Climate Change: Aims for COP 28

Debate between Lord Callanan and Lord McNicol of West Kilbride

Tuesday 28th November 2023 Lords Chamber

[Lord Callanan (Con)]

Well, I just said in my previous answer that we have not reduced our commitment to international climate finance and all the various areas that it covers. The Prime Minister and senior Ministers are attending COP 28 and the noble Lord might want to watch for any announcements that are made at that point.

[Lord McNicol of West Kilbride (Lab)]

Perhaps I might ask the Minister: what does success at COP 28 for the UK look like?

[Lord Callanan (Con)]

I do not want to repeat the five points that I have made. Obviously, we want to make progress on all of them. That is probably unrealistic; it is a negotiation and there are many countries with different agendas going into it, but we will negotiate in good faith and the overall pledge to take action on 1.5 degrees is probably going to be the most important point, but there are a number of other important negotiating points as well.

Manufacturing Post Brexit

Debate between Lord Callanan and Lord McNicol of West Kilbride

Thursday 26th January 2023 Lords Chamber

[Lord McNicol of West Kilbride]

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

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

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

[Lord McNicol of West Kilbride (Lab)]

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

[Lord Callanan (Con)]

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

COP 27: Outcome

Debate between Lord Callanan and Lord McNicol of West Kilbride

Tuesday 6th December 2022 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and I make the House aware of my register of interests.

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

My Lords, COP 27 established a new fund for responding to loss and damage as part of other funding arrangements relevant for loss and damage. This is significant in supporting the most vulnerable. New pledges were also made to the Adaptation Fund totalling more than $230 million. However, we had to fight at COP 27 to keep 1.5 degrees alive. While we were disappointed not to make progress on fossil fuels, the deal does preserve the Glasgow climate pact.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for his Answer. I had the privilege of attending COP 27 with rewired.earth, a not-for-profit organisation. Like many, we were very concerned at the low level of agreement and ambition for the future. With the war in Ukraine, the energy crisis and the cost of living crisis, it is understandable but very worrying that there was not more emphasis on the net-zero approach. Global emissions remain at a record level and the world is on track for warming well in excess of 2 degrees. I believe Britain can be at the forefront of solving the problem. What mechanisms have the Government put in place to ensure joined-up, consistent policy-making between departments so that policies are aligned with and do not put in jeopardy our pull towards delivering on climate?

[Lord Callanan (Con)]

I agree with the noble Lord’s initial comments about COP. I think it is worth being a little optimistic, in that over 90% of world GDP is now covered by net-zero commitments and 169 countries have put forward new or updated 2030 NDCs. However, I entirely agree with him that there is a lot more progress still to be made. This Government are very proud of our record. We have the world-leading net-zero commitment in law and all government departments are working together to deliver that.

Employers: Fire and Rehire

Debate between Lord Callanan and Lord McNicol of West Kilbride

Thursday 3rd November 2022 Lords Chamber

[Lord Callanan (Con)]

The noble Lord has answered his own question. The position remains that we will bring forward an employment rights Bill when parliamentary time allows. I point out that the Government are supporting numerous Private Member’s Bills which have been introduced, particularly in the other place, such as the Neonatal Care (Leave and Pay) Bill, Employment (Allocation of Tips) Bill, Protection from Redundancy (Pregnancy and Family Leave) Bill and the Carer’s Leave Bill. Many of these provisions are being taken forward.

[Lord McNicol of West Kilbride (Lab)]

My Lords, everyone deserves to be treated with dignity and respect at work, even government Ministers. Being rehired on worse terms and conditions is just plain wrong. It has been over seven months since the Government announced the new statutory code on fire and rehire, which I think the TUC called baby steps that would not deal with rogue employers. Can I push the Minster a little more? He said, “in due course”, but can he give any more detail on the timescale for the start of the consultation? Regarding the last question from the noble Lord, Lord Fox, I do not think P&O carried out fire and rehire, but just fired staff.

[Lord Callanan (Con)]

I answered the question from the noble Lord, Lord Fox. I cannot be absolutely precise on a timescale with the noble Lord; he will understand that. But we want to bring it forward in the near future.

Workforce: Trades Union Congress

Debate between Lord Callanan and Lord McNicol of West Kilbride

Wednesday 19th October 2022 Lords Chamber

[Lord Callanan (Con)]

I am sure that the Prime Minister does not need my advice as to whether she wishes to meet the Trades Union Congress. The direct answer to my noble friend’s Question is that I have no information that a meeting is scheduled or not.

[Lord McNicol of West Kilbride (Lab)]

My Lords, Frances O’Grady, the TUC general secretary, will be a welcome addition to your Lordships’ House. Last year, when talking about supply chains and employment, she said:

“Ministers may scratch their heads about how to protect supply chains and fill vacancies. Well, here’s a novel idea. Invite unions in with employers. Get us around the table. And let’s make that industry deliver decent conditions, direct employment and a proper pay rise.”


Does the Minister share my view that this is an eminently sensible suggestion, and will he action it?

[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.

Energy Supplies

Debate between Lord Callanan and Lord McNicol of West Kilbride

Wednesday 12th October 2022 Lords Chamber

[Lord Callanan (Con)]

I am happy to hear from the noble Baroness the great news that the Prime Minister agrees with me and has said the same thing, which is always good for a Minister to hear. However, the reality is that the issuing of hydraulic fracturing consents is a matter for BEIS and the Secretary of State for BEIS.

[Lord McNicol of West Kilbride (Lab)]

My Lords, as many speakers have alluded to, there is little evidence to suggest that fracking is the answer to the current energy crisis. However, reducing our collective energy demand would improve energy security and lower prices. Why was the Government-led campaign to encourage household energy savings scrapped?

[Lord Callanan (Con)]

If I can just correct the noble Lord: fracking is not the only answer; it is one of the potential answers to energy security. As I said earlier, we need a diverse range of supply. I remind the House that while we have our own domestic supplies of gas, we still import a considerable amount of very carbon-intensive LNG. If fracking gas—shale gas—can replace some of that, then that is a net carbon saving.

With regard to information, the Government will continue to promote all our energy efficiency schemes. We will continue to provide information to consumers on ways that energy can be saved and, more importantly, on how they can reduce their bills. There is one pre-eminent technology that everybody should do, which is to turn down the flow temperature of your condensing boiler: you will end up with the same temperature, the boiler will run much more efficiently, and you will save 8% to 10% on your gas bills.

North Sea Gas

Debate between Lord Callanan and Lord McNicol of West Kilbride

Wednesday 7th September 2022 Lords Chamber

[Lord Callanan (Con)]

We have received proposals from Centrica, which we are closely examining at the moment. I point out that the market in 2017 was in a very different position. A number of independent reports were produced by experts at the time, supporting that decision from Centrica. However, the situation is very different now, which is why it is now looking at reopening it.

[Lord McNicol of West Kilbride (Lab)]

My Lords, following on from that answer, I welcome the Government’s approach to reopening the gas storage facility in the North Sea. However, as the Minister just touched on, questions persist with regard to the safety of Rough wells, and these concerns, as he mentioned, are shared by many, including energy consultants and safety experts. This raises real concerns over the safety of reopening without extensive remedial work. Can the Minister say what measures the Government are putting in place to ensure the safety of both the facility and the workers, to make sure that they are protected?

[Lord Callanan (Con)]

As I said, the facility was closed in 2017 for commercial reasons, and that was not a decision for BEIS or Ministers at the time. The Government understand that Centrica is seeking all the necessary regulatory approvals to reopen the facility. The decisions to grant any and all approvals are of course taken by independent safety regulators; health and safety is their top priority.

Net Zero Strategy: High Court Ruling

Debate between Lord Callanan and Lord McNicol of West Kilbride

Thursday 21st July 2022 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, paragraph 252 of the High Court judgment ruled that the Government’s net zero strategy was unlawful. The court found that the net zero strategy did not go below national and sector levels to look at contributions to emissions reductions, and that it needs to be rewritten with quantified accounts and a realistic assessment. The Energy Bill is currently passing through your Lordships’ House; it establishes an independent system operator and planner, which is a welcome step. However, the legislation does not establish a system operator and planner at a regional level to promote the 2008 Act. If Her Majesty’s Opposition were to lay an amendment to deliver a regional system operator and planner which would solve some of the problems of the judgment, would Her Majesty’s Government support that?

[Lord Callanan (Con)]

I would need to look at the details of the noble Lord’s amendment before giving him an answer. As the Climate Change Committee recognises, the net zero strategy is a comprehensive plan for meeting our climate targets, which outlines measures to transition to a green and sustainable future, helping businesses and consumers move to clean power. We think we are on strategy; as I said, we will look closely at the judgment and decide whether or not to appeal.

TRIPS Agreement: Vaccines

Debate between Lord Callanan and Lord McNicol of West Kilbride

Monday 11th July 2022 Lords Chamber

[Lord Callanan (Con)]

The position is as I repeated to my noble friend Lady Sugg: all vaccine dose donations will be reported as overseas development assistance and be included within the 0.5%. I think the noble Lord is being very unfair about the UK’s support. We are in fact a leader of international support in response to the pandemic; we have spent more than £2.1 billion since 2020 to address its impacts and that includes up to £829 million to support the global development, manufacture and delivery of vaccines, treatments and tests in lower-income countries.

[Lord McNicol of West Kilbride (Lab)]

My Lord, the deal agreed at the WTO conference obviously fell short of what was initially proposed. Even after 18 months, discussions on extending the waiver to treatments and tests have been postponed again by another six months. Surely sharing clinical data and research on vaccine production is in our own self-interest, but a poor substitute would be having a relationship with or speaking to the pharmaceutical industry. Have Her Majesty’s Government had any representations with British pharmaceutical corporations to try to bypass the obstacles that exist?

[Lord Callanan (Con)]

The UK Government have regular meetings with pharmaceutical companies. Of course we want to see the maximum amount of support offered to lower-income countries. I just outlined the support we are providing, but we agreed at the meeting to a consensus-based decision that does not waive IP rights but streamlines the processes for developing countries using compulsory licensing to produce and export Covid-19 vaccines.

Construction Contracts (England) Exclusion Order 2022

Debate between Lord Callanan and Lord McNicol of West Kilbride

Monday 13th June 2022 Grand Committee

[Lord McNicol of West Kilbride (Lab)]

Oh!

[Lord Callanan (Con)]

Yes—very good. There is a pipeline of potential projects that could adopt this model, and the Government believe that its use will deliver benefits to consumers. Through increasing competition in the delivery of strategic infrastructure, it will ensure that the cost of this infrastructure is market tested and therefore fair for water and sewerage customers. I apologise for the complicated nature of the explanation and I commend this instrument to the House.

--- Later in debate ---

[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.

[Lord McNicol of West Kilbride (Lab)]

I understand when the consultation took place. The bit I could not find when I was reading the statutory instrument was the response to the consultation and whether that has been published on the website or shared at all, because I could not find any information on the consultation. I knew exactly when it was and what happened.

[Lord Callanan (Con)]

It was not published, but I would be happy to send the noble Lord a letter with the details of the consultation in question.

I was asked a question on pay when paid. Again, it is quite technical. DPC first-tier subcontracts are not excluded from Section 113 of the Housing Grants, Construction and Regeneration Act 1996 under this statutory instrument. This means that pay-when-paid clauses are not permitted. Instead, payments will be made according to an agreed schedule for the delivery of the project.

The basis of DPC is to provide better value for money for customers, ultimately, and bills are expected to be lower than they would have been if the schemes were delivered by regulated water companies via the traditional business-as-usual model by which companies’ prices are set. The first-tier contractors are expected to be part of the highest-level CAP and they are responsible for funding the delivery of the schemes under those contracts.

I hope that I have been able to satisfy the Committee on the questions that were asked—obviously not.

Contracts for Difference (Allocation) and Electricity Market Reform (General) (Amendment) Regulations 2022

Debate between Lord Callanan and Lord McNicol of West Kilbride

Monday 13th June 2022 Grand Committee

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for his introduction. I similarly had only three questions arising from this SI—two of which the noble Lord, Lord Lilley, asked and the final one has also just been asked. This is a very technical SI, which we support, and I will just pick up on a couple of points.

The instrument will amend the validity period of the supply chain plan statement—one point that the noble Lord, Lord Lilley, raised—so that it is valid for nine months, not 12 months, from the date of notice given by the Secretary of State. However, it goes on to say:

“The Secretary of State will … be able to determine a longer period if in their opinion there is a compelling reason for the period to be longer”.


Can the Minister share what he would consider to be “compelling reasons” for why it would be extended past nine months, if we are moving it back from 12 months? The noble Lord, Lord Lilley, touched on the second point about the qualifying of the impact under the new commitments; I will leave the Minister to answer that question.

On the supply chain, Regulation 2(3) amends the requirement to provide a supply chain plan statement so that it applies to all floating offshore wind projects. This was the point just made: the current 300-megawatt threshold generating capacity will continue to apply to all other eligible projects that are not floating offshore wind projects. Have the Government given any consideration to removing this threshold for other projects to encourage SCPs?

Finally, I understand that the consultation on the new supply chain plan questionnaire—the condensed version—closes tomorrow. Do any of the changes that would come under that affect this SI and does closing the consultation after the Grand Committee agrees this SI have any consequences?

[Lord Callanan (Con)]

I thank all the three noble Lords for their contributions. They were raising wider concerns about how the process works; I do not think anybody objected to the SI itself, so I thank Members for their support. The points that were raised demonstrate the need for these regulations—they are technical changes—and the support for introducing them.

As I said at the start of the debate, these changes are essential to ensure that the next CfD allocation round, which will be the first annual one, can best support something we all want to see: an increase in the pace of renewable development and the deployment needed to help us achieve our net-zero ambitions and get the price of electricity down in the longer term. At the same time, they help to achieve our legal net-zero commitments.

My noble friend Lord Lilley was right to point out the need to consider the likely cost to consumers, the impacts on energy security, et cetera. These regulations must be made now, ahead of the next CfD allocation round, which is planned for March next year, as I said, so that the developers have certainty as to the legislative framework for the next round.

Dealing with some of the questions raised, my noble friend Lord Lilley asked me to explain how a shorter validity acts as an incentive and what happens after the supply chain lapses. He also asked whether supply chain plans are published. The answer is that they are. They set out how they will improve the capacity of the supply chain. The noble Lord, Lord Teverson, touched on the reason and I need to be slightly careful here. We are endeavouring to ensure that—how should I put this?—as much of the supply chain as possible is located in the United Kingdom, without breaching our legal obligations, which nobody would want to see us do. We are subject to legal action from the European Commission in the WTO, at the moment.

My noble friend Lord Lilley also asked what the Government are doing to stop CfD generators delaying their start dates so they can benefit from high energy prices. First, the vast majority of operational CfD projects are, happily, paying back into the system, due to the current high energy prices. I set out those figures in a letter to the noble Lord, Lord Teverson. Subject to his agreement, I would be happy to send a copy to my noble friend.

In essence, in April this year, the Low Carbon Contracts Company, which is responsible for administering this system, returned £108.3 million to GB suppliers in respect of payments made by generators since last autumn. However, my noble friend is correct, and the Government are aware of a small number of projects that have delayed their contract start dates to try to benefit from current high wholesale prices. Legally, CfDs are private law contracts between the Low Carbon Contracts Company, the CfD counterparty and generators. The Government are not legally a counterparty to those contracts. However, we have raised the matter with the industry and made it clear that, in our view, this practice is not within the spirit of the scheme, which is intended to deliver benefits to both consumers and developers. While operating on commercial terms, these developers will not receive CfD payments. We are examining possible changes to the scheme to prevent future CfD projects acting in this way. While this practice is regrettable, it is important to remember that CfDs have played a significant role in massively bringing down the cost of offshore wind in recent years.

My noble friend also asked about capacity. The CfD scheme currently supports 16 gigawatts of new capacity, of which 13 gigawatts is offshore wind. Only two projects, totalling 1.4 gigawatts, have delayed their contract start dates in order to sell their electricity on the open market.

Turning to the slightly problematic area which concerns the noble Lord, Lord Teverson, reflecting the concern of the EU that we are breaching WTO rules, my legalistic response to this is that in the supply chain plans we do not require developers to use UK content. The supply chain plans are there to encourage them to invest in creating competitive, capable and efficient supply chains which are, of course, necessary for us to deliver net zero, taking into account our national obligations.

Contracts for Difference (Miscellaneous Amendments) Regulations 2022

Debate between Lord Callanan and Lord McNicol of West Kilbride

Tuesday 17th May 2022 Grand Committee

[Lord McNicol of West Kilbride (Lab)]

My Lords, although it is a little tangential, I declare my interest as set out in the register as a commissioner on the UK Hydrogen Policy Commission, which is within the same field though not directly relevant to this SI.

First, as other noble Lords have done, I thank the Minister for his explanation of the regulations before the Committee. As we have heard, they make a few minor but important amendments to two previous sets of regulations—the eligible generator regulations and the allocation regulations. Before I dive into those, I reiterate our support for the continuation of contracts for difference as a method of securing energy capacity while ensuring that developers, government and customers can be confident in the security of long-term, high-cost and high-investment projects.

Regulation 2 in the draft regulations ensures that non-pipeline transport methods are included within the definition of complete CCS systems. My reading of the 2014 eligible generator regulations, and that of many who responded to the consultation, certainly did not appear to exclude this system. I am not convinced how necessary it is. I agree that non-pipeline transport of carbon dioxide is essential to decarbonised projects outside the clusters. As the noble Lord, Lord Teverson, said, we would hope that transport around and inside the clusters would be by pipeline.

The noble Lord, Lord Teverson, presumed that this would be on trucks. My presumption was that it would be on rails. Again, it would be interesting if the Minister had any information from the department about how non-pipeline transport would take place, as there is an environmental difference between rail and road transport.

Regulation 2 also widens the criteria for carrying out generating activity to include alterations of existing generation stations to connect them to a CCS system. As other noble Lords have said, this makes perfect sense. I agree that it is an important step to help retrofit a station to give access to the benefits of contracts for difference.

That change is appropriately repeated, in Regulation 3, for the allocation regulations, but the main thrust of Regulation 3 is to allow contemplation of contracts that do not specify a strike price and reference price, in line with the new payment method under the DPA business model. Instead, the DPA business model will implement an availability payment for low-carbon generation capacity and a variable payment, which links the new power CCS plants—again, there is a long time lead-in here, since we are hoping they will be in operation by 2030, so perhaps the Minister can confirm the dates for the completion of the CCS plants—with an unabated reference plant. This is said to incentivise availability and enable more flexible operation. Of course, it is right to ensure that the regulations are updated correctly, to allow for these new developments to take place, but perhaps the Minister could elaborate somewhat on how these changes will incentivise availability and when we can expect to reap the benefits from the new power CCS plants.

The noble Baroness, Lady McIntosh, has already picked up on—and I am sure that the Minister has read with excitement—the Secondary Legislation Scrutiny Committee’s 37th report. In paragraphs 21 to 23, as has been stated, the committee was critical. To be fair, all our interventions have been quite detailed. In the produced documentation, I have been able to understand clearly that it is of importance. We have already had from the department an Explanatory Memorandum on that. I hope that, before all future debates, these points raised on page 9 of the committee’s report will be taken into consideration.

[Lord Callanan (Con)]

First, I thank my noble friend Lady McIntosh, and the noble Lords, Lord Teverson and Lord McNicol, for their constructive points and comments. Let me start by emphasising that the changes contained in these regulations are essential to enable the award of power carbon capture and storage contracts. The Government are committed to reaching net zero and, of course, to decarbonising our electricity system. All noble Lords will be aware that the Climate Change Committee has described CCS as a necessity and not an option to help us on the road and transition to net zero. Therefore, CCUS will be essential to meeting the UK’s 2050 net-zero target—I think that all three speakers agreed with that point.

Decarbonising the power sector has so far led the UK’s efforts to reduce greenhouse gas emissions. Thirty years ago, fossil fuels provided nearly 80% of the UK’s electricity supply. In 1990, electricity generation accounted for about 25% of total UK emissions, but by 2018 that was down to only 15% of total UK emissions. Today, I am pleased to say that the country gets over half of its power from low-carbon technologies, and the majority of those are renewable.

We can be confident that renewables will continue to play a key and increasing role in our generation mix on the overall journey to net zero, to decarbonise while maintaining security of supply, and keeping costs low. But for when the wind is not blowing and when the sun is not shining—something that applies particularly to the homeland of the noble Lord, Lord McNicol—we will need to balance renewable variable against demand. To do that, of course, we need system flexibility and energy storage, and we need non-weather dependent low-carbon power generation. That is why we consider that thermal power with carbon capture and storage is one technology that can provide that at scale. Therefore, carbon capture storage technologies will be important for the trajectory to achieving our 2050 net-zero target, and they will play a vital role in levelling up the economy, supporting the low-carbon economic transformation in our industrial regions and helping to create new high-value jobs.

On the specific points that were raised, starting with my noble friend Lady McIntosh, I am pleased to say that these regulations will indeed facilitate the rollout of the Government’s CCUS programme but of course will not bring projects forward in themselves. However, I am pleased to say that we have also seen significant interest in the programme, particularly from the east-coast cluster that my noble friend mentioned. We will seek to bring forward at least one power CCUS plant in the mid-2020s. This will be achieved through the CCUS cluster sequencing process and is subject to the outcome of that process, including, as always, value for money and affordability considerations. I am sure that my noble friend would agree with that.

Around half of our demand for gas is met through domestic supplies, but in meeting net zero by 2050 we may still use a quarter of the gas that we use now. So, to help to reduce our reliance on fossil fuels, we have to fully utilise the great North Sea reserve: we have to use the empty caverns that we have created for CO₂ storage, and we must bring through hydrogen to use as an alternative to natural gas and help to use our offshore expertise to support our offshore wind sector. As a result of those plans, the North Sea will still be a foundation of our energy security, but of course we will have reduced our gas consumption by over 40% by 2030.

As clarified by the noble Lord, Lord Teverson, who was doing my job for me, the Explanatory Memorandum was revised on 5 May with in-depth footnotes to explain the acronyms and technical terms. I apologise if it was not clear; obviously, it is a complicated subject.

On the points made by the noble Lord, Lord Teverson, we consider that the capacity for T&S networks to be able to accept CO₂ from dispersed sites and from international sources, transported by ship, road or rail—which would be non-pipeline transportation—may be important for our long-term objectives of achieving our carbon budgets and net zero, so we do not want to exclude power CCS projects that can transport and store CO₂ by non-pipeline transport. We will need significant volumes of new-build, low-carbon capacity to meet growing electricity demand and to take the place of retiring capacity. To complement expanding intermittent renewables, it is important that some of this capacity is flexible and can operate for extended periods when renewable output is lower.

Our existing gas generation capacity is ageing. Most of it was built in the 1990s, during the so-called dash for gas. Advances in gas turbine technology mean that a purpose-built, modern, new-build gas-fired power station with CCUS would be more efficient than an older design retrofitted with CCUS technology. However, utilising existing assets can of course improve value for money in some cases, and to decarbonise our electricity system in line with the targets of the fifth and sixth carbon budgets, we consider that we will have to use existing generation as well as new-build capacity, both of which of course would need to be abated.

On the capacity market, CCUS requires more support for capacity given the co-ordination problem with infrastructure yet to be built, and the DPA incentivises investment to bring forward low-carbon generation capacity. The availability payment also acts as a way to incentivise those power CCUS projects and helps to maintain high capture rates throughout the DPA. I will come back to the noble Lord in writing on his question regarding the “payback” from CfDs for departments, but I think the answer will revolve around the fact that the money goes into Ofgem and is therefore used to offset other CfD payments. I certainly do not think that any of it appears either in the BEIS or Treasury budgets, but I will come back to the noble Lord and confirm the details of that.

On the points raised by the noble Lord, Lord McNicol, we wanted to ensure that non-pipeline transport was explicitly and unambiguously included in these regulations, and there is certainly no presumption in favour of road transport. Indeed, rail or shipping may also be covered and are probably more likely forms of transport. To take one pertinent example, at the moment Norway is currently shipping CO₂. I hope that clarifies the point for the noble Lord.

To close, I underline once more that these regulations are a vital part of the UK’s efforts to reach net zero and to decarbonise our electricity system. With that, I commend these draft regulations to the Committee.

Energy Security Strategy

Debate between Lord Callanan and Lord McNicol of West Kilbride

Thursday 7th April 2022 Lords Chamber

[Lord Callanan (Con)]

There were a number of questions from the noble Baroness. I think she may have unfairly maligned my noble friend Lord Ashton. I am not aware that he has any strong views on the subject. I am sure he will communicate with me if he does, but he has not so far. The strategy will be published later today, and I apologise that the noble Baroness has not had a chance to look at it so far.

With regard to her other questions, we are rolling out the development and formation of low-carbon sources of power, be they nuclear or offshore wind, and we are going to go further on onshore wind. I know it is a subject that the noble Baroness feels passionately about. We must do so in full recognition of the concerns of many local communities. We want to take people with us when we do that, so we will seek a number of pilots to take those policies forward.

We are already spending a lot of money on energy efficiency programmes. I have outlined them numerous times in this House before, but I would be happy to do so again. It would have been good to go further but, regrettably, that was not possible in this case.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I think there may be a theme to these questions. The Minister is well aware of these Benches’ support for nuclear and offshore wind. However, onshore wind and solar power are the electricity sources that can reduce our reliance on Russian gas the fastest, given their short construction times. Bottlenecks in planning can be resolved through changes to regulation, and doing so would unlock new power to eliminate Russian gas from our energy mix. Yet our understanding is that specific targets for onshore wind, which is the cheapest and fastest, have disappeared or been removed. Could the Minister explain why? Surely it is not possible that the Government are once again prioritising internal party politics rather than the national interest.

[Lord Callanan (Con)]

There is a lot of good news in this strategy for those who believe in the development and deployment of low-carbon power: the expansion of nuclear and of offshore wind, further developments in hydrogen, et cetera. As I said, in terms of onshore wind, we will be looking to develop a limited range of partnerships with supportive local communities. I should add that this is in England; Scotland and Wales have their own separate planning powers. We will look to develop partnerships with a limited range of supportive communities to try to agree further deployment of onshore wind.

Gazprom Energy

Debate between Lord Callanan and Lord McNicol of West Kilbride

Thursday 24th March 2022 Lords Chamber

[Lord Callanan (Con)]

We keep these matters under constant review and the sanctions regime is constantly evolving. The noble Lord will be aware that the Foreign Secretary today sanctioned another 65 new bodies, and we have now sanctioned over 1,000 individuals and businesses since the invasion started.

[Lord McNicol of West Kilbride (Lab)]

Many local authorities, NHS trusts and other public bodies have gas supply contracts with Gazprom Energy. What support is Her Majesty’s Government giving to authorities and trusts that wish to break their contracts with Gazprom, and what consideration has the Government given to changing public procurement rules to allow that?

[Lord Callanan (Con)]

The noble Lord makes an important point. Gazprom Energy supplies about 20% of the UK business market, as he correctly observes, including many schools and hospitals, and so on. It would not be right for the Government to interfere in individual contractual decisions but for those that choose to break their contracts, the Crown Commercial Service stands by to support them in securing their next energy contract.

Subsidy Control Bill

Debate between Lord Callanan and Lord McNicol of West Kilbride

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

[Lord McNicol of West Kilbride (Lab)]

My Lords, this group of concessions, as the Minister has outlined, is significant because of both the number of amendments and, more importantly, their text and practical effect. We are grateful to the Minister and the Bill team for their engagement on these issues over many weeks now; our discussions have been very useful, and although we have not achieved everything we wanted, as the noble Lord, Lord Fox, said, the new subsidy control scheme will be far more transparent than the Bill initially proposed. There are 31 amendments in this large group, 30 from the Government and one from me. I still think mine is a good amendment but I understand the Minister’s points, which we will come on to in a second.

The main issue is that we remain somewhat unconvinced of the Government’s argument in relation to the £100,0000 threshold. Given that many public authorities already have to publish details of spending at much lower levels—in many cases, it is £500 for local authorities—the £14 million cost quoted by the Minister to take the transparency threshold down from £100,000 to £500 would be well spent because that transparency would then sit across the whole of the subsidy controls and subsidies issued. However, an 80% reduction, coupled with the universal requirements across different subsidy types, is a clear step in the right direction.

To be fair, the noble Lord, Lord Fox, has already stolen a lot of my thunder in relation to Amendment 20. The points he made were absolutely spot on so I will not repeat them; I look forward to the Minister’s response. I tabled Amendment 20 in an attempt to deal with the potential for public authorities to award multiple payments that fall under the £100,000 disclosure threshold. As the Minister outlined in his opening remarks, there are a number of possible reasons why a subsidy may be given at that level. The noble Lord, Lord Fox, is right: it is the final one of those three points, about a nefarious reason why an individual in a local authority would encourage a local authority to give multiple awards under the reporting threshold. A fundamental question still sits there: how will we and, more importantly, businesses and organisations that are or could be affected by a subsidy, challenge it if we have no sight of it?

We would be delighted if the Minister accepted this amendment but he explained in his opening remarks why he will not. If the Government are not willing to accept it, can the Minister outline any other safeguards that could be brought in to check this possible kind of behaviour? He did not touch on safeguards in outlining the three points; his response was that the Government do not expect this to happen or do not believe that it could happen. I hope that the Minister can also confirm, because this is important, that the ministerial delegated powers to amend the transparency thresholds will not be used before—I would prefer that they were not used at all, but especially before—the CMA and other interested parties are able to see the new system in operation. We appreciate that any future increases are subject to a cap but it would make a mockery of the process and the concession package if any of the thresholds were increased before the new system was up and running and had been tested and checked by the CMA.

One area not subject to amendments today but which we see as incredibly important is the process around MFA subsidies. At present, beneficiaries in receipt of MFA subsidies must maintain paper records, which not only increases the bureaucracy involved but goes against the grain of the general transition to paperless record-keeping. We do not believe that moving this system to a digital process would require any amendments to primary legislation, so can the Minister commit today to looking at the available options for digitising the MFA process, either as part of the department’s existing subsidy database workstream or as a stand-alone project?

I will touch on one final point about the move on upload from six months to three months. Again, I fully support this. The sooner this information is uploaded on to the database, the better for all, but we still have concerns about the right to appeal against a subsidy that a business or an organisation could be affected by. That is limited to one month; the Minister and the department have not moved that to six weeks or two months. I have some concern that we could have gone a bit further. With the reduction from six months to three months, we could have increased the ability for someone—or an organisation—adversely affected by a subsidy awarded to a competitor to challenge this by giving them a little more time. I understand the Minister’s argument about wanting the subsidy to be in place, agreed and unchallengeable, before the business will spend it, because it then has certainty. None the less, we could have given a bit more time to those who could possibly be adversely affected by it to make a challenge. With that, I again thank the Minister for the 30 amendments—it is just a shame that he could not go one more and make it 31.

[Lord Callanan (Con)]

I thank the noble Lords, Lord Fox and Lord McNicol, for their relatively supportive comments. I can provide much of the reassurance for which both noble Lords are looking.

I can certainly reassure the noble Lord, Lord Fox, that the Government will continue to keep both the thresholds and the upload deadlines under review. We will carefully consider new evidence as it arises, most notably from the CMA’s regular reporting on the operation of the regime. As part of this package of transparency measures, the Government have taken the power to be able to amend these limits, as I said, via affirmative regulations. We will certainly want to see how the new regime beds in and operates in practice before we look at any changes. Of course, they are by affirmative resolutions, so I have no doubt that the noble Lord would take me to task if we did this too early.

I can also confirm to the noble Lord, Lord Fox, that subsidies given under subsidy schemes of more than £100,000 must be uploaded on to the database within three months for non-taxed subsidies, and within 12 months for taxed subsidies.

I turn to the point of the noble Lord, Lord McNicol, about how these nefarious subsidies would be discovered. If this nefarious activity is going on, it is clearly already not in compliance with the Bill and can be challenged—so there is no need to add more rules with which the public authority is then not going to comply. We believe that these subsidies will become apparent because they will lead to distortion and harms on the market.

I turn now to the question of safeguards raised by the noble Lord, Lord McNicol. The key safeguards for the regime as a whole are the existence of the Competition Appeal Tribunal enforcement process, the CMA’s regular monitoring reports and the ongoing responsibilities of my department for the successful operation of the scheme. We will carefully see how the system operates in practice and, as I said, keep the levels under review.

I turn now to the noble Lord’s point about cumulation. Cumulation is essential for the minimum financial assistance to ensure compliance with our international obligations. The Bill sets out a straightforward way for public authorities and enterprises to clarify whether the cumulative threshold has been reached. However, this process is not necessary for in-scheme subsidies. The MFA process set out in Clause 37 can be done simply and easily as part of the normal communications between a public authority and a recipient before any subsidy is given—for example, through forms, emails and tick boxes. We are committed to making this regime as straightforward as possible to ensure that funding reaches beneficiaries as smoothly as possibly, while balancing the need for transparency. Preventing misused cumulation of awards within a scheme for transparency is disproportionate, but we will also keep the operation of that under review and will seek to make it as unburdensome as possible for the various public authorities.

With that, I commend my amendments and ask that they be supported by the House.

--- Later in debate ---

[Lord McNicol of West Kilbride (Lab)]

My Lords, as we move to the final group it seems that Covid has claimed yet another victim in the noble Lord, Lord Lamont, who is unable to move his amendment. It is a shame that we get to this important group so late in the evening. If we had been here earlier, I am sure that the will of the House on Amendment 55 in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd, would have been tested. At this late hour, I guess that is not going to happen. It is a shame because this group of amendments tabled by the noble Lord, Lord Lamont, the noble and learned Lord, Lord Thomas, and me are important in how the subsidy control scheme and processes will work. I am sure that those amendments would have brought more sense to the Bill, as did the amendments on transparency. I am grateful to the noble Lord, Lord Fox, for speaking to Amendments 47 and 50 on behalf of the noble Lord, Lord Lamont, and to the noble and learned Lord, Lord Thomas of Cwmgiedd, for speaking so ably to his Amendment 55.

I have tabled two amendments in this group. They both bring us back to earlier debates on the functioning of the challenge process. We continue to be concerned by the prohibition on challenges to individual subsidies made under a scheme. The threshold for successfully challenging a scheme is likely to be substantially higher than that attached to the challenge of an individual subsidy, and the Government’s refusal to move on this area suggests a determination to close the door, or at least to push it back a bit, on the ability legitimately to challenge any subsidies. I apologise for bringing up these issues on the previous group. I was getting a bit ahead of myself there.

We also do not understand why the Government have refused to move on the CAT application deadline. As I said earlier, many organisations will lack the capacity to constantly check the subsidy database to monitor the subsidies received by their competitors. This is a particular challenge for SMEs, which are unlikely to have in-house expertise on these matters but are arguably most susceptible to the impact of any economic distortions caused by a subsidy award.

The Government continue to insist that a six- or eight-week application window to bring a challenge under CAT would be an unacceptable length. From our Benches, we fundamentally disagree. An extended period would give those businesses and organisations possibly affected adversely by a subsidy more time to understand and analyse what was happening. However, with the disclosure deadline for non-tax incentives having been halved from six months to three, doubling the time for submitting a challenge to the CAT would not take us further than what was in the original wording of the Bill.

Having promised businesses, particularly SMEs, time and again that Brexit would mean the slashing of red tape, the Government continue to subject businesses to unacceptable burdens. The new subsidy control system may cut red tape in some respects, but it also imposes unacceptably high barriers in cases where a party feels wronged. We know from discussions between Committee and Report that the Government believe that affected enterprises would have alternative means of legal redress and I look forward to the Minister outlining them in his response to this group of amendments.

However, the fact remains that the entire enforcement side of this new regime does not seem up to scratch. We await the CMA’s initial report and I very much hope I will be proven wrong, but the Government will need to be prepared to revisit some of these matters if it transpires that their chosen approach is failing to ensure fairness, transparency and access to justice.

To finish on this, and to use the words that have come through on this debate, I have a modicum of comfort and delight that we are now completing the Report stage of this Bill.

[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.

Lithium Ion Batteries: Fire Safety Standards

Debate between Lord Callanan and Lord McNicol of West Kilbride

Thursday 3rd March 2022 Lords Chamber

[Lord Callanan (Con)]

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

[Lord McNicol of West Kilbride (Lab)]

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

[Lord Callanan (Con)]

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

Post Office: Horizon

Debate between Lord Callanan and Lord McNicol of West Kilbride

Thursday 24th February 2022 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

I thank the Minister for repeating the response in the other place. The Horizon scandal is the UK’s biggest miscarriage of justice. The Minister has partly answered my question, but I will push him a little further on it because we are really keen to ensure that the 555 litigants who originally exposed this do not receive a lesser amount.

The judge-led inquiry into the scandal began this week, as the Minister said. He is right that we have heard some extremely moving testimonies. Can he confirm that the 555 litigants—the group who exposed this issue—will be able to claim full compensation and that the Government will spend some time and resources looking specifically at that? I appreciate that the Government are trying to achieve 95% by the end of the year, but now only 30% have had their claims processed. What pressure are the Government putting on the Post Office to speed the process up?

[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.

Nuclear Energy (Financing) Bill

Debate between Lord Callanan and Lord McNicol of West Kilbride

2nd reading
Monday 21st February 2022 Lords Chamber

[Lord Callanan (Con)]

When we have announcements to make on those areas, I am sure the noble Baroness will be here to question me, but I am not in a position to release the names at the moment.

The noble Lords, Lord Whitty, Lord Wigley and Lord Ravensdale, all made important points about nuclear projects’ potential for the cogeneration of hydrogen. As the noble Lord, Lord Ravensdale, said, the Sizewell C project is in the initial phase of exploring the potential of using electricity and low-carbon heat for a range of cogeneration applications such as the production of low-carbon hydrogen and direct air capture of CO₂ for carbon capture. While these cogeneration opportunities are currently outside the scope of consumer funding through the RAB model, they could provide benefits to consumers by enabling Sizewell C to be utilised as a more flexible asset. I look forward to exploring that further with the noble Lord. This could provide greater flexibility for the energy system, thereby facilitating a greater number of potential pathways to meet the net zero target by 2050. If used in this way, Sizewell C could become the first nuclear low-carbon heat source, setting an example that we can emulate at other future nuclear power plants.

The noble Lord, Lord Wigley, and my noble friends Lord Howell and Lord Trenchard asked about the application of legislation to small and advanced nuclear modular reactors, for which we see a vital role moving forward. The Prime Minister’s 10-point plan for a green industrial revolution highlighted that SMR technologies have the potential to be operational by the early 2030s in the UK. The recently published net-zero strategy committed to take measures to inform investment decisions during the next Parliament on further nuclear projects as we work to reach our net-zero target. This will of course include consideration of large-scale and advanced nuclear technologies, including SMRs and, potentially, AMRs. As part of this, the net-zero strategy announced a new £120 million future nuclear enabling fund to provide targeted support to barriers to entry. Let me reassure noble Lords that the Bill is not product-specific and could apply to all civil nuclear technologies, and we will make decisions on appropriate investment portfolios on a case-by-case basis when presented with specific project proposals.

The noble Lord, Lord Wigley, as he always does, asked me about the role of devolved Administrations in the process of designating a project company to benefit from the RAB model. Although the ultimate decision to designate a nuclear company for the purposes of the RAB model will sit with the Secretary of State, given that nuclear energy and electricity are not devolved matters for Scotland or Wales, the Bill takes steps to ensure there is both strong transparency in decision-making and involvement of the devolved Governments. The Secretary of State will need to consult the relevant devolved Government before designating a nuclear company where any part of the site of the relevant nuclear project is in Scotland or Wales. It is important to make the point that the Bill will not alter the current planning approval process for new nuclear or the responsibilities of the devolved Governments in the planning process. Nothing in the Bill will change the fact that devolved Ministers are responsible for approving applications for large-scale onshore electricity generation stations within their own territories.

To move on to address some of the points made by the noble Lord, Lord Oates—I addressed some earlier—renewables represent an important and ever-growing source of electricity, but it is important that we have a diverse mix of sources to ensure a resilient electricity system in which the lights do not go off. Just as consumers paid for the previous generation of nuclear power plants, which, according to EDF, have generated enough electricity to power all Britain’s homes for 20 years and saved something like 700 million tonnes of greenhouse gas emissions, it is right that all consumers should share the costs of these projects to help realise their overall longevity and ensure that future generators bear the cost of the low-carbon infrastructure that we need to reach our net-zero goals.

The noble Lord, Lord West—and, I think, the noble Lord, Lord McNicol—asked me about Chinese involvement. In a 2016 Statement to Parliament, the then Secretary of State, Greg Clark, set out Her Majesty’s Government’s intention to

“take a special share in all future nuclear new build projects.”—[Official Report, Commons, 15/9/16; col. 1066.]

This policy has not changed; as such, we intend to take a special share in the Sizewell C project at the suitable time and, of course, subject to negotiation.

[Lord McNicol of West Kilbride (Lab)]

My Lords, the Minister mentioned taking a special share in Sizewell C. Are the Government looking to take one in Hinkley as well?

[Lord Callanan (Con)]

These matters are subject to future negotiations. I will come back to the noble Lord on that.

I have addressed most of the points made in the debate. I am encouraged by the general support for the Bill across your Lordships’ House and I look forward to continuing the constructive engagement with all sides as it progresses. I therefore commend the Bill to the House.

Subsidy Control Bill

Debate between Lord Callanan and Lord McNicol of West Kilbride

Committee stage
Wednesday 9th February 2022 Grand Committee

[Lord McNicol of West Kilbride (Lab)]

We welcome the tabling of these two amendments, which move us on from the composition and core investigatory powers of the CMA towards enforcement or, to use the word of the noble and learned Lord, Lord Hope, “guidance” of subsidy decisions, via the Competition Appeal Tribunal. The two amendments in this group aim to achieve similar things but by different means.

In relation to Amendment 67 from the noble and learned Lord, Lord Thomas of Cwmgiedd, the CMA would have the option to refer matters to the CAT. That is a sensible proposition, and we are more than happy to support it. It seems counterintuitive to have a body tasked with investigating or looking at whether due process was followed when the subsidy was awarded, only for a separate person or entity to be left to initiate enforcement proceedings. Even if an interested party were to use the SAU’s output as a basis for referring the matter to the CAT, how much weight does the Minister think such a report would carry? As an entirely separate entity, would it be reasonable for the CAT to disregard or override any of the SAU’s findings?

Amendment 71 from the noble Lord, Lord Fox, takes a slightly different approach. It gives the CAT the powers to pre-emptively investigate subsidies if it believes that an award is not consistent with the principles of the Bill. I am more than happy to support this amendment. Whichever approach is taken, it is clear that all involved need greater clarity on how disputes will play out. I will not repeat the points made by the noble Lord, Lord Lamont, but independent enforcement will bring clearer and better oversight to the Bill.

[Lord Callanan (Con)]

I thank the noble and learned Lord, Lord Thomas, and my noble friend Lord Lamont for tabling Amendment 67. I also thank them and the noble Lord, Lord Fox, for Amendment 71. Before addressing the two amendments in turn, I will offer some context. We have discussed at length the conception of the new domestic control regime as envisaged by the Government. We have heard criticism to the effect that the regime is, in the view of the protagonists, lacking in robust enforcement.

Of course, international comparisons are somewhat beside the point for our UK-specific approach. It is worth while bearing in mind, though, that the mere fact of establishing a coherent regime for the purposes of subsidy control would place the UK somewhere near the top of the list of the most comprehensive subsidy control regimes. Outside the European Union, no other international partner or competitor will enjoy such a comprehensive and transparent approach to the regulation of subsidies.

[Lord Callanan (Con)]

This legislation was predicated in the TCA, as my noble friend points out. We are of course meeting our obligations. One of the purposes of this legislation is to meet our international obligations, not just under the TCA but with other trade agreements that we might strike as well.

In our view, an interventionist regulatory role is not necessary for the effective scrutiny of subsidies and would be detrimental to the smooth development and deployment of subsidies where they are needed. I have confidence that public authorities will take their statutory obligations under this regime very seriously and, in fulfilling those obligations, public authorities will be supported by comprehensive guidance. As a result, I do not anticipate that breaches will be by any means a common occurrence. My noble friend referred to the EU state aid regime, which is a different system, but it is revealing of public authorities’ attitudes to their obligations that since 1999, the European Commission has ordered UK public authorities to recover aid on only four occasions.

[Lord McNicol of West Kilbride (Lab)]

That is because those systems are fundamentally different. The EU state aid system was a pre-authorisation, not a post-investigation or oversight. It is not comparing apples with apples, because of how the systems operate.

[Lord Callanan (Con)]

I said that it was a different regime but was pointing out the number of times that subsidy has been recovered since 1999. My point is that it is not a frequent occurrence. I totally accept that it is a different system and that they are different regimes, but it served as an example of the behaviour of UK public authorities.

In the event of such breaches occurring, a private person asking the court to review the legality of a public authority’s action is a well-established route for ensuring that those authorities do not exceed their powers or act irrationally, and for preserving the rights of the individual against the state. Indeed, it is the normal way for challenging the actions of public authorities, and that is why we have broadly replicated the judicial review process in this Bill, with some subsidy-specific adjustments and additions. I know that noble Lords sitting at the back will be much more familiar with that regime than I am.

Today and in other Committee sessions, your Lordships have asked, in the absence of an enforcer—I will not attempt to repeat my noble friend Lord Lamont’s Latin experience—who will challenge subsidies and how a potential interested party will know about a subsidy that may affect their interests.

The subsidy control requirements are not a regulatory abstraction; they are there to prevent unnecessary distortions of competition. Where a public authority has failed to assess a subsidy against the principles, there is likely to be harm. Anyone whose interests may be affected by the subsidy, be they individuals, businesses or other public authorities, including the devolved Administrations, they have standing to challenge it. The people best placed to decide whether to bring a challenge are those who are actually operating in the relevant sector and area.

Transparency declarations will provide enough information for people to assess whether their interests may be affected by a subsidy. I once again underline that every subsidy or scheme that is in scope of the main subsidy control requirements and that may be challenged in the Competition Appeal Tribunal is also subject to the subsidy control transparency requirements, with the exception of certain SPEI subsidies, as we debated the other day. For those subsidies that present a greater risk to the market, or where the public authority is less sure of its assessment, the CMA reports will provide further information still.

On the point made by the noble and learned Lord, Lord Thomas, about the costs of pursuing a challenge, in practice an interested party is likely to take legal advice before deciding to ask for a review of a subsidy, and of course that will incur costs. However, as with other kinds of legal proceedings, the CAT can award costs to whichever party is successful. The pre-action information request process will be an important opportunity for a potential interested party to find out more about a subsidy and make a decision about whether to proceed with a challenge, and then to make a decision informed by the likelihood of success, most likely following advice.

I turn to Amendment 67 from the noble and learned Lord, Lord Thomas, and the noble Lord, Lord Lamont, and I return to some of the arguments that I made in respect of the grouping we finished at the beginning of this afternoon’s session. The subsidy advice unit is an advisory body; it is intended to advise public authorities on the most potentially distortive subsidies and, by doing so, to provide a measure of additional scrutiny and transparency to the benefit of interested parties and, ultimately, the public at large. Ultimately, the SAU will shine a light on the underlying assumptions that have led to the development of a subsidy or scheme. It is for the public authority to exercise its own judgment with respect to that information. I have confidence that public authorities will take their responsibilities under this regime seriously and, where the CMA has issued a report, the public authority will give appropriate weight to the CMA’s conclusions.

In response to the question from the noble Lord, Lord McNicol, about the purpose of SAU reports, they will provide a public indication of the quality of a public authority’s assessment. It is in a public authority’s best interests to demonstrate that they have properly considered the potential distortive impacts of a proposed subsidy or scheme, and that offering such a measure is justified and proportionate to the policy problem that they are trying to address. Should a public authority fail to take proper account of the CMA’s conclusions, the report means there will be a significant amount of information about the subsidy in the public domain, beyond what would already have been required by the transparency database. Interested parties will therefore be all the more able to assess whether the subsidy may affect their interests, and of course to mount a challenge if they so wish. There may be a difference of opinion on this, but I am afraid that I just do not agree that there should be a role for the CMA in this.

In response to the Latin question of the noble Lord, Lord Lamont, about who will guard the guards themselves, I repeat that, assisted by guidance, which will help public authorities to understand their obligation—I have cited the example of a number of repayments previously—I think we can expect a high level of compliance with the regime. As the noble and learned Lord, Lord Hope, observed, the Competition Appeal Tribunal will build up a body of case law which will then be an important additional source of guidance for public authorities.

As I said to the Committee on Monday, of course I hope that no UK government subsidies would require referral, but Ministers intend to be open-minded to calling in a UK government subsidy for SAU scrutiny where that is requested by another public authority or considered desirable for other reasons. Furthermore, where necessary, the Secretary of State has the ability to refer subsidies to the Competition Appeal Tribunal. However, I would be surprised and disappointed if he or she had to challenge a subsidy made by a UK government department, but he or she could certainly do so if they felt that a subsidy risked competition and investment within the UK or compliance with the UK’s international obligations.

I turn now to Amendment 71, tabled by the noble Lords, Lord Fox and Lord Lamont, and the noble and learned Lord, Lord Thomas. This would have the Competition Appeal Tribunal refer specific subsidies to itself for decision. I would submit that that is highly unusual and would potentially compromise the CAT’s neutrality. Of course, there are practical objections to this amendment as well. As with all courts, the tribunal’s expertise, resourcing and premises are equipped for hearing cases, not for gumshoe investigatory work. I do not think that the noble Lords are really suggesting that this should be the case.

--- Later in debate ---

[Lord McNicol of West Kilbride (Lab)]

I have very little to add; it has been covered comprehensively. I was happy and pleased to add my name to Amendment 69.

We have talked a lot about equity and balance, and the final group of amendments probably has even more of the issues raised in it so, rather than repeat everything that has been said, I am more than happy to endorse it. We will then pick up the final issues around engagement and involvement with the devolved authorities and central government in the final group.

[Lord Callanan (Con)]

My Lords, before I speak to the detail of these amendments, this is perhaps a good opportunity to update the Committee on our progress in seeking legislative consent for the Bill, as we promised in our first Committee session on 31 January.

These amendments, and a number of others we have debated, touch on the UK-wide and devolved aspects of the Bill. As we have discussed on numerous occasions, subsidy control is reserved, but there are clauses in the Bill that alter the executive competence of the devolved Administrations. From the very beginning, the UK Government, at both ministerial and official level, have worked closely and extensively with the devolved Administrations in designing the new subsidy control regime. We have worked to secure their support for LCMs for the Bill. I pay tribute to my officials and those in the devolved Administrations for their ongoing efforts in this space.

Our strong preference remains to secure legislative consent, and we will keep all avenues open to achieve this and to remedy the significant concerns of the devolved Administrations. Of course, we also want to ensure the operability of the new regime. Negotiations are still in progress, but I assure noble Lords that I will keep the House updated at the earliest opportunity, without prejudicing the content of those negotiations. I also assure the Committee that, should any amendments be necessary to reflect the outcome of those negotiations, we will table them as soon as possible prior to Report to enable your Lordships’ House to consider and scrutinise them with sufficient time.

--- Later in debate ---

[Lord Callanan (Con)]

My Lords, I thank the noble lord, Lord McNicol for this amendment, and the noble Baroness, Lady Blake, for speaking to it. I also thank the contributions of other noble Lords—and the noble Lords, Lord Fox and Lord Lamont, reflected on this issue during the Monday’s session.

An interested party, which is anyone whose interests are affected by the subsidy, may apply to the Competition Appeal Tribunal for a review of the subsidy within one month of the subsidy’s upload to the transparency database, if there has been a post-award referral to the CMA within one month of that report, or if a pre-action information request has been made within one month of the response to this request. The limit has been set at one month so that we can give legal certainty to public authorities and subsidy beneficiaries as swiftly as possible. It is important to avoid creating such prolonged uncertainty that it acts as a brake on legitimate subsidies.

We must also ensure that interested parties have sufficient time to consider a subsidy before asking the CAT to review it. That is just what this Bill does. An interested party, perhaps a competitor who is thinking of approaching the CAT to review a subsidy, can make a pre-action information request to a public authority. The limitation period is then extended until one month after the public authority has responded. Since the pre-action information request gives the public authority up to 28 days to respond, in practice, the limitation period can run for two or three months after the publication of the subsidy or scheme on this database.

[Lord McNicol of West Kilbride (Lab)]

If the argument is that we are only giving one month to raise a complaint or to look into this, why are the uploading timeframes six months and/or one year? If the Government want to create legal certainty for the organisation that is giving the subsidy, surely, as the noble Lord, Lord Lamont said on Monday, what is good for the goose is good for the gander. If they want that legal certainly, deliver that within the one month in terms of the upload to the database. Then there is parity and legal certainty.

[Lord Callanan (Con)]

As the noble Lord, Lord McNicol suggested, we explored this point fully last week. There are good reasons for it. If it is a tax subsidy, the full amount might not be clear. It might be variable, based on a number of different reasons, and the fact of giving a subsidy may well be published in other transparency obligations that local authorities or the devolved Administrations already have. However, I understand the noble Lord’s point.

In response to the noble Baroness, Lady Blake, Clause 71 also makes it clear that in exceptional circumstances, the tribunal may extend the time limits for bringing a challenge. This amendment would extend the general window for bringing a challenge from one month to three months, which is too long. It is longer than the challenge periods available in other areas where business decisions are dependent on the decisions of public bodies, such as procurement and planning decisions, where the limitation periods are 30 days and six weeks, respectively. In those areas, the harmful effects of prolonged uncertainty have been recognised through the shorter challenge periods available. The same reasoning applies in the subsidy control context. If the general limitation period for challenging subsidy decisions was extended to three months, as this amendment proposes, public authorities and subsidy beneficiaries could in practice have to wait as long as five months before having reasonable legal certainty about a subsidy that they have granted.

There is a risk that this could have a chilling effect, not only on the giving of subsidies but on the timely use of them by beneficiaries. For example, a subsidy could take the form of a loan guarantee for a capital investment, such as buying new machinery. Your Lordships will appreciate that some beneficiaries may be reluctant to go ahead with purchasing that machinery for as long as there is a possibility that the subsidy decision could be quashed and a recovery order made.

The noble Baroness, Lady Blake, and the noble Lord, Lord McNicol, asked how the Government can justify giving public authorities six months to fulfil their transparency obligations but providing interested parties only one month to challenge a subsidy. I recognise the strength of feeling on the length of time on the transparency deadline and how this compares with the limitation period. During Monday’s Committee, I set out the reasons why the deadline is set at six months: it allows for better-quality data where subsidies are based on an estimate, and it gives public authorities greater ability to upload their subsidies in bulk, and therefore to reduce administrative burden.

--- Later in debate ---

[Lord McNicol of West Kilbride (Lab)]

My Lords, I think we have a hard stop in 20 minutes, so I will be very brief. I am grateful to noble Lords who put down amendments in this group, including the Minister; I hope there will be lots more to come from the Minister. My Amendment 75 has been signed by the noble and learned Lord, Lord Hope of Craighead, and the noble Lords, Lord German and Lord Wigley, and I appreciate their support on this, as well as in the debates on many other devolution-focused amendments.

I was going to say, judging by the previous responses on the devolved authority amendments, that I did not think we would hear much change, but actually the Minister’s response to the last debate was heartening, so hopefully this amendment regarding the devolved authorities will receive the same response. I will leave it there. As we finish Committee, I note that the comments made in the DPRRC report were very telling, and I look forward to discussions with the Minister and officials between now and Report. I hope that we can address some of the DPRRC’s concerns.

[Lord Callanan (Con)]

My Lords, I am pleased to say that we are now on the final group of amendments. I have made it through thanks to the supply of copious quantities of cough lozenges, so I thank Ruth for those.

I first thank the noble Lord, Lord German, for tabling Amendment 74, the noble and learned Lord, Lord Thomas of Cwmgiedd—

Subsidy Control Bill

Debate between Lord Callanan and Lord McNicol of West Kilbride

Committee stage
Monday 7th February 2022 Grand Committee

[Lord McNicol of West Kilbride (Lab)]

I thank the Minister for giving way. Just on the point about challenge and that if a subsidy is below the £500,000 it will be part of a scheme, I think he said before that if it was given as part of the subsidy scheme, it would have to meet the seven principles; it would be good if that could be clarified. Probably more importantly, however, is whether a one-off subsidy that is less than the individual subsidy limit—the £315,000—has to meet the principles. My understanding from some of the earlier discussions in the other place is that that was not confirmed or clarified. Can the Minister clarify whether a subsidy that is less than £315,000 has to meet the seven principles or the other energy principles?

[Lord Callanan (Con)]

Yes, of course. All subsidies need to meet the principles—this discussion is about what parts of those are published. If a subsidy is awarded under the scheme, then the scheme principles would also need to comply with the subsidy control principles.

[Lord McNicol of West Kilbride (Lab)]

So, just to be absolutely clear, if a subsidy is awarded that is less than £315,000 as an individual subsidy, it says in the Bill that it needs to meet the seven principles and possibly the energy principles.

[Lord Callanan (Con)]

My understanding is that, yes, that is the case. If that is not correct I will certainly clarify that to the noble Lord, but my understanding is that that would be the case.

[Lord Callanan (Con)]

Just to clarify the points from the noble Lord, Lord McNicol, yes, it would need to meet the scheme requirements if it was given under a scheme. If the subsidy is not minimal financial assistance —so it exceeds £315,000 accumulated over three years—it does have to meet the principles; if it is MFA, it does not need to meet the principles. Reviewing the cost as an impact assessment does not necessarily cover all those options.

[Lord McNicol of West Kilbride (Lab)]

So, if it is under the £315,000—sorry, forget the scheme, I confused things by talking about the £500,000 for the scheme. If an individual subsidy is less than £315,000—this is quite important for transparency—it does not have to meet the principles that are laid out in the Bill?

--- Later in debate ---

[Lord McNicol of West Kilbride (Lab)]

Before the Minister sits down—I ask this as I genuinely do not know—he stated that 76%, or however much it was, of those who responded to the consultation supported the deadlines of six months and a year. Does he know what the consultation said about the other side of this, with regards to the timescales for challenge?

[Lord Callanan (Con)]

The figure I used was 74%, not 76%. I do not have that information, but I can certainly get it for the noble Lord—I will supply it in writing.

--- Later in debate ---

[Lord Callanan (Con)]

The position in the clause is fairly transparent; they will be able to ask for information on the scheme and the authority would have a duty to provide it. That is separate from the provisions for uploading it to the database.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for his response. As the noble Lord, Lord Lamont, picked up, he very much focused on Amendments 40 and 42, rather than Amendments 41 and 43. The Minister is absolutely right that there will need to be a balance between bureaucratic burden and proper transparency and oversight. As the Bill sits just now, I do not believe that the balance is in the right place. I am sure that we will come back to this—after the Division.

--- Later in debate ---

[Lord McNicol of West Kilbride (Lab)]

My Lords, I think we will have a hard stop at 7.45 pm, so I will try to be brief. Even then, though, I am not sure that we will get through everything. Obviously I am grateful to the noble Lord, Lord Lamont, for tabling his amendments in this group; they sit very nicely with my amendment.

There are some general concerns over whether the CMA is the appropriate body to undertake all this work but, putting that to one side just now, it seems counterintuitive not to give the responsible regulator the ability to initiate its own investigations—especially because, as the noble Lord, Lord Lamont, rightly said, this is a very permissive regime in terms of how it has been pulled together. It is fundamentally different from the European state aid regime and we expect it to be policed by competitors and citizens, and that is only if they have checked the database and if the subsidy has been of a high enough level to make it on to the database—more than £315,000, I think. Even then, they will be able to make those challenges only within a tight timeframe.

On the amendments, although my Amendment 61 is quite detailed, again, we really are not precious about the wording in it or who has oversight, whether it is someone from our own Benches or those of the noble Lord, Lord Lamont—or even if the Government themselves wish to bring an amendment to look to give the CMA, as an independent body, more powers to follow through and ensure that transparency is actually there. My amendment would give the CMA the power to conduct post-award investigations in cases where it believes, God forbid, that a public authority has failed to comply with the requirement. With that, I end my remarks and look forward to the Minister’s response.

[Lord Callanan (Con)]

I am grateful to noble Lords. I know that time is getting on; hopefully I will have a chance to get through my remarks in the time we have available. This is an important debate and I recognise that, if it were not for the time, other noble Lords might also have wanted to intervene on the role of the Competition and Markets Authority in this new subsidy control regime.

I listened with particular interest to my noble friend Lord Lamont’s reflections on subsidy. In response, I would say that it is important to emphasise that the Bill does not, of course, replace our gold-standard mechanisms—my noble friend may have been responsible for many of them—for managing public money and for the transparency and scrutiny accorded to the UK Government’s spending decisions. I also note that we addressed the concept of market failure in the illustrative guidance we sent round; we believe that it is a fundamental part of the guidance that will be published before the regime comes into force.

Before I address the amendments, let me take this opportunity to lay out why we have taken the approach we have in the Bill as it stands; I hope that this will address the concerns of the noble Lord, Lord Purvis. We start from the knowledge that public authorities, in my view, take their statutory obligations seriously. The subsidy control principles and other requirements are straightforward and sensible, and we expect the vast majority of public authorities to comply with these requirements in giving the overwhelming majority of their subsidies. This regime empowers public authorities to make subsidy control decisions without excessive bureaucracy or regulation of the kind that I think most people accept is found in the EU state aid system and nowhere else in the world.

With this in mind, we proposed the functions of the subsidy advice unit set out in the Bill for two closely related reasons: first, to support public authorities in giving the subsidies that are most likely to be distortive; and, secondly, to ensure that those subsidies are subject to additional scrutiny and transparency before they are given. As the noble and learned Lord, Lord Thomas, set out, we think that this is an extremely important role. Once a subsidy or scheme has been referred, the subsidy advice unit will not attempt to replicate the role of the public authority in giving that subsidy in the first place or deciding whether or not to give a subsidy. Of course, it will also not replicate the role of the Competition Appeal Tribunal in applying the law to every aspect of the case. The subsidy advice unit will not carry out its own independent evaluation of the impacts of the subsidy; nor will it come to a definitive judgment on the public authority’s legal assessment of whether the measure is a subsidy, to answer the question from the noble and learned Lord, Lord Thomas.

--- Later in debate ---

[Lord McNicol of West Kilbride (Lab)]

My Lords, rather than rush through, let us finish here. I am sure there are some issues that we would go into if there were not one minute remaining.

[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.

[Lord Callanan (Con)]

So shall we finish at this point and start again on Wednesday. Is my noble friend Lord Lamont available for the next Committee session on Wednesday afternoon? We are talking about suspending at this point, because we have run out of time, and returning to this group of amendments then.

Subsidy Control Bill

Debate between Lord Callanan and Lord McNicol of West Kilbride

Committee stage
Wednesday 2nd February 2022 Grand Committee

[Lord German (LD)]

The Minister has mentioned the question of guidance twice. Guidance is not law, of course, unless it is. It exactly what it is meant to be: guidance. Given the importance of guidance to the question of what an area is, would it be possible for this guidance to be issued, even in draft form, before we conclude this Bill, so that we can at least know what is in the Government’s mind?

[Lord McNicol of West Kilbride (Lab)]

Just to take both earlier points, if the Secretary of State defined an area as the whole of the United Kingdom, and that covers it, part of the subsidies could be used to move businesses inside the whole of that area. If that is the case, it defeats the whole purpose of it, does it not?

[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.

--- Later in debate ---

[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.

[Lord Callanan (Con)]

I am happy to see that the Liberal Democrats believe in consistency and to work with the opposition parties when amendments are required, as appropriate.

Subsidy Control Bill

Debate between Lord Callanan and Lord McNicol of West Kilbride

Committee stage
Monday 31st January 2022 Grand Committee

[Lord Callanan (Con)]

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

[Lord McNicol of West Kilbride (Lab)]

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

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

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

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

Post Office: Horizon Compensation

Debate between Lord Callanan and Lord McNicol of West Kilbride

Monday 10th January 2022 Lords Chamber

[Lord Callanan (Con)]

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

[Lord McNicol of West Kilbride (Lab)]

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

[Lord Callanan (Con)]

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

Deep Seabed Mining

Debate between Lord Callanan and Lord McNicol of West Kilbride

Monday 6th September 2021 Lords Chamber

[Lord Callanan (Con)]

I think my noble friend has said essentially the same thing: we should take part in constructive discussions; anything else is just rhetoric.

[Lord McNicol of West Kilbride (Lab)]

My Lords, deep seabed mining is associated with the fragmentation of ecosystems and the loss of marine species. As we know, one of the best solutions is recycling and reusing minerals such as magnesium, cobalt and zinc, which are often the targets of deep seabed mining. What plans do Her Majesty’s Government have to accelerate this principle of recycling? Can the Minister explain a little more about the consultation and discussions with the ISA?

[Lord Callanan (Con)]

The noble Lord is absolutely correct. The net zero campaign that we all contribute to and support will produce massive demand for many of those minerals, so investing in two new interdisciplinary circular economy centres—one on technology metals and one on circular metals—will help. Separately, Defra will be consulting later this year on new measures that will ensure that we better manage electronic waste and do more to drive up reuse and recycling, because of course that is a much preferable solution.

Human Rights Due Diligence

Debate between Lord Callanan and Lord McNicol of West Kilbride

Tuesday 20th July 2021 Lords Chamber

[Lord Callanan (Con)]

Businesses involved in the export of waste are required to take all necessary steps to ensure that the waste they ship is managed in an environmentally sound manner, throughout its shipment and during its recycling. Current penalties for breaching the legislation are a two-year jail term and an unlimited fine. My noble friend will be aware that the Environment Bill will introduce even tougher controls on illegal waste exports, including powers to make it harder for criminals to obtain and export waste illegally.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I am supporting a project with Rewired.Earth, which aims to deliver full and proper ESG audits, including through the supply chains. If achieved, this would provide a huge step forward in delivering environmental, social and governance oversight, going a long way to answer the Question of the noble Baroness, Lady Sheehan.

With $110 trillion of worldwide investment already being directed through ethical investing, this would be a great opportunity for the UK. Do Her Majesty’s Government support the premise of ESG audits as a way for the UK financial sector to lead the way across the globe, both in financial investing and by creating a vehicle that can help save the planet?

[Lord Callanan (Con)]

As the noble Lord will be aware, we have just finished a consultation on the audit reform proposals, which include extending audit to some non-financial matters such as climate change. Of course, we will be very happy to consider all other proposals.

Post Office Update

Debate between Lord Callanan and Lord McNicol of West Kilbride

Monday 24th May 2021 Lords Chamber

[Lord Callanan (Con)]

Let me again pay tribute to the work that the noble Lord has done, both in the other place and here, in seeking to draw attention to this scandal. He was well ahead of many people in seeing the true extent of this horrendous scandal but, as I have previously said to the House, the December 2019 settlement was between the Post Office and a group of sub-postmasters. Both those parties were legally represented; the Government were not a party to this litigation, nor to the settlement that was agreed, and we still believe that it would not be appropriate for the inquiry to reopen or review such a settlement, which was agreed in the courts.

[Lord McNicol of West Kilbride (Lab)]

Perhaps I may take the question put by the noble Lord, Lord Arbuthnot, a little further and probe the Minister. I would like to ask about the scale, scope and timeframe of compensation; the Minister touched on it a little, but perhaps I could dig a little further. As we all know, Her Majesty’s Government are the sole shareholder in the Post Office, which has ultimate responsibility for where the compensation lies. Can the Minister set out in a bit more detail the scale and scope of the compensation discussed between Her Majesty’s Government and the Post Office? Importantly, can he put a bit more meat on the bones of the timeframe? We all know that this compensation for sub-postmasters and sub-postmistresses is so well deserved.

[Lord Callanan (Con)]

I agree with the noble Lord and understand his impatience. The Government are keen to ensure that postmasters whose convictions are overturned are fairly compensated. But I am sure he will understand that it is for the Post Office to consider the next steps in this case, in the first instance. I therefore regrettably cannot provide him with a timescale for this process or make commitments on funding at this point, but I can assure the House and the noble Lord that we are eager to see that this happens as speedily as possible.

National Security and Investment Bill

Debate between Lord Callanan and Lord McNicol of West Kilbride

Committee stage
Tuesday 16th March 2021 Lords Chamber

[Lord Callanan (Con)]

I thank all noble Lords who have taken part in this brief debate, particularly my noble friends Lady Noakes and Lord Lansley for their contributions. I will start with Amendments 49, 62 and 64, which for the convenience of the Committee I will take together.

As drafted, the Bill provides that the Secretary of State must decide whether to reject or accept a mandatory or voluntary notice

“as soon as reasonably practicable”

after receiving it. He must then inform relevant parties of his decision as soon as is practicable. Amendment 49 would require the Secretary of State to decide whether to accept or reject a mandatory notice within five working days, as opposed to the current drafting. Amendment 62 would have the same effect, but for voluntary notices. Amendment 64 would require the Secretary of State to notify each relevant person whether a voluntary notice has been accepted within five working days of it being accepted, as opposed to the current drafting of doing so as soon as practicable.

As I am sure noble Lords would agree, mandatory and voluntary notifications should include the necessary information to enable the Secretary of State to determine whether to call in an acquisition for further scrutiny. Once a notification is accepted, the Secretary of State will be required to issue any call-in notice within 30 working days or else clear the acquisition to proceed. It is therefore important that the Secretary of State is able to reject a notification if it does not meet the requirements specified in the legislation. Of course, it is important that all decisions made under this regime by the Secretary of State are made promptly.

I therefore assure the Committee that the Secretary of State will make great efforts to ensure that decisions to accept or reject notifications are made quickly and that parties are notified in a timely way. In fact, one of my officials was keen to point out that the record so far for responding to informal guidance is 19 minutes. Civil servants will of course have different ways of going about it and will pursue different speedy methods, so I am sure that will not always be the case. Nevertheless, we will endeavour to reach these decisions to provide help and guidance to businesses and companies as speedily as possible.

As noble Lords will be aware, the Government intend to lay regulations setting out the form and content of the types of notification soon after Royal Assent. The draft notification form was published alongside the introduction of the Bill to help interested parties understand what information is likely to be required. Parties will therefore have clarity, and certainty about the information that they should provide when notifying the Secretary of State. We therefore expect notifications to be generally of high quality and, where this is the case, the Secretary of State expects to be able to decide quickly and then inform parties of decisions to accept their notices, in many cases, clearly, more quickly than the five working-day limit proposed.

However, it is important that there is scope for flexibility in the relatively rare circumstances where more time may be needed. For example, a hostile actor could intentionally provide very large amounts of unnecessary information that would take many days to read through to establish that important information was missing or incorrect. Or there might be multiple parties involved in a particularly complex acquisition that had all submitted notifications. In the event that the notifications do not match up, more detailed verification may be needed. I would argue that it is better for the Secretary of State to take the time to ensure that he has the information that he needs at the start of the process rather than risk finding gaps in information later on.

I turn to Amendments 51, 54 and 66. I know that my noble friend Lord Lansley did not speak to Amendment 51, but it is in this grouping, so, if he will forgive me, I will address the issue at this point. Clause 14 provides for the mandatory notification procedure, including subsection (6), which sets out the grounds on which the Secretary of State may reject a mandatory notice, and subsection (9), which explains when the 30-working day “clock” for reviewing a mandatory notice begins. These amendments go to the heart of both matters, so let me address each of them briefly.

Amendment 51, to which my noble friend referred although he did not speak to it, would remove the third ground for the Secretary of State to reject a mandatory notice, which is where

“it does not contain sufficient information to allow the Secretary of State to decide whether to give a call-in notice in relation to the proposed notifiable acquisition”.

I imagine that noble Lords may well consider that the first two grounds—which enable the Secretary of State to reject a mandatory notice where it does not meet the requirements of this clause or as prescribed in regulations—will cover most bases. However, we must also ensure that an acquirer cannot meet the technical requirements of providing a notice by doing so in a limited way or with incomplete information. Noble Lords will appreciate that if, for instance—in a purely hypothetical example, I was required to fill in the name of my chief executive on a mandatory notice, the ISU would have a pretty good chance of working out who “Boris” was, but in the case of the chief executive of a small start-up company that might have been operating for only a few months, a mandatory notice that had the same information would provide little to go on. I understand that it is an outlandish example, but it illustrates why we must not prevent the Secretary of State rejecting notices from those who plainly look to game the system.

Amendment 54 would adjust the timing for the beginning of the 30-working day review period from, as now, the date on which the Secretary of State confirms acceptance of a mandatory notice to the date on which he received the notice. Amendment 66 would make the equivalent changes in respect of voluntary notices. I can assure my noble friend Lord Lansley and other noble Lords that in the vast majority of circumstances we expect to confirm acceptance quickly and to begin the clock on the review period. However, the process of initially determining whether a valid and complete notice has been submitted is separate from fuller screening of the acquisition itself. Some acquisitions are likely to be complicated and a significant amount of information may be provided as part of the mandatory notice. In these instances, it is conceivable that the investment security unit may need a short time to ascertain that the relevant information has been provided. None the less, the screening will not yet have begun and, accordingly, it is right that the clock does not do so either.

Amendments 53 and 65 would reduce the time available to the Secretary of State to screen mandatory and voluntary notifications from a maximum of 30 working days to 20. I mention “maximum” again because that is exactly what these deadlines represent. In many cases, we expect the Secretary of State to be able to review and clear notifications much more quickly. The question, therefore, is what is appropriate in more complex cases and whether the ISU may need to gather input and expertise from across Whitehall on those acquisitions. The total figure of 30 working days is not arbitrarily chosen by the Government. I apologise to my noble friend Lady Noakes for saying yet again that it reflects detailed work undertaken across Whitehall to test past cases and mock scenarios against the new regime—I repeat that because it is our position. Some acquisitions may involve complicated ownership structures; the technology and activities of the target entity may not be immediately clear, and the format of the acquisition itself may be unconventional. It is vital the Secretary of State has the necessary time to examine an acquisition and to make an informed decision.

I again commend my noble friend’s efforts to make the new regime even more nimble and fleet of foot, but I hope she will understand—even if she does not agree with me—why I am unable to accept these and other amendments that I have addressed in this group. Therefore, I hope that both my noble friends will choose not to press their amendments.

[The Deputy Chairman of Committees (Lord McNicol of West Kilbride) (Lab)]

My Lords, I have received no request to speak after the Minister, so I call the noble Baroness, Lady Noakes.

REACH and CE

Debate between Lord Callanan and Lord McNicol of West Kilbride

Thursday 17th September 2020 Lords Chamber

[Lord Callanan (Con)]

If those traders wanted to sell their goods into the European Union market, because that was the system they had, they would have to be CE marked. They would have to comply with similar standards if they wanted to sell them in the North American market.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

My Lords, all supplementary questions have been asked. We now move to the fourth Oral Question.

Corporate Insolvency and Governance Bill

Debate between Lord Callanan and Lord McNicol of West Kilbride

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

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

I remind noble Lords that Members other than the mover of an amendment and the Minister may speak only once and that short questions of elucidation are discouraged. Anyone wishing to press this or any other amendment in the group to a Division should make that clear in the debate.

[Lord Callanan]

My Lords, the Government have listened carefully to the concerns raised by noble Lords in Committee and elsewhere.

Where used appropriately, pre-pack sales can perform a useful rescue function. In some instances, sales to connected parties are beneficial. However, we accept that the nature of the transaction and the speed with which it is carried out might also provide some opportunities for mischief. This could particularly be the case during the current crisis. The Government acknowledge that there may be a risk of an increase in the use of pre-pack sales, which could adversely affect businesses already struggling as a result of Covid-19.

The Government therefore propose amendments to revive the power, which expired in May 2020, to regulate sales in administration to connected parties, and to introduce a similar power in Northern Ireland. These government amendments will revive paragraph 60A in Schedule B1 to the Insolvency Act 1986. This will enable the Secretary of State to make regulations to prohibit or impose requirements or conditions in relation to the sale of property of a company by the administrator to a connected person, in circumstances specified in the regulations. This power will expire at the end of June 2021, unless it is previously exercised.

The amendments will also insert a new power in Schedule B1 to the Insolvency (Northern Ireland) Order 1989 to enable similar regulation of sales to a connected person in Northern Ireland. This power will also be time limited until the end of June 2021, unless previously exercised. Regulations made under the power in Northern Ireland must be laid in draft and approved by a resolution of the Northern Ireland Assembly. And we are going further: ahead of using the power, we will publish the Government’s review of existing voluntary measures in respect of pre-pack sales this summer to help further inform the public debate on this issue. I beg to move.

Horizon Accounting System

Debate between Lord Callanan and Lord McNicol of West Kilbride

Wednesday 25th March 2020 Lords Chamber

[Lord McNicol of West Kilbride]

To ask Her Majesty’s Government, further to the judgment in Bates v Post Office [2019] EWHC 3408 on 16 December 2019, what steps they are taking to ensure that the directors responsible for the Horizon Accounting System are held to account.

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

My Lords, the Post Office board members who took the original decision on the Horizon case are no longer in post. While this is not a matter for BEIS, my officials have drawn the Horizon case and its implications to the attention of their counterparts in the Department of Health and Social Care, which oversees appointments to the boards of NHS trusts.

[Lord McNicol of West Kilbride (Lab)]

I thank the Minister for that Answer. In the debates we have had in this House on Horizon and the Post Office case, across all sides of the House we have been shocked when we have started to get into the detail of what happened and the implications for individuals’ lives. Some of those stories are quite harrowing, so I welcome the Government’s recent announcement that they have committed to an independent review. When will a chair be announced for the review? Will Her Majesty’s Government consult on the terms of the review? What is the timeline for the review to conclude? Finally, when will the framework document between BEIS, UKGI and the Post Office be published?

[Lord Callanan]

On the noble Lord’s last point, I believe it was published this morning and is on GOV.UK; I will send him a link so that he can access that. With regard to the review, I am afraid I cannot yet give him a time on that. We are looking for an independent chair at the moment and finalising the terms of the inquiry. I will let him have more information as soon as I have it.

Parental Bereavement Leave and Pay (Consequential Amendments to Subordinate Legislation) Regulations 2020

Debate between Lord Callanan and Lord McNicol of West Kilbride

Monday 23rd March 2020 Grand Committee

[Lord Clement-Jones (LD)]

I thank the Minister for that introduction. I am not sure whether I am the understudy or the understudy’s understudy, but it has been instructive reading a number of SIs over the weekend and doing my homework. I admit I was shocked to learn that, from government estimates, only two-thirds of businesses provide parental bereavement leave currently, particularly when the last figures I saw, from 2017, were that 7,600 babies and children under 18 died. This is not insignificant. The Minister rightly paid tribute to the noble Lord, Lord Knight, but this also derived from a Private Member’s Bill by Kevin Hollinrake MP and noble Lords should credit him for that.

I very much welcome what the Minister has said and recognise that this is the third of the three statutory instruments needed to put this in place, but I ask the Minister why it has taken two years from passing the original Bill to get this much-needed help. The Minister hoped that this would lead to certain consequences; I hope there will be a communications exercise with business, particularly small businesses, about this duty. I also hope that there will be a full review, not overengineered, of how this is being put in place, after a period—I do not know how long that should be, but maybe a year or shorter—to see whether businesses are really complying. Otherwise, this hard-fought new right, which we very much welcome, will not be worth as much as has been hoped.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I echo and share the comments of the noble Lord, Lord Clement-Jones, especially in thanking both the MP and the noble Lord, Lord Knight, for their work to get this on the statute book. The noble Lord, Lord Clement-Jones, touched on the numbers affected. Before I continue, I declare a non-financial interest as a patron of the children’s charity, Jigsaw4u, which supports the flip of this—children whose parents have died. It is within the same area, so I note that.

This side also supports the intention and wording of this SI. It is good to see legislation or rights being brought in from day one, something we were able to do starting with the Employment Rights Act in the 1990s. Most issues have been touched on, so there is no need to repeat them. This is just to say that we welcome and support both the intention and language of this SI.

[Lord Callanan (Con)]

I thank both the noble Lord, Lord Clement-Jones, and the noble Lord, Lord McNicol, for their contributions to this brief debate. This is not a matter of controversy, but I thank them for supporting its introduction, nevertheless. When we debated the main regulations to implement parental bereavement leave and pay a few weeks ago, the noble Lord, Lord Knight of Weymouth, who played such a crucial role in this—together with Members from the other place, as mentioned by the noble Lord, Lord Clement-Jones—remarked that this legislation is an example of where the democratic and parliamentary process has worked well to effect a change in the law.

For noble Lords who do not know, this legislation is a result of a tireless campaign by Lucy Herd, whose son, Jack, died 10 years ago. This explains why it has been given the title “Jack’s law”, which has been used interchangeably with the much more complex formal title “parental bereavement leave and pay” in the media.

This Government are committed to supporting working parents and making this country the best place both to work and grow a business. Jack’s law is an important step towards achieving this. Together with the other regulations that have already been debated, this SI will provide bereaved parents with the space to grieve following the death or stillbirth of their child, and will send the right signal to employers and colleagues about the value of compassion and support at such a tragic time.

I reiterate that these regulations represent a statutory baseline, which should be considered the bare minimum that an employee who has suffered this tragic loss should expect from their employer. As always, the Government encourage all employers to go further than statutory minima, where they are able to, and to act compassionately and considerately towards their staff. Most employers already provide exemplary bereavement support to their staff. However, some still do not, so I hope this new legislation not only ensures minimum protection for all employees, but also leads to better workplace support for bereavement across the board.

Turning to the contributions, the noble Lord, Lord Clement-Jones, asked me why this has taken two years. It has been complex to get the policy right. There have been a number of challenges to departmental resources, not to mention the incredible amount of work preparing for something that did not happen, which was a no-deal Brexit. It was always the intention to get the regulations in place to apply from April 2020.

Covid-19: Employment Support

Debate between Lord Callanan and Lord McNicol of West Kilbride

Thursday 19th March 2020 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for repeating the Statement. We welcome the Government’s commitment to do whatever it takes during this crisis, and especially the comments about not just standing behind business but standing shoulder to shoulder with businesses and workers and engaging with the trade unions and the TUC. I have only two questions for the Minister. First, when will the new forms of employment support be introduced? Secondly, are the Government considering paying the majority of wages to provide the job guarantees? As Gordon Brown said earlier today, if families do not have income protection, there will be a lot of other consequences. People may try to work when they are sick, putting themselves at risk, so their health becomes a public health issue.

[Lord Callanan]

I thank the noble Lord for his questions and for the responsible attitude that the Opposition are taking to this emergency. I am afraid that I am unable to give him a timescale at the moment; I can say only that all government departments are working as urgently as they possibly can on these matters. As soon as we have any further information on schemes that will be introduced, the Chancellor will make the appropriate announcement.

Sub-postmasters: Compensation

Debate between Lord Callanan and Lord McNicol of West Kilbride

Thursday 5th March 2020 Lords Chamber

[Lord Callanan]

The noble Baroness makes an important point. In the near future, a scheme will be announced with the aim of addressing the historic shortfalls for postmasters who are not part of the group litigation. The Government will challenge and monitor the progress of this scheme. There is also the important issue of people convicted of offences: 57 cases have been referred to the Criminal Cases Review Commission. If a case is referred to the Court of Appeal and a conviction is overturned, there are avenues for people to pursue compensation there as well.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I want to follow up on the point made by the noble Lord, Lord Arbuthnot. At Prime Minister’s Questions, as has been said, the Prime Minister committed to an independent inquiry on the back of a Question from Kate Osborne about whether he would launch such an inquiry. The Prime Minister said that he would follow up on that but No. 10 communications later said that no decisions had been taken with regard to a specific independent inquiry. I was not clear from the Minister’s earlier answer whether we are going to progress with an independent inquiry to get to the bottom of this matter. We had a very good debate in the Moses Room on it last week, and a lot of information came out. Can the Minister say whether there will be an independent inquiry and, if so, what its timescale will be?

[Lord Callanan]

We agree that there needs to be a full examination, with due rigour, of what happened and what the next steps will be, but I cannot go further than the answer that I gave earlier to my noble friend—that, as soon as we can, we will announce the next steps following the Prime Minister’s announcement.

European Union (Withdrawal Agreement) Bill

Debate between Lord Callanan and Lord McNicol of West Kilbride

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 am grateful to the three speakers that we have had in this debate on Amendment 30: the noble Lord, Lord McNicol, the noble Baroness, Lady Bennett, and, briefly, the noble Lord, Lord Warner. I can be brief on this one. The procedures for introducing and scrutinising Bills are, of course, very well established, and those procedures are not without reason. All the Bills mentioned will be introduced with adequate time for scrutiny. To ask for so many Bills to be published in draft is unprecedented, as it is for the Government to commit to a statement on the amount of time each Bill might spend in Parliament. Let me reassure noble Lords directly, however, that this Government are committed to ensuring that all the necessary legislation is passed by the end of the implementation period.

As the noble Lord intimated in his speech, versions of the Bills covering many of the areas noted in his amendment have already been published in previous Parliaments and are publicly available for study. Others were mentioned in the Queen’s Speech. However, I am sure that the House can appreciate the tremendous amount of work being done to make sure that these Bills best achieve their policy aims. In some cases, this means that the Bills will differ slightly from the previous versions. I can assure the House that the Government are committed to proper scrutiny and that we will balance the need to have the necessary Bills in place by the end of the implementation period with adequate time for Parliament to scrutinise them.

I suspect that the noble Lord got the answer he was expecting, so I hope he will feel able to withdraw his amendment.

[Lord McNicol of West Kilbride]

My Lords, I thank the noble Lords who have taken part in this very short debate, and I thank the Minister for his response. The reason for launching this is that we want to secure proper time for scrutiny, debate and discussion. The Trade Bill was my first Bill in this House. My noble friend Lord Stevenson and I put a lot of time and energy into that Bill and this House made some good, sensible changes to it. It would be a shame for that to go to waste. I beg leave to withdraw the amendment.

Brexit: Statutory Instruments

Debate between Lord Callanan and Lord McNicol of West Kilbride

Thursday 10th January 2019 Lords Chamber

[Lord Callanan]

Of course we have concerns about quality. We are endeavouring to keep all the relevant committees informed of when SIs will be tabled. We wrote to them before Christmas to give details. We are publishing full explanatory statements with every SI as required under the legislation; we are endeavouring to work with Parliament as much as possible in this process.

[Lord McNicol of West Kilbride (Lab)]

My Lords, as has been touched on already, many of the SIs being laid are in preparation for a no-deal Brexit. Does the Minister agree that a huge amount of parliamentary and civil servants’ time, and money, would be far better spent and saved if the Government simply did not bring forward SIs that deal with a no-deal Brexit? Nobody wants it.

[Lord Callanan]

The Labour Party cannot have it both ways. It cannot on the one hand say, “We are voting against the best and only deal available”, and then say, “But we don’t want no deal”. No deal is the absence of a deal. If you want a deal, European Union leaders have made it very clear that this is the best and only deal available, the result of two years of negotiation. No alternative deal is available. If you do not want no deal, you need to vote for the deal.