Nuclear Safeguards Bill

Lord Fox Excerpts

Report stage (Hansard): House of Lords
Tuesday 20th March 2018 Lords Chamber

[Viscount Trenchard]

My Lords, I welcome Amendment 6, proposed by the Minister. It makes a lot of sense but I do not think the House would be wise to support Amendments 7 or 9. Amendment 7 is about collaboration with Euratom in future in research and development and the import and export of qualifying nuclear material. I think we will benefit from greater flexibility by making our own decisions about research and development and committing our own funds. Of course Euratom will be an important and continuing partner for us in nuclear but we will be freed of the obligation and in the position where we will own our own research material, which of course in the JET and ITER programmes we do not. We should caution against overoptimism on what ITER is likely to bring; I understand that there is considerable scepticism in the industry about whether it is really worth the massive amount of money that it costs, and that there is some chance of a demonstration operation by 2045 if all goes well. If we were to commit funds to SMR research, by contrast, in which we in this country have several notable qualified players, we would own the outcome and could get ourselves back into the lead in nuclear by selling our new technology to others. We would have greater flexibility and the freedom not to be committed—

[Lord Fox (LD)]

I remind the noble Viscount that the two are not mutually exclusive.

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[Lord Warner]

My Lords, I support Amendments 7 and 9, and I compliment the Government on Amendment 6. I remind the noble Viscount, Lord Trenchard, that scientific research, in this area or anywhere else, is now overwhelmingly collaborative. If you do not get in the game collaboratively, you find that some of your best researchers and ideas are rapidly transferred abroad to someone else who is much more interested in collaborative research. We have moved on from being a Great Britain that does all this stuff ourselves to being a collaborative, global, international participant in research, including in this area. That is one of the reasons why I support Amendment 7; I think it takes us in the right direction. I am sure that the noble Lord, Lord Broers, whose amendment last night I sadly missed, will want to say a bit about that.

I am really pleased that we have come back to talking about medical isotopes and having a report that keeps Parliament up to date in that area. There is huge concern outside this House about whether the supply chains around medical isotopes will be sufficient to cope with the needs and demands of NHS research and NHS patients.

On Amendment 9, after the last debate that we had before the vote, you would have to be one of life’s perennial optimists—I am not a Liberal Democrat so I do not join that particular club—to believe that everything is going to be okay by March 2019. I suggest to the Minister that he might find it useful to have an independent reviewer who can make independent reports to Parliament to convince sceptical parliamentarians such as me and, I suspect, a few others in this House that good progress is being made on some of the critical issues. That is why I support Amendments 7 and 9.

[Lord Fox]

My Lords, I support Amendment 9, to which my name is appended, and I commend the Government on Amendment 6 and support Amendment 7. I echo the words of the noble Lord, Lord Warner: not even the Liberal Democrats are optimistic enough to imagine that everything is going to be in place in time. That is why we believe this is a helpful amendment to the Government and to the Minister. We heard in the debate on Amendment 3 that the stakes are high in achieving what needs to be achieved in time. I believe, en passant, that for the noble Viscount, Lord Trenchard, to use the cost as a reason for not having something like this in place is a little like trying to save the money that is down the side of the sofa when the whole house is potentially at stake. I suggest that cost is not a reason for not doing this.

The stakes are high. I will not rehearse them again but the Committee has heard scepticism, concern and worry from a vast array of people about whether the finish line can be crossed in time. The Minister—this is in no way reflects scepticism of the Minister himself—has stood up on a number of occasions and said everything is in order and we need not worry. Almost every statement he makes begins with, “I believe”. That is the problem; at this point, to some extent it is difficult to go beyond a belief system. Amendment 9 would put in place an independent voice, someone who was marking the Government’s homework but was not the Government. This is not a question of doing the work of the IAEA; it is a question of following and tracking the Government’s progress in getting to the finish line.

I echo the noble Lord, Lord Warner: this could be very useful for the Government in helping to give reassurance. It would be another voice to prove that the Minister was correct—if he was. When the noble Lord, Lord Hunt, says that this is not an aggressive amendment and not intended to be unhelpful, I know, because I participated in the discussion around this amendment, that it is genuinely not intended to wreck or harm the Bill in any way. It is intended to give support and some further credibility to the argument that things are moving in the right direction.

[Lord Broers]

My Lords, I will make some brief remarks in answer to the noble Viscount, Lord Trenchard. The research we are talking about here is not necessarily just in fusion—it includes fusion, but that is a great big project—but in areas that are ancillary to a certain extent but terribly important. Research is going on everywhere into radioactive waste disposal, but we happen to lead that. I do not think that this defeats the noble Viscount’s ambition—which is my ambition—that our own industry does a lot and gains a lot from that. It also gains a lot from being accepted by the community, so that when our advances come up, others will use what we did. The same is true of radiological protection, which is always a problem with workers around nuclear plants. So it is not just the new reactors, although the one gap in our knowledge is what is happening to the new generation fission reactors beyond the EPRs that people are working on. We really need international collaboration.

With respect to our own ambitions, I entirely support the noble Viscount in terms of SMRs. We are dying to get going—to be specific Rolls-Royce is dying to get going—on SMRs. In fact, Rolls-Royce tells us they are spending £1 million a month keeping that programme alive and waiting for the Government to make a decision on the competition which I hope will come.

Also, in fusion, there is Tokamak Energy. This is a very ambitious small company which feels it can contain fusion in a spherical tokamak, which is a fascinating thing. I should love to spend a lot of time talking about it. It is a very clever and effective way to up the efficiency of the use of the magnetic field to confine the plasma. So there is more to this research than just a few of the most obvious things. I think that is greatly in support of Amendment 7. I also support Amendment 6. I agree with the noble Lords, Lord Fox and Lord Hunt, who mentioned this. I think the independent review is designed to help the Government and not be a hindrance.

[Lord Henley]

My Lords, I want to begin by adding to something that the noble Lord, Lord Fox, said. He said that I repeatedly say, “I believe, I believe”, and that the House has to take it on trust. I hope this goes beyond me and officials within the department. We have seen what is happening when it comes to nuclear safeguards—

[Lord Fox]

I should say that was not intended in any way to impugn the noble Lord’s integrity in his answers.

[Lord Henley]

I was not suggesting that the noble Lord was doing that in any way whatsoever.

Since Second Reading, I have visited Sellafield—well, obviously I have visited it on occasions in the past because it is in my home county, but I visited it again—just to see what nuclear safeguarding amounts to. After all, Sellafield contains two of the three sites that will be relevant in terms of nuclear safeguarding. I cannot say that a one-day visit has turned me into an expert in any way. I would not want to claim that, but I can say that I can go beyond, “I believe”, and say “I have seen”.

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[Lord Henley]

My Lords, I am grateful to the noble Lord, Lord Teverson, for moving his amendment, and for the contributions of other noble Lords. I accept that it will continue to be important to attract—as the noble Lords, Lord Hunt and Lord Warner, and my noble friend Lord Selborne put it—the brightest and the best, to ensure that we maintain our excellence in the nuclear field. This amendment, however, is somewhat more limited in scope than that. Our future immigration system will be set out shortly and it would not be right for me to go into it. As my right honourable friend made clear in his Statement on 11 January, we will ensure that businesses and communities, as well as Parliament, have the opportunity to contribute their views before any decisions are made about the future system that the Home Office will be developing.

[Lord Fox]

Can the Minister confirm that the issues rehearsed in this debate have been presented by DBEIS to the Home Office and the people drawing up these Immigration Rules?

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[Lord Warner]

My Lords, I support the amendment, but I do not expect us to go for our hat trick of votes on it. I speak as someone who had the misfortune to inherit the NHS IT system as a responsibility. I also had some experience in the Home Office of IT systems. Things never work out the way that noble Lords think they will. They are usually delayed and they usually malfunction a bit when they are first introduced and used. My question for the Minister is: has he got a plan B and what is it, if this IT system does not come online to time? At the end of the day, the ONR will still have some responsibilities to discharge. If it does not have the IT system, how will it go about discharging its responsibilities?

[Lord Fox]

Following my noble friend Lord Teverson’s excellent explanation for the reason for this amendment, on the long-named programmes and systems in proposed new subsection (2), can the Minister tell the House whether these are built on existing systems that are being adapted or will they be built from scratch? The Minister may have to write to me in answer. Also, on the nature of the IT companies delivering these, is there competition in delivering systems such as this or is this a very specialist area with a small pool to fish from and not much choice, which of course leads to price escalation?

[Lord Grantchester]

I thank the noble Lord, Lord Teverson, for raising the important issue of the information technology systems necessary for nuclear safeguards. I also saw the written Q&A from the noble Lord and I thank the Minister for replying so swiftly. In Committee, the importance of understanding the full inventory costs in IT management systems was debated. The Government clarified that the full implications of the mechanisms that the ONR will need to set up are matters that could be included in each report that the Government will undertake. It can only build confidence that Parliament will be reassured through any audit process that the UK’s regime will be costed, reported and certified to be robust.

Public Services: Corporate Governance of Businesses

Lord Fox Excerpts

Tuesday 13th March 2018 Lords Chamber

[Lord Henley]

I am grateful to my noble friend for that response and I am aware of the Lord Mayor’s campaign. In fact, I was present—if I remember the precise event—at the launch of that campaign by the Lord Mayor. My right honourable friend the Prime Minister has also always made her views clear about the importance of corporate governance and reforms thereof. That is why we have brought forward this package and why, as I said, the Financial Reporting Council is consulting on it.

[Lord Fox (LD)]

My Lords, the role of the shareholder is very important in maintaining corporate governance, but increasingly the share registers of Britain’s companies are dominated by passive shareholders who do not have the capacity to oversee the corporate governance of the companies they own. Will the Minister explain who, in the absence of the shareholder, is the prime overseer of the board to maintain corporate governance?

[Lord Henley]

My Lords, as I said, the code and its revisions will be important, but it is also important that shareholders play their part in this process. We have considered that and it is why we have already brought forward certain reforms to increase shareholders’ knowledge. For example, shareholders can now see when companies have significant shareholder opposition to directors’ pay. The Investment Association’s public register was launched in December and a number of investors—that is, shareholders—are already using this information as a tool to inform their voting in the upcoming reporting season. If we can improve shareholders’ knowledge, that will improve what they can do in controlling their companies.

Nuclear Safeguards Bill

Lord Fox Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Thursday 1st March 2018 Lords Chamber

[Lord Teverson (LD)]

My Lords, I strongly support my noble friend’s amendment, but want to follow up what was said by the noble Lord, Lord Carlile, who made the obvious point that the more the Government keep us in touch with what is going on, the more confidence everybody, including the industry, has; we might then avoid half the debate we have every time we discuss Euratom. That is true of the whole process of EU withdrawal, but if we could just get it right in this niche area of Euratom, we could save the Government, Ministers and Parliament a whole load of time just by understanding what is going on.

To be honest, I think the Government undersell their position in this area in all sorts of ways. I thank the Minister, the noble Baroness, Lady Vere, for her letter to me in response to my question at the end of the last session about the transition for Euratom, because, so far as I could see, there was no disagreement between Brussels and the UK about it. The noble Baroness’s letter effectively confirmed that. In the legal draft framework on withdrawal and transition, there is a whole area on Euratom—I read it through yesterday; I do not have it here. In terms of the EU-UK relationship, the withdrawal from Euratom, particularly in respect of the transitional period, seems fairly well agreed, and I welcome that. The difficulty I still have is around third parties. There has been good communication on where we have got to with nuclear co-operation agreements, but I am still unclear as to whether the International Atomic Energy Agency and third countries are happy to accept that, while not being a member of Euratom, we can still use all those provisions as a safeguarding regime.

I also noted in the document the expectation of the UK to come up to Euratom standards on nuclear safeguarding. I would be very interested to hear the Minister’s explanation of that and what it means for the transition and withdrawal process.

[Lord Fox (LD)]

My Lords, I do not wish to put a dampener on proceedings, as the word “transition” seems to have lifted your Lordships a little, but does the Minister agree that for there to be a transition there needs to be agreement between the United Kingdom and the European Union on the terms of leaving the European Union and that, in the event of there being no agreement, we go into a period where there is no transition? If that is true, I refer your Lordships to that little lecture I gave on risk on the previous day in Committee: there remains a finite risk that we need a safeguarding regime in March 2019. This provision does not take the pressure off us to get this sorted out and to have a process that delivers the safeguarding regime we need, whether or not the prospect of transition is increased.

[Lord Grantchester (Lab)]

I want to speak to Amendment 18, which is in our name, but also to respond to Amendment 7, in the names of the noble Lords, Lord Fox and Teverson, and the noble Baroness, Lady Featherstone, on the Liberal Democrat Benches. Amendment 7 would specify in new Section 76A(9) further consultees the Secretary of State must consult before making any regulations and add the requirement to lay before Parliament a Written Statement on the resourcing and preparedness of the ONR. In conjunction with the other amendments taken last week on Euratom and the UK’s levels of standards, we agree that this would be most useful. However, it may not go far enough, in that it would be the Secretary of State doing the interpretation of any evidence received and judging its sufficiency. Notwithstanding the comments of the noble Viscount, Lord Trenchard, and the noble Baroness, Lady Neville-Rolfe, these matters were debated last week and it would be the Government making the declaration. The Committee was not inclined to take at face value many of the Government’s assurances last week. Unfortunately, I have not seen the recent letter to the noble Lord, Lord Carlile, nor the letter from the noble Baroness to the noble Lord, Lord Teverson. I request that in future the whole Committee be copied in to the letters, so that we can keep abreast. Many thanks.

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[Lord Henley]

I think I answered that question at Second Reading and gave a figure to the noble Lord. Rather than trying to guess or remember what I said on that occasion, I will write to him. But I am perfectly happy that we have made that commitment. There will be sufficient funds and then there will be ongoing costs—the noble Lord is right to distinguish between the two—and again, we are happy about that.

[Lord Fox]

When the Minister writes that letter, and assuming we all get it, can he please include some indication of the Euratom assets that will be assumed by the new organisation and some estimate of the liability that comes with those assets?

[Lord Henley]

Obviously the noble Lord is right that assets belonging to Euratom are in there. I do not think I am giving away any secrets if I say that on my visit I saw physical things that were Euratom assets; there will also be software and other things. I am sure that deals will be done as part of the negotiations, and some of those will be transferred over. I do not think I can go any further at the Dispatch Box and I would not want to, but if there is anything more that I can say in a letter then I shall. I will make sure that my letter goes to all noble Lords by whatever means in this inclement weather—we will get it to the noble Lord—and place copies in the Library, which is where people like to find them.

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[Lord Grantchester]

I shall also speak to Amendment 13 in this group. At Second Reading we on these Benches drew attention to the powers that the Government wish to confer on themselves through the Bill. At that time we signalled that we would take into consideration the views of your Lordships’ Delegated Powers and Regulatory Reform Committee on the Bill. The committee has now reported its findings in its 13th report of this Session, drawing attention to three areas of concern. My noble friend Lord Hunt highlighted the first in an amendment last week, that “civil activities” should be defined under new Section 76A(5) in Clause 1(2) of the Bill.

Amendments 8 and 13 draw attention to the other issues drawn attention to in the report. Amendment 8 concerns the definition of “relevant international agreement” in the power conferred on the Secretary of State under new Section 76A(1)(b) to give effect to any future relevant international agreement. When this happens, the functions of the ONR are extended to include taking the necessary steps to ensure compliance with that agreement. In the present situation where the Government are in negotiation with the IAEA and several key partners, the report does not find it unreasonable that the Government extend their powers in this way. However, the committee is correct when it states that this should not result in the Government having an enduring power into the future, long after the UK has withdrawn from the Euratom treaty.

Amendment 8 would set a sunset provision so that in new Section 112(1B) in the Energy Act 2013 these powers may not be exercised after a period of two years from withdrawal from Euratom. This two-year period would reflect Clause 8(4) of the European Union (Withdrawal) Bill, where powers to amend legislation to prevent breaches of international obligations arising from the EU withdrawal will cease two years after exit day. This comfortably sits alongside any transition period that the Government are set to announce, maybe as early as tomorrow, in response to the announcement yesterday by the EU Commission.

Amendment 13 concerned the powers being conferred on Ministers under Clause 2 of the Bill to amend the legislation listed under Clause 2(1) relating to nuclear safeguards. The memorandum prepared by the department for the Delegated Powers Committee explains the provisions and agreements between the UK, the IAEA and Euratom. At Second Reading it was acknowledged that these tripartite agreements would need to be replaced. Necessarily, the voluntary offer agreement, the VOA, and additional protocol, AP, will become ineffective on the UK’s withdrawal from the Euratom treaty.

As in Amendment 8, the committee agreed that the Government may take the powers to amend both primary and secondary legislation to ensure compliance with the UK’s international obligations after withdrawal. However, once again, there is no justification in the memorandum for these powers to continue indefinitely. We agree, and therefore Amendment 13 similarly sets a sunset provision to Clause 2: that the powers to be conferred cease after two years and may not be exercised following the end of that period.

At Second Reading, the Minister replied that he would look carefully at any recommendations forthcoming from your Lordships’ Delegated Powers Committee, and I would appreciate hearing from his noble friend that they will bring forward government amendments on Report to give effect to these recommendations. I beg to move.

[Lord Fox]

I support Amendments 8 and 13 and do not intend to speak at length. When the Minister was responding to Amendment 6 in the Committee’s previous sitting, he expressed a high degree of approval of the Delegated Powers and Regulatory Reform Committee, and I trust that that continues through these amendments. The case has been set out by the noble Lord, Lord Grantchester, and the DPRRC, and I hope that on these two amendments the noble Baroness can give us similar encouragement to that given by the Minister on Amendment 6. We on these Benches support the restricted use of these measures to give the Government the flexibility that they need. This is a good compromise between untrammelled power and the power they need for the flexibility to ensure the necessary regime.

[Baroness Vere of Norbiton (Con)]

My Lords, I thank the noble Lords, Lord Grantchester and Lord Fox, for their contributions. The amendments apply sunset provisions to two key powers in the Bill, Amendment 8 in respect of new Section 112(1B), which enables the Secretary of State to specify in regulations international agreements relating to safeguards that should be treated as “relevant international agreements”, and Amendment 13 in respect of the Henry VIII power in Clause 2.

I am grateful to the Delegated Powers and Regulatory Reform Committee for its considered report on the Bill. We are considering the recommendations carefully, and my noble friend Lord Henley hopes to respond positively to many of the recommendations soon.

I welcome the principles that appear to be behind these amendments, namely those of scrutiny, certainty and restriction of powers. However, as the underlying purpose behind these powers is very different, the proposed two-year sunset clauses must be considered in each context specifically.

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Even the current regime, which is heavily reliant on Euratom’s international role, provides for this type of flexibility through Section 93(2)(d) of the Energy Act 2013. The Bill repeals Section 93, reflecting the change in the regime, and the flexibility to incorporate international safeguards commitments in the new legislation is indeed drawn more narrowly. I shall give an example of the type of international change we might see in the future: we expect to agree NCAs beyond those with the four countries in the first tranche. Where such NCAs require particular nuclear safeguard reporting measures, it is vital that our regime can accommodate that—both in the scope of the ONR’s purposes, and in the scope of the relevant regulations—without significant uncertainty or delay. I stress that the power to which the “relevant international agreements” relates is specific to nuclear safeguards. The power is there to ensure that we can incorporate additional reporting obligations resulting from international commitments into our safeguards regime: I do not think we could claim to have an effective, future-proofed safeguards regime if new primary legislation were required every time we entered into a new agreement that included new safeguards obligations.

[Lord Fox]

I thank the Minister for giving way. She has just referred to every time that we have a new agreement, but could she give us an estimate beyond the two-year period of how many additional agreements she would expect to have to insert into the regime?

[Baroness Vere of Norbiton]

Of course, it is very difficult to be specific on that but, as we know, we are focusing on four NCAs in the first tranche. The noble Lord will know that there are many other countries with which we would like to have an NCA in future which perhaps do not fall within the first tranche. The second thing to recognise is that this is not just about entering into new NCAs; it is whether new obligations arise as conditions change within the international community for safeguarding. This gives us the flexibility, but it is not drawn so widely that we can do whatever we like.

While we cannot accept Amendment 8, I would like to provide reassurance of the scrutiny that will be in place to ensure that there is proper oversight in the use of this power. Pursuant to the Constitutional Reform and Governance Act 2010, we would expect any new international treaties relating to safeguards to go through the ratification processes set out in that Act. Use of the power to make regulations specifying agreements as “relevant international agreements” is itself subject to the draft affirmative procedure in all cases, and any regulations made under the power that relies on these agreements must be consulted on. I am therefore confident that an appropriate level of scrutiny and restriction of powers is already in place.

I recognise the principles which lie behind the proposed amendments, and I hope that noble Lords will accept why I cannot accept them today. I therefore hope that the noble Lord, Lord Grantchester, feels able to withdraw his amendment.

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[Lord Henley]

My Lords, I accept that this is a probing amendment and that the noble Lord wanted to go wider than the Bill itself and beyond safeguarding to problems facing the entire nuclear industry, and in particular the need for skilled workers. The noble Lords, Lord Hunt of Kings Heath and Lord Teverson, are worried about whether I and the department have sufficient backbone to take on the Home Office and others in these matters. I give him an assurance that we accept the importance of getting the right skilled workers in, just as we always have. I understand the importance of that because on my recent visit to Sellafield I saw some of the construction work and how very specialist it is. It is not just the skilled workers but the type of concrete that has to be used and all such matters—other noble Lords will know this far better than me. More generally on that point, BEIS knows that there are shortages in certain areas and will do its bit within government to make sure that the Home Office understands the importance of our being able to attract the right staff more generally.

On the question of having the right staff in the very specialised field of nuclear safeguarding, the amendment attempts to ensure freedom of employment for specialists employed in that area. That is obviously a matter of particular interest in the light of the Government’s preparations for establishing the domestic nuclear safeguards regime which, among other important work, means securing high-quality safeguards staff in the right quantity for the ONR.

We are working very closely with the ONR to ensure that it is in a position to regulate the UK’s new civil nuclear safeguards regime that will follow withdrawal from Euratom. That includes, among other preparations, recruiting and training additional inspectors and building additional institutional capacity. I have already outlined the ONR’s staffing numbers and estimates. I referred to that in the letters sent on 20 February—so all noble Lords should have had copies of those, even the noble Lord, Lord Grantchester.

Given the importance of attracting the right staff to work in this specialist field, the Government are committed to ensuring that the United Kingdom nuclear industry has the required skilled personnel to deliver robust regulatory regimes. The Prime Minister has been clear that we will always welcome those with the skills and the expertise that we need, whether they come from Europe or the rest of the world—as we do now. We will also ensure—if the noble Lord will bear with me—that we manage our immigration system in the way that best serves the national interest. That is why we will be using our best influence with the Home Office—and I am sure that the Home Office in due course will be able to respond. I give way now to the noble Lord.

[Lord Fox]

Picking on the language, the Minister talked a number of times about skilled people. The noble Lord, Lord Hunt, made the point that the definition of “skilled people” is the problem. Will the Minister acknowledge that issue and carry that point in the discussions he is having with other agencies?

[Lord Henley]

As I said, we are in discussions with the ONR in relation to the Bill to make sure that it can get people with the appropriate very specialist skills that we need for safeguarding. That is why we are going to have the right regime in place by next year.

The noble Lord then asked me to go further on the more general point—it might be construction for the nuclear industry or a whole host of other things. Yes, BEIS will continue to operate as it always does and to offer help and guidance to the Home Office as it develops policy in this field.

[Lord Fox]

For information, some of the researchers who work in the nuclear fusion project, for example, are paid below the threshold that gives them the privilege to come into this country. We are not just talking about steel fixers but about quite serious researchers who, because they have taken an academic career, are not paid above the threshold. So it is a very serious issue.

[Lord Henley]

I am fully aware of the concerns of the noble Lord and of the industry. Obviously it is a matter for the Home Office to develop these policies, and I am very grateful that a Home Office Minister—just by chance—happens to be sitting near me; she will listen to this and take it back to her colleagues. I repeat that we are satisfied that we can deal with safeguarding. Our concerns, the noble Lord’s concerns and other concerns will be dealt with. Proposals for a future immigration system will be set out shortly. That is something that my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy will play his part in.

The noble Lord said that his amendment was a probing one. I hope that I have given the appropriate assurances for him to withdraw it.

Retail Trade: Online Suppliers

Lord Fox Excerpts

Wednesday 28th February 2018 Lords Chamber

[Lord Henley]

I do not think I can take the noble Lord much further than I have at the moment. Colleagues in the Treasury and in Revenue & Customs are aware of some of these problems and are looking at them, and he will be aware of commitments that were made in our manifesto. I cannot take it much farther than that.

[Lord Fox (LD)]

My Lords, the Minister is very sanguine about what is going on in our high streets, but today, Toys “R” Us went into administration, putting about 3,000 jobs at risk and Maplin has called in the administrators. There is a crisis on the high street. What are the Government doing to recognise the pressure that the digital economy is putting on the physical shops on our high street?

[Lord Henley]

We recognise this. As the noble Lord will be aware, we have made changes to the rates system to provide some help to the high street and will continue to do so. We have also established the Future High Streets Forum, which is chaired by my honourable friend the Minister for the Northern Powerhouse and Local Growth, Jake Berry. That will look at what we can do with retailers, but it is obviously up to retailers, as I said, to adapt to a marketplace changing as a result of consumer demand.

Nuclear Safeguards Bill

Lord Fox Excerpts

Committee: 1st sitting (Hansard): House of Lords
Thursday 22nd February 2018 Lords Chamber

[Lord O'Neill of Clackmannan]

I am very pleased to follow the last two speakers, because I have had associations with both of them. In the case of my noble friend Lord Hutton, I was his predecessor as chair of the Nuclear Industry Association.

In supporting Amendments 2, 12 and 17, particularly Amendment 2, I draw attention to the fact that the Bill is about reassuring the industry and the British people that we will have safeguarding regimes of a quality and a standard that will enable there to be continuing public support for civil nuclear in the United Kingdom. This is not a matter of holding the Government’s feet to the fire—although, as an Opposition Member, I largely approve of such an approach—but to make it clear that it is essential that we get reports back. The fact is that, so far—as has been evidenced by the appearance of the word “Euratom” in the withdrawal papers—that has been a pretty low priority for the Government. Frankly, we cannot trust them without something in the Bill to require there to be a report, albeit an interim one, by Christmas. That is where both the Liberal amendment and the amendment from my colleagues come in. That is not unreasonable, because the record is pretty feeble so far. At worst, we have heard platitudinous nonsense from the Government on many of these issues. We want there to be a requirement that means that their attention is focused on a particular time and date so that, before Christmas of this year, we will have an interim report on the progress that has been made. The areas covered are quite clear.

It is also fair to say that we need a transition period. The noble Lord, Lord Broers, has been riding the horse that he usually rides in respect of research and development, on which he has become an acknowledged expert. I just make the point that there is a lot more to the nuclear industry than research and development and the generation of power. We have considerable expertise in safety matters as consultants in United Kingdom companies and internationally. Our record on the decommissioning of power stations is probably second to none because we have been at it longer than anyone else and because we started building them long before most other people. However, if we are not able to keep abreast of improvements and developments, we will not be able to continue that kind of work.

As I said, the nuclear cycle involves more than just research and the generation of power, and at the moment we enjoy a pretty good position. As my noble friend Lord Hutton said, it is a not insignificant contributor to the engineering and manufacturing side of the British economy, so it is economically important. Politically, it is also important that in this House there is a consensus that then breeds confidence in the country as a whole.

These amendments will have their deficiencies. At this stage in legislation it is the stuff of ministerial responses to say that the amendments are not quite good enough, but when the case is strong enough—I think we all believe that it is—it is the responsibility of government to accept the spirit of the amendments and to go away and consult the Front Benches and interested parties to secure wording which we consider to be appropriate for the scale of the challenge that has to be met to sustain the confidence of the nuclear industry, the confidence of this House and, ultimately, the confidence of the country as a whole in the civil nuclear project in which we are currently engaged.

I will be very disappointed if the Minister tries to duck and dive on this issue. If he does, I suspect that he will get bruised when we come to consider it at the next stage. I think that there is a strong feeling about this on pretty well all sides of the House. Even the noble Viscount was somewhat half-hearted in his backing of the Government and made the point that transitional arrangements are necessary. However, for transitional arrangements to be effective, we must have reports at every stage of the process. Frankly, nine months on is not an unreasonable point at which to ask for such a report. It is not enough for Ministers simply to say, “Yes, we will come back and address the House”. We need something more concrete than that. We also need assurances that, before any further action is taken, we are given clear indications of matters relating to finance and future developments so that we can avoid the charge that we have given the Government a blank cheque in relation to a piece of our national economy which is essential to the future energy needs of our country.

[Lord Fox (LD)]

My Lords, noble Lords have heard about the scale of the risk of not achieving the objective of the Bill. If you were doing a classic risk analysis in the private sector—the sort of thing that, under corporate governance, the Minister’s department requires every board to observe—you would say that there was a very high risk of not achieving that objective. Even if the Minister thought that there was only a very small chance of not doing so, if we were a board of directors he would be required to mitigate that risk. These amendments provide a pathway to mitigation—a pathway to a plan B. It is the sort of medicine that, quite rightly, the department supplies for all business and enterprise across the United Kingdom—that is, understanding the risks that they are undergoing and seeking a way to mitigate them. That is exactly what the Government and the Minister should be doing, and it is why, between now and Report, the Government have to embrace the messages that they have heard today.

--- Later in debate ---

[Lord Henley]

The noble Lord knows that he always gets wisdom from me. I want also to say that I am not necessarily going to respond to all the points in the course of this debate because an awful lot of them apply to later amendments. Nevertheless I will give a fairly full response, but I shall start by making a pretty fundamental point, made by my noble friend Lady Neville-Rolfe. It is that we are where we are. My noble friend supports this Bill because, as she said, it is very important that we have plans in place for when we leave Euratom. We are going to leave Euratom at the same time as we leave the European Union in March of next year. That was dealt with in the notice of withdrawal Bill, now the European Union (Notification of Withdrawal) Act 2017. The legislation has been through both Houses of Parliament and has the support of the party opposite and others.

What I want to make clear to the Committee is that we are determined to continue to have a constructive and collaborative relationship with Euratom and with all our other international partners. The withdrawal of the United Kingdom from Euratom will in no way diminish our nuclear ambitions, and I make that clear to the noble Lord, Lord Broers, and others. Maintaining the continuity of our mutually successful civil nuclear co-operation with Euratom and international partners is going to be a key priority for us. As a member of the International Atomic Energy Agency, we are committed to have in place nuclear safeguards. I should remind the Committee that these have nothing to do with safety. Nuclear safeguards are reporting and verification processes by which states demonstrate to the international community that civil nuclear material is not being diverted into military or weapons programmes. The United Kingdom has been a member of the IAEA since its formation back in 1957.

Under the Euratom treaty, the civil nuclear material and facilities within member states are subject to nuclear safeguards measures conducted by the European Commission on behalf of Euratom. Euratom also provides reporting on member states’ safeguards to the International Atomic Energy Agency, which conducts nuclear safeguards globally. Nuclear safeguards measures include reporting on civil nuclear material holdings and development plans, inspections of nuclear facilities by international inspectors, and monitoring, including cameras in selected facilities. I repeat that nuclear safeguards are distinct from nuclear safety, which covers the prevention of nuclear accidents, and nuclear security, which covers physical protection measures. Those are the subject of independent regulatory provisions and we shall move on to them in due course.

As was made clear by my noble friend last night and I make clear again today, the European Union and Euratom are uniquely legally joined. Euratom shares a common institutional framework, making use of the same institutions; namely, the Council, the Commission, the European Parliament and the ECJ. For example, the European Commission has an active role in shaping and enforcing Euratom rules and it currently plays a central operational role on safeguards in the UK. As was further made clear by my noble friend last night, Euratom is also subject to the jurisdiction of the ECJ.

When the Prime Minister formally notified our intention to leave the European Union in June, she also commenced the process for leaving Euratom. That notification was debated and authorised by Parliament through the European Union (Notification of Withdrawal) Act 2017 which, as I have said, had the full support of both Houses of Parliament. The United Kingdom will therefore withdraw from Euratom in 2019 at the same time as withdrawing from the European Union. That is why we need the legislation before us now to be in place.

The United Kingdom’s current nuclear safeguards regime operated by Euratom will cease to function in the United Kingdom as a result of our withdrawal from Euratom. The Nuclear Safeguards Bill will ensure that we have the right regime in place for the Office for Nuclear Regulation to regulate nuclear safeguards. I reassure the Committee that the Government are meeting the challenges that clearly lie before us. We have already made great progress in the work that we are doing to secure continuity for our nuclear industry by establishing long-term arrangements to secure nuclear safeguards. The Queen’s Speech on 21 June last year included our intention to take up the powers that will set up a domestic nuclear safeguards regime, and that is what this Bill seeks to do.

[Lord Fox]

My Lords, perhaps I missed them, but what are the long-term arrangements that have already been established?

[Lord Henley]

My Lords, will the noble Lord bear with me? I said that I was going to play a fairly long innings and I want to explain these matters in full. There is no point in the noble Lord interrupting at this stage. I am going through this carefully and slowly in order to explain what we are going to do to make sure that we have the right things in place for when we leave Euratom and the EU in March of next year.

Our intention is for the new domestic regime to exceed the standard that the international community would require from the United Kingdom as a member of the IAEA. It will be run by the Office for Nuclear Regulation which, as the Committee will know, already regulates nuclear safety and nuclear security. We will also be agreeing a new voluntary offer agreement with the IAEA. I believe that we all recognise the special contribution—

Nuclear Safeguards Bill

Lord Fox Excerpts

Committee: 1st sitting (Hansard - continued): House of Lords
Thursday 22nd February 2018 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, the points made by the noble Lord, Lord Teverson, underline the desirability of an implementation period in this area as in other Brexit areas. For clarity, I want to ask a question arising from what the noble Lord, Lord Carlile, said. Are energy officials and Energy Ministers able to get on with this? The assumption that I have been working on is that the timetable is tight in this nuclear area and that discussions therefore need to go ahead with the IAEA, Euratom and the other nuclear states. Is that work in hand? Is there a plan for it? It would be helpful if the Minister were able to respond on that.

[Lord Fox (LD)]

I want briefly to speak in support of Amendment 14, which bears my name. While avoiding repeating what the noble Lord, Lord Carlile, has said, I want to pick out subsection (2)(c) of the proposed new clause, which refers to, “relevant research projects”. The noble Lord, Lord Broers, spoke eloquently in a previous debate about the importance of research in this area. As your Lordships and, I am sure, the Minister know, the UK benefits enormously from the long-term research funding and its membership of the Fusion for Energy programme, which flow through the Euratom relationship. I think the supply chain has been awarded some £0.5 billion to date and expects more, and the UK Atomic Energy Authority receives significant sums—around £50 million. On a broader level, as a leading participant in Euratom and the research element of it, the United Kingdom has been able authoritatively to drive research priorities. What does the Minister envisage our authority being following this process? Will it have risen or sunk as a result of our ability to drive and influence research in the nuclear field?

My noble friend Lord Teverson illustrated how hard and tough the Table Office has been on the wording of the amendments. In many cases—certainly, in other conversations—the Minister has ruled out of order a lot of what we have talked about. However, on Amendment 14, which covers some of these areas, the Table Office has been clear that this is in spec with the Bill and our debate today.

[Lord Grantchester]

My Lords, we have added our names to Amendment 4 in the name of the noble Lord, Lord Warner. It is Labour policy to remain a member of Euratom or to continue equivalent arrangements with it. The Conservative Government have been reckless to reject immediately the UK’s membership of Euratom. Your Lordships’ discussion in Committee last night on the withdrawal Bill highlighted how the Euratom treaty is distinct from the EU treaty. The Government state that, because there is an overlap of membership, with the same nation states as are in the EU, it is part of the same organisation. However, the two treaties are legally distinct, which has not been contradicted by the Government.

The Minister said this morning that both organisations are uniquely and legally joined. He needs to explain how they are so legally. It is reckless to make the theoretical and technical oversight of the European Court of Justice a defining reason, when the UK is far from ready to undertake its own safeguards regimes to the standard maintained by Euratom. The ECJ has never been called on to make a ruling.

Furthermore, the Government have committed to continue as far as possible through negotiations to be in close association with Euratom. They must be exhaustive in their endeavours and report back to Parliament on the outcome. If it is no longer possible to establish an association, they must say so, with reasons.

Amendment 9, in the names of the noble Lords, Lord Teverson and Lord Fox, and the noble Baroness, Lady Featherstone, map out further agreements to be pursued before withdrawal. It requires the Secretary of State to request “a transition period” so that the UK,

“can continue to benefit from existing nuclear safeguard agreements”,

with the approval of the IAEA, that the ONR is the approved UK safeguarding authority. My noble friend Lord Hunt of Kings Heath has spoken to Amendment 12 on the transitional period. It must be recognised that approvals of nuclear co-operation agreements are sequential to the recognition by the IAEA that the UK safeguarding standards are sufficient. Although these NCAs may be progressing, their ratification will necessarily take some time and may spill over into any transition period. We endorse the sentiments behind Amendment 9 as crucial to maintaining the UK as a credible internationally recognised nuclear state operating to international standards.

Amendment 14, in the name of the noble Lord, Lord Carlile, would insert a new clause stating that before leaving Euratom the Government must publish a report detailing agreements reached with Euratom to ensure compliance with international non-proliferation agreements and lay appropriate regulations to give effect to their implementation. We understand and are in unison with the importance noble Lords on all Benches place on the highest standards, the nearest equivalence, the closest association, with any necessary transition period, to replicate the regime currently operated under Euratom. We support the amendment of the noble Lord, Lord Warner, that says the Government must keep Parliament informed regarding the ongoing UK status with Euratom. The noble Lord, Lord Teverson, has also said that it is far from clear where we will be in March 2019, when timing is such a critical issue.

--- Later in debate ---

[Lord Hunt of Kings Heath]

My Lords, we come to the end of our discussion today, and I hope that the Minister will be able to accept these amendments. As the noble Lord made clear in the debate before last, nuclear safeguarding primarily involves reporting and verification processes by which we as a country demonstrate to the international community that civil nuclear material is not diverted into military weapons programmes, so the definition of what is meant by “civil activities” is rather important.

In Clause 2, page 2, new Section 76A(5) of the 2013 Act as inserted by the Bill will allow the regulations to specify what and what not are to be treated as civil activities. The memorandum that goes with the Bill explains the reason the Government think that the power is necessary to enable further clarification of the regulating power already provided. The Government say that the phrase “civil activities” has a natural meaning, but this power enables the Secretary of State to provide greater certainty about what are and what are not civil activities. This in turn refines the purpose test contained in Section 76(1)(a) and provides enhanced certainty about when nuclear safeguard regulation can be made.

This is important, and the Delegated Powers Committee described the term “civil activities” as a concept central to the nuclear safeguards regulations. However, it says that it is not convinced that the term has a natural meaning. It takes it that it refers to non-military activities and says that if that is correct, there is no reason why that should not be made clear in the Bill. It recommends that it should be defined in new Section 76A of the 2013 Act rather than leaving it to be dealt with exclusively in regulations. My Amendments 5 and 6 essentially do just that, and I hope that the Government are prepared to accept them. I beg to move.

[Lord Fox]

My Lords, this may be an opportunity for the Minister to play an uncharacteristic square drive. I support the amendment and, with the authority of the Delegated Powers Committee behind it, I should have thought this is an opportunity to send us away with a song in our heart before the next helping. I cannot speak for the noble Lord, but I guess that if the actual definition of civil nuclear needs amendment, there is plenty of conversation to be had. I hope that the Government are able to accept the amendment.

[Lord O'Neill of Clackmannan]

For someone of my age and generation, it was always fashionable to attack the Wilson Governments of 1964 and 1966. In the light of the Blair Middle Eastern excursions, which I have to say I supported at the time, history now favours Wilson on the basis that he did not send any troops to Vietnam. Equally importantly, those of us who in those days were marching against nuclear weapons often forgot that one of the great achievements of the Wilson Administrations was their sponsorship of the non-proliferation treaty. At the heart of the amendment is a degree of clarity and a redefinition of civil activities. It would be useful to have a clear and explicit definition, which is why this amendment deserves support. It is not against the Bill; it is not going to harm Brexiteers or frighten the horses. It is a straightforward amendment—and, at this late stage of the afternoon, for God’s sake give us something!

The Minister has hidden behind what are quite clearly inadequate ministerial briefs. The noble Baroness, Lady Vere, went on and on. I was reminded of the story about Lord Willie Ross, when he was shadow Secretary of State for Scotland at a time when Labour was in opposition. He dismissed the speech of the then Secretary of State for Scotland, saying that there were three things wrong with it—first, that he read it; secondly, that he read it badly; and, thirdly, it was not worth reading in the first place. I absolve the noble Baroness of the second charge, but the first and third points are still relevant. We are not on the same side as the Liberals, I have to say; it is only the Conservatives who get into bed with the Liberals. This is an amendment that we are quite happy to support, but do not let us have this obfuscatory nonsense that we have been getting. Give us something that makes today’s efforts worthwhile—if not, we will be after you at the next stage, and we will win because we have the majority in the House of Lords.

Taylor Review

Lord Fox Excerpts

Wednesday 7th February 2018 Lords Chamber

[Lord Henley]

I am sorry that the noble Lord was disappointed with my response, as I think that we went a long way. He failed to recognise that we are announcing further consultation on some of the grey areas in which there is a lack of clarity. The noble Lord will be aware that we have the Employment Rights Act 1996, and the law on the subject has grown and developed as a result of cases in the courts since then. We all accept that there are grey areas in which there is a lack of clarity regarding employment. That is why my right honourable friend wanted to set up this review and why he has responded with the Statement on good work today. He has also responded with a series of consultations, the first and most important of which is the consultation on employment status. We have responded as we did to get that correct so that we can then move on to legislate where it is necessary. We look forward to helpful contributions from the noble Lord and his party in due course.

[Lord Fox (LD)]

My Lords, on employee status, a central part of the Taylor review concerned dependent contractor status. The Government seem to be agnostic on that. They are going into consultation, but what mood are they in? Are they in favour of moving towards dependent contractor status? If not, why not—and how long will this consultation process take? People are already working in this economy and being exploited by it. Will this require primary legislation? If so, what timetable do the Government envisage before we deal with this issue on the Floor of this House?

[Lord Henley]

My Lords, the noble Lord seems to think that we need to look only at dependent contractor status but the whole question of the boundaries between employed status and being self-employed also needs to be looked at. That is part of the consultation and I look forward to hearing his comments on that in due course as part of the consultation. Thinking back to the Employment Rights Act 1996—I do not remember its passage, though it is not that long ago—it is very likely that inclarities, if I may call them that, will emerge as a result of the consultation and will need to be looked at, as has happened since 1996. For that reason we are consulting—just to keep the noble Lord busy, there are three other consultations as well, where we would again be grateful for his comments—and it is quite likely that we will need to legislate as a result. As to the likely timescale for bringing forward primary legislation, I am afraid that I cannot give any assurances to the noble Lord. He will be aware that both Houses are rather busy with quite a lot of legislation at the moment.

Nuclear Safeguards Bill

Lord Fox Excerpts

2nd reading (Hansard): House of Lords
Wednesday 7th February 2018 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the Minister for his very tolerant and understanding introduction. I congratulate the noble Lord, Lord Grantchester, on a comprehensive assessment of the situation, with much of which I associate this party.

Judging from the debate in the other place, I expected to be told that this was a narrow technical Bill and that it was about safeguarding, not safety—and so we were. Like the Minister, though, I have sneaking suspicions too: I suspect that by narrowing the focus of the Bill and the debate, the Government were hoping to avoid having to debate many of the other issues. I am afraid that, as we have already seen and as the Minister has experienced, that will not be the case. There are important issues in addition to safeguarding—which is of course important—such as providing the nuclear single market for goods and services, and providing funding for nuclear fusion research.

How did it come to this? Not even the most ardent no voter in the referendum was aware that a vote against the EU was going to turn into a vote against Euratom. I have not met anyone who voted against Euratom in the referendum. I agree with the honourable Member for Oxford West and Abingdon in the other place when she said:

“The most sensible approach to nuclear safeguarding would be for the United Kingdom to remain a member of Euratom”,—[Official Report, Commons, 16/10/17; col. 648.]


rather than having to go through this process. This view has been supported by the Nuclear Industry Association, as we have heard, but the Government have produced and waved around legal advice to say that that is not possible. With all due respect to some members of the legal profession in this House, my experience is that the answer you get is only sometimes associated with the question you asked in the first place. I believe some others had a legal opinion that points in the other direction. The NIA also states that leaving Euratom without having replicated and replaced the current arrangements could impact on the supply of electricity and medical isotopes. That is why your Lordships are right to be concerned about this. The NIA calls for a transitional period to guarantee continuity and avoid a cliff edge in March 2019. Can the Minister outline the Government’s position regarding transition?

As the Minister outlined, the first clause is about creating powers for the ONR and the second is one of the now-traditional Henry VIII powers that seem to pop up in every piece of legislation that comes before your Lordships’ House. I shall leave the Clause 2 debate for Committee stage, except to reiterate the concerns that the noble Lord, Lord Grantchester, has already expressed. I will dwell on Clause 1 and the aim of reforming existing legislation to ensure that the ONR is able to pick up its important safeguarding role next spring, in the event that the Government continue to press on with departing from Euratom.

The legislation appears to be the easy bit. The challenge is the scramble to get all the pieces in place in the event of the metaphorical cliff edge arriving. The Bill fails to make any clearer how the Government will address the practical challenge of setting up this regime. It is a hands-off approach. At the moment, as the Minister knows, Euratom employs about 160 staff, a quarter of whom focus on UK installations. We are told that the ONR is recruiting and training people to replace the 40 Euratom safeguarding staff. Can the Minister tell us how that is going and by how much the ONR budget is being and has been increased to facilitate this up-skilling?

There is the issue of facilities. Will the ONR be taking over existing Euratom equipment and facilities in the UK? If so, have the Government given thought to the liability it is taking on? Will taking ownership make the ONR or BEIS liable for the decommissioning, removal and disposal of any equipment taken on as a result of the transfer? Again, what is the projected cost of liability?

Those are just a couple of issues. There is so much to do and so little time to do it. Does the Minister agree with the senior ONR official cited by the noble Lord, Lord Grantchester, who told the Commons BEIS Select Committee that the timescale for adding safeguarding responsibilities to the ONR is very challenging?

Looking beyond our shores for a moment and turning to the wider proliferation landscape, my noble friend Lord Teverson will pick up on the international and institutional issues. I just note that to cover for our Euratom departure, the UK will need to complete international agreements with a wide range of non-EU countries. Once again, this is a formidable to-do list, especially given that there are one or two other things to do associated with the whole Brexit process. It relies on an enormous groundswell of good will from the global nuclear community. Let us hope that this is forthcoming.

Briefly, I turn to the two areas of Euratom actively ignored by the Bill: the nuclear single market and nuclear fusion research. The Minister has already tried to bat those to one side as irrelevant to the Bill, but he should recognise the legitimate concerns of noble Lords about these issues and that, unless there is another forum for us to debate the wider nuclear agenda, this is the only game in town. For that reason, he should take these issues seriously and engage with this debate.

The focal point of the free market issue has been and is radioactive isotopes for medical and scientific use. The concern is not trumped up by politicians; it has come from radiologists, scientists and practitioners in the industry. It is a genuine concern and legitimate issue that the Government have to address.

If it is not this Bill and if it is not BEIS, can the Minister tell us which department and who in that department is now working on this process, who will be accountable and when we will have the opportunity to discuss that on the Floor of the House? As the Member for Wantage so compellingly put it in the other place, we need to replicate the nuclear common market that exists because of our membership of Euratom. I would add that because the Prime Minister has now said that we will not have a customs union, this becomes much harder. During the course of the Bill, the Minister must explain how this common market will be achieved. It is not just about radioisotopes. Post exit, if a nuclear component is sourced outside the UK for a project to build or maintain a nuclear power station, it could no longer be seamlessly imported. Delay in such matters is critical.

This is not theoretical. As EDF has pointed out, the Sizewell B plant breakdown in 2010 was handled using the nuclear market arrangements. They will not be available in future.

The Commons BEIS Select Committee views withdrawal from Euratom as having a considerable impact on the UK civil nuclear sector. Having listened to the Minister’s opening comments, he seems to be accepting that there will be more friction than there is now—“as frictionless as possible” is an acknowledgement that friction will exist. He said that everything that could be done will be done, and “We are doing what we can”. If the Minister is a betting man, would he put it at 70:30 that he will do as much as can be done, or is it a 60:40 chance that we will succeed in this negotiation?

Another area on which noble Lords will talk in detail is nuclear research. As the Minister knows, the UK is home to JET. The Government have underwritten Culham, I believe to 2020, which the Minister will realise is not very far away. People working there need certainty and to know what is happening beyond 2020. The UK has benefited in the long term from fusion projects, and I believe that the Government want that to continue. Membership of the Fusion For Energy programmes has led to at least £500 million of contracts for UK concerns, but there needs to be long-term security for this research, and 2020 does not constitute long term. Perhaps the Minister can help with this. This is not just about the prospects for the projects; brilliant researchers and engineers have gathered here from across the whole of Europe, and they need to know the status of their project as well as the status of their passport.

By hiding behind the narrow remit of this Bill we are not addressing these important issues, which we look forward to hearing more about. My party will work to help improve the Bill, but we are disappointed that it deliberately ignores some very important issues and concerns of this House. Given that this is the only chance to air them, the onus is on the Minister to come to the Dispatch Box with a broad mind and a full set of answers to this wider set of issues. We await his answers with interest.

Green Finance

Lord Fox Excerpts

Thursday 18th January 2018 Lords Chamber

[Lord Fox (LD)]

My Lords, I join others in thanking my noble friend Lord Teverson for securing this debate and for proving that he is the very model of a modern eco-warrior. I will focus on two areas: resilience to climate change, and transparency; and—the Minister will not be surprised to hear—the industrial implications of this for the UK.

Starting with resilience and transparency, historically UK pension investments were dominated by fossil fuels, not least because of the position of Shell and BP in the FTSE. A managed retreat from that exposure to fossil fuels is in our interests not just societally but in terms of our pensions. Progress has been made but it should be noted that the value of local council pension fund holdings in fossil fuels has actually risen 15% to £16 billion over the past two years.

Planning and reporting decisions need to be made rationally. They need to be based on investment-grade analysis and backed by real data. London pension funds have been global leaders in pressing companies to report their exposure to climate change, as we heard from the previous speaker. We warmly support the Bank of England and its task force on climate disclosure and reporting requirements for companies because, clearly, we need to do more. In that regard, does the Minister have any comments on my right honourable friend Vince Cable’s suggestion regarding reporting? He suggested that the UK should follow France’s lead in ensuring that disclosure applies both to companies and the flows of finance. That would include requiring investors to explain how their policies align with UK carbon budgets set under the Climate Change Act. As your Lordships know, transparency on sustainability, alongside transparency in financial reporting, helps investors make informed decisions.

This is a global trend and, as we have heard from other speakers, the UK benefits hugely from being an early adopter, helping to shape how the practice has developed globally. The Government can best help this by setting standards for transparency. Can the Minister reassure the House that the momentum injected into transparency by the coalition Government will not be lost over time? Reporting will also be assisted by common standards so we are looking forward to the output of the BSI, which is working closely with industry to develop a new set of green and sustainable finance management standards. The first standard will be produced, I think, early this year, but these standards will be voluntary. Can the Minister confirm that once the standards have emerged, the Government will put their weight behind getting business and other areas to adopt them? Without a standard approach, comparison becomes very difficult.

Turning to the industrial implications of this sector in the UK, as the Minister knows, importantly, the Government’s published industrial strategy includes a clean growth strategy. Clean technology must be an important element of our future industrial strategy. BEIS estimates that clean tech already employs about 430,000 people in the UK and is growing at double-digit rates. The very existence of the clean growth strategy is itself positive and we welcome it. Clean energy entrepreneurs have long felt that they were fighting for recognition. This starts that process. The Government have firmly stated that this industry is not a niche and that the clean economy is an important growth area for the UK economy. We welcome that.

Of course, the challenge is what happens next. This is a very broad sector that operates at many scales. It covers everything from a neighbourhood scheme to insulate homes, to a £1 billion offshore wind farm. Can the Minister perhaps devote some of his time to explaining the way in which the Government’s industrial strategy will vary across these different opportunities? Of course, progress turns not just on government but on access to finance, and we have heard strong interventions today from other speakers. Yet the UK’s Green Investment Bank—GIB—has been sold to Macquarie. Before the sale, GIB demonstrated the benefits of building a centre of expertise in green finance. My party regrets what we see as an ideological sale. While there are other games in town for those seeking finance, the Government must now further free things up, in particular by changing—as my noble friend, I think, pointed out—the fiduciary duties of owners of pension funds.

Place was another important, and very welcome, aspect of the industrial strategy. In that regard, the existing clean-tech industry is more geographically spread than many other industries: it is helping to rebalance some of the industrial activity around the United Kingdom. Much of this industry serves local people and is inherently distributed across the country, so it serves the “place” part of the industrial strategy agenda to continue to encourage it. In addition, the Government now plan local industrial strategies. Can the Minister say how these will incorporate the green element?

Funding for smaller projects is still a challenge. With the sale of GIB, we lost an organisation dedicated to this sector. It was, I repeat, wrong for it to be sold. We now need the Minister to explain how the Government will encourage more microfinance for the smaller, more locally based projects around the country. Perhaps the Government should also commit to allowing local authorities to borrow for green infrastructure improvements related to energy saving or other green elements.

I turn to business investment. Many businesses perhaps choose to spend capital on new plant, rather than fixing some of the environmental needs of their sites. The Government can do more on messaging the importance of efficiency—in the energy or environmental sense—to leverage higher productivity, and they can look at taxation. Will the Minister undertake to speak to Treasury colleagues about how tax can be further used to drive green investment in our industry?

Worryingly, the UK is becoming a less attractive destination for green investment. For example, the EY—formerly Ernst & Young—index measuring countries’ attractiveness to energy investment saw the UK fall from fourth place in 2013 to 10th place in 2017. Can the Minister tell the House how he intends to reverse this negative trend?

I expect that the Minister will mention the Government’s green finance task force, as have other noble Lords. We welcome it, but my understanding is that it will meet three times and disband after six months. Can the Minister confirm that and, if it is true, say what he hopes to get from such an ephemeral gathering?

Clean energy forms a significant part of green finance. Energy is complex, as the Minister knows. Heat, transport and power are inextricably linked. Any action on one element has a reaction elsewhere. Energy is badly served by decisions taken on political instinct or to grab headlines. Energy investments are long term, requiring investors to consider future policy for several Parliaments to come—often more than several. We need stable policy, developed collaboratively across the whole industry.

A clear pipeline of future work is the best environment for clean investment. Businesses that see a future market will invest in technology, facilities and the skills of their people. That helps bring costs down and hastens the transition to a clean economy. Furthermore, it will unlock the clean finance we need.

To conclude, the UK led the way on resilience and reporting. It has built great expertise in investing around the world, as we have heard from other speakers. As this debate reveals, there is cause for positive thoughts, but overall there can be no backsliding: it is a competitive world. Most of the success outlined here today is a result of decisions taken five or 10 years ago. We need to know that this Government understand today’s challenges and opportunities. I call on the Minister to convince us that he has that understanding.

Industrial Strategy

Lord Fox Excerpts

Monday 8th January 2018 Lords Chamber

[Lord Fox (LD)]

My Lords, I, too, welcome this debate and the White Paper. I refer Members to my declared interests. The debate has been far-ranging, with much wisdom and experience. Your Lordships will be relieved to hear that I will not try to distil the whole debate in my speech. But I note, as others have, the commonality and the coming together of the language that noble Lords have used in describing an industrial strategy. As many have noted, from the noble Lord, Lord Heseltine, to the noble Lord, Lord Mandelson, to the coalition, through to today’s White Paper, the curriculum has begun to come together.

However, before we become too self-congratulatory about that, the White Paper is designed to, and does, paint big pictures—pictures that many noble Lords can pick up and take something from. As the noble Lord, Lord Prior, pointed out, the harder part is the next step—the implementation. That is where the nitty-gritty—the friction—will come. We heard some preludes to that from the noble Lords, Lord Heseltine, Lord Wrigglesworth and Lord Stunell, who started to set out some of those challenges. For this reason, I will unapologetically focus in on some of the nitty-gritty in that implementation. I trust that if the Minister is unable to answer today, he will provide a written answer. Looking at the paper in front of him, I suspect that he has rather a lot of questions to answer already.

During the launch of the White Paper, very little was said about how the strategy would be driven, measured and assessed. As other noble Lords have pointed out, it was announced that the Cabinet committee chaired by the PM would be at the apex of the strategy. Can the Minister tell us when, if and how often this committee will meet, and who else will be involved?

Moving on, we talked about the industrial strategy council. The noble Lord, Lord Hollick, brought that into focus, saying that it has to be focused on outcomes. How will it be funded? What metrics and benchmarks will it hold the strategy to? How will it hold the Government to account? Will it be at Cabinet level or Select Committee level? Who will be on it and how will members be selected? In other words, how will it maintain an independent view? Actually, will it be able to maintain an independent view as an OBR-type organisation? Perhaps the desire of the noble Lord, Lord Heseltine, to have an organisation that can look ahead as well as back may be possible within that, but a lot depends on the questions I have just asked.

As to delivery at local level, a lot has been said by many people. The challenge of place is important, not least around the equality issue that a number of noble Lords on both sides of the House made very strong points about. The challenge of overlapping responsibility, as illustrated by the noble Lord, Lord Heseltine, is huge. For example, in terms of training and small business development, there are 133 organisations doing small business development in Cheshire alone. This level of duplication and lack of focus really will get in the way of a meaningful delivery of local industrial strategies, so how are the Government going to develop that necessary focus?

We also talked about civic leadership. Beyond the seven mayoral areas, my noble friend Lady Randerson pointed out that we need to find ways of developing that civic leadership in areas where there is no mayoral leadership.

Local enterprise partnerships have been mentioned. The paradox here is that they are generally weakest in the places where we most need what they might do. How are the Government going to address that issue if we do not have a single, unitary focus? LEPs are going to be an important part of it so where do they feature in the Government’s thinking and what are they going to do to make them work where we need them most? The noble Baroness, Lady Valentine, raised a relevant query about how local industrial strategies will be trialled and where. Again, we need more details around how that will come.

Regarding funding, on the positive side, to date the Treasury has signalled support for the research and innovation elements of the strategy. That has been extremely positive and I agree with the noble Lord, Lord Willetts, that we should all be behind that process. The industrial strategy challenge fund has been a focus, and the noble Lord, Lord Kakkar, and others have made it clear that we have to ensure that basic research also gets the necessary funds and that it is not all going through a challenge route, because that basic competence is the magnet that draws so much to the United Kingdom. Going back to the challenge fund, I think that wave 2 funding has been decided. Can the Minister explain how that decision process will be in train for further and future waves? Perhaps he can also help us with some maths and tell us, after the money which has so far been announced by the Government, how much money is now left for future challenges.

More widely, some examples within the White Paper which highlight and demonstrate the Government’s commitment are actually partially, or largely, funded by the European Regional Development Fund. We have not seen guarantees of where and how all that ERDF funding is going to be replaced. We would like some indication about that because there is a danger of it leaving some very important projects in limbo. That would hardly signal the long-term approach that the White Paper promised. Perhaps the Minister will be able to address that issue.

As many noble Lords noted, including the Minister himself, a meaningful industrial strategy has to encompass and embrace industry 4.0—the automation, digital and robot revolution. I was surprised and perhaps a bit disappointed that neither the Minister nor anyone else mentioned the Made Smarter Review, which the Government commissioned and contains some very strong and specific recommendations. The last time that the Minister and I engaged on this subject was the day after he took over. I hope he has now had a chance to study the report and can let us know where he feels some of those important recommendations should come. Now is not the time and place to go through them all but one was about a national adoption mechanism, which starts to address the long-tail issue mentioned by a number of noble Lords. There is a very long tail of small and medium-sized businesses for which embracing industry 4.0 or the digital age is going to be difficult. Frankly, they are not going to be much driven by it. The Made Smarter Review put together a strategy on how the Government can start to lead that process, bringing that long tail up to speed. So far the Government have passed on opportunities to fund it, the most recent Budget being the most recent opportunity. Perhaps the Minister will say where that lies in the firmament of opportunities to invest in items.

Many words have been spoken today about training and skills. The noble Lord, Lord Bhattacharyya, highlighted what I think he called the skills mess. However the Government, and certainly the Minister, presented a very rose-tinted view of where we are on training and skills in the White Paper. If there is any part of the White Paper that I would urge the Government to go back into, it is that one. There are huge challenges, some of which have been outlined by noble Lords. I will pick up on a couple.

One is the terrible outflow already of EU 27 talent. We are seeing it from academia and from industry, and the Government need to find a way of staunching that now, as well as embracing some of the issues that the noble Lord, Lord Maude, brought up around free movement and ways of making sure we can remain the magnet for talent that we have become within the European Union. We have to find a way of doing that.

The second point, highlighted by the noble Lord, Lord Horam, is the apprentice system and, frankly, the disarray that we currently find it in. All of us hope that this disarray is temporary and is about the apprentice levy being worked through, but there is a suspicion that there have been quite a lot of dropped balls when it comes to the implementation of this. It has also impacted other areas, particularly vocational training and other colleges where accreditation has been interfered with by the system. I would ask the Government to redouble their efforts to clear up the mess that appears to have been created around the apprentice levy.

We have not talked a lot about teachers, but the STEM teachers of the future come from the student body we have. That is a lot of pressure on teaching. Teacher recruitment has constantly missed targets, which have generally, a bit like in the construction industry, been filled by recruits from other EU countries. Clearly, the possibility of Brexit is already creating uncertainty for those potential recruits. At the same time, the number of domestic recruits has plummeted. The Minister has some big challenges here around skills. There is a real danger that this industrial strategy could be dead in the water from the outset due to the absence of the people to actually deliver it. The Minister needs to acknowledge that and perhaps tell us how the White Paper, and certainly its implementation, can address that challenge.

We clearly have a long way to travel: as the noble Lord, Lord Prior, said, this is the hors d’oeuvre, and we have a great deal of hard work to get to the nuts and port. However, the fact that the Government and all those in opposition are debating this on the same terms should be taken as a positive. We are using the same language, which has a big benefit. Wise Peers have noted that we need to develop, engender and move forward that consensus in order to smooth this delivery process. I agree with that. We face an uncertain future and, as the Minister said, we are at a critical point.