Subsidy Control Bill

Lord Callanan Excerpts

Committee stage
Monday 31st January 2022 Grand Committee

[Lord Fox (LD)]

My Lords, as we have heard, this set of amendments seeks to create some foundation for a future subsidy regime, whether that is geographical or socially minded or in terms of activity.

In introducing the Bill, and at other times, the Minister has sought to use phrases such as “flexible” and “light touch” to describe the Government’s plans. We do not have to rely on our own experience: we can read what the noble Lord, Lord Agnew, wrote in the newspapers over the weekend about how he saw a light touch rooted in ad hoc decision-making that created a soft touch for light-fingered individuals. We do not want to enshrine that in an Act of Parliament.

To guide where we are going, it is useful to look at where we have been. That is not nostalgia; it is common sense. As my noble friend Lady Sheehan said, about 10 months ago, the Government abandoned any pretence that they were seeking to deliver a modern industrial strategy and withdrew their promise to set out a long-term plan to boost the UK’s productivity. This interrupted what had been something of a consensus. From Heseltine to Mandelson to Cable to Clark, all of them worked within the same tramlines to a lesser or greater extent. This is characteristic of a Government who constantly seem to want to chip away at things that are multilateral and consensual, and to introduce their own stand-alone version.

As I am sure the Minister remembers, the strategic intensions for the industrial strategy were artificial intelligence and data, clean growth, the future of mobility and supporting an ageing society, alongside the important need to improve the UK’s declining productivity. As we know, the political U-turn was executed by the Business Secretary, the right honourable Kwasi Kwarteng, who at the same time disbanded the Industrial Strategy Council, which was due to oversee this whole process. Meanwhile, I understand that, in BEIS, the associated industrial strategy team was also broken up.

What we got instead was the Build Back Better brochure: a glossy, colour catalogue composed half of launches—usually ones that had already happened—backed up by page after page of colour library photos. The Minister may note that the picture illustrating the infrastructure page is of a Victorian viaduct, which perhaps rather indicates the direction in which the Government might be going. In other words, there is nothing now to guide where we might focus subsidy investment. I understand the Minister’s allergy to central micromanagement but what we have been left with will be chaotic and, I am sure, wasteful and unfair.

On the issue of focusing on regions or areas, there is an example we could look at. It is called the European Regional Development Fund—the ERDF. It aims to strengthen economic, social and territorial cohesion in the European Union by correcting imbalances between its regions. It is what you might call levelling up. It states:

“The ERDF finances programmes in shared responsibility between the European Commission and national and regional authorities in Member States.”


I think that reflects some of the words we have heard already. It goes on:

“The Member States’ administrations choose which projects to finance and take responsibility for day-to-day management … In 2021-2027 it will enable investments in a smarter, greener, more connected and more social Europe that is closer to its citizens.”


The aim is to create businesses that are

“more competitive and smarter … greener … more connected”,

supporting the social life of the areas in which they operate—this very much speaks to the point of the noble Baroness, Lady Jones, about improving the lives of the people who live in the country, which is something we should all be seeking every time we debate an issue—and are

“closer to citizens, supporting locally-led development and sustainable urban development.”

I am not proposing that the Minister leads us bravely back into the European Union. What I am proposing is that the Minister learns from the experience of others and applies that learning in a sensible way. This is an opportunity to do such learning.

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

Apologies; I thought that the noble Lord, Lord McNicol, was going to speak there. I thank the noble Lords, Lord Ravensdale and Lord McNicol, the noble Baronesses, Lady Blake and Lady Randerson, and the noble and learned Lord, Lord Thomas, for tabling Amendments 4, 4A, 5, 5A, 6 and 25.

Let me go back to first principles. The Bill establishes a clear, flexible set of rules for granting subsidies for all public authorities in the United Kingdom. Its central function and purpose is to reduce harmful distortions to domestic competition and investment—as well as to trade and investment between the UK and other countries, of course—which can arise from the giving of subsidies. The new domestic regime will not, however, instruct public authorities on which policy objectives they should direct subsidies towards, so long as they remedy a market failure or address the much-discussed equity concerns.

We are not in the business of interfering with the policy decisions of democratically elected public bodies in Scotland, Wales, Northern Ireland or elsewhere in the United Kingdom. In keeping with this, the new subsidy control regime will empower public authorities to design subsidies in a way that is tailored and bespoke for their local needs, without facing excessive bureaucracy in order to do so. That is why we have provided clear guidance that supports public authorities, and which they must consider, to support them in choosing the appropriate indicators because we believe that they are the ones who are best placed to make those final decisions.

Turning first to Amendments 4 and 25, I thank the noble Lord, Lord McNicol, for his amendments; the noble Baroness, Lady Sheehan, put her name to Amendment 4. However, it is my view that Amendments 4 and 25 go against the grain of the Bill. Taken together, they would provide for the Secretary of State to make, by regulations, a strategy that sets out how subsidies should be used by all public authorities to support the delivery of various other strategies. They would then require public authorities to consider the subsidy strategy before awarding a subsidy or making a subsidy scheme. The UK Government have developed various strategies for specific policy issues and will continue to do so. This is where and how the Government will articulate and develop a coherent approach to issues such as net zero and levelling up.

To take an example, in March last year, the Government published a policy paper on how they will build back better, setting out plans to support growth through significant investment in infrastructure, skills and innovation. The Government will also soon publish a levelling-up White Paper—eagerly awaited by the noble Baroness, Lady Blake, no doubt—articulating how bold new policy interventions will improve opportunity and boost livelihoods across the country as we recover from the pandemic. On the points made by the noble Baronesses, Lady Blake and Lady Sheehan, the shared prosperity fund will ramp up to £1.5 billion per year in 2024-25 and total funding will, at a minimum, match the size of EU funds in all nations each year. The Government will publish further details of the fund in due course.

The Committee should bear in mind that subsidies are but one possible tool in the toolbox for supporting strategic public priorities. It is not necessary for the UK as a whole, or even the UK Government, to have an overarching strategy for the provision of subsidies, much in the same way as there is no need for a broad strategy on the use of regulatory levers. Strategies should focus on how to tackle the major issues, rather than the specific tools through which we may address them. A subsidy strategy could well risk steering public authorities towards using subsidies inappropriately or indiscriminately.

It is imperative that public authorities give proper consideration, on a case-by-case basis, to whether the subsidy they propose is the appropriate instrument for achieving any given policy objective. In many cases, there may be more appropriate measures which a public authority can deploy. To take an example dear to the heart of the noble Baroness, Lady Jones, meeting our net-zero targets will involve leveraging a mixture of public interventions, including but not limited to regulation, the emissions trading scheme and public procurement, as well as appropriate and carefully targeted subsidies.

I will now address Amendment 5, tabled by the noble Lord, Lord McNicol. Subsidy control principle A allows public authorities to address inequality and disadvantage through the use of subsidies. It states:

“Subsidies should pursue a … policy objective”


that either remedies a market failure or addresses

“an equity rationale (such as social difficulties or distributional concerns).”

Amendment 5 seeks to include areas of relative economic deprivation as an example of an equity rationale that may be addressed through subsidies. I welcome the noble Lord’s support for levelling up and his interest in ensuring that the subsidy control regime provides for this. I can assure him, however, that the Bill already facilitates the use of subsidies to support areas of relative economic deprivation.

The concept of equity rationale set out in principle A unquestionably covers investment in areas of relative economic deprivation. It is my view that guidance is the best place to provide further examples of legitimate policy objectives for subsidies and, more broadly, to address the practical application of those principles. The Government recently published illustrative guidance on the application of the subsidy control principles. This elaborated on the meaning of an equity objective:

“Equity objectives seek to reduce these disparities between different groups in society or geographic areas.”


It further states that subsidies targeted at

“Levelling up a deprived or disadvantaged area”

would be an example of an equity objective. I would be very happy to discuss this further ahead of Report with the noble Lord, Lord McNicol, and my noble friend Lord Lamont as I am keen to ensure that the intention here—that regional disadvantage is an example of equity rationale—is clear.

The amendments tabled by the noble Lord, Lord Ravensdale, raise a number of similar issues. I am glad of the opportunity to address those as well. A Bill for regulating the granting of subsidies for all purposes, in all policy areas, is not the place to articulate a levelling-up strategy. There will be plenty of time to debate that when the White Paper is published. The purpose of his amendment is to ensure that subsidies to remedy regional disadvantage are permitted under this regime, and on that point I hope I can give him complete reassurance.

As I have mentioned, this is an inherently permissive regime; there is no default prohibition on subsidies. I confirm again that addressing regional disadvantage is an equity rationale for the purposes of principle A, and one that would therefore justify the giving of a subsidy. In contrast to the EU state aid regime, there is no need for central government to set out maps or other metrics of deprivation in the Bill to permit levelling-up subsidies. By empowering public authorities at all levels of government to give subsidies that are designed by them to meet the needs of the places for which they are responsible, the Bill will undoubtedly be an important enabler of the Government’s levelling-up agenda.

However, the subsidy control regime is distinct from it. It is not directly through this Bill or regulations made under it that the Government will pursue their programme to level up the UK. It is perhaps also worth noting that, just like the EU state aid regime, the Bill is concerned with regulation; it is not a source of funding. No doubt there will be lots of debates at other times and in other places about the appropriate level of funding, but I submit that Committee on the Bill is not the place to have those debates. Everything is in its place. This is a flexible and permissive subsidy control regime. Although it facilitates levelling up, it is not the place to define it and it should not be seen as the main vehicle for pursuing it.

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[Lord Purvis of Tweed (LD)]

As I understand it, the guidance states that every authority now needs to define for itself what a social equity is as far as deprivation is concerned, even taking into consideration what relative that would be. It says:

“Public authorities must use supporting evidence which … should include measures or statistical indicators set against appropriate comparators”.


That suggests that every public authority defining its own scheme will have to provide its own statistical basis and definitions. How will the CMA judge those against others? Given that there will be no commonly agreed areas of social deprivation, is it not likely to create even more bureaucracy and confusion if every public authority has to make its own definitions and provide its own necessary material and statistical basis?

[Lord Callanan (Con)]

It is for the CMA to provide guidance on those matters but for the authorities themselves to determine whether the subsidy in question is justified. Then, but only if it is challenged against the principles in the Act, will the CAT be empowered to make a judgment on whether it is in compliance with the specific provisions in the Act.

[Baroness Blake of Leeds (Lab)]

My Lords, I express my gratitude for all the contributions to this increasingly important debate. Judging by the response from the Minister, there are still many areas that I am sure we will want to pursue and explore and to which we will come back at later stages of our proceedings. I echo the comment by the noble Lord, Lord Ravensdale, that there is a clear question here: is there a clear strategy? That is something that we can all question as we go forward.

Many of us in the Room today have been involved with the vexed issue of distributing regional funding, which is extraordinarily complex. I come back to the very clear comments by the noble and learned Lord, Lord Thomas, about the nature of the political decision in this. I have enormous concerns about how the whole process will be taken forward if it is allowed to stay in its current form, and real concern about the lack of focus on what it is going to mean in terms of benefit for communities and for people. As the noble Baroness, Lady Sheehan, emphasised, a lack of clarity, very little in the way of guidance and too many gaps have been the theme that has run through this debate.

I have to pick up one of the comments that the noble Baroness, Lady Jones, made concerning tension within the Government. I think that helps to explain where the lack of clarity has come from.

I think we would all welcome improvements. No one is trying to suggest that what we had before was perfect. I myself go back to the time of SRB funding, for example, when local authorities were put by a national directive in the position where communities were split down the middle, with funding going into an area on one side of a street but not the other. We do not want to move away from local determination, and that is very much the spirit in which we are taking this up.

With those comments, and with a clear understanding that we will be coming back to discuss these important matters, I beg leave to withdraw the amendment.

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[Lord Callanan (Con)]

I am grateful to all noble Lords who took part in this debate. The noble Baronesses, Lady Sheehan, Lady Hayman and Lady Jones, raising their favourite subject brought me a great sense of déjà vu—the feeling that I have been here before and will no doubt be here on many occasions in future. Nevertheless, it is important to highlight the crucial issues of our net-zero commitments, climate change and environmental protection.

Before I address the individual amendments, I will explain further the approach that we have taken in this Bill towards the vital subject of energy and environmental protections. As noble Lords are aware, the Subsidy Control Bill sets out a new approach that is tailored to the needs of the UK. Broadly, it addresses two objectives: first, to facilitate compliance with our international commitments, including the subsidy control provisions in the EU–UK Trade and Cooperation Agreement; and, secondly and perhaps more importantly, to ensure that markets in the UK function effectively and that we minimise the domestic distortive effects of subsidies.

However, in respect of energy and environmental objectives, it would be fair to say that our approach is slightly different. In this area, the UK’s existing commitments, regulations and practices are extensive and world-leading, from the Environment Act principles to support for Sizewell C and the clean heat grant. Given all this, I believe that we already have the right framework in place.

As a result, our primary objective in respect of the energy and environment principles is to fulfil our international obligations—specifically, to implement the provisions in the TCA. These are good, common-sense principles; it will not be a challenge for UK public authorities to comply with them. I am not trying to suggest that they have been included reluctantly or that they do not have this Government’s full endorsement, but, equally, we have not sought to introduce further requirements or extend the scope more widely than required because we believe that energy and environment rules in general should apply to all kinds of policy-making, regulation and funding, rather than having specific provisions just for one tool in the toolbox. This brings me to the question asked by the noble Baroness, Lady Jones, on why nuclear has been excluded from the principles set out in Schedule 2; I will come on to that in more detail.

I will start with Amendments 7 to 10, all of which would amend Schedule 1. I thank the noble Lords, Lord McNicol and Lord Whitty, and the noble Baronesses, Lady Sheehan, Lady Jones of Moulsecoomb, Lady Bennett of Manor Castle—I see that she is not with us—and Lady Boycott, for tabling and putting their names to the respective amendments.

Schedule 1 sets out the subsidy control principles that public authorities must consider for any subsidies that they award or subsidy schemes that they make. These common-sense principles will ensure that subsidies and schemes offer value for money while addressing important public policy objectives in the United Kingdom. Public authorities will need to consider the effects of subsidies in the round before awarding them. The areas currently listed under principle G are those that subsidies inherently affect: competition, investment and trade. Other negative effects should be considered for the purposes of principle G only in so far as they are relevant.

Net-zero and climate change considerations are not inherent to all subsidies. Placing additional emphasis on climate change in principle G, or adding an additional principle H, could lead to public authorities having to do bespoke, possibly onerous, assessments for every single subsidy awarded or subsidy scheme made, even when it has no meaningful impact on net-zero targets.

I turn now to Amendment 11 to Schedule 2. Schedule 2 sets out that energy and environment subsidies must aim at one of two objectives: first, delivering a secure, affordable and sustainable energy system and a well-functioning and competitive energy market; or, secondly, increasing the level of environmental protection compared with the level that would be achieved in the absence of that subsidy. I would have thought that the noble Baroness, Lady Jones, would support that. This amendment would add a third aim, specifying that subsidies in relation to energy and environment should incentivise the beneficiary to help to deliver the UK’s net-zero target.

As I have said—there is no disagreement among us here—I and the Government entirely agree that net zero is of critical importance. Indeed, the Government published their Net Zero Strategy last year. The Government have already announced new subsidy schemes that promote net-zero objectives, are compliant with the interim subsidy control regime and, of course, ensure good taxpayer value at the same time. These include schemes such as the clean heat grant, which will help consumers to overcome the high up-front costs of low-carbon heat and will build supply chains for low-carbon heat ahead of the introduction of regulations for existing buildings off the gas grid, which we will come to later in the decade.

However, I do not believe that it is necessary to add an additional aim in Schedule 2, principle A. Sustainability and environmental protection are explicitly mentioned in the principle already, and it is clear that progressing our net-zero priorities would fall into these categories. Adding a further requirement on all subsidies and schemes, on top of those existing principles and regardless of whether the subsidy or scheme has a specific net-zero aim or impact, is not necessary given the existing comprehensive set of regulatory requirements on public authorities. I have mentioned several of these already but they include the legally binding environmental targets in the Environment Act, for example. It could even disincentivise other valuable subsidies that improve environmental protections but would not have a direct net-zero component.

[Lord Purvis of Tweed (LD)]

The Minister and the Government have been consistent in saying that moves are unnecessary, specifically because of principle G, but principle G says that

“beneficial effects (in terms of achieving their specific policy objective) should outweigh any negative effects”.

The “beneficial effects” are the achieving of the “policy objective”, so if the policy objective has nothing whatever to do with sustainability—it could well be market support in one area—then only beneficial effects with regard to that “specific policy objective” will be taken into consideration. There will not necessarily be beneficial impacts on sustainability, net zero or climate because the beneficial effects are very narrowly defined under principle G. So the necessary element still stands because the Government have restricted beneficial effects only to those linked with the original policy objective.

[Lord Callanan (Con)]

I think we discussed this earlier. I am really not sure of the point the noble Lord is trying to make.

Amendments 12 and 29, tabled by the noble Baronesses, Lady Boycott and Lady Sheehan, and the noble Lord, Lord Whitty, would prevent subsidies that would relieve their beneficiaries from their liabilities as a polluter. Provision already exists in the Bill to protect the “polluter pays” principle for any subsidy in relation to energy and environment. Principle B in Schedule 2 sets this out explicitly:

“Subsidies in relation to energy and environment shall not relieve the beneficiary from liabilities arising from its responsibilities as a polluter under the law of England and Wales, Scotland or Northern Ireland.”


Clause 13(3)(b) ensures that a public authority

“must not make the scheme unless it is of the view that the subsidies provided for by the scheme will be consistent with those principles.”

As I have previously set out, it is right that the provisions in the “polluter pays” principle apply only where they are relevant. That principle has long-standing foundations in UK law—including, most recently, in the provisions of the Environment Act 2021, which I also covered earlier.

Amendment 33 would prohibit subsidies for fossil fuels, including those subsidies that fall within the definition used by the IMF for fossil fuel subsidies. This would include subsidies for fossil fuel development and for the construction of new unmitigated fossil fuel-powered electricity generation, either in the UK or abroad. The principles in Schedule 2 to the Bill will help ensure that energy and environment subsidies contribute to optimal outcomes for UK citizens, recognising the importance of a secure, affordable and sustainable energy system and increasing levels of environmental protection.

I am fully in agreement with the noble Baroness, Lady Sheehan, that inefficient fossil fuel subsidies encourage wasteful consumption, reduce our energy security, impede investment in clean energy sources and undermine efforts to deal with the threat of climate change. However, I cannot accept this amendment because unabated gas-fired generation currently plays a critical role in keeping Great Britain’s electricity system secure and stable. New-build gas generation capacity will continue to be needed to ensure security of supply until clean alternatives are deployable at scale.

[Baroness Sheehan (LD)]

I have a question for the Minister. We have a real problem with fuel poverty and the energy cost of living—indeed, the cost of living everywhere. Energy costs are so high, and they are going to get even higher come April. Does it not worry the Minister—and, through him, the Government —that Shell paid $1.8 billion in tax to Norway in 2020 but, over the same period, it received $99.1 million from our Government in the UK? In that year, the UK was the only country where Shell operates in which it did not pay tax, according to the company’s own annual report on payments to Governments. There is something very wrong here.

[Lord Callanan (Con)]

That is not a subject for today’s debate. I have no idea whether the figures produced by the noble Baroness are accurate, but we have had this debate many times. We are phasing out fossil fuel-required generation. We have one of the fastest deployable rates of renewables in the world. We have the largest offshore wind capacity in the world. I appreciate that the noble Baroness wants to go even faster but, unless she is standing here saying that we should turn the lights out tomorrow, even the Climate Change Committee accepts that we will need gas-fired generation in the years to come. This is a transition, not a revolution, so we will scale down our use of fossil fuels gradually but, in the short term, we will continue to need them.

[Baroness Sheehan (LD)]

I really must challenge the Minister on this. He knows that this is not a question of switching off the lights overnight. The Climate Change Committee has a well-worked-out plan for scaling down our use of fossil fuels. In that plan, we start to reduce our reliance on oil and gas to a point where the only oil and gas we have is mitigated by some form of abatement, in whatever form that may take, by 2050. The plan is not that we continue to use gas unabated until 2050—that just is not the case. It is very misleading to say that.

[Lord Callanan (Con)]

Indeed—[Interruption.] I will let the noble Baroness, Lady Jones, come in as well.

[Baroness Jones of Moulsecoomb (GP)]

We may have had this debate many times but the fact is that the Government do not listen. For example, the Government could have already reduced by a huge margin our reliance on fossil fuels and gas by helping people insulate their homes. They have given little bits here and little bits there, but they have not invested heavily. They could do more but they refuse to do so. I do not understand why. So, we are going to continue having these debates until the Government actually fulfil some of the promises they have made.

[Lord Callanan (Con)]

We will continue to have these debates: I just point the noble Baroness to the fact that we are spending £3.4 billion over the next few years on precisely the schemes that she mentions. By all means, argue that we should be spending even more, but it is just not true to say that we are not spending anything at all. We will continue to have these debates.

Going back to the points by the noble Baroness, Lady Sheehan, I think we are in danger of violently agreeing here. Of course, there has to be a transition and we have to reduce our reliance over time, but my point is and will remain that in the meantime, we still require unabated gas-fired generation unless she is proposing to turn the lights out, which I know she is not. Therefore, we are effectively agreeing. We could have a long and detailed debate about the scale of the transition and how we should progress the transition, but in essence we are saying the same things.

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[Lord Purvis of Tweed (LD)]

Will the Minister address the points about how the regulated asset base will be considered—I understand his comments about that—and specifically about support for the small reactor scheme for Rolls-Royce?

[Lord Callanan (Con)]

The noble Lord makes some valid points on the RAB mechanism, which will be debated in full on the upcoming nuclear Bill, but I will write to him on the specific points, particularly about support for the SMR reactors he talked about. I point out that existing subsidy schemes are of course excluded from the Bill. No doubt he will want to ask what happens if we want to award a similar subsidy in the future.

In my view, the energy and environment principles provide helpful support to our energy, environmental and climate change ambitions, but they are not the main engine of those ambitions. Finally, to answer the other questions of the noble Baroness, Lady Jones, on community energy—not really a matter for the Bill—and the Government’s approach to net zero, I am very happy to follow that up and write to her with the details. We are fully in favour of community energy projects, but of course they have to pay their share of the costs towards the network, as all other projects do if they wish to be connected to the national grid. I will write to her with the details and follow up with the noble Lord, Lord Purvis, on SMRs and the basis of nuclear subsidies.

[Lord Fox (LD)]

My Lords—

[Lord Callanan (Con)]

I have not satisfied them all yet.

[Lord Fox (LD)]

There may be something to add to the letter. My noble friend Lord Purvis made a valid point about paragraph G of Schedule 1, to which the Minister feigned non comprendi. The point my noble friend was making is that the Minister had said there was no need to have an explicit environmental or energy benefit in the Bill because that was implicitly within everything. However, paragraph G absolutely says that unless something is a specific policy objective, it is not considered to be a beneficial effect, so that paragraph cancels out what the Minister said to the Committee. Some sense of resolving that tension would be helpful. That is something we can come back to because, if indeed paragraph G overrides other benefits, which it seems to do, it is even more important that environmental and energy issues are placed at the heart of the Bill.

[Lord Callanan (Con)]

I think if the objective is set then it is an overarching benefit, but I will be happy to confirm that to the noble Lord, Lord Purvis, and will copy the letter to the noble Lord, Lord Fox, as well. Once again, I will be very busy in my letter-writing activities for the next few days. With that, I hope noble Lords are satisfied—or, if not satisfied, content—with the answers that I have given and therefore, in compliance with that, that the noble Lord will feel able to withdraw the amendment at this stage.

[Lord McNicol of West Kilbride (Lab)]

I thank the Minister for his response, and I thank the noble Baronesses, Lady Jones, Lady Sheehan and Lady Hayman, for their comments. I am not quite sure how many of the four questions asked by the noble Baroness, Lady Jones, we got through; we might be coming back to some of them.

As expected, to be fair, the Minister said that he believes we have the right framework in place and there is no need to extend it. I had a different take on the discussions with the noble Lords, Lord Purvis and Lord Fox, about paragraph G. The Minister said that not all subsidies will be relevant to net zero. As the noble Lord, Lord Fox, pointed out earlier, many subsidies fit around the issue of energy and climate but, if we take the Minister at his word on that and a particular subsidy has no meaningful impact on climate or net zero, his argument was that it could cause an extra administrative burden on the authorities if they have to show that it is not relevant. However, if the subsidy had no relevance to the environment or to climate. it would be relatively straightforward for them to say so. My feeling was that that negated the argument that the Minister was making for not including Amendments 7 or 11 in the Bill.

I am still genuinely struggling to understand why it would be so difficult to include that commitment, because those are guiding principles. If we all agree that we need to move towards net zero, protecting the environment and delivering on the climate emergency, then this is an opportunity to put that language in the Bill—especially a Bill that is so relevant to the fact that historically either state aid or government decisions, which we have argued for many times, have supported industries that harm the environment, albeit for very good reasons.

I am sure we will come back to this issue but, with that I beg leave to withdraw the amendment.

Economic Crime: Planned Government Bill

Lord Callanan Excerpts

Monday 31st January 2022 Lords Chamber

[Lord Fox (LD)]

My Lords, when this Question was put in the Commons last week, the Conservative MP John Penrose said:

“The well of excuses after three or four years of promising this piece of legislation or its related pieces has now run dry. This legislation is essential for the credibility of this country and this Government”.—[Official Report, Commons, 26/1/22; col. 1008.]


I agree. Does the Minister agree with his colleague in the Commons and, if so, when will this legislation be brought forward?

[Lord Callanan (Con)]

My Lords, as the noble Lord is aware, I cannot give him a timescale for this. As the Prime Minister said last week, we remain committed to this legislation. We have already carried out pre-legislative scrutiny on it and we will legislate when parliamentary time allows.

[Baroness Chapman of Darlington (Lab)]

My Lords, the Government have long promised a full public register of beneficial ownership, alongside a comprehensive set of reforms to Companies House. Reforms are being made, but the pace is slow and the level of ambition is low. If the Government truly want to crack down on fraud and other forms of economic crime, why have these work streams been allowed to move at such glacial pace? If the noble Lord, Lord Agnew, was not able to secure progress from within, why should we believe other Ministers when they say that this issue is being treated with urgency?

[Lord Callanan (Con)]

Well, the issue is being treated with urgency. The Treasury is undertaking a number of different anti-money laundering pieces of work. We have already commenced the reforms required in Companies House. We will spend £12 million in 2023-24 and 2024-25 on economic crime reforms and £63 million in a spending review for Companies House reform. As the Prime Minister said, we are committed to making progress on this urgent and essential legislation, and we will do so when parliamentary time allows.

[Lord Cormack (Con)]

What is my noble friend’s definition of “urgency”?

[Lord Callanan (Con)]

It is an important matter; it is one of many important matters on the Government’s agenda; and, when parliamentary time allows, we will legislate for it.

[Lord Wallace of Saltaire (LD)]

The draft legislation over these entities is quite closely linked to this. Perhaps the Minister can tell us whether that will be wrapped up in an economic crime Bill when it comes, or whether it will be a separate Bill. Perhaps at the same time he could tell us what the relationship is with the overseas territories on the beneficial ownership of these properties. A great many of them are owned by companies based in the British Virgin Islands or other overseas territories. They are sovereign parts of the UK. They seem to have all the benefits of British sovereignty but none of the responsibilities. Are the Government going to ensure that the secrecy of our overseas territories on financial matters is also covered in these Bills?

[Lord Callanan (Con)]

Indeed, the register of overseas entities Bill is currently tied up in the economic crime Bill, which we hope to make progress on as quickly as possible. However, I do not want to rule out any alternative legislative routes that might present themselves. As the noble Lord will be aware, it has gone through pre-legislative scrutiny and was well received by the committee that looked at it. We have incorporated some of the suggestions that were made. Of course, I cannot commit to what may, or may not, be in Her Majesty’s speech, but clearly a key element of taking forward this work is liaising closely with the overseas territories, which we will do.

[Lord Rooker (Lab)]

Will the Bill, when it arrives, fulfil the commitments that David Cameron made in his seminal speech in Singapore?

[Lord Callanan (Con)]

I cannot give the noble Lord a commitment about when a Bill might arrive. I also cannot give a commitment about what might be in it when it does arrive.

[Lord Stevenson of Balmacara (Lab)]

One of the key recommendations of the recent Joint Committee on the Online Safety Bill was that scams and economic crimes on the internet should be in scope of the revised Bill when it comes forward. We obviously await the Government’s response to that, but does this not give the Government an opportunity of a double win? Either Bill would do, but the issue has to be addressed.

[Lord Callanan (Con)]

There are indeed a number of positive elements to legislating on this issue. One of them is the issue highlighted by the noble Lord. However, we are again dealing with hypotheticals: something that may happen in good time. As I keep saying, we are committed to pursuing this legislation, but I am afraid I am going to sound a bit like a broken record when I say I cannot give a commitment at this stage to noble Lords on when we might be able to do it.

[Lord Purvis of Tweed (LD)]

The latest full accounts of Aquind Ltd give its directors as Mr K Glukhovskoy and Mr A Temerko. Four years ago, the Minister was a member of the board and at that time it had a controlling entity in the British Virgin Islands. It now has a controlling entity in Luxembourg. The last set of accounts showed a loss of more than £3 million and it paid no tax, yet it was able to find £213,000 for donations to the Conservative Party. Will the Government’s measures, which they say are urgent, also address the source of the wealth of controlling entities registered in the Virgin Islands—or, indeed, Luxembourg?

[Lord Callanan (Con)]

I thank the noble Lord for his fascinating question.

[Lord Vaux of Harrowden (CB)]

My Lords, it seems that this Bill will be some time in coming, but surely there are things we can do more quickly. For example, the Companies Act 2006 sets out clearly what information is required on directors and shareholders. Is it actually necessary to legislate for Companies House to verify that information? It may not be able to refuse to register the information, but there is nothing to stop it flagging the fact that the information is unverified.

[Lord Callanan (Con)]

I am afraid that it is necessary for primary legislation to enact the reforms of Companies House. This is an area for which I am responsible, and I work closely with Companies House on it. I get a steady flow of complaints from noble Lords and from Members of Parliament about abuses of the Companies House register. There is a certain amount that we can do with the funding that I announced in terms of reforms, but the primary reforms require primary legislation.

[Lord Forsyth of Drumlean (Con)]

My Lords, will this Bill perhaps offer a remedy to ensure that when political parties have had donations from criminals who are fugitives from justice—such as Mr Michael Brown, who made a substantial donation to the Liberal Party—that money will be returned?

[Lord Callanan (Con)]

I thank my noble friend for that question. As he was straying on to the issue of party-political donations, I noticed groans from the Liberal Democrat Benches. I think that is evidence that they can dish it out but are not so keen on taking it.

[Lord Pannick (CB)]

My Lords, does the Minister agree that the Government’s inability to recover the billions of pounds obtained by fraudsters from Covid business plans, as highlighted by the noble Lord, Lord Agnew, in his resignation speech last week, demonstrates the vital need for urgent legislative reform?

[Lord Callanan (Con)]

The issues are not necessarily related. We are continuing to pursue many of the frauds that the noble Lord referred to. I can give the House some examples. The Insolvency Service has already achieved 86 director disqualifications, 39 bankruptcy restrictions have been imposed, and 13 live companies have been wound up in the public interest. It has also identified 947 further director disqualification and 46 criminal cases for investigation, all of which contain an element of bounce-back loans scheme abuses. That scheme was put in place in response to a global pandemic at a very rapid pace, and I think all noble Lords can agree that it succeeded in saving many businesses and many hundreds of thousands of jobs in this country. However, we will not tolerate any abuses of the scheme, and we will continue to pursue people who are fraudulently benefiting from it.

[Baroness Bennett of Manor Castle (GP)]

My Lords, there is clearly a problem of international confidence in the UK’s financial governance system. Without targeting any particular party, are the Government considering controls on financial donations to all political parties and candidates, as a way of restoring international confidence?

[Lord Callanan (Con)]

I thought that I had come to answer questions on an economic crime Bill, but I see that we are getting into party-political donations again. That is not a matter for which I am, or my department is, responsible, so I am unable to furnish the noble Baroness with a response to her question.

[Lord Rooker (Lab)]

You are answering for the Government.

[The Lord Bishop of Durham]

My Lords, those who decide to perpetrate economic crime are apparently targeted, swift and very bright about how they do it. I read the Statement and it mentions the Home Office, the Treasury and BEIS. Is it not time for more targeted, thought-through, quick action by government, rather than action that is divided across too many departments?

[Lord Callanan (Con)]

All departments are working together to try to combat this menace, and there are a number of different elements to that. Obviously, BEIS’s responsibilities, in terms of Companies House and the register of beneficial owners, are one aspect—but of course there are also tax elements, which are the responsibility of the Treasury, and there are Home Office enforcement matters as well, in terms of criminal liability. So it is not a question of which department looks after this: an enormous amount of cross-departmental co-operation goes on to try to combat it.

Status of Workers Bill [HL]

Lord Callanan Excerpts

3rd reading
Friday 28th January 2022 Lords Chamber

[Lord Balfe (Con)]

My Lords, I have made this speech on a number of occasions. There are roughly 6 million trade unionists in Britain, and a third of them—2 million—vote for the party on these Benches. I am pleased, on their behalf, to welcome the Bill. It is a good step forward, because we always need to keep in mind the balance between the rights of the workers and those of the employers. This is a good Bill that rights an anomaly, and I hope that it will go further. I know that is difficult, but it is certainly in the right place and it has my personal full support.

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

My Lords, I thank the noble Lord, Lord Hendy, for moving his technical amendment in order to comply, as he said, with the recommendation of the Delegated Powers and Regulatory Reform Committee. While the Government are not convinced that the Bill is the right course of action, we agree with the importance of legislative scrutiny and consistency. The Government therefore welcome the amendment, which would ensure consistency under the Trade Union and Labour Relations (Consolidation) Act 1992 and the Employment Rights Act 1996—although, as I said, we cannot support the Bill.

I congratulate the noble Lord on bringing the Bill to the House and on enabling this debate on an important subject. I thank all noble Lords for their contributions during Second Reading, which allowed for what I thought was an insightful and important debate on this topic. I also thank the Delegated Powers and Regulatory Reform Committee for its expert contribution and the noble Lord, Lord Hendy, for tabling his amendment.

As I said at the start, the Government are not convinced that the Bill is the right solution to give greater protection to those in insecure work. We will continue to take steps to protect vulnerable workers, delivering on our ambition to make the UK the best place in the world to work and grow a business.

[Lord Hendy (Lab)]

My Lords, I am grateful to the Minister for his speech. I am grateful, too, for the other speeches made today and those which were made on Second Reading. I am particularly grateful that the Bill has enjoyed wide support across the House, on all sides. I of course understand the position of the Minister in being unable to support it, but he stands alone in this. If the Bill is passed it will, as the noble Lord, Lord Balfe, said, render great justice to hundreds of thousands of workers who are wrongly classified, and thereby deprived of the statutory rights which Parliament has bestowed on working people. It will also provide, in accordance with the Government’s policy, a levelling-up process by which all employers will stand on a level playing field in the engagement of their workforce.

Post Office: Horizon Compensation

Lord Callanan Excerpts

Monday 24th January 2022 Lords Chamber

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

My Lords, the Government have indeed set aside up to £685 million to support the Post Office in paying compensation to postmasters with quashed Horizon-related convictions. The Post Office reached a settlement to pay compensation of £42.75 million, plus costs, in 2019 with a further group of postmasters. The Post Office has separately set up a historical shortfall scheme to provide compensation to postmasters who suffered Horizon-related losses but were not convicted or prosecuted and were not part of the GLO.

[Lord Arbuthnot of Edrom (Con)]

My Lords, Fujitsu knew that it could—and did—alter the accounts of sub-postmasters without their knowledge. It knew that the Government were denying that this could be done. It knew that the sub-postmasters were being prosecuted for those altered accounts. Is it not high time, and beyond, that Fujitsu began to become part of the solution rather than being part of the problem?

[Lord Callanan (Con)]

The noble Lord makes an important point, with which I know many in the House will have some sympathy, but it is important that we await the outcome of Sir Wyn Williams’s inquiry. We all have our suspicions about this and we all have our views, but the inquiry has been set up to provide us with definitive answers to questions such as the very good one that the noble Lord has posed.

[Lord Fox (LD)]

My Lords, fewer than a third of the 2,005 applications have been dealt with so far, and this is a pattern—we saw it with Windrush. First, there is a campaign, then there is a big political announcement. Money is apparently made available and then everything grinds to a halt. This is bureaucracy standing in the way of settling personal tragedies. Will the Minister go back to his department and get things moving?

[Lord Callanan (Con)]

I think the noble Lord is being a little unfair. He referred to a third, but it depends which of the cases he is talking about. There are a number of different aspects to this. There are those who had their convictions overturned, most of whom have already received £100,000 in interim compensation. On top of that there is the historical shortfall scheme, which is proceeding as fast as we can. The reason we set this up is to precisely avoid long delays through litigation, and obviously the process itself is managed through the Post Office and its advisers. But I will certainly take his message back. Nobody wants to see this drag on for too long.

[Lord Bassam of Brighton (Lab)]

My Lords, I would like to return to the point made by the noble Lord, Lord Arbuthnot. It seems quite wrong that a company that knew what it was doing, knew that the kit was faulty, and knew that mistakes were being made has not been involved in this case. They should be making payments to the Government so that the Government can fully compensate all those who have being wrongfully imprisoned, charged within this scheme and have suffered years of life-destroying consequences. That company must be held responsible, and the Government should make sure that is the case.

--- Later in debate ---

[Lord Callanan (Con)]

Both noble Lords who have raised this matter make an important point. I very much hope that those who were judged responsible will be held accountable, but it is important to wait for the outcome of the independent public inquiry that has been launched and is proceeding before we apportion blame.

[Lord Laming (CB)]

My Lords, I want to follow up on those two questions. Is it not extraordinary that years have passed since this came to light, that people’s lives were completely ruined by what happened and that the Government are now having to put forward this huge sum of money, yet nobody from the Post Office has been held accountable for what happened?

[Lord Callanan (Con)]

It is beyond extraordinary, if I can disagree slightly with the noble Lord. The whole situation is tragic, appalling—there are numerous words we could use to describe the depth of the suffering of so many people. Financial compensation will never put right what went wrong. Again, we all think we know who was responsible and where the blame lies. The public inquiry has been established and is proceeding so that we can get a full account; we already have partial accounts through the various High Court cases that have proceeded. The importance of the inquiry is so that we can get a full account of exactly what happened over many years, through different regimes of government and people in leadership roles at the Post Office, and blame can be apportioned in the right way.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, some of these postmasters who live in Northern Ireland have had their lives and livelihoods destroyed by the actions of this internet scheme owned, I suppose, by Fujitsu. As my noble friend Lord Bassam and the noble Lord, Lord Arbuthnot, have already asked, could the Minister ensure that Fujitsu is held responsible and accountable for its actions, which have left many lives destroyed and have financially destroyed people as well?

[Lord Callanan (Con)]

Of course, it is not just Northern Ireland: throughout the whole United Kingdom people have been financially, emotionally and criminally destroyed by this case. No words that we could utter here could minimise the terrible suffering and distress that has gone on. Again, I am sorry to be practical and hard-headed about this, but we have to return to the central point: we all think we know where blame lies, but let us wait for the results of the inquiry. By all means, in the meantime get on with paying compensation to those who have suffered—but let us have a proper inquest at the end of the inquiry, when we have the full results, of exactly who was to blame.

[Baroness Altmann (Con)]

My Lords, I congratulate my noble friend Lord Arbuthnot and all involved on their persistence and tenacity in pursuing this egregious injustice. I am also delighted that the Government have set aside money to at least start to address these issues. Could my noble friend the Minister tell or reassure the House whether those who have been affected will be fully compensated, including for the legal costs they have incurred? Obviously no money can offset the emotional and psychological damage done, but I understand that there are concerns that some of those who have had to go through the courts may still end up financially worse off as a result.

[Lord Callanan (Con)]

I certainly join my noble friend in paying tribute to the work of the noble Lord, Lord Arbuthnot, both in this place and the other place, as well as—to be fair—a number of Members on all sides of the House who drew attention over a number of years to this slowly unfolding catastrophe. This issue is an excellent example of some great work done by parliamentarians. With regard to my noble friend’s question, the answer is yes: the legal costs are covered as part of the payments.

[Lord Grade of Yarmouth (Con)]

My Lords, I wonder if the Government would remove Fujitsu from their preferred suppliers tendering for government contracts, pending that inquiry’s result.

[Lord Callanan (Con)]

I do not know whether Fujitsu is still on the tender lists or is the subject of any government contracts, but I will certainly find out and write to the noble Lord on that.

[Lord Cormack (Con)]

My Lords, I have several times urged my noble friend to put a terminal date on this. He talked about the “slowly unfolding” tragedy, and he is right, but it is a slowly ending tragedy as well. Of course we must have the inquiry, but can we please set a date—I have suggested before the end of June—for when this will be resolved and people will get their due deserts?

[Lord Callanan (Con)]

I agree with my noble friend, because I would obviously like to see this all end as much as possible. When I said “slowly unfolding”, I meant that the revelations of the whole scandal came out over many years as a result of a number of different stages of parliamentary action, legal cases, et cetera. I assure him that we are keen to bring this to a resolution as quickly as possible in terms of compensation, but there are a number of different aspects to it, as I explained in my reply to the noble Lord, Lord Fox. Many postmasters are still in the process of having their convictions overturned. That process is ongoing, as is the progress of the historical shortfall scheme, which we have deliberately designed to try to avoid costly, long-drawn-out legal proceedings.

National Living Wage

Lord Callanan Excerpts

Monday 17th January 2022 Lords Chamber

[Lord Sentamu (CB)]

In asking this Question, I declare my interests. I chair the Living Wage Commission and led a debate in your Lordships’ House on 5 May 2020, when 52 Members of the House asked the Government to take action on income inequality and sustainability.

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

My Lords, on 1 April 2022, the Government will increase the national living wage by 6.6% to £9.50. Following this increase, the annual earnings of a full-time worker on the national living wage will have increased by around £5,000 since 2015. The Government are committed to further increasing the national living wage in line with their manifesto commitment to equal two-thirds of median earnings by 2024, and we are on track to achieve this ambitious target.

[Lord Sentamu (CB)]

My Lords, I thank the Minister for that Answer, but given that it was in September 2016 that the Living Wage Commission published its findings, that the Government took six years to raise the minimum wage to the recommended living wage, and that national insurance contributions will increase in April, are the Government, in their levelling-up agenda, going to match their rhetoric on income inequality?

[Lord Callanan (Con)]

I pay tribute to the work that the noble and right reverend Lord does on these matters, and it is important that he raises them; we are grateful for that. As the noble and right reverend Lord is aware, we take advice from the Low Pay Commission—comprising business representatives, worker representatives and independent members—on the appropriate increases, taking into account all the various issues: what is affordable for business, rates of inflation, et cetera. I am proud of the record that we have in increasing the national minimum wage.

[Baroness Lister of Burtersett (Lab)]

My Lords, families with children have been suffering some of the worst in-work poverty and hardship. As wages cannot and should not take account of family size, what are the Government doing to make good the cuts in financial support for children, including child benefit, since 2010?

[Lord Callanan (Con)]

Of course, we are here discussing the national minimum wage. As the noble Baroness is aware, benefits, universal credit, et cetera, are a separate issue—it is important, but it is a separate issue. On increases in the national minimum wage, since it was introduced in 2016 it has given the lowest earners the fastest pay rise in almost 20 years, something this Government are very proud of.

[Baroness Kramer (LD)]

My Lords, some 9,000 employers across the United Kingdom pay the real living wage as calculated by the Living Wage Foundation. From April it will be 40p more an hour than the Government’s national living wage. What steps are the Government taking to persuade more employers to pay the real living wage, which virtually everyone accepts is much closer to reality in assessing the cost of living, especially at a time of inflation?

--- Later in debate ---

[Lord Callanan (Con)]

Of course, I completely agree with the noble Baroness that, where it is possible to do so, employers should pay the higher rates for the living wage that she referenced. We want to see as many employers as possible doing that, but when the Low Pay Commission makes recommendations—and it has representations from all sides of the industrial sectors—it takes into account business affordability. I am sure the noble Baroness would not want to see the rise in unemployment that might result from unrealistic increases in the minimum wage.

[Lord Hannan of Kingsclere (Con)]

My Lords, of course, any increase in wages tends to get passed on to customers. Is my noble friend the Minister aware of studies that show that these increases are disproportionately felt by people on low incomes? If you have a higher wage cost which pushes up prices in a fast food joint, it is not generally investment bankers who are impacted. At a time of rising living costs, what assessment have the Government made of the inflationary impact of repeatedly raising the living wage faster than wages generally?

[Lord Callanan (Con)]

My noble friend makes an important point. I am disappointed by some of the responses from the Opposition Benches. As always with these matters, it is a question of getting the balance right. Of course, we all want to see the lowest paid in society paid more—nobody would want to see that more than I would and I am sure my noble friend feels the same way—but we have to bear in mind the importance of considering whether it is affordable for business. That is why we have the independent Low Pay Commission that makes recommendations on the maximum level of increase that can be afforded without undue inflationary impacts and is affordable for business.

[Lord Lennie (Lab)]

I remind noble Lords—before the Minister takes too much credit for it—that it was the Labour Government who introduced the national minimum wage and that it was introduced against universal hostility from the Tory Opposition. Given the doubling of energy prices expected in April, does the Minister believe that the rise in the minimum wage to £9.50 an hour will be sufficient for ordinary household budgets to cope?

[Lord Callanan (Con)]

Indeed, I am happy to pay credit to the Labour Government of the time for introducing the national minimum wage and I am happy to take credit for the biggest increases in the national minimum wage that we, as a Conservative Government and a Conservative-led Government, have implemented since we came to power. As I said, these are difficult issues. We all want to see it increasing; that is why we have the independent Low Pay Commission to provide independent advice to the Government on what is affordable for business. We are working towards the manifesto commitment to increase the level to two-thirds of national median pay.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I am absolutely delighted to see this rise in the national living wage, but is the Minister aware that if one works a 35-hour week at £9.50 an hour, that makes a weekly total of £332.50? If it is the national living wage, has anybody in the Government actually tried living on it for a week?

[Lord Callanan (Con)]

I know the noble Baroness feels passionately about this and, as I said in response to earlier questions, I think the whole House is united in wanting to see increases in the minimum wage and the living wage as much as possible. However, it benefits nobody if it drives people into unemployment and further poverty. We want to see increases in the national minimum wage, but we want to see them on a sustainable basis.

[Lord Forsyth of Drumlean (Con)]

My Lords, listening to these questions, is my noble friend satisfied that the Bank of England is correct in assuming that inflation is going to be a transient phenomenon? Was it not a mistake that it continued with its programme of QE even when the economy was growing rapidly? If people push for wage increases, that is how inflation takes off, and it will be very difficult for the Bank of England to control it.

[Lord Callanan (Con)]

My noble friend also makes an important point. Inflation has a pernicious impact on the economy and, of course, it impacts most on the lowest paid. I am sure the Bank of England wants to take all these factors into account. I will not stand here and give it advice on this matter, but it is important that we take account of inflation in calculating the minimum wage, and that is exactly what the Low Pay Commission does.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, to protect fixed incomes, people’s savings and to prevent poverty, what are the Government doing to put downward pressure on inflation? Perhaps the Minister could provide us with some of the detail.

[Lord Callanan (Con)]

The original Question was about the minimum wage. The points the noble Baroness raises are important but they are matters for the Treasury—I would be very happy to speak to Treasury officials and get her a proper answer on that.

[Lord Grocott (Lab)]

I am grateful to the Minister for reminding us that it was a Labour Government who introduced the national minimum wage. He did not remind us that it was done in the teeth of Tory opposition, and neither did he remind us that the principal argument used by the Tories at the time was that any introduction of a national minimum wage would inevitably result in a huge increase in unemployment— 2 million, I think, was the figure most frequently quoted. Will he now acknowledge at least that whoever was doing the Tory forecasting at the time had not the faintest idea what they were talking about?

[Lord Callanan (Con)]

Obviously I was not in government at the time but, looking back at the debate, a lot of independent economists were concerned about the possible impact. As I indicated in previous answers, nobody wants to see rises in unemployment. At the end of the day, low pay is better than no pay at all. But I am delighted to say that with the increases in the national minimum wage—and our record on this is second to none—we have seen the national living wage outpace the rate of inflation by over 20 percentage points since we have been in power. That is a good thing: it has not resulted in a rise in unemployment, and I think that is something we should all welcome.

[Lord Watts (Lab)]

My Lords, the Minister takes credit for the increases the Government have introduced. Given the cost of energy and foodstuffs to low-income families, does he think the increase that he is taking credit for will compensate those families for the increases they now face?

[Lord Callanan (Con)]

We take credit because the Government accepted the recommendations of the Low Pay Commission, which, as I have indicated, was set up to consider all these matters. But I agree with the noble Lord: it is going to be difficult—the cost of living is going to increase substantially, probably, over the next few months, with food and energy prices. It comes back to the points made by some of my noble friends earlier: it is important that we get a grip on inflation because that is something that affects the lowest paid the most.

Energy Prices

Lord Callanan Excerpts

Wednesday 12th January 2022 Lords Chamber

[Lord Dodds of Duncairn]

To ask Her Majesty’s Government what assessment they have made of the impact of rising energy prices on the most vulnerable people in society, and the most effective means of helping them.

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

My Lords, the largest element of gas and electricity bills, which is wholesale costs, has increased significantly. The Government are committed to protecting customers, especially the most vulnerable. Households will continue to be protected through the winter by the price cap and through the warm home discount, winter fuel payment and cold weather payment schemes. A new £500 million household support fund has also been made available to councils to help the most in need over the winter.

[Lord Dodds of Duncairn (DUP)]

My Lords, I thank the Minister for his Answer. We are looking at extraordinarily steep increases in energy prices over a relatively short period, coming on top of already big increases. This is causing real fear and anxiety among vulnerable people, especially the elderly, about the financial severity and hardship to come. So can the Minister go further today and announce new measures that will deal with the immediate crisis that people are facing, especially in the context of other cost-of-living pressures which are coming the way of hard-pressed families and individuals?

[Lord Callanan (Con)]

I totally understand the point that the noble Lord makes. Unfortunately, I am not in a position today to announce further measures, but I can tell him that we are actively engaging with stakeholders and energy companies. The Prime Minister and the Chancellor are in urgent discussions and we hope to announce some action shortly.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, was it not entirely predictable that there would be a surge in gas prices, and in such circumstances what further work will BEIS and the Government undertake? Why did they not have further plans at the ready to address the situation to help struggling households and to mitigate the impact of deepening fuel poverty as a result of those rising costs, as already referenced by the noble Lord, Lord Dodds?

[Lord Callanan (Con)]

I am not clear what further plans the noble Baroness is referring to, but, as I mentioned, we have a whole series of mitigations in place to protect precisely the people whom she mentioned. For example, the warm home discount scheme has helped millions of people at a cost of several billion pounds, and we will continue with policies such as that to help the most vulnerable.

[Lord Howell of Guildford (Con)]

My Lords, is it appreciated in this drama of exceptionally high prices that the whole process of moving to a decarbonised world and energy transition requires the most careful management of balance between supply and demand? If supply is discouraged or undermined while demand is still rising, we will get again and again the huge, volatile and extremely damaging rise in fuel and power prices that we have now. Is that not the main lesson to be learned from the mess that we are in now?

[Lord Callanan (Con)]

I know that my noble friend, as a former Energy Minister himself, is very experienced in these matters. Of course, the underlying point that he makes is right—but it is a transition that will take place over many years and, in the meantime, there will of course be considerable demand for fossil fuels.

[Lord Newby (LD)]

The Minister has just talked about mitigations that the Government have in place, but those mitigations were inadequate before the price rise that we have seen, and clearly will be completely inadequate in dealing with the huge increases with which vulnerable families will be faced in the next few months. On measures that the Government might take that will require expenditure, have they considered raising the money required by imposing a windfall tax on those oil and gas companies whose profits have soared as prices have soared?

[Lord Callanan (Con)]

There are a number of different policies under consideration but, of course, the situation is never as simple as the noble Lord would have us believe. Many of the North Sea producers over which we would have taxation control have long-term contracts in place at fixed prices to supply wholesalers in the United Kingdom. So it is not clear that there are excessive profits being made—but I am sure that this is something that the Chancellor will want to look at in his review, to see what else we can do in this area.

[Baroness Lister of Burtersett (Lab)]

My Lords, if the Government want to focus any help with the cost of living crisis on those in greatest need, the simplest and fastest way in which to do so is to boost social security. Why are they not proposing such a boost?

[Lord Callanan (Con)]

Let me tell the noble Baroness what we are doing. The winter fuel payment provides all pensioners across Britain with between £100 and £300 to put toward their fuel bills, which costs £2 billion a year. The cold weather payment provides vulnerable households on qualifying benefits with payments of £25 during periods of cold weather, and the Government have spent £100 million on that. We will continue to spend considerable sums of money to help those most in need.

[Lord Hannan of Kingsclere (Con)]

My Lords, one thing that we have learned over the past 22 months is that government targets sometimes have to be adjusted in the light of circumstance. Would there be a situation in which the Government might reconsider their net-zero timetable; for example, if costs on consumers or taxpayers were disproportionate and if there were a realistic prospect that technological improvement would mean a significant fall in those costs with a deferral?

[Lord Callanan (Con)]

Of course, we want to keep all these things under review but, as my noble friend is well aware, net zero is a legally binding commitment, legislated for by Parliament—and, of course, it is the duty of government to carry out the wishes of Parliament. If a future Parliament or Government wish to reconsider that, I am sure that the Government at the time would want to take full cognisance of that.

[Lord Grantchester (Lab)]

My Lords, we all wish to protect vulnerable households, and there are many support schemes targeting approximately 3 million households. The expected increase in the price cap in April is around £600 per household to a total of £1,865 a year. While the Government continue to dither, Labour has announced costed, detailed plans to reduce the size of the exposure and extend help to more households to limit increases to just £5 a year for the most vulnerable. What target do the Government have in mind to reduce the size of the exposure in the forthcoming price cap rise, to be announced on 7 February?

[Lord Callanan (Con)]

Before I answer the noble Lord’s question, I understand that this is his last outing as a member of the Opposition Front Bench. From my point of view, it has been a pleasure sitting opposite him and dealing with his questions and points. I am sure that he will have a lot to contribute to the House from the Back Benches in future, and I certainly wish him well.

Of course, the price cap is a matter for the independent regulator—Ofgem—and we will find out in a couple of weeks’ time what it will be. The Government have already announced £500 million for local authorities to support vulnerable householders across the country with essentials, including utility bills. As I said in response to earlier questions, we are looking at what else we can do.

[Lord Lilley (Con)]

When my noble friend considers the impact of higher energy prices, will he bear in mind the fact that, wherever the cost of meeting net-zero targets has become an electoral issue, with the gilets jaunes in France, the elections in Australia and Canada and the municipal elections in the Netherlands, the party opposing higher taxes on energy has won?

--- Later in debate ---

[Lord Callanan (Con)]

We have taken careful note of the points that my noble friend has made. I know that we have discussed this in previous debates but, as I said to my noble friend Lord Hannan, net zero is a legally binding commitment that Parliament has placed upon the Government and, as long as that remains the case, that will be the policy of the Government.

[Baroness Janke (LD)]

My Lords, what is the Government’s response to the predictions of National Energy Action that children will be forced to do homework in cafés, libraries, the homes of friends and relatives and even A&E departments due to rising energy bills at home? What support will the Government provide to prevent further educational disadvantage to children and young people from poorer homes whose education has already suffered enormously as a result of the pandemic?

[Lord Callanan (Con)]

I outlined in earlier answers the support that we are providing for vulnerable families for their energy bills to do precisely that. As I also said, we are currently engaging with stakeholders and looking to see what else we can do in this area.

[Baroness Altmann (Con)]

My Lords, the winter fuel payment is currently less than it was in 2009, the cold weather payments are the same as they were in 2008, and the warm homes discount—which I agree is an excellent measure—has stayed the same since 2011. Given that the cost of fuel is rising so substantially and also that most of these benefits are available only to those who are claiming pension credit, will the Government now look at urgent measures to increase the take-up of pension credit, which has been stuck at 40% of people not claiming it since 2010? It would be a direct way of getting help to people immediately.

[Lord Callanan (Con)]

My noble friend is asking about social security policy, which, I am sorry to say, is not within my speciality, but I will certainly write to her with details on that. On the warm homes discount, she will of course be aware that we consulted last year on increasing the discount and extending the number of eligible households that would qualify for it. We will be responding to that consultation soon.

Net-zero Test for New Policies

Lord Callanan Excerpts

Tuesday 11th January 2022 Lords Chamber

[Baroness Hayman]

To ask Her Majesty’s Government what assessment they have made of the letter from the Confederation of British Industry, Trades Union Congress and others, to the Prime Minister on 3 December 2021; and in particular the recommendation to establish “a new overarching Net Zero Test for new policies”.

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

My Lords, the Government are ensuring that decision-making across government is aligned to deliver net zero. This includes establishing two Cabinet committees to co-ordinate action across government and strengthening official-level governance. The Net Zero Strategy includes a commitment to:

“Ensure that decisions taken on government spending are informed by their impact on meeting net zero.”


The Government have also committed to publishing

“an annual progress update against a set of key indicators for achieving our climate goals.”

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register. I am grateful to the Minister for that Answer, but it is very similar to the Answer he gave me some months ago when I asked about the recommendation that the Climate Change Committee made to Parliament that there should be a net-zero test on all government policies. Last month that recommendation was endorsed in a letter to the Prime Minister by the CBI, the TUC, UK corporate leaders’ groups and others. They see the benefits of a comprehensive approach not only in achieving our net-zero targets but in providing a coherent and transparent framework from government for the efforts of business and industry to fuel the green growth we so badly need. Will the Government now accept the advice they have been given so broadly?

[Lord Callanan (Con)]

I thank the noble Baroness, but the reason my Answer was very similar to a few months ago was that the Question was very similar to the one she asked me a few months ago. We have taken new approaches to embed net zero in spending decisions, including requiring departments to include the greenhouse gas emissions of their spending review bids and their impact on meeting carbon budgets and net zero. There is a huge amount of co-ordination taking place across government and between this Government and the devolved Administrations in helping us to meet our goals.

[Lord Oates (LD)]

Does the Minister agree with the same letter where it says that we must

“ensure the competitiveness of UK businesses is not disadvantaged by imports that do not have the same carbon costs”?

If so, why is it that the only thing the Treasury’s Net Zero Review has to say in the way of action on carbon leakage is that

“a case for conducting a formal call for evidence may emerge.”

Is that not a woefully complacent approach which puts at risk British industry and British jobs?

[Lord Callanan (Con)]

I agree with the noble Lord that the competitiveness of UK industry is extremely important. The question he is asking is effectively about the carbon border adjustment mechanism which the EU and others are considering. I am sure that the noble Lord would be the first to accept that this is a complicated and difficult policy area. It cuts across various WTO and international trade commitments. I can see in principle the case for what he is saying, but it is a complicated area.

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

Does the Minister agree that new nuclear has an important part to play in achieving our net-zero targets? Will he indicate what the UK Government are doing in relation to that in England, and will he arrange to meet with Scottish Ministers to try to persuade them of the importance of new nuclear?

[Lord Callanan (Con)]

I agree completely with the noble Lord for a change. He is quite right to make the case for new nuclear. Indeed, the other place passed the nuclear Bill just yesterday, so it will be coming to this House shortly; I look forward to debating it alongside the noble Lord. I already meet with Scottish Ministers, although I fear that my efforts to persuade them of anything are very much in vain.

[Lord Browne of Ladyton (Lab)]

My Lords, I take the Minister back to his own reference to the key commitment that the Government made under the heading of “Embedding Net Zero in Government” in the Net Zero Strategy; the commitment that he referred to was to publish an update of progress against a “set of … indicators” for achieving our climate change goals on an annual basis. What progress is being made in taking forward this commitment, and what scrutiny will there be of the agreed indicators?

[Lord Callanan (Con)]

We are indeed committed to publishing this, exactly as I said, and we are making a considerable commitment towards meeting our targets. We have the most ambitious programme of emissions reductions in the whole of the G7. Let me give an example of how difficult these areas are. It is easy to say that, yes, we must embed net zero in all our policies, but the other place is currently having a debate brought forward by the noble Lord’s party on removing VAT from domestic fuel. Everybody can see why that might be important at the moment but, arguably, such a test would fail the commitment on net zero, since most fuel is still produced by carbon-intensive methods. These are difficult policy areas; we have to balance the overarching aim of net zero with other commitments on fuel poverty, et cetera.

[Baroness Jones of Moulsecoomb (GP)]

Anyone watching the Government can see that there is no coherence and that they do not understand net zero. That is why it is so important to take up this idea. Any Government who understood net zero would not have made a deal with the Australian Government for lamb and similar things. That is not a net-zero deal. At the same time, they are condemning British farming to sometimes going out of business. Does the Minister agree that the Government have to step up a bit and be a little more ambitious on net zero?

[Lord Callanan (Con)]

I understand the point that the noble Baroness is making—I know that she is very passionate on this subject, and we have debated it many times—but we have the most ambitious net-zero goals of all of the G7. The noble Baroness puts her head in her hands, but that is true. Of course, you could always argue that we should go further or faster, but that would be expensive and would affect our competitiveness. At the end of the day, the UK is responsible for 1% of worldwide emissions. We need to make sure that we go forward in a co-ordinated manner with other countries across the world and approach this problem together.

[Lord Geddes (Con)]

My Lords, before Christmas, I fed my noble friend the Minister what he took as a helpful line. I will try to do it again: where are we with tidal power?

[Lord Callanan (Con)]

The answer I gave my noble friend then was that tidal power is included in the latest contracts for difference round; I think the figure is £20 million that we propose to expend on it. My noble friend makes a good point that there are some very feasible tidal power projects, but we need to be realistic—tidal power will not contribute more than a small percentage of our power needs.

[Baroness Blackstone (Ind Lab)]

My Lords, does the Minister agree that the current levels of spending on climate-positive measures are far below what the Climate Change Committee has recommended to achieve net zero? If so, what plans do the Government have to increase expenditure so that we have a greater chance of achieving their net-zero target?

[Lord Callanan (Con)]

The noble Baroness makes an important point but it is not just government spending that contributes to net zero. Regulatory policies also have an impact. We are spending considerable sums; certainly, within my department we could always do with spending more, but the difficult job that the Treasury and Chancellor have is balancing tax income with net expenditure. Many government departments would, I am sure, prefer to be spending more money at the moment.

[Baroness Sheehan (LD)]

My Lords, just before Christmas, the Government launched a consultation with oil and gas companies on the design of the UK policy for the sector. Can the Minister say, first, whether the consultation will be carried out in accordance with the consensus between scientists and the International Energy Agency that new oil and gas production is incompatible with net zero by 2050? Secondly, how are the Government proposing to give voice to other stakeholders?

[Lord Callanan (Con)]

The noble Baroness and I have also debated this topic at length before. The point she needs to recognise is that, during the transition, there is still a requirement for oil and gas products in the United Kingdom. Liberal Democrats might not like that but it is a fact—unless you are going to stop people driving their cars and turn their gas boilers off tomorrow, and I do not see that being produced on a focus leaflet any time soon. We need to transition to net zero. During a transition period, therefore, the choice is: do we use oil and gas products we generate, creating jobs and paying taxes from UK assets, or do we get them from Russia or Saudi Arabia? I know what I would prefer.

[Lord Grantchester (Lab)]

My Lords, of the gaps identified by this letter still needing to be filled in the urgency of the climate challenge in the Glasgow climate pact, perhaps the one identified on adaptation and resilience has received least attention. Little progress is being made. What increases in adaptation policy ambition have the Government determined are needed from the reports of the adaptation sub-committee of the Climate Change Committee?

[Lord Callanan (Con)]

I have not seen the particular report that the noble Lord refers to but I shall certainly have a look at it, take it back to the department and write to him on that subject.

[Lord Patel (CB)]

My Lords, in respect of developing strategies for nature-based solutions, what advice are the Government developing to help farmers meet their responsibilities?

[Lord Callanan (Con)]

The noble Lord makes a good point. Emissions from agriculture and farm animals, et cetera, are a considerable component. These matters are of course addressed in the Environment Act, and there is no question that we are taking a whole-economy approach. Every sector needs to do its bit; food and farming production certainly need also to do their bit towards net zero.

Advanced Research and Invention Agency Bill

Lord Callanan Excerpts

3rd reading
Monday 10th January 2022 Lords Chamber

Moved by

[Lord Callanan]

1: Schedule 1, page 7, line 40, leave out from beginning to “not” and insert “Sub-paragraph (1) does”
Member’s explanatory statement
This amendment removes a reference to a paragraph that was removed at Report.

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

My Lords, Amendment 1 is minor and technical and is consequential to the amendment made on Report in the name of my noble friend Lady Noakes.

My noble friend’s amendment removed the power for the Secretary of State to determine a pension or gratuity for non-executive members. This government amendment is needed to remove a reference to that power, which no longer exists, in paragraph 7(4) of Schedule 1. This paragraph disapplies the power for the Secretary of State to determine a pension or gratuity for the Government Chief Scientific Adviser, who will sit as a non-executive member on ARIA’s board ex officio. The power is of course not relevant in this case due to the Chief Scientific Adviser’s existing employment and pension entitlement as a civil servant. As the original power no longer exists, I am sure that noble Lords will agree that this reference needs to be removed to tidy up the Bill before it returns to the Commons for consideration of the amendments made in this House.

[Viscount Stansgate (Lab)]

My Lords, is it in order to congratulate the noble Baroness, Lady Noakes, on her success in moving her amendment in Committee? I watched as it went through and I thought how pleasing it must be for anyone to get an amendment accepted by the Government.

--- Later in debate ---

Moved by

[Lord Callanan]

That the Bill do now pass.

[Lord Callanan (Con)]

My Lords, it is my great pleasure to thank all those who have supported the progress of this Bill. I first thank my Whip, my noble friend Lady Bloomfield, who is currently demonstrating just how good she is at multi-tasking because she is in Grand Committee supervising another piece of legislation going through. It is always a joy to work alongside her with her support, capability and good humour.

As we have debated this Bill, I am of course grateful to have witnessed the shared ambition across the House for our nation to cement its role as a science superpower and for recognition of the important role that additional funding for high-risk research can play within that, through the ARIA model. While this is a relatively short Bill, the debate has none the less been thorough, as is right and proper in this House—from the role of ARIA in the R&D landscape to the definition of gratuities. It has demonstrated once again the important function of this House.

To that end, I join the noble Viscount, Lord Stansgate, in thanking my noble friend Lady Noakes for her efforts in sharpening the governance arrangements set out in the Bill, and my other noble friends Lord Willetts, Lord Lansley and Lady Neville-Rolfe, among others, for contributing their considerable experience.

I thank, on the part of the Opposition, the noble Baroness, Lady Chapman, for her constructive challenge on many parts of the Bill. I think we worked well together, and I look forward to continuing to work with her on future Bills. I also pay tribute to the noble Lords, Lord Ravensdale, Lord Fox and Lord Clement-Jones, the noble Viscount, Lord Stansgate, and members of the Science and Technology Committee for their very thoughtful contributions. I particularly welcome the thoughtful debate we have had on, for instance, intellectual property and the importance of retaining its benefits. I thank all noble Lords who spoke on these important issues. I am sure that the noble Lord, Lord Browne of Ladyton, especially, will closely follow the words of the Science Minister as the Bill returns to the other place.

It would be remiss of me not to also thank, once again, the excellent team of officials who have been behind me on this Bill. As always, I am just the front guy, as it were. Their support has been invaluable and a tribute once again to the finest traditions of the Civil Service. I particularly single out my private secretary, Hannah Cowie, for her support; the Bill manager, Andrew Crawford, and his deputy, Salisa Kaur; and Katie Reardon, Alex Prior, Robert Magowan and Charles Norris for their work over the last 18 months—a considerable time—to take this Bill forward and, hopefully in the near future, get it on the statute book. I also thank the broader ARIA team and colleagues across government who are undertaking the programme of work to make it a brilliant and realistic success.

Finally, let me recognise the exemplary work of the parliamentary counsel in both drafting this Bill and supporting its progress at so many points during its passage so far, and, of course, the House authorities, parliamentary staff, clerks and doorkeepers. As I mentioned, this is a relatively short Bill, but I really do believe its potential impact is profound. I know I am not alone in this House in looking forward in anticipation to all that will come out of ARIA and the benefits it will create for the research community, businesses and the everyday lives of people across this country.

[Lord Fox (LD)]

My Lords, first I should apologise for not being here to participate in the Report stage of this Bill. My disappointment was alleviated by the knowledge that my colleague and noble friend Lord Clement-Jones would more than compensate for my absence. I thank him for that and for his assistance throughout consideration of the Bill, and my noble friends Lady Randerson and Lord Oates for their work. I also thank the Minister, the noble Baroness, Lady Bloomfield, and the departmental team that has seen this Bill through; and the noble Baroness, Lady Chapman, the Labour Party and their team for working with us and the Cross-Benchers in a collegiate way. This was an example of good scrutiny coming to the fore. Finally, a big thank you to Sarah Pughe in our office for her support.

We still do not really know what ARIA is. Until it is decided who is leading ARIA, we will not know what its purpose is or how it will interact with the rest of the research environment. During the debate the Minister undertook to keep us informed—while enshrining secrecy in the Bill, of course, at the same time. So, I hope he will be able to keep us well informed as this effort unfolds —indeed, perhaps in advance of things happening. Without wishing to rain on the parade, we should keep a sense of proportion about what this is. This primary legislation has put in place a research effort worth about £200 million to 300 million per year. Meanwhile, the UK’s participation in Horizon Europe has more or less evaporated. During the debate, there were many discussions about the effectiveness of UKRI. In accepting this Bill and moving forward with ARIA, we would be grateful if the Minister also addressed these two elephants in the room: the continued participation of the United Kingdom in Horizon Europe and making sure that UKRI is as effective as it really can be, in order to make a big difference to the research effort in this country.

Post Office: Horizon Compensation

Lord Callanan Excerpts

Monday 10th January 2022 Lords Chamber

[Baroness Bakewell]

To ask Her Majesty’s Government what steps they are taking, if any, to expedite the payment of compensation due to postmasters and mistresses as a result of the Post Office Horizon IT scandal.

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

My Lords, the Government are working closely with the Post Office to ensure that the approach and processes adopted are being designed to ensure that postmasters receive fair settlements as swiftly as possible. Of the 72 postmasters who have so far had their convictions quashed, 66 have applied for interim payments, of which 62 have received offers; 57 of those have been paid. The Government are also ensuring that the historical shortfall scheme is delivering in line with its objectives.

[Baroness Bakewell (Lab)]

My Lords, the Post Office scandal involved some 732 prosecutions over a 20-year period. Many convictions have since been overturned. Can the Minister say how many claims have now been settled, how many remain outstanding and what the total cost will be?

--- Later in debate ---

[Lord Callanan (Con)]

I gave the noble Baroness the figures on those who have had their convictions overturned so far. Interim payments of £100,000 each have already been made to many of them. We are attempting to negotiate with the rest of them; payments will be made as quickly as possible. It will then go to the dispute resolution process, which we think will be quicker than any ongoing further court action, to negotiate appropriate settlements with those sub-postmasters who were wrongly convicted.

[Lord Arbuthnot of Edrom (Con)]

My Lords, what matters will be covered by the compensation announced last month for those sub-postmasters who have had their convictions overturned? It will include financial loss, obviously, but will it also cover loss of reputation, pain and suffering, and consequential loss? How will the Government ensure consistency over the many different types of cases that there will be?

[Lord Callanan (Con)]

I start by paying tribute to the work of my noble friend in both this House and the other place in drawing attention to this scandal when many others were not discussing it; he was right to do so, along with many other Members on all sides. I can confirm that, when negotiating compensation for postmasters with overturned convictions, the Post Office will consider claims for financial and consequential losses as well as non-financial losses, such as reputational damage and mental distress. In terms of consistency, each case will necessarily be decided on the particular circumstances of the individual postmaster but, to ensure broad consistency, the Post Office and its legal advisers will seek to agree a consistent approach in assessing the different heads of loss with legal representatives.

[Lord Berkeley (Lab)]

My Lords, my noble friend Lady Bakewell said in her follow-up question that there had been 732 convictions. From the Minister’s Answer, I get the impression that only 10% of those convicted have actually had their cases heard. Is that correct? When does he see that the whole process will be completed?

[Lord Callanan (Con)]

The noble Lord makes a good point but this is in the hands of the court. So far, 72 people have had their convictions overturned. As soon as the others have had their convictions overturned, we will proceed with offering compensation to them as well.

[Baroness Hoey (Non-Afl)]

My Lords, the postmasters and postmistresses were treated shockingly by the Post Office. Can the Minister tell us whether anyone in the Post Office seniority has been reprimanded or sacked or had money taken off them? Has anything happened to anyone? Has anyone in the Post Office taken responsibility for this appalling treatment of men and women?

[Lord Callanan (Con)]

“Shockingly” is almost an understatement of the full extent of the terrible injustices that went on for sub-postmasters over many years and many different Governments, Ministers et cetera. Most of the senior executives of the Post Office who were responsible are not there anymore, but the appropriate mechanism to find out exactly who was to blame and who was responsible is the independent public inquiry with full statutory powers, which is currently considering these matters.

[Lord Fox (LD)]

My Lords, this is not the first time that your Lordships have had to discuss this, and already this year we have this Question again. I am sure that the Minister would agree that, for these people to start to live the rest of their lives, they need to draw a line and be able to move on. This process is dragging on, so does the Minister agree that by setting a target—a political target that the Minister can set—with his department, with the lawyers and with the Post Office, we could get this done? Will he undertake to do that, and make sure that this is done in the first half of this year, so that the line can be drawn?

[Lord Callanan (Con)]

I can speak for my colleague Paul Scully, the postal affairs Minister, that we want to see this settled as quickly as possible in order, as the noble Lord said, to draw a line under it for the benefit of those people who were so badly affected. Of course, we are in the hands of the courts initially for the convictions to be overturned, but as soon as they are—if that is the judgment that the courts come to—we want to use the ADR process to try to get compensation offers to these people as quickly as possible.

[Lord Polak (Con)]

My Lords, I have raised the plight of my friend Rita Threlfall on a number of occasions. She is one of the 555 sub-postmasters and mistresses who initiated the group litigation. They won, and were awarded £57 million. However, £46 million went on costs and funding the action—action that helped lead to today’s situation. They were thanked by the Government, but their compensation was woefully inadequate. Will the Minister ensure that the 554 plus Rita are properly compensated? At the moment, their feeling is not of compensation but of discrimination.

[Lord Callanan (Con)]

I totally understand the point that my noble friend is making; we have spoken about it on a number of times in the past. The problem, of course, is that this compensation settlement that was reached in a civil action was in full and final settlement of the claims. However, having said that, my colleague Paul Scully has met with them many times and has said that we are in active discussions with them to see what more could be done. Indeed, officials are meeting this week with lawyers representing them to discuss it.

[The Lord Bishop of Leeds]

My Lords, will the Minister say whether, following on from that question, those who are currently negotiating compensation with the Post Office for some form of redress are having their legal costs paid, or are they expected to pay them and then try to claim them back later?

--- Later in debate ---

[Lord Callanan (Con)]

I am not sure of the precise details of that; I assume the right reverend Prelate means those from the historical shortfall scheme or those who have had their convictions overturned. My understanding is that all of their costs will be met, but if that is not right, I will write to him.

[Lord McNicol of West Kilbride (Lab)]

My Lords, hundreds of sub-postmasters and mistresses were sacked and prosecuted over the space of 16 years and wrongfully labelled as thieves and fraudsters by the Post Office and by our judicial system. Just to take the noble Baroness’s Question a bit further, what action if any has been, or will be, taken against Her Majesty’s Government’s representatives who sat on the board of the Post Office throughout this terrible situation?

[Lord Callanan (Con)]

I totally agree with the noble Lord on the first part of his question. The correct answer to that is to wait for the outcome of the inquiry. As we have discussed before, this went on for decades, and exactly who was responsible at the time, and who knew what and when, is a hugely complicated issue. Of course, many of the people responsible at those times are no longer in government, in the department or in the Post Office. It will be important to find out who exactly who was responsible over a long period of time, and then we can pin the appropriate blame.

[Lord Anderson of Swansea (Lab)]

My Lords, to accelerate things and bring an end to the scandal, would the Government consider a scheme similar to that which applies to personal injury cases, to agree guidelines or bands within which a settlement could be reached so that legal advisers can properly give advice to those who have suffered as a result of the Post Office injustice?

[Lord Callanan (Con)]

As I outlined in my earlier answer to my noble friend Lord Arbuthnot, we will of course take all the circumstances into account, but necessarily it is important to look at the individual circumstances of each of the postmasters who were wrongly convicted and had their conviction overturned. We want to ensure that everybody is appropriately and fairly compensated within the appropriate bands and will do so.

[Baroness Redfern (Con)]

My Lords, we hear many tragic cases of people who have lost their liberties and lives and faced years of financial hardship. Can the Minister clarify what role the National Federation of SubPostmasters played in the Horizon scandal, in terms of representing affected sub-postmasters, and the damage that Horizon has caused to the relationship between the Post Office Ltd and postmasters? Finally, will this impact on the post office network, going forward?

[Lord Callanan (Con)]

The answer to my noble friend’s last question is no. The funding for the post office network is separate to this. It provides a vital service, and we must ensure that it continues. I do not know the answer to her question on the precise role played by the National Federation of SubPostmasters, but from discussions that I have had with senior management of the Post Office I know that they are very keen to ensure that relations with people who provide the day-to-day services for their organisation is improved and they are much better represented in the future than they were in the past.

Energy Costs

Lord Callanan Excerpts

Thursday 6th January 2022 Lords Chamber

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

My Lords, I first pay tribute to and thank my noble friend Lady McIntosh for securing this debate on what is, of course, an extremely important topic. I think that all of us will agree that the debate has, yet again, been interesting and informative. I am also grateful to all others who contributed.

First, I make it absolutely clear that this Government are committed to supporting vulnerable households with their energy bills, both now and in the long term, as we seek to decarbonise our energy system and transition to net zero by 2050. I say to the noble Lords, Lord Berkeley and Lord Grantchester, that the Government are currently engaging with stakeholders, including consumer groups, energy retailers and other business sectors to consider what further action may be necessary in the short term.

The recent rise in energy prices has been driven by the increase in the price of wholesale gas, the demand for which has grown, as we and other nations recover from the Covid pandemic. Consequently, higher gas prices were observed internationally in the latter half of 2021, with tremendous increases across the world. In addition, greater liquefied natural gas—LNG—demand in Asia, upstream maintenance affecting supply capacity last summer, a fire at one of the UK’s major electricity interconnectors with France, and increased demand for gas in electricity generation in the UK and on the continent, as coal is disincentivised, have all played a role in and contributed to rising prices.

However, it is important to emphasise that this has not impacted on our energy security. The Government continue to work closely with Ofgem, National Grid, National Grid Gas and other key industry organisations to monitor gas supply and demand.

A number of Peers—the noble Lord, Lord McNally, the noble Baroness, Lady Boycott, the noble Lord, Lord Hendy, and others—raised the issue of protection for households. The Government already have a wide range of support measures in place to help the most vulnerable households reduce their energy consumption, through both rebates and energy efficiency measures. These include, first, the warm homes discount, providing support with energy bills through rebates and helping households to stay warm and healthy in winter. The scheme currently provides more than 2 million low-income and vulnerable households with a £140 rebate of their winter energy bill, and BEIS has already consulted on proposals that would expand the scheme from about £350 million to £475 million per year at 2020 prices, which will help the scheme to reach 3 million households from winter 2022-23 onwards. Let me say to my noble friend Lady McIntosh that in 2011, that scheme replaced the social tariff to which she referred, and, in our view, it provides better targeted support than the tariff. The additional funding and proposed reforms would mean that 780,000 more households would receive rebates every winter, with a proposed increase in the value of rebates to £150 per household. In addition, most households would receive their rebates automatically, without having to apply.

On the many points raised on energy efficiency by the noble Lords, Lord Berkeley, Lord Oates, and others, we of course have the energy obligation scheme, which has already installed 3.3 million measures in 2.3 million homes. We are increasing the amount that energy suppliers invest in energy efficiency measures for low-income households, extending ECO until 2026 and boosting its value from £640 million to £1 billion per year. We estimate that this will help at least an extra 305,000 families with green measures such as insulation and low-carbon boilers, which will reduce their energy demand and save them an average of £300 a year on their dual fuel bills.

I remind the noble Lord, Lord Oates, that we are also investing more than £2 billion in other energy efficiency schemes through projects such as the home upgrade grant, the local authority delivery scheme, the sustainable warmth competition, which brings together HUG 1 and LAD 3, and the social housing decarbonisation fund. All those measures are helping to provide long-term solutions by improving the energy efficiency of homes.

In addition, the Department for Work and Pensions provides support for both vulnerable users and pensioners through its winter fuel payment and cold weather payment schemes. The winter fuel payment is worth between £100 and £300 and is paid automatically to those in receipt of state pension or other social security benefits, while the cold weather payment is a £25 payment for vulnerable householders on qualifying benefits when the weather is expected to be unusually cold. In addition, the Department for Work and Pensions announced last autumn a £500 million support fund to help those most in need this winter, and that includes provision for utility costs, including energy.

A number of noble Lords—the noble Lord, Lord Grantchester, and my noble friend Lady McIntosh in particular—raised the issue of the price cap, which has protected households this winter from the short-term volatility of wholesale gas prices. Ofgem has confirmed that the cap will stay at the current level this winter. The Government have committed to retaining powers to implement a price cap beyond the current long-stop date of 2023, should that be necessary. I say to the noble Lord, Lord Hendy, that the Government have made protection of consumers their priority, and the price cap has indeed protected millions of consumers. Setting it is, of course, a matter for Ofgem, and the regulator has issued a number of consultations in recent weeks on how the price cap could adapt to changes in the cost of supplying energy to households; we look forward to its decision on this matter. In the longer term, in reply to the noble Lord, Lord Grantchester, the Government are looking at how policy costs that help to fund low-carbon energy infrastructure, to provide support to vulnerable consumers and to ensure security of supply are distributed between gas and electricity.

My noble friend Lord Lilley raised the issue—I think it was also raised by the noble Lord, Lord McNally—of green levies. As set out in the Heat and Buildings Strategy, we will publish a fairness and affordability call for evidence to set out the options for energy levies and obligations in order to help to rebalance electricity and gas prices and to support green choices, with a view to taking decisions this year.

My noble friend Lady McIntosh asked me about a number of matters, particularly the removal of green levies, as did my noble friend Lord Lilley; I think the noble Baroness, Lady Fox made a similar point. I say to all of them that the Government’s energy, investment, environmental and social policies have helped to protect the most vulnerable, to lower emissions and to increase security of supply. However, we also want to make sure that our policies enable consumers to make decisions that support decarbonisation. As set out in the Heat and Buildings Strategy, as I said earlier, we will publish a fairness and affordability call for evidence to set out the options for energy levies and obligations, in order to help to rebalance electricity and gas prices to support the transition to net zero.

On scrapping VAT on energy bills, raised by my noble friends Lady McIntosh and Lord Lilley and the noble Lord, Lord Sikka, I suspect all noble Lords know that this remains a matter for the Chancellor and Her Majesty’s Treasury and is not something I am able to comment on, although it is worth bearing in mind the point made by my noble friend Lord Lilley: that the only reason why we can even consider doing this is that we have now left the EU.

On energy loss from transmission lines, raised by my noble friend Lady McIntosh, the Government and Ofgem recognise the value of minimising energy losses in reducing emissions and protecting consumers from unnecessary cost. It is an important feature of Ofgem’s regulation of energy companies.

The noble Lord, Lord Grantchester, and my noble friend Lady McIntosh raised the issue of off-grid homes. The Government are of course aware that the price of oil has remained around levels not seen since 2018, which has had an impact on the price of heating oils. Heating oil consumers are of course able to shop around for the best price for each delivery, and we believe that this provides the best long-term guarantee of competitive prices.

On the costs of renewables and decarbonisation, raised by the noble Baroness, Lady Fox, as we set out in the Net Zero Strategy, the Government are introducing a balanced range of low-carbon technologies, including new nuclear and hydrogen technologies. The noble Baroness also raised the important issue of the costs to businesses. We recognise the impact of rising energy prices on businesses of all sizes, and Ofgem and the Government are in regular contact with business groups and suppliers.

Unfortunately, I am running out of time, so I say in conclusion that the Government are committed to protecting vulnerable households in respect of their energy bills, which is why we have in place the many support schemes I have outlined to help those most in need, both through direct financial rebates and through measures to improve energy efficiency in the home. We will continue to engage with consumer groups and industry and consider what further support may be necessary. I apologise to those noble Lords whose points I did not get a chance to refer to, but I will write to them.