Agriculture, Fisheries and the Rural Environment
Lord Whitty Excerpts(7 years, 3 months ago)
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Lord Whitty (Lab)
My Lords, I thank the noble Earl for this debate and for his wide-ranging introduction. He is of course right to have begun with the real historic importance of this debate: the retirement from this House of the noble Lord, Lord Plumb. I first met the noble Lord, when he was plain Sir Henry, back in the European Parliament days when he was leader of the Conservative group. In those days the Conservatives were a very influential group within Europe and in the European Parliament and had many friends, but times change. My conversations with him then must have revealed to him that I did not have a very clear grasp of agriculture. Since he knows the way of the world, it can hardly have come as a surprise to him that a few short years later I was appointed as the Agriculture Minister in this House. That was in very difficult times in the immediate aftermath of foot and mouth; indeed, it was still going on. I think I speak for everyone on every side of the House who has spoken on agriculture or had responsibility for it when I speak of the importance of the contributions we had from the noble Lord, Lord Plumb, in the Chamber, in Select Committees and in private conversations. I thank him for that. I am not saying we always agreed. I am not even saying he was always right, but he usually was. This House and many people in it will miss him.
I have two points to make today. First, the noble Earl is clearly right that we have an opportunity to substitute for the CAP a new British agricultural policy. As I said a few days ago, we need to remember that the CAP had multiple objectives and multiple effects. It was not simply a protectionist policy, although it was that and a very effective one; it also had environmental aims, land-use aims, rural development aims and aims that affected the whole of the food chain, which accounts for well over 10% of our employment and our GDP. Whatever reform and replacement there is of the CAP, which was never a perfect fit for the UK in any of its manifestations, has to recognise all those multiple dimensions. If we regard it simply as an agricultural or environmental policy, we will not have done the job of replacing it and taking this opportunity seriously. I will not expand on this, given the time.
My second point relates to an issue that rarely gets referred to here and, to be honest—looking at the list of speakers—may not be quite so popular, as in some cases it is the dark side of certain parts of the agriculture and food-processing industry: the labour force and the industry’s treatment of it. The last 40 years have seen an increasing dependence on migrant labour for certain parts of agriculture and food processing. It may not be politically correct to say so, but that imported labour and its effects socially and locally have led to social tensions in some parts of our country. It is no coincidence that many of the largest votes for Brexit were in the small towns and villages in counties in the east of England where these issues are at their most acute. It is also ironic but no coincidence that many of the farmers who, contrary to the advice of the NFU, advocated Brexit and shouted most loudly for it are now among those who are shouting for exemptions from what will be a stronger migration policy following Brexit. I am not against a new and properly regulated seasonal workers scheme; in fact, I am for it, and I hope it is part of the outcome. However, the more general outcome needs to see a situation where the workers within the agriculture and first-line processing sectors are treated better than they have been over the last few decades.
Contrary to the reassuring noises made by several noble Lords when we debated the abolition of the Agricultural Wages Board a few years ago, the reality has been that in a period when real wages for the rest of the economy have not gone up, the relative position of agricultural workers, as far as statisticians can make out, has still deteriorated. The abolition of the board and, for example, the restriction until recently on the activities and resources of the Gangmasters and Labour Abuse Authority have meant that the problems within that sector had not been properly addressed. Whatever we do in terms of the new agricultural and rural development policy, we must make sure that we have a workforce who are invested in it, properly trained and properly rewarded.
Air and Water Pollution: Impact
Lord Whitty Excerpts(7 years, 3 months ago)
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Lord Whitty (Lab)
My Lords, I join in the thanks to the noble Baroness, Lady Miller, for introducing this debate, and her impressive introduction. I want to use my time mainly to focus on the regulatory framework for controlling air quality in the UK in the post-Brexit scenario. I declare an interest, in that I am the current president of Environmental Protection UK, Britain’s oldest environmental charity—formerly the National Society for Clean Air, which was instrumental in bringing into being the Clean Air Act 1956.
I make no apology for repeating my reference to that Act, which I did in the debate initiated by the noble Lord, Lord Borwick, in July. Like the noble Baroness, Lady Walmsley, I have another, personal interest to declare. As a 10 year-old living in west London with heavy congestion on the ground and under the Heathrow flight path, I was diagnosed with severe asthma. I continued to live in London for many years and, as a result of the Clean Air Act 1956, it began largely to clear up. But for a lot of other people, air pollution is still a problem in London, as it is in many urban and semi-urban parts of the UK.
As the noble Earl, Lord Caithness, said, we have made progress. We have drastically cut sulphur dioxide emissions, for example, and many other pollutants have been reduced. This is partly because of the elimination of dirty factories, partly because emissions have been better managed and partly because there has been better regulation. Whatever the reason, we have made progress. The remaining area is principally, but not only, traffic and that is mainly, but not only, diesel—the wear and tear on the tyres and brakes also contribute to air pollution. Traffic volume is an important issue, but some 50% of air pollution is non-traffic—it comes from construction sites, agriculture, static plant, wood burning and gas appliances. Nitrogen dioxide and particulates have proved very difficult to reduce. Some are stubborn; some have been reduced but are now going up slightly again. There are more than 40 areas within the UK which are not meeting EU standards, which were supposed to have been achieved by 2010.
The medical effects have been spelled out this week in a substantial article in the Lancet and by evidence which, I suspect, we have all received from the BMA, the Chartered Institute of Environmental Health and the Royal College of Physicians. So we are looking not only at the statistical evidence of air pollution on mortality and on general ill-health, but our physicians have now identified the plausible means whereby damage is done and have shown that very small, ultra-fine particles enter the bloodstream within minutes of being inhaled. As has been said, this is particularly a problem for infants and young children and for children in the womb. The net effect on adults and children has been to contribute to 40,000-plus deaths nationwide, through pulmonary, cardiovascular and other diseases and aggravation of pre-existing conditions.
As the noble Baroness, Lady Walmsley, said, there is also a social dimension. It affects the least well-off, and children are the least well-off in our society. One could say that the diesel cars of the top 25% are damaging the health of the bottom 25%, and the children in particular.
The way in which this has been dealt with has been very dependent on EU regulations and ultimately on EU enforcement. These regulations have not been met, either within the UK or within many other European countries. Enforcement has been difficult. As the noble Earl, Lord Caithness, indicated, the Volkswagen crisis has shown that the power of the German car manufacturers has overridden the health of the European population. Whether or not there were other ways of dealing with that, it greatly aggravated both the problem and the credibility of the system. The value limits in these EU regulations are at twice the level which the World Health Organization suggests are safe.
Even to meet the EU standards, the UK Government will need a more effective air quality strategy than they currently have. Having been found wanting in the courts twice over the last few months, the latest July version of Defra’s air quality plan admittedly includes a number of new elements—in particular, a target of 2040 for the end of petrol and diesel cars, which is less than other public authorities in Britain and Europe have set. It also provides some funds to support low-carbon vehicles. However, if you add up the totality of the air quality strategy, it is, in effect, a call for local authorities to draw up their own plans without any significant additional powers or resources. It is still not a coherent strategy, nor is it a coherent way in which to develop clean air zones. Local authorities have been somewhat slow in developing those. There is a real need to focus on the areas of worst pollution and to ensure that all central and local government-sanctioned developments near the areas of highest pollution do not cut across that.
This may be a minor example in some ways, but the reference of the noble Baroness, Lady Walmsley, to trees reminded me that just this week I saw an article in the Camden New Journal, which said that it was proposed to cut down 50 plane trees, which absorb pollution, to house temporarily the taxi rank displaced by HS2. That is an absurd counteraction. There is an even worse one: the London mayor has begun to develop an ambitious programme to introduce charges on all diesel vehicles and develop ultra-low vehicle emissions zones, but that could be undermined by the decision on Heathrow. Only yesterday, the Times stated that the latest reports suggest that the evidence relating to likely air quality problems arising from the building of a third runway at Heathrow mean that even the EU’s current levels will be undermined. I say to the Minister and his transport ministerial colleagues that the Times also stated that the risks of those limits not being met are low at Gatwick but very high at Heathrow. Given that new evidence, is the Minister inclined to change the approach to the building of a third runway at Heathrow?
Brexit: Agriculture and Farm Animal Welfare (European Union Committee Report)
Lord Whitty Excerpts(7 years, 3 months ago)
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Lord Whitty (Lab)
My Lords, I congratulate the noble Lords, Lord Teverson and Lord Curry, and the other members of the committee. It is a very effective report. We speak in a week when we have had two quite bad pieces of news. The first is that the Agriculture and Horticulture Development Board has produced a fairly well-based report on its expectations for various scenarios as the outcome of Brexit. They list three: evolution, which is, broadly speaking, the Chancellor of the Exchequer’s preferred outcome; unilateral liberalism, which I presume is Liam Fox’s preferred outcome; and fortress Britain, which, I presume from his remarks this week, is Chris Grayling’s preferred outcome. Whatever the origins of those broad-brush outcomes, the conclusion is that in the last two, there will be dramatic falls in farm income in almost all sectors and for almost all farms. In the first scenario, which is broadly the status quo—through a free trade agreement—farm incomes will be kept up only if the level of subsidy from the UK Government keeps pace with what would otherwise have been the European payouts. In all three scenarios there is a presumption that consumer prices will increase, which may be interesting for some theorists. As the noble Lord, Lord Curry, says, we have an opportunity to redevelop and bring in a different British agricultural policy, replacing the 40-odd years of the CAP. Michael Gove has a serious challenge.
We have to see any new agricultural policy in the broadest possible terms. As a bit of history, the CAP was first conceived not simply as a protectionist food policy—although it was always that—but as a regional, rural and social policy. In effect, it was avoiding for the rural areas of France and Italy the kind of depopulation and rural poverty which in the previous century had hit other economies such as those of Ireland and Scotland, and which in the current century is hitting many Asian economies with rural depopulation and poverty. The CAP has always had multiple outputs.
Therefore, we need a wide range of objectives—public goods, as the noble Baroness, Lady Miller, calls them—for any new system: support for the wider rural economy and society, and the rural environment; support for land and water management; and the preservation and enhancement of our natural capital. The answer will be different in different parts of the country, and it will be different in different English regions. However, there are political problems with the fact that they will be very different in different parts of the devolved Administrations. If what has hitherto been the Brussels input to agricultural policy is simply centralised in Whitehall, there will be quite serious problems with the devolved Administrations. We need an all-UK approach to this, but it will be difficult to achieve without causing grave difficulties for the devolution settlement.
Just this week, Carwyn Jones, the First Minister of Wales—who was my oppo in Wales when I was Agriculture Minister and he was in Cardiff—has pointed out that certain trade outcomes and regulatory outcomes could completely wipe out hill farming in Wales. That would be a disaster, not just for Wales but for the whole country. There will also be serious problems in Scotland and Northern Ireland. In the latter, it is greatly compounded by areas covered by previous reports from the Select Committee with regard to the Irish trade and the dominance of the north-south arrangements. Goods which end up as consumer goods finally cross the border several times, and the Irish economy, both north and south, depends heavily on exports to the UK, and via the UK to the EU.
My second main point is on trade. The noble Lord, Lord Teverson, already reported on this week’s row on trade quotas. This is a situation in which, quietly, EU, UK and WTO officials were seeing a way forward. Almost immediately after that became semi-public knowledge, it was objected to by other countries, with which some hope we will reach very detailed free trade agreements in the near future. This proves a number of things. First, we do not have that many friends out there. However, it also proves that if agricultural quotas are not settled, it will be very difficult to deliver a whole-scale free-trade agreement with Europe and, beyond Europe, with other countries. Unless agricultural quotas are settled, because agriculture is such an important aspect of the European Union, reaching an agreement on other trade arrangements with Europe will be more difficult. When we come to negotiate the other agreements that people have in mind, unless we have settled that, they will not know what their quotas will be, whether they have an arrangement for a free-trade agreement with Europe already—in which case there are quotas referred to there—or if they can trade with Europe free of quotas but facing tariffs.
It is in fact worse than that. Historically, any agreement on trade has floundered heavily on failure to agree, under the WTO or whatever, and under GATT before it, on agricultural quotas and the reflection of the level of subsidy—the amber box subsidies—in any trade negotiations. The latest example of that, only 10 years ago, was the almost complete failure of the Doha round, principally because we could not agree multilaterally on trade quotas and trade subsidies for agriculture.
Agriculture therefore has implications way beyond its own importance within our economy, our society and our countryside. Unless we manage to resolve with our European partners and beyond the way in which we treat trade in agriculture, we will not get free trade agreements anywhere.
Air Quality: London
Lord Whitty Excerpts(7 years, 7 months ago)
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Lord Whitty (Lab)
My Lords, I offer my warm congratulations to the noble Lord not only because he has initiated this debate but on giving us such a comprehensive and technically informed tour of the issues involved. I need to declare an interest as the current honorary president of Environmental Protection UK, which is the successor body to the National Society for Clean Air, one of the campaigning bodies that produced the Clean Air Act 1956, referred to by the noble Lord. My noble friend Lord Hunt, who will speak later in the debate, is also a former president of that organisation—not as far back as 1956, but nevertheless he made a significant contribution to it. I look forward to his speech.
As the noble Lord, Lord Borwick, said, the 1956 Act was a great landmark. It effectively removed smog and pea-souper fogs from London and thus transformed this city. But I have to tell noble Lords that the Government of the day were not initially persuaded of the necessity for such an Act. I have before me a confidential Cabinet committee paper, admittedly not a scoop because it dates back to 1953. In it Harold Macmillan, then the Housing Minister and a brilliant one in that role, did not initially take air pollution very seriously. Indeed, he was at his most disdainful and cynical. I shall quote him directly:
“Today everybody expects the Government to solve every problem. It is a symptom of the welfare state … For some reason or another, ‘smog’ has captured the imagination of the press and the people. I would suggest that we form a Committee. Committees are the oriflame of democracy. There are some short-term things which we have done; and can do. There are some longer-term solutions … We cannot do very much, but we can seem to be very busy—and that is half the battle nowadays”.
Eventually Harold Macmillan changed his mind, but only after another three years of vigorous public campaigning as well as the work of the committee of inquiry set up under Sir Hugh Beaver. Of course, later in his life Macmillan claimed the Clean Air Act as one of his great successes.
I now fear that more recent Governments, including the current one, have been as complacent as Macmillan originally was. Unfortunately, as the noble Lord has just said, there are still dangerous although invisible substances in our atmosphere which have yet to be tackled effectively and which again affect in particular the poorer communities within our population. Large parts of London still exceed EU standards for NO2 and World Health Organization standards for both NO2 and ultrafine particulates. These are damaging to cardiovascular health and can cause respiratory diseases. Although the calculations are complicated, they are thought to have caused up to 10,000 equivalents of death in London alone.
I take some responsibility as I have been both a Transport Minister and a Minister in Defra, and I briefly held the portfolio for air quality. Subsequently, I served on the board of the Environment Agency, which has responsibility for non-vehicular emissions. There has been some success in limiting point-source emissions but very little in relation to vehicular traffic. Moreover, the standards we have in place have been dramatically revealed to be inadequate. The Volkswagen scandal revealed a huge subterfuge in the motor sector to the detriment of the population at large, despite more rigorous EU standards and increasingly well-evidenced and assertive reports from medical and public health authorities.
Even the powers that we have had, we have failed to use. It is 20 years since I took legislation through this House to set up low-emission zones, but it has hardly been used. In London we now have the basis of low-emission zones and we have the mayor’s new air quality strategy as well as work being done in some London boroughs of all political persuasions, to which the noble Lord referred. All are attempting to do something about the problem, but we need to do significantly more. The theme of my speech today is that it is important that the mayor’s strategy is followed through so that the zones can be expanded and enforced, but a national strategy is needed to back that up. The mayor’s powers are limited and the lack of a national strategy has already twice been exposed in the High Court as inadequate in terms of the Government’s responsibilities under European legislation and under their own commitments.
Pushing all the responsibility on to local authorities, as the current draft strategy does, will not work. They need the staffing and the resources to deliver. That is even more the case in cities outside London which face greater challenges. However, the Government are going backwards on that as well. Of the 17 cities they first thought needed attention, it is now proposed that only five will go forward in the national strategy.
The scope of the powers also needs to be addressed. Although road transport is the major contributor to pollution in London, it actually accounts for less than half of it, as the noble Lord indicated in his speech. He referred to stand-by diesel generators, and indeed stand-by generators of any sort as well as decentralised energy sources and other forms of heating. Another example is off-road construction machinery. All of it contributes to pollution levels. These need to be addressed by the mayor, who does not actually have the power to do so very effectively.
There are of course trade-offs in this. The noble Lord referred to the biggest of them, which is between climate change objectives and air quality objectives and the overriding commitment to fuel efficiency and thus carbon saving. That has led to what in retrospect was a mistake when the balance of taxation was changed in favour of diesel vehicles. That has aggravated the situation significantly, so technology and regulation must catch up. We need to take a holistic approach. It should not be impossible for the motor industry, even using current technologies, to produce filters that can tackle carbon and other emissions which are damaging to public health. Technology ought to be able to provide solutions and regulation has to back it up.
Other choices such as wood burning are allegedly also carried out for environmental reasons. I have my doubts about wood burning myself because I think that it is more of a lifestyle choice, and it is an increasing contributor to pollution in London and elsewhere. There are other trade-offs in relation to road safety. The noble Lord referred to the dust produced by braking and how some road humps actually contribute to increased air pollution by vehicles. However, the humps save lives, so we need road design that can contribute both to road safety and improve air quality by reducing pollution.
I have a number of questions for the Minister. Do the Government accept the findings of the King’s College study which calculates a mortality equivalent of 9,500 deaths in London? Do the Government have figures for the number of staff and resources in local government, the Environment Agency and Defra and how they have reduced over the past few years? What has been the effect of that? Can the Minister tell us what will happen after Brexit, given that infraction proceedings will no longer be the enforcement mechanism? How will the Government enforce air quality standards? Again after Brexit, will the Government base policy on the same standards as the EU or will they adopt the WHO standards, which are more stringent? Will Volkswagen and any other transgressors face US-style penalties if they in effect distort testing results both on-road and off-road in the way that company did? Why is there no scrappage scheme for older diesel vehicles, and will all new diesel motors be subject to on-road, real driving tests, with those failing being banned? I have a number of other questions but I shall put them in writing for the Minister; these are enough to be going on with.
I hope that the dismissive tones of Harold Macmillan 64 years ago are not echoed by the Minister’s boss, Mr Michael Gove. In my capacity as president of EP UK I have written to Michael Gove urging him to set up a wide-ranging, high-powered independent clean air commission with the immediate task of helping to prioritise and allocate resources across government to ensure the effective enforcement of existing measures, and more particularly to develop a forward strategy and a new clean air Act. At the beginning, Macmillan was dismissive of experts; the current Secretary of State has been known to be similarly dismissive. In the end, Macmillan took their advice. The 1956 Act was, in retrospect, one of the few successful legacies of the Eden Government—a Government who, noble Lords may note, were an otherwise somewhat controversial and short-lived Conservative Administration, so it ought to have some attractions for the incumbents. I hope they adopt a more aggressive stance on this. It will be a real legacy that will benefit hundreds of thousands of citizens in London and beyond.
Air Quality
Lord Whitty Excerpts(8 years, 3 months ago)
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Lord Whitty (Lab)
My Lords, does the Statement mean that the Government now accept that the national air quality strategy produced by the Minister’s department was found by the court, in what has been a bad week for the Government in court, to be flawed in its evidence and lacking in ambition to meet the targets? Although the Government endorsed the five cities that the Minister referred to, did not the Minister’s own officials recommend that clean air zones should be established in more than 20 cities? Lastly, 60 years on from the Clean Air Act—probably the only remaining positive outcome of the Eden Government—do the current Government accept that we need a new clear air Act, and possibly a clean air commission, as recommended by Clean Air Alliance UK? I declare an interest as the president of Environmental Protection UK, one of the members of that alliance.
Lord Gardiner of Kimble
My Lords, I would be the first to say that I think that the Clean Air Act and some of the improvements we have seen since that time have shown that Governments of all persuasions have taken this matter very seriously indeed. As I say, we got the judgment 24 hours ago and it is very important that we consider all the measures. We accept the judgment, and we now have to work speedily and constructively to ensure that we remedy a situation that we all wish to be much improved.
Public Bodies (Abolition of the Advisory Committees on Pesticides) Order 2015
Lord Whitty Excerpts(9 years, 11 months ago)
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The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, this is an order to be made under the Public Bodies Act 2011. As detailed in the explanatory document accompanying it, it delivers one of the outcomes of the Government’s programme of reform for public bodies. The order will abolish the Advisory Committee on Pesticides and the equivalent body for Northern Ireland as statutory non-departmental public bodies. The Government will then establish a new expert scientific committee.
I wish to make it absolutely clear that this is not an attempt on the Government’s part to stem the flow of impartial and independent scientific advice on pesticides—in fact, quite the reverse. We are very clear that the Advisory Committee on Pesticides has several strong features that must continue. These include: expertise, independence, impartiality, transparency, a direct line to Ministers, and the ability to initiate its own lines of inquiry. We will retain these qualities, but we see an opportunity to make improvements. I firmly believe that there will be benefits from the successor committee operating in a different and more flexible way, while of course retaining its independence.
We need new arrangements to reflect wider changes in the regulatory landscape for pesticides since the Advisory Committee on Pesticides was set up nearly 30 years ago. We need to establish a broader, more strategic and proactive role for the successor committee while meeting the continuing need for independent expert scientific advice in this area.
Over recent years, Defra has taken steps to improve its management of the wide range of scientific advice and evidence that underpins its work. As an expert scientific committee, the successor body to the Advisory Committee on Pesticides will work in a more co-ordinated and peer-reviewed environment. This is overseen by our chief scientific adviser and science advisory council. They do not interfere in the work of experts but provide valuable co-ordination, challenge and support.
We have consulted widely, as required by the Public Bodies Act, on the future of the Advisory Committee on Pesticides. As we have reported, there was clear support for our proposals. We also have the full support of other UK departments and the devolved Administrations. We have secured the required clearance from the devolved legislatures for the order. I believe we have gained this support because we acknowledge that these other parties have a strong interest in the future arrangements. We have worked closely with them and with the committee itself to draft the terms of reference for the new expert scientific committee. The input of the committee members is particularly important because they will transfer to the successor body.
The draft terms of reference have been discussed at two meetings of the committee and small but important adjustments have been made. These changes have satisfied members that the draft clearly sets out a shared vision of the independence of the committee, its right to initiate work and its right to communicate directly with Ministers. This text has now been put to departments for final agreement.
The Secondary Legislation Scrutiny Committee report on the order highlighted several issues to be captured in the terms of reference. These included addressing the comments by the Advisory Committee on Pesticides in the earlier consultation about independence and proactivity. It also mentioned the importance of the Principles of Scientific Advice to Government and the Code of Practice for Scientific Advisory Committees. The report also called for the establishment of escalation routes to ensure that advice from expert scientific committees can be submitted directly to Ministers, as appropriate.
In flagging those points, the Secondary Legislation Scrutiny Committee nevertheless concluded that the Government have demonstrated that the draft order serves the purpose of improving the exercise of public functions as set out in the 2011 Act, in line with the considerations contained in it. The committee was consequently content to clear the order within the 40-day affirmative procedure.
I am glad to be able to confirm that the issues raised by the scrutiny committee are all carefully and fully addressed in the draft terms of reference for the successor body. I can also confirm, as outlined earlier, that the members of the current Advisory Committee on Pesticides and all the relevant departments have been closely involved in this work. The existing Advisory Committee on Pesticides has provided real value over a number of years and the Government are determined to carry over its strengths to the new body. However, the new structure will be more flexible and efficient. I commend the draft order to the Committee.
Lord Whitty (Lab)
My Lords, I thank the Minister for spelling out the content of this order. Clearly, with the passage of the Public Bodies Bill—four years ago now—the authority to abolish this committee, provided the Government followed the appropriate procedure, has been there.
In Committee on the Public Bodies Bill, I queried the wisdom of abolishing this committee, and my noble friend Lady Quin queried it on Report. The significance of that for those who are not all that familiar with the history of Defra is that my noble friend Lady Quin was the last MAFF Minister to have responsibility for pesticides and I was the first Defra Minister to have responsibility for pesticides. We relied very heavily on the objectivity of the statutory committee, as well as the operations of the pesticides department—PSD—within Defra, because there are always some very difficult, if not controversial, issues arising about pesticides.
The difficulties and controversy have, if anything, increased in recent years. A number of bans at European level have been contested by the industry and some others in crop protection. There has recently been a serious disagreement between the Government and our European colleagues on neonicotinoids. There are always concerns for wildlife and, in particular, the bee population, the effects of various pesticides on them and therefore on their ability to fertilise a whole range of cultivated and wild plant life.
Within what is a no doubt objective and highly scientific area, there are quite often serious disagreements between experts. One of my main memories of my time as a Minister in this area was one huge row where—I will not go into the details—somebody was appointed to the committee whom the crop protection industry was not particularly keen on. It was always important to ensure a balance on the committee, with a range of people. Of course, that is quite difficult for government appointments. Almost everybody with a scientific background in this area, whether at university or in industry, has at some point in their career been employed or had their research sponsored by companies within the industry. It is therefore very important that transparency, accountability, independence—from industry as well as from government—and balance are clear in the advice that the Government receive.
Actually, the non-departmental public body requirements help to ensure that. My concern about the abolition of the committee was that we might lose that balance. The Government have gone through the correct procedures to ensure that there is understanding of the new way of carrying things out. I appreciate that and have every faith in the Government being very diligent in ensuring that that balance and independence are still there. They put it within a wider context where, effectively, this is an expert committee reporting to the science advisory council, which oversees the whole of Defra’s scientific work. That makes sense to a degree, provided that that is well resourced and that the expert committees covering specialist areas maintain the balance and independence I referred to.
I accept the Government’s good intentions within this area but they have to recognise that it is one where, publicly, media-wise and in the scientific community, controversy can jump out at Ministers who are without great expectation or, frankly, much knowledge of the balance of understanding on the scientific argument. That means the Government must be able to defend whatever future, more flexible arrangements are put in place. The Government refer to flexibility of advice. That should not be too ad hoc or Ministers would be open to the accusation that they have chosen the advice from those people most likely to favour their or the industry’s position. That would be unfortunate in an area where a degree of objectivity has generally been respected over the years.
Pesticides used in our agriculture and horticulture have an important effect on the countryside, wildlife, bystanders, rural communities and the productivity and economic structure of our agricultural sector, so this is an important issue. I hope that the new arrangements work as well as the old ones. I dug out the latest annual report. It is clear from even the summary of the activity—where there were 12 important authorisations of pesticides, some more authorisations of equipment and some serious discussions about the regulatory regime of pesticides in that very year—that that intensity is unlikely to diminish.
Single Use Carrier Bags Charges (England) Order 2015
Lord Whitty Excerpts(9 years, 11 months ago)
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Viscount Ridley (Con)
My Lords, I want to make a couple of quick points and press a couple of questions similar to ones that have already been made. What we are talking about is known in economics as a Pigovian tax. I know this is not a tax but Pigovian taxes are intended to discourage activity. The one thing economists say about them is that they should be as technology-neutral, as transparent and as even as possible, otherwise they simply push down something that pops up somewhere else. I worry that we are talking about dealing with what is a very small part of the amount of plastic litter that ends up in the countryside. The point has been made that there is an awful lot of litter on roadsides, particularly at this time of year, and relatively little of it consists of supermarket plastic bags. I have heard the figure of 1%, although I do not know if that is right. Is it not possible to come up with something much more neutral about plastic technology generally across the board, to see whether we can discourage it without picking on this one bag?
I find it very hard to believe that the savings in littering and CO2 will be in the region of £780 million— I think that was the number I heard. This is only a relatively small part of the litter that is around. I cannot believe that 10 minutes less spent picking up litter on the side of the road because there are no plastic bags there will add up to £780 million. On the CO2 point, I echo what the right reverend Prelate the Bishop of Chester said. It is not at all clear that the alternatives will produce less CO2—unless we all use the equivalent of the right reverend Prelate’s bag and I am not sure that everybody will. We know that more energy often goes into making paper bags by the time that transport and everything else is taken into account, whether or not, as my noble friend Lord Holmes said, that paper bag gets reused. We also heard from my noble friend Lord Lindsay that oxydegradable plastic bags will have an impact on the recycling chain. Can we make absolutely sure that, when we quote figures for the amount of carbon dioxide that will be saved by this measure, they are honest and properly audited? One hears some claptrap in this area and it would be nice to be sure that the figures are right.
The hypothecation of taxes—that is, when a tax automatically goes to one use rather than just into the Treasury—is something that the Treasury has always resisted. I know that this is not a tax—it is a charge—but none the less it has been hypothecated to certain good causes. On the whole, that is quite a good idea, as long as the customer is allowed to direct where it goes. I hope that that becomes a slightly more general point across government.
Lord Whitty (Lab)
My Lords, I suspect the Minister was hoping for full approval for this government initiative. I am gratified that the Government have finally got around to it. I have been campaigning on this front for at least 15 years, so I am glad that, 13 years after the Republic of Ireland, and then following the devolved Administrations within the UK, we have at last reached this position. To continue the scriptural allusions of my noble friend Lord Dubs, there is always much joy in heaven for a sinner who repenteth, and we should all appreciate that. Nevertheless, we could have had a much clearer policy announced today—one that would have been better understood by the public. I was struck by the point made by the noble Lord, Lord Holmes, that it is people who litter, not bags. That is absolutely true. However, as the noble Viscount, Lord Ridley, said, the whole point of this tax is effectively to change behaviour. It is not a tax; it is a levy.
My noble friend Lord Anderson referred to the experience in Wales. I happened to be in Tesco in Dundee on Sunday with a young lad. I would not say that he had great green credentials nor that he was always affected by prices, but he had already—this is relatively new in Scotland—changed his behaviour and brought a bag with him. That is the point. Yes, in the end, it is people who create litter and, by using these plastic bags, not only cause unnecessary carbon emissions but bring desecration to our countryside, wildlife, marine life, beaches and many of our city centres. I am glad that my noble friend Lady Golding found only one plastic bag in her car park, but I must say that that is not the general experience in either urban or rural car parks, or in other open spaces. It has been reported that some 2,000 of them can be found on every square kilometre of beach. That is atrocious from the aesthetic as well as the environmental and economic point of view.
I welcome the principle, but it has been unnecessarily curtailed, and in such a way that it does not do what it alleges it intends to do. The big exemption is for retailers with fewer than 250 employees, which exempts quite large retailers and represents around a third of all retail outlets. These exemptions do not exist in the devolved Administrations, but the exemption for very small retailers from completing the reporting mechanisms—the real red tape and administrative burden—is set at 10 employees. That seems to be a sensible approach. The exemption should be from the reporting and administrative burden, not from the requirement to impose the charge.
The exemption makes a big difference to the figures in the Government’s own impact assessment. The net present value of this over 10 years, according to the impact assessment set out on page 7 of the Government’s report and as indicated by the Minister, is £782 million. However, it would rise to more than £1 billion if all retailers were included. The Government’s position would be understandable if the retailers themselves were strongly pressing for this exemption, but I am sure that other noble Lords have seen the representations from a number of organisations that represent retail outlets, all of whom are saying, “This is daft and will actually impose a burden on retailers that will put them at a competitive disadvantage in certain respects”.
The British Retail Consortium has said that it is unfair to put smaller retailers in a position where they have to choose whether to charge. There are doubts about having an inconsistent position across the UK. The Association of Convenience Stores has said that some 60% of its members support a single-use carrier bag levy being applied, and in Wales, where it has actually happened, more than 80% of convenience stores support it. The association would strongly support its own membership being covered by this in England as well as in Wales, Scotland and Northern Ireland. The British Independent Retailers Association, which is the voice of the independent retailer and is often critical of the red tape of government regulations, has said that this should cover businesses of all sizes and that the only exemption should be on the administrative burden, to which I have referred. The Government do not have the support of those who would allegedly benefit from the substantial exemption this order provides for.
There are other exemptions or potential exemptions which can also be queried. The noble Earl, Lord Lindsay, has spelt out comprehensively why the issue of oxo-biodegradable bags is not worthy of being considered as an exemption because of their knock-on effect on waste management and the reusability of plastics in general. Others have queried whether other sorts of bags that are being exempted should have that exemption. The big issue I refer to in that respect is: why should non-reused paper bags be excluded when they themselves have a very high carbon content and are a significant part of the litter around our towns and countryside?
Given, therefore, that there is now a general acceptance of this approach, and that the alleged beneficiaries of the exemptions do not seem to be in favour of the Government’s position, why do the Government persist in doing this? Why, in particular, do they do so when the rest of the United Kingdom does not provide for those exemptions, or most of them, and when we may well be faced with a European directive at some point, which will probably not have those exemptions either?
As I say, we should give at least two cheers for the Government for coming forward with this at last. Nevertheless, it is a pity that they have botched it a bit, and I hope that maybe they will fairly rapidly rethink this, and that, even if we adopt this statutory instrument today or when it is considered in the Chamber, they will come back and say, “Actually, these exemptions are pretty much a nonsense. Let’s make it straightforward so that everybody can understand it, and it will have the effect on everybody, whether they are a customer of a small or large business, whether they have a plastic bag or a paper bag, and whether they are in the country or the centre of our towns”. I hope that the Minister will take that at least as partial support, but some rethinking would be appropriate in his department.
Lord De Mauley
My Lords, I thank all noble Lords for their comments, but in particular I thank those noble Lords who have given at least the partial support that the noble Lord, Lord Whitty, offered. I will see how many of noble Lords’ questions and comments I can address, bearing in mind that our process may shortly be interrupted. However, I will see how far I can get.
The noble Lord, Lord Anderson of Swansea, asked why there had been a delay in getting to where we have. I know that I will not satisfy him entirely, and I suspect that he may have heard me say this before. However, I will say again that we carefully considered the situation and looked at the effect of the scheme in Wales to enable us to design what we considered to be the most appropriate scheme in England. As he knows, we first used voluntary industry initiatives to reduce bags, which proved successful up to a point. The other point it is worth making is that we needed to work with retailers to give them time to prepare. I know that I am not satisfying him entirely, but he will allow me to make that point.
He also asked what the purpose of an end date to the legislation is. It is standard practice from the perspective of Better Regulation to include a sunset date. It gives the Government of the day the opportunity to review the legislation to decide whether it is fit for purpose, and indeed to amend it if they wish to do so. Seven years is standard practice in that regard.
The noble Lord raised the exclusion of SMEs, as did a number of noble Lords. I am aware that some SMEs wish to be included within the scheme, but we have chosen to exempt small and medium-sized businesses from the charge to reduce the administrative burden on start-up and growing businesses at a time when we are supporting new growth in our economy. It is important to remember that the large majority of single-use plastic bags are distributed by the large retailers, and the seven major supermarkets gave out more than 7 billion of those bags in 2013. Small and medium-sized businesses are able to charge on a voluntary basis if they wish, and we have been told about some that already charge voluntarily and are generating significant financial benefits from a reduction in the number of bags they supply. I thoroughly encourage that. There is a requirement in the order for the system to be reviewed within five years, and the scope of the review will be set by the Secretary of State at the time, but I am confident that the SME exemption will be one element of the policy that will be considered as part of that review.
The noble Lord, Lord Whitty, asked a related question. The impact assessment also states that there is an overall net benefit to society when SMEs are excluded from the scheme. The Government have therefore chosen to exempt them from the plastic bag charge to avoid placing an administrative burden on them at a time when, as I said, we are supporting growth in the economy.
Natural Environment
Lord Whitty Excerpts(10 years, 1 month ago)
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Lord Whitty (Lab)
My Lords, I, too, thank the noble Baroness for initiating this very wide-ranging debate. I thank her also for giving us a quick preview of what would be the Queen’s Speech of a Liberal Democrat Government—some of which sounds vaguely attractive, and I might support it.
The title of this debate ranges from the very local to the international, and we do not know where to begin. The noble Baroness began, as I rather suspected she might, with the situation in Somerset and the Somerset levels and the disastrous, distressful floods. There was a terrible impact on both the people there and the environment. However, as the noble Earl, Lord Selborne, said, the key thing about the Somerset levels is that they are not, in a strict sense, a natural environment. They have been created by manmade measures over the centuries: intricate water management, successive different forms of farming putting pressure on the system, deforestation, local pollarding of trees and so forth, and ever-changing farming practices. They all put pressure on the system. All those efforts gave an economic base to the area and the landscape that we love, but the levels are not a natural environment. They need to be protected, but we need a different system of human management for such areas.
The storms of last year which caused the floods in Somerset and elsewhere were a unique event and were unprecedented in their form. While one cannot ascribe any individual extreme weather event to climate change, climate change means that we are going to get more of them. The likelihood is therefore that the UK and the world will face greater storms, floods, droughts and other disasters, and we need human management to deal with that. In order to protect our environment, we need a change in intervention. As in 19th century Sicily, unless there is change, things cannot remain the same. We therefore need to recognise that the challenge of global climate change will mean a lot of new, local interventions. I do not want to be too despondent, but the world has largely failed on climate change. The conference in Paris this year may be the last-chance saloon to stop average global temperatures going over the 2 degrees level.
There are some fairly worrying indications. The fall in the oil price means that people and markets are switching back to fossil fuels. The development of shale gas and shale oil has displaced coal in America. On balance, this is a positive thing, but it has reduced the price of coal, which is being exported to markets at a low cost, as is US oil. The net result is that the price of fossil fuels, relative to nuclear and renewables, is changing. The problem is not just in places like China, where coal-fired power stations are coming on stream every month, or India where the explicit objective of the new Government’s policy is to exploit to the full India’s domestic coal resources—most of which are lignite, the worst form of coal. It is also true within Europe, where Polish and German lignite is now being used to a greater degree: even green Germany is opening new coal-fired power stations.
In aggregate, the global subsidies for coal far outweigh those for renewables or nuclear energy. The markets and, in some cases, government policy, are moving in the wrong direction. Over the years, the UK Government have, commendably, taken the lead in both establishing targets and introducing policies designed to offset this. However, most of those policies have not delivered to the extent that they should. The noble Baroness mentioned issues of energy efficiency in residential and other property, but so far the measures are faltering. The ECO is not working as it should, nor is the Green Deal, and take-up of the RHI is very limited. A report which I was partly responsible for found that there are very few pressures in the commercial and industrial sectors for increasing the environmental efficiency—and therefore the energy use—of commercial buildings, old and new.
As the noble Baroness said, we need intensified policies in all of these areas. We also need them on land management: how we use land and water. We need to plant more, appropriate trees on many of our hillsides; we need more effective water management by catchment; we need to reform the abstraction regime for water in our uplands. We cannot defer this, as we have done for many years. Some of these interventions, and some on the energy side, will be seen by some as detrimental to the natural environment, but that will only be in the short term. In the long term, they will protect our natural environment.
I am not saying that we should give up trying to mitigate the rise in carbon and greenhouse gas emissions. That objective is still there, but we need to recognise that a significant rise in global temperatures—probably over 2 degrees—is now almost inevitable. We therefore need to look at adaptation in the way that we have looked at attempts to mitigate. On the mitigation side, the Climate Change Committee has indicated that the next Budget will require us to cut, between now and 2025, by another 28%. We succeeded in meeting the first budget targets only because of the recession. The underlying change is nowhere near close to achieving those ends. That means that even in the UK—which is leading in this area—we are not likely to make our contribution to reducing carbon.
We therefore need to focus as well on mitigation. That will need capital expenditure by both public and private sectors. We know that the way in which projects are assessed in the private sector tends to focus on the short term. We know that the immediate fiscal problem with regard to public expenditure is limiting the amount of public investment in things such as flood defence, resilience of infrastructure and the whole area of protection of our countryside. Unless we put the money in and give some priority to that form of investment, we will neither protect what we call our natural environment nor avoid the major problems that are facing us through the process of climate change.
EU: Counting the Cost of Food Waste (EUC Report)
Lord Whitty Excerpts(10 years, 3 months ago)
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Lord Whitty (Lab)
My Lords, I was a member of the Select Committee, serving under the very effective leadership of the noble Baroness, Lady Scott. It was a fascinating task and she very deftly explained both the main points of what we have covered and what has happened since. I shall try just to underline one or two points.
My first point is what a big deal this is. On some estimates, the amount of food waste in the industrialised countries exceeds the total first production of the whole continent of Africa. This is an incredible waste of human effort and environmental and economic cost. I say, “On some estimates”, because we very rapidly found that the estimates in this field are rather difficult, which limits the degree to which the EU can play as effective a role as it perhaps ought. We found that measurement of food waste at different stages of the chain and between different countries was pretty incompatible. Until that is resolved, the EU level probably has to be aspirational, exculpatory and a matter of learning from best practice. Best practice in this area largely rests in the United Kingdom and, to some extent, in the Netherlands.
The next point I will emphasise is the key role of the retailers in the supply chain. Clearly, the retailers have done a lot to cut their own waste at their stage in the process and they are taking it further and helping out on aspects such as food redistribution, but it is also true that they bear a heavy responsibility for what happens at both ends of the chain. Their contracting deals with farmers and small producers inevitably lead to some wastage at that level.
It is part of the general imbalance between the great supermarket chains and farmers and other small producers that leads to alterations in contracts, including premiums for particular, very highly specialised specifications for vegetables and other materials. The way that contracts are actually carved up leads to waste at that level. That is something that needs to be addressed, particularly in the same context as the grocery code and the role of the grocery code adjudicator. At the moment, the adjudicator’s responsibilities do not really include a responsibility for ensuring that the contracting arrangements between the retailer and the provider do not create unnecessary waste, and I think they probably should.
Retailers also have a responsibility to the consumer. They fulfil some of it; I have certainly learnt from the labels on consumer goods and food that I have bought in supermarkets and which I have started reading since we have been engaged in this. It has changed my habits somewhat, as to storage, packaging, how long I think I can keep fruit and what should and should not be in the fridge. If I, who have some responsibility in this area, do not know how to behave in relation to my consumer responsibilities, and need to be told by a retailer, the retailer needs to shout even louder to the vast majority of the population. They are taking on that role, but they need to do more of it. It is undermined, to some extent, by some of the ways they market themselves, particularly with what are called BOGOF deals—where you are tempted to buy more than you need and half of it goes off—and other forms of incentive. That is the downside of the positive role of retailers in this area and it one that they need seriously to address.
Another point I underline is the role of WRAP in this area. Universally within the supply chain, here and across Europe, there is great recognition of the role that WRAP has played. We were rather dismayed to hear that the resources available to WRAP had been cut significantly and that there was some expectation that it would have to draw in its horns in this area. Can the Minister indicate what the latest development is on that front? The role of WRAP in the delivery of, for example, the Courtauld initiative with industry and in other initiatives that have taken place has been exemplary. It is one which needs to be retained and generalised across Europe.
We touched on another couple of things in terms of waste disposal for what is wasted. One of the problems with this was raised in debate on the Deregulation Bill yesterday. It is the differential approach to the labelling of waste between local authorities and the need for the public to understand therefore what should be put in what bin, and whether to have differential disposal of food waste because it can be used in different ways from other forms of waste. In some local authorities that is allowed and in some it is not, which seems completely barmy.
There was also some anxiety that in the waste hierarchy, which we considered would continue to be a useful tool, some of the incentives for moving food waste into waste for energy meant that other options such as animal feed, recycling and so forth appeared less attractive, even though they were higher up the waste hierarchy. While I am strongly in favour of anaerobic digestion, for example, and other forms of waste for energy, I think that area needs to be looked at because it distorts the way in which waste is disposed of.
My final point is about food redistribution, which the noble Baroness, Lady Jenkin, has just spoken about. Food banks are a feature of our life; we touched on them in the previous debate. Undoubtedly the shifting of waste food from the retail end—and increasingly, I hope, from the catering end because caterers as well as retailers need to take some responsibility in this area—into food banks is important. We saw in the Netherlands an example where fresh food was being used more substantially in that area. At the moment, if you go into supermarkets and see what is put into food banks, it is all food in tins and other packaging. In this country, there is in most cases a problem of providing fresh food. In the Netherlands, they seem to have cracked that; admittedly, we were in the middle of an intensive agricultural area. Nevertheless, for nutritional purposes as well as for food waste minimisation, food which was fresh and may have just passed its sell-by date could be diverted into food banks and other forms of food redistribution.
We learnt a lot from this exercise and a lot of things need to be followed through. I suppose that, at the end of the day, we did not think that the EU could help a lot in setting mandatory targets at this stage. However, we believe that the issue of food waste needs to be addressed by retailers here in particular and by the food chain as a whole, with support from the Government, in particular for WRAP, and by converting all of us into consumers who do not chuck quite so much away without consideration.
Water Bill
Lord Whitty Excerpts(10 years, 10 months ago)
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Lord Marks of Henley-on-Thames (LD)
My Lords, I support Amendment 13, which was spoken to by my noble friend Lady Parminter and to which I have added my name. I do so as a member of the Delegated Powers and Regulatory Reform Committee of which the noble Lord, Lord Haskel, who has already spoken, is also a member—other members are in their places today—to explain why that committee takes the strong view that a strengthened procedure, often called the super-affirmative resolution procedure, is important, at least on first exercise in the case of these regulations.
The context in which these amendments fall to be considered is that they are a wide-ranging set of amendments which represent a radical change of direction in the Bill. The Bill itself introduces considerable change in the way that the water industry operates, that industry being of great importance to the UK economy as a whole and to individuals. Although these amendments on retail exit are concerned with non-household supplies, as my noble friend has already stated, they are nevertheless of wide public importance.
The noble Lords, Lord De Mauley and Lord Moynihan, and my noble friend Lady Parminter have all explained the political context and impact of these amendments. I will confine what I say to the three reasons why a strengthened procedure is so important. First, there has been very limited time for the consideration of this scheme as a whole, as the noble Lord, Lord De Mauley, frankly recognised. The amendments are introduced in this House at Third Reading in response to amendments introduced earlier, notably by the noble Lords, Lord Moynihan, Lord Whitty and Lord Grantchester. However, in legislative terms, the amendments come, in this House at least, not even at the 11th hour: it is a minute to midnight. It is not, I suggest, satisfactory, and it is certainly not desirable, for nearly 11 pages of amendments to be introduced at such a late stage in the passage of the Bill without the time for lengthy and informed scrutiny of the detail of the proposed scheme. The amendments are complex and demand detailed scrutiny after all interested parties have had ample opportunity to consider them and to comment on them. The timing of their introduction has simply not permitted this to happen and the use of a simple affirmative procedure, as is proposed, would be likely to lead to a draft set of exit regulations being laid before Parliament for approval in unamendable form.
Secondly, quite regardless of the issue of timing, this is, I suggest, a case for a super-affirmative procedure in any event. The amendments would introduce into the Bill the power to make regulations which would effectively amount to an entire new legal framework to enable relevant undertakers to withdraw from the new market arrangements. If those provisions become part of the Bill without a super-affirmative procedure, then Parliament will have, as your Lordships well know, no opportunity to consider and report on the individual details of the proposed regulations and, in practical terms, no opportunity to invite detailed revision of their provisions. With the super-affirmative procedure set out in our amendment, there will be an opportunity for a committee of either House to consider the draft regulations in detail and to recommend changes to the draft for the Secretary of State to consider. The procedure proposed is similar to that in Section 102 of the Local Transport Act 2008, which the Delegated Powers and Regulatory Reform Committee recommended as a model. There is no rush to introduce these exit regulations, particularly not when they are potentially of such importance. They should not be the subject of delegated legislation without a full opportunity for Parliament to consider their detail.
Thirdly—this was touched on by the noble Lord, Lord Haskel—our committee was extremely concerned by the degree to which the amendments establish, not a list of requirements to which the Secretary of State must adhere in presenting the regulations, but a menu from which he can largely pick and choose at will. I have no objection to the fact that the power to make regulations in the first place, in subsection (1)(a) of the new clause proposed in Amendment 1, is permissive and not mandatory. It may be that the Secretary of State decides against exercising the power to make such regulations at all, although that is of course unlikely. However, if he makes such regulations, it is surely right that he should be required to incorporate all the safeguards of which the noble Lord, Lord De Mauley, spoke, which are essential to protect customers, to ensure proper consultation with interested parties, to safeguard the public interest and to secure appropriate parliamentary scrutiny. Yet the amendments as drafted are almost entirely permissive in respect of such matters.
I will trespass on your Lordships’ time for a moment or two to look at a couple of examples. Amendment 1 provides that exit regulations,
“may include provision for protecting customers”,
affected by a relevant undertaker’s withdrawal. Amendment 2 provides that:
“Provision under subsection (1)(a) may require a relevant undertaker … to consult”.
Amendment 4 states that:
“Exit regulations about the transfer of a part of a relevant undertaker’s undertaking may include provision for the making of a scheme to transfer property”.
These are all matters on which this House would wish to be given the opportunity for detailed consideration.
General directions are of general application. I will address two points on Amendment 9. Subsection (1) states:
“Exit regulations may make provision for the Secretary of State to publish … a statement setting out general directions for the”,
regulators. Subsection (4) states:
“Exit regulations may make provision for the Secretary of State, before publishing a statement under the regulations, to consult”.
These are all matters which I would expect, and I suggest your Lordships would expect, to be requirements. They are matters which concerned the Delegated Powers and Regulatory Reform Committee. The list goes on. The central point is that it is vital for Parliament to have the opportunity to consider the proposed exit regulations individually and to recommend changes to particular regulations before they become law without being restricted by the limitation inherent in a simple affirmative resolution procedure.
Lord Whitty (Lab)
My Lords, first, I apologise to the Minister that, due to a misreading of the Order Paper, I was not here to hear his first couple of minutes.
The Minister gave us a fulsome presentation of the changed position of the Government, which explained in considerable detail how these new powers would work. Those of us who sat through Committee and Report will know that the Government were faced with a pretty widespread view across the House that they needed to change their mind on retail exit. The noble Lord, Lord Moynihan, headed a series of debates which eventually brought the Government to change their mind and present these new clauses that are before us today.
It is of course a pity in many senses that this comes so late. Given this stage of the Bill, which has gone through both Houses of Parliament, it is difficult to deal with such a complex set of amendments. I am sure that when the noble Lord, Lord Moynihan, put amendments in this direction on the Order Paper at an earlier stage, and certainly when I did so, we did not expect to create quite such a substantial job-creation scheme for parliamentary counsel, but the Government have done a major job here and it would be churlish to quibble too much about it. However, there are problems with it. We all welcome deathbed conversions, but the central problem here is the lateness of the conversion. I wish that we were a stage earlier in the proceedings, when we could have tried to make minor amendments to the proposed clauses.
I echo the points made by the noble Lord, Lord Marks, in particular that there are several points in this, from the first new clause onwards, particularly in the very first line and the reference to protecting consumers, where “must” really ought to be substituted for “may”. With a bit more time, the Government might have come to that conclusion themselves in the instructions that they gave to counsel. However, we are where we are, and this is a major concession by the Government to the House. In a sense, the whole process has been a vindication of the way in which the House considers complex legislation and minds are changed—and we have the result here before us.
Lord Curry of Kirkharle
Perhaps I may respond to that as I work through my argument.
Secondly, identifying the properties that will be subject to this special treatment will require the wisdom of Solomon and might create division and resentment among other property owners who are not able to benefit from the resilience measures used.
Thirdly—here I have some sympathy with the comments made by the noble Baroness, Lady Parminter—Flood Re needs a strategy for the amount of reserves that will be appropriate and need to be built up to cover flood risk. A strategic approach to the amount of surplus required is important. It will be very difficult to determine what the reserve should be to cover flood risk over a period of years, but it is essential that a reserve is established to maintain adequate funds to cover significant flood risk.
Finally, my most important point—I respond here to the comments made by the noble Lord, Lord Campbell-Savours—is that, as a policyholder, I do not want to continue contributing to a fund that has established a significant surplus. Once the surplus has been determined and achieved, I would hope that the Government and the ABI would have a mature discussion about reducing the contributions to the fund so that they do not establish an ever-increasing fund which may never be used. It would benefit the insurance companies if they did not need to continue collecting funds to contribute to this reserve. Resilience measures are essential and should be taken as properties are restored after flooding, but it is not the role of the fund to provide the resources to do that.
Lord Whitty
My Lords, I can see the immediate attractiveness of the amendment but I share some of the reservations of the noble Lord, Lord Curry. If we are going to do this, we have to be more precise than the provisions in the amendment. The noble Lord rightly said that Flood Re will need a strategy for its surpluses and the limitations on the degree of cross-subsidy it can require from policyholders more generally. There will be a limit as to what is acceptable in that regard. It will also need a strategy to ensure that resilience and mitigation measures are adopted by those at the highest risk. If this amendment means that, and if it is a relatively small part of such surpluses—by which I mean a very small part—I can probably go along with it. If, however, it is as open-ended as it appears—and we know what the demands for flood mitigation as climate change and population pressures increase are likely to be—the temptation for insurance companies outside the system, the Government and the population to try to raid the Flood Re surplus for those purposes will begin to increase as well.
Despite the initial attractions, I do not think I can support the rather open-ended nature of the amendment as it stands. However, as we move forward and review the scheme, I hope that the Government and the administrators of Flood Re, along with other stakeholders, will find ways of ensuring a maximal take-up of resilience measures by those who own properties at risk and their insurance companies.
Lord De Mauley
My Lords, I thank my noble friend Lady Parminter and the noble Lord, Lord Krebs, for Amendment 14. I am glad to be able to return to your Lordships, having considered the proposals in more detail. As I have said previously, reserves that build up during the lifetime of Flood Re will be used primarily to pay flood claims in the bad years. It will not be easy to identify surplus funds and any decision about Flood Re’s reserves will require a judgment about the level of cover needed for the unpredictable risks it bears. Any commitment by Flood Re to spend a proportion of its reserves in a certain way, such as on betterment or resilience, would potentially increase the amount of capital it needs to hold on an ongoing basis, thereby having an impact on the cost of the scheme and ultimately the levy.
However, it is entirely right that there should be clarity on the principles regarding how surplus reserves would be dealt with, should that situation arise. This is not about small reserves that could provide one or two years’ comfort for Flood Re, but significant additional capital implying that Flood Re is excessively capitalised. It is important to recognise that this is not a situation that we anticipate occurring in the first few years of Flood Re’s life, as reserves will build up only gradually, if at all.
We have previously set out that during Flood Re’s life, we would expect the levy and eligibility thresholds to be set in such a way as to manage down excess reserves. I agree with my noble friend Lady Parminter that it should be open to Flood Re to spend some surplus money on resilience measures if it is appropriate to do so as part of its commitment to support households to prepare for risk-reflective pricing. Flood Re will have a duty to deliver value for money. One of the benefits for both households and insurers of installing property-level resilience measures is that, properly fitted, they can reduce the cost of future claims. Research suggests that for some homes, installing resilience measures can reduce the cost of subsequent flood claims by more than 70%. While we recognise that there is still work to be done to improve the evidence base, a point that the insurance industry raised in the Public Bill Committee on the Bill in the other place, I strongly agree that investment in resilience measures from whatever source could have a role to play in reducing the overall cost of claims over the lifetime of the scheme.
I recognise, too, that it would be helpful to provide greater clarity about how Flood Re will support policy- holders to prepare for transition to risk-reflective prices. We therefore propose that the secondary legislation, which will itself be subject to the affirmative procedure, will set out in more detail the points that Flood Re’s transition plan should cover, including that Flood Re could encourage and incentivise policyholders to make their properties more resilient to flooding. We will also expect Flood Re to consider in broad terms the process for managing any surplus during the lifetime of the scheme, either as part of the transition plan or in its wider governance framework. Parliament will have an important role to play in holding Flood Re to account for its use of resources and the delivery of its purpose, and its directors will be directly accountable to Parliament for that.
In relation to any reserves at the end of Flood Re’s life, as I have previously explained, Clause 71 allows the Government to require Flood Re to transfer a sum of the reserves to government, following consultation with Flood Re. It will ultimately be for the Government of the day, in consultation with Flood Re and Parliament, through affirmative resolution, to decide on the treatment of any reserves. I reassure your Lordships that there is no presumption about how reserves might be disbursed.
Lord Whitty
My Lords, I am grateful to my noble friend Lord Campbell-Savours for tabling the amendment and, more particularly, for reminding the House and the Government that at the end of Report there was still considerable confusion over inclusions and exclusions in Flood Re and, as the poignant examples that my noble friend has alluded to make clear, a considerable amount of alarm out there about the potential exclusion from insurance of leaseholders in particular but also of other groups of people who are not clear whether they are included or excluded. As the noble Earl, Lord Lytton, has just said, it is a question not just of insurance but of current and future mortgage and other loans that one can raise on the property, and it therefore has very profound effects.
As the noble Earl said, whether we need a review every year is one matter, but it is incumbent on the Government to say that we need this continually under review, and the only formal reference to review is every five years. This confusion and alarm need to be cleared up a lot sooner than in five years’ time. I hope the Minister can at least give some reassuring words to my noble friend that that will indeed be done.
Lord De Mauley
I thank the noble Lord, Lord Campbell-Savours, for his amendment and I thank him even more for reminding me that, in my excitement over my earlier amendments, I have so far omitted to declare my interests, and I should do so. I own a farm, through which a tributary of the River Thames runs, I have an extraction licence, a bore hole, a house which was flooded in 2007 and a minority stake in a lake. I am glad to put that on the record.
As I explained in previous debates, Flood Re will be subject to regular review. We expect these formal reviews will take place at least every five years. These formal reviews will need to consider the effectiveness of Flood Re in discharging its purpose and functions. Importantly, the reviews will also need to consider the levy and premium thresholds, particularly in relation to its capital model, which we debated in detail earlier in relation to the amendment from my noble friend.
The reviews will also need to consider Flood Re’s effectiveness in managing the transition to risk-reflective pricing over the operation of the scheme. As I said earlier, the secondary legislation will set out in more detail the points that Flood Re’s transition plan should cover. Flood Re will have to lay its accounts in Parliament on an annual basis, and its responsible officer will be directly accountable to Parliament. The Comptroller and Auditor-General will examine Flood Re’s economy, efficiency and effectiveness as well as its propriety and regularity.
It is also important to note that there is nothing to preclude the formal reviews taking place more frequently, which the noble Lord, Lord Whitty, asked me to confirm, should concerns be raised; for example, if it is seen that excessive surpluses are being built up.
I hope that it is clear that Flood Re is going to be regularly reviewed and closely scrutinised, but we need to strike a balance and, in particular, I am concerned about significant risks to the certainty and stability of Flood Re income if it is under constant review. Flood Re, the insurance industry and policyholders need to have some degree of certainty about its operation and Flood Re must be allowed to plan for transition accordingly. Insurance is a long-term business. An annual review of the scheme would be resource intensive and I am not clear what added value it would bring in addition to the current arrangements for parliamentary scrutiny.
In addition to the formal review process which will be carried out at least every five years, as I have described, both the Government and the Association of British Insurers have committed to monitoring the market for flood insurance and will publish the results of that monitoring.
Lord Whitty
My Lords, I thank the Minister for these amendments and for his explanation. I will not oppose any of these amendments, as he is no doubt gratified to hear. I will make two points, one of disappointment and the other of praise.
The disappointment is that among amendments brought forward by the Government at this stage are not those that relate to clarifying the position on abstraction reform and on providing some greater assurance on affordability of water bills. Whoever is in government in the next couple of years must address those two issues with some degree of urgency. It is a pity that we did not manage that in the Bill.
My praise, like the Minister’s, goes to his officials, who undoubtedly gave us a lot of information at the beginning of the Bill and put up with all our idiot child questions throughout the Bill. We made considerable progress, even today. I thank the Minister and the noble Baroness, Lady Northover, for their patience.