Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Bill [HL]

Lord Johnson of Lainston Excerpts

Committee stage
Thursday 7th December 2023 Grand Committee

[Baroness McIntosh of Pickering (Con)]

My Lords, I want to intervene at a late stage on this amendment. I, too, was unable to participate at Second Reading because I could not be there for the whole debate, which I understand the rules, quite rightly, insist on. I apologise for not being able to participate then.

The amendment moved by the noble Lord, Lord Purvis, seems to have a certain similarity to a later amendment in my name, Amendment 27. I have already spoken to my noble friend the Minister informally—I hesitate to say “casually”—and alerted him to the background to that amendment, to which I shall speak when the time comes. Can my noble friend help me by telling me what the relevant conformity standards body is for food and agricultural imports? He will be familiar, I am sure, with the report from the Food Standards Agency in England and the Food Standards Scotland, to which I shall refer in more detail when I speak briefly to my amendment.

I want to congratulate the Government on something that I have been asking for for some 10 years. I understand that they have appointed a larger number of agricultural attachés. The original one was appointed in Beijing by my right honourable friend Liz Truss when she was the Secretary of State for agriculture. If attachés can be placed in countries such as those referred to my noble friend Lord Trenchard, including Japan and others, under this agreement, it will be an enormous boost. I applaud that. If my noble friend the Minister cannot answer today, could he provide the Committee with details on what part of the cost the farming and food sector would have to pay and which part the Government may pick up, because it would be an enormous investment?

As I said, I would be interested to know also which conformity standards body would be relevant to food and agricultural products, but I shall keep my main thoughts for when I speak to my own amendment in more detail.

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

I greet noble Lords who have been kind enough to come back for another wonderful discussion on the merits and benefits of free trade that will be visited upon our nation thanks to the vision of this Government in seeking to apply to and being successfully admitted, we hope, to the CPTPP. I am grateful to noble Lords for continuing their discussions, particularly those who have tabled amendments, and for the interlocution that we have had up until now, which has allowed us to have a good debate. I hope that they are well aware that I am available to them continuously to make sure that we draft the right legislation and profit from these free trade agreements.

I shall take the amendments one at a time if I may, though in this instance I think they are quite well grouped. The noble Lord, Lord Lansley, well covered the points raised by the noble Lord, Lord Purvis. There is no derogation of standards. This is not about standards; it is quite a helpful and straightforward process of authorising conformity assessment bodies to perform a function which, in many instances, they may already be doing—there may be mutual recognition in some areas and there may be other standards being undertaken or tested for. It simply allows the Secretary of State to authorise CABs to approve the activities of a CAB in a CPTPP country. Very importantly—we forget this, because often we look only one way in these agreements—CABs in CPTPP countries can authorise activities in the United Kingdom so that we can export more efficiently. It is of enormous assistance to industry, without question.

I have just been told the answer to my noble friend Lady McIntosh’s question: UKAS is the conformity assessment body for agricultural standards. That answer came through just at the right time, but, as always, I am happy to write to noble Lords if I do not have the specific information. On CABs, the statutory instruments or secondary legislation that will come from this will cover a whole range of specialist and manufactured goods.

I feel I have been brief, but I believe everything has been covered in the discussion, unless I have missed anything. This is not about regulations, changing standards or anything like that; it is about a straightforward process where conformity assessment bodies can be authorised to follow whatever standards the domestic CABs wish them to follow in any CPTPP country. This strikes me as eminently sensible, and we very much hope that the noble Lord, Lord Purvis, would be comfortable with withdrawing his amendment.

[Lord Purvis of Tweed (LD)]

I am grateful to Members who took part in this short debate. I like the Minister, and his enthusiasm for the 0.08% bounty to our economy from this Government’s vision is infectious. But we want businesses to take the opportunities from this.

I have a couple of points that the Minister might want to write to us about. If he will forgive me, the question I neglected to ask in moving the amendment is a concern that still plays slightly on my mind. If the United Kingdom Accreditation Service is now approving those within CPTPP countries, will those accreditation bodies be sufficiently aware of the Windsor agreement and the internal market of the UK? As the Minister knows, there is not just the UK certification badge on goods; if it is to do with the Northern Ireland market, there is also the UKNI certification process. This is complicated—we have debated it long and hard—and it will be a task for our accreditation service to judge whether the bodies within CPTPP countries are sufficiently qualified to understand our market and entering goods into all parts of the UK market, not just GB.

As the noble Lord, Lord Lansley, rightly said, there is currently a workaround for this because of the CE markings. From my point of view, it would be eminently sensible if we just kept that going on in perpetuity. However, the noble Viscount, Lord Trenchard, and the noble Lord, Lord Frost, may have issues with that, because it would mean that we would have to maintain EU standards in perpetuity too—so there would perhaps be consequences to that. In the absence of mutual recognition agreements, we will probably have to keep an eye on this. I am aware that there are some MRAs within and between CPTPP countries, and whether we wish to take the next step forward with those countries is an interesting issue. I am certainly very open-minded about that, because it makes eminent sense, as the noble Lord, Lord Lansley, indicated.

Fundamentally, if we are to approve other bodies, it would be helpful to know, through a report, which bodies have been approved, which have not and why. If they are not able to certify goods properly within the categories that are not self-certifiable under the WTO, there will still be that lingering doubt that goods will be entering into the UK market without the proper process. If there is a reason why our accreditation bodies have not approved them, there is a reason why those goods should not necessarily enter into the UK market.

I hear what the Minister said. Can he give an indication about whether he will write to me on Northern Ireland? He is nodding from a sedentary position, but is he willing to intervene?

[Lord Johnson of Lainston (Con)]

I will do that and, on the other point, clarify where I think there may be a misunderstanding about the conformity assessment bodies and our current imports. Do not forget that we already import a great deal from CPTPP countries without this arrangement in place; this just facilitates the effectiveness of the CABs internationally and vice versa. I hope we can clarify that—I can write to Members to do so.

[Lord Purvis of Tweed (LD)]

I am grateful for that—as we know, there are currently imports under both the WTO approach and the CE markings, so, if this is moving away from that, a little understanding is needed. On Northern Ireland in particular, I am grateful that the Minister said he would write. At the moment, I beg leave to withdraw.

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[Lord McNicol of West Kilbride (Lab)]

My Lords, there is very little to add to the detailed probing question—and answers—from the noble Lord, Lord Lansley. With that, I look forward to the Minister’s response.

[Lord Johnson of Lainston (Con)]

My Lords, it is a constant pleasure to debate with such intellectual firepowers as the noble Lords, Lord McNicol and Lord Purvis, and my noble friend Lord Lansley. It is a joy to learn new things, every day, about the opportunities and benefits of free trade, particularly the CPTPP treaty itself.

However, in this instance, the Government are not keen to accept the amendment, for the simple reason that this strikes me as an absolutely eminent clarification of the procurement relationship between a UK procurer covered by the CPTPP legislation and the international procurer who would not be covered by it. It clarifies the point that, if we are in a minority funding position, we have to be in a majority funding position in order to qualify under our own procurement legislation.

Therefore, this does something very sensible: it confirms that point. I am happy to clarify this further with the noble Lord outside this room, but it would be difficult for procuring agents in the UK who were not in control of the funding process to conform to the CPTPP procurement funding processes or our own national processes. That is why this is clarified. Otherwise, if you have a minority position, you do not have control over it—if you are putting in only a small amount of capital, it makes sense for the international body to make the procurement decisions.

Maybe I have missed something, but this strikes me as quite straightforward. I felt that, of all the amendments placed today, what we were doing here seemed to make things easier and clearer, rather than more opaque.

[Lord Lansley (Con)]

I intervene just to pre-empt my subsequent remarks. We are in Committee and may not need to return to this on Report, but it would be jolly useful to run through some case studies to examine how this works. My noble friend might help here, but this relates to whether it is exempted from covered procurement under UK procurement law. That may mean that there is less of a problem, but there is none the less a risk that these are procurements that may happen in the United Kingdom—Pergau dam buying consultant engineering services, for example. We might take that and say, “Here is a big engineering project in a developing country, and the procurement includes consulting engineering services in the United Kingdom. Do we need to know whether that it is wholly or mainly funded?” Maybe we could work through some case studies.

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for his intervention. The principle here is ensuring that our procurement laws cover our own activities, so it is right to clarify where that is the case. I am happy to write further on this matter. I do not see anything wrong here and, in fact, I suggested to my officials before this debate that we look specifically at an example that could help to illustrate this—one floated earlier, concerning World Bank funding, would be very good to follow up on. We are happy to demonstrate that. However, this seems eminently sensible, so, unless it were felt otherwise, I would be reluctant to give way on this point, which clarifies the issue very well.

[Lord Lansley (Con)]

I thank my noble friend. I sense that the Committee would be happy for us to take this away and look at it. We may or may not need to return to it on Report, but I am grateful to my noble friend for that offer. I beg leave to withdraw the amendment.

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[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the noble Lord, Lord Lansley. The Trade Marks Act 1994 at no point uses the phrase “established by use”. However, it specifically makes provision for registered trademarks, whereas—this was the final point of the noble Lord, Lord Lansley; he may be wrong and looking for clarification from the Minister—if it is established by use then it would presumably be unregistered, as he said. Therefore, would it not be subject to common law through the concept known as “passing off”? With that, I look forward to the Minister’s response.

[Lord Johnson of Lainston (Con)]

As always, I am grateful to noble Lords for their points. Clearly, it is easy to confuse trademarks and geographical indications. With geographical indications, there is a principle of established use, whereas with trademarks, something is either trademarked or it is not. That is why we are comfortable with the language as it sits.

There is no reference in the Trade Marks Act 1994 to the concept of “established by use”, because the concept refers to unregistered trademarks, whereas the Trade Marks Act is concerned principally with protections conferred on registered marks. However, “established by use” has meaning under the law relating to geographical indications.

[Lord Lansley (Con)]

I remain confused because, in Clause 4(3), “established by use” relates to the trademark and not to the GI. I see the point that my noble friend makes, but where is the concept of a trademark established by use?

[Lord Johnson of Lainston (Con)]

I apologise to my noble friend, but that is not how I read it. It is linked to designation—that is, if origin and geographical indication conflict with trademarks. It would be logical that “established by use” is in relation to geographical indications. I am afraid that that is how I have read it. I do not think that there is an inconsistency. As with all things, I am very comfortable having a further look at it, but I think it would be an issue if we took out “established by use” and inserted

“in use prior to that date”,

which could result in applications for GIs being rejected under our amended rule, which is not required under CPTPP.

It is important to note that this authority allows the Secretary of State to restrict the use of a geographical indication if it is likely to cause confusion for any GIs that come in after accession or after this Bill becomes an Act. Clearly, she must have an eye to the UK legislative framework. The provision gives her the power to clarify the geographical indications. I do not believe that I have missed anything, but I am probably about to be corrected.

[Lord Stevenson of Balmacara (Lab)]

You are not—I would not dream of doing so—but I think the point made by the noble Lord is worth further consideration. My—relatively recent—reading of it is that we are pointing in two directions. There is a question about trademarks and how they may or may not be protected consequent on us joining the CPTPP; there is also the question of the very new idea of GIs. They are recent inventions and I do not think we have quite tracked out where they go and what they do. For example, if Melton Mowbray pies are to become a standard under which we take this forward, we need to think quite carefully about what that means in relation to the countries that we are joining, because the tradition there is completely different. I am not saying that the wording is wrong, but it would be helpful to have a discussion offline.

I have always found in these matters—others will have heard me on this—that there is a small group in your Lordships’ House who really understand and like intellectual property. It has a nasty habit of tripping you up if you do not get it right first time round, and we might be in that sort of territory here.

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord. I hope that he does not feel that I have been tripped up by this. I am very comfortable with what we have drafted. It gives protections in the right way for GIs which are established by use, and it clarifies the difference between those and trademarks. As with all things, it is important that we have a deep discussion about this, so I am very comfortable having further debates about it. We will no doubt return to this matter, because it is important. It is not a political point to make but a technical point to ensure that we are doing it in the right way. As the noble Lord rightly pointed out, GIs are a relatively new concept. At the same time, it makes sense to ensure that our historical GIs which have been in established use are properly protected. We have the opportunity to protect them into the future against other GIs that may cause confusion with commercial intent.

I ask the noble Lord to withdraw his amendment, but, clearly, we are happy to have further discussions and I am sure that my officials will engage on that at the first possible opportunity.

[Lord Lansley (Con)]

I am grateful to my noble friend. I am very happy to proceed on the basis he proposes, but I say that the way it is structured at the moment, “established by use” relates to the trademark, not to the GI, so the concept of a trademark established by use in statute when it is not in the Trade Marks Act seems a potential problem. I leave that thought. We will talk about it more and may need to come back to it, just as we did on the preceding group. I am grateful to my noble friend for his willingness to have a good look at it. I beg leave to withdraw the amendment.

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[Baroness Lawlor (Con)]

My Lords, apropos of the amendment in the name of the noble Lord, Lord Davies, it is important not to get carried away by the precautionary principle because it introduces difficult conflicts in the arrangements of our own law. The precautionary principle owes a great deal to the civil law tradition and its code-based arrangements, whereas our common-law approach is much more open and based on case law, and it is more conducive to our businesses.

[Lord Johnson of Lainston (Con)]

I thank everyone who attended Second Reading. It seems a very few did; I do not know where everyone has come from since then. I was there. I believe it was the noble Lord, Lord Purvis, who recommended that I read the Hansard of the Second Reading, which I thought was peculiar, since I definitely remember being there, but maybe it was an avatar or a creation. None the less, it is important that people feel that they can come into and out of these different discussions to add value where they can.

I shall try to answer these very important points in order, but please forgive me if I miss anything because I want to make sure that we have a chance to go through them. I shall begin by addressing the comments of the noble Lord, Lord Purvis, as much as the amendment itself. The noble Baroness, Lady McIntosh, raised the same point slightly earlier, which I did not cover, about our agricultural attachés and the importance of making the most of our free trade agreements. I completely agree that there is an unlimited amount that any Government can do to promote the advantages of free trade and the free trade agreements, so I am keen and open, as is the department, to hear any views or suggestions that we can deploy effectively and cost-effectively to spread the word. It is why these debates are so important.

It is also why the initiatives we have taken are very relevant. We are assessing a range of different options, including using AI to feed into information we get from HMRC on what companies are engaged in or where they are already exporting to. Where there may be overlaps, we can then contact the companies and promote the different free trade options. It is complicated, but essential because if we do not promote the free trade options, what are we doing having these lengthy debates about free trade agreements? I am happy to be pressed on that. Clearly, it is important that the department reports on the assistance it gives to exporters, and it does. For example, earlier today I was talking to one of our IT staff who was presenting to me the effects that their specific system is having on exports. He listed a very significant total which he said was growing continually. These sorts of areas are reported on, and they should be. We should be held to account on that.

When it comes to specific reports on the effect on GIs, the noble Lord is trying to approach two concepts, as I understand it. First, there will be derogative elements on GIs, so have we protected our GIs and is there a protection regime being effectively deployed on account of us joining the CPTPP? That is difficult to do because not all countries have a multilateral agreement rather than a single country-to-country free trade agreement, and not all countries—I am afraid I cannot recall which ones but Australia and New Zealand in relation to our relationship via the EU is a good example—have geographical indications regimes, so it would not count; they could not police it. However, by having these stated relationships and highlighting these principles, we already go a long way to effectively protecting our GIs in CPTPP countries because we have a forum in which we can have open and frank discussions. It is clearly not in any country’s interest to derogate another country’s trademark policies, GIs or whatever. It would be difficult to apply this piece, but I am fully aware of the importance of making sure that this is clearly monitored.

The second part goes back to my first answer, which was about how we make the most of our GIs, such as cheddar cheese or whatever. We continue to invest particularly in the area of agriculture. I think we have one dozen—it may be nine, but between nine and 12—agricultural attachés placed around the world, funded by Defra and supported by the Department for Business and Trade and the Foreign, Commonwealth and Development Office. It is a multistrand initiative, which we think is very important in order to promote these products. Scotch whisky has been mentioned. As we are aware, tariffs into Malaysia will be reduced in gradations from 80%—a rate which effectively doubles the price of a bottle of whisky—to effectively zero over the next 10 years. These are important changes. I see them as agricultural products—food, drink and agricultural products linking together to be supported.

A number of noble Peers rightly raised the point about reporting. I will not go into all the different details, but I will try to touch on them. I would be reluctant—we will have this debate in the next Committee session on 14 December—statutorily to oblige the Secretary of State to undertake significant, specific levels of reporting. Noble Lords might say that that is because I am a government Minister, and officials always tell Ministers to avoid producing statutory reports. As a civilian, before I entered this job, I asked, “Why are we not producing more reports?” Having gone into the Government, I now realise that you can produce a lot of reports, but the problem is that if they are statutory government reports, the principles behind them can often become outdated very fast, so you lose flexibility. They are also enormously costly to produce. I see how the government machine functions: it rightly respects Parliament and its writ and so wants to dot the “i”s and cross the “t”s, so you often end up producing supposedly very comprehensive reports that do not really tell us what we are looking for.

What we have agreed to and will see over the next period is much more useful. In 2024, CPTPP countries will do a review of CPTPP and how it has worked. Two years after our accession to the treaty we will produce a summary report on the effects of CPTPP, and after five years we will produce a full report. It would be more useful to clarify the sorts of areas we wish to cover in those reports. We had this debate with Australia and New Zealand, and we came to some sensible conclusions. I was very happy giving Dispatch Box commitments, as a government Minister, that these will be the so-called obvious areas that we will want to investigate. Clearly one of them will be whether we have protected our intellectual property of whatever type, and others will be the effect on the environment and on standards, if any.

On that, to go to my next point, which the noble Lord, Lord Davies, raised in association with his amendment, I think there has been some misunderstanding as to what a free trade agreement is. A free trade agreement does not change anything about UK standards. We already trade with all those countries significantly, such as with Malaysia. Perhaps I should raise my interests so they are on record: I have done a huge amount of business in the past with all those countries, and I still have interests in companies that operate in them—maybe I should have said it at the beginning, although I do not think it is relevant to this debate. However, I was doing business there when we did not have the CPTPP, so it does not make any difference to the standards employed in this country—there is no derogation from our standards.

If my officials agree, I will read from the excellent report from the Trade and Agriculture Commission, which your Lordships will all have read and which I think came out today—I am never quite sure what is in the public domain or not, but this is. I shall read out only two questions. Question 1 is:

“Does CPTPP require the UK to change its levels of statutory protection in relation to (a) animal or plant life or health, (b) animal welfare, and (c) environmental protection? Answer: No”.


Question 2 is:

“Does CPTPP reinforce the UK’s levels of statutory protection in these areas? Answer: Yes”.


That is pretty relevant for me—I hope your Lordships do not think I am being glib, because clearly the report says more than that. However, that is an important assessment—I think some noble Lords sit on the TAC, but maybe not those in the Room today. It is not about derogating our standards in any way but is particularly about making sure that our businesses can deploy their skill sets and expertise more effectively, with less friction and with lower tariffs, which is good for the consumer and for our businesses. However, it does not change our standards, or, by the way, the standards of the countries to which we are exporting.

I will roll on to the other points, which are on the rules of origin. It is perfectly normal for traders to self-certify, and in fact, that is what we want. I have visited freeports recently, another great initiative of this Government, so I have seen a number of port activities. Efficient port activities rely on ad hoc inspections, therefore risk-based approaches to customs clearances for most things, and that is absolutely right. Although the rules of origin are complicated, and there are varying channels of rules of origin, as the noble Lord, Lord Foster, so rightly pointed out, it is up to the company to choose the avenue that it uses. I believe that we have the right resources to make sure that our rules of origin processes are properly checked, and I have continued to check that. However, there is also a committee in CPTPP on the rules of origin so this can be further discussed and clarified. It met last month and we attended it as an acceding member, so we are already participating in this, which is important.

The noble Lord, Lord Kerr, rightly raised the principle around the timing of the report; I think I covered that point in the sense that certainly after 12 months it would be unhelpful to produce a report on anything, frankly. However, if we are going to produce a report after two years, which we have committed to do, I am very happy to have further discussions about what will be in that report and what will be in the five-year report.

I was delighted that the noble Lord, Lord Alton, raised the extremely close relationship that we have with Korea— rather than attend the Second Reading, he and the noble Viscount, Lord Trenchard, attended the address by President Yoon. That is a good example in that although South Korea is not a member of CPTPP, we celebrated, thanks to the good works of the investment team, over £20 billion-worth of investment in the UK. That was a significant celebration of the depth of our relationship with Korea—if I may say that as an aside and champion the investment department at the Department for Business and Trade.

I will cover two points on the precautionary principle, which the noble Viscount, Lord Trenchard, raised, which is important, and it is clearly in this amendment. The precautionary principle already exists in the Environment Act 2021, so I think the Secretary of State has to have an eye to it in her activities, as do all Secretaries of State. To add it into this free trade agreement would create unnecessary duplication and parallel obligations, which causes confusion for businesses and countries.

[Lord Davies of Brixton (Lab)]

The Minister is quite correct. It is in a statement associated with the Act, but it applies only to the environment. Of course, the trade under this Bill goes somewhat wider, and there is just the thought that it should apply more broadly across the potential changes in protections.

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for that comment; I am happy to have a discussion with him and other noble Lords about this. We would resist this significantly. It would cause confusion to have parallel principles around how the Secretary of State should act in relation to this FTA and in other areas, in terms of how we manage our own economy and how we check our supply chains. The noble Lord, Lord McNicol, was right to raise the concept of supply chains; I have conversations with many noble Lords in many instances about the principles around how we protect our products in this country from supply chains that we find are either not aligned with our values—as well raised by the noble Lord, Lord Alton—or lack competitive advantage. I have great sympathy in particular with the agriculture sector, with which I have engaged significantly and which says that it is not about free trade but that we are obliged to conform to standards that are significantly higher than in other countries. It is classified as unfair, and we are very sensitive to that.

[Lord Alton of Liverpool (CB)]

I am grateful to the Minister for referring explicitly to the supply chain issue. It should form the basis of further discussion, perhaps outside the Committee and before we get to Report. If we look at the requirements under the 2015 modern slavery legislation—pioneered by the Minister’s right honourable friend Theresa May during her time in the Home Office—we see that it places duties on us to look at the way in which products have been manufactured. It is not just about the precautionary principle; this is asking us, every time we take decisions about things that we are going to purchase in this country, what the supply chain was. It is not just about free trade; it is about fair trade. How can manufacturing industry in the United Kingdom possibly compete if people are using slave labour in places in Xinjiang?

I take the Minister back, if I may, to the amendments that I moved during the passage of the Trade Act 2021 and the Health and Care Act 2022 and, indeed—as the noble Lord, Lord Lansley, and others will recall—the Procurement Act 2023. They all looked at our duties and obligations under the 2015 legislation. By very significant margins, cross-party amendments were added to all those pieces of legislation. I simply ask the Minister: how will we comply with the 2015 Act? Would he agree to have discussions outside the Committee before we go further on that point?

[Lord Johnson of Lainston (Con)]

I absolutely make myself available to have discussions outside this Committee on all points. I refer the noble Lord, Lord Alton, to my original statement that collaboration around this is very high.

I will try to make a philosophical point which I think is very important: this is a free trade agreement. It is concerned principally with tariffs, smooth movement of trade and other principles. It is very important to separate that from the important standards that we hold ourselves to in this country. It is right that we have a number of very important pieces of legislation that drive standards in supply chains. Any of us who have been involved in business know that we have to ascertain our supply chains. In other areas, particularly in relation to the environment, I believe that supply chains are covered very well by our legal processes in terms of child slavery and other abhorrent activities. That is well understood and the supply chain obligations are very clearly understood. In the environment, it is still more nuanced. It will always be a complex area, because other geographies clearly have different environmental advantages and disadvantages compared with us. We are still working on that, but it is for a separate track of legislation. I do not think that it is right to confuse the principles of the legislation around free trade agreements with legislation around our own supply chain obligations.

When given the decision, should one be in a free trade area, able to bring to bear one’s own values to make necessary changes, or not be, because you do not believe that the participant parties are aligned with your values? I would prefer always to pick the former.

Although I would not necessarily suggest that there was a significant gulf between us, Australia and New Zealand when we negotiated the Australia and New Zealand FTAs, there is absolutely no doubt in my mind that the engagement with the UK on environmental and animal welfare issues resulted in significant changes in the Australian and New Zealand domestic animal welfare and environment policies. I have no specific evidence of that, but I know full well that there were strong levels of conversation around that and, at the same time, Australia and New Zealand made significant changes in our direction in both areas. Either that was a great coincidence or it was partially supported by the fact that we were collaborating with them more effectively. This is what the CPTPP will allow us to do.

I refer back to the TAC report, which made clear our own standards for pesticides, which were raised by the noble Lord, Lord McNicol. That does not change: nothing changes in our standards the day after CPTPP comes into force—that is for our own sovereignty to control.

I ask that this amendment is withdrawn, but clearly I am here to discuss in detail how we can reassure noble Lords that the principles around the need to report on the effectiveness and concomitant effects of the FTA are properly established, as well as other key points around derogation and key values issues, which should be properly controlled and contained.

[Lord Purvis of Tweed (LD)]

I am grateful for the Minister’s helpful and interesting reply. My understanding is that Ministers are always advised to read Hansard: that is when they find out, the next day, what they should have said at the Dispatch Box and what officials have made sure is in print. The noble Lord, Lord McNicol, is absolutely right: nothing in the Companion required noble Lords to say that they met the President of Korea, but I guess it sounds good.

I thank all noble Lords who took part. At the start of his contribution, the Minister said that he did not see the value of the statutory reporting in many respects. I noted that he subsequently quoted from a statutory report and said that there was great value in it. Given that the TAC was the result of amendments that Parliament asked of the Government, I will take the second part of what he said as the basis of the ministerial response—there is great value in that statutory report. But, as my noble friend Lord Foster said at Second Reading at col. 700, it would have been helpful to have had that report in advance of the start of the Second Reading. Nevertheless, we will study that report now that it has been released.

The noble Viscount, Lord Trenchard, was right to make reference to the growing economies within this area. However, if we had the data on the growth of the CPTPP economies and stripped out their reliance on the growth of the Chinese economy, I wonder what those growth figures would look like vis-à-vis those in Europe. I suspect that they would be rather similar. It is hard to disaggregate the growth of the Asia-Pacific economy from that of the Chinese economy. I note that UK imports from China, for example, have grown to over £40 billion, now that we have a trade deficit in goods with China. The impact of China’s growth is disproportionate with regard to them all.

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[Lord Johnson of Lainston (Con)]

I again thank noble Lords for their input. The noble Lord, Lord Purvis, referred to my declaration of interests and asked about my interests in Malaysia. I do not have any interests in Malaysia, but I have had interests there, which serve to highlight the points I tried to make about trade. My interests are very clearly listed on the Lords’ register. I have small shares in fund management businesses but, as I said, I do not believe there is any conflict relating to this debate. I am always very cautious in that area, so I like to make everything as transparent as possible. I apologise for not making my declarations at the beginning of the debate.

I will now cover the important points. It is important to reaffirm that, as I committed to at Second Reading, the Intellectual Property Office will undergo a full consultation and report early next year on the effects these changes will have on artists and the industry itself in the United Kingdom.

[Lord Foster of Bath (LD)]

I am sorry, but although it will report early next year, that will be after we have concluded all our deliberations on the Bill.

[Lord Johnson of Lainston (Con)]

That is true of the House of Lords process, but I assume that, by then, the Bill will be in the other place, so there will be an opportunity to reference the consultation. My point is that the consultation will not have an effect on the treaty in the sense that we are able to take ameliorative action as a nation. I am grateful to the noble Lord for raising this, but it is not necessary to make amendments to the CPTPP Bill. We want to take time to decide the best course of action relating to how artists are compensated for their works being broadcast on broadcast media.

I am very comfortable with the principles around the consultation process, and I hope that noble Lords will be reassured that I have taken a significant personal interest in ensuring that we get into this debate with all the details that it presents. It is not necessarily as straightforward as it may appear. I admit to coming to this at First Reading and thinking, “This seems an extremely reasonable affair; shouldn’t all artists receive 50% of their broadcast rights?” Further investigation shows that the situation is much more complicated, with different artists having different concepts of rights, particularly in America, which has the largest market in relation to this, and certain revenues being able to be captured and retained in the UK, rather than repatriated, and so on. A very relevant point was raised to do with reciprocity.

If I may, I will explain to noble Lords, who know more about these subjects than I do, that joining CPTPP fundamentally changes an important principle in how we assess artists’ rights. The copyright Act extends rights to performers who are nationals of or who give a performance in a “qualifying country”, the principle being that you will qualify for the protections if you are a British citizen or if you perform—as I am sure the noble Lord, Lord Foster, regularly does—your musical extravaganzas in the United Kingdom or in countries that are specifically linked via the Rome convention, for example. The secondary legislation to the CPTPP will change this. It requires that we introduce a new basis of qualification which is linked to where the music is first published. To qualify, you do not have to be either a citizen of a CPTPP country or doing the performance in a CPTPP country, so long as it is first published there. There are grace periods around that too.

It is not as simple as saying that artists’ remuneration and royalty payments are extended to everyone in the world, because that is not the case. For example, a US citizen giving an original performance in the US and registering it there would not qualify if it was then broadcast on UK media. It is important to understand that there are some nuances. I give way to the noble Lord, Lord Foster, if he has a technical point.

[Lord Foster of Bath (LD)]

I was not going to intervene, although I was tempted. The Minister is 100% right that this is incredibly complicated. There is the issue of a UK session musician who performs on an American record that is then first performed elsewhere. The complications are enormous. The problem is that the proposed changes also have enormous potential implications, none of which we have had the opportunity to debate or fully understand the impact of on the UK music industry, which is confused about this. All I am asking the Minister to do is accept that there is something incredibly complicated, but it can and should be dealt with separately.

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for his understanding of the complexity of this. I hope I have been able to explain to noble Lords the different principles in what we currently look to in our copyright Act and what we are signing up to in the CPTPP. It is certainly navigable. Regardless of accession to the CPTPP, it is already complicated, and there are specific agencies to make sure that these royalties are properly collected and stored.

I am reluctant to accept these amendments today and ask noble Lords who have proposed them to withdraw them, but I am very comfortable with having further discussions. It would be helpful for us to have a good discussion with the IPO so that people feel comfortable that the consultation is going in the right direction and that the right levels of input are being prescribed. The tertiary changes that we may wish to make to protect our music industry and artists would not necessarily be linked to this trade Bill, but they are important.

I am glad that I have managed to highlight and explain the new approach on who is eligible for these resale rights, because I think in the first instance it was assumed that everyone would be. That is not the case. It is important to differentiate that. We are signing up to a new approach in the CPTPP and this clearly forms part of our treaty obligations. It is very relevant that we debate that in some depth.

The noble Lord, Lord McNicol, raised a very good point in his amendment. I hope I can reassure him that this is not retrospective, but it would make sense for performances undertaken before the date to qualify. However, you would not be paid royalties for qualifying performances that were broadcast before the date. Otherwise, everyone would claim for past performances over the 70 years that IP goes back to—that would be totally impractical and inappropriate and is not what we are suggesting at all. Our legal advice is clear that the cut-off date is the day on which this comes into force. Anything following that point would qualify. Historic performances are clearly part of the IP record, but you would not receive royalties for anything from before that point. I hope that reassures noble Lords.

I hope I have covered the points raised. I am very grateful for noble Lords’ input on this important, sensitive and complex area. As is often the case in dealing with noble Lords in this Room, we are talking not about party-political or even political issues but issues of detail that have great ramifications. I see that the noble Lord, Lord Lansley, is keen to intervene as I may not have covered his points. The order of this is that the first statutory instrument gives the Secretary of State the power to make the changes, after which there is the consultation, and then the second instrument makes the changes. I hope that helps answer his initial point on the order of activity.

[Lord Lansley (Con)]

My noble friend has referred very well to all the issues relating to the definition of a qualifying performance, but my amendment relates narrowly and specifically not to subsection (2) but to subsection (3). It concerns the question of a qualifying country not simply in relation to the CPTPP and takes a power to make Orders in Council to extend the definition of “qualifying country” in future—not just to CPTPP countries but, potentially, beyond. My noble friend says that the Secretary of State can publish a draft and then consult on it. They can do that, but there is nothing in the legislation to say that they should. I would like to be sure. If my noble friend is saying that such a consultation must take place, I am not sure where it is clear that it must.

[Lord Johnson of Lainston (Con)]

We have not legislated for a consultation—there is no mention of that in the Bill—but we made such an undertaking at Second Reading. It is part of the process and we are very aware of the need to consult.

[Lord Lansley (Con)]

Is that an undertaking always to consult before making an order under Sections 206 or 208 of the Copyright, Designs and Patents Act?

[Lord Johnson of Lainston (Con)]

No, I am sorry—it is not an undertaking to consult on the artist performance rights every time changes may be made to the countries that become applicable.

[Lord Lansley (Con)]

Just to be clear, what my noble friend has said may satisfy the noble Lord, Lord Foster of Bath—is that “Bath” with a short or a long “a”?

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord. I am very happy to have conversations about this. Clearly, these FTAs make it difficult, if we are to comply with them, to have various and significant amendments to them. However, I am reassured by my officials that, in making significant changes to “qualifying countries”, we would make sure that there was an appropriate level of consultation. I am very sensitive about making great promises from the Dispatch Box because I always find myself getting into trouble later, but I hope that—

[Lord McNicol of West Kilbride (Lab)]

No, I think it is good. Carry on.

[Lord Johnson of Lainston (Con)]

The noble Lord, Lord McNicol, would like me to make off-the-cuff commitments on behalf of the Government. It would be only logical to assume that there would be a degree of consultation in the same way that we are effecting one in this instance but, since I cannot give a firm commitment, I am very comfortable to come back to my noble friend between now and Report.

[Lord Lansley (Con)]

That reassurance affords me the opportunity to beg leave to withdraw my amendment.

Code of Practice on Reasonable Steps to be taken by a Trade Union (Minimum Service Levels)

Lord Johnson of Lainston Excerpts

Wednesday 6th December 2023 Lords Chamber

Moved by

[Lord Johnson of Lainston]

That the draft Code of Practice laid before the House on 13 November be approved.

Relevant document: 3rd 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 beg to move that the draft Code of Practice on Reasonable Steps to be taken by a Trade Union (Minimum Service Levels), as laid before the House on 13 November 2023, be approved. This code of practice, which I will refer to as the code for the remainder of this debate, provides important clarity on how trade unions can meet the legal requirement in the Trade Union and Labour Relations (Consolidation) Act 1992, as amended by the Strikes (Minimum Service Levels) Act 2023.

As noble Lords are aware, the 2023 Act enables regulations to be made specifying minimum service levels and the services they apply to. Where minimum service level regulations are in force, if a trade union gives the employer notice of a strike action, the employer can issue a work notice to the trade union ahead of the strike identifying the persons who are required to work and the work they are required to carry out to secure the minimum service level for that strike period. Trade unions should then take reasonable steps to ensure that their members who are identified in a work notice comply with that notice and do not take strike action during the periods in which they are required by the work notice to work.

During the passage of the Strikes (Minimum Service Levels) Bill, the Government committed to bringing forward a statutory code of practice to provide more detail on the reasonable steps that trade unions should take. In accordance with the 1992 Act, the Secretary of State consulted with ACAS on the draft statutory code and, on 25 August, published a draft code, enabling trade unions, employers and other interested parties to contribute their views. Careful consideration was given to those views and, as a result, important changes were made to the draft code. An updated draft code was laid in Parliament on 13 November.

Alongside the code, we have supplemented the more detailed provisions of the Act on work notices by publishing non-statutory guidance for employers—that is important—setting out the steps for employers to take. These include engaging with trade unions and workers when developing the process, consulting with the trade unions on the numbers required to work and the work they must do, and having regard to their views before issuing the work notice and notifying the workers.

The code before the House today sets out four reasonable steps that trade unions should take to meet the legal requirement under Section 234E of the 1992 Act. Although the code itself does not impose legal obligations, it is admissible in evidence and taken into account where a court or tribunal considers it relevant.

First, trade unions should identify workers who are its members in a work notice. Secondly, trade unions should send an individual communication, known as a compliance notice, to each member identified in a work notice to advise them not to strike during the periods in which they are required by the work notice to work as well as to encourage them to comply with the work notice. Thirdly, trade unions should instruct picket supervisors to use reasonable endeavours to ensure that picketers avoid, so far as is reasonably practicable, trying to persuade members who are identified in the work notice not to cross the picket line at times when they are required by the work notice to work. Finally, once a work notice is received by the union, trade unions should ensure that they do not do other things that undermine the steps they take to meet the reasonable steps requirement.

It is worth noting that the code being debated today reflects much of the feedback that we received in the consultation on the earlier draft. For example, the updated code no longer includes a step requiring trade unions to communicate with their wider membership who are called to strike. The Government have changed the language so that it no longer requires those on the picket line to encourage individuals identified in a work notice to attend work. Instead, it now makes clear that those on the picket should simply refrain from encouraging those identified on a work notice to strike where they are aware that this is the case.

Having explained the background to the code, I will now turn to the fatal and regret amendments that have been laid on this code by the noble Lord, Lord Collins of Highbury, and the noble Baroness, Lady Bennett of Manor Castle. I will start with the fatal amendment, much of the content of which was more properly for debate during the passage of the Bill. I have no intention of re-running the debates on the Act which Parliament passed earlier this year, but I do want to remind noble Lords of why it was brought forward.

--- Later in debate ---

[Lord Thomas of Cwmgiedd (CB)]

Notices are often fraught with peril, so I want to know from the Minister what the employer is required to do when giving a notice. What is specified as to his means of communication? Is the means of communication employed by the employer to be communicated to the trade union, so that the trade union has some idea of what the employer thought was a means of bringing it to the attention of the employee? If this is to work, there must be a reasonable degree of co-operation.

[Lord Johnson of Lainston (Con)]

My Lords, I greatly thank all noble Lords who participated in this debate. I hope to clarify some key points, which are well labelled on the Government’s website and in the code.

I begin by thanking my noble friend Lady Noakes for her comments. This is a code, not a law. The whole point about this code is to enable unions to know how they can safely operate once they have taken reasonable steps to ensure that minimum service levels have been applied. The noble Lord, Lord Cromwell, mentioned that I came from a business background. He is correct and, from my point of view, this will provide welcome clarity to enable us to operate effectively. It does not impose anything or any type of activity: it simply makes recommendations. If you look at the concepts such as the template, that is the recommended template. It is not necessarily the template by which unions will have to operate. I would have thought that it would be very helpful for unions to have a template construction in that way to enable them to feel safe when they are communicating with their members.

I wish to raise something that I consider most valuable when debating this point and this code. Minimum service levels, as operated by the Act and structured by a useful guide such as this code, really—in my view and in the view of the Government—should be the last resort. The noble and learned Lord, Lord Thomas, made apparent the crucial point that it is through collaboration with employers, businesses and unions that we will have strong relations. The noble Lord, Lord Fox, also made that point. The timelines imposed by the Act and referred to in the code are quite short, but are designed to fit within the strike legislation, enabling a 14-day announcement of a strike, a seven-day turnaround for the work notices, and then further days to refine that.

The theory is that the employer and the unions will have done a great deal of work to prepare for the scenario so that effective work notices can be issued. It is not unreasonable for an employer and a union to be expected to collaborate very closely to ensure that this process can be as smooth as possible. At no point does this code, in any way, derogate the right to strike. It gives vital clarity on the relationship between the union and the employer. It actually goes further than that: it protects the rights of unions and the rights of the union members, so that they know where they stand.

A number of noble Lords raised points about reasonable steps, and they are just that. This has been quite well clarified by previous discussions in the sense that, so long as the union can prove that it has taken reasonable steps to ensure that the work notices are properly served and communication has taken place and that workers are not prevented from attending a work site, it can consider itself relatively safe when it comes to the process that may be placed on it in the courts by an employer. That is the whole point of the code: to make the unions feel safer and to ensure that an act around a strike can be properly orchestrated.

In conclusion, I ask for the support of this House. What we are discussing here is a code that will enable a great degree of welcome clarity and was called for by all sides on this debate. There have been a number of consultations to which the Government have responded, making changes to the code to bring to bear some of the very sensible points that were raised to ensure that it is reasonable, practical, fair and clear. It balances the unions’ and individuals’ rights to withhold their labour, while crucially providing minimum service levels so that the public can go about their business and the economy can sustain itself.

[Baroness Bennett of Manor Castle (GP)]

My Lords, we have had a very strong debate. I do not think the Minister answered my direct question about when, if your Lordships’ House allows this through, it will come into operation. Perhaps he could answer that now.

[Lord Johnson of Lainston (Con)]

I said at the beginning of my opening remarks that it will come into effect once it has been laid, so in the next three days.

[Baroness Bennett of Manor Castle (GP)]

I thank the Minister for that information: it is useful for the world to know that we will be facing this situation in three days’ time.

We have had a useful debate: this code of practice and all these statutory instruments that we are debating today have been very thoroughly critiqued. The noble Lord, Lord Hendy, made a powerful statement about the way in which the UK is, yet again, placing itself beyond the international pale in terms of norms and legal standards.

Northern Ireland Investment Summit

Lord Johnson of Lainston Excerpts

Thursday 23rd November 2023 Lords Chamber

[Baroness Hoey]

To ask His Majesty’s Government what assessment they have made of the success of the Northern Ireland Investment Summit held in Belfast in September.

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

The summit was a success. It was a truly global occasion, attended by 181 international investors from 24 countries, representing 130 companies and organisations. The Department for Business and Trade has had hugely positive feedback from the delegates. The summit sent a clear message about the opportunities and ambition of Northern Ireland. I am very grateful to Invest Northern Ireland and the Northern Ireland Office for their collaboration and partnership. Some 1,000 jobs were announced at the summit and more investments are expected as a result.

[Baroness Hoey (Non-Afl)]

My Lords, I hope the Minister understands just how important his contribution was to the success of that conference. His hard work and enthusiasm went down very well and I have to say that he is more popular now in Northern Ireland than the Secretary of State. Could he have a gentle word with the Secretary of State and advise him not to go ahead with the suggested removal of industrial derating used for the purposes of manufacturing, because this would have a detrimental effect on businesses that are working so hard in that sector? Does the Minister agree that the decision not to award Northern Ireland levelling-up money from the latest round, because there is no Executive, is very strange given that, in the past, when there was no Executive, it having been brought down by Sinn Féin, the funding was given? Are there double standards operating?

[Lord Johnson of Lainston (Con)]

I am very grateful to the noble Baroness for her compliments. The effort around the Northern Ireland Investment Summit was huge, and everyone played their part. I am pleased to say all parties also played their part, including Joe Kennedy III in his leadership as President Biden’s envoy to Northern Ireland. I will certainly review the concept with the Northern Ireland Office around the matter the noble Baroness mentioned, but I believe that our Secretary of State is a phenomenal advocate for Northern Ireland and a significant ambassador in encouraging investment, as is my noble friend Lord Caine, who spends much of his time travelling around the world getting more money into Northern Ireland, so that everyone can prosper.

[Lord McNicol of West Kilbride (Lab)]

My Lords, one of the messages that came out of the Northern Ireland Investment Summit was the need for political stability to encourage much needed investment, with Joe Biden even saying that US firms would be willing to pump billions of dollars into the Northern Ireland economy if there was more political stability. Recently, the Northern Ireland Secretary said talks to restore a functioning Executive in Northern Ireland were in their final phase. Will the Government provide an update on these negotiations?

[Lord Johnson of Lainston (Con)]

I am not sure whether the Government provide an ongoing commentary for such sensitive, but very important, negotiations. However, for me it is cause for great optimism that, a few weeks ago, Joe Kennedy III led a delegation, as a follow-up to the Northern Ireland Investment Summit, where a number of United States companies announced specific investments. Some 70 companies and business leaders accompanied him, so the appetite is there regardless. We totally push for a resolution to the formation of the Executive because we know that there is more to come.

[Baroness Goldie (Con)]

My Lords, I had the privilege of being in Northern Ireland in October and seeing at first hand the vibrant business scene that is operating there. Is there perhaps more we can do across government, particularly from the departments which are involved in foreign travel and foreign engagement, to more coherently showcase what many of these small and medium-sized enterprises—not only in Northern Ireland but across the United Kingdom—are achieving?

[Lord Johnson of Lainston (Con)]

I am grateful to my noble friend for asking that question, although I am sorry not to see her sitting alongside me on the Front Bench. She is quite right; there is always more to do, and my noble friend Lord Offord announced recently a further package to encourage exports, not only from Northern Ireland but from the rest of the United Kingdom. We continue to work very hard in the Department for Business and Trade to ensure that our message is spread throughout the world. The Harrington review, which has been very favourably received by the Government and commented on in the Autumn Statement yesterday, goes further in talking about ensuring that we have the resources and the right technologies and systems to encourage further investment in the United Kingdom.

[Lord Swire (Con)]

My Lords, Northern Ireland scores highly on any indices of a place to live and work and to invest, so I welcome the success of the summit. However, these summits are only so good if they are repeated. What plans does my noble friend have to repeat an investment summit in Northern Ireland? In the event that there is going to be one—and I hope it will become a regular event—what plans can he suggest to involve more people from this House, who might be able to contribute some expertise and ideas towards it?

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I am grateful to my noble friend for that prompt. The Northern Ireland Investment Summit was itself ultimately funded by an initiative led by our current Prime Minister when he was Chancellor of the Exchequer. I am determined to ensure that we follow up, which is why, this week, we hosted a round table at No. 10 with venture capitalists, to encourage investment in Northern Ireland. We supported Joe Kennedy’s mission and we have many more projects and plans to come. However, I note my noble friend’s recommendation for a further summit. It is something I would certainly celebrate, but we have to ensure that we can pay for it and that it would deliver strong value for money for the taxpayer.

[Lord Fox (LD)]

My Lords, there appears to be rare harmony between the noble Baroness, Lady Hoey, and the Minister and myself. This was clearly a very successful event. Does the Minister put a strong measure of that success down to the fact that Northern Ireland has a unique opportunity, with access to both the EU and the UK markets? Is the Minister pushing that key selling point?

[Lord Johnson of Lainston (Con)]

I must say that I am delighted that my friend the noble Lord, Lord Fox, from the Liberal Democrat Benches is rejoicing and celebrating the benefits of Brexit, because that is exactly what the Windsor Framework delivers. It puts Northern Ireland in a unique place to benefit precisely from the regulatory environments and frameworks that we have in this nation, while at the same accessing the goods and markets in the European Union.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, coming from Northern Ireland, I am well aware of the success of the investment conference and the large number of investors who came from the United States, along with the economic envoy, Joe Kennedy III. However, would the Minister agree that it would be much better if there was a restoration of the political institutions to underpin our local economy in Northern Ireland and provide that necessary confidence to potential investors? Will the Minister, along with Invest NI, investigate the need for a more equal distribution of those potential investors looking at sites in Northern Ireland with a view to further investments and job opportunities to avail themselves of the Windsor Framework and access to both markets?

[Lord Johnson of Lainston (Con)]

I completely agree with the noble Baroness on the need to come to a conclusion over forming a stable political environment for businesses to invest in Northern Ireland. I reassure her that the United States is not the only market that invests heavily in Northern Ireland. Across the world, particularly in Asian countries such as Japan, there is enormous interest in taking advantage of the skills in Northern Ireland. It is not simply the opportunities presented by the Windsor Framework; it is the opportunities presented by the people of Northern Ireland and their brains and brilliance.

[Lord Howell of Guildford (Con)]

My Lords—

--- Later in debate ---

[Lord Howell of Guildford (Con)]

I declare my interest as a former Minister of Commerce in Northern Ireland. Having travelled around the world raising interest in investment in Northern Ireland, I confirm what my noble friend has just said. There was immense attention to the sheer quality of the training and skills in Northern Ireland, particularly then in the aeronautical sector, in Harland & Wolff, and in a number of other high-tech electronic industries—Japan was especially interested. This was some decades ago, but now that we have a renewed and strong interest in links of every kind with Japan, is that aspect to be emphasised in Northern Ireland?

[Lord Johnson of Lainston (Con)]

I thank my noble friend for that point and I agree with him. We have a renewed staff level in Belfast to encourage this type of investment, and I hope that they will continue their excellent work.

[Lord Morrow (DUP)]

My Lords, like everyone else in your Lordships’ House, I too welcome the recent summit and hope that there will be an increase in good news following it. Can the Minister tell me to what degree does the rate of corporation tax impact our economy and the attraction of foreign investment, bearing in mind that the rate today is 25% while in the Republic of Ireland it is 12.5%?

[Lord Johnson of Lainston (Con)]

I am grateful for that question and the opportunity to discuss matters of tax. Yesterday, the Chancellor announced in his Autumn Statement a raft of incredibly powerful measures to ensure that businesses are competitive, that we invest and that we can create the jobs for our modern future economy. It is crucial to remember—and the point is often made in this House—that fiscal responsibility is the central component of good government finances. That is what my investor base looks forward to—predictability, certainty and decent long-term returns—and that is what we are providing.

Workers’ Rights

Lord Johnson of Lainston Excerpts

Thursday 23rd November 2023 Lords Chamber

[Lord Woodley]

To ask His Majesty’s Government what steps they are taking to legislate to ensure high standards of workers’ rights.

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

Protecting and enhancing workers’ rights while supporting businesses to grow remains a priority for this Government. The Government have supported a package of six Private Members’ Bills, which enhance workers’ rights, to achieve Royal Assent, and will lay down secondary legislation in due course to implement these Acts. This package of legislation will increase workforce participation, protect vulnerable workers and level the playing field, ensuring that unscrupulous businesses do not have a competitive edge.

[Lord Woodley (Lab)]

My Lords, I will shock the Minister by thanking him for his support for investment in Vauxhall Ellesmere Port for a new car; it is appreciated. After a challenge by my union, Unite, and others, the High Court ruled in July that the Government had acted unlawfully by allowing bad bosses to use agency workers to break strikes. But now the Government are trying again, launching a consultation in an attempt to get around the court’s judgment, which ruled that their proposals were unfair, unlawful and irrational. Can the Minister explain why the Government seem so determined to crush workers’ rights, despite being elected on a promise very much to improve them?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for his question. I believe that, over the last 13 years, we have made significant and wholehearted reforms to workers’ rights legislation to ensure that they are properly protected. On the matter that he specifically referred to, we launched a consultation on repealing Regulation 7 on 16 November. It will remain open for eight weeks, and I very much invite his participation in the process, which will finish on 16 January next year.

[Lord Bellingham (Con)]

My Lords, does the Minister agree with me that rights are of course important but, as I know from my experience as an MP for 32 years, what workers want most of all is improved pay? Does he welcome the increase in the national minimum wage from £10.42 to £11.44, which is a significant move?

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I am grateful to my noble friend for that point. In fact, if I look back to 2016, I see that the national living wage was £7.20 for those 25 and over, and it will soon go to £11.44, which, by my maths, is an increase of over 50% in that period.

[The Earl of Clancarty (CB)]

My Lords, there are well over 4 million self-employed workers in the country. Does the Minister not agree that much more could be done for their workers’ rights? Furthermore, is he aware of the growing calls within the creative industries for the appointment of a freelance commissioner to oversee the concerns of a group that is significant but relatively neglected within the workforce?

[Lord Johnson of Lainston (Con)]

I agree with the noble Earl’s comments about the importance of self-employed individuals, who are the backbone of this country—I have been one myself in the past. That is why, in what I thought was a fabulous Autumn Statement, designed to power this economy forward into the future, the Government and the Chancellor of the Exchequer yesterday cut various sections of national insurance contributions for self-employed people, not simply allowing them to keep more hard-earned money from their work but making their lives easier, which is a fundamental principle of this Conservative Government.

[Lord Palmer of Childs Hill (LD)]

My Lords, the Government made a commitment not to reduce the standards of workers’ rights when EU law was retained. If new EU law improved the standards of workers, what would the Government’s reaction be?

[Lord Johnson of Lainston (Con)]

The Government have rightly maintained a whole series of sections of EU law that allow workers to be properly treated. We are also consulting on a range of other areas where we can ensure that workers’ rights are protected—but, I am pleased to say, under British rather than European law.

[Lord Cormack (Con)]

My Lords, what the noble Earl, Lord Clancarty, said applies particularly to self-employed musicians, which are a neglected section of the community. I invite my noble friend to give some real thought to how their lot can be improved.

[Lord Johnson of Lainston (Con)]

I am delighted to be taking through the CPTPP Bill, of which one of the key tenets is ensuring that musicians receive a fair proportion of the money they earn from broadcast media. This is just one of the many areas that we are focusing on, and I will also mention the support allocated in the Autumn Statement yesterday to the creative industries in general. We make all the great films in the world here, including “Barbie”, and I hope that will continue, whether you are a self-employed musician or part of a larger organisation.

[Lord Leong (Lab)]

My Lords, I will follow on from my noble friend’s supplementary question. On Tuesday this week, the Supreme Court ruled that Deliveroo drivers are not entitled to certain rights, including unionisation, because they are considered to be self-employed and not workers. Do the Government have any plans to protect the growing number of workers in the gig economy, rather than allowing multinationals to dodge basic employer obligations by pretending that some of these lowest-paid workers are able to exercise their freedom to turn down work?

[Lord Johnson of Lainston (Con)]

The Government have done a huge amount to ensure that principles such as zero-hours contracts can remain flexible, allowing millions of people to do the work they wish to do and allowing students to participate in the workforce, while ensuring that they have the right levels of protection for holidays and other crucial concepts in workers’ rights. It is important that we have a strong economy, which will enable people to have these jobs. I remind all noble Lords that we have increased the number of employed people by over 3 million since we came to power in 2010.

[Lord Watts (Lab)]

My Lords, when we left the European Union, Ministers stood at the Dispatch Box and promised that workers’ rights would be protected. Will the Minister produce a list from his department of the rights that have been lost since we left the European Union and a list of the Government’s actions to address that issue?

[Lord Johnson of Lainston (Con)]

This debate has run for many months. Over the last year in this House—I am honoured to have played my role in this—we have introduced a number of key workers’ rights Acts, including the Neonatal Care (Leave and Pay) Act, the Protection from Redundancy (Pregnancy and Family Leave) Act, the Carer’s Leave Act and, very importantly—I am a generous tipper myself—the Employment (Allocation of Tips) Act 2023, which ensures that people who are given their tips are, rightly, receiving them.

[Lord Lilley (Con)]

My Lords, does my noble friend agree that important though legal rights at work are, they are meaningless unless there are plentiful job opportunities created by a dynamic labour market? It is no use giving workers freedom from being sacked if they have no job to be sacked from or to go to.

[Lord Johnson of Lainston (Con)]

In yesterday’s Autumn Statement, a whole range of measures was announced to ensure that we increase productivity and growth in the economy. In particular, I draw this House’s attention to the £4.5 billion plan to encourage advanced manufacturing in this country, which has enabled us—as the noble Lord, Lord Woodley, mentioned—to encourage more car production in this country. Today, I was pleased to read in the papers that Nissan intends to expand its manufacturing lines to make the Qashqai and the Juke. This comes on top of BMW making the Mini in Oxford, the extraordinary gains we have had with Stellantis in Ellesmere Port, and the celebrated Tata gigafactory, which will become one of the largest buildings ever constructed by humans in the world and, clearly, in the United Kingdom as well.

[Lord Balfe (Con)]

My Lords, the Government have spent some years looking at the case for electronic balloting in trade unions, and have got nowhere. Since it is okay for the Conservative Party to elect its leadership by electronic balloting, does the Minister accept that the technical problems have now been overcome, and that we should speed towards getting electronic balloting allowed for trade unions in electing their general secretaries, et cetera?

[Lord Johnson of Lainston (Con)]

I rejoice that the electronic ballot results have produced the leader of my own party. I recommend that trade unions look at ways to modernise—not just the way they ballot but the way they look at the economy. Ending the concept of labour flexibility in this country would be devastating, particularly to the sorts of investment I work on daily, including the celebration of over £20 billion of new capital committed to this country two days ago by a number of Korean companies. They are coming here because of our economic growth prospects and the flexibility of our labour markets, among other things. Trade unionists and all my colleagues opposite should remember that.

[Lord Fox (LD)]

My Lords, the Minister is no stranger to hyperbole, but his description of the CPTPP issues around intellectual property contains several misapprehensions. Could he undertake to read, carefully, the debate in Hansard that accompanied that Bill’s Second Reading? There are serious concerns from the creative industries about the clauses on intellectual property.

[Lord Johnson of Lainston (Con)]

I will read Hansard on that debate. I seem to remember being there myself; I delegated the opening to one of our newest Members. We promised, during that debate, to have a full consultation on how artists’ rights are treated. It is extremely important that we get the balance right. Ultimately, it is about fairness and equity, and we stand four-square behind that, as I am sure the noble Lord will agree is right.

[Lord Brooke of Alverthorpe (Lab)]

The noble Lord mentioned the carer’s Act. Does he recognise that we have millions of workers in this country who are paid nothing at all? It is high time we started paying more attention to carers and giving them support. Looking to the future, is one way we could do this not to have a universal wage rather than a minimum wage? In due course, as AI spreads, there will be less requirement for people to be leaving their home, and they will be working more from home. We need to think longer term, rather than short term.

[Lord Johnson of Lainston (Con)]

The Government wholeheartedly agree that the support we must give to carers should be continually reviewed. That is why I was so proud to bring in the Carer’s Leave Act and the Neonatal Care (Leave and Pay) Act, which will result in millions of people being able to take leave in order to look after their loved ones and, we believe, 36,000 parents being able to take up the right to one week’s paid leave. I am grateful for the comments, and we will continue to work in this important area.

Tata Steel: Port Talbot

Lord Johnson of Lainston Excerpts

Tuesday 19th September 2023 Lords Chamber

[Lord Anderson of Swansea (Lab)]

My Lords—

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

Apologies, my Lord. I think I have the opportunity now to respond to the two opening speeches and then I will answer questions one at a time, if I have the order correct.

I greatly appreciate the debate we have had so far over what I believe is a pretty sensational recovery of an extremely difficult situation. Noble Lords will be aware that these conversations around Port Talbot have been going on for many years—some say even more than a decade. Certainly, from my own experience in the private sector, I regarded the situation with a great degree of pessimism, to be frank, and I am surprised that the tone of the debate is not more positive. That does not negate the realities of saving the situation and the transformation that will result in the locality.

I will go through the points raised by the noble Baroness, Lady Chapman. I am happy to answer them one by one because we have a strong and coherent policy response to each of the very important points raised. This is a very serious issue. We are not playing politics here; we are dealing with people’s lives and the important commitment of, I believe, all of us in this House to maintain steel production in Port Talbot and to guarantee a future for those communities. What we have ended up with is a powerful opportunity for this country to reshape its industrial base in terms of producing steel and reducing emissions. Noble Lords will be aware of the astonishing level of emissions that Port Talbot alone produces; I think it is 1% of our entire national output. If we are serious—and I think, collectively, we are—about reducing carbon emissions, to reduce one site that produces 1% of the emissions by 80%, which is what this outcome will produce, is significant for the collective challenge we are presented with.

I also find, if I may say so to noble Lords in this House and to the noble Baroness, Lady Chapman, and the noble Lord, Lord Fox, that there is an opportunity to shift. This is a business case—so it is subjective and perfectly reasonable to raise it—for virgin steel, whereby we import the ore, at great cost to emissions and national resilience, and recycle the nine or 10 million-plus tonnes of scrap. This presents an opportunity to us, to Port Talbot, to the people of Wales and to the whole country to realign our steelmaking industry—to rightly make the most of this scrap steel, which otherwise is being exported to Turkey or the US to be recycled. We were losing out on an enormous opportunity to be part of the circular economy.

Let us look at the prima facie business case for what the Government have done, to work in partnership with Tata. I put on record my personal thanks to the leadership of Tata for the extraordinarily good tone of the negotiations that I know it engaged in. From my first meeting with the chairman of Tata a year ago—although I was not involved in these specific negotiations —there was a very clear signal that Tata felt it was important that it reflected its family ownership in terms of commitment to the community of Port Talbot and the United Kingdom. I hope all noble Lords will join me in expressing thanks for the intense amount of good will demonstrated.

The Government have been extremely brave and forward-footed in bringing forward a proposal that will enable us to transform this site, reduce our emissions and, through the transformation to the Celtic freeport projects and the work we shall do—the noble Lord, Lord Fox, rightly raised this—in releasing land that is currently either potentially contaminated or has risk around it, create up to 16,000 new jobs. The noble Baroness, Lady Chapman, is right to call back some of the policy decisions taken in the 1980s, when there probably was not enough sensitivity paid to the transformation process, which affects people but ultimately makes us safer. That is why the Government have been extremely aware of and sensitive to this crucial point that affects people’s lives. Working with Tata—again, a private enterprise—we have created, or are in the process of establishing, a £100 million fund specifically to look after the communities and the people affected. I am aware that specific task forces are being set up to ensure that the process can be properly handled.

There is a reasonable case to be made by noble Lords, although I do necessarily agree with it, about the process by which this announcement was made, but I am sure all noble Lords who have been involved in sensitive and complex commercial negotiations will be aware that the specific terms cannot be entirely public. It was quite right that we got to a good decision, rather than one jeopardised by too much general community discussion. However, as the noble Baroness, Lady Chapman, will know well, as will her colleagues on the Front Bench, these discussions have been going on for a very long time. Indeed, the announcement of electric arc furnaces at Port Talbot really should have brought great relief to many people, because the worry in the air was that a far more jeopardous decision would be made.

This gives us an enormous opportunity to restructure our industry and reduce our emissions, which is a core commitment of all sides of this House and this Government. It gives us an opportunity to reinvent a huge site with great potential, creating tens of thousands of jobs. I have tried to take a much more positive view of what is a wonderful partnership between the Government, private enterprise and the community that will safeguard thousands of jobs, when the risk of losing those jobs was so significant.

I am aware that both the noble Baroness, Lady Chapman, and the noble Lord, Lord Fox, asked me specific questions, which I am sure other noble Lords would like answers to. If the noble Baroness will allow me, I will just cover those points I did not cover in my main speech. There is an issue over virgin steel. The noble Lord, Lord Fox, suggested that we guarantee always to have a capacity for virgin steel.

[Lord Fox (LD)]

I did not say that; I just asked what the assessment was.

[Lord Johnson of Lainston (Con)]

I apologise. The noble Baroness, Lady Chapman, asked whether we would guarantee to make virgin steel strategically important. It is not my place at this Dispatch Box to make such industrial guarantees. However—again, I am happy to take advice from experts—the arc furnaces being installed at Port Talbot are far more sophisticated, I am told, than current arc furnaces in scale, sophistication and the quality of the steel they can produce. They will produce, even on the current plans, steel very close to the quality that we require for all our steel needs.

Think of the automotive sector. Port Talbot provides half of all sheet metal for the automotive sector in the UK. That can still be provided. Think of railway track. That, I am told, can still be provided using these processes. We will be importing the necessary steel to produce cans and other specific steel that requires virgin steel, but we believe that over time—this is where the technical debate comes into play—we can produce the same quality of steel that is hoped for to enable us to ensure that we have resilience in that area.

I was asked about the supply of green energy. I assume that linked to that is a question about connectivity and pace of change. We are in discussions with National Grid, Tata and other agencies to ensure that can be done as soon as practically possible. The process that has led up to this very celebratory announcement has been going on for some time and there has been a great deal of planning. I do not have a specific date but the assumption is that everything will go on track in terms of the supply of green energy, grid connectivity, the decommissioning of the blast furnaces and the introduction of the electric arc furnaces.

I believe there was a question about support for the workforce, which I hope I have covered. In his comments the noble Lord, Lord Fox, raised the situation of the Whitehaven mine. There was never an indication by Tata that it was going to use the coking product from that mine, so I cannot answer further than to say that that was never in the expected plan, whatever the outcome was. I am happy to look further into the export possibilities of the mine, but I do not think that is necessarily relevant today.

The British industry supercharger is a follow-on policy to support energy-intensive industries and make sure that they can compete. I am happy to write to the noble Lord on the specific number of companies that qualify. It is not a huge number; it is quite a specific number of heavy energy users that we are supporting to make sure that they can compete on an international scale. I think all noble Lords would agree that it is very important that we continue to provide that type of support.

I have two final points. I have covered the decontamination point briefly; one of the very important elements of the decision-making around this process was why we could not simply sell the site to a third party. I asked that question myself. The reality is that there are so many complexities around the site, including decontamination and the liabilities that the Government would have had to undertake, that this is genuinely the most effective way to retain as efficient a support level from the Government as possible—not to oversubsidise or oversupport—while at the same time ensuring that the company is viable and can be successful. I mean this in a heartfelt and sincere way. We can deal with the significant issues that those sites present, and at the same time it will have the knock-on effect of using the land for the amazing regenerative opportunities of the Celtic port plan.

On my last point, I thank the noble Lord, Lord Fox, for raising some of the great successes over the last few months. I have been proud to be part of the department that has delivered these successes, such as the announcement a few months ago of the Tata gigafactory, one of the largest buildings ever to be built in the history of this country, maybe even the largest, and one of the biggest investments ever in the car industry; the announcement that Stellantis are going to build Fiats, Peugeots and Citroëns in Ellesmere Port after significant consideration of whether or not it wanted to base their production facilities in the UK; and the announcement last week that BMW is going to—again, after significant consideration—build its electric Minis in this country. Further announcements from companies such as Nissan on its capacity to build cars will ensure that this country has a strong industrial base.

I am very proud of what we have managed to achieve. They are true public/private partnerships. We are asked whether we have a strategy. The strategy is: we want a strong industrial base in this country and, if I may say so, we are delivering it.

[Lord Murphy of Torfaen (Lab)]

My Lords, can I press the Minister on the point of process and communication that he has touched on? When I had the privilege of being the Secretary of State for Wales, I went to Port Talbot steelworks on many occasions. On those occasions, I saw a very close relationship with the trade unions and the representatives of the workforce. It seems to me that they have been completely left out of making the case for changes in Port Talbot. After all, 3,000 jobs have been lost—a terrible price to pay for what the Minister referred to as a “triumph” in ensuring that we keep the steelworks in Port Talbot. Can he tell me whether any attempt was made to deal with the trade unions before this announcement was made? Can he tell the House whether the Welsh Government were involved before the announcement was made? Can he also tell us what effect this will have on the steel plants in Trostre and Llanwern?

[Lord Johnson of Lainston (Con)]

I am very grateful to the noble Lord for his points. I think it would be very unfair to suggest that at any point the Government or myself—I would say this personally—are somehow triumphant about people not having their employment. I think that is very unfair of any noble Lord in this House to suggest that there is triumphalism over an important transformation.

However, it is right to celebrate the saving of many thousands of jobs, and the opportunity to repoint our steel industry, which the noble Lord cares about with his heritage and history. We are surely working as one here in solving an extremely complex problem for the better. I could not think of any other outcome that could be as optimised as this. That does not mean that every outcome does not have an element of compromise. In the short term, there have been very difficult decisions to make, but I have made it very clear that the Government take this incredibly seriously. A huge number of lessons have been learned over the last 40 years in terms of industrial transformation. That is why we are committing £100 million specifically to the transformation fund, to ensure that people are insulated to some extent from the effects, and so that we can service communities and assist individuals who may find themselves without employment in that specific job in the future. We also hope that we will create tens of thousands of jobs for the communities of Port Talbot through this act.

There is a question that has come up often and with which I have sympathy, and I hope the noble Lord will give me credit for that. I understand there is frustration about the consultation process that led to the announcement last week. I am sure that many people would have liked to be consulted, but it is very difficult to engage with a broad group on specific commercial transactions such as this. Having said that, as far as I am aware, there has been a huge number of engagements and consultations with all the unions involved—the three unions at Port Talbot—and with the Welsh Government. It is very important that we have some clarity now that this deal has been announced. The people of Port Talbot and the staff of the plant can now know what the future is, when last week they did not. From my point of view, that is one of the most important flags for the future. It gives us the opportunity to have the structure around which to have proper consultation, which the company is obliged to take part in and would want to do so in any case. So some of these questions will be answered in the near future and I am grateful to the noble Lord for his question.

[Lord Anderson of Swansea (Lab)]

My Lords, as the only person present who lives in the area and knows the decades-long dependence of Swansea Bay city on the steel industry, I say that it is sad that it is the local community that is now likely to pay the price of green steelmaking. How many jobs will be lost? Is it accepted that it will be 3,000? Can we be assured that there will be an attempt to synchronise those job losses and any incoming jobs at a time when there are few large investments in prospect and increased competition? Finally, is there a danger that the transformation will lead to increased imports from countries not subject to the decarbonisation process?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for his questions. On the last point particularly, we are very aware of the need to ensure that our carbon border pricing mechanisms are properly implemented. In this House, we are all aware of the situation of competitive imports that we face in this country, which the noble Lord alluded to. We have been particularly forward-footed in ensuring that our World Trade Organization tariff processes are well deployed in order to protect our economy.

On the question asked by the noble Lord on the synchronicity of the Celtic port investments and the transformation of Port Talbot, we are doing everything we can to ensure that that would be the case. Clearly, it is very difficult, but this is a long-term process. The noble Lord was absolutely right to raise it. It is our intention, through this extraordinarily forward- footed and bold investment partnership with Tata, and working with the freeport and the ports companies operating there, to truly transform this area that the noble Lord has such affinity with into the most astonishingly vibrant, advanced manufacturing and industrial hub.

[Baroness Randerson (LD)]

My Lords, the process, as the Minister acknowledges, will involve redundancies. Those redundancies will have huge community impact, as will the change in the nature of the plant at Port Talbot. Many of those community impacts will fall under the powers of the Welsh Government: education, retraining of the staff involved and huge environmental impacts—some of them for the better. But it will be a period of transition.

That will mean that it is absolutely essential that the UK Government work closely with the Welsh Government. I have been struck by the Minister’s unwillingness to refer to the Welsh Government and the vagueness of his answer about the role of the Welsh Government so far. Can we have a commitment from him now that, in future, there will be full co-operation, joint working and confidence between the UK Government and the Welsh Government to help these people as the transition occurs?

[A noble Lord]

Hear, hear!

[Lord Johnson of Lainston (Con)]

I am grateful for the noble Baroness’s comments—I “hear, hear!” them too, although I would push back slightly on the point that I have been vague in my comments about working with the Welsh Government because I have not mentioned them so far, but I am now given the opportunity to do so. It is extremely important that we engage very closely with the Welsh Government. I can, very comfortably, commit to all sides of this House that we will engage as much as possible with the Welsh Government to ensure that we have good outcomes.

For those noble Lords who question the power and value of the union, this is one of the greatest examples I can give them of the power of the union in recent memory—the UK Government nationwide serving the interests of the people of Wales and the Welsh Government. This is a partnership between the UK Government and the Welsh Government, and one that could not be more powerfully written than in the sheer financial, emotional and strategic support that we are all giving to this incredibly important transformation.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, my noble friend Lady Chapman, at the end of her remarks, asked about the national security case for steel-making and the national security concerns about making our own steel. I do not think that the Minister answered that point at all—the words have not passed his lips so far—so I would like to give him another chance to answer my noble friend.

[Lord Johnson of Lainston (Con)]

I am very grateful to the noble Lord for giving me an opportunity to repeat myself, because I thought that I was quite clear that I am not able, at the Dispatch Box, to make industrial commitments on that scale—and he would not expect me to. We still have one steel mill in Scunthorpe operating with blast furnaces that can produce virgin steel. I am not a technical expert, but I hope that noble Lords will bear with me when I say that the processes are now close enough to being able to produce the steel almost to the quality that we need for all the uses that we require it for. We are not quite there yet, but we expect to be, and work is being undertaken to ensure that we can do that in the future.

What we have been able to do is make us more resilient. The noble Lord talked of national security, but I never felt that we were particularly nationally secure by having to import, in effect, all our ore in order to make the steel that we then roll. So here we have the opportunity, at last, to be secure, to take advantage of the circular economy and to use the scrap currently going abroad—totally bizarrely, in my view—to mill it in this country. That will allow us to have the circular economy that will give us far more security than a necessity to produce virgin steel on our own simply through imported ore.

[Baroness Royall of Blaisdon (Lab)]

My Lords, my noble friend asked for confirmation of the number of job losses. I think that the number of 3,000 was mentioned, but it would be helpful for your Lordships to have confirmation.

[Lord Johnson of Lainston (Con)]

Again, I appreciate very much the questions on this extremely sensitive and complex area. It is not the Government who run Port Talbot steelworks or Tata Steel, so I am not able to give a specific figure. We are projecting that at least 5,000 jobs have been saved through this move, and we think that tens of thousands of other jobs will be created through the release of land and the transformation of Port Talbot and the freeport area. I hope that that gives the noble Baroness some security.

[Lord Touhig (Lab)]

My Lords, perhaps I misunderstood, but the Minister seemed to suggest that it was not possible to engage with the workforce before this announcement because there was some sort of commercial sensitivity. What commercial sensitivity would have been at risk from telling the workers that there were to be substantial job losses? Following the comments made by the noble Baroness from the Liberal Democrat Benches, the Minister has now engaged on working with the Welsh Government. Do the Government have a specific package of proposals that they intend to put to the Welsh Government to work in partnership to find new and alternative employment for the people who will be made unemployed in that part of Wales?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for a point well made. The Welsh Government and the UK Government are working together on a transformational transition board. Forgive me for not having the specific nomenclature for it, but it is a collective group led by the UK Government, with participation from the Welsh Government, to ensure that there is strong transition for the people and communities most affected. That includes £100 million, with a substantial contribution from Tata, to ensure that there is money available for that transformation and the transition for the affected individuals and communities. That is a very important commitment. As I said, if we look back 40 or 50 years, it was perfectly reasonable for the charge to be raised that there was not enough done to allow communities and individuals to transition properly from one industrial position to another—that is something that we will not allow to happen. It is absolutely essential that we work closely with the Welsh Government; I see this as a partnership between the two Governments of the UK and Wales. As I responded to the noble Baroness, this is the exact benefit of a strong United Kingdom and a strong union.

I will return again to the point raised about the consultation process on this commercially sensitive and complex arrangement. It is impossible to know what the ramifications of a transformation will be until you have decided what the funding and financing behind it will be. Tata is investing over £1 billion in this transformation programme and the UK Government are putting in £500 million. Until that had been confirmed, it would have been impossible—noble Lords must surely realise this—to know what the future of the site and its industrial capability would be, and, as result, what the projections on the consultations for employment would be. I have great sympathy with both the Government and Tata for making sure that there was a high degree of confidentiality around the specific deals. But make no mistake: this discussion has been going on for a decade and the outcome is no surprise to anyone in this House or in Port Talbot. What is a delight and to be celebrated is that we have come to a decision; people no longer have to worry about a decision that has not been taken. Now we can get on with the job of delivering a transformed Port Talbot steelworks, a strong partnership with Tata and a very strong partnership between the UK Government and the Welsh Government.

[Lord Berkeley (Lab)]

My Lords, the Minister will be aware of the great interest from his colleagues in the Department for Energy Security and Net Zero about offshore wind farms in the Celtic Sea. A number of us have been attending meetings about where these would be located and where the shore stations would be, if we can call them that. I live in Cornwall and felt fairly miserable that they could not be built there because there is no flat land big enough for those enormous great tanks to be built—although that is fair enough. Obviously, Port Talbot comes top of the list for having a large number of flat areas and decent quays and, until now, the right steel-making facilities. Is anyone, between the Minister’s department and the energy department, talking about how those facilities could still be built at Port Talbot, even with a new electric arc furnace? Is it the right type of steel, and is there enough space? Presumably, it will create some jobs, which I hope will be welcomed.

[Lord Johnson of Lainston (Con)]

My Lords, I am very grateful to the noble Lord for his comments. I am afraid that I was not entirely clear on some of the points he made, but, as I understood it, he was looking for clean energy supply to the Port Talbot facility. There have been a number of discussions on that, and I share his view on, and enthusiasm for, offshore wind—particularly floating offshore wind—and I believe that all these options are being explored. They will create a huge amount of inward investment, a huge number of jobs and an enormous amount of innovation. The UK is leading the way, as noble Lords know, on the provision and building of offshore wind capabilities.

Economic Crime and Corporate Transparency Bill

Lord Johnson of Lainston Excerpts

Consideration of Commons amendments
Monday 11th September 2023 Lords Chamber

Moved by

[Lord Johnson of Lainston]

That this House do disagree with the Commons in their Amendment 23A and do propose Amendments 23B and 23C in lieu—

23A: As an amendment to Lords Amendment 23, leave out lines 84 to 96

--- Later in debate ---

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

My Lords, I shall also speak to Motions B, C, D and D1. I thank noble Lords for their extraordinarily high level of constructive input over the last few days as we have come to this point. I believe that together, across the House, we have created a truly powerful piece of legislation that will have a meaningful impact on how Companies House operates, how we deal with financial crime and how we make our system safer and cleaner.

I should declare my interests. I have interests in limited companies and other companies, but I do not believe there is any conflict of interest in this process today.

Motion A relates to Lords Amendment 23, tabled on Report by the noble Lord, Lord Vaux of Harrowden, which would require members of all UK companies to declare whether they were holding shares on behalf of, or subject to the direction of, another person or persons as a nominee and, if so, to provide details of the person or persons. We have been in conversation over the last few days about that amendment. While we understand the intention to tackle what we perceive to be an industry of nominee service providers prone to acting unlawfully, I am afraid we do not believe that the amendment is the appropriate way to achieve that goal.

However, the Government, via Motion A, have therefore tabled Amendments 23B and 23C in lieu of Commons Amendment 23A. I hope that is making sense to the noble Lord. The new amendments allow the Secretary of State to make regulations to make further provision for the purpose of enabling a company to find out who its PSCs are—that is, people of significant control—in cases where shares are held by a nominee. That could include, among other things, imposing further obligations on companies to find out if they have nominee shareholders and, if so, for whom they are holding shares, or imposing further obligations on nominee shareholders to disclose their status and for whom they are holding shares.

It is important that we make it clear that the reason for tabling the new amendments rather than accepting the noble Lord’s revised amendment is that we are slightly wary of imposing disproportionate burdens on business. There are a vast variety of nominee types which we need to make sure we have taken into account when ensuring that we are getting the right information from the right types of nominees. As I have said to the noble lord—at this Dispatch Box, I believe—the commitment in principle to try better to understand the route between the nominee and the beneficiary is an important one. We want to do it in the right way, and these amendments would give the Secretary of State the powers to do that. I hope that the noble Lord can agree that that is the right approach to take and, assuming that is so, can support the Government in this new amendment and consider withdrawing his own.

I turn to Motion B.

[Lord Agnew of Oulton (Con)]

My Lords, I apologise to my noble friend the Minister. I had been told that I needed to address my Motion D1 while Motion A was under discussion. I am very happy to wait but those were the instructions I had from the Table. Would anyone like to clarify?

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I am told that I should continue, and we will hear from my noble friend at a later stage—which I welcome and look forward to greatly.

Motion B is a technical Motion that allows the power to modify who is able to file with Companies House on others’ behalf, to ensure it is consistent for all types of filings. I hope the House is assured that these amendments are minor but sensible modifications to the Bill.

Motion C relates to Lords Amendment 115, also tabled by the noble Lord, Lord Vaux, at Report. This will introduce two new duties for overseas entities, the first requiring event-driven updates on beneficial ownership information, and the second requiring overseas entities to update their records no more than 14 days before the completion of a land transaction. We believe that requiring event-driven updates for the Register of Overseas Entities will not work in principle. I would like to reassure noble Lords that we have done an enormous amount of highly collaborative work with the noble Lord, Lord Vaux, on this issue. We are concerned that this would create additional risk for purchasers of properties involved with overseas entities. However, as I hope I have made clear to noble Lords, we are extremely committed to working further on this subject. The Government commit to keeping under review the question of the update period for the Register of Overseas Entities. That is extremely important, and I personally commit to that on behalf of the Government. We will have more evidence at our disposal as the first set of annual updates comes through. If we felt it necessary to change the reporting requirements, and if there were not the risks that we feel may be presented by the noble Lord’s proposal, then we would look to consult on that. For that reason, we will not be supporting that amendment.

I turn to Motion D, which my noble friend Lord Agnew will then speak to. Again, I am very grateful to my noble friend for his extraordinarily high level of commitment to making sure that the Economic Crime and Corporate Transparency Bill is genuinely powerful legislation that will enable us to achieve the goals we wish to achieve. Ultimately, transparency is at the core of our ambition. However, we are concerned, in that his amendment would make information about trusts submitted to the Register of Overseas Entities publicly available by removing it from the list of material listed as unavailable for public inspection. I note that my noble friend has also tabled a further amendment.

However, it is important to come back to these points, because they are very relevant to our ambitions. We are resolute in saying that we will not unilaterally change the rules relating to these trusts, and I think Members of the House understand why. However, we have committed already to launching a full public consultation before the end of the year on how we can further improve the transparency of trust information. Following further discussion with my noble friend, I would like to make it clear that the public consultation to which we are committed is a separate exercise from the commitment to make regulations that I have discussed already. The consultation will look at the case for broader transparency regarding trusts. The Government’s ambition is to increase and improve transparency. We commit absolutely that we will undertake this consultation and that it will be launched before Christmas of this year and run for no more than 12 weeks. That is in line with discussions we had with my noble friend.

I reassure my noble friend that Ministers across departments are committed to meeting this deadline and acting swiftly on the consultation’s findings. I would be very happy to meet with my noble friend, and indeed any noble Lords, soon after the consultation closes to discuss how we can move forward at pace. We therefore oppose my noble friend’s amendment, but I hope he can take the commitments I have made today at the Dispatch Box as sufficient reassurance to persuade him to withdraw his amendment. I beg to move.

--- Later in debate ---

[Baroness Blake of Leeds (Lab)]

My Lords, I start by thanking the Minister for the broader tidying up of the amendments in this group and by reflecting on the time, over several months, that we have been discussing these important issues. We must keep our eye on the scale of the issues that we are dealing with; they are immense, and they cost this country billions of pounds. We have a great deal to do to repair the UK’s reputation in the world, and I hope that we involved in this debate will all have our eyes on that prize.

I am pleased to say that we have seen some positive changes achieved through the passage of this Bill and a genuine appetite for change, as we experienced with our conversation with Companies House. We are going through an immense cultural change in the management of these affairs. As we know, it is the biggest shake-up for 170 years. I also pay tribute to everyone in the Chamber, and those who are not here today, for their diligence in the work that they have done, and to my colleagues in the other place, Dame Margaret Hodge and Seema Malhotra in particular. Months and months of work have gone into getting us to this place.

I am very grateful for the explanation that the noble Lord, Lord Vaux, gave. There is real recognition that there will be an ongoing need to scrutinise. I think we all accept the commitments in good faith, but we need to make it clear to Ministers and their officials that the interest is very live and that there will be close scrutiny as these matters roll up. Compromise has been reached on this—I accept that that is the reason we will not be taking the amendment to a vote—but we add our support to the ongoing scrutiny that will need to take place.

I also pay tribute to the noble Lord, Lord Agnew, for his persistence in this and his unique position having had experience in government, which has informed the approach he has taken and the concern that I think many would agree he has rightly raised. We are where we are—he has decided to accept the reassurances—but we also have an insight into those elephant traps that he referred to. I also reference the comments of my noble friend Lord Eatwell on the explicit need for vigilance.

With those comments, and thanking everyone for the spirit of compromise, I reassure everyone that we will look closely at this, and we very much hope that the measures being brought in today will be sufficient. We will look to those delegated powers that have been built in to make sure that, if change is necessary, it will indeed be made.

[Lord Johnson of Lainston (Con)]

I thank noble Lords for their contributions, including the noble Baroness, Lady Blake, for her extremely helpful and supportive comments about the overall debate. In her summation, she was right that we have, through a great degree of good faith among us all, come up with a very strong series of actions that will genuinely change the economic landscape in this country for the better.

I have had the privilege of working with my noble friend Lord Agnew for a number of months as we have come to today’s conclusion on these measures. I reiterate my personal commitment, and the commitment of this Government, to delivering on the thrust of his ambitions. On a process that came to light only recently—the issue of bulk data and its accessibility—I can commit that Companies House will do a review of how it can assess bulk data for the trusts’ information on the register of overseas entities once a consultation period has finished and it is deemed appropriate.

Ultimately, we are committed to greater transparency, and I am very grateful to my noble friend and noble Lords across the House for their understanding of our approach to how we can best achieve this without either endangering vulnerable minors or individuals or opening ourselves up to legal challenge which could derail many of the main principles of this part the Bill to which my noble friend is rightly keen to contribute.

Finally, I express my gratitude to the noble Lord, Lord Vaux, who, from the very beginning, has been a tireless collaborator in creating—with his input across the board in this section of the Bill—a truly powerful piece of legislation. It was my own personal pleasure and pride to work with him as we have come to this conclusion, and I am very grateful to him for his understanding, again, of how we believe that we can achieve our shared ambitions in what we think will be the right way.

We have made some clear further commitments today—to which I would be delighted to be held to account by my noble friend Lord Agnew and all noble Lords in the House today—to make the Economic Crime and Corporate Transparency Bill the most effective legislation it can be. I therefore invite the House to agree the government Motions in this group.

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Moved by

[Lord Johnson of Lainston]

That this House do not insist on its Amendment 56 and do agree with the Commons in their Amendments 56A, 56B and 56C in lieu.

56A: Page 57, line 25, leave out subsection (3) and insert— “(3) After section 1067 insert—
“Who may deliver documents to the registrar
1067A Delivery of documents: identity verification requirements etc
(1) An individual may not deliver a document to the registrar on their own behalf unless—
(a) their identity is verified (see section 1110A), and
(b) the document is accompanied by a statement to that effect.
(2) An individual (A) may not deliver a document to the registrar on behalf of another person (B) who is of a description specified in column 1 of the following table unless—
(a) the individual is of a description specified in the corresponding entry in column 2, and
(b) the document is accompanied by the statement specified in the corresponding entry in column 3.

	1	2	3
	Description of person on whose behalf document delivered (B)	Description of individual who may deliver document on B’s behalf (A)	Accompanying statement
1	Firm	Individual who is an officer or employee of the firm and whose identity is verified (see section 1110A).	Statement by A— (a) that A is an officer or employee of the firm, (b) that A is delivering the document on the firm’s behalf, and (c) that A’s identity is verified.
2	Firm	Individual who is an officer or employee of a corporate officer of the firm and whose identity is verified.	Statement by A— (a) that A is an officer or employee of a corporate officer of the firm, (b) that A is delivering the document on the firm’s behalf, and (c) that A’s identity is verified.
	1	2	3
	Description of person on whose behalf document delivered (B)	Description of individual who may deliver document on B’s behalf (A)	Accompanying statement
3	Firm	Individual who is an authorised corporate service provider (see section 1098A).	Statement by A— (a) that A is an authorised corporate service provider, and (b) that A is delivering the document on the firm’s behalf.
4	Firm	Individual who is an officer or employee of an authorised corporate service provider.	Statement by A— (a) that A is an officer or employee of an authorised corporate service provider, and (b) that A is delivering the document on the firm’s behalf.
5	Individual	Individual whose identity is verified.	Statement by A— (a) that A is delivering the document on B’s behalf, and (b) that A’s identity is verified.
6	Individual	Individual who is an authorised corporate service provider.	Statement by A— (a) that A is an authorised corporate service provider, and (b) that A is delivering the document on B’s behalf.
7	Individual	Individual who is an officer or employee of an authorised corporate service provider.	Statement by A— (a) that A is an officer or employee of an authorised corporate service provider, and (b) that A is delivering the document on B’s behalf.

(3) In relation to a corporate officer that has only corporate officers, the reference in row 2 of the table to an individual who is one of its officers is to—
(a) an individual who is an officer of one of those corporate officers, or
(b) if the officers of those corporate officers are all corporate officers, an individual who is an officer of any of the corporate officers’ corporate officers,
and so on until there is at least one individual who is an officer.
(4) The Secretary of State may by regulations—
(a) create exceptions to subsections (1) or (2) (which may be framed by reference to the person by whom or on whose behalf a document is delivered or by reference to descriptions of document or in any other way);
(b) amend this section for the purpose of changing the effect of the table in subsection (2).
(5) Regulations under subsection (4)(a)—
(a) may require any document delivered to the registrar in reliance on an exception to be accompanied by a statement; (b) may amend this section.
(6) The Secretary of State may by regulations make provision requiring a statement delivered to the registrar under subsection (2) to be accompanied by additional statements or additional information in connection with the subject-matter of the statement.
(7) Regulations under this section are subject to affirmative resolution procedure.
(8) In this section “corporate officer” means an officer that is not an individual.””

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Moved by

[Lord Johnson of Lainston]

That this House do not insist on its Amendment 115, to which the Commons have disagreed for their Reason 115A.

115A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

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Moved by

[Lord Johnson of Lainston]

That this House do not insist on its Amendment 117, to which the Commons have disagreed for their Reason 117A.

117A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Lord Johnson of Lainston (Con)]

I beg to move.

Motion D1 not moved.

Economic Crime and Corporate Transparency Bill

Lord Johnson of Lainston Excerpts

3rd reading
Tuesday 4th July 2023 Lords Chamber

Moved by

[Lord Johnson of Lainston]

That the Bill now be read a third time.

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

My Lords, following the expedited passage of the Economic Crime (Transparency and Enforcement) Act 2022, my noble friend Lord Callanan assured the devolved Governments that they would be closely engaged throughout the passage of this second Bill. Our officials have been sure to keep their counterparts in the devolved Administrations informed and we have met a number of times at ministerial level to discuss key issues.

As noble Lords will be aware, the Northern Ireland Civil Service is facing a number of challenges in the absence of the Northern Ireland Assembly and the subsequent lack of an Executive, one of which being that it is not possible to engage the legislative consent process for this or any other Bill. Given the importance of this Bill, the official level of support for its provisions and the desire to ensure a united response against economic crime, we will proceed to legislate for the whole of the UK without the formal legislative consent of the Northern Ireland Assembly. We have written to the Northern Ireland Permanent Secretaries to keep them informed.

However, I am pleased to confirm that on 20 June the Welsh Senedd voted to grant legislative consent to the Bill. Last week, on the Scottish Parliament’s last sitting day before the Summer Recess, the Scottish Parliament also voted to grant legislative consent to the Bill. I thank colleagues and officials in all three Administrations for the constructive way in which they have worked during the development and passage of this Bill to design measures that will be as effective as possible in tackling economic crime across all parts of the United Kingdom.

Amendment 1

Moved by

[Lord Johnson of Lainston]

1: After Clause 61, insert the following new Clause—
“Duty to deliver information about exemption from Part 21A
In section 853H of the Companies Act 2006 (duty to deliver information about exemption from Part 21A), after subsection (2) insert—“(2A) The statement under subsection (2) must specify— (a) whether the company falls within the description specified in section 790B(1)(a) or a description specified in regulations under section 790B(1)(b), and(b) if it falls within a description specified in regulations under section 790B(1)(b), what that description is.””Member’s explanatory statement
A company that is exempt from Part 21A of the Companies Act 2006 (information about persons with significant control) has to confirm that it is exempt in each confirmation statement. This new clause would require it to explain why. See the Minister's undertaking at report stage (20 June, col. 149)

[Lord Johnson of Lainston (Con)]

My Lords, I will now speak briefly to the government amendments, which deliver on the undertakings I made on Report, first in response to concerns raised about the robustness of the people with significant control—PSC—framework and secondly to close a gap in the register of overseas entities information requirements. I thank the noble Lord, Lord Vaux of Harrowden, in particular, for raising these issues. I also welcome the contributions of my noble friend Lord Agnew of Oulton and of the noble Lords, Lord Fox, Lord Ponsonby of Shulbrede, Lord Cromwell and Lord Clement-Jones.

The majority of the amendments fall into the former category of the PSC framework. I reassure noble Lords that, although the number of amendments is higher than we might have liked to table at Third Reading, the majority are minor consequential or tidying-up amendments, and a lot of the new material is in fact a refashioning of existing rules to make them work in the new context of a central register, rather than locally held PSC registers. These amendments improve this by requiring companies to collect additional and more useful information, and by improving the mechanisms through which companies collect the information and report it to Companies House.

Currently, companies must record various “additional matters” in the PSC register. The Bill as drafted removed the regulation-making power through which these additional matters are prescribed. Amendments 26 and 32 preserve those requirements in the context of a centrally held PSC register. Amendment 26 means that a company will notify the registrar if the company knows, or has cause to believe, that a person has become a PSC but the company has not yet had confirmation from them. Amendment 32 means that a company must give notice to the registrar if it knows or has cause to believe that the company has no PSC. This will provide a hook for the registrar to query the statement that a company has no PSC, if she has intelligence to suggest otherwise.

The Bill as drafted removed an important measure to ensure that personal information is protected appropriately. Amendments 14, 17, 20, 22 and 25 ensure that protection mechanisms remain in place, otherwise a person who is at serious risk of violence or intimidation could be reported as a PSC without ever knowing, meaning that they may not have had the opportunity to apply for their personal information not to be displayed publicly.

To improve accuracy and transparency, and to make it easier to monitor and prosecute non-compliance, Amendment 1 requires a company that is exempt from the PSC requirements to explain why it is exempt in each confirmation statement. Amendment 15 improves existing provisions of the Companies Act 2006 which require companies to investigate and obtain information about their PSCs.

Amendments 33 and 34 widen the scope of a regulation- making power in the Bill so that the power can amend relevant parts of the Companies Act 2006 and to make consequential amendments to other parts of the Act. This is to ensure that the legislation is coherent, by avoiding having similar provisions spread across primary and secondary legislation.

Amendment 39 creates a reasonable excuse defence relating to the offence of failing to comply with information notices. This aligns the drafting of the offences with other similar offences.

All other amendments are consequential. I hope that noble Lords will support these amendments.

I turn to Amendment 9. On Report, the noble Lord, Lord Vaux of Harrowden, tabled an amendment seeking to close a gap in the register of overseas entities’ information requirements relating to overseas entities acting as nominees. The Government agreed that this gap exists, and I thank the noble Lord and Transparency International for bringing it to our attention. The amendment tabled by the noble Lord was not quite right, but I hope that this amendment addresses his concerns. It amends Schedule 1 to the Economic Crime Transparency and Enforcement Act 2022 to ensure that, where there is a nominee relationship, this is declared. It then inserts a new definition of beneficial ownership into Schedule 2 to the 2022 Act: “registrable beneficial owners”. I hope that noble Lords will welcome this amendment and agree that it closes the gap that we discussed on Report. I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I thank the Minister for these amendments. As he said, I described at Report the loophole in the register of overseas entities that allows people to hide the true ownership of UK properties through nominee arrangements. As the Minister described, he tabled Amendment 9, as he undertook to do, which effectively closes that loophole. I am not sure what conclusion to take from the fact that my original 11-line amendment has turned into one that runs to three pages—it presumably says something about my amendment drafting skills—but I am most grateful.

The other amendments that the Minister tabled relate to the register of persons with significant control. These new amendments tighten the rules and will improve the ability to identify PSCs. In particular, I welcome the requirement for the information to be filed on a centrally held register, rather than locally held registers managed by the companies themselves. The requirement to explain why a company is exempt from the PSC requirements is also an important improvement.

I was slightly confused as to what happens if a company has become aware that it has a PSC but the PSC has not yet confirmed their status or information. Amendment 20 appears to deal with that situation; it requires the company to notify the registrar if it knows, or has cause to believe, that a person has become a registrable person but has not yet had confirmation. However, that seems to conflict with the explanatory statement to Amendment 17:

“This means that a company will only need to notify the registrar of a person with significant control if the person has confirmed their status and information about them”.


Amendment 20 says that the registrar must be notified of an unconfirmed PSC but Amendment 17, or at least the explanatory statement to it, seems to say exactly the opposite. Can the Minister please explain which is right and how the two work together? More importantly, can he reassure me that a PSC will not be able to avoid being notified to the registrar simply by failing to confirm their status or information.

I put on record that, while I welcome and support the amendments, I do not believe that they deal with the problem of nominee shareholders not having to declare themselves as such. The new amendments are not an alternative to the amendment that the House passed on Report that required shareholders to state whether or not they are acting as a nominee, and if so who for. I hope that the Government will continue to consider that amendment and look at it favourably in the other place, or at the very least meet with me and others to see whether we can find a workable compromise. It should not be possible for bad actors to hide behind nominees, and there should be consequences for those who act as nominees to conceal such bad actors.

I am extremely grateful to the Minister and his officials for their helpful and constructive engagement throughout this process; they have been extremely generous with their time. In particular, I thank them for having addressed a number of issues, including the one we have just talked about, throughout the progress of the Bill. The level of engagement from all Ministers involved has been exemplary—if only all Bills were managed so constructively. I also thank all noble Lords who have been so generous in their support of the various amendments that I have proposed. When the Bill started in this House, it was generally seen to be a good Bill, and I think that it emerges from this House in even better shape.

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[Baroness Blake of Leeds (Lab)]

My Lords, I thank the Minister for his letter on the amendments tabled at Third Reading; it was very much appreciated. All of us involved fully understand the importance of transparency of ownership in Companies House and the register of overseas entities, issues we have revisited many times throughout consideration of the Bill.

Ensuring that complex, opaque structures cannot be built to hide economic wrongdoing is central to what we need this Bill to do. I appreciate the approaches taken in working with colleagues across the House to make sure that this important and complex Bill is as effective as possible at preventing economic crime and enforcing consequences for those who commit or facilitate it. However, as we have heard, other areas of the Bill need to be changed, as this House has agreed and as the noble Lord, Lord Vaux, noted, particularly through his own amendments. I hope that Ministers will also hear those points as the Bill heads back to our colleagues in the other place.

I thank all the officials, whose diligence, work, unfailing response and willingness to talk to us throughout has been exemplary. I thank the Ministers for their patience and commitment to working with all parties across the House, in particular the noble Lords, Lord Johnson and Lord Sharpe, and the noble and learned Lord, Lord Bellamy. We are very grateful for that commitment. I give special thanks to Clare Scally, who works in our office. Her tireless support and endless patience working through the various amendments is to be commended. She has kept us on the straight and narrow going through the various changes, which have been welcomed, in the main. I particularly thank my noble friends who have engaged in the debate, especially my noble friends Lord Ponsonby and Lord Coaker, who have given so much of their insight and expertise to help us move forward.

As we have heard today, there is no doubt that this Bill is in a better place than when we started. However, all of us, hand on heart, know that there is still much more to do, particularly in tackling the sheer scale of economic crime in this country. Many people who were not aware of that now are, and I believe that the demand for action will grow. I hope that our improvements to the Bill will have a swift impact on its legislative journey and really help the many victims who must remain at the heart of our considerations.

[Lord Johnson of Lainston (Con)]

My Lords, before I conclude, I would just like to cover the comments made by the noble Lord, Lord Vaux. If my memory is correct, Amendment 17 prevents the publication of a PSC whose identity has not been verified, so there is no conflict between the two. It is only right that people whose identity has not been verified is published. What is important about these additional amendments is that they ensure that you have to ascertain that you have no PSCs, or if the PSC has not been identified then the registrar is able to make further inquiries. They are not inconsistent and make a sound change to the Bill very much along the lines the noble Lord was recommending in the first place.

I thank the Opposition Front-Benchers, in particular the noble Lords, Lord Coaker and Lord Ponsonby of Shulbrede, the noble Baroness, Lady Blake of Leeds—a formidable Front Bench, if I may say—and the noble Lord, Lord Fox. I thank them for their engagement and constructive scrutiny of the Bill, as well as the enormous amount of time they dedicated to the various meetings ahead of each set of debates. It was a very valuable collaboration and I believe together in this House, we have formed a significant piece of legislation that all the peoples of the United Kingdom will benefit from.

I thank some of the other key contributors to this Bill. Many other noble Lords have been instrumental in the improvements made during its passage through this House, including the noble Lords, Lord Vaux of Harrowden and Lord Alton of Liverpool. The noble Lord, Lord Vaux, and I spent many hours working through this Bill, and if ever asked to point to the value of this great Chamber, it is exactly those constructive debates that I would point to. I am extremely grateful for his input and strong sense of collaboration.

Thanks must also go to my noble friends Lady Stowell of Beeston, Lady Morgan of Coates, Lord Leigh of Hurley—I have rightly described him as a “guru of finance”— Lord Sandhurst, and others for their input and constructive challenge. I also thank my noble friend Lord Agnew of Oulton, who has also engaged extremely constructively with me during this process, and my noble and learned friend Lord Garnier. Over recent months, we have had robust discussions and debates and I genuinely thank them for their engagement.

I must also thank the Whip, my noble friend Lord Evans of Rainow; the formidable team of Whips and officials; and my ministerial colleagues—my noble friends Lord Sharpe of Epsom and Lord Minto, and my noble and learned friend Lord Bellamy—who have all done an excellent job when representing this Bill in the House in all debates over the last few months. The Bill is significant both in size and scope, spanning several departments.

This brings me to all the officials working across multiple departments behind the scenes supporting the ministerial team as we engaged and debated with noble Lords on the detail of the Bill; I extend true personal thanks and the thanks of my noble friend Lord Sharpe. I thank Louise Smyth, the registrar of Companies House, who will be taking many of the actions we are passing through this House in order to make Companies House function more effectively. She and her entire team have engaged consistently throughout this process, and we wish her the greatest of success in implementing this dramatic programme.

I thank the analysis, company law and corporate transparency team in my own Department for Business and Trade, headed especially ably by the deputy director, Matt Ray, and his head of policy, Steve Webster. I thank the criminal finances and asset recovery unit in the Home Office, excellently led by Maria Hannan. I thank Paul Rowlands, Lucy Chisholm, the hard-working legal teams in both departments—I can certainly attest to that—and the expert drafters from the Office of the Parliamentary Counsel, particularly Diggory Bailey and Camilla Grundy. I thank my private office team, in particular, Emily Tranter and Simon Moore, who have supported me so much over these last few months. Finally, I thank the Bill team: Tom Ball, the Bill manager, and his fantastic team of Nicola Wallace, Anna Gray, Corrie Monaghan, Tim Holland, Sophie Curry, Monique Sidhu, Michael Tam and Carolin Grassmann. Everyone involved has demonstrated impressive levels of expertise, and I think I can speak for all Ministers when I say that we felt in safe hands. I am grateful for their proactive, patient and professional support throughout.

Finally, I thank the House authorities for managing the large number of amendments made in this House, and the parliamentary staff, the doorkeepers and clerks for their professionalism and continued support to the Bill and to your Lordships’ House.

To conclude, this Bill is a milestone piece of legislation, which will deliver major reforms to the framework for corporate criminal liability, improving the ability to hold corporations liable in their own right for economic crimes; the first serious reform of limited partnership law since 1907; the most significant changes to our system for setting up and maintaining companies since the 1850s; the first national legislation from any Government to take action against SLAPPs; and the legislative underpinning to tackle the new threats facing us in 21st century through action on crypto assets and improved data-sharing.

Economic crime affects every single one of us in different ways and at different scales. This Government are determined to tackle economic crime and drive out dirty money, protecting British citizens. We are ensuring that public agencies, law enforcement and the private sector have the tools needed to deliver greater protections for members of the public and businesses. As I have said on multiple occasions, the Government have been determined throughout that the Bill strikes the right balance in all areas between tackling criminality and avoiding undue burdens on the law-abiding majority. I remain keener than ever to get this important legislation on the statute books, and look forward to implementing the reforms that it contains when we reach Royal Assent. I beg to move.

Amendment 1 agreed.

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Moved by

[Lord Johnson of Lainston]

2: Clause 63, page 52, line 23, leave out “790LD” and insert “790LDA”
Member’s explanatory statement
This is consequential on my amendment to Schedule 2, page 222, line 31. See the Minister's undertaking at report stage (20 June, col. 149).

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Moved by

[Lord Johnson of Lainston]

5: Clause 68, page 67, line 7, after “statement” insert “or other document”
Member’s explanatory statement
Clauses 68, 136 and 166 ensure that certain documents are withheld from public inspection. My amendments to those Clauses protect similar documents delivered under regulations under section 1067A(5)(a) and (6) of the CA 2006. My amendments are therefore consequential on those regulation-making powers, which were added at earlier stages.

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Moved by

[Lord Johnson of Lainston]

7: Clause 136, page 135, line 5, after “statement” insert “or other document”
Member’s explanatory statement
See the explanatory statement to my first amendment to Clause 68.

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Moved by

[Lord Johnson of Lainston]

9: After Clause 160, insert the following new Clause—
“Registrable beneficial owners: nominees
(1) The Economic Crime (Transparency and Enforcement) Act 2022 is amended as follows.(2) In Schedule 1 (required information)—(a) in paragraph 3(1), for paragraphs (e) and (f) substitute—“(e) whether the individual is a registrable beneficial owner by virtue of paragraph 2(1) of Schedule 2 or paragraph 2(2) of that Schedule;(f) if the individual is a registrable beneficial owner by virtue of paragraph 2(1) of Schedule 2—(i) a statement as to which of the conditions in paragraph 6 of that Schedule is met and why, and(ii) a statement as to whether that condition is met by virtue of the individual being a trustee;(fa) if the individual is a registrable beneficial owner by virtue of paragraph 2(2) of Schedule 2, a statement as to which of the conditions in paragraph 6A of that Schedule is met and why;”;(b) in paragraph 4, for sub-paragraph (f) substitute—“(f) whether the government or public authority is a registrable beneficial owner by virtue of paragraph 4(1) of Schedule 2 or paragraph 4(2) of that Schedule;(fa) if the government or public authority is a registrable beneficial owner by virtue of paragraph 4(1) of Schedule 2, a statement as to which of the conditions in paragraph 6 of that Schedule is met and why;(fb) if the government or public authority is a registrable beneficial owner by virtue of paragraph 4(2) of Schedule 2, a statement as to which of the conditions in paragraph 6A of that Schedule is met and why;”;(c) in paragraph 5(1), for paragraphs (g) and (h) substitute—“(g) whether the entity is a registrable beneficial owner by virtue of paragraph 3(1) of Schedule 2 or paragraph 3(2) of that Schedule;(h) if the entity is a registrable beneficial owner by virtue of paragraph 3(1) of Schedule 2—(i) a statement as to which of the conditions in paragraph 6 of that Schedule is met and why, and(ii) a statement as to whether that condition is met by virtue of the entity being a trustee;(ha) if the entity is a registrable beneficial owner by virtue of paragraph 3(2) of Schedule 2, a statement as to which of the conditions in paragraph 6A of that Schedule is met and why;”. (3) In Schedule 2 (registrable beneficial owners)—(a) in paragraph 2—(i) the existing text becomes sub-paragraph (1);(ii) in paragraph (a) of that sub-paragraph, for “(see Part 2)” substitute “by virtue of paragraph 6”;(iii) after that sub-paragraph insert—“(2) An individual is also a “registrable beneficial owner” in relation to an overseas entity if the individual is treated as a beneficial owner of the overseas entity by virtue of paragraph 6A.”;(b) in paragraph 3—(i) the existing text becomes sub-paragraph (1);(ii) in paragraph (a) of that sub-paragraph, for “(see Part 2)” substitute “by virtue of paragraph 6”;(iii) after that sub-paragraph insert—“(2) A legal entity other than a government or public authority is also a “registrable beneficial owner” in relation to an overseas entity if it is treated as a beneficial owner of the overseas entity by virtue of paragraph 6A.”;(c) in paragraph 4—(i) the existing text becomes sub-paragraph (1);(ii) in that sub-paragraph, for “(see Part 2)” substitute “by virtue of paragraph 6”;(iii) after that sub-paragraph insert—“(2) A government or public authority is also a “registrable beneficial owner” in relation to an overseas entity if it is treated as a beneficial owner of the overseas entity by virtue of paragraph 6A.”;(d) after paragraph 6 insert—“Persons treated as beneficial owners where entity holds land as nominee6A_ A person (“X”) is to be treated as a beneficial owner of an overseas entity (“Y”) if one or more of the following conditions are met.Y holds land in England or Wales as nominee for XCondition 1 is that Y—(a) is registered in the register of title kept under the Land Registration Act 2002 as the proprietor of a qualifying estate within the meaning of Schedule 4A to that Act,(b) became so registered in pursuance of an application made on or after 1 January 1999, and(c) holds the qualifying estate as nominee for—(i) X, or(ii) an entity of which X is a beneficial owner by virtue of paragraph 6.Y holds land in Scotland as nominee for XCondition 2 is that—(a) Y—(i) holds an interest in land by virtue of being entered, on or after 8 December 2014, as proprietor in the proprietorship section of the title sheet for a plot of land that is registered in the Land Register of Scotland,(ii) is, in relation to a lease that was recorded in the General Register of Sasines or registered in the Land Register of Scotland before that date, by virtue of an assignation of the lease registered in the Land Register of Scotland on or after that date, the tenant under the lease, or(iii) is the tenant under a lease that was registered in the Land Register of Scotland on or after that date, and(b) Y holds the interest in land referred to in paragraph (a)(i), (ii) or (iii) as nominee for— (i) X, or(ii) an entity of which X is a beneficial owner by virtue of paragraph 6.Y holds land in Northern Ireland as nominee for XCondition 3 is that Y—(a) is registered in the register kept under the Land Registration Act (Northern Ireland) 1970 (c. 18 (N.I.)) as the owner of a qualifying estate within the meaning of Schedule 8A to that Act,(b) became so registered on or after the day on which that Schedule came into force, and(c) holds the qualifying estate as nominee for—(i) X, or(ii) an entity of which X is a beneficial owner by virtue of paragraph 6.”;(e) in paragraph 8, for “paragraphs 2(b) and 3(c)” substitute “paragraphs 2(1)(b) and 3(1)(c)”.”Member’s explanatory statement
This amendment means that where an overseas entity holds certain interests in land as a nominee for another person that person is treated as a beneficial owner for the purposes of the register of overseas entity. It also deals with less direct relationships. See the Minister's undertaking at report stage (20 June, col. 187).

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Moved by

[Lord Johnson of Lainston]

10: Clause 166, page 159, line 42, after “statement” insert “or other document”
Member’s explanatory statement
See the explanatory statement to my first amendment to Clause 68.

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Moved by

[Lord Johnson of Lainston]

12: Clause 184, page 178, line 4, leave out “337ZL(5)” and insert “339ZL(5)”
Member’s explanatory statement
This amendment corrects a cross-reference.

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Moved by

[Lord Johnson of Lainston]

13: Schedule 2, page 222, line 9, leave out paragraph 9 and insert—
“9_ In section 790C (key terms), omit subsection (10).”Member’s explanatory statement
This is consequential on my other amendments to Schedule 2 and leaves out a definition that is no longer used. See the Minister's undertaking at report stage (20 June, col. 149).

Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017 (Amendment) (Northern Ireland) Regulations 2023

Lord Johnson of Lainston Excerpts

Thursday 29th June 2023 Lords Chamber

Moved by

[Lord Johnson of Lainston]

That the draft Regulations laid before the House on 6 June be approved. Considered in Grand Committee on 28 June.

Motion agreed.

Employment Gap: Black, Asian and Minority Ethnic, and White, Workforce

Lord Johnson of Lainston Excerpts

Thursday 29th June 2023 Lords Chamber

[Baroness Thornton]

To ask His Majesty’s Government what assessment they have made of the contribution to the economy which could result from closing the employment gap between (1) the Black, Asian and minority ethnic, and (2) white, workforce.

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

The employment rate gap is closing. Data for the first quarter of 2023 shows an ethnic minority employment rate of 69.4%, which is a record high and an increase of 1.1 percentage points on the same quarter a year ago. In April, we set out to Parliament the excellent progress we have made in delivering our ambitious Inclusive Britain strategy to tackle unjust racial disparities in education, health, criminal justice and the workplace.

[Baroness Thornton (Lab)]

My Lords, I thank the Minister for that Answer. The reward for getting this right and closing the gap between BAME and white employees is huge. Research has shown over many years that this could add billions to the economy. Why is this not a priority for the Treasury, the business community and the Government? It would not only deal with the unfairness for the individuals affected but add hugely to the size of our economy. That is really the point. Please can the Government think big about this and take on board the research from McKinsey and all sorts of places that says that this will grow our economy if we get it right?

[Lord Johnson of Lainston (Con)]

I thank the noble Baroness, Lady Thornton, very much for those comments. It is absolutely right that the expected deficit of underutilisation of all groups in this economy is between £20 billion and £30 billion. I draw attention to the fact that 32 of the 74 measures in Inclusive Britain that we put into place have been achieved or are in motion. A huge amount of work is being done to encourage right entry into workplaces following graduation, entrepreneurship, changes in bank lending policies, fundamental mentoring policies and money being put into scholarship programmes. I completely agree with the noble Baroness’s points. This is very much a focus for the Government, and my Secretary of State, Kemi Badenoch, sees it as one of her core priorities.

[Lord Shinkwin (Con)]

My Lords, the introduction of mandatory ethnicity pay gap reporting is the number one recommendation from the Institute of Directors’ commission, which I chair, in The Future of Business: Harnessing Diverse Talent For Success. The director-general and I wrote to the Prime Minister last November, and we are still waiting for a response. I ask my noble friend to encourage No. 10 to reply to our recommendations and avoid giving the impression that this is not an important issue.

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[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for his point. I will certainly encourage a response, and I appreciate the comment.

[Baroness Burt of Solihull (LD)]

My Lords, while government guidance is very welcome, does the Minister accept that the only way to close the ethnicity pay gap is to make reporting mandatory for businesses and companies with over 250 employees, and that we can address this disparity only when we really know the true scale of the problem?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Baroness for her comment. As this House will be aware, a deep consultation was undertaken to see what would be the most effective way to ensure that those gaps were narrowed. Since 2012, the gap has narrowed from 5.1% to 2.3% in median hourly pay, but it has very much been felt that, because of the complexities of measuring ethnicity pay gap differentials, particularly in smaller companies of 500 employees or fewer, it would produce data that would not be valid and helpful. Instead, we have introduced a series of voluntary measures and a great deal of training and guidance, which we believe will have the intended outcomes.

[Lord Singh of Wimbledon (CB)]

My Lords, prejudice in society should be tackled not simply for economic reasons but because it is wrong. We all like to believe that it is those people out there who have prejudices and it is not in us. The reality is that prejudice—wariness of difference—is ingrained in us all, in our very genes. But we have to tackle irrational prejudice based on the assumption that people of different colour or who look different are inherently different and inferior to us. What steps are the Government taking to make sure that that irrational prejudice is tackled in schools and universities, particularly in religious education, to emphasise what Sikhs constantly repeat about the oneness of the human family?

[Lord Johnson of Lainston (Con)]

I greatly appreciate the noble Lord’s comments. Clearly, this is a government priority. Continuing on the theme of the original Question, we have developed a number of different action plans, including a work panel process to assess how we can, for example, give more support to employers on ensuring inclusivity. I am pleased to say that we committed to launching that inclusion at work panel and the first meeting is today.

[Lord Sewell of Sanderstead (Con)]

My Lords, I am sure that my noble friend will be aware of the findings of my recent report. One of the things that has come out of it is the disparity in apprenticeships. We found that take-up of higher apprenticeships by white young people was twice as likely as by black youngsters. Does my noble friend agree that we need to target parents to explain that apprenticeships are an effective route to great jobs?

[Lord Johnson of Lainston (Con)]

I am afraid that I was not able to hear the entirety of that question, but I will certainly follow up in more detail. On encouraging inclusion in entrepreneurship, in accessing banking services and in high-quality postgraduate education, the Government have paid specific attention in our Inclusive Britain report to ensuring that there is mentoring and specific funding—I believe that £70 million has been allocated specifically for a scholarship programme that will enable people to move into the right jobs that they want to seek—and that the barriers around class and culture are reduced to enable all students in this country to achieve their potential.

[Baroness Lawrence of Clarendon (Lab)]

My Lords—

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[Baroness Lawrence of Clarendon (Lab)]

My Lords, I will mention the disparity report that came out a couple of years ago. It put immigration, race relations, unemployment and education so much further back, so it is completely wrong to use it as something that is well known. Will the Minister focus on what the noble Baroness, Lady Thornton, was talking about, which is the contribution around education and employment that needs to be looked at, making sure that the disparity is forthcoming, and that employers understand that it is all about the earnings, not the report?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Baroness for her comments. I hope that she understands the importance that the Government place on this. It is also worth looking at how companies—the FTSE 100 businesses and so on—are managing their own boards and make-up to provide the signal and leadership. By the time of the March 2023 report, 96% of the FTSE 100 had met the target to the end of 2022, which is an increase of 7% from 2021. In the FTSE 250, 59% of the companies had achieved their target ahead of their 2024 goal. This is following on from the Parker review. I think that this is extremely encouraging.

This is a priority for the Government. I have said very clearly that the estimated economic loss to the economy was between £20 billion and £30 billion. If I look at the different ethnic groups that make up some of the most successful businesses in this companies, for instance, the Indian ethnicity group is powering ahead. If any noble Lords have had a chance to read the Grant Thornton report that came out three weeks ago, they will see the enormous value of releasing the potential of different specific groups on the economy.

[Lord Green of Deddington (CB)]

My Lords, in the last couple of years or so, the Government have reduced the salary requirements for immigrant workers and the qualifications required, from degree level to A-levels, and they have abolished the requirement to first advertise jobs in local markets. How can those actions help achieve the objectives referred to in this Question?

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[Lord Johnson of Lainston (Con)]

I am not entirely sure that I agree with the noble Lord on all those comments, or, necessarily, on the relevance. However, he commented on education. There is an issue around ethnic groups accessing the highest levels of quality in education, rather than going to low-quality tertiary education outlets. There has been a particular amount of work done on that, as I said, to ensure that we live in an inclusive, one-nation country where everyone can achieve their potential.

Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017 (Amendment) (Northern Ireland) Regulations 2023

Lord Johnson of Lainston Excerpts

Wednesday 28th June 2023 Grand Committee

Moved by

[Lord Johnson of Lainston]

That the Grand Committee do consider the Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017 (Amendment) (Northern Ireland) Regulations 2023.

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

My Lords, the purpose of this instrument is to ensure that the Windsor Framework, in respect of European Union directive 2014/34/EU, known as the ATEX directive, is properly implemented in Northern Ireland, including provisions regarding the UKNI marking.

I believe it would be helpful if I started today by providing some of the background to this instrument. The ATEX directive aims to prevent equipment or protective systems becoming sources of ignition in atmospheres that could be explosive if conditions lead to dangerous levels of flammable gases, mists or dusts. Settings where these conditions could arise include petrol stations and a range of mainly industrial locations such as agricultural silos, and chemical processing plants.

There are separate GB and Northern Ireland regulations covering ATEX requirements. The Northern Ireland ATEX regulations—the Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) Regulations 2017—were made by the Department for the Economy in Northern Ireland. The enforcement authority is the Health and Safety Executive for Northern Ireland, or HSENI. Currently, the Northern Ireland ATEX regulations refer only to the EU market, which no longer includes Northern Ireland. Conformity assessment bodies perform the vital role of assessing that specified requirements relating to a product, process, system, person or body are fulfilled, carrying out calibration, testing, certification and inspection activities.

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[Baroness Blake of Leeds (Lab)]

I thank the Minister for the full explanation, which is very much appreciated, and those in the Room for their questions. A few things have been covered that I was going to pick up, and I do not have a great deal more to add. As the noble Baroness, Lady Suttie, mentioned, I was intrigued by the arrangements of the health and safety aspects, particularly the responsibilities for the Secretary of State. I look forward to the answers on that. There are some interesting questions to answer around the consultation. With all these matters, some reassurance is needed on the changes around resources, how they will be managed and, particularly, how they will be monitored. I am sure that the Minister will pick up on the impact assessment in his closing remarks. The only other aspect is around whether there will be any impact on the way that implementation in Great Britain continues and whether this will have any particular impact on that: would there be any digression from the situation arising in Northern Ireland? With those comments, I look forward, with interest, to the Minister’s summing up.

[Lord Johnson of Lainston (Con)]

I am extremely grateful to all noble Lords for their participation in the discussion on this statutory instrument. I will try to answer the questions raised in this debate, if I can.

I start with the noble Baroness, Lady Ritchie. I apologised to her in the Division Lobbies for not completely hearing her final question. My commitment here is to focus on the changes relating to these ATEX products, so she will understand if I am quite keen to focus specifically on this regulatory change. I am very aware of the other questions raised around this, particularly relating to the Windsor Framework.

I will cover two points on consultation and, to some extent, impact. We did not undertake a public consultation, given that the instrument’s provisions are limited to making amendments for the implementation of a Windsor Framework obligation and ensuring that Northern Ireland continues to implement EU-derived product safety requirements for ATEX goods. But we did have informal discussions around product sector legislation. As I understand it, these were held with over 4,000 businesses, including manufacturers, trade associations and industry representatives by means of a series of structured interviews. There were further discussions with the Northern Ireland civil servants, the department and the Ministry of Justice. These took place in the form of emails and telephone calls. There was some discussion around the process of this SI and who was effectively responsible for these regulations. That is one of the reasons why they have taken some time to come to noble Lords’ attention.

It is worth looking also at the impact on businesses themselves. We estimate that there are just under 5,500 businesses in the UK subject to ATEX regulations—anywhere between lower and upper bands of 5,000 and 6,000. We think that some businesses may incur costs associated with familiarisation of the new requirements and the labelling, but we believe that the impacts of these changes are expected to be very limited, and the expected net impact of these changes is estimated to be about £2.5 million of direct costs to businesses, most likely relating to familiarisation, among other things.

Officials in the Office for Product Safety & Standards will provide online industry guidance, which I mentioned earlier, to coincide with the instrument coming into force to ensure that businesses have all the information they need on how to comply with the new requirements, but I certainly note the well-made comment of the noble Baroness, Lady Suttie, about the importance of ensuring that the affected businesses are well signalled. Officials are also liaising with the Health and Safety Executive for Northern Ireland, which is responsible for enforcing the Northern Ireland ATEX regulations and ensuring they have all the necessary information on doing so.