Nuclear Energy: Small Modular Reactors

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Monday 24th April 2017 Lords Chamber

[Lord Prior of Brampton]

My Lords, the honest answer is that we simply do not yet know whether small modular reactors will represent a cheap source of low-carbon energy for the future. We just do not know what the economics are, which is why in due course we will be publishing a technical and economic evaluation, based on assessing the 32 proposals that have been put to us for SMRs. The only truthful answer at the moment is that the jury is still out.

[Lord Fox (LD)]

My Lords, the Minister will be aware that different designs of SMR require different levels of fuel enrichment, and that that brings into play proliferation issues. Can he explain what thoughts and conversations are going on about proliferation and how the UK will continue to pursue non-proliferation issues when we summarily remove ourselves from Euratom?

EU Membership: UK Science

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Thursday 23rd March 2017 Lords Chamber

[Lord Fox (LD)]

My Lords, I too thank the noble Earl, Lord Selborne, for his wise leadership of the committee, and I thank fellow committee members for their tolerance of my interventions. The advice we received and the support that we had from the team as well as the evidence that we received from the inquiry was all very helpful for the report. As the noble Earl pointed out, science and research are central to the economic future of this country. Its importance was recognised in the industrial strategy paper and I welcome the opportunity to debate it today.

As our chairman pointed out, a preceding report in April set out the challenges and some of the reasons why Brexit would be a problem for British science. The role of this report is to set out how we can address the challenge of Brexit and make it work for this country. The word “boldness” in the report’s title is an appropriate injunction. For that we have to thank the noble Lord, Lord Hennessy, for persuading us to adopt such stridency.

There is certainly complexity around this issue. There is Brexit, of course, but also the industrial strategy, as previously mentioned, and the Higher Education and Research Bill, to name but two elements of that. There are a lot of moving pieces. However, it is important not to let these moving pieces divert us from the scale of the task that we should undertake. The enormity of that is set out in the report. Therefore, I shall try to simplify my remarks around the themes of people, money and co-operation.

People are the cornerstone of science in this country, as the noble Lord, Lord Winston, set out very spiritedly, and the present situation is not good in that regard. The report is clear that,

“the Government should send repeated signals to the global science community that the UK remains”,

an exciting place for talented scientists. This patently has not been done as regards the response to immigration. People who are vital to our research and our scientific future are already making decisions. Some are leaving. Others are deciding not to come in the first place, and many more are mulling their options very seriously. I know scientists in this country who are confused, uncertain and hurt by the reaction they have confronted. Therefore the decision not to unilaterally offer the right to remain in this country to EU and EFTA scientists, and to include them in immigration figures, is idiotic, as the noble Earl, Lord Selborne, put it. It hangs over science a bit like a foul smell in a fume cupboard and has a bad influence on our way forward.

The report is right: we need to continue to pursue schemes that attract people to this country, such as the Chevening scholarships, the Erasmus scheme and others. Far more ambitiously, we need to step out with the front foot and search for some of the world’s leaders in science. But how can that happen when the overall message is, “You are foreigners; you are alien”? Does the Minister agree with the approach to attract world leaders in science? If he does, why are the Government not working harder to make the leading scientists who we already have in this country feel more welcome?

My next theme is money. The noble Earl set out the huge amount of money that is at stake. Underwriting the approved Horizon 2020 funding was a good, reasonable first step and the Government should be commended for that. However, time moves on and the next programme is already being considered. We need to understand where we are going on that. The report raises those concerns. In today’s Times Higher Education, a leading German academic pointed out that the current confusion makes it very difficult to understand whether the United Kingdom will be part of the EU’s multibillion research funding system. How do the Government view our position within the funding system as regards Horizon 2020 and the other schemes? If they are not planning to be part of that system, what is the plan? Will all the money from which we benefit be replaced from somewhere else in the United Kingdom?

The additional funding set out in the Autumn Statement was welcome. Can the Minister confirm that this is additional funding and not the first down payment to replace money that we are going to lose? If the Minister could confirm that, it would be helpful. I also note that the first tranche of the industrial strategy challenge fund money—£270 million—was allocated to three important technology areas. However, I wonder whether the cart has not been put before the horse a little in that the industrial strategy itself is still just in the form of a consultative Green Paper and something of a twinkle in the Minister’s and the Government’s eye, and yet money has already been pitched into it. I hope that the Minister will explain how, without an industrial strategy, they plan to focus the industrial strategy challenge fund.

The report is strong on the need for continued and enhanced co-operation. I am sure that no one in this House would disagree with that. However, we have a very good example of where existing co-operation is already being threatened, which sends out a bad message. I am sure that other noble Lords will have their own examples, but that message and the speed with which we are dealing with the Euratom issue throws the future of Culham into full and stark relief. In the context of seeking future co-operation, will the Minister explain how we are going to deal with the current co-operation issues vis-à-vis this very important institute? More importantly, would he tell the House what is the position of the scientists at Culham today? What is their future and how will it be mapped out as we go through the disengagement process?

The report rightly calls for boldness. Boldness requires bravery on the part of the Government in unilaterally assuring EU and EFTA scientists that they have a place here as long as they want to stay, in stating how the European funding of British science will be managed in future, and in admitting that we are sending out the wrong signals through our handling of the Euratom issue, and changing the way we deal with it. I ask the Minister to see the report as a call for action to achieve the best ends. At the risk of sounding like the title of a South American soap opera, I urge him to be bold and brave.

Industrial Strategy Consultation

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Monday 23rd January 2017 Lords Chamber

[Lord Mendelsohn (Lab)]

My Lords, I welcome the launch of the Government’s Green Paper on industrial strategy. There is much to go through and be positive about and much to scrutinise. I hope there will be other opportunities to have meaningful debates on this matter. There are considerable questions about the Green Paper, which I hope the Minister can answer. It is clear that there is much for us to do to maintain our economic position. Whether or not it has novel ideas is no test of a good industrial policy. There is much to be gained by doing more of what was being done—just doing it better. Much of this has a familiar feel. Seven of the 10 pillars of the industrial strategy were key parts of the Government’s productivity plan, Fixing the Foundations—the words “cut and paste” crossed my mind.

However, on this side of the House we are glad that some of the approach—particularly the sector plan—does represent a new way to support the development of our economy. We are keen to observe the development of this strategy: how the Government will deal with the obvious issues around picking winners and national champions, and how this approach will evolve. We are pleased that the Government are looking to support the automotive industry. A sector deal would undoubtedly be useful here. The Government have been very coy about the view that they did much to encourage the most recent announcement of investment by Nissan—the so-called secret deal. However, I am sure the Minister can confirm that there was, in fact, no deal and that the investment announced was planned for a timescale that would not be adversely affected by our relationship with Europe. Will the Minister confirm that the message from Nissan reminded the Government that, in common with other Japanese companies, it would review its position in keeping with the Japanese Government’s 15-page letter? Given the current plan for exit from Europe, and its inconsistency with their desired approach, a sector deal is the only way to ensure a viable car industry in the medium to long term.

I am also pleased to see that the pharma industry and the life science industry get a special mention. Can the Minister confirm that the Government will defend the UK base against US industry’s ambitions in any potential trade deal with the United States?

The Green Paper was accompanied by the re-announcement of existing commitments of resources. The funds for science and research are very important and, as I understand it, recover our position since the cuts started to set in in 2010. None the less, the focus on supporting science, technology and innovation is to be strongly supported. Additionally, the support for technical education is welcome, and the work of the noble Lord, Lord Sainsbury, in promoting this crucial requirement for our economy should be acknowledged.

As with many areas of this plan, there is a case for scepticism about any further education proposals that do not address the severe capacity issues in the sector. Can the Minister provide a clearer idea of how the development of this strategy will be able to call on new resources, what the expected timetable is for outlining further elements of the industrial strategy, and how it will dovetail with the budget process?

The Green Paper suffers from two of the perennial problems we always face with government business policy announcements. There is a terrible lack of objectives, and there is no clear road map or sense of desired outcomes. Instead, a series of good and reasonable measures, worthy as they are, do not make a plan that is likely to have real impact or be effective and efficient. Can the Minister tell us whether any concrete objectives or goals that can reasonably be measured will be set in this process?

Secondly—the Statement just did this again—the Green Paper glosses over a huge imbalance in the economy. Our huge reliance on the service sector is not meaningfully addressed in this industrial strategy; nor is the acute problem of the size of our manufacturing industry and its disproportionate decline. While any industrial strategy must look to the long term, our immediate future relies on how well our services can perform. I would be grateful if the Minister could outline how the service sector is expected to be part of, or to be assisted by, the industrial strategy. This is especially important in areas where, in support of the industrial strategy, we are looking at reinforcing our research and innovation, such as in robotics and artificial intelligence, and many others that are likely to have a major impact on employment requirements in the services sector.

There are, of course, some areas in which we had been expecting something new and different in the industrial strategy. We had hoped for greater ambition on broadband and mobile capacity, signalling a change to the currently pedestrian goals in the Digital Economy Bill. We had also expected slightly more about how we see effective markets and competition, and the culture of business. Crucially, are there any plans to create tougher oversight of foreign investment in the United Kingdom? Does the Minister agree with the sentiment that,

“A proper industrial strategy wouldn’t automatically stop the sale of British firms to foreign ones, but it should be capable of stepping in to defend a sector that is as important as pharmaceuticals is to Britain”?


I am sure he does: those were, of course, the words of the Prime Minister previously. Can the Minister account for their omission from the Green Paper?

There is much to welcome in starting a conversation about an industrial strategy, and there are some positive ideas here. But this is not yet a plan, and on this side of the House we hope that, over time, one will emerge. This is a first step. Martin Luther King said:

“Faith is taking the first step even when you don’t see the whole staircase”.


The Government would do well to remember the old adage that setting goals is the first step in turning the invisible into the visible. An effective industrial strategy will need that.

[Lord Fox (LD)]

My Lords, the Prime Minister’s decision to adopt a new active role for Government in industry is welcomed on these Benches. The Green Paper’s 10 pillars have most of the right words, and they identify many of the areas of concern that have been voiced in many debates over the past few years. I trust that we will have an opportunity to debate some of those aspects in more detail. I shall focus on just two of those elements—skills and cultivating world-leading sectors. I remind your Lordships of my published interests.

First, the Green Paper is right to identify skills as a central issue to future prosperity and productivity for the country, and a cash boost for technical and STEM education is, of course, welcome. However, it should be put into the context of a 7.5% reduction in schools’ per-pupil funding by 2020 and the cash-freezing of the adult skills budget until 2020—a £30 million real-terms cut next year. Thus, £170 million for new institutes of technology is all very fine but irrelevant given some of the wider cuts affecting all our young people. Therefore, can the Minister please tell us whether the Government plan to reverse their cuts to the education budgets for four to 19 year-olds? Also on skills, the Government continue to ignore the benefit and value that we gain from workers and scientists from the European Union working in this country. They continue to treat these people and their families as a bargaining chip. Could the Minister at least acknowledge the personal anguish being caused to these people, many of whom are already contributing greatly to the success of the industrial sectors that he seeks to bolster?

Secondly, the Green Paper’s support for the coalition’s sector strategy is very welcome. Here I disagree with the noble Lord, Lord Mendelsohn, in that a bit of cut and paste is actually a good thing as these strategies have to span more than one Parliament to be successful and take root. Therefore, they depend on a long-term approach. It is good news that the Government are continuing to run those strategies through. However, the idea that any Government can have a reasonable strategy for British industry while recklessly withdrawing from the single market is not credible.

Last week, the Prime Minister confirmed her intention to exit the single market, yet, extraordinarily, the Green Paper fails to refer to either the single market or the customs union, although a few euphemisms such as “turbulent times” creep in. The Government’s idea seems to be to negotiate individual sectoral agreements for “frictionless trade”—their term. Not every sector can benefit from this, or we would still be in the single market, and not every sector can expect the negotiations to succeed. Therefore, as these negotiations start, the Government will have to decide which sectors will be top of their list for trade deals. Conversely, some will be at the bottom. The Prime Minister has said that the industrial strategy is not about picking winners, but the Brexit negotiations will inevitably pick losers. Can the Minister please tell the House which sectors will win and which will lose?

[Lord Prior of Brampton]

I thank both noble Lords for their interesting comments. I agree with the noble Lord, Lord Fox, that if this industrial strategy is to have real strength, it will have to be spread across Parliaments. As part of the consultation process it will be interesting to hear whether noble Lords have any ideas on how we can do that and how we can institutionalise some cross-party agreement around productivity. I do not know whether anyone else read the speech given by Andy Haldane from the Bank of England in the north-east a month or so ago, which I think was entitled Red Car, Blue Car. He reminded us that the US economist, Paul Krugman, noted:

“Productivity isn’t everything, but in the long run it is almost everything”.


I think that most people would agree with that. Particularly in an economy such as ours with high levels of employment, if you want to increase wealth, you have to increase productivity.

It is true that we are building on the past. I pay tribute to the work done by previous Governments in this field. But despite what has been done in the past we have to accept that productivity levels in this country are low; worse than that, they are much lower in some parts of the country than in others. Although productivity may be just an economic concept, the consequence of that is that wage levels are much lower in some parts of the country than in others. In the East Midlands, for example, the average wage is £480 a week, whereas in the south-east it is £670 a week. No one, on either side of the House, can be happy with that degree of inequality. If we are to address that, we have to address productivity. Therefore, if there is a familiar feel to our Green Paper, I make no apologies for that. We are building on the past but we must do a lot better.

I think that both noble Lords support the very significant growth in R&D spending, and that there will be broad support across the House for the two horizontal parts of this industrial strategy: R&D and innovation spending, and the focus on technical skills. That is not to say that we are not doing anything now but we could do a lot more. We have huge strengths in our university sector, but we are less strong on how we commercialise some of that research. I was horrified to learn that 14 to 16 year-olds today are no more literate or numerate than people aged between 45 and 55. There has been no real improvement in teaching basic literacy and numeracy for 20 or 30 years, which is quite an indictment of our education system. Therefore, putting more resource into education at all levels—primary school as well as later on—particularly into the STEM subjects, is extremely important. Skills are very important.

Reference was made to coming out of the single market. I do not think that is a debate we can usefully have at this point. Of course, we will do everything we can to retain as much frictionless access to the single market as possible. It is a very important market for many industries. However, other markets are important as well and we need to develop them. That is very much a part of the industrial strategy.

The noble Lord, Lord Mendelsohn, referred to life sciences. I absolutely confirm that they are important. The pharmaceutical, med tech and biotech industries are extremely important. British research is absolutely at the forefront of world research in cell and gene therapy. As far as Japanese investment is concerned, we will do everything we can to encourage inward investment from Japan and other parts of the world. The automotive industry would be only a pale shadow, were it not for the big Japanese investments that came here in the 1980s. We fully recognise that and are working very closely with Toyota, Nissan and Honda to ensure that they remain and continue to invest in the UK. The advanced manufacturing unit at Warwick is doing extraordinary work in automotive and advanced manufacturing, and the Green Paper contains a commitment to develop an institute for battery technology. Finding a way to store energy economically and efficiently would give us a huge competitive advantage as we develop the industrial strategy. However, this is a Green Paper; it is out for discussion for the next three months. I was asked about the timing. The consultation period will last for three months. The plan is to produce a White Paper by September, which will feed into the Autumn Statement. That is the broad timing. I look forward to engaging with many noble Lords as we develop the Green Paper into a White Paper over the next six months.

National Minimum Wage (Amendment) (No. 2) Regulations 2016

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Thursday 8th September 2016 Lords Chamber

[The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)]

My Lords, the purpose of these regulations is to increase the hourly rate of the national minimum wage and increase the maximum amount for living accommodation that counts towards minimum wage pay to ensure the provision of higher-quality accommodation by employers, in line with the recommendations from the Low Pay Commission.

The national minimum wage is designed to protect low-income workers and provides an incentive to work by ensuring that all workers receive at least the hourly minimum rates set. It helps to deter unscrupulous employers from competing on very low pay.

Following advice from the Low Pay Commission, the Government are uprating the minimum wage from 1 October, so that the main rate for 21 to 24 year-olds will be £6.95 per hour. This represents an increase of 3.7%, despite CPI inflation currently being 0.6%.

Younger people aged between 18 and 20 years-old will be entitled to a minimum of £5.55, a 4.7% increase on the rate currently in force, and those between 16 and 17 years old will have a minimum wage rate of £4 an hour. For apprentices aged under 19, or those aged 19 and over in the first year of their apprenticeship, we are increasing the minimum wage by 3% to £3.40. This follows the 57% increase to the apprenticeship minimum wage last year, the largest increase to date.

For 21 to 24 year-olds, this is the largest increase in the main rate of the national minimum wage since 2008. It will mean that someone working full time on the national minimum wage will see their earnings increase by around £450 per year. The new main rate of the national minimum wage is expected to be at its highest level ever when accounting for the general increases in prices, surpassing its pre-recession peak. In all, we estimate that around 500,000 workers are expected to benefit from the national minimum wage increases being debated today.

The accommodation offset was introduced in 1999. It limits the amount that employers can recoup through accommodation charges. This year we followed advice from the Low Pay Commission and increased it significantly by 12% to £6 a day from October 2016. This is intended to ensure the provision of higher-quality accommodation by employers.

Since its introduction in 1999, the national minimum wage has been a success in supporting the lowest-paid UK workers. Over that period it has increased faster than average wages and inflation without an adverse effect on employment. It has continued to rise each year during the worst recession in living memory and the new main rate is expected to be at its highest-ever real value.

These increases to minimum wage rates are of course in addition to the national living wage for those aged 25 and over, which we implemented in April. It is the Government’s ambition for the national living wage to reach 60% of median earnings by 2020. In addition, the national minimum wage cycle will be aligned with the national living wage cycle from April 2017. This will reduce the burden on businesses that have to update their workforce’s pay more than once a year and will mean that the statutory pay floor for all ages is uprated simultaneously.

I note the findings of the recent research conducted by the Federation of Small Businesses and understand that some concerns have been raised about the impact on businesses’ profitability. Let me address this point specifically. The Government are committed to ensuring that the new rates work for businesses of all sizes and we continue to work closely with the LPC to consider the wider economic and business impact when recommending and setting national minimum wage rates. We have already introduced measures to mitigate the cost to business of our ambition to move to a higher-wage economy, including increasing the employment allowance from £2,000 to £3,000 this year. This measure will benefit up to 500,000 employers and take 90,000 employers out of NIC payments altogether.

For smaller businesses we have extended the doubling of the small business rate relief for a further year until April 2017. Around 600,000 small businesses benefit from the small business rate relief and about 405,000 businesses will pay no rates at all as a result of the extension.

The most recent employment statistics show that the employment rate is at a record high, with almost 32 million people in work and the unemployment rate at its lowest level in more than 10 years, with fewer than 1.7 million people unemployed and wages up 2.4% on a year earlier, while inflation has, of course, remained low. While the referendum result may have introduced uncertainty over forecasts and assessments made before June, we should remember that the UK labour market was remarkably resilient during the worst recession in living memory.

The new rates are recommended by the independent Low Pay Commission, which consulted extensively with stakeholders representing both business and workers, as well as conducting comprehensive research and analysis. Crucially, the Low Pay Commission has proven that a rising minimum wage can go hand in hand with rising employment. The carefully considered independent advice from the Low Pay Commission is central to maintaining this balance. In particular, its remit is clear that, when considering the pace of increased minimum wage rates, the state of the economy should be taken into account. The LPC has stated that the labour market has continued to perform well, with robust employment growth in low-paying sectors.

[Lord Fox (LD)]

My Lords, the Minister is right to suggest that we have high or record high employment levels. We are also at record levels of zero-hour contracts. The minimum wage is not actually a wage; it is a minimum hourly rate and people fight to get sufficient hours to get that minimum wage. Can the Minister comment on the way in which the Government will approach the zero-hour part, which is diminishing the minimum wage for many people across the country?

[Baroness Neville-Rolfe]

We have debated zero-hours contracts in this House a number of times. I continue to believe that they have a part to play in the modern flexible market. There were some abuses to those contracts, which we discussed last year, and we have banned the use of exclusivity clauses so that people have the freedom to look for and take other work opportunities and have more control over their work hours and income. However, I believe that a strong minimum wage framework with good enforcement, which I am going to talk about, is the right way forward. The effectiveness of this system—I think that this is true in every regulatory area that I deal with—relies on proper enforcement.

We are clear that anyone entitled to be paid the national minimum wage or the national living wage should receive it, whether they are on a zero-hours contract or not. The enforcement of a minimum wage is therefore essential to its success and we are committed to cracking down on employers who break the minimum wage law. That is across all sectors of the economy. That is why we have increased the enforcement budget for HMRC, which enforces the minimum wage on behalf of our department. That is £20 million in 2016-17, up from £13 million last year. That bolsters its resources and ensures that it can respond to every worker complaint. We will continue to take a tough approach to employers who break minimum wage law. As of April this year, the Government have also doubled the national minimum wage penalty paid by employers, so it is up from 100% to 200% of the arrears owed to the worker, up to a maximum of £20,000 per worker—penalties that really hit those who do not comply with the law. Finally, HMRC will continue to refer the most serious cases of wilful non-compliance for criminal investigation.

The Government believe that the rates set out in the regulations before the House today will increase the wages of the lowest paid while being affordable for business. I commend the regulations to the House.