Draft Petroleum (Transfer of Functions) Regulations 2016
(7 years, 11 months ago)
General CommitteesRead Full debate Read Hansard Text
The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
I beg to move,
That the Committee has considered the draft Petroleum (Transfer of Functions) Regulations 2016.
It is a great pleasure to serve under your chairmanship for the first time, Ms Ryan. I am pleased to open the debate on the regulations, which will transfer certain functions relating to the licensing and taxation of oil and gas from the Secretary of State for Energy and Climate Change to the Oil and Gas Authority. With the recent debate on the Energy Act 2016 no doubt still fresh in hon. Members’ minds, I am sure that most will be familiar with the background to the establishment of the OGA and Sir Ian Wood’s review into maximising the economic recovery of petroleum from the UK continental shelf. However, for the sake of coherence, I will outline briefly where we have got to.
The benefit of the oil and gas industry to the UK is not in doubt: it has extracted around 43 billion barrels of oil, paid more than £330 billion of taxes and supported many hundreds of thousands of jobs. However, as one of the most mature regions in that global industry, the UK now faces new challenges, with remaining reserves increasingly dispersed and more difficult and potentially expensive to exploit. Notwithstanding that and the additional pressures resulting from low prices, great value can still be extracted. The Wood review recommended that delivering that value would require a new approach and the focused attention of a new independent regulator and asset steward. In response, the Government legislated to establish the principle of “maximising economic recovery” or MER UK, and have set out a strategy to deliver that. The industry and the OGA are now required to act in accordance with that strategy when going about their business.
The OGA has been established as an Executive agency of the Department of Energy and Climate Change and has made great progress. The successful passage of the Energy Act enables the OGA to be set up as a Government company and empowered with a broader range of tools to meet the challenge of MER UK, as envisaged by the Wood review. A central part of the establishment of the OGA is the transfer to it of essential functions currently exercised by the Secretary of State.
Hon. Members may recall that schedule 1 to the Energy Act provides for the transfer of the majority of those functions, including some relating to offshore oil and gas infrastructure as well as the licensing of carbon dioxide and gas storage. However, it was decided that certain core functions in relation to petroleum licensing and taxation would not be transferred by that Act, due to interdependencies with the new devolution settlements for Scotland and Wales, as outlined in the Scotland Act 2016 and the Wales Bill respectively. Specifically, both those settlements include provision to devolve such functions in the onshore area, and that requires us to amend the same part of the Petroleum Act 1998. Due to the complexities caused by the sequencing of those measures, it was decided that we would transfer those specific functions via regulations under the Energy Act to allow greater flexibility. The regulations seek to effect that transfer.
The rationale for transferring those functions to the OGA is the same as for transferring the functions transferred by the Energy Act: the effective establishment and operation of the OGA as regulator and asset steward of the UK continental shelf. The only difference in this case is the legislative vehicle by which the functions are formally transferred. It is worth noting that, as with the functions transferred by the Energy Act, the functions that will be transferred by the regulations are all currently being exercised by the OGA in its capacity as an Executive agency of the Department of Energy and Climate Change. However, once the OGA is established as a Government company, it will be legally distinct from the Department. In order to continue to carry out its functions, they will need to be formally transferred to it.
In conclusion, the regulations make relatively minor amendments to legislation governing petroleum licensing and taxation to enable the OGA to continue its important work of regulating the oil and gas sector and to ensure a smooth transfer of functions to Scottish and Welsh Ministers in due course. I commend the regulations to the Committee.
Barry Gardiner (Brent North) (Lab)
Ms Ryan, it is always a delight to see you in the Chair. Some hon. Members from the Minister’s party have encouraged me to detain her in Committee for as long as is reasonably possible this morning. In respect of their wishes, I have searched back through the Petroleum Act 1998, section 3: licences to search and bore for and get petroleum, and section 4: licences for further provisions. I have gone to the Oil Taxation Act 1975, section 3: allowance of expenditure (other than expenditure on long-term assets and abortive exploration expenditure), and to schedule 2, which talks about the management and collection of petroleum revenue tax returns by participators. I am sad to say that I have not been able to find any cause to detain the Committee longer.
My party has agreed with the findings of Sir Ian Wood’s review. The OGA’s new powers and oversight to ensure that decommissioning is used to best advantage in the North sea seems to us entirely right. Decommissioning should not operate in the short-term interests of those involved, but in the longer-term interests of the co-operative use of the infrastructure. That is a point I wish to make particularly for the benefit of not only those who are involved in future production in more marginal fields over this coming period, but the future possible use of the North sea as one of the world’s finest repositories for carbon capture and storage.
I regret that the Government have abandoned their funding for the development of the CCS programme. I think that is a devastating shame. We have the finest repositories in the world and they are going to be there awaiting CCS technology. Although, in terms of our own emissions reduction capacity and our own climate commitments, CCS is not critical for our infrastructure in the immediate future, it could have been marketed across the world through the technology and skills that Britain could have exported. For that reason, I regret the loss of funding. However, it does not give me cause to detain the Committee longer or to press the matter to a vote.
John Mc Nally (Falkirk) (SNP)
I am happy to agree and am satisfied with the progression of the legislation. I think the speech by the hon. Member for Brent North was excellent; he has obviously done a lot of research for what seems very little reward. We are happy and satisfied with the transfer of powers going forward.
Andrea Leadsom
I am delighted that there is unanimous agreement. I am grateful to hon. Members for their contributions and particularly grateful to the hon. Member for Brent North for his thorough research. That is always important.
As we have discussed, the regulations are largely procedural in nature, but they are an important central part of the establishment of the OGA as an arm’s length regulator and steward of the UK continental shelf. The transfer of responsibility from the Secretary of State to the OGA is essential if the OGA is to continue to exercise the functions it has been set up to deliver once it is formally established as a Government company.
Question put and agreed to.
Independent Parliamentary Standards Authority
(7 years, 11 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Deputy Leader of the House of Commons (Dr Thérèse Coffey)
I beg to move,
That the Committee has considered the motion, That an humble Address be presented to Her Majesty, praying that Her Majesty will appoint Jenny Willott to the office of ordinary member of the Independent Parliamentary Standards Authority with effect from 7 August 2016 for the period ending 31 December 2020.
It is a pleasure to serve under your chairmanship, Mr Bone. I welcome the hon. Member for Newport West to the Front Bench. My right hon. Friend the Leader of the House has already welcomed him, but this is the first time I have served in Committee with him.
The motion proposes that an humble Address be presented to Her Majesty, praying that she will appoint Jenny Willott to the Independent Parliamentary Standards Authority from 7 August 2016 until 31 December 2020.
The appointment has arisen as a result of the decision by the current parliamentary member, Lord Thurso, to step down from the board of IPSA following his election to the House of Lords as a hereditary peer. He submitted his resignation on 8 May and it will take effect from 7 August.
Members of IPSA are appointed under the Parliamentary Standards Act 2009. Under the Act, the Speaker is responsible for overseeing the selection of candidates for appointment to IPSA, and the names of any candidates to be a member of IPSA must be approved by the Speaker’s Committee for IPSA, known as SCIPSA.
The Speaker has had regard to the Commissioner for Public Appointments code of practice for ministerial appointments to public bodies, which allows for the appointment of a candidate from the reserve list when a vacancy occurs within 12 months of a previous recruitment process. The Speaker’s Committee met on 14 June to discuss how to proceed and agreed to offer the position of parliamentary member of the IPSA board to Jenny Willott, the Member of Parliament for Cardiff Central from 2005 to 2015, who was identified as an appointable candidate in the previous recruitment process.
If the appointment is made, Jenny Willott will serve on the IPSA board until 31 December 2020. The Speaker’s Committee has produced a report—its second report of 2016—in relation to the motion, which was circulated yesterday to members of this Committee. I hope that the Committee, and ultimately the House, will support the appointment. We wish Mrs Willott well as she takes up her new post.
Paul Flynn (Newport West) (Lab)
It is a pleasure to support the motion. Many of us have known Jenny Willott for many years for her splendid service in the House. She served with great distinction as the Member for a neighbouring constituency to mine, sometimes called Cardiff Central, but known to us as Newport Far West.
It is fascinating that in the protozoan world of mini-democracy, Viscount Thurso has gone because he was in an election where the entire group of possible candidates was seven, the electorate was three and he gained 100% of the vote. Following that triumph of democracy, it is a pleasure to see Jenny Willott take his place. We welcome her and wish her well in her duties.
Question put and agreed to.
Draft Water and Sewerage Undertakers (Exit from non-household Retail Market) Regulations 2016
(7 years, 11 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rory Stewart)
I beg to move,
That the Committee has considered the draft Water and Sewerage Undertakers (Exit from Non-household Retail Market) Regulations 2016.
It is a great privilege to serve under your chairmanship, Mr Streeter. I warmly welcome the new shadow Secretary of State for Environment, Food and Rural Affairs, the hon. Member for York Central.
For the Committee’s benefit, let me provide a brief introduction to the regulations. They are set within the context of the Water Act 2014. People who were in the House at the time or who have taken an interest will remember that the Act basically did three things. The first thing was that it provided affordable flood insurance under the Flood Re process, which guarantees that people in a flood-vulnerable area are able to access flood insurance at affordable rates that are attached to their council tax bands. The second thing was that the Act provided for reform to the upstream water markets, which is complicated work that relates to what happens right up at the source of the water. The third thing, which is what the regulations are specifically relevant to, is the non-household retail end: the Act provided, not for individual houses but for businesses and others, an ability to have more efficient services. That involves billing, meter reading, handling of calls, complaint handling and water efficiency services.
I will give a couple of examples to show how the regulations are relevant to people. An organisation such as Tesco that has a lot of stores spread out across the country would be able for the first time to get a package to cover its thousands of stores and to get all its efficiency services—controlling the amount of water used, its bills and its complaints—handled centrally. That is also relevant to large water users. Imagine an electricity utility company or a brewer that uses a huge amount of water. Suddenly there is a market opportunity for a retailer to turn up and offer it a specific package. All Members present will be able to think of analogies, such as the way in which, in the electricity and gas markets, new people enter the market and are able to offer more tailored, more efficient and more affordable services.
Specifically, the regulations come out of an amendment to the 2014 Act. They focus on two things: one is the process that a retailer that wishes to offer such services has to follow in order to get approved, and the other—their exact focus—is the exit of the previous holder. Let us imagine that there were a water company in my constituency of Penrith that currently provides those retail services. The regulations define the conditions under which that existing company can leave the market and somebody else can come in.
This has been a very serious piece of parliamentary drafting, which has been going on for almost two years. The conditions that have been set out essentially revolve around five key principles that drive this type of regulation. The first, which is very important, is equivalence, which means that you as a customer will be able to get the same service from the new entrant that you had from the previous retailer—it is a guarantee for the customer. The second is what I would call a principle of competence, to assure that the acquiring retailer, which has been licensed by Ofwat, is competent to take over the service. The third is what I would call a principle of universality, to ensure that nobody is left out; to return to my example of a non-household customer in my constituency of Penrith, it is essential that when the transfer takes place they do not get left out of the system, so these regulations provide for that guarantee of universality. The fourth principle is one of control, allowing Ofwat to regulate the terms and conditions of transfer to customers. The final principle is what I would call a principle of transparency, to ensure that customers are kept fully informed through the process.
The regulations are all backed up by the provisions of the 2014 Act, which provides the framework under which Ofwat issues those licences. There has been a very thorough consultation process. Parliamentary counsel, as well as DEFRA lawyers and policy teams, have been engaged in great detail to make sure that we have tested all the principles, both with business and consumers, and that the regulations meet the needs of the age. These are sensible, well drafted regulations, which I am pleased to present to the Committee.
Rachael Maskell (York Central) (Lab/Co-op)
It is always a pleasure to serve under your chairmanship, Mr Streeter, and I thank the Minister for his kind remarks.
I would like to speak on behalf of the Opposition today on these regulations. I first want to put on record my thanks for the enormity of work that has already been put in place in order to bring us to the point we are at today. Although I recognise that the 2014 Act has made it permissive to increase competition in the water and sewage industry for 1.2 million businesses, charities and public sector organisations, I want to ensure that we are thorough in our scrutiny of the regulations today. I therefore want to forward a number of questions to the Minister, to ensure that everything is watertight.
To start with, my questions are essentially on consumer protection. I want to know how long it is proposed that the exit process will take, bearing in mind that customers will need to be guaranteed the provision of the retailer before the exit is granted.
Secondly, I would like to ask how much notice a customer receives of their undertaker withdrawing from the market, since they may choose to continue a service with the retailer who has taken over the customers of the undertaker, or the customer may need time to choose an alternative retailer.
Thirdly, as the guidance notes say, there should be minimal disruption to the customer, but when it talks about minimum disruption, will there be any disruption and, if so, what disruption does the Minister envisage behind that?
Fourthly, I would like to ask about process, so that there is not confusion over billing, as has been seen elsewhere in the energy market when somebody exits the market and there is a change in licensee providing the service.
Finally on this point, I would like to know how customers will be communicated with about the changes of service provision, to enable them to maximise their choices.
Rory Stewart
I should be grateful if the shadow Secretary of State could clarify her fourth question on process, which I did not fully understand. There was a question on notice, a question on minimum disruption and then I missed the question on process.
Rachael Maskell
I am more than happy to clarify that point. The question is so there is not confusion around billing between the different organisations. When somebody exits the market, there will obviously be a new licensee who is providing that service, and, as has been seen elsewhere in the energy market, there has been confusion about the billing process. We need to make sure that customers are able to be communicated with by one organisation and be clear that they are not billed twice.
It is also essential that customers experience no detriment and, while I recognise the principle of equivalence, detriment could occur to non-household customers. I therefore seek further reassurance on behalf of customers. For example, while outstanding complaints will be passed to the new licensee, the guidance is silent as to how potential liabilities will be addressed. That could result in remedies being less favourable to the customer. Can the Minister bring clarity to that, since the guidance simply states that this is dependent on the commercial agreement drawn up? A current customer would want confidence that the terms on which they raised their complaint would result in no less favourable outcome.
For customers whose undertaker withdraws from the market, can the Minister confirm that, should they choose to deal with a different licensee from that which took over the customer base from the undertaker, they will have two years through which to switch from and back to them again, should they choose? Again, this is slightly ambiguous, but I know was raised in the debate on the regulations in the other place.
With regard to the risks identified, I note that there is expected to be an increased financial risk both to Ofwat and to DEFRA. What assessment has been made of the size of the risk in the light of the already severe cuts to the Department?
Finally, I would like the Minister to clarify a couple of questions on consequential issues appertaining to the measure. One of the most important areas of work in the industry looks at water-saving initiatives. Clearly these must be across the whole water and sewerage industry, and not just seen as a customer responsibility. How will the undertakers and the licensees work together to ensure that water conservation remains a priority in this new fragmented environment?
The second consequential issue appertains to householders. Although these regulations do not appertain to householders, householders and non-householders currently deal with the same water companies. After April next year, that may not be the case. I note that in the other place’s scrutiny of these regulations, the Minister said that they would be subject to the current cost basis for their water and sewerage in this five-year cycle. However, what risk assessment has been made on the impact on households? If none has been undertaken, will the Minister look into the matter?
Labour recognises that the Government’s ambition is to protect the consumer in the light of the permissible action available from the 2014 Act through these regulations. Although we have concerns about further marketisation and fragmentation of the water and sewerage industry, we believe that, subject to the Minister’s response today, we will not be calling for the Committee to divide.
Rory Stewart
You can understand why I welcomed the shadow Secretary of State to her position, Mr Streeter. I think I have nine different questions here, which I will try to deal with one by one. If I miss anything, I am very happy to continue the debate through interventions.
I think the first question was around time and notice. The notice provisions are covered under regulation 12, as the shadow Secretary of State will be aware. Regulation 12(4) clarifies that,
“notice must be given…in the case of a person who is a customer immediately before the Secretary of State grants permission for the relevant undertaker to withdraw from the non-household retail market, at least 2 months before the exit date”.
On disruption, and the process we follow in terms of customer bills, the industry has set up a new company called Market Operator Services Ltd whose job is to build and manage a database of accurate information to enable switching and settlement.
There was a question on detriment and, in particular, complaints. This subject is dealt with in regulation 17, “Transfer of outstanding complaints”, at paragraph (3). As the shadow Secretary of State presumably knows, it went through a great deal of debate, both within the Department and with the parliamentary draftsman. Paragraphs (1) and (2) are largely laying out the terminology; the key to regulation 17 is paragraph (3), which states:
“Anything done by or in relation to the relevant undertaker in connection with the complaint is to be treated, on and after the exit date, as having been done by or in relation to the acquiring licensee.”
Clearly we all believe that excess words turn septic. The decision was that that was the clearest way of laying out the complaint. To return to my Penrith example, had I lodged a complaint as a non-household customer against the hypothetical Penrith Water Company that existed previously, at the date on which the exit takes place my complaint would become a complaint against the new company and would be treated as such.
Rachael Maskell
On that very point, although I understand that the complaint will be dealt with, as with the old undertaker, by the new licensee, can the Minister confirm that the remedy will be the same with the new licensee, as per the commercial agreement?
Rory Stewart
This is a very important technical question. The understanding of the Department and our legal experts is that this would be governed through normal legal contract arrangements. That is why it has been left as a very short sentence, as we believe that the existing procedures, regulated by Ofwat, will be sufficient to ensure that the complaint process is properly handled. We believe that putting in excess words and trying to micro-manage the detail of the process will not end up in as good and transparent a result for the customer as simply making it clear that normal complaint procedures are followed for the new company, regulated by Ofwat, as they would have been for the pre-existing Penrith company. I am confident that this is the best and most straightforward way of proceeding, but I understand the shadow Secretary of State’s anxiety.
On the question of switching, there are two key principles that underlie the regulations: completion and permanence. Although there were some suggestions during the debate in the other place, as the shadow Secretary of State pointed out, that it might be possible for a customer to leave and return—to leave my putative Penrith company and then hop back to them later—we decided, after a great deal of consultation, that that is not the correct way to proceed. The correct way to proceed is that it is complete and it is permanent. The Penrith company leaves, the new entrant enters and that is the end of it. There is no way for the Penrith company to then come back into that market or for an individual non-household customer to move back and forth between their previous provider and the new one. That is very important in order to have the market opportunity and flexibility for a new entrant. Let us imagine that a Scottish retailer wished to come into the retail market. It would need to be able to pick up a critical mass of customers and would not be able to do that unless there was a clear and completed exit procedure that meant the customer could not switch back.
The shadow Secretary of State made an additional point about the financial risks to DEFRA and Ofwat. We have looked at that in considerable detail. We do not believe that there are any financial risks to DEFRA. The costs, in so far as they fall, will fall on the industry. There is a very detailed cost-benefit analysis of what that will mean for the industry. Our assessment, based on our best evidence from a team of economists, and agreed by the industry, is that instead of being a net cost for the industry, the benefits over a 30-year period are in the order of £200 million.
Rachael Maskell
Could I just clarify the point about additional financial risks for DEFRA? My understanding is that the application to exit the market needs to be made to the Department. Therefore, surely that will mean that there are consequential risks as a result of administering the process.
Rory Stewart
The shadow Secretary of State is absolutely right. The applications are made to the Department, will be cleared by departmental officials and signed off by the Secretary of State, but as she will be aware, the application for determination is a relatively straightforward process. The Secretary of State must grant permission, unless it is contrary to the interests of the public or the relevant undertaker has failed to comply with regulation 9. The bulk of the due diligence is done through Ofwat granting a licence to the individual, and Ofwat has a serious process in place to decide whether somebody is a competent operator. If that individual has received a licence from Ofwat—in other words, they are a competent operator approved by Ofwat—all our Department will be looking for in that process is that the proper notifications to the public have gone through, that the proper forms have been filled in, and that there is a clear agreement on who is exiting and who is taking over that market to provide the universal service to the customer.
The final issue raised was about the issue of water conservation and household customers. Household customers is a future piece of business. We are now talking about that issue, but it is not covered by these regulations. I am very happy to talk to members of the Committee and to the shadow Secretary of State about the detail of household customers in future, when that comes forward. These regulations cover non-household customers.
Water conservation is central to our strategic work and we have to consider it in every way, on both the supply side, such as leakage from pipes, and the demand side, such as how to reduce water use. One of the things that these measures should do, particularly for big water users—I give the example of utility companies, brewers or Tesco—is to provide really good incentives to reduce water use. There is more that we could do right across this issue. Water meters will be an important part of reducing demand. Finally, we have a huge process going forward, led by the water industry but with DEFRA closely involved, that is looking at long- term infrastructure investments—that could include interconnecting pipes and new reservoir systems—to provide for the possibility of drought and climate change in the future.
Question put and agreed to.
Draft Civil Proceedings, First-tier Tribunal, Upper Tribunal and Employment Tribunals Fees (Amendment) Order 2016
(7 years, 11 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 9 / Noes: 5 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)
I beg to move,
That the Committee has considered the draft Civil Proceedings, First-tier Tribunal, Upper Tribunal and Employment Tribunals Fees (Amendment) Order 2016.
May I say what a pleasure it is to serve under your chairmanship this morning, Mr Nuttall? The purpose of the draft order is to make changes to the fees payable in proceedings in the civil courts and tribunals. Specifically, the order will uplift a number of fees charged in the civil and magistrates courts by 10%.
Mr Andrew Smith (Oxford East) (Lab)
The Minister says that the fees are being increased by 10%. How does he justify such a large increase over and above inflation? Does that not put at risk the process of, and access to, justice?
Mr Vara
The right hon. Gentleman asks a good question, but he will be aware that running the courts and tribunals system costs a lot of money. Given the economic difficulties that the country is in, we have found it necessary to impose fees that will contribute towards the cost of keeping Her Majesty’s Courts and Tribunals Service operating.
As I was saying, the order will uplift a number of fees charged in the civil and magistrates courts by 10%. That will include all the fees that are currently at full cost recovery levels including, for example, the fees for judicial review proceedings, but the uplift will not apply to fees in civil proceedings that are already set above cost. The uplift will also apply to judicial review proceedings heard in the immigration and asylum chamber of the upper tribunal to ensure that the fees in judicial review proceedings are consistent across jurisdictions.
The order also introduces a new, consistent fee-charging approach across the property chamber of the first-tier tribunal. The current structure that operates in the tribunal is complex and inconsistent, with a range of different fees charged for some application types and no fees charged for others. Our changes will simplify and standardise the approach, reducing the burden on the general taxpayer by raising the overall recovery rate in the tribunal from about 4% to about 10% and sharing that burden more equally between all those who use the tribunal.
As we announced in our consultation response last December, the target is to recover about 25% of cost from fees in the property chamber. Achieving that aim will require us to revisit our specific proposals relating to leasehold enfranchisement cases, and we will make an announcement on our plans for fees in those proceedings in due course.
Finally, the order will change the default classification of two new appeal rights that have been created in the employment tribunals from a type B claim, which attracts the higher fee, to a type A claim, for which the fee is lower. The normal rule is that when those who use a public service are charged a fee to access them, the fee should be set at a level designed to cover the full costs of the service. The civil and family courts have operated on that basis for a number of years.
Section 180 of the Anti-social Behaviour, Crime and Policing Act 2014 provides the Lord Chancellor with the power to prescribe fees above cost, but requires that those fees are used to
“finance an efficient and effective system of courts and tribunals”.
That power was used for the first time in March last year to increase the fees for money claims, and again earlier this year to increase the fees for possession claims, general applications in civil proceedings and applications for a divorce or dissolution of a civil partnership. The power will be exercised again in this order to increase the fees in a range of civil proceedings by 10%, which will take those fees above cost recovery levels.
The fee changes that affect the property chamber of the first-tier tribunal and employment tribunals will be made under section 42 of the Tribunals, Courts and Enforcement Act 2007, given that even after these changes, the fees will remain well below cost recovery levels.
The case for revisiting the fees that we charge in courts and tribunals is based firmly on the need to ensure that Her Majesty’s Courts and Tribunals Service is properly funded to protect the vital principle of access to justice.
Chris Stephens (Glasgow South West) (SNP)
Can the Minister confirm that the fees recovered in the last year were about 12.5% of Ministry of Justice income?
Mr Vara
I am not familiar with the precise figure and I am keen to ensure that the hon. Gentleman gets it, so I am happy to write to him with the details of whether the figure is 12.5% or more or less than that.
A fully functioning and properly funded justice system is the cornerstone of our democratic society. It should provide everyone with the ability to redress their problems in an efficient and effective forum, and it should also underpin our economy. The Government have committed to an historic, once-in-a-generation investment of more than £700 million to transform our courts and tribunals system. The scale of that investment and the ambition of our reform plan will enable us to build a justice system that is simpler, swifter and more efficient, using modern technology.
In a tough financial climate, there is only so much that can be delivered through spending cuts and efficiencies. That is why we have had to look again at the balance between what users pay towards the overall cost of court and tribunal services and the financial burden that falls on the taxpayer. We estimate that the measures set out in the order will generate about £6 million per annum in additional income, with every pound collected being spent on providing our system of courts and tribunals. I recognise that no one will ever welcome an increase in fees, but I hope that right hon. and hon. Members will recognise that increases are required so that we can ensure that the courts and tribunals are properly funded and access to justice is protected.
May I take this opportunity to congratulate the hon. Member for Leeds East on his appointment as shadow Lord Chancellor and Secretary of State for Justice? I look forward to having debates with him on many occasions, and I hope that the debates will be constructive for the benefit of all those who need access to justice.
Richard Burgon (Leeds East) (Lab)
It is a pleasure to serve under your chairmanship, Mr Nuttall. I thank the Minister for his kind remarks, and I look forward to having many a constructive conversation and debate with him and his colleagues.
This is our second opportunity this week to debate court and tribunal fees, following the debate on Monday in the Chamber, during which we had the opportunity to discuss the Select Committee on Justice’s recent report on the issue. Hon. Members will recall that although it was an estimates vote on Monday night, Labour decided to treat it as a vote on tribunal fees in order to make clear our opposition to the Government’s policy on employment tribunal fees, so strong is our belief that they are a barrier to justice. Today we have an opportunity to make another clear statement on barriers to access to justice, as we discuss the proposed increases in court and tribunal fees set out in the order.
On Monday, I made it clear that I see it as my priority in my new role as shadow Justice Secretary to speak up for all those whose access to justice has been deliberately obstructed by this Government and the coalition Government who preceded them. We will assess the order on two grounds: affordability in providing access to justice and the Government’s evidence base for the proposals.
In principle, we can be in no doubt whatever that civil litigation fees discourage claims, particularly from those least well placed to afford them, such as people in receipt of benefits, whether unemployed or on low pay, women, black or minority ethnic individuals, the disabled and those seeking asylum. The introduction of fees in employment tribunals has coincided with an enormous fall of 70% or thereabouts in claims being brought, particularly those relating to sex discrimination, pregnancy or maternity rights, race discrimination and disability discrimination.
Chris Stephens
Is the shadow Secretary of State aware that there has also been a 70% drop in workers pursuing claims for non-payment of the national minimum wage?
Richard Burgon
The hon. Gentleman makes an important and alarming point. The reason for the drop in claims, whether those for enforcement of the national minimum wage or the other claims that I have outlined, is not that bad employment practices have suddenly become much rarer since the introduction of employment tribunal fees; it is that the fees are deterring people from making claims. That is not good for anybody, because employment tribunals deter bad employers from following bad practices and even protect employees who would never dream of making a claim themselves.
Today, the Government are proposing a 10% increase in civil litigation fees across the board. When did anyone who has to pay those fees have a 10% pay rise? I know from my previous brief as shadow City Minister that there are some people who might expect a 10% pay rise, but which council worker, health worker or factory worker—which of our constituents—last received a 10% pay increase? We need to be clear: this inflation-busting increase will lift access to justice further out of the reach of ordinary people on ordinary pay who receive ordinary pay awards. My right hon. Friend the Member for Oxford East put that point well in his intervention.
Today’s debate is also about the principle of court fees and how the legal system is increasingly used, in the words of the Law Society, as “a profit centre”. On Monday, I highlighted in the Chamber how concerned I was that litigants are increasingly treated as customers. As I said, I remember the first time, as an employment lawyer, I assisted a claimant to make a claim following the introduction of employment tribunal fees. I was sickened to see the following words on the Employment Tribunals Service website: “Customer, please enter your credit card details”. I was shocked and saddened to see that we are not treating people as citizens trying to assert their statutory rights; we are increasingly seeing them as consumers or customers. That shows the wrong priorities on the Government’s part.
We also need to be clear that the fee remission system in employment tribunals often requires people to provide a humiliating level of detail. I remember receiving remission forms requiring bank statements, and on one claimant’s remission form the Employment Tribunals Service had highlighted the fact that in December they had received a bank transfer of £12 from a relative. They were asked to explain what that £12 was for and why it was sent to them. If I remember correctly, it was money relating to a Christmas present, but that is the kind of intrusion that people are subjected to. It is almost as though the service did not want people to apply for fee remissions. Of those who do apply, only about 3.7% get any joy.
So why are the Government doing this? On Monday we discussed employment tribunal fees, which contribute something like £7 million of the £70 million-plus that it costs to run the Employment Tribunals Service. Today we are discussing a measure that the Government’s impact assessment says will bring in £5.9 million, but which will see fees leap up in a way that will make individuals think twice before applying. Some of those increases are as follows. A request to reconsider at a hearing a decision on permission in the immigration and asylum chamber will increase from £350 to £385; the High Court fee will increase from £480 to £528; and the fee for a contested hearing in the magistrates court will increase from £515 to £567. In the civil court, the fee for permission to proceed with a judicial review will increase from £700 to £770. Those increases are simply unfair and will deny access to justice.
The Government are clearly concerned enough by the fall in applications to employment tribunals that they have agreed, correctly, to initiate a review of the impact of employment tribunal fees. They are yet to produce or publish that report, five months after it was given to the Minister. Now they wish to push ahead with increasing civil litigation fees in a number of areas—including the property chamber, the immigration and asylum chamber and others—without publishing their review of employment tribunal fees or carrying out a further review of the affordability of civil court fees and the fee remission system. Such a review should take place, and it is not just those on the Labour Benches saying that. A number of stakeholders advocated that approach in response to the Government’s consultation. I am sad to say that the Government do not seem to be listening to those stakeholders.
The Government conducted a consultation on the increases in court and tribunal fees, following which they concluded that they still wished to impose a general 10% increase in civil litigation fees. That decision flies in the face of the submitted evidence. I would argue that the key question in that consultation was the one that asked:
“Do you agree with the proposal to uplift all civil fees not affected by one of the other specific proposals by 10%?”
The Government’s response noted that of 82 responses to that question, four agreed and 78 disagreed, and stated:
“Those who disagreed raised a number of opposing arguments,”
including that
“it would deter people from bringing claims”
and
“prevent people from accessing justice”.
There were 46 responses to the question:
“Do you agree with Government’s proposal to increase the fees charged for proceedings in the First-tier Tribunal (Immigration and Asylum Chamber)?”
Some 37 of those responses disagreed with that proposal, saying that
“people seeking asylum in many cases were vulnerable and would be unable to afford the fees”,
and that
“the fees would prevent access to justice”.
The Justice Committee report, the words of which should weigh heavily on Members from all parts of the House, highlighted considerable concern at the Government’s proposals to set immigration fees at a cost recovery level.
I wish to highlight some of the arguments that the Law Society set out in opposition to the increase in fees in its submissions to the Government consultation and the Select Committee inquiry. I will quote the Law Society at some length, because it is worth listening to. It said:
“It is wrong in principle for the court service to be treated as a profit centre—the courts have a vital social function which it is for the State to provide, and should not be treated as a commercial activity to subsidise other work…The Government’s decision will discourage people from bringing legitimate cases, thus reducing access to justice…The proposals are not supported by any evidence or concrete proposals to indicate how the Government will use the money gained to improve the court service ... The research on which the decision was based is inadequate.”
The submission says that there is limited evidence of the impact on the poor in society, particularly in the immigration field.
The submission continues to say that
“fee increases will shift the burden of responsibility and costs onto innocent parties, deterring individuals from seeking redress and creating another barrier to access to justice…The income level at which fee remissions is available is far too low to be of any assistance to the majority of individuals—it is below the threshold for eligibility for civil legal aid…Increased fees could lead to the prospect of clients having to take out loans to fund court fees. This will only serve to create a further barrier to justice as many clients will not want to take out a loan or will not meet banks’ lending criteria. Those who do take out loans will have to pay interest…The process of applying for the remission of court fees is also highly complicated, designed seemingly to deter ordinary people from applying and in urgent need of simplification.”
I apologise for quoting at such length, but it is important that the Law Society’s comments are heard, heeded and put on record. They are damning words from a respected body of professionals who keep our legal system running.
I will also take a moment to highlight the concerns of the Immigration Law Practitioners Association. It highlighted the fact that the Immigration Act 2014 dramatically reduced rights of appeal in immigration and asylum cases. It said to me that in many cases, access to judicial review
“will provide the only remedy to challenge the certification of a case as one in which the appeal may be conducted from outside the UK without leading to a breach of human rights including serious and irreversible harm”.
It said that access to judicial review
“will therefore be an essential safeguard against poor quality decision-making in this context and the risk of removal leading to breaches of human rights breaches.”
It concluded that in many cases, applicants
“will be facing imminent removal. Finding the funds to pay court fees or completing complicated applications for remission of the fees”
is complicated by the urgency of their cases. It also blames the Home Office for creating those court costs through
“poor decisions with (high overturn rates on appeal), to create delays in immigration proceedings and to fail consistently and timeously to give effect to the decisions of the courts.”
On the back of those concerns, we also have the latest proposal to increase immigration and asylum chamber fees, but I will leave that point there.
The one positive item in the order is the proposal to reclassify posted workers’ claims against employers in the employment tribunal as type A rather than type B claims, meaning that a lower fee will be payable. But one swallow does not make a summer, and in any event we remain committed to the abolition of employment tribunal fees under a Labour Government.
The Law Society has advised me that
“in light of the damning report from the Justice Select Committee on the impact of fee increases, the Law Society believes that any further increases should not be implemented until at the very least the MoJ has responded to that report, and preferably until a proper review has been carried out of the impact.”
I agree. I therefore ask the Minister the following. Will he listen to stakeholders from across the legal profession and conduct a review of the impact of civil litigation fees? Since it is three days since our last debate, is there any news on when he will publish the review of employment tribunal fees?
Given the evidence that court fees are a barrier to justice and given that the Government have refused to conduct or publish sufficient reviews of the impact of court fees, I confirm that we will divide the Committee to demonstrate the Opposition’s commitment to access to justice and to oppose the across-the-board, inflation-busting increase of 10% that my right hon. Friend the Member for Oxford East so eloquently described.
Chris Stephens
It is a pleasure, as always, to serve under your chairmanship, Mr Nuttall. I welcome the hon. Member for Leeds East and congratulate him on his new role and responsibilities.
At a time when maternity discrimination and the number of workers being made redundant are on the increase and, according to the National Audit Office, 209,000 workers were not paid the minimum wage last year and a further 56,000 are awaiting payment of national minimum wage arrears, an above-inflation increase will price low-paid workers out of justice. That is exactly what has taken place since employment tribunal fees were introduced.
The Trades Union Congress report “At what price justice?” shows that the introduction of fees in July 2013 has led to a 79% fall in the overall number of claims being taken to employment tribunals. Women are already the biggest losers: there has been an 80% fall in the number of women pursuing sex discrimination cases. Just 1,222 women made such claims between January and March 2014, compared with 6,017 in the same period in 2013. In addition, race discrimination and sexual orientation claims both fell by 60% in that timeframe, and there was a 46% year-on-year reduction in disability claims.
The TUC also argues that workers are being cheated out of wages. There has been a 70% drop in the number of workers pursuing claims for non-payment of the national minimum wage, and in many cases claims for unpaid wages are lower than the fees themselves. That is another barrier to workers pursuing justice. Working time directive claims are down 78%; unfair dismissal claims are down 72%; equal pay claims are down 58%; breach of contract claims are down 75%; and as I said earlier, sex discrimination claims are down 68%.
I think I misspoke slightly when I asked the Minister about the Ministry of Justice accounts. I understand from a Unison report that the introduction of fees has contributed a net 12.5% gain in revenue: income from fees is £9 million, compared with the Employment Tribunals Service’s total budget of £71.4 million.
On tribunal fees, as has been said, the order adds claims under the new Posted Workers (Enforcement of Employment Rights) Regulations 2016, but there is evidence in the Justice Committee’s recent report on access to employment tribunals that there has been a drop in access to justice in that regard. The Committee agreed with that evidence. The fact that there is sometimes no automatic financial award for successful tribunal claims also does not seem to have been taken into account. Some claims that are lodged—for example, those relating to written pay statements and written statements of reasons for dismissal—do not attract such a monetary award.
Statutory employment rights exist to ensure minimum standards of treatment in the workplace. Rights such as the minimum wage, paid annual leave and paid time off for maternity, paternity or parental reasons, and the rights not to be discriminated against or unfairly dismissed, are important and have social and economic benefits. If observed, they help to ensure decent standards of living, stability of income, job security and equality of opportunity. They can also contribute to the creation of a committed and engaged workforce, help to reduce sickness absence and support the retention of skilled workers—all things that boost productivity.
We are also concerned about the proposed increase in fees for the immigration and asylum chamber. As the hon. Member for Leeds East pointed out, the Immigration Law Practitioners Association has consistently argued that there should be a “polluter pays” approach, and in its view, the Home Office
“continues to make poor decisions (with high overturn rates on appeal), to create delays in immigration proceedings and to fail consistently and timeously to give effect to the decisions of the courts. If the Home Office were to bear the costs of these myriad failings, not only would court costs (and legal aid payments) be reduced but there would be a strong incentive for immigration and asylum decision-making to improve, and thus for savings in all cases.”
The cases that we are talking about are challenges to the lawfulness of detention; challenges to the validity of legislation, including incompatibility with the Human Rights Act; and challenges relating to the inclusion of sponsors on the register of sponsors for the points-based system and to nationality law and citizenship.
The Scottish Government will be removing employment tribunal fees in Scotland. I agree with that, and the trade union movement, the citizens advice service and many other organisations share that view. It is our view that the order will have an impact on the most vulnerable in our society and therefore does not deserve our support.
John Mann (Bassetlaw) (Lab)
We all know who is behind this order: a Chancellor of the Exchequer who is totally discredited. All his proposals should be taken off the table now. He has failed to introduce his promised emergency Budget that he said was necessary, and now he is punishing the most vulnerable people in society, probably because of the way that they voted in the referendum.
I am no lawyer, but I take employment tribunal cases for constituents like Alan Hardwick, who has spent 15 years working for the same employer. He gets locked out and then finds that some new agency workers who happen to be new migrant workers in the country are taking his job. They are there the next day, being paid a lot less, and he has to go to a tribunal to try to get anything out of it. The law is already far too weak for people like Mr Alan Hardwick.
Or there is Michaela Lake, who is 16 years old. She and her colleague are in their first ever job, working in a hairdresser’s. They work for four weeks and do not get paid. The owner disappears, and they have still never been paid. I track him down on a Tory website, because he is a Tory donor and activist in Gosport, but what can Michaela and her colleague do? How can they pay the fees? Michaela Lake had not been paid; that was why she was going to a tribunal. Not a penny was paid in her first job—welcome to flexible labour market Britain. Welcome to fairness Britain. And some people wonder why there is a bit of a people’s rebellion going on at the moment. Why should she have to pay anything? Why should she have to pay more to go to a tribunal?
What about John Anderton, a driver with Eddie Stobart, or Brian Jackson, or 50 others who were slung out as the company was restructured? Every one of them has to pay a fee to go to tribunal to get the money they are owed, never mind compensation or the redundancy they have not been given. They have to pay a fee to get their holiday pay and their wages from the last week they worked. Stobart is not a tiny little employer like that Tory from Gosport, but employers like that still do the same thing. The balance of power is wrong.
The law is too weak, yet Parliament chooses not to listen to what is going on out there and not to get a glimmer of inspiration from the people. Many of them have never voted before, but they are now participating in politics in this country, and look at how they voted. Brian Jackson had a big poster up when I went past his house in Langold village, which voted 85% in a certain direction.
Tory Members voted in different ways, so I am just appealing to those of them who want to remain in contact with the wider public. I say to them, vote with your conscience. Here is an opportunity to knock back the Chancellor of the Exchequer, who hits the wrong people in the wrong way. Let us make a little mark by standing up for the little man, the little woman and the 16-year-old who has not been paid. Let us stand up for people’s rights and for empowerment, because that is what this is about.
Of course the money matters, but this is about empowerment and what we say to people about how they are being forced to pay, and then pay more, for their basic human rights. There are people who work at 16 years old and do not get paid at all. What kind of country are we living in where it is not automatic that their employer should be jailed, never mind taken to a tribunal? That 16-year-old should be paid to go to a tribunal, never mind having to pay fees to go to it. That goes for Alan Hardwick too, and for Brian Jackson, John Anderton and many more of my constituents. Those are just the ones I have represented in tribunals. Sometimes nobody bothers turning up, or sometimes there are fancy lawyers there who are paid lots of money to defend the indefensible, minimise the situation, talk about the technicalities of how the forms are filled in and grab back the money that is due to decent people from my constituency. That is why this is so important.
I see that heads are down on the Conservative Benches, but I want to look into the eyes of the Tories who want to stay in touch with the world. There could be an election coming up; they have to be careful. My advice is to listen to what the people are saying and, on this occasion, vote with the Opposition parties.
Mr Vara
I start by thanking the hon. Members for Leeds East, for Glasgow South West and for Bassetlaw for their contributions. Much of what was said is not relevant to the debate, because the order is about the narrow confines of the order, but I will take a moment or two to reply to some points that have been raised, for the sake of balance in Hansard.
On the need for fees, which the shadow Lord Chancellor raised, I reiterate that we live in difficult times and it is necessary to take measures to deal with the economic and financial climate in which we are living. The total cost of the courts and tribunals system in 2014-15 was £1.8 billion and the fee income was £700 million, leaving a net cost to the taxpayer of about £1.1 billion. I hear loud and clear the criticisms that have been made about fees, but there is a deafening silence on Opposition Members’ alternative for getting the money to meet the £1.1 billion shortfall. I suppose that the luxury of opposition is the ability to make grand promises and be critical without having to take the tough decisions that government requires.
Chris Stephens
The Minister would surely concede that the Scottish Government have taken a more enlightened approach, and have indicated that they will abolish employment tribunal fees. At least one part of the United Kingdom is taking a different approach, and the Scottish Government will find that in their budget.
Mr Vara
The hon. Gentleman is right that the Scottish Government have taken a different approach. However, there has been a distinct lack of any mention of where they will get the money from. From which other budget will they take it? Until that response is given, the promise of scrapping one set of fees is somewhat hollow, commendable though it is. There is an element of balancing budgets here.
It is not unreasonable to charge people who use the courts and tribunals system so that they make a contribution for that use. The order is not about profit—it is simply wrong to say that it is. In fact, it shows a complete lack of understanding of how the courts and tribunals system operates. It is abundantly clear that the fees will be used to help run the courts and tribunals system and will go towards the additional £700 million that the Chancellor has made available to ensure that we have a 21st-century, first-class courts system that is the envy of the world. There is simply not a bottomless pit of money, and we must remember that we are talking about taxpayers’ money.
The issue of employment tribunal fees is not relevant to this debate, but I will briefly make one or two comments to rebut some points that have been made. As the hon. Member for Glasgow South West said, the latest figure for the cost of employment tribunals was £71 million a year. It is therefore not unreasonable that the public should contribute towards the use of those tribunals. What has not been taken note of, however, is that some 83,000 people have used the ACAS early conciliation scheme, which is free.
It is ironic that some Members here claim to represent the public, given what they have said today. Indeed, the hon. Member for Bassetlaw said that we are not in touch with the public. He is the one who is not in touch with the public, because he is seeking to scrap fees. We are instead encouraging people to use a system that is absolutely free, with no lawyers’ fees, no court fees—no anything. We have the irony that these people are standing up and advocating a system of people going to employment tribunals, which would necessitate cost.
John Mann
Irony? The irony is that people are required to go to ACAS. Does the Minister think that in the cases that I take, we do not go to ACAS? The employers, like that Gosport Tory, refuse to answer the phone calls and letters from ACAS. Of course we go through ACAS. These bad employers do not settle in ACAS. I do not suggest that the taxpayer should be funding the service—of course the taxpayer should not be funding it. There should instead be proper fines for employers that break the law. That is how the tribunal system ought to operate, and that—enforcing and strengthening the law—would be easy to do.
Chris Stephens
As the hon. Member for Bassetlaw indicated, settlement in ACAS relies on the employer also joining ACAS and playing ball. In many cases, rogue employers do not play ball. ACAS is one route, but that relies on the employer going to ACAS and joining the discussion, which does not happen often enough.
Richard Burgon
On the subject of lawyers, which my hon. Friend the Member for Bassetlaw mentioned, I have been thinking about what the Minister said earlier. He said that to say that fees were about treating courts as a profit centre showed—I think these were his words, as Hansard will show—“a complete misunderstanding” of the court system. If I remember correctly, the quote to which he was responding was from the Law Society. Is he saying that the Law Society has a complete misunderstanding of the court system?
Mr Vara
There are various stakeholders involved in this debate and there are a variety of views. I disagree with the views that have been put forward, and that is why these fees are being introduced. I simply say as far as fees are concerned—this applies to employment tribunal fees as well as all the other fees that are relevant to the order—that a remission process exists. Subject to meeting the right criteria, people can apply for remission of the fees.
The Government estimate that the measures in the order will generate about £6 million per annum in additional income, with every pound that is collected being spent on providing an efficient and effective courts and tribunals system. The purpose of these reforms is to increase fee income and so reduce the costs of the courts to the taxpayer, and to ensure that access to justice and to the Courts and Tribunals Service is protected. I commend the draft order to the Committee.
Question put.