Companies (Disclosure of Address) (Amendment) Regulations 2018
Lord Henley Excerpts(6 years, 6 months ago)
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Lord Henley
That the draft Regulations laid before the House on 22 February be approved.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, these regulations will make it easier for people to protect information about their residential address on the companies register. Prior to the Companies Act 2006, directors’ residential addresses were generally publicly available on the register. The 2006 Act changed the general position by protecting this information from disclosure. However, this change did not apply retrospectively.
Regulations made in 2009 allow people to apply to the Registrar of Companies to make an address unavailable to the public in certain circumstances. An address can only be made unavailable where there is a serious risk of violence or intimidation to those living at the address, this risk arises because of the activities of the company and the information was filed with the registrar after 1 January 2003. These restrictions mean that residential address information cannot be protected if the information was filed before 2003, even if the person is at serious risk of violence or intimidation because of the company’s activities. Nor can the information be protected if the risk of violence or intimidation does not come from the company’s activities—for example, someone in the public domain who may attract abuse—or where someone is at risk of identity theft and fraud rather than violence or intimidation.
Since the companies register was made free to search online in 2015, it is much more widely used than ever. This has increased concerns about the availability of personal information. The draft regulations address these concerns, first by allowing applications where the information was filed before 2003. Most of this information is kept non-digitally; for example, on microfiche. When the original regulations were drafted in 2009, it was thought that it would not be possible to redact such non-electronic information without risking damage to the public record. However, subsequent improvements in technology mean that this is no longer the case. There is therefore no need to retain this restriction.
The regulations also remove the requirement in regulation 9 of the 2009 regulations to show a serious risk of violence or intimidation because of the company’s activities. This is consistent with the general approach taken by the Companies Act 2006 that the registrar must protect directors’ residential addresses.
The draft regulations do, however, retain this test for applications made under regulations 10 and 11 of the 2009 regulations. Regulation 10 allows applications from companies to protect the residential address information of all their members. Removing the test for such company applications could result in large-scale redactions of historic information, potentially involving thousands of members’ addresses for larger companies. While we do not consider that this is justified, an individual member will be able to apply under new regulation 9 to have their residential address suppressed without having to show any risk of harm. We are also retaining the test for applications under regulation 11 from people who register a charge, as the registrar receives very few applications and no concerns have been raised about the test in this context.
People who are legally required to maintain a current address on the register—for example, current directors of live companies—will have to provide a service address as part of their application. This will be publicly available on the register in place of their residential address. However, people who are not subject to this requirement—such as former directors of dissolved companies—will not need to provide a service address. Instead, their residential address will be partially suppressed, leaving the first half of the postcode. Public authorities—such as a police force, the Insolvency Service and the Pensions Regulator—will still be able to obtain information about a person’s residential address from the registrar, even where that information is not available to the public on the register.
We have not consulted in this instance. A number of cases have been raised recently with my department where the people involved are at risk of violence or intimidation yet cannot have their address information protected. Delaying action to consult would increase the risk that people may be caused actual harm. I believe that not consulting is justified in this case, particularly as the regulations apply the principle which has been in place since 2009 that residential address information should not be shown publicly on the register.
It is important that the information on the companies register is of real practical use to those who wish to find out information about a company. At the same time, the information should not become a tool for abuse by exposing people to a risk of harm. These regulations strike an appropriate balance between transparency and the protection of individuals, and I commend them to the House.
Lord Henley
My Lords, I am sorry that we could not continue with the same attitude as we had to the previous order, other than in relation to the noble Lord, Lord Stevenson. I am grateful that the noble Lord, Lord Fox, described this as a pragmatic balance. That is exactly what we have tried to achieve in providing protection for the individual but still making sure that certain public things continue to be public.
The noble Lord, Lord Stevenson, objected to the lack of consultation for something as important as this, saying that there was a lack of consultation and a lack of an impact statement. I will write to him in further detail on the lack of consultation but I assure him that we have received a number of inquiries— around 3,000, I am told. As the Minister who deals with letters from Members of another place on their constituents’ concerns, I have had to sign a number of letters relating to their concerns over not being able to get something removed. It is depressing that I often have to say, “I’m terribly sorry, there is nothing we can do at this stage”, so I was grateful that we could do something quickly and without the necessary consultation. Since individual companies are not required to do anything—or stop doing anything—an impact statement is not necessary. All the regulations do is give people the option of applying to have residential address information suppressed, if they so choose. There is no impact on Companies House, as the application fee will cover the costs of processing the application. In those circumstances, an impact assessment—whether coloured in for the noble Lord or in black and white—is not necessary.
The noble Lord, Lord Stevenson, picked up on the problem with microfiches. I understand that deleting something from a microfiche can affect it. Now that one can move things on to CDs, the process is somewhat easier, but the important thing is that the microfiches will be kept. From a historical point of view, we will still keep records from the past. I will write to him in greater detail about public authorities and how they get appropriate authority, but that will not change as a result of this order. The issue—the mere fact that it comes in immediately—does not affect companies and there will be no burden, so the lack of a commencement date is not a problem. As always, I note what the noble Lord, Lord Stevenson, said about the desirability of sticking to common commencement dates and will try to stick to that in future.
The noble Lord, Lord Campbell-Savours, asked rather a technical question about the category relating to constables in a police force. Under Regulation 5 of the 2009 regulations, on disclosing a residential address to a credit reference agency, one of the grounds for applying to the registrar is that a person is or has been employed by a police force. We are concerned that this may not cover constables because they are technically officeholders rather than employees. The draft regulations merely make it clear that police constables may apply to prevent disclosure under Regulation 5.
Lord Henley
That would be a matter for the police constables themselves. It would probably be best, rather than ad-libbing an answer, if I wrote in greater detail to the noble Lord on that point.
Finally, the noble Lord, Lord Fox, asked about the criteria to be used by Companies House in considering this. The regulations merely allow a person to apply to have their residential address and information suppressed without having to give any reason. The criteria are not relevant in this case; they do not have to give a reason for their application, whereas in the past they did. That therefore simplifies matters and, I hope, continues to meet that pragmatic balance that the noble Lord so warmly welcomed. I hope that deals with all the points that were made.
Lord Henley
I will possibly add this to my response to the noble Lord, but I suspect that giving half a postcode provides, as it were, some information without giving details. In other words, if someone added CA6 to my name one would know that I lived somewhere not so far from the noble Lord in Cumberland, but it would not say precisely where I live because it would not give the address. As the noble Lord, Lord Stevenson, said, there are other ways of finding out people’s addresses. We are just trying to provide appropriate protection.
Lord Henley
I will write to the noble Lords, Lord Campbell-Savours, Lord Fox and Lord Stevenson. I will make sure that a copy of the letter is placed in the Library. With those explanations and the general support of the House, I commend the regulations to the House.
Nuclear Safeguards Bill
Lord Henley ExcerptsTuesday 27th March 2018
(6 years, 7 months ago)
Lords ChamberRead Full debate Nuclear Safeguards Act 2018 View all Nuclear Safeguards Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 81-R-I(a) Amendment for Report, supplementary to the marshalled list (PDF, 54KB) - (19 Mar 2018)
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Nuclear Safeguards Bill, has consented to place her interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
GKN/Melrose Takeover: Update
Lord Henley Excerpts(6 years, 7 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I would like to repeat a Statement being made in another place by my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy. The Statement is as follows:
“With permission Mr Speaker, I would like to make a Statement about the current takeover bid by Melrose plc for GKN plc.
Following the announcement of the bid, I spoke to the chief executives of GKN and Melrose to understand their plans, and I have done so again as the bid time- table draws to a close and changes have been made from the original terms proposed. My quasi-judicial role requires me to treat all parties fairly, so I should disclose that I have also had a briefing with the chief executive of Dana Incorporated, which has been proposed as a partner in a transaction with GKN.
As honourable Members know, the longstanding British manufacturing and engineering company GKN is subject to a current takeover bid from the British company Melrose plc. One of the most important features of the British economy is that we have a vigorous market for corporate control. Businesses are kept competitive and efficient by the possibility of the current management being replaced by another set of managers if, in the view of their shareholders, they are underperforming and the company could be better run.
However uncomfortable that constant threat may be for incumbent managements, it is an important one and acts against complacency and inefficiency and so is in the interests of employees, customers, suppliers and taxpayers as well as shareholders. It is worth reminding ourselves that shareholders include the pension funds on which millions of working men and women rely for a comfortable retirement.
There are strict and limited grounds for ministerial intervention in proposed mergers. The limited exceptions apply where one or more of the three public interest grounds are engaged. These are those of national security, media plurality and financial stability. The Enterprise Act 2002 gave powers focusing narrowly on those grounds to refer a bid to the Competition and Markets Authority. Such a reference is possible until four months after the completion of a transaction.
I will make such an assessment following receipt of advice from the Ministry of Defence and other agencies on the final terms of a bid, were it to be successful, and I will inform the House immediately if an intervention is launched. However, beyond that formal statutory role, I am concerned to ensure that significant takeover bids shall not act against the interests of our economy, employees or the broader set of stakeholders.
It has long been recognised that companies and their directors have duties which extend beyond current shareholders alone. Section 172 of the Companies Act sets out a requirement for directors to have regard to, among other things, the interests of the company employees, its business relationships with suppliers, customers and others; and the impact on the community and the environment. In my view, this establishes the principle that we expect interests broader than pure shareholder value to be taken into account by directors and in the attitude of the Government.
In the past, some takeovers have had consequences for these groups that were not only deleterious but were at odds with indications given during takeover bids. For this reason, a new regime was established whereby bidding companies can now make legally binding commitments as to their intended conduct in the event of the bid succeeding. Having established this regime, I believe it should be used in takeover bids where the interest of these stakeholders is engaged, as is clearly the case here.
GKN is a valued employer, directly and through its supply chain, and plays an important role in Britain’s automotive and aerospace sectors. Through its research and development it has a vital role to play in our industrial strategy. It also benefits from government-sponsored contracts and participates in sectors which enjoy active engagement from government-sponsored R&D programmes. It also carries responsibility for a large number of pensions that depend on GKN’s prosperity to fund the pension scheme, which is currently in deficit.
Melrose’s business model is based on acquiring, improving and selling businesses to new owners after a small number of years. While this approach can have advantages in terms of efficiencies, tensions can arise between it and the need for long-term investment and stability for important relationships.
With the deadline for the offer period closing on Thursday, and without prejudice to my use of the Enterprise Act powers, which operate according to a longer timetable, I believe that Melrose should set out more clearly its intentions towards wider stakeholders, and specifically to make commitments concerning them in a legally binding form before the opportunity is lost with the closure of the offer period. Accordingly, I wrote to Melrose yesterday asking it to set out clearly its proposed commitments, including on maintaining the business headquartered and listed in the UK; maintaining a United Kingdom workforce and respecting its employment rights, as well as engaging closely with representatives; continuing to pay tax as a UK taxpayer; continuing to invest in R&D programmes, which are crucial to our industrial strategy; investing in the training and development of the workforce, including in apprenticeships; treating suppliers well, including the prompt payment of suppliers; and making arrangements for current and future pensioners which are to the satisfaction of both trustees and the independent Pensions Regulator.
In addition, stable ownership and financing is an important part of underpinning the trusted relationships which particularly characterise the defence sector. That stability is also important for research and development partnerships which, by their nature, endure over many years, whereas Melrose’s model has been built on short-term ownership. I have therefore sought a legally binding commitment from Melrose to greater continuity of ownership specific to the defence-related businesses, and to exclude the option of a short-term sale of this business without the prior consent of the Government. I have also made it clear that, in the event of a successful bid, the Ministry of Defence would look to require a legally binding commitment relating to the management of any defence contracts. It is important to emphasise that these would be voluntary commitments by the company, over and above questions of the use of Enterprise Act powers, but it is right that these wider issues of public concern should be addressed by Melrose before the bid closes formally. Melrose has, earlier today, given a response to my letter, which I will place in the Libraries of both Houses, alongside my letter to Melrose.
Subject to the powers that I have described, it is for shareholders of GKN to decide which management team they wish to run their company. But my strong belief is that when broader interests are at stake, and having established a new regime in which legally binding commitments about the future can be given, they should be used before the opportunity to do so expires. I will continue to keep the House up to date at every phase of these proceedings, and the House can be assured that I will carry out my responsibilities seriously, meticulously and fairly in representing the public interest in the future of such an important company. I commend the Statement to the House”.
My Lords, that concludes the Statement.
Baroness Kramer (LD)
My Lords, I want to press the Government a little more on one or two of the issues raised by the noble Lord, Lord Stevenson. One of those is the timing of the letter. The Minister will be very much aware that, presumably, it was meant to elicit information and to express some government concerns to be taken into consideration by the shareholders of GKN before they exercise their votes. However, as he will know, many of the shareholders have already declared —and I think he will confirm that a declaration once made cannot be retracted. In addition, the remaining shareholders have largely had all their internal meetings to come to their final decisions, and cannot pull those meetings back together to reconsider in the very brief timeframe of the next 48 hours. Therefore, if this is something other than public relations, will he explain to me how it is meant to inform shareholders, because I do not understand that? Will he especially, in that case, confirm that he still takes the view that the Secretary of State can call in this transaction, in whatever form it goes through, if concerns remain following the vote?
I scanned through the Melrose response very quickly but there seems to be no mention of the 6,000 workers. There are various assurances on other points but I saw no mention of them. Will the Minister comment on that? I am also concerned that all the various declarations seem to have a timeframe of five years. Considering the length of time needed to plan measures such as the industrial strategy and the sustainable relationships that need to be developed in the aerospace, defence and other fields, five years seems an infinitesimal period. Will the Minister explain why that short timeframe apparently reassures him, because I am not sure that it does me?
Does the public interest definition need to be looked at again as it does not mention workers’ rights or pensioners and does not refer to the industrial strategy, which is supposed to have a much more important role now? Airbus, for example, has expressed concerns about a potential new owner, which could undermine the direction in which the Government are trying to take industry in this country.
My last point concerns an issue I do not fully understand. However, the Minister may be able to help me. I understand that many of the shares are held by arbitration houses, and that rather than buying them and paying stamp duty they have them on loan and are exercising them in that format. Is that really appropriate and is it something else we should look at?
Lord Henley
My Lords, I shall make a fist at answering some of the points put to me by the noble Lord, Lord Stevenson, and the noble Baroness, Lady Kramer. However, I apologise in advance if I fail to do so on some points as this issue is highly technical. I want to be very careful about precisely what I say, bearing in mind that my right honourable friend will possibly have to make quasi-judicial decisions following advice from the Ministry of Defence. I am not party to that but the noble Baroness and the noble Lord will understand what I mean: I have to take care over what I say.
The noble Lord’s first criticism was that we were slow off the mark on this issue. I can assure him that right from the start, from the moment we knew there was a bid—it goes back only to January—the Government have monitored this and paid attention to it. As the noble Lord will know, as things have hotted up, we have taken a more active line; hence the letter from my right honourable friend yesterday, to which he and the noble Baroness referred. I will say a little more about that, and about the response today from Melrose.
The noble Lord also asked about the timescale and what we will do to keep the House informed. I can assure him that we will keep the House informed as things happen, as my right honourable friend made clear. The Secretary of State set out the statutory timeframe under the 2002 Act. He will inform the House if an intervention is ordered, again in line with his quasi-judicial powers. As I made clear, there are limits to what my right honourable friend can and cannot do. He set out in his Statement just when he could intervene under the terms of the Act. In the third paragraph of the letter to Melrose, he again makes it clear that the Act gives powers to the Secretary of State to act in a quasi-judicial manner.
He goes on to say, when talking about broader stakeholder interests, that in addition to his statutory role, he, as Business Secretary, had a wider concern that,
“where important businesses are involved, takeovers should not act against the interests of our economy, employees or the broader set of stakeholders”.
He adds that Section 172 of the Companies Act, to which he referred in his Statement, sets out that statutory requirement for directors,
“to have regard to, amongst other things, the interests of the company’s employees; the company’s business relationships with suppliers, customers and others; and the impact on the community and the environment”.
A response to that letter came through from Melrose. It is now available in the Library, and I hope the noble Lord, the noble Baroness and others have seen copies of that letter. In the letter, Melrose again set out what it felt it could do, particularly where it agreed with the takeover panel on the form of the legally enforceable undertakings:
“For a period of five years, Melrose will: maintain its UK listing; maintain its UK headquarters; ensure a majority of its directors are resident in the UK …”,
and so it goes on. There are commitments about the amount of research and development it will invest in. That is all set out in what it refers to as its takeover panel-enforceable undertakings. The letter goes on to make further long-term commitments that we hope that it, as an honourable company, will adhere to should it be successful. That is obviously, as my right honourable friend made clear, a matter for the shareholders.
Going back to those initial undertakings about legally enforceable commitments in the letter, the Secretary of State indicated in his letter his wish to see Melrose making those other commitments, to which I referred in the main letter, in good faith. I hope the company will stick to that. Since the noble Lord asked particularly about R&D and training, the commitments about R&D are listed in its letter in the paragraphs about enforceable undertakings, which state:
“Melrose will at least maintain GKN’s current level of expensed research and development investment equal to 2.2% of sales over the financial years 2019, 2020, 2021, 2022 and 2023”.
This is a legally enforceable commitment.
As I said, I am limited in what I can say, and I want to be very careful about what I do say and how far I go because the Secretary of State has to look at this thereafter. I will leave it there and take up that rather technical point that the noble Baroness made about arbitration houses—
Lord Henley
Yes, arbitrage houses. I will write to her in due course, because I would not want to give a response that was in any way misleading. I hope that deals with most of noble Lords’ concerns.
Lord King of Bridgwater (Con)
My Lords, the House will recognise that this is a very serious announcement about a major British company that is obviously facing some difficulties in its present operation and is now the subject of this takeover bid. It is extremely worrying that this has occurred at a time when, obviously, the future prospects for our economy are far from certain in the present Brexit developments. The Secretary of State was absolutely right to ask for the clearest undertakings, although, as the noble Lord from the Front Bench said, it has come rather late. I do not understand at all the idea that the Secretary of State has up to four months in which to intervene in something that may have already taken place. However, he does recognise that it is not just a matter of national security: the Secretary of State says he has a wider concern that the takeover should not act against the interests of the economy. He asked for undertakings from Melrose Industries plc, but I find them extremely inadequate. The company says that it is prepared to give an undertaking to maintain its UK listing and UK headquarters for five years, and to,
“ensure that the Aerospace and Driveline divisions retain the rights to the GKN name”.
However, it goes on later to say that if a strategic purchaser comes forward with an investment proposal prior to 2023, it hopes that it would be allowed to consider that. It goes on to add:
“Unfortunately, as a result of the nature of the transaction, we have not had access to the information we would expect in order to make detailed commitments”.
By the end of that, I wonder just what commitments are being given. This is a very serious matter and the Government need to think very carefully indeed. I pay tribute to Melrose, which is obviously an extremely successful company, whose business will be to acquire it and to sell it on. No doubt it will make a great success of that, and full marks to it for its approach. Whether or not it is appropriate in this situation, a heavy burden is on the Government to get far clearer and far more binding undertakings that will give some form of security to an essential part of the UK industrial economy.
Lord Henley
My Lords, I note exactly what my noble friend has said. As he said, my right honourable friend has up to four months to consider these matters, depending on the advice he receives from colleagues in the Ministry of Defence. I am also grateful to my noble friend for referring to the response from Melrose. It is not for me to say whether that is a good or bad response; I just note that, ultimately, it has to be a matter for shareholders and others. But parts of that, as I made clear—the letter is now in the public domain—will be enforceable commitments, albeit some of them for only five years, and another part will be undertakings of a less enforceable nature. It is not for me to defend or attack that letter. I have simply set it out as the response that my right honourable friend the Secretary of State received from Melrose following his letter, in which he set out, first, his legal obligations under the 2002 Act—which gave him a relatively limited power to intervene, which is quite appropriate. Secondly, however, he stressed—I am grateful to my noble friend for underlining this—the wider interests he has as Business Secretary and the wider interests that the directors have under Section 172 of the Companies Act as regards what they must look at. In the end, the shareholders will have to take a view on that matter. As I said, it is possible that my right honourable friend will have to make a decision in a quasi-judicial manner. He must await advice on that, and at that stage, if appropriate, he will intervene.
Lord Higgins (Con)
My Lords, I share the view that this takeover proposal is important for the UK economy. My noble friend the Minister refers to legally binding contracts. There have been cases in the past where contracts have not been fulfilled by those taking companies over. What will be the consequences if these legally binding contracts are broken? In particular, since it seems unlikely that the takeover company in this case will retain indefinitely the company it has taken over—the expectation is quite the contrary—how will the legally binding commitment be carried forward as regards any future owner of the company?
Lord Henley
My Lords, I would need to take advice on that. I was quoting the letter from Melrose back to my right honourable friend the Secretary of State. In that letter—in the paragraph headed, “Takeover Panel enforceable undertakings”—Melrose states:
“We have been able to agree with the Takeover Panel”—
I imagine this is a matter for it—
“the form of the following legally enforceable undertakings”.
I am not aware of how and in what way those would be legally enforceable, but that is the assertion it made.
Lord Jopling (Con)
My Lords, surely one of the most worrying aspects of this matter is the suggestion that a company whose business is very much concerned with national security could be bought and held for only five years by a company whose business seems to be a quick turnover on selling and buying businesses. In five years’ time, as I understand it, the business could then be passed on to China or almost anybody, which has severe implications for the five-year term. I notice that the five-year issue was not in the Minister’s Statement. It seems a crucial, central aspect of the issue. Can we know why the Government were not frank enough to put it in the Statement?
Lord Henley
Again, I am not sure that I can take my noble friend much further than I did earlier when I talked about the advice that my right honourable friend needs to receive from the Ministry of Defence. Under the 2002 Act, there are limited grounds on which the Secretary of State can intervene in matters of this sort, one of which is on grounds of national security. He needs to take advice on that and, if appropriate, he can then act; but as I said earlier, he needs to act in a quasi-judicial manner. If the other two reasons for intervening do not come into play, my right honourable friend would not have the ability to intervene because national security would not be affected. It would be for my right honourable friend to take that advice and come to a decision, but these matters have to be decided in a quasi-judicial manner and I therefore do not want to say anything that might damage his ability to do that in any way.
Lord Browne of Ladyton (Lab)
My Lords, I apologise to the Minister in advance if I should know the answer to this question. Can he tell your Lordships’ House if any such legally enforceable undertakings have, in the past, ever been enforced by the Takeover Panel? What have been the consequences of such enforcement action? That seems to be at the heart of the concern of your Lordships’ House. In what sense are these undertakings enforceable?
Lord Henley
I am always filled with dread when experienced colleagues such as the noble Lord get to their feet and say that they should know the answer to a question. I do not know the answer to that question, but I will commit to write to him about occasions when, and if, such legally enforceable commitments have been enforced, and I will make sure that it is copied to other noble Lords who have taken part in this debate.
Lord Elton (Con)
My Lords, my noble friend and other colleagues have brought forward the term of five years as though it was reassuring, but surely all the issues that are alive now will be equally alive in five years’ time. Merely pushing a cataclysm back does not solve the problem. Can we have some assurance that the Secretary of State will look to the longer term and not merely to the contractual niceties that he has set out so far? Can the Minister answer the question—a question to which I too should know the answer—of what the extent of his power to intervene is if he decides to do so?
Lord Henley
I do not think that our national security is limited to five years, and I do not think that the 2002 Act says that. These commitments have been made by Melrose. I am sure that it will be for my right honourable friend to consider national security on a long-term basis. I hope the noble Lord will understand that I cannot pre-empt how my right honourable friend might consider that.
Electricity Supplier Payments (Amendment) Regulations 2018
Lord Henley Excerpts(6 years, 7 months ago)
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Lord Henley
That the draft Regulations laid before the House on 5 February be approved.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, this draft instrument seeks to amend regulations concerning the contracts for difference, or CfD, scheme and the capacity market. CfDs provide long-term price stabilisation to low-carbon generators, incentivising investment by lowering the costs of capital and thus reducing the costs to consumers. The capacity market is the Government’s main policy to ensure a healthy margin of electricity capacity. Regular payments are made to different forms of generation or demand-side response in return for such capacity being available when needed.
In both schemes, support to participants is assigned through competitive auctions, minimising costs to consumers. The 2017 CfD auction secured 3.3 gigawatts of renewable capacity, enough to power an estimated 3.6 million homes. It also saw the clearing price of offshore wind halve compared to the first auction back in 2015. The next competitive auction for less established renewable technologies is planned for spring 2019.
Following four successful four-year-ahead auctions, the capacity market is already securing the capacity we need through to 2021-22. The latest auction secured 50.4 gigawatts of capacity at a price of £8.40 per kilowatt per year. The main auctions have all cleared at between £8.40 and £22.50 per kilowatt per year, below most industry estimates and indicating that the process is highly competitive and delivers value for money for consumers.
The Low Carbon Contracts Company and the Electricity Settlements Company, two operationally independent government-owned companies, work with government to operate the capacity market and CfDs, playing a crucial role in their successful delivery. The Low Carbon Contracts Company was set up to be the counterparty to the contracts for difference. It manages the contracts for their duration, as well as collecting and making CfD payments. The Electricity Settlements Company was established as the capacity market settlement body to oversee all financial transactions relating to the capacity market. Both companies recover their operational costs through levies on electricity suppliers. This is the subject of the regulations that we are considering today.
The regulations will set revised operational cost levies for each of the companies for financial years 2018, 2019 and 2020. Previously, the levies have been set annually. These regulations, however, will set levies for each of the next three financial years, allowing the companies to recover their expected operational costs over this period. Additionally, the regulations make a minor grammatical amendment to the Electricity Capacity (Supplier Payment etc.) Regulations 2014, removing the words “is responsible”, which are not required.
Both companies are essential to the Government’s decarbonisation and security-of-supply objectives and must be sufficiently funded to perform effectively while keeping costs to consumers minimised. The budget-setting process aims to strike the right balance. The budgets are scrutinised by government to ensure they reflect operational requirements and deliver value for money. The budgets have also been exposed to external scrutiny through consultation. The three consultation responses were broadly supportive of the proposed budgets. We also asked stakeholders for their views on setting levies for the next three years instead of one year ahead. They agreed that this was a sensible approach, as it provides them with greater visibility of the estimated costs. Furthermore, parliamentary time is saved over what is likely to be a very busy period.
The operational cost budgets over the three-year period have been set to cover the expected activity required to manage the CfD scheme and the capacity market. The Low Carbon Contracts Company’s budget will be £16.5 million in 2018-19, increasing by about £0.5 million for each of the next two years. The Electricity Settlements Company’s budget will be £7.6 million in 2018-19 and decrease slightly to £7.5 million in 2020-21. The Low Carbon Contracts Company’s net core operating cost for 2018-19 is slightly down on last year. The increase in total cost reflects the inclusion of a contingency provision for managing potential contract disputes. The increase in the final two years takes account of potential additional contracts awarded through future allocation rounds. Importantly, however, management costs per contract are projected to fall by 30% over the budget period.
The Electricity Settlements Company is managing a significant increase in the amount of capacity and the number and type of capacity providers. Moreover, there will be an ongoing need to refine the operation of the capacity market. To manage this activity effectively and ensure that it continues to successfully deliver all the financial transactions for the capacity market, the Electricity Settlements Company requires investment. The budget increase reflects the investment needed.
The regulations revise the levies currently in place to reflect the expected operational cost requirements in financial years 2018, 2019 and 2020. Subject to the will of Parliament, the levy to fund the Electricity Settlements Company’s operational costs is due to come into force on the day after the regulations are made; the operational costs levy for the Low Carbon Contracts Company on 1 April. I commend these regulations to the House.
Baroness Featherstone (LD)
My Lords, capacity markets and contracts for difference have been a roaring success and came in during the coalition years when Ed Davey was Secretary of State—we would expect no less. The regulations will pass today, but it is absolutely right to question any rise in cost, particularly when a small proportion of it is passed on to the consumer. It is always important to keep an eye on costs and particularly when renewing a contract with an entity that is effectively the sole supplier in the field, thus making competition on pricing an impossibility—there is no one competing, so they get more.
Having read the debate in the other place, the rationale given for the steep rise in costs to the Low Carbon Contracts Company and the Electricity Settlements Company since commencement, is basically the expansion of the number of providers, as the noble Lord, Lord Grantchester, mentioned, from 46 to 447—which, of course, is a good thing—as well as the need to cover disputes. I too am very interested in the information on exactly what those disputes are and look forward to reading that in due course. We need to remain vigilant that all costs are properly scrutinised.
I could not help but note that the Minister in another place, Claire Perry, in order to assuage any concerns over the creeping inflation of costs beyond what they should be, said:
“I am always keen to run the calculator over these companies’ calculations. As the Minister ultimately responsible, I will continue to do so”.—[Official Report, Commons, Delegated Legislation Committee, 19/3/18; col. 8.]
I am impressed with the Minister’s personal intervention in this mission and trust that her background in banking and finance mean that her use of a calculator is unimpeachable—but I hope there are some accountants keeping an eye on this too. I simply wish to reiterate that companies in receipt of large sums of public money need strict monitoring. On the basis that this will happen, I am content that the regulations should pass.
Lord Henley
My Lords, I can certainly assure the noble Baroness, Lady Featherstone, that my right honourable friend Claire Perry will continue, as the noble Baroness quoted, to run a calculator over these issues—I am sure she will use a calculator, an abacus or any other instrument that is necessary but, just as important, she will also make use of accountants, and the department will keep a very close eye on these matters.
I think the only matter that I need to deal with for both the noble Baroness and the noble Lord, Lord Grantchester—who very helpfully let the department know what his concerns were—is how the budget, including the provision to deal with potential disputes in relations to managing CfDs, has been calculated. As the Low Carbon Contracts Company is the counterparty for CfDs, it is important that it has sufficient funds to defend a dispute if necessary. The provision included in the budget is largely based on previous experience and assumptions about potential disputes. Previous disputes have largely related to contract matters, though the nature of those will be confidential—that is the nature of such things. I emphasise that if the provision is not utilised for disputes and the surplus levy income is not required for other operational activity—we are only talking about matters relating to such activity—it will be repaid to suppliers in accordance with the regulations.
I hope that satisfies both the noble Baroness and the noble Lord and that, with their agreement, I can commend these draft regulations to the House.
Motion agreed.
National Minimum Wage (Amendment) Regulations 2018
Lord Henley Excerpts(6 years, 7 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Henley
That the draft Regulations and Order laid before the House on 5 February, 23 January and 18 January be approved.
Relevant document: 19th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 15 March.
Nuclear Safeguards Bill
Lord Henley ExcerptsTuesday 20th March 2018
(6 years, 7 months ago)
Lords ChamberRead Full debate Nuclear Safeguards Act 2018 View all Nuclear Safeguards Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 81-R-I(a) Amendment for Report, supplementary to the marshalled list (PDF, 54KB) - (19 Mar 2018)
Lord Henley
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley)
My Lords, I shall speak also to Amendments 2 and 12.The amendments place the definition of “civil activities” in the Bill. The House will be aware that the term “civil activities” forms a key part of the main regulation-making power set out in new Section 76A(1)(a). Regulations can be made for the purpose of ensuring that qualifying nuclear materials, facilities or equipment are available only for use for civil activities, so the meaning of “civil activities” is one of the elements that determine the scope of the safeguards regime that can be made through those regulations.
I am grateful to the Delegated Powers and Regulatory Reform Committee for its recommendation on this matter: that a definition of “civil activities” should be, so far as is possible, placed in the Bill, supplemented by a power where necessary to develop its meaning in regulations. Having considered the committee’s recommendation on this matter, I am pleased to have been able to table this government amendment, which places the definition of “civil activities” in the Bill. This definition takes into account the continuing work on the draft regulations which will underpin the Bill, on which we are intending to consult by June.
It is important to emphasise again the fundamentals of what safeguards actually are and what we are hoping to achieve with our new domestic regime. Safeguards are nuclear non-proliferation reporting and verification processes by which states demonstrate to the international community that civil nuclear material is not diverted into military or weapons programmes. Nuclear safeguards measures include: reporting on civil nuclear material holdings and development plans; inspections of nuclear facilities by international inspectors; and monitoring, including by cameras in selected facilities.
As the House will now be well aware, nuclear safeguards are distinct from nuclear safety, which regards the prevention of nuclear accidents, and nuclear security, which is physical protection measures. Nuclear safety and nuclear security are the subject of separate regulatory regimes operated by the ONR.
The new domestic civil nuclear safeguards regime which we are developing is designed to ensure that we can robustly demonstrate to the international community that civil nuclear material is not being diverted into military or weapons programmes. I hope that the House will therefore agree that the proposed definition of “civil activities”, which has the concept of “peaceful purposes” at its core, suitably recognises this international commitment while including helpful detail on the types of activities covered by safeguards.
Although the committee accepted that it might still be necessary to supplement this definition with a power to embellish its meaning in regulations, I have not found that to be necessary. The amendment removes the existing power to specify in regulations activities that are or are not to be treated as “civil activities” and replaces it with a definition on the face of the Bill without creating another power. It therefore reduces the number of powers created by the Bill.
I hope that the House will agree that the amendments satisfactorily address the recommendations of the Delegated Powers and Regulatory Reform Committee. I commend them to the House and beg to move.
Lord Hutton of Furness (Lab)
My Lords, I welcome the tabling by the Minister of this amendment. It is always a good idea to see on the face of legislation the definition of terms used in it. It is helpful.
I quite understand why the Minister would want to confine the definition of “civil activities” to things carried on for peaceful purposes; for example, in relation to the production, processing and storage of nuclear material—it is within the safeguarding arrangements and makes sense; the same is true for the purposes of research and development. What I do not understand is why he has felt it necessary to use the words,
“carried on for peaceful purposes”,
in the context of generation of electricity, because I am not aware that the generation of electricity is ever for anything other than peaceful purposes.
Lord Hunt of Kings Heath (Lab)
My Lords, I will enjoy the Minister’s response to my noble friend’s question. I welcome the amendments brought by the Minister; they follow our discussion in Committee and the recommendation of the Delegated Powers Committee. However, on his eloquent defence of our having this Bill before us, the Bill would be quite unnecessary if the Government were to reverse their decision to leave Euratom, which remains for many of us unfathomable and unjustified.
Lord Henley
On the last point of the noble Lord, Lord Hunt, it is not necessary to rehearse all the arguments that we have been through on this matter because the decision has been made to leave Euratom. As he knows, that was dealt with in the transition Bill, which received a large majority in another place and is now an Act. It is a done deal. That is where we are and we have legislated on that issue.
On the more detailed technical point raised by the noble Lord, Lord Hutton, about electricity generation carried out for non-peaceful purposes, I have not got a clue and will take advice on the matter. I am assured by those drafting the Bill that this was the appropriate and proper way to deal with this matter. We wanted to ensure that we did not need to keep a residual power so that we could come back to this and make further amendments. That would have upset the noble Lord, Lord Hunt, who would have accused me of retaining a Henry VIII power to seek further amendments to the primary legislation. By tabling this amendment and drafting it in that way, I have been able to make sure that there is not even that residual power. That is the proper way to go forward.
Having said that, I will write to the noble Lord, Lord Hutton, to give him an idea about electricity generation that is carried on for non-peaceful purposes, if such an answer can be found. I will make that information available to other noble Lords as they so wish.
Lord Henley
““civil activities” means—(a) production, processing or storage activities which are carried on for peaceful purposes;(b) electricity generation carried on for peaceful purposes;(c) decommissioning;(d) research and development carried on for peaceful purposes;(e) any other activity carried on for peaceful purposes;”
Lord Henley
My Lords, I hope that I can persuade the House that it could be irresponsible and would create confusion and doubt to support this amendment in a Division, as the noble Lord, Lord Grantchester, wishes to do.
The amendment seeks to require Ministers to request, as part of the negotiations with the EU, that the United Kingdom does not leave the Euratom treaty if it does not have certain agreements or arrangements in place by 1 March next year—that is, four weeks before exit day. Those agreements or arrangements are set out briefly in paragraphs (a), (b) and (c) of new subsection (3) proposed in the amendment, and I will deal with those in due course.
The noble Lord, Lord Grantchester, also made it clear that the amendment is not about stopping us leaving Euratom. He might give us that assurance but, listening to some of the other speeches, I am not sure that that is necessarily the wish of others, who have made it clear that they would like us to stay in Euratom—a point made in earlier interventions by the noble Lord, Lord Hutton, and others.
At this stage, it is important to remind the House that when my right honourable friend the Prime Minister gave notice last year of our intention to leave the European Union, she also commenced the process for leaving Euratom. The power to make that notification has already been debated at considerable length in both Houses of Parliament and authorised by the European Union (Notification of Withdrawal) Act 2017. That notification has been accepted by the European Union. The United Kingdom will therefore withdraw from Euratom at the same time as withdrawing from the European Union. That, as I put it to the noble Lord, Lord Hutton, earlier, is a done deal.
I commend all noble Lords’ commitment to ensuring that all the necessary measures are in place so that the United Kingdom can operate as an independent and responsible nuclear state upon withdrawal from Euratom. It is essential that the civil nuclear industry is not adversely affected by the UK’s withdrawal from either the EU or Euratom and that it can continue to operate with certainty. I underline the word “certainty”. That is our top priority and the reason for the Bill. It is why we are bringing forward all the regulations that sit beneath it—of which noble Lords will have seen draft versions—and the reason for the work the ONR is doing to put in place a regime, and that my department is doing to secure the agreements we need with the IAEA and key international partners. I will reiterate this point until the House understands the extent to which the UK stands ready to operate as an independent and responsible nuclear state from day one of exit.
The first quarterly update to Parliament, which will be available before the Easter break, will demonstrate our significant progress on this front, and I will share some of the details with the House shortly. Before I do so, however, I will address the crucial issue of the timing of our withdrawal from the Euratom treaty and the timings provided for in this amendment.
The amendment’s proposed suspension period for Euratom withdrawal is in conflict with the transition period already agreed by the UK and the European Union. This has been referred to by several noble Lords, including the noble Lord, Lord Teverson, and my noble friend Lord Trenchard. The agreement is for a transition period running from 30 March 2019 to 31 December 2020 and will include all of the Euratom acquis. To be clear, the agreement reached in Brussels on 19 March is that the transition period will include the continued delivery of the Euratom safeguards regime in the UK, and the UK will continue to be covered by Euratom-level agreements with third countries during that period. Clearly, this will take effect after the UK has left Euratom, whereas this amendment refers to a period prior to the implementation of Euratom withdrawal—one of the reasons why it is not satisfactory. The amendment is, therefore, at odds with national government policy and as such mandates a request that we know is futile.
In terms of the overall principle of the amendment, I must be clear that an attempt to mandate a particular stance in negotiations, in the way that this amendment seeks to do, does not belong in primary legislation. I cannot, therefore, accept this amendment but I understand that the House will want reassurances that we have in place the international agreements that we need on safeguards.
I turn to progress on securing those new bilateral safeguard agreements. We have made very good progress in negotiating these with the IAEA, which I will simply refer to as “the agency”—I have problems with the initials, as noble Lords may have noticed. Both the UK and the agency are clear that the new agreements should follow the same principles and scope as the current trilateral agreements.
The amendment also addresses relevant international agreements with other nations—the NCAs. To be clear, the United Kingdom is not a party to nuclear co-operation agreements concluded by Euratom with other nations. These are concluded by Euratom on behalf of the member states. I understand, however, that the intention of this amendment is to cover agreements Euratom currently has in place with third countries.
As the House will be aware, the Government have prioritised putting in place nuclear co-operation agreements with those nations which have a legal or policy requirement for them to be in place as a prerequisite for civil nuclear trade. We are on track to conclude, and to secure third-country and UK ratification of, all such agreements that are essential to ensure a smooth withdrawal from Euratom in advance of 2019, in particular those with the US, Canada, Australia and Japan. We have held positive and constructive discussions with each of these four countries and remain on track to ensure that these agreements will be in place in time.
Lord Hutton of Furness
Have Her Majesty’s Government received any assurance from the Government of the United States that this legislation will be in place, having passed through both Houses of Congress, in time to ensure that there is no break in trade? Has he received that assurance?
Lord Henley
My Lords, I am not aware of any such assurances. It is important that we get this legislation in place in good time. That is why I hope that we will complete Report today and Third Reading next week, and the Bill will receive Royal Assent some time after the Easter break. I do not know what is happening in the United States but I can assure the noble Lord that negotiations continue. We believe that we are on track to achieving the NCAs which are necessary. As I said, the important NCAs that we need are with the US, Canada, Australia and Japan. The amendment seeks relevant international agreements with those nations with which we have exercised rights within the last three years, which would include others that are not relevant. The important ones are those four—the ones that we trade with—and I give an assurance that we are on track. We have held positive and constructive discussions with each of these four countries and remain on track that those agreements will be in place in time.
All sides recognise the mutual interest in having these agreements in place to replace the Euratom agreements on which the UK currently relies. As I have said, discussions have been constructive; the substance of the new agreements is planned to follow very closely what is in the existing agreements. I am confident that sufficient progress is being made in this area, including on draft texts and ensuring that respective ratification processes and timetables have been taken into account in the planning.
Our substantial progress in international negotiations, coupled with our swift action to establish a legislative and regulatory framework for a domestic safeguards regime, not least via this Bill, means that we will be ready for exiting the Euratom treaty no matter the outcome of wider government negotiations on Brexit. The core aspects of this element of Amendment 3 will therefore already be met, and are therefore unnecessary.
Crucially, I must also bring the House’s attention to the fact that the effect of this amendment would extend to covering a number of additional agreements which, de facto, are not required to ensure a smooth withdrawal from Euratom. Introducing such requirements into the Bill will unnecessarily create huge risks and uncertainties to the UK’s ability to operate as an independent nuclear state from March 2019. I refer the noble Lord, Lord Hutton, particularly to proposed new subsection (3)(c) of the amendment, which could cover NCAs that Euratom has concluded with Uzbekistan, Kazakhstan, Argentina, and Ukraine. As I have previously set out, none of these countries has a legal or policy requirement for an NCA to be in place to facilitate nuclear trade. Requiring us to put agreements in place with each of these countries before we withdraw from Euratom would be a fruitless exercise which could jeopardise our work to establish a civil nuclear safeguards regime for the UK with all the essential agreements in place.
Further, proposed new subsection (3)(a) refers to an agreement between the UK and the agency to recognise the Office for Nuclear Regulation as the approved UK safeguards authority. I would like to make it clear that the agency’s focus in respect of the UK’s safeguards lies with the voluntary offer agreement and additional protocol, rather than the domestic legislation underpinning the domestic regime, or the UK’s arrangements for fulfilling its commitments. It is the Government—not the ONR—who enter into these agreements, and therefore the Government who must uphold these commitments, regardless of whether or not we choose to delegate obligations to an independent domestic regulator. The additional agreement referred to in Amendment 3 as distinct from the voluntary offer agreement is therefore unnecessary, impractical, and in no way required for a smooth withdrawal from Euratom.
As I and ministerial colleagues have emphasised throughout the passage of this Bill—this has been echoed by all those taking part in this and earlier debates—certainty for the industry is essential. Creating a situation where we are compelled to secure agreements—
Lord Warner
I am sorry to interrupt the Minister as he comes to his peroration. Will he answer the question asked by the noble Lord, Lord Hutton, in more detail? Can he give a categorical assurance to this House that there is no risk of Sizewell B closing down as a result of the Government’s failure to put in place all the things that he assured us of by 29 March next year? As he will know, it is of a US design and relies on imported spare parts and maintenance arrangements, and generates about 8% to 10% of the UK’s electricity.
Lord Henley
The noble Lord is asking whether that NCA with the United States will be completed. I have given all the assurances I can that it will be and I cannot go any further than what I said in response to the noble Lord, Lord Hutton. With that in mind, what I was trying to make quite clear in what the noble Lord, Lord Warner, described as my peroration was the need for certainty for the industry, and this amendment would remove that certainty. The amendment would create a situation where we are compelled to secure agreements that we do not need and it runs counter to what the Government are doing: creating certainty. Even if this amendment were technically correct, its impact would be to introduce further uncertainty and potential disruption to an industry by casting doubt over establishing the domestic safeguards regime in the long term. I do not believe that can be the intention of the noble Lords who tabled it.
I believe we are on track to provide continuity and that this amendment is not only unnecessary but exacerbates the risks that it seeks to remove. I hope with the assurances I have given, and with the explanation of the weaknesses in the amendment, that the noble Lord will withdraw it.
Lord Broers
My Lords, I very much appreciate what the Minister said with respect to the progress the Government are making to seek these agreements—it is essential that we get agreements with our major partners. I do not feel that the amendment, as it is, will put us in great danger by going beyond our major partners, but perhaps such adjustments could be made in the other place.
I do feel, however, that I have heard too many assurances that have not been fulfilled. In a case of such great importance, this amendment would secure what may be relatively straightforward, as the Minister said. We are well on the way to gaining most of these agreements already so it should not be too burdensome, but I wish to test the opinion of the House.
Lord Henley
“Report on nuclear safeguards
(1) The Secretary of State must, in respect of each reporting period, prepare a report containing information about nuclear safeguards.(2) Information about nuclear safeguards includes information about—(a) international arrangements relating to nuclear safeguards to which the United Kingdom is (or is proposed to be) a party, and(b) the establishment in the United Kingdom of arrangements relating to nuclear safeguards.(3) A report under this section must be laid before Parliament after the end of the reporting period to which it relates.(4) There are four successive reporting periods, each of which is a period of 3 months.(5) The first reporting period is the period of 3 months beginning with the day on which this Act is passed.”
Lord Henley
My Lords, in moving Amendment 6 I shall speak also to my Amendment 10. This group includes Amendments 7 and 9, of which Amendment 7 is an amendment to my Amendment 6. Therefore, I take it that after I have spoken the noble Lord, Lord Hunt, will move his Amendment 7, and we can then debate the general issues. At this stage I shall speak to Amendment 6, and I shall respond to the noble Lord’s words on Amendments 7 and 9 in due course.
We all agree about the importance of ensuring that the industry can continue to flourish in trade, regulation and innovative nuclear research, no matter what the outcome of negotiations with the European Union or the final terms of our withdrawal from the EU and Euratom. Whatever the outcome and terms, we obviously want to see this great industry continue to flourish. We have made substantial progress in ensuring that the United Kingdom can operate as an independent and responsible nuclear state from day one, and we are committed to being transparent to Parliament about our work in this area. We have taken seriously the requests from Members of both Houses, across all parties, for regular, detailed updates about nuclear safeguarding arrangements in this country.
I agree that it is vital that Parliament is able to assure itself that the Government are taking effective action in relation to nuclear safeguards. In order to promote a transparent system of regular information on progress, my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy committed to provide quarterly updates on overall progress on Euratom negotiations, going further than the proposed amendments at the time. The House will be aware that we plan to publish the first such update at the end of this month. This is even sooner than originally envisaged, coming three months since the publication of our January statement. As the end of the three months would fall during the Easter Recess, a decision was made to bring forward the publication of the first update so that it will be laid before Parliament rises.
Further updates will be made available every three months, with the next one scheduled for June 2018. I listened very carefully in Committee and I understand that noble Lords across the House would like something more than hopeful reassurances; for that reason Amendments 6 and 10 would place a statutory duty on the Secretary of State to provide quarterly reports on nuclear safeguards, covering both domestic and international matters, for the first year after the Bill receives Royal Assent. We will come on to the other amendments but I hope that our Amendments 6 and 10, as well as the current commitment under the Written Ministerial Statement of 11 January to report on wider matters relating to our withdrawal from Euratom, demonstrate our continuing commitment to provide information and clarity to Parliament and provide sufficient reassurances to noble Lords. I will listen very carefully to what the noble Lord says about his Amendments 7 and 9, in his name and those of a slightly varying list of supporters, and deal with them at the end of the debate. In the meantime, I beg to move.
Amendment 7 (to Amendment 6)
Lord Broers
My Lords, I will make some brief remarks in answer to the noble Viscount, Lord Trenchard. The research we are talking about here is not necessarily just in fusion—it includes fusion, but that is a great big project—but in areas that are ancillary to a certain extent but terribly important. Research is going on everywhere into radioactive waste disposal, but we happen to lead that. I do not think that this defeats the noble Viscount’s ambition—which is my ambition—that our own industry does a lot and gains a lot from that. It also gains a lot from being accepted by the community, so that when our advances come up, others will use what we did. The same is true of radiological protection, which is always a problem with workers around nuclear plants. So it is not just the new reactors, although the one gap in our knowledge is what is happening to the new generation fission reactors beyond the EPRs that people are working on. We really need international collaboration.
With respect to our own ambitions, I entirely support the noble Viscount in terms of SMRs. We are dying to get going—to be specific Rolls-Royce is dying to get going—on SMRs. In fact, Rolls-Royce tells us they are spending £1 million a month keeping that programme alive and waiting for the Government to make a decision on the competition which I hope will come.
Also, in fusion, there is Tokamak Energy. This is a very ambitious small company which feels it can contain fusion in a spherical tokamak, which is a fascinating thing. I should love to spend a lot of time talking about it. It is a very clever and effective way to up the efficiency of the use of the magnetic field to confine the plasma. So there is more to this research than just a few of the most obvious things. I think that is greatly in support of Amendment 7. I also support Amendment 6. I agree with the noble Lords, Lord Fox and Lord Hunt, who mentioned this. I think the independent review is designed to help the Government and not be a hindrance.
Lord Henley
My Lords, I want to begin by adding to something that the noble Lord, Lord Fox, said. He said that I repeatedly say, “I believe, I believe”, and that the House has to take it on trust. I hope this goes beyond me and officials within the department. We have seen what is happening when it comes to nuclear safeguards—
Lord Henley
I was not suggesting that the noble Lord was doing that in any way whatsoever.
Since Second Reading, I have visited Sellafield—well, obviously I have visited it on occasions in the past because it is in my home county, but I visited it again—just to see what nuclear safeguarding amounts to. After all, Sellafield contains two of the three sites that will be relevant in terms of nuclear safeguarding. I cannot say that a one-day visit has turned me into an expert in any way. I would not want to claim that, but I can say that I can go beyond, “I believe”, and say “I have seen”.
Lord Henley
I am amusing the clerical members of the Cross Benches and I will try to restrain from doing so. Perhaps they thought I was making some sort of evangelical speech.
Let me start by dealing with the two amendments. While expressing my deep sympathy for them, I do not think they are necessary, but I want to give some indication as to how importantly we take them. I am grateful to various noble Lords who welcomed the original amendment, which is government Amendment 6.
Lord Grantchester
I commend the noble Lords, Lord Teverson and Lord Warner, for bringing back this amendment on Report. It concerns an important issue: that the UK must address the skills that are needed in the UK. The problem of labour supply with the necessary skills beyond those present and available in the UK will need to be addressed by several industries—and none more crucial than the power industry, in relation not only to new build but to the continuing need for decommissioning.
EDF is certainly correct to identify the importance of the specialisms needed to deliver Hinkley Point C on time. The noble Lord, Lord Warner, drew attention to this and to the Immigration Rules. With restrictions on freedom of movement, currently no route is identified for the many categories of workers to enter the UK under the points system in order to fill the vacancies envisaged. It is crucial that the Minister’s department underlines the importance of the issue to the Home Office and comes up with a solution. It will be needed in the best interests of the UK’s civil nuclear industry.
Lord Henley
My Lords, I am grateful to the noble Lord, Lord Teverson, for moving his amendment, and for the contributions of other noble Lords. I accept that it will continue to be important to attract—as the noble Lords, Lord Hunt and Lord Warner, and my noble friend Lord Selborne put it—the brightest and the best, to ensure that we maintain our excellence in the nuclear field. This amendment, however, is somewhat more limited in scope than that. Our future immigration system will be set out shortly and it would not be right for me to go into it. As my right honourable friend made clear in his Statement on 11 January, we will ensure that businesses and communities, as well as Parliament, have the opportunity to contribute their views before any decisions are made about the future system that the Home Office will be developing.
Lord Henley
As I remember, the last time we debated this, by chance—I may be misremembering—a Home Office Minister was sitting next to me. I can confirm, however, that the Home Office is fully aware of the concerns expressed in debates of this sort, and we will make sure that it continues to be so. It is important to us that we continue to—as I put it—access the best talent. As the noble Lord will be aware, we have already doubled the number of available visas in the tier 1 exceptional talent review, and will be looking at changing Immigration Rules to enable world- leading scientists and researchers under the tier 1 route to apply for settlement after three years and to make it quicker for highly skilled students to apply for work in the United Kingdom after finishing a degree. We are, therefore, relaxing the labour market tests where appropriate.
The crux of this amendment, which relates to safeguarding staff—the Bill has been drafted in that way and so the amendment must be too—attempts to ensure the freedom of employment of specialists employed in that field. This is clearly a matter of particular interest in the light of the Government’s preparations for establishing a domestic nuclear safeguards regime, which, among other important work, means securing the right quality and quantity of appropriate safeguarding staff in the Office for Nuclear Regulation. Given the importance of attracting the right staff to work in this specialist field, the Government are committed to ensuring that the ONR has the right personnel. I can give the House a bit of information: in the most recent recruitment round for two further posts in this field there were 112 applicants for the ONR to look at. We will continue to work with the ONR to ensure that it has the right staff to regulate the UK’s new civil nuclear safeguards regime. Those figures show that there is no shortage, certainly in the world of recruiting and training the appropriate inspectors and building additional institutional capacity.
The noble Lord will not be surprised if I do not go into this, because he will then ask for further details. If I give him an assurance that the amendment is possibly itself defective and not suitable for inclusion, and he accepts that in spirit there is no need for it—since the Government are committed to ensuring that we have the right specialists and the Home Office continues to work in this field—I hope that he will feel able to withdraw Amendment 8.
Lord Teverson
I thank the Minister for his reply. It is good to have some figures: can we have more of them in these interactions around groups? I also remind the Minister that he regularly mentions the highly skilled and the talented. That may, I agree, be the case in nuclear safeguarding, but in a lot of Brexit areas, perhaps including some areas of the nuclear industry, the need is far broader. However, I take his point in regard to this Bill.
I also recognise that this issue will inevitably be fought out during the immigration Bill that we will eventually get. I am delighted that we will have another opportunity to debate Euratom in another Bill, to pursue sanity and perhaps get some change in this area. I therefore accept the noble Lord’s challenge—as it were—and his assurances about taking up these issues in the future immigration Bill, which we continue to await with interest. In the meantime, I beg leave to withdraw the amendment.
Lord Grantchester
I thank the noble Lord, Lord Teverson, for raising the important issue of the information technology systems necessary for nuclear safeguards. I also saw the written Q&A from the noble Lord and I thank the Minister for replying so swiftly. In Committee, the importance of understanding the full inventory costs in IT management systems was debated. The Government clarified that the full implications of the mechanisms that the ONR will need to set up are matters that could be included in each report that the Government will undertake. It can only build confidence that Parliament will be reassured through any audit process that the UK’s regime will be costed, reported and certified to be robust.
Lord Henley
My Lords, I am grateful to the noble Lord, Lord Teverson, for moving his amendment. He and the House really want two things. They want substantive reassurances and details of further reporting. I asked to have this amendment grouped with Amendment 6, which to some extent deals with this matter. We propose to put such reporting on the face of the Bill, and progress with the information technology systems required for the safeguarding regime will fall within that reporting duty. I hope that the noble Lord will feel that he does in due course get sufficient information. In the meantime, I will give an update about what is happening. As the noble Lord, Lord Fox, said, I might have to write with further detail later on, but let us see how the quarterly statements take place to see whether they provide sufficient information. If not, noble Lords can come back to me.
The overall system of safeguards is generally referred to as a state system of accountancy for and control of nuclear materials. The noble Lord referred to that in my original Written Answer. That is also known as an SSAC. The last time I came across SSAC it was the Social Security Advisory Committee, but that was in another world and another place. We will not go there now. As part of this, the ONR plans to put in place an IT system which it refers to as the safeguards information management and reporting system. I do not know how you pronounce “SIMRS” so we shall refer to it by its initials. The SIMRS is aimed at enabling the ONR to obtain and process the information necessary to ensure timely submission to the International Atomic Energy Agency of the reports required by any future safeguards agreements with the agency. The SIMRS will also enable submission of any specific reports required by supplier states as part of nuclear co-operation agreements.
The ONR has estimated that it will cost some £10 million—the figure I gave some weeks ago in Committee—to establish a UK SSAC, and the SIMRS is included as a part of this overall estimate. A pre-qualification questionnaire in relation to the SIMRS was recently advertised on the Government’s digital marketplace. Sixteen suppliers responded, of which six have been invited to respond to the invitation to tender by 6 April. Responses to that tender will provide more certainty on estimated costs, and the ONR expects to let the contract in early May.
I of course take note of what the noble Lord, Lord Warner, warned about IT systems from his experience with the health service and the Home Office. We are all aware of problems that new IT systems can have. I do not think that what we are proposing here is on the scale of what the National Health Service needs, but I accept that there can be problems. We and the department have a duty to examine that as carefully as we can. I give an assurance that we will do that as far as is possible.
Put very simply, that is where we are at the moment. We will keep noble Lords updated. We have accepted my Amendment 6, as amended by the amendment moved by the noble Lord, Lord Hunt. There is no need to further complicate the Bill’s proceedings by adding this amendment, which duplicates what we already have. Therefore, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Teverson
My Lords, I thank the Minister and welcome his undertaking that the IT systems will be included in the regular reporting. It would be useful if the Minister could answer my noble friend Lord Fox’s question about whether they are starting from zero or whether we are effectively modifying existing systems.
Lord Teverson
I welcome that and on that basis beg leave to withdraw the amendment.
Lord Henley
Lord Henley
Brexit: Fashion Industry
Lord Henley Excerpts(6 years, 7 months ago)
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Lord Clement-Jones
To ask Her Majesty’s Government what assessment they have made of the impact on the fashion and other design-based industries of the potential loss of European unregistered design rights for United Kingdom-generated designs following Brexit.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, as expressed in the United Kingdom technical note on other separation issues, where the UK does not have existing domestic legislation to protect certain types of rights, it will establish new schemes. This will preserve the full scope of the unregistered Community design right in the United Kingdom.
Lord Clement-Jones (LD)
My Lords, the hard exit from the EU means the loss of EU unregistered Community design rights and of vital protection for designers who first disclosed their design in the UK. This is just the way to lose London Fashion Week. We have discussed the problems with loss of country of origin rights for our broadcasters. Is this not yet another example of why the creative industries want us to remain in the single market?
Lord Henley
My Lords, I am not going to get into the wider debate about the EU at this stage, but what I can say, to expand on my Answer, is that we will bring forward various statutory instruments in this country to further our rights here. The negotiations will take place with the EU as part of the leaving process, which we hope will deal with these matters, but there are also, as the noble Lord is fully aware, what I think I can call inclarities in the current EU regulations, which obviously need to be sorted out by the EU itself.
Lord Howarth of Newport (Lab)
My Lords, in framing new law for the period following Brexit, will the Government be mindful that intellectual property rights create monopolies? Will they therefore reflect carefully on the appropriate balance within the UK’s future intellectual property regime between the producer interest and the consumer interest and make sure that they are not unduly influenced by producer lobbies?
Lord Henley
My Lords, obviously we will take account of all those who have an interest. The noble Lord is right to draw that to my attention. He will be aware that we went through a major reform of intellectual property rights with the 2014 Act, which I think was discussed at length in this House—fortunately, I was not involved. I am not sure that the noble Lord would want to go through that process again, but there are some minor changes that need to be made as a result of leaving.
Lord Foster of Bath (LD)
My Lords, not only will we need reciprocal arrangements with the European Union with regard to intellectual property, including unregistered design rights, but does the Minister accept that we will also need them with regard to enforcement of intellectual property rights, currently carried out in part by Europol? How will that enforcement be carried out?
Lord Henley
My Lords, again, that will be a matter for discussion as part of the leaving process.
Baroness Goudie (Lab)
My Lords, we have a problem of indecision. Organisations such as fashion week will disappear from London. The amount of GDP that fashion week brings to this country is enormous. As we are not doing very well in other parts of the world, we really need it to continue. Will the Government assure those industries that they are welcome here, and do so quite quickly, otherwise they will look to go to Paris and Milan, because they are asking and baiting them to come?
Lord Henley
My Lords, the noble Baroness is taking a rather pessimistic view of things, but we are aware of those risks. When one thinks of the strengths of the industry in this country, I think it is very unlikely to leave overnight. We will be in discussion with people such as those at the British Fashion Council and listen to their particular concerns. As I said, we will continue with our negotiation as part of the leaving process.
Lord Howell of Guildford (Con)
Did my noble friend notice the highly successful Commonwealth fashion event the other week, which demonstrated that London fashion was roaring ahead regardless of Brexit? It involved wider-world influences in a highly successful and satisfactory way.
Lord Henley
My Lords, sadly, I missed that, but I am very grateful to my noble friend for bringing it not only to my attention but, more importantly, to the attention of the House.
Baroness Hayter of Kentish Town (Lab)
My Lords, as a dedicated follower of fashion—that gives away one’s age, does it not?—I would add that although the IP itself is important, we also need our lawyers to continue to represent any of our designers when they appear in courts in other countries. We also need the models and others to be able to move across borders so that they can perform or show their wares. Will the Minister give some assurance that, in the discussions on Brexit and the ability to move for work, this will be uppermost in their minds?
Lord Henley
Yes, my Lords, we will take the point about lawyers into account, and I will make sure that the noble Baroness’s concerns are brought to the attention of my honourable and right honourable colleagues. As regards others such as models moving abroad, I think that there will probably be no problem whatever, because there will be a particular attraction to making sure that English models and all others involved in the fashion industry are able to work in Europe and sell their wares.
Lord Tebbit (Con)
My Lords, I wonder whether my noble friend can tell me whether we have any problem with the Americans, for example, behaving in a dastardly, unfair way, as Lib Dem Peers fear our European friends would behave if we were not in the EU.
Lord Henley
My Lords, I think I had better confine myself purely to questions about fashion rather than other areas, but on that particular subject I can agree with my noble friend.
Lord Wallace of Saltaire (LD)
My Lords, does the noble Lord’s department have an estimate yet of how many statutory instruments will be required to fulfil the pledge he has just given us? Will those statutory instruments be by the affirmative or the negative procedure?
Lord Henley
My Lords, on the overall number of statutory instruments that will be required, different people have put forward different estimates of very large numbers. As regards this particular subject, as far as I know, we need just one statutory instrument. There might be more, and I will write to the noble Lord if that is the case. Whether they will be affirmative or negative is again something that I cannot answer at this stage, but I will write to the noble Lord if a decision has been made.
Lord Lawson of Blaby
My Lords, I congratulate my noble friend on his excellent Answer to the original Question. The Liberal Democrats’ refusal to accept this clearly portrays a lack of confidence in this country’s ability to govern itself. Does he think that that is simply a lack of confidence in this country, or that it might be because the Liberal party will never be in government again?
Lord Henley
I did serve in government with the Liberal Democrat party in the past. Whether that will happen again is a matter for speculation, but I suspect it is unlikely that I would be part of that, and one would hope that the Liberals would not be part of it either.
National Minimum Wage (Amendment) Regulations 2018
Lord Henley Excerpts(6 years, 7 months ago)
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Lord Henley
That the Grand Committee do consider the National Minimum Wage (Amendment) Regulations 2018.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I beg to move that the National Minimum Wage (Amendment) Regulations 2018, which were laid before the House on 5 February 2018, be approved. The purpose of the regulations is to increase the national living wage and all of the national minimum wage rates from April 2018. The regulations also include an increase in the accommodation offset rate, which is the only benefit in kind that counts towards minimum wage pay.
The national living wage has had a real, positive impact on the earnings of the lowest paid: between April 2015 and April 2017 those at the fifth percentile of the earnings distribution saw their wages grow by almost 7% above inflation. This is faster than at any other point in the earnings distribution and, according to the Resolution Foundation, wage inequality, as measured by the ratio between the top decile and the bottom decile of the earnings distribution, fell in all regions of the United Kingdom between 2015 and 2017 thanks to the national living wage. Increasing the minimum wage is one more way in which the Government’s industrial strategy is boosting people’s earning power and seeking to raise productivity throughout the United Kingdom.
From next month the national living wage for those aged 25 and over will increase by 33p to £7.83, which is a 4.4% increase. The 33p increase in April will mean that a full-time worker on the national living wage will see their pay increase by over £600 over the year. The national living wage is on course to reach the Government’s target of 60% of median earnings by 2020.
The 21 to 24 year-old rate will increase by 33p, meaning those in that age group will be entitled to a minimum of £7.38—an annual increase of 4.7%. Those aged between 18 and 20 will be entitled to a minimum of £5.90—an annual increase of 5.4%—and those aged 16 and 17 will be entitled to a minimum of £4.20, an annual increase of 3.7%. Finally, apprentices aged under 19, or those aged 19 and over in the first year of their apprenticeship, will be entitled to £3.70, which is the largest annual increase of all the rates at 5.7%.
All of these above-inflation increases represent real pay rises for the lowest-paid workers in the United Kingdom. For younger workers on the national minimum wage, it is the largest and fastest increase in more than 10 years. The Government’s green-rated impact assessment estimates that more than 2 million people will directly benefit from these regulations.
All of the rates in the regulations have been recommended by the independent and expert Low Pay Commission. The LPC brings together employer and worker representatives to reach a consensus when making its recommendations. The Government asked the Low Pay Commission to recommend the rate of the national living wage so that it reaches 60% of median earnings in 2020, subject to sustained economic growth.
For the national minimum wage, the LPC has recommended rates that increase the earnings of the lowest-paid young workers without damaging their employment prospects by setting it too high. I thank the LPC for the extensive research and consultation that has informed these rate recommendations, all of which was set out in its 2017 report, published in November.
The Government recognise that, as the minimum wage rises, there is a higher risk of non-compliance as a larger share of the workforce is covered by the minimum wage. The Government are committed to cracking down on employers who fail to pay the national minimum wage. We are clear that anyone entitled to be paid the minimum wage should receive it. Consequently, the Department for Business, Energy and Industrial Strategy has increased funding for HMRC national minimum wage enforcement to £25.3 million this year—up from £13 million in 2015. HMRC follows up on every complaint it receives, even those which are anonymous. These include those made to the ACAS helpline, via the online complaint form or from other sources.
In 2016 HMRC recovered pay arrears in excess of £10.9 million for more than 98,000 workers. Those employers who underpay their workers the minimum wage face public naming by the Government. Indeed, last Friday BEIS named 179 employers who had underpaid a total of £1.1 million to 9,200 workers.
Sustainable increases in minimum wage rates depend on strong employment growth. Over the past year the UK labour market has reached a record high employment rate, and the lowest unemployment rate since the 1970s. Evidence has long told us that investing in human capital is crucial for the long-term productivity of the workforce. The industrial strategy sets out our long-term vision for increasing productivity, including through raising the minimum wage and so boosting the earning power of the lowest-paid workers. Through these regulations the Government are building an economy that works for everyone. I commend the regulations to the Committee.
Lord Stevenson of Balmacara (Lab)
My Lords, I thank the Minister very much for his introduction. I will not go back over the recent history of the introduction of the national minimum wage, because I think it is now a settled agreement between all the parties that it is a good thing. It works for all sections of society, but particularly for the lower paid, and we have evidence before us that shows that.
While we are in congratulatory mode, I thank the LPC, as the Minister did, for its work. It is often unsung and not very visible, but it is well rooted in the interest it has in this area and I know that Ministers value the work that it does. I also congratulate the team responsible for the paper before us. It is a bit of a shock to have to read back through some of the stuff one thought one had forgotten a long time ago about microeconomics and the impact of some of the very narrow points raised in the 51 pages or so of the supplementary work, which I am sure the Minister has in his mind and can quote extensively from memory. It is a very good read and very interesting. It agonises a lot about issues that we do not need to detain the Committee with, but it is important that that work is done. I appreciate the fact that it is there and we should publicly recognise the contribution made by it.
Having said that, while I give an alpha plus for the work that has been done, I give it a beta minus for presentation. I came to this slightly late, otherwise I would have raised it earlier, but it is unfortunate that some of the pagination has been lost in the form that the document comes to us. The pagination matters because, for instance, on page 15 of the copy we have from the Printed Paper Office there is a box that should be on one page but which has gone on to several pages. It makes it very difficult to pick up where we are on that. On page 17 there is a rather complicated and important wage distribution graph that is only really readable in colour, although it is printed in black and white. It therefore does not make sense. You have to spend quite a lot of time working out which of the confidence limits percentages are being referred to in the text. If they had been colour coded one would have been able to do so. I am not complaining about this; I am just pointing out that intelligibility would be improved if we could think more about a reader who is not directly involved.
I will make three points—but before I do, I will say that this is the third time that I have responded to this particular instrument, so I am quite familiar with the process, and in particular the rather neat shuffle that took place this time last year, or maybe six months ago, when we moved from October to April. Last time the instrument came partly under the national minimum wage and partly under the living wage. It did the work of assessment and thinking in terms of the minimum wage but prefigured how we would move to the living wage. This is a simpler and more straightforward document than we had the last time we went through this.
Having said that, we have lost a little bit of the context for the decisions that are quite important in this area, which is that the move from the minimum wage to the national living wage is one of significant increases over a relatively short period of time to jump-start an increase in funds at the lower end of the pay spectrum. We absolutely welcome that, but I have lost the thinking of why we are doing it over three years. Also, the Minister used the phrase “subject to satisfactory economic growth”. Well, economic growth is not very satisfactory. For reassurance’s sake, may I have a confirmation that there are no red lights about the future of this and that, as far as we are able to say at this stage, we are still on track to do this oddly phrased equal bite, or single bite, or whatever it is called—it is called the “straight line bite path”—movement from the current position to hit 60% of the median earnings in October 2020, and that there is nothing I have missed in this that would suggest there is any doubt about whether we will do that, subject obviously to the overriding concern about economic growth? It is important to give reassurance if we are at that stage.
Another minor point is that the percentage increases in individual hourly rates are good. One could perhaps make a little too much of 5.7% arising from a 20p per hour rate increase for apprentices, but nevertheless it is valuable in itself. However, the rates are significantly higher than they would have been otherwise and indeed contrast with the reduction in real wages which we are seeing elsewhere in the economy—so to that extent it is doubly welcome.
Having said that, the LPC has recommended, and as far as I can see the Government have accepted without comment, a much bigger increase in the disregard for accommodation rates. I wonder if the Minister could give me some thoughts on that. This is a sensible way of treating those who have accommodation benefits. I do not dispute the principle, but the particularity of squeezing cash in the pocket or the purse, as it were, by raising the disregard for accommodation at a higher rate than the increase in pay seems a little unfair. Is there any context around that in documentation that we have not seen? I would be grateful if the Minister could tell me that today. If not, I will be happy to receive a letter.
Lord Stoneham of Droxford (LD)
My Lords, I have two or three points to make on these regulations. We welcome the move to increase the rates and we support that policy. Obviously, evidence over the past few months has shown that the economy is slowing. We have some quite serious problems in the retail sector and cutbacks in catering, with a lot of chains in financial difficulty. The other sector I would like to mention—here I must declare an interest as the chair of Housing & Care 21, a housing association with considerable care interests—is the whole care sector, which is under huge pressure. Obviously, this is a further burden in terms of costs—and not just for the operators because, given that the health service does not protect a lot of people in this sector, those costs are coming straight out of the pockets of consumers. I hope that the Government are paying some attention to these sectors and I should like to ask the Minister what they are doing.
A key issue is the degree to which productivity will increase in order to absorb some of the significant costs that are being imposed on these low-wage sectors. What are the Government doing? We have various estimates of productivity, but what initiatives are the Government taking to encourage productivity growth in these sectors? What case studies are they implementing to judge the impact of labour costs in these sectors? What policy initiatives are being speeded up—particularly, I hope, in the care sector—to address the fact that the sector is very labour-intensive and that inevitably the costs will impact directly on some very needy people who are not catered for by the National Health Service? The Government’s delay in producing their social care policies is a major consideration as this policy of increasing the living wage continues towards the Government’s targets.
Finally, as we seek to improve to improve rates of low pay, the best scenario in which to do it is one in which the economy is growing well, living standards are increasing and we have no undue pressures. We know, however, that we are now facing a period of low growth and that, because of the movement in the exchange rate and the rise in costs—particularly those imposed by these measures—living standards will be squeezed. On top of that, the Government will impose on the economy the huge costs of Brexit. The Prime Minister has admitted that Brexit will affect jobs and standards of living, regardless. I would therefore like to know what specific measures and initiatives the Government are taking to deal with these problems, which could undermine their low-pay strategy.
Lord Henley
My Lords, I thank both noble Lords for their helpful contributions to this debate and their broad welcome for these regulations. I will deal with the regulations and their attached documentation, and the concerns of the noble Lord, Lord Stevenson, that they were not set out exactly as they should be. I will ask the officials to send him a more readable version. More importantly, we take note of what he said. I will make sure that we do somewhat better at setting these documents out and making them clear to the noble Lord and other noble Lords taking part.
The noble Lord was also rather worried about why I used the expression “subject to economic growth”. The important point here is that the Low Pay Commission makes its recommendations in the light of an array of matters, and—as the noble Lord will know—it includes representatives of employers, employees and others. Ultimately, it makes recommendations and it is for the Government to make the decision. Those who are somewhat higher up in the Government—the Chancellor and others—have to take into account the effect on the economy of the Low Pay Commission’s recommendations, though we hope that it will also have considered the effect its recommendations might have on increasing unemployment by making it less affordable to employ people. The matter is, therefore, considered by the Low Pay Commission but, more importantly, my right honourable friend the Chancellor and others consider what lies ahead.
I join the noble Lord, Lord Stoneham, in wishing to see greater growth, but—as my right honourable friend the Chancellor set out recently—we are seeing steady growth over the coming years and I see no particular red lights in this area. We are still on track to achieve the target that we wanted to achieve—I think the noble Lord asked about this—which is 60% of median earnings by 2020. The Low Pay Commission will take all evidence into account in trying to get there.
The noble Lord also asked about the bigger change in the disregard for accommodation. Again, the Low Pay Commission took evidence to determine that off-set and its report summarises its view that the rate is a fair balance of the employer’s and the worker’s interests. Obviously I am happy to write to the noble Lord in greater detail on that if he so wishes.
I move on to the comment of the noble Lord, Lord Stoneham, that this imposes particular pressure on certain sectors. He singled out one that he knows particularly well, the care sector, for which we accept it can be difficult, and similarly for retail and other areas where wages tend to be on the lower side. That is why we are very grateful that there are representatives of employers on the Low Pay Commission to make sure that that point is made. There is no point raising rates too far if it will increase unemployment or create difficulties for certain businesses. Obviously it means that there will be extra costs for businesses but, as I think the noble Lord will accept, we want to make sure that workers are fairly rewarded.
There are certain things that Governments can do to recognise the increased costs for businesses. We give employers up to £3,000 off their employer NICs bill through the employment allowance. Last year more than 1 million employers benefited from that, saving some £2 billion. That will apply in all sectors. We cut corporation tax, as the noble Lord will be aware, from 28% to 19%, and that again benefits a large number of firms. As the noble Lord will remember, my right honourable friend announced reductions to business rates in the Budget.
I appreciate that things can still be difficult. The point behind having the Low Pay Commission, with representatives from both sides and others, is to make sure that we try to take all factors into account and, I hope, achieve greater balance. The noble Lord would like me to discuss the Government’s care policies more generally, but I do not think I am the right person or that this is the right place for me to do that at this stage, so I shall restrain myself from being tempted to take up his offer. No doubt he will find other opportunities to raise this matter with others in due course.
With what I take to be the support of both noble Lords, I commend these regulations to the Committee.
Works Detrimental to Navigation (Powers and Duties of Inspectors) Regulations 2018
Lord Henley Excerpts(6 years, 7 months ago)
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Lord Henley
That the Grand Committee do consider the Works Detrimental to Navigation (Powers and Duties of Inspectors) Regulations 2018.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I beg to move that the draft Works Detrimental to Navigation (Powers and Duties of Inspectors) Regulations 2018, which were laid before Parliament in January 2018, be approved.
We are moving on to a somewhat different and more technical subject, and I am very pleased to see the noble Lord, Lord Bradshaw, in his place. He will presumably bring a great deal of technical expertise to this debate. The regulations will provide inspectors in BEIS’s Offshore Petroleum Regulator for Environment and Decommissioning, which I will refer to as OPRED, with powers to conduct inspections to assess compliance by operators of offshore hydrocarbon installations with the conditions of consents to locate as granted under Part 4A of the Energy Act 2008.
OPRED inspectors travel to offshore installations to monitor compliance with our offshore environmental regulatory framework. However, they do not have powers to conduct inspections to assess operator compliance with consents to locate conditions. The regulations will close that gap in enforcement capabilities by enabling inspectors to board offshore installations to assess operator compliance with the consents to locate regime, inspect and investigate any legislative breaches, and take enforcement action where required.
Consents to locate are required before offshore activities likely to cause danger to navigation are carried out. A condition of consents to locate is the need for operators to maintain navigational aids, such as lighting, foghorns and other signage, to warn shipping of the presence of offshore installations. Part 4A of the 2008 Act gives the Secretary of State powers to make inspection regulations for enforcing the consents to locate regime and create criminal offences. Regulation 3 of the regulations contains powers to allow inspectors to undertake examinations and investigations and Regulation 6 sets out the offences and penalties that would apply to a failure to co-operate with inspectors. Inspectors would normally conduct checks on the consents to locate regime when undertaking routine visits to offshore installations to determine operator compliance with other environmental legislation.
The regulations are needed due to an increasing trend from 2015 onwards whereby non-compliances by some operators with the consents to locate conditions, primarily the obligation to maintain functioning navigational aids, have not been remedied timeously despite OPRED’s efforts. Although most operators initially responded to incidents of malfunctioning navigational aids by deploying temporary collision-avoidance measures, notably the use of guard vessels around installations, and eventually resolved breaches after protracted negotiations, this is not an ideal situation. Notwithstanding the instigation by operators of temporary solutions, the risk to shipping of a collision with an offshore installation at night, or during times of poor visibility, remains until functioning navigational systems are reinstated.
Without powers to access offshore installations and conduct inspections, we are reliant upon operator good will or evidence from third parties, namely the general lighthouse authorities and the Maritime and Coastguard Agency, in order to gather evidence to establish whether consents to locate requirements have been breached and to encourage operators to revert to compliance. The regulations would provide inspectors with powers to investigate and enforce an expedient return to compliance by operators, thus reducing the risk of offshore collisions occurring.
While the risk of a collision with shipping remains low and to date there have been no incidents of shipping colliding with UK offshore installations as a consequence of failed navigational aids, the human, environmental and economic impacts of a collision would be significant. There are invariably lengthy time lags before the resolution of non-compliances—in one instance it took four months before compliance was restored—which increases the risk of collisions at night or in adverse weather conditions.
The regulations will contribute to our aim of ensuring that offshore hydrocarbon activities are carried out in a safe, clean and environmentally sound manner. In 2017, OPRED conducted a consultation with the offshore sector on the regulations. Two responses were received seeking simple clarification. We replied to both consultees addressing their comments and agreeing to publish updated regulatory guidance once the regulations entered into force.
One substantive issue arose from the consultation regarding the provisions that would allow inspectors to take original documents as evidence in an investigation. To enforce the consents to locate regime effectively, it was our opinion that obtaining original documents would fulfil the legal obligation to gather the best evidence available should we need to pursue criminal proceedings against non-compliant operators. We decided to retain the power to seize original documents in the regulations, but took account of industry concerns by caveating it with limitations on the use of the power.
The objective of the regulations will be to achieve a high level of operator compliance with the consents to locate regime through inspections and the investigation of breaches, the use of enforcement notices instructing operators to take timely actions and the imposition of penalties. Given the need for the regulations, it would be useful if they entered into force on the day after they are made. I commend these regulations to the Committee.
Lord Stevenson of Balmacara (Lab)
My Lords, like the noble Lord, Lord Bradshaw, I am supportive of the intention behind these regulations and have no wish to delay them in any sense. Before I start, I should like to say how nice it is to have had three Lords Chairman officiating over our modest debate. I am sure it must be a very interesting chance for the Lord Speaker to shine a spotlight into the activities of your Lordships’ House in a way that is not often possible.
Lord Stevenson of Balmacara
Real life and marine life as well, as we are going to discover.
I have three main points but they are not at all major. First, as I think the Minister said, these regulations have been in force since 2009 as part of the implementation of the 2008 Act. Yet there seems to have been a sudden rush of activity since 2015, according to the Explanatory Memorandum. Can he give a little more detail about what is going on here? Is there some new interest in the area, arising from some activity which we were not aware of and, if so, why is all this litter being left around and causing difficulty to ships? I would be interested in the background if that is possible.
Secondly, I do not think the Explanatory Memorandum makes the case very well for OPRED’s lack of ability to force operators to return expediently to compliance. The powers now in these regulations would allow them to get more information in the form of paper and other documents. That would somehow seem to inform them better but I do not quite see how it will make anybody do anything they are not currently doing. I would be grateful if my puzzlement on that could be met with a bit more information.
In that respect, there was a four-week targeted consultation. I am not saying it is true of this occasion, but whenever I see the words “targeted consultation”, I wonder whether very many people have been involved. Given that there were only two responses from what seems to be a very large sector of our economy with many companies—indeed the Explanatory Memorandum states later on that there is a large number of small companies involved—maybe there could be a few words about whether, in the department’s view, the consultation was as effective as it could have been. There were only two responses, neither of which was significant in terms of what we are told here, but they did manage to persuade OPRED that there should be a change in relation to the power to seize original documents. Paragraph 8.3 says that OPRED decided to take,
“account of industry concerns by caveating it with sensible limitations on the use of the power”,
but does not say what those limitations are. Again, perhaps the Minister could just explain them.
However, my main concern is timing. Members of the department will be aware that every time BEIS comes in with a regulation, I think I have made a point of pointing out that the Government have accepted, as have previous Governments, that there should be adherence where possible to the common commencement dates of 6 April and 1 October. These common commencement dates are there for the benefit of businesses and to make sure that regulations do not sprinkle upon them like rain from the heavens but are brought up at two points in the year when they can anticipate that there will be regulations, plan for them and expect them to be implemented in an appropriate way. There may be some reason for the commencement date, but these regulations seem to be coming into force in a rather ad hoc way. They come into force the day after they are made. The Explanatory Memorandum comments that,
“the critical need for, and core objective of, the instrument”,
means that the regulations,
“will enter into force on the day after they are made and, if feasible, either prior to, or (if apposite) beyond, the next Common Commencement Date of 6 April 2018”.
It happens that 6 April 2018 is not very far away, so it would not have been very difficult, and certainly given the pressures on all concerned not impossible, for these regulations to come in on 6 April. There may be good reasons for bringing them in a few days before then, and I would be interested to hear what they are, but I worry more generally that the department does not, much as I would wish it to, try to work to the common commencement dates. I am sure the Minister will accept that they are important. They have been advertised and adhered to now for, I think, 15 years. It is something we should respect if we can. I would be grateful for his comments.
Lord Henley
My Lords, we will try to stick to common commencement dates where appropriate, but as I think the noble Lord suggested, there has already been some concern that a degree of time has been taken getting these regulations ready. We therefore felt that this is one of those occasions when not sticking to the common commencement dates would be appropriate. Bearing in mind that there is always the risk of an accident, we thought it appropriate to move as quickly as possible. For that reason again, we thought that a relatively short, targeted consultation—going to what we thought would be the appropriate people—was appropriate. As a result, we obviously missed out the noble Lord.
Lord Stevenson of Balmacara
I just wanted to be sure that “targeted” did not mean two people on this occasion.
Lord Henley
I will take advice, but I am fairly sure it was a number greater than two. I do not know what it was, but on this occasion we did not need a general consultation including the noble Lord and others. We are talking about a fairly specific field that many of us do not know a great deal about. I will come to some of his other points later on, but will deal with points raised by the noble Lord, Lord Bradshaw, first and give him a little more background and detail about the amount of non-compliance there has been.
On average there are at least 49 incidents a year on offshore installations, a proportion of which seem to be in the southern North Sea, which is obviously a fairly busy shipping route. Nine offshore installations had components of their main or subsidiary lighting systems repeatedly fail completely, meaning that parts of the installations were not visible at night or at times of poor visibility due to intense fog. Thirty-two offshore installations had other types of repeated malfunctions relating to other navigational aids, including lights not flashing in unison and dim lighting systems causing reduced visibility from a distance. Five installations had fog signals that were repeatedly inaudible or not functioning, while the radar communications systems on three offshore installations repeatedly failed. Those are the numbers involved and reflect the scale of the issue. I hope that is useful to the noble Lord.
I will have to write to him about the number of inspectors and whether we think that that number needs to be increased. The important point is that the inspectors are already doing their job, but we are giving them extra powers to make sure that there is proper enforcement. He also asked about the appropriate penalties if operators are prosecuted under these regulations. An operator guilty of an offence as set out in Regulation 6 would be liable on summary conviction in England and Wales to an unlimited fine and on summary conviction in Scotland and Northern Ireland to a fine not exceeding the statutory maximum, which is £10,000 in Scotland and £5,000 in Northern Ireland. I hope that the noble Lord does not ask me why the fines are different among the nations, but if he has any concerns I will write to him about it. Conviction on indictment leads to an unlimited fine, which would usually be for an amount greater than the fine on summary conviction. I might be wrong, but that is probably the explanation for the difference between England and Wales and Scotland and Northern Ireland. In Scotland and Northern Ireland there is summary conviction or on indictment whereas in England and Wales there seems to be only summary conviction.
The noble Lord, Lord Stevenson, asked why after 2015 it became more difficult for operators to rectify promptly breaches of consents to locate obligations. Some have asked whether it coincided with the drop in the price of oil at the time. The reason it has become more difficult to get smaller operators to rectify breaches is not entirely clear. Contributing factors may have been the low oil price which has put pressure on operators, but whatever happens the situation is clearly unsatisfactory, given the critical nature of navigation aids, hence the need to put these regulations on to the statute book as quickly as possible. I appreciate that some will argue that we have taken our time to do this, but it is important to get on with them now.
I again thank both noble Lords for their contributions. I think that I have largely dealt with the points, but if I have missed any, I will write. I commend these regulations to the Committee.
Criminal Justice and Police Act 2001 (Powers of Seizure) Order 2018
Lord Henley Excerpts(6 years, 7 months ago)
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Lord Henley
That the Grand Committee do consider the Criminal Justice and Police Act 2001 (Powers of Seizure) Order 2018.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I congratulate the noble Lord, Lord Stevenson, who is still with us for the third item of business. I am grateful for the feedback from the Secondary Legislation Scrutiny Committee regarding the explanatory material accompanying this draft order. We always strive to provide sufficient information for noble Lords to gain a clear understanding of an instrument’s policy objective and intended implementation. Furthermore, my department will take account of the comments of noble Lords made in this Committee when preparing explanatory memoranda for future instruments.
Insider trading and price manipulation in the wholesale energy markets is a crime and ultimately consumers and businesses pay the price for such behaviour in the form of higher bills. It is therefore important that the energy regulator in Great Britain, Ofgem, has sufficient powers to investigate and punish those behaving in such a way and that that acts as a deterrent. Insider trading and market manipulation in the wholesale energy markets are prohibited by the wholesale energy market integrity and transparency regulation—REMIT —which has been in force since December 2011.
In June 2013, the Government made civil enforcement regulations for REMIT—the Electricity and Gas (Market Integrity and Transparency) (Enforcement etc.) Regulations 2013—which give Ofgem powers to impose unlimited financial penalties, access to information and the power to enter the premises of a regulated person under a warrant. In March 2015 the Government strengthened that regime by making further regulations to create criminal offences of intentionally or recklessly breaching the prohibitions on insider trading and market manipulation.
The 2013 regulations give the regulator the power, under warrant, to enter premises to search for, and seize, information and documents that appear to be relevant. However, there are cases where Ofgem may have difficulty exercising this power of seizure. Investigating officers may be presented with a large volume of documents. Identifying documents relating to suspicious transactions among many documents of a similar nature can be akin to finding a needle in a haystack. Ofgem currently has no power to take away an entire body of documents to sift them for relevance off premises. In some cases, this may mean that vital evidence is missed.
Section 50 of the Criminal Justice and Police Act 2001 addresses this problem. It enables a person exercising a power of seizure to remove material from the premises being searched to determine whether it is something which the person is entitled to seize if it would not be reasonably practicable to determine that on the premises. The power in Section 50 applies where a person is exercising a power of seizure listed in Schedule 1 to the Criminal Justice and Police Act. More than 60 such powers are already listed in the schedule. The effect of this order is to extend this power to Ofgem when it is searching premises to investigate breaches of REMIT. The Government believe this would be a measured and sensible extension of Ofgem’s powers, which will help to ensure it can take effective enforcement action.
The Government sought views in December 2015 through consultation on whether Ofgem’s powers should be strengthened to bring them into line with this provision. Industry stakeholders, perhaps not surprisingly, believed that the additional powers offered to Ofgem were disproportionate. Others, including consumer groups, were neutral or in favour of the provision. The Government believe that effective regulation in this area is essential and that sufficient safeguards will be in place to meet stakeholder concerns. The Government do not believe that costs will be unreasonable.
The power will apply only where a court has granted Ofgem a warrant to search premises. When Ofgem exercises this power it will be under a statutory duty to sift information as soon as reasonably practicable after seizing it and return anything which it was not entitled by the warrant to seize. Additionally, a person who is the owner of a document can apply to the court for the return of such material.
We believe that this additional power will aid Ofgem in its investigation of market abuse and that the safeguards should ensure that it is not used unnecessarily. I commend the order to the Committee. I beg to move.
Lord Stevenson of Balmacara (Lab)
My Lords, I thank the Minister for his full introduction to this order. Again, we have no significant concerns about the order itself because it is an appropriate way forward. Indeed, it seems to be needed, based on the description we have had.
As the Minister has said, the Secondary Legislation Scrutiny Committee reported on the order in order to draw it to the attention of the House on the grounds of a policy likely to be of interest. The committee’s main concern seems to be about the rather extended time taken to go from the initial idea booted around in the consultation paper in December 2015 to the final decision to move forward on a part of what was consulted on—only a part—as late as earlier this year. The Minister said that the issues raised will be taken back with everything else, but he did not give us an explanation about that issue. The letter from the department that covered it is also rather vague. It is mainly to do with the fact that internal government processes got in the way of the smooth running of the overall proposal and that the decision was taken quite late simply to go ahead with these REMIT proposals. More information about that would be of interest.
My concern is slightly different. The consultation that was carried out was broader than the REMIT, but the Explanatory Memorandum focuses on those issues. I take it that the references in Article 8 of the Explanatory Memorandum are around that. It says in paragraph (8.2):
“Some energy companies expressed support for the initially proposed “seize and sift” powers, but the majority of companies and representative groups”—
so it is not quite as the noble Lord mentioned—
“argued that these were disproportionate, unnecessary or gave Ofgem too much leeway on which information to remove”.
In other words, they were about the powers. It seems to me that the majority of companies did not agree with the proposal. They felt that the existing powers would be sufficient and that seeing papers on sight, sifting through them there and taking information away in that form would be sufficient for their processes. In paragraph (8.3) however, the department’s response states:
“Having taken account of the consultation responses, BEIS considers that the aim of the policy … justifies the additional burdens identified by industry”.
They were complaining not about the burdens, but the powers. The Explanatory Memorandum is completely silent on whether these powers are appropriate. It seems that the Government have decided to ignore the consultation and go ahead. Will the Minister comment on that? He is not wrong in the sense that the ends may justify the means, but the process would have left a number of companies a bit bruised, given the very short time available and the lack of any individual consultation. They would be entitled to feel that they have not been taken account of properly.
Finally, I have to come back to the matter of the implementation date. This is a new group of civil servants and I can expand on my worries. Other noble Lords will realise that I have raised this matter before. This order may be cited from, and comes into force on, the “twenty-first day after the day on which it is made”. It will have a considerable impact on a small number of companies operating in the electricity and gas field. It is therefore not inappropriate to think that the order should start from the common commencement date: 6 April. If you do the maths, 21 days takes you just beyond 6 April. It would be not inappropriate if the Minister decided to suggest, even with the regulation in this form, that 6 April would have been a better date, and I appeal to his better judgment to make the necessary changes if he can.
Lord Bradshaw
In considering this order we should consider the enormous public dissatisfaction with some of the regulated industries that we have seen for a long time. I think I am correct that the regulators have often been caught out saying that prices should be allowed to rise by a certain amount, and immediately after the announcement, companies’ share prices have risen. To me, this means that the regulator has misjudged the situation. Bodies such as Ofgem are extremely powerful, and from the point of view of the consumer and the general public it is important that a very close watch is kept on their activities. I am happy to support what is in this paper because the balance of advantage between consumer and supplier is tilted very much one way, and this will tilt it back the other way.
Lord Henley
My Lords, I think that I am grateful to the noble Lord, Lord Bradshaw, for his comments. It is always difficult to get the balance right in these matters, which is what we are trying to do in a number of other pieces of legislation—as the noble Lord will be aware—that are before another place at the moment.
It is important that we ensure that Ofgem has the appropriate powers to look after the consumer interest. Obviously, we take very seriously the idea of any extension of powers that we might grant to Ofgem or any other body, and that is why, under the Police-and-whatever-it-is Act 2001, we have to make an order if we want to do that. They are affirmative orders and we have to come to the House to argue the case for them. That is what I am doing.
The noble Lord, Lord Stevenson, was slightly worried about the consultation and whether we listened to the consultees. What I said in my opening remarks was that the industry and stakeholders, perhaps not surprisingly, believed the additional powers were disproportionate, but I added that others, including consumer groups—this is the point that the noble Lord, Lord Bradshaw, picked up—were neutral or in favour of the provision. The Government have to consider these matters very carefully.
Lord Stevenson of Balmacara
Just to be clear, paragraph 8.2 of the Explanatory Memorandum does not say what the Minister just said. It may just be that the expression needs to be changed, but it states,
“the majority of companies and representative groups”.
I think “representative groups” includes consumer groups. The Minister said there were others, but we do not have the detail. They,
“argued that these were disproportionate, unnecessary or gave Ofgem too much leeway”.
Lord Henley
It does not just include consumer groups. The point I was making was that consumer groups in particular were neutral or in favour. Having listened to the consultation, the Government came to their conclusions and decided what was necessary. We considered that the powers were very important and we considered bringing them in with appropriate safeguards. I think that is what we have done.
The noble Lord was concerned about the timing of the order. I am glad that it was not just me listening to him. As he said, there is a collection of officials listening behind me, and I hope this will suffuse through the department so that all of us—Ministers as well as officials—can be aware of his concern that as far as possible we stick to the appropriate dates. Obviously, there will be other occasions when we cannot. I have no power to make amendments now. The noble Lord probably guessed that, since he made the suggestion. Since I have general agreement that this order should go through, I repeat that the department could possibly do better in future. I will keep my beady eye on these matters and see to it that we do as well as possible. As I said at the beginning, we will continue to take the Committee’s views into account in future.
Lord Stevenson of Balmacara
I go back to my original point and ask the Minister, for my comfort and satisfaction, to write with a bit more explanation about the make-up of the responses that were received. May I also welcome the Minister to the small band of people who believe in common commencement dates?
Lord Henley
The noble Lord will get a reputation for having a bee in his bonnet about common commencement dates and will, no doubt, be teased by his colleagues as “Lord Common Commencement Dates” for ever. I will certainly write to him in greater detail on the other matter. I am grateful for the support from both noble Lords.