Electricity: Cost-competitiveness

Debate between Lord Callanan and Lord Fox

Thursday 16th May 2024 Lords Chamber

[Lord Fox (LD)]

My Lords, a battery plant is being built in Somerset and electric arc steel is being put into Wales. It would benefit the country if offshore wind were built on the west side of it as well as the east. So can the Government explain what is happening to encourage offshore wind in the Celtic Sea and its environs?

[Lord Callanan (Con)]

There is already some wind generation, but of course the waters are deeper, which is one reason why we are developing floating offshore wind, which I referred to earlier.

Strikes (Minimum Service Levels) Bill

Debate between Lord Callanan and Lord Fox

Consideration of Commons amendments
Thursday 20th July 2023 Lords Chamber

[Lord Fox (LD)]

My Lords, it is a great pleasure to follow the noble Lords, Lord Hendy and Lord Collins, and I completely associate myself with their critical process and legal analysis of this Bill. From the outset, this was a political Bill and I make no apology at the end of this process for making a political comment.

It may have escaped your Lordships’ notice, but there are three by-elections going on today across different parts of the country. In knocking on those doors, the number one or number two concern of the people in those houses in those communities is the delivery of the health service in this country. I refer to this Bill and the challenge that this Government have in dealing with the industrial disputes going on within the health service. It is quite clear that this Bill will do nothing to bring those disputes to an end and, if it is deployed, it would exacerbate them. Those people answering their doors and talking to politicians as they are being canvassed would love to have a minimum service level every day of the week. The Government need to solve this industrial issue as well as the service delivery within the health service, and this Bill when it becomes an Act will do nothing towards doing that.

[Lord Callanan (Con)]

My Lords, I thank all three noble Lords who have contributed to today’s debate. The Government always listen carefully to the views of this House.

In response to the noble Lord, Lord Hendy, I have seen the letter from the European TUC, which I read with interest. I am sure the noble Lord will accept that it is hardly an impartial referee on these matters. It is also fair to say that it had nothing new to say. We have been over all this ground many times before and have provided explanations of the type it has sought.

It is also fair to point out that, in our view, this legislation is compatible with the ILO convention, and I am sure the noble Lord will accept that there are many other ILO states that already have minimum service levels as part of their domestic legislation. We will, of course, ensure that any secondary legislation is also in compliance with all our international obligations.

I can also confirm in response to the noble Lord, Lord Collins, that the Government will launch a consultation on the draft code this summer, following consultation with ACAS. The code will be put to both Houses for approval in line with the procedure set out in Section 204 of the Trade Union and Labour Relations (Consolidation) Act, and we will consult for an appropriate period.

Strikes (Minimum Service Levels) Bill

Debate between Lord Callanan and Lord Fox

Consideration of Commons amendments
Tuesday 4th July 2023 Lords Chamber

[Lord Fox (LD)]

My Lords, it is a pleasure to support the amendment, as set out so thoroughly and excellently by the noble Lord, Lord Collins. I have very little to say; I will make just three points.

First, noble Lords who have been observing will remember that on a number of occasions I have proposed amendments that try to give Parliament more say on what is going on. Having got to where we are, I am happy to subsume that objective within the amendment that the noble Lord, Lord Collins, has set forward, but it remains an important and missing element in the Bill. We should not forget that.

The noble Lord also set a lot of store by the recent ILO announcement. He is right to do so, but this amendment is necessary with or without it. The announcement makes it clear to us on these Benches that the Commons should be given another chance to reassess the Bill in the light of the details coming in from the ILO.

Finally, the Minister talks about delay. The first iteration of this Bill was drafted and laid before Parliament about a year ago. If the Government really are that breathless about getting this on the statute book, they could have moved a little quicker. This is about politics, not actually doing anything real out there. The noble Lord, Lord Balfe, is right in that concern. Because of that, we will certainly support the noble Lord, Lord Collins, if he chooses to put this to a vote.

[Lord Callanan (Con)]

My Lords, as I said in my opening remarks, we have had a very similar debate a number of times, so I can keep my response brief. I have responded to these points previously, but I will make one point on the ILO report in response to the noble Lords, Lord Collins, Lord Pannick and Lord Fox.

The ILO did not say that this legislation did not comply with the convention; it simply said that it should and that we should ensure that it does. In my view it does, as our response to the Parliamentary Question rightly said. I have made the point many times in this House that the ILO has been clear over many years that minimum service levels can be appropriate in public services of fundamental public importance. That is why many other countries in Europe and around the world that are signatories to the ILO have had minimum service levels in place for many years. The Liberal Democrats and the noble Lord, Lord Fox, normally urge us to go the way of Europe and follow what EU countries are doing. In this case, we are doing precisely that.

I therefore hope, although without a great deal of optimism, that noble Lords will cede to the wishes of the elected House and agree to the Government’s Motions, which would then bring this Bill’s passage to a close.

Strikes (Minimum Service Levels) Bill

Debate between Lord Callanan and Lord Fox

Consideration of Commons amendments
Thursday 8th June 2023 Lords Chamber

[Lord Fox (LD)]

My Lords, I was so enjoying the debate on Motion A1 that I failed to stand up and speak to Motion B1 in my name. I apologise to the noble Lord, Lord Collins, for not providing him with sufficient up-to-date quotations, but he seemed to manage. We have spent so much time on the Bill together that we probably know how each other thinks.

We are in familiar territory, and indeed were too with Motion A1, because this is a long-repeated trope of this Government. They seek to override not only the devolved authorities but our own Parliament here. Bill after Bill has measures that take powers that should rightfully be vested in Parliament and lodge them firmly with the Executive, with very little or negligible recourse. This amendment seeks to regain that balance.

We have had similar discussions many times. I will not go over all these, but I will remind the House very briefly why, in this case, it is very important. The centrepiece of this legislation is a system of predetermined minimum service levels which may be used by employers to determine the minimum manning levels in the event of a strike. If a strike is called, specific work orders have to be or may be issued, requiring named individuals to ignore the strike and go to work. If they do not, as the Bill stands, they can be sacked.

The scale of the minimum service level is key. The nearer it is to 100% of normal service, the smaller the number of people who can legitimately and legally strike becomes—to the point that it becomes almost zero, or zero, and strikes are banned. This is not an abstract argument: if you look at certain areas of emergency care or issues such as rail track signalling, it is clear that a very high level of presenteeism will be required to run those services. In effect, those people on that work order will therefore have their right to strike banned. Speaking as a Liberal, I say that this is a libertarian issue that we find very important.

The setting of these minimum services levels is a vital part of how this Bill will operate. As the Minister has said, some non-binding consultation is under way but as things stand, to all intents and purposes the scale of the minimum service levels is the Secretary of State’s decision and theirs alone. We find that unacceptable.

The Commons declined our last amendment on the grounds that there is “adequate consultation”. We think that there is not and would like to ask the Commons to revisit that process. This amendment would require that consultation takes place and is reviewed by a committee of each House of Parliament prior to regulations being made. That consultation would be more formal and set out in some detail compared to the informal and ad hoc nature of the consultation that is going on. As we heard from the noble Lord, Lord Collins, when he was quoting me, those consulted will include the relevant unions, employers and other interested parties and would include an assessment of the impact on the rights of those workers.

The Minister talked about time and how this would wrap up the process into indefinite time. I remind your Lordships that the original Bill from which this Bill is generated started about a year ago. That Bill of course referred to what was in the Conservative Party manifesto, unlike this one, which has been broadened way beyond the scope of what was in the manifesto. The Government have shown themselves very adept at setting up time for such things to be debated, yesterday being an example. I am sure that time is not the issue—“won’t” rather than “can’t” is what we are dealing with here.

In short, we seek through this Motion to regularise the consultation process and give a mandatory role for Parliament that is far more than we see. With most Governments, this might not be controversial but with this one there has been a pattern and it is systematic, so here we seek to reassert the role of parliamentary democracy. My noble friend talked about there being the potential for a constitutional crisis around the treatment of government and the devolved authorities, I think we are already heading in the same direction with the treatment by this Government of our Parliament.

[Lord Callanan (Con)]

My Lords, I thank all those who have contributed. The House will be pleased to know that I do not intend to detain noble Lords for very long. We have debated these matters extensively on a number of occasions in a very rigorous manner, so I do not intend to repeat all the arguments. But, let me just say very briefly, particularly in response to the noble and learned Lord, Lord Thomas, that we are certain that the minimum service levels are a reserved matter. They are reserved because they obviously apply only when there are strikes, which fall within employment rights and industrial relations. This is clearly a reserved matter under each of the devolution settlements for Scotland and Wales. Put another way, the Bill amends the Trade Union and Labour Relations (Consolidation) Act 1992, the subject of which is specifically reserved under each of these settlements. I always hesitate to disagree with distinguished lawyers on matters of law but I am afraid that we just have a different opinion on this.

I addressed the points from the noble Lord, Lord Fox, in my opening remarks and will not repeat that. I acknowledge all those who have spoken. I understand the strength of opinion in the House on this but once again I point the House towards the other place—the elected place—and the clear will it has expressed on these matters. I urge the House not to prolong this matter unnecessarily and, while it looks as though we are going to vote on the Motion from the noble Lord, Lord Fox, I am grateful that the noble and learned Lord, Lord Thomas, indicated that he would not be dividing the House.

Retained EU Law (Revocation and Reform) Bill

Debate between Lord Callanan and Lord Fox

3rd reading
Monday 22nd May 2023 Lords Chamber

[Lord Callanan (Con)]

Nevertheless, the contributions are appreciated.

The Government have of course sought to address the concerns raised, notably around the sunset and courts provisions. We listened to the points made in the House and addressed those concerns via the amendments that we brought forward on Report. I hope that the House recognises how significant a move this was from the Government and takes that movement in the spirit in which it was intended. We really did try to alter the Bill to take account of many of the concerns that were addressed.

The House has also made its views known on some other areas of the Bill on which the Government do not agree, including the reform and repeal powers we believe are crucial to the ambitions we have in this space. Our work in producing the retained EU law dashboard highlighted that there are many defunct laws on our statute book relating to activities that the UK does not conduct, such as my famous example of regulating reindeer herdsmen in Lapland. Now that we have taken back control of our statute book, it is appropriate to update it by amending, repealing or replacing REUL that is no longer fit for the UK.

I do not think there is much argument on all sides of the House about the list of measures we have produced that deserve to be repealed. This will allow us to create new pro-growth, high-standard regulatory frameworks that give businesses the opportunities and confidence to innovate, invest and ultimately to create jobs. This Bill delivers, in addition to providing clarity and certainty. It provides the powers for the Government to make legislative changes that will benefit all of us in the United Kingdom. With that, I beg to move that the Bill do now pass.

[Lord Fox (LD)]

My Lords, I thank the Minister for his speech. His answer to the question asked by the noble Lord, Lord Carlile, indicates why what I will call the Hope-Hamilton amendments are so important. I hope it is clear to the Minister that your Lordships’ House considers these to be very important and that they should be retained rather than reversed when they head to the other place.

Any Commons reversal of Amendment 48 will be seen as a show of intention by the Conservative Party on environmental legislation. Again, it would not be wise, given the very good reassurance we have had from the noble Lords, Lord Benyon and Lord Callanan, on retaining that legislation. Pushing out Amendment 48 would be moving things in the opposite direction.

Overall, the work of this House has achieved a major change and a U-turn. As I said before, it has achieved a reverse in the polarity of this Bill, and noble Lords should be very proud of that. It has been a fraught debate at times. I owe a mea culpa to the noble Baroness, Lady Fox. In the hubbub I misrepresented her use of the term “blob”, and I am happy to put the record straight—so apologies there. During that debate there was also a to and fro, which was very important. The Minister is right to say that that is the role of this House.

I thank the Ministers—the noble Baronesses, Lady Bloomfield and Lady Neville-Rolfe, and the noble Lords, Lord Benyon and Lord Bellamy—for their hard work in trying to bring us along; they have not often or always succeeded, of course. The Bill team, when we have met, have always been very helpful and courteous; they are a credit to their service. I hope that, for those of the team who want to visit the Cheshire salt mines, I have in some way helped them head that direction.

His Majesty’s Opposition have been a pleasure to work with: I thank the noble Baroness, Lady Chapman, the noble Lord, Lord Collins, and of course the team in their Whips’ Office. Many Cross-Benchers and other noble Lords across the House have participated fully. It would be difficult to mention them all, but for his virtuoso display during Report, the noble and learned Lord, Lord Hope, deserves the full gratitude of your Lordships’ House.

Quite a few Liberal Democrats have participated in the Bill, not least those who were mobilised over the weekend to try to review 600 laws and work out what they did. I am not going to name them all, but I thank them for their support. I will name my noble friend Lady Ludford, who unfortunately cannot be here; she has been able company for me on the Front Bench. Finally, I thank Elizabeth Plummer in our Whips’ Office, whose grasp of this Bill has been beyond compare.

Retained EU Law (Revocation and Reform) Bill

Debate between Lord Callanan and Lord Fox

Report stage
Wednesday 17th May 2023 Lords Chamber

[Lord Callanan (Con)]

We are on Report. We do not need to wait until the next stage; I can tell the noble Lord now that there is a power in the amendments to allow exactly that. He does not need to have any further concerns about it.

In response to the noble Baroness, Lady Jones, I say that the UK remains committed to international agreements on air pollution, to which we are an independent signatory. We set new, legally binding targets under the Environment Act and the environmental improvement plan to halt and to reverse nature’s decline. The stretching targets mean that any reform to retained EU law must deliver positive environmental outcomes, and nothing in this schedule alters those commitments. I hope that reassures the noble Baroness.

In response to the noble Lord, Lord Fox, and his famous salt mine example, I am sorry to tell him that he is wrong. The National Archives found its pieces of retained EU law in its EU legislation database, which is now online. The noble Lord might want to consult the internet next time, rather than crawling down his salt mine. One of my officials said that she would have loved to have gone down a salt mine—it would have been a very interesting experience—but she did not need to.

[Lord Fox (LD)]

I think the Minister should check that.

[Lord Callanan (Con)]

I can absolutely assure him: she would have been delighted to go down a salt mine. I will not name her, but she messaged me to say that she was very keen to do so. Perhaps the noble Lord would want to arrange it for her.

The noble Lord also mentioned several regulations which are good examples of EU-inherited provisions that we may no longer need. He may not realise it, but some regulations perform multiple functions—we want to revoke some and to keep or reform others. To update and improve the regulations, we of course need to keep them for now, so that we can make those changes.

I had a feeling that the noble Lord might ask me about the famous reindeer regulation. Indeed, Regulation 1308/2013 of the European Parliament and of the Council includes provisions on reindeer, which we want to revoke because, the last time I looked, there were not many in the United Kingdom for which we need to have responsibility—perhaps even the noble Lord could agree with that. But there are other aspects of the regulation that we want to keep; therefore, in due course, there will be a reform programme which will alter that regulation. Of course, the House will get to see that through a statutory instrument at the time. I have no doubt that the noble Lord will want to engage with the Defra Minister in a meaningful debate on how important it is for the Liberal Democrats to preserve the preservation of reindeer in Lapland.

Finally, I turn to the issue of interpretative effects. My noble friend Lady McIntosh asked again for clarity on the Government’s intention. I assure her that the Government’s intentions have not changed in this regard. As she will be aware, the House agreed to Amendment 15 in the name of the noble Lord, Lord Anderson, on Monday, which seeks to replace the sunset of Section 4 of the EU withdrawal Act at the end of each year with a requirement for the Secretary of State to make a statement on the Section 4 rights and obligations which will be sunsetted at the end of this year. The House can be assured that the Government will address that.

Clauses 5 and 6, which relate to the ending of the principle of supremacy, including the principle of consistent interpretation or indirect effect and ending the application of general principles of EU law, will stand part of the Bill, as agreed by the House.

Retained EU Law (Revocation and Reform) Bill

Debate between Lord Callanan and Lord Fox

Report stage
Monday 15th May 2023 Lords Chamber

[Lord Callanan (Con)]

I thank all noble Lords who have contributed to this debate. I find myself standing here bathed in sunlight; I am not sure whether that is a sign.

[Lord Fox (LD)]

My Lords—

[Lord Callanan (Con)]

I do not require the noble Lord’s advice on this.

I will start with Amendment 2 from the noble and learned Lord, Lord Hope, which requires that legislation listed in the revocation schedule be referred to a Joint Committee of both Houses and be considered by the committee for a period of at least 30 sitting days. Should the Joint Committee consider that the revocation of the legislation listed would substantially alter UK law, a Minister of the Crown must ensure that the revocation be debated and voted on by both Houses prior to 31 December.

I start by reassuring noble Lords that it is the Government’s view that this amendment is unnecessary. Every piece of retained EU law in the schedule has been thoroughly reviewed, and will be reviewed and debated alongside Amendment 64, which has been tabled. I am confident that the changes to Clause 1 that we have introduced have alleviated the substantial concerns raised by Members across this House during the passage of the Bill and provided the legal clarity and certainty that has been called for.

Although I know that a number of noble Lords have not yet had the chance to see it, today we have published an extensive schedule explainer—again, responding to the concerns that many Members have raised; officials have been working hard on this all weekend—which explains, line by line, why each of the, in total, 587 pieces of legislation has been deemed suitable for inclusion on the schedule. That has been sent to every Member in advance of the debate on Wednesday. I hope that this will alleviate the concerns raised in this debate, including by my noble friend Lord Hodgson and the noble Lord, Lord Kerr, and other noble Lords, about the amount of information that has now been made publicly available.

In addition, the preservation power in Clause 1 will enable relevant national authorities to preserve legislation on the revocation schedule where they deem it necessary and where the relevant procedures and timescales have been adhered to. This provides a proportionate safeguard against unforeseen consequences of legislation listed on the schedule being revoked. The purpose of our amendment is to provide that legal certainty and clarity as efficiently as possible. To require yet further referrals and debates, and approvals to the list which can be scrutinised during the Bill’s passage, is unnecessary.

On Amendment 4, I have introduced changes to the Bill that I hope will reassure the noble and learned Lord, Lord Hope of Craighead—I think they have done—that his proposed changes to the functioning of the Bill are not necessary. Indeed, the revocation schedule I have laid guarantees that only a set amount of retained EU law will be revoked, which is clearly set out in the Bill. This is very similar to the mechanism proposed in this amendment that would see instruments or provisions expressly listed in a ministerial Statement. However, for a number of reasons, I believe that my proposed revocation schedule is better equipped to deliver this amendment’s desired outcome.

For similar reasons I am opposed to Amendment 6. This amendment would introduce changes to Clause 1 that are reflective of those already introduced by the Government. Indeed, the revocation schedule in Amendments 1 and 5 seeks to accomplish similar goals to Amendment 6 but in a more comprehensive way. This amendment would require a list to be compiled in order to be revoked and would open the door for multiple such lists being laid over the coming months. Again, the proposed revocation schedule is already drafted, has been vetted and is ready, and I believe it is a more appropriate solution. Finally, the amendment has unclear timelines and does not offer as much certainty as the revocation schedule, which is clear about when the revocation of pieces of retained EU law would occur and works in step with other timings in the Bill, such as the expiry of the powers on 23 June 2026.

I was going to refer to the amendment in the name of the noble Lord, Lord Hacking, but he said that he will not press it.

Amendment 8 attempts to exempt any pieces of legislation from the sunset should they be identified after the end of 2023. As I already outlined, this amendment is now unnecessary.

Amendments 10, 11 and 12 all concern the devolved Administrations and their preservation power in what was Clause 3. However, given that under my proposal Clauses 1 and 2 have been removed from the Bill and a revocation schedule has replaced the sunset, these three amendments are defunct and we ask that they are not pressed.

Amendment 16 seeks to oblige the Secretary of State to publish a health and safety impact assessment for any retained EU law which is to be revoked, at least 90 days before the revocation. All legislation listed on the revocation schedule has been considered by the relevant departments and checked by the relevant teams. As such, a health and safety impact assessment is not needed, given the depth of the work that has already been carried out.

We have introduced this Bill to help us realise the opportunities of Brexit. I reassure my noble friend Lord Jackson and other noble Lords that the Government remain committed to a reform programme. Legislation that has been identified on this schedule had already been identified and would have been allowed to sunset anyway. We are still committed to making the opportunities of the reform programme, and we retain the ambition and fundamental purpose behind this work.

I hope that the noble and learned Lord will feel able to withdraw his amendment and that other noble Lords will not press theirs and will support the government amendments.

--- Later in debate ---

[Lord Fox (LD)]

It is the Minister’s turn.

[Lord Callanan (Con)]

Thank you; I did not get up because I thought the Opposition Front Bench was going to speak. I reject Amendments 3, 36, 38 and 42 to 44, tabled by my noble friend Lady McIntosh.

I will deal with the point raised by the noble and learned Baroness, Lady Butler-Sloss, and give an explanation to my noble friend Lord Hamilton. A notion seems to be springing up that the Government and departments somehow did not know what legislation they actually had responsibility for. They knew very well what legislation they had; what was sometimes unclear was whether that legislation was as a result of an EU obligation and therefore was retained EU law. This was because, over the 40-odd years of our membership, different Governments had different policies. Only a small part of EU legislation was introduced through the so-called Section 2(2) pipeline of the European Communities Act. If it is those regulations, that is very obvious—people know where that has come from—but Governments often did not want to say that legislation was introduced as a result of an EU obligation. It was therefore introduced under various instruments, under either domestic legislation or normal domestic secondary legislation. Therefore, the difficulty that departments faced was identifying what was an EU obligation. It is not that they did not know what legislation they were responsible for, were somehow finding legislation down the back of the sofa or anything else. That has been the issue: the definition of what was retained EU law. I hope that explanation is helpful.

Amendment 3 seeks to change the sunset date, pushing it back to the end of 2028. Given the amendments to the Bill that we have already discussed and the significant changes to the operation of the sunset, I hope my noble friend recognises that it is therefore not necessary to also change the sunset date. The current scope of the sunset in Clause 1 will no longer be relevant, as it will be replaced with a schedule to the Bill. The schedule will list retained EU law that departments have identified for removal. This is the only legislation that will be revoked on 31 December 2023.

Similarly, Amendments 36 and 38 seek to change the date of the powers to restate under Clauses 13 and 14. Amendment 36 would mean that Clause 13 was capable of acting on retained EU law until 31 December 2028. Pieces of retained EU law that are not included in the revocation schedule will, of course, not be revoked on 31 December 2023, but they will be stripped of their EU interpretative effects and assimilated in domestic legislation.

Consequently, those pieces of legislation will no longer be retained EU law. They will be assimilated law as part of the normal law of the United Kingdom, and the status of retained EU law on the UK statute book will come to an end. There will be no more REUL after 31 December. As retained EU law will end as a legal category at the end of this year, it is right that this power, which is capable of acting only on REUL, expires then. I am not clear why my noble friend wants to extend the sunset date of a power that will no longer be required.

Amendment 38 seeks to change the date on which the power to restate assimilated law under Clause 14 will expire from 23 June 2026 to 31 December 2028. It is in my view entirely right and appropriate that this power should be available for a time-limited window up to 23 June 2026. This is consistent with the powers to revoke or replace in Clause 16. I am confident that the time window currently set out in Clause 14 will provide sufficient time for the power to be exercised on all the necessary legislation.

Amendment 42 changes the date on which the powers to revoke or replace within Clause 16 are capable of acting on REUL from 23 June 2026 to 31 December 2028. Similarly, Amendment 43 changes the date that the powers to revoke or replace can act on assimilated law to 31 December 2028. Amendment 44 changes the date in Clause 16(11) from the end of 2023 to the end of 2028 so that the references to retained EU law in Clause 16(8) can be read as a reference to assimilated law until 31 December 2028. Again, this group of amendments is no longer necessary due to the revocation schedule. There is more than adequate time for the use of the powers on assimilated law within the timescales provided for in the Bill. The powers to revoke or replace will enable UK and devolved Ministers to remove those regulations that are no longer fit for purpose and replace them with regulations that are more tailored to the UK within a timely manner, and the Government are committed to achieving these much-needed reforms by 2026. That is why the powers are restricted in their use and available only for a time-limited window, up to 23 June 2026. I hope that, with the explanations I have been able to provide, my noble friend will withdraw her amendment.

Strikes (Minimum Service Levels) Bill

Debate between Lord Callanan and Lord Fox

Report stage
Wednesday 26th April 2023 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, I apologise for keeping the House waiting for the start of the debate; the previous business finished much earlier than everyone expected.

I am grateful to those who have contributed to this debate, although clearly we have repeated a lot of what was discussed in previous debates. The House will be unsurprised to hear that my position is similar to what it was in Committee. As I did then, I resist this amendment relating to consultation requirements, parliamentary scrutiny and assessment of impacts of the legislation.

As I made clear in Committee, it is my firm view that sufficient checks and balances are already built into the legislation before regulations can be made. This includes the need to carry out consultations—indeed, we are undergoing consultations at the moment on some draft regulations—which, of course, relevant parliamentary committees are able to and almost certainly will contribute to, as well as the requirement that regulations must be approved by both Houses before they can be made. Impact assessments will also be published for all subsequent regulations on minimum service levels.

Key stakeholders, including employers, employees, members of the public, trade unions and their members are all encouraged to participate in the consultations—some of which, as I said, are live even now—and have their say in the setting of the appropriate minimum service levels, and all that will happen before the minimum service levels come into effect, and only then if they have been approved by Parliament.

I am therefore of the view that this approach is both appropriate and in line with the normal way in which secondary legislation is made. As such, the Government believe that the amendment adds unnecessary duplication into the process, and therefore I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Fox (LD)]

My Lords, I thank both noble Lords for their support for this amendment. The Minister is right that much of this debate has been had before in Committee. He is also right when he describes this as the normal way. I am afraid it has become the normal way that this Government operate to shunt as much power as possible to the Secretary of State and marginalise Parliament as often and as broadly as they can. This is a highly skeletal Bill—it is almost impossible to get one that is smaller. For that reason, I would like to test the will of the House.

--- Later in debate ---

[Lord Callanan (Con)]

My Lords, I beg to move Amendment 2 in my name. The House will know that the Government were clear at the introduction of the Bill that employers must not have regard to a person’s trade union status when producing a work notice. Employers should identify the workers who are best placed and most appropriate for each role, so that that minimum service level can be achieved. In our view, a person’s trade union status has no place in this process.

I thank the Joint Committee on Human Rights for its report on the Bill and for its feedback, as well as feedback from the debates in Committee on protections from trade union discrimination in relation to work notices—including from the noble Lord, Lord Hendy, who was particularly vocal on this point. I hope the noble Lord will agree that this amendment addresses his concerns in full.

Through this amendment, employers must not have regard to whether a person has or has not taken part in trade union activities, made use of their services or had issues raised by a trade union on their behalf. Employers must also not have regard to whether a person is part of a particular trade union or a particular branch or section of a trade union. This also ensures a greater level of consistency with existing sections within the Trade Union and Labour Relations (Consolidation) Act 1992, such as Sections 146 and 152.

As I said in Committee, the activity or services that a trade union member may have been involved in are connected to whether they are a trade union member, and therefore, even under the clause as it stood, an employer must not have regard to such matters when producing a work notice. While I still believe this to be true, I hope that the amendment provides further reassurance to the House, in addition to trade unions and workers, putting the issue of trade union discrimination in relation to work notices beyond doubt. I beg to move.

[Lord Fox (LD)]

My Lords, very briefly, it is appreciated that the Minister has done this and that the Government have understood that there was ambiguity. In a sense, it is a shame that the Minister has not taken all our advice, but we thank the Government for taking this particular piece.

Strikes (Minimum Service Levels) Bill

Debate between Lord Callanan and Lord Fox

Committee stage
Thursday 23rd March 2023 Lords Chamber

[Lord Fox (LD)]

I have two points. In answering the noble Baroness, Lady Chakrabarti, the Minister used the ambulance service as an example of the Government having to use the power. I understood that it was the employer that used the power, and in the case of ambulance workers the Government are not the employer. Can the Minister perhaps square that language?

In a rather less difficult answer, in dismissing one of the amendments tabled by the noble Lord, Lord Collins, the Minister said that the process of publishing information at parliamentary level would take too much time. It is on the record that a recent former Transport Secretary of State said that the Bill will not solve the current problems. What is the Government’s time target for this, given we know that the Minister thinks one of the amendments would take too much time? What is sufficient time? When do the Government expect the Bill to be in place, all other things being equal, and what is the hurry?

[Lord Callanan (Con)]

On the noble Lord’s first question, as he well knows, it is the Government’s job—or duty, if we get the legislation through—to make the regulations, and then it will be at the discretion of employers whether they use the powers that are given to issue work notices. We have debated this many times.

With regard to the timetable, these things are beyond my authority level. It depends how quickly the Bill goes through Parliament, how many amendments there are, how long ping-pong takes, and the scheduling of the legislation by the usual channels. I hope we will get the legislation through as quickly as possible. Of course, I hope that we never need to use it, as I have said before, but we think it is appropriate that the power should be there as a backstop.

Strikes (Minimum Service Levels) Bill

Debate between Lord Callanan and Lord Fox

Committee stage
Thursday 23rd March 2023 Lords Chamber

[Lord Fox (LD)]

My Lords, I fully expect the Minister to stand up and tell us that none of these amendments, which have been put so well by noble Lords, is necessary. I expect him to say that there is no possibility of the Bill, once it becomes an Act, breaking or impairing our relationship with the international organisations that noble Lords have mentioned. I wonder how he will be able to say that, given the nature of the Bill.

We come back to its skeletal nature and the answer which nobody seems to know to the question “What is a minimum service level?” Until we know, we do not know whether the Bill breaks any agreements that we have with organisations in this country or around the world. I refer your Lordships to our previous debate in Committee, in which we discussed correspondence with the noble Lord, Lord Sharpe, in which he represented the issues around the fire and rescue services. I remind noble Lords that, after I prompted him on why the consultation had raised the issue of the Grenfell Tower fire and the Manchester Arena bombing, the Minister—the noble Lord, Lord Callanan—said that one thing the consultation sought to probe was that the minimum service level would include the ability to cope with issues on that scale. He did not disagree with me when I came back and said that that implied that 100% of the fire and rescue services in an area would need to have been named in the work order under a minimum service level. In effect, that would ban striking.

In the event of such a minimum service level, that calls into question our relationships with the ILO, the EU under the TCA and others, because it is a de facto ban on striking. It may or may not upset those relationships, but I want the Minister to be able to say what minimum service level is being modelled when he tells us that we do not need to worry.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, I sometimes wonder when I listen to the noble Lord, Lord Fox, whether I need to bother replying to these debates, because he has written my speeches before I get up. For the benefit of the House, I will go through this anyway.

Amendments 18A, 18B, 32B and 36C all relate to the UK’s international obligations. Before I deal with the amendments in detail, it is worth reiterating, as I have previously and as we debated last time round with the noble Baroness, Lady Chakrabarti, that the Government firmly believe that the Bill is compatible with our convention rights and complies with all international conventions that the UK is signed up to. I signed a statement to that effect.

Amendment 18A in the name of the noble Lord, Lord Hendy, looks to ensure that the Bill does not prevent people from taking strike action and cannot be used to create an offence. I oppose this amendment because its effect would be to prevent any minimum service levels from being implemented at all. He will understand my reservations, given how the Bill is drafted in respect of the operation of work notices and where an employee would lose their automatic protection from unfair dismissal for industrial action if they participated in a strike while being named on a work notice. To be clear, our Bill does not prohibit strikes or other industrial action, but it does enable employers to continue to deliver a minimum service level to their users and stakeholders during and notwithstanding that action.

The Bill is about balancing the ability to strike with the rights and freedoms of others. Preventing minimum service levels being implemented does not strike a balance; it would merely maintain the current disproportionate impacts that strikes can have on the public—although I expect that that is a cause of legitimate disagreement between us.

Amendment 18B would ensure that the regulations did not compromise our obligations under the trade and co-operation agreement. However, given the reiteration I made earlier, we believe that this amendment is duplicative and unnecessary. The Government remain committed to our international obligation and respect the process of the respective governing bodies in providing any rulings that are required concerning compliance. I recognise that the noble Lord, Lord Hendy, has a desire for relevant international conventions and treaties, and their associated governing bodies, to have a greater role in respect to minimum service levels in Great Britain. But my argument here is that incorporating decisions by supervisory committees into domestic primary legislation, as this amendment seeks to do, goes way too far.

Amendment 32B, tabled by the noble Lord, Lord Collins, and the noble Baroness, Lady O’Grady, seeks similarly to prevent minimum service regulations being made where they could be said to be within scope of the trade and co-operation agreement and other international obligations. As I stated at the outset, the Government firmly believe that we are entitled to bring forward this legislation—many other European countries already have similar legislation—which I remain satisfied is compatible with all the international conventions the UK is signed up to. The noble Baroness will, of course, be aware that there are existing mechanisms for monitoring adherence to the trade and co-operation agreement—if indeed there are concerns from EU member states or the European Commission, although I do not believe there will be.

In any case, I am surprised if anybody thinks that ensuring that the public are able to access some level of service in key sectors, including emergency services, during strike action goes to the heart of the TCA, not least because many EU member states already have minimum service level arrangements in place. Indeed, in some of the services we have mentioned, some member states ban strike action completely in those areas. As drafted—and perhaps not intentionally—this amendment would prevent minimum service levels regulations being made at all, which, given that is the purpose of the Bill, we clearly cannot accept.

Finally, on Amendment 36C from the noble Lord, Lord Hendy, and to respond to the points the noble Baroness, Lady Chakrabarti, and the noble Lord, Lord Woodley, made, as I have stated previously, the Government firmly believe that the Bill is compliant with convention rights and international conventions. The Bill also enables regulations to be made in a way that is compliant with the convention rights, and on making those regulations, Secretaries of State will need to carefully consider the relevant articles of the ECHR, alongside international conventions, if they choose to suggest minimum service regulations to Parliament. So they will also have to make similar statements.

I highlight that this amendment seeks to restrict minimum service levels so that they can be made only where they are necessary to provide protection for the life, personal safety or health of the whole or part of the population. While the protection of life and health are indeed important aims of minimum service levels in areas such as healthcare—

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[Lord Callanan (Con)]

Let me outline the procedure for the benefit of the noble Baroness. The work notice will not be a public document. The Bill makes it clear that current data protection legislation applies, while allowing the employer to provide the work notice to a trade union so that the Bill can be effective. Under the Bill, trade unions are required to take reasonable steps to ensure that their members who are identified in the work notice comply with that work notice. The trade union therefore of course needs to see the work notice and to know which union members may be named, in order to enable it to take those reasonable steps. Unions will otherwise be bound by data protection law in the usual way. Additionally, while those named on a work notice will be notified about that regarding themselves only, they will not be issued the work notice itself. Naming individuals to work in advance of the strike day helps to provide clarity to the workers, to unions and to employers regarding arrangements for that working day as well as the strike.

If the Committee will now permit me to move on and answer the question posed by the noble Baroness, Lady O’Grady, that may provide some clarity on the Government’s thinking in this respect. The first question the noble Baroness asked was whether Secretaries of State have a say in who is identified in a work notice. Fundamentally, the work notice is a matter for the employer, so there is no way that Secretaries of State can influence who is identified on a work notice.

Secondly, the noble Baroness asked whether a worker would be in breach of a work notice if they were sick on the relevant strike day. Workers should of course be supported if they are unwell and cannot work, and it remains the case that if a worker is too unwell to work, they are not obliged to work under a work notice. I hope that provides the clarity the Committee is seeking on this point, and I therefore hope that the noble Lord can withdraw his amendment.

[Lord Fox (LD)]

My Lords, this debate has revealed—or rather, not revealed—more than I expected. I am grateful to the Minister for imaginatively making things up as he goes along, which is what this seems to be. We have a Bill in which none of the details is included, and we are relying on the Minister to flesh out from the Dispatch Box how the Bill will work. [Interruption.] I am not talking about what the Bill is, but how it will work.

At least two misapprehensions are driving that interpretation of how the Bill will work—not what it says in law, but what it will do. The first is that the nature of the service sectors the Bill has identified is such that they are politicised. The Minister’s description of the interplay between employer and employee is an unrestrained free-market description, but we know—and this is why I was talking in the last group about using the current dispute as a model—that this is not a pure-play employee/employer relationship. There are three parties in this dispute, and the third party is the Government. By experience, behind the scenes and sometimes in front of the scenes, the Government have been part of the process of progression of these disputes, and in the end, they have been the arbiter of whether or not they were settled. So the Minister’s description of the nature of the dispute in which these minimum service levels and work orders would be used is an inaccurate model for us to consider.

The Minister speaks of the unions and the workforce as if they are two separate entities. We have to understand what the Minister thinks a union is. In large part, the union is the workforce, so keeping the work order secret from the workers by giving it to the union is an interesting concept.

The second misapprehension is that the Minister is expecting the union to oversee the work order, which is a list of names. We know from the Bill, because it specifically says so, that the names on that list could and should be either union members or non-union members. How does the union deal with the non-union members? Is it fair for the non-union members to have their names on the union’s list? These are the sort of practical details we do not have to hand because we do not have a description of work orders and minimum service levels. That is the problem the Minister is having to deal with and is working very hard to do so.

I will look very hard at Hansard because I find it very difficult to understand how the Minister sees the unions and the workforce operating independently in a workplace. Leaving that to one side, I beg leave to withdraw Amendment 21.

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[Lord Fox (LD)]

I will speak very briefly to this group of amendments; I will make no attempt to emulate the speeches from either the noble Lord, Lord Woodley, or the noble Baroness, Lady O’Grady, who have great experience in the union movement.

In the Bill, there is a specific requirement for the unions “to take reasonable steps” to implement work orders. On these Benches, there is still no understanding of what “reasonable steps” actually means and what legal jeopardy unions would be in if they did, or did not do, particular activities. However, I characterise this collection of amendments as causing the employers to take reasonable steps not to victimise members of the union as a result of this legislation. Therefore, it adds a mirror to the reasonable steps that the unions have to observe, so that the employers should similarly observe the same steps—and I support the spirit in which the amendments have been delivered.

The noble Baroness, Lady O’Grady, mentioned private sector deliverers. Having read the letter from the noble Lord, Lord Markham, my reading is that he rules providers such as Amazon out of the remit of this legislation. It would be helpful if the Minister could confirm whether my interpretation is correct. I credit the noble Lord, Lord Markham, with coming to your Lordships’ House and participating in Committee. We had no such benefit of a Transport Minister, and we still do not know the position of private sector suppliers of services in the transport industry. While we seem to have an explicit ruling out of private sector deliverers in the health service, we have no such ruling out in the transport sector. Will the Minister, in responding to or confirming my interpretation of the letter from the noble Lord, Lord Markham, also tell us whether the similar and other deliverers of private sector services, which are crucial to the railway industry, will be included in the remit of the Bill, or, as in the health service, not included?

[Lord Callanan (Con)]

My Lords, I thank all noble Lords who have participated in this short debate: the noble Lords, Lord Collins, Lord Hendy, Lord Woodley and Lord Fox, and the noble Baroness, Lady O’Grady.

Amendments 22 and 24 to 31 all relate to placing additional requirements on the process of issuing our famous work notice. It is the view of the Government that the current requirements in the Bill strike the right balance between the views and perspectives of employers and unions to enable a reasonable and fair work notice to be issued. The Bill explicitly requires that employers must consult a relevant trade union, and have regard to their views, before issuing a work notice. Additionally, work notices must not include more persons than are reasonably necessary to meet the minimum service level and employers, as I said earlier, must not have regard to whether a worker is or is not a member of a trade union when producing that work notice.

I respond, first, to the point made by the noble Baroness, Lady O’Grady, who waxed lyrical about Amazon warehouses. While it is possible for a private business to be in the scope of minimum service level regulations, if they provide a relevant service as specified within the regulations, I am happy to reassure the noble Baroness that the Government have no plans or intentions to apply minimum service levels to Amazon.

Amendment 22 tabled by the noble Lords, Lord Collins and Lord Hendy, and the noble Baroness, Lady O’Grady, would limit the issuing of work notices to recognised trade unions only. However, it is of course possible that strikes can be called by recognised and unrecognised trade unions, which can lead to disproportionate impacts on the public. It is therefore our view that MSLs must be able to be applied where a union, recognised or not, provides a strike notice to an employer.

I move on to Amendments 24 to 31 from the noble Lord, Lord Collins, and noble Baroness, Lady O’Grady. Amendment 24 looks to ensure that employers cannot name more persons than necessary to secure the minimum level of service. However, it is already recognised that employers should not roster more people than are needed to achieve a minimum service level, so that some workers can continue to take strike action if they wish to—that is the whole principle of the Bill. That is why the Bill already requires employers not to identify more persons than are reasonably necessary. This enables the employer some limited flexibility in providing for contingency to respond on the day to any operational incidents, sickness or other types of absence. In our view, the existing approach strikes the right balance and provides sufficient safeguards for workers. To go further would limit or eliminate an employer’s flexibility, which could then mean that minimum service levels—the whole point of the legislation—would not be achieved.

Amendments 25 and 26 both look to ensure that each individual is able to go on strike for at least part of the period of the strike, notwithstanding any work notice. The Government resist these amendments for three reasons. First, the number of days on a strike notice could be substantial across both short and long periods for which the union has a mandate to strike. It is therefore reasonable that some workers may need to work more than 50% of those strike days, especially if their colleagues are off sick, on leave or attending training. Secondly, these amendments would cap the minimum service level and reduce the influence of the consultation, and those who respond to it, in the setting of the minimum service level. Thirdly, Amendment 26 appears to prevent any work notice being given where there is only one day given on a strike notice, which therefore creates a loophole which could be exploited—that may have been the purpose of the amendment.

Amendments 27 and 28 look to require the employer to ignore a person’s trade union activities or use of trade union services in deciding whether to identify a person in a work notice. However, we believe the Bill already sufficiently protects against any discrimination regarding a worker’s union status when employers are preparing their work notices. The trade union activity or services that a union member may have been involved in are connected to whether they are a union member, which, as we have already said, the employer must not have regard to.

Additionally, existing legislation—Section 146 of the Trade Union and Labour Relations (Consolidation) Act 1992—already provides a remedy for workers who are discriminated against on union grounds, and that section will continue to be applicable here. Therefore, we believe the amendment is duplicative in nature.

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[Lord Callanan (Con)]

My Lords, I thank all noble Lords who have contributed to this debate. At the risk of provoking further interventions, I will start by replying to the noble Baroness, Lady Chakrabarti. I do not know the legal definition of victimisation, but her understanding of it is clearly different from mine. I would define it as something like “subjecting an individual to degrading, unfair treatment”. In effect, a work notice says to an employee, “You fulfil your contract, as has been previously agreed, as normal. You come into work, do your normal contracted job and get paid for it.” In any definition that I understand, that is not victimisation. Obviously she has an alternative view, but I do not believe that it would come under the definition.

I will directly address the point by the noble Baroness, Lady O’Grady. I have said it before and will say it again: this legislation is not about sacking key workers. Let me be very clear about that. She inquired about the outline of the Bill: it is about protecting the lives and livelihoods of the public by enabling minimum service levels to be applied on a strike day. If people comply with the legislation, then there is no question of anybody being sacked on the basis of it.

This group of amendments seeks to ensure that no detrimental action could be taken by an employer against persons who are named on, but then fail to comply with, a work notice. There would be no consequences for participating in a strike despite being named on a work notice. The whole intention of these amendments is not to achieve a balance between the ability to strike and the rights and freedoms of the rest of us to go about our normal daily business—to get an ambulance, to attend the health service or to have a firefighter come to put out a fire in my property. This is about ensuring that strike action can continue with no consequence whatever and with no regard as to whether a minimum service level will be achieved. That fundamentally cannot be accepted by the Government.

For a minimum service level to be achieved, it strikes me as obvious that enough people need to attend work and therefore workers need to be appropriately incentivised to do that. The legislation achieves this by removing the automatic protection from unfair dismissal where employees participate in strike action despite being named on a work notice. While it is at the discretion of employers rather than the Government as to what, if any, action is then taken against employees in those circumstances, we think it vital that the Bill equips employers to manage instances of non-compliance, just as they would in any other case of unauthorised absence, to enable them to achieve that minimum service level. As my noble friend Lady Noakes observed, employees retain all their existing protections against discrimination—a very good point that further reinforces why these amendments are not required.

Overall, we believe that the approach in this legislation is fair and reasonable and ensures that there is the balance, which we have talked about so often, between the ability to strike and the rights and freedoms of everyone else to go about their daily business and use essential public services. Removing the ability for there to be any consequences whatever for failing to comply with a work notice would likely lead to strikes being more disruptive, as we have seen, when compared with the level of service that employers would be able to provide by applying a minimum service level that allows for these consequences.

Finally, there is a point of detail. Amendments 32 and 32A, if implemented, would cause a significant legal conflict with Part 2 of the Schedule, which makes amendments to the Trade Union and Labour Relations (Consolidation) Act 1992 to make clear that there is no automatic protection from unfair dismissal for an employee who is identified in a valid work notice but participates in the strike contrary to that work notice.

In conclusion, I resist these amendments on the grounds that they seek to sustain or increase the disproportionate impact that strikes in these key areas can have on the public as a continuation of the status quo, a continuation of the public being disproportionately impacted by strikes and a continuation of lives and livelihoods being put at risk by those strikes. Therefore, I cannot accept these amendments.

[Lord Fox (LD)]

With each group of amendments that passes, I get the impression that the area of carpet between me and the Minister is getting larger. The differences are getting larger rather than smaller, which is disappointing because sometimes in Committee they can be narrowed, but I do not get that sense. In describing the change in a person’s contract so that on one day they are able to strike with legal protections and on the next day that contract is unilaterally changed, I do not have to use the word “victimisation”. I can use some other word, perhaps “unfair” or “wrong”. That is the fundamental difference between me and the Minister, and that is what is causing the carpet to expand. Acknowledging that this was a probing amendment, I beg leave to withdraw the amendment.

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[Lord Callanan (Con)]

My Lords, as I set out in the previous group, which the noble Lord, Lord Fox, described as the amuse-bouche grouping, there are already sufficient checks and balances built into the legislation before any regulations can be made. These include the need to carry out consultations with key stakeholders, including employers, employees, relevant trade unions and their members, who are all encouraged to participate in the consultations—we have some of the regulations out for consultation at the moment—and have their say in setting minimum service levels before they come into effect.

Parliament, including Select Committees, will also have an opportunity to contribute to the consultation and scrutinise the regulations. The Government firmly believe that this is the right approach. It ensures that a wide range of views can be gathered. Parliament can scrutinise regulations without significantly delaying the implementation of MSLs and therefore extending the disproportionate impact that strikes can have on the public.

Amendments 42 to 48 all seek to amend the provisions to make consequential amendments. The Government resist these amendments on the grounds that Clause 3 is a fairly standard clause, used regularly in primary legislation. Let me explain to the Committee what it is for. The power to amend primary legislation within the clause is a standard power with standard wording. Perhaps it will be helpful to give some examples of where it is on the statute book already. It is in Section 182 of the Health and Care Act 2022, Section 47 of the Corporate Insolvency and Governance Act 2020, Section 23 of the Bus Services Act 2017—I am sorry that the noble Baroness, Lady Randerson, is not here to hear that—and Section 66 of the Children and Social Work Act 2017. This power is not unique to legislation introduced under a Conservative Government. I say to the noble Lord, Lord Collins, that Section 51 of the Constitutional Reform and Governance Act 2010 also includes the same power. Additionally, the report, The Legislative Process: the Delegation of Powers, published by the Lords Select Committee on the Constitution in 2018, states:

“Delegating power to make provision for minor and technical matters is a necessary part of the legislative process … Delegated legislation, which is subject to less parliamentary scrutiny, should only be used to fill in the details.”


That is exactly what this power is intended for.

I remind noble Lords that the DPRRC did not draw attention to or raise concerns about this delegated power in its report published on 2 February. I know that it did on others, but it did not with this one. The power may be used only to make amendments to other legislation that are genuinely consequential on this Bill. It is there purely to ensure that the legal provisions within this Bill can be maintained after they have received Royal Assent. Therefore, the Committee will understand why I cannot support these amendments.

Amendment 48 seeks to remove the power for the Secretary of State to make consequential amendments to primary legislation made by the Scottish Parliament or the Senedd. The Government again resist this amendment on the grounds that the provisions of this Act will extend to England and Wales and Scotland. Employment rights and duties and industrial relations are reserved in respect of Scotland and Wales. Therefore, it is right that the Secretary of State has the power to make consequential amendments to primary legislation made by the Scottish Parliament or the Senedd, if required to ensure that the new legal framework operates in a coherent way across the entirety of Great Britain.

The disproportionate impacts that strikes can have are no less severe on people in Scotland or Wales than they are in England. They have every right to expect the Government to act to ensure that they can continue to access vital public services during strikes. The Government will of course engage with the devolved Administrations as appropriate. I have met devolved Ministers to discuss the Bill. Obviously, we will engage further if any consequential amendments are required to Acts of the Scottish Parliament or Welsh Assembly. As this clause is completely standard and has been introduced in several pieces of legislation, including by a previous Labour Government, I hope that noble Lords will feel able to withdraw or not move their unnecessary amendments.

Turning to Amendments 45 and 46, I believe that the intention of the noble Lord, Lord Collins, is to delay the commencement of regulations providing for minimum services until the Government have assessed the Bill’s impact on recruitment and retention in the public and private sectors, and the impact on those with protected characteristics. However, the amendments as drafted are to Clause 3, which provides a power to the Secretary of State to make consequential provision. Therefore, the amendments would delay commencement of regulations which make consequential amendments to other legislation.

Speaking to what I believe is the intended purpose of the amendment, I say that the Government resist it. As I have already set out in my response to the noble Lord, Lord Fox, the Secretary of State must consult on regulations, and they must be approved by both Houses before they can be made.

Impact assessments will be published for all subsequent regulations on minimum service levels and will, as always, contain a public sector equality duty assessment. I also draw noble Lords’ attention to the already published impact assessments for the Bill and currently ongoing consultations on establishing minimum service levels in ambulance, fire and rescue, and rail services, all of which contain public sector equality duty assessments. I hope that I have convinced noble Lords to withdraw and not move their amendments.

[Lord Fox (LD)]

I thank noble Lords for their contributions to the debate on this group. I am particularly grateful to the right reverend Prelate the Bishop of Leeds for painting a picture of King Henry VIII strutting across the Field of the Cloth of Gold on a pair of stilts.

Carbon Budgets: Methane Flaring

Debate between Lord Callanan and Lord Fox

Thursday 9th March 2023 Lords Chamber

[Lord Callanan (Con)]

The noble Lord makes a very good point. The finest minds in the Civil Service have been devoted to deciding the acronym for the new department. “Deznez” seems to be the favourite, though I should say that my Secretary of State rightly points out that no one has any idea what all these acronyms stand for so we should use its full title, which is the Department for Energy Security and Net Zero.

[Lord Fox (LD)]

In answer to my noble friend’s Question, the Minister said that there are reasons why this is technically difficult. It would help noble Lords if the Minister could explain what those technical difficulties are. I can understand it when new wells are being tested, but this is established production over the long term. What exactly are the technical difficulties?

[Lord Callanan (Con)]

I am happy to arrange a briefing with officials for the noble Lord if he would like, but the technical difficulties are, first, technological, in that it requires a lot of new infrastructure and pipework to be installed, and some of the facilities that flare are oil platforms that do not have facilities to pipe the gas to shore. Secondly, there are huge economic costs associated with it; obviously, some of the infrastructure goes back to the 1970s.

Strikes (Minimum Service Levels) Bill

Debate between Lord Callanan and Lord Fox

Committee stage
Thursday 9th March 2023 Lords Chamber

[Lord Callanan (Con)]

I think that comes down to the essence of the political disagreement, and maybe I was not exposing myself correctly, but certainly the Opposition disagree with the minimum service levels legislation. I accept that in some areas the noble Lord might believe in minimum service levels but, as I have said, if voluntary negotiations are in place in certain sectors, that is preferable to the heavy hand of legislation, and we accept that. However, in the case of ambulances, some unions in some areas have agreed minimum service levels and others have not, so we think it is right to have the back-up of legislation in case we need to reach for it, but we hope that we do not need to use it.

As I was saying in response to the intervention by the noble Baroness, Lady Chakrabarti, this is about the essential political balance and what services should be included. I think the noble Lord, Lord Hogan-Howe, makes a good case that policing services should be included, and I will get him a full reply on that. That is the essential political judgment that the Government took when we were drafting this legislation about what services should be included, but I accept that there is political difference of opinion. Some people think they are too broadly drawn, some people think they are not widely enough drawn and some Members think additional services should be included. I can present only the legislation and view that the Government took on this at the time.

With that, I have concluded my remarks in response to the group, so I hope that the noble Lord, Lord Fox, will feel able to withdraw the amendment he moved on behalf of the noble Baroness, Lady Randerson.

[Lord Fox (LD)]

My Lords, I thank noble Lords for their comments and speeches on this group. I think we are beginning to draw the lines a little more clearly. First, I am delighted that the Minister has come out as a bulwark against legal ambiguity. I will clean up our legal ambiguity by withdrawing Amendment 2 shortly, if he clears up his legal ambiguity by withdrawing the Bill.

Looking at the rest of the debate, I think I am beginning to see the problem, which is the difference between minimum service levels and emergency cover. Some of the services highlighted in this Bill are emergency services; they are services that you need in extremis. Some of them are in the Bill, and some of the ones that the noble Lord, Lord Hogan-Howe, mentioned are not. Some of them, particularly transport, are not generally services that you need in extremis. In that case, minimum service level is an appropriate term.

For the others, emergency cover is covered in the Civil Contingencies Act, and the trade union Acts of 1996 and 2002 are more appropriate. In reverting to the language of minimum service level when referring to services that are required in extremis, the Minister is accidentally or deliberately missing the point. I think we will come back to this on a number of occasions, so it would be helpful if the Minister can be persuaded to understand it, even if not to agree with it. On the basis of trying to bring us all together, I beg leave to withdraw Amendment 2.

Retained EU Law (Revocation and Reform) Bill

Debate between Lord Callanan and Lord Fox

Committee stage
Thursday 2nd March 2023 Lords Chamber

[Lord Callanan (Con)]

I know that many noble Lords want to make the point that, somehow, major pieces of retained EU law will suddenly just accidentally disappear from the statute book. We have conducted a very authoritative process of assessing what is retained EU law and what is not, and we are very satisfied that departments know exactly the legislation for which they are responsible.

It is not entirely clear—this goes back to a point that the noble Baroness, Lady Ludford, made the other day, with which I agree—because successive Governments over the years have used different processes to assimilate what was an EU obligation into UK law. Even if departments know what law they are responsible for, they do not necessarily know the process by which it was introduced, or whether that law was as a result of an EU obligation or not. The Government introduced earlier amendments to remove any legal risk of an SI being quashed if it contained a provision preserved as REUL that later turned out not to be one. Our advice to departments is that where they are not sure, it should be preserved.

[Lord Fox (LD)]

My Lords—

[Lord Callanan (Con)]

Can I explain this point please, and then I will take the intervention from the noble Lord?

We are satisfied that departments know the law for which they are responsible. They do not yet know whether it is a retained EU law—in other words, whether it was done in respect of an EU obligation or not. The default position that we are suggesting is that it should be retained if they are not sure, but we have tabled an SI to put that position beyond doubt. I will take one more intervention on this.

[Lord Fox (LD)]

I apologise for my enthusiasm causing a truncation of the Minister’s response. Does he at least understand, if he does not accept, that as long as the Government resist suggestions such as come through in these amendments, whereby a list of the laws that are covered by the Bill is laid before Parliament and officially and definitively made available—not a catalogue, as we have been promised but a definitive and complete list, of the sort of laws that not only the noble Baroness but all of us feel passionately about—we are bound to be fuelled by distrust?

[Baroness Ludford (LD)]

Before the Minister replies, I add that what the Minister is saying now directly contradicts the letter we had the other day from the noble Baroness, Lady Bloomfield, which we discussed. The distinction is made by the Government between an authoritative catalogue and a comprehensive list. The Government admit that the dashboard is not comprehensive, so how can each department possibly know all the EU law it is responsible for? As anyone can, I can give examples—and I am grateful to the organisation Justice, of which I should declare I am a vice-president, for giving two examples of direct effect treaty articles and directive clauses which are not on the dashboard, which cites only 28 in that category. That is Article 157 of the treaty and a clause of the habitats directive. They are not on the dashboard, so how are we meant to believe that departments know exactly what law they are dealing with?

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[Lord Callanan (Con)]

I think I have already taken two interventions from the noble Lord, Lord Fox, but I will take one more.

[Lord Fox (LD)]

I thank the Minister; I appreciate it. I thought he dealt with the democracy issue, to some extent, and cited that it was inconvenient to have to have primary law. The Minister used the Procurement Bill as his paradigm. Sitting next to him is the Lord Privy Seal, who, in a previous guise, brought forward the Procurement Bill—along with the 350-plus government amendments that accompanied it, because it was so badly drafted. If that Bill is a paradigm for anything, it is a paradigm for this Bill and the poor drafting of legislation.

[Lord Callanan (Con)]

I do not think I ever used the word “inconvenient”, but reforming all this by primary legislation, whatever view you take of it, would take many years, if not decades.

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[Lord Callanan (Con)]

Case law is being retained. Case law is not being abolished, it will still exist, and courts will still be able to take account of it. Removing the complex and opaque legal gloss associated with Section 4 of the 2018 Act will improve the clarity of our domestic law. It would be, in our view, inappropriate, to leave these provisions on our statute book, and we wish to end them as soon as reasonably practicable. We consequently also oppose Amendment 137, which specifies that any regulation made under the power conferred by Amendment 62 would be subject to the draft affirmative procedure.

[Lord Fox (LD)]

I think the Minister is departing from Clause 3. This sounds like small beer compared to some of the issues that colleagues have raised, but I asked a specific question about the difference in approach to the extension of sunsetting between Clauses 1 and 3, and I hoped the Minister would address that—if he was intending to.

[Lord Callanan (Con)]

I have some more remarks on Clause 3. Let me come to the end of them and, if the noble Lord does not feel that he has got an answer, we can talk about that further then.

I was going to move on to the point of the noble Baroness, Lady Ritchie, who tabled notice of her intention to oppose Clause 3 stand part of the Bill. For the reasons set out, the repeal of Section 4 of the 2018 Act is, in our view, a crucial part of the Government’s agenda to take back control of our statute book and improve legal clarity. I completely agree with the points made by the noble Baroness, Lady Chapman, about the Windsor Framework. We do not think this Bill has any effect on the agreements made. Of course, we will examine the text of that very closely, but it goes without saying that the Government are completely committed to the agreement and we would not wish to do anything in either this or future legislation to impinge on what I view as a fantastic agreement.

Moving on, Clause 4 abolishes the principle of the supremacy of EU law. I do not think that I have any notes to address the points made by the noble Lord, Lord Fox, so let me say that we will include that in the general write-around about—well, I will not refer to them as legal technicalities because the noble Lord, Lord Anderson, will tell me that they are extremely important legal principles. I will seek legal advice and get a proper answer for the Committee.

--- Later in debate ---

[Lord Callanan (Con)]

That is fair enough; it was a slightly gratuitous point. I actually agree with the noble Baroness—we want the law to be as clear and accessible as possible. That is why we do not believe that the general principles of EU law, which of course were developed by the CJEU for use primarily by EU institutions and member states, should be relevant to the UK now that we are an independent nation, whatever our differences of opinion might have been on that.

[Lord Fox (LD)]

I think I failed to explain why I think that they are relevant. They are relevant because of the EU retained law part of the Minister’s mishmash, which gets assimilated into UK law. The interpretation of that EU part, which is now UK law, somehow loses the basis upon which the interpretation was made. I explained that I understood why the Government wanted to do this, but the fact that they become separated is an issue. I suggested a way for those interpretations to be ported across, specifically and explicitly for each one. If that is not the way it will be done and the Minister says that somehow this is going to happen, then at some point in this debate we need to understand. If it is not in the letter, then it needs to be later in this debate.

[Lord Callanan (Con)]

I made the point earlier that, when departments are reviewing their legislation and any modifications they might need to make to statutory instruments, they will of course want to take account of the fact that the general principles of EU law will no longer apply in the UK and make any modifications that would be required.

I move on to the somewhat related point raised by the noble Baroness, Lady O’Grady. Let me be clear that retained case law—this comes back to the point made by the noble Baroness, Lady Chapman—is not and cannot be directly sunsetted, as it consists of judges’ judgments, which are essentially statements of historical fact. Where general principles and other interpretive effects are removed by the Bill in Clauses 3 to 5, it would be expected that courts would continue to consider relevant case law where it is clear from the restatement that that is the intention.

Amendment 67 would introduce an extension power for the removal of general principles of EU law, as well as the abolition of supremacy and the repeal of Section 4 of the 2018 Act, as I have already set out. Removing these complex legal glosses will, in my view, satisfy the noble Baroness, Lady Ludford, and improve the clarity of our domestic law. It is imperative that we end them as soon as is reasonably practicable.

Retained EU Law (Revocation and Reform) Bill

Debate between Lord Callanan and Lord Fox

Committee stage
Thursday 23rd February 2023 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, I thank everybody who has contributed. I suppose we had to have the debate in principle at some stage, and we have had it on Clause 1. I will attempt to provide some reassurance to noble Lords. I suspect that those who think that somehow the Government have malign intentions will not be convinced, but let me try my arguments anyway.

As my noble friend Lord Frost made clear, this is of course an enabling Bill. The measures in it, including the sunset, will provide for UK and devolved Ministers to make decisions to review, amend or repeal retained EU law as they see fit. I agree with my noble friend Lord Frost’s point. I understand that the Opposition will want to portray all EU law as perfect and ideally suited for the UK’s circumstances, but most of my time in the European Parliament was spent during the period of the last Labour Government. There were numerous occasions when UK Ministers, and civil servant at the behest of UK Ministers, came to give me examples of where the regulations were not suited to the UK and not in the UK’s interests. Many times, as a Conservative, I agreed with them, and we did our best to change or amend them. Often, we were not successful. This legislation gives us the opportunity—

[Lord Fox (LD)]

My Lords—

[Lord Callanan (Con)]

I will let the noble Lord come back in a moment, but let me make a little progress—I might answer some of his points, you never know.

Let us not pretend that it is all perfect. I accept that the Opposition have a principled difference with us on how we go about this process, but at least let us have the debate and, I hope, make some progress. The sunset is not intended to restrict decision-making; rather, it will accelerate the review of retained EU law across all sectors, as my noble friend Lord Hamilton made clear. The Bill will allow for additional flexibility and discretion to make decisions in the best interests of this country.

I start with Amendment 1, in the name of the noble Lord, Lord Fox. I take this opportunity, as I have done many times in this Chamber before, to reassure him and the noble Baroness, Lady Burt, and the Committee, that the repeal of maternity rights is not and never has been the UK Government’s policy. As I have said many times before, our higher standards in this area were never dependent on our membership of the European Union. Indeed, the UK provides stronger protection for workers than is required by EU law. I have made this point many times, and the opposition parties do not seem to want to accept it.

[Lord Fox (LD)]

My Lords—

[Lord Callanan (Con)]

I am going to make this point and then I will allow the noble Lord to intervene.

Our high standards were never dependent on our membership of the European Union. We provide stronger protection for workers than is required by EU law, both under previous Governments and under this Government. Let me give the Committee some examples. We have one of the highest minimum wages in Europe. On 1 April this year, the Government will increase the national living wage by 9.7% to £10.42—higher than most other European countries. UK workers are entitled to 5.6 weeks of annual leave, compared with the EU requirement of four weeks. We provide a year of maternity leave, with the option to convert to shared parental leave to enable parents to share care, whereas EU maternity leave is just 14 weeks. The right to request flexible working for all employees was introduced in the UK in the early 2000s; the EU agreed rules only recently and will offer the right to parents and carers only. The UK introduced two weeks of paid paternity leave in 2003; the EU has legislated for this only recently. Let there be no doubt about the commitment of this Government to enhancing and providing for workers’ rights.

[Lord Fox (LD)]

I am afraid I can wait no longer. I am somewhat surprised that I still do not really understand what the Minister is saying. We did not put on the dashboard the regulations and laws set out so ably by the noble Lord, Lord Collins, and by my noble friend and others; the Government put them on the dashboard. If the Minister is saying that these do not affect British employment regulations, how can that be true? It is simply not true. What the Minister is saying is wrong. They are on the dashboard and they will sunset if nothing is done. They affect day-to-day employee rights, and therefore the Bill potentially affects those employee rights because these regulations are on the Government’s dashboard.

[Lord Callanan (Con)]

They are on the dashboard if they are retained EU law. I noticed that, in all the statements and speeches from Members opposite, the words “if” and “could” were doing an awful lot of heavy lifting. I accept that there is no trust from the Opposition in the intentions of the Government and that they want to make their political attacks. The reason I outlined UK employment rights and standards was to demonstrate the commitment of this Government to those rights. The point that the noble Lord, Lord Fox, made earlier is essentially correct: while we have some very high standards, of which we are proud and will maintain, there is a complicated mishmash of laws in this area between some elements of EU and domestic law.

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[Lord Callanan (Con)]

I thought I had given the noble Baroness a serious response. Within the area of devolved competence, the devolved Administrations have the same rights as the UK Government to amend, repeal or replace retained EU law.

[Lord Fox (LD)]

My Lords, I am assuming the Minister has now sat down. He touched on the interpretive effects that I raised in the set of amendments, but I do not think the answer was as full as we need. I think there will be other opportunities for the Minister to come back, and I will certainly press them. In the end, my assumption is that it will be up to the courts to decide which cases are in and which are out; it will be up to the courts and the lawyers who are pressing the courts to reinterpret or allow interpretations to continue. We need to know from the Government what is their assessment of the effect of that on this body of law and others across the spectrum we are discussing.

All Governments have to make choices, and the day-to-day push and pull of government can throw up many difficult dilemmas and severely stretch the national bandwidth for decision-making, but with this Bill, the Government are giving themselves 4,000 more choices they did not need to make. In opting to make these choices alone, without debate, discussion or consensus, each of these choices is bound to become a battleground, and each will be down to a Secretary of State—decisions that will call down attention from every corner of civil, legal, commercial and social society. So good luck with that, Minister.

The first amendment in the group illustrates some of the places where these battles will be fought across the country. No matter how close to their chest the Government play this, the arguments will not go away; indeed, the more secrecy and circumspection, the more suspicion will rise. The right reverend Prelate spoke about using the specifics to test the general, and this was an opportunity for the Minister to be more specific so that we could judge the general better. I do not think he has yet achieved that; however, we have six groups in very much in the same vein, so perhaps the Minister can work on his performance. In the meantime, I beg leave to withdraw Amendment 1.

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[Lord Callanan (Con)]

My noble friend asks what she can say to women. She can tell them that they have one of the highest minimum wages in Europe as a result of the policies of this Government, that they are entitled to 5.6 weeks of annual leave compared with an EU requirement of four weeks, and that they are entitled to a year of maternity leave in the UK whereas the EU minimum is only 14 weeks—that is what she can say to women workers.

[Lord Fox (LD)]

My Lords, I believe I owe the Committee an apology. In withdrawing my previous amendment I said there were 4,000 unnecessary decisions facing the Government. I am afraid I was wrong. I have listened to the Minister and I understand now that it is 4,700 unnecessary decisions, on which the Government will be using important legislative and administrative bandwidth. I believe there are better things to be doing than this process, and perhaps in one of his other comments the Minister can explain why all this time is being wasted if, as he says, nothing will change—and that is our point.

When it comes to the question of interpretative effects, it is strike two. The noble Baroness, Lady O’Grady, and indeed the Minister himself, set out this intermingling of UK-derived, EU-derived and case law, and the fact that if we start pulling one piece of string there is a very great chance of it unravelling. The Minister has acknowledged there are interpretative effects, but we need a more detailed assessment of how the Government expect those to pan out as the courts get their teeth into the post-2023 situation. When I ask this in the next group, it might be better if the Minister undertakes to write a very detailed letter—possibly assisted by the department’s lawyers—that explains the legal view on how this is going to work. That is perhaps a way of avoiding me asking the question another few times.

At the end of the previous group, there was a very interesting intervention from the Minister’s own Benches on Clause 15(5), and how changes to the wording of that clause could begin to draw the sting of some of the arguments that we have heard so far and will hear later. The Minister might take to heart the advice that came from his own Benches.

We heard in the debate about the disproportionate effect that the stifling of this legislation could have on women, minorities, the creative industries and a wide group of people. That is why it was important to have this amendment in a separate group. However, given the nature of the debate, I beg leave to withdraw Amendment 2.

Manufacturing Post Brexit

Debate between Lord Callanan and Lord Fox

Thursday 26th January 2023 Lords Chamber

[Lord Callanan (Con)]

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

[Lord Fox (LD)]

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

[Lord Callanan (Con)]

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

REUL Bill: Trade Unions and Workers’ Rights

Debate between Lord Callanan and Lord Fox

Monday 23rd January 2023 Lords Chamber

[Lord Callanan (Con)]

We are of course continuing to do detailed work on this matter. There will be an opportunity to debate that in full in the House in the near future, and I am sure that the noble Earl will want to make his contribution on that. We will update the dashboard shortly.

[Lord Fox (LD)]

I will follow on from the question from the noble Earl, Lord Kinnoull. How many members of the Minister’s team are currently out there working on this Bill? How many of them are looking for the lost legislation that seems to be appearing every day? How many members of his department are being used for that purpose rather than working on industrial strategy, which is what it is there to do?

[Lord Callanan (Con)]

I do not have a precise number but there are of course a number of civil servants working on the legislation that is before Parliament and has been discussed extensively in the House of Commons. Every department is engaged in looking through its EU legislation to see what is there. Obviously most of the main pieces have been identified, but sometimes there are obscure Acts and regulations that they are still discovering.

Electric Vehicle Battery Production

Debate between Lord Callanan and Lord Fox

Monday 23rd January 2023 Lords Chamber

[Lord Callanan (Con)]

I know that my noble friend has personal experience of problems with his keys, and I hope they are resolved. That is not intended as an obscure comment—his is a genuine complaint, and I know it will be resolved. Of course, it is always regrettable if manufacturing is outsourced overseas, but the UK car industry has been successful in the past, and we have one of the biggest car industries in Europe. A massive programme of transformation is required in the industry as we move towards more electric vehicles, but I am sure that the industry will rise to the challenge.

[Lord Fox (LD)]

My Lords, the Minister, given his intimate knowledge of the trade and co-operation agreement, will know that there is an important clause relevant to this. In 2024, the rules of origin for electric vehicles change, increasing the need for local content. Because batteries make up so much of electric cars, we cannot achieve that local content without batteries being built in this country. Will the Minister tell the House whether his department speaking to the other relevant departments in government to reopen this negotiation? Is it this Government’s intention to push back the commencement date of this clause, because without doing so, we have a really serious problem here?

[Lord Callanan (Con)]

Like the noble Lord, I am familiar with the rules of origin provisions of the TCA. There was a lot of debate about this at the time, and we continue to keep an eye on it. Of course, there are discussions across government. One of the reasons for setting up the automotive transformation fund was to attempt to get more of these gigafactories into the UK, and we stand ready to talk to any other prospective investors to do that.

Industrial Action

Debate between Lord Callanan and Lord Fox

Wednesday 11th January 2023 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the Minister for taking questions on the Statement and congratulate the noble Lord, Lord Lennie, on his contribution. I will try to focus my questions and comments on how the Minister expects this to work.

The coming Bill is interesting because it introduces the concept of a minimum service level. Of course, in the Bill, the actual levels of service are not defined—true to form, this Government will come back with secondary legislation to do that. Can the Minister give your Lordships’ House at least an idea of what criteria will be used to come up with the minimum service levels? Will they be the same right across the country or will, for example, rural and urban areas have different minimum service levels? These are important issues.

There is, however, a wider issue around service levels. Taking yesterday as an example—when there were no strikes, as far as I am aware—can the Minister tell your Lordships’ House whether the tens of thousands of people waiting weeks to see their GP were getting a minimum service level? Were the people across Britain waiting sometimes tens of hours for ambulances getting a minimum service level? Were the people trying desperately to travel by train from Manchester to London experiencing a minimum service level? This is the baseline from which this legislation is working, and it is clearly not good enough. The public expect and deserve higher minimum standards than they are getting today, and on every day when there are no strikes.

Instead of addressing this issue, which I would define as the Government’s duty of care, the Bill passes the onus on to individual workers in these sectors. It is not the Ministers, the bosses or indeed the union leaders who will be sacked if the Government’s standards are not met; it is individual workers. I want briefly to illustrate this. If the Bill is enacted, the Secretary of State will impose a minimum service level. In the event of a strike, employers will be required to identify named employees who will be mandated to work via a work notice. At that point, these individuals are deprived of their right to strike on pain of probable dismissal. That does not square with the Secretary of State’s statement that this does not infringe the right to strike.

I know the Minister, and I am sure that, in his heart, he knows that a different approach is needed to deliver the service levels we need in this country. First, as was mentioned by the noble Lord, Lord Lennie, we need to plug the huge hole in our public sector workforce. We literally need hundreds of thousands of new people in order to deliver the basic service levels we require. A serious Government would be working with everyone in every part of these vital sectors. Can the minister tell your Lordships’ House one thing in this legislation that will help to build a bigger, better workforce in this country? Of course, a necessary first step is sorting out the pay disputes.

Turning to the NHS, the Government have absented themselves from negotiating the pay round, citing the inviolability of the pay review body. This position would have more credibility had not the Government suspended the body as recently as 2018, instead negotiating directly to deliver the 2018-21 pay agreement. What has changed since 2018 that means the Government will no longer directly negotiate with workers on this issue?

The original Bill, over the summer, targeted only rail. As we have heard from the noble Lord, Lord Lennie, the impact assessment identifies more than a dozen risks and unintended consequences—not least, I hasten to add, the proliferation of sub-strike action such as overtime bans, which would cripple the NHS and is already crippling our rail services. The current Bill steps beyond the Government’s manifesto commitment and adds five more sectors. Given the differences between the two Bills, when will the Government publish an updated impact assessment?

Finally, I am sure it is extremely frustrating running a public service in the United Kingdom, but can the Minister tell us how many bosses actually asked His Majesty’s Government for this legislation? Can he point to any appetite for this beyond the Back Benches of his own party? As I said, we will take a practical approach to scrutinising this legislation when it comes to your Lordships’ House.

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

My Lords, I thank the noble Lords, Lord Lennie and Lord Fox, for their contributions. I start by placing on record the Government’s thanks to public sector workers, especially those working in the NHS. Their work is greatly valued and I know that all noble Lords here today are very grateful for the work they do.

Let me say in response to the noble Lords that while the pressure on the public sector is of course recognised—there are unprecedented strains, particularly on the health service at the moment—it is regrettable that multiple unions have taken the decision to strike. The public are understandably worried about access to emergency care and they are tired of the ongoing chaos on many parts of our public transport network. The Government want to resolve these disputes where that is possible and Ministers across government have been meeting union representatives this week to find meaningful ways forward that are fair and reasonable to the taxpayer. While these conversations continue, it is sensible and reasonable for the Government to take steps to reduce the disproportionate impact that strikes can have on the wider public and on our economy, and that is why we have taken the decision to introduce this legislation.

Let me be clear: we hope that in many cases we will not have to use the powers the Bill gives us. Where unions reach voluntary agreements—as is the case with the nursing unions at the moment—to provide adequate minimum levels of service that keep people safe and help the economy and society to function, we will not regulate those sectors. However, it is absolutely right that the Government have the power to act in key services where that does not happen.

The noble Lord, Lord Lennie, raised the issue of international compatibility, particularly with the ILO. I can reassure noble Lords that as part of the introduction of this legislation, the Secretary of State signed a statement of compatibility with the ECHR, and a memorandum to this effect has been published. I will place a copy of that memorandum, in addition to the delegated powers memorandum, in the Libraries of the House. Since the noble Lord quoted the ILO, let me quote the ILO back to him. The ILO itself states that minimum service levels can be a proportionate way of balancing the right to strike with the right to protect the wider public, and that is exactly what we are doing.

Let me address head on the issue raised by both noble Lords, Lord Lennie and Lord Fox, with their fairly alarmist statements about it somehow being the Government’s policy to sack workers as part of this legislation. I clarify for the record and for noble Lords that that is not the case. It is a ridiculous exaggeration. When it comes to the position of this Government on the number of key workers, we are in favour of increasing them, not sacking them.

Both noble Lords referred to other European countries. There is a certain irony in this, because normally, both noble Lords press me to adopt what other European countries are already doing—they normally quote it, particularly the Liberal Democrats, as an example of what we should be doing in this country. It is the case, although noble Lords might not like it, that many European countries and other global democracies have minimum service levels. They are facing precisely the same challenges and protecting the wider public from disproportionate impacts of strikes. In fact, many of those countries ban strikes completely in blue light and border security areas. Of course, we are not proposing to do that. This legislation does not ban the right to strike. The Government will always defend workers’ ability to withdraw their labour, but in line with what the Liberal Democrats normally ask us to do, this legislation actually brings us into line with what many other modern European countries already do.

Both noble Lords asked me about implementation and the detail of how these would work in practice. We will consult on how they will be applied to rail, ambulances and the services. These consultations will outline the proposed approaches for MSLs in each service—they will differ across different services, of course—and I will endeavour to have published during the passage of this legislation each consultation expected to be published. I look forward to engaging with noble Lords on this issue in more detail during the passage of the Bill.

The noble Lord, Lord Lennie, suggested that the Government should focus on resolving the disputes with the unions and do away with this legislation. As the Prime Minister promised last week, we are building a better future for the country by halving inflation this year, growing the economy and getting our national debt down. If we met all the inflation-busting demands of the unions, we would be shooting the economy in the foot and making life harder for other workers up and down the country. The answer to his point is that we are doing both. Of course, we will continue to talk and negotiate with the unions, but it is right that we take action to make sure that the public are protected where necessary.

--- Later in debate ---

[Lord Callanan (Con)]

I welcome the noble Lord saying that he regrets the strike action—I think that is the first time I have heard anybody from the Opposition say that they regret the inconvenience that has been caused to the public. I take in good heart his other comments; of course we will proceed with care and caution, and with full consultation. However, we are very clear that this action needs to be taken in some sectors, because the public are getting tired of the disruption caused by the actions of one or two unions to their ability to go about their daily business.

[Lord Fox (LD)]

My Lords, I will follow up on the point made by the noble Lord, Lord Clarke. It is quite clear that the Government will not be setting the personnel levels that companies will need to deliver the service levels that the Government are setting. It will be up to local management to decide how many people they need. The point that the noble Lord made was not addressed by the Minister; perhaps Second Reading will be a chance to go through that in more detail.

The Minister will have to address the point about sanctions. What happens if named individuals on work orders refuse to work? He says, “We have no intention to sack people” but essentially, if someone refuses to do something, that is grounds for sacking. There are two sides to this, and when we come to Second Reading, the Minister will have to be able to answer these sorts of questions on the operational detail that I was talking about. Can he undertake to come back on Second Reading with that level of detail so that we can move forward sensibly on this legislation?

[Lord Callanan (Con)]

As I said in my short remarks, the overall minimum service level will be determined in regulations approved by Parliament, and the noble Lord is right that the implementation of that—in other words, how many workers will need to turn up to deliver that service level, plus, presumably, a few for reserve, et cetera, for those who might be sick on the day—will need to be set by individual employers on the ground in response to the different circumstances that will apply. The ultimate sanction is the same as for anybody who does not turn up to work now: they are in breach of their contracts and they will lose their right to unfair dismissal protection.

Prime Minister: Trade Unions

Debate between Lord Callanan and Lord Fox

Monday 19th December 2022 Lords Chamber

[Lord Callanan (Con)]

It will not surprise the noble Lord to know that I do not agree with him. The reason we have independent pay review bodies is to try to take the politics out of these settlements. The Government have said that we will accept those recommendations in full. Frankly, some of the increases that are being asked for are unaffordable.

[Lord Fox (LD)]

My Lords, over the weekend several senior government spokespeople have justified not increasing the offer on public sector pay because it would fuel inflation. I believe that the Minister here is more economically literate than those spokesmen, because he knows well that public sector pay does not fuel inflation, neither is it driving private sector pay—you have only to look at the discontinuity now. Will the Minister please disabuse his colleagues of this specious argument? Will he urge them to sit down with the nurses and settle this dispute?

[Lord Callanan (Con)]

Of course we want to see the action ended and the dispute brought to an end, but it remains the case that, if above-inflation pay rises are accepted, that will mean less money for the services that everybody wants to see expanded. There is a limited pot of money that can go only so far.

Employment Policies

Debate between Lord Callanan and Lord Fox

Tuesday 6th December 2022 Lords Chamber

[Lord Callanan (Con)]

The noble Lord will be unsurprised to know that I completely disagree with him. The Government are confident that all our measures are in full compliance with our international obligations. We remain in full compliance with ILO conventions. We are trying to balance the understandable right to strike, which I know that the noble Lord is very proud of—but I also want to support the right of people to go to work, if they wish to do so.

[Lord Fox (LD)]

My Lords, there is another area that the Minister could address for your Lordships’ House. I had a meeting this morning with about 20 representatives of manufacturing businesses, and one thing that they were anxious to highlight was the failure of the apprenticeship levy. When the levy was brought in, 150,000 young people were going in to become apprentices; that number is now below 50,000. The first way in which to solve a problem is to admit that you have a problem. Will the Minister admit that there is a problem, and will he undertake to solve it?

[Lord Callanan (Con)]

I thank the noble Lord for his question. It is slightly unrelated to the point under discussion, but I would be happy to get back to him in writing.

Newport Wafer Fab

Debate between Lord Callanan and Lord Fox

Tuesday 22nd November 2022 Lords Chamber

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

My Lords, obviously, there is a limit to what I can say about this, but I will endeavour to be as helpful to the House as possible. I certainly can confirm to the noble Lord that the review did take place and was one of the factors that the Secretary of State took into consideration when he made his decision. It was made in a quasi-judicial manner and the Secretary of State considered that a risk to national security had arisen from the trigger event, which is why he made the order that he has.

[Lord Fox (LD)]

My Lords, I think we welcome this decision. When it comes to the National Security and Investment Act, the Minister is the best authority because, while Secretaries of State have come and gone, the Minister took it through this House and he is still here. Perhaps he can add some perspective, because at the outset of this case the Minister stood up and said that the technology in Newport Wafer Fab was not worthy of being called in through the National Security and Investment Act. Over time, that has evolved, so what has changed? Is it the Government’s view of Newport Wafer Fab or the Government’s view of China?

[Lord Callanan (Con)]

I am not sure that I said that, but I will certainly look back through the record. This has been going on for a long period. The Secretary of State has taken into account all the relevant factors, as he is obliged to do under the legislation. The noble Lord is right; we debated it extensively, but this decision has been taken purely on the grounds of national security. That is what the Secretary of State is required to do. That is what he has done, taking all the relevant factors into consideration, and he has made a final order in this case.

Government Departments: Communication with Industry and Commerce

Debate between Lord Callanan and Lord Fox

Monday 14th November 2022 Lords Chamber

[Lord Callanan (Con)]

I am happy to agree with the noble Lord. The CBI was one of the organisations that my right honourable friend the Business Secretary met only last week.

[Lord Fox (LD)]

My Lords, in his Answer, the Minister used “consistent”. However, if you talk to businesses, that is not a word that they use. They use “inconsistent”. There has been a rotating door of Business Secretaries, a rotating door of Prime Ministers, and an ever-changing policy landscape. How does the Minister expect businesses to know where to invest and how to invest when there is no consistent policy from the Government?

[Lord Callanan (Con)]

The noble Lord is wrong. There is consistent policy from the Government. In a whole range of areas of policy, life continues as it did. There are of course unique challenges facing us at the moment—the headwinds of Covid, the energy crisis, et cetera—but this Government have the solutions and will carry on implementing them.

Employers: Fire and Rehire

Debate between Lord Callanan and Lord Fox

Thursday 3rd November 2022 Lords Chamber

[Lord Fox (LD)]

My Lords, many across this House joined together to condemn P&O Ferries for its appalling behaviour towards its employees. Does the Minister agree that, in the long run, it seems to have got away with it and that this indicates the weakness of employment law?

[Lord Callanan (Con)]

As the noble Lord will be aware, the Government are bringing forward legislation to stop those kinds of practices and extend minimum wage provisions to seafarers. The DfT is progressing that.

Workforce: Trades Union Congress

Debate between Lord Callanan and Lord Fox

Wednesday 19th October 2022 Lords Chamber

[Lord Callanan (Con)]

We are always looking for helpful suggestions to improve supply chains. In fact, Frances O’Grady was in a BEIS meeting with one of my ministerial colleagues in August. We remain open to constructive meetings with trade unions where it is required.

[Lord Fox (LD)]

The noble Lord talked about opportunities for the supply chain. The biggest barrier to growth and prosperity in this country is a shortage of skills, so will the Minister take back the comment that the Government, trade unions and employers must work together to deliver the skills we need? Can the Minister tell us what new initiatives the Government are now bringing in place to deliver the skills that we so badly need?

[Lord Callanan (Con)]

Skills is an important part of the Government’s agenda; we are spending some £2.5 billion, directed through the Department for Education, on building up skills provision across the economy. We remain open to working with trade unions, employers and whoever has good proposals for the future.

Four-Day Working Week

Debate between Lord Callanan and Lord Fox

Monday 5th September 2022 Lords Chamber

[Lord Fox (LD)]

My Lords, that is all well and good, but Jacob Rees-Mogg recently said that he wanted to crack down on flexitime, and he has also been very hard on working from home. I agree with the Minister’s point that it should be up to individual employers to assess the benefits of flexible working and, indeed, working from home. The Government are the employer of hundreds of thousands of people, so what is their assessment of flexible working and working from home when it comes to operational effectiveness, skills and recruitment and employee well-being? What data is being gathered and when can we see it?

[Lord Callanan (Con)]

The right to request flexible working applies as much in the public sector as in the private sector. Civil servants already have very good working conditions and many do work flexibly—there are, for instance, many job-share arrangements in my department. So we think it is a good thing, but it very much depends on the circumstances of individual organisations.

Strikes: Cover by Agency Workers

Debate between Lord Callanan and Lord Fox

Tuesday 5th July 2022 Lords Chamber

[Lord Callanan (Con)]

The noble Lord will not be surprised to know that I do not agree with him. We did consult the trade unions; in fact, the TUC submitted a petition of 25,000 names against the proposals, so they clearly had a chance to comment. We will of course consult Parliament when the regulations are debated.

[Lord Fox (LD)]

My Lords, there is a huge workforce crisis across the United Kingdom and a shortage of people. Does the Minister not believe that, rather than using agencies to cross picket lines, he should be working with agencies and other groups to try to plug the hole in Britain’s workforce?

[Lord Callanan (Con)]

I am not sure of the point the noble Lord is making. We want to work with all the appropriate agencies to, as the noble Lord says, plug the hole in the workforce.

--- Later in debate ---

[Lord Callanan (Con)]

This is not specifically targeted at the current rail strikes. The regulations will apply to all sectors of the economy, not just the rail sector.

[Lord Fox (LD)]

My Lords, the noble Lord, Lord Woodley, mentioned the letter that the heads of the major agencies wrote to the Secretary of State. In that letter they said:

“we can only see these proposals inflaming strikes—not ending them.”

Will the Government take the advice of these experts in employment and back down from this measure?

[Lord Callanan (Con)]

If agencies do not wish to take part in the freedoms offered by these regulations then it is entirely their right not to do so.

Fuel Poverty

Debate between Lord Callanan and Lord Fox

Monday 13th June 2022 Lords Chamber

[Lord Callanan (Con)]

The noble Baroness makes a very good point. Heat networks are another of the difficult areas we need to address as part of the consultation we are doing. I also point out that we are, of course, taking powers to regulate heat networks, which are currently unregulated, in the forthcoming energy Bill, because it is an area that we need to expand in this country and there is no protection for those residents currently on heat networks, either in housing associations or in the private sector.

[Lord Fox (LD)]

My Lords, the Minister knows that, in fact, as he stated, very little of our gas, for example, comes from the world market, yet it is the world market price for gas that is driving up the cost of fuel and energy, in terms of electricity, for our citizens. Is there not a case for reviewing how the basket of electricity is costed, so that it actually reflects the cost of generation more effectively in this country, rather than it being driven by the highest marginal cost of gas?

[Lord Callanan (Con)]

The noble Lord is partially right. Of course, 40% of our gas supplies come from our own domestic production. We get quite a bit from the world market through Norway and quite a bit from LNG as well, so we are, of course, subject to world market fluctuations. But there is a lot of validity in the points that he has made.

Construction Contracts (England) Exclusion Order 2022

Debate between Lord Callanan and Lord Fox

Monday 13th June 2022 Grand Committee

[Lord Callanan (Con)]

As I said, these are specific to a unique procurement model which is being trialled and which we think will be appropriate in the water and sewerage sector. We therefore think it appropriate to exempt these particular, very large contracts to enable the model which effectively, as far as the companies are concerned, delivers the construction, management, maintenance, et cetera of very large construction projects. It is a unique procurement mechanism which we think has the potential to benefit customers in the future, so in this very limited case it was deemed appropriate by the Secretary of State to exempt them from the regulations.

[Lord Fox (LD)]

I shall further demonstrate my confusion on this statutory instrument. I think I heard the Minister say that payment to the tier-one supplier could be delayed until the point at which the service has been delivered, but that payments to those lower down the supply chain would not be delayed. If that is the case, there is a significant cash flow issue for the tier-one suppliers who are not necessarily robust in cash, as we have seen in other projects. Has the department carried out an impact assessment in cash terms on the tier-one suppliers who would potentially be taking a knock here?

[Lord Callanan (Con)]

In essence, the noble Lord is right. The regulation exemption will apply to the main, overall contract, but the separate contracts that will exist lower down the supply chain with SMEs will still be subject to the provisions of the construction Act. I suppose the answer to the noble Lord’s question is ultimately it is for the main supplier to price in the risk. Of course, if it wants to be paid, it needs to deliver on the contract and on the service that it is being contracted to provide. As in all these things, it is about providing the right incentives and fair value for the taxpayer or, in this case, the water bill payer, and for the main contractor to deliver the project as efficiently as possible. Ultimately contracts between the lower-tier levels and smaller SMEs are still subject to the provisions and they will need to be paid in any case.

In response to the question asked by the noble Lord, Lord McNicol, this instrument is limited to a specific procurement model that Ofwat wants to use in the regulated water and sewerage sector. He referred to the consultation. That was held through individual and group meetings with the relevant construction industry and with water sector stakeholders and was undertaken over a two-month period.

I was asked a question on pay when paid.

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[Lord Fox (LD)]

I apologise for labouring this point. First, an observation on the Minister’s answer to my last question is that, if I were a tier 1 contractor factoring in the risk to my cash flow, it would increase rather than decrease my price, because I would be taking some sort of insurance or loan to finance the flow of cash through my business. So I do not quite get the idea that competitiveness would work in the way the Minister is depicting.

I am struggling with why, and why now. Are there historic issues with delivery that have caused the department and the Government to want to push this model through this statutory instrument? We cannot simply point to the construction Act being there; the construction Act is there, but projects have been going on. What specifically has caused this to happen now? I still do not get that.

[Lord Callanan (Con)]

While Ofwat’s regulatory regime has been successful at challenging the performance and efficiency of what are ultimately monopoly companies, in some areas, such as the delivery of major infrastructure projects, we believe that competition can deliver greater benefits for consumers. That is why, with advice from the regulator and the appropriate consultations, we think that these procurement models will deliver better value with a greater competition benefit for consumers—which is why we are introducing them. I hope I have satisfied the noble Lord’s question and I therefore commend these draft—

Queen’s Speech

Debate between Lord Callanan and Lord Fox

Monday 16th May 2022 Lords Chamber

[Lord Callanan (Con)]

We are funding a number of innovative projects—from memory, I think that there was one in the Scottish islands—helping to explore the potential for wave as well as tidal power. I would be happy to write to the noble Baroness with more details on that.

I turn to the question of the noble Baroness, Lady Kramer, on the financial capacity of the infrastructure bank compared to the European Investment Bank, which used to invest around £5 billion a year in the UK. However, the EIB has a broader focus than the UK Infrastructure Bank, which is not a direct replacement for it.

The noble Viscount, Lord Chandos, asked why the Government chose to privatise the green finance bank. The bank had a targeted mandate to mobilise private finance, and, when it did so, it was sold. However, as I said, the UK Infrastructure Bank has a broader mandate, spanning both investment in green technologies and infrastructure projects needed to tackle climate change and support economic growth across the UK.

The noble Lord, Lord Redesdale—I do not see him in his place—asked me about carbon reporting. The UK’s economy-wide sustainability disclosure requirements regime will require businesses and investment products to report on their impact on the climate and the environment. Legislation introducing these changes will be brought forward when parliamentary time allows. I apologise; I can see the noble Lord now.

Moving on to the environment, we know that we live on one interconnected planet and that it is our duty to guard it for the next generation. I welcome my noble friend Lord Harlech’s contribution to the debate on rural issues. His father was a champion of the countryside, and I am glad that he continues to speak passionately about rural issues. I am sure that he, my noble friend Lord Smith and the noble Baroness, Lady Donaghy, have already acquainted themselves with the Levelling-up and Regeneration Bill introduced to the other place last week, and I encourage their contributions when that Bill makes its way to this House.

We also want to ensure that there is enough food for everyone, even as the climate changes. That is why we are positioning the country to become a world leader in precision breeding technologies such as genetic editing. I welcome the recognition from the noble Baroness, Lady Hayman, that this can be of huge benefit to the country.

Alongside this, leaving the EU has enabled us to improve our animal welfare standards. The Animal Welfare (Kept Animals) Bill delivers on three government manifesto commitments on animal welfare and is a high priority for the Government.

I reassure my noble friend Lady McIntosh that the Government are committed to securing free trade agreements that are tailored to British firms and the economy, and, of course, are not compromising our environmental, food and animal welfare standards. We are also working hand-in-hand with farmers on our plans for a renewed agricultural sector, which will transform the way we support farmers in the UK.

In conclusion, I thank all noble Lords for some excellent contributions. I apologise that, with almost 60 speakers, I was not able to address all the points made in the time I have available; in fact, I am already over my allotted time. However, we covered from financial services to farming, economic crime and energy security. The Queen’s Speech we have debated this evening will help to strengthen our country after a turbulent few years.

[Lord Fox (LD)]

I appreciate the Minister giving way and the time constraints. I asked some specific questions on ARIA. I am sure the Minister has the answers in his head, but if he could write to me with them, I would be very appreciative.

[Lord Callanan (Con)]

I will be happy to write to the noble Lord, as always. I seem to write lots of letters to the noble Lord at the moment, but I will be happy to write another one.

We will continue to stand by workers and businesses while boosting economic growth the length and breadth of the UK. As always, I look forward to working closely—as do all Ministers—with every Member of this House as these Bills come to fruition and pass through the legislative process.

Amendment to the Motion

Vaccine Manufacturing and Innovation Centre

Debate between Lord Callanan and Lord Fox

Monday 25th April 2022 Lords Chamber

[Lord Callanan (Con)]

I am sorry but a number of assumptions behind the noble Baroness’s question are wrong. First, this is a private company that sold off its facilities to a very successful US manufacturer that produced virtually all the Moderna vaccine, with great success. The vast majority of the vaccines that we have used and successfully deployed were also rolled out by private companies. All the employees who work there are being guaranteed their jobs, on the same terms and conditions, and indeed the facility will be expanded. She needs to rethink her questions on this.

[Lord Fox (LD)]

My Lords, I think that everyone across the House agrees that we were ill prepared when this pandemic arrived, and planning for future pandemics is very important. The security and investment Bill was intended to secure private facilities that might be needed to secure the future of this country. Was that legislation applied, and was this sale evaluated by the unit in the Minister’s department? If not, why not?

Newport Wafer Fab

Debate between Lord Callanan and Lord Fox

Thursday 7th April 2022 Lords Chamber

[Lord Fox]

To ask Her Majesty’s Government what is their position regarding the acquisition of Newport Wafer Fab by Chinese-owned technology company Nexperia.

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

My Lords, the Government are considering the case and no decisions have been made. I am unable to comment on the details of businesses’ commercial transactions or on national security assessments. The Government always stand ready to act, where necessary, to protect the UK’s national security.

[Lord Fox (LD)]

My Lords, the problem here is that we seem to be looking at this issue in a vacuum. The Minister has said in the past that there are no specialist technologies at Newport Wafer Fab, but that ignores the need for industrial capacity to build technology. The Minister will say, and has said, that the factories will not move, so why should we care who owns them? I do care. There is a crippling shortage of microprocessors around the world that is hampering manufacturing. To combat that, the EU and the US have strategies. We seem to be waiting and seeing. So, to put this acquisition into context, can the Minister tell us when will we have a plan? Will he undertake not to allow this business to be sold until such a plan is forthcoming?

[Lord Callanan (Con)]

I cannot comment on the details of that particular transaction, which is still under consideration, but I can tell the noble Lord that DCMS is working on a semiconductor strategy that will also be published shortly.

Energy Security Strategy

Debate between Lord Callanan and Lord Fox

Thursday 7th April 2022 Lords Chamber

[Lord Callanan (Con)]

Both the cases highlighted by my noble friend show the difficulties of proceeding in this environment, because we are a democratic society; we have strict planning rules and we have to try to proceed with these things with care and the support of local communities. I have outlined the position a number of times in relation to onshore wind. With regard to fracking for shale gas, my noble friend will be aware that the Business Secretary commissioned the British Geological Survey to do a further study to see if extraction of shale gas can take place without the unfortunate seismic events that occurred the last time it was tried. We will continue to be guided by the science in this respect.

[Lord Fox (LD)]

My Lords—

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[Lord Fox (LD)]

I appreciate that, and I thank the noble Lord for giving way. As your Lordships’ House knows, the financial risk of funding future nuclear is falling to consumers through the RAB model. Can the Minister tell us when consumers will see their bills go up, and by how much? When will they see the fruits of that investment—in nuclear electricity—coming down their pipes? How long will they have to wait and how much will they have to invest before that electricity comes on stream?

[Lord Callanan (Con)]

We debated these matters extensively during the passage of the Nuclear Energy (Financing) Act. The impact on consumer bills under the RAB model is relatively small. I would be happy to let the noble Lord have the figures that we used during the progress of the Bill. As I suspect he is well aware, new nuclear projects take a number of years to come on stream. This is about the UK’s long-term energy security policy; a mix of policies will be required, which I have outlined at great length. Of course, it will be a number of years before new nuclear comes on stream.

Returning to the question I think the noble Lord, Lord Hunt, was about to ask me when the strategy will be published. The answer is today.

Energy Storage Capacity

Debate between Lord Callanan and Lord Fox

Tuesday 5th April 2022 Lords Chamber

[Lord Callanan (Con)]

As I responded to my noble friend earlier, more storage is not the answer to high prices at the moment. It benefits the system in the longer term. Sadly, in energy policy, nothing happens in the near future and everything is long term. The noble Lord is aware of the £9.1 billion package of support that the Chancellor announced to try to mitigate the effect of high prices at the moment.

[Lord Fox (LD)]

My Lords, the success of offshore wind was driven by the contracts for difference structure that has caused private money to pour into the sector. The Government have recently passed the Nuclear Energy (Financing) Act, which looks at the RAB model. What models are they now looking at to finance storage because, without companies knowing how they will make money from building storage facilities, they will not build them. It is really important that the Government step forward now to explain how this will work financially. What are the plans to deliver a structure that will finance this?

[Lord Callanan (Con)]

The noble Lord is correct and, as I said earlier in response to the noble Lord, Lord Oates, we had a call for evidence last year and we will announce our analysis and the results of that shortly.

Exports: Support for Businesses

Debate between Lord Callanan and Lord Fox

Thursday 31st March 2022 Lords Chamber

[Lord Callanan (Con)]

I am obviously very sorry to hear of my noble friend’s experience. I will certainly take that back to the department to see what we can do to alleviate those difficulties. There is clearly some disruption at some ports, et cetera, and we are attempting to smooth the flows of paperwork and export requirements needed to trade with the EU at the moment. I know that a lot of colleagues across government are working to try to reduce those delays.

[Lord Fox (LD)]

My Lords, I am sure that the Minister will agree that businesses in areas such as conference organisation, music and theatre, which rely on people travelling from this country to countries in the European Union, are suffering great confusion and difficulty in moving their people to the right place in time. Having agreed with that, can the Minister tell your Lordships’ House what the Government are doing to smooth the path for what are mostly small and medium-sized businesses that rely on moving their people efficiently and friction-free across Europe?

[Lord Callanan (Con)]

I am of course aware—we have discussed this before—that there were difficulties for travelling musicians and others, which principally revolved around the different visa requirements of different EU member states, but I know that DCMS in particular has been heavily engaged in working with member states to work out exactly what the visa requirements are and to publish them on the UK government website to provide support to businesses that are struggling, exactly as the noble Lord says. I think that the situation is a lot easier than it was last year.

Subsidy Control Bill

Debate between Lord Callanan and Lord Fox

Lords Hansard - Part 2 & Report stage
Tuesday 22nd March 2022 Lords Chamber

[Lord Fox (LD)]

I apologise to the Minister and thank him for giving way. I am struggling a little with why the Government want to hoard the right to create streamlined subsidies to central government. I can assume only that it is because it gives the Government the ability to parachute schemes into Scotland, Wales and Northern Ireland—which might not be seen by those devolved Administrations as something they would have—and, because they are streamlined schemes, they cannot be challenged. Is that the reason the Government are not prepared to let devolved authorities have streamlined subsidy schemes for themselves?

[Lord Callanan (Con)]

No, I think the noble Lord is being unfair; the operation of these schemes is entirely optional. We will consult the devolved Administrations closely before making any such schemes. I only just said that we will seek to involve DA officials and others in expert working groups for each of the routes we are developing.

[Lord Fox (LD)]

I am sorry to prolong this, but is the Minister now saying that, for a streamlined scheme that is presented by central government and could be taken up by, for example, organisations and companies in Scotland, the Scottish Government have the option of not allowing that to happen? That, I think, is what the Minister just said.

[Lord Callanan (Con)]

They could choose not to use the scheme if they wished, but it would be a UK-wide scheme. They would be consulted on the development and involved in the expert groups that put them together.

I will move on to Amendment 58, also tabled by the noble and learned Lord, Lord Thomas. This amendment sets out a new route for subsidies given in devolved primary legislation to be considered by the courts, by allowing the relevant law officer to refer the question of whether a Bill is compatible with the principles in Chapter 1 of Part 2 to the Supreme Court. It also removes the requirement for the promoter of the legislation to consider the subsidy control principles and other requirements, and the ability of the courts to consider whether the provisions of Parts 1 and 2 of Chapter 2 have been properly applied, thereby removing the ability of an interested party to challenge the subsidy in the general courts on that basis.

I am of course very grateful for the interest taken by the noble and learned Lord in this clause and for his engagement on it with me and my officials. I believe that both he and I share an objective to ensure that these provisions reflect our constitutional and legal institutions, as well as our obligations under international law. Schedule 3, as it stands in the Bill, accomplishes those objectives.

It is important that the subsidy control requirements apply to subsidies in devolved primary legislation, and that these subsidies are not immune from challenge by interested parties. This is both for consistency with other subsidies and to ensure compliance with our international obligations, particularly under the trade and co-operation agreement with the EU. However, it is also important that the unique constitutional status of the devolved legislatures is respected. That is why we have tailored the provisions in Schedule 3 specifically, and there is no mandatory referral to the subsidy advice unit for these subsidies.

I must therefore reject the amendment tabled by the noble and learned Lord for two reasons. First, it would not meet our international obligations under the TCA, which requires us to make available a route to challenge in a court or tribunal for interested parties, on grounds of compliance with the substantive subsidy control requirements. This amendment would, effectively, remove that route.

In response to the noble and learned Lord, Lord Hope, on the intention of paragraphs 6 and 7, it is those interested parties that may challenge, for example, another public authority or another business, as long as they meet the test set out in Clause 70. The promoter would normally be the government Minister, or the person making an amendment to the Bill, and this is defined in paragraph 2 of Schedule 3.

The second problem with the amendment is that it would have the effect of asking the Supreme Court to consider questions of fact. It is my understanding that the High Court or Court of Session is the appropriate forum to consider these questions in the first instance, followed by the relevant appeals court, and, as relevant, the Supreme Court as the ultimate arbiter for questions of law. Creating a route for the law officers to refer a question to the Supreme Court implies that any challenge to a subsidy in devolved primary legislation would be a constitutional question, as it is comparable to the route for referring devolution issues under the devolution settlements. While the Bill affects the exercise of responsibilities of all public authorities in the UK, I do not consider that this is a constitutional question.

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[Lord Callanan (Con)]

I thank all those who have contributed to the debate. It has been a good discussion, both tonight and in the previous discussions we have had on the regime as a whole and the subsidy advice unit. I particularly enjoyed the contribution from the spokesman for my noble friend Lord Lamont. This is a trend that should perhaps continue on other subjects on which my noble friend feels strongly.

[Lord Fox (LD)]

Have I been fired as the Minister’s speechwriter?

[Lord Callanan (Con)]

If the noble Lord is going to write my speeches, he might as well write them for my noble friend Lord Lamont, as well. The answer to the question of my noble friend Lord Lamont, through his spokesman, is the Green Book and Managing Public Money guidelines; I suspect as an ex-Chancellor he knows that very well indeed—probably better than we do.

Government Amendments 52 and 53 to Clause 65 have been tabled to address your Lordships’ concerns regarding the frequency of the CMA’s monitoring reports under Clause 65. Instead of mandating a report within five years of the implementation of the regime, the amendments require an initial report after only three years, subsequently followed up by a further report after another three years. Subsequent reporting will then revert to a five-year cycle.

I hope noble Lords will agree that the publication of these two initial reports will be sufficient to keep Parliament and the public informed of how the new subsidy control regime is functioning, and to assist in setting best practice going forward. As a result of these changes, I have also tabled two consequential amendments to clarify how these new initial reports will interact with other provisions in the Bill. These are Amendments 54 and 63.

Economic Crime (Transparency and Enforcement) Bill

Debate between Lord Callanan and Lord Fox

Committee stage
Monday 14th March 2022 Lords Chamber

[Lord Callanan (Con)]

Of course, we are constantly looking at these matters. The Treasury is implicitly engaged in pursuing crackdowns on the so-called enablers that the noble Lord has mentioned, and the anti-money laundering regulations exist. This register, which is a transparency measure, is designed to provide information to the public, HMRC and other law enforcement agencies that can then take the appropriate action under the other provisions. However—before the noble Lord, Lord Fox, gets up—I totally agree with the noble Lord that we need to look again at whether the anti-money laundering statutes are appropriate. It is not for this legislation, but I am sure it is something we will want to look at in detail before we get to the next Bill, because it is a complicated area of law. If we do not, I am sure the noble Lord will wish to table his amendments again then.

[Lord Fox (LD)]

Each time the Minister speaks on this, I do not hear him acknowledge that there is a problem. In order for there to be a solution, there has to be an acknowledgement that there is a problem. So, does the Minister agree with me that there is a problem with unscrupulous enablers currently operating in the City and the United Kingdom? Unless the Minister agrees, I do not think that we can have much hope of a solution.

[Lord Callanan (Con)]

I am happy to agree with the noble Lord. If there is one firm of accountants or one legal practice that is turning a blind eye to these provisions, there is a problem with which we need to deal. Nobody wants to see that; we want to give the UK a reputation as the best place in the world to do business and to crack down on the small minority of the legal profession that are abusing their position and facilities—of course we would want to do that.

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[Lord Fox (LD)]

It did indeed, and I am glad that the noble Lord has had the opportunity to speak.

Once again, we have a huge number of varied amendments lumped into the same group, which I think is a side-effect of the process we are travelling through. I am going to focus on two themes. I am not going to interpose myself between lawyers on the subject of Amendment 92, but I look forward to the Minister’s response to the comments of the noble Lord, Lord Coaker, and my noble friend Lady Kramer.

I will turn to Amendments 56, 61, 80 and 83 in the name of the noble Baroness, Lady Chapman, and signed by myself. I will be brief because I do not think we have to speak for very long on this. The noble Lord, Lord Coaker, has been eloquent in this vein already in the unfortunate absence of the noble Baroness, Lady Chapman.

During Second Reading we heard a chorus of disapproval on the six-month transition period, and there is a good reason for that. The noble Lord, Lord Coaker, was clear on those reasons, as were other speakers, including the noble Baroness, Lady Jones, and the noble Lord, Lord Sikka. We have to focus on what the Government are seeking to achieve and how they are going to achieve it. While that number is very important, the second number, introduced by the noble Lord, Lord Coaker, may be even more important, and it is the one covered by Amendment 97 in my name. It seeks to bring commencement forward to the First Reading of this Bill in the Commons. When I tabled that amendment, I was thinking of the National Security and Investment Act, which did just that.

In one of the meetings that the Minister kindly invited me to, he set out a number of reasons why that commencement date is, in Government’s view, not popular. The longer the Minister’s explanations were, the more alarmed I became, because it is clear now that the commencement date is subject to the pace of the slowest moving IT project. That is a matter of great concern, and certainly should be to your Lordships’ House.

In looking at the six-month transition period, we cannot isolate it from the commencement period, as the noble Lord, Lord Coaker, wisely stated. What the Minister has to think about and convince your Lordships of is how these two times work together. Can they be concurrent? Indeed, can commencement start without the whole system being in place? In other words, can there be some flexibility in how parts of the Bill come in? That would be controlled through statutory instruments, which the Government have control over.

Commencement is one thing, statutory instruments are another and the transition period is a third. They all add up to either a long time or a medium amount of time. The Minister needs to explain the formula the Government have in mind, because at the moment it seems to be a blank number. We do not really know when the terms of this Bill will be in place.

[Lord Callanan (Con)]

I am mindful that several noble Lords, including the noble Baroness, Lady Chapman of Darlington, and the noble Lords, Lord Fox and Lord Sikka, have tabled a number of amendments in this group. I will start with Amendment 34 in the name of the noble Lord, Lord Foulkes, who I see is not in his place. I will speak to it alongside Amendments 58 and 67 tabled by the noble Lord, Lord Sikka, as they cover the same subject of retrospectivity and the subject the noble Baroness, Lady Jones, raised earlier.

These amendments seek to extend the scope of the definition of overseas entities registered as the proprietor of a relevant interest in land by removing the registration dates currently stated in the Bill. This has obviously been an area of interest in both Houses. The Government, of course, agree that the register should be as comprehensive as possible. However, there is no benefit to be gained from removing the dates as suggested, as I explained to the noble Baroness, Lady Jones, earlier. Doing so would instead create legal uncertainty. Due to the way information was collected prior to those dates, the land registries would have no way of reliably and consistently identifying properties owned by overseas entities and those that are not. It was not compulsory in England and Wales, for example, to register the jurisdiction of ownership before 1 January 1999. As such, the Land Registry would have this information only where the overseas entity had voluntarily supplied the information itself.

The amendment would result in inconsistent application, as the information needed to enter restrictions on disposition on to relevant titles is not readily available before these dates. They were not just dreamt up arbitrarily; these dates are put in for good reason. The result of removing the reference to the registration dates would be that only those entities that could be identified as being overseas entities could be brought properly into scope. Others that could not be so identified would not be.

This situation would also introduce significant uncertainty for buyers. There would be no way of providing absolute legal certainty as to whether an entity should or should not be in scope for those properties registered before 1999 in England and Wales, and before 2014 in Scotland. Third parties who were in the process of or considering purchasing a piece of land in the UK registered before those dates could not be sure whether they were engaging with an overseas entity that was in scope of the Bill, and which could become non-compliant at any time. The existing clauses are therefore essential for the register to be effective and operable, and to provide certainty as to which overseas entities are actually in scope of the requirement to register once the register goes live.

Finally, I remind the House that the agents who support property transactions are, as we have said earlier, all covered by the provisions of the anti-money laundering regulations. If there are properties with titles held by overseas entities going back further in time, when those entities next come to sell or lease those properties, the agents involved will be obliged to conduct appropriate checks for money laundering.

I turn now to Amendments 56, 57, 61, 62, 80 and 83 on the transition period. I thank the noble Baroness, Lady Chapman, and the noble Lords, Lord Fox and Lord Sikka, for their amendments to shorten the transition period as proposed. Of course, as the noble Lord, Lord Fox, has just said, I am aware that speed of implementation of the register and of the transition period has been the focus of much debate in both Houses so far. The Government have already reduced the transition period from the initially proposed 18 months to six months.

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[Lord Callanan (Con)]

The noble Lord will know from his time in Government that the law officers provide confidential legal advice to Ministers. I can only say to him that I am personally satisfied that this six-month period is appropriate. We are taking a severe step with this legislation; we are retrospectively interfering with property rights. Whether the legislation has been flagged in advance—I think David Cameron first promised it in 2015—does not, as I understand it, alter the legal case that somebody who wished to purchase expensive legal help to challenge the legislation would be able to do so under the Human Rights Act. I can do no more than assure the noble Lord that the officials and I are acting under the legal advice that we have received about the appropriate period. I can assure him that I wish to bring this in as quickly as I can. He will be aware that the Government originally proposed a period of 18 months. Following fairly significant political pressure, we have taken further advice and have managed to reduce it to six months. I am seriously concerned that, if we reduced it further, we could be subject to legal challenge. I am happy to speak to him outside the House.

[Lord Fox (LD)]

My Lords, I assume that the noble Lord, Lord Faulks, has had the answer he required. To come back to implementation and commencement, it is not clear what the trigger for commencement would be. Can the Minister be clear on what the trigger for commencement will be and, having stated that, can he perhaps undertake to maintain a dialogue with your Lordships’ House on how reaching that trigger is getting along and when we might expect the commencement of this Bill?

[Lord Callanan (Con)]

I totally understand the point the noble Lord is making. I cannot give him a precise date; all I can say is that I am keen to commence this legislation as quickly as possible, but there are number of steps that we need to take. We need to publish and implement a number of statutory instruments on the back of this. Companies House needs to put the systems in place; it has already been given the funding for that. The computer systems need to be set up and the register needs to be activated. I am very happy to maintain a dialogue and keep the House informed, but the ultimate answer to the question of when the legislation will be commenced is: as soon as we possibly can.

[Lord Fox (LD)]

Given that your Lordships’ House has demonstrated that it can process statutory instruments at an insatiable rate, my point that the rate-determining step is an IT system in Companies House is entirely correct. Would the Minister confirm that?

[Lord Callanan (Con)]

It is a number of different things. There are administrative procedures to be put in place; the IT system is of course important—I am hesitant to give assurances on when a government IT system might operate. It is not a hugely complicated system, but it needs to be done and to be put in place. Of course, we also need to go on to the next step, namely the economic crime Bill which will follow this one and will give Companies House the right to query the information that has been provided, as I outlined to noble Lords earlier. However, I am very happy to keep the House informed as to commencement dates. I am sure a lot of people will be writing to me about it and will be using the devices of the House to table Questions to ensure that my feet are held to the fire on this one.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, Amendment 43 is also signed by the noble Lord, Lord Coaker. During Second Reading, I spoke at length on this issue, so noble Lords will be pleased to know that that allows me to be brief in Committee. The amendment is clear, but I shall briefly explain its purpose. Frankly, it is one of the simpler amendments we have before us.

Clause 18 deals with exemptions. Subsection (1) gives the Secretary of State the power to write to a person to exempt them from this part of the Bill if said Secretary of State is satisfied that one of three conditions is fulfilled:

“(a) in the interests of national security … (c) for the purposes of preventing or detecting serious crime”—


I do not think any of your Lordships would find that an unacceptable condition—but

“(b) in the interests of the economic wellbeing of the United Kingdom”.


First, what does that mean, and secondly, why is it there?

The Minister heard not just my words but the compelling words of the right reverend Prelate the Bishop of Leeds, my noble friend Lady Kramer and others who explained—and I hope the Minister understood—why Clause 18(1)(b) is the wrong message to be sending, particularly at this time. I explained this issue to some members of the general public—people who do not actively engage in the sport of politics—and asked them what they thought. Their reply was, “Isn’t that the approach that got us into this trouble in the first place?” Quite. That is the message that the clause is sending.

This part of the Bill is designed to deliver transparent information that can be used by authorities, potential business partners and others to avoid trading with kleptocrats, thieves and money launderers. Hiding that information unnecessarily cannot be good for the economy. Why would a Secretary of State want to do that in these conditions? Amendment 43 removes that power from the Bill, and I beg to move.

[Lord Callanan (Con)]

My Lords, it might be helpful for the Committee, before it debates this amendment, if I set out that of course I am aware of the strength of feeling on this issue and am very grateful for the engagement with the noble Lords, Lord Coaker and Lord Fox, and others on it over the weekend and the past few days.

As I indicated earlier, we are keen to progress this vital legislation collaboratively and swiftly, and I again pay tribute to the Opposition for helping us to do that. Therefore, if I tell the House that the Government are prepared to accept Amendment 43 tabled by the noble Lords, Lord Fox and Lord Coaker, should they wish to re-table it on Report, perhaps that would enable a more speedy consideration of this group.

Economic Crime (Transparency and Enforcement) Bill

Debate between Lord Callanan and Lord Fox

Report stage
Monday 14th March 2022 Lords Chamber

[Lord Coaker (Lab)]

My Lords, I want to say a few things about this group of amendments, and in particular to speak to my Amendment 62. As the Minister knows, we are generally supportive of the amendments in this group. The Government, to be fair, have moved in several areas, and that is to their credit. Once again, I thank the Minister and his ministerial colleagues for their engagement over the course of these last few days with respect to this Bill. It has been most helpful.

Earlier today, the Minister outlined several reasons for opposing a reduction in the transition period from six months to 28 days. In the spirit of compromise, we therefore tabled an alternative provision of 90 days for the transition period, and that is the subject of my Amendment 62. He will also know that this amendment is supported by the body representing accountants, which has said that it believes three months is a reasonable figure for the transition period. I shall not go over all the arguments on the length of the transition period that we have had today and at Second Reading, as the Minister will be very well aware of them. Noble Lords are worried that this will allow people to avoid the new rules and regulations and be able to circumvent them.

Furthermore, given the potential lengthy process that needs to be followedbefore Part 1 of the Bill can be formally commenced, we believe that there is also a case for accelerating the registration period. As I again said to the Minister, the commencement period is subject to the Secretary of State’s decision for Part 1, so there is no clarity as to when that will actually start. If there is a six-month transition period and six months until it is commenced, that will be a year. Therefore, we seek clarity from the Minister, even at this late stage, about the implementation of the measures in the Bill, not only with respect to the commencement date, but to some of the other issues. Can the Minister say anything further?

We would, of course, be delighted if the Minister were able to accept the amendment, but if he is to hold firm, would he be able to make certain commitments so that we would be clear on the steps that the Government are taking to ensure Parliament is appraised of the progress between this Bill receiving Royal Assent and the next, more substantial piece of legislation to be introduced—namely the Bill that has become known as economic crime Bill 2? We want to know something about the effectiveness of the measures within this Bill and the way forward to the next Bill.

Can the Minister confirm the scope of the next Bill? Will that be broad, and will there be an opportunity to amend some of the measures in this Bill as we move forward to the next Bill? As we know, many noble Lords have raised the issues within this Bill of the fact that there has not been proper scrutiny. It may well be that many of the points that noble Lords have raised will actually come to fruition, but we need some assessment of that from the Government so that we can then inform our deliberations with respect to the economic crime Bill 2.

Also, as I say, there is a general belief that, although we are allowing the Bill to pass because of the emergency we face, there are still significant weaknesses and omissions within it. There is, therefore, a need for the next Bill to be brought as soon as possible—that is absolutely crucial—rather than at some time in the future. Can the Minister give any assurances to the House as to when he expects the next economic crime Bill to come before your Lordships in order to discuss that? There are a number of questions for the Minister, and I look forward to hearing the answers to them to determine whether we wish to test the opinion of the House or not.

[Lord Fox (LD)]

Very briefly, my Lords, we thank the noble Lord and congratulate him on tabling this amendment. We on these Benches still remain concerned about the cumulative delay of transition and commencement—or the potential cumulative delay—so we are pleased that the Minister has another chance to respond to that particular concern. We also share the concerns of the noble Lord, Lord Coaker, about the speed with which ECB 2 arrives in your Lordships’ House.

[Lord Callanan (Con)]

I thank both the noble Lords, Lord Coaker and Lord Fox, for their extremely constructive engagement over the course of the weekend and over the course of a number of meetings and chats today. I really am very grateful for their constructive attitude and for their willingness to be open to the arguments that we have deployed in why we genuinely do not think that reducing the transition period further is a runner, for a whole variety of reasons we have discussed—I will not go into detail now. But I am grateful—I want to put that on record—for the support of the Opposition parties in accepting this as emergency legislation that we want to get through as swiftly as possible and passed down to the other place.

I also note their interest in seeing a rapid introduction of the measures of this Bill and their focus on ensuring its effective implementation—and also their interest in a wider range of issues that can be covered in the Bill. The forthcoming legislation on economic crime will, as I have said previously, provide for significant reform of the powers of the Companies House registrar. These will directly interact with the provisions of this Bill, enhancing further its effectiveness—for instance, by providing greater powers to query and act on the information on the register. I would be happy, therefore, to commit the Government that this House will have the opportunity to review the effectiveness of the current legislation in that wider context of our discussion on the new powers. I am also committed to the rapid implementation of the measures in this Bill, and I would also be happy to commit to updating the House on the Government’s progress on this within six weeks of this measure achieving Royal Assent.

I can reassure noble Lords that the further economic crime Bill that the Government intend to introduce in the next Session will be a broad one. We will, of course, consider and carefully examine any amendments put forward in either House which serve to strengthen our frameworks for tackling economic crime. As my honourable friend the Minister for Small Business, Consumers and Labour Markets—who I am pleased to see at the Bar of the House—said in the other place last week, we are committed to bringing forward the next economic crime Bill early in the next Session.

I hope that has provided sufficient reassurance for the noble Lord and that, therefore, he will feel able to withdraw his amendment.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, the arguments have all been made in the previous stage, when the Minister stood up and said that the Government were prepared to accept what was then Amendment 43; I was delighted. It is now Amendment 27, which I beg to move.

[Lord Callanan (Con)]

My Lords, I am happy to confirm and accept the amendment from the noble Lord, Lord Fox, also signed by the noble Lord, Lord Coaker, which was originally Amendment 43. It removes an exemption from reporting where this is in the interests of the economic well-being for the UK. As I said in Committee, I have listened carefully and we have engaged on this. In reflection of this and, as has been said, in the interests of working together to progress this vital legislation collaboratively and swiftly, the Government are happy to support this amendment.

Horizon Europe

Debate between Lord Callanan and Lord Fox

Wednesday 9th March 2022 Lords Chamber

[Lord Callanan (Con)]

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

[Lord Fox (LD)]

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

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


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

[Lord Callanan (Con)]

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

Economic Crime (Transparency and Enforcement) Bill

Debate between Lord Callanan and Lord Fox

2nd reading
Wednesday 9th March 2022 Lords Chamber

[Lord Callanan (Con)]

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

[Lord Fox (LD)]

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

[Lord Callanan (Con)]

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

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

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

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

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

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

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

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

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

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

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

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

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



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

Russian Oil and Gas Imports

Debate between Lord Callanan and Lord Fox

Monday 7th March 2022 Lords Chamber

[Lord Callanan (Con)]

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

[Lord Fox (LD)]

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

[Lord Callanan (Con)]

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

Post Office: Horizon

Debate between Lord Callanan and Lord Fox

Thursday 24th February 2022 Lords Chamber

[Lord Callanan (Con)]

I thank the noble Lord for his excellent questions. On this, I agree with many of the points he made. Regarding the 555, who he rightly highlighted, as I said, they have been pioneers in this area. My honourable friend the Minister for Small Business is working at speed on this issue. They exposed the scandal by taking the Post Office to the High Court. They performed a huge public service by doing so, and I know that many noble Lords will support the Select Committee’s view that it is unfair that they have received less compensation than those who were not part of the case. I know that my honourable friend shares that view, and he has said that resolving that is the most important issue he currently faces. It is important to recognise that this is a legally complex issue because the case was settled in the High Court, but I know that officials and my honourable friend are working at pace to try to resolve it.

With regard to the historical shortfall scheme, things are slightly better than the noble Lord suggested; we are now up to 38% of the cases having been resolved. The Post Office’s best current estimate is that the scheme will cost £153 million across about 2,300 claims. It is important that we work through them as quickly as possible. Some of them are complex but they need to be worked through and resolved.

[Lord Fox (LD)]

My Lords, I know the Minister has been working hard on this issue and he should be commended by all sides of the House on the effort that he is putting into it. The Statement says the Government are stepping in and that that is unwelcome. We should remember that the genesis of this problem came with faulty software and a system that did not work; it was made worse by the events that followed. We should also remember that Fujitsu, the company that provided that software, had revenues last year of over £20 billion, and we calculate that since 2013 the Government have awarded it a further £3 billion in contracts. Does the Minister share my surprise and indeed incredulity that Fujitsu has not been asked to provide some of the money that the Government are now unfortunately having to step up and pay?

[Lord Callanan (Con)]

I thank the noble Lord for his praise for me, but it is slightly unjust; it is the Minister for Small Business who is responsible for the Post Office and is putting in the hard yards on this issue, and I will certainly pass on the noble Lord’s commendations.

I have considerable sympathy for the view that the noble Lord, Lord Fox, outlines. A public inquiry is taking place and that is the proper place for blame to be apportioned. We all have our suspicions and views, but let us wait for the outcome of the inquiry to see exactly where fault lies—whether with Ministers, officials, Post Office executives, Fujitsu or whoever—and then we can take the appropriate action.

North Sea Oil and Gas

Debate between Lord Callanan and Lord Fox

Thursday 10th February 2022 Lords Chamber

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

I thank the noble Baroness for her question. She is right: we intend to introduce a climate-compatibility checkpoint for all new licences, which will be used to assess whether any future licensing rounds remain in keeping with our climate goals.

[Lord Fox (LD)]

My Lords, in Q3 of last year, which is the last time for which data is available, exports from the UK North Sea were double those of the period in the previous year. At the same time, Ministers were reported to be scrabbling to Kuwait to secure extra supplies of LNG to the UK to meet the energy crisis. This is very counterintuitive. Does the Minister agree that shipping expensive—in environmental terms—LNG from the Middle East, rather than using gas that comes from our doorstep, is not sensible or good for the planet? Will he tell your Lordships’ House how the Government will turn that around and make better use of the resources we already have and are already producing?

[Lord Callanan (Con)]

First, I agree with the noble Lord that it is much more sensible to use our own domestic resources, rather than LNG. However, the reality is that, throughout this period, the UK remains a net importer of oil and gas. Therefore, it makes no sense to pursue the operations he is proposing. We do not produce enough of our own domestic energy. We are expanding our renewable capacity massively and have the largest developments of offshore wind in the world. We need to go further and faster, but it makes no sense to isolate ourselves from the rest of the world and cut off imports and exports.

Subsidy Control Bill

Debate between Lord Callanan and Lord Fox

Committee stage
Wednesday 9th February 2022 Grand Committee

[Lord Callanan (Con)]

I think that speaks for itself. I stand by those words.

[Lord Fox (LD)]

I thank the Minister for giving way. Perhaps that is why we asked him to stop—so that we could start again today. His answer to my noble friend Lord Purvis is intriguing. He seems to be saying that no matter how much a subsidy affects the UK internal market—I will wait for the Minister to finish his conversation—it can never be within the purview of the internal market Act. Is that what he just said?

[Lord Callanan (Con)]

Yes. Subsidy is not a regulated provision within the scope of the UK provisions. We are debating this in a future grouping, so we will no doubt be able to come back to it, but my advice is that it is not.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, this is an interesting debate. I originally set out, as Committee stages are wont to do, to tease out some minor details and things from this legislation, but it is clear that there is a major philosophical point that needs to be established before the minor details can be filled in.

Perhaps the Minister can cast himself back to when he was at school. I am sure that he popped into the odd mathematics lesson. He may well have come across a thing called a Venn diagram. For those who missed that particular week, a Venn diagram is made up of a number of circles. The degree to which they intersect indicates the amount of common area that they have—and perhaps the Minister is beginning to understand the direction of travel.

The issue here is that the Minister is asserting that, when it comes to subsidies, essentially, the internal market Act and this Subsidy Control Bill are discrete circles—that is circles that barely intersect or do not do so at all. We have ministerial assertion, and then we have the words as written in Bills and Acts. My noble friend Lord Purvis carefully and usefully filleted the words from the internal market Act, which seem to indicate that there is a large element of common ground with respect to subsidies between these two circles—these two pieces of legislation. Therefore, it is not possible to unpick the words and aims of the internal market Act when talking about subsidies.

My noble friend set out some of the potential contradictions. I will be simpler, because I am a simpler person. Reading those two pieces of legislation, and looking at words rather than hearing the Minister’s assertions, it seems to me that the Scottish Government could design a subsidies scheme. The CMA and the SAU within it, using this Subsidy Control Bill as their guide, as my noble friend set out, would indicate that this scheme is allowable and that market distortions are only minimal, as the Bill allows. The scheme could therefore be launched. However, the OIM—the Office for the Internal Market—would then analyse that subsidies scheme and detect that there are indeed distortions, albeit minimal ones, in that market. This information would be passed to the Secretary of State, who could, quite properly, then withdraw that scheme or cause it to be withdrawn; that is what the words in that Act and this Bill say. So I am interested to understand from the Minister why this might not be the case.

A separate and slightly smaller issue is that, within the CMA, we have the OIM and the SAU. Will these two organisations be operated discretely? Will there be Chinese walls between them in that they will operate under different Acts? Will they operate off the same data, or will they have to get their data separately? Indeed, coming back to the question asked by the noble Lord, Lord German, will they share the same lawyers when push comes to shove?

We seem to have here two things that the Minister is trying to push apart but which the words bring closely together. The purpose of these amendments is to understand how the Minister can assert that these two worlds are separate when the words indicate quite the opposite.

[Lord Callanan (Con)]

First, I thank the noble Lords, Lord Purvis and Lord Fox, for their amendments. They seek to probe the interactions between the OIM and the Bill, as well as the functions of the CMA more generally; I will take them together. Seeing as we were all involved in the debate on the then internal market Bill, I am getting flashes of déjà vu with all the different acronyms, such as the OIM and the SAU. Perhaps it is a Venn diagram, as the noble Lord, Lord Fox, indicated, but I will set out the position and, hopefully, resolve it.

--- Later in debate ---

[Lord Fox (LD)]

I am interested in this concept of a chilling effect. What evidence is there for that, and what consultation has there been? There may or may not be a chilling effect. It seems like more of an idea than a practical reality. I have a suggestion that might help. The Bill could start out with a longer reporting time—perhaps 60 days, or something along those lines—and the evidence, or otherwise, of a chilling effect could be gathered. If necessary, and if the reality of a chilling effect actually emerges, the Government could come back and reduce that period by statutory instrument.

[Lord Callanan (Con)]

I think that is the first time the Liberal Democrats have proposed giving the Government more secondary legislation powers, but I understand the noble Lord’s point. As I said, I have heard the strength of opinion on both sides of the Committee and will reflect further on this matter.

Subsidy Control Bill

Debate between Lord Callanan and Lord Fox

Committee stage
Monday 7th February 2022 Grand Committee

[Lord Callanan (Con)]

Nothing in this Bill affects the existing duties of local authorities and others to publish any financial information that they already do. This Bill concerns the information that needs to be published on the subsidy database. The same point applies to the earlier question from the noble Lord, Lord Purvis, about freedom of information. I hesitate, given the trouble I got into last time, to return to the FoI principles, but nothing in this Bill affects the original FoI legislation or the principles contained in it.

I turn to Amendment 47, which seeks to introduce a transparency threshold of £500, above which subsidies granted as minimal financial assistance would need to be uploaded to the database. As noble Lords will be aware, the MFA exemption allows public authorities to award low-value subsidies of up to £315,000 per recipient over three years, with no requirement to consider the subsidy control principles or other requirements, and no need to upload on to the subsidy control database. I think that clarifies what the noble Lord, Lord McNicol, asked about—what I said earlier on this was probably incorrect, so my apologies for that. The Government have taken this approach to ensure that public authorities can deliver smaller subsidies quickly and easily without undue administrative burden, since they are very unlikely to have any appreciable distortive effects.

This amendment, by seeking to require the addition of low-cost subsidies to the subsidy control database, would certainly introduce an additional burden for public authorities. Introducing a low-value transparency threshold for such low-value subsidies would require additional staff time and costs as the volume of entries would be expected to increase significantly—for what gain, bearing in mind that these subsidies are those that, by their very nature, are unlikely to have any appreciable distortive effects?

On this basis, I do not believe that the amendment would introduce the appropriate balance between sufficient transparency to allow for meaningful scrutiny and an efficient allocation of resource to identify those subsidies that are most likely to harm our economy, either locally or nationally.

Turning to Amendments 48 and 49, as we have discussed before, the Committee will be aware that services of public economic interest—SPEI—are vital services that, without public subsidy, would not be supplied in the appropriate way by the market or, in some cases, would not be supplied at all. This clause exempts certain SPEI subsidies from the transparency requirement in Clause 33 to upload the subsidy on to the database. There are two categories of exemption: first, for subsidies of less than £14.5 million; and, secondly, subsidies for one of the activities listed in subsection (1)(b). In response to the question posed by the noble Baroness, Lady Blake, the reason for the difference is that, in our view, subsidies in the second group are even less likely to distort competition.

These amendments would mean that all SPEI subsidies of £500 or more would need to be uploaded on to the database. I submit that this would represent a significant burden on public authorities, yet it is generally agreed in the Committee, I think, that these subsidies, granted for public services, are unlikely to be unduly distortive.

The same arguments put forward for not setting a transparency threshold of £500 for MFA apply equally here, in that doing so would not represent a balanced or proportionate outcome for our domestic regime. Although noble Lords are right to challenge the Government on the issue of transparency, I would like to set out why reducing the exemption from transparency requirements for SPEI subsidies to £500 would not result in a stronger regime.

First, by its nature, granting subsidies for public services is unlikely to be unduly distortive. This is because the very reason they are needed is that other providers are unable or unwilling to provide the necessary service at a reasonable cost. This goes back to the example we discussed last time, when the noble Baroness, Lady Blake, referred to bus services in rural areas: granting a public subsidy there is unlikely to be distortive because the reason why the public authorities have to provide that service is because nobody else in the market does so. The lower risk of distortion therefore justifies a higher transparency threshold.

Secondly, Clause 29 sets out that the award of a SPEI subsidy must be given in a transparent manner, which means that the subsidy must be being given through a written contract or other written legally enforceable arrangement. As the noble Lord, Lord Purvis, noted, public authorities normally publish these contracts, and it is good practice to do so.

Thirdly, a public authority providing SPEI subsidies must be satisfied that the subsidies are limited to what is strictly necessary in providing that service, with regard to costs and reasonable profit, and must keep that under review. This means that the SPEI enterprise should not gain an unfair advantage over other enterprises; consequently, again, there is unlikely to be undue distortion to competition.

The Government do not share the view that requiring public authorities to upload SPEI subsidies with a value as low as £500 would contribute to a more robust regime. SPEI subsidies are, and will continue to be, subject to appropriate safeguards where public authorities actively ensure that this is the case so that contracts deliver value for money for the citizens in that particular area.

Although I understand the objectives of the noble Lord, for the reasons I have set out, I cannot accept this amendment. I hope, therefore, that he will feel able to withdraw it.

[Lord Fox (LD)]

I have a brief question because £14.5 million is a curious number. There is no reason why it should be a round number in millions, but it is strange. Can the Minister explain the genesis of that particular number? Also, could I be cc’d into the Minister’s reply to the important question asked by the noble Lord, Lord McNicol, on the subject of what is in and what is out?

[Lord Callanan (Con)]

Indeed. The noble Lord, Lord Fox is clearly not tired of receiving letters from me, so I will happily copy him into the letter that I send to the noble Lord, Lord McNicol. I will have to come back to him on his question about the £14.5 million. I will include that in yet another letter—or maybe even the same one.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, during the debate on the previous group, the noble Baroness, Lady Altmann, asked, “How will they know?” This amendment seeks the answer to the question: how will they know in time? As the noble Lord, Lord McNicol, said, because of the limits of reporting, we are talking about very sizeable subsidies that could exist with a competitor company for up to a year before a person is able to find out what their company is competing against. I am sure that the Minister would understand that that is not a fair situation, and it is within the gift of the Government to make it fairer.

Both noble Lords spoke about the imbalance; that is, a long time to report it and a short time to appeal it. One would almost think that the Government were seeking to discourage the process of challenging subsidies. I am sure that that is not the Minister’s aim and therefore the best way of expressing that aim is to redress that balance.

Reflecting on the last debate and this one, I think that we are in a bit of a mess around reporting—or, indeed, we are not but the Government are. On the one hand, we have the database with the six-month time limit and a very high ceiling; on the other hand, we have local authority websites with a three-month time statute and a much lower ceiling, and potentially we have FoIs—although the problem is that you need to know something exists before you can FoI it. The Government have therefore knowingly or unknowingly set up a multiple market for information.

If I am a business and I need to know what is happening in my sector, the Minister will say that this information is freely available. It is freely available on a pull basis. I shall have to employ someone to go out there regularly to check whether the information exists, where it is and what is happening in my sector. If I am a small business in a market where the receipt of subsidy could affect my business, I shall have to employ an extra person or part of an extra person to do that. This does not seem a sensible way of dealing with the issue. A central database with a shorter time span and a lower value ceiling would be the best way to help businesses thrive.

[Lord Callanan (Con)]

I thank the noble Lord, Lord McNicol, and my noble friend Lord Lamont for these amendments, which seek to reduce the time available to public authorities to upload their subsidies to the database. I note the comments made by the noble Lord, Lord McNicol, on the limitation period, which I look forward to discussing in our next Committee session.

As is the case with the thresholds on transparency, our objective here in setting the upload deadlines has been guided by the fine balance between minimising bureaucratic burdens while ensuring that accurate information is available promptly for interested parties to enable them to consider whether to launch a challenge. We agree that subsidies should be available to be seen on the database as soon as is practical. However, there are good reasons why public authorities require longer than the one and three months put forward in these amendments.

First, let me note that public authorities have an incentive to upload subsidies as quickly as possible. The sooner a subsidy is uploaded to the database, the sooner the clock for the limitation period starts to run, and therefore the sooner the public authority and the beneficiary will gain certainty that the subsidy will not be challenged. Public authorities also have a strong incentive to upload subsidies accurately first time round to avoid the possibility of having to amend entries later on.

Upload deadlines as short as one and three months may result in more public authorities needing to amend their entries at a later date. Although this is of course possible on the database, it creates an unnecessary burden for those authorities. This means that the initial period where the subsidy has been uploaded is more likely to contain inaccuracies, which will not help an interested party to know whether they wish to challenge. Surely we agree that, although we all want prompt uploads to the database, upload speed should not come at the expense of accuracy.

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[Lord Callanan (Con)]

Do we have time to finish?

[Lord Fox (LD)]

I think we are comfortable starting again on Wednesday and giving this proper time.

[Lord McNicol of West Kilbride (Lab)]

The noble Lord, Lord Lamont, has yet to respond as well. It will not take long on Wednesday.

Subsidy Control Bill

Debate between Lord Callanan and Lord Fox

Committee stage
Wednesday 2nd February 2022 Grand Committee

[Lord Callanan (Con)]

I do not want noble Lords getting mixed up. I was referring to the fact that schemes can be designed for the whole of the United Kingdom. The purpose of this clause is to prohibit direct subsidies where a business is paid a sum of money to move from area A to area B—let me finish this point—depending on the definition of the areas that we spoke about previously.

However, that is only for direct subsidies, of course. The attractiveness, training provisions et cetera that could exist or be subsidised in a different area might make it more attractive for that business elsewhere, but the idea is to avoid the situation in the US that I talked about, where they come along and give companies—I will not name them, but noble Lords know the examples I am talking about—huge amounts of money literally to get it to close down its operations in one state and move to another. That is what we are trying to avoid, but we fully accept that it is perfectly in order to increase the attractiveness of an area, show how wonderful it is and show what is available there, including trading provision, sites et cetera. However, we do not accept using direct financial assistance to move from one part to the next.

We have already published illustrative guidance. We will look at enhancing that further with more detail before we commence with the legislation. If it is drafted and ready in time, I will share it with the noble Lord, of course.

[Lord Fox (LD)]

Without labouring the point, but labouring the point, I want to come back to the point made by the noble and learned Lord, Lord Thomas, about the grey areas that appear to be here. This is not a hypothetical example—it is a real one without names—but imagine that you have an inward investor, possibly doubling down on an investment that has already been made. As part of the process of negotiating with that investor, government, whether national or local, determines that it is important to have a technology park where the investor’s suppliers are aggregated and work together to support the investor.

The level of support needed to create the system of suppliers that supports the inward investment, which is clearly of benefit to the region, and therefore to the country, is clear. However, it is also clear that, if arms are not twisted, they are also being bribed or given money to create that park, that environment, to make sure that the inward investor gets what they want when it comes to the investment. Is the Minister saying that this sort of process will be entirely legal even if Clause 18 remains in the Bill?

[Lord Callanan (Con)]

Yes, if they are an inward investor coming into the country and they do not already have an operation in another part of the country.

[Lord Fox (LD)]

But if they are relocating suppliers in order to support—

[Lord Callanan (Con)]

That is not the example the noble Lord quoted. My understanding is that, if they are just increasing the attractiveness of an area and there is no direct financial payment to the company to move from one area to the next, yes, that would be allowed. If that is not correct, I will write to the noble Lord, but that is certainly my understanding of how that would work.

As I explained, this prohibition puts down a marker that is intended to prevent the small class of disruptive but harmful subsidies, such as poaching and outright bidding wars. I suggest to the noble and learned Lord, Lord Thomas, that it would not be easy for such subsidies to circumvent this prohibition.

--- Later in debate ---

[Lord Callanan (Con)]

That issue is not covered by these amendments, but I will come back to the noble Baroness in writing.

[Lord Fox (LD)]

My Lords, those on this side welcome these three amendments. It is always hard to get those first government amendments out; after then, you can keep them coming, Minister. We have one or two suggestions about what you might like to put in them.

It is good to have a consistent approach; indeed, a consistent approach to how you value a subsidy is a good starting point. Perhaps we can then have a consistent approach to how local authorities evaluate the need for a subsidy, and to how they are regulated and managed within areas. Consistency is what we are calling for. This is clearly the first baby step towards having a control system operated from a level playing field.

[Lord McNicol of West Kilbride (Lab)]

I echo the points of the noble Lord, Lord Fox: it is interesting to see government amendments at this early stage, even though none of these issues was raised at Second Reading. Likewise, we are not going to oppose any of these amendments.

Similarly, not just on consistency but on transparency, a good number of amendments were tabled in Committee on which we are more than happy to work with the department and the Minister to bring them back on Report. This will hopefully deal with a number of issues on which we have concerns, so that we do not object to them at that point.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, it is a great pleasure to follow that speech by the noble Baroness, Lady Blake. I was reassured by some of things she said about how the Nolan principles are being applied at the local level—that that is her experience is reassuring. Of course, it brings this Bill into focus again.

To some extent the amendment is idealistic, but look at it the other way round. What is the converse of this amendment? It is that we allow a Bill to go through that will be subjected to huge political manipulation and little transparency. We have already seen that the Government are not averse to using political direction to spend literally billions of pounds. I ask the Minister to put himself in the boots of the Opposition, because the Bill that he is creating is one that future Governments will have to use. If the Minister, if he were listening, were to put himself—

[Lord Callanan (Con)]

I am listening.

[Lord Fox (LD)]

Sorry; I withdraw that. If the Minister were sitting in the opposition seat and opposing this Bill—or, indeed, opposing its use—he would, I am sure, find it very difficult. That is why it is to the enormous credit of Her Majesty’s loyal Opposition that they are standing hard against this Bill. I am sure that they harbour a view that, in time, they will find themselves in government and the temptation for them—indeed, for any Government—to use these powers would be quite high. It is therefore to the Opposition’s credit that, together, we are seeking to put some transparency into this.

At Second Reading, I said that the more flexibility and opacity there is in the subsidy system, the more opportunity there will be for subsidies to be directed for political purposes. I did not use the phrase “pork barrel” but I should have, because there is no other way of explaining how almost seven-eighths of the £1-billion English towns fund goes to Conservative-held seats. There is no way to explain how that money goes there other than political direction. I am sure that the Minister will tell me that there is a formula. There is a formula for almost anything; if you know what you want to create, you build the formula to achieve it. We are already seeing that. I assume that schemes like that will be rolled into a subsidy scheme so that we never see the granularity by seat. This is perhaps our last chance to point to that evidence before it all gets rolled up and aggregated so that we cannot disassemble it.

As we look at this Bill, we should look at the future of subsidies in this country, not the short-term gain for a political party. That is what we are seeing at the moment: a short-term gaming, or potential gaming, of the subsidy system. That is why this amendment was moved and why we have had an interesting short debate on it. I will be interested to see whether the Minister decides to engage at all, because sometimes he just does not. If he does decide to engage, I will be very interested to hear what he has to say.

[Lord Callanan (Con)]

It is very unfair of the noble Lord, Lord Fox, to suggest that I would not engage with his amendment. In this debate, I particularly enjoyed the noble Baroness, Lady Blake, using exactly the same argument that I will deploy against the amendment to argue somehow that she is in favour of it.

Anyway, let us explore the amendment as it was tabled, because I think we will all agree that it is a particularly ridiculous amendment. However, I thank the noble Lords, Lord Purvis and Lord Fox, for putting it forward. Essentially, the amendment seeks to prevent subsidies being given where there is a political motivation or influence. I will not engage with some of the broader points noble Lords made about transparency and things like that because we will come on to those points later in the debate, but I will take the amendment as it is printed. I suspect that what both noble Lords actually meant to say is that they seek to prevent improper political influence over subsidy decision-making. On that, we completely agree, of course. However, as I will argue, I do not believe that this amendment is necessary to achieve that.

First, there are already a number of safety nets in the Bill which will help to prevent improper political influence over subsidy decision-making. Any subsidy, unless exempted, must meet the subsidy control principles, including remedying an identified market failure or addressing an equity rationale. In addition, the subsidy must be limited to what is necessary to achieve it. A subsidy which had improper political influence would struggle to meet those principles.

Secondly, Clause 77 prevents the misuse of subsidies, and a public authority may recover a subsidy from the beneficiary where it has been used for a purpose other than the purpose for which it was given. Even outside the subsidy control requirements, a subsidy must meet value-for-money tests, which help to ensure that public spending is being made appropriately. For UK government spending, this is governed by the Treasury Green Book—all those in government who have to engage with the Treasury will know how rigorous it is in implementing that—and, of course, all the principles set out in Managing Public Money. They will be generally applicable to all public authorities in the UK, although the devolved Governments have their own detailed rulebooks, as is right. Finally, a subsidy granted for an improper purpose may give rise to judicial review on public law grounds.

More broadly—this comes back to the point that the noble Baroness, Lady Blake, made, even though, bizarrely, she was arguing in favour of the amendment—it is unclear how a public authority might avoid any political motivation whatever. I do not think that that would be desirable. When the noble Baroness, Lady Blake, was in a position of authority on Leeds City Council, her authority, or a devolved Government, for example, was or would have been democratically elected. I assume that when she stood for election with her party she set out her political priorities. She might have said that where a subsidy was appropriate she wanted to stand for election on that basis. It is right and proper that she should have been able to do that where the subsidy met the subsidy control principles. It would be almost impossible for any democratically elected local authority or a devolved Government to avoid any political influence. We are all politicians, some of whom were democratically elected. This applies to central and local government.

All subsidies have a degree of political motivation or influence because they are desired to achieve a public policy objective on which people stand for election and which will have been set by a public authority with democratic accountability. Let us pursue the example from the noble Baroness, Lady Blake. If she stood for election on Leeds City Council with a commitment to, for instance, provide subsidised transport in rural parts of Leeds—I think Leeds has some rural areas—it might have been appropriate to provide a subsidy to a bus operator. That commitment will have been made at a political level as the result of her manifesto in a political election. That would have been a politically motivated subsidy, but I think we would all agree that, in the circumstances, that would have been wholly appropriate and presumably useful for that particular area.

I hope that I have demonstrated that the amendment is unnecessary. The wording is clearly seriously flawed. I therefore hope the noble Lord will be able to withdraw it.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, I rise to speak to Amendments 44, 45 and 46, to all of which I have added my name. It is a pleasure to follow the noble Lord, Lord McNicol. Amendment 44 requires the date a subsidy scheme is entered into to be put into the database, Amendment 45 is about domestically sourced content and Amendment 46 is about other areas of specifying the date. All three of these amendments come together to play to the word that we have been using in these groups, which is “transparency”.

I shall briefly focus on Amendment 45 because it is an interesting point. The nature of what we are talking about hinges around Clause 17(1), which I assume is a WTO-driven point that we cannot favour domestic content over external content. I accept that we need to follow WTO rules. However, as the noble Lord, Lord McNicol, said, that does not stop us collecting the data. Why collect the data if you do not have an actionable need to use it? Therefore—never mind the subsidy that is running, for which we are collecting the data—if it turns out that all that subsidy leads to imports only rather than domestic benefit to the supply chain, when we come to extending or repeating that subsidy or using it in a similar way in another sector, I assume that it is perfectly legal within WTO for the Government to take the benefit and the learnings of that data, having of course given themselves the power to collect it through Amendment 45, to modify future schemes which would still be legal within WI and benefit the domestic supply chain. WI? Jam for all. I meant WTO.

It is a legal question. The Minister may not have the answer straightaway. That data having been collected, I assume, and I would like confirmation, that it is perfectly legal to use that data to design repeat or future schemes so that the UK economy benefits more from that subsidy. That is my main question on these amendments.

[Lord Callanan (Con)]

I am grateful to the noble Lord, Lord McNicol, for these amendments. I think we have much more consensus on the principles. I shall start with Amendment 37. I think we agree that the database should be as accurate as possible. There was an extensive debate in the other place about the quality of the database and the requirements on public authorities when uploading to the database. As was set out there, the database is relatively new and, as the noble Lord acknowledged, it continues to be developed. My department has been working on a range of improvements and we continue to review how it operates. I genuinely welcome any feedback that noble Lords have now or in future on how it can be improved.

Since Report in the other place, our officials have launched an initiative to follow up with public authorities where the information on the database is vague or the links provided go to a landing page rather than providing the necessary detail about a subsidy. In addition, where the subsidy control team receives information about schemes that have been made, that information is now cross-referenced with what is on the database to ensure that it is correct. More broadly, the Government are committed to best practice when it comes to public data, and the subsidy database uses the service standards specified by the Government Digital Service.

Economic Crime: Planned Government Bill

Debate between Lord Callanan and Lord Fox

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.

Subsidy Control Bill

Debate between Lord Callanan and Lord Fox

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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

Post Office: Horizon Compensation

Debate between Lord Callanan and Lord Fox

Monday 24th January 2022 Lords Chamber

[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.

Post Office: Horizon Compensation

Debate between Lord Callanan and Lord Fox

Monday 10th January 2022 Lords Chamber

[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.

Advanced Research and Invention Agency Bill

Debate between Lord Callanan and Lord Fox

3rd reading
Monday 10th January 2022 Lords Chamber

[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.

Small Business Commissioner: Late Payments

Debate between Lord Callanan and Lord Fox

Tuesday 7th December 2021 Lords Chamber

[Lord Callanan (Con)]

This is a priority for the Government —there are lots of priorities for the Government at the moment. The new powers that we consulted on include compelling the disclosure of information, including in relation to payment terms and practices, and imposing financial penalties or binding payment terms on businesses. These are important issues that need to be considered properly. We need to go through the consultation responses properly, and we will respond as soon as we can.

[Lord Fox (LD)]

My Lords, there is a danger that the Minister’s response might be interpreted as kicking the can down the road and waiting some time for legislation to possibly come in the future. In the meantime, small businesses of the type described by your Lordships are suffering. Will the Minister recognise that the current situation is not as it should be and use current powers and levers to improve it?

[Lord Callanan (Con)]

We have a newly appointed Small Business Commissioner who is cracking on with the job. She is currently in discussion with my department about the resourcing that she requires. As I said, so far almost £8 million-worth of debts have been recovered for small businesses, so there is a lot of good work going on, but I totally accept that we need to do more.

Newport Wafer Fab

Debate between Lord Callanan and Lord Fox

Monday 6th December 2021 Lords Chamber

[Lord Callanan (Con)]

Nexperia is not new to this particular company; it already owned 15% of it before the latest takeover. As I said, I cannot comment any further on that particular transaction, but we will look carefully at all the facts of the case. Our powers are being strengthened with the National Security and Investment Act coming into force on 4 January next year. We have retrospective powers under that Act and we will not hesitate to act if we need to.

[Lord Fox (LD)]

My Lords, hardly a week goes by without the semiconductor shortage impacting some of our businesses in this country. It is not just about security; it is about manufacturing. Meanwhile, there is an investigation into Newport Wafer Fab and a separate one going on into Arm. Would it not make more sense if there was a holistic view of the semiconductor business in this country and a task force put together, so that we can secure indigenous supplies of these absolutely vital components?

[Lord Callanan (Con)]

The noble Lord is of course aware that we have announced action in both of those cases: both the instances he mentioned are currently being reviewed. As I said, if we need to take action, we will. On his broader question about semiconductors, we already offer a lot of support to industry through the research councils and the catapults and will continue to do so. It is an area that the Government are acutely aware of.

Oil and Gas Authority: Remit

Debate between Lord Callanan and Lord Fox

Thursday 2nd December 2021 Lords Chamber

[Lord Callanan (Con)]

That is a very good question, and this is why we have our world-leading oil and gas sector transition deal, the North Sea Transition Deal. We are committed to it, with the support of all the oil and gas companies, to precisely bring about that happy state of affairs so that workers can transition to working in the clean economy.

[Lord Fox (LD)]

My Lords, speaking last month, Tim Eggar, the chairman of the Oil and Gas Authority, was bullish when referencing future offshore licensing rounds in the UK. He said:

“Let’s be clear, there is no current ban on exploration and licensing”—


and, of course, he is right. On the other hand, the International Energy Agency—the global expert on energy stats—is equally unequivocal that the development of any new gas or oil field is incompatible with net zero by 2050. Perhaps the Minister could help us here and confirm what his department’s objectives will be with regard to future licensing. Will it adhere to IEA advice, aim for net zero and end future exploration, or will it go along with the oil industry and keep on drilling?

[Lord Callanan (Con)]

We will go along with our net-zero commitment. I do not know how many times I have to repeat this for the benefit of the Liberal Democrats, but under all of the climate change scenarios, including that towards net zero, we will remain a net importer of oil and gas during that period. The choice that faces us is whether we wish to import them or produce them domestically and gain the tax revenues from that. I really cannot see why this is such a difficult concept for the Liberal Democrats to grasp.

Power Outages: North of England

Debate between Lord Callanan and Lord Fox

Thursday 2nd December 2021 Lords Chamber

[Lord Callanan (Con)]

Of course, there are many lessons to be learned from the past week. It has been extremely challenging in the north of the country. I am from there myself and well aware of the issues: many people have contacted me about it. I just say to the noble Baroness that more than 4,000 engineers have been working to repair the damage, 750 generators have been deployed to provide emergency power and vulnerable customers have been prioritised for support. There are clearly issues about being able to contact Northern Powergrid, in particular; it was overwhelmed by the volume of calls. These were exceptionally strong winds of more than 100 miles per hour, and it is the most damage that has been done to the system for 15 years.

[Lord Fox (LD)]

My Lords, obviously, the capacity to respond is in question, and I am pleased to hear the Minister say that there will be a review ongoing, but the review is no good to the people who have lost power today. As the noble Baroness, Lady McIntosh, said, there are rumours—indeed, statements—that this could go on for some people right up to Christmas and the new year. Speaking in the House, the Secretary of State was unable to say whether that was true. He said

“I will do everything in my power to ensure that this does not happen.”—[Official Report, Commons, 1/12/21; col. 924.]

Given the structure of the industry, perhaps the Minister can say what is in the power of the Secretary of State and what practical help he has given to the people who still do not have power.

[Lord Callanan (Con)]

My colleague, Minister Hands, went up to visit the area yesterday, spoke to many people who had been affected and met many of the engineers who have been working around the clock over the past week to restore power. As the noble Lord said, there are a number of lessons that we need to learn from this. It was fairly unprecedented, but of course that is no compensation to the people affected, concentrated in the north of England and Scotland, who have been suffering greatly—I have heard many of their stories myself. We must give any resources or support that we can to the companies concerned. Restoring power is a complicated, technical exercise. We need to ensure that the people doing it, who are very skilled personnel, are working safely and we will want to support them in every possible way.

Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill

Debate between Lord Callanan and Lord Fox

Report stage
Wednesday 1st December 2021 Lords Chamber

[Lord Fox (LD)]

Before the Minister sits down, first I thank the Minister, who has largely been able to meet most of our concerns. On a point of clarification, he said something like, “There will be no automatic restoration process, nor is there a need for one” for the purposes of investigation and disqualification. Does that also mean that there would be no need for one for the purposes of pursuing a compensation order? Can the Minister confirm that there does not need to be reinstatement for the compensation order to be pursued?

[Lord Callanan (Con)]

Yes, it is my understanding that the Bill, if passed, will enable compensation to be pursued, and there is no need for the restoration of companies to the register for that to take place.

Advanced Research and Invention Agency Bill

Debate between Lord Callanan and Lord Fox

Committee stage
Monday 22nd November 2021 Grand Committee

[Lord Fox (LD)]

My Lords, I took the time to discuss this amendment with the noble Baroness, Lady Neville-Rolfe, and I congratulate the noble Baroness, Lady Noakes, on completely representing her views on it—but, strangely, we approach this from opposite directions and land in the same place, similarly to the noble Baroness, Lady Chapman. There is a false dichotomy here. Just because an organisation has a purpose does not mean to say that it cannot be independent. On that basis, it is important for it to be independent, and it is equally important for it to have a purpose—and that purpose should be climate change.

[Lord Callanan (Con)]

I thank the noble Baroness, Lady Noakes, for her comments and for stepping so ably into the breach to represent my noble friend Lady Neville-Rolfe in her amendment. It is perfectly right that we have returned once again to the central issue of ARIA’s independence, because it is a core part of equipping it for its unique funding approach and for the distinct contribution that we expect it to make to the UK’s R&D landscape.

I support the ambition for the Secretary of State to be mindful of protecting ARIA’s independence in all its interactions with the organisations, where such interactions are required by the Secretary of State’s very limited functions. However, I differ with my noble friend on how we protect its independence in a practical way. I submit that it would be the accumulation of many small things—perhaps creeping influence over strategy, new mechanisms of oversight, or ever-increasing reporting demands on issues of political priority—that would be the arena in which ARIA’s independence would be compromised or lost.

My noble friend Lord Willetts, who is not in his place, spoke eloquently on Wednesday about the challenges he has experienced in trying to carve out space for new approaches in the current R&D system. At that stage, we also had a fairly extensive debate on the accumulated obligations placed on ARIA. We considered how those obligations might be balanced with this vital principle of independence, in the context of amendments which, I believe, would have diminished ARIA’s autonomy in a way that would have been entirely counterproductive. If we truly wish to safeguard ARIA’s independence, it is on those issues that we must look to do it, and there is no easy alternative.

I do not suggest that this is a moment to reopen that debate, but I submit that we cannot have this conversation on independence in an abstract way, divorced from consideration of the practical and operational ways in which it will or will not be given to ARIA. I am sure that there will be plentiful opportunities to discuss this important issue in future. I hope, on the basis of the reassurances I have been able to provide, that my noble friend will, on behalf of my noble friend Lady Neville-Rolfe, feel able to withdraw the amendment today.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, this has obviously been an unsatisfactory semi-debate. That dissatisfaction has rung out in various corners of the Room. The advice of the noble Lord, Lord Browne, seems good; if we continue on our current trajectory, Wednesday afternoon will have some time in it. I will not repeat the questions which have been raised, but I add another which we would like to address on Wednesday afternoon when the Minister calls us together to explain. Is this outwith the framework agreement process? Is there a separate process going on? I add that to the list of unanswered questions.

[Lord Callanan (Con)]

I thank noble Lords for their comments. First, on the agreement, the text has been agreed by Ministers in Scotland, Wales and Northern Ireland. I thought it best to share it as soon as possible; I wanted to share it in advance—it was not far in advance but it was slightly in advance—rather than not share it at all. We originally committed to sharing it ahead of Report; I will ensure that all noble Lords have the opportunity properly to scrutinise it ahead of that and we can return to the issue then. Once noble Lords have had an opportunity to discuss it, I would be very happy to arrange a further briefing with officials for anyone interested in this subject.

--- Later in debate ---

[Lord Callanan (Con)]

I thank Members who have contributed to this brief debate. I am disappointed that the noble Lord, Lord Browne, did not exercise us again with his Daily Telegraph subscription, which I was very impressed by. I congratulate the noble Lord, Lord Fox, on saving the best to last with his bravura amendment. He has obviously been searching his thesaurus over the weekend for appropriate analogies. It was well moved and I do understand the seriousness of the issue and the noble Lord’s intention, which relates to the desire, as we have heard, to understand more details of how ARIA will work in practice.

As I mentioned at Second Reading, ARIA’s framework document is a governance document. It is a standard requirement for public bodies—which, of course, ARIA will be. As suggested in the noble Lord’s amendment, it will set the parameters for ARIA’s relationship with BEIS, as its sponsoring department. That is indeed its very purpose.

The noble Lord, Lord Clement-Jones, referred to the guidance published by Her Majesty’s Treasury, and I reassure him that, by drawing on the Treasury’s guidance, ARIA’s framework document will ensure that the agency and BEIS work effectively together. It will outline ARIA’s accountability, its decision-making and its financial management structures, along with some broader reporting requirements. However, it is not the appropriate place to codify ARIA’s relationship with other government departments. Other departments have no accountability relationship with ARIA, so its terms of engagement with them are a question of strategy rather than governance. The framework document will not contain any information relating to ARIA’s strategy in terms of collaboration, its project portfolio or indeed, its areas of research interest, all of which, I know, are of great interest to noble Lords.

On the sequencing of publication and commencement, given that both ARIA and the department need to be in agreement on the framework document, I reiterate, as I said at Second Reading, that it is therefore not possible to finalise it before ARIA’s senior leadership is in place, as my noble friend Lady Noakes, pointed out. It is not possible for the framework document to be published in advance of ARIA coming into legal existence. Similarly, the framework document for UKRI, for example, was finalised and published after that body came into legal existence.

Finally, it is worth noting that framework documents are live publications and are amended regularly to reflect any changes in the sponsor department or indeed the arm’s-length body itself, and they are all thoroughly reviewed every three years.

On the point raised by the noble Viscount, Lord Stansgate, on whether the framework document will outline the role of the Government’s Chief Scientific Adviser on ARIA, it is likely to. I will be happy to write to the noble Viscount with any more detail that I can on that.

I hope therefore that noble Lords understand that, in our view, there is a logical process to follow in the establishment of a public body and therefore that they will accept my assurance that we will publish the finalised framework document as soon as practicably possible.

[Lord Fox (LD)]

I have a couple of questions before the Minister sits down—or rather, I will now respond. The Minister seeks to downplay why we should be interested in the framework agreement, but the noble Lord, Lord Willetts, when he was in his seat, specifically asked about the relationship between UKRI and ARIA. That is just one question; there is a lot of interest in this and a lot of need to know. So the Minister should acknowledge that this is important to people and to organisations that are, in turn, important to this country.

I have a second point on which I would like an answer. I assume from what the Minister said that the sequence is: first, appoint a chief executive and then appoint the person to whom the chief executive reports. I still find that an interesting sequence, but certainly both those people will be asking what our relationship is with, for example, UKRI—or with others, as set out by the noble Viscount, Lord Stansgate.

It seems to me that either the Government will have an answer to that question during the recruitment process, or they will say, “Well, please yourself”. I suspect they have an answer and, just as the noble Lord, Lord Browne, said, trusting us with the draft of how that question will be answered would be completely reasonable and something that we would appreciate. With that said, I beg leave to withdraw the amendment.

Advanced Research and Invention Agency Bill

Debate between Lord Callanan and Lord Fox

Committee stage
Wednesday 17th November 2021 Grand Committee

[Lord Fox (LD)]

I asked some specific questions about the future legal structure of ARIA and the nature of who its members are. I do not think the Minister had time to answer.

[Lord Callanan (Con)]

I will write to the noble Lord with the legal details he requires.

Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill

Debate between Lord Callanan and Lord Fox

Wednesday 10th November 2021 Grand Committee

[Lord Callanan (Con)]

I thank all noble Lords who contributed to what was a good short debate on Amendments 4, 5 and 8. I completely agree that it is very important that we closely monitor the effectiveness of the new legislation and make sure that our departments are adequately resourced to do the work asked of them.

I start with the amendment of the noble Baroness, Lady Blake, on the reporting of enforcement outcomes. I hope that she will be reassured to hear that there is a wealth of insolvency enforcement statistics. They are published regularly by the Insolvency Service and are readily available on this internet thing.

The published data includes figures for company insolvencies across the UK and personal insolvencies in England and Wales, as well as some of the data behind those figures, which the noble Baroness might be interested in, such as regional variations. Those statistical releases are made every three months, but, since the Covid pandemic started, experimental releases of monthly data concerning numbers of insolvencies have been provisionally added by the Insolvency Service. This additional information has been extremely valuable as an indicator of the impact of Covid on insolvencies. From my point of view, the number has been lower than I expected, which is good news.

Specifically regarding the Insolvency Service’s enforcement activities, information on numbers of disqualification orders is published and updated monthly. Those figures include the number of companies that are wound up in the public interest and a breakdown of disqualification orders and undertakings obtained under the relevant section of the Company Directors Disqualification Act under which they were sought. Those monthly figures also include lengths of periods of disqualification and, furthermore, there is an annual report on the nature of misconduct in disqualification allegations.

Perhaps the noble Baroness could have a look at all that published information and check that it is adequate for her requirements. I hope that this reassures her that, when she does the online search, she will find all the information she requires. There is a copious amount of excellent, helpful data. If the Bill is subsequently passed, future reports will include disqualification numbers made against former directors of dissolved companies.

The noble Lord, Lord Fox, made the very good point that it is important to see evidence of returns to creditors, but I make the important distinction that the disqualification mechanism is for deterring misconduct and protecting the public. It is not, in fact, intended primarily to be a method of recovering funds to creditors. However, he will be pleased to hear that compensation orders can be issued in respect of disqualified directors, who may be required to make good financially on the damage that they have caused, which I suspect is the outcome that we all looking for.

Both the noble Lord, Lord Fox, and the noble Baroness, Lady Blake, asked a good question about the numbers of additional staff. I assure them both that the point I made earlier applies: resources are not limitless, the Insolvency Service already has a team set up for this precise purpose, and a complaints portal is waiting to go live, although of course we will not activate it until the Bill is passed and given Royal Assent.

My noble friend Lord Leigh asked about the number of cases that have been referred to. If I may respectfully correct him, the number of cases investigated that he cited was actually the number of successful disqualifications. There will be many more cases investigated where it will have been determined that there was no public interest in proceeding. That is a difficult judgment that officials in the Insolvency Service and, ultimately, the Secretary of State will take.

My noble friend also asked about the regulation of insolvency practitioners. As I think he is aware, we are reviewing the regulatory framework that governs them to ensure that the best possible outcomes are achieved for creditors. He will be delighted to hear that we will publish the proposed reforms to the insolvency profession shortly, which I hope will go some way to assuaging his concerns.

I move on to the figures that we will publish and the impact assessment in terms of a post-disqualification review. Did the noble Lord want to intervene?

[Lord Fox (LD)]

I intervene given that the Minister is moving on. I specifically asked what tools would be available to deliver compensation. The Minister referred only to compensation orders; the noble Lord, Lord Leigh, made it clear that there are extreme limitations to those and if you talk to the professionals, they have a great deal of doubt about how effective they can be overall. Will the Minister either address that now or come back to us in letter form to explain how these compensation orders can be used to compensate people more widely or, if they cannot, what other options there are?

[Lord Callanan (Con)]

I outlined the issue of enforcement orders, but I am very happy to clarify any additional tools available to the Insolvency Service and to other agencies directly—though not connected to this Bill—to help recover funds both for public authorities and individual creditors. I will write to him about that.

As I said, we have already committed in the legislation to conduct a review into how it is working in practice. That will be done within five years of commencement of the legislation, in line with our better regulation requirement. It is too soon to determine exactly how that review will look, but it will likely be informed by overall case numbers and will include an assessment of whether the new powers are being used as intended.

Net-zero Emissions Target: Fossil Fuel Extraction Projects

Debate between Lord Callanan and Lord Fox

Wednesday 3rd November 2021 Lords Chamber

[Lord Fox (LD)]

In reply to my noble friend, the Minister set up a false dichotomy. I will answer his question: we do not want the oil to come from Surrey. However, Surrey County Council has granted permission to drill oil wells as part of the Horse Hill development. If these are developed, they will put 10 million tonnes of CO₂ into the atmosphere. So will the Minister use his influence with his Conservative colleagues who run the council and get them to step back from this development—and, if he fails, will he ask his colleague to call this development in?

[Lord Callanan (Con)]

It is strange; I thought the Liberal Democrats were in favour of local planning control—obviously not in these particular cases. As the noble Lord is aware, that application is subject to an application in the Court of Appeal at the moment, and therefore I cannot comment on it.

Advanced Research and Invention Agency Bill

Debate between Lord Callanan and Lord Fox

2nd reading
Tuesday 2nd November 2021 Lords Chamber

[Lord Callanan (Con)]

I am sure it was equally as good as the first half of his speech and that the Whip has taken careful note. It is a principle of our Committees that we try not to have the same speeches we got at Second Reading made again—a point most Members tend to ignore—so the noble Lord is well positioned to make a new contribution in Committee. Most other Members could perhaps take note of the excellent example that he will be setting them.

I also recognise the sentiment of the noble Lord, Lord Rees of Ludlow, that the setting up of UKRI was not that long ago in the grand scheme of things. With an £8 billion budget, UKRI has system-wide responsibilities and with this comes a certain operating model. I refer the noble Lord, Lord Fox, to Professor Leyser’s other comments, where she said at her select committee appearance that UKRI’s responsibility to make the whole system work sometimes makes it harder to do the wild experimental things.

In contrast, as enabled by Clause 3 of the Bill, which has been the focus of a number of contributions from noble Lords, it is ARIA’s mandate to do the experimental things and push the frontiers of science. To achieve this, it must have a streamlined structure and minimal bureaucracy. In response to the noble Lord, Lord Rees, this goes beyond what is possible or desirable under the legislative framework and governance arrangements in place for UKRI as the system’s core funding agency.

In reply to the question put by the noble Lord, Lord Fox, as part of any Parliament it is usual to review our partner organisations to ensure that they are successfully fulfilling objectives on the Government’s behalf. The independent review of UKRI to which the noble Lord referred began yesterday under the leadership of Sir David Grant, and it will be reporting to Ministers in due course.

The noble Lord, Lord Rees, also mentioned a very important point about how ARIA’s success will be measured without constraining creativity. There are is a key point I would like to put to the noble Lord here. One of the key features of the ARIA model is its hands-on approach to project management, with projects constantly being re-evaluated and reassessed. ARIA’s agility means that programmes can not only start quickly, but they can also be halted quickly too. ARIA should not be judged on projects that fail in the short term because that is the nature of high-risk research.

The noble Lord, Lord Kakkar, in one of his typically excellent contributions, asked about how ARIA can truly be risk taking as a government arm’s-length body. We will have both legislative and non-legislative mechanisms to enable ARIA to operate boldly and autonomously. Clause 3 in the Bill equips ARIA to give particular weight to the potential benefits of high-risk research in carrying out its functions—not just what research it funds, but how it funds it. We will also set out in a future framework document and other agreements, a unique and specific set of financial and non-financial arrangements to cut unnecessary bureaucracy and ministerial control from ARIA’s operations. I hope that will also allay the concerns raised by the noble Lords, Lord Patel and Lord Broers, on protecting ARIA from day-to-day political pressure. The independent review of research bureaucracy being led by Professor Adam Tickell will also consider bureaucracy from a system-wide perspective. Interim findings will be produced this autumn, and we are expecting a final report to follow in early 2022.

In terms of governance, the noble Lord, Lord Patel, asked who the senior Minister with responsibility for ARIA will be. As my noble friend Lord Patten helpfully reminded us, as a manifesto commitment ARIA is a priority for the Prime Minister and the Cabinet. The Bill provides a specific role for the Secretary of State and any delegation of ministerial responsibility would be at the Secretary of State’s discretion.

I move on to the decision to exempt ARIA from freedom of information requests, which was raised by a number of noble Lords: the noble Lords, Lord Clement-Jones, Lord Davies of Brixton and Lord Fox, and the noble Viscount, Lord Stansgate. I reassure the House that the decision to omit ARIA from the FoI Act has not been taken lightly. To create the extraordinarily lean operating system that I have spoken about, we have had to consider what the most appropriate mechanisms to assure transparency and accountability are within ARIA. I thank my noble friend Lady Noakes for her support on this. Together, robust arrangements are in place that will provide a clear picture to Parliament and taxpayers about how ARIA’s activities are funded and where it spends its money. So I politely refute the views of the noble Lord, Lord Fox, on this.

First, the Bill requires ARIA to submit an annual report and a statement of accounts, which will be laid before Parliament. Secondly, ARIA will be audited by the National Audit Office and will be the subject of value-for-money assessments. Thirdly, ARIA will interact with Select Committees of this House and the other place in the normal way. Finally, we will draw up a framework document, detailing ARIA’s relationship with BEIS and further reporting requirements, such as details of what is published in the annual report. It is also an important fact that other bodies subject to the FoI Act, such as universities and government departments —including my own, BEIS—will still process requests about their activities with ARIA in the usual way.

The noble Lord, Lord Clement-Jones, made a comparison to the number of FoI requests in DARPA. It is an interesting fact that, when making an FoI request in the US, requesters are required to consider paying applicable fees of up to $25—I think that that is an excellent idea. If requests are expected to exceed this cost, the requester is notified to agree additional payment. While fee waivers or reductions can be granted in certain circumstances, there is not a like-for-like comparison to the FoI process in the UK, where, as I am sure the noble Lord will be aware, we get hundreds of what I call “sweeping requests” from people fishing for information when they are not really sure what they want but think that there might be something there, so they pour in FoI requests. Therefore, it is not right to assume that ARIA will receive a similar amount of FoI requests to DARPA.

The noble Lords, Lord Clement-Jones and Lord Fox, and my noble friend Lord Borwick asked about whether the Government will publish the framework document during the passage of the Bill. I should be clear that the framework document will not set a vision or strategy for ARIA—as I have said, that is for the organisation itself. It is a governance document that will follow the Treasury’s standard template and set out the role of BEIS as ARIA’s sponsoring department, its accountability, decision-making and financial management. Given the nature of its content, the framework document must be agreed with ARIA’s senior leadership, for which we are still recruiting. We are therefore not able to publish a draft framework document at this stage, but I would like to reassure the House that I will do so as soon as I am able to.

I thank the noble Baroness, Lady Chapman, for her general support, from the Opposition’s point of view, for the Bill. She rightly asked about the provisions in the Bill to exempt ARIA from public contract regulations and how we assure the appropriate propriety. We have provided a non-legislative commitment for an independent internal auditor to report on ARIA’s procurement activities, demonstrating transparency and good governance. ARIA’s framework document, which I just referred to, will also set out the expectations for conflict-of-interest procedures, in line with practice across government. I thank my noble friend Lord Borwick for his thoughtful comments on this. However, as a further safeguard, Schedule 1 provides the Secretary of State with the power to set out a procedure in legislation should it be required in the future. We will bring forward draft regulations for this power, for illustrative purposes, as the Bill goes through the House.

The noble Lord, Lord Davies of Brixton, and my noble friends Lady Noakes and Lord Patten asked about how we attract these high-risk ideas and the exceptional people who will pursue them, or, as the noble Viscount, Lord Stansgate, eloquently put it: today’s Alan Turing or Barnes Wallis. The recruitment campaign for the CEO launched on 1 June and will aim to conclude in the coming weeks. We are looking for the ability to provide inspiring leadership to high-performing teams.

In response to my noble friend Lord Borwick, we will soon be launching campaigns for the chairman and other non-executive members through an open and fair ministerial appointments process so that we are able to recruit the right talent to work alongside the CEO as a complementary leadership team. We recognise the need to ensure a competitive salary for this position and are in discussions with the Treasury. I will update the House as appropriate.

I welcome the considered contributions from my noble friend Lord Lansley, the noble Lord, Lord Kakkar, and the noble Viscount, Lord Stansgate, on the Haldane principle and ARIA’s use of peer review. It is right that at its core this is about scientists judging ideas on their merits, and that is at the heart of ARIA’s approach. However, the concept that funding proposals should be assessed by peer review is embedded within the Haldane principle, and I agree that that will not always be appropriate for ARIA, which will have an innovative approach to funding and will seek to empower exceptional scientists to start—and stop—projects quickly.

The noble Lord, Lord Patel, asked about research cost sharing, by which I assume he means with universities. We are considering the appropriate arrangements for funding research projects in universities to ensure both that they are properly costed and that those costs are met to enable transformative scientific research. Details on expectations for ARIA in that regard will be set out at a later date.

My noble friend Lord Borwick queried the definition of “property” in Clause 2. The Bill uses the definition “that which a person owns”. In exercising its functions, ARIA may acquire and own both physical property and intangible property, such as intellectual property. “Restoration” means “to return”, so ARIA can own a piece of research equipment that it can loan out on the condition that it is returned to ARIA within a specific timeframe. I hope this clarifies the issue for my noble friend and that he agrees that an amendment is therefore unnecessary.

[Lord Fox (LD)]

I do not wish to labour the property point, but if ARIA is not doing research then I do not understand why it would own research equipment. Sorry, I am confused.

[Lord Callanan (Con)]

It can fund the purchase of a piece of research equipment, which ARIA then owns, and it can loan it out on the condition that it is then returned within a specific timeframe. I am not quite sure why the noble Lord is confused but perhaps we can return to this issue in Committee.

I have tried my best to address most if not all of the points that have been made today. I am sorry to detain the House at such a late hour but I am deeply encouraged by its general support, albeit with some reservations, for the dedicated funding of high-risk research. I look forward to continued engagement with all sides as we progress the Bill through the House. I therefore commend the Bill to the House and beg to move.

Private Equity Takeovers

Debate between Lord Callanan and Lord Fox

Thursday 21st October 2021 Lords Chamber

[Lord Callanan (Con)]

My Lords, of course we look at all transactions closely and there are specific grounds to intervene, set out by the Government that the noble Lord was actually a member of, as I said. We recognise the need for greater accountability for large private companies, including those owned by private equity. We published plans to do just that in our proposals on restoring audit and governance.

[Lord Fox (LD)]

My Lords, I am sure that the Minister is aware of the acronym ESG, which stands for environmental and social governance—an important way of making sure that businesses behave properly. But there are different reporting standards for listed companies and private equity companies. Will he ensure that all companies trading in this country report on a level playing field? Will he undertake to make sure that everybody affirms the same ESG standards?

[Lord Callanan (Con)]

As the noble Lord is aware, there are a multiplicity of different international standards, but we are of course introducing the transparency requirements on climate disclosures, as he knows. We have the audit reform proposals, which will extend the reporting requirements to many large private companies as well. We will publish our response to that consultation shortly.

UK Property Ownership: Overseas Jurisdictions

Debate between Lord Callanan and Lord Fox

Wednesday 13th October 2021 Lords Chamber

[Lord Callanan (Con)]

As I said, the Financial Action Task Force that we established got the best rating of any country assessed so far in the round of evaluations in countering money laundering. We are opposed to it and we will do all we can to fight it, as noble Lords will want us to do. We intend to legislate on the registration of beneficial ownership and will do so as soon as parliamentary time allows.

[Lord Fox (LD)]

My Lords, as we all know, “legislate when time allows” is a phrase to kick things into the long grass. The evidence to date is that this item is nestling very deep in the long grass. The Government have had the time and the opportunity to bring forward legislation, so can the Minister be clearer to your Lordships’ House why they have not done so?

[Lord Callanan (Con)]

It is absolutely not an intention to kick it into the long grass: it remains a priority, which is why we published the draft Bill, why we invited pre-parliamentary scrutiny and why we have acted on many of the recommendations that were issued during that time, but there remains a lot of pressure on the parliamentary timetable and we will legislate when time allows.

Emissions Trading Scheme: Transport

Debate between Lord Callanan and Lord Fox

Monday 11th October 2021 Lords Chamber

[Lord Callanan (Con)]

The effect on poor people, including in the UK, will be one of the factors that we will need to consider when expanding the ETS. These are important fiscal measures. We will need to look at them properly and consider all the implications, and we will set out our thinking in due course.

[Lord Fox (LD)]

My Lords, as the Minister pointed out, these schemes cover energy-intensive businesses. However, if the disorderly situation that is currently under way continues, manufacturers of ceramics, steel and cement—energy-intensive businesses—will not have any emissions to trade because they will have collapsed. Can the Minister clear up what is happening? Have talks between BEIS and the Treasury happened, as the Secretary of State said yesterday, or was the Treasury right that no talks have happened? When will the Minister let us know what is going on? Can the Government clear up this mess?

[Lord Callanan (Con)]

I agree with the comments made by my Secretary of State yesterday. There are always ongoing discussions between government departments on a huge range of measures, and I am sure that the Treasury and BEIS will be closely involved in further discussions.

Employment Rights

Debate between Lord Callanan and Lord Fox

Thursday 10th June 2021 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the Minister for repeating the Statement. This is a relatively small, long-overdue step towards upholding workers’ rights, and to that extent it is welcome. However, it comes with no parliamentary time allocated for legislation and no new funding.

There was a glaring hole in the Queen’s Speech. After a pandemic that has made life extremely hard for many people, it is disappointing that the Government are yet to announce an employment Bill to strengthen workers’ rights and to make the rules fit for modern working practice.

A single enforcement agency is welcome but, unless we look again at people’s working conditions and the rules in place, this agency—when it eventually emerges—will not be able to deliver the change that people need in their lives. To do that, it needs proper funding. For example, the International Labour Organization recommends that Governments have one inspector per 10,000 workers. In the UK the current funding is for 0.4, so can the Minister tell your Lordships’ House if and when the new agency will be funded to deliver ILO levels of inspection?

When an illusionist is practising their art, the key skill is misdirection. In this case, our attention is in danger of being distracted by decent and welcome words condemning the practice of fire and rehire. Meanwhile, the Government have conflated employment abuses with measures to crack down on trade unions. While there may be some issues in a small number of unions, they are not the cause of the problems faced by so many families. It is sharp employment practice that is taking UK families to the edge, not trade unions, so my next question to the Minister is: how do the Parliamentary Under-Secretary’s words in this Statement help people who right now are being fired and taken back on downgraded working contracts? This Statement condemns the practice, but now the Government have asked for a further report on the subject. This is kicking it into the long grass. When will the Government actually do something to help workers?

More broadly, in October 2016 the Government commissioned Matthew Taylor to carry out an independent review of the UK employment framework. The Taylor Review of Modern Working Practices found that the labour market was changing due to the emergence of new business models and different forms of gig economy working; the Minister knows about this very well. It proposed many important measures to help support people’s jobs in those sectors. These measures received a broad welcome, and indeed warm words flowed from the Benches opposite. In their last manifesto, the Conservatives undertook to implement many of the report’s findings—yet it still gathers dust. Mr Taylor became interim Director of Labour Market Enforcement in August 2019, but then in January this year he announced that he was leaving and the role was not refilled. So have the Government abandoned their pledge to implement the Taylor review?

With or without Taylor, things need to change—and quickly. When will we see an end to the toxic practice of delivery workers being required to drive illegally so that they can meet their quotas? When will we see an end to people being forced to skip bathroom breaks? When will nearly two in five workers get more than a week’s notice of their working hours? When will gig economy workers get the wages they deserve—for example, the 20% higher minimum wage for people on zero-hours contracts? Because this is the real world of work that is facing many people right now.

Speaking in the Commons, the Parliamentary Under-Secretary said:

“Nothing is off the table.”—[Official Report, Commons, 8/6/21; col. 849.]


Actually, for the poorest, most exploited workers there is nothing on the table. These are words. When will we see some action?

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

I thank the noble Lords, Lord Lennie and Lord Fox, for their comments. To pick up the final question from the noble Lord, Lord Fox, about the Taylor review and workers’ rights, we have made good progress in bringing forward legislation to protect workers’ rights. We have closed the loophole that sees agency workers employed on cheaper rates than permanent workers, we have quadrupled the maximum fine for employers who treat their workers badly and we have given all workers the right to receive a statement of their rights from day one.

We are committed to protecting and enhancing workers’ rights. The noble Lord pointed to the Uber Supreme Court judgment. It was clear that those who qualify as workers under existing employment law are entitled to rights such as the minimum wage, and all gig economy businesses should ensure that they are fulfilling their legal responsibilities.

On the employment Bill, which both noble Lords asked me about, I can tell them, particularly the noble Lord, Lord Lennie, who said that the Bill had been dropped, that he is not correct. We are committed to bringing forward an employment Bill to protect and enhance workers’ rights as we build back better. We want a high-productivity, high-wage economy that delivers on our ambition, and we want to see workers protected.

With regard to firing and rehiring, the Government have set out a clear and proportionate course of action to address fire and rehire. It is a complex area of law so we have asked ACAS to produce better, more comprehensive and clearer guidance to help employers explore all the options before considering fire and rehire and to encourage good employment relations practice. We are looking closely at the ACAS report. While we are not legislating at this stage, we will continue to monitor the evidence on the use and prevalence of fire and rehire.

Both noble Lords asked me about the funding for the single enforcement body. As with all government funding, that will be considered during the spending review later this year. On the questions about the Certification Officer, it is important to point out that the principle of this in the legislation was passed and agreed in the Trade Union Act 2016. This is merely the enactment of those provisions, and it does no more than give powers to the Certification Officer similar to those that many other regulators already possess in these sorts of areas.

Post Office Update

Debate between Lord Callanan and Lord Fox

Monday 24th May 2021 Lords Chamber

[Lord Fox (LD)]

My Lords, let us remind ourselves of the human scale of this outrage. Starting more than 20 years ago, the Post Office prosecuted nearly 1,000 sub- postmasters and sub-postmistresses based on incorrect information from a recently installed computer system. Some went to prison following convictions for false accounting and theft, many were financially ruined, and some have since died with the shame of this still hanging over them and their families.

As we know, a subset of those people were acquitted and, as we discussed around a month ago, the Government have asked Sir Wyn Williams to inquire into this episode. We are of course pleased that the lid is beginning to be lifted on some of these issues. Speaking on 28 April about suggestions that the inquiry was underpowered, the Minister was very clear:

“Given that all parties so far are committed to co-operating, we remain of the view that a non-statutory inquiry is the right approach.”


He added:

“However, if Sir Wyn does not get the co-operation he requires, then all options are on the table and we will not hesitate to act.”—[Official Report, 28/4/21; col. 2324.]


Today we are discussing a new Statement that says the context of the inquiry has changed, hence the move to a statutory basis, but it cites the successful appeal as that context. That is strange as the results of that appeal were available on 28 April. So what has actually changed? What has caused the department to change its mind? For example, has the co-operation of which the Minister spoke evaporated? If so, who is now no longer co-operating?

I do not think the noble Baroness, Lady Hayter, or I are surprised that this change has had to happen. Like her, we welcome it as a small step in the right direction, but I point out that on an already tight schedule this has not helped. On 28 April the Minister said he expected the report in the summer, and in your Lordships’ House the Minister was adamant that this deadline could be met. Now the inquiry report is delayed. What will take the extra time? What has caused that delay? Will the new deadline of the autumn be met?

As the Statement suggested, the terms of reference for Sir Wyn have been amended. As we do not have the benefit of tracked changes, can the Minister please outline for the record and for your Lordships the principal changes in those terms of reference? If we look overall at the terms of reference, the overriding problem is there for all of us to see: six clauses, each set out with very passive language. “Assess”, “understand” and “acknowledge” are all good words, I will admit, but they are not an indicator that this inquiry has any way to identify culprits. They are not the words of a robust bringing to book. Even if he wanted to, Sir Wyn will not be able to go beyond those terms of reference as there is no wriggle room. If this is the only inquiry, I fear it is not going to be a satisfactory one.

For example, section B of the terms of reference uses the words

“to establish a clear account of…the implementation and failings of Horizon”

and the Post Office’s use of that information—the latter are my words, not those of the ToR. Given that this inquiry is essentially a fact-finding mission, what will the Government do with the facts when they get them? Further, it seems to be focused largely on the failure of the Horizon system and not that of Post Office management—and, as we know, this case was compounded by what appears to have been an intentional decision by the Post Office not to disclose material that undermined its case. So where in the terms of reference will this issue be tested and judged?

As in other cases, there are two levels of failure here. The first was an excess of trust in the system and technology; the second was the failure to deal with the consequences of this when the facts became apparent to some people within that organisation. This inquiry is set up to learn lessons from history but not to deal with the legacy of this past. With these terms of reference, I do not see how this inquiry will establish culpability from these facts, and how it will be the means to deliver resolution to the sub-postmasters and sub-postmistresses and their families over whom this case hangs. I do not see it as a route to compensating these people. So, while it is a step forward, I can understand why former sub-postmasters are demanding a judge-led inquiry into this scandal. I have a great deal of sympathy for their demand.

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

I thank the noble Baroness, Lady Hayter, and the noble Lord, Lord Fox, for their comments. Let me say from the start that I completely share their outrage about this scandal, as I think they both know. It has been going on for many years, under many different Ministers and Governments, and we should all accept our share of the responsibility for the dreadful way these poor people were treated. Nobody who saw them emerging on to the steps of the High Court a few weeks ago could have failed to have been moved by what they had to say.

Turning to the many questions that the noble Lords asked, as I said, this Government deeply regret that this situation has occurred. Since it was launched in September 2020, the Post Office Horizon inquiry has made swift progress. The inquiry’s chairman, Sir Wyn Williams, and his team have heard from many affected postmasters and gathered evidence from key parties, including the Post Office, my department, UKGI and Fujitsu.

The noble Lord, Lord Fox, asked about the changes to the terms of reference. It is clearly critical that the inquiry is able to look at exactly what decisions were made and why, in relation to the Horizon prosecutions, so that lessons can be learned. The terms of reference have changed to clarify that the inquiry can investigate the Post Office’s decision-making in taking action against postmasters, including pursuing prosecutions and a fairly aggressive legal strategy, and in particular of course it can investigate the cases of those whose prosecutions have now been quashed.

The noble Baroness, Lady Hayter, asked about accountability. Let me be clear, for the avoidance of doubt, that the inquiry can make findings of fact and make recommendations. With regards to accountability, as noble Lords will understand, matters of criminal and civil law remain for the courts, as only the courts can make such judgments. However, they and other bodies can draw on the findings of the inquiry when considering these issues. It is therefore now for Sir Wyn to establish what happened, what went wrong and why it went wrong. We can then consider whether more needs to be done in the light of those findings.

The noble Lord, Lord Fox, asked about the timeframe for the inquiry. The deadline for the final report has now been extended to autumn 2022, to take account of the new statutory nature of the inquiry, but we are expecting a progress update later this summer. The changes to the inquiry’s timeline mean that Sir Wyn will have more time to determine exactly what went wrong at the Post Office during this period and to make sure that a situation such as this cannot happen again.

The noble Lord, Lord Fox, and the noble Baroness, Lady Hayter, both raised the issue of compensation. I know that many postmasters, and Peers across this House, have called for further compensation for those who have been caught up in this situation. Those whose convictions have been quashed, with a settlement amounted in the group litigation, are of course outside the scope of the inquiry. But, as I said previously, the Government are keen to see that all sub-postmasters whose convictions are overturned are fairly compensated as quickly as possible. We will ensure that we work with the Post Office to make this happen as quickly as it is possible to organise.

The noble Baroness, Lady Hayter, referred to Fujitsu. She will be aware that two Fujitsu employees are still the subject of a police investigation. However, so far Fujitsu has co-operated fully with the terms of the inquiry. I confirm to the noble Lord, Lord Fox, that all actions of the Post Office, including its fairly aggressive legal strategy, can and will be examined under the terms of the inquiry.

Post Office Court of Appeal Judgment

Debate between Lord Callanan and Lord Fox

Wednesday 28th April 2021 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the Minister for bringing this Statement to your Lordships’ House, and for his two letters to all Peers over the last five weeks. I should say that I have been a member of the Post Offices APPG for some time.

Looking back, the Government have said that they will determine what went wrong. Of course, we absolutely support that. To this end, their route has been to ask Sir Wyn Williams to lead the Post Office Horizon IT inquiry. The inquiry, they say, will work

“to fully understand these events, gather available evidence and ensure lessons have been learnt so that this cannot occur again.”

I am sure that this will be a thorough investigation, which will shine a bright light on systems and programmes, and their implementation. But can the Minister reassure us that it will also illuminate the overriding issue of how this business behaved? As the noble Baroness, Lady Hayter, has just eloquently set out, the moral shortcomings of the management are central to why this happened. To fully understand this issue, as the Government want to, they need a thorough appraisal of the management culture of the Post Office. It is changing the culture that makes sure that something never happens again, not updating an operating system or rewriting a computer programme.

Can the Minister please make available the full terms of reference according to which Sir Wyn will conduct his inquiry? Government communications include the phrase:

“The Government look forward to receiving Sir Wyn’s report in the summer”.


Does the Minister expect the report to be completed by this summer, or have I misunderstood? If so, what support will the investigation have to run to such a tight timetable? I am concerned because this is not a statutory inquiry. What will happen if individuals retain lawyers to represent their interests? How will Sir Wyn proceed in those circumstances?

I echo the praise given by the noble Baroness, Lady Hayter, to the noble Lord, Lord Arbuthnot of Edrom. He has tenaciously pursued this issue, and in February last year he asked a question of the then Under-Secretary of State at BEIS, the noble Lord, Lord Duncan of Springbank:

“To ask Her Majesty’s Government what recent assessment they have made of the Post Office’s powers to conduct prosecutions.”-


The response was that

“the Post Office’s powers to bring a private prosecution, which fall under section 6(1) of the Prosecution of Offences Act 1985, are not specific to that company.”—[Official Report, 4/2/20; col. 1709.]

I forewarned the Minister that I would bring this up, because my understanding is that while it has not been granted investigative powers, the Post Office has regularly undertaken joint investigations with the police and other investigative bodies that do have statutory investigating powers. It was granted access to the national police computer system for intelligence and prosecution purposes; it had financial investigators appointed by the National Crime Agency for the purpose of undertaking financial investigations for restraint and confiscation proceedings; and Royal Mail was included in the list of relevant public authorities, under the Regulation of Investigatory Powers Act 2000, designated to grant authorisations for the carrying out of directed surveillance to investigate crime. The Minister’s views on that would be welcome. Is it really still appropriate that this organisation should enjoy those powers?

This is by no means the end of the road, as the Statement makes clear. In yesterday’s debate in the House of Commons, my honourable friend Christine Jardine MP asked the Parliamentary Under-Secretary, Paul Scully, to give an assurance that the Government will commit to treating each of the former sub-postmasters as individuals. The Minister acknowledged that, as well as those prosecuted, there were those whose lives had been blighted by incorrect accusations. I am pleased to report that he acknowledged the human cost. However, it is not clear to me what this acknowledgment means in practice. How will the Government embark on treating everybody individually? As part of the settlement, we have the historical shortfall scheme and it has been explained that this had received over 2,400 applications when it closed last August. First, although this is more than the Post Office anticipated, is the Minister satisfied that everybody who could have applied for this was aware of it and did? Secondly, the Minister was clear that Her Majesty’s Government will support the Post Office with resources. We of course endorse that. We do not yet know what form compensation will take and how it will be calculated. However, in a Written Answer, the noble Lord, Lord Callanan, said:

“we will not spend more of taxpayer’s money than is necessary to ensure that the Scheme meets its objectives.”

That sounds like a management expectation exercise and is a bit ominous. This is not an area, or a time, for penny pinching.

However financially generous the scheme turns out to be, the Government have to be clear that they can never fully compensate for the emotional and social damage that has been visited on many thousands of innocent people in this country.

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

I thank the noble Baroness, Lady Hayter, and the noble Lord, Lord Fox, for their comments. I completely share many of their sentiments of shock and outrage. The tragic failings of the Post Office have occurred over many years, over many different Governments. On behalf of the current Government I can only say that we are truly sorry.

We welcome the decision of the Court of Appeal on 23 April to quash the 39 convictions. This is in addition to the six convictions that were quashed in the Crown Court in December. The impact that this ordeal has had on affected postmasters, their lives and livelihoods cannot be overstated. Nobody who saw the television coverage and the news reports the other day can fail to have been affected by the individuals featured. We certainly hope that, with this decision, these postmasters can at least start the process of moving forward to a new chapter in their lives.

I move on to the specific issues raised by the noble Lords. On compensation, the Government hope that the court’s decision is another important step towards bringing resolution to these postmasters. The Court of Appeal’s judgment will require careful consideration by all involved, and the Post Office itself will need to consider the next steps and the best process for fairly compensating these postmasters. We are keen to see that all those whose convictions are overturned are fairly compensated as quickly as possible and we will certainly work with the Post Office towards this goal. I understand the strength of feeling felt by those postmasters in the GLO who I understand only received a portion of the original £57.75 million settlement by the Post Office. However, that was a full and final settlement reached between the claimants in the GLO and the Post Office.

Both noble Lords mentioned the inquiry. Many postmasters and their families have suffered issues and distress since the faults in the Horizon system. We all agree on that. Some had their livelihoods and businesses taken away and were convicted of crimes that we now know they did not commit. Anybody can only imagine the distress that that must have caused to loyal, upstanding and honest members of the community. We are clear that a situation such as this must never, ever be allowed to happen again.

To ensure that the right lessons are learned, and to establish what must change, we launched an independent inquiry, led by Sir Wyn Williams, in September last year. He is a retired High Court judge with a wealth of experience and is fully independent of both the Government and the Post Office. I can tell the noble Lord, Lord Fox, that the inquiry has made swift progress. It has already heard from a wide group of affected postmasters. The call for evidence has recently closed and I understand that Sir Wyn is planning to have some public hearings on these matters in June. I can confirm that we expect to get his report by the end of the summer.

Given that all parties so far are committed to co-operating, we remain of the view that a non-statutory inquiry is the right approach. However, if Sir Wyn does not get the co-operation he requires, then all options are on the table and we will not hesitate to act. We do expect his report in the summer.

On who is to blame, decisions regarding the litigation strategy at the time were taken by the Post Office based on the legal advice that it had received. The Government at the time relied on the Post Office’s management to investigate issues with the Horizon system. As we have seen from both Mr Justice Fraser’s judgment and now the Court of Appeal judgment, the Post Office consistently maintained that the Horizon system was robust. That obviously turned out to be incorrect. What is also clear, from the Court of Appeal judgment last week and the judgments in the 2019 group litigation, is just how misguided the Post Office was in its approach to the management of issues arising from the operation of the IT system. All of these matters will be investigated in the inquiry, so that we can ensure this never happens again. I commit to keeping the House fully informed.

The noble Lord, Lord Fox, raised the issue of private prosecutions. The Post Office no longer undertakes any private prosecutions, and I have been personally assured by the new chief executive that it has no plans to undertake any further prosecutions in these matters. However, the Government understand the wider challenge that the Post Office case poses regarding the responsibilities that companies have in undertaking private prosecutions. The Justice Select Committee considered this last year and concluded that prosecutions brought by victims of crime themselves, whether corporate or individual, still have a valuable part to play. The Select Committee concluded that existing safeguards in place to regulate private prosecutions are effective at filtering out weak claims. As the noble Lord, Lord Fox, himself acknowledged, the Post Office’s powers to bring private prosecution fall under Section 6(1) of the Prosecution of Offences Act 1985, and they are not specific to that company. It has the same right as any other, whether an individual or a company, to bring a private prosecution but, as I said, I have been assured that it has no plans to bring any further prosecutions.

The noble Lord, Lord Fox, was kind enough earlier today to mention the issue of the Post Office and its investigatory powers. Since he did, I have asked my officials to investigate this matter. There are, apparently, over 600 public authorities that can use investigatory powers, and these are overseen by the Investigatory Powers Commissioner’s Office. There have been no changes to the authorities that the IPCO oversees since the introduction of the Investigatory Powers Act. According to the IPCO 2019 annual report, Post Office Ltd is not on that list.

National Security and Investment Bill

Debate between Lord Callanan and Lord Fox

Report stage
Thursday 15th April 2021 Lords Chamber

[Lord Callanan (Con)]

My Lords, I of course welcome the amendment from the noble Lords, Lord Fox and Lord Clement-Jones, which seeks further parliamentary scrutiny of Clause 6 regulations, and the opportunity to put forward the Government’s case once more. I can spare the noble Lord, Lord Fox, the agony and tell him that, great though my ministerial powers are, I am not a miracle worker and, therefore, probably will not satisfy him.

The Bill as drafted provides for regulations made under Clause 6 to be subject to the affirmative resolution procedure. This amendment would require the Secretary of State to lay a proposed draft of any regulations made under Clause 6 before Parliament for 30 days before the draft regulations themselves are laid and subject to the approval of both Houses. It would also require the Secretary of State to identify a committee to report on the proposed draft regulations and then report on their consideration of the committee’s recommendations.

We have, as the noble Lord, Lord Fox, said, previously discussed the importance of regulation under Clause 6, and I thank the noble Lords for their commitment to ensuring meaningful parliamentary scrutiny of the making of such regulations. However, the Government’s position remains that the affirmative procedure—or regulations made under Clause 6—ensures such scrutiny by requiring Parliament to approve regulations. In Grand Committee, the noble Lord also highlighted the importance of the Secretary of State maintaining “serious technology foresight” and making any regulations under Clause 6 to protect our national security effectively. I can assure noble Lords that the Government are committed to keeping regulations under constant review to ensure that this regime is effective in protecting our national security and reflects technological changes.

The affirmative procedure will, in addition, provide the Secretary of State with the flexibility to update the mandatory regime quickly should new risks to national security arise. For all these reasons, I ask that the noble Lord withdraw his amendment though, in the absence of the requested miracle, I suspect that he is not going to do so.

[Lord Fox (LD)]

I thank the Minister for his response and the noble Lord, Lord Grantchester, for his speech. The Minister is correct: there was no miracle, and there was no surprise. Of course, I was aware that the Secondary Legislation Scrutiny Committee had not recommended opposing this in any way. Sitting through three days in Committee and a day on Report would activate many people who worry about the way in which Governments run their affairs. Therefore, with all due respect to everyone, having been through that process, it would be remiss if someone did not bring an amendment of this kind before your Lordships’ House. To that end, I would like to test the mood of the House.

Global Navigation Satellite System

Debate between Lord Callanan and Lord Fox

Wednesday 10th March 2021 Lords Chamber

[Lord Callanan (Con)]

As I said in answer to the noble Lord, Lord West, we have been clear that the possible provision of PNT services was not the rationale for our investment in OneWeb. OneWeb is primarily a telecommunications operation and that is what its primary focus will be. However, we are not ruling out that it may play a role in future services to come.

[Lord Fox (LD)]

My Lords, the cost of OneWeb does not stop with the Government’s share of $1 billion. In order to complete the array, the chairman of Bharti Enterprises says that a further $2.5 billion will be required, for which the Government are on the hook for $600 million. Given that that has to happen soon, where in the Budget is that line for the Government’s investment, and what value are UK taxpayers going to get from that huge amount of money?

[Lord Callanan (Con)]

We will be setting out a strategy for OneWeb in the future. We have made an investment in OneWeb and we are looking for alternative sources of finance to come.

Vauxhall at Ellesmere Port and Battery Manufacturing Strategy

Debate between Lord Callanan and Lord Fox

Tuesday 2nd March 2021 Lords Chamber

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

I assure the noble Lord that we are doing all that we can to ensure that Ellesmere Port has a bright future. The automotive industry in general is an essential part of the Government’s plans for green growth, levelling up across our country and driving emissions to net zero. As the noble Lord will be aware, as part of the Prime Minister’s 10-point plan, the Government brought forward the phase-out date for new petrol and diesel cars and vans to 2030, and, by 2035, all new cars and vans must be fully zero-emission at the tailpipe.

[Lord Fox (LD)]

My Lords, I am on the executive of the All-Party Parliamentary Motor Group. In his Statement, the Secretary of State boasted that some £1.5 billion of joint funding had gone to the APC and the Faraday battery challenge. To put that into context, that is about a tenth of what the French Government are putting into this sector. The fate of Ellesmere Port will be decided in days, but the Government have had years to get ready for moments like this. Everyone knew and knows that we need significant battery manufacturing capacity in this country. The Faraday challenge has been running for eight years, so what has stopped a battery gigafactory being built already?

[Lord Callanan (Con)]

Ultimately, of course, these are commercial decisions for the companies involved, but we are working closely with a number of people interested in establishing gigafactories. We have announced £500 million as part of our wider commitment of up to £1 billion to support the electrification of vehicles and their supply chains, including developing gigafactories in the UK.

National Security and Investment Bill

Debate between Lord Callanan and Lord Fox

Committee stage & Lords Hansard
Tuesday 2nd March 2021 Grand Committee

[Lord Fox (LD)]

During that comprehensive answer, I think I heard the Minister say something and I would like to test whether I understood correctly. In explaining why people should not be concerned that certain parts of infrastructure are not included in the list, I think I heard the Minister say that the Bill’s call-in power is economy-wide. That suggests to me that the list of 17 issues is irrelevant because everything is on the list. In other words, anything can be called in, whether it is on the list or not. So, the list is merely indicative, but the exhaustive list is the entire economy. Could the Minister explain whether that is the correct interpretation of what I just heard?

[Lord Callanan (Con)]

If the acquisition in question poses a risk to national security, yes, there is the general power, but the point I was making is that, with regard to areas of political and national infrastructure, there are also separate powers in different pieces of legislation that would help to protect in those areas.

Workers’ Rights

Debate between Lord Callanan and Lord Fox

Tuesday 26th January 2021 Lords Chamber

[Lord Callanan (Con)]

There is no plan to make vulnerable workers more vulnerable, as he put it. The House should be in no doubt that the Government will always stand behind workers and continue to stamp out unscrupulous practices where they occur.

[Lord Fox (LD) [V]]

My Lords, I know of no business organisation calling for the Government to cut back workers’ rights, but no matter how much the Minister protests, the Government did sound the working time dog whistle to Back-Bench Tories. Business are calling for help to retain and recruit people through, for example, a cut in employers’ national insurance contributions. Will the Minister undertake to redirect the activities of his department to ensure that the Treasury brings in this vital support to our businesses?

[Lord Callanan (Con)]

I am sure the noble Lord is well aware that I cannot speculate on tax changes. They are a matter for the Chancellor. I would get myself into serious bother if I tried to pre-empt what he might decide to do.

United Kingdom Internal Market Bill

Debate between Lord Callanan and Lord Fox

Consideration of Commons amendments
Monday 14th December 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, I welcome the noble Baroness, Lady Bennett, back to her seat—just in time for tier 3 to arrive. We have again had a short debate. As we have seen the evolution of this argument—in the amendment’s approach to common frameworks it is, in a sense, the yin to the yang of the noble and learned Lord, Lord Hope—we are now looking at a different way of trying to ensure that diversity can survive under the automation of the market access measures.

In the past, the Minister has brought to bear the Government’s disapproval of the breadth of the exclusions that previous versions of this amendment made. As the noble Baroness, Lady Bennett, pointed out, many of those have now dropped off. So, in a sense, the Government have already pushed this to a narrower set of exclusions. The Minister highlighted his uncertainty around the word “proportionate”. Of course, none of us would want to do something disproportionate, but I cannot help thinking that the Government, in all their wisdom and with all their clever legal people, could come up with a frame of words that will prevent hideous problems developing in the courts—so I cannot help thinking that that is something of a red herring.

As the noble Lord, Lord Stevenson, said, this is getting more modest than was previously attempted, but it still has the overriding aim of dealing with the problem which keeps coming up throughout this debate. The Minister has magnanimously said that the devolved authorities are perfectly at liberty to develop new and innovative ways of doing things—so far, so good—and then, of course, the market access principles mean that those innovations will get undercut if someone else in the British Isles is doing it differently. I do not understand how the Minister can keep linking those two sentences without seeing that the one excludes the other. If it does not do it in governmental terms, it will do it in the courts. This will be a creature of the courts, because there will be businesses that will be going at a legal opportunity to get their products into devolved authorities that have sought to raise standards, as they see it.

The issue of minimum-unit alcohol pricing often comes up, and it is quite clear that this legislation will not affect that at all. We are all in agreement there. But if we were seeking to bring that in once this legislation was in place, what chance would it have of surviving the courts? That is why we will support this amendment.

[Lord Callanan (Con)]

I thank everybody who has contributed to what has been a very good, albeit brief, debate. I have listened very carefully to the points that have been raised, and I will respond directly to the points of the noble Lords, Lord Stevenson and Lord Fox. Innovative policy-making relating to public health and the environment will be fully possible under the Bill, within the clearly defined market access principles. Schedule 1 sets out a clear exclusion process for:

“Threats to human, animal or plant health”.


There are also several other exclusions relating to the environment and public health: chemicals and pesticides, for example. All of these are drafted tightly to strike the right balance between these objectives and the integrity of the market.

It is also essential to remember that neither of the market access principles affects the devolved Administrations’ abilities to uphold and enforce rules governing how consumers use goods. Neither would they prevent reasonable “manner of sale” restrictions, as long as they are not discriminatory. If an Administration wanted to introduce minimum alcohol pricing or the plastic bag charges, they are fully able to do so and can use them to fulfil environmental or public health aims in future; the principles would not be an obstacle to that, as long as those rules do not discriminate. I say to the noble Baroness, Lady Bennett, that she is wrong: if a future devolved Administration wanted to introduce the plastic bag charges, they would be able to do so under these market access principles, as long as they were non-discriminatory.

United Kingdom Internal Market Bill

Debate between Lord Callanan and Lord Fox

Consideration of Commons amendments & Ping Pong (Hansard) & Ping Pong (Hansard): House of Lords
Wednesday 9th December 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, like the noble Lord, Lord Stevenson, I will take the amendments in the opposite order to the Minister, if the House is happy with that.

The delegated powers issue has almost become a ritual in your Lordships’ House. A Bill is published and in it are many very draconian powers, which seek to change almost everything the Bill can do at the will of the Minister. There is then a report from the DPRRC which condemns it, and then there is a debate and we start to move towards a more reasonable situation. I hope, perhaps, that we can learn from this and maybe cut out a few of the steps, so that we can get to the reasonable situation. The Government have given considerable ground on this, and for that we should all be accepting and reasonable and, I suppose, grateful, although perhaps gratitude is the wrong word.

With respect to Clause 12, I think we will all be watching quite closely to see how those powers are exercised, because advice can come in many forms and we will be seeking to observe that.

The characterisation that these delegated powers are required in order for the Government to react and act with speed has been absolutely confounded by the way in which the Covid crisis has been addressed by the Government. There has been very rapid legislation and very rapid reaction. Looking forward, we have got to a better place than we were in when we started. I still do not think that we would call it perfect, but we have taken a long time to get there.

My reading of the amendment proposed by the noble Lord, Lord Stevenson, is that it is the return of Amendment 21, or at least most of it. Listening to his very reasonable presentation of the amendment and having listened to the debates on Report, I am somewhat surprised that the Government continue to dig their heels in. I can understand that the list in subsection (2) of the proposed new clause might have raised some concerns, and it can of course be subject to negotiation, but as the list now stands—with environmental standards and protection; animal welfare; consumer standards, including digital; employment rights and protections; the health and life of humans, animals or plants; the protection of public health; or equality entitlements—it seems that the Government could not possibly object to it, so I am surprised. The Minister has set out his concerns about an ordered market, but it is very clear that any market that did not observe these things would not be one that we wanted anyway.

With that response, I suggest that we will be supporting the noble Lord, Lord Stevenson, when this Motion is put to a vote. We hope that the Government will be able to have discussions with the noble Lord and others, so that next time they can come back with something much closer to what we have seen today.

[Lord Callanan (Con)]

I thank both noble Lords for a good, albeit brief, debate. To summarise, earlier I expressed my concerns about Amendment 8L and the expansive list of exclusions from the market access principles that it introduces. The list that we have included has been carefully drafted to strike what is, in our view, a measured balance. It protects the ability of the devolved Administrations and the UK Government to deliver policy, while avoiding harmful or costly barriers to trade within the UK internal market. The Bill does nothing to stop all nations working together to achieve mutual goals and build on our shared high standards.

On the delegated powers in the Bill, it is not proportionate to remove the Government’s ability to ensure that the list of exclusions and legitimate aims remains appropriate. The Government have already set out a comprehensive package of changes to the delegated powers in the Bill, including for the removal of certain powers and for reviews and reporting to Parliament, and new amendments on the role of the devolved Administrations. This provides for effective transparency and scrutiny of the remaining powers.

We believe that there is a reasonable middle ground here. Many noble Lords tabled and supported amendments to alter, but not remove, the powers in the Bill. We agree with those colleagues. These powers are necessary, and we believe that the changes we have proposed should address their concerns. I therefore hope that noble Lords will be able to support the Government’s approach to reinstating these powers in the Bill.

United Kingdom Internal Market Bill

Debate between Lord Callanan and Lord Fox

Committee stage & Committee: 5th sitting (Hansard) & Committee: 5th sitting (Hansard): House of Lords
Monday 9th November 2020 Lords Chamber

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

I have received a request to speak after the Minister from the noble Lord, Lord Fox.

[Lord Fox (LD)]

With every answer, there come more questions, I am afraid. The Minister sought to explain that the devolved authorities will still be able to spend the money—I think those were the words that he used—but I am interested to know to which money he is referring. How in future will they get their hands on the money? Will there be a competitive bidding process? Is it part of the formula? Is that the money that he is talking about? Perhaps he could outline what he means by “the money”, because it is not entirely clear to me. He is looking at me as though I am being slightly stupid and I shall be very happy to be educated by him in writing rather than verbally.

[Lord Callanan (Con)]

I certainly did not intend to imply that at all and I apologise if the noble Lord got that impression. I was talking about the existing block grants that the devolved Administrations have. It is their existing spending power—the money that they spend at the moment. They will continue to make decisions about their devolved spending on subsidies, as they do at the moment—how much, to whom and for what—within any future UK-wide subsidy control regime if, following consultation, the Government and Parliament decide that we want to legislate in this space. I hope that I have resolved the noble Lord’s question; if not, I will certainly write to him.

United Kingdom Internal Market Bill

Debate between Lord Callanan and Lord Fox

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Wednesday 4th November 2020 Lords Chamber

[Lord Fox (LD)]

I much appreciate the Minister’s answer. The questions I asked about university tuition fees were in the light of having read his letter, which my noble friend Lord Purvis made available to me—there is no need to send it to me. In it the Minister states that,

“we are aware of the questions raised in relation to university services and how they may interact with the Bill”,

which is good. The letter continues:

“We have the power to amend the exclusions Schedule and will keep the area of higher education under close review.”


It therefore seems that the Government are planning to do that after Report. My point is that it would be a boon to our process on the Bill if the Government were to consult before Report and come back with something that I am sure, given what the Minister said, would merely fulfil their ambition for the Bill while settling concerns in the university sector.

[Lord Callanan (Con)]

I thought that I had put the matter to rest by writing the letter to the noble Lord, Lord Purvis, on which the noble Lord, Lord Fox, has commented. In our view, there is no doubt that the regulation of tuition fees is outside the scope of the Bill and, therefore, beyond the scope of the office for the internal market’s functions. But as the letter to him confirmed, we will keep the matter under review and not hesitate to take action if there is a problem, which we do not believe exists.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, at the outset I should say that, because of my past but discontinued interests, I will not be speaking to the specifics of the example that the noble Baroness, Lady Hayter, brought up; rather, I will speak generally on this issue.

I speak to support the spirit of this amendment. It is a shame that the noble Lord, Lord Tyrie, is not still here because I would have welcomed his view on this issue. As the noble Baroness, Lady Neville-Rolfe, said, there are examples of Secretaries of State who wanted to do more but were constrained, and Cadbury is a good example of that.

However, after two dozen or more hours in Committee, I find myself at last coming to agree with something that the noble Lord, Lord Naseby, said, and that is that this issue goes wider than simply the nature of the Bill. The noble Baroness, Lady Neville-Rolfe, said the same thing. It is an important issue, so we should be thankful that the noble Baroness, Lady Hayter, has brought it up. It is clearly inadequate; the Secretary of State needs a better armoury to assess the public interest and deal with what will undoubtedly be, as the noble Lord, Lord Naseby, said, a flood of potential acquisitions and hostile takeovers.

This may not be the right Bill to be doing it in, but it is a big issue. That said, it also opens up the question of how the new office for the internal market relates to the Secretary of State and the CMA when it is dealing with a hostile takeover that the Secretary of State has called in. As the Bill stands now, allowing for the fact that the Minister may not accept the amendment, how do the Government envision the interactivity between the office for the internal market, the CMA and a hostile takeover bid that the Secretary of State has called in? Who does what, and where?

[Lord Callanan (Con)]

I thank the noble Baroness, Lady Hayter, for her amendment. I understand her concerns but, as I am sure she is aware, the internal market Bill is concerned with protecting the flow of goods and services across the UK after the end of the transition period. It is not concerned with the general merger regime, nor with Ministers’ powers to intervene in mergers. Noble Lords should be aware that they will have the opportunity to debate these matters further in the Government’s forthcoming national security and investment Bill.

United Kingdom Internal Market Bill

Debate between Lord Callanan and Lord Fox

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Monday 2nd November 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, with all due respect to the Minister, I am sure he understands how unsatisfactory that answer was. My noble friend Lord Thomas of Gresford talked about the gobbledegook of future-proofing, and this is gobbledegook. First, could the Minister tell your Lordships’ House what past examples lead the Government today to this conclusion? Secondly, why is there a problem with bringing any future issues to the Government and your Lordships’ House bespoke in the event that the Minister proves correct and something turns up? To seek to produce a Bill that covers all of the unknown unknowns that are going to happen in the history of time seems overambitious.

[Lord Callanan (Con)]

I think we are just going to have to differ on this one. We do not want to be returning to the House to create unnecessary difficulties and disagreements in the future; we want to ensure that, before any of these difficulties arise, we have put in place, as in the rest of the Bill, a framework that covers the whole of the United Kingdom to regulate how we will manage and control these issues in the future. That is all we are seeking to do. I understand the points that noble Lords are making. There are differently regulated professions in some parts of the UK already; we accept that and that the status quo is there, but we think that, in future, these things are best regulated on a UK-wide basis, and we want no new barriers to trade to emerge.

United Kingdom Internal Market Bill

Debate between Lord Callanan and Lord Fox

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 28th October 2020 Lords Chamber

[Lord Fox (LD)]

I sometimes wonder whether the Minister sustains himself through the long periods of Committee by imagining himself throwing off the yoke of hideous EU conformity. In fact, nothing could be further from the truth. How does the noble Lord explain all the examples of diversity across the four nations of the United Kingdom if there is this conformity? How can his comment that the market has worked very well for 20 years stand up, if this conformity was so bad? Indeed, the 2020 assessment by the Government of the frameworks says that they will maintain, as a minimum, equivalent flexibility for tailoring policies to the specific needs of each territory, as afforded by the current EU rules. The Government clearly recognise the flexibility in the current EU rules.

I commend the Minister for getting through that lengthy statement without once mentioning the words “common frameworks”. There is still no explanation of how the common frameworks inform the Government’s view today of the internal market. Will he please answer that question?

[Lord Callanan (Con)]

I thought my comments might provoke a reaction from the noble Lord. Of course, there are EU common standards in many areas as well as EU minimum standards in many areas, and it is possible for Administrations to go further than those minimum standards in many areas, as he will know from his knowledge of EU affairs.

I have said a number of times that we are committed to the work on frameworks and will take it forward, but we were looking for frameworks in something like 38 different areas. So far, we have managed to agree frameworks in two of them. In terms of the frameworks that have been approved by the ministerial committee, I think those numbers are correct; I will write to the noble Lord if they are not. We are committed to taking forward that work on common frameworks, but we believe that this legislation provides an underpinning to that work. We do not believe that they are mutually exclusive; indeed, we think that they complement each other.

United Kingdom Internal Market Bill

Debate between Lord Callanan and Lord Fox

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Monday 26th October 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, if the Ministers shepherding this Bill expected an easy ride, this gives a taste of things to come. It serves a purpose in setting the scene, and a lot of arguments and debates will come in other groups as we go through this process. I shall not labour those points. An overriding sense I got from my noble friend Lord Purvis is that the question everybody wants to know the answer to is: why have Her Majesty’s Government decided to turn away from a process of managing markets that has been extremely successful? It was successful before we joined the European Union and successful afterwards. This is the overriding question that hangs over this whole debate.

On Amendments 1 and 112, if ever we needed convincing that things such as the environment need to be written into the Bill, the speech by the noble Lord, Lord Naseby, convinced me that they do. This is because we cannot take things for granted. Governments come and Governments go, but the law stays, and we need to be sure that our public policy is being directed properly. I uncharacteristically find myself somewhat agreeing with the noble Baroness, Lady Noakes: we have to be careful not to constrain the nature of this Bill. We need to find a way to write in issues such as those of the consumer and the environment. I would add some of the points made by my noble friend Lady Bowles and food safety to that. We need to ensure that there is an assessment of the success of this internal market in some of those areas, including the environment, the effect on consumers, the effect on jobs, et cetera. I share the view of my noble friend Lady Bowles that perhaps more work is needed, but the issue is live and very important. I thank the proposers of the amendment.

Turning to Amendment 2, I do not think proportionality pops up anywhere in other amendments. We had a brief discussion of this extremely important subject from various speakers. I take my lead on this from the noble and learned Lord, Lord Hope, who understands the law, and my noble friend Lady Bowles, who knows a thing or two about regulation. If they are concerned about proportionality, so are we on these Benches. The Government need to find a way of writing that issue into the Bill.

On public procurement, we need to understand what the Government mean by what they seek to do in this legislation. The issue highlighted by my noble friend Lord Purvis is live and real: how will this legislation affect those issues? It is a probing amendment, but for it to work we need answers.

We have started. There are issues we shall return to, but proportionality and public procurement are two on which I hope the Minister will respond at length.

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

My Lords, let me open by thanking noble Lords for their contributions at Second Reading last week. Again, the contributions have demonstrated the tremendous breadth of expertise in this House. This is indeed a crucial piece of legislation. In this respect, I agree with the noble Lord, Lord Fox, and I look forward to providing the scrutiny it deserves and that I am sure it will receive from noble Lords, beginning today and in the days and weeks ahead.

Let me reassure, and to some extent disagree with, my noble friend Lord Cormack, which will not come as a surprise to him. We are not riding roughshod over the devolution settlements. The devolved Administrations will acquire dozens of new powers that they have not exercised before once we leave the EU transition period. The Bill is about ensuring that those powers are exercised in a non-discriminatory manner, but they will acquire new powers and new responsibilities. Before I address the specifics of Amendments 1, 2, 59 and 112, which we are discussing in this first group, I want to remind to noble Lords of why we need this Bill and the context of Part 1.

By opening with the purpose of the Bill, I hope to explain why these four amendments, which seek to alter the Bill’s core principles, are not necessary. The Bill aims to allow the continuing smooth functioning of our UK internal market at the end of the transition period. As we set out in the White Paper, and as I explained at Second Reading, the Bill will establish a market access commitment by enshrining mutual recognition and non-discrimination in law. Part 1 concerns itself with delivering this market access commitment for goods. The principle of mutual recognition is that goods and services from one part of the UK will continue to be recognised across the country. This will ensure the devolved Administrations will benefit from their additional powers and freedoms outside the EU. As the transition period ends, they will gain increased powers, as I said to my noble friend Lord Cormack, to set their own rules and standards across a wide range of policy areas within their competence. At the same time, it provides firm assurance to our businesses that their goods can continue to flow freely throughout the United Kingdom. Non-discrimination ensures that there is continued equal opportunity for companies to trade in the UK, regardless of where in the UK the business is based.

I say to the noble Lord, Lord Empey, that the measures in the Bill will also ensure that Northern Ireland qualifying goods benefit from the market access commitment and receive mutual recognition in the rest of the UK. The Bill will also affirm the principle that those goods are not subject to checks, controls or administrative processes as they move from Northern Ireland to Great Britain. I hope that I can reassure the noble Lord on that point. This means we will fulfil our commitment to legislate for unfettered access, as we promised to the people and businesses of Northern Ireland. This will ensure that businesses and citizens in the United Kingdom can continue to trade freely across the four nations.

With this context in mind, I turn to Amendments 1 and 112 together. These seek respectively to limit the purpose of Part 1 and the Office for the Internal Market’s statutory objective to the protection of the environment and consumer interests. Now, it goes without saying that the protection of the environment and consumers is hugely important, and something that we as a Government are already committed to. The UK, as I never tire of repeating, has some of the highest standards in the world, and we will continue to improve these ahead of others. We remain committed to being at the forefront of environmental protection and a leader in setting ambitious targets to prevent damage to our natural world, building on our already strong environmental record. For example, we have set out a range of new policies in the Environment Bill that are designed to drive up environmental standards in line with the UK’s priorities.

The statutory objective of the Competition and Markets Authority—acting as the Office for the Internal Market—ensures that the office is able to effectively operate as the monitoring body for the internal market, and that there is no confusion between the pre-existing powers of the CMA and those newly conferred on it as the OIM. Distinct objectives will prevent any operationally problematic blurring of functions.

As my noble friend Lady Noakes observed, the office will operate for the benefit of all those with an interest in a smooth-functioning internal market, whether that be regulators, businesses, professionals, the four legislatures or indeed consumers. Explicitly narrowing its focus to consumers would be to the detriment of all the others that I have listed.

Moreover, the functions set out in Part 4 of the Bill clearly establish that the office will consider the economic impacts of regulatory measures on the internal market. Although some of these will of course be environmental protection measures, it will not be authorised to opine on the extent to which these measures safeguard the environment, because this would risk duplicating the role of existing public bodies with a purely environmental focus. As such, given how much the Government are already doing in the area of consumer and environmental protection, I consider that these amendments, which seek to change the purpose of the Bill, are unnecessary, and I hope that I have been able to persuade my noble friend Lady McIntosh and the noble Baroness, Lady Hayter, to withdraw Amendment 1 and not move Amendment 112.

Amendment 2 aims to introduce the principles of proportionality and subsidiarity into the Bill as additional market access principles. These are European law principles. We have now left the EU and are free to organise our internal market in a way that is better suited to the UK’s unique constitutional arrangements and common-law systems. I agree with my noble friend Lady Noakes that the market access principles will protect seamless trade and jobs across all four corners of the United Kingdom following the end of the transition period in December 2020. They have been designed for the UK’s specific devolution arrangements and legal approach, and they already take account of the need for reasonableness and respect for devolution. In contrast, the proposed amendment would muddy the waters with EU concepts that in our view are ill-fitting in the UK. For these reasons, the Government cannot accept this amendment and I hope that noble Lords will not move it.

Amendment 59, on which there was considerable discussion, seeks to disapply the market access principles from the public procurement rules. I assure the noble Baroness, Lady Hayter, and the noble Lords, Lord Purvis and Lord Fox, that the principles proposed in the Bill will not typically operate in the area of public procurement, and indeed that we intend to legislate separately in this area via a wider package of procurement reform, on which we will shortly consult. The market access principles are not relevant to procurement as they are about how business is regulated. The procurement rules cover how public authorities carry out their procurement function. We believe that the risk of divergence can be effectively managed through a combination of close devolved Administration engagement and use of the common frameworks, and we are working to develop a concordat on expected public procurement practices and policies between the four UK nations.

--- Later in debate ---

[Lord Callanan (Con)]

The purpose of the office for the internal market is to provide advice, reports and monitoring to all four Governments and legislatures. It will have no direct role in dispute resolution, which will be a matter for the Joint Ministerial Committee to discuss.

[Lord Fox (LD)]

My Lords, I apologise to the Deputy Chairman of Committees for having jumped in so soon. I thank all noble Lords for their contributions; the subsequent questions were worth waiting for, so I am glad that I did not plough on.

This has been an interesting debate; however many more hours we will have in Committee, it has uncovered above all else how half-baked—how completely undercooked—this Bill is. It is not worked through. The point of this amendment was to highlight, and give the Government, an opportunity to step back and admit that there are so many open questions and so many issues. I feel sorry for the Minister—I rarely do, but on this occasion I do—because he is having to respond to things that have not been properly locked down in this legislation. So I will look at Hansard, but it is quite clear that, one way or another, we will have to come back on Report to these absolutely central issues. Having said that, I beg leave to withdraw Amendment 4.

Rolls-Royce

Debate between Lord Callanan and Lord Fox

Wednesday 14th October 2020 Lords Chamber

[Lord Callanan (Con)]

The noble Viscount makes a very good point. We are working closely with the company to ensure that the UK remains at the heart of its operations, and we are currently supporting the development of the next generation of engine through the ATI programme, as well as discussing longer-term possibilities around new, clean aviation technologies.

[Lord Fox (LD)]

My Lords, in moving this vital skill to Singapore, Rolls-Royce was obviously responding to financial inducements. In his Answer to my noble friend, the Minister threw up his arms metaphorically and said “There’s nothing we can do. It’s the global market”. The Government had leverage and are giving support to the company. Why did the Government not tie that support to the retention of these jobs and skills in this country?

[Lord Callanan (Con)]

The noble Lord needs to understand the difficult environment in which Rolls-Royce is operating. Its revenues have fallen off a cliff, and we all know what has happened to the passenger jet market. It has to consolidate its operations across two sites, and that was the commercial decision it took. As I said, we are offering it extensive support and we are in regular and ongoing dialogue.

Energy White Paper

Debate between Lord Callanan and Lord Fox

Monday 28th September 2020 Lords Chamber

[Lord Callanan (Con)]

We are always willing to work with innovative British companies. I agree with the noble Viscount’s points about hydrogen and advanced nuclear technologies, which we are providing considerable support for.

[Lord Fox (LD)]

As the Minister knows, the current target for offshore wind generation is 30 gigawatts by 2030. During the election campaign, Boris Johnson said that if the Tories won, that target would go up to 40 gigawatts. Which number will be included in the energy White Paper? Whichever one is used, do the Government recognise that not just Ofgem but the Government must make sure that this electricity can be distributed around the country?

[Lord Callanan (Con)]

The noble Lord makes an important point about the distribution and alterations of the grid that will be required, but I am afraid that I must ask him to curb his impatience and wait for the White Paper with regard to numbers.

REACH and CE

Debate between Lord Callanan and Lord Fox

Thursday 17th September 2020 Lords Chamber

[Lord Callanan (Con)]

We are aware of the possibility, but of course we are working hard to make sure that does not happen. The registration requirements in the UK will be as strict as they were previously; we are seeking to duplicate many aspects of the previous regime. Of course, we are seeking during the negotiations a data-sharing agreement with the European Chemicals Agency which will reduce the costs and burdens of the new scheme.

[Lord Fox (LD)]

My Lords, the Government have been flexible. They have listened and proposed lengthening the registration time for chemicals under British REACH, which I think is welcomed by the industry. However, the cost of registering chemicals has not been addressed. That additional red tape will cost British industry at least £1 billion—that is its estimate. This is money being spent on re-registering chemicals today that cannot be spent on creating jobs for tomorrow. Can the Minister undertake to be similarly flexible when looking at costs and redouble efforts with his department and other departments to address this tax on British business?

[Lord Callanan (Con)]

As I said in previous answers, we are endeavouring to be as flexible as possible to keep the transition as simple as possible and to reduce the costs. As I said, we are seeking a data-sharing agreement with the European Chemicals Agency which will make the registration process relatively straight- forward.

OneWeb

Debate between Lord Callanan and Lord Fox

Wednesday 8th July 2020 Lords Chamber

[Lord Callanan]

The noble Lord asks a lot of questions and there is not time to address all of them. We are investing in this as a one-off strategic opportunity to own a satellite communications network, working with Bharti Global Ltd, and to support our ambition for the UK to be a pioneer of novel satellite technologies. We are delighted that our bid was successful.

[Lord Fox (LD) [V]]

As recently as last year, OneWeb raised $1.25 billion, then in March of this year, having launched only a fraction of the satellites that it needs, it filed for bankruptcy protection. Clearly, the American market was not prepared to back it any more. For now, the UK Government, along with Indian tycoon Sunil Bharti Mittal, have committed a further billion dollars. On recent experience, that will last about nine months. How much more will it cost the British taxpayer before the Minister and his colleagues realise that this is not a good investment?

[Lord Callanan]

As I have said, given commercial considerations, I am unable to provide further detail on ongoing discussions, but we will be discussing the future funding of the business, and the merits of bringing in additional shareholders, with our partners in due course.

Corporate Insolvency and Governance Bill

Debate between Lord Callanan and Lord Fox

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 23rd June 2020 Lords Chamber

[Lord Fox]

In reference to Amendment 75, the Minister talked about the danger of employees leaking the state of the business. In my experience of acquisitions and disposals in continental Europe, where the pre-briefing of employees is legally required, there has never been an issue with employees leaking the information. The leaks have only ever come from advisers, usually banks. What grounds does the Minister have for making that statement?

[Lord Callanan]

I do not think that I used the word “leaking”. We want the moratorium to be a light-touch procedure with the minimum level of bureaucracy. Of course, it goes without saying that any information being disclosed from whatever source of a company’s intention to go into this procedure could have serious adverse consequences if certain creditors seek to pre-empt the operation of the moratorium. However, we have built concessions into this part of the Bill. I hope noble Lords will be able to accept them. I take on board the noble Lord’s points, although I did not use those words.

Corporate Insolvency and Governance Bill

Debate between Lord Callanan and Lord Fox

3rd reading & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords
Tuesday 23rd June 2020 Lords Chamber

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

My Lords, first, I thank the House of Lords Public Bill Office and the House clerks for their support and their extremely hard work in ensuring that this emergency Bill could be expedited through the House to support businesses as a matter of urgency in these unprecedented times.

Secondly, I place on record my thanks to the Bill team, Andy Ormerod-Cloke, Muneera Lula, Jess Bradbury and all the team, both in BEIS and in the Insolvency Service, who have worked so hard on the Bill. I am sure Members will appreciate the untold hours that went in on evenings and weekends to assist in the progress of this legislation and to provide help and guidance to me, my noble friends Lady Bloomfield and Lord Howe and many other noble Lords who we have spoken to and consulted over the last couple of weeks on all sides of the House. I am grateful to all Members for their contributions. The Bill team and the Insolvency Service did a splendid job operating in, let us not forget, extremely difficult circumstances. They can be proud of their work and they are a credit to the Civil Service.

I also thank my private office team, Marty and Jenny, for ably assisting me in co-ordinating the various bits of government to come together on the Bill. I pay tribute to the Opposition spokesmen: the noble Lords, Lord Stevenson and Lord Fox. This made a pleasant change from my previous job, piloting the Brexit legislation through, where, as Members can imagine, there was no common ground whatever. This has been an historic day: I have actually won three votes in the House, which is the quite amazing pinnacle of my ministerial career. It can only be downhill from here. I am grateful to them for their constructive engagement. They have acted responsibly, recognising that this is emergency legislation, and have worked with us to improve the legislation where that was required. On behalf of the Government, we have been pleased to accept the many constructive contributions. The Bill leaves this House in a much better and improved form than when it entered it. We have been responsible and have acted where necessary, and I hope Members will agree that the Government have responded to their concerns.

I mentioned them earlier but I the other members of the ministerial team—my noble friends Lady Bloomfield and Lord Howe—who have assisted me in pushing this measure through. As a result of this legislation, I hope that many otherwise viable companies will no longer face the threat of insolvency. The measures that the Bill introduces will give our businesses the vital support that they need to keep themselves afloat, thereby preserving jobs and maintaining productive capacity, enabling the foundations to be late for this country’s economic recovery.

Once again, I thank noble Lords for their scrutiny of the Bill. It has, as I said, been much improved thanks to the amendments that have been made during its passage. I hope Members will think that the Government played a constructive role in reacting to many of the concerns they have raised. I hope that the other place will promptly accept these amendments so that the Bill can come into force as a matter of urgency. I beg to move.

[Lord Fox]

My Lords, the Minister was right that this is an important Bill because it is about people’s jobs, livelihoods and future prosperity. I think we all agreed from the outset that that was the objective here, and in many respects we have managed to fulfil it. I join the Minister in thanking the Public Bill Office, which as usual has been extremely helpful when it comes to marshalling our amendments.

I especially pick out the Bill team. Normally when I look at the Box over there, there is a team looking tired, wan and reasonably pleased that their job is reaching the end. They must have had some very long days. I assume that the Bill team are somewhere out there in the ether, so I thank them for their work.

I thank my own team: my colleagues who have sat through this process, on the Benches and virtually, and Sarah Pughe, who has kept us more or less on the straight and narrow. I thank my opposite number the noble Lord, Lord Stevenson, and the ministerial team—the noble Lord, Lord Callanan, the noble Earl, Lord Howe, and the noble Baroness, Lady Bloomfield—for their open and cheerful approach to the Bill. I think we got a glimpse of why the noble Lord was cheerful: this Bill is nowhere near as bad as what he has just been doing.

That is true, but it was still a difficult Bill. It is a big Bill of mixed intent, in that some of it is permanent and some of it is not, and it was an accelerated process. It has not been easy, and of course we leave here wishing that things were different from the way they are. This feels like the end of something but I suspect, given the powers and the intent that the Government have to trim, modify and improve the Bill, it may be a question not of “Farewell” but rather of “See you later”.

Corporate Insolvency and Governance Bill

Debate between Lord Callanan and Lord Fox

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 16th June 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, I draw noble Lords’ attention to my interests as set out in the register. The noble Lord, Lord Stevenson, in his understated way, called this a wide group of amendments and we have heard a wide and knowledgeable group of Peers speaking to it. I agree with the noble Viscount, Lord Trenchard, that we need proper scrutiny of this Bill. Whether we are here virtually or physically, cramming so many amendments into one group is symptomatic of trying to rush this Bill through. That will have unintended consequences, whether the noble Baroness, Lady Neville-Rolfe, believes it or otherwise. We are suffering from undue haste in trying to do in one day what should have been done over at least two or three days.

I will speak to a small number of amendments. On Amendment 10, the noble Lord, Lord Stevenson, queried 20 days and suggested 30 days. My question for the Minister is: why 20? What was the science and evidence that suggested that 20 was correct? The noble Lord, Lord Leigh, spoke about the courts being busy. Well, one way of relieving the courts of work would be to have a slightly longer period, because that would mean that the monitor would not have to go back to the courts so often to renew the process. Why 20 days and why not 30, or indeed some other number of days?

Amendment 2, to some extent Amendment 1 and certainly Amendment 28 ask the perfectly reasonable question of what the monitor’s role is. What is the correct qualification for the monitor? It is perfectly reasonable in a Bill such as this, with the role of monitor so central to this process, that we understand what that monitor is and who it might be. I look forward to the Minister’s comments on that.

This group, among others, contains a whole load of amendments that address what I call the creditor waterfall. Amendment 21 and, in different ways, Amendments 25 and 40, talk about the role of the banks and financial institutions and seek to restrain the advantage that those institutions can get from their special position within the creditor landscape. It is not in the Government’s interests to continue to allow these organisations the freedom of the remaining resources of a failing business. What was going through the mind of the Government when those decisions were made to set out this level of access and give financial institutions the run that they seem to get from the Bill?

My noble friends Lady Kramer and Lady Bowles and others talked about the role of small and medium-sized businesses, and Amendment 22 adds small entities to the list of those with preferential treatments. Amendments 37 and 40 call for a review after 18 months of how a moratorium is dealing with SMEs. This is an entirely different review from the other reviews that crop up on later groups. It is very much about how this is really affecting businesses. I am proud to put my name to Amendments 98 and 99, proposed by my colleague and noble friend Lady Bowles, which makes wages and salaries rank alongside continuing supplier and not below them. That seems entirely reasonable and I thought that she set that out very well.

All these issues set up the central point: the Bill is not a fully formed piece of legislation. The Government have recognised that, as my noble friend Lady Bowles pointed out, by granting themselves an almost unprecedented ability to rewrite it. They know that it is not the finished article. We will have an opportunity in later groups of amendments to discuss a better way of doing that and a way of giving Parliament the power to assess and possibly rewrite the rules, but I look forward to the Minister’s reply.

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

I thank all noble Lords who have spoken in this debate. Yet again, the contributions have demonstrated the breadth of expertise that exists in this House. I must say to my noble friend Lord Trenchard that I would never scowl at him. This is entirely the job of the Whips and not my fault. While there is of course no overall time limit on speeches at Second Reading, there is an overall time limit on the debate in Committee. With that, I will address as many of the points as possible. I apologise to noble Lords if there is not enough time to address all their points, but I am happy to have individual correspondence or a meeting with anyone who does not feel that their concerns have been addressed.

The moratorium was a subject raised by many noble Lords. It is built on two pillars: that the directors believe that the company is insolvent or likely to become so, and that an insolvency practitioner thinks that the company is liable to be rescued having been in a moratorium—finances on one hand and viability on the other. The intention of the moratorium is not to make the creditors’ position worse nor to allow a company to delay an inevitable administration or liquidation. On the contrary, the intention of the moratorium is to rescue the company, and a rescue of the company will be better for creditors, better for suppliers and of course better for employees.

I say in response to the noble and learned Lord, Lord Hope, that, although I fully understand the intention behind his amendment, we are concerned that it would add another burden on to the directors of the company at a time when the company needs to enter into the procedure as quickly as possible. It has never been our intention that the moratorium should be used to “line up the ducks” for a pre-pack administration. Although they are subject to some criticism, we believe that pre-packs are a useful tool that allows businesses and jobs to be saved. However, as with all administrations, the likelihood of a substantial return to unsecured creditors is of course small.

The amendments tabled by noble Lords who seek to lower the barrier to entry into a moratorium to focus on the rescue of a company’s undertakings, rather than the company, could, in our view, lead to increased losses to creditors. The new moratorium provides protection for a company, perhaps further upstream than when administration is the only route open to it. If the company or corporate vehicle can be saved, the outcome for unsecured creditors will almost certainly be better than it would be through the form of insolvency that results in the sale of the company’s undertaking and its ultimate dissolution.

As has been said, the moratorium lasts for an initial period of 20 business days, although it can be extended relatively easily for a further 20 business days. In response to a point raised by the noble Lord, Lord Fox, and my noble friend Lord Leigh, we do not believe that it will lead to an increased burden on the courts. The moratorium is intended to be light touch as far as the court is concerned. Entry is by administrative filing, other than where overseas orders file a winding-up petition, rather than through judicial scrutiny. The courts get involved in longer moratoriums only if the monitor requires court direction or if there is a challenge to the monitor or to the directors’ actions. I hope that that resolves those issues.

Although, in my view, the amendment in the name of the noble Lord, Lord Stevenson, that seeks to permit small businesses an initial period of 30 business days is laudable, it does not appreciate the position that the company’s creditors are in. In our view, the moratorium balances creditor interests with those of the company.

The noble Lord, Lord Fox, asked why the period proposed is 20 days, and that of course is a good question. We consulted on what the period should be, and the clear view was that it should not be left for too long before creditors’ views are considered. The Government are confident that a moratorium with one extension lasting 40 business days is the right length. There is of course always a balance to be struck, and the company should seek the views of its pre-moratorium creditors on whether a moratorium should or should not continue.

A number of amendments have been tabled on the role and status of the monitor, including by my noble friend Lady Altmann, the noble Baroness, Lady Kramer, and my noble friend Lord Hodgson. It is important to say that only licensed insolvency practitioners—a highly regulated profession—are permitted to be monitors of company moratoriums. Practitioners are subject to very high ethical and professional standards. The insolvency code of ethics sets out five fundamental principles of ethics for insolvency practitioners. These include the need for objectivity and a duty not to compromise professional or business judgments because of bias or a conflict of interest. We believe that this strong regulatory framework underpins the independence of insolvency practitioners from those who appoint them.

Many of the amendments proposed by noble Lords, with good intention, seek to strengthen the independence of the monitor, but in our view they would in practice add nothing to the regulatory framework that monitors will already be subject to. Creditors benefit from strong protections. If they think that their interests have been unfairly harmed by the action, or indeed inaction, of the monitor or the directors during a moratorium, it is always open to them to challenge that behaviour in court. This specific right to challenge builds on the strong foundations of the regulatory framework.

In addition, employees are well protected. Requiring a statement from a trade union, alongside documents filed in court when a moratorium commences, as proposed by the noble Lord, Lord Lennie, would in our view add an unacceptable layer of bureaucracy. It might also risk a company’s financial problems being publicised before it is protected from creditor action, leading to unnecessary company failures. I repeat the Government’s view that the greatest support that we can give workers is to keep their businesses afloat, thereby saving their jobs.

Horizon: Sub-postmaster Convictions

Debate between Lord Callanan and Lord Fox

Thursday 11th June 2020 Lords Chamber

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

My Lords, I join the noble Lord in paying tribute to all those Members from both Houses who have laboured for many years to draw attention to this unfolding scandal.

While the terms of reference for the review chime with that of an inquiry, we are undertaking a review in order to allow progress to be achieved in an accelerated timeframe. I can tell the noble Lord that the Post Office has committed to fully co-operating with the review, and Ministers will hold it to that commitment. The purpose of this non-statutory inquiry is to ensure that there is a public summary of the failings that occurred at the Post Office, drawing on the judgments from the Horizon case and listening to those who have been most affected, so that we make sure that those lessons have genuinely been learned and this cannot happen again. With regard to documentary evidence, as I said, the Post Office is expected to co-operate fully with the review.

[Lord Fox (LD) [V]]

My Lords, I associate myself with the comments of the noble Lord, Lord Stevenson, regarding the campaigners in this case, because hundreds of people have had their lives ruined, and sometimes ended, by this terrible scandal. The Prime Minister in February committed to getting to the bottom of this, and we have to take that at face value, but in answer to the question of the noble Lord, Lord Stevenson, I do not think it is entirely clear what powers this independent inquiry will have. Yes, the Post Office has committed, but will this inquiry actually have legal powers to command people to give evidence and to sequester evidence? Unless it is able to do that, I do not think the Prime Minister is going to get his wish—we will not get to the bottom of this. I understand the time element, but can the Minister reassure the House that this will be an inquiry with teeth?

[Lord Callanan]

Well, we are committed to getting to the bottom of this scandal. I can tell noble Lords that, yes, the Post Office has committed to co-operate fully with the inquiry; Ministers will expect it to do that. We expect others involved to co-operate with the inquiry as well, and if we need to take further action to make sure that they co-operate, we will be prepared to look at that.

Corporate Insolvency and Governance Bill

Debate between Lord Callanan and Lord Fox

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 9th June 2020 Lords Chamber

[Lord Callanan]

I start by thanking all noble Lords, both in person and virtually, for their insightful contributions to this debate, which has shown this House at its best, and for the co-operation of many and their engagement throughout the Bill. I thank particularly the Labour and Liberal Democrat Front Benches for the co-operative spirit that they have shown. I am grateful to all noble Lords who have contributed, and who are helping us scrutinise the Bill effectively.

The points raised have highlighted the importance of the measures in the Bill and the necessity of giving them effect without delay. The permanent package of insolvency reforms in the Bill—the moratorium, restructuring plan, prohibition of termination clauses, et cetera—will provide businesses with the space and tools they need to help them continue trading and avoid insolvency during this challenging time and beyond. It is vital that we introduce these measures immediately to help UK businesses weather this crisis and, I hope, thrive on the other side.

The temporary changes to insolvency law introduced are necessary to help businesses get through this unprecedented period. The temporary suspension of wrongful trading liability will encourage directors to use their best endeavours to keep trading through Covid-19 by removing the threat of personal liability. I again reiterate that directors will still be bound by their wider legal duties under company and insolvency law.

The Bill also temporarily prohibits creditors from issuing statutory demands and winding-up petitions against companies unable to pay their debts due to Covid-19. It will give businesses and creditors the opportunity to co-operate to reach a fair agreement and help companies survive. These temporary insolvency measures are retrospective in effect and have been widely welcomed by the business community. They will apply until one month after Royal Assent and can—and will—be extended should it prove necessary to do so. Of course, any case for further extensions will be carefully considered and subject to all the usual scrutiny that this House undertakes.

The temporary changes to corporate governance that the Bill introduces will provide companies and other bodies with much-needed temporary flexibilities on meetings and filings. This is of particular importance at this critical time, when businesses are struggling to cope with reduced resources and, like the rest of us, are abiding by social distancing rules. We have been careful, throughout this process, to take account of the interests of investors and others in devising these measures.

I will now respond to the many points that have been made. Many noble Lords, including the noble Lord, Lord Stevenson, and my noble friend Lord Balfe, raised the important issue of employees’ rights. I am in complete agreement with my noble friend Lord Dobbs, who summed it up extremely well—as he usually does—when he said that the greatest protection for employees is to see their company survive. Where employees are included in restructuring plan proposals, they will be treated in the same way as other creditors, including in relation to their right to information, participation in voting and ability to make representations to the court. I can confirm to my noble friend Lord Balfe that I fully support ministerial colleagues in the other place, who said that it is expected that the court would be mindful of the interests of employees affected by a restructuring plan when deciding if that plan is just and equitable.

The noble Lords, Lord Stevenson, Lord Mendelsohn and Lord Hain, my noble friend Lady Altmann and other noble Lords asked about the classification of pensions and defined benefit schemes. Similar issues were raised by the noble Baronesses, Lady Drake, Lady Warwick and Lady Blower. Employees will want the company pension scheme to be able to pay them when they retire. If an employee is not a creditor or shareholder of the company, they cannot be included in a restructuring proposal. The interaction between pensions legislation and insolvency legislation gives rise to some extremely complicated issues, and the Government are working closely with key stakeholders to determine any implications for the Pension Protection Fund, the Pensions Regulator and pension schemes more generally.

The noble Baroness, Lady Bowles, spoke about the prioritisation of debt in relation to moratoriums and termination clauses. If a moratorium ends and is followed within 12 weeks by administration or liquidation, any unpaid moratorium debts, including those to suppliers who were obliged to continue supply under the new termination clause provisions, will indeed receive super-priority. This means that they are paid above all expenses of that administration or liquidation, including the administrator’s or liquidator’s fees and payments to other creditors, other than fixed-charge creditors.

On super-priority, the noble Baroness, Lady Bowles, and the noble and learned Lord, Lord Hope, both raised points on preventing banks profiting in moratorium. We are aware of the concerns that have been raised about the priority order of debts. We are also very conscious that attempts to game super-priority, by banks or anyone else, should be deterred. The Government are working with all the relevant stakeholders to ensure that creditors are not disadvantaged by these important measures, and we will continue to work to avoid this.

On the knotty subject of HMRC, many noble Lords, including the noble and learned Lord, Lord Hope, the noble Lords, Lord Adonis, Lord Palmer and Lord Liddle, and my noble friend Lord Leigh, raised concerns about Her Majesty’s Revenue and Customs climbing up the creditor ranking, not through this Bill but through other work that is being done. This House will of course agree—I hope—that it is important that taxes go to fund our valuable public services. This reform will ensure that when a business becomes insolvent, more of the taxes that have already been paid in good faith by its employees and customers, but which are held temporarily by the business, will go to fund public services, as intended, rather than being distributed to other creditors. This is money that has already been paid by employees but is held by the business. It is important to note that HMRC will remain an unsecured, non-preferential creditor for taxes levied directly on businesses, such as corporation tax and employer national insurance contributions.

I thank the noble Lord, Lord Stevenson, and my noble friends Lord Dobbs and Lady Neville-Rolfe for their important points on the need to extend the powers of the Small Business Commissioner. This Government intend to fulfil our manifesto commitment to consult on extending the powers of the Small Business Commissioner to advocate for and support small businesses as soon as we are able. We are keen to capture as many views as possible to ensure that the policy response is the right one. In light of businesses having furloughed staff and other priorities, we do not believe that consulting now would be the correct course of action.

The prompt payment code was raised by the noble Lord, Lord Stevenson, as well as the noble Baroness, Lady Kramer. The code now has more than 2,400 signatories. UK legislation already effectively establishes maximum 30-day payment terms for contracts for the supply of goods and services between businesses and public authorities. There are 60-day maximum payment terms between businesses, although longer payment terms may be agreed, provided that they are not grossly unfair to the supplier. To make the voluntary code mandatory without further appropriate modification would in effect set maximum payment terms for large companies when contracting with smaller suppliers.

I understand that it might seem desirable but, while setting limits on the maximum legal payment terms might address the problem of lengthy payment periods in some commercial contracts, we believe the disadvantages of a one-size-fits-all approach are of greater significance.

I thank the noble Lord, Lord Stevenson, my noble friend Lord Bourne and others for raising their concerns on the need for directors to continue to act in good faith when wrongful trading liability is suspended. Let me reassure them and other noble Lords who raised this point that directors will still be obliged to comply with their normal duties, as clearly set out in the Companies Act. Other remedies will remain available where directors do not meet acceptable standards of behaviour, such as fraudulent trading provisions. I therefore hope that noble Lords will agree that, with these provisions stated elsewhere, putting them in the Bill is unnecessary.

I pay tribute to the noble and learned Lord, Lord Hope, for raising an important point on the role of the court, as mentioned in Clause 10, in relation to wrongful trading. Let me reassure him that the wording of the clause is sufficient to direct the court to make an assumption. It does not invite an argument to the contrary. The noble and learned Lord may be aware of similar provisions elsewhere in insolvency legislation which create the possibility of rebuttal. For example, where a preference payment is made by a company, which may be clawed back by a liquidator, and the recipient is a connected party, it is presumed to have been made with the intention of putting the recipient in a better position in the event of insolvency “unless the contrary is shown”. The last part of that provision creates the opportunity for rebuttal, and Clause 10 does not use such language.

The lack of transparency of pre-packs was raised as a concern by a number of noble Lords, including the noble Lords, Lord Vaux and Lord Mendelsohn, and my noble friends Lord Hodgson and Lady Neville-Rolfe. The Government recognise creditors’ concerns about pre-packs, particularly where the sale is to a connected party. If strengthening of professional standards and the existing regulation do not deliver increased creditor confidence in connected pre-pack sales, the Government will look to bring forward further legislation.

The noble Baroness, Lady Bowles, asked whether Companies House undertakes scrutiny of information submitted during this emergency. The register of companies is continuously under scrutiny. It was accessed more than 9.4 billion times in the financial year 2019-20. With so many eyes viewing the data, any errors, omissions or worse can be identified and reported. Companies House undertakes numerous checks on the validity of information, both at incorporation and throughout the life of the company as new information is submitted. Companies House will continue to be vigilant during the current period. Compliance with the extended deadlines is still expected, and the existing offences and penalties for late filings, as set out in the Companies Act 2006, will continue to apply.

In addition, my noble friend Lord Wei asked whether late filings should be reflected in the credit rating of a company. This is already the case. Extending the filing deadline will therefore ensure that filings are not classified as late. This will help directors to focus on managing their businesses without being diverted by credit rating changes based on temporary practical impediments to filing while the Covid-19 restrictions apply.

The noble Lord, Lord Vaux, the noble Baroness, Lady Burt, and my noble friend Lord Blencathra raised concerns regarding small suppliers once termination clauses are prohibited. We think it right to give a temporary exemption to small companies at a time when many are suffering due to the pandemic. I entirely understand and sympathise with noble Lords’ concerns and the desire to assist small companies; the intention is to do so for as long as necessary in the current economic climate. I assure them that if the protections are needed beyond their present expiry date, they can be extended by statutory instrument. In addition, we have built in numerous protections for suppliers who are required to continue supplying a company during a moratorium or other insolvency procedure, including allowing suppliers to apply to a court for permission to terminate a contract if continuing supply would cause them hardship.

My noble friend Lord Dobbs mentioned the need for the moratorium to run beyond 20 business days. The initial moratorium period of 20 business days can be extended by the company by a further 20 business days, and further extensions beyond that can also be made with creditor or court approval.

On timing, the noble Baroness, Lady Falkner, asked whether there was a limit to the number of times a moratorium could be extended. While creditors can agree to extend a moratorium a number of times, they cannot agree cumulatively to extend beyond one year. A court may extend beyond one year but, when doing so, it must consider the interests of pre-moratorium creditors and the likelihood that the extension will lead to a rescue of the company.

During the debate, we have heard several questions about moratoriums, including from my noble friends Lord Hunt, Lord Flight and Lady Altmann. I assure the House that the qualifying condition of entry into a moratorium is that it is likely that the moratorium will result in the rescue of the company. This will be assessed by the proposed monitor of the moratorium prior to their agreeing to take the appointment.

On the lack of a requirement to seek support from the secured creditors, the moratorium will enable companies to act early, which we hope will increase the chance of a successful rescue. For unsecured creditors, the new moratorium can be accessed only if the company is likely to be rescued as a going concern in the opinion of an insolvency practitioner. Where a rescue is achieved via the moratorium, all stakeholders of a business, including secured creditors, will benefit.

On her point about individual bankruptcy, I assure my noble friend Lady McIntosh that the Government recognise fully the impact of Covid-19 on individuals. We will continue to monitor the situation as a whole and consider whether further measures are needed. Credit card companies and other lenders have been required by the Financial Conduct Authority to offer payment holidays to people struggling to make repayments at this time, and it has issued guidance to lenders about offering mortgage payment holidays and halting repossession actions.

I appreciate the points made by the noble Lords, Lord Stevenson, Lord Mendelsohn, Lord Palmer of Childs Hill and Lord Mann, and my noble friends Lord Hunt, Lady Altmann and Lady McIntosh on insolvency practitioners acting as monitors. Insolvency is a highly regulated profession. Insolvency practitioners are qualified members of a recognised professional body who are required to abide by legislative, professional and ethical standards. There are strict educational and professional competence requirements for becoming a practitioner, and the vast majority are highly professional individuals with a great deal of expertise in insolvency and business rescue. Where an insolvency practitioner fails to comply with required standards, they can be subject to disciplinary sanctions by their authorising body, which, in the most serious cases, can involve them having their authorisation to practise withdrawn. I hope that this goes some way to alleviating noble Lords’ concerns.

As the noble Lord, Lord Blunkett, rightly said, the role of insolvency practitioners is positive rather than negative. They can offer professional advice to companies on the best options available and may help businesses to avoid insolvency where appropriate, as well as ease the process where it is inevitable.

The noble Baroness, Lady Jones, spoke about the green recovery. My department is committed to a recovery that is as green as possible, and it is of course responsible for energy and for COP 26.

I turn to the point raised by my noble friend Lady Anelay about charities and the impact that the Bill will have on that sector. As my noble friend said in her contribution, it is important to listen to those closest to the third sector. Colleagues at the Department for Digital, Culture, Media and Sport have developed these measures alongside the Charity Commission. The commission has indicated that it will take a proportionate approach where members’ meetings need to be postponed or held virtually in order to comply with social distancing, even if that is contrary to the rules of the charity’s governing document. In such cases, the Charity Commission advises trustees to record their decisions, attendees and the time of the meeting in order to demonstrate good governance of the charity. I hope this will provide some reassurance to my noble friend and to those charities that the regulator will adopt a sensible and flexible approach in the current difficult circumstances.

We have heard a number of concerns about the limited time available to scrutinise the Bill, and I totally accept the points made by many noble Lords. These concerns were rightly highlighted and raised by my noble friends Lord Blencathra, Lord Flight, Lord Shrewsbury and Lord Trenchard. The Bill contains a series of familiar measures; in fact, many of these insolvency measures have been consulted on and refined over many months. Her Majesty’s Government were always seeking to bring forward reform to the insolvency regime that would bring our regime in line with those of other nations with similar economies. Covid-19 has, sadly, made the need for these measures more acute.

The other provisions in the Bill are all temporary. If the Government wish to extend their operation, both Houses will have the opportunity to scrutinise the relevant order. In addition, any regulations made after the Bill will of course be subject to the usual scrutiny.

The noble Lord, Lord Stevenson, asked whether there was no limit to the overall number of times that the temporary measure can be extended. At present, all the temporary insolvency measures will automatically sunset one month following Royal Assent. The Bill contains a provision enabling these temporary measures to be extended by statutory instrument where appropriate. The Government have every intention of making use of that provision if the protections are needed beyond their present expiry date. The maximum time period for which the temporary measures can be extended by statutory instrument is six months and the power to extend can be used more than once, so there is no absolute sunset.

The noble Baroness, Lady Kramer, asked for the Bill to sunset the permanent measures. The permanent provisions have not just been developed in the short time since Covid-19 first appeared; they have been the subject of a considerable period of consultation and engagement dating back to 2015. This process included the then Government’s review of the corporate insolvency framework, a public consultation in 2016 and an extensive period of engagement since then with a wide range of stakeholders. Additionally, the Bill includes regulation-making powers to enable changes to be made as and where necessary.

At present, all the temporary insolvency measures will automatically sunset the month after Royal Assent. These measures all have significant impacts on the normal working of various parts of insolvency legislation and the business community, and they will need to be considered and scrutinised by Parliament when determining when the temporary measures should be extended and for how long. The Government also have the power to bring any temporary measures to an early end if they are no longer required.

My noble friend Lord Trenchard also raised a point on the introduction of retrospective legislation. The decision to make certain aspects of the Bill retrospective has been taken for specific policy reasons. For example, in the case of the suspension of wrongful trading, retrospection takes effect at the time the Covid-19 emergency began, rather than when the Bill is enacted.

I thank the noble Lords who raised the use of Henry VIII powers. I thank the chair of the Delegated Powers and Regulatory Reform Committee, my noble friend Lord Blencathra, for his comments on these powers. We all look forward to receiving the committee’s report on the Bill, which I think is due tomorrow. The Bill contains powers to enable its provisions to be adapted to different types of corporate body or bodies subject to special insolvency procedures, as well as to ensure that the detail of the procedures can be amended in the light of these reforms. Delegated powers are also included to extend the temporary provisions should it prove necessary and to make other temporary amendments to insolvency law to deal with the effects of Covid-19 where needed.

The noble Baroness, Lady Northover, raised a point about impact assessments on the Bill’s measures. The impact assessment estimates that the three permanent changes to the UK insolvency framework will result in net benefits totalling over £1.9 billion in today’s prices. The equivalent annual net direct cost to business of the three permanent changes to the UK insolvency framework is estimated to be minus £222.9 million. In other words, we estimate an overall £222.9 million annual net benefit.

I will respond to the point from the noble Lord, Lord Fox, about WUPs and the Covid test: how, in this climate, the creditor will be able to show that the test has been met, and whether it is to be fleshed out by the courts. Whenever legislation creates a new legal requirement, it will of course be for the courts to consider how the test should be applied in individual cases. Indeed, this measure is no different. The test of whether Covid-19 has caused the company’s difficulties is indeed intended to present a high bar. The measures in respect of statutory demands and winding up petitions are intended to temporarily enforce the forbearance from creditors that the Government have called for.

I will be happy to meet the noble Lord to discuss trade credit insurance. He also asked about what happens if directors do not co-operate with the monitor. The legislation enables the monitor to bring the moratorium to an end if the directors fail to comply with the rules. These include providing information requested by the monitor and paying certain debts due during the moratorium period.

In closing, since 23 March this country has faced unprecedented hardship as a result of the stringent social distancing measures necessitated by the Covid-19 pandemic. As noble Lords are all aware, UK businesses have been hit hard as a result, with many unable to trade or facing a significant reduction in demand for their goods and services. Consequently, many otherwise viable companies face the threat of insolvency.

The Government are committed to doing all we can to support businesses during this challenging time to ensure that they can bounce back once the pandemic is over. The measures introduced by the Bill offer vital support alongside the substantial fiscal support packages for businesses and workers already in place. It is crucial that these measures are brought forward as a matter of urgency to protect those businesses. They will provide the flexibility and breathing space needed by businesses large and small to ensure their survival now and as the country emerges and rebuilds from this crisis.

[Lord Fox]

Could the Minister write to my noble friend Lady Barker on her question on mutuals?

[Lord Callanan]

Yes, of course. I would be very happy to do so.

Covid-19: British Business Bank

Debate between Lord Callanan and Lord Fox

Thursday 30th April 2020 Lords Chamber

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

The Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme have been developed to provide financial support for UK businesses that have been impacted by the coronavirus outbreak. There will be no limit on the number or aggregate value of loans that lenders can issue through these schemes. As of 29 April, over 25,000 loans, worth over £4 billion, have been provided to businesses under the two schemes.

[Lord Fox (LD)]

My Lords, this money is needed urgently, yet many businesses are encountering problems in getting access to it. For example, long-standing and profitable firms whose cash flow was perfect before the Covid-19 outbreak now apply to banks and are told that they cannot have the money because they do not have the cash flow. This is a Catch-22 situation. It is supposed to be emergency assistance. The Treasury issues guidance but on the grounds the banks are dragging their heels. Unless that culture is changed, good businesses will go to the wall. What are the Government doing to lean on the banks to change this very damaging culture?

[Lord Callanan]

I thank the noble Lord for his question; he makes a good point. We have received lots of helpful feedback from stakeholders on how the schemes have been working. He will be aware that, on Monday, the Chancellor announced further steps to ensure that lenders have the confidence they need to process these applications. We have removed the forward-looking viability test and the per-lender portfolio cap, to give lenders the full 80% guarantee across all CBILS lending. We keep the scheme under constant monitoring and are available for any future changes.

Scientific Advisory Group for Emergencies

Debate between Lord Callanan and Lord Fox

Tuesday 28th April 2020 Lords Chamber

[Lord Callanan]

My Lords, I certainly agree with the noble Baroness about transparency. I can give her a commitment that the minutes of the SAGE meetings will be published at the end of the pandemic in line with normal procedure. The Chief Scientific Adviser has agreed that the names of those participants who wish to be named will be published in the coming days.

[Lord Fox (LD)]

My Lords, almost to the day, 34 years ago the Chernobyl nuclear disaster kicked off. In retrospect, the Soviet expert scientific committee was shown to be slow to react, driven by political apparatchiks rather than scientists. We saw the same in Wuhan. We are told by the newspapers that, of the 23 members of SAGE, 13 are paid advisers. Does the Minister agree that, to get the best advice, scientific committees such as SAGE should be left to independent scientists and should not include political advisers?

[Lord Callanan]

I agree. As I said in my Answer to the noble Baroness, Lady Thornton, SAGE is not a membership body. The number of participants varies from meeting to meeting. There have been over 100 participants in all of the 29 meetings that have taken place on the Covid pandemic. It is up to the Chief Scientific Adviser and the Chief Medical Officer to invite the appropriate academics and advisers to each meeting. The number and names of participants vary from meeting to meeting.

Covid-19: Business Interruption Loans

Debate between Lord Callanan and Lord Fox

Wednesday 22nd April 2020 Lords Chamber

[Lord Callanan]

It is important to remember that not all SMEs will want debt finance. There is a wide range of different support schemes available to businesses, including the job retention scheme and various local authority grants. We will be looking to publish, in the interests of transparency, the full range of offers that have been made to business in due course.

[Lord Fox (LD)]

My Lords, I join the noble Lord, Lord Stevenson, in congratulating BEIS, the Treasury and HMRC on the work that they done but, looking at the point in a different way, of those 47 accredited lenders, only the banks have the liquidity to lend at scale. Those banks are generally sticking to their current customers and, today, only six banks are offering CBILS loans to new customers. This is a really important issue. Furthermore, many are not lending below £25,000; about 90% of applications are pitched at that level and below. I was pleased that the Minister said that this was a work in progress. Can he confirm that further modifications are now under consideration and also undertake to ensure that the lack of access for new customers and the exclusion of lower-value applicants are addressed really quickly?

[Lord Callanan]

The noble Lord makes a very good point. As I have said, we have already introduced a number of technical changes to the scheme—obviously it was introduced very rapidly. We are keeping all aspects of it under review. The one that he has mentioned is important; we are looking at bringing in new lenders as soon as possible, including Funding Circle, which specialises in smaller loans for companies such as those he talks about. To answer his question: yes, we are keeping this under review, we are seeking to get new lenders accredited as quickly as possible, and we are keeping all other aspects of the scheme under review as well.

Climate Change: COP 26 Arrangements

Debate between Lord Callanan and Lord Fox

Thursday 12th March 2020 Lords Chamber

[Lord Callanan]

What I like about my noble friend is that he is always tenacious in getting his subjects on to the agenda. Perhaps in this instance it would be best if I did not comment directly on the substance of his question.

[Lord Fox (LD)]

My Lords, we welcome the Minister’s commitment to a successful COP 26. As he knows, success at the conference is predicated on intergovernmental discussions beforehand. It is only through shuttle diplomacy between the key players at the conference that anything meaningful can come out of it. Can the Minister tell us what level of engagement is currently under way with the key players around the world, particularly the United States, because without its signing up to the COP 26 conclusions it will be a very poor result?

[Lord Callanan]

The noble Lord is quite correct that a huge amount of international engagement will be required. We are looking to every country to put forward its nationally determined contributions this year at COP, including the United States. We have been talking to it about that. Obviously, the current coronavirus problem presents a challenge for international engagement, but we continue to do our best in the circumstances.

Artistic Content: Copyright Protection

Debate between Lord Callanan and Lord Fox

Monday 2nd March 2020 Lords Chamber

[Lord Callanan]

Of course, my noble friend makes a very important point. As I said earlier, we have one of the strongest copyright protection frameworks in the world. Many of these are subject to international agreements, such as the TRIPS agreement. We will continue to engage in international fora and make sure that artists and creators have protection for their works.

[Lord Fox (LD)]

My Lords, a number of different ministries have commented on this, as my noble friend pointed out, including BEIS and DCMS. Am I to conclude from the fact that the noble Lord, Lord Callanan, is speaking to this that BEIS will be accountable for this and will be the ministry that makes sure that people—including, I should say, people in my family—who work in this industry get paid? If they do not, they need to know who is accountable.

[Lord Callanan]

Yes, BEIS is responsible for intellectual property and copyright, but of course there is considerable input from DCMS concerning the creative industries. DCMS is taking forward a creative industries forum and various round tables with content providers and social media platforms, et cetera. So it lies across the two departments.

European Union (Withdrawal Agreement) Bill

Debate between Lord Callanan and Lord Fox

Committee: 2nd sitting (Hansard continued) & Committee stage & Committee: 2nd sitting (Hansard continued): House of Lords
Wednesday 15th January 2020 Lords Chamber

[Lord Callanan]

My Lords, I thank the noble Lord, Lord Fox, for his amendment and for raising the important subject of a mobility framework. I also thank the noble Earl, Lord Clancarty, the noble Lord, Lord Warner, my main interlocutors, the noble Baronesses, Lady Ludford and Lady Hayter, and the noble Baroness, Lady Bennett, for their contributions.

We are all aware that free movement of people between the EU and the UK will end as we leave the European Union. I am sure that noble Lords will appreciate—even if they do not necessarily agree—that seeking to mandate the Government to negotiate further free movement provisions goes against our entire approach. As we have previously announced, the Government will be introducing a new points-based immigration system built around the skills and talents that people have, not necessarily based just on where they are from.

I appreciate the desire to secure rights to travel, work, study and live in the EU in the future. We recognise the importance of mobility for economic, social and cultural co-operation, and we committed to agreeing the best deal for the whole of the United Kingdom. The political declaration that we have agreed sets out the aspects of mobility that the UK and the EU have committed to discussing in the future-relationship negotiations. These include: providing for visa-free travel for short-term stays; mobility for research, study, training and youth exchanges, and securing mobility for business purposes.

The noble Lord’s inclusion of the right to work across borders is well intentioned, but in our view unnecessary. The agreements that we have reached on citizens’ rights with the EU, EEA/EFTA countries and Switzerland protect the rights of these so-called frontier workers. These are UK nationals who are living in the UK or a member state but are working in another member state, or EU citizens living in the EU and working in the UK. That will take effect at the end of the implementation period.

For example, this will protect an individual who lives in London but works in Paris or Brussels, and vice versa. I hope that I have been able to reassure the noble Lord on this point. However, as we have argued in other amendments, in this situation it is not helpful for Parliament to set a negotiating objective for the Government in statute. This would limit the Government’s flexibility in negotiations and, as I said, the detail of future mobility arrangements with the EU is set out in the political declaration and will be discussed in the next phase of the negotiations.

The noble Baronesses, Lady Hayter and Lady Ludford, raised the important subject of the onward-movement rights of UK nationals in the EU. We recognised at the outset that this was a vital subject for those UK nationals who are living in the EU. I have to tell both noble Baronesses that we tried very hard to get it included in the negotiations, but the EU refused to discuss it in the withdrawal agreement and said that it was an issue to be discussed in the future relationship negotiations—so that is what we will do. I assure noble Lords that we tried very hard to get it included in the negotiations, and it was not for the lack of trying on our side that we were not able to conclude an agreement on that. On that basis, the details of future mobility arrangements will be subject to negotiations in the next phase of the talks.

I hope that I have been able to satisfy the noble Lord, Lord Fox, with my response to his amendment—although I suspect that I have not—and that he will feel able to withdraw it.

[Lord Fox]

I thank the Minister for his response. Frankly, I had not expected a great melding of minds. It is clear that from these Benches, and seemingly from all the other Benches, that we think the Government are wrong on this. The Government of course have a majority and therefore have the right to pursue their wrong-headed policies, but there will be many of us who will continue to remind them of, and take opportunities to change, that wrongness. As time unfolds and the Government begin to attempt to implement a complex points-based system, as they call it, they will find that they have neither the personnel nor the systems to do so quickly, and pretty soon they will find that we are accessing and bringing in at least as many people as we are now, if not more. Personally, I welcome that, but it stands against many of the things that the Government have said in the past. That said, I beg leave at this stage to withdraw the amendment.