Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2020
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The Chair
I remind hon. Members to observe social distancing and sit only in places that are clearly marked. Hansard colleagues would be most grateful if Members sent speaking notes by email to hansardnotes@parliament.uk.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
I beg to move,
That the Committee has considered the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2020 (S.I. 2020, No. 1483).
It is a pleasure to serve under your chairmanship, Ms Rees, and to cover this debate on behalf of the Under-Secretary of State for Small Business, Consumers and Labour Markets, my hon. Friend the Member for Sutton and Cheam (Paul Scully). I well understand the importance and impact of insolvency regulation. The regulations were laid before the House on 9 December 2020.
Since the emergence of covid-19, the Government have been swift to act, providing support to businesses affected by its impact on health, to give them every chance to survive and get through this period of uncertainty. Since March, businesses have benefited from a package of Government support targeted at saving jobs and livelihoods, such as the furlough and job retention schemes, as well as billions of pounds in loans, rates relief, tax deferrals and grants.
Today, all areas of Great Britain are again subject to restrictions put in place to limit the spread of the virus and to help save lives. Those restrictions are crucial to stop our NHS being overwhelmed while we wait for everybody to be vaccinated, but the adverse effects that these essential measures continue to have on many businesses, particularly those in the retail and hospitality sectors, have been well documented. Once again, the Government have been quick to react to the recent announcement of further national restrictions, with a new £4.6 billion package of lockdown grants to support businesses and protect jobs in the retail, leisure and hospitality sectors, which have been hit particularly hard.
The regulations will continue to help companies by extending to 31 March 2021 the temporary suspension on issuing statutory demands and the restrictions on company winding-up petitions. These measures, which were first introduced by the Corporate Insolvency and Governance Act 2020, were extended by earlier regulations from the end of September 2020 to 31 December; the present regulations extend them further.
Since they were introduced last March, the measures have helped to protect many viable companies from aggressive creditor enforcement during these difficult trading times. The temporary restriction on company winding-up petitions means that a petitioner must satisfy a court that any debts are not covid-19 related. The extension will further help to support companies while national restrictions continue to affect the trading capability of many of our businesses. Although these measures are intended to help companies that may be subject to aggressive creditor enforcement, the Government have been clear that they are not to be seen as a payment holiday; where companies can pay their debts, they should do so.
In addition to the protection that the measures give, they are also intended to give companies with unavoidable accrued arrears that have been caused by the pandemic time to take advice from restructuring professionals and to negotiate and reach agreements with their creditors wherever possible. I know that many companies have done so successfully, and I am grateful to them; I urge others to do so and to plan for the post-covid future with confidence.
I know that many businesses and their business representatives will welcome the continued support that the regulations will give them during these really very uncertain times, but I also recognise that these measures will mean a further period of uncertainty for creditors, in which their rights to enforce recovery of their debts will be temporarily suspended. We do not take this action lightly, and we will review carefully before taking any further decisions when the extension expires at the end of March. I commend the regulations to the Committee.
Amanda Solloway
I thank the hon. Member for Southampton, Test for his contribution and his support for the legislation. The points raised highlighted the importance of the measures being extended by the regulations, and the necessity of extending them again so that businesses can continue to benefit from them. As I mentioned in my opening remarks, this Government have given unprecedented support.
In response to the hon. Gentleman’s question about the cliff edge, since the emergence of covid-19, businesses have received billions in loans, tax deferrals, business rate relief and grants to support them and help save jobs, and the recently announced package of targeted measures to provide ongoing essential support as social restrictions are reintroduced in many regions.
Since March last year, businesses have continued to face an exceptionally challenging time, none of which could have been predicted. They have been unable to trade, or their ability to trade at full capacity has been restricted due to social distancing measures. The regulations will provide the much-needed continued support for businesses to concentrate their best efforts on continuing to trade and build on the foundations of our economic recovery. I sincerely hope that companies and their creditors will come together in good faith to maintain the future trading relationships and secure the benefits to both themselves and the economy as a whole.
I thank the hon. Gentleman again for his valuable contribution to the debate, and I commend the regulations to the Committee.
Question put and agreed to.
Oral Answers to Questions
Amanda Solloway Excerpts(3 years, 4 months ago)
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Ben Bradley (Mansfield) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
We are delivering on our ambitious commitment to build back greener from covid-19. The Prime Minister’s 10-point plan for a green industrial revolution will be instrumental, creating long-term advantages for the UK in low-carbon industries and supporting up to a quarter of a million green jobs while continuing to drive down our emissions.
Ben Bradley
I thank my hon. Friend for that answer. I know that, in the long term, the green element of this plan will be hugely important for our whole country, but in the short term, in the current economic climate, I know that many of my constituents will be focused on job creation and employment. Can she assure me that these investments will create opportunities for the most left behind parts of this country, and tell me how my constituents in Mansfield will directly benefit from that investment?
Amanda Solloway
The 10-point plan is crucial to a part of the Prime Minister’s mission to level up the country and to revitalise the towns and regions of places such as the east midlands, from where my hon. Friend and I hail, and which is also the birthplace of the first industrial revolution. I can tell him that green recovery will support highly skilled jobs in towns such as Mansfield across a range of green industries from electric vehicle technicians to those installing low-carbon heating to make our homes warmer and fitter for the future.
Caroline Ansell (Eastbourne) (Con)
Mick Whitley (Birkenhead) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
The UK is a world leader in offshore wind and proud to be the home of the world’s largest offshore wind farm. That is why we have increased our target to deliver 40 GW of offshore wind, quadrupling capacity by 2030, and announced £160 million to support ports and infrastructure enabling the sector to support up to 60,000 jobs.
Caroline Ansell
Off the Sussex coast, the Rampion wind farm has plans to triple its output. It is already powering local homes, but it could also be key to developing green hydrogen to power heavy transport, including buses. Does my hon. Friend agree that this technology needs to be scaled up and at pace, and what support is being given by her Department to bring partners together to deliver this green hydrogen fuel across the network so that places such as my home town of Eastbourne can see an improvement in its air quality and meet its 2030 carbon neutral ambition?
Amanda Solloway
My hon. Friend is absolutely right. Green hydrogen, coupled with our abundant offshore wind resources, could play a vital role in decarbonising crucial parts of the economy, including heavy transport. The energy White Paper sets out our ambition for 5 GW of low-carbon hydrogen production capacity by 2030. The £23 million hydrogen for transport programme has already helped grow the number of publicly accessible hydrogen refuelling stations across the UK.
Mick Whitley
The tidal energy industry has a hugely important role to play in meeting increased demand for electricity and achieving net zero carbon emissions. The Mersey tidal project has the potential to transform Merseyside, generating enough power for 1 million homes across the north-west, while creating thousands of jobs and positioning our region as a world leader in tidal energy. What practical steps are the Government taking in the immediate term to support the development of this much needed project?
Amanda Solloway
I thank the hon. Member for his question. The Government have funded the north-west energy hub to develop renewable opportunities in the region and are open to considering well-developed proposals with strongly demonstratable value for money and for the environment. He will also know that our officials have been in communication with the Mersey tidal power team, and I ask that they continue their engagement.
Mike Amesbury (Weaver Vale) (Lab)
Financial Assistance to Industry
Amanda Solloway Excerpts(3 years, 4 months ago)
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The Chair
Before we begin, the Chairman of Ways and Means has asked me to remind Members to observe social distancing and to sit only in places that are clearly marked. I think everybody is doing that, so very well done. Hansard colleagues to my left would be most grateful if Members could send their speaking notes to hansardnotes@parliament.uk.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
I beg to move,
That the Committee has considered the motion, That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, sums exceeding £30 million and up to a total of £300 million in respect of compensation for indirect costs of the UK Emissions Trading System or the Carbon Emissions Tax and Carbon Price Support mechanism in each case to British Steel Ltd; Celsa Manufacturing (UK) Ltd; CF Fertilisers UK Ltd; DS Smith Paper Ltd; INEOS Chemical Grangemouth Ltd; INEOS ChlorVinyls Ltd; Kimberly Clark Ltd; Outokumpu Stainless Ltd; Palm Paper Ltd; Runcorn MCP Ltd; SABIC UK Petrochemicals Ltd; Tata Steel UK Ltd; and UPM-Kymmene (UK) Ltd.
It is a great pleasure to serve under your chairmanship, Mr Pritchard. The current scheme to compensate certain energy-intensive industries for indirect emissions costs arising from the EU emissions trading scheme expires at the end of 2020. Ministers in the Department for Business, Energy and Industrial Strategy have agreed to extend the compensation schemes in line with the current framework for a further year, to the end of the next financial year. Under section 8 of the Industrial Development Act 1982, we seek the House of Commons’ approval to pay compensation in excess of £30 million to individual businesses.
The UK will announce either a United Kingdom emissions trading scheme or a carbon emissions tax as a successor to the EU ETS. That means that the motion agreed by the Commons in 2014, providing approval to spend more than the limit in section 8 of the Industrial Development Act, will no longer be valid. That is because the UK has left the EU and will no longer be part of the EU ETS. We are therefore tabling a motion to seek the Commons’ approval to ensure that BEIS can continue to compensate businesses for more than £30 million of indirect costs from the UK ETS or carbon emissions tax and carbon price support mechanism.
Energy-intensive sectors that are eligible for BEIS relief schemes employ around 350,000 workers, and they have a gross value-added of £28.5 billion, or 2% of the UK economy. Their turnover is around £134 billion, and in 2018 their exports totalled around £93 billion, which is 27% of total UK exports. Carbon pricing policies create a cost differential between the UK and other countries, and that increases the risk of carbon leakage. Carbon leakage could occur if, for reasons of cost related to climate policies, businesses were to transfer production or reallocate investment to other countries that have lower carbon pricing policies. That could lead to an increase in global greenhouse gas emissions. The Government have therefore been compensating certain energy-intensive industries for the indirect emissions costs arising from the EU ETS and the carbon price support mechanism since 2013 and 2014 respectively.
In their 2011 autumn statement, the Government announced that, to ensure that manufacturing was able to remain competitive during the shift to a low-carbon economy and to minimise carbon leakage, they would compensate key electricity-intensive businesses to help to offset the indirect emissions cost of the carbon price and the EU ETS. Cost compensation should remain as long as there are differences in low-carbon policy costs between the UK and international competitors. The Government should ensure that businesses can plan on the basis that that will be the case, while keeping the precise coverage level and conditionality of compensation and exemptions under review. The main beneficiaries are certain energy-intensive industries, particularly companies in the steel, paper and pulp chemical sector. The compensation is paid from the BEIS budget.
As I have mentioned, section 8 of the Industrial Development Act requires approval by a resolution of the House of Commons for support in excess of £30 million under any one project. In 2014, the Commons approved a motion to increase that limit to £300 million for 13 companies in respect of compensation for the EU ETS and carbon price floor. As we will move to a new scheme—a UK ETS or carbon emissions tax—from 1 January 2021, we are seeking approval from the Commons again.
Without new approval from the House of Commons, my Department would not be permitted to compensate businesses from 1 January 2021. Given the pressure facing businesses from covid-19, preparations for the end of the transition period and the continuation of relatively high UK industrial electricity prices, Ministers have agreed to the continued operation of the compensation scheme for a further year—until the end of the financial year 2021-22.
We will revise the schemes in early 2021 to assess whether—and if so, how—to continue the compensation scheme for the longer term. By that time, we will have more clarity about our future relationship with the EU carbon pricing policy. The UK’s subsidy control regime has broader Government objectives, such as the delivery of the covid-19 response and net zero commitments.
The Government recognise that energy-intensive industries need to play their part in reducing emissions, and we have introduced various policies to help them decarbonise. In the Budget of 2018, the Government announced £315 million for an industrial energy transformation fund to support industrial energy efficiency and decarbonisation projects, to bring energy costs down for industry.
Kevin Hollinrake (Thirsk and Malton) (Con)
The Minister is making a very strong case for the motion, but can she set out why some industries in other countries pay less than UK companies for energy? Why is that?
Amanda Solloway
I thank my hon. Friend for that intervention; if I may, I will come to that point in my closing remarks.
As set out in our 10-point plan for a green industrial revolution, our aim is for the UK to develop 5 GW of low-carbon hydrogen production capacity by 2030; that could see the UK benefit from about 8,000 jobs across our industrial heartlands and beyond. It will be supported by a range of measures, including a £240 million net zero hydrogen fund. The financial system outlined in the motion will be of huge benefit to the UK energy-intensive industries most at risk of carbon leakage. It is imperative that we continue to support those industries, which are so vital to the UK economy. I am assured that section 8 of the Industrial Development Act 1982 is the appropriate means by which to make such payments, and I commend the motion to the Committee.
Amanda Solloway
I thank hon. Members for their contributions to the debate. The discussions we have had highlight the value of energy-intensive industries such as steel, chemicals, plastic and cement to the UK.
In response to my hon. Friend the Member for Thirsk and Malton, we do recognise that the UK’s industrial electricity costs are currently higher than those of our competitors. That partly reflects how the costs of electricity systems are distributed across household and industrial customers. For example, German industrial users pay lower electricity prices than UK industrial users, but German households pay higher electricity prices than UK households.
In response to the hon. Member for Greenwich and Woolwich, the operations are under negotiation. Of course we have a long-term commitment to climate change, as indicated in our 10-point plan. The Government are determined to continue to minimise the risk of carbon leakage to help businesses improve their productivity and competitiveness as part of our industrial strategy. Furthermore, we will work with our partners in industry to start deploying hydrogen and carbon capture usage and storage technologies.
At the same time, it is important that we continue to mitigate the cumulative impact of energy and climate change policy costs on energy prices for energy-intensive industries as we make the transition to the low-carbon economy. The Government have taken steps to reduce the impact of energy and climate change policies on industrial electricity prices for key energy-intensive industries in sectors such as steel, chemicals, cement, paper and glass. Between 2013 and 2019, total relief to energy-intensive industries for electrical policy costs was around £1.5 billion to over 220 businesses across the UK. We therefore seek approval to pay sums exceeding £30 million and up to a total of £300 million in respect of compensation for indirect costs of the UK emissions trading system, or the carbon emissions tax and carbon price support mechanism, in each case to 13 companies. I commend the motion to the Committee.
Charity-funded Medical Research
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
It is a pleasure to serve under your chairmanship, Ms McVey, and I congratulate my hon. Friend the Member for Vale of Clwyd (James Davies) on securing this important debate and raising the issues currently affecting medical research charities. I thank all hon. Members for the quality of their contributions to the debate. My hon. Friend the Member for Vale of Clwyd spoke of how the work of the medical charities is invaluable—he mentioned the British Heart Foundation and Cancer Research UK—and of the practical benefits that those charities bring.
The hon. Member for Blaydon (Liz Twist)—who I am sure would look very dignified in a pink boa, as have I, in my time—commented on the work of life sciences charities, specifically in relation to breast cancer. We recognise that work, which affects so many lives. The Government’s research and delivery parties are committed to trying to get the clinical trials started as soon as we can. My hon. Friend the Member for Bolton West (Chris Green) talked about the varied work that is being done, and mentioned the marathon elite runners. I have run the marathon twice, although I am sad to say that this year I was not invited to join the elite runners. The work is incredibly important, and this medical research is constantly on my mind.
The hon. Member for York Central (Rachael Maskell) mentioned the work of the AMRC, also acknowledging what the charities do in giving advice. It is very important that we get that advice and I am sure that it has been welcomed.
The hon. Member for Kirkcaldy and Cowdenbeath (Neale Hanvey) mentioned the work of the Teenage Cancer Trust. We have been able to retain the research that is needed, and we absolutely acknowledge the vital work that it does. We have indicated in our R&D road map that we acknowledge the work of these charities.
The hon. Member for Manchester Central (Lucy Powell) mentioned the work of life science charities and their key role in medical breakthroughs, as well as the many medical research charities that are involved. I would like to acknowledge the work that is carried out by the thousands of charities, including medical research charities, across the UK. The people who work and volunteer for them demonstrate huge passion and a commitment to the incredibly important causes. I saw the passion at first hand during the time I was working at Help the Aged, which is now known as Age UK. I have also seen it in my time as a science Minister when working with the medical research charities over the last year. The research that they collectively support has a huge impact and improves our health and wellbeing, and the Government have been working with them over the past few months to see how the research can be best supported.
Science, research and innovation are central to the Government’s ambitions. As I have mentioned, we published our R&D road map in July to ensure the UK is the best place in the world for scientists, researchers and entrepreneurs to live and work. Although we recognise the challenging economic and fiscal climate, the Prime Minister only this month re-emphasised the importance of science and innovation to our future prosperity and our ambition to move towards investing 2.4% of GDP in research and development. The UK is a world-leading research base and has global expertise across a wide range of disciplines—not least in medical research, where we boast a vibrant ecosystem that brings together researchers in some of the world’s top universities to work collaboratively with their counterparts in leading pharmaceutical companies, clinical researchers in the NHS and those supported by medical research charities.
Charity-funded research has been a distinct part of the UK research system, and I am proud to say that the UK is home to many globally recognised medical research charities, which are an integral part of the world-leading life sciences sector. The health and wellbeing of millions of people in the UK and around the world depends on the medical advances that have come from research funded by charities. I want to take the opportunity to give thanks for the contributions made by research charities, both to the important areas of research that they fund and to the many brilliant researchers they support.
Additionally, the Government have provided significant support to research charities through investments in research infrastructure, such as Manchester Cancer Research Centre and the Institute for Cancer Research in London, which provided the facilities and expertise needed by Cancer Research UK to carry out its incredible work, and through collaborations such as the UK Age Research Forum, where UK Research and Innovation works with a range of charities, including the British Heart Foundation, Versus Arthritis and Alzheimer’s Research UK, to support research that makes a difference to the lives of older people. Through direct funding, Research England is providing £204 million this year to support charity-funded research in universities in England. Through the tax system, over £1.3 billion in tax relief on donations was received in 2018-19 through gift aid, benefiting all charities, including those carrying out vital medical research.
All that shows that we as a Government are committed to supporting research into diseases and conditions that affect so many people around the UK. I know the pandemic has been a challenging time for charities, and that all parts of society and the economy have been affected by the covid pandemic—medical research charities and the research that they support are no exception. We have heard during the debate that they have suffered a series of blows to their income. Many charity shops around the country have been unable to remain open. Fundraising events, which are so important for raising money for research and for raising the profile of these causes, have been cancelled or postponed. The impact of the loss of income has had an impact on the research programmes that charities are currently supporting; as we have heard, it will affect their plans for future research.
In response to the challenges, the Government have provided significant support both across the economy and to charities more specifically. The coronavirus job retention scheme has enabled charities to avoid making staff redundant and to continue their vital work. During these unprecedented times, however, the Government have depended on the expertise of our research base to respond to the enormous challenges we have faced. Our scientists and medics, including those supported by charity funding, have had a key role in taking forward our response to the pandemic. We established a vaccine taskforce to co-ordinate all the work going on across Government, academia and industry, and we accelerated the development and manufacture of covid-19 vaccines. Through the university research sustainability taskforce, we quickly gained a fuller understanding of the impact of covid-19 on research in universities, including that supported by charities.
Many hon. Members mentioned the SURE fund. As a result of the university research sustainability taskforce, we put in place the sustaining university research expertise fund to support university research that has been impacted by the pandemic and to secure researchers’ jobs in universities. The fund has now gone live, with expressions of interest from universities expected this week. Universities are required to pay particular attention to the medical research that charities have traditionally supported when allocating the funding. In addition, we have provided £60 million to support PhD students whose research has been affected or delayed by the pandemic, to give them the time they need to complete their work. We have also supported UKRI to commit more than £95 million to research to tackle covid-19 and we have repurposed research grants with a total value of £80 million to address the effects of the pandemic.
All of that sits alongside the road map we published in July, which sets out the Government’s long-term plan to bolster the UK’s world-class credentials in research and development and to deliver economic growth and societal benefits across the UK for decades to come.
Chris Green
For long-term research projects that take a great while to get off the ground and perhaps recruit people for clinical trials—including people studying at university at the moment—a £320 million commitment tomorrow would give a great deal of reassurance. Obviously the Minister cannot commit to that here and now, but will she reassure us that that is on her mind and that she will make her best endeavours with the Chancellor?
Amanda Solloway
I thank my hon. Friend for that point, which I will refer to in my remarks.
The Government’s goal is to further strengthen science research and innovation across the UK to ignite the UK’s economic recovery, boosting productivity, creating new jobs and improving people’s quality of life. Within that, we also have a commitment to the levelling up agenda. The road map sets out our wish to build on the UK’s strengths in the life sciences sector. I look forward to continuing that work with the medical research charities as we develop a more detailed plan for delivering the road map’s ambitions.
Medical research charities are an important part of the UK research landscape. As I have set out, the Government recognise that and already provide significant support through the tax system, the research funding system and the many measures introduced to counter the impacts of the pandemic. While it would not be appropriate to respond in detail at this stage about the spending review, I assure hon. Members that the issues they have raised have been noted and in the coming weeks we will continue to work with the Association of Medical Research Charities on how they can be addressed, how we can support this vital research and how we can maintain the UK’s excellent capabilities in medical research while recognising the challenging fiscal circumstances we face.
Exiting the European Union
Amanda Solloway Excerpts(3 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
I beg to move,
That the draft Prohibition on Quantitative Restrictions (EU Exit) Regulations 2020, which were laid before this House on 9 November, be approved.
As I am sure hon. Members recognise, it is important that we have full sovereignty over our regulatory regime for goods at the end of the transition period. The statutory instrument will help to ensure that we are not challenged if we choose to diverge from EU regulations. At the end of the transition period, EU treaty rights on the movement of goods stemming from articles 34 to 36 of the treaty on the functioning of the European Union will be retained in UK law unless they are removed by this SI.
Alan Brown (Kilmarnock and Loudoun) (SNP)
I thank the Minister for giving way. Obviously, the statutory instrument is about divergence, and the UK Government talk about taking back control. What is the position on consent to the regulations from the devolved nations? More importantly, what discussions have the Government had with the devolved nations to make sure that their wishes are not overridden and that divergences are not forced on the devolved Administrations?
Amanda Solloway
I thank the hon. Gentleman for his question. I will come on to that later in my opening comments.
The EU treaty rights prohibit quantitative restrictions or equivalent measures on imports and exports, meaning that divergence from EU regulatory requirements could result in a challenge from a business or importer if they deem it a barrier to placing their goods on the market in Great Britain. To be clear, the SI is not a pre-condition for divergence: as of 1 January, Parliament will of course have the ability to introduce new regulations. Instead, it is about removing potential grounds for legal challenge based on retained treaty articles that have no place on our statute book once we have fully regained our independence.
The SI will remove the aforementioned EU treaty rights so they no longer apply in England, Scotland or Wales. It will not result in any immediate changes for goods in the UK but will protect our right to diverge from EU goods regulations in future, where we so choose.
The SI will protect our ability to regulate goods as we see fit and ensure that challenges do not require us to keep in line with the EU regulations. I commend it to the House.
Alan Brown
On a point of order, Madam Deputy Speaker. I asked the Minister a specific question about consent and the devolved Administration and the Minister said that she would come on to that in her speech. Can you advise me on how I can get that answer from the Minister?
Madam Deputy Speaker
That is the Minister’s right, but she has given an undertaking that she will respond at the end to the points raised, so we will leave it at that.
Amanda Solloway
I thank the House for its consideration of this statutory instrument and for the valuable contributions made to the debate.
I stress that my opening speech was short because these regulations do not result in any immediate change and will not introduce any changes for business. The regulations mean that if we choose to diverge from the EU requirements, either actively or by changing our legislation, or by not keeping pace with the EU regulations, we cannot be challenged under the EU treaty. As I have made clear—
Several hon. Members rose—
Amanda Solloway
Apologies, but I will not be giving way.
As I have made clear, the SI is not a precondition for divergence, nor does the SI itself introduce any diversion from current laws. I have set out today, however, the importance of this SI for ensuring that we are not faced with legal challenges that seek to keep us in line with EU regulations. This will ensure that we have the freedom to regulate in Great Britain how we see fit, considering the impact on businesses and consumers, while ensuring that UK product safety remains one of the strongest in the world.
We have engaged with officials across all the devolved Administrations, sharing drafts of the SI and taking them through the changes as appropriate. Consent has been received from the Welsh and Scottish Governments as some of the changes are subject to devolved competence. The SI will not impact on Wales’s and Scotland’s ability to regulate those that fall under these areas of devolved competence. Articles 34 to 36 of the treaty on the functioning of the European Union will still apply in Northern Ireland by virtue of the Northern Ireland protocol. It is therefore not necessary for this SI to extend to Northern Ireland.
Amanda Solloway
Apologies, but I am not giving way.
Coming on to business participation, since the summer the Department has been rolling out an ambitious series of readiness events for businesses and has published a range of guidance, including on this requirement, on placing goods on the market from January 2021. Let me once again stress that this SI itself does not—
Madam Deputy Speaker (Dame Eleanor Laing)
Order. That is not a point of order—it is a point about the content of the Minister’s speech, which is entirely a matter for the Minister, and she does not have very long, so we must let her finish.
Amanda Solloway
Thank you, Madam Deputy Speaker.
Let me once again stress that this SI itself does not introduce any changes for businesses.
These regulations give business greater certainty that as UK rules change they will not be rolled back after any legal challenges based on them. At the end of the transition period, EU treaty rights on the movement of goods stemming from articles 34 to 36 of the treaty on the functioning of the European Union will be retained in UK law unless they are removed by this SI. The UK will have its own regulatory regime after the end of the transition period. However, if retained, these EU treaty rights could impact our ability to diverge from EU regulation in the future. The EU treaty rights prohibit quantitative restrictions of equivalent measures on imports and exports, meaning that divergence from the EU regulatory requirements could result in a challenge. This SI will remove the EU treaty rights flowing from articles 34 to 36 of the treaty on the functioning of the European Union.
My Department published guidance on gov.uk on 1 September and 10 November detailing requirements on placing goods on the Northern Ireland market, as well as arrangements for access to the rest of the UK. My Department also issues regular transition bulletins that provide the latest readiness information. When the SI comes into force on 1 January 2021, it will protect our right to diverge from the EU regulations without being challenged under the EU treaty rights. I commend these regulations to the House.
Question put and agreed to.
Resolved,
That the draft Prohibition on Quantitative Restrictions (EU Exit) Regulations 2020, which were laid before this House on 9 November, be approved.
Madam Deputy Speaker (Dame Eleanor Laing)
I am going to suspend the House for a few minutes in order that we can have a change of Members and Ministers.
Draft Supplementary Protection Certificates (Amendment) (EU Exit) Regulations 2020
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
I beg to move,
That the Committee has considered the draft Supplementary Protection Certificates (Amendment) (EU Exit) Regulations 2020.
It is a pleasure to serve under your chairmanship, Ms Ghani. Intellectual property forms a vital part of the UK economy. A well-balanced IP system supports our citizens in their creativity and ingenuity, provides incentives for companies to innovate through research and development, and ensures that great research and ideas can be turned into great businesses.
Supplementary protection certificates are an important part of the framework supporting our life sciences industry. The sector is one of the UK’s most valuable industries and is crucial to our success as a science superpower. It has consistently been the largest investor in research and development in the UK, investing more than £4.5 billion in 2018.
Developing new drugs is expensive. The Association of the British Pharmaceutical Industry estimates that the cost of doing so may exceed £1 billion. It also takes time to reach the point where the drug has been tested and proven to be safe and can be placed on the market. Where a product is protected by a patent, that means that the time during which the holder can benefit from its exclusive rights is reduced. SPCs therefore provide an additional period of protection for patented medicines and pesticides to address that. They give the innovator more time to recoup the costs using those exclusive rights, and they protect some of our most innovative drugs.
The SPC system is also designed to strike a balance between supporting the development of novel drugs and ensuring that those drugs become available more cheaply through competition from generics in good time. It enables the NHS to benefit from innovative new medicines and the wide availability of existing treatments. It is therefore important that any changes to the system recognise and take account of that balance. The SPC system is based on EU legislation, although the right itself is examined and granted on an individual national basis.
The Government have already made a number of changes to the SPC regulations in advance of their being retained in UK law at the end of the transition period. Members of the Committee may recall that we debated some of those changes a few weeks ago. The fixed efficiencies would have existed in the retained EU law when it was brought across.
Why is further legislation necessary? This instrument comes about as an indirect effect of the Northern Ireland protocol. The additional protection provided by an SPC is granted as a result of the patented medicine or agrochemical receiving approval to be sold in the UK market and market authorisation. The connection with the regulatory system is therefore crucial to how the SPC legislation works.
As the Committee knows, the protocol is intended to ensure that there is no hard border between Northern Ireland and the Republic of Ireland. To accomplish that, the protocol sets out that certain EU laws, including those relating to the movement of goods, continue to apply in Northern Ireland for as long as the protocol has effect. For medicines and pesticides, that means that marketing authorisations in Northern Ireland must be granted accordance with EU law, whereas Great Britain will follow separate legislation. That will not, however, prevent a product from being marketed on a UK-wide basis.
Given the relationship between SPCs and the regulatory system, further changes are needed to the SPC legislation to ensure that the arrangements arising from the protocol are properly reflected. The Intellectual Property Office has been working with regulatory agencies to understand those arrangements and integrate them into the SPC system. This instrument is the result.
The instrument will ensure that the SPC remains a UK-wide intellectual property right. There will be no separate SPCs for Great Britain and Northern Ireland. If a patented product has been authorised for sale somewhere in the UK, whether in Great Britain, Northern Ireland or the UK as a whole, an SPC may be granted. However, the protection provided by the SPC will extend only to the territory in which the product has been authorised. That preserves the link between the SPC and the approval for the product. Otherwise, the additional protection of the SPC would be provided in the UK where no protection had been given, which would go against the principle of the SPC system.
If another authorisation is granted for the product in a different part of the UK, the protection provided by the SPC can be extended to cover that territory, but the legislation makes it clear that that would be allowed only up to the point that the patent expires and the granted SPC takes effect. That gives certainty for all. It would not be fair for a third party to find that legitimate action, which had been taken in a territory where protection did not extend, suddenly became an infringement at a later date. That is why the scope of protection is fixed in place when the SPC comes into force.
The process of getting an SPC will remain largely unchanged. Applicants will use the same forms and pay the same fees, and have their applications examined by the IPO using the same principles. Applicants will need to notify the IPO of other authorisations if they want to extend their SPC protection. Although the information required will be essentially the same as that for the initial application, we recognise that that is an additional administrative task.
The IPO will ensure that clear guidance is in place to explain the changes and the actions that business needs to take. That work is already in progress. The guidance will be published in the next few weeks, should Parliament approve the legislation. Any changes to the statutory forms will be in place for 1 January.
Giving business the clear guidance and support it needs is important. That relates to another IP issue that some hon. Members and many IP professionals are interested in, namely the IPO’s address for service rules. I am pleased to announce that today, the Government are publishing the response to a recent call for views and will shortly lay legislation to require a UK address for service for new applications and new proceedings before the IPO. That will level the playing field for UK patent and trademark attorney professionals as we leave the EU IP systems.
My officials have collaborated with the major representative bodies on ways to communicate all the changes, such as by taking part in industry webinars. Those bodies have been engaged in the development of the legislation and are in a strong position to help to disseminate our guidance and provide advice to their members.
In conclusion, the instrument will ensure that the SPC system works alongside the regulatory system when the transition period comes to an end, which will give certainty to our innovative businesses in the important field of technology and maintain the fine balance that is critical to the success of the complex area of IP law. I commend the regulations to the Committee.
Amanda Solloway
I thank the Committee for consideration of the draft regulations. I also thank the hon. Member for Newcastle upon Tyne Central for her useful comments, as always.
As I have said in earlier debates, intellectual property matters. The IP system exists to encourage innovation and the sharing of information and knowledge. It provides individuals and businesses with the confidence to invest their time, money and energy in developing something new, whether it be a new business, book or piece of technology. The UK IP system is consistently rated as one of the best in the world.
As the hon. Lady will recall from only a few weeks ago, the World Intellectual Property Organisation recently ranked the UK the fourth most innovative country in the world. The Government are committed to ensuring that we maintain and improve our world-leading position. Innovation will be crucial in the years ahead to support our recovery from the impacts of covid-19, especially in life sciences, where treatments and vaccines will be key to bringing us closer to normal.
The hon. Lady asked several important questions about SPCs and the Government’s approach with the draft instrument. I am happy to give some further explanation. On the duration of the rights and whether that will change, the calculation remains the same. SPCs last for up to five years, depending on how long has been taken to approve the product. Between the remaining life of the patent and the SPC, the result is a maximum of 15 years of effective IP protection. That is part of the balance of the system and will not be affected by the amendments in the SI.
On who benefits from the rights, SPCs are granted to the patent holder, which is usually the developer of the original product. SPCs are often held by companies—such as, given that the hon. Lady asked for examples, AstraZeneca and GlaxoSmithKline—but smaller enterprises such as research universities and their spin-off companies also benefit from the protection given by SPCs.
On whether an SPC that provides protection only in Northern Ireland might allow a company to sell a generic product in Great Britain, in most cases we expect pharmaceutical companies to file for authorisations across the UK so that their SPC protection is UK-wide. However, where an SPC provides protection not only in part of the UK—say, Northern Ireland—it could not be used to prevent manufacture or sale of the drug in GB. Other forms of IP protection such as data and market exclusivity might still apply in GB, and any generic medicine would need to be authorised in its own right before it could be sold.
This summer, the Government set out their long-term objectives for research and development through the new R&D road map. We are committed to further strengthening science, research and innovation across the UK, making them central to tackling the major challenges that we face. IP and the Intellectual Property Office have important roles in support of those objectives. The IPO will continue to deliver high-quality rights, grant services, lead best practice in enforcement of IP rights, and retain its central involvement in international discussions on the development of the global IP system. The draft regulations form part of that work, ensuring that the IP system is in a good place to support the Government’s goals for innovation, so that the UK is the best place to develop and grow innovative businesses. I hope that the Committee will support the instrument.
Question put and agreed to.
The Chair
Please will Committee members leave the room promptly by the exit door while observing social distancing?
Oral Answers to Questions
Amanda Solloway Excerpts(3 years, 5 months ago)
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Chris Loder (West Dorset) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
Young Enterprise does excellent work, engaging young people and providing valuable education in enterprise and financial skills. Ministerial colleagues recently met Young Enterprise to hear about its work and correspondence on this and have shared that information with education Ministers. If I may also add, the lessons that I learned when I did Young Enterprise in the sixth form, which was not so long ago, were invaluable.
Chris Loder
As someone who did not go to university, who benefited greatly from Young Enterprise and who is from a rural area, I know full well how important the scheme is. How is the Minister helping young people in rural areas, such as in my constituency of West Dorset, and will she ensure that the development of non-cognitive skills in schools features in our industrial strategy?
Amanda Solloway
Skills for adults and young people in rural areas, such as West Dorset, are absolutely invaluable. Towns and cities are an important part of supporting the future economy, and we are working with education colleagues to consider how Government support on skills will be an integral part of our strategy for growth.
Richard Graham (Gloucester) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
This Government are fully committed to unleashing innovation and supporting priority technologies. For example, combined public and private investment in the National Quantum Technologies Programme over its 10-year lifetime is set to pass the £1 billion mark. We are investing £750 million through Innovate UK to support innovative businesses through the pandemic and have also launched the future fund.
Richard Graham
I welcome the Minister’s response. Does she agree more broadly with me that the UK should retain key technology assets where there is a national interest and that Arm Ltd’s capabilities in semiconductor and chip design, including processes for mobile phones, have national security implications? If she agrees, can she, her Department and the Government do more to protect the national interest in the proposed sale of Arm by SoftBank to Nvidia?
Amanda Solloway
Arm is an important part of the UK tech sector and makes a significant contribution to the UK economy. Although acquisitions are primarily a commercial matter for the parties concerned, the Government monitor them closely. When a takeover may have a significant impact on the UK, we will not hesitate to investigate further and take action. We will be scrutinising the deal carefully to understand its impact on the UK.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
Ben Everitt (Milton Keynes North) (Con)
In August, I was lucky enough to meet Dynamic Imaging Analytics in Milton Keynes—a fantastic local company that is doing some really cool stuff with space technology, including working with our local university, the Open University, to mine for water on the moon. Perhaps the Minister will join me in congratulating the Open University on its recent successes on that.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
The UK’s world-leading universities have a rich heritage in space science and exploration, and they are key to our ambition of becoming a science superpower. Of course I will join my hon. Friend in sending congratulations to the scientists in his constituency on their groundbreaking research. We are investing £1.5 million this year in Open University space activities, including those of PROSPECT instruments, which will improve our understanding of water on the moon—and who knows, they might put the first concrete cows on the moon.
Oral Answers to Questions
Amanda Solloway Excerpts(3 years, 7 months ago)
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Simon Baynes (Clwyd South) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
BEIS continues to engage with industry and suppliers to ensure that we can support our manufacturing sectors during and after the covid-19 crisis. This includes an unprecedented package of Government support to help with business continuity and drive recovery after the pandemic.
Miriam Cates
Steel manufacture is the heart and soul of towns like Stocksbridge in my constituency. It provides high-skilled, well-paid, productive jobs. Once we have left the EU, we will be free to use our procurement processes to favour British manufacturers. Will my hon. Friend commit to grasping this opportunity to make sure that our infrastructure revolution helps to secure the future of British steel?
Amanda Solloway
The Government have helped our steel industry to compete globally by providing more than £480 million in relief to the sector for electricity costs since 2013. We want to ensure that UK steel producers can compete for and win contracts associated with domestic infrastructure investments, including HS2. We are working closely with the sector and other relevant parties to realise these opportunities.
Greg Smith
Furniture manufacturing is an enormously important part of the economy in my constituency, with firms such as Ercol and Hypnos Beds located in Princes Risborough. As a result of covid, the industry estimates a 25% to 30% reduction in UK furniture sales this year, with 10,000 jobs at risk. Will my hon. Friend join me in backing the industry’s “Buy the Best, Buy British, Save Jobs” campaign, which is also supported by the all-party parliamentary group on furniture makers, and outline what more she can do to support our furniture makers?
Amanda Solloway
I will be delighted to support that campaign. It is great to see the furniture industry supporting high-quality British manufacturing with its “Buy British” initiative. Now, more than ever, we all need to do our bit by backing British industry to drive jobs, innovation and growth.
Simon Baynes
Manufacturing industries in my constituency such as Cadbury’s in Chirk—part of the Mondelēz group—Barnett Engineering in Rhos and Ifor Williams Trailers in Cynwyd are the bedrock of the country’s manufacturing sector. Will the Minister comment on how the Chancellor’s announcement of economic measures last week will help these manufacturing companies through the coronavirus crisis?
Amanda Solloway
I welcome the measures announced by the Chancellor last week and agree that manufacturing is a key component of the UK’s thriving industrial sector. The job support scheme will provide eligible manufacturing businesses in Clwyd South with a grant covering one third of all employees’ wages for hours not worked, up to a cap of £697.92 a month. Furthermore, the deadline for applications for coronavirus business interruption loans and the future fund has now been extended to 30 November.
Sarah Olney (Richmond Park) (LD)
More than 90% of the UK’s manufacturing companies have kept working, even at the height of the pandemic, keeping food on supermarket shelves and medicines and ventilators in our hospitals. However, many of them will face a major crisis when the furlough scheme ends in a few weeks’ time. Demand is still incredibly low in some parts of industry, but Government support is being withdrawn. It is patently obvious that the well-paid and highly skilled jobs that we have in sectors such as aerospace and aviation should be the foundations of our future economic growth and the public will not forget it if the Government allow them to wither on the vine. As the voice of business within the Government—
Sarah Olney
May I ask the Minister, as the voice of business within the Government, what she is doing to ensure that these vital jobs and skills are being protected?
Amanda Solloway
The hon. Lady will know that the Government are absolutely committed to making sure that businesses are the future of the economy and that we need to get the economy back on track. We have invested billions of pounds making sure that we have all the schemes in place that will enable this economy to thrive.
Sally-Ann Hart (Hastings and Rye) (Con)
Anthony Mangnall (Totnes) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
The UK has one of the most vibrant and innovative tech sectors in the world, and it has been highly resilient through the pandemic. We are providing a wide range of support for high-tech industries, including the artificial intelligence sector deal, the industrial strategy challenge fund and the £1.25 billion coronavirus package of support for innovative firms.
Anthony Mangnall
The Minister will be aware of the value of the photonics industry to the UK economy. My constituency is home to the EPIC Centre in Paignton and its own site in Brixham. Given the leading value it has in the manufacturing industry and in quantum photonics, what support will it be given, along the lines of the research and development roadmap?
Amanda Solloway
Indeed, I know about the excellent work in Totnes. The Government recognise the important contribution made to the UK economy by the photonics industry and its underpinning role in growing the UK’s quantum technology sector. Successive Governments have supported the growth of the sector with R&D investment. As the Government implement our ambitious “UK research and development roadmap”, published in July, investing in cross-cutting technologies and realising the potential for regional strengths will be vital to making the most of the UK’s potential and becoming a science superpower.
Virginia Crosbie (Ynys Môn) (Con)
Claire Coutinho (East Surrey) (Con)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
We are making good progress in implementing the Government’s ambitious R&D road map, including by investing £236 million around the UK through the strength in places fund, setting up the innovation expert group and the place advisory group, and taking steps to reduce unnecessary bureaucracy.
Claire Coutinho
I welcome the near doubling of spend on UK R&D. Will my hon. Friend outline the work that is being done to draw in the R&D centres of international companies? This will be key to the prosperity not just of East Surrey, but of the whole country.
Amanda Solloway
As part of the R&D road map we are actively developing a place strategy, which will set out how we can develop and grow an R&D capability across the country. I regularly meet my noble Friend Lord Grimstone, the Minister for Investment, to discuss how we can leverage and increase foreign direct investment to benefit all regions and nations of the UK.
Mohammad Yasin (Bedford) (Lab)
Draft Square Kilometre Array Observatory (Immunities and Privileges) Order 2020
Amanda Solloway Excerpts(3 years, 7 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
I beg to move,
That the Committee has considered the draft Square Kilometre Array Observatory (Immunities and Privileges) Order 2020.
It is a great pleasure to serve under your chairmanship, Sir Edward. The order was made and laid before the House on 14 July 2020 under the affirmative process. I will explain the rationale behind it. The order confers immunities, privileges, reliefs and exemptions to the new intergovernmental organisation, the Square Kilometre Array Observatory, the SKAO, under the International Organisations Act 1968. If the Committee agrees, the order will complete the UK’s ratification of the convention signed in March 2019 and laid in Parliament in July of that year under the Constitutional Reform and Governance Act 2010.
Before I go into detail, I would like to set the context with a few words about the Square Kilometre Array project and the new intergovernmental organisation, the SKAO, which is being established to deliver and operate it. The Square Kilometre Array is an international megascience project to build the world’s largest and most sensitive radio telescope. It is truly a global effort, involving 11 member countries and the participation of about 100 organisations across 20 countries. The SKA is one of the most ambitious international science projects of the 21st century, co-located in South Africa and western Australia. It will use hundreds of dishes and thousands of antennae connected together by optical fibre to monitor the sky in unprecedented detail. The SKA is many times faster and significantly more sensitive than any current radio telescope and of a scale never seen before, which will enable scientists to test some of the key questions in physics about the nature of the universe. For example, was Einstein right about gravity? What is dark energy and why is it so important in our universe, and where did magnetism come from?
The SKA will deliver significant technological advances in data processing and opportunities for business innovation. It will help to inspire the next generation of scientists and engineers. The SKAO, based in the United Kingdom at the Jodrell Bank Observatory, will be the inter- governmental organisation building and managing the SKA. It will manage the construction, operation and data processing of the telescopes.
The SKA is a flagship project for the UK Government and underlines our commitment to worldwide partnerships as part of the modern industrial strategy ambition, to ensure that the UK remains a global leader in science, research and innovation. The Government have already committed £100 million to the construction of the SKA—we are one of the largest contributors—and a further £85 million for running costs over a 10-year period to 2026-27. Such investment gives the UK a leading role in the project during the construction and operation phases. That investment and the UK’s hosting of this new intergovernmental organisation at its Jodrell Bank headquarters is a demonstration of our world-leading position and influence in radio astronomy and wider scientific collaboration and exploration.
On the details of the order, the convention was formally laid in Parliament under the Constitutional Reform and Governance Act in July last year and was completed in October. The order is part of the UK’s ratification and provides the privileges and immunities to enable the SKAO to function as an intergovernmental organisation in the United Kingdom.
It is standard practice for intergovernmental organisations and their staff to be accorded privileges and immunities by member states, but I reassure the Committee that the privileges and immunities afforded to officers of the SKAO in the UK are limited to those required for them to conduct their official activities and are not for their personal benefit. They are in line with those offered to officers of other intergovernmental organisations of which the UK is a member and include limited immunity from jurisdiction and inviolability for its officers and employees, including immunity from legal process in respect of their official acts, and tax exemption. They do not include immunity from UK road traffic law. The SKAO convention also requires that the SKAO has legal capacity so that it can enter into contracts and take such other action as may be necessary or useful for its purpose and activities.
The order applies to the whole UK. However, some provisions of the instrument do not extend to, or apply in, Scotland. A separate Scottish Order in Council has been prepared to deal with those provisions within the legislative competence of the Scottish Parliament. That was laid before the Scottish Parliament on 10 August.
This order confers on the new SKAO and its staff the privileges and immunities that are necessary for the organisation to function effectively and conduct its official activities. The order will enable the UK to complete its ratification of the SKAO convention and make the global SKA project a reality. Completing ratification of the SKAO convention will bring us closer to answering some of the most important questions in advancing our understanding of the universe. The SKA will provide huge opportunities for technological advances and innovation, notably in the field of big data processing and in areas in which UK industry and research establishments are poised to benefit.
Amanda Solloway
I acknowledge all the enthusiasm and passion expressed by the hon. Member for Newcastle upon Tyne Central. As she knows, we share a passion for the subject. I will attempt to answer most of the questions that have been asked but, if there are any I do not answer, we have already organised a further meeting.
I thank the Committee for its consideration of the draft order. We are looking at all the negotiations, and clearly, as the hon. Member for Newcastle upon Tyne Central mentioned, we have been talking to the Netherlands, Italy and South Africa. We are making sure that we have those continuing conversations. It is likely and expected in respect of those that we shall ratify shortly.
The hon. Member for Rhondda made many interesting points, and I was writing down some answers as I went along. We are working on all of the points that he raised, and we are more than happy to share that work as we do it. He is right that we have an international obligation. We have been working towards our roadmap, in which we have put all the things that we hope to do, and the UK Space Agency is at the heart of much of what we seek to achieve.
The hon. Gentleman mentioned diplomatic immunity. Clearly, what happened with Harry Dunn was unacceptable and I assure the hon. Gentleman that we are pursuing that in the best way that we can. The order confers privileges and immunities on the new Square Kilometre Array Observatory only as far as is necessary for its function as an intergovernmental organisation in the UK.
It is enormously exciting for the UK and our astronomy community to be a key partner in a global project. As the hon. Member for Newcastle upon Tyne Central said, we want to be the best in the world and unlock all the secrets of the universe. We remain committed to strengthening our position as a world leader in astronomy and space exploration. The order takes us one step closer to bringing the SKAO into operation. As one of the host countries, the Government remain committed to bringing the SKAO into being as soon as possible. By hosting the intergovernmental organisation in the UK, the UK will play a key role in bringing the project to fruition. Therefore, I commend the order to the Committee.
Question put and agreed to.
DRAFT INTELLECTUAL PROPERTY (AMENDMENT ETC.) (EU EXIT) REGULATIONS 2020
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The Chair
Order. Before we begin, I remind Members that social distancing should be observed at all times. Hand sanitiser has been provided. It is obvious that some colleagues present have not served on a Delegated Legislation Committee before; the Government and Opposition Whips are available to explain to Members, if they have any queries, how to proceed.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
I beg to move,
That the Committee has considered the draft Intellectual Property (Amendment etc.) (EU Exit) Regulations 2020.
It is a great pleasure to serve under your chairmanship, Sir David, and it is a pleasure to speak in my first Delegated Legislation Committee as a Minister, particularly on such an important area as intellectual property. Intellectual property forms a vital part of the UK economy. A well-balanced IP system supports our citizens in their creativity and ingenuity, providing incentives for our businesses to innovate through research and development. We have seen the importance of innovation and creativity throughout the pandemic: the repurposing of old treatments to combat the virus, new technologies supporting social distancing, and theatre companies bringing performances into our homes.
IP enables society to benefit from sharing knowledge and ideas while rewarding creators. Innovation will be crucial in the years ahead to support our recovery from the impacts of covid-19, and the UK is already a global leader. Just last week, the World Intellectual Property Organisation ranked the UK as the fourth most innovative country in the world, and the Government are committed to ensuring that we maintain that position.
So why are the regulations needed? As the Committee knows, the European Union (Withdrawal) Act 2018 brings across EU law that applies to the UK at the end of the transition period, making it into domestic law. To safeguard against the possibility of leaving the EU without an agreement, six statutory instruments were approved last year, covering various IP rights. They ensure that EU law on IP will work correctly when brought across. Of course, the withdrawal agreement meant that the UK left the EU on 31 January 2020 in an orderly way. At the end of the transition period, we will have control of our laws and will operate once again as a sovereign, independent nation. However, it is still important that we do so with a statute book that functions effectively.
This SI, which was laid before Parliament on 13 July, therefore has three objectives. First, it updates last year’s SIs on IP so that they will work correctly at the end of the transition period. There will be changes to previous references to “exit day”. Updating also allows us to fix some small errors that were found when revisiting the text of those SIs.
Secondly, as EU law continues to apply to the UK during the transition period, the SI deals with the new EU law that has been introduced since last year’s SIs were made. It fixes inoperabilities that will arise when the law is brought over into UK law in December.
Thirdly, the SI ensures that we fulfil our obligations under the withdrawal agreement. The agreement commits the UK to preserving IP rights that had effect by virtue of our EU membership. Of course, that is what last year’s SIs were already doing, but there are some practical differences that must be reflected.
On trademarks and designs, last year’s legislation ensured that an equivalent UK right would be created for any EU right that is in force on exit day. Since EU rights continue to apply in the UK during the transition period, the SI moves the date of that process to 31 December. That will safeguard as many as 200,000 additional IP rights that will have been granted by that time. Where the validity of the EU right is being challenged and a decision is still pending at the end of the transition period, the withdrawal agreement requires us to apply that decision to the equivalent UK right once it has been made. The SI sets out how the process will work. It means that third parties will not require the expense of separate action to get rid of the equivalent UK right. The changes ensure that holders of such rights have certainty that their rights will be properly protected in the UK.
Another important area of IP law is supplementary protection certificates—SPCs—which provide additional protections for patented medicines and pesticides. This reflects that those must be approved by a regulator before they can be sold, which can take many years. SPCs help protect our most innovative drugs. For example, the asthma medicine Nucala has been protected for a maximum period of five years. Developed by GlaxoSmithKline, it has had world sales of more than £200 million in the last quarter. SPCs balance supporting innovation and developing new drugs with the need for patients to have access to drugs cheaply through competition from generic manufacturers.
The UK’s SP system derives from EU law. Last year’s legislation ensured that the system would function in the same way before and after exit day, giving certainty for both right holders and the wider interests. Since then, the EU law on SPCs has taken effect, introducing what is generally referred to as the manufacturing waiver. This allows third parties to make SPC-protected medicines in certain specific circumstances while the SPC is in force, without requiring the permission of the SPC holder. We consulted stakeholders on how the waiver should work in the UK. They were clear that we should keep the circumstances in which it can be used the same. That is the approach we have taken in this instrument to ensure we maintain the fine balance of this complex area of IP law.
Finally, the SI also deals with copyright and database rights, as well as the principle of exhaustion of rights. The changes in those areas are all concerned with simply updating last year’s legislation to reflect the end of the transition period. This instrument will ensure that the UK’s IP system has a firm footing when the transition period comes to an end, giving our innovative and creative citizens and businesses the certainty they need in this important area. I commend the regulations to the Committee.
Amanda Solloway
I thank the hon. Member for Newcastle upon Tyne Central for her comments and acknowledge her great passion for science and this particular field. I thank the Committee for its consideration of the draft regulations and hon. Members for their valuable contributions.
In response to the specific questions that have been asked, of course we are interested in protecting UK rights here and abroad. This and other legislation ensures that we do that by, for example, creating comparable rights in the UK for trademark and design holders.
One of the questions was about consultation. The Government have taken on board the concerns raised by UK attorneys about their loss of rights and representation at EUIPO. The IPO has recently finished an online call for views on this issue, which received more than 1,000 responses. We are considering whether to reciprocate by requiring a UK-only correspondence. The IPO has been planning for some time for the end of the transition period. It is the most robust place to cope with the additional IP rights that will come across from the EU. No EU rights have yet been transferred; they will come across at the end of the transition period.
Intellectual property matters. The IP system exists to encourage innovation and the sharing of information, and gives confidence to invest time, money and energy in developing something new—a business, a new book or a new piece of technology. The UK IP system is consistently rated as one of the best in the world, and I agree with the hon. Lady about wanting to make the UK the most innovative country in the world—I thank her for that.
Earlier in the summer, the Government set out our long-term objective for research and development through the new R&D roadmap, which I believe is a strong foundation for the way forward. We are committed to strengthening science, research and innovation further across the UK and making them central to tackling the major challenges that we face, including disabilities such as blindness. Intellectual property has an important role to play in supporting those objectives.
The IPO will continue to deliver high-quality rights, grant services, lead best practice for the enforcement of IP rights and retain its central involvement in international discussions on the development of the global IP system. Alongside the roadmap and the IPO’s work, these draft regulations will play their part in helping to ensure that our IP system is in a good place to support the Government’s goals and innovation so that the UK is best placed to develop and grow innovative businesses. I hope the Committee will support the regulations.
Question put and agreed to.