Climate Change Act 2008 (2050 Target Amendment) Order 2019
Lord Henley Excerpts(5 years, 5 months ago)
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Lord Henley
That the draft Order laid before the House on 12 June be approved.
Relevant document: 53rd Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, two weeks ago, in laying this order, my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy made a Statement in another place, subsequently repeated here, setting out the Government’s ambitions to reduce greenhouse gas emissions from a target of at least 80% to 100%. This draft order does just that by seeking to amend the Climate Change Act. The target, otherwise known as net zero, will constitute a legally binding commitment to end the UK’s contribution to climate change.
I note the attention the Secondary Legislation Scrutiny Committee has drawn to this draft order, specifically on the economic and wider societal implications. I thank the committee for its review of the order and will address these points in my speech. However, first I will set out the case for action.
Last year the Intergovernmental Panel on Climate Change published its report on the impact of global warming at 1.5% above preindustrial levels. In that report it made it clear that a target set to limit global warming to 2% above preindustrial levels was no longer enough. It made it clear that by limiting warming to 1.5%, we may be able to mitigate some of the effects on health, livelihoods, food security, water supply, human security and economic growth—
Viscount Ridley (Con)
My noble friend mentions “2%” and “1.5%”. Surely, he means 2 degrees centigrade and 1.5 degrees centigrade above preindustrial levels?
Lord Henley
My noble friend is absolutely correct. I should have said 1.5 degrees centigrade and 2 degrees centigrade, and I am grateful for that correction.
The panel made it clear that countries across the world, including the UK, need to do more.
The House has heard of the great progress we have made in tackling climate change; of how we have cut emissions—on this occasion I will correctly give a percentage—by 42% since 1990, while growing the economy by 72%; of how we have cut coal from 40% of our electricity generation to less than 5% in just six years; and of our leadership role in sectors from offshore wind to green finance. That progress has been delivered by parties across this House and by communities across the UK. But we know that this is only the start and that we need to do more. That is why we commissioned our expert independent advisers, the Committee on Climate Change, to see if we should, and could, go further than our 80% target and set a target for achieving net zero greenhouse gas emissions. On 2 May the committee responded.
In its report, the committee has told us, quite clearly, that ending the UK’s contribution to global warming is now within reach. It has advised that a net zero emissions target is necessary, because climate change is the single most important issue facing us; feasible, because we can get there using existing technologies and approaches, enabling us to continue to grow our economy and to maintain and improve our quality of life; and affordable, because it can be achieved at a cost equivalent to 1% to 2% of GDP in 2050. Due to falling costs, this is the same cost envelope which Parliament accepted for an 80% target back in 2008. That is before the many benefits, from improved air quality to new green-collar jobs, are taken into account.
The Secondary Legislation Scrutiny Committee drew particular attention to the economic and societal impacts of this transition. While this statutory instrument does not in itself place a direct burden on any other body than central government, it is right that we understand how to meet the costs of this transition in a fair and balanced way. That is why the Treasury will be taking forward a review on how to achieve this transition in a way that works for households, businesses and public finances. The review will also consider the implications for UK competitiveness. We provide full impact assessments when we set carbon budgets and will continue to do so for the sixth carbon budget when that is set.
In its report, the Committee on Climate Change made it clear that 2050 is the right year for this target and is the appropriate UK contribution to the Paris agreement; it does not currently consider it credible for the UK to aim to reach net zero emissions earlier than 2050. I thank the Committee on Climate Change for the quality, breadth and analytical rigour of its advice.
Recent months and weeks have been a time of huge and growing interest in how we tackle the defining challenge of climate change. Calls for action have come from across society, and we all know that in doing this, it is important that we take people with us. My message today is that we have listened and we are taking action.
This country has long been a leader in tackling climate change. Thirty years ago, the then Prime Minister Mrs Thatcher was the first global leader to acknowledge at the UN,
“what may be early signs of man-induced climatic change”.
Eleven years ago, Parliament—under a different Government, of a different hue—passed the ground-breaking Climate Change Act, the first legislation in the world to set legally binding long-term targets for reducing emissions. That Act, passed with strong support from all sides of both Houses, created a vital precedent on climate: listen to the science; focus on the evidence; pursue deliverable solutions. Today I believe that we can make history again as the first major economy in the world to commit to ending our contribution to global warming. I ask the House to come together today in the same spirit to support this draft legislation.
Lord Howell of Guildford (Con)
Before my noble friend comes to an end, does the measure address carbon consumption, as opposed to carbon production? Carbon consumption is increasing fast and will increase further under this measure. Is that not considered important?
Lord Henley
My noble friend is of course correct: as he is aware, this is about carbon production. If we wanted to measure total consumption, we would need worldwide agreement with other countries and changes would have to be made. At this stage, that is not the case. We believe that this is an important moment to show the world what we are determined to do, and not to rest on our achievements.
I was not coming to an end, because now is the time to say a word or two, particularly as it came up in various interventions after Question Time, on the Motion—
Lord Rooker (Lab)
Before the Minister goes on to a different subject, as I understood him the noble Lord, Lord Howell, was asking about carbon production. I do not think the Minister addressed that. I think his noble friend was talking about issues such as afforestation, so that we do things other than cutting out boilers in houses. Does the order address those aspects of climate change?
Lord Henley
The order addresses setting a new target. Obviously, we will have to address the questions about how we achieve it. As I understood my noble friend’s question—I may have misunderstood him—he was concerned about our production of carbon as a country. He was addressing consumption and what one could therefore say was displaced production: consumption by means of importing things that might otherwise have been produced in this country. That is what I was trying to address, and I hope that the noble Lord will accept that. On his other point about the means by which we do that—whether we can also reduce levels of carbon by planting trees, carbon capture and storage, or whatever—I imagine that all these matters will come up, but that is another issue and not for the order.
I turn to the amendment in the name of the noble Lord, Lord Grantchester, because it might help if I say a few words now in advance of him, presumably, moving his amendment and then making a decision on what he wants to do with it. I believe that his amendment is unnecessary and that a bipartisan approach to the order is very important. As I put it earlier, this is something on which the bipartisan approach and the need to take people with us is important. Perhaps I can deal with the three points that he makes in his amendment.
On the first, I direct the noble Lord to the detailed and analytically rigorous report we have had from the Committee on Climate Change and assure him that it is just the start. We will build on the frameworks set out in our clean growth strategy and industrial strategy to deliver that target. As the climate change committee has acknowledged, those provide the right framework for action. In addition, our forthcoming White Paper will outline the Government’s vision for the energy system to 2050. On his second point, we are using the powers set out in the 2008 Act—an Act introduced by the Government of whom he was a supporter, and which again had cross-party support. The climate change committee’s report has also shown that that target is now feasible and deliverable, and can be met within the same cost envelope as the 80% target. I have also announced that the Treasury will publish a review on that point. On his final point, although emissions from international aviation and shipping are not formally included within the legislative target, we have made clear the need for action across the whole economy, including international aviation and shipping. As he knows, emissions from domestic flights and shipping are already covered by our existing domestic legislation—
Lord Henley
If I may finish this sentence, I will give way. They are already covered by our existing domestic legislation and the Committee on Climate Change accounts for international flights in its advice to us on setting interim carbon budgets. That will continue to be the case for our more ambitious target.
Lord Deben
Does my noble friend wish to emphasise the fact that, under the arrangements here, shipping and aircraft emissions are included in our estimates and budgets so that, although how we will do it internationally may still be a matter for argument, the Government have committed that the net zero will cover emissions from aeroplanes and shipping?
Lord Henley
My noble friend is correct. I was trying to distinguish between domestic and international in the legislation that we already have. As I and my noble friend have made clear, both of them will continue to be covered in our interim budgets.
Today is just the start. We have laid a strong foundation in the clean growth strategy and the industrial strategy—a point borne out in the independent advice from my noble friend Lord Deben as chairman of the Committee on Climate Change. As I think all noble Lords will accept, achieving net-zero emissions will require hard choices and leadership. It will require us to agree on the ends and strive for consensus on the means, which is why I stress how important it is to take people with us. It will require us to continue to transform our economy, our homes, our transport, our businesses and how we generate and use energy.
Our forthcoming energy White Paper, which noble Lords must wait for, will outline the Government’s vision for the energy system in 2050 and a series of actions to enable that system to evolve during the next decade to achieve our 2050 aims. We will lay out plans across other sectors in the months and years ahead. With continued cross-party support and collaboration across all sectors in society, we can deliver this. I commend the draft order to the House.
Amendment to the Motion
Lord Donoughue
My Lords, I declare my interests as in the register. This massive proposal, which is imaginative and exciting in many ways, is being rushed through Parliament, partly because the departing Prime Minister has a desire for a legacy and partly because of the claimed emergency over climate change or global warming. I am in the minority as I was rather sympathetic to the Prime Minister on many things—but not on this issue.
On the latter issue, warming, we have certainly experienced a mild warming cycle for some 140 years, with carbon emissions playing a significant role in it. I have never questioned that. I listened carefully to the noble Lord, Lord Turner, but I cannot find any sudden acceleration. According to Met Office figures, the past 20 years show a rise of 0.3%, which is broadly in line with the whole cycle. It is slightly slower than the further warming in the last quarter of the 20th century, so it is of concern, but it is not a sudden emergency.
The excitement occurring now may arise from the forecasts by models of a boiling planet later this century. That may happen—anything may happen—and I understand people who want assurance, but so far there is no observational scientific evidence for it. Nearly all those models—there are more than 100 of them—have been deeply inaccurate so far and have been seriously biased towards overheating, sometimes by up to 300%. Interestingly, only the Russian model has been accurate for this syndrome, so these models should be treated with care.
There has quite rightly been much discussion of costs. The climate change committee’s prediction of a net benefit cost of £50 billion per annum by 2050 may be optimistic. Other outside estimates reject it; the Department for Business, Energy and Industrial Strategy puts the cost 40% higher, at £70 billion per annum. That was quoted by the Chancellor in his letter to the Prime Minister. All seem to agree that the total expenditure by 2050 will be more than £1 trillion. That seems testing. The committee’s figures seem to omit carbon taxes and renewable subsidies, amounting to around £1 trillion, and the decarbonising of heat by refurbishing all houses. I should point out that that figure was from a respectable sectoral energy institute, which is why it was quoted. I find the total financial liability falling on consumers and taxpayers very complex to account for, but it is likely to be huge and perhaps larger. Equally, it could perhaps be smaller. We do not know, as the climate committee admits.
As an infrastructure project, this revolutionary programme involves greater public expenditure than any done by this country since we committed to fighting the Second World War. It inevitably involves massive disruption to our existing economy. There will certainly be benefits—I accept that—but it will create a new and potentially more expensive energy base, and worsen our export competitiveness by raising costs. It would probably close, or export, our existing high-energy consuming industries—steel, engineering, cement et cetera—and if it does, it will hit jobs and living standards. The idea of a cleaner environment is commendable, and I have always supported it, but these are huge costs.
We have to ask, as the Chancellor did in his letter to the Prime Minister, which areas of public expenditure may have to suffer the costs to pay for it. Will health, social care, schools or defence be cut to shoulder that burden? My Labour colleagues, in particular, may wish to consider that. Will it be, as is the case with the £15 billion in current climate costs, that the working people of this country carry the main burden, relative to their incomes, through paying significantly higher energy costs and green taxes to subside renewables? I note that the committee seems to appreciate that problem and I will be interested in the Government’s response to it.
The climate change revolution is predominantly a professional-class religion where the main cost is paid by working people who often do not share the faith. The noble Lord, Lord Deben, claimed that most people are on his side. There is no evidence for that. Polls have long shown that working people do not massively support this project, and they have not yet heard of these proposed new burdens. Whatever noble Lords’ feelings about decarbonisation—I sense that most people probably like the general idea because they rightly, like me, dislike pollution and want a better environment—they must surely agree that it is irresponsible of the Government to push through this massive and not fully-considered project in a statutory instrument without serious assessment of the practicality of its proposed details or costs, and where those costs will fall. Surely with such a massive project we can wait until the Treasury—or perhaps, as I would like to see, an independent inquiry chaired by the Treasury followed by full parliamentary scrutiny—reports to us. This project must be properly handled by the Government, positively, with concern for our future environment but also with responsible concern for its technological and financial practicality, and the livelihoods of our working people.
My final, and even more worrying, point is about the cavalier way in which this costly adventure has been launched. It is being proposed on a single-nation basis—not that that is its ideal, but it is there. The UK is apparently to be prepared to do this with no guarantees of the global environmental benefits, thus offering virtue-signalling moral leadership to the whole world. That is dangerous. Our share of global emissions is just over 1%. If we alone decarbonise tomorrow, that is the amount by which global carbon emissions will diminish, yet in the next few years China and India alone—the great carbon emitters—will increase their carbon emissions by more than double that share. Our contribution will be swamped and carbon emissions will still rise, but at what economic cost to the working people of this country?
Pursuing zero carbon in Britain alone while the big emitters continue to pollute the atmosphere on a massive scale is a futile gesture of moral imperialism. No doubt the virtue signallers have good intentions—I have never questioned that—but, as an earlier politician wisely said, the road to hell is paved with good intentions. We should mobilise the present environmental energy to encourage the great economies of the world to look seriously at the scientific facts on climate change, not at the alarmist propaganda, and then, in a measured way in conjunction with the observational evidence, move towards a time when carbon emissions are more limited. However, that world discipline and its benefits must be guaranteed and not based on delusional hopes. There should be no false paper promises based on ill-supported forecasts, like the Paris agreement.
Until then, our Government must take their national duties responsibly, scrutinising any climate venture with care, checking the observational facts of the science and allowing into the process sensible sceptics asking questions—as was traditionally done under Enlightenment science—and not behaving, as the BBC now sadly does, like a Stalinist censor, excluding any informed sceptic who questions wilder climate fantasies. I say to the BBC that working people will not have much extra revenue to buy their licences if all these proposals go through. Above all, the Government must scrutinise properly. We may eventually wish to enter this revolution but must first agree on whether it will pragmatically achieve its shared purpose, what it will cost and who will pay for it.
Lord Henley
My Lords, I do not think that I will be behaving like a Stalinist censor if I kill off the debate at this stage; I suspect that the House will be with me if we bring this to a conclusion. I shall address a few of the points made in the debate, although I confess that I will not be able to address all of them by any means.
Perhaps I may start by making a brief comment to my noble friend Lord Lilley, whom I served with on various occasions many years ago and for whom I have the greatest respect. He worried that this was one of those measures where the two Front Benches being in agreement probably meant that it was wrong and that it would not get proper scrutiny and proper debate. Certainly I can say that the two Front Benches are not in total agreement on this because we have the amendment that we have been debating from the noble Lord, Lord Grantchester, and I said earlier that I did not think there was much point in it. He was worried that his amendment could be misinterpreted. I think that it was and still is misinterpreted and that it is unnecessary.
I also say to my noble friend that there has been considerable debate over a mere two hours. There have been contributions from a number of noble Lords, ranging from the noble Baroness, Lady Jones, who feels that we are not going nearly far enough, the Liberal Democrat Benches, who say that we are not going far enough, and others who say that we are going too far. We have covered a large range of subjects, including whether we are failing on our carbon budgets and the suggestion that we need to do more onshore. The noble Lord, Lord Grantchester, said we need greater clarity on nuclear. Even my noble friend Lord Deben, who generally supports what we do, feels that we are failing on domestic heating and cars, and wants us to go further on those issues.
The noble Lord, Lord Fox, wants me to lie down in front of a bulldozer at Heathrow, but that is not part of my plan. However, he also mentioned the importance of storage—a subject that he and I have discussed on other occasions. I agree that that is important and that there are matters such as storage, energy efficiency, batteries, hydrogen and heat exchange where more work and more research need to be done. The Government will be doing more and he will hear about that in due course.
Many noble Lords felt that there needed to be more on the costs and in the way of impact assessments and so on, and I will address those matters in due course. Others, including my noble friend Lord Ridley and the noble Lord, Lord Ravensdale, talked about carbon capture and storage. Again, that is vital for the future and we obviously need to look at it.
I could go on, but it is important that I address two particular points. The first is on costs. Secondly, I should say a little—I cannot say more—about “how”. The question of how deals with the next two carbon budgets and the claims that we will fail on those and in so doing will—as my noble friend said—fail later, putting off and making it difficult to reach the net zero target by 2050.
Viscount Ridley
I am most grateful to my noble friend the Minister and apologise for intervening. Can he address my point about why the Committee on Climate Change has not shown in sufficient detail its workings in arriving at this figure of 1% to 2% of GDP?
Lord Henley
My Lords, I have mentioned the Treasury review, which will be available when it comes out in due course, but that question is a matter for the Committee on Climate Change, which is independent. The committee will no doubt—I hope—consider my noble friend’s request and make that information available to him.
The second big topic I want to address in the limited time for which I feel the House will tolerate my speaking is the beginning of the question of how. I have made clear that the energy White Paper will come forward later in the summer. At this point, I have to say that, if noble Lords can be a little patient, there will be more to come before the House and more to hear. There have been accusations that, although we have met the first three carbon budgets, we are not on track to meet the fourth and fifth. We are over 90% of the way to the fourth and fifth carbon budgets, even before many of the policies and proposals in the clean growth strategy have had an opportunity to bite. But we recognise that there is a need to take further action and we are delivering that.
I shall give a few examples. I am thinking about complaints from my noble friend Lord Deben about housebuilding standards and a point made by the noble Lord, Lord Fox. The future homes standard provides that new-build homes will be future-proofed with low-carbon heating and world-leading levels of energy efficiency by 2025. We have published the carbon capture and utilisation action plan. We have announced £60 million for the next contracts for difference auction. But I note the point made by the noble Baroness, Lady Brown, about the offshore wind sector deal, which she has championed. She also very kindly mentioned the fact that I had spent lunchtime—and missed my lunch—addressing that conference, but I still had time to come here and deal with this important business. I am grateful for having had the opportunity to do so. We have also increased support for the transition to zero-emission vehicles to nearly £1.5 billion.
We are doing a lot; there is more to do. The order is about legislating to end our contribution to one of the most serious environmental challenges we face: climate change. We aim to be one of the first countries and one of the first major economies—if not the first G7 country—in the world to legislate for that net zero target. I believe we are doing, and achieving, a great deal. I do not believe that the amendment in the name of the noble Lord, Lord Grantchester, takes us any further. In fact, it is an unhelpful distraction. He said that it was likely to be misinterpreted; I have to say that it was, and is. I hope he will feel able to withdraw it.
Lord Grantchester
My Lords, I am grateful for all the contributions to today’s debate. We should not make the order contentious but we should point out where the Government are falling short. The debate should not disguise that this is a momentous occasion, and I am honoured to be able to approve the order today. The Government are right to adopt Labour’s policy by amending Section 1 of the Climate Change Act 2008 to create a more ambitious target. Indeed, it may be the only way to avoid a carbon catastrophe and the horrors that will be realised if the world does not come together to prevent a 1.5-degree temperature rise by 2050.
However, I regret that we are going about this in the wrong way. Net zero emissions by 2050 is an enormous aim, and it needs more than rhetoric to be realised. We need to develop alternative energy sources on a scale never seen before. The Government must urgently commit to a green industrial revolution and a transformation of energy in the UK, harnessing the resources of the state and the private sector to invest in the infrastructure. However, for an issue that will have such enormous ramifications, the Government have not outlined the route ahead. It is only right for Parliament to be given the information to consider such changes in full, and that Parliament must be able to appreciate the necessary implications of all actions.
The Government cannot simply lay this instrument and hope for the best. Challenging times are ahead and the lives of each of us will change. We now need a commitment that the absolute priority is overcoming this existential threat to our planet. Should circumstances change and it becomes apparent that the Government must bring the target forward, we need a guarantee that they will be prepared to do so.
According to the best scientific advice at the moment, the new target of net zero emissions by 2050 is the right path for the UK to avoid the greatest challenge the planet has ever faced. Because of the urgency of the climate challenge, I understand that, in these unusual and exceptional circumstances, no consultation is being undertaken and there is very little information at this stage. However, I wish through this amendment to put the Government on notice that they must come forward with full information on how the UK will fulfil the statutory commitment. I think the House is in unison on this, and I ask it to underline the challenge to the Government by voting for the amendment.
Consumer Rights Act 2015 (Enforcement) (Amendment) Order 2019
Lord Henley Excerpts(5 years, 5 months ago)
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Lord Henley
That the draft Order laid before the House on 13 May be approved.
Relevant document: 52nd Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, this order aims to strengthen the ability of the Office for Product Safety & Standards to carry out its role in leading the response to national product safety incidents and to ensure consistency across the product safety system.
The order has a threefold purpose. First, it will enable the Secretary of State, and the Office for Product Safety & Standards on his behalf, to investigate potential safety issues related to consumer products regulated by the General Product Safety Regulations 2005, using the investigatory powers listed in Schedule 5 to the Consumer Rights Act 2015. Secondly, it will enable enforcement authorities in the UK, including local authority trading standards, district councils in Northern Ireland and the Secretary of State, to use those same investigatory powers to investigate claims about gas appliances and personal protective equipment. Thirdly, it makes a minor amendment to the Measuring Instruments Regulations 2016, and to the related reference in paragraph 10 of Schedule 5, to correct a typographical error.
The majority of claims about unsafe consumer products that fall under the General Product Safety Regulations 2005 are investigated by local authority trading standards in Great Britain and by district councils in Northern Ireland. So why give these investigatory powers to the Secretary of State? Part of the remit of the Office for Product Safety & Standards, created last year, is to take the lead in a serious product safety incident that needs managing at a national level. The office published Strengthening National Capacity for Product Safety: 2018-2020 Strategy, setting out its approach to managing this sort of incident. This order continues the process of developing the office’s national incident management capability. It allows the office to investigate claims of unsafe products in the context of a national incident, where a local trading standards authority or other relevant enforcement authority lacks the resources or expertise to do so. It does this by giving the office equivalent investigatory powers to those of local authority trading standards.
The order provides the full range of powers contained in Schedule 5 to the 2015 Act. This schedule includes powers to require the production and potential seizure of documents and to inspect and purchase products, as well as to test equipment and seize and detain goods. These are essential aspects of undertaking effective checks and actions in relation to unsafe goods. It is vital that our new national regulator has these powers across the broad spectrum of consumer products. These will enable it to provide leadership in incidents of national importance. The Secretary of State, and the Office for Product Safety & Standards on his behalf, can already exercise these powers in relation to the enforcement of sector-specific regulations, such as those for electrical equipment and lifts. The Government want to ensure that the Secretary of State can lead across the wide range of consumer products, not just those that fall under sector-specific regulations. The order therefore allows the Secretary of State to investigate any type of product covered solely by the General Product Safety Regulations 2005, should the need arise. The office will thus have the authority to provide the leadership and action needed to deal with national incidents.
The second purpose of the order is to make sure that the Secretary of State, local authority trading standards in Great Britain and district councils in Northern Ireland can investigate safety issues concerning gas appliances and personal protective equipment. New regulations were introduced last year by the negative procedure and this order provides for the amendment of the Consumer Rights Act by affirmative procedure. It now enables enforcement authorities to use the investigatory powers in Schedule 5 in relation to these products covered by the 2018 regulations.
Finally, the intention underpinning the enforcement of the Measuring Instruments Regulations 2016 has always been that the enforcement authorities should have access to the investigatory powers in Schedule 5. This order corrects that typographical error in the relevant provision in both the regulations and Schedule 5.
In conclusion, the order improves the ability of the Secretary of State to investigate claims about unsafe consumer products, protecting consumers and preventing injury and loss of life. It ensures that the Office for Product Safety & Standards can fulfil its regulatory role in the area of product safety by leading and co-ordinating responses to national product safety incidents across the wide range of consumer products within its remit. It enables the Secretary of State, local trading standards and district councils to investigate the safety of gas appliances and personal protective equipment regulated by the 2018 regulations. It contributes to the Government’s aim of promoting and protecting law-abiding businesses by preventing unfair competition through the placing of unsafe products on to the United Kingdom market. I commend the order to the House and beg to move.
Baroness Neville-Rolfe (Con)
My Lords, I support this measure, which will improve the enforcement framework for unsafe consumer products—always a concern of mine because of my background in retail and at the business department. I want to raise two issues. The first is the adequacy of resourcing for trading standards in their important work on product safety. I welcome the new Office for Product Safety & Standards in Birmingham and hope that, through the Minister’s good offices, some of us might be able to visit it on some future occasion. Local authorities are squeezed. I fear that trading standards, which do such an excellent job across the country, do not have the funding they need to tackle product safety and product counterfeiting, which is often a cause of safety incidents in some local authority areas.
The second issue is Whirlpool. I would like an update on the recall of Whirlpool tumble dryers. I am not entirely clear on what this SI adds in the case of electrical white goods, which, as the Minister said, are already regulated, but Whirlpool is mentioned on page 3 of the Explanatory Memorandum and the 10 days of BEIS consultation on the recall are nearly up. What are the Government’s plans in respect of this matter and, even more importantly, of future enforcement of product safety more broadly? What are the criteria for recalls and speed of response, which in the case of Whirlpool has sadly been very slow—I think nearly four years, although I must commend current Ministers for moving ahead on that. Can the Minister clarify the numbers involved? I understand from Which? that the recall will involve 300,000 to 500,000 dryers, which is a fall of about 500,000 in the department’s estimate of the number of unmodified dryers since last year. Yet only some 50,000 have been modified since then, so I do not see how the numbers add up. Can the Minister also kindly advise—in writing if need be, because I appreciate that these are detailed questions—on the number of modified dryers that have caught fire, and on why the Government are comfortable, as stated in Parliament on 17 June, that they are low risk. I hope for all our sakes that this judgment is correct. We should give the owners of modified dryers further comfort if that is possible.
Baroness Hayter of Kentish Town (Lab)
My Lords, like others, we welcome the draft order, the objectives of which we support. Anything that prioritises and increases consumer protection and safety is naturally welcome. It is just a shame that the way the Government are seeking to take us out of the EU will have exactly the opposite effect and risks reducing consumer protection. Indeed, it is notable how little involvement consumer bodies have been offered in the whole exit process—an issue we have raised repeatedly in this House, though sadly to nil effect.
We support the SI, but our concern is about the environment in which it will land, about which I shall make four points. The first is about the OPSS itself, which is, rightly, the key target for these new powers. Our worry is that, on its effective first outing, it has failed to convince. The Minister is well aware of the serious criticisms that Which? and others have of the OPSS Whirlpool review, which judged, inexplicably, that the modified machines posed only a low risk, as noted by the noble Baroness, Lady Neville-Rolfe. Which? described this early test of the OPSS’s intelligence and research abilities, and of its independence, or “bottle”, as “fundamentally flawed”. I do not know whether it was its research that let it down—it is interesting that it failed to interview any consumers. Indeed, had the OPSS sought some consumer input, it might have heard from my noble and learned friend Lord Goldsmith, whose grandchildren played in the kitchen completely unaware that immediately below them the tumble dryer had caught fire. Luckily, no one was hurt, but the family was out of the house for some months while the damage was repaired.
Was it its research that let it down, or was it the OPSS’s lack of bottle? It appeared, in the words of Which?,
“to favour business interests over people’s safety”.
It seems that the OPSS somehow had not grasped that it needed to look at Whirlpool’s miserable failure to deal with fire risk in its products, and therefore the resultant lack of public awareness of the risks posed in their own homes. I hope that by the time the order is activated we might see a more robust OPSS. Meanwhile, perhaps the OPSS could publish the list of affected Whirlpool machines, which we know it has and which Whirlpool refuses to release. It expects consumers to know about the potential problem, to know that their unit might be at risk, to be able to locate the serial number on their machine and then be able to type it into a very poorly advertised website.
Secondly, of course, there is the issue raised by the noble Baronesses, Lady Neville-Rolfe and Lady Burt, of the dire condition of trading standards departments, thanks to the Government’s cuts to local government funding. This reduction in funding has a direct influence on what trading standards can do. It is simply no good the Government boasting, quite rightly, that they have created powers, if they then starve the relevant authorities of the staff to employ those powers. Cuts in resources and staff of 50% mean that consumer protection that exists on paper simply cannot be effected in practice. Will the Minister assure the House that none of the powers in this order will lie dormant for lack of resources?
Thirdly, while we have strongly supported a number of the Government’s initiatives in consumer protection—particularly, I say in the presence of the noble Baroness, Lady Neville-Rolfe, the 2015 Act itself, but also progress on legislation on letting agents and other things—the problem is that it has all been a bit scattergun and without a coherent framework. Of course, it was much undermined by the Government’s abolition of the much-needed National Consumer Council, leaving a very patchy consumer representation landscape. As the Minister knows, we are delighted that the CMA seems to have picked up the cudgels on behalf of consumers, but we await a proper government response to this and across the patch. Will the Minister tell the House when we might expect the promised consumer White Paper? I offer him a range of responses—those pre-drafted ones that tend to come his way: “shortly”, “in due course”, “before long”, “in the fullness of time”, “very soon”, “imminently” or “before the summer”. We hope it might be the last of these, but it would be good to know.
Finally, my fourth point returns to Brexit. Which? warns that we could be flooded by a rising tide of unsafe toys, cars and white goods if the Government fail to reform consumer enforcement, because of our potential exit from Safety Gate, the rapid warning system through which European countries alert each other to products with serious safety problems. It flagged more than 2,000 non-food products last year. Not only do the Government need to negotiate the UK’s continuing participation in Safety Gate, they must ensure that the OPSS and other regulators have the tools to act on incoming alerts.
To repeat the thrust of our comments, we support this order. We need the powers, but also the intelligence and the enforcement if UK consumers are to be properly protected, so I hope the Minister will be able to offer some reassurance on that point.
Lord Henley
My Lords, I am grateful for the general support for the order from my noble friend and the noble Baronesses, Lady Hayter and Lady Burt, and for the questions they have asked.
I am also grateful, as always, to the noble Baroness, Lady Hayter, for offering me drafting advice, with a number of different options as to which word I could use for when a consumer White Paper might come out. I think I have used all those words at one time or another in the past; I even tried to tell the House many years ago that something would be published later that spring—I have to admit, in July it was quite difficult to argue that it was still spring. On this occasion I will try to be even more helpful to the noble Baroness. It will be published later this year; that gives her a final cut-off point. It will be there during 2019. If it is not there, she will have to come back to me and tell me that I have misled the House. If so, I will make the appropriate apology, but here is an assurance that it will be there.
I also assure my noble friend and the two noble Baronesses—I am grateful for everything that they have said—how important we think this is. This order is obviously essential as part of the process that the Government maintain as a priority to ensure that people across the United Kingdom continue to have confidence in the safety of all products that they buy and use every day. I assure the noble Baroness, Lady Burt, that without this order the Secretary of State would not be able to fulfil as effectively his lead role in managing national product safety incidents through the Office for Product Safety & Standards. He would not be able to assist the investigations of local authority trading standards in Great Britain, and district councils in Northern Ireland, that require the specialist expertise and capacity that the office can provide.
A number of questions have been raised, and I will deal with them in turn. I will start by giving an update on Whirlpool, which my noble friend Lady Neville-Rolfe asked about. As she knows, we made a Statement which was repeated in this House only a week or so ago. I assure her that the investigation into Whirlpool is ongoing. We will need to write further to her and others on the specifics of the case, but the statutory instrument adds to the enforcement regime of the OPSS and allows it to offer further support on that to local authorities.
However, as my noble friend will be aware, I can confirm that Whirlpool responded to the notification of intent from the Office for Product Safety & Standards to issue a recall notice on unmodified dryers. It is currently reviewing the information provided in detail, and we continue to urge anyone with an unmodified machine to unplug it and contact Whirlpool. Again, as I made clear to the House when I repeated the Statement, those who have a modified machine can be assured that it, as far as possible, will be safe—in so far as anything can be safe. It would probably be better if I wrote in further detail to my noble friend on the process and copied it to others, because obviously that process is ongoing.
Baroness Hayter of Kentish Town
Before the Minister moves on, I asked a specific question about Whirlpool. The people who do not have modified machines still do not always know that they have a Whirlpool machine, because they were sold under a lot of different names—perhaps 14 of them. You, the Government, know the list of the machines that they were marketed under; some are Hotpoint—I cannot remember all the names. Not everyone knows them. The Government know them, as do Whirlpool, but neither of you will publish that list. You will not give them to the electrical safety consumer bodies so that they can get them out, or put them on a website, and you are expecting people to know that their machine is one of them. If the Minister cannot give me the undertaking now that the Government or the OPSS will publish that, will he explain to the House why that vital piece of information is not being put in the public domain?
Lord Henley
My Lords, I think the noble Baroness is probably right that Whirlpool has absorbed something in the order of 14 different companies, so that what an individual will think of as an X machine is in fact a Whirlpool one. If it is possible to publish that list, I will certainly make it public; I do not think that there is any secret about it. The important thing is that we try to identify as many of those who still have unmodified machines so that they can be identified. My understanding is that Whirlpool—I do not speak for it—has already achieved considerable success in previous recalls in identifying quite a high percentage of potential owners of machines, certainly compared with other recalls that have happened. However, it will probably be better if I write in greater detail to my noble friend, copying it to the noble Baroness, on the names of the individual companies to deal with that point at greater length.
Baroness Neville-Rolfe
A letter from my noble friend would be extremely helpful. Regarding food safety, which I also know a lot about from my background, there was a practice whereby unsafe products would be listed in a newspaper or on a website almost as a routine matter. Even if for some reason it is not possible to do that on this occasion, that is one of the criteria that should be looked at for the future so that when there is publicity about a product safety problem, consumers can check easily whether there is an issue with their machine.
Lord Henley
Again, my noble friend is absolutely correct. I can remember seeing campaigns of exactly that sort. It is important for the consumer, or rather the original purchaser of a machine, to be able to identify what it is, which is why on occasion there have been such advertisements, as my noble friend points out. As I said, I would prefer to write in further detail to her on that issue.
I will now deal with the whole question of resourcing, not only of the new OPSS but of local authorities. As we have made clear, some £12 million has been made available to the OPSS, and we believe that that figure is an adequate sum. My noble friend asked whether she could visit its office, and I am sure that such a visit can be arranged through my department. If she would like to get in touch, we can send her up to Birmingham as soon as the Whips allow such visits to take place, and if other noble Lords wish to take part, that is obviously a matter for them. That money is for the OPSS; local authorities are funded through the general local authority grant, and there is no ring-fenced budget. However, we believe that, whatever difficulties local authorities might have, by giving the OPSS equivalency of investigatory powers, it can certainly support trading standards at a local level. The support of the OPSS, which employs some 300 staff, can be of extraordinary use to local authorities, providing training, for example.
I turn next to the question of EU exit, raised by the noble Baroness, Lady Hayter. Again, I make it clear that—although this issue is possibly beyond my pay grade—delivering the negotiated deal remains the priority and we continue to make appropriate arrangements in the event of no deal. We have created a new, UK-specific market surveillance database that will allow market surveillance authorities to record product safety and compliance incidents. That database will give the United Kingdom a rapid alert mechanism for dangerous products which will allow for product recall to protect consumers.
I turn now to the impact on small business. The noble Baroness, Lady Burt, was worried about the lack of an impact assessment. There is no impact assessment because the order gives powers to public bodies and does not place a burden on business itself. A full impact assessment was carried out in 2013, which I can make available to her. It concluded that there was a zero cost to business and a net benefit to business of £5.3 million by consolidating and simplifying the process. There is no reason to assume that those underlying assumptions have changed.
Baroness Burt of Solihull
Before the Minister sits down, paragraph 13.1 of the Explanatory Memorandum states:
“This instrument does not directly apply to activities that are undertaken by small businesses”.
I am not sure that what the Minister is talking about is quite the same thing. Perhaps I am getting confused here, but would he have a look at this issue and write to me? I should be very grateful.
Lord Henley
I think it is probably best if I write to the noble Baroness about the meaning of paragraph 13. I think it makes it clear that the instrument governs the investigatory powers of the Secretary of State and others with enforcement processes, so there is no specific impact on small businesses. It does not suggest that small businesses are exempt from the effect of the order, should they be making electrical goods, but I had better write to her on that detail if there is more I can offer.
Without the order, we would not be maximising the potential of the new regulator, the Office for Product Safety & Standards, to take effective action against unsafe products. If we did not do that, ultimately, the British public would have less protection from unsafe products and non-compliant businesses. That is not what the Government want. We are committed to making the United Kingdom’s product safety system the best in the world and ensuring that our regulators have the right tools to protect our people. This is a further step towards achieving that goal, and I commend the order to the House.
Whirlpool Tumble Dryers: Product Recall
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer to an Urgent Question given by my honourable friend the Minister for Small Business:
“The Government take the safety of electrical products very seriously. For our children, our relatives and our families, we all want our homes to be places of safety and security. I provided an update to the House, at departmental Questions last week, on the most recent step taken by the Office for Product Safety and Standards in relation to Whirlpool tumble dryers. This follows the OPSS review of the actions taken by Whirlpool in relation to its corrective action. The findings of the review were published on 4 April.
The OPSS review examined, in detail, the modification programme put in place by Whirlpool, as well as technical documents supplied by Whirlpool. The review concluded that the risk posed by modified tumble dryers is low. The Office for Product Safety and Standards produced a list of required actions for the business to take and Whirlpool was given 28 days to respond, outlining the actions that it would take.
The response received from Whirlpool was considered to be inadequate. As a result, the OPSS has written to Whirlpool to inform the company of its intention to serve a recall notice under the provisions of the General Product Safety Regulations 2005, in respect of the unmodified tumble dryers that remain in homes in the UK.
As required by law, Whirlpool was given 10 days’ notice of that intention. The 10 days allowed Whirlpool to submit its views prior to the service of the recall notice or to seek arbitration in line with the provisions under the GPSR. Officials in the OPSS are reviewing Whirlpool’s response to determine whether it fully meets the requirements laid down in the draft recall notice.
At this time all enforcement options remain on the table, including serving a formal recall notice. It would be inappropriate for me to comment further while the legal process is ongoing. I will update the House in due course.
It is important to stress that consumers who have had their affected tumble dryers modified can continue to use them. Those with an unmodified affected tumble dryer have been urged to unplug them and to contact Whirlpool. I encourage all consumers to register their appliances to ensure they receive updates on product modifications and recalls.
The OPSS will continue to monitor this situation closely and will take any steps it deems appropriate to ensure that consumers in the UK continue to enjoy the high levels of protection they have come to expect”.
My Lords, that concludes the Statement.
Baroness Hayter of Kentish Town (Lab)
My Lords, while thanking the Minister for repeating the Statement, I find it rather complacent. Whirlpool and the Government have rather dillied and dallied over this, despite tumble dryers causing a third of fires started by appliances; that is probably three per day.
Even now, with a belated recall covering only 500,000 of the affected machines, there is no list of the models available and Whirlpool refuses to release these details. The Minister urges people,
“with an unmodified, affected tumble dryer ... to unplug them and to contact Whirlpool”.
But consumers do not know whether their dryer is one of those affected, and even the charity Electrical Safety First has been denied the list. So consumers have first to find a serial number, which is not always easy, and then go on to a website and type in the serial number to even see whether their machine is affected. This is not good enough. Will the Government either compel Whirlpool to come clean with a list of the affected models, or publish the list themselves, because we know they have it?
Lord Henley
My Lords, I am not sure where the noble Baroness gets her figures, but they were faintly alarmist. She claimed that a third of all fires caused by domestic appliances were caused by tumble dryers. The figures I have show that the number of fires caused by domestic tumble dryers is coming down. There were only 724 last year, down from 808 the previous year—a 10% fall. I am told that in the figures for 2017-18, if you take all domestic appliances, some 16,000 fires were caused by electric appliances—so tumble dryers did not cause a third of them, as the noble Baroness claimed.
I will not defend Whirlpool, but it has mounted a fairly large operation to try to identify where the appliances are. It is reckoned that Whirlpool has got to something like 50% of the tumble dryers that need to be looked at, and there are probably another 500 or 1,000 or so to get at. We welcome Whirlpool’s response on what it is doing to identify those machines, get at them and make the appropriate modifications. As I said in the Statement, the number of fires in modified appliances is significantly lower than in those that have not been modified. I must repeat that the manufacturer has the responsibility to ensure product safety, and it should be for the Government—which is what we have done here—to take the appropriate action to hold it to account.
Lord Razzall (LD)
My Lords, I have one small point and two questions. My small point is that I am very glad that the noble Baroness, Lady Neville-Rolfe, is in her place, because she has been fighting this campaign for as long as I can remember. Whether she regards this as progress we will see when she rises to her feet.
I turn to my first question. I know that the Minister has been trading numbers with the Labour Benches, but the government information is that 750 fires in the last 11 years have been caused by tumble dryers. Bearing in mind that we are very close to the anniversary of the Grenfell fire, will the Government confirm that they are taking all steps to ensure that tumble dryers in tower blocks will no longer provide any threat of further fires?
My second question, which is not surprising coming from these Benches, is: will the Minister confirm that, whatever the terms of Brexit—whether it is with no deal or a new deal—the health and safety issues regarding tumble dryers will be as strong as they are today with regard to imported dryers?
Lord Henley
My Lords, all I can say is that I await my noble friend’s question in due course. As for the number of fires caused, I quoted the figure, saying that some 724 last year were caused by tumble dryers but that that was a decline. One must remember that any white goods are going to have a risk, and the important thing is that manufacturers ensure that they are as risk-free as possible. That is why on this occasion, as I said, we want to hold Whirlpool to account and ensure that it gets to as many machines as possible to make sure that they are dealt with. However, it is right and proper that we not only deal with tumble dryers where there is a problem but ensure the safety of all other white goods.
On the question of our exit from the EU, I assure the noble Lord that the department will make sure that safety remains an absolute priority in dealing with these matters. Ensuring that we have a robust system of market surveillance to make sure that we can protect our border from unsafe products will be a priority for the department.
Baroness Neville-Rolfe (Con)
I was very glad to hear of the recall, albeit it is rather late in the process. It is, I think, three and a half years since these fires were first identified, and I hope we will learn from the process.
I have two questions for my noble friend. As the department knows, because they were very helpful, I have two Whirlpool tumble dryers. In fact, they are Hotpoint; as noble Lords will know, Hotpoint was taken over by Whirlpool, a US company. The second was modified only after my meeting with the Minister. In the Statement my noble friend suggested that the risk from modified tumble dryers was low. There have been examples of fires in modified dryers, though, so how can the Government be sure that they are safe? Modifying the dryers is quite a long process, as I observed it for two hours on my lawn.
My second question, which I think is the more important one, is: is the system for the recall of white goods good enough, given the danger to the British consumer if there are fires? What changes have the Government made, or are they planning, to ensure that we can sleep safely in our beds?
Lord Henley
My Lords, on my noble friend’s first point, I can confirm, as I said in the Statement, that the risk from modified tumble dryers is low. I cannot quantify it, but I can repeat that assurance. It is certainly an improvement on what was there before. As I said in response to the noble Lord, Lord Razzall, one can never remove all risks with white goods; obviously, any electrical product inherently has some danger. However, we must do what we can—or rather, manufacturers must do what they can—to ensure that all products are as safe as possible. It is then the Government’s job to hold those manufacturers to account.
My noble friend also asked whether the system was good enough. We will always keep the system under review. We introduced the Office for Product Safety and Standards a little over a year ago and we will monitor how it is going. If one looks at the figures for domestic fires, including those caused by electrical products, and sees their steady decline, one can say that we are heading in the right direction. This has been happening for some time.
Lord Scriven (LD)
My Lords, the National Fire Chiefs Council, which is the council of the country’s chief fire officers, does not think that the scheme is good enough. Since 2017, it has been asking for a single government-backed recall register for white goods. Why are the Government still dragging their feet on this and not doing a proper assessment?
Lord Henley
My Lords, there would be considerable difficulties in setting up such a register, but we note what the noble Lord and national fire officers have said on this matter and we will consider it. I think we have a pretty good system. We set up the OPSS in January last year. As I said, we will continue to monitor how that works and do what we can to hold manufacturers to account.
Baroness Donaghy (Lab)
My Lords, if the chief fire officers, the Fire Brigades Union, trading standards officers and a number of other consumer groups have all been incredibly critical of the system we have had for not just three and a half years but many more, with companies such as Whirlpool getting away with it, can we really say that the system is satisfactory? Can the Government not do a proper review and ensure that these goods are not risking lives? I am very grateful to the noble Lord, Lord Razzall, for raising the fact that a white goods issue started the Grenfell fire—that all seems to have gone rather quiet. I do not think the Government have a sense of urgency about this. In light of the comments from all those who actually know what they are talking about, who are asking for better safety regulations, the Government should sit down and do their job.
Lord Henley
My Lords, I reject the noble Baroness’s accusation that we are being complacent on this matter. It is not my job to defend Whirlpool and I accept that it has not been as fast as it might have been, but the Government have certainly held it to account. Whirlpool has at least got to some 50% of the tumble dryers it is looking at, which is far better than any other similar recall process; I understand that 10% to 20% is normally expected in programmes of this sort. Whirlpool has made progress, but the Government feel it can do more and that is why my honourable friend took the action she did and why we are holding it to account.
Lord Porter of Spalding (Con)
My Lords, surely the Minister has just answered his own question—
Music Licensing
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Lord Smith of Hindhead (Con)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I make reference to my interests set out in the register.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the Government have had no discussions with Phonographic Performance Limited about this tariff. Collecting societies are private commercial organisations, and the Government play no role in setting their licence tariffs. However, dissatisfied businesses may have recourse to the Copyright Tribunal, a specialised court that adjudicates on the price and terms of copyright licences. I understand that the British Beer and Pub Association and UKHospitality intend to make reference to the Copyright Tribunal on this issue.
Lord Smith of Hindhead
I thank the Minister for his reply, and I am pleased that this matter has been referred to the Copyright Tribunal since my Question was tabled. It is estimated that the proposed new tariff will cost the hospitality industry an additional £49 million each year—an increase that is simply unaffordable for many operators. PPL collected £250 million last year and raked off £35 million in admin fees, paying its CEO over £750,000. Does the Minister agree that a better way to provide increased payments to copyright holders is for PPL to cut its own expenditure?
Lord Henley
My Lords, it is not for me to comment on the pay of the CEO of PPL; this must be a matter for the members of that organisation. However, I think all agree it is important that PPL, and PRS for that matter, get the best deal for all its members—performers, composers and others who own a copyright—and make sure they get the appropriate amount of money they are owed for us hearing their music.
Lord Clement-Jones (LD)
My Lords, does the Minister agree that there is a major danger of misunderstanding what is proposed and what is involved here? The new tariff does not apply to grass-roots live music venues. It is designed to be fairer to small venues using recorded music. It will be phased in for other places and the beneficiaries will be many currently underpaid performers and artists.
Lord Henley
My Lords, the noble Lord makes a very useful contribution. I stress that this is about ensuring that those artists, performers and others receive the appropriate reward for their work.
Lord McNicol of West Kilbride (Lab)
My Lords, I am sure this House will agree that artists, especially the less well-known ones, should be paid fairly if their music is played in public. What, if any, are the expected consequences following the delay in implementing the new specially featured entertainment tariff—SFE—which was meant to be implemented on 1 July? Does he know when the subsequent independent review by the Copyright Tribunal will be completed?
Lord Henley
My Lords, I am not going to comment on a case that is about to be before the Copyright Tribunal; that would not be right or proper. Nor can I help the noble Lord on the first part of his question. As I made clear earlier, it is important that these collective management organisations—CMOs—provide the best possible service for their members and negotiate in a proper and fair way with the hospitality organisations that want to use their music.
UK Net Zero Emissions Target
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, with the leave of the House, I will repeat a Statement 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 give the Statement on legislation I have tabled today to end our country’s contribution to global warming. There are many issues in this House on which we passionately disagree, but there are moments when we can act together to take the long-term decisions that will shape the future of the world that we leave to our children and grandchildren.
Just over a decade ago, I was the shadow Secretary of State for Energy and Climate Change when the right honourable Member for Doncaster North secured Royal Assent for the landmark 2008 Climate Change Act. I was proud on behalf of my party to speak in support of the first law of its kind in the world setting a legally binding target to reduce greenhouse gas emissions by at least 80% by 2050 relative to 1990 levels.
Today, I am proud to stand on this side of the House to propose an amendment to the same Act which will enable this Parliament to make its own historic commitment to tackling climate change—a commitment that has been made possible by many years of hard work from Members across the House of Commons and beyond.
I want to thank in particular my noble friend Lord Deben for his leadership as chair of the independent Committee on Climate Change, the committee’s members and staff, and the honourable Member for Leeds West and my honourable friend the Member for Cheltenham for their recent Bills that have also paved the way for today’s legislation. I also pay tribute to the extraordinary work of my friend and ministerial colleague the right honourable Member for Devizes.
Today we can make the United Kingdom the first major economy in the world to commit to ending our contribution to global warming for ever. The United Kingdom was the home of the first industrial revolution. Furnaces and mills nestled in English dales, coal mines in the Welsh valleys, shipyards on the Clyde and in Belfast harbour. They powered the world into the industrial age.
We now stand on the threshold of a new fourth industrial revolution—one not powered by fossil fuels, but driven by green growth and clean, renewable technologies. Once again the United Kingdom and all its parts stand ready to lead the way. It is right that economies like ours, which made use of carbon-intensive technologies to start that first industrial revolution, should now blaze a trail in the fourth industrial revolution. Whether it be through our global offshore wind industry, our leadership on green finance or our unrivalled research base that is leading the charge on electric vehicles, we are showing that the economic benefits of cutting emissions can help to grow our economy.
Through our industrial strategy, the UK is already forging that future, leading the way in the development, manufacture and use of low-carbon technologies. By responding to the grand challenges that we have set—including on the future of mobility and clean growth—we are already creating thousands of new jobs right across the country. We are showing that there is no false choice between protecting our planet and improving our prosperity. We can and must do both.
Low-carbon technology and clean energy already contribute more than £44 billion to our economy every year. In 2017, energy-related carbon dioxide emissions in the UK reached their lowest levels since 1888. Last year, we secured more than half our electricity from low-carbon sources. Just last month, we set a new record for the number of days we have gone without burning any coal, since the world’s first public coal-fired power station opened in London in 1882. We have said that we will completely phase out unabated coal-fired power generation by 2025, ending the harmful impacts to our health and environment for good. Together with Canada, we launched the Powering Past Coal Alliance, which has now seen 80 national and local governments, alongside businesses and NGOs, join together in a pioneering commitment to phase out unabated coal.
If our actions are to be equal to the scale of the threat, nations across the world must strive to go further still. We in the United Kingdom must continue to fulfil our responsibility to lead the way. That is why in October, following the latest evidence from the Intergovernmental Panel on Climate Change, the Government wrote to the independent Committee on Climate Change to seek its advice on our long-term emissions targets. Last month, it issued its response recommending that we legislate for the UK to reach net zero greenhouse gas emissions by 2050, taking into account our emissions from international air travel and shipping, so I am today laying a statutory instrument —in fact, it is already before the House—to amend the Climate Change Act 2008 with a new legally binding net zero emissions target by 2050. Ending our contribution to climate change can be the defining decision of our generation in fulfilling our responsibility to the next.
However, it will require the effort of a generation to deliver it, so I am grateful to all those business leaders, faith leaders, scientists and climate campaigners—and many Members of this House—who have written to the Prime Minister and me to express support for this landmark proposal. It will require government and political parties of all colours to work together with all sectors of business and society. We must fully engage young people too, which is why a new youth steering group, led by the British Youth Council, will be set up to advise government—for the first time giving young people the chance directly to shape our future climate policy.
The assessment of the independent Committee on Climate Change is based on the latest climate science. It drives our ability to drive action on the international stage and considers current consumer trends and technologies. The committee concluded that a net zero 2050 target is feasible, deliverable and can be met within the exact same cost envelope of 1% to 2% of GDP in 2050 as the 80 per cent target when it was set, such has been the power of innovation in reducing costs.
It is, however, absolutely right that we should also look carefully at how such costs are distributed in the longer term, as Professor Dieter Helm recommended in his report to the Government. The Government are also today accepting the recommendation of the independent Committee on Climate Change for the Treasury to lead a review into the costs of decarbonisation. This will consider how to achieve the transition to net zero in a way that works for households, businesses and public finances. It will also consider the implications for UK competitiveness.
In fulfilling the scale of the commitment we are making today, we will need technological and logistical changes in the way we use our land: for example, with more emphasis on carbon sequestration. We will need to redouble our determination to seize the opportunity to support investment in a range of new technologies, including in areas such as carbon capture, usage and storage, hydrogen and bioenergy. But as the committee also found, the foundations for these step changes are already in place, including in the industrial strategy and the clean growth strategy.
Indeed, there is no reason whatever to fear that fulfilling this commitment will do anything to limit our success in the years ahead—quite the reverse. In our industrial strategy, we have backed technology and innovation, including the UK’s biggest ever increase in public investment in research and development—the biggest that has ever taken place in the history of this country. The International Energy Agency report on the UK, published last week, found that:
‘The United Kingdom has shown real results in terms of boosting investment in renewables, reducing emissions and maintaining energy security’.
By doubling down on innovation in this way, we can expect to reap the benefits as we move forward toward meeting this target by 2050.
I believe that by leading the world and harnessing the power of innovative new technologies, we can seize the full economic potential of building a competitive and climate-neutral economy, but we do not intend for a moment for this to be a unilateral action. If we are to meet the challenge of climate change, we need international partners across the world to step up to this level of ambition. While we retain the ability in the Act to use international carbon credits that contribute to actions in other countries, we want them to take their own actions, and we do not intend to use them.
We will continue to drive this, including through our bid to host COP 26. As the IEA report found last week, the UK’s efforts are,
‘an inspiration for many countries who seek to design effective decarbonisation frameworks’.
Just as we have reviewed the 2008 Act in making this amendment today, so we will use the review mechanism contained in the Act within five years to confirm that other countries are taking similarly ambitious action, multiplying the effect of the UK’s lead and ensuring that our industries do not face unfair competition.
Finally, I do not believe that this commitment will negatively affect our day-to-day lives. No G20 country has decarbonised its economy as quickly as we have. Today, the UK is cleaner and greener, but no one can credibly suggest that our lives are worse as a result. Quite the reverse, we are richer in every sense of the word, for being cleaner, for wasting less and for cherishing, not squandering, our common inheritance.
We may account for less than 1% of the world’s population and around 1% of global carbon emissions, but by making this commitment we can lead by example. We can be the ambitious global Britain that we all want our country to be. We can seize this once-in-a-generation opportunity to tackle one of the biggest threats to humanity, making this a defining and unifying commitment of an otherwise riven and often irresolute Parliament—a commitment that is agreed by all, honoured by all and fulfilled by all.
In the first industrial revolution, we applied the powers of science and innovation to create new products and services in which this country came to excel, but which came at a cost to our environment. In this new industrial revolution, we can innovate and lead all over again, creating new markets and earning our way in the world in the decades ahead, but in a way that protects our planet for every generation that follows ours. When history is written, this Parliament can be remembered not only for the times it disagreed but for the moment when it forged this most significant agreement of all. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Baroness Randerson (LD)
My Lords, this is obviously a very welcome Statement, and all the more so because it is such a surprise. It has been a real conversion on the road to Damascus by this Government, which as a general rule have not featured environmental issues and climate near the top of their priorities. In fact, the Government have been keen to abandon a number of policies introduced during the coalition Government by Ed Davey when he was Secretary of State for Energy and Climate Change. That has led to a loss of impetus in the renewable energy industries. In practice, 2050 may still be too late, especially if the Government and their successors adopt the tactic of leaving the heavy lifting until last. They cannot simply reach for a few easy plastic straws; they have to tackle the really difficult issues at the start, and there has to be a very steep trajectory of change if this is to have the impact it should.
The noble Lord, Lord Grantchester, referred to transport policy. That will certainly need to be one of the first government policies to be revolutionised as a result of this new approach. Will the Government now rethink their leisurely approach to ending the manufacture of petrol and diesel cars? The date they have set is 2040. The industry is going to get there well before then, but it needs to have the Government supporting and encouraging it as well as pushing it along the way, so 2030 would be a much better date. Will the Government rethink their decision to reduce subsidies for the purchase of electric vehicles and their approach to the abandonment of the electrification of the railways?
Turning to energy, will the Government reconsider their opposition to the Swansea tidal lagoon? It has a huge contribution to make, along with subsequent lagoons around the coast once one is built. As I say, that could make a huge contribution to renewable energy in our country. How can the Government expect to reach this target when fracking is still a UK energy source?
Finally, what steps are the Government taking to encourage other nations to follow suit and to pursue ambitious global targets to mitigate the effects of the climate emergency? The Statement refers to the importance of working with other countries. I would be grateful if the Minister gave some specific examples of the way in which the Government will approach this in future.
Lord Henley
My Lords, I thank the noble Lord and the noble Baroness for their—I suppose I ought to say “relatively”—positive welcome for this Statement. I think I heard a slightly more positive welcome from their colleagues in another place when I listened to my right honourable friend make the Statement I am merely repeating. Anyway, I got some sort of welcome.
I will deal with some of the points made on the negative side of their so-called welcome—first, the allegation yet again that we are failing to meet the existing targets. We have met the first two carbon budgets, are on track to meet the third and are over 90% of the way to meeting the fourth and fifth. Many of the policies and proposals in the Clean Growth Strategy published a little under two years ago are taken into account. Obviously, there is more to be done, but we are making progress, doing what we can and will continue to do what we can. As advised by the climate change committee, we now want to set stricter and more testing targets as necessary.
The noble Lord, Lord Grantchester, asked what steps we are taking. He knows about the 2017 Clean Growth Strategy. I hope he is awaiting the energy White Paper that will come out later in the summer, and we will probably have a chance to discuss this matter in greater detail when we get the statutory instrument. He asked when that will come before the House, and at this point I have to say that that is beyond my control. I am awaiting advice from the usual channels and will be ready and available to debate that with all noble Lords as and when it is ready.
The noble Lord, Lord Grantchester, then posed a number of specific questions about various forms of renewable energy, such as why we could not do more onshore. I point him to the success of offshore wind: we have seen a dramatic decrease in the costs of offshore energy, are now the world leaders in offshore wind energy and are making great strides forward. He asked what we are doing about nuclear. As I have made clear in a number of recent debates in this House, we are still committed to nuclear, which can provide carbon-free energy and the baseload we need at this stage. We will continue to pursue the possibilities of nuclear, but not at any cost—as my right honourable friend made clear when he made the announcements about Moorside and Wylfa. Again, we will continue to look at possibilities for expansion regarding small modular reactors, advanced modular reactors and so on.
The noble Lord, Lord Grantchester, then asked about transport. I can assure him that the Department for Transport is signed up, and we will continue to pursue the policy of phasing out petrol and diesel cars by 2040. I do not think it is right and proper that we should bring that forward. To answer the point made by the noble Baroness, Lady Randerson, the automotive industry deals in quite long periods of time. To disrupt it in such a way, as it is beginning the process of moving to electric vehicles, would not be good for that industry. We have seen the problems that Bridgend is facing; a Statement on that was made only two days ago. To bring forward that sort of disruption before the industry was ready would not be right or responsible.
Both the noble Lord and the noble Baroness asked about buildings, homes and so on. Again, I point to recent debates we have had on statutory instruments bringing in new obligations on landlords to ensure that their homes are suitably insulated. We have announced the future homes standards, with new-build homes being future-proofed with low-carbon heating and world-leading levels of energy efficiency by 2025, along with the energy efficiency regulations I referred to.
The noble Baroness also asked about Swansea tidal; again, I do not want to repeat everything I have said about that. We have debated that matter, and we debated the general aspects of tidal lagoons only last week. Yes, it is possible, if it can be done at an affordable price, but there is no point building a lagoon that is going to cost probably two or three times as much as nuclear power when one also has to take into account the carbon footprint of building things such as Swansea tidal. In effect, concrete and other matter is simply poured into the ground. Concrete, as we know, also has a fairly big carbon footprint, so do not think that tidal is going to be the be-all and end-all. It might be, and we will continue to offer help and research in that area, but it is not necessarily the answer to everything.
The noble Baroness also asked about fracking. It is right that we should continue to pursue a policy of looking at shale gas extraction. Gas is obviously going to continue to be a major part of our energy mix for some time. Shale gas extraction has a role to play as a transition fuel, and I hope all noble Lords will bear in mind that it offers us the possibility of greater energy security as we see quantities of gas in the North Sea decline. Is it not far better that we use our own gas, rather than import it from countries of a rather dubious sort in other parts of the world? I would have thought that the answer is yes, and we will continue to pursue the possibilities of shale gas extraction as we can.
Lastly, the noble Baroness asked how we are going to encourage others. My right honourable friend made it clear in the Statement that we are very keen to host COP26 next year. He also mentioned the praise we have received from the International Energy Agency for what we have achieved so far. We are the leading G7 country in this field and we can provide a good example not only for this country but for the rest of the world, and we will continue to do so.
Lord Cunningham of Felling (Lab)
My Lords, I welcome the Minister’s Statement, and the Government’s decision to set a target. Both are welcome, but the Minister and the Statement are implying profound changes in the lives of everyone in this country, including in housing, transport and workplace experience. The Statement needs to be underpinned by a sector-by-sector approach to how this will be achieved and delivered.
One thing that cannot happen—the Minister and I had an exchange about this earlier this week—is achieving this without a contribution from civil nuclear power. The world, never mind the UK, is not going to get by without civil nuclear power. We have abandoned our own ability to build a nuclear power station. I do not blame the present Government for this; other Governments are culpable, including the one I was a Minister in. The Government should set up a task force to see how we can recreate that ability on our own account, because depending on the Japanese, the Chinese or the French is a high-risk business. I hope the Government will give that serious consideration.
Lord Henley
My Lords, on the noble Lord’s first point, he is right that these are great challenges and that there will have to be a change in behaviour. We should go about this in the right way, taking people with us because a great deal of this will involve changes in individual lives. We are already seeing this through a decline in car use by many people. I have certainly noticed that younger people are purchasing fewer cars and so on. Again, this is disruptive for the automotive industry but if we want to make these changes these things will happen, and changes are happening. We will need to take people with us. However, the Government must offer help in both innovation and research, and we will do that. On the noble Lord’s point about nuclear, I have made it clear it that we have not abandoned nuclear but we want it at the right price. As we made clear in the nuclear sector deal last year, we will continue to put research into all aspects of nuclear, whether small modular, large nuclear or whatever.
Baroness Worthington (CB)
My Lords, when we passed the original Climate Change Act in 2008, the UK was the first country to pass a legally binding target for reducing our climate-damaging emissions. I am glad that in setting that example we triggered action from other countries; Sweden and New Zealand have now also legislated. Now that we are taking this bolder step to remove all our domestic emissions, we will see others follow. In the past few weeks, both Chile and Japan have committed to moving to net zero targets. I commend the Government and everyone who has contributed to getting to this position. The UK is taking the morally correct path. We are showing leadership at a time when the world is completely distracted by the rise of nationalism and populism. We are saying that there are more important issues that unify us as citizens of this sole planet that we share. We must take every step to ensure that this is not just a paper target but is backed up by policy. We have decades of examples of how we have done this; we are not starting with a blank sheet of paper. We have shown that we can decarbonise fastest among all OECD countries without it affecting our growth or economic development. We are a shining of beacon of hope in fairly dark times. I sincerely hope we will take our message to the UN in September, to Washington and Beijing, and that we will see others stepping up and increasing their ambition. It is easier and cheaper to do this than it has ever been. The technologies are there, the political will is growing and the children are out on the streets demanding that we do more. I am delighted that the Government are showing such leadership. Now we need to take it to Parliaments all around the world.
Viscount Younger of Leckie (Con)
My Lords, before the Minister replies, I suggest that questions be kept succinct and short to enable as many Peers as possible to speak in the time available.
Lord Henley
My Lords, I shall try to keep my answers short. I accept what the noble Baroness said: in 2008 we were the first country to legislate and we are now bringing forward tighter proposals to take us to net zero by 2050. I think the French have just brought forward legislation on this. Let us see if we can pass ours before the French.
Lord Howell of Guildford (Con)
I declare an interest, as in the register. Has my noble friend seen yesterday’s reports that last year worldwide carbon emissions rose faster than for many years past? Indeed, the amount by which carbon emissions increased is said to be the equivalent of putting 400 million new motor cars on the road—that is an additional third of all the cars on the roads on the planet. Energy consumption rose even faster—to record levels—last year. Does this not indicate that whatever we do here, however admirable it is and however we try to promote our example, the fact is that the fundamental approach—even despite Paris—to world carbon emissions is not working. Is not a totally new approach now needed?
Lord Henley
My Lords, my noble friend is right to say that what we do on our own about emissions will not make that big a difference. However, the leadership we can show is important. That is why we are committed to going further and trying to secure the hosting of COP26 next year. We will do all we can to continue to show leadership in that area.
Lord Taylor of Goss Moor (LD)
My Lords, I strongly welcome the Government’s commitment, particularly given the Chancellor of the Exchequer apparently trying to argue that they should not make it. This is an important moment, supported across the House.
I work in development, housing and renewable heat. I should declare that, but I do so because I am deeply concerned that, while a car may last a decade or so, the houses we build today will—we hope—last a century or much longer. Between now and 2025, when the Minister said we would introduce the new regulations, we will have built some 2 million more homes. Retrofitting old homes to meet zero carbon targets for heat and water is extremely difficult. We have that problem for all those we have already built. We should not build millions more without making that long-term decision now. The Committee on Climate Change has pointed that out and asked for urgent action. London has shown that if you bring in new standards, the market quickly moves to them. Will the Minister bring forward the changes that he has indicated will not come through until 2025?
Lord Henley
My Lords, on his first point, the noble Lord is wrong to say that the Chancellor was trying to squash this: he was merely pointing out potential costs. As was made clear in the Statement, the climate change committee estimates that the annual cost of delivering a net zero target is within the same range as the 80% target was when it was set in 2008. Our own assessment of costs is within that range. It is right that the Chancellor takes an interest in the likely costs—after all, he is responsible for these measures.
The noble Lord is right to point to the importance of what we do about homes. We have an appropriate target and have announced what we want to do about energy efficiency by 2025. We will stick to that date, which will allow us to meet our target.
Lord Haskel (Lab)
My Lords, in the Statement the Minister spoke of a review in five years’ time. Why is this necessary, particularly after what the noble Baroness said? Surely this will be interpreted as showing less commitment? It would provide an excuse to delay investment for five years because it provides too short a timescale. Will the Government give this more consideration?
Lord Henley
My Lords, the noble Lord will remember that the idea of a five-year review was part of the original 2008 Act—which I am sure he supported, because the Act was introduced by a Government of which he was probably part at the time. We will continue with this idea, but we can review matters further if there are changes and developments as we commit. We are bound to review every five years but could do so earlier.
Lord Robathan (Con)
My Lords, I welcome this aspiration—that is what it is. I notice that air travel was not mentioned, although it leaves a particularly big carbon footprint. Can my noble friend help me: which of this country’s political parties does he think will put in its next manifesto that it will stop the good people of this country going on holiday to the Costa Brava or Florida, or, indeed, flying back first-class from Los Angeles to take part in demonstrations in this country? That is contributing greatly to the carbon in the atmosphere.
Lord Henley
I can give my noble friend an assurance. If he had listened carefully to the Statement, he would know that our plans cover net zero for the whole economy, including aviation and shipping. Emissions from domestic flights and shipping are covered by our existing domestic legislation. The Committee on Climate Change accounts for international flights in its advice on setting our interim carbon budgets. This will continue to be the case for the more ambitious target.
Lord Campbell-Savours (Lab)
Will the Minister consider seriously the impact assessment for each sector proposed by my noble friend Lord Cunningham of Felling?
Lord Henley
My Lords, an impact assessment is made by the climate change committee. At this stage, departments—this will involve a whole array of them—have not produced individual ones. As each suggestion is made about where we have to go in each area, appropriate impact assessments will be made.
Lord Lilley (Con)
My Lords, I draw your attention to my interest as a trustee of the Global Warming Policy Foundation. The Government have embarked on a policy that will result in one of the most expensive programmes since the introduction of the welfare state, without first carrying out a cost-benefit analysis. Is that not extraordinary given that when the previous target was raised from 60% to 80%, in the Government’s estimates the cost more than doubled? Going from 80% to 100% will certainly more than double it again. The Chancellor believes that it will cost a trillion pounds, which could otherwise be spent on welfare programmes, health and education; the UN climate committee believes it will cost at least twice what the Treasury estimates; and the New Zealand Government have estimated that it will cost five times as much relative to their economy, as has been suggested. Given that, is it not irrational to enter this, as any, policy programme without first estimating the costs and calculating the benefits? Why are we doing it?
Lord Henley
My Lords, the Committee on Climate Change, as I made clear, has given us its vision of the likely cost of delivering a net zero target; that is within the same range as the original 80% target set out in 2008. It is equivalent to 1% to 2% of GDP by 2050, and our own assessment of costs is broadly within that range. One has to add that the impact of this could be partly offset by the many benefits, such as economic growth, green-collar jobs, reduced air pollution and reducing the risks and potential costs of catastrophic climate change. We will continue with that and, as was made clear in the Statement, the Treasury will also make its own further assessments of the costs. It is quite right that we should take those into account. As I said in response to the noble Lord, Lord Cunningham, it is very important that as we pursue this policy, which we believe is entirely necessary and agreed on most sides of the House, we take everybody else with us.
Lord Howarth of Newport (Lab)
My Lords, does the Minister agree that, whatever it costs, we have to tackle climate change effectively if we are to avoid catastrophe? Given that all other policies that Parliament is concerned with are trivial by comparison, will the Government put this right at the top of their priorities?
Lord Henley
My Lords, this goes back again to that point about the importance of taking people with us. So much of what needs to be done comes down to individual decisions about how people live their lives and how they are taxed. If we can take people with us it will be much easier to meet those targets. I agree with the noble Lord that it is a very pressing issue and one of the most important in front of us.
Viscount Ridley (Con)
My Lords, I declare my energy interests as listed in the register. Does my noble friend the Minister agree that the people in denial in this debate are those who think we could meet such an ambitious target either by renewables or by asking people to wear a hair-shirt and reduce their consumption of such things as foreign holidays? Given that solar and wind provided 3% of world energy last year, and only a little more in this country, it is unrealistic to assume that they will make a significant contribution to meeting a target like this, as people such as Dieter Helm and the late Sir David MacKay have said. Does the Minister agree that the only way we would hit such a target in an affordable manner would be if we took carbon capture usage and storage, as he has mentioned, and made that into a realistic prospect, in which this country has a definite selective advantage because of the existence of the North Sea oil industry, which could be used to store carbon?
Lord Henley
My noble friend makes the point that it is important that we take people with us. As he says, people are not going to wear hair-shirts or give up their holidays. I agree with him that gas will continue to play a major part in this. That is why one occasionally looks rather hopefully over to the Liberal Democrats and others to seek their support for such things as shale gas extraction. He is also right to refer to the importance of carbon capture and storage. We will continue to research matters in that area. We should also look at further research into the storage of electricity and other forms of energy; again, this came up only recently.
Lord Soley (Lab)
Would the Minister accept that research bodies and universities have to play a central role here? This is to do with not just the climate change gases that we produce but the rapid melt of the permafrost in the northern hemisphere. We are seeing some effects of this even in north Scotland, with some fires burning out of control, which did not happen previously. Controlling the use of climate-changing gases is important, but the ability to extract them from the atmosphere is particularly important.
Lord Henley
The noble Lord points out how important it is that we continue all the research we do. A great deal of research is going on into the areas he talked about. I could also take him through research I have seen into wave power, tidal energy and a whole range of other areas. We will continue to support that. Innovation is at the heart of what we seek. It potentially has great benefits for this country, as well as in reducing our carbon dioxide production.
Baroness McIntosh of Pickering (Con)
My Lords, I declare my interests as set out in the register, particularly my interest as president of NEA. I am not a scientist; could my noble friend explain how we square the circle between reducing carbon emissions and fracking for shale gas? Can he also assure us that there will be joined-up government in the Bills coming before this House, particularly the Agriculture Bill and the environment Bill? Can he assure us that many of the policies he has set out today will be on the face of those Bills?
Lord Henley
My Lords, I assure my noble friend that both the Agriculture Bill and the environment Bill will be very important in this field. On shale gas extraction, I made the point earlier that it is very important that gas continues to be a major part of our fuel for a considerable time, as a transition fuel as we move towards clean energy, coupled with carbon capture and storage. It also has the advantage of providing us with the energy security we need. If she does not want shale gas extraction as we see a reduction in gas coming from the North Sea, it means we have to get our gas from rather peculiar places, as I made clear earlier.
Baroness Hayman (CB)
My Lords, earlier today this House discussed the upcoming Commonwealth Heads of Government Meeting in Kigali. The Statement refers to the UK’s bid to host COP 26, but does the Minister agree that it is important to raise these issues with other countries? We want to lead and ask our own citizens to take action, but we also need to discuss this with other countries, particularly the Commonwealth, and encourage them to make this a priority.
Lord Henley
My Lords, it is not for me to say what CHOGM should discuss, but the noble Baroness is quite right to stress the importance of that meeting. We are very lucky to be members of a body such as the Commonwealth that offers us the chance to influence and, I hope, provide leadership in this area. COP 26 also provides an opportunity to do this and that is why we will continue to try to secure the hosting of it in the coming year.
Nuclear Energy: Small Modular Reactors
Lord Henley Excerpts(5 years, 5 months ago)
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Baroness Bloomfield of Hinton Waldrist (Con)
I beg leave to ask the Question standing in my name on the Order Paper and in so doing draw attention to my interests as set out in the register.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, there are many designs in development around the world for application in a diverse range of markets. The Government are assessing eight advanced modular reactors through the AMR R&D programme. We have received the feasibility studies and will announce any contracts for promising designs in the summer. We are also considering a proposal from the UK SMR consortium to the industrial strategy challenge fund. We will make a decision on this soon.
Baroness Bloomfield of Hinton Waldrist
I am grateful to my noble friend for his reply and pleased that the Government continue to encourage the development of this technology. Can he confirm that the Trawsfynydd site in north Wales is still being considered as a trial site to test a whole range of different designs for generation III and generation IV SMRs?
Lord Henley
My Lords, I can confirm to my noble friend that Trawsfynydd remains a potential site; it has been neither ruled in nor ruled out. We believe that small and advanced nuclear reactors have the potential to drive down costs through technology and production innovations.
Lord Wigley (PC)
My Lords, may I add my support to the bid made in favour of Trawsfynydd? The old nuclear power station there is half decommissioned, but the lake is too small for a full new nuclear power station. Given that the Wylfa project is, to say the least, in doubt, will he look positively at the Trawsfynydd option for SMRs in order to keep this technology alive in north-west Wales?
Lord Henley
The noble Lord speaks with great experience on this subject. He was involved in the building of Trawsfynydd, more years ago than he probably cares to remember. I note what he says; he is correct to say that the lake is on the small side for a full-scale nuclear reactor, which might make the small modular reactor more appropriate, but as I said, nothing has been ruled in or out.
Lord Fox (LD)
My Lords, any decision on SMRs should be taken within the context of the best possible carbon-free energy system. Does the Minister share my view that nuclear is competing not with windmills and photovoltaics but with energy storage, because in future the baseload can be provided either by nuclear or by effective storage? The Minister paints a picture of activity within his ministry. Can he guarantee that the same amount of effort will go into developing effective methods of bulk energy storage as is going into nuclear power?
Lord Henley
I completely agree with the noble Lord. The advantage of nuclear is that it provides baseload but if, as he says, we make further progress on storage, the variables in renewables would have the same effect. Therefore, we will continue to provide equal priority to advances in technology for storing electricity.
Lord Patel (CB)
My Lords, in their reports on small modular nuclear reactors, both the Parliamentary Office of Science and Technology and the House of Lords Science and Technology Committee made the point that the UK’s ability to deliver on the development and implementation of small modular reactors depends on our skills base. We have a significant lack of skills. What are the Government doing to develop those skills in nuclear science?
Lord Henley
My Lords, I accept the points that the noble Lord makes and refer him back to the nuclear sector deal, which is a collaboration between the Government and the industry. In that, we accepted that there was a need to develop our skills base, which we will continue to do.
Lord Cunningham of Felling (Lab)
My Lords, it is important to continue the research and development of small modular nuclear reactors. I compliment the Government on that, even though progress is slow. Can the Minister enlighten the House as to whether all the money originally allocated for that project has been taken up? It is not clear. In the meantime, as well as Trawsfynydd, Moorside in Cumbria has disappeared from the planning process. As the Minister rightly says, many existing nuclear reactors providing significant amounts of baseload will inevitably come to a conclusion before too long and we are apparently not in a position to replace them. While I recognise the importance of the point made about storage, it will not be there in time on that scale, capacity and ability.
Lord Henley
My Lords, the point I was making about storage was that it needs further research, because there are potentials there. I acknowledge the noble Lord’s expertise from his former constituency interests, and his interest in Moorside. He knows that we were disappointed that Moorside fell through but the site is still there, and it too might be looked at for small modular reactors.
Lord Campbell-Savours (Lab)
My Lords, following up on the question just asked, who would fund an SMR programme at Trawsfynydd?
Lord Baker of Dorking (Con)
My Lords, is the Minister aware that at Sellafield there is a university technical college for training 14 to 18 year-olds? Last July, 80% of its leavers became apprentices in the industry and 20% went on to study nuclear and STEM courses at university. We are providing the expert staff of the future for not only Sellafield but other sites.
Lord Henley
I am grateful to my noble friend for reminding the House of the success of UTCs and, in particular, the UTC in that area.
National Minimum Wage Naming Scheme
Lord Henley Excerpts(5 years, 5 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, with the leave of the House I shall now repeat, in the form of a Statement, the Answer given yesterday in another place to an Urgent Question which asked my honourable friend the Secretary of State for Business, Energy and Industrial Strategy to make a statement on the suspension of the national minimum wage naming scheme. The Statement is as follows:
“Enforcement of the national minimum wage and the national living wage is a priority for the Government, and we take tough action against the minority of employers who underpay. Last year, employers were ordered to repay over 220,000 UK workers a record £24.4 million of arrears. We have more than doubled the budget for minimum wage compliance and enforcement since 2015, and it is now at a record high of £27.4 million.
As part of our enforcement approach, we name employers who have breached the legislation, which raises awareness of national minimum wage enforcement and deters others who may be tempted to break the law. To date, the Government have named almost 2,000 employers who have underpaid the national minimum wage. The Government are reviewing the naming scheme to ensure that it continues effectively to support minimum wage compliance. This is in response to a recommendation made by the director of labour market enforcement, Professor Sir David Metcalf, last year.
In December 2018 we accepted both of the director’s recommendations relating to the naming scheme, specifically to review the scheme’s effectiveness and to consider how to provide further information under the scheme in future. The Government have sought to learn from other naming schemes and other regulatory approaches. We have also discussed the evidence with the director of labour market enforcement and have conducted further analysis to understand the impact that any changes to the scheme would have on the number of employers named.
Naming and shaming remains an important part of our enforcement toolkit, and the review will be concluded in the coming weeks. Any changes to the scheme will be communicated through the national minimum wage enforcement policy documents”.
That concludes the Statement.
Lord Stevenson of Balmacara (Lab)
My Lords, I am very grateful to the Minister for repeating the Statement. I am still a bit confused, however. He went on at length about the value the Government place on the scheme, but has it actually been suspended during this review, or not? Will he confirm, for the record, that the review the Government are carrying out is actually on the effectiveness of the naming and shaming scheme, not on the scheme itself, that the scheme has not been suspended or dropped, and that naming and shaming will continue until such time as a firm decision has been reached by the Government on the current review? Will he also confirm that, although it is true that the director of labour market enforcement called for an evaluation of the naming scheme, this was only one of 37 recommendations made in the excellent 2018 report? What is happening to the other very important recommendations, including the one to which he referred which called for greater use of, and more publicity for, prosecutions, undertakings and orders, so as to alter employers’ behaviour by raising their risk of being caught and increasing the penalties for breaching the law?
Lord Henley
My Lords, naming and shaming is just one of a number of different actions that can be taken, alongside self-correction by employers, the civil penalties that are available, and the criminal proceedings and resulting fines. As the noble Lord said, and as I made clear in the Statement, we will review the naming and shaming scheme and he will have to await further announcements on that. As my honourable friend Kelly Tolhurst made clear yesterday, she considers that it has been effective, but it is obviously quite a draconian measure to use against employers and we should be wary about the effect it might have on them. I think it is quite right that the Government should consider how to operate this in the future: that is what we are doing and I ask the noble Lord to be patient about this and about the other recommendations made by Sir David. In due course, announcements will be made.
Lord Fox (LD)
I join the noble Lord, Lord Stevenson, in thanking the Minister for repeating the Statement. I am confused by his answer and the debate in Hansard yesterday in the other place, where no one seemed to be calling out naming and shaming as an issue. Can we get to the nub of what exact problem the Government are seeking to fix here in cherry picking this one recommendation and putting it up for review? Can the Minister tease out that information by telling us what terms of reference this review will have? Is it to make naming and shaming more effective or to find a way of not having naming and shaming? Finally, the last sentence of the Statement says that this will be made public through the national minimum wage enforcement policy document. That is not good enough. Given the nature of this and the interest from both Houses, a Statement from the Minister on what this review comes up with will be important. Will he undertake to do that?
Lord Henley
My Lords, as I said to the noble Lord, Lord Stevenson, the noble Lord will have to be patient and wait for the full announcement. Sir David made his comments and my right honourable friend took them on board. We want to review the effectiveness of naming and shaming. My honourable friend made it clear yesterday that:
“It is absolutely right for me, as the Minister responsible, to evaluate the scheme and make sure that any naming and shaming scheme is meaningful, adds value, acts as a tool to aid employers to make sure that they are able to comply with the national minimum wage legislation”.—[Official Report, Commons, 4/6/19; col. 49.]
We want to make sure that that legislation is effective. This is just one tool among many. As I made clear, there is also self-correction by employers and the possibility of civil fines and, as has happened on occasion, prosecuting in the criminal courts. We want to see how effective this is and whether it should be looked at again. That is what my honourable friend and right honourable friend are proposing to do.
Lord Arbuthnot of Edrom (Con)
My Lords, I am quite sure that it is my fault, but I remain confused. Has the naming and shaming scheme been suspended?
Lord Henley
I would not want to use the word “suspended”. My honourable friend made it clear in her Statement yesterday that naming and shaming was still there and available, but that while we were reviewing the scheme we were not using it. We want to look at the effectiveness of that scheme, as my honourable friend said, and decide how it can be made use of most effectively as one of the tools in ensuring that the minimum wage legislation, which goes back a long way—it was introduced by the party opposite, extended by the coalition Government and had further increases under the Conservative Government—all works well. It belongs to all of us.
Baroness Donaghy (Lab)
My Lords, the Minister has asked us to be patient. Does he have any idea at all when this review might be completed so that we can have more definite information? Having spoken recently to Sir David Metcalf, who was an original member of the Low Pay Commission—we served together 20 years ago—at the 20th anniversary of the minimum wage, I know that he is quite clearly looking at the whole range of possibilities to make sure that implementation takes place. Without wanting to sound too critical, if you divide £24.4 million of arrears among 220,000 UK workers, if my maths is right that is about £110.90 each. I accept that that is a lot for people on minimum wage, but implementing the whole area is more important than worrying about this one issue. I hope that we get some very speedy action on the whole range of implementation of underpayment, rather than just the naming and shaming issue.
Lord Henley
My Lords, I cannot be any more precise on the timing of when the Government will make a further announcement. I have got things wrong in the past when I have said that things will be published “later in the spring”, and one had to be quite flexible about how one defined the spring. I will say only that we hope that there will be something later in the summer.
Lord Scriven (LD)
My Lords, can the Minister name how many of the 239 companies that were named and shamed previously are not paying the national minimum wage?
Lord Henley
My Lords, again, I cannot answer that. However, one would hope that naming and shaming has been effective, and that we will know that in due course. As I made clear in some of my earlier responses, one also has to understand that naming and shaming is quite a draconian power and can have a major effect on any individual company. We therefore want to look at just how useful it is as part of the overall toolkit that is available to ensure that we can get all employers to meet the minimum wage.
The Countess of Mar (CB)
My Lords, for many years, gangmasters have taken people out of cities to work in rural communities and have been known to pay them below the minimum wage. Are they regarded as employers or is the farmer who uses these men and women regarded as the employer, and if so, how many farmers have been named and shamed?
Lord Henley
My Lords, I am afraid that I cannot answer the noble Countess’s question, but if I have any further information, I will certainly write to her. However, as I made clear in the Statement, we have increased the resources available to HMRC, more or less doubling them. I am told that last year it completed some 3,000 investigations and issued £17 million in financial penalties to more than 1,000 non-compliant employers. Obviously, more can be done, and we will do as much as we can to make sure that where there is legislation—which has had all-party support—it is effective with regard to the employers concerned.
Lord Stevenson of Balmacara
My Lords, I am a patient person, and I was glad that my patience has resulted in getting a statement out of the Minister which he was perhaps reluctant to make. His noble friend asked whether this scheme had been suspended. He ducked that question and said that it had not been suspended, but I took from him—I would be grateful if he could confirm it—that the scheme in its present form is not being used until the results of the review have been published. We do not know when that will be but we hope it will be imminent. Given that most of the 37 recommendations in the very good report we have referred to assume that the scheme will continue, are the Government really considering suspending it completely?
Lord Henley
I will not prejudge that review. We have made it quite clear that we believe the scheme is effective, but, as I have made clear, on occasion it can be quite a draconian power. We want to look at how the scheme works, whether it is good, and whether it is, as I put it, a useful tool to have in the box to deal with this issue.
Renewable Energy
Lord Henley Excerpts(5 years, 5 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, too, thank the noble Lord, Lord Cameron, for introducing this debate and emphasising that what we in this country should be doing is playing to our strengths. He mentioned that, unlike a lot of other countries, we have an awful lot of tides, just as we have an awful lot of wind, and that we should certainly make use of them. I hope that I will be able to set out what we are doing, what we feel we can support and what the constraints will be in the short time available to me.
I was very pleased that, in the main, everyone—excluding the noble Baroness, Lady Maddock, and the noble Lord, Lord Grantchester—took a relatively positive line on what we were doing. I think that we have a pretty good story to tell in this country. Over the past 30 or 40 years, under a variety of different Governments, we have reduced our emissions. My colleagues and I have said on many occasions that we have reduced them by more than 40% while seeing the economy grow. We want to continue that process.
I make clear in the presence of my noble friend Lord Deben that we will be responding to his committee’s report, with its challenging targets, in due course. My noble friend and other noble Lords would not expect me to presume on my right honourable friend the Secretary of State by responding at this stage. We have been set challenging targets. We will want to make progress towards them. We will want to continue to provide leadership for the world, as mentioned by the noble Lord, Lord Grantchester, the right reverend Prelate and the noble Lord, Lord Giddens, who talked about the failings of Brazil and America to acknowledge that there is any problem at all. Again, I remind the House that we are anxious that we should get the opportunity to host COP26 next year, and support from all sides of the House would create a very positive approach.
Living where we do, we obviously want a diverse electricity system that provides homes and businesses with secure, affordable and clean power. However—we keep coming back to this—we want that power at a cost that is both acceptable and supports continued growth. On many occasions, noble Lords have talked about the fact that costs come down. We have seen that with wind, solar and tidal; I am grateful to the noble Lord, Lord Berkeley, for his comments there.
There is some doubt about whether one will see costs come down in quite the same way for a technology that is not exactly new and, as the noble Lord reminded us, is largely about pumping a lot of concrete and rock into the ground; after all, concrete is not the most carbon-friendly material. One cannot see technology reducing costs there in the same way as it has done for wind and solar. Again, as the noble Lord, Lord Cameron, said, we must play to our strengths; we will do so for wind because we are a very windy spot. To do that, we obviously need to continue to bring down the costs of all forms of low-carbon generation; I am grateful to my noble friend Lady Bloomfield for mentioning how many there are. As the noble Lord, Lord Teverson, said, we have not seen the same cost reduction in areas such as nuclear as we are seeing with solar and wind.
I have some criticism of the noble Baroness, Lady Maddock, for taking a rather negative approach to what the Government are and have been doing. We are investing a great deal of public funds—some £900 million—in innovation, including a further £177 million to reduce further the cost of renewables and up to £100 million in leading-edge carbon capture and storage and industrial innovation. That is to drive down the costs there and, as I said, we have seen remarkable cost reductions over the year. We have seen low-carbon generation rise from 54% in the third quarter of 2017 to a record high of 56% in the third quarter of 2018, due to that increased renewables generation.
It has been a record-breaking year. I will give noble Lords some figures, although I will probably be able to give even better ones in a few weeks’ time. We have gone a whole fortnight without any coal-fired generation, which we aim to get rid of. This is in a country where, some 70 years ago, a Labour politician said:
“This island is made mainly of coal and surrounded by fish”.
Anyway, we are getting rid of the use of coal to generate electricity; as I said, we have just gone another fortnight without using any. Last year, there were nearly 1,800 coal-free hours over 10 weeks in total—so we are making progress.
I will deal with one or two individual issues. Since all noble Lords mentioned Swansea Bay, it is right that I address both that and the programme for six tidal lagoons proposed by Tidal Lagoon Power Ltd. I repeated the Statement made by my right honourable friend in another place on costs. We made it quite clear that the costs of that particular programme did not meet our requirements for value for money. I appreciate that the noble Lord, Lord Giddens, had some queries about that, as did other noble Lords, but we published a summary of our value for money analysis. The figures were clear; even the developer himself conceded that the project required a CFD strike price three times that of onshore wind.
Further, that issue was looked at by both the Welsh Affairs Select Committee and the BEIS Select Committee, which published details of the additional requests from the Swansea Bay developers over and above a 35-year CFD at £92.50 per megawatt hour. It was expensive. That fact was echoed by the National Infrastructure Commission in its national infrastructure assessment, published last July, which stated that,
“tidal lagoon power will remain an expensive technology in the future. The extra benefits which arise from its predictability are not enough to offset its higher capital costs. And it will never be a large-scale solution: an entire fleet of tidal lagoons would only meet up to 10 per cent of current electricity demand in the UK”.
I appreciate that other tidal projects are being looked at. For example, the Mersey and the Solway—in my part of the world—were mentioned. Officials and Ministers in the department have had several meetings with those promoting such things. We will continue to hold meetings and talk to developers. For example, the Solway Firth tidal lagoon project is at much too early a stage of development: to date, the engineering details have not been finalised and the developers have not yet applied for the consents and licences that would be required to develop the site. Obviously, we will continue to look at that project, take an interest and make a decision in due course on whether the project is good.
As the noble Lord, Lord Grantchester, mentioned, it is important to take environmental considerations into account, but there has been no detailed monitoring at this stage. For example, no seabed surveys have been undertaken on the sites; I am thinking in particular of the one in the Solway. So at this stage we must proceed carefully before going further.
Other noble Lords, of which the noble Lord, Lord Cameron, was the first, mentioned the possibility of tidal stream energy. Again, that should be looked at. The Government have provided long-standing and targeted support for the development of both wave and tidal stream energy. Since 2003, we have provided £175 million of innovation funding in the wave and tidal sectors; we have provided almost £80 million of that since 2010.
That has supported many firsts, including the wold’s first megawatt-scale tidal stream turbine, SeaGen, which was deployed in Strangford Lough in 2008. There has been much mention of Orkney, including by the noble Lord, Lord Berkeley, and the noble Baroness, Lady Maddock. I visited Orkney last year and met her colleague, Alistair Carmichael, and saw some projects that are being tried out there, with government money going into them. The world’s first pre-commercial array, the 6 megawatt MeyGen project off Caithness, received £10 million from BEIS innovation funding and is supported under the renewables scheme.
There have been some successful small-scale tidal stream tests over recent years. They are still at an early stage of development but they might be at the point where, as with wind, the price could come down—although I suspect that, for some of the bigger tidal barrages, the prospects are possibly less good. However, it must still be viewed in the context of the falling costs of other forms of low-carbon generation such as offshore wind. At the moment, their costs are five times that of offshore wind. I assure noble Lords that officials, Ministers and my right honourable friend Claire Perry will continue to engage with the sector to better understand its cost-reduction potential.
Finally, I reiterate that we will publish the energy White Paper in the summer, which will build on my right honourable friend’s strategy address in November of last year, setting out four guiding principles for electricity policy and addressing the challenges arising from the radical transformation of the energy system over the coming decades. It will take a long-term view of the energy system, out to 2050, and show just how we can deliver our climate change goals and the aims of the industrial strategy. At that point, or sooner, I hope that my right honourable friend will be able to respond to my noble friend Lord Deben and his climate change committee report.
I appreciate that my time is up. I hope that I have given a partially positive view of what the Government can do. There will be more we can do and further developments in all forms of renewable energy. Tidal may be part of that, and all forms of tidal—whether by barrage or otherwise—will be looked at.
Lord Grantchester
I appreciate that the Minister is under tight time constraints, but as the energy White Paper approaches, could he give us a detailed answer on how the control of low-carbon levies will operate?
Lord Henley
The noble Lord will have to be patient and wait for the White Paper. No doubt we will respond and he will have an answer in due course.
British Steel
Lord Henley Excerpts(5 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, with the leave of the House I shall now repeat a Statement 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 your permission, Mr Speaker, I would like to make a Statement about British Steel. It was announced this morning that the court has granted an application by the directors of British Steel to enter an insolvency process. Control of the company will now pass to the official receiver, an employee of the Insolvency Service, who will run a compulsory liquidation. The official receiver has made it clear that British Steel employees will continue to be paid and employed, and that the business will continue to trade and supply its customers while he considers the position of the company. In fact, employees were paid early with the May payroll being run yesterday through cash advanced by the company’s lenders.
As the House will recall, I made a Statement on 1 May setting out details of a bridging facility that the Government agreed to provide to ensure that British Steel was able to meet its obligations under the EU Emissions Trading System, which fell due on 30 April. The Government provided the facility to purchase the allowances, worth £120 million, against the security of the 2019 ETS allowances, which are currently suspended pending ratification of the withdrawal agreement. Without this facility, British Steel would have faced a financial pressure of over £600 million—the ETS liability plus a £500 million fine. This would not only have placed British Steel in an insolvent financial position; the charge attached to its operational assets would have been likely to prevent any new owner acquiring the assets in the future. This transaction demonstrated the Government’s continuing willingness to work closely with all parties to secure the long-term success of this important business.
Following this agreement, the Government have worked intensively with the company for many weeks to seek solutions to the broader financial challenges it has been facing. The Government and individual Ministers can act only within the law and this requires that any financial support to a steel company must be made on a commercial basis. In the case of the ETS facility, this was based on the security of future ETS allowances. To provide liquidity to the business in the face of its cash flow difficulties, the Government were willing to consider making a cash loan to the company and worked hard to investigate exhaustively the possibilities of doing this. However, the absence of adequate security and no reasonable prospect that any loan would have been repaid, and the shareholder being unwilling to provide a sufficient cash injection itself, meant that this did not meet the required legal tests. I am placing in the Library of the House the accounting officer’s assessment of these proposals, drawing on professional and legal advice, which concludes:
‘It would be unlawful to provide a guarantee or loan on the terms of any of the proposals that the company or any other party has made or any others we have considered. You must note that such an offer cannot be made legally and that by making it you would be in breach of the Ministerial Code”.
The insolvency removes Greybull from the day-to-day control of British Steel. Given the Government’s willingness to help secure British Steel’s future, demonstrated in the ETS facility and the discussions that have taken place in recent weeks, the Government will work closely with the official receiver and prospective new owners to achieve the best possible outcome for the sites. The Government have provided an indemnity to the official receiver, who is now responsible for the operations. We will take every possible step to ensure that these vital operations can continue, that jobs are secured and that the sites at Scunthorpe, Skinningrove and on Teesside continue to be important centres of excellent steel-working. During the days and weeks ahead, I will work with the official receiver, the special managers and a British Steel support group of trade unions, management, suppliers, customers and the local communities to pursue remorselessly every step to secure the future of these valuable operations.
This is a worrying time for everyone associated with British Steel. Each one of its sites has a proud record of steel-making excellence and I am determined to see that continue. Britain and the world will continue to need high-quality steel, and British Steel is among the best in the world. Today is a very big setback for these operations, but it is far from being the end and we will take every possible step to secure a successful future for these vital assets, both people and plant”.
My Lords, that concludes the Statement.
Lord Fox (LD)
My Lords, I too thank the Minister for repeating the Statement made in the other place. Yesterday, we talked about the environment of uncertainty around Brexit, which has put pressure on this business. It certainly cannot have helped it in its struggle. I will not repeat those points today, because they have been well made.
Yesterday, the Minister stood at the Dispatch Box and metaphorically tapped his nose and said, “Wait and see”. We did not have to wait long, and what we see is really pretty terrible—for the employees and subcontractors, for Scunthorpe and the other areas in this business and, frankly, for the country. The Government can trumpet the proportion of British steel each department buys, but if this company goes down, there will be a significant lack of steel for these departments to buy.
The Minister says that the Government seek “the best possible outcome”. The best possible outcome for this business is the continuing making of steel in these furnaces. As I am sure the Minister acknowledges, the first job of the receiver is to do everything possible to keep this business going for future use. The priority is to keep the furnaces burning; once the furnaces go cold, the hope for those factories goes cold as well. Can the Minister confirm that this is the number one priority the Government have given the receiver? What other assistance will be available from the Government to keep those furnaces burning?
The Statement alludes to a sticking point around what future aid could be given and EU state aid rules, and reference was made to a letter from the accounting office. Can the Minister tell us what consultation has gone on with the European Union and the Commission, what response they have had in those discussions, who they talked to and when? I am slightly concerned that there is a level of scapegoating going on here.
As the noble Lord, Lord Stevenson, pointed out, there are a number of questions around Greybull Capital. I shall not repeat them, but there are suggestions that the private equity owner of Greybull was unwilling to play ball when it came to the amount of money required to show its commitment to this business. Perhaps the Minister would like to set the record straight on that.
Just up the road from where I live, there is an empty former My Local convenience store; some of my friends were stranded when Monarch went bust; and today, we have British Steel. What is the link? The link is that they all went down on Greybull’s watch. That might be unfortunate, it might be a coincidence, or it might be a pattern. Some would say that these kinds of businesses come with an attendant risk and that sometimes, because of that risk, they fail. But who is taking the risk? Is it Greybull, the private equity owner of this business, or is it the Government who are actually absorbing the risk? We heard yesterday and today about the £120 million granted as a bridging loan. We have heard that the negotiations to rescue this company failed. How much risk are the Swedish and Turkish owners of this private equity company prepared to take? For there to be reward, there should also be risk.
Yesterday, the Minister said that no stone would go unturned. Today, he talked about remorseless activity. Could he tell us which stones are being turned? What actions are open to the Government to make sure that they continue to make steel in those blast furnaces?
Lord Henley
My Lords, I start by agreeing with both noble Lords. I accept the words they used: the noble Lord, Lord Stevenson, said that this was devastating news and the noble Lord, Lord Fox, said that it was terrible news. It is bad news, as my right honourable friend the Secretary of State made clear only an hour or so ago when he made this Statement in another place. He was very grateful for the positive, cross-party support he had from all round the House for what the Government have done and are proposing to do.
The noble Lord, Lord Stevenson, claimed that I said nothing yesterday. I agree that I said relatively little, but at that stage it was not possible to say much. Despite what he seemed to imply, I can assure your Lordships that the department, my right honourable friend and other Ministers have been involved in this matter for some considerable time. They have been in discussions with, as he made clear, the company and its owner, Greybull, and with the unions, the community, suppliers and others. I will possibly write to the noble Lord, Lord Fox, with details of further discussions they have had with the Commission about these things.
There are, however, obviously limits to what government can and cannot do within the law. Our focus now has to be on working with the official receiver to find new partners and new owners. As the noble Lord, Lord Fox, made quite clear, our focus should also be on working with him to keep the furnaces burning, for the very simple practical reason that they lose their value rapidly if they go cold. There is nothing so worthless as a cold steel works, and therefore, as far as is possible, one thing the official receiver will have to do is try to make sure things can be kept going for as long as possible so that he has an asset that is of value to sell on.
I want to make it clear that obviously, we can act only within the law and that requires any financial support to a steel company to be on a commercial basis. I have been advised that it would be unlawful to provide a guarantee or a loan on the terms of any proposals that the Government have made so far. As the noble Lord, Lord Stevenson, made clear, the company did ask for £30 million, but it did not offer any contribution itself and without that it would not be possible for the Government to act.
The noble Lord, Lord Stevenson, also put forward the idea that we should nationalise the company, but that does not solve any of its problems, such as the need for investment and the fact that it is operating in a highly competitive global market. I have been criticised by both noble Lords for repeating that, but it is a simple statement of fact that a great deal of steel is being produced and it is a highly competitive market. All of us in this House who have been around a long time know that the UK steel industry has changed greatly over the past 40 years. We have a much better industry than we possibly had in the past but, even so, it is a competitive market and it is necessary to recognise that.
As I made clear, we will continue to work with the official receiver, the unions, local government and all the other stakeholders to provide the support that the workforce and the company need to provide continuity for the skills and expertise that we have in the plants in Scunthorpe, Skinningrove and Redcar. I hope that when my right honourable friend next has to make a Statement about British Steel, we can bring better news.
Lord Trefgarne (Con)
My Lords, was there ever any prospect of British Steel being selected to provide all the steel rails necessary for the HS2 project, and would that have made any difference?
Lord Henley
My Lords, I do not know whether that is the case; I will make inquiries. I know that providing steel for Network Rail is a major part of its business and it is a major supplier. Whether that would be the case for those who are building HS2 is another matter, but obviously that is some years off.
Baroness Redfern (Con)
My Lords, the Scunthorpe site sits in my constituency. For those nearly 5,000 employees and 20,000 workers in the supply chain, news that the directors of British Steel will enter into an insolvency process will be devastating, particularly for the families. Does the Minister agree that British Steel’s success is key to any future UK steel strategy because it is a national asset? We should 100% support it in saving our steel industry. Those blast furnaces must continue to burn. Steel has been the backbone of the UK’s industrial landscape for 150 years and must continue to sit alongside the global tech firms.
Lord Henley
Coming from Lincolnshire, my noble friend knows exactly the problems faced by those employed by British Steel in Scunthorpe. As my right honourable friend made clear, particularly in responding to a whole raft of questions from those in another place who have constituency interests, one of our first concerns is to ensure that the uncertainty can be removed for those workers. That is why we are encouraged that their pay packets have at least been dealt with as of yesterday. But as I said, we want to work with the official receiver to ensure that this can continue and that a viable, operating concern can be sold on to someone else, so that steel can continue to be produced both at Scunthorpe and at the other two sites.
Lord West of Spithead (Lab)
My Lords, there is a strategic defence requirement for a capability to produce steel. Thirty-seven years ago, in the early hours of the morning my ship sank and blew up in the Falklands, having been attacked for 18 hours. In war, you need to replace ships, and you cannot always rely on people supplying you with steel—or anything—because they might not agree with what you are doing. There is an absolute need to do this. It seems that we have not pulled together our defence industrial strategy in terms of the 100,000 tonnes of steel that we would get from the UK if we built solid support ships in the UK, the 25,000 tonnes of frigate steel if we built the 31e’s here and the 80,000 tonnes of steel for the new ballistic missile submarines. We have given the recipe for specialist steel, at which we are the best in the world, to the French so they can provide us with some. This is not joined up. Does the Minister agree that it is an absolute strategic defence requirement for our nation to be able to produce steel, and that we must therefore pull together a policy and provide support in whatever way necessary to ensure that we have this for the future?
Lord Henley
My Lords, as far as I am aware, British Steel is not producing steel in large quantities for the defence industry. Having said that, I take the point that the noble Lord made. It is obviously very important to our defence industry and, more importantly, to the defence of the realm to make sure that we can produce steel of an appropriate sort. My right honourable friend is fully aware of that, and that is why he has encouraged all departments to look to their procurement of steel and why, where possible, certain adjustments have been made to allow them to take other factors into account in procurement. The noble Lord, Lord Fox, was rather dismissive of the tables we have produced to encourage other departments to buy British steel, but they are important. I can assure the noble Lord that, wherever possible within the rules, we will certainly use British steel for defence projects, but not necessarily steel produced by this company, if it does not produce the right sort of steel.
Baroness McIntosh of Pickering (Con)
My Lords, the Minister mentioned Scunthorpe and also Teesside, which was the cradle of the Industrial Revolution. Have the Government worked out the implications for our much-heralded industrial strategy, given that we have taken quite a knock with a number of manufacturing jobs going, Nissan’s announcement about its production and Honda closing its production in 2021? The good news story is Hitachi in County Durham building the Azuma trains that will be required for HS3 as well as HS2. Will the Government look favourably on retraining any workers who in the long term lose their jobs with British Steel, so that they can participate in other manufacturing roles in the north?
Lord Henley
I shall not comment on my noble friend’s assertion that Teesside is the cradle of the Industrial Revolution because I think that one or two other areas would also make that claim, and I do not want to have to be the judge on that. She is however right to point out that the loss of manufacturing jobs in a particular area is a very painful process, and we want to offer as much help as we can to those who are affected. She is right to take an optimistic approach in talking about developments in Durham with Hitachi, for example, where new jobs are on offer and there are therefore possibilities for retraining people from Teesside. It is important to remember that while we are looking at a risk to those jobs—at this stage it is only a risk, because good news could emerge in due course—at the same time, we have to look at the unemployment figures. Unemployment continues to decline very steadily and employment continues to rise.
Baroness Kramer (LD)
My Lords, can the Minister help me understand the situation so as to better understand the appropriate response? Is he describing a company that in a sense is unlikely to be viable in any normalised market condition or a company that is in fact both efficient, producing high-quality goods with appropriate costs, but also suddenly in trouble because its primary European customers, afraid of the consequences of a no-deal Brexit with tariffs and disruptive supply chains, have had to source their product from other companies within the 27? If that is so, it seems that the burden falls on government, and it also means that we will start to see a chain of similar problems in other companies that are dependent on exports to the European Union 27.
Lord Henley
No, I am not describing a company that has terminal problems. I think that it has a future, and it is the official receiver’s job to explore that and to find something viable that he can sell on. British Steel is producing fine products but it has been having problems. The level of the pound has increased the cost of its imports and, the company believes, the uncertainty over Brexit has also caused problems. However, I do not think that that is necessarily terminal for the company. It is a good company that produces fine products, and it is for the official receiver to find the right solution.
Lord Morris of Aberavon (Lab)
My Lords, can the Minister give an assurance that government procurement provides a level playing field for steel produced within the United Kingdom?
Lord Henley
My Lords, I can expand a little on procurement. As the noble and learned Lord knows, there are rules that the Government must stick to, but we were able to relax them so as to allow, for example, government procurement to make use of British firms slightly more liberally than was the case in the past. It might be better if I write to the noble and learned Lord in greater detail on that point, but certainly we have been encouraging the government departments that use steel to use British steel wherever possible.
Lord Campbell-Savours (Lab)
My Lords, will the Minister confirm that, in the event that Ministers allow British Steel to fail, HS2 rail requirements will be met in Hayange in France as opposed to Scunthorpe?
Lord Henley
My Lords, one ought to make it clear that British Steel is not the only manufacturer of steel in the country; there are other steel producers. However, as the noble Lord quite rightly puts it, it is a major producer of track for railway lines and that is why Network Rail has been using it. Whether the builders of HS2 will have that opportunity will depend on whether this company survives, which we very much hope it does.
Lord Kirkhope of Harrogate (Con)
My Lords, perhaps I may ask my noble friend about the comprehensive nature of our steel industry. As he rightly alluded to earlier, some of these factories are turning out a finished product rather than just the basic steel. Is he satisfied that, in these circumstances, this country will continue to have comprehensive steel production across all the different categories, which we will need if it is necessary for us to be independent?
Lord Henley
My noble friend is right to draw attention to the fact that this is just one company among a number producing steel and steel products. I would hope that we could produce steel in a sufficiently wide number of areas to deal with the point that my noble friend makes. However, I think he would also have to accept that it is a very varied business, as he made clear in his question. Steel producers manufacture a whole raft of products, but whether we have the right blend is a wider question.
Lord Brookman (Lab)
My Lords, I would like to make a brief point. I do not want to be criticised as I was recently with shouts of “Order”, or “Question”, but I want the Minister to know that I am pleased on behalf of the steel-workers involved in this crisis, that they have been shown unanimous support. Nobody is arguing that the listed steelworks are not good and should not remain. The trade union leaders, who have not been mentioned much in this discussion, are first class and doing a good job, and we hope that we can win.
Lord Henley
I am grateful to the noble Lord for making that point. I do not know whether he was able to hear the Secretary of State make his Statement in another place, but certainly my right honourable friend referred to individuals among the trade unions with whom he and other ministerial colleagues have had considerable dealings. He wants to continue to have those dealings and is the first to say that this is a matter where—as he said—we want to continue to talk and work with everyone involved. On this occasion, that includes the trade unions.
Lord Judd (Lab)
My Lords, the Minister has said that he would hope there are alternative facilities available for the manufacturers of steel should the worst happen. That is really not good enough. If we are aiming to be an independent nation, with a strong, strategic role in the world in our defence arrangements, steel is absolutely central to all we are planning to do. We need a strategic approach to the steel industry which is included not only in our planning for an industrial strategy but in our planning for a defence strategy. We cannot drift along like this. We need to see some muscular, convincing arguments from the Government that show they have taken all this on board and are determined to develop the necessary strategies.
Lord Henley
My Lords, I agree with the noble Lord up to a point. I am sure he would be the first to accept that, in the modern world that we live in, it is frequently wise to buy certain things from abroad because other people can produce them better or more cheaply. Obviously, one always has to take into account the strategic considerations that the noble Lord raises. But there is no point trying to produce absolutely everything oneself, probably at greater cost and less effectively.
Baroness Altmann (Con)
My Lords, would my noble friend the Minister care to comment on the impact of the private equity capital structure games that are often played, with deep discount bonds being bought up and the ultimate owners ending up with a profit even when a company of such strategic importance ultimately fails? Can he assure us that the Government will look into the ways in which capital structure is used, particularly because the steelworkers had been doing such a marvellous job of turning around an industry that had failed in the past and was now operating extremely well? Indeed, we have other sectors in this country which are at risk, more directly perhaps, from a no-deal Brexit, and may have similar ownership structures, which we need to look into urgently.
Lord Henley
My noble friend makes an interesting point. My right honourable friend would be the first to say that we want to learn any lessons possible from what has happened here with Greybull’s purchase of this company, which was then renamed British Steel, some three years ago. It is a good company and I am glad that my noble friend pays tribute to its employees. It has made improvements. As I understand it, the company was returning to profitability. My noble friend goes on to talk about wider lessons to be learned about the structure of companies such as Greybull. All I can say is that we will learn what lessons we can.
British Steel
Lord Henley Excerpts(5 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given earlier today in another place to an Urgent Question, which asked my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy whether he will make a Statement on the discussions he has held with British Steel regarding its future. The Statement is as follows:
“As the business department, my department is in regular conversation with a wide range of companies, including those in the steel industry. As the House will be aware, on 24 April the Government entered into a commercial arrangement with British Steel, valued at £120 million, relating to the company’s obligations under the EU Emissions Trading Scheme. The Secretary of State updated the House on this agreement in an Oral Statement on 1 May—the first available opportunity after market-sensitive elements of the resulting transaction were concluded. The commercial agreement reached with British Steel ensured that the company was able to meet its 2018 EU ETS obligations under a deed of forfeiture. It also ensured that the company did not incur EU ETS non-compliance fines, coupled with 2018 ETS liabilities, which would have equated to a financial pressure of over £600 million on the company, a sum which would have put the company under significant financial strain.
The speculation regarding the future of British Steel will no doubt be creating uncertainty for those employed by the company. As shown through the ETS agreement, the Government have been willing to act. We have been in ongoing discussions with the company and I am sure the House will understand that we cannot comment in detail at this stage. We will, however, update the House when there is more information available. I can, however, reassure the House that, subject to strict legal bounds, the Government will leave no stone unturned in their support of the steel industry. Yesterday I signed up to the UK steel charter. We want to acknowledge and support this initiative from industry and the charter is one element of that. We have been also been encouraging the UK steel sector to strengthen its engagement with all existing and potential domestic steel consumers, maximising opportunities to benefit from the £3.8 billion a year by 2030 high market-value opportunities that we have identified.
We recognise that global economic conditions continue to be challenging for the industry, which is why the Government are working with the sector, unions and the devolved Administrations to support a sustainable, productive and modern UK steel sector”.
My Lords, that concludes the Statement.
Lord Stevenson of Balmacara (Lab)
My Lords, I am grateful to the Minister for repeating the Answer given in the other place, although it was curious because it did not seem to address any of the points that could bear on the Question which the Secretary of State was asked.
British Steel is our second biggest steel maker and one of only two integrated steel-making sites in the UK. As the only UK steel plant which produces rails used in our tracks, it provides almost all those procured by Network Rail, as well as supplying ScotRail, TfL and Translink in Northern Ireland. It also exports a large volume of products across Europe. Given these facts, your Lordships might well have expected the department to have a very detailed knowledge of the workings of British Steel, which I assume is at the heart of our industrial strategy. For instance, as we heard only last week, and in the Statement, it put £120 million into the company as part of the ETS bailout. Is that money now at risk? Are we to believe that if the company goes into administration tomorrow—as it may do—the money will not actually come back to taxpayers, as was stated? Did the Minister agree with the company’s acquisition of a company based in France, for £42 million, only last week? These things do not suggest a company in trouble, yet we hear today that it needs between £30 million and £75 million to survive.
In order to get some answers, I will ask some specific questions. How much is the company actually asking for? Press reports today range between £30 million and £75 million. What is the figure? What is the current status of the negotiations? There are rumours circulating in the press that the discussions have stalled. Have they? If the company does go into administration tomorrow, what plans do the Government have to support the 4,000 or so people employed directly and the 20,000 or so in the supply chain?
Lord Henley
My Lords, I do not think I can take the noble Lord very far on this. His first question was whether the ETS £120 million was at risk. I assure him that that is not the case. That was made clear by the various guarantees that my right honourable friend announced when he made the Statement on 1 May this year. I did offer to repeat that Statement in the House but that was declined. That money is secure. The noble Lord asked a number of other questions about how much British Steel was asking for and what our further plans were. As my honourable friend made clear in the Statement, it would be wrong at this stage to say much more, because detailed discussions with the company have been going on and will continue. As my honourable friend made clear, we will update the House as soon as possible and bring further information to another place and this House when it is appropriate.
Lord Fox (LD)
My Lords, I thank the Minister for repeating the Statement. Like the noble Lord, Lord Stevenson, I am disappointed by the absence of any actual information. Clearly, there is no point in pressing on those issues, since the Minister either does not know or will not say, but in the Statement the Government say that they are working to strengthen engagement with customers. The steel industry has stated that the uncertainty surrounding Brexit is causing real problems with its customers. The Statement also says that the Government will leave no stone unturned, so perhaps the Minister can stand up and say that he agrees with the Chancellor of the Exchequer that a no-deal Brexit would be catastrophic, both for the steel industry and for the rest of British manufacturing.
Lord Henley
My Lords, the noble Lord says that I either do not know or will not say. The fact is that it is not appropriate to say anything at the moment. That is very important and, as my honourable friend made clear in another place, he or my right honourable friend the Secretary of State will come before another place at the appropriate moment and let the House know what is necessary to know at that stage. He went on to make various remarks about Brexit. I appreciate his concerns about the element of uncertainty that is affecting a number of people. All I can recommend is that all parties rally round and support the Prime Minister’s deal, get that deal through another place and let us get on with life.
The Lord Bishop of Winchester
My Lords, among the 4,500 British Steel jobs at risk are many apprenticeship trainees and students enrolled on degree apprenticeships. What action will the Government take to ensure that these apprentices will not lose their training or have their training disrupted, but will be able to continue their training elsewhere in another steel-based firm, or have an equivalent apprenticeship in another place?
Lord Henley
My Lords, the right reverend Prelate is quite right to draw attention to the uncertainty facing apprentices in the steelworks at Scunthorpe and the other places where British Steel is based, but also to draw attention to the concerns of all those who are employed by British Steel and the uncertainty they face. I can offer him an assurance that my right honourable friend will be talking to government colleagues in other departments to make sure that all appropriate help and support can be given by the Government, particularly, as the right reverend Prelate drew attention to, to those who are in the middle of apprenticeships with British Steel. It is right to remember at this stage that we have an economy that is providing virtually full employment. We have seen employment grow to levels that we have not seen for a very long time, we have seen unemployment continue to fall and we want to continue that process.
Lord Carlile of Berriew (CB)
My Lords, I ask my question as the father-in-law of somebody employed in the steelworks at Scunthorpe. Does the Minister accept that there is a sense of panic and despair among the ordinary population of Scunthorpe, a town totally dominated by the steel industry? Will he confirm that discussions with the Government are going on hour by hour to try to secure an outcome? Will the Government bear in mind that what is being asked for at the moment is simply bridging finance to get through a crisis period, not something more permanent than that?
Lord Henley
I am very grateful to the noble Lord for bringing to the attention of the House his concerns and those of his family. Obviously, we all have Scunthorpe in our minds at the moment because a very large number of jobs in one area are at risk. The Government are active and will continue to be active in doing all we can to offer whatever appropriate help it is possible to offer, but the noble Lord will appreciate that at this stage it would not be appropriate for me to go much further. I repeat that my right honourable friend has made it clear he will come before the House to make a further Statement.
Lord Davies of Stamford (Lab)
The Minister has refused to answer a whole raft of questions this afternoon on the grounds that discussions are continuing with the company concerned. That may be a perfectly good excuse so far as matters related purely to gifts or subsidies to British Steel are concerned, but it is not a reason for the noble Lord to avoid answering questions on a fundamental government policy. I ask him again— and I hope for an answer this time—whether he believes that leaving the European Union, and leaving the customs area of the European Union, is conducive to the future prosperity of the steel industry in this country.
Lord Henley
My Lords, the most important thing is to get my right honourable friend the Prime Minister’s deal through, and for the noble Lord and others to sign up to it, to get the certainty that we need. This relates not just to the steel industry but to all parts of the economy, and we will continue to work for that.
Baroness Altmann (Con)
My Lords, will my noble friend relay from these Benches the deep concern that if we proceed on a no-deal Brexit basis, this may be just the beginning of the demise of a significantly successful manufacturing industry in this country? The money that has been spent on planning for no deal could be considered in the context of the bridging loan that is required to save these precious jobs in Scunthorpe.
Lord Henley
My Lords, I do not think I can take my noble friend further than I have already done when commenting on Brexit and the desirability of getting my right honourable friend’s deal through.