Employment: Automation

Lord Fox Excerpts

Monday 1st April 2019 Lords Chamber

Asked by

[Lord Fox]

To ask Her Majesty’s Government what assessment they have made of the analysis by the Office for National Statistics, published on 25 March, that nearly 1.5 million jobs may be at risk of being lost to automation and that those most at risk are female workers.

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

My Lords, the work of the ONS demonstrates the significant transitional challenge posed by automation but overlooks the considerable opportunity for the creation of new, highly skilled employment opportunities. The industrial strategy sets out the Government’s vision to make the UK a global centre for AI and data innovation, alongside measures to ensure our people are equipped to capitalise on those opportunities.

[Lord Fox (LD)]

I thank the Minister for his Answer, which looks at the benefits—and there certainly are benefits from automation—but there are also risks, not only in gender terms but also in geographic terms. In addition to the study that came out last week, the Centre for Cities last year issued a study highlighting that those economies in the United Kingdom which are already weakest will be the ones whose jobs are most at risk. Therefore, I repeat the Question with a geographical bent. What in the industrial strategy and what in the Government’s plans is focusing specifically on the danger to further diversity and on the danger of putting further issues on to our weakest economies?

[Lord Henley]

My Lords, I am glad that the noble Lord recognises that there are very positive sides to developments in this field. As he will know, the World Economic Forum estimates that, although there might be some 75 million jobs lost globally as a result of change of this sort, another 133 million could be created. However, the noble Lord is right to point out that there will be disadvantages for people, particularly for those who are low-skilled and particularly—he mentioned the gender point—for women. Therefore, as the industrial strategy makes clear, it is very important that we look to retraining. I refer the noble Lord to large parts of the industrial strategy that point in the direction of retraining and upskilling our workforce as much as possible.

State Aid (EU Exit) Regulations 2019

Lord Fox Excerpts

Thursday 14th March 2019 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

My Lords, I welcome the opportunity to discuss these two statutory instruments and I welcome the opportunity of the amendments that have been tabled to press the Government. I shall take each in turn. I remind the House that as a very young person I spent six months working as a stagiaire in DG IV, as it then was—it is now DG COMP—of the European Commission, where we looked at measures to prevent the distortion of competition, such as state aid.

I shall press my noble friend on whether and at what stage the Government will come forward with their policy on state aid post Brexit. We do not yet know what our own destination will be. It is quite possible that we will end up remaining or applying to join the EEA and EFTA, which have a competition regime very similar to that of the European Union. If that were the case and we ended up with a sort of Norway-plus EEA/EFTA-style arrangement, would the House have to revisit the statutory instrument in that regard, and would other changes have to be made?

I cannot remember which Government were in power at the time but it is worthy of note that the United Kingdom was effectively the author of the original Articles 85, 86 and, I think, 92, which relate specifically to state aid. The noble Lord, Lord Stevenson, raised in particular the question of the Irish border. Obviously, that will have an impact, particularly in relation to the block exemption on agriculture but also to any subsidies for other products that may be deemed to be a distortion of trade. A no-deal Brexit is still a potential prospect, so what consideration has been given to the World Trade Organization rules that will apply to subsidies? If the answer is in this rather long SI, perhaps the Minister could refer us to it. That would be immensely helpful.

I now turn to the European structural and investment funds regulations. Yesterday we had a debate on the rural development agricultural fund and a short debate on the maritime and fisheries fund, and this debate on structural funds is not dissimilar. I do not know whether the investment funds cover Horizon 2020. Perhaps the Minister could confirm my understanding that it is the Government’s desire to continue to participate in projects such as Horizon 2020. It would be immensely helpful to know that.

I should like to place on record—I know that the noble Baroness, Lady Crawley, will remember this only too well from her time in the European Parliament— that we have benefited from a European Social Fund programme targeted at new opportunities for women returning to work, and there are other specific projects as well. This is something that for some reason the UK Conservative Government would never embrace: targeting and giving assistance, through funding, to workers in their 50s or older who perhaps need training before they feel confident enough to return to the employment market. I see the noble Baroness, Lady Quin, in her place. She too will remember that great training schemes were made available for youth employment, although obviously they were not that helpful. When one sees the level of youth unemployment in countries such as Spain, it is clear that these projects are never as well funded as they could be.

Therefore, can the Minister say what criteria will be used, what projects and beneficiaries might be identified, and what sums will be made available? My specific question relates to paragraph 7.5 of the Explanatory Memorandum to the structural funds regulations, which says:

“To this end, HM Government funding guarantee ensures that, in the event of a No Deal, HM Treasury will underwrite sums that would have otherwise been received from the European Commission”.


I would like to pin the Minister down. Am I correct in understanding that we will have matched funding replaced by additional government funds, and am I right in assuming that HM Treasury’s largesse will know no limits? That is a very big ask because, if we have been allocated £8.4 billion of funding under structural funds for 2014 to 2020, there will be a remaining period until the end of that time is reached. So I should like clarification that the matched funding will be made good by Her Majesty’s Treasury for the projects that are outstanding for that period.

Finally, I will follow up on a point raised by my noble friend the Minister in his introduction, when he said that this was something to which we might return. The point was highlighted by the House of Lords Secondary Legislation Scrutiny Committee Sub-Committee B, in paragraph 42 of its report. The Government have decided not to replicate the current power granted by the European Council, which the Secretary of State could assume in the right circumstances. Will my noble friend set out the circumstances in which the Government might seek to appropriate those powers? Would it be a statutory instrument that he would intend to assume? Will he explain to the House and satisfy Sub-Committee B that there is sufficient flexibility in the statutory instrument to override any need for the Secretary of State to have the final say?

[Lord Fox (LD)]

My Lords, in the event that the proposition put prior to this debate by the noble Lord, Lord Adonis, comes to pass, and this SI is not needed, my time will not have been wasted: a more cogent seminar on state aid I could not have asked for than the one I have just received from the noble Lord, Lord Stevenson. I am grateful to him for placing these amendments before your Lordships’ House as this is an issue that requires greater clarity; I associate myself with the questions put by the noble Baroness, Lady McIntosh.

My remarks will be less structured than those of the noble Lord, Lord Stevenson. Regarding the question he posed of what qualifies as state aid, I put before your Lordships my experience of working in the United States and where, for example, a company might be looking to establish a new facility. When considering where that facility might be located, the company speaks to the administrations of various states—this is literally state aid. It asks about the tax structure it would receive in that state, the training regimes that universities might deliver, the buildings and planning regulations that might be needed. All these things qualify as aid which may be offered to companies to locate in a particular place.

The United States would talk about not being a country that distorts the market. Yet the local market is heavily distorted by literally billions of dollars that different US states put in to attract businesses to their location. How does this future regime of state aid fit into that pattern? We have unitary authorities. My noble friend Lord Purvis is going to ask about the role of devolved authorities, but we already have a degree of devolution to unitary authorities in England. They are required to deliver local or regional industrial strategies; LEPs are being granted money to deliver them. How does this fit into a structured state aid programme?

We talked recently about Nissan, which received a secret letter from the Government reassuring the company that it should keep one of its models in the north of England—a large sum of money was secretly committed by the Government in that letter. I contend that that was state aid; whether it would be recognised internationally as state aid is another matter. But we have a dichotomy: there is aid that the state—through a central, local or devolved budget—can give to companies or individuals to help them flourish or locate to particular areas, but it may or may not qualify in terms of whatever international agreements we are under. The noble Baroness, Lady McIntosh, is right to say that, whether we are operating under an EEA, WTO or any other regime, this will become an important distinction. What work are the Government doing on distinguishing between these various forms of state aid?

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On the noble Lord’s point about these matters and to what extent they are devolved, it is Her Majesty’s Government’s view that regulation of state aid is a matter that is reserved for them. I recognise that there is a difference of view. However, given that the UK Government are closely aligned with the devolved Administrations on the substance of policy and given the limited scope to depart from mirroring the EU regime by using powers in regulations, it is not necessary for us to resolve the matter at this stage, because at this stage we are just bringing in no-deal regulations to deal with these points. We will come on to others, such as the shared prosperity fund, later. I appreciate that all noble Lords who have spoken want me to say more about it. There is a certain amount I can say but I obviously cannot go quite as far as noble Lords would want on guarantees and so on.

[Lord Fox]

We would be satisfied with that kind of comment if we knew what vehicle the debate about these future issues will come in. Will it be in primary legislation brought to this House straight away? Would it be merely a series of Command Papers? If the Minister could explain the structure by which future negotiation or legislation will go ahead, we could perhaps be more satisfied by that.

[Lord Henley]

I will see how I get on in my response to the various remarks made by the noble Lord, Lord Fox, and others. I was going to start with state aid rather than on structural funds but we all know about the shared prosperity fund. I think it was back in July that my right honourable friend made a Written Ministerial Statement on that subject. The noble Lord will know, as that Statement made it clear, that it is designed to tackle inequalities between communities, especially in those parts of the country whose economies are furthest behind. It will achieve that by investing in the “foundations of productivity” and so on, as outlined in our industrial strategy, which is now—gosh, it is a year and a half old. But it will be an integrated, simplified fund, operating across the UK. I do not know at this stage whether it will need primary or secondary legislation, or whatever, and it would be wrong to speculate.

[Lord Henley]

My Lords, I do not accept the point that the noble Lord is making. I made it clear that we believe that state aid is a matter reserved for HMG. As I said, we recognise that there is a difference of view; that can be resolved in due course but I do not think it necessarily needs to be resolved in advance of this SI. He and I will obviously have to continue to disagree on that matter.

I was going to deal with these matters in the order that I originally set out, starting with questions relating to state aid and in particular to the amendment moved by the noble Lord, Lord Stevenson. What is important on this occasion is that we do not conflate the rules that govern the overall aid framework with the provision of aid itself. Decisions by public authorities on how and when to provide funding to business and industry after EU exit are quite separate from the decision in front of the House today, which is on whether to approve a state aid framework to ensure fair and open competition throughout the UK. By keeping the rules as close as possible to how they operate today, compared to what has been the case, will provide continuity and certainty in the immediate aftermath of the UK’s departure from the EU. This will ensure that aid can be provided in a similar way to now.

Individual choices on how and when to give aid within that regulatory framework will obviously be for each public authority to make. That applies equally to successive Governments, the devolved Administrations and local authorities. As with the other public authorities granting that state aid, the Government will of course continue to consult individual spending authorities where it is appropriate to do so after the UK leaves the EU. But our strategy for supporting business and industry before and after EU exit is comprehensively set out in the industrial strategy, which we have debated on various occasions. As I said, it was launched almost a year and half ago and is already having an impact. That is how it should be set out.

As I made clear, and I repeat it, we have engaged constructively and intensively with each of the devolved Administrations on the state aid regime, including discussing the details of the proposed regulations and the accompanying set of commitments to underpin how the regime will operate. I think the noble Lord, Lord Fox, wanted more detail on this—perhaps it was the noble Lord, Lord Purvis—and we hope to conclude a memorandum of understanding in due course with the devolved Administrations. No doubt when we have concluded that, it can be published. Our discussions over the last year have shown a broad alignment on the substance of the policy to establish a UK-wide state aid regime that mirrors the EU’s. We will continue to work with the devolved Administrations and, as agreed, each of them will be responsible for managing communication between their respective aid givers and the CMA. They will not need to go through my department, as is the case at the moment.

[Lord Fox]

I thank the noble Lord for beginning to flesh this out. Rather than continue the debate here, it would be helpful if the Minister could go back to his department and then write to us about the basis for the assertion by Her Majesty’s Government that they have predominance on this issue over Scotland and the devolved authorities. On what basis in law do the Government assert that UK-wide role? Can he also flesh out the mechanics for the CMA operating in Scotland? Rather than detain the Minister at the Dispatch Box, a written response would be helpful.

[Lord Henley]

I am more than happy to offer a written response, but the Government have been clear throughout. My noble and learned friend Lord Keen set out our position in various debates on the withdrawal Bill and so on. I will dig that out and offer it to the noble Lord. Other Ministers, equally learned in the law, have also made similar points in another place. As I said to the noble Lord, Lord Purvis, this is a matter for the Government but we believe we should continue to consult the devolved Administrations.

The noble Lords, Lord Fox and Lord Stevenson, also wanted me to flesh out the role of the CMA and asked whether it would have the power to overturn legislation. I repeat that our intention is to make sure that the regime covers the same sectors, applies to the same actors and does the same job as it does at the moment. It is worth noting that there are very limited circumstances in which aid is granted directly by Act of Parliament. To ensure that aid granted by any future Act of Parliament can be reviewed in a non-binding way by the CMA, which is the domestic regulator, Schedule 3 creates a process for it to consider aid that may be granted directly by an Act of Parliament. It provides for a Minister of the Crown to seek a non-binding advisory opinion on proposals for grant aid by an Act of Parliament. It also provides for interested parties to request the CMA to prepare a non-binding advisory opinion. I hope that explains the matter, but I will expand on it in any letter that I write to noble Lords in future.

The noble Lord, Lord Stevenson, also asked how we were intending to use this provision in future. I will expand on this a little more. The rules are not intended to prevent public authorities supporting industries or businesses, or even—dare I say it—nationalising assets. A rigorous state aid system is good for taxpayers and consumers and ensures an efficient allocation of resources. There is a large degree of flexibility in the rules to ensure that a wide range of interventions can still be deployed, but in a way that minimises distortions to competition. The future regime will still allow the Government to act swiftly if necessary, much as they have been able to under the existing one. EU state aid rules do not prevent, and have not prevented, the UK pursuing its active industrial strategy. In practice, the existing EU rules have always been sufficiently flexible to allow the UK to make innovative state aid interventions where necessary.

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[Lord Henley]

The noble Baroness is too fast for me. I had two final points, one of which was to deal with concerns about match funding and whether that guarantee would underwrite it. The guarantee will underwrite the funding previously received by the EU. Match funding will continue to be provided by existing match-funding providers, such as the National Lottery.

My noble friend also asked about our future participation in Horizon. All I can say at the moment is that decisions on future such EU programmes will come as part of the spending review.

I appreciate I have not answered all the questions that have been put to me, but I believe I have answered most of those that are directly relevant to the statutory instruments before us. I appreciate that the noble Lord, Lord Fox, would like—and will receive—a letter. That letter will set out more about the possibilities for the future, and I will write to the noble Lord, Lord Purvis, in greater detail about our possible disagreement on where responsibility lies.

[Lord Fox]

The Minister may have answered this question, so I apologise if I missed it. In dealing with the shared prosperity fund and its disbursement, we come back to that paradigm of what happens in the United States, for example. Do the Minister and the Government foresee that the CMA will have a role in policing that process? If not, how do we prevent regions bidding up, which we have experienced in some RDAs? The Minister again said we will have ample opportunity to debate this in the future, but it is not clear to me through what vehicle this debate will continue.

[Lord Henley]

I am sure the noble Lord will find it easy to raise the subject, and will do so. Whether there will be the opportunity through primary, secondary or whatever legislation, I do not know. On his broader questions about the shared prosperity fund, he will have to wait for the guidance that the right honourable Secretary of State will provide. That might be his moment to consider such matters. With that, I beg to move.

Brexit: Small Businesses

Lord Fox Excerpts

Tuesday 5th March 2019 Lords Chamber

[Lord Fox (LD)]

My Lords, the overwhelming cry coming from businesses large and small is: “Tell us what our trading environment will be in 25 days’ time”. Does the Minister really think that any of the messages will get through when the credibility of the Government is completely shot if they cannot answer that question?

[Lord Henley]

My Lords, we have been offering advice to businesses as to what they ought to do. We also made it clear in the document we published last week that we think a lot of businesses have not done what they ought to be doing: making preparations in case there is no deal because, as I made clear, no deal is the default position. What is important is that we get behind the Prime Minister and get a deal.

Shipments of Radioactive Substances (EU Exit) Regulations 2019

Lord Fox Excerpts

Tuesday 26th February 2019 Grand Committee

[Lord Jones (Lab)]

My Lords, I thank the Minister for his exposition. I acknowledge that this is a complex and highly technical subject, but it is important to all citizens. I note on the first page of the document that “competent authority” means,

“in Wales, the Natural Resources Body for Wales”.

On page two, some lines down, it states that “shipment”,

“means the transport from the place of origin to the place of destination, including loading and unloading, of sealed sources”.

Should we presume that this refers to a sea voyage, as opposed to a road or rail journey? The word “shipment”, on paper, seems a trifle ambiguous.

In north Wales there are two nuclear power stations: Trawsfynydd in Meirionnydd and Wylfa in Anglesey, or Ynys Môn. I believe that the former is dormant and the latter is to be replaced, although I understand that plans for the new Wylfa are now on hold, which is a cause for concern across the island. It is not my intention to query those issues as such, but can it be presumed that shipment from plants such as these—should there be a need for shipment—would begin by road or rail? As I said, “shipment”, as referred to on page 2, is a trifle ambiguous. I recollect seeing the transportation by rail southwards from north-west Wales of a flask mounted on a rail-wagon frame. The flask, which was large and possibly made of steel or iron, was engaged within the train in just one wagon and was easily identifiable to people like me in the locality as a flask connected with the plants that I have instanced.

[Lord Fox (LD)]

My Lords, I thank the Minister very much for presenting this statutory instrument. Obviously, this is not just a consequence of the Brexit decision but of the Euratom decision, so I put it on record that we regret that it is necessary. In the debate in the other place, this was billed as the last SI connected to Euratom, although I think the next one is as well, so I am not sure how that works. I know that previous SIs have been dealt with by my noble friend Lord Teverson.

I shall raise a couple of points. First, the Minister was clear that this relates to sealed transportation, yet the Explanatory Notes are clear that it covers both sealed and unsealed transportation, so I am a little confused about that. Certainly, in the debate in the other place, the Opposition Front Bench spokesperson also expressed some concern over how these regulations extend into the unsealed transportation—“unsealed” being vials, for example—of nuclear material. I would welcome some explanation from the Minister of why he chose not to talk about unsealed transportation while the Explanatory Notes are clear on that. Perhaps he could spend some time adding detail to that.

The Minister was clear that this is one-way legislation, which it has to be in that it applies to imports from the EU into the UK. It was clear that this affects about 100 concerns in the UK. On reciprocal travel, I am not aware that there is much material of this nature travelling in the opposite direction, but what is BEIS’s analysis of the traffic in the opposite direction, and what impact would that have were the European Union not to reciprocate in equal measure to the way we have gone about continuing the Euratom process?

The noble Lord behind me—I am afraid I do not know his name—

[Lord Jones]

Jones of Wales.

[Lord Fox]

I guessed it was Wales. The noble Lord mentioned competent authorities, and obviously the ONR is a competent authority to handle this kind of material. What extra competence is required of the environment and natural resource agencies highlighted in the Minister’s speech to manage this process?

Finally—again, this came up in the other place—there was some confusion between the Minister and some MPs in the debate over the ability of this process to continue to track radioactive material as it moves around the United Kingdom. The Minister seemed clear that it was competent to do this, and that was brought into question. The Minister promised to write to the Opposition Front Bench spokesperson on this subject. I am not aware that that letter has gone out but, given that the Minister in the other place saw fit to write on this subject, it would be helpful if the Minister could let us know the content of that letter to underline the competence or otherwise of this process to continue to track these materials as they travel throughout the United Kingdom.

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[Lord Henley]

I think the less said about last Saturday the better, but that is another matter. I shall start, because of last Saturday, by dealing with the noble Lord’s question, which is pretty straightforward. I can assure him that “shipment” refers to any form of transport. It might have the word “ship” in it, but it also covers trains, which, as he knows, have been used a great deal over the years to move nuclear waste and nuclear materials around all parts of England, Wales and Scotland. Whether by road or whatever, “shipment” covers everything.

I note also what the noble Lord said about Wylfa. Now is neither the time nor the place to go over that again. We hope that something will emerge in due course, but he knows the reasons why that could not go ahead.

I turn to the questions asked by the noble Lords, Lord Fox and Lord Grantchester. On whether the measure covers both sealed and unsealed transportation, I know that my honourable friend Mr Harrington is meeting his opposite number, Dr Whitehead, about that tomorrow. I hope they will be able to resolve whatever uncertainties there were between the two of them on that matter. I hope also that they will be able to follow up the confusion relating to tracking and deal with the letter to which the noble Lord, Lord Fox, referred.

[Lord Fox]

I thank the Minister for that. I realise that his colleague is always right, but do we have any inkling as to how this question will be resolved? In other words, is the Explanatory Note that states the measure deals with “unsealed” as well as “sealed” incorrect, or was the impression given in the other place perhaps misunderstood and the Explanatory Note correct?

[Lord Henley]

My honourable friend is always correct, but, as the noble Lord knows, even Homer nods, and he might not have been quite as correct as he normally is on every occasion. As I said, I would prefer to have that dealt with tomorrow, between my honourable friend and Mr Whitehead.

The noble Lord asked also about the impact on exports and the reciprocal nature of this. I am afraid I cannot give him any figures about how much is going the other way. If there are some figures on that, I shall certainly write to him. The position in relation to UK exports into the EU obviously sits entirely within the EU’s competence after exit. Operators have been advised that they should seek guidance from the EU and member states on any future requirements on exports to the EU. In that respect, I assure the noble Lord, Lord Grantchester, that we will continue to maintain close relations with Euratom, just as relations with the International Atomic Energy Agency remain important. It is keen that we bear in mind the standards that it will wish to maintain in this area, just as we have always done. I made it clear throughout the passage of that first bit of Brexit legislation, the Nuclear Safeguards Act—which I am sure noble Lords will agree seems quite a long time ago—that we would continue to maintain close relations with those bodies, and I make it clear it now. I think it was the noble Lord, Lord Fox, who asked whether this was the last bit of EU exit legislation relating to nuclear matters but then thought that the next instrument also dealt with such matters. The next statutory instrument is not technically an EU exit regulation, so I think my honourable friend was correct in saying that this was the last of our EU exit statutory instruments on nuclear matters. As he is aware, we still have to deal with quite a number of other EU exit SIs and legislation.

I think that deals with almost all the questions noble Lords asked. The final one was on the competence of the various environmental agencies and whether they have the appropriate skills. All the environment agencies have been dealing with these matters already, so there will be no extra burden on them and no extra skills to acquire. They will continue to work in this field.

Carriage of Dangerous Goods (Amendment) Regulations 2019

Lord Fox Excerpts

Tuesday 26th February 2019 Grand Committee

[Lord Jones]

My Lords, I restate my question: how many shipments, if any, are by road annually? I presume that transportation is inevitably through urban centres. Is the Minister able to give us any detail or information of any responsible kind? The proposals on page 7, looking at emergency plans, are clearly well-considered and very sound, but who oversees them? What arm of the British state is responsible in the end for these emergency plans, when one takes into account the chain of command?

I referred very briefly to the village of Rhydymwyn in the county of Flintshire, where the dosages were first suffered. I conclude by telling the Committee that there was an upshot in 1979. It was a general election, and as a Minister I found myself in the wilds of Meirionnydd, not a million miles from Blaenau Ffestiniog. I was hunted in that locality by the constabulary, on the basis of urgent representations made by officials from my department at that time. They had established that in the proximity of Rhydymwyn, which was making something like mustard gas but deep in the bowels of the buildings, there was the beginnings of a trace of atomic energy. The point was: my officials told me that the road outside that factory had shown evidence of collapse, and very dangerous substance material was feared to be leaking. It did not happen, but that is the context of these words.

[Lord Fox (LD)]

My Lords, I thank the Minister for introducing this statutory instrument. I am enjoying the novelty of dealing with one that is not related to Brexit, so it is almost like a holiday among all the others.

I have three points to make. First, I welcome the extension of the definitions of an emergency. Some of those are quite subjective in their description—for example, “quality of life”. I wonder what work has gone on to make sure that an emergency is indeed an emergency, and that transporters are not exposed to unwarranted legal action through what would be described as a loose definition in the Act. What impact analysis has been done on the litigation risk around the looseness of the term?

It was very helpful that the Minister brought up the issue of whether this was in order around the Transfrontier Shipment of Radioactive Waste and Spent Fuel (EU Exit) Regulations 2018. He mentioned that these regulations would in the event automatically be nullified—“nullity”, I think, was the word he used. How is that nullifying process triggered? Is it part of an overall Bill where a group of SIs or parts of SIs are triggered? My sense is that only a part of this SI gets nullified; or is all of it nullified? What is the mechanism for the triggering of its nullification?

The noble Lord, Lord Jones, paints an interesting picture of his home village. I cannot help thinking that it must be very beautiful and he is hell-bent on keeping people out with tales of mustard gas and atomic leaks.

[Lord Jones]

I am not a nationalist. Borders mean nothing to me.

[Lord Fox]

There is another point to consider. Essential to this is the definition of an emergency worker. Is it someone who is predetermined as an emergency worker? We have heard of the heroic efforts of ordinary engineers and ordinary people during the massive meltdown of the Japanese reactor, and we know that in Chernobyl heroic individuals took it upon themselves to be part of an emergency exercise. Although there is a definition of emergency workers in the SI, it is clear that, if there is an emergency—let us hope it never comes to pass—individuals will become de facto emergency workers by their proximity to what is happening. They perhaps are not covered by these regulations. In any case, how do you limit these people to 500 millisieverts when they are in the middle of an emergency? They do not necessarily have monitoring equipment to hand; they are dealing with an emergency. While this is a useful limit, no emergency is planned, so unless these people are already wearing the necessary monitoring equipment, they will not be monitoring the dose; and if they are accidental emergency workers—if you follow my drift—they will not have that monitoring equipment either. I would welcome the Minister’s response to those three points.

[Lord Grantchester (Lab)]

My Lords, I am grateful to the Minister for his explanation of the order before the Committee today, and for providing us with updated information on its passage in the other place. The noble Lord, Lord Fox, said that it is not entirely to do with a no-deal scenario; hence I am a little perplexed as to how this order is split—if that is the right word—into parts that will be nullified and those that will not at the relevant outcome.

I also reiterate that we found it unfortunate that Euratom was swept up into the withdrawal letter, and hence into the withdrawal agreement, and that we need to leave Euratom at the same time as we leave the EU. That is deeply regretted, but I am grateful to the Minister for his updating remarks on the order in the Commons regarding the Transfrontier Shipment of Radioactive Waste and Spent Fuel Regulations 2008.

We see no issue with the order in general; however, I have noted the circumstances on which the Minister reported, and which have been taken up in other contributions around the Committee, around radioactive emergencies, notably in relation to exposure to risks for emergency workers. I welcome the consultation and the Government’s response: this does indeed strengthen the UK’s emergencies preparedness and aligns with IAEA best practice and the highest safety standards. I also welcome the fact that under the regulations the ONR has a duty to provide information to the public about the nature and effect of a potential radioactive emergency and that they introduce a national reference level below which exposure must be kept.

I put on record that it is of great benefit that there is now a duty to have a handover report to a recovery phase in any emergency and that training will be provided to give clarity to workers, including those that the noble Lord, Lord Fox, asked about, who might suddenly come within the bracket of the emergency regulations, though they may not necessarily have been designated as emergency workers.

The Minister paid regard to the setting of the definitive reference level that was part of the debate in the other place. Emergency workers will be exposed to levels potentially above the general level of 100 millisieverts, to a higher level of 500 millisieverts: this is well above the level that workers were exposed to at the Chernobyl disaster, which reached 350 millisieverts. I recognise that this level is in compliance with the EU directive, but will the Minister say whether it is future policy to look at this more closely and perhaps see what can be done to reduce this in order to be less above the level that would pertain in an ordinary situation? I know that an emergency could entail a wide divergence to very high levels; nevertheless, if he can say something about that, it would be helpful.

I also notice that the ONR will publish guidance. Will that have a statutory reference in relation to health and safety at work? Will it include action to be taken should there be a series of spikes that could cumulatively expose a worker to a level well above that which is generally provided for? Is there any responsibility to an emergency worker should he be put into such a position? With those questions, I am happy to pass the order today.

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[Lord Henley]

I will try Corridors of Power as well as The New Men. The one thing I will not do, because it is beyond what I should ask of my officials, who are absolutely wonderful and have looked after me very well through all these debates and others, is ask them to read CP Snow. However, they might also take guidance from the noble Lord, Lord Jones.

The noble Lord also asked about the number of shipments by road. I can give him quite a number of figures. The total number of packages containing radioactive material transported by rail was about 1,500, and that was a total number of about 750 consignments. On road transport, we think that there were around a total of 110,000 packages, but again, you have to halve that because of going to and fro. The total figure we seem to have for road, rail and other means is around 40,000 packages. The majority are transported to nuclear power stations, but the transport of radioactive material by rail arises from the civil nuclear industry and consists of transport between Sellafield and the nuclear power stations, and from Sellafield to the low-level waste depository at Drigg. The road transport includes medical and industrial sources, some of which are moved more than once, hence bringing that figure down to 40,000. PHE estimates that 76% of packages transported by road in the UK are medical, 4% are industrial, and the remaining 20% are in the nuclear industry.

I will quickly deal with the point made by the noble Lord, Lord Fox, about the nullifying part of the regulations. I explained that the provision would be nullified, but the noble Lord asked about how nullification happened. There is no formal process—it just happens because a provision has been nullified, and there is case law which indicates how the courts are to treat such a nullified provision. I presume that if it is nullified, it is treated as if it is not there. If the noble Lord wants the case law, it is Inco Europe Ltd v First Choice Distribution in 2000.

On the question of emergency and who oversees that, the emergency plans, which the noble Lord, Lord Jones, asked for, are a matter for the Office for Nuclear Regulation, which is laid down by the Energy Act 2013. Obviously, any definition of “emergency”, as the noble Lord, Lord Fox, points out, to some extent has to be subjective, but further details will be set out in guidance from the ONR. The reference here is based on the IAEA best practice.

The noble Lord also wanted to know just how we would then manage excessive doses. As I think I set out at the beginning, the regulations make lawful a deliberate exposure at high levels in an emergency. Obviously, in extremis workers might be subject to that higher level of exposure. They could not be ordered into such a situation, but—again, as I set out at the beginning—obviously, if it is a question of life and death, that is a different matter.

On the question asked by the noble Lord, Lord Jones, about the 500 milliSieverts level, the regulations provide that in exceptional situations—in order to save life, prevent severe radiation-induced health effects or prevent the development of catastrophic conditions—the reference level for an effective dose from external radiation for emergency workers may be set above 100 milliSieverts, but not exceeding 500 milliSieverts. In line with this provision, the CDG regulations disapply the IRR 2017 dose limits, subject to a maximum of 500 milliSieverts, providing that the emergency worker,

“is engaged in preventing the occurrence of a radiation emergency; or … is acting to mitigate the consequences of a radiation emergency”.

As I said, further guidance will be available from the ONR. These regulations tightly restrict the circumstances under which an emergency worker may be exposed to that maximum dose. They state that such exposure is possible only if this worker is engaged in activities for the purpose of saving life and with their informed consent.

[Lord Fox]

That is slightly helpful, so I thank the Minister, but I am still troubled by what I call the first first responder, who may well be on the scene without the necessary equipment and monitoring of dosage available. We know that people of that nature run towards danger rather than away from it. These people could be knowingly or unknowingly exposing themselves to high dosages, whether at 500 milliSieverts or not. We will not know, because they are not being monitored. What is the policy on individuals who are exposed to radiation but are not in a position to measure that dosage? Is there a modelling process? How would we know what these people are exposing themselves to? Or does this legislation simply not deal with that situation and take the approach that, frankly, it happens but you cannot regulate for it?

[Lord Henley]

I would prefer to write in greater detail to the noble Lord on that. We are bringing in this limit of 500—for the first time, I think I am right in saying—but obviously, in emergencies of the sort he is talking about, things often go beyond what can be regulated for. Would the noble Lord be happy if I wrote to him in greater detail on this? It would be a pity if I started getting things wrong. Obviously, I will copy that to the noble Lords, Lord Jones and Lord Grantchester.

[Lord Fox]

I would appreciate that.

[Lord Henley]

The final point that needed to be dealt with was that from the noble Lord, Lord Grantchester, about emergency workers suffering from cumulative spikes. Any facility suffering multiple strikes—multiple urgencies—could be shut down by the ONR. That is what the ONR is there for. I do not expect that scenario to occur in practice, but obviously there could be occasions. If I need to add more to that, I will write to the noble Lord. I beg to move.

Electricity and Gas etc. (Amendment etc.) (EU Exit) Regulations 2019

Lord Fox Excerpts

Tuesday 26th February 2019 Grand Committee

In conclusion, while leaving the EU without a withdrawal agreement is not what the Government want or are aiming for, these regulations make the necessary changes to ensure that the electricity and gas markets continue to function as normal, including the continuation of the single electricity market on the island of Ireland. This will maximise business continuity for UK market operators, facilitate the continued efficient international trade in energy and ensure that consumers continue to benefit from reliable, affordable and clean electricity and gas. I beg to move.

[Lord Fox (LD)]

I think we are down to the hard core now.

If I were a member of the EU 27 and I were sitting over there listening to this, I would detect a pulling up of the drawbridge, because that is what it feels like. Of course we are doing no such thing, because for UK consumers to continue to have the electricity and gas they need, they will rely very much on the interconnector and on gas pipelines, and on the island of Ireland there is an integrated supply. So it is with great regret that we are having this debate.

Even though we are debating what would happen in the event of a crash-out, for us to participate in the single European energy market seems very unlikely, no matter what deal Mrs May and others manage to hatch. This points the way not just to the future of this country’s energy market in the event of a crash-out but to what sort of market we will have and how we intend to regulate it even in the event of a deal. Again, that is regrettable.

Even if we are not within the energy market, our electricity system will remain contiguous with that on the continent of Europe thanks to interconnection, and our gas system will remain plugged into European gas networks. It seems to me that completely absenting ourselves from balancing and suchlike is not where we want to be—although I understand that that is what we would do in the wake of an emergency. I would like some assurance from the Minister that this is not where we want to be in the event of a negotiated exit or no-deal exit.

We are placing consumers at some risk, not least around the point of no longer participating in balancing. If there are outages or if supplies go down in one place, we have been able to use the European energy market to fill in and take more power quickly through interconnection. On security of supply for British consumers, we will be absenting ourselves from having that option. In the event of a crash-out or of not having made an appropriate deal to remain part of the energy market, consumers will be at more risk of blackouts and interruption of supply. Perhaps the Minister would like to comment on that point.

Ofgem clearly has an important role, and I have the same questions that I have asked Ministers lots of times. Does Ofgem have the capacity and capability to do that? If not, is it likely to have it at the end of next month, or when will it have? What extra requirement is needed for Ofgem?

I note that we have in the SI a requirement to commence registration four weeks after exit day. It is not clear to me what happens in the four weeks between exit day and the registration of suppliers. Where are they legally? Are they in limbo? I await the Minister’s answers.

[Lord Grantchester (Lab)]

I am grateful to the Minister for his full and thorough explanation of the regulations before the Committee. Once again, I note that this instrument is brought forward under a no-deal scenario, such that it merely transposes existing regulations into UK jurisdiction with no appreciable policy differences. I am therefore happy to approve the instrument: it does exactly what it says on the tin.

However, I would add that, as they would normally be negative instruments, I am grateful to your Lordships’ Secondary Legislative Scrutiny Committee for recommending that they be upgraded to the affirmative procedure. I agree that they are important for the internal energy market and, more importantly, for the all-Ireland energy market.

We are nevertheless concerned that, in future scenarios, interconnectors will become a key feature in the supply of electricity to the UK and to the EU. How it will operate effectively into the future is a matter of anxiety.

At present, it is an integrated seamless supply, and the single energy market should be able to operate unimpeded in any situation after withdrawal. Last week, Munir Hassan, head of clean energy at CMS, told Utility Week that even in the event of no deal the internal energy market “just has to continue”. In view of this, and of the fact that the internal energy market is seamless, will it be a bit less easy to understand the nature of the electricity market should frictions be put in place with changes between the all-Ireland energy market and the UK, and across the interconnectors into the EU? Is the Minister confident that these regulations and others will enable all that to happen with seamless continuity?

As a result of these regulations, powers will be transferred to UK organisations such as the Gas and Electricity Markets Authority, represented by Ofgem. I Fourth Delegated Legislation

Committee ask again: what organisational and budgetary support will be offered to these groups by the Government to allow them to cope with every necessary increase in workload?

There is also concern over how the all-Ireland energy market will operate in relation to the EU internal market through southern Ireland and into the internal energy market of the UK. I agree that the regulations are largely technical in nature but they assume agreement. We can agree to a grid agreement update, but this nevertheless brings philosophical anxiety.

Lastly, there is concern that the Explanatory Memorandum has not been amended in relation to the upgrade to an affirmative instrument. Under a negative instrument, there are often sections dealing with compliance with the European Convention on Human Rights, but that has not been included. These points may not be strictly material to the upgrade, but nevertheless it would be informative to understand from the Minister why there has not been a redrafting in relation to the affirmative procedure.

--- Later in debate ---

[Lord Fox]

That was the point I was trying to make.

[Lord Henley]

We use electricity at different times and, therefore, when we have a surplus, we can export it to them and vice versa. I cannot see that that will not continue to happen and bring benefit to consumers.

I move to the question of registration and the remit of Ofgem. Ofgem and its counterpart in Northern Ireland, the Utility Regulator, intend to continue to recognise registrations made by each other and by EU regulators, so we believe this will have no impact on the regulators’ ability to regulate. I hope that they will continue to be able to do the job that they do very well at the moment. We have engaged extensively with them and are confident that they will be able to meet their obligations within existing budgets. Where new systems are required, such as reporting mechanisms under the remit, the cost can be recouped through fees.

Finally, the noble Lord, Lord Grantchester, asked about Ireland and the single electricity market. We are confident that new arrangements can be put in place for trading in a no-deal scenario that will minimise disruption to the single electricity market. We have been working very closely with colleagues in the Northern Ireland Civil Service, the Northern Ireland Utility Regulator, Ofgem, systems operators and interconnectors to understand what day one arrangements for trading between the SEM would be in a no-deal scenario—not only the SEM within Ireland but interconnectors going to and fro between the two countries.

I think that deals with the points made by both noble Lords, and I therefore commend the first of the five regulations.

Energy Efficiency (Private Rented Property) (England and Wales) (Amendment) Regulations 2018

Lord Fox Excerpts

Tuesday 26th February 2019 Grand Committee

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

My Lords, these regulations, laid before the House on 23 November last year, will amend the domestic minimum standard provisions within the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015. In our clean growth strategy, we set out our ambitions to upgrade the energy efficiency of all buildings by the 2030s. The 2015 energy efficiency regulations, which set minimum energy performance targets for properties in the private rented sector, are an important precursor to that work, helping the Government to deliver our fuel poverty and decarbonisation commitments.

Although I appreciate that noble Lords may already be familiar with the minimum standards, some background on the sector and the 2015 regulations may still prove useful before we discuss the specific effect of these amendments. There are about 4.5 million privately rented homes across England and Wales, making it the second largest tenure after owner-occupation. Most of these properties already have an Energy Performance Certificate, or EPC, rating of E or above. However, about 290,000—that is 6% of the market—have a rating of F or G and, as such, are particularly energy inefficient and costly to heat. In fact, it costs about £1,000 more per year on average to heat an F or G-rated home than one rated at band D. Moreover, many tenants of these properties are among the most vulnerable and approximately 45% are in fuel poverty.

The 2015 regulations were designed to drive energy efficiency improvements to these inefficient privately rented homes and established a minimum energy efficiency standard of EPC E for these properties. Since 2018, the regulations have required landlords who let properties below the standard to improve them to EPC E before granting a new tenancy or renewing an existing one. However, the regulations also state that improvements are required only where they can be made at no cost to the landlord, using third-party funding: notably Green Deal finance. Where a home cannot be improved to EPC E, either because funding is unavailable or because of legitimate technical concerns, the regulations permit the landlord to continue to let it, provided they have registered an exemption on the new minimum standard exemptions register. However, access to no-cost funding, particularly Green Deal finance, is more constrained than was originally anticipated when the regulations were made. This means that most F and G-rated properties now qualify for an exemption.

The key amendment under discussion today addresses this by requiring landlords of domestic properties to invest their own funds in energy efficiency measures where third-party funding is insufficient or cannot be secured. To ensure that landlords are not overburdened, this investment requirement will be capped at £3,500 per property, inclusive of VAT and any third-party funding obtained. Ancillary amendments will also be made to the exemptions framework to ensure that the investment requirement delivers improvements where they are most needed.

I shall now briefly discuss the choice of £3,500 for the cap. At consultation, £2,500 was proposed, with a range of other caps presented for comparison. Following overwhelming calls, from 67% of respondents, for a higher cap, and from the results of further modelling, £3,500 was ultimately selected. Our updated modelling shows that of the caps considered in the consultation, £3,500 was the most effective at balancing the costs to landlords against the benefits to tenants and society. Specifically, that analysis shows that under a £3,500 cap: 48% of F and G properties will reach band E, with an average cost of £1,200; the remaining 52% of properties will be able to receive at least one improvement, at an average cost of £2,000; and tenants in improved properties will save an average of £180 a year on their energy bills. The £3,500 cap strikes the right balance between ensuring that a meaningful number of properties are improved to EPC E while ensuring that those improvements are affordable, particularly for smaller landlords who make up the majority of the sector.

However, I should also highlight that, alongside the clear benefits of thermal comfort for tenants, landlords themselves will benefit from the improved energy efficiency of their properties: specifically, in the form of reduced maintenance costs and increases in property capital value, as well as increased tenant satisfaction and following that, one would hope, shorter void periods.

In conclusion, these amendments will help ensure that the domestic minimum standard regulations can operate effectively in line with Parliament’s original intentions and deliver meaningful energy efficiency improvements to the least efficient homes in the private rented sector. I beg to move.

[Lord Fox (LD)]

My Lords, I thank the Minister for presenting this statutory instrument. The noble Lord, Lord Grantchester, is a world expert in the new Green Deal, so I look forward to his contribution and will defer to him in all ways in this area.

First, in many cases we have had to take the Government to task for not consulting but it seems that there has been an extensive consultation in this process, which should be acknowledged.

I became a little confused when I looked back at when this was debated in the other place. I found a debate that goes back to June 2016; if noble Lords can cast their minds back that far, Andrea Leadsom was then the Secretary of State. It appears that this was debated at that time. What happened to it in between—what has been going on? The then Secretary of State refers to all sorts of dates with regard to launching the register, which have passed. Perhaps I have got terribly confused, but it seems that this is the SI that was being debated and that there has been a very long gap in between. In due course I will refer to something the Secretary of State mentioned in that debate.

As the Minister set out, this deals with some of the least satisfactory housing in the country: nearly 300,000 substandard private rented sector homes. As the Secondary Legislation Scrutiny Committee pointed out:

“The Committee is of the view that, as a significant proportion of tenants in ‘substandard’ properties are in fuel poverty”.


The committee recommends that the,

“Department may wish to monitor whether the proposals lead to any adverse impact on vulnerable tenants”,

and recommends that the department might wish to monitor how the proposals lead to the impact on vulnerable tenants and whether they become less or more fuel poor. I would welcome a response from the Minister to that recommendation.

Moving forward, the fact that we have moved from public investment into the new Green Deal to private finance providers flags up concerns—I do not know whether the noble Lord, Lord Grantchester, will go into more detail. We talk about private finance providers. Private finance initiatives in other sectors are clearly not covered in glory at the moment, so I am interested in and concerned about how those finances are regulated and registered and what level of their returns on their finance we are expecting back. What kind of cap do they have on their returns?

As the Minister set out, the key proposal here is the removal of the no-cost-to-landlord aspects of the legislation. I think that that is right, because it is quite clear that work needs to be done and it will come at a cost. The Minister highlights this as being an important element of the green agenda, and it is very clear that there are big wins to be had for relatively small investment.

--- Later in debate ---

[Lord Fox]

As I was saying, I romped through some questions around private finance providers and details of registration control and the management of that process. I welcome the removal of the “no cost to landlords” clause and the insertion of the £3,500 cap, but there are some issues with that. I note that VAT is included within it, and so obviously it is 20% less than you think. It includes also any other funding that the landlord is able to pull in, including local authority or Green Deal funding. Already, it starts to look like less, as it will not always be the landlord putting the £3,500 in.

I would not call them loopholes, but we then have some other ways for the landlord to invest less. One is the recognition of previous investment, which clearly is often possible. How do the Government expect to avoid that in many cases? The second point I have concerns about is the high-cost exemption. It is not hard to get estimates for jobs. Frankly, if you ask a builder to give you high estimates for jobs, they are usually better at that than they are at low estimates. I suggest that that is a gaping loophole for unscrupulous landlords, sadly many of whom operate in this sector. I would welcome the Minister’s view on that.

Another potential issue was brought up in the debate of 2016 to which I referred earlier. The Secretary of State, Andrea Leadsom, said that,

“landlords will be required to install only measures that cost the same as or less than their expected energy savings over a seven-year period, and they will be eligible for an exemption if the improvements do not meet that payback test”.—[Official Report, Commons, Fourth Delegated Legislation Committee, 8/6/16; col. 4.]

There is no mention of that payback test in the accompanying material to this SI. Could the Minister please explain that status?

My final point is this. The Minister mentioned that those obtaining an exemption will be put on a register. Will he undertake that this will be a public register so that those landlords would be fully knowable to the wider community? I await the answers to those questions.

[Lord Grantchester (Lab)]

My Lords, I thank the Minister once again for his exemplary introduction to the regulations before the Committee today. I note that, at last, we have come out of the jurisdiction of no-deal outcomes to look at matters of great importance that are, nevertheless, outwith our previous debates on the tranches of SIs that deal with a no-deal scenario.

We come now to the important aspect of energy efficiency, a necessary and effective part of our infrastructure improvement to reduce and remove carbon emissions in the longer term. I always thought that it was a very key part of the Green Deal, introduced— I hasten to advise the noble Lord, Lord Fox—during the coalition years under a Liberal Democrat Minister of State in DECC, and it was to his great regret that it eventually collapsed, as we showed at the time, through very great difficulties in its construction.

--- Later in debate ---

[Lord Fox]

I appreciate that answer. Clearly, if anyone is considering work, it is helpful to get more than one quote. I was implying that this would be a construct to not do the work rather than to do the work cost-effectively. It is not beyond the bounds of human ingenuity to use the high-cost exemption to get out of doing work. On that basis, I ask that the Minister’s department monitor the use of the exemption and come back to Parliament after some time to tell us whether his thought is correct and it is not being used very often, or whether it is in fact becoming a useful loophole for unscrupulous landlords.

[Lord Henley]

I fully accept the noble Lord’s point that the unscrupulous—we are talking about a relatively small number of very small landlords—could seek exemption by getting quotes from friends and all that sort of thing. We all have our views about certain aspects of the building trade and so on, but I do not think it is worth me going any further at this stage. I give him an assurance that we will do what we can to keep an eye on this issue—to monitor it, as he puts it—and if it turns out that too many exemptions are being sought for the sort of reasons that he mentions, I think my right honourable friend would be the first to say, “This is not working as we intended so we’ve got to try something else”.

The noble Lord, Lord Grantchester, made two other points. The first was about houses in multiple occupation. They will be covered if they are legally required to have an EPC and if they are let on a qualifying tenancy. Some HMOs are not required to have an EPC at this time, but that is something that the department is keeping under review. If we think it is necessary that we act, we will do so.

--- Later in debate ---

[Lord Henley]

I offer to write to the noble Lord. I will see if we have the sort of figures that he wants on HMOs and whether I can bring a bit more detail on that.

Finally, I make it clear that the Green Deal has not been cancelled. It still exists. The Government ceased funding it in 2015 but the mechanism remains active and private finance continues to operate in the sector.

[Lord Fox]

I asked one question about the limits on profitability in the private finance investment in the Green Deal. If the Minister wants to write to me on that rather than answering at the Dispatch Box, that is fine.

[Lord Henley]

I apologise to the noble Lord; I am afraid I had not jotted that down. I will write to him in due course and give him an answer on that point. Other than that, I think I have dealt with all the questions.

Companies, Limited Liability Partnerships and Partnerships (Amendment etc.) (EU Exit) Regulations 2019

Lord Fox Excerpts

Monday 11th February 2019 Lords Chamber

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

My Lords, the changes being made by this instrument relate to the Companies Act 2006 and supporting secondary legislation. In some cases, the changes will have no impact on business; they simply tidy up provisions in the legislation to reflect Brexit. Other provisions will have an impact on business. These provisions are mainly to ensure that certain EEA-based entities will be treated in the same way as other third country entities after exit day. This is an approach that has been taken in many statutory instruments that this House and the other place have considered over the last few months. These changes are made only when necessary to ensure that the UK does not breach the World Trade Organization’s most favoured nation rule upon exit.

I will set out these changes and the impact on companies, but first I would like to briefly highlight two provisions that remove access to EU-based processes and systems. The first is that this instrument revokes the Companies (Cross-Border Mergers) Regulations 2007. This allows the merger of two or more companies or partnerships based in at least two EEA member states. There have been approximately 400 cross-border mergers involving UK companies and a company in another EEA jurisdiction since 2010, around 50 a year. After exit, companies seeking a merger with another company outside of the UK will need to transfer assets and liabilities using contractual arrangements. This already happens now between UK and non-EEA companies, so many businesses will already be familiar with it.

The second provision is that after exit the UK will no longer be part of the Business Registers Interconnection System. This tool connects business registries across Europe. Much of the information that Companies House makes accessible on BRIS is openly available on the UK company register via GOV.UK. Many other member states do the same on their registers for business transparency reasons.

I turn now to how the provisions in this instrument deal with certain EEA entities and EEA—regulated markets. The main practical impacts are around filing changes. EEA companies that have registered with Companies House under the overseas companies regulations will need to provide additional information. This will align the information required from them with that required from non-EEA companies. The additional information is minor, such as the address of the registered office and the law under which a company is incorporated. The same group of companies will also be required to provide more detail in customer-facing material. This includes the location of the company’s head office, its legal form, liability status and whether it is subject to insolvency proceedings.

While these are minor administrative details, they are important for corporate transparency and very useful for the clients and customers of foreign companies with UK operations. These changes apply only to EEA companies that are already registered as overseas companies in the UK. We have provided companies with a three-month notice period to provide the additional information and Companies House will inform them of the requirements. The forms to update their details will be available on GOV.UK on exit day. Further changes affect UK companies which have an EEA corporate appointment—that is, a director or company secretary that itself is an EEA company. Any UK company with this type of appointment will need to provide Companies House with two pieces of additional information within three months of exit. This aligns the filing requirements for EEA and non-EEA corporate appointments.

Another change ensures that EEA credit reference agencies and credit and financial institutions are treated in the same way as those from third countries. After exit the registrar of Companies House will no longer be able to send protected information that they hold on directors to these companies.

I would also like to explain the definitions of the phrases “UK regulated market” and “EU regulated market” within these regulations. These definitions were inserted in the Companies Act 2006 by the Accounts and Reports (Amendment) (EU Exit) Regulations 2019 and are consistent with the definition in the Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2018, which we debated in December last year. The definition confers preferential treatment on certain entities listed on EEA-regulated markets such as the London Stock Exchange and the Frankfurt stock exchange. In most instances we have inserted,

“UK regulated market or an EU regulated market”,

to maintain the status quo. However, in two places we have restricted the provisions to companies listed on a “UK regulated market” to avoid breaching WTO rules. The first is the exemption to the prohibition on subsidiary companies owning shares in a parent holding company. This exemption will be available only to companies that have access to UK-regulated markets. The second provides that only companies listed on a UK-regulated market will be able to benefit from some relaxations on controls on their distribution of profits. We are providing a one-year transitional period for those affected.

Overall, these amendments do no more than is necessary, are broadly technical in nature and will ensure that a clear and coherent company law framework is in place after exit. I commend these regulations to the House.

[Lord Fox (LD)]

My Lords, I thank the Minister for bringing this SI to the House. It is another episode in the unravelling process. I have four comments, along with one pro forma comment on consultation.

The Minister mentioned the Business Registers Interconnection System. My understanding is that that is already part of Companies House. Can the Minister assure your Lordships’ House that there is no change in the information available—in other words that the information that was available on BRIS remains available on the new Companies House system?

That takes me to my second point. There are a number of mentions of a role for the company registrar in this instrument, and a lot of them are time-limited over the three months post exit day. What level of capacity will be needed to handle what will be a surge of registration, inquiry and people wanting to know what to do? What level of information will go out to inform companies that they are required to do these things? Who will hold the buck for putting that information out there? It is not clear how companies will find out about this or whether there will be the capacity within Companies House to handle the three-month surge. I would like to know what kind of risk analysis has been done by the Government and what level of communication they are planning.

Thirdly, as the Minister set out there are a number of technical changes around cross holdings of shares between EEA and UK companies. It is not clear to me how many companies this would affect. What intelligence do the Government have on how many companies will be affected in this shareholding? Obviously, there is time for these companies to change that. Does that significantly change the shareholder profile of many companies in this country? If so, how? Does it have any effect overall on market liquidity? What kind of analysis of what this means has gone on?

The final substantive point is on cross-border mergers. The Minister mentioned those in his introduction. He did not explain what the implications are if there are cross-border mergers already under way now or at the time of exit. What regime are these cross-border mergers governed by?

All of this is regrettable, because we have a functioning system that works very well. I am co-operating in so far as I think it is important that we have some sense of where this is going in the regrettable event of exit day. My final point is this: can the Minister outline what level of consultation has gone on? Again, it looks like none. What is the justification for no consultation?

[Lord Adonis (Lab)]

My Lords, I want to pick up on consultation, the final point of the noble Lord, Lord Fox. A theme running through our consideration of all these statutory instruments is either non-existent or totally inadequate consultation, which in any other context would not be regarded as acceptable. Since these are changes in the law that affect significant parts of our economy and significant organisations, it is totally unacceptable that there was no proper consultation.

The blather in the Explanatory Memoranda, which varies by statutory instrument, amounts to the same thing: all this planning was done in secret. It is only at the last minute that this cascade of orders has been presented to the House. Because, I presume, the Government did not want to indicate to the EU that we were engaged in such intensive no-deal planning, there is a straightforward admission that practically no consultation has taken place at all.

The noble Lord, Lord Fox, asked what the level of consultation was. We are told in paragraph 10.1 of the Explanatory Memorandum:

“We have not been able to publicly consult in order to minimise sensitivities in advance of negotiations with the EU”.


But these negotiations had been going on for two and a half years when this order was laid before Parliament. Can the Minister tell us what the sensitivities were in advance of negotiations with the EU, which meant us being told that an entirely technical set of changes concerning access to Companies House databases could not be consulted upon with the relevant business communities? It seems to me that the only thing that is sensitive is not the content of these regulations but the very fact that the Government were engaging in no-deal planning. But it was hardly a secret that the Government were engaging in no-deal planning—it was widely known. After all, the Prime Minister told us that no deal would be better than a bad deal. The arguments are entirely implausible and unacceptable.

What really happened, as we are seeing time and again in these orders, is that the Government had no idea of the scale of the changes that would be required. This was all done in a massive rush in the run-up to Christmas, when the no-deal planning was accelerated. It was not that there were sensitivities—there were no sensitivities at all in respect of these orders. Having read the debates on the orders in the other place, I cannot see a single sensitivity. Indeed, the Government’s own argument that these changes are technical answers the point about there being sensitivities.

The reason there was no consultation is that there was no time to consult. And the reason there was no time to consult is because this whole thing has been done in a massive rush. That is why—having had a quick glance at the Order Paper—we have this week some 30 statutory instruments being considered one after another and we are not being given a recess.

While these changes themselves appear entirely technical, the continuing declaration by the Government, order by order, that there has been no meaningful consultation whatever is unacceptable. It is only right that the House should put that on record. As we get to the end game of this terrible period, that will weigh on the House as we consider whether it is right to extend the Article 50 negotiating period so that we are not faced with what will otherwise happen—a massive rush of ill-considered orders with almost no time to consider them at the end.

I have one specific question for the Minister. Paragraph 10.1 states that informal consultation took place with the Law Society, but it does not mention any business-related organisations. It does not say whether the CBI or the Federation of Small Businesses were consulted, even informally. Those are the organisations that represent the business community, so will the Minister tell us why, in this informal consultation, only the Law Society was consulted? What is the special status of the Law Society in relation to this statutory instrument, which in fact affects companies and the operation of Companies House? Why were the CBI and the FSB not consulted?

Since this instrument has been published, of course, business organisations have had a chance to come forward. Will the Minister tell us whether the CBI, the Federation of Small Businesses or any other business-related organisation made any informal or formal responses to the Government, and what those responses were?

Recognition of Professional Qualifications (Amendment etc.) (EU Exit) Regulations 2018

Lord Fox Excerpts

Monday 11th February 2019 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I remind the House of my membership of the board of the General Medical Council. I want to follow the noble Baroness by focusing on doctors in discussing this SI. As far as the GMC is concerned, the SI provides welcome legal clarification and certainty on the supporting framework governing how EEA-qualified doctors will enter the UK medical register if the UK leaves the EU on these terms—in other words, under a no-deal Brexit. We hope it will help to manage any potential disruption to the NHS medical workforce in those circumstances.

However, can the Minister confirm—I think he did so by implication in his opening remarks—that the regulations will be of only limited application to the medical profession? They will apply only in so far as they make transitional provisions for applications made or actions taken before exit day and which have not been fully determined by then.

The Minister will be aware that there is continuing anxiety in the health service about the uncertainties caused by the current state of negotiations. Given the reaction of many EU nationals working in the NHS to the climate of opinion in this country, I think we have to be really concerned about future staffing and the workforce pressures that will come around the corner very quickly.

[Lord Fox (LD)]

My Lords, before going into detail, I acknowledge that the General Medical Council, the Law Society, the Institute of Chartered Accountants in England and Wales and the Engineering Council have welcomed these proposals. I suspect this is more in sorrow than anything else, since this is better than the uncertainty that would exist without them.

My understanding of secondary legislation and its role—I fear I am treading into Adonis country here—is that it should be about technical, non-controversial issues. When you consider that the 2005 directive paves the way for free movement, you realise that this is actually quite a controversial instrument. In essence, it is here to make up for the fact that, outside the EU, we can no longer treat the European Union as a most favoured nation under WTO rules and will have to strike out the movement opportunities of EU 27 citizens. I understand that; that is why I tabled Amendment 66 to the Trade Bill. I know the Minister was not the beneficiary of that debate or speech but, for the sake of completeness, I am sure he would like to consult Hansard from about this time last week. He will see that free movement has important benefits and this SI tries to mitigate their removal. For that reason, I would say that this is not non-controversial and it is not, strictly speaking, just a technical piece of legislation. Therefore, we should probably not be using this instrument to discuss it, but here we are again.

I am sure the Minister has had a chance to look through Hansard for the other place; his colleague Richard Harrington, the Under-Secretary of State, piloted the debate through that House. A number of issues came up, which have already been touched on. One of these was about the Internal Market Information System, or IMI, of which we will no longer be members after exit. This is an important registry of skills and the way they relate to each other. It is not clear what we will replace it with—an Excel spreadsheet, perhaps—or who will hold it and be accountable for its veracity. I suspect it will be the Minister’s department, but this is not clear.

Reciprocity was raised by the noble Baroness, Lady McIntosh. The debate in the other place seems to indicate that there is no guarantee of reciprocity or process by which it is being sought or managed. If that is the case—it seemed to be the view of the Under-Secretary of State—why not? What are the Government doing to protect the interests of British citizens?

[Baroness McIntosh of Pickering]

I am most grateful to the noble Lord. We managed to get it on the record from my noble and learned friend Lord Keen that there is no reciprocity. Reciprocity remains a matter for negotiation. Perhaps the Minister could confirm this, but my understanding is that all those professionals who happen to be British and wish to practise, or continue to practise, in EEA countries and Switzerland will not be subject to reciprocity. This will have to be negotiated at some future date.

[Lord Fox]

I thank the noble Baroness for her intervention, as that seemed to be the tone of the debate in the other place.

More importantly, at that time the Minister was asked how many British citizens are affected and what was being done to inform them. He then gave a series of off-the-cuff answers. There has been time now for the department to get to some substance, given that that debate occurred some time ago. Perhaps the Minister can tell us how many there are or how one can go about finding out how many are involved. What level of the information process is going on? As we know, the European Union has said that individuals currently practising abroad on this basis will have to register with the relevant bodies within the European Union. This is worrying, and worrying for British citizens. The Minister should take this seriously and explain what is going on.

The issue regarding the medical profession will be very important indeed. It is about making sure that we do not just continue to recognise the qualifications of current employees in the health service, but have a smooth and seamless way in which future employees can be qualified to operate in it.

On the subject of farriers, it is not clear to me why farriers are included, but in another off-the-cuff comment the Minister in the other place made a joke. He said that one Member of the other place who was a qualified accountant was lucky because he was not a farrier. That seemed to imply that farriers were providing a second-class service to that of chartered accountants. Perhaps the Minister can dispel that myth.

[Lord Adonis (Lab)]

My Lords, the noble Baroness and the noble Lord, Lord Fox, have raised a number of significant issues. The first point to make about the issues involved, which are to do with the recognition of professional qualifications or the potential non-recognition of them in what will be only six weeks’ time, is that it seems impossible to say that these issues are purely technical. There is nothing technical about whether people’s professional qualifications are or are not going to apply, and whether they will or will not be able to work in a matter of months. The noble Baroness said, rightly, that the response of the Government is that further negotiations should take place on this. We are six weeks away—six weeks—and I doubt that the Minister is going to pretend, since his honourable friend in another place did not, that these matters can be resolved in the next six weeks.

[Lord Adonis]

That is a very good question. My understanding—but I am not the Minister and he will have to tell us, since it is hard enough for us to understand without my trying to answer for him—is that the provisions of this statutory instrument give all the relevant regulatory bodies dealing with professional qualifications the power to determine whether those bodies will admit EEA and EU nationals and their qualifications. If the noble Baroness is right, it is much more complicated than I thought. I had thought that this one statutory instrument simply conferred all those powers, in so far as they are granted by the state, but if in fact further statutory instruments will be required that will be of huge concern to many professionals.

We are told that all these statutory instruments are technical. I emphasise that there is nothing technical about these issues at all. Indeed, the scale of the issues became apparent to me only on reading the debate in another place, which was referred to by the noble Lord, Lord Fox. If I may, I will read quite a chilling exchange between my honourable friend Chi Onwurah and Richard Harrington, the Business Minister, on this very important question of what will happen to UK nationals who have jobs on the continent which, at the moment, depend upon the automatic and mutual recognition of qualifications. We are saying, quite properly, that we are going to immediately roll over the recognition of qualifications of EU nationals here and we have the power to do so—of course, we have no power to do so and enforce this in respect of UK nationals who practise on the continent. The House can imagine the concerns that they have.

I will read the exchanges from the other place. My honourable friend asks the Minister,

“given that British citizens living in the European Union will be required to regularise their professional qualifications, does the Minister envisage that there could be circumstances in which they would not be able to continue working without doing so?”,

to which the Minister replied:

“I envisage that there could be those circumstances … the only way that that could not happen is for there to be no crashing out … the hon. Lady has made valid point; I would not say it was a ridiculous point”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 4/2/19; col. 11.]


This is a matter of huge concern. This Parliament is not in a position to be able to guarantee that—we do not even know the number.

[Lord Fox]

The noble Lord is completely correct, but the Minister was incorrect in saying that by voting for the current deal this would not be an issue. The political declaration says that free movement of people will end. Therefore, this issue remains on the table whether or not there is a deal, whether we crash out or have a deal.

[Lord Adonis]

The noble Lord is absolutely right. What makes it even more extraordinary is that we are debating this as some kind of technical change, when in fact it is potentially fundamentally affecting the livelihoods of UK citizens abroad, which Her Majesty’s Government have a duty to protect. That is one of the fundamental duties of the state: to protect the interests of citizens going about their lawful business. The Government do not even know the numbers. The Minister for Business in another place said:

“I do not know how we would know which UK nationals were working abroad”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 4/2/19; cols. 11-12.]


If this was being properly prepared for, it is within the resources of Her Majesty’s Government to be able to make estimates to consult with the relevant professional bodies and invite those affected to make representations. However, all the preparation of these instruments has happened in secret, so there has been no opportunity to do so.

With the situation we are facing in respect of this instrument it is fundamentally irresponsible for us to be proceeding down this course. I doubt whether the Minister will be able to keep a straight face and say that this is purely technical—it clearly is not a technical matter that Her Majesty’s Government are not in a position to guarantee the right of UK citizens to continue in their employment on the continent after 29 March. I anticipate that he will say that he has no choice because if we crash out there is no alternative. But there is an alternative: for us not to crash out on 29 March. The Government should do what they have been resisting for months; in the event of us not having a deal by the end of March—and the Government are running down the clock now, deeply irresponsibly—they should, in good order, apply for an extension of Article 50 so that we do not crash out.

This statutory instrument brings into very sharp relief the reasons why it is so much the duty of the Government and the state to do so. We are not in a position otherwise to guarantee the fundamental and legitimate rights of UK citizens, unless we have a continuation of the current regime of European law. We have no basis to do so; Ministers have accepted that. Because we have good relations with our European neighbours, we are hoping that they will not start imposing new requirements or that their relevant professional bodies will not start nit-picking or introducing new requirements.

Not only do we not have a guarantee—the noble Lord, Lord Fox, used the word “guarantee”—we do not even have any assurance. I can understand that it might not be possible to guarantee it, but because there has been no time to have any of these discussions, we have no assurances whatever that the existing qualifications of UK citizens on the continent will be recognised. Nor do we have any assurance that there might not be sudden changes. Let us make some fair assessment of what will happen. I will be astonished if existing employers try to turf out UK citizens from their jobs on 29 March. However, it is perfectly possible.

Some of us are acquainted with professional bodies on the continent. They are sticklers for their processes. Sometimes they can be a tad nationalistic in their approach to these issues, which is part of the reason for our being in the EU. They can decide to start protecting their own, and they will have an absolute right to do so once we do not have these rules in place. Profession by profession, in all kinds of technical and perhaps even surreptitious ways, I can easily see them start changing the rules, which will quite rapidly close down options for UK citizens to be able to take jobs on the continent. These are not technical issues; these are fundamental issues.

[Lord Fox]

Does the noble Lord agree that if we allow our regulators sector by sector to supervise the application process and grant access or stop access on the basis of their rules, that is exactly what will happen in all the countries of the EU 27? The danger of restrictive practice such as he suggests is very real.

[Lord Adonis]

The noble Lord makes a very good point, because, yet again, there has been no proper process of consultation. I am becoming a bit of a connoisseur of how consultation has been conducted under these statutory instruments and I can tell your Lordships that this one is unique in that it does not even have a paragraph that says what the consultation was. Paragraph 10 of the Explanatory Memorandum is simply headed: “Consultation outcome”. It continues:

“Consultation between Devolved Administration officials and Government officials, supported by Government Legal Advisers, took the form of regular meetings and engagement specific to the amendments made by this instrument”.


It does not say what that consultation was, with whom it was conducted, what the results were, or anything. However, I note that quoted by my assiduous honourable friend Chi Onwurah in the debate in the other place was the briefing given to her by the Institute of Chartered Accountants in England and Wales, which said—I suspect there have been many such representations:

“’Elements of the SI are open to interpretation. A UK regulator could refuse an EEA applicant by saying the EEA qualification is not equivalent in some way. There is a chance that EU members states will notice this and potentially do the same in their provisions for considering UK nationals/UK qualification holders’”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 4/2/19; col. 7.]


That goes to the fundamental point made by the noble Lord, Lord Fox, which is that Her Majesty’s Government have no means of requiring our professional bodies to continue recognising the qualifications of EU nationals. Indeed, the Institute of Chartered Accountants, which represents one of the most numerous and significant professions in the country, says—it is not us scaremongering —that under these regulations regulators could choose to vary their requirements in respect of mutual recognition and that, if they do so, the legitimate expectation is that regulators on the continent do tit-for-tat responses in respect of their countries.

Let us be clear—we are debating this statutory instrument some six weeks before it comes into effect: we are talking about hundreds of professions, thousands of professional qualifications and 27 other countries, all of which will have discretion to act as they see fit in the matter of these regulations after 29 March. This is profoundly irresponsible. It is just one facet of the whole business of crashing out with no deal, but I could not conceivably be a party to agreeing it today. If the noble Lord, Lord Fox, chooses to divide the House on it, I shall certainly not support the regulations.

--- Later in debate ---

[Lord Henley]

My Lords, as the noble Lord, Lord Stevenson, put it, this is not about farriers—I will not deal with that question, unfortunately; my noble friend Lord Gardiner will possibly have to deal with it on some other occasion—or about why they are not regulated in Northern Ireland but are regulated in England, Wales and Scotland. I do not think anyone knows the answer to that question, and I will not try to answer it, just as I do not know why, for example, hairdressers are regulated in Italy but not here. In France, they are doubly regulated; you find that if you want to be a hairdresser who makes home visits you must have one form of qualification, and if you want to operate from a shop, you must have another. Again, we do not consider that necessary, but obviously we have to make provisions for UK citizens who want to work abroad to do so when that is possible.

However, before anyone thinks it is all sunshine out there under the current system—the noble Lords, Lord Fox and Lord Adonis, in their little exchange seemed to imply that as a result of these regulations we would get further restrictive practices—I remind noble Lords of the restrictive practices that happen already. One has only to look at the position of UK ski instructors—to take one example from the 600 or so professions that can be affected—and the problems they have had trying to operate in France, where, for some reason, throughout these wonderful years restrictive practices have always come into effect to try to exclude UK ski instructors from operating.

[Lord Fox]

Does the Minister believe that this statutory instrument will improve the lot of British ski instructors trying to get a qualification in a continental country, or will it make it harder?

[Lord Henley]

No, it will not, but we are making it quite clear that we believe that we will offer that unilateral ability to operate over here—not that there are that many ski instructors here, although I believe there are north of the border. The noble Lord should welcome the unilateral nature of these regulations.

We will talk about no deal; as I said, we hope that with a deal we will be able to cover all the other 600 or so professions or quasi-professions that are covered. However, I make it clear that I will not deal with other professions, which are, quite rightly, a matter for other departments. Therefore I will not answer the point made by the noble Lord, Lord Hunt, about doctors, because that will be a matter for regulations from the Department of Health and Social Care that either might have already gone through or will go through, and the same is true of my noble friend Lady McIntosh’s concerns about legal services. The legal services SI and the BEIS SI are separate legislation, laid by the Ministry of Justice, and are an effect of the legal services directive and the establishment directive. These alternative routes for recognition of lawyers exist now and, as I said, that is a matter for them.

I shall start off with numbers—the noble Lord, Lord Adonis, and other neighbourhoods, expressed concern about numbers. As the noble Lord will be aware, the European Commission maintains a database of the number of qualification recognition decisions awarded to most professions across the EU, the EEA and Switzerland. It does not tell us exactly how many professionals are working in the European Union at any given time, but it gives an indication in the form of the number who have sought recognition of their qualifications. That database tells us that in the 10 years from 2008 to the end of 2017, approximately 20,000 UK professionals have successfully had their qualification recognised in the EU, the EEA or Switzerland, and of those 20,000 decisions, about 12,000 related to qualifications in the scope of this statutory instrument. Further, I can tell the noble Lord that the top five professions having their UK qualifications recognised are: secondary school teachers, with approximately 3,400; lawyers, with approximately 1,600; doctors, with approximately 1,500; primary school teachers, with about 1,500; and, going back to Italy and France, 1,400 hairdressers.

--- Later in debate ---

[Baroness McIntosh of Pickering]

My Lords—

[Lord Fox]

My Lords—

[Lord Henley]

There is no point in my giving way every time the noble Lord speaks because I must try to answer the points.

[Lord Fox]

It is only one point.

[Lord Henley]

I apologise to the noble Lord.

There has been guidance from the European Commission on this matter. Decisions on the recognition of our qualifications made by another EU member state before exit will not be affected by our withdrawal from the EU. That is what the Commission has said. Therefore those 12,000, should they still be there, will be perfectly all right. Obviously, for any new person it will depend on what arrangements come into effect. We are dealing with our own arrangements for people coming into the UK. I hope that finally answers the noble Lord’s point.

--- Later in debate ---

[Lord Henley]

My Lords, we are bringing these forward in the event of no deal. We are saying, “We will take in all your qualifications”. The Commission, as the noble Lord acknowledges, has said that it will recognise existing qualifications from UK nationals out there.

[Lord Fox]

My Lords—

[Lord Henley]

The noble Lord will have to wait until I have finished answering this point. He can then interrupt me if I decide to give way, but I think I ought to be allowed to answer a point fully before I take another one.

I will now quote from a letter that my honourable friend wrote to his opposite number following the debate on these regulations in another place:

“Therefore, UK citizens living in EU countries who are working in regulated professions or under protected titles, and who are doing so under a recognition decision under the MRPQ directive, will not have their recognition decisions affected by our withdrawal from the EU and they will not seek further recognition in order to be able to continue working or using their title”.


I will now give way to the noble Lord.

[Lord Fox]

I thank the Minister for giving way and apologise for being so enthusiastic. Richard Harrington said in the other place that,

“the Commission has advised holders of UK qualifications living in the EU to obtain recognition in an EU27 member state before exit”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 4/2/19; col. 11.]

Is the Minister saying that that is wrong or is he saying that his colleague in the other place is right?

[Lord Henley]

My honourable friend is always right. On this occasion, he wanted to clarify his thoughts a little, and that is why I am quoting from the letter he wrote. I hope that response answers the noble Lord’s question.

Nissan in Sunderland

Lord Fox Excerpts

Tuesday 5th February 2019 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for repeating the Statement made in the other place and must declare an interest as having bought a Qashqai for the very reason that it was made in the UK.

Nissan’s decision that the new X-Trail will no longer be built in Sunderland but instead in Japan is a bitter blow to the people of Sunderland and to the wider north-east. Close to 7,000 people are employed at the plant in Sunderland, with many thousands more along the wider supply chain and support services. Although the X-Trail decision does not impact directly on the existing workforce, it sets a worrying trend for the future.

What is interesting in the Secretary of State’s Statement is that the Government, as far as we are aware, are trying to pursue an industrial strategy that looks to develop a co-operative partnership approach with such an important sector—an initiative that we support and something that this side of the House has been calling for for many years.

Of course, Brexit was not the only factor in Nissan’s decision, and it would be dishonest to suggest that the issue of diesel did not play a part in Nissan’s thinking. However—and this is important—Nissan for the first time, through its European chairman, Gianluca de Ficchy, has brought to the fore the uncertainty of Brexit as a key factor. He said on Sunday:

“The continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future”.


That is a damning statement. The continued uncertainty is not helping.

What is more worrying is that the Government could help by ruling out the worst aspect of that uncertainty: that of a no-deal Brexit. The Government have the ability, the authority and the duty to do all they can to protect the interests of our businesses and economy.

Can the noble Lord confirm that the Government will actively engage with the trade unions and automotive manufacturers to protect what is now left? The truth is that the news of Nissan’s departure is not isolated and, in the coming months, more jobs and investment could well be lost in industries elsewhere across the UK. Only last week the Society of Motor Manufacturers and Traders announced that car production is down to its lowest level in five years: in total it has now slumped by 9%; and in the past year alone new investment has halved. What considerations are being given through the industrial strategy to ensure that other parts of the industry, such as Bridgend or Ellesmere Port, do not suffer in the same way?

Our automobile industry and wider manufacturing sector is in desperate need of assurances from the Government. They must finally rule out a no-deal Brexit, which in itself is the single most important decision they could take to remove that uncertainty.

Finally, why has no discernible progress been made on trade agreement negotiations, despite pledges otherwise? Where are we with the commitment that there will be no tariffs on British-made vehicles entering the EU?

[Lord Fox (LD)]

My Lords, I too thank the Minister for repeating the Statement. Just over a year ago Secretary of State Greg Clark launched the automotive sector deal. Things were a bit different then: in a confident, upbeat foreword, he said that,

“the government is investing in a new industry-led programme to raise the competitiveness of UK suppliers to match the best in Europe”.

Today’s Statement underlines how much things have changed. How can the Government claim to be raising competitiveness when uncertainty and delay make it impossible for businesses to plan and invest? Nissan’s comments underline its struggle to plan ahead. Manufacturers do not even know what tariffs they will face at the end of next month, never mind the supply chain friction that will confront them. They are having to plan shutdowns in April to take stock of the situation. That is hardly raising competitiveness, and it is a key reason why confidence in the automotive industry is plummeting and, as the noble Lord on my right said, investment is halving.

One of the foundations of the Government’s industrial strategy was to create the best place to grow a business. It is clear that the abject confusion over Brexit and the surrounding discussions is weakening communities and the strategy. As the Minister said, we had confirmation yesterday that Nissan has decided not to build the X-Trail in the UK. However the Minister and the Secretary of State seek to dress this up, that is not a vote of confidence in the Government’s strategy. As the Secretary of State acknowledged, it injects uncertainty into an industry that is very important for the north-east—uncertainty over 7,000 direct-employment jobs and approximately 35,000 in the supply chain.

In the Statement, the Secretary of State was clear that Nissan had located in the north-east,

“having been persuaded by Mrs Thatcher that the combination of British engineering excellence and tariff-free access to the European Union made Britain an ideal location”.

So, when the chill winds blew in the year before last, the Minister acted fast and secretly to seek to insulate Nissan. In 2016, in order to reassure the company, the Government made a deal, which included public investment of around £60 million, as we heard, and was sealed in a letter that the Government moved heaven and earth not to publish. They cited commercial sensitivity as the reason—until this week, when publishing suddenly suited the Government. I have a number of questions about that letter.

First, what was commercially sensitive before that is not so now, particularly when the Secretary of State goes out of his way to explain that the funding surrounds the Juke and Qashqai ranges but not the X-Trail? That range will continue, so any commercial sensitivity should surely continue, too. Secondly, and perhaps more importantly, did the Government notify the EU competition authorities about their deal with Nissan? If not, why not? I note that in 2001 some £40 million of support for the production of the Nissan Micra was cleared through the EU. What was different about this support?

The Minister stated that the Government’s fourth commitment is to the,

“strong common ground that exists between the UK and other EU member states”.

I suspect that we would question that. He also said that Her Majesty’s Government would,

“pursue a deal that could ensure free trade unencumbered by tariffs or other impediments”.

There is no sign that the Prime Minister’s red lines will allow this to happen—and clearly Nissan no longer believes the Government either. The reduced sector investment tells the same story.

The prime phrase in all this is “damaging uncertainty”. Faith is falling, even in the Minister’s own department. His colleagues in the other place sound increasingly worried about what is going on and whether the right of his party will drive the country over a cliff. Mr Harrington has called no deal a “complete disaster”, while Mr Clark warned that a no-deal Brexit would be “ruinous” to the economy. Can the Minister tell us the adjective he would use to describe it?

[Lord Henley]

My Lords, before I answer any of the questions put to me by noble Lords, may I correct myself? I think I misread from my right honourable friend’s Statement, in that I suggested some 3,000 companies have been supported by the regional growth fund since 2010. In fact, the figure is 30,000. I apologise for that small error.