Retail Trade: Online Suppliers

Lord Whitty Excerpts

Wednesday 28th February 2018 Lords Chamber

[Lord Henley]

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

[Lord Whitty (Lab)]

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

[Lord Henley]

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

Nuclear Safeguards Bill

Lord Whitty Excerpts

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

[Lord Whitty (Lab)]

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

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

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

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

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

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

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

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

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

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

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

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

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

Better Regulation

Lord Whitty Excerpts

Thursday 7th December 2017 Lords Chamber

[Lord Whitty (Lab)]

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

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

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

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

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

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

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

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

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

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

Euratom

Lord Whitty Excerpts

Thursday 20th July 2017 Lords Chamber

[Lord Whitty (Lab)]

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

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

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

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

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

[Lord Lea of Crondall (Lab)]

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

[Lord Whitty]

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

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

Deregulation: Public Services and Health and Safety

Lord Whitty Excerpts

Thursday 13th July 2017 Lords Chamber

[Lord Whitty (Lab)]

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

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

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

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

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

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

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

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

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

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

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

Energy Price Caps

Lord Whitty Excerpts

Monday 3rd July 2017 Lords Chamber

[Lord Whitty (Lab)]

My Lords, perhaps I could pursue the point raised by the noble Lord, Lord Stoneham. The reality is that the CMA inquiry found that the standard variable tariff, which is the bulk of the market, was being exploited by the oligopoly that runs most of our energy supply. It was an absolutely condemnatory finding. Unfortunately, the remedies proposed by the CMA did not add up to very much, which is presumably why the Prime Minister thought she had to make clear that heavier government action was necessary.

If my noble friend Lord Grantchester is right that the remedy proposed in the letter to Ofgem affects only a minority of those consumers, and that in any case it depends on Ofgem finding a way within its existing rules to implement it, that total market distortion is not going to be resolved by the relatively slow creep of greater competition; it is going to require some clear and probably legislative action by the Government. None of that was reflected in the Queen’s Speech. Can we therefore expect that, if Ofgem gives an unsatisfactory answer to the Minister, we will get legislation on this basis in this Session of Parliament?

[Lord Prior of Brampton]

My Lords, I think the Secretary of State made it clear that, if there is an unsatisfactory response from Ofgem, he will resort to bringing through legislation. I should add that we should be careful about the law of unintended consequences in this case. It is very easy to win a headline with a blanket price cap and to reap adverse consequences later when the distortions that you bring into the market through that price cap make it worse for consumers rather than better.