Energy Policy

Lord Whitty Excerpts

Monday 25th June 2018 Lords Chamber

[Lord Henley]

My Lords, I cannot assist my noble friend with announcements about Sizewell C—but, as always, I shall say “in due course”. My noble friend is right to point out the costs of nuclear; that decision has been made. What we are talking about here is a potential decision to generate electricity at three times that price at a time when the cost of, for example, offshore wind had come down so dramatically. That is why we had to make that decision, and why we have made it. It is possible that for other nuclear power, in due course, if more work is done in the world of modular nuclear power stations, the cost could come down. But we have made the decision on Hinkley, and have now made the decision not to go ahead with Swansea—but we will continue to look at all possible sources of energy to make sure that we have green energy and secure energy.

[Lord Whitty (Lab)]

My Lords, like others, I find this decision depressing. On the other hand, I recognise the Minister’s dilemma. The figures that he quotes at us appear irrefutable, even though they are somewhat at odds with those from Charles Hendry’s report and any long-term view. This seems a similar decision to the closure of the carbon and capture elements in Peterhead. In effect, we are not looking over a long enough timescale.

I have two quick technical questions and two strategic ones. First, were the costs clearly incorporating the benefit of having attached to this not only tidal power but some offshore wind power, which was part of the project, and—as the noble Lord, Lord Teverson, said—a significant amount of storage of electricity, which would be of great benefit to future lagoon technology, were this to be proven?

Secondly, can the Minister really envisage a situation whereby, in 50 years’ time, these islands will not in part be powered by wave and tidal energy? We have a huge natural advantage and a huge relative benefit around our shores of having power that is predictable, not intermittent, as other technologies are not. We would be a world leader in this, and abandoning this project makes it more difficult. However, I take some comfort from the Minister’s reference to other projects. Which other projects does he have in mind and how soon, given the delay on this decision, can we get a decision on some of those? Are the Government still committed to looking at wave and tidal technology as part of our long-term future?

[Lord Henley]

I correct the noble Lord on just one thing. He said that tidal power was predictable—and I agree with him that it is predictable—but it is also intermittent because, as he knows, tides go up and down and there are slack periods as well. The intermittency is variable, so it is predictably intermittent, which makes for complications—but it also leads on to the noble Lord’s point about storage.

Obviously, with all these sorts of renewables, storage becomes very important, and developments on that front will change over the coming years. The noble Lord asked us all to look 50 years in the future. First, most of us will not be around in 50 years—but we can all remember 50 years back, and we all know just how much things have changed over those past 50 years. The point that I am making is that it would be wrong for me to predict what might happen over the next 50 years.

I want to make it clear that we have not ruled out tidal power. As the noble Lord says, we have some of the best tides in the world. I am reminded of those lines that noble Lords will remember from “Lochinvar”:

“Love swells like the Solway, but ebbs like its tide”.


It comes in very fast in those areas and goes out very fast. The variation in the Bristol channel is as good as anything that you will get anywhere else in the world, except I think in the St Lawrence estuary.

Much can be done, and we should certainly look at those in future. I cannot say which might then turn out to be suitable. Some of the other tidal power projects being looked at here could offer electricity somewhat cheaper—but only somewhat—than the Swansea bay, because the Swansea bay one is relatively small. We should look at any project on its merits. But I think that the noble Lord, who is as diligent as I am about the view that we must preserve taxpayers’ and consumers’ money, would not want to go ahead with a project that was going to cost three times as much as electricity from, say, Hinkley Point.

Domestic Gas and Electricity (Tariff Cap) Bill

Lord Whitty Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 11th June 2018 Grand Committee

Our two amendments ask that the level of protection in place for consumers with disabilities is also taken into consideration.

[Lord Whitty (Lab)]

My Lords, I apologise for not being here for the previous debate. Clearly, there are crossovers between that group of amendments and this one. I declare an interest in that I have been appointed chair of the commission on vulnerability set up by Energy UK. We have not started our work yet so I am not pre-empting that and I am not speaking on behalf of the commission. But it has caused me to look at the complexity of the vulnerability of consumers in this sector and how that is compounded by the difficulty that people experience in getting around to switching, despite the emphasis on switching in public policy, and the attempts—legislatively and by the regulator—to encourage people to find a better tariff.

The fact of the matter is that while we have had a significant increase in the competition at one end, the competition between and within companies to attract and retain vulnerable groups in their own best interests has not ended up being very effective. I am sure we all know of groups in our own community which have had grave difficulty, either by being stuck on a tariff or by attempting to change their tariff, with consequences that were detrimental or at least incomprehensible to them. That remains the position.

When we are talking about vulnerability, we need to recognise that not all of that is obvious. It is not just the elderly, or physically or mentally disabled people, who are vulnerable. It is also people on small incomes, particularly those on irregular incomes, who fail to pay at some point and suddenly become vulnerable because they build up debt and get into the company’s bad books.

The industry is well aware of all this. Indeed, in some ways, it has attempted to address it, but it has not come through. This top-down approach of a cap, which may be necessary at the moment to drive future competition will not help the differential impact on the more vulnerable members of our society. If it does, it will do so inadvertently. That is the not the central theme of this approach. The issue has to be explained to people in a way that does not make life more complicated and that will enable them, at least to a degree, to be more proactive in switching to a lower tariff.

Communication between energy companies and their consumers is therefore vital. The increase in competition through the number of companies in the field has not necessarily led to a dramatic change in this situation. It is important that not just the big six but all companies in the sector take steps to ensure that they take this into account after we have legislated for the cap to address the interests of different groups of vulnerable people. We will return to this issue—amendments have been tabled on it at various points in the Bill—but unless we somehow crack this and make it clear that the cap must address issues of vulnerability at the same time, the social problems that are the outcome of the current dysfunctional and inadequately competitive market will simply continue.

For a number of these groups of people, although I am in favour of smart meters, I do not think that the smart meters rollout will occur in the timescale to match what is in the Bill for a cap. Also, many of those groups will be the last to benefit easily from the information and techniques that smart meters ought to give to consumers. The benefit will be to those who have already made the switch and, quite rightly, stimulated a new market, but they are not necessarily the most vulnerable in the market—in most cases they are quite the opposite. Unless we cater for all aspects of this market, with central objectives improving the position of those various groups of vulnerable consumers, we as legislators, and Ofgem as the regulator, will have failed.

[Lord Henley]

I thank noble Lords for what they said on these various amendments. I hope to set out what we are doing to protect the more vulnerable and disabled consumers in due course, but I will start by dealing with the point made by the noble Lord, Lord Stevenson, about what is referred to as “tease and squeeze”. We believe that the best way to end this practice is the detailed work that Ofgem is undertaking to test better ways to secure customer engagement and make switching quicker and more reliable, as well as many other programmes to make the market work better. Recent changes mean that suppliers can make their default tariff a fixed-rate deal rather than a variable-rate tariff; many have done so.

The amendments would require Ofgem to have specific regard to vulnerable and disabled consumers when setting the level of the cap, but they are unnecessary because Clause 1(6) already places a duty on Ofgem,

“to protect existing and future domestic customers who pay standard variable and default rates”.

That of course includes vulnerable and disabled customers. Further, the amendments tabled by the noble Baroness, Lady Featherstone, to Clause 7 would require Ofgem and the Secretary of State to consider whether effective competition is in place in the domestic energy supply market as a whole, and again this will include effective competition for all domestic consumers, including vulnerable and disabled customers.

As noble Lords will be aware, in addition to the duty imposed on Ofgem by the Bill to protect all existing and future domestic customers on SVTs and default tariffs, the gas and electricity Acts place a duty on Ofgem to protect the interests of existing and future consumers. In carrying out this duty, Ofgem should have regard to the interests of individuals who are chronically sick, disabled or of pensionable age on low incomes, and those residing in rural areas. With the protections for SVT and default tariff customers in this Bill and the specific duties in existing legislation for vulnerable people, there is no need to place additional duties on Ofgem to protect the interests of those consumers.

Ofgem and the Government are taking a number of steps to support vulnerable consumers. For instance, Ofgem has extended the prepayment meter cap to around 1 million vulnerable consumers in receipt of the warm home discount, mentioned by the noble Lord, Lord Stevenson. The Government have laid regulations that, among other things, will enable data sharing between government bodies such as the Department for Work and Pensions and energy suppliers for the purpose of fuel poverty, including safeguard tariffs. Clause 3 of this Bill enables Ofgem not to apply the market-wide price cap to customers who benefit from another cap by reason of them being or appearing to be vulnerable.

I believe that these amendments broadly repeat the provision which is already set out in the Bill so they are an unnecessary duplication, but it is worth me going through some of the existing government support for vulnerable consumers. There is the payment of £140 a year to 2 million low-income households through the warm home discount scheme, along with £100 to £300 a year for all pensioner households through winter fuel payments. Some £25 a week is available to low-income and vulnerable households during a cold snap through cold weather payments. There is also the priority services register, which is a free service provided by suppliers for people of pensionable age, those who are sick or have a chronic medical condition, and those in vulnerable situations. That register includes priority support in an emergency by, for example, providing alternative heating and cooking facilities in the event of a supply interruption.

I thank the noble Lord for moving his amendment and I am grateful to the noble Lord, Lord Whitty, for his intervention. I note that the commission he is to chair has been set up by Energy UK and we look forward to seeing its work in due course. However, I believe that the Government are taking appropriate action, including through this Bill, which is all about making the market work properly, to protect consumers from paying too much for their energy. The amendment would therefore be an unnecessary duplication and I hope that the noble Lord will feel able to withdraw it.

Brexit: Competition and State Aid (EUC Report)

Lord Whitty Excerpts

Thursday 24th May 2018 Lords Chamber

Moved by

[Lord Whitty]

To move that this House takes note of the Report from the European Union Committee Brexit: competition and State aid (12th Report, HL Paper 67).

[Lord Whitty (Lab)]

My Lords, this inquiry was conducted by the EU Internal Market Sub-committee between September 2017 and January this year and was published in February. My thanks as ever go to the members of my committee, several of whom are going to speak today, and particularly to the members of staff and to our specialist adviser, Professor Erika Szyszczak. We were pleased also to receive a response from the Government within the deadline—a decidedly better record than many of our Brexit reports have received. So our thanks go to the BEIS Minister, who has also given us a reply on the CMA’s role as a post-Brexit state aid body. Congratulations to BEIS, and I hope that other departments will follow suit.

The speed of the ministerial response may be due in part to the fact that most of the report is relatively non-contentious in the sense that the Minister, broadly at least, agrees with us. This reflects the fact that the UK’s domestic competition framework has been closely modelled on the EU’s, but it is equally true to say that the EU model itself was based on the earlier precedent of British law and British experience. That does not mean that there is no dissent; witnesses were generally positive about the UK competition regime in its interaction with the EU, but concerns were raised about consumer protection and consumer rights, about tackling market dominance in new-fangled forms of markets such as online platforms, a topic on which the sub-committee had previously reported, and about delays and bureaucracy in the EU state aid approval process.

Repatriation of policy to the UK in these areas poses some complex problems in our relationship with the EU post Brexit and for the UK internally. A deep and comprehensive free trade agreement with the EU would undoubtedly retain some mutual arrangements on fair competition, state aid and public procurement. Indeed, any modern free trade agreement with any major economy would probably have some such provisions—as, to a degree, would trade on WTO terms. As in many areas, “taking back control” is therefore a relative term.

Nevertheless, the prospect of taking back control has raised some old arguments about these policies, especially on state aid, to which I shall return later. First, on the immediate short-term implications of Brexit, the Competition Act, under which UK procedures operate, sets out a consistency principle that obliges UK courts to ensure that there is no inconsistency between the application of domestic anti-trust prohibitions and EU law. That principle will clearly go after Brexit, but the Government apparently agree with the retention of some sort of duty on UK courts to take account of European competition jurisprudence. There is no clear indication what form that would take. I should be grateful if the Minister could give further detail on that: will it be “should have regard to”, “may have regard to”, “should take into account”, or whatever? Any comments would be helpful.

The domestic system of merger control currently operates alongside EU merger regulations. This arrangement is known as the “one-stop shop”. The loss of UK access to the one-stop shop at European level will lead to a need for separate notifications for markets that go beyond the UK to both the CMA and the European authorities. It will therefore mean not only an increased workload for the CMA but some businesses being faced with duplicate inquiries and costs.

The Government’s response says that they intend to limit the impact of the loss of the one-stop shop by increasing the efficiency of the CMA. I am not sure that goes far enough. Should the Government not seek an arrangement that would modify, reduce or, in some cases, abrogate the need for a UK merger review when a transaction has already, or in parallel, been notified to the European authorities?

Contributors to the inquiry set out a number of common transitional issues relating to anti-trust, merger control and state aid. They involve the status of cases still live at the point of exit, future cases that relate to pre-exit behaviour and pre-Brexit cases where remedies and commitments need to continue to be monitored by the authorities. That raises the whole question of the enforcement gap. Given the UK’s red line on the involvement of the European Court of Justice in these matters, has any further progress been made in negotiations on how such things would be dealt with after Brexit?

I will raise one tangential issue. There was discussion in the committee as to whether we should mention this, as it involves the employment of lawyers, and we were not quite sure whether it was relevant to the inquiry—but as we are a sub-committee that deals with non-financial services in the Brexit context, we thought that we should raise it. The UK is effectively the leading jurisdiction for private individuals or businesses seeking damages for breaches of EU anti-trust law. Litigants are attracted to the UK for the skill of its lawyers, the clearness of its procedures, et cetera. Many of those features may well continue. Nevertheless, there was anxiety that that substantial—and, indeed, remunerative—part of EU legal services may cease with Brexit.

The Government say in their response that the UK’s attractiveness as a jurisdiction should not be affected, but they acknowledge that the legal base for pursuing claims based on Commission decisions will be subject to negotiations about future civil justice co-operation. Again, does the Minister have any further detail on those discussions and negotiations so far?

Those are the transitional problems. The key issue is where future UK policy goes. While there was broad consensus from witnesses that there should be general continuity of policy in these areas, there was also recognition that we would have the opportunity and scope to look at policies again. This applies particularly to policy on mergers, for example—on attitudes to the public interest dimension and to overseas takeovers—and even more so to the most difficult area of state aid. Some of these are quite old arguments that are now posed in a new post Brexit context.

I shall take each of the main areas separately. First, on anti-trust, the global nature of competition has resulted in a broadly consistent international approach to competition policy. While it was made clear to us, and we agreed, that the UK should maintain the principles underpinning its competition policy, there will be some opportunities post Brexit to improve the regime, for example in the area I mentioned earlier in relation to the market dominance within digital areas such as online platforms. The Government say that they do not intend to fundamentally change the UK’s competition law and enforcement framework, but they have, for example, said that they are taking steps, independent of Brexit—allegedly—to strengthen this framework, including granting additional resources to the CMA and completing their review of UK competition policy by April next year. I ask the Minister whether there might be commitments in the future UK-EU relationship that could limit or prevent the UK in future from taking a more innovative, independent approach to enforcement.

Secondly, on the merger side, the discussions we have had on mergers policy in this country in the last few years has been overshadowed a bit by the Cadbury takeover by Kraft, which was one of the most controversial foreign acquisitions of a UK firm in recent years, and indeed one where the conditions imposed by the UK authorities were subsequently ignored by the acquiring company. That has rather coloured people’s views on the effectiveness of our merger policy, and some view Brexit as an opportunity to revise and strengthen the public interest criteria in merger control.

We, however, concluded that historically it has not been EU state aid rules that have seriously restricted the UK authorities looking at wider merger control criteria. However, it is the case that it is likely that Brexit will mean increased pressure internally to change current UK legislation and practice. The pressure on overseas takeovers could be in one of two directions—one from a protectionist view to defend UK-owned assets, and the other from the globalists who want to be more welcoming to international investment. Our general view is that we should keep things broadly as they are.

The Government recognise that a reliable merger control regime is important, but of course they themselves have opened the door a little by proposing some new public interest regimes in relation to security issues in the October 2017 National Security and Infrastructure Investment Review. This has amended the threshold tests for the military and dual-use sectors and parts of advanced technology—which could be quite a substantial part of the economy. How will the Government balance future changes in merger control because of these domestic pressures with their stated desire to ensure that we continue to be broadly aligned with European processes? In relation to resources, are the Government convinced that the additional resources provided to the CMA will be sufficient to cover the increased number and complexity of cases?

In terms of negotiations the UK and the EU start from a position of extensive mutual assistance on competition matters through what is known as the European Competition Network of national competition authorities. We would hope, and the Government would hope, that we will maintain that co-operation. What kind of role, if any, would the Government see for the CMA in the European Competition Network, which has provided us with a very substantial degree of benefit over the years?

The last area is state aid, and it is the most complex area that we considered. The EU is, of course, conferred with exclusive competence in this area, and its rulings are applied directly and enforced directly by the Commission. EU state aid rules have clearly been a source of frustration for some and, in some cases, have been painted as the central obstacle to government intervention—a particular example, allegedly, being the recent crisis in the steel sector. However, we concluded that, in general, successive Governments have found EU state aid rules flexible enough to provide support where they have wanted to provide assistance for major projects. Indeed, we found that other EU member states had managed to spend significantly higher sums on state aid, suggesting that it is not really EU rules themselves that are the barrier. To take a topical example, an incoming Chancellor—say, John McDonnell—could quadruple state aid spending in this country without matching the level of other leading economies such as Germany, and in most cases would do so without incurring EU state aid censure. That is not to say that he would not run into trouble with some other bits of EU legislation, but not on state aid provisions.

For post-Brexit state aid policy and institutions, we need a new state aid authority, which will have a dual perspective: first, to ensure that proposed state aid does not contravene our international obligations under our free trade agreement with Europe or, indeed, with anybody else, or indeed under WTO rules. It is likely that any significant free trade agreement will have some such provisions. The EU has been clear that it seeks an agreement that ensures a level playing field between parties on competition matters, and there will need to be co-operation between the CMA and the proposed trade remedies body that is going to be set up under the Trade Bill—if and when it makes progress in another place.

Secondly, as well as those international obligations—and, in a sense, for the first time—the new authority will decide whether state aid, including public procurement aspects, granted by UK bodies, is compatible and does not distort the European or international market or, indeed, the UK internal single market. That is a bit of a novel responsibility, which could cause significant internal political tensions. That is why we emphasised the need for the Government to act in concert particularly with devolved Administrations and local government when they draw up their post-Brexit state aid policy, and the CMA takes on that responsibility.

It is, of course, also true that under EU rules there are substantial block exemptions from state aid limitations, which includes most public services and agriculture, for example. In immediate terms, those will be transposed under the withdrawal Bill, but we would like to hear from the Government whether that is likely to be altered in future or whether we will continue to try to retain the same block exemptions that are in European law. More explicitly, will the £23.6 million additional finance for the CMA be sufficient for it to take on the state aid role, as well as providing resources for the substantial increase in the number of merger and anti-trust cases? Could the Minister report on the views of the devolved Administrations on establishing the UK-wide state aid regulator?

Building a coherent post-Brexit competition and state aid framework will be of vital importance to the UK and, throughout our inquiry, we were told that the UK has a robust and well-respected competition regime and that Brexit does not necessitate a fundamental revision. However, we see some pressures and opportunities for the UK to take a more innovative approach. The repatriation of responsibilities for state aid approval will be the fundamental change, and it is important that government works to involve and secure the support of local government and the devolved Administrations in that.

In determining the UK’s future approach to state aid, the UK will have the opportunity to address criticisms of the complexity and bureaucracy faced under the current EU regime, as well as related issues such as public procurement procedures. The UK will have the opportunity to create a system that is easier for small businesses, in particular, to understand and for consumers to appreciate and benefit from.

In general, this report and our relative consensus with the Government on it should indicate a way forward, but there are some issues that I would like the Government to address, which I hope I have spelled out in the course of my speech. I beg to move.

--- Later in debate ---

[Lord Whitty]

My Lords, I thank the Minister for those remarks. We definitely look forward to the competition review which is promised. I will keep my remarks reasonably short, if only to protect my throat.

I think there has been a reasonable degree of agreement around the Chamber, as there was on the committee, which I shall try to summarise. The principles of the European approach to competition and state aid will continue, with some degree of co-operation and alignment—quite what, we know not yet, but no doubt the negotiations will make that clear. We also have the opportunity to refine that and make it more relevant, and perhaps to look at related issues, such as public procurement, in the new era.

I take the point that the independence of the CMA, particularly given its enhanced role, is very important. Clearly, and particularly in relation to state aid, getting some degree of consensus and structure with the devolved Administrations and local government is vital. I think the issue of how broad the public interest criteria are will not go away, as my noble friend Lady Donaghy said, and there will be arguments from various sides as we go on, but it will be within UK control to decide, politically, how we manage that.

A number of principles were established by the report and have been largely underlined by this debate. I will treasure the new accolade that has been given to me by this House and will point to that accolade in Hansard to my grandchildren, I have no doubt. I repeat my thanks to all members of the committee.

The noble Baroness, Lady Noakes, raised an important point at the beginning, and I imagine the House will have to return to it. My own view is that, at the moment, the structure of the committees is coping with moving from focusing on scrutiny to the outcome on Brexit—keeping an eye on the outcome of those negotiations and holding Ministers to account. It may be that the structure is a bit clunky, but that is an important role. For when we get to the end of those negotiations and we are in the brave new world post Brexit, the House has already set in train a means of looking at the committee structure—which is above my pay grade, let alone the Minister’s—and I hope that the noble Lord, Lord McFall, will present us with some proposals on that front in the coming months.

Meanwhile, in relation to competition, state aid and mergers, we will expect some new kinds of cases and new markets which we will have to address as the UK, but the continuity is as important as the new freedoms. With that, I thank the House.

Motion agreed.

Domestic Gas and Electricity (Tariff Cap) Bill

Lord Whitty Excerpts

2nd reading (Hansard): House of Lords
Tuesday 22nd May 2018 Lords Chamber

[Lord Whitty (Lab)]

My Lords, the noble Lord, Lord Hunt, reminded us that the motivation for this Bill did not stem either from the industry or from the sector regulator but was based on the very substantial CMA report in 2016 on decisions by Ministers and indeed by the Prime Minister. He is correct in saying that some interventions by Prime Ministers have not turned out that well, including David Cameron’s intervention on the four tariffs. That was not a great success, to say the least, and had to be abandoned, as he says. The fact that this intervention seems to have united the election pledges of Mrs May and Ed Miliband —albeit in different elections—does not necessarily mean it is going to be any more successful. In passing, I also agree with the noble Lord, Lord Hunt, on the need for an appeal to the CMA. I think that is needed in the Bill: I agree with him and, prospectively, with the noble and learned Lord, Lord Mackay of Clashfern.

I need to declare an interest: I will be chairing a commission on vulnerable energy consumers set up by the industry. That body has only just started work, so nothing I say today should be taken as anticipating the commission’s conclusions or anything like it.

But I do have some immediate questions. My two queries are these: are we answering, or attempting to answer, the wrong question? And are price caps on their own ever enough to protect the most vulnerable consumers? The CMA report two years ago met a mixed response. For myself, I thought its analysis was very substantial and essentially sound, but I also felt that its detailed recommendations were, in some cases, weak and confused, and that lies behind the method that this intervention is intended to achieve—what the CMA found was wrong with the market.

The CMA did indeed find that the big six, in particular, were making excessive profits margins on their standard variable tariff customers, but the key finding, as implied by the Minister in his opening remarks, was that this is a somewhat odd market, in that energy consumers are broadly speaking split into two groups, with one group being exploited and another benefiting. Newer, more active customers—the switchers —were being cross-subsidised by the loyal, older customers who have never, or not recently, switched supplier or tariff. The CMA also identified, as has been said, that the most marked unfairness related to prepayment meter customers. On that, the regulator has now moved and I support that in principle.

But if the problem is that long-term customers, often customers of the big six who have actually not switched since privatisation, are effectively cross-subsidising switchers, company by company—in other words, there is a sort of negative loyalty bonus—then surely the remedy is that the relativity between the tariff with which long-term customers pay, which is normally the default tariff or the standard variable tariff, and the tariff and package for newcomers is the most important metric in this approach. In other words, as my noble friend Lord Stevenson implied, we should perhaps be regulating by differential or by margin between the two, rather than, or possibly in addition to, an absolute cap. I appreciate that this could be complex, because many of the starter rates which entice new customers and switchers are time-limited and in practice revert to something very close to the standard variable tariff after a year or two. That is another practice that perhaps the regulator should look at. But the issue of whether a relative cap is more appropriate than an absolute cap needs returning to. I am not sure that the Government gave an adequate reply to that in the Commons. I would like to hear more clearly the rationale for that today.

My second point is that the price needs to be seen together with the broader issue of customer service, customer choice and consumer protection—for all but particularly for those who are the most vulnerable, either temporarily or permanently. Let us face it: most households do not understand the energy market or the choices within it. For many people, price comparison sites can be more confusing than helpful and in some cases are downright misleading. Any tariff intervention, therefore, needs to be accompanied by greater care for the consumer, for example on the choice of method of communication between the supplier and the consumer. The insistence on electronic or telephonic communication disadvantages certain subgroups of consumers, who prefer paper. Noble Lords may well have received the information on the Keep Me Posted campaign, which spells this out. The additional help that companies appear to offer consumers is often very limited and does not really help the individual consumer to navigate the complexity of tariffs; rather, they revert to the default position of staying on the rate that they have always been on.

It is no use simply putting a cap on the price, valuable though that can be in certain circumstances, if the consumer does not understand how and why they are being charged that rate and what the alternatives are. At a minimum, therefore, the Bill needs to have some provision on customer service and support and help for vulnerable consumers—perhaps I should say the more vulnerable consumers, since most of us are at risk at some point in our lives and sometimes struggle with our energy bills. The Bill would be better for such a clause, even if it were put in the most general terms. I repeat that I would like a clearer answer to why the Bill is, on the face of it, about a temporary absolute cap, when it has clearly been shown that a relative control would reduce unfairness and deliver a more just relative treatment between long-standing customers and the small, active proportion—it may be 20%—of frequent switchers.

The Bill requires a further CMA investigation of the market. I am not against another detailed study. I find tying it to the timetable for smart meters slightly odd. At best that needs to be kept reasonably flexible. The point is that neither price caps nor competition is sufficient to ensure that all consumers benefit from the market. Treatment of the more passive and the more vulnerable consumers requires much more specific interventions by companies and a better consumer service from all suppliers. It is true that all markets require switchers to make them work, but in a market as central to our lives as energy the market price and the structure of tariffs need to reflect fairness and justice for all consumers, certainly, but between different groups of consumers as well.

Smart Meters Bill

Lord Whitty Excerpts

2nd reading (Hansard): House of Lords
Tuesday 13th March 2018 Lords Chamber

[Lord Whitty (Lab)]

My Lords, like the noble Lord, Lord Teverson, and my noble friend Lord Grantchester, I am a bit schizophrenic about this Bill. On the one hand, I welcome some of its provisions, but on the other I look at the history of the rollout of the smart meters programme with deep depression. It has had mixed results, to put it mildly.

On the other hand again, some of the benefits of smart meters have been realised and a significant proportion of consumers have changed their behaviour as a result, so that gives us some cause for hope. I also have some fairly substantial strands of sorrow and anger about this, some of which goes back to proceedings on the Energy Bill 2008. This, I am afraid, is the “I told you so” bit in my speech. I took quite an active part in those proceedings and told the then Government of my concerns. Some of them have already been mentioned; they relate to the very limited interoperability of the first generation of smart meters, which meant that the ability of consumers to switch was greatly restricted and they were left with stranded assets—and smart meters were pretty dumb in many respects.

I also mentioned the inadequate relationship between this massive £11 billion programme of installing smart meters and actually getting them into every household in the country. That programme should have been accompanied by more general advice, direction and help on installing energy efficiency equipment in the home.

I also was deeply perturbed by the basic premise of the delivery of the smart meters programme: requiring that it be carried out by the supply companies. That led to behaviour based on self-interest and to inefficient delivery. It would have been far better if the state itself—although I could not really have expected this of even the coalition Government, and certainly not this one—or the network companies had proceeded street by street, instead of every building in every area having to have a meter installed by different suppliers.

The way in which different suppliers have done it has varied significantly. I thought at the time that the central strategic decision to give responsibility of delivery to the supply companies was the wrong one, although it is probably too late to change that now. It has also helped to increase consumer distrust in the programme itself, over and above the natural resistance of some consumers to new technology.

I was also perturbed and somewhat baffled by the exact responsibilities and status of DCC. I remember asking the then Minister to explain exactly what this body would be. It was only after we had finished with the Bill that the contract was given to Capita, which alarmed me even more. Following the Carillion collapse, the Bill must ensure that, if Capita similarly collapses, which looked possible a week or two ago—I of course hope it will not—provision is made for dealing with its insolvency. Its performance, as noble Lords have pointed out, has not been that great, but the possibility of its insolvency undermines this whole process. The cost of that is going to fall, once again, on the consumers, who, through their bills, are already paying for the programme as a whole.

That is the end of the “I told you so” part of my speech—but I did tell you so. Some fairly wrong strategic decisions were taken at the beginning of this programme. Partly as a result of that, we are of course behind on the timetable.

On a more positive note, however, we are now moving to the next generation of smart meters. I hope we can do so rapidly, and that there will be no performance problems. The Minister should spell out clearly the timescale. A concomitant point is that we will need at some point to replace the first generation with a second and a third generation. Otherwise, some 8 million to 9 million people will effectively have fairly dumb meters which, although they can induce some change in behaviour, will not do the full job that the cutting-edge technology could deliver. Therefore, we need to speed up the process. I would like the Minister to spell out somewhere in this Bill the process for the retrofitting and replacement of the first generation, as well as the timetable for introducing further metering in the next generation.

More positively, some significant research has shown that even some of the dumber smart meters have enabled people to take a greater interest in their energy consumption and make related decisions on light bulbs, switching off washing machines and changing the time at which they operate appliances, thereby saving energy. So the outcome may well eventually be very positive. The downside, though, is that there has also been some negative reaction to smart meters. I hope we will be able to overcome that.

I very much welcome the move to half-hourly billing. That brings its own problems in terms of privacy and security but I hope that we will find a way to reassure consumers in that respect. Once we move to half-hourly billing, consumers could well get on top of making serious improvements in their energy efficiency behaviour and the energy performance of their homes. I am very much in favour of that so long as the privacy downsides are addressed in the Ofgem regulations.

I still have problems with how this programme is being delivered in premises in multiple occupation that have multiple suppliers, in both the social housing and the private sectors. There has been some progress on the relationship between smart meters and prepayment meters, but the phase we are discussing ought to turn that into something much more positive because some of the most vulnerable consumers are prepayment consumers and smart meters should help them. We have some good examples of that. We need to build on those and make this process more systematic.

I have mentioned the situation with DCC. I recognise that the Government had to move on that. It was a bit of a panic move which did not reflect the original concept of the Bill, but it was probably necessary. However, it underlines what my noble friend Lord Haskel said at Question Time about the reliance on single, near monopolistic outsourcing companies for the delivery of key elements of our infrastructure. I hope that we will address that in broader terms as well as in relation to this specific programme.

I still think that there is an insufficiently close relationship between the installation of smart meters and other energy efficiency measures. However, we should perhaps look at the totality of energy efficiency interventions as we move away from the ECO, as we have known it, and consider all the current programmes so that we can maximise energy efficiency house by house and company by company.

So far there is a very mixed picture with a lot of downsides. We have the opportunity to move to the next stage in a more positive vein. However, while the Bill introduces some useful provisions, in particular half-hourly billing, they are not sufficient to ensure the full delivery of the programme and the full step-change in our energy efficiency performance which those of us who supported the concept in the first place looked for.

Retail Trade: Online Suppliers

Lord Whitty Excerpts

Wednesday 28th February 2018 Lords Chamber

[Lord Henley]

I made it clear that we have made changes in the Autumn Budget, with measures worth £2.3 billion by cutting business rates and trying to bring a degree of fairness to the system. There are limits to how far one can go and one must accept that a lot of what is happening is a result of what consumers want. It is obviously up to the retail sector itself to adapt and change in the face of changing consumer and social trends. The Government are doing what we can. That is why I mentioned the Future High Streets Forum, chaired by my honourable friend and why we have announced changes to rates. Thereafter, it must be for the retail sector itself to see what it can do to change.

[Lord Whitty (Lab)]

My Lords, is the noble Lord aware that a couple of years ago, a sub-committee of your Lordships’ EU Select Committee—under my chairmanship, as it happens—produced a report on online platforms? We found that the apparent consumer advantage was taken advantage of by the big online platforms, and the competition authorities at the European level were finding that difficult to come to terms with—witness the ongoing problem with Google. Is it not now important, post Brexit, that the competition authorities here tackle the domination and abuse of competition by the online platform giants?

[Lord Henley]

My Lords, that is why we set up the CMA in 2013. That is why it has the powers it has and the ability to investigate abuse when it sees it.

Nuclear Safeguards Bill

Lord Whitty Excerpts

2nd reading (Hansard): House of Lords
Wednesday 7th February 2018 Lords Chamber

[Lord Whitty (Lab)]

My Lords, my noble friend Lord O’Neill referred to the Bill as an unfortunate necessity, but it is only necessary because of choices the Government have already made. We could have remained in Euratom while leaving the other institutions of the EU. Euratom was originally in a separate treaty and remained a discrete part of the consolidated treaty. It would not have been cherry-picking for us to remain. The EU would not have objected. There is admittedly a role for the ECJ in Euratom’s institutional structure, but that has never been used. It would have been a sensible and safe thing to do to say at the beginning of the post-referendum process or at the point of triggering Article 50 that we were withdrawing from the other institutions but wished to remain within Euratom. It would have been the logical thing to do, and it would also have been by far the safest thing to do.

In the Bill, we are dealing with the rules that govern the use and proliferation of what is probably the most dangerous material handled by mankind, and their enforcement. Frankly, the boundaries between civil and potential military use need always to be absolutely clear and shared within and between nations. That has not always been the case in the history of the nuclear industry, nuclear power and military hardware.

The global system under the auspices of the IAEA is vital but is not watertight. Over the years there have been a number of reports about fissile materials going missing in the sense that they have been unaccounted for. Usually, the authorities have reassured us that it was an administrative glitch and not a real diversion of these vital materials to North Korea, to terrorist organisations or to other countries wishing to join the nuclear powers. But that has not always been certain. The role of the Euratom operation in preventing proliferation has been vital and is one of the tightest parts of the global system. Under Euratom, the tightness of the safeguards has been maintained. It has monitored nuclear sites and trade to ensure security of operations and transfers within and beyond Europe, and as the noble Lord, Lord Teverson, said, it has also been responsible for the third party treaties. We will have to replicate those treaties post our leaving the EU.

It is true that the Minister has distinguished between safety and safeguards, but as the noble Lord, Lord Carlile, has just implied, it is not always a clear distinction and not a clear one in the minds of the public. It would certainly not be a clear distinction if an incident actually happened. By and large the HSE and latterly the ONR, along with the organisations in this country to which they have delegated powers, have enforced that safety. However, we also need international and particularly cross-European co-ordination. Hitherto, Euratom has helped to ensure that co-ordination and indeed the UK’s own compliance with the various international conventions governing nuclear materials, nuclear safety and non-proliferation.

Under the Bill it is true that the UK through the ONR will continue to meet IAEA standards, but the reporting and monitoring standards of the IAEA are different and on the face of it less rigorous than those of Euratom. I was grateful to hear what the Minister said about maintaining Euratom rather than IAEA standards and I hope that somehow appears in the final version of the Bill. However, all of this will place severe pressures on the ONR, an organisation that has performed well but, frankly, has had its resources cut by more than two thirds in the current spending round up to 2020 for its existing responsibilities.

I would be grateful if the Minister set out clearly, before the Bill completes its passage through this House, the resources, staffing and level of qualifications of staff for the ONR that will be needed for it to carry out its new obligations. I understand that currently, 40 Euratom safeguarding staff are based in the UK and focused on UK nuclear institutions while at the moment only eight ONR staff have professional safeguarding qualifications. How many extra staff will the ONR need, or will it sub-contract the work back to Euratom? I hope that any new migration package will not stop those staff coming in. These questions are vital if we are to establish that the ONR will be in a position to carry out these new duties. There are also duties relating to what is currently Euratom equipment. Are the Government going to acquire that equipment for the ONR, and will it be a cost to the ONR and the Exchequer? What will be the future cost of its decommissioning and replacement? How will all this be taken into account on the basis of a significantly reduced ONR budget and a shrinking expertise base, which is what we are inheriting?

The phrase “Euratom equivalence” requires some further explanation in the context of the regulations, as does the ONR’s independence. The UK Government, via the ONR, will be inspecting their own provisions regarding the civil and military interface, for example. I think I can say without severely breaching the Official Secrets Act that when I worked for the Atomic Energy Authority, well before Euratom, those interfaces were not always clear. I shall say no more. ONR independence from government is absolutely essential; otherwise, the Government will effectively be marking their own homework in this vital area.

The Bill does not cover all the other functions of Euratom, but even the safeguarding provisions stray into other areas. For example, another key Euratom function has been the facilitation of cross-border supply chains. Since much of the UK nuclear industry is owned overseas and certainly has overseas suppliers, primarily French, these international supply chains are key. I, and I expect other noble Lords, have received evidence from EDF that spells out how important this seamless supply chain was in dealing with a very dangerous emergency situation at Sizewell B a few years ago, and now in fulfilling the effective delivery of the new Hinkley Point station. If we are absent from not only Euratom itself but its agencies—the observatory referred to by the noble Lord, Lord Teverson, and its supply agency—the monitoring and support for these supply chains will inevitably diminish.

The Minister might say that this is irrelevant to the direct subject of the Bill, but others have already mentioned the R&D provisions under Euratom, which spill over into safeguarding. I recognise that much R&D is international. I have probably related this in the House previously, but in my early youth in the 1960s—prior to Euratom even being invented, or certainly the UK being a member of it—I worked at Harwell and Culham. Noble Lords might find it difficult to believe, but I received security clearance to the highest level. It took about three passes to get to my office. But one morning I was in early and I heard this babble outside in the corridor, which was all in Russian. Harwell had invited a whole crowd of Russian experts and scientists, because science is international. This was at the height of the Cold War.

Some international collaboration is open, but Euratom has channelled expertise and money into projects that have already been referred to, which include the important work on fusion technology. The Minister may try to downplay the importance of Euratom in this, but it is all part of the picture of European co-operation. Before we finish with the Bill, we need to get a clear indication of the Minister’s understanding of and position on the JET and Torus fusion projects, and other R&D programmes, when we leave the EU and Euratom.

The noble Lord referred to progress being made on Euratom in the Brexit negotiations. I would be grateful if he could expand on this and how, in agreement with our European ex-partners, we will liaise in future. Are the Government at least seeking associate membership of Euratom and its agencies? I assume from what the Minister said that the answer to that is no, but it is possible. Norway is party to some of these.

The recent EU document suggests that we will be absent from the agencies as well as the institutions of the EU, not only after the end of the transition period but from the beginning of it. That means that by March 2019, we must beef up the operation of the ONR, reach an understanding with the EU and ensure that an adequate alternative UK regime is recognised internationally and co-ordinated in new bilateral treaties replacing those currently covered by the EU. That stretches credibility. While there are aspects of the Bill that I welcome, the Government need to stop pretending that all of this can be done. We need to ensure that the endpoint of this process, if we are leaving Euratom, is at least the endpoint of the transition period. There is no chance of us meeting it by what is effectively October, or even by March 2019.

I recognise that, in the circumstances, the Government have created the need for the Bill, but there are many queries still to be faced. In particular, I would like a justification for what appears to be an impossible timetable.

Better Regulation

Lord Whitty Excerpts

Thursday 7th December 2017 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I heartily thank the noble Baroness for introducing the debate with her usual clarity—not that I agree with everything that she says. I agree with a fair part of it, but there are some aspects with which I do not.

As she said, five months ago, we had a debate on regulation in the name of my noble friend Lady Andrews. That was almost directly in the wake of Grenfell Tower, which, as she said, was a lethal cocktail of failure of regulation, regulators and enforcers to fulfil what is generally regarded as the first duty of the state: to protect its people. In that context, I gave a fairly fundamentalist speech to your Lordships about the attack on regulation, which was often under the guise of better regulation. I declared myself then to be a defender of the nanny state, and I remain unashamedly so. In these slightly more relaxed times, perhaps I should explain that I was in favour of a nanny state that was strict, fair and child-friendly, rather than the opposite. Nevertheless, I stand by my words. I can do no other.

Yet I recognise the need both for constant vigilance about the nature, quality and quantity of regulation, and for the real and positive better regulation agenda. I understand that to be the noble Baroness’s agenda. We need regulation that is accessible, not overly complex, clearly focused on outcome, intelligible and proportionate. Noble Lords will notice that I use the term “proportionate” rather than “balanced”, as in the noble Baroness’s Motion. They are not the same thing. “Proportionate” means not excessively costly or restrictive, relative to the prime objective of the regulation. “Balanced” implies that there is a trade-off between the objective and other objectives—particularly economic costs. That is not the objective of regulation. For example, if a substance or process can be lethal then we need to stop endangering human—or in some cases, animal or plant—life. That is the focus and objective of regulatory intervention in the first place. We should do so based on risk and in the most efficient and cost-effective way, but not by compromising the prime objective. Therefore, it is a question not of balance, but of proportion and adopting the most cost-effective and best available technology to meet the objective. Later today, there is a debate on the natural environment in which I will make a few remarks about pesticides. I will leave those remarks for noble Lords who can stand two interventions by me on the same day.

In a wider context, I am concerned about the Government’s approach to transposing a whole corpus of EU law into British law. The European Union (Withdrawal) Bill will be before your Lordships in the new year—quite how early is not yet entirely clear. It is time to put up a few markers. I fear the combination of the unprecedented need to rewrite and change the status of such a wide swathe of law and the political tendency influencing the Government—I was going to say within the Government—and of those who seek to use a post-Brexit scenario to move to a UK economy based on minimal regulation, perhaps under the guise of better regulation. They denounce the nanny Euro-state and put our physical security, fair treatment at work and in society, and the future of our landscape and biodiversity at risk, in order to cut regulatory costs. They insist on light-touch regulation or thin self-regulation and reduce the powers of regulators and cut their resources—allegedly so that the UK can compete in a ruthless world market. That is not my vision of post-Brexit Britain, but it is one that has an uncomfortable resonance in some circles not far from the centre of power—for the people more comfortable with regulatory alignment between the UK and Texas than between Armagh and Dundalk.

Already over the last decade, under successive Governments of all hues, we have seen examples of cuts in the powers and independence of, for example, the Health and Safety Executive and the Environment Agency. More recently we have seen a serious diminution in the resources at local level for trading standards, as the noble Baroness said. Under the guise of better regulation, we have also seen what I regard as the quite absurd mechanistic formula of one in, three out, supposedly to reduce the burden on business, but in fact introducing another completely nonsensical trade-off.

In the Brexit Bill we see the necessary literal transfer of the wording of directives and regulations, but without, as it currently stands, the guiding principles of European regulation that exist in the treaties or, in some cases, in the preambles of directives and regulations. We are withdrawing from the treaties and English lawyers do not like the concept of preambles, but we miss some very important principles by not translating them into English and Scottish law, for example on fundamental rights, sustainability and the precautionary principle, which, as the Bill stands, are not being transferred, although the detailed regulations are. Nor is it clear from the Bill how the regulations, which hitherto have largely relied on European-level enforcement, are to be enforced on the British economy and public institutions post Brexit. I hope your Lordships will have the opportunity to get that right when we receive the Bill.

However, let me be a bit more positive about the agenda that the noble Baroness has set out. Indeed, over her lifetime she and the noble Lord, Lord Curry, who is about to speak, have spent a long time looking at the positive side of better regulation—a painstaking process of updating, simplifying and reducing overlap; challenging half-baked cases for new regulations, of which there are far too many; cutting complexity; and, yes, avoiding unnecessary cost, particularly the administrative cost on small businesses. That is not so much the cost of compliance as it is the overhead burden of administration.

To help the process, successive Governments have established a precise, independent and effective method of checking and doing the necessary weeding, certification and assessing of proposals from departments for new or revised regulations. It has not been comprehensive, but where government departments have allowed it to operate it has been successful and has helped to ensure that new regulations have been more cost effective, accessible and workable. My noble friend Lady Andrews has already referred to the unfortunate rumours we have heard that part of that apparatus is being chopped off at the knees and that the role of the Better Regulation Executive and in particular the Regulatory Policy Committee is likely to be reduced—presumably, to put it benignly, in order not to jam up the process of transferral of European regulations through the Brexit process. I repeat my noble friend’s anxiety, because these processes have gained the confidence not only of those who are pressing for regulations but of those who would normally be very apprehensive about them, in particular small businesses. We are in danger of this process losing that confidence.

I worry that we are entering a period where people see the post-Brexit fate of this country as an offshore, low-regulation, low-tax, low-enforcement economy and society. By contrast, if your Lordships are interested, I have a whole list of areas where we should have better, more substantial regulation. On the environment, it should be on soil protection, air and water quality, and pesticides and fertilisers. In housing it should be on the private rented sector in particular and on building regulations. In the legal services, we should have a rather more independent system of regulation not wedded to the professional bodies.

So I, too, have an agenda which may appear to go in the opposite direction to that of the noble Baroness, but I hope that any new regulations in that area meet many of the principles that she has expounded today. I hope that the better regulation process hereafter, in particular through the tedious and complicated process of transferring European regulations into our own laws, meets genuine better regulation objectives and is not, in effect, putting our society at greater risk.

Euratom

Lord Whitty Excerpts

Thursday 20th July 2017 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I thank the noble Lord, Lord Teverson, for tabling this debate and I agree with what he has said. I intervene for only two reasons: first, to underline the importance of Euratom; and, secondly, to draw more general conclusions for the way in which the negotiations on leaving the EU are being carried out. I have a long-standing concern about and support for the nuclear industry, but I hesitate to say that it is now half a century since I worked for the AEA at Harwell and Culham. Even in those days you needed international agreements on the transport, storage and use of fissile and radioactive materials. During our membership of the EU, all that has been provided by Euratom. The organisation is also vital to the development of nuclear power, which in turn is vital to help us reach our targets on carbon-free energy supplies, both in this country and around the world. This is even more important because ownership of the UK nuclear industry is almost entirely in the hands of overseas firms.

Euratom is also vital to the development of nuclear science and research, and to keeping that expertise and facilities available in this country, in particular the important Joint European Torus at Culham and its fusion research. It is also vital, as the noble Lord has just said, to the provision of medical supplies and treatments. Radioisotopes are used to treat many key diseases including cancer, cardiovascular conditions and brain problems. I would venture to say, given the demography of this House, that many of us depend for our quality of life on such treatments and the continued high standards of safety and security of supply of such treatments. Euratom is also vital as a part of the non-proliferation treaty and therefore to world peace.

Legally speaking, initially the Government could not really make up their mind whether the vote to leave the EU inevitably meant that we would have to leave Euratom. As late as last December we were told that the Government were still,

“assessing the legal and policy implications of the vote to leave, including the potential implications for the UK’s membership of Euratom”.

Because Euratom was originally a separate treaty before the treaties were consolidated, it was arguable that we could differentiate even in the consolidated treaty. Legal opinions differ, but it would have been possible to argue that we could remain a full member of Euratom had it not been for the Government’s obsession about the jurisdiction of the ECJ, which in practice has not often intervened in Euratom business.

[Lord Lea of Crondall (Lab)]

Does my noble friend recall that the Republic of Ireland joined Euratom a long time before it joined the European Economic Community? In fact, I chaired a meeting in Cambridge in 1961 at which the Taoiseach said that Ireland was going to apply to join Euratom, which of course was a staging post to joining the European Economic Community, but equally that demonstrated that they are not exactly the same thing.

[Lord Whitty]

My Lords, I agree with my noble friend, who goes back even further than I do. The issue of whether we could continue to be a member of Euratom ought still to be live in the initial withdrawal discussions because it will define the way in which we will withdraw from the European institutions. If the Government are not prepared to seek full membership of Euratom, they must at least publicly state their objective of having full associate membership so that we can still have some influence over how the standards are set, the areas in which research is directed, and the funds that are related to those.

If the Government do not treat Euratom as somewhat different from the rest of the treaty and show that they can have a different sort of relationship, they are in effect defining Euratom and its agencies as EU agencies. I have with me a list of 34 EU agencies and in all cases the industries and organisations which participate in those agencies want to retain something very close to the status quo. This morning my Select Committee was discussing aviation and the issues around the European Aviation Safety Agency. The same is true in food standards, chemicals, banking and so forth. The industries want to retain a position within those agencies that is as close to the status quo as possible. The way in which we treat Euratom may well be the template for the way in which we deal with all the other agencies. I hope that the Government will take on board the very widespread view that most of those agencies work to our economic, social and environmental advantage. We should try to retain as close a relationship as possible in these negotiations.

Deregulation: Public Services and Health and Safety

Lord Whitty Excerpts

Thursday 13th July 2017 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I congratulate my noble friend Lady Andrews and thank her for seeking and getting this debate. It is timely; in fact a lot of us would say it is seriously overdue. The noble Lord, Lord Patten, is correct to say that the mood for better regulation—or I would say, in many cases, less regulation—has persisted through several Governments, for about 30 years. I think that mood—that surge of anti-regulation—needs to be reversed, and my noble friend is correct that this is an ideological debate. She was very forensic in her approach; I will be somewhat broad-sweeping and pretty ideological in my response, because it is time for change, and the Bill that has appeared today shows us that we are going to have to take some very serious decisions about the future of British regulation post Brexit.

The first duty of the state is to protect its citizens. That used to be entirely about the Army, or possibly the police force, but it is about a lot more things in a complex society such as our own: the state also has the responsibility to protect its citizens from natural and man-made disasters and hazards, from exposure to unsafe substances, from disease, from unsafe buildings and workplaces, from economic and physical exploitation, from other people and sometimes, indeed, from themselves—not just the vulnerable but all of us.

This need also applies in the economic sphere. We need protection as well as freedoms for markets to operate. We need freedoms for businesses, consumers and workers, but we also need to make the capitalist system actually work. The state has stepped in here, from medieval weights and measures legislation to ensure fair trading, right through to the anti-trust legislation we now have. Regulation is not the enemy of the market: literally free markets end in oligopoly and monopoly. Without regulation, markets as properly understood would not work.

It is also true that, at various stages of history, there have been backlashes against regulation. Perhaps your Lordships should consider the House’s reaction to the Earl of Shaftesbury when he first started trying to stop people putting children up chimneys. We have a media which weep crocodile tears over natural and man-made disasters—as just recently—but on the opposite page are attacking the “jobsworths” who are attempting to apply the rules.

In the past three decades, there has been a torrent of abuse in the media and among politicians against the so-called nanny state. I am in favour of the nanny state. There are some bad nannies and some good nannies—so I am told—and the way the state operates needs review to assess whether regulation is right and whether regulators are acting fairly, but the principle of regulation should be a central duty of the state and a central theme of a modern society.

As some more elderly Members of the House will recall, as a Minister I was responsible for large swathes of regulation in transport, local government, health and safety, agriculture and environmental matters, and I still take an interest. I also served on the boards of two regulators. I readily accept the sort of point which the noble Lord, Lord Patten, made: that some regulations are overcomplex, some regulate the wrong thing and some fail to achieve what they were intended to. I also accept that—this is a feature of the British legal system, including within the Civil Service—there has been gold-plating in the UK transposition of certain EU regulations. But that is an issue of better regulation, not of reducing regulation, not even one that favours light-touch regulation. Over the past few years, people have been calling for less regulation and surreptitiously acting to ensure it. What started out as a fairly scientific approach to existing regulations through the better regulation initiatives under different Governments has ended up with the absurdity of “one in, three out”.

In parallel with all this, organisations such as the Environment Agency—set up by a Tory Government as an independent body from government—have had their independence undermined and their resources and powers limited. Similarly, the HSE’s powers have been diluted and the resources given to it cut. In local authorities, because many of these are non-statutory services, the cuts have fallen disproportionately on areas such as environmental health officers, trading standards, planning departments and building regulation departments. The net effect is that there has been not only less effective regulation but, in many cases, an absence of regulation.

We will shortly be faced with a decision on what we do about the so-called great repeal Bill. We are to transpose some key EU laws into the UK and, in some cases, into devolved legislative frameworks. That all sounded very simple and straightforward when it was first announced in the Lancaster House speech, but it will be extraordinarily complex. A whole range of legislation on the environment, agriculture, land use, animal health, food safety et cetera is actually primarily EU legislation at the moment and is enforced by the EU. Simply transposing the regulations does not deal with the issue of enforcement. Of course, we can give some powers to organisations such as the Environment Agency, HSE or, indeed, local authorities, but they are all increasingly starved of resources and expertise and having their powers cut or queried by attacks on the nanny state. If they are to take on what has hitherto been largely the enforcement role of the European Union, they will need to be bolstered, improved and respected by politicians and Governments and not undermined and denigrated. So we need to resist the call for attacks on the nanny state.

Last week, I participated in a debate on air quality. I called specifically for a new UK clean air Act because, at present, our regulations are primarily from the EU, which sets limits on air pollution locally and sets tests for polluting diesel vehicles and so forth. Theoretically, it has been the responsibility of national authorities to enforce those, but that has not happened; we have breached those limits, and the EU is about to take action. Without that threat of EU action and the fact that ClientEarth took cases to the UK courts in anticipation of that EU action, the Government would not have moved at all, and have still yet to deliver a proper and effective air quality strategy.

That is just one example of what we face, and it is crucial at this stage, before going into the debate of how we transpose EU laws into our own operations, that we face up to the need to sharpen up our own enforcement mechanisms and our own respect for the enforcers and those who play the game in industry and society, and who follow the regulations for the benefit of us all.

We are about to have a great debate on the repeal Bill. I accept that some of these negative effects started with very good intentions and delivered some good results. But, as we have seen of late, we start with attempts to simplify regulations, then we try to reduce the burden and cost on business, and then, as time goes on, we fail to keep regulations up to date with changes in use or in technology and society. Then we reduce the powers and cut the resources available to the national enforcement authorities. We put the burden of austerity cuts disproportionately on to local authorities, who then cut disproportionately the inspection and enforcement areas within their own remit. Then, of course, there is the deprioritising of that within both national and local government. As a result—surprisingly—unscrupulous individuals and firms, cutting corners, take advantage of inattentive public authorities and lack of resources for those authorities; and you end up with Grenfell Tower.