Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) Regulations 2018
Lord Henley Excerpts(5 years, 10 months ago)
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Lord Henley
That the draft Regulations laid before the House on 29 November 2018 be approved.
Relevant document: 9th 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, I was going to move this and the next set of regulations jointly, as set out on the Order Paper. However, I received a request from the noble Lord, Lord Adonis, and I am grateful to him for giving notice that he would find it more convenient if we dealt with them separately. I am more than happy to comply with that request. Therefore, we will debate these regulations and then, I hope, as I seek to earn my sweeties from the sweetie cupboard, we will move on to the final Motion in my name.
There are two sets of related regulations being considered today, each requiring a separate vote— that is possibly why the noble Lord, Lord Adonis, would like us to have two separate debates. The Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) Regulations define the terms “fissionable material” and “relevant international agreements” for the purpose of the sections of the Energy Act 2013, as amended by the Nuclear Safeguards Act 2018. These terms are used in the related Nuclear Safeguards (EU Exit) Regulations 2018, which will be considered in due course, and set out the detail of the legal framework for our new domestic safeguards regime.
I begin by emphasising that the two sets of regulations are essential to establishing our domestic regime whether we leave the EU with a deal or not. The powers to make this secondary legislation are found in the Energy Act 2013, as amended by the Nuclear Safeguards Act 2018. The territorial extent and application of these regulations is England, Wales, Scotland and Northern Ireland.
Nuclear safeguards are accounting, reporting and verification processes designed to assure and demonstrate to the international community that civil nuclear material is not diverted unlawfully into military or weapons programmes. As was made clear during the passage of the Nuclear Safeguards Act, nuclear safeguards are separate and distinct from nuclear safety and nuclear security.
The nuclear industry is of key strategic importance to the United Kingdom and our departure from the EU in no way diminishes the ambition that we have set out in the nuclear sector deal. The UK has a long and distinguished record as a responsible nuclear state and was a founding member of the International Atomic Energy Agency in 1957. The IAEA ensures that states are honouring their international legal nuclear safeguards obligations in connection with the Treaty on the Non-Proliferation of Nuclear Weapons, the NPT. While not bound by the NPT, the UK has voluntarily accepted the application of two safeguards agreements with the IAEA: a voluntary offer agreement and an additional protocol, as defined in these regulations. These bilateral agreements will replace the trilateral safeguards agreements between the UK, the IAEA and Euratom, and ensure that we continue in our role as a responsible nuclear state when Euratom arrangements no longer apply. The ratification of these agreements was approved by Parliament at the end of last year.
To enable continuity of civil nuclear trade with our international trading partners, the Government have prioritised having in place nuclear co-operation agreements with Australia, Canada, Japan and the USA, as required by these countries. NCAs are legally binding treaties that allow states formally to recognise their willingness to co-operate with each other on civil nuclear matters.
Baroness Altmann (Con)
I hesitate to participate in this debate, given that this is a very complex issue, but I imagine that members of the public and the industry would wish to be assured that the House is scrutinising issues of such significance from the point of view of public safety. I note that the Secondary Legislation Scrutiny Committee drew these draft regulations to the attention of the House in view of the important issues of public policy.
I note from the committee’s report that there will be ways in which our nuclear safeguards will be deficient after March 2019 relative to Euratom, notwithstanding that they meet international obligations. I would be grateful if my noble friend could help the House understand in what way those deficiencies will manifest themselves in the event that we leave with no deal or, if we leave with a withdrawal agreement, during the interim period—before, as I understand it, our standards will meet the Euratom standards by the end of 2020.
Lord Henley
My Lords, I hope that I can deal with most of the points that have been made in the debate by noble Lords. If I miss any, perhaps on Regulation 4, we will be able to catch up on them. The noble Lord, Lord Redesdale, said that he had only one speech for both sets of regulations but I am sure that he will want to come in again if I fail to address his points.
First, the noble Lord asked whether we needed an NCA with Euratom. I can give an assurance that an NCA is not required for these regulations. Secondly, he regretted what he described as the demise of the nuclear industry. It is sad that last Thursday we had to make the announcement that I think he was referring to. I offered to repeat the Statement made by my right honourable friend in another place but, sadly, the House did not feel that necessary.
It is obviously a difficult situation, although I do not accept that we are looking at the demise of the nuclear industry—I think that it has a future. Being one of the world’s great optimists, the noble Lord should remember that some of the problems facing new developments in the nuclear industry—and we are still committed to seeing what we can do there—are possibly down to the success that we have seen in renewables, with the costs of offshore, onshore, wind and solar coming down. That makes the costs of nuclear, for example, much harder to deal with. We would like to bring those costs down but I do not think that they are likely to drop as much as has happened in the case of some renewables. Similarly, the costs of renewables include the cost of electricity storage, which, again, is coming down. Therefore, I suspect that the noble Lord, rather than being a Jeremiah, should always take a positive approach to changes and always look on the bright side of life, if that is possible.
I turn to the noble Lord, Lord Adonis. I am grateful that he referred to the debate in another place on 14 January, and I will certainly pass on to my honourable friend Richard Harrington the noble Lord’s welcome for his response to that debate, which I think dealt with most of the points that he raised. However, in my incompetence, I muddied the water and raised further points for the noble Lord. I hope that I will be able to deal with his concerns relating to additional qualifying material and the extra information required for the Secretary of State.
On additional qualifying material, all operators will provide accountancy and control plans to the ONR. That is a new requirement, which will come into effect in January 2021. The noble Lord also asked about the principal requirements of Regulation 45, which concerns the notification of receipt, production and transfer. That regulation requires an operator of a qualifying nuclear facility or other person to notify the Secretary of State of the receipt of a relevant item or qualifying nuclear material, the production, processing, derivation or fabrication of a relevant item from another relevant item or from obligated qualifying nuclear material, and the proposed transfer of a relevant item, together with details of the transferee and their location.
I turn to the process for NCAs and the questions raised by the noble Lord, Lord Grantchester, particularly in relation to Japan. I made it clear that we had concluded new agreements with Canada, the US and Australia. The situation is slightly different with Japan, in that, as I think I made clear in my opening remarks, a bilateral NCA is already in place. It will remain in place following the UK’s departure from the EU and therefore it is not necessary to conclude a new one. We have had detailed discussions on this and are in negotiations to ensure that we have appropriate arrangements in place with Japan to allow the agreement to remain operable after our exit from Euratom.
I note the remarks made by my noble friend Lady Altmann on the comments from whichever committee it was regarding these orders. I give an assurance that, with these orders, we are making sure that we have broad equivalence; we will have the same protection in place as existed before.
Lord Grantchester
It appears that there may be an issue with Japan. The Minister says that there is an agreement and we do not need to do anything but also that there are discussions about whether the agreement will remain operable. Could he clarify whether there are any issues at all with Japan?
Lord Henley
I am not aware of any issues. As I said, we have an NCA in place with Japan that goes back to 1998. That will remain in effect but, obviously, we want to continue discussions just in case. If I can help the noble Lord any further I will write to him, but that will probably not be necessary.
Justification Decision Power (Amendment) (EU Exit) Regulations 2018
Lord Henley Excerpts(5 years, 10 months ago)
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Lord Henley
That the draft Regulations laid before the House on 23 November 2018 be approved.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the Justification of Practices Involving Ionising Radiation Regulations 2004, which I will refer to from now on as the justification regulations, provide a framework in which justification decisions regarding ionising radiation are made. Justification decisions are an important part of our regulatory regime surrounding ionising radiation, as they determine whether a practice involving ionising radiation is justified in advance of being first adopted or approved. In addition, it may be determined that a class or type of practice is no longer justified as a result of a review.
The power to make these decisions is currently provided by Section 2(2) of the European Communities Act 1972. Following the United Kingdom’s exit from the European Union and Euratom, and repeal of the 1972 Act, the justifying authority will no longer retain the power to make justification decisions regarding practices involving ionising radiation. This instrument will correct this inoperability by providing the justifying authority with a replacement power to make such justification decisions. The powers to make this secondary legislation are found in the European Union (Withdrawal) Act 2018.
Before I explain the changes in more detail, it may be helpful to provide background information on the Government’s position in relation to the justification of practices involving ionising radiation. The UK is committed to maintaining an up-to-date and internationally concurrent justification regime, in order to remain a world leader in radiological safety, as well as maintaining our international reputation and status as a trusted partner with whom to trade nuclear skills, services and materials.
The justification regulations are the first step towards regulatory approval for a new class or type of practice involving ionising radiation, including medical treatments and new nuclear reactor designs. These regulations provide a framework setting out how government determines whether the practice is justified. “Justified” here means that the individual or societal benefit of the practice involving ionising radiation outweighs its potential detriment to health. These decisions are taken by the justifying authority. This can be the Secretary of State of the relevant department or, in some cases, the devolved Administrations, in the form of regulations.
The justifying regulations cover activities which fall within both reserved and devolved subject matters. To ensure consistency in how the process for making justification decisions is dealt with across the UK and different reserved and devolved subject matters, the devolved Administrations have to date been content for the UK Government to establish and make changes to the justification regime, using UK-wide regulations. This instrument will allow the UK Government to make UK justification decisions in reserved areas using UK-wide regulations. It will also allow the devolved Administrations to make justification decisions using regulations covering their own geographic areas for activities falling within devolved subject matters. We have received letters of consent from each of the devolved Administrations agreeing that they are happy to proceed with this instrument.
I will now briefly expand on the amendment itself. On 29 March 2017, the Prime Minister triggered Article 50 and started the UK’s exit from the European Union. To give effect to the UK’s exit in domestic law, the European Union (Withdrawal) Act 2018 will repeal, as I said earlier, the 1972 Act at the moment of exit. However, to ensure continuity for the UK, the withdrawal Act will preserve EU-derived domestic legislation so that it continues to have effect in domestic law. This will leave our statute book with several EU-related inoperabilities, the power to make justification decisions being one example of this.
The purpose of this instrument is therefore to provide the justifying authority with a replacement power to make justification decisions under the justification regulations, once the current power ceases to be available as a result of the repeal of the 1972 Act. Such a power will be created by this instrument using the powers in Section 8 of the European Union (Withdrawal) Act 2018. It is important to note that this instrument does not allow the Secretary of State or devolved Administrations to make decisions in any other way, or with any greater freedoms than they currently do with respect to the justification regulations. Unlike the wide power under Section 2(2) of the 1972 Act, this replacement power is a narrow one that is limited to making justification decisions for the purposes of the justification regulations. It should also be mentioned that future justification decisions which determine that a new class or type of practice is justified will be made by affirmative regulations and therefore will be subject to debate in the House as usual.
Looking forward, my department is currently aware of several potential justification applications that may require a decision by the Secretary of State in the future. These applications will require a functioning justification regime to ensure that they are subject to the appropriate scrutiny procedures. For example, the HPR1000 reactor, intended for use at Bradwell, is a new nuclear reactor design which would require a justification decision before it could be deployed.
I hope that we can reach an agreement that these amendments are necessary to ensure a functioning statute book on exit day regardless of the outcomes of the negotiations. I therefore commend these regulations to the House.
Lord Adonis
I am intervening on the Minister before he sits down. Will the organisation called the justifying authority, which I understand is the organisation which takes these decisions, be affected in any way by the regulations, or will it continue in the same way after a no-deal withdrawal as before? This is a very technical area with which I am not familiar, but my reading of the regulations is that there is an organisation called the justifying authority whose decisions at present depend on EU law and the Government are investing those decision-making powers in the same authority but through UK law. Can the Minister confirm that that is the case and that I have understood it properly?
Lord Henley
My Lords, it is complex and technical. There is no one body called the justifying authority; there are a number of different authorities. On certain occasions, it will by my right honourable friend the Secretary of State for Business; on other occasions, if it was a matter relating to health, it could be the Secretary of State for Health. As I made clear earlier, where it was a devolved matter, it could be the devolved Administrations.
Let me give an example to illustrate how a whole range of things are covered—I am thinking of something that has been in the news recently. If prisons wanted to install a new system for examining or scanning prisoners and others as they came through—I believe that that has already been justified—that involves ionising radiation. I shall now add a further complication: one might presume that the Ministry of Justice would be the justifying authority in that matter, but on this occasion it would be the Home Office. In other words, it would have to look at what the risks to people using these things might be and whether the societal benefits that I referred to earlier were greater such that we wanted to install the technology, hence the need for a justifying authority. There are a number of justifying authorities.
Unlike some other regulations that the noble Lord and I have debated, these are both what we could call deal and no-deal regulations. We are just trying to make sure that the right order is in place so that life can continue as before, with the appropriate justifying authority making the appropriate decision.
Lord Pannick (CB)
Can I ask the Minister some questions before he sits down?
Lord Grantchester (Lab)
My Lords, the Minister is correct to portray the order before the House today as merely a technical replacement justification power, where “justified” means that the benefit resulting from the practice outweighs the risk and potential health detriment it may cause, under the ionising radiations regulations or the directive. These regulations are a first step towards regulatory approval for any new class or type of practice involving ionising radiation, such as a medical treatment or new nuclear reactor design. These activities are important, and it is important that they are regulated properly. To my mind, they are as needed in any situation as they are needed for exit from the EU. To me it is a straight transposition from an EU-derived power to a UK power to give effect to the UK’s exit in domestic law. There should be no issues with this order.
This is the latest type of Brexit—I am calling it a continuity Brexit—to allow EU-derived legislation to continue to have effect in domestic law, and this order is merely a replica of previous ones. I approve the order today.
I understand that the Government Whips’ Office in the other place has a new sweetie box as a reward system, whereby Ministers are rewarded for each successful continuity order passed before exit day. I trust that the Minister will be rewarded with a bonus issue for this order.
Lord Henley
On that last point, I have had an assurance from my noble friend Lady Vere that a reward will be on offer—but let us wait until we have got through all four of these before I rely on the generosity of her offer: she might change her mind later.
Let me deal with the points that have been raised. The noble Lord, Lord Pannick, asked when these were published. I can assure him that they were published on 23 November last year. The instrument makes absolutely no changes to policy: it is just a technical amendment to ensure the continued operability of the justification regulations, and therefore a public consultation was considered unnecessary and inappropriate. Subsequent regulations made using the power contained in this instrument will continue to be subject to the consultation requirements, where the justification regulations impose on the making of justification decisions.
Lord Pannick
Can the Minister then give an undertaking that those exit regulations brought before the House that do make policy changes will be the subject of public consultation?
Lord Henley
My Lords, where appropriate, that will happen. I can speak only for regulations that I will bring before this House relating to my department—but the noble Lord will no doubt be in his place to listen to other Ministers and other regulations as they come through. I repeat that, when we come to make further decisions under these regulations, at that moment—because there might be a change in policy—those decisions will be subject to the consultation process that I spoke about. If the noble Lord will bear with me, I will give way on this.
Lord Pannick
I am very grateful for the noble Lord’s patience. Is he then giving that undertaking in relation to regulations brought forward by his department—that if they are exit regulations that make a change of policy, they will be the subject of public consultation before they are brought before the House?
Lord Henley
That is not what I said. I said that, where appropriate, we will consult if it is possible. Most regulations we are bringing forward deal with the eventuality of a no deal. Obviously, there will be constraints on the full consultation process that the noble Lord is seeking. That was clear in other regulations with which I dealt in the Moses Room on another occasion. As with these, we went into extensive consultations with the devolved Administrations—because they are the relevant bodies—and we have consulted within government, because a lot of different justification authorities abound. Where appropriate, we will consult: I can say no more than that.
The noble Lords, Lord Redesdale and Lord Warner, wanted to know in effect how the justifying authority worked. I think that the noble Lord, Lord Warner, wanted to know whether they were simply no-deal regulations. What I was trying to say was that these are both deal and no-deal regulations—even if there were a deal, we would still need these regulations. They would not become defunct in the event of a deal. We want to make sure that this is right whatever happens, and I hope that will be the case.
Lord Warner
Perhaps I may come back on this, because there is a matter of principle here, particularly following up on what was said by the noble Lord, Lord Pannick. The Minister will recall that we had some fruitful, if somewhat lengthy, discussions in Grand Committee on some of these regulations. We were debating the idea that these were no-deal exit regulations, and there was often a dispute over whether the regulations did or did not change policy. The Government’s view on some regulations was not necessarily shared by other Members of this House, but I think we were inclined to be tolerant on the basis that these were no-deal regulations, rather than regulations that would continue into the future. So is it going to be a pattern now that we will get these regulations, in a number of areas, presented as no-deal regulations, but then find that—lo and behold—there has been a change in policy that has slipped through, with no consultation, and that the regulations will continue into the future? The Minister might want to say that I am showing my customary paranoia on this issue, but it is a serious point that we in this House need to be clear on when we deal with these regulations. Our attitude will be very much conditioned by whether they are no-deal regulations or whether they will carry on into the future.
Lord Henley
To make life easier for the noble Lord, I can assure him that the other three regulations—to which I will be speaking later—are purely no-deal regulations. I do not think the noble Lord is paranoid about this—he is quite right to explore these matters. But I want to make clear to him that there is no change of policy in these regulations; we are just trying to make sure that things are okay on 29 March. That is the case, deal or no deal.
I think that that deals with his point and the point made by the noble Lord, Lord Redesdale. I believe therefore that I have answered the questions put before me. I am grateful again to the noble Lord, Lord Grantchester, for his comments.
Transfrontier Shipment of Radioactive Waste and Spent Fuel (EU Exit) Regulations 2018
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Lord Henley
That the draft Regulations laid before the House on 28 November 2018 be approved.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, this instrument will ensure that the UK maintains high standards for the supervision and control of shipments of radioactive waste and spent fuel in the event of no deal. The instrument will set out a regime to ensure that radioactive waste and spent fuel is not shipped into or out of the UK without prior authorisation from the relevant competent authorities. This is vital in order to protect the public and the environment from the dangers of ionising radiation. The instrument will further ensure that the UK continues to meet its commitments to the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management.
This new instrument is made under powers set out in Section 8 of the European Union (Withdrawal) Act 2018. It is laid to address specific inoperabilities arising from the UK’s withdrawal from the EU and Euratom, and would come into force on exit day only in the event of no deal between the UK and EU. The UK is seeking a wide-ranging nuclear co-operation agreement with Euratom while putting in place the necessary measures to ensure that the UK industry can operate in all scenarios. This particular instrument will revoke the then inoperable Transfrontier Shipment of Radioactive Waste and Spent Fuel Regulations 2008 and replace these with the new 2019 regulations. These new regulations broadly replicate the procedures under the 2008 regulations for the import, export and transit of radioactive waste and spent fuel into and out of the UK, but will reflect the UK’s independence from the Euratom community. The instrument applies to the whole of the UK.
The UK has ceased reprocessing other nations’ spent fuel. The high-level waste arising from the last of these reprocessing contracts will need to be returned to its countries of origin: Australia, Japan, Germany, and Italy. The instrument will allow for the return of this high-level waste and is of strategic importance to the UK in fulfilling reprocessing contracts and supporting the decommissioning and clean-up mission of the Sellafield site. Further, the UK makes around 400 shipments of radioactive waste a year to Euratom member states. The majority of these are contaminated metals for treatment to Germany and Sweden.
The previous 2008 regulations laid down a set of regulatory procedures for transfrontier shipments that take place within the Euratom community, and a separate set of procedures for shipments entering or exiting the community. Following the UK’s withdrawal from the EU and Euratom, the 2008 regulations will become inoperable, as they treat the EU as a single bloc that includes the UK. In order to ensure an operable regime after exit day, the new 2019 regulations will treat Euratom member states and all other countries in the same way. This will result in three operational changes for UK operators shipping to and from Euratom member states.
First, UK operators will need to request authorisation from the relevant competent authority when importing a shipment from Euratom states. The competent authorities are the Environment Agency, Natural Resources Wales, the Scottish Environmental Protection Agency and the Northern Ireland Environment Agency. Secondly, UK operators will need to notify the relevant competent authority of the completion of shipments to Euratom states. Thirdly, when importing from a Euratom state, UK operators will need to provide evidence that they have made an arrangement with the exporter which has been accepted by the exporter’s competent authority. The arrangement would oblige them to take back the radioactive waste or spent fuel if the shipment cannot be completed in accordance with the regulations.
These changes do not affect all of the nuclear industry. At present, six UK operators have authorisations to ship radioactive waste. Officials have estimated the total cost to all impacted industry from these additional steps to be between £1,700 and £6,000 every three years, as well as a minor familiarisation cost for operators of between £100 to £900 each.
Guidance for the new regulations will be published online prior to the coming into force of this instrument. Officials have been engaging regularly with operators who will be affected by the regulations to ensure that business operations may continue with minimal disruption.
This instrument was drafted in collaboration with the devolved Administrations, the UK’s environment agencies, the Office for Nuclear Regulation and the Nuclear Decommissioning Authority. The legislative competence is reserved—however, this collaborative approach recognised that the administrative implementation of the regime is devolved.
All operators affected by these regulations have been informed of changes and more detailed engagement has been undertaken with those involved in regular shipments. Further engagement initiatives have taken place through stakeholder workshops, the Euratom Industry Forum and other industry events.
These regulations are vital to the success of the UK’s decommissioning programme and to the completion of our last reprocessing contracts. Making them would allow the UK to maintain the highest nuclear safety standards, while ensuring that relevant UK operators can continue to operate in a no-deal scenario. I commend them to the House.
Lord Adonis (Lab)
My Lords, as far as I can see from reading the material supporting the regulations, they do not involve any change in the operation of the law. As the Minister says, they have been approved by the devolved authorities, therefore they seem to me straightforwardly technical, but as there is no opportunity on the whole suite of regulations being moved today to raise issues about their management, I want to ask the Minister one question to which I hope he will respond when he replies.
In the original publication of the Order Paper, two further orders were due for debate today: the Conservation of Habitats and Species Order (Amendment) (EU Exit) and the Conservation (Natural Habitats etc.) (Northern Ireland) (EU Exit) Order. They were both on the Order Paper published on 16 January for today, but then they disappeared from the Order Paper published today. When I was preparing for this debate, there seemed to be some controversial issues surrounding those regulations, and they raise significant issues to do with natural habitats.
When the Minister replies—by then he will have been able to be advised by the Box—can he say why those two regulations were withdrawn from debate today, having been on the Order Paper on 16 January for today, what has happened to them and when they will appear before the House? Some of us are having great difficulty tracking the progress of these highly important regulations through the House because they seem to appear on and then disappear from the Order Paper almost at random.
Lord Grantchester (Lab)
I thank the Minister for his introduction to the regulations before the House, which were excellently portrayed and explained by his department’s officials in the accompanying Explanatory Memorandum.
Under the UK’s commitment to the Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management, the present regulations, drawn up while the UK was a member of the Euratom community, become inoperable on exit as internal mechanisms in Euratom members will need to be replaced as far as the UK is concerned. Radioactive waste and spent fuel cannot be moved between countries without these authorisations.
As has been explained, the duplication of authorisation with Euratom countries looks unavoidable, not only because the UK will be treated as a third country but because UK businesses will need to go through both domestic and Euratom procedures. As the Minister stated, this will give rise to a marginal additional cost of compliance, as was also explained in the impact assessment. This is not meaningful, but it allows me to probe into the future a bit.
The Minister will remember the debates during the passage of the then Nuclear Safeguards Bill when he was emphatic that, post exit, the UK would seek to maintain a close working relationship with Euratom. Although the regulations are limited to radioactive waste and spent fuel, does the Minister see any quick, easy wins whereby, at the very least, procedures on this and other exchanges with Euratom members could be administratively streamlined without transgressing the important management of cross-border shipments? More widely, the House would be pleased to receive any further updates from the Minister on the shipping of medical isotopes, which was of such initial concern during the passage of that Bill.
Lord Henley
My Lords, I start with the point made by the noble Lord, Lord Adonis, when he referred to orders that seem to have been removed from the Order Paper. I did not quite catch the details, but I think they related to non-invasive species or something of that nature.
Lord Henley
I do not think that those orders related to my department. The noble Lord will be aware from his time as a Minister that all Ministers answer from the Dispatch Box on behalf of Her Majesty’s Government as a whole, not purely their department. I think he would accept from his experience that very often one is not in a position to know why decisions have been made by another department on what has been withdrawn from the Order Paper and what has not. I think he will accept—this is quite fair—that those who advise me on such occasions would be even less likely to know why orders relating to habitats and the other matters he referred to, which are not relevant to the department I represent on this occasion, are or are not on the Order Paper.
Lord Adonis
I understand the Minister’s point. Will he write to me to let me know the answer and copy in noble Lords so that we understand what is happening? As I said, that business was supposed to be discussed by the House today but it suddenly vanished.
Lord Henley
Either I will write to him or the noble Lord will be aware that fairly soon—when we have finished with my regulations, whenever that will be and whether I get the sweets from the sweetie box referred to earlier—I will be followed by my noble friend Lord Gardiner from Defra, who might be in a better position to advise him on these matters. We will certainly pass that on to my noble friend. I do not think it would help if I did write to the noble Lord on that subject; I leave it to him to make that point later. He also wanted to know—I think this was at the heart of the question from the noble Lord, Lord Pannick—what the regulations will resemble in the event of a deal scenario. These new regulations have been drafted for a no-deal scenario. The old 2008 regulations would have remained in effect for the implementation period if there was a deal. In the event of a deal, the future supervision and control of shipments of radioactive waste and spent fuel will be subject to negotiations with the EU. This may mean that the 2019 regulations never come into force, or come into force in an amended form. I do not think I can take that any further.
Lord Pannick
With the indulgence of the Minister, I ask whether he agrees that it would be helpful to the House if the Explanatory Memoranda to regulations of this nature were to state clearly that they were regulations brought forward specifically for no deal and to explain why the regulations, in the view of the Government, would not be appropriate at all or in this form if there were a deal. I am looking at the Explanatory Memorandum to these regulations and cannot immediately see that we are told they are no-deal regulations.
Lord Henley
I thought it was implicit in the regulations. I thought I made that clear in my opening remarks. I hope that will satisfy the noble Lord.
Lord Pannick
I am sorry to come back to the Minister. I am not questioning his assertion that these are no-deal regulations; I entirely accept that. I am simply saying that when we perform our scrutiny function and look at these regulations for the purposes of debate, it would be very helpful if the material—the Explanatory Memorandum—were to state for the guidance of Members of the House that they were no-deal regulations and what the position would be if there were a deal. That is all.
Lord Henley
My Lords, I have now set that out. These regulations have been to the appropriate scrutiny committees. They have not queried that part of the Explanatory Memorandum, and I do not think I can take the noble Lord any further.
Lord Warner (CB)
Can the Minister clarify something for me? He is saying these are no-deal regulations. Do I interpret his remarks as meaning that, if there is a deal, during the implementation or transition period—whichever you want to call it—we could end up, having reached an agreement with the EU, going back to using the Euratom framework to deal with these problems in future? Is that a distinct possibility if there is a deal?
Lord Henley
As I think I made clear, in the event of a deal during the transition period we revert to the old 2008 regulations and they remain in effect for the implementation period. Thereafter, it depends on the outcome of the negotiations.
I come to the point raised by the noble Lord, Lord Redesdale, about the cost of some new IT system. All I can say at the moment is that no bespoke IT system is required as a result of the procedures set out in these regulations. The cost relates to administrative working hours.
Finally, I notice the point made by my noble friend Lord Selborne and the noble Lord, Lord Grantchester, about Euratom. We will leave Euratom; that has been made clear and is cut and dried. But obviously we will continue to work with it, as we have made clear on a number of occasions—not least during the passage of the then Nuclear Safeguards Bill, which now seems an awfully long time ago.
Brexit: Consumer Rights
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Baroness Wilcox (Con)
My Lords, I beg leave the Question standing in my name on the Order Paper. In doing so, I draw attention to my interests as set out in the register.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the Government have undertaken a significant amount of work to assess the impacts of leaving the EU. We are committed to maintaining high standards of consumer protection and close co-operation on enforcement. Under the withdrawal agreement, all existing rights for UK consumers will remain the same until the end of the implementation period.
Baroness Wilcox
I thank my noble friend the Minister for his response, short though it was. The Chartered Trading Standards Institute runs a centre called the UK consumer centre network, which assists consumers in cross-border disputes with EU traders. Since it was formed just 11 years ago, it has handled more than 100,000 cases. The UK centre is currently co-funded by the UK Government and the European Union. Can the Minister assure the House that, as we leave the European Union, the Government will fully fund the UK part of the centre so that it can continue its excellent work?
Lord Henley
I thank my noble friend for that question. As she will be aware, we have been dealing with consumer affairs quite a lot this week and debated this matter in relation to the Select Committee’s report only last night. In that debate, I made it clear that, in the event of a no-deal exit, the Government have committed to fund the UK European Consumer Centre for at least one more year until March 2020. That will obviously be kept under review during this year.
Lord Bird (CB)
My Lords, what will the Government do about Amazon, which pays its taxes outside the UK? Will we able to claim those taxes back to the UK after Brexit?
Lord Henley
My Lords, the noble Lord will appreciate that that question is completely wide of that on the Order Paper and I do not intend to answer it.
Baroness Crawley (Lab)
My Lords, like the noble Baroness, Lady Wilcox, I declare an interest as a former president of the Chartered Trading Standards Institute. It is clear to all of us in the sector that consumer rights and protections have been continually strengthened through our membership of the European Union. Why do the Government not value the cross-border enforcement work that the UK European Consumer Centre promotes? Why will they not guarantee beyond one year’s financing—as the Minister has just said—the work of that centre in advising UK consumers at this time of enormous anxiety to them and businesses? Is there any chance of the Government funding beyond one year this very important centre for consumers?
Lord Henley
The noble Baroness, who has great experience in this field, is right to draw the House’s attention to the high levels of consumer protection that we have in this country. I was grateful to the noble Baroness, Lady Burt, for stressing from the Liberal Democrat Benches only yesterday that they are higher in this country than in most other countries in the EU. Obviously, as the noble Baroness will be aware, we want those protections to be maintained—that is what we have made clear—and we do not think that consumers should see any immediate differences in protection between UK law and that of the member states immediately after exit. It is quite right and proper that UK enforcers should continue to co-operate with their colleagues in other EU states wherever possible. That was also something I was keen to stress in yesterday’s debate.
Baroness Burt of Solihull (LD)
My Lords, I am getting a sense of déjà vu all over again as this is the third time this week that this question has arisen. I do not believe that the Minister has managed to answer the question once, so will he indulge me again? How will British consumers be protected—if and when we leave the EU—regarding the terms and conditions of purchase before we buy, and afterwards in the event of purchasing faulty goods?
Lord Henley
My Lords, I too feel like this is the latest in a series of number 11 buses coming along together. I have been keen to stress on all occasions—on Tuesday, yesterday and today—that UK consumers should not see any immediate difference. As always, they should continue to read the terms and conditions and I am grateful to the noble Baroness for reminding them of that. They should take advice where appropriate from Citizens Advice and, as I said in response to my noble friend Lady Wilcox, there will still be funding for at least one year for the UK European Consumer Centre. We will consider whether to extend that during the course of the year.
Lord Anderson of Swansea (Lab)
My Lords, the Minister has used the phrase, “immediate effect” on two occasions. Does he recall that in October 2016 David Davis, the former Brexit Secretary, said that there would be no downside after Brexit, only a considerable upside? In light of yesterday’s debate, in which the Minister participated, and the report of the EU Justice Sub-Committee, which showed that we are essentially dealing with damage limitation in respect of consumer protection, does he think that Mr Davis’s views were very wide of the mark?
Lord Henley
My Lords, the noble Lord will remember other remarks in yesterday’s debate about how long a week is. October 2016 is a very long time ago. I merely reiterate that there will be changes, and we want to make sure that they are as minor as possible and that UK consumers continue to have their existing protection.
Nuclear Power: Future Energy Needs
Lord Henley Excerpts(5 years, 10 months ago)
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Lord West of Spithead
To ask Her Majesty’s Government what assessment they have made of the impact on the United Kingdom’s future energy needs of any decision by Hitachi to withdraw from the Wylfa Newydd nuclear project and Toshiba having withdrawn from the Moorside project in Cumbria.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the noble Lord’s Question is timely. My right honourable friend the Secretary of State for Business, Energy and Industrial Strategy will be making a Statement in another place following Hitachi’s announcement this morning; I would have been happy to repeat it. National Grid has confirmed that it does not see an issue for future security of supply for plans for these projects over the long term, and there is plenty of time for the market to respond.
Lord West of Spithead (Lab)
My Lords, our nuclear industry is in crisis; I have to say that that Answer has a certain element of complacency in it. In the 1950s, our nation led the world in nuclear power generation, and decisions by successive Governments of all hues have got us into the position today where we cannot even construct a large civil nuclear reactor. A quarter of our energy is provided by nuclear; looking at 2035, when the energy requirements will be much larger, we are saying that a third of our energy will be supplied by nuclear. Now the only player seems to be Chinese. Bearing in mind our view on the rollout of 5G, are we happy for the Chinese, by 2035, to control one-third of the energy supply of our nation?
Lord Henley
My Lords, I am glad that the noble Lord stresses the importance of the nuclear industry and the fact that it is supplying some 20% of our electricity requirements and 40% of low-carbon electricity. Some 15 nuclear reactors operate throughout the UK. We would have hoped for a better announcement from Hitachi but that was not the case, and it is obviously right that my right honourable friend looks to the taxpayer to make sure that there is the appropriate deal for them. At the moment, costs in the nuclear sector are still rising, at a time when costs for a great many renewables are coming down. That is one of the reasons why there are problems. However, the fact is that we have seen the development of Hinkley C, and, as the noble Lord was quite right to suggest, we are the first Government for a number of years to make progress in that area.
Lord Howell of Guildford (Con)
My Lords, is my noble friend aware that, with the possible withdrawal of the Japanese from Wylfa and their withdrawal anyway from Moorside, and with the Chinese building at Bradwell, involved in Sizewell C—which has not been mentioned yet—and of course financing Hinkley C, this places the Chinese, as the noble Lord, Lord West, rightly said, in pole position in the rebuilding and replacement of our nuclear fleet? Does the Minister agree that this will have a major impact on our UK energy policy, which already has all its problems, and will he ask his government colleagues, including the Whips, whether we can have a serious and urgent debate on this whole matter, which has major implications for national security and policy?
Lord Henley
My noble friend is quite right. That was the tail end of the question from the noble Lord, Lord West; I apologise to the House for not being able to address it in the time that was available to me. I certainly agree that it would be timely to have a debate on this in the light of the recent announcement; I was hoping to be able to repeat the Statement, and perhaps there might be other moments when this could happen. However, obviously that is a matter for the usual channels.
Lord Wigley (PC)
My Lords, does the Minister accept that putting Wylfa Newydd on indefinite hold causes economic planning blight in north-west Wales, and the north Wales growth deal is based on the assumption that it is going ahead? Will the Government now raise the level of support allocated to this region?
Lord Henley
My Lords, I am aware of that growth deal, but I do not accept the noble Lord’s suggestion that this in effect scuppers that—I cannot remember what precise words he used. Obviously, it makes life more difficult, and we would not have wished to have to make this Statement, but it is also right that my right honourable friend the Secretary of State looks to the calls on the taxpayer and ensures that we get a good deal for any investment we make.
Lord Fox (LD)
My Lords, the Minister said that the market has time to respond. The market has responded. EDF caught a cold and got cold feet, Toshiba has pulled out, Hitachi has pulled out. What is the market in large nuclear generation and what is the Government’s plan B if they fail to deliver the financial engineering, as they clearly are at the moment?
Lord Henley
My Lords, in responding to questions of this sort at the Dispatch Box, it is difficult to go into the full details of what was planned. As I said, my right honourable friend the Secretary of State will make a Statement any minute now on the subject—I am waiting for a signal. I would have been happy to have repeated it, but no doubt the noble Lord and I, and others, can discuss it afterwards, and there may be other opportunities to have a wider debate on the subject.
Lord Cunningham of Felling (Lab)
My Lords, this is the second major blow to the long-term strategy of electricity supply here in the United Kingdom. As my noble friend Lord West pointed out, we cannot deliver this technology ourselves, having been a world leader for decades. If we cannot trust the Chinese with optical fibre technology, are we really going to put all our eggs in the Chinese basket on nuclear technology?
Lord Henley
My Lords, as I said, this announcement is not welcome. I should have preferred to have had more time to debate it in a proper and timely manner. Nevertheless, we remain committed to nuclear power. The noble Lord will remember our nuclear sector deal. We will look to see what we can do. We still have a great deal of expertise in this country, and I think we can work on that.
Brexit: Consumer Protection (European Union Committee Report)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I join other speakers in offering my congratulations to the noble Baroness, Lady Kennedy of The Shaws, on chairing the EU Justice Sub-Committee and on producing this report. I also congratulate her on chairing what the noble Lord, Lord Anderson, described as a happy committee. I congratulate, too, on all their work the noble Lords, Lord Anderson, Lord Judd and Lord Cashman, and the noble Earl, Lord Kinnoull, as I do the members of the committee who are not able to be here. When she goes away, the noble Baroness will, if nothing else, have the praise of her noble friend Lord Judd, who described her as someone who had views, and I am sure that all of us would echo that. All of us who have known the noble Baroness for some time know that she is certainly somebody who has views.
It is my pleasure, indeed my joy, to respond on behalf of the Government—it is late but we will, I hope, be finished by 10 o’clock. I welcome the focus of the committee, which has been on consumer protection. I am grateful to the noble Baroness, Lady Burt, for emphasising the very high standard of consumer protection that we have in UK law. It is useful to point that out. Maintaining and enforcing this protection effectively remains a government priority as the UK withdraws from the EU.
The report was published in December 2017, which, I accept, is now quite a long time ago. The Government responded in a timely fashion in February 2018, almost a year ago. I will not go through the response produced by my colleague Andrew Griffiths at that time. It is now on the record and has been referred to in the debate. I can only apologise for the fact that it does take time for some of these reports to get debated. It might have been the noble Lord, Lord Bilimoria, who said during this debate or the previous one that we have had time and should perhaps have used other evenings for debating some of these reports. These are matters beyond my pay grade, and for the usual channels. I apologise, but we are having the debate on this occasion.
What has been happening this week will not have escaped noble Lords. My noble friend Lady Williams referred to the old adage that a week is a long time in politics—this week somewhat longer than others, even though it is only Wednesday. In the context of this debate and the timing of the EU exit process, obviously things change; there are many questions to be answered on what will happen next. I am unlikely to be able to address them all in detail during my 20 minutes or so of winding up. What I can say is that the withdrawal agreement still offers a time-limited implementation period during which UK consumer protections based on EU law will be retained; this meets our main aim of an orderly Brexit delivering the stability and continuity that consumers and business both need and demand.
The terms of the future relationship will continue to be a matter—dare I say it, as colleagues have done on earlier occasions—for negotiation. We are aiming for high levels of cross-border co-operation on consumer issues as part of our new relationship with the EU. As a responsible Government, we continue to prepare proportionately for all scenarios. In order to minimise disruption, our preparations for a no-deal scenario are focused on maintaining continuity in the short term for businesses and citizens; for example, the Government have committed to funding the European Consumer Centre for at least one year in the event of a no-deal exit. Consumers will be able to contact this service for help and advice until at least March 2020. We have also progressed legislation under the withdrawal Act to ensure that consumer law will continue to function effectively after exit day.
As the Government made clear in our written response, we recognise the importance of effective cross-border enforcement co-operation and information-sharing systems in protecting consumers. I can reassure the House again that the Government are fully committed to negotiating the best possible deal with our partners to deliver this. We want UK consumers to be able to buy with confidence from traders in the EU, and vice versa. The way that consumer protections apply when buying cross-border in future, and how reciprocal arrangements would work, are a matter for the negotiations. The political declaration on the framework for the future relationship sets out that the UK and EU will work together to safeguard high standards of consumer rights.
I shall say a little about national regulatory and trading standards bodies. On the role of national regulators, the Government are working closely with stakeholders across the consumer protection landscape to ensure that enforcement remains effective after EU withdrawal. We work hard to make sure that national, regional and local enforcement is joined up. National Trading Standards supports its local colleagues in sharing intelligence and handling complex or wider-ranging issues that span local authority boundaries. The Government have also set up the Consumer Protection Partnership, which helps enforcers and consumer advice groups to work together to pool information, identify new issues and make the best use of their resources.
On funding, about which the noble Baronesses, Lady Burt and Lady Hayter, and the noble Lord, Lord Anderson, all expressed some concern, it is important to be clear about the different funding streams. Local authorities are responsible for their own finances and recruitment, and are accountable to their local electorate. That means that spending and resourcing decisions for individual trading standards are a matter for each local authority, and they will determine their own priorities. In addition, two national bodies, National Trading Standards and Trading Standards Scotland, have responsibility for prioritising and co-ordinating cross-local authority boundary enforcement. Combined funding from my department for those two organisations is just over £14 million per year in 2018-19, enabling serious regional and national level breaches of consumer law to be tackled effectively.
Baroness Hayter of Kentish Town
We were discussing not the national issues but rather local trading standards having to check local products. I think the Minister is saying that although there will be more checks, they are not going to make any more money available.
Lord Henley
My Lords, I have given the amount of money that will be available from central government for National Trading Standards and for Trading Standards Scotland. Obviously, as I made clear, other matters are a matter for local authorities.
I turn to engagement with stakeholders. We have continued to engage regularly with consumer groups, despite what the noble Baroness had to say, and we will continue to do so; we have recently had two ministerial round tables. The noble Baroness said that I would come with a briefing setting out a long list. She has received a letter containing our meetings with the appropriate authorities and she seemed to imply that most of those meetings were not adequate. She is right: I have come with a long list. I am not going to read through it all, partly because—I have to admit that this is my own incompetence—I see that the list that I have come with starts at the beginning of 2018 but only goes up to June 2018. There will be many more going beyond that.
The point that I wanted to make is that this is not just a list of Ministers from my own department, although they appear as well; there are Ministers from other departments such as DExEU, the DWP, Defra, the DfE and DCMS. Even the Treasury has been gracious enough to see people. I am sure that that will continue. I feel that we have engaged and will continue to engage in order to ensure that there is the appropriate protection in the right way and that we listen to everyone’s concerns.
I shall deal with some of the specific concerns raised in the course of the debate, starting with those raised by the noble Earl, Lord Kinnoull. I am grateful to him for alerting me to them, as they are very important. He wanted an update on CEN and CENELEC and what we intend. As I think he will be aware, the British Standards Institution, the UK’s national standards body, is independent of the Government, but we are working together to ensure that our future relationship with European standards bodies continues to support a productive and open competitive business environment in the UK. The members of CEN and CENELEC have agreed a transition period until the end of 2020, to resolve their membership criteria and find a form of wording that continues to include the BSI as a full member.
The noble Earl wanted an update on the efforts to achieve good civil justice co-operation and participation in the Lugano Convention. The political declaration on the framework for the future relationship between the EU and the UK provides a positive basis for discussions on this, and we remain committed to future co-operation with the EU on civil and commercial matters, recognising that it is in our interests to co-operate with international parties. The UK will continue to prioritise joining Hague 2005 in our own right and seek to accede to the Lugano Convention. The UK will engage with EU partners to ensure that these important issues, which provide essential protections for systems, are a focus of the detailed negotiations to come.
I also want to address some of the concerns raised by the noble Baroness, Lady Hayter, including those she alluded to last night when we were dealing with EU exit regulations, particularly the consumer protection regulations. She asked about information sharing and noted how vital it was for product safety and alerting other authorities. She asked whether that will continue and wanted assurances that we would retain access to RAPEX, the EU rapid alert system for dangerous non-food products. Information sharing with other countries is one of the most important ways that we can help to protect consumers from unsafe products and it is in all our interests that EU and UK market surveillance authorities continue to share information. Work is under way to explore options for maintaining information sharing across borders as part of our ongoing partnership. We will also ensure that the UK’s market surveillance system continues to be robust following our exit from the EU.
The noble Baroness also asked whether we would be just waving goods through to avoid congestion at the border. Again, I assure her that we continue to take the issue of consumer product safety seriously and are committed to ensuring that only safe products are placed on the UK market now and in the future. Our robust programme of risk-based market surveillance will continue to include the ability to intercept products as they enter the UK, check products already on the market and gather information through a variety of intelligence sources. If there is a no-deal exit, EU and UK product-safety legislation will be aligned on day one, and therefore we do not anticipate significant changes in risk initially. She also asked about EHICs—I think I have one of those cards in my wallet at the moment—and I will write to her about that, if I may, as I will have to take advice from the Department of Health and Social Care in due course.
The noble Baroness, Lady Kennedy, was worried that we would see a watering down of consumer rights after Brexit. I make it clear that we want to continue to maintain close co-operation with the EU on consumer enforcement, as I think I have made clear throughout my speech. We will seek to do that as part of the future economic partnership.
I accept that cross-border enforcement co-operation might become more difficult in the event of a no-deal exit, but we have retained all the necessary powers for our enforcement bodies to continue protecting consumers in the UK courts in cases of infringement of retained EU consumer law. The exact impact on consumers will be difficult to predict because the scale, nature and severity of infringements will vary. It will also depend on the degree to which UK and EU enforcers are willing and able to co-operate with each other. As I made clear, we will obviously continue to work with consumer groups and enforcers to monitor the impacts and to respond as necessary.
Lastly, I will touch on the Competition and Markets Authority, which the noble Baroness referred to, and whether it is prepared for a no-deal exit. We remain confident in the CMA’s ability to be ready for exit day. It continues to plan for such an outcome. BEIS continues to work closely with the CMA to ensure that that is the case. As the noble Baroness will remember, in the Budget back in autumn 2017, I think, my right honourable friend the Chancellor committed £3 billion over the next two financial years to help departments, which includes the CMA and the devolved Administrations, prepare for the UK’s exit from the EU. The CMA is recruiting additional consumer protection staff, which amounts to a 25% increase in its capacity in anticipation of more complex cross-border consumer protection work. The vast majority of those roles have now been filled.
I hope that I have dealt with most of the questions. As I said to the noble Baroness, Lady Hayter, I will write to her on her question about the EHIC. If I find that there are other matters that I need to write on, I will do so. I again thank and congratulate the noble Baroness on—as the noble Lord, Lord Anderson, put it—her happy sub-committee. I thank and congratulate all those who participated in the debate and give the assurance that continued effective consumer protection and enforcement after EU withdrawal remains a priority for Her Majesty’s Government.
Insolvency (Amendment) (EU Exit) Regulations 2018
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Lord Henley
That the draft Regulations laid before the House on 19 November 2018 be approved.
Special attention drawn to the instrument by the Joint Committee on Statutory Instruments, 42nd Report
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, while we believe that a deal with the EU is in our mutual interest, it would not be appropriate to assume the outcome. It is therefore important that we also plan and provide, as the instrument before us does, for a no-deal outcome.
It may be helpful if I speak briefly about the current EU framework for cross-border insolvencies. The existing EU insolvency regulation ensures that member states automatically recognise an insolvency order made in an EU country, assisting the insolvency practitioner in recovering assets and returning money to creditors, avoiding unnecessary court proceedings, time and costs, and helping return more money to creditors, or rescuing a business, or saving employees’ jobs. The EU legislation contains safeguards to ensure that individual member states’ own laws are respected, and cannot be overridden by an insolvency order made in another state. I give way to the noble Lord.
Lord Foulkes of Cumnock (Lab Co-op)
I want to ask about a point of procedure as I am surprised that the Minister is moving this, given that the 42nd report of the Joint Committee on Statutory Instruments says, at paragraph 1.12:
“The Committee accordingly reports regulation 5(1) for defective drafting”.
Further on, it says:
“The Committee accordingly reports regulation 5(2) on the grounds that it appears to make an unexpected use of the enabling power”.
Given that very strong criticism from the committee, is it really the Government’s intention to move ahead with this?
Lord Henley
My Lords, it is my intention so to do, and I was coming to address the points made by the JCSI. This is a perfectly regular procedure. The noble Lord is very experienced in dealing with statutory instruments and with reports from the JCSI. It often happens that a report will come with criticism from the JCSI. The department then issues its response, and that should deal with the matter. I was going to come to this in my opening remarks and it is right that I should do so. The noble Lord will be able to listen to my explanation and, I hope, will accept that I, and the Government, have dealt satisfactorily with the concerns that the JCSI put to us. We greatly respect the JCSI. It does a very good job and we are very grateful for that. Back in the long-distant past, the noble Lord—like most of us—probably served on the JCSI and, if he had that honour, I am sure that he did a very good job in so doing.
This instrument recognises that, as we leave the EU, our European Union (Withdrawal) Act will automatically retain a version of EU regulation in UK law. However, the safeguards that the regulation provides can no longer be relied upon as the remaining member states will no longer be bound by them in respect of the UK. Many in the professional insolvency sector have argued that reciprocity is an essential part of continuing with this legislation. In the absence of a deal, it is vital that we do not indefinitely continue to apply EU rules that could override our own law and prevent us from dealing effectively with insolvencies in the UK.
The instrument therefore repeals the majority of the EU insolvency regulation, retaining only the small part necessary to keep the right to open proceedings in the UK. It provides for an orderly wind-down of the arrangements by continuing to apply the current EU rules to existing cases where main insolvency proceedings are already open on exit day. But, as a safeguard, the courts may disapply the EU rules where they will lead to a different outcome from that which would have been the case before we left.
I come now to the JCSI report, which the noble Lord, Lord Foulkes, has kindly brought to the attention of the House. I assure the noble Lord that I had every intention of raising this subject. The report refers to a lack of clarity—the noble Lord no doubt has it before him—and an unexpected use of the withdrawal Act power. I am confident that the provisions are an appropriate use of the power in the withdrawal Act. The provisions will give the court the necessary discretion to respond to unexpected outcomes from the interaction between our law and that of EU member states. There are precedents in existing insolvency legislation providing the court with the broad discretion to make orders in insolvency proceedings.
If, following EU exit, UK creditors or others with an interest in the insolvency are being treated unfavourably, it is only right that the court is allowed to apply the powers in our own cross-border insolvency regulations—which are used for non-EU insolvency proceedings—or make some other appropriate order to resolve the situation. The detailed examples that we provided to the JCSI demonstrated just some of the situations in which this might arise, and these examples were included within the JCSI’s report.
The instrument also amends certain employment legislation which ensures that protection for employees is retained following the insolvency of their employer. This ensures that the current financial support given to UK-based employees when their employer in the EU becomes insolvent will continue after exit day. In the absence of a Northern Ireland Executive, the instrument updates and makes similar changes to the law on insolvency and employment rights in Northern Ireland, on behalf of the Northern Ireland Government. I commend the regulations to the House.
Lord Fox (LD)
My Lords, in addition to the concerns which were very importantly raised on the nature of the drafting involved here and the use of powers, I have a couple of major technical quibbles. At the risk of treading into what may be the patented territory of asymmetry, which was just discussed, we seem to be back in an asymmetrical relationship here. We are changing our rules in the hope that Europe will reciprocate. That is my interpretation; if it is wrong, perhaps the Minister can update me. How forlorn or optimistic is this hope? What hope do those employees have of their rights and benefits being preserved—the Minister rightly highlighted that we need to have these processes in order to preserve them—for businesses which cross not just into the United Kingdom but into the rest of Europe?
The Minister’s point about courts was very interesting, because that of course was what the European Court of Justice was for: dealing with cross-border disputes over a similar group of rules. What the Minister describes is complicated, expensive and fraught with the possibility of failure. Perhaps the Minister can explain what benefits we will reap from substituting what we have today with what his department has set in front of us. So I have serious concerns that there are major problems with this SI.
Lord Foulkes of Cumnock
My Lords, I indicated earlier that I was surprised that the Minister was pressing ahead with this, given the critical report from the Joint Committee on Statutory Instruments. I do not think that the Government have dealt with it fully—and we have just heard an explanation of the concerns. As I said yesterday and last week in Grand Committee, I am surprised that the Government are pressing ahead with these instruments in the event of no deal, with all the time and expense of the excellent civil servants—not to mention Ministers—involved. Given what has just happened down the Corridor, where the Government have been defeated by a majority of 230, the largest government defeat in history, I cannot believe the noble Lord, Lord Henley, has the enthusiasm, let alone the responsibility and legitimacy, to press ahead with this. I urge him to do himself and the House a favour and withdraw this statutory instrument.
Lord Henley
I will not comment on my legitimacy in front of the noble Lord, but I can assure him that I still have enthusiasm. I await guidance on what is going on in another place. Meanwhile, it is probably right and proper that we deal with this. Irrespective of that result, there is still the possibility that we might leave the EU without a deal. The noble Lord will be aware of all the legislation that has gone through with support from all parties, setting out what we will do and that if there is no deal we will leave on 29 March. That remains the situation at this stage. So it would be useful to continue with these regulations, which are designed purely to deal with a no-deal situation.
I will deal with some of the points made, starting with those from the noble Lord, Lord Fox, who referred again to asymmetry—I was worried that he was stealing it from the noble Lord, Lord Stevenson. I will make it clear that we are making changes here, because we can, but obviously we cannot control how other member states deal with their legislation. We think it is right to do so and so give certainty to the UK in the event of no deal. That is what we will do and we will continue to negotiate to deal with other matters.
Turning to the noble Lord, Lord Stevenson, I am glad he reminded us that this regulation has generally been welcomed by industry; I think that is the case and it is very important. He also asked what assessment we had made of the total cost to business for all the no-deal SIs—I think that was the noble Lord, Lord Stevenson. On 28 November we published a robust, objective assessment of potential impacts on sectors, nations and regions of the UK, and it shows that our deal—which obviously had not been rejected by another place—would be the best available for jobs and economies. We will continue to publish individual impact assessments to accompany legislation, as we have done on many occasions, including SIs where appropriate.
I turn finally to the questions relating to the JCSI asked by my noble friend Lord Lexden. Again, I am grateful for his words. I repeat the praise for the JCSI, which I first served on some 35 years ago. We are fully aware of its concerns. As my noble friend may have seen, the department issued the very detailed memorandum to the committee that is attached to the report, setting out the reasons why the transitional provisions are important to protect the United Kingdom’s position on exit day in a no-deal scenario. I do not intend to go through all the points that were raised in that memorandum, other than to say that the safeguard provided is necessary to enable the court to act where there is an adverse impact of exit on insolvency cases that are already open on exit day. That power provided to the courts to deal with cases that are ongoing on exit day is both necessary and proportionate, and is similar to provisions found in other UK insolvency law. It would not be possible to limit its scope without potentially tying the hands of the courts in dealing with these matters.
I believe that I have dealt with the points that were raised, and I beg to move.
Takeovers (Amendment) (EU Exit) Regulations 2019
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Lord Henley
That the draft Regulations laid before the House on 1 November 2018 be approved.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, these regulations will be made under powers in the European Union (Withdrawal) Act 2018. They amend Part 28 of the Companies Act 2006 so that the United Kingdom’s corporate takeovers regime can operate independently of the EU in the event of a no-deal exit. They provide clarity and certainty to businesses and shareholders.
The takeovers regime ensures that shareholders receive fair and equal treatment when the company in which they have invested is subject to a takeover bid. Part 28 of the Companies Act 2006 transposed the takeovers directive, 2004/25/EC, into UK law. The directive was intended to harmonise certain aspects of takeovers supervision across the European Economic Area, creating expectations of reasonable behaviour to which company shareholders could hold bidders.
The Companies Act requires the Takeover Panel to make rules to give effect to the directive in the UK. The panel has done so in the City Code on Takeovers and Mergers. These regulations preserve the statutory underpinning of the code and make only minimal changes to the way the UK regime functions.
In developing the regulations, we have worked closely with the UK’s supervisory authority, the Takeover Panel. It has consulted on the changes it will need to make to the takeover code to reflect these regulations. The takeovers regime is wholly separate from the mergers regime in the Enterprise Act 2002, which considers the competition implications of mergers. These regulations have no bearing on the mergers regime, or the powers and responsibilities of the Competition and Markets Authority.
For the most part, these regulations import and correct provisions from the directive necessary for the independent operation of the UK regime, but do not change how the domestic regime operates. They make only three substantive changes. First, they remove the shared jurisdiction regime. The EEA takeovers regime includes a system of shared jurisdiction for companies registered and listed in different countries. The supervision of a company captured by the shared jurisdiction system is usually by two regulatory authorities, one in the country where the company has its registered office and the other in the country where the company is listed. The shared jurisdiction regime works on a reciprocal basis. Since the reciprocal arrangements will no longer apply to the UK after EU exit, the regulations will remove shared jurisdiction from the UK takeovers regime. The panel has consulted on how the takeover code should apply to UK-registered companies that would otherwise have fallen within the shared jurisdiction regime because they have shares trading on another EEA state’s regulated market. It has proposed that the takeover code should apply to takeover bids for such companies if their place of central management and control is in the UK. Companies not fitting this criteria may be supervised by another authority.
The second feature of the regulations relates to the duty of co-operation. Section 950 of the Companies Act 2006 places a duty on the Takeover Panel to co-operate with its counterparts and certain other regulatory agencies in any country or territory outside the UK. It also imposes a duty to co-operate with EEA supervisory authorities. The duty to co-operate with supervisory authorities in the EEA is derived from the takeovers directive. After exit, EEA member states will no longer be bound to co-operate with the UK under the directive. These regulations therefore remove the obligation to co-operate with EEA supervisory authorities as it will no longer be reciprocal. However, the Takeover Panel will still be required to co-operate with the authorities of EEA member states under the duty in Section 950 to co-operate with any international supervisory authority with an equivalent role.
The third feature of the regulations relates to restrictions on the disclosure of confidential information. Section 948 of the Companies Act restricts the disclosure of confidential information obtained by the Takeover Panel during the course of its duties and sets the conditions under which this information can be shared. It applies to both the panel and the organisations with which information is shared. To breach the Section 948 restriction is a criminal offence. The Companies Act provides an exemption from the Section 948 restriction for EEA public bodies using confidential information disclosed by the panel for the purpose of pursuing an EU obligation. Instead, the EEA framework provides reciprocal protections to prevent the inappropriate disclosure of information and maintain professional secrecy. After EU exit, these reciprocal protections will no longer apply to the UK and the removal of the exemption for EEA public bodies ensures that there is a sanction for inappropriate onward disclosure of confidential information.
In conclusion, corporate mergers and takeovers are an important part of a healthy economy. By encouraging efficiency gains, spreading knowledge and promoting innovation, they drive economic growth and job creation. It is vital that we seek to safeguard the legal framework that gives companies and their shareholders the confidence to engage in merger and acquisition activity. These regulations achieve that goal by making only those changes needed to fix deficiencies in UK law arising from EU exit. They will have a negligible overall net effect on our economy. I beg to move.
Lord Fox (LD)
My Lords, this time last year I was engaged in my civilian life on one of the largest contested takeovers in the British Stock Exchange, so I have some first-hand experience of the Takeover Panel and its operations—which I will not regale the House with today. However, after that experience I was left with the realisation that there are major issues around takeover policy in this country and I beg to disagree with the last words of the Minister when he described the beneficial effects of takeovers. Many of them prove not to be beneficial. Although some are, as he says, part of a healthy and vibrant economy, many are driven by the wrong motives and have outcomes that are not necessarily favourable to the economy of the United Kingdom. However, this is not the medium through which to have that discussion or to make those changes, so I will not attempt it.
The role of the Takeover Panel is interesting. While this is not a game, the way in which it operates is very much as a referee. Two sides are contesting and the Takeover Panel acts as a referee. It has a lot of experience—although each takeover is different, so the process of learning is for the Takeover Panel as well. In essence it is a put-together team in terms of the referees as well as the contesting companies. That process of consultation is quite interesting because what kind of response you get will depend on who you speak to from the Takeover Panel. It is the same as taking 10 Premiership referees and asking them how to change the rules of association football; they would all come up with different ideas. So I would like a little more information on the consultation process.
Lord Stevenson of Balmacara (Lab)
My Lords, I will pick up on a couple of points raised by the noble Lord, Lord Fox, and respond in part to some of the points made by the Minister in his introduction of this memorandum, about which we have very little of substance to complain because it does what it says it is going to do on the tin, as they say.
I first reinforce the wider context, which—although I think it sent shivers through a number of those sitting opposite me—we will have to return to before too long in one context or another. The arrangements under which company takeovers and mergers are taken are complex. This is bedevilled by the fact that some are statutory and some not. The role of the statutory bodies does not always fit perfectly with those of the listing arrangements under the Stock Exchange rules. The problems bedevilling British industry, which are too well known to need rehearsing here—short-termism and often acting without regard to national interest—have been raised by the Government over a number of years, but we still do not have their final conclusion or decisions, and we await them with some interest.
Having said that, this SI has similarities with a number we discussed in previous weeks. Only yesterday we talked about intellectual property. I am struck by the difference in approach taken by the department in this SI on takeovers and those we discussed yesterday on intellectual property, patents and trademarks. Does the Minister agree that one of the underlying themes of the debate yesterday on intellectual property was what appeared to be a fairly clear steer by the department that it wished to bring into play regulations that would future-proof discussions that may emerge should there be some form of deal or, even if there is not a deal, some sort of discussions and debates about how the country would wish to engage with partners in the EU on intellectual property, trademarks and patents? Is he struck, as I am, by the fact that the asymmetric approach taken yesterday in those SIs is not being picked up today?
The issue here is whether there should be some form of joint supervision and some mutual recognition of arrangements and structures. Companies increasingly operate across borders. It may not always be easy to identify precisely where the headquarters are. Indeed, some companies have made a virtue of having more than one headquartered operation in a number of countries. Simply doing it on a numerical basis of where securities are listed is not going to get to the same conclusion, as the SI admits. So we have a potential problem, in a sense not dissimilar to that addressed in the SIs we dealt with yesterday, which could perhaps provide an opportunity for further discussion. Does he therefore agree that this SI, as we have it before us, does not meet the asymmetry test in the terms we discussed?
On a slightly different line, consultation was raised extensively and has been raised in all these EU exit regulations. I can understand why the Minister will respond by saying that the consultation was appropriate for the circumstances. But in this case the only consultation I can see mentioned is with the Takeover Panel itself. There has been no attempt to try to look out to a wider interest—for example, to consumer interests, trade union interests or employee interests more directly—in the way these operations take place. There is no reference to the CBI or the FSB. I am a bit surprised about that, and I wonder if he would like to comment on whether he felt the department had the best advice possible in circumstances where so few people were consulted.
My final point is the question raised earlier this evening, which is relevant again now. There is nothing in the SI itself or the Explanatory Memorandum to confirm whether this statutory instrument will continue in the event that there is no no deal. As mentioned in the last debate, I wonder where the poison pill lies in this. What are the circumstances under which elements of this SI will fall away, and how will that be achieved? Does it require a further debate and discussion? Does it require a new statutory instrument? I would be grateful if we could be put in the picture. It would be interesting, if somewhat frustrating, to feel that all the effort we are putting into these statutory instruments today is simply a rehearsal for going back and redoing them should no no deal take place. We should presumably know in about 20 minutes whether that is likely to be the case.
In conclusion, it may be that elements of this SI would continue to any deal scenario. The Secondary Legislation Scrutiny Committee pointed this out on another SI that we will discuss shortly. I wonder if that is the case here and, if so, if the Minister could identify which elements of this would continue in any future discussions and negotiations.
Lord Henley
My Lords, I thank both noble Lords for their contributions, particularly the noble Lord, Lord Fox, for saying how helpful the notes attached to this order were. This does not often happen and I must thank the noble Lord on the occasions that he is as polite as that. I also welcome the experience he brings to this debate, particularly with his knowledge of takeovers, although I am not sure I fully share his view of the general helpfulness or unhelpfulness of shareholders. Perhaps I could deal with some of the questions that he, my noble friend Lord Leigh and the noble Lord, Lord Stevenson, put.
First, as always, let me remind the noble Lord, Lord Stevenson, that these are no-deal regulations only brought before the House for the eventuality that we leave the EU without a deal. In the event of a deal, as has been made clear by other colleagues from the Front Bench, there will need to be legislation in the Act that will come before us in due course to deal with that. We will have time enough to debate that.
I also do not think I accept his point—I am not sure I fully understood it—whereby he suggested we were taking an asymmetric approach to these matters when we dealt with those three orders yesterday. I imagine we will deal with them again in the Chamber in due course, but not on this occasion. I never quite understand what the noble Lord means by that asymmetric approach.
Lord Stevenson of Balmacara
I do not want to delay the House unduly, but I would not wish the evening to conclude with the Minister going off in confusion and worrying all night. Just to be certain, there was no need in the drafting we saw yesterday—let us take the trademark arrangements, for example—for us as a UK emerging from the EU as an independent state to offer to recognise trademarks registered in the EU. That does not seem to be taking back control, because one is opening up to UK manufacturers which have their own trademarks a chance to lose out to trademarks they will have to compete against which are registered elsewhere in the EU, and we are not part of the EU. I can understand the logic of it, but it certainly does not seem to fit the criteria set out for a no-deal Brexit.
The interesting arguments that emerged during the debate yesterday were that the primary reason that was there was that it might be negotiable in the future for similar arrangements for UK trademarks to be deemed to be registered also in the EU. In that sense, that symmetry of each section—the EU 27 and the UK having their own arrangements for registering trademarks which are then mutually recognised—is symmetrical, but what the SI proposed was very much asymmetrical.
Lord Henley
I take the noble Lord’s point, but I do not think it is relevant to the regulations we are dealing with today, so I will get back to the various questions that noble Lords put. I will first deal, as always, with consultation, which is so important to noble Lords. I can again give an assurance that in developing these we worked very closely with the United Kingdom supervisory authority, the Takeover Panel. The noble Lord, Lord Fox, talked about its role as a referee. I do not think it is necessary at this stage for me to get on to the composition of it. The Takeover Panel includes representatives from a range of business sectors. I can give an assurance that it consulted publicly on the changes it will need to make to the Takeover Panel to reflect these regulations. No doubt, if it is available, I will seek advice from the Takeover Panel and give a little more information to the noble Lord.
The noble Lord also asked about the impact on the companies affected. I can say that the only cost to business arising from these regulations will be that associated with compliance with a different supervisory regime. That will affect only the few companies that previously fell under the Takeover Panel’s jurisdiction and will no longer do so after exit, following the loss of that shared jurisdiction regime. The cost of compliance between the different regimes is unlikely to vary significantly as the takeover directive establishes standard requirements, and these costs will arise only in the event of a takeover. I give way to the noble Lord.
Lord Henley
I am sorry; I miswrote down what the noble Lord originally said. It does say 35 in the order: 35 EEA companies come out and 10 UK companies go in. I think the noble Lord has got it right. Again, I will write to him on that if I am wrong. He also referred to paragraph 20, on what drove changes to the definition of a takeover and what other amendments have been made. I can give an assurance that there have been no changes to the definition of a takeover, and the scope of companies that can be subject to takeover has been narrowed, obviously, to UK companies. That would be implicit in the order.
My noble friend Lord Leigh asked, very helpfully, about shared jurisdiction. The EEA takeovers regime includes a system of shared jurisdiction for companies registered and listed in different countries. Since the reciprocal arrangements underpinning the system will no longer apply to the UK after exit, the regulations will remove shared jurisdiction from the UK takeovers regime. My noble friend then asked whether that was likely to bring more companies to the UK. He and I are always optimists in these matters and there is every chance it might have that effect, although that is a matter not for the Government but for the companies themselves. I believe I have answered all the points put to me but if I failed to deal with any I will write to noble Lords.
Consumer Protection (Enforcement) (Amendment etc.) (EU Exit) Regulations 2018
Lord Henley Excerpts(5 years, 10 months ago)
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Lord Henley
That the draft Regulations laid before the House on 4 December 2018 be approved.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, this instrument is part of our EU exit contingency planning. It will not be needed should the UK conclude the withdrawal agreement with the EU.
Several laws allow for collective redress where infringements of consumer protection laws take place. The first of these is the consumer protection co-operation regulation, known as the CPC regulation. The reciprocal arrangements that this EU law sets out require enforcers to act on requests from their counterparts in another EU member state. They are required to investigate and, if necessary, take action to end infringements of EU consumer law where the collective interests of consumers in another member state are being harmed.
The second of these laws is the injunctions directive. The reciprocal arrangements in this EU directive allow enforcers to take action in the courts of other member states to stop the relevant infringement. In the UK, Part 8 of the Enterprise Act 2002 implements the injunctions directive as well as providing the UK’s enforcement mechanism for the CPC regulation. It enables certain UK and EU enforcers to apply for enforcement orders to stop the infringement in question, where listed EU consumer laws are being breached— known as community infringements—and the collective interests of consumers are being harmed. Lastly, UK enforcers are given the necessary investigatory powers through Schedule 5 to the Consumer Rights Act 2015.
After EU exit, and in the absence of a deal, the CPC regulation and injunctions directive will no longer apply to the UK as we will cease to be a member state. In consequence, UK consumer enforcers such as the Competition and Markets Authority will no longer be part of the reciprocal cross-border enforcement arrangements. This instrument therefore revokes the CPC regulation, which will otherwise continue to apply in UK law. This prevents a situation in which UK enforcers are required to assist their EU counterparts while EU enforcers are not under the same obligation.
The instrument also amends the Enterprise Act so that EU enforcers cannot apply for enforcement orders in the UK courts. This prevents a situation whereby EU enforcers remain able to take legal proceedings under the injunctions directive in UK courts while UK enforcers lose their equivalent right to take proceedings in the EU. However, the instrument does not prevent UK enforcers co-operating with their EU counterparts. UK public bodies will remain able to share information that they hold in their capacity as enforcers under Part 8 of the Enterprise Act to assist their counterparts abroad, although we recognise that cross-border enforcement co-operation to protect consumers will become more limited in a no-deal scenario.
The instrument also ensures that UK enforcers retain the powers that they have now to continue, within the UK, to investigate and address infringements of UK consumer law, including retained EU consumer law, after exit day. These laws are set out in the new Schedule 13 to the Enterprise Act inserted by this instrument.
In conclusion, these changes are a necessary use of the powers of the EU withdrawal Act and I commend the instrument to the House.
Baroness Burt of Solihull (LD)
My Lords, I thank the Minister for his letter of 7 January to my colleague, my noble friend Lord Fox, explaining much of the reasoning behind this statutory instrument. I sincerely hope that we will never ever need the provisions within the instrument; the effect of the vote that has just been held in the other place on the prospect of no deal remains to be seen. The letter says that the regulations,
“form an essential part of the government’s preparations to ensure a functioning statute book should the United Kingdom leave the European Union without a deal on 29th of March 2019”.
There has been much speculation about what would ensue should that happen, and we know that no one—or very few individuals, anyway—would want us to be in that situation. However, I wonder if the Minister knows how many more statutory instruments there are to come before 29 March in his own department alone? I understand that many have not yet even been drafted, but I would be very grateful, and I am sure the House would be too, for his best estimate of just how much work remains to prepare for that potentially disastrous eventuality.
The UK has a proud record of close and complex co-operation with the EU on consumer protection matters, but we know that if there is a no-deal withdrawal, UK consumer protection enforcement bodies will no longer be a part of the reciprocal cross-border enforcement arrangements in the consumer protection co-operation regulations or the injunctions directive. If the EU and the UK lose their mechanism for cross-border collaboration, we will all be the poorer for it. We will no longer benefit from reciprocal rights under EU law. As the Minister said, the instrument introduces the concept of a “Schedule 13 infringement”. I think I understood what he was saying but I would be grateful if he elaborated on how this might work in practice.
The letter says that the instrument will,
“protect UK consumers in the case of infringement of EU derived UK consumer laws”.
Could the Minister give an example? We know that purchased items that were manufactured in the EU but supplied through UK-based suppliers will be protected under UK rules, which will cover the vast majority of our purchases of EU-manufactured goods. Could the Minister give an example of when this Schedule 13 infringement power might be required and how it might be enacted?
It looks to me as though UK enforcement bodies can retain powers to protect UK consumers but are not obliged to co-operate with their European partners. I am sure the Minister will have some reassuring comments to make about that; it is certainly in nobody’s interest not to co-operate, but it is unfortunate that we potentially find ourselves in this position.
My final question relates to the UK European Consumer Centre, which the Government will be keeping open for at least a year, until March 2020. All well and good, but what happens to EU-purchased goods after that date? If you buy something and it develops a fault after March 2020, to whom will you go for advice?
In conclusion, the UK has been a leader in consumer protection issues and has helped to shape much of existing EU legislation. The letter says that the Government are,
“fitted to agree high levels of cross-border co-operation on consumer issues”.
It would be very helpful to know what this co-operation will look like and when it will happen. Any explanation the Minister can give about proposed timescales and content would also be appreciated.
Baroness Hayter of Kentish Town (Lab)
My Lords, I think everyone else on our Benches has gone away to celebrate, and we will join them soon. While thanking the Minister for setting out the reasoning behind these regulations and their purpose, I find it deeply regrettable that we have come to this: having to legislate to take away the protection of consumer rights simply because the Government have so miserably failed to negotiate a withdrawal agreement acceptable either to this House or—as we have now learned—to the other place.
Ministers are therefore threatening to crash out of our near half-century relationship, with all the rights and benefits that have accrued to consumers over that period—threatening no deal in an attempt to persuade MPs to vote for their inadequate deal. As we have seen, it did not work.
Meanwhile, the Government pursue these no-deal regulations, each and every one of which does two things. First, they show how much we have gained from and depend on our close working relationship across the EU, not only in trade but in all those associated areas, be it the recognition of legal judgments or—as in this case—the cross-border protection of consumer rights. It is an issue which, sadly, has been lacking throughout the Government’s approach to Brexit. We will have a longer debate on that tomorrow, when the Minister will also be replying, so perhaps I will just give him notice of one of the things I shall say then, which is to note the shocking failure of Ministers over two years to engage with consumer bodies and their representatives during their process of considering Brexit.
Secondly, the SIs do not only show how closely we have been intertwined with the EU; they are also testament to the disaster any no-deal exit would bring, because, literally overnight, long-standing protections would disappear. Consumers would feel this more than anyone else because it will happen immediately. The suggestion has been made, not by the Government but by some of their supporters, that somehow it would be a good idea to just wave through imports at our borders, particularly at our ports, to save congestion in Kent. That may be fine for the roads of Kent, but waving throughout unchecked lorries will mean we very quickly see shoddy, fake or unsafe goods in our shops, because we will lose all the protections that prevent that happening, and it will be consumers who pay the price.
So the regulations before us are a pitiful example of what will face us should we crash out on 30 March. As we have heard, what they show is that, with no deal, key consumer protection enforcement bodies—particularly trading standards and the CMA—will no longer be part of that absolutely essential cross-border network whereby rogue traders, rip-off companies, cartels and the makers of shoddy goods and services can be brought to book, as they can at the moment, by sharing intelligence and by pan-EU enforcement.
No matter what the Government say, consumer protection will be weaker. All these mechanisms have allowed trading standards bodies to alert their professional equivalents across the other 27 countries in the EU about unsafe products or traders, and to ensure that evidence found in one place can be used in another jurisdiction. That means that courts in one country can tackle a business located elsewhere, which is often the case when a consumer is buying something made in a different country. But under no deal—the outcome this House found unacceptable last night—our domestic enforcement authorities will no longer benefit, on behalf of consumers, from all those reciprocal arrangements and rights now granted under EU law. That is a big loss for our consumers.
But strangely and inexplicably, because of this self-injury to our consumers, the Government have decided, via these regulations, to similarly harm EU consumers by ending the requirement on our enforcement bodies to help other EU states in the interest of their consumers. They have made it voluntary rather than a requirement. That was never necessary. No rationale was given for this. Just because we have chosen to harm our consumers by leaving, I do not see why we are also willing to harm consumers in the other countries.
Furthermore, that was a policy decision. It was not automatic because of our exit. It was a policy decision to end our assistance to consumer bodies elsewhere, and therefore it was absolutely correct that our scrutiny committee insisted on this being an affirmative measure, because it is a policy and not an automatic decision. I hope there will be no further attempts to disguise policy decisions being taken by seeking to slip them through as negative orders.
Perhaps the Minister could explain the rationale for this mean-spirited decision. It is our Government—or even our people—who voted to come out, so why on earth should we make EU consumers pay the penalty? Could the Minister also explain why there has been no impact assessment for this measure? It is a vital measure for consumers and they will feel the impact, as will SMEs. They will have to do more of the checking which thus far they have not had to do because they have relied on any product coming from across the EU being safe to be sold here. Also, the cost will be paid even more by trading standards, not only because they will be hampered in their enforcement, but because they will have to do those checks on products arriving which currently they do not have to do. That should have been in the impact assessment.
Inexplicably, the Explanatory Memorandum says that the regulations will have an impact of less than £5 million. First, I do not believe it. Secondly, how on earth do the Government know without doing an impact assessment? Did they even contact trading standards to find out the impact on them of extra checks? Did they look at the costs where consumers are harmed and therefore compensation has to be paid? Did they look at the impact of enforcement taking longer when the intelligence is missing? Or is it simply that the Minister’s department does not really care too much about consumers?
In the same context, what assessment was made of the cost of the extra checks at borders once we can no longer rely on intelligence from trading standards abroad? We heard it said in the debate yesterday, “Don’t worry about the extra checks, because the checks at our border are done on a risk basis”. That means that they are done on the basis of intelligence. The moment that we take out intelligence, we lose our basis for a risk assessment, so the idea that there will no extra checks at the border is absurd. A little clarity from the Minister would be appreciated. The loss of access to these consumer protection networks is bound to be bad for consumers. It would have been more honest had the Government acknowledged this.
I have one further question for the Minister. This statutory instrument is supposedly “contingency planning” for no deal, but can he detail the Government’s intentions for the whole of the UK’s consumer regime should we leave in a slightly more ordered way with a deal? We would like to know something about the timing of the SIs that will be needed also for those circumstances.
Lord Henley
My Lords, I thank both noble Baronesses for their comments, particularly the noble Baroness, Lady Hayter, for reminding me that we would deal again with these matters tomorrow and that I might want to respond more fully at that stage. After considering things overnight, it might be that I deal with just a few more of the noble Baroness’s points in that debate on the report from the Select Committee—a debate which, dare I say it, will happen somewhat later than tonight’s.
The noble Baroness, Lady Burt, raised a number of questions. She started by asking how many statutory instruments were coming from the department, how many were drafted and when she would see the figure. I regret that I do not have the figure in front of me, but I think virtually all of them are now drafted and on their way through the process. I think we will be able to get them ready in time for 29 March. I look forward to discussing those and others with her, the noble Baroness, Lady Hayter, and other noble Lords as they come before us. I will continue to write to the noble Baroness or her noble friend, depending on whether I can work out who is dealing with each SI—but I am sure that they manage to exchange letters perfectly well—just as I wrote on this occasion to the noble Lord, Lord Stevenson, who no doubt passed on that letter to the noble Baroness, Lady Hayter.
The noble Baroness asked also about the EU consumer centre and what our plans were. I am grateful to her for repeating what a good job it did and saying that it will continue to operate until March 2020. At this stage, all I can say is that we have made no final decisions, but we will review that over the coming year. Again, I will make sure that the noble Baroness is kept informed in the appropriate manner.
On engagement, I can give the assurance that discussions were held with the Competition and Markets Authority, members of the Consumer Protection Partnership, Which?, MoneySavingExpert, the devolved Administrations, the Government of Gibraltar, the Crown dependencies and other government departments with direct responsibility for the laws in the annexe to the CPC regulation. The related competent authorities were also consulted. That engagement was as wide as is appropriate.
The noble Baroness, Lady Hayter, will be aware that it is not necessary to publish a full impact assessment for this SI because it qualifies for the de minimis exemption. The de minimis exemption from a full impact assessment applies where the expected net direct impact on businesses is no more than £5 million per year. It is also important to note that, in assessing impact, we are considering the effect of the SI in question rather than the wider impacts of EU exit. These regulations are designed to correct the deficiencies in legislation after exit to maintain the status quo as much as possible. Therefore, the expected impacts are small. To form the assessment of likely impacts, the department has engaged in informal partnership with the Consumer Protection Partnership.
Baroness Hayter of Kentish Town
I still do not understand how the figure of £5 million has been reached.
Lord Henley
I am not sure that I can give from the Dispatch Box a precise breakdown as to how we reach those figures. This is general guidance on all impacts in that we look at the effect on business; we make an estimate, and if it is below £5 million—this has been in existence for some time—we do not publish an impact assessment. That is a standard procedure. I will write in greater detail to the noble Baroness setting out how we do that.
I hope that I can say a little more tomorrow, because it goes wider than this SI, in response to the question asked by the noble Baroness about extra checks at borders. I think that would possibly be more relevant to that debate.
Finally, I will deal with the question from the noble Baroness, Lady Burt, relating to Schedule 13 infringements and how they differ from Community infringements. A Community infringement is a breach of the EU regulations and directives—specified in the current Schedule 13 to the Enterprise Act—as implemented by the EU member states. A Schedule 13 infringement is contravention of retained EU law that will form part of UK law post exit and thus will deal with breaches of national law. I hope that explains the issue. If not, I will no doubt receive a prod from the noble Baroness and be asked to write in further detail.
I believe I have dealt with the questions that relate to the instrument; others, as I have said, possibly went wider and might be addressed in our debate tomorrow, which I look forward to with enormous pleasure. Again, I remind the noble Baroness and possibly the noble Baroness, Lady Burt, who will also be speaking, I think, that we might be at a somewhat later hour, as there are two debates beforehand, both of which seem to have attracted a reasonable number of speakers. I commend these regulations to the House and I beg to move.
Patents (Amendment) (EU Exit) Regulations 2018
Lord Henley Excerpts(5 years, 10 months ago)
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Lord Henley
That the Grand Committee do consider the Patents (Amendment) (EU Exit) Regulations 2018.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I beg to move that the Committee considers the draft Patents (Amendment) (EU Exit) Regulations 2018, which were laid before the House on 28 November.
Intellectual property plays a vital role in the UK’s knowledge economy, and this will continue to be the case after our departure from the European Union. Ensuring strong and balanced IP protection and enforcement is central to the Government’s aim of encouraging businesses to innovate and develop new ideas and technologies, which forms part of the industrial strategy. Our IP system is consistently rated one of the best in the world.
Lord Adonis (Lab)
I am very grateful to the Minister for giving way. Can he tell us—the same issue came up with the previous regulation—what consultation there has been on the regulation?
Lord Henley
I will answer that in due course. The noble Lord will have an opportunity to speak after my speech, and we might make better progress if I take it in that manner.
The regulations are part of the work being delivered by the Intellectual Property Office to ensure that the IP system for the UK continues to function effectively in the event of no deal being agreed when we leave the EU in March. This is essential to ensure a smooth transition for business and provide maximum certainty and clarity.
The draft instrument before the Committee today uses the powers provided by the European Union (Withdrawal) Act 2018 to address deficiencies in UK patent law which would arise on exit. The majority of UK patent law is domestic in origin or derived from various international agreements, so will not be affected by leaving the EU. Only a few specific areas of patent law are governed by EU legislation, and it is those areas which the draft instrument is intended to address.
I shall focus in particular on supplementary protection certificates, which are a special type of IP rights connected with patents. Noble Lords may recall that SPCs were created in the 1990s by way of EU legislation to deal with a growing issue affecting pharmaceutical and agrochemical products. Before such products can be made available on the market, the regulatory body must be satisfied that they are safe for use in order to authorise them for sale. As this process is extensive and often lengthy, it can stop the innovator enjoying the full period of exclusivity which a patent on such products normally provides. The aim of the SPC system is to limit the effect of that by providing up to five and a half years of additional protection to an authorised product after the expiry of the patents. This arrangement gives the maker of the product more time to recoup the costs involved in research and development, which is especially important in relation to pharmaceuticals.
The association representing British manufacturers in the field, the ABPI, has estimated that bringing a new drug to market costs more than £1 billion. SPCs therefore play an important role in encouraging innovators to develop new and more effective medicines by helping to cover those costs and providing additional revenue to put back into research. The framework for SPCs is set out in EU regulations 1610/96 and 469/2009 which will be retained under the withdrawal Act.
Lord Henley
My Lords, I did not say that and the noble Lord should not put words into my mouth. I said that when I come to respond at the end, I would deal with the point. No doubt the noble Lord would like to intervene to make the point and I have now listened to it. If the noble Lord would like to stay until the end of the debate, I will respond to it them.
Lord Adonis
My Lords, I do not think that that is a satisfactory response at all. Our consideration of this regulation, which we are just about to engage in, crucially depends on the Minister telling us what consultation has taken place. It is not good enough for him to say that he will speak at the end of the debate when we raise the issue. I have raised the issue because I wish to respond, as will other Members of the Grand Committee, to what he has to say about the consultation that has taken place.
Lord Henley
The noble Lord intervened more than once during the previous debate. I had a number of responses to give to him but sadly he did not think it necessary to stay until the end.
Lord Henley
Will the noble Lord sit down? I have not given way to him. The noble Lord can make his point when I have given way.
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, it might be for the convenience of the Committee if I were to put the Question so that the debate can then continue.
Lord Adonis
My Lords, I do not think it is for the convenience of the Committee, because the noble Lord has just made a direct allegation that I was not present in my place to listen to his response. The reason is that I was speaking in the debate on the EU withdrawal agreement in the Chamber. I have made the point to the Whips, including on our side, that it is highly unsatisfactory for the debate to be taking place in the Grand Committee on regulations concerning exactly the same matters as are being debated in the Chamber. It is not possible, even for the noble Lord with his considerable abilities, to be present in two places at once. It is because I wished to participate to the debate—it is a discourtesy to the House that I am not able to be present for most of it, because I am fulfilling my duties in the Grand Committee—that I was not here. I hope the noble Lord will withdraw the remark he just made, which appeared to imply—maybe because he was not aware that I was in the Chamber—that I was not fulfilling my duties. After he has noted that I was not here because I was in the Chamber, I think he needs to answer this point to begin with. Otherwise, I will continue interrupting until he actually gives us some information on what consultation took place on this regulation—before we can properly consider it and whether we think the consultation that took place was adequate.
Lord Henley
My Lords, I quite understand that the noble Lord was in the Chamber and therefore not able to be there at the end. I merely made a statement of fact that he was not there and that therefore I was not able to respond to him. I similarly make the quite straightforward statement that I have spoken on this, for which I hope the noble Lord is grateful, and I will respond in due course to the points made. I hope the noble Lord will understand that the wide-scale engagement he would like, as we discussed on the earlier amendment, was not possible on a draft no-deal regulation of this sort. I can give the assurance, as I gave on the previous order—this is the important thing—that there will be a proper consultation in the future. The noble Lord should bear in mind that at the moment we are making sure there is a degree of certainty for businesses in the eventuality that there is no deal.
Lord Henley
No; there is no need for noble Lords to get up. I will sit down and give way to the noble Baroness or the noble Lord when I am ready, but I am entitled to speak and give way as I wish.
We will consult as appropriate on whatever the future regime might be, deal or no deal. We are trying to get things right in the eventuality of there being no deal. It is quite right—
Lord Henley
Can the noble Baroness wait just a moment? I am still speaking. It is quite right that we make appropriate contingency plans. I now give way to the noble Baroness, then I will no doubt give way to the noble Lord, Lord Warner, who is itching to get to his feet.
Baroness Kingsmill
I was actually trying to be a little helpful. In the notes on this matter, there is a little more detail about the consultation than on the previous one. They say a consultation was taken with “informal discussions”—informal is always questionable—
“with a small group of selected individuals with expertise in the relevant areas, or in patent law generally”.
I read that to suggest that the consultation was with lawyers, as opposed to people directly affected by this. I wonder if the Minister could make that clear. If it is with lawyers, they will be looking at it on the basis of the law as opposed to the impact on businesses. Once the Minister has clarified who and what it was, I could then understand the impact. In paragraph 12, the Government assert that there is,
“no, or no significant, impact on business”.
If there has been a proper consultation, that is fine and perhaps one has to accept that impact. But at present an informal discussion,
“with a small group of selected individuals”,
does not sound to me like the kind of consultation that is going to give anybody the possibility of saying there is,
“no, or no significant, impact on business”.
Perhaps the Minister would care to clarify.
Lord Warner
May I intervene to be helpful to the Minister? He might wish to consider withholding his remarks about consultation until he has heard what I have to say a little later about the consultation process—if we may venerate it with such a description. I think he might want to hear those before he commits himself too far on what consultation has taken place.
Lord Henley
The noble Baroness, Lady Kingsmill, suggested that it was only lawyers who were consulted. There is nothing wrong with lawyers—I speak as one myself—but others were involved too, including a number of business stakeholders, a representative from the BioIndustry Association and other representatives from the pharmaceutical and generic industries. I imagine this will be confirmed by the noble Lord, Lord Warner, when he speaks; I am looking forward to his remarks. All I can say is that that has happened, but obviously the consultations will continue so as to ensure we get the right process for the future, deal or no deal. At the moment we are dealing just with contingency planning should there not be a deal. I think I have moved, and I think I have now sat down.
The Deputy Chairman of Committees: The Question is, that the Grand Committee do consider the draft Patents (Amendment) (EU Exit) Regulations 2018.
Lord Warner
My Lords, I hope to throw a little light on the subject of consultation during the course of my remarks, which I am afraid will be slightly lengthy. My remarks are based upon a briefing I have received from the BioIndustry Association They relate to its concerns about both the impact and the process by which these regulations were drawn up and consulted upon. Again, I use the term “consulted” in a very loose way.
Before I get down to the business of what the BIA’s concerns are, I want to make a couple of general remarks which came out of our debates in Grand Committee last week about the previous set of regulations, and out of our discussions this afternoon about the first set of regulations. They are two issues which we keep coming back to time and time again. I hope that, for the rest of the proceedings, the Minister might refrain from continuing to run the argument that these documents do not reflect any change of policy. I shall set out the arguments as to why there is a change of policy here. Last week there was a set of policy changes in the regulations that were produced. I understand why there may have been a change of policy, given the circumstances in which these regulations were pursued, but it would be helpful to informed debate for the Government to stop saying that there is no change of policy because there palpably is a change of policy in many of these sets of regulations.
That is request number one to the Minister. The second concerns the Minister saying that somehow these regulations were only hypothetical and relate to a set of circumstances which may not occur. We raised this last week when he was not here and we were dealing with another Minister. The truth is that this is a set of regulations the Government of the day have drawn up and put in the public arena, and they have an impact on the people who may or may not be affected by them. As I said last week, as an ex-civil servant I know that even if these regulations are not used for the purposes for which they have been drawn up, they will be tucked away in a Whitehall cupboard. That is the reality. If we get down to some of these issues subsequent to Brexit day, they will still be there, they will still be a resource which will be drawn upon, and I would be willing to bet a large sum of money that they will be used to some extent in drafting another set of regulations.
The point that we have been trying to make to Ministers, singularly unsuccessfully, is that there are concerns about how they may be used and how the outside world may interpret the Government’s attitude in these areas in the future. That is why it is very important to challenge the Government when there are defects both in the assessment of impacts and in the inadequacy of the consultation process.
Lord Adonis
My Lords, my noble friend has made an extremely grave allegation. Would the Minister care to say whether he is correct that precisely one person in one company was consulted about these regulations? I would happily give way to him if he would like to contradict that statement, because it seems to be of immense importance.
Lord Adonis
I think that the Grand Committee will be extremely concerned to have information on this point. If what my noble friend has said is the case, it would be a situation without precedent in my experience: that on matters of significant impact on a major industrial sector, precisely one person in one company has been consulted and the relevant trade bodies were not even given the opportunity to express their views.
Lord Deben
What is more, that one person was selected but clearly not trusted.
Lord Henley
I was going to leave this to the end and I suspect that any intervention I make will just prolong these proceedings, but for the sake of assisting the noble Lord at this stage, I can assure him that consultation participants on the technical view of the draft instrument included the BIA, the ABPI, the IP Federation, the Chartered Institute of Patent Attorneys, the British Generic Manufacturers Association and the agrochemicals industry.
Lord Warner
I flatly reject the idea that the BIA was consulted on the exclusivity aspects of these regulations. That is the assurance that I was given by it and I put it on the record in my speech.
Lord Adonis
My Lords, we seem to have a serious situation where the Minister has just said that one body of central relevance to these regulations was consulted and my noble friend Lord Warner has flatly denied it. Would the Minister like to elaborate on what he said; otherwise, it might be a matter for other authorities to examine?
Lord Warner
The exclusivity point is a key element in these regulations, as I made clear. If the Minister looks at Regulation 55, he will see that. I made it absolutely clear—I am not usually noted for obfuscation —that on the subject of exclusivity there was no consultation of the BIA. I cannot be any clearer than that. If the Minister has evidence that the BIA was consulted on the exclusivity point, I would be happy to withdraw that and apologise as graciously as I can, but the information it gave me was that it was not consulted on that point, which is at the core of this set of regulations.
Lord Henley
My Lords, I am not sure if it is helpful to continue this discussion. That point is for another regulation, not the ones we are discussing at the moment. We will, no doubt, get to that one—and to that point—in due course. I am not making any accusation that the noble Lord has misled the Committee and I do not think I have misled it. I have made it clear who was consulted and I was hoping I could deal with that in my closing remarks as that might have been a neater and tidier way of dealing with these matters. I will leave it there.
Lord Foulkes of Cumnock (Lab Co-op)
I wonder if the Minister could help me out. I have been listening to the speeches since I came back from the Liaison Committee. In the light of what we have just heard, is the Minister still pressing ahead with this statutory instrument? Would it not be better for him to withdraw it and clear up some of these points before we consider it again?
Lord Henley
My Lords, I will continue with these regulations: I have moved them. No doubt the noble Lord will say, as he and other noble Lords have done with other regulations, that he is not happy for them to be considered by this Committee and they can then be considered in another place. However, we are having a useful discussion at this stage, which I want to be part of, and we should complete what we are doing and deal with as much as is relevant to these regulations as we can. I will continue to do that and I will listen to the noble Lord, Lord Adonis, conclude his speech. The noble Lords, Lord Clement-Jones and Lord Stevenson, and other noble Lords will no doubt wish to intervene. I will then respond to that, as is right, proper and normal. It is up to noble Lords to decide where they wish to take things after that. However, we wish to get this through, to provide continued certainty for this body and to assist the whole life sciences industry, the importance of which the noble Lord, Lord Warner, has just reminded the Committee.
Lord Adonis
My Lords, a situation has arisen where there is a serious difference of view, to put it mildly—
Lord Henley
My Lords, I confess that I cannot begin to answer the noble Lord’s question about the Isle of Man, and promise to write on that and the other issues I did not manage to cover. I note what he says about the advice that my department—the Department for Business, Energy and Industrial Strategy—should take from Her Majesty’s Treasury. As with all departments, we always listen carefully to what our colleagues in the Treasury say, and this time will be no exception.
I was not intending to intervene in the middle of the debate, but I did, and so to get back to this question of consultation and how we set about this with these regulations—which I repeat, are only to deal with the no-deal possibility I think the noble Lord, Lord Adonis, would be the first to agree that we would be irresponsible in not having done something should that eventuality arise. I give way to the noble Lord.
Lord Foulkes of Cumnock
The Minister has been very kind and polite, and I am most grateful to him. Talking about the impossibility of dealing with things, I—like the noble Lord, Lord Deben—have some sympathy with him, and even more with his civil servants behind him. In today’s Order Paper, there are 38 affirmative instruments waiting for consideration by the Joint Committee on Statutory Instruments, 65 affirmative instruments waiting for affirmative resolution and 18 proposed negative statutory instruments made under the European Union (Notification of Withdrawal) Act 2017. Is it not irresponsible to be pressing ahead with this, with no proper scrutiny on things such as conservation, animal health, veterinary surgery, pesticides, employment rights, construction products, insurance distribution, maritime transport, motor vehicles, plant health, air quality? I could go on and on. We are rushing them all through. Is that not irresponsible? Is that not a waste of the Minister’s time and the time of the well-qualified people behind him, in anticipation of something none of us really want to happen? Would it not be better if the Minister came to his senses now, withdrew this order and, along with all his other colleagues, said, “We are not going to take any more of these orders through the Grand Committee and the House of Lords because it is a total waste of time and totally irresponsible”?
Lord Henley
My Lords, I am always kind and polite to the noble Lord. I know he is a delicate flower and does not want me to be too hard on him.
I appreciate there are a lot of no-deal regulations and that we are asking a lot of the Joint Committee on Statutory Instruments. The noble Lord has served on that wonderful committee, as have we all, and it does a very good job, as do the other committees that have this duty. We are satisfied that they have enough time and resources. I think the House feels that it too has enough time. This can be discussed by the usual channels. We are having a very useful debate this evening and I am looking forward to continuing that process. It is difficult, but equally it would be much more irresponsible not to be moving regulations or producing them for the eventuality that there was a no deal, because the noble Lord will be aware that as a result of Article 50 and various other Acts of Parliament that have been through both Houses, if we do not reach an agreement by 29 March, we leave the EU without a deal. This order, the previous order and other orders are designed to provide that certainty businesses need, and we will continue to move the appropriate orders.
Lord Henley
Will the noble Baroness let me finish? I will then give way. She must not be quite so enthusiastic.
As is right and proper, we will then move them so that we can be in that prime position.
Baroness Kingsmill
My Lords, it surprises me that the Minister is not concerned by the extent of the statutory instruments still to be debated, because the question must be asked: why on earth are we rushing through them at this late stage? There have been two years in which we could have been prepared; there were two years when the possibility of a no-deal outcome was on the cards. Why on earth are we and the noble Lord’s civil servants being expected to race through with inadequate research and consultation now at such a late stage when there have been two years when these things could have been prepared?
Lord Henley
My Lords, I simply do not accept that point. The fact is that we are doing them now and giving them proper scrutiny, as the noble Baroness, her noble friend and other noble Lords would accept. There will be other opportunities to debate this and other regulations.
Lord Henley
My Lords, I am on my feet, and I will give way to the noble Baroness when I wish. I will now give way.
Baroness Kingsmill
May I just say that we have been at this for getting on for four hours? If we proceed at this pace with the number of statutory instruments that we have still to debate, we will never get through them and there will be a vote before long to say that there will be no no deal. So what is the point of all this? I referred earlier to Alice in Wonderland; it seems even more peculiar.
Lord Henley
My Lords, the noble Baroness is getting on to wider questions. I cannot remember whether it is in Alice in Wonderland or Through the Looking Glass, but I am a mere pawn on the chessboard of life. I believe that we are having appropriate discussion on the order and I think that it is right and proper that, since we have started, we should continue. I look forward so to doing and, as I said, there will possibly be other opportunities as well. I think we should continue with that. Others, who may be the kings, queens and bishops, will then discuss what is the proper procedure, but at the moment, we are considering the Patents (Amendment) (EU Exit) Regulations, which relate only to no deal. We do not want to broaden it out to other things; others can discuss that issue.
Let me return to the debate and the consultation. As I made clear earlier, the IPO sought the views of a group of individual stakeholders—I shall not go into the slightly different words that my noble friend cited from different letters—and consulted them in their personal capacity to identify any issues with the drafting and raise any concerns with the approach. As I made clear, legal experts—there is nothing wrong with lawyers; the noble Baroness, Lady Kingsmill, is one of them, as am I—and business representatives were present. It was a helpful and constructive review of the draft and it was understood that the regs were designed to maintain continuity. I repeat for the sake of the record that at that meeting, as I understand it, there were representatives from the BIA, the ABPI, the IP Federation, the Chartered Institute of Patent Attorneys, the British Generic Manufacturers Association and the agrochemicals industry. If I can add to that list and give further details, I will certainly include that in any letter I write to noble Lords.
On letters, I believe—I am open to correction—that in advance of these regulations I wrote to the noble Lord, Lord Stevenson, and to the noble Lord, Lord Fox, from the Liberal Democrat Benches. I do not know whether I should have taken that wider and written to others. I will consider that with each order I deal with, as appropriate. I also make clear, on the lack of consultation, that we were not preoccupied with the deal. The IPO had sufficient resources to take both deal and no deal in parallel. It was necessary across Government to treat no-deal preparations sensitively when we were in the middle of negotiating a proper deal. From the perspective of business, retaining the regulations means that both the process for applying for an SPC and the scope of the right for which it is granted would be the same after exit as before.
I turn to the post-exit concerns of the noble Lord, Lord Warner. I appreciate that after exit day there may be new drivers for policy change. I think it was the noble Lord who talked about the possible time it may take to get a UK authorisation compared to now and the potential effects. I hear the noble Lord’s concerns, but we should understand the issues when the time comes then properly consider the right policy solution at that point. As I have already said, I would expect that to involve the more usual open and constructive discussions with stakeholders and interests in this area that the IPA usually enjoys. I can assure the noble Lord and others that our intention would be to fully engage with the BIA, the IP Federation and other similar bodies.
Lord Warner
I just want to clarify for the Minister that the damage to the life sciences will be wider as a result of Brexit, but the point I made in my speech was that it is the result of the approach to exclusivity and SPCs in this set of regulations. It is not a wider set of damage. It is a damage to the industry and the sector arising from this set of regulations.
Lord Henley
The noble Lord is right to point to the importance of the life sciences sector, and I am grateful he did. One should also re-emphasise—I would be grateful if the noble Lord would do so—just how important the life sciences industry is to us and what a great state it is in at the moment. The noble Lord will be aware of the recent stage 2 of the sector deal in life sciences that we published along with that sector. I am sure the noble Lord very much welcomed the fact that a major multinational—one based in Brussels, for that matter—announced at that stage that it was investing a further £1 billion over the next five years in research in the UK. Obviously Brexit is not putting off certain parts of the life sciences industry, and I am sure the noble Lord will welcome that.
I do not share the noble Lord’s view that there is a policy change. The SI maintains precisely the current calculation of the SPC duration, and at present it is calculated from the first marketing authorisation in the EEA, which includes the UK. After exit, without the provisions we have set out in this SI, the duration of an SPC in the UK would be calculated from the first authorisation in the EEA—but that would not include the UK. That would be nonsensical and is exactly the sort of deficiency that Parliament gave Ministers carefully limited powers to fix within the withdrawal Act. We believe we are complying with the powers we have within the withdrawal Act. That is what the SI does. It shows that after exit, SPCs within the UK will continue to be calculated from the first marketing authorisation in the EEA or the UK, and the status quo is maintained.
Finally, I turn to the point made by the noble Lord, Lord Adonis, about the Explanatory Memorandum. He said that there was little impact. If a measure has a net impact to business of less than £5 million then obviously a full impact assessment is not required. The £5 million threshold, as the noble Lord will be aware as a former Minister, is set out in the better regulation framework guidance, and measures below the threshold must be accompanied by a proportionate analysis. The analysis is summarised, as the noble Lord will be well aware, in paragraph 12.3 of the Explanatory Memorandum.
I used the word “finally” but, if noble Lords will bear with me, I will have one or two more “finallys”. I turn to the concerns about the unified patent court. We have set out our proposals for the future relationship with the EU, including exploring continued participation in the UPC and the unitary patent. In the political declaration, the UK and the EU have agreed to co-operate in areas of mutual interest relating to intellectual property, including patents. The future of the UPC and the unitary patent will be a matter for negotiation. It is therefore rather too soon to be setting out the further dovetailing legislation.
The noble Lord, Lord Clement-Jones, also set out the points made by the law firm Bristows. We are aware of the point that Bristows has made. The patents legislation contains a number of references to the comptroller and the court, and all those references will be modified in the event of the UPC coming into force. The patents legislation will fully recognise the jurisdiction of the UPC.
Lord Clement-Jones
I apologise to the Minister but actually it was not the Bristows opinion; the 39-page opinion that I mentioned is actually from Brick Court Chambers, and it is very comprehensive. It makes it very clear that if we are to sign up, or to continue with our intention to sign up, we will have to recognise the jurisdiction of the European Court of Justice and there will be no getting out of that. That is what makes this so ironic in the circumstances.
Lord Henley
I look forward to reading the opinion that has emanated from Brick Court Chambers in due course. I was responding, I thought, to the points that the noble Lord had made about Bristows.
Lord Henley
I apologise to the noble Lord, Lord Adonis. I will no doubt study, as will my officials, both the Bristows letter and the opinion from Brick Court.
Lord Adonis
Before the Minister sits down, he has very kindly said that he will write to respond to a number of the points that he has been unable to deal with. Those points are going to be crucial for the House itself to consider when this regulation goes to the House, particularly the points about consultation that were raised by my noble friend Lord Warner.
I ask that the Minister sends his reply and full statement in response to the debate to all Members of the House together with a copy of the debate itself because of the very unsatisfactory arrangements under which the proceedings of the Grand Committee are now reported. They are no longer in the main body of Hansard, a change that I find inexplicable. I do not know when it happened. It must have been beyond the oversight of that shrinking violet, my noble friend Lord Foulkes. It would never have happened if he had noticed it; he must have been shrinking on that particular day. If the Minister could send his full response, with the full proceedings of this debate, to all Members of the House it would be extremely useful in informing noble Lords before they consider these important matters.
Lord Henley
I think that the noble Lord would not expect me to respond quite as positively as he wishes. It might be an overuse of paper to write to every Member of the House. I will write to the noble Lord and other appropriate Peers, and make sure that a copy of my letter is, as always, available in the Library. The noble Lord and I understand that procedure well. A copy of this debate will be available in Hansard. Even if it is not the same Hansard in which reports of the Chamber appear, I understand that it is still Hansard and open to all noble Lords to read. If we want to be really modern about these things, it is also available for the noble Lord to read online.
Baroness Bowles of Berkhamsted
I have two points before the Minister sits down. First, I do not think he replied to my point about whether there was any intended alignment with the supplementary protection certificates and parallel import points. The Minister may wish to come back to me on that. Secondly, the unified patent court and its relationship to the ECJ has been mentioned. That is inevitable. The unified patent court is an international court. The European patent is not an EU invention—it is external to it—but it has been agreed under the convention to which the UK is a party that it recognises the judgments of the ECJ. As I understand it, our own Intellectual Property Office would therefore have to take those judgments into account. Whatever convolutions there may be, we will not get away from the influence of ECJ decisions, whether or not the unified patent court comes into being.
Lord Adonis
My Lords, a moment ago the Minister mentioned writing to “appropriate Peers”. I have never before heard a Minister in the House using the phrase “appropriate Peers”, presumably as opposed to inappropriate Peers. I suspect that, in the Government’s view, I am probably an inappropriate Peer. Particularly in the light of my noble friend Lord Warner’s remarks about “selected and trusted” consultees, I hope we are not going to start introducing the concept of selected and trusted Peers who are to be made privy to the Minister’s responses to these debates. I strongly suggest that all noble Lords receive his letter, together with the account of the proceedings of the Grand Committee. If he is not able to give that assurance, will he take this matter up with the Leader of the House and let noble Lords present in Grand Committee today know soon what the Government intend to do on this? I and other noble Lords may wish to take this matter up with the Leader of the House and with my noble friend the Leader of the Opposition. It goes to the rights and privileges of Members when the whole House considers these matters.
Lord Henley
This is one occasion where I can give a categorical assurance to the noble Lord, because he merely asks what I meant by “appropriate”. I define it as meaning that I will write one letter to all noble Lords who have taken part in this debate and make that available in the Library of the House, as is the normal convention. By that means, all those who have taken part in the debate will have a copy of my responses to the noble Lords, Lord Warner, Lord Adonis, or Lord Clement-Jones. It would be easier if I wrote one letter to all “appropriate Peers”; that is, Peers who have spoken in this debate.
Lord Adonis
My Lords, I am grateful to the Minister for seeking to define “appropriate”, but I do not think that Members of the Grand Committee think that his definition is adequate. Our job is to advise the House as a whole, but there may be a feeling in the Grand Committee that other noble Lords should receive this letter so that they are aware of the gravity of the issues raised about the whole future of the life science industry, which the noble Lord, Lord Warner, referred to, and the importance of taking note of those issues before the House comes to consider them.
Lord Henley
I am grateful to the noble Lord, because obviously he always considers what is important to the House. He will no doubt make sure that that letter of mine, which will be available in the Library of the House, is made available to everyone else whom he thinks it is right should see it. I cannot go further than that, but it would not be right to write to every noble Lord on this regulation.
The Deputy Chairman of Committees (Baroness Finlay of Llandaff) (CB)
The Question is that the Grand Committee do consider the Patents (Amendment) (EU Exit) Regulations 2018.