Seaborne Freight
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Lord Rosser (Lab)
I thank the Minister for repeating the Statement. On 8 January, my noble friend Lord Tunnicliffe was told by the Government:
“With Seaborne, the proposal was subject to technical, financial and commercial assurance”.—[Official Report, 8/1/19; col. 2127.]
What were the financial assurances received and from whom? Were the financial assurances given specific, firm, unqualified and in writing, or were they only in the form of an intention or a consideration of giving financial support, as the Statement suggests?
Why was no reference made in the Statement of 8 January to the extensive involvement on the financial side of the Irish company Arklow Shipping? The Government said it was for commercial reasons. What commercial reasons were so important that they overruled the public interest and transparency on a Brexit issue? Perhaps instead it was because the Secretary of State was so determined to have the involvement at all costs of a British shipping company, to avoid the embarrassment of having to rely exclusively on European companies to help us out of a no-deal mess, that he reached this questionable agreement with Seaborne Freight without competitive tendering and then knowingly did not disclose in the Statement that even British Seaborne Freight was dependent on financial backing materialising from an EU-based Irish company? If that is not the case, why was the agreement not reached directly with Arklow Shipping, one of Europe’s largest shipping companies and clearly the intended real power behind Seaborne Freight?
Baroness Sugg
My Lords, we have listed the checks carried out as due diligence on the operational suitability of all the bids submitted as part of the department’s procurement of additional freight capacity. They were director searches and basic counterparty financial solvency checks, with technical support provided by Mott MacDonald. Two high-level technical reviews were completed. The first related to the ferry tender and submission compliance within the DfT evaluation process and the second to the technical feasibility of the tendered ferry intervention. Financial analysis was carried out by Deloitte to assess the financial robustness of operators, and price benchmarking by Deloitte to examine the prices offered to DfT in comparison with market rates to enable the assessment of value for money as part of the procurement process.
I explained earlier in the Statement the reasoning behind not mentioning Arklow before. It was for commercial reasons. It would have adversely affected the cost of ships in order to procure the contract. We contracted directly with Seaborne because it was the company that had been working for over a year to provide the service between Ramsgate and Ostend.
Railways: Dawlish
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Baroness Sugg
My Lords, this train line has been a long-standing problem ever since it was opened in 1846—that year trains failed to run along it. We are working closely on that and although I am not able to give the noble Lord a date, we are making significant progress. Network Rail has submitted a plan that we are looking at carefully and we hope to make an announcement on it very shortly.
Lord Rosser (Lab)
First, in very bad weather, as has been said, the Voyager trains used by the CrossCountry franchise are often unable to operate west of Exeter, as electrics on the roofs of the trains are adversely affected by salt water coming over the sea wall in the Dawlish area. Will the new Hitachi trains being introduced on the line also be adversely affected by salt water coming over the sea wall? Secondly, Network Rail’s plan for preventing sea damage is, as has been said, to build a new, higher sea wall, in respect of which it has made a planning submission to the relevant local authority, with the knowledge of the Secretary of State. We know the problem is only going to get worse as sea levels rise, so what happens if that planning application is declined? What is plan B? Or is there no plan B?
Baroness Sugg
The noble Lord is right to point to the issues we have with CrossCountry trains. The new intercity express trains on GWR were also affected by weather along the Devon coast last week, so we are working very closely with Hitachi to find a solution. As the noble Lord pointed out, there is a planning submission in play and, as I said, we are absolutely determined to come up with a long-term solution to this problem.
Operation of Air Services (Amendment etc.) (EU Exit) Regulations 2018
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Baroness Randerson
My disappointment with the SI that we had a week or so ago was definitely with the lack of certainty about which criteria the Government would use. The Government adroitly managed to give themselves the broadest possible set of criteria and we are no nearer knowing how exactly those permits will be applied. The industry is worried as a result.
There has already been a degree of reorganisation within the aviation industry as airlines previously registered in the UK have moved abroad for their registration, with the inevitable drift of at least some jobs abroad. It is important that we bear in mind that this additional bureaucracy—the additional requirements as a result of Brexit—will put our expertise in such an important aviation market at a disadvantage.
The Secondary Legislation Scrutiny Committee raised the issue of wet leasing, which, as the Minister explained, is when an airline releases an aircraft and its crew and so on. This is usually done at busy times or in exceptional circumstances. If the aircraft is not registered in the UK, the airline has to satisfy certain safety criteria. The airlines are concerned that this should be the subject of a reciprocal agreement with EU countries. Can the Minister explain what progress the Department for Transport has made in its discussions on this?
Public service obligations apply when a service would be uneconomical but is needed for economic and social reasons. They usually apply to far-flung places such as the Scottish islands. In future, such services could be operated by UK carriers and by others with cabotage rights—although, to be honest, that would be unlikely with no deal. These are sensitive and complex issues of state aid. As someone from Wales, I know that there has been a long debate on why rights are granted on some Scottish routes but similar rights were not granted in Wales. Could the Minister give us a little more detail on this?
State aid rules were previously adjudicated by the European Commission. This is a complex and controversial area, but the distance of the European Commission in power terms from the decisions that it made neutralised the issue to a large extent. Those powers will now be given to the CMA. What resources will it be given to deal with this? I also warn the Minister that those things are likely to become much more sharply controversial.
Paragraph 7.10 of the Explanatory Memorandum deals with the allocation of scarce capacity. The 2007 regulations dealt with air service agreements between EU members and third countries. Scarce capacity occurs when there are restrictions on the frequency of flights. The Explanatory Memorandum includes a political declaration that the UK Government will always seek to lift or remove such a cap but will hold a hearing to allocate frequencies if that is not possible. What is the legal force of that statement? It seems that it is simply a political declaration. It is a statement of intent by the current Government, but they cannot bind their successors. I would like some clarification on that.
Finally, it would be helpful, as we sit here week after week wading our way through dozens of these SIs, to be able to see the full context of where we are on air services. Maybe the Minister can tell us what other air services SIs we are waiting for.
Lord Rosser (Lab)
I thank the Minister for explaining the purpose and content of these regulations, which set out the contingency measures for the licensing and oversight of flights to and from the UK in the event of no deal with the European Union. UK carriers will require a route licence, as well as the operating licence that is currently required under EU law, for operations beyond the UK. Air carriers from the European Economic Area will also have to obtain a foreign carrier permit to operate in the UK.
In the event of there being no deal with the European Union, UK and EU airlines will no longer have the automatic right to operate air services between the UK and the EU without the need for advance permission from individual states. In this scenario, the Government expect to grant permission to EU carriers to operate to UK airports and for this to be reciprocated by EU states granting permission to UK air carriers to operate to points in the EU. Failing such a multilateral agreement, the Government’s intention would be to seek bilateral arrangements with individual states. I know that this point has been raised before but I raise it again: why do the Government believe that such bilateral arrangements between the UK and individual states could actually be put in place in the short time left even between now and 29 March 2019, let alone between early or mid-December and the end of March 2019?
Baroness Sugg
As I said, to make responsible preparations it is important to consider all the different options available to us. Of course we are having conversations with the Commission and the member states about a wide range of issues. I am not able to give further detailed information at this moment but our preference is very strongly for a broader deal which will provide a liberalised agreement with the EU, though there are other options available to us. I hope this provides reassurance that we will continue to see flights between the UK and the EU. We will continue to work towards this as we move towards exit day.
Lord Rosser
On bilateral discussions, the European Commission document that we have had—which I appreciate extends across the whole gamut and does not apply just to aviation—says:
“In the same spirit, Member States should refrain from bilateral discussions and agreements with the United Kingdom, which would undermine EU unity”.
It may be that this particular sentence does not apply to air transport. Is it then the case that we are having bilateral discussions in the apparent teeth of opposition from the European Union?
Lord Rosser
Before the Minister sits down, if the document that we have had from the European Commission, specifically the section on air transport, represents the Commission’s stance in the event of no deal—as I understand it, the Minister said we were in discussions with it—what is the latest date by which something has to be agreed so that it is effective from 29 March? Presumably what has been listed here by the European Commission as its position cannot be agreed the day before, and presumably it has to be agreed before then to come into operation on 29 March. So what is the latest date, realistically, by which something has to be agreed?
Baroness Sugg
The noble Lord will know that there are many positions on the negotiations. As I said, that is the Commission’s latest position. We are continuing to negotiate with it on the broader future partnership arrangements. Alongside that, we are of course talking to it about no deal too. There is no specific latest date. That is why we need to do this no-deal preparation, so that if it goes close to the date of exit the industry understands what the alternatives are. We are very keen to provide industry with certainty as early as possible.
We have the European Council on Sunday and I expect that there will be an outcome from that. We will then look at what next steps need to be taken. We are very hopeful that the deal is done and will be agreed by Parliament so that we reach our implementation period on 29 March and the industry has that certainty. Should that not be the case, we will of course continue the discussions with the Commission to provide certainty as early as we possibly can. I am very aware, in my many meetings with the aviation sector, of the importance of providing that certainty. That is what this no-deal planning and our continued negotiations with the Commission are about. I beg to move.
International Road Transport Permits (EU Exit) Regulations 2018
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Lord Rosser (Lab)
I too thank the Minister for setting out the content and purpose of these draft regulations and order. I share the concerns already expressed, and will revisit only some of them due to the time constraints that I know we are under today.
The draft international road transport permits regulations are laid, as are the others, under the Haulage Permits and Trailer Registration Act 2018. That Act allows arrangements to be put in place to enable international road haulage to continue after departure from the EU. Those arrangements create a framework for a single permit scheme that will deal with bilateral permit arrangements between the UK and non-EU countries, the multilateral European Conference of Ministers of Transport—ECMT—permit scheme and any future permit scheme that may be agreed with the EU. The draft order also includes provisions on applying for and granting a permit, along with provisions on cancellations, appeals and charging.
As has already been said, the ECMT permit scheme provides for a limited number of permits to be available to the UK. It is not much used at present, as the Community licence covers haulage to EU member states. However, if there is no deal for EU countries, Community licences will no longer be recognised from exit day, in which case UK hauliers will need either an ECMT permit for journeys to, in or through the EU, or a bilateral permit under an existing agreement with an individual EU member state to carry goods to, from or through the territory of that member state. But the number of ECMT permits available is limited, and demand for ECMT is expected to significantly exceed supply. Can the Minister say by how much demand for ECMT permits is expected to exceed supply in the event of no deal, and with which EU states there are existing bilateral agreements covering the carriage of goods—or alternatively, with which EU states there are no existing bilateral agreements?
The Explanatory Memorandum says that these regulations provide for an objective and transparent way of selecting which applications should be allocated permits. But what happens to those applicants who are not allocated permits from the limited number available to the UK? What will be the impact on them, and on our economy? If there is no deal or no satisfactory deal, how many applicants is it expected there will be who will not be able to get either an ECMT permit or a bilateral permit? How many UK hauliers currently have a Community licence? How will the Government assist operators who are not granted a permit and who may experience an adverse impact on their business as a result?
The Government have said that they are working to have bilateral agreements in place by exit day. Is that a bilateral agreement with each EU member state, and are the Government giving an assurance that such agreements with each member state will be in existence and effective by exit day? The Government have said that there are nearly 3,000 monthly ECMT permits. How will the operation of these monthly permits work in practice? Will UK hauliers have to reapply on a monthly basis, and how will the Government assist hauliers who need longer-term plans for their operations than monthly permits can provide?
The regulations grant the Secretary of State discretion to determine the allocation of permits where they are oversubscribed. How will the Government ensure that there is a fair and consistent approach, in particular over “random selection”, which is referred to in the regulations and which has already been referred to in today’s debate.
I will not go into the Trailer Registration Regulations 2018 at any length, except to say that I very much share one of the concerns in particular that the noble Baroness, Lady Randerson, expressed, on the level of awareness issue.
The road safety financial penalty deposit amendment order 2018 sets out the monetary amount of the financial penalty deposit—the FPD—for specified offences relating to the use of goods vehicles and trailers without the appropriate authorisation, FPDs or registration. FPDs can be taken immediately from a person without a UK address who is believed to have committed a specified offence. A separate order will designate specified offences relating to haulage permits, trailer registration and community licences as FPD offences. The specified offences under the Haulage Permits and Trailer Registration Act 2018 relate to failing to produce a permit when required to do so by an examiner, obstructing an examiner or breaching a prohibition on the use of a goods vehicle on an international journey.
Will the Minister say how the conclusion was reached that the level of deposits shown in the SI is appropriate for the offences in question, bearing in mind for example that,
“wilfully obstructing an examiner exercising powers”,
and carrying out an inspection attracts an FPD of just £300; likewise, a similar amount for “breaching a prohibition” or,
“causing or permitting a breach of a prohibition …on taking a vehicle to a country without reasonable excuse”.
We are talking about goods vehicles, trailers and safety issues since this is a road safety order. How wilful has the obstruction of the examiner got to be, and how blatant a breach of a prohibition, before an FPD is not considered appropriate? Once the requirement to pay an FPD has been imposed under the terms of this draft instrument, what further action will be taken in the light of the offence?
Baroness Sugg
My Lords, I thank noble Lords for their consideration of these draft regulations. Throughout the passage of the Haulage Permits and Trailer Registration Act there was valuable debate, which allowed us to refine and improve the Act and ensure that it laid out the necessary framework. I am grateful once again for the opportunity to consider the detail of this legislation. I shall attempt to answer all the questions, although I am not sure I will be able to in the time allowed. If there are questions I do not get to, I will follow up in writing.
On the requests for current haulage industry figures: there are 8,400 standard international licences currently in use and 32,000 Community licences. Our figures show that if hauliers were to make one trip per week on each permit, around 20% of current activity by UK HGVs could be facilitated on ECMT permits alone. However, 20% is not enough and we do not expect to rely solely on ECMT permits. These regulations and the published guidance refer only to ECMT permit applications. We do not yet know the outcome of negotiations, so we are not able to provide further information to hauliers on that. Whether with the EU or with member states, it could be that no permits are required at all. In that case, obviously these regulations will not come into force.
I will say a little more on the permit application process—
Railways: East Coast Main Line
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Baroness Sugg
My Lords, I am afraid that I am not able to give a definite date. We are trying to introduce the trains as soon as possible, but there remain issues that we need to work through. LNER has said that it hopes to start introducing the trains early next year. On my noble friend’s point about King’s Cross, we are carrying out essential works on King’s Cross to replace the expired track and signalling to ensure that we can see the full benefits of the east coast main line enhancements.
Lord Rosser (Lab)
It was from the government Dispatch Box that we were told on 23 May this year that:
“The good news also is that we fully expect the new intercity express trains to be introduced on the east coast main line from the end of this year, as planned”.—[Official Report, 23/5/18; col. 1032.]
Is this episode yet another example of the reality that, in our fragmented railway system, no one is in overall charge? No one is ultimately accountable for the performance or lack of it of our national railway network and, as a result, no one accepted responsibility for ensuring that the new trains would start running on the planned date. If the Government disagree that that is the case, then which individual or body was accountable for ensuring that the new trains would start running on the planned date on the east coast main line?
Baroness Sugg
Well, that was not me. The noble Lord is quite right to say that in May I gave reassurance that those trains would come into service. At the time, that was very much what we were planning. However, as I said, there have been emerging issues on that which we need to work through. It is not unusual with delivery of a whole new infrastructure—and this is a £2.7 billion investment, which we should welcome—that there are some compatibility issues. We are working through them. On the noble Lord’s point about the rail system, it has been well over a decade since we have seen a large change in the rail network and, while we have seen record private investment and the doubling of passenger journeys, of course it has had its challenges. The time is absolutely right for a comprehensive review, and that is what the rail review will do.
Railways: Fares
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Baroness Sugg
My Lords, since privatisation, UK railways have seen a period of incredible growth and passenger journeys have more than doubled. The industry has not been able to keep up with that demand, which is why we are looking at the rail review. It will consider all parts of the rail industry, from the current franchising system to industry structures. That will not stop us continuing to invest in the meantime and seeing more trains with more capacity come on to our lines.
Lord Rosser (Lab)
As has been said, the issue is the level of fares. The Government’s line is that their annual new year present to rail users of a fare increase is to finance their rail investment programme. In fact, that is not the case. The reason for the Government’s high level of fare increases each year is to ensure that we remain the European railway network with the highest, or nearly the highest, percentage contribution towards the running costs of our network coming from fares paid by passengers and the lowest, or nearly the lowest, percentage from the Government. That is why our fares are so high. Will the Government confirm that in any new modernised rail fare structure that will unfortunately continue to be the position?
Baroness Sugg
My Lords, as I said, we are aiming to move from RPI to CPI. We are continuing with record levels of funding, with around £48 billion expected to be spent on the network from 2019 to 24, but rail fares will continue to play a role in delivering improvements. We are delivering the biggest rail modernisation for more than a century, and it is meaning faster journeys, longer trains, longer platforms and more seats.
Civil Aviation (Insurance) (Amendment) (EU Exit) Regulations 2018
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Baroness Randerson (LD)
My Lords, the airline industry in this country is intensely competitive. It is a commercial environment where there is a real danger that airlines seeking to reduce costs will cut their insurance to the minimum in order to do so. It is obvious from this SI that freeing ourselves from EU standards means that we could allow airlines to have a lower level of insurance. The Minister read out an impressive but rather grim list of the risks that airlines face. Obviously those risks are also faced by their passengers and therefore I would be grateful if she could give some more detail about what restrictions will be put on airlines that are registered in Britain: how low can they go as regards their insurance cover?
It is obvious that the Government are anticipating a reduction because paragraph 7.3 of the Explanatory Memorandum makes it absolutely clear that this legislation will free airlines in the UK to take up lower levels of insurance cover than those required in the EU. It gives the example of “non-commercial operations”. As an aside, I would like to ask the Minister if she could define what the Government mean by that phrase. What sort of operations will need to have or will be allowed to have a lower level of cover? There is no point in freeing yourself up from EU controls if you are not going to allow variations from the standards that the EU has set. Will there be any guarantees of a minimum level of insurance cover or will we have some sort of free-for-all as a result of this? Air passengers will be concerned that there should always be an adequate level of cover.
I reiterate the question put by the noble Lord, Lord Berkeley: exactly how will this work? I have been trying to envisage the process. Thank goodness that several of our airlines have decided that they will neutralise some of the risks of Brexit and life after Brexit by registering in other countries. That covers their risks, which is a very good thing for them to have done. However, airlines are often based in more than one country. They may have their headquarters in one country but have most of their aircraft based in another one. Of course they fly between countries, so who will set the level of insurance that is required on each occasion? Will it depend on their country of origin, the flight that day, or will it depend on where the airline’s headquarters are based? If our UK-based planes fly from the UK to an EU country, will they not have the right to demand that those planes have an EU level of cover, not the reduced cover that the Government seem to envisage would be possible?
Finally, I put a rather prosaic point to the Minister. Paragraph 3.2 of the Explanatory Memorandum states:
“The territorial application of this instrument includes Scotland and Northern Ireland”.
What has happened to Wales, which has more than one airport? Can I ask for an assurance that the Scottish Government—sadly I cannot ask about Northern Ireland at this moment—have expressed their agreement to the concepts behind this SI and that the Welsh Government have done so as well, particularly since they do not seem to have been mentioned?
Lord Rosser (Lab)
I also thank the Minister for explaining the purpose of the regulations before us. Perhaps I may pursue the point that has been made about paragraph 7.3 of the Explanatory Memorandum to clarify what it means—or at least to establish that what I think it means is correct. It states:
“Article 6 sets out levels of insurance in respect of liability for passengers, baggage and cargo. Under Article 6(1), the minimum insurance cover for liability in respect of passengers is set at 250,000 SDRs per passenger”.
Can I take it that, as far as these regulations are concerned, there is no change and that the minimum insurance cover which applies at the moment will continue to be applied in the future and not be reduced? The memorandum continues:
“For non-commercial operations by aircraft with a MTOM of 2,700kg or less, there is an option for Member States to set a lower level of minimum insurance cover”—
I take it that that is the present situation with us being within the EU and that we already have the option because the memorandum says—
“which the United Kingdom has chosen to exercise. To ensure that the flexibility provided for in Article 6(1) is retained, Article 6(1) is amended to include a provision for the Secretary of State, by regulations, to set a lower level of minimum insurance cover in respect of non-commercial operations by aircraft with a MTOM of 2,700kg”.
Does the Secretary of State intend to go to a lower level of minimum insurance requirement than we have already exercised under what I understand is provided for under the existing arrangements? It is clear from looking at it that the Secretary of State could take the first opportunity to reduce it even further. What are the advantages of having the lower level of minimum insurance cover that the Secretary of State may set by regulations? To whose advantage is it? Is it safer to have a lower level of minimum insurance cover? It would be helpful to know what the advantages are and whether the Secretary of State intends to lower the level even further than I presume we have already reached.
Lord Berkeley
Will my noble friend clarify his thinking on non-commercial operations of aircraft with a minimum take-off or landing weight of 2,700 kilograms? That covers small private planes. Does he agree that it would be quite difficult if those private planes had such a small amount of insurance cover that anybody who might be affected by anything they did could be seriously out of pocket?
Lord Rosser
That would seem to be one issue, but I was posing the question to the Minister with no particular objective in mind other than simply to find out the thinking behind it, given that we have already moved to a lower level of minimum insurance cover than would have applied if we had not exercised the option. At the moment, I genuinely do not know what the thinking behind it is, to whom it is considered advantageous and whether there are any downsides. That is the point of my question and I hope that the Minister will be able to respond to it.
The Minister referred to international treaties. Paragraph 7.4 of the Explanatory Memorandum states:
“Article 6(5) sets out that the values referred to in Article 6 may be amended if required because of changes to international treaties … Article 7(2) sets out that the values referred to in Article 7(1) may be amended where it is required as a result of changes to international treaties, and this is amended to enable the Secretary of State, by regulations, to amend the values in Article 7”.
I think that the Minister has already said this, but I would like an assurance that those changes will be made only in response to changes in international treaties and that the Secretary of State will not use this instrument to make changes that are not required under international treaties.
Baroness Sugg
I think with all the SIs we are doing, we are literally transcribing EU law into UK law and treating it the same way, as the UK, as we would as a member of the EU. I think any change of policy in the future is not going to be part of these SIs, it would be done as a separate policy decision and debated in the normal way in both Houses. All these SIs are specifically correcting deficiencies which will exist after the withdrawal Act to ensure we have the correct regulatory frameworks. They are not changing; any changes to the minimum requirements would be done if and only if there is a change to international treaties. Some of these SIs do have executive functions which are being carried across; that is why we are giving the reassurance that any time an executive function is used, it will be in the affirmative way.
I will say more about the minimum insurance cover as several noble Lords have mentioned it. Article 6.1 gives member states the power to set a level of minimum insurance cover in respect of the liabilities for passengers, baggage and cargo, and that is lower than 250,000 special drawing rights per passenger for non-commercial aircraft with a maximum take-off mass of 2,700 kilograms or less. In answer to the question asked by the noble Baroness, non-commercial just means that no money has changed hands for the flight. That applies primarily to light and experimental aircraft, and cover must be at least 100,000 SDRs per passenger. The UK has exercised that power, as have other member states, and set the lower minimum of 100,000 SDRs within the Civil Aviation (Insurance) Regulations. This SI does not give us an option to set it lower—not that we would want to—it just carries across the minimum level. I hope I have assured noble Lords that this is not an attempt to change that in any way. We have no intention of doing so.
In answer to questions on airspace, this is not dealt with in the same way as an air services agreement; it is an International Air Services Transit Agreement which accompanies the Chicago Convention. Almost all EU member states are separate signatories to an IASTA, meaning they allow overflights and will continue to do so whether or not we are a member of the EU. On the devolved Administrations, obviously aviation is primarily a reserved matter and civil aviation insurance is fully reserved in respect of all three devolved Administrations, but of course we are continuing to engage with them on all aviation matters.
There were a couple of questions from the noble Lord, Lord Rosser. I think the last exceptional failure of the insurance market was in response to 9/11. We are working closely with passenger representatives throughout the development of our position on EU exit and aviation in preparing these SIs.
Lord Rosser
If the Government are having discussions with passenger representatives, why did it not say so in the consultation outcome paragraph?
Baroness Sugg
I apologise that it did not. I will be looking at what we say in the consultation paragraphs in future to ensure that there is proper information to give assurance to noble Lords. I personally, my officials and indeed the Secretary of State regularly meet with industry and passenger interest groups to ensure that we are getting this right as we leave the European Union.
As I say, I hope I have answered the majority of questions. I apologise if I have missed any but there were quite a few, so I will follow up in writing. As I have said, we remain confident that we will reach an agreement with the EU, but of course it is important that we prepare our legislative framework in case we leave the EU with no deal. That is what this SI is doing. The regulations do not make any changes to the substance of the insurance requirements that air carriers and aircraft operators are expected to meet, but they are essential to ensuring that the retained EU legislation which sets out these requirements continues to work effectively in the UK immediately after exit day. That is what these SIs are designed to do. We need to ensure that we have the right regulatory and legislative framework to provide passengers and industry with choice, connectivity and value for money irrespective of the outcome of the negotiations. I beg to move.
Merchant Shipping (Monitoring, Reporting and Verification of Carbon Dioxide Emissions) (Amendment) (EU Exit) Regulations 2018
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Lord Teverson (LD)
My Lords, I should declare that I am a board member of the Marine Management Organisation. I do not think that it conflicts with what we are considering here, but I mention it for the avoidance of doubt. I would like to respond to the noble Baroness, Lady McIntosh, by saying that in her role as leading the group in the European Parliament when the Conservatives were part of the EPP, which is exactly where they should still be, she was a fantastic advocate for her position. I was in a different group that sometimes became involved in things like trans-European networks, and I noted that she was very successful in what she tried to do. She presented a difficult opposition.
I want to come back to a few points about carbon budgets, which is what this comes down to. In her remarks the Minister alternated between talking about carbon emissions and greenhouse gas emissions. There is a very important difference between those two phrases. I would be interested in understanding whether these regulations are in fact concerned with greenhouse gases or carbon dioxide emissions. I know that they refer to carbon dioxide, but most of the monitoring that is done is for greenhouse gases. Although emissions of methane are lower, it is a much more potent greenhouse gas. The difference is important and I presume that it is particularly relevant to the shipping industry, given its emissions.
I congratulate the Minister on reminding us that international shipping is the one area where we still have not solved this issue internationally. In aviation we have this rather dodgy—if I am honest—offset system. We will see how it works, but I suspect that the Amazon rainforest will not grow at the rate that aircraft emissions will. Given that sympathy, I am interested to understand whether, given the fact that we have international paralysis, and with the Government perhaps frustrated by the fact that that sector is not represented within European or British carbon budgets, the UK, as the Climate Change Committee has often advocated, will take on its leadership role in this area again and start to reconsider whether the sector should be. I am not expecting a policy decision today in the Moses Room, but I will be interested to know if the Government will start to look at that issue.
When it comes to individual matters of these particular regulations, I shall quote from the Explanatory Memorandum as the legislation refers to European regulations all the way through and it is very difficult to read, as I am sure the Minister understands:
“The amendments … remove what will become redundant requirements on the UK to make certain reports to the Commission”.
I wanted to clarify whether those requirements, whatever they are, or those reports will actually now be made within the UK anyway.
I am in particularly interested in documents of compliance. I do not know much about this topic although I am sure the noble Lord, Lord Berkeley, is clued up on them. I presume that they will be issued by the Marine and Coastguard Agency. I am interested to understand whether these are existing EU systems. If they are, are we having to replace the IT systems? Are they ready? How many of these things do we issue at the moment and how many are we going to have to issue after March 2019, or after the transition period if we manage to come to an agreement? As we all know, IT systems and the increase in documentation and red tape are one of the biggest challenges in making Brexit work.
I have to ask about this ability to expel ships from a port, which we are getting rid of because we already have the ability to get rid of ships for safety and environmental reasons. I am interested to understand, in terms of EU legislation, what other scenarios the Government were thinking of in that legislation other than safety and the environment, in order to understand what rights we are forgoing.
Lord Rosser (Lab)
My Lords, these regulations have already been through the Commons, as obviously the Minister knows better than I do. We indicated our support for them when they were considered there last week, and I hope she will not be too surprised when I say that that is still our position today. In the Commons, in response to points that we raised about the impact of these regulations on compliance with the IMO strategy and targets for carbon reductions from shipping by 2050, the Government said they would provide assurances in writing. I am afraid I genuinely do not know yet whether those assurances—I see the Minister is waving the letter, so if one is not already on its way to me, I would be extremely grateful to receive a copy.
I turn to Part 2 of the annex to the Explanatory Memorandum, headed:
“Statements required when using enabling powers under the European Union (Withdrawal) 2018 Act”,
which refers to the undertaking that has been given by the Parliamentary Under-Secretary of State that:
“In my view the draft Merchant Shipping (Monitoring, Reporting and Verification of Carbon Dioxide Emissions from Ships) (Amendment) (EU Exit) Regulations 2018 does no more than is appropriate”.
The Explanatory Memorandum to the previous SI that we were considering went on to say that the changes,
“do no more than is strictly necessary”.
This one does not contain those words. It says:
“This is the case because the amendments being made do no more than ensure the continuing effectiveness of the existing regulatory regime”.
Department for Transport (Fees) (Amendment) (EU Exit) Regulations 2018
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Baroness Randerson
The noble Lord has found an ingenious way of adding an extra question and I will pass it on to the Minister.
Lord Rosser (Lab)
I thank the Minister for explaining the purpose and content of the SI, which we will not oppose. In the light of concerns that have been expressed about the possible effect on fees in future and other possible impacts, will the Minister gives us some clarification on the consultation? Paragraph 10 of the Explanatory Memorandum states:
“A consultation is not considered necessary as the amendments are minor and technical in nature and do not impact upon either business or the individual”.
Does that mean that there has been literally no consultation, or have some bodies or organisations been consulted? If so, which organisations or bodies have been consulted about this SI and its contents?
As the Minister said, the regulations amend the Department for Transport’s fees orders covering the road traffic field. Fees orders do not set fees but specify functions and their costs which may be taken into account in setting fees. These regulations amend those orders by removing references to the Secretary of State having functions to carry out to comply with EU obligations or requirements on the basis that we are withdrawing from the European Union. Those functions referred to in the fees orders will no longer be carried out under EU legislation but will continue to be carried out by the Secretary of State under domestic law as provided for by the European Union (Withdrawal) Act 2018. As the Minister said, the functions currently carried out by the Secretary of State under EU legislation are those relating to international road haulage permits, type approval certification, tachograph calibration centres, international road passenger transport authorisations, driver licensing, vehicle registration, licences to operate public service vehicles and licences to operate goods vehicles.
The SI relates to a situation where we have withdrawn from the European Union. It would appear that it covers a no-deal situation and our intended departure on 29 March next year. What is the position if there is a deal approved by Parliament and that deal entails a transition period with continued membership of the customs union and/or the single market for an unspecified time or other provisions that do not provide for a clean break on 29 March next year? What is the need for this SI in that scenario? We may not in reality have withdrawn from the EU because we would still be bound to accept that some or all of its legislation applies to us. We would not be able to alter it unilaterally and we would also be bound by any subsequent amendments made to that legislation by the European Union pending our full withdrawal.
What then would be the relevance of an SI, such as the one we are now considering, coming into effect on 29 March next year, which asserts in paragraph 2.4 of the Explanatory Memorandum:
“The relevant EU related functions specified by the Fees Order will, after EU exit, no longer be carried out in pursuance of EU legislation”,
when, if there is a deal, these functions could have to be, including to the extent, for a possible period of time unknown, that we would also have to abide by EU legislation that was further amended by the EU without our agreement? Would it not be better, with a decision on a deal apparently close, to withdraw this SI and wait until we know whether there is a deal and, if there is, produce an SI which reflects the reality and terms of that deal? It is, after all, not the fault of this House if the Government are having difficulty adhering to their intended timetable for progress in negotiations with the EU, as appears to be the case. It would be helpful if the Minister could spell out what the impact of a deal with a transition period could be on the provisions and relevance of this SI, and whether during the transition period agreements could be reached or arrangements made that could have an impact on the terms and relevance of this SI.
I turn to one other point. The Haulage Permits and Trailer Registration Act gave the Secretary of State the power to introduce regulations to charge fees for international road transport permits if a new permit scheme is required, as UK-issued Community licences will no longer be valid in the EU if we leave, unless an agreement is reached otherwise. The Government have previously said that any permit fees would only cover the cost of any new scheme and that the detail on fees would be consulted on later in 2018 when the outcome of the negotiations was clearer. Has the consultation started, or has the lack of clarity at the moment over how the negotiations with the EU will end precluded the commencement of the consultation?
Since an issue of concern is that hauliers or taxpayers will incur additional costs if a new scheme is required, does that not underline the importance of continuing with the Community licensing system? Once again, would it not therefore be better to be discussing this SI once the outcome of the negotiations was clearer and the SI itself could reflect that outcome? The SI is not intended to come into force for another five and a half months, yet we are being asked to agree to it now when it is not clear to what extent we will or will not be continuing to follow EU legislation, including any subsequent amendments to the legislation, after the SI is intended to come into effect on 29 March 2019.
Baroness Sugg
My Lords, I thank noble Lords for their consideration of these draft regulations. As the noble Baroness said, I am afraid they are the first of many EU exit transport regulations. The purpose of these regulations is indeed to make minor and technical amendments to the three pieces of legislation that we are discussing, by amending the language used to take account of EU exit, but otherwise to maintain the status quo.
As I said in my opening remarks, the regulations themselves do not set, raise or lower fees. The fees orders are supplementary to existing powers that the Secretary of State has in other legislation, and that other legislation sets the fees. The regulations do not in any way extend the powers of the Secretary of State or relate to a change in the fees.
I turn to the questions that were asked. The noble Lord, Lord Berkeley, mentioned the Haulage Permits and Trailer Registration Act, as did the noble Lord, Lord Rosser. We have consulted extensively with the industry on that and we will be discussing the regulations under that Act soon. There is a government response to the consultation, which I will forward to the noble Lord, explaining where we are on fees. We will be discussing that soon.
As I said, the regulations do not set or change the fees themselves but merely set out what can be taken into account, so charges absolutely will not go up. There has been a role for the EU Commission in setting the charges in the past but there will not be after exit.
For the non-UK driver—an issue raised by the noble Lord, Lord Berkeley—EU driving licences will continue to be recognised in the UK post Brexit, as set out in some of our recent technical notices, so the charges for getting a GB driving licence will not change.
On the question of devolved Administrations, which the noble Baroness, Lady Randerson, mentioned, we are working closely with them throughout our entire SI programme—obviously more so on some which are directly relevant than on others, but on every one we are working closely with them. Some of the fees orders’ functions are GB-wide—for example, driving licences, as Northern Ireland has its own regime and its own legislation to set its own fees—while others relate to the whole of the UK.
Baroness Sugg
That is very much subject to negotiations. We hope to agree a mutually beneficial deal with liberalised access to continue as it is for haulage firms. Bilateral permits exist. In the event of no deal, we will work bilaterally with the countries involved to agree permit systems. We are very keen to pursue continuing the access that we have at the moment, which would be reciprocal. That is what we are working towards.
The noble Baroness is quite right that many of our goods are moved by small businesses and we are reliant on them for that. I agree that an increase in charges would adversely affect them but, as I said, the regulations do not change the fee or regulate businesses. The fee orders determine what the Secretary of State can consider rather than regulate small businesses. That is why it is noted as such.
The noble Lord, Lord Rosser, asked about consultation. We are working closely with all our transport stakeholders on the Brexit regulations. We have spoken to them about all the different SIs. This SI will not affect stakeholders. All it will do is remove the obligation on the Secretary of State to take note of the European Union.
On the impact of a deal, which we are all working hard to achieve, the SI will come into force on exit day, which is defined in the withdrawal Act as 29 March 2019. Ultimately, the coming into force of the SI will depend on the outcome of the EU negotiations and any new legislation arising from that outcome. If the UK reaches a withdrawal agreement with the EU, that agreement is expected to provide for an implementation period. We have announced that in that event, we will introduce to Parliament a European Union withdrawal agreement Bill as a primary means of implementing the agreement. Exit day would remain 11 pm on 29 March 2019 but the coming into force of the SI may be reviewed and delayed until the end of the implementation period. The SI may not be needed, but it is part of our readiness work, as are the SIs to come, which we strongly believe we should be doing as a responsible Government. Noble Lords are aware of the number of upcoming SIs and the limited parliamentary time, so we will spread them out between now and exit day to get through them. Obviously, if a deal is reached and an implementation period is agreed, that will affect that.
Lord Rosser
Can the Minister say something about what is said in the regulations under “Citation and commencement”? She said that the regulations will come into force on exit day. We have been told repeatedly by the Government that we will exit the European Union on 29 March next year, but I sense from what she just said—I am sure that she will correct me if I am wrong—that the reference to exit day may not apply to 29 March 2019 if a deal is done, so the Government accept that we may not withdraw from the European Union on that day. Is that the Government’s position?
Baroness Sugg
As I said, exit day will remain 11 pm on 29 March 2019. When this SI comes into force is currently defined in the withdrawal Act but should a deal be reached where we get a withdrawal agreement, the implementation day of the instrument could change through the subsequent Bill that the Government will bring forward to implement the withdrawal agreement in UK law.
Lord Rosser
I am not sure whether the Minister has responded to my point, but I asked whether there was any possibility that during the transition period, agreements could be reached or arrangements made that could have an impact on the terms and relevance of the SI. Is it the Government’s position that even if there is a transition period, nothing will happen then that could have an impact on the relevance of anything in this statutory instrument?
Baroness Sugg
The expectation is that with the withdrawal agreement we will have an implementation period. During that period we would be covered by current EU laws and therefore this secondary legislation would not come into effect. Obviously I cannot give a guarantee of that because we do not yet know the outcome regarding the withdrawal agreement and it has yet to pass through Parliament, but the expectation is that during the implementation period we would continue as we are and the SI would not come into force until the date agreed through the withdrawal agreement Bill that will be coming through the House.
Lord Rosser
Is the Government’s position that in any discussions during the transition period nothing would be agreed that might have an impact upon the relevance of this SI and necessitate it being altered, other than its effective date?
Baroness Sugg
I am afraid I am not able to give a definitive answer to the noble Lord’s question. As I said, we have yet to agree a transition or implementation period with the EU. As we do not know those terms, I am not able to answer the question. However, our expectation is that throughout that period we will continue as we are, so this SI would not come into effect until a date set out in the EU withdrawal agreement Bill.
I take the noble Lord’s point that the negotiations and discussions on that agreement are ongoing, and the outcome of those may of course affect what we do in future. However, due to the number of regulations that will have to be discussed in order to ensure that our statute books are fit for 29 March should we not reach an agreement, we think it is the responsible thing to do to keep going with this programme and start these discussions between now and exit day.
I reiterate that the detail around the delivery of the specified functions and the prescription of the fees that can be charged for delivery are set out in other legislation. Making this proposed instrument would merely enable the continuation of the current fee-setting process by removing references to the EU after we leave, so things would absolutely continue as they are.
Railways: Train Timetables
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Baroness Sugg
My Lords, the new timetable was planned to deliver hundreds more services up and down the country to benefit passengers, but I think that we can all agree that it has not been successfully delivered. As I say, we are working closely with the train operating companies to ensure that the interim timetables provide the reliable services that passengers expect and deserve. We are conducting a review into whether GTR has met its contractual obligations, which will report in the coming weeks. Once completed, we will follow the advice.
Lord Rosser (Lab)
An industry readiness board was set up to review and direct,
“industry programmes for Thameslink 2018 operational readiness to minimise all risks associated with entry into service and ongoing sustained operations”.
The Department for Transport sat on that readiness board, with its “operational readiness” remit. How can the Secretary of State for Transport maintain that he has no responsibility or accountability for the operational effectiveness and performance of the railway network—including the present shambles—when his own department was represented on the Thameslink 2018 industry readiness board with its clear operational readiness remit?
Baroness Sugg
My Lords, the rail industry has collectively failed to deliver for its customers. It is right that it apologise, and the Department for Transport has apologised too. As I have said, we are prioritising the reliability of the service, but I take the noble Lord’s point. That is why we have set up an independent inquiry —to understand what went wrong. We are eagerly awaiting its recommendations because we must learn these lessons, and we will.