Draft Criminal Justice and Police Act 2001 (Powers of Seizure) Order 2018

Alan Whitehead Excerpts

Tuesday 20th March 2018 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Ryan. As the Minister has already set out in detail, the order gives Ofgem additional powers concerning the seizure and examination of documents—I note that those are both paper and electronic—in respect of an inquiry about possible market abuse. We support the idea that Ofgem should have sufficient powers to do these investigations. It is important that Ofgem is able to conduct investigations effectively and properly. We know that on occasions there have been suggestions of market abuse and it is important that the market is as clean as it can be—for example, in relation to energy trading or the relationship between trading and distribution—and that everything is on the table and transparent. In terms of what we are doing over the next period with the price cap, for example, it is particularly important that there are no manipulations of the market to get round regulations. This is a timely addition to the powers that Ofgem has and a timely putting right of the restrictions that it previously had, under the EU REMIT legislation, to search and seize documents. The issue is that Ofgem has the power of search and seizure at the moment, but not the power to take away and look at the documents it has come across, and the order puts that right.

I welcomed the Minister’s setting out of the safeguards that might be in place as far as those seizures are concerned. However, given the wide range of powers that Ofgem has in different areas of the energy markets, it is important that any action by Ofgem is not seen as a fishing expedition. It is important to have confidence that Ofgem, as an even-handed and fair regulator, would not undertake seizures and examinations of material that might then be used for purposes other than the investigation that Ofgem is engaged in. It is important that there are safeguards, particularly on the extent to which Ofgem would need an application to undertake the seizure of the documents, but it is also important that we are absolutely clear that any suggestion that Ofgem has attempted, or will attempt, to remove documents at any point for purposes other than the one that it is centrally engaged in not only should be frowned upon, but would not be countenanced. I would welcome it if the Minister clarified that that is behind what his proposals this afternoon.

The Opposition do not want to delay the introduction of the new powers; I am afraid it is the Government that have done so. The power was first mooted in a consultation, as the Minister mentioned, launched on 18 December 2015. Its urgency meant that responses to the consultation were required by the end of January 2016—a pretty short window. As a result of that rapid turnaround, those people in industry responding to the consultation would have expected action to be taken subsequently. However, 2016 and 2017 came and went, with no response. Eventually, a response to the consultation came on 1 February 2018—more than two years after the original proposals were mooted in consultation. Frankly, that gives no confidence to people who take part in such consultations that what is intended to be done as a result of a consultation actually will be done. Indeed, in this instance, that proved to be the case; nothing was done for two years.

It seems to me quite important that Ofgem has these powers. It was therefore incumbent on the Government at the time to make some progress in translating the consultation into the reality of an order. On this occasion, that has not happened. I do not know whether the Minister has any observations he wishes to make on why that process was so unbelievably slow. Were there good reasons why the process between consultation and the introduction of an order was so slow, or was it just forgotten about, and has only just come back to the surface of the pile, and been acted on? I hope that there is a good reason for the lengthy delay, but I fear that that may not be the case. In any event, I would be grateful for the Minister’s observations on that.

--- Later in debate ---

[Mr Gyimah]

I thank hon. Members for their valuable and relevant comments on the order. The first point made by the Opposition spokesperson was about whether this power would encourage fishing expeditions on the part of Ofgem. To assuage his concerns and those of the Committee, the terms of the warrant to conduct seize and sift will be clear and well defined. Ofgem will only seize and retain information that is relevant to the investigation at hand and specified in the warrant.

There was also concern about the timing and the sense of urgency regarding the consultation and the path to where we are now. The Government have been considering priorities against a very restricted legislative timetable, as the hon. Member for Southampton, Test, will be aware. A decision was taken in July 2017 to take forward the proposals on REMIT separately from the other proposals in the consultation. The timeline was driven by the non-REMIT part of the consultation, which included proposals for new primary legislation, on which decisions were due to be taken in early 2016. The opportunity for that decision to be taken was then delayed. I hope that that gives some background on the timing.

[Dr Whitehead]

The other piece of secondary legislation to which the Minister has referred comes under another area of law and, as far as we understand, that has been laid before Parliament as a negative statutory instrument and will come into force on 9 April, I think. That appears to suggest that the two bits of legislation that were set out in the consultation ran in parallel and not separately, as he appears to be suggesting.