Professional Qualifications Bill [HL]

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Monday 14th June 2021 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank all noble Lords for participating in this short debate, and I thank the noble Baroness, Lady Hayter, for the amendment and the noble Baroness, Lady Blake, for presenting it so ably. I welcome the opportunity to consider the important issue of mutual recognition of statutory audit qualifications in the UK and the audit qualifications in other jurisdictions.

The Companies Act 2006 provides that these may be agreed on a reciprocal basis by the Financial Reporting Council—FRC—on behalf of the UK Secretary of State, with the competent authority of an overseas jurisdiction. Amendment 34 would give the FRC the discretion to relax the standards of compliance that overseas qualifications must meet before they can be recognised in the UK. It would not compel the FRC to relax those standards but would enable it to do so where it considers this appropriate as part of a reciprocal agreement.

The UK’s audit sector is highly respected and valued both domestically and across the world. The Government are currently consulting on the White Paper Restoring Trust in Audit and Corporate Governance. These reforms are needed because there have been a number of examples of poor practice and poor standards in UK corporate audit that have risked the UK’s reputation as a safe and trusted place to do business—a number of noble Lords, including the noble Lord, Lord Palmer, have just mentioned this. We therefore need to be careful when considering the framework to allow individuals to undertake statutory audit in the UK to ensure that it is robust and maintains the UK’s high standards and reputation.

While this amendment would only provide the ability for the regulator to apply looser requirements to recognising other nations’ qualifications, it would open the door to concerns of loosening standards and reduced oversight. It would also expose the regulator to pressures to use the flexibilities provided in cases where this might not be in the best interest of the UK profession or its clients. The statutory audit profession in the UK has a comparatively strong reputation internationally for the standards that it maintains. The Government are working hard to maintain this reputation, and we would not wish either the UK’s standards or its reputation to be devalued.

The Government acknowledge that an essential part of maintaining our standards and reputation internationally is to seek to influence developments in corporate reporting and audit by building links to other regulators that are prepared to uphold comparable standards. The ability for UK auditors and those with comparable qualifications overseas to exchange and transfer experience is an important part of this.

The noble Baroness, Lady Blake, asked why the audit reform was not included in the Queen’s Speech. The reform of audit and corporate governance is a priority for Ministers. We have promised to legislate on an appropriate timetable, and the Government do not intend to add new requirements at a time when they would hold back businesses’ recovery from the pandemic. By the time of presenting proposals to Parliament, the Government want to be confident that they are effective and command broad support. Consultation on the Government’s White Paper is open until 8 July, and Ministers look forward to contributing to the BEIS Select Committee’s inquiry into the delivery of audit reform.

I believe that the regulator can already make agreements with international counterparts to this end, so I ask the noble Baroness to withdraw her amendment.

[The Deputy Chairman of Committees (Baroness Barker) (LD)]

I have received a message from the noble Baroness, Lady Noakes, who wishes to speak.

[Baroness Noakes (Con)]

Could my noble friend the Minister explain why, in Clause 1, which we know will be applied largely to the medical professions—we are therefore dealing with patient safety—it is adequate for medical professions if

“a specified regulator of the specified regulated profession has made a determination that the overseas qualifications … demonstrate substantially the same knowledge and skills”,

but, somehow, a different standard is implied when the much more mundane activity of auditing is involved? I do not quite understand how the Minister can have one view of the medical professions and another of what happens in the accounting profession. Can she explain that contradiction?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I do not agree that that is a contradiction. This would have the effect of weakening the standards in audit reform, which we are keen to prevent—so I do not agree with the premise of my noble friend’s question.

[Baroness Blake of Leeds (Lab)]

I thank the Minister for her full response. I particularly thank the noble Baroness, Lady Noakes, for reminding me of the many hours of excitement that I have ahead of me in this place and thank her for her suggested wording. I also welcome the reminder from the noble Lord, Lord Palmer, of the shortcomings in this particular area.

We keep mentioning the word “assuage”, which I do not think I have ever come across quite so much in my life before. I looked up “assuage” and it referred to the easing of grief. I am not sure that my particular grief in this area has been eased by this. There is a great deal in the answers that we will look at. I am sure we will revisit this very important, if technical, area in the meetings ahead, and I beg leave to withdraw the amendment.

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[Baroness Hayter of Kentish Town (Lab)]

My Lords, while I absolutely agree with my noble friend Lord Foulkes that any advice would be better if it was comprehensive and included all the things that everyone would want to know if they were applying either to move here or to go away, the more fundamental question, which I and the noble Baroness, Lady Noakes, asked, is whether we need Clause 7 at all. As she and others have said, it is not clear why it is necessary to establish a statutory advice centre simply to handle information and provide advice and assistance. It will not make any decisions. It will not have the authority to chide regulators for not doing something; it does not have any authority over them. The statutory requirement is actually on regulators to provide advice to the centre—there is no statutory requirement on the centre to fine them if they do not do it or anything else like that—although, as has been said, there are already other ways of getting that information. In addition, only the UK Government, not the other Governments in the Bill, interestingly enough, are able to enforce this requirement. I do not know whether that is an oversight but, given that there is more than one national authority in the Bill, it would be interesting to know why the requirement on regulators is laid down only by the UK Government.

This is all very strange. It is a very clunky and convoluted way of simply asking statutory regulators to tell a Minister such information as is needed to provide advice to potential applicants on how they go about getting their qualifications recognised here. They have been doing that for years. We heard earlier about a number of regulators, particularly in the health service, veterinary science and other areas, that have been doing this for years without any statutory requirement to provide the advice, so it is unclear why the new law is needed. As has already been said, we know that the assistance centre is already in operation. But I think none of us knows why we need a specific underpinning now, and what it is that could not be done by a couple of civil servants within BEIS.

The Minister said last Wednesday that “new legislative cover” is required, but he did not spell out what it was required to do—why this could not be done on a voluntary basis. We have lots of other advice centres which do not have to have statutory underpinning, so why is legislation needed? He said, as the noble Lord, Lord Fox, just quoted, that the centre

“is basically a focal point—a signposting mechanism that tells people where to go to get more information about professions”

and that

“it employs either two or three people.”

It must be tiny; I was going to say that it received 1,600 queries in a year, but it has now received 1,601—I think our little website here gets far more hits than that. As the Minister had the honesty to confess:

“These queries can be as simple as saying, ‘What is the address of the place I have to write to, to find out how I become a nurse in Great Britain?’”—[Official Report, 9/6/21; col. 1501.]


If you google “nurse vacancies”, you might just find it. The idea that we are employing anybody and paying them money to tell people about the address they need to write to to find out how to become a nurse in Great Britain makes me worried, and why on earth does it have to be a statutory body if it is just signposting?

The impact assessment says that

“the Secretary of State can (through contractual arrangements) require the national assistance centre to support professionals”—

it is unclear what “support” means—

“in getting their UK qualifications recognised overseas by providing reasonable information to their overseas counterparts.”

Again, surely the regulator can do that. If a doctor wants to apply to be a doctor in New Zealand, for example, surely their regulator can supply that information. If it is to be done by the advice centre and by contract, it is really hard to think why, again, it needs two bodies or persons to be statutory if they are simply setting up contracts to be able to exchange information—because it is not a decision-making body.

It is unclear what the relationship will be between the centre and overseas regulators. If it is by contracts, how much will they be bound by data protection to ensure that the overseas regulators will look after people’s data according to normal laws? That is easier in a regulator-to-regulator agreement—we have talked about these elsewhere, so why not here?

I am completely mystified as to why Clause 7 is in the Bill. Perhaps we can just take it out, and then we can all go home.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I have to confess that I am still surprised that this is proving such a contentious part of the Bill. For the record, the centre has had 1,602 inquiries—I rang it this morning and it was very helpful, answering the phone within minutes and telling me exactly what to do about what I was asking.

I thank the noble Lords, Lord Foulkes and Lord Fox, and the noble Baroness, Lady Garden of Frognal, for their amendments, which address wide-ranging issues around the operation of the assistance centre, in particular extending the scope of advice provided, readjusting how information-sharing interacts with data protection, and the definition of “corresponding profession”.

Amendment 39 from the noble Lord, Lord Foulkes, seeks to place an additional duty on the Secretary of State to make arrangements for the assistance centre to publish advice and information about immigration requirements for entry to the UK for the purposes of practising a regulated profession. I clarify that, under the current arrangements, the assistance centre is part of the UK ENIC, which I had not realised until the noble Lord brought that up. The UK ENIC focuses more broadly on academic qualifications, whereas the assistance centre focuses on professional qualifications.

Placing an additional duty on the assistance centre to publish advice and information about immigration requirements would go beyond the scope of the Bill. Furthermore, under the provisions of the Immigration and Asylum Act 1999, immigration advice and services can be provided only by qualified persons. To include these additional requirements would increase the asks on the remit of the assistance centre and the qualifications of the staff required to deliver it. It would also increase the costs associated with doing so. I know that others in the Committee, including my noble friend Lady Noakes, wish any service to be as economical and targeted as possible.

The Home Office already provides guides and tools to the public to help them understand immigration requirements and eligibility, including a dedicated visa-checking tool. Adding this to the assistance centre contract would therefore duplicate Home Office services.

Amendment 43 tabled by the noble Lord, Lord Fox, would remove Clause 7(4), which clarifies that the disclosure of the information required under Clause 7 does not breach disclosure restrictions, such as any obligations of confidence. The subsection as drafted is both consistent with existing legislation and required to give clarity about the intersection of this clause with data protection legislation. Without it, no direction would be given on which takes precedence.

The noble Lord, Lord Fox, also asked about the information that the Government are asking regulators to provide to the assistance centre. This is very limited in nature and not onerous: it is to ensure that the assistance centre has the necessary information to support the delivery of its functions. It also facilitates transparency on the recognition of professional qualifications in the UK. Regulators are already required to provide this information to the current assistance centre, and, in our engagement, no regulators have raised concerns about continuing to do so. The objective of the service provided by the assistance centre is and always has been to complement and support regulators, not to replace them.

Amendments 44 and 50 tabled by the noble Lord, Lord Foulkes, relate to data protection in Clauses 7 and 10. Similarly to another tabled by him last week, they seek to create a defence if a disclosure made under the duties in either clause contravenes data protection legislation. As my noble friend Lord Lansley reflected on the first day of Committee, the approach in the Bill is consistent with existing legislation such as the Trade (Disclosure of Information) Act 2020 and the European Union (Future Relationship) Act 2020. I return to my earlier point that Clauses 7 and 10 require disclosure only when it does not contravene data protection legislation. Therefore, a defence is not needed.

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[Lord Fox (LD)]

I thank the Minister for her response. I am having trouble matching the words that she is using with the thing that she is describing. That is my problem. The words “a website run by two people” and “assistance centre” are not really the same, so are we talking about an assistance centre or a landing page? When I talked about a landing page the other Minister kind of nodded. It would help if the Government would clear up what this thing actually is and, in so doing, tell us how much they think it will cost.

The specific question I have is about data. The Minister seemed to suggest that in order for this centre/website to conform to existing data protection regulation it needed guidance in primary legislation. Is that because it will be asked to do more data protection, less data protection or the same amount? If it is the same amount of data protection, why does it need primary legislation to tell it what to do?

[Baroness Bloomfield of Hinton Waldrist (Con)]

Providing a statutory basis for the continued existence of an assistance centre places a duty on competent authorities to co-operate with it. This is to ensure that the assistance centre has the necessary information to help support the delivery of its functions, rather than relying on voluntary information-sharing arrangements. In a practical sense, it provides a signposting system through its website. It also has a telephone answering service, which dealt with my question this morning about the need for English language skills for particular professions. It answered the question very carefully and properly by saying that that was not part of its remit and I needed to talk to the visa requirements section. The centre is at least directing you to where you need to go for your questions to be answered.

The legislation also requires that the assistance centre provides information to the Secretary of State when requested. As I said, this is not onerous information, but it is an important requirement, as the Secretary of State has a responsibility for the wider recognition of professional qualifications principles. Lastly, its existence in legislation helps validate the credibility of the assistance centre for engagement with its overseas counterparts.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, a lot of interesting things have emerged during this debate. The noble Baroness, Lady Noakes, my noble friend Lady Hayter and the noble Baroness, Lady Randerson, seem to have set up a new all-party group—friends of Google. I warn them to be careful and alert them to the fact that if you Google something you will find at the very top of the list people who have paid to come top of that list. If you look, for example, at getting a Covid test, you will find that the ones that you pay for are right at the top and the free ones are down at the bottom. Beware of Google—and other equivalents—because they do not necessarily give you the best advice.

The Minister has been very helpful in her response. However, some things still need teasing out as far as the assistance centre is concerned. I would argue still that the visa and admission regulations that I am suggesting would enhance its role. It was suggested by the noble Baroness, Lady Randerson, that the functions it is dealing with now might be better dealt with at a devolved level. As she knows, I am a very strong devolutionist. Immigration, visa regulations and other regulations are not devolved. Therefore, that would give the assistance centre a little more credibility.

However, my noble friend Lady Hayter has a good point: does it need to be statutory? I think you can have an assistance centre working very effectively without it having to be on the face of the Bill. Often, we argue strongly that things should be on the face of a Bill, and we get rebuffed, but I am not sure the case has yet been made for it to be statutory.

When I was a Minister, I used to tell officials and civil servants to go back and think again from time to time. I ask that both Ministers—the noble Lord, Lord Grimstone, and the noble Baroness, who has replied so eloquently to this debate—perhaps have another look afterwards, in the cold light of tomorrow morning, and go back to the department and say, “Wait a minute. Some valid points have been raised”. That is what these sessions of Committee and Report are about—going back to the department. Perhaps it could be arranged for some of us to be given more information and some direct contact with the centre. There are things that can be done between now and Report that would make the Bill much better and make it more likely for us to get consensus when we get to Report. I hope the Minister will be able to do that. She is nodding nicely to me as always. With that, I will withdraw the amendment.

Professional Qualifications Bill [HL]

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Wednesday 9th June 2021 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I will dwell on Amendment 18 in the name of the noble Lord, Lord Lansley. As he said, delays to services may not have anything to do with the workforce, although they may. I put my hands up: I live in a cladded building at the moment, and we feel strongly the lack of specialist fire surveyors to get things going. Therefore, one may have unmet demand for all sorts of reasons. Another one—save I would not want to say it to the ex-Secretary of State for Health—might be that the Government just do not spend enough money on the health service.

The issue that I really wanted to raise is not that one—I just cannot help teasing from time to time, as the Minister will well know—but the other point that the noble Lord, Lord Lansley, raised. In that letter sent by the noble Lord, Lord Grimstone, on 3 June to the Delegated Powers and Regulatory Reform Committee, which is in its report of Monday, the Minister said—it has already been quoted—that, in ascertaining whether there is an unmet demand for a particular profession, “delay” could be a factor. More surprising to me to hear from a Minister on that side of the House was his reference to “high charges” charged by the profession. Normally, that side of the House in particular would stray away from any government intervention in the setting of fees by professions or indeed any other service. As a consumer representative, I have often gone to the CMA or other regulators, saying, “We’re being ripped off”, and they say, “No; as long as the consumer knows what they’re paying beforehand and has the chance to take themselves out of the contract, we or the Government do not get involved in the fees charged to consumers”. As such, I find this unusual because it sounds like the Government are saying that if they felt that lawyers or surveyors, for example, were charging “high” fees—that was the word that the Minister used in the letter, not “excessive”—they could bring in regulation to open up the profession to outsiders. I hope that I have got that wrong, but it looks to me as if that is what this says, or it could be a way of defining it.

In a later group, we will come back to how we deal with skills shortages, and we will make comments at that point about the Government’s responsibility to fill any such shortages. However, at the moment, I ask for some explanation about whether it really is possible for the Government to put themselves in a position of defining whether a professional is charging excessive fees and, if so, being more sympathetic to bringing in overseas providers. Some clarity on that would be appreciated.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I thank my noble friends Lady Noakes and Lord Lansley for Amendments 9 and 18, which bring together two elements of the recognition framework proposed under the Bill. Noble Lords have raised some interesting points about the Bill’s potential impact on professionals and consumers of their services.

I turn first to Amendment 9, tabled by my noble friend Lady Noakes, which seeks to ensure that any cost or burden on UK regulators in helping individuals with overseas qualifications or experience to make up deficiencies in their knowledge or skills is reasonable. The amendment proposes that particular means of addressing these deficiencies should not be available if the costs or other burdens on UK regulators and existing UK professionals, including those who fund professional bodies, are not reasonable.

By way of background, I note that Clause 1 allows the regulator to specify a means for an individual with overseas qualifications or experience to make up for a shortfall in their knowledge and skills, compared to UK requirements. This is typically known as a compensatory measure, which could include aptitude tests, completion of an academic course or further experience. If Ministers in the UK Government or the devolved Administrations make regulations under Clause 1, the regulator will decide the means by which it assesses individuals with overseas qualifications and experience. It is for the regulator to specify any appropriate compensatory measures.

I agree with my noble friend that any compensatory measures to demonstrate that the professional has met this standard should not be unreasonable or burdensome on the regulator or the qualified professionals whom they regulate. This is why there is no requirement for the regulator to have to specify a means to make up shortfalls where it is not appropriate or not available. There is no requirement for the regulator itself to provide particular courses or experience to an individual to help them make up shortfalls.

In some cases, a regulator may, for example, simply specify that the individual must complete certain academic courses or obtain a certain amount of additional work experience. This would not place unreasonable costs on the regulator. I should add that compensatory measures are a commonly used approach in professional qualification recognition; it is not a new concept or practice for many regulators.

For example, if English language proficiency were required in order properly and safely to practise a profession, it would be reasonable for a regulator to require an individual with poor English to take a course and pass exams to show that their English had improved. It would not be necessary for the regulator itself to deliver that course. In conclusion, I hope that regulators would not consider that compensatory measures place unreasonable costs or burdens on them.

Amendment 18, tabled by my noble friend Lord Lansley, who speaks with some authority in this field, seeks to remove “unreasonable delays or charges” to consumers being taken into account under the condition in Clause 2 for making regulations under Clause 1. Instead, the condition would focus solely on whether regulations would enable demand for professional services to be met.

Clause 2 limits the scope of the power in Clause 1 to a specific set of circumstances where the appropriate national authority deems it necessary to enable the demand for services provided by that profession to be met without unreasonable delays or charges. By this, I mean that the consumers of those services in the UK are experiencing unreasonable delays or having to pay high charges. An illustrative example of an unreasonable charge might be where consumers or businesses face unreasonably high fees caused by a shortage of professionals. For example, this could be the NHS—a consumer of professional services—or the general public’s consumption of them, direct from a professional. An unreasonable delay might, for example, occur if a profession was unable to deliver its services quickly enough without more professionals in the workforce. This could include, for example, waiting times for social worker support—so unreasonable delay or cost can be made distinct from demand or shortage. Without this wording, the levers that we have to take action where there is a need are narrowed.

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[Baroness Hayter of Kentish Town (Lab)]

The Minister has not answered my question. She seems to have continued to say that a national authority—that is, the Government or one of the devolved Governments—can decide when a professional is charging high fees. Can she be absolutely clear that she is saying that? I would like to know on what basis that would be and whether they would go to the CMA for advice. Whether it is a farrier or anything else—or an accountant, although I think they are not covered—on what basis is a Minister going to decide that a professional is charging a high fee? Will that be challengeable in court or via the CMA? What would be the mechanism for that decision?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I am sorry that I gave that impression, but I do not believe that I did give the impression that the Government would set the fees. There would be a mechanism for oversight, which would be the impact assessment route that I mentioned in my speech.

[The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)]

I have had a request to speak from the noble Lord, Lord Purvis of Tweed.

[Lord Purvis of Tweed (LD)]

Could the Minister repeat what she said at the Dispatch Box? She said that the regulators do not have parliamentary oversight in setting their fees. The Health Department’s consultation at the moment says that four do not but the remaining ones do. They have to secure the approval of the Privy Council and, in some cases, the Scottish Parliament. So which is it, and will any of these regulations have any impact on the relationship with the Privy Council and the Scottish Parliament when it comes to the fact that they have to approve changes of fees?

[Baroness Bloomfield of Hinton Waldrist (Con)]

Perhaps I can clarify what I said earlier. The Privy Council is the intermediary between independent regulators and the Government; it is essential to maintaining regulators’ independence, such that regulators are able to deliver their duties impartially. There is no relationship between the council and the Bill.

[Baroness Noakes (Con)]

My Lords, I thank all noble Lords who have taken part in this debate for their contributions, an awful lot of which were on my amendment. Some important issues were raised by the noble Lord, Lord Purvis of Tweed, and the noble Baroness, Lady Hayter, none of which have been very satisfactorily dealt with by the Minister.

I turn to my amendment. I thank my noble friend Lord Lansley for his support and accept his challenge to look at the positioning of my amendment if I decide to take it forward at a later stage. The Minister talked as if compensatory measures were just sitting in every regulator’s toolbox to deal with every situation that could possibly arise, but the truth is that compensatory measures will have been designed for the sort of applicants who have already been coming to the UK for assessment, and they are not going to cause any problem. We do not even need this Bill for those applicants.

We are most likely to encounter problems when other forms of overseas applicant arise, with less traditional professional qualifications and/or experience. It is that which is likely to cause the burdens on the individual regulated professions to cope with things that they are not already coping with. The question posed by my amendment was about how we avoid unreasonable burdens being placed on those regulators and, in particular, on existing members of those professional bodies who fund the regulators.

To be honest, I do not think that the Minister answered that question at all. There is a very real problem there. I can see that we are not going to progress it any further today, but I recommend to my Front Bench that all the issues raised in this debate are looked at again before we get to Report because there are some big unanswered questions arising from this debate.

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[Baroness Bloomfield of Hinton Waldrist (Con)]

The firm advice that I had from my officials was that it would.

Amendment 9 withdrawn.

Employment Rights Act 1996 (Protection from Detriment in Health and Safety Cases) (Amendment) Order 2021

Baroness Bloomfield of Hinton Waldrist Excerpts

Tuesday 27th April 2021 Grand Committee

[Baroness Bloomfield of Hinton Waldrist]

That the Grand Committee do consider the Employment Rights Act 1996 (Protection from Detriment in Health and Safety Cases) (Amendment) Order 2021.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I beg to move that the order, which was laid before the House on 17 March 2021, be approved.

I want to begin with some important background to this statutory instrument. The UK is unique in having three employment statuses for employment rights—self-employed, limb (b) worker and employee—when most other countries, including in the EU, have two: self-employed and employee. Those in the category of workers known as limb (b) workers have a more casual employment relationship than employees and are entitled to a basic set of rights, such as minimum wage and holiday pay. The limb (b) worker employment status allows for much-needed flexibility in the labour market.

Sections 44(d) and 44(e) of the Employment Rights Act 1996, which implements the EU health and safety directive into domestic law, gives employees the right not to be subjected to detriment by their employer for leaving or refusing to return to their workplace. It also gives employees the right not to be subject to detriment for taking steps to protect themselves or others in circumstances of danger that they reasonably believe to be serious and imminent.

Moving on to what this statutory instrument does, in May 2020, the Independent Workers’ Union of Great Britain brought a judicial review against the Secretaries of State for the Department for Work and Pensions and the Department for Business, Energy and Industrial Strategy. Following comprehensive proceedings, the High Court found in November 2020 that the UK had not fully implemented the EU’s health and safety framework directive into domestic law in Section 44 of the Employment Rights Act 1996, concluding that some protections were available only to employees while the court held that they should also extend to limb (b) workers.

The claim succeeded only in part: the court accepted that the UK was not required to extend unfair dismissal to limb (b) workers and had properly implemented the general obligations of the health and safety framework directive. The Government accepted this judgment and are therefore proposing this order, which will extend these protections from detriment in health and safety cases to all workers, not just employees—as had previously been the case. The court also held that the Personal Protective Equipment at Work Regulations 1992 should also be extended to limb (b) workers. I am assured by officials at the Health and Safety Executive that work is under way to consult and extend these regulations to all workers through an additional statutory instrument due to be laid later this year.

These important protections have proved even more essential for employees who have continued to work throughout the pandemic and for those who are returning to work as businesses emerge from lockdown. It ensures that employees have the legal protection that they need to act to ensure their own safety and the safety of others without fear of suffering detriment for doing the right thing. This includes protecting them against being denied promotion or training opportunities.

Having considered the court judgment, we agree that limb (b) workers should also benefit from these protections. This does not represent a major change as limb (b) workers represent a small share of the workforce. However, that does not make it less important, as these workers will undoubtedly have a significant role to play in our economic recovery from the Covid-19 pandemic. That is why the Government would like to clarify the UK’s understanding of the health and safety framework directive by amending Section 44 of the Employment Rights Act 1996.

This Government are committed to protecting workers’ rights and supporting workers through the challenges created by the Covid-19 pandemic, making the UK the best place in the world to work. Clarifying our interpretation of this directive in the light of the High Court judgment will mean that more people are protected by these provisions.

On scope, the changes made to Section 44 of the Employment Rights Act in this SI will apply in England, Scotland and Wales. Employment law is devolved in Northern Ireland. However, we have discussed this statutory instrument with the Northern Ireland Administration; they have laid legislation to the same effect, which will come into operation in parallel subject to the Northern Ireland Assembly procedure.

Given that limb (b) workers represent a small share of the workforce, the direct cost to business of this change is expected to be very low. We also do not expect the amendments to have a significant and disproportionate cost or impact in any region across England, Scotland and Wales.

In conclusion, this change is necessary to clarify the Government’s interpretation of the health and safety directive. It will ensure that all workers are covered by these protections and that we build back better from the pandemic by maintaining the highest standards when it comes to workers’ rights in the UK labour market. I therefore commend this order to the Committee.

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[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank noble Lords for their valuable contributions to this debate. I am glad there is broad agreement in this Committee that the UK has a strong record for setting high standards on workers’ rights. We have always been clear that we will continue to ensure that workers’ rights are protected. We are proud of our limb (b) worker status, which allows much-needed flexibility in the labour market while providing “day one” workers’ rights and protections, which undoubtedly will have a significant role to play in building back better from the Covid-19 pandemic.

This statutory instrument will ensure that all workers are protected from detriment in health and safety cases in the workplace. In particular, this includes having the right not to be subjected to detriment by their employer for leaving or refusing to return to their workplace. It also includes the right not to be subjected to detriment for taking steps to protect themselves or others in circumstances of danger which they reasonably believe to be serious and imminent.

I thank the noble Lord, Lord Blunkett, for his thoughtful and supportive contribution which, as always, was well informed by his experience. There is always a delicate balance to be struck between protecting the rights of workers while retaining the flexibility of the labour market that makes the UK an attractive place to do business.

The UK has a strong record for setting high standards on workers’ rights and we have always been clear that we will continue to ensure that workers’ rights are protected. As laid out in our manifesto, we will bring forward measures, when parliamentary time allows, to establish an employment framework that is fit for purpose and keeps pace with the needs of modern workplaces.

My noble friend Lord Bourne of Aberystwyth asked about government plans to ensure the change is publicised. We have plans to engage organisations to publicise the amendment and help businesses and individuals understand the new regulations. In particular, we have plans to engage ACAS and Citizens Advice. We have also engaged the CBI, TUC and IWGB following the laying of this legislation.

The noble Lord, Lord Hendy, asked about legislation to resolve employment status and when the employment Bill will be introduced—a question asked by a number of noble Lords. The rationale for having a separate limb (b) worker status for rights is that it allows, as I have said, for increased flexibility in the labour market. A limb (b) worker has fewer obligations and responsibilities to their employer and, as a result, they are entitled to a basic set of rights, including national minimum wage and holiday pay et cetera, rather than the full suite that employees get.

We are clear that any reforms we bring forward will require us to consider the needs of our labour market today. This is why we continue to work with stakeholders to understand the needs and challenges of modern workplaces to ensure that our vision of a labour market is fit for purpose. The reforms will form part of the Government’s plan to build back better, enabling a high-skilled, high-productivity, high-wage economy that delivers on our ambition to make the UK the best place in the world to work and grow a business. We intend to bring forward the employment Bill when parliamentary time allows.

The noble Baroness, Lady Ritchie of Downpatrick, asked about the Government’s legislative plans. I thank the noble Baroness for her useful contribution on the important topic of TUPE. I will have to write to the noble Baroness on this topic because I do not have enough briefing to give a sensible response at this stage. I have laid out our commitment to the employment Bill already, which we will bring forward when parliamentary time allows.

My noble friend Lady McIntosh of Pickering asked to what extent other rights would be extended to limb (b) workers and how limb (b) workers could be equated to or differentiated from zero-hours contract workers. Zero-hours contract workers have a part to play in a modern, flexible labour market. They help support business flexibility and provide choice and opportunity of employment for young people, students, those with caring responsibilities or those wishing to retire early.

These contracts are useful where work demands are irregular or where there is not a constant demand for staff. Some types of work are driven by external factors that are out of the employer’s control. This can happen in a range of sectors, including, for example, hospitality, leisure and catering. However, they should not be considered an alternative to proper business planning and should not be used as a permanent arrangement if it is not justifiable. An individual’s employment rights are determined by their employment status and not the type of employment contract they have, such as a zero-hours contract.

My noble friend Lady Gardner of Parkes asked what else can be introduced to help workers as we emerge from the pandemic. The Government are committed to bringing forward an employment Bill that will help us to build back better. This will enable a highly skilled, productive workforce and ensure that the flexibility of the labour market is not impeded by any encroachment on workers’ rights.

Since the publication of the Good Work Plan, the Government have made good progress in taking forward a range of commitments that support our flexible labour market while ensuring the protection of workers’ rights. These have included measures such as: extending the right to a written statement of core terms of employment to all workers; quadrupling the maximum fine for employers who treat their workers badly; closing a loophole that sees agency workers employed on cheaper rates than permanent ones; introducing key information documents that give agency workers more information about how they may be engaged and paid before they join an agency; and reforming rules to align the incentives of employers and workers when applying for and taking annual leave.

We have also banned the use of exclusivity clauses in zero-hours contracts to give workers more flexibility. This means that an employer cannot stop an individual on a zero-hours contract looking for or accepting work from another employer. It also prevents an employer stipulating that the individual must seek their permission to look for or accept work elsewhere.

We have provided unprecedented support to workers throughout the Covid-19 crisis. So far, the furlough scheme has helped 1.2 million employers to pay the wages of 9.9 million jobs across all sectors of the economy.

The noble Baroness, Lady Bennett of Manor Castle, asked about plans for further protections for workers, especially those in insecure employment in the light of the pandemic. The Government recognise concerns about employment status and are considering options to improve clarity, making it easier for individuals and businesses to understand which rights apply to them.

The noble Lord, Lord Lennie, asked about the IWGB case in the High Court, including how much the case cost the taxpayer and when the Government were first made aware of it. He also asked about the PPE regulations. It is right that the courts were able to consider all details of the case before coming to a conclusion. The claim succeeded only in part: the court accepted that the UK was not required to extend unfair dismissal to limb (b) workers and had properly implemented the general obligations of the health and safety framework directive. The Government chose not to appeal the judgment and are clarifying their understanding of the EU directive when transposing into domestic law.

The amendment to the PPE at work regulations contains a legal duty to consult, which is why we are not bringing the SI forward just yet. The Health and Safety Executive and the Department for Work and Pensions expect to lay this legislation later in the year. Covid has had a profound effect on the labour market, so it is only right that we take time to consider the impact of our reforms to ensure that they address the challenges of today and achieve change that works for all. We will continue to work with stakeholders, and we will bring forward detailed proposals in due course.

As I mentioned, officials at the Health and Safety Executive have assured me that work is also well under way to extend the protections of the PPE directive to limb (b) workers, as well as to employees, to align with the court ruling. This work is on schedule.

To close, I underline once more that these regulations will help workers across the country during this coronavirus pandemic and beyond, providing all limb (b) workers and employees with the right not to be subjected to detriment in health and safety cases. I commend these draft regulations to the Committee.

Motion agreed.

National Security and Investment Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Tuesday 16th March 2021 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

My Lords, this sounds like a “me too” moment, because we also have tremendous sympathy with the amendments, especially after hearing the concerns of stakeholders in the research sector about the uncertainty around the time for notices to be decided by the Government. As we have heard, their concerns reflect others from business and investors.

Could the Minister explain why a default approval should not be included in the Bill if organisations have not heard back within a particular timeframe? She will probably know about the important process for clinical trials involving medical products prescribed in the Medicines for Human Use (Clinical Trials) Regulations. In that case, where no notice is given or where further information is requested within 60 days, the clinical trial is treated as authorised. I am not suggesting that these are two exact types of decision, but that default authorisation in legislation seems to be one we might look at. I am interested to know whether the Government have looked at a similar default approval to add here. Perhaps the Minister could say what sort of advice the Government have had on whether that would work here.

On Amendment 67, could the Minister indicate whether 30 days is right for such a process? It would be useful to know the Government’s thinking on the expected average turnaround time for a call-in notice.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I am grateful to my noble friends Lady Noakes and Lord Hodgson of Astley Abbotts for their amendments, which, I believe with good intention, seek to bring further clarity to the status of acquisitions that have been notified to the Secretary of State after the end of the 30 working- day review period. In particular, they seek to provide that acquisitions notified to the Secretary of State are deemed to be cleared following the review period if the Secretary of State does not issue a call-in notice within that period. Both worry, as other noble Lords have, that such a transaction might be stranded in a so-called no man’s land. Amendment 43, from my noble friend Lady Noakes, would apply to both mandatory and voluntary notifications, whereas Amendment 67 from my noble friend Lord Hodgson of Astley Abbotts would apply just to voluntary notifications.

I think we are all agreed it is essential that businesses and investors have the clarity and certainty they need from this regime. That is exactly why we have included statutory timescales for cases—those covered by mandatory notification as well as voluntary notification —to be screened by the investment security unit. That is also why the Secretary of State is already required to give a call-in notice or issue a notification of no further action before the end of the review period in response to both voluntary and mandatory notification. He has no other option, and I hope that noble Lords are reassured by this. The Government consider that this is the right approach as it imposes a legal requirement on the Secretary of State to take a positive action to provide certainty one way or another. I do not believe that the default approval system suggested by the noble Baroness, Lady Hayter, would add to that certainty.

The Government do not think it would be in anyone’s interest to leave the situation ambiguous as to whether an acquisition has been cleared or requires further scrutiny, so I am pleased to be able to reassure my noble friends of the Bill’s functioning on these matters. Many of the businesses the Government have spoken to about the new regime have emphasised they would not wish to proceed with completing an acquisition without unequivocal confidence that they are cleared to do so. As such, it is not clear to me that my noble friends’ amendments would provide greater confidence in the business and investment communities.

For these reasons, I cannot accept the amendment, and I hope that my noble friend Lady Noakes will withdraw it.

[Baroness Noakes (Con)]

My Lords, I thank all noble Lords who have spoken on this group of amendments, especially my noble friend Lord Hodgson of Astley Abbots, who explained the interaction with Clause 2(2) and (4), and his Amendment 67, which I had not appreciated.

Apart from my Front Bench, we are agreed that there is a problem here. My noble friend the Minister explained why a time limit is put in the Bill. We understand that, but the Bill still does not give the certainty required: it does not deal with the position if the Secretary of State does not actually do something. We think the investment community is entitled to that certainty. One possibility is the default approval mechanism that the noble Baroness, Lady Hayter, referred to. We cannot just take it that because the investment community would like the certainty of a positive approval, we should let this Bill off from the ambiguity over what happens if the Secretary of State does nothing.

I shall read carefully what my noble friend has said in Hansard, but she should be aware that we will need to return to this on Report, because she has not satisfactorily dealt with the problem we have put to her. With that, I beg leave to withdraw the amendment.

National Security and Investment Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Tuesday 9th March 2021 Grand Committee

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank my noble friends Lord Lansley and Lord Vaizey, and the noble Lord, Lord Clement-Jones, for these amendments. They seek to clarify and reduce the scope of the regime in relation to asset acquisitions. The Government expect that the majority of trigger events of national security interest will be traditional mergers and acquisitions, but the Secretary of State must also be able to intervene in the rare circumstances where acquisitions of individual assets, rather than entities, may raise national security risks. The Bill as drafted provides that land, tangible moveable property and intellectual property fall within scope of the regime as qualifying assets; this has a degree of extraterritorial application.

Amendments 22 and 28 seek to restrict the inclusion of land as a qualifying asset only to land located within one mile of a sensitive site, and to require the Government to create an online checking service to identify land that is regarded as sensitive. Amendment 23 seeks to exclude “business as usual” procurement, such as the purchasing of software licences or standard network equipment, from the definition of a qualifying asset. Amendment 38 aims to ensure that intellectual property licences that do not permanently transfer ownership of the IP to the licensee are not treated as an acquisition of control over that IP.

I will first turn to Amendments 22 and 28. In limited cases, the acquisition of land can give rise to national security concerns, in particular, but not limited to, proximity risks. The UK Government do not publish the location of the sites in the UK that they consider sensitive from a national security perspective. To do so would give rise to risks to national security: it would serve as a directory for hostile actors who wish to acquire land proximate to sensitive sites, as well as actors who wish to harm us in other ways. Acquisitions of land and other assets that do not pose a national security risk can be pursued with no expectation of being called in. Parties who are unsure or believe that the land in question may be proximate to a site where the Secretary of State is likely to have concerns can voluntarily notify and receive clearance if no national security risks arise.

Risks to national security can also arise from acquisitions of control over land more than one mile from a sensitive site. Indeed, the US regime under the Committee on Foreign Investment in the United States, to which my noble friend referred and to which the amendment alludes, includes a limit of more than one mile for some sites. For example, if we are concerned about a hostile party having a good line of sight to a sensitive site, a plot of land sitting atop a hill more than a mile away might still present an excellent view and the associated security risks. Although most land-based risks are expected to relate to proximity to sensitive sites, not all will. In particular, the Secretary of State will be entitled to take into account the intended use of the land, which may be divorced from any proximity concerns.

I will now turn to Amendment 23. Noble Lords are right to argue that, in most cases, there is unlikely to be a risk to national security from the acquisition of control over intellectual property that is generally and widely available on the commercial market, but such a scenario cannot be ruled out. As set out in the draft statement provided for in Clause 3, which was published alongside the Bill, the Secretary of State expects to intervene only very rarely in acquisitions of any assets. The draft statement lists intellectual property in relation to which the Secretary of State expects acquisitions to be more likely to give rise to national security risks, although this does not include intellectual property that is easily available.

Turning to the detail of the amendment, there is no generally recognised definition of an asset being

“generally and widely available on the commercial market”.

For example, it does not specify where or to whom the asset should be available. It may be that certain intellectual property is in general widely available but is not generally or widely available to certain parties. We may wish to ensure that those parties continue to struggle to access that intellectual property.

I now turn to Amendment 38. As currently drafted, an acquisition of control over intellectual property does not require the acquirer to gain ownership of that IP. This is because acquisitions of control over intellectual property, where the asset is being licensed on a non-permanent basis, can still give rise to national security concerns. Such an exemption could allow hostile parties to use licensing arrangements to avoid the regime, for example by leasing intellectual property for an arbitrarily long period of time rather than buying it.

Temporary access to sensitive intellectual property may, for example, also allow a hostile party to copy and transfer abroad parts of it. Of course, the licensor may have some level of control over the use of its intellectual property, and any assessment of a possible risk to national security would take this into account. However, in the same way that there is no guarantee that a party selling sensitive intellectual property would ensure that the sale does not give rise to national security risks, there is also no guarantee that a party licensing intellectual property would do so.

By way of conclusion, I appreciate that these amendments are motivated by a desire to limit how assets are covered by the regime without adversely affecting the Secretary of State’s ability to protect national security. They would effectively limit the scope, but they would also inadvertently expose our national security to additional risk, which I have confidence is not the aim of my noble friend. In answer to the question posed by the noble Lord, Lord Grantchester, about how many notifications we expect to arise from procurements, the number is expected to be very low, and we will indeed publish guidance on those procurements.

For these reasons, I hope that the noble Lord will withdraw his amendment.

[The Deputy Chairman of Committees (Lord Bates) (Con)]

I have received requests to speak after the Minister from the noble Baroness, Lady Bowles of Berkhamsted, and the noble Lord, Lord Clement-Jones. I will call the noble Baroness first.

[Baroness Bowles of Berkhamsted (LD) [V]]

I have one comment and one question. My comment is that I understand everything the Minister said and I broadly agree, but I think the Government underestimate the amount of licensing they might find has to be reported, because licensing is the new sale. That is the way everything is going: there is no outright purchase of anything any more; everything is licensed, whether the programmes you use on your computer or anything else. Indeed, accounting standards even drive towards that kind of model because in some instances it becomes increasingly difficult to fit true sales into the new IFRS. I cite IFRS 15 as an example.

I meant to ask my question, but I spoke a bit too spontaneously to remember it. I am interested in follow-on activities. If, for example, you have a clearance on an investment into, say, some university research but that also encompasses a right to have a licence, would that licence to the same organisation automatically be cleared if the investment has been cleared or would you have to go round the loop again? You could apply the same to any assignment of a licence: if it is assigned to an essentially similar kind of business and a previous notification has not resulted in a clearing, can you be confident that you do not have to notify again on the basis of such a previous clearance?

[Baroness Bloomfield of Hinton Waldrist (Con)]

The noble Baroness makes some very good points—I am conscious of her much greater knowledge of this area than I have—particularly the point she makes about licensing being the new sale. I am pretty confident that we have taken these points into consideration. On her specific point about whether investments would be cleared, the true answer is that every notification would be counted separately.

[Lord Clement-Jones (LD)]

My Lords, I bow to my noble friend’s much superior knowledge on intellectual property issues. I entirely agree with her. That is a good reason for keeping provisions about intellectual property broadly speaking as they are. My noble friend pointed out to me that nowadays even Rolls-Royce engines are licensed as opposed to sold, because so much data is given off by their operation. That is proprietary in itself. So it is very difficult to distinguish between an outright sale and a licence in commercial life.

I wanted to come back because I did not think that the Minister was quite positive enough on Amendment 23 from the noble Lord, Lord Vaizey. I laughed out loud; that particular response was like an episode of “Yes Minister” because it tried to draw distinctions that were not particularly helpful in the circumstances. Somebody was being extremely clever when they put the paragraph together, but I do not think it pushes back the argument why that day-to-day type of software —that sort of absolutely bog-standard commercial licence equipment—should be captured in the definition of a qualifying asset. I will look very carefully at that very well-crafted paragraph again before Report.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I am grateful for those comments. They will be noted.

[Lord Vaizey of Didcot (Con) [V]]

My Lords, I would never put my noble friend the Minister in the same paragraph as “Yes Minister”. She is a far classier act than that and a wonderful and effective force in your Lordships’ House. But, in a hesitant fashion, I will say that, when listening to the Government’s response, my concerns continued to grow. It seems that their position, which is perhaps understandable, is that they have crafted a Bill that covers every conceivable transaction. Then they will see how it works in practice, over the next couple of years, and gradually narrow it down. That was the tone of the response that I got from my noble friend Lord Callanan. When my noble friend Lady Bloomfield was responding, I began to wonder whether the sale of an iPhone to a Chinese government official in a phone shop in Westfield in Shepherd’s Bush would count as a transaction.

--- Later in debate ---

[Baroness Bloomfield of Hinton Waldrist (Con)]

Let us try to get this done in five minutes.

I thank the noble Baroness, Lady Hayter, and my noble friends Lord Lansley and Lord Vaizey for tabling these amendments. I will begin with Amendments 36 and 88, which concern the Bill’s effect on higher education. Amendment 36 seeks to exempt from the regime the use of qualifying assets where that use is conducted wholly within the activity of a UK-based higher education or research institution. Amendment 88 seeks to introduce guidance to explain some of the Bill’s provisions in relation to higher education.

First, I intend to provide some general assurance to the Committee about the asset powers under the Bill. There are no asset transactions that must be notified to the Secretary of State as assets are not subject to the mandatory notifiable acquisitions regime. To quote the statement published on introduction, interventions in asset transactions by the Secretary of State are expected only in

“the headline sectors in which national security risks are more likely to arise than in the wider economy”.

The draft statement states more broadly:

“The Secretary of State expects to intervene very rarely in asset transactions.”


In relation to higher education, I assure the Committee that we do not generally expect the acquisition of qualifying assets for exclusive use by UK-based research or higher education institutions to give rise to national security concerns.

Indeed, to go further, the use of assets where there is no acquisition of a right or interest resulting in control over a qualifying asset would not even constitute a trigger event, although my understanding is that Amendment 36 seeks to go wider than this. We do, however, expect national security risks to arise in the higher education and research sectors sometimes. For example, hostile actors could seek to set up a UK-based research organisation and acquire sensitive assets through this vehicle, or enter into some form of agreement with one and gain control over sensitive assets that way. Exempting such acquisitions from the regime would therefore create a notable gap in the Secretary of State’s ability to safeguard national security.

Turning to the likelihood of the Secretary of State calling in acquisitions related to contract research, consultancy work and collaborative research and development, and the request for guidance, I point the noble Baroness to the three levels of risk set out in the draft statement. The intention of the statement is to provide guidance on the expected use of the call-in power by the Secretary of State. The three levels of risk in the statement give a hierarchy of how likely the Secretary of State is to call in an acquisition. The most likely areas of concern are “core areas”, “core activities” and “the wider economy”. Acquisitions in “core areas” are likely to be of most interest to the Secretary of State. “Core activities” are likely to fall within the “core areas” but may also fall outside them. This covers the sectors proposed to be set out in regulations under Clause 6. The Government have consulted on the definitions of the sectors to be covered by Clause 6 and published their response at the beginning of this Committee. “The wider economy” concerns everything else. The Secretary of State considers these areas unlikely to pose risks to national security. Therefore, they are unlikely to be called in under the NSI regime. I am confident that higher education and research institutions will be able to assess their activities and decide in which of these three areas of risk they fall.

I want to take a moment to assure the Committee that BEIS consulted Universities UK, the University Alliance and the Russell group on the national security and investment White Paper, published on 24 July 2018. They were very helpful. Of course, since the introduction of the Bill, as my noble friend Lord Lansley noted, BEIS has continued to engage with a number of research and academic institutions, including the Russell group. The Government very much appreciate the Russell group’s ideas on inclusion for guidance.

Turning to strategic security partnerships and domestic partners, the Bill deals only with acquisitions of control over qualifying entities and assets; it does not regulate these strategic security partnerships specifically. Any acquisitions of control made by such a partnership will be subject to the Bill in the same way as any other qualifying acquisition—namely, the Secretary of State’s likely interest in them is illustrated in the draft statement under Clause 3.

I now turn to Amendment 40 in the names of my noble friend Lord Vaizey and the noble Lord, Lord Clement-Jones. This amendment concerns Clause 12, which provides supplementary provisions about trigger events, including details about when they take place. The amendment seeks to make it clear that, in relation to the creation or potential creation of a new qualifying asset, a trigger event can take place only upon the creation of that asset.

The Government also consider that acquisitions of control over qualifying assets can take place only from the point of their creation, whether in tangible or intangible form. I reassure the noble Lords that the Bill as drafted provides for that. They will, however, be aware that the Secretary of State’s call-in power applies both to trigger events which have taken place and to those which are “in progress or contemplation”. The point at which a trigger event is in progress or contemplation will clearly depend on the facts of the case, but it could include circumstances where research and development partnerships are agreed, and it is abundantly clear what assets are to be developed and what control the funder will be acquiring over them.

We think that this is the right approach, as the primary focus of this regime is acquisitions of control over existing entities and assets. We cannot hope to know the future and how technology and national security risks might develop in every circumstance, so it is right that control of new assets can occur only once they have been created.

With the arguments I have outlined against the amendments in this group, I ask that noble Lords agree not to press them.

[The Deputy Chairman of Committees (Lord Bates) (Con)]

Before I call the noble Lord, Lord Lansley, to respond, I need to make the Committee aware of the Procedure Committee’s guidance about five hours of sitting, which expired five minutes ago. I do not want to put pressure on the noble Lord to respond on a very detailed debate, but if his response is brief we can probably include it. If not, it might be that the Whip needs to consider moving an adjournment.

National Security and Investment Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage & Lords Hansard
Tuesday 2nd March 2021 Grand Committee

[Lord Grantchester (Lab)]

I welcome the probing of Amendment 7, in the names of the noble Lords, Lord Hodgson and Lord Clement-Jones, on the extent of five years in which the Secretary of State may issue a call-in notice once a trigger event has taken place.

The debate on how long this period may need to be and the reasons behind these decisions has been interesting. When the Government originally consulted on this, the period was much shorter. The Minister will need to answer why it has changed and been extended for such a long period, as well as the other questions raised. Indeed, five years is a far horizon in today’s fast-moving world—even if it is not long enough for some, often unpopular, Government to be able to continue in office.

Could this length of time threaten the policy stability of the economy across many sectors as well as give rise to unnecessary anxiety for businesses, especially in relation to retrospective elements previously discussed? However, the interpretation of Clause 2 may be that the Secretary of State is unaware of the trigger event but that the intentions of the parties have not materialised. The clause is rather unclear, and I appreciate the remarks of the noble Lord, Lord Lansley, in his interpretation. I would certainly welcome the Minister’s reply.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank my noble friend Lord Hodgson for his amendment, which intends to shorten the time limit for the Secretary of State to call in trigger events which have already taken place. The Bill as drafted allows the Secretary of State to call in trigger events up to five years after they have taken place. This ensures that the regime powers can be applied to completed trigger events which have given rise to, or which may give rise to, risks to national security but which have not been notified to the Secretary of State.

The length of five years is important to give the Secretary of State sufficient time to become aware of the trigger event and to make it difficult for the parties to keep the trigger event hidden. However, the proposed change from five years to two would make it easier for hostile actors to hide their acquisitions and effectively time-out the Secretary of State. It would increase the incentives to keep an acquisition quiet or inactive, as hostile actors would need to do so for only two years.

While not necessarily straightforward, this is clearly easier—both practically and financially—than keeping an acquisition hidden for a longer period. For example, if a hostile actor acquires an entity and intends to merge it with their existing operations, there are practical costs of not doing so within five years. They would not be able to merge IT, payroll, HR, et cetera, or take advantage of that entity and its assets. Likewise, if a hostile actor acquired an entity for its technology, that technology might well be obsolete in five years, so they would need to use their acquisition now to get the benefit.

In the Government’s view, five years strikes the right balance between creating a substantial disincentive for efforts to obfuscate and conceal relevant acquisitions while giving legitimate business certainty that they will not be called in after that period. Importantly, this approach puts us into line with our international partners. For example, in Germany a review may be initiated up to five years after the purchase agreement. It is in line with other countries, including France and Germany, and we believe that it is appropriate. Indeed, it is shorter than some partners, including the USA and Japan, which have no time limits. Further, a five-year reach-back period applies only to trigger events which have completed or which will complete after the introduction of the Bill, contrary to what some observers have suggested. That is to say that no acquisition which has been completed prior to 12 November 2020 may be called in under the Bill.

As helpfully noted by my noble friend Lord Lansley, in the Bill the five-year period is tempered by the requirement for the Secretary of State to call in a completed trigger event within six months of becoming aware of it. This further reduces the time limit for intervention and creates greater certainty for parties to a relevant acquisition. If there is doubt, parties should submit a voluntary notification to the Secretary of State. This will give them certainty on whether their trigger event will be called in.

Before I conclude, in response to my noble friend’s query relating to whether final orders can require the unwinding of acquisitions, that is very much within the scope of the power. The order, however, makes commands and may not deal with practical arrangements. How remedies are given effect will be for parties to finalise, subject to the requirements of the order.

My noble friend Lord Lansley asked about the nature of the acquirer. To clarify, the five-year backstop applies to the date on which the acquisition itself took place. Circumstances where the identity of the acquirer is not known until some time after the trigger event took place are precisely why the reach-back period might be important in certain cases. In circumstances where a notification was given and false or misleading information was given about the true identity of the acquirer, the Bill already provides that the Secretary of State can re-examine such cases.

With reassurance provided for business, knowing that we are acting in line with allies, and for the reasons I have set out, I hope my noble friend will withdraw his amendment.

[Lord Hodgson of Astley Abbotts (Con)]

I am grateful to my noble friend for her reply. I do not think I heard whether future pre-emptive actions under the new regime will be the subject of a statutory instrument or will just happen from the Secretary of State’s desk. Perhaps, she could answer how this or the other House will know what is happening.

I am grateful to everybody who spoke on this. It is obviously a tricky area. I am grateful to the noble Lord, Lord Clement-Jones. Undesirable, uncertain and impractical—I could not have put it better myself. I am grateful to the noble Baroness, Lady Bowles, for drawing attention to the question of the difference between two years and five years, and what will happen in that three-year period other than causing uncertainty among investors. The noble Lord, Lord Fox, raised very practical points.

Let me meet my noble friend Lord Lansley some of the way. I do not think that this will happen very frequently, but, like the noble Baroness, Lady Bowles, I am not convinced that the three additional years are really needed. The point my noble friend makes, which has certainly eluded the Law Society, is the interplay between the six-month trigger and the five years. In the tech sector, these companies grow like Topsy: they are nothing now, and they will be quite big very quickly indeed. You could have a situation where some event, ex post, could have been described as a trigger event but was not picked up as such at the time. It is unfair for people to have that uncertainty lasting for five years. The Secretary of State could say, “I never became aware of that, so I have more time to start the unwinding process, as long as it isn’t within the five-year period.” I see my noble friend’s point, and I accept that it is a rare occasion, but I still think there is something to be teased out about how the different pieces fit together, particularly in sectors of the market where very fast growth occurs.

I would be grateful if the Minister could tell me about the statutory instruments and how publicity of pre-emptive actions is to be provided.

[The Deputy Chairman of Committees (Lord Bates) (Con)]

Does the Minister wish to respond?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I will respond in writing.

[The Deputy Chairman of Committees (Lord Bates) (Con)]

The Minister is saying she will respond in writing. Is the noble Lord, Lord Hodgson, withdrawing his amendment?

--- Later in debate ---

[Lord Hodgson of Astley Abbotts (Con)]

Was it the fact or just the implication?

[Baroness Bloomfield of Hinton Waldrist (Con)]

No, I will respond to the noble Lord in writing.

[Lord Hodgson of Astley Abbotts (Con)]

Okay, that is fine. We need to go away and put my noble friend Lord Lansley in the blue corner and the Law Society in the red corner and see how we get on. In the mean- time, I beg leave to withdraw the amendment.

--- Later in debate ---

In the area of IP, of course, this would anyway be quite hard to quantify. While expanding the mandatory notification regime to assets may be a worthwhile step for easily identifiable strategic assets, such as land, the application to ideas and information could be extremely problematic. There is also the issue of the 15%, although it is not referred to in these amendments. For Wellcome, the overlap of that very low-capture area with the possibility of other things being added to the list causes it concern. I hope that, in light of that, the Minister will agree to meet me and the Wellcome Trust, because it would be better if we could capture and sort out these worries at this stage, rather than when the Bill becomes an Act. This is, as noble Lords know, an organisation well experienced in exactly the areas we are talking about, so I think its advice would be of considerable help to the Government, as well, as I say, of trying to get rid of the problem before it emerges.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I welcome Amendment 14 from my noble friend Lady McIntosh of Pickering, and Amendment 94 from the noble Lords, Lord Fox and Lord Clement-Jones, which overall seek further consultation and scrutiny on Clause 6 regulations. Perhaps I may say at the outset that we would be delighted to meet the noble Baroness, Lady Hayter, to discuss the concerns of the Wellcome Trust, which, as she said, is a world-class research organisation and worth hearing.

Perhaps I may begin by clarifying for the benefit of the Committee that while acquisitions of land are in scope of the call-in power, they are not in scope of the mandatory regime. Acquisitions of land, as with assets more widely, are expected to be called in only very rarely.

I turn first to Amendment 14, tabled by my noble friend Lady McIntosh of Pickering. It would require the Secretary of State to consult relevant stakeholders before making any regulations under Clause 6. Those regulations are of significance as they define the scope of the mandatory notification regime. As such, the Secretary of State has already consulted on sectoral definitions for the qualifying entities proposed to be in scope of the mandatory regime, and further engagement is planned with particular sectors in advance of turning these definitions into draft regulations. Again, I echo my noble friend’s apologies that the information on sectoral scope arrived only as we came into the Committee. The consultation was extensive and lasted from November for eight weeks. We received 94 responses and have not yet finalised all the sectoral definitions. Further targeted engagement to refine these definitions will be made in advance of laying regulations. The Secretary of State will therefore undertake consultation where appropriate.

I can reassure my noble friend Lady McIntosh and the noble Lord, Lord Bruce of Bennachie, that, given the importance and potential complexity of any future regulations under Clause 6—defining and bringing new advanced technology sectors into the regime, for example—it is difficult to foresee many instances in which consultation of relevant stakeholders will not be required. As such, there is no need to create a requirement in statute to cater for this. Public law duties already create the right incentives.

The second amendment to Clause 6, Amendment 94, proposed by the noble Lords, Lord Fox and Lord Clement- Jones, would require the Secretary of State to lay before Parliament a proposed draft of any regulations made under the clause for 30 days before the draft regulations themselves are laid and are subject to the approval of both Houses. Amendment 94 would also require the Secretary of State to identify a committee to report on the proposed draft regulations and then himself report on his consideration of the committee’s recommendations. The Bill as drafted provides for regulations made under Clause 6 clause to be subject to the affirmative resolution procedure.

While I take the points made by the noble Lord, Lord Fox, that these statutory instruments cannot be amended, they can be declined, as we have seen a small number of times in the past. This ensures an appropriate balance whereby the mandatory regime can be quickly updated should new risks to national security emerge, while still giving Parliament appropriate oversight by requiring it to approve the regulations.

In its report on the Bill published on 22 February, the Delegated Powers and Regulatory Reform Committee concluded that,

“there is nothing in the Bill to which we would wish to draw the attention of the House.”

So, although I was in some way surprised to see the noble Lords’ amendment tabled in relation to Clause 6, in disagreement with the judgment of the committee, we can agree that the powers of the Bill are necessarily drawn widely in order to make the process more efficient. I believe that the committee recognised the careful balance that the Bill strikes in Clause 6 and other clauses between allowing the Secretary of State the flexibility to ensure that the regime is effective in protecting our national security while providing sufficient opportunity for parliamentary scrutiny and input.

I welcome the opportunity to discuss this matter further with noble Lords. However, for the reasons I have set out, I cannot accept these amendments and ask that they be withdrawn or not moved.

[The Deputy Chairman of Committees (Lord Bates) (Con)]

My Lords, I have received two requests to speak after the Minister: from the noble Baroness, Lady Hayter, and the noble Lord, Lord Clement-Jones.

[Lord Clement-Jones (LD)]

My Lords, I thank the Minister for her response but I do not think that she has quite got to grips with the full concern about this. It is not so much that there has not been consultation about the current sectors; there has been an extensive consultation and the Government have come back with their views and have explicitly said that they may change them even further. Yet they are still going to return to Parliament with a pure affirmative process. It is not as if parliamentarians will be able to change it. The stakeholder discussion and consultation is going forward as she said, but there is no guarantee that when that set of regulations is passed there will be proper debate in the House, nor will there be thereafter if the sectors are changed and made more specific, less specific, added to—whatever. There is no guarantee that consultation will take place.

The Minister said that there are the right incentives. That is a bit thin. If that is the guarantee of government consultation, it is not very solid, and even then, Parliament is entitled to have a view about the width of those sectors in the light of changing circumstances. It might have different views about new risks emerging, to use the Minister’s phrase. Therefore, it would be entirely legitimate to have that debate if those regulations were revised. The Minister has not got the nub of the concern in all of this.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I reiterate that we will continue to consult widely on important changes that merit further scrutiny. The Government care deeply that we get these definitions accurately put into the Bill before it receives Royal Assent.

[Lord Fox (LD)]

I anticipated the Minister’s answer on the subject of time, and 30 days is 30 days, but the Government have shown that they are relatively adept. If there really was a national security emergency requiring quick action using other means, a statutory instrument with a debate in Parliament would act as a plug. My noble friend Lord Clement-Jones made the point that there is such significance, particularly around this list but also around the other elements of Clause 6, so I hope that the Minister will read Hansard and at least find some way of moving towards the very valid arguments that she has heard today on both amendments.

State Aid (Revocations and Amendments) (EU Exit) Regulations 2020

Baroness Bloomfield of Hinton Waldrist Excerpts

Wednesday 2nd December 2020 Lords Chamber

[Baroness Wheatcroft (Non-Afl) [V]]

My Lords, state aid has the potential to distort market competition. As a member of the EU, we were governed by its state aid rules. This SI does away with that, but there is a degree of flexibility to those rules. In 2015, for instance, the Government wanted to subsidise the Drax power station to enable it to convert one of its units from coal to biomass fuel. The European Commission investigated and gave its approval. Clearly there were advantages for all in making that contribution to its own carbon emissions, and the EU state aid rules did not get in the way.

I am grateful to the noble Viscount, Lord Trenchard, for explaining to us how the EU state aid rules have been used so fairly, largely to keep France and Germany in line and to allow the UK to do most of what it wanted. They are not overly unfair. We should not characterise EU state aid rules as necessarily preventing the UK doing what is right. As Theresa May said in Florence in 2017, the UK and EU understand and agree about the purpose of state aid rules and

“trying to beat other countries’ industries by unfairly subsidising one’s own is a serious mistake”.

Some of us fear that the Government are about to make that serious mistake.

That is why I take issue with the noble Baroness, Lady Noakes. The Government can now define their own state aid rules but those have implications far beyond the UK. After all, we are a great trading nation, and everything being said about our future outside the EU is about how we are going to trade brilliantly all around the world. State aid rules that are not approved by those we wish to trade with will make that increasingly difficult. That is why we shall not be able to escape completely from state aid rules. The WTO operates its own and, as the noble Lord, Lord Liddle, pointed out, they are far from adequate, but in every trade deal, as we have heard, state aid will be an issue that has to be agreed on.

So what state aid are the Government so keen to be able to dispense that it stood, in part, in the way of a Brexit deal being negotiated? Perhaps the Minister could tell us what the Government want to do. It seems very strange to see a Conservative Government so apparently keen on being able to dispense state aid. In the past, we have seen plenty of instances where government interventions in industry have been disastrous. It gave us the Austin Allegro, for instance, a car that was not only unattractive but prone to breaking down. That failed to rescue the British car industry; being open to overseas investment was what did that.

Backing winners is not something that we have shown particular acumen in doing, but perhaps that is what the Government have in mind to try again. The partial purchase of the bankrupt satellite company, OneWeb, in the summer seemed to be a move in that direction, but hopes for that business have already begun to fade. At the time of the partial purchase, which civil servants definitely were not comfortable with and had to be mandated to do, OneWeb appeared to be caught in the UK’s efforts to find a replacement for the crucial Galileo project and the GPS system that it fuels. Five months on from that purchase, I am no clearer about how we plan to replace Galileo. I would be grateful if the Minister could tell the House whether he envisages pumping more public money into OneWeb and indeed if he could provide reassurance about how Galileo is to be reproduced in just a matter of weeks.

As the noble Lord, Lord Stevenson, pointed out, we still do not know what state aid policies the Government have in mind. It seems wrong to do away with one policy without explaining what will take its place. I can understand why the EU would be concerned about that, and why it could be standing in the way of a deal. Whatever importance the Government put on being able to dispense state aid as they wish, that cannot be as important as securing a deal with our largest trading partner.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I remind the noble Baroness that the time limit for speeches is five minutes.

[Baroness Wheatcroft (Non-Afl) [V]]

In debate after debate, we hear more stories of the chaos that looms with a no-deal Brexit, particularly on top of Covid, so surely the Government could make clear what state aid regime they favour and whether they no longer believe that British companies are capable of competing fairly on the world stage. Four years after the decision to leave the EU, could the Minister tell us how close the Government are to developing their state aid regime?

United Kingdom Internal Market Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Report stage & Report: 3rd sitting (Hansard) & Report: 3rd sitting (Hansard): House of Lords
Wednesday 25th November 2020 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I regret that I do not believe that the noble Lord, Lord Flight, was here for the start of the debate and, therefore, cannot speak. His name has already been called.

[The Deputy Speaker (Lord Lexden) (Con)]

I apologise. The noble Lord, Lord Flight, told me that he was here at the start of the debate, but that is not so. I am sorry, Lord Flight. In that case, I cannot call you, as you were not here at the start of the debate.

United Kingdom Internal Market Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Report stage & Report: 2nd sitting (Hansard) & Report: 2nd sitting (Hansard): House of Lords
Monday 23rd November 2020 Lords Chamber

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, the key word of this debate has been “clarity” and the fact that clarity is required. I think that the Minister needs to get to the Dispatch Box and answer as many of the questions as she can, but I assume that government Amendment 51A is intended to answer the points raised by the noble Baroness, Lady Bennett of Manor Castle. But questions have been raised that do not seem to point in the same direction, so I look forward to hearing from the Dispatch Box that the amendment does what it is required to do. If not, perhaps the Minister will confirm that she will come back at Third Reading with a better version of it, to make sure that the doubt is removed.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I will start with some of those questions, particularly because there was a common theme from the noble Lords, Lord Purvis and Lord German, and the noble Baroness, Lady Bennett, about the definition of teachers and why we have excluded them. By referring to “school teaching”, it is intended that primary and secondary school teachers, as well as teachers in maintained nurseries in England, will be within the scope of the amendment. Where further education teachers are employed to teach in a school, we suggest that they too are likely to be covered by this exclusion. However, it is not intended to cover further or higher education teachers in institutions that are not schools.

The exclusion is worded to refer specifically to school teachers rather than teachers more generally. In answer to my noble friend Lord Naseby, we do not intend to include pilates teachers or flying teachers in the scope of this. The latter is a much wider term that could be interpreted so broadly that it could be difficult to establish what would be within the scope of this exclusion.

In response to the noble Lord, Lord German, on care workers, social care workers are in scope of Part 3 as they are not included in the list of excluded professions. If the competent authority believes that the automatic principle is not appropriate, it can adopt an alternative recognition system.

I shall go back to my speaking notes. I begin by reassuring noble Lords that this Government are committed to maintaining excellent teaching standards across the UK. Given the attention dedicated to the issue in this House and representations from interested parties, we have given further consideration to the status of school teachers in Part 3 of the Bill. As part of this, it is important to note that, under the alternative recognition process in Clause 24, relevant authorities are able to assess individuals’ qualifications and experience on a case-by-case basis and can refuse access to the profession if they do not meet the required standards. This means that relevant authorities in each part of the UK will still be able to set and maintain professional standards, and are able effectively to hold professionals to those standards.

However, having taken into account the representations that have been made and the long history of differences in the regulation of teaching in schools across the UK, the Government have now decided to exclude school teachers from the scope of Clause 22. To this purpose, Amendment 51A seeks to add school teachers to the list of professions excluded from the recognition provisions in Part 3 of the Bill in the same way as legal professions are excluded. As government Amendment 51A meets the intended purposes of Amendment 50, I reassure noble Lords that Amendment 50 is now duplicative and unnecessary.

I shall explain why Amendment 37 is also unnecessary. The amendment would add “teaching services” to the list of services in Schedule 2 that are excluded from the mutual recognition principle in Part 2 of the Bill. However, the amendment does not address the noble Baroness’s concerns. I understand from Committee that the noble Baroness, Lady Bennett, is concerned that the Bill will allow individuals to teach in a part of the UK even if they do not meet the required standards in that part. However, the recognition of qualifications and the ability to practise a regulated profession such as teaching are wholly governed by Part 3 of the Bill.

Clause 16(5)(b) excludes from the scope of Part 2 provision that limits the ability to practise a profession by reference to qualifications or experience. Additionally, services provided in the exercise of a public function, including education services, are already excluded from the scope of Part 2 by virtue of the entries in Schedule 2 in respect of

“services provided by a person exercising functions of a public nature.”

Most aspects of teaching services are therefore already covered under this public function exclusion from the mutual recognition and non-discrimination principles in Part 2. For example, the exclusion covers most activity carried out within state-funded schools and further education colleges, so they would not be affected by the amendment either. The amendment would therefore have an effect on only a very limited number of service providers.

My noble friend Lord Flight asked, as did the noble Lord, Lord German, why other professions were not excluded. Legal professions, as we know, have been excluded from the Bill’s provisions because they carry out roles that rely on their expertise in the underpinning legal systems, which are different across the UK. School teachers have been excluded after considering the representations on the matter carefully and taking into account the long history of differences in their regulation across the UK, and to put beyond all doubt that teaching regulators will retain control over who can teach in a part of the UK.

So, in answer to the noble Lord, Lord German, the devolved Administrations will still have control over who can have access the profession in their jurisdiction. A relevant authority may consider that automatic recognition is not appropriate for that profession because of a difference in policy environment or specific regulatory needs in that part of the UK. If so, it is possible for it to disapply automatic recognition by putting in place an alternative process to recognition that complies with the principles set out in the Bill.

The noble Lord, Lord German, also asked about common frameworks. We continue to work constructively with the devolved Administrations on developing a common framework. We are working to make sure that any arrangements sit alongside the work to review the regulatory landscape for regulated professions, as set out in the call for evidence on the recognition of professional qualifications and the regulation of professions.

I do hope that I have managed to answer most of the questions, but I will look at Hansard and if there is anything else that I need to reply to I will of course do so in writing. I hope that the Government’s Amendment 51A will have allayed the noble Baroness’s concerns on this matter and that she will feel able to withdraw her amendment.

--- Later in debate ---

[Lord Purvis of Tweed (LD)]

My Lords, I am grateful to the Minister for her thorough response. When she comes to read Hansard, perhaps she could reflect on the point that the General Teaching Council for Scotland, the regulatory body, now also includes college lecturers. Perhaps she would reflect on the point that it is the regulatory body, rather than the type of teaching that the registers are responsible for. I am sure that there is no intention to have an anomaly, but I would be most grateful if she could look at this.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I will of course be delighted to do that and I will take the point back to the department.

[Baroness Bennett of Manor Castle (GP) [V]]

I thank the Minister for her answer and I apologise for not noting the changeover in Front Bench responsibilities.

To be honest, I am not entirely reassured, and I want to put a specific question to the Minister that follows on from what the noble Lord, Lord Purvis of Tweed, has just said about further education. The suggestion of Pilates teachers is something of a red herring, or perhaps a straw man or woman. I am not a lawyer, but perhaps a term like “registered teachers” would allow for an arrangement whereby those who are currently covered by the General Teaching Council for Scotland, or indeed those teachers who are covered by the Education Workforce Council in Wales, would be covered by such a term.

I do not think that we have gone into the detail of the question asked by the noble Lord, Lord German, about the common frameworks and how they work with the Bill, which is a question that noble Lords have been wrestling with right through this Bill. I will quote the noble Lord, Lord German, who said that we are trying to “bottom out the detail” of the Bill. I do not think that we are there yet, and the government amendments do not quite get us there.

Before I make a final call on this amendment, perhaps the Minister could say why a term like “registered teachers” would not do the job more clearly and fully than the term “school teachers”.

[Baroness Bloomfield of Hinton Waldrist (Con)]

We are talking about semantics here. We are trying to be clear that who we intend to exclude from this provision are school teachers working in a school environment, whether or not they come from a higher education college in order to work in that environment. I do not believe that I can go further than what I have said already.

[Baroness Bennett of Manor Castle (GP) [V]]

I thank the Minister for her answer. I am still not sure that we are where we need to be or that we have dealt with the issues raised by the noble Lord, Lord German, regarding youth work and the social care professions. However, I am not sure that pushing a vote on Amendments 37 and 50 would get us to where we need to be. I hope very much that, as the noble Lord, Lord Stevenson, said, the Government will look at the lack of clarity and problems that have been exposed in this debate and seek to tidy up the Bill, as the noble Lord, Lord Purvis of Tweed, has said. For the moment, I beg leave to withdraw the amendment.

United Kingdom Internal Market Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Monday 2nd November 2020 Lords Chamber

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, we have had an extensive and thoughtful debate, and I thank all noble Lords who have taken part. I thank my noble friends Lord Palmer and Lord Purvis for supporting my amendments, and indeed others who have mentioned them; one who springs to mind is the noble Baroness, Lady Altmann. As ever, the major constitutional issue has taken pride of place over technical issues. I am sure that noble Lords have realised that I am rather interested in the technical issues too, but we will end up having to come to grips with them, so I will not reiterate now.

To comment on some of what has been said—I cannot do justice to all speakers—my noble friend Lord Palmer said that there needed to be much more clarity to the OIM, and that we needed to resolve the ambiguity of its structure, flesh out how it works and find out what it meant in real terms. I think that is also the basis for a lot of other thoughts, whether they are technical or to do with devolution. What comes out loud and clear is whether all parts of the UK will feel that they have voice or ownership. My noble friend Lady Randerson led with the proposals that others have also spoken on and which have the support of the Welsh Government. It is all about having a structure that is workable for everybody and not part of something working inside the UK Government.

The Minister says that the CMA is independent. I accept that to a large extent that may be true, but there is still the problem that its strategy can be directed or steered by BEIS. That is just not the way to give the devolved Administrations confidence when, as has been outlined, the hybrid role of UK Ministers leaves us in the rather unsatisfactory situation of the same person trying to arbitrate. It is like the referee in the rugby match that my noble friend Lady Randerson referenced. Indeed, the noble Lord, Lord Wigley, said that basically the referee cannot be the manager of one of the teams—which rather seems to be the situation that we have here.

Some very valid points were made by the noble and learned Lord, Lord Thomas of Cwmgiedd, who said that judges had to be drawn from the different parts of the United Kingdom who understood everything vis-à-vis their specialist knowledge. I would not hold myself out at the level of a judge. I am not bad when it comes to negotiating things internationally, but I am English and would never hold myself out as being able to represent the positions of the devolved Administrations. I know that there are known unknowns that I do not know, and that is the situation we have to recognise. Whatever the integrity of the people on the CMA, you just do not know that the background is there unless they are drawn from a diverse field. I am very much one of those people who says that you cannot have sectoral interests, but this is different. I do not consider that devolution is political in that sense—we are all trying to get on together.

The noble Baroness, Lady Finlay, made a very interesting point when she suggested that it could perhaps be an interim measure because it has all been brought together very quickly. The noble Lord, Lord Hain, investigated the governance of the CMA and came up with many of the same conclusions as others. The noble Baroness, Lady Bennett, echoed that it is all about a voice for the legislatures and how to keep devolution alive.

As I said, I share with the noble Baroness, Lady Noakes, the view that the CMA is meant to be a UK-wide body and that nominees are not always the best people, but what is good enough for judges is, I think, good enough for the OIM. Yes, perhaps you always have to compromise, but my compromise comes down on the side of voice and ownership; otherwise, the body will never be trusted, as the noble Lord, Lord Empey, said. You have to have the confidence of knowing that people are properly at the table. I acknowledge that we have had rather haphazard devolution but, just because we have left the EU, that cannot be solved with “Whitehall knows best” and by taking back things that properly have been devolved.

The noble and learned Lord, Lord Hope, supported consensual Motions and said that consultation is not a guarantee. The noble Lord, Lord Cormack, warned us of the danger of a broken United Kingdom, emphasising again that there was a need for more time to be taken and for more confidence. The noble Lord, Lord Judd, had a good point in suggesting that we need a federal UK. That would perhaps make things easier, but we are not able to resolve that now—so, as he said, it comes back to understanding separate identities and to ownership.

The noble Baroness, Lady Altmann, supported some of my amendments and wanted the proper involvement of all parties. She also felt that the CMA was the wrong home, and really was not a viable place or a viable alternative to constructing a new body, because of the strategic involvement of BEIS and HMT, and because of it not being sensitive to matters of small businesses and diversity.

The noble Baroness, Lady Ritchie, was I think the first to bring forward the same points about needing a degree of independence and embracing the devolved legislatures, and also the fact that the Constitution Committee had also asked, “Why the CMA?” This was echoed by the views of my noble friend Lord Purvis. I agree with him; I could not find the flagging up of the CMA. It may be that one respondent said “a body such as the CMA”, but I did not see any consultation on it being the CMA or whether it was appropriate. The noble Baroness, Lady Ritchie, and other noble Lords also pointed out that the CMA is used to dealing with private business and enterprise and has a BEIS strategic influence.

I cannot begin to summarise what was said by my noble friend Lord Purvis, but the fact is that the CMA is left trying to analyse hypothetical benefits. It is true that we do not really know how this is all going to work out. If noble Lords follow the logic of my noble friend’s argument, they will find that he concluded by asking what incentive there was for this body to be used by the devolved Administrations. It is not intended to stir up wars between the devolved parts of the UK and the centre, but my view is that, by its set-up, it is likely to stoke rather than resolve concerns.

As I said before, the noble Lord does not like looking to the EU for examples, but it is a bit like when the Commission comes out with a proposal. It always wants to harmonise everything to make it easier and then the member states, notably the UK, get stuck in. You then get down to the nitty-gritty and you solve it. At the moment, we have this sort of overview coming from the Government that gives the devolved Administrations no room to manoeuvre—yet, when they get down to the nitty-gritty in the common frameworks, what happens? You can reach a conclusion.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Perhaps the noble Baroness cannot feel the mood of the Committee, which is that she should now withdraw her opposition.

[Baroness Bowles of Berkhamsted (LD) [V]]

I am sorry; I had basically come to a close anyway. There is much more that needs to be done. I do not think this is politicising; I think it is respecting devolution.

--- Later in debate ---

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I appreciate the comments made in the debate and I appreciate that these amendments seek to correct, improve and debate the issue. Indeed, that is the role of this Committee. Given that, I take issue with the last point made by the noble Lord, Lord Fox.

Amendments 115 and 131 would bring in fundamental changes to the statutory basis for the Office for the Internal Market. They propose making the office a separate, standalone public body, thereby removing its Crown status. The noble Lord, Lord Stevenson of Balmacara, suggested that the new OIM should use Ofcom or the National Audit Office as a model. This would fundamentally change the nature of the OIM. It would change its funding model and would ask it to operate like a regulator, although it is not intended to act as one.

It has already been explained that the Government have concluded that the CMA is best suited to house the Office for the Internal Market to perform these functions, and the reasons were set out in the Government’s consultation response. I will again emphasise the key points. The CMA has built up a wealth of expertise and experience that makes it a natural fit to take on these additional functions. It has a global reputation for promoting competition for the benefit of consumers and for ensuring that markets work well for consumers, businesses and the economy. We will come on to discuss the concerns of the noble Baroness, Lady Hayter, about the interests of consumers being reflected in the OIM.

The Office for the Internal Market will build on the CMA’s existing technical and economic expertise which will now support the further development of the UK internal market. My noble friend Lady McIntosh asked how we can guarantee the independence of the OIM and ensure that we carry the devolved nations with us. The OIM will be independent and will operate at arm’s length from the Government and the devolved Administrations. It will not be an enforcement body and it will not be able to override the decisions of any of the Administrations. As noble Lords will know, the Government are continuing their engagement with the devolved Administrations as the functions are developed further.

In the last group, the noble Lord, Lord Purvis, asked what the incentives are for the devolved Administrations to use the OIM. All of the devolved Administrations have an interest in the smooth functioning of the internal market and the development of effective regulation to support it. The Government are confident that all the Administrations and legislatures will value the expertise and advice of the OIM and the authority of the evidence base that it will build up.

The noble Baroness, Lady Jones, asked whether the OIM will give advice on the decisions made by the devolved authorities. I assure the noble Baroness that the non-binding advice of the OIM will provide a complementary and expert resource to help facilitate better regulation and, should it be requested, this will include regulation developed by the devolved Administrations as well as by the UK Government. The OIM will be independent and will operate at arm’s length from the Government and the devolved Administrations. As I have said, it will not be an enforcement body and it will not be able to override the decisions of any of the Administrations.

An earlier grouping addressed the involvement of the devolved Administrations in the panel membership of the office. I will therefore say briefly that the direct devolved Administration appointments to the panel of the OIM would risk its effective and independent operation. Appointments to the body will be made by open and fair competition and the chair through the robust procedures of the Public Appointments Commission and the Cabinet Office, which operates across the jurisdictions of all of the devolved Administrations.

I turn to UK subsidy control. Clause 50 reserves to the UK the exclusive ability to legislate for a UK subsidy control regime in the future. It is an issue of national economic importance as it is essential to supporting the smooth functioning of the UK’s internal market. We will debate the detail of subsidy control reservation in a later grouping, but I will cover it briefly now. On 9 September, the Government published a statement regarding the future of subsidy control. In that statement, we committed to publishing guidance on the international commitments that will apply to the UK on 1 January 2021, before the end of the year. This will cover World Trade Organization rules on subsidies and any commitments we have made in free trade agreements.

We also set out our intention to publish a consultation in the coming months on whether we should go further than our WTO and international commitments. This will include consulting on whether any further legislation should be put in place. The amendment would create uncertainty and fundamentally undermine the future consultation which will be the mechanism through which decisions regarding future regulations for UK subsidy controls will be made.

In addition, it should be noted that the function of the office for the internal market will be to provide non-binding technical advice, monitoring and reporting on the health of the internal market. It is not the Government’s intention to give it a range of enforcement and regulatory powers, which the proposed new schedule would do in respect of UK subsidy control.

My noble friend Lord True said on an earlier group of amendments said that, in line with GDPR, not all respondents had consented to sharing their views, so publishing only a subset of the consultation would not offer an accurate enough reflection.

For the reasons set out now and earlier, I am not able to accept this amendment. I hope that the noble Lord will therefore withdraw it.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

My Lords, I have had no request to speak after the Minister, so I call the noble Lord, Lord Stevenson of Balmacara.

--- Later in debate ---

[The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)]

My Lords, the noble Baronesses, Lady Noakes, Lady Jones and Lady Neville-Rolfe, and the noble Lord, Lord Palmer, have all withdrawn so I now call the Minister, the noble Baroness, Lady Bloomfield of Hinton Waldrist.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I start by trying to reassure the noble Baroness, Lady Hayter, that we do not wish to see monopolies increasing and choice and quality declining either.

Amendments 136, 139, 140 and 142 aim to give the monitoring and reporting obligations of the office for the internal market a specific focus on the interests of consumers. Clause 31 enables the office for the internal market within the Competition and Markets Authority to operate general and periodic reporting and monitoring to assess the effective operation of the UK internal market and Parts 1 and 3 of the Bill, including how it operates for consumers. These amendments would limit this function to assessing the operation of the market as it affects consumers.

The role of the office for the internal market is to monitor the health of the UK internal market, including specific regulations, sectors and nations. Moving to a narrower definition of the assessment criteria of Clause 31, from the outset, would hinder its effectiveness in fully delivering this function.

To appreciate this, it is worth setting out the breadth of the areas of monitoring that are in scope. They include emerging trends and developments in the UK internal market, cross-border competition, the nature and level of trade between different parts of the UK and access to goods, services and trade. Monitoring may be undertaken independently by the CMA or upon request by other parties such as the UK Government and the devolved Administrations. Proposals can be submitted to review specific sectors relating to the UK internal market.

In doing its work, the office for the internal market will naturally be able to gather information from consumers, businesses and public bodies. Clause 32(4) also specifies that its advice and reporting can involve consideration of the impact of new regulatory proposals on the pricing, quality and choice of goods and on services for consumers. The interests of consumers are therefore an important concern which is already laid out for the office for the internal market when undertaking its monitoring and reporting functions. So, I can assure your Lordships that it will take into account consumer interests in undertaking its wide monitoring and reporting functions and there is no need for a specific reference to this in Clause 31.

Amendment 138 aims to impose an additional requirement in Clause 31 that reporting on reviews which the CMA undertakes of its own initiative or following a request under subsection (1) on matters relevant to the effective working of the UK internal market must be published. Clause 31(4) already requires that all reports the Competition and Markets Authority produces on matters in subsection (1) be published. Clause 32(10), Clause 33(6)(b) and Clause 34(10) also require publication of the reports on the operation of the UK internal market referred to in those clauses as soon as reasonably practicable. In light of this reasoning, I trust that the noble Baroness, Lady Hayter, will be assured that the amendments are unnecessary and that the amendment moved should be withdrawn. We are already doing a lot of background thinking on consumer protections; it is not a closed issue.

[Baroness Hayter of Kentish Town (Lab)]

I thank the Minister for that reply and particularly for her last few words about ongoing consideration. If these debates feed into that consideration, we will not all have stayed up late for nothing.

I also thank the noble Baroness, Lady Bowles, for her support. I have not looked at the exact wording or at whether what the Minister said is right, but what the noble Baroness said about transparency is important. Because it is very difficult for individual consumers to take up these big questions, transparency is really important for their advocates—that is, consumer representatives—who are often very underrepresented on all these committees. Transparency is particularly important for those who, from the outside, are trying to ask questions about choice, redress, standards, quality and so on. I hope that those who are thinking about that issue will hear some of the arguments we have made. If they influence the sort of questions that are posed, we will put one little tick there, but the proof of the pudding will be in the eating. Will this be better for consumers when we have the market going? For the moment, I beg leave to withdraw the amendment.