Economic Growth (Regulatory Functions) (Amendment) Order 2024

Lord Fox Excerpts

Monday 15th April 2024 Lords Chamber

[Lord Fox (LD)]

My Lords, the Minister is the latest government Minister to wade into the sewage debate, but having previously tried to crack a joke about wading into sewage, I will not do it again.

Having had that interlude, we have had a chance to reflect on some of the comments that the Minister made. Some of the tricks of good government are timing and self-awareness. Those two things are absent from the extremely maladroit introduction of this order. At the centre of it is the conflation of Ofgem, Ofcom and Ofwat. As we heard from the noble Duke, the Duke of Wellington, these are very different markets. The communications market and the energy market are distinctly different from the privatised regional monopoly system which is the water industry. Because of that, the role of the regulator is substantially different. The idea, for example, of causing competition in the water market is irrelevant—there is no competition in the water market. This puts into focus the problem that is central to this order: it is inappropriate in the markets that it is seeking to address. That is at the heart of what your Lordships have said today.

We look forward to the Minister’s White Paper on competition. When the Truss Administration had their brief flurry, a whole bunch of stuff was said about growth and the “anti-growth coalition”. I am sure the Minister is smarter than the people who were using that language then. The role of growth in amongst the role of regulation is an important issue; the Minister is right to have broached it. On its seeking to influence the water market at this time—coming back to timing—this is not the moment to seek to rein back on regulation. This is the moment when we need to target regulation in the places where it is quite clearly breaking down.

The Minister sought to calm us about the effect of growth on environmental enforcement. Again, the noble Duke gave the lie to that issue by very clearly pointing out what I was going to point out in this document: that the two are very much conflated.

I will suggest a hypothetical issue: I am a regulator. I am about to implement an environmental order. This will undoubtedly affect the growth prospects of some companies in the region. Am I now inhibited by this order? The answer is: it seems so. Moreover, can the companies that receive the downside of this environmental order take it to judicial review? I believe they can. The Minister can confirm that or otherwise. So, at the very least, the environmental order is delayed.

We do not have a problem with the water industry restricting growth; we have the opposite. I cite my home river, the River Wye, as evidence of that. The unrestrained growth of the poultry industry has killed part of that river—not polluted it or made it a little bit dirty but killed it biologically. That is the effect of unrestrained growth. We need the opposite of what the Minister is talking about.

With these thoughts, I am very pleased that my noble friend has brought this amendment, and I am pleased to hear the contributions of your Lordships today. I hope the Minister will stand up and say, “We will set this aside”. If he does not say that, I hope he will say that these rules will be rewritten to make sure that the number one priority for the water industry is to solve the environmental crisis that is currently in our midst.

[Lord Leong (Lab)]

My Lords, I thank the Minister for introducing the regulation and all noble Lords who have spoken. Every day, we hear of sewage dumping. On average, a sewage dumping event now takes place every two and a half minutes. The lack of investment in our water systems over the past 14 years is a scandal that is increasingly hard to ignore. Billions have been extracted in shareholder dividends and millions in bosses’ bonuses, all while delivering a deteriorating system.

During the passage of the Environment Act, Conservative MPs had the opportunity to support a Labour-backed amendment that would have brought an end to sewage dumping. Of course, they did not do so. We should be extracting sewage from water supplies, not extracting value in unjustified dividends and overleveraged debt. Let us imagine the economic growth, the skilled jobs and supply chains that could have been created if, instead, this money had been funnelled into developing creaking infrastructure, repairing and upgrading pipelines, and preparing for the predicted increase in demand and increasing rainfall.

The Labour Party has long been making the case for the increasingly urgent need to invest for the long term and to improve quality in the short and medium term. So on this issue we agree with the Government that bringing these three regulators within scope of the growth duty will help to ensure they consider how best to promote growth in their sectors.

However, making the changes required by this instrument will obviously require dedicated resources within Ofcom, Ofwat and Ofgem. As the amendment to the Motion makes clear, these regulators already have a lot on their plates, so can the Minister indicate how they are expected to juggle this as well? Are the Government confident that the regulators have the capacity to deliver to the full extent that the order demands?

Like the regulators, we want to support businesses and stimulate the vital investment needed to ensure a quality service to current and future consumers. For example, Labour’s plan to establish “GB Energy” would create half a million new skilled jobs in the industries of the future, rebuild the strength of our industrial heartlands and reduce energy costs and carbon pollution. Labour is already thinking ambitiously about the long-term future of this country.

Given that the Government’s order is about long-term growth, could the Minister explain over what timeline they expect to see the benefits of the change, and over what timeline they will be reviewing its impact?

As far as Ofcom is concerned, the growth duty will also not apply to its regulatory functions under Part 3 of the Enterprise Act 2002, which concern mergers. In particular, it will ensure that Ofcom is not required to consider other factors when providing advice to the Secretary of State on the public interest considerations on media merger cases. Can the Minister explain the reasoning for that very specific exception?

In this regulator’s sector in particular, many noble Lords will know that I am passionately interested in the enormous potential for growth in our telecoms industry, especially in AI, but the world will not wait for us. We risk missing out on exploiting the potential commercial benefits from our world-leading research base if we do not have a clear industrial strategy, if we do not encourage and invest in tech start-ups and scale-ups, and if we do not develop a serious regulatory presence alongside the USA and the EU as global standards are being established.

To conclude, we support bringing the three regulators within the scope of the growth duty, but we regret—who could not?—the failure of the Government to prioritise the sanctioning of polluters and the cleanliness of waterways. Just last month, rowers in the world-famous boat race, some of the fittest people in the nation, fell sick because of their exposure to the water in the Thames. I would be hard pushed to invent a metaphor more apt to sum up why this Government have so comprehensively failed—on regulation, on public health, for young people today and in investing in their tomorrows. Labour stands ready to deliver the decade of national renewal that this country self-evidently needs.

While we support the regulation, we acknowledge the amendment to the Motion tabled by the noble Baroness, Lady Bakewell. We must address the sanctions needed against short-term profiteering by the CEOs of utility companies enriching themselves. I look forward to the Minister’s response.

Steel: Port Talbot

Lord Fox Excerpts

Monday 15th April 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

I thank my noble friend for that point, and she is absolutely right. If we look back six months or a year, there was very little future for steel-making in this country, and now we have one; we have a truly advanced manufacturing plan for this entire industry. This is something we should celebrate. It is a true industrial policy backed by government money, in partnership with the private sector, and supported by the extraordinary and brilliant talent of the people at Port Talbot.

[Lord Fox (LD)]

My Lords, the Minister will have noticed that the Prime Minister and the leader of the Opposition visited Barrow-in-Furness recently. The reason they went there, as he knows, is to see its submarine manufacturing process. Submarines need high-strength steel—the sort of steel that comes from blast furnaces and not from electric arc ones. Where will that steel come from? From which countries will we import it?

[Lord Johnson of Lainston (Con)]

It is very important that we have a strong defence basis; there is no question about that. The UK industry uses only about 1% of British steel. A quantity of the steel comes from Sheffield Forgemasters, which is owned by the Ministry of Defence. This plan will actually produce the right level of steel from recycled scrap, which is far more efficient for the environment, to enable us to provide for our defence needs.

Code of Practice on Dismissal and Re-Engagement

Lord Fox Excerpts

Monday 25th March 2024 Lords Chamber

The other would be to give the option to the union to obtain an injunction to prevent dismissals where there had been inadequate consultation and inadequate disclosure. For the reason that the committee’s recommendations do not find any reflection in the code of practice, I share my noble friend’s sense of regret at this code.

[Lord Fox (LD)]

My Lords, I regret that I did not have the pleasure of being present when the Bill of the noble Lord, Lord Woodley, received its Second Reading a month or so ago. I clearly understand that the nature of that debate reflects very clearly on what we are debating today.

The Minister was not in your Lordships’ House when we debated the P&O issue. Had he been, he would have experienced outrage and hand-wringing, not just from these Benches but from the Benches behind him and indeed from the Dispatch Box itself. That outrage was felt across the whole of your Lordships’ House. As we have heard, this code was supposed to help embrace that issue and try to make sure that such outrages are not repeated. As we have heard in three well-made speeches from the Opposition Benches, we do not believe that this code comes close to doing that.

The code takes a very optimistic view of human nature: it infers that there are two willing parties with reasonable actions and beliefs. That is not the case that a code of conduct needs to deal with. When reasonable people negotiate with reasonable people, we do not need this code. This code is, essentially, how normal, reasonable people would act, and, as the Minister said, most companies are reasonable companies, and most employees operate with reason. That is why this code, in a sense, merely codifies what normal, civilised behaviour should be.

That is not what a code is for. A code is to deal with the people trying to operate outside normal, reasonable behaviour. On several occasions, the Minister used the word “ensure”. This does not ensure anything, and noble Lords do not have to take my word for it. Paragraph 12 says:

“A failure to follow the code does not, in itself, make a person or organisation liable to proceedings”.


In other words, any teeth it might have had in the first place have been removed by paragraph 12. I share the belief it really had no teeth.

Many other provisions in the code—for example, paragraphs 21 and 22—use the term “reasonable”. How would we test “reasonable” in this circumstance? In Section C, around information, I would be interested to know: what is reasonable? We then move to paragraph 27, which is about commercial sensitivity and confidentiality. In every case of fire and rehire, there will be commercial sensitivity. Therefore, it makes sure that no information ever gets put forward. I am old enough to remember when the United Kingdom was part of the European Union, and we were part of the European Works Council system. That excuse is not allowable within the European Works Council. There is a system within that whereby the works councils are brought into the confidence of the management about their intentions in such circumstances. This does not allow such reasonable behaviour to occur.

Given the genuine and heartfelt comments made opposite during the P&O issue, I am disappointed that this is the result. It is toothless, as the noble Lord, Lord Woodley, said on several occasions; it does not ensure that something such as P&O could never happen again. As the noble Lord, Lord Hendy, put it, the 25% uplift is not worth a hill of beans when you look at the financial gain it has made by the actions it has taken.

[Lord Leong (Lab)]

My Lords, I thank the Minister for setting out the code of practice and express my gratitude to all noble Lords who have spoken.

Last week saw the two-year anniversary of the P&O Ferries dismissals, the highest-profile abuse of fire and rehire in recent years—but, sadly, not the only one. The Minister might say that the P&O case is not fire and rehire, but many will not agree with that sentiment. If it looks like a duck, swims like a duck and quacks like a duck, it probably is a duck. Today the replaced workers are paid less than half the national wage, as my noble friend Lord Woodley referred to, in conditions that one described as like being in jail. Workers’ pay and conditions horrendously diminished. Meanwhile, the company and its parent, DP World, was awarded £230 million in UK government contracts between March 2022 and July 2023.

This injustice has driven me to extraordinary lengths: it has made me agree with the Member for Welwyn Hatfield, the right honourable Grant Shapps. When he was Secretary of State for Transport, he described the company as

“pirates of the high sea”.

I am even minded to agree with the then Prime Minister, Boris Johnson, who said that fire and rehire was

“unacceptable as a negotiating tactic”.

The code does nothing to prevent any employer treating workers in a shabby way in the months and years to come.

Noble Lords who have run businesses, as I have, know what it is like to face difficult financial decisions. We understand that, in extreme cases, sometimes the only way to continue operating is to consult with employees on renegotiating contracts. If the company goes bust, nobody wins; everybody loses their job. Only in that situation can fire and rehire possibly be justified. Yet in court, employers do not have to prove that the fire and rehire policy would mean the difference between the life and death of the business. That widely criticised omission acts as a cloak of unaccountability, permitting employers to present unscrupulous decisions as unavoidable. All the well-intentioned recommendations in the code—that the employer “take into account” employee objections; that they engage in “all reasonable steps”; and that they do not raise the spectre of job losses too early in the process—are, in effect, neutered by this loophole.

Furthermore, several noble Lords have referred to the potential sanctions—a 25% uplift in fines at the end of a long David and Goliath legal battle—that could be factored in as a cost of doing business, as the noble Lords, Lord Fox and Lord Hendy, stated. We could see companies rewarding executives who are prepared to brush off a few bad PR headlines while making workers’ lives worse. That is appalling in principle and in practice.

The P&O Ferries example should serve as a warning; even the then Prime Minister Johnson thought so. The code does not prevent a race to the bottom; it could lead to a hollowing out of secure jobs. Roads paved with good intentions—whether labelled promises, pledges or non-binding codes of practice—lead only in one direction. It is the workers, threatened with either losing their jobs or accepting worse conditions, who end up feeling the heat. The code currently makes no reference to a necessary qualifying period of employment before it becomes applicable to an employee. Can the Minister tell the House whether the code is applicable from day one for all employees?

In light of the range of concerns raised from only 50 responses to the consultation, I hope that the Minister and the Government will address the shortcomings of the proposal. To that end, my noble friend Lord Woodley’s amendment sets out clearly why the Government should reconsider.

Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024

Lord Fox Excerpts

Monday 25th March 2024 Lords Chamber

[Lord Fox (LD)]

My Lords, I think, the mantle having passed through several Ministers, that this is an economic crime debut for the noble Lord, Lord Offord, so I welcome him to our world. He is ideally suited to bearing down on economic crime.

We welcome this statutory instrument; it is part of the process of having debated the economic crime Bill. Many of us had high hopes for what the economic crime Bill would and could achieve, but at the centre of what we ended up with was the performance of Companies House and its strength to uphold what we need. This is another important step.

I have a couple of questions on the first part of the statutory instrument: first, the potential for multiple penalties. If we were to use the real-life Knighton example of literally hundreds of companies being registered to an unwitting property owner, in theory could Companies House levy a £10,000 penalty for each and every one of those companies registered? It would, clearly, have discretion over whether do that. My second point is on the right to appeal. If Companies House is levying those penalties on the wrongful registration of a company, what is the right of appeal? Is it judicial review—a long period of review and appeal—or is it a relatively swift action?

The Minister mentioned the opportunity to update us when the next tranche of statutory instruments comes through; this would be good. We had a very useful briefing from the Companies House representatives while we were debating the Bill, and it was clear that there was a tremendous amount of resolve there but also an awful lot to do. A full update on where Companies House is on capability and capacity—for example, on recruitment and on starting to implement these measures; I saw reports that it has taken actions that it was not able to before the passing of the Act—would be very helpful. But with those provisos, we look forward to the next 50 statutory instruments.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I draw the attention of your Lordships’ House to my registered interests as director and shareholder of McNicol Consulting Limited, which is registered at Companies House.

I have read the Commons debate on this SI, and I have gone through the Act and the Explanatory Memorandum—the memorandum was very helpful, so I thank the Bill team. We will support this SI on these Benches. I have a few questions for the Minister. Will Companies House require more resources if these cases are to be dealt with internally rather than passed on to the criminal justice system? If more are resources needed, will the Government be fulfilling those needs?

National Minimum Wage Legislation

Lord Fox Excerpts

Thursday 21st March 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

The Government remain totally committed to the effective enforcement of employment rights and provide a lot of funding, including over £35 million this year to the existing dedicated labour market enforcement bodies. That is a 121% increase in funding since 2010, so a lot of money has gone into this area. On top of that, we provide funding of over £50 million per annum to ACAS, to support employment tribunals. We have had great success in reducing the number of companies not paying the national minimum wage.

[Lord Fox (LD)]

My Lords, we heard about in-work poverty in the previous Question. One reason there is so much in-work poverty is that too many workers are slipping through the national minimum wage net. One of the key areas in this is food delivery apps. Uber justifies its treatment of its employees as so-called self-employed as balancing flexibility and protection. Does the Minister agree that it is the food delivery apps that get all the flexibility, while the workers get no protection at all?

[Lord Offord of Garvel (Con)]

In the recent Supreme Court judgment on Uber, it was made clear that those who qualify as workers under existing employment law are entitled to core employment rights and that all gig economy businesses must ensure that they fulfil their legal responsibilities. We now have a situation in which the national minimum wage is two-thirds of hourly median pay, and under OECD rules that means it is no longer classified as low pay. We know that 5% of our workforce is on national minimum wage, which is a great success.

Comprehensive and Progressive Trans-Pacific Partnership (IAC Report)

Lord Fox Excerpts

Tuesday 19th March 2024 Lords Chamber

[Lord Fox (LD)]

My Lords, it is a great and unexpected pleasure to follow the noble and learned Lord, Lord Goldsmith, whose points I very much reinforce from these Benches. This has been a great debate, with some excellent speeches. The noble Baroness, Lady Hayter, should once again be congratulated on stepping back up to the plate and giving an excellent summary of the committee’s report.

The noble Viscount, Lord Trenchard, entreated us to be more enthusiastic. Happily, the overall average level of enthusiasm was raised massively by the noble Baroness, Lady Lawlor, which leaves me to be my normal self.

I am a member of this committee, as were several of today’s speakers, so it is not sensible for me to reiterate the entire debate. I will focus on a few points. As we heard, the committee broadly welcomes the accession of the UK to the CPTPP and any additional economic benefits that might result from new market access to Malaysia and Brunei. However, the committee also acknowledges the limited economic gains suggested by current projections, and indeed by the Government’s own impact assessment.

There are opportunities for UK manufacturers, but, equally, member countries that are geographically closer to each other might find it easier to develop those integrated supply chains that the noble Lord, Lord Udny-Lister, hinted at. When I talk to businesses, I certainly find that they absolutely prefer closer customers when making and exporting things. Clearly, when a market is 60 miles away, it is a heck of a lot easier than when it is several thousand miles away.

I have a couple of specific points. I should note that I am vice-chair of the All-Party Parliamentary Motor Group. The noble Viscount, Lord Trenchard, mentioned the automotive industry. The industry has welcomed the side letter signed with Malaysia, which essentially allows for 25% reciprocal regional content for products under a particular heading. That means there is a very high chance that content from these products, particularly engines or batteries, will originate from somewhere else—probably China. This is applicable in both directions between Malaysia and the UK, but it is something that your Lordships and the Government should keep an eye on. I suggest that there are other issues, such as non-tariff issues, around those particular products coming from somewhere outside, including future carbon border regulations and existing issues such as environmental impact and forced labour. A door has been opened and we should police that door quite carefully.

The committee was concerned about Northern Ireland’s direct trade with CPTPP countries, taking the view that it is likely to face restrictions that will not affect the rest of the United Kingdom. Therefore, as a committee, we have requested further information on the Government’s view of what they expect those restrictions to be and ways in which they may be avoided.

The committee welcomes the CPTPP’s provisions on services, while acknowledging that the benefits may be even more limited than the Government have suggested. In particular, it notes the lack of provision on the mutual recognition of professional qualifications, which is a key issue on services, as the noble Baroness, Lady Lawlor, mentioned.

It remains to be seen whether the Government’s intended trade benefits will materialise, and here the noble Lord, Lord Marland, hit the nail on the head. The future development of this treaty will be key to how much benefit the United Kingdom can have. Going forward, we should focus on digital services, professional services, and environmental goods and services, because these are the things from which we can benefit. I too join in asking the Government for their analysis of how committed the other partners are to making these substantive changes to the treaty, and how they will go about driving those changes which would so benefit the upside of this treaty.

The committee welcomes the provisions of the accession protocol which avoid threatening the European Patent Convention. It was very important that this was done; it was good work, and it remains an important part.

It also welcomes the report from the Trade and Agriculture Commission and the joint statement on the environment. These respectively state that UK food and drink rules, as well as environmental protections, do not have to change as a result of CPTPP accession. However, the committee notes the concerns raised by witnesses regarding the UK import of palm oil.

Building on a point made by the noble Baronesses, Lady Hayter and Lady Bennett, I draw attention to the evidence of LSE assistant professor of law, Dr Leonelli, who argued that the CPTPP chapter on sanitary and phytosanitary—SPS—measures could see UK regulators pressured into recognising other countries’ less stringent food safety standards, or other SPS standards, as equivalent to our own. This is a point that has been made. Unlike the UK’s trade arrangements with Australia and New Zealand, the CPTPP’s arrangement does not specify that the final judgment on SPS equivalence rests with the importing party. Instead, further state-to-state dispute settlement does not apply to the SPS chapters with Australia and New Zealand but does apply to the CPTPP. Again, this raises the point about how the Government intend to address the potential risk of equivalence provisions leading to regulatory chill, as we have heard. It would really help our understanding of that to know the Government’s approach to ISDS, which appears to flip and flop depending on which trade deal is being negotiated.

The committee raised the importance of workers’ terms and conditions and called on the Government to monitor closely the employment practices of our CPTPP partners and to be prepared to act should they identify issues. Can the Minister please confirm that this will indeed be done?

How will this best benefit UK plc? Our evidence suggests that the Government do not currently have an adequate plan for promoting CPTPP opportunities. We heard from a number of your Lordships concerns about the extent to which businesses in general and SMEs in particular will take advantage of what the treaty has to offer. The report sets out many recommendations as to how the Minister’s department should go about helping business, especially SMEs, to tap into the potential that there is. I believe that the Minister has taken note of this, and it will be important for him to suggest that he did.

I am very pleased that the Minister is here today. As I have suggested, he sometimes takes the hyperbolic end of the enthusiasm scale, so I entreat him to adopt—which I think he will—a realistic approach to the treaty. Even if UK business is effectively activated and increases its trading with CPTPP partners, the actual economic effect on UK GDP is vanishingly small, as we heard from many, including the noble Baroness, Lady Hayter. We know that the Pacific bloc has been growing quickly and faster than other blocs; I agree with my noble friend Lord Purvis that that is most likely on the back of Chinese growth, so we will see what happens going forward. But we also know that we all expect—as do the Government—to have a very tiny share of that growth. We will have only a tiny proportion of what has already been lost by leaving the EU’s huge single market. It is close to two orders of magnitude smaller: 1% of what we have lost.

In truth, if joining the CPTPP is anything, it could be seen as a statement of intent, rather than an actual deal that creates significant trade. What is that statement? A phrase that has come up on a number of occasions and is laced throughout government comments is “a tilt to the Pacific”. What does that mean? There is little supporting material beyond that soundbite to help us to understand the consequences of that tilt and whether it is beneficial to the United Kingdom. It has been said that there is potential for the CPTPP to be a forum for engagement with partners in the Indo-Pacific—despite its primary function being a free trade agreement with no secretariat and little structure. If that is the case, how will that work? Would not something such as the RCEP be a better version of that?

The integrated review and the integrated review refresh are no help, as they lack any detail on how the Government intend to utilise the CPTPP in a geostrategic manner. Therefore, the committee asks for further detail on how the Government expect membership of the CPTPP to contribute to the delivery of their geopolitical strategic aims for the region. I add: what are those aims? Several of your Lordships, particularly the noble Lord, Lord Udny-Lister, have mentioned the accession of new countries to the group. On the issue of China, to date, Ministers have ducked and dived to avoid answering questions on the Government’s position. At some point soon, it will be time for the Government to spell out their approach to the accession of other countries, including China and Taiwan, which my noble friend mentioned, and to confirm a role for Parliament in any negotiations for new countries to accede to the treaty.

Perhaps one question that the Minister can tackle, without breaching others, is whether it is the department’s understanding that the current applicants may be tackled in any order, irrespective of the order in which they lodged their application to join, or whether there is a first-in, first-considered understanding with partners. For Parliament, the Government should at least offer the same process of consultation that they would for a new, stand-alone FTA partner—that is a CraG-related process.

Overall, as we have heard, the committee reiterates the need for the Government to publish a trade policy that sets out defined priorities in areas of benefit to the UK. The UK needs to have a coherently formulated trade and investment policy that is recognised as an integral part of a wider industrial and trade strategy focused on competitiveness and productivity. That wider policy must shape trade policy, as the two work together.

In conclusion, I return to the phrase, “a tilt to the Pacific”. Fellow members of the committee will recall that I have a problem—quite a big problem—with it. We all know that a tilt—or, indeed, “a pivot”, which is used interchangeably—is a zero-sum game. Any tilt towards something is accompanied by a tilt away from something else. In geostrategy terms, is that really the message that the Government intend to communicate? If it is, and if the CPTPP is indeed a tilt towards the Pacific, can the Minister explain which regions and countries we are tilting away from and why?

--- Later in debate ---

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

I thank all noble Lords for the extraordinary, high-quality debate that we have enjoyed today. I hope people at home are watching this discussion, because it is great proof of the value of this House and its contributions.

[Lord Fox (LD)]

They are crowded around their television sets.

[Lord Johnson of Lainston (Con)]

They are hopefully crowded around their iPads; the noble Lord should know that we have updated from the old-fashioned wireless—which, of course, we have in my household.

I want to say thank you, genuinely, to the noble Baroness, Lady Hayter, and the noble and learned Lord, Lord Goldsmith. I thank the International Agreements Committee for its report. I have a draft set of responses to the report, which will be formulated appropriately and given to the noble Lords as soon as possible. It really was excellent, and I think all the points that the Government have been challenged on are worthy of a response. I am extremely grateful for the mature approach the report took to the value of this trade deal and seeing the optimistic benefits of the CPTPP, within the reasonable framework that we will operate to.

It is possible that noble Lords may hear cheering if they listen carefully, because a few moments ago the Bill was passed in the House of Commons. I am sure we all feel the ripple—the Mexican wave, which is appropriate as it is a CPTPP member—coming down the Corridor to us. Before I go further and answer many noble Lords’ points, I refer Members to my register of interest. I do not believe there are specific conflicts, but I do have interests in CPTPP countries.

I have tried to group the comments made in this important debate and so, if I may, I will go through them. I will try to refer specifically to noble Lords themselves. I will highlight a few individuals, particularly the noble Baroness, Lady Lawlor. I congratulate her for giving a succinct and powerful description of the benefits of free trade, which often we forget. It is right that, in a scrutiny environment such as this House, we look at the problems, issues or challenges that might present themselves with a piece of legislation or a new treaty. To have the truly positive case for free trade made so clearly and powerfully is something that I welcome, and I am very grateful to the noble Baroness for that.

I am very grateful to the noble Viscount, Lord Trenchard, for his words. Again, he has been a passenger on the free trade express over the last year and a half since I have taken this position. I am extremely grateful for his advice and expert opinion on Japan, and the very positive case that Japan makes in terms of our trade relationship with the CPTPP and the associated benefits we have, both through having a trade agreement and an association with it through this process.

I thank the noble Lord, Lord Marland, for his very generous comments about our joint efforts to spread the benefits of UK trade around the world. If anyone has the most air miles on these red Benches, it must be a close competition between the noble Lords, Lord Purvis and Lord Marland. Both noble Lords are doing such important work, whether in spreading democracy and helping complex situations be resolved, or in pushing the Commonwealth. While this is not a debate about the Commonwealth, it is important to note how many countries that make up CPTPP are Commonwealth members. It is absolutely right that we should use this as further leverage to work with our Commonwealth peers. I will certainly take to my colleagues in the Foreign, Commonwealth and Development Office the comments made by the noble Lord, Lord Marland.

I am always grateful to the noble Lord, Lord Kerr, for his comments as to how we can better manage our trade process. If I may, I will just draw his attention, as someone so distinguished and who lauded the EU’s FTA negotiation process, to the fact that I do not think the EU has done a trade deal in my political lifetime. The most recent one was after a culmination of 17 years of negotiation, and the current ones are all live after many years. We have managed to close this deal in an extremely effective time period.

I turn to the process of CRaG which has been well raised by noble Lords. We made a clear commitment under the Grimstone convention that, if there was time, we would have a debate, and this is exactly what we are doing today. My colleagues and I have made ourselves totally and freely available to engage on every issue. Officials have been extremely open in responding to questions and challenges and I am glad to see some of them here today. I am particular aware of issues, such as SPS protection which was raised by the noble Baroness, Lady McIntosh, or agriculture, raised by the noble Lord, Lord McNicol, as well as points made by other speakers on the Front Bench from all parties. I think we have exceeded expectations in the work we have done in order to project that necessary element of debate.

I am not trying to avoid the point, but it is not for me to comment on the activities of the other place. I will leave that to them. It is right to be very comfortable in knowing that any new accession will be equally bound by the CRaG process. This is extremely important. It would be completely unreasonable if that were not the case. The Government have committed to that and I am very comfortable in making a further Front Bench commitment to it.

It is worth touching on some of the sub-issues that have come up in this debate. The noble Lord, Lord Fox, wisely raised SPS measures, and comments were made about ISDS. I believe we had a discussion earlier in this Chamber about the brevity of speeches and the importance of avoiding repetition, but I am going to have to repeat myself, if I may, and test the patience of noble Lords. There is no derogation. It says so in Hansard. It has been in Hansard before. There should be a collected, bound edition of my repeated statements in Hansard about free trade agreements that do not derogate from the security of our sanitary and phytosanitary provisions. It is very important to be comfortable about this. Hormone- injected beef, chlorinated chicken or dangerous pesticides which are banned here are not allowed into the UK on account of the FTA. This is a matter under our own control. It is important that consumers hear this.

When I talk to people about free trade deals, a lot of them worry that, somehow, this will result in a tidal wave of deadly products. The noble Baroness, Lady Bennett, referred to the UK becoming a dumping ground for dangerous products. Any decision to allow so-called dangerous products into the UK is a matter for the UK Border Agency, the food safety authorities and the Government. If that is the case, it has nothing to do with this FTA, which is important in the sense that it changes our position on tariffs and how we trade with each of the different countries. I just want to reassure noble Lords and the public that nothing will change.

Digital Markets, Competition and Consumers Bill

Lord Fox Excerpts

Report stage
Monday 11th March 2024 Lords Chamber

[Lord Fox (LD)]

My Lords, Amendment 60 is in my name. I was expecting to be ploughing a rather lonely furrow on this amendment, so I welcome the enthusiasm of the noble Baroness, Lady Kidron, particularly as it is based on such relevant experience and came with such authority. I thank her for that.

The Minister has been very open in our discussions on these issues, which focus on two areas: interoperability and standards, which are, of course, inextricably linked. One critical area to be clarified is the importance of vertical and horizontal interoperability and the fact that each requires different responses. Clause 20 covers vertical interoperability; for example, the promotion of the use of platforms as neutral distribution channels to market for all kinds of apps. The Bill does not explicitly include interoperability between an app and a platform that operates as a distributor and, in a network sense, among websites that compete with each other and with the platforms. This is horizontal interoperability.

The department’s view is that Clause 12 is wide enough to catch all of this. The Minister said in Committee that it is the department’s contention that defining interoperability is unnecessary because it considers it to be a “commonly understood technical term”. That is welcome, but it relies on a level of interpretation and inference by the DMU because the department’s interpretation is not clear by the letter of the Bill. As such, it would be helpful if the Minister could confirm the explicit inclusion of horizontal interoperability between websites in promoting competition. Will he please confirm that Clause 20(3)(e) will not limit conduct requirements to promote interoperability with a platform only, and set out how the Bill permits the DMU to consider requirements relating to interoperability in a range of contexts, including web browsers, apps, operating systems and websites?

As far as standards are concerned, I think we agree that there is a need for open and non-discriminatory international standards to support interoperability and promote the competition at which the Bill is so firmly targeted. That this is important is illustrated by the fact that Apple recently publicly threatened to block access to the open web from its devices. For there to be competition, the open web needs to interoperate with Apple and Google browsers. This is quite a serious point. This activity is controlled via W3C standards.

The amendment I have tabled is designed to be helpful. It ensures simply that the DMU understands its role in seeking to ensure that international standards bodies are promoting interoperability, both vertically and horizontally, and hence promoting competition. Given the central importance of standards to competition, my aim is to emphasise that this is not an add-on for the DMU but a core activity. I thought the Minister might be able to accept this amendment, but if he feels unwilling to do so, I feel sure that if he could put on record this important role for the DMU, it will be an important step forward, and I look forward to his response.

[Lord Leong (Lab)]

My Lords, it has been illuminating to listen to the varied and valuable contributions from all noble Lords who have spoken in this debate. I thank all those who have risen to speak. As may be expected, a broad range of knowledge, differing views and important concerns has been shared and expressed. The noble Lord, Lord Clement-Jones, referred to Apple’s dominance and it not being prepared to comply with any digital legislation. This should make us mindful of what big tech is getting up to. One thing is very clear: there is a strong consensus in the House that legislation is needed to catch up with, and indeed anticipate, the rapidly changing digital landscape which even the most technophobic among us can no longer afford to ignore.

I shall speak specifically to Amendments 14, 15, 23 and 24 in the name of my noble friend Lady Jones of Whitchurch. I thank the noble Baronesses, Lady Harding and Lady Kidron, and the noble Lord, Lord Clement-Jones, for adding their names. The principle behind Amendments 14 and 15 is to ensure that the Competition and Markets Authority can tackle anti-competitive conduct in a non-designated activity, provided that the anti-competitive conduct is related to a designated activity. These amendments do not seek to hamper digital innovation but rather to create a pro-competition market in which consumer interests are safeguarded.

Brexit: Benefits to Economy and Society

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Wednesday 6th March 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

As I said, in the last five years we have obviously had Brexit, but also there has been Covid, massive disruption to the supply chain in China and massive contraction in manufacturing around the world. We have Ukraine, energy prices; it has been an extraordinarily difficult period of contraction in all global economies, whether in Germany, France, Australia or the USA. Our economy is now set fair to grow fast. Like my colleague Minister Hands in the other place, I will be working very closely with individual EU countries. We are signing co-operation deals on financial services, we have resumed participation in the North Seas Energy Cooperation, the UK has rejoined Horizon Europe and Copernicus, and we have agreed to extend zero-tariff trade on electric vehicles. There is a whole list of co-operations with the EU that we continue to push through.

[Lord Fox (LD)]

My Lords, the Minister, in answering my noble friend, dismissed the role of geography. If you are exporting goods, geography is very important; it is much easier and cheaper to sell to your nearest customers than half way across the world. Here is another list, that the Minister could perhaps consider, of issues that I hear about from people selling goods and the friction they encounter: customs declarations; safety and security certificates; evidence of origin of goods; VAT requirements; health certificates; and chemical certificates. Here is the friction that our people and manufacturers are facing every day. Will the Minister admit this is an issue and will he undertake to try to do something about it?

[Lord Offord of Garvel (Con)]

I thank the noble Lord. Yes, this is an issue, and it relates to 24% of our pie chart of exports; that is, our manufactured goods exported to the EU. Some 41% of our exports go to the EU 27 today, and it is 49% if you make it the Europe 34, so this idea that we do not trade with Europe any more, when half of our exports go there, is simply not the case. On the matter of friction on trade, we are making massive strides with the single trade window, the Electronic Trade Documents Act, the new border target operating model, and the ecosystem of trust. We are moving into a new digital world where goods will move much faster, and we recently had a situation where we sent a batch of valves from Burnley to Singapore without any paperwork, thanks to the Electronic Trade Documents Act.

Post Office Horizon: Compensation and Legislation

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Tuesday 27th February 2024 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, victims of the Fujitsu Horizon scandal have lacked justice for more than 20 years now. Lives and livelihoods were taken away, victims were told that it was only them and were not believed, and little progress has been seen until recently. Better late than never is little consolation, especially when, in numerous cases, the victims are no longer with us. Nonetheless, the Government’s progression of the legislation to rightly exonerate those wrongly convicted is welcome and I commend the work that has been done to get us here. I also appreciate the regularity with which the House has been updated, and the Minister has come here to answer our questions. The legal work needed to make this legislation happen will require cross-party work and support, so I urge the Government to continue in the manner that has brought us here.

I turn to the Statement. What further details can we expect on the legislation being tabled, and when? Do the Government have a timeline for the exoneration to be fulfilled and for full compensation to be delivered to all those who deserve it?

Our legal system played a huge part in this scandal. Time and again, the courts believed the Fujitsu computer rather than the individual sub-postmasters and sub-postmistresses. As my noble friend Lord Browne of Ladyton has asked on many occasions—and I am sure he will again today—when will His Majesty’s Government look at overturning the premise that it is for the individual to prove that the computer was wrong rather than the opposite?

Many postmasters and postmistresses have waited far too long for redress. As we all know, justice delayed is justice denied. Dealing with that point, will the Minister tell us whether there will be an opportunity within the legislation for the 66 postmasters who have died, and the four who have committed suicide, to have their convictions overturned and quashed? Surely it is only fair for their families to also have justice and closure.

Looking at the reach of the legislation, is there a specific reason why it does not cover Northern Ireland? As we know, the Northern Ireland Justice Minister has said that she supports the Government’s line of approach, calling it the fastest and most equitable legislative solution. Would it not make sense to apply it directly across Northern Ireland? On a similar note, would the Minister update your Lordships’ House on conversations that the Government have had with their Scottish counterparts regarding overturning convictions that took place under the Scottish jurisdiction?

I would also be keen to hear whether any prosecutions were made using data from the precursor to Horizon, Capture? Did any sub-postmasters or sub-postmistresses lose money due to Capture failings? If so, surely these should also be included in the scope of the legislation.

I turn to the legal ramifications. The Statement makes it clear that a precedent will not be set for the future regarding the relationship between the judiciary and the legislature, but that is easier said than done. In future, what is to stop this case being treated as a precedent where Parliament can pass law to overturn judicial decisions?

In the case of other similar scandals, would not the Government consider taking a similar approach, especially as some people are asking whether we consider that this example could be relevant in other historic or other worthy causes? I would be particularly keen to hear what specific safeguards the Government are putting in place to protect this stance, and what advice they have received to provide them with the appropriate assurances regarding their approach.

On a slightly separate note, the Government have now confirmed with the Post Office that no investigators involved in this horrendous scandal remain working for the Post Office. This is progress, but can the Minister provide us with an update on progress not on the Wyn Williams statutory inquiry but on the Government’s own investigations?

Finally, last Monday the Business Secretary told the other place that

“while Mr Staunton was in post, a formal investigation was launched into allegations made regarding his conduct, including serious matters such as bullying”.—[Official Report, Commons, 19/2/24; col. 474.]

Today, Mr Staunton told the Commons Business and Trade Select Committee that it was Nick Read, not him, who was the subject of the misconduct inquiry. Can the Minister confirm that that is correct and, if so, where it leaves the Secretary of State?

[Lord Fox (LD)]

My Lords, I thank the Minister for allowing this Statement to be debated in your Lordships’ House. We welcome its direction of travel.

Everything that could be said about the horror and unfairness of this scandal has been said, but we need to remind ourselves, as the noble Lord did, of the crushed human lives that sit beneath this issue. The move to quash these wrongful convictions at the point of the forthcoming Act’s commencement without the need for people to apply to have their convictions overturned is welcome, and the fact that it is being designed to reduce or eliminate the bureaucratic application process is promising. But clearly we need to understand it.

To qualify for this, as I understand it, there is an understandable list of criteria that have to be met, including the offence, the contract that people had, the timings, their exposure to Horizon, technology and other things. Here I have concerns. Can the Minister confirm that it will not be Post Office Ltd that will be sifting through who qualifies to have their conviction overturned? Experience has shown that it cannot be trusted; it has neither the good faith nor the processes to do this effectively and efficiently. But even if it is removed from this part of the process, it is Post Office Ltd that owns and controls most of the documentation and information that is needed to decide who qualifies for exoneration. As such, the upcoming legislation must include a duty on POL to provide documentation within a timeframe, with sanctions if they do not.

There is an overall communications issue that needs to be engaged with around those victims—what is happening to them, and how is the process going forward? If people who believe that they should be on the exoneration list are not on it, we need to know what the appeals process for them will be.

Of course, once their convictions are quashed, then we move into the compensation zone. Minister Hollinrake agreed yesterday that compensation has been delivered too slowly—I think we can all agree with that. We welcome the Minister’s comments about attempts to speed up payments, but it is clear that having three separate schemes and five different classes of victims has been a nightmare for those victims when it comes to getting through the system, and they have not been helped by Post Office Ltd—quite the opposite.

The chair of the Horizon Compensation Advisory Board, Professor Chris Hodges, speaking on the radio today made it clear that in his view POL should be completely removed from the role of processing and setting compensation payments. We agree, so can the Minister confirm that that is the Government’s intention? Of course, as the noble Lord said, this announcement covers only England and Wales, so we need to know intentions in respect of the two remaining countries. As the noble Lord asked, what is happening in Scotland and Northern Ireland? We understand the issues around devolved authorities, but what is the timing going to be and when could we see it?

There is also the issue of those who have been convicted in relation to the Capture system. Kevan Jones MP has been very clear on this, and we would like to know where that is going to go and how fast it is going to move, as with people who paid back sums to avoid the scandal that the Post Office was hanging over their heads. How will they move into the compensation zone? It is still not clear.

When will the legislation happen? The Minister talks about a July Royal Assent, which was my understanding. Given the sell-by date of this Parliament, that is running things a little fine. If possible, we need to move much faster.

As the noble Lord said, this legislation is unprecedented, and we will need time to get into the detail of what the Government are proposing. Your Lordships’ House needs time properly to assess both the effectiveness of the legislation and its constitutional implications. That is not to hold it up, but it is to do our job properly. Can the Minister tell your Lordships’ House when it will be tabled in the Commons and when we are likely to see it here? We need time for proper scrutiny, but let us get on with it. Victims are dying, victims are in financial need and victims need closure.

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

I thank all noble Lords for participating in all these debates and of course my two opposite numbers for their comments in their opening statements. Without me going through a great grandstanding point, it is better if I address each individual point, because that will allow me to clarify the situation as it stands.

I share the sentiments expressed by the noble Lord, Lord McNicol, about the cross-party support: we have all come together to ensure that these people are properly compensated, and we have come up with an extremely bold and unique mechanism for exonerating those who were wrongfully convicted. I am very grateful to my colleagues, and I think I speak on behalf of my noble friend Lord Offord in this House and Minister Hollinrake, who has done an exceptional amount to progress this entire process. I take this opportunity to pay tribute to him.

The further details of what needs to be worked out following the quashing of convictions Bill that we hope to introduce as soon as possible cover a range of issues, some of which have been raised today. The details of eligibility are certainly something that we need to ensure we get right. The noble Lord, Lord Fox, raised the principle of linking the appeals process to people who feel they should be on this list but are not included. I can say that it will be the Government who, in effect, compile the list of people who are eligible, according to the criteria. We set out the criteria very clearly in the Written Statement yesterday and they seem to me entirely logical. Clearly, you have to have been prosecuted by a certain prosecutor, such as the Post Office or the Crown Prosecution Service; you clearly have to have worked for the Post Office between certain dates; and I believe the evidence has to be linked to the Horizon scandal and to certain specific crimes, such as theft or fraud. I have looked carefully through the list, and it seems to cover key areas that we are trying to cover. However, there may be individuals who feel that they should be eligible for their convictions to be quashed but who may not necessarily fulfil the specific and very narrow criteria, so these are the sorts of details that I believe we will have to work on. We look forward to developing those as the time comes.

The principle around the devolved nations was raised and is very relevant. As noble Lords will understand, they are different legal systems, certainly in Scotland. I know that my colleague, Minister Hollinrake, met his counterparts yesterday, or over the last few days certainly, to progress what we believe will be a logical replication of this concept. I am not aware of any decision on the part of the devolved nations to change the principles that are operating, but of course it is up to them. We very much hope that they will follow our suit.

I agree that the situation of the postmasters who were convicted and have since passed away is indeed terrible, but the convictions will be quashed automatically through the Bill and by the sheer nature of the individuals’ eligibility. This is not the same as applying for compensation; postmasters will not have to apply to have their conviction quashed. The whole point about this sweeping Bill and why it requires, as both noble Lords have said, considerable scrutiny is that all convictions will be quashed en masse at the moment it becomes an Act. That is an important point; the families of anyone who is deceased will know that their conviction has been quashed and they will have that relief.

I agree that the entire tone regarding the speed of compensation has changed dramatically over the past two and a half years. I am very grateful to Minister Hollinrake for the work he has done to ensure, most importantly, that interim payments can be made before final payments. He recently increased the payments for those who have been convicted to £400,000, which gives people the immediate payment they need before they decide to take the next step. There are also substantially increased fixed offers; the record so far is quite significant: 78% of claims have now been paid and there is a clear focus on ensuring that all offers are fully completed within 40 working days in 90% of cases for the GLO scheme.

The comment was rightly made about the number of different compensation schemes. As a Minister answering questions on this, I want to get the facts right. It is clear that there are many different pools and mechanisms for making sure that people are fully compensated. There is a great historical tale as well, which further complicates things. The Government are very aware of this; we have been doing a huge amount to make sure that people have interim payments, that there is no playing with the detail when it comes to compensating them, and that we are forward-footed in assisting postmasters in making claims. We are reviewing how the payments processing is operated, particularly in those cases operated by the Post Office. As I said in Questions, this is not a decision to be taken by me, but it is obvious that all these points remain under constant review. We want people to be compensated; the Government have allocated an enormous amount of money to ensure that they are so that there is no discussion about quantum and people can be properly compensated. As soon as the Bill goes through, I would expect a significant number of new compensation claims to be made. To claim their compensation, people will have to sign a form saying that they are eligible and have not broken the law, which is a sensible measure to take.

Finally, this is a significant and wholly unprecedented move. I am grateful to be joined by my noble and learned friend Lord Bellamy, who is a greater legal expert than me and is keen to make sure that his wise counsel is included in this process. This House will have the opportunity to debate in detail this unprecedented and unique situation. However, it is absolutely the right thing to do, given the historic tale, the sheer quantum and the clarity around the falseness of these convictions in so many cases. I hope that all noble Lords will agree and support the Government in executing this crucial move.

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I thank my noble friend for raising that point. I think it has been widely publicised that Fujitsu has apologised for its role in this —as one would expect and hope—but has also accepted a moral responsibility. It has also suggested that it will look to see how it will participate in this process and my colleague Mr Hollinrake has been very clear that this overall envelope of compensation to postmasters is not to be borne solely by the Government. Clearly, there is an ongoing inquiry. This is an extremely complicated process to comment on at this stage but the tone of what my noble friend is suggesting chimes completely with the Government’s view.

[Lord Fox (LD)]

To build on the question from the noble Lord, Lord Foulkes, in his reply the Minister talked about the remuneration of the executive team, but actually the sharp end of the Post Office is the people working behind the counters—who we all see when we are getting service from the Post Office. This can be nothing but a demoralising series of news for those people. Their morale within that business is really important, as they work for a company that has been so vilified publicly and hauled through the mud. Does the Minister think that the executive team, the evidence of which we saw today, is the team that can rebuild the morale and the spirit within the Post Office, which will be needed to deliver the sort of turnaround that the Minister was talking about?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord, Lord Fox, for those comments. I should say that the Government have full confidence in the CEO and in the board whom we have appointed over the last two to three years. I am told they are extremely grateful for the services of the government representative and the UKGI representative. There are two postmasters, who I think are elected to the board, so it is a diverse board that represents the interests of the Post Office. Its members are not tarnished, as it were, by previous activities, and they have been doing a good job in responding to what can be described only as a crisis.

I echo the noble Lord’s points. The Post Office personnel are the absolute core of the business, of many communities and of this country, and it is agonising to see them put through so much distress. I agree with the comment made, I think by a colleague of mine, that in some respects the sheer greatness of our Post Office staff around the country has been magnified by this event, and I am sure that more of us will use our local services when we get the opportunity. This has also drawn a lot of attention to the needs of the postal service around the country, the conditions that its employees work in and the opportunity to improve them, with more recruitment and more people entering the Post Office service. I totally support the noble Lord’s aim; it is a magnificent organisation in its principal core ambitions of delivering great service to communities. The people who work there should be celebrated, and we certainly do that.

Life Sciences Businesses

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Monday 26th February 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

The noble Lord is absolutely right to raise this as a core issue. I am quite frustrated myself at some of our planning points, which certainly delay the building of these essential facilities. I am glad that life sciences wet lab space has been coming on stream in significant quantities, not least recently in Canary Wharf, which I hope he will join me in celebrating. However, there is more to be done; I totally agree with the noble Lord.

[Lord Fox (LD)]

My Lords, the Office for Life Sciences reports to the DHSC and the DSIT. The Office for Investment is a joint No. 10 and Department for Business and Trade unit. I spoke to a major biotech investor in this country, which said that the lack of communication between these two organisations is hampering its progress in building new biotech capacity in this country. Does the Minister agree that these two organisations ought to work closely together? There ought to be an explicit link, so that when companies are trying to scale up and invest in this country there is a proper joined-up approach.