Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023

Lord Callanan Excerpts

Monday 6th February 2023 Lords Chamber

Moved by

[Lord Callanan]

That the Regulations laid before the House on 11 January be approved.

Relevant document: 26th Report from the Secondary Legislation Scrutiny Committee. Instrument not yet reported by the Joint Committee on Statutory Instruments. Considered in Grand Committee on 30 January

Motion agreed.

Retained EU Law (Revocation and Reform) Bill

Lord Callanan Excerpts

2nd reading
Monday 6th February 2023 Lords Chamber

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

My Lords, this has been a characteristically excellent debate which I think reflects the importance of the Bill. Before I get on to the substance of the issues raised, I will congratulate our two maidens, the noble Baroness, Lady O’Grady, and my noble friend Lady Bray, on their fine maiden speeches. I hope that the House is a similarly engaged audience to the one that my noble friend Lady Bray had when she was presenting for the British Forces Broadcasting Service in Gibraltar. I noted with interest that she studied medieval history at St Andrews. I am also told that she was fired as a PPS in the other place in 2012 for voting against the coalition Government’s plans to reform this House. With those two bits of excellent experience, she will clearly make an excellent Member of this House.

Then we come on to excellent contribution from the noble Baroness, Lady O’Grady. I profoundly disagreed with all of it, of course, but she put it extremely well. I think it was the noble Baroness, Lady Andrews, who referred to her choice of “A Change Is Gonna Come” on “Desert Island Discs”. I was slightly more concerned by two of her other music choices on that programme—“Pieces of a Man” and “Burn It Down”. I hope neither of them is an omen for me or the House on some of our future debates. I congratulate both maiden speakers; I thought they did extremely well.

As we have had 60 speakers today, I am afraid noble Lords will understand that I cannot answer every Peer directly. I am sure that many of the points will come up again in Committee. I seem to have heard an awful lot of them in the Brexit withdrawal debates from essentially the same people, but I am sure we will raise the points again.

Before I turn to the wider contributions, let me first address the regret amendments tabled today by the noble Lord, Lord Fox, and the noble Baroness, Lady Chapman. I am sure it will come as no surprise to either noble Lord that I disagree with the amendments on all points. I do not accept the characterisation that these powers are unprecedented or weaken the scrutiny of Parliament. Indeed, as has been said many times, many of these laws were brought into force with no scrutiny of any kind by this Parliament and were merely directly imposed by Brussels. I noted with interest my noble friend Lord Lilley’s remarks on how this process really worked in practice from the point of view of a UK Cabinet Minister.

Furthermore, the sifting committee for the more substantial powers will ensure that Parliament can debate and vote where it deems appropriate. The scrutiny role of Parliament is not reduced but rather enhanced through this Bill. Of course, we respect the role of the devolved Administrations, which is why the majority of the powers contained in the Bill are conferred on devolved Ministers. It will be up to the devolved Ministers and Administrations to decide which direction they take their stock of retained EU law.

On the final two points of the regret amendments, we should of course aim to complete these reforms as quickly as practically possible. They are necessary to seize the benefits of Brexit and I do not accept that this will cause significant uncertainty nor that, if it did, uncertainty alone is a reason not to make these legislative changes. With regard to environmental law, workers’ rights and the other areas that noble Lords have referred to, I refer all noble Lords to the commitments that have been made by me in this House so far—and I will no doubt do so many times in the Committee debates to come—and by Government Ministers in the other place.

I move now to the substantive points raised in the debate. I thank my noble friend Lord Frost for setting into motion the two reviews into retained EU law that have culminated in the Bill—he has a lot to be proud of—and for explaining the importance of removing REUL from the statute book.

I also pay tribute to the remarks of my noble friends Lord Hannan, Lord Lilley and Lord Jackson for making the obvious point that Parliament will have much more say over this legislation than it did during our time in the EU, when direct EU legislation did not receive full parliamentary scrutiny before it became law in the UK. Had we not left the EU, much of this legislation would be amendable by the EU as if it were secondary legislation, without any direct input from this Parliament at all. By treating this legislation in the same way as domestic secondary legislation for amendment purposes, it can be amended much more easily by delegated powers. It is therefore appropriate that the changes to this body of legislation can be done via secondary legislation. Requiring REUL reform to be subject to primary legislation would take decades in many cases and would see a marked reduction in the UK’s dynamism. My noble friend Lord Dobbs amplified this point, emphasising that the Bill has come through the elected Chamber of this Parliament with only government amendments. It is only right and proper that we view the Bill in light of that majority.

I also commend the excellent speech of my noble friend Lord Jackson, who was right to note the majority that the Bill received at Third Reading in the other place and the lack of concern that this House often showed to powers that were exercised under the European Communities Act—another point also made by my noble friend Lord Hannan.

My noble friend Lord Howard of Rising made it clear that there are many opportunities for us to seize as part of Brexit. He is right to laud the success of our vaccine programme and to note, in the same vein as my noble friend Lord Lilley, that Parliament will have much more of a say in regulation that works on behalf of the UK.

I was disappointed by the remarks of the noble Lord, Lord Rooker, about parliamentary counsel and their work and approach. He is correct that parliamentary counsel are civil servants working for, and delivering the priorities of, the Government of the day. However, although I acknowledge the strength of the noble Lord’s views, it is not in keeping with the customary courtesy of Members to criticise those who cannot defend themselves in this Chamber.

The noble Baroness, Lady Chapman, and my noble friend Lord Hamilton of Epsom raised questions about why we are changing the EU withdrawal Act only five years after its passage. It was a bridging measure and was never intended to be on the statute book indefinitely; we discussed it at length at the time. Now that our future relationship with the EU is known and we have established a sense of legal certainty, it is right for us to review retained EU law. The Bill ensures that only retained EU law that we judge is right for the UK is assimilated into our statute book.

The noble and learned Lord, Lord Judge, the noble Lord, Lord Beith, and many others are concerned that the sunset could be a regulatory cliff edge. In our judgment, a sunset is the quickest and most effective way to accelerate the review of the majority of retained EU law. A major cross-government programme is already under way to identify retained EU law that can be reformed, repealed or replaced. When the Bill receives Royal Assent, a cross-government legislative programme will commence to sensibly manage change ahead of that sunset date. Without the sunset as a default for retained EU law, we risk unsuitable or obsolete EU laws still being on our statute book in 10, 15 or even 20 years’ time, which should not be acceptable to anyone in this House. We do not need regulations on the issuing of a certificate for the export of cheeses that the UK has never exported. Nor do we need regulations that grant additional aid for the consumption of butter, or hundreds of other obsolete EU regulations. A sunset ensures that we can quickly and easily remove outdated legislation of this nature.

Many noble Lords, including the noble Earl, Lord Kinnoull, and the noble Baroness, Lady Chapman, made claims that the Government will need to pass nearly 4,000 SIs before the end of this year. That is absolutely not the case. Our work to date has indicated that the number of SIs would be in the hundreds, not the thousands. Of course, this is still a significant task, but it is certainly not the impossible one that has been portrayed today. My noble friend Lord Udny-Lister is right that our first-rate Civil Service and legal service are more than capable of delivering the work required.

A number of noble Lords raised environmental concerns, as they often do, including the noble Baronesses, Lady Parminter, Lady Young of Old Scone and Lady Bennett, who all claimed that this will somehow remove environmental protections. I can absolutely provide the reassurance that my rightly cynical noble friend Lord Randall was looking for. The Government will ensure that we continue to improve environmental outcomes for this country. The UK has a long record of environmental protection, most of which was never dependent on the EU. The Bill will not change that, nor will it change the world-leading Environment Act that this Conservative Government are proud to have passed.

The noble Lord, Lord Trees, questioned whether this means that we are resiling from our commitment to food standards, and the noble Baroness, Lady Boycott, questioned what this means for the FSA. The Government remain committed to promoting robust food standards, both nationally and internationally, to protect consumer interests, to facilitate international trade and to ensure that consumers can have confidence in the food they buy.

The trade unionists, the noble Lords, Lord Monks, Lord Hendy and Lord Woodley, have claimed that the Bill will lead to a downgrading of UK workers’ rights. We have had similar debates a number of times across this Chamber, and I have no doubt that we will continue to have them on issues such as TUPE. As I have said many times before, their claim could not be further from the case. We are proud of the UK’s excellent record on labour standards. We have one of the best workers’ rights records in the world, one of the lowest rates of unemployment and one of the highest minimum wages. As I have repeated many times, our high standards were never dependent on our membership of the European Union; indeed, in many areas, the UK provides for stronger protections for workers than are required by minimum EU standards.

The noble Earl, Lord Kinnoull, and the noble Baronesses, Lady Randerson and Lady Andrews, raised the important issue of the impacts of the Bill on devolution. The provisions in the Bill do not affect the devolution settlements, and they are not intended to restrict the competence of either the devolved legislatures or the devolved Governments. Rather, the majority of the powers will be conferred concurrently on the devolved Governments, enabling devolved Ministers to make active decisions on retained EU law in their respective areas of devolved competence. The UK Government are committed to respect the devolution settlements to safeguard the union and to ensure that the provisions in the Bill work for all parts of the UK, and we will continue our discussions with the devolved Administrations with that in mind. When using the powers in the Bill, we will use the appropriate mechanisms, such as the common frameworks, to engage with the devolved Governments to allow for proper joined-up decision-making across this United Kingdom.

Speaking of devolution, the noble Baronesses, Lady Chapman and Lady Hoey, raised concerns about the specific impacts of the Bill on Northern Ireland. The territorial scope of the Bill will be UK-wide. It is constitutionally appropriate that the core measures in the Bill apply across all parts of the United Kingdom. As my honourable colleagues in the other place have committed, the UK Government will ensure that the necessary legislation is in place to uphold the UK’s international obligations, including the Northern Ireland protocol and the trade and co-operation agreement, after the sunset date.

To answer the specific question from the noble Lord, Lord Fox, on case law, the REUL Bill does not require the creation of brand-new case law across the piece. The Bill’s measures facilitate UK courts to treat retained case law in a similar way to judgments of other foreign jurisdictions by encouraging departure from retained case law in a careful and managed way to allow for the proper development of UK law.

Many noble Lords and noble Baronesses, including the noble Baroness, Lady O’Grady, have expressed concern about Clause 15(5) through the somewhat misplaced fear that it means that standards can only be lowered. Let me be clear: that is not a correct interpretation. By removing unnecessary or unsuitable regulations, or by consolidating multiple regulations into one, it will be perfectly possible to add new regulations with higher standards under the powers to revoke, provided that the overall regulatory burden is not increased. My noble friends Lady Bray and Lady Lea recognised that point in their speeches, noting that we can keep our high standards with the Bill. I can confirm that the Government share their ambition to ensure that the body of legislation is better suited to the UK. The review of legislation will enable us to improve regulation for business and the economy, which I also hope addresses the concerns of the noble Lord, Lord Hannay, although I suspect that it will not.

On business and trade, my noble friend Lady McIntosh raised the issue of imports and exports. I can confirm that we have already modified EU legislation covering the use of export restrictions to manage short supply, to make it effective in the UK following our exit from the European Union.

My noble friends Lord McLoughlin and Lord Hodgson spoke eloquently about their respective committee reports. The Government welcome the publication of the reports and I look forward to engaging with the recommendations that have been made. I hope my noble friends will understand that, given the reports’ recent publications, I cannot yet comment on what position the Government will take on the recommendations, but I will carefully study them and a formal response will be made in the usual manner.

Turning to the many comments on impact assessments and post-implementation reviews made by many noble Lords, including my noble friend Lord Hodgson, we recognise their importance and departments will be expected to take a proportionate approach to analysing the impact of SIs. For smaller-impact measures, this could include the completion of the impact section in an Explanatory Memorandum, a de minimis assessment or a fuller impact assessment, dependent on the regulation in question. Where expected business impacts exceed the current threshold of £5 million of annual business impacts, in the usual way departments will need to submit a full impact assessment for independent scrutiny if their change is a regulatory provision, as defined in the current better regulation framework, to which we are fully committed.

I am, of course, grateful for the recent recommendations of the Secondary Legislation Scrutiny Committee on impact assessments and will ensure that my officials make clear to departments the expectations for providing enough information to Parliament when studying new regulations. Departments will be expected to conduct proportionate monitoring and evaluation of their measures up to and including full post-implementation review. My officials will be providing more guidance on this to departments shortly.

I would like to reassure my noble friend Lord Balfe that the Government are committed to maintaining comprehensive safety standards, as he would expect, including in civil aviation and all manner of transport. Similarly, I can reassure the noble Baroness, Lady Ludford—although again I suspect she will not accept the reassurance—that, while I do not agree with her assessment of the level of scrutiny that laws received within the EU institutions, I can confirm that the Government will not, of course, weaken building safety standards.

This Bill will ensure that we can end retained EU law as a legal category, simplifying and bringing certainty to our statute book. It will also ensure that we can bring forward genuine reform, now ensuring that the UK’s regulatory system is suited to our needs. The Government are determined to see the opportunities of Brexit and I know that the Bill delivers that result.

--- Later in debate ---

Moved by

[Lord Callanan]

That the bill be committed to a Committee of the Whole House, and that it be an instruction to the Committee of the Whole House that they consider the bill in the following order: Clauses 1 to 6, Schedule 1, Clauses 7 to 10, Schedule 2, Clauses 11 to 20, Schedules 3 and 4, Clauses 21 to 23, Title.

Motion agreed.

Retained EU Law (Revocation and Reform) Bill

Lord Callanan Excerpts

2nd reading
Monday 6th February 2023 Lords Chamber

Moved by

[Lord Callanan]

That the Bill be now read a second time.

Relevant documents: 28th Report from the Secondary Legislation Scrutiny Committee, 25th Report from the Delegated Powers Committee

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

My Lords, before I get into my speech, I note with great anticipation that we will be hearing not one but two maiden speeches today. We are indeed blessed. Let me first warmly welcome my noble friend Lady Bray of Coln and the noble Baroness, Lady O’Grady of Upper Holloway. I am delighted to note that Lady O’Grady has come from advocating for a people’s assembly in 2013 to joining us here today—quite the journey. I look forward to both their contributions to this debate.

First, I thank the Minister for Industry and Investment Security for ensuring that the Bill has been sent to us in this place following much reasoned and thorough debate in the other place. At all stages there were commitments made across a number of issues, including our international obligations, employment rights and environmental protections. I reiterate those commitments now and of course will continue to do so throughout the passage of the Bill.

The retained EU law Bill is the next step in reasserting the sovereignty of Parliament and untangling the United Kingdom from nearly 50 years of EU membership. Retained EU law was never intended to sit on our statute book indefinitely. Indeed, the time is now right to review retained EU law and end it as a special legal category. The Bill will achieve this by enabling the Government to more easily amend, revoke or replace retained EU law by the end of 2023. This will ensure that the Government are able to create legislation which better suits the UK without taking decades of parliamentary time to achieve.

The Bill enables the UK to fully grasp the myriad opportunities to create modern and agile regulation, to support the ambitions of our sovereign nation. There are countless opportunities for reform ahead of us, ranging from financial services to data, and from artificial intelligence to transport and energy. Through the Bill, the Government will work to develop a new, pro-growth, high-standards regulatory framework that gives businesses the confidence to innovate, invest, scale up and therefore to create more jobs.

Clause 1 lays the groundwork for an ambitious and efficient overhaul of all retained EU law. It establishes 31 December 2023 as the sunset date on which retained EU law will cease to exist, unless there is further action by government and Parliament to preserve it as “assimilated law” without its special EU law features. In this way, the sunset ensures that outdated and unnecessary laws are quickly and easily repealed. It will also provide government departments with a clear timeline to seize reform opportunities. Indeed, a sunset is the quickest and most effective way to accelerate reform across over 400 policy areas and deliver the rapid repeal of retained EU law.

It is only right to set the sunset of retained EU law as the default position. This ensures that we are proactively choosing to preserve laws inherited from our membership of the EU only where they work in the best interests of the United Kingdom. Some retained EU law is of course inoperable and removing it from the statute book is merely good democratic governance.

The sunset extension mechanism, found in Clause 2, will allow specified instruments or specified descriptions of retained EU law to continue in force beyond the sunset date where that is necessary and in our interests. The sunset date cannot be extended beyond the end of 23 June 2026. It is my hope that this clause proves unnecessary, but it would be irresponsible not to include a clause to allow for unforeseen circumstances. Together, these two clauses will facilitate reforms that will help to grow our economy, deliver the opportunities Brexit provides and support advances in technology and science.

From the end of 2023, the Bill will end the special status of retained EU law on our statute book. Clauses 3 to 5 will ensure that EU rights, obligations and remedies retained by Section 4 of the withdrawal Act will cease to apply and that the application of the principle of supremacy and general principles of EU law as rules of interpretation will end. The retention of these principles provided legal continuity at the end of the transition period, but it would be constitutionally inappropriate to leave these retained EU law principles on the UK statute book in perpetuity. In many cases, the principles and rights in question already overlap with well-established provisions in domestic law. This has the potential to undermine the clarity of our law. To reflect these changes, Clause 6 renames retained EU law which has not been sunset as “assimilated law” after the end of 2023. This is not, as some have said, a simple “rebranding” exercise but is a new body of law without the EU law rules of interpretation.

Where further provision is necessary, the Bill provides powers in Clause 8 and Clauses 12 to 14 to codify specific rights and interpretive effects clearly and accessibly in domestic statute. We are proud of the history of the UK legal system, in which common-law principles and legislation are well established. These reforms will continue that tradition and ensure that our law continues to develop as one best suited to the UK context.

Past judgments of the courts have set too high a bar for UK courts to depart from retained case law and the judgments of EU courts. Now that we have left the European Union, we must reassess when it is right to depart from retained case law and establish more UK-focused precedents. The retained EU law Bill will free our courts to develop case law on retained EU law in a way that is right for the United Kingdom. Clause 7 introduces new tests for higher courts to apply when considering departure from retained case law. The tests give higher courts greater clarity on the factors to consider, and greater freedom to decide when it is appropriate to depart from that retained case law. The clause will also facilitate more decisions on departure from retained case law. It empowers lower courts to refer points of law to higher courts for a decision on whether to depart. It also confers on the law officers of the UK and on the devolved Governments similar reference powers and gives them the right to join cases to argue with regard to departure from retained case law.

Clause 9 gives the judiciary powers in connection with the ending of the supremacy of EU law. Courts and tribunals will issue incompatibility orders and will be able to grant appropriate remedies in legal proceedings where retained direct EU legislation cannot be read consistently with other pieces of domestic legislation.

Retained direct EU legislation, composed mainly of EU regulations over which the UK Parliament had no real say, often does not reflect the UK’s priorities or objectives to drive growth. We are currently forced to treat some of this legislation as equivalent to an Act of Parliament when amending it. This limits our ability to make vital reforms and is constitutionally inappropriate.

[Viscount Hailsham (Con)]

In respect of the legislation that is to be revoked or re-enacted, is my noble friend going to tell the House what consultation there will be with the various stakeholders, who must run into the thousands?

[Lord Callanan (Con)]

When secondary law is implemented there is a well-established procedure for appropriate consultations, which of course will take place. All those stakeholders are able to have their say through many Members of both Houses of Parliament as well.

Clause 10 will therefore ensure that retained direct principal EU legislation and Section 4 EU withdrawal Act rights are downgraded, ensuring that they are treated as equivalent to secondary legislation for the purposes of amendment.

It is critical to ensure that this body of law can be updated, amended and reformed using appropriate delegated powers. Without these measures, thousands of regulations will become stagnant—unable to stay up to date, react to new information or implement new international agreements without requiring a new Act of Parliament. Clauses 10 and 11 support this Government’s commitment to taking the necessary steps to put the UK statute book on a sustainable footing, guaranteeing that we can seize all the opportunities that leaving the EU supplies.

The powers in the Bill, combined with the downgrading of retained direct principal legislation, will make it easier for Ministers to amend or repeal retained EU law without the need for primary legislation. The powers have also been designed to deal with matters arising in relation to the sunset and the ending of retained EU law as a legal category at the end of 2023. It has become increasingly clear that there is a lack of subordinate legislation-making powers to remove retained EU law from the statute book. It is appropriate to take powers in the Bill to address this.

The retained EU law dashboard has identified over 3,700 pieces of retained EU law across 16 departments. While some of these laws will be preserved, of course, many are outdated, some are unduly burdensome, and others are increasingly unsuited to the UK’s economic circumstances. Therefore, it is necessary to have powers in the Bill that are capable of acting on a wide range of retained EU law covering a variety of different policy areas. This is not a power grab by the Government.

[Noble Lords]

Oh!

[Lord Callanan (Con)]

Rather, the powers in the Bill will enable us to seize the opportunities of Brexit through reviewing the laws that were imposed on us by Brussels during our membership of the European Union. Sectoral-specific legislation simply cannot be passed in a timely enough manner to ensure that these regulations are made suitable for the United Kingdom.

The powers in the Bill will enable the Government to more easily replace retained EU law with domestic laws that are tailored to the UK and, importantly, work in the interests of the United Kingdom, while the power to update will ensure that the UK keeps pace with advances in science and technology over time.

The Government recognise the importance of ensuring that legislation undergoes the appropriate level of scrutiny.

[Noble Lords]

Oh!

[Lord Callanan (Con)]

Well, it is more than some of the EU legislation did. I did not mean to start a debate on this.

[Lord Hannay of Chiswick (CB)]

My Lords—

[Lord Hannay of Chiswick (CB)]

My name is on the list.

[Lord Callanan (Con)]

I will take the noble Lord’s point.

[Lord Hannay of Chiswick (CB)]

I merely want to ask the Minister: what proportion of the legislation was, as he described it, imposed? Presumably, it was only the laws that we voted against.

[Lord Callanan (Con)]

Given his direct experience, the noble Lord knows exactly how the procedures work in Brussels. The point I was making was that the vast majority was introduced into UK law directly, without any appropriate scrutiny from Parliament beforehand. Obviously, there were lots of discussions in Brussels. He took part in some on behalf of the Council, and I took part in many in the European Parliament as well. But there was no scrutiny in this Parliament for much of that legislation.

[The Earl of Kinnoull (CB)]

I do not mean to be discourteous; I really am not. But the European Union Committee of this House and the European Scrutiny Committee of the other place sat for nearly 50 years doing the scrutiny that the Minister is saying did not take place. It was very heavy: it used 72 Peers from this Chamber in its structure. There was quite a lot of scrutiny going on.

[Lord Callanan (Con)]

There was scrutiny but no ability for Parliament to amend any of it, of course.

[Noble Lords]

Oh!

[Lord Callanan (Con)]

We will have this debate as we progress with the legislation, I am sure.

As I was saying, the Government recognise the importance of ensuring that legislation undergoes the appropriate level of scrutiny. The Bill has been drafted to ensure there are robust scrutiny measures and safeguards in place. This includes a sifting procedure for regulations proposed to be made under the powers to restate and the powers to revoke or replace.

Now that we have left the EU and regained our sovereignty, it is important that the UK has a regulatory system designed to benefit UK consumers and businesses. To ensure that the UK makes the most of the opportunities outside the EU, and as outlined in the The Benefits of Brexit report published in January last year, the UK is reforming how it monitors and evaluates future regulation.

It is important that we repeal the business impact target, which has too narrow a focus on the impacts of regulation. Our new system will ensure earlier scrutiny of proposed regulation; a more holistic assessment of its impacts on UK households, businesses and consumers; and a regulatory framework that is therefore fit for purpose.

We have seen how our legislature has evolved since leaving the EU. It is right that we now take the next step and relinquish from our statute book retained EU laws that do not work in the interests of the United Kingdom. The Bill ensures that we can achieve that, by seizing the freedoms afforded to us by Brexit.

The Government have read with interest the reports from the DPRRC and the Secondary Legislation Scrutiny Committee. I look forward to hearing reasoned comments on these from many noble Lords, particularly my noble friend Lord McLoughlin and members of both of those committees.

The Bill will benefit people and businesses across our country, reassert our sovereign approach to law and regulation, and support the interests of our United Kingdom, rather than those of Brussels. I know that many noble Lords in this Chamber will agree with me when I say that, in this current climate, protecting the UK’s best interests is of the utmost importance. We must therefore continue to surge forward to ensure that our statute book is put on a sustainable footing for all four sovereign nations of the United Kingdom. I beg to move.

Energy Bill Relief Scheme (Non-Standard Cases) Regulations 2023

Lord Callanan Excerpts

Wednesday 1st February 2023 Lords Chamber

Moved by

[Lord Callanan]

That the Regulations laid before the House on 11 January be approved.

Considered in Grand Committee on 31 January.

Motion agreed.

Employment Rights Legislation

Lord Callanan Excerpts

Wednesday 1st February 2023 Lords Chamber

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

My Lords, we are proud of the UK’s record on employment standards, having raised domestic standards over recent years to make them some of the highest in the world. Our high standards were never dependent on us mirroring the same rules as the EU. We are seizing the opportunities provided by Brexit to review all retained EU law and ensure that our regulations are tailored to the needs of the UK economy.

[Lord Woodley (Lab)]

My Lords, I am pleased that the Minister recognises the importance of employment rights to workers in Britain. But as he will remember, last week I asked, as did my noble friend Lord Watts, whether he would guarantee that no employment rights will fall off the statute books at year end. Not surprisingly, the Minister did not answer the question, which in my mind speaks volumes. Let us try again, please. Contrary to the impression given last week, at least 13 such legal protections, categorised as EU retained laws, are at risk. Let me name just one: TUPE, which protects pay and terms and conditions in the event of company takeovers. This right will be lost at the end of the year unless the Government actively save it. Again, I ask the Minister: can he guarantee that the TUPE protections will not be scrapped and are not for the chop?

[Lord Callanan (Con)]

As I have said to the noble Lord on this issue before, our workers’ rights, of which we are very proud, do not and did not depend on our membership of the EU. We have standards far in excess of those provided by the EU. Regarding the regulations the noble Lord mentions, as with all retained EU law we will look at that and see whether it is appropriate for the UK economy, and if necessary we will modernise, update or replace it.

[Baroness Ludford (LD)]

My Lords, when this came up in Questions on 23 January, the Minister, in response to the noble Baroness, Lady Wheatcroft, said that he had not seen the comments of CBI director-general Tony Danker, reported in the FT that day. He surely now has, but I will remind him. Mr Danker said that the plan to scrap EU laws wholesale is creating huge uncertainty for UK firms and risks throwing industry into some chaos; that companies are asking whether we are really going to erode maternity and paternity regulations and health and safety standards; and that he concluded that we need to recognise that divergence will often shrink our market size and add a skipload of red tape. Will the Minister recognise that business does not want this scrapping of EU laws?

[Lord Callanan (Con)]

We will no doubt have this debate at Second Reading of the rule legislation on Monday. If those are the comments of the director-general of the CBI, then he is wrong. Our paternity and maternity regulations are far in excess of those guaranteed by EU minimums. We are proud of that and will continue with them.

[The Earl of Kinnoull (CB)]

My Lords, when the rule Bill was introduced in the Commons in September, the Explanatory Notes said that there were 2,400 bits of rule legislation. When the notes appeared here on 19 January, that number had risen to 3,200. I have just accessed the dashboard, and that refers to 3,745 bits; that is an increase of more than 40 bits of rule legislation a day in the last 13 days. Can the Minister tell us how many of the 1,345 bits of rule legislation added since September are about employment rights?

[Lord Callanan (Con)]

As the noble Lord said, they are all available on the dashboard for him to refer to.

[Noble Lords]

Oh!

[Lord Callanan (Con)]

Noble Lords are confused: just because there is an item of retained of EU law, it does not mean it is necessarily still valid for the UK. It has been a very useful exercise to go back through the history books to find out about some of this stuff. Much of it is no longer applicable—some of it refers to sugar prices in the 1970s. My favourite bit is a regulation referring to the movement of reindeer between Denmark and Sweden. I am sure noble Lords do not believe that this is something we should retain on our statute book.

[Lord Balfe (Con)]

My Lords, does the Minister realise that many people are a bit worried that the end product might be the relaxation of some of the standards they have got used to, and that he could end this concern very easily by saying that whatever is changed, it will not worsen the protection currently in place?

[Lord Callanan (Con)]

I say to my noble friend that we have made it clear that we have no intention of weakening workers’ rights. I know this is a common refrain from the Opposition but let me repeat: UK standards did not depend on EU law. Let me give noble Lords an example. UK workers are entitled to 5.6 weeks of annual leave, compared with the EU requirement of four weeks. We provide a year of maternity leave, with the option to convert parental leave to enable parents to share care. The EU minimum maternity leave is 14 weeks. Our standards are far in excess of those provided by the EU.

[Lord Watts (Lab)]

The Minister is quite wrong: some protections are better than the European average, but lots more are not. The Government are very fond of rolling over trade deals; why can they not roll over the protections British workers have now, so that they will not worry about their future conditions?

[Lord Callanan (Con)]

Perhaps the noble Lord could write and tell me what parts of British law have worse standards than are provided by the EU, because as far as I am concerned the vast majority of our standards are in excess of those offered by the EU. We will take the opportunity of reviewing retained EU law to update and modernise it to make it fit for the UK economy.

[Lord Hannay of Chiswick (CB)]

Will the Minister recognise that his reply to the noble Baroness, Lady Ludford, showed that he had not read the article by the director-general of the CBI very carefully? The main point he made, which the noble Baroness raised, was that the uncertainty created by this Bill and the inability of Ministers at the Dispatch Box to say how many measures are going to be struck down, what they are going to put in their place and when they are going to do it is damaging inward investment. Will the Minister now reply to that point?

[Lord Callanan (Con)]

We are providing certainty. The sunset date provides certainty: a target by which departments can look at their body of retained EU law and decide whether it needs replacing, retaining or updating.

[Lord Cunningham of Felling (Lab)]

My Lords, why are the Government intent on diminishing scrutiny in this House, as is strongly suspected by many Members? Why are Members of this House being denied the opportunity to question Ministers on these changes, and why is Parliament itself, which apparently is in the Minister’s mind, being refused the opportunity to discuss these things?

[Lord Callanan (Con)]

Parliament is not being refused the opportunity to discuss these things. We will no doubt have many days of debate on the retained EU law Bill. All the regulations that are updated or changed will come back to Parliament for approval, in precisely the same way as the EU regulations were introduced in the first place—in fact, they were subject to a lesser degree of scrutiny. I would have a little more support for the position of some noble Lords if they had objected to the way this legislation was introduced into UK law in the first place.

[Lord Prentis of Leeds (Lab)]

My Lords, in the very short time I have had the honour of being part of this House, I have witnessed the concerns many noble Lords have about the increasing use of statutory instruments. I have seen the potential for the use of SIs in the Retained EU Law (Revocation and Reform) Bill to reverse a half-century of progress on basic rights for women. I would like to—

[Lord Prentis of Leeds (Lab)]

I bring to your Lordships’ attention the Part-time Workers (Prevention of Less Favourable Treatment) Regulations, which were passed in 2000. These EU regulations enabled the trade unions to win a court case on behalf of more than 100,000 part-time teaching assistants and school meal staff, 95% of whom were women, who had been denied access to the local government pension scheme. Can the noble Lord confirm that His Majesty’s Government have no intention of letting these vital regulations end on 31 December 2023?

[Lord Callanan (Con)]

I am pleased that the noble Lord finally got round to a question. We are proud of our record on workers’ rights, particularly women’s rights. I quoted earlier the figures on the maternity leave provisions that are applicable in the UK as opposed to the EU; we want to see that happy state of affairs continue.

Horizon Europe: UK Participation

Lord Callanan Excerpts

Tuesday 31st January 2023 Lords Chamber

[Viscount Stansgate (Lab)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper; it is not the first time that I have asked it.

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

The noble Viscount is getting ahead of himself. The Government have been pushing the EU to implement our association to EU programmes, including Horizon Europe, but the EU has delayed our association, to the detriment of researchers and businesses in both the UK and the EU. If this situation persists, we will be ready to introduce a comprehensive alternative programme, which will include a new long-term talent offer, a single innovation programme uniting industry and academia, a global collaboration programme and support for world- class infrastructure.

[Viscount Stansgate (Lab)]

My Lords, I thank the Minister for his Answer. He will surely agree that, for decades, the UK benefited hugely from our association with EU research programmes, but will he not grudgingly accept that, three years after Brexit, real damage has been done to British science by being out of it? The Royal Society wants to know, as do I: first, what will happen to the Horizon Europe guarantee fund when it runs out in March; secondly, what about the £2 billion that has been set aside for future association; and, thirdly, do the Government recognise signs of a brain drain caused by the uncertainty? In short, while we all want the UK-EU negotiations on the Northern Ireland protocol to succeed, we do not want plan B; we want plan A, as promised. When will the Government deliver it?

[Lord Callanan (Con)]

The noble Viscount needs to take that message to the EU. The Government stand ready to implement the agreement that we freely entered into; it is the EU that is refusing to do so. I agree with the noble Viscount that Horizon Europe has been very valuable. That is why we entered into an agreement—the TCA—to continue our association, but the EU refuses to progress it.

[Lord Krebs (CB)]

My Lords, first, does the Minister recognise that, when we were members of Horizon, we took out more money than we put in because of the excellence of our proposals? Does the Government’s plan B—if we do not associate with Horizon—include the extra money that we got from the European Union from other EU countries? Secondly, does the Minister agree that, when we were members of Horizon, we gained membership from our leadership role in designing research programmes and shaping the future of Horizon? What is the Government’s estimate of the loss to UK science of the lack of that leadership role?

[Lord Callanan (Con)]

My Lords, the Government need no convincing about the benefits of association with Horizon Europe. We benefited from it. The UK has eight universities in the top 50 globally; the EU has only six. It is a multifaceted programme; exchanges benefit both sides. We were of the view that association would be a good idea; that is why we entered into the agreement. We still hope that the EU will have second thoughts.

[Lord Hamilton of Epsom (Con)]

My Lords, the noble Viscount, Lord Stansgate, has apologised for asking the same question twice. I will do the same thing and ask why we cannot be associate members of Horizon, like Israel and Tunisia.

[Lord Callanan (Con)]

I think my noble friend has asked that question three times. He gets the same answer every time but he is welcome to ask it again. The point that he makes is very valid. There are 15 countries in addition to the EU that have associated to Horizon, including Israel, Kosovo, Turkey and Tunisia, but, for reasons known only to itself, the EU refuses to continue the agreement.

[Baroness Walmsley (LD)]

My Lords, the Government’s plan B will not help the situation, as the Science and Technology Committee found in its report on the Government’s ambition to be a scientific superpower. Our work and scientific visas and upfront health costs are up to six times as high as those of other leading scientific nations. Will the Government implement our recommendation to reduce visa fees in line with those of our competitors? If not, we will carry on losing scientists.

--- Later in debate ---

[Lord Callanan (Con)]

We remain very proud of our scientific efforts and researchers continue to come from all over the world to study in the UK and to continue their research here. We want that to continue but I will certainly pass on the noble Baroness’s comments to the Home Office.

[Lord Winston (Lab)]

My Lords, something that is not mentioned enough in this argument is the collaboration between people individually within a large laboratory. In my group there were speakers of 15 European languages. We made long-term relationships with people that we could carry on while we were still in the EU. That has now been lost. How can the Government replace that?

[Lord Callanan (Con)]

If it proves not possible to associate with Horizon, as I said—although we continue our efforts to try to persuade the EU otherwise and to fulfil the agreement that it entered into—we will have to put in place alternative arrangements involving scientists from EU countries as well as from across the world. I agree with the noble Lord, and I know he has tremendous experience in this, that research collaboration across countries and across continents is always useful.

[Lord Cormack (Con)]

My Lords, are we not in this position because we threatened to abrogate an international treaty into which we had willingly entered? I very much want to see the protocol negotiations succeed. Where do they stand at the moment?

[Lord Callanan (Con)]

I cannot comment on the protocol negotiations in detail. As far as I am aware, they are going well. I realise that my noble friend wants to link the two issues, but they are entirely separate. They are entirely separate agreements. Justifying the EU’s unreasonable position on this helps no one.

[Lord Mair (CB)]

My Lords, time is running out. Every university and research organisation in the country will provide examples of projects that are now in limbo. They are not being included in new EU projects because they are seen as a risk. Last week the Science Minister, George Freeman, announced that if the UK does not associate to Horizon Europe, the Government will be ready with a “comprehensive alternative” to ensure strong international collaboration opportunities—the so-called plan B—both transitional and in the longer term. How soon will more details, especially for the longer term, be announced? Does the Minister agree that there is an urgency to ending the uncertainty that is so damaging to our universities and research organisations?

[Lord Callanan (Con)]

I agree with the noble Lord. There is a limit to how long this period of limbo can go on. We have provided guarantees to researchers, and we are funding them in the meantime. The time is approaching when we will need to make a final decision on this.

[Lord Cunningham of Felling (Lab)]

My Lords, since the Minister has considerable experience of the European Union and its institutions, why does he think that the European Union is behaving in this remarkably unkind way? Is there some explanation or is it just a question of the EU using this issue to try to succeed in some other way in the negotiations?

[Lord Callanan (Con)]

I think the Commission has been very clear in intimating that the issue is linked to the Northern Ireland protocol, but, as I have said, this is a separate issue. They are separate legal agreements, and we stand ready to continue the discussions about association, which is part of an agreement we already have with the EU.

[Lord Bassam of Brighton (Lab)]

My Lords, I think we would all, on our side, feel more convinced if it was not always the case that the Government think it is someone else’s fault. Surely this is the time to engage in more meaningful negotiations with our former EU partners because the time by which a decision has to be made on this is fast approaching. As I understand it, we need to agree a guarantee scheme by the end of March. That being the case, can the Minister confirm whether that is the cut-off date, and that the Government will bring forward a plan B to ensure that we have the right levels of international co-operation in research that this country urgently needs so that our businesses thrive in the future?

[Lord Callanan (Con)]

I always stand ready to receive advice from the noble Lord about how we can meaningfully enter into negotiations with someone who does not want to meaningfully enter into negotiations with us. Obviously, the Labour Opposition know better than we do on this.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend not think that the Government might be more successful in delivering what everyone wants if the Opposition do not keep taking the side of the EU, which is responsible for this?

[Lord Callanan (Con)]

My noble friend gets the Opposition riled more than I do sometimes. Criticism of the EU is almost blasphemy in some parts of this House, but the reality is this is the fault of the EU. We stand ready to continue the negotiations and to associate as soon as the EU is prepared to talk to us about it.

[Lord Patel (CB)]

My Lords, not only are we not a member of Horizon Europe but we are not part of Euratom. I believe that has led to supply problems of radioisotopes imported for both treatment and measurements in medicine. What are the Government doing about that?

[Lord Callanan (Con)]

Indeed. The noble Lord is correct. We are working to overcome those difficulties as quickly as we can.

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

This is one of the many disasters of Brexit. What are the benefits? Could the Minister tell us what the benefits are?

--- Later in debate ---

[Lord Callanan (Con)]

I do not know how long the noble Lord has got, but there are huge amounts of benefits. I could talk about all the trade agreements we have entered into or the newfound regulatory freedom we have—

[Noble Lords]

Oh!

[Lord Callanan (Con)]

If the House will listen, I am prepared to spend as much time as needed on this. From financial services regulation to gene editing and gene modifications, animal rights legislation and environmental legislation—all of this is now possible, and it was not when we were members of the European Union. In this case, we have entered into an agreement with the EU. All we want it to do is implement it.

Vulnerable Households: Energy Costs

Lord Callanan Excerpts

Tuesday 31st January 2023 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and in doing so I refer to my entry on the register as honorary president of National Energy Action.

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

My Lords, as part of the Government’s comprehensive package of support, in addition to the energy bills support scheme, EBSS, and the energy price guarantee, EPG, there is further targeted support for vulnerable households to help them to navigate these challenging times. This includes a cost of living payment of £900 to households on means-tested benefits, £300 to pensioner households and £150 to individuals on disability benefits. Ofgem is supporting the Government to deliver EBSS and EPG.

[Baroness McIntosh of Pickering (Con)]

I pay tribute to the Government’s warm home discount scheme and accept that it has been an enormous success. Recently, the chief executive of Ofcom has asked for a serious assessment of introducing a social tariff. Given the fact that Citizens Advice recognises that there has been an excess profit of £7.9 billion this year for electricity distribution companies, will my noble friend do one of two things: either introduce a new social tariff or increase the warm home discount? Instead of asking other households to pay for it, will he ask the electricity distribution companies to pay for the increase?

[Lord Callanan (Con)]

There were a lot of questions there. The issue around social tariffs is that the warm home discount was introduced in the first place to replace various social tariffs on offer because this was considered to be a better way of supporting vulnerable households, but we always keep these things under review. I did not quite understand my noble friend’s point about excess profits. If she was talking about suppliers, many suppliers have actually gone bankrupt; they are not making excess profits. If she was talking about generators, we have already imposed an excess profit levy on generators.

[Lord Watts (Lab)]

My Lords, will the Minister explain why energy bills in the UK are double what they are in the rest of Europe? Can he explain that to the customers?

--- Later in debate ---

[Lord Callanan (Con)]

I am interested to see the noble Lord’s figures on that. Various amounts of support are being imposed by different Governments, at different levels and in different ways, so there is a mixed picture across Europe. I know that the German Government, for instance, are putting a huge amount of money behind bills support, as indeed are the UK Government. I struggle to believe that bills are double what they are in Europe.

[Lord Teverson (LD)]

My Lords, one reason we have very high energy prices, obviously apart from Putin himself, is that we are still very reliant on gas for heating and the generation of electricity. Should not one of the tasks of Ofgem be to persuade the Government to make sure that they have as one of their prime objectives the decarbonisation of our electricity system, not least to make sure that we have connections into the grid—it is a crisis at the present moment?

[Lord Callanan (Con)]

Ofgem does not need to persuade the Government to do that. We already have decarbonisation of the grid as one of our prime objectives. The noble Lord is right that we still rely very heavily on gas. It is a falling proportion of our generation, as we roll out more and more renewables, but it is a transition. We are advanced on that transition but we clearly need to go faster.

[Baroness Finlay of Llandaff (CB)]

My Lords, I want to follow on from my previous question about patients at home, some of whom are handicapped children and people on ventilators, using oxygen concentrators and so on; these are pieces of equipment which consume a high amount of electricity. Have the Government undertaken an audit to look at the excess cost borne by these families, where the care is happening at home and such equipment has been installed? Following data from that audit, is there any review of the benefits available in those situations, particularly where there are young people who are extremely handicapped but living at home?

[Lord Callanan (Con)]

Many of those families are on benefits and I outlined earlier some of the support that is being offered. Ofgem also requires energy suppliers and network operators to maintain a priority services register and to provide free non-financial support to people in vulnerable situations with their energy. Customers in such a situation should contact their supplier and their network operator to register.

[The Lord Bishop of St Edmundsbury and Ipswich]

My Lords, I recognise that my question connects with the previous Oral Question. Listening to clergy in my diocese who are operating food banks and warm spaces, they say to me that one of the biggest challenges that vulnerable households are facing as they try to pay their energy bills is accessing information, particularly when it is available only online. What assurance can the Minister give that those responsible for delivering affordable energy, including Ofgem, will use or require the use of alternatives to electronic forms of communication when trying to reach those in need, including partnering with service providers such as food banks?

--- Later in debate ---

[Lord Callanan (Con)]

Ofgem tries really hard to connect the most vulnerable consumers, to make sure they get the support that they require. There are a number of different forms of payment: people can still pay their bills manually using cash if they wish to do so, and there are prepayment meters which are manually upgraded with tokens, as well as those that are available to update online. There is a variety of payment methods, but we stand ready to assist vulnerable consumers in every way we can.

[Baroness Blake of Leeds (Lab)]

My Lords, it is now well documented that prepayment customers, many of whom are the least well off in our society, are charged a higher rate for their energy. Do the Government fully recognise the injustice of thousands more families being forced on to prepayment meters and higher rates at a time when so many are facing severe cost of living pressures—for example, we saw the announcement that grocery price inflation has now gone up to 16.7%? Can the Minister assure us that this area is being treated with the urgency it deserves and that we will see some recommendations coming forward swiftly?

[Lord Callanan (Con)]

I can indeed reassure the noble Baroness that there are extensive regulatory protections in this area. Ofgem rules are clear that suppliers can install a prepayment meter to recover a debt only as a very last resort, and they require energy suppliers to offer a prepayment service only when it is safe to do so. The noble Baroness will have seen that my Secretary of State announced a five-point plan last week, and the Minister of State for Energy has had a meeting with the energy suppliers to discuss this matter. We are on top of it.

[Baroness Pinnock (LD)]

My Lords, it is estimated that there will be 8.4 million households in fuel poverty by next April. The warm home discount is clearly not sufficient or adequate to meet that need. Which utility companies provide social tariffs that do not have to be applied for and are offered to customers in need? Why on earth can the Government not, through Ofgem, ensure that social tariffs are provided for electricity and gas payments?

[Lord Callanan (Con)]

Let me repeat the answer I gave to my noble friend Lady McIntosh earlier: we used to have a system of social tariffs which was judged to be ineffective. That is why we moved to the warm home discount payment, which, of course, has been increased this year. We keep these matters about the best way of getting support to vulnerable consumers under review, and we will continue to look at this.

[Baroness Altmann (Con)]

Would my noble friend comment on the need to reform the standing charge for energy pricing? For the most vulnerable households and, for example, single-person households, regardless of how much they try to cut their energy use, they cannot escape the standing charge—which has in many cases doubled to several hundred pounds per year. I understand that part of the rationale for that is to help pay for the cost of failed gas providers, but this charge is paid even by those who have electricity and no gas.

--- Later in debate ---

[Lord Callanan (Con)]

I know that the standing charge is a subject of controversy, but it is there to cover the costs of providing a supply: the cables, the network and the infrastructure. Included within that are some of the costs for what is called the supplier of last resort function, which includes some of the suppliers that went bust in recent years. They were not just gas suppliers; there were a lot of electricity suppliers as well. We think it is right that these costs should be socialised, because otherwise people would be disconnected from suppliers completely.

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

My Lords, the Minister is very good at the gobbledegook but could he explain why the decrease in wholesale prices is not passed on by decreasing the price to consumers?

[Lord Callanan (Con)]

I am sorry if the noble Lord thinks I am spouting gobbledegook but let me try to explain it to him. Many of the suppliers have hedged their supplies over the longer term, so they paid increased amounts. When the price cap is reviewed and the wholesale prices are coming down then eventually that will feed through into lower prices as well. The noble Lord shakes his head but this is one of the protections put in place for consumers to prevent the large increases which would have happened otherwise.

Energy Bill Relief Scheme (Non-Standard Cases) Regulations 2023

Lord Callanan Excerpts

Monday 30th January 2023 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Energy Bill Relief Scheme (Non-Standard Cases) Regulations 2023.

Relevant document: 26th Report from the Secondary Legislation Scrutiny Committee

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

My Lords, I beg to move that the Energy Bill Relief Scheme (Non-Standard Cases) Regulations 2023, which were laid before the House on 11 January, be approved.

The EBRS regulations require licensed suppliers to discount their prices for the supply of electricity and gas to non-domestic consumers. Licensed suppliers provide the vast majority of electricity and gas supplied to non-domestic customers but some UK businesses do not receive their energy in this way. The Energy Prices Act 2022 allows us to provide financial assistance for energy costs using non-legislative schemes. On 9 January 2023, the EBRS non-standard customers scheme opened for applications. This is a grant scheme that allows payments to be made to those non-domestic customers who receive an unlicensed supply of electricity or gas that has been drawn from the public electricity or gas grid over the period from 1 October 2022 to 31 March 2023. The regulations we are discussing today are ancillary to the non-standard customers scheme.

The businesses eligible to benefit from the scheme include energy-intensive critical national infrastructure. They have been exposed to high energy costs in the same way as those who have benefited from discounts under the EBRS regulations. The scheme enables them to receive relief at a level comparable to the customers of licensed suppliers. We expect businesses to begin receiving support under the scheme this month; this will be applied retrospectively. The EBRS non-standard cases regulations are essential secondary legislation needed to support the operation and delivery of the EBRS non-standard cases scheme. I pay tribute to the work of the Secondary Legislation Scrutiny Committee for reviewing these regulations and note that it has no comments.

Let me turn now to the detail of the regulations for the benefit of the Committee. Identifying who is eligible to receive payments under the scheme is not always straightforward. The regulations provide the Secretary of State with powers to obtain information from those involved in the often quite complex supply chains through which this energy flows, so that we can be sure that the right businesses are admitted to and benefit from the scheme. They imply some terms into the contracts between those involved in these supply chains to help the scheme work more smoothly.

Finally, as in the case of all the schemes put in place under the Act, they provide for certain intermediary businesses—again, often landlords—that receive a benefit under the scheme but which in turn provide energy to others, often in another form, such as heat, and pass a fair share of the benefit that they receive on to their end-users. The regulations also make provisions for pass-through requirements. The energy provider must calculate and pass through a just and reasonable amount of the benefit to end-users as soon as reasonably practicable.

These regulations set out the information which relevant intermediaries are required to provide end-users about the scheme benefit, including the amount and supporting details about how they have calculated this in a just and reasonable manner. Where the energy provider fails to effect a pass-through, the amounts are recoverable from the energy provider by the customer as a civil debt.

To accompany the regulations, we have published a suite of scheme terms and non-statutory guidance, which provides further detail on how the scheme for non-standard cases works. Given the urgency of ensuring that organisations receive the support they need this winter, we have not launched a formal consultation. Instead, we launched a call for evidence on 17 November requesting examples from organisations that are unable to access the EBRS because they are non-licensed suppliers of energy or supply energy to businesses in non-standard ways.

We have also had informal consultation with energy providers, and their energy-intensive customers, on the scheme terms and guidance. My department will continue to monitor this instrument following its implementation, including any feedback from stakeholders, and will of course review as necessary.

Support delivered through the scheme provides relief on the wholesale element of customers’ gas and electricity bills. Customers eligible for support under the scheme are exposed—sometimes very exposed—to high energy costs. In some cases, relief from those costs may well help to avoid firm closures and potential redundancies. More broadly, by reducing industry’s energy costs, the scheme should support economic growth and limit inflation.

In conclusion, the EBRS non-standard customers are a source of critical support for non-domestic customers in the UK, particularly those in energy-intensive industries, many of which are essential to our national infrastructure. I emphasise that the measures in these regulations are crucial for the effective operation of the non-standard cases scheme. The scheme complements the existing large-scale support that the Government are providing during the energy crisis. On that basis, I hope that noble Lords will support these measures and their objectives and I commend these regulations to the Committee.

[Lord Teverson (LD)]

My Lords, again, this instrument came into force on 12 January and we are now more or less into February. Can the Minister remind us when the scheme ends, because we must be getting quite close to that?

I have only one question on this, and I will not ask the one about prosecution, because these are large amounts of money; I would have thought it was more important. According to the Explanatory Note on page 11,

“Regulations 3 and 4 provide the Secretary of State with a power to obtain information about the supply of gas or electricity to persons who are or may be eligible for assistance under the Scheme.”


I am interested in whether the Minister’s officials have done that, and how they found it.

--- Later in debate ---

[Lord Lennie (Lab)]

I agree; there is no penalty at all. They just have to pay back the money to the individual that they should have paid in the first place, plus a bit of additional assistance.

[Lord Callanan (Con)]

I again thank the noble Lords, Lord Teverson and Lord Lennie, for their contributions. As both noble Lords have said, the EBRS Great Britain and Northern Ireland regulations are already in force and delivering support to organisations across the United Kingdom. However, the Government have responded to the concerns of stakeholders to ensure that a further group of non-domestic energy consumers, including some critical to national infrastructure, can also receive support to avoid decreases in production or, even worse, the closure of some businesses. These regulations are essential secondary legislation which is needed to support the delivery and operation of the EBRS non-standard scheme.

The Government remain committed to taking decisive action during this energy crisis to assist the widest possible range of consumers. As well as providing immediate assistance, this relief will support economic growth and limit inflation caused by increasing energy bills and their knock-on impacts on prices, labour, goods and services. We are confident that providing relief via the non-standard cases scheme will help mitigate the risks of closures and redundancies among eligible businesses and ensure that they can continue to operate.

The scheme has been designed to operate robustly and guard against fraud, error and gaming. We will continue to monitor it to ensure that this support is provided to the businesses it is designed to help. The Government remain committed to ensuring that consumers receive help with the rising cost of energy. The regulations are vital in ensuring that support is delivered to those businesses.

I turn to the questions asked by both noble Lords. The noble Lord, Lord Teverson, asked whether the scheme will run for the same period as the standard EBRS. Yes, it runs from 1 October to 31 March. He also asked about passing information to the Secretary of State—whether the department has done this and how it found it. So far, we have found that energy suppliers are providing the information we require to support their claims in a timely manner, which ultimately supports their own customers and end-users.

The noble Lord, Lord Lennie, asked why it applies only until March 2023; that is, the same finishing date as the existing EBDS. Of course, there are substantial costs on the Exchequer. I am sure the Chancellor keeps all these things under review, but at the moment, the scheme ends at that point. The noble Lord also asked whether the EBDS will be fully effective after the EBRS is ended. I assure him that many civil servants in my department are working to ensure that that is exactly the case and that there is a smooth transition between the two schemes.

The noble Lord also asked whether a mistake has been rectified with EBRS. It was not a mistake. We identified that there was a group of businesses supplied with energy by unlicensed suppliers and we have set up this scheme to provide support for those businesses which did not benefit when others benefited because they receive their energy through licensed suppliers. We stood up the scheme as quickly as we possibly could, given all the demands that have been placed on the department from all the other schemes as well.

In response to the noble Lord’s questions about intermediaries, we believe that in those cases, energy providers are working closely with their end-customers to ensure that they are all offered support. Of course, in many cases, these are very big businesses, and we have direct communication with many of the end-customers. Normally, we do not have a problem making sure they realise their eligibility, but we are of course seeking to provide as much information as possible to ensure that they are aware of their rights—although, in those cases, I am sure they are well aware of them themselves.

I think I have dealt with the questions from both noble Lords, and I therefore commend the regulations to the Committee.

Motion agreed.

Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023

Lord Callanan Excerpts

Monday 30th January 2023 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023.

Relevant document: 26th Report from the Secondary Legislation Scrutiny Committee (Instrument not yet reported by the Joint Committee on Statutory Instruments.)

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

My Lords, the Energy Bills Support Scheme and Alternative Fuel Payment Pass-through Requirement (Northern Ireland) Regulations 2023 were laid before the House on 11 January 2023.

Throughout this winter, the Government have responded rapidly to the unprecedented rise in energy prices. This includes introducing emergency legislation on energy support. The Government’s support package has protected and will continue to protect households and non-domestic consumers across the United Kingdom.

In December, the Government announced details of the merged delivery of the energy bills support scheme, EBSS, and alternative fuel payment, AFP, in Northern Ireland. Householders in Northern Ireland have already received or will soon receive £600 in a single payment for support with their energy bills. In recognition of the high prevalence of alternative fuel usage in Northern Ireland, the AFP will be delivered to all domestic households in Northern Ireland. The total of £600 is composed of £400 of EBSS, which provides support for the energy costs of all domestic households, and the AFP, which provides an additional £200 of support.

To deliver the scheme, in December the Secretary of State made a direction pursuant to Section 22 of the Energy Prices Act. This placed requirements on Northern Ireland electricity suppliers to provide this crucial support to households this winter. Delivery has commenced and households are already benefiting. We expect the vast majority of eligible households to have benefited by the end of February.

Turning to the pass-through requirements, these regulations will place a legal obligation on intermediaries to pass any benefits received through the schemes to end-users. This will help ensure that the energy support is received by the intended beneficiaries. These regulations have been created under the Energy Prices Act 2022. They are essential secondary legislation to fully implement the schemes.

The regulations are modelled on the pass-through requirements for other energy schemes, such as the EBSS in Great Britain. In that, we are not waiting for intermediaries to act on their own accord; we are legally requiring that they pass on the financial benefit to end-users.

An intermediary is any individual who is party to a domestic electricity contract, has a domestic electricity meter and is the recipient of government energy support. This group includes landlords. An end-user is an individual who consumes the energy and pays for this energy usage. This includes tenants. The regulations also outline when and how intermediaries should communicate with end-users about information regarding pass-through of benefit from the schemes.

The enforcement approach for EBSS AFP NI is consistent with other support such as the energy bills support scheme in Great Britain and the UK-wide energy price guarantee. Namely, if the intermediary does not pass on the benefit, the end-user could pursue recovery of the benefit as a debt through civil proceedings. Should a court rule in the end-user’s favour, they would be entitled to the payment plus interest. The interest is set at 2% above the Bank of England’s base rate.

The Government continue to ensure that the intermediaries and end-users are clear on their obligations and rights. In particular, we have published guidance on GOV.UK to help support intermediaries to discharge their obligations. There are also template letters to support tenants, should they wish to raise concerns with their landlords about their energy bills and the pass-through.

I thank the Secondary Legislation Scrutiny Committee for its view on these regulations. I have noted that its concerns remain the same as those it previously raised on the pass-through requirements of the energy bills support scheme in Great Britain. The committee’s concerns relate to the definition of “just and reasonable”, and to an “inequality of arms” and how that affects vulnerable groups.

The energy market is complex. There is a vast range of contracting structures relating to the supply, resale, provision and charging of energy. This means that there are many different circumstances for how energy can be consumed. That is why it continues to be important that the regulations can account for the numerous configurations of an intermediary/end-user relationship. It is highly risky to draw a narrow and limiting definition which could result in some intermediaries falling outside the pass-through requirements. By requiring landlords to pass on the financial benefit in a just and reasonable manner, end-users will be treated fairly and lawfully.

The fact that the regulations require intermediaries to pass on the amount in a just and reasonable manner means that situations where there could be an inequality of arms are also covered. For example, if a landlord owns multiple properties and receives the scheme benefit on them all, he or she must divide and allocate the amount among their end-users and inform them how they have calculated the financial benefit.

The committee’s other concern, about vulnerable groups, is of course valid. The Government are also making sure that all groups in scope of the pass-through regulations, including vulnerable groups, receive what they are entitled to through our engagement with those impacted. Over the past several months, we have engaged with consumer groups, landlords, housing associations and charities to disseminate communications and to underline the obligations placed on intermediaries and the rights of end-users. Our extensive engagement activities include organisations in Northern Ireland.

In conclusion, these regulations are essential to ensure the effectiveness of the energy bills support scheme and the alternative fuel payment Northern Ireland scheme and that the support reaches the people it is intended to help. Without the regulations, there would be a risk that intermediaries did not pass on the £600 benefit in a just and reasonable way, leaving some households in Northern Ireland exposed to high energy costs. I therefore commend the regulations to the Committee.

[Lord Teverson (LD)]

My Lords, I thank the Minister for going through yet another of these SIs. I am sure he will not mind if I ask him some just and reasonable questions about it.

First, I note that the measure came into force on 12 January, so it is already in place. Obviously, it is administered, to a degree, by the energy companies, but who is policing it? Is it the Northern Ireland civil servants, or is it BEIS directly? I would be interested to understand that. If it is Northern Ireland officials, are we confident that sufficient management governance will take place from here?

I welcome that the Government and the department have spoken at length to consumer organisations in Northern Ireland. I am interested to understand whether there have been any complaints yet of end-users not receiving this when they feel that they should have, to get some idea of how well it is working.

The Minister talked about the method of civil law, and having fines—plus, generously, an interest-rate benefit if people manage to get through a whole court process. We have said before that it is very unlikely that much of that would happen, but, if an intermediary ignored the need under this legislation to pass on those payments, would the Government have the ability to prosecute that person? I can imagine there being a certain number of landlords who will just think, “No one’s looking at me, there’s not a lot of publicity about this, I’ll just keep the money”. I would be interested to understand whether there is, at the end of the day, a criminal long-stop prosecution ability in terms of fraud and so on. Also, will the Minister say how many more SIs around these schemes are still to come?

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[Lord Callanan (Con)]

I thank the noble Lords, Lord Teverson and Lord Lennie, for their comments. I guess they do not disagree with the principle, but nevertheless had some notable questions which I will address in a second.

These regulations are critical to the successful implementation of the energy bills support scheme and alternative fuel payment in Northern Ireland. The Government’s focus has been on delivering this support to those who need it in Northern Ireland. That is why we focused on creating a delivery mechanism which could be rapidly implemented this winter and allow consumers to feel the benefit immediately, which is quite a challenge in government. This includes combining the support from two schemes into a single payment. Now that delivery has commenced, more than 800,000 households in Northern Ireland will benefit from this support. This comes on top of support households in Northern Ireland have received and will continue to receive through the energy price guarantee.

Spearheaded by the energy bills relief scheme and energy price guarantee reviews, the Government are considering the broader energy affordability landscape. Naturally, our considerations will include the needs of those in Northern Ireland.

Manufacturing Post Brexit

Lord Callanan Excerpts

Thursday 26th January 2023 Lords Chamber

[Lord McNicol of West Kilbride]

To ask His Majesty’s Government what plans they have to support manufacturing in the United Kingdom following the UK’s departure from the European Union.

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

My Lords, following the UK’s departure from the European Union, the Government are focused on transforming our industrial heartlands by attracting inward investment, future-proofing businesses and securing high-wage, high-skilled jobs. We continue to support manufacturing through programmes in strategically important subsectors such as aerospace, automotive and life sciences, and we have committed nearly £650 million to fund the High Value Manufacturing Catapult centres, and nearly £200 million to the Made Smarter programme.

[Lord McNicol of West Kilbride (Lab)]

I thank the Minister for his Answer. Trade exports with the EU are down 15% since Brexit; paperwork and delivery times are up, while regulatory divergence, which was heralded as one of the key Brexit benefits, has so far been very limited. As divergence increases, manufacturers see only additional cost, extra paperwork and further disruptions. What further steps is the Minister’s department taking to support UK manufacturers, their employees and their supply chains to overcome the frustrations that they face on a daily basis? What does his department’s detailed cost-benefit analysis of further and future regulatory divergence show?

[Lord Callanan (Con)]

There are tremendous opportunities facing the UK following Brexit. We can have regulatory freedom in a number of areas where we were constrained by the EU. I do not want to cast doubt on the noble Lord’s figures, but manufacturing in the UK is doing well. According to Make UK, which is the largest UK manufacturing trade body, manufacturers are continuing to increase investment in the next 12 months, more than half of manufacturers plan to increase investment in both people and training within the next 12 months, and a further 57% are planning to increase investment in new product development. Manufacturing is doing well. We should not talk it down.

[Lord Howell of Guildford (Con)]

When we look to supporting manufacturing industries, is not the immediate question what we are all going to do in the face of rising American protectionism and subsidies, particularly in the motor sector? Are we going to challenge them? Are we going to join with the EU in its enormous plan for subsidies to counter American subsidies, or are we going to do nothing or go it alone?

[Lord Callanan (Con)]

My noble friend makes an important point. The Inflation Reduction Act in the US is clearly going to have big effects on the UK and Europe. We need to work together with our friends and partners in engaging with the US to try and convince them that a rise in global protectionism is really not the way to go.

[Lord Fox (LD)]

My Lords, if you talk to the trade associations—Make UK for example—they will also tell you that their members and the manufacturing industry are facing massive headwinds: increased costs, broken supply chains, increased paperwork when they try to export to the EU, a shortage of skilled people and a rising cost of capital. They look over the fence to other countries: they see Governments in the European Union and in the US that are seeking to work out plans to help their industries. Then they look here and see empty words and press releases, but nothing behind them. So when are we going to have actual plans, real road maps and proper support?

[Lord Callanan (Con)]

The noble Lord obviously wrote his question before I gave the earlier answer, because the figures that I quoted on increased manufacturing investment—more than half of manufacturers plan to increase investment in people and industry—were from Make UK, so the noble Lord is painting an unnecessarily gloomy picture.

[Lord Leigh of Hurley (Con)]

My Lords, would my noble friend agree with me, in respect of manufacturing post Brexit, that R&D is a very important part of manufacturing growth? The ONS revised statistics show that research and development in the UK was £33 billion just before Brexit; last year, it was £42 billion. This is in part thanks to the Government’s R&D tax credits of £6.7 billion last year. Will BEIS encourage the Treasury to ensure that the scheme to combine SME and larger companies’ R&D will not prejudice SME companies in claiming the invaluable R&D tax credits they need?

[Lord Callanan (Con)]

My noble friend makes an important point, and I know that he is very expert in this area. The Government are taking steps to increase our international competitiveness, by increasing the research and development expenditure credit from 13% to 20%; we will increase our economic competitiveness in that way. As part of the ongoing R&D tax relief review, I know that the Treasury is looking at this issue carefully.

[Lord Woodley (Lab)]

My Lords, Honda closed its factory primarily because of Brexit, when, unlike Europe, we removed those tariffs on vehicles coming in from Japan. Twelve years ago, the Government’s Automotive Council, which I had the privilege of sitting on, set aside £400 million—a lot of money in those days—to entice battery manufactures into the UK. It was small change compared to the billions of state money being put in by Germany, China and Japan. So, with respect to the Minister’s answer the day before, it is not nostalgic to nationalise Britishvolt; it is strategic, irrespective of the relatively small but very important battery production by some car companies that is taking place now. My question is: if we failed in battery mega factories, what is the Government’s strategy now for the industry? Is it hydrogen vehicles or whatever? Without investment and without strategy, we will have no industry in 25 years’ time.

[Lord Callanan (Con)]

I know that the noble Lord is passionate in his views on this, but I am afraid that I just do not agree with him that nationalising the car industry is the way forward. The noble Lord will have been around in the 1970s when we saw the decimation of the UK car industry under state control. The future is not state control; the future is what we are doing, which is incentivising manufacturers to move to the UK. The case of Britishvolt is very disappointing, but the money that we had available remains on the table. We very much hope that other companies will show interest in the excellent site in Cambois, near Blyth, and we continue to do all that we can to encourage investment in the UK.

[Lord Patel (CB)]

My Lords, the Minister mentioned the Government’s support for life sciences, and I applaud the Government for their strong support. But recent reports, particularly from big pharma in the United States, suggest that despite the £1 billion investment we had last year, it is now slowing down compared with investment in Europe and the USA. What other encouragement can the Government give to have inward investment from overseas?

[Lord Callanan (Con)]

I know that the noble Lord is very expert in this area, and we have discussed it before. We need to do all that we can to encourage life science investment; the UK has one of the most successful life science sectors in the world. We need to make sure that investment continues to flow into this country, and we want to use all the policy levers open to us to make sure that that success story continues.

[Lord Allan of Hallam (LD)]

My Lords, why does the Minister think that UK car production has fallen to its lowest level since 1956? Do the Government have plans to invest in particular in the charge point infrastructure that will be needed for the UK car industry to make a successful transition to electric vehicle production?

[Lord Callanan (Con)]

The noble Lord makes a good point. We need to do lots of things to help us on the journey to electric vehicles. Charging infrastructure is an important point. We have very ambitious plans to invest in thousands of new chargers, which are being rolled out. We already have one of the largest charging networks in Europe, but we need to do an awful lot more. In addition, as I mentioned, encouraging gigavolt battery manufacturing plants in the UK is particularly important. There is a lot that we need to do to support our electric vehicle plans.

[Lord Marlesford (Con)]

My Lords—

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[Lord Marlesford (Con)]

My Lords, Britain has over the decades sadly lost its pre-eminent position in nuclear power. Has my noble friend noticed that Rolls-Royce has today announced a new nuclear academy of excellence in Derby? Will he recognise that this is a real opportunity to move forward with the experience Rolls-Royce has in small modular reactors?

[Lord Callanan (Con)]

I completely agree with my noble friend. There is a great future ahead for small modular reactors. We want to support Rolls-Royce as much as we can in this area. We are rolling out support for Great British Nuclear and the SMR programme.

[Lord Bassam of Brighton (Lab)]

My Lords, I declare an interest as director of Business in the Community, the UK’s biggest responsible business network. The fall in manufacturing in the UK since the 1970s has been quicker than almost any other developed country, despite jobs in the sector paying 12% more than equivalent sectors and being seen as key to growth and bringing pride back to Britain. As the noble Lord from the Lib Dem Benches pointed out, it is reported today that UK car production is at its lowest level since 1956. It seems to us that the Government have accepted the decline, so what plans do they have seriously to arrest it? We have not heard enough from the Minister today and we do not hear enough from the Government on this point. We want manufacturing to recover. “Made in Britain” should be a slogan we should all be proud of.

[Lord Callanan (Con)]

I certainly agree with the noble Lord’s last statement, if not many of his earlier ones. There is always more that we can do. We continue to support UK manufacturing, but the UK is one of the largest manufacturing nations in the world—it is the ninth globally by output. Manufacturing contributed £205 billion of gross value added to the UK economy and supports 2.5 million jobs, most of them outside London, which is a good thing. Of course we always need to look at new policies and regulations. I am sure the Opposition will support our new regulatory freedom to help make things easier for the manufacturing industry, but let us get behind British manufacturing and not be so gloomy.