Baroness Wheatcroft (Non-Afl) [V]

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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 Wheatcroft (Non-Afl) [V]

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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?

Lord Flight (Con)

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My Lords, I apologise for having to move my timing, but I had to get something urgently for my wife.

The Deputy Speaker (Lord Lexden) (Con)

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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.

Lord Stevenson of Balmacara (Lab) [V]

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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.

The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)

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My Lords, I have one request to ask a question of the Minister, from the noble Lord, Lord Purvis of Tweed.

Lord Purvis of Tweed (LD)

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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 Bennett of Manor Castle (GP) [V]

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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 Bennett of Manor Castle (GP) [V]

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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.

Baroness Bowles of Berkhamsted (LD) [V]

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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 Bowles of Berkhamsted (LD) [V]

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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.

Lord Fox (LD)

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My Lords, so far there have been four groups of amendments dealing with the CMA and the OIM, and three different Ministers fielding. That perhaps summarises the fragmented nature of this Bill and the unjoined-up nature of what we are seeking to achieve. In those four groups, and this group, amendments have sought, in a sense, to correct and improve this Bill, but there is no point, because this Bill is beyond that stage. Other speakers have sought to probe and get information from the Government, and there has been no point to that either, because the Government have not answered questions. Despite extremely well directed, forensic analysis and questioning, the Government have ducked, dived and shrugged.

In addition to supporting the request made by the noble Baroness, Lady McIntosh of Pickering, for the consultation to be published, I would like this Minister, who is before us for the first time in this debate, to answer the questions on this group, and to undertake, on behalf of the other Ministers, to answer all the questions that the last four groups have presented, because they are all extremely important to understanding what on earth the Government intend to do.

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

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

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

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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 Hayter of Kentish Town (Lab)

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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.

Lord Stevenson of Balmacara (Lab) [V]

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My Lords, we are obviously in competition to make the shortest speech of the evening; I cannot imagine why, because this is quite an interesting question, although we had a partial answer to it in an earlier debate. My take on it was not so much about the points raised clearly by the noble Baroness, Lady McIntosh; I am worried about how acceptably these phrases, put into this Bill at this time, work in a digital world. It is clearly stated in the clause that we are talking about businesses that are local and not local, businesses which are located or not located in an area. We are talking about propinquity and the ability of those who have to interpret these clauses to understand where there are real businesses and how they are operating if they are to be seen to be local.

That does not work for Amazon or quite a lot of the shopping we will be doing between now and Christmas, which will be largely digital in form. Is “hypothetical” to mean virtual? I leave that rather complicated philosophical question for the Minister to respond to.

Baroness McIntosh of Pickering (Con) [V]

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I am grateful to all noble Lords who have contributed to this little debate, which I hope wins the prize for the shortest debate during the passage of the Bill. I am grateful for the attempt of my noble friend Lord Naseby to give us the benefit of his marketing experience and take a stab at what is meant here, but I am very much in line with the noble Lords, Lord Fox and Lord Stevenson, in that I think it would help to have an explanation in the Bill. Many Bills include definitions, and it would help if this was one such.

One hypothetical example that springs to mind is that, in the days before cloning, one would never have thought that a cloned animal could be bred in the way that Dolly the sheep was by the Roslin Institute, which is part of the University of Edinburgh. As my noble friend has gone to the trouble of explaining—I hope I understand it a little better—in the final analysis, it is for the courts to determine. It is regrettable that we do not have a definition in the Bill that would save court time and legal fees, going forward.

I very much enjoyed the contribution from the noble Lord, Lord Stevenson, particularly his hypothetical question about how this would apply to virtual sales. I do not think we have had an answer to that, so I would be grateful if the Minister could write to us.

Generally, the difficulty I have with Clause 7 has been eased, to some extent, by the explanation from the Minister. As my noble and learned friend Lord Mackay said in an earlier debate, a lot of EU law has been passed over and retained. The non-discrimination part of EU law, under the treaties, is on the grounds of nationality and is inherently clearer. The complicated process we have come up with in Clause 7 could be summed up by how no one can discriminate against a good—or a service in a later part of the Bill—simply because it comes from a different nation of the United Kingdom. That could have been explained more clearly, but I am grateful for the opportunity to have had this little debate and the explanation, as far as it went, from my noble friend Lady Bloomfield. At this stage, I beg leave to withdraw the amendment.

Lord Falconer of Thoroton (Lab)

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I am obliged to the noble Baroness, Lady McIntosh of Pickering, for raising these points. There is a raft of unanswered questions here. It is late at night, so I will try to focus on only the most important. Am I right in assuming that the market access principles, recognition and discrimination, apply to the rental and gifting of goods? If they apply to the rental of goods, what is the policy purpose? What is the purpose of applying them to the gifting of goods and what does it mean in practice? For example, does it apply to statutory requirements for the provision of food by food suppliers that are subject to statutory requirements?

The second head of issues concerns the position of public bodies engaged in commerce. I understand, but only from the Explanatory Notes, that the supplying of drugs by the NHS, even though it does so in a commercial context from time to time, is not covered by the Bill. Is this right? I have particularly in mind Clause 14(2), which says:

“‘Sale’ does not include a sale which … is made in the course of a business but only for the purpose of performing a function of a public nature.”

I read in the Explanatory Notes that that means the NHS supplying drugs. If that is right, what does the completely impenetrable Clause 14(3)(b) mean when it says:

“Subsection (2)(b) does not exclude a sale which is … not made for the purpose of performing a function of a public nature (other than a function relating to the carrying on of commercial activities)”?

Can the Minister explain this to the House? It matters quite considerably because I suspect it will cover a great deal of commercial activity performed by public bodies.

Thirdly, and separately, what is the position in relation to the goods that are made partly in one part of the United Kingdom and partly in another—for example, cars on an assembly line that crosses borders, or planes or high-tech equipment where parts from elsewhere come into it? As a result of Clause 15(3) and (4), is there a separate application to each of the individual components or does one look only at the completed goods?

Lastly, and this is perhaps the most significant, how do the Government envisage that this will operate? My understanding of Clause 6, on the non-discrimination principle, is that where a statutory or regulatory requirement in one part of the country discriminates indirectly, making the sale of those goods disadvantageous in another part of the United Kingdom, that disadvantageous provision can be supported only if it has one of the legitimate aims identified in Clause 8(6).

Let us take minimum alcohol pricing in Scotland. This is a relevant requirement which indiscriminately discriminates against incoming goods on the basis that alcohol brought into Scotland from England by a supplier is the subject of a disadvantage as defined in Clause 8(2); namely, minimum pricing makes it less attractive because the goods are more expensive to buy. As I understand it, this can be justified only if that minimum pricing statutory requirement has one of the following aims:

“the protection of the life or health of humans, animals or plants”

or

“the protection of public safety or security”.

Am I right in understanding that if, for example, a large supplier of alcohol from England into Scotland wished to challenge minimum alcohol pricing, he could do so by taking his buyer to court? There would then be a private law action in the courts of either Scotland or England—could the Minister tell me which it would be, assuming that the minimum alcohol pricing was in Scotland and the supplier was in England?—and the courts would have to decide whether or not minimum alcohol pricing was a regulation that had a legitimate aim.

The consequence of this Act—which is quite tricky to understand and is perhaps unthought-out—is that we in Parliament are handing over to the courts the determination of policies such as minimum alcohol pricing. That seems at the moment to be the consequence of the way that the Bill is drafted. I cannot believe that that is what any sensible Government would wish. Could the Minister please explain how Clause 8 works? I hope she can explain why my conclusions on the basis of Clause 8 are wrong—I really hope they are.

The Deputy Chairman of Committees (Lord Alderdice) (LD)

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I have received a request to speak after the Minister from the noble Lord, Lord Purvis of Tweed.

Lord Falconer of Thoroton (Lab)

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I am not complaining, but the Minister did not try to answer any of my questions, so I would like a comprehensive response.

I am really interested in whether the Government envisage that in private law actions the courts will be resolving whether regulations that are discriminatory on the face of it for public purposes, as defined in the Bill, are valid—that is, whether they are for a legitimate aim. If they are, then the consequence is that Parliament is subcontracting decisions on these policy issues to the courts. I am not asking the Minister to deal with the other issues, but if she could deal with that one now, I would be grateful. If she cannot, because the answer is not yet known or has not been worked out, I would be grateful if she could indicate that. This issue seems to be absolutely key to the question of certainty for business. If where we come out at the end of the Bill is the courts system deciding on the legitimacy of a whole range of regulations, I am sure that that would not be what the Government would have wished. That is why the common frameworks process looks so much more attractive.

Baroness McIntosh of Pickering (Con) [V]

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My Lords, I am grateful to have had this little debate. I am particularly grateful to the noble Lord, Lord Purvis, and the noble and learned Lord, Lord Falconer, for identifying even more issues than I and the Law Society of Scotland had done.

I thank my noble friend Lady Bloomfield for her answers, as far as they went, but, bearing in mind in particular the way that procedure operates in this place as opposed to the other place, it is extremely important that we have a very full letter. Perhaps she could write to the three of us who have contributed, as well as putting a copy of her letter in the Library, before we get anywhere close to the next stage.

I would like to, and still do not, understand why we are bringing in a new definition of “sale” that has a different meaning from that in the Sale of Goods Act 1979. I do not know whether my noble friend is saying that we are widening the definition to include what is generally understood in EU law, but I do not recognise any of this from what is before us in the Bill, so I would be grateful if my noble friend could write to me and say what, precisely, is the legal basis for widening and changing the definition in the way that the Government have in that regard.

I am grateful to the noble Lord, Lord Purvis, for the definitions that he gave and the illustrations that he posted as being a particular problem north of the border. I am also grateful to the noble and learned Lord, Lord Falconer of Thoroton, because I think this is absolutely vital: none of us here this evening wants to put up barriers to trade between the four nations of the United Kingdom. However, it is absolutely essential that we have clarity on the face of the Bill for the reasons that the noble and learned Lord, Lord Falconer of Thoroton, has given: we do not wish to have to resort to private-law actions before the courts—that, surely, is not acceptable. I quite understand that the Government have had to bring this Bill forward in something of a hurry, but I am here this evening to help them identify these issues.

Certainly, I am now even more confused as to why Clause 14(6)(c) has been introduced, particularly as regards the noble and learned Lord, Lord Falconer of Thoroton, referring to Clause 8(6) in this regard. However, rather than delay proceedings this evening, I will say that it would be extremely helpful to have a written understanding from my noble friend Lady Bloomfield as to why we are in this position this evening. With those remarks, I beg leave to withdraw Amendment 66 at this stage.

Lord Stevenson of Balmacara (Lab) [V]

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My Lords, at the end of the previous group the Minister, the noble Lord, Lord True, kindly said that his mind was not closed to further discussion on this issue about common frameworks and how they relate to the Bill. I welcome that. In a sense, the amendments in this group are part of the same debate. I therefore hope that they will also be included in the next-stage discussions, as they are a variation on the theme.

I set out my route map for progress in my response to the previous group and I will not repeat it. However, I endorse the points made by the noble Baroness, Lady Finlay, my noble friend Lady Andrews, the noble Lord, Lord German, and the noble and learned Lord, Lord Hope, particularly their growing confusion about what exactly is in the Government’s mind on this issue. Perhaps the noble Baroness, Lady Bloomfield, coming fresh to the debate, can persuade us that there is indeed a coherent logic to the Government’s position—because it certainly eludes me.

The Deputy Chairman of Committees (The Earl of Kinnoull) (Non-Afl)

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I have received one request to speak after the Minister. I call the noble Lord, Lord Purvis of Tweed.

Lord Purvis of Tweed (LD)

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My Lords, I listened very carefully to what the Minister said about the need for certainty, which seems to be the overriding approach. But, having listened to my noble friend Lord German and the noble Baroness, Lady Finlay, I would refer to the Food Standards Agency report, Food and Feed Safety and Hygiene Common Framework Update. Paragraph 3.15 states, in relation to adopting mitigating measures against mutual recognition, which we will discuss in another group on another day, makes a quite interesting point that

“where common approaches are taken, mutual recognition will not apply.”

If that is the case in this Bill, the common approaches across the nations—the mutual recognition and certainty that she indicated—will not apply. But we do not yet have full agreement on all the common frameworks, so how can that apply under this Bill, given that we have not reached the agreements yet? However, the Government’s own position is that mutual recognition will not apply if common approaches are taken on any regulatory changes. So which is it? Is it in this Bill or is it within the common frameworks?

Baroness Finlay of Llandaff (CB) [V]

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My Lords, I am most grateful to all noble Lords who have spoken. I am grateful to the Minister for her response but it is disappointing.

I must say that I appreciate the noble Lord, Lord German, pressing the Government on why they cannot specify any examples of potential disruption to the internal market, because we really need to hear those. Perhaps the Minister might write to me with some of those specific points following this debate. I note that the noble Baroness, Lady Andrews, confirmed that there is no evidence that common frameworks are breaking down, nor that there is an inability to be fast.

I can see that the timing in the amendment needs to be looked at and renegotiated, and I am sure that would not be a problem. I know that the Welsh Government are sincerely committed to bridging the gap that the noble and learned Lord, Lord Hope, outlined so clearly; at the moment it is a chasm, but it can be bridged.

I agree with the noble Baroness, Lady Neville-Rolfe, and the noble Lord, Lord Naseby, that we all want the UK to prosper and things to work, but we must find a way to make them work by not splitting the UK, which is what the Bill seems to be doing at the moment.

I am grateful for confirmation from the noble Baroness, Lady Randerson, and the noble Lord, Lord Stevenson, of cross-party support for this approach. I have to agree with the noble Baroness that there is little evidence of the Government’s good will towards devolution in the Bill as drafted, and that at the moment the logic of the Government’s approach is quite difficult to discern.

The amendment was a genuine attempt to restore confidence between the central Westminster Government and the devolved Governments. I hope we will return to it because I think we need to. This was a hand of peace, an olive branch, and we must return to it later on Report. For the moment, though, pending further discussions and negotiations, I beg leave to withdraw the amendment.

Lord Whitty (Lab) [V]

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My Lords, most contributions so far have related to Part 5 and the Government’s somewhat ham-fisted attempt to unilaterally disavow an undertaking made only a few months ago. I agree with those sentiments. and with the reports of the Constitution Committee and the EU Select Committee and the contributions by their chairs, the noble Baroness, Lady Taylor, and the noble Earl, Lord Kinnoull. I will also support the Motion in the name of the noble and learned Lord, Lord Judge, at the end of the debate.

However, this is quite a big Bill, and I want to talk about something else. Before doing so, I welcome my noble friend Lady Hayman to the Chamber. I commend her speech, including the importance that she stressed of environmental standards, which relate to this Bill as much as they do to much of the legislation we will face over the coming months.

I want to talk about state aid, which is in the Bill but is dealt with rather superficially. It needs to be clearer before the Bill finishes its passage through this House. In a sense, the noble Baroness, Lady Noakes, referred to this in her contribution. She and I were members of an EU Select Committee that produced a report on state aid about two years ago. We rarely agreed on anything fully, but we do agree on the importance of this issue.

At its most acute, the issue of state aid could be epitomised by the issue in Northern Ireland. As a result of the agreement and the way the Government are now pursuing the matter, through the Northern Ireland protocol Northern Ireland is to be part of the customs union and, to a large extent, the single market. So if the Stormont Government gave a subsidy or preferential public procurement arrangement to, say, a Northern Ireland textile company, the main exports of which are to the Republic, and if its Irish competitors objected, would EU state aid rules prevail or would the UK internal market rule prevail? It is clear that we need a UK state aid regime and it is fairly clear how that will relate to our international obligations under the WTO and, I hope, to future bilateral free trade agreements. But it is not at all clear how it will operate in relation to the internal market, which is the focus of the Bill. If that same Northern Irish company’s main export were to Scotland, what then would the arrangements be? If it were to England, would it be different again, because there would be an equivalent objection from England-based competitors?

The fact is that industrial, employment and consumer policy—all of which are relevant to state aid considerations —are differentially devolved between the three Administration and centralised in England but not in the UK. Of course, even in England there is the expected intention to devolve more industrial and employment policy to the English regions, so the question could, at some stage in the future, apply to Greater Manchester, which may have a different industrial and employment support system from that in the West Midlands. How does that play out in the new state aid framework?

The central question is whether there is yet a draft framework for all of this in relation to state aid, at least between the UK Government and the Scottish, Welsh and Northern Irish Governments. If not, what do the Government think it should look like and, above all, how should it be enforced? Is the office for the internal market, due to be established within the CMA, wholly a creature of the UK Government or will the devolved Administrations have a say in its governance and decision-making? During the EU regime, the Commission’s state aid arm had authority over member states, with prohibitions and fines at its disposal. That could be the case for the CMA.

Lord Whitty (Lab) [V]

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Before the passage of the Bill, we need to clarify these issues.

Lord Howarth of Newport (Lab) [V]

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My Lords, I add my warm welcome and congratulations to my noble friend Lady Hayman of Ullock. Despite the case just made by the noble Lord, Lord Cavendish of Furness, it is a puzzle to me that the Government have introduced this Bill, given the commitment agreed in the Joint Ministerial Committee—of Ministers of the UK and the devolved Governments—to develop by consensus common frameworks for the UK internal market. We are told that good progress has been made on that yet, with perfunctory consultation, the Bill has been brought in.

The Bill contains no mention of common frameworks. It takes powers to override devolved legislation by means of regulations passed at Westminster and to spend money in areas of devolved competence. It contains only patchy and vague provisions for future consultation on the exercise of the powers that it creates. It has provoked indignation in Wales, Scotland and Northern Ireland, and legislative consent is highly unlikely to be forthcoming. The Bill is disrespectful to the devolved Administrations. When the union is under great stress from Brexit and Covid, it is also reckless.

The Bill is disrespectful towards this Parliament. It contains egregious Henry VIII clauses, most notably Clause 53(2), which says:

“Any power to make regulations under this Act includes power … to amend, repeal or otherwise modify legislation.”

The Bill is disrespectful towards our treaty partners. It authorises breaches of the Northern Ireland protocol and the withdrawal agreement. The Government offer as justification that the EU may intend to interpret ambiguities in the withdrawal agreement—ambiguities that the Government were happy to write in a year ago—to the detriment of the UK’s internal market and the Good Friday agreement. Ministers may see this as a suitable tactic in the Brexit negotiations. It may also be a reckless reminder to other countries not to trust perfidious Albion.

The brutal declaration in the House of Commons by the Northern Ireland Secretary that the Government are deliberately taking power to break international law sounds a loud alarm. The Bill is disrespectful to the rule of law and the judiciary. In this regard it echoes thinly veiled threats to the judiciary in the Conservative manifesto, the notorious remarks in Conservative Home by Suella Braverman shortly before she was appointed Attorney-General, and attacks on lawyers by the Home Secretary and the Prime Minister at the Conservative Party conference.

The Government make the case in self-exculpation that their defiance of international law is legal under domestic law. They also insist that they are not precluding judicial review, although in Clause 47 they go to extreme lengths to insulate regulations made under the Bill from challenge. The Government cannot justify what they are doing by quibbling. Constitutionality entails acting in a spirit of respect towards the rule of law, including both international law and, in our domestic jurisdiction, the effective ability for persons to have redress in court for the misuse of executive power.

It consists in respecting conventions which, though uncodified, ought to be binding on Ministers and on Parliament. These conventions include respect for the role of other institutions which form part of the constitution, among them the devolved Administrations as well as the judiciary, and therefore acting with restraint towards them. Proper government keeps the convoy moving along together. It shows itself to be trustworthy. The doctrine of the omnicompetence of statute, undoubtedly valid, is gratifying to the vanity of parliamentarians and convenient to Governments, but such ill-judged deployment of statutory power as we see in this Bill risks imposing intolerable stresses on the cohesion of the constitution and of the United Kingdom.

The Bill is an expression of a loutishness that characterises this Government’s political dealings. Where will this debasement of our democracy take us if we collude in it?

Lord Howarth of Newport (Lab) [V]

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In this House we must do all we can to limit the damage that the Bill causes, starting by supporting the amendment of the noble and learned Lord, Lord Judge.

Baroness Bennett of Manor Castle (GP) [V]

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My Lords, I have two related questions for the Minister. I understand that they may not fall under his departmental responsibilities, but I would appreciate an answer at some time.

We seem to have heard less of the term “world-leading” from the Government recently, at least in regard to Covid-19, but are we learning from the rest of the world and following best global practice closely? Last month, the World Health Organization produced a report on pandemic fatigue. It advised presenting evidence clearly to the public, acknowledging the difficulties that rules present and making it clear that the Government are letting people live their lives with as much freedom as possible. On 5 October, the World Health Organization Insights Unit had a high-level meeting related to that. Did the UK have a representative at that meeting?

Secondly, the Minister may be aware of the Australian state of Victoria, which, through intensive contact tracing—

Baroness Bennett of Manor Castle (GP) [V]

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Victoria appears to be close to getting a grip on the so-called second wave. I will get to businesses in a second.

If the Minister is not, I suggest he reads an account of the outbreak at the Butcher Club in Chadstone shopping centre; it is of particular relevance to today’s debate in that the businesses in the case seem to have done everything right, yet they were still at the centre of contagion. In the accounts, it is almost possible to trace every step of the virus around the shopping centre and across the streets. My understanding is that some of the scores of local test and trace units around the country could operate in such a way, but it is clear that our national, privatised, chaotic system cannot. What justification do the Government have for continuing with the failing system, as a number of other noble Lords have asked?

We hope to see soon, as the amendment calls for, extra support for businesses—and, I would add, individuals. The Victoria outbreak was traced to a cleaner in a business who went to work ill out of economic necessity. We hope that such things do not happen in the UK, but the Government are not doing anything like enough to save people from that extremely difficult position.

Baroness Wheatcroft (Non-Afl) [V]

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My Lords, the regulations related to hospitality do not make sense. Other noble Lords have pointed out the illogicalities, particularly around dancing. The Minister insists that consultation has driven government thinking. Consultation with the restaurant and pub business would have told the Government that the 10 pm curfew could not be justified. There has been little evidence of scientific reason behind it. Restaurants practising social distancing could survive if they were able to do two sittings at dinner, but the 10 pm curfew makes that impossible.

Publicans have to watch their customers leave and head straight to the supermarket or off-licence to buy more alcohol, which they can then drink outdoors without following any social distancing rules at all. Local authority leaders have pleaded with the Government for changes to this legislation on drink sales but have had no success. The regulations are not being respected because people do not understand government thinking.

Are we really facing an appalling rise in Covid cases, as the scientists say? Even Health Minister Nadine Dorries has warned that our intensive care beds could be overrun within 10 days if the current rate of increase in Covid cases continues. If that is the case, why are we debating these already outdated regulations? We are consistently told that the Government are following the science, but at what distance?

With a virus that spreads in this way, we need immediate action. It will be painful but, without decisive action, the long-term pain will be even greater. If we need more draconian measures, let us have them now, when they might stave off the problem, not when it is too late. The leader of the Opposition, Keir Starmer, wrote this morning that the current dithering is causing confusion.

Lord McColl of Dulwich (Con) [V]

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My Lords, I thank the Minister for his helpful and informative introduction to these regulations. I fully support them, as they are important to deal with the increasing number of cases of the virus. When critics repeatedly criticise the Government, should we not ask them what they suggest? For instance, if they object to the rule of six, what number would they suggest? What is the scientific evidence to justify their view?

I was interested in the remarks of the noble Lord, Lord Lilley, about masks. As a surgeon, I wore a mask almost every day for 60 years, so I know a great deal about them. I repeatedly see people putting their masks below their chins, then replacing them. They are then ineffective. As for coughing and sneezing, I notice that they turn their head to the right or left, which ensures that the content of the cough or sneeze goes straight into the face of the person opposite. What advice has been given to them? What about microdroplets, which go straight through the masks? There is so much that we still do not know about this virus.

Lord Stevenson of Balmacara (Lab) [V]

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My Lords, I thank the Minister for introducing these statutory instruments today in his usual clear way. As he said, these SIs amend the Enterprise Act 2002 to enable the Secretary of State to intervene in mergers on two new grounds: by lowering the jurisdictional thresholds for reviewing transactions affecting UK-targeted companies involved in AI, cryptographic authentication and advanced materials; and by introducing a new criterion for intervention to preserve UK critical health and crisis mitigation, including but not limited to those needed for Covid-19. He stressed that these were short-term measures until more fundamental reform was taken forward in the now long-promised national security and investment Bill.

I tabled a regret Motion which stems from the report of the Secondary Legislation Scrutiny Committee and relates to four main points. There is a discrepancy between the apparently permanent changes set out in these SIs and the accompanying comment from BEIS that more fundamental change is in train. There is a lack of any information about the timing or content of the national security and investment Bill other than its antecedent, the White Paper 2018, which now seems a very long time ago. The committee suggests that the draft Bill be published forthwith and be subject to comprehensive debate and pre-legislative scrutiny. Further, the committee suggests that a better lens for consideration of the impact of mergers and takeovers would be to include their impact on consumers and consumer detriment. I will briefly expand on those points and look forward to the debates from other noble Lords who signed up to speak.

We broadly welcome the intention behind these reforms, which mirror changes to FDI in other countries, including France, Germany, Australia and Canada. The Minister is right to stress that these do not alter our commitment to having an open economy, which we support, and they are not against FDI, which has done so much to improve the quality of work in this country and the jobs available, and they are certainly not about putting up barriers. The country must remain open for business.

However, experience shows that many new tools must be available if we are to combat action and reaction to pandemics. These reforms presumably reach out, as the Minister said, to pharmaceutical and medical equipment suppliers, but they also seem to extend further. As he mentioned, they look at the effects of the pandemic including on food supply and service providers such as the internet. That is a very wide reach. Will the Minister confirm that this new power could also be used to prevent hostile takeovers of otherwise profitable and stable companies suffering short-term reductions in profitability or depressed share prices as a result of the pandemic or similar emergency? Will he also confirm that notifications to the CMA will remain voluntary, even though the intention remains to mitigate risks in the short term, which suggests that a more direct route of action might be required? Will there be further guidance on what might trigger this power, which has been criticised as being potentially very broad, and, if so, when that will be published?

The Government last lowered the jurisdictional turnover thresholds of the UK merger control regime in June 2018, when we passed an SI concerned with the development and production of military and dual-use technology, computing hardware and quantum technology. At that time, the threshold in relation to UK target company turnovers was lowered from £70 million to £1 million, which is a big change, and the 25% share of supply, which the Minister mentioned, was amended. We supported the moves at that time, but we questioned whether other sectors should be included. But these were described at that time as temporary, short-term reforms, again pending primary legislation. Is that still the situation? Can we expect more changes when the Bill finally arrives? When does temporary and short-term actually morph into permanent?

We now have a proposal to extend these already amended jurisdictional thresholds to three further sectors under quite broad headings—artificial intelligence, cryptographic authentication and advanced materials. The Explanatory Memorandum makes it clear that the intention is to cover producers but also researchers, and it covers suppliers to these companies, so the scope is again potentially very wide. There is a promise of further guidance on this. Will the Minister give us some more information on when that will be available? Again, the notification system will be voluntary, and companies will have to take the risk of the CMA or the Secretary of State initiating an investigation. Is that really the most sensible way of proceeding?

The outstanding questions that my regret Motion raises and that I would like the Minister to respond to are as follows. As the SLSC says, it is very difficult to scrutinise these SIs. Indeed, it will not really be possible to do so until we see the National Security and Investment Bill itself. When will it be published? Will there be pre-legislative scrutiny? If not, why not? Can the Minister settle the question of whether the changes set out in these SIs are intended to be temporary, in the sense that they might be unwound in the NS and I Bill, once it arrives, or are they permanent? Can he confirm that it remains the Government’s intention to unwind the earlier June 2018 amendments once the new regime is in place, or are they now permanent? Can the Minister confirm whether the new Bill will follow the proposals in the 2018 White Paper? The world is a very different place now, and I wonder whether, for example, the voluntary notification system is really sufficient for national security concerns. Also, will there be turnover cut-offs or sectoral cut-offs? What about regional and place considerations?

Finally, why are consumer interests not given a central part in this process? The CMA, under its recent chair, the noble Lord, Lord Tyrie, was rightly refocusing work around the prevention of detriment to consumers. Its recent consultation on its 2020-21 plan stressed that competition, particularly in digital markets, was getting weaker in many sectors and that practices that damaged effective competition needed to be eliminated. In a sense, this is the other side of the same coin which is being addressed by these SIs.

Lord Stevenson of Balmacara [V]

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I am just winding up. I accept that some mergers and acquisitions affect national security, however it is defined, but all mergers and acquisitions affect consumers, so can the Minister confirm that consumer detriment will form part of it? I beg to move.

Baroness Uddin (Non-Afl) [V]

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My Lords, taking part in the Business and Planning Bill has pushed me to venture into this debate, and I add my small voice of support for the Motion of Regret in the name of the noble Lord, Lord Stevenson of Balmacara. I agree with the noble Lord, Lord Bruce, that we should remain mindful of our international obligations towards developing countries with regard to potential vaccine development.

I also agree with the sentiment that the Government must ensure that they have the capacity and confidence to guard against future threats. I understand their wish to be self-reliant when dealing with current and future public health crises in order to safeguard the welfare of the British people and intervene on grounds of public interest.

The new categories of businesses to be subject to the share of supply test are justified—although I would like to see the list widened—given the terrible complications and supply shortfalls that we have experienced during the pandemic. As a nation, we must be more alert and prepared for any potential second wave and other detrimental advances arising from external hostile forces that might be a peril to our national interest.

I also welcome the lowering of the thresholds, but I agree with noble Earl, Lord Lindsay, about not having any. Indeed, this might have been a factor that led to companies in the UK producing PPE and other medical instruments and making them available abroad while our capacity was drastically low.

I accept that, under these extenuating circumstances, for matters related to the availability of vaccines, essential food products, pharmaceuticals, and internet and communication infrastructures, we should intervene to protect our public interest. At the same time, any interventions must be transparent and beyond retrospective reproach, as suggested by my noble friend Lord Liddle, unless it is a matter of defence and state security.

Finally, a question arises about the financial impact of government intervention and how we safeguard parliamentary scrutiny and democratic oversight. Should the Government need to assist or rescue companies and intervene in merger processes, they should do so with thorough consultation with relevant trade organisations—

Baroness Bowles of Berkhamsted (LD) [V]

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My Lords, I give a “better late than never” welcome to these statutory instruments, because protection of national interests, such as security of critical supply, critical infrastructure and defence of our science, technology and intellectual property base, has for too long been neglected and sacrificed on the altar of “We can buy it in” or, worse, takeovers have been celebrated as “evidence that Britain’s low-tax economy could attract major foreign investment”, which I believe is what some said of Pfizer’s proposed takeover of AstraZeneca in 2014.

It is a good thing that Vince Cable did not see it that way, and I recall that the present Prime Minister did not see it that way either. It is a pity that the Government’s public interest powers to cover the pharmaceutical and science sectors were not extended then, as was mooted. After the financial crisis, the financial sector was added for public interest protection. After a health crisis,

“public health and crisis mitigation capabilities”

have been added, and the farrago of Huawei and Hong Kong alerts us to reasons to have threshold-lowering measures for sensitive technology.

I see the creep towards a more comprehensive policy, but we are too slow. Other countries took faster measures to stop the buy-up of companies while they were cheap, a measure more needed in the UK as takeover is easier. I understand the concern not to overstep, but I share the broad sentiments expressed in the Motion in the name of the noble Lord, Lord Stevenson, that having good time and opportunity to scrutinise the national security and investment Bill would assist in finding the right balance for strategic economic security, preserving international reputation and even reducing risk of retaliation.

We have had a White Paper consultation already, and reports abound that further changes may be in train. However, there are opponents, especially in those business quarters that make significant money out of the UK’s easy takeover regimes. Do not listen to them: being a global investment and business centre does not have to be on a “UK for sale” basis. Many countries are sprucing up their FDI requirements in the light of experience, and they do not all have minimum turnover requirements, which I also challenge, as did the noble Lord, Lord McCrea. Having a broader set of FDI requirements does not undermine the key words from the Enterprise Act that there should be transparent and predictable decision-making. It is important to retain that, and the comments of the noble Lords, Lord Moynihan, Lord Adonis and Lord Liddle, are relevant to that.

I like the headlines from the new Dutch FDI proposals: ensuring continuity of vital processes; integrity and exclusivity of data and know-how; and avoiding the creation of strategic dependency. We have already ended up with strategic dependency in our energy sector— a matter that has exercised minds in several Lords committees, including the Economic Affairs Committee, of which I am a member, in its 2017 report on electricity. I welcome the inclusion of intellectual property in the additional share of supply order. However, like the Dutch, I would have included know-how, which has all too easily been lost in the past. I agree with the comments of the noble Lord, Lord Lansley, about IP held in separate small entities. It is of course a subject dear to my heart, as a patent attorney, and I have also had the dubious pleasure of coping with the vagaries of MoD secrecy orders on intellectual property, making me well aware of the difficulty that there can be in assessing relevance—which will be reflected in any government team trying to assess strategic issues.

Although couched in terms of security and investment, these are matters of competition policy, which is a sensitive issue on the international stage. Even for a body as strong, well-established and independent as the EU Commission competition body, it works best when there is political consensus. While I was ECON chair in the European Parliament, I was deeply involved in competition policy, bringing about procedural changes and new legislation. That happened largely because the Commissioner recognised the advantages of parliamentary support, not least in its external representation. Now, as the UK forges an independent competition policy—notwithstanding what may or may not be in a Brexit agreement—and hones foreign direct investment policy, I hope that the Government will draw on support from consensus. Competition disputes can last longer than Governments, and the undermining of strategic interests certainly does.

The Deputy Speaker (Lord Bates) (Con)

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I call the noble Baroness, Lady Taylor. No? Then I call the noble Lord, Lord Pannick.

The Deputy Speaker

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Just before I call the Minister, I am going to see whether we can try the noble Baroness, Lady Taylor, again. No? I call the Minister.

The Deputy Chairman of Committees

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I call the noble Lord, Lord Stevenson of Balmacara. Is he there? No? I call the Minister, the noble Baroness, Lady Bloomfield of Hinton Waldrist.

The Deputy Chairman of Committees

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I have received a request to speak after the Minister from the noble Lord, Lord Stevenson of Balmacara. We were unable to hear him earlier due to a technical error.

Lord Stevenson of Balmacara [V]

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My Lords, I want to make a brief point. The Minister’s response was interesting but very much couched in the existing paradigm. We seem to be in a situation where, as somebody said, the Government have lifted the lid on the debate over how we work out what goes into the insolvency waterfall, as it were, and how to compensate those who lose out as a result of that compression. Pensions should be part of wages and salary; they should not be where they are. Small businesses always seem to suffer. Thirty per cent is just a figure; it is beneficial but it does not go to the heart of the problem of how we deal with creditors and who comprises the neediest in terms of the analysis of what must be paid back and how that should be organised.

As the Minister was trying to argue, I think, there may be a short-term fix to get this thing back on the road, but these reforms will not be sufficient to resolve the inadequacies of the present arrangement. Does she agree that the time has come—but perhaps it is already too late—to review this area critically, with particular reference to issues such as debtor-in-possession financing? Obviously, there is a crisis because of Covid-19; that crisis provides an opportunity to say that we need to look at this issue again. This would be a good time to do so.

Baroness Bowles of Berkhamsted [V]

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My Lords, I thank everybody who spoke in this wide-ranging debate. We have explored further how the Bill has been a catalyst for looking at some long-standing issues with the fairness of the insolvency waterfall in general. I hear what the Minister says about the April update but that is still broadly based on the original tenets.

As the noble Lord, Lord Hendy, explained so well, the situation is different in modern times, with many more what would have been employees and other workers falling to the unsecured creditors. It is also they who are squeezed in the robbing of Peter to pay Paul that goes on in the adjustments to provide the impetus for a moratorium. We heard an interesting suggestion from the noble Baroness, Lady Altmann—one she has made before, perhaps in connection with the Pensions Bill—that, instead of looking at Section 75 debt, which tends to make you throw up your hands in horror and run away, we should look at technical provisions or the amount that would go to the PPF; that is another part that could be preserved.

I thank noble Lords. We have more food for thought. I accept that new Clause A18 is perhaps not the place to introduce new priority protection—that probably belongs more in Schedule 3—but these matters are serious enough that they must be brought back at a later date. For now, I beg leave to withdraw the amendment.

The Deputy Chairman of Committees

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I will now try the noble Earl, Lord Clancarty, again. No, that did not work, so we will go to the Minister, the noble Baroness, Lady Bloomfield.

Lord Stevenson of Balmacara [V]

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My Lords, I thank all speakers in this short debate. It has been very wide-ranging and we have ended up with what almost amounts to a raft of future changes that we would all like to see in the legislation relating to corporate governance and related matters. I look forward to hearing about progress on that in the near future.

I have one point to make which does not need a response from the noble Baroness at this stage. The noble Baroness, Lady Anelay of St Johns, rightly raised the question of charitable companies. We have been given a response to the effect that it is not felt appropriate to deal with the very small number which fall into the main category. However, I put it to the Minister that these days most charities have trading companies and all of those will be subject to the same rules and regulations that we have been talking about prior to this. Therefore, I assume that any charity which is set up—whether by royal charter or a company set up by Parliament or indeed by any other way in which charities are formed—and has a trading company would be caught by the main tenet of these things. I am afraid that insolvency is quite likely, given the very bad impact of the coronavirus on charities. Tourism numbers are down, and we are likely to see problems and I hope that that will be covered. Perhaps the Minister could drop me a note on this point.

In the same vein, I ask the Minister to confirm that companies which are set up through credit union legislation could have similar issues, so their particular circumstances need to be looked at, as are those companies set up on a social enterprise model for which there is not the same legal framework. However, the same intention lies behind them and they should be able to trade and operate in a way that is effective for their members. I beg leave to withdraw the amendment.

Lord Wallace of Tankerness [V]

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My Lords, I will seek to be brief. The point I will make relates to retrospection, which Amendment 129 from the noble Lord, Lord Hodgson of Astley Abbotts, perhaps illuminates; he is trying to make some of the provisions even more retrospective. I will not work through all the detail; suffice it to say that in Schedule 10 we are asked to enact a provision that would retrospectively void a court order that had been legally pursued and granted. In the words of the Government’s Explanatory Notes, this

“may lead to the petitioner becoming liable for the cost of doing so.”

I do not doubt that there are important business and commercial reasons underpinning these provisions. I ask simply that the Committee proceeds with the utmost caution when making retrospective provision. I quote from the Constitution Committee’s seventh report:

“We recognise that the COVID-19 pandemic presents companies with considerable challenges and that the Government is rightly seeking to protect businesses and the economy as a whole … However, measures with retrospective effect are exceptional and undesirable in principle, requiring the strongest possible justification. We do not think the Government has yet made the case for them in this Bill.”

I simply invite the Minister, when he comes to reply, to try to make a justification and, if he is unable to do so in the time remaining in these foreshortened proceedings today, to undertake to make a response to the Constitution Committee’s report before the House meets for Report.

Lord Howarth of Newport [V]

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My Lords, I will follow the noble and learned Lord, Lord Wallace of Tankerness, and make my comments in reference to Amendment 129 in the name of the noble Lord, Lord Hodgson of Astley Abbotts. I begin by commending him on the very strong statement of principle he made in the debate on the first group about the constitutional impropriety of too many aspects of this Bill.

His amendment dealing with the “relevant period” provides us the opportunity to touch on the constitutional principle of retrospectivity. The Bill’s provisions are backdated, altering the law on winding-up petitions as it stood after 1 March in some aspects and after 27 April in others. I do not in any way dissent from the intention of the noble Lord, Lord Hodgson, to bring in a further measure to protect vulnerable businesses. None the less, we ought to recognise that it is generally held that retrospective legislation undermines the rule of law.

In this Bill, a legal right that people relied on is ex post facto wiped out, to the detriment of persons who relied on it. Provisions in Schedule 10 operate retrospectively to invalidate winding-up petitions made by creditors, albeit creditors exercising a statutory right. They could even be deprived of the benefit of a favourable court judgment previously made, as the noble and learned Lord just said. It allows the court to undo the effect of winding-up petitions and even to require petitioners to be liable for costs. This is a remarkable provision and appears to be incompatible with the rule of law.

Retrospective legislation should be very rare indeed. It is constitutionally objectionable in principle, so, like the noble and learned Lord, Lord Wallace, I ask: how does the Minister justify it? If he considers it necessary to deal with abuses by creditors, how widespread are these abuses? How many instances have been reported? Why is a change in the law needed to deal with them, and why a retrospective change in the law?

Lord Lennie [V]

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I thank my noble friends Lord Hendy, Lord Hain and Lord Monks for bringing forward their amendments on this part of the Bill. Given the constraints on time, I ask the Minister whether the Government intend to bring forward further legislation on this matter. Does this have to be dealt with now, or can it wait for further legislation?

Lord Vaux of Harrowden [V]

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My Lords, given the time, I will not try to sum up the brief debate we have had on these 18 amendments, including one dealing with small companies and one relating to employment situations. I look forward to the letter from the noble Baroness and ask that she has another look at how we might mitigate the impacts on the very smallest of businesses, otherwise we may have to revisit the matter on Report. That said, I beg leave to withdraw the amendment.

Baroness Bowles of Berkhamsted (LD) [V]

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My Lords, I draw attention to my financial interests, as in the register. Although we broadly support the Bill, it is a little frustrating. It does too much by permitting things in a fast-tracked temporary measures Bill, and too little because it has left out other important measures similarly well consulted on. The Minister may conclude that that balance is like Baby Bear’s porridge and just about right. Nevertheless, there are some lumps in the porridge. Expediency has meant that it is the business-favouring parts of the consultations that are being fast-tracked and the more social-facing, small business and employee-facing measures that are left out. I therefore ask the Minister for reassurance that the Bill is not seen as removing pressure from legislating other important reforms on corporate governance and reporting, ESG, insolvency practitioners, audit and replacement of the Financial Reporting Council. I certainly do not see it as a justification for holding off.

The moratorium provision was expected, but there may be traps in the way it works, especially in the event of a following insolvency. There are changes in the insolvency distribution waterfall, with unpaid moratorium debts, and pre-moratorium debts without a payment holiday, being given a new super-priority. Both the treatment of what becomes super-priority and what is “normal supply” disadvantage smaller suppliers. All their pre-moratorium debt is in the subordinated category and normal supply favours stronger creditors’ amounts of super-priority, as they will have contracted shorter payment terms. Will events be monitored, and rankings readjusted if the super-priority does result in outcomes with less in the pot for SMEs, unsecured creditors and pension fund deficits? Unfortunately, it also looks as though the slaying hand will be held by HMRC, with its new claims for extra super-priority, and by banks, as they are outside the ipso facto provisions. It may be that security is not exercised in moratorium, but where are the provisions that prevent banks charging special fees and hiking interest so they can profit in moratorium, or making repayment acceleration demands to secure larger sums with super-priority? Such actions will not help rescue companies, are unfair and should be restrained. That is not to say that the moratorium concept is unwelcome but, because we do not have the time now to weigh up all the checks and balances, it would be sensible to hold its operation under review, to see how it worked and for revisions in the light of unintended consequences to be brought forward.

The temporary suspension of winding-up petitions also has lumps. In a sense, it robs Peter to pay Paul and whether it is the potential petitioner or the company that is smaller, more at risk or more aggressive, is not always one way. I therefore recognise the compromise in trying to keep the period short. However, under Schedule 10, the courts could impose retrospective restoration costs on those required to withdraw petitions made under the current law. Unlimited, might that be a retrospective step too far?

I am conscious that fast-tracked emergency legislation is not appropriate for complex changes and additions, but a few simple things within the scope of the Bill could be achieved. My noble friends will say more.

I regret that there are not more provisions to assist with personal bankruptcy. Australia has raised both the payment time and the financial threshold for initiation of proceedings.

Baroness Bowles of Berkhamsted [V]

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What is happening in the UK? Additionally, I regret that the Bill does not include simple Companies House provisions on identity verification, enabling it to play a role in preventing rogue or criminal elements abusing the current crisis to commit fraud. Again, there has been consultation already, but how is that being followed up?

Baroness Bowles of Berkhamsted [V]

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I intend to revert to the various matters I have mentioned with amendments.

Baroness Uddin (Non-Afl)

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My Lords, we have heard about the extraordinary impact of the private sector contribution from the noble Lord, Lord Dobbs, and other noble Lords. I wish to highlight the work of the British curry industry which, as a collective of 11,000 restaurants with 80,000 staff—[Inaudible.] Any recession or job losses elsewhere is likely to have profound effect on this business, which is interconnected and interdependent. Many noble Lords will be aware of the pioneering entrepreneurs and leaders among the 5,000-strong members of the Bangladesh Caterers Association —[Inaudible.] This lockdown has been devastating on their profession. Further job losses—[Inaudible.] It has impacted hundreds of thousands of families for whom this has been their livelihood for generations.

Post lockdown, with the economic decline, many of these businesses are likely to face catastrophic meltdown. The UK’s forthcoming immigration point-based system will further exacerbate the pressure—[Inaudible]—staff from overseas, though not Europe. I look forward to the Home Secretary fulfilling her promises made during the Brexit campaign to support this industry and to recruit skilled chefs from abroad.

Despite all these factors, the majority of restaurants, if not all, throughout the four nations have responded to this emergency in earnest by donating ready-made meals to hundreds of thousands of vulnerable families—particularly during the month of Ramadan—and of course to every hospital in their locality as well as to care staff. I am proud of their formidable endeavours, reaching out to make a difference and disregarding—[Inaudible.] They are indeed the pride of Britain.

I invite the Minister to commend the work of the Bangladesh Caterers Association and agree that government measures for the curry industry are equally as essential—[Inaudible.]

Baroness Uddin

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I have finished.

Lord Liddle (Lab)

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My Lords, I join others in congratulating the noble Lord, Lord Callanan, on the clarity of his exposition at the start of the debate on this very complex matter. It is also nice to see him at the virtual Dispatch Box once again. To tell the truth, I am rather missing him from all the debates that we had together on Brexit. It is a shame, in a way, that he has gone to another department—certainly his successor does not appear to wish to engage the House on the issues of our future relationship with Europe in quite the same depth that he was so nobly and willingly keen to do—so it is a pleasure to be debating something with him again today.

This is essentially a very technical measure; I thought the noble Baroness, Lady Northover, put it very well in explaining its importance. However, in the past this business of weights and measures has of course been of no small amount of political significance. I would just like to make some comments on that.

We will all remember the great brouhaha of the early 2000s about the “Metric Martyrs”, the refusal of traders in some of our markets to go along with these standards. They were taken to court, and this was described by the Daily Mail as the EU’s “bureaucratic bullying”. I think it was described by many people who were opponents of the EU at the time as a classic example of the EU bullying its way into something that good Brits wanted to have nothing to do with. What makes the row about the Metric Martyrs quite poignant is that, of course, one of the people who were greatly involved in it was a man called Mr Steve Thoburn, a trader in Sunderland. It was a case involving Sunderland City Council that brought this issue to prominence, and of course Sunderland was the city that voted overwhelmingly for Brexit.

Lord Liddle

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Yes. I believe that the Government should now be acknowledging that this issue is nothing to do with EU sovereignty but was to do with international standards, and that it is desirable for Britain fully to follow international standards. I humbly suggest that the Minister, as a former North East MEP, writes to the Daily Mail, the Daily Telegraph and all those others—

Lord Liddle

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Of course I will. I suggest that he writes to them and explains that the great brouhaha about EU bullying was so much nonsense.

Lord Empey (UUP)

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My Lords, there is no question that this process is any substitute for proper scrutiny. In normal circumstances, this budget would have gone to departmental committees of Stormont, it would have been scrutinised, and Assembly Members would have made decisions based on their priorities and what they felt was in the best interests of their constituents. But, as the noble Lord, Lord Bruce, has just said, there is no alternative to dealing with it in this way today. However, a number of things need to be highlighted.

First, on the intervention of the noble Lord, Lord Hain, both today and yesterday, I can say to him that, after the proceedings here I took myself down to the other place. It was clear, during a Statement made by the Leader of the other place to the Commons, that Members were getting information from the Front Bench that was out of date; it had been superseded by the proceedings in here that had not been transmitted to the Members there. There was overwhelming support in the other place for dealing with the Bill. I got the impression that the Leader of the House had listened to Members there and that perhaps something could be done. If it is not done, it will be the greatest kick in the teeth that this Parliament could possibly deliver to a group of victims. I sincerely hope that we will be able to dispatch the Bill later today and get it down to the other place for its deliberations.

My noble friend Lord Lexden raised a number of issues in his contribution. It goes back to the debate earlier this year when we were looking at the question of the RHI and the scheme that was to be in place. The Minister will be aware that I moved amendments, which I withdrew only on the basis of the undertakings that he gave to the House at that stage. That centred around the report and the scheme that was to be put in place to provide compensation for those who had in good faith availed themselves of the scheme but found themselves penalised effectively at the end of the process by having made economic decisions based on an anticipated income. They had sought loans from banks to do other things on the basis of that, and then discovered that their whole economic and business plans were completely frustrated when the scheme was arbitrarily changed part-way through.

The Minister will also have to be aware that similar schemes have now been introduced in the Republic of Ireland, and the scheme has gone on here in Britain unabated.

Lord Empey

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I will just say to the Minister, regarding the mitigation that was raised, that I put an amendment into the Act which required a report to be made by 1 December. Given that Parliament will not be sitting on 1 December, can the Minister tell us when that report will be published and what effect the gap of the election will have in regard to the process of ensuring that those mitigation measures are put in place? Otherwise, very significant hardship will be inflicted on many thousands of people. I would be grateful if the Minister could do that in his response.

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)

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My Lords, there are many designs in development around the world for application in a diverse range of markets. The Government are assessing eight advanced modular reactors through the AMR R&D programme. We have received the feasibility studies and will announce any contracts for promising designs in the summer. We are also considering a proposal from the UK SMR consortium to the industrial strategy challenge fund. We will make a decision on this soon.

Lord Henley

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My Lords, I can confirm to my noble friend that Trawsfynydd remains a potential site; it has been neither ruled in nor ruled out. We believe that small and advanced nuclear reactors have the potential to drive down costs through technology and production innovations.

My Lords, I too congratulate the noble Lord, Lord Cameron of Dillington, on securing this debate. I feel somewhat intimidated by the two previous speakers, who have a lot of expertise in the area we are discussing, but this is a very important and timely debate about technology that we hope will reduce the UK’s carbon footprint and therefore contribute towards the sustainability of our globe.

As has already been said, around half of Europe’s potential wave and tidal resource is thought to be in the United Kingdom. It is estimated that this resource could generate up to 20% of the UK’s current electricity demands. Yet no large-scale tidal lagoons or wave technology projects have been developed here in the UK, and over the years, UK Governments have been very timid in their support of this source of sustainable energy. They have also missed a great opportunity to support cutting-edge tidal energy projects. This is despite the fact that the UK is in a very advantageous position to establish a natural lead market for marine energy technologies, both wave and tidal. There are favourable natural conditions here in the UK. Globally, the UK is leading on planned power projects and there are a number of major industrial players in this sector. In addition, the United Kingdom has several world-class testing facilities and a variety of public funding mechanisms —the noble Lord, Lord Cameron, was talking about how we could use those to promote lagoons.

Despite this, the Government have continued to reject various projects. The noble Lord, Lord Giddens, has already talked about the scheme in Swansea: as early as 2013, a government department rejected that scheme as “not cost effective”. Again, as the noble Lord pointed out, the Government did not listen to the Charles Hendry report of 2017 either, despite the fact that the report said that this was,

“an … opportunity where the UK can … aspire to be the global leader”.

The Government concluded that the scheme was not value for money. As the noble Lord also pointed out, there are some queries about the costs. We also heard clearly from the noble Lord, Lord Cameron of Dillington, that the costs are actually fairly comparable and that nuclear is not cheaper than what was proposed. However, if we consider that easy-to-reach oil and gas will start to run out, that global energy demand is rising and that the commitment to tackle climate change gets stronger and stronger, surely the case for wave and tidal power also becomes stronger and stronger.

I found the Library briefing for this debate extremely helpful. One thing stood out for me from it, which was the title of one of the links:

“UK missing opportunity as it swims against tidal energy”.

It invited me into reading the article from Professional Engineering of February this year, which turned out to be very interesting. It highlighted the recent success of a single floating turbine off the coast of Orkney and said that in 12 months, it,

“generated over 3GWh—more than the whole Scottish wave and tidal sector managed in the 12 years up to 2016. It supplied energy for the equivalent of 830 households, weathering the worst winter storms … in the process”.

I think the noble Lord, Lord Cameron, mentioned that there was also positive news about tidal turbines in the Pentland Firth between Orkney and the mainland, indicating a generation of 8 gigawatts. Yet the Government seem determined to miss the chance to help the UK take the lead in the tidal and wave energy sector. This parallels the stance taken on onshore wind in the 1970s, where it is now quite clear that we missed the chance to take the lead. Denmark and Germany stole a march on us—we also heard about China from the noble Lord, Lord Giddens—and in 1981, the first large-scale wind turbine in Orkney came from Denmark. We ended up being a net importer of onshore wind technology.

Given this situation, it is not surprising that my Liberal Democrat colleague in another place, Alistair Carmichael, the MP for Orkney and Shetland, questioned the Energy Minister, Claire Perry, in March this year about the importance of financial support for the sector. He asked for assurance that financial support for marine renewable energy would be fully recognised in the forthcoming White Paper. Her response was not totally negative but there was no commitment. I was also interested in another exchange in the Commons in April this year when Dr Alan Whitehead, the Labour MP for Southampton, Test, whom I have worked with over a number of years on these issues, questioned Chris Skidmore, the Minister for Universities, Research and Innovation. He asked the Minister to acknowledge that marine and tidal power had been almost strangled at birth by government indifference and even active hostility. Having prepared for this debate and followed energy matters over the course of my parliamentary career—more than 25 years in both Houses now—I believe there is a lot of truth in Dr Whitehead’s observation.

With climate change at the top of the agenda for not only politicians but the general public, as we have seen over recent weeks, along with our commitment in the Paris Agreement to decarbonise and the need to support cutting-edge British technology—whether we are in or out of Europe—the Government need to seriously re-examine their record on a lack of support for marine and renewable energy. It is 10 years since the Climate Change Act became law and on 2 May this year, the Committee on Climate Change stated that now is the time to set a more ambitious goal for reducing UK greenhouse gas emissions. It recommended ending our contribution to global warming within 30 years and reducing greenhouse gas emissions to zero by 2050, in line with the UK’s commitment under the Paris Agreement. Surely the time has come for the UK Government to embrace the role of wave and tidal renewable energy, to enable us to contribute to this zero target by 2050.

The Lord Bishop of Salisbury

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My Lords, this debate has already become something of a no-brainer. Quite a lot of what I wanted to say has been said, so there is no point in repeating it, but I want to thank the noble Lord, Lord Cameron, for asking the Question which has generated the debate.

The context is one in which we see a climate emergency, an increasing number of councils across the country responding to it and the other place in Parliament recognising that. Whatever we think of Extinction Rebellion, it has raised the public profile and urgency of the climate change debate and the environmental awareness of what is required of us as legislators. It cannot be business as usual. We need new thinking and new ways of doing things to meet the challenge of being carbon neutral or carbon zero by 2050 or sooner.

For obvious reasons, this country is a great maritime nation. We have been reminded of this today, with the 75th anniversary of the D-day landings in which many of our fathers would have taken part. Earlier today, I was at the annual service for Trinity House. It was founded in the early 16th century as a guild of mariners to bring good order where there were inexperienced and unregulated seamen endangering life and cargo. It was probably also a good move for defence and profitability.

Sometimes, people behave badly and need good governance. It is increasingly clear that our continuing dependence on fossil fuels is people behaving badly. Good law and good governance also encourage good behaviour, and in this case we need to encourage new thinking and a change in behaviour. We know the rich resources that are around the UK; they have already been rehearsed. The task for government is to create a stable and predictable framework for investment, and to move from experimental to developmental to commercial, so that the UK can make the most of its innovative marine technologies and grow opportunity and business in a global market.

Christiana Figueres, who chaired the Paris climate change talks, said at the conference in San Francisco in September that we are moving faster than we could have predicted, and what is making the difference is climate leadership, market forces and digital technology. However, this is not just a technical problem, whether scientific, economic or political. We need to make space and opportunity for the best minds, the biggest hearts and the greatest souls to exercise leadership. That is partly about vision and spirit, but also about regulation and investment. There is growing concern about our slipping back and accepting a rather modest pace of change in relation to renewable energy. It is an area that needs investment—private and public partnership—which will pay dividends in jobs and the economy, and realise the potential of energy that will be renewable and is sustainable.

The question for Her Majesty’s Government, asked by the noble Lord, Lord Cameron, is a no-brainer. The response needs to be substantial, determined and transformative.

Lord Henley

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My Lords, I am grateful to the noble Lord for his welcome for the Statement. Like him, I can remember an occasion when we were world leaders; we both know that, in Cumbria, we still are world leaders in what it has to offer. The noble Lord is right to call attention to the importance of looking at developments in modular reactors. I can reassure him that, as part of this deal, we are providing £56 million to support the development of advanced modular reactors.

Lord Henley

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My Lords, I believe my noble friend is correct, but she will appreciate that I was informed about repeating this Answer only some 15 minutes before the House met. I cannot give precise details about the Trawsfynydd site at this stage, but I will write to her with further details. As I said, I think she is correct.

Lord Carlile of Berriew

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I absolutely accept that, because two or three years ago I changed my provider, and it took me about three months to achieve.

Lord Lennie (Lab)

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My Lords, I begin by thanking all noble Lords who have spoken this afternoon. The principle of the Bill is unusually uncontentious and it has considerable support around the House—other than from the noble Viscount, Lord Ridley. However, that is not to say that the Bill cannot and should not be improved.

The Bill arises out of energy market failure and the shortcomings of Ofgem in addressing that failure over the past 20 or 30 years. Successive Ofgem leaders have not addressed the problem. As I understand it, not so long ago Ofgem was considering packing up altogether. It felt that its job was done and that it was no longer needed or significant to the industry. However, that was then and this is now, and we now have a meeting of minds between Labour and Conservatives on the need for such a Bill to come into being.

The current situation is that competition is failing customers. It is allowing market dominance by the so-called big six, who have something like 80% of the market. The biggest slice of the market that a small competitor has had over the last 30 years is about 1%, which does not seem to be enough to invade the market. Maybe 1.5 million customers overall between all 55 competitor suppliers against the big six is a very small number.

Competition was supposed to facilitate cheaper energy costs and to protect vulnerable customers. It was supposed to take away monopoly behaviour by suppliers and to make companies more efficient. Bits of that might have happened, but not in sufficient quantity—and it has not been sufficiently evident to customers in the prices they pay for their energy.

So what do we have? We have pricing that is described as a rip-off. Vulnerable customers are being exploited. They are on prepayment meters and pay higher charges. Until very recently those were capped, as it was very evident that they were being exploited. With 80% of the market dominated by the big six, inefficiency is built into the supply system.

The Conservative Party widely ridiculed Labour in 2013 when we proposed a price freeze. It was felt to be anti-competitive, unnecessary, a backward step and an admission of market failure. So it is hard to understand what the Conservatives say now. It is nice to see a damascene conversion of some sort, but the explanation of that conversion is not clear. We must have a tariff cap for all customers on top of what has already been introduced for vulnerable customers. Has the market significantly changed in the past couple of years to bring about the reversal of policy think? I do not think so. However, the CMA’s recognition that, unless something is done quickly, the ripping off of customers will become intolerable might be the justification that the Government give for introducing this now.

How does the market work? We have heard some accounts from the noble Lord, Lord Carlile, and others about their experience of trying to switch, but the big six’s behaviour goes something like this. You start up on a leader-price, low-price tariff. They get you into the market and then, a year later, they will get you back, in some cases by more than doubling your charges. By the way, the cheaper deals they offer will be withdrawn for you just before you try to find them and renew and take up an alternative to your standard variable tariff. They all do it. Some do it more than others—some are more blatant—but they are all at it. All the big six are at it: monopoly suppliers fleecing largely their customers, until recently the most vulnerable of whom were the worst affected, as they had to have prepayment meters which charged higher rates because the companies had the additional cost of installing the meter. They did not take account of the fact that they actually got an income after installing a prepayment meter, having previously complained that there was no income coming from the most vulnerable customers.

There have been some beneficiaries. Those most able to afford to pay have exploited the market—the noble Lord, Lord Carlile, being one of them. They have made savings for themselves by switching but they are, as someone said, subsidised by those who are unable or unwilling to do so. Four out of five customers each year never do so; they do not have the time, the inclination, the resources or the access to computing to do so. So a large majority of customers have to be punished by paying higher prices. We have recently seen an increase in charges of 5%, or thereabouts, by many of the big six, which is way above inflation and above supply costs. Why is that in the Bill? Why has that become necessary? It is storing up some spare for when the tariff cap comes into effect.

Ofgem was set up to regulate the market against unfair competition, but its track record is not so good. It is cautious, it is safe, and it is ineffective, with instincts which are not to rock any boats in the industry. What is the cost? According to figures produced by the CMA, which may be disputed by certain noble Lords, we are paying £1.4 billion more for energy each year than we should. That £1.4 billion recurs every year that we have the current system in place.

What is to be done? The Bill should allow a bit of control to be brought to bear on the energy market. In order to address this, some questions need to be answered, so I ask the Government the following. Do they have any idea what the level of the tariff cap will be? Will the Secretary of State or Ofgem make the ultimate decision? Will it be a recommendation from Ofgem to the Secretary of State, or will it be Ofgem left alone? Why do the Government envisage that the tariff cap will be necessary only for a short time? We have heard that 2023 is linked to the potential rollout of smart meters. The plan is in some difficulty and I think that it is unlikely to hit that deadline. Therefore, why do the Government envisage it being necessary only until 2020 or 2023?

What would be the effect of smart meters on every customer’s bills? If the cost is £11 billion, what will be the cost in individual customers’ bills? How will the Government know when the market is working or behaving as it should? What indicators will the Government use to make judgments about whether the market is behaving properly? Will the warm home discounts be a requirement for all energy suppliers? Suppliers are currently exempt if they supply fewer than 200,000 households or customers. There does not seem to be any reason why that should be the case. Can that be considered as part of the legislation? Will customers be able to have paper bills at no additional cost, as has already been asked? That is important to older customers in particular. Finally, when will the tariff cap come into place? Certainly, it should be no later than when the clocks go back this year, when winter starts. Winter 2018 has been mentioned, but when does winter start in the mind of the Government?

I started by saying that there was little contention about the need for this Bill, and I remain of that view. But there are many unanswered questions and more detail is required as the Bill progresses through the House. We will know that the Bill has succeeded if customers have something like £1.5 billion to £2 billion returned to them as an effect of the tariff price cap coming into being.

Lord Henley

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My Lords, south-west Wales—and the whole of Wales—is not at the bottom of the queue. As my right honourable friend the Minister for Energy made clear in another place this afternoon, she has been engaged in discussions with colleagues in the Welsh Government. A decision will be taken at the appropriate time but we do not want to be rushed into it.

Lord Henley

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My Lords, I note what my noble friend says and the feelings of the House. As I said, the Government should not be rushed into an answer but I will make sure that my right honourable friend is fully aware of the concerns that have been raised.

Lord Judd (Lab)

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My Lords, I should declare a couple of interests. I am a member of the Cumbria Trust, which has considerable concerns about some of the issues being discussed today. I also live 12 miles north-east of Sellafield, which always reminds me that at school I was taught that the prevailing winds were south-west.

The Minister was very firm at the briefing meeting that he kindly arranged before the Bill was under consideration here—and that meeting really was very much appreciated—that the Bill was about safeguards, not safety. The Minister has a style about him, and he was at his firmest in saying that. I have a great affection and considerable regard for the Minister. I have more respect for him perhaps in the sphere of marmalade than in political matters.

It just will not wash. There are no dividing lines: civil, military, safeguards and safety all overlap. They all have implications for each other. To think that one can take part of this and put it in a watertight compartment is, if the Minister will forgive me, nonsense.

We are all pretty disturbed—that has come across clearly in the debate—that we are dealing with a situation that is apparently an incidental consequence of deciding to leave the European Union. We are dealing with the utmost grave issues here—issues which affect not only current society but will affect men, women and children for thousands of years to come. They are profoundly grave and significant issues. To think that we can somehow rush this thing through in legislation is a betrayal of future generations. We must put it under very firm scrutiny, and we must be satisfied.

As if that were not enough, the fact that we are a nuclear power with our own nuclear deterrent again puts a heavy responsibility on us. When the non-proliferation treaty was secured, we gave the most solemn undertakings about our responsibilities in these spheres. We therefore have a duty to fulfil them.

I share with those who have spoken deep anxiety about the belief that national arrangements for inspection can in any way be a convincing substitute for international arrangements. It is crucial for the world—and for our own people—to see the independent judgments and assessments that come from international arrangements. It will become a cosy, closed circle in which things may tend to slip. So we must do our best to ensure that whatever is put in place is not open to any kind of doubt. Personally, I do not see how we can do that, but we must try.

It is also clear from what has been said in the debate that, because of what I just said and for other reasons, we should remain as close to Euratom as possible. We should not be defeatist about associate membership of Euratom, and I would like to think that the best legal brains available to the Government are working on how we do this, as distinct from why we cannot. In my experience of responsibility in organisations, it is crucial to find the lawyers who can help you to do what you want to, as distinct from those who tell you why it cannot be done.

The time available is clearly ludicrous, and some special arrangements will have to be made. But, if we are to have special arrangements with IAEA and voluntary agreements, as has been mentioned, we need to be clear about how they will be effective in this transitional phase, because I do not believe that the deadlines we have been asked to accept are feasible.

At the moment, there are eight professional safeguarding staff employed by ONR, compared with 40 at Euratom, focused on UK issues. We are asking for this to be undertaken with our British arrangements at a time when there has been a 70% cut in government grants to ONR from 2015-16 to 2019-20. There is also the issue of whether we have the necessary expertise. I recall that, some time back, when we were considering new legislation on nuclear power, the Government’s argument was that one of the reasons we needed to have foreign interests coming into the process was that we simply did not have the expertise that was available to those foreign experts. If that is real—it is a very worrying thought—and if it applies to the generation of nuclear energy, how much more real does that argument become to monitor effectively what we are ourselves doing? Parliament simply has to be satisfied that arrangements involving the IAEA, voluntary agreements and the additional protocol are as fool-proof as they can be—although I remain sceptical as to whether that is possible.

The noble Lord, Lord Fox, spoke about the costs and consequences of taking over the ownership of Euratom facilities and the subsequent costs of decommissioning. We really will need very convincing arguments from the Minister on all that. I particularly appreciated the speech of my noble friend Lord O’Neill of Clackmannan. In this context, I am interested that the Department for Business, Energy and Industrial Strategy has itself produced a number of—intended to be, I think—helpful factsheets. They have been produced in the context of our deliberations. I see that one on transport and waste states:

“The UK will continue to uphold its responsibilities in respect of spent fuel and radioactive waste. Appropriate arrangements will need to be agreed between the UK and the EU in relation to the status of radioactive waste and spent fuel generated by the UK but currently situated on EU 27 territory and spent fuel and radioactive waste generated by the EU 27 but currently situated on UK territory. UK legislation and standards in this area will continue to be informed by recommendations of the International Commission on Radiological Protection, the Joint Convention on Spent Fuel and Radioactive Waste, and the safety standards of the International Atomic Energy Authority”.

These are vital considerations. But, in dealing with waste, let us please remember that there are two categories of waste at least. There is the existing waste, which is a time-bomb ticking away, and there is future waste, which has implications for thousands of years ahead. We are involved in a situation that is not only grave but is of immense, incalculable historical significance for the future. We cannot rush it or botch it, and it will need a great deal of careful scrutiny by this House.

Viscount Hanworth (Lab)

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My Lords, the Nuclear Safeguards Bill is slim by the standards of Brexit Bills, but this belies the importance of the issues it addresses. The Bill makes provisions for the eventuality that the UK will leave the European Atomic Energy Community, or Euratom, to give its common name. In its place, we should have to establish a new safeguards regime to oversee the security of our nuclear materials. Euratom has provided much more for us than an inspection regime for ensuring that radioactive material does not fall into the wrong hands. It governs the supply of fuel and all the nuclear engineering materials and equipment that come to us from abroad. It facilitates international exchanges of personnel trained in nuclear technology. It governs the acquisition and supply of medical radioactive isotopes and it funds an extensive nuclear research and development programme.

Euratom is governed by the International Atomic Energy Agency—the IAEA—which is an organisation affiliated to the United Nations. It mediates our relationships with third-party countries. On leaving Euratom, we should have to establish individual nuclear treaties with each of those nations. Even now, there remains doubt as to whether it is necessary, in any case, for the UK to sever its connection with Euratom. The legal opinions on the matter have been divided. It is clear that the Ministers most closely involved are far from enthusiastic about the prospect of this divorce.

The die was cast at the beginning of 2017 when, in a flurry of Written and Oral Statements, the Government asserted that there would be no room for compromise in exiting the European Union. Thus, in a speech on 17 January, the Prime Minister asserted that there is to be no,

“partial membership of the European Union, associate membership … or anything that leaves us half-in, half-out …We do not seek to hold on to bits of membership as we leave”.

Euratom is an international organisation founded in 1957, as we have heard, and is legally distinct from the European Union. However, since the European Court of Justice plays a marginal role in its affairs, Euratom was judged to be half in the European Union and, therefore, an organisation that the UK is bound to leave.

During Second Reading of the Nuclear Safeguards Bill in the Commons on 16 October 2017, the Minister Greg Clark emphasised:

“Triggering article 50 of the treaty on European Union also requires triggering article 50 on membership of Euratom”.

He also asserted:

“That is not just the Government’s view; it is the European Commission’s view, too”.—[Official Report, Commons, 16/10/17; col. 618.]

He proceeded to quote a declaration to this effect that had been made in the European Parliament. It appears that the European Commission and the European Parliament have been happy to go along with the view of the UK Government. The Government’s insistence on a clean break from European institutions has led to a perverse outcome that we are now coming to regret. It is arguable that, had we taken a different approach at the outset, we would not now be faced with the need to enact the present Bill. The trouble that is entailed in leaving Euratom might be mitigated by the proposed two-year transition period after our formal departure from the European Union in March 2019.

Leaving Euratom imposes tasks that would be impossible to accomplish by that date of departure. There have been numerous testimonies regarding the expense and the damage that will result from leaving Euratom, and they bear some repeating. In the UK, more than 100 facilities and locations are currently subject to Euratom safeguards and inspections. The Office for Nuclear Regulation—the ONR—which is the UK’s nuclear regulatory agency, has repeatedly asserted that it will be unable to implement equivalent safeguarding standards by March 2019. To deliver the new domestic regime, the ONR will need to double the number of its inspectors by 2019 and triple the number by 2021. The costs of purchasing and installing replacement equipment would, in its testimony,

“likely be well in excess of £150m”.

Once established, the regime is expected to involve an ongoing cost of £10 million per annum. Without safeguards and nuclear co-operation agreements, critical areas of nuclear trade and research collaboration would cease. The United States, on which we depend for nuclear equipment, will not trade with us unless a regime is in place. Moreover, a new safeguards regime will need to be implemented before any nuclear co-operation agreements can be concluded and ratified. That is to say, none of the necessary third-party nuclear co-operation agreements, or NCAs, can be negotiated in advance of a settled regime.

At present, in excess of 20% of our power is provided by nuclear energy. The flow of nuclear goods and services that are required to sustain this output cannot continue without a safeguards regime. The construction of new nuclear power stations requires the importation of specialised equipment and personnel that is regulated by the codes of the IAEA. EDF, which is overseeing the construction of a nuclear power station at Hinkley Point, has expressed grave anxieties in this connection. In a very telling memorandum, it has revealed the extent of the international co-operation that was required to overcome a seemingly minor operational problem affecting the Sizewell B reactor, which arose when a seal on one of the heating elements failed. The supply chain involved France and the USA as well as the UK. Its point is that an impaired access to the international supply chain is bound to prejudice the safe and reliable operation of our nuclear power stations.

The UK hosts important nuclear research facilities, including the Joint European Torus at Culham, which is currently funded largely by Euratom. The Government have undertaken to meet the costs of JET until 2020. Thereafter, the future of the Culham enterprise is in doubt.

The next phase of the international fusion programme entails the construction of the International Thermonuclear Experimental Reactor, which is being constructed in Provence, France. ITER, which will exploit the developments at Culham, is one step away from an operational power plant. If we cease to be fully involved in this enterprise, we will squander our intellectual capital and forgo some significant business opportunities for British enterprises.

These troubles, and more besides, are the consequence of an ill-considered and intransigent attitude on the part of the Government in pursuit of their Brexit agenda. These difficulties could be mitigated to some extent if we were prepared to contract the delivery of our safeguards regime to Euratom, while maintaining our overall responsibility. In fact, this has been proposed in a recent report of the Business, Energy and Industrial Strategy Committee of the House of Commons. There is no other reasonable course of action.