Whistleblowers

Lord Johnson of Lainston Excerpts

Monday 28th October 2024 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

We are looking at the way we give future government contracts; that is a huge piece of work that is taking place. I will certainly take the noble Baroness’s point on board and see whether that has a role. We want to make sure that the allocation of public funding to organisations is done on a fair and transparent basis.

[Lord Johnson of Lainston (Con)]

My Lords, this is not just a situation facing the private sector; the public sector also has significant issues of whistleblowing. This year the Secretary of State for Health and Social Care pledged before the election—I am aware that plenty of pledges were made before the election, so the Minister may be confused about this—that NHS managers who silence and scapegoat

“will never work in the NHS again”.

Has that goal been achieved? If not, when do the Government intend to achieve it?

[Baroness Jones of Whitchurch (Lab)]

As I say, we are absolutely committed to lead from the top on this issue. That includes in the health service where, as the noble Lord said, there have been some terrible examples of professional staff being discriminated against and losing their jobs. I am sure that the Secretary of State for Health is working on this issue, and I hope to be able to come back to the House in due course and update noble Lords on the progress being made.

Post Office Horizon: Redress

Lord Johnson of Lainston Excerpts

Tuesday 10th September 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

My Lords, I thank the Secretary of State for yesterday’s Statement. It does not need to be repeated today but our team appreciated seeing a copy of it in advance. We share the view of this whole House that compensation must be delivered promptly and with minimum friction. We all, I think, welcome the new appeals process for those who have historically settled their claim under the Horizon short- fall scheme set out in this Statement. Clearly, we also welcome the implementation of the Horizon Compensation Advisory Board’s work. However, we have a few questions coming from this Statement; I am sure that some have them have been covered in the intervening period but I would be grateful if the Minister could enlighten the House.

The new appeals process will, as we understand it, be open to claimants who have settled their claims but who have new information to present. However, all of us in this House know that these processes are cumbersome and complex. The question is whether the process can be open to all claimants and not just those with so-called new information—and of course the categorisation of new information is in itself complex. To clarify, if people choose the £75,000 top-up, can they still appeal? When will the appeals process be up and running, and can the Minister confirm that those individuals will be entitled to legal representation and general support? I appreciate that we may need to be written to in response to some of those questions.

On compensation payments, can the Minister comment on the fact that, as I understand it, only six claims have been offered through the Horizon convictions redress scheme? As I understand it, no full and final settlements have been reached, which is a bit extraordinary, and we should look very closely at this. I hope that the Minister does not mind the pressure that this House will bring to bear on her to answer that question.

I also understand that only 130 letters of around 700 quashing convictions have been sent. Can the Minister comment on this? Again, that seems an extremely low number, given that we were debating this issue three months ago and the Government then were very committed to sending the letters out as quickly as possible. I am sure that we fully understand that there are some people who may be hard to contact, or there may be specific issues around communication, but this is really the wrong way around. The last Government were working with Sir Gary Hickinbottom to be appointed across all schemes to expedite claims. I am not sure whether that has been confirmed; it may have been, but if the Minister could confirm that, it would be extremely helpful.

Finally, I am afraid that it is understood via my colleagues, and the extraordinarily strong work previously done by Kevin Hollinrake in the other place in communication with the victims of this situation, that the process is being slowed—as has historically been the case but really should not be the case now—by lawyers arguing with lawyers. Are we really moving fast enough, and do we have a proper culture among the public servants of the department, and in the Post Office and the various different organisations helping to expedite this process, to ensure that we are doing the right thing as rapidly as possible?

For all Members of this House, how we deal as a nation with this disgraceful scandal will be the mark to which we will be judged. No one party, Minister or official can carry the specific blame; it really was an entire system at fault—a statist culture of bureaucratic indifference of the worst sort. I hope that the Government will continue to look into the culture that allowed these sorts of situations to arise, and particularly into the role of various government departments, civil servants and the public prosecutor’s office. Who at the top of the tree should bear responsibility for these actions, and what are we going to do, very importantly, to change the culture and the lines of the reporting?

I very much commit this side of the House—the Opposition—to work closely with the Government to make sure that we are as supportive and collaborative as possible, supporting the Minister in making sure that we get redress for the victims of this terrible tragedy.

[Baroness Brinton (LD)]

My Lords, I echo the comments of the noble Lord, Lord Johnson, about the Government’s Statement being very welcome and the attempt to try to unscramble some of the complexities of the scheme, but from these Benches too we are concerned about the low level of conclusion of cases, despite the process. I echo his questions about how this is being managed. Mindful that there are other inquiry redress processes that have hit problems and have had to repeatedly be redesigned, my first question to the Minister is to ask whether she is absolutely convinced that she has addressed all of them. I shall come on to a couple of specific points.

Chris Head, a former sub-postmaster who lost everything when he was wrongly accused of theft, has spoken up since the publication of the statements with some concerns, saying:

“The remit of the appeal process cannot be restricted to only those that produce new evidence. Many people have been materially disadvantaged by not having access to legal advice and interim payments that were only introduced in November 2022. This appeals mechanism must be available to everyone that has settled claims since the scheme launched in 2020 to ensure they are properly compensated back to a position they would have been in had the scandal not happened”.


Members of your Lordships’ House, including the Minister, I think, have repeatedly raised concerns about the difference between these various schemes for different sub-postmasters and staff. While it is good that the Government want to have an independent appeals process for the HSS, I remind her that the complex redress schemes arising out of other tragic scandals have had to be adapted. It took the work done on the Victims and Prisoners Act to create the infected blood compensation scheme earlier this year—with an enormous amount of energy—to untangle all the different parts of that redress scheme. Does the Minister recognise that Mr Head and others have valid concerns about inconsistencies between the schemes, and that trying to sort all this out now, at pace, as was done with the infected blood scheme, must be a priority?

I want to raise two other issues briefly. First, on the predecessor package to Horizon, known as Capture, I raised the issue of the postmasters and staff who lost their jobs because of Capture, some of whom were also prosecuted but many of whom were sacked. The Independent newspaper and ITN have given voice to these victims. When will the Government’s own investigation into Capture be published and when will they update your Lordships’ House on its findings? Should redress be due, will it be incorporated into the existing postmasters’ scheme, or will there have to be a brand-new one?

Finally, in July, my noble friend Lord Fox raised again the issue of those not included in the overturning of convictions because they had appealed their cases and lost in the Appeal Court. Both he and I had helpful discussions with the previous Minister. The concern was expressed that the judiciary, in particular, had felt it was wrong for this group of victims to have their cases overturned under the legislation in the summer, because there was some merit to other parts of the cases brought against them. Yet, that question was not asked of any other case whatever, only those that went to appeal. Are the Government prepared to reconsider that? What now exists in the redress scheme is a small group of people who have to have an exceptionally high bar of going to the Criminal Cases Review Commission, hoping that it will refer their cases back to the Court of Appeal. This seems unfair and particularly long term, which means these victims will not get resolution for a long time to come.

Construction Sector: Cash Retentions

Lord Johnson of Lainston Excerpts

Tuesday 10th September 2024 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

The noble Baroness makes an important point about public procurement. There are steps that we can take to progress on this issue; it is a manifesto commitment that we will do so. Obviously, we will consult before we introduce any further legislation, but we are committed to reviewing our policies on this issue, to enable more smaller firms to be able to access public contracts.

[Lord Johnson of Lainston (Con)]

My Lords, late payments in the construction sector hold developments back significantly, which hinders progress on the delivery of new homes. The previous Government took strong action on this and published a payment and cash flow review in November 2023. What assessment have the Government made of the impact of cash retention on housing delivery, and will the Minister commit to continuing the excellent work of the previous Government to tackle this issue?

[Baroness Jones of Whitchurch (Lab)]

As the noble Lord has said, there have already been some changes made to this and we are following that up to introduce further changes. We will be addressing the value of payments and the level of invoices not paid because of disputes, but there is more work to be done on this and enforcement is obviously part of that. DBT has already written to 416 large companies not complying with the payment performance reporting requirements and 45% of firms written to have come into compliance. We have further follow-up action to make sure that those further transgressions are being addressed.

Watchdogs (Industry and Regulators Committee Report)

Lord Johnson of Lainston Excerpts

Monday 9th September 2024 Lords Chamber

[Lord Johnson of Lainston (Con)]

My Lords, I direct Members to my register of interests, although I do not believe that I have any specific conflicts relating to this debate. I should admit that I am going through a planning process at the moment, so I can work from home; I will not raise the word “bats”, which will no doubt send shivers down the spine of anyone who has looked at regulation.

I thank the Industry and Regulators Committee for its work in producing this important report. I thank the noble Lord, Lord Hollick, for his introduction to this debate and his chairing of the committee, which has been succeeded exceptionally ably by the noble Baroness, Lady Taylor. I very much enjoyed our interactions in the last few months when I was the Minister for Smarter Regulation.

I welcome the Minister to her place and look forward to her replies. I look forward to hearing her clearly stating this Government’s commitment to better regulation. This is my first appearance on behalf of His Majesty’s Opposition and naturally I am extremely keen to play a strong part in holding this Government to account. I seized a copy of the Government’s response to Who Watches the Watchdogs?, sure in the knowledge that it would be full of holes and give me plenty of opportunities to challenge the Minister, and possibly even cause significant embarrassment to her so early on in her tenure. But as I read it, I was overwhelmed by a steady and growing sense of déjà vu, realising somewhat late in the document it was written by me, when I was Minister for Regulatory Reform.

First, I praise the essence of the response in its balance and breadth, and I confirm that, as the noble Lord, Lord Clement-Jones, said, we supported the majority of all the extremely good points raised. I also take this opportunity to say how much I appreciated the work of the regulatory directive in the DBT, headed by Chris Carr. I am sure that the Minister and her colleagues will have a chance to work with it, because it really did excellent work in trying to introduce reforms to our regulatory environment and better understand it.

It is important to state that I am personally very aware—as is my party, the Conservatives—that regulation is at the core of our high-functioning advanced economy, as the noble Lord, Lord Teverson, said. Consumers need to be protected, and we see how the failure of regulation and regulatory implementation can lead to devastating loss of life, as the noble Lord, Lord Clement-Jones, mentioned earlier. Markets need to operate effectively, and we must have frameworks that generate trust, without which we cannot function. But as the noble Lord, Lord Hollick, said, excessive regulation and the wrong standards—for example, ill-co-ordinated regulations, coming often out of departments, and a lack of effective collaboration between regulators, business, the consumer and the Government—have resulted in regulatory burdens costing the wealth of the nation tens of billions of pounds annually. We cannot ignore that—and I was particularly fascinated by the history lesson given to us by the noble Lord, Lord Skidelsky.

As I discovered when I was Minister for Regulatory Reform, the long and short of it is that we love regulation. This House and the other place are designed to create regulations; that is what we are—we are legislators, and we are here to make regulations. I found it very difficult—as I am sure my predecessors did and my successor will, which is why I wish him so much success—to get my hands around the regulatory structures and reduce regulatory burdens, to make them more meaningful and effective. However, in light of this, I ask the Government for their view of the growth objective, which the noble Lord, Lord Hunt, mentioned at the beginning of the debate. We have not heard much about it during this debate, but it was introduced and recently confirmed to cover a whole raft of regulators. Frankly, it is central to how we believe that we need to proceed with regulatory actions. My first main question is whether the Minister will continue to commit the Government to the principle that regulation must always be proportionate and effective and that regulators must adhere to the growth objective passed into law earlier this year as a requirement for them to bear in mind when managing their affairs.

It is clear from both the report and several consultations undertaken by the Department for Business and Trade—as well as from many good comments, some of them made by the noble Baroness, Lady Finn, in her excellent speech—that the entire regulatory landscape is confusing, with overlapping duties and a lack of clarity about those duties, layered over generations. Regulators are also often unsure of their relationship with government, so will the Minister confirm that her Government will take action to simplify and measure regulators’ duties? That has come up time and again, particularly in this report. Will the Government work to provide better assessment of the regulators themselves, as called for in this report, and work hard to ensure that strategic steers and better accountability to Ministers—and ultimately to Parliament, as the noble Baroness, Lady Taylor, raised—are now built better into the system. That was covered by a number of Peers, including the noble Lord, Lord Cromwell, and the noble Baroness, Lady Kidron.

In my work, and clearly identified by this report, are issues surrounding the work of regulators. If we are to innovate and grow our economy—the noble Baroness, Lady Kidron, and the noble Lord, Lord Holmes, made a strong series of points about the importance of AI—and if we are effectively to police the market to ensure proper consumer safety, the people who lead and staff these regulators must have proper qualifications in monitoring. With this in mind, will the Government properly assess the competency of the regulators and ensure that they have the resources necessary to carry out their functions? That includes timely appointments of boards, where we would agree that Parliament should also have more effective opportunities for scrutiny and oversight.

Too often, the cry is for more regulation or, on the other hand, deregulation. People used to come up to me and whisper furtively, “I’m so glad you’re Regulation Minister, let’s get rid of all regulation”. Other people would confront me in the passages here and come right up to me and say, “What are you doing? We need more regulation”. It is completely ridiculous—a bonfire of red tape, or whatever it may be, in reality has nothing to do with the quantum of regulation, more or less, and everything to do with the culture of regulation and how regulators themselves undertake their work.

We heard a great deal about the failure of regulation in the water sector from many noble Lords today, but clearly that has nothing to do with a lack of regulation. The process of water companies to establish pricing now runs to more than 20,000 pages. It clearly has to do with the lack of clarity regarding the objectives, often a lack of expertise in the regulator and a belief in checking boxes rather than looking at proper outcomes, with a view that the regulator has only a limited role to play in making the sector function effectively and does not look closely enough at how to make it a success for consumers and the economy more broadly.

To respond to these issues, and indeed many of the points raised in the report, the last Government issued a White Paper entitled Smarter Regulation, which was mentioned by the noble Lord, Lord Hunt. I have a copy here, signed by the team. It followed on from the now well-established smarter regulation framework, which, by the way, I assume that the Government have no plans to deviate from, and the context of which was the introduction of the growth mandate mentioned. In this document, there were 10 key principles designed to make the regulatory environment more effective. To point to a few, they were: clear guidance; transparency and accountability; the need to avoid unnecessary risk aversion; proportionality; and a focus on being highly pro-innovation, as the noble Lord, Lord Holmes, raised. All were absolutely central. They also included: far better collaboration between regulators; much better engagement with business and citizens, which is important regarding regulation as a service; a real focus on skills and capabilities; and more understanding of how regulations are applied at local levels, which will be particularly relevant in planning reform.

I have a simple question for the Minister, if I may. Is this White Paper still a feature of the Government’s ambitions? How will the Government build on this important work? To some extent, some of the problems highlighted in this debate stem from the original work of departments in issuing directions and drafting new regulations. If we had more or better analysis of the cost of regulations, and assessment as to the impact on regulatory activity in business, we would be in a far better place than we are today.

This brings me to the work of the Regulatory Policy Committee, headed by the very able Stephen Gibson. The work of this body has been too narrowly defined and its resources too thin to enable it really to aid Parliament to monitor the cost of regulations as well as the actions of regulators. There is talk of a super-regulator; this may actually be a very good compromise answer to that conundrum. We thoroughly support a review of this body, to increase its effectiveness, and I hope the Government will continue to ensure that its impact assessment processes continue to be a central feature of their own legislative process.

In summary, will the Minister tell the House how she will comply with the response to the committee’s extra paper? Additionally, will the Government commit to continuing the work started by the White Paper on smarter regulation, especially when it comes to more funding and investigatory powers for the Regulatory Policy Committee, higher expectations on regulators to foster innovation, provide better service to business and collaborate more effectively with each other.

Finally, will this Government, with all their commitment to economic growth, give proper credence to the process of the better regulatory framework and the now established principle of smarter regulation? I very much look forward to hearing from the Minister on these points and those raised in the excellent report under discussion today.

Code of Practice on Fair and Transparent Distribution of Tips

Lord Johnson of Lainston Excerpts

Friday 24th May 2024 Lords Chamber

Moved by

[Lord Johnson of Lainston]

That the draft Code of Practice laid before the House on 22 April be approved.

Relevant documents: 24th Report from the Secondary Legislation Scrutiny Committee

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

My Lords, just so that everyone is clear about these measures, “tips” covers all tips, gratuities and service charges. The code of practice will give legal effect to standards in the allocation and distribution of tips and transparency surrounding the keeping of records and the retention of written tipping policies.

As I am sure all noble Lords are aware, an initial draft of the code was published in December and updated following a public consultation. I say, on behalf of the department, that we are extremely grateful for all those businesses, workers and other stakeholders who provided helpful responses to the consultation. All those responses have been carefully considered. It is important to stress that many thousands—the vast majority, in fact—of hospitality venues, bars and clubs behave extremely well with tips. It is a crucial component of encouraging people to work in the hospitality sector, which is what we absolutely need in this country.

There are, however, some who have not behaved appropriately, and this code will ensure that there is an appropriate framework around which they now must operate. Law-abiding, legitimate processes will also be properly codified. We have also published a response to the consultation, setting out in more detail the feedback that we have received and the changes that have been made.

I have some technical points in conclusion. The updated code was laid before Parliament on Monday 22 April, pursuant to Section 9 of the Employment (Allocation of Tips) Act 2023, and approved by the House of Commons on Tuesday 14 May. The code contains summaries of the key intentions of the Act. It details the scope of the measures and provides further information on the need to maintain fairness in the allocation and distribution of tips and the need to uphold transparency in the handling of tips.

It was not the Government’s intention that certain hospitality venues should re-engineer their tips process and describe them as “brand fees” or some other charge that could circumvent the principle that, when consumers believe that they are giving a gratuity to an individual member of staff, it goes to them rather than to the corporation that controls the venue. We have been in touch on some of the most high-profile cases and will continue to keep a close watch on them.

The code subsequently expands on how to resolve conflicts which arise between employers and workers, including impartial advice and assistance in resolving problems through ACAS and eventual escalation to an employment tribunal. Following approval by this House, the code of practice and the other remaining measures in the tipping Act will come into force on Tuesday 1 October, thus, I hope, cementing this Government’s reputation as a true friend to all waiters, waitresses and hospitality workers across this country. I beg to move—and keep the tip.

[Lord Addington (LD)]

My Lords, it is a pity that we have to do this, but it is good that we have done it. I am glad that it has happened.

--- Later in debate ---

[Lord Boateng (Lab)]

My Lords, I will raise one matter arising from when I was working as a community lawyer in the Queensway area, in W2, where there are many workers in the hospitality industry. It relates to the impact of tips on tax and benefits. I commend the work of the Low Incomes Tax Reform Group in this often neglected area.

This legislation and the code of practice are entirely welcome, as my noble friend Lord Leong has indicated, but the reality is that, as a result of this, some employers will be paying service charges over to workers for the first time, as opposed to keeping them, and will adopt different practices, such as removing service charges, so that they do not have to handle tips. It is therefore likely that more workers will receive tips and in larger amounts. That is wholly desirable and to be welcomed, but it will have implications for tax and welfare benefits.

We have seen the consequences when sufficient attention is not paid to the impact of additional payments on people’s entitlement to welfare benefits—it can have extremely adverse implications for the individuals concerned. The Low Incomes Tax Reform Group made representations to the department during the welcome consultation that there should be clearer signposting to HMRC and the benefits department to make sure that there will not be adverse unintended consequences for employers and employees.

I can find only one reference to tax implications, which is a sort of signpost, in paragraph 2(a) of the code of practice. I urge the Minister to go back to the department and make sure that, when this is promulgated, there will be clearer signposting on the tax and benefit implications of this welcome code.

[Lord Johnson of Lainston (Con)]

I thank noble Lords for their interventions. If I may turn to the specific points raised by the noble Lord, Lord Boateng, I completely agree with his comments. I will certainly take them back to the department. As with all things, there are often unintended consequences. As Minister for better regulation, I am very aware that we do not want to drive restaurants and so on to stop giving tips to staff. If Hanson’s Café was allowing people to keep tips, and then decides that the new legislation means it wants to remove the principle, we should be aware of that and monitor it closely.

As the noble Lord, Lord Addington, raised, it is important that people know that their tips are now going to go to the waiting staff. I regret that we have to bring this type of legislation forward. It is a surprise to many of us that this is necessary, but I think it is necessary. This code of practice will give a great deal of transparency and clarity.

As the noble Lord, Lord Leong, said, it is vital that we have an effective tipping policy. It is not simply a gratuity or a nice to have. We need to have a functioning hospitality industry. Tips play an important part in compensating and incentivising the service industry, so it is really important that the Government and all of us in this House see the importance of legislation such as this to ensure that the system runs properly, people are treated fairly and the economy can function as a result.

I will take all points back to the department. I assure the noble Lord, Lord Boateng, that his point is fed in directly. I reassure the House that there are no changes to the tax processes on account of this legislation. Clearly, there are different tax treatments for various types of tip, in terms of cash, whether is it paid through a tronc or directly from the venue under the new principles. It is right to make sure that they are clearly signposted.

In response to the kind comments from the noble Lord, Lord Leong, it has been an enormous pleasure to work with him over the last year or so. I think we have achieved a great deal together for this country and I am very proud of the collaboration that we have managed to achieve in so many different areas. I extend these comments to his colleague, the noble Lord, Lord McNicol, who has been extremely collaborative and very supportive. I know they are not in their usual place, but the noble Lords, Lord Fox and Lord Purvis, have also been highly collaborative, although they like to ask me as difficult questions as possible. I am not sure how much that will be missed in the future, depending on various different outcomes. I am extremely proud of the work that we have done on our free trade, business and regulatory agenda. We can all feel that this last piece of important legislation is a job well done. I beg to move.

Motion agreed.

Company Directors: Identification

Lord Johnson of Lainston Excerpts

Wednesday 22nd May 2024 Lords Chamber

[Lord Mann]

To ask His Majesty’s Government whether they plan to introduce legislation to require company directors to provide identification of who they are and where they live.

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

The Economic Crime and Corporate Transparency Act will require that directors, people with significant control and the majority of those who file information with Companies House verify their identity. As part of that process, individuals will be required to provide their usual residential address. Today, we have laid regulations that establish the procedure for identity verification. The new requirements will be introduced in phases, beginning in spring next year.

[Lord Mann (Non-Afl)]

Before spring next year, 700 new Chinese fake companies will be registered every day. There are streets that have been targeted literally hundreds of times—dozens of times per property. People who have never dealt with this kind of thing before are being threatened with fake invoices. Credit referencing by the credit reference agencies has been impaired, as has the ability to sell houses. Can we have a simple, fast-track system so that householders who are being deluged by this horrendous onslaught of fake companies can remedy it with Companies House and cleanse their records immediately—within days—rather than in the six or eight months that it currently takes?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for making those points. As I said, today we have introduced the statutory instrument that will enable us to clean up the register, but since 4 March we have already removed details that we thought were erroneous to the tune of 12,600, which is slightly more than we thought. If you are called, for instance, Jack Hanson and your name is being erroneously used from your address in Worcestershire, that is now being corrected by the registrar of Companies House. I have communicated with Companies House today and it is progressing extremely rapidly in solving this problem.

Since 1904, no such significant reform of Companies House and how people register their companies, their addresses and their verifications has been undertaken. The Government have done more than any other for over 120 years to make sure that we crack down on fraud and corporate crime and ensure that our companies register is indeed verifiable.

[Lord Vaux of Harrowden (CB)]

The Minister will remember that during the passage of the Economic Crime and Corporate Transparency Act last year, we had a lot of debates on how to tackle the problem of nominees being used to hide shareholders’ real identities. During ping-pong on the Bill, he rightly referred to

“what we perceive to be an industry of nominee service providers prone to acting unlawfully”.—[Official Report, 11/9/23; col. 685.]

As a result, the Government introduced a power to make regulations that would impose obligations on nominees to enable companies to find out who their persons of significant control are. Can the Minister please tell us whether HM Government still intend to make such regulations? If so, when? If not, why not?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for his question and his extremely collaborative input in the ECCT Bill over the past year or so. The statutory instrument that we are introducing today looks at the identity verification checks that ACSPs will have to undertake. As he will know, ACSPs are well covered by their various industry bodies, and, as I said, we have done an enormous amount to ensure that information on the register in Companies House is now true and verifiable. He will also know that we have gone even further to ensure that people with significant control are caught by the new regulations.

[Lord Clarke of Nottingham (Con)]

My Lords, the previous Parliament passed an amendment to extend to the overseas territories of the United Kingdom the legal obligation to have a company register show beneficial ownership and to make that register open to public inspection. Can the Minister let the House know what progress there has been in making the British Overseas Territories, such as the Cayman Islands and the British Virgin Islands, comply with our obligations and open a register of beneficial ownership?

[Lord Johnson of Lainston (Con)]

I thank my noble friend for that point. We are making very good progress and we collaborate with all such jurisdictions. There is more work to be done. A consultation on how much identity can be published has concluded recently, and we will report back to the House when we have our own findings that are appropriate for these measures.

[Lord Anderson of Swansea (Lab)]

My Lords, sunlight is the best disinfectant. Andrew Mitchell said recently that over 40% of laundered money globally passes through London. How satisfied are the Government that the overseas territories and the Crown dependencies are indeed making progress on registers? Surely they are defying the Government.

[Lord Johnson of Lainston (Con)]

I am afraid that I will push back slightly on the noble Lord’s point. We have had extremely high degrees of collaboration with the overseas territories. We are now very clear on who the beneficial owners are of land in this country, and, as I said, we have just completed a consultation that will allow us to go further in ensuring that everything is extremely transparent. I truly believe that real progress has been made, without impinging on the ability of legitimate businesspeople to open companies, run their businesses, make profits and grow the economy.

[Lord Fox (LD)]

My Lords, I agree with the Minister that some progress has been made, but a great deal more is required. There are somewhere between 4.5 million and 5 million companies registered with Companies House, and they also need to be cleaned up. Can the Minister tell us how Companies House is getting on with that and when we will know for sure that all those companies are what they say they are?

[Lord Johnson of Lainston (Con)]

I appreciate the noble Lord for pointing back to my previous answer about the 12,600 or so companies that have had their identities checked, expunged, changed or verified. That is clearly a significant starting number, which we expect will increase over the next year or so as Companies House deploys the £50-odd million that we gave it to introduce new systems to hire new people. That goes hand in hand with the 475 new economic crime prevention officers we have hired and the £400 million we have dedicated to fight economic crime between 2023 and 2026.

[Lord Browne of Belmont (DUP)]

My Lords, I congratulate the noble Lord, Lord Mann, on his Question. I stand here today as a victim of identity theft. I was listed as a director of a bogus company back in 2021 and became aware of that only recently. I can tell the House that it was not an easy exercise to have my name removed from the Companies House register. Will the Minister outline to the House what assistance the Government provide to the many people who find themselves in a similar position? I declare that unfortunately I have no interest in the goldmines in Ukraine which are listed.

[Lord Johnson of Lainston (Con)]

I apologise to the noble Lord for the discovery that he does not have a significant interest in a goldmine. I am sure it will be something he would not want corrected on the register but I am pleased to say that now Companies House actually has the power to make common-sense changes, effective immediately. I assume that there is a process that requires some additional verification but Louise Smyth, the registrar, is particularly focused on this issue. It was something that was raised continually in the debates. For many people, the situation where they found themselves erroneously registered as directors or their address as a company’s address has been extremely traumatic. I am glad that we have now solved this problem with the 12,600 or so companies that we have taken action on, which is a good start, and we expect more to continue. I appreciate the anecdote.

[Lord Leong (Lab)]

My Lords, registering a UK company costs as little as £50. Companies House, as at today, does not verify the names and addresses supplied by applicants. It was recently reported that nearly 40% of money laundered in the world is going through the UK, and London in particular. Can the Minister tell the House how much of this laundered money goes to shell or ghost companies?

[Lord Johnson of Lainston (Con)]

I am grateful for that question. It is certainly work that we continue to do. I do not have that information to hand. The figure mentioned by the noble Lord seems like an incredibly high amount and a surprisingly large number. But the reality is that there is clearly economic crime in the system and we have done everything we can to remove that. I stress to the House the incredible cross-party consensus that we built around the Economic Crime and Corporate Transparency Bill to ensure exactly this. We have gone further than any Government for the past 120 years and I think we should get some credit for it.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, there are thousands of people in this country now of whom there is no identification by the state. It applies not just in companies but in so many areas. If you know anything about the Chinese community, you will know that there are literally scores and scores of people there who do not exist as far as the UK is concerned. As we are seeking to work together, is it not time that we return to trying to produce a proper digital identity scheme for the whole of the country?

[Lord Johnson of Lainston (Con)]

I am delighted to say that the introduction of ID cards is not a component of this Question, as far as I am concerned. However, I should say that Companies House now will require electronic verification, so one will have to provide registered, nationally approved identity. One has to have one’s photograph taken. Importantly, to make life easier for businesses, we are going to have an effective digital system. So one has one login ID, however many directorships one has or companies one is involved in, whereby we can track people. For businesses and individuals, the system will be extremely simple.

[Baroness Kramer (LD)]

My Lords, one area where open registers and public registers do not exist is for companies in freeports. Have the Government taken another look at this set of issues? Of course, those companies also do not have the normal tax and customs checks over their various activities. Does the Minister intend to link up registers of freeports with Companies House?

[Lord Johnson of Lainston (Con)]

I beg to push back against the noble Baroness’s question. All companies in this country have to register and all have to go through similar processes. Freeports are no different and it is important to quash the idea that somehow there is a free-for-all in freeports. There are still checks. There is still our own English national law framework and all the other components that make sure that these are very exciting opportunities for companies which want to set up in this country. They cannot avoid their obligations. What they can do is profit from the opportunity.

Paternity Leave (Bereavement) Bill

Lord Johnson of Lainston Excerpts

2nd reading
Friday 17th May 2024 Lords Chamber

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

As always, I am grateful to the noble Lord, Lord McNicol, for his comments. The matters raised in the other areas related to maternity—survival rates and so on—are certainly things the Government take seriously, but they are not specifically relevant to this debate. I thank him for raising them.

I thank the noble Baroness, Lady Anderson of Stoke-on-Trent, for bringing this important Bill forward for debate. I have much appreciated the collaboration we have had over the last few weeks in the run-up to today. It is without question a personal pleasure to be here today to confirm the Government’s ongoing support for the Bill, following the excellent work, highlighted by the noble Baroness, Lady Bottomley, by the Minister in the other place, Kevin Hollinrake. I also express my gratitude to Chris Elmore, MP for Ogmore, for his role in leading us here today to debate such an important topic. I also thank all of those who have spoken on this important matter, including the charity Gingerbread, which has been mentioned, and Mr Aaron Horsey, who I believe is here today. I want to acknowledge the campaigning he has done personally to bring this to debate today, during what is also an extremely difficult time. I was extremely privileged to meet Mr Horsey earlier, and I hope he feels that we are doing credit to his mission.

I am sure we can all agree that extending a right to statutory leave for employed parents in these dreadful and sudden circumstances is clearly the right thing to do. Like the noble Baroness, Lady Taylor of Bolton, I was struck by the fact that we have had to bring this legislation forward in the first place. I think everyone who was confronted with this issue would have probably said exactly what I said—that this seems to be an extraordinary anomaly, and I am not sure how this has managed to pass. I am very glad that we now have an opportunity to rectify this.

We are very pleased to support this Private Member’s Bill, which will provide support and security for bereaved parents during one of the most difficult periods in their lives. The Bill’s progress to this House means that we are not only one move closer to the day this entitlement can take effect but able to demonstrate what can be achieved through cross-party co-operation. I have watched the Bill’s progress through the other place with great interest, and I am extremely pleased it has arrived here for our consideration so swiftly.

As has been mentioned by other speakers, having a child should be one of the happiest moments of a new parent’s life. However, for a small number of people each year, this monumental event is followed by unimaginable grief. Losing a partner is a truly devastating experience for anyone and combining that grief with the challenge of caring for a new baby must, as I am sure we all know, be incredibly hard. My sincere condolences, on behalf of myself and all my colleagues, go to anyone who finds themselves in this devastating situation. By setting out this new entitlement to an extended form of paternity leave in the statute book, we will ensure that those parents are supported and are not burdened with additional stress over whether they can take time off work during the crucial first year with their child.

The United Kingdom already has a range of generous entitlements and protections designed to help parents balance their family and work commitments while also maintaining their place in the labour market. This change will come in the wake of six Private Members’ Bills that the Government have supported to Royal Assent alongside supporting secondary legislation that will better the experience of all our citizens in the workforce.

I turn to the Bill briefly. As set out by the noble Baroness, the Bill will give employed bereaved fathers and partners a day-one right to paternity leave if they are in the tragic circumstance of losing the mother or primary adopter of the child in the time surrounding the birth or adoption. By making this change to the legislative framework, we ensure that employees who lose their partner in the time surrounding childbirth or adoption have access to a much-needed period of leave to care for their new child. This change will make sure that bereaved partners can take time off work without needing to rely on the good will of their employer and, importantly, are able to stay connected to the labour market until they are able to return.

I add, because there have been comments about how employers have functioned until now and Mr Horsey raised this point with me, that many employers wish to do the right thing. But because there is no legislative framework around which they can do it, they are not able to do so, particularly in larger companies where there are legal issues around it. I pay tribute to many employers who probably have done the right thing, but this gives them certainty.

It is right that the noble Baroness, Lady Anderson, challenges me and the Government about when these measures can take effect. It is quite complex. There are a number of statutory instruments, but let me be clear that my personal point of view is full commitment to ensuring that this is brought in as speedily as possible, and we should be prompted on a target for the next financial year. If I am in a position to do so, I will take as much responsibility around that as I can. I am sure that colleagues and noble Lords agree about the importance of simplicity in the sense of the mission that we all desire to see completed.

The noble Baroness, Lady Bennett of Manor Castle, raised Northern Ireland. We are working with officials in Northern Ireland. Clearly, there are separate structures and systems there, but my officials have been engaged with officials there. It is something that we encourage, and we will be there to support officials in the Northern Ireland Administration if that is something they wish to enact.

These measures will provide valuable support and protection to parents during one of the most awful and life-changing periods of their lives. Supporting this Bill is in line with our ongoing commitment to support workers and build a high-skilled, high-wage, high-productivity economy. It is very good to see from today’s debate that there is support from across the political spectrum in this House for this important measure. I look forward to continuing to work with the noble Baroness, Lady Anderson, as the Bill progresses through this House.

Economic Growth (Regulatory Functions) (Amendment) Order 2024

Lord Johnson of Lainston Excerpts

Monday 15th April 2024 Lords Chamber

[Lord Leong (Lab)]

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

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

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

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

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

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

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

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

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

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

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

My Lords, I am extremely grateful to all noble Lords for their participation in this debate. I particularly congratulate the noble Lord, Lord Leong, on what I thought was an excellent example of good rhetoric in terms of his parallels.

I shall cover some of the points in turn. I am happy to have further conversations with noble Lords about this important statutory instrument. I am grateful for the undertone of what I think the noble Lord, Lord Fox, was suggesting and the overtone of what the noble Lord, Lord Leong, was suggesting. Unfortunately, I did not hear a great deal of support from any other Member of the House; I am sorry to see that on my own Benches the enthusiasts of better regulation seem to have deserted me today.

Ultimately, the statutory guidance, which I will be happy to touch on in a few moments, is an important and useful document to help regulators by refreshing the statutory guidance that we already have. If noble Lords read the original document, as I suggested at the beginning of this debate, and compare it to what we have now, they will see that if you care about the economy, the environment and better outcomes then this is a far better document in terms of directing the regulators in how they perform and enact.

I also said—because this is a particular passion of mine—that this will enable us to have better regulation, not less regulation. This is about regulating in a better way for businesses, for the economy, for consumers and for this nation’s future growth. I said to my officials that I would like to avoid the topic of water and Ofwat and focus on the other 52 regulators and the opportunities this presents—but it is absolutely right, when we are looking at this broad waterfront of how we run our economy and how we regulate for our own safety, for trust in markets, for the consumer and for the environment, that we have this debate.

--- Later in debate ---

[Lord Bellingham (Con)]

I am grateful to the Minister for giving way, as I understand that it is not normal practice for Ministers to give way in a debate like this. I would be grateful if he would look again at the point made by the noble Lord, Lord Fox. I know a bit about the Wye Valley and the damage that has been done by the excessive number of nitrates going into the river. It was not so much that all those poultry producers were breaking the law; it was the sheer scale of those operations that was having such an impact. Could the Minister comment on that particular point?

[Lord Johnson of Lainston (Con)]

I am grateful to my noble friend for the intervention. I did not realise I did not have to give way; my newness to the House probably insisted that I did so.

What is important is that we were discussing the guidance on growth for 52 or 53 regulators. This is not a debate about the Wye Valley. I have heard what the noble Lord, Lord Fox, said about that situation. I understand that the Government have announced this week an action plan and full review. I am delighted that this is a good example of where there is cause and consequence.

I want to bring us back to the guidelines. It is important that a functioning economy allows all stakeholders to operate in it. Clearly, that is the whole principle. If there is one stakeholder that is dominating its universe through its own actions, that is unacceptable in terms of creating the trust and framework we need in the market.

I return, in conclusion, to what has been a very important debate. I hope it will continue to be an important debate. I stress again that in four years we will have a full review of the growth duty so that we can see how it has been successful. One of the questions asked was: how soon will we know whether it has been successful? I hope it will start to show economic growth, in some of the points I will come to in a moment, immediately. We will certainly do a review after four years. There will be an explicit focus on ensuring that areas such as the derogation of consumer rights, the environment, or whatever it may be, will clearly be included in this.

I will touch on two final points because it is good to have this on the record. Regulators should have regard to medium- and long-term growth—not necessarily short-term growth or the profitability of the actions of any one company—by ensuring that key policy decisions and strategic choices are informed by consideration of key drivers of economic growth. This may include, but is not limited to, innovation, infrastructure and investment, competition, skills, efficiency and productivity, trade, and environmental sustainability, which I have touched on before. That is very important because, if you are running a business, you want to produce phenomenal products for the future of our nation. All too often we have had issues with regulators and the Government being slow to regulate on the innovative products we need to make this economy successful, both for our health and the economy around that.

How many times have businesses come to noble Lords—not all of your Lordships will have been approached by businesses, but many will—to complain about the lack of transparency around the regulator’s decision-making or the timeliness of its response on permitting, or to suggest that international standards could be used or that our own standards could be improved on, or to ask for more skills in regulators or for regulators to help them be skilful? It is so important that we respond to this. I am aware of the comments made around the water industry, and I hope that, to some extent, I have reassured noble Lords that this in no way derogates our responsibilities and abilities to act.

[The Duke of Wellington (CB)]

The Minister has many times referred to the wording in the draft statutory guidance refresh, which I assume can still be amended. Therefore, I ask the Minister to comment on page 26, which I quoted earlier, where it says that

“certain enforcement actions … can be particularly damaging to the growth. These include, for example … financial sanctions; and publicity”.

Surely the Minister would agree, in view of what he said, very persuasively, that those words should be looked at again. They certainly will inhibit a regulator from enforcing financial sanctions.

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Duke for those points. The relationship between the draft document and the formal document is a matter of moments before we finish the debate, so I do not think that is a possibility—but I am happy to be corrected by someone with better procedural knowledge of the House. I will deal with that in a moment, but I do not want to spend too much longer on this because I know that we want to move on.

I return to what this is about. As I say, there are 50 or so regulators covered by the statutory instrument. This is a refresh, so only three new regulators are affected, though there may be other smaller regulators that come into scope; fundamentally, it will be the main economic regulators that we have talked about. The rest of the regulators are covered by the existing statutory guidance, and the refresh improves on that. It is a very good thing, and I hope noble Lords will support us in this quest.

It is right that regulators—even the water regulator—should be pro-innovation, skilled and capable, business aware, proportionate, effective and responsive, and collaborative. I have had a number of businesses represent to me that too many regulators cross over each other and cause a great deal of confusion. They should be internationally aware, and they should be consistent, transparent and accountable. I do not see how any of us in this Chamber can suggest that these ambitions for the regulatory environment are not good. They should be reinforced. If we are to have a strong economy, we have to apply those decent, sensible, long-term economic criteria to the three main regulators.

I am happy to have further discussions as we head towards the White Paper around this. I am also happy to flag other points that noble Lords think will help in constructing a better regulatory framework to enable companies to flourish, consumers and the environment to be protected, and the overall economy of the country to see the necessary growth for the strength and wealth needed to protect our environment in the long term. I am grateful to all noble Lords for their contributions to the debate, and I commend the SI.

Steel: Port Talbot

Lord Johnson of Lainston Excerpts

Monday 15th April 2024 Lords Chamber

[Lord Roberts of Llandudno]

To ask His Majesty’s Government what assessment they have made of the social impact of the Port Talbot steel works blast furnace’s closure on the surrounding communities.

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

My Lords, the Government recognise the impact of transforming the Port Talbot steelworks. This is why we have established a transition board with membership from the local authority, the Welsh Government and Tata. The board has £100 million of funding—£80 million from the UK Government and £20 million from Tata—for projects to support the communities affected. The UK Government are contributing £500 million towards Tata’s £1.25 billion investment, to ensure a sustainable future for Welsh steel and to safeguard up to 5,000 jobs.

[Lord Roberts of Llandudno (LD)]

I thank the Minister for those remarks, but can I have an answer to one question? What assurance have we that we have sufficient electricity to work the steel plants at full capacity? Without that, we could have large-scale unemployment. South Wales has known enough of that in the past. Also, our communities could be affected. I remember how many of our local organisations lost out because of previous unemployment, being unable to take part again. There will be all sorts of consequences if we do not have full-scale working plants, and that depends on full-scale electricity supply.

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for that point and agree with him. This is why we have invested significantly in developing the Celtic Freeport as an anchor for floating offshore wind. It will be sufficient to provide a large portion of the power for these two new electric arc furnaces.

[Lord Woodley (Lab)]

My Lords, my union, Unite, last week voted to strike over Tata’s disastrous plan. The plan is an appalling act of industrial vandalism as far as we are concerned, with the loss of thousands of jobs devastating the local community and the local economy. As the Minister knows, Tata has other options, especially as Unite has secured a commitment from the Labour Party to invest £3 billion—not half a billion pounds—in UK steel. Will the Minister therefore urgently rethink the Government’s strategy and insist that Tata keeps at least one blast furnace going until the end of its life as a condition of investing any public money in this operation?

[Lord Johnson of Lainston (Con)]

I must respectfully disagree. This is a very sound plan to ensure that we have a future of steel-making not just in this country but in Wales. This plan will save 5,000 jobs. It will make the steel industry profitable and result in a crucial circular economy where we take our scrap metal and turn it into real steel rather than importing steel or ore from abroad. The Opposition are keen to copy the Conservative Party in so many of our policies, so I am surprised that in this instance they refuse to do so.

[Lord Wigley (PC)]

My Lords, does the Minister accept that there is an outstanding record of employee work in Port Talbot, and that there has not been a significant strike for 40 years there? In these circumstances, is it not outrageous that Tata should now threaten to take back the employees’ pension and redundancy packages to try to stop any industrial action? Is it not time that the Government got a grip on this to secure the future of this vital plant?

[Lord Johnson of Lainston (Con)]

I am grateful for that point. All of us in government are very sensitive to the people whose lives will be affected, which is why we are putting so much money into this process—£100 million in the transition board. I take this opportunity to thank Tata for its commitment to invest £1.25 billion in regenerating the area and renewing the British steel industry. I urge the unions to maintain their very strong record of good relationships, to not go on strike and to work with Tata, so that we can deliver what will be an incredible benefit for the area and the country.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I agree with all previous speakers that it would be an utter tragedy for steel-making to disappear from Port Talbot. However, does my noble friend agree that the only way of preserving a great British steel industry, and a green steel industry at that, is for the workers to work closely with Tata Steel, and for us to further green it using the offshore floating wind projects and with the potential of advanced modular reactors on site in Port Talbot?

[Lord Johnson of Lainston (Con)]

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

[Lord Fox (LD)]

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

[Lord Johnson of Lainston (Con)]

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

[Lord Naseby (Con)]

My Lords, is my noble friend aware that the resources he has announced are enormously welcome? However, on the point the noble Lord, Lord Griffiths, made about electricity supply, there should be an absolute guarantee. His Majesty’s Government might consider using the site for one of our many nuclear reactors that we have talked about for the last 18 months. This would be a wonderful situation if that were included on this particular site.

[Lord Johnson of Lainston (Con)]

I am grateful to my noble friend for that comment. The possibility of advanced modular reactors or small modular reactors operating in conjunction with offshore wind was just mentioned. The key is to build a sustainable green steel industry. That is why the Government have put so much money and thought behind this extraordinary and very powerful revolutionary plan.

[Baroness Blower (Lab)]

My Lords, demand for steel is expected to grow tenfold in the coming years. With proper investment, the UK could again be the steel-making capital of Europe. Will the Minister consider changing the procurement rules to ensure that UK public contracts use 100% UK steel, which by itself would create and maintain hundreds, possibly thousands, of jobs?

[Lord Johnson of Lainston (Con)]

I am always wary of insisting on local content when it comes to procurement. We want the best possible value and choice for our consumers, so I am not sure that is the answer. The point is to create a steel industry that produces steel that everyone in the world—not simply customers in the United Kingdom—wants to buy at the right price.

[Lord Bilimoria (CB)]

My Lords, we should be very grateful for the investment that Tata has made in the United Kingdom, starting with Tata Steel and then Jaguar Land Rover. These are huge, risky investments. With the big free trade agreement between the UK and India about to be signed, we should back Tata and appreciate what it has done.

[Lord Johnson of Lainston (Con)]

I am extremely grateful to the noble Lord for making that point. The first visit of my colleague Minister Mak as a Minister in my department was to Port Talbot to meet Tata’s managers. They made it very clear that they want to manage the redundancy process as closely as possible and by using a voluntary scheme. They have a huge amount of interest in this country and have partnered with us by creating a giga-factory, which kick-started our EV car industry in a major way. I echo the noble Lord when I thank Tata for all it is doing with the United Kingdom.

[Lord Leong (Lab)]

My Lords, the Government’s decision to give £500 million to Tata means that 2,800 people will lose their jobs. These are desperate times. People are worried and angry. The Government’s negligence in the 1980s devastated industrial communities, and the scars of entrenched inequality are still evident today. The Port Talbot transition board has up to £100 million to invest in skills and regeneration. Seven months on, can the Minister tell your Lordships’ House if any of this has been spent and if the strategy for doing so will be set out?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for his comments. I point out that the Conservatives have not been in government continuously since the 1980s; there was a prolonged period when Labour was in power. However, the next meeting of the transition board, on 27 April, will discuss exactly that: how will that £100 million be spent on local regeneration? The Government have also invested just under £800 million in the four city deals and £150 million in the Swansea Bay area. We are also investing significant tens of millions, nearly £60 million, in the offshore wind industry in the area, so we are definitely putting our money where our mouth is.

[Lord West of Spithead (Lab)]

My Lords, I will return to the question from the noble Lord, Lord Fox. What percentage of British steel will be used in the Dreadnought class, the AUKUS class submarines, Type 26s, Type 32s and fleet solid support ships? We need sovereign capability and resilience, and I have a feeling that we will be relying on France and other countries for quite a lot of this specialist steel.

[Lord Johnson of Lainston (Con)]

The noble Lord knows far more about building warships than I ever will. All I can say, as I said earlier, is that 1% of defence requirement is provided by UK steel. We believe that this plan will allow us to produce the necessary steel for all our industries, particularly as technology develops. I say again that this is truly a first-class plan to regenerate the area and create a green steel industry for the UK. We should celebrate it while putting in a huge amount of attention to detail to ensure that we mitigate for affecting people’s lives, as much as possible.

Economic Growth (Regulatory Functions) (Amendment) Order 2024

Lord Johnson of Lainston Excerpts

Monday 15th April 2024 Lords Chamber

Moved by

[Lord Johnson of Lainston]

That the draft Order laid before the House on 6 March be approved.

Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee. Special attention drawn to the instrument.

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

My Lords, I direct noble Lords to my register of interests. I do not believe I have any specific conflicts, but I am a shareholder in various companies and so on, and it is important for me to highlight that point at the start.

The Economic Growth (Regulatory Functions) (Amendment) Order 2024 and draft guidance, issued under Section 110(1) of the Deregulation Act 2015, were laid before the House on 6 March 2024. I am aware of the amendment that has been tabled, to which I will respond in due course. I also reassure the House that I have responded to the SLSC, following a submission from Wildlife and Countryside Link, which, again, I will cover in due course.

Regulators play a vital role in shaping the UK economy through the way in which they regulate. Regulators set strategies and make decisions that significantly affect the types, the scale and the locations of economic activity in important sectors of the economy. It is therefore critical that regulation is cognisant of the requirements of growth. Efficiencies from improved regulation can translate into lower input costs and higher economic growth overall. I will be publishing a White Paper shortly that addresses the relationship of regulation and growth in greater detail; I look forward to discussing that with many noble Lords in the future.

The instrument and guidance we are debating today relate to the growth duty, a duty that requires specified regulators to have regard to the desirability of promoting economic growth when exercising certain regulatory functions. The instrument extending the growth duty will support an increase in the productivity of our businesses, drive economic performance, and grow our economy. By extending the growth duty to Ofgem, Ofcom and Ofwat, we will ensure that these critical regulators have regard to the need to promote economic growth.

It is clear that regulators can affect growth through their policy decisions. However, regulators can also affect growth through the approach they take to regulation and the wider environment that they establish, including in their relationships with regulated businesses. A good regulatory environment, emerging from the attentive and responsive stewardship of an effective regulator, can create the conditions for business confidence and investment, sensible risk-taking and innovation.

The growth duty currently applies to more than 50 regulators and came into statutory effect alongside the relevant statutory guidance on 29 March 2017 under the Deregulation Act 2015. Currently, the growth duty does not apply to the Office of Communications, also known as Ofcom; the Office of Gas and Electricity Markets, Ofgem; and the Water Services Regulation Authority, Ofwat. This instrument will extend the duty to these three regulators. These regulators oversee industry sectors which alone account for 13% of annual private UK investment and around 4% of UK GDP.

In extending the growth duty, the department has also taken the opportunity to refresh the related statutory guidance, to provide greater clarity to support regulators in their application of and reporting against the growth duty. The refreshed guidance has identified “drivers of growth” and “behaviours of Smarter Regulation”, which will assist regulators to better support sustainable economic growth. I hope that noble Lords have had a chance to read the guidance, which is an extremely well-written document.

I will talk about some of the key drivers of economic growth. I will list them, if I may: innovation, infrastructure and investment, competition, skills, efficiency and productivity, trade, and—very importantly, please take note—environmental sustainability. I understand that there is a perception that the growth duty is in conflict with environmental duties or protection of the environment. I assure all noble Lords that nothing could be further from the truth. The refreshed growth duty statutory guidance sets out in the opening paragraph the importance of ensuring

“adequate protections for consumers and the environment”.

It goes on to state:

“Natural capital and the ecosystem”


in which we live

“are fundamental to economic growth”

and therefore need to be safeguarded for economic growth to be sustained. The growth duty does not legitimise non-compliance with other duties or objectives, and its purpose is not to achieve or pursue economic growth at the expense of necessary protections.

Together, the extension of the growth duty and revised guidance will support the positive shift in the way that regulation is delivered, driving growth and paving the way for businesses to start to grow. An economy that promotes growth is one which is better able to attract businesses to our shores, to innovate and to serve households, and delivers prosperity across our nation.

The extension of the growth duty expands the remit of what Ofgem, Ofcom and Ofwat should consider when exercising their regulatory functions. Requiring these regulators to consider the growth duty will empower them to consider other areas which may not be reflected or may be only partly reflected in their duties, such as promoting innovation or trade. The growth duty is not prescriptive. It does not mandate particular actions; nor does it create a hierarchy over existing regulatory duties. The draft statutory guidance is clear that it is for regulators to balance their duties. We recognise that decisions on growth will need to be carefully considered along with other duties. The Government have also committed to review the impact of the extension of this SI within the related impact assessment and will consider the impact and effectiveness of the growth duty on investment growth, the environment and other factors in detail at the committed review point.

The refreshed guidance outlines drivers of sustainable economic growth supported by case-study examples to provide clarity to regulators within scope of the duty and help them to promote growth. For the purposes of this debate, I refer noble Lords to the previous sets of guidance, which I found to be limited in terms of the sorts of ambitions that we have, particularly when it comes to making sure that regulators understand the balance of their different duties.

The guidance also identifies behaviours that contribute to good regulatory decision-making and smarter regulation. The purpose of the guidance is to assist regulators to give appropriate consideration to the potential impact of their decisions on economic growth within the sectors they directly regulate and the broader UK economy alongside or as part of consideration of their other statutory duties. Decisions on growth will involve consideration of a regulator’s other duties; for example, they may relate to environmental or consumer protection, and there may be a need to balance multiple objectives. As independent and experienced bodies, regulators are best placed to balance their decision-making in this regard, and the revised guidance intends to encourage transparency and accountability for growth across regulators, attracting investment and, we hope, creating jobs.

Before concluding, I turn briefly to the regret amendment in the name of the noble Baroness, Lady Bakewell of Hardington Mandeville. The amendment is concerned that the growth duty could impact Ofwat’s ability to take enforcement action against polluting companies. We are aware that water pollution levels are totally unacceptable, so we expect Ofwat to take the right decisions to protect our waterways. I reassure the House that it is not a case of growth versus the environment.

First, I confirm to the House that the growth duty does not, has not and will not legitimise non-compliance with existing protections and does not prevent Ofwat taking enforcement action. This includes environmental responsibilities and this is explicit in the revised statutory guidance. The purpose of the growth duty is to ensure that specified regulators consider the potential impact of their activities and decisions on economic growth alongside their other statutory duties. The statutory guidance is clear that this does not legitimise non-compliance with existing duties. Further, it specifically lists environmental sustainability as a driver of economic growth and reiterates that the Government are committed to the net-zero and environmental targets in the Climate Change Act 2008 and the Environment Act 2021. A well-protected and healthy population and environment lead to higher productivity and growth. Therefore, we consider that there is no tension between a regulator’s protection duties and the growth duty.

Secondly, the guidance does not in any way set restrictions on regulators about how their enforcement can and should operate. We can all agree that non-compliant activity or behaviour that undermines protections to the detriment of the environment needs to be appropriately dealt with by regulators. Regulators operate independently from the Government and are free to make enforcement decisions based on the evidence presented to them. The growth duty does not prevent any enforcement. I want to be clear that degradation of the environment does not support long-term growth, and it is not something that the growth duty seeks or permits.

In conclusion, this statutory instrument is necessary to ensure that the energy, water and communications sectors strive for maximum efficiency over a sustained period. A well-regulated system will deliver efficient outputs and drive economic growth and productivity. The refreshed guidance makes it clear that regulators should work with businesses on, among other things, the environment, trade, investment and skills to ensure sustainable medium to long-term economic growth. This ensures that current-day economic growth can be achieved without undermining the ability of future growth. Applying the growth duty to the regulators of the energy, water and communications sectors will help ensure an efficient system by encouraging pro-growth regulatory practices where these are compatible with existing duties. The refreshed growth-duty guidance will support regulators in their application of and reporting against this growth duty. The guidance will assist regulators in discharging their responsibilities under the growth duty and provide clarity for stakeholders as to what they should expect of regulators.

Amendment to the Motion

Moved by