UK Car Production Since 2016

Lord Johnson of Lainston Excerpts

Tuesday 14th March 2023 Lords Chamber

[A noble Baroness]

What time do you call this?

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

My apologies; I was waiting outside.

The Government are focused on transitioning our car industry from internal combustion engines to electric and other sustainably powered vehicles. Shortages of semiconductors and supply chain disruption have been key factors affecting recent UK and global car production numbers. However, the Government are accelerating and positioning ourselves for growth in electrification and unlocking industry investment.

[Lord Hain (Lab)]

I give a warm welcome to the Minister.

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[Lord Hain (Lab)]

I also appeal to Ministers to be more open. My question asked about car production. Car production in the UK has collapsed by over half since 2016—the worst performance of any car producer in Europe. Even the soaring demand for electrical vehicles is likely to be affected when, under the trade and co-operation agreement with the EU, car industry rules of origin exemptions for EVs come to an end this coming December. Brexit has created nothing but uncertainty, extra costs and supply chain problems for business. What incentives have the Government provided for international investors in the car industry to come to this country at a time when the major trading blocs, from which we are now excluded, are becoming more protectionist?

[Lord Johnson of Lainston (Con)]

I sincerely thank the noble Lord for raising this point. It is important that we have a strong car industry in this country, and there are some legitimate reasons why the industry is transitioning. As many noble Lords who have been involved in this industry will know, we are moving from internal combustion engines to electric vehicles, which means some lines end and it takes time to start new lines. I am also very aware of the rules of origin issue, and I sincerely hope that our new relationship with Europe will allow us to have a more constructive conversation around that. It is in no one’s interest to have a trade war on cars.

I will finish by saying that there have been some great announcements over the last few years, and the Government have been extremely influential and relevant in supporting companies such as Nissan and Envision, with investment in the Vauxhall plant at Ellesmere Port and support for Pensana’s factory near Hull. Ford has committed just under £0.25 billion of investment in Halewood, and in 2022, Bentley announced a £2.5 billion investment to produce its first battery electrical vehicles by 2026, which will secure 4,000 jobs at its Crewe plant. There is certainly more that we can do, but we are acting, and we are trying to transition our car industry into one that is sustainable for the future.

[Lord Howell of Guildford (Con)]

My Lords, with growing Chinese competition in car manufacturing—in fact, China is dominating the EV market altogether—there are obviously even worse challenges to come. But would my noble friend like to say what he thinks about the EU proposal, announced yesterday, to go for what it calls a Net-Zero Industry Act to compete with the Inflation Reduction Act in the United States, because it is very nervous that Volkswagen and other European manufacturers are all about to move from France and Germany to the United States? How are we going to work it out in this situation? It seems rather dangerous.

[Lord Johnson of Lainston (Con)]

I thank my noble friend for his comments. There has been a large amount of debate around the value of the Inflation Reduction Act, which I believe is the greatest oxymoronic legislative title in history, frankly, as I cannot believe that it will reduce inflation. Some of its measures are also relatively protectionist. The Government are investing heavily, not just in car manufacturing but in the research and development around it. For example, the Faraday Challenge amounts to £500 million, the Automotive Transformation Fund is hundreds of millions of pounds and the Advanced Propulsion Centre is providing huge amounts of much-needed money for new car production facilities and the inventiveness around that. It is not good enough just to try to find a bigger bazooka; we must ensure we focus on regulation and proper support for R&D, because our brains are our best defence.

[Baroness Randerson (LD)]

My Lords, the Minister may call it “transitioning” but most people will call it “declining”. But let us take his word: transitioning. In order to create the industry for electric vehicles, Britain needs a gigafactory. The Government pinned their hopes on the Britishvolt factory. That failed, the company is being taken over and it will now be used for a different purpose. Last week I asked how the Government’s ambitions for a gigafactory would be fulfilled in the very near future. I did not get a detailed answer and I would be very grateful if the Minister could give me a proper answer now that explains how the industry is going to be able to rely on a gigafactory at the centre of government strategic thinking.

[Lord Johnson of Lainston (Con)]

I greatly appreciate the pressing on this point. It is essential that we have strong battery manufacture capability in this country if we are to have an automotive industry. Do not be under any illusion: the Government are concentrating on this night and day. I draw the noble Baroness’s attention to the fact that I think the Britishvolt transition —if I can use that word again—was quite successfully handled. The Government pledged money, which should have worked in the financing. Unfortunately, it had to evolve to a new owner, but that transition has been successfully managed and it will still be making battery materials and technology.

As I highlighted earlier, through government support through the Automotive Transformation Fund, Nissan and Envision have signed a deal to produce batteries. Importantly, this is linked to a critical mineral supply deal we did with Indonesia that I personally helped steer through after the excellent work of my noble friend Lord Grimstone. This does not just give us battery manufacturing capability. As importantly, the focus of this Government is to make sure that we have the materials to supply these batteries, so that we can be ahead of our competitors.

[Lord Stirrup (CB)]

My Lords, the Minister referred to our brains as being our competitive advantage. The Government reiterated in the integrated review refresh their ambition for the UK to be investing 2.4% of GDP in R&D. The OECD average is 2.7%. Does the Minister think that the Government’s ambition is likely to turn us into a so-called superpower in terms of science, and will that be sufficient to support the kinds of ambitions we ought to have in our car industry?

[Lord Johnson of Lainston (Con)]

I thank the noble and gallant Lord for his point. I am glad he agrees with us that our brains are our best defence. I see around this House many good examples of that. I would stress that the Government are investing not simply in R&D in science and technology to become a science and technology superpower, but heavily in education, which is not necessarily classified under those figures. I saw recently an extra £2.8 billion being announced for education and training. We have further projects to ensure that our tertiary education remains the strongest in the world with, I might point out, three of the top 10 greatest universities in the world coming from this nation, which is something we should celebrate.

[Baroness Armstrong of Hill Top (Lab)]

My Lords, why are the Government investing for their own fleet of cars in South Korea? My friends in Sunderland are bewildered as to why investment is going to South Korea and not to the Nissan Leaf in Sunderland.

[Lord Johnson of Lainston (Con)]

I greatly appreciate the noble Baroness for drawing this to my attention; I am afraid that I was unaware of government investment in Korean car production, so maybe we can follow that up at a later date. As I said, the Government have provided a huge amount of support for the motor industry, not just financial support but real support. I can assure her that the Office for Investment, which is under me at the Department for Business and Trade, works continually to ensure that all the opportunities around the world are brought to this country so that we can have a strong car manufacture and research and development industry in this nation.

[Baroness Jones of Moulsecoomb (GP)]

My Lords—

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[Baroness Jones of Moulsecoomb (GP)]

It is good that the Minister emphasises R&D, but, truly, electric cars are not really sustainable, so the Government will actually have to think about the next generation of much more sustainable vehicles. Will any of that research and development go into improving our public transport networks—not HS2?

[Lord Johnson of Lainston (Con)]

I am grateful, as always, for the prompting on the importance of achieving net zero and sustainability over the next so many years. I draw this House’s attention to the broadness of our attempts to build a sustainable automotive sector in this country, with Johnson Matthey announcing in July an £80 million hydrogen gigafactory at its existing site in Royston. So this is not simply about EVs; it is important that we want to have a diversified strategy to ensure that we are sustainable for the future. That requires effort, finance and the businesses themselves to be successful, and we are supporting all those three.

[Lord Lamont of Lerwick (Con)]

My Lords, is the European-wide nature of the problems facing the car industry not illustrated by the fact that Germany in 2021 produced fewer car passenger vehicles than it did 30 years ago? The German Ministry for Economic Affairs has prophesised that there will be loss of 100,000 jobs in the car industry because of the transition. Has my noble friend the Minister noted the intention announced by both the German and Italian industry Ministers that they may veto the previous decision of the EU to phase out CO₂-emitting cars by 2035? If that were to happen, what would the impact be on Britain, with its different target?

[Lord Johnson of Lainston (Con)]

I appreciate my noble friend’s point on this subject. We are committed to our targets, and it is absolutely right to achieve net zero by the date we have set. I am glad that he mentioned the other European car manufacturers, because this past week alone the Prime Minister travelled to Paris for a summit with President Macron to work on the very important task of rebuilding our links with Europe, to ensure we can have sensible conversations with our European partners. I call that Project Grand Amour, and it has been enormously successful. If we look ahead at some of the problems facing us, particularly in our automotive industry—and at the importance of ensuring we have strong trading relationships with our European neighbours, which is the essence of this point—we should be extremely grateful for, and indeed celebrate, the Prime Minister’s wonderful and marvellous actions last week in the new Belle Alliance.

Trade (Australia and New Zealand) Bill

Lord Johnson of Lainston Excerpts

Report stage
Tuesday 14th March 2023 Lords Chamber

[Lord Purvis of Tweed (LD)]

I am grateful to the noble Lord; he knows I respect his work on this area very much. I would like the Minister to confirm that that will be the case, because I am not convinced. I see the noble Baroness, Lady Neville-Rolfe, in her place. She was kind enough to have a meeting with me about it. I am not yet convinced, because of the elements within the Procurement Bill which will require there to be no discrimination for any of the treaty countries for public procurement in this country, that what he is arguing for, which is effectively a carve-out, will in fact be the case. My understanding is that under the Procurement Bill, we are unable to discriminate against any of the treaty suppliers. I am not sure that a public body in this country would be able to discriminate. I hope the Minister will be able to clarify that point.

The reason this is relevant and why I quoted the then candidate for leader of the Conservative Party’s commitment to 50% of public procurement in this country being local is that I do not know how that squares with what will be the legal requirement under the Procurement Bill that we are then unable to discriminate against Australian and New Zealand produce which will enter the market. I do not know how that squares.

I am simply asking the questions, because we have not had more meat on the bone, if that is not too inappropriate an analogy, about what has been published as a government commitment and is in the Procurement Bill. If the noble Lord has any other answers, I am happy for him to intervene on me. I do not know how he knows how this might be squared. I do not at this moment. That is why part of our agriculture sector is also questioning how these two commitments will come together. The different sequencing of this Bill and the Procurement Bill is relevant. Because it also sets the precedent for Canada and Mexico, with new produce coming in, and if these are gateway agreements for CPTPP, we are looking at potential competition with all CPTPP members for public procurement of produce. If you are a public body in the UK looking at cost-effective procurement of food for schools or hospitals and you are unable under the Procurement Bill to discriminate against Australian or New Zealand produce or that from any CPTPP country and state that there is local producing, similarly, I do not know that it is matched.

I hope that, at this late stage, the Minister can offer some reassurance. I hope that he is able to explain how these commitments to 50% of procurement can be matched, as well as give further reassurances, specifically on the impact on tenant farmers and biodiversity. There are genuine concerns here, I do not think they will go away and we need to offer that reassurance to these sectors, which are so vital to our rural economy.

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

My Lords, I draw Members’ attention to my entry in the register of interests, although I do not believe there is any conflict relating to our debate today. I am also grateful for the apology of the noble Lord, Lord Purvis, for being slightly late. I was fractionally late for Questions this afternoon, and was called on to resign, among other things. I hope the House does not mind that I have not taken that too seriously.

I am delighted to be speaking on Report of this very important Bill. If it is appropriate to make a personal comment, I have deeply appreciated the high level of engagement with the Opposition Front Benches, my noble friends and noble Lords across the House. I do not want to put words into people’s mouths, but I think we agree that it is a fundamentally good thing to do a trade deal with Australia and New Zealand. I was watching the news yesterday and seeing the extraordinary advances we have made in collaboration, particularly with Australia, in our defence. It will benefit the economy in many areas in the north-west of this country, among other parts of this nation. The sheer sincerity of the brotherhood between our nations should be expressed very clearly. I very much hope that if the high commissioner of either Australia or New Zealand—I am grateful to the noble Lord, Lord Lennie, for engaging with Phil Goff recently—is watching this debate, they know that the fundamental spirit of the House is for a successful conclusion of this process and a good and successful trade deal with Australia and New Zealand.

At the same time, I am very aware of the issues that trade deals create. I am certainly not triumphal in any way about trade liberalisation or the effects that this trade deal will have on individuals and farming communities. I have been very sensitive to those discussions over the past few months and take this very seriously. I express my personal view that we must support our farming community, and this is unquestionably the view of this Government as well. It is important to have that on the record.

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[Baroness Bennett of Manor Castle (GP)]

I am aware that the Minister suggested that there be no interventions, but I have to say one word: mulesing. That is a dreadful animal welfare issue in Australian sheep farming.

[Lord Johnson of Lainston (Con)]

I thank the noble Baroness for that intervention. It is not my plan in this debate to be triumphal or to score points or whatever in terms of coming backwards and forwards. I have done a great deal of work in order to satisfy myself that when it comes to mulesing, the reports suggest that a tiny percentage of meats that would appear in this country—I am only going on the reports that I have been given—would be at risk of being from that practice. I have also been encouraged by reports that I have read about changing practices and standards in Australia. In particular, farmers who come under the Australian farm assurance programme certainly insist on anaesthetising before mulesing. I do not want to go down an alleyway, but the point is that great efforts have been made to ensure that, broadly speaking, our standards are aligned.

I have two more important points. The New Zealand Government have introduced a significant upgrade to their animal welfare standards. I cannot recall the name of the Bill, but if noble Lords wish to look, they will see that they are introducing a whole raft of new animal welfare standards and general environmental standards for farming, which will have enormous ramifications for their production and align them even further, if not go even further than we do. I spoke yesterday, specifically ahead of this debate, to the Australian high commissioner and raised this issue again, as I did with the Trade and Agriculture Minister who I met a few months ago. This has been my main issue, particularly when speaking directly to interlocutors about animal welfare standards.

They have confirmed to me that they are doing further work, which is very important. The Government of Australia have announced the banning of other practices, not associated with our exports but relating to live animal exports and so on. The direction of travel is very positive. We have not celebrated enough that our work in negotiating these trade deals has helped to drive up standards in both countries. I applaud our negotiating team for doing that, and applaud the debates that we have, with leadership from individuals such as the noble Baroness, Lady Bennett, ensuring that these areas are properly highlighted and that we can draw attention to our interlocutors and set standards, and that our negotiating partners know that we have these standards and that we wish to be aligned on them.

I have only a few more points to make. The noble Baroness, Lady McIntosh, made some very relevant references to the Food Standards Agency. I wrote to her and the noble Lords, Lord Purvis and Lord Lennie, covering some of the questions raised in the last debate. This issue was raised. I have interviewed staff there to ensure that they carry out physical checks at the border for Australian and New Zealand products. They do not check every container, and frankly it is quite right that they do not. It would be an extreme impediment to trade, especially for food produce. However, they take a very proactive approach to ensuring that our standards—which, to reinforce the point, are not derogated in any way by these trade Bills—are upheld.

On top of that, the noble Lord, Lord Inglewood, raised a point about whether we can be comfortable of certification on the ground. In my recent call with the Food Standards Authority, I particularly covered the topic of Australia, which has a local assurance system, as do we. To be eligible to export, a farmer must sign up to the federal export assurance scheme; I cannot recall its name, but your Lordships will know what I mean. Therefore, vets who are under obligation to perform their duties—

[Lord Inglewood (Non-Afl)]

The question that follows from the helpful remarks of the Minister is: are the British Government confident and fully in line with what those schemes have to say?

[Lord Johnson of Lainston (Con)]

I was just coming to that. I may have taken a bit too long to get there but I am trying to reassure noble Lords by describing in detail the lengthy process of assurance that Australia provides us with. It is part of the global trading system and not necessarily unique to Australia. We must do the same, as I understand. If I am wrong, I will ensure that this is corrected, but we must do the same with any agricultural or meat exports that we send to Australia.

Are we confident that Australia is upholding their system and managing it properly? The answer is yes. I have been impressed with the calls that I have had around this subject. It is a detailed and complicated process of assurance that ensures that we are comfortable that what we receive is indeed what is advertised. I do not want to be called back here if there is a case where that does not happen, because clearly that is not my intention, but on whether we are confident about the processes in place, the short answer is yes.

Regarding South American beef being passed off under British beef titles, I understand that this was only from one retailer, and the National Food Crime Unit is investigating. This struck me as an isolated case. Forgive me that I do not have all the details, but the major supermarket retailers have all denied any knowledge of this and it has not affected them. This is a unique case. I am happy to have someone write to the noble Lord because it would be interesting to find out a bit more about this, but it is not relevant in this instance. It does not seem to be widespread, but is specific. That it has been caught and is being investigated is very important.

I come to a conclusion—

[Lord Purvis of Tweed (LD)]

Can the Minister address the commitment that the now Prime Minister made for 50% of public sector procurement to be sourced locally? Is that government policy? How does that interact with the legal requirements in the Procurement Bill that a public body in this country would not be able to choose a local producer over a treaty supplier producer, on that basis?

[Lord Johnson of Lainston (Con)]

I appreciate the noble Lord’s comments and was about to come on to that when I said “conclusion”. Sadly, my conclusions can run to several topics, the noble Lord’s being one of them.

It is correct that the procurement legislation prohibits a nationalist tilt towards procurement, which is what we want. When it comes to government procurement, we want the highest quality products at the lowest possible prices, and I would like to think that they will be British products. It will reassure this House to know that 81% of all beef sold in this country is under British brand labels. Only 19% international beef is sold in this country in the first place. The assumption is that you are already looking at a very high level of local procurement. A 50% threshold would be logical for something such as beef, which already fits into that.

There is a further question and further investigation regarding whether procurement can be assessed in terms of other relevant factors. I am happy to have a further debate about that in general. It can apply to a wide range of concepts. It could even apply to how energy is sourced and supplied. There is always work defining what concepts such as sustainability or relevance to the environment could be in terms of transportation distances and so on. They are discussions to have. I have been having discussions in other areas, for reasons not linked to these trade discussions, on whether these factors can be brought to bear in procurement. We are very wary of introducing anything other than straightforward procurement rules, but I assure the noble Lord that—as with beef, where 81% is already UK beef—it would seem logical that a very high proportion of produce is sourced locally.

[Lord Lansley (Con)]

At the risk of delaying us on this point, the access that is given through these procurement chapters and for treaty state suppliers under the Procurement Bill is to cover procurement, which means procurements larger than the threshold amounts set out in the schedule to the Procurement Bill. For example, for local food production for a set of schools, this would have to be a procurement over £213,000. In truth, the issue is not whether there is an Australian company that is likely to bid for such a procurement, because these procurements will be smaller than that. It is whether beef from Australia is in this country and in circulation in their market which might then be used by local suppliers—but then they are a local supplier to the school.

[Lord Johnson of Lainston (Con)]

I have appreciated my noble friend’s extremely positive interventions and applaud wholeheartedly his phrase, “Let’s get on with it.” He has also been extremely helpful in pointing out the specifics of the Bill and the difficulty of attaching these sorts of amendments to it, although I am very sympathetic to the overall philosophy of the desire for proper impact assessments, which we have had and agree to wholeheartedly in terms of the two-year and the five-year monitoring report. I stress again that this treaty does not create a precedent. However, it does create a model. I am very impressed and support wholeheartedly the flexibility of this agreement because it will allow us and allow noble Lords to call Ministers to account on a constant and rolling basis concerning the effectiveness of these trade treaties.

I believe that I have covered most of the points raised. I am very happy to continue a dialogue around these and any other measures that may not have been covered on this important piece of legislation. We believe, and I believe passionately, that this trade Bill is a good thing for this country. It will be of huge benefit to our citizens and our consumers. It will give us enormous additional security and allow us to have a closer relationship with two nations that have been, since their founding, sister nations of this country.

I am continually being asked by the representatives of Australia and New Zealand when this treaty will come into force because, as soon as it does, and only then, their businesses and citizens, and ours, will be able to take advantage of it. I call on this House to support the Government in this mission. I ask the noble Lord, Lord Lennie, to withdraw his amendment, and for the noble Baroness, Lady McIntosh, and the noble Lord, Lord Purvis, not to move theirs.

[Lord Lennie (Lab)]

The TAC covering procurement seems to be a future possibility, and I welcome the Minister’s comments on it. On the questions of food standards and quality assurance that noble Lords have raised, we will wait and see. We will have a review in two years and a conclusion to that in five years, and we will find out whether the assurances that we seek on food standards have been maintained. I do not think that there is any doubt about this being a gateway agreement: it is clearly to do with the CPTPP. The impact assessment that we are calling for is a one-off. This is the first time that we have negotiated a trade deal for some 45 years. To make sure that we have covered all the bases and got things right, we thought that a review—rather more frequently than the five years offered—would have been better. I beg leave to withdraw the amendment.

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Moved by

[Lord Johnson of Lainston]

2: Clause 2, page 2, line 9, after “make” insert “different”
Member's explanatory statement
This amendment inserts a word missing from Clause 2(1)(a).

[Lord Johnson of Lainston (Con)]

My Lords, Amendment 2, in my name, is a minor and technical amendment that has been tabled by the Government to correct a typographical error in the Bill and clarify the power available to Ministers of the Crown or a devolved Administration under Clause 1. I am very grateful for noble Lords’ scrutiny, which was instrumental in highlighting this typographical error in the Bill. In particular, I thank the noble Lord, Lord Kerr, who is not in his usual place, and my noble friend Lady McIntosh, for highlighting this issue in Committee. If I may say so, their laser focus on detail in the Bill shows the real value of your Lordships’ House in ensuring that legislation is as robust and clear as possible. The Government are very grateful to noble Lords for highlighting this issue. I beg to move.

[Lord Lennie (Lab)]

There is nothing to say; we agree.

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[Lord Lennie (Lab)]

I rise briefly to speak to Amendments 7 and 8 in this group. These two amendments would sunset the ability to make amendments to two years after the law passes or the UK’s accession to the CPTPP. Incidentally, the Government previously said that accession would happen last year, but, as I am sure we are aware, it has not yet taken place.

The Explanatory Notes to these deals state that each party to the free trade agreement should ensure that its domestic legislative framework is consistent with the obligations in the FTA. The UK-Australia and UK-New Zealand free trade agreements require changes to domestic procurement law. Therefore, why not have sunset powers in the legislation? Is there any expectation that achieving this intention would take more than two years, and are there concerns that constant updates would be required for whatever reason? If so, would it be right to do so for more than two years in any event? If accession to the CPTPP will change our trade relationship with Australia and New Zealand, will a domestic legislative framework need to be updated in a manner not possible within the powers in the Bill so that it is aligned with the CPTPP and these deals if they are to coexist? A series of trade experts have commented that the UK will be a rule-taker, not a rule-maker, when we join the CPTPP. The Minister may perhaps wish to comment on this interplay between the Australia and New Zealand trade deals and the CPTPP. I beg to move.

[Lord Johnson of Lainston (Con)]

My Lords, I turn to Amendment 8 specifically, which seeks for the Bill to lapse when the UK joins the CPTPP. Bilateral free trade agreements, such as these signed with Australia and New Zealand, do not lapse due to membership of plurilateral agreements such as the CPTPP and the WTO Agreement on Government Procurement. They exist alongside each other—that is important to note—with the UK having separate and continuing commitments under each. This is already the case with the numerous bilateral trade agreements that the UK has with members of the GPA, such as Canada, Switzerland, the Republic of Korea, the EU and Ukraine, to name a few.

I emphasise that the procurement chapters of the Australia and New Zealand agreements will not be superseded by the UK’s accession to the CPTPP. Accordingly, the power in the Bill will still be needed when the UK has acceded to the CPTPP, to implement future modifications to the Australia and New Zealand agreements. In light of this, I ask for the amendment to be withdrawn.

[Lord Lennie (Lab)]

I beg leave to withdraw the amendment.

National Minimum Wage (Amendment) Regulations 2023

Lord Johnson of Lainston Excerpts

Monday 6th March 2023 Grand Committee

Moved by

[Lord Johnson of Lainston]

That the Grand Committee do consider the National Minimum Wage (Amendment) Regulations 2023.

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

My Lords, the purpose of these regulations, which were laid before the House on 30 January 2023, is to raise the national living wage and the national minimum wage rates on 1 April 2023.

The strength of the UK labour market remains something to be proud of. Unemployment is low, the number of employees on payrolls is 1 million above pre-pandemic levels and demand for workers remains close to record levels. The Government’s overarching priority is to achieve sustained economic growth. Our commitment to a high-skilled, high-productivity, high-wage economy will further address cost of living pressures, as well as levelling up every part of the UK and hastening the transition to net zero.

However, we recognise the impact of inflation for people right across the country, which is why this Government have continued to take robust action. This year sees the largest cash increase in the history of the minimum wage, and, once these measures come into force, the national living wage will have risen more than twice as fast as inflation since its introduction in 2015. Furthermore, benefit payments and the state pension will increase by 10.1% in April, in line with September’s CPI inflation rate. We have also delivered a package of measures, including the energy price guarantee, which has saved a typical UK household around £900 across the winter, and hundreds of pounds-worth of support in the form of cost of living payments targeted towards the vulnerable households that need it most.

I turn to the detail of the national living wage and national minimum wage regulations, which will come into force on 1 April. Following a comprehensive impact assessment prepared and published by the Government, we estimate that 2.9 million workers will receive a pay rise across the United Kingdom. I am pleased to confirm that the Government have accepted all the rate recommendations made by the Low Pay Commission in October 2022. The Low Pay Commission is an independent body which conducts expert research and analysis and brings together input from representatives of business and workers. I thank it for its tireless efforts.

The Government remain committed to their ambitious target for the national living wage to equal two-thirds of median earnings by 2024, provided that economic conditions allow. This will have the effect of ending low pay in the UK in line with the OECD definition, and this year’s increases keep us on course to achieve that target. Under the new regulations, the national living wage, which applies to those aged 23 and over, will increase to £10.42 an hour. This is an increase of 9.7% or 92p. As a result, a full-time worker on the national living wage will see their annual pay before tax rise from £17,300 to over £18,900—an increase in excess of £1,600. This also ensures our national living wage rate remains one of the highest in the world. According to the Low Pay Commission, as of the start of 2022 the UK had the fourth highest minimum wage rate in Europe.

These regulations will also increase the national minimum wage rates for younger workers and apprentices, as well as the accommodation offset. Workers aged 21 and 22 will be entitled to a minimum hourly rate of £10.18, representing an increase of £1 or 10.9%. This narrows the gap with the 23 and over rate and keeps this group on course to receive the full entitlement to the full national living wage by 2024—another ambitious target set by this Government. Those aged between 18 and 20 will be entitled to a minimum rate of £7.49 an hour, an extra 66p, while those aged under 18 will be entitled to a minimum rate of £5.28 an hour, an extra 47p. Both these changes represent an increase of 9.7%. Apprentices under 19 or those in the first year of their apprenticeship will also receive an increase of 9.7%, as their rate rises from £4.81 to £5.28.

Finally, on the detail of the regulations, the accommodation offset will also be increasing. This is the maximum daily amount that an employer can charge a worker for accommodation without it affecting their pay for minimum wage purposes; it will be rising by 4.6% from £8.70 to £9.10. The Low Pay Commission has made recommendations about the future of the accommodation offset in its recent report. The Government are continuing to consider them carefully and will issue a full response in due course.

These regulations aim to reward the lowest paid workers in every sector and in every part of the country for their contribution to our economy. We are aware of cost of living pressures and will continue to closely monitor all the impacts of increases to the national living wage and national minimum wage rates. To that end, the Government will shortly publish this year’s remit to the Low Pay Commission and ask it to provide recommendations for the rates which will apply from April 2024.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for the report on this statutory instrument. I note that, only a few minutes ago in the Chamber, the Minister answered an Oral Question and gave a lot of information related to what we are discussing here. I thank him for that information as well. He said that we do things in bits to get them through. In a sense, it is not very clear when you are doing it “in bits” what the whole picture is.

The increases in minimum wage must be welcomed; of course, we welcome them. But they are not that generous, as £10.42 per hour times, say, 35 hours over a seven-day week is only £364. I wonder if we really consider that anybody can manage on that sort of sum in our large conurbations—£364, if you manage to do 35 hours. It should be more.

The Minister kindly gave us the detail that in October 2022, five months ago, these were considered to be the increases that ought to happen. The question I ask him to consider, because we are doing this five months later, is how up to date those figures are. Should they be more generous? As a start, perhaps we should consider an independent review to consult on how to set a genuine living wage across all sectors. For instance, we could pay the living wage in all central government departments and their agencies and encourage other public sector bodies to do likewise. It is important to set minimum wages at appropriate levels, including setting a 20% higher minimum wage for those on zero-hours contracts at a time of normal demand to compensate for the fluctuations in their hours of work. This statutory instrument takes no account of that.

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[Lord Lennie (Lab)]

My thanks are due to the Minister for setting out the upratings on the national minimum wage, the living wage and associated allowances, and the noble Lord, Lord Palmer, for setting out his views on how things should improve in future. These changes are welcomed by the Opposition. Not surprisingly, it was us who set up the national minimum wage in 1999. We had a minimum wage, below which earnings must not fall, in the teeth of fierce opposition from the then Conservative Opposition Benches. I am glad that that situation has now been ameliorated, and they now support the minimum wage; all converts are welcome.

I think the number of jobs covered in all these figures is 2.9 million. The number affected by the national minimum wage is approximately 1.5 million, which compares with 700,000 at the time of its introduction. Does the Minister have any explanation for this increase in the numbers covered by the national minimum wage? Retail, hospitality and cleaning and maintenance are overrepresented in the minimum wage sector, and women are approximately two-thirds of those currently on the national minimum wage. Some explanation for that would be helpful.

The Labour Party would ensure that the national minimum wage was a real living wage. The noble Lord, Lord Palmer, asked how to do so. We would do it by changing the Low Pay Commission’s remit so that, in addition to other factors, it reflected the need for working people’s pay to at least cover the cost of living. The national living wage would finally live up to its name. We would ensure that the national minimum wage applied to every adult worker and was properly enforced. It is unfair to pay adult workers below the national minimum wage, and by adult worker we mean everyone aged 18—the age at which you are treated as an adult in the UK—or over.

Many employers already pay the national minimum wage, and that is to be commended, but compliance is a big and continuing problem. Can the Minister tell us how many prosecutions or enforcements took place last year for failure to pay the national minimum wage? We welcome these upratings, as I have said, and look forward to having the opportunity to progress this legislation further by extending the protection that the national minimum wage provides for all adult workers sometime in the near future.

[Lord Johnson of Lainston (Con)]

I thank noble Lords for their valuable contributions in today’s debate. I particularly appreciated the comments of the noble Lord, Lord Palmer, about my responses on the OQ earlier. I like to think that we will have a slightly more mature exchange over this issue than we experienced then—but such is the nature of the important scrutiny of the parliamentary system.

If noble Lords do not mind, I will go through and try to answer some of the points raised by noble Lords. The noble Lord, Lord Palmer, asked about the relationship between the October date and the bringing into practice date of 1 April. In normal periods, that would be a perfectly reasonable time lag; in fact, it is relatively fast for Governments to move with only a six-month or so period. I am very sensitive to the fact that we live in an inflationary environment, and inflation is taken into account by the Low Pay Commission. A number of factors are taken into account, as noble Lords may imagine. It would be difficult to make sudden changes, however, given the fact that we need to make sure that employers have a suitable timeframe to bring into practice the pay increases. Although the public sector is also paying the minimum wage and the national living wage, we must not forget that it is on the whole employers who are paying these additional wages, and we should be thankful to them for the support of this overall concept.

Given that this is appraised every year, I hope we will still be in a position to make sure that these wages reflect our ambition, which is to make them represent two-thirds of median earnings. In preparation for this debate, I did some work with the officials from the department, who can bear witness to this. I wanted to see where we were in relation to other European countries on median earnings and absolute amounts, given the currency fluctuations. It is not my place to celebrate or feel triumphant about minimum wage levels, because we want people on maximum wage levels—but it is important to see where we stand, so at least we can benchmark. We compare very strongly. If you look at where we are on the European averages, you can see that we are one of the highest, out of the whole of Europe, and we compare extremely favourably with countries such as Germany.

The noble Lord, Lord Lennie, made a very good point, and I have thought about the philosophy of minimum wages, which were brought in in 1999 by a Labour Government and not supported by the Conservative Opposition at the time. I personally was unsure of what the effects would be on business; I was concerned that it would drive up costs for business and cause a negative or opposite effect to giving people security—that it would lead to greater insecurity and lower levels of employment. Actually, it has made sure that people are guaranteed a level of income, and it is an extremely powerful way for us to manage our economy. I am very pleased that we have converted—and, like all converts, we have probably ended up being more passionate about the cause than the original proponent. We have introduced the national living wage, which is a very effective way to ensure that the overall pay rates are raised.

On the noble Lord’s comment about the age at which these rates should apply—in other words, that the national minimum wage and the national living wage should be synchronous—I have some sympathy. At the same time, it has been believed, and I think there is evidence, that an element of flexibility for 18 to 22 year-olds, or those in their early 20s, is necessary, particularly as that is where there is greater vulnerability for employment volatility. We have plans for the pay scales of those over the age of 21 to eventually come into line with the national living wage, but we would still be keen to retain some flexibility for employees below that level.

This is all about making sure that the employment market functions properly and that we can employ as many people as possible at the right rates. This is certainly a matter for debate—we are trying to ensure, not that people are paid less, but that there is flexibility in the market so that new workers in the workforce can get the jobs they need.

It is important to cover the noble Lord’s point about there now being 1.5 million, from 700,000 when this came into practice. I am happy to do some more analysis of that, but my surface suspicion is that there are 3.75 million new people in the workforce since 2010. It would be interesting to see an analysis of what those jobs are. I would like to inquire into this, as I appreciate that the noble Lord has raised a very relevant point. In some respects, I would like to think that it is a good thing that we have people coming into the workforce, but clearly we do not want to see a derogation of wages. We want to see people being paid more. I stress that these are minimum-wage levels—they are not the set wage levels—to ensure that no one is paid less than that rate.

The noble Lord, Lord Palmer, mentioned issues around fixed-hours contracts and the flexible economy. We are doing an awful lot in that area to make sure that people have an element of certainty. He was generous enough to remember my response to the Oral Question earlier today. There is quite a long list of different types of specific protections that we are bringing in. I draw his attention to the Employment Relations (Flexible Working) Bill, which effectively allows employees to demand flexible working from day one, rather than week 26, and to the Workers (Predictable Terms and Conditions) Bill, which is probably more relevant to what he was talking about. It gives more strength to employees’ requirements for predictability in terms of numbers of hours if they are on temporary work contracts. Once you have worked for an employer on a part-time basis for a certain length of time, you will be given a greater opportunity to ask for predictability in how you are paid and your hours.

We have to strike a balance—and I think we do—in giving employers flexibility, which is at the core of what has been an incredibly dynamic and successful labour market over the last 20 years or longer, and making sure that workers feel protected. Importantly, flexible working hours are very much appreciated by a number of workers who want flexibility. It would be a mistake to throw the baby out with the bath water and get rid of zero-hours contracts or highly flexible working. People appreciate them, as they give a great deal of flexibility. A lot of students and part-time workers who could not do full-time work and would not want predictable work will use these contracts. They constitute about 3% of the workforce. There are mechanisms and there is analysis of how we can improve the rights of workers, but we do not want to dilute the flexibility that these structures give to our workforce and economy.

The question from the noble Lord, Lord Lennie, about the factors that the Low Pay Commission takes into account is well made. It takes a great number of factors into account when assessing pay. I believe that the Government have accepted all the recommendations of the Low Pay Commission; this is a very important partnership that we have. My assumption is that the factors in decision-making are continually reviewed, which is absolutely right. Ultimately, our ambition is to ensure that the national living wage effectively reaches two-thirds of median earnings by next year. I am very pleased to say that we are on track to achieve that. As a nation and a society—let alone a sense of triumph for the Government; this is about people’s hard work and being rewarded properly—it would be a great thing if the United Kingdom could achieve that, and we are on track and very close to doing so.

I believe I have covered all the issues, except for the question raised by the noble Lord, Lord Palmer, on tips. I am afraid I do not recall seeing the noble Lord in his usual place on Friday for the debate on tips. The legislation is very specific and will be brought to bear specifically so that all tips go to the workforce, with no deductions, not even for credit card charges. I hope that is clear, because that is the whole purpose. They will be paid monthly, so they cannot be accumulated, and, importantly, they cannot be used as so-called “pay bonuses” or “top-ups”.

--- Later in debate ---

[Lord Lennie (Lab)]

Before the noble Lord sits down, could he comment—or write to me if he cannot—on enforcement actions in the past 12 months? What are the numbers and so on?

[Lord Johnson of Lainston (Con)]

I apologise to the noble Lord, Lord Lennie. I try to answer all the questions, but there is always one that I miss. Enforcement is very important and all businesses are responsible for paying the correct minimum wage to their staff. HMRC follows up on every worker complaint it receives, even those that are anonymous. This includes complaints made to the ACAS helpline. In 2021-22, HMRC identified pay arrears in excess of £16.3 million for more than 120,000 workers. I am very happy to go through this now, but it might be more useful to write to the noble Lord if he is happy with that.

I will address one point that has been raised. To some extent I am embarrassed by it, but not embarrassed to be open and transparent about it. The question was why the listing of companies that have not paid their staff the minimum wage had not happened. The list is supposed to be published every quarter. I am afraid that there has been some turnover of Ministers. I spoke to the Minister responsible today and he is determined to make sure that it happens in the very near future. I cannot give a specific time, but we are very aware of it. We want to make sure these companies are named; it is a powerful incentive for employers to behave properly. We are entirely of one mind here and I will be delighted to put the information in the House of Lords Library relating to enforcement. The good news is that I can reassure the Committee that HMRC in particular has been focusing on tackling wilful non-compliance and that significant progress has been made.

Motion agreed.

Trade (Australia and New Zealand) Bill

Lord Johnson of Lainston Excerpts

Monday 6th March 2023 Lords Chamber

Moved by

[Lord Johnson of Lainston]

That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 and 2, Schedules 1 and 2, Clauses 3 and 4, Title.

Motion agreed.

Workers’ Rights

Lord Johnson of Lainston Excerpts

Monday 6th March 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)]

Over the past year, we have proven our commitment to supporting workers across the UK by raising the national living wage to its highest rate yet. The Government are supporting six Private Members’ Bills to increase workers’ rights. These deliver enhanced protections for new parents, unpaid carers and hospitality workers. They also give all employees easy access to flexible working and workers the right to request a more predictable contract.

[Lord Woodley (Lab)]

My Lords, the Tories won the last election by promising improvements to employment rights, but we have seen completely the opposite. I am sick and tired of posing the same questions to the Minister time and again concerning the protection of TUPE legislation. We never get a straight answer, and I believe that it is disrespectful to this House. The Minister’s attitude to date has always been, “Let’s just wait and see.” That cannot possibly be right when we have employers and employees wondering what is coming round the corner—if, indeed, there are any fundamental changes to the Government’s thoughts on employment legislation. So, for the fourth time of asking: will the Minister confirm that TUPE will remain to protect workers’ wages and terms and conditions? Or, failing that, will he finally admit that the British people were hoodwinked at the 2019 election?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for raising this matter, and I think it right that we look at employment rights. He asks what is coming round the corner, and I will tell him: the Neonatal Care (Leave and Pay) Bill, the Employment (Allocation of Tips) Bill, the protection from redundancy Bill, the Carer’s Leave Bill, the employment relations Bill and the Workers (Predictable Terms and Conditions) Bill, all supported by the Government. Three of those Bills were brought into this House on Friday with the wonderful cross-party support of everyone here who believes in actually doing something for workers and giving them the protections this Government will afford them.

[Lord Naseby (Con)]

My Lords, do not workers’ rights apply equally to all our school leavers this summer, regardless of whether they were educated in the independent or public sectors? If those rights do apply, why has the Bank of England announced that independent sector pupils, including those on bursaries, will be excluded from its education presentations and group talks? Surely this is social discrimination. Will my noble friend approach the Bank and ask it to think again?

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I thank my noble friend for that question. I saw that article myself and I was surprised by it. It is not for me to comment on the tour practices of the Old Lady of Threadneedle Street, but this is certainly worth further inquiry.

[Lord Storey (LD)]

I want to come back to the issue of paid care workers. Care workers are skilled workers who are often subject to low wages and poor working conditions. Without urgent reform, this sector will continue to suffer from high vacancies that jeopardise the quality of care. Currently there are 165,000 vacancies, an increase of 55,000 from last year. Is not the answer that if more money is provided to these skilled workers, many of the problems the care sector faces will no longer exist?

[Lord Johnson of Lainston (Con)]

I appreciate the noble Lord’s point. It is an incredibly important sector, and the approximately 1.5 million people who work in it are to be cherished and celebrated. The Government have put £7 billion into the sector over the last two years, which clearly is a follow-on from the crisis we faced during Covid. I will be pleased this afternoon to place a statutory instrument before this House to raise the national living wage and the minimum wage by a substantial 9.7%. All these things will help, but I am always aware that we must do all we can to support that important and vital sector.

[The Earl of Clancarty (CB)]

My Lords, I think the Minister mentioned hospitality work. Freelance work has been a long-term and growing aspect of the economy, with 1.77 million freelancers contributing £125 billion to the economy. What attention are the Government going to give to those insecure workers’ rights?

[Lord Johnson of Lainston (Con)]

I thank the noble Earl for that point. Hospitality has been an important focus for this Government, which is why we are introducing the Employment (Allocation of Tips) Bill, an important measure to ensure that, when you tip, the money actually goes to the service staff who have supported you. To my surprise, and probably that of many other Members of this House, in many instances it did not. These are the sort of Acts we absolutely need to focus on, and I am always delighted to have further conversations about how we can do more to protect this vital sector.

[Baroness O’Grady of Upper Holloway (Lab)]

My Lords, the employment Bill that was promised back in 2019 has been promised time and again; in fact, on 20 different occasions we have been promised a comprehensive Bill that would deal with workers’ real concerns. Millions of workers in this country are on zero-hours contracts, false self-employment or other forms of temporary work, or stuck in low-paid employment, and now with the prospect of real fears and concerns about what will happen to their rights. Can the Minister explain why there has apparently not been time to bring forward a Bill that would give workers much-needed and urgent protection on everything from TUPE to sexual harassment to insecure contracts, yet the Government have found time to bring forward two red-rated Bills, on retained EU law and strikes, that will make it harder for workers to stand up for their rights?

[Lord Johnson of Lainston (Con)]

I enjoyed that question because it bites into my time for answering questions, so I thank the noble Baroness. It is very relevant to realise that this Government have invested a huge amount of time in focusing exactly on this, and I would like to go through a few quick points. Apart from increasing pay by raising minimum wage levels, we have extended the ban on exclusivity clauses, which is vital for allowing flexibility in the workforce; we have introduced legislation to ensure that an equivalent to the minimum wage is paid to thousands of seafarers, who are in a sector that is very important to this country and needs protecting; we have closed loopholes that allowed agency workers to be employed on cheaper rates than permanent workers; and we have quadrupled the maximum fines for employers who treat their workers badly. I have mentioned the list of employment legislation that we are bringing in, and we continue to try to do more. If you look at it in the round, better than having one huge, complicated piece of legislation is getting these measures through in their own way and actually making a difference to the workers in this country. That is how I would prefer it.

[Baroness Blackwood of North Oxford (Con)]

My Lords, the disability work gap remains stubbornly wide. Can the Minister update the House on the workforce review being conducted by the DWP, which is examining proposals for subsidies for occupational health services that could close that gap?

[Lord Johnson of Lainston (Con)]

I am grateful to my noble friend for that question. I am afraid this is not my department, but I would be delighted to come back to her with a Written Answer.

[Lord Leong (Lab)]

My Lords, both the Minister and I founded and ran our own businesses before coming to this place. I hope he will agree not just with me but with many business leaders and trade unionists, such as my noble friend Lord Woodley, that decent working conditions for employees’ security, health and well-being directly lead to improvements in productivity. Will he remind his government colleagues that a surefire way to make UK plc more productive would be to enshrine the highest standards of workers’ rights in legislation and not to seek to weaken or remove them through the Retained EU Law (Revocation and Reform) Bill or the Strikes (Minimum Service Levels) Bill going through both Houses?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for that point and for the extraordinarily high level of collaboration we engaged in last week when we were doing exactly this: bringing in protections for workers—in this case, the Carer’s Leave Bill, which will allow carers the flexibility to have a much-needed one week of unpaid leave. Ultimately, the best way to strengthen the workforce in this country and to enable businesses to give pay rises is to encourage the sorts of policies this Conservative Administration have brought into play, which have resulted in nearly 4 million new people in work, the average and minimum wages going up by over £8,000 and—

[Noble Lords]

Oh!

[Lord Johnson of Lainston (Con)]

This is important, because if you do not have a strong economy, you cannot deliver the sorts of benefits this country needs and the strength of pay, which is the most important thing in a proper workforce.

[Lord Balfe (Con)]

My Lords, I am sure the catalogue the Minister read out is welcome to many people. I was here last Friday when we brought some of those laws forward, but the fact of the matter is that the wealth generators of this country who go to work every day feel that the Government do not particularly see them as colleagues. May I ask the Minister to do his best to get the social partners back together again and, in particular, to meet with the TUC and other people who want to improve the benefits and productivity of this country so we can all work together as a team?

[Lord Johnson of Lainston (Con)]

I thank my noble friend for raising that point. It is important that we work collaboratively, and my department does meet regularly with the unions in terms of trade advisory groups. We will continue to do so, and to collaborate to ensure that we have the best framework for employment, employment rights and business in this country.

Carer’s Leave Bill

Lord Johnson of Lainston Excerpts

Friday 3rd March 2023 Lords Chamber

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

I thank the noble Lord, Lord Fox, for introducing this debate. It was a highly eloquent, extremely thoughtful, very technical and, frankly, quite moving introduction to what I think we all agree is a most essential Bill. I also thank Wendy Chamberlain for initiating this process in the other place and the noble Baroness, Lady Pitkeathley, who clearly has been an inspiration to many in this House. She is an inspiration to me and has helped drive this agenda for many years. I hope that the noble Baroness feels a sense of satisfaction as she sits here participating in this debate, where we can now as a group “do something about it”, as they say. I personally appreciate the enormous support the noble Baroness has given to this process.

I would like to cover three specific areas in terms of why the Government are so keen to support the Bill. First, this is good for business. I believe that the noble Baroness, Lady Blake, covered this from her expertise in her trade and economy role. Many other noble Lords also focused on this important point. We cannot afford for so many individuals to leave the workforce if we can possibly avoid it. I will talk about the moral case for that in a moment, but purely commercially, it does not make sense. It is an economic disaster that people are forced to leave employment in order to care. The figure quoted, of £2.9 billion, seems to me to understate the cost to the economy of this situation. Coming at this from a relatively dry economic standpoint, as someone who is not a proponent, fundamentally, of excessive regulation or additional burdens on businesses, I believe this is absolutely the opposite. It is an essential lubrication to the opportunity for businesses to prosper and for more people to come back into the workforce. As the noble Baroness, Lady Pitkeathley, wisely said, it will allow us to raise the profile of carers. It will allow people to better understand the business case for being able to combine work and caring. It will also help businesses understand the importance of retaining their staff and engendering good relations with their employees. I am absolutely convinced, as are the Government, that the business case for this Bill is paramount and incontrovertible.

Secondly, the Bill reflects the relevant role that carers play in our society. I was appalled to hear of some of the costs that the noble Baroness, Lady Pitkeathley, mentioned, of between £10,000 and £20,000, the well-established losses to pension contributions, and the poverty levels in which many carers find themselves on account of having to give up work to do the right thing.

The right reverend Prelate the Bishop of Leicester raised a number of issues which have confluence with these points. I have not read the report of the Archbishops’ Commission on Reimagining Care. I would be grateful if he would be kind enough to make a copy available to me, and I will certainly invest some time in it.

Other noble Lords raised the issue of the economic cost to carers, including the noble Baronesses, Lady Blake and Lady Tyler. The noble Baroness, Lady Tyler, had to hide her caring responsibilities from her employer. My noble friend Lord Young asked whether employers are obliged to keep a register of carers in their companies. They will be obliged to record people who say they are carers—clearly the process to obtain the unpaid leave will necessitate that type of information—but they are not obliged to undertake a survey of their staff. I do not believe it is a requirement for registration when you join a firm. I think this initial stage is probably satisfactory, but it is certainly something that should be kept under review.

We hope this legislation will start to change the attitudes of businesses and individuals so that we can be proud to be carers, and businesses can be proud to have carers in their businesses and to support them in an appropriate way, as they would those in other occupations, such as the Territorial Army or whatever it may be, who have important work to do and whom they want to retain. This is a very relevant incentive—not that I am comparing those two roles, but I hope noble Lords understand what I am trying to imply.

The noble Baroness, Lady Uddin, made important points that I would like to address relating to making sure that the profile and value of carers is appropriately raised. Their importance to society must not be understated. For me, this Government and, I am sure, all of us in this House, it is better that we have an effective voluntary care system for dependants from loved ones, friends, neighbours and relations as a principle in how we structure our society and community. We believe firmly in that, so any measures that enable this type of society—a society of people bound together through love—is more powerful than any state support that could be provided to an individual, so I emphasise to the noble Baroness, Lady Uddin, my support for her remarks.

I am also very aware of the noble Baroness’s comments around signposting entitlements to carers. It is important that we have a variety of different signpost mechanisms. They are, on the whole, the traditional mechanisms of websites, through ACAS and the tribunal system and similar government information portals, but I am not unaware of the need to raise the profile of this principle. I hope that debates such as this and the work of noble Lords will ensure we can continue to do this.

I am also aware of the issue around minority information portals. The Government are very committed to ensuring that all language communities are fully covered, but if there is anything that I can do personally to magnify this situation to any specific community, I would be keen to hear. This is ongoing work. I am sure all input will be well received. I believe the noble Baroness, Lady Uddin, asked me to write to her with specific details. I will be delighted to do so, and that may instigate further debate.

I hope I have covered everyone’s specific points. I express my gratitude to all sides of the House for the moving and powerful way that we have come together to very clearly put all our support behind something that is very straightforward, easy to administer, essential for our economy, right for the moral fibre of our nation in terms of keeping carers in work, and will benefit society fundamentally in the long term as well as raising the profile of this issue so that we can be proud to be carers and workers.

I turn now to some of the specifics that it would be useful to have on record. The Bill will create a highly flexible new leave right with low administration requirements. It will be available from the first day of employment, so people will be able to take their one-week entitlement in blocks as small as half a day or, indeed, for the full week. Both “dependant” and “long-term care need” are defined in the Bill, as has been raised. This is important, and these definitions are very broad, as has been welcomed. This ensures that leave is available for the widest possible range of long-term caring scenarios.

The Bill also keeps the administration process as light as possible. It is our intention that the associated regulations will state that an employer cannot demand that an employee present documentation in support of a leave request. I think we all agree that that is a relevant point. It is not for people to justify their actions; that raises even higher hurdles and barriers around the situation we are discussing. This helps the employee, who may not wish to divulge details of the health and well-being of their relative or friend. It also helps the employer, frankly, as it will relieve them of the responsibility of storing and managing that data effectively.

In conclusion, the Government are pleased to support this Private Member’s Bill and deliver our manifesto commitment. I thank again the noble Lord, Lord Fox, for bringing the Bill before us today, and the noble Baroness, Lady Pitkeathley, for her endeavour and her journey to where we stand now. I thank all noble Lords who have participated in the debate. Many have spoken passionately about their personal experience of caring for loved ones. I hope that in future, for many unpaid carers, this new leave right will make it that little bit easier to balance their work and caring commitments, and that their lives will be a little bit better for that. This is why I want to see the Bill succeed. We have an opportunity here today to make a real difference to the lives of those who seek to rely upon carer’s leave in the future.

Protection from Redundancy (Pregnancy and Family Leave) Bill

Lord Johnson of Lainston Excerpts

2nd reading
Friday 3rd March 2023 Lords Chamber

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

Hear, hear. I congratulate the noble Lord, Lord Leong, on a fabulous first outing at the Dispatch Box. I believe that he was in the same cohort as myself in October last year. Like him, I feel like a troop in some war film; I arrived as a fresh recruit and a musket was thrust into my hand, and I was pushed forward to the front line. I thought that he acquitted himself beautifully, and I look forward to many hours debating with him over the next few years. This is a subject that is clearly extremely dear to both our hearts. I really do feel deeply moved by the words I have heard during this debate. I thank the noble Baroness, Lady Bertin, for introducing the Bill today and for her comments and technical coverage, which were extremely useful. It is an honour for me, as a father, to confirm this Government’s ongoing support for this absolutely essential Bill. I also pay tribute to Dan Jarvis for initiating the process that led to us being able to be here at this moment debating such an important and clearly right topic.

Pregnancy and maternity discrimination has been a cause for concern for some time, as has been raised by noble Lords today. The noble Baroness highlighted the research which showed that 54,000 women are forced out of work a year; that was also echoed by the noble Lord, Lord Browne. The noble Lord, Lord Fox, commented that 54,000 women were not returning to work after maternity, but I am sure he misquoted this point. I am only emphasising it because of the important fact that, actually, these are women coming back after maternity who are being forced out of work. It is not of their choosing. This is on top of mothers who are coming back to work and feeling pressured to leave the workforce. It is a separate point and an enormous number. These figures are absolutely shocking. In 2017, the Women and Equalities Select Committee undertook an inquiry into pregnancy and maternity discrimination. Its headline conclusion was that

“pregnant women and mothers report more discrimination and poor treatment at work now than they did a decade ago.”

We would like to think that we have a progression in our society, in terms of respect for and understanding the vitality of motherhood in our workplaces. It is tragic to discover that, according to this evidence, it is not the case. It is absolutely right that this Government are taking forward these moves in supporting this Private Member’s Bill.

I will cover some of the comments made by the noble Lords, Lord Browne and Lord Fox, based around the systems of other countries. I too investigated what other countries do with interest. We should aim for the very best policies that we can to encourage these sentiments and activities. However, given where and how the German and Swedish systems operate, I think the processes and proposals here go a long way towards achieving our ambitions, as noble Lords were right to say. As is often the case in legislation, this is a journey. I hope the noble Lord, Lord Fox, will agree that it is essential that we put this in place now so these measures can be built on. I believe there are sentiment or cultural changes that will come from further legislation. I support this as a result while paying attention to, investigating and noting what other countries aspire to so that we may also aspire to those levels.

I will turn to some of the other points. In January 2019, the Government consulted on extending redundancy protection for women and new parents. We received 643 responses, which is a considerably high number for these sorts of consultations. The majority strongly agreed or agreed—and this refers to the question of whether or not we are going far enough—that six months would be an appropriate period of “return to work” for redundancy protection purposes, and that protection should be extended to parents who have taken adoption leave and shared parental leave. This shows we have struck a very sensible and appropriate approach. The noble Baroness, Lady Bertin, raised an important point about the entitlement period—if I have the phrase right. This will be covered in the consultation process which will follow the Bill. That is important, as is right that there is a threshold limit for some elements of shared parental leave. That would only be fair and proper and, given our direction of travel, would fit in well. I stress to this House that these are major steps in ensuring that parents can return to work and be protected. That is what this is about.

I stress that in November 2019 the Conservative manifesto—we were discussing manifestos earlier and the noble Lord, Lord Leong, mentioned his party’s manifesto going forward, so I would like to look at our party manifesto historically—made a commitment on redundancy protection.

Questions have been raised about an employment Bill and why we are doing this now. There are no plans, as far as I am aware, to bring in an employment Bill. That is why it is all the more important that the Bills that we are discussing today are enacted, since they form an important component of how we wish to run our employment legislation. In 2019 the Government published a consultation on this issue and announced steps to bring forward legislation to implement these changes. We are pleased to support this Private Member’s Bill, because it delivers stronger redundancy protections for pregnant women and those returning from parental leave.

I am also extremely pleased at the degree of cross-party co-operation and support in the other place. It is a testament to the strength of our system that we can work across parties, put aside our rivalries and deliver change which will make a real and positive impact on people’s lives. However, I would not like the noble Lord, Lord Leong, to think that every debate with me will be so amicable as to either begin or end with a group hug.

There are a few technical details before to I come to a conclusion. As set out by my noble friend Lady Bertin, the Bill will give the Secretary of State the power through regulations to extend the MAPLE protection into pregnancy and for a period following the birth of a child covering the return to work period. The existing redundancy protection that applies when a parent is taking relevant leave will remain unchanged. The result will be that redundancy protection will apply consistently from the point when a woman tells her employer she is pregnant all the way through to 18 months after the child is born.

I am very aware, as I am sure noble Lords are, that businesses have to accommodate these important changes. We think it is essential for the way we wish to structure and construct our society. We also believe it is essential in order to have a sustainable workforce that we bring these measures to bear. However, it is not the Government’s intention needlessly to burden businesses with excessive regulatory burdens. I think we would agree with that, since they power our economy. This Private Member’s Bill does one thing which I think is very important: it makes it much simpler for businesses. Maternity legislation can be complex, and by having a very simple timeframe, as I have just described, redundancy protection will apply consistently from the point a woman tells her employer she is pregnant all the way through to 18 months after the child is born: it is clear for everyone to understand. I think that is very important indeed. I hope that businesses see this as a clarification rather than a confusion, and I know that the general public will be pleased to see the simplicity and clarity of this approach.

I am also pleased to reassure this House that the powers in this Bill as far as possible mirror the provisions relating to the existing MAPLE regulation 1999. I believe we had confirmation of that yesterday or the day before, when the Delegated Powers and Regulatory Reform Committee published its report stating simply that there was nothing in the Bill to which it wished to draw the attention of the House. I hope this is ample reassurance for noble Lords.

To conclude, these measures will provide valuable support and protection for pregnant women and parents after parental leave. The Government are pleased to support this Private Member’s Bill and to deliver our manifesto commitment. Supporting this Bill is in line with our ongoing commitment to supporting workers, working mothers and parents and building a high-skilled, highly productive, high-wage and fair economy. I believe it is simple for business, and I believe it is absolutely the right thing to do on our journey to building a better society. I look forward to continuing to work with my noble friend Lady Bertin as the Bill progresses through the House.

Employment (Allocation of Tips) Bill

Lord Johnson of Lainston Excerpts

2nd reading
Friday 3rd March 2023 Lords Chamber

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

I thank the noble Baroness, Lady Chapman, very much indeed—she could always give me a tip for the work we are doing today, but I do not expect one. I pay tribute to my noble friend Lord Robathan for bringing this Bill forward, and I also make special mention of Dean Russell, the honourable Member for Watford, for the tireless work he engaged in to make sure that after a long period, this very important matter is now placed before this House.

It comes down to a simple matter of fairness. As customers, we were all surprised by this, and I was certainly surprised to discover that the tip I gave when I went to get my family pizza was not going to the staff—the people in the restaurant who were expecting it, and whom I was expecting to pay. For me, this is as much a matter of accurate description, to ensure that what people are saying is happening actually is. At the end of the day, this Government are committed to fairness and ensuring that employees get the right rewards that it is expected they will receive. I am delighted to take this Bill forward today.

I will go through some of the points that were raised. I covered the point made by the noble Lord, Lord Browne, in that now absolutely is the time. Looking back over the last few years, we were disturbed by the Covid crisis, but the initial voluntary scheme simply did not work, which was a pity. In my experience, the majority of restaurateurs are good, honest hardworking people, and it is important to highlight that running a restaurant is not a straightforward business, particularly for small restaurants. Restaurants and pubs are important to our community, and it is important that we support them and do not impose onerous legislation on them. But unfortunately, because the voluntary code of practice was not a success—and that had to be borne out in time—we were obliged to go into a consultation, and here we are. There is no looking back from this point, but it has taken a while for good reason.

Regarding the contribution of the noble Lord, Lord Mitchell, I do not know whether Your Father’s Moustache is still in existence, but it sounds like he was earning more then—adjusted for inflation—than he might be being paid to attend the House today. I must therefore question his business acumen, quite apart from his patriotism.

I will cover some of the important points that have been raised, first, on agency workers. At the core of the Bill, the honourable Member for Watford and other officials have been trying to work out how to make this fair. It is considered in principle fair to pay temporary staff in a place of hospitality for the work they do. It would seem appropriate that, if someone works for a period in a restaurant or pub, they be rewarded with a share of the tips, commensurate with their input. Having said that, there have been comments—such as those of the noble Lord, Lord Mitchell—about additional pay for agency workers as opposed to full-time workers, who may be more committed to an establishment. This matter will be covered in the consultation and will be included in the guidance issued by the Secretary of State, which will eventually appear in the code of practice. It is not necessarily straightforward, and it is important that practices already in place in establishments passing on the full quantity of tips be able to continue. I believe that they will be able to continue with smoothing out the fairness between agency workers paid at different rates and full-time staff who are paid at potentially lower rates for their full commitment to the establishment. This is a principles-based activity, based on what is fair, and the system should be designed to ensure a smoothing out of that, but it is certainly worth raising.

The Bill is quite specific that credit card charges may not be passed on to the employee—to clarify, they may not be deducted. We feel that is important because it creates a level playing field for all employers in making sure that there is no discrimination. We found that under the voluntary code various different charges were being levied—the so-called administration charges—from 2% up to 10%. The reason we believe the voluntary code was not working is precisely that employers were starting to impose fixed-cost charges on tips that we felt were not right to go to the employee, so we have not allowed for credit card charges. There may be other charges that need to be considered in the consultation, but they will come out during that discussion. However, that is an important principle that has been laid out and made clear.

Multisite operations have been mentioned. That topic has arisen quite a lot in these discussions. We have sympathy regarding the complexities. Again, let us return to the principle of fairness and what is right. A lot of this will come out in the consultation and will be developed into the code of practice, but the principle here is that the unit itself—the restaurant or pub—is the economic entity that will allocate the tips to the individuals working in that place of employment. The Bill is designed specifically to ensure that that is the case. It is not designed to allow large corporations to pool tips and allocate them accordingly. We are trying to draw a line between the gratuity or pourboire given by the customer to the person who has been serving them and those around them. That is an important point of principle. I am sure this will be discussed in the consultation period, but I want to make it clear that currently it is specifically to ensure that a single site is the recipient of the tip process and then that is distributed accordingly.

The noble Lord, Lord Shipley, raised the importance of the consultation process, as did my noble friend Lord Bourne and the noble Baroness, Lady Chapman, and of ensuring that it is widely publicised. We do not necessarily have the resources in this instance to embark upon a highly expensive publicity campaign but actually I do not think that will be necessary. If any noble Lords in this House have been involved in this process, they will have been contacted by large numbers of restaurateurs and recipients of tips to ensure that their views are clearly heard. This is an emotive subject that commands a lot of popular appeal. We will make every effort to ensure that the consultation is widely held and that people are aware of the opportunities to contribute to the consultation process in order to effect a strong code of practice.

On the point about publicity and how to project an establishment’s tip policy to clients, it is clearly stated in the legislation that it has to be available to the employee on day one when they arrive, it has to be clearly stated, and it must be available for clients as soon as we have developed the code of practice so that they can see, if they wish, what the tip practice is. There is currently no specification to put an extended tip policy on the receipt or whatever—I think that might be rather cumbersome—but it should certainly be available to the client. More important than a technical description of how every dollar is allocated among the staff is the knowledge that we are putting in place today, thanks to the good work of my colleagues, a fair system where clients and customers who tip staff know that all that money is going to the deserving workforce who have created the environment and given the service that has been received.

The noble Baroness, Lady Deech, made a series of extremely thoughtful points. I too have enjoyed the concept of a troncmaster, which is a phrase that has only recently come into my vocabulary. That is a very practical way of delivering fairness among employees. In the work that I have done, I have been struck by how straightforward and sensible this system is, and we want to keep it sensible and straightforward. I emphasise that we are not trying to increase bureaucracy and burdens upon hard-working restaurateurs, innkeepers and pub owners. That is not what this is about. It is about fairness and making sure that the majority of restaurateurs who do the right thing are able to do so in a continuing fashion, and that the people who do not are made to.

The tronc system allows for an independent person, often someone associated with the restaurant—they might be its accountant or whatever, which is perfectly reasonable—to make sure that there is a fair allocation of tips. I understand that there are some troncmasters who franchise their operations so that there are multiple troncmasters, so there is a job there if the $60-a-day tip does not continue to come to the noble Lord, Lord Mitchell, in terms of making sure that there is a fair allocation. That seems to me to be an effective way of doing it. It was asked whether it was current and appropriate; we think so, and we have very much factored that into the legislation.

I do not want to go on too long but there was an important point about the monthly pay cycle. It is worth noting that in this House, when you go to one of the restaurants or eateries and you leave a gratuity, as I do—I hope I am known as a generous tipper—that money is accumulated over the year and then paid out in January to all the staff in the House of Lords. That includes the doorkeepers and the secretarial staff, though I am not sure whether it includes Hansard, the clerks and so on. The point is that this is more complicated than it seems. In the consultation we will work to ensure that fairness is the basis of this rather than procedure. The reason why we have the one-month payment cycle—that is, one month after money has been received—is to ensure that employers pay the staff on time for the work that they do when it comes to passing on tips from customers. That is absolutely right and it should be the core principle. Frankly, we should resist trying to find mechanisms and delays around that process, while at the same time understanding the importance of making sure that people who have systems that are fair can still operate, given the flexibility required.

I am grateful to my noble friend Lord Bourne for supporting a fast-track process. I do not think the House of Lords is necessarily known for its fast-track processes. I would not necessarily encourage any circumventing of our marvellous and ancient processes, but I agree that we should get on with it, and we are pleased to be doing so.

I thank the noble Baroness, Lady Chapman, for the comments that she made. I will say only that if she has a chance to engage with us, she will see that the code of practice will be detailed and there will be written policies. I do not believe we have suggested using ACAS as a process for managing organisations that do not pass tips on in full as they should; instead, it goes through the employment tribunal system. Whether that is run by ACAS I do not know, but we would certainly be delighted to engage on how the process should work. But we want to keep this quite light-touch. The last thing we want to see is employees having to go through complicated and cumbersome legal processes for something that should involve pretty immediate redress. If the noble Baroness has the opportunity to go through the legislation, she will see the detail that is there for relatively rapid redress processes.

To conclude, bringing forward these new regulations will protect millions of workers, among them many of the lowest paid across a wide variety of sectors, and give them an avenue to seek remedies. Consumers will rest assured that the tips they leave are going, as intended, to reward the good service and hard work of staff rather than lining the pockets of bosses. Additionally, those business that are already doing the right thing—passing on tips to workers in full without deductions—will be confident that they are not at risk of being undercut by their less reputable competitors, which is a very important point.

These new measures are backed by government evidence and analysis, with a full impact assessment of the measures having been published. Continued stakeholder engagement will ensure that we do not inadvertently disallow arrangements that are considered fair in some workplaces, as I have mentioned, meaning that we can continue to promote fairness for both businesses and their staff.

The Government are pleased to support these new measures and we are glad to see the level of support for them across the House. I have greatly appreciated that during today’s debate. All waiters and other restaurant staff will look to us, I hope, as a beacon of fairness as we bring this legislation into force. I look forward to continuing to work with my noble friend Lord Robathan to support the passage of the Bill.

Electric Cars: Export to EU

Lord Johnson of Lainston Excerpts

Thursday 2nd March 2023 Lords Chamber

[Lord Fox]

To ask His Majesty’s Government how they will ensure that electric cars built in the United Kingdom after 2024 meet the country-of-origin requirements, such that they can continue to be exported to the European Union tariff-free.

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

The modern rules of origin we negotiated with the EU underpin our unprecedented zero-tariff, zero-quota trade agreement. These rules were developed with industry to reflect the needs of UK electric vehicle manufacturing. We are aware of the supply chain challenges, also caused by external factors, including Russia’s war in Ukraine. This is why our officials are in constant dialogue with the sector to support it to access the maximum benefits of this agreement and other assistance.

[Lord Fox (LD)]

My Lords, I thank the Minister for his Answer. He did not say what his department is doing about the clause in the trade and co-operation agreement that kicks in at the end of this year—in 2024—where, if there is not 40% of local content in UK-manufactured electric vehicles, they will be subject to up to 22% tariffs when exporting to the EU, and that will have a knock-on effect on other free trade agreements. Will the Minister undertake specifically to go back to the European Union to look at that clause, because we will not be able to export electric vehicles from this country economically unless it is put on hold at the end of this year.

[Lord Johnson of Lainston (Con)]

I am very grateful to the noble Lord for raising this point, and I hope I answered his Question to some extent. It is very important that we invest in future vehicle manufacture in this country. In the papers I brought with me to this great House are lists of the enormous number of subsidies, grants, credits and other mechanisms of support to ensure that we can build here the electric vehicles and the batteries we need, homegrown in the United Kingdom, to ensure that we have almost 100% of content of these vehicles when we sell them—not just to the European Union but all around the world. It is important to mention the automotive transformation fund and how it has helped Stellantis and Nissan, both of which are successfully working on producing batteries following, crucially, a critical mineral supply deal with Indonesia which I personally signed one month ago. There is work to do, let us be under no illusion, but the Government are committed to it. Huge amounts of money and a great deal of resource, including the attention of His Majesty’s Government, have been committed to it.

[Lord Woodley (Lab)]

My Lords, I declare an interest as a former member of the Government’s Automotive Council UK, looking at investment in this important industry of ours. The Americans have set aside £102 billion to encourage inward investment in new technologies, including electrification of the whole of their car and automotive industry. There is no doubt, looking at what we are putting aside here, that we are barely in the game. There is £850 million set aside to entice and encourage people here, which sounds a lot of money, but it is not, compared to what other people are doing. Jaguar Land Rover has asked the Government for half a billion pounds for a mega battery factory in Somerset, as opposed to Spain. It is crucial for the long-term interest of our industry that we do not let this investment disappear from our shores, otherwise, my dear friends, there will be no industry in this country in 10 years’ time.

[Lord Johnson of Lainston (Con)]

I greatly thank the noble Lord for his intervention and for the important promotion of this industry. I say to anyone who is thinking of locating their business in Spain that Ferrovial announced yesterday that it is leaving Spain because it is one of the least hospitable environments in Europe to do business, whereas we know that Britain remains the top destination for doing business in Europe and the second most important destination for foreign direct investment in the world. It is important to remember and celebrate that last year we raised more money for technology and start-ups, which is precisely what we are talking about with the battery and EV industry, than France and Germany combined, more than China, and more than India. It is a testament to this Government’s efforts to ensure that we have the subsidies and support, including government support, to enable our citizenry—some of the best educated in the world—to take advantage of this. I take the point made by the noble Lord very seriously. We are doing a huge amount: the facts bear it out, the money is coming here and so is the industry.

[Lord Hannay of Chiswick (CB)]

My Lords, would the Minister perhaps be so kind as to answer the question that the noble Lord, Lord Fox, asked about the use of the machinery of the trade and co-operation agreement to take up with the European Union any difficulties that might arise through a change in circumstances described, because it is really important? With the presumably better climate that now exists for our dealings with the European Union, surely this is the time to raise the matter in the appropriate top-level committee of the TCA.

[Lord Johnson of Lainston (Con)]

We work with all our partners to ensure that trade with the European Union is as seamless and friction-free as possible, and I know that we all congratulate the Prime Minister on the resolution of the situation in Northern Ireland. I believe personally and passionately from my conversations over the last few days alone—including at a breakfast I attended with the Spanish Business Council—that this will allow a substantial number of the market access barriers, the other areas of friction, to be removed. This was demonstrated when we saw the reintroduction of discussions on the Horizon programme almost immediately following the announcement of the Windsor Framework, so I am very confident that a practical solution can be reached, but these are short-term measures. The reality is that we need to build our own capacity in this country, invest in it and support it, and that is exactly what we are doing.

[Lord Swire (Con)]

My Lords, is not the truth of the matter that unless we rapidly increase the back-up with electric vehicle charging in this country, there will be no electric cars going to the EU, or anywhere else for that matter, from this country? What confidence can my noble friend give to those who are considering switching to electric vehicles or already have them, because the infrastructure is lagging behind the demand, and if the Government seek to achieve their targets, they need to invest more within this country?

[Lord Johnson of Lainston (Con)]

My noble friend is clearly hoping to upgrade his car from his 23 year-old Range Rover. We are very aware of the need, as we are as individuals in this House, to ensure that the infrastructure is there. It takes time, it is very costly, there has been government investment, but he is absolutely right that further focus is required, and I am very happy to write to him on the specifics, because it is important that everything fits together.

[Lord Bassam of Brighton (Lab)]

My Lords, it is all well and good the Minister telling us all this, but a new report from the Energy & Climate Intelligence Unit warns that UK motorists could miss out on £9 billion-worth of savings on electric vehicles due to the shrunken second-hand car market, which could be as many as 2.1 million vehicles smaller by 2033, if the Government continue to fail to boost EV take-up. This will be bad for drivers, bad for the country and bad for the environment, with low-income drivers forced to continue running petrol cars. What positive steps will the Government now take to buck this trend and ensure a viable second-hand car market for EV vehicles?

[Lord Johnson of Lainston (Con)]

It strikes me that, if you want to have a second-hand car market in EVs in this country, you need to build more new EVs in the first place. That is why we are investing heavily in making sure both that we have the facilities and capacity to procure critical minerals to enable us to make batteries, which are the core component in such cars, and that we have the partners in this country to develop the battery technology. We are not simply looking at manufacturing; we are also investing heavily in the R&D around battery design. Our real strength and core defence against the future are our brains. The investment that we have made in concepts, such as our investment of more than £500 million in the Faraday Institution in Coventry, is a good representation of the work that we are trying to do. This does not happen overnight. It is truly a national endeavour. I hope that the noble Lord is reassured that the Government’s focus is on this incredibly important and topical subject.

[Baroness Randerson (LD)]

My Lords, there was news this week that the failed Britishvolt company has been bought by a newly established company based abroad and that the site will not be used as intended to create a much-needed gigafactory to supply manufacturers of electric vehicles. Can the Minister clarify how the new plans fit into the Government’s priorities for the industry? What funding has already been given to this project? Are there plans to give it any further funding?

[Lord Johnson of Lainston (Con)]

This is an ongoing commercial issue so it would not be appropriate for me to comment on some of the specific points that the noble Baroness makes. However, we did support Britishvolt originally—I am happy to write to her with the specific numbers—as we have supported all battery endeavours in this country. It is the right thing to do. These are new technologies and companies. They are being created by entrepreneurs taking significant risk; we should celebrate that. It is not a straight line, however. We must be prepared for disruption in this market; there will be volatility. The important thing is that the Government stand behind this industry. We want a car industry in this country that builds high-quality electric vehicles with batteries made here, to sell to the rest of the world and take advantage of our post-Brexit vision for Britain.

Subsidy Control (Information-Gathering Powers) (Modification) Regulations 2022

Lord Johnson of Lainston Excerpts

Monday 20th February 2023 Lords Chamber

[Lord Fox (LD)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Dodds, and the noble Baroness, Lady Blake, who, alongside the noble Lord, Lord Coaker, and my noble friend Lady Randerson, have the scars of the Subsidy Control Bill on our backs. We all worked on its passage, and my noble friend Lady Randerson also worked on the United Kingdom Internal Market Bill, to which she referred.

The wheels of ministerial responsibility have turned, and we have a different Minister answering some of the questions which, as my noble friend pointed out, were previously raised. I am grateful to the noble Lord, Lord Dodds, for raising Northern Ireland, because the ambiguity of the Northern Ireland regime was something we discussed many times with the Minister’s predecessor. That issue was never properly resolved from the Dispatch Box; perhaps a new Minister can provide some more clarity.

It is difficult to look at this, having been through the passage of the Subsidy Control Act, and feel that the Government were operating in good faith during that process. This is exactly what we said would happen, and it was essentially denied from the Dispatch Box, so here we are. I would dispute a little with the noble Baroness, Lady Blake: I do not think this is the thin end of the wedge. We have seen the thin end, and we are moving up the wedge as far as the Government’s attitude towards the devolved Administrations and devolved power is concerned. This is just another example, and it clearly shows that the Conservative model for taking back power is to remove power from the devolved Administrations, as well as assuming power from Brussels.

My noble friend pointed out that this comes at that difficult nexus between devolved and reserved powers. That is what the common frameworks process was established to deal with. Can the Minister tell your Lordships’ House why the common frameworks process was not considered the right way to resolve this issue, which, as my noble friend rightly said, sits on the border between devolved and reserved issues? That is exactly the reason why the common frameworks were put in place.

My noble friend illustrated the non-political system that was practised between the EU and the devolved Administrations. There were strict legalistic rules which set up how the money was distributed. But now, all the evidence suggests that His Majesty’s Government are departing from what I would call a legalistic framework and working to political grace and favour. Political allocation of subsidies is clearly what is happening. We only have to look at what has happened to date. Under the cover of bidding processes, money is being allocated where it suits this Government best for their electoral prospects. This is a big departure from the legalistic approach the European Union established. We could set that aside and say that this is clumsy, which it is. We could perhaps understand if the Government rushed into this in haste without proper consultation with the devolved Administrations. I would like to think that was true. It would be easier to illustrate that if the Minister could tell us whether the CMA requested these powers, why it requested them and when.

It is clear that this has again upset the relationship with the Welsh Government and, I am sure, with the other devolved Administrations, as we heard from the noble Lord, Lord Dodds. Why are the Government being so clumsy on this? What, in the long run, are they seeking by cutting themselves off from the information supply? The noble Baroness, Lady Blake, said that the Government are cutting themselves off from valuable information which should be available. I can only take the gloomy view of this. This instrument makes the process of what I will call “subsidy gerrymandering” easier. For that reason, we find it unacceptable.

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

I thank the noble Baroness, Lady Randerson, for tabling this Motion and the noble Lords, Lord Dodds and Lord Fox, and the noble Baroness, Lady Blake, for their incredibly valuable contributions. I am also well aware of the nature of this debate and how it relates to devolution and the important sense of respect between the UK Government, the devolved Administrations and public authorities. I stress my own personal sensitivity to this matter. I note the comment of the noble Baroness, Lady Blake, about the timeliness of the responses sought by devolved Administrations; I will ensure that I relay that to my colleagues. I also want to stress the importance we place on interlocution with the Welsh Government.

This is a technical debate. The specific matter of the subsidy advice unit, which I am going to cover this evening, involves a number of technical aspects. I am extremely comfortable with having further conversations with any noble Lords about any of the specifics we are discussing, as I did over the weekend with the noble Baroness, Lady Randerson.

The noble Lord, Lord Dodds, mentioned consultations relating to article 10 and the subsidy advice unit, and I am happy to provide the noble Lord with a fuller answer on that. It would not cover subsidies that would come under the EU state aid rules because clearly, the subsidy advice unit is for UK-based subsidies. There are some services it will be relevant for, which I am happy to talk about in further detail later.

I also reassure the noble Baroness and other contributors to this very important debate that in this instance there is no lack of respect. There has been no abdication by central government of responsibilities and duties to devolved nations. We are not shutting ourselves away, as may have been suggested. This is not a forerunner of a roll-back of devolution. It is not a power grab, as has been mentioned. I would not suggest that, relating to this specific issue, this is even the tip of the thinnest end of the wedge; I do not think the wedge comes into it. Hopefully, I will now explain why.

The measures contained in this and various other pieces of legislation relating to it actually give devolved nations more flexibility—as has been said by the noble Baroness—to design their subsidies so that they can rightly ensure that all such support is directed to local priorities, better serving their citizens and enabling, frankly, a far better series of targeted outcomes. This is, if noble Lords will allow me a reference, what we talk about when we use the phrase “Brexit dividend”.

--- Later in debate ---

[Lord Fox (LD)]

Before moving off the point, to take what the Minister has said, I still do not quite understand why, if the CMA still had to consult the devolved Administrations in the way that it would have to without this measure, how that consultation would stop it doing anything that the Minister has just described that it will be doing. In other words, what is the purpose of removing that obligation to consult?

[Lord Johnson of Lainston (Con)]

There are a number of useful procedural and technical reasons for doing that. The point is that the Subsidy Advice Unit is exactly that; it is an advisory unit which the devolved Administrations or local authorities will call in themselves in order to review whether their subsidies conform to our international agreements. There are some specific areas where these might be reviewed—I think that if it is above £5 million, that would automatically trigger some of them to review—but these are reserved powers and this relates to an advisory unit, so this is effectively tidying up the process. That allows the Secretary of State to have more control over the framework. I think we agree that setting levels of fines for non-provision of information, which is very important; it would not be helpful if devolved nations or local authorities were not providing the information we need in order to ensure that we are running an effective subsidy regime, and to ensure that each of the other devolved nations were able to view what each of the others were up to. Therefore it is absolutely right that the Secretary of State can set those rates, and it would not be appropriate for that to go to consultation, because it is a reserved matter and specifically relates back to the devolved nations. I hope I have explained myself; I am very happy to have further meetings on this at a later date. I have a few more comments to make, and then I will come to the end.

It is important to note that the Government have engaged regularly with the devolved Administrations on the design of a UK-wide subsidy control regime. Clearly, the whole point is to make this regime a positive factor of the post-Brexit vision of Britain. This is both at official and ministerial level, including through a regular policy forum. It is in all our interests to ensure that the regime works for the whole of the UK and enables the UK’s domestic markets to function properly. I note that as part of its outreach programme for public authorities, the Department for Business and Trade delivered in-person events in Belfast, Cardiff and Glasgow, and dedicated online sessions for public authorities in Wales and Northern Ireland. The series, attended by 1,500 people in total, also helped build awareness and understanding of the new regime among public authorities.

Therefore, while it is right and proper for debates in this House and for legislation to reflect important points of principle, such as the difference between reserved and devolved competencies, I hope noble Lords will be reassured that the actual delivery of specific polices, such as the administration of the UK’s subsidy control regime, is much more practical and pragmatic in nature. The Subsidy Advice Unit and Department for Business and Trade have had a productive and positive working relationship with counterparts in the devolved Administrations throughout the development of the new subsidy control regime. His Majesty’s Government are absolutely committed to maintaining that working relationship and looking for further opportunities to collaborate with devolved Administrations as we look to the future of the regime as well. We are not trying to make enemies of friends. For those reasons, I ask the noble Baroness to withdraw her Motion.

[Baroness Randerson (LD)]

I thank the Minister for his response and thank all noble Lords who have taken part in this short debate. In particular, I thank the noble Lord, Lord Dodds. With the many months that have passed without the Northern Ireland Assembly, we here speak only too infrequently of Northern Ireland in terms of devolution. It is important that we very much keep the situation at the front of our minds, because it is very complex.

I remind the Minister that I was in the Wales Office for three years and that I have spoken here on Northern Ireland as well. I know that consultations and relationships with the devolved Administrations need time, hard work, patience and respect, and I am pleased that he repeated the importance of respect. However, I also know that it helps to have a formal structure for consultation; that makes certain that corners are not cut. The error in the Explanatory Memorandum exemplifies that this is the sort of situation which would not have occurred if there had been proper consultation on the long-term implications, as there should be on this. The important thing here is not whether the SAU is advisory but the fact that the process overall, including the role of the Secretary of State, includes penalties for non-compliance for information gathering. When a penalty is involved, there are bound to be concerns about a lack of consultation. If this had been properly flagged up during the passage of the Bill, there would almost certainly be far weaker grounds for objection by the devolved Administrations. In effect, this is an SI to amend primary legislation, which is why they are concerned.

I repeat the meaning of the final words of my opening speech: how can a system established to cater for local needs seek to do so by centralising decision-making and ruling out consultation? If it is going to be sensitive to local needs, it should increase consultation. I will look very closely at the Minister’s detailed response, for which I thank him. I do not intend to push this to a vote, but I think it will be of interest to the devolved Administrations and to noble Lords across this House who are interested in devolution. I beg leave to withdraw my Motion.