Domestic Premises (Energy Performance) Bill [HL]

Lord McNicol of West Kilbride Excerpts

2nd reading & 2nd reading (Hansard): House of Lords & 2nd reading (Hansard)
Friday 7th February 2020 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, like many other noble Lords, I thank the noble Lord, Lord Foster, for securing today’s debate.

This Wednesday, the charity National Energy Action held the Nation’s Biggest Housewarming. While many noble Lords will have attended enjoyable housewarming parties over the years, this event was a bit different; it aimed to highlight all those living in fuel poverty and the importance of having access to a warm, dry, safe home, something I am sure all noble Lords believe in. Therefore, I welcome the Bill’s timely Second Reading, which allows us to shine a light on the NEA’s work and the important issue of fuel poverty. By creating energy-efficient homes, we can tackle both this and the climate crisis.

The noble Lord, Lord Foster, rightly stated that it is all well and good setting high standards for new homes, but improving the energy efficiency of existing homes and housing stock must take priority. I think we all share the view of the noble Lord, Lord Deben, that homes being built today will not surpass the energy efficiency and future net-zero targets that are only a decade and a half away. That seems bizarre. My noble friend Lord Whitty clearly outlined the three factors that lead to fuel poverty: household income, expensive bills or tariffs, and the fabric of the building. As he said, we must aim to solve all three factors together.

With a few weeks left of winter, it is shocking to think of how many people remain cold in their own homes up and down the country. The noble Earl, Lord Erroll, talked about the choice to wear a jumper. To be fair, he was not talking about fuel poverty but about the properties of people in his area and their choice to put on a jumper, but for many it is not a choice. They cannot afford to heat their homes. They do not choose to put on a jumper or jacket to stop damp coming into the house; they have to do it to stay warm.

According to uSwitch, around 3.5 million UK households live in fuel poverty and are unable to adequately heat their homes. It also found that 1.6 million of these households choose between warming their homes and putting food on the table. The picture is particularly bad in Scotland. Last month, the Scottish Government published figures which showed that 619,000 homes were in fuel poverty in 2018. One in 10 was in extreme fuel poverty. Clearly, this is one of the many areas where the SNP has failed, and its new target of eradicating fuel poverty in 20 years is not nearly ambitious enough.

The worst consequence of this is winter deaths, on which the UK has one of the worst rates in Europe. According to a 2018 study by the NEA, 36,000 deaths over the previous five years could be attributed to conditions relating to living in a cold home. A further 17,000 people are estimated to have died as a direct result of fuel poverty. The NEA has called these deaths “preventable and shameful”, and I could not agree more. Fuel poverty can and must end; it should be addressed together with moving towards net zero.

Turning to energy efficiency, as we have heard, decarbonising heat is a massive challenge for any Government, but it is one we must meet if we are to keep global heating way below the two-degree increase. According to the Committee on Climate Change

“It will be extraordinarily difficult to hit 2050”


net zero

“without a plan in place for heat very quickly.”

Most homes have natural gas-powered boilers, which need to be replaced by electric or hydrogen boilers. Better insulation and more efficient appliances are other avenues to cut emissions and cut bills. The UK FIRES’ report Absolute Zero also stresses how real investment in heat pumps is needed. These are already well established in many other countries, yet heat pump installation remains at very low levels in the UK. Do the Government propose any significant expansion in that area?

The broad aims of the Bill are therefore welcome—I say “broad aims” for the very reason that the noble Lord, Lord Foster, mentioned: the Bill’s reasonableness. It would ensure that the properties of those living in fuel poverty have a minimum EPC band C rating by the end of 2030, and would force the Government to publish and implement a strategy to deliver on these targets. The Bill would enable the Secretary of State to require mortgage lenders to provide information on the energy performance of properties and new requirements concerning the energy efficiency of new heating systems installed in existing properties. As well as this, the Bill would make it a legal requirement for the Government to ensure that as many homes as possible are improved to EPC band C by 2035. However, Labour has called for us to move faster, and for almost all the UK’s 27 million homes to have the highest energy efficiency standards by 2030.

Ultimately, we are discussing this Private Member’s Bill because the Government are not doing enough on fuel poverty. Astonishingly, fuel poverty was not mentioned once in either the Conservative manifesto or the Queen’s Speech. That is despite the Government’s welcome consultation on the fuel poverty strategy, which closed last September. When will a response from the Government be published, and when will they publish their energy White Paper?

The Government have committed to spending £3.8 billion on insulating 2 million social homes, and £2.5 billion on retrofitting 200,000 fuel-poor households. While this is welcome, the spending commitment for social homes is far less than what is needed to fully retrofit a property, and a full retrofit will be offered to only a small fraction of the 3.5 million households in the UK living in fuel poverty. There is also no additional funding for most households. How do the Government plan to cut emissions and bills for the many? Labour has called for the Government to fully fund the retrofit of every low-income property in the country and provide interest-free loans to enable able-to-pay households to do that. We would also introduce a zero-carbon homes standard for all new homes.

In conclusion, everyone has the right to live in a warm and safe home but, sadly, this is not reflected in reality. Both the UK Government and the Scottish Government need to do more to alleviate and get rid of fuel poverty. Excuse the pun, but a lot more energy needs to be put in to eradicate both climate problems and fuel poverty.

Post Office: Prosecution Powers

Lord McNicol of West Kilbride Excerpts

Tuesday 4th February 2020 Lords Chamber

[Lord Duncan of Springbank]

My noble friend is right to draw attention to this. As my noble friend Lord Arbuthnot said at the outset, there will be a settlement of nearly £60 million for those who brought the class action itself. There will also need to be individual criminal examination for those who have experienced the sharpest end of the law. I cannot comment on these matters, but I recognise how important they are to bring about the justice required.

[Lord McNicol of West Kilbride (Lab)]

My Lords, there are a number of points to pick up on, but I will focus on the £60 million. How much of that will the sub-postmasters themselves receive? My understanding is that, unlike in many other cases, the legal fees have to come out of that £60 million, which is one of the reasons for the settlement. Some clarification of how much the sub-postmasters themselves will receive would be welcomed by all.

Gift Vouchers

Lord McNicol of West Kilbride Excerpts

Wednesday 22nd January 2020 Lords Chamber

[Lord Duncan of Springbank]

My noble friend is correct. It is a challenge when we live in an internet age that connects the global marketplace in a competitive sense with smaller businesses on the high street, so we need to be cautious. However, I hope that any rules in this regard would be of the highest possible standard to ensure that people who received gift vouchers did not find themselves penalised by holding them.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I looked in my wallet before coming to this debate and noticed that I had two gift vouchers from Christmas. I am not quite sure what they say about me: one is for Greggs, the bakers, and one is for Waterstones. Nitecrest has estimated that 98.6% of gift vouchers are spent within the first year, but since the market for gift vouchers is worth around £6 billion, that means that about £84 million is not spent within the first year. Do the Government know what proportion of people who fail to spend their gift vouchers come from low-income households? If they have the answer to that, what measures, if any, are they looking to take to help support consumers and customers?

[Lord Duncan of Springbank]

The noble Lord clearly has kind friends who give him Greggs vouchers and Waterstones vouchers: food for the heart and for the mind. At present, some £300 million in gift vouchers per year is unclaimed out of a £6 billion retail offering. Quite often they are lost—they have not been redeemed because they have simply been misplaced. I do not have the figures, and I do not believe the figures have been gathered, on those who come from low-income families, but I recognise that this is still 5% of the overall market, which is way too high. We need to find a way to ensure that the value of these products is not lost, particularly when low-income households are affected.

European Union (Withdrawal Agreement) Bill

Lord McNicol of West Kilbride Excerpts

Report stage & Report stage (Hansard): House of Lords & Report: 1st sitting: House of Lords & Report: 1st sitting
Monday 20th January 2020 Lords Chamber

[Baroness Altmann (Con)]

My Lords, I congratulate my noble friend in the Government on their statement that there will be pragmatism in applying this system. However, what contingency plans are there or could there be in place should there be a major IT failure which prevents somebody, for example, who wants to rent a flat, being able to prove digitally that they have indefinite leave to remain? Maybe the department could consider that further.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank all noble Lords for their comments in the debate.

The amendment to Clause 7, in the name of the noble Lord, Lord Oates, and supported by myself and other noble Lords, is a variant of that tabled in Committee. As the noble Lord, Lord Oates, previously outlined, we are far from convinced by the responses we have heard from government—I think the noble Baroness, Lady Deech, said that the Government were “unconvincing”.

Indeed, there have even been a number of contradictory statements from No. 10 in response to Friday’s comments by the European Parliament’s Brexit lead, Guy Verhofstadt. He claimed that the Secretary of State had provided assurances over the provision of physical documentation, as well as confirming a policy of no forced deportations if individuals fail to apply for settled status by the June 2021 deadline. However, the newspapers carried a contradictory quote from a government official, who said of the meeting:

“They discussed their respective position on physical documents. There weren’t any offers or changes from yesterday’s meeting.”


A statement from the Home Office later added:

“There is no change to our digital approach. It has always been the case that people could print a copy of their confirmation letter, but this can’t be used as evidence of status.”


The noble Viscount, Lord Ridley, said that this could lead to ID cards. The response to that is that people will be asked for physical documentation that proves their status now—as I will come on to, people are already being asked for it. If the Government could make this small change, we would be able to move on.

We should look at the last statement from the Home Office. When we travel abroad and hire a car on the continent, before we go we can print out a document from the DVLA which is proof that we are legally able to hire a vehicle and that the driving licence is covered. While the DVLA holds that documentation on computer, we can get physical documentation that proves the position. Again, it would be fantastic if we could see a little movement by the Government on this.

Under the evidence, we are not satisfied that the Government will provide assurances on physical documents, although I hope they will, or that they will verify the policy of no forced deportations for those who do not apply for settled status by the deadline. As the noble Lord, Lord Oates, touched on, a new poll of EU citizens living in the UK found that an overwhelming majority of 70% would favour physical documentation. These are people who have chosen to make the UK their home and to live, work and play in and thus be part of our countries and our society. On this evidence, the Government are going against good practice and the wishes of EU citizens currently living in the UK.

I shall go back to the point made by the noble Viscount, Lord Ridley. As many as 11% say that they have already been asked for proof of their status, and there have been warnings from private landlords that the new system could introduce the risk of discrimination.

Why would the Government implement a system that puts people who contribute greatly to our society at the risk of facing discrimination? Are they saying that the current proposal for a digital-only system is risk free? The arguments on documentation and deportation at the end of non-registration or non-agreement to pre-settled or settled status were well rehearsed in Committee and we have heard a number of contributions to that effect today, so I will leave it there. We recognise that the Government have provided some comfort as regards the appeals procedure, but there is too much uncertainty about other aspects of EU citizens’ rights. A representative of the3million campaign group has rightly pointed out that far from providing certainty, the current system is best described as giving an “unsettled status”.

We continue to believe that the declaratory system is the best way forward and that EU citizens should enjoy the same rights as many UK citizens living on the continent. Negotiations have already started and hopefully further talks will secure the position as we go forward. If the Minister is unable to promise to table a suitable government amendment at Third Reading and if the noble Lord, Lord Oates, chooses to push his amendment to a vote, we will support stronger protections for the millions of EU citizens who have made this country their home.

I shall touch briefly on the comments made by the noble Lord, Lord Kerslake. He said that the Government should take every reasonable step to ensure that EU citizens who choose to make the UK their home are treated fairly, and the simple safeguards set out in the amendment would achieve that.

[The Minister of State, Home Office (Baroness Williams of Trafford) (Con)]

My Lords, I thank the noble Lord, Lord Oates, for his explanation of the amendment, but he will not be surprised to learn that we reject it. The amendment would require the Government to establish a declaratory system for those eligible for residence rights under the withdrawal agreement, the EEA EFTA separation agreement or the Swiss citizens’ rights agreement, which for the sake of brevity I shall call from here on in the agreements. References to EU citizens should likewise be taken to include EEA, EFTA and Swiss nationals and their family members.

The noble Lord has continued to press for this change in the belief that it will reassure EU citizens already resident here. The Government have already provided this certainty through the EU settlement scheme—not as a proposal, as the noble Lord, Lord McNicol, has suggested, but as something that is up and running and which the noble Lord, Lord Kerslake, acknowledges is working well.

Fundamentally changing a system that is working well would have the opposite effect to that which I believe the noble Lord is trying to achieve. Amendment 1 would create a declaratory system under EU law, whereby EU citizens may apply for a document confirming their residence status if they wish but do not have to do so. The Government do not agree that this is the right way to secure the status of EU citizens resident in the UK at the end of the implementation period.

After the implementation period, free movement will end and those who are not British or Irish citizens will require a UK immigration status to enter and reside in the UK. The EU settlement scheme is a vital part of transitioning the UK from free movement to a new, points-based immigration system that starts in 2021.

--- Later in debate ---

[Baroness Williams of Trafford]

That is not the point that I was making. We used to have paper accompaniments to the licence and we no longer have them. We used to have a paper part of the licence and it was phased out, but to hire a car you need a code.

[Lord McNicol of West Kilbride]

The noble Baroness is correct that the paper part of the licence has been phased out, but when you go abroad you need proof for the insurance to hire a car. The noble Baroness might well be correct that you can just use a code but, as we have heard, if you go with just a code there is no proof with it. I, many other noble Lords and many other people would print out proper documentation and proof that you have that code with the DVLA’s name at the top of it. That is what we are saying: it does not just show it when you hire a car, but proves it.

[Viscount Waverley]

My Lords, while the noble Baroness is still sitting down, would it be possible, or is it anticipated, for government agencies in the EU 27 countries concerned to have access to our official databases so that they can look up and access data to confirm all these relevant issues, whether for borders or for whatever reason?

Product Safety, Metrology and Mutual Recognition Agreement (Amendment) (EU Exit) Regulations 2019

Lord McNicol of West Kilbride Excerpts

Monday 7th October 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank)]

My Lords, the extension to Article 50 requires changes to legislation made earlier this year to ensure continued confidence in our consumer safety system. This statutory instrument will amend three earlier regulations: first, a number of product schedules in the Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019, made in March 2019; secondly, the Pressure Equipment (Safety) Regulations 2016; and, thirdly, the Conformity Assessment (Mutual Recognition Agreements) Regulations 2019. I will now take noble Lords through the detail of the changes made to each of these regulations—I can see the excitement building.

The change in exit day has created ambiguity for the personal protective equipment industry, necessitating revision to the Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019. The opportunity has also been taken to refine the instrument based on stakeholder feedback and ongoing developments in the sector, notably clarifying the continued use of data from pre-March 2013 as it affects cosmetics and ensuring that the UK will be able to update the lists of prohibited or restricted substances in all circumstances going forward.

I am concerned that, following publication of the main product safety instrument, stakeholders drew to our attention a number of these issues. I wish to apologise that these errors were identified by stakeholders after our own internal scrutiny processes had been cleared. Once alerted to these issues, we held meetings with the representative bodies from across the product areas to discuss the drafting errors identified and review the relevant product schedule for any other potential points that might require clarification. Eight meetings were held and a number of phone calls and emails were exchanged with relevant stakeholders. We have sought to do all we can in this regard to catch any issues that might not have been caught in the first instance.

Consequently, minor amendments regarding outdoor noise, recreational craft, toys, electromagnetic compatibility, electrical equipment, radio equipment, simple pressure vessels, machinery, measuring instruments and accreditation will be made. We will also correct the error whereby pressure equipment manufacturers would have been deprived of the option of having their manufacturing processes of base materials certified by a competent body.

Details of the technical changes are included in paragraph 7 of the published Explanatory Memorandum. These could ordinarily have been addressed through guidance. However, the extension to exit day meant that we were required to make an instrument to address specific exit-related issues, and we decided that it would be good practice at the same time to bring these minor changes into legislation to give full clarity for business.

We have also taken the opportunity to update the Pressure Equipment (Safety) Regulations 2016 to ensure full implementation of the importer labelling requirements to make it clear that an importer must put their information on both pressure equipment and assemblies. Post exit, UK importers in some circumstances will be able to put their details on a document accompanying the equipment or the assembly.

The instrument also implements into domestic law obligations that the UK currently has as an EU member state with regard to certain goods imported from Switzerland. This was originally implemented through a global provision in the Conformity Assessment (Mutual Recognition Agreements) Regulations 2019. Following further departmental legal analysis, we considered it more appropriate to make it explicitly clear in the law itself. This instrument will allow UK importers of relevant products from Switzerland to put their details on accompanying documentation rather than on the product for a period of 18 months after exit and extend recognition of Swiss authorised representatives to act on behalf of manufacturers to comply with regulations on noise emissions from outdoor equipment in line with the existing EU/Swiss mutual recognition agreement.

A full impact assessment has not been prepared for this instrument because no provisions trigger changes to in-scope operational costs. The impact is limited to familiarisation costs for business, which were previously assessed in a full impact assessment on the earlier instrument as de minimis. A copy of that full impact assessment is publicly available on legislation.gov.uk.

On consultation, the department has benefited from significant stakeholder feedback following the passage of the original regulations, all of which has been taken into account in the revised instruments. However, clearly, this was the wrong way round. As I said when taking forward regulations last week, my department will reflect carefully on ensuring adequate consultation before bringing forward such complicated legislation. This commitment from the Dispatch Box follows on from issues raised by the Joint Committee on Statutory Instruments, whose comments we welcome and will take fully on board.

The amendments made by this instrument will ensure that instruments are correct and that our high standards are maintained after our exit from the European Union. I beg to move.

[Lord McNicol of West Kilbride (Lab)]

My Lords, moving between topics as varied as Hong Kong to product safety is one of the joys of being a Front-Bencher in the House of Lords.

The House is again debating an instrument to rectify problems with previous no-deal regulations, this time on the crucial issues of product safety and metrology. Before I delve into the specifics of the instrument on mutual recognition, I ask the Minister to explain why the House is still debating regulations which will apply only in the event of no deal when the recent European Union (Withdrawal) (No. 2) Act will prevent such a scenario. This feels both disrespectful of Parliament and a little bizarre.

Much of the instrument is intended to ensure that previous regulations will be operable for the latest exit date. As he was asked last week, can the Minister confirm that Parliament will be asked again to revisit these issues if the exit date is again changed?

According to the department’s Explanatory Memorandum, the regulation strives to ensure that products placed on the UK market continue to meet,

“substantially the same essential requirements”.

Why is it only “substantially” the same requirements, not exactly the same ones? If there is no difference, will the Minister clarify this? If there is a difference between substantially copying over requirements and completely doing so, which ones are not required to be copied over?

Insolvency (Amendment) (EU Exit) (No 2) Regulations 2019

Lord McNicol of West Kilbride Excerpts

Monday 30th September 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, these regulations address the consequences of the change in the UK’s departure date from the EU to the insolvency regulations previously approved by Parliament. The purpose of the new regulations, as with the previous regulations, is to ensure that the UK’s insolvency law operates effectively after Brexit, in all circumstances. The regulations laid before your Lordships make two changes that are necessary to address the introduction of the modernised Scottish insolvency rules, which came into force after 31 March, and the coming into force of Article 25 of the original EU regulation, which creates an integrated insolvency register across the EU.

These latest regulations update the Scottish rules by removing references related to the EU regulation to ensure a consistent approach to the UK courts’ jurisdiction to commence insolvency proceedings. The changes are made at the behest of the Scottish Government and with the support of the Scottish Parliament, following consultation.

The changes to UK insolvency necessitated by Article 25, which seeks to integrate member states’ insolvency registers, would carry an immediate cost that would be incurred without certainty of reciprocity after exit day. The current regulations would revoke Article 25 of the EU regulation if we leave the EU without agreement.

I stress that it is not the Government’s preferred outcome for the UK and the EU to cease co-operating on cross-border insolvency issues. We have listened carefully to industry professionals, who have outlined the risks that such an outcome would pose to the efficient management of insolvency cases. None the less, we must ensure that the UK’s approach to insolvency is legally correct irrespective of the nature of our exit.

Our assessment of the impact of losing automatic recognition for UK insolvencies in the EU was carefully made; the cost to business would be in the region of £2.7 million per year. We note also that a similar cost will befall EU insolvency practitioners applying to UK courts. However, both sides can retain the benefit of reciprocity only if there is a deal. In the absence of such an arrangement it is important to provide businesses and individuals with certainty regarding the rules governing insolvency in the UK.

These two changes ensure that the impact of leaving the EU will not be exacerbated by retaining inoperable law, which would lead only to confusion and cost. On that basis, I commend the regulations to the House.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for taking time before the discussion on the Floor of the House to go through some of the more technical detail of the SI. As he said, the regulations make amendments to the Insolvency (Amendment) (EU Exit) Regulations 2019, which were agreed by this House in January. Those regulations were mostly welcomed by the industry and, although concerns were raised by the Joint Committee on Statutory Instruments at the time, the House ultimately passed them. They dealt with the core policy, which I will not seek to reopen, while the No. 2 instrument debated here today appears to make only minor technical amendments.

I shall move on to the substance of today’s regulations. Despite Parliament making it clear that it does not wish the UK to crash out without a deal, it appears that much of this instrument is necessary only to facilitate such a scenario. As the Minister will be aware, both Houses have repeatedly rejected the UK leaving the EU without a deal. Why spend the time and money, therefore, moving forward with SIs that should play no part in the future of our decision-making? Are there any further SIs yet to be laid that deal specifically with a no-deal scenario?

As noted, another element and purpose of this instrument is to amend the Scotland-only regulations, as insolvency is partly devolved. I note from the EM at the back of the SI paperwork that consultation was carried out with the Administration in Scotland. It would be helpful to get a little more detail about what consultation was carried out between the department here and the Scottish Administration. I am curious too about timing. Why have the regulations been brought forward only now, when the new Scottish insolvency laws came into force in April this year?

With regard to the drafting of these regulations, I mentioned earlier that the previous insolvency regulations were mostly welcomed by industry. As the Minister has pointed out, there is a financial cost. I am curious about whether any further discussion or consultation has taken place with the industry.

We have no intention of opposing these technical regulations, though I would be grateful if the Minister could offer assurances in relation to a number of the issues that I have raised.

--- Later in debate ---

[Lord McNicol of West Kilbride]

I just want to follow up on that and seek some clarification from the Minister. If, for some unknown reason, we do not exit the EU on 31 October, will we need to be back here changing the dates in the SIs all over again to whatever the next date is?

[Lord Duncan of Springbank]

That is very easy and straightforward to answer. It is the Government’s policy to leave on 31 October, but the laws have been drafted to ensure that, going forward, we will not have to revisit these regulations. I reiterate that, come Halloween, we will be on the other side.

Gas Tariffs Code (Amendment) (EU Exit) Regulations 2019

Lord McNicol of West Kilbride Excerpts

Thursday 26th September 2019 Lords Chamber

[Lord Liddle (Lab)]

Building on the interventions by the noble Lords, Lord Teverson and Lord Howell, I have a question. The Minister will be aware that gas networks and cross-border supplies are a matter of high politics and security, as well as energy policy. The Russians, in their disputes with Ukraine, frequently threaten to interfere with gas supplies crossing Ukraine. When originally proposed, the new German pipeline that the noble Lord, Lord Howell, referred to, which connects Germany and Russia, was described by Poland and the Baltic states as the economic equivalent of the Ribbentrop-Molotov pact, in that it exposed them and made them vulnerable to discrimination by Russia, to put political pressure on their democracies.

As I understand it, if there was a such a crisis involving Russian gas supplies, we would be protected by the principle of non-discrimination, because we are members of the internal market. In other words, if there was pressure on gas supplies on the continent it would not be legal for suppliers on the continent to turn off the taps to Britain. What will the situation be when we leave the EU: will we have those kinds of legal protections, and will the Minister enlighten us as to what they are?

[Lord McNicol of West Kilbride (Lab)]

My Lords, I join the noble Lord, Lord Teverson, in welcoming the Minister to the Dispatch Box. I am sure that in preparing for this SI, looking through the paperwork and the impact assessment, which says there is no significant impact, he might have thought this was a nice, easy one, but the noble Lords, Lord Howell, Lord Teverson and Lord Liddle, have rightly asked further far-reaching questions on the wider issues of energy and gas supply as we move forward. I shall take the Minister back to the start.

The regulations before us deal with the establishment of a network code on harmonised transmission tariff structures for gas, arising from the UK’s withdrawal from the European Union. This issue was debated at length during the debate on the Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019. The Explanatory Memorandum makes it clear that today’s instrument is needed because exit day has been pushed back: it therefore amends those regulations. Will the Minister therefore begin by assuring the House that these regulations do not mark any shift in policy towards the regulatory framework relating to gas?

Looking briefly at how these regulations were laid, I need not remind the House that they would not have been debated and passed until next month had the Supreme Court not announced that Prorogation was invalid. In such a situation, can the Minister be certain that they would have completed their passage before exit day? If not, what would the consequences have been? On the drafting of these regulations, the House will be aware that other regulations need to be amended as a result of the change in exit date. Will the Minister explain why these need to be amended? If this instrument is necessary to make such a small change, will he say why the Government chose to pass this through the affirmative procedure?

More widely, the regulatory framework is an important cornerstone of energy policy, and while the subject has been debated at length, I want to return to one core issue. My noble friend Lord Grantchester has been vocal on the transfer of powers relating to energy policy, particularly on the many responsibilities due to be handed to Ofgem, which has faced budgetary constraints under this Government. Can the Minister say whether any further regulations due to be laid before exit day will transfer any energy powers to UK agencies? Going back to a point made by the three noble Lords who spoke earlier, protecting our energy supply is critical to our safety and security in such difficult and troubling times. I agree with the noble Lord, Lord Teverson, that retention of the petroleum reserves is an issue of national security. Although it does not relate directly to the SI, some words about that from the Minister on behalf of Her Majesty’s Government would be appreciated.

[Lord Duncan of Springbank]

I thank all noble Lords for their participation in this short but none the less instructive debate. I will begin where the noble Lord, Lord McNicol, left off, to answer some of the questions specific to the statutory instrument.

The issue to remember is that because we did not leave on 31 March, the legislation that had been passed at that point as retained law had to incorporate the fact that this piece of EU law was passed on 31 May and therefore became part of EU retained law. The reason we have brought this back now is that there are certain elements of that retained law which would need to be adjusted to be functional after Brexit within domestic law. The changes are relatively modest but none the less critical.

The answer to why it was done via the affirmative procedure is simple: because it has elements in relation to fees. As to whether it represents any shift in our policy, at a fundamental level the answer is no. This is simply a tidying-up exercise, which is modest in its implications but none the less critical to make sure that there is a functioning statute book after Brexit. As to the transfer of powers to Ofgem—it was not in my briefing pack but it is now—in the transfer of powers from the EU regulator ACER to Ofgem, no additional powers are created.

Those are the specific answers to the questions on the statutory instrument. I will now turn to the questions raised by noble Lords and begin, in order, with the noble Lord, Lord Teverson. One of the important things to stress about the market on the island of Ireland is that it is a single electricity market, not a single gas market. The gas does not cross the borders, only the electricity. The UK Government remain fully committed—as do the Irish Government—to ensuring the single electricity market on the island of Ireland. We believe that will be a priority for both Governments to ensure.

There is an interconnector transferring gas from the United Kingdom into the Republic of Ireland and we do not anticipate that that will be affected by any of these issues. The gas market across the EU is a remarkably—I want to use the term without meaning it as a pun—liquid market, but it is a very significant and successful market.

When it comes to interconnectors with the EU, touching on some of the issues raised by the noble Lord, Lord Liddle, we secure only 5% of our gas from the EU. It is a modest amount. Will that be affected by some of the geopolitics on the continent of Europe? We do not anticipate so, but have reserves which will allow us to secure continued use of gas during any such period.

My noble friend Lord Howell raised the wider situation on the continent of Europe. It is important to look at some of the real challenges this creates for the continent, the EU and ourselves. The first thing to stress is that we believe the Nord Stream pipeline is a problematic reality, which is why we are supportive of where Ukraine stands. However, there are also serious issues for the states to the east of the European Union. In this country we are moving swiftly towards decarbonisation but Poland, the Czech Republic, Slovakia and others are presently faced by the impossible devil’s dilemma of having to continue with their indigenous coal reserves being utilised or importing from Russia. Noble Lords can appreciate the dilemma that creates for the EU as it seeks to determine a decarbonised agenda. We have been, as a number of noble Lords have noted, a very liberalising influence in trying to secure the movement going forward to help those countries decarbonise, but it is, as my noble friend Lord Howell correctly stresses, one of the greater challenges faced by the continent today.

We will seek to continue to be participants in the energy markets of the EU. Brexit will have an impact on that and it is very difficult for me to anticipate exactly how we shall continue in that area. For example, one of the issues on which we have been a great leader inside the European Union is emissions trading, where we have sought from a leadership position to encourage the decarbonisation through a market-based regime. Exactly how we will continue to do so after Brexit remains to be determined. Part of the difficulty, with which noble Lords will be very familiar, is that we are unable to begin to negotiate the future relationship until we have established the departure. Some of these questions which rightly should not only be answered now but should have been some time ago have not been answered. On that basis, we cannot do it unanimously and must wait until such time as we can move this forward with the EU after Brexit.

Statutory Auditors, Third Country Auditors and International Accounts Standards (Amendment) (EU Exit) Regulations 2019

Lord McNicol of West Kilbride Excerpts

Thursday 26th September 2019 Lords Chamber

[Lord Duncan of Springbank]

The impact assessment was conducted on a de minimis basis and it established that the cost is £0.93 million—£930,000. I am happy to write further to the noble Lord on this matter to set out exactly how this figure was reached and who is affected by it and will place a copy in the Library.

[Lord McNicol of West Kilbride (Lab)]

I thank the Minister for his introduction to this statutory instrument. Before I come to the substance of the policy in these regulations, I highlight the comments made by the House of Lords Secondary Legislation Scrutiny Committee, which said:

“However, the range and magnitude of the changes are significant: the Regulations make changes to 15 items of legislation and include a sub-delegation of powers to UK regulators and extend a ministerial power of direction”.


The committee is right. Despite the utterances in the Explanatory Memorandum that this instrument exists only to continue the framework of the regulatory oversight and professional recognition of statutory auditors and third-country auditors in the UK, concerns have been raised, as we have just heard, that the regulations extend beyond this. The challenges financial services organisations will face in adapting to these changes are numerous, and were also noted by the SLSC. Can the Minister confirm whether any recent support has been offered to such firms to assist them in adapting to the changes?

In the light of such wide-ranging challenges resulting from these regulations, I draw the House’s attention to the fact that one of the core reasons why the other place divided on this instrument was the absence of a full impact assessment. Although I have no intention of similarly dividing this House, I place on record my disappointment that the Government have chosen not to publish an assessment in the period between these regulations being debated in the Commons and today. Parliament needs to be given the full information on the impact that these regulations will have on the financial sector; without such an assessment, that is not the case.

Moving on, I should like to ask the Minister a number of technical questions about the substance of these regulations. I will speak slowly. First, on Regulation 4, which deals with the loss of the EEA subsidiary exemption, can he confirm the timescale for the issues here to take effect? The legislation does not give a specific timeframe for the implementation of this provision, so I can assume only that further regulations may well be necessary. Secondly, in relation to Regulation 6, which focuses on the EEA qualification for auditors and which the Minister touched on, can he guarantee to the House that EEA-qualified auditors recognised up to December 2020 will retain their eligibility? If I missed that in his introductory remarks, my apologies.

To conclude, the way in which this instrument has been progressed, with little assessment and consultation, is deeply disappointing. It is mentioned in the Explanatory Memorandum for the SI, under paragraph 10 on “Consultation outcome”, that there has been no consultation on this instrument, which is deeply worrying. There also seems to be a thread of ambiguity through the regulations, which I hope the Minister can cast aside with assurances today. On this side of the House, we have agreed that the Government should make preparation through secondary legislation to ensure continuity after exit, but I hope the Minister can confirm that future regulations aimed at doing this will take a different approach.

[Lord Liddle (Lab)]

My Lords, I was not planning to intervene, having not read these papers in great detail, but until my noble friend spoke I was not aware that the Government had not carried out an economic assessment of the impact of these changes. On the face of it, this seems rather worrying.

As the Minister will know, there has been considerable controversy over the role of auditors and accountants in the past five years. The competition authorities in Europe have sought to break up the monopoly of the big five, although I am sure they would not put it as crudely as that. In the UK, the Competition Commission has also pursued these questions. There are also big ethical questions about the combination of roles between accounting and audit, which has resulted in some major scandals about the role of auditors.

Are we content that nothing in what we are doing in any way limits the ability of the authorities to pursue the cause of greater competition and greater separation of powers and duties? One of my really big worries about Brexit is that we may be creating a situation in which a close relationship between an industry and a UK ministry results in arrangements that are not in the interests of consumers or shareholders and that work against the public interest.

International Climate Action

Lord McNicol of West Kilbride Excerpts

Thursday 26th September 2019 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for repeating the Statement that has just been given in the other place. Unfortunately, I was not able to get an advance copy of the Statement, so that is something that we could try to work on in the future.

The climate emergency is the greatest danger facing our planet and all its inhabitants. It threatens our livelihoods and our lifestyles, and could soon, if not checked, put our very existence in danger. I am therefore pleased that the international community came together at the United Nations Climate Action Summit to recognise not only the threat that we collectively face, but the immeasurable suffering that is already happening across so many parts of the world. Through increasing temperatures and precipitation, diseases are being spread, homes are being destroyed and infrastructure and services are being disrupted. We should not treat the climate emergency as merely a current threat, but more as an immediate crisis that is currently leading to death and suffering across so many communities. We have only to look at the number and force of recent weather extremes, as extremes that were once a rare, once-in-a-generation occurrence now seem to happen far too regularly. It is important to understand that this can be tackled only through international co-operation. I am, therefore, disappointed by the themes that constantly thread through the Prime Minister’s speech, and indeed those of many of the other world leaders: it was full of empty rhetoric rather than commitment and action.

In the Statement that has just been read, the Minister said:

“Mr Speaker, the Prime Minister and other world leaders met because they wanted to take decisive collective action to cut emissions and to improve the resilience of countries and communities”.


Can the Minister give the House some details about what that decisive collective action is? In the following paragraph—I am not making light of this at all—the Minister rightly mentions that,

“we have cut emissions by 42% since 1990 while growing the economy by 72%”.

The Statement then explains that the cut in emissions from electricity production have come from a reduction in the use of coal from almost 40% to only 5%. Of the 42% overall reduction in emissions, how much is due to the reduction in the use of coal in electricity and power production?

The international community is still a long way from meeting the targets of the Intergovernmental Panel on Climate Change on limiting global warming. It is time to take concrete steps to address this. Some of the world’s largest economies—India, the US and China—are lagging far behind on their commitments, and give little indication of a serious change in direction. While I welcome the Prime Minister’s announcement about furthering our national contributions and efforts relating to international development, I ask the Government also to focus on how the UK economy may be adding to global emissions at home. The UK must urgently invest in green technology to rapidly decarbonise domestically in a way that could usher in a green industrial revolution. We have created some jobs, but creating more jobs and delivering more on this will reduce our carbon emissions at a far greater speed. Looking at the wider world, we must consider how our trade relationships can best be utilised and adapted to minimise emissions and meet those global targets.

As is touched on in the Statement, our planet is facing a grave predicament. I end, therefore, with a warning. The House may be aware that several other world leaders pledged ambitious net zero emissions targets. Many of those nations are smaller states already facing the worst consequences of the climate crisis. The world cannot afford a situation in which nations take emergency actions only when they are in immediate danger. We must all act now and take whatever recourses are possible to end the suffering that many already face. If we do not, the devastating results of volatile weather extremes will wreak havoc, through flooding and wildfire damage. The effects on food production, water availability and public health will be disastrous. The Government, and indeed the international community, must be more ambitious and begin to take action now, by aiming for net zero emissions by 2030.