Brexit: Protection for Workers

Lord Henley Excerpts

Thursday 7th March 2019 Lords Chamber

[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:

“Mr Speaker, I would like to make a Statement about workers’ rights when we leave the European Union. Before I do, since this is my first time at the Dispatch Box since his death, I want to put on record our deep appreciation of the life and work of Lord Bhattacharyya. A heroic figure in British manufacturing, Lord Bhattacharyya’s work attracted investments to which hundreds of thousands of working men and women owe their livelihood. A Labour Member of the House of Lords, Kumar worked easily with Ministers—indeed, Prime Ministers—from all parties for the benefit of the people of the West Midlands and the nation.

The United Kingdom and this Parliament have a proud record of improving the rights of working men and women, from Shaftesbury’s factories Acts and William Hague’s Disability Discrimination Act to the minimum wage introduced by a Labour Government and the national living wage brought in by a Conservative Government. While the EU sets minimum requirements in many areas of workers’ rights, and health and safety requirements, time and again Britain has been in advance of them and has chosen to exceed them.

The EU agency for the improvement of working conditions ranks the UK as the second-strongest, behind only Sweden, of all 28 member states for well-being in the workplace. The UK offers 39 weeks of statutory maternity pay compared with the 14 weeks required by the EU. We have given fathers and partners a statutory right to paternity leave and pay—something that the EU is only just starting to consider. Our national living wage is one of the highest in the EU and the Low Pay Commission, which advises on it, is widely respected. As we have not, in practice, been limited by EU standards, there is no reason why we should not maintain this record of leadership outside the EU.

The Prime Minister has given a commitment that Brexit will not be allowed to erode workers’ rights. Nevertheless, some honourable Members have advanced the view that a parliamentary mechanism should be established to monitor and implement that commitment. The honourable Member for Great Grimsby introduced a Private Member’s Bill to that effect, and the honourable and right honourable Members for Bassetlaw, Don Valley and Stoke-on-Trent Central proposed an amendment to a previous Motion in a similar vein. We have been discussing closely with Members across the House and with trade unions and businesses how we can turn this intention into law. The Government are today publishing draft clauses for inclusion in the withdrawal agreement and implementation Bill to put these commitments into law.

There are two main features of the clauses. First, there will be a new statutory duty placed on Ministers bringing forward a Bill that affects employment or workplace health and safety that they should certify, before the Second Reading of any such Bill, that it is compatible with the principle of non-regression that the Prime Minister has given. They will be required to provide explanatory information to Parliament in support of the statement, which will be drawn up following consultation with businesses and trade unions. This will ensure that while respecting and upholding the sovereignty of Parliament, in the future Members of this House will be able clearly to consider the compatibility of every proposed measure with the non-regression principle to which the Prime Minister has made a commitment.

The second aspect of the draft clauses concerns future EU legislation. Parliament will be given the opportunity at least every six months to consider any changes to EU workers’ rights and health and safety standards in the workplace. This will be reported to Parliament through a document which has been subject to consultation with employers and trade unions. It will be scrutinised by the relevant Select Committees of this House. The Government will be required to table an amendable Motion on their intended course of action on those new EU rules. For example, the Government may set out that they intend to legislate to give effect to those commitments; that they intend to give effect to them in a different way; or that they do not intend to give effect to them, setting out their rationale.

A number of legislative proposals are under consideration in the EU which have a deadline for transposition into national law after the implementation period. We would expect them to be put forward for Parliament’s consideration under this new process. The draft clauses, published in a Command Paper today, combine well our determination to honour the commitment the Prime Minister has made not to see workers’ rights weakened, with respecting the sovereignty of this Parliament.

A similar framework will also apply to environmental protections as the UK leaves the EU, implemented through the Environment Bill. On 19 December, we published the draft Environment (Principles and Governance) Bill, which is the first part of a much larger environment Bill to follow in the next Session. The draft Bill outlines our proposals to establish a world-leading body to hold Government to account for environmental outcomes after the UK leaves the EU. The draft Bill also requires the Government to publish a statutory policy statement on the interpretation and application of nine environmental principles, including the four contained in the EU treaties. Further, the Government will legislate to ensure that where future Bills could affect environmental protections, a Minister of the Crown will make a Statement of compatibility to Parliament and provide explanatory information. We will also create a new statutory duty on the Government to monitor any strengthening of environmental protections and regulations by the EU and to report regularly to Parliament about the Government’s intended course of action in those areas. This will give Parliament the information it needs to consider whether domestic protections need to be strengthened accordingly.

Through these commitments, the Government will provide a robust framework for the maintenance and strengthening of environmental standards as the UK leaves the EU. In addition to these measures, I am also announcing today steps that will strengthen the enforcement of employment rights. The vast majority of businesses operate fairly and treat employees well, but I have been concerned about practices in a small number of firms in a small number of industries where abuses of conditions are used to the detriment not just of workers but of reputable competitors who suffer a disadvantage by comparison.

I intend to consult broadly on establishing a new body to bring together the relevant enforcement functions of the Gangmasters and Labour Abuse Authority, HMRC and the Employment Agency Standards Inspectorate. As part of the forthcoming spending review we will consider what level of funding is appropriate to ensure that it is adequately resourced to deliver its strengthened remit.

The measures I have announced today reflect a process of engagement across this House and with employers and trade unions. Not everyone will agree with every proposal. But if, as I hope, an agreement can be reached on the withdrawal process, they serve as a helpful guide to how we might find and act on common ground across the House in the next phase of negotiations. I commend this Statement to the House”.

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[Baroness Burt of Solihull (LD)]

I agree with the Minister that we have a proud record of protecting workers’ rights. As he said, in many cases they are stronger than in European law.

I welcome the enforcement measures announced by the Secretary of State yesterday on existing rights. We all know that it is pointless introducing legislation unless someone intends to enforce it, and enforcement costs money. We on these Benches will look closely at the forthcoming spending review to check that the Secretary of State has been as good as his word.

What we see in the Statement yesterday and the Opposition’s response is a playing out of the traditional distrust between the two parties. The Government seek to assure the Opposition that they will not dilute workers’ rights post Brexit. However, I agree with Labour that the Statement does not provide all the protections that would guarantee that workers’ rights will not fall behind those enjoyed by workers in the European Union.

In the Commons yesterday Opposition spokesperson Rebecca Long Bailey, and the noble Lord, Lord McNicol, this afternoon, made the telling point that the promise given by the Government does not apply to secondary legislation, which could allow each existing EU-derived right to be watered down with ease. This latest move has been described as a cynical attempt to buy off wavering Labour MPs from leave constituencies so that they can justify voting with the Government on the EU withdrawal and implementation Bill. We on these Benches will not fall for it and the Government have a long way to go yet to satisfy a distrustful Labour Party.

The arithmetic does not yet stack up in the Government’s favour and, as things stand, they are destined for another whopping defeat in the Commons next week. The only way to guarantee that British workers’ rights keep parity with those of European workers is for Britain to remain within the EU. Why do not Labour and the Government realise that it is in the interests of all the people they represent to give them a say and back a referendum on the deal?

[Lord Henley]

I remind the noble Baroness, Lady Burt, that we have had a referendum which quite clearly stated that the people of this country wished to leave the EU, and there is no point in trying to readdress that question.

My right honourable friend made an announcement about how we will continue to protect workers’ rights in the future, and I am grateful that the noble Baroness took, to start with, a reasonably positive approach to this, agreed that we had a proud record in this area and welcomed his announcement about enforcement. I note what she said about examining carefully any future announcements about the level of resources. No doubt we will come to that in future business.

I am afraid the noble Lord, Lord McNicol, took—probably under orders—a less positive approach to my right honourable friend’s announcement. I do not accept a lot of what he said or the somewhat negative remarks that I also heard the general secretary of the TUC, Frances O’Grady, make on the radio yesterday morning. I think she and the noble Lord are being very negative. I give an assurance that there have been considerable discussions with MPs on his side of the House and with trade unions, as the noble Lord knows. He will know that my right honourable friend has regular meetings with individual unions and the TUC. He has committed to bring forward legislation to hold the Government to account for non-regression on these rights.

The noble Lord thinks there is no guarantee of no reduction in rights. He seems to have very little faith in Parliament being able to achieve those things. He might prefer to leave these matters to the European Court of Justice or to what is going on in the EU. I stressed that our rights here go well beyond anything that has ever emerged from the Commission. We will continue that, and we have set in place a process that will allow Parliament to provide proper scrutiny of the processes and the rights of workers, taking into account the needs of employers and of those who are not working but are seeking work to make sure that the labour market works for them and provides them with jobs.

The noble Lord also wanted to know a little more about the scope of these measures and what will be included. I assure him that TUPE will be covered and make clear that the equality framework directive and other equalities directives, where they relate to non-discrimination, equality and work, will also be covered. Working time and holidays, including the working time directive, will be covered. Directions providing protections for part-time, fixed-term and young workers will be covered, and I could go on. My right honourable friend has made it clear that we want to cover all employees and provide protection for them, and to allow Parliament appropriate scrutiny of these matters.

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[Lord Balfe]

I will ask a question. In repeating the Statement, the Minister said:

“Parliament will be given the opportunity at least every six months to consider any changes to EU workers’ rights”,


and so on, and referred to,

“a document which has been subject to consultation with employers and trade unions, and which will be scrutinised by the relevant Select Committees of this House”—

meaning the House of Commons. Can he give us any more enlightenment on whether there will be any opportunity for this House also to scrutinise these documents? We are, after all, a bicameral legislature.

[Lord Henley]

My noble friend has made a number of points very well, particularly the fact that not all trade unionists vote Labour. He also referred to remarks made by Frances O’Grady, the general secretary of the TUC. I think Frances O’Grady is absolutely wonderful; it is just that we do not necessarily always agree on every matter. She took rather a negative approach to my right honourable friend’s announcement. I assure my noble friend that a document will be produced by the Government every six months after consultation and it will refer to any changes made in the EU. We might want to consider whether we wish to follow those changes, do something better or reject them for whatever reason. My noble friend referred to how they would be examined by another place. I am sure this House will find ways of examining them, just as another place will.

[Lord Monks (Lab)]

My Lords, Frances O’Grady certainly does not need any defence from me. She very much reflected the trade union mission in life, which is always to seek more—one word: more. Some business schools could learn from that mission statement. This is an astonishing change from the Government. We have been faced with a stream of anti-union and anti-worker legislation from them and their predecessor, and I can now see a change. It is not a huge change, and the motives for it are extremely murky in terms of next week’s vote and so on, but I ask the Minister to confirm two things. First, how does he see the role of trade unions going forward? Will there be an institution in which they will be involved to make sure that everything announced in the other place yesterday happens? Secondly, I would like him to repeat—I shall savour the moment—that the Government have no intention of changing the working time directive.

[Lord Henley]

My Lords, I imagine that Frances O’Grady would not want to be defended by me. I merely said that I did not agree with her on certain matters but that I thought she was wonderful in many other respects. The noble Lord said that he always wanted more. Lots of people always want more but it is important to get the right balance so that, as my right honourable friend made clear, we protect the rights of those in work, we do not impose excessive burdens on employers and we create a situation in which it is easy for those who are not in work to find work because work is available and employers want to employ people. That is something that unions should always remember. Although they are assiduous in looking after those in work, they should remember those who are not in work, and we want to create the right environment for them.

The noble Lord then asked whether there would be an institution involving trade unions. I cannot commit to creating any institutions; nor do I think it necessary to do so. What is important is that my right honourable friend, or whoever holds that office or is in government, has an open-door policy whereby they can continue to consult, talk to and have a dialogue with trade unions and all others who have an interest in the matters we are talking about.

Finally, just because the noble Lord wanted to hear me say it, I was asked to make it clear that we have no intention of getting rid of or watering down—I cannot remember the precise words he used—the working time directive. I can give him that assurance.

[Lord Cormack (Con)]

My Lords, I am sure we are all glad of that last assurance from my noble friend the Minister. I thank him for making the point so effectively that the most fundamental right of workers is the right to be able to work. It is therefore crucial—I hope my noble friend will agree—that we leave the European Union with a proper deal, which will not jeopardise much of the remaining manufacturing capacity of this country as well as service and other industries. Does he agree that this is fundamental, and that it is therefore crucial that a deal is produced next week which can command the support of the other place?

[Lord Henley]

My noble friend is quite right to talk about the fundamental right to be able to work. That is why we consider it very important, for example, that employers have the right to hire and fire. If one restricts the right to hire and fire—as we find if we look at, say, our neighbours in France—employers are less likely to want to take people on. As my noble friend and I made clear, we should consider the rights not only of those in work but of those seeking work. I confirm to my noble friend that we very much hope we will get a deal next week that our colleagues in another place will feel able to endorse, and that they will back my right honourable friend the Prime Minister.

[Lord Morris of Handsworth (Lab)]

My Lords, I suspect that this is an occasion when we must be grateful for small mercies. We are grateful that, at last, for whatever reason, workers’ rights have got on to the Government’s agenda. But if the Government really want to deal with workers’ rights and make the workplace more habitable—a place of co-operation and commitment—they need to get rid of a lot of the issues that prohibit such an environment, which we could all share, work for and develop.

I notice that the Statement says nothing about zero-hours contracts—not a word. One problem currently affecting British industry and workers’ contributions to productivity is the so-called gig economy—here today and gone tomorrow. When we talk about workers’ rights it is in the context of family, but there is nothing here about family: nothing about mothers, and indeed fathers, having the opportunity to take time off to take the children to school or to hospital; and nothing to ensure an environment that combines work, community and family. It is a tripartite relationship, but nothing was said on that. We welcome what has been said so far but we hope that, when the Government return to this House, it will be with a more positive and enduring attempt to make life in the workplace better than it is today.

[Lord Henley]

I am sorry that the noble Lord takes a faintly negative attitude to the announcement we have made today, particularly in the light of all that we have done—and propose to do—to improve conditions at work. I refer the noble Lord to the report we commissioned from Matthew Taylor. That report made recommendations; I forget the precise number. I will say that there were 59 and we accepted 58, although I cannot remember what the 59th, which we did not accept, was. We have taken all those recommendations on board. We will be bringing forward further legislation—after the legislation that I have been talking about, which will come with the withdrawal agreement Bill—to deal with the recommendations in the Matthew Taylor report and other matters.

I am sorry that the noble Lord comes back again to zero-hours contracts. That was something that Matthew Taylor looked at; he recognised that they serve a very useful purpose in certain conditions and saw no case whatever for legislating against them. Again, that is one of Matthew Taylor’s recommendations that we accept.

[Lord Hope of Craighead (CB)]

My Lords, one should not ignore the contribution that the European Court of Human Rights has made in the development of workers’ rights, particularly for part-time workers, for whom significant changes have been made as a result of rulings by that court in the interpretation of measures passed in the European Parliament—directives, regulations or whatever they may be. Can the Minister assure us that, in the process described in the Statement, account will be taken of developments through the court in the interpretation of the measures which are to be looked at in the process we have been told about?

[Lord Henley]

I can tell the noble and learned Lord that we are delighted that we will no longer come under the influence or aegis of the Court of Justice of the European Union, but obviously we will still take note of judgments of the European Court of Human Rights, just as we always have.

[Lord Hope of Craighead]

If I may, I remind the Minister that it is the European Court of Justice which interprets the European legislation I am talking about; it has nothing to do with the European Court of Human Rights.

[Lord Henley]

I am terribly sorry. I misheard the noble and learned Lord and thought he was referring to the European Court of Human Rights. We will continue to take account of that. We will no longer be bound by the European Court of Justice—the ECJ—but we will take note of any judgment from it. However, it will be for Parliament to make decisions about that because obviously we will no longer be bound by the European Court of Justice.

[Lord Beith (LD)]

My Lords, it is helpful that the Government have today published the clauses to be inserted in the withdrawal Bill that deal with these matters. However, there are only 12 sitting days left for that Bill to pass through both Houses and none of the other clauses of that Bill have yet been seen by anybody outside the Government. How are the clauses to which the Minister referred to be adequately scrutinised in the two Houses?

[Lord Henley]

My Lords, how we deal with the withdrawal agreement Bill is a matter beyond my pay grade. The department that I have the honour to represent in this House has published the clauses that we are talking about today. That gives time for some scrutiny of them in advance of the publication of the full Bill and I hope the noble Lord and others will make use of that.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, we do not need a crystal ball when we have the history books. I spent 26 years as a Member of Parliament in the other place. Every Bill or proposal to improve workers’ rights put forward by the Labour Government, and every argument we made to protect workers against employers, was opposed by the Tories, including the national minimum wage. When there was a Tory Government, the only improvements came because the European Union insisted on them. Why should we accept these warm words from the Government now, when we know the record of all these past years?

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[Lord Henley]

I have to say that that is complete and utter nonsense and I totally reject—

[Lord Foulkes of Cumnock]

I was there, but the Minister was not.

[Lord Henley]

I have been in this House long enough to see what goes on. I think I have been in this House slightly longer than the noble Lord was in another place. Conservative Governments have brought forward a great many improvements. My right honourable friend listed those in his Statement earlier, starting with the Disability Discrimination Act 1995, brought in under John Major’s Government by my noble friend Lord Hague. Look at the national living wage. Conservative Governments have done a great deal. My right honourable friend went back as far as the Shaftesbury Acts two centuries ago. We have made improvements and will continue to do so, but we will make sure we get the right balance.

[Lord Whitty (Lab)]

My Lords, my noble friend talked about history, as has the Minister, but we also need to consider what the future will look like. Can the Minister understand why there are some suspicions in the labour movement and the trade unions about the intentions of a post-Brexit Conservative Government when so many of his colleagues have held out the vision of a low-regulation, low-cost economy competing with employers across Europe and the world? The whole point about European legislation is that employers cannot undercut each other on workers’ rights, yet the Minister himself briefly made a slip when he referred to the relative situation in France against that in Britain. That shows the psychology of some elements of his party in how they see the future. I should like an assurance that that is not likely to be the official policy of a Conservative post-Brexit Government, if such there be.

[Lord Henley]

Would the noble Lord like unemployment levels at the same rate we see in France, or would he prefer to see employment and unemployment levels at the rates we have in this country, where we also have the right sort of protections for workers but do not have inappropriate protections that prevent people getting jobs?

[Lord Stevenson of Balmacara (Lab)]

My Lords, the Statement refers to the intention to establish,

“a new body to bring together the relevant enforcement functions”,

of the gangmaster agency and others. The Minister did not give the exact position in his response to my noble friend. There is an opportunity for a new body to have trade union representation. Can he confirm that that will be under consideration?

My main point relates to two things. First, the gig economy has been raised. Is it in the Government’s mind to eliminate once and for all the gap between “employees” and “workers”, which has bedevilled many of the issues we have been talking about? There is a need to make sure that all workers are employees so that they can have the rights and protections the Government are now bringing forward.

Secondly, on the new body, is this not the time to bring in some of the other issues that have affected workers’ rights, such as giving the Small Business Commissioner statutory powers under this new body? Also, would it not be sensible, as is perhaps alluded to in the Statement, to bring in the enforcement body that the Treasury operates for flagrant breaches of the low pay regulations, including the national minimum wage and the national living wage? They should also be part of the same body.

[Lord Henley]

I think the noble Lord will find that my right honourable friend referred to HMRC as one of the bodies that might be brought into some new enforcement body. As he made clear, it is a matter for consultation. We will want to consider what possible arrangements we can come to, but I cannot go any further than that at the moment.

The noble Lord also asked about dealing with the problems of the definitions of “worker” and “employee”. It is quite difficult. I can go as far back as when I was sitting the Bar exams a very long time ago. I found it quite difficult then; it is still difficult, but it certainly needs to be considered. No doubt that is something we can consider in due course when we come to legislation following Taylor and our Good Work Plan.

Energy Efficiency (Private Rented Property) (England and Wales) (Amendment) Regulations 2018

Lord Henley Excerpts

Wednesday 6th March 2019 Lords Chamber

Moved by

[Lord Henley]

That the draft Regulations laid before the House on 27 November, 17, 19, 20 December 2018, 21 and 30 January be approved.

Relevant documents: 10th and 16th Reports from the Secondary Legislation Scrutiny Committee (Sub-Committee A) and the 12th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B). Considered in Grand Committee on 13 and 26 February.

Motions agreed.

Brexit: Small Businesses

Lord Henley Excerpts

Tuesday 5th March 2019 Lords Chamber

[Baroness Burt of Solihull]

To ask Her Majesty’s Government what assessment they have made of the preparedness of small business for a no-deal Brexit.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, the Government have provided ample communication setting out the steps that businesses need to take to prepare for a no-deal scenario. As we set out in Implications for Business and Trade of a No Deal Exit on 29 March 2019, published last week, there is little evidence that businesses are preparing in earnest for a no-deal scenario; evidence indicates that readiness of small and medium-sized enterprises is particularly low.

[Baroness Burt of Solihull (LD)]

My Lords, the Government’s own no-deal impact assessment last week revealed the bleak picture that only 17% of small businesses that trade exclusively with the EU had signed up to the necessary identification to continue trade in Europe. Small businesses are far less able to prepare for a no-deal Brexit. They lack the legal and regulatory expertise to do so, and the cash and the space to stockpile. They, and we, are staring disaster in the face. Should we not put a stop to this madness now, halt the Brexit process and give everyone whose livelihoods and futures are at risk a say on the deal?

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[Lord Henley]

My Lords, I remind the noble Baroness that no deal is the legal default position as agreed by both Houses, and that until we agree a deal, that will remain the case. What is important therefore is that another place, or Parliament as a whole, agrees a deal and gets behind the Prime Minister, so that business can have the certainty that is needed.

[Baroness Wheatcroft (Con)]

My Lords, of the licences to which the noble Baroness just referred, only 40,000 of the 240,000 companies that export to the EU have registered for those licences, and the capacity to issue those licences is currently only for 11,000 a day. Therefore, with 29 March getting closer, could the Minister say what precautions are being taken to increase the capacity for issuing these essential licences?

[Lord Henley]

My Lords, the important thing is that businesses themselves get their act together and apply for the licences. As we made clear in that document last week—and this is why we published it—there is a failing on the part of many small businesses to apply for those licences. I am grateful to my noble friend for highlighting that again. There is capacity to deal with this in the time available, and we hope that small and medium-sized businesses will take note of the advice we have given them.

[The Earl of Clancarty (CB)]

My Lords, is the Minister aware that many British workers who run small businesses in the services sector are already losing contracts with EU companies because of their insistence on British access to the single market, in other words, free movement of people? In these instances, it makes no difference whether it is May’s deal or no deal.

[Lord Henley]

My Lords, I do not accept that. What is important is that we get a deal, and that is what we should all be behind. That is what businesses want and what we should all look for.

[Lord McNicol of West Kilbride (Lab)]

My Lords, we are 584 hours away from Brexit and we are discussing business preparedness, or the lack of it. Labour has repeatedly urged the Government to take no deal off the table, and believes that the threat of no deal is creating unnecessary uncertainty for businesses both large and small. In your Lordships’ House, we are dealing daily with SIs that will impact on the services, productivity and finances of SMEs. Would not the Minister’s department’s time be better spent dealing with some of the more pressing issues for SMEs, such as the scandal of late payments and other day to day issues, rather than working on a no-deal Brexit that nobody wants?

[Lord Henley]

My Lords, all I can do is to repeat the position we are in at the moment. No deal is the default position. What is important is that we get a deal; that is what my right honourable friend the Prime Minister is seeking to do. If she had support from the party opposite, that would be a great deal of help.

[Lord Fox (LD)]

My Lords, the overwhelming cry coming from businesses large and small is: “Tell us what our trading environment will be in 25 days’ time”. Does the Minister really think that any of the messages will get through when the credibility of the Government is completely shot if they cannot answer that question?

[Lord Henley]

My Lords, we have been offering advice to businesses as to what they ought to do. We also made it clear in the document we published last week that we think a lot of businesses have not done what they ought to be doing: making preparations in case there is no deal because, as I made clear, no deal is the default position. What is important is that we get behind the Prime Minister and get a deal.

[Lord Tugendhat (Con)]

My Lords, in the light of what my noble friend said about making ample information available, is he able to cast light on the report in the Financial Times that the Department for International Trade is to cease the preparedness meetings that it has been holding with business? It is of course public knowledge that the department is very much behind hand in reaching agreements with our trading partners. If it is now ceasing to provide information, that really seems to be something of a dereliction of duty.

[Lord Henley]

My Lords, without having seen that report in the Financial Times, I cannot comment on it but I can make it clear that my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy is having regular meetings with representatives of all businesses. He will continue to do so to offer as much advice and support as he and the department as a whole can.

[Baroness Symons of Vernham Dean (Lab)]

My Lords, on the question raised by the noble Baroness, Lady Wheatcroft, the Minister assured the House that if all 200,000 small businesses which have not yet registered do so, there is the capacity to deal with that before 29 March. Can he assure the House on the very important point that the noble Baroness raised?

[Lord Henley]

My Lords, I am satisfied that there is capacity to deal with those businesses which want or need to do so.

Designs and International Trademarks (Amendment etc.) (EU Exit) Regulations 2019

Lord Henley Excerpts

Monday 4th March 2019 Grand Committee

Moved by

[Lord Henley]

That the Grand Committee do consider the Designs and International Trademarks (Amendment etc.) (EU Exit) Regulations 2019.

Relevant document: 16th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B)

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, the Intellectual Property Office has been preparing for a range of outcomes to our negotiation with the EU. The regulations form part of that preparation and are intended to ensure that the system governing intellectual property rights in the UK continues to function in the event of no deal being agreed when we leave the EU on 29 March.

For designs, much of our existing domestic legislation derives from EU directives, which are implemented through the Registered Designs Act 1949. Under the EU design regulation, the appearance of a product can be protected under a registered community design, granted by the EU Intellectual Property Office. This system runs in parallel to our domestic system, so protection in the UK can currently be obtained by registration under either or both the EU or UK systems.

Shape and appearance can also be protected under the unregistered community design. This is automatically established when a design is first shown to the public and is particularly valued by design-intensive sectors such as the fashion industry. Like registered design, the UK provides a parallel domestic system. However, the terms of UK unregistered design are different from those of EU unregistered design. After exit, protection in the UK for existing registered and unregistered designs under the EU regulation will be lost. The draft instrument uses the powers provided by the European Union (Withdrawal) Act 2018 to address deficiencies in UK design law that would arise upon exit and to ensure that such EU design rights are not lost.

In addition to the rights granted by the EU Intellectual Property Office, businesses can obtain EU-wide registered design and trademark protection through an international system administered by the World Intellectual Property Organization. This system enables businesses to protect their designs and trademarks in multiple territories via a single application, filed in one language. Both the EU and UK are contracting parties to this system. Like registered EU rights, international EU rights are protected through EU regulations, meaning that a failure to act will result in the protections afforded to these rights also being lost.

This instrument ensures that replacement rights will be provided to those who own registered EU designs on exit day in the form of a “re-registered” UK design. We will preserve UK protection through the “continuing unregistered design” for those who hold unregistered EU design rights at exit day. These new UK design rights will be fully independent of the corresponding EU right. However, they will retain the effective date of the EU design and, in the case of a reregistered design, any other relevant dates that were filed as part of the original EU application.

Because the terms of EU unregistered design right are broader than those provided by existing UK unregistered design, we are also introducing a new type of UK right called “supplementary unregistered design”. In doing so, we will ensure that the full range of design protection provided in the UK prior to exit day will remain available after we leave the EU. This new right will function alongside existing UK unregistered design. An EU unregistered design that exists before exit day will continue to provide protection in the UK through the continuing unregistered design, while those who disclose new designs in the UK after exit day will enjoy continued access to the characteristics of EU unregistered design through the new supplementary unregistered design right.

The instrument also ensures that registered designs and trademarks which are protected in the UK through EU designations under the Hague agreement and the Madrid protocol will continue to be protected in the UK after we leave the EU. For international designs that designate the EU, we will create comparable reregistered UK designs just as we are with EU designs registered at the EU Intellectual Property Office. For international trademarks designating the EU, we will create a comparable UK trademark, taking an approach similar to that set out in the EU trademarks exit SI, recently approved by both Houses.

As with reregistered designs and comparable trademarks being created from registered EU designs and trademarks, these new rights will be fully independent of the corresponding international designs and trademarks, but they will inherit their effective dates and will be treated as if applied for and registered under UK law.

The instrument further explains the approach that will be taken for registered community design applications and international design and trademark applications which are pending on exit day. Those with such a pending application will be able to file a new application in the UK, claiming the earlier filing date of the EU application. To claim the earlier filing date, the application must be submitted to the IPO within nine months of exit day.

The instrument also sets out provisions to accommodate other particulars of EU and international design and trademark protection, including deferment of design publication and the use of subsequent designations to create multiple EU protections under a single international trademark registration. As these new UK rights can be challenged, assigned, licensed and renewed in their own right, the instrument also contains provisions to accommodate those procedures.

Finally, there are miscellaneous amendments to existing UK trademark and design law to reflect the fact that the UK will no longer be an EU member state or a member of the European Economic Area. Although this SI has not been subject to a formal consultation, the IPO has discussed options for preserving EU and international design and trademark rights with both UK stakeholders and the World Intellectual Property Organization. These regulations represent the culmination of those discussions. The IPO ensured that businesses and legal practitioners were made aware of these changes through technical notices published in September last year, and it will also provide full business guidance once the draft instruments are made.

The regulations are a small but vital part of ensuring that the intellectual property system continues to function if the no-deal outcome arises. I hope that noble Lords will support them and I commend them to the Committee.

[Baroness McIntosh of Pickering (Con)]

My Lords, I thank my noble friend the Minister for setting out the scheme. I have just one or two questions so as to gain a greater understanding of the background.

The Explanatory Note, which forms part of the statutory instrument, states on page 69:

“An impact assessment has not been published for this instrument as no, or no significant, impact on the private, public and voluntary sectors is foreseen”.


The Explanatory Memorandum then sets out precisely what the costs are. If the department has not conducted an impact assessment, how can it be sure that no significant costs will arise? If a design is not reregistered, will it lapse? In the view of my noble friend and the department, is a deadline of nine months following exit day for reregistering a design sufficient, given the sheer volume of designs that I understand are in play? There seem to be different figures for the costings, and it would be helpful to know what those costings are.

Paragraph 7.10 on page 5 of the Explanatory Memo-randum, under the heading “Deferred publication”, says:

“Rights holders with a deferred design at EUIPO that request deferment in the UK will not be able to defer publication for more than 30 months overall”.


Therefore, there is a discrepancy, with one deadline being nine months and the other being 30 months. Does that mean that rights holders will have an extension between nine and 30 months? Presumably this would not be affected by something subsequently being negotiated in the event of a deal being agreed, as with earlier statutory instruments. Paragraph 7.10 goes on to say:

“As these designs will already be examined by the EUIPO, no formal examination … will take place at the UK IPO”.


That seems sensible indeed.

--- Later in debate ---

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am very grateful for the comments of the noble Baroness, Lady McIntosh, and the noble Lord, Lord Clement-Jones, which have covered much of the ground that I was going to raise, so I shall not go back over it. As both of them have said, this is a complicated area. My feeling from the comments made is that it is likely to become more complicated after a no-deal exit, not least because of an additional design right.

On that point, as the noble Lord, Lord Clement-Jones, pointed out, it has taken this rather odd set of circumstances to persuade the Government that there is a problem with our whole range of design rights. We have raised in the House before the question of why there is such a focus in the UK on registered design rights, as against the very much larger number of unregistered design rights used in fast-moving industries such as fashion and why those industries do not use the registration system at all. Bringing in another model just to try to fill a gap seems to overcomplicate the whole structure, although it provides additional cover, as the noble Lord said, and I welcome that.

Does the Minister recognise that an issue is looming here? Do we need another in-depth look at this whole area to try to unbottle some of the problems that we have caused in the past few years by bringing in additional layers of legislation and regulation and consider whether we need a new approach, because the industry has moved away from the current regulatory structures?

Having said that, a number of points raised need answers, and I look forward to hearing what the Minister will say. I have only a couple to mention. The noble Baroness mentioned paragraph 12 of the Explanatory Memorandum. I have two points on that. At paragraph 12.11, there is a rather odd piece of typography. It states:

“An Impact Assessment has not been prepared for this instrument because [].”


There are just two square brackets, so we do not know why it was not prepared, although we can guess. Can the Minister confirm why we have not had an impact assessment and not leave us hanging? It is a bit like a missing third act.

I have a point about cost recovery, which was well argued by the noble Baroness. The resourcing issues of this are not small: they may be £500,000, they may be £375,000, but they are still substantial. On a cost-recovery model, who pays? Are we saying that designers currently registering designs—which is about 10% of the total design component of industry—are carrying the costs not only of the existing arrangements but the additional burden of having to produce another registered design system introduced because of the possibility of defects in the relationship of those registered on the European basis? It is all very well saying that this is a benefit to the designers, but it is at a cost. I should be grateful if the Minister would confirm my reading of the situation.

I asked this question on the previous statutory instrument, but I did not get a full answer. We seem again to be engaging in asymmetry. There would be an argument for saying that if we have to have a no-deal exit, when that happens, the arrangements for design protection must be limited to the UK because no reciprocity is promised from the EU, yet here we are saying that we in the UK will continue to recognise the registration process which takes place in EU countries after we leave but are unable to offer that right to those who register designs with the UK, even with the additional right. Why are we doing that? Is that an asymmetric approach, or is there something we do not know about the arrangements that have been made for that? I am not against what has been going on. However, if I am right, I think the consequences are that, while overseas or European designers may benefit from having their designs copyrighted—the catwalk example is a good one, in that you can have a fashion show in Paris and be confident that your designs will be covered in Britain—in Britain, we will not be able to do that because there is no necessary reciprocity. That seems unreasonable and I would be grateful to know who benefits from it when we hear from the Minister.

[Lord Henley]

My Lords, I will start with consultation and explain what we did. I will not repeat what I said on the previous SI, but the important thing is that, although we were not able to consult fully in the way one might have wished, the IPO has engaged with businesses on the implications of exit ever since the referendum result. We have sought to maximise continuity in the no-deal scenario and in the early stages of negotiation on the future partnership. As I said earlier, revealing the details of our continuity approach through public consultation might have risked that. The individuals who took part in the technical review did so in a personal capacity; we invited all sorts and I hope we had a representative group. They were chosen because of their past experience as representatives of various stakeholder bodies which usually engage in consultation with the IPO.

[Lord Stevenson of Balmacara]

I thank the Minister for giving way. We have been over this ground before and I do not want to prolong the debate. However, the essential difference that is now emerging across all the SIs that we have been considering is the question of whether consultation has been carried out under Cabinet Office rules or not. If it is done under Cabinet Office rules, there are procedures, processes and resulting consequences, including publication and the reporting of all evidence received. I think we all agree that this would probably have helped materially in the process of going through all these statutory instruments.

The second point is that the consultation has then got to be on an open and representative basis, rather than selecting people from organisations with which the department, quite rightly, has ongoing and continuing discussions. The problem with this approach is that it tends to give the impression that those who have been consulted are speaking in their official capacity, when the Minister is making the point quite clearly that that is not the case and that this is very much an informal, personal discussion, because the consultation is not happening under Cabinet Office rules. That is the point we are all making; I do not think we need to dwell on it, but we should accept that that is the situation so that we do not get mixed up between the two systems.

[Lord Henley]

I am glad that the noble Lord is prepared to accept that point. Obviously, we could not follow the Cabinet Office rules—I was trying to make that clear. They are not strict in that respect and there was no absolute necessity to follow them on this occasion. However, we wanted to make sure that we consulted enough and consulted appropriate people to make sure that we were not going into this blind—not that we would have been doing so even if we had not consulted.

I move on to the other hardy perennial—the impact assessment. We assessed the impact using the better regulation framework in line with the Treasury’s Green Book guidance. The impact was deemed to be less than £5 million so a full impact assessment was not required. Analysis is focused on the direct impact of the relevant SI compared with the current legislation, and analysis of the wider impacts of the UK’s exit from the EU has previously been published in the form of the long-term economic analysis, which was published in November 2018. My noble friend asked how we could be so sure of that. I want to make clear that our renewal fee estimates are based on the proportion of registered community designs currently held by UK businesses. That figure is 7% and the calculation was based on that.

My noble friend then gave the figure of 375,000 or roughly half a million and asked whether the fees would increase because of this. UK-registered design fees were subject to significant reductions in 2017. We have no plans to increase these fees to accommodate the cost of converting registered community designs. My noble friend also asked whether a design would be allowed to lapse if it were not reregistered. Creation of a reregistered design will be automatic—the holder will be granted the reregistered design if he or she holds a registered community design on exit day.

[Lord Clement-Jones]

My Lords, I understand that there is provision for reregistration—as the Minister describes it—for European designs that are in the pipeline.

[Lord Henley]

I think the noble Lord is correct. If I have got that wrong I will write to him. He also asked about designers being able to disclose their unregistered designs in the UK and whether they would be protected from copying in the EU. A registered design will need to be disclosed in the EU first to be protected there should we leave without a deal. The statutory instrument provisions allow us to negotiate reciprocal arrangements on first disclosure with third countries—which may be the EU, individual countries within it or wider—but that has to be a subject for a future agreement.

My noble friend also asked about the discrepancy between the nine months’ deadline for pending applications and 30 months for deferred publication. The UK will honour the EU deferment period. We will not allow designs to exceed 30 months in total. Applicants will be allowed to file an application claim for a 12-month UK deferment within the nine-month period. However, in some circumstances the full 30 months will fall short. Unless already subject to deferment, applicants will have only 21 months in total.

[Baroness McIntosh of Pickering]

Does the Minister think it is clear from the instrument that there is the 21-month discrepancy? He said in moving and introducing the regulations that it was nine months. I picked up from reading the statutory instrument that it was 30 months. He has now said that it will be 21 months. I am concerned that if I were a designer and not au fait with these instruments I would be confused about the period.

--- Later in debate ---

[Lord Henley]

As I said, 21 months is 30 months less nine months. I was trying to make clear that the EU deferment period will not allow designs to exceed 30 months in total. Within the nine-month period, applicants will be allowed to file a UK application claim for a 12-month deferment. However, in some circumstances the full 30 months will fall short, unless already subject to deferment and then applicants will have only 21 months in total. I think it is clear—if not, I might have to write to the noble Baroness, Lady McIntosh, on that matter.

I will move on to the question asked by the noble Lord, Lord Stevenson, about the qualification for holding a UK unregistered design right. Currently, the UK law says that someone who lives in or carries on a business in a member state can claim UK unregistered design protection. That is because of Section 217 of the Copyright, Designs and Patents Act, which says that any qualifying person—someone who lives in or runs a business in the qualifying country, which is defined to include a member state—can claim a UK unregistered design right. If we did not make any change to this, after exit day people and businesses in the EU would be able to claim new UK unregistered design rights while people and businesses in the UK would lose their equivalent rights in the European Union. That would create an imbalance between the UK rights holders and the EU rights holders. The UK law is therefore being amended to limit the geographical criteria for a qualifying person to claim unregistered design protection. That means that, after the UK’s departure from the EU, a company based in a member state will not qualify for UK unregistered design.

Finally, I will address a point made by the noble Lord, Lord Clement-Jones, about what would happen if one had a registered community design application which was still pending in the EU Intellectual Property Office on exit day. Businesses with applications which are still pending on exit day must file new UK-registered design applications to obtain continued protection in the UK after exit. However, where a new UK application is filed within nine months of exit day, it will retain the earlier filing date recorded against the corresponding EU application. That will ensure that those with pending registered community design applications will not lose any rights in the UK.

I go back to the point raised by my noble friend, to try to make it a bit clearer, on the nine months provided for pending trademark and design EU applications. The time period was established following informal consultations, and stakeholders who were consulted were content in the main with those nine months. I appreciate it was not the full consultation the noble Lord would have liked.

I think I have answered most of the questions—

[Lord Clement-Jones]

Before the Minister sits down, could he answer my question on exhaustion of rights?

[Lord Henley]

I apologise to the noble Lord. Would he be happy to allow me to write to him on exhaustion of rights? I think that might make life easier.

[Lord Clement-Jones]

I thank the Minister. It is of course a very important aspect for the fashion industry.

--- Later in debate ---

[Lord Henley]

I fully accept that and will certainly write to the noble Lord as soon as possible. I beg to move.

Motion agreed.

Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019

Lord Henley Excerpts

Monday 4th March 2019 Grand Committee

Moved by

[Lord Henley]

That the Grand Committee do consider the Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019.

Relevant document: 17th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B)

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, these regulations were laid before the House on 7 February 2019.

The protection of consumers from unsafe products is at the heart of the legislation before us today. It has a single yet crucial objective—to ensure that, in the event of no deal, the UK continues to have a robust and highly effective product safety and legal metrology regime. It ensures continued protection for consumers across the UK and provides certainty and clarity for businesses.

The UK product safety and legal metrology regime is among the strongest in the world. It is vital that we continue to retain such a robust system, even if the UK leaves the EU without a deal in place. The legislation will not change the existing system or approach taken, which I know is supported by stakeholders. The changes are limited to those necessary to ensure that the 38 product safety and metrology laws it covers will still work effectively on exit.

Before I say more, I would like to explain the approach we have taken, because I appreciate that some noble Lords may have concerns that such a large instrument may be difficult to navigate.

[Lord Stevenson of Balmacara (Lab)]

My Lords, it is not the navigation but the strain on our hands.

[Lord Henley]

I make no comment.

I assure the Committee that this approach has been designed to increase understanding and reduce the number of similar instruments that would otherwise be needed. Many cross-cutting issues are the same for different products. These have similar definitions, obligations and requirements. As a result they require similar amendments, which it makes sense to group together into one instrument rather than to separate out into many different instruments. Another reason for the size of this instrument is the lengthy technical schedules. These are used widely by industry, and incorporating them here from retained EU law makes it easier for businesses to see and understand the legislation as a whole.

During development of this instrument, we have been mindful of the impact on business of changes to processes as a result of the UK’s exit from the EU. Where possible, we have given businesses time to adjust, including an 18-month transition period for importers for any labelling changes and a 90-day transition period for companies notifying key safety information for cosmetic products already on the market. We have also engaged with businesses on the drafting. Drafts of the schedules were shared with stakeholders and feedback obtained. Stakeholders, including trade associations, industry experts and enforcement agencies, took part and welcomed this approach. As a result we have a better understanding of the main requirements and concerns of stakeholders, including businesses, and have been able to reflect these in the legislation that is before us today. In addition, and given the importance of this area of law, we have completed and published a full impact assessment to ensure complete transparency—despite the impact being below the threshold at which an impact assessment is required.

On the detail of the instrument, it is important to repeat that it will not change the UK’s approach to product safety. It keeps important elements; for example, it retains the requirement for conformity assessment to ensure that products meet the essential requirements set out in the legislation, including the need for assessment by third-party organisations where that is currently required. It retains the use of standards that give rise to presumptions of conformity with the legislative requirements, making it easier for businesses to ensure that their products are safe by following a designated standard.

Taking action to protect consumers from unsafe products remains vital, and this legislation ensures that the UK’s market surveillance system will continue to work to limit the number of unsafe and non-compliant goods available to UK consumers and businesses. It also gives ongoing recognition of existing authorised representatives in the European Economic Area for any appointed before exit, while those after exit will need to be in the UK.

For cosmetic products, due to the risk they pose to human health, responsible persons—who play a key role in ensuring the safety of cosmetic products—will be required to be based in the UK from the point of exit. By addressing these issues we are able to give business certainty and—crucially—we will retain our ability to remove unsafe or non-compliant products from the market.

To conclude, I hope that the Committee will agree that maintaining a functioning product safety framework in the event of no deal is essential both for consumer safety and business confidence. Without this legislation in place, there would be major risks to the safety of consumers—the safety of the toys our children play with, the cosmetics we all use every day, and the electrical items which are found in abundance in our homes. Maintaining these protections is vital to people across the country. I beg to move.

[Baroness Crawley (Lab)]

My Lords, I thank the noble Lord for setting out the Government’s position on this SI. When I first lifted the SI, which I understand weighs 4.5 kilograms, my first thought—

[Lord Henley]

The figure that I have is 2.54 kilograms, but I am quite happy to be corrected.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, I join other noble Lords in thanking the Minister for organising the meeting held last week on this SI—as has been said, it was very useful in covering a lot of the ground that otherwise would have needed to be raised today. It is interesting to have had the experience of going through such an extraordinarily large tome with so many details; it took me into areas of public policy where I did not think I would ever have to go. I particularly enjoyed, and of course immediately read first, the intoxicating liquor order 1988, which was closely followed by the strawberry regulations. Both were of immense interest and, for those who have not yet managed to get that far through the document, worth the journey.

I will not raise many of the points which have been made, but I will come back to a point raised during the meeting which has not yet been properly answered. There is substantial additional work implicit in the change in regulations, which has already been mentioned by the noble Earl, Lord Lindsay, and my noble friend Lady Donaghy, for the United Kingdom Accreditation Service and the Health and Safety Executive. It is not yet clear that the additional resources that may be required will be funded and that support will be offered. Could the Minister confirm that that will be the case? Additional work will clearly be required; it may be of a short-term and temporary nature, but I suspect that it will be continuing. Assurances need to be given that the additional work will be properly covered, or we will lose.

On that same theme, the Minister said as he introduced this that it was really all about consumer confidence and product safety. Of course, that will be only as good as the body and individuals which have to police it. That will largely fall to trading standards—we have already discussed some of the issues that are raised in this. I asked at the meeting, and ask again: what will the financial arrangement be for this? Clearly we want good product safety and consumer confidence, but will get them only if we pay for them. In the past it has been assumed that the additional work can be picked up by those responsible for trading standards, which are largely local authorities. When primary legislation has gone through this House in the past, we have also asked these questions and had assurances that substantive new additional work applying from primary legislation—such as the recent Bills going through this House—would be funded. Indeed, mechanisms for that have already been described and put in place. Can we again have some confirmation that the additionality implied in these regulations will also be funded?

[Lord Henley]

My Lords, I forget who it was who said, “Never apologise, never explain”, but I will start with an apology for the sheer size of this SI, which has received some comment—not just at this meeting, but at the meeting I held last week. I am grateful for the comments made by all those who came to that meeting and more widely by others, particularly the concerns of the Secondary Legislation Scrutiny Committee, on which the noble Baroness, Lady Donaghy, and the noble Lord, Lord Rooker, sit. I also discussed that with the chairman of that committee, the noble Lord, Lord Cunningham. I know he has also had correspondence with my honourable friend Kelly Tolhurst, who has ministerial responsibility for these matters within the department, and with my right honourable friend the Secretary of State.

--- Later in debate ---

[Baroness Crawley]

Will the Minister be kind enough to send me the list of organisations, businesses, market surveillance authorisations and consumer organisations involved in the consultation?

[Lord Henley]

I will certainly write to the noble Baroness on that and I hope that we can give further and better particulars, as they say in the law. She will then know exactly whom we have spoken to and I hope that she will feel content that we have gone out largely to the right people.

The impact on business was raised by a number of noble Lords. I explained what was behind the impact assessment, which was published on GOV.UK. We found the impacts as being de minimis; they are largely costs of familiarisation. I dare say that, because we are trying to replicate what already exists, familiarisation should not be too much of a problem. As is always right and proper, the impact assessment was shared with the Regulatory Policy Committee. I hope that the smooth arrangements we have put in place will help businesses in understanding that some of the new administrative requirements will make life easier and ease the impact of exiting the EU.

The noble Baroness, Lady Crawley, asked about the cosmetics database and whether I could guarantee that no consumer would be put at risk. She is right to emphasise the importance of this, because cosmetics can have a detrimental effect if not properly policed and supervised in the right way. The SI includes a requirement that all cosmetic products must be safe for human health. Each cosmetic product has a responsible person to ensure that it is safe before it is placed on the market. I assure her that preparations for the UK database are well advanced and trading standards has the power to take action against unsafe products.

[Baroness Burt of Solihull]

Can I take the Minister back to the costs of labelling and of having to register with two separate bodies? Has any assessment been made of the cost of that? It is an issue that was raised by others who know a lot more about this than I do.

[Lord Henley]

That is not a direct cost of the SI; it is a cost of leaving the EU. That is why it was not part of the impact assessment. I will, as I am planning to do for one or two other questions she raised, write to the noble Baroness on what the extra costs are likely to be for registering both here and in the EU.

My noble friend Lady McIntosh asked about the uncertainty of the loss of access to the product safety database and what effect it will have on consumers. The new product safety database will be available to all market surveillance scientists from exit day. The new service will give the UK national capability to collate information on unsafe and non-compliant products, share information and rapidly alert market surveillance authorities. In addition—as was raised by the noble Baroness, Lady Burt, who talked about RAPEX—the UK will retain access to any publicly available information on RAPEX.

[Baroness McIntosh of Pickering]

RAPEX is very similar to the food alert, which I think is called RASFF—the noble Lord, Lord Rooker, knows it by heart. My noble friend just mentioned information that will be publicly available, but it sounds as though we are not going to be part of it. This raises the question: if there was a rapid alert about a product in this country which we wished to share, would we have a reciprocal arrangement? Will that be part of the deal we hope to negotiate?

[Lord Henley]

That will be a matter for the deal. I was talking about what was publicly available from RAPEX. What we will make available and other such matters go beyond what we are debating at the moment, as we are discussing no deal, but they are matters which we should consider as part of the deal.

I move on to trading standard resources; the noble Baroness, Lady Donaghy, asked whether they were sufficient. I have to make it clear that I believe there are no new duties placed on trading standards. The Office for Product Safety and Standards has been working with trading standards to ensure that it has the capability to discharge its responsibilities, including working with the Chartered Trading Standards Institute on EU exit plans. She asked about the appointment of the new chief executive of the HSE. I am afraid I do not have any information on that, but I will add that to the many letters I will be sending out and will write to her.

My noble friend Lord Lindsay asked about the position of UKAS and whether it might be undermined by profit-seeking bodies coming in to take over its job. I make it absolutely clear that there will continue to be just one national accreditation body and that body only will be able to issue accreditation certificates demonstrating that organisations meet the approved requirements. We have it on the record now, but if my noble friend would like me to write to UKAS, I would be more than happy to do so.

The noble Baroness, Lady Burt, asked about the cost of changing to the UKCA mark and the new notified body. The SI means that most manufacturing companies will not have to use the UKCA mark. If a business needs to change to an EU body as a result of the EU’s position on the no-deal scenario, that will be a result of the EU’s position and it is something that would be part of any future negotiations. I also give her an assurance that we will need further legislation should we want to end CE marking recognition, so that will not come through as a result of this.

The noble Baroness asked about Electrical Safety First. Again, I will have to write to her on that. My noble friend asked for an assurance that we were not gold-plating, just as there were accusations when we were taking these things on board the other way many years ago. No gold-plating is going on here; we do not have the powers to gold-plate under the EU withdrawal Act. I hope all we are doing is providing a degree of certainty to the industries concerned and the public that things will continue as before.

Motion agreed.

Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2018

Lord Henley Excerpts

Monday 4th March 2019 Grand Committee

Moved by

[Lord Henley]

That the Grand Committee do consider the Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2018.

Relevant document: 12th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B)

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, the regulations were laid before the House on 19 December 2018.

Copyright law is largely harmonised internationally by a series of multilateral treaties, to which the UK and most other countries are party. Our membership of these treaties does not depend on our relationship with the EU and ensures that, in all scenarios after exit, UK copyright works will continue to receive protection around the world. Conversely, foreign works will continue to receive protection in the UK. However, there is a body of EU law on copyright that goes beyond the provisions of these international agreements. This has introduced EU-only rights—such as the sui generis database right, which provides EU-wide protection for EU database creators—and arrangements that facilitate the use of copyright content in cross-border services, such as the copyright country-of-origin principle, under which satellite broadcasters transmitting films and other copyright-protected works across the EU need permission from the copyright owner only for the state in which a broadcast originates, rather than in every state in which it is received.

A significant portion of UK copyright legislation derives from the EU copyright acquis and therefore includes references to the EU and member states. Without amendment, many of these references would become inappropriate after exit, either because they presuppose the UK’s membership of the EU and will not make sense once we are no longer a member state, or because they implement EU cross-border copyright mechanisms that, in a no-deal scenario, will become inoperable.

For those reasons we are introducing this instrument. In broad terms, it will preserve, where possible and appropriate, existing arrangements in UK copyright legislation by making minor, correcting amendments. The only exceptions to this principle of continuity arise in our implementation of some of the EU cross-border copyright mechanisms. It is unavoidable that the reciprocal element of these mechanisms between the EU and UK will become inoperable in a no-deal scenario, because they depend on reciprocal provisions that apply only between member states. This SI therefore amends our implementation of these mechanisms.

In some cases, it is appropriate to continue to extend a cross-border provision to the EU on a unilateral basis, because providing continuity in this way benefits UK consumers or businesses. This is the case for the country-of-origin principle in satellite broadcasting, where maintaining the effect of existing law will support UK consumers’ continued access to foreign television programming. For other mechanisms, providing continuity would be detrimental to those in the UK: for example, to continue to provide database rights for EU creators without reciprocal action by the EU would put UK businesses at a competitive disadvantage. This instrument will restrict those mechanisms to operate on a purely domestic basis, or bring them to an end, as appropriate.

We know that there are concerns over lack of consultation, and I would like to offer assurances that we engaged with affected stakeholders as far as possible within the constraints. There is no question that formal consultations are an important part of the process of engagement, but they are not the only part. We have regularly engaged with and listened to the concerns of stakeholders from across the creative and digital industries on an informal basis since the referendum. This engagement has given us a sound basis from which to prepare these regulations, and we are grateful to all those who have shared their views on copyright and EU exit.

In support of this instrument, we have published three impact assessments, each of which has been green-rated by the independent Regulatory Policy Committee. Those correspond to three of the most significant cross-border mechanisms: sui generis database rights; the copyright country-of-origin principle; and cross-border portability of online content services, which allows EU consumers to access their online streaming or rental services as if they are at home when they visit another member state.

Both the Secondary Legislation Scrutiny Committee and the European Statutory Instruments Committee commented that those assessments did not provide sufficient detail on the impacts of no deal on UK stakeholders. The reason is the same in each case: impacts on UK consumers, rights holders and broadcasters will result from the UK being treated as a third country in a no-deal scenario—not from these regulations, which amend the UK’s implementation of the cross-border provisions and will primarily affect EU rights holders, consumers and broadcasters.

In line with the better regulation framework, the impact assessments consider the effects of this instrument, and not the impacts that arise from the legislation of other countries and which we cannot avoid in a no-deal situation. However, we recognise that these impacts exist and that UK stakeholders will need to be aware of them. That is why the Government published in November 2018 a long-term economic analysis of the impacts of leaving the EU, and detailed guidance on what a no-deal Brexit would mean for copyright and related rights. That gives consumers, rights holders, businesses and other organisations the information that they need, in plain English, to make informed preparations for all outcomes.

These regulations will provide certainty, clarity and, as far as possible, continuity for UK businesses, rights holders and consumers as we leave the EU. I commend them to the Committee.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am delighted that this statutory instrument is being considered as an affirmative one, which is probably all my fault as I wrote to the relevant committee on 1 November setting out my interest in the subject and why I believed that it should be discussed. My interest dates back to having been an MEP and MP, and I spent time as a stagiaire in DG IV—as it then was—of the EU Commission, although I was concerned more with anti-trust at that time than intellectual property.

I would like to press the Minister on three separate issues, although he will be pleased to know that I am not against the statutory instrument in any shape or form. We are obviously helped by the findings of the two committees, for which I think that this Committee will be grateful. The report of the Secondary Legislation Scrutiny Committee mentions, as one reason why it was critical and thought that the House would benefit from such discussion, the assessment of the impact of the loss of the reciprocities. The Minister referred to that. As UK consumers while in another member state, we were going to lose the right to benefit from Netflix—if we only knew how to do it, of course—but visitors from another member state to this country would continue to benefit.

I understand the conclusion that the Government have drawn. However, given the extensive range of copyright issues covered in this instrument and that it seeks to establish reciprocity in relation to the loss of free access to portable online content services for consumers, how did the department reach that decision without having made an assessment of the impact of that loss on UK consumers?

We have heard from the Minister this afternoon that there has been a broad and general paper, from which I am sure that we will all benefit, but what was the basis for reaching the decision? Has he had any discussions with Ministers of other member states to see whether, having given up reciprocity, there is any way we might revert to it in future when we are negotiating a deal? Is that lost for ever, or is it only in the context of the no-deal statutory instrument before us today?

How wide an impact assessment has the department done in preparing for this statutory instrument? Do we know either how many UK-based broadcasters will be affected, how the loss of portability of online content may impact on UK consumers or how much the facility has been used in the past? From my experience, if you are visiting Brussels in the capacity of an MEP or as a lawyer, I frankly do not think that you would have much time to watch Netflix—I see that the shadow Minister disagrees. However, if you are there on holiday, it would obviously have a greater impact. The conclusion reached by the Secondary Legislation Scrutiny Committee Sub-Committee B is that it would have been helpful to provide more information, if the department has it, on the potential impact of EU exit on both UK businesses and consumers in this area.

We are apparently seeking to preserve the UK’s compliance with the requirements of the Marrakesh treaty—where these treaties are drafted and signed seems ever more exotic. I understand that we are seeking to ratify the treaty in our own right. Does my noble friend have a proposed timetable for that? We have learnt from other departments that ratifications of treaties and deals are not quite as straightforward as we might believe. I should be grateful for a response to those questions as well as to my overall question as to whether we are seeking reciprocity in the long term through a deal.

--- Later in debate ---

[Lord McNicol of West Kilbride]

Well, my next point is on lack of consultation. The Minister touched on this because, again, he obviously saw this coming down the line. There was no detail in the statement about the stakeholders. In fact, there was a comment—unfortunately I have not written it down—on how consultation has been ongoing since the decision was taken on Brexit. That may well the case, but the specifics of the issues around this area are really important. It would have been nice, and still would be, to get a little more detail on who the consulted stakeholders are, when they were consulted and what that consultation looked like.

I will pick up on another of the Minister’s comments. To paraphrase, he said that the general public will know about this because we have this information about the loss of reciprocity on our website. Until picking up this SI and coming here to respond on behalf of the Opposition, I was not aware—which was obviously my fault—that reciprocity would be lost following no deal or the UK’s going into a third-country situation. The idea that it is widely known that individuals will lose access to online content—whether it be Netflix, iTunes or other aspects of it—is just not correct. If we are going to end up in this situation, some information from the department to the wider British public, whether through the businesses or the organisations, would be a good thing. It would make the public aware of what was coming down the line if we ended up with no deal.

I will not pick up on all the other issues; they were covered very well by the noble Baroness and the noble Lord. I am sure the Minister will pick up on the points about the Marrakesh treaty, so I will leave it there.

[Lord Henley]

I thank all noble Lords for their contributions. I will start off with consultation. At the time we were developing these regulations, we were in the early stage of negotiations. Revealing our continuity of approach through a public consultation might have risked our negotiating position, so it was not possible to conduct that full formal public consultation of the sort one would normally like. Within those constraints, the Government engaged with stakeholders in the creative and digital industries as far as possible: in August last year, officials in the department held a whole series of industry round tables to discuss no-deal planning with publishers, collective management organisations, broadcasters, technology firms, museums, archives and educational establishments. I could undoubtedly write to noble Lords and give them greater detail—for example, on the alliance for IP and the British Copyright Council, both of which are representative bodies that cover a broad range of copyright needs. I believe we engaged as far as was right and proper.

However, as the noble Lord, Lord Clement-Jones, and my noble friend Lady McIntosh, stressed, there is an impact from no deal. We did an impact assessment on these regulations and the impact is minimal, but the wider impact of leaving without a deal will be greater. We recognise that leaving the EU without a deal will lead to disruption in the field of intellectual property for the UK’s creative industries. However, in passing this instrument, we will provide continuity wherever possible and, where changes to existing arrangements are unavoidable, we will ensure that clear and appropriate legislation is in place. I believe that that will minimise, as far as possible, disruption to the creative and digital industries, whose work obviously depends on an effective intellectual property framework.

The noble Lord, Lord Clement-Jones, asked what the Government were doing to support UK broadcasters facing the loss of the AVMSD and the copyright country-of-origin principle. I assure him that it is still the Government’s intention to secure an agreement with the EU on our future relationship, and we set that out in last year’s White Paper. We want any deal to involve the best possible arrangements for the broadcasting sector. If we leave without a deal, broadcasters might face disruption due to the EU copyright country-of-origin principle ceasing to apply to the UK. Therefore, again, we sought to give broadcasters and others as much information as possible about the implications of no deal by publishing technical notices and detailed guidance on what that would mean for copyright. However, I make it clear that we will continue to seek a deal.

I also make it clear to the noble Lord and to my noble friend Lady McIntosh that we will continue to seek reciprocity. The political declaration provides a good basis on which to negotiate our future relationship with the EU on these matters. For copyright, this includes a commitment from both parties to maintain high levels of protection for database rights and artists’ resale rights. The specifics of our future relationship with the EU will obviously be the subject of those negotiations. However, as set out in the political declaration, our aim will be to make sure that the agreement continues to stimulate innovation, creativity and economic activity.

Further on reciprocity, the EU portability regulation works through reciprocal application of the cross-border rules. The regulations that we are dealing with today will not cover UK/EU travel in the event of no deal, and the UK obviously cannot replicate the effect of existing arrangements on a unilateral basis. However, keeping the portability regulation in UK law after exit would not have the same effect as an agreement on mutual cross-border portability. Instead, it would place unreciprocated and inappropriate obligations on service providers operating in the UK. Whether we can continue to agree reciprocal portability with the EU will have to be a matter for detailed negotiations. At this stage, I cannot go any further than that.

My noble friend also asked how the IPO came to this decision without an assessment of the loss of service in the UK. UK consumers of online content services might see changes in their services when they visit the EU after exit. This could range from being offered different content to having their access restricted. Ultimately, this will depend on the licences that their service providers have in place and the terms of service. That is a direct result of the UK being considered a third country under the portability regulation. Again, I stress that it is not something that we can deal with unilaterally.

My noble friend also asked about the effect on UK broadcasters. Without a deal, member states may cease to apply the country-of-origin principle to broadcasts from the UK, which will mean that UK broadcasters that transmit across the EU may need to renegotiate their licences to acquire rightholder permissions for every member state in which their broadcast is received. The issue arrives out of EU legislation; again, it is not something that we can address unilaterally.

I turn to the question which all three noble Lords asked about the ratification of the Marrakesh treaty. We are committed to making sure that people with disabilities continue to benefit from improved access to copyright-protected works. We are on track to ensure that we are able to ratify the Marrakesh treaty in our own right as soon as possible after exit. Our ratification will then need to be accepted by the World Intellectual Property Organization before we are once again considered a member of the treaty. While there is likely to be a delay between exit and the acceptance of our ratification in a no-deal scenario, we are working hard to ensure that this will be as short as possible.

There were a few more questions. The noble Lord, Lord McNicol, asked for any further information from the department explaining no-deal issues. I go back to the October 2018 guidance, which sets out in pretty clear terms what no deal means for copyright. I have a little more detail about who we consulted, but I do not think it adds anything to what I said before. I assure noble Lords that this included representatives and trade bodies from commercial broadcasters, collective management organisations, libraries and archives, tech firms, publishers, authors and photographers. I do not think I need to write with any further points. I think that deals with most, if not all, of the points raised, but I see that the noble Lord, Lord Clement-Jones, would like to come in.

[Lord Clement-Jones]

Could the Minister confirm that nobody at any level of the Government has any clue about the full cost of clearing with all those EU countries, which will now be necessary for those broadcasters?

[Lord Henley]

My Lords, I am afraid I cannot give any figure of that sort to the noble Lord and I am not sure it will be possible to do so. If I can do better, I will certainly write to him,

[Lord McNicol of West Kilbride]

On the consultation, the Minister helpfully outlined a number of organisations. Were the SI and the issues around intellectual property that we are discussing today discussed as part of that round table?

[Lord Henley]

My Lords, I stress—I think I made this clear—that I used the words “round table” in the plural. There were a number of round tables and I am sure matters of the sort that are coming up today were discussed. If they were not, I will certainly write to the noble Lord, but I cannot believe that they were not discussed.

[Lord McNicol of West Kilbride]

It would be helpful to know with which organisations intellectual property was discussed.

[Lord Henley]

I commit to writing to both noble Lords on that issue. I beg to move.

Motion agreed.

National Minimum Wage (Amendment) Regulations 2019

Lord Henley Excerpts

Monday 4th March 2019 Grand Committee

Moved by

[Lord Henley]

That the Grand Committee do consider the National Minimum Wage (Amendment) Regulations 2019.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, the regulations were laid before the House on 28 January 2019. Their purpose is to increase the national living wage and all the national minimum wage rates from 1 April 2019. The regulations also include an increase in the accommodation offset rate, which is the only benefit in kind that counts towards minimum wage pay.

The national living wage has had a positive impact on the earnings of the lowest-paid. Between April 2015 and April 2018, those at the fifth percentile of the earnings distribution saw their wages grow by almost 8% above inflation. That is faster than at any other point in the earnings distribution.

The labour market has continued to perform well. The employment rate is at a record high of 75.8% and the unemployment rate is at 4%, the lowest since the 1970s. Increasing the minimum wage is one more way in which the Government’s industrial strategy is boosting people’s earnings power and seeking to raise productivity throughout the UK.

From April, the national living wage for those aged 25 and over will increase by 38p to £8.21, which is a 4.9% increase. The 38p increase in April will mean that a full-time worker on the national living wage will see their pay increase by more than £690 over the year. The national living wage is on course to reach the Government’s target of 60% of median earnings in 2020. The annual earnings of a full-time minimum wage worker will have increased by more than £2,750 since the introduction of the national living wage in April 2016.

The 21 to 24 year-old rate will increase by 32p, meaning that those in that age group will be entitled to a minimum of £7.70, an annual increase of 4.3%. Those aged between 18 and 20 will be entitled to a minimum of £6.15, an annual increase of 4.2%. Those aged 16 and 17 will be entitled to a minimum of £4.35, an annual increase of 3.6%. Finally, apprentices aged under 19, or those aged 19 and over in the first year of their apprenticeship, will be entitled to £3.90. This is a 5.4% increase and is the largest increase of all the rates that we are debating today. All these above-inflation increases represent real pay rises for the lowest-paid workers in the UK.

The Government’s green-rated impact assessment estimates that more than 2.1 million people will benefit directly from the regulations. All the rates in the regulations have been recommended by the independent and expert Low Pay Commission. The LPC brings together employer and worker representatives to reach a consensus when making its recommendations. The Government asked the Low Pay Commission to recommend the rate of the national living wage such that it reaches 60% of median earnings in 2020, subject to sustained economic growth.

For the national minimum wage, the LPC has recommended rates that increase the earnings of the lowest-paid young workers without damaging their employment prospects by setting it too high. I thank the LPC for the extensive research and consultation that has informed these rates recommendations, all of which is set out in its 2018 report published in November. At Budget 2019, the Chancellor will announce the LPC’s remit in the years after 2020. The Government have an aspiration to end low pay. This year, we will engage with the LPC, workers and businesses to balance this ambition with the need to protect employment for lower-paid workers.

The Government recognise that as the minimum wage rises, there is a higher risk of non-compliance as a larger share of the workforce is covered by the minimum wage. The Government are committed to cracking down on employers who fail to pay the national minimum wage, and we are clear that anyone entitled to be paid the minimum wage should receive it. Consequently, the Department for Business, Energy and Industrial Strategy has almost doubled the budget for enforcing the national minimum wage and national living wage. Funding reached £26.3 million this year, up from £13.2 million in 2015-16.

HMRC follows up on every complaint it receives, even those which are anonymous; these include those made to the ACAS helpline, via the online complaint form or from other sources. Increasing the budget allows HMRC to focus on tackling the most serious cases of wilful non-compliance. It also increases the number of compliance officers available to investigate national minimum wage complaints and conduct risk-based enforcement in sectors where non-compliance is most likely. In 2017-18, HMRC recovered pay arrears in excess of £15.6 million for over 200,000 workers.

Sustainable increases in minimum wage rates depend on strong economic fundamentals—and those of the UK are strong. The economy has now grown for 24 quarters in a row—the longest streak in the G7. Evidence has also long told us that investment in human capital is crucial for the long-term productivity of the workforce. The industrial strategy sets out our long-term vision for increasing productivity, including through raising the minimum wage, and so boosting the earnings power of the lowest-paid workers. Through these regulations, the Government are building an economy that works for everyone. I commend them to the Committee and I beg to move.

[Baroness Donaghy (Lab)]

My Lords, I welcome this statutory instrument and the increases outlined by the Minister. As he knows, next month will be the 20th anniversary of the introduction of the national minimum wage, and I had the honour of being one of the founding members of the Low Pay Commission at the time. The recommendations we made impacted on and benefited 1 million women—and, incidentally, the world did not come to an end, which some forecasts had said would happen.

I am pleased that successive Governments have upheld the principles laid down by the original committee, and I hope that that will continue. Obviously, this was before the national living wage was introduced. However, one omission from our very first report in 1998, before the implementation, was the issue of accommodation offset. We were asked as a committee to look at that again, because we had not seen the significance of it.

I well remember being taken with the committee down to a convent in the middle of the Devon countryside to be gently lobbied by the Mother Superior and a number of nuns about the importance of having an accommodation offset. The Minister will know that it might have been gentle lobbying, but, my goodness, we were in absolutely no doubt whatever about the strength of feeling involved. The experience we had on the committee is a memory I will take with me for a long time. We were conscious that we were creating history, and I am very glad indeed that this is still here for us to admire.

--- Later in debate ---

I understand the logic behind that, which was explained well by my noble friend, but I do not understand the differential approach. There must be figures which support it, which may be in documents to which I have not had access, but will the Minister explain why it is necessary to raise it at the rate of 7.9%, which seems to be adverse in terms of remuneration—taken-home pay—when the rest of the percentage increases are at a more modest level? Is there a particular reason? Do rents in the areas we are talking about particularly differ from the rest of the country? Is there a particular reason or has a general approach been taken? I should be grateful for further information on that.

[Lord Henley]

My Lords, I join both the noble Baroness, Lady Donaghy, and the noble Lord, Lord Stevenson, in offering my thanks to the Low Pay Commission. I had not realised that the noble Baroness was a founder member of it 20 years ago, and I offer congratulations on its 20th anniversary. Unlike her, I have never been lobbied by a Mother Superior from a Devon convent, but one looks forward to all new experiences in life. I will just say that I can imagine what it is like.

We are very grateful to the Low Pay Commission for the work it does. It is a good body that understands that it has to make difficult decisions in trying to come to the right figure for the different rates, representing the interests of those in work, those out of work, employers and the effect on employment. We are grateful to it for its advice.

The Government, as noble Lords will note, set an annual remit for it asking it to recommend the highest possible national minimum wage rates such that it does not increase unemployment. Again, we have that target, referred to in my opening marks and by the noble Lord, of getting to 60% of median earnings by 2020, subject to sustained economic growth. I hope we can do that; we are on track for it at the moment. As I made clear, my right honourable friend the Chancellor will set out further guidance in the Budget Statement for life beyond 2020. The duty of the Low Pay Commission is to advise us. It is then for the Government to produce a figure and put it into the regulations. That is what we are debating today.

The noble Baroness, Lady Burt, asked about the difference between the national minimum wage and the national living wage. The latter is just another phrase for the statutory minimum wage that applies to those aged 25 or over. It was brought in in 2016 and we are aiming to get that statutory minimum wage to that 60%. She asked why we could not follow what the Living Wage Foundation suggested. It is possibly better to follow the advice of the body that we have sought advice from—the Low Pay Commission—rather than another external body. I believe that setting the national living wage too high or increasing it too quickly could in the end lead to higher unemployment and harm the very people whom the policy is intended to help. That is why we look to the Low Pay Commission to set those rates; it will draw on economic, labour market and pay analysis, independent research and stakeholder evidence, as well as its own experience from trade unionists, business representatives and economists. I commend the work of the Living Wage Foundation, but the key distinction of the rates recommended by the LPC is that that body has to consider the impact on business.

The noble Baroness also asked about levels of non-compliance and about how many were underpaying. In 2017, 1,000 businesses were found by HMRC to have underpaid the national minimum wage. The cases resulted in £15 million of pay arrears being identified for more than 200,000 workers. There have been 14 successful prosecutions since 2007, but the important thing is to identify the businesses that are non-compliant and get them to comply. She also asked about the percentages of public sector workers receiving the living wage. I will write to her with any exact figures on that.

Finally, the noble Lord, Lord Stevenson, asked about the large increase in the accommodation off-set. The LPC seeks to raise the accommodation off-set to reach the level of the 21 to 24 year-old rate. A high rate for the off-set better reflects the cost of provision and enables investment in higher standards of accommodation by business. I hope that that deals with that point.

I think that that covers all the points that have been raised. I beg to move.

Motion agreed.

Electricity and Gas etc. (Amendment etc.) (EU Exit) Regulations 2019

Lord Henley Excerpts

Tuesday 26th February 2019 Grand Committee

Moved by

[Lord Henley]

That the Grand Committee do consider the Electricity and Gas etc. (Amendment etc.) (EU Exit) Regulations 2019.

Relevant document: 16th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A)

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, I will also speak to the other four statutory instruments listed on the Order Paper.

As we approach EU exit, the department is working to ensure that our energy legislation continues to function effectively after exit day, ensuring that consumers continue to benefit from reliable, affordable and clean electricity and gas. A significant part of the legislation that governs our energy markets takes the form of direct EU legislation. This will be incorporated into domestic law as retained EU law upon our departure from the EU by the European Union (Withdrawal) Act. These instruments amend EU regulations that will become retained EU law and address a range of highly technical issues, from cross-border trade to the energy market objectives of regulators.

The instruments simply remove inoperabilities in retained EU law in the event that we leave the EU without a deal. In the main, they remove references to the EU and EU institutions that would make no sense following EU exit. This ensures that, in the event of a no-deal exit, we would retain the regulatory functions and frameworks needed to keep Great Britain and Northern Ireland’s electricity and gas markets working effectively, facilitating continuity for UK industry and consumers. This is a sensible contingency to minimise uncertainty and disruption to our energy markets.

The instruments make similar amendments to legislation applying to Northern Ireland and Great Britain, although they are not always identical. This will ensure a consistent approach to retained EU legislation that previously applied across the UK while still recognising the unique nature of the single electricity market on the island of Ireland. On the single electricity market, let me be clear that the Government will take all necessary steps to seek to ensure that it can continue in a no-deal scenario. These instruments help to facilitate that. In preparing this legislation, the department has worked closely with Ofgem in Great Britain, and the Department for the Economy and the Utility Regulator in Northern Ireland.

In sifting this and related instruments, the Secondary Legislation Scrutiny Committee Sub-Committee A reported that the draft regulations,

“are necessary to enable UK energy markets to operate effectively if there is no agreement with the EU”,

and that,

“the proposed changes … do not appear to present significant policy or regulatory changes”.

The Electricity and Gas etc. (Amendment etc.) (EU Exit) Regulations amend and make “workable” the retained EU electricity and gas legislation that was created to harmonise energy markets and regulation across the EU. They also revoke guidelines for trans-European energy infrastructure which set out processes for development of EU infrastructure, as these will be redundant in a domestic setting.

The Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations amend retained EU gas legislation. They ensure that the regulatory framework relating to gas is maintained, including the technical EU network codes that cover the cross-border gas trade. This will maintain maximum business continuity and efficiency for UK gas operators and UK gas consumers. It also maintains the framework for dealing with security of supply, such as responding to gas supply emergencies by updating the security of supply regulation to remove references to EU institutions.

The Electricity Network Codes and Guidelines (Markets and Trading) (Amendment) (EU Exit) Regulations address EU electricity legislation relating to markets and trading, ensuring that they operate as part of domestic law. In particular, this instrument amends a wider package of rules, known as EU network codes for electricity. It revokes the guideline on forward capacity allocation and the guideline on capacity allocation and congestion management. These codes govern how cross-border trade operates within the EU’s internal energy market. The EU has been clear that, were the UK to leave the EU without an agreement, we would no longer be part of the internal energy market. These codes would therefore have little to no practical application in UK law and are being revoked. Alternative arrangements for cross-border trade are being put in place by GB interconnectors similar to those that were in place prior to European market coupling. Fallback arrangements will be in place for the interconnectors between the single electricity market and GB to ensure that trading can continue to take place in a no-deal scenario.

This instrument also amends the inter-transmission system operator compensation mechanism regulation, which established a mechanism to compensate national transmission system operators for hosting cross-border flows of electricity. The cross-border elements are removed as they cannot be provided for by domestic UK legislation. Provisions relating to the setting of domestic network charges are retained.

--- Later in debate ---

[Lord Grantchester (Lab)]

I am grateful to the Minister for his full and thorough explanation of the regulations before the Committee. Once again, I note that this instrument is brought forward under a no-deal scenario, such that it merely transposes existing regulations into UK jurisdiction with no appreciable policy differences. I am therefore happy to approve the instrument: it does exactly what it says on the tin.

However, I would add that, as they would normally be negative instruments, I am grateful to your Lordships’ Secondary Legislative Scrutiny Committee for recommending that they be upgraded to the affirmative procedure. I agree that they are important for the internal energy market and, more importantly, for the all-Ireland energy market.

We are nevertheless concerned that, in future scenarios, interconnectors will become a key feature in the supply of electricity to the UK and to the EU. How it will operate effectively into the future is a matter of anxiety.

At present, it is an integrated seamless supply, and the single energy market should be able to operate unimpeded in any situation after withdrawal. Last week, Munir Hassan, head of clean energy at CMS, told Utility Week that even in the event of no deal the internal energy market “just has to continue”. In view of this, and of the fact that the internal energy market is seamless, will it be a bit less easy to understand the nature of the electricity market should frictions be put in place with changes between the all-Ireland energy market and the UK, and across the interconnectors into the EU? Is the Minister confident that these regulations and others will enable all that to happen with seamless continuity?

As a result of these regulations, powers will be transferred to UK organisations such as the Gas and Electricity Markets Authority, represented by Ofgem. I Fourth Delegated Legislation

Committee ask again: what organisational and budgetary support will be offered to these groups by the Government to allow them to cope with every necessary increase in workload?

There is also concern over how the all-Ireland energy market will operate in relation to the EU internal market through southern Ireland and into the internal energy market of the UK. I agree that the regulations are largely technical in nature but they assume agreement. We can agree to a grid agreement update, but this nevertheless brings philosophical anxiety.

Lastly, there is concern that the Explanatory Memorandum has not been amended in relation to the upgrade to an affirmative instrument. Under a negative instrument, there are often sections dealing with compliance with the European Convention on Human Rights, but that has not been included. These points may not be strictly material to the upgrade, but nevertheless it would be informative to understand from the Minister why there has not been a redrafting in relation to the affirmative procedure.

[Lord Henley]

My Lords, as I made clear, these are pretty technical regulations that are designed purely for no deal. We laid a package of five instruments to resolve those inoperabilities across the body of retained EU law. As I think the noble Lord, Lord Grantchester, implied, although the committee that looked at them—I am trying to remember which committee it was; I think it was the Secondary Legislation Scrutiny Committee—recognised that they were absolutely necessary, it felt that the cumulative effect of all five warranted the affirmative rather than the negative procedure. That is why we are here today. Whether that means that the Explanatory Memorandum needs an upgrade, I really cannot tell him. I will write to him and deal with that point if it needs dealing with.

The broader question from both noble Lords, but particularly from the noble Lord, Lord Fox, is whether we would continue to participate in the internal energy market in the event of a deal. In the political declaration we agreed that we should put in place mechanisms as part of the future relationship to ensure as far as possible continued efficient electricity and gas trade over the infrastructure linking the UK and the EU, supported by technical co-operation. Further details are obviously a matter for negotiation. It is our position to seek a deal, and I reiterate that the regulations are for a no-deal scenario only.

It is worth reminding the noble Lord, Lord Fox, if he was being overly negative, that interconnectors are already in place between the UK and France and other countries. There is advantage for both parties in continuing to make use of them.

[Lord Fox]

That was the point I was trying to make.

[Lord Henley]

We use electricity at different times and, therefore, when we have a surplus, we can export it to them and vice versa. I cannot see that that will not continue to happen and bring benefit to consumers.

I move to the question of registration and the remit of Ofgem. Ofgem and its counterpart in Northern Ireland, the Utility Regulator, intend to continue to recognise registrations made by each other and by EU regulators, so we believe this will have no impact on the regulators’ ability to regulate. I hope that they will continue to be able to do the job that they do very well at the moment. We have engaged extensively with them and are confident that they will be able to meet their obligations within existing budgets. Where new systems are required, such as reporting mechanisms under the remit, the cost can be recouped through fees.

Finally, the noble Lord, Lord Grantchester, asked about Ireland and the single electricity market. We are confident that new arrangements can be put in place for trading in a no-deal scenario that will minimise disruption to the single electricity market. We have been working very closely with colleagues in the Northern Ireland Civil Service, the Northern Ireland Utility Regulator, Ofgem, systems operators and interconnectors to understand what day one arrangements for trading between the SEM would be in a no-deal scenario—not only the SEM within Ireland but interconnectors going to and fro between the two countries.

I think that deals with the points made by both noble Lords, and I therefore commend the first of the five regulations.

Motion agreed.

Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019

Lord Henley Excerpts

Tuesday 26th February 2019 Grand Committee

Moved by

[Lord Henley]

That the Grand Committee do consider the Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019.

Relevant document: 16th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A)

Motion agreed.

Carriage of Dangerous Goods (Amendment) Regulations 2019

Lord Henley Excerpts

Tuesday 26th February 2019 Grand Committee

Moved by

[Lord Henley]

That the Grand Committee do consider the Carriage of Dangerous Goods (Amendment) Regulations 2019.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, this statutory instrument will change the Carriage of Dangerous Goods and Use of Transportable Pressure Equipment Regulations 2009. These regulate the transport of most dangerous goods in Great Britain, and this instrument will update the sections that deal specifically with radioactive materials.

The amendments in the instrument will strengthen Great Britain’s emergency preparedness and response arrangements for the transport of radioactive materials. They will apply to transport by rail, road and inland waterway. The changes in the instrument will bring Great Britain into step with the highest international safety standards, as they implement the emergency preparedness and response requirements of the Euratom basic safety standards directive 2013.

One of the amendments introduces provisions on the control of so-called volatile organic compounds resulting from the storage of petrol and its distribution from terminals to service stations. It corrects an unintended revocation of guidance for the design and construction of petrol tanks in respect of the control of such compounds. The other simply updates a cross-reference in the Transfrontier Shipment of Radioactive Waste and Spent Fuel Regulations 2008.

On that matter, I should like to point out that, in the debate in another place, concerns were raised about the drafting of this amendment. It was suggested that the 2008 regulations had been revoked and replaced by the Transfrontier Shipment of Radioactive Waste and Spent Fuel (EU Exit) Regulations 2019, and that this amendment therefore constituted defective drafting, which would be fatal to the SI. I am happy to confirm that the amendment in question is legally sound, as the revocation and replacement of the 2008 regulations will take effect only if the UK leaves the EU on 29 March without a deal. In this unlikely event, the amendment would simply be null and void; its nullity would have no impact on the remaining provisions of these regulations.

The department held a joint consultation with the Ministry of Defence and the Health and Safety Executive on the changes made by this instrument. We published our response to the consultation in October last year. Of 71 respondents, 31 commented on the transport-specific elements of the consultation. I am happy to report that the proposals received broad support.

I shall now briefly outline the amendments made by this instrument. We have broadened the definition of “emergency” to include risks to quality of life, property and the environment. We have also updated the principles and purposes that duty holders are to have regard to when drafting emergency plans, to ensure that plans are flexible and proportionate. We are including in the regulations a definition of “emergency worker”, with comprehensive requirements for training. We are also expanding the requirement to regularly review and test emergency plans. For civil nuclear transport, the competent authority in Great Britain, currently the ONR, will have a duty to provide information to the public about the nature and effect of a potential radiation emergency.

--- Later in debate ---

[Lord Grantchester (Lab)]

My Lords, I am grateful to the Minister for his explanation of the order before the Committee today, and for providing us with updated information on its passage in the other place. The noble Lord, Lord Fox, said that it is not entirely to do with a no-deal scenario; hence I am a little perplexed as to how this order is split—if that is the right word—into parts that will be nullified and those that will not at the relevant outcome.

I also reiterate that we found it unfortunate that Euratom was swept up into the withdrawal letter, and hence into the withdrawal agreement, and that we need to leave Euratom at the same time as we leave the EU. That is deeply regretted, but I am grateful to the Minister for his updating remarks on the order in the Commons regarding the Transfrontier Shipment of Radioactive Waste and Spent Fuel Regulations 2008.

We see no issue with the order in general; however, I have noted the circumstances on which the Minister reported, and which have been taken up in other contributions around the Committee, around radioactive emergencies, notably in relation to exposure to risks for emergency workers. I welcome the consultation and the Government’s response: this does indeed strengthen the UK’s emergencies preparedness and aligns with IAEA best practice and the highest safety standards. I also welcome the fact that under the regulations the ONR has a duty to provide information to the public about the nature and effect of a potential radioactive emergency and that they introduce a national reference level below which exposure must be kept.

I put on record that it is of great benefit that there is now a duty to have a handover report to a recovery phase in any emergency and that training will be provided to give clarity to workers, including those that the noble Lord, Lord Fox, asked about, who might suddenly come within the bracket of the emergency regulations, though they may not necessarily have been designated as emergency workers.

The Minister paid regard to the setting of the definitive reference level that was part of the debate in the other place. Emergency workers will be exposed to levels potentially above the general level of 100 millisieverts, to a higher level of 500 millisieverts: this is well above the level that workers were exposed to at the Chernobyl disaster, which reached 350 millisieverts. I recognise that this level is in compliance with the EU directive, but will the Minister say whether it is future policy to look at this more closely and perhaps see what can be done to reduce this in order to be less above the level that would pertain in an ordinary situation? I know that an emergency could entail a wide divergence to very high levels; nevertheless, if he can say something about that, it would be helpful.

I also notice that the ONR will publish guidance. Will that have a statutory reference in relation to health and safety at work? Will it include action to be taken should there be a series of spikes that could cumulatively expose a worker to a level well above that which is generally provided for? Is there any responsibility to an emergency worker should he be put into such a position? With those questions, I am happy to pass the order today.

[Lord Henley]

My Lords, again I thank all three noble Lords for their contributions; in particular I thank the noble Lord, Lord Jones, for his insights on CP Snow, particularly The New Men. It is a long time since I read any CP Snow, but I feel that I must go back and read some.

[Lord Jones]

May I recommend to the noble Lord Corridors of Power, which delineates activities here in this House?

[Lord Henley]

I will try Corridors of Power as well as The New Men. The one thing I will not do, because it is beyond what I should ask of my officials, who are absolutely wonderful and have looked after me very well through all these debates and others, is ask them to read CP Snow. However, they might also take guidance from the noble Lord, Lord Jones.

The noble Lord also asked about the number of shipments by road. I can give him quite a number of figures. The total number of packages containing radioactive material transported by rail was about 1,500, and that was a total number of about 750 consignments. On road transport, we think that there were around a total of 110,000 packages, but again, you have to halve that because of going to and fro. The total figure we seem to have for road, rail and other means is around 40,000 packages. The majority are transported to nuclear power stations, but the transport of radioactive material by rail arises from the civil nuclear industry and consists of transport between Sellafield and the nuclear power stations, and from Sellafield to the low-level waste depository at Drigg. The road transport includes medical and industrial sources, some of which are moved more than once, hence bringing that figure down to 40,000. PHE estimates that 76% of packages transported by road in the UK are medical, 4% are industrial, and the remaining 20% are in the nuclear industry.

I will quickly deal with the point made by the noble Lord, Lord Fox, about the nullifying part of the regulations. I explained that the provision would be nullified, but the noble Lord asked about how nullification happened. There is no formal process—it just happens because a provision has been nullified, and there is case law which indicates how the courts are to treat such a nullified provision. I presume that if it is nullified, it is treated as if it is not there. If the noble Lord wants the case law, it is Inco Europe Ltd v First Choice Distribution in 2000.

On the question of emergency and who oversees that, the emergency plans, which the noble Lord, Lord Jones, asked for, are a matter for the Office for Nuclear Regulation, which is laid down by the Energy Act 2013. Obviously, any definition of “emergency”, as the noble Lord, Lord Fox, points out, to some extent has to be subjective, but further details will be set out in guidance from the ONR. The reference here is based on the IAEA best practice.

The noble Lord also wanted to know just how we would then manage excessive doses. As I think I set out at the beginning, the regulations make lawful a deliberate exposure at high levels in an emergency. Obviously, in extremis workers might be subject to that higher level of exposure. They could not be ordered into such a situation, but—again, as I set out at the beginning—obviously, if it is a question of life and death, that is a different matter.

On the question asked by the noble Lord, Lord Jones, about the 500 milliSieverts level, the regulations provide that in exceptional situations—in order to save life, prevent severe radiation-induced health effects or prevent the development of catastrophic conditions—the reference level for an effective dose from external radiation for emergency workers may be set above 100 milliSieverts, but not exceeding 500 milliSieverts. In line with this provision, the CDG regulations disapply the IRR 2017 dose limits, subject to a maximum of 500 milliSieverts, providing that the emergency worker,

“is engaged in preventing the occurrence of a radiation emergency; or … is acting to mitigate the consequences of a radiation emergency”.

As I said, further guidance will be available from the ONR. These regulations tightly restrict the circumstances under which an emergency worker may be exposed to that maximum dose. They state that such exposure is possible only if this worker is engaged in activities for the purpose of saving life and with their informed consent.

[Lord Fox]

That is slightly helpful, so I thank the Minister, but I am still troubled by what I call the first first responder, who may well be on the scene without the necessary equipment and monitoring of dosage available. We know that people of that nature run towards danger rather than away from it. These people could be knowingly or unknowingly exposing themselves to high dosages, whether at 500 milliSieverts or not. We will not know, because they are not being monitored. What is the policy on individuals who are exposed to radiation but are not in a position to measure that dosage? Is there a modelling process? How would we know what these people are exposing themselves to? Or does this legislation simply not deal with that situation and take the approach that, frankly, it happens but you cannot regulate for it?

[Lord Henley]

I would prefer to write in greater detail to the noble Lord on that. We are bringing in this limit of 500—for the first time, I think I am right in saying—but obviously, in emergencies of the sort he is talking about, things often go beyond what can be regulated for. Would the noble Lord be happy if I wrote to him in greater detail on this? It would be a pity if I started getting things wrong. Obviously, I will copy that to the noble Lords, Lord Jones and Lord Grantchester.

[Lord Fox]

I would appreciate that.

[Lord Henley]

The final point that needed to be dealt with was that from the noble Lord, Lord Grantchester, about emergency workers suffering from cumulative spikes. Any facility suffering multiple strikes—multiple urgencies—could be shut down by the ONR. That is what the ONR is there for. I do not expect that scenario to occur in practice, but obviously there could be occasions. If I need to add more to that, I will write to the noble Lord. I beg to move.

Motion agreed.