Fire and Rehire

Lord Lennie Excerpts

Wednesday 15th June 2022 Lords Chamber

[Lord Callanan (Con)]

The difference is very clear. What P&O did is potentially illegal. Investigations into both criminal and civil wrongdoings are ongoing, so I cannot comment on those particular investigations, but if trade unions are considering holding the travelling public to ransom, as many of them are, then it is right that we should look at all available options, and we will do so.

[Lord Lennie (Lab)]

My Lords, British Airways, Accenture, and the DP World-owned P&O Ferries—significant players in the UK economy—have all used fire and rehire to replace their workforce. They have faced down government criticism and the public’s disdain. For this to change, legislation is required to outlaw this practice. Will the Government take a lead by bringing forward a definitive code of practice that bans fire and rehire? Further, will the Government commit now to ensuring that companies found to have been using fire and rehire will neither be awarded contracts for any public body nor be allowed to take over provision of public services?

[Lord Callanan (Con)]

I said that we are committed to bringing forward a code and we will consult on it shortly, but as I said in response to the noble Lord, Lord Woodley, it is a complicated area of industrial relations and employment law. I assume that even the Labour Party would accept that we cannot ban redundancy if a company is going bankrupt. Therefore, by banning fire and rehire we would end up banning the rehiring part of it, which I am sure nobody wants to see.

Fuel Poverty

Lord Lennie Excerpts

Monday 13th June 2022 Lords Chamber

[Lord Lennie (Lab)]

My Lords, the government figures are out of date. The chairman of NEA is right: 6.2 million households is nearer the figure than the 3.2 million that the Minister referred to. The pressures of doubling fuel prices on top of this trend will continue to worry householders across the country. In 2015, the Government estimated it would take until 2030—another eight years from now—to end fuel poverty, but on current figures it will take more than 60 years. What new measures are the Government proposing to ensure they get back on track to meet their original deadline of zero fuel poverty by 2030?

[Lord Callanan (Con)]

The figures that the noble Lord quotes are, of course, using different metrics. There is a big debate about which is the appropriate metric to use, but we can all accept, whatever metric we use, that this a very difficult time and people are suffering. The best route to end fuel poverty is through energy-efficiency measures, and that is why we are spending £6.6 billion this year in precisely targeting energy-efficiency measures—home improvements, retrofits—towards those in society on the lowest incomes, but of course we will need to do more.

Pollution Prevention and Control (Fees) (Miscellaneous Amendments) Regulations 2022

Lord Lennie Excerpts

Monday 23rd May 2022 Grand Committee

[Lord Redesdale (LD)]

My Lords, I will speak to the regulations very briefly. This is one of the briefest SIs I have ever had to speak to, and it seems utterly bizarre that we are having this discussion about a very minor matter. This is an area I have interest in because I was on the Science and Technology Committee in 1996, looking at the decommissioning of oil and gas rigs. I even went out to one of the rigs at the time.

I want to raise two questions. When we conducted the original committee report and it was debated, it was assumed that metal pipework that was to be laid would be left in the ground and forgotten about. I declare my interest as chairman of the UK Metals Expo. I went to an interesting presentation on the value of the metal in the pipework in the North Sea. Of course, if it has value it is quite likely to be dredged up again, but that will have environmental issues associated with it. Is this being taken into account by OPRED? Is the value of that metalwork being assessed?

The second question concerns the Government’s long-term views on removing large structures. The very large gas rigs still in place are surrounded by drilling offsets, which was a normal aspect, but of course a lot of oil and pollution is then tied up around the base of these structures. If they are to be removed from the seabed, there will be a great deal of localised pollution in that operation. Have the Government looked at a recent report? No report had been carried out on that issue at that point.

I will finish there because it is so brief a report. On that basis I actually read the whole report, and I was quite amused by a slight error in paragraph 8.1 of the Explanatory Memorandum.

[Lord Lennie (Lab)]

I thank the Minister for putting forward these proposals, which are, as we have heard, rather inconsequential and unremarkable. There is nothing I want to add by way of commentary, but I have a few questions.

First, as the noble Baroness, Lady McIntosh, asked, can the Minister explain why the fee for specialists has risen at the same time as the fee for non-specialists has fallen? If it is to do with numbers, can he explain the reason for this change in the balance between specialists and non-specialists?

Secondly, the fees received have remained the same as the previous average, £6.2 million. In the Government’s assessment, is this is likely to remain the case for the foreseeable future, bearing in mind what the noble Lord has said?

Thirdly, while I understand that no formal representations were made by the industry regarding OPRED’s plans, can the Minister say whether any informal opinions were given and whether the industry as a whole is satisfied by the proposals? I look forward to his response.

[Lord Callanan (Con)]

I thank noble Lords for their brief contributions to this debate, which reflect the relatively uncontroversial nature of the regulations. As I said in my introduction, the regulations will enable OPRED to recover its costs for the provision of regulatory services under the offshore oil and gas environmental legislative regime, as opposed to the alternative—those costs being borne by the taxpayer.

The annual fees income is, on average, £6.2 million, which represents around 65% of the cost of running OPRED’s environmental operations unit. The total running cost of around £10 million per year includes the cost of the office in Aberdeen and corporate support provided from London.

In terms of chargeable activities, OPRED considers the environmental implications of all offshore oil and gas operations before issuing permits and consents covering areas as diverse as seismic surveys, marine licences, oil pollution emergency plans, chemical permits, oil discharge permits and consents to locate permissions for offshore installations. OPRED reviews around 3,000 applications for permits and consents annually. In addition, there is a regular programme of monitoring and inspections to ensure compliance with environmental regulations.

As I said in my introduction, in line with the Treasury’s Managing Public Money guidance, OPRED does not charge for policy work—for example, the enacting of new or revisions to existing offshore environmental legislation—and nor is OPRED able to charge for enforcement activity, such as prosecutions. OPRED is proposing the fees regulations pursuant to a power that requires an affirmative procedure. This is because the changes allowing OPRED to recoup the costs for the provision of regulatory services are not alterations to reflect changes in the value of money.

Questions were asked by both my noble friend Lady McIntosh and the noble Lord, Lord Lennie, about what proportion of the workforce are specialists, compared with non-specialists. Both also asked for an explanation of the fee rise for specialists and the reasons for the change. The revisions to the hourly rates reflect changes to OPRED’s staffing levels and associated costs, plus corporate costs such as IT, accommodation, human resources and finance, which are allocated on a per-head basis. There are 53 staff who work in the offshore environmental unit, of whom 40 are environmental specialists and 13 are non-specialists. The reduction for non-specialists is largely due to a reduction in London corporate costs; the increase for specialists relates to an increase in the cost for advice from statutory nature conservation bodies.

The question from the noble Lord, Lord Redesdale, was nothing to do with these regulations, but I am happy to take it back to the department and send the noble Lord a reply in writing. As I said in my introduction, about 45% of the cost of running OPRED is currently recovered from the offshore hydrocarbons sector through these fees.

With the exception of the noble Lord, Lord Redesdale, to whom I will write, I hope I have answered the questions raised by noble Lords—the noble Lord, Lord Lennie, and my noble friend Lady McIntosh. Therefore, I commend the draft fees regulations to the Committee.

European Research Council

Lord Lennie Excerpts

Wednesday 27th April 2022 Lords Chamber

[Lord Callanan (Con)]

The Northern Ireland protocol is a completely separate agreement. It is different from the agreement that the EU signed. I am sorry, but we should not accept the EU’s excuses on this. The EU signed an agreement, and it should abide by it. I wish that noble Lords would sometimes be on the UK’s side rather than wanting to see fault in everything that we do. We should allocate the blame where it belongs.

[Lord Lennie (Lab)]

We should all live by the agreements that we sign. Should the European research grants be withdrawn from the UK-based researchers, have the Government sought or received any assurances that these grants will be restored once associate membership of the Horizon Europe programme is re-achieved?

[Lord Callanan (Con)]

The UK has provided a guarantee to all those researchers. If the ERC continues to say that they will not be eligible for grants, as long as the EU itself refuses to agree participation in the Horizon programme, then the Government have said that we will guarantee all those researchers’ grants.

International Energy Agency Report

Lord Lennie Excerpts

Tuesday 26th April 2022 Lords Chamber

[Lord Callanan (Con)]

We are seeking to end imports of Russian oil by the end of this year. We already have one of the fastest transition periods to electric vehicles in the western world; we will ban the sale of petrol and diesel cars by 2030. We are already rolling out more efficient vehicles, although we should be aware of the cost of these to many families at the moment.

[Lord Lennie (Lab)]

My Lords, the International Energy Agency report contains useful recommendations for citizens to use energy more efficiently and highlights the many benefits of doing so, but the Government do not seem to be leading by example. Why did the energy security strategy fail to deliver in this area and what steps will the Government take to ensure that sensible personal decisions are backed by them?

[Lord Callanan (Con)]

Of course, it was regrettable that we did not manage to include some more insulation measures within the energy security strategy, but the Government always back people to take responsible decisions, as I mentioned in my Answer to the noble Lord, Lord Rooker. We want to support people to make responsible choices, whether in heating their home, in travelling or in their personal circumstances.

Energy Storage Capacity

Lord Lennie Excerpts

Tuesday 5th April 2022 Lords Chamber

[Lord Callanan (Con)]

Indeed, I am aware of the excellent Dinorwig facility. I remember studying it when I was an engineering student many years ago and it is an incredible feat of engineering. The noble Lord can be reassured that the capacity market auction has already secured enough standby capacity market supplies, through to 2025-26. We are aware of the point about Dinorwig.

[Lord Lennie (Lab)]

My Lords, given that in the last year energy storage capacity increased to record levels, which is something the Government can be congratulated on, what are they doing to turn this into savings for hard-pressed consumers, who are already dealing with a cost of living crisis that is not of their making?

[Lord Callanan (Con)]

As I responded to my noble friend earlier, more storage is not the answer to high prices at the moment. It benefits the system in the longer term. Sadly, in energy policy, nothing happens in the near future and everything is long term. The noble Lord is aware of the £9.1 billion package of support that the Chancellor announced to try to mitigate the effect of high prices at the moment.

Electricity Supplier Payments (Amendment) Regulations 2022

Lord Lennie Excerpts

Monday 21st March 2022 Grand Committee

[Lord Oates (LD)]

My Lords, we on the Liberal Democrat Benches support these regulations so I will not take up too much of the Grand Committee’s time, but there are a number of questions which I hope the Minister will be able to address.

I fondly remember discussing these regulations—the previous, equivalent regulations—back on a cold afternoon last February. At that time, I asked the Minister why the review of the operation of the electricity market, which under Section 66 of the Energy Act 2013 is required after five years and so was due in 2018, had still not been completed and reported three years after it was due. The Minister said:

“We expect it to be laid in Parliament shortly.”—[Official Report, 23/2/21; col. 811.]


The Explanatory Memorandum accompanying these regulations says almost exactly the same the thing, stating that

“the findings for the review are expected to be laid in Parliament shortly.”

Can the Minister tell us what the Government’s definition of “shortly” is, and give us some reassurance that we will actually see the outcome of this review? Has it been completed? If it has, why has it not been laid yet? Had it been completed when we discussed it last year, when the Minister said it would be laid shortly? I hope that he can give us some reassurance on this matter. The reasons given were Covid and Brexit. Obviously, we understand that Covid was a big blow—although Brexit was due two years after we had voted to leave—but we really need some reassurance about when we will see the review.

I will make just a few other points. When we discussed forecasts last year, we were discussing only one year’s levy because of Covid uncertainties. The Government now say that they are confident that they can forecast electricity demand with sufficient accuracy to reinstate the multiyear format. I note that the Minister has explained how the Government expect to see demand falling, albeit modestly, over that period. I wonder whether he could say something about how the Government are factoring in all the complexities of the massive price spike, and what that might do to demand, alongside the new demands of electric vehicles and heat pumps, et cetera.

As has been noted, the operational costs are up 40% over the levy period, and that is on top of the 19% increase that we debated last year. I recognise that there has been an expansion in the CfDs that the organisation is responsible for overseeing, and we welcome it, but I hope that the relentless pressure down on costs which the Minister talked about really will be applied continuously. I wonder whether some further economies of scale can be achieved, because both these organisations, as I understand it, operate from the same address. Are there functions that could be merged to save more money?

On the subject of the expansion of CfDs, I wonder whether the Minister can tell us where we are on the CfD for hydrogen. I note that it is the number two request on the CBI’s call for measures from the Government in terms of growth—number one, incidentally, is to close the public investment gap in terms of retrofitting commercial and domestic buildings. Perhaps the Minister could tell us whether that CfD on hydrogen will be forthcoming soon.

In terms of costs on bills, the Explanatory Memorandum estimates that these will be 50p on domestic consumers’ bills and between £30 and £1,200 on business bills, depending on their electricity usage. Obviously, 50p may seem a small amount, but I am slightly confused because I believe that the Explanatory Memorandum for the last levy-setting regulations said that it would be increased by 40p. It seems odd that this is only 50p over the period. Clearly, although these are small amounts, they all add up. People are facing crippling bills at the moment, so it is important that we keep an eye on that and on how we can drive down costs.

Another point I want to ask the Minister about relates to page 5 of the Explanatory Memorandum—which was presumably prepared some time ago—which talks about inflation of 5% having been allowed and discusses omicron and so on. However, this was clearly before some of the price spikes happened, and obviously before the Russian invasion of Ukraine. The CBI and other commentators expect inflation to peak somewhere around 8% to 9%, and there is increasing feeling that that level of inflation may be sustained for a longer period than was initially anticipated. In his reply, can the Minister tell us whether these new inflationary pressures in the system have been taken into account? If they have not, as some of them are fairly new, can he tell us how things might be adjusted over the period of the levy?

Finally, if there is a surplus and the money is paid back to consumers, can the Minister tell us whether there is a way of ensuring that the electricity supply companies deliver that rebate back to consumers if they effectively have to pay the charges in the beginning?

[Lord Lennie (Lab)]

My Lords, I thank the Minister for his explanation of the regulations before the House. They are essentially non-controversial and, on this lonely side of the House, we do not take issue with them. As we have heard, the regulations update the rates for the operational costs levy and settlement costs levy, which fund the operational costs of the LCCC and the Electricity Settlements Company, respectively. As these two private companies share staff and facilities, these levies are set together.

After a single year of unpredictably and reduced electricity demand during the pandemic, first, it is welcome that this process has been able to return to a three-year system, allowing stakeholders greater visibility of the estimated operational costs, as well as reducing the administrative burdens on the two companies and on us here. Given the situation, it was sensible to reduce the periodicity, and I am glad that we have returned to normal.

Both the LCCC’s contracts for difference and the Electricity Settlements Company’s capacity market are measures that encourage low-carbon electricity generation and ensure security of supply, which is a noble intention. As my colleagues in both Houses have argued whenever these issues have arisen, since these arrangements came into place in 2013, a levy system, which will be passed on to customers by the electricity firms, is possibly the most regressive way of making these arrangements. The figures involved are certainly not large, as the noble Lord, Lord Oates, said, especially when looking only at the impact on the yearly changes, as is the case with the explanatory notice, but with energy bills increasing substantially amid a wider cost-of-living crisis, it is certainly the case that every little bit helps. Has the Minister therefore given any consideration to other methods that could facilitate the costs of these arrangements not falling on the customer?

I would also like to ask some questions about the consultation that took place ahead of the laying of this regulation, both on questions coming from it and the consultation itself. The consultation ran for four weeks and received only one response, from Scottish Power. While the perspective of this large stakeholder was welcome, I am sure the Minister would agree that having a single response to any consultation is not ideal. It is no fault of Scottish Power, but there were gaps in the responses leaving questions mostly unanswered, and inherent biases from a single respondent were unavoidable. Perhaps when this is revisited in three years’ time, the Minister could consider a longer consultation for a broader spectrum of responses to be generated.

One aspect of Scottish Power’s response that I would like to pick up upon surrounds budget lines related to providing policy support to BEIS, which Scottish Power recommended be kept under review. In their response, the Government committed to returning funds allocated here to suppliers. As this is the case with any unused funds, will unallocated funds from this aspect be ring-fenced for return, and, more importantly —as the noble Lord, Lord Oates, has said—will steps be taken to ensure that this is passed on to customers, given that any adjustment to their bills will have already been enacted?

It was also pointed out that the year-on-year budget rises are not insignificant, reaching approximately 40% over the four years from this financial year to the last of the three years this regulation covers. The Government rightly say that this is not unprecedented, given that at least in the case of the Electricity Settlement Company, the Explanatory Memorandum suggests that the body has only become more efficient, but I would be grateful if the Minister could elaborate a little on where the cost increases come from.

I look forward to the Minister’s responses to these questions.

[Lord Callanan (Con)]

I thank the noble Lords, Lord Lennie and Lord Oates, for their contributions to this brief debate. The noble Lord, Lord Oates, is of course quite right to raise the issue of the publication of the five-year review, especially since I told him last year that it was going to be ready shortly—I am sure there could be a big debate on what “shortly” means in the context of government. If I may fill in a little more detail for the noble Lord, I understand that updated advice on the matter is currently with my colleague Greg Hands, the Minister for Energy, Clean Growth and Climate Change. I think he intends to publish the review in due course—I hope, shortly.

The noble Lord also, rightly, asked for an explanation of why the review is so delayed. I can certainly say that it has of course been a government priority to deliver on our commitment to open the largest ever CfD allocation round—I am sure that is something he would agree on—and it has been announced that the rounds will be running annually from March 2023. A lot of work has gone into the preparation behind that. Schemes such as CfD are vital in developing domestic sources of renewable energy to reduce our exposure to volatile global fossil fuel markets, which are of course peaking at the moment, and to protect consumers in the longer term. Delivering on those priorities has had an unfortunate knock-on impact on the publication of the review, but we will endeavour to get it out as quickly as possible.

The noble Lord also asked for an update on the hydrogen business model. Of course, it is not part of this statutory instrument, but I would be very happy to write to him separately. I can certainly confirm that we are not intending to fund hydrogen under this particular mechanism or under the Energy Act 2013, so it falls outside the scope of today’s debate.

On the noble Lord’s questions on inflation, we have used a somewhat optimistic assessment of 5% inflation for each year of the proposed budgets. That was after careful consideration of the forecasts produced by the Office for Budget Responsibility. They probably looked very sensible when it put its advice together, but it suggested that, on balance, an assumption of 5% was appropriate.

Shale Gas Production

Lord Lennie Excerpts

Tuesday 15th March 2022 Lords Chamber

[Lord Lennie (Lab)]

My Lords, the Government’s consideration of fracking is a potentially dangerous and risky policy that neither addresses the real concerns about future affordable energy supplies nor contributes to achieving our net-zero targets. Surely, a better way to proceed would be to reintroduce government support for onshore wind as a cheap and generally reliable fuel source—it was abandoned by the then Conservative Government in 2015. Will the Government now reconsider this damaging decision by reinstating their support for major onshore wind farm developments?

[Lord Callanan (Con)]

As the noble Lord is aware, there was a further contracts for difference round held in December and onshore wind was able to bid into it. We will be announcing decisions on that shortly.

Commercial Rent (Coronavirus) Bill

Lord Lennie Excerpts

3rd reading
Tuesday 15th March 2022 Lords Chamber

[Lord Grimstone of Boscobel (Con)]

My Lords, I start by thanking noble Lords for their thorough engagement throughout the Bill’s passage through your Lordships’ House. As ever, the erudite contributions of your Lordships have given rise to constructive and robust discussion of the Bill and it has been pleasing to see the consensus that we have reached as a result. In particular, I thank the noble Baroness, Lady Blake of Leeds, in absentia, supported so admirably by the noble Lord, Lord Lennie, as well as the noble Lord, Lord Fox, as ever, for his support for and scrutiny of the Bill. It has been a pleasure working with them on this Bill following our previous work on the Professional Qualifications Bill. I am also grateful to the noble Earl, Lord Lytton, for his expertise on arbitration. Furthermore, I give thanks to the noble Lords, Lord Lennie, Lord Shipley, Lord Thurlow and Lord Mendelsohn, and my noble friend Lord Hunt of Wirral for their interest in the Bill.

I also thank the noble Lord, Lord Brennan, QC, for his consideration of the Bill. The noble Lord wrote to me recently to discuss the focused eligibility of the scheme, on which I will take a moment to respond. Significant thought has been given to the eligibility of the scheme. It is important to remember that the capacity of the arbitral market is limited and, as such, the scheme that this Bill establishes must be targeted appropriately.

Businesses that were mandated to close were among those hardest hit by the pandemic. Some of these businesses, such as nightclubs, were required to close for over 18 months. Evidence suggests that businesses in the sectors that were mandated to close are the least likely to have reached agreements on outstanding rent. In light of this, we consider it a proportionate requirement that, in order to access the scheme, a business must have been mandated to close its premises, or businesses carried on there, in part or in whole.

I am entirely sympathetic to businesses that were not required to close but were still affected by the pandemic. Alongside the Bill’s introduction in the other place, the Government published a revised version of a code of practice for the commercial property sector. This code of practice can be used by any business to help it resolve disputes about unpaid commercial rent, regardless of the business’s eligibility to access the arbitration scheme. I hope that this provides some clarity to the noble Lord regarding the purposefully focused eligibility of the scheme.

I recognise that the Government have made several changes to the Bill during its passage through your Lordships’ House. I am pleased that the changes have been well received, which is a testament to our shared desire to ensure that this Bill is as clearly drafted and fit for purpose as it can be.

Many of these amendments have been clarificatory or technical—for example, in confirming that an obligation to close either premises or businesses is regarded as a closure requirement—as well as expressly setting out the effect of an arbitral award, including how it affects the liability of the tenant and of a guarantor or former tenant. Minor amendments were also made to Schedules 2 and 3, to clarify the application of certain provisions to former tenants and guarantors, including where an indemnity was given.

However, we have also made more significant amendments, particularly following our extensive interaction with the Welsh Government and in response to the DPRRC’s report. I thank the Welsh Government and officials for their positive and extended engagement. I am extremely pleased that the Welsh Government have felt content to recommend legislative consent and that the Senedd has agreed a legislative consent Motion.

Furthermore, I thank the Delegated Powers and Regulatory Reform Committee for scrutinising the Bill and for drawing the House’s attention to Clause 28—previously Clause 27—on reapplying the Bill. We have amended the clause to ensure that its power is appropriately limited, following the committee’s report. I am grateful for the support which these amendments have received. I am also grateful to the Royal Institute of Chartered Surveyors and to the noble Earl, Lord Lytton, for raising the immunity of arbitration bodies, which prompted the amendment we brought forward today.

I also thank the stakeholders who will be most impacted by the Bill. These include arbitration bodies, and tenant and landlord trade associations. I emphasise, as I have before, that balance, inclusivity and ease of access are some of the core features of this Bill. The Government have engaged with these stakeholders at great length, including at several round tables which I held myself. They have raised relevant concerns and issues, allowing us to mould this legislation and the guidance which my officials are working on—and that we have discussed in previous debates—to make it as useful as possible. As such, I am extremely grateful for their expert input.

I am also grateful to the Bill policy and legal team which has developed this legislation. This includes Carl Creswell, Charles McCall, Jessica Barnaby, Hamza Shoaib, Radhika Sundaram, Matthew Beese, Geraldine Haden, Jane Chelliah-Manning, Justine Antill, Sarah Machen, Louise Dobrin, Simon Burke, Jahan Meeran, Rachel Campbell, Rebecca Denham, Elaine Anderson, Davy Cowie and Martin Gunther. This is a most impressive team.

I thank my private secretary, Ben Kerindi, for organising and managing me—no easy task. I thank the Leader of the House, the Whips and the Office of Parliamentary Counsel, as well as the clerks. Finally, I thank my Whip, my noble friend Lady Bloomfield of Hinton Waldrist.

[Lord Lennie (Lab)]

My Lords, I thank the Minister for his customary courtesy and thoroughness in handling this somewhat uncontentious Bill. In fact, the Bill has been so successful that the hundreds of thousands of cases which were presumed to require arbitration are now down to either the thousands or the hundreds. They are certainly a reduced number and that is a credit to the Bill.

I place on record my appreciation for the contributions of the “Covid 2”—namely my noble friend Lady Blake and the noble Earl, Lord Lytton—who both provided detailed research, experience and commitment during the passage of the Bill, latterly from afar.

Finally, I thank the noble Lord, Lord Fox, in particular for his detailed understanding of the complexity of the Bill. I also thank the Bill team for their work and efforts in getting this Bill in shape. While we still do not know what the term “viable” means and whether there will be a sufficiency to arbitrate, time will tell—time which I have now run out of.

[Lord Fox (LD)]

My Lords, this has been a short process, but an interesting and important Bill. It is important for those businesses which found their entire business model cancelled by something over which they had no control. It is important that we find a way for those businesses to secure their future by sorting out the past. I think the Minister would agree with me that the overriding principle of this Bill has been to ring-fence the debt and then, through an arbitration process, share in the impact of that debt. I am pleased to see that the Minister is nodding as I say that.

The Minister has been sensitive to the advice he has got, and I am very pleased that the Government were able to agree with the Welsh Government on how this Bill would apply in Wales.

There was a period at Report when the number of Bill officials outnumbered the number of Peers two to one. Having heard the list that the Minister has just totted off, I can see that not all of them were there even then—but thanks to the Bill team for the hard work that it put in, and thanks to the Minister and the noble Baroness, Lady Bloomfield, as well as the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake. Because of Covid and dentists, we found ourselves depleted several times during this process, but I also thank my noble friend Lord Shipley—and, back in the Whips’ Office, keeping the legislative process on track, Sarah Pughe.

Commercial Rent (Coronavirus) Bill

Lord Lennie Excerpts

Report stage
Wednesday 9th March 2022 Lords Chamber

[Lord Lennie (Lab)]

My Lords, as the House may have spotted, I am not the noble Baroness, Lady Blake, as she is one of the two noble Lords who have fallen victim to Covid. We all wish her well for a quick recovery.

On this side of the House, we also welcome the Government’s moves, which follow on from representations made by the Welsh Government and the DPRRC. They show that the Government have listened and have acted upon the concerns raised. Perhaps the Minister could confirm in response that the Welsh Government are fully satisfied with these changes too, in which case we too are satisfied.

[Lord Grimstone of Boscobel (Con)]

My Lords, I can so confirm.

--- Later in debate ---

Moved by

[Lord Lennie]

2: Clause 7, page 5, line 23, at end insert—
“(2A) The Secretary of State must ensure that bodies approved under subsection (1) have adequate resources and sufficient numbers of arbitrators as are (whether alone or as a member of a panel of arbitrators) required to conduct arbitrations under this Part.”Member’s explanatory statement
This amendment would require the Secretary of State to ensure that the approved arbitration bodies collectively have sufficient capacity, and resourcing, to hear all arbitrations under this Part.

[Lord Lennie (Lab)]

My Lords, Amendment 2 builds on the debate in Committee. The House will be pleased that I will not repeat all the arguments put forward then, but it is worth saying at the outset that this amendment is in response to severe pressures that businesses, tenants and landlords are under following an extremely difficult trading winter, plus the economic pressures of national insurance increases, energy price rises and escalated inflation. The clock is ticking loudly.

Arbitrators will be dealing with the cases that could not be resolved through voluntary measures between the parties. These will include in the main the most complex, as well as those where a failure to act was in the hope that debt would just disappear. As a point of interest, it would be beneficial to know from which sectors these outstanding cases come—not geographically, but from which sectors of economic activity. Perhaps the Minister could respond.

In Committee, the Minister—whom I paraphrase—told us not to worry about the arbitration service and that all would be well and sorted out in due course. Can he tell us what his optimism is based on? Have the Government made an assessment about the demands that will be made on the service, beyond simply the number of outstanding cases? If so, can we see the evidence of that assessment? Also in Committee, the Minister said that the Government supported the market-based approach in which arbitration firms would move things around to get over the expected spike in demand. The Minister said that he had been reassured by the arbitration firms of their ability to cope. But, without a detailed assessment or understanding of both the volume and complexity of cases, coupled with a change in the nature of the work that arbitrators will be asked to carry out—which the noble Lord, Lord Fox, will introduce in a later amendment, on behalf of the noble Earl, Lord Lytton—this would appear to be wishful thinking.

If in reality there is either an insufficient number of arbitrators, or too many complex cases, or both, this reliance of the market-based approach may be something the Government come to regret. So will they keep the progress in clearing the backlog of cases under review and report back to Parliament from time to time? I have no doubt about the quality and excellence of the arbitration service itself across the whole of the UK, but we are concerned that the Government have not undertaken an assessment of the numbers and the resources available in order to be fully satisfied that all arbitrations can be conducted in good time.

Amendment 15 proposes that, when the Government issue guidance to arbitrators aimed at enabling better outcomes, Parliament should be informed. Some concern has been expressed, in particular by small businesses, that the draft guidance produced may not be fully appropriate to the arbitration process. This is turn raises the prospect that arbitrators’ decisions are likely to be distorted. So Amendment 15 adds a layer to safeguard against such an occurrence by asking the Government to bring statutory guidance to Parliament before it is issued. In both the Commons and in Committee we raised the need for a review of the Bill’s provisions to ensure that the process is being applied transparently, fairly and consistently. While we may not have convinced the Government to include a specific review mechanism, can the Minister assure the House that the operation of the Bill will be carefully monitored?

Finally, on the many thorny questions of viability, can the Minister tell us what engagement is being undertaken with stakeholders to stress test the Government’s draft guidance on this to make sure that it is fit for purpose? I look forward to the noble Lord’s response.

[Lord Fox (LD)]

My Lords, I will speak to Amendments 2 and 15 in my name. Amendment 2 is important because it is important to have the arbitrators in place to deliver this service. The purpose of Amendment 15 is to probe the guidance notes, because in Committee that guidance was out for consultation. It is important to get a chance to air some of the issues thrown up from it and to get a sense from the Minister of where we are and when your Lordships’ House will see the final draft—I hesitate to use the phrase “final draft”, because I hope he can confirm that it is a live document and will develop over time alongside experience of this process.

The noble Lord talked about stress testing. It would be helpful if the Minister, during the process of monitoring the guidelines, talked to those who have been involved in arbitration about their experience so that they can be improved over time. Can he confirm that he will?

The Government’s instinct to try to keep this simple is correct, but sometimes simplicity can leave ambiguity. I think some of that has come through in the responses they may well have received. One way of removing that ambiguity is better use of templates, which is one of the responses I have received from people on this. Can the guidelines be better used to genuinely short-circuit the process and therefore reduce costs for the proponents’ way?

A second real issue is the definition of “viability”. We had a debate on that at Second Reading and in Committee; I do not propose to return to it, but there are issues around viability that concern businesses, particularly seasonal ones. There is scope within the guidelines—I have been given this advice by some seasonal businesses—to better define the role of seasonality when looking at the viability of these businesses. I would appreciate the Minister’s thoughts on those issues.

Finally, there is an underlying suspicion from some tenants that large-scale landlords, some of whom have experience in previous types of dispute, will game the system and use their financial muscle to take advantage. They fear that these well-resourced landlords will go for the most expensive options, bid up the costs and put the process beyond the means of small independent traders. Will the Minister ensure that the arbitrators are vigilant in this regard? I would be a bit hesitant here, because there is a potential conflict of interest for those arbitrators—the bigger the job, the larger the potential fee. We then come to important issues around fees. The Minister needs to set very clear guidelines to the arbitrators on that issue, such that they are not bidding up the process or creating the opportunity for big companies to flex their financial muscle.

--- Later in debate ---

[Lord Lennie (Lab)]

My Lords, I thank the Minister for his detailed response to the contributions and questions raised. It is good to know that only 2,500 cases remain. He is quite right that the longer we talk, the fewer cases will be left. I am not entirely convinced that this is proof that the market-based approach is working. It is something else, probably about the voluntarily nature of agreements entered into by people under the threat of the arbitration process. Nevertheless, it is a positive sign.

As for the statutory guidance, we welcome being informed of updates, but our preference would probably have been to have it approved, although that is neither here nor there. I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, I rise to speak on behalf of the noble Earl, Earl Lytton, who, as previously advertised, is the second member of the “Covid 2” in this team. His absence is disappointing for two reasons. First, he is not here to make these speeches and I have to do so on his behalf, and secondly, his wisdom on the issue of property is second to few in your Lordships’ House. The nature of these amendments points to the direction of the advice that he would have given your Lordships’ House had he been here, and I will do my best to represent that. I am given to understand that the amendments that the noble Earl tabled are supported by the RICS, which focuses their purpose.

I will speak to them in groups. In the Clause 8 amendments, the noble Earl’s point is that the appointing body that oversees the function should not carry out more than a general monitoring of the administrative good order of the process. The reason behind the noble Earl’s point is that he is anxious to ensure that the terms of Arbitration Act 1996 are not circumvented, so perhaps the Minister can set the Bill in this context with respect to the Act.

At the heart of the Clause 10 amendments is the expectation that the appointing bodies do not materially alter their screening and selection processes. The noble Earl’s point is that on potential conflicts of interest, they are almost wholly reliant on self-disclosure by potential appointees, so they would frequently have no means of checking the responses for accuracy. I would welcome the Minister’s view on this.

The purpose of the Clause 19 and Clause 20 amendments is to make it permissible in a complex case, or cases, for the appointing body to demand from the parties that a clear statement of the issues and scope of evidence be placed before the arbitrator. Any fee specified in advance should be able to rely on the statement, but also on providing a broad estimate of the applicable arbitrator time and rate, where a fixed fee is impractical. I think what the noble Earl is driving at is that the arbitrators should not be signing a blank cheque for the work they are going to do; they deserve to have a scope to understand what it is they will be arbitrating.

Those are the groupings as the noble Earl set out. For my part, I hope to hear how the Minister and his department will balance these important points from the noble Earl, Lord Lytton, and the RICS, with the need to keep things as simple and cost-effective as possible. I think this is possible but I want to hear how the Government will absorb these two issues. I beg to move Amendment 3.

[Lord Lennie (Lab)]

The noble Lord, Lord Fox, raises the central concerns of the struck-ill noble Earl, Lord Lytton, about the expectations of arbitrators. I would add that he seemed to suggest in Committee that the role of arbitrators in this legislation is inconsistent with the expectation of arbitrators in the Arbitration Act—that is, they decide either one way or the other between two competing cases, rather than trying to filter between the cases to find some remedy between the two.

[Lord Grimstone of Boscobel (Con)]

My Lords, I apologise—I was caught short by the speed with which we are moving through these amendments. Before I respond to these points, I thank the noble Earl, Lord Lytton, for the amendments he tabled. I think everybody who heard him in Committee was impressed by his erudition. I am sorry he is not able to join us to debate these points, but on behalf of the House I thank the noble Lord, Lord Fox, for stepping into the breach and for his impressive grasp of the technical matters underlying these amendments.

I start by saying that I am fully aware of the concerns of arbitration bodies seeking approval under the Bill and my officials have been in continual contact with them to ensure that their views are registered and dealt with appropriately.

The Bill differs in some aspects from the Arbitration Act 1996, and provides that approved arbitration bodies have oversight over arbitrators where they have appointed them. In answer to the noble Earl, Lord Lytton, this was deliberate, and it gives certainty to landlords and tenants that arbitration will be managed efficiently and any issues with the process dealt with expeditiously. I can assure noble Lords that the oversight function is not intended to be onerous and is primarily administrative to ensure that the process runs smoothly. We do not expect bodies to continually monitor proceedings, but only step in where a party has a legitimate complaint or new information comes to light, raising a concern. I hope this reassures the noble Lord, Lord Fox.

Under the Bill, arbitration bodies can decide on unilateral removal requests, and this was also deliberate to avoid adding to pressure on the court system. The bodies should apply the same principles in case law as the court, including that there is a high bar to removing an arbitrator, and the parties should raise any concerns promptly. Frivolous, vexatious or unsubstantiated complaints should be quickly dismissed. Complaints of any substance should be rare, given the rigorous pre-appointment checks that bodies will doubtless carry out. I am pleased to clarify the point raised by the noble Earl in Committee: it is open to the approved arbitration bodies to charge a fee for dealing with a removal application. The intention is that this may disincentivise frivolous or vexatious complaints. In addition, the arbitrator can require an obstructive party to pay a greater share of the arbitration fees. We will include this clarification in the guidance to which I referred earlier.

I appreciate that there is concern about the extent to which arbitration bodies have immunity in respect of their functions. This is an important point that has been raised; I am considering it and will return to this issue at Third Reading.