide so. The only reason why such paraphernalia is on display and legally sold is to consume tobacco, but we will get more information on that for her when we get to clause 45, which covers that issue.
I was talking about the Windsor framework. We believe that this policy is in accordance with our international obligations. In terms of what products are in scope, the Bill captures all tobacco products, including shisha, cigars and heated tobacco. That is because all tobacco products are harmful. There is no safe level of tobacco consumption. For example, tobacco smoke from cigars leads to the same types of disease as the smoke from cigarettes. In England alone, around five times as many people smoke other tobacco products, such as cigars, as did a decade ago, and children are a part of that increase. Shisha, to which the hon. Member for Windsor referred, also causes the same diseases as cigarettes, including cancer, respiratory diseases and cardiovascular diseases. The volume of smoke produced in the average 45-minute shisha session is estimated to be the same as around 25 cigarettes’-worth of tar, 11 cigarettes’-worth of carbon monoxide and two cigarettes’-worth of nicotine.
Finally, there is clear evidence about the toxicity of heated tobacco. The aerosol generated by heated tobacco also contains carcinogens, and there will be some risk to the health of anyone using those products. The crucial point is that, unlike with vapes, there is no evidence that heated tobacco supports smoking cessation. We must ensure that the Bill is future-proofed to include new or novel products, such as heated tobacco, to protect the public from the harms of tobacco use.
Although cigarettes are the most used form of tobacco, we do not want to create loopholes in the Bill so that the tobacco industry can pivot and continue addicting people to tobacco. As I said previously, the issue is about saying, “The market share you’ve got now is it. We are stopping the conveyor belt.” As we know, if we block one road, the tobacco industry finds another route through. We are making sure that the Bill is as watertight and future-proof as possible so that the tobacco industry can no longer continue to trade with another product that harms and addicts future generations.
Sarah Bool (South Northamptonshire) (Con)
I want to look specifically at clause 1(3), which relates to identity documents. In the previous sitting, the Minister said that he would have powers to change the list of identity documents; I think he was referring to clause 46. But at the moment the definition of identity documents is very tight; only the six listed are permitted. My hon. Friend the shadow Minister mentioned veterans cards, and this would be an ample opportunity to include those, as was the intention, because the definition is very strict—people will be able to use only the listed documents.
A further question that has been raised is that the list rules out digital forms of identification, as those listed are physical. I want to understand how retailers can best enforce the measures in practice.
Andrew Gwynne
I do not want to go over the arguments that I have already put to the Committee in an earlier sitting, but there is an ability to use other forms of identification, as I set out. We will be working with the retail industry during the long lead-in time to get in place procedures that retailers are confident with. They will be able to ask for veterans cards, for example.
Andrew Gwynne
Can the hon. Lady let me finish answering the point she put to me? In fact, I have now forgotten the point she put to me—[Laughter.]
Sarah Bool
I was talking from a legal perspective. Clause 1(3) is about what “identity document” means, which obviously means that those listed are the six that people are allowed to use. I take the point that later the Minister could introduce regulations to allow for veterans cards, but legally a retailer’s defence would have to be that they were shown what appeared to be an identity document, which means:
“(a) a passport,
(b) a UK driving licence,
(c) a driving licence issued by any of the Channel Islands or the Isle of Man,
(d) a European Union photocard driving licence, or
(e) an identity card issued by the Proof of Age Standards Scheme”.
The clause is very specific. Whatever the intention, the retailer would not technically be able to use having been shown a veterans card as a defence. Hence I am asking whether we should consider the issue at this point, rather than relying on the regulations mentioned in clause 46.
Andrew Gwynne
I stand by what I have already said. The intention is to work with the retail industry during the long lead-in time to get the mechanisms in place that allow them to adequately enforce the measures in the Bill. We do not want to get this wrong. I politely say to the hon. Lady, however, that in the first instance it is highly unlikely that a veteran born before 1 January 2009 will seek to purchase cigarettes or other tobacco products and be queried about their age. I will take on board what has been said and, if what I said earlier is incorrect, we can perhaps come back to the issue.
I want to come back to tobacco products because the point is crucial. We want to ensure that the tobacco industry has that conveyor belt cut-off. It is therefore rational for all the products that I have mentioned to be included in the smoke-free generation legislation. That will prevent anyone from taking up use of the products in the first place.
As I stated in my opening speech, I am grateful to the hon. Member for Windsor for bringing the discussion before the Committee, but while I appreciate his intention, it is not something the Government support. In relation to the amendments, I say to the Committee that the Government do not believe it is appropriate to establish a more lenient penalty regime for the offences, or to introduce a mandatory age-verification policy.
The clause seeks to change the age of sale for tobacco products, herbal smoking products and cigarette papers in England, Wales, Scotland and Northern Ireland so that no one born on or after 1 January 2009 will legally be sold those products. The Bill will be the biggest public health intervention in a generation, breaking the cycle of addiction and disadvantage, and putting us on track towards a smoke-free UK. For those reasons, I commend the clause to the Committee.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Dr Johnson
On a point of order, Mr Dowd. May I ask a procedural question? I heard some Members shout, “Aye”, and some Members shout, “No”. In the previous session we recorded what Members said, but we have not done so this time. Can I inquire as to what the reason for that is? Last time there was a vote that was then recorded for Hansard, but that has not happened this time.
The Chair
That is because a Division was not called. I made the decision that the Ayes had it in this particular case and that the Noes did not. If a Member wished to challenge that at the time and call a Division, they were free to do so. They did not—
The Chair
They would just indicate that they wished for a Division—keep shouting, in effect.
Jack Rankin (Windsor) (Con)
Further to that point of order, Mr Dowd. I would like the chance to put my No on record, so I would appreciate a Division.
The Chair
Regrettably, we have moved on.
Clause 2
Purchase of tobacco etc on behalf of others
Dr Johnson
I beg to move amendment 58, in clause 2, page 2, line 23, at end insert
“, save if it is a first offence.”.
See explanatory statement to Amendment 59.
The Chair
With this it will be convenient to discuss the following:
Amendment 59, in clause 2, page 2, line 23, at end insert—
“(4A) A person who has admitted guilt of a first offence under this section is liable to a fine not exceeding level 3 on the standard scale or provides for a discretionary caution.”.
This amendment, together with Amendments 56, 57, and 58, prevents penalties under sections 1 and 2 beyond level 3 for a first offence and provides for a discretionary caution.
Amendment 75, in clause 69, page 36, line 31, at end insert
“, save if it is a first offence.”
See explanatory statement to Amendment 76.
Amendment 76, in clause 69, page 36, line 31, at end insert—
“(4A) A person who has admitted guilt of a first offence under this Article is liable to a fine not exceeding level 3 on the standard scale or a conditional caution.”
This amendment, together with Amendments 73, 74, and 75, prevents penalties for a first offence under Sections 68 and 69 being beyond level 3 and provides for a cautionary warning.
Dr Johnson
Amendments 58 and 59 seek to amend clause 2. Will we get the chance to debate clause 2 later, Mr Dowd?
Dr Johnson
Amendments 58 and 59 go back to the principle of proportionality. I know the Minister gave his views on that last week, so I will not go on at length. But there is a difference between the individual shop assistant who may make an intentional error, and a shop that continues to repeatedly and recklessly sell to children or people who are too young to buy an age-restricted product. That is the principle of the amendments—[Interruption.]
The Chair
Order. Can we be clear? If Members want to speak in the debate they should bob, just like in the Chamber. If you wish to intervene, Ms Jarvis—I assume you do, but I do not know—you could bring your request for the intervention to the person who is speaking.
Liz Jarvis (Eastleigh) (LD)
Mr Dowd, I was just going to ask the shadow Minister to speak up because I cannot hear her at all.
Dr Johnson
My apologies. I was explaining the principle behind Opposition amendments 58 and 59, which are in my name. I do not know whether the hon. Member for Eastleigh was present on Thursday afternoon. Clause 2 refers to a “person” but does not specify who that person is, and there is as yet no guidance. The Minister said that the person could be the shopkeeper, the shop worker, the chief executive officer or whoever trading standards decided was the right person.
The fines to deter or punish illegal behaviour would necessarily need to be significantly larger for a large corporation than for a young chap of 19 working a few hours in the corner shop on a Saturday afternoon, for whom some fines would be quite punitive. The amendments allow for first offences to be treated leniently, in comparison with repeat offences, and their aim is to encourage the Government to think more carefully about guidance. When the previous Bill was introduced last Easter by the Conservative Government, with very similar wording in many cases, that Government produced guidance on how those charges would be applied. I am trying to encourage the Government to do the same thing. That is the purpose of the amendments.
I will endeavour to speak a bit louder. I do not know whether the hearing loop is working—
Andrew Gwynne
I am grateful to the shadow Minister for bringing this discussion to the Committee. As we have already argued, the amendments would create a more lenient penalty regime for the offence of purchasing tobacco, herbal smoking products or cigarette papers on behalf of someone under age—commonly known as proxy purchasing. In England, Wales and Northern Ireland, the amendments would create an exception to the maximum penalty that a person could face for committing that offence, if it was the person’s first offence. The amendments would establish that someone who admits to committing an offence for the first time would be liable, on summary conviction,
“to a fine not exceeding level 3 on the standard scale”,
which is £1,000, or liable instead to a discretionary caution in England and Wales or to a conditional caution in Northern Ireland. That is one level lower than the fine for which someone who committed that offence would be liable under the current legislation in England and Wales—level 4, which is £2,500. It is two levels lower than in Northern Ireland, where the fine would be at level 5, which is £5,000.
The amendments would have a similar effect on first-time offences as amendments that we have already discussed. If the Committee is content, I will not repeat myself as the rationale for asking the shadow Minister to withdraw the amendment remains the same as that for amendments that we have already covered.
Dr Johnson
Amendments 75 and 76 have the same principle behind them, so I will not repeat myself. They relate to clause 69; as hon. Members will recall, clause 69 amends Northern Ireland legislation that is similar to the legislation in clause 2. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chair
We are considering amendment 59 to clause 2, which was debated with amendment 58 to clause 2. Dr Johnson, have you decided whether you want to press amendment 59 to a Division?
Dr Johnson
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr Johnson
On a point of order, Mr Dowd, I just wanted to understand. In this morning’s groupings, which were sent by the Clerks, it appeared that not only amendments 58, 59, 75 and 76, but amendments 19 to 21 and 34 to 37 were to be debated before clause 2 stand part. Why were those latter amendments not called?
The Chair
As I indicated, the point had already been debated, so it was my decision that we would move on.
Question proposed, That the clause stand part of the Bill.
Andrew Gwynne
These clauses make it an offence in England, Wales and Northern Ireland for someone over the age of 18 to buy or attempt to buy tobacco products, herbal smoking products or cigarette papers for someone born on or after 1 January 2009. That is called proxy purchasing. Clause 2 replaces the current offence under the Children and Families Act 2014 of someone aged 18 or over buying or attempting to buy tobacco products or cigarette papers on behalf of someone who is under 18 in England and Wales.
Clause 69 amends the offence of proxy purchasing in Northern Ireland to align to the change in the age of sale. That applies to tobacco products, herbal smoking products and cigarette papers.
Gregory Stafford (Farnham and Bordon) (Con)
The Minister said that this measure was to prevent people from buying cigarettes, cigarette papers or tobacco products for people under the age of 18. Obviously, when the Bill is first passed, that will be true, but with every progressive year, it will prevent buying for people aged 19, 20, 21 and 22. Why has the Minister not made a differential in law to ensure that, once the Bill is in place, there is a separate and more serious offence of buying tobacco products for someone under 18, however far in the future, and a separate offence of buying them for an adult who is ineligible to have them?
Andrew Gwynne
The hon. Gentleman makes a reasonable point. The Bill ensures that no one over the age of 18 is legally able to purchase tobacco products on behalf of someone under the legal age of sale, and there is a differential over time there. The age of 18 was chosen as it avoids criminalising children. This measure applies to all adults, and it does not allow for any ambiguity in law in the future. For example, it captures a situation in which someone over the age of 18, but under the legal age of sale for tobacco, attempts to buy products for a child. This action would be restricted, and the liability would not only be on the person selling the tobacco product, but also on the adult attempting to buy that product for the child.
These clauses align proxy purchasing offences with the new age of sale restriction for England, Wales and Northern Ireland. They provide a defence if a person charged with this offence can prove they had no reason to suspect that the person was born on or after 1 January 2009 or they can prove that they had no reason to believe that the other person intended to use the cigarette papers for smoking, which is in line with existing defences. These clauses are essential to ensure that there are no loopholes in the age of sale legislation, and they build on what works in the current age of sale legislation. I therefore commend the clauses to the Committee.
Dr Johnson
Clause 2 makes it an offence for a person aged 18 or over to make a proxy purchase of tobacco products, herbal smoking products or cigarette papers for a person born on or after 1 January 2009. It essentially stops an older person going in and buying those products for a younger person, which we are aware has been happening for many years with both tobacco and alcohol. If found guilty, the person committing the offence faces a level 4 fine on the standard scale, which hon. Members will recall is £2,500.
The clause replaces the current offence under section 91 of the Children and Families Act of someone aged over 18 buying or attempting to buy tobacco products or cigarette papers on behalf of someone aged under 18 in England and Wales. In many ways, that seems a sensible consequence to clause 1. If we want it to be illegal for people born after a set date to have tobacco, it makes sense to ensure that people cannot buy it for them.
However, I have some questions, particularly in relation to cigarette papers. I did not particularly talk about cigarette papers in our discussion of clause 1 because they are more rightly talked about in relation to clause 2, which treats cigarette papers differently, in so far as it makes them illegal unless a person can prove that they are using them for something else. I looked into what that something else might be. I naively thought that cigarette papers were essentially just bits of paper of a particular thinness that could be rolled up and stuck together with a little gum arabic once somebody had rolled whatever they wanted to roll inside them; in fact, that turns out not to be the case because of the law.
The papers contain ethylene-vinyl acetate, which makes them more fire-resistant. The sad situation is that every year people smoke in bed or in their armchair, fall asleep and cause themselves burns, and sometimes even cause death or house fires. The ethylene-vinyl acetate—a sort of plastic—added to cigarette papers helps them to self-extinguish and reduces the risk of fires; we know that some particularly dreadful fires, such as the Kings Cross fire, are believed to have been caused by loose cigarettes.
The cigarette papers are essentially made from plant fibre, such as bamboo flax and rice, but they can be flavoured and coloured. In the evidence given to the Committee last Tuesday, we heard about the tobacco industry’s aim of ensuring that younger people are enticed by colours and flavours. A quick look at Amazon—other sellers are, of course, available—reveals that people can buy cigarette papers in a whole range of bright colours. People can also buy cigarette papers with pictures of cherries, apricots, bubbles and all sorts of things on them. I thought it was interesting that that has not been covered in relation to cigarette papers. Why give an exemption allowing them to continue to be sold when the reality is that they will continue to be used for rolling either illegal tobacco or other forms of illegal drug?
Gregory Stafford
Is my hon. Friend saying that cigarette papers have a specific definition in law and therefore that the papers she talks about, which have chemicals to make them fire-resistant and so on, will be banned, or is she saying that the clause will ban anything that could be used as a cigarette paper within the law? If she does not know the answer, perhaps the Minister can pick that up when he responds.
Dr Johnson
Clause 48, which we obviously have not come on to yet, gives the interpretation of part 1 and all the definitions. The definition of cigarette papers in the Bill includes
“anything…to be used for encasing tobacco products or herbal smoking products for the purpose of enabling them to be smoked”.
Different chemicals are put in, believe it or not, to make the ash whiter—people are concerned, when they have burnt their cigarette, with the colour of the ash that has fallen from it, which seems remarkable to me. Calcium carbonate, magnesium carbonate and titanium oxide can be added to affect the colour of not just the paper, but the ash produced. Seignette salts—sodium potassium tartrate and sodium citrate—are also added to make it burn faster, so that people go through cigarettes slightly more quickly. Then there is the glue of the acacia gum.
As far as I can tell, it is impossible to find out what is in the cigarette papers that one might wish to purchase; if one looks online, it is very hard to work out what is in them. I have seen medical reports of people allergic to the ingredients having: cheilitis, or inflammation of the lips; circumoral—around the mouth—inflammation; and finger dermatitis. If one is selling a ham sandwich, it is important to include the ingredients so that people know what it is in it, but it seems that for cigarette papers that is not the case and I am not entirely sure why. It is also the case that some commercially available papers contain copper, chromium and vanadium. As they burn, the pigments can lead to very high levels of exposure. These are not inexpensive; Amazon sells a random choice of eight flavours for £9.99. The issues are worth considering. It has been proposed that individual cigarette papers have on them a message saying “Smoking is bad for you” or something along those lines, but does that not involve adding further chemicals to the paper and therefore further risk?
Clause 2(3) states:
“It is a defence for a person charged with an offence”
of proxy purchasing
“to prove that they had no reason to suspect that the other person intended to use the papers for smoking”,
To which the somewhat obvious question is, “What on earth else would one use cigarette papers for?” With some trepidation, I asked Mr Google. Initially, all I could find was that they are used for smoking joints of cannabis, which did not seem to me a particularly good reason—the smoking of another illegal substance—for the Government to exclude them. Then I found out that some people use them for woodwind instruments. They place them underneath the key and press the key down, which allows extraneous water to be soaked up. They then release the key and pull the paper out. That helps to dry the instrument, prolong its life and prevent damage. Clarinet players—I did learn the clarinet but I did not know this; maybe that is why I was not so good at it—or players of the oboe, bassoon, flute or saxophone can buy cigarettes papers for that purpose.
The question of whether the Government need to provide an exemption for cigarette papers hinges on whether there is an alternative for the public to use for their woodwind instruments—and there is, of course. It is obvious in some respects that the market would provide one were cigarette papers banned. Connoisseurs of such instruments tell me that cigarette papers are not ideal to use for this purpose because of the additional, potentially toxic chemicals they contain—one is potentially inhaling bits of the chemicals back in—and because it is not ideal to get traces of the gum on one’s instrument. It is possible buy Superslick Pad and Yamaha cleaning papers. As far as I can tell, they do not contain toxic chemicals, because nobody would be interested in whether the ash burnt from them was white or otherwise since no one is going to set fire to them. Is it therefore really necessary to have a specific exemption for the use of cigarette papers for instruments, when in practice that is unlikely to be what they will be used for? There is an alternative and the most likely use—I think the Minister will understand this—is that they will be used for smoking joints.
Sarah Bool
I agree with everything my hon. Friend says. My first question was, “Well, what else they would be using cigarette papers for?” The second question—which maybe the Minister can answer—is about the level of proof. This comes up not only in clause 2(3), but elsewhere in clause 2. I know that the Minister will say, in relation to clause 2(3), that this is in line with legislation as it currently stands, but if we are tightening up on the whole, perhaps this is an area that we should consider tightening up further?
Dr Johnson
Indeed, it does seem contradictory, if not counterintuitive. It also leaves us with a bizarre situation where, were someone to be a bassoon player, for example, and they wished to buy these products to use for the alternative purpose of drying their keys, then they would have to get someone else to buy them because they would not be able to buy them themselves. For a child born after 1 January 2009 and learning to play such an instrument, either the market will need to provide another opportunity to buy such a product, or the child will need someone else to buy the product for them. That does not make sense. The rolling age of sale that we discussed in clause 1 means that, over time, the number of individuals wanting to buy the product for their instruments but not allowed to, compared to the number of people allowed to, would inevitably diminish. We would have a larger group of people trying to find an ever smaller group of people to buy their cigarette papers for them for that purpose. To some extent, it would be more sensible to remove subsection (3) all together because it creates a loophole that will be used almost entirely for illegal uses of these papers. There is a market already providing a reasonably priced alternative for people to use for their instruments—which in practice are better for instruments in any case.
The final point is on the burden of proof. As a defence, someone purchasing the product on behalf of another has to prove they have no reason to suspect that the person was born on or after 1 January 2009. What does that really mean? Is that a reversal of the burden of proof? Is it saying a person has to prove their innocence rather than the state having to prove them guilty? In what circumstances would it apply? In what circumstances is it necessary for someone to buy cigarette papers, other than the oboe player or the saxophone player? I guess if someone in his or her 70s attends a corner shop but has forgotten their ID, they could ask somebody older to buy the papers for them; I guess that would be okay. They may find that they have come with a veterans card, thinking that they can use it because it is usable for voter ID, but that particular type of ID is not included; we have discussed widening the scope of those documents.
Tristan Osborne (Chatham and Aylesford) (Lab)
I understand that the term “cigarette paper” clearly indicates that the primary use for such an item is likely to be tobacco usage. However, it is not exclusive. As a model maker, I use cigarette papers in model making. I understand they are also used in art and in other activities. Although I am not suggesting that there are no alternative products to cigarette papers, it is not 100% exclusive. With respect, I think the clause refers to a person buying cigarette papers for another individual for a purpose other than smoking—if that can be proved. I accept what the hon. Lady is saying, but think she is stretching the point quite a lot.
Dr Caroline Johnson
I searched quite extensively for other uses of cigarette papers and had not come across that one; that is very interesting. I do not know whether the hon. Gentleman thinks they need to have pictures on them—perhaps that helps with the art. I think there is still a difference in a cigarette paper that contains extra toxic chemicals to help it burn a particular colour, for example. I am not sure whether there is any particular art or model making application for having the cigarette paper with all the chemicals in, as opposed to any other type of paper that is produced for the purpose. Inevitably, the market would produce a non-cigarette paper for the purpose, which would reduce the amount of toxic chemicals that are used and therefore also the amount of toxic chemicals in our environment—given that, inevitably, once they finish being used, they get wasted.
The point stands that the papers themselves contain toxins that would not be required for any other uses, whether that be for models, art or music. Therefore, since such products are available on the market to buy separately from cigarette papers, though they may currently be slightly more expensive, the Minister may want to consider removing that exemption, because it inevitably creates a loophole for these products to be used for the smoking of illegal tobacco or a joint.
Gregory Stafford
It is interesting—now that we have moved on to the alternative uses—to note that anyone who has ever had children knows that pipe cleaners are an essential part of any craft kit. Obviously, they can be used for cleaning a pipe, as well as making a spider or whatever else. The Minister has not sought to ban pipe cleaners in the same way. I wonder why he has picked out cigarette papers, which have alternative uses, but not pipe cleaners, which clearly have alternative uses as well.
Dr Johnson
The hon. Gentleman is bringing back painful memories of trying to create things with pipe cleaners for my children, and trying to make them stand up straight when they simply are not quite that stiff—but some fun memories, too. Yes, I do see that they are used in art. That suggests another question. The Minister can correct me if I am wrong, but I presume that the Government have chosen to ban cigarette papers because they want to reduce the amount of people smoking illegal tobacco; it is also an opportunity to reduce the amount of availability of papers for smoking cannabis and other illegal products, but why have they not included filters?
For many years, the tobacco industry has implied that smoking through a filter is safer and many in the population believe that smoking through a filter is safer, but it is a single-use plastic—and I am sure the Minister is very worried about the environment and the use of single-use plastics. The previous Government banned quite a lot of single-use plastic items to reduce waste. The cigarette filter is the most littered item globally every year and it is a single-use plastic. It contains a cellulose acetate filter, which I am told is a plastic pollution. It also increases the risk of a particular form of lung cancer, because the tiny little itty bits of plastic are inhaled into the individual who is smoking. They also increase the way that people draw on a cigarette, which means they could take in more of the toxins when there is a filter than when there is not. Will the Minister discuss whether he plans to include filters on Report?
Let us look at international examples. In 2011, the United States said that all cigarette papers should have Food and Drug Administration approval for their ingredients. Is the Minister considering publishing the ingredients on the packet here in the UK, so that if they are to continue to be sold, people are aware of the toxins they contain? Further, where these products are being used for modelling or art purposes, perhaps such steps will start to reduce the number of toxins contained in them.
As part of clause 2 we are also going to discuss clause 69 stand part. Clause 69 substitutes for article 4A of the Health and Personal Social Services (Northern Ireland) Order 1978. That is, essentially, identical to clause 2, except for the fact that subsection (4) states someone guilty of an offence under the article is liable to a fine “not exceeding level 5”, whereas clause 2 says “not exceedingly level 4.” As the Minister is looking for consistency across the four countries of the United Kingdom, could he explain why he has chosen to have a lower level of fine for the proxy sales offence here than he has in Northern Ireland?
It should be noted that, although we have already discussed clause 50, that part of the Bill provides for legislation for proxy sales in Scotland, where the fine threshold is also set at level 5. I understand that the Minister is a fan of devolution, and wants devolved nations to be able to have different fines, so why has he chosen the fine level for this particular part of the country to be at level 4, which is lower than in Scotland and Northern Ireland? Additionally, section 5 of the Tobacco and Primary Medical Services (Scotland) Act 2010 says that it is illegal to buy, or attempt to buy, for oneself if under 18. Is it the Minister’s intention to amend that? That is my final question on clause 2.
Jack Rankin
I do not intend to go over the scope of the clause in great detail, because I think the principles largely flow form the principles of clause 1, but I will pick up on the cigarette paper point that my hon. Friend, the shadow Minister made, and talk about clause 2(3):
“It is a defence for a person charged with an offence under this section in respect of cigarette papers to prove that they had no reason to suspect that the other person intended to use the papers for smoking.”
I commend the shadow Minister’s researchers, because I can feel her thoroughness—I know a lot more about cigarette papers than I did an hour ago, and much more about cigarette papers than I thought there could possibly be to know, so she has answered some of my question.
Dr Johnson
I am pleased that my hon. Friend has found today interesting. Does he also find it interesting that some of these papers that can currently be bought legally from major retailers in the United Kingdom are not just coloured and have designs on, but flavoured? That is clearly not necessary for someone using them for a model or artwork. They may make people smoke more, because they disguise the taste of the tobacco and make smoking more pleasant.
Jack Rankin
I believe that is the case, and it is something I did not know before today. My questions were along the lines of: is this not just paper, and, if so, why is it excluded in some sense? I was racking my brain for legitimate reasons, and, in her speech, the shadow Minister gave some legitimate reasons, whether that is the woodwind instruments, or the model making mentioned by the Member for Chatham and Aylesford. It seems to me that—even though I disagree with the principle of the Bill—those extra properties would not be necessary for those legitimate uses in this instance.
As my hon. Friend the shadow Minister said, the market should be able to make a difference. Clause 2(3) should be struck from the Bill, because it does not seem that there is a legitimate use for cigarette papers that would not be picked up in another way, shape or form if that subsection were removed. I understand from the guidance I received as a new Member on my first day here that I have to three days to table an amendment before discussion, but I would suggest the removal of subsection (3). Perhaps the Government will consider whether the provision should remain fully in the next iteration of the clause later in this process.
I also want to speak to the term “no reason to suspect”, because I am not clear where the burden of proof sits. If someone goes into a newsagent to order cigarette papers, the overwhelming likelihood is that they will use them to smoke cigarettes. I accept that other reasons exist, but is the shopkeeper supposed to ask? The Bill says “no reason to suspect”; I would expect shopkeepers to have every reason to suspect that people who buy cigarette papers smoke cigarettes. It seems a little woolly. What would the Minister expect the shopkeeper to do in those instances? Is he supposed to ask? If the person says, “I am using this for a woodwind instrument,” is that sufficient? If I were a person who wished to get around the law, I could pretty easily work out that that would get me around the clause.
Andrew Gwynne
I shall answer some of the points made, which were valid. To answer the shadow Minister, cigarette papers are within the scope of the existing legislation. They are included because burning them adds to the volume of smoke and because, with their bleaches and dyes, as she rightly set out, the range of toxicants in the smoke contributes to the additional risks to smokers.
On filters, I am sympathetic to the shadow Minister’s premise. Although cigarette filters have historically been marketed to make smoking safer, there is no evidence of that whatsoever. All tobacco products are harmful. However, as with all regulations, it is important that measures are considered fully and that the evidence base is there, with no unintended consequences. I do not want to give the tobacco industry the opportunity to greenwash and to say, “Not only are filters healthier for you, but they are healthier for the environment.” We absolutely do not want that. We have powers in part 5 of the Bill to restrict the flavours in cigarette papers, so the argument set out by the shadow Minister is covered. On single-use plastics, it is for the Department for Environment, Food and Rural Affairs to legislate, and it already has powers that enable it to consult on single-use plastics in cigarette filters.
As we have heard, a number of relevant products—for example, pipe cleaners and cigarette papers—can be used for musical instruments, as well as for crafting, art, model making and a whole range of other uses. We do not want to restrict those uses; we want to make it more difficult for people to access such products for the provision of smoking. As we said when we discussed clause 1, we are not making the smoking of tobacco illegal; we are preventing the next generation from getting hooked. The restrictions therefore strike a proportionate balance. A current smoker will be able to smoke until the until the day they die. Although we will do everything we can to give them the opportunity to give up, they will be able to access the products legally, but the Bill will introduce restrictions on them.
We think we have got the balance right, but we will take away the arguments and consider them, because they are valid arguments about how a musician, or someone who wants to use them for crafting and modelling, will still able to access these products if they want to use them.
Dr Beccy Cooper (Worthing West) (Lab)
I have quick and pragmatic point about the different uses of cigarette papers. I am a mum and a saxophone player myself, and I suggest that other materials can be used in the place of cigarette papers. I appreciate the debate, but I do not think this is about a pragmatic use.
Andrew Gwynne
That is precisely the point I was coming to. We will take the argument away because it is a reasonable argument, and we will perhaps consider returning to this issue on Report.
I know that the shadow Minister has every sympathy with the fact that cigarette papers are dangerous when used for the consumption of tobacco, which is what we want to bear down on. As I have said, there are powers in part 5 to restrict the flavours of cigarette papers, but we want to get the balance right so we will take the argument away and consider it.
Dr Danny Chambers (Winchester) (LD)
I am reticent to extend the discussion about cigarette papers; I was unaware it was possible to discuss something to such an extent. I am not legally trained, so I ask this for my own understanding as someone who is not a learned Member. If the exact same product was renamed and rebranded as model paper or musical instrument paper, would this law still apply to it?
Andrew Gwynne
That is a good question. Of course, if it was to be used for the consumption of tobacco, it would come within the scope of the Bill. We have to be clear that many of these products have dual uses, as we have heard. I am as guilty as anybody of making pipe-cleaner characters for my children and grandchildren—grandchild, rather, because I have only one so far.
We want to make sure that those who want to continue smoking are able to do so, but that obvious restrictions and boundaries are put in place regarding the accessibility of these products, so that no child born after 1 January 2009 will ever legally be sold them.
Dr Caroline Johnson
I thank the Minister for engaging in this discussion, because although it is somewhat technical to discuss cigarette papers, it is important. The hon. Member for Worthing West made the key distinction, which is that it is about the ingredients that are in a product. It would be possible for the Minister to devise legislation that sought to ban cigarette papers, without preventing a market in a similar product that would be ineffective as a cigarette paper but useful for the average modeller.
Andrew Gwynne
Perhaps we will return to that on Report. I have every sympathy with what the shadow Minister says. We do not want to prevent the legitimate use—indeed, a whole variety of uses—of these products, which is why we have the exemption in the Bill. If we are able to do what she suggests under the powers in the Bill, that would be great; if we can do only some of what she asks for in respect of flavours, that would go part of the way, and we will need to look at how we can strengthen that. If the shadow Minister can be a little patient, I think we can come back to this on Report.
The Chair
Order. I do not mind Members seeking clarification, but when the Minister has sat down we need to leave it at that.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Clause 3
Tobacco vending machines
Question proposed, That the clause stand part of the Bill.
Andrew Gwynne
The clauses restate the ban on tobacco vending machines in England, Wales and Northern Ireland and extend it to include vending machines that sell cigarette papers. The prohibition came into force in 2011 in England and in 2012 in Wales and Northern Ireland. Under the amendments made by the Bill it will be an offence for a person with management or control of a premises to have a vending machine available for use from which tobacco products, herbal smoking products or cigarettes may be bought.
The prohibition was originally introduced because tobacco vending machines were largely unsupervised and allowed under-age access to tobacco. In 2010, 8% of 11 to 15-year-olds who regularly smoked said that vending machines were a usual source of cigarettes. The policy has successfully contributed to reducing smoking rates in young people and has been effective at enabling the age-of-sale restrictions to be implemented and enforced properly.
The existing legislation is consolidated in the Bill to replace the regulations that cover an automatic machine from which tobacco products, herbal smoking products or cigarette papers may be bought. With all the restrictions that apply to such products covered in one Act, those who are affected by and who apply the legislation will find it easier to access them. I commend the clauses to the Committee.
Dr Johnson
As the Minister says, clause 3 outlaws the use of vending machines that sell tobacco or tobacco products, as well as herbal smoking products and cigarette papers. I note that there are no amendments to clause 3, presumably because it is somewhat settled and established law.
In the same way as vapes and other nicotine products, which we will come to later, vending machines make it much easier for people under the age of 18—or, under clause 1, those born after 1 January 2009—to buy age-restricted products that they are not legally allowed to purchase. They are self-service machines, so it is difficult to prove age and easy to get around if it is machine led. Historically, such machines have often been unsupervised by staff in a shop, thereby providing easy opportunities for younger people to buy from them.
It was coalition Government legislation—the Protection from Tobacco (Sales from Vending Machines) (England) Regulations 2010—that banned the sale of tobacco products from vending machines from 1 October 2011. That statutory instrument was made under section 3A of the Children and Young Persons (Protection from Tobacco) Act 1991, which was inserted by section 22 of the Health Act 2009. That is a complex chain to follow, so having this clause where everything is in one place is much simpler. The clause also adds herbal smoking and cigarette paper vending machines to the legislation—on a personal level, I welcome that, for the reasons I have given already—and clarifies the penalty, which was more difficult to establish when looking at the previous trail of legislation.
However, the clause does change the terminology. Previously, it was illegal on the basis of sale “from an automatic machine”; the Bill talks about an “automatic machine from which” products “may be bought”. It seems that they are the same thing, but of course we heard repeatedly in evidence how the tobacco industry tries to get round these things.
I found a trail of people discussing online how to get round the vending machine legislation, which raised various questions. If I buy a product from a major retailer online, I can choose to get that delivered to my home, I can collect it from one of its stores, and I can also pick it up from our local Co-op, the local post office, or from a box with a keypad door, at the garage and in other locations. If one were to buy tobacco products, herbal smoking products, or cigarette papers using an online app, and collect them from a dispensing machine—an automatic machine that dispenses cigarettes—in a pub, would that be covered by this legislation, or is that a loophole that could be exploited? I would be interested in the Minister’s comments on that, because we have heard how inventive the industry is. Would it be possible for people to circumnavigate the Bill’s intent by creating a machine that does not sell the product but simply gives to a person the product they have already bought?
Clause 70 applies to Northern Ireland. It will insert into the Health and Personal Social Services (Northern Ireland) Order 1978 the new article 4B, which is essentially the same as clause 3, so the same questions and comments apply. The only difference between the two clauses that I can see is that in Northern Ireland we have a level 5 offence, and in England and Wales we have a level 4 offence.
I wondered briefly why there was no clause for Scotland, but section 9 of the Tobacco and Primary Medical Services (Scotland) Act 2010 makes it illegal to have an automatic machine for the sale of tobacco products, regardless of whether the machine also sells other products, with a level 4 fine, so Members can be reassured that that is covered. I do not think the Minister answered this point in relation to the previous clause: clearly he chooses the fine levels for England and Wales in the Bill; why has he chosen to have the same penalty as Scotland but a lower penalty than that in Northern Ireland?
Sarah Bool
Clause 3(1) says:
“A person commits an offence if the person has the management or control of premises on which a tobacco vending machine is available for use.”
My first point goes to the point my hon. Friend the Member for Sleaford and North Hykeham made about the concept of that person, because that leads to some questions and confusion about where the liability sits. When it comes to the person who has management or control of the premises, we might expect there to be a landlord and a tenant, in which case perhaps the tenant has control legally under the terms of their lease. But if the landlord has a managing agent—the hint is in the name—could they be caught within the scope of the Bill if they have not done enough to prevent the machine from being on the property?
What about cases in which a landlord who is a licensor has a licensee? The concept is slightly different: it is not as official as a lease, but someone has the right to use the premises but not exclusive use or possession of the premises. We could potentially argue about who actually has the management and control of the property in that instance. It would be interesting to know whether in future landlords could be in trouble if they do not include in the lease a provision that bans the location and siting of a vending machine in the property. I do not think that would be where landlords currently stand, but that is perhaps worth considering. It seems pedantic but, knowing the way the legal system can go when people want to find defences, we do have to stress test the wording we use, so we need to examine the concept of a person having management and control.
Dr Johnson
My hon. Friend is making a very important point that I had not fully considered: who is responsible where you have a larger corporation with a group of shops beneath? You have the board level, the regional managers, the local shop manager, the shift supervisor and then the shop worker, so who has the control? Is that something the Government have a fixed position on, or would each company individually need to prove who that was? If trading standards was prosecuting such an offence and chose the wrong individual, would the Government allow the corporation to get off scot-free?
Sarah Bool
My hon. Friend makes an incredibly valid point. It is something we are duty-bound to explore and test, to make sure we can avoid any problems with the roll-out and implementation of this.
Jack Rankin
The nub of clause 3 is age verification. The reason the Minister and the Government do not want tobacco vending machines in operation is not that they do not want convenience for the customer, but rather that they want to make sure that people are of a suitable age under the law. Without somebody to check, that is a problem.
In my youth, I used to play snooker in what was the Minister’s constituency. There was a little area of the club, with a little gate, where the gambling machines were, and there was a tobacco vending machine in there. The only thing preventing us from going in there was honesty. Whereas it stopped me as a teenager, I do not suppose that it would have stopped adults in the same way—if you wanted to restrict adults from being a smoker in the future, that would not serve as a deterrent.
My question is about nicotine products, which I was hoping the Minister could come to, perhaps when he winds up. Nicotine products are defined separately from tobacco products in this legislation, so it would still be acceptable for things such as nicotine patches to be sold through vending machines. That does not sound unsensible, because it does not seem to me that people trying to evade this law would be attracted to nicotine products in the same way they might be to other tobacco cessation devices. Perhaps the Minister can comment on how he proposes to treat them when he winds up.
Andrew Gwynne
Let me first say to the shadow Minister that we are aware of the new type of machines she mentioned, and we are concerned by their presence. The Department is looking to ensure that there are no loopholes in this legislation and that these machines, which may seek to bypass the age of sale restrictions, are not able to. Secondly, she has already answered the point about Scotland: the reason these measures do not appertain to Scotland is that Scotland already has legislation covering them.
To other Members, I say that we are overcomplicating this. As I said in opening, the clauses merely restate the existing ban on tobacco vending machines in England, Wales and Northern Ireland. We are consolidating the legislation to make it easier to understand the law but also to enforce it from one place—and that is it. This is the consolidation of existing powers that are working now.
The hon. Member for Windsor is absolutely right when he says that we want to ensure that age of sale is absolutely enabled to be enforced. As he said, when he was playing snooker in my old constituency, he would have been able to purchase tobacco products from a vending machine, and it was basically on the basis of trust that people were able to do that. That is no longer acceptable. We are bringing in the age restrictions, and we therefore need to make sure that they are adhered to.
I do not wish to stray on to nicotine products, because those are subject to a debate further on in the Bill. However, the hon. Gentleman is right to draw a distinction in the way he has. That is why the whole Bill treats nicotine products separately to, and very differently from, tobacco products, for reasons we will get to in due course.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clause 4
Sale of unpackaged cigarettes
Question proposed, That the clause stand part of the Bill.
Andrew Gwynne
These clauses restate that it is an offence for tobacco retailers to sell cigarettes that are not in the original packaging they were supplied in. Selling unpackaged cigarettes is currently an offence in England, Wales, Scotland and Northern Ireland, and these clauses re-enact that offence. The prohibition was originally introduced to reduce smoking among children, because there was evidence that children were being sold single cigarettes. The clauses ensure that the sale of loose cigarettes continues to be prohibited and that cigarettes are sold in the appropriate packaging. I therefore commend the clauses to the Committee.
Dr Johnson
As the Minister says, clause 4 makes it against the law to sell cigarettes that are not in their original packaging, so that individual or small amounts of cigarettes cannot be sold separately. That is in part because cigarette packets now have standardised formats, warnings and information designed to alert the smoker to the health problems caused by the smoking habit, and selling cigarettes outside the packets means the smoker avoids that information.
I asked the Minister earlier about proposals for warning notices about smoking on the cigarette paper itself, but I did not hear his thoughts. The notices might ensure that, were individual sales to happen despite the law, the warning would still be received by the child or smoker, but there is also the risk of adding additional chemicals to the paper. Where does he think the benefit or balance of risk lies in that respect?
Everywhere else the Bill makes it an offence for a “person” to do something, so why does the clause mention a “tobacco retailer” rather than a “person”? If the Minister does not wish cigarettes to be sold individually, why would it be more of an offence for a proper tobacco retailer to sell them individually than it would be for an individual who is not a tobacco retailer? Why the change in wording? I do not understand. If someone is not a tobacco retailer, it would clearly be illegal, because they would have no licence. Why not have this additional offence for the most reckless people, so that they can be dealt with more severely?
As the Minister says, the minimum pack size of 20 was brought forward in 2017, because it was felt that packs of 10 were closer to the level of pocket money and were encouraging the uptake of cigarettes by children. When we come to vaping, we will discuss the pocket money nature of some of these products.
Jack Rankin
Certainly in my experience, the only reason people sell unpackaged cigarettes is to make them cheaper for schoolchildren, so I find it strange that subsection (2) states that the fine is level 3 on the standard scale. If I understand what my hon. Friend said in the last sitting about the standard scale, level 3 is lower than the level 4 fine for sale. A sale could have been in error, but unpackaging cigarettes to sell to schoolchildren seems deliberately malicious, so I am surprised that it is not treated more severely. Perhaps my hon. Friend can comment on that.
Dr Johnson
My hon. Friend is right that the offence of selling a product to a person born on or after 1 January 2009 is something someone could do unintentionally. They could genuinely believe the ID in front of them, or that the person looked so significantly older that it was not even necessary to ask them for ID, whereas selling cigarettes outside the packaging requires the deliberate act of removing them from the packet and selling them individually, in a way that is not normally done. I think my hon. Friend is right, and it is perhaps surprising to have a deliberate act at a lower fine level than a potentially unintentional one.
Sarah Bool
Why are we limiting this to cigarettes? Forgive me, I am not an expert—I have never bought herbal smoking products—but if we are applying the same rules and we just want an outright ban, perhaps we should apply it generally, in case there are rule changes, to the sale of not only unpackaged cigarettes but unpackaged herbal smoking products. That would add further to the emphasis on changing the term from “a tobacco retailer” to “a person”, as my hon. Friend suggested.
Dr Johnson
I thank my hon. Friend for her contribution, and she is right to talk about the quantity. If the principle behind this clause is to ensure that the quantity of sale is such that it restricts younger people from purchasing these products with their pocket money, what consideration has the Minister given to the quantities of herbal cigarettes, or herbal smoking products, and cigarette papers, so that they would be purchased in quantities not easily accessible to young people?
On the comments made by my hon. Friend the Member for Windsor about the fine levels, the fines are level 3, which in this case is consistent across the four nations of the United Kingdom. Clause 51 amends the Tobacco and Primary Medical Services (Scotland) Act 2010 to add proposed new section 4E, which essentially has the same effect—it is different wording, but it has the same essential effect of banning the sale of loose cigarettes. Clause 71 adds proposed new section 4C, which is essentially the same as clause 4, to the Health and Personal Social Services (Northern Ireland) Order 1978 to have the same effect. Again, it has the same fine, so there is some consistency across the four nations of the country, but I would be grateful for the Minister’s comments on the points I have raised.
Andrew Gwynne
I thank the hon. Lady for raising these matters. Again, it is a case of perhaps overcomplicating what the clause does. As with clause 3, clause 4 merely restates that it is an offence for tobacco retailers to sell cigarettes that are not in the original packaging they were supplied in. We are not talking about proxy purchasing, or somebody breaking up a packet of cigarettes and selling them as an individual; we are talking here about retailers. This practice used to be quite common, but thankfully, because of the measures that are already in place, it is already an offence and we are reaffirming that offence in the Bill.
Dr Johnson
The Minister says that it has been illegal for some time and that is an offence to sell loose cigarettes, and of course it has been. However, we heard in evidence from the Royal College of Physicians last week that the sale of loose cigarettes to youngsters was still a problem—it is an entry way into cigarettes. Does the Minister have any comment on whether reaffirming the offence with this legislation will actually help to enforce it to any greater degree?
Andrew Gwynne
Yes, I believe it will. Of course, this measure is not being taken in isolation, and it is not just a stand-alone measure. This is part of a whole package of tobacco control measures that form this part of the Bill. Taken together, these things will ensure that we drive down even further smoking prevalence in young people. However, we do not want to undo the legislation as it stands; we need it to be part and parcel of the whole raft of measures we are bringing forward.
Sarah Bool
I am concerned about whether we are accidentally and inadvertently creating a loophole here. If we are not going to ban someone from breaking down a cigarette packet and selling it, that is the way they will go about doing it. We should be going for consistency and tightness on this. I appreciate that that is the law as it stands, which is why we have applied it, but have we had the foresight to ensure that we do not create a loophole? It seems quite possible that we have.
Andrew Gwynne
If the hon. Lady is not talking about retailers breaking up packets, which is illegal, she is talking, effectively, about proxy purchasing—an adult buying tobacco products for children, splitting up the packet and selling those products on. It is already an offence for those children to get cigarettes—whether a full packet or part of a packet—even if they are not from retailers. It is proxy purchasing, and we have already covered that.
The shadow Minister raised the issue of messaging on individual cigarettes. I am not sure whether she was under the misapprehension that it is not covered in the Bill. The Bill restates the existing power to make regulations on the appearance of tobacco products, including cigarette sticks. Not only that, but it goes further by extending the power to other products, including cigarette papers. Although we do not plan to introduce dissuasive cigarettes at this time, as we believe we already have strong health warnings in the existing measures, we will continue to monitor the situation. We do leave an open door to it, and the powers are there. We will, however, mandate pack inserts into cigarette packs. We believe that that is proportionate at this time, while not closing the door to going further.
Lastly, the shadow Minister noted that, in some cases, fines are consistent across the United Kingdom, but that, in others, there are differences. I am afraid that that is the result of the devolution settlement. We have built into the Bill the ability for all four nations to walk together on making our country smoke-free, but the levels at which fines are levied are entirely a matter for the devolved Administrations. That is why there is sometimes an inconsistency in fine levels.
Question put and agreed to.
Clause 4 accordingly ordered to stand part of the Bill.
Clause 5
Age of sale notice at point of sale: England
Question proposed, That the clause stand part of the Bill.
Andrew Gwynne
Clauses 5, 6 and 72 replace the requirement for age of sale notices in England, Wales and Northern Ireland to reflect the new age of sale for tobacco products. Clause 55 provides Scottish Ministers with the power to set requirements about warning statements, which are notices that reflect the new age of sale requirements there. Age of sale notices are required under current legislation and must state in a prominent position:
“It is illegal to sell tobacco products to anyone under the age of 18.”
The Bill will replace that requirement with a requirement for notices to reflect the new age of sale, stating:
“It is illegal to sell tobacco products to anyone born on or after 1 January 2009.”
The notices must comply with any requirements set out in regulations on the size or appearance of those notices. This updated wording on age of sale notices will support tobacco retailers in implementing the new age of sale restrictions by helping to clarify and underline them for customers and staff. I therefore commend these clauses to the Committee.
Dr Johnson
Clauses 5, 6, 55 and 72 make provision for age of sale notices. Clause 5(1) makes it clear on which premises the notices must be displayed. In some respects, that is obvious, but the fact that the Bill makes clear that the notices must be on the same premises where the tobacco is being sold is perhaps a sign that the Minister has the measure of the tobacco industry: if that was not clearly stipulated, there would be temptation to display the notices in head office or somewhere else where no one could see them. The fact that it is thought necessary to state what is blindingly obvious—that the notice must be displayed in the right place—is somewhat sad.
Subsection (3) deals with positioning. The statement that the notice must be prominent and readily visible at each point of sale is relevant to shops that have more than one till at the counter. One sometimes goes to the counter of a large supermarket, or similar, and sees a whole row of tills. It is therefore important that the signs are visible from all the tills, not just the one closest to the tobacco.
What the notice must say is provided for in subsection (2):
“It is illegal to sell tobacco products to anyone born on or after 1 January 2009”.
That is clear, simple and informative, which is good. However, it does not mention cigarette papers or herbal smoking products. Why has the Minister chosen not to include the other items included in the rolling age of sale and the Government’s smoke-free generation on the notice for clarity? That is important because we heard in evidence, and have all read in the news, of examples where people who work in our retail sector have been treated in an abusive—sometimes violent—fashion or people have been very rude to them.
If the purpose of the notice is to be clear on what the law is, providing clarity that it also includes herbal smoking products and cigarette papers would enable the public to be aware of the law and the retailer to point to the sign and say, “I can’t do this—look.” The message as currently drafted does not do that, and that could cause shopkeepers or shop assistants more difficulty. I notice that under subsection (4), any aspect of the notices, including the appearance and wording, can be amended, so that could be done at a later date if the Minister feels that the shopkeepers’ evidence is that herbal smoking products and cigarette papers are proving a challenge. Why has he chosen not to do that at the outset?
Subsection (7) talks about a defence of having taken reasonable steps. I have two questions on that. First, is “It fell down and I hadn’t noticed, your honour” an adequate defence? How does the Minister envisage the reasonable steps defence? What are the reasonable steps? If the Government choose under subsection (4) to change the appearance or wording—perhaps if they discover it is inadequate in some way—what steps will need to be taken to ensure that all retailers are aware of those changes, and within what timeframe will retailers be expected to react to those changes?
The impact assessment says that the cost of putting up a new sign is not prohibitively expensive for an individual business—it is about £4 per retailer—but it means that there is an overall cost to small and micro-retailers of around £124,000 in England, and £143,000 in the UK. That is a cost to business overall, even if a small one to individual businesses. The impact assessment also notes the cost of staff training and awareness. There are an estimated 42,582 convenience stores in England, each with a store manager who would have to disseminate that information to the estimated 299,957 members of staff. Of those stores, 71% would be considered small or microbusinesses.
The cost of amending those things means that the Opposition invite the Minister to get the notice right the first time so costs are not incurred twice. There is an estimated cost of around £2 million in total on training. Although the cost to any one small or microbusiness is likely to be small—around £70 on average—that cost combined with £4 for a sign, at a time when small businesses are being squeezed by other budgetary measures the Government have brought in, is another potential straw to break the camel’s back.
The fine is at a level 3, and the person who carries on a business involving the sale of tobacco products by retail is the person who is liable. But what does it mean to be
“a person who carries on a business involving the sale of tobacco products by retail”.
Is it the director of the business? Is it the store manager who is on duty that day? Is it the overall store manager, or is it the licence holder?
Jack Rankin
My hon. Friend has previously sought to amend the Bill in various places to add the qualifier “save for the first offence”. It seems to me that, particularly in the first instance, this could be a genuine oversight and that it would be appropriate for a council officer or someone from trading standards to simply bring it to the attention of store management and ask them to rectify it over a period of time. Does she think this clause should be tweaked in such a way, on the same principle on which that she has sought to amend other clauses?
Dr Johnson
I am going to disagree with my hon. Friend on that point. There will be licensing for tobacco products, and part of the due diligence of setting up to sell such products includes familiarising oneself with the legislation as it stands and thus with the regulations around signage, buying and putting up the appropriate signs, and providing the appropriate training. The challenge occurs if the Government seek to amend the notice, at which point they would need to ensure that they had given adequate notice and information to the company to ensure that it had the time, resources and information to put up the correct signs.
Tristan Osborne
On signs, if we accept the premise that the law is changed—as we have done in clause 1—to include a rolling scale with the date being 1 January 2009, signs will have to be updated in any event to reflect that. The current signs about being 18 would have to be removed. On the definition on the signs—tobacco products versus relevant products—is it not clearer to the public, who are going to be the purchasers of the products, if it is tobacco products? It does not preclude extra signage, which exists in many stores, of what can and cannot be purchased. While I accept the premise of the idea of relevant products versus tobacco products, for the public it would be clearer if it were tobacco products.
Dr Johnson
The hon. Gentleman is right, of course, that those selling tobacco products legally now will need to change their signs to have the date of 1 January 2009 on them, as opposed to the age of 18, because that will be the law: that clause has now passed, and I expect that it will continue its passage through the House and the other place, because it has broad support among the public and within Parliament.
Dr Beccy Cooper
I just wanted to clarify something with the hon. Lady, because she is talking about the size of the signs in Wales, under clause 6, I think. Clause 6(4) says:
“The notice must comply with any requirements set out in regulations made by the Welsh Ministers”.
I presume that that is the response that she is looking for: the Welsh Ministers will absolutely be able to decide on the size of the signs.
Gregory Stafford
My hon. Friend is making, I think, an important point about whether Ministers, either in England or in the devolved Administrations, can put signs together in order to reduce the burden on a business of having multiple, potentially confusing signs. I understand the point about devolution, but most ordinary people will look for a single regulated sign for this. I wonder whether there is any discussion—even if the Minister cannot legally enforce it within the Bill—about working in tandem with the relevant Ministers in Scotland, Wales and Northern Ireland, so that there can be a standardised sign, so that it is abundantly clear, whether someone is in England, Wales, Scotland or Northern Ireland, that that is the sign, and that it is both clear to consumers and it is clear to businesses what they are supposed to be displaying.
Dr Johnson
I thank my hon. Friend for his intervention. It is of course correct that we have devolution, and the hon. Member for Worthing West is of course right that Welsh Ministers—in the same way as Scottish Ministers, and, as I will come to, Northern Irish Ministers—have the capacity to deal with changes to the signs, but it will be easier to have clarity. I am merely suggesting that the Minister could discuss these details with his devolved counterparts and put such measures on the face of the Bill now, rather than not do so and then require, for example, as I said before, the Scottish Ministers to then introduce an SI for something that could be changed much more cheaply with drafting now. It would require much less time and energy from the civil service in Scotland—and spend less taxpayers’ money—to achieve that.
I am interested by the comment from my hon. Friend the Member for Farnham and Bordon about joint signs. The point I was making was about the display space: if someone has to put a lot of different signs up—particularly given that the Minister has shown reluctance on the principle of a nicotine-free generation, which I suspect is where we will end up—and we need to do that at a later date, we will end up with yet another sign with yet another date on it. There comes a point at which the amount of display space available to retailers starts to become smaller, given the required font size.
Before I finish, I have one more quick point, which is just to note that clause 72 is the Northern Irish equivalent added to the Health and Personal Social Services (Northern Ireland) Order 1978, so it is the same as clause 5, with the same effect.
Ordered, That the debate be now adjourned.—(Taiwo Owatemi.)
Tobacco and Vapes Bill (Sixth sitting)
Tuesday 14th January 2025
(1 month, 1 week ago)
Public Bill CommitteesTobacco and Vapes Bill 2024-26 View all Tobacco and Vapes Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 January 2025 - (14 Jan 2025)
The Committee divided: - Ayes: 3 / Noes: 12 - Question accordingly negatived.
The Chair
I remind the Committee that with this it will be convenient to discuss clauses 6, 55 and 72 stand part.
Jack Rankin (Windsor) (Con)
At first sight, the clause can appear to follow on naturally from the rest of the Bill, and in some sense it does, but I think it is important. We heard from shopkeepers in the evidence session last week, from the British Retail Consortium, and in the representations to us made in writing that it can be difficult for younger shopkeepers to hold the line on this, and they might be at the wrong end of unacceptable verbal abuse. In my view, the Bill will increase that risk.
With younger people often manning retail stands, in the future we might have 18 or 19-year-olds having to refuse to sell tobacco products to people a decade or so older than them. That will be increasingly challenging, even compared with the existing situation. I have spoken about being opposed to the principle of the Bill and finding it somewhat unworkable, but putting that to one side, I think that if we are to proceed with it, we have a particular obligation to make things as easy as possible for shopkeepers. I am sure that everyone agrees.
The language used, or proposed to be used, in the age of sale notice in subsection (2) is quite legalistic, being presented as:
“It is illegal to sell tobacco products to anyone born on or after 1 January 2009”.
That is a statement of fact. It mirrors what we see today, but it is very legal. I think it would benefit from being a bit more practical. For example—I think my hon. Friend the Member for Sleaford and North Hykeham made this point—it is illegal to sell herbal smoking products, cigarette papers and not just cigarettes, but cigars. We might help our shopkeepers if we made the list a bit more practical, so that the shopkeeper could turn around to say, “Sorry, guvnor, but this is the law,” whereas with the Bill saying “tobacco products”, the verbal altercation might include, “These are not cigarettes, though.” Perhaps we should move away from legalistic language to help staff, especially younger members of staff. That is particularly necessary, given what seems to be a general coarsening in our society, I am afraid to say.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
The regulations will need to be enforced not just in a large supermarket, where the shop assistant has the benefit of a security guard and other—
Dr Johnson
I am sorry, Sir Mark. The regulations will need to be enforced whether one is a shop assistant in a small shop or in a large shop. In a large shop that sells tobacco, such as a large supermarket, one might have the benefit of a security guard, additional staff and many more people around. Alternatively, a 19-year-old might be trying to enforce the regulations on a Saturday evening in a rural shop many miles from the local police station, with no security guard or anyone else around.
Jack Rankin
That is exactly the kind of situation I am thinking of. The language could be a bit more practical, less legal and it might aid that shopkeeper to point to an external source for validation.
I have two further points. One is a point of ignorance for me as a new Member, for which I apologise. I do not know what subsection (5) means when it says that
“Regulations under subsection (4) are subject to the negative resolution procedure.”
I hope someone can help me with that. Clause 6 is being taken together with clause 5, because clause 5 applies to England and clause 6 applies to Wales. To me, they appear to be exactly the same, apart from the age of sale notice described in clause 6(2) and the fact that clause 6 obviously also includes the Welsh version. I am going to take at face value that it says the same thing in Welsh, although I do not speak Welsh. It would be nice to clarify whether it is either/or whether it is both together. That is of interest.
Sarah Bool (South Northamptonshire) (Con)
I want to follow up on the points made on clause 5(3) and clause 6(3) in particular. Both specify that
“The notice must be displayed in a prominent position”.
I agree with many of the points my hon. Friend the Member for Windsor made about what that means in practice. In the information pack that we have been given, there is a quote from the Scottish Grocers’ Federation, which I want to read for the record. It explicitly states:
“In most convenience stores, space is at a premium and the suggested wording set out in UK Government proposals will require a significant surface area in order to be legible and accessible to all customers. The complexity of a moving ban will require very clear public messaging. Appropriate and mandatory signage is essential for good practice and the sale of age restricted items, SGF is concerned that multiple messages throughout the store relating to various product ranges and items could potentially create confusion and lead to challenging interactions between customers and staff.”
To protect our retailers, we must ensure that we enforce these regulations correctly. When making the regulations, the Secretary of State should take into account the voice of the retailers.
The Parliamentary Under-Secretary of State for Health and Social Care (Andrew Gwynne)
It is a pleasure to serve under your chairmanship, Sir Mark. In responding to points that have been made, I want first to reiterate that these two clauses do not relate to enforcement; they concern the nature of the signage that will be required to be displayed. We can come to those other matters later in the Bill’s proceedings. I remind Opposition Members of what has been said in previous debates: we will use the very long lead-in time to engage fully with the retail sector to ensure that we get the delivery in shops right and to ensure that the Bill’s provisions can be implemented without any hiccups.
I also reiterate that we abhor any violence and abuse towards retail staff—or anybody else—and it is the intention of this Labour Government to introduce a new offence in this respect. Given the comments that have rightly been made in the course of this and earlier debates, I hope that it will command full support from all parts of the House.
The hon. Member for Windsor asked what is meant by “negative resolution procedure”. It is the procedure for the statutory instrument that will be have to be made to introduce these regulations. The fact that it is “negative” means purely that it will not require a parliamentary debate. It will be done through the usual secondary legislation processes.
There were questions about the nature of the clauses relating to different parts of the United Kingdom, and why we are approaching this with slightly different methods. I must say politely—particularly to the shadow Minister—that we have to respect the devolution settlement. These matters are entirely within the legislative competence of the devolved Administrations. Some things remain reserved for the UK Government, but for a lot of the measures in the Bill, the legislative competence rests with the devolved Administrations and their Parliaments.
Dr Johnson
I have at no point suggested that I do not respect the devolution that is in place. I made two remarks that reference devolution. One was about the different penalties that apply for the same offence in different parts of the United Kingdom. While I recognise that Ministers in other parts of the country have the competence to change the penalties to make them different from those that apply in England, it is clearly the Minister here who decides what the draft legislation should say with regards to the penalty in England. My questions focused on why he has chosen to make it different in England from other parts of the United Kingdom. Clearly, if the Northern Irish had chosen a higher penalty, it is up to him if he wishes to join them, or to have a lower penalty.
The other issue I have raised regarding devolution was in relation to clause 5. The Bill as drafted says that tobacco cannot be sold to people born on or after 1 January 2009, and much effort has gone into ensuring that that is replicated in Scottish legislation all the way through, even though the Scottish Parliament could do that itself if it wanted to. It makes sense to do it in one go here because that is more efficient in terms of both time and financial expenditure for civil servants across the country. So my question was why the Minister has chosen not to include in the Bill the change to the notice in clause 5, saying that tobacco cannot be sold to people under 18. Why not change that now?
Dr Johnson
I am defending myself, as the Minister has accused me of something, Sir Mark.
Dr Johnson
I am merely suggesting that changing the notice in clause 5 to
“born on or after 1 January 2009”
instead of “under 18” now would be more efficient, and help our Scottish colleagues, rather than implying they are not capable of doing so.
Andrew Gwynne
Sir Mark, the hon. Lady protests too much here, because while it is true that she was questioning why, for example, the English fines could not be the rate of the Northern Irish fines, she was also pretty much calling for us to legislate for Scotland and Wales to bring consistency across the whole United Kingdom. Likewise with clause 5, she asks why we in this place are not legislating for Scotland in respect of the notices that will be displayed in Scotland. It is not our job to legislate where the Scottish Government do not want us to do so.
Andrew Gwynne
No, I will answer the hon. Lady. My officials and I have been in contact throughout the production of this Bill with officials and Ministers in the devolved Administrations. I have had umpteen meetings personally with my counterparts in Scotland, Wales, and Northern Ireland, and there is an open offer. They are genuinely excited, Sir Mark, that we are able—as far as possible—to legislate with their consent to make smoke-free UK a reality, and we have sought to design this Bill in co-production with the devolved Administrations. None the less, there are some things that the devolved Administrations do not wish this Parliament to legislate on. For example, in respect of clause 5, on the notices, the Scottish Government have made it very clear that this is something they wish to do in their own way, in their own time, notwithstanding the fact that they have given us assurances that the measures will be in place to give enough time for retailers north of the border in Scotland to implement them. It is not for me to overrule the will of Scottish Ministers, who have the legislative competence to do this, if they do not wish this Parliament to do it on their behalf.
I hope that that answers future similar questions about the differences in different parts of the United Kingdom. We are legislating with the permission and consent of the three devolved Administration Governments, and we are not going to overstep. I have already said to my ministerial colleagues in other parts of the United Kingdom that if, during the course of the Bill through this House and the other place, they think, “That is not quite right and we need it to be amended,” or, “You know, it does make sense for Westminster to do it all in one go and do it for us,” we will respect that.
I have given Ministers my promise that if, as an afterthought, they want us to do some of this for them on their behalf during the Bill’s progress through its stages in both Houses, we will facilitate that. However, I am not going to overstep the powers given to me by the Scottish, Welsh and Northern Irish Ministers to legislate on their behalf and to ensure that we have a United Kingdom-wide Bill that meets the separate and different needs, ambitions and expectations of our devolved settlement.
Dr Johnson
I am grateful to the Minister for making clear that the reason that the text contained within the age of sale notice is not being amended at this stage is because Scottish Ministers have told him they would prefer to amend it themselves at a later date.
Andrew Gwynne
I am grateful for that, and if any offence was caused by my earlier comments, I apologise to the hon. Lady. We need to set out clearly that we are doing something quite ingenious, and that is only because of the goodwill and the desire of Ministers from different political backgrounds in Scotland, Wales and Northern Ireland to get this legislation through the United Kingdom Parliament with the ability for them to then differ on consultations and other matters once the legislation is on the statute book. That would have been unheard of in years gone by, when relationships were not necessarily as good as they currently are between the devolved Administrations and the Westminster Government.
The same argument applies to clause 6. The sign will be a matter for Welsh Ministers. Although the framework of the sign is set down in the Bill for Wales, because that was how they wished us to approach it, any changes would be a matter for Welsh Ministers. The hon. Lady asked the hypothetical question whether, if we changed the notices again, there would be adequate consultation or time for retailers. We are not planning on making life difficult for retailers. We think that the wording here is the right wording. I do not take it to be legalistic and technical in the way that the hon. Member for Windsor seems to think it is. It is the same wording that applies now, with the exception that rather than talking about people “under the age of 18”, it will say
“anyone born on or before 1 January 2009”.
I think that is pretty clear.
The wording on the signage was tested during the public consultation in January, and more than 70% of respondents supported it. Many respondents noted that we need to mirror the existing wording to ensure accessibility. Other products are more niche and were not deemed to be necessary on the sign, but I think most people understand what a tobacco product is, and a cigar is certainly a tobacco product. I commend the clauses to the Committee.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clause 6 ordered to stand part of the Bill.
Clause 7
Ban on manufacture of snus etc
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clause 8 stand part.
Amendment 60, in clause 9, page 5, line 10, at end insert
“, save if it is a first offence.”
See explanatory statement to Amendment 62.
Amendment 61, in clause 9, page 5, line 12, at end insert
“, save if it is a first offence.”
See explanatory statement to Amendment 62.
Amendment 62, in clause 9, page 5, line 12, at end insert—
“(3A) A person who has admitted guilt of a first offence under this section is liable to a fine not exceeding level 3 on the standard scale or a caution.”
This amendment, together with Amendments 60 and 61, prevents penalties for a first offence under section 9 being a fine beyond level 3 and provides for a discretionary caution.
Clause 9 stand part.
Clauses 56 and 57 stand part.
Amendment 70, in clause 58, page 29, line 19, at end insert
“, save if it is a first offence.”
See explanatory statement to Amendment 72.
Amendment 71, in clause 58, page 29, line 21, at end insert
“, save if it is a first offence.”
See explanatory statement to Amendment 72.
Amendment 72, in clause 58, page 29, line 21, at end insert—
“(3A) A person who has admitted guilt of a first offence under subsection (1) is liable to a fine not exceeding level 3 on the standard scale or a recorded police warning.”
This amendment, together with Amendments 70 and 71, prevents penalties for a first offence under Section 58 (pertaining to restrictions on the possession of snus with an intent to supply in Scotland) being beyond level 3 and provides for a discretionary recorded police warning.
Clause 58 stand part.
Clauses 73 and 74 stand part.
Amendment 77, in clause 75, page 39, line 19, at end insert
“, save if it is a first offence.”
See explanatory statement to Amendment 79.
Amendment 78, in clause 75, page 39, line 21, at end insert
“, save if it is a first offence.”
See explanatory statement to Amendment 79.
Amendment 79, in clause 75, page 39, line 21, at end insert—
“(3A) A person who has admitted guilt of a first offence under this Article is liable to a to a fine not exceeding level 3 on the standard scale or conditional caution.”
This amendment, together with Amendments 77 and 78, prevents penalties for a first offence under Section 75 (pertaining to restrictions on the possession with an intent to supply of snus in Northern Ireland) being beyond level 3 and provides for a conditional caution.
Clause 75 stand part.
Andrew Gwynne
I am grateful for the opportunity to open this debate. Amendments 60 to 62, 70 to 72 and 77 to 79 would create a more lenient penalty regime for the offence of possessing the relevant oral tobacco product, for example snus, with intent to supply it to another person in the course of business in England, Wales, Scotland and Northern Ireland, by creating an exception to the maximum penalty that a person can face for committing that offence if it is their first offence.
The amendments would establish that someone who admits to committing an offence for the first time would be liable on summary conviction or indictment to a fine not exceeding level 3 on the standard scale, which is £1,000, or provide instead for a discretionary caution in England and Wales, a recorded police warning in Scotland or a conditional caution in Northern Ireland. That is lower than the current maximum penalties, which are, on summary conviction, imprisonment for up to six months in England, Wales and Northern Ireland and 12 months in Scotland, a fine, or both; or, on conviction on indictment, imprisonment for up to two years, a fine, or both.
The amendments would remove the distinction between summary conviction and conviction on indictment for first-time offenders, meaning that the severity of the offence committed would not be taken into account in those cases as it would under current provisions. In creating a first-time offence, the amendments would have a similar effect to amendments that we have already discussed, so, if the Committee is content, I will not repeat myself, as my rationale for asking the shadow Minister to withdraw her amendment remains the same.
Dr Johnson
This group of clauses and amendments all apply to snus, which we are trying to ban, so the first question is: what is snus? Snus is a tobacco product predominantly used in Sweden and, to an extent, in the USA. When the Health and Social Care Committee, which I was a member of in the last Parliament, visited Sweden at around the time the previous Tobacco and Vapes Bill was introduced, we saw shops with massive displays of different types, brands and flavours of snus, which came in small round pots similar to those that we see nicotine pouches in; they were mostly kept in the refrigerator.
Snus is produced using tobacco leaves, salt and alkalis such as sodium bicarbonate or sodium carbonate. The alkali is there to help the nicotine to be absorbed more easily into the mouth and therefore into the bloodstream of the person using the product. Producers also potentially add a flavouring. As we have seen in cigarette papers, flavourings are used to improve the palatability of tobacco products. The mixture of tobacco leaf, salt, alkalis and flavouring is ground up, steam-pasteurised to inhibit the growth of bacteria, and then supplied loose or in small pouches.
The loose form is a moist, powdery product, which I understand is rolled between one’s fingers to create a sort of cylinder shape known as a pinch. It is placed under the upper lip, where it is held for about 30 minutes while the nicotine is absorbed into the bloodstream. Its moist nature helps to facilitate the absorption of nicotine and makes the nicotine hit faster; it is absorbed more quickly than it would otherwise be.
The second way that snus can be supplied is in a small pouch resembling a very little teabag, which comes in two formats: original and white. The original version is a sachet of material that is kept moist and is brown in colour. Again, the moistness allows a quick release, but the tobacco product does not need rolling and pinching; it just needs putting into one’s mouth, and it stays in its little pouch. The white version is not in all cases white, but the genre is known as white snus. It has a milder taste and a slower release because the powder in the pouch is dry. The dryness means that one needs to get it moist in the mouth before it will dissolve across the membrane and give the nicotine hit, which means that the dry snus is a slower-release product than the original. The American snus is a lower moisture product, again provided in a variety of flavours to suit the customer.
Why did I and others not know what snus was? I am sure you are familiar with it, Sir Mark. This specific form of tobacco product has been banned in the UK for some time. It was banned by the Tobacco for Oral Use (Safety) Regulations 1992—I was still at school—and then EU tobacco products directive 2014/40 created a European-wide ban, which was incorporated into UK law by the Tobacco and Related Products Regulations 2016. The Committee might be interested to know that Sweden has a derogation specifically for snus under that EU regulation, so snus is still sold there, as I described.
Advocates of snus believe it is less harmful and causes less respiratory disease and less cancer than does an inhaled form of tobacco. They try to market it as an alternative to smoking that is less harmful. However, the evidence shows a risk of cancer, particularly of the cheek and gums. Perhaps that is not surprising, given where it is placed to be used. Oral squamous cell carcinoma, a form of cancer of the mouth, often occurs in the site at which snus is commonly placed. It has also been shown that snus causes increased blood pressure, particularly in females, and despite not being inhaled it can contribute to an increased rate of asthma.
Aside from all that, snus contains nicotine, which we know is addictive. Regardless of the form in which it is taken, it creates the addiction and cravings that rob people of the choice not to use the product, which the Minister spoke about so powerfully last week. It is important that we consider this carefully, because otherwise people will become addicted to snus as another form of nicotine.
Jack Rankin
The shadow Minister is a doctor, so she is learned in this area, and she makes the case that snus is harmful in the same way as tobacco. What does she know of the relative harm? I am concerned that, in taking quite a studs-up and puritanical approach, we are taking away things that might not be as bad as cigarettes that could allow people to effectively tier down. Does she have any thoughts on that?
Dr Johnson
That was the second question I considered when preparing for the debate on this clause. My first question was: what is snus? My second was: if it is a tobacco product, why is it treated differently? We have talked about all sorts of different tobacco products—cigarettes, cigars, snuff—yet this one has particularly robust regulation and a robust legal framework. The only reason I could find was that it is new, trendy and coming forward very quickly, and there were concerns that it would quickly take over the children’s market in the same way as vaping. That is the only suggestion I was able to find. I am sure the Minister will be able to help us to understand why snus is treated so robustly, although I am not sad to see that.
Clause 7 makes it an offence to manufacture oral tobacco products. Oral tobacco products are defined quite particularly as those that are for oral use but not intended to be inhaled or chewed, so they do not include chewing tobacco, which would be included under clause 1. They also have to be in either powder or particle form—as I said, they are in the form of ground tobacco. Currently, the Tobacco and Related Products Regulations 2016 define “tobacco for oral use” similarly, as tobacco “intended for oral use”, not to be inhaled or chewed, and
“in powder or particulate form or any combination”,
whether presented in a
“sachet portion or a porous sachet, or in any other way”.
Regulation 17 provides for a UK-wide ban on the production and sale of snus. Schedule 6 to the Bill, which we will come to, will repeal that measure and replace it with clause 7.
I want to ask the Minister why it is an offence to manufacture oral tobacco products in the UK, and not an offence to manufacture other tobacco products. He has talked about the need for a smoke-free generation and his worries that smoking tobacco harms individuals’ health, wellbeing and ability to choose, but he has not chosen to ban the production of other tobacco products. I found that the last time an English-produced cigarette rolled off the production line was at the Horizon Imperial Tobacco factory in Nottingham in May 2016, and the last UK-made cigarette was produced at Japan Tobacco International’s plant in County Antrim in October 2017. He may feel that such a ban is unnecessary because we are not producing any tobacco products, but I am interested in his thoughts on the matter.
The penalty here is the most severe so far. We have had some debate about different clauses containing fines at levels 3, 4 and 5 on the standard scale, but this clause contains a much more severe penalty for a product that may or may not be less harmful than cigarettes, although it has not been suggested that it is much more harmful. The fine for breaching clause 7 on the ban on manufacture of snus is, on summary conviction, imprisonment of six months, a fine or both. Six months is based on the current upper limit in a magistrates court, but the Lord Chancellor announced in October last year a plan to increase the maximum penalty for a magistrates court to 12 months’ imprisonment, which would presumably apply to this Bill. I will be grateful if the Minister could clarify whether that is the case and whether there have been any convictions under the existing legislation. The penalty for conviction on indictment would be imprisonment not exceeding two years, a fine or both—again, quite severe penalties when compared with other aspects of the Bill and other tobacco products. I am interested to understand why.
Sarah Bool
I apologise to my hon. Friend. I might have misunderstood, so may I clarify the intended purpose here? If snus is illegal under earlier regulations, what is this further provision? Is it to ensure that nicotine pouches are also caught? The UK has already banned the sale of all oral tobacco products, including snus, under the Tobacco for Oral Use (Safety) Regulations 1992, which implemented European Union directive 92/41. I am hoping for some clarity about that, but perhaps it will come from the Minister.
Dr Johnson
My understanding—I am sure the Minister will leap to his feet to correct me if I am wrong—is that the Bill does not apply to nicotine pouches per se, because nicotine pouches do not contain tobacco. As I understand it, the brands we see in our local supermarket in similar round pots contain nicotine, and they are put in the mouth and absorbed in a similar way, but they are not tobacco products. As I read the Bill, clause 7 will not apply to them, and obviously they are not currently illegal, because they are widely sold.
Andrew Gwynne
I can easily clarify that point. The clause applies to relevant oral tobacco products, which are defined as tobacco products intended for oral use, not intended to be inhaled or chewed, and that consist wholly or partially of tobacco. It does not apply to tobacco-free nicotine pouches, which are sometimes informally referred to as snus; the Bill classes nicotine pouches as nicotine products.
Dr Johnson
I thank the Minister for clarifying that so comprehensively.
Clause 8 deals with the sale of snus. Clause 7 having made it an offence to manufacture snus, clause 8 bans the sale of snus, which it defines, in the same way as described by the Minister, as a “relevant oral tobacco product”. In wording that is slightly different from that in other clauses, clause 8 also describes the offence as not only to sell, but to
“offer or expose…for sale”.
I had to look up what that meant. To help the Committee, apparently, to offer or expose something for sale means to expose it to attract an offer of purchase from the public. Something is put in the shop window—in the same way as the bongs the Minister described in a shop window the other day—to be visible to a customer and the customer may then choose to make an offer for the purchase of the product, and the product is thereby exposed for sale. In essence, this provision will make putting these products in a shop window an offence.
I am interested to understand why the wording in clause 8 is different from that for all the other tobacco and nicotine products in the Bill, where that wording is not used. If the Minister could explain that, I will be grateful. Again, the defence offered by clause 8 is “all reasonable steps”, but I am not sure what such steps would be, so I will be grateful for clarification on that, too, please.
The penalties for disobeying clause 8 are quite severe. The penalty on summary conviction is
“imprisonment for a term not exceeding the general limit”
in a magistrates court, which is six months, potentially rising to 12 months based on what the Lord Chancellor has said over the past few months, or a fine—of how much, the Bill does not state, so perhaps the Minister could help with that—or both. On conviction on indictment, the penalty is
“imprisonment for a term not exceeding 2 years, or a fine, or both.”
That means that we have a contradiction within the Bill. For virtually any other tobacco or nicotine products that may not be sold, but are sold by an offender, the offender is liable for a fine at level 3, 4 or 5, but clause 8—the sale of snus, as distinct from all other tobacco products—creates an offence that carries a penalty of significant imprisonment. I am not saying that that should not be the case, but I am interested to understand the rationale for the difference, because, notwithstanding any devolution differences, the decision on what to do in England and Wales is clearly for this Government and this Minister.
Clause 9 concerns possession with intent to supply in the course of business of a “relevant oral tobacco product”, as has been defined in clauses 7 and 8. I am interested in what is meant by “the course of business”. If one looks at section 4 of the Misuse of Drugs Act 1971, where possession with intent to supply is most readily thought of, it is the intent to supply it to another person. However, does “the course of business” imply that money must change hands? If one had the intent to supply to another without being paid, would that not be in “the course of business” and therefore be legal? Also, does the word “business” itself imply a properly regulated business? It could not be a properly regulated business in so far as it would be an illegal sale. Does the Minister therefore make a distinction between the product being sold from a business premises as opposed to being bought down the pub from an acquaintance?
Amendments 60, 61 and 62 to clause 9 basically look once again at the principle of proportionality. If, for example, we were to prosecute someone for the sale of cigarettes to a 19-year-old born on 1 January 2009, and it was that person’s first offence, we would give them a fine—so why would we wish to consider imprisoning somebody at the first offence for selling snus? The crime would appear to be somewhat similar but the penalty is very different. I do not intend to push the amendments to a vote, although other hon. Members may wish to, but they are designed to provoke debate on the proportionality of different offences, and the inconsistency between the penalties for different offences that may appear to be very similar. Amendments 60 and 61 insert the phrase
“save if it is a first offence”
and amendment 62 says:
“A person who has admitted guilt of a first offence…is liable to a fine not exceeding level 3 on the standard scale or a caution.”
I will be interested in the Minister’s comments.
Jack Rankin
I am sorry if this is my ignorance as a new legislator, but clauses 7, 8 and 9 applied to England and Wales. However, clauses 56, 57 and 58 apply the same measures to Scotland, and then we have the same for Northern Ireland. In previous clauses, we have also seen that replicated for Wales. Does that mean that clauses 7, 8 and 9 apply to both England and Wales, and how come that devolution is treated differently? Perhaps my hon. Friend the Member for Sleaford and North Hykeham knows the answer to that, or maybe the Minister could clarify.
Dr Johnson
I thank my hon. Friend for his point. I believe that the Bill specifies somewhere which clauses apply under which jurisdictions, but I cannot remember exactly which page that is on. I am sure the Minister in his summing up will be able to identify where my hon. Friend can look to review that, but some of the clauses will apply to different jurisdictions. Some will apply to the whole of the United Kingdom and others will apply to England and Wales, or England alone, depending on various different factors. My hon. Friend will be able to look at the relevant part of the Bill to find that out. My understanding is that clauses 7, 8 and 9 will apply in England and Wales, and I would be grateful if the Minister clarified that point in his summing up.
As my hon. Friend the Member for Windsor has identified, clauses 56, 57 and 58 apply to Scotland; they essentially replicate clauses 7, 8 and 9. Clause 56 prevents the manufacture of snus, clause 57 prevents the sale of snus and clause 58 prevents the possession with intent to supply of snus. Amendments 70, 71 and 72 to clause 58 replicate amendments 60, 61 and 62 and say that there should be proportionality in relation to penalties.
Andrew Gwynne
I am grateful to the shadow Minister for her comments. Although I appreciate her intention to establish greater leniency for first-time offenders, these amendments are not appropriate. Tobacco and vape offences must be taken seriously. We do not want to weaken the penalty regime for these offences, including offences relating to snus, by creating exceptions for first-time offenders or anyone who has committed these offences. We do not want to remove the ability of the court to issue a higher-level penalty, where that is viewed as proportionate for a particular case, for anyone convicted of these offences.
I turn to the shadow Minister’s comments on clauses 7 to 9, 56 to 58 and 73 to 75. Those clauses make it an offence to manufacture, sell or offer for sale, or possess with the intent to supply, a relevant oral tobacco product, such as snus, in England, Wales, Scotland and Northern Ireland. A relevant oral tobacco product is something intended for oral use—the clue is in the name: it is not intended to be inhaled or chewed and it consists wholly or partly of tobacco in powder or particulate form. That includes snus.
As the shadow Minister rightly pointed out, snus has been banned in the UK and the EU since 1992. Snus was banned as it was a novel tobacco product that is harmful to health. Snus contains harmful compounds that have been demonstrated to cause cancer, including cancers of the mouth. The manufacture of snus with a view to the product being supplied for consumption in the United Kingdom or through the travel retail sector is currently banned, as she rightly pointed out, under the Tobacco and Related Products Regulations 2016. These clauses re-enact that ban on manufacture but, unlike the 2016 regulations, do not limit it to supplying the UK or travel retail sector. In effect, that extends the ban to include manufacturing snus for export. That simplifies enforcement and reduces the possibility of such harmful products being available within the United Kingdom.
Andrew Gwynne
I will have to get back to the hon. Lady on that point. We will write to Committee members to update them, because I do not have that information to hand or in my mind.
As I was saying, the supply of snus for consumption in any part of the United Kingdom or through the travel retail sector is also already banned under the Tobacco and Related Products Regulations 2016, and these clauses recast the existing ban as a general ban on sale. The ban on possession of snus for intent to supply support the ban on sale, while preserving the current position under the Tobacco and Related Products Regulations 2016, which allows possession of snus for personal use.
Under these clauses, it will not be an offence to possess snus for personal use or for personal gifting to friends and family; this is not about criminalising individuals who possess snus for personal use. These clauses maintain and simplify the ban, in place since 1992, on the sale of a harmful tobacco product. The clauses also make the prohibition on snus more comprehensive and make the legislation clearer and more accessible. We have no intention of allowing a banned and harmful product into the United Kingdom market. I commend the clauses to the Committee.
The hon. Lady asks about “all reasonable steps”. As we have already discussed, it will be for the discretion of trading standards as to whether all reasonable steps have been taken. As we know, they take a proportionate approach to these matters, and we know that their current procedures work. There is no expectation that they will not work with the legislation before us.
What would prevent a retailer from just giving some of these products to a customer, rather than selling them, to get round the law? Well, there is “brand promotion”, which includes free giveaways anyway. That covers all tobacco products—so it covers that situation.
Dr Johnson
I thank the Minister for going through the questions thoroughly. I did not want to risk his getting to the end of his speech without answering the question of why snus is treated differently from other forms of tobacco. Is it merely a historical artefact?
Andrew Gwynne
The hon. Lady need not worry so much, because I have notes to clarify her points. Many people ask why we are banning snus but only gradually raising the age of sale for cigarettes, given that snus is less harmful than cigarettes. Consumption of any tobacco product is harmful. We heard that—[Interruption.]. We heard that very loudly and clearly from somebody upstairs, but also from the four chief medical officers. They made it very clear that there is no safe level of tobacco consumption and that tobacco is uniquely harmful as a product in whatever form it is consumed.
It is this Government’s policy to support people to quit all forms of tobacco. Snus has been banned in the UK and across the EU since 1992. It was banned because it was a harmful novel tobacco product at the time, and it still is. It was agreed to prevent this new harmful product from ever coming on to the market. Why on earth would we now decide to give the tobacco industry a get out of jail free card and allow a product that has never ever been allowed on the market in the United Kingdom to enter the marketplace, irrespective of the age of sale?
Dr Johnson
To be clear, I am not suggesting that it should be on the market, as the Minister well knows, because I support both helping people using tobacco to quit and preventing people from starting to use tobacco. I merely want to understand why there is a difference in treatment. On the basis of what the Minister has said, why not make the penalties for cigarette sales the same as the robust penalties that already exist for snus sales? It is his choice.
Andrew Gwynne
The hon. Lady teases me, Sir Mark, and I get her desire for scrutiny of the issue of fines and of the measures we will take to enforce these laws in England, where they stand at different rates to other parts of the United Kingdom. There are different rates for different products as well. If somebody wants consistency across the four nations and consistency of approach across all products, I get that—that is laudable—but we believe that the measures in the Bill are proportionate and workable. If they turn out not to be—if they turn out to be an incentive rather than a disincentive—Ministers can come back and can look at these things again.
On territorial extent, the earlier clauses refer to England and Wales and the later clauses to Scotland and Northern Ireland. As the shadow Minister pointed out to the hon. Member for Windsor, a full breakdown of the territorial extent of clauses can be found in the annexe of the explanatory notes to the Bill, which hopefully will then be able to clarify in his mind which bits are UK legislation, which bits are devolved legislation and which bits have territorial extent across England, England and Wales, Great Britain or the United Kingdom.
Question put and agreed to.
Clause 7 accordingly ordered to stand part of the Bill.
Clauses 8 and 9 ordered to stand part of the Bill.
Clause 10
Sale of vaping or nicotine products to under 18s
Dr Johnson
I beg to move amendment 63, in clause 10, page 5, line 33, at end insert
“, save if it is a first offence.”
See explanatory statement to Amendment 66.
The Chair
With this it will be convenient to discuss the following:
Amendment 64, in clause 10, page 5, line 33, at end insert—
“(4A) A person who has admitted guilt of a first offence under this section is liable to a fine not exceeding level 3 on the standard scale or a caution.”
See explanatory statement to Amendment 66.
Clause stand part.
Clause 59 stand part.
Amendment 80, in clause 76, page 40, line 9, at end insert
“, save if it is a first offence.”
See explanatory statement to Amendment 83.
Amendment 81, in clause 76, page 40, line 9, at end insert—
“(4A) A person who has admitted guilt of a first offence under this Article is liable to a fine not exceeding level 3 on the standard scale or conditional caution.”
See explanatory statement to Amendment 83.
Clause 76 stand part.
New clause 10—Age verification requirement for online sales of vaping devices and products—
“(1) A person commits an offence if the person—
(a) carries on an online vaping product business, and
(b) fails to operate an age verification policy in respect of online sales of vaping products and devices.
(2) An ‘age verification policy’ is a policy that steps are to be taken to establish and ensure the age of a person attempting to buy a vaping product (the ‘customer’) is not under 18 years of age.
(3) The appropriate national authority may by regulations amend the age specified in subsection (2).
(4) The appropriate national authority may publish guidance on matters relating to age verification policies, including, in particular, guidance about—
(a) steps that should be taken to establish a customer’s age,
(b) documents that may be used as evidence of a customer’s age,
(c) training that should be undertaken by the person selling vaping products,
(d) the form and content of notices that should be displayed on websites; and
(e) the form and content of records that should be maintained in relation to an age verification policy.
(5) A person guilty of an offence under subsection (1) is liable on summary conviction to a fine not exceeding level 2 on the standard scale.
(6) Regulations under subsection (3) are subject to the affirmative resolution procedure.
(7) In this section—
‘the appropriate national authority’ means—
(a) in relation to England, the Secretary of State, and
(b) in relation to Wales, the Welsh Ministers,
‘online vaping product business’ means a business involving the sale of vaping products by retail online.”
This new clause introduces a requirement on online vaping product businesses to operate an age verification policy covering steps to be taken to establish the age of persons attempting to buy vaping products online. It reflects provisions in place in Scotland.
Dr Johnson
The amendments in this group are similar to previous amendments and are designed to provoke debate on the proportionality of the offences. Like other such Opposition amendments, amendment 63 would amend clause 10 to add
“, save if it is a first offence”.
Amendment 64 would amend clause 10 by adding that if someone has admitted guilt of a first offence under the clause they are liable for a fine at level 3 of the standard scale of caution. We are making a suggestion that the Minister could consider more lenience for someone who commits such an offence for the first time as opposed to someone who recklessly and repeatedly flouts this important legislation.
Did you want me to discuss the whole of clause 10 at this point, Sir Mark?
Dr Johnson
Clauses 1 to 9 of the Bill have predominantly dealt with tobacco products of varying kinds. Clause 10 moves on to the sale of vaping or nicotine products to under-18s, distinct from the measures on a smoke-free generation and the date of birth of 1 January 2009.
The first question is what are the vaping products of which we speak. Clause 48 deals with the interpretation and definitions within part 1. It defines a vape as
“a device which…vaporises substances, other than tobacco, for the purpose of inhalation through a mouthpiece”.
That applies whether it vaporises tobacco as well or not. It excludes medical devices, although we heard in evidence that no vapes are medically approved in the United Kingdom, and medicinal products that vaporise, including any aerosolisers. The clause also refers to an item that is intended to form part of a device, including anything to be attached to a vaping device with a view to imparting flavour. As the Government have already brought forward legislation to ban single-use vapes, it is important that individual components of reusable vapes are covered by the Bill.
A “vaping product” itself means a vape or vaping substance. A vaping substance means a substance other than tobacco that is intended to be vaporised by a vape. Vapes themselves can either contain nicotine or not and work essentially by heating up a liquid that creates a vapour to be inhaled. A nicotine vape typically contains nicotine, propylene glycol or vegetable glycerin, and flavourings, which we will come to discuss because of their importance in enticing children.
Nicotine products are also relevant to clause 10, on the sale of vaping or nicotine products. Clause 49 defines nicotine products as
“a device which is intended to enable nicotine to be delivered into the human body”,
part of a device that does that, or anything that contains nicotine. That is important because we have heard again and again how the industry will continually evolve to entrap people in a lifetime of nicotine addiction. This wide definition of anything containing nicotine helps to future-proof this legislation such that it does not have to be revisited again and again as the industry continues to evolve.
The main type of nicotine product currently on the market, other than vapes, is oral nicotine pouches from brands such as Velo and White Fox. These are a tobacco-free product placed between the lip and the gum for oral nicotine absorption. They are similar to Swedish snus, which we have discussed; they are pre-portioned pouches and they are produced in a variety of flavours. We have seen flavours such as lemonade razz and others that are designed with childlike descriptions, perhaps to influence children to use them. Certainly, when I talk to teachers, they say that they starting to see them used in the classroom. They look to parents very much like a small square of chewing gum, and some parents may not be aware of the hazards that these items pose.
The nicotine content within oral nicotine pouches can vary and is typically between 4 mg and 18 mg of oral nicotine per pouch. That is important; I have seen amendments suggesting that they should be limited 20 mg, but 20 mg is a lot. When we look at the amount of nicotine in a cigarette, we have to look not at the amount contained within it in its packet, but at how much is absorbed by the end user, the customer, when actually smoking it. The amount absorbed by the end user is much smaller than the amount in the cigarette. When brands imply that the amount within a pouch is similar to what is in a cigarette, they are talking about the amount within the cigarette itself, not how much the person smoking it will absorb from the cigarette.
The difference is quite marked: people may only take 1.2 mg from a cigarette when they smoke it in the usual way, so 18 mg in an oral nicotine pouch is an awful lot of nicotine. Some online retailers will sell products containing up to 150 mg of nicotine per pouch, with examples of flavours including black cherry, citrus and coffee. The release of nicotine from oral pouches is similar to, or faster than, from smokeless tobacco products and, given the Minister’s robust approach to snus and novel products designed to create addiction, I hope he will take a strong approach to these too.
Oral nicotine pouches sit alongside other novel nicotine products such as nicotine toothpicks and nicotine toothpaste that have emerged on the market. They are regulated under the General Product Safety Regulations 2005. Under those regulations, there is no age of sale requirement for retailers to impose. As such, individuals aged under 18 can legally purchase nicotine pouches, as opposed to tobacco and vaping products, which require all purchasers to be aged over 18. Clause 10 will help to deal with that.
Furthermore, oral nicotine pouches are not regulated by the Medicines and Healthcare products Regulatory Agency, since no medical claims are made, and they are not an alternative to an authorised medicinal nicotine product—something like Nicorette gum, for example. I should note that some supermarkets have a voluntary age of sale; some supermarkets and larger retailers, or even smaller retailers, will voluntarily not sell these products to under-18s, but there currently is no legal requirement for them not to do it.
There is also no restriction on the amount of nicotine contained in an oral nicotine pouch under the current legislation, as such new products sold within the UK can contain levels of nicotine exceeding other nicotine or tobacco-based products such as cigarettes. We have heard about the addictive nature of nicotine; the higher amount transmitted so rapidly into the bloodstream is clearly stronger in its effect and therefore undesirable because it will remove people’s choice not to have those products.
What about the health impact? The health impact of nicotine is another reason why we need to invoke clause 10. Some people say, “If you take the nicotine out of the tobacco, maybe that will be safer.” However, it is safer but not safe. According to the impact assessment produced by the Government in response to the Bill, a recent scoping review found that oral nicotine pouches claimed to be less toxic than cigarettes and that they deliver comparable amounts of nicotine. However, the data for that review was mainly available from industry-funded studies. Despite potentially lower toxicity than cigarettes, oral nicotine pouches still contain nicotine, and that still has harmful effects.
Gregory Stafford (Farnham and Bordon) (Con)
My hon. Friend is right to highlight all the problems of vapes, especially for children, and the lack of evidence out there, other than that produced by the industry itself. Is she aware of any independent studies, either in the UK or abroad, that have done any substantive investigation into how harmful vapes are, either for adults or for children?
Dr Johnson
I thank my hon. Friend for his intervention. Last Tuesday, we heard in evidence from various medical sources, and both the Select Committee and our processor Bill Committee heard in evidence that nicotine is, of itself, harmful, and that the chemicals added to vapes are harmful. In some cases, they are extremely harmful. I will talk more about vaping chemicals later. Indeed, sometimes the products do not contain what they are expected to contain, and that can be worse still. I will return to that subject later, too.
Nicotine is highly addictive and can permanently affect the development of the adolescent brain. We have heard how the industry targets young people, and that is because the adolescent brain is particularly vulnerable. Nicotine can permanently affect its development. Nicotine also fulfils all the criteria for drug dependence. Giving it up is very difficult, and withdrawal symptoms can include cravings, irritability, anxiety, trouble concentrating, headaches and other mental symptoms. Symptoms associated with nicotine and dependence are often not recognised by novice smokers, particularly if they are young.
Dr Danny Chambers (Winchester) (LD)
On the subject of how nicotine affects the brain and brain development, one thing we have not really touched on—and we have touched on many physical health issues—is the incidence of smoking among people with mental health issues. One submission was from the Mental Health and Smoking Partnership, which said that 45% of people with a serious mental health issue smoke, and around 25% of people with clinical anxiety. It would stand to reason that the impact on a young person’s brain could also start to lead to serious mental health issues, as well as all the physical health and development issues.
Dr Johnson
The hon. Gentleman is right to raise the importance of managing nicotine dependence for those with mental health conditions. We know that smoking, in particular, is more likely to take place among people with mental health conditions or those who are in mental health in-patient units. I am sure we will go on to discuss the issue of vending machines.
Last May, in the previous Bill Committee, we heard evidence from the Mental Health Foundation about the myth that tobacco helps with anxiety, and how that myth needed busting. We also heard about the importance of giving extra support to people with mental health conditions to enable them to kick the habit of nicotine—whether that habit is smoking or vaping—because it will help both their physical and mental health. However, it can be more challenging for them to complete. I am grateful to the hon. Gentleman for raising that important issue.
Returning to clause 10, a study considering the effects in adolescents of nicotine dependence after the initiation of smoking cigarettes found that the symptoms of nicotine dependence can appear only a few days after initiation. Given that oral nicotine pouches contain similar or higher levels of nicotine, similar symptoms may appear following initiation of oral nicotine pouch use, which is why it is particularly important for children that we pass clause 10 and ensure that children are protected from these nicotine products.
Jim Dickson (Dartford) (Lab)
I applaud the hon. Lady for her admirable history lesson on the background of vaping. Can I ask how it is relevant to what we are discussing in terms of the penalties and the sale of products?
Dr Johnson
It is relevant because we are discussing a product in the UK that we are considering essentially doing away with, and banning completely for children. The hon. Gentleman may note that we discussed the history of tobacco when we debated clause 1, on tobacco, and no less than two Members of the hon. Gentleman’s own party talked about how interesting and relevant that was—[Interruption.] At least one of those individuals appeared very genuine.
Let me go back to Hon Lik, who invented the first e-cigarette as a way to cure his own smoking addiction and to try to prevent deaths such as his father’s from lung cancer—and we have talked much about the potential for smoking to cause lung cancer. The basic concept of mimicking smoking via vaporising liquids remains the same. The company he started was later bought as a subsidiary of Imperial Tobacco, which again demonstrates that the industry will continue to try, where it can, to be involved in nicotine addiction.
The World Health Organisation proclaims that it does not consider electronic cigarettes a legitimate smoking cessation aid. It demands that marketers immediately remove from their material any suggestion that it considers electronic cigarettes to be safe and effective. In 2011, the WHO released a report on e-cigarettes recommending that they be regulated in the same way as tobacco products. Clause 10 will do some of that, inasmuch as it will bring e-cigarettes in line with the legislation on tobacco products so that they cannot be sold to under-18s. However, it does not go so far as to bring it in line with the new smoke-free generation legislation. The Minister may wish to comment on why he has not done so.
In the last Bill, the hon. Member for York Central (Rachael Maskell) tabled an amendment that would have included nicotine products in the smoke-free generation legislation, banning them for those born after 1 January 2009 rather than just for under-18s. Her concern, as I understand it, was that the industry would pivot to other forms of nicotine that did not contain tobacco, hook a new generation on them and use similar marketing techniques to hook them on a lifetime of nicotine addiction, as it once did with tobacco. The Minister could seek to avoid that by preventing non-medicinal products containing nicotine from being used by anyone born after 1 January 2009. That power is within his grasp. On a personal level—this is not necessarily my party’s view—I would like him to seize that power.
The sale of vaping products to under-18s is addressed in clause 10. One of the reasons for restricting the sale is the range of pulmonary and coronary conditions—lung and heart conditions—that can occur for people who vape. To help us to understand why they are so damaging, it is important to understand what is in vapes per se. This is not just about nicotine products; it is also about vaping products.
As I say, nicotine is an extremely addictive substance that disrupts brain development in adolescence. Because adolescence is a critical time for neural development, it makes young people particularly vulnerable to the negative effects of nicotine. Adolescence is marked by substantial neurodevelopment, including synaptic pruning and the maturing of the pre-frontal cortex, the part of the brain that governs decision making, impulse control and emotional regulation. Nicotine exposure during this period can disrupt those processes, leading to lasting cognitive and behavioural impairment. Research indicates that nicotine alters the neurotransmitter systems, noticeably those using acetylcholine and glutamate receptors, affecting the neural pathways essential for learning and memory development. Nicotine exposure during adolescence has been linked to deficits in attention, learning and impulse control. Studies have shown that adolescents using nicotine products exhibit diminished cognitive performance and are more prone to mood disorders, including depression and anxiety.
Another reason to get rid of these products, which relates to the point made by the hon. Member for Winchester, is that they can lead, in and of themselves, to problems with mental health. As hon. Members will know, these issues can adversely affect academic achievement—as we have heard from teachers’ evidence in the past and evidence to this Committee—and social interactions, potentially leading to broader physical challenges.
The Chair
May I ask the shadow Minister to shorten her very interesting and detailed explanation of why nicotine and other substances are harmful and focus more on the legislation and less on the historical and scientific background?
Dr Johnson
You will be pleased to know that I have concluded my remarks on history for now, Sir Mark, but with your leave, I want to talk about a couple of the chemicals that are found in vaping products. It is important for hon. Members to understand the reason for banning vaping products per se, as opposed to just nicotine products. There is a reason why both are included, rather than just one. That is why I wanted to discuss nicotine and its effects, as well as the effects of some other chemical constituents of the vaping product.
Propylene glycol is another main constituent of vapes. It is used in antifreeze, paint solvents and artificial smoke for fog machines and helps the vape to carry the nicotine and flavours to the user. When used in small amounts it is considered safe, but when used in high doses or over prolonged periods it can accumulate and cause lactic acidosis, depression of the nervous system and haemolysis, the destruction of red blood cells. When one’s red blood cells are destroyed, one becomes anaemic, which makes one tired and can make one very unwell.
Another component in some vapes is diethylene glycol, a toxic compound found in antifreeze that is associated with lung disease. It can be used as a sweetener, but it has resulted in many epidemics of poisoning since the early 20th century, perhaps most famously when it was found in wine and many bottles of wine had to be recalled. Believe it or not, some vapes also contain formaldehyde, which is classified as carcinogenic by the International Agency for Research on Cancer, showing once again that the products that clause 10 seeks to ban are not as benign as some may believe or as their pretty colours and flavours may suggest. It can also cause respiratory and skin irritation on exposure.
The Chair
Order. May I ask the shadow Minister to cut down on some of the detail? Just tell us that it is harmful and give us the reason, without going through a full paragraph on every chemical.
Dr Johnson
I am grateful for your guidance, Sir Mark. Other chemicals found in some vapes that can be harmful are acrolein, which is a herbicide, and diacetyl, which is found in flavours such as chocolate milk and toffee because it has a buttery taste. Another is benzene, which is found in car exhaust fumes and is a carcinogenic chemical that can cause such things as acute lymphoblastic leukaemia, chronic lymphocytic leukaemia, multiple myeloma and non-Hodgkin lymphoma—all conditions that we certainly do not want children, or indeed anyone, to get.
It is also worth noting that, because e-cigarette heaters contain a coil and cartridge with a metal component, the vapour can contain some heavy metals, including cadmium, which can cause chest pain, shortness of breath and cancer; nickel, which is carcinogenic; lead, which we know causes health problems; and chromium. That is a non-exhaustive list. My speech originally contained such a long list that I feared it would take up all the Committee’s time. I do not want to do that, Sir Mark, or to test your patience, but I want to emphasise that these findings come from the research that has been done on vapes so far. It took time for the scientific community to establish the fact that cigarettes and tobacco are harmful to health and the ways in which they are harmful. We are already finding the health challenges of vaping, so it is important for us to take these steps today.
On 8 February 2023, I presented the Disposable Electronic Cigarettes (Prohibition of Sale) Bill, a ten-minute rule Bill that highlighted the challenges that vapes pose to the environment and to children’s health. I am pleased that the Government have now taken steps to ban them. Things have progressed, and I am personally delighted that this Bill is before the House. It is important to see the progression of legislation on vapes, which is so important not only to me but to Parliament and the country.
On clause 10, it is already an offence to sell nicotine vaping products to under-18s in all parts of the UK, but it is not an offence to sell nicotine products to them. Currently, local authority trading standards in England can bring a prosecution under section 7 of the Children and Young Persons Act 1933 for the under-age sale of tobacco products or cigarette papers; magistrates courts can impose a fine of £2,500 on conviction and prevent the individual from selling those products for 12 months. Under the Proxy Purchasing of Tobacco, Nicotine Products etc. (Fixed Penalty Amount) Regulations 2015, trading standards officers can issue a fixed penalty notice of £90 to individuals for purchasing or attempting to purchase tobacco and nicotine products for someone under 18. However, it is the adult making or attempting to make the purchase who commits the offence, not the retailer.
Jack Rankin
We are talking specifically about under-18s. I disagree with some of the later regulations on vaping, but when it comes to under-18s being given vaping products, I am aligned with the Government. Does my hon. Friend agree that if companies are giving away free products to Members of Parliament and staffers who are over the age of 18—some of them may be smokers—they are actually supporting the Government’s aim of getting to a smoke-free generation, which is very different from what we see in clause 10? I agree with the Government’s aim.
Dr Johnson
I think my hon. Friend highlights something common across our party. Many members of our party are uncertain, as I understand my hon. Friend is, about the changes to tobacco legislation for adults with the competency to make risk-based decisions. I understand your points; I do not necessarily share them, but I understand them.
Dr Johnson
Sorry. Equally, I note that the vast majority of Members across the House, both in my party and in other parties, strongly agree with clause 10 and the other clauses that seek to ensure that children do not have access to these products. If someone sells a vaping or nicotine product to a purchaser who is under the age of 18, it is an offence. Under clause 10(2), the seller can defend themselves on the basis
“that they were shown what appeared to be an identity document belonging to the purchaser and it confirmed the purchaser’s age as at least 18 years old, or…that they otherwise took all reasonable steps to avoid the commission of the offence.”
The Minister has talked about the simplicity of the smoke-free generation and his view that it is easier for shop workers to look at a piece of identification and establish whether someone’s birthday was before or after 1 January 2009 than to establish whether someone was born 18 years ago by doing the mathematics in their head from the person’s date of birth. That brings me again to the question of why we will not have a nicotine-free generation as well as a smoke-free generation. Would it be classed as a reasonable step? If a shop worker had asked for ID, taken the proper ID, as defined in clause 10(3), and done the mathematics wrong in their head, would they have taken all reasonable steps or would their arithmetic error mean that they were to all intents and purposes a criminal? I would be grateful for the Minister’s comments.
Acceptable identity documents for the purpose of buying nicotine or vaping products if one is over the age of 18 include a passport, a UK driving licence, a driving licence from the Channel Islands or the Isle of Man, a European photocard driving licence or a proof-of-age standards scheme card with a hologram. During the discussions of voter ID, there was a debate about how many people had access to different forms of ID. Passports are reasonably expensive and not everyone drives a car, so how would someone who did not drive a car or have a passport provide ID? When it came to voter ID, the previous Government looked at a number of reliable sources of identification that could be used, which included the veterans card, certain travel documents and the like.
Sarah Bool
Recent announcements from the Home Office have confirmed that businesses will be able to legally accept the use of digital proof of age for alcohol products. I would like to see that approach extended to these products, to make the life of retailers easier as far as identification goes. It would be good to have further consistency and an extension of the definition of identity documents to allow for digital forms.
Dr Johnson
Digital ID is not something that I am particularly familiar with, but nevertheless it sounds sensible, where ID is reliable, reproducible, not easily faked and easily identifiable by staff. Broadening the forms of acceptable ID would ensure that when somebody is old enough to legally purchase a product, it is not excessively challenging for them to obtain an ID to do so. Clearly the Minister would want people to be able to buy age-restricted products if they are old enough, so I am interested to hear his view not only on my hon. Friend’s intervention about digital identification, but on veterans cards, bus passes and other cards that demonstrate the age of the user and include a photograph for added reliability.
Clause 10(4) states:
“A person who commits an offence under this section is liable on summary conviction to a fine not exceeding level 4 on the standard scale.”
On a personal level, selling vapes and nicotine products to children is a dreadful thing to do, as I am sure the chief medical officer has said. I am more than happy for the Minister to increase that fine if he wants to, but I am interested to understand why he has set it at that level. Notwithstanding any changes across the four nations, it is important that we look at the choices that the Minister has made. That is what we are here to scrutinise.
The problem that clause 10 seeks to address is vaping among children. Are children vaping? Yes, I am afraid to say that they are, in large quantities. The biggest report of which I am aware that looked specifically at rates of youth vaping was published in 2023 by Healthwatch Blackpool. It looked at over 4,000 children and found that just under a third of them—31%—said that they
“currently vape or sometimes vape”.
Of those children, 65%
“expressed a preference for fruity flavoured vapes”,
which we will deal with later in the Bill. There is clearly an issue that vapes are being directly marketed to children with bright, attractive colours. Some of the most popular flavours include bubble gum, cotton candy, strawberry ice cream and unicorn milkshake. What does unicorn milkshake taste like? I have no idea, but it is easy to see the appeal to children.
An investigation by The Observer in 2022 found that ElfBar, a company that makes vapes, was promoting its products to kids via TikTok. The TikTok platform is apparently used by half of eight to 11-year-olds and by three quarters of 16 to 17-year-olds. When I found that out, I had a look at the screen time of my own children to establish that they were not getting on it.
Jack Rankin
I support my hon. Friend wholeheartedly on restricting flavours aimed at children, which I think is the Minister’s intention, but does she agree that vape flavours that are being advertised more generally, so long as they are straightforward and descriptive, can help people to shake smoking and can be firmly aimed at adults? The Government should not restrict the flavours so generally that the smoking cessation tool is weakened.
Dr Johnson
I am afraid that once again I have to disagree with my hon. Friend. I do not believe that those who advertise brightly coloured vapes shaped like highlighters or SpongeBob SquarePants, or flavoured as unicorn milkshake and green gummy bear, are advertising them for the consumption of adults. I do not doubt that there are some adult smokers in their 40s who enjoy the flavour of unicorn milkshake and green gummy bear—perhaps those flavours are nice—but I do not believe that adults are the target audience for that marketing at all.
Jack Rankin
Perhaps I explained myself ineloquently —or maybe my hon. Friend was being mischievous in her characterisation. I agree with her wholeheartedly, but I would say that raspberry is a perfectly legitimate flavour for an upstanding vape seller to sell to an adult smoker as a cessation device. I would not want to go too hard on that so that we do not cut off that legitimate smoking cessation route.
Dr Johnson
I thank my hon. Friend for clarifying his intervention but, again, I am not sure about that.
The Chair
Order. Flavours will come up later in the Bill. The question really is not pertinent to clause 10.
Dr Johnson
My hon. Friend can ask me later, when we come to the colours and flavours.
To summarise, clause 10 is an important clause that seeks to stop children getting hold of vapes and nicotine products and, in so doing, aims to reduce the number of children who get hooked on nicotine, which has very harmful effects, and who may even damage themselves using vapes. In one school in my constituency, eight children collapsed after using vaping products. Lincolnshire police examined five of the vapes confiscated from the school and found that they contained antifreeze, poster varnish and other chemicals such as trichloroethylene, 2-methoxyethyl acetate, Steol-M and diethylene glycol diacetate—some very harmful chemicals that have no legal place in vapes at all. Some of those chemicals are banned, but are nevertheless being put into these products.
Clause 59 is similar, but, given the principle of devolution, applies to Scotland. It provides for the same principle of an extension of offences to vaping and nicotine products, but does so in recognition of the fact that Scotland has different laws by amending the Tobacco and Primary Medical Services (Scotland) Act 2010. It adds various substitutions to ensure that it is not possible to buy tobacco and vaping products in Scotland, in order to protect the children of Scotland.
Clause 76 provides continuity across the United Kingdom based on the principles of devolution in Northern Ireland and of working together to protect the interests of children. That is very important. The clause adds article 4H, on the sale of vaping and nicotine products, to the Health and Personal Social Services (Northern Ireland) Order 1978 after article 4G, which is itself inserted by clause 75. This provision essentially inserts the same provisions as those in clause 10, except that once again we see a higher penalty in Northern Ireland. Northern Ireland is clearly more concerned with punishing those who sell vaping and nicotine products to children than the Minister appears to be.
Amendments 63, 64, 80 and 81 look specifically at the proportionality of penalties and the balance in choosing them—whether they be as punitive as those in Northern Ireland, or those in place for snus for people who are reckless and do it often as opposed to those who have committed a first offence and do not do it so often.
Sarah Bool
I echo what my hon. Friend is saying, particularly in relation to online sales. I think we are all very aware that one aspect is being in the shop and physically trying to buy a product with ID; I take it from the ingenuity of our younger generation that they will always find ways around that, especially online, so we should perhaps give some further thought to how we can ensure that the companies are operating effectively—that there is robustness without over-regulation and that we have the methods to ensure that people are not following another loophole.
The Chair
Order. Before we proceed, let me explain that Sir Mark has had to leave the Chair and I am taking over for the duration—for as long as you choose to sit. I have, however, been briefed, so I am sure that nobody in the room will seek to take advantage of a change of Chairman to cover the same subjects all over again.
Dr Johnson
That is very kind of you, Sir Roger. It is good to see you in the Chair, and an honour to serve under your chairmanship again. As you have been briefed, we are discussing clause 10, the importance of banning the sale of vaping and nicotine products to children. We had just moved on to new clause 10, which is part of this group of amendments. It was tabled by the Opposition and looks at the online marketplace, because there is concern that the industry seeks every single workaround and loophole as creatively as possible. The new clause seeks to ensure that guidance is provided to prevent advantage from being taken in the online marketplace, particularly because we have seen adverts for “no ID” sales, which clearly are designed to entice children to buy products that they should not be able to get.
Subsection (4)(d) of the new clause talks about
“the form and content of notices…displayed on websites”,
so it looks at the messaging. I suppose that is the equivalent of clauses 5 and 6: “What should our billboard notice say?”
New clause 10(5) says:
“A person guilty of an offence under subsection (1) is liable…to a fine not exceeding level 2 on the standard scale.”
The Minister may wish to change that—it was the opening point for that offence—but again there clearly needs to be a penalty for people who do sell in the online marketplace.
Subsection (6) says:
“Regulations under subsection (3) are subject to the affirmative resolution procedure.”
We did talk about the negative resolution procedure—my hon. Friend the Member for Windsor is temporarily not in his place—but essentially the affirmative resolution procedure means that regulations would require, I believe, a vote in the House to push them forward.
Just to clarify, subsection (7) says:
“In this section…‘the appropriate national authority’”,
which would be able to provide the regulations and produce the guidance, would be the Secretary of State in England and the Welsh Ministers in Wales.
The principle of this proposal is that vaping businesses that operate online should be subject to the same regulations, rules and laws, enforced with the same stringency and severity, as corner shops, supermarkets and the like.
Sarah Bool
I rise to speak in support of new clause 10, on banning those who are under 18 from vaping. Many know about the health risks of smoking. They see it as a bad habit and disgusting, as the children of my hon. Friend the Member for Farnham and Bordon noted, but vapes are seen as being new age and social. Parents are in danger of encouraging vaping by buying something that they think is safer than smoking or drugs. We must be very careful about that, so this ban will be important in restricting sales. Children fear being excluded, so, through peer pressure, they are forced into vaping. We need to stamp out this practice.
Children are often confused about vaping. The problem is that they get an accidental addition to nicotine and struggle to pay attention in school, which has a negative impact not just on them but on their classmates. Apparently, children vape to deal with stress and anxiety—they are almost self-medicating, which is appalling. It is right that we protect our children by introducing this offence.
Dr Johnson
My hon. Friend talks about children self-medicating, but are they not making the situation worse? The use of vapes and nicotine products may exacerbate, rather than ease, any mental health symptoms that they have.
Sarah Bool
Absolutely. Unlike my hon. Friend, I am not a medical professional, but I wholeheartedly agree that it is a self-perpetuating cycle, and we need to stop it as soon as possible to protect children.
Gregory Stafford
It is a pleasure to serve under your chairmanship, Sir Roger. I want to make two points about this part of the Bill. First, I support new clause 10, in the name of my hon. Friend the Member for Sleaford and North Hykeham. It is essential that we close off all avenues for children to purchase vapes. In the Bill, the Government have done a very good job of dealing with physical retailers, but there is a gap in relation to online retailers. I hope the Minister is minded to support the new clause, either when we come to a vote on it in a few moments, or by inserting something similar into the Bill on Report to ensure we close off online retailers.
In my opinion, online retailers are more dangerous than physical shops. A child—especially a very young child—has to depart from their guardian or their adult to go and buy something in a shop, whereas they can purchase products online on their phone or computer in the comfort of their own home, and it is very difficult for a parent or a senior person in their family to spot that. We know that that is where a number of children and young people are getting these products, so we have to close off that avenue.
My second point is about a more fundamental issue with the clause itself. My hon. Friend the shadow Minister has said this quite extensively, but it bears repeating so that we get some answers from the Minister. It does not seem obvious why the Government decided to ban vapes for anyone under the age of 18, whereas for other tobacco products it is for anyone born on or after 1 January 2009. I completely accept that vapes can be used as a smoking cessation tool; it is important that they are used in that way.
When we come on to vending machines, there are medical settings in which people require some form of intervention to help to stop smoking, and we should be looking at that. However, it is not beyond the wit of the Bill’s drafting to apply 1 January 2009 to tobacco products, and then to create an exemption specifically for smoking cessation. I want to understand why the Minister has decided to make this distinction. Does he not see the potential risks in doing so? Hopefully, we all want people not to be addicted to any products that are harmful to them, but both retailers and consumers, when faced with two sets of rules for very similar products, could become confused and accidently fall foul of the law. Because of that confusion, the law might not be enforced as the Minister would like it to be. I very much hope the Minister addresses those two points in his closing remarks on these clauses.
The Chair
Order. Forgive me, I have only just taken over as Chair, but the hon. Gentleman was not in the room for a chunk of this debate. Is that correct?
The Chair
In that case, I do not think it is quite appropriate for the hon. Gentleman to speak. I will allow him to speak very briefly, but I do mean brief.
Jack Rankin
I disagree with the Government on some of the clauses dealing with vaping, but I will come to those later, when it is more appropriate. I agree with what the Government are trying to do in clauses 10, 11 and 12 to toughen things up for under-18s. To that end, I encourage them to support new clause 10, tabled by the shadow Minister, which tries to make purchasing more difficult for under-18s online. We talked earlier about the principle of vending machines, which is addressed in clause 12 and by trying to ensure age verification when there is no one else present. It seems to me that new clause 10 is entirely in line with that, so I hope the Minister might consider supporting it.
Andrew Gwynne
It is good to see you back in the Chair, Sir Roger. Before addressing these amendments, the respective clauses and the proposed new clause, I want to make it clear that I will be using the generic term “vapes or vaping products” throughout to refer to vapes, e-cigarettes or nicotine vapour products. Likewise, I will use the term “nicotine products” to refer to consumer nicotine products, such as nicotine pouches. I am not referring to licensed nicotine-based medicines, which will not be further restricted by the Bill.
Under clause 10 it will continue to be an offence to sell a nicotine vape to a person who is under the age of 18 in England and Wales, and anyone who is found guilty of the offence will be liable to pay a fine of up to £2,500 if convicted. It is a defence if the person can prove they were shown what appeared to be an identity document belonging to the purchaser that showed they were over 18, or that they otherwise took all reasonable steps to avoid committing an offence. The clause also extends this age of sale restriction to consumer nicotine products and non-nicotine vapes, as we know that children are accessing those products. There are currently no age of sale restrictions on those products, and non-nicotine vapes can easily have nicotine solutions manually added to them.
Clause 59 refers to Scotland and extends existing offences in Scotland for selling vaping products to under-18s, proxy purchases on behalf of under-18s, and failure to operate an age verification policy related to vaping products, so nicotine products are also covered in those offences. By amending that legislation, we will align the approach across the United Kingdom, which is the wish of the devolved Administrations. The clause amends Scottish legislation by replacing the term “nicotine vapour products” with the term “vaping products”, thus aligning the definitions across the UK.
Another of the changes to Scottish legislation in this clause makes it an offence for any person managing or controlling a premises to have a prohibited vending machine available for use. This effectively maintains the existing prohibition in Scotland on vending machines selling vaping and tobacco products; indeed, it extends it to include machines from which nicotine products, herbal smoking products and cigarette papers can be purchased. Again, this aligns the approach across the UK.
Clause 76 applies similar measures in Northern Ireland to those in England and Wales, meaning that it will be an offence to sell a vaping or nicotine product to a person in Northern Ireland under the age of 18, thereby expanding current Northern Ireland legislation to cover all vaping products and nicotine products. Anyone convicted of the offence will be liable to a pay a fine of up to £5,000. All these measures for England, Scotland and Northern Ireland will come into force six months after the Bill receives Royal Assent, to give retailers time to introduce them.
These clauses will play an important role in ensuring that we can tackle youth vaping successfully. They provide businesses with certainty as to who they may legally sell products to, and they reinforce our health advice that children should never vape.
However, the amendments tabled by the shadow Minister would undermine that approach by creating a more lenient penalty regime for the offence of selling vaping or nicotine products to someone under age. They would establish that someone who admits to committing an offence for the first time would either be liable on summary conviction to a fine not exceeding level 3 on the standard scale—that is, a fine of £1,000—or be given a caution instead. Level 3 is one level lower than the level 4 fine of £2,500 that someone who commits this offence is liable to under the current legislation.
Dr Johnson
The Minister knows me well enough to understand that I would never seek more lenient penalties for those selling vapes to children; there is no excuse for selling vapes to children. However, I am concerned that there may be sales in the online marketplace that are not adequately covered by the regulations as they are currently drafted. The principle of new clause 10 was to ensure that such offences are properly covered, so I would be grateful for his reassurance in that regard.
Andrew Gwynne
I will come to that; I am just spelling out why I am concerned about the consequences of the shadow Minister’s proposals in the amendment, because they would lead to more lenient penalties for those committing an offence for the first time than they are liable to under the current legislation. Again, like the amendments that we have already discussed, the effect would be to create a first-time offence, and if the Committee is content, I will not repeat myself, as the rationale for my asking the shadow Minister to withdraw the amendment remains the same.
The shadow Minister’s new clause 10 would introduce an offence in England and Wales for businesses selling vaping products online without applying an age verification policy. It would therefore create a requirement for businesses selling vaping products online to take steps to establish and ensure that any customer attempting to purchase those products online was above the age of 18.
Although I am incredibly sympathetic to the shadow Minister’s intentions, as I said earlier, the Bill already makes it an offence in England and Wales to sell a vaping or nicotine product to anyone under the age of 18. As with in-person retail, online retailers must take all reasonable steps to avoid selling vaping products to anyone under age. Alongside the Bill, we are exploring how we can enhance online age verification to further tackle online under-age sales. The office for digital identities and attributes, which sits within the Department for Science, Innovation and Technology, is creating a framework of standards and governance, underpinned by legislation, which will enable the widespread use of trusted digital identity services. We are working closely with DSIT to consider how its work to enable the use of digital identities can best support retailers selling tobacco and vapes, whether online or in-person. It is for those reasons that I commend clauses 10, 59 and 76.
Gregory Stafford
I may have missed the Minister’s explanation, but why has he decided not to have the incremental increase for vapes when he has it for smoking? Does he feel that there is something fundamentally different about vapes, beyond the smoking cessation element, that could have been an exemption from the progressive age range that he has for tobacco?
Andrew Gwynne
The hon. Gentleman should panic not; I had not quite come to the end of my contribution. I was merely saying that it is for those reasons that I commend clause 10, clause 59 and clause 76 to the Committee.
Andrew Gwynne
If the hon. Lady will allow me to first answer her hon. Friend, it may well be that I answer her thoughts in the course of answering him. The hon. Gentleman is absolutely right that there is a difference here between our approach to tobacco and to vapes. The hon. Lady—the shadow Minister—has, rightly, always been, and will continue to be, a doughty campaigner for a nicotine-free generation and for a smoke-free generation. That may well be where we end up at some stage in the future. However, we believe that the measures in the Bill are entirely appropriate and proportionate. We are not planning to raise the age of sale for vapes in a similar way to that for tobacco; let me explain why.
Tobacco is a uniquely harmful product. No other consumer product kills two thirds of its users. It is therefore entirely appropriate to create a smoke-free generation, as we are seeking to do in this legislation, and to gradually phase out tobacco so that it is a thing of history. Although vaping is not harm-free—I will come on to the harms in due course—it is less harmful than smoking and, currently, we do not believe that a generational age of sale restriction on vapes would be an appropriate response to the current evidence in relation to health harms. Instead, the Bill contains strong measures to stop the promotion and the blatant advertising of vapes to children, and so bring about definitive and positive change to stop future generations from becoming hooked on nicotine.
It may well be, over the course of the coming years, that greater evidence emerges about the harms of nicotine. Lots of studies of vaping are taking place and it may well be that we have to take further action; that is why the measures in the Bill are permissive. The tobacco industry has often, after having one route closed off to it, sought an alternative route to maintain market share and market presence. It may well be that the vaping industry employs exactly the same tactics—all the evidence so far would suggest that it does. That is why the measures in the Bill are not just proportionate for the here and now but future-proof, so that Ministers can come back to Parliament, on a whole range of issues, and seek to close off other routes.
I would hope that, with that explanation, the hon. Member for Farnham and Bordon understands that there is a very big difference between tobacco and vaping. However, we reserve the right to return to Parliament and to utilise the powers in this Bill, should we be granted them, to ensure that, if there is evidence of harms, we can immediately respond to those.
Jack Rankin
I commend the Minister on making the evidence-based point about the difference between a smoke-free generation and a nicotine-free generation. Does he agree—I think he does, given the comments he has just made—that there are some somewhat sweeping powers here, which could be used to come back and ask for more legislation against vaping companies? Does he agree that that potential lack of certainty for legitimate vaping businesses might impede investment in this space, which is actually contributing to the benefit of a smoke-free generation?
Andrew Gwynne
There is nothing in the Bill that we are proposing to do that will restrict the legitimate sale of vapes. As a Government, we recognise that vapes have been used, and continue to be used, as a stop smoking tool. Our advice remains very clear: vapes are not harm free. We do not yet know the full extent of the harm, but as we heard from the chief medical officers from the four nations, it is unlikely that they are harm free. Indeed, there is limited evidence showing some harms, and there are lots of studies and research taking place to ascertain what the long-term impacts of vaping might be.
Our advice remains clear: if a person has never smoked, not smoking, and not vaping, is the best thing. If a person has smoked, vaping is safer than smoking, but it is not risk-free, and as a smoking cessation tool, it has proven to be successful for some. We do not want children to ever take up vaping—ever, and not in adulthood, either. Vaping is for people who have been smokers who want to give up; vapes are a safer product than tobacco.
Dr Johnson
I thank the Minister for clearly explaining that children should never vape. In fact, if children are smoking and wish to quit, they can get support from their GP and others, but they should not use vaping, because vaping is bad for children.
To take the Minister back to my question about new clause 10, before he took the two previous interventions, he said that he is working with DSIT to provide regulations and legislation that would cover new clause 10 and ensure that online sellers of age-restricted products are obliged to check a person’s age before selling them. Will he advise when he expects such regulations to be available? Will they be in time for his smoke-free generation in a couple of years’ time?
Andrew Gwynne
I absolutely hope that the measures will be worked on at pace and will be available for that. Officials from the Department of Health and Social Care are working closely with colleagues in DSIT to ensure that these matters are included in the online age verification legislation that it is seeking to introduce.
A couple of other points were raised in the course of the debate. On the issue of fines and why there are inconsistencies, I do not wish to over-labour the point, but the maximum fines that the shadow Minister quoted are consistent with existing tobacco and vapes legislation. We believe they are proportionate to the severity of the offences. There is a bit of a pushmi-pullyu argument here, because on the one hand we have had amendments that seek to have more lenient penalties, and on the other, arguments for harsher penalties. We believe that the current fine levels in England are appropriate, which is why we are remaining with them. It is for trading standards to take a proportionate approach to enforcement, deciding the appropriate action to take for a given case to achieve compliance based on the evidence before it.
On TikTok and advertising, I understand that the Advertising Standards Agency has issued an enforcement notice to vaping companies and brands instructing them to stop any advertising on TikTok. To date, it has reported around 300 posts, approximately 80% of which predated the notice to TikTok for removal.
On the issue of enforcement with physical sales, and online sales with age verification, it was interesting that in the evidence session we heard from National Trading Standards that it has undertaken test purchasing both in brick and mortar premises and online and that the failure rate in brick and mortar premises was 26%, compared with 10% online. We do not want any breaches of the law, but that puts into context that the current issues tend to be on the ground rather than online—although we need to cover all bases. I ask the shadow Minister to withdraw her amendments and proposed new clause.
Dr Johnson
I am grateful to the Minister for providing the extra information. Amendments 63, 64, 81 and 80 were designed once again to provoke debate on the coherency of the penalties across the different clauses of the Bill. Sometimes the penalties are different for the same offence and, inexplicably, sometimes they are the same for different offences that perhaps one would expect them to be different for. However, I will not press those amendments to a vote, and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 ordered to stand part of the Bill.
Clause 11
PURCHASE OF VAPING OR NICOTINE PRODUCTS ON BEHALF OF UNDER 18S
Dr Johnson
I beg to move amendment 65, in clause 11, page 6, line 5, at end insert
“, save if it is a first offence.”.
See explanatory statement to Amendment 66.
The Chair
With this it will be convenient to discuss the following:
Amendment 66, in clause 11, page 6, line 5, at end insert—
“(3A) A person who has admitted guilt of a first offence under this section is liable to a fine not exceeding level 3 on the standard scale or a caution.”.
This amendment, together with Amendment 63, 64, and 65, prevents penalties for a first offence under sections 10 and 11 being beyond level 3 and provides for a discretionary caution.
Clause stand part.
Amendment 82, in clause 77, page 40, line 22, at end insert
“, save if it is a first offence.”.
See explanatory statement to Amendment 83.
Amendment 83, in clause 77, page 40, line 22, at end insert—
“(3A) A person who has admitted guilt of a first offence under this Article is liable to a fine not exceeding level 3 on the standard scale or a conditional caution.”.
This amendment, together with amendments 80, 81, and 82, prevent penalties for a first offence under sections 76 and 77 (pertaining to age of sale restrictions for vaping and nicotine products in Northern Ireland) beyond level 3 and provides for a caution.
Clause 77 stand part.
Dr Johnson
Amendments 65 and 66 apply to clause 11. In line with other Opposition amendments tabled to various clauses of this Bill, they seek to provoke debate on the coherency of the penalties. They encourage the Minister to look in detail at those penalties before Report—specifically, to consider the differences between the shop worker, the shopkeeper and the shop owner in terms of the level of fine required, and also to consider the individual who inadvertently commits an offence on one occasion versus the person or company that deliberately and repeatedly flouts the law and require different handling.
Amendment 65 amends clause 11 to add at the end of page 6, line 5,
“, save if it is a first offence.”,
while amendment 66 inserts:
“A person who has admitted guilt”—
that is, a person who has owned up—
“of a first offence under this section is liable to a fine not exceeding level 3 on the standard scale”.
I think I have explained what those are for.
Clause 11 makes it a criminal offence for a person aged 18 or over to purchase, or attempt to purchase, a vaping or nicotine product on behalf of someone who is under the age of 18—essentially stopping adults from buying vapes for kids. Clearly, buying things for children that are so potentially harmful to them is not the action of a responsible adult.
If a person is charged with this offence, they can defend themselves by saying that they had no reason to suspect that the person they were buying for was under 18. It is not really clear to me when that sort of a situation would occur. If someone is under 18, it should be fairly obvious that they are quite young. Any responsible adult who knew the child would have an idea of how old they were, and any responsible adult who did not know the child would surely guess that there was a risk in buying something for someone who looked young, in case they were under 18 and incriminated themselves. I understand why the defence is there, but I am not really sure how it would be used. The Minister may be able to enlighten us further.
A person found guilty in relation to this offence is liable to a fine up to level 4 on the standard scale, which amounts to £2,500. This clause is very important, because we must stop children getting access to vapes. Popular culture tells us that vapes are very accessible to children. For example, we were all glued to our screens—I know we were in the Johnson household—watching Luke Littler, the recent BBC young sports personality of the year, win the PDC world darts championship. It was fabulous to see someone so young achieve such an amazing feat.
Luke Littler won half a million pounds, which is a wonderful thing for that young gentleman, but he reportedly said that he would celebrate by vaping. Of course, he is actually a 17-year-old young man, despite his great achievements. He is a sports prodigy, a national hero, and a wonderful example to young people of what can be achieved at a young age, but presumably, until he turns 18 very soon, he will need someone else to buy vapes for him. That will be illegal under the new law.
On a more serious note, we know through the various different reports that on county lines, where people are selling drugs, they are often giving vapes to children as a way of enticing them into feeling that they are favoured by those adults. They are using children’s addiction to nicotine and desire for further vapes, and for access to further vapes, as part of a grooming process to get them into dreadful situations with county lines. Clause 11, which prevents children’s access to vaping and nicotine products via a proxy adult, is a very sensible measure that I will support.
Andrew Gwynne
I am grateful to the shadow Minister for her support. Clause 11 means that it will be an offence for a person aged 18 or over to buy, or attempt to buy, a vaping or nicotine product on behalf of a person who is under the age of 18 in England and Wales. The clause replaces the existing restrictions, which only apply to nicotine vapes.
Similarly, for Northern Ireland, clause 77 means that it will be an offence for a person aged 18 or over to buy, or attempt to buy, a vaping or nicotine product on behalf of a person who is under the age of 18 in Northern Ireland. The clause replaces the existing restrictions that only apply to nicotine vapes and extends them to non-nicotine vapes and nicotine products such as nicotine pouches. Anyone convicted of the offence would be liable to a fine of up to £5,000. Both of these clauses contain the defence for those charged that, if they can prove they had no reason to suspect the person they were buying the product for was under 18, that would be considered.
Dr Johnson
Amendments 65, 66, 82 and 83 were specifically there to provoke debate on the coherency of the penalty portfolio across the Bill. The Minister has clarified his position on that. It is very important that we see those who are selling vapes to children or, in the case of clause 11, buying vapes for children, appropriately deterred from doing so or appropriately punished. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 ordered to stand part of the Bill.
Clause 12
Vaping and nicotine product vending machines
Sarah Bool
I beg to move amendment 96, in clause 12, page 6, line 8, at end insert—
“(1A) The offence set out in subsection (1) does not apply to vending machines that are located within specialised mental health units that provide care for mental health patients.”
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Clause 78 stand part.
Sarah Bool
This amendment states:
“The offence set out in subsection (1) does not apply to vending machines that are located within specialised mental health units that provide care for mental health patients.”
I tabled this amendment on the basis of the evidence provided to us. I put on record that the Committee received a letter by Peter Terry, a
“Smoke Free lead in a large Mental Health Trust in the North West of England”.
In his letter, he says,
“As you may be aware the success of hospitals and Trusts becoming smokefree environments (especially Mental Health units) is particularly challenging. Mental Health service users due to their conditions have little or no motivation to stop smoking. On the units of my trust the prevalence of smoking is consistently between 70-77%.”
He goes on to say:
“To ensure we allow service users who are hospitalized a safer way to manage their nicotine addiction...my Trust would require Vending machines. These would allow service users to purchase a closed pod system device, which is a lot less harmful than tobacco smoking. On admission they would be offered either free NRT products or to purchase a vape as described above.”
He is asking that we make an exemption.
The exemption was also supported in another submission from the Cambridgeshire and Peterborough NHS foundation trust. Ben Kingsbury, the tobacco dependency lead in that trust, wrote to express his concerns over the ban on the sale of vapes from vending machines. He indicated that his trust had installed vending machines back in May 2024
“to ensure that vapes are available to staff and patients at all times.”
He stated:
“Since installation of the vending machines in our Trust we have had over 2400 individual vends. Each vend represents a staff or service user making a positive decision to improve their health. 2400 individual vends in just 6 months represents a saving to the Trust of around £12,000.”
He argued:
“Removing the machines will reduce patients’ independence in buying their own devices while in hospital and will have a financial implication to our Trust, as wards would be expected to fund more vapes.”
He was also concerned that
“a lack of vape provision on our Trust premises may result in patients returning to smoking”,
which I am sure we all agree we do not wish to be the result. He also asked that we consider the financial implications, as well as health and wellbeing of service users, by implementing the exemption.
We can all empathise with those who are admitted to mental health units. They may have difficult and complex conditions that they need to work through, and coping with a potential addiction may be too much for them. There may be a logic to listen to the voices of the experts—especially if we end up having smoke-free places around hospitals and how that will work out—asking us to allow a mechanism to help someone with smoking cessation.
The Minister himself has just said that vaping can be good to help someone quit, but if they do not have access to a vape they may face difficulties such as cravings, anxiety, trouble concentrating and all the other elements that go with it, including potentially going back to smoking tobacco in its pure form. Taking away the option from those in mental health units will only make their recovery harder, longer and more expensive for the NHS. I heartedly commend to all members of the Committee that we all consider this amendment thoroughly, to ensure that we are not doing additional harm by taking an aggressive approach in this regard.
Gregory Stafford
I thank my hon. Friend the Member for South Northamptonshire for moving the amendment. One thing we have seen across the debate thus far, and indeed during oral evidence, is that we have been led by the evidence—the Minister has clearly said that. The evidence that my hon. Friend has provided is from medical experts. These are not vape peddlers or people from the industry, or people who want to make a quick buck out of those who are addicted to nicotine. These are health professionals who are trying to ensure that there is a balance between what is absolutely right—we do not want to see people vaping—and the reality of the situation in medical settings, especially in mental health settings, where the ability for patients to have a certain amount of autonomy is often vital to their mental recovery.
My hon. Friend also made the valid point that if we remove smoking and tobacco products from in and around hospitals, which is a suggestion in the Bill that I think I support, we must ensure that those who are addicted—and we accept that it is an addiction—are dealt with appropriately. Obviously, in most regular acute trusts, that would be dealt with through a nicotine patch, but for mental health services, as I said, the requirement for autonomy should sometimes outweigh the functional nature of a nicotine patch. Indeed, my understanding is that nicotine patches do not work for everyone, because some of the addiction is in the holding as well as the imbibing.
I welcome the Minister’s response. As I have said to him on previous amendments, even if he is not happy with the precise wording my hon. Friend the Member for South Northamptonshire has put forward, I hope that he can bring in some kind of exemption on Report, so that the medical professionals who have written to us are satisfied that their concerns have been heard?
Dr Johnson
Amendment 96 and clause 12 relate to vaping and nicotine product vending machines. I support the clause; indeed, if one looks at proceedings on the previous, Conservative iteration of the Bill from earlier this year, one will see that new clause 4, which was signed by just under 40 Members proposed a ban on vaping product vending machines, and the lead name was mine. I was concerned that vending machines would be used by children to obtain vaping and nicotine products. That loophole in the law that would make it easy—as we have seen with cigarettes in the past—for youngsters to circumvent the age-restricted product legislation designed to protect them, by allowing them to buy things from a machine that was not checking how old they were. I am therefore clearly supportive of this legislation.
Clause 12 makes it an offence for a person who manages or controls a premises to have a vending machine that sells vaping or nicotine products—
“an automatic machine from which”
vaping or nicotine products “may be bought”. Again, I ask the Minister to look at the principle of machines “from which” these products “may be bought” and to reconsider the wording to ensure that the industry cannot sell products using an app or online platform that can then be collected from a dispensing machine, in the same way as someone might buy something off a retailer and collect it from another retailer or a lock box collection point.
Banning the sale of vaping products, nicotine products and cigarette papers from vending machines would, by virtue of the various clauses in the Bill, including clauses 12 and 17, be a UK-wide provision. That would be beneficial because it would have consistency across the UK in a positive direction. The clause introduces a new offence, as there are currently no restrictions on the use of vaping or nicotine product vending machines in the UK, in the way that there is with tobacco vending machines. This is a new offence, and in my view a welcome one.
Self-service vending machines provide an anonymous, unregulated environment where individuals under the legal age could otherwise purchase vaping or nicotine products without any face-to-face interaction with a retailer, clearly increasing the risk of under-age sales. The offence will come into force six months after Royal Assent, which means that premises that currently contain a vape or nicotine product vending machine will have time to remove it or to stock it with a product that can legitimately be sold to younger people.
The primary rationale behind the restriction on vape vending machines is to reduce vaping rates, particularly among minors and children. The Government’s aims, as I understand them, are to protect young people from the harmful effects of vaping by limiting their access to vaping and nicotine products. Vape or nicotine product vending machines, which may also be used for pouches, are seen as a mechanism to bypass the responsibility of retail staff in ensuring that restrictions are met, contributing to increased sales.
The fine is level 4 on the standard scale, which is similar to that for selling over the counter. That makes sense to me, but I want to ask the Minister who qualifies as a person who manages or controls a premises? If it is a tenanted property, does that mean the landlord or the tenant who has control of the premises? If it is a larger retailer, such as a large supermarket, who controls those premises? Who takes the blame there? Is it the person who was on shift as the supervisor? Is it the store manager? On a more general basis, is it the regional manager or the managing director of the company? Who is responsible for managing and controlling those premises? The Minister needs to provide guidance on that so that people understand their responsibilities and so that, in the event a crime is committed and a vending machine is put in place, fingers are not pointed in every direction, making it impossible to work out whose responsibility and fault it was, such that nobody is held to account for the breach.
The Department of Health and Social Care has produced an impact assessment for the Bill, and paragraph 477 says:
“Regulating vape flavours, packaging, and presentation, as well as point of sale displays, and banning vending machines which sell vapes and nicotine products is expected to reduce the number of people taking up vaping, and therefore it is expected that there will be environmental benefits from reduced litter from vaping products.”
The clause will therefore benefit the health of not just our children but the environment in which they live and grow.
Paragraph 781 of the impact assessment highlights the following information about vending machines and under-age sales:
“A survey conducted by ASH”—
which gave evidence to our Committee last week—
“found that 6.6% of 11–17-year-olds who currently vape used machines as a source of vapes.”
Given that vaping vending machines are not currently that common, that seems quite a high figure. Without a ban and the implementation of the clause, that figure will surely increase.
Tristan Osborne (Chatham and Aylesford) (Lab)
I appreciate the point that the hon. Lady is making and those that other Members have made. As I understand it, we already have a law that bans people from purchasing vapes from a customer-managed vending machine. The only vending machines that should be selling vapes are managed by someone else. Can I just clarify that that is the case, because I think there is some confusion about how people are getting these vapes at hospitals and particularly in mental health settings? I have a concern about that because it puts vulnerable people, in a sense, with an addictive product. Can I just clarify that vending machines for vapes are currently not allowed in this country, except where they are not individually customer operated?
Dr Johnson
I thank the hon. Member for his intervention. I will come to amendment 96 and the mental health aspect shortly, but I will deal with the clause first, which makes sure that these vending machines are not available. At the moment, one can buy nicotine products in a vending machine where those exist. As I said, the ASH survey showed that 6.6% of 11 to 17-year-olds who currently vape have access to vapes through a vending machine, so this is happening in the UK already. The hon. Gentleman will have heard me say earlier that, until this Bill passes, it is not illegal to sell nicotine products to children. Some responsible retailers have a voluntary scheme for not selling to under-18s, but it is not a legal requirement. Some irresponsible sellers do sell vapes to children.
Paragraph 782 of the impact assessment says:
“There is limited evidence presented on the number and locations of vape vending machines, however it is suggested by online retailers that they are currently predominantly placed in locations such as nightclubs, bars and pubs. It is anticipated that”
without this legislation
“the market will develop further and vape vending machines will become more prevalent in other locations such as supermarkets, train/bus stations and other locations accessible to under-18s.”
In my mind’s eye, I remember recently seeing a vape in a vending machine alongside sweets; I just cannot quite remember where it was, but it was certainly somewhere that was easily accessible to people.
The aim of the clause is to protect children and to ensure that vending machines—commonly found dispensing food and drink in child-friendly establishments such as canteens and leisure centres, and easily used by young people—are not available. The machines protect anon—anonymity; I might have to put my teeth in, Sir Mark—
Dr Johnson
It is catching—it is the time of day, I think.
Paragraph 787 of the impact assessment says:
“We know that one of the main reasons children take up vaping is due to peer pressure…It is therefore worth considering that instances of vape vending machines in easily accessible areas might be an enabler for those who would not otherwise seek out a vape or who would be deterred by having to speak to an adult”.
Children would have to seek out an adult to make a purchase, because they have to go to a till or counter to get the vapes. Under the new legislation, that adult would look for ID, while a vending machine would provide a circumnavigation, so this is a sensible clause.
Most of us recognise that the vending machines currently selling disposable vapes have a finite lifetime, because this Government have banned them in the future under a statutory instrument in the competence of the Department for Environment, Food and Rural Affairs. However, British American Tobacco has already stated that it is working on a product to sell the Velo brand—one of its nicotine pouches—via “age-gated vending machines” and is hiring for the product. Again, that is taken from the impact assessment.
That further highlights the need for a blanket ban on vending machines, particularly given that, as things stand, they are clearly advertising tools for vaping. Wherever the machines are placed, they are visible to the consumer, and the consumer needs to know what is in the vending machine in order to choose what to buy. Given the regulations appearing later in the Bill, we will be looking at the display of such products. It therefore seems nonsensical to have restrictions on the display of products, but to allow vending machines, which allow the display of products, in contravention of that. One aim of the Bill is to ensure that non-smokers do not begin vaping and get hooked on nicotine. These provisions strengthen that through age verification and on the marketing front.
I will now deal with some of the issues to do with mental health hospitals. My hon. Friend the Member for South Northamptonshire said that the 2,400 vends were evidence of 2,400 positive choices. I am not sure that that is necessarily the case. The evidence is that 2,400 vapes were bought, but not that those individuals had ever smoked. We do not know whether the vending machines are being used by people who smoke or people who do not—[Interruption.] My hon. Friend the Member for Windsor comments from a sedentary position; if he wants to intervene, he is welcome to do so. A proportion of people out there smoke, and a proportion do not.
Sadik Al-Hassan (North Somerset) (Lab)
It is a pleasure to serve under your chairship, Sir Mark. Based on the behaviour of vape companies now, which is similar to that of tobacco companies previously, this proposal would allow further expansion of vending machines and further display on vending machines in more and more places. Is that the point that the hon. Member is making?
Dr Johnson
In essence, in relation to clause 12, yes. I do not think that vending machines including tobacco and nicotine products or vapes are a good idea, and I moved a new clause for inclusion in the previous Bill because a ban on nicotine and vaping products in vending machines had not been included at the outset. Without such a measure, we will see an expansion of vending machines as a way of selling products to children and getting children addicted. It will be done as a way of making products more available to adults, but its effect will be that the products are more available to children. I do not want to see such products available to children, because they are clearly harmful for them. All the medical evidence we have had states that clearly.
With regard to individuals in mental health hospitals, some may be there as voluntary patients, and some under a mental health section. When someone’s liberty has been taken from them because they are being treated for a mental health condition, we need to be careful that we are not restricting them in other ways in which we would not restrict other people. That is a fair point to make.
We also have to be mindful of the staff. As we go through the Bill, the Minister will rightly be looking at exposure to vaping inside hospitals and at extending the tobacco regulations that limit smoking in public indoor places to cover vaping in indoor public spaces. Indeed, he and you, Sir Roger, will have seen the signs placed in the Tea Room by the Speaker, who rightly wants to see that we do not have vaping there. The public do not want vaping in their tea rooms or in the public domain either, so that is the right thing to do. We need to consider that there are staff and other patients in mental health hospitals who may not wish to vape and should not be inadvertently and unnecessarily exposed to vaping products.
I do not support the idea that 2,400 vends means that this is a positive choice. For some of these people, vaping may have been a positive change from smoking, but for others it may have been a decision to vape.
Sarah Bool
I appreciate that; those were the words of the NHS trusts themselves when they talked about positive decisions. We cannot always be sure exactly why someone made that decision, but we have to hope in the first instance that that move away from smoking would turn into vaping and, ultimately, into a smoke-free generation.
I am minded to tighten the wording of my amendment on Report to ensure that the vending machines are in those mental health units for the purpose of facilitating smoke-free policies and smoking cessation, because I do not necessarily want nurses and those working in those units to be exposed to any unnecessary products. When we are dealing with addiction, we all appreciate how difficult it is, and I want to ensure that a process is in place that means that we deal with both the mental health issues patients are dealing with and the addiction in a suitable and balanced fashion.
Dr Johnson
I know my hon. Friend’s heart is in a good place when she thinks about how we can protect individual mental health patients who also have an addiction to nicotine. She said that having no vapes on the hospital site could lead to patients taking up smoking, but there are of course no cigarettes on the hospital site either. I do not support the idea that the removal of one product will automatically lead to the use of another unavailable product.
If a member of the Committee, for example, wanted to leave the room now and go and get some vapes, they would need to leave the House, go and find a shop, and purchase them, and the same is true of an average patient: they would have to leave their home, find a shop, buy their vapes and come home again. The availability of a vaping vending machine on a ward in a mental health hospital would make vapes much more available to an individual and much more proximal than they would be under normal circumstances, which may lead to a greater consumption of nicotine than would be the case if the vapes had to be accessed elsewhere.
As we have mentioned repeatedly, nicotine is a very addictive drug, and I will not reiterate that beyond saying that if one is in a hospital unit and unable to leave because one is on a section, and one is used to using nicotine, the cravings would be extremely unpleasant and the withdrawal could be very nasty indeed. With that in mind, we wish to ensure that those individuals are cared for, and I know that the Minister wants to ensure that they are cared for too, but I remind the Committee that other nicotine replacements are available.
Several treatments are available from shops and pharmacies to help to beat the addiction, and those are available on prescription to individuals currently residing in a mental health unit, voluntarily or otherwise. Essentially, they are nicotine replacement therapies, by which I mean a proper medicine, as opposed to a consumer product, that provides somebody with a low level of nicotine without the tar, carbon monoxide and other poisonous chemicals present in tobacco smoke. They help to reduce unpleasant withdrawal effects, such as bad moods and cravings, and may affect mental health treatment too. They can be bought from pharmacies and shops, but a doctor can prescribe them and NHS stop-smoking services can provide them, and they are available in a whole range of forms. There are skin patches that provide a slower release, chewing gum and little inhalators that look like a small plastic cigarette. There are tablets, oral strips, lozenges, and nasal and mouth sprays.
There is a huge variety of different nicotine replacement therapies. Some, such as the inhalators, gums and sprays, act quickly to provide nicotine, and some, such as the patches, release nicotine slowly. The treatment depends on the stage of craving and the stage of giving up that somebody is at, and on what is most suitable for them. Sometimes patients find that the best way to use nicotine replacement therapy is to have a low-dose patch that is worn all the time, with top-ups from a gum, inhalator or nasal spray if they have particular cravings. Treatment with such nicotine replacement therapy usually lasts eight to 12 weeks before the dose is reduced and eventually stopped.
Jack Rankin
I supported clauses 10 and 11 because I agree with the Government that under no circumstances should children be taking up vaping. I was heartened by the Minister’s comments on the principle of clause 10, the general point about evidence and balance when it came to vaping, and treating vaping differently from cigarettes and tobacco products.
However, I cannot quite go along with the Government on clause 12, because there they have the balance slightly wrong. I accept that vape vending machines should be prohibited, for the same reason that tobacco and cigarette vending machines were prohibited: vending machines cannot provide for age verification. That balance is well struck. However, I do not support the related measure for nicotine product vending machines. The Minister may seek to correct me, but I am not aware that any of the products described by the shadow Minister, such as nicotine patches and gum, is used recreationally or is attractive to children.
Sadik Al-Hassan
Does the hon. Gentleman not think that, if other items are restricted, people will end up buying those items? We are going to restrict what is available, and that will surely open them up as an avenue if we do not close it now.
Jack Rankin
I do not think that nicotine products are attractive to children in any way, shape or form today. My concern is that, as the Government are seeking to stop children using them by restricting them in vending machines—I do not think they should be using them—
Dr Johnson
May I clarify the point that my hon. Friend is making? When he says that he does not think nicotine products are attractive to children, does he mean the medical nicotine replacement therapy products, as opposed to other nicotine products such as nicotine pouches or vapes?
Jack Rankin
I mean the former: nicotine patches and gum. The stated intention of the Bill, supported by the House on Second Reading, is to move to a smokefree generation, so it would seem sensible to make nicotine products pretty widely accessible, in so far as they do not attract children. We should largely welcome a vending machine selling nicotine patches or gum if the intention is to move to a smokefree generation. I do not think the Government have the evidence and the balance quite right on that point, so I cannot support clause 12 as it is currently written.
I would make a similar case in support of the amendment in the name of my hon. Friend the Member for South Northamptonshire. She has read to us evidence from a relevant professional, who has a legitimate concern. It might be sensible, in the interest of broader public health, to have such a vending machine. If the Government are concerned about evidence and balance, those are exactly the kinds of voices they should be listening to, and they should accept the amendment, which is very much in line with their intent.
Sadik Al-Hassan
Does the hon. Gentleman have any evidence that there is a restriction on access to stop smoking products now? In my experience as a pharmacist, I have not seen that.
Jack Rankin
I do not think I can talk to that point, but I thank the hon. Gentleman for making it.
We have to find a balance. The Government can use their majority in the House to cast aside my hon. Friend’s amendment, but it seems to me that it is in line with the principle of the Bill, so it is a sensible thing to do.
Dr Johnson
I understand that my hon. Friend thinks that the amendment is sensible, but Dame Andrea Leadsom, the public health Minister in the previous Government, asked Mark Rowland, the chief executive of the Mental Health Foundation, the “chicken-and-egg question”, as she put it:
“Does smoking make you depressed, does depression cause you to smoke or is it both?”
He said:
“it is difficult to disaggregate exactly for many people, but we know that both are a real issue. We talk about this cycle of smoking increasing the risk of poor mental health and poor mental health increasing the chances of smoking and the number of cigarettes someone smokes. People with mental health problems smoke far more, and that addiction then exacerbates psychiatric symptoms. Those psychiatric symptoms also then lead to increased poverty and increased chances of being unemployed, and that leads to poorer mental health. It is a complex picture, but we are really starting to see the causal drivers of mental ill health.” ––[Official Report, Tobacco and Vapes Public Bill Committee, 1 May 2024; c. 116, Q179.]
Does my hon. Friend agree that one should not say that those in mental health hospitals need access to vapes or nicotine in the form of pouches from vending machines to ease their mental health? In actual fact, it may do quite the opposite.
Jack Rankin
I had not heard that remark, but I thank my hon. Friend for putting it on the record. To add to that theme, I would make the point that these things are multifaceted. The point that my hon. Friend the Member for South Northamptonshire, who is the successor to Dame Andrea, was making is that people have quite a lot to be getting on with, so they do not need this added stress.
Dr Johnson
Does my hon. Friend see it as an added stress or an added opportunity to add in-patient support to quit smoking to further benefit the individual’s mental and physical health?
Jack Rankin
Perhaps it is an added thing that doctors in mental healthcare can try to address, but my hon. Friend the Member for South Northamptonshire read out a letter from someone at the coalface, who takes the opposite approach from that of the shadow Minister.
Sarah Bool
I will say a little about the intention behind the amendment. We have obviously stressed throughout this debate how addictive nicotine is, but I want to ensure that if we are trying to deal with mental health issues, we are not creating an extra burden. The intention was not to encourage people to smoke, vape or take up other bad habits, but to make sure that we offer the best possible healthcare in the round, which means giving support.
Nicotine is addictive and so stresses are associated with it. Perhaps there are alternatives to give patients, but if they are not suitable for a particular patient or they do not work as well for them as nicotine, they will effectively be going cold turkey, which has its own issues. The intention behind the amendment was purely to encourage us to listen to the evidence from trusts themselves, to try to come up with a practical solution to enable this transition and allow us to get to a smokefree generation.
Jack Rankin
I thank my hon. Friend for her intervention and I agree with everything she has just said.
I will just finish my remarks to my hon. Friend the shadow Minister. She talked about this measure being a further opportunity; I would suggest that the easy availability of nicotine products in certain instances would be an aid on that journey.
We should be working pragmatically on amendments such as this in Committee, to ensure that the evidence is considered and that the right balance is struck. I will support the amendment tabled by my hon. Friend the Member for South Northamptonshire. Because the nicotine product vending machine measure is part of clause 12, I will vote against clause 12 stand part.
Andrew Gwynne
Clauses 12 and 78 prohibit vape and nicotine product vending machines in England, Wales and Northern Ireland, and similar provisions are made elsewhere for Scotland. However, it is really important that the Committee understands that Scotland already specifically prohibits vape vending machines.
Clause 12 makes it an offence for any person managing or controlling a premises to have a vaping or nicotine product vending machine available for use, which effectively prohibits the sale of vapes and nicotine products from vending machines. I will try to clarify this point for the shadow Minister. She asks, “Who is responsible? Who is that person?” The offence is linked to the person with management control of the premises, as that is the most appropriate mechanism; they have control over whether the vending machine is present. That is the answer to her question.
This Government will stop the next generation from becoming hooked on nicotine. To do that, it is essential that we stop children from accessing harmful and age-restricted products. Prior to the prohibition of tobacco vending machines, we know that children who smoked regularly used those machines as their source of cigarettes. We cannot allow the same thing to happen with vapes.
Vending machines do not require any human oversight, so it is much easier for determined individuals to bypass age-of-sale restrictions and, crucially, to undertake proxy purchases on behalf of individuals under 18 because there is a much lower chance of their being challenged about such a purchase. Additionally, by their very presence vending machines advertise their contents and the Bill will ban the advertising of vapes. We need to ensure that children are protected from harmful and addictive products. Ensuring that we remove the ability of children to access age-restricted products is an essential part of that approach.
I turn to amendment 96, regarding the exempting of mental health units from the vending machine prohibition. I am grateful to the hon. Member for South Northamptonshire for bringing this important issue before the Committee today for discussion. Her amendment would allow vape and nicotine product vending machines to be available for use in specialised mental health units in England and Wales.
I am very sympathetic to the needs of adult smokers and vapers in mental health facilities, and I know that this topic came up during the evidence session. However, we do not currently believe that there is a need to exempt mental health settings or other healthcare settings from these requirements. Scotland did not exempt mental health units from its vape vending machine ban, and it has had no issues. I want to be clear, because it is really important that I make this point: we are not banning the sale of vapes and nicotine products in mental health settings. We are only prohibiting their sale from automatic machines that provide no means to prevent proxy purchasing. Facilities that contain shops will still be able to sell vapes to patients and staff. Additionally, patients in mental health settings may be able to benefit from stop smoking services and the swap to stop scheme.
The majority of in-patient trusts, both acute and mental health, successfully deliver stop smoking support to smokers. As part of the swap to stop scheme, localities can request free vaping starter kits to provide to adults engaging with their local stop smoking services. Awards have now been made to individual services in a range of settings, including NHS and mental health settings, and to specific populations. It will still be legal and possible for vending machines to dispense medicinally licensed nicotine replacement therapies such as gums, patches and inhalers. These important medicines will still be available to patients who are looking to quit smoking or who are struggling with their nicotine addiction.
Dr Beccy Cooper (Worthing West) (Lab)
I thank my hon. Friend for making the arguments on vending machines. From a public health consultant point of view, I have listened and think there is a reasonable debate to be had. I am convinced by the arguments that my hon. Friend the Minister has given, but I would ask that following the debate the conversation continues as the Bill progresses and that the Department of Health and Social Care continues to have these conversations.
Andrew Gwynne
I am grateful to my hon. Friend for that. This debate will not stop here at Committee stage; I am almost certain it will be raised on Report. If it is not concluded to the satisfaction of those who wish to see such provisions in the Bill, I have no doubt that it will be raised in the other place, too.
However, it is really important that we do not end up with unintended consequences. We have to get this legislation right. The smoking cessation services available are far-reaching in these settings, and I see no reason for an exemption, given that nicotine replacement therapies such as gums, patches, inhalers—important medicines—will still be still be available to patients with a nicotine addiction in mental health settings. It is for that reason that I ask the hon. Member for South Northamptonshire to withdraw her amendment.
Sarah Bool
I would like to press my amendment to a Division.
Question put, That the amendment be made.
The Chair
With this it will be convenient to discuss the following:
Clause 14 stand part.
Clause 61 stand part.
Clause 79 stand part.
Before we embark on this debate, because there is a series of stand-part debates coming up, I will make the point that it is not actually de rigueur to speak in every stand-part debate if you have no desire or need to do so—you do not have to read things into the record.
My second point is that we may be coming to a conclusion of the business on the Floor of the House fairly shortly, although I do not think we have yet got on to the winding-up speeches. I must make the point to the Committee that if a Member is on their feet when a Division is moved—and there will then be a sequence of Divisions, so we could be talking about an hour or an hour and a half—I shall have no choice but to suspend the Committee, unless the adjournment has already been moved. I call Dr Caroline Johnson.
Dr Johnson
In the provisional grouping provided by the Clerk, you have clauses 13, 14, 61 and 79 together. Would you like to—
The Chair
Order. I do beg your pardon; I am wrong. I am never wrong! But this time I am. I call the Minister to speak first.
Andrew Gwynne
Thank you, Sir Roger. I was doubting my officials, but perhaps I should have had more trust in the notes that they gave me, which say “AG to open”—heaven forbid that you, in the Chair, would ever be wrong.
Clauses 13, 14 and 79 provide a power for the Secretary of State, Welsh Ministers, and the Department of Health, Social Services and Public Safety in Northern Ireland, to regulate the display of relevant products, including prices and empty retail packaging, within retail establishments in England, Wales and Northern Ireland. Tobacco product displays are currently regulated under the Tobacco Advertising and Promotion Act 2002. This Bill repeals and replaces that Act, so tobacco display regulations will be made under this new power for when the repeal takes effect.
Clause 61 provides Scottish Ministers with powers to regulate the display of herbal smoking products, vaping products and nicotine products, and their prices, in retailers in Scotland. The powers also allow regulation of the display of empty retail packaging or anything that represents the products. It is slightly different to the equivalent clauses for England, Wales and Northern Ireland, which also cover tobacco products. Tobacco products are not included in clause 61, because Scotland has made its own provision on tobacco displays under the Tobacco and Primary Medical Services (Scotland) Act 2010.
Evidence shows us that vapes and nicotine products are currently too easily accessible to children within shops. Vapes are sometimes displayed alongside sweets and confectionery in retail environments, and often promoted in shop-front windows. These products are too easily seen and too readily available for children. That is unacceptable. We must reduce the visibility and the accessibility of vaping and nicotine products to protect children from getting hooked on nicotine.
These clauses provide each of the devolved Governments with the power to regulate such displays and ensure that they are proportionate to the risks that these products pose to the audiences within retail establishments. They also ensure that the Secretary of State, Welsh Ministers, the Department of Health, Social Services and Public Safety in Northern Ireland, and Scottish Ministers, will be required to consult before making regulations. I commend the clauses to the Committee.
The Chair
Let me just explain: the clause stand part is Government business, so it is absolutely correct that the Minister is entitled to move it. He is allowed to move it formally if he chooses to do so. He does not have to speak to it, but by moving it formally, he can then open the debate and come back later if he so chooses. He has chosen to take the path he has gone down and he was absolutely right to do so.
Dr Johnson
Thank you, Sir Roger. I am grateful for your guidance as Chair on the order of doing things. It has been, at times, quite confusing.
Clauses 13, 14, 61 and 79 regulate the display of products in England, Wales, Scotland and Northern Ireland. It does not take much to realise why that is necessary. Simply take a drive down a high street in any small town across the country, and one will come across a shop with an entire front window blocked out with pictures of sweets, other confectionery and chocolate, usually an energy drink or two thrown in, and a whole host of brightly-coloured vaping devices. The clear message is that these are fun and exciting products—not stop-smoking devices, but recreational products—and is clearly designed to entice children into purchasing them.
I had cause to go to a major service station on the A1-M25 junction, and as I came out of the bathroom I noticed that, at the eye level of about a six-year-old, there was a whole pile of coloured vapes in a shop front. Going into a major newsagent to purchase a newspaper, one will also find a whole load of pictures behind the counter. I have even seen electronic video displays advertising a vaping product in WHSmith—I think it was a Lost Mary—so one cannot get away from the advertising of those products even if one wishes to. It is clearly necessary for the display of those products within stores to be regulated to ensure that children are not enticed—the industry would say inadvertently, while others would suggest very deliberately—into wanting to buy them.
Clause 13 provides the Secretary of State with powers to regulate the display of tobacco products, herbal smoking products, cigarette papers, vaping products and nicotine products. It also regulates their prices. I wonder if the Minister could comment on what that means, and how the prices of all those products will come under some sort of Government control. Will the Government fix the prices and therefore the profit, or will they apply additional taxation to the product—something that they seem to like to do, although it would not necessarily be as unwelcome in this case as some of the other taxes they have applied recently—so that they create an overall price? How does the Minister intend this price fixing, as it were, to work?
Clause 13 also gives the capacity to regulate the display of empty retail packaging or anything else that represents the product, whether that be putting up a video display or large versions of the products at an entrance, so that the products can be kept away from children. Under the Tobacco Advertising and Promotion Act 2002 and regulations made under it, there are already restrictions on the display in the course of business of tobacco products and pricing, but not specifically nicotine and vaping products. Given all we have heard about the addictive nature of nicotine, the enticement of children into taking such products, and the harm they may cause children particularly in adolescence, this is a welcome change.
Clause 13(6) confirms that before making regulations, the Secretary of State must consult who he or she considers it appropriate to consult. I am interested to understand whether the Minister believes that such a consultation should include the tobacco industry and/or the vaping and nicotine product industry, whether that be medical or otherwise, and whether he sees a distinction between the two.
Clause 13 creates an offence for failure to comply with the regulations, and anyone convicted of an offence under this clause on indictment can be subject to imprisonment of up to two years, or a fine, or both. If they are convicted of a slightly lesser offence on summary conviction, they can be subject to imprisonment for a term not exceeding a general limit in a magistrates court, or a fine, or both.
I refer the Minister to my previous remark that the general limit in a magistrates court is apparently going to double after the Lord Chancellor’s statement in October. As such, is the Minister content to have a fluctuating limit or would he prefer a fixed one? Perhaps that is something to consider before Report. Clearly, deliberately advertising vapes in a way that may be attractive to children requires a reasonably stiff penalty.
Under clause 13(1), the legislation explicitly allows for the regulation of physical displays of these products, including empty packaging and pricing information, which are often used to draw attention to them. Subsection (2) defines the “relevant products” pretty comprehensively, encompassing not just tobacco and vaping items but accessories such as cigarette papers and herbal smoking products. The broad definition ensures that the regulations cover a wide array of potentially harmful products. Subsection (3) further strengthens that by extending the rules to include representations of these products, such as promotional materials or images that might signify them at the point of sale, which is again welcome.
Currently, vaping products are often displayed prominently in retail settings, frequently at checkout counters or in bright, attention-grabbing displays. That placement encourages impulse purchases and can make those products more appealing to young people. Unlike tobacco products, which have strict display restrictions, vaping and nicotine products remain accessible and visible in shops, and the standard packaging laws for cigarettes do not apply, for example, to their shape and colour. Clause 13 aims to address that disparity by introducing measures to regulate the visibility and presentation of the products.
The collaborative approach to the consultation will hopefully strike the right balance between public health objectives and the interests of businesses, but I urge the Minister to give further information on how we can strike that balance while maintaining that the important thing is to protect the health of the public, particularly children, from vaping products. Both nicotine and non-nicotine vaping products, unlike tobacco, are currently allowed to be displayed at the point of sale in shops on countertops, in eye-catching displays on the shop floor, and in the windows. It is somewhat ironic that sweeties and chocolate have been banned at the till because of the pester power of children, only to be replaced in some shops by vapes. I suggest that, if any parent were given the choice, they would rather their children were having sweets than vapes, which are clearly addictive and much more harmful. There is much to be considered on the nature of unintended consequences, as well as the nature of the industry with which we are dealing.
Jack Rankin
My hon. Friend is making an eloquent case that we should not be advertising vapes, or their pricing and products, to children. What she is not doing is making a case for banning the display of products or prices of vapes to adults. Does she think it is incongruous to treat tobacco products and vaping products in the same way in this clause?
Dr Johnson
I thank my hon. Friend for his intervention. Part of me wants to say, “Well, what do you do when the child goes into the newsagent? Put a blindfold on them?” If the displays are visible to adults, they will be visible to the children who are walking beside them. It would be helpful if my hon. Friend has any ideas on how we can ensure that, when walking into an average newsagent, children cannot see something that grown-ups can.
Jack Rankin
I suggest to my hon. Friend that advertising a vape with Mickey Mouse is obviously aimed at a child, but it would be very much aimed at an adult, and not attractive to a child at all, to advertise a vape with, “This is what smoking 40 cigarettes a day costs you over a year. This is what our product costs. This is what you would save.” That would very much be in line with the aims of a smoke-free generation.
Dr Johnson
I thank my hon. Friend for his intervention, which goes to the principle of advertising, and whether there needs to be an exemption for medical advertising of vaping as a stop smoking tool by health professionals, for example in doctors’ surgeries, where it may also be visible to child patients. That is not really the aim of clauses 13 and 14, which focus on the display of products in shops. They are less about how the products are advertised and more about where they are displayed and how visible they are to someone shopping.
To some extent, my hon. Friend has a point about how we convey the message to smokers that vaping devices are items they can use to help them quit smoking—a message given by the chief medical officer—and about the distinction between that advertising and the sort of advertising that sees sports stadiums and sports shirts emblazoned with the brands of vaping companies, such that young children watching their heroes on the pitch, playing football or rugby, see vaping as a good thing. We will come to that later, but it is distinctly different from clauses 13 and 14.
At the moment, the legislation most relevant to where products are displayed is probably the Tobacco and Related Products Regulations 2016, known as the TRPR, which brought EU tobacco products directive 2014/40 into law. The regulations, which are now in the form of retained EU law, set standards for nicotine vapes, including limits on nicotine strength, bottle and tank sizes, and rules on packaging and advertising. But when it comes to the display of vape products, there are no specific regulations. They are openly displayed in stores, in large and small shops, both household names and individual retail outlets. They are also displayed in outlets that we might not expect. I noticed that the place I took my son for a haircut was selling both haircuts and vapes, and that a shop in the local town that repairs mobile phones and sells second-hand devices also sells vapes. The number of places that sell vapes and display them in their shop window is remarkable.
The Department of Health and Social Care has expressed concern about the lack of regulation, warning that children can easily see and pick up vapes due to them being displayed within aisles close to sweets, and on accessible shelves and display towers on the shop floor close to children’s eye level. A particular concern to me—and no doubt to many others in the Committee—is the visual similarity between a vape display and a shelf of sweets. Vapes are often displayed in an array of eye-catching colours. It is not uncommon to see them in a rainbow, with a range of sweet and fruity flavours on offer, including specific sweet brand names like Skittles, Starburst and Sour Patch Kids. The way they are sometimes presented as a safe alternative to smoking—which we understand that they are for smokers—can mislead consumers into thinking they are risk free, which is concerning considering that they contain nicotine and other harmful chemicals. I have also noticed a fashion for an increasing number of products to be advertised as pure, fresh, natural and organic, potentially to give the impression that they are less damaging than they are.
Finally, I have not seen this raised before, but I would like the Minister to consider that the fact that these highly addictive products are so easily accessible on the shop floor and at children’s height makes it easy for children to pick them up and walk out with them, particularly if they want to avoid being asked for ID by the shopkeeper. Putting them behind the counter where they are less accessible to children may reduce that temptation.
Clauses 14, 61 and 79 relate to similar regulations in Wales, Northern Ireland and Scotland. I do not intend to go through them and repeat my arguments.
Andrew Gwynne
I reassure the shadow Minister that the measures in clauses 13 and 14 will regulate only the display of pricing, not the actual prices. We are not yet in the realms of fixing prices for products—I hope that reassures the hon. Member for Windsor, too.
On engagement with the tobacco industry and the vape industry, the UK is party to the World Health Organisation framework convention on tobacco control, so we have an obligation to protect the development of public health policy from the vested interests of the tobacco industry. We take that commitment incredibly seriously and, in line with the requirements of article 5.3 of the FCTC, we summarise the views of respondents with disclosed links to the tobacco industry when responding to consultations.
With respect to the display of vapes, we know—and the shadow Minister has expressed very powerfully—that research on vape packaging has shown that reduced brand imagery can decrease the appeal to young people who have not previously smoked or vaped, without reducing the appeal of vapes to adult smokers. That is why I believe the measures in clauses 13 and 14 are appropriate and measured, and will have the outcomes that both the shadow Minister and those of us on the Government side of the Committee desire. I commend the clauses to the Committee.
Question put and agreed to.
Clause 13 accordingly ordered to stand part of the Bill.
Clause 14 ordered to stand part of the Bill.
Clause 15
Free distribution and discount of products
Question proposed, That the clause stand part of the Bill.
Jack Rankin
I have supported the Government so far on the principle of not allowing under-18s to vape, but I am concerned that, as we get to these clauses relating to distribution and discount—we have just talked about display, and I will not talk about flavours and marketing in depth, because I know they will come later—we are at risk of moving away from the evidence, and from the balanced approach that the Minister talked about when he delineated between vaping and tobacco.
These clauses give quite wide scope to Ministers on all of these products together, but I think the products should be treated differently. There should be scope for legitimate, responsible vaping companies to offer free distribution and discount of products, in aid of the Government’s stated aim. We do not want to create new vapers, but vaping is a powerful tool to realise the aim of a smoke-free generation. As with most products, it is possible to promote price savings in a responsible way.
We have received a huge weight of correspondence on this topic and I cannot say that I have had the time to read everything that has come across our desks, but I read the letter from VPZ, which I understand is a vaping company. It talked about its partnership with the NHS in Essex, which had put out to tender for a process to help people successfully quit. There was a £55 voucher from the NHS associated with that partnership. As I understand the letter—perhaps the Minister knows more about this than I do—VPZ used that voucher to offer a cashback scheme such that that money came off the price of vapes. VPZ did not benefit directly, because it did not think it should be doing so from a public source, but it passed that saving on, and I suppose that counts as a discount on a product.
I might contend to the Minister that that is exactly the kind of thing we want responsible, legitimate vaping companies to do. I understand that he wants, through this mechanism, to strictly limit advertising to, and targeting of, children and new vapers, but—
Gregory Stafford
I accept the point that my hon. Friend is making: there might be an argument for some kind of promotion around the use of a vape for cessation from tobacco products. However, the reality is that there are thousands, if not tens of thousands, of medicines that we do not advertise in this country, because they are generally prescribed by a medical professional, and those that are not—those that can be bought over the counter—are generally harmless so long as they are taken according to the instructions. We would not want a situation like that in America, where specific drugs are promoted to the general public, because I think that would send us down a very difficult route. Does my hon. Friend not think that what he is suggesting on vapes is something like that, and that for products prescribed by a doctor for smoking cessation, or at least for over-the-counter products, we should not have advertising, marketing or promotional products?
Jack Rankin
It will not surprise my hon. Friend that I do not agree with him. The last thing we need is more people going through our GP surgeries. We should allow legitimate use of these discounts in a public health manner. Some of the problems I have with the structure of some of the clauses from here on in is that they give quite sweeping regulatory power to Ministers, perhaps through secondary legislation. The Minister might say that the Government do not necessarily want to restrict those things, but the lack of certainty may result in a chilling of investment by legitimate vaping companies. If we want genuinely to move to a smoke-free generation, I do not think that is something we should encourage; we should be advocating such responsible investment.
Dr Johnson
My hon. Friend is talking about the availability and visibility of products, and my hon. Friend the Member for Farnham and Bordon talked about the availability of vaping products as medical products. However, the Committee heard evidence from the MHRA that there are no medically approved vaping devices currently registered in the United Kingdom. While it continues to encourage vaping companies to come forward with a vaping product for regulation and medical assessment, that so far has not come to fruition.
Jack Rankin
I take the shadow Minister’s point, but I think the Minister said in summing up the clause 10 stand part debate that while vaping potentially was not harm-free, given its harm compared with cigarettes, that was something that the Government would want to see.
Clause 15 does not say that there should not be discounts on products for children or products for recreational use; it leaves the scope quite broad. I think the Government have got that wrong, and that it might have a direct adverse effect on the kinds of partnerships I described. I saw some polling recently that showed that the general public thought vaping was as dangerous as smoking, and this is the kind of messaging that gives that wrong impression, which is against the Government’s stated aim.
Ordered, That the debate be now adjourned.—(Taiwo Owatemi.)
Water (Special Measures) Bill [ Lords ] (Third sitting)
Tuesday 14th January 2025
(1 month, 1 week ago)
Public Bill CommitteesWater (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: Public Bill Committee Amendments as at 14 January 2025 - (14 Jan 2025)
The Committee divided: - Ayes: 11 / Noes: 6 - Question accordingly agreed to.
The Committee divided: - Ayes: 11 / Noes: 6 - Question accordingly agreed to.
The Committee divided: - Ayes: 5 / Noes: 11 - Question accordingly negatived.
The Chair
I remind Members that they should send their speaking notes by email to hansardnotes @parliament.uk. Electronic devices should be switched to silent. Tea and coffee are not allowed during sittings but there is water—blue is still, silver is fizzy.
Clause 7
Automatic penalties for certain offences
Question proposed, That the clause stand part of the Bill.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
It is lovely to see everybody again and it is a pleasure to serve under your chairwomanship, Dr Huq.
Clause 7 will give the environmental regulators new powers to impose automatic penalties for specified offences. The current process for imposing fixed monetary penalties for minor to moderate offending can be time and cost-intensive. To impose a penalty, the regulators must evidence beyond reasonable doubt—the criminal standard of proof—that an offence has been committed. In addition, the fixed monetary penalty amount that regulators can currently impose for certain water industry offences to that standard of proof is set at just £300. That means it is generally not cost-effective for the regulators to impose financial penalties for frequent minor to moderate offending. Clause 7 introduces automatic penalties for specified offences, which will enable the regulators to impose penalties more quickly without having to direct significant resources to lengthy investigations.
I reassure hon. Members that we will consult on the specific offences that will be in scope for the new automatic penalties and on the value of the penalties. The proposed offences will cover information requests and reporting offences, pollution offences and water resource offences. The House will also have the opportunity to debate and vote on secondary legislation before any changes are made. I hope the Committee agrees that this measure is essential for improving compliance across the water sector.
Dr Neil Hudson (Epping Forest) (Con)
It is a privilege to serve under your chairship today, Dr Huq. We have no formal objection to clause 7, which imposes a duty on environmental regulators to impose penalties for offences by water company that the clause specifies. Offences have of course increased, and water bosses have been banned from receiving bonuses if a company has committed serious criminal breaches. Regulators have more powers than they used to in being able to impose larger fines for polluters without needing to go to court. The clause focuses on exactly the same principle and we therefore have no formal objections.
I raised in an earlier Bill Committee sitting—this is relevant here—that there has been an increase in the number of inspections that water companies can expect, from 4,000 a year by April this year to 10,000 a year by April of next year. In other words, what has been addressed in the past is not just regulation, but the whole pathway of the enforcement of regulations, so that regulations are not merely blunt instruments but active ones that water companies can expect to have to deal with if they do not act responsibly to their customers, the environment and the wider public.
On that last point, will the Minister clarify and ensure that these offences are and will be enforced and commit to making further amendments to the law, not only regarding the offences themselves, but also on their enforcement, if the Government believe that things need to be tightened up moving forward? Aside from those clarifications, we have no formal objections to the clause.
Tim Farron (Westmorland and Lonsdale) (LD)
It is a great privilege to serve under your guidance this morning, Dr Huq. We also have no objection to the clause and, in fact, we consider automatic penalties to be a positive move.
My concern is that we see water companies not paying the fines that are levied against them. We talk about minor to moderate offences, but water companies wriggle out of paying fines for much larger offences, too. I just want to probe the extent to which the automatic penalties might stretch to what are considered more serious breaches.
I mentioned an example last week in Committee. In November 2021, Ofwat launched an inquiry into sewage discharges and how water companies manage their treatment centres and networks. It found three water companies in particular to be in breach: Thames, Northumbrian and Yorkshire. It imposed fines on those three companies—a £17 million fine against Northumbrian Water, a £47.15 million fine against Yorkshire Water and a £104.5 million fine against Thames Water—but as of autumn last year, not a single penny of that has been collected. It is understood that Ofwat allocated a grand total of eight and a half people to pursuing that particular line of inquiry.
Large fines, which there is no doubt that these companies rightly face, make no difference if they are never collected. That underpins the failure of our regulatory framework—water companies clearly feel they can just run rings around Ofwat and the other regulators. We very much welcome the automatic penalties, but we remain a bit concerned and would like the Minister to clarify whether those automatic penalties would have covered fines of that size as well. Otherwise, we are very supportive of the clause.
Emma Hardy
It is good to start the day off with a bit of unity in the Committee Room and everyone agreeing. In terms of which offences the automatic penalties will apply to, we are looking at targeting minor to moderate offending. The purpose behind the clause, and much of the Bill, is to change the culture of the water industry.
As I said in my opening remarks, one of the concerns about how the water industry operates at the moment is that the standard of proof needed to impose fines for minor to moderate offending is often seen as not being worth the cost. Companies are therefore getting away with minor to moderate offences because of the cost of trying to prosecute them. These penalties will apply to those offences. If the offence turns out to be more significant—not minor to moderate, but more of a major pollution incident—obviously, penalties will apply in the usual way.
For an offence to be suitable for an automatic penalty, we consider that the Environment Agency must be able to quickly identify and impose the penalty and the offence must cause no or limited environmental harm. I describe it to colleagues as similar to speeding ticket offences. Everybody knows that if they go over 30 mph in a 30 mph zone where there is a camera, they will get caught and fined. That is the idea behind the fixed penalty notice. If someone commits an offence that they are not meant to do, they are automatically fined.
The proposed offences will cover information requests. The details will be dealt with in secondary legislation, on which colleagues across the House will vote. My thinking on information requests is that a situation where someone has to comply with a request for information and is given a timeframe, but does not deal with it in the timeframe, is the kind of thing we are looking at for automatic fines. As for reporting offences, pollution offences and water resource offences, we will consult on where the penalties can be used, and Parliament will debate and vote on them before any changes are made.
The Regulatory Enforcement and Sanctions Act 2008 provides for the enforcement of penalties if a company refuses to pay a penalty. That includes allowing regulators to use the same enforcement mechanisms available to a court. The Act also allows for interest charges in the event of late payment. Parliament will debate and vote on the details in secondary legislation.
I thank all hon. Members for their invaluable contributions to the debate on clause 7. The clause will fundamentally drive improved compliance across the water sector through introducing automatic penalties for specific offences, allowing the regulators to impose penalties more quickly.
Question put and agreed to.
Clause 7 accordingly ordered to stand part of the Bill.
Clause 8
Abstraction and impounding: power to impose general conditions
Question proposed, That the clause stand part of the Bill.
Emma Hardy
Clause 8 grants the Secretary of State and Welsh Ministers the power to introduce conditions or general rules subject to which water industry abstraction and impounding licences will have effect. This provision is needed to ensure that automatic penalties under clause 7 can be applied to abstraction and impounding offences under the Water Resources Act 1991. Existing licences have been issued since the 1960s and have inconsistent conditions, making the use of automatic penalties nearly impossible.
More broadly, clause 8 allows for the harmonisation of requirements in relation to abstraction and impounding activities so that the sector operates under consistent and modern standards. A delegated power to introduce conditions or general rules through regulations is crucial in this context, because water resource management is dynamic and must be responsive to emerging challenges. I hope that hon. Members will agree that this power is needed to improve the water industry’s regulatory framework.
Dr Hudson
Clause 8 seeks to grant the Secretary of State and Welsh Ministers additional powers to impose conditions or general rules on water industry licences relating to abstraction and impoundment activity. His Majesty’s loyal Opposition do not have any formal objections to the clause, but I would suggest that it reinforces some of my comments on clause 6 about the need to make the Government have the powers they need to regulate as necessary a more consistent principle across the Bill.
Emma Hardy
I thank the hon. Gentleman for his comments. Modifying the licences individually is both expensive and time consuming, which is why we are hoping to modernise and harmonise the process under this clause. It is crucial that automatic penalties under clause 7 can be applied to abstraction and impounding offences, so this power is needed to improve the water industry’s regulatory framework. For that reason, I commend the clause to the Committee.
Question put and agreed to.
Clause 8 accordingly ordered to stand part of the Bill.
Clause 9
Requirement for Ofwat to have regard to climate change etc
Tim Farron
I beg to move amendment 27, in clause 9, page 14, line 11, leave out from duties to end of line 13.
Tim Farron
Let me clarify what we mean with this amendment. Among the myriad problems in the water industry, perhaps the greatest is the failure of the regulatory systems. We are concerned, particularly in relation to the Climate Change Act 2008, that the obligations placed on water companies via the regulator are not sufficiently clear. Let us look at the wording of clause 9:
“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”,
and we are happy with that, but then it states
“where the Authority considers that exercise or performance to be relevant to the making of such a contribution.”
Basically, we are giving Ofwat wriggle room to do nowt if it wants to. As we saw earlier on clause 7, Ofwat has a track record of not even imposing the colossal fines due from water companies, and I am not filled with confidence that if we give it wriggle room, it will not use it.
My concern is that the clause is building in a qualification, an opportunity for the regulator to step back and the possibility—dare I say, the probability—that measures against water companies will not be enforced. If we care about tackling climate change and about a stronger and robust regulatory framework—and we surely do—we should remove these words to remove the wriggle room and to make sure that regulation is fit for purpose.
Dr Hudson
Clause 9 would introduce a new requirement for Ofwat to consider, as part of its regulatory decision making and the exercise of its powers and duties as given by the Water Industry Act 1991, the section 1 duty confirmed the Climate Change Act and section 5 of the Environment Act 2021. We have no formal objections to raise to that basic principle and no amendments that we wish to make to clause 9.
Can the Minister provide some clarity on the line that amendment 27 from the Liberal Democrats seeks to remove from the Bill? It states that Ofwat’s duty to have regard to the Secretary of State’s duty to meet environmental targets applies
“where the Authority considers that exercise or performance to be relevant to the making of such a contribution.”
Will the Minister assure the Committee that she and the Government will work with Ofwat so that it has clear guidance on when these environmental targets would be relevant, so that there are no grey areas in Ofwat’s work as it looks to enforce those targets? Can she assure the Committee that the Government will also work with Ofwat to ensure that with regard to its powers and duties in the spirit of clause 9, consumers are protected should there be any subsequent financial costs to water companies, so that we get both environmental protection and the value for money that the tax-paying consumer deserves?
I would be grateful if the Minister provided clarification on some of those questions. However, his Majesty’s loyal Opposition have no formal objections to clause 9.
Emma Hardy
As I am sure the hon. Member for Westmorland and Lonsdale will agree, the Government heard the strong support in the other place for adding a further environmental duty to Ofwat’s core duties to support the Government in making progress against our environmental targets. I pay tribute to Baroness Hayman for her work on this.
We understand that there are concerns around the current core environmental performance of the water industry and around the role and responsibilities of the water industry regulators. It is for this reason that the Government tabled an amendment in the other place that will require Ofwat to have regard to the need to contribute to achieving targets set under the Environment Act 2021 and Climate Change Act 2008 when carrying out its functions.
This amendment will further ensure that Ofwat’s work to contribute to the achievement of environmental targets complements the work of Government, who are ultimately responsible for the 2021 Act and the 2008 Act targets. It is important to note that the independent commission announced by the Government will take a full view of the roles and responsibilities of the water industry regulators. Any changes made now to Ofwat’s duties may therefore be superseded by the outcomes of the commission. I hope the Committee agrees that this power is needed to ensure that the environment is considered in regulatory decision making.
Amendment 27 seeks to remove Ofwat’s discretion to exercise its duty to have regard to environmental targets where it feels this as relevant. It will be for Ofwat as the independent regulator to determine how it applies the Government’s new obligation to its regulatory decision making, and how this new duty will not take precedence over other duties. It is for this reason that flexibility has been built into the drafting of this duty, ensuring that Ofwat has discretion to exercise the duty where it feels it is relevant.
Mechanically applying a duty in circumstances where it is not relevant to a particular matter would be a waste of resource. That discretion is in line with similar duties for other regulators. For example, the Financial Services and Markets Act 2000 was recently amended to provide an environmental duty for the financial regulators. It is right that as the independent regulator, Ofwat has the discretion to balance its duties and determine when it is appropriate that they are applied. The new duty introduced by the Government can be only a stopgap before more fundamental reforms are brought forward. For those reasons, we will not accept the amendment from the hon. Member for Westmorland and Lonsdale, and I hope he feels able to withdraw it.
Tim Farron
I am not reassured that removing this discretion means that a mechanical duty is placed upon Ofwat. I think that removing discretion is actually very important. It will only be applied where it is relevant by definition. I feel that by building in wriggle room, we are creating vagueness in the process. Nevertheless, we will not seek to push this amendment to a vote today. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 9 ordered to stand part of the Bill.
Clause 10
Charges in respect of Environment Agency and NRBW functions
Question proposed, That the clause stand part of the Bill.
Emma Hardy
Thank you, Dr Huq, for giving me the opportunity to speak on clause 10, which is one of my favourites. The costs for Environment Agency and Natural Resources Wales enforcement activities are paid by the taxpayer via grant in aid. The clause broadens existing charge-making powers, allowing the Environment Agency and Natural Resources Wales to recover costs for enforcement from water companies instead of taxpayers. Failure to introduce the clause would result in the burden of funding water industry enforcement continuing to fall on the taxpayer. It could also result in the regulators being unable to scale up their water industry enforcement activities due to wider budgetary pressures.
The Secretary of State, or the Welsh Minister in Wales, and HM Treasury are required to approve charging schemes in consultation with affected parties. Those safeguards ensure that environmental regulatory powers are proportionate and support sustained improvements in environmental performance in the water industry. I hope the Committee agrees that this power is essential for environmental regulators to become more self-sufficient and less reliant on the taxpayer. I commend the clause to the Committee.
Dr Hudson
Clause 10 amends the Environment Act 1995 to allow the Environment Agency and Natural Resources Wales the power to make charging schemes to recover costs from water companies. While the Opposition wish to raise no formal objections to the clause, we would be grateful for clarification on a couple of points from the Minister.
First, can the Minister explain whether the changes in this clause to the Environment Act 1995 that allow costs to be recovered from water companies could impact consumers in any way? Although it is already possible, we must be mindful that consumers may face extra costs, which I will discuss later regarding issues with the special administration orders that the Government have laid out in clauses 12 and 13, to be debated shortly. Consumers have already been informed by Ofwat that they should expect to see bills rise—the complete opposite of what the Government had said they intended to deliver. Therefore, do the Government feel confident that they can avoid contributing to the problem of a rising trajectory of bills, at a time when trust in the industry, as we have been debating in Committee, remains low due to financial mismanagement from some water companies and, too often, consumers receive poor quality from these services?
A further question, which I would be grateful if the Minister could clarify, is what modelling have the Government done to ensure that all the costs recovered will always be to the benefit of the taxpayer and the consumer? While we all share the desire that water companies that do the wrong thing must pay to put it right, we must ensure that, when we punish those water companies, we do not hurt the end consumer, who very much deserves to be protected. I would be grateful for the Minister’s thoughts on this, but again, we have no formal, explicit objections to the clause.
Emma Hardy
Clause 10 requires payment by water companies. It is fair and reasonable that the regulator should recover costs associated with its regulatory functions. Ofwat will consider the regulator’s proposals to determine which costs are appropriate to be passed on. The impact assessment, which I have mentioned in previous debates, details exactly how much all of the Bill will cost the customer. All the details are in there, and I refer the hon. Member for Epping Forest to look at that if he wants the specifics on the exact numbers that each measure will take.
I thank all hon. Members who have contributed their views on clause 10. I remain of the view that clause 10 will empower environmental regulators to become self-sufficient, reducing the burden on the taxpayer to fund water industry enforcement activities. Therefore, I commend the clause to the Committee.
Question put and agreed to.
Clause 10 accordingly ordered to stand part of the Bill.
Clause 11
Drinking Water Inspectorate: functions and fees
Question proposed, That the clause stand part of the Bill.
Emma Hardy
We are making excellent progress on the Bill this morning. I am grateful for the opportunity to speak on the importance of clause 11. I would like to mention the unsung hero of water regulation: the Drinking Water Inspectorate.
The clause enables the Drinking Water Inspectorate to fully recover the costs for the security and emergency regulatory work that it provides to companies. I think one of the reasons that it is an unsung hero is because it does its job so well; that is why not many people have heard of it. The responsibility for security and emergencies was delegated to the Drinking Water Inspectorate in 2022, but since then it has been unable to fully recharge for that work. This clause, subject to amendments to the Water Quality and Supply (Fees) Order 2016, will ensure that the inspectorate can fully recover all costs related to security and emergencies, enabling it to scale up its enforcement activities and enhance its capacity to conduct security and emergencies checks with water suppliers.
The clause will give the DWI greater flexibility in how it structures the fees it charges water companies. It will allow the DWI to introduce new charging models that more equitably share the financial burden of regulation in the water sector. I hope the Committee agrees that the clause rightly remunerates the DWI for its security and emergencies work and allows it to design a more equitable fee structure.
Dr Hudson
Clause 11 extends the purposes for which water quality inspectors may be appointed to include functions relating to national security directions under section 208 of the Water Industry Act 1991, and it provides flexibility for the charging of fees for regulatory work. This is a straightforward clause to which we raise no formal objection, but once again we would be grateful for a couple of clarification points from the Minister. How will the Government increase the Drinking Water Inspectorate’s ability to monitor and audit water supplies? Does the Minister feel that the clause will improve the inspectorate’s functions? Will the Minister please explain how the Government intend to support the powers of the Drinking Water Inspectorate, beyond this clause? She praised the inspectorate, and I echo that praise, but how do the Government intend to support its capabilities?
Once again, we wish to raise no formal objections to the clause. I would be grateful for clarity on the points I have highlighted.
Tim Farron
We also have no objections to the clause, but I want to probe it a bit. The Minister rightly praised the Drinking Water Inspectorate. I think most of us would say that its performance as a regulator is significantly better than Ofwat’s, but one of the biggest problems that we face within regulation is the fragmented regulatory framework. We have the DWI, Ofwat, the Environment Agency and others too. What consideration has the Minister given to the efficacy of continuing that fragmentation?
The Minister may argue, in relation to the DWI, that if it ain’t broke, don’t fix it. I take that point, but regulation of the water industry is absolutely broke. It is very clear, particularly when it comes to the Environment Agency and Ofwat, that large water companies run rings around the regulators because of their heft, their weight, their capability and the volume of their staffing, which is larger than that of the regulators. The culture of the regulators is sometimes not aimed at pursuing those they are meant to regulate.
Although the DWI is broadly a successful regulator, do we not face the ongoing problem that having so many regulators gives water companies the ability to avoid their responsibilities? Will the Minister give that some further consideration?
Emma Hardy
I am pleased that hon. Members have echoed my support for the DWI. This clause is specifically about how it can recover some of its costs. It is estimated that the increased cost to householders will be only 2p a year, so it is very good value for money.
The wider issue of regulation and regulators will be covered by the water commission, which is looking at the entirety of regulation. That is out of the scope of this Bill, although the hon. Member for Westmorland and Lonsdale has made those points a number of times, and I have heard them each time.
This measure will cost customers about 2p a year. This is a much-needed clause. The Government maintain that it is important that the Drinking Water Inspectorate is remunerated for its security and emergencies work and is able to design a more equitable fee structure. I therefore commend the clause to the Committee.
Question put and agreed to.
Clause 11 accordingly ordered to stand part of the Bill.
Clause 12
Modification by Secretary of State of water company’s appointment conditions etc to recover losses
Charlie Maynard (Witney) (LD)
I beg to move amendment 11, in clause 12, page 16, line 11, leave out from “to” to “such” in line 13 and insert “recover from its creditors”.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Amendment 12, in clause 13, page 18, line 31, leave out from “to” to “such” in line 33 and insert “recover from its creditors”.
Clause 13 stand part.
Charlie Maynard
I will speak about clauses 12 and 13 together, with clause 12 covering England and clause 13 covering Wales. Clause 12 relates to the Secretary of State’s ability to recover losses incurred by the state in a special administration regime—many Members might know that as bankruptcy. What is being proposed by the Government is set out in the Department for Environment, Food and Rural Affairs’ explanatory note 69:
“The modifications can require a water company to raise amounts of money determined by the Secretary of State from its consumers”—
I repeat “the consumers”—
“and to pay those amounts to the Secretary of State to make good any shortfall and may include a requirement that amounts be held on trust pending payment to the Secretary of State.”
What we are talking about here are costs associated with a bankruptcy and the Government want to make good those costs. There is no issue with any of that. What I find completely extraordinary is that a Labour Government are proposing that the consumers pay for that rather than the creditors who put us there in the first place. The management and the creditors are the people who are responsible for the mess that we find ourselves in in the water sector.
Jerome Mayhew (Broadland and Fakenham) (Con)
The hon. Gentleman says it is the creditors who put the undertakers in the position that they are in, but surely that cannot be right. Creditors are the people who provide services for a fee to the undertaker—they will not be the organisations that put the undertaker into that position. Surely the hon. Gentleman agrees that if he were to replace the consumer or any other body with recovery from creditors, that would be meaningless unless Government debt was placed above those of other creditors. How would that be fair to the providers of services to water undertakers?
Charlie Maynard
I thank the hon. Gentleman—I think he jumped in before I had finished the sentence, which was on the creditors and the management. Who is responsible for this? Yes it is the management, yes it is the regulators and prior Governments, and yes it is the creditors who have provided the debt—they have gone into that with eyes and ears open and they have made that decision to provide that debt willingly. Therefore, they have put that money at risk and they have to take responsibility for that. That is what debt is.
I am not talking about Government debt, but about a loss and who is making good that loss. The Government are proposing that all the consumers pay for that—in other words, the bill payers. That is wrong. The bill payers should not be paying for this; the creditors should be, because they have put in, in Thames Water’s case, £17 billion—soon to be £20 billion very likely—which has saddled those companies with vast amounts of debt. More than a third of the bills of the bill payers of Thames Water is just being spent on paying interest on that debt.
Jerome Mayhew
The hon. Gentleman is conflating the term creditor with debt provision, but actually there is a plethora of suppliers to any large organisation such as a water undertaker. They are creditors—that is just how they are defined. His clause would cover small and medium enterprises that are providers of services, and in fact any provider of a service who would be a creditor of such an organisation. How does he propose that his clause only affects debt provision, which I understand is the direction he is trying to focus the clause on, and does not cover all creditors as it is currently drafted?
Charlie Maynard
The change in wording would mean that the clause states:
“The Secretary of State may make modifications of the conditions of the company’s appointment so that they include conditions requiring or enabling the company…to recover from its creditors such amounts as may be determined by or under the conditions”.
Let us talk through the special administration regime and what happens. I would like this to already have happened but it has not When a company is put into special administration—I would like this to already have happened, but it has not—a court appoints a special administrator. A special administrator looks at the creditors. It looks at the debt and the other creditors involved, and it will prioritise, according to the seniority of that debt and those creditors, who is senior to the other. Suppliers will be a lot more senior.
Charlie Maynard
Well, compared with the creditors, but I am advocating that the debt providers take the hit.
Jerome Mayhew
The hon. Gentleman will perhaps know that under current insolvency law, there are secured creditors. There is a hierarchy of debt, and the least protected—not the most protected—are suppliers. Does he envisage changing the rules to give additional protection in this process to unsecured creditors and essentially reverse the security of credit? That would be an odd thing to do, but I understand why he might need to do it to make this process effective.
Charlie Maynard
We are seeking for the debt providers to take the hit. They have gone into this process and been part of the problem that has led to the state of our rivers today. They should be taking the hit ahead of the customers. That is our direction of travel, and I think that is fair and reasonable. What the clause does is the opposite, and that is what we are going after.
We fully support the losses being recovered by the administration process—we have no issue with that—but if we support the clause as drafted, we will find a very large bill on the customer’s account. That is something we want to avoid. I am keen to hear the Minister’s view as to why it is reasonable for the customer to be paying rather than the lenders.
Dr Hudson
On clauses 12 and 13, the Opposition tabled amendments 7 and 8 to remove them. They provide the Government with the power to issue special administration orders to water companies that face financial difficulties.
I put on record my thanks to my Conservative colleagues in the other place for sounding the alarm on this issue when the Bill came forward. They made the case that the measures in clauses 12 and 13 could put the very people we want to protect in such legislation, namely the consumers, at risk. The moral hazard has been explicitly set out by my colleagues in the other place, but I will attempt to summarise it so that we are clear what the problem is. As it stands, the clauses will give the Government the power to recover any losses they make through placing a company in special administration by raising consumer bills.
The problem seems self-evident. If water companies, through their own failure, require the Government to place them under special administration, why should consumers be expected to foot the bill for those failures when they had no particular responsibility for them? It runs contrary to the nature of all the action that has been taken in recent years to try to improve our water quality, and companies that have failed to get their affairs in order must take responsibility.
I was on the Environment, Food and Rural Affairs Committee in the last Parliament, and we spent a lot of time looking at the financial resilience and behaviour of the water sector in close detail. I know that the current iteration is continuing that work. It was concerning to hear about the financial resilience of the sector at first hand in our hearings and meetings. As I said in a sitting of this Committee last week, the financial resilience of the water industry is not a hypothetical issue, but one of paramount concern right now.
We are all starkly aware of concerns surrounding the financial resilience of companies such as Thames Water. We heard about that in detail on the Environment, Food and Rural Affairs Committee in the last Parliament. In November, Ofwat’s “Monitoring Financial Resilience” report identified 10 companies that needed an increased level of monitoring and/or engagement concerning financial resilience. Three were placed in the highest category of “action required”, which means that action must be taken or is being taken to strengthen a company’s financial resilience challenges and that there is a requirement to publish additional information and reporting on improvements at a more senior level with Ofwat.
As well as sending out the opposite message to the companies that Ofwat is working so hard to scrutinise and regulate to protect consumers, clauses 12 and 13 send out the wrong message to consumers themselves. Consumers were recently told that they can expect their average bills to rise by a minimum of about £86, at a time when no doubt some of them have concerns about how to afford their existing bills, along with wider cost concerns. I say gently to the Government that the recent Budget did not help the situation for people’s household budgets. How can it be fair that as a result of these clauses the Government may lead consumers to pay more at a time when many are finding it difficult to pay their bills and do not feel that they are getting the clean water that they deserve? It will potentially add insult to injury when many people are all too aware that they could face higher prices on their water bills because of the Government’s moves.
Shareholders and water company bosses used to be able to receive dividends and bonuses despite polluting our rivers and seas and failing to do the right thing to tackle it. Although reforms have been made to ensure that water company bosses who are not doing their duty with regard to our waterways are forbidden from claiming excessive bonuses, the sting will remain for many people when they keep in mind the prospect of paying higher bills to bail out companies for their poor financial performance.
To water companies, these clauses will send out a signal that they do not have to worry about incurring the consequences of financial irresponsibility, as the Government will have a mechanism to bail them out and consumers may indirectly have to fork out the costs. Nobody is being required to take accountability or face the consequences of the decisions that have caused the failure, but those who have no responsibility or influence are being forced to pay an unfair price increase.
Worse still, the clauses fail completely to specify how much they can require companies to raise from consumers or how much consumers could have to pay in increased costs as a result of the Government’s imposition of these conditions on water companies. That means that any announcements of price changes to water bills, such as those announced by Ofwat, could give no indication at all of how much consumers could end up paying on their water bills. To compound the higher prices even further, consumers may end up facing higher bills to solve special administration financial issues for companies by which they are not even served.
Under clause 12, proposed new section 12J(4) of the Water Industry Act states that “relevant financial assistance” in subsection (3) can include
“any other company which holds or held an appointment under this Chapter and whose area is or was wholly or mainly in England.”
Companies that do the right thing could be forced to pay up, or make their consumers pay up, for the mistakes of those who have failed to do the right thing. As my noble Friend Lord Remnant put it:
“It is the debt and equity investors”
in a company that has failed to do the right thing
“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?”—[Official Report, House of Lords, 20 November 2024; Vol. 841, c. 293.]
Although in the other place the Government attempted to explain away concerns by suggesting that they do not think that they will have to use the power except as a last resort, and that the bar for special administration would be extremely high, the fact that on more than one occasion the Government could have accepted amendments to remove proposed new subsection (4) must mean that they expect that on at least some occasions they will require its use. The time taken to defend the measure and oppose reforms suggests that this is no mere formality in the wording of the Bill, but something that the Government may put in place.
The Minister in the other place said that the Government would seek to exercise the power in proposed new subsection (4) only if Government bail-outs to water companies could not be financed for the duration for which a company is in special administration—that is, during the shortfall. If that is the condition the Government are setting for the measure—if we have to have the measure at all—could they not have set it out explicitly within the Bill? At the very least, that would have provided clarity about how far the power should be permitted to go.
Clause 13 will provide the Welsh Government with the same powers as those in clause 12. Although the powers in clause 13 are independent of who occupies the offices of the Welsh Government, it should be noted that the Welsh Government who would currently be expected to exercise the powers do not have the most brilliant track record on the water industry, to say the least. Under the Welsh Labour Administration, the average number of spills from storm overflows in 2022 was two thirds higher than in England. That record suggests that the Government in Wales leave much to be desired when it comes to the competence of the water industry, and there is evidence for concern when it comes to exercising the clause’s powers.
Regardless of the specifics of the subsections and of who holds the powers contained in clauses 12 and 13, they are, as they stand, completely against the principles of improving the water industry. I urge the Minister to consider those points and to remove the clauses. Accordingly, we will seek a vote to remove clauses 12 and 13 from the Bill.
Tim Farron
I back my hon. Friend the Member for Witney, who has made an excellent case for our amendment to clauses 12 and 13. We are deeply concerned about the issue. There are two aspects to the public’s reaction to the scandal in our water industry. First, there is revulsion about sewage being dumped in our lakes, rivers, streams and coastal areas, which is obviously appalling. Secondly, there is a deep sense of injustice that people are making vast amounts of money while not providing basic services.
For a day or two last week, the coldest place in the country was Shap, in my constituency. I had the pleasure of being there over the weekend. All water was frozen. However, that is not always the case. Last year alone, at Shap pumping station, 1,000 hours’ worth of sewage was pumped into Docker beck. Just along the way at Askham waste water treatment works, 414 hours’ worth of sewage were dumped into the beautiful River Lowther just last year. I make that point because the water bill payers who have to deal with that know that of every £9 they spend on their water bills, £1 is going to serve United Utilities’ debt. That is at the low end of the scale: until the change announced just before Christmas, 46% from Thames Water’s bills was used to service debt.
Over the lifetime of our privatised system in this country, the water companies have collectively racked up £70 billion of debt. That means that all bill payers are paying between 11% and 46% of their bills simply to service those companies’ debt. Our amendment would simply tackle the fact that if investors choose to take risks, hoping to make gains, but fail, they should accept the consequences of those risks, which they chose to take, rather than passing on the cost to my constituents and everybody else’s. It is not for the public to carry the can for corporate failure.
Emma Hardy
I will speak to amendments 11 and 12, both of which were tabled by the hon. Member for Westmorland and Lonsdale. I welcome the opportunity to bust some myths and add some facts to the debate. Speaking of facts, following the debate that we had at our last sitting, we have produced a fact sheet relating to storm and other overflows, which has been circulated to all members of the Committee. I recognise that we are not discussing that now, but I thought I might mention that my promise to provide the evidence has been fulfilled. For this debate, perhaps it would be helpful to produce a fact sheet that explains exactly what this is and what it is not, because there has been an awful lot of confusion already.
On the subject of facts, I am not quite sure where the shadow Minister’s number on average bill increases of over £80 a year comes from. The fact is that the average bill increase is £31 a year.
Emma Hardy
If the hon. Member does not mind, I would like to finish my remarks, and then I am sure we will hear from him again.
Although I have outlined some of the merits of clauses 12 and 13, I would like to stress again the importance of including them in the Bill. A SAR will ensure the continued provision of essential public services and is the ultimate tool in Ofwat’s regulatory toolkit. There is therefore a high bar for the use of a SAR. A water company can be placed into special administration either on insolvency grounds, where it is unable to pay its debts, or on performance grounds, where it is in such serious breach of its principal statutory duties on enforcement order that it is inappropriate for the company to retain its licence. That includes consideration of a company’s environmental and financial performance. Although the Government have had the powers to place water companies into special administration for more than three decades, it is important that we regularly update legislation to reflect the modernisation of law and experience in other sectors.
Clauses 12 and 13 are essential because if a SAR occurs, Government funding could be provided to cover the cost of special administration. In the unlikely event that the proceeds of a sale or a repayment agreed as part of the rescue at the end of a SAR are insufficient to cover repaying Government funding, there is risk of a funding shortfall. I really am at a loss to understand how this has suddenly become about the Government using customer money to bail out creditors. I am confused about how that started.
The money will be used to cover the cost of repaying Government funding in the risk of a funding shortfall. The DEFRA Secretary of State and the Welsh Ministers do not currently have the power to require this shortfall to be repaid. The shortfall, of course, is the money that the Government may have to provide in the event of a SAR. This is unlike other sectors such as energy, in which the relevant Secretary of State has flexible powers to recover a shortfall in funding. Without this power, there is a risk that taxpayers will foot the bill for costs usually contained within the water sector. Again, that has nothing to do with creditors; it has to do with the costs that the Government could have to pay for the SAR.
Clauses 12 and 13 will therefore introduce a new power for the Secretary of State and the Welsh Ministers to modify water company licence conditions to allocate costs appropriately should there be a shortfall in financial assistance provided in a water industry SAR. The power is designed to be flexible, allowing the Secretary of State or the Welsh Ministers to recover any shortfall in funding in a manner appropriate to the circumstances. The use of the power is also subject to public consultation.
The Secretary of State will be able to decide whether or not to use the power, and to decide the rates at which the shortfall should be recovered from customers. The shortfall that we are talking about is any cost that the Government could have during the time the company is in a SAR; it has nothing to do with shareholders and creditors. The decision will include the group of customers from which it should be recovered. For example, it could be recovered from all water companies’ customers—that is, those in England—or a subset of the sector, or only customers whose water company went into a SAR.
It is possible that a decision could be taken to spread the cost of a SAR across multiple companies, such as where spending benefits are coupled in another region due to shared infrastructure. There is a well-established practice of socialising costs in the energy sector. If a SAR occurs and this power is ever required, it will allow a decision to be made and consulted on as to what the fairest cost recovery option is, based on the evidence and the circumstances at the time.
Charlie Maynard
I think the Minister is confirming that consumers will pay for that shortfall. We are advocating that the creditors should pay. We are not looking to rewrite the Insolvency Act. Whatever the special administrator decides in terms of the hierarchy, fine—that is up to the special administrator. I think the Minister has just confirmed what paragraph 69 in DEFRA’s explanatory notes says, which is that a company is required to
“raise amounts of money determined by the Secretary of State from its consumers”
—that is, the bill payers—for that shortfall, rather than the creditors. That is the bit that we are getting at. We think that the special administrator should take into account that hit that the Government have taken and take it out of the creditor’s pocket rather than the customer’s.
Emma Hardy
The hon. Gentleman has failed to acknowledge that, as I have just remarked, there is a hierarchy under the Insolvency Act when it comes to debt being repaid. The people he suggests that we take the money from might be people who, in fact, do not receive any money back. As I have already mentioned, the exact quantity of debt recouped by creditors or equity recouped by shareholders is a matter for the SAR. It is unlikely that all debt will be repaid at the end of special administration, and Government funding provided during a SAR takes priority over most creditors. In the event that there was a cost unable to be recovered from the sale of the company or from reprioritising its debt, the Government would receive their money back first and, therefore, this cost recovery mechanism for customers might not be provided before we reach some of the other creditors, and of course that is determined under the Insolvency Act. I am therefore at a loss to understand the hon. Member’s point. It would make sense if there were people who received their debt repayment before the Government, but that is not the case. There seems to be a lot of confusion about what is happening.
All that the Government are doing are providing that, in the unlikely event of the Government’s being unable to recoup costs that they could have paid during the time that a company is under a SAR, there are various mechanisms to have that repaid, all of which would be consulted upon. At the moment, as we know, that would come from the taxpayer. We are instead providing that, yes, we could still use the taxpayer to recoup that debt, or we could use the customers of that particular water company, of neighbouring water companies, or of all of England—and that would be consulted upon.
I think that the hon. Member’s confusion emanates from his being under the impression that, at the exiting of the SAR, creditors would skip off into the sunset with all the money and the Government would take money from customers. That is not the point I am making because, as I have already said, it is unlikely that all debt will be repaid at the end of a SAR and there is a specific order of priority for repayment. I will make the offer—as I did last time and made good on—to provide a fact sheet on exactly how a SAR would work so that there is no further confusion as we progress through the Bill.
I hope that the Committee agrees that the power is essential to protect taxpayers’ money in the event of a SAR.
Charlie Maynard
We are going backwards and forwards. I have made my point. The note here is clear—the Secretary of State is looking for moneys from the customers. I think the special administrator should follow the insolvency rules, but that the hit should come from the creditors, not the customers. I will park it there. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question put, That the clause stand part of the Bill.
Emma Hardy
I hope this clause will be a little less fractious than the last one—it is pretty straightforward. If a water or waste water company is about to go insolvent, it can make a winding-up petition to court, as may its creditors. If the court is satisfied that the company is insolvent, it must make a special administration order, triggering a water industry special administration regime, or SAR.
Unlike in normal administration, in a SAR the administrator must prioritise the public interest ahead of creditors. In this case, that means ensuring that water and waste water services continue. However, there is no statutory requirement for creditors or the court to notify the Government or Ofwat that a winding-up petition has been made. In addition, neither the Government nor Ofwat have guaranteed rights to be heard at the subsequent court hearings. This creates the risk that a SAR could be triggered without Government involvement. Given the essential nature of water and waste water services, a SAR presents significant risk to public safety if it is not conducted appropriately. It would be vital, in the event of an imminent SAR, for the Government to be quickly made aware of important developments and to be involved in the arrangements for how the SAR is run. Creditors are unlikely to protect the public interest as comprehensively as a Government and may exercise undue influence over a SAR if a Government are unable to make their views heard.
This clause prohibits a court from making an SAO without the Government and Ofwat being notified, and it gives both parties guaranteed rights to be heard at the subsequent court hearings. That provides a vital safeguard against the risks of a SAR being triggered without Government involvement and the potential dilution of the public interests that that could entail. This also updates the water industry’s SAR to bring it into line with more recently introduced regimes, such as energy, where these rights are standard practice. I hope the Committee agrees that these rights are essential to safeguard the public interest and modernise the water industry’s special administration regime. I commend the clause to the Committee.
Dr Hudson
The Opposition note that clause 14 attempts to make amendments to previous legislation so that a court may not exercise powers that it currently has with regard to an application for winding up an undertaker without providing advance notice of the petition to the Secretary of State, Welsh Ministers—as appropriate—and Ofwat, and without a period of 14 days having elapsed, as outlined in subsection (2). We also note that the clause likewise grants a further power for the Secretary of State, Welsh Ministers and Ofwat to be entitled to be heard at a winding-up petition’s hearing and any other hearing that relates to part 4 of the Insolvency Act 1986.
Again, we do not wish to raise any formal objections to this particular clause, but we ask for a couple of clarifications from the Minister, if she will indulge us. First, we would like to hear the Minister articulate what benefits this particular clause brings to the Bill. I was not fully clear from her introductory remarks about the actual benefits. Secondly, does she believe that this change to winding up a water company or any other relevant undertaker will provide a fairer winding-up process?
While we are focusing on water companies and the processes for them, we all want to ensure that the clause provides, again, protection for the consumers, who, as we agree across the Committee, have for too long faced unsatisfactory levels of service from the water industry and the practices of some water companies, so could the Minister please explain whether consumers were considered when this clause was drafted? I and others have outlined in Committee that the performance of water companies in financial resilience, as well as many other matters, has not been satisfactory and has been very upsetting for the British public. Therefore could the Minister please respond and assure the Committee that there can be no unforeseen repercussions for consumers from this clause? That is a recurrent theme as we go through line-by-line scrutiny of the Bill: are there any unintended consequences whereby the taxpayer and the end point consumer will be unfairly penalised by the legislative changes? With that in mind, we have no formal objections to this clause but again we seek clarification that the end point consumer will not inadvertently suffer detriment from this legislation.
Emma Hardy
To be clear, this is literally just a point of process. The provision, which is not currently available in law, says that in the event of an application to the court for a SAR, the Government will be notified at the same time. The reason, as I outlined in my opening remarks, is that we do not believe that creditors are likely to protect the public interest as comprehensively as the Government. It is a mere process clause that provides that in the event of an application to the court for special administration, the Government and Ofwat need to be informed at the same time. The Government maintain the importance of ensuring that the Government and Ofwat are notified in the event of a winding-up petition. For that reason, I urge that the clause stand part of the Bill.
Question put and agreed to.
Clause 14 accordingly ordered to stand part of the Bill.
Clause 15
Extent, commencement, transitional provision and short title
Tim Farron
I beg to move amendment 20, in clause 15, page 21, line 22, leave out subsections (2) to (8) and insert—
“(2) The provisions of this Act come into force on the day on which this Act is passed.”
The Chair
With this it will be convenient to discuss the following:
Government amendment 5.
Clause stand part.
Tim Farron
We recognise and, indeed, strongly believe that patience is a virtue, but on these Benches we are also a bit impatient. Our concern regarding this clause is simply about implementation. There are two categories of things to be delivered. Some are to be done straightaway, and with others it looks like we are preparing to drag our heels. Therefore our amendment seeks to simplify implementation with one clear and immediate deadline for all provisions of the Bill.
Clause 15 provides that issues to do with remuneration and governance, pollution incident reduction plans, emergency overflows and nature-based solutions, for example, will come into force
“on such day as the Secretary of State may by regulations appoint”—
in other words, not right now. That troubles us, given that there is this great sense that there has been a lot of talk about reform of the water industry and we run the risk, at least when it comes to those provisions, of getting just more talk. Making things subject to consultation, further navel contemplation, does not feel like the way to radically reform our industry. Our single deadline would cut through all that and bring the urgent change that the water industry desperately needs, so we commend amendment 20 to the Committee.
Emma Hardy
I thank all hon. Members for their contributions. Amendment 20, tabled by the hon. Member for Westmorland and Lonsdale, seeks to make all provisions in the Bill come into force on the day it receives Royal Assent. I share his urge to get on with things, which is why I am a little confused by the desire elsewhere for another water review, but we will get to that when we get to it. First and foremost, I would like to reassure the hon. Member that the Government have carefully considered the appropriate method and timing for the commencement of each clause and have made provision accordingly in clause 15. A one-size-fits-all approach cannot be justified.
For example, the emergency overflows provision will be implemented over the course of two price review periods to protect bill payers from sudden cost increases. Therefore, the commencement provision for clause 3 has been designed to allow for a staged implementation where it is needed. The Government have already committed in clause 15 to the immediate commencement of the civil penalties provisions on Royal Assent. I assure the Committee that the Government and the water industry regulators are dedicated to ensuring that all measures in the Bill are commenced and implemented as soon as possible and appropriate, to drive rapid improvements in the performance and culture of the water industry.
The hon. Member for Westmorland and Lonsdale tempts me to read through a list of every provision and when they will be enacted, but I am going to save that treat for another time and instead list the clauses, rather than going through them in detail. The provisions in clauses 5 to 8, and in 10 to 15, will all come into force automatically either on Royal Assent or two months later. Clauses 1 to 4 and clause 9 will not commence immediately after Royal Assent and will require secondary legislation to come into force, which is due to the need for regulations required to commence the powers. I am sure that the hon. Member will have thoughts to share on those provisions involving statutory instruments after Royal Assent.
I trust that the hon. Member for Westmorland and Lonsdale is reassured by the Government’s careful consideration of the commencement of each clause, which has the best interests of bill payers in mind and recognises the need to debate and discuss some of the exact details under secondary legislation. I therefore ask the hon. Member to withdraw his amendment.
Government amendment 5 removes the privilege amendment made in the other place. I like this amendment, because one of the quirks of how British politics has evolved is that we have the amendment in the Bill—I found it quite amusing. The privilege amendment is a declaration from the other place that nothing in the Bill involves a charge on the people or on public funds. It is because the Bill started in the Lords that we have to have the amendment to remove that. It recognises the primacy of the Commons, and I think it is quite fun. It is standard process for that text to be removed from the Bill through an amendment at Committee Stage.
Clause 15 sets out the extent of the Bill, when and how its provisions are to be commenced and its short title. The Bill extends to England and Wales only. As set out in the clause, the provisions of the Bill will variously come into force on Royal Assent, two months following Royal Assent, or in accordance with regulations made by the Secretary of State or Welsh Ministers. The clause makes specific provisions, such as that the commencement of clause 3 may make reference to matters to be determined by the environmental regulators.
Tim Farron
I am happy to accept many of the assurances that the Minister gave, particularly on the role of Government amendment 5—I learn something new every day. The Liberal Democrats retain concerns about the delay in implementation of some of the good things in the Bill. All the same, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: 5, in clause 15, page 22, line 40, leave out subsection (11).—(Emma Hardy.)
This amendment reverses the “privilege amendment” made in the Lords.
Clause 15, as amended, ordered to stand part of the Bill.
New Clause 1
Special administration for breach of environmental and other obligations
“(1) Section 24 of the Water Industry Act 1991 (special administration orders made on special petitions) is amended as follows.
(2) After subsection (2)(a) insert—
“(aa) that there have been failures resulting in enforcement action from the Authority or the Environment Agency on three or more occasions to—
(i) maintain efficient and economical water supply,
(ii) improve mains for the flow of clean water,
(iii) provide sewerage systems that are effectually drained,
(iv) comply with the terms of its licence, or
(v) abide by anti-pollution duties in the Environmental Protection Act 1990, Water Resources Act 1991, or the Environmental Permitting (England and Wales) Regulations 2016 (SI 2016/1154);”
(3) After subsection (2) insert—
“(2A) In support of an application made by virtue of subsection (1)(a) in relation to subsection (2)(aa), the Secretary of State must compile and present to the High Court records of—
(a) water pipe leaks,
(b) sewage spilled into waterways, bathing waters, and private properties, and
(c) falling below international standards of effective water management.”—(Adrian Ramsay.)
This new clause aims to require the Secretary of State to place a water company into special administration arrangements if they breach certain environmental or other conditions.
Brought up, and read the First time.
Adrian Ramsay (Waveney Valley) (Green)
I beg to move, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss:
New clause 31—Special administration orders: credit ratings—
“(1) The Water Industry Act 1991 is amended as follows
(2) In section 24 (special administration orders made on special petitions)—
(a) after subsection (1A) insert—
“(1B) Where a company which is a qualifying water supply licensee or qualifying sewerage licensee—
(a) is required, as a condition of its licence, to maintain two Issuer Credit Ratings which are Investment Grade Ratings from two different Credit Rating Agencies, and
(b) fails to comply with that requirement,
the Secretary of State must make an application to the High Court by petition under this section.”, and
(b) in subsection (2), after (c) insert—
“(ca) that the company—
(i) is required, as a condition of its licence, to maintain two Issuer Credit Ratings which are Investment Grade Ratings from two different Credit Rating Agencies, and
(ii) has failed to comply with that requirement”.”
Adrian Ramsay
It is a pleasure to serve under your chairship, Dr Huq. I reiterate my apologies for not being able to be present at the Committee last week due to illness. I am pleased to be here today to speak to new clause 1, which would clarify that water companies may be subject to special administration measures should companies be guilty of significant and sustained environmental breaches.
I commend the commitments the Minister made during last Thursday’s sitting that the legislation will have a meaningful impact to ensure that water companies deliver for customers and for the environment. That echoes the Secretary of State’s pledge to the House in December to bring to the water sector
“reform that puts customers and the environment first.”—[Official Report, 16 December 2024; Vol. 759, c. 78.]
Charlie Maynard
New clause 31 would make the process of putting a company into special administration much easier and clearer. There are two steps in the provision: making it easier to apply for special administration and giving more guidance to judges on whether to grant special administration.
Proposed new section 24(1B) of the Water Industry Act 1991 states:
“Where a company which is a qualifying water supply licensee or qualifying sewerage licensee…is required, as a condition of its licence, to maintain two Issuer Credit Ratings which are Investment Grade Ratings from two different Credit Rating Agencies, and…fails to comply with that requirement, the Secretary of State must make an application to the High Court by petition under this section.”
That states that if a company does not have investment grade credit ratings, the Secretary of State will apply for special administration.
Proposed new section 24(2)(ca) of the 1991 Act states that special administration may be granted if a company
“is required, as a condition of its licence, to maintain two Issuer Credit Ratings which are Investment Grade Ratings from two different Credit Rating Agencies, and…has failed to comply with that requirement.”
That gives guidance to the judge. It says, “You’ve got to have those credit ratings. If you don’t, special administration is much more likely to be granted.”
At the moment, we have some bizarre situations. Thames Water, which I will use as my standard example, has £17 billion of debt and cash flows of £1.2 billion; its debt is 14 times higher than the cash flow it generates every year. By financial standards, that is somewhere between ludicrous and ridiculous. In an unregulated sector, the company would have gone bankrupt long ago. I believe—people may contest this—that our Government are keeping it alive because they are worried about being sued by the bondholders if they put it into special administration, because the criteria are not very clear.
If we are serious about fixing our rivers, we have to deal with the debt. We cannot spend the money our rivers require if we do not fix the debt, but we are still digging. Thames Water’s proposed £3 billion of special restructuring is going through the courts right now, so we are adding even more debt—an even bigger millstone around that company’s shoulders. Its debt will go from £17 billion to £20 billion. The Government have the opportunity to say, “That is the last Administration’s trick. We are going to do something different,” but at the moment they are not saying that. I really hope that we will change course. If we do not, all we will do is add more debt on to these companies; that will keep them alive for another 12 or 18 months, but we will be back in the same place again. Customers in Witney and in every constituency are paying through the nose just to cover the interest expenses.
Ofwat has just thrown Thames Water the great big juicy bone of a 35% price increase. That is great news for lenders, but not such great news for customers. It means that instead of 46% of my bill covering the lenders’ interest expenses, it will be only 38%, but I will be paying 35% more. I do not believe that is helping, so the purpose of the new clause is to make it easier to get water companies into special administration.
Emma Hardy
I emphasise to Committee members that special administration is the ultimate regulatory enforcement tool; as such, the bar is set high.
To respond to new clause 1, tabled by the hon. Member for Waveney Valley, and new clause 31, tabled by the hon. Members for Witney and for Westmorland and Lonsdale, a water company can already be placed into special administration on performance grounds where it is, or is likely to be, in serious breach of its principal statutory duties or an enforcement order—in other words, where it is inappropriate for the company to retain its licence—as set out in section 24 of the Water Industry Act 1991.
The Secretary of State and Ofwat will consider all aspects of a company’s performance and enforcement record, including environmental and financial performance, when considering whether to pursue an SAR on performance grounds. Licence breaches, such as the loss of an investment-grade credit rating, are considered as part of that holistic review of a company’s performance. Ofwat will consider the circumstances around any loss of an investment-grade credit rating to identify the actions that the company must take to address associated licence breaches.
Regulators have a range of enforcement mechanisms to ensure the delivery of performance, including environmental performance. Water companies can also be required to make clear plans to address failures. I gently point out that this Bill does an awful lot to give more powers to address environmental performance. As we have discussed, our pollution reduction implementation plans address some problems relating to pollution.
Special administration must be a last resort, as it has significant consequences for a company’s investors. If special administration could be triggered without allowing a company to rectify performance issues and licence breaches, investors would have low confidence and would not provide the necessary funding. That could create instability in the market, potentially affecting the entire sector.
Although we recognise the concern behind these new clauses and others tabled by the hon. Gentlemen that highlight concerns that the system is not working, they address the symptoms rather than the underlying causes. In October 2024, the Government announced an independent commission that would be the largest review of the water sector since privatisation. That commission has a broad scope and will consult experts in areas such as the environment, public health, engineering, customers, investors and economics.
The governance of companies and regulatory measures to support financial resilience will be covered, including the operation of existing tools, such as the special administration regime. The review will report by quarter two in 2025. The UK and the Welsh Governments will respond and consult on proposals they intend to take forward. We expect those to form the basis of future legislation to tackle the systematic issues to transform the water sector fundamentally. On that basis, I hope that the hon. Member is content to withdraw the proposed new clause.
Adrian Ramsay
I thank the Minister for her response. I appreciate that special administration would only happen in extreme cases. We have, however, repeated failures and neglect, including on environmental performance, from a number of water companies. That is why I wanted to make the provision explicit in the Bill that environmental neglect could be a reason for special administration. I take her point that there are reviews and wider plans underway. Although I am happy not to push this to a vote at this stage, I will take a close interest in how the situation progresses. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 2
Establishment of Water Restoration Fund
(1) The Secretary of State must, within 60 days of the passing of this Act, make provision for the establishment, operation and management of a Water Restoration Fund.
(2) A Water Restoration Fund is a fund—
(a) into which any monetary penalties imposed on water companies for specified offences must be paid, and
(b) out of which payments must be made for expenditure on measures—
(i) to help water bodies, including chalk streams, achieve good ecological status, and improve ecological potential and chemical status;
(ii) to prevent further deterioration of the ecological status, ecological potential or chemical status of water bodies, including chalk streams;
(iii) to enable water-dependent habitats to return to, or remain at, favourable condition;
(iv) to restore other water-dependent habitats and species, especially where action supports restoration of associated protected sites or water bodies.
(3) The Secretary of State must, by regulations, list the specified offences for the purposes of this section, which must include—
(a) any relevant provisions of the Water Resources Act 1991, including—
(i) section 24(4) (unlicensed abstraction or related works or contravening abstraction licence);
(ii) section 25(2) (unlicensed impounding works or contravening impounding licence);
(iii) section 25C(1) (contravening abstraction or impounding enforcement notice);
(iv) section 80 (contravening drought order or permit);
(v) section 201(3) (contravening water resources information notice);
(b) any relevant regulations under section 2 of the Pollution Prevention and Control Act 1999 (regulation of polluting activities etc) related to water pollution;
(c) regulations under section 61 of the Water Act 2014 (regulation of water resources etc).
(4) 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.
(5) The provisions in this section replace any existing provision for the sums received for specified offences, including in section 22A(9) of the Water Industry Act 1991 (penalties).—(Dr Hudson.)
Brought up, and read the First time.
Dr Hudson
I beg to move, That the clause be read a Second time. The proposed new clause would introduce a legal requirement that money collected from water companies from financial penalties imposed by the Bill are legally required to be used by the water restoration fund. As with much of the Bill, the Government intend to build on the work begun by the previous Conservative Government. The water restoration fund is one pillar of that record that the Government would do well to advance. I look forward to hearing from the Minister what they plan to do with that excellent fund, which needs to be reinstated and progressed.
I have personally championed the water restoration fund, not only in my present role as shadow DEFRA Minister, but before that as a member of the Conservative Environment Network. I pay tribute to that body for its successful campaigning, which in led no small part to the previous Conservative Government introducing the excellent water restoration fund. In 2022, I was proud to sign the Conservative Environment Network’s “Changing course: a manifesto for our rivers, seas and waterways”. That was its first public declaration, setting out the ambition to introduce this policy recommendation.
In addition to the Conservative Environment Network, I would like to namecheck and thank the good folk of Wildlife and Countryside Link for their support and campaigning for the fund and this proposed new clause. I also pay tribute to the Angling Trust for the discussion we had on this matter, and give a big shout-out to our former colleague Philip Dunne, who was respected across the House. The former MP for Ludlow and Chair of the Environmental Audit Committee made assiduous efforts to see this fund introduced, as well as wider measures to protect our precious waterways.
As we have discussed with the Minister, there is considerable consensus on what we can do collectively and on a cross-party basis to protect and nurture our watercourses and waterways. I hope the Government will take forward and continue the water restoration fund because it is pivotal to what we are trying to do.
Jerome Mayhew
I have a slightly cheeky intervention. Is the shadow Minister aware that there is a debate in Westminster Hall at 4 o’clock tomorrow led by yours truly on nature-based solutions for farmland flooding? The fund is central to improving the situation.
Dr Hudson
Yes, I was aware of that. I am acutely aware of it now and congratulate my hon. Friend on securing it. It highlights the fact that there is a lot of agreement. I am sure that his debate will demonstrate cross-party consensus on the use of nature-based solutions. We debated flood mitigation in Committee last week, but the water restoration fund is pivotal to trying to improve the situation at the local level and at the local catchment level as well.
Since being introduced by the previous Government, the water restoration fund has provided £11 million for communities to repair their local waterways and restore them to the quality that they should be at—the quality to which local communities should be entitled. At the heart of the proposal is simply this: those who are at fault for the damage done to our waterways must make restoration for it. Given the facts, I find it disappointing that, despite the cross-party efforts in the other place to enact such measures, they were not listened to by the Government. I hope that in a spirit of consensus the Government will look at that in this Session.
The arguments made by the Government in the other place were not satisfactory. They objected to the principle of ringfencing the funding and to the need for the Treasury to have flexibility in how it spends the money, but in this specific case the argument does not quite stack up. Where money comes from taxation, ringfencing is not always the most reliable way to ensure the Treasury has the spending power it needs to deliver public spending, but we are talking about something completely different. Fines are much more uncertain and provide less guarantee regarding the amount of money that they will bring in. To rely on funds such as these for day-to-day broad Treasury spending simply does not make sense.
Ringfencing penalties for the water restoration fund is a much more sensible measure that allows Governments to guarantee that they can meet a specific need. In other words, those who are at fault for harming the quality of our rivers, seas, coasts and lakes make restoration for the damage caused by their action—or inaction. Given all that we have outlined, there cannot be a more justified way of directly making restoration for damage to our previous water system than the mechanism laid out by the water restoration fund. Water companies pay the fines for the damage that they have done, and local communities that are affected are empowered to restore the precious waterways that they live near.
A finer detail of the amendment that should not be ignored is the fact that we will improve chalk streams. It is unfortunately clear that, despite the Government’s pitch to the British public that they would do better than the previous Government in protecting our waterways, their actions on chalk streams do not bear that out. It was very disappointing that over the Christmas period it was revealed that plans from the Conservatives to recover our chalk streams have been laid to one side by the Government. Given that England is home to over 80% of the world’s chalk streams, the failure to act on this issue is neglect of a vital duty to protect a not only a key part of the UK’s environment, but a feature in the environment of the world. They are a precious resource that very few countries are lucky to have access to. Members across this House represent areas with chalk streams. It is a dereliction of duty to ignore that category in the UK environment.
The plans that the previous Government proposed would have given chalk streams a new status of protection. Special consideration would have been given to watercourses in road guidance, and supporting the physical restoration of the streams as key pillars of our plan would have put chalk streams back on the road to the recovery that is needed. As the deviser of the plans has said publicly, although the Government may want to focus on chalk streams in national parks and landscapes, they risk ignoring chalk streams in most need of recovery across the country. Can the Minister explain why this vital plan of action, which was ready to go, has not been fulfilled? I hope that this decision was not based on politics. We need to look at this in terms of evidence and what is best for our environment.
Emma Hardy
I wonder whether there has been some confusion, given that the debate on chalk streams comes later on.
Dr Hudson
Good. We are all for talking about and raising the issue of chalk streams, but it is clear that we wanted to include that in our amendment. Our amendment will therefore be a chance to give chalk streams the attention they need from this Government. The previous Government were ready to deliver that and hand the baton over to the new Government, so that they could follow through on the explicit requirement that chalk streams be considered.
The amendment is a chance for the Government to reconsider their stance on the water restoration fund. I would be grateful for clarity from the Minister about what they are planning to do. If they are serious about improving our waterways and if the money from penalised water companies is allowed to go back into the local area to improve those waterways, we could agree about that. If the Government do not face up to this, that might be a negation of the various promises they made to the electorate when in opposition and send a message that their words are merely soundbites. I hope that the Minister will consider the points I have made and support this amendment to restore the water restoration fund—for the sake of not only our waters, but the democratic and local accountability on which they rely. We will seek to push new clause 2 to a vote.
Tim Farron
I rise briefly to support the new clause. Among many other reasons, it bears great similarity to one proposed by my noble Friend Baroness Bakewell. We consider everything in it to be right. As the hon. Member for Epping Forest has said, we should be deeply concerned about the Treasury seeking to hang on to money that, if there is any justice, ought to be invested back into the waterways that have been polluted by those who have been fined for that very offence.
I talked earlier about the deep sense of injustice felt across the country about those who pollute, who are getting away with polluting and who even—far from being found guilty—are getting benefits from that pollution. The measure would simply codify a move towards the establishment of a water restoration fund, supported, at least in part, by the fines gathered from those guilty in the first place. There would be a great sense of justice being done for folks concerned about how Windermere is cleaned up, how we make sure that Coniston’s bathing water standards remain high and how we deal with some of the issues I mentioned earlier on the River Lowther, River Eden and River Kent.
The water restoration fund should in part be supported by funds gained from those who are guilty: that is basic justice. We strongly support the new clause and will be voting for it if it is put to a vote.
Emma Hardy
I thank the hon. Member for Epping Forest for tabling new clause 2, which seeks to establish a water restoration fund in legislation. I accept his invitation to do better than the previous Government when it comes to pollution in the waterways, and welcome the low bar that they have set me.
A water restoration fund is already being established to direct water company fines into water environment improvement projects. This arrangement does not require legislation, because it exists. Defining a water restoration fund in legislation would create an inflexible and rigid funding mechanism, with the amendment requiring specific detail on the scope, operation and management of fines and money. We need to maintain flexibility in how water company fines are spent, to ensure that Government spending is delivering value for money.
The hon. Member can already see from the Bill and the discussions we have had that the cost recovery powers that we have introduced for the Environment Agency are an example of how we can ensure that water companies pay for enforcement. It is continuing to work with His Majesty’s Treasury regarding continued reinvestment of water company fines and penalties, and water environment improvement. A final decision on that will be made when the spending review concludes later this year. On that basis, I ask the hon. Member to withdraw his amendment.
Dr Hudson
I am not reassured by those comments. The Minister says that the water restoration fund does not need new legislation, but we are concerned that the fact that the fund is not in the Bill shows that the Government are not doing anything with it. They are completely silent about it. I fear that they are going to drop the baton they are being handed and let it pass away. The fund needs to be in the Bill. I am not reassured by the Minister, so we will press a vote on the establishment of a water restoration fund in the Bill.
Question put, That the clause be read a Second time.
Dr Hudson
I beg to move, That the clause be read a Second time.
New clause 3, which His Majesty’s Opposition will again push to a vote, has at its heart the people we want to protect—the very individuals who this Committee has acknowledged are most affected: the consumers and bill payers. They are the pivotal reason why we have tabled the clause.
The clause would require the Secretary of State to make provision so that where a water company has faced financial penalties for failure to comply with the law, a financial amount equal to those penalties must be removed from the bills of that water company’s consumers. Of course, one might suppose that it is difficult to make an equivalence between the amount of a financial penalty and the amount to be reduced on the bills, but subsection (2) sets out that it must be calculated by dividing the total financial penalty by the water company’s number of customers. We have laid out a formula that the Secretary of State could follow in fulfilling the duties under the clause.
The Government might object that the clause would create additional duties for the Secretary of State on top of their existing ones, but the Opposition believe that the measure is relatively simple, can be calculated and is worth adopting for the very principle of accountability for which all of us across this House are striving.
I have already mentioned that, when the Conservatives were in government, we took action to set out that water bosses would be banned from receiving bonuses if a company had committed serious criminal breaches. The Bill copies that and takes it forwards, but the new clause takes the principle of accountability, which has been raised in the Committee’s last couple of sittings, even further.
Helena Dollimore (Hastings and Rye) (Lab/Co-op)
It is a pleasure to serve under your chairship, Dr Huq. The hon. Member referred to the record of his party while in government for the last 14 years, and said that it set the threshold for a water boss being denied a bonus at the level of criminal activity. Does he agree that many of our constituents would find it strange to set a bar for not having a bonus at the level of committing criminal activity, given that in many workplaces up and down the country a bonus is based on good performance and on serving customers? The last Government set the bar for banning bonuses far too high, and that is why, despite repeated failure, the boss of Southern Water still received a bonus, as the boss of Ofwat confirmed to the Select Committee.
Dr Hudson
The Conservative Government were the first Government to start addressing this issue by actually evaluating the data, monitoring overflows and monitoring outflows. I gently remind the hon. Member that when her party left power, only 7% of storm overflows were measured; when the Conservatives left power, 100% were measured. We were the first party to find that there was a problem.
To return to the dental analogy, in the last parliamentary Session we tried to give the regulators more powers—more teeth—to go after the water bosses. We need to firm up how the regulator has been using those powers, so that we can hold the water companies to account. I agree that there is outrage across the House about how water companies have breached their terms of reference and broken the law. We have tried to hold them accountable. The Bill will try to take things further, but I gently say to the Government that we were the party that started collecting the data, which allowed us to realise the scale of the situation and try to introduce measures to sort it.
The new clause ensures fairness for customers and ensures that fines on water companies will not impact customers, who are not at fault for the water companies’ mistakes or the bad practices that led to the fines. We believe that customers should not be impacted by fines imposed on water companies. The clause attempts to remedy that. In the name of accountability and trust between the public and Governments—of all colours—that seek to address this issue, subsection (3) states that the reductions to customer bills imposed under the clause will be indicated on the statement of account for each consumer who has received the reduction. We believe that that is important.
For too long, a toxic cocktail of water companies’ poor behaviour and rising bills has led too many people to feel that they are getting poor value for money, and that they are not getting the quality water services they deserve for the price they are paying—hard-working people, up and down the country, who work consistently to pay their bills and do the right thing, while the water industry’s negative practices continue. Given the amount of time we have spent talking about this issue, they may also feel that the new Government are not willing to act to protect the consumer in this area.
Subsection (3) seeks to break that cycle and send a signal to bill payers that actions to regulate water companies have a real, tangible effect. Showing the reduction in consumer bills directly on the statement of account will provide a real, tangible sign that the poor behaviour has been looked at, people are going after the water companies and consumers will benefit from that. It also serves as compensation for those who have been directly affected and as an example of justice in action—the principle being that those who harm pay a penalty, and those who are harmed receive restitution.
I return to my comments about the water restoration fund. Fines being re-circulated into the local area will be good for local accountability.
Dan Aldridge (Weston-super-Mare) (Lab)
It is a pleasure to serve under your chairmanship, Dr Huq. The hon. Gentleman talks about the outrage across the House, and I also feel outraged as a member of the public. The vast majority of my constituents are incredibly outraged at the situation they find themselves in. One of the things I am told when I knock on doors in my constituency is, “The previous Government have shown no contrition about their role in the degradation of our waterways.” The Opposition have a revisionist attitude that is incredibly perplexing to me and angering to my constituents, so I would just like to see a bit of contrition from them.
Dr Hudson
Can I just say that the previous Government went and looked for the problem, and found the scale of it? We all agree that it is a huge problem that needs to be addressed; we are not downplaying the scale of it. We collected data and were brave enough to say, “There is a problem.”
Labour Members threw a lot of things at us during the passage of the landmark Environment Act 2021. They have made misleading comments about Conservative Members of Parliament, but we were the party that grasped the nettle and said, “There is a problem, and we need to look at it.” A lot of the amendments that were tabled to try to scupper the Environment Act were completely uncosted and would have cost taxpayers lots and lots of money. We tried to introduce practical, cost-effective, reasonable measures to address the scale of the problem that we unearthed.
Jerome Mayhew
The shadow Minister is right that a lot of the supposed solutions were uncosted and had an impractical timeframe. One that springs to mind was the Liberal Democrat amendment that was costed: there was a tax that was supposed to pay for the improvements to water quality. Does he agree that, on a basic calculation, it would have taken more than 300 years to pay it back?
Dr Hudson
I agree. Amendments are easy to table with a view to obstruction and making political points, and those were not affordable and would not have been deliverable in any realistic timescale. Governments have to make realistic, cost-effective decisions that honour the taxpayer, and they have to be clear with the public about how such measures will be implemented and paid for.
If the Government do not support our amendment, I hope they will clarify what steps they are taking to protect customers from the knock-on impact of fines. Unfortunately, in many industries when costs are imposed, customers sometimes pay higher prices. With the new clause, we want to ensure that when we rightly impose financial penalties on water companies there are no unintended consequences for the consumers we aim to defend by imposing the financial penalties in the first place. With that in mind, and given the aim of accountability, we sincerely hope the Government will support the new clause. Ultimately, we aim to press it to a vote.
Ordered, That the debate be now adjourned.—(Jeff Smith.)
Water (Special Measures) Bill [ Lords ] (Fourth sitting)
Tuesday 14th January 2025
(1 month, 1 week ago)
Public Bill CommitteesWater (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: Public Bill Committee Amendments as at 14 January 2025 - (14 Jan 2025)
The Committee divided: - Ayes: 5 / Noes: 12 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 11 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 11 - Question accordingly negatived.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
I thank the hon. Member for Epping Forest for tabling new clause 3, which would require a water company to reduce customer bills by an equivalent amount to the total monetary penalties paid in the previous year by that company. I will start by clarifying that we expect the cost of the penalties to be borne by the companies, not by the customers. However, I would also like to reassure the hon. Member that there are existing procedures in place to ensure that customers are reimbursed for a water company’s poor performance.
As the independent economic regulator of the water industry, Ofwat is best placed to ensure that customers are reimbursed appropriately if water companies perform poorly. Ofwat already sets specific performance targets for water companies in the five-yearly price review. Those performance commitments hold water companies to account for the outcomes that customers pay for. Where they are not met, companies must reimburse customers through lower water bills in the next financial year.
Those performance targets take a holistic view of water company performance and consider wider factors beyond companies receiving penalties. Performance targets include customer-facing commitments, such as water supply interruptions; environmental commitments, such as pollution incidents, storm overflows and bathing water quality; and commitments related to asset health, such as repairs to burst mains. As a result of underperformance in the last financial year, Ofwat is currently requiring 13 companies to return £157 million to customers.
The hon. Member’s new clause is therefore not appropriate for this Bill, given that it would overlap with existing procedures. However, there is simply not enough improvement in performance across the water industry. That is why we have launched the independent commission, which will look at issues, including performance, and make recommendations on how to transform the water sector.
I hope that the hon. Member for Epping Forest is reassured about how customers will be reimbursed for poor performance, and about the steps that we are taking to improve performance. On that basis, I ask him to withdraw his new clause.
Dr Neil Hudson (Epping Forest) (Con)
I thank the Minister for her comments. I am afraid that I am not fully reassured, and we would like to see provision in the Bill for any fines imposed on water companies to have a concomitant effect—a direct effect—on customer bills. This well-intended measure has been tabled to create a link between the two, so although I hear the Minister’s comments, we would still like to press new clause 3 to a vote.
Question put, That the clause be read a Second time.
Dr Hudson
I beg to move, That the clause be read a Second time.
New clause 4 amends the Water Industry Act 1991 to insert new rules regarding the limits to the amount of money that can be borrowed by a water company, which the Secretary of State for the Department for Environment, Food and Rural Affairs would be able to enact by means of statutory instrument. Although we have discussed statutory instruments in Committee, the Opposition hope that the Government will recognise that this proposed statutory instrument power needs to be made.
New clause 4 ensures that water companies are not excessively borrowing money, as that is ultimately bad for bill payers. At the heart of our concern about financial resilience is the borrowing in the industry and the over-leveraging because of that borrowing. It is clear that there is a direct link between financial resilience, problems connected to borrowing and the very survivability of the water firms. That should be of huge concern to all of us.
Consumers are concerned that the provision of their water is at risk, and we as legislators must work out how to deal with the issues, including the financial implications, relating to the risk of nationalising the water companies that have no other way of providing services. That can reverberate back to the consumers again, who may face increased costs because of the financial support that the Government have to provide to keep water companies afloat. In other words, tackling the choices that water companies may have made, and will make in the future, including borrowing choices, is an issue that we are required to correct for the very future of our water industry.
I reiterate my profound respect for the way that both the Minister and Baroness Hayman have conducted themselves in this debate. I note that Baroness Hayman expressed concern in the other place that putting a fixed percentage limit on borrowing could be a risk to investment at a crucial time for financial resilience and investment in the water industry. That is why my Conservative colleague, Lord Roborough, revised his amendment on that in the other place to give the Secretary of State the power to set limits by means of a statutory instrument. I pay tribute to my colleague and friend Lord Roborough for working so hard to raise the issue of financial resilience in the other place through this amendment.
We are not saying that a hard limit has to be set on borrowing levels, but merely giving the Secretary of State the option to do so if they feel it necessary to protect consumers from the negative effects of the water industry. I come back to the point I made in previous sittings: giving the powers to the Secretary of State, a democratically elected Minister in His Majesty’s Government, through statutory instrument, improves democracy and accountability for the water companies. I do not think the Labour Government need to shy away from this constructive amendment, which gives the Secretary of State the ability to hold the water companies to account, as we all want to do.
If the Minister does not see the need for the amendment —I am not pre-empting her, but I imagine that is how her response will go—can she clarify how much borrowing the Government consider acceptable for a water company, and what they will do to reduce the impact on the consumer of excessive borrowing and spending? The new clause also limits the amount of dividends that can be paid out to shareholders if the water company has exceeded the borrowing limit. Should a limit be set, it would therefore make water companies fairer in their practices to bill payers, as when a company borrows it will have less of an impact on consumer bills.
While in government, the Conservatives gave Ofwat the powers to link performance to payouts to shareholders and water company management. New clause 4 further aims to protect consumers from companies that are failing to prioritise their customers. Considering those points, the Opposition believe that the Government could move a bit on this, and enact democratic accountability with the statutory instrument. We hope that they will look on new clause 4 favourably.
Emma Hardy
I thank the hon. Member for Epping Forest for tabling the new clause, which would implement a limit on borrowing by water companies. I note that Baroness Hayman had multiple discussions with Lord Roborough on the similar amendment that he put forward in the House of Lords, and that Lord Roborough was satisfied with our reasoning for not introducing restrictions on borrowing in the Bill.
Debt has been rising in companies since privatisation, and it of course accelerated under the previous Administration. In some instances, levels of debt have reached a point at which the financial resilience of companies could be threatened. We have been clear that Ofwat must continue to have a strong focus on company financial resilience to secure efficient long-term investment and deliver long-term value for money for customers and the environment.
I assure the Committee that Ofwat is already taking steps to closely monitor debt levels as part of its annual monitoring financial resilience report, and it will take action where the financial resilience of a company is threatened. Ofwat published its final determinations for the 2024 price review in December, which included a confirmed £104 billion upgrade for the water sector. Investment in the water sector is financed up front by investors, and repaid by customers over time to smooth the impact on bills. Borrowing is therefore a key part of the process.
David Reed (Exmouth and Exeter East) (Con)
I agree with many of the points raised by my hon. Friend the Member for Epping Forest on debt. He raised the serious question of how much debt is too much. Does Ofwat have a firm number on how much companies should be borrowing, and at what point it should intervene?
Emma Hardy
I thank the hon. Member for his helpful intervention to look at what the borrowing and debt limits should be. We think that placing new borrowing limits on companies at this late stage in the price review process would disrupt business planning. However, taking on board the points that have been made and the concerns about companies’ levels of debt, I refer Members to the fact that we have announced an independent water commission, which will be a more appropriate vehicle for considering longer-term reform options such as the proposals from the hon. Member for Epping Forest. Company financial structures are one of a number of areas that could be explored under the commission, and we do not want to pre-empt the outcome of the commission through this new clause.
Charlie Maynard (Witney) (LD)
With respect, I feel that we are living in parallel universes. I will take Thames Water as an example, whose debt is 14 times the level of its cash flows. The Minister is saying that financial resilience could be threatened, but I spent 25 years in finance, and that ratio is very threatening. Is Ofwat closely monitoring that? Moody’s and Standard & Poor’s have put Thames Water into junk bond ratings—seven ratings under the investment grade—and we are pedalling on regardless. Could the Minister give a view on Thames Water’s levels of debt, and whether they are threatening to the company?
Emma Hardy
I hope that the hon. Gentleman has not misunderstood. There is certainly no desire from me to keep pedalling. Instead, what we want to do is look at the entire financial situation of companies—he knows that we have had that conversation outside this room. We need to look at some of the longer-term reform options for how companies are structured financially, which is why we have the deputy governor of the Bank of England leading our review, and using his knowledge and expertise to look at how companies are structured.
I do not think that the new clause is the appropriate place to pre-empt the outcome of the commission before it has had an opportunity to report, or even to listen to the hon. Member for Epping Forest through the call for evidence that is yet to be announced. I want to stress that I support sentiment of the hon. Member for Witney, but I express caution around the risks of putting through changes of this magnitude without giving full and proper consideration. We believe that the commission is the appropriate way to do that.
Jerome Mayhew (Broadland and Fakenham) (Con)
Okay, perhaps the Minister is right—perhaps the detail of what percentage of debt or what multiple of revenue is appropriate should be established by the commission and the wider review—but surely the principle can be established now. From any investigation in this area, we can say that the principle will be that debt will need to be capped or managed, or have some oversight, because we have seen what happens—particularly with Thames Water—when there is no cap or oversight. Does the Minister not agree that the new clause just sets out the principle, and the amount would be set out by an SI?
Emma Hardy
I respect the hon. Gentleman’s contributions on matters of finance, and I recognise his knowledge in this area. However, I think he would probably acknowledge—even if not publicly—that using a new clause to determine the level of debt that we think is appropriate is not the best way to make legislation for our country, or for the financial resilience of the water sector. I am entirely confident that the best way to look at this seriously, taking contributions and recommendations from all the wider stakeholders, is through the water commission. The commission might draw similar conclusions but it is not for us to pre-empt them now, without having first taken on board the opinions of many other stakeholders. I trust that the hon. Member for Epping Forest is reassured by the steps being taken by the Government, and by Ofwat, and I ask him to withdraw the clause.
Dr Hudson
I thank the Minister for the constructive tone with which she has engaged in this whole debate, but I think we are going round in circles. We are trying to hold the water companies to account, and the Government are saying, “It is okay, Ofwat can do that,” but we have heard contributions saying that Ofwat is not using its powers and we need to give it more powers.
All we are doing, with this new clause, is putting in place the principle that the Secretary of State has the capability to oversee that. If the Secretary of State and the Government felt that Ofwat was doing what the legislation intended, they would not need to activate the new clause’s provisions. If, however, they did not feel that Ofwat was doing that, the new clause would give them that particular power. We are again talking about—I know the Government Back Benchers are going to wince—teeth. In this case, regarding Ofwat’s and the Environment Agency’s capabilities, we are saying to the democratically elected Government of the day that there is an extra tooth to hold over Ofwat, and that if Ofwat is not doing its job then the Government can, potentially, step in.
I take on board the comments about the commission but, to echo some of the comments of the hon. Member for Witney about being impatient for change, if this issue is going to the commission, and the can is being kicked down the track, that is disappointing. With this new clause, we are trying, constructively, to give the Government and the Secretary of State of the day the capability to act if they feel that the processes set up under the previous Administration and the new Administration are not working well. I urge the Minister to think again on this matter, and we will press the clause to a vote.
Question put, That the clause be read a Second time.
Dr Hudson
I beg to move, That the clause be read a Second time.
New clause 6 is a fair and reasonable request to strengthen the Bill. Quite simply, it would do what it says on the tin by requiring the Government to report on the impact that they expect the Bill to have on water pollution and on the actual and verifiable effects that the Bill, when it becomes an Act, will have on our water quality.
It is completely agreed that accountability for addressing the quality of our water system should be at the heart of how we tackle water pollution and related issues. That should be true of every actor involved: not just the water companies, but the Government whose regulation they are expected to abide by. We cannot rightly say on the one hand that water companies should be expected to meet criteria to restore public trust, while suggesting on the other hand that the Government should not likewise work to be accountable and to uphold public trust on the issue.
Furthermore, the new clause feeds into the basic fact that ensuring that our water systems are being improved is not a one-time event that can be magically resolved with a single piece of legislation every now and then. It must be a consistent focus for the Department for Environment, Food and Rural Affairs and for all the agencies under whose remit the issue falls.
The work of agencies such as the Environment Agency is vital. I pay tribute to its hard work, not least when flooding hits, as we have discussed. We should not underestimate those on the frontline who do so much to keep people safe, to make sure that the environment is protected and to ensure that the quality of people’s water is safe and suitable.
To improve our water systems, however, the buck must stop not with the EA, but higher up: with DEFRA and the Government. The new clause would help to provide that accountability. As in our earlier discussions regarding the online publication of implementation reports, if the measures set out in the Government’s approach do not meet their targets, for legitimate reasons, the Government would have a chance to lay out exactly why not and to give a justification for their findings on the Act’s impact. Our new clause would provide a natural mechanism to ensure that long-term planning and reviews of the Act are taking place and that the Government are looking at water pollution and the actions that the water industry has taken or needs to take to further improve the situation.
We should not shy away from the fact that the new clause would build on the previous Government’s efforts to look at that point. Our plan for water set out a 25-year plan to ensure that our water companies were investing in our water system for the long term, not just while the issue was in the headlines. Again, that is why our new clause matters: because it would ensure the continued focus of Governments of all parties on the protection of our waters. That matters all the time, not just when it becomes a political or media issue.
We must also consider the evolving factors that affect the water industry and its ability to reduce water pollution. The flooding that we have seen in the past weeks has highlighted once again that our country is facing more regular extreme flooding events. In simple terms, more flooding means more excess groundwater and surface water that can enter the network, which creates more of a risk that sewerage overflows will be required to maintain our water systems.
With such events becoming more unpredictable in their timing and yet more commonplace because of extreme weather events and the effects of climate change, looking at the evolution of issues such as this will be crucial to ensuring that any measures to improve overflows and water quality are successful in the long term. We need to make decisions now that have an impact in the future, because in the long term we all want water quality to improve and to be protected for future generations. To achieve that, we need long-term and consistent attention and reflection on the policies being enacted and their effects. The new clause would help to facilitate that.
Once again, transparency is not a hindrance; it helps everybody involved in managing the quality of our water system. Trust can be maintained only if everyone tries to do what is right and the Government, of whichever political party, are no exception. We need to be trying to do the right thing. Given that, His Majesty’s Opposition believe the new clause to be a highly reasonable and fair amendment to the Bill, and we hope that the Minister might support it.
Emma Hardy
I will quickly note the constructive and nice way in which the hon. Member for Epping Forest is taking part in these debates. I also want to come up with more dentistry analogies, so I will be thinking of those as we keep going.
The Bill will drive meaningful improvements in the performance and culture of the water industry. In line with that, it will introduce many measures to disincentivise pollution. For example, it will provide Ofwat with legal powers to ban bonuses where companies fail to meet standards on environmental performance, financial resilience, customer outcomes or criminal liability. The Bill will also enable automatic and severe fines, allowing regulators to take swift action. It will enable the public to hold companies to account through a new requirement for water companies to produce annual reports on pollution incident reduction. Collectively, these measures will strengthen enforcement, improve transparency and disincentivise water company pollution.
The Committee and the wider public are able to see a more detailed assessment of the expected impact of the Bill via the published impact assessment. I reassure the Committee that my Department is committed to post-legislative scrutiny of primary legislation. The Department for Environment, Food and Rural Affairs will work with the cross-party Select Committee on Environment, Food and Rural Affairs to assess the impacts of the Act three to five years after Royal Assent as part of the standard practice for all new legislation. I welcome that scrutiny.
The Government therefore cannot accept new clause 6. Although we agree on the importance of understanding the impact of the Bill on environmental pollution, adding further reporting requirements to the Bill would be duplicative and unnecessary.
The Chair
It is votes à gogo this afternoon.
Question put, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 20—Review of the water industry—
“(1) The Secretary of State must consider as part of any review into the water industry the following—
(a) the functions and performance of the Water Services Regulation Authority, and the case for its abolition;
(b) whether a public benefit company could better perform the role of current undertakers.
(2) The consideration under subsection (1)(a) must analyse the case for replacing the Water Services Regulation Authority with a new corporate body known as the Clean Water Authority, with the following general duties—
(a) to issue guidance to undertakers, and enforce the implementation of that guidance, requiring undertakers to meet excellent standards concerning—
(i) the provision of clean drinking water,
(ii) the maintenance of bathing waters of excellent quality,
(iii) the maintenance of lakes, rivers and beaches of high ecological status,
(iv) the conservation of water resources, and
(v) the charging of reasonable water bills;
(b) to issue rules prohibiting a relevant undertaker from giving to persons holding senior roles performance-related pay in respect of any financial year in which the undertaker has failed to meet any relevant targets set by the Authority;
(c) to swiftly revoke the licence of water companies that have performed poorly, as defined by the Authority, with particular regard to the standards set out in paragraph (a);
(d) to require relevant undertakers to have arrangements in place for environmental experts to be members of a board, committee or panel of the undertaker;
(e) to issue stringent and legally-binding targets concerning sewage discharges affecting bathing waters and highly sensitive nature sites;
(f) to mandate that undertakers publish publicly-accessible live time data on the recorded volume, duration and number of sewage spills on a single site maintained by the Authority;
(g) to perform unannounced inspections with regard to the duties under this subsection.”
Tim Farron
I will try to be brief and speak to both new clauses. For the Committee’s information, we will not seek to press new clause 7 to a vote, but we will seek to press new clause 20.
I know that the Minister will talk about the Cunliffe review as the time when these things will be considered. Nevertheless, we have all spent enough time in opposition to have come to some conclusions before this Parliament. Even if nothing else had happened beforehand, there was Ofwat’s signing off of the bill increases last December. This is a 21% increase in bills, and that is 14 times larger than the current inflation rate. In my part of the world, it is a 25% price rise. As I said earlier, 11% of the bills being paid by my constituents will go to finance company debt.
We have seen bonuses signed off regularly despite shocking performance. We see Ofwat as a failed regulator with a culture and presumption of non-intervention. Nearly four years on, Ofwat still has not collected £168 million-worth of fines. We see a culture of weakness and an organisation that the water companies consider to be weak and for which they do not have respect. It is partly the fault of Ofwat and its leadership, but it is also that the powers given to it are not sufficient.
Catherine Fookes (Monmouthshire) (Lab)
I think we can safely say that Ofwat is already under review. In my mind, it has until 2030 to deliver everything that we want. We have an independent commission coming up, so I would say that the hon. Member’s new clause is not necessary. We should let the commission report and say what extra steps are necessary.
Tim Farron
I thank the hon. Member for her very reasonable intervention. In the extremely unlikely event that the Committee rejects my new clause today, we will of course submit our ideas to Sir Jon Cunliffe and take part in the review, which we welcome. Nevertheless, my point is that the division of responsibility and division of attention, particularly in the Environment Agency as a regulator dealing with flooding and so on, means that it does not have the resource; I know that we will talk about that later. Also, the fact that the regulatory set-up is so fragmented means that the water companies simply run rings around the various regulators.
One final point arising from new clause 20 is that we must outline a potential way forward. We are not convinced at this stage that renationalisation would be affordable or wise. I am not saying that I am opposed to it in principle; it just does not seem wise at this stage to do something that will cost the taxpayer a vast amount and put money in the hands of people who have fleeced us once already. Unless people can come up with a different model, that does not feel like the right way of doing it.
At the same time, the current model of ownership has clearly failed. We suggest a not-for-profit, a community benefit company model or looking at mutuals, but there may be a way of migrating the system towards that model of ownership via what happens at the end of the administration.
Jerome Mayhew
The hon. Member says that privatisation has demonstrably failed. I challenge him on that. There are elements of privatisation that have failed: the refinancing, the imposition of debt and the removal of money through dividends in the noughties and, I am sorry to say, between 2010 and 2015. That is a failure, but I hope that the hon. Member accepts that privatisation as a whole has delivered more than £160 billion of capex investment into the industry, which simply would not have happened if it had been up against schools, hospitals and the other calls on the public purse.
I know that I am straying too far, but subsection (1)(b) of the new clause refers to
“whether a public benefit company could better perform the role of current undertakers.”
As I am sure the hon. Member will know, we have an example of that: Welsh Water. Is he able to point to a single metric by which Welsh Water has outperformed its private sector comparators?
Tim Farron
I am not wedded to one model or another. Having said all that, water is blindingly obviously a natural monopoly and should not have been privatised in the first place. Can I give one metric? Yes. Of the 16 water companies, Welsh Water is among the minority that are financially sound. Performance is not necessarily and always a function of ownership absolutely: it is a combination of ownership, culture and regulation.
We are simply saying that we should look at migrating the system to this model. Let us bear in mind that for all the additional money we can say we leverage in through private investment, a vast amount of money leaks out of the system to shareholders, often through holding companies overseas and in bonuses, which could otherwise have been spent internally.
New clause 7 is an attempt to come up with a constructive alternative. We would abolish Ofwat, take the water regulatory powers off the Environment Agency, create a single regulator in the form of the clean water authority and seek to migrate ownership within the water industry towards a mutual and community benefit model. As I say, we will not push new clause 7 to a vote, but we will seek a vote on new clause 20.
Dr Hudson
As we have gone through the Bill, there has been a lot of cross-party consensus on trying to get measures in place. I respect the efforts of the hon. Member for Westmorland and Lonsdale and the third party in trying to improve the situation, not least in such matters as nature-based solutions. From the official Opposition’s perspective, however, the hon. Member’s new clause 7 is perhaps an overly eager response. Throwing out Ofwat completely at this juncture when we want it to do its regulatory job would create more problems than he wants, whatever the intention of the new clause.
I know that the Liberal Democrats have argued that steps should be taken to set up a new regulator in some way. New clause 7 does not really introduce a specific requirement or measures to enable a transition from Ofwat to the purported new regulator. If we were to proceed with the new clause, we would simply be left in limbo and in the lurch with regard to regulation of the industry. It is not that we believe that the situation is perfect: we have debated the powers of the Environment Agency and Ofwat, and we have agreed that things are not perfect with the water industry and regulators. We have all heard at first hand about issues that we are not happy with, such as executives moving into higher-paid roles within water regulators, of which we heard evidence in the EFRA Committee in the last Parliament.
The hon. Member for Westmorland and Lonsdale generously shouted out the people who work in Ofwat and the Environment Agency, but although he will not push new clause 7 to a vote, he still talks about abolishing Ofwat. In doing that, we would be left with a vacuum while a new regulator was set up—something we can ill afford when we all agree that there is so much work to be done. A new regulator could not be established overnight; it could take months or even years while structures were being established, the personnel needed to do its everyday work were appointed and the like. Let us be honest that making such a move would not come without financial cost.
Even if that money could be raised through Government resources—ultimately, that means taxpayers’ money—we would be using it to establish a completely new infrastructure for the water regulator, rather than trying to enhance and give more power to the regulator we already have. In addition, we have to remember that its role as a regulator affects consumer bills, too. While none of us wants to see water bills rise for any of our constituents, particularly in difficult economic times, bills would have only been higher if a regulator had not been there at all. If we are left with a vacuum until a replacement mechanism is put in place, and if that takes a lot of time, do we really want to run the risk of unregulated companies raising prices even further in the meantime?
We are in agreement that the status quo has not been good enough when it comes to water companies, but progress has been made and continues to be made in that seismic task. Water companies are starting to face the financial penalties for their failures to both people and our precious environment. For example, back in November, Wessex Water was ordered to pay £500,000 for the loss of thousands of fish because of a sewage pumping failure. That very same month, Thames Water was fined over £18 million for its failure to obey rules introduced on the spending of dividends. Those incidents are not good news stories, and we should never say that they are, but they are signs that the mechanism is working. Ofwat is holding the companies to account and trying to act—it is trying to use the teeth that are there.
There are early signs that giving the regulator those teeth—which we have heard a lot about in this Committee —means that there are clear consequences for the water companies that break the rules that have been implemented. That is not the end of the story, but it is the start of the journey, as we try to hold those water companies to account. As I have also mentioned, the pathway for inspections into water company activity is increasing. It is the whole approach—from incident, to investigation, to penalty—that needs to be examined and reviewed in order to drive change, and that is what has been done and what this legislation is trying to take forward.
Although things are not perfect, we need to allow the existing legislation, as well as this new legislation, to take effect so that the regulator can get on and do its job. We should not put things in jeopardy by completely abolishing things. I note that the Liberal Democrats have tabled this new clause, and they are not pushing it to a vote, but I want to put on record the Opposition’s reservations about what they are suggesting.
Emma Hardy
I thank the hon. Member for Westmorland and Lonsdale once again for his thorough consideration of the Bill. I will turn first to new clause 7, which was tabled in his name and which proposes the abolition of Ofwat. As the hon. Member will be aware, and as he already mentioned in October ’24, the UK and Welsh Governments launched the independent commission to fundamentally transform how our water system works. The commission, led by Sir Jon Cunliffe, will be broad-ranging and will make recommendations in line with eight objectives, which include specific objectives considering the role, structures, responsibilities and powers of the regulator.
It is right that the commission, rather than this Water (Special Measures) Bill, is the vehicle for considering the water regulator’s roles and responsibilities. This Bill focuses on strengthening the powers of the regulators to drive improvements in performance. The Bill will not, and cannot, fix all the sector’s problems. The commission is the right place to consider the long-term future of the regulatory system and the role of the regulator. Indeed, I would argue that the Labour Government want to move away from sticking-plaster politics to fundamentally reset and transform the problems facing our country for good. I hope therefore that the hon. Member for Westmorland and Lonsdale is content that this new clause is unnecessary.
New clause 20 was also tabled by the hon. Member for Westmorland and Lonsdale. It sets out requirements for a water review that is undertaken by the Secretary of State. I think we are all agreed that we have seen years of water company underperformance, and we all agree that there is a clear need to fundamentally reset the water sector. Although I understand that the hon. Member is seeking to ensure that any review of the water sector is sufficiently thorough, the Government are confident that the commission’s scope is broad and comprehensive. Sir Jon will be supported by a range of experts from the regulatory, environment, health, engineering, customer, investor and economic sectors to effectively examine this sector as a whole, including the regulatory framework.
By setting out considerations for a water review in primary legislation, we risk prejudicing or pre-empting the outcome of the current commission, as well as its independence. The sector is facing complex challenges that require the support of customers, environment groups, investors and companies alike to address. An independent review is best placed to find solutions to those challenges, and it is critical that its independence is preserved. The commission will report its findings in summer 2025, and the Government will consider them in full before outlining the next steps. I therefore hope that the hon. Member for Westmorland and Lonsdale understands that to avoid duplication and, importantly, maintain the independence of the commission, the Government will not accept the new clause.
Tim Farron
As I said earlier, we will not press the new clause to a vote at this stage, but we will press new clause 20 later. Notwithstanding all that has been said about Sir Jon Cunliffe’s review—we want to proactively engage with it, and believe it has great potential to do good—there is no harm in proposing solutions at this stage, and that is what we seek to do. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 8
Duties of water regulators for clean water
“(1) The Water Industry Act 1991 is amended as follows.
(2) In section 2 (General duties with respect to water industry)—
(a) omit paragraph (2A)(c);
(b) in subsection (2B), omit from ‘by’ to the end of the subsection and insert—
‘ensuring—
(a) clean drinking water,
(b) bathing waters of excellent quality,
(c) lakes, rivers and beaches of high ecological status,
(d) the conservation of water resources, and
(e) reasonable water bills.’
(3) In section 3 (General environmental and recreational duties), in subsection (2), before paragraph (a) insert—
‘(aa) a requirement to achieve excellent quality of all bathing waters, lakes, rivers and beaches of high ecological status, and elimination of sewage, waste and other pollution so far as reasonably practicable from all waterways;’”.—(Tim Farron.)
This new clause would amend Ofwat’s consumer duty to prioritise clean water and bill levels instead of commercial competition.
Brought up, and read the First time.
Tim Farron
I beg to move, That the clause be read a Second time.
The new clause is similar in scope to the last one, and I do not want to detain the Committee long. The clause refers to the duties of the water regulator under the Water Industry Act 1991, and lists duties against which the regulator would be able to mark water companies to see whether they perform. The duties would be to ensure,
“clean drinking water…bathing waters of excellent quality…lakes, rivers and beaches of high ecological status…the conservation of water resources, and…reasonable water bills.”
Interestingly, those are significantly more detailed than the 1991 Act currently provides. We are seeking to beef up Ofwat’s powers so that water companies are marked against these higher and more comprehensive standards. We do not think the clause should be controversial, and will seek to push it to a vote.
The Chair
The Clerk keeps reminding me that—I think because we have a lot of new Members in the room; Tim Farron is not guilty of this—people keep saying “you”, which is a cardinal sin. You have to say “the hon. Member”, because “you” is me, and I am not doing anything except sitting here saying the “Unlock the doors” stuff.
Emma Hardy
May I say—often said, not always meant—that it is indeed a pleasure to serve under your chairwomanship, Dr Huq? I thank the hon. Member for Westmorland and Lonsdale for the intention behind new clause 8. Ofwat has a range of primary duties, including protecting the interests of consumers, ensuring that companies properly carry out their functions and ensuring that companies can finance the delivery of their statutory duties. Removing Ofwat’s duty to ensure that companies are appropriately financed would put at risk companies’ ability to deliver for customers and the environment. The new clause also seems to contradict the others tabled by the hon. Member. For example, new clauses 19 and 23 seek to increase regulation around water company financial resilience, but new clause 8 seems to aim to reduce it.
Ofwat must continue to ensure that water companies can finance the proper carrying out of their statutory obligations, in line with the outcome the new clause seeks. Ofwat already has a primary duty to seek to ensure that companies deliver their statutory obligations, including environmental obligations. Ofwat’s existing duties, combined with the strengthened power for regulators provided by the Bill, will therefore drive the desired outcome sought by the new clause and ensure that the environment is at the heart of water companies’ activities. That is something on which we all agree.
In addition, the independent commission on the water sector will look at wider long-term reform of the water sector, including considering and clarifying the role of regulators, and we do not wish to prejudice the outcome of the commission by implementing the new clause. I hope that the hon. Member is reassured that Ofwat’s existing core duties capture the intent behind it, and that the independent commission will consider the duties of Ofwat more broadly. For those reasons, we will not accept the new clause.
Tim Farron
I thank the Minister for her response. The new clause aims not to replace the business side of Ofwat’s regulatory framework and powers, but to supplement it. As I said earlier, it is odd that in the broadest sense—I know that this is not entirely true—Ofwat looks at the business side of the water industry and the EA looks at the environmental side. They are clearly one and the same, or they ought to be. We are simply trying to draw these things together. This is not about reducing Ofwat’s powers on one side in order to beef them up on the other; this is about additionality. We think it is entirely consistent.
I hear the Minister—if I were at that crease, my straight bat would be “Sir Jon Cunliffe” every single time. I get that, but surely, there has to be some point to this water Bill, and we are trying to push the Government to strengthen the regulators. We debated earlier the extent to which Ofwat should exist or not, but if we take it that the Government have a majority and therefore that Ofwat is likely to overcome my time on this Committee, what can we do to make it a more holistic regulator with more power and scope? We therefore think there is a very strong case for new clause 8.
Question put, That the clause be read a Second time.
Tim Farron
I beg to move, That the clause be read a Second time.
The Environment Agency will have more powers as a consequence of the Bill. There will be greater regulation and there will be an impact on the Environment Agency as an organisation. It is my privilege to represent large chunks of the English Lake district. We have an agency full of really good people—dedicated and qualified professionals, many of whom are from and love the area, and yet they already find themselves overwhelmed with their responsibilities. I made an allusion earlier, but it might help to give a sense of how the organisation copes with its challenges.
We are still in the process of having walls built around the River Kent to protect the town of Kendal and its businesses from a repeat of the devastation in December 2015, when something like 6,000 of my residents lost their homes and we saw just under 1,000 businesses devastated. The Environment Agency is looking after that, and just up the road are Windermere, Coniston, Ullswater and the other lakes, rivers and coastal areas of our beautiful part of the world. We are already stretching the capacity of those people, to say the least, and we are beginning to see that in real time, as we try to deal with sewage spills in the tributaries that lead into Windermere. We see many such failures, and although the Environment Agency is trying to find the time to regulate, observe and scrutinise them, it is understandably distracted by the huge civil engineering project that it is overseeing in Kendal to protect the town from flooding.
This is about paying tribute to people in the EA, but also recognising that they are already under enormous pressure. The Minister has said that there will be 500 new members of staff at the Environment Agency. That is one answer to the question. We are trying to recognise that that is still only one person per English constituency. We need to therefore test the extent to which the Environment Agency has the capacity to do its job, because part of the problem is insufficient regulatory powers, and the other is agencies without the resource to police the powers that they already have. This aims to be a helpful new clause. It recognises that the Government seek to and will do good through the Bill, but we need to ensure that the agencies there to deliver that good have the capability to do so.
Emma Hardy
I thank the hon. Member for suggesting new clause 10 and agree it is important to understand the impacts of the Bill on the Environment Agency. I echo remarks made by all Members on the wonderful work that the Environment Agency does, particularly those who are working in the frontline and those who were working on new year’s day trying to support communities that had been flooded. I also pay tribute to the Wildlife and Countryside Link and to all the environmental groups, organisations and charities that have shown an interest in the Bill. Their tireless campaigning is probably what has led to many of us being here to discuss it today.
I reassure the hon. Member for Westmorland and Lonsdale that the current provisions in the Bill are sufficient to do what he wants. Through clause 10, the Environment Agency will be able to recover costs for the full extent of their water company enforcement activities, including for new provisions in the Bill. This will allow the Environment Agency to fully fund their water industry enforcement functions and meet the requirements of the Act, ensuring that polluters can be held to account for breaches of their obligations.
Environment Agency funding will continue to be closely monitored by DEFRA as a sponsoring Department, ensuring that the regulator is fully equipped to carry out its duties and functions effectively and to deliver for the public and the environment. The Environment Agency is already recruiting up to 500 additional staff for inspections, enforcement and stronger regulation of the water industry, increasing compliance checks and quadrupling the number of water company inspections by March. This increased capacity is funded by £55 million a year through increased grant in aid funding from DEFRA and additional funding from water quality permit charges levied on water companies.
I hope the hon. Gentleman is reassured that these measures will ensure that the Environment Agency consistently has the resources it needs to fund its regulatory activities. As such, the proposed new clause is unnecessary and therefore I ask him to withdraw it.
Tim Farron
I am not entirely reassured but I am partially at least and we have no desire to push this new clause a vote. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 11
Duty to publish maps of sewage catchment networks
After section 205 of the Water Industry Act 1991 insert—
“205ZA Duty to publish maps of sewage catchment networks
(1) Each relevant undertaker must publish a map of its sewage catchment network.
(2) A map published under this section must illustrate any relevant pumping stations, pipes, and other works constituting part of the undertaker’s sewerage network.
(3) Maps published under this section must be published within 12 months of the passing of this Act, and must be updated whenever changes are made to the sewage catchment network or the components listed in subsection (2).
(4) Maps published under this section must be made publicly accessible on the undertaker’s website.”—(Charlie Maynard.)
Brought up, and read the First time.
Charlie Maynard
I beg to move, That the clause be read a Second time.
This is a very nuts and bolts thing. I believe we are here to try to make a better water sector. I will rattle through the clause, which would mean that each relevant undertaker
“must publish a map of its sewage catchment networks”,
and that maps published under the provision
“must illustrate…pumping stations, pipes and other works constituting part of the undertaker’s sewerage network…must be published within 12 months of the passing of this Act…must be made publicly accessible on the undertaker’s website.”
I am a district councillor as well as an MP and in my ward of Standlake Aston and Stanton Harcourt, parish councillors, members of the public and campaigners have grappled for information and failed to find it. Many people do not know how to do a freedom of information request. This means that people do not know where the sewage is going from and to, and that leads to confusion and means that the problems are further away from us.
Putting these maps in the public domain, making them easily accessible and making sure that not only the pumping stations and the treatment works but the pipes connecting them all—which are not automatically clear —are always in the public domain and always easily accessible means that we are getting to a solution quicker. That is all this new clause is about. I am probably going to get a response saying, “We have to wait for the water commission”, in which case I would express some disappointment, because these things do not cost any money and they mean we move quicker to solve problems. I would really like a culture of, “If that’s a good idea, let’s do it”.
Emma Hardy
I understand the intent of new clause 11. The location and health of a water company’s assets is key to ensuring their maintenance and improvement. Under section 199 of the Water Industry Act, companies are required to keep records of the locations of many of their sewers, natural drains or disposal mains. Members of the public are able to request this information from water and sewerage companies in map form. Furthermore, the Environment Agency hosts a public register of information relating to all sites and assets permitted under the environmental permitting regulations. As of 1 January—this month—all water companies are required to publish discharge data from their storm overflows. Water UK’s centralised map shows that near real-time data for water companies across England in a publicly accessible format.
Charlie Maynard
Frankly, it is pretty worrying that we do not have maps of sewer networks around the country. That is a pretty fundamental thing that we would want a water utility company to have. I acknowledge that they do not, though, and nowhere in the new clause am I proposing that the network is mapped. I am simply saying that we should take the existing maps and get them into the public domain by default. Currently, it is necessary to make a freedom of information request to access them.
I suggest that the Minister might be being a little disingenuous in saying, “We’re just being asked to monitor, but we want to act.” The Government can do both. It is not the case that if we are monitoring, we are not acting; there is plenty to be acting on and plenty to be monitoring. Also, when I hear, “If we put in flow monitors then we would need to cover the quality,” I think, “Yes—all of it. Let’s do it now.” It is not an either/or, and I do not like the occasional suggestion that there may be an either/or.
Having said all that, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 12
Environmental duties with respect to chalk streams
“(1) The Water Industry Act 1991 is amended as follows.
(2) After section 4, insert—
‘4A Environmental duties with respect to chalk streams
(1) Where a relevant undertaker operates, or has any effect on chalk streams, that undertaker must—
(a) secure and maintain high ecological status of such chalk streams, and
(b) clearly mark chalk streams which are of high ecological status.
(2) In this section “high ecological status” relates to the classification of water bodies in The Environment (Water Framework Directive) (England and Wales) Regulations 2017.””—(Tim Farron.)
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss new clause 27—Environmental duties with respect to national parks—
“After section 4 of the Water Industry Act 1991 insert—
‘4A Environmental duties with respect to national parks
(1) Where a relevant undertaker operates, or has any effect, on land within national parks or the Broads, that undertaker must—
(a) Secure and maintain “high ecological status” in the water in these areas by 2028;
(b) further the conservation and enhancement of wildlife and natural beauty;
(c) improve every storm overflow that discharges within these areas by 2028;
(d) reduce the load of total phosphorus discharged into freshwaters within these areas from relevant discharges by 2028 to at least 90% lower than the baseline as defined in Regulation 13(1) of the Waste Water Targets set under the Environment Targets (Water) (England) Regulations 2023.
(2) A relevant undertaker must be put into special administration, and not be eligible for a further licence, if it fails to—
(a) demonstrate adequate progress each year;
(b) meet the targets in subsection (1).
(3) Within one year of the day on which the Water (Special Measures) Act 2025 is passed, the Secretary of State must lay a report on the undertakers’ implementation of the environmental duties in subsections (1) and (2) before Parliament.
(4) Following the first report being published under subsection (3), a progress report on implementation must be included in the annual environment improvement plan, issued under section 8 of the Environment Act 2021.
(5) The Secretary of State must by regulations make provision requiring an undertaker to achieve bespoke objectives for specific iconic and the most culturally and ecologically significant waterways, including, where appropriate, complete removal of sewage discharge from the undertaker’s infrastructure.
(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.
(7) In this section—
“the Broads” has the same meaning as in the Norfolk and Suffolk Broads Act 1988;
“land” includes rivers, lakes, streams, estuarine and other waterways;
“High Ecological Status” means the classification of water bodies defined in Regulation 6 of The Water Environment (Water Framework Directive) (England and Wales) Regulations 2017.””
This new clause would require water companies to adhere to and deliver stronger environmental objectives and duties within National Parks and the Broads, so as to protect waters across National Parks from sewage. The new clause would give the Secretary of State regulation-making power to extend protections to specific bodies of water, such as Lake Windermere.
Tim Farron
New clause 12 is a short, and I hope consensual, measure relating to chalk streams, which we have already discussed, and new clause 27 deals more widely with the powers of national parks.
Some 85% of all the chalk streams on planet Earth are in the south of England. The impact that that has on the biodiversity of this part of the world—and more broadly—is hugely significant, creating pure, clean water from underground chalk aquifers and springs, which is ideal for wildlife to breed and thrive. They make a vital contribution to global biodiversity, providing natural habitats for many plants and animals. They will exist in many Members’ constituencies—not in mine, but, as a resident of planet Earth, I still reckon they are very important. I therefore think that they are worthy of specific attention and regulation in this Bill, so I commend new clause 12 to the Committee.
New clause 27 makes specific reference to powers regarding—and the importance of—national parks. It is my great privilege to represent a constituency with two of them: the dales and the lakes. We recognise the importance of natural national landscapes, which, of course, include areas of outstanding natural beauty, as they were known until relatively recently. We recognise many of the worthy inclusions and mentions in the Glover review for reform within our national parks—I remember meeting Julian Glover as he began that review. I agreed with much that he recommended, and was disappointed that the previous Government did so little with his recommendations.
Jerome Mayhew
To save everyone’s time, I will not make a speech on this, but I am concerned about new clause 12 because it confers an absolute duty regarding chalk streams. I represent a constituency with several chalk streams, including the Stiffkey, which goes through Walsingham. The new clause says:
“Where a relevant undertaker operates, or has any effect on chalk streams, that undertaker must—”
so it is a direction—
“secure and maintain high ecological status of such chalk streams”.
We all want that outcome, but the problem is that water undertakers are not the only ones with negative impacts on chalk streams, yet the new clause gives them the requirement, which is absolute in its terms. We know that farming, and increasingly road detritus, also affects chalk streams, so how does the hon. Member square that circle?
Tim Farron
The hon. Member makes a very good point, and we will later come to a new clause that we tabled about planning, because undoubtedly development and industrial activity also have an impact. However, this goes back to my original comment about the importance of singularity in regulation; while we recognise that the water companies may not be entirely responsible, we think that the regulator should have a responsibility across the piece.
However, the hon. Member makes a good point. We are not planning to push new clause 12 to a vote, but we are keen for the Minister to look at what we have said—and indeed what the hon. Member and his colleagues have said previously in Committee—about the importance of chalk streams, and for them to be included on the face of the Bill.
New clause 27 relates particularly to national parks. Every single lake, river and stream in England’s national parks—every single one—is polluted in one way or another. There has been no regard by water companies for national park status in this process. It is not that the lakes, rivers and waterways outside national parks do not matter—they absolutely do, and a vast part of my constituency is not in either of the national parks—but nevertheless, the lack of a higher bar for those in our national parks demands the question: what is the point in the national parks? We need to make sure that that stipulation is included. New clause 27 would therefore force water companies to specifically reduce pollution in those precious places.
To talk about my own community, United Utilities’ negligent treatment of Lake Windermere has been a standout example. Over the two years between 2021 and 2023, 165 hours of illegal sewage was pumped into Windermere, England’s largest lake and the centre of our hospitality and tourism economy, with 7 million visitors every year to that part of the Lake district alone, out of the 20 million who visit the lakes overall.
For the record, I should say that I still swim in Windermere and I do not think I am a complete lunatic, so it is not an open sewer by any means. Nevertheless, for many people, the reality is that so many of the 14—I think—assets that United Utilities owns on or around the tributaries of Windermere, or its connecting lakes, are not fit for purpose. I am thinking about the pumping station at Sawrey, for example, or the water treatment works at Ambleside. It is unconscionable that we have these assets, many of which are ageing and under-invested in, and the water company, United Utilities, failing to take action. Windermere is known globally and is part of Britain’s national brand. If its reputation becomes unfairly sullied, it will hit my constituents’ revenues.
Jerome Mayhew
I am afraid I have to make the same point about new clause 27. Proposed new section 4A(1)(a) contains an absolute duty on the undertaker, which “must”—so this is a direction—secure and maintain high ecological status, and that has to be achieved within three years. I question the practicality of that.
I am also keen to highlight the fact that proposed new section 4A(7) includes the broads, which I am lucky enough to represent. The broads are affected by all sorts of factors: we have a high degree of recreational use, with boating as well as angling, and it is a farming environment, with grazing in the marshes, particularly down in the Halvergate marshes. Yes, Anglian Water has affected water quality negatively—as well as in some positive ways, to give it credit—but it would be a travesty to place an absolute duty on Anglian Water when it has only partial control of the answer, and over a three- year timeframe. Does the hon. Gentleman agree that that is unrealistic?
Tim Farron
I do not think it is unrealistic—we need to be ambitious—but I absolutely accept that there are multiple sources of pollution.
I promise to be brief in talking about my patch, which is not of interest to everybody. It is key to point out that pollution in Windermere generally comes from three sources. It is true that agricultural run-off is an issue but, sadly, the policies of this Government and the previous one, over a period of time, have effectively destocked the fells, meaning run-off has a massively reducing impact on Windermere and the broader catchment.
The bigger two problems are the 14 assets that United Utilities has either on or around the lake or its tributaries. There is also the best part of 2,000 septic tanks around the lake or its tributaries. Unlike septic tanks and, indeed, package treatment works in many rural communities, these are not scattered all over in the middle of nowhere; they are in a ring around the lake, most of them within yards of a mainline sewer. It is, then, entirely possible for the water companies, while gaining significant income benefit as a consequence, to mainline a massive proportion of the sources of sewage spillage into the lake, via the septic tanks and the package treatment works being brought into the system.
The new clause is of course slightly selfish, but it is really important that we seek to maintain national parks right across the country at the highest possible bar, and therefore make sure they set an example for others to follow. We will seek to press new clause 27 to a vote.
Emma Hardy
I thank the hon. Member for Westmorland and Lonsdale for tabling the new clauses. It is always nice to have a conversation about the beautiful chalk streams and national parks in our country.
New clause 12 would have significant implications for existing legal frameworks and operational delivery, and would not necessarily result in environmental improvements for chalk streams, for which there are already established objectives to conserve and restore their ecological health. Under the water environment regulations, the default objective is to achieve good ecological status for all chalk streams in England. Good ecological status is a high standard that represents a thriving aquatic environment with only minor disturbances from natural conditions.
High ecological status equates to water that is almost entirely undisturbed from its natural conditions. If we set high ecological status as the objective for all chalk streams, overriding cost-benefit assessments, it would have wide-ranging impacts on future planning developments and human interaction with chalk streams, including by restricting farming and fishing. Any planning for housing developments that would have even a minor impact on the water quality of chalk streams would be restricted without impractical and disproportionately costly mitigation measures. The new clause would place achieving that demanding objective on water companies only, as the hon. Member for Broadland and Fakenham highlighted, regardless of the pressures that are actually impacting chalk streams. This would not allow for the consideration of technical feasibility or costs, which would ultimately be borne by water bill payers. The new clause would necessitate amendments to the water environment regulations and habitat regulations, creating complexity and difficult delivery implications.
Jerome Mayhew
I would like the Minister’s comments on the issue that we have, and I am focusing primarily on the Norfolk broads, of which I represent a good chunk. There is the requirement to make a mandatory obligation on the water undertaker to ensure “high ecological status”, which is above “good ecological status”—that is the point the Minister is making. Does she agree that, while they are a primary input into the quality of the water in the Norfolk broads, they are not the only influencer? While the intention to create and encourage high ecological status in the broads is a very good one, and it is one that I share, does the Minister agree that the drafting of this new clause is not appropriate?
Emma Hardy
The hon. Gentleman is right to highlight that the pollution caused in the Norfolk broads and in many other areas does not come from water companies alone. As has been discussed, it comes from the environment, road run-off and various other places. “High ecological status”, as we have stated, could involve not being able to fish in those waters at all, which I know is a recreational activity in his area. It may also restrict planning for housing developments with any minor effects on the water quality of water bodies in national parks. The Government therefore cannot accept either new clause, although I recognise the intention behind them. I hope that the hon. Gentleman feels able not to press both.
Tim Farron
In short, I am happy not to push new clause 12 to a vote now, nor will I seek to push new clause 27 to a vote when we get to that stage. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 13
Guidance on poly- and perfluorinated alkyl substances
“After section 86ZA of the Water Industry Act 1991, insert—
‘86ZB Guidance on poly- and perfluorinated alkyl substances
(1) The Secretary of State must by regulations made by statutory instrument make provision for the regulation of poly- and perfluorinated alkyl substances in drinking water based on guidance issued by the Drinking Water Inspectorate.
(2) Until the Secretary of State makes provision for the regulation of poly- and perfluorinated alkyl substances, water and sewerage companies must implement any relevant guidance issued by the Drinking Water Inspectorate.
(3) 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.’”—(Tim Farron.)
This new clause would require the Secretary of State to make regulations relating to the presence of poly- and perfluorinated alkyl substances in drinking water based on guidance issued by the Drinking Water Inspectorate, and require water companies to follow the Inspectorate’s guidance in the interim.
Brought up, and read the First time.
Tim Farron
I beg to move, That the clause be read a Second time.
New clauses 13 and 14 are connected, so with the Chair’s permission, I might speak to both of them.
Tim Farron
Thank you—I do not want to detain the Committee any longer than I need to. The new clauses are about a vexing and serious issue: the presence of polyfluorinated and perfluorinated alkyl substances in our waterways and in our drinking water, in particular. I pay tribute to my hon. Friend the Member for Twickenham (Munira Wilson) for championing this issue in this place and outside it.
The new clause attempts to raise the existing guidance from the Drinking Water Inspectorate on PFAS levels in drinking water to a statutory level; that is the key point. The Bill seeks to increase regulatory power over water companies, and the new clause will increase the Drinking Water Inspectorate’s power to enforce the guidance regarding PFAS. There is currently no legal limit on the amount of PFAS present in our drinking water. There is only guidance, even though the Environment Agency and the Health and Safety Executive have both recommended that there should be a legal limit.
New clause 13 would require water companies to prioritise and take a proactive stance on limiting PFAS in drinking water. Currently, if a water company were to breach PFAS guidance, its regulatory compliance score would not be affected as it would if, for example, lead was found in its water. This would encourage them to invest in treating water to remove PFAS. This is an important first step in prompting the Government to create a fully-fledged chemical strategy to deal with chemical pollutions of all kinds, starting with the most direct threat to human health, which is the direct consumption of PFAS through drinking water. PFAS are toxic, they are forever and they are very pervasive. Links have been found between PFAS chemicals and a host of health issues, such as, but not limited to, cancer, thyroid disease, fertility issues, lowered birth weight, weakened bones in children and immune resistance to vaccinations.
New clause 14 would put the duty on the water companies to take responsibility for the reduction and prevention of PFAS chemicals in water systems, ensuring that each water company is responsible.
Emma Hardy
I thank the hon. Member for proposing new clauses 13 and 14 on this incredibly important issue, and for highlighting the importance of PFAS monitoring. I want to reassure everybody that the quality of drinking water in England is exceptionally high and among the best in the world. It is important to me that it remains that way.
Across Government, we are working to assess PFAS levels occurring in the environment, as well as their sources and potential risks, to inform future policy and regulatory approaches, safeguard the current high drinking water quality and ensure our regulations remain fit for purpose. Water companies have a statutory obligation under the Water Supply (Water Quality) Regulations 2016 to carry out risk assessments to identify anything that could pose a risk to health or cause the water supplier to be unwholesome. That includes the risk of PFAS.
I will explain which PFAS are tested for in drinking water. The Drinking Water Inspectorate issued a series of information letters to water companies to set out a risk-assessment methodology and associated monitoring strategies for up to 48 individual PFAS compounds. The guideline values of PFOS, or perfluorooctane sulfonic acid, and PFOA, or perfluorooctanoic acid, are agreed with the UK Health Security Agency, and have been applied to 48 individual PFAS. The DWI guidance will be reviewed and updated where necessary.
The Drinking Water Inspectorate has provided guidance on PFAS to water companies since 2007 and, as I explained, that is regularly updated as new research emerges. In July 2024, DEFRA announced a rapid review of the environmental improvement plan to deliver on our legally binding targets to save nature. That includes how best to manage chemicals, including the risks posed by PFAS, and we are working closely with the DWI on all matters, including PFAS.
I reassure the hon. Member for Westmorland and Lonsdale that the Water Industry Act 1991 already provides the necessary powers to amend existing regulations to deal expressly with PFAS, should the Government wish to do so. I will have a meeting with his hon. Friend, the hon. Member for Twickenham (Munira Wilson), on this issue. I hope that the hon. Gentleman is reassured that this new clause is not suitable for the Bill, so I ask him to withdraw it.
New clause 14 focuses on chemical contaminants entering our waterways. I agree with the hon. Member for Westmorland and Lonsdale about the importance of the issue, which is why, as I announced, we will have the rapid review of the environmental improvement plan to deliver on our targets to restore nature. That includes looking carefully at the risks posed by PFAS. The review will consider and set out effective measures to mitigate harmful chemical substances entering our water through the environment. Through the chemical investigations programme, we are working with the water industry to understand how levels of contaminants in treated waste water affect our water environment. The programme will provide valuable information to understand the effectiveness of different measures to tackle chemical contamination of our rivers.
Significant costs are associated with end-of-pipe technologies at sewage treatment works to manage the more challenging chemicals, such as PFAS. We therefore need to prevent contaminants entering the water system in the first place, before they get to the waste water treatment works, where the cost for treatment will be unfairly borne by water customers, rather than the polluters. Work continues across Government to help us to assess the levels of PFAS occurring in the environment, their sources and the potential risks, so that those can inform future policy and regulatory approaches to safeguard our high drinking water quality and to ensure that regulations remain fit for purpose.
The DWI expects water companies to plan to reduce PFAS concentrations in treated water progressively by implementing a reactive and systematic risk-reduction strategy. That is why we need to need to prevent them entering the water in the first place. I hope that the hon. Member is reassured by the actions that we are taking and will not press new clause 14.
Tim Farron
I am substantially reassured that the Minister is taking this issue seriously, and I am grateful that she is to meet my hon. Friend the Member for Twickenham, who has championed it so well. All the same, while I do not agree, I accept the Minister’s point about the way in which we are doing this—which, I guess, is contained in new clause 14, so I will not press that to a vote—but new clause 13 simply says what the Health and Safety Executive and the Environment Agency are already saying, which is that those chemicals are deeply dangerous and that the restrictions on them should therefore be moved from guidance to a statutory level. That ought to be a no-brainer, so we will press that new clause to a vote.
Question put, That the clause be read a Second time.
Tim Farron
I beg to move, That the clause be read a Second time.
I will try to be brief, I promise. The new clause is based on the fact that we seriously approve of the Government’s approach to monitoring. We want the regulatory bodies to be well equipped and resourced to be able to hold water companies and other potential polluters to account. But the Government have made a clear decision, of which I totally approve, to lionise and put front and centre citizen science and voluntary groups around the country—groups such as Windrush Against Sewage Pollution, Save Windermere in my constituency, the Clean River Kent group and the Rivers Trusts in Eden and South Lakeland. These are wonderful people, pretty much all of them acting in a voluntary capacity. The groups contain lots of incredibly clever, bright people who are passionate about our environment.
The Government are doing something we approve of by seeking to deploy and mobilise people in their communities. The new clause is about trying to make sure that we equip them, underpin what they do and provide resource to support them, and that the Government use some resource to proactively look to fill in the gaps. We are simply saying that we approve of the mobilisation of citizen science across the country to hold water companies to account through use of the real-time database and a variety of other tools. But if we are going to rely on a group of people, let us support them. We will seek to push this to a vote, because we think it is a central part of what the Bill should aim to achieve.
Emma Hardy
I thank the hon. Gentleman for tabling new clause 15. We fully support greater involvement of citizen science to hold water companies to account. I thank them for all the work that they have done in this area up and down our country. Local people know their rivers best, and their campaigns on pollution issues have been crucial in bringing the scale of the issues to light.
The Bill already includes several amendments to support transparency to make it easier to scrutinise water companies. Clause 2 will enable the public to scrutinise the measures that water companies are taking to reduce pollution incidents. Clause 3 will make information on discharges from emergency overflows available in near real time. This data, in addition to the near real-time information already available on storm overflow discharges, will be provided in a way that will enable citizens to identify trends and key issues. That will supplement the significant information that the Environment Agency already publishes.
The Environment Agency also operates a 24-hour environmental incident hotline to enable the public to report incidents that they observe in their local area. The Environment Agency shares the enthusiasm and values the expertise and local knowledge of citizen scientists. It has recently funded an internal project supporting citizen science, which will run until March 2025.
I welcome the hon. Gentleman’s approval of the Government’s work on this issue. The question is whether we require primary legislation to continue doing something we are already doing successfully. This project, along with many others that are being supported by the Government or the Environment Agency, is considering how to facilitate better engagement with citizen scientists. The Government believe that the existing measures are more effective for supporting citizen science than creating a fixed legislative duty on the Secretary of State. We are already doing work in this area, so we will not support the new clause.
Tim Farron
I am grateful for the Minister’s remarks, but we think that seeking to mobilise thousands of people around the country is so central to the ethos of the Bill that we should also seek to resource them and proactively seek to fill in the gaps, where they exist, so that every community has this level of scrutiny. We will press the new clause to a vote.
Question put, That the clause be read a Second time.
Tim Farron
I beg to move, That the clause be read a Second time.
Water bill poverty is a reality, and many people will require greater water use because of disability, age or health conditions. Although WaterSure benefits exist, they are patchy and are something of a postcode lottery. Which benefits a person may receive under WaterSure depends on supplier and catchment, and whether someone qualifies depends on which water company they get water from. That is not right. There should be a single social tariff that is applicable and understandable for everyone. A postcode lottery should not dictate whether a person gets the support they may need, and which water company someone lives under should not dictate whether they can afford their bills.
Some water companies require three or four pieces of evidence and some just a quick assessment of finances, and the savings range from 15% to 90% off a bill. We would bring that under one simple tariff. We have certainly heard Government Members regularly talk about the value and importance of such a measure, and we simply want to put it on the face of the Bill. A unified and universal social tariff is about basic social justice. It would help those people for whom paying water bills is most difficult, for a variety of reasons—health and disability reasons, as well as financial ones. This is something that the Government should accept, or else we will seek to press it to a vote.
Emma Hardy
I thank the hon. Member for tabling new clause 17. It is clear that consumers are concerned about their bills, and this Government want to do everything they can to help and support people who are struggling, particularly given that water bills are due to rise following Ofwat’s final determinations. Although this Government do not consider it suitable to adopt the new clause at this time, we will continue to consider all measures available to best support vulnerable customers, and we are exploring options to improve social tariff arrangements and improve fairness and consistency in who is eligible for support and in the levels of assistance provided.
There are already customer assistance schemes in place. WaterSure caps water and sewerage bills for vulnerable customers who have the higher essential water use requirement for family or health reasons. Under the scheme, £66 million of support was provided to 230,000 households in ’23-24, with an average bill discount of £286. That sits alongside debt measures, water efficiency measures and company social tariffs, which are all targeted at supporting customers who are struggling to pay. Company social tariffs, which water companies design themselves and offer to customers who are struggling to afford their water bills, are forecast to provide an average of £640 million a year in support between 2025 and 2030.
Prior to the introduction of any new support scheme, in-depth research and analysis must be completed to ensure a properly designed policy. Therefore, the Government are continuing to work with the water industry to explore options to improve affordability arrangements, including by holding the sector accountable for its public commitment to end water poverty by 2030. For that reason, I ask the hon. Member for Westmorland and Lonsdale to withdraw new clause 17.
Tim Farron
In-depth analysis is not going to tell us anything other than that there is massive inconsistency across the country. Of course, WaterSure provides benefits, but it is different depending on where someone lives. The benefits received by someone living in a Yorkshire Water area, United Utilities or Northumbrian Water area will differ, as will the qualifying criteria. That means that some people in poverty, and some people with serious disabilities or health needs, who therefore have higher water usage requirements, will be hit by higher bills simply because of the lack of a single social tariff. We think that the new clause is important to ensuring social justice and helping those most in need in our communities, and therefore that it is very important to put it to the vote.
Question put, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 23—Ofwat to publish guidance on debt levels after administration—
“In section 2 of the Water Industry Act 1991, after subsection (2D) insert—
‘(2DZA) For the purposes of ensuring that relevant undertakers are able to finance the proper carrying out of their functions under subsection (2A)(c), the Authority must establish guidelines to be followed by relevant undertakers who have been in special administration.
(2DZB) Guidelines produced under subsection (2DZA) must—
(a) set out a maximum level of debt which can be accrued by the undertaker;
(b) set out a process for agreeing capital expenditure necessary for service improvements, bill increases, and changes to operating costs while the undertaker is subject to the Special Administration Regime;
(c) state the penalties which will be imposed for breaches of such guidelines, which may include –
(i) financial penalties;
(ii) prohibitions on the payment of dividends or other bonuses; or
(iii) such other special measures as the Authority deems appropriate.’”
Charlie Maynard
I will speak first to new clause 19, which has three parts. Proposed new section (2DZA), which I will cover very quickly, essentially ensures the financial stability of water or sewerage undertakers. I think we discussed that at length in the debate on new clause 4, which I will not rehash, as I think we all know each other’s views.
Proposed new section (2DZB) has two subsections, (a) and (b). Subsection (a) is
“a prohibition on water or sewerage undertakers having offshore holding companies”.
Why would a UK-regulated water company need an offshore holding company? Maybe to dodge some tax? Maybe to make it as untransparent as possible? I would like a straight answer as to why we are not going to kill this possibility off today. Do we really need to push this out another six, maybe 12 or maybe 24 months—until maybe never—with the water commission? I do not know. I think each of us could just find our way to saying that offshore holding companies are not good for our rivers, our citizens or our country. I really hope we get there.
It is getting a bit late, but there is something I would really like Members to engage their brains on. It is a difficult and complicated subject, but it is the key to understanding what is going wrong with our water companies. It is called regulated capital value. What is in proposed new section (2DZB)(b)? It would introduce
“a requirement that the Regulated Capital Value for each undertaker is annually reconciled against the market values of the undertaker’s equity and debt.”
What on earth is regulated capital value? The key thing to remember is that it decides how much money the water companies make, so a higher regulated capital value is good for water companies.
The bizarre thing is that regulated capital value has not really been a proxy for enterprise value, which basically means the equity value of the company—what the shareholders’ value of the company is worth—plus the net debt. That was set up—this is really one of the original sins—back in the mists of time, around 1989 and beyond, when the companies were originally privatised. It has been carried forward every year: “Take last year’s, and add a bit for inflation and a bit for capex. Never, never, never reconcile it with reality.” That is what has gone on for decades.
Now we have this thing called regulated capital value, which is the critical thing the water utility companies are focused on: “This is how we make money, so we want this number as big as possible.” What we are advocating here is taking that apart, because of the reality on the ground. I will take Thames Water as my usual guinea pig. Many, many of Thames Water’s equity shareholders have declared that their holding in Thames Water has no value. That includes OMERS—the Ontario Municipal Employees Retirement System—and the UK’s Universities Superannuation Scheme, and I think the Abu Dhabi Investment Authority may have done it as well. They have said, “Our equity is toast. It’s written off.”
The debt is not that hard to calculate either, because people can just look at what Thames Water is trading at; these are bonds, and people can see what discounts they are trading at. People can add that up, and they have a number that is much, much smaller than the regulated capital value of Thames Water today. But if it is a water company or Ofwat, they say, “Let’s just put a big pair of mufflers on and ignore that fact,” because it is safer to be in fantasyland.
Jerome Mayhew
This is a genuinely interesting point. I know it is late, but I would be grateful if the hon. Member could expand in further detail. While he is referencing regulated capital value and the difference between what is on the sheet and what is reality, could he explain in a bit more detail, for the benefit of the Committee, what that means in reality? If there were to be a rebase of regulated capital value, what would be the practical impact of that?
Charlie Maynard
I question what value regulated capital value, given how completely out of whack it is with reality, is bringing to the table. I do not have all the answers, but I question whether this has any utility to the conversation. What is happening here is that a business is generating £1.2 billion of cash flows, and it has this enormous balance sheet and this enormous regulated capital value. Because of those essentially false premises—I believe that we do not actually have assets of that value—regulated capital value is essentially a figment. We are grappling with things that have no basis, and we would do well to reconcile and to look at the facts—at what these assets are actually worth—and then to build out from there.
Jerome Mayhew
One possible reason why regulated capital value is important is that the assessment of whether bills are reasonable or not relates—in part, at least—to what is considered to be a reasonable return on capital. Does the hon. Member agree that if one’s regulated capital value has depreciated to zero, there might be an adverse knock-on impact on what is considered a reasonable bill, to take account of the debt and the capital investment? Does he think that that might be something to do with it?
Charlie Maynard
The whole thing is reverse engineered—I am completely in agreement on that—and that is not necessary or useful in terms of where we are getting to, and that is causing a lot of the trouble. I would like to find a way out of that, and I would really recommend that the water commission digs into this to find a way out. I am on the Business and Trade Committee and I will be asking the Financial Reporting Council, which oversees the accounting body, to ask these accounting firms whether they actually think those numbers—those incredibly slow depreciation periods of 150 years—are valid and, if so, why.
Jerome Mayhew
I am grateful to the hon. Member for allowing me another intervention, this time on proposed new subsection (2DZB)(a), which refers to
“a prohibition on water or sewerage undertakers having offshore holding companies”.
He referenced some of the international investors who have holdings in Thames Water, and perhaps in the majority of the other water companies. Access to international markets is very important for raising investment into our water utilities. Does he accept that using offshore holding companies might be a mechanism that allows for easier transfer of funds, easier investment and easier access to international finance, and may therefore have a benign rationale? We always assume that offshore holding companies are somehow suspicious, or that their motivation is tax avoidance, and I believe that the hon. Member referenced that earlier. That might be the case—in which case, they should not be encouraged—but with his 25 years’ experience in finance, which he referenced, does he think that there is an argument for saying that offshore holding companies make it easier to access international investment?
Charlie Maynard
I have the name of one here: Thames Water Utilities Cayman Finance Holdings Ltd. Why Cayman? If I say “Cayman”, people say “tax haven”. That is why it is there. We should be doing our best to stop that. Last I looked, London was still a financial capital, and equity and debt could still be raised in this country, and I sincerely hope that remains the case. So I do not see a good reason to have holding companies offshore. Hon. Members might be happy to hear that that was all I wanted to say on new clause 19.
New clause 23 is also being considered in this tranche, and I will highlight proposed new subsection (2DZB)(b), which refers to
“a process for agreeing capital expenditure necessary for service improvements, bill increases, and changes to operating costs while the undertaker is subject to the Special Administration Regime”.
We have to spend a huge amount of money on our water utility companies, because they have not been spending enough over the last decade or two. When a special administrator is appointed in such instances, the goal is to ensure that the special administrator takes that future spend into account in considering how much debt needs to be cut. We do not want to come out of special administration with debt that is still high, which will prevent the investments from being made that will be required over the next. That is the goal of the new clause.
Emma Hardy
I thank the hon. Member for Westmorland and Lonsdale for the intent behind new clause 19. As highlighted, it seems in parts to contradict new clause 18, which was also tabled in his name.
It is important to highlight that Ofwat already has a core duty under section 2 of the Water Industry Act 1991 to ensure that water companies are able to finance the proper carrying out of their statutory obligations. Ofwat already monitors information it receives about companies and their financial positions on an ongoing basis. That includes carrying out a detailed review of the financial information published by companies in annual performance reports, statutory accounts, interim accounts, investor reports and other sources. Ofwat also directly engages with companies where it sees an increased level of risk. Additionally, Ofwat has recently updated water company licences to require companies to take account of service delivery for customers and the environment, as well as financial resilience when deciding whether to pay a dividend.
More broadly, the independent commission into the water industry will look at long-term, wider reform of the water sector, as I have mentioned. Company financial structures are one of a number of areas that could be explored under the commission, and we do not want to pre-empt the outcome of the commission through this new clause. The former deputy governor of the Bank of England, Sir Jon Cunliffe, chairs the commission. As mentioned, he has decades of financial, investor and regulatory experience. His appointment demonstrates the Government’s ambition to fix the foundations of the industry. As I have mentioned previously, there will be a call for evidence, and the hon. Member will be able to make his points to Sir Jon Cunliffe and the commission. Given the existing monitoring of the financial resilience of the sector and the forthcoming recommendations of the independent commission, we do not believe that the new clause is appropriate, and I ask the hon. Member to withdraw it.
Turning to new clause 23, which was also tabled by the hon. Member for Westmorland and Lonsdale, a special administration regime enables a company that provides vital public services—water, energy or rail—to be put into administration in certain circumstances to ensure that the public service will continue to be provided pending rescue, via a means such as debt restructuring or transfer, via a sale, to new owners. There is no need for a company exiting a SAR to be placed under an enhanced regime regarding its debt levels. Water companies are allowed to raise debt to fund the delivery of their services, and it is for companies to decide their financial structures. I will resist the urge to repeat my previous comments about the water commission looking at the financial structures of all the water companies, and I hope the hon. Member will take what I outlined previously as read.
In relation to capital expenditure during a SAR, it is not necessary to establish a statutory process for agreeing that expenditure, as that would be agreed under a court-appointed special administrator in the lead-up to a SAR. The Government can provide funding support to a special administrator. Any company under a SAR will still be subjected to the same regulatory regime and expected to meet its statutory obligations.
I hope the hon. Member understands why we cannot accept his new clauses, but I repeat the offer made: he will be able to talk to Sir Jon Cunliffe and present to him the evidence he has just presented to the Committee, so that he can consider it as part of the wider evidence gathering. I therefore ask the hon. Member not to press his new clauses.
Charlie Maynard
It is very kind of the Minister to have so much faith in, and be so charitable towards, Ofwat, given its record over the last decade or two, particularly with regard to its management of water companies’ financials. We will not press new clause 23, but would like to call a vote on new clause 19.
Question put, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 29—Ofwat consideration of pollution targets for price reviews—
“(1) The Water Industry Act 2011 is amended as follows.
(2) After section 17I insert—
‘17IA Duty to have regard to pollution targets in carrying out price reviews
When carrying out a periodic review for the purpose of setting a Price Control in respect of one or more relevant undertakers, the Authority must have regard to the performance of the relevant undertaker or undertakers against pollution targets across the previous five years.’”
Charlie Maynard
I will be brief. We just want to highlight the five-year price review and the shoehorning in of that time period. It might have worked for Lenin—maybe not—but we do not think it works well in the water sector, so we want to see whether we can release ourselves from it. We will come to new clause 35 later, but in certain situations we will all be better off if we look over a longer time period. We have some really big problems and we need to think about reducing them not just over the next five years, but over a 10 or 15-year period. We need to work towards some really big fixes over a longer period. If we are always locked into these five-year cycles, we are not serving ourselves well. That is the point of new clause 21.
New clause 29 states that
“the Authority must have regard to the performance of the relevant undertaker or undertakers against pollution targets across the previous five years.”
At the moment, how companies do is not very well linked to their reward. Most of the time, with water companies, everybody is thinking about sticks—I certainly am—but we ought to think a little about carrots as well. Let us say that ultimately we do good things such as setting pollution reduction targets. If companies beat those targets, we should work towards a solution whereby they do well out of that. They could have a carrot as a reward for doing well, as opposed to endlessly being given the stick. That is the point of new clause 29. We will not push either new clause to a vote.
Emma Hardy
I thank the hon. Members for Witney and for Westmorland and Lonsdale for the intention behind their new clauses. The water sector is facing multiple challenges and growing pressures. Resolving them will require transformational change.
The Government agree that it is crucial to conduct a fundamental review of the water industry regulatory system. We want to ensure that we have a system that supports strategic planning and investment, with fairness to customers and environmental improvement at its core. I reassure the hon. Member for Witney that such a review is already under way—I might have mentioned this once or twice before—through the independent commission, led by Sir Jon Cunliffe. That comprehensive review is addressing the three elements that the new clause raises: planning, financing and investment. It is taking a holistic approach to assessing the system, and it will make recommendations to ensure that the water sector is better equipped to ensure clean rivers, lakes and seas and a sustainable water supply for the future.
The commission will report to the Government by the second quarter of 2025, ahead of the timeframe recommended in the new clause. I trust that the hon. Member for Witney is reassured that the requirements of the new clause are already being addressed through the work of the independent commission.
On new clause 29, which was also tabled by the hon. Members for Westmorland and Lonsdale and for Witney, I reassure them that the Government are fully aware of the scale of damage that pollution is causing to our waterways. We are committed to working with the water industry regulators to address that.
As a regulator, Ofwat has a range of primary duties, including ensuring that companies properly carry out their functions and can finance the delivery of their statutory obligations, including environmental obligations. Ofwat sets the total spending envelope for companies through its price review process and it reviews company business plans to ensure compliance with statutory obligations. I am pleased to inform the Committee that Ofwat published its final determinations for the 2024 price review on 19 December, which included confirmation of £104 billion-worth of expenditure over the next five years. That is the highest level of investment in the water sector since privatisation and will fund reducing the number of spills from storm overflows by 45% through upgrading 2,800 storm overflows.
In addition, companies will improve river water quality by improving more than 1,700 waste water treatment works. Furthermore, Ofwat has increased the number of outcome delivery incentives against which companies must deliver, including targets on reducing serious pollution incidents, such as a reduction in storm overflows and operational greenhouse gas emissions. That means that serious pollution incidents will lead to clear and robust financial penalties for companies. I trust that the hon. Member for Witney is reassured that his new clause is not required, as pollution targets are already closely factored into the current price review model, and I ask him not to press it.
Charlie Maynard
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 22
Prohibition on bail-out of water company shareholders and creditors
“(1) The Secretary of State and His Majesty’s Treasury must not directly or indirectly discharge, assume, or guarantee any debts of legal entities in any water company group subject to proceedings under section 24 of the Water Industry Act 1991 (special administration orders made on special petitions), except in accordance with subsection (2).
(2) The special administrator of a water company may reduce the debts owed by the regulated entity to its creditors by up to 100 per cent, taking into account the future forecast expenditure over the short, medium and long term and subject to the administrator’s confidence in the company’s ability to accommodate this spending.
(3) The prohibition set out in subsection (1) and the reduction of debts set out in subsection (2) must not include pension, wage and other obligations owed to employees, excluding any past or current member of a board of directors, within the water company group.”—(Charlie Maynard.)
This new clause aims to allow up to 100% of debts to be cancelled in the event of special administration proceedings, taking into account the scale of investment required to hit the future targets established by the Authority.
Brought up, and read the First time.
Charlie Maynard
I beg to move, That the clause be read a Second time.
We have covered this already, so I will be brief. I highlight subsection (2):
“The special administrator of a water company may reduce the debts owed by the regulated entity to its creditors by up to 100 per cent, taking into account the future forecast expenditure over the short, medium and long term and subject to the administrator’s confidence in the company’s ability to accommodate this spending.”
We have already discussed this. I am not going to go through it further, and I am not going to push it to a vote, so I will leave it at that.
Emma Hardy
I thank the hon. Members for Westmorland and Lonsdale and for Witney for tabling new clause 22. As the hon. Member for Witney says, we have already had a debate on this issue. I hoped that we had made the situation quite clear about what the special administration regime is and what it is not, but here we go again.
I must reject the new clause, because it would jeopardise the main purpose of the water special administration regime: the continued provision of vital public services. The role of a special administrator does not include a power to cancel debt, and the purpose of the administration is not to bail out water company creditors or shareholders. The new clause is therefore unnecessary. It would divert from long-established insolvency principles of treating creditors equally according to their rights as commercial entities. When a water company enters special administration, creditors are unable to enforce their debt repayments unless they seek leave of the court or receive permission from the special administrator. When a water company exits from special administration either by rescue, such as debt restructuring, or by transfer, such as a sale, the special administrator determines the level of repayment to credits. That will be calculated according to the statutory order of priority.
It is very unlikely that all debt would be repaid at the end of a special administration, because of the order in which payments are required to be made. Debts can be cancelled only according to a restructuring plan or under court supervision. The Government do not directly or indirectly make any decisions relating to the exact quantity of debt recouped by creditors or equity recouped by shareholders.
I must reject the new clause, because the changes that we are making align the water industry special administration regime with regimes in other sectors. We do not intend to alter the regime’s relationship with the existing framework of insolvency legislation.
Charlie Maynard
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 26
Rules about performance-related pay
“(1) The Water Industry Act 1991 is amended as follows.
(2) After section 35D (inserted by section 1 of this Act) insert—
‘35E Rules about performance-related pay
(1) The Authority must issue rules prohibiting a relevant undertaker from giving to persons holding senior roles performance-related pay in respect of any financial year in which the undertaker has failed to prevent all sewage discharges, spills, or leaks.
(2) The rules issued under subsection (1) must include—
(a) provision designed to secure that performance-related pay which, if given by a relevant undertaker, would contravene the pay prohibition on the part of the undertaker, is not given by another person;
(b) that any provision of an agreement (whether made before or after the issuing of the rules) is void to the extent that it contravenes the pay prohibition;
(c) provision for a relevant undertaker to recover any payment made, or other property transferred, in breach of the pay prohibition.
(3) For the purposes of subsection (1)—
(a) “performance-related pay” means any payment, consideration or other benefit (including pension benefit) the giving of which results from the meeting of any targets or performance standards on the part of the relevant undertaker or the person to whom such payment, consideration or benefit is given;
(b) a person holds a “senior role” with a relevant undertaker if the person—
(i) is a chief executive of the undertaker,
(ii) is a director of the undertaker, or
(iii) holds such other description of role with the undertaker as may be specified.’”—(Tim Farron.)
This new clause creates a new section in the Water Industry Act 1991 to require Ofwat to ban bonuses for water company bosses if they fail to prevent sewage discharges, spills, or leaks.
Brought up, and read the First time.
Tim Farron
I beg to move, That the clause be read a Second time.
I do not really want to press this new clause to a vote, but we tabled it because my noble Friend Lady Bakewell withdrew it in the Lords after being given assurances by the noble Baroness, Lady Hayman, for whom I have enormous respect and of whom I think very highly. It seeks to ban bonuses for senior company executives who have been found guilty of a category 1 or 2 discharge. It would prevent any loopholes such as pay rises and share options that might enable bonuses to be paid under those circumstances.
From the Dispatch Box in the other place, Baroness Hayman said:
“However, we are very aware that water companies need to attract investment so, as outlined in Ofwat’s consultation, the circumstances under which performance-related pay bans are being proposed represent very serious failures by a company. I reassure the noble Baroness, Lady Bakewell of Hardington Mandeville, that this includes instances of criminal convictions, credit ratings falling below investment grade and Ofwat’s proposed metric for bonuses to be prohibited if a company has had a serious category 1 or 2 pollution incident in the preceding calendar year…I would like to be clear with all noble Lords that we are not asking companies to meet any higher or new standard than that which is already expected of them.”—[Official Report, House of Lords, 20 November 2024; Vol. 841, c. 247.]
We were grateful for that assurance, but nothing of that sort has appeared in the Bill since. Will the Minister give me some reassurance as to why we should not press the new clause to a vote? I do not see anything in writing that gives us confidence, other than the words of the noble Baroness.
Emma Hardy
I thank the hon. Gentleman for tabling new clause 26. The Government agree that we need to rebuild trust in the water sector and that executives should be firmly held to account for companies’ serious failures to meet environmental standards. That is why clause 1 will give Ofwat new powers to issue rules on remuneration and governance. The legislation requires Ofwat to set rules that make the payment of bonuses contingent on companies achieving high environmental standards. It is more appropriate for Ofwat, as the independent regulator, to determine the performance metrics to be applied when setting the rules for performance-related pay.
As outlined in the initial policy consultation, Ofwat is currently considering prohibiting bonuses where companies have had a serious category 1 or 2 pollution incident in the preceding calendar year. That is not on the face of the Bill, but it is very clearly in Ofwat’s consultation. It is looking to consult on prohibiting bonuses after a category 1 or 2 pollution incident, as my noble Friend outlined. That provides an early indication of the direction of travel on the environment metric.
Ofwat would be able to use its direction-giving power and wider enforcement framework to hold companies to account where it has reason to believe that they are in breach of the rules. However, banning bonuses, even in cases of unwanted but legal spills, would effectively ban bonuses for all companies. That could unnecessarily threaten the sector’s ability to attract and retain talent. I refer the hon. Member for Westmorland and Lonsdale to the consultation that Ofwat has launched so that he can see for himself the pollution metric that I have mentioned. On that basis, I hope that he feels able to withdraw new clause 26.
Tim Farron
I am reassured to a large degree by what the Minister says, but I am concerned that it is not on the face of the Bill. Simply handing this over to Ofwat, given its track record, does not fill me with confidence. We will reserve our position on this one—we may potentially talk about it further on Report—but we will not press new clause 26 to a vote. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Ordered, That further consideration be now adjourned. —(Jeff Smith.)