Small Businesses: Late Payments

Lord Prior of Brampton Excerpts

Monday 11th September 2017 Lords Chamber

[Lord Harrison]

To ask Her Majesty’s Government what action they have taken to assist small businesses in accessing finance by tackling the issue of late payment of commercial debt.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)]

My Lords, we know how important tackling late payment is, especially for smaller businesses. We are taking forward a number of measures to improve payment practices across the public and private sector, including establishing the Small Business Commissioner and introducing transparency reporting in both public and private sectors.

[Lord Harrison (Lab)]

My Lords, there is an abject and continuing failure from this Government to outlaw late payment on commercial debt. The Federation of Small Businesses says that we lose 50,000 viable businesses every year, and we lose some £2.5 billion to the Exchequer, because of the failure to act on that effectively. Would the Minister write me a short but elegant essay on the question of how, given tonight’s vote in the other place, we might transport and import European legislation on this issue into UK law?

[Lord Prior of Brampton]

My Lords, of course I understand that late payment is very serious for many small businesses and cash is very important to them, but we have made very significant progress in this area. In central government, for example, 95% of all commercial debt is settled within seven days and 99% is settled within 30 days. It is true that in some parts of the economy—in construction, for example—payment terms are later. We believe that by bringing forward the Small Business Commissioner and bringing greater transparency to this area, it will get better.

[Earl Attlee (Con)]

My Lords, is not this a totally flawed economic system, where large businesses are financed by small businesses, although it is large businesses that can easily raise the finance? What are the disadvantages, if any, of moving to a system where all goods and services are paid for by the end of the month following the month of invoice?

[Lord Prior of Brampton]

Industries are very different from each other—the construction industry is very different from the retail business, for example. Waitrose has a scheme whereby it pays small businesses selling goods worth less than £100,000 a year to Waitrose within seven days. Rolls-Royce has a scheme with a time that is longer than that, and Marks & Spencer has a scheme giving special terms for smaller businesses. Some flexibility in this area is not unwarranted.

[Lord Palmer of Childs Hill (LD)]

My Lords, the consultation on the appointment of a Small Business Commissioner was first mentioned on 26 July 2015, and the end of the consultation was 7 October 2015. If this Government think that supporting small businesses is important, surely they should get their act together in under two years. If a small business had to wait for two years to make such an appointment, it would be bankrupt.

[Lord Prior of Brampton]

The noble Lord will be pleased to know that interviews have taken place for the Small Business Commissioner and an appointment will be made in the near term—“soon” is, I think, the right word. By the end of the year, when further secondary legislation comes through Parliament, the complaints handling system which the commissioner will operate will be in place as well.

[Lord Stevenson of Balmacara (Lab)]

My Lords, the Government have said that big businesses will begin mandatory reporting of their payment performance—a very important part of this new system—under new regulations from October 2017, via an online service. Yet we discovered, in response to a Written Question, that by the end of July only 208 businesses out of 15,000 had even been invited to join the system. That is 1% signed up so far. What is the current figure?

[Lord Prior of Brampton]

My Lords, I do not have that figure. The noble Lord is absolutely right that there is now an obligation on big companies to be transparent in their reporting. That came in in April 2017 and is done on an annual basis, so we will not know until April 2018 how many companies are doing it.

[Lord Hamilton of Epsom (Con)]

My Lords, when the late Lord Weinstock’s GEC took three months to pay my small engineering company, when it should have taken a month, I sued him in the county court and everything changed dramatically. Small companies are reluctant to sue big ones, but they fail to take into account that the accounts departments of these ginormous companies very rarely talk to the sales departments.

[Lord Prior of Brampton]

My Lords, the noble Lord makes a very good point. Small companies are often reticent to take on big ones, in the fear that they will lose business in the future. Making that relationship easier is one of the reasons why we are appointing the Small Business Commissioner. Where public contracts are involved, we have a mystery shopping service, which enables small companies to ask the Government, on their behalf, to verify late payment and understand why it is taking place.

[Lord Campbell-Savours (Lab)]

My Lords, this argument has been going on, under successive Governments, for the last 30 years at least. Where is the real resistance to change and intervention by government coming from? Nothing ever changes.

[Lord Prior of Brampton]

My Lords, there is a natural reluctance for any Government to get in between supplier and customer in commercial relationships. If there is a problem, it is much better if it can be sorted out. As my noble friend Lord Hamilton pointed out, there are ways of getting redress. I am not sure what the figures are, but I imagine that, going back 30 years, you would find that the average number of days outstanding for commercial debts has come down considerably.

[Lord Leigh of Hurley (Con)]

Does the Minister agree that part of the problem is that the SME community is underbanked? Nearly half are permanent non-borrowers and 90% of the SMEs which do borrow do so from the big four banks. Surely the answer to the credit problem is further steps like those that the Government have taken in establishing the British Business Bank and encouraging the growth of alternative finance. I declare my interests to your Lordships’ House.

[Lord Prior of Brampton]

My Lords, the British Business Bank is not a commercial lender in the way that Barclays or NatWest is. Alternative sources of finance, be it equity or quasi-equity, and making smaller companies’ balance sheets stronger are clearly a good way forward.

[Lord Cotter (LD)]

My Lords, have the Government looked into the issue of payments by NGOs, by enterprise agencies and by local councils, many of which get their funds originally from the Government? Will the Minister look into the issue of local payment by local organisations?

[Lord Prior of Brampton]

My Lords, I believe that local authorities are covered by the Public Contract Regulations 2015, so they have to publish their performance annually. They have to report against a 30-day target, so if their length of outstanding indebtedness goes beyond that it will be transparent and open for the public to see.

Euratom

Lord Prior of Brampton Excerpts

Thursday 20th July 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)]

My Lords, I also thank the noble Lord, Lord Teverson, for bringing this debate to the House today. We discussed the implications for Euratom at the time of the Article 50 notice being given. At that time, it was explained that the machinery of the two treaties was inextricably intertwined and that it was not possible to give notice under Article 50 without also giving notice under Euratom. I am sure we may wish to debate that issue further on another day but that is the position as I understand it.

The noble Lord was quite right when he started the debate by saying that Euratom is hugely important yet it is a treaty that few people had ever heard of. However, the Government are certainly under no illusions about how important Euratom is. I hope that I shall pick up most of the questions raised by noble Lords in this debate while I wind up. In so far as I do not, I will write.

[Lord Kerr of Kinlochard (CB)]

If they are “inextricably intertwined”, why did the letter have a specific, separate paragraph saying that, in addition to leaving the European Union, we wish to leave Euratom?

[Lord Prior of Brampton]

My Lords, I cannot answer that question standing here because I do not know. I am not briefed for a long and intricate legal discussion about how notice given under Article 50 related to Euratom. If it is all right with the noble Lord, I will write to him after the debate.

I should make clear to noble Lords that the Government regard the Euratom situation as hugely important and serious. At the beginning of my remarks, I should also be absolutely clear on three broad points. First, our aim is to maintain our mutually successful civil nuclear co-operation with Euratom. Secondly, we are committed to the highest standards of nuclear safety and support for the industry. Thirdly, we will continue to apply international standards on nuclear safeguards.

A number of noble Lords raised the issue of medical isotopes. There is a genuine difference of understanding here. We do not believe that leaving Euratom will have any adverse effect on the supply of medical radio-isotopes. Here, I was very sorry to hear about the noble Lord, Lord O’Neill. We will all think of him and hope he makes a good recovery over the summer. However, contrary to what has been in some newspapers that noble Lords may have read, medical radio-isotopes are not classed as special fissile material and are not subject to nuclear safeguards. Put frankly, you cannot build a nuclear weapon out of medical radioactive material. They are not part of the nuclear non-proliferation treaty, which is the driver of our nuclear safeguards regime.

In addition, Euratom places no restrictions on the export of medical isotopes to countries outside the EU. It is in everyone’s interests to ensure that there are no restrictions on the export of medical isotopes to countries outside the EU. These isotopes are not subject to Euratom supply agency contracts or to Euratom safeguards. This means that no special arrangements need to be put in place ahead of withdrawal. The UK’s ability to import medical isotopes from Europe and the rest of the world will not be affected.

Let me say a little more about safeguards as this is also, quite rightly, a subject with which noble Lords are concerned. It is clear that we need continuity and must avoid any break in our safeguards regime. The UK meets our safeguards standards through our membership of Euratom. The Government’s aim is clear: we want to maintain our mutually successful civil nuclear co-operation with Euratom. We can do so while establishing our own nuclear safeguards regime, using the body that already regulates nuclear security and safety: the Office for Nuclear Regulation. To do that, we need primary legislation.

That is why the Queen’s Speech on 21 June included our intention to take powers to set up a domestic nuclear safeguards regime, in partnership with the Office for Nuclear Regulation, to enable us to continue to meet international safeguards and nuclear non-proliferation obligations. Regardless of where Members of both Houses may stand on the UK’s future relationship with Euratom, I hope we can all agree that it is sensible and prudent to take such powers.

I know that your Lordships are keen to understand the Government’s approach to securing a successful negotiation outcome and continuity for our nuclear industry. I should like to set out here what the Government have been doing to further the UK’s interests. First, your Lordships will be aware that on 22 May, the Government formally entered EU exit negotiations with the European Commission. The EU negotiating directives, agreed by the European Council on 22 May, set out priority issues that have been identified by the EU as necessary for the orderly withdrawal of the UK. As part of these priority issues, the directives noted that a suitable agreement will need to be reached in relation to the ownership of “special fissile materials” and safeguards equipment in the UK which are currently the property of Euratom. The outcome of such an agreement, as with the rest of the UK’s future relationship with Euratom, will be subject to negotiations with the EU and Euratom.

The Government’s primary aim throughout these negotiations will be to maintain our mutually successful civil nuclear co-operation with Euratom and the rest of the world. We are strong supporters of Euratom and that is not going to change. Last Friday, the UK published a position paper setting out its objectives for a future relationship with Euratom. We are ready and confident that we can find common ground as officials enter this first phase of negotiations but, regardless of where we stand on the question of membership, associate membership, transition or departure from Euratom, we can agree that it is sensible and prudent to ensure that the Office for Nuclear Regulation has the power it needs for a domestic safeguards regime.

Secondly, we are keen to ensure that there is minimal disruption to civil nuclear trade and co-operation with non-European partners. To this end, the Government are negotiating with the United States, Canada, Australia and Japan so that the UK has appropriate nuclear co-operation agreements in place. Government officials have met with the Canadian Government and the Canadian regulators; we have also written to them at ministerial level. Canada is as keen as we are to reach a new agreement on bilateral terms. That is equally true of the USA, Japan and Australia, with all of whom we have started constructive discussions.

Let me reinforce this point because it may be that the House has heard or read that everything has to be done in a sequence that will take many years. I can tell the House that not only is it possible to do these things in parallel but we have already started to do so. We are preparing a domestic nuclear safeguards Bill; we are opening negotiations with the EU; we are talking to third countries about bilateral agreements; finally, of course, we are talking to the International Atomic Energy Agency. My officials have met with IAEA officials in Vienna and had constructive conversations about a new voluntary offer agreement, to replace the current one that we have by virtue of our Euratom membership.

There should be no question of any lack of support for Euratom. The decision to leave was taken at the time of triggering Article 50. Noble Lords will be aware that the triggering of Article 50 notified the Commission of the UK’s intention to leave the European Union and to leave Euratom, as the EU and Euratom are uniquely and legally joined. Leaving one means leaving the other. That is an issue we addressed earlier but I will write to the noble Lord, Lord Kerr, about it. The UK has been at the forefront on nuclear non-proliferation for 60 years and we have been members of Euratom since 1973. I have no doubt that we can bring all these discussions to a satisfactory conclusion.

A number of noble Lords raised issues of research, in particular that done at Culham. In last week’s Westminster Hall debate my fellow Minister, the honourable Member for Watford, Richard Harrington, set out that the Government are pursuing research and development opportunities with our European counterparts. My right honourable friend the Secretary of State announced on 27 June the underwriting of the UK’s share of the EU JET fusion project. This demonstrates our commitment to continued nuclear research and development collaboration, and in particular to the world-leading Culham Centre for Fusion Energy located near Oxford. The UK’s participation in JET and the ITER project in France supports around 1,300 jobs, which includes 600 highly skilled positions. UK engineering and technology firms have indirectly benefited, as we heard from a noble Lord earlier, from around €500 million-worth of ITER construction contracts.

In conclusion, I make it clear that the Government are determined to continue a constructive, collaborative relationship with Euratom. The UK is a great supporter of Euratom and will continue to be so. This Government remain absolutely committed to the highest standards of nuclear safety and to supporting the nuclear industry. We will achieve this through continued application of international standards on nuclear safeguards, new legislation and new agreements with our international partners.

Industrial Strategy

Lord Prior of Brampton Excerpts

Wednesday 19th July 2017 Lords Chamber

[Lord Fox]

To ask Her Majesty’s Government what conclusions they have drawn from their consultation on the introduction of a new industrial strategy.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)]

My Lords, the responses to the consultation are broadly supportive of the proposals in the Green Paper and endorse the challenge of developing an ambitious and enduring industrial strategy that sets a clear long-term vision and works for all parts of the country. The responses will inform the development of the White Paper to be published later this year.

[Lord Fox (LD)]

I thank the noble Lord for his response and for the fact that the consultation is being heeded. I understand that sector discussions are under way and that the metaphor has moved from referring to 10 pillars down to four. Quite apart from that giving the department more time to spend on Brexit chaos, what is the rationale behind this change and which of the pillars have been jettisoned?

[Lord Prior of Brampton]

I think that the noble Lord is confusing two things. This is a question about how the White Paper is to be structured. It is clear from the feedback received during the consultation period that technical skills is probably the most important area we need to focus on, along with universities and science and innovation, infrastructure, and what we all call “place”. We cannot have an industrial strategy that does not reach out to other parts of the country beyond London.

[Lord West of Spithead (Lab)]

My Lords, I am sure that the Minister will agree that a key plank of any industrial strategy is the shipbuilding strategy which we were promised in the spring of this year. It is now past the summer solstice and by the time we sit again the September equinox will have come and gone, so which spring are the Government talking about, bearing in mind that the recent order for three frigates does not really solve the terrible problem of having too few escorts for our great nation? It is a national disgrace. So when will the shipbuilding strategy actually be on the streets?

--- Later in debate ---

[Lord Prior of Brampton]

I thank the noble Lord. The shipbuilding strategy will be an important part of our overall industrial strategy, and of course it is not just about naval shipbuilding, it is about civil shipbuilding as well.

[Lord Patel (CB)]

My Lords, when do the Government intend to publish the life sciences industrial strategy? When it is published, will it be a definitive document with timelines over the next two, four, six and 10 years, or will it just be a wish list?

[Lord Prior of Brampton]

A strategy for life sciences is a critical part of our industrial strategy. It will be published imminently and certainly well before the industrial strategy is published in the autumn. It will not only set out a strategy for one year but look forward for at least 10 years.

[Baroness Harding of Winscombe (Con)]

My Lords, does the Minister agree that it is competition that brings out the best not just in politicians but in businesses, whether they are small, medium or large? Can my noble friend assure us that the industrial strategy will not ditch this but instead strengthen our competition authorities?

[Lord Prior of Brampton]

I agree with my noble friend that competition is essential to drive improvement and progress. It is also important that government, industry and academia/universities work together very closely.

[Lord Kinnock (Lab)]

My Lords, does the Minister recall that at the time of the publication of the Green Paper on industrial strategy there was considerable disappointment, which was entirely justified, at the scant mention of steel—indeed, it appeared once, on page 96? Can he give us an undertaking now that in the forthcoming White Paper there will be a cogent and effective strategy for steel to uphold the interests and competitiveness of this crucial foundation industry?

[Lord Prior of Brampton]

Steel is clearly a very important part of any industrial strategy, but I should make it absolutely clear to the noble Lord that this strategy is about the future and not just about incumbents. While there is an important future for steel, there is also the whole new world of digital technologies, which are also very important.

[Lord Hennessy of Nympsfield (CB)]

My Lords, when your Lordships’ House first debated the Green Paper on industrial strategy, I asked the Minister what were its magic ingredients that had eluded the framers of the previous nine industrial strategies since the Second World War. I wonder whether the consultation has shed any light so that he can give me a considered answer beyond the one that he gave me that day.

[Lord Prior of Brampton]

I fear that I may be giving the noble Lord almost the same answer, but there are two critical elements of the industrial strategy. One is technical skills, an area where, if we are honest, we admit that we have been struggling since the 1950s, and the second is to build on the extraordinary comparative advantage that we have in our universities.

[Lord Stevenson of Balmacara (Lab)]

My Lords, the noble Lord will be aware of the independent Industrial Strategy Commission, which reported recently. It said that a key component of a successful and sustainable industrial strategy would be enhancing a state’s purchasing and regulating power. Does the Minister agree? Will he give some examples of where that might happen, including in such areas as diversity and apprenticeship training, which have been so lacking in recent years?

[Lord Prior of Brampton]

There is no doubt that government procurement is critical; for example, in the construction industry. For example, Crossrail has built into a number of its contracts requirements for apprenticeship training and for using new technologies and small businesses. There is no doubt that procurement can be extremely important.

[Baroness Bonham-Carter of Yarnbury (LD)]

My Lords, I congratulate the Government on their commitment in the Green Paper to an early deal for the creative industries sector, but how are they planning to support skills in that sector, which are so important, particularly given the prospect of Brexit, when they are not covered by the innovation and research budget? Is the DfE involved in discussion and happy to allow creative companies flexibility in their use of the apprenticeship levy?

[Lord Prior of Brampton]

The noble Baroness probably knows that Sir Peter Bazalgette will produce a paper for us on the creative industries. I am sure that he will make a number of recommendations about how we develop skills to support the creative industries. We should hear from him within a couple of months.

[Baroness McIntosh of Pickering (Con)]

My Lords, does my noble friend agree that the industrial strategy should have a rural slant to it? Will he use his good offices to ensure that rural areas will have access to technologies such as broadband and mobile phone coverage, which is woeful at present?

[Lord Prior of Brampton]

My noble friend will be pleased to know that there is a commitment in our strategy to spend £740 million on improving our broadband and ensuring that 5G is made much more available around the country.

Deregulation: Public Services and Health and Safety

Lord Prior of Brampton Excerpts

Thursday 13th July 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)]

My Lords, I thank the noble Baroness, Lady Andrews, for tabling this debate, which has been of an exceptionally high standard—

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

There was an agreement that the noble Lord might wish to make an intervention at some point during the closing speech, but not at the very beginning. If he wishes to, he will be able to do so, but it should be short and during the closing speech.

[Lord Prior of Brampton]

I have forgotten where I had got to. The noble Baroness, Lady Andrews, raised a rather existential question at the beginning of her speech when she asked, “What kind of state do we want to live in?”. Many noble Lords on the other side may be thinking about that at the moment, as noble Lords on our side may also be. I heard the Mayor of London on “Newsnight” last night talking about London and the tale of two cities: the invisible people as well as the visible people. This awful tragedy at Grenfell goes far beyond the narrow issues we have been talking about today. It asks all of us what kind of state we want to live in. However, I take issue with one point the noble Baroness made, when she said that we were ideologically opposed to regulation. As someone who was chairman of the Care Quality Commission for several years and has been quite heavily involved in education for many years, I can tell the noble Baroness that we are not ideologically opposed to regulation; I will address that issue later on in my speech.

I will go further than that and say that regulation is essential to any civilised society. The noble Lord, Lord Whitty, referred back to Lord Shaftesbury. I had hoped that Lord Shaftesbury was a Tory, but I note that as it happens, he was a Whig. However, many former Conservative Prime Ministers throughout the Victorian age were at the forefront of bringing regulation into the factories, to chimneys and the like. So let us be absolutely clear that regulation has a long and proud history and that it is an important and crucial part of improving people’s lives. That does not mean, as a number of noble Lords said, that all regulation is perfect, or that some regulations have gone beyond their sell-by date. All regulation needs to be kept under constant review.

We have heard a number of examples from the environmental field, particularly from the noble Lord, Lord Smith, and there has been no question that regulation has achieved hugely beneficial things. The noble Baroness, Lady Young, mentioned beaches and water quality, as well as air quality and the like. There is no question that regulations have had a huge impact to the good in that area. However, the noble Baroness is concerned within the context of Brexit about some of the principles that underlie some of that EU regulation. For example, she mentioned the principle that the polluter pays. There is nothing to stop us incorporating that as a principle in our future environmental legislation here, and in a post-Brexit world we can carry on many of the good things that have come out of Europe, of which there are many. The noble Baroness mentioned pollution in the inner Thames. The Thames tideway project will remove 60 million litres of raw sewage out of the Thames, and we can do that both in or outside Europe.

[Baroness Young of Old Scone]

It is slightly fishy that action on the tideway happened only when Europe threatened to fine us.

[Lord Prior of Brampton]

Europe has brought us many good things.

[A noble Lord]

Hear, hear.

[Lord Prior of Brampton]

I do not think that there is any doubt about that on all sides of the House; even people who were supportive of Brexit will accept that Europe has brought us some good things. One of the criticisms has often been that we have gold-plated things that have come out of Europe and made them stronger.

On the subject of Europe, as it happens, I just received a “Dear Colleague” letter from David Davis, and it is worth reading just one paragraph. He says that the repeal Bill,

“ensures, as far as possible, that the same rules and laws will apply on the day after exit as on the day before. For business, workers and consumers across the UK this means that they can have confidence that they will not be subject to unexpected changes on the day we leave the EU … This Bill is not a vehicle for policy changes”.

It is worth making sure that that is on the record.

Turning back to regulation, it needs to be kept under constant review. Products change, technology changes, and, more than anything, people’s expectations change. The noble Lords, Lord Whitty and Lord Hunt, went back 30 or 40 years, and all Governments, rightly, while not obsessed with the need to review regulation constantly, have taken it seriously. A fault of regulation is that although it can drive up quality, it can also level down to minimum standards. That is one of the reasons why it has to be constantly reviewed, because what was acceptable 30 or 40 years ago may not be acceptable today. That is one of the reasons why regulation needs constant revision.

What has been the recent history of keeping our rulebooks and regulation up to date? Over the past 20 years, all Governments of all parties have been working consistently on getting the delicate balance right between the costs and benefits of regulation, developing a number of tools and institutions to make our rulebooks the right ones to have. The tone that has surrounded the debate about regulation has not been a happy one. Regulations and those who enforce them have been subject to caricature and ridicule. The culture that has surrounded regulation has not been very constructive.

In 1997 the Labour Government set up the Better Regulation Task Force. I think it is worth stressing the word “better”—it was better, not lesser, and that has been a consistent theme for the past 20 years. The Better Regulation Task Force identified the basic tests of whether any regulation is fit for purpose, which were set out by the noble Baroness, Lady Crawley: proportionality, accountability, consistency, transparency and targeting. The only word I would add is “intelligent”. There are times when regulations have ticked the box but entirely missed the point. Regulations need to be enforced intelligently. Sometimes more is less.

March 2005 saw the creation of the Better Regulation Executive and the publication of the Hampton report, which led to the introduction of the Regulators’ Code in 2008, which asks regulators to perform their duties in a business-friendly way, by planning regulation and inspections in a way that causes least disruption to the economy. At the same time the Government adopted a target to reduce the administrative burdens of legislation, such as form-filling, by 25%. The rule that has attracted the most criticism today is the coalition Government’s one-in, one-out rule, which later became one in, two out. I should say that in taking two out, they did not have to come from the same area: if you introduced one regulation on safety, you did not have to take out two relating to safety. The coalition also introduced the Red Tape Challenge initiative to tackle the stock of regulation by asking the public to help identify outdated, unnecessary or overly complex legislation.

I argue that these initiatives have delivered some real improvements in how people, business and public bodies are regulated. This includes the removal of some outdated and rather bizarre rules, such as the requirement for childminders who feed children in their care to register as a food business, or the ban on teenagers buying Christmas crackers. But it has also seen the removal of a huge amount of unnecessary form-filling, as well as simplification; for example, 37 million vehicles no longer need a paper tax disc, and small firms do not have to do full audits on their accounts, saving them some £300 million a year.

Of course, in the light of the awful tragedy at Grenfell, we are looking at regulation anew.

[Lord Curry of Kirkharle]

My Lords, I thank the Minister for giving way. He has reached the point in his speech that is relevant to the comments I want to make. As the noble Baroness, Lady Young, indicated, I chaired the Better Regulation Executive during the coalition period from 2010 to 2015, so was responsible for the one-in, one-out and one-in, two-out process, and the Red Tape Challenge programme. It is important to bear in mind that in 2010 business attitudes in Britain were very negative about regulation. We regularly carried out surveys and in 2010 62% of businesses regarded regulation as a barrier to progress and expansion. By the end of that period, that had dropped to 42%. We did that, as the Minister indicated, without putting lives at risk. It forced departments to really review their stock of regulation and to consider regulation that had become outdated and irrelevant. As a cleansing exercise it was a very effective process. I have to say that I was never responsible for one in, three out, which I believe is a step too far, and even one in, two out can be administered for only a short period to allow departments to really look at their stock and, having done that, to move on. The change in business attitudes to regulation in Britain is really important as we face Brexit. We want Britain to be an economy where businesses want to be located, grow and expand, and we need to encourage that thinking.

[Lord Prior of Brampton]

I thank the noble Lord for that intervention. It is worth noting that over this period, in which a significant number of regulations were taken off the statute book, public safety has improved significantly; for example, the number of fatal injuries in the workplace has halved over the past two decades. Deregulation and public safety are not necessarily contradictory. Throughout this time successive Governments have continued to bring in new regulations when they are necessary, including the licensing of security staff, the mandatory wearing of seatbelts and banning smoking from workplaces. Whenever there has been a public safety or public health issue, the Government have not been slow to bring in new regulations.

How regulation is delivered is just as important as having the right protections in place. My department works with regulators and businesses to support good regulatory delivery so that regulation works in practice. That is one reason why the number of businesses that object to regulations has dropped from 62% to 42%. Good regulatory delivery is not about less enforcement, nor necessarily about a light touch. It is about having competent regulators, being outcome-focused and having regulatory activities that rely on a robust assessment of risk. Those are the principles that underpin good regulatory delivery. It is not about officious box-ticking.

There has been a strong focus in government, in this and previous Administrations, on improving how regulators deliver the protections they are responsible for. Regulators must have regard to the Regulators’ Code, introduced in 2008 and updated in 2014. It is a principles-based framework for how regulators should engage with those they regulate. It requires regulators to consider risk and to be transparent about their activities and expectations. It applies to nearly all regulators across the UK, including fire and rescue services, trading standards and national regulators such as the Health and Safety Executive. Regulators know the industries they work with and the outcomes that they need to deliver, whether that is the safety of premises or the labelling of foods. Through robust risk assessment they can identify and target the highest risks more effectively and make the most difference.

I think the crux of today’s debate is whether the pendulum has swung too far in one direction or whether we have got it about right. That is a matter of judgment. Of course, the awful tragedy at Grenfell will make us rethink some of these issues. I hope it will change the culture that surrounds the way we look at regulation. It is worth repeating the words of my right honourable friend Damian Green, when he said yesterday in the House of Commons:

“The Department for Communities and Local Government and the Cabinet Office are working together across the piece and on the wider building safety programme, about which I know hon. Members on both sides of the House are concerned … DCLG has formed an expert advisory panel made up of a range of building and fire safety experts to advise the Government on any immediate action required to ensure that buildings are safe”.—[Official Report, Commons, 12/7/17; cols. 316-17.]


The panel will certainly take into account the words of the noble Lords, Lord Tunnicliffe and Lord Stunell, who both made very interesting observations about how we can improve safety regulations in buildings.

This debate will carry on into the future. I feel that the balance we have achieved over the past 20 years has been about right. It is now time to think afresh about how we approach regulation and certainly time to stop demonising those people who are involved in the enforcement of regulations.

[Baroness Andrews (Lab)]

My Lords, I am very grateful to everyone who has taken part. I said that I thought that this would be the start of a wider debate on the state of the nation and the nature of attitudes towards regulation, and so it has turned out. I note that in concluding, the Minister said that he hopes that Grenfell Tower will indeed change the culture around regulation, and I hope that that is the case. It is up to the Government, essentially, whether that happens.

I thank all noble Lords for their incredibly thoughtful and informative contributions. I say to the noble Lord, Lord Patten, that there was wide consensus around the House that the attempt to introduce effective, proportionate regulation started with the Labour Government, but there was also a sense around the House that there has been a step change to a more aggressive culture. The Prime Minister has learned of the absurdity and perversity of the process and outcomes of some of the ways in which the one in, three out rule has been interpreted. I was particularly grateful for the contribution of the noble Lord, Lord Stunell, his frank and thoughtful account of his time as a Minister, and his proposition on building inspection responsibility.

I asked the Minister four questions; none of them has been answered. I understand why two of them were not. They were about the review of regulation, although he gave some illustrations of outcomes. I should be very grateful if he would answer them as best he can, especially the invitations to the organisations that I mentioned.

[Lord Prior of Brampton]

I am sure that I can address those questions. On the meeting with the two groups of people that the noble Baroness suggested, I would be very happy to do that, but I think it would be best if they met my noble friend Lord Bourne from the DCLG, rather than me.

[Baroness Andrews]

I understand and am grateful for that.

In conclusion, Brexit raises huge problems, some of which have been identified today, in terms of transposition and enforcement. I go back to where the noble Lord, Lord Best, started: when we have effective regulation, high standards and high ambitions for the quality of public services—what we provide by way of housing and everything else—we are actually doing a service to the economy as well as to the community. That should be our ambition; that should be what we want government to do; that should be what we want the state to do.

I am very grateful to all noble Lords who have taken part, some at considerable personal expense, and I hope that this will open up a debate which we will continue, particularly as we face the prospect of Brexit. I beg to move.

Taylor Review of Modern Working Practices

Lord Prior of Brampton Excerpts

Tuesday 11th July 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)]

My Lords, with the permission of the House, I would like to repeat a Statement made in the other place by the Parliamentary Under-Secretary of State for Small Business, Consumers and Corporate Responsibility, Margot James, on the independent review of modern working practices, which was led by Matthew Taylor and published earlier today. The Statement is as follows.

“Mr Speaker, the review sets out that British business is successful at creating jobs, enhancing earning power and improving life chances across the UK. Employment rates are the highest since records began. Unemployment and economic inactivity are at record lows. More people are in work than ever before and minimum wage rates have never been higher. This is a story of success and one which this Government will seek to sustain.

The UK economy’s continued success is built on the flexibility of our labour market, which benefits both workers and business. Businesses can create jobs and individuals can find work because our labour market regulation balances the demands of both. Minimum standards set a baseline, beyond which there is flexibility to set arrangements to suit all parties. Our dynamic approach responds well to fluctuations in the economic cycle without the structural weaknesses present in some other countries.

It is important that we preserve this success but also enhance it further. While the majority of people employed in the UK are in full-time, permanent employment, globalisation, demographics and especially technology are changing the way in which we work. We need to make sure that the British labour market stays strong and that everyone in the UK can benefit from it.

That is why, last year, the Prime Minister asked Matthew Taylor, chief executive of the Royal Society of Arts, to lead an independent review of employment practices in the modern economy. That review has now been published and I am delighted to lay a copy in the House Library today. It is a thorough and detailed piece of work, for which I am very grateful not only to Matthew and his panel members but to the numerous businesses, trade unions, organisations and individuals who have provided their views on this very important topic.

The review has a strong overarching ambition: that all work in the UK should be fair and decent with realistic scope for fulfilment and progression. Matthew has outlined seven principles to meet this ambition, and I urge honourable Members to examine these principles and the rest of the report in detail, since it is an important contribution to a critical subject.

In summary, these principles are: that our national strategy for work should be explicitly directed towards the goal of good work for all; that platform-based working offers welcome opportunities for genuine flexibility but there should be greater distinction between workers—or as the review suggests renaming them, “dependent contractors”—and those who are fully self-employed; that there should be additional protections for this group and stronger incentives for firms to treat them fairly; that the best way to achieve better work is through good corporate governance, good management and strong employment relations; that it is vital that individuals have realistically attainable ways to strengthen their future work prospects; that there should be a more proactive approach to workplace health; and that the national living wage is a powerful tool to raise the financial baseline of low-paid workers but it needs to be accompanied by sectoral strategies, engaging employers, employees and stakeholders to raise prospects further.

This is an independent review addressed to government. While we may not ultimately accept every recommendation in full, I am determined that we consider the report very carefully, and we will respond fully by the end of the year.

Matthew Taylor has been clear: the UK labour market is a success; the “British way” works. But he has also said that there are instances where it is not working fairly for everyone. For example, he highlights where our legislation needs updating or where flexibility seems only to work one way, to the benefit of the employer. We recognise the points he makes. We accept that as a country we now need to focus as much on the quality of the working experience, especially for those in lower-paid roles, as on the number of jobs we create, vital though that is.

This Government have made a commitment to upholding workers’ rights. The Prime Minister has said repeatedly, in this House and elsewhere, that as we leave the EU there will be no rollback of employment protections. The Queen’s Speech also sets out that this Government will go further than that and will seek to enhance rights and protections in the modern workplace. Today’s publication of the Good Work review, and the public consideration of Matthew’s recommendations that will follow, will help to inform the development of our industrial strategy in the autumn. I commend the Statement to the House”.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, this report is welcome as it frames the need to reconsider working conditions in a clear manner. I should like to quote from it that,

“while having employment is itself vital to people’s health and well-being, the quality of people’s work is also a major factor in helping people to stay healthy and happy, something which benefits them and serves the wider public interest”.

This is an important and true statement that we should bear in mind when considering not only this report but the wider realm of employment and industrial strategy. We are living in a time of huge change in the world of work, so the Prime Minister was right to ask Matthew Taylor to carry out an independent review and produce a report. As noble Lords will have noted when I dropped it just now, the resulting document is comprehensive and hard to absorb in the short time we have had to do so.

The Government’s Statement points out that the report highlights the need to deliver additional protection to the increasing number of people we describe as platform-based, or rather, what we know as the gig economy. The most important distinction to make is between the creation of a new group of workers or dependent contractors and those who are truly self-employed. While this may seem to be tame to some, it is starting to move down the road of classifying people in a way that enables them to have the rights they deserve. So it should be no surprise that the Liberal Democrats broadly welcome the recommendations in the Taylor review. The right to request fixed hours and employment rights for those who are now classified as dependent contractors was set out in the Lib Dem manifesto, so obviously we support that. If enacted, it will provide additional protections for this group as well as strong incentives for firms to treat these workers fairly. It is clear that these rules will have to be backed up by policing. That will improve workers’ rights in the gig economy while maintaining flexibility for those who want it, and that is the key. Some people want flexibility, but others have it thrust upon them. Noble Lords may remember that the Government opposed these proposals during the coalition Government.

We should also remember of course that workers’ rights are ultimately underpinned by EU law. This is backed up by the UK’s ability to create and protect high-quality jobs, which in itself is dependent on the UK being part of the single market. As noble Lords would expect me to say, under Theresa May’s Brexit plans we will continue to see falling real wages and slowing economic growth, and jobs will begin to fall back. This is bad for all workers but it is worse for these workers. Furthermore, there are some people—including on the Benches opposite—who will seek to use Brexit not to strengthen workers’ rights, but to weaken or even abolish some of them.

That is why it is important for the Government not to get bogged down in this report and to move swiftly. The Minister has pledged to respond by the end of the year. We look forward to the industrial strategy and how that will play into this. We believe it is important that the Government proceed rapidly to a conclusion that accepts the clear direction of this report and brings forward proposals that will enact its substance. The longer the Government delay, the longer this important and growing band of workers will be deprived of justified employment rights. The longer the Government delay, the more suspicions will be raised that Brexit will be used to water down people’s rights. As the report says:

“All work in the UK economy should be fair and decent with realistic scope for development and fulfilment”.


We hope the Government accept that point and bring forward rules and laws that help to bring it about.

[Lord Prior of Brampton]

My Lords, I shall first respond to the two asks from the noble Baroness, Lady Hayter, the first of which was that we should take into account the consumer. She is absolutely right. I read the report fairly rapidly myself and she is right about that. Thinking about it, it is very much focused on workers and businesses. We ought to look at it through the eyes of the consumer, such as the lady waiting for her Uber late at night who wants to know that the driver is indeed safe, healthy and wide awake. That is certainly something we will feed back into the consultation over the next few months.

Secondly, the noble Baroness raised the involvement of trade unions. They have been fully involved in this whole process. Matthew Taylor has been exemplary in reaching out to all kinds of people, not least the trade unions. As she knows, trade unions these days are very much focused on public services. Their representation not just in the gig economy but in the private sector as a whole is much diminished. In part that is because many companies in the private sector have exemplary employee relations and have done an extremely fine job. There is much the public sector can learn from the private sector in some of these areas. Nevertheless, I assure the noble Baroness that Matthew Taylor has indeed reached out to the trade unions.

The noble Baroness also raised employee tribunals. I have a note on that, but maybe, since it is a fairly narrow area, I will write to her about it. She knows we are consulting on this to reduce the threshold to enable help for industrial tribunal fees, but I will write on that point.

The noble Baroness ended by saying that she thought this was a slightly tame report—I think that is the word she used. I argue, as I think the noble Lord, Lord Fox, would, that it is a balanced and fair report. It is not sensational, in part because the system is working quite well. The statistic that really surprised me on reading the report was that there has not been nearly as much change in the labour market over the last 20 years as I thought. Actually, 63% of people in full-time employment are on a conventional employment contract, and 20 years ago the figure was 64.6%. I thought a bigger change had happened. Nevertheless, as the noble Lord, Lord Fox, commented, this is an important and growing part of the economy. It is quite right that we should look at this issue now and get the balance right between flexibility on the one hand and proper job security on the other. It is an extremely important balance to get right.

I assure the noble Lord that the Conservative Party and the Prime Minister are not using Brexit as any excuse for watering down employee rights. The Prime Minister has been absolutely clear that she wishes to maintain and even enhance employee rights, and this is an area where maybe we can enhance employee rights.

The noble Lord asked for a rapid response. Of course, that is tempting, because I think we all agree with the spirit of the report. It is easy to talk in generalisations today, but it may take a little longer to get some of the distinctions right between employee, self-employed, worker and dependent contractor, and nail them down so they have legal validity.

I think we all agree with the noble Lord that all employment should be fair and decent, with scope for fulfilment. It is easy to say that that is just motherhood and apple pie, but there is no doubt that companies that treat their employees fairly and decently and as proper colleagues have much better results.

[Lord Cormack (Con)]

My Lords, the remarks of the noble Baroness, Lady Hayter, about Uber were extremely important. They illustrate that quality, reliability and excellence of products and services are essential. Does my noble friend accept that there is a real threat to the quality, reliability and excellence of taxi services in London, which, in black cabs, enjoys the finest service in the world? Whatever is done as a result of this report, it should try to ensure that there is proper equality of treatment between those who provide a service as well.

[Lord Prior of Brampton]

My Lords, I concur entirely with part of what my noble friend said: that black cabs in London provide a remarkable service. However, Uber provides a remarkable service in many respects. As the noble Baroness, Lady Hayter, said, it is now an extremely valuable and important service. I do not think that there is any contradiction in having a successful Uber service, or one similar to it, running alongside the excellent black cab service in London.

[Lord Lea of Crondall (Lab)]

My Lords, I think it is apparent that this side of the House would not agree with the Minister’s throwaway line that,

“the system is working quite well”.

That is not the theme of the report. Nor is it true, if one looks at manifold evidence from public opinion polls, that job security is not prevalent as an issue and a worry for almost all classes of worker. It is being economical with the truth to make generalisations about workers preferring casual hours to guaranteed hours. There may be some people—students are a good example, out of term time or even in it in some cases—who prefer such hours, but does the Minister accept that you cannot get a mortgage on a zero-hours contract? Has the Minister done any research on whether that is true? If not, will he do some research and let the House know, perhaps in a letter? Is it possible to get a mortgage on a zero-hours contract? If it is not, does that not mean that we live in a two-class society—with different types of contract of employment —in respect of one of people’s most vital needs: to be able to get a mortgage, with those on such contracts falling away financially from people who are able to buy a house?

[Lord Prior of Brampton]

My Lords, on the noble Lord’s general point about the underlying theme of the report, I shall quote to him from the beginning of it—these are Matthew Taylor’s words and not mine—where he says of our flexible labour market that,

“the British way is rightly seen internationally as largely successful”.

Everything that comes through this report tells us that while the system is not perfect it is actually working quite well.

The noble Lord is right that even where people are working quite a few hours under a zero-hours contract they still find it very difficult to get a mortgage because the mortgage company sees it as zero hours. That is why one recommendation of the report, and it is an eminently sensible one, is that where an individual consistently works a number of hours on a zero-hours contract, after a year they can request that it be converted to a fixed-hours contract. That is one of the report’s recommendations that we will take extremely seriously.

[Lord Higgins (Con)]

My Lords, it seems that both the noble Baroness on the Opposition Front Bench and my noble friend are under some misapprehension regarding the relationship between Uber and black taxis. It is now perfectly easy, on a free app, to summon a black taxi on one’s iPhone and there is no competitive advantage, as far as Uber is concerned, in that respect. It also emerged from the debate the other night that it is very necessary for there to be some control over the number of minicabs. At the moment, neither Transport for London nor this House nor anyone else has any control over the number of minicabs given licences.

[Lord Prior of Brampton]

My noble friend makes an interesting point which is slightly outside the remit of the report but is something that I am sure will be drawn to the attention of the mayor—I think it is the mayor’s responsibility.

[Baroness Hollis of Heigham (Lab)]

My Lords, I think it is right to say that students and early-retired people welcome flexibility, but there is a real problem for people, particularly lone parents with children and so on, in maintaining an acceptable and predictable income in a zero-hours contract economy. Many retailers use zero-hours contracts, yet senior managers in retail have said that because demand is predictable, zero-hours contracts in retail are lazy management. What will the Minister say to the lone parent who, as a cinema usherette, does not know from week to week whether she is going to work four hours a week or 34? Will he, in that case, take it up with his colleagues in the DWP, because the benefits which make her income possible are always falling behind her hours and she therefore never knows from week to week whether she can afford to get the fridge repaired or buy her son his trainers?

[Lord Prior of Brampton]

The noble Baroness makes a very good point. Certainly, some 20% of those on zero-hours contracts are students who are using it to top up. Equally, people who have retired use it to top up, and it is much less satisfactory for people for whom it is their main source of income. One point that Matthew Taylor makes in his report, and it is a good point, is that some employers are quite lazy about this: they do not have to schedule the hours properly because they know that they have people on tap. One of his recommendations in the report is to address that issue.

[Baroness Altmann (Con)]

My Lords—

--- Later in debate ---

[Baroness Altmann]

I thank my noble friend. I congratulate Matthew Taylor on his excellent report and I particularly congratulate the Government on achieving record levels of employment and record low unemployment. It is important that we recognise the benefits to this country’s employment market of flexibility. We have achieved great success; indeed, I point out that when I was business champion for older workers, I found that it is not only students who welcome zero-hours contracts, it is also older people. Does the Minister agree that we need to recognise the increasing importance for people in a pre-retirement phase of being able to work flexibly, part-time and zero hours? Indeed, when McDonald’s offered all its workers on zero-hours contracts the opportunity of fixed contacts, 80% said they wanted to stay on the zero-hours contracts.

[Lord Prior of Brampton]

I thank my noble friend for her contribution. Of course, flexibility suits older people greatly and is something much to be encouraged. The great success of the British way is that we have very high levels of employment. The great weakness of the British way is that we have very low levels of earnings, and that is something that we are going to address through the industrial strategy.

[Lord Howarth of Newport (Lab)]

My Lords, does the Minister share my view that the term “gig economy” is unfortunate? It implies that people willingly embrace insecurity at work when they do not, and seems to trivialise the issue.

--- Later in debate ---

[Lord Prior of Brampton]

Possibly it trivialises the issue, but it does reflect the fact that these new, app-based jobs are different. I suppose that “gig” is possibly an unfortunate word.

[Lord Naseby]

Is the Minister aware that I had the privilege of working with Matthew Taylor on the child trust fund? I put it to the Minister that this report is excellent. Do the Government recognise that there are three levels—or parties—involved, and that, as the noble Baroness, Lady Hayter, said, the consumer is one? Clearly the workers are absolutely fundamental as well, but fair competition among employers is the third dimension. Is this not an opportunity for Her Majesty’s Government to act almost as a referee by looking at all these aspects and making sure that at every single level there is now fair competition, fair wages and a fair opportunity for all parties to work together?

[Lord Prior of Brampton]

My Lords, as the noble Lord said, there are three parts to this. The report focuses very much on workers and business, and, as the noble Baroness, Lady Hayter, said, we ought possibly to look at this issue also through the eyes of the consumer. This is an ideal opportunity for the Government to act, if you like, partly as a referee: ultimately, we do have a clear responsibility in this area and when we have had a chance to consider the report I am sure that we will not disappoint my noble friend.

[Lord Morris of Handsworth (Lab)]

My Lords, the House at this stage will naturally want to reserve judgment on the totality of the report and its recommendations. That said, at face value it is an important and positive step. Of course, one of the major deterrents to a good workplace is the issue of discrimination. Will the Minister say at this stage what the report indicates in terms of race and sex discrimination, and discrimination against people with a disability? If the report has tackled those issues, will he say what remedies are suggested?

[Lord Prior of Brampton]

My Lords, the terms of the report did not include discrimination. Unless I have missed something in the report—I read it last night—it does not come with up recommendations around discrimination but looks purely at new forms of employment: that is, the relationship between self-employment and people working in the gig economy, who may now be called dependent contractors. It does not deal directly with the issues that the noble Lord raised.

[Baroness Donaghy (Lab)]

I welcome the statement that,

“the best way to achieve better work is through good corporate governance, good management and strong employment relations”.

That is an extremely good summary, and if that is what the eventual recommendations and implementation achieve, it will have been a historic report. I have three brief questions. First, one of the problems about our low-wage economy is that we are getting a lower tax base. Therefore, this is not necessarily good news for HMRC; a lot of the so-called independent contractors and bogus self-employed do not pay very much in the way of income tax.

Secondly, there has been increasing confusion between the statutory national minimum wage and the national living wage; people are getting very confused about those two things, to the detriment of both issues. Thirdly, there are recommendations about changing the remit of the Low Pay Commission—I declare an interest as one of the founding commissioners in 1998. One of the reasons for the tripartite success of the commission is that it has focused on a fairly narrow range of issues. My concern is that if these were widened to include quality of work on a sectoral basis, it might eventually weaken the power of its recommendations. Would the Minister care to comment on that?

[Lord Prior of Brampton]

My Lords, the noble Baroness is clearly right about the lower tax take. Clearly, if earnings are higher, the tax take will be higher. It is rather shocking. These are the figures in America: in 1970 the average median salary among the lowest-paid 90% of people was $34,000; in 2013 it was $31,000—it has gone down. This is the problem that all western economies face: earnings are stagnant and falling. Our children’s generation may be facing a less prosperous future than we do. This is the huge dilemma that we all face. When she says there will be a lower tax base, she is absolutely right. The whole point of improving productivity is to improve earnings. It is in all our interests to improve earnings—to see wages grow.

The noble Baroness also talked about the confusion between the living wage and the national minimum wage. She has now confused me so I shall have to write to her. She went on to talk about the Low Pay Commission. When the previous Government brought in the living wage and the trajectory for it, that was a political decision; it was not made by the Low Pay Commission. One of the criticisms of the minimum wage is that politicians cannot resist the temptation to get involved in it. To some extent, the Low Pay Commission has been subverted by politics. I guess that was inevitable. Actually, the increase in the living wage was one of the great triumphs of the coalition Government.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, I have not read the report yet, so I would be grateful if the Minister could put me right. Not all western countries are in the difficulties that the States and the Anglo-Saxon type economies are in. Sweden does not have the kinds of problems that we have. It has some, but not on the scale that we have. The major difference between Sweden and similar countries is that the difference in income between those at the top and those at the bottom has not widened in the way that it has in the UK and the States. To start to address this, we have to look at that as well—not just the quality of the work but the totality of the distribution of income in the workforce. Do the Government have any plans for doing that?

[Lord Prior of Brampton]

The noble Lord is right that the disparities in Sweden are smaller than in the US, the UK and other parts of the world. They are smaller but they are not non-existent. It is a big issue in the Scandinavian countries as well. We intend to address that through our industrial strategy. The second issue that the noble Lord touched on is that growth in productivity, in so far as there has been any, used to trickle down into the incomes of all people—everyone was brought up by improvements in productivity. That link seems to have been greatly weakened over the years, so that when there is growth, it goes to the top 10% and not to the 90%. The noble Lord is quite right that we need to look at that very carefully.

[Lord Lucas (Con)]

My Lords, one of the protections we offer workers is through employment agency legislation, but this legislation does not apply to many of the organisations that get gigs for gig workers. Do the Government intend to extend the protections of employment agency legislation to those who supply gigs?

[Lord Prior of Brampton]

I am not sure I can do that question justice. I would like to think about it and respond to my noble friend. Is he talking about gig workers supplied through employment agencies?

[Lord Lucas]

Agencies such as Upwork, for instance.

[Lord Prior of Brampton]

I will have to respond to my noble friend by letter.

[Lord Lennie (Lab)]

The Minister expressed surprise that there had been so little change in employment over the period: 63% and 64% were the figures given. But that masks the fact that currently in the north-east something like 70% of all new work—jobs growth—is defined as insecure work. Does that not indicate the need for more assertive action from the Government to address what is very rapidly coming round the corner at us?

[Lord Prior of Brampton]

I assume that the noble Lord means that what is coming around the corner are the new technologies and artificial intelligence—the digital economy, if you like—which are going to have a big impact on the labour market. Andy Haldane, the chief economist of the Bank of England, is predicting that, I think, 17 million existing jobs will disappear as a result of new technologies. Other people say that the new technologies are nothing like as profound as some people think they are and that the impact will be a lot less. Nevertheless, if we are going to thrive in this digital age, we have to skill people to do so. We need a much more digitally literate and technically well-trained workforce. I am sure that that will be something that will be a key part of our industrial strategy.

Energy Price Caps

Lord Prior of Brampton Excerpts

Monday 3rd July 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)]

My Lords, I beg leave to repeat, in the form of a Statement, the Answer given to an Urgent Question by my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy in the other place.

“Mr Speaker, the Competition and Markets Authority, following a two-year inquiry, found that energy customers on standard variable tariffs were paying on average £1.4 billion a year more than would be the case in a competitive market. That is completely unacceptable, so my party’s manifesto committed to introduce a safeguard tariff to extend the price protection currently in place for some vulnerable customers—those on pre-payment meters—to more customers on the poorest-value tariffs.

The energy regulator, Ofgem, has the powers necessary to act to impose such a price cap without delay. I wrote on 21 June to the chief executive of Ofgem asking it to use the regulator’s powers to do that. Today, the regulator has replied and has announced that it will work with consumer groups to take measures, including extending the current safeguard tariff for those on pre-payment meters to a wider groups of consumers, and to move urgently to implement these changes. I welcome this initial proposal—it is a step in the right direction—but I will wait to see the actual proposals and to see them turned into action to cut bills.

The test of whether the regulator’s changes go far enough is whether it moves sufficiently to eradicate the detriment to consumers that the CMA has identified. I remain prepared to legislate if it does not, and I hope that such legislation will command wide support across the House”.

[Lord Grantchester (Lab)]

I thank the Minister for that Statement. Does he accept that, during the election, his party placed the promise of a cap on energy prices at the centre of its manifesto? Does he recall that the Prime Minister stated:

“So I am making this promise: if I am re-elected on June 8, I will take action to end this injustice by introducing a cap on unfair energy price rises. It will protect around 17 million families on standard variable tariffs from being exploited with sudden and unjustified increases in bills”?


Although these are welcome suggestions on safeguarding tariffs and on capping warrant charges for the installation of pre-pay meters, these measures would affect only 2.5 million customers, leaving more than 14 million standard variable tariff customers completely unprotected from price rises over the next period. Does he accept that the response to the letter to Ofgem of 21 June on energy prices falls far short of implementing that promise? Although welcome, extending the safeguard tariff to more customers will not end the injustice of an excess £1.4 billion a year being paid on standard variable tariffs or bring about a competitive market.

Can the Minister confirm that the letter of 21 June does not ask Ofgem to consider introducing a general price cap? Can he explain why not, even though the CEO of Ofgem confirmed earlier this year that Ofgem would have the discretionary power to implement an energy price cap? Will the Government now be asking Ofgem to consider introducing a price cap? Is legislation coming or is the Minister content to ignore his party’s election promise of an energy price cap? What does the Minister have to say to the millions more people on standard variable tariffs who heard the Prime Minister’s remarks and may now be feeling misled and betrayed by the Conservative Government?

[Lord Prior of Brampton]

My Lords, in my right honourable friend the Secretary of State for BEIS’s letter to Dermot Nolan, the chief executive of Ofgem, he says:

“You will have seen that the Conservative manifesto proposed to ‘extend the price protection currently in place for some vulnerable customers to more customers on the poorest value tariffs’”.


That is what my right honourable friend has asked Ofgem to do. It will now go through a period of consultation and decide how best to do that.

[Lord Stoneham of Droxford (LD)]

My Lords, on this side of the House we appreciate and welcome the measures that are obviously designed to help poorer customers. I will ask the Minister two questions. How much of this £1.4 billion does he assume is going to be redistributed back to customers as a result of these measures, and what is the shortfall on that? Secondly, his party, despite its election manifesto, has never seen a way of resolving these problems by price cuts. What is he going to do to improve competition? That is the way to control prices in this sector, and clearly they are not going to be controlled when you have a six-body cartel that is operating against customers’ interests.

[Lord Prior of Brampton]

My Lords, the Secretary of State has made it clear that, in judging whether Ofgem’s proposals go far enough, he will be looking at that figure of £1.4 billion—which, as the noble Lord knows, was identified in the CMA report of 2014. Clearly that is the figure that the Secretary of State has in mind. The noble Lord is absolutely right, though, that for the long term getting real competition into the market will drive prices down. Some 20% of the market is now supplied by companies other than the big six. I think that they now number 50, so there are signs of growing competition. The CMA is quite categoric in its diagnosis that customers are not yet feeling sufficiently well informed or enabled to make the switch. I went on to uSwitch today to have a look and I can understand that—one’s brain sort of hazes over a bit when you go into this sort of field. So I think it will take some time before competition really works in this market—which is why the Secretary of State decided to ask Ofgem to review the situation today.

[Lord Whitty (Lab)]

My Lords, perhaps I could pursue the point raised by the noble Lord, Lord Stoneham. The reality is that the CMA inquiry found that the standard variable tariff, which is the bulk of the market, was being exploited by the oligopoly that runs most of our energy supply. It was an absolutely condemnatory finding. Unfortunately, the remedies proposed by the CMA did not add up to very much, which is presumably why the Prime Minister thought she had to make clear that heavier government action was necessary.

If my noble friend Lord Grantchester is right that the remedy proposed in the letter to Ofgem affects only a minority of those consumers, and that in any case it depends on Ofgem finding a way within its existing rules to implement it, that total market distortion is not going to be resolved by the relatively slow creep of greater competition; it is going to require some clear and probably legislative action by the Government. None of that was reflected in the Queen’s Speech. Can we therefore expect that, if Ofgem gives an unsatisfactory answer to the Minister, we will get legislation on this basis in this Session of Parliament?

[Lord Prior of Brampton]

My Lords, I think the Secretary of State made it clear that, if there is an unsatisfactory response from Ofgem, he will resort to bringing through legislation. I should add that we should be careful about the law of unintended consequences in this case. It is very easy to win a headline with a blanket price cap and to reap adverse consequences later when the distortions that you bring into the market through that price cap make it worse for consumers rather than better.

Industrial Strategy

Lord Prior of Brampton Excerpts

Wednesday 28th June 2017 Lords Chamber

[Lord Haskel]

To ask Her Majesty’s Government when they will introduce their industrial strategy.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)]

My Lords, our industrial strategy Green Paper was launched on 23 January. Following extensive consultation, we intend to publish a White Paper in the autumn.

[Lord Haskel (Lab)]

I thank the Minister for that Answer. At least we have taken a first step away from austerity. Perhaps I may ask him the question everybody else out there would like to have answered: will he confirm that the funding laid out in the Autumn Statement 2016 will be made available in full, plus the substantial increase in grant funding to be awarded through UKRI, which was also promised in the Autumn Statement, so that money for innovation will not be spread too thinly?

[Lord Prior of Brampton]

I am very happy to give that assurance. As the noble Lord will know, UKRI will receive an additional £4.9 billion over the period to 2021. Much of that resource will go through UK Innovate into a number of productivity schemes. I hope that will be, as he says, a creative alternative to austerity.

[Lord Fox (LD)]

My Lords, the Minister is very well aware of the importance of catapult centres in the industrial strategy. Will he now say what his plans are for maintaining funding for the current level of catapult centres and for opening new centres?

[Lord Prior of Brampton]

My Lords, the catapult programme has, on the whole, been a huge success, but not all catapults are performing as well as others, so we are now undertaking a review of the catapults to identify those that have been performing well and those that have not. There is no intention that I am aware of to reduce the funding of all the catapults.

[Lord Lansley (Con)]

My Lords, will my noble friend confirm that it continues to be the Government’s intention to publish sector strategies following up the consultation to which he referred? Is he able to say whether an early sector strategy will relate to life sciences? In doing so, will the Government also be able to bring forward relatively speedily a positive response to the accelerated access review?

[Lord Prior of Brampton]

My Lords, the sector strategies will be an important part of the industrial strategy and the life science strategy is probably one of the furthest forward. It will, I assure my noble friend, include proposals to improve access to the NHS.

[Lord Mendelsohn (Lab)]

My Lords, I am sure the Minister is aware of the Social Mobility Commission’s Time for Change report, which urges the Government to commit to speedy reform to avoid unsustainable social division, particularly with the regions being left behind with very uneven pay and skill levels, employment rates, job quality and access to high-level qualifications. Will the Government accept the commission’s call to use the industrial strategy to address this imbalance, which will, of course, show a more committed effort towards the regions than the fact that there have been three northern powerhouse Ministers in four years?

[Lord Prior of Brampton]

My Lords, I would say that probably the single most important objective of the industrial strategy is to address some of the regional imbalances that the noble Lord refers to. We have seen London and the south-east do extremely well over the last few years, and we will carry on supporting London and the south-east to continue doing well, but there is no doubt that many parts of the country have been left behind, with many people on stagnant and falling earnings. That is absolutely a key priority for the strategy.

[Baroness Jolly (LD)]

My Lords, will the Minister please confirm to the House that the defence growth strategy will fit within the Government’s industrial strategy?

[Lord Prior of Brampton]

There will be many sector strategies and the Defence Growth Partnership is one that we hope will be part of the industrial strategy.

Queen’s Speech

Lord Prior of Brampton Excerpts

Monday 26th June 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)]

My Lords, we have had more than 60 speakers this evening, and many insights from much experience. We have ranged from lobsters, through the libel laws to horticulture, and I am afraid I cannot address all the issues that have been raised this evening. But I will just begin by congratulating my noble friend Lord Callanan on introducing the debate so well earlier this evening. He set out a very comprehensive legislative programme over the next two years, and I do not intend to repeat what he has said already. I also congratulate the noble Lords, Lord Mountevans and Lord Colgrain, on their two excellent maiden speeches. They bring to this House much experience from the world of financial services, the maritime industry and the rural sector.

I intend to spend most of my time this evening discussing the economy—as the noble Lord, Lord Davies, would like me to do—and Brexit a bit. Before I do that, two issues have been raised by a number of noble Lords this evening in addition to those. The first, of course, is agriculture. I refer to my declaration of interests: I am a partner in a small family farm. I was talking to a farmer at the weekend who was ranting on about the uncertainty caused by Brexit for the outlook for farm prices and about the difficulty he had in attracting labour to pick his fruit. I asked him how he had voted in the referendum, and he said he had voted for Brexit, so my sympathy for that particular farmer was somewhat limited in the circumstances.

As the noble Lords, Lord Plumb and Lord Curry, two very distinguished former presidents of the National Farmers’ Union, have said in the debate this evening, British agriculture is facing probably about as much uncertainty, or as big a decision, as it faced in 1946 after the war. We will be returning to this country the powers to make our own decisions about the trade-offs and priorities in British farming. We will have to decide whether we will retain area payments, whether we wish to treat big farmers differently from small farmers and what the trade-offs are between low prices and the need for better animal welfare. Then there are the ethical concerns about GM foods and animal and plant breeding. Those are the kind of decisions that we will have to make.

Personally, I have never been a great fan of the common agricultural policy. I felt it was a policy designed, by and large, for French farmers and the French structure of agriculture rather than the structure of British agriculture, which is very different. I have always been very pro-European myself, and I voted to remain in the European Union, but I think the repatriation of the common agricultural policy will be a good thing in the long run for British consumers and British agriculture.

The other issue that I ought to address was raised by the noble Baroness, Lady Featherstone, and the noble Lord, Lord Oxburgh, and other noble Lords: climate change and what we are doing on that. I would just point out to the noble Baroness, who was very critical of our policy on climate change, that between 1990 and 2016, carbon emissions in this country went down by 42%, at a time when GDP grew by 67%. I do not take all the credit for that. In fact, I personally take none of the credit for it. The coalition Government, of whom she and her colleagues were a part, can take some credit for that, but we have made huge progress in that area. We are trebling renewable electricity capacity for the period from 2010 to date. We have spent £730 million on renewable support over that time. We are leading the world in the offshore wind industry. We are committing £1 million to support ultra-low-emission vehicles. I do not feel remotely embarrassed about what this country has done when it comes to meeting our obligations to reduce carbon emissions and supporting all our initiatives on climate change.

I turn to Brexit. I do not want to spend the rest of my time talking about Brexit, because virtually everything that could be said about it has been said before. It is undeniable that there is a high degree of uncertainty in the business world at the moment, a point made by my noble friend Lady Rock, and it is going to be some time before we reach the sunny uplands of the economy that may result from Brexit. However, there is a dream that most of us can share, whether we are pro-European or have always wanted to leave the EU, and that is that we can come out of the machinery of government of the EU, we can leave that structure, and remain a very strong and committed trading partner with Europe. Surely now that we have had the vote on the referendum, that is something that we all need to support and get around. One of the few clear messages that came out of the last general election is that the electorate want us to work together to deliver a satisfactory outcome to the Brexit negotiations. I hope there is no room on either side for any triumphalism in these matters. We need now to get together and work out a solution.

I turn to the more substantive issue of this debate: the UK economy. We have reduced the deficit by 75%. Of course we would have liked to have cleared it further than we have. It is only because we were not actually tied as tightly to the policies of austerity that we have not succeeded in doing so. Still, the employment rate is now the highest it has ever been in this country, and over the last three years we have been the second-fastest growing economy in the EU.

That is one part of the picture. I accept that there is another part, and I thought the noble Lord, Lord Low, put it very strongly in his speech, while the Lord, Lord Hain, talked about seven years of prosperity. The noble Lord, Lord Low, referred to the personal misery of many young people who were without hope. The right reverend Prelate the Bishop of Durham referred to the precariousness and uncertainty of business in the north-east where he is in Durham. It is true that pay growth and earnings have been stagnant for many people. It is hard to disagree with the analysis that too many people have been left behind and that, as the economy has grown, too few people have enjoyed the benefit of it. However, this is not a recent phenomenon; it has been a growing issue for most of my working life. We have to ask ourselves why it has happened, and I think the answer is twofold.

The first answer is globalisation. The great beneficiaries of globalisation have been the billions of people living in China, south Asia, India and the like who have been raised out of poverty in extraordinary fashion over the last 20 or 30 years. The other beneficiaries have been a very small minority of people living in the West, many of them like those in this Chamber today, who have seen extraordinary rises in their income over the same period. That is true of every country in Europe and the USA. It is somewhat less in some of the Scandinavian countries, but by and large there has been a small sliver of people who have done extremely well over the last 20 or 30 years. There have been a small number of winners and a great many people who, if I may use the expression used by our Prime Minister, are “just about managing”. The Prime Minister absolutely recognised that as a huge issue.

The noble Viscount, Lord Thurso, talked about wealth creation and social cohesion. If we are honest with ourselves, we have not done so well on social cohesion, and not just over the last two or three years. You cannot just put this at our doorstep; it has been happening at a fundamental level for many years.

If we ask ourselves why so many people have had to put up with stagnant earnings for so long, the only true answer, as several noble Lords have said, is that we have had very poor levels of productivity. Paul Krugman said:

“Productivity isn’t everything, but in the long run it is almost everything”.


The fact is that, since the 1980s, we have been trailing in productivity by 20% or 30% behind the Germans, the French and the Americans. I have to accept, because it is true, that that gap has widened, not narrowed, since 2007. I do not think anyone fully knows the reasons for that, but it is actually worse than that, because in the south-east of this country and in London our productivity is very high. Arithmetically, it must be true, therefore, that in other parts of the country the productivity gap is even greater.

I have to say to the House that I think that this trend is getting worse, not better. There is a risk that it will get worse very quickly, because the advent of what is called “Industry 4.0”—in lay man’s terms, machine learning, artificial intelligence, robotics and automation—is, if anything, going to make it more difficult. One of the great lessons that we need to learn from the 1980s is that we have to look at the consequence of these changes. The consequences of globalisation destroyed the livelihoods of many people during the 1980s and 1990s. We must make very sure that those people who lose their jobs as a result of these new technologies are looked after much better than we have looked after people in the past. The noble Lord, Lord Fox, said in his introduction that he thought that this was an existential challenge outside Brexit. In many ways, the impact of these new technologies could be greater than that of Brexit.

Interestingly, the speeches of the chief economist at the Bank of England, Andy Haldane, predict that between now and 2030 16 million to 17 million existing jobs will disappear. That is supported by work done by the McKinsey institute. That is a huge change in a very short period that we will have to address. We are addressing it through our industrial strategy, and I shall describe just a few parts of that.

First, as the noble Lord, Lord Kakkar, said, we must build our universities. Our universities are an absolute source of competitive advantage for this country. We have four universities—Imperial, UCL, Oxford and Cambridge—in the top 10 in the world, and building on the universities to develop our life science industry, as described by the noble Lord, is a priority for us.

Skill is, clearly, always a huge issue. The noble Lord, Lord Howarth, said that we have a 200-year cultural legacy of problems in this area. We have always favoured academic over technical education. That is something that we must address in our industrial strategy. We must address digital and technical skills. The noble Lord, Lord Bichard, was absolutely right to draw attention to the need to develop enterprise and entrepreneurship skills at the same time. The noble Lord, Lord Kirkham, referred to the need for parity of esteem between technical and academic education.

We must address our physical infrastructure. We have talked about HS2. I will not get into a discussion with my noble friend Lord Framlingham about HS2 this evening, but a strong, good, efficient physical infrastructure is very important. So is high-speed broadband. It is a disgrace that we still have 2,000 schools this country without access to broadband. We have a commitment that, by 2018, 95% of the country will be covered by high-speed broadband—that point was made strongly by the noble Earl, Lord Arran.

The noble Earl, Lord Selborne, said that we must be sure that our industrial strategy is based around the country. It is no good basing our industrial strategy on London; it has to be in some of our great northern cities, in the northern powerhouse, Birmingham, Newcastle and the like. Two other interesting observations were made about the strategy. One was by my noble friend Lord Lindsay: that our quality standards under UKQI were an important part of the British offering abroad. My noble friend Lord Leigh and others referred to Sir Damon Buffini’s report on patient equity capital being available to our start-up firms, which is very important.

We are not starting at ground zero. I pay tribute to the noble Lord, Lord Mandelson, who is not here this evening, and to Vince Cable in the other place, both of whom, as the noble Lord, Lord Fox, mentioned in his speech, had a big contribution to make to our industrial strategy, which is something that we in this Government are building on. We are investing £23 billion through the national productivity investment fund up to 2021-22 into key productivity-enhancing areas such as infrastructure, R&D and housing. We are putting an extra £4.7 billion into science, research and innovation, and we have formed UKRI.

We are not standing still. I hope that large parts of our industrial strategy will gain the support of all parts of the House. If we do not address this productivity problem, we cannot address the social cohesion issue. I can assure noble Lords that our industrial strategy will have twin aims. It is in part wealth creation, but it is also, and very importantly, about social cohesion. If we do not get both those parts of this strategy right, we will not be successful.

It is late, so I shall bring my speech to a conclusion. For me, it has been, as it always is in this House, a very enlightening debate. It is right that we should hold up a mirror, and sometimes we see different things in that mirror. The noble Lord, Lord Davies, sees different things from me in the mirror. The truth is that we are probably both right to some extent. We probably ought to be given more credit than has been given to us. We acknowledge many of the problems in the economy that others not on my side of the House have identified and we will be using our industrial strategy to address them.

Debate adjourned until Tuesday 27 June.

Steel Industry

Lord Prior of Brampton Excerpts

Tuesday 25th April 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)]

My Lords, I begin by thanking the noble Lord, Lord Mendelsohn, for bringing this debate to the House. It is extremely important. Steel is very close to many of our hearts in this Chamber. It is very good to have the chance to debate it.

I have not yet visited Scunthorpe under the new management of Greybull, but I very much look forward to doing so and meeting the team that the noble Lord met when he was there a few months ago—although I do not imagine he got his new suntan when he was in Scunthorpe. I also mention my noble friend Lady Redfern, who lives very close to Scunthorpe. She mentioned the community spirit and the importance of the supply chain. She mentioned that the jobs of 16,000 people were dependent on the supply chain of the Scunthorpe steelworks, so when we talk about steel we are talking about many other industries as well.

The noble Lord, Lord Jones, referred to steel as a foundation industry. He is absolutely right. He spoke about Shotton. I visited Shotton only a month ago. It is wonderful to see the coatings plant there, but it is pretty sad to see where once there was a great integrated steelworks.

The noble Lord, Lord Bhattacharyya, mentioned that when he was growing up as a young engineer in the 1960s Britain was seen as the home of steel. He said that for many years, really since the war, the British steel industry has suffered from underinvestment for all that time. I think he said that in 1980, despite having invented continuous casting in this country, which was a fundamental technological breakthrough for the steel industry, we had the lowest percentage of steel made through continuous casting—a pretty damning condemnation of our industry at the time. I think of how much investment went into two steel plants, Llanwern and Ravenscraig: both were undersized, in the wrong place and underinvested. However wonderful and flexible the labour force is, if the strategy is fundamentally wrong, as those two plants were, in the long run nothing can save them.

Listening to the noble Lord, Lord Brookman, I could almost see in my mind two people that I am sure he remembers from those days: Bill Sirs, who was general-secretary of the ISTC, and Hector Smith, who was general-secretary of the National Union of Blastfurnacemen at the time. He spoke with great passion about Ebbw Vale.

I did not agree with many of the words of the noble Lord, Lord Bilimoria. I did not recognise his characterisation of our industrial strategy Green Paper; I did not see where he was coming from. We are absolutely committed to a strong and competitive manufacturing sector in this country. I reassure the noble Lord, Lord Stoneham, that we are calling for a modern, competitive industrial sector in this country. It has to be long-term; there is no point having an industrial strategy for the length of just one Parliament. Whoever wins, I hope that after the next general election we can have some consensus over that. If we cannot have consensus over the long term, how is industry to have it?

The noble and learned Lord, Lord Morris, raised pensions. I have to declare an interest as a member of the British Steel pension scheme, so I cannot address his particular issues. If the officials can write to him after this debate, I will arrange for that to happen.

For me this is Groundhog Day. When I joined British Steel in 1980 we were producing 15 million tonnes of steel a year. We had five integrated sites. About 200,000 people worked in the industry. Since then, 30 years have passed. What makes it Groundhog Day is this: the problem in 1980 was fundamentally one of overcapacity, which led to low prices. In the trading year 1979, British Steel lost £309 million. I could not find the figure, but my recollection is that in 1980 it lost £700 million. In today’s money, that is £3 billion to £4 billion.

In those days, new capacity was coming on, largely from Japan, closely followed by South Korea. Japan installed 100 million tonnes of capacity. It was low-cost capacity; it was all on deep water. It was all highly productive; it was new technology. It was all continuous casting and of great quality. To our shame, most of the steel that went into the pipelines in the North Sea to bring ashore oil and gas was made in Japan and not by British mills. Much of the steel going into the Ford Motor Company at the time had to come from abroad because we could not meet the quality requirements.

Today, we have a similar problem but from a different country: it is of course China. Its steel production capacity is hard to measure, but it is probably around 1 billion tonnes. If we put that against our total UK production in 2016 of a little over 7 million tonnes, it sets our industry in some kind of context. Chinese steel production has increased sixfold since 2000.

As China has exported into other Asian markets so they, too, have exported in return into the western European markets. In a high fixed-cost industry such as steel, the temptation to marginally price is hard to resist, so we have had extremely low prices for a long time.

As has been pointed out by noble Lords this evening, particularly the noble Lord, Lord Bhattacharyya, we had an extraordinary inheritance. The Industrial Revolution started here. The iron and steel industry started here. There was the open hearth process and continuous casting. We invented stainless steel. British-made steel products are seen in iconic buildings and structures all over the world.

Despite that, since the war, with the uncertainties of nationalisation and denationalisation, we suffered from persistently low levels of investment. Where we did invest, I am afraid that the involvement of politicians was not a happy one. We would not have had Ravenscraig here and Llanwern there had it not been for, with hindsight, mad political interference. At Redcar, we had a one-blast-furnace operation. That is not a viable strategy for the long run. The whole concept of producing on Teesside low-value, semi-finished slabs from iron ore and coal coming in from Australia and Brazil, and then re-exporting those slabs back to Thailand, was hardly a strategic decision of great genius. Even today—if we are honest—although the configuration with two integrated sites is where we need to be, those two sites are not ideal. It is not ideal to have coating plants at Shotton and hot rolled coil being made at Port Talbot. It is not ideal to be making blooms and billets at Scunthorpe and to have the finishing section mills on Teesside. While those plants are not ideal, they can be competitive, but we must be realistic that they will not be as competitive as those fully integrated plants that we see on deep water, with modern equipment and modern investment, in other parts of the world.

Nevertheless, we have reached the point where we have two integrated plants in the UK and not five, which is a huge improvement. We also have a very important scrap-based electric arc business in Sheffield and south Wales. Again, given the right investment, these should be competitive given the availability of scrap. We export 7 million tonnes of scrap a year from this country. Surely we can do better by melting more of that in the UK.

The overall numbers for the UK are grounds for encouragement. UK steel demand is around 10 million tonnes a year, which is roughly in line with our capacity. If we add in the steel of imported manufactures, we see that we consume 22 million tonnes a year. If some of that manufacturing can be reshored to this country over the next five to 10 years, then that gives even bigger opportunities for our domestic producers.

Much has changed since this House was last formally updated in April 2016. As noble Lords mentioned, Greybull Capital acquired Tata’s long products business based in Scunthorpe. In September, the two Scottish plate mills, at Dalzell and Clydebridge, re-opened under Liberty Steel’s ownership, following their acquisition from Tata. More recently, Liberty Steel announced it had agreed a sale and purchase agreement with Tata for the speciality steel business in South Yorkshire. At the same time, Tata Steel Europe remains in negotiations with regard to a possible joint venture with thyssenkrupp. So much is going on in the ownership of the steel industry but in a sense having a clear separation of special steels, long products and strip mill products is no bad thing. They are three very different businesses with different markets and different manufacturing processes.

I also acknowledge the efficiency savings and productivity improvements realised at Port Talbot by the Tata workforce. The noble Lord, Lord Bhattacharyya, and others referred to the flexibility and spirit of the workforce both at Port Talbot and in Scunthorpe.

I then turn briefly to the actions the Government have taken. We are compensating energy-intensive manufacturers such as steel for the costs of renewables and climate change policy. To date, we have paid over £151 million to the steel sector. We secured flexibility over the implementation of EU emissions regulations. The Government introduced revised steel procurement guidance, as has already been noted, to ensure that UK steel producers have the best possible chances of competing for public sector work. We provided a procurement pipeline for steel to ensure that the UK sector has every opportunity to prepare to meet this future demand. We also successfully pressed for the introduction of trade defence instruments to protect UK steel producers from unfair steel dumping. There are now 41 in place in the EU. Yet in my experience of anti-dumping, it is always too little, too late—it always takes too long because the damage is done before the actions can take place.

I have not got much time and it is late in the evening. We are open to a sector deal for steel. Anyone who thinks that steel is a low priority has misread the runes. We put it to the UK steel industry that it is in its hands to come forward with a proposal for a sector deal. Of course, it is entirely up to the industry what is in that sector deal but I would certainly expect it to focus on: technology; investment, clearly; training; how we can go further up the value chain; how we can look at new products—the new rails at Scunthorpe were mentioned and that is exactly the kind of thing we should do—lower energy uses; and how we can make better use of the surplus scrap available in the UK.

There can never be a guarantee about the future of any industry at a time of such extraordinary technological disruption as is going on in our markets. However, this industry in the UK has been resized. I must believe that there is a long and profitable future for the UK steel industry. We are committed to a strong manufacturing base in this country and steel is a vital part of a long-term supply chain for many industries. You cannot build a manufacturing base buying on a spot basis from overseas. That is not a viable way of securing that. So I am optimistic about the future. It has been a long and traumatic journey and struggle for this industry. Many lives have been ruined along the way because of poor strategic decisions taken in the past. However, now the structure of the steel industry and the commitment of companies such as Tata to it give me great hope for the future.

Nuclear Energy: Small Modular Reactors

Lord Prior of Brampton Excerpts

Monday 24th April 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Prior of Brampton) (Con)]

My Lords, last summer officials met with all eligible small modular reactor competition participants to discuss their proposals. We will communicate next steps for the SMR programme in due course. Significant work is already under way to assess the options for the long-term disposition of the UK’s civil plutonium inventory. The different technologies have varying degrees of maturity, and more work is required to enable the UK to assess, select and subsequently implement the preferred option.

[Viscount Hanworth (Lab)]

I thank the Minister for that Answer. I am glad to hear that the second stage of the competition is forthcoming. The competition has been a confusing affair. It has been inhibited by the rules that prevent the Government engaging directly with competitors. The decision on how to handle our stocks of plutonium has been held in abeyance for many years. Is it true that the Government are now disregarding the possibility of using plutonium to fuel a fast reactor such as the PRISM or the CANDU reactors, and that they are favouring subterranean disposal? My essential question is this: when will the Government recognise the need to adopt a strategic plan for our nuclear industry that is supported by the necessary government funds?

[Lord Prior of Brampton]

My Lords, the Government’s position is clear on how to deal with the plutonium inventory that we have accumulated over many years: the NDA has been set up with the funds to assess the two broad options, which are either to reuse plutonium or to store it safely.

[Lord Howell of Guildford (Con)]

My Lords, I declare an interest as chairman of the Windsor Energy Group. Does my noble friend agree that the SMRs hold out one of the best paths for the development of cheaper but also safe nuclear power, and probably perform better than the existing vast creations and structures that have been built today? Does the competition cover not only the conventional SMRs but the other technologies, including stable salt reactors which offer an even cheaper and safer form of nuclear power? They are now being developed and taken up by the Canadians and may be the way forward for us as well.

[Lord Prior of Brampton]

My Lords, the honest answer is that we simply do not yet know whether small modular reactors will represent a cheap source of low-carbon energy for the future. We just do not know what the economics are, which is why in due course we will be publishing a technical and economic evaluation, based on assessing the 32 proposals that have been put to us for SMRs. The only truthful answer at the moment is that the jury is still out.

[Lord Fox (LD)]

My Lords, the Minister will be aware that different designs of SMR require different levels of fuel enrichment, and that that brings into play proliferation issues. Can he explain what thoughts and conversations are going on about proliferation and how the UK will continue to pursue non-proliferation issues when we summarily remove ourselves from Euratom?

--- Later in debate ---

[Lord Prior of Brampton]

My Lords, clearly, in any assessment of new SMR technology, safety and non-proliferation will be crucial. The regulatory and policy aspects of developing SMRs are very much at the front of the Government’s mind.

[Baroness Brown of Cambridge (CB)]

My Lords, I speak as a proud former Rolls-Royce engineer and, as a result of my employment, a Rolls-Royce shareholder. Given the news that the EU is now excluding the UK from new collaboration, the growing evidence of the challenge of financing major nuclear power station development and the importance of low-carbon energy technologies to global decarbonisation, does the Minister agree that our exit from the EU provides an excellent opportunity to support UK technology and jobs—including in the steel industry, which we will be talking about tomorrow—and to address a major global export market through government support for the Rolls-Royce-led small modular reactor programme? I suggest that that would be a great feelgood message for after the election.

[Lord Prior of Brampton]

As the noble Baroness knows, Rolls-Royce is one of the 32 companies which have submitted a proposal. There is no doubt that if we could build SMRs on a modular basis, much of the work could be done in the UK. We may have lost out in the race to build big nuclear plants, but companies such as Rolls-Royce and others in the UK could compete effectively on SMRs and we could then export them around the world. But there is no point embarking on that new technology until we are sure that it can deliver low-carbon energy at an economic cost.

[Lord West of Spithead (Lab)]

My Lords, there seem to be huge benefits in moving down the route of small modular reactors. The Minister will be aware that, notwithstanding the efforts of my leader, the Navy runs a huge number of nuclear reactors. When those nuclear submarines are plugged into the national grid, does the MoD get money back for the electricity being put into the national grid?

[Lord Prior of Brampton]

I am not quite clear whether the noble Lord is announcing yet another Labour Party policy: that in future, Polaris submarines will, instead of firing Trident missiles, be plugged into the national grid, but it is something to conjure with. In principle, the way that the grid will be supplied in future will enable those supplying it, whether through SMRs or other ways, to be properly remunerated.

[Lord Broers (CB)]

My Lords—

--- Later in debate ---

[Lord Prior of Brampton]

The noble Lord makes the good and strong point that you can never be 100% sure, but you have to assure yourself that there is a route to market before you embark on a major new capital investment.