Economic Crime (Transparency and Enforcement) Bill

Lord Callanan Excerpts

2nd reading
Wednesday 9th March 2022 Lords Chamber

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

I start by thanking all noble Lords for their constructive engagement in advance of and during today’s debate, and for the support generally expressed for the swift passage of this Bill. The noble Baroness, Lady Jones, was right—she is occasionally—that this was a good debate with many insightful points. I would not go so far as to say that I enjoyed it but it was nevertheless a good debate. It has underlined the importance of taking action on the dirty money flowing through the UK, following Russia’s brutal and barbaric invasion of Ukraine. I totally agree with the noble Lord, Lord Coaker, that it is more important than ever to ensure that we have the powers we need to take swift action to tackle economic crime. In doing so, we should ensure that the UK remains the place for legitimate investment to flourish. I am confident that this legislation strikes the right balance.

I know that many noble Lords—the noble Lord, Lord Fox, in particular—have a strong interest in Companies House reform and limited partnership reform. So do I, as the Minister responsible for implementing these important policies. Let me assure the House that these measures will be included in a wider Bill in the coming months. They will come alongside new powers to make it easier to seize crypto assets from criminals and measures to provide businesses with more confidence to share information on suspected money laundering.

[Lord Eatwell (Lab)]

Will the Minister give way?

[Lord Callanan (Con)]

I may be about to address some of the noble Lord’s points about Companies House reform so let me finish this paragraph; if I do not address his points, I will come back to him, if that would be helpful.

I can say to the noble Lords, Lord Fox and Lord Coaker, and others that reform is already under way at Companies House. It has received £20 million for this financial year. A further £63 million was announced at the spending review. However, the full Economic Crime Bill will be very significant. I understand why noble Lords are questioning me about why it is not being included at this time; to be frank, it is purely a matter of drafting time. This will be the biggest change to our system of company registration in some 170 years—the biggest change to limited partnership law since 1907. Drafting has already begun and I can assure the House that we will bring it forward as soon as we possibly can in the next Session. I hope that what I have been able to say will provide some reassurance to the noble Lords, Lord Eatwell and Lord Coaker, the noble Baroness, Lady Jones, and the House as a whole.

[Lord Eatwell (Lab)]

Given the wide level of expertise evident in this debate, will the Minister commit to pre-legislative scrutiny of the new economic crime Bill? That would be the way both to exploit the talents available in this House and to ensure that the Bill, when it arrives on the Floor, will have a smooth passage.

[Lord Callanan (Con)]

Let me come back to the noble Lord on that. I certainly commit to full scrutiny of the Bill when it is ready, which I think the noble Baroness, Lady Chapman, also asked me about. It will not be emergency legislation; we expect it to have the full scrutiny of this House. I think that pre-legislative scrutiny would probably be a bit time-consuming; it is probably better just to bring the legislation forward, then it will get its full scrutiny. However, as I say, we are getting it drafted as quickly as possible. It is something like 150 pages of legislation so it will be substantial.

[Lord Fox (LD)]

About that: with many other Bills, the Government go out for consultation for six or eight months, redraft the Bill, then have two more White Papers. Then, sometime after three Christmases, we get the Bill. So, does “as quickly as possible” mean a few months or weeks? Are we looking at the latter half of the next Session, or are we looking at it being one of the first Bills to come out in the next Session?

[Lord Callanan (Con)]

I cannot win on this one: if I give too much time to pre-legislative scrutiny, for consultation et cetera, I will be criticised. I cannot give the noble Lord, a definitive time because, of course, it is not purely in my hands; it depends on parliamentary time, on the Whips, on the usual channels and on the availability of the House of Commons. It is certainly my intention to get it in front of noble Lords in a matter of months but I cannot be more specific than that. It will depend on when it gets drafted and when we can get parliamentary time. It is a firm commitment that we will bring it forward in the next Session—ideally towards the start of the next Session, if that helps the noble Lord.

I welcome the support from across the House, particularly from the Opposition Front-Benchers—I thank them very much. As I just said, I can reassure the noble Baroness, Lady Chapman, and the noble Lord, Lord Vaux, that the economic crime Bill will progress under normal procedures. I am sure there will be a full and detailed discussion about it. I will speak later to some of the points of the noble Baroness, and the noble Baroness, Lady Kramer. The noble Baroness, Lady Kramer, also raised the subject of the Crown dependencies. I can tell her that I spoke to the Crown dependency Ministers earlier today, just before I came in for this debate, and they are also fully on board with these measures, looking to help wherever they can and to progress similar measures in their own jurisdictions.

Moving on, many noble Lords, including my noble and learned friend Lord Garnier and the noble Lords, Lord Rooker and Lord Faulks, raised the legitimate question of why it has taken the Government so long to introduce the legislation. I can assure them it is not for the want of trying on my part; it is purely about the pressure on the legislative programme. They, as well as the right reverend Prelate the Bishop of Leeds, stressed the importance, and I totally agree, of stopping dirty money flowing from Russia and, indeed, other countries. This is not just about Russia. It benefits us in terms of Russia but, frankly, this reform is long overdue and it will also help us in the fight against money laundering from other jurisdictions. What matters is that, despite the long delay, we are now urgently bringing this legislation forward. We were planning to put this in the wider economic crime Bill but we decided to introduce these measures earlier, to put them into effect shortly. I am grateful for the support of the Opposition in doing that, and the wider economic crime Bill measures will follow in due course.

I take the opportunity to thank my noble friend Lord Faulks again, for all his work to develop the legislation and for some of the powerful points he made today. I reassure him that since we took the measure thorough pre-legislative scrutiny, we have been able to improve the legislation to reflect some of the pre-legislative scrutiny committees’ recommendations and to align it with the broader reform of Companies House, which I completely agree we need to do, to make the measure effective. I think the legislation as a whole will be more effective as a result of the scrutiny that has taken place. This has been central to ensuring the new requirements are workable and proportionate and that the register strikes the right balance between improving transparency and minimising burdens on legitimate economic and commercial activity.

I thank the noble Baroness, Lady Kramer, the noble Lords, Lord Hannay and Lord Vaux, and my noble and learned friend Lord Garnier for their points on the transition period. I think the noble Lords, Lord Coaker and Lord Fox, made similar points. Let me explain our logic on this. We have already reduced the transition period from 18 months to six months. I understand the importance that noble Lords attach to this, but it is important to remember that the majority of properties held via overseas entities will be owned by entirely law-abiding businesses and people. To give noble Lords an idea of the scale, we are talking about roughly 95,000 properties in England and Wales owned by some 32,000 overseas entities. It is a fact that only a tiny fraction of these are likely to be held by criminal or corrupt interests.

The transition period is an important protection for the rights of those legitimate owners of property and we have to be careful about interfering with individuals’ property rights, interference that could not reasonably have been expected when those rights over the properties within scope of the register were originally acquired. This legislation has considerable retrospective effects. We have to ensure that we are respecting those rights in a way that cannot be challenged—not least under human rights legislation. No doubt, those who wish to avoid these requirements and are able to afford expensive legal teams will take advantage of any opportunity to do so.

Many of the ultimate owners will be law-abiding British companies that have adopted these structures for legitimate commercial reasons. They could include real estate investment trusts, which are public companies whose core business is to manage and own properties that generate income, or particular pension schemes that hold land and properties. Others will be British nationals who have adopted the arrangements for legitimate reasons of privacy—a point made from the Cross Benches but I forget who made it. That may involve, for instance, celebrities who do not want their address to be known publicly.

As the noble Lord, Lord Fox, observed, I am aware of the strength of feeling expressed that corrupt people must not be allowed to sell up and escape the transparency that the register will bring. The Government see merit in requiring all those selling property to submit a declaration of their details at the point of transfer of land title during the transition period. This would mean that a zero-day transition period to provide certain information immediately would be given to anyone selling. They would have to register ownership if selling, and that way we either get their ownership details immediately or, if they do not sell, we get it at the end of the transition period but in a way that still protects legitimate owners. We are urgently looking at this idea and giving it some serious consideration, but we need to get the drafting right and legally watertight, so that it is workable, effective and achieves what we want to achieve. Officials are working on this at the moment and I hope to get the proposal to noble Lords for consideration before we reach Committee.

Although the register will not be operational immediately, we expect the measures to have an immediate dissuasive effect on those who are intending to buy UK property with illicit funds. I can assure the noble Lord, Lord Faulks, that work on implementing the new register will begin as soon as we have achieved Royal Assent, and we will look to have the new register in place as soon as practicably possible—as soon as this House is able to consider and pass the relevant statutory instruments, and when some of the other measures are put in place. I should also add in response to many of the comments that all conveyancers and estate agents are already required to assess transactions for money-laundering risks and to alert authorities about suspicious activity.

I turn to the question from the noble Baroness, Lady Bennett, on the retrospective application of the register. It will apply retrospectively, thereby compelling overseas entities to register if they have property bought since January 1999 in England and Wales and December 2014 in Scotland. Those dates have been selected because they relate to when jurisdiction of incorporation was originally required by Her Majesty’s Land Registry and the Registers of Scotland when registering title documents for land. This information has never been recorded by the Northern Ireland land registry, so we are unable to make any retrospection apply there.

As set out in the Bill, if a foreign company does not comply with the new obligations, every officer in default can face criminal sanctions, including fines of up to £2,500 per day or a prison sentence of up to five years. We have also included a power to make secondary legislation that can allow the registrar to impose financial penalties for non-compliance without the need for criminal prosecution. Critically, non-compliant overseas entities will face significant restrictions over dealing with their land. That is important because by their very nature, it might be difficult to impose criminal penalties on people who are overseas. But a restriction on them being able to deal with and dispose of their land will be particularly important because that will in effect prevent sales and render the property worthless.

I thank noble Lords and others who have made insightful and important points on the importance of robust supervision and the need to tackle the so-called professional enablers. Those noble Lords include the noble Baroness, Lady Bennett, the noble Lords, Lord Londesborough and Lord Cromwell, the noble Baroness, Lady Chapman, the noble Lords, Lord Faulks, Lord Carlile, Lord Thomas and Lord Rooker, and others.

The UK supervisory regime is comprehensive. The UK regulates and supervises all businesses most at risk of facilitating money laundering, including accountants, estate and letting agents, high-value dealers, trust or company service providers, the art market and so on. We strengthened the money laundering regulations in June 2017, thereby bringing UK legislation in line with the latest international standards. This includes requiring estate agents to carry out due diligence on both buyers and sellers of property.



To be very clear to the noble Viscount, Lord Waverley, any money obtained through corruption or criminality is not welcome in the United Kingdom, including that linked to Russia or other countries. That is why we are at the forefront of global action, spanning the operational, policy and diplomatic communities to target the money launderers and enablers who underpin corrupt elites and serious and organised crime.

[Baroness Kramer (LD)]

I am sorry to intervene, but perhaps the Minister could explain why, if there is such an effective system in place, we have a problem today. Surely there is a flaw.

[Lord Callanan (Con)]

This is what we are attempting to address in this legislation. We are trying to make the system as transparent as possible, to improve the action on unexplained wealth orders, et cetera.

[Lord Clement-Jones (LD)]

My Lords, the noble Lord has contradicted himself. He said that there was a robust system in place, but he has just talked about money laundering for enablers.

[Lord Callanan (Con)]

I said there was a robust system in place under the money laundering regulations in response to the various points that were made about financial services professionals, estate agents, et cetera. That is not to say that we cannot improve the system; we certainly look to do that. Providing information and transparency on property ownership, unexplained wealth orders and the sanctions regime, which is what we are doing, will help to supplement that system.

In July 2021, the CPS amended its legal guidance on money laundering offences for prosecutors to make it clear that it is possible to charge someone under Section 330 of POCA, which relates to the failure to disclose money laundering in the regulated sector. This closes a long-standing gap in law enforcement’s toolkit, which will better enable us to tackle the small minority of complicit professional enablers.

In addition, the Solicitors Regulation Authority—the largest legal PBS which supervises approximately 75% of regulated legal service providers in the UK—undertook a broad range of enforcement action in 2021. This included issuing 14 fines totalling £163,000, suspending membership three times and cancelling membership 13 times, effectively preventing an individual conducting regulated activity.

To take another example, the Institute of Chartered Accountants in England and Wales—the largest accountancy PBS—undertook a broad range of enforcement action. This included issuing 59 fines, totalling £178,000, and cancelling the membership of firms six times—again, effectively preventing an individual conducting regulated activity.

The noble Lord, Lord Carlile, suggested that we should consider how we can make legal professionals report matters relating to national security in a structured way and without the benefit of legal professional privilege. This is a complicated matter and not for this Bill, but I certainly welcome his contribution and his engagement, and we will certainly look at that.

The noble Baroness, Lady Kramer, raised an important point on protecting whistleblowers. We recognise how valuable it is that whistleblowers are prepared to shine a light on wrongdoing and believe that they should be able to do so without fear of recriminations. The whistleblowing regime enables workers to seek redress if they are dismissed or suffer detriment because they have made a so-called protective disclosure about wrongdoing. It is right and proper that the Government review the whistleblowing framework once we have had sufficient time to build the necessary evidence of impact of the most recent reforms. We are considering the scope and timing of a review.

A number of noble Lords—the noble Lord, Lord Macdonald, in particular— raised an important point concerning the wording “knowingly and recklessly”. The wording is drafted on precedent, coming from the Companies Act. This clause is intended to provide a necessary and proportionate deterrent to those who may otherwise provide inaccurate or misleading information on the register of overseas entities. This was debated at length in the other place and the Government have already made a commitment to reconsider the drafting. I also welcome the comments of the noble Lord, Lord Macdonald, on the sanctions proposals.

The noble Baroness, Lady Kramer, and the noble and learned Lord, Lord Garnier, asked about the issue of the register and trusts. If the assets are owned via an overseas legal entity, then this entity is within the scope of the draft Bill and will be required to register the trustees as beneficial owners with Companies House and state the reason that they are the beneficial owner—that is, because they are the trustees of that trust.

Her Majesty’s Revenue and Customs introduced a register of trusts in 2017. Trustees of trusts that acquire UK land or property are required to register and provide information on the beneficial ownership of the trust. The information on the register can be shared with law enforcement authorities and enables them to access information on the trustees and beneficiaries of all trusts. Reforms to unexplained wealth orders will also allow law enforcement to investigate the origin of any property held via trusts.

I now turn to the points raised by the noble Lords, Lord Vaux and Lord Eatwell, on verification. Clause 16 requires the Secretary of State to make regulations requiring the verification of information before an overseas entity makes an application for registration, complies with the updating duty or makes an application to be removed from the live register. To ensure that regulations are laid in a timely way, we have added a requirement for regulations to be made before applications may be made for registration in the register of overseas entities. We expect that UK anti-money laundering supervised professionals may have a part to play in this, and we will set out details on the verification scheme in regulations. Overseas entities will be required to update their information annually, and Companies House will be given broad powers to query information it holds via the further legislation to come later in the year. Also, the very public nature of the register means that there will be many eyes viewing the data, which will of course aid in identifying any inaccuracies. I thank my noble and learned friend Lord Garnier for his comments on whether we are capturing the ultimate beneficiaries of property. This is an important point.

[Lord Vaux of Harrowden (CB)]

The Minister has not answered the question about why the register is updated annually, not 14 days after a transaction in the way that the PSC rules have to be updated.

[Lord Callanan (Con)]

I will come to that in a second. The new register is designed to allow investigators to get behind opaque companies. Whether a title is held by a company or an individual, the noble Lord is right that there may be a different beneficiary of the property. That is something investigators may explore further. The task of this register is to look through the company, and that is where we are focused in scope. The question of recording the ultimate beneficiaries of property is a far wider point and would apply to properties held by individuals and UK companies too.

I thank the noble Lord, Lord Carlile, for sharing his experiences with Companies House. We have outlined in the White Paper, published last week, what we are proposing to do under register reform. We are seeking to limit the risk of the misuse of companies by ensuring more reliably accurate information on the companies register, reinforced by identity verification of people who manage or control companies and other UK- registered entities. We will give greater powers to Companies House to query and to challenge the information it receives, and we will give enhanced protection of personal information provided to Companies House. There will be more effective investigation and enforcement and better cross-checking of data with other public and private sector bodies. Companies House will be able to proactively share information with law-enforcement bodies where they have evidence of anomalous filings or suspicious behaviours.

I move on to unexplained wealth orders. I thank the noble Baroness, Lady Chapman, the noble Lords, Lord Vaux and Lord Carlile, and my noble and learned friend Lord Garnier for the points that they raised on the use of UWOs. The threat of substantial legal costs has been a barrier to the use of UWOs. Likely subjects of UWOs are the most litigious persons. To ensure that unexplained wealth can be investigated in the maximum number of cases, we are reforming the cost rules to ensure that agencies will not be burdened with high legal costs if they act with integrity. If an agency acts dishonestly, unreasonably or improperly, it may still be ordered to pay the costs of those subject to a UWO, which is to ensure fairness. An important point to raise regards the changes to the cost rules to limit law-enforcement liability following an adverse court ruling. Protection from costs means that the court has discretion to award costs against an enforcement agency only if it acted dishonestly, unreasonably or improperly. This will remove a key barrier that has discouraged the use of UWOs, while of course providing a safeguard against arbitrary use of the powers.

The noble Lords, Lord Vaux and Lord Carlile, expressed concerns relating to resourcing for law enforcement agencies. The Government have developed a sustainable funding model that demonstrates our commitment to tackling economic crime. The combination of this year’s spending review settlement and private sector contributions through the levy will provide economic crime funding totalling around £400 million over the spending review period. That includes the £63 million that I mentioned earlier for Companies House reform. Since 2006-07 nearly £1.2 billion of the assets recovered under the Proceeds of Crime Act has been returned to law enforcement agencies, prosecutors and the courts to fund further asset-recovery capability or work that protects the public from harm.

Account freezing and forfeiture orders are a hugely impactful tool in the law enforcement toolkit. AFOs have proved their worth in a wide range of cases and are seen by law enforcement agencies as a quick and effective method of disrupting criminals and recovering their assets. In 2020-21 just under £219 million of the proceeds of crime were recovered within England, Wales and Northern Ireland. This continues the general trend of improved performance since 2016-17.

The noble Baroness, Lady Kramer, raised an important point on Clause 18 of the Bill and the exemptions for which it provides. The phrase used in the draft Registration of Overseas Entities Bill, published in 2018, was that the Secretary of State may exempt a person from the requirement to register only for “special reasons”. This was intended to mirror the wording used in the Companies Act 2006 in respect of the persons with significant control regime. However, the pre-legislative scrutiny committee that examined the draft Bill in 2019 was of the opinion that the reasons why an exemption could be granted should be explicit in the Bill. The Government accepted the committee’s concern that otherwise the power may be too wide, and we amended the Bill accordingly—I think that also addresses some of the points made by the noble Lord, Lord Carlile. The circumstances outlined in the Bill have been carefully considered to provide clarity but also flexibility for unforeseeable but legitimate scenarios. Given that the key objectives of this register are to improve transparency and combat money laundering, these exemptions will be used very carefully, and only for evidenced and legitimate reasons.

The noble Baronesses, Lady Bennett and Lady Kramer, raised the subject of freeports. Throughout the bidding prospectus and subsequent business-case processes, prospective freeports were required to set out how they would manage the risk of illicit activity. Those plans were scrutinised by officials in Border Force, HMRC, the National Crime Agency and others. The Government already require each freeport governance body to take reasonable efforts to verify the beneficial ownership of businesses operating within the freeport tax site and to make that information available to HMRC, law enforcement agencies and other relevant public bodies. Given the nature of the information, we do not think it would be appropriate for the freeport governance body to release that information publicly because it is a third party and does not have the locus to release such information about a business to the public. Furthermore, the requirement would also partially duplicate the people with significant control register at Companies House, where there is already an onus on the company itself to provide information.

I fear that I am running out of time—

[Viscount Waverley (CB)]

My Lords, I apologise. Would the Minister consider this as a subject for the upcoming Commonwealth Heads of Government Meeting in Kigali? Will he represent the Government in fully engaging with all Commonwealth countries, including the Overseas Territories, so as to encourage the English-speaking world to understand fully all these measures, because they should all engage with this, and we do after all share a common judicial system?

[Lord Callanan (Con)]

I am sure we will want to engage with all other parts of the world, not just the English-speaking world, through the Commonwealth Heads of Government Meeting. We will want to engage with as many countries as possible to see that this regime is extended.

I apologise; there were a number of other points made that I wanted to answer, but I have run out of time. However, I shall pick up one point made by the noble Lord, Lord Empey, about Northern Ireland. We are working with Northern Ireland Ministers on the devolved matters in the Bill. As he will be aware, due to the ongoing situation with the Northern Ireland Executive we are unable to formally seek a legislative consent Motion, but the noble Lord can be assured that we would not proceed without the support of Northern Ireland Ministers. I have had meetings with Ministers from Northern Ireland and from Scotland to discuss this matter.

I know I have not addressed some points, but I am sure we will examine them in Committee. I have already been speaking for 30 minutes, the hour is late and the Chief Whip is getting unsettled, so I will draw my remarks to a close. We have to respond to this illegal invasion and the Bill enables us to do so. We need to rid this country of dirty money, and I am greatly encouraged by the support given to us by all parts of the House. I apologise for taking a long time over my response, but I commend the Bill to the House.

Bill read a second time and committed to a Committee of the Whole House.

Green Skills

Lord Callanan Excerpts

Wednesday 9th March 2022 Lords Chamber

[Baroness Hayman]

To ask Her Majesty’s Government what consideration they have given to introducing a national green skills strategy to ensure that the workforce has the necessary skills to meet the United Kingdom’s net zero emissions commitments.

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

My Lords, the Net Zero Strategy sets out our plans to work with industry to create the skilled workforce needed to deliver our net-zero targets. This includes green apprenticeships and retraining boot camps. The Government are establishing a green jobs delivery group, co-chaired by a government Minister and an industry representative, where government, industry and other key stakeholders will work together to deliver the skills needed for net zero.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register and thank the Minister for that Answer. Green skills will be fundamental to economic growth and the levelling-up agenda, as well as to achieving net zero. While I recognise that much is going on in various parts of the forest, will the Government now bring together all the various agencies and departments with business and industry to provide a comprehensive and systematic strategy for skills? I also take the opportunity of the Minister being at the Dispatch Box to ask whether, given the reports in today’s papers about onshore wind, the Government will now give my Private Member’s Bill on the issue fair passage.

[Lord Callanan (Con)]

I thank the noble Baroness for her question. Before I answer, I will detain the House for a moment to acknowledge that, after 52 years of distinguished service in Parliament, this is the final appearance of my noble friend Lord Tebbit, who is joined by his family in the Public Gallery. I am sure I speak for the whole House in saying that we have been greatly enhanced by his presence here and wish him the very best for his long and happy retirement. We on these Benches will miss him.

Going back to the question of the noble Baroness, she makes a very good point. We are bringing together the Green Jobs Taskforce, chaired by my right honourable friend Minister Hands, with representatives from the DfE, the DWP and all the key departments in Whitehall. With regard to her Private Member’s Bill, we have an energy Bill coming up which will deal with many of these matters.

[Baroness Fookes (Con)]

My Lords, is my noble friend aware of the great amount of consideration that should be given to the horticultural sector, which can offer so much? It has a shortage and is crying out for skilled jobs. What can my noble friend do to assist?

[Lord Callanan (Con)]

My noble friend makes a very good point. There are a number of different apprenticeship standards supporting green skills. The horticultural sector is very much a green skill, so I totally agree with her that we want to do all we can to encourage this important sector.

[Lord Kennedy of Southwark]

My Lords, I join the Minister in paying tribute to the noble Lord, Lord Tebbit, for his long and distinguished service to this House and the other place.

Could the Minister set out for the House the specific skills that the workforce needs to develop and obtain to meet the UK’s net zero commitments?

[Lord Callanan (Con)]

That is a very wide-ranging question. There are a number of them, but I can give some examples: the wave 1 and 2 skills bootcamps in green subjects, such as housing retrofit, solar and nuclear energy, vehicle electrification. We have 40-plus apprenticeship standards in digital, STEM, nuclear, forestry, manufacturing et cetera—there are a number of them.

[Lord Howell of Guildford (Con)]

My Lords, the International Energy Agency confirms that global emissions are again rising fast. Sadly, it looks as though even if we achieve the UK net zero aim, which is commendable and something that we all want to see, those emissions will continue to rise fast and take us further and further away from the Paris targets. Is it not necessary to think about not only skills for our own net zero but skills to develop entirely new initiatives both in the production of low-carbon energy and in carbon absorption, which has been rather neglected and can be met on a much bigger scale—not only by trees but by entirely new strategies which are now being discussed?

[Lord Callanan (Con)]

Indeed, my noble friend makes a very good point. The UK is responsible for only 1% of worldwide emissions; it is very much a global problem that we have to work internationally to tackle. There are many exciting new developments in a whole range of industries and technologies that we want to encourage as much as possible. Technology could be our friend here.

[Lord Foster of Bath (LD)]

My Lords, over one-third of our homes are inadequately insulated, and yet after many failed green deals, the industry that will actually deliver the solution to the problem has lost confidence. It says that if it is going to invest in research, equipment and skills training, it wants the confidence of the Government’s home insulation targets placed firmly into legislation. Why have the Government refused?

[Lord Callanan (Con)]

We are working very closely with the retrofitting insulation industry. The noble Lord is aware that we are spending billions of pounds helping low-income families to upgrade their accommodation in the low-income private sector, social housing and through local authorities. This is a well-advanced programme, and we also have the ECO scheme which spends up to £1 billion a year on green retrofitting measures, so there is a lot going on this sector.

[Lord Clark of Windermere (Lab)]

My Lords, over four decades ago there was a similar scheme to try and push green jobs, based on a fairly similar tripartite-plus system. It was not a great success, although it had a lot of support. Will the Minister ask his civil servants to see if there are any lessons to be learned from that experience that will make sure it works now?

[Lord Callanan (Con)]

I thank the noble Lord for his suggestion based on his long experience in government. I will certainly pass on that suggestion to my ministerial colleague, and I am sure we would want to learn lessons from past experiences.

[Lord Lilley (Con)]

My Lords, if my noble friend believes the Government’s strategy when it says that green energy will create more jobs at higher pay than producing an equivalent amount of conventional energy, does that not mean it is wasteful, and that green energy must be more expensive than conventional energy?

[Lord Callanan (Con)]

It is the entire sector, not just the generation of energy; it includes all the retrofitting standards, the upgrading of insulation, new homes built to higher standards and others that have been mentioned. We are confident that there will be a net increase of jobs, but we do have a legally binding commitment to net zero which we need to pursue.

[Lord Brownlow of Shurlock Row (Con)]

My Lords, I join the Minister in paying tribute to Lord Tebbit, who was inspirational to me, as an 18 year old, to get involved in politics, and I thank him for all his service.

I have a background in recruitment: can the Minister tell me how many individuals he estimates would be needed in, say, the next five years to join a green skills workforce?

[Lord Callanan (Con)]

It is very hard to put a precise number on that, but I can give my noble friend some figures. Our net zero strategy supports up to 190,000 jobs by the middle of the 2020s, and up to 440,00 jobs by 2030.

[Baroness Bennett of Manor Castle (GP)]

My Lords, the major IPCC report out this week said that the shift from incremental change to transformational change was crucial, given the fact that carbon emissions are heading in the wrong direction. Do the Government really think they are finding the true innovation, the true change, rather than just doing business as usual with a bit of greenwash added?

[Lord Callanan (Con)]

It is very much not business as usual. As the noble Baroness will be aware, we have one of the most ambitious decarbonisation targets in the western world. We have decarbonised faster than most other industrialised countries. I am sorry if the noble Baroness does not like that, but it remains a fact. As I said in an earlier answer, we are responsible for 1% of worldwide emissions. Yes, we need to make progress in this country, but we also have to look at a global scale and work with partners across the world to bring down their emissions as well.

[Lord Teverson (LD)]

My Lords, can I make a plea to the Government? So often when we talk about green jobs—as has been mentioned already, in fact—it is nearly always around green energy, renewable energy and all of that side, whereas there is a huge need for those skills that are meeting the biodiversity emergency in this country and globally, as the noble Baroness, Lady Fookes, said. In particular, I mean biologists, ecologists, horticulturalists and farm advisers—there is a real shortage of these. If we want that emergency to be solved as well, we need jobs and training in that sector.

[Lord Callanan (Con)]

Yes, I am very happy to agree with the noble Lord on that point. He makes some good observations.

[Lord St John of Bletso (CB)]

My Lords, there is no denying that environmental illiteracy is a major problem in both the public and private sector. What measures are being taken to embrace technologies such as smart meters to change behaviours?

[Lord Callanan (Con)]

One of my ministerial responsibilities is the smart metering programme, which has quietly gone ahead in the background. I forget the exact figures, but I think we now have 25 million smart meters installed in this country, and the programme is already delivering net benefits. We have launched a publicity drive to drive take-up even further, and we are looking to see what we can do to expand it even more, because smart meters are a very good thing.

Horizon Europe

Lord Callanan Excerpts

Wednesday 9th March 2022 Lords Chamber

[Viscount Stansgate (Lab)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper—and, if I may, I would like to wish the noble Lord, Lord Tebbit, well in his retirement. He is a man I have disagreed with all my adult life, and I am sorry he did not quite last long enough in the Chamber to listen to the exchanges on what is my first Oral Question.

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

My Lords, in line with the agreement made in December 2020, this Government are committed to finalising our association to Horizon Europe at the earliest opportunity. We continue to push the EU swiftly to formalise our association to Horizon Europe, as international co-operation is more important than ever now. We will support the UK R&D sector in all scenarios, either by associating to Horizon Europe or by implementing an alternative UK programme.

[Viscount Stansgate (Lab)]

My Lords, I thank the Minister for the reply, but it is very dispiriting. On Monday this week in the other place, the annual STEM for Britain competition was held, which features early-career scientists from the UK and Europe, with brilliant work on display. It is the very week when our chances of co-operation with Europe are slipping away, which will be terribly damaging. Indeed, does the Minister agree with me that not joining Horizon Europe is

“harming scientific research and collaboration”?

He certainly should, because that is a direct quote from the meeting held before Christmas of the Specialised Committee on Participation in Union Programmes.

Finally, may I also ask him about the money? Money has been allocated in the Budget for our participation in Horizon Europe. The financial year is drawing to an end, and we have not yet joined. Can the Minister assure the House that the money allocated for Horizon Europe will not be lost to science but will be carried over, either for the UK’s participation in Horizon Europe or for such other plan B as may eventually be necessary?

[Lord Callanan (Con)]

I agree with the noble Viscount; it is indeed very disappointing that the EU is refusing to abide by the agreement we made with it. I am sure that some of the EU’s supporters in this House will want to urge it to press ahead with this agreement. The UK stands willing and able to associate. We have an agreement to that effect, and we hope the EU will also abide by its commitments. The noble Viscount will be aware that the spending review allocated funding for full association to EU programmes. In the event that the UK is unable to associate, the full funding allocated will go to UK programmes; £5.6 billion was set aside over the spending review period.

[Lord Fox (LD)]

My Lords, the head of policy at the Wellcome Trust is quoted as saying:

“There is a real prospect that bright young scientists will decide it will be best … if they leave the UK.”


Meanwhile, recruitment of postgraduates in some of our elite universities is reported to be seeing a huge drop in candidates. This is because young researchers fear for the future progression of their careers. The Minister said we were seeking to resolve this at the earliest possible opportunity, and I take him at his word. However, these people are making decisions now—the brain drain is already happening. In the meantime, what is the plan to attract and retain the talent we need in this country?

[Lord Callanan (Con)]

I reiterate the point: we want to associate with Horizon Europe. It is not the UK that is holding up association but the EU. We want to do that at the earliest possible opportunity. If the funding we have set aside is not used for Horizon Europe, we intend to spend equivalent sums on a UK programme, co-operating with other third countries if necessary. Hopefully that will attract the talent the noble Lord refers to.

[Lord Hannay of Chiswick (CB)]

My Lords, does the Minister take pleasure from the fact that your Lordships’ European Affairs Committee has written to the Commissioner and the Foreign Secretary about seeking to unblock Horizon? Does he not recognise that we and the EU are now basically in a lose-lose situation in which both sides are being damaged by failure to reach agreement? In the months ahead, could we see an effort by both sides to get that unblocked?

[Lord Callanan (Con)]

I am delighted that the European Affairs Committee has supported our position on this. As I say, the blockage is not on our side. I hope that in its letter it acknowledged where the fault lies in this situation. The EU has an agreement to associate, which we signed up to in good faith. We stand willing to associate; it is the EU that is currently blocking progress.

[Baroness Chapman of Darlington (Lab)]

My Lords, we need to be pragmatic about this. The truth is that this is being held up and delayed because the Government have made such a hash of negotiations on the Northern Ireland protocol. I do not see any prospect of getting it resolved until that problem is sorted out. As this may take some time, are the Government reaching out to counterparts in the EU to make sure that, even if some further months elapse, we can still join the Horizon programme, albeit at a late stage?

[Lord Callanan (Con)]

I am sorry that the Opposition seem to be supporting the EU position on this. The Northern Ireland protocol is a completely separate part of the agreement, and of course we stand willing to negotiate in good faith on that as well. The two are not linked. The EU has signed up to an agreement and should honour it; we will continue to press it to do so. The Northern Ireland protocol is also part of the same agreement.

[Lord Trees (CB)]

My Lords, does the Minister agree that the European Horizon programmes have been hugely important in catalysing research collaborations and networks, not only between British scientists and European ones but with scientists in low and middle-income countries? Moreover, does he agree that they have also been an invaluable funding bridge between the basic science funding that our research councils provide and the much more downstream R&D funding that industry provides? Her Majesty’s Government are committed to funding successful applications to Horizon while negotiations to join continue, but how long is that commitment for? Will it continue if our application to join ultimately fails?

[Lord Callanan (Con)]

I agree with the noble Lord that the Horizon project is very valuable. That is why we want to continue association with it and why the funding has been allocated. With regard to the funding guarantee, of course we will want to provide certainty as quickly as possible. We will have announcements to make in that regard in due course.

[Lord West of Spithead (Lab)]

My Lords, the Minister will be aware that one of the key areas of research in the Horizon programme is space, which we see as very important; the Government have done a considerable amount in that area. One area where there was great advance is OneWeb. Have the events in Ukraine effectively stopped the disposition of that satellite system? If not, where do we stand on it?

[Lord Callanan (Con)]

The noble Lord makes a very good point. Of course, there is currently a dispute ongoing with Russia about the launch of the OneWeb satellite. My right honourable friend the Secretary of State is closely involved in this and is trying to unblock it as quickly as possible. But we will not be held to ransom.

[Lord Patel (CB)]

My Lords, accepting that the ideal scenario would be for the UK to be part of the Horizon Europe programme, we are, I understand, in a similar situation to Switzerland. In that respect, what plan or negotiation are the Government having with the Swiss research council to collaborate with it?

[Lord Callanan (Con)]

The noble Lord asks a very good question. I know that the Minister for Science has had productive discussions with the Swiss on that. They have an extremely good, advanced and able scientific programme, and we will be looking to step up our co-operation with Switzerland.

[Baroness Garden of Frognal (LD)]

My Lords, in headier days the Government assured us that Brexit would not mean leaving either Erasmus or Horizon. One is tempted to ask what went wrong, because it certainly is not all the EU’s fault. If the Government have an alternative, why can they not start spending now?

--- Later in debate ---

[Lord Callanan (Con)]

I am afraid it is indeed the EU’s fault, and no amount of spinning from the Liberal Democrats will get away from that. We want to associate with the programme, we stand ready to do so and the money is available. If it proves to be not possible, we will spend equivalent sums on supporting UK science.

[Lord Watts (Lab)]

My Lords, when the Government negotiated, did they make an “in principle” decision agreement or a cast-iron agreement? It is hard to believe that something that the European Commission agreed to as cast iron is now being rejected by it.

[Lord Callanan (Con)]

I am sorry that the noble Lord cannot believe that the European Commission could do anything wrong, but this is actually part of the trade and co-operation agreement that the EU and the UK signed up to. We want to see all parts of that agreement implemented.

[Lord Flight (Con)]

My Lords, Horizon Europe is the EU’s key funding programme for research and innovation, with a budget of £95.5 billion. It tackles climate change, helps to achieve the UN’s sustainable development goals, and boosts the EU’s competitiveness and growth. Legal entities from the EU and associate countries can participate. Can our participation and our expenditure be on the basis of having the ability to benefit from items that we are financing?

[Lord Callanan (Con)]

Yes, we will try to do that.

[The Earl of Kinnoull (CB)]

My Lords, the noble Lord, Lord Hannay, referred to our letter. Our letter came after an evidence session, when it was clear that it was mutually harmful to science communities of the UK and Europe not to have the UK participating in the programme. That is not surprising, because the joint declaration, which is the foundation of this agreement, says:

“The Parties recognise the mutual benefit”.


Can the Minister assure us that both parties understand that there is a mutual harm in the programme not starting with UK participation?

[Lord Callanan (Con)]

I agree totally with the noble Earl that it is to the benefit of both parties. It provides value for money for the UK, which is why we agreed to associate with it. We thought that we had a legally binding agreement with the EU, as part of the trade and co-operation agreement. We will continue to try to unblock that and work towards agreement. We want to associate with it precisely because we think that it is to the benefit of both parties, and we hope that will be obvious to the EU as well.

Economic Crime (Transparency and Enforcement) Bill

Lord Callanan Excerpts

Wednesday 9th March 2022 Lords Chamber

Moved by

[Lord Callanan]

That it be an instruction to the Committee of the Whole House to which the Economic Crime (Transparency and Enforcement) Bill has been committed that they consider the bill in the following order:

Clauses 1 to 4, Schedules 1 and 2, Clauses 5 to 32, Schedules 3 to 5, Clauses 33 to 65, Title.

Motion agreed.

Nuclear Energy (Financing) Bill

Lord Callanan Excerpts

Committee stage
Tuesday 8th March 2022 Grand Committee

[Lord Oates (LD)]

My Lords, I will speak briefly on this group, particularly to Amendments 2 and 9 in the name of the noble Lord, Lord McNicol of West Kilbride, which I have also signed. I also support the amendments in the name of the noble Lord, Lord Vaux. Like the noble Baroness, Lady Bennett, I come at this from a different perspective from him, but it surely must be right that we are able to identify and verify the ultimate ownership.

As the noble Baroness, Lady Wilcox, set out, Amendments 2 and 9 seek to ensure that a nuclear power station cannot be owned or part-owned by a company controlled by a foreign state and being operated for investment purposes. However, I was a little surprised to hear her say that the amendment would cover EDF, because that was not my understanding. My understanding was that the amendments would not cover EDF, which is not operating for investment purposes, and that is why

“and operating for investment purposes”

is critical in the definition—but it would cover China General Nuclear Power Group, which does operate for investment purposes. I understood that was why the amendment was tabled and drawn in that specific way, but we can perhaps discuss that further later.

The main point here is the general concern that has been expressed on all sides of the Committee about the involvement of the Chinese state in critical national infrastructure, particularly nuclear. As we know, it currently has a 35% stake in Hinkley C and will have a proposed 20% stake in Sizewell C if that goes ahead. So I imagine that, regardless of our wider views on nuclear, we are all concerned about this issue and need some clarity from the Government on their position on this. I hope that the Minister will be able to tell us how the Government intend to proceed with regard to these matters and also answer the important questions asked by the noble Lord, Lord Howell.

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

First, I thank everyone who contributed to this important and well-structured debate. I also pay tribute to the noble Baroness, Lady Wilcox, for her valuable contributions and for stepping in at the last moment to substitute for the noble Lord, Lord McNicol; having picked up a difficult and complicated subject at such late notice, she did extremely well in moving the amendment.

This group includes Amendments 2, 9, 11, 19, 22 and 24, originally tabled by the noble Lords, Lord McNicol, Lord Oates and Lord Vaux. They have been grouped together because they all address in different ways the ownership of nuclear companies that ultimately may benefit from the RAB model. Let me be clear at the outset, as I was at Second Reading, that the Government emphatically do not support investment in our critical infrastructure at the expense of national security. There is no compromising on that point and I hope to reassure all noble Lords who have spoken during this discussion shortly.

The general purpose of this Bill is to broaden our options when financing new nuclear projects and to widen the pool of potential investors; that is widely understood. It is our expectation that doing this will reduce our reliance on state-owned developers to finance the construction of new nuclear power stations. So I do not consider that Amendment 11 and, as a consequence, Amendment 22 are necessary, for the reason that designation is a robust and transparent process. I make a similar case with regard to Amendment 24. The Committee can be assured that appropriate and robust due diligence will be carried out through to the financial close of every single project, in particular following a capital raise where the financing structure of the project may change as new investment is introduced.

I assure noble Lords—particularly my old sparring partner, the noble Lord, Lord Foulkes—that the Government have strong oversight of foreign ownership in nuclear projects as a result of the National Security and Investment Act, which includes a wide-ranging ability to call in for assessment qualifying acquisitions if, in our opinion, there are any national security concerns. These are wide-ranging powers. The noble Lord will be aware that we deliberately did not define “national security” during the passage of what became that Act to give ourselves a wide range of flexibility on this subject.

I should add that the Secretary of State may also apply any conditions that he deems appropriate to the designation of a nuclear company—conditions that, if not met, may lead to the company having its designation revoked. Let me also stress—I made this point in a letter to the noble Lord, Lord McNicol—that it is the Government’s intention to take a special share in the Sizewell C project, assuming that the negotiations are successful and the project proceeds to a final investment decision.

I note the intention of the noble Lord, Lord Vaux, that we should legislate for this sort of safeguard, but I caution him that it is right that the terms of the special share should be negotiated as a commercial agreement, according to the circumstances of every particular RAB project. The projects might be different when they are negotiated, so I think that imposing constraints in primary legislation would be too severe.

--- Later in debate ---

[Baroness Wilcox of Newport (Lab)]

I have started so I will finish. Amendment 10 would require the Secretary of State to gain assurances about the delivery of a project before designating a nuclear company to undertake it. We hope that a designated nuclear company will not fail and that projects will be delivered without a hitch, but experience teaches us that complex infrastructure projects often encounter bumps in the road. There will always be scenarios that cannot be planned for but the aim of this amendment is to ensure that the Government can demonstrate the existence of contingency plans for the most obvious obstacles.

Amendment 16 is designed to probe plans for promoting the production and capture of hydrogen as part of nuclear power generation. Various methods are outlined in the UK hydrogen strategy but the next steps are limited to awaiting further innovation and developments in the 2020s. Have the Government assessed the potential benefits of utilising by-products from nuclear processes, and have they now modelled costs and other impacts?

Amendment 29 would require the Secretary of State to lay before Parliament a statement outlining the steps taken to prevent further charges being imposed on revenue collection contracts when cost caps are revised. We understand that the Government would not necessarily want to rule out imposing further charges on consumers if it is the only way a project can come to fruition, but I hope that the Minister can clearly state today that it is by no means the department’s preferred option.

Finally, Amendment 38 would bring legacy benefits within the scope of Amendment 37 in the name of the noble Lord, Lord Oates. Many legacy benefits remain active. If we were to insulate recipients of universal credit from additional costs, that same protection should be extended. Again, I am sure that the Government will not want to rule anything out, but I hope that the Minister can demonstrate how they will shield the least well-off from relevant levies on energy bills. They are a constant source of worry and concern given the cost-of-living issues we face at this time and will face in future.

[Lord Callanan (Con)]

I thank everybody who has spoken in yet another wide-ranging debate on energy policy—I definitely have all my lines ready now for the next time we have Oral Questions in the House. At the risk of agreeing with almost everybody, I just want to say that what we need in this country is a diverse mix of supply—yes, we need new nuclear; yes, we need more renewables; yes, we need interconnectors; yes, we need pump storage—which is the best way to keep bills low and supply reliable. It is absolutely not a question of renewables or nuclear; government policy is that we need both.

There is a long list of amendments in this group. They have been tabled respectively by the noble Baroness, Lady Bennett, and the noble Lords, Lord Foster, Lord Teverson, Lord Oates and Lord McNicol. We have taken them together because they are of similar intent and similar subject matter.

Let me start by replying to the noble Lord, Lord Foster, and his comments on the designation statement. He is of course right that the department is still developing the statement, given that we do not want to pre-empt any of the debates we are currently having in Parliament on this Bill; the noble Lord would be one of the first to criticise us if we decided all these things in advance. We want to listen to what parliamentarians say and gather all opinions before finalising the statement.

Before coming on to the individual amendments, let me remind the Committee of the commitment we made in the 2020 energy White Paper to bring at least one large-scale nuclear project to a final investment decision by the end of this Parliament, subject to value for money and all the relevant approvals. I thank my noble friend Lord Howell and the noble Baroness, Lady Worthington, for their thoughtful contributions setting out all the considerations that we need to take into account when making decisions about the value for money of new nuclear projects.

The Bill has been introduced with this objective in mind. It seeks to introduce a funding model that can lower the cost of finance for the large-scale nuclear that most of us agree we need; help to invigorate the UK nuclear industry; encourage, ideally, investment from British institutional investors and pension funds; and support our desire—shared by everyone, I think—for a decarbonised, resilient energy system.

Amendments 7 and 8 seek to clarify the types of company that may benefit from the nuclear RAB model. Amendment 7 would severely inhibit our ability to achieve the objectives I have just set out by restricting those able to benefit from the RAB model to not for profit, co-operatives, community-interested companies or companies wholly owned by a UK public authority. I understand the political intent of the amendments tabled by the noble Baroness, Lady Bennett, but I point her to the brilliant examples of energy companies that have been set up by a multiplicity of local authorities across the country in recent years. Without exception, every one of them has gone bankrupt, with considerable costs to local taxpayers. These things are not as easy to do in the public sector as the noble Baroness might imagine. If it was so easy and simple, all those companies would be prospering and returning funds to the taxpayer. In fact, a number of—mainly Labour—local authorities have lost millions of pounds for local taxpayers in attempting to do things better than the market. Public is not always good.

With regards to Amendment 8, I am pleased to confirm that Clause 14 already provides that “a company” means a company that is registered under the Companies Act 2006 in England and Wales or Scotland. The amendment is therefore unnecessary.

On Amendment 23, I can confirm to the noble Baroness, Lady Bennett, that, irrelevant of ownership, if a designated nuclear company ceases to meet the designation conditions set out in the Bill, the Secretary of State has the power to revoke its designation. Provision is already made for this in Clause 5(1); for that reason, the noble Baroness’s amendment is unnecessary.

Amendments 6, 10 and 29 seek to tackle scenarios whereby a nuclear station may not be built or suffer from cost overruns, or there are issues with its generation output. Those things can happen in the real world but all these scenarios are fairly unlikely to occur. The approvals process for nuclear projects, of which designation for the purposes of the RAB model will form a part, is designed precisely to ensure that the Secretary of State must be sufficiently confident that the proposed project would be able to complete construction. In due course, we will publish a statement to provide details of exactly how the Secretary of State expects to determine whether the designation criteria have been met.

Once construction is under way, we will want to make sure that the project company is incentivised to manage its costs and schedule. It will be overseen by Ofgem as the independent regulator. However, in the unlikely and remote circumstance that a project looks as though it may exceed the cap on construction costs set out in its modified licence, it is important that there is a mechanism in place to allow additional capital to be raised to ensure completion of the project. The aims of that, of course, are to ensure that consumers can continue to benefit from their investment and to minimise the risk of sunk costs.

With regard to Amendment 6 and the first part of Amendment 16, I assure the Committee that the RAB model will be designed to ensure that the appropriate incentives are placed on the company to maximise plant availability. Nuclear reactors have an extremely good record of availability and delivery but we want to make sure that that is maintained. On broader generation capacity security, I draw the Committee’s attention to the Great Britain security and quality of supply standard and the Great Britain capacity market. Both these essential tools ensure that security of supply is met in GB and that we have resilience in the day-to-day operation of the GB electricity system should generation outages occur.

[The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)]

There is a Division in the House. The Committee will adjourn and resume as soon as agreed after the Members present have voted.

--- Later in debate ---

[Lord Callanan (Con)]

Moving on to the second part of Amendment 16, the Government are in full agreement that nuclear could have a role in low-carbon hydrogen production. I was delighted to discuss this in a meeting with the noble Baroness, Lady Worthington, earlier this week—or was it last week? I have lost track of when it was. Of course, this could potentially include the Sizewell C project if it goes ahead. It is for this reason that the Government are looking to stimulate private investment in new low-carbon hydrogen production. We have consulted on the appropriate hydrogen business model, and we included a lot of this in the UK’s first hydrogen strategy, which was launched in August last year.

However, as I made clear to the noble Baroness, I do not consider that this Bill is the right place for such an amendment. The purpose of the Bill is to facilitate investment in the design, construction, commissioning and operation of nuclear energy generation projects. It is therefore more appropriate, in my view, that hydrogen production specifically should be taken forward using a different vehicle. It is for this reason, and those given previously with regard to incentivising plant availability, that I am not in a position to accept Amendment 16.

Prior to turning to the next amendments, let me address the questions asked by the noble Baroness, Lady Worthington, and confirm for her benefit that any payments received by a nuclear company above its allowed revenue would not be received by the Treasury. Instead, they would be returned to the suppliers who were levied in the first place. They who would then have the choice of whether to refund the payments to consumers in a competitive market situation. As the noble Baroness mentioned, the process is similar to the CfD model under which consumers will ultimately benefit from a cheaper system.

Amendments 4, 13, 37 and 38 were tabled by the noble Lords, Lord Foster, Lord Teverson, Lord McNicol, and the noble Baroness, Lady Bennett. Each amendment addresses the important subject of consumers and value for money. On Amendments 37 and 38, I of course agree on the importance of protecting vulnerable consumers from increases in their energy bills, but let me reassure all noble Lords that the need to protect consumers’ interests is very much at the heart of the Bill. The nuclear RAB model will be regulated by Ofgem, whose principal objective, as enshrined in statute, is to protect the interests of all existing and future consumers, including consumers who are claiming universal credit and other legacy benefits.

Ofgem is also a statutory consultee for significant decisions in the Bill relating to whether a nuclear company should benefit from the RAB model. In addition, the Bill requires the Secretary of State to have regard to the interests of existing and future consumers when making any modifications to a nuclear company’s licence. So I make it clear that the Government intend to protect all our most vulnerable energy consumers in what is a very difficult market at the moment, given the record high gas prices, but we believe that Amendments 37 and 38 are not the best way of ensuring this and that a more holistic strategy for supporting vulnerable energy customers is preferable, as the noble Lord, Lord Wigley, commented in the debate.

The Government are taking a number of actions to help low-income households. I will list them for the Committee. They include the warm homes discount, which provides eligible households with a £140 discount, and the Chancellor confirmed on 3 February the Government’s plans to expand the scheme by almost one-third, raising the number of beneficiaries from 2.2 million vulnerable households to more than 3 million. We are further supporting consumers through the cold weather fund and the household support fund. I think that those measures are a more appropriate way of protecting vulnerable consumers, and I hope that I have been able to reassure noble Lords who tabled these amendments that the design of the RAB model and the revenue stream that will flow from that are such that the interests of vulnerable consumers are and will be the highest priority for us.

On Amendments 4 and 13, I stress to the Committee that we have sought to establish a transparent designation process that requires the consideration of whether designation of a nuclear company is likely to result in value for money. This process requires the Secretary of State to prepare draft reasons for designation, to consult on those reasons with specified persons, including independent regulators such as Ofgem, and to publish a designation notice setting out the final reasons for designation. This final notice would include designation against the criteria of being likely to result in value for money, which the noble Lord, Lord Foster, asked about in the debate.

Given all that, I am confident that the process is sufficiently transparent. Through consultation with Ofgem we will ensure that consumer impacts are fully taken into consideration and accounted for. Value for money is and always will be a core part of government approvals beyond the designation of a nuclear company as a designated company’s licence conditions are negotiated and as part of any capital raised for a project. Therefore, I hope the noble Lords who tabled Amendments 4 and 13 will not press them.

Finally, on Amendment 26 from the noble Lord, Lord Foster, let me gently point out that the amendment would remove the obligation for the Secretary of State to have regard to whether the nuclear company has appropriate incentives. I am not sure that that was the intention of the noble Lord, so perhaps he will have another look at it and will feel able not to press it because ensuring that projects have appropriate incentives forms a vital part of the RAB model. We have learned from the experience of projects in the US—the noble Lord quoted them to me at one of our meetings—and elsewhere that incentivising developers to deliver to cost and schedule will be important to ensure value for money for consumers. As the noble Lord, Lord Foster, questioned in the debate, we expect that such incentives will include an appropriate risk-sharing mechanism between consumers and the nuclear company and its investors. We would not expect the bill payer to bear all the risk.

We expect that incentives would be included in the modified licence conditions for the nuclear company, and so would be consulted on and published as set out under the provisions of the Bill. These incentives would be overseen by Ofgem in its role as the independent regulator.

In conclusion, I hope I have been able to satisfy noble Lords on all these measures and provided the appropriate reassurance that the Bill introduces a robust and transparent process for the approval and awarding of the benefits of a RAB model to nuclear companies, and that there are appropriate checks and incentives in place to protect consumer interests—which should be at the forefront of our thinking. Therefore, I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Foster of Bath (LD)]

My Lords, I am enormously grateful for the opportunity to listen to so many noble Lords who have contributed to the debate. It has been a masterclass in what we mean by value for money. I am enormously grateful; I have learned a great deal about whether or not we should be just using commercial accounting or incorporating opportunity costs. Should we define opportunity costs in the way that the noble Baroness, Lady Bennett, and others have defined them? It has been incredibly illuminating.

My amendment was very simple indeed. The Government said they were going to do an assessment; all I wanted them to do was publish it. I am enormously grateful that I got the support of the noble Baroness, Lady Worthington, for that. Sadly, despite all the Minister subsequently said, we have not yet heard whether the value for money assessment is or is not going to be published—and, if it is, when that would be.

We then come to the interesting issue of the amendments surrounding the designation process. I am enormously grateful to the noble Lord the Minister, who enables me to sit down while we vote again.

--- Later in debate ---

[Lord Foster of Bath (LD)]

As I was saying, we come to the second string of things that were debated, in relation to the criteria surrounding the designation process. We heard something wonderful: a Government who admit that they are a listening Government. “The reason we haven’t published the designation criteria is that we are listening to what you lot have got to say.” Well, I say to the Minister that by the end of this evening at 8.45 pm he will have heard what has been said not only in the other place but in this place, so presumably there will be the opportunity to draft the designation criteria in time for the further stages of the Bill. So I hope that, before I sit down, he will intervene on me and make a clear promise that we will get at least a draft of the designation criteria before the final stages of this Bill are passed. I happily give way to the Minister.

[Lord Callanan (Con)]

Like all government documents, they will be published at the appropriate time, and I will be sure to let the noble Lord know when that is.

--- Later in debate ---

We support including sensible transparency requirements in the Bill and are yet to be convinced that the current draft strikes the right balance. Amendment 25 would require the Secretary of State to lay before Parliament a statement on proposed licence modifications, under Clause 6. Given that the use of the power is limited to facilitating the design, construction, commissioning and operation of nuclear projects, the statement would essentially have to show the Secretary of State’s working out and wider thinking. We hope the Government will take some of these suggestions seriously and come forward with proposals between now and Report.

[Lord Callanan (Con)]

I will start with Amendments 5 and 27, laid by the noble Lords, Lord Foster, Lord Wigley, Lord Oates and Lord Teverson, and the noble Baroness, Lady Bennett. It will not surprise the Committee to know that I have reservations about how these amendments would operate in practice. On Amendment 5, for example, the requirement to publish estimates of the costs payable by consumers at the point of designation would risk undermining the independence of Ofgem, which has responsibility for determining a nuclear company’s allowed revenue in accordance with its modified generation licence.

Moreover, the obligations to report on the price of electricity, or the minimum floor price, referred to in Amendment 27, simply do not align with the reality of how we expect the RAB model to operate in practice. Under the model, there is no minimum floor price. Ofgem, in its role as the regime’s economic regulator, will need to determine the revenue the project is entitled to receive, in accordance with its modified electricity generation licence.

Finally, on decommissioning costs, we already have robust legal requirements in place in the Energy Act 2008, which require an operator to have a funded decommissioning programme in place before construction can commence on a new nuclear project. This must set out the operator’s costed plans for dealing with decommissioning and waste management. For these reasons, I am unable to accept the amendments.

Turning to the comments made earlier in the debate by the noble Lord, Lord Wigley, under the RAB model, the regular price reviews would provide an opportunity to assess the performance of the FDP, and adjustments to the operator’s allowed revenue can then be made should any potential deficiency in the fund be identified. This will deal with the noble Lord’s concern, minimise any chances of a fund shortfall and ensure the operator retains its responsibility to meet the costs of decommissioning so they do not fall on local communities. I hope that this provides the reassurance that the noble Lord was seeking.

Amendments 12, 18, 25 and 32, from the noble Lords, Lord McNicol, Lord Foster, Lord Oates and Lord Teverson, and the noble Baroness, Lady Bennett, are aimed at obliging the Secretary of State to publish various pieces of information related to the functioning and implementation of the RAB regime. I fully understand noble Lords’ desire for more information, but think this is already addressed in the Bill.

On the publication of licence modifications, Clause 6(9) already provides that modifications made under Clause 6 would not come into effect unless a revenue collection contract was entered into with the nuclear company. Publishing them as soon as reasonably practicable will provide adequate opportunity for scrutiny.

On Amendment 12, the Bill already obliges the Secretary of State to publish a statement setting out how they expect to determine whether the designation criteria have been met. This statement will provide further explanation as to how the Secretary of State expects to determine whether the development of a project is “sufficiently advanced”. While, as I said, we will publish a statement in due course, I can tell the noble Lord, Lord Foster, and the Committee that we would expect it to include consideration of a number of factors, including, for example, the progress of the prospective project through the important planning process.

On Amendment 18, where it is assessed that it would be appropriate for development funding to be included in the calculation of a nuclear RAB company’s allowed revenue, this would in turn be reflected in the company’s modified licence. Outside of the RAB structure, the Government may choose to provide development funding to projects to mature technologies and de-risk the development and construction phases. However, as this is not intended to be funded through the RAB scheme, it would be inappropriate to include information requirements about it in the Bill. They will be published in other quarters.

On Amendment 25, Clause 6(2) already states that the licence modification powers can be used only for the purpose of facilitating investment in the design, construction, commissioning and operation of nuclear energy generation projects. The Secretary of State may not exercise the powers for any other purpose. This is aligned with the consideration that the amendment discusses. I believe that the transparency processes already included in the Bill, the obligation to publish a statement on the designation criteria and the opportunity for scrutiny before the designation and licence modification powers may be exercised render these amendments unnecessary.

The final amendment on transparency is Amendment 28 from the noble Lords, Lord Foster and Lord Oates. It seeks to make the licence modifications necessary to implement the RAB model for a nuclear company contingent on approval by the House of Commons of a report about consumer bill impacts.

Bringing a project to the point where licence modifications can be made is likely to require significant investment. I submit that making a project subject to a parliamentary vote at that very late stage of licence modification would add huge uncertainty to the outcome of developers’ investment. This additional uncertainty would make it very much harder to bring forward projects —which is possibly the purpose of the amendment—and lead to either an absence of new projects or the costs of financing being raised significantly to take account of the increased risks. That would inevitably result in much worse value for consumers. The amendment could therefore defeat the policy objective of the Bill: to secure financing for new nuclear projects in a way that could deliver better value for money for consumers.

To reiterate, in rejecting the amendments put forward, the Government are not attempting to hide from challenge or scrutiny. Through this Bill, we have created a clear and transparent process for implementing the RAB model. It will allow for the voices of experts and stakeholders to be heard and appropriate consultation to be carried out. That will help ensure that the model works for the industry and, above all, for consumers. I therefore hope that noble Lords will not press their amendments.

[Lord Oates (LD)]

My Lords, I will speak briefly as time is marching on. I think the Minister told us that the reason why Amendment 5 would not work is basically that the Government cannot tell us how much this will all cost the consumer, which is one of our key worries about this means of financing.

On Amendment 12 and the definition of “sufficiently advanced”, my noble friend Lord Foster raised a number of specific issues in relation to Sizewell C and asked whether, in view of those, the project would be regarded as sufficiently advanced. The Minister notably did not answer that question but repeated his previous statement that the Government will publish the designation criteria “in due course”. Again, what he is telling us is that the Government will not tell us what those are before they expect noble Lords to vote on the Bill. As my noble friend said, whatever one’s views for or against nuclear power, that is surely not a way to do legislation.

I hope that the Minister will consider carefully all the issues that have been raised in this group. If you are pro nuclear, I would have thought that transparency was a good thing, but, certainly, I hope that he will consider these issues and come back with some clearer answers for us on Report. With that, I beg leave to withdraw my amendment.

--- Later in debate ---

[Baroness Wilcox of Newport (Lab)]

I am grateful to the noble Lord, Lord Oates, for tabling these amendments, which bring us back to transparency. We are sympathetic to the argument that, generally, information should be made public unless there is a compelling reason for that not to be the case. However, we understand that these are arrangements with commercial partners and that this reality needs to be reflected in the final transparency provisions.

[Lord Callanan (Con)]

I realise that time is getting on, so I will be as brief as possible. I thank the noble Lords, Lord Oates and Lord Foster, for Amendments 33, 34, 35 and 36. As most of the material is similar, I will take them together, starting with Amendments 33 and 36.

By way of background, I will explain the purpose of Clause 13. Four amendments have been tabled to it, but I reassure noble Lords and my noble friend Lady Neville-Rolfe that this clause is in no way designed to act as a “free pass” for the Government. It is a narrowly drawn provision, allowing for the exclusion of specific, sensitive, commercial and national security information only. I want to be upfront and clear about that. From looking at their detail, I do not believe these amendments will achieve what I suspect is noble Lords’ goal to increase transparency. Actually, they could cause extra confusion.

Amendment 33 makes the publication of relevant material the “primary duty” of the Secretary of State, and so would effectively place transparency above the protection of national security. I submit that this is intuitively wrong; it would be dangerous to subordinate national security concerns to publication concerns.

Amendment 36 would require the Secretary of State to make statements to Parliament about the seriousness of the potential impact of the release of information on the commercial interests of companies and how this is balanced against the public interest in disclosure. This creates ambiguity around the protection of commercial interests, which could have a serious impact on the ability of a project to raise the necessary investment. It would either make it harder to bring forward new projects or, alternatively, raise the cost of financing those projects; either way would result in worse value for consumers. I submit that it also goes against a basic tenet of commercial negotiations and operations: that an investor’s commercial interests will be treated respectfully and confidentially.

Amendments 34 and 35 similarly seek to restrict what information can be excluded from publication or disclosure under Part 1 on the grounds of national security or prejudicing commercial interests. Similar to the previous amendments, the suggestions made in these amendments would add unnecessary and unhelpful ambiguity to an otherwise straightforward provision. Again, this would introduce additional uncertainty for both the Government and potential developers.

Looking first at the addition of “in exceptional circumstances”, there is no obvious legal understanding or definition of what such circumstances would be. This would create uncertainty as to when the provision could be used and what information could be redacted. The circumstances in which Clause 13 applies are already sufficiently set out in its subsection (2). Similarly, given that “seriously” has no clear definition in this context, I submit that the addition of this term would add to the uncertainty and ambiguity about whether legitimate commercial interests would be respected for potential investors. I think that it would make them less likely to go on to be involved in projects.

I understand the desire for increased transparency behind these amendments, but I hope that, given the legal uncertainty of the wording used, I have been able to reassure noble Lords that the Government have no intention of hiding any information that we do not strictly need to in order to respect commercial confidences, so I hope that noble Lords will feel able to withdraw or not press their amendments.

[Lord Oates (LD)]

My Lords, I thank the Minister for his reply. I am afraid that I am not entirely reassured by it, because there is a lot of talk in this Bill about protecting commercial interests but there seems to be little about protecting consumers’ interests. This Bill imposes burdens on consumers, and it is only right that they have available to them information to understand how decisions are made.

I will certainly go away and think about the points that the Minister made. I make it clear that the aim of this amendment was not to compromise the Secretary of State’s ability to exclude material on grounds of national security; I fully accept that that may well be necessary. It may be that the current Minister would not use this test to withhold large amounts of material, but that certainly seems possible, and I think that there needs to be a much firmer test to protect the consumer. No doubt we will come back to these amendments, or versions of them, on Report. In the meantime, I beg leave to withdraw my amendment.

--- Later in debate ---

[Lord Foster of Bath (LD)]

My Lords, very briefly, there are two amendments in my name and that of my noble friend Lord Oates. I think we are all conscious that things can go wrong and there may need to be procedures to pick things up and move forward. We accept that might be the case. Sadly, it is the case for Taishan 1, as I mentioned before; after only a couple of years, it suddenly went offline. They do not even know what is wrong with it, and somehow they have to pick up the pieces.

I absolutely accept that there is a need to have procedures in place, such as a special administration regime. I merely suggest in Amendment 40 that, if that is the case and action needs to be taken, there should be a report covering the issues I have referred to in the amendment—the liabilities associated with the nuclear company, the estimated cost of getting it going again if it has been temporarily shut down, the lifespan of the nuclear power station and so on. It seems fairly straightforward.

Of course, the Minister will say that he cannot do it because that would be providing information which is somehow sensitive or commercial and it should not be done. In those circumstances, I cannot see anything commercial or sensitive about it, and it is something the public need to know; they will find someone else to do it or find a way of supporting the existing company to carry on doing it. It will be the taxpayer’s money, and the taxpayer has a right to know what it will be used on. That is why, in Amendment 43, I am basically saying that any payments that would come out in that process ought to be approved by an independent body—in this case I have suggested, perhaps slightly surprisingly, that the House of Commons should have the opportunity, as the elected body, to decide whether or not the money proposed to be spent is being spent wisely. With that, I look forward to the Minister’s response.

[Lord Callanan (Con)]

My Lords, I thank noble Lords for their brevity. I know that time is getting on, so I will attempt to be as brief as possible in providing noble Lords with the information that they properly seek.

Amendments 39, 40 and 43 from the noble Lords, Lord Foster, Lord Oates and Lord McNicol, have been grouped because they all relate to the special administration regime set out in Part 3. I remind the Committee of the purpose of the SAR. It is imperative that in the—hopefully, vanishingly—unlikely event of an insolvency we would be able to act quickly to ensure that a plant could commence or continue electricity generation. That gives an important protection to consumers. The special administrator has a duty, as per the Bill, to achieve this objective as quickly and efficiently as is reasonably practicable. I must add that these are powers that we hope never to have to use, but I agree with the noble Baroness, Lady Wilcox, that it is important to prepare in case we do. There is a very low probability of insolvency under a RAB model, but we need to prepare just in case.

It is for these reasons that I cannot accept Amendment 39. If the rescue of the company cannot be achieved, the special administrator will need to consider all options for a transfer, including, very possibly, a transfer to a publicly owned company. This may be supported by the Secretary of State where it would provide clear value for money for both consumers and taxpayers. The amendment implies that the special administrator would consider a transfer to a publicly owned company only if a transfer to a privately owned company were not feasible, so we would simply want to have more flexibility, or rather give more flexibility to the administrator in those circumstances.

It is essential that the administrator and the Secretary of State retain the ability to act quickly if all options to achieve the objective of the special administration have been exhausted. It is highly likely that in meeting their objectives, the administrator will consider various ownership structures for the project and their various relative merits. In placing a new reporting requirement on the Secretary of State to make this assessment and to publish it before acting, the amendment could frustrate this process and potentially delay exit from administration, which could cause additional cost to both consumers and taxpayers.

[Lord Foster of Bath (LD)]

The Minister just said that publishing a report could frustrate the way forward. Can he explain with an example how that would happen?

[Lord Callanan (Con)]

This is not a direct example, but, of course, the special administration regime has recently been used in the case of one particular energy company. I do not need to go into the specific example, but I was aware of a lot of the discussions that went on before it. Some of those were extremely commercially confidential because, of course, discussing possible outcomes results in potentially prejudicial publicity and might perhaps bring about the objective that we did not want. The company eventually went into a special administration regime, and information was published as soon as practicable about that. It is important in those circumstances to retain the flexibility. The Secretary of State’s discretion to act expediently would obtain the best outcome for consumers and taxpayers during the special administration.

Amendments 40 and 43 seek to place an additional reporting requirement on the Secretary of State which we consider would also impede the ability of the special administration to achieve its objective. In the case of Amendment 40, I remind the Committee that a special administration is a court-administered procedure and, in the circumstances, a nuclear administrator would be an appointee of the court. It is therefore important that we retain the established process and do not seek to put in place reporting requirements which could oblige the Secretary of State potentially to publish commercially sensitive material, which would then jeopardise a transfer. I cannot, of course, seek to predict the court process, but it is possible that that some aspects of the information that Amendment 40 seeks to have published would also be publicly available, such as through companies publishing their financial statements.

In the circumstances, should any licence modifications be made by the Secretary of State during the administration, the legislation determines that such modifications will—correctly—need to be published, except for any matters which are commercially sensitive or would be contrary to the interests of national security.

There are already statutory arrangements in place with regard to the costs of decommissioning in the Energy Act 2008. This requires an operator to have in place an approved funded decommissioning programme— as already discussed—before construction on a new project can commence. I expect that, as was done for Hinkley Point C, the FDP for any future projects would be published along with relevant supporting documentation —again, apart from material of a sensitive nature.

Turning to Amendment 43, again, I am unable to accept this amendment, because it would risk the ultimate operability of the special administration regime and consequently risk consumers being unable to realise the benefit of the plant they have helped to build. As we have seen during the recent energy supplier crisis, it is imperative, as in the example that I just gave to the noble Lord, Lord Foster, that a fully operational special administration regime can be stood up in the quickest possible timeframe to protect consumers. This includes allowing for requisite funding from the Secretary of State to be provided efficiently. In addition, if insolvency occurred when perhaps the House was not sitting, I am sure that the noble Lord would accept that this would also cause unnecessary further delay.

The amendment would also cause a level of uncertainty that could deter potential administrators from undertaking the appointment under the special administration regime. The administrator would need to be assured that funding would be available from day one of the SAR to ensure its operability and ability to deliver its objectives, which of course are to continue or commence the generation of electricity. If there are delays in accessing the required funding, that could result in outages and problems with security of supply. In the case of a nuclear power station, there are also safety considerations. Any lapse in funding could result in some safety-critical expenditure not being met.

I thank noble Lords for all their amendments and in particular for their consideration of these matters with regard to the special administration regime. I hope that I have been able to provide appropriate reassurance that we hope never to use the regime, but it is there to serve the crucial purpose of protecting the interests of consumers. We need to make sure in that case that it is fully operable, efficient and able to meet its objective that energy generation will commence or continue in the unlikely event of an insolvency. I hope therefore that the amendments will not be pressed.

[Baroness Wilcox of Newport (Lab)]

I thank the Minister for his reply and recognise the points that he has made regarding SARs. Nevertheless, I still feel that greater safeguards need to be in place. However, at this point, I beg leave to withdraw the amendment.

Russian Oil and Gas Imports

Lord Callanan Excerpts

Monday 7th March 2022 Lords Chamber

[Lord Forsyth of Drumlean]

To ask Her Majesty’s Government what plans they have (1) to impose sanctions on the import of gas and oil from Russia, and (2) to encourage (a) coal-fired power generation, and (b) investment in (i) shale gas fracking, and (ii) offshore energy sources.

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

My Lords, we have imposed the most severe package of sanctions that Russia has ever seen. Although there is currently no ban on Russian oil and gas imports, this is under urgent review. However, the UK is in no way dependent on Russian gas. In 2021, it made up less than 4% of our supply. Most of our gas came from domestic production and reliable suppliers such as Norway. To boost energy security, we need to generate more domestic renewable power.

[Lord Forsyth of Drumlean (Con)]

My Lords, although we all want a cleaner, greener future, surely we have a duty to put the maximum pressure on President Putin when the situation in Ukraine is beyond grim. Should we not therefore develop our own resources—in the North Sea, through fracking and through nuclear power—to guarantee security of supply, which surely must be the first duty of any Government?

[Lord Callanan (Con)]

I agree with a number of the points my noble friend made. Of course we should put the maximum pressure on Putin because of his appalling actions, and continue to invest in the North Sea for our domestic production. We should also continue to invest in nuclear power and renewables. One point I differ with him on slightly is fracking, which I am afraid does not offer the silver bullet many people think it does.

[Lord Anderson of Swansea (Lab)]

My Lords, is it the Government’s view that the current and proposed increases in energy prices fundamentally alter the economic and security case for tidal barrages, such as that proposed for Swansea Bay?

[Lord Callanan (Con)]

Not directly. The cheapest and most effective renewable source in the UK is offshore wind, which is why we are continuing to develop that at pace. We already have one of the largest offshore wind sectors in the world. We have a target of considerable extra capacity, moving up to 30 gigawatts by 2030.

[Lord Stirrup (CB)]

My Lords, Russia is clearly the immediate focus, but will the Government take a wider strategic view and set urgent work in hand to reduce our dependence on the supply of resources, goods and services from all autocracies, most particularly China?

[Lord Callanan (Con)]

Of course we need a diverse mix of energy, which this Question is about, and to generate as much of our own power as possible. The noble and gallant Lord makes a good point about reducing our dependence on autocracies.

[Lord Oates (LD)]

Does the Minister agree that, if we think we can solve the current fossil fuel crisis by pretending that the clear and present danger of climate change does not exist, we will simply call down a far greater catastrophe on the world? Does he agree that the answer to the fossil fuel crisis is to invest to get off them as soon as possible, not to burn more of them?

[Lord Callanan (Con)]

The answer to the high price of oil, gas and fossil fuels is to use less of them. To that extent I agree with the noble Lord. That is why we are generating as much as we possibly can from renewables. That is why we accelerated the contracts for difference round, why we have one of the largest capacities in the world, and why we need to expand it even further.

[Lord Howell of Guildford (Con)]

Is my noble friend Lord Forsyth not entirely right that some very tough short-term measures will have to be taken to help break the Russian monopoly—one part of the measures we need to put pressure on them? Should we not take this opportunity to develop a solid future energy security strategy? Should not a central part of that be to seize the moment to recommit ourselves to rebuilding a strong, low-carbon nuclear sector, as we once had in this country, to meet all contingencies, particularly when disruptions occur, such as Ukraine, or when the wind does not blow?

[Lord Callanan (Con)]

Indeed. I agree very much with my noble friend, who makes some extremely good points. We need to bear in mind that a relatively small percentage of our supply is from Russia, of both oil and gas; it makes up less than 4%. I totally agree with him regarding nuclear. Indeed, for those noble Lords who are interested, the Nuclear Energy (Financing) Bill is in Grand Committee tomorrow.

[Lord Bassam of Brighton (Lab)]

My Lords, I have heard the Minister’s response, taking on board in part the point from the noble Lord, Lord Forsyth, and recognise that we live in uncertain times. For clarity, can the Minister reconfirm the Government’s commitment to prioritising the development of renewables and that Ministers are looking to speed this programme up, and further commit to ensuring that the Government will renew measures to protect the poorest in our communities from the worsening impacts of rising energy prices?

[Lord Callanan (Con)]

I agree in large part with what the noble Lord said. Of course we need to expand our renewable capacity as quickly as possible. We already have record amounts and we need to pursue that. We are introducing contracts for difference rounds every year to maintain the ongoing flow of supply. As the noble Lord is aware, we introduced a £9.1 billion package of support for the poorest households.

[Lord Wigley (PC)]

My Lords, we need to maintain the maximum possible pressure on Putin, obviously. The biggest problem facing mankind is global warming, which could wipe out humanity within a couple of centuries. That being so, would it not be totally irresponsible to restart coal burning in order to generate electricity when that generates 30 times more units of carbon than renewable and offshore generation?

[Lord Callanan (Con)]

That is a very wide-ranging question. I think I would disagree with the noble Lord: I think Putin is a bigger threat at the moment to worldwide peace and stability. The important thing to bear in mind with regard to climate change, which is of course an important subject, is the tiny percentage of global warming caused by our emissions in the UK, which are rapidly decreasing. It is something that we need to work on, on a global basis; just eliminating our emissions on our own is really not going to make any difference.

[Baroness Meacher (CB)]

My Lords, I very much agree with the various points already made, but in the light of the Ukrainian crisis, have the Government got serious plans to bring forward and radically increase investment in green hydrogen development? If they do have such plans, will the Minister write to me with the details and put a copy of the letter in the Library?

[Lord Callanan (Con)]

We have a very ambitious hydrogen strategy and it is perfectly possible that hydrogen will be one element of our campaign to decarbonise the UK economy. We will shortly be moving towards a hydrogen business model and we will attempt to roll out hydrogen production. However, again, no decisions are imminent, and it will be a few years before we know the full potential that hydrogen can offer.

[Baroness Sheehan (LD)]

My Lords, Germany has announced a £222 billion plan to transform its economy between now and 2026. Central to that is to wean itself off fossil fuels fast. Where is our big plan for immediate climate-compatible action?

[Lord Callanan (Con)]

I do not think the noble Baroness is quoting a very good example. The Germans have made a singular mess of much of their policies by phasing out nuclear power, which has resulted in the burning of much more coal. I am not sure that that is an example of what the noble Baroness wants us to follow. We have an excellent plan in this country. We have a much bigger renewable sector than Germany, which puts far too much reliance on gas from Russia and now may well be paying the consequences.

[Lord Naseby]

Going back to Ukraine, is it not a fact that Russian gas is coming to this country by ship, in LNG tankers? In that case, why do we as a country not refuse entry to any of those tankers from this day forward?

--- Later in debate ---

[Lord Callanan (Con)]

We have already banned all Russian oil and gas tankers entering UK ports and we are looking to go further to ban cargoes from Russia as well.

[Lord Eatwell (Lab)]

My Lords, the market for oil and gas is global, and therefore the figure that the Minister has cited twice about our dependence being only 4% is entirely irrelevant to what happens to the price of energy in the UK. If there is a shortage of gas in Germany, the gas price goes up globally. The only answer to this is to reduce hydrocarbon use throughout Europe, and therefore reduce the market which the Russians are exploiting.

[Lord Callanan (Con)]

The noble Lord makes a sensible point. Of course it is an international market. It is usually operated by private companies, and any shortages in Russia will feed through into the UK. It will not affect the price, but it will affect our energy security, which is why I used the fact that only 4% of our gas is Russian. Most of our supply comes from our resources in the North Sea or from Norway. Security of supply is not affected, but the noble Lord is right about international pricing.

[Baroness O'Loan (CB)]

Given that the increase in fuel prices for both domestic and commercial use has been very significant—the consequence of which is that the Government are taking hugely increased revenues from the taxes applicable to that fuel—do the Government have any plans to cap or reduce the level of tax charged on fuel in those circumstances, and to redistribute that money for the benefit not just of people at the extreme end of the poverty line but of those seeking to be involved commercially?

[Lord Callanan (Con)]

I will leave the setting of taxation policies to the Chancellor, but the noble Baroness makes a good point. Of course, we have already announced a record-breaking £9.1 billion package to alleviate some of the worst excesses of the current increases in fuel prices, but I do not want to mislead anyone: this will not solve all of the problem. This is a global crisis and we cannot insulate ourselves completely from international pricing.

[Lord Cormack (Con)]

My Lords, as the Question put by my noble friend Lord Forsyth of Drumlean indicates, this is an urgent crisis. We do not have time to develop many things but we do have time to stop Russian imports full stop and, although it may be painful, the sooner that is done, the better.

[Lord Callanan (Con)]

We are looking at this seriously and decisions will be announced shortly but it is important to bear in mind that, while we would all love there to be quick and easy solutions, the building, construction and implementation of energy infrastructure takes many years, sometimes even decades. I am afraid there are no quick solutions to any of this.

[Lord Fox (LD)]

My Lords, the remarkable spike in gas prices today indicates a real challenge ahead for gas distribution in this country. To date, the big companies have absorbed the customers of the smaller companies that have gone bankrupt. As things stand, those big companies will themselves come under huge pressure with forward contracts that they cannot cover. What is the department doing, in consultation with the gas companies in this country, to maintain security of supply for the consumers of Great Britain?

[Lord Callanan (Con)]

A number of companies are indeed under pressure and, unfortunately, we have seen a number exiting the market. I assure the noble Lord that we are in regular contact with all the gas and electricity supply companies; my right honourable friend the Secretary of State meets them regularly. This is indeed an unprecedented crisis but we are closely following events and I can say that, while there is obviously a problem with the price, there is no problem with security of supply.

[Lord Hunt of Kings Heath (Lab)]

My Lords, the Minister referred to the German decision to discontinue nuclear energy but is he satisfied with the progress that we are making in developing new nuclear?

[Lord Callanan (Con)]

Yes, I am satisfied with the progress that this Government are making. It is disappointing that previous Governments did not take action on new nuclear urgently; should the noble Lord wish to follow the debate tomorrow, we will be in Grand Committee on the Nuclear Energy (Financing) Bill.

[Baroness Butler-Sloss (CB)]

My Lords, the Minister referred to sanctions against oil coming in through Russian tankers but I understand that oil is coming in through other tankers owned by other companies. What are the Government going to do about that?

[Lord Callanan (Con)]

That was indeed the point I made in response to the Question. We have banned Russian vessels but, at the moment, cargo can still be imported, in relatively small quantities, from other vessels. We are in urgent consultation with our allies on whether we can go further.

[Lord Lancaster of Kimbolton (Con)]

My Lords, I have listened carefully to this debate. While I accept that it is no silver bullet, is the real question in the short term not if the Government will start fracking but when?

[Lord Callanan (Con)]

I understand the attraction of this option but I am afraid that, having looked closely at this, there are some severe environmental problems—we cannot hide this fact—with original fracking operations. Lancashire is not Texas; it is much more heavily populated. Fracking is a relatively unproven technology in the UK. The reality is that it would be many years, if not decades, before we got meaningful quantities of gas out of the ground, even if we could resolve all the environmental problems—and none of that would affect the current price. We would not be producing anywhere near enough gas to affect the high prices in an international market so I am afraid, much as I would love it to be the case, it really is not the silver bullet that people think it is.

Trade Union (Levy Payable to the Certification Officer) Regulations 2022

Lord Callanan Excerpts

Monday 7th March 2022 Lords Chamber

Moved by

[Lord Callanan]

That the draft Regulations laid before the House on 14 December 2021 be approved.

Relevant document: 25th 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, these regulations enact the reforms made by the Trade Union Act 2016 to the powers of the Certification Officer, the regulator of trade unions and employers’ associations. These regulations have been commented on by the Secondary Legislation Scrutiny Committee in its 25th report on grounds of policy interest.

Before I explain the contents of the regulations, it is important to provide the context to these reforms. Trade unions have an important role in effective industrial relations and in wider society. There is a legitimate public interest that trade unions run their affairs according to what is required of them, so it is necessary that they have a responsible and diligent regulator. The reforms in the Trade Union Act are about proportionate and effective regulation. We are bringing the powers of the Certification Officer up to date with those of comparable regulators in other sectors.

The Trade Union Act brings three reforms to the role. The first enhances the Certification Officer’s investigatory powers. These reforms were implemented in commencement regulations made in December 2021 and will commence in April. They are not the subject of these regulations, so I will give only a brief overview. Currently, union members may bring complaints to the Certification Officer—for example, on the conduct of elections. The Trade Union Act gives the Certification Officer the same powers to investigate all breaches that she currently has for financial matters and the register of members. This will enable her to act without having to rely on a complaint from a member. This is a wholly reasonable power for a regulator.

These regulations bring into effect the second and third reforms introduced under the Trade Union Act: financial penalties and a levy. We consulted separately on these reforms in 2017 and conducted a further engagement exercise on the levy last year. Unsurprisingly, trade unions made up the majority of the responses to these consultations and the further engagement exercise. I will go on to explain the measures that we have put in place to address the concerns raised.

The Trade Union (Power of the Certification Officer to Impose Financial Penalties) Regulations 2022 strengthen the Certification Officer’s enforcement powers by allowing her to impose financial penalties against organisations that breach their statutory obligations. Penalties will be banded into three groups, according to the severity of the obligation breached. This approach was supported during consultation. For breaches of the most important statutory obligations, including the proper conduct of union elections and political funding, the Certification Officer will be able to impose a maximum penalty of £20,000. This is in line with penalties imposed by other bodies, such as the Electoral Commission.

For other breaches of statutory governance requirements, including keeping the membership register up to date, the Certification Officer will be able to impose a maximum penalty of £10,000. For breaches relating to requirements to provide information or comply with investigatory requirements, or breaches of internal union rules, the maximum penalty will be £5,000. The regulations provide for a 50% reduction in the maxima for unions whose membership is under 100,000 people. In response to concerns raised in the consultation regarding the impact on small unions, we will not be charging interest for late payment of penalties. The Trade Union (Levy Payable to the Certification Officer) Regulations provide for a levy on unions and employers’ associations to fund the Certification Officer’s work. In this time of financial constraint, it is right that organisations should contribute towards a levy. This is a widely used way to fund such regulators.

The regulations establish a levy framework that is equitable, affordable, predictable and simple. To ensure that the levy is equitable, the Certification Officer will be able to broadly apportion the levy between the different categories of regulated organisations—that is, non-federated trade unions, federated trade unions, non-federated employers’ associations and federated employers’ associations—based on how much time she spends on each of them. To ensure the levy is affordable for all, lower-income organisations will be exempt from the levy entirely. No organisation will pay more than 2.5% of their annual income, as set out in their annual return to the Certification Officer.

To ensure that the levy is predictable each year, the Government will continue to fund the cost of any external inspectors, as the use and cost of these is variable. This was discussed at the time that we debated the Trade Union Bill. For the same reason, the Government will also fund the cost of any external legal advice that the Certification Officer may seek. This was not identified during the passage of the Act, but we believe it will allow for a fairer levy. Finally, to ensure the levy is simple and transparent, the Certification Officer will need to aim to ensure that income from the levy matches her expenditure over a three-year period. She will also need to explain how she calculates the amount of levy that each organisation is charged.

Separate regulations will abolish the majority of the Certification Officer’s existing fees, which will be subsumed into the levy. These will be made under the negative procedure, and we intend that they come into force at the same time as the levy. In response to requests by trade unions during consultation, two fees will be preserved: the fee for listing as an organisation, and the fee for a union to be granted a certificate of independence.

We recognise that these are significant changes for the organisations involved, albeit that they are a clear and required implementation of the Trade Union Act 2016. That is why we announced these reforms in June last year, to allow trade unions and employers’ associations time to prepare before they are implemented in April 2022. This also allowed the Certification Officer time to put the systems in place to determine and charge the levy.

In conclusion, these reforms are not about constraining the ability of unions and employers’ associations to do their valuable work. These regulations will give the Certification Officer the tools that she needs to do her job as effectively as possible, and ensure that the taxpayer no longer foots the whole of a bill that unions and employers’ associations can well afford to pay in part. I commend both these regulations to the House.

Amendment to the Motion

Moved by

--- Later in debate ---

[Baroness Blower (Lab)]

My Lords, in 2016, I was not yet a Member of your Lordships’ House and I protested on many occasions, very loudly, outside this House at the trade union legislation then going through the processes here. I trust that I shall always be able to protest very loudly outside this House, whether standing still or moving around, when legislation of this type is proposed.

The Minister talks of the valuable work of unions, but the actions of this Government belie that. My noble friends on this side, in particular my noble friend Lord Monks, have talked about the level of constraint and regulation on the trade union movement in this country. From my engagement with trade unions across Europe, both east and west, I know that to be true. This is therefore a regulation too far. While I do not agree with all the remarks made by the noble Lord, Lord Balfe, I certainly agree with his opening remarks that this is unwarranted and gives rise to the view that this Government are anti-trade union.

[Lord Callanan (Con)]

I thank all noble Lords for their valuable contributions to the debate. It is great to see the noble Lord, Lord Woodley, back with us in such hale and hearty form. I had the pleasure of replying to the debate when the noble Lord made his maiden speech, so I regard it as a particular honour that I get the chance to respond to him again tonight, albeit in slightly less harmonious circumstances.

Turning to the amendment put forward by the noble Lord, Lord Bassam, I thank him for raising his concerns, although, as will become clear, I do not agree with very much of what he said. However, I reiterate what I said at the start: unions play an important role in some aspects of industrial relations and have an important part to play in our economic recovery. It is therefore crucial that the public have confidence that they are regulated effectively and fairly.

These reforms will bring the Certification Officer in line with the powers and funding arrangements of other regulators. They will allow the Certification Officer to take robust enforcement action against an organisation that breaches its statutory obligations. The reforms will ensure that the taxpayer no longer has to pay in full for the regulation of trade unions and employers’ associations. The cost will be borne in part by the organisations that can afford it.

Despite many of the comments that were made, there are many precedents for this: a number of other regulators are funded by a levy. For example, the Groceries Code Adjudicator, the Office of Rail and Road, and the Pensions Regulator are all funded by a variety of levy schemes. The Pensions Regulator uses a banded scheme based on membership of pension funds. Companies House is partly funded by fees from company directors. The Financial Reporting Council is paid for in large part by the auditors that it regulates.

Other regulators also have a range of sanctions at their disposal. The Electoral Commission and the Information Commissioner’s Office, like the Certification Officer, can either take civil enforcement action or launch criminal prosecutions. The Electoral Commission’s compliance notices are similar to the Certification Officer’s enforcement orders. The Electoral Commission also has a range of financial penalties at its disposal, from £200 to £20,000, which mirrors those proposed for the trade union Certification Officer. Those instances are all slightly different, but it is not true that this is somehow something being imposed uniquely on trade unions.

In reply to the noble Lord, Lord Bassam, we have of course considered the affordability of the levy and how much it can grow in the future. As no organisation will pay more than 2.5% of its annual income, and lower-income organisations will be exempted from the levy entirely, I think his criticisms on that were unwarranted and have no validity. As the Certification Officer regulates both employers’ associations and unions, it is fair that employers’ associations also contribute in part towards the levy.

The Trade Union Act 2016 contains an important safeguard that requires the Certification Officer to aim to ensure that the total amount levied over a three-year period does not exceed the actual expenses she has incurred. We believe that this will ensure that the levy remains predictable and affordable. The Certification Officer has always gone about their duties in an independent and impartial way, and of course that will continue.

I will now answer some of the other points raised during the debate. The noble Lord, Lord Bassam, and my noble friends Lady Neville-Rolfe and Lord Balfe all raised the issue of electronic balloting. Indeed, the Trade Union Act included provisions to introduce electronic balloting for union elections. A review of electronic balloting was conducted by Sir Ken Knight, but before responding to the recommendations in his review, the Government were required by Section 4 of the Trade Union Act 2016 to consult relevant organisations, including professionals from expert associations, to seek their advice and recommendations. We have now done this, and we are finalising our consideration of Sir Ken’s recommendations before we issue our response in due course.

I have answered many of the points made by the noble Lord, Lord Razzall, about the comparison with other regulated bodies. I reiterate that the role of the Certification Officer is unique, as is the role of trade unions, and that comparisons with other sectors, while there are some parallels, are not totally relevant.

The noble Lord, Lord Woodley, and my noble friend Lord Balfe raised the possibility of vexatious complaints being made at a cost to unions. I must say, respectfully, that the Government disagree. When there are vexatious complaints, we do not expect that the Certification Officer will spend much time on them. The CO is a public authority, and she has to act reasonably. She cannot appoint an inspector unless a new, higher judicial test has been met that she has reasonable grounds to suspect that a breach of the regulations has occurred.

The noble Lord, Lord Bassam, raised the point about the significant limit on how much the levy could raise in similar years. The noble Lord, Lord Monks, also raised the point that the Certification Officer can somehow just do as she pleases. I responded to that in my previous comments, but we have removed most of the variable costs from the levy and, as I said, the Certification Officer, as a public authority, has to act reasonably, and that is a higher judicial test than in the current regulations.

Lastly, my noble friend Lady Neville-Rolfe asked me whether USDAW had responded to the consultation. I am afraid I do not have that information with me, but I will ask officials to look through the consultations and write to her accordingly.

In conclusion, this is not about constraining the ability of unions and employers’ associations to do their work. There is, unquestionably, a strong public interest in appropriately regulated trade unions. These reforms are about modernising the Certification Officer’s role to ensure that she can continue to deliver exactly on that. Therefore, I commend these draft regulations to the House.

[Lord Bassam of Brighton (Lab)]

My Lords, I am very disappointed by what the Minister has had to say to the House this evening. I am not persuaded away from my view that this is a vindictive piece of secondary legislation. The Minister has not really adduced a strong case in his own defence, I fear. It was interesting to hear Back-Benchers on the Government Benches making the point that this could be seen as vindictive and as having a go at unions for the sake of it, and that there was a need in the Government to grow up and try to learn to live with the trade union movement even if they do not like what it seeks to do.

The Minister did not really fully answer my noble friend Lord Hendy’s point about for-profit and not-for-profit organisations and there being a distinction. Many of the organisations that the Minister referred to have resources far in excess of those that trade unions have and are much better placed to make a contribution towards the regulation that they currently enjoy. I think the closest comparator is the Charity Commission and it does not seek to impose levies on charities. That would be unthinkable. Trade unions operate as not-for-profit organisations. They are there entirely for the benefit of their members and their role is very narrowly circumscribed to that.

I accept that we are not going to agree across the Dispatch Box on this issue. I regret that the Government have this attitude towards the valued work that unions undertake. The Minister himself talked of that. Looking at the hour and at the Chamber, it is not my intention to press my amendment because I can see that Members probably wish to move on with the Health and Care Bill. I am grateful for the time that we have had to discuss and debate these issues. No doubt we will return to them in future. I beg leave to withdraw the amendment.

Trade Union (Power of the Certification Officer to Impose Financial Penalties) Regulations 2022

Lord Callanan Excerpts

Monday 7th March 2022 Lords Chamber

Moved by

[Lord Callanan]

That the draft Regulations laid before the House on 14 December 2021 be approved.

Relevant document: 25th Report from the Secondary Legislation Scrutiny Committee

Motion agreed.

Lithium Ion Batteries: Fire Safety Standards

Lord Callanan Excerpts

Thursday 3rd March 2022 Lords Chamber

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

My Lords, the product safety regulatory framework places obligations on manufacturers to ensure the safety of consumer goods, including the batteries used to power them. In short, the law requires that batteries used in such products must be inherently safe, regardless of where they are used, charged or stored. To support them, manufacturers may choose to apply standard EN 62133-2, which specifies requirements and safety tests for the safe operation of portable, sealed secondary lithium cells and batteries.

[Lord Berkeley (Lab)]

My Lords, I thank the Minister for that Answer. I have a different EN number, which I will not bore the House with. He will be aware of a number of fires allegedly caused by lithium ion batteries in cars, on bikes and on scooters, which have caused house fires and one on an Underground train. One manufacturer told me that

“unless we can prove that a product has caused serious accident or injuries, there is no priority from Trading Standards to do any pro-active checks”.

Is not the answer to have proactive checks, as I believe they do in Belgium, the Netherlands and Germany, for about 10 years to prevent these illegal imports causing more fires, allowing the development of lithium ion batteries to continue safely?

[Lord Callanan (Con)]

The noble Lord highlights an important point. I am devastated that our EN numbers do not match, but I would be happy to compare them afterwards if the noble Lord wishes. It is vital that we carry out checks on illegally imported products; the fire that he referred to was caused by something not in conformity with UK standards. We carry out checks on a risk-based approach where required.

[Baroness McIntosh of Pickering (Con)]

My Lords, does the Minister not agree that if these e-scooters are privately owned, they are illegal, so they should not be taken on to the train in the first place?

[Lord Callanan (Con)]

No, I do not. If they are privately owned, there is a prohibition on riding them on public highways, but there is nothing wrong with taking them on trains if permitted by the train operators.

[Baroness Randerson (LD)]

My Lords, e-bikes and e-scooters are a great innovation, but it is the wild west out there. A lack of regulation and enforcement is giving them a bad reputation. There have been e-scooter trials and the assessments are now complete for many places, so there is no longer any excuse for government inaction. Will the Minister undertake to work with Department for Transport colleagues to commit to an early date for tighter restrictions on both imports and the way in which these vehicles are used on our roads and pavements?

[Lord Callanan (Con)]

I do not share the noble Baroness’s enthusiasm for banning e-scooters. The Department for Transport is considering options for how best to regulate them and to crack down on their illegal use, which we are all concerned about. New measures being considered will be designed to create a much clearer, fit-for-purpose and fully enforceable regime for regulators.

[Lord Bridges of Headley (Con)]

My Lords, as we make the transition to net zero, we are going to need to rely on batteries more and more. Some 156 out of the world’s largest 211 battery factories are in China, which owns and controls enormous swathes of the supply chain. If we are going to get security of supply in batteries, what steps are the Government taking to ensure that that is going to happen?

[Lord Callanan (Con)]

The noble Lord makes an important point. The access to minerals and rare earth required to make batteries is a source of considerable interest to the Government. We are looking closely at where supplies can be obtained. He will be aware of the number of recent announcements on car batteries now being manufactured in gigafactories—or they will be—in the United Kingdom, but it is an important issue, and we need to bear it in mind.

[Lord McNicol of West Kilbride (Lab)]

My Lords, when introduced and managed well, e-bikes and e-scooters can be part of the solution to many of the world’s urban transport and health issues. In fact, this morning I cycled in on my Scott e-bike, which got me here ahead of a lot of the other traffic. As my noble friend Lord Berkeley said, the solution is simple: better regulation and better enforcement. Do Her Majesty’s Government have any plans to introduce further enforcement and regulation which will help deliver good-quality batteries and good-quality bikes and scooters on our streets?

[Lord Callanan (Con)]

I am delighted to hear that the noble Lord came in today on his e-bike. I am unable to resist the opportunity to say that perhaps he could have a word with his friends in the trade unions, to allow us all to come in on the Tube if we would like to at the moment. As I said earlier, the Department for Transport is considering options for how best to regulate e-scooters and crack down on their illegal use.

[Baroness Randerson (LD)]

My Lords, as there is time in the schedule, can I invite the Minister to reconsider his reply to me? He accused me of calling for the banning of these vehicles, when I specifically praised their innovation. I asked for regulation, not annihilation.

[Lord Callanan (Con)]

If I heard the noble Baroness wrong, I apologise of course. We support responsible regulation. If that is what she supports us in doing, it is welcome news.

[Lord Cormack (Con)]

As one who does want annihilation, can I ask my noble friend to ensure that when these wretched machines, which go up to 40 mph, are on the roads, they are all properly registered and numbered, with their drivers fined if they are not wearing helmets?

--- Later in debate ---

[Lord Callanan (Con)]

I am not surprised that the noble Lord supports annihilation. I do not agree with him. E-scooters represent great opportunities for urban mobility. Yes, we need to regulate them properly, ensure that they are used safely and of course ensure that riders are safe, but they offer a responsible commuting option for many people.

[The Lord Bishop of Leeds]

My Lords, however these things are regulated, we are building up a massive resource of batteries that one day will have to be disposed of, with the environmental risks that they bring as well. What assessment have the Government made of how in the long term we will deal with what could before too long become a problem?

[Lord Callanan (Con)]

The right reverend Prelate makes an important point but, of course, better than disposing of the batteries would be to recycle them. A number of technologies exist to enable batteries to be reused, recycled and repurposed. There are a number of instances of electric car batteries being reused as portable electricity storage devices in the home.

[Lord Hain (Lab)]

My Lords, what incentives are the Government offering to householders with solar PV panels to install batteries so that they can become more self-sufficient in their electricity generation, including charging their electric cars where that is possible?

[Lord Callanan (Con)]

It is an important point. We offer an attractive tariff for consumers who generate their own electricity to export to the grid but, as that tariff is lower than that for which they would have to buy the electricity themselves, there is an incentive, if possible, to store it and reuse it. As we get more EVs, we will see their increasing use as storage devices, and companies will start to offer an attractive tariff to enable electricity to be released from those at times of busy demand.

[Baroness Walmsley (LD)]

My Lords, going back to the right reverend Prelate’s question, how many facilities for recycling batteries are there in the UK, and what is being done to make sure that we have end-to-end design technologies in this country?

[Lord Callanan (Con)]

I do not have figures for the precise number of battery recycling plants in the UK. I am aware of some developments in that field, but I do not have the precise numbers. The noble Baroness makes an important point: that we need to ensure end-to-end recycling and reuse.

[Lord Berkeley (Lab)]

My Lords, I am grateful to the Minister for his earlier response to me, but he will be aware that in the last month two train companies have banned electric bikes and scooters being taken on to their trains. That has now been withdrawn, but it was done because London Fire Brigade’s press release was a bit unclear about the risk. This goes back to the lack of a firm specification for and firm enforcement of the quality of batteries so that there is no misunderstanding. It has upset a lot of people.

--- Later in debate ---

[Lord Callanan (Con)]

I think that there was one incident on one Transport for London train, which was caused by an illegal product—it was not even properly regulated. In what I thought was a gross overreaction, Transport for London then banned e-scooters, but other train operators allow them. It is obviously a matter for individual companies to work out the risks, but a relatively tiny number of incidents have been caused from the more than 1 million that we estimate are currently in use.

Global Warming

Lord Callanan Excerpts

Thursday 3rd March 2022 Lords Chamber

[Baroness Sheehan]

To ask Her Majesty’s Government further to the finding by the Mauna Loa Observatory that carbon dioxide in the atmosphere reached 419 parts per million in May 2021, what advice they have received from their Chief Scientific Adviser about the implications of global warming for the United Kingdom.

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

Her Majesty’s Government and advice from their Chief Scientific Adviser are informed by the latest scientific evidence as presented by the Intergovernmental Panel on Climate Change. The panel’s report set out how, as carbon dioxide concentrations in the atmosphere rise, global temperatures are also expected to rise, with severe impacts globally. Risks to the UK are assessed in the UK’s climate change risk assessments, which are informed by the Climate Change Committee’s independent assessments.

[Baroness Sheehan (LD)]

I thank the Minister for his reply. The figure of 419 parts per million is the highest ever recorded over the last 800,000 years and it is a direct indicator, based on hard science, of a rapidly changing climate and consequent irreversible damage to our ecosystems. The BBC reports that in January 2020 some hard science was presented to the Prime Minister in the form of a slide show at a teach-in organised by Sir Patrick Vallance and led by Professor Stephen Belcher of the Met Office. It is said to have convinced the Prime Minister to take climate change seriously and that must mean keeping fossil fuels in the ground. Was the Minister present and will he ask for a similar teach-in for all government departments?

[Lord Callanan (Con)]

No, I was not present, but we have regular meetings with all the advisers who inform government policy on this matter. I know the noble Baroness has a strong view about “leaving fossil fuels in the ground”, but we require gas as a transition fuel. In the context of the recent crisis in Ukraine, surely even the noble Baroness can see the logic of obtaining that transitional fuel from UK sources.

[Baroness Boycott (CB)]

My Lords, in 2020 BEIS set up a committee to look at and collaborate on policy development to ensure that individual policies were joined up across government—surely a good move. That committee was disbanded in May 2021. May I ask the Minister two questions? What has replaced that committee as a cross-government body to oversee climate considerations in all departments? If that committee is the one chaired by the Prime Minister, when did it last meet and are we allowed to know what it discussed?

[Lord Callanan (Con)]

There is a Cabinet committee on climate change chaired by the Prime Minister dealing with cross-government issues. The noble Baroness will be aware individual Cabinet committee meetings are confidential, but she can be assured that there is regular collaborative cross-government working between departments on all these issues.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, the Thwaites Glacier in western Antarctica is collapsing into the sea, which could raise sea levels by as much as 10 feet if the whole ice sheet falls. In such circumstances, have the Government undertaken an assessment of the likely impact that this would have on coastal communities in the UK and on vulnerable areas around the world?

[Lord Callanan (Con)]

The Government’s third climate change risk assessment sets out 61 risks and opportunities facing the UK from climate change, with eight priority risk areas identified as requiring action within the next two years. Action already taken includes £5.2 billion in 2021 for flood and coastal defences.

[Baroness Blackstone (Ind Lab)]

My Lords, following the IPCC report, mentioned by the noble Baroness, Lady Sheehan, on the damage to our ecosystem, can the Minister update the House on what further work is being done to engage the public on climate change and biodiversity issues? I think he agrees with me that evidence shows that, if these issues are understood, far more people are willing to change the way they live to reduce the impact of climate change.

[Lord Callanan (Con)]

My Lords, I agree with the noble Baroness; of course, we regularly undertake public information activities. The public are well aware of the risks presented by climate change and there is wide public support for action.

[Lord West of Spithead (Lab)]

My Lords, does the Minister agree that these concerns make it even more imperative that we press ahead with our plans for getting more nuclear power, and that anyone opposing that has no idea of what the risks are?

[Lord Callanan (Con)]

On this, as with so many issues, I totally agree with the noble Lord; he should, perhaps, be on this side of the House. The noble Lord is, of course, absolutely right. We need to expand our nuclear power provisions and I am delighted that we have the support of the Official Opposition for our Nuclear Energy (Financing) Bill, which is shortly to come back to the House.

[Baroness Janke (LD)]

My Lords, do the Government plan to take any action to ensure that factually incorrect statements made in your Lordships’ House are corrected, either at the time they are made or subsequently, given that the science behind climate change is incontrovertible?

--- Later in debate ---

[Lord Callanan (Con)]

Individual Members are responsible for their own statements and opinions. This is a debating House, in which there are strongly held opinions on all sides, but if any Member, whether in government or otherwise, gets something factually wrong, I am sure they would want to correct the record.

[Baroness Hayman of Ullock (Lab)]

My Lords, this week’s IPCC report suggests increasingly severe climate impacts, with warnings that heatwaves and flooding are highly likely, including in the UK. Firefighters are the primary public service responding to flooding in the UK; heatwaves can cause wildfires, which firefighters increasingly face. Yet our fire and rescue service has seen huge cuts, including one in every five firefighters since 2010. What plans do the Government have to fully support those in our emergency services who have to deal with the increasing numbers of catastrophic events?

[Lord Callanan (Con)]

My Lords, the noble Baroness makes an important point. Of course we want to support workers in our emergency services, who do such a tremendous job. We saw some of that during the recent flooding: they are the first line of our defence, and we should support them in every way that we can.

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

My Lords, the Minister mentioned the Nuclear Energy (Financing) Bill. He will be aware from an intervention that I made previously that many of us are concerned that the Scottish Government might be able to use planning laws to thwart the development of new nuclear in Scotland. Is it not the case that, if this is vital for the security and diversity of energy supply for the whole United Kingdom, there must be some way in which the United Kingdom can make sure that new nuclear can extend to Scotland as well? Will he look into this further?

[Lord Callanan (Con)]

I would be happy to have a further look at it and I completely agree with the noble Lord. I think the Scottish Government’s policy to rule out new nuclear is crazy, and what will end up happening is that Scotland will be supplied from nuclear power in England and Wales, because there are lots of interlinking connecters. The same thing is happening in Germany. Ironically, the Germans just announced that they were abandoning their nuclear stations, but will end being supplied by the huge number just across the border in France.