Brexit: Small Businesses
Baroness Burt of Solihull Excerpts(5 years, 2 months ago)
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Baroness Burt of Solihull
To ask Her Majesty’s Government what assessment they have made of the preparedness of small business for a no-deal Brexit.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the Government have provided ample communication setting out the steps that businesses need to take to prepare for a no-deal scenario. As we set out in Implications for Business and Trade of a No Deal Exit on 29 March 2019, published last week, there is little evidence that businesses are preparing in earnest for a no-deal scenario; evidence indicates that readiness of small and medium-sized enterprises is particularly low.
Baroness Burt of Solihull (LD)
My Lords, the Government’s own no-deal impact assessment last week revealed the bleak picture that only 17% of small businesses that trade exclusively with the EU had signed up to the necessary identification to continue trade in Europe. Small businesses are far less able to prepare for a no-deal Brexit. They lack the legal and regulatory expertise to do so, and the cash and the space to stockpile. They, and we, are staring disaster in the face. Should we not put a stop to this madness now, halt the Brexit process and give everyone whose livelihoods and futures are at risk a say on the deal?
National Minimum Wage (Amendment) Regulations 2019
Baroness Burt of Solihull Excerpts(5 years, 2 months ago)
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Baroness Donaghy (Lab)
My Lords, I welcome this statutory instrument and the increases outlined by the Minister. As he knows, next month will be the 20th anniversary of the introduction of the national minimum wage, and I had the honour of being one of the founding members of the Low Pay Commission at the time. The recommendations we made impacted on and benefited 1 million women—and, incidentally, the world did not come to an end, which some forecasts had said would happen.
I am pleased that successive Governments have upheld the principles laid down by the original committee, and I hope that that will continue. Obviously, this was before the national living wage was introduced. However, one omission from our very first report in 1998, before the implementation, was the issue of accommodation offset. We were asked as a committee to look at that again, because we had not seen the significance of it.
I well remember being taken with the committee down to a convent in the middle of the Devon countryside to be gently lobbied by the Mother Superior and a number of nuns about the importance of having an accommodation offset. The Minister will know that it might have been gentle lobbying, but, my goodness, we were in absolutely no doubt whatever about the strength of feeling involved. The experience we had on the committee is a memory I will take with me for a long time. We were conscious that we were creating history, and I am very glad indeed that this is still here for us to admire.
Baroness Burt of Solihull (LD)
My Lords, I will fulfil the promise I made to the Minister on the previous statutory instrument and be brief. It is also a great relief from Brexit to be discussing something that is current and not contingent on anything else happening.
The statutory instrument talks about the national minimum wage amendment regulations, but the table refers to the national living wage. It does not take much to confuse me. I just want to explore that difference for a minute or two. The uplift of 4.9% for over-25s to £8.21 is very welcome and I accept and welcome the comments from the Minister on the progress that the Government are making to get to 60% of median earnings by 2020.
The concept of the national living wage was introduced by the Government in 2015. I appreciate the Minister’s comments on how the amount has increased but my understanding is that it is not a national living wage because it is not based on actual living costs. The Living Wage Foundation currently calculates it—although presumably it is due for an uplift as well—at £9 per hour and £10.55 in London. It says that the living wage is what people need to earn to live. Citizens UK says that there is a moral imperative on employers to pay that if they can and 4,700 businesses and 104 local authorities do.
We know that 20% of all low-paid workers are in the public sector. Can the Minister say what percentage of public sector workers are in receipt of the living wage? It was very good to hear the Minister’s comments on enforcement. Can he tell me how many companies have been found to be paying below the minimum wage and how many of these have actually been prosecuted?
In conclusion, I hope that we will be moving towards the living wage very soon. It is proven to be good for business because it improves staff morale and retention. It is good for society and for the Government’s coffers too, because 35% of those earnings will go to the Treasury.
Lord Stevenson of Balmacara (Lab)
My Lords, I declare an interest as one of my children is an apprentice aged over 19. He is in the first year of the apprenticeship and so would benefit from the figures that we have in front of us today. I have not discussed it with him but I am sure he will be delighted to hear that there is more money on its way.
My noble friend Lady Donaghy’s comments were well made and it is astonishing that we are 20 years into what was seen at the time as quite a revolutionary policy and which is now, in the words of the Minister who introduced the order, settled between all parties as a feature of our working environment. It is a good thing as it works for all sections of society, particularly those at the lower end of the pay spectrum.
This is the fourth consecutive year that I have been reviewing this order, so I took the change of looking back to last year’s Statement, when the Minister was also responding, although that was only his first time. I will repeat some of the things that were said then because I think that the issues are still relevant. There are two important points to put on record. The document in front of us is an excellent piece of work. Again, I congratulate the team responsible for it. It reads very well indeed. It is a bit scary to go back to what we learned at university about the economics of wage policy and the impact of living and national wages but, nevertheless, it is important to see it all there. The document itself is good but also it plays back to the work done by the Low Pay Commission, in place for 20 years now, but doing fantastic work. It is very good to see its ability to move from the national minimum wage conditions when it was set up in 1998 to now, with the national living wage, which progressively moves the lower paid on full rates up to 60% of the median wage. The commission has adapted and continues to do its work in a way that is important and effective for society as whole.
Three points were made last year which I think have been picked up in the current document. One concerned whether the approach that has been taken to calculate the impact of the national minimum wage has stood the test of time. It was good that the department decided to take external advice from an expert body, and it is good to read the report and evaluation, which goes some way to answer some of the points I raised last time. That gives us a good basis on which to go forward.
Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019
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The Earl of Lindsay (Con)
My Lords, like the noble Baroness, Lady Crawley, I am a vice-president of the Chartered Trading Standards Institute. The other interest I declare—as it is pertinent to the remarks I want to make—is my chairmanship of the government-appointed national accreditation body, the United Kingdom Accreditation Service, or UKAS. In that role, I welcome the work that has gone into this statutory instrument in respect to the transposition of the EU regulation on accreditation. I also welcome the consultative approach taken by BEIS and the Office for Product Safety and Standards with UKAS and other relevant stakeholders and the engagement surrounding that consultation. Like the noble Baroness, Lady Donaghy, I thank the Minister and his officials for the briefing we were offered on this statutory instrument.
I recognise that transposing EU regulations to make them operable under UK law necessitates some changes. None the less, the reassurance that there has been no change to government policy is important. Therefore, UKAS is generally supportive of the way that the accreditation regulations have been transposed. We are reassured by the Government’s continuing commitment to maintaining the United Kingdom’s regulatory standards for product safety and the conformity assessment activities required for demonstrating compliance. We welcome the fact that UKAS’s position as the sole national accreditation body has been retained.
However, there are one or two potentially negative impacts from the amendments to EU Regulation 765/2008, the accreditation and market surveillance regulation amendment. My one question today relates to what measures are in place to prevent a competitive and possibly profit-driven rather than a not-for-profit accreditation market developing for United Kingdom-based conformity assessment bodies. Have the Government considered what else they might do to safeguard UKAS’s position as a not-for-profit national accreditation body and to prevent other accreditation bodies offering accreditation in the United Kingdom?
Baroness Burt of Solihull (LD)
My Lords, I add my thanks to the Minister for conducting a consultation on this “minor” piece of legislation last week and for his explanatory letter to the noble Lord, Lord Fox, which has been passed on to me. However, after the meeting last week I have rather more questions now than I had in the first place.
In the event of a no-deal Brexit, this SI creates a new independent regime for checking product conformity, initially mirroring EU product-safety standards. The Government have combined 38 measures into one, creating a piece of legislation over 600 pages long. The concerns that I outlined at the meeting—which were subsequently outlined by the noble Baroness, Lady Crawley, as well—regarding the breadth of industries and the number of sectors covered by this instrument remain. It makes it difficult for Parliament to read and scrutinise let alone those organisations to which it actually applies. Any company, small or otherwise, looking at this piece of legislation would be daunted, and I do not accept the argument that the repetition over all the different sectors covered will be reassuring and ensure consistency of treatment between different areas, as was mentioned at the meeting last week.
I also do not think that the 241,000 businesses which will be covered by this instrument will thank the Government for making them wade through so much paperwork to find what they need. Surely one of the fundamental principles of a democratic society is that people should be able to know what the law is and easily understand how it applies to them. Today’s SI has the potential to undermine that principle.
We know that there is a premium on time before 29 March, and we certainly have plenty of SIs to get through, but the Government could have laid each of the measures separately and then grouped them together in smaller debates. Companies, and consumers, will not thank them for this tombstone of an SI.
At the meeting last week, I also raised the costs of implementation, which have been calculated at a total of £25 million. The analysis and evidence summary talks of a corporate manager or director taking an average of three hours to familiarise themselves with the new legislation. The £25 million is supposed to cover an estimated £54 billion-worth of GVA and £63 billion-worth of goods from our exporters to other EU countries, with about £104 billion imported from EU countries.
The impact assessment does not include the wider impact caused by the separation of the UK and EU product safety regimes. It is surely here where the biggest costs to businesses of a damaging no-deal Brexit would lie. No assessment that I can see is made of the cost of relabelling products—removing the old CE marker and substituting the new UKCA one. The manufacturers’ organisation Make UK told the BBC that,
“thousands of companies are going to have to spend millions of pounds collectively on changing all their markings to comply with the new mark”.
It does not include the cost to British exporters of having to seek approval from two notifying bodies: one based in the UK and one based on the EU.
My first question is: what assessment have the Government made of those costs to UK businesses and what knock-on effect will they have on consumer prices? Is this not another reason why the UK would be foolish to leave on 29 March without a deal? That is a rhetorical question: the Minister and I both know the answer to it.
My second question, to which I would appreciate an answer, regards the impact of a no-deal Brexit on our 176 notified bodies operating in the UK which provide more than 4,000 jobs between them. If the EU does not allow UKCA-marked products to be sold in the EU, there will be no incentive for foreign manufacturers to have their products certified in the UK. They will go to an EU-notified body to receive the CE mark and then import the products into the UK. Does the Minister agree with that assessment? In the light of it, are the Government seeking assurances from the European Commission that it would accept UKCA products in a no-deal scenario?
On the subject of the CE mark, I should like to ask a question on behalf of the charity Electrical Safety First. It is concerned that although the UK Government have created their own mark, it will not be a consumer mark widely recognised by the public. What plans do the Government have to raise awareness of the new mark among consumers? What are the timings and what transition plans are there? Electrical Safety First would like the Government to work with it and industry to raise awareness of the UKCA. That sounds like a fair offer to me. How does the Minister respond?
Next, I should appreciate some clarification on the expiry of the CE mark. The Government have decided that they will continue to allow products imported from the EU that bear the CE mark to be sold on the UK market and that this will happen unilaterally, regardless of whether the EU agrees to allow UKCA-marked products to be sold to the EU. At the meeting with the Minister, he referred to a transition period of 18 months using the existing marks for importers, and to one of 90 days for cosmetic product imports. We discussed that earlier today. But there appears to be no sunset clause on the SI. I presume the Government will have to change the law to ban CE marked-products from being sold in the UK should they ever wish to do so. Can the Minister clarify whether that is correct?
Finally, I will mention market surveillance. The UK will lose access to RAPEX—the EU’s rapid alert system—and ICSMS, the Information and Communication System on Market Surveillance, which we will replace with our own databases for market surveillance and public protection to help remove unsafe or non-compliant products from the UK market. The charity Electrical Safety First is unsurprisingly exercised about counterfeit goods as well, particularly those sold online. What plans are there to prevent more counterfeit and substandard electrical goods from being sold, particularly online, after Brexit?
I am sorry for the length of my remarks and promise to make it up to the Minister in the next SI, but this is, as I have mentioned, an inordinately long one. I appreciate that I have asked a lot of questions, so will the Minister undertake to write to me on any he may not manage to answer today?
Lord Stevenson of Balmacara
My Lords, I join other noble Lords in thanking the Minister for organising the meeting held last week on this SI—as has been said, it was very useful in covering a lot of the ground that otherwise would have needed to be raised today. It is interesting to have had the experience of going through such an extraordinarily large tome with so many details; it took me into areas of public policy where I did not think I would ever have to go. I particularly enjoyed, and of course immediately read first, the intoxicating liquor order 1988, which was closely followed by the strawberry regulations. Both were of immense interest and, for those who have not yet managed to get that far through the document, worth the journey.
I will not raise many of the points which have been made, but I will come back to a point raised during the meeting which has not yet been properly answered. There is substantial additional work implicit in the change in regulations, which has already been mentioned by the noble Earl, Lord Lindsay, and my noble friend Lady Donaghy, for the United Kingdom Accreditation Service and the Health and Safety Executive. It is not yet clear that the additional resources that may be required will be funded and that support will be offered. Could the Minister confirm that that will be the case? Additional work will clearly be required; it may be of a short-term and temporary nature, but I suspect that it will be continuing. Assurances need to be given that the additional work will be properly covered, or we will lose.
On that same theme, the Minister said as he introduced this that it was really all about consumer confidence and product safety. Of course, that will be only as good as the body and individuals which have to police it. That will largely fall to trading standards—we have already discussed some of the issues that are raised in this. I asked at the meeting, and ask again: what will the financial arrangement be for this? Clearly we want good product safety and consumer confidence, but will get them only if we pay for them. In the past it has been assumed that the additional work can be picked up by those responsible for trading standards, which are largely local authorities. When primary legislation has gone through this House in the past, we have also asked these questions and had assurances that substantive new additional work applying from primary legislation—such as the recent Bills going through this House—would be funded. Indeed, mechanisms for that have already been described and put in place. Can we again have some confirmation that the additionality implied in these regulations will also be funded?
Lord Henley
I will certainly write to the noble Baroness on that and I hope that we can give further and better particulars, as they say in the law. She will then know exactly whom we have spoken to and I hope that she will feel content that we have gone out largely to the right people.
The impact on business was raised by a number of noble Lords. I explained what was behind the impact assessment, which was published on GOV.UK. We found the impacts as being de minimis; they are largely costs of familiarisation. I dare say that, because we are trying to replicate what already exists, familiarisation should not be too much of a problem. As is always right and proper, the impact assessment was shared with the Regulatory Policy Committee. I hope that the smooth arrangements we have put in place will help businesses in understanding that some of the new administrative requirements will make life easier and ease the impact of exiting the EU.
The noble Baroness, Lady Crawley, asked about the cosmetics database and whether I could guarantee that no consumer would be put at risk. She is right to emphasise the importance of this, because cosmetics can have a detrimental effect if not properly policed and supervised in the right way. The SI includes a requirement that all cosmetic products must be safe for human health. Each cosmetic product has a responsible person to ensure that it is safe before it is placed on the market. I assure her that preparations for the UK database are well advanced and trading standards has the power to take action against unsafe products.
Baroness Burt of Solihull
Can I take the Minister back to the costs of labelling and of having to register with two separate bodies? Has any assessment been made of the cost of that? It is an issue that was raised by others who know a lot more about this than I do.
Lord Henley
That is not a direct cost of the SI; it is a cost of leaving the EU. That is why it was not part of the impact assessment. I will, as I am planning to do for one or two other questions she raised, write to the noble Baroness on what the extra costs are likely to be for registering both here and in the EU.
My noble friend Lady McIntosh asked about the uncertainty of the loss of access to the product safety database and what effect it will have on consumers. The new product safety database will be available to all market surveillance scientists from exit day. The new service will give the UK national capability to collate information on unsafe and non-compliant products, share information and rapidly alert market surveillance authorities. In addition—as was raised by the noble Baroness, Lady Burt, who talked about RAPEX—the UK will retain access to any publicly available information on RAPEX.
Employment Rights (Amendment) (EU Exit) (No. 2) Regulations 2018
Baroness Burt of Solihull Excerpts(5 years, 3 months ago)
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Baroness Burt of Solihull (LD)
I thank the Minister for his explanation. These four statutory instruments have been somewhat of a revelation to me. I was not aware that Northern Ireland has a different system of rules, although it comes under the same European legislation as the rest of the United Kingdom. I hope that the Minister and other colleagues will forgive me if some of the questions I am about to ask seem a little naive: I do not have the same level of expert advice, and hope that the Government and the Official Opposition will bear with me. I also did not get the TUC paper referred to by the noble Lord, Lord Monks.
Two of the statutory instruments obviously relate to Northern Ireland, and I was surprised to discover that legislation which presumably covers the same European Union rules differs. Why, under the same general legislative EU framework, does Northern Ireland go its own way, to a degree? In what way do the Northern Ireland regulations differ?
The regulations for mainland UK and Northern Ireland cover paternity and adoption pay, fair employment tribunals, industrial tribunals, shared parenting, working time, posted workers, small businesses and so on. I saw no reference to TUPE regulations in the Northern Ireland statutory instruments. I am sure that that is my omission, but do those elements operate differently? Surely TUPE exists in Northern Ireland as it does in the rest of the United Kingdom.
I also note that the statutory instruments amend primary as well as secondary legislation, so presumably the instruments cover areas where the primary legislation is amendable by secondary legislation. Can the Minister confirm that that is correct?
I have another question on the instruments relating to England, Wales and Scotland. Paragraph 12 of the main regulation relates to statutory paternity pay where a person has worked in the EEA. Can the Minister confirm that statutory paternity pay will not be affected by our exit from the European Union for fathers working in the rest of Europe?
Finally, I get twitchy when I read examples such as in part 1 of Schedule 1, paragraph 2, which states:
“In section 79(2) (entitlement to parental leave—supplemental) omit subsection (3)”
of the Employment Rights Act 1996. There are several such examples throughout the SIs. Can the Minister assure us that no existing rights are being omitted or weakened in any of the statutory instruments we are considering this afternoon?
In discussing the withdrawal Act—it seems a long time ago now—we sought assurances from the Government that employment rights would not be weakened post Brexit. Our fears were echoed by the noble Lord, Lord Monks. We do not know what will happen; indeed, one needs a crystal ball to predict what will happen next week, let alone after any possible Brexit. Will the Minister assure the House, as much as he can, that employment rights will not be diminished?
In conclusion, I hope that none of these instruments will ever need to apply, unless we commit the wilful act of self-destruction of leaving the European Union without a deal. The Minister alluded to that. Is he still feeling optimistic?
Lord Balfe (Con)
My Lords, I draw attention to my various interests in the register to do with trade unions. I am very pleased to follow the noble Lord, Lord Monks, a distinguished former general-secretary of both the TUC and the European TUC. Many of us in this House forget that the European TUC is a very powerful body that represents workers from all over Europe and has had a decisive impact on much legislation that has covered workers.
I have also been extremely pleased recently to see that the Government, on the road to Damascus, are now again talking to the unions. It must be two and a half years since union leaders last met a Prime Minister. When I was working as trade union adviser to David Cameron, one of my jobs was to ensure that that scenario never existed. I hope that the present Prime Minister will realise that a regular dialogue with the trade union movement is for the good of Britain, because it enables trade union leaders, who have a very good bird’s eye view of what is going on in Britain, to contribute to the national wealth.
We have spent most of today talking about things which we really hope will never matter—in other words, that we will not leave the EU without a deal and that therefore none of what we have dealt with today will come into force. I noticed that both of the main SIs state that they can be,
“deferred, revoked or amended”.
My first question is whether consideration has been given as to which one of those three is likely to come into force. I would like them never brought into action and revoked straightaway, but the word that worries me the most is “amended”. In other words, they would no longer be SIs if we leave without a deal but would be amended in some way to accommodate a deal.
My next point is on the enshrinement in law of workers’ rights in the side agreement that we had with the EU. When I met Gavin Barwell, the Prime Minister’s chief of staff, I specifically asked: “How strong is this agreement and how enforceable is it?”. He confirmed to me that it was not enforceable. When legislation comes to this House to deal with post Brexit when there is a deal on the table, a number of Members will be looking to write those agreements on workers’ rights into Bills, to make them fully enforceable.
I want to make one or two points on the documents in front of us. I will try not to copy what the noble Lord, Lord Monks, has said. However, there is concern about workers’ councils. They play a valuable role and we will be looking to the British industry part of workers’ councils to maintain a commitment to them—in other words, not to use the absence of Britain from the EU as a way of weakening the ability of workers from the British side of workers’ councils to continue to participate in them. We will be looking for the Transnational Information and Consultation of Employees Regulations to be kept fully in force.
What will happen if an external request is made for a new European workers’ council from a European country? I notice that companies that operate in Switzerland often include Switzerland within their scope and include Swiss worker representatives as EWC members. Switzerland is not in the EEA—that is one reason why I use this example—and the provisions do not appear to make provision for workers’ councils continuing to include the UK within their scope on a voluntary basis. I would like to know what the Minister sees as the future in that area.
On the updating rights, the Minister can enact legislation to keep UK law in line with EU law. I would like to think that we will do our best to do that. Has he had any thoughts on that?
I turn briefly to the other regulations. I agree completely with the noble Lord, Lord Monks, that we need a much clearer definition of what “TUPE-like” means. This looks like something, but is not quite the same. I would like to see an agreement that TUPE-like means that TUPE, as practised at the moment, will be the standard to which Ministers will try to hold any future statutory instrument or legislative developments.
I thank the Minister for bringing this to the House tonight. I look forward to his responses and promise him that when labour relations matters come up, I will continue to represent the 30% of paid-up trade union members who vote for the Conservative Party.
Home Care Workers
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Baroness Burt of Solihull (LD)
My Lords, the Minister says that the law is clear, but the problem lies with its enforcement, as the noble Lord, Lord Wills, has said. Too many home care workers get confusing pay packets which can obscure the fact that they are not being paid for travel time. Could it not be made a legal requirement that employers separate out travel time and make pay packets clearer on the different elements of pay?
Lord Henley
The noble Baroness is right to draw attention to transparency in pay packets, and I can give an assurance that legislation will take effect in April of this year for the first time entitling all workers to receive a pay slip. Where a worker is paid with a reference to time worked, the pay slip will now also detail the number of hours worked.
Brexit: Consumer Rights
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Lord Henley
The noble Baroness, who has great experience in this field, is right to draw the House’s attention to the high levels of consumer protection that we have in this country. I was grateful to the noble Baroness, Lady Burt, for stressing from the Liberal Democrat Benches only yesterday that they are higher in this country than in most other countries in the EU. Obviously, as the noble Baroness will be aware, we want those protections to be maintained—that is what we have made clear—and we do not think that consumers should see any immediate differences in protection between UK law and that of the member states immediately after exit. It is quite right and proper that UK enforcers should continue to co-operate with their colleagues in other EU states wherever possible. That was also something I was keen to stress in yesterday’s debate.
Baroness Burt of Solihull (LD)
My Lords, I am getting a sense of déjà vu all over again as this is the third time this week that this question has arisen. I do not believe that the Minister has managed to answer the question once, so will he indulge me again? How will British consumers be protected—if and when we leave the EU—regarding the terms and conditions of purchase before we buy, and afterwards in the event of purchasing faulty goods?
Lord Henley
My Lords, I too feel like this is the latest in a series of number 11 buses coming along together. I have been keen to stress on all occasions—on Tuesday, yesterday and today—that UK consumers should not see any immediate difference. As always, they should continue to read the terms and conditions and I am grateful to the noble Baroness for reminding them of that. They should take advice where appropriate from Citizens Advice and, as I said in response to my noble friend Lady Wilcox, there will still be funding for at least one year for the UK European Consumer Centre. We will consider whether to extend that during the course of the year.
Brexit: Consumer Protection (European Union Committee Report)
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Baroness Burt of Solihull (LD)
My Lords, we are here to take note of the European Union Committee report on the effect on consumer protection of withdrawal from the European Union, and I certainly commend the committee and the noble Baroness, Lady Kennedy of The Shaws, for undertaking this very important work. I was not a member of the committee, so I am extremely grateful for the clear and very interesting account that she gave of what happened on it.
The report tries to be positive, but I sincerely doubt whether any situation that we try to construct for ourselves from outside the EU to protect consumers will ever measure up to the protection that our own consumers—and EU consumers—currently enjoy through the complex and intertwined relationships that have developed to protect them over the past 50 years.
However, paragraph 20 of the report makes the point that our national law often provides for a higher degree of protection than the EU. That is true, and I truly hope that we will continue to be leaders in the field of consumer protection policy. But, since the interaction that we will have with our hitherto European partners will be so severely diminished, opportunities to learn from each other and create legislation to more effectively protect consumers will be severely limited. Consumers in the EU and the UK will be the poorer.
However, the government response to this is that existing consumer protections that are based on EU law in the UK will be retained. That will be fine when UK customers buy from UK-based traders—and ONS figures tell us that 82% of UK online purchases come from the UK-based companies. But, of course, if we are buying from EU-based companies—or EU citizens buy from UK-based companies—the situation will be different and protections will not be the same, particularly ongoing.
In paragraph 60 of the report, the Government is requested to address specifically the rights of UK citizens who visit EU 27 countries post Brexit. In their response I am unable to see anything that is particularly clear or helpful, other than the fact that they are working on it. I ask the Minister: have I got this wrong? If I have not, can he confirm when we will know what protections UK consumers visiting the EU 27 will enjoy?
A key issue raised by the report concerns how the Government are going to maintain access to the cross-co-operation mechanisms that facilitate the protection of European consumers. The noble Baroness, Lady Hayter, referred to this in the statutory instrument that she, the Minister and I took part in last night, on preparing the UK law in the event of a no-deal Brexit. She said that the Government had ended,
“the requirement on our enforcement bodies to help other EU states in the interest of their consumers. They have made it voluntary rather than a requirement. That was never necessary”.—[Official Report, 15/1/19; col. 208.]
Can the Minister explain why this step was taken? If consumers on both sides benefit, what would be the reasoning for discontinuing it?
In paragraph 84 of the report, grave concern was raised by the Select Committee about the clear evidence that national regulatory and trading standards bodies are already struggling to fulfil their important roles because of financial constraints, even before the additional complications and challenges of Brexit. The noble Baroness, Lady Kennedy, has already mentioned this. All the work that our consumer protection bodies do needs to be properly funded. If it is not being sufficiently funded now, what hope is there for protecting the needs of consumers in the future?
Finally, in the Government’s response to this question and others, they say that,
“the Government is fully committed to securing the … best possible deal for consumers”.
Surely the best possible deal is the deal that we have now.
Consumer Protection (Enforcement) (Amendment etc.) (EU Exit) Regulations 2018
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, this instrument is part of our EU exit contingency planning. It will not be needed should the UK conclude the withdrawal agreement with the EU.
Several laws allow for collective redress where infringements of consumer protection laws take place. The first of these is the consumer protection co-operation regulation, known as the CPC regulation. The reciprocal arrangements that this EU law sets out require enforcers to act on requests from their counterparts in another EU member state. They are required to investigate and, if necessary, take action to end infringements of EU consumer law where the collective interests of consumers in another member state are being harmed.
The second of these laws is the injunctions directive. The reciprocal arrangements in this EU directive allow enforcers to take action in the courts of other member states to stop the relevant infringement. In the UK, Part 8 of the Enterprise Act 2002 implements the injunctions directive as well as providing the UK’s enforcement mechanism for the CPC regulation. It enables certain UK and EU enforcers to apply for enforcement orders to stop the infringement in question, where listed EU consumer laws are being breached— known as community infringements—and the collective interests of consumers are being harmed. Lastly, UK enforcers are given the necessary investigatory powers through Schedule 5 to the Consumer Rights Act 2015.
After EU exit, and in the absence of a deal, the CPC regulation and injunctions directive will no longer apply to the UK as we will cease to be a member state. In consequence, UK consumer enforcers such as the Competition and Markets Authority will no longer be part of the reciprocal cross-border enforcement arrangements. This instrument therefore revokes the CPC regulation, which will otherwise continue to apply in UK law. This prevents a situation in which UK enforcers are required to assist their EU counterparts while EU enforcers are not under the same obligation.
The instrument also amends the Enterprise Act so that EU enforcers cannot apply for enforcement orders in the UK courts. This prevents a situation whereby EU enforcers remain able to take legal proceedings under the injunctions directive in UK courts while UK enforcers lose their equivalent right to take proceedings in the EU. However, the instrument does not prevent UK enforcers co-operating with their EU counterparts. UK public bodies will remain able to share information that they hold in their capacity as enforcers under Part 8 of the Enterprise Act to assist their counterparts abroad, although we recognise that cross-border enforcement co-operation to protect consumers will become more limited in a no-deal scenario.
The instrument also ensures that UK enforcers retain the powers that they have now to continue, within the UK, to investigate and address infringements of UK consumer law, including retained EU consumer law, after exit day. These laws are set out in the new Schedule 13 to the Enterprise Act inserted by this instrument.
In conclusion, these changes are a necessary use of the powers of the EU withdrawal Act and I commend the instrument to the House.
Baroness Burt of Solihull (LD)
My Lords, I thank the Minister for his letter of 7 January to my colleague, my noble friend Lord Fox, explaining much of the reasoning behind this statutory instrument. I sincerely hope that we will never ever need the provisions within the instrument; the effect of the vote that has just been held in the other place on the prospect of no deal remains to be seen. The letter says that the regulations,
“form an essential part of the government’s preparations to ensure a functioning statute book should the United Kingdom leave the European Union without a deal on 29th of March 2019”.
There has been much speculation about what would ensue should that happen, and we know that no one—or very few individuals, anyway—would want us to be in that situation. However, I wonder if the Minister knows how many more statutory instruments there are to come before 29 March in his own department alone? I understand that many have not yet even been drafted, but I would be very grateful, and I am sure the House would be too, for his best estimate of just how much work remains to prepare for that potentially disastrous eventuality.
The UK has a proud record of close and complex co-operation with the EU on consumer protection matters, but we know that if there is a no-deal withdrawal, UK consumer protection enforcement bodies will no longer be a part of the reciprocal cross-border enforcement arrangements in the consumer protection co-operation regulations or the injunctions directive. If the EU and the UK lose their mechanism for cross-border collaboration, we will all be the poorer for it. We will no longer benefit from reciprocal rights under EU law. As the Minister said, the instrument introduces the concept of a “Schedule 13 infringement”. I think I understood what he was saying but I would be grateful if he elaborated on how this might work in practice.
The letter says that the instrument will,
“protect UK consumers in the case of infringement of EU derived UK consumer laws”.
Could the Minister give an example? We know that purchased items that were manufactured in the EU but supplied through UK-based suppliers will be protected under UK rules, which will cover the vast majority of our purchases of EU-manufactured goods. Could the Minister give an example of when this Schedule 13 infringement power might be required and how it might be enacted?
It looks to me as though UK enforcement bodies can retain powers to protect UK consumers but are not obliged to co-operate with their European partners. I am sure the Minister will have some reassuring comments to make about that; it is certainly in nobody’s interest not to co-operate, but it is unfortunate that we potentially find ourselves in this position.
My final question relates to the UK European Consumer Centre, which the Government will be keeping open for at least a year, until March 2020. All well and good, but what happens to EU-purchased goods after that date? If you buy something and it develops a fault after March 2020, to whom will you go for advice?
In conclusion, the UK has been a leader in consumer protection issues and has helped to shape much of existing EU legislation. The letter says that the Government are,
“fitted to agree high levels of cross-border co-operation on consumer issues”.
It would be very helpful to know what this co-operation will look like and when it will happen. Any explanation the Minister can give about proposed timescales and content would also be appreciated.
Postal and Parcel Services (Amendment etc.) (EU Exit) Regulations 2018
Baroness Burt of Solihull Excerpts(5 years, 5 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
The Government are confident that an agreement on EU exit will be achieved, but, as I said earlier, we must be prepared for all outcomes. If the UK leaves the EU without an agreement in place, these regulations will provide legal clarity for the regulator and postal operators. These draft regulations are made under the powers conferred by the European Union (Withdrawal) Act 2018, and correct deficiencies in the statute book associated with exiting the EU.
The Secondary Legislation Scrutiny Committee agreed with the Government’s recommendation that these regulations should follow the negative resolution procedure, when the draft was originally presented in July. However, at the time, the European Statutory Instruments Committee in another place felt that further explanation was required regarding the changes that these draft regulations present because of exiting the EU, and recommended that the draft regulations should be upgraded to the affirmative procedure. The Government accepted that recommendation.
If approved, the regulations would not change the operation of postal and parcel services beyond the changes that are necessary to ensure the regime is fully functional on exit day. There are four necessary changes. First, they amend the Postal Services Acts 2000 and 2011, to remove or replace references to EU obligations which will no longer apply once the UK leaves the EU. They also remove provisions which impose duties to notify the European Commission. Secondly, they remove from statute the Postal Services Regulations 1999, which implemented Article 22 of the postal services directive and required member states to designate a national regulatory authority for the postal sector. Thirdly, they revoke the European Commission’s decision of 10 August 2010 that established the European Regulators Group for Postal Services—the ERGP. Finally, they revoke Regulation 2018/644 on cross-border parcel delivery services. I will explain each in turn.
The Postal Services Acts 2000 and 2011 set out the minimum requirements of the UK’s universal postal service. The amendments to primary legislation governing postal services in these regulations will not affect the UK’s universal postal service. These regulations ensure that any remaining obligations under retained EU law are maintained in the Postal Services Act 2011 and remove redundant provisions. The regulations also remove obligations of the EU postal services directive, such as sharing information with the European Commission, because the UK will no longer be subject to the directive’s provisions or to the authority of the European Commission after we leave the EU.
The Postal Services Regulations 1999 designate Ofcom and the Secretary of State as the UK’s national regulatory authorities for postal services, a requirement of the postal services directive. Duties and functions of Ofcom and the Secretary of State relating to postal services are set out in the Postal Services Acts 2000 and 2011, so there is no longer a requirement to “designate” them under separate regulations.
The 1999 regulations will become redundant when the UK leaves the EU and are revoked in full by these regulations. The European Commission decision of 2010 established the European Regulators Group for Postal Services. The group consists of national regulatory authorities of member states. It provides advice to the European Commission and aims to facilitate consultation and co-operation between national regulatory authorities of member states.
Ofcom is a member of the group as the UK’s national regulatory authority. After we leave the EU, the UK will no longer hold membership status, as it will cease to be an EU member state, and therefore Ofcom will not be entitled to participate formally as a member of the group. The regulations therefore revoke this EU decision which contains a list of members, one of them being the UK.
The withdrawal from the ERGP was an issue of interest for the House of Commons sifting committee. The House requested further information on the effect of the UK’s non-participation in the ERGP and any alternative future arrangement. Ofcom intends to seek permanent observer status after the UK has exited the EU, in the way that NRAs of the European Economic Area states, Switzerland and EU candidate countries participate at present. Although observer status would remove Ofcom’s right to vote, the impact would likely be minimal given the co-operative nature of the forum. The group generally makes decisions based on consensus. If required, issues that would be voted on are the final work programme, published reports or opinions and the elected officials of the ERGP; that is, the chair and two vice-chairs. If granted observer status, Ofcom will still be able to engage in strategic discussions, negotiations and the sharing of best practice after we exit the EU.
I turn now to Regulation (EU) 2018/644 on cross-border parcel delivery services. The aim of this EU regulation, which came into force in May this year, is to increase regulatory oversight and price transparency of cross-border parcel delivery services within the EU. These regulations revoke the EU regulation in full. The EU regulation requires regular submission of information on cross-border parcel delivery services to the European Commission with the aim of publishing tariff information on member states’ cross-border parcel operators. This duty should no longer apply after the UK leaves the EU, as the UK will cease to be a member state and will no longer be subject to the authority of the European Commission. In any event, the principal information-gathering powers of Ofcom, the UK’s postal regulator, are provided under the Postal Services Act 2011. Ofcom already draws on this as part of its regulatory monitoring of postal services.
These regulations are a sensible and necessary use of the powers of the withdrawal Act, which will ensure that postal and parcel services continue to operate effectively after the withdrawal of the United Kingdom from the European Union. I commend them to the House.
Baroness Burt of Solihull (LD)
My Lords, I am grateful to the Minister for his explanation. My understanding of this piece of legislation is that it pulls us out of retained EU law that will no longer be applicable on our withdrawal from the EU if we get no deal and crash out; unfortunately the noble Lord, Lord Framlingham, who asked the “crashing out” question, is no longer in his place. Again, there is no impact assessment. I take the point that the Minister made earlier but I ask for his patience and for assurances on a couple of issues. I am sure he will be able to supply them.
My first question relates to the directives that we are rejecting which opened up the sector to competition and defined a universal postal service as a right. What will the situation be post Brexit for remote communities, for which the universal postal service is vital, even though it might not be economically viable to provide? As the Minister said, Regulation (EU) 2018/664 increases price transparency and regulatory oversight of cross-border parcel delivery services. Can the Minister explain for the ignorant what difference this is likely to make to price transparency and the prices of cross-border parcels to and from the UK?
Finally, what do the Government assess will be the effect of removing us from these EU regulations? Will our ability to send and receive parcels cross-border be affected in the future? I am not asking the Minister to look in his crystal ball here, although it would be helpful if he had one to hand, but does he think that it will be harder or easier? The Government have produced no impact assessment, but how can there be no effect of withdrawing from this legislation?
Lord Stevenson of Balmacara (Lab)
My Lords, again, I am very grateful to the Minister for the very full letter about this SI that I received last week. He covered all the points that he has made in his speech—and, in fact, a few more—and it was very useful in getting us ready for this debate.
However, there was one thing that I wanted to pick out relating to the Postal Services Regulations 1999, which were set to become redundant and will be revoked in full. I presume that the rationale for wishing to revoke them is that they are derived from an EU directive, I think, rather than a regulation, and they require member states to designate a national regulatory authority in the UK. In this case, Ofcom is the designated authority. The letter goes on to say that the functions of the Secretary of State and Ofcom in regulating the sector are set out in the Postal Services Acts 2000 and 2011, but I question whether the removal of the 1999 regulations, which designate Ofcom as a specific post of national regulatory authority in the UK, does not in some way discriminate against Ofcom as being the likely regulator for postal services in the UK. It is really a question of whether there will be any diminution in Ofcom’s authority as a result of this. I would be grateful for reassurance that there will be no change in substance, even though there will be a change in the legal basis on which it is appointed.
The noble Lord has spent a lot of time discussing the role of the ERGP and the future of that body with Ofcom as an attendee. It is an obvious point but attending is not the same as being a participant, and even though it is an informal body largely operating by consensus, there will still be a difference, so we will be a rule-taker and not a rule-maker in a very real sense. Again, I would like reassurance that there is no question that we will lose out in terms of how our postal services flow and our parcels are delivered in the future.
I have two further points. Like many noble Lords, I am sure, we have received a number of representations from those involved in cross-channel activities, particularly about getting access to goods and bringing them through the Channel Tunnel to make sure that markets in the UK are satisfied. Therefore, this is about inward goods but it is also about external goods. A lot of material flows out through the tunnel to other places, and a particular issue is time-sensitive goods. Is there anything that the noble Lord feels it appropriate to share with us, particularly in relation to recent comments by his colleagues in the Department for Transport about the difficulties in ensuring that goods move backwards and forwards? Would that impact on anything that these regulations should do? Time-sensitive goods are obviously the most important, such as fresh goods and other materials that need to arrive at a particular time. These will be affected by blockages and changes in the overall system. Where they are postal, additional regulatory authority and other issues may be engaged, and there may be costs involved that we are not yet aware of. I would be grateful for some comments on that.
Finally, paragraph 7.6 of the Explanatory Memorandum deals with Article 7 of the EU parcel delivery regulation. I recently saw documentation from the Institute for Government, which has been looking at the Government’s readiness for Brexit in the case of a no-deal crash out. One issue flagged as red, and therefore not ready, is parcels. Does the Minister have any information on that, given that it falls within his brief? Is there a problem here and, if so, is it something that he wishes to share with us? The Explanatory Memorandum makes the point that the EU parcel delivery regulation is largely covered by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. It goes on to say:
“Therefore, the EU Parcel Delivery Regulation will become substantially redundant following the UK’s exit from the EU”.
But “substantially redundant” is not the same as “completely redundant”. Will the Minister spell out the differences that are envisaged?
Competition (Amendment etc.) (EU Exit) Regulations 2019
Baroness Burt of Solihull Excerpts(5 years, 5 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the UK has a world-renowned competition regime, but currently the domestic system is highly integrated with the EU competition system. The primary aim of this SI, therefore, is to remove provisions in domestic legislation associated with being part of the EU competition system. While the draft withdrawal agreement with the EU sets out separation arrangements on competition, the Government are preparing for all contingencies. Should we leave the EU without an agreement in place, this statutory instrument will minimise the litigation risk for the Competition and Markets Authority and provide legal clarity and certainty for businesses and consumers; that is why the statutory instrument is before the House today.
The Secondary Legislation Scrutiny Committee has drawn this SI to the special attention of the House on the ground that it gives rise to issues of public policy likely to be of special interest. As the Scrutiny Committee correctly noted in its report, this statutory instrument makes amendments to the Competition Act 1998 and the Enterprise Act 2002, and makes provision for incorporating European block exemption regulations. I will set out the main changes made by the SI, including those raised by the Scrutiny Committee.
First, the Competition Act 1998 sets out prohibitions against anticompetitive conduct in the UK and empowers the CMA and sector regulators to investigate and take enforcement action against infringements of those prohibitions. The Competition Act, together with EU regulations, also empowers the CMA to investigate and take enforcement action against infringements of EU competition law and provides for investigation co-operation between the CMA, the European Commission and member states’ national competition authorities. This SI amends the Competition Act to remove the CMA’s power to investigate anticompetitive agreements under EU competition law, as it will investigate solely under UK law after exit.
The Scrutiny Committee noted that the SI makes provision for the continued application of pre-exit EU competition case law of the Court of Justice of the European Union after exit. The committee is referring to changes the Government have made to Section 60 of the Competition Act. Currently, Section 60 of the Competition Act provides that competition regulators and UK courts must interpret UK competition law in a manner consistent with EU competition law. The statutory instrument revokes Section 60, as it is inappropriate and contrary to the withdrawal Act to require UK courts to follow ECJ case law after exit. It introduces a new Section 60A, which provides that UK courts and regulators will continue to ensure consistency with pre-exit EU competition case law when interpreting UK competition law, but they may depart from that case law where appropriate in specified circumstances. This approach aims to provide consistency and clarity in the law for courts, regulators and businesses, which look to legal precedent when interpreting the law, while also allowing the competition regulators and UK courts to depart, where appropriate, from EU case law.
With respect to private damages claims, claimants can currently pursue follow-on claims in UK courts, based on enforcement decisions of the European Commission and the CMA. After exit, claimants will still be able to bring private damages claims in UK courts; however, UK courts will not be bound, as a matter of statute, by European Commission decisions. This approach aligns with the European Union (Withdrawal) Act, which provides that UK courts will not be bound by decisions of EU courts after exit.
Under the current system, the European Commission makes block exemption regulations, which exempt certain categories of agreements from EU competition law, where they are believed to have a neutral or beneficial effect on competition. Agreements which benefit from an EU block exemption are also exempt from UK competition law. At exit, all of the seven current block exemptions will be incorporated into UK law, as retained block exemptions. Agreements that meet the terms of the retained block exemptions will continue to be exempt from domestic competition law. This statutory instrument amends the retained block exemptions so that they operate effectively in domestic law. It also empowers the Secretary of State to vary or revoke the retained exemptions.
I turn to the Enterprise Act 2002, which contains the rules on mergers. Currently the CMA is responsible for investigating mergers to ensure that they do not have anti-competitive effects in the UK market. However, if a merger triggers the turnover thresholds set out in the EU Merger Regulation, it is reviewed by the European Commission, including the UK aspects of the merger. After exit, the EU Merger Regulation will no longer apply in the UK, and the UK dimensions of mergers will be reviewed solely by the CMA. The statutory instrument amends the Enterprise Act to remove references to the EU Merger Regulation and other provisions related to being part of the EU’s one-stop shop for merger clearance in the single market. This statutory instrument also makes transitional arrangements for CMA anti-trust and merger cases that are live at the point of exit, so that those cases can continue to be managed effectively.
Anti-trust law protects consumers from anti-competitive behaviour. Similarly, merger control is an important component of a healthy and growing economy. It is vital that we safeguard the legal framework that protects consumers and our competitive market. This statutory instrument achieves these goals by maintaining the strength of the UK’s current competition system, while making only those changes designed to separate the UK competition system from that of Europe in a no-deal scenario. I commend the regulations to the House.
Baroness Burt of Solihull (LD)
My Lords, unlike my noble friend Lord Kirkwood, I have not sat on the scrutiny committee so some of my questions may appear a trifle naive to more learned Members, for which I apologise in advance. I ask the Minister to bear with me.
The regulations address deficiencies in competition legislation arising from our exit from the EU. As I understand it, we will no longer be part of the EU competition system. Can the Minister say how this is likely to affect our ability to tender for EU contracts? Currently we do very well in tendering for and obtaining EU contracts. Am I correct in supposing that we will lose our ability to tender for EU contracts? If so, what estimate have the Government made of the loss of value that this will have on the UK economy? Perhaps the Minister can help me; there is no impact assessment because, according to the text, the SI is supposed to have no effect on private businesses and charities.
The regulations come into force on exit day. But when, if ever, will exit day be? Unless the very worst happens, presumably it will not be 29 March 2019. We understand that we are not going to crash out—that is not going to be allowed—but, on the legal information to which we have not been privy and on which they are voting right now in the other place, presumably exit day could be years away, if ever. The only way that the British people can know is to have a say on the deal that Mrs May has negotiated and vote to end the madness and remain.
We have the advice of the chief legal adviser to the EU that we could pull out of Brexit with no penalty right now. I appreciate that if Brexit continues to prevail, we have to have a plan. Having retained much existing EU law, we have to pick through the bits of legislation which will not apply or which are unlikely to work once we have left. These regulations relate to inconsistencies in competition law in the event of the worst possible piece of self-harm that the British people have done for generations—a no-deal Brexit.
The regulations relate to infringements of and exemptions from competition and merger law. Part 2 of the regulations is “Amendment of the Competition Act 1998”. Part 3 is “Amendment of the Enterprise Act 2002”. Part 4 is “Amendment of other primary legislation”. Part 5 is “Amendment of subordinate legislation”. Part 6 relates to amending and revoking retained EU law, and part 7 is “Saving and transitional provision”.
I am no legal expert, as I am sure has already become apparent to noble Lords, but the fact that no impact assessment has been produced because no significant impact on the voluntary or private sector is foreseen suggests to me that it is hoped that this is merely a tidying-up exercise. It may be technical, but I still fail to see why there is no impact assessment on what impact this competition crisis will have on our ability to trade and compete with our biggest market, indeed, the biggest single market in the world.
Lord Berkeley (Lab)
My Lords, my understanding is that these draft regulations will apply only if we crash out or similar with no deal at the end of March next year. As the noble Baroness said, there are some interesting questions, to which we need answers.
I should like to get some answers from the Minister about what happens to some of the cases that are being considered at present by either the CMA or the European Commission competition authorities. Such cases run for years. They may have started now, but they certainly will not finish. Presumably anything that starts before 29 March next year will continue to some conclusion by the competition authority in the Commission. Is there a time limit on that? How will the relationships between the UK parties, if you like, and the Commission and the other parties be handled in that transition period, which may go on for a great deal longer than any transition that the Prime Minister may be negotiating? Some of these competition cases go on for years.
One case I have got slightly involved in watching is between two railway manufacturing companies, Siemens and Alstom. Siemens has its head office in Germany and Alstom has its head office in France, I think. They have been proposing a merger of all their businesses for several years now. The European Commission has got to the stage of issuing something that is not technically an opinion, but seems to me to be an opinion, which suggests that a merger would be a bad idea for competition across Europe in the whole railway sector. The companies appear to have been trying to promote the merger as a way of preventing Chinese industries taking over everything in Europe, including the UK. Both companies have subsidiaries in the UK; some make trains, some make signalling and some do other things. If that merger went ahead on the continent—in Europe—could the CMA stop a merger between their subsidiaries in this country, or vice versa? How would it work? If they wanted to merge in this country, would the CMA’s decision apply in Europe?
Presumably, if any of this is to work at all, there has to be some communication between the CMA and the European Commission’s competition department on issues such as this. I would welcome a comment from the Minister as to how that conversation—it may be only a conversation—would happen and the extent to which a decision by one party would be binding on the other. I look forward to his comments.