Grand Committee
Haulage Permits and Trailer Registration Bill [HL]
Tuesday 13th March 2018
(6 years, 1 month ago)
Grand CommitteeRead Full debate Haulage Permits and Trailer Registration Act 2018 View all Haulage Permits and Trailer Registration Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 84-I(a) Amendments for Grand Committee, supplementary to the marshalled list (PDF, 61KB) - (12 Mar 2018)
The Deputy Chairman of Committees (Viscount Simon) (Lab)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Amendment 1
Lord Bassam of Brighton
“EU Community Licence arrangements
(1) It is an objective of the Government, in negotiating a withdrawal agreement from the EU, to seek continued UK participation in the EU’s Community Licence arrangements.(2) If the continued participation referred to in subsection (1) is achieved after the passing of this Act, no Minister of the Crown may make regulations under sections 1 to 5 or 23(2) of this Act.”
Lord Bassam of Brighton (Lab)
My Lords, you will have to bear with me; it is a while since I have had to do this.
I welcome the noble Baroness, Lady Sugg, to Grand Committee and hope that she enjoys it as much as we will. Amendment 1, in my name and that of the noble Baroness, Lady Randerson, is very simple. Its aim is to ensure that the Government have as a negotiating objective continuing participation in the EU Community licence arrangements. Those arrangements have served the UK well. One might argue that they have created a frictionless regime for borders, are easy to understand and largely ensure safe passage of UK goods across the EU 27 and from the EU into the UK.
The Minister should welcome the amendment because it is surely what the Government want to secure in their negotiations. To put it into the Bill would give the freight industry the sort of confidence that it requires and demonstrate beyond doubt that the Government are very much on the industry’s side. If anyone needed reminding of the importance of freight to our economy, they need go no further than read last night’s Hansard. I have had the benefit of reading it, and my noble friend Lord Berkeley, among others, was passionate in his arguments on behalf of the freight industry generally, but for our economy in particular, when he moved amendments on freight-related issues. In particular, his Amendment 104 to Clause 7 of the withdrawal Bill caught my eye. It has similar objectives to this amendment in the sense that any new procedures that we put in place should avoid increasing delays to freight transport. The only surefire way to achieve that is to continue the current scheme.
The volume of traffic between the UK and the EU is enormous. In 2016, as my noble friend Lord Berkeley reminded us, 67 million tonnes of unitised freight were imported or exported, of which 14 million tonnes were temperature-controlled. There are 3,000 trucks a day carrying temperature-controlled loads. In one year alone, 55 million UK customs declarations had to be made, and my noble friend says that this is likely to multiply fivefold after Brexit.
We want at all costs to avoid the queues we have seen when Operation Stack has had to kick in. That would kill our export trade and decimate our ability to move materials into the UK for industry and farming purposes. Seeking to emulate what we already have must be an objective of the Bill, and that is what my amendment achieves.
I look forward to the happy prospect of the Minister not just welcoming my amendment but agreeing to busily import it and incorporate it into the Bill. I cannot believe that the Government would want to create any doubt in anyone’s mind about their intention to be successful in their negotiations and to secure the self-same benefits for the road freight sector that we currently enjoy. I am sure that the FTA and RHA would welcome that certainty. I am confident that our farming industry would want it and that manufacturers, the pharmaceutical sector and, importantly, the construction industry would want it too.
It might be for the convenience of the Committee if I say just a few words about some of the other amendments in my name in this group. The noble Lord, Lord Tunnicliffe, and I have put our names to sunset provisions simply because, if the Government are successful, not only do the main provisions of the Bill cease to have relevance but we both feel that the clauses should cease to have a place on the statute book. These amendments are supported by the Delegated Powers Committee and the Constitution Committee; I draw colleagues’ attention to the Constitution Committee’s report that has just been published. I also support the amendment tabled by the noble Lord, Lord Berkeley, in the group. I beg to move.
Baroness Randerson (LD)
My Lords, I signed Amendment 1 because it drew attention to the fact that, yet again, we have an example of the Government trying desperately to devise a way to maintain a position that we already have. They are fighting to keep the benefits that we currently enjoy as members of the EU. Although the Government have been quite innovative in their approach—in so far as there is any detail—the situation will clearly not be anything like as good as what hauliers currently enjoy.
The formulation in the amendment is similar to that used in the Nuclear Safeguards Bill, for example, in which we urge the Government to pursue Euratom membership. The Minister will be familiar with my Private Member’s Bill on the open skies agreement; it is the same formulation. We have a perfectly good arrangement in the EU at the moment, which we will leave for something less satisfactory. This group of amendments ensures that the powers granted under the haulage permits Bill are not applicable if we stay within the EU’s Community licence regime—in other words, if we successfully negotiate to remain in some kind of positive relationship within the EU.
I draw attention to the very harsh words of the Delegated Powers and Regulatory Reform Committee on the Bill. They reflect the sort of thing that we have heard quite regularly recently, but they are rather stronger than we are used to:
“The Bill is wholly skeletal, more of a mission statement than legislation”.
The committee also points out that:
“16 of the 24 clauses contain delegated powers, all of them subject only to the negative procedure”.
We have not even got draft regulations in order to see what the Government are aiming at.
It is clear that the Bill was written in a panic at the very last minute. It is the first instance I have come across of the Government legislating while saying that they do not want to and admitting that they do not know how the system will work. That is not how British democracy should work. It is yet another example of the destructive impact of Brexit. Having admitted that they did not want to have to legislate in this way, the Government should have included in the Bill some sunset clauses or the use of only the affirmative procedure. As it stands, the Bill is not worthy of a democracy.
Lord Snape (Lab)
My Lords, I support the noble Lord and the noble Baroness in their amendment. Noble Lords will have to forgive me if I sound even less coherent than usual today. I am suffering from what everybody else would call a cold, but, being a man, I believe it is something far more serious. Nevertheless, I am still here.
I would have thought, as my noble friend implied, that the Government would be in favour of the proposed new clause. As the noble Baroness said, this is rather last-minute legislation. In a way, it is understandable, because we still do not know how far negotiations have gone where these matters are concerned. I promised myself not to make a Second Reading speech and will not, but I found it surprising during the Brexit discussion to find so many road hauliers in favour of Brexit because they were not happy with the status quo as it then was. Now, of course, they are a lot less happy at the prospect of a status quo no longer existing. The main concern, at least of those whom I spoke to, was about cabotage; there is little mention—in fact, I do not think there is any—of cabotage in the Bill, and it would be interesting to hear from the Minister whether any discussions which have taken place with the rest of the EU have concentrated on this aspect of the road haulage industry.
My noble friend and the noble Baroness mentioned the number of lorry movements from the United Kingdom to the rest of the EU; there are a hell of a lot coming the other way—I understand about three times as many. We have expressed concern about the likelihood of Kent being a lorry park if no arrangements are made in light of this amendment, but if three times as many lorries are coming into the United Kingdom as leaving, it would be possible to imagine northern France also becoming a lorry park. That is not to say that I share the optimism of those who say that there will be an agreement because these matters cause even more dislocation to our European partners than they do the United Kingdom. Again, it is difficult to tease from the Government where exactly we are in the negotiations. We await the Minister’s response to this amendment. My view is that it might be something that the Government are happy to support. If she says that, at least we will have started the Committee off on a happy note, even if it is not repeated—although I hope it will be—during our deliberations. I support my noble friend and the noble Baroness and hope that the Minister can give a sympathetic response.
Lord Berkeley (Lab)
My Lords, I, too, support all the amendments in the group, and am grateful for the kind words said about me by my noble friend Lord Bassam of Brighton and our debate last night.
The noble Baroness may be right that there are many things wrong with this Bill, but it is a great deal better than nothing. It affects only drivers’ permits and trailers. Last night in the discussion on Amendment 104, we discussed many other issues relating to cross-channel and cross-frontier freight and all the customs issues that went with them. As I think I said last night, it would be good if we had had a separate Bill for that so that we might have gone into the detail, but here we are. We had a very good Second Reading debate. My worry, which is contained in Amendment 7 in my name, is that when we discussed at Second Reading Clause 2, which is to do with the number and allocation of permits, it seemed to become quite confusing. One noble Lord—I cannot remember who—warned against the “random selection” in Clause 2(2) because it was greatly open to abuse. Perhaps that should be removed.
Lord Blencathra (Con)
My Lords, I support Amendments 6 and 11 in this group in the name of the noble Lord, Lord Tunnicliffe. I do so in my capacity as chairman of the Delegated Powers and Regulatory Reform Committee.
The first thing I need to say to the noble Baroness, Lady Randerson, is that it is a bit unfair to characterise my committee’s report as having “very harsh words”. The noble Lords, Lord Tyler, Lord Thomas of Gresford, Lord Thurlow and Lord Lisvane, and my noble friend Lord Moynihan do not do harsh. Further, if one looks at my committee’s report, one will see that we have made five recommendations, two of which say that it would be nice to have a sifting committee and two of which say that we should have a sunset clause, as proposed in Amendments 6 and 11. The first recommendation suggests that it would have been helpful if the Government had given us some examples of the type of regulations necessary. If those are “harsh words”, I think the noble Baroness is living in cloud-cuckoo-land, if I may say so.
Baroness Randerson
Can I clarify that? Having used the term “harsh”, I then used the precise words that are in the report. Anyone reading these proceedings will be absolutely clear that my definition of “harsh” is based on the words used in the report. It might be in the eyes of the reader rather than the reality of the situation.
Lord Blencathra
I thank the noble Baroness. Our report does say:
“The Bill is wholly skeletal, more of a mission statement than legislation”.
It goes on to say in paragraph 4 that:
“We appreciate that the position remains unclear for a variety of reasons”,
which explains why we think the Bill is skeletal. I hope my noble friend the Minister can give us a few examples of the sort of regulations that may be necessary.
On Amendments 6 and 11, the Government’s helpful Explanatory Memorandum says that:
“The power has been left to delegated legislation rather than included in the Bill because the terms of international road transport agreements are as yet unknown. The provisions put in place, if any provisions are needed at all, will reflect the terms agreed between the UK and the EU or other countries for the carriage of goods”.
The wording in the Explanatory Memorandum is almost identical on Clauses 1 and 3, to which these amendments relate. That is why we simply say in our committee’s report:
“Given that regulations under clause 1”—
and Clause 3—
“might prove to be unnecessary, we recommend that the Bill should contain a sunset provision, extendable if necessary, to remove the regulation-making power in clause 1 if it does in fact prove to be unnecessary”.
I congratulate the noble Lord, Lord Tunnicliffe, on tabling that amendment on behalf of my committee. I had been a bit negligent in putting it down myself, so I am grateful to him and I would be grateful if the Minister, in due course, could respond to the points made.
Earl Attlee (Con)
My Lords, regarding Amendment 1 in the name of the noble Lord, Lord Bassam, I do not think we should tie the hands of government. If we set something in stone in primary legislation, it will be to our disadvantage and our opponents’ advantage. However, I very much hope that the negotiations will result in the absolute minimum of friction, for the reasons so well explained by all noble Lords who have spoken so far. The noble Baroness, Lady Randerson, observed that there are no draft regulations in sight and that this is a framework Bill. That is not surprising, because we do not know what the negotiated agreement will look like. However, the Committee will be aware that if the Bill is passed, it will strengthen the Government’s negotiating hand.
The noble Lord, Lord Berkeley, raises an important point in his Amendment 7. I would like to see no restrictions on permits—more or less free issue—with one exception, which I am sure he will agree with. Is there any scope for denying permits to non-compliant operators if they are in trouble with the traffic commissioners or the Vehicle Inspectorate? I do not expect an answer from my noble friend the Minister this afternoon but perhaps she could write to me in due course. As I say, I am for no quantity restrictions but I do not think we should put this into the Bill because it would tie the hands of Ministers when they are negotiating Brexit.
Lord Berkeley
I understand the noble Earl’s comment in suggesting that Amendment 7 may not be a good thing to put into the Bill. But he will remember that when this was debated at Second Reading, there was much discussion of the allocation of permits. Does he not agree that there needs to be some wording to ensure that the allocation, if it has to happen—I share his views that it should not and that there should be enough for everyone—should be seen to be fair? Perhaps he has some other ideas to replace my proposed new clause in Amendment 7.
Earl Attlee
I assure the Committee that I will not be tabling amendments but I was alarmed by some of the history of permits that we looked at during Second Reading. That is something I do not want to see because it constrains the market and competition. I would much rather see permits issued more or less freely, with that one exception: that we could see it as an opportunity to make things more difficult for non-compliant operators.
Lord Campbell-Savours (Lab)
My Lords, I might be the only person in the Room who has run on one of these permits, which was some 50 years ago. I have some permit documentation, going back 30 years, in front of me now. I want to talk about what happened then and what we should avoid happening in the future.
We were carrying our own goods, exporting them and importing components. When we were exporting goods, we had to run on either non-quota or quota—non-quota was a defined group of products that we carried if we were going to an exhibition. For example, I remember going to a clock exhibition in Switzerland, and we had to get a non-quota to carry to Basle there. If we showed at the Paris Porte de Versailles in France, again we would run on non-quota permits but if we were running goods of our own manufacture, we would have to carry a permit. The undersupply of permits was a real problem.
The Minister sent us out a letter during the week in which she talked about electronic management of these systems. To some extent, that might work but I will come to a problem that might arise. The problem in the late 1960s and 1970s, when I was involved in this business, was that there were a lot of forgeries out there. Many truckers who could not get permits would forge them and, when they got to customs frontiers in Europe, bribe customs officers to get passage into another country. As I said at Second Reading, I saw this happen myself. I remember that the customs officer would almost wink and people would drop notes in an old jar standing on the counter. People knew what was going on and it was widespread. I never got involved in it myself, but I observed it. People used to get quite angry about the attitude of some customs officers. They would ask you to open the back of your truck to see what you were carrying, as if they were checking against the bills of lading—the document which indicated what goods you were carrying—as if they were to be given a tip for the pleasure of having your truck opened. It was examined, not properly but in a very curious way, with nods and winks. That went on a lot and I am worried about it.
That was one of the abuses. The next one—it was not even an abuse, as people just turned a blind eye to it—was the selling of permits. Some companies had more permits than they needed whereas others were starved of them. Someone told me on the phone the other day that the going rate, even in the 1980s, was something like £250 for a permit, depending on where you were. When they were carrying expensive goods that was a minor cost to pay, because it was transferred on to the people whose goods they were. If there is electronic control, the chances of abuse in that form are very remote.
We come back to the number of permits. If there is a shortage—and the French, the Dutch and the Belgians may argue for one—it will mean that when you load your truck in the UK you will have to drop your load at Antwerp, Amsterdam, Ostend, Zeebrugge, Calais or wherever. A French lorry will come and pick it up and get the business. At the moment, many British hauliers are able to carry right across Europe. If we do not have the permits to run in Europe, the Europeans will get the trade and all our lorries will be doing is running them across the channel, dropping them, then taking the tractor unit home. In the real world, there could be many problems. I know that this is a skeletal Bill and it may not even happen, but if it does there is going to be a lot of trouble and people are going to be angry.
Lord Snape
I do not doubt the situation outlined by my noble friend, but will it not be to the advantage of British hauliers, to a certain extent, if the system applies the other way around? If there are three times more lorries coming to the UK than going from the UK to Europe, will the British road haulage industry not benefit enormously? Judging by what he said, loads coming from the EU will have to be dropped in Dover or wherever.
Lord Campbell-Savours
I do not know. That may well be, but I want a straightforward system. I want the number of permits to be sufficient to meet the demand and not have to fiddle around with whether we reciprocate or not. I want to avoid all that.
Finally, I turn to what the permits are. In the old days, we had quota and non-quota permits. If we get ourselves into trouble in this area of negotiation, we should try and widen the description of non-quota. Earlier in my contribution, I referred to non-quota covering exhibition goods—which is what we ran. Because the rules are set so tightly if we have to go down this route, we might well be able to widen the description of non-quota to cover what would otherwise come under quota. I do not know if the Minister is with me on that. That is because the regime for non-quota permits is different from the quota regime. On the quota regime there will be a lot more restriction, because non-quota permits are not as frequently used so, if we widen the non-quota permit arrangements, some of that trade may well be transferred over to non-quota. I am sorry if I have not made that altogether clear, but I am sure that in time it will ring correct.
Lord Moynihan (Con)
My Lords, I declare an interest as a member of the Delegated Powers and Regulatory Reform Committee. I will speak to Amendments 6 and 11. However, before I do, maybe I will be allowed to allay the shock of the noble Lord, Lord Snape, who looks at me aghast at the fact that I am not at Cheltenham today, supporting, as I always do, matters sporting. There is a related sporting issue that is relevant here. Thoroughbred racing and breeding is a truly international industry, with significant routes in Europe, and a key element of the success of Cheltenham, and indeed the whole of the thoroughbred, racing and breeding industry, is the current tripartite agreement—the TPA—between the UK, France and Ireland, which facilitates 25,000 movements annually between the three countries for racing, breeding and sales purposes. It is very important that that is kept in place and that we look, for example, at electronic passports in the future to protect that industry.
Lord Snape
I never doubted for a moment, knowing the noble Lord as long as I have, that if it came to a choice between duty and Cheltenham, duty would obviously be first choice.
Lord Moynihan
I pass swiftly on from the observation of the noble Lord, Lord Snape, but I am sad that I am not in Cheltenham today—and, indeed, that I will not be there tomorrow, because I will be speaking on matters sporting, and racing issues in particular, in the Brexit debate on the relevant amendment.
I support the comments that have been made by my chairman of the Delegated Powers and Regulatory Reform Committee in the context of Amendments 6 and 11. Bills that grant wide powers to Ministers on the basis of no clear policy are difficult to scrutinise, as the Constitution Committee highlighted, and therefore present a fundamental challenge to the balance of power between Parliament and the Executive. Much of the detail of how these regimes are to be put in place is left to secondary legislation. In the absence of policy detail or the illustrative regulations—examples that my noble friend mentioned earlier—it is not at all clear to me how these powers will be used or whether they will be used. That is what led to what I believe—I speak in a personal capacity—was a constructive comment when we said that it was,
“more of a mission statement than legislation”.
I therefore hope that where there are exceptional circumstances, which in this case require the creation of criminal offences by regulations, they should normally be subject to the affirmative procedure. What can support that specifically in the context of Amendments 6 and 11 is the inclusion of sunset clauses, which would mitigate the constitutional concerns raised by the broad powers in the Bill and the uncertainty about how they might be used. That is an important constitutional issue; it is interesting that that was covered in some detail both by the Constitution Committee and the committee on which I have the privilege to sit, both of which were at one. I ask the Minister to take those into account seriously as we progress through the Bill, to make sure that there is an appropriate balance between the Executive and the legislature so that we have the opportunity in the future to have a rather more detailed look, both through sunset clauses and the affirmative procedure, at some of the key aspects of the Bill.
Earl Attlee
Supposing that the Government lay some negative instruments to deal with the outcome of the negotiations, and that they are extremely disadvantageous to our road haulage industry, it would be open to the road haulage industry to get on to noble Lords like myself and the noble Lords, Lord Berkeley, Lord Snape and Lord Campbell-Savours, who could pray against the negative instrument in the first 40 days and say no to it.
Lord Campbell-Savours
My Lords, I want to correct the record on something. I said that we ran on quota permits but we ran on non-quota permits. I just checked my notes.
Lord Tunnicliffe (Lab)
My Lords, I did not read Hansard for last night’s debate; I was there. There is no doubt about the extent of the concern expressed by Committee Members last night about permits and trade and the impact on society. I therefore support Amendment 1. Having been a negotiator, I was alerted to the concern of the noble Earl, Lord Attlee, so I looked at what it said—that:
“It is an objective of the Government, in negotiating a withdrawal agreement from the EU, to seek continued UK participation in the EU’s Community Licence arrangements”.
I have to say, as negotiating briefs go, I have rarely seen one less prescriptive. It simply expresses a direction of travel and, broadly speaking, I support it. Similarly, I support Amendment 7, which once again gives more guidance than anything seriously prescriptive from a negotiator’s point of view.
I am grateful to read the report of the Delegated Powers and Regulatory Reform Committee. I think we have an amendment for every recommendation but I will check that before the next sitting. It would be easier if we had correspondence and the Government gave in in advance. We have here what one might call a contingency Bill—that is, a Bill to create an Act of Parliament against a contingency. All the committee is saying is that it is wrong to leave powers lying about. That relates specifically to Clauses 1 and 3. On Clause 1, the report states:
“Given that regulations under clause 1 might prove to be unnecessary, we recommend that the Bill should contain a sunset provision, extendable if necessary, to remove the regulation-making power in clause 1 if it does in fact prove to be unnecessary”.
In almost identical terms, Amendment 11 refers to Clause 3. In examining Clause 2, we could not see any reason why the same logic should not apply, so we have also proposed Amendment 10, which refers to Clause 2.
The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)
My Lords, I thank all noble Lords for their contributions. The proposed amendments would enshrine in the Bill an objective in negotiating the EU withdrawal agreement and, should a certain agreement be reached, Clauses 1 to 3 would cease to have an effect.
I will speak first to the amendment in the name of the noble Lord, Lord Bassam, and the noble Baroness, Lady Randerson, which seeks continued recognition of Community licences issued by the UK in the negotiations. As I outlined on Second Reading, the Government’s objective is to maintain the existing liberalised access for UK hauliers. Road haulage is at the heart of the £110 billion of trade that takes place between the UK and the EU every year. We are confident of success in the negotiations, as the continued movement of goods is in the interests of both the UK and the EU.
As noble Lords have pointed out, access is currently secured through participation in the Community licence arrangements. Outside the EU, only EEA members are currently party to the Community licence system. Although continued participation in the Community licence arrangements could be one outcome, the best way to secure mutual recognition and continued access for our hauliers will be through negotiations. I am afraid I must disappoint the noble Lord, Lord Bassam, in saying that we do not feel it would be right, or beneficial to our negotiations, to place any negotiation objectives in the legislation. As my noble friend Lord Attlee said, that would tie our hands.
The Government will take all reasonable steps to see that there are no restrictions on the movement of goods. This can take many forms, including the Community licence, mutual recognition of the operator licence or a permit-based agreement. Many international agreements that are permit-based do not restrict the numbers of permits exchanged; indeed, some of our existing agreements do not require permits at all, including our agreement with Turkey. As I said, our aim is to continue the liberalised access we enjoy today.
Lord Bassam of Brighton
Will the Minister pause for a moment? The noble Earl, Lord Attlee, said that Amendment 1 would set the objective in stone. It would not. As the noble Lord, Lord Tunnicliffe, said, it simply says that an objective of our negotiations should be essentially to retain what we currently have. What is wrong with trying to do that? How does it tie the Government’s hands? I cannot see that it ties their hands at all. The amendment simply says that that should be an objective. If it is only an objective, what do the Government feel binds them in any way?
Earl Attlee
My Lords, the answer to the noble Lord’s question is that I imagine that the noble Lord, Lord Pannick, would have no difficulty at all in convincing the courts that the matter was set in stone.
Lord Bassam of Brighton
I am not here to listen to the noble Lord, Lord Pannick, in his absence. I am keen to hear the Minister give her explanation, which is what the Committee needs.
Baroness Sugg
I will try my best, although I may not be as clear as the noble Lord, Lord Pannick. As I said, the existing Community arrangement is currently only for EU members and EEA members. When we leave the EU, we will not be either of those. What is suggested is one option, but there may well be an equally satisfactory option, such as an unlimited permit system or, as I said, mutual recognition of operators’ licences. We want to be able to keep those options open and not to be sent down the road of agreeing to the Community licence. There is no reason why a permit that replaces the Community licence could not provide the same level of access as exists currently. That could well be our negotiation objective.
On the amendment in the name of the noble Lord, Lord Berkeley, I take the opportunity to reassure him that of course the Secretary of State will take all reasonable steps to meet the demand for permits from UK hauliers. We regularly meet industry to understand its requirements and priorities, which will be reflected in our detailed negotiations with the European Union. While the amendment would not tie our hands in the negotiation, I hope that what I have said gives the noble Lord confidence that it is not necessary to include this aim in the Bill.
Lord Campbell-Savours
I would like to press the question of how these will be allocated. Clause 2(2) says:
“The methods that may be specified under subsection (1)(d) include random selection and first come, first served”.
What does “random selection” mean? How can we randomly select? Is it like a lottery? What about “first come, first served”? Is it a postal arrangement? We need more detail. I do not like this sentence being in the Bill and I think that it should be removed. If you go into negotiations with that in the Bill and a civil servant in Europe reads it, I think that I would know what to do in those negotiations.
Baroness Sugg
I understand the noble Lord’s concern. Later, we will discuss Amendment 8, tabled by the noble Lord, Lord Tunnicliffe, which addresses these issues. There is an explanation and, with the noble Lord’s permission, we will address it then.
The amendments on a sunset clause suggest that, should recognition of Community licences be secured as part of our negotiations, Clauses 1 to 3 should cease to have effect. I understand the intention and I agree that we do not wish to create delegated powers if they are not going to be used at any point in the future in relation to EU exit, but I would like to set out why this Bill has a wider application than just to our road haulage access with the EU. It should also apply to the European Conference of Ministers of Transport multilateral permit scheme and our bilateral agreements with non-EU countries.
While these non-EU agreements have, until now, been dealt with under administrative powers, now that we are introducing this Bill we think that it is important that those agreements are brought in scope, so that there is compliance and consistency in the administration, allocation and enforcement of permits with whatever agreement we reach with the European Union. There would be problems with having different legislation covering similar permit schemes. We are keen to ensure that UK hauliers can use one online system to apply and get permits for the EU as well as non-EU countries, as that would reduce burdens on them.
Lord Bassam of Brighton
Do I understand the noble Baroness right? Is she seeking to incorporate the ECMT scheme within the parameters of the Community licence? Is that part of the objective of the negotiations?
Baroness Sugg
No, not exactly. If the outcome of the negotiations is a permit-based system, whether unlimited or whatever, yes, we would use this legislation for the allocation of other permits for ECMT and non-EU countries. As I said, that is to simplify the system, have everything in one place under the regulations and allow hauliers to have just one point of access. Beyond the first regulations made under this power, they would need to be updated and amended as our international agreements, whether they be with EU or non-EU countries, change over time. We would need to retain the ability to create regulations under the Bill.
Lord Campbell-Savours
Let us take the Mont Blanc or the Brenner Pass. A truck turns up with a permit which is handed over in the office. Will there be some sort of IT connection between that customs post on the Brenner with a central data point in the United Kingdom, so that it can check whether it is a valid or a forged permit? If so, we do not need particularly sophisticated documentation, because all along the line there will be an IT check on what is seen abroad. Can the Minister give us that assurance?
Baroness Sugg
I understand the noble Lord’s point. Sadly, I cannot speak for what will happen in the EU until we have concluded the negotiations. Within the UK, that is absolutely the idea: there would be a system to check on these permits. The noble Lord makes a very good point: we will seek to minimise corruption in future, but that will be subject to negotiations.
Lord Berkeley
On the issue of fraud, I have come across people involved in the delivery of trucks. There appears to be a way you can avoid being limited in your hours by the tachograph because it does not stay with the person, it stays with the truck. That has probably been the case for 20 or 30 years. What have we learned from that and how will we prevent the same thing happening in future with these licences that my noble friend has spoken about?
Baroness Sugg
Absolutely. I agree with the noble Lord that that has happened in the past. We are working with the DVSA on how to better enforce compliance, on both this and future licensing systems, and we will continue to do so.
My noble friend Lord Moynihan mentioned the tripartite agreement between the UK, France and Ireland. We have been looking at how best to ensure that the racing industry is not affected by this Bill and is protected. However, I will take away what he said and will look at it.
Lord Campbell-Savours
Can I ask another question? I am sorry to keep coming back, but I will try to get all my questions out of the way at the beginning. What about the transfer of permits? Will there be some sort of mechanism to ensure that one haulier cannot sell a permit to another haulier? Perhaps we could have that assurance.
Baroness Sugg
I am afraid that until we know the exact system of the permits, we will not be able to give the noble Lord that assurance. Obviously, we need to avoid there being a false market for these permits. We will look at how permits are allocated and if they are limited in any way, which we hope they will not be, we will certainly consider how to avoid that. Again, the allocation system should make sure that additional permits are not allocated to people who are not using them. It is certainly something we will consider.
I hope I have addressed the need for this legislation, regardless of the agreement reached with the EU. I understand the sentiments of noble Lords in proposing these amendments and welcome the discussion it has enabled. However, as I said, we do not believe that the Community licence system is the only way to proceed and therefore do not think the Bill is an appropriate place to set out that negotiation objective. On that basis, I ask the noble Lord to withdraw his amendment.
Lord Bassam of Brighton
My Lords, it is the tradition in Grand Committee to agree to withdraw amendments, and I shall shortly do so. However, I am disappointed with the Minister’s response. I thought I gave her a rather generous invitation to accept Amendment 1.
There is something I find more puzzling still. Over the weekend I extended my reading to take in the international road freight permits policy scoping document. While it does not give us a lot more information, paragraph 1.6 says that the Bill is intended to support the Government’s aim of continuing the liberal access for commercial transport to the EU. It goes on to say that the importance of keeping essential trade flowing is recognised by the EU and is strongly in the mutual interest of both sides, and the industry is therefore confident that a deal will be secured to ensure that essential trade flows will continue without any restriction on access.
I take the argument that this is an opportunity for the Government to look at other ways in which haulage could be permitted, not just in the EU but more widely. I welcome the observation made by the Minister about the way in which they are going to try to simplify the permit scheme and, it seemed to me, bring schemes together to look for a simple way forward in the future. The beauty of the Community licence approach is that it is very simple. Once the primary point has been satisfied and you get the standard international operator’s licence in place, things flow from that. Therefore, I do not think that it is too big an ask to try to have that as an objective in the negotiations.
I will obviously undertake to read what the Minister has said in her reply, but I think it likely that I shall want to bring back this amendment, or one very similar, at Report. I do not think we have heard enough from her to persuade me otherwise, hard though she has tried this afternoon. Our haulage industry requires a bit more certainty and a sense of the Government’s direction of travel, what they have in mind and what their objective is.
If I have one fundamental objection to the Bill, it is that it is only a framework and is entirely skeletal. That much is very clear, not least from the reports that have been prepared by the Constitution Committee and the DPRRC. It is not a very satisfactory Bill, because we will end up having something skeletal as a contingency—that is what this Bill is. If we have to press the button and make it go live—to make it work and make it govern the way in which haulage operates as an industry—the Government will end up having to colour in a lot of the blanks that the Bill leaves, and will have to take rather urgent action to do that at a time when most of us, not least the industry itself, will be worrying about issues relating to Brexit.
I am grateful to the Minister for her response and to the noble Earl, Lord Attlee, for his help in attempting to clarify things for her. I am grateful for the support I have had this afternoon for Amendment 1, across the Committee. I therefore beg leave to withdraw the amendment.
Lord Berkeley
Lord Berkeley
My Lords, Amendments 2, 4 and 5 in my name come from a question I have about Clause 1: why do drivers transporting goods to Northern Ireland get singled out? We know that the Republic is going to remain in the single market and that Northern Ireland is not. I see no difference between the requirements for a permit, or anything else, for drivers going between Northern Ireland and the Republic, between Northern Ireland and the UK—I assume that there is no need for a special licence between Northern Ireland and the UK—and between Northern Ireland and continental Europe. There is an added complexity to the licensing system which is not justified. What is the difference between drivers in Northern Ireland and those in other parts of the UK going to other parts of the European Union? Finding that out is the purpose of these three amendments. I beg to move.
Baroness Randerson
My Lords, Amendment 3 in my name also deals with Northern Ireland. It is a probing amendment, seeking an explanation from the Minister. Following an “international agreement”, Clause 3 allows the creation of regulations prohibiting an operator of a goods vehicle using it in specified circumstances. This creates obvious problems for the Irish border. If an international agreement were able to prohibit the travel of goods between Northern Ireland and the Republic of Ireland, this could lead to a diminishing sense of the common identity that has developed in the years following the Good Friday agreement. It also presents a practical problem, as the avoidance of a hard border between Northern Ireland and the Republic would not be possible. We all know that the Prime Minister has repeatedly said that she wishes to avoid a hard border, but you are going to have a problem delivering that if checks are needed on the border. Whether the operator can cross the border or not, it is the checks that are the issue.
The Bill suggests that there is a sensitivity about travel between Northern Ireland and the Republic. Our amendment simply strengthens that reference. We obviously do not want to imply that there should be checks between Northern Ireland and the rest of the UK—quite the contrary. I therefore want to emphasise that the amendment is to investigate how this provision would work and in what circumstances the Government anticipate that they might have to use it. It would obviously be a lot easier for everyone if we kept to the current arrangements.
Lord Snape
My Lords, like my noble friend Lord Berkeley, I am confused about the continual references to Northern Ireland in the Bill before the Committee. Bearing in mind the years of the Troubles in Northern Ireland, is there some specific reason why the Government are—“harping on” would be the wrong phrase to use—continually mentioning Northern Ireland in the Bill?
We need to seek some clarity from the Minister about the permits as well. What information does she envisage appearing on the permit? Will the permit be in the name of the driver, the vehicle or the company? Will it be for a specific journey or a period of time? Again, following my noble friend’s amendment, why are there specific references to Northern Ireland? It is and will remain part of the United Kingdom; I do not envy those in the negotiations that will take place between the Government and the Democratic Unionist Party but, for the moment, we have to say that Northern Ireland is part of the United Kingdom. Whatever amendments we pass to the Bill will therefore apply equally in all parts of the United Kingdom. Perhaps the Minister can help us where the permit system is concerned. Will there be a difference in the permits for Northern Ireland, and exactly what information do the Government envisage setting out on those permits before they are issued?
Lord Tunnicliffe
My Lords, in speaking to the amendments in this group, I admit that to a fair degree I am not sure what the Bill says about Northern Ireland. I am not entirely sure what it will say about Northern Ireland, with or without these amendments. One thing I know about Northern Ireland is that before you say anything about it, you have to consult a lot of people to make sure you get it right. Accordingly, all I will say is that our position is to support the Good Friday agreement. We will examine what has been said so far and what the Minister says before determining our position on this group.
Baroness Sugg
My Lords, I thank the noble Lord, Lord Berkeley, and the noble Baroness, Lady Randerson, for tabling these amendments and allowing a discussion on the important issue of haulage between Northern Ireland and Ireland. I take this opportunity to reiterate that this Bill does not create a permit regime or hard border on the island of Ireland. Clarity about this issue is of great importance, given the Government’s commitment to having no physical infrastructure or related checks and controls. We must preserve north-south co-operation, of which transport is a priority area for the North/South Ministerial Council, established under the Good Friday agreement.
The regulations brought forward under the Bill may prohibit a goods vehicle from undertaking an international journey to a country outside the UK, unless they have a permit, where an international agreement has been concluded requiring permits to be carried. In relation to Ireland, we have included an additional requirement that the Secretary of State must certify that the Government of Ireland have consented to the use of permits on journeys on the island of Ireland before this comes into force. This has been included to recognise and respect the long history of co-operation with regards to transport on the island of Ireland; the Government believe it is an important addition to the Bill.
Clause 1 is drafted to make it explicitly clear that regulations requiring permits for journeys on the island of Ireland will not be introduced without that clear agreement; we have singled it out because of the importance of ensuring that there is no hard border.
Lord Bassam of Brighton
Just to clarify, if the agreement reached with either the EU or the Government in Ireland was such that they consented to a permit regime being introduced for haulage through Ireland, does that not envisage a situation where there might be a hard border?
Baroness Sugg
The clause as drafted ensures that there has to be a direct agreement between the UK Government and the Government of Ireland before any such scheme is introduced. It aims to avoid exactly that.
Lord Berkeley
Does not the question of requiring the Government of Ireland to consent to the use of permits apply to the whole European Union? In other words, are we allowed to use these permits unless the EU accepts them as a valid document? Does that not apply equally to the rest of the EU, not just Ireland?
Baroness Sugg
The permits would need to be recognised by the EU to be used. As I said, this is an extra clause to ensure that we can also have a separate agreement between the Government of Ireland and the Government of the United Kingdom before anything is put in place.
Lord Bassam of Brighton
Picking up on my noble friend Lord Berkeley’s point, does that mean that there has already been some negotiation between our Government and the EU on the possibility, or prospect, of a permit scheme having to be put in place? Are the negotiators aware that this contingency legislation has been drafted and do they see it as a practical way forward, with all other considerations put aside?
Baroness Sugg
As noble Lords will be aware, there have been many conversations between the EU and the UK on Northern Ireland and the island of Ireland. Obviously, that was addressed in the December agreement. I am afraid that I am unable to tell the noble Lord, Lord Bassam—despite consulting widely, as the noble Lord, Lord Tunnicliffe, said—whether this specific piece of legislation has been discussed with the EU in detail. I will find that out and write to him. The example we have given in Clause 1 is an attempt to provide clarity on how the prohibition of using a goods vehicle without a permit in regulations may be limited, so it does not apply to journeys on the island of Ireland. It is designed to show that there is flexibility to agree something different on the island of Ireland, which is why we believe it is important to include an illustrative example.
Moving on to the amendment in the name of the noble Baroness, Lady Randerson, the Bill allows for a range of outcomes while also meeting our commitments on north/south co-operation as set out in the joint report. We do not think that the amendment as it stands will allow us that same flexibility. As we have not yet agreed the arrangements for haulage for when we leave the EU, we want to keep that flexibility to ensure that any agreement can be implemented. The Bill does not give the UK Government the power to restrict the number of trucks crossing the Irish border; it gives us the power only to implement any new cross-border arrangements that are agreed directly with the Republic of Ireland. As I say, both the UK and Irish Governments have made clear their commitment to avoiding a hard border and preserving cross-border co-operation in any scenario. There is no question of either Government agreeing to such restrictions on cross-border haulage.
On the question asked by the noble Lord, Lord Snape, on permits and what they will show, obviously we are consulting carefully on that, but we expect it to be the name of the company—as opposed to the truck—its validity and its unique number, which is similar to what we have on the Community licence.
Lord Snape
Would that permit be worded in exactly the same way if the journey originates in Northern Ireland?
Baroness Sugg
We expect that the permits would be the same; it is just that the agreement on how the permit system is enacted would be made only if it was subject to a direct and separate agreement between the Government of the UK and the Government of Ireland.
Lord Bassam of Brighton
Would a company based in Ireland but travelling through the UK require a permit?
Baroness Sugg
If its journey would then go on to the European Union, yes, it would. However, if it was going just to the UK, that would fall under the agreement.
I understand that these amendments are designed to ensure that there are no new restrictions and to get clarity on the issue of the island of Ireland. We are committed to this goal and believe the current drafting of the Bill has that intention; as the noble Lord, Lord Tunnicliffe, highlighted, it has been extensively consulted on. However, I will take noble Lords’ comments on this—
Lord Bassam of Brighton
I am sorry about this but on the permits from within Ireland that means a company based in Dublin, for example, would require a UK government permit to travel through the UK to go to the rest of Europe and beyond. Have we consulted with the Irish Government on that issue? It seems an important consultation to undertake. What if they are not happy for us to have a permit scheme which will apply to companies based in Ireland? I do not know how many of those there are; possibly not that many, although I am sure there are a sufficient number to be a burden on their businesses. Have they actively considered that?
Lord Berkeley
Before the Minister responds, I will widen the question a little. My noble friend mentioned the example of a lorry starting in Dublin and going through the UK to the continent, and asked whether it needs a permit. That is why I tabled Amendment 14B, which we shall come on to in due course, to ask whether foreign trucks need a permit to enter the UK. Surely it does not make any difference whether it is delivering from Dublin to the UK or going through the UK to deliver to Paris, as it still needs the same licence. Is my assumption correct?
Baroness Sugg
The noble Lord is correct. We will move on to discuss cabotage, which is an incredibly important issue, whether it be for Republic of Ireland hauliers or UK hauliers. We continue to work with industry to understand its needs. We have spoken to those within the island of Ireland and to a certain extent those in the EU about the Bill. As I said, the exact arrangement on cabotage will be subject to negotiation, so I cannot provide a precise answer at this stage on exactly what that truck from the Republic of Ireland travelling to the UK and on to France will need, because it will depend on the outcome of the negotiations.
As I said, the clause is an attempt to provide clarity on the issue around the island of Ireland. I will take away noble Lords’ comments, consider them carefully and look again at the wording. The reason for this provision is to single out a potential issue and provide reassurance that there will be no hard border in Northern Ireland. Noble Lords may not agree that it does that, so I will take it away and look at it in detail. But for now, I ask the noble Lord to withdraw his amendment.
Lord Berkeley
I am grateful to the Minister for some pretty long and detailed explanations. I can see the political need for something like this. On the other hand, when one sees what has been going on in the last six months, where the Irish Government have clearly allowed the European Commission—probably quite rightly—to do all their negotiations for it as just another member state, that gives cause for reflection. I shall reflect with colleagues and, in the meantime, I beg leave to withdraw the amendment.
Lord Tunnicliffe
Lord Tunnicliffe
My Lords, I move Amendment 8 simply because I believe two things. First, we cannot contemplate a situation where there are not enough permits. If we have a permit system, we must negotiate a position where there are sufficient. That is the principal reason for my moving the amendment: to emphasise that point, to allow people to speak to it and for some of the passion of last night to come through on the back of it.
If there is a limit, it is unthinkable that it should be a matter of random allocation or “first come, first served”. How do you build the future of your business, which is to a degree capital intensive, while depending on employing staff to line up at some government office with sleeping bags to sleep overnight to be first in the queue as if it is Wimbledon, or plan your investments on the basis of how their names might come out of some hat? First, we should not contemplate a limit on the number of permits; secondly, I cannot believe that these words were put in a Bill, as it cannot be a serious suggestion to this extraordinarily important industry that it would be required to behave like that to carry on trading. I beg to move.
Earl Attlee
My Lords, I support the initial comments of the noble Lord, Lord Tunnicliffe. It would be a disaster if we had to regulate the issue of permits in the way provided for, but I hope that the Minister can reassure us that we will take all necessary steps to avoid such a situation. However, I think that it is a sensible provision in a Bill as a backstop, while recognising that it would be terrible in the way if we found ourselves in such a situation as the noble Lord described.
Lord Bassam of Brighton
My Lords, I support my noble friend Lord Tunnicliffe on this. Pretty much every year, I try to get tickets to go to Glastonbury. You go on the website at 9 am and are still there at 10.30 am, and you suddenly discover that your youngest daughter has got tickets but you have not. There is something clearly wrong about a system that does that in my family, let alone anywhere else. The notion that we might have some random process—first come, first served or whatever—is clearly something that we should not allow ourselves to sign up to.
I want to hear on the record some reassuring words from the Minister. This may be a vague Bill, a schematic Bill, a framework Bill and all the rest, but this matter needs some clarification.
Lord Campbell-Savours
My Lords, “first come, first served” implies immediately a limited number of permits, a shortage of permits and problems in the industry. I want to read the general conditions from one such permit issued nearly 35 years ago, which civil servants may find useful during the negotiations. It is quite short, but raises a number of issues. Under “General Conditions”, it states:
“This authorisation, together with the journey record mentioned below, must be carried on the vehicle and be produced at the request of any authorised inspecting officer. It authorises only the number of journeys indicated. It is not valid for national transport. It is not transferable. The carrier is required to comply, in the territory of each Member State, with the laws, regulations and administrative provisions of that State, and in particular with those concerning transport and traffic. This authorisation must be returned to the issuing agency within fifteen days of date of expiry. Before each transport operation, the holder of this authorisation is required to prepare any journey record provided for in bilateral agreements. Such journey record must be returned at the same time as this authorisation”.
So it is a fairly complicated process for the hauliers.
If it is not used within 15 days of the date of expiry, it is returned, but that permit has already been allocated to a specific journey—if that is what it says in the terms and conditions. Is that permit then written off? Does it affect the total number or permits that are allocated, or can we simply allocate a substitute permit, having declared that permit to be written off? I am asking this because, if a limited number of permits are allocated, there is going to be some argument about where they are going. I am trying to establish how we calculate the total numbers that are allocated.
I have been thinking about the earlier intervention by my noble friend Lord Snape. He talked about it being of benefit, in certain circumstances, to our haulage industry. There is a problem there, because we want to avoid that. If we are going into these negotiations on the basis that we want enough permits to supply all the demand, the last thing we want to do is starve the Irish of permits. If they need them, they should be given them, because that helps our case in the negotiations with the European Union.
Baroness Randerson
In her reply, will the Minister clarify exactly what these permits will be? The background briefing that her department issued referred to single-journey permits and multiple-journey permits. It referred to the European Conference of Ministers of Transport permit system. Having researched this, I believe that the number of permits available under that system would be absolutely tiny. Where are these permits going to come from? What is going to regulate them? Are we going to dream it up ourselves or base it on the international system? We need a bit of clarity on this.
Baroness Sugg
My Lords, I thank noble Lords again for their contributions to this debate. I assure noble Lords that this provision is not intended to allow these methods to be the only approach used, or for these to be used without the use of other criteria. We are in the process of negotiating with the EU on how UK hauliers will operate in the EU 27 after our withdrawal. As I said, we are confident we will secure an agreement which allows them to operate without restrictions on market access. If we do agree a permit system, “no restrictions” would mean unlimited permits. The exact nature of what will be in the permits will be down to the international agreement with the EU. We do not have details of that yet, but I imagine that it would follow the international information which is included on them. I will take back the point made by the noble Lord, Lord Campbell-Savours. I will look in detail in Hansard about what the exact restrictions on that permit are. I am not sure that we would repeat them in a future system.
In including this, we are attempting to be prudent in ensuring that the industry would be able to continue to operate under a range of different outcomes. It may be that, depending on our future partnership agreement, in some circumstances, the demand for permits may exceed the available number. As I said, that is not the aim of negotiations or what we are hoping for, but we have a duty to plan for that, as a contingency.
One of those outcomes could see the permit scheme we agree involving a set quota of permits. The Bill allows us to set criteria to allocate those permits, should we need to. The detail of the criteria will be setout in regulations and guidance. We have set out some examples in the scoping documents. In such a case, criteria such as the economic benefit the permit would bring would be reflected. Of course, a more sensible way of allocating permits would be the best outcome. However, if the use of those criteria—set out in the regulations—was not sufficient to balance demand versus supply, we may need to apply a further method such as random allocation to decide between applicants. For example, if we were able to clearly allocate 90% of applications because of the economic case, we could then use a first come, first served basis or random allocation to allocate the other 10%. As I said, and as noble Lords have made clear, we want to avoid a system with a limited number of permits, but we need the ability to allocate them should we find ourselves in the unfortunate situation of their being limited.
Baroness Sugg
I was coming on to that. It might be appropriate and fairer to combine a number of criteria and approaches to different types of permits. For many of our current permit schemes with third-party countries, such as Morocco and Ukraine, the number of permits is significantly greater than the take-up and this is not expected to change. In these circumstances, the optimal approach is first come, first served, which we use at the moment.
It would of course still be possible for the Government to bring forward a proposal to use these specific approaches for the EU by putting them in regulations alongside other criteria and methods. As I said, we discussed that further in the policy scoping note.
Lord Campbell-Savours
I am sorry. The transmission on the audio equipment was very bad when you were answering the question I asked. It was impossible to hear because the audio went wrong, so I repeat my question: if that sentence were not in the Bill, would it make any difference? Why not just remove it?
Baroness Sugg
As I said, we may use that system for current non-EU agreements and agreements with third countries, which we discussed before. That is the system we currently use because we have an excess of permits to demand. That could be on a random basis or on a first come, first served basis.
Lord Bassam of Brighton
I am sorry. If we are in one of those desperate situations where there is a shortage of permits compared to what we need, retaining that subsection is extremely damaging because it means that, in most circumstances, we cannot allocate on a needs basis. I should have thought that there are certain things we need to import or export that have a high degree of priority. Having that clause drives a coach and horses through that, does it not?
Lord Campbell-Savours
Before the Minister answers, can I ask her to take this away and discuss it in the department? I think she may get different advice when there has been a full discussion.
Baroness Sugg
I absolutely agree that we will need to put criteria in place in the unfortunate situation of there not being enough permits to go round. Of course we would do that; I hope I explained earlier that this would give us the ability to allocate the remainder of the permits if those criteria could not fairly decide what the allocations should be.
I entirely understand that noble Lords are concerned that the methods of allocation appear somewhat arbitrary when viewed in isolation. The intention is that when we bring forward the regulations—which will have all the criteria set out in the policy scoping notes—the industry will see that there is an objective and equitable approach. The option of including these criteria as part of the approach is an important contingency.
Lord Bassam of Brighton
The thing about regulations is that they are unamendable. You either buy the package or you reject the lot. This provision does not terribly help, because it could end up contradicting the regulations. That is why my noble friend is suggesting that the Minister might want to take it away to give it a bit more thought. I am struggling to think of a set of circumstances where these two things will work.
Lord Campbell-Savours
Can I add to that intervention? I can give the Minister another criterion. What about regional considerations, which might well be in our favour?
Baroness Sugg
The reason we put these two methods in the Bill and left other criteria and approaches for the regulations is based on legal advice. Perhaps the Committee would allow me to set it out.
Although there is no specific reference to the exercise of discretion in the Bill, all regulation-making powers and the regulations state that the Secretary of State “may make provision”, which obviously involves the exercise of discretion. Decisions on the allocation of permits will involve an element of discretion in both setting the criteria and applying them to determine which operator gets a permit. Discretion in the Secretary of State’s decision must be in accordance with public law principles, so it must be lawful, rational and procedurally fair, and decisions may be challenged by way of judicial review where they do not comply with those principles.
To be clear that the Secretary of State is able in certain circumstances to allow the use of first come, first served or random allocation, they have been included in the Bill. Where the criteria set out in regulations and guidance are not sufficient to allocate all the permits, the Secretary of State is able to use that discretion to allocate permits on a first come, first served basis. It is best included in the Bill in accordance with public law principles.
I understand the noble Lord’s point. We have had extensive discussion on this. It is based on very clear legal advice that if we were not to include it, we could not use it at any point. Although we do not want to use it for the allocation of permits, because I entirely agree that that would not be fair, I will take it back and discuss it further with the legal team to clarify. I understand why it standing alone in the Bill causes concern.
Lord Berkeley
I am grateful to the Minister. While she is doing that, could she come up with some precedents where the first come, first served principle has been used and, if it is buying tickets for sporting events, or whatever, whether it is appropriate for this?
Baroness Sugg
I certainly will. As I said, we currently use it in certain non-EU agreements, but this is obviously the first time we will be partially using it in an EU-UK agreement. Let us not forget that we are all hopeful that we will not need to include it, but if we do, it is incredibly important that we get it right in order that it is fair. I will take it away, discuss it further and see whether we can get across the same principle and ensure that we are not subject to legal challenge in a way that is more acceptable to noble Lords.
Earl Attlee
When my noble friend takes it away, can she also have a look at why we do not simply auction the permits? We auction all sorts of things: oil exploration rights, for instance. They are very valuable and they are auctioned. That seems a much more sensible way to allocate a scarce resource rather than first come, first served, which seems to have all sorts of difficulties alluded to by the noble Lord, Lord Campbell-Savours, although he shakes his head vigorously.
Lord Berkeley
The noble Earl would prefer to see a lorry load of caviar coming in rather than basic food.
Earl Attlee
I made it quite clear that I do not think we should go anywhere close to being short on permits. We are talking about disaster if we are short on permits. As we know perfectly well, the Bill’s provision is just a long-stop measure, but I am glad that my noble friend will be taking it away.
Baroness Sugg
Currently, the scoping document does not include a provision to auction. That is a new one on me, and I think there will be various views on it. We are of course discussing what criteria should be used and that is subject to consultation, so I shall be happy to feed in my noble friend’s thoughts.
As I said, I understand the issue. I will take it back to see whether there is anything that we can do. With that, I hope that the noble Lord will be able to withdraw his amendment.
Lord Tunnicliffe
My Lords, if the Minister comes back with an agreement where this subsection is needed, she will have failed, and if she fails, the use of these criteria would be unreasonable. The Minister and I have already done spaceports and lasers. She has a commendable record on bringing back compromises; I hope that she does so in this case. In the meantime, I beg leave to withdraw the amendment.
Lord Berkeley
“(3A) Before exit day, the Secretary of State must publish a report outlining the content of any agreement with the EU over the allocation of permits for UK registered vehicles to operate in the EU.(3B) In subsection (3A), “exit day” has the same meaning as in section 14 of the European Union (Withdrawal) Act 2018.”
Lord Berkeley
My Lords, I will also speak to Amendment 14B in my name.
Amendment 9 is quite simple. It would require the Secretary of State to publish a report saying what is in any agreement that has been made on the allocation of permits for UK-registered vehicles to operate in the EU. I do not need to go into it in any more detail than that. We have had a good discussion about that this afternoon, and I am sure that the Minister will welcome this. She will probably say that she is going to do it anyway, and if she is not going to, she jolly well should. However, there is a reciprocal problem that we have not discussed so far—although my noble friend Lord Snape mentioned it—which is about EU lorries coming into the UK. Amendment 14B would allow the Government to make regulations to issue permits for non-UK registered vehicles to come into the UK. This would include vehicles, as I said earlier, from the Republic of Ireland.
Does the Minister agree that there is a need to issue such licences? I hope that she does, because otherwise, EU lorries will roam around the UK freely, doing exactly what they like, presumably doing cabotage for several months before they run out of fuel. It seems unfair, and I am sure that the European Union negotiators will accept that there has to be a reciprocal arrangement. Does the Minister envisage an allocation of permits to each member state, or will there be one lot of permits to cover the whole 26 or so member states—apart from Ukraine and places like that, because they are not within the EU? If the answer is, “No, it is an EU one and that’s fine”, will the Republic of Ireland to be happy with that, and how will it get its allocation—will it be separate or together?
I can see from past experience that the French and Dutch Governments in particular may want more than their fair share, or more than what we may think is their fair share, so there is the question of how we would deal with that.
Lastly—I hardly dare go back to this question of first come, first served—but how will it be done? I cannot say much more than that, but I look forward to hearing what the Minister says. I beg to move.
Lord Bassam of Brighton
My Lords, I have a number of amendments in this group. These amendments have been laid to ensure clarity of purpose in the Government’s strategy. Amendment 12 seeks to get the Government to lay a report within a month of the Bill passing on forecasts of how the permits regime will affect the efficiency of haulage and in every year following. Amendment 13 asks that within three months of the Bill passing the Government produce a report setting out their expectations for future arrangements between the EU and the UK with regard to road haulage. Amendment 14 suggests that within three months of the Bill passing a report on the costs of the future international haulage permit scheme be published.
It is essential to business continuity that the industry knows what the Government are up to and what their expectations are, what forecasts are being made and, most importantly, what costs they are likely to incur should the scheme in the Bill need to be implemented. It is fair to say that the impact assessments published were delphic in the extreme on cost estimating. No figures were given, but there were a lot of words to suggest that there is an expectation that companies in the small and medium-sized haulage sector might seriously struggle with the cost when permits are introduced, particularly given that, on the face of it, it is going to be a full cost recovery system.
The Minister will say that it is too early and that we have not got to the point at which we need to do a lot of this, but at Second Reading she gave some indication of what the range of costs might be for individual permits. We need more information, and there ought to be an obligation on the Government to produce reports setting out forecasts and expectations for future arrangements and costs. Without those things, we will not have certainty in the industry, and the industry definitely needs certainty. From my discussions with the FTA I know that it is concerned not so much about the scheme itself as about how it will work, what the details of implementation will be, the burdens that it will place on its businesses and the likely impact on the haulage industry in the UK generally. These are not unreasonable concerns. We, as responsible legislators, ought to focus on that. I hope that the Government can come up with some answers and will commit to producing reports and assessments of the sort that these amendments describe.
Lord Campbell-Savours
My Lords, I want to concentrate on Amendment 14, which refers to cost. I will refer to documents that I have from 30 years ago, which deal with the costs at that time. What interests me is how the costs are split between various categories. Again, civil servants might find this useful. I have with me a non-quota permit for France and a non-quota permit for Italy. The price I refer to now is an indicator for one country, so obviously if a truck were passing through a number of countries the totals would be multiplied. On a single journey to France, 30 years ago, a permit was £2.80; a multiple-journey permit valid for two journeys was £3.40; a multiple-journey permit valid for three journeys was £5.10; a multiple-journey permit valid for four journeys was £6.80; and a period permit was £50. That is for one country; as I said, those figures have to be multiplied for permits for more than one country.
The office in the United Kingdom that received that money was in Westgate House, on Westgate Road in Newcastle upon Tyne. That is where everything was organised from, and as my origins are in the northern region and as that was my former constituency, I hope that if we go into this business again, which I hope we will not, permits will again be allocated from somewhere in the north of England, and in particular from Newcastle.
I have with me also the detail that is required for a permit. I want to go through it, because it is quite onerous and people should reflect on these matters before we go down this route. The form, which is from more than 30 years ago, asks for: the full name of applicant; address in full; British operator’s licence number, the traffic area in which it was issued and the date of expiry, and for Northern Ireland operators a freight operator’s licence number and the date of expiry; details of vehicle, including make, registration number and MOT plate; the maximum permissible laden weight; the unladen weight; the maximum permissible load; the date for departure from GB; countries to be traversed; date of entry into country, in this case Italy; the town and country where the goods were loaded; the town and country where the goods were unloaded; the nature of the goods to be carried; the weight of the goods to be carried; the estimated total length of journey on the continent; and whether the vehicle will cross the Italian frontier by rail or Kangarou service on the outward or return journey. That is a lot of information.
When we are in these negotiations, we should try to minimise the amount of information that hauliers are required to provide, if possible. I have talked about what would happen with frontiers; I remember occasions when trucks were stopped because a mistake had been made in the permit allocation. Under the current arrangements, that would incur demurrage charges. The former Transport Minister will know all about demurrage charges; I think I remember a debate he was involved in some time ago. Those charges can be very high: the freight operators at Dover talk about a current rate of about £250 a day. So, a hold-up as a result of a mistake on an allocated permit can be very costly. Therefore, there is a need to minimise the amount of information required.
Baroness Randerson
My Lords, I rise to speak specifically to Amendment 12, to which I added my name, but also to the group as a whole, because it covers the cost of all this to the haulage industry: the cost of UK-registered vehicles operating in the EU; the efficiency of haulage after Brexit; future arrangements for the international transport of goods; and the cost impact. I have a slight feeling of Groundhog Day. I will spare your Lordships much of the detail, but I have been through this once in the previous 24 hours, during the EU withdrawal Bill debate, when we covered some of the same territory. For the sake of variety, I will say a few different things because there are plenty of things to say.
A report came out today—hence it was not the topic of my speech last night—by Clifford Chance and Oliver Wyman. It estimates that the costs to business of Brexit in terms of customs arrangements, additional legal and bureaucratic requirements and haulage requirements in relation to customs arrangements for goods in transit will be £32.8 billion. I always measure things in relation to £350 million, for reasons that might be obvious to some noble Lords here; that figure comes out at roughly double £350 million a week. That is a very significant issue and I am delighted that the noble Lord, Lord Campbell-Savours, illustrated the situation so well with original documents. I recall that, a year ago, one of the haulage organisations—forgive me, I am delving into my memory and cannot remember which one—sent us a briefing about the costs to the haulage industry. It illustrated them by saying that, depending on the type of goods being carried, driving from the UK to Italy and back could require 64 different pieces of documentation. In this day and age, I am sure that would not be pieces of paper, but people have to fill in the forms online in just the same way. Anyone who spends as much time filling in forms online as I do will know that it is very easy to make one of the mistakes referred to by the noble Lord.
Last night, we talked about delays at the ports. Dover is a particularly stark example because of its geographical configuration and the built-up area around it. That all adds to the cost, and the issue of permits and other documentation is key to getting the lorries through Dover and all the other ports as quickly as possible.
The amendments address the impact of additional border controls and delays, the costs of which go well beyond the haulage industry. When we had Operation Stack—and Dover port is predicting worse queues than Operation Stack as a regular feature—it cost the police and council in Kent £1 million a day. All these other things add up, so it is so important that any permit system is simple, straightforward and as flexible as possible.
I also emphasised last night that we talk all the time about the cost to government, but businesses have to internalise and absorb those costs or pass them on to their customers. In the case of large companies, that might be quite reasonable over a period, but there are SMEs that have only ever exported to EU countries. They will never have dealt with custom systems before, and will not be familiar with the whole process. They will have to set up whole new departments and systems, which will be of significant cost to business and have significant impact on our industry. That applies across the board.
The Clifford Chance report picked out the impact on the car industry because car parts move across borders frequently during their production. The impact will be on car manufacturers not just in this country but in other countries bringing their cars and car parts to us.
I very much hope that the Minister will be able to assure us that the Government are doing some work on this and will soon be able to produce some hard figures. Reports have been published. They may be accurate or inaccurate, but the work has been done. Individual industries are doing that work. It would be very useful if we had some information on what the Government calculate will be the impact.
Earl Attlee
My Lords, I see merit in some of the amendments. Clearly, we need to know the outcome of the negotiation and what the impact will be. The noble Lord, Lord Campbell-Savours, mentioned demurrage, which is a good point. If you have a complex system, you can foul up. The problem for a small haulier is getting anyone to pay demurrage. It might be in the contract, but you try getting your customer to pay it for a small haulage business: you will struggle. It may be okay if you have a supertanker and your contract agreed on the Baltic Exchange, but for a little haulage deal? Forget it.
The Committee needs to consider the position of our EU partners. It is not in their interest to have a complex system either. We have the Hams Hall engine plant making BMW engines that have to go to Germany. We know perfectly well that automotive components go backwards and forwards several times, as the noble Baroness, Lady Randerson, said. It is in no one’s interest to have a complex system.
Lord Campbell-Savours
I am not sure that is the case. If you are required to give your load to someone else, because you do not have a permit to run in Germany, you lose the business. A German tractor unit will take over your load and take it to its destination.
Earl Attlee
I agree with the noble Lord that the Government will have to negotiate the UK’s position effectively, but it is in no one’s interest—neither ours nor that of the other EU states—to have a complex system that harks back 50 years. The noble Lord has illustrated the problem very well: if you have a complex system, it will be horrendously expensive, and we do much more cross-channel trade now than we ever used to. I cannot see the driver of having a complex system. We may legally have to have a permit system, but it is up to the Government to negotiate as simple a system as possible, which I am confident they will do.
Lord Campbell-Savours
I have just seen something in a non-quota document which might be of interest to Ministers. It is an Italian document stating that a permit is required for the transport of goods by means of an unaccompanied trailer or semi-trailer as well as by means of a motor vehicle with or without trailer or semi-trailer. It says that “articulated vehicle” means a tractor hauling of semi-trailer. If we really get into hard territory, we should be arguing on the gross tonnage of vehicles, because that might be a way of getting more permits. Our vehicles are 24 tonnes, 32 tonnes, 15 tonnes and 10 tonnes—I am not a transport expert; my noble friend Lord Berkeley will correct me. We may get an exemption for lower-tonnage vehicles in the event that we find ourselves in a corner on the allocation.
Earl Attlee
Of course, the noble Lord is thinking about a complex system. One might need a permit just to run vehicle registration number XYZ in Europe; it might be as simple as that; we simply do not know. The Minister will not give the indication because she is negotiating. It need not be horrendously complicated.
Lord Tunnicliffe
My Lords, this is the reports group of amendments; various reports are suggested. We have two amendments in the group, Amendments 13 and 14, but they all centre on the same issue: how is this critical, potentially catastrophic problem being solved and how much is it costing?
It is important to realise that this is not a second-order hard or soft Brexit debate; it has nothing to do with that. Whether it is a hard Brexit or a soft Brexit, if this problem is not solved, we starve. Last night, it was clear just how concerned the House is about the situation. There is an argument that, because it will cause them pain and cause us pain, the world will be rational. The trouble is that the negotiations are being led not by businessmen or exporters but by politicians. I hate to say it: in history, politicians have not always been rational. Our friends in Europe are feeling very bruised about Brexit. They should probably be cheering because they are getting rid of us, but they are not; they are upset. Their club is being challenged by our departure, so there is every possibility that they will not be rational.
The argument that the pain is the same from anything we get wrong, again, is not valid. If you put a border down the North Sea and down the channel so that nothing can cross it, the EU 27 will survive and we will not. This problem has to be solved. All that we are asking for in this group of amendments is to be told how it is happening. Whether we agree the amendment or not, I hope that the Minister will hear what we are saying, arrange one way or another to keep us informed of developments and convince us that the energy and effort that such an important issue requires are going into solving it.
Baroness Sugg
My Lords, these amendments set out requirements to report on a range of matters related to road haulage, from the allocation of permits to forecasting how a permits regime will affect the efficiency of road haulage, what our future arrangements will be for transporting goods, the cost to the road haulage industry and the permit arrangements for foreign hauliers. As noble Lords have made clear, road haulage is essential to our economy. It is an indispensable enabler of much of the wider economy, too. I appreciate that the Committee’s concerns here are how the permits system may affect the movement of haulage between the United Kingdom and the EU, and any impacts on UK hauliers and the wider economy—the direct financial impacts to industry and the wider economic effect.
The key impact for hauliers alongside the use of permits, as highlighted by many noble Lords, will be any restriction of trade and the possible friction at borders, which is why we are obviously doing what we can to reduce that. I am afraid I cannot give any further information on the wider negotiations currently taking place, and can only repeat that a future partnership is in the interests of both sides.
In implementing this legislation, we will bring forward a straightforward system that minimises any additional burdens or costs for business arising from the scheme. I previously set out that there will be no new transport checks required at borders. The noble Lord, Lord Berkeley, proposes that we produce a report outlining the content of any agreement on the allocation of permits, if they are required. When our agreement with the EU is settled, we will of course ensure that the haulage industry is properly informed and educated. As he predicted, I can say that we will publish the details of that scheme as soon as it becomes available. I am not convinced of the need to enshrine in the Bill the requirement to lay such reports before Parliament, as the information will be in the public domain.
Within the other amendments, Amendment 12 proposes that one month after the Bill comes into effect, and thereafter on an annual basis,
“the Secretary of State must lay a report before both Houses of Parliament containing a forecast of how the permits regime will affect the efficiency of haulage”,
while the noble Lord, Lord Berkeley, has tabled an amendment about reporting within three months of the Bill coming into effect on the arrangement of the allocation of permits. I will address those together.
Although I cannot provide detailed forecasts of the impacts on the haulage industry while we are in negotiations as we do not know the final deal, as I have said, we are aiming to continue the existing liberalised access we have today. Again as predicted, this time by the noble Lord, Lord Bassam, I do not believe that a requirement in legislation to produce a report containing analysis of how the permits scheme has impacted haulage is appropriate, or indeed even possible, one month or three months after the Act is passed as suggested, as negotiations may still be concluding.
However, I absolutely agree that it is incredibly important that the impact of any EU permit scheme—if that is required, and we are obviously all keen that it will not be—is assessed at an appropriate stage to take into account the application of the agreement itself, the administration of the scheme and the effect it will have on industry. If we need any new permit scheme, it is unlikely to have gone live within the timescales suggested, and we would not be in a position to provide any evaluation of its impacts. As I have said, we will publish details of the scheme as soon as they are available, but I absolutely recognise that there is a need to review the impacts. I will consider how best to do this ahead of Report and come back to noble Lords on that.
The noble Lord, Lord Campbell-Savours, made a point about information. Where possible, we aim to use existing information provided as part of the operator’s licence, and of course we will consult on all additional information needed and will aim to minimise that. He helpfully highlighted previous requirements, which certainly seem excessive to me. If we can use the negotiations to simplify the information needed on permits, we should certainly do that. As the noble Baroness, Lady Randerson, said, this should be as simple and straightforward as possible.
I turn to the amendments on foreign hauliers. The Bill is not directly concerned with the operation of foreign hauliers in this country, except to the extent that Clauses 10 and 11 allow for derogations from a permitting scheme in emergencies. With the exception of Clauses 10 and 11, the Bill is solely concerned with requirements on UK hauliers operating internationally and provides powers only for the UK Government to issue permits to UK hauliers. But in light of the amendments, and because how EU hauliers are treated in the UK is incredibly important, it is probably helpful to outline the Government’s current thinking on international hauliers operating in the UK.
As noble Lords have pointed out, foreign hauliers play an essential part in freight movements between the UK and the EU. Foreign-registered HGVs carry more than five times as much freight as UK-registered HGVs, hauling 40 million tonnes between Great Britain and the other 27 EU member states. While the UK remains an EU member state, we participate in the Community licence scheme, an EU-wide scheme that permits a haulier licensed in one member state to operate across the Union, including some cross-border and within-border trade in other member states. The arrangements we make with the EU should, of course, be reciprocal. Whether we will require a permit scheme for foreign hauliers, and how it will work, will be subject to negotiations with the EU in the same way as whether UK hauliers will require a permit in the EU.
If future arrangements require permits for UK vehicles to travel to the EU, it follows that EU vehicles would require permits to travel to the UK. If we did require a permit scheme it would be for other member states, rather than the UK, to organise the issuing of their own permits. That would not be something the UK Government did. How they allocate these will be up to them, but we will discuss this with them in detail. I would be interested to hear their thoughts on first come first served and random allocation. That is why the Bill does not address this.
Lord Berkeley
I thank the Minister for her explanation. To be clear, if each member state is to be allocating permits, what about the quantity for each state? Will there be more permits in total than we want and will we be able to limit them? How is it going to work? Will the European Commission do it? I think that would be a pretty good disaster, but it is for it to decide.
Baroness Sugg
I am afraid that the answer to that is that it is all subject to the negotiations. The noble Lord asked earlier whether we were doing this on an EU-wide or bilateral basis. We think that an EU-wide basis is the simplest way. Of course, we want to ensure that enough permits are allocated to countries, for example Northern Ireland and France, which we currently have a lot of dealings with. I go back to the point that we are hoping we will not need a permit system, but if we do it will be unlimited and allocation would therefore not be an issue. If it is limited, which it may be, then if the number of UK permits is limited, how the European Commission allocates them will be down to negotiation.
Lord Campbell-Savours
It is very important that we do not have to negotiate bilaterally because we could be held to ransom by some of the northern European states, whereas others might be more generous. If we cannot get through France, Belgium or Holland, what is the point of them in the states lower down?
Baroness Sugg
The noble Lord is quite right. We think it is best to negotiate this as an EU-wide agreement. Bilateral agreements remain an option should we need them, but we very much hope that we do not.
Lord Berkeley
Is there a precedent in the negotiations with Ukraine, or another country outside the EU? Does Ukraine negotiate bilaterally with every other member state or with the EU, and are the lorries allowed to roam freely within the EU once they have got in?
Baroness Sugg
Our current agreement with Ukraine is negotiated through the EU. I believe that Ukraine has an unlimited number of permits. I will go back and look at specific examples. Most of these negotiations are done with the EU as a bloc, as I say, not bilaterally.
Lord Campbell-Savours
Surely, the position is that if you are carrying your own goods it will come under one quota system and there should be no restriction whatever. If you are carrying other people’s goods, there might be a restriction. We should have that in mind when we negotiate.
Baroness Sugg
I agree, as I do with the noble Lord’s point on using tonnage within the negotiations, which I will pass on.
I will explain to noble Lords how the regulation of foreign hauliers is being handled in legislation. It is currently carried out under the Goods Vehicles (Licensing of Operators) Act 1995, which requires any operator, whether based in Great Britain or abroad, to carry a Great Britain operator’s licence, failure to do so being an offence subject to a level 5 fine on summary conviction. However, EU hauliers are currently exempt from carrying a GB operator’s licence because they carry a Community licence under EU law.
If EU community licences are no longer recognised when we leave the EU, we will remove the exemption for EU hauliers and regulate their access to the UK in the same way that we regulate access for non-EU hauliers. Obviously, how we do that will be subject to negotiations; again, I make the point that we hope we will not need to do this because of the open access. We will do that by setting out the conditions agreed in the international agreement concluded with each country or with the EU, including whether a permit is required.
The recognition of EU Community licences in Great Britain will be removed using the power to correct deficiencies arising from the UK’s withdrawal from the EU under Clause 7 of the European Union (Withdrawal) Bill, which, as noble Lords know, we discussed in detail last night. When that comes into force, it will enable the Government to correct EU retained law and UK legislation where reciprocal arrangements between the UK and EU, such as the recognition of Community licences, no longer exist. The new conditions—if any are agreed in negotiations—placed on EU hauliers, including carrying a permit, may then be put in place by using existing powers under the Goods Vehicles (Licensing of Operators) Act 1995, if the Government consider that this is required. The same approach will be taken in Northern Ireland legislation.
Baroness Golding (Lab)
I am concerned about horseracing. As the Minister will know, horses travel from Ireland to England, into France and back again. Will they be exempt from this kind of operation or is there another scheme to deal with horseracing and all the gear they take to a race and then to bring it back? As my noble friend Lord Campbell-Savours just said, they are other people’s property as well as the driver’s own. It does not make any sense to me to get them involved.
Baroness Sugg
This came up at Second Reading, and we have consulted extensively with the horseracing industry to ensure that it does not affect it. Our understanding is that all-in-one horseboxes—as I will call them again—are used rather than trailers, so they would not be affected by this legislation, but we are working with the industry to ensure that this will not affect it.
The reason why I set out how we deal with this in legislation is to make the point that there is a system there for us to do it through the withdrawal Bill and the Goods Vehicles (Licensing of Operators) Act, which is why we have not addressed it in the Bill, which relates solely to UK hauliers. However, as I say, we are hopeful that we will not need to use it.
Lord Berkeley
Before we leave that, I think the Minister is arguing—obviously, I will have to read the record afterwards—that we do not need these amendments because it is already covered by existing legislation. However, I would be interested to know two things. My noble friend Lord Campbell-Savours talked about the difference between owned goods in a lorry and third-party ones. Is that condition still there, and do we have to take it into account? After the noble Baroness’s intervention earlier, would it be possible to have a total list of all the different permissions that are needed to carry goods out of and into the country? I could put it down as a Written Question, but it is easier to ask it now. It would be quite interesting to have such a list of what permissions one needs. I do not suggest that the Minister answers this now.
Baroness Sugg
I will have to get back to the noble Lord on that in writing, but I will certainly do so before Report.
I will say a quick word on cabotage. The proposed new clause would enable the Secretary of State to allow cabotage for UK goods vehicles in the EU and for EU-registered goods vehicles in the United Kingdom. Cabotage is currently secured through participation in the Community licence arrangements. It may be that, depending on our future partnership agreement, permits would allow for cabotage rights and would therefore be dealt with using existing legislation, as I outlined previously—the goods vehicles licensing Act. I hope that the noble Lord will agree that this amendment is not needed to achieve what he is seeking, as we already have legislative cover on that.
On the point around owned hauliers, I will have to get back to the noble Lord in writing.
Lord Campbell-Savours
I am sorry to keep getting up, but it is not just about your own goods. Under the arrangements that I remember, it was own goods, works of art, fresh fruit and veg and exhibition goods. All that I am arguing is that it might be possible to widen those descriptions in the event that we get ourselves into difficulties.
Baroness Sugg
The noble Lord makes a valid point. I will have to go back and look at that in detail and come back to the Committee in writing.
As was covered earlier when we were discussing the reporting requirements, I agree that we must consider the impacts of leaving the EU on the haulage sector. That should cover both UK and foreign hauliers. We need to come up with a form of reporting on this; I do not believe it needs to be in the Bill, but I will consider that and come back with a proposal ahead of Report. Once again, I welcome the discussion that this amendment has enabled, and I ask the noble Lord to withdraw his amendment at this stage.
Lord Berkeley
I am grateful to the Minister. She has been very patient with the questions from me and other noble Lords. Obviously I shall reflect on what has been said. In the meantime, I beg leave to withdraw the amendment.
Baroness Randerson
My Lords, this clause refers to the payment of fees for the permits that we have been talking about. Currently, hauliers have to buy a licence to register as hauliers, but they are also able to have on request a Community licence, which will be equivalent to the permit and which is free. However, under the scheme that the Government envisage, Clause 5 gives them the power to levy fees for the permits. I want to know why the Government feel they should charge fees for something that up to now has been provided to the hauliers free of charge.
The hauliers seem to be suffering several times over. Rather than having this easy-to-access, free and on-demand Community licence, they now have to apply for a specific permit, pay for it, perhaps even queue for it if we are still talking about first come, first served—and all this when in the end they are going to have a much less convenient system.
My particular concern is for SMEs. Given that, when we discussed this informally, the Minister indicated that the amounts of money would be in the order of £50 or £55—if I recall correctly—clearly for a large haulage company operating vehicles on a daily basis, that will not be a massive amount of money and will be passed on to the customers, as is inevitable. However, this will be a significant additional cost for an SME. Can the Minister explain to us the cause of the Government’s decision to reclaim their costs, when clearly they have not done so up to now, whether they are open to persuasion that charging for this would not be a good idea and the basis on which charges will be levied?
Lord Bassam of Brighton
My Lords, the noble Baroness raised some interesting issues, some of which I touched on earlier. When I read the impact assessment, I could see that there was clearly some consideration by the Government about the potential impact on SMEs, as the noble Baroness, Lady Randerson, said. The assessment suggests that some SMEs would struggle. Clearly that worries us: we have a vibrant and viable haulage sector that works well and has served our economy well and we do not want to damage it.
I wonder what full-cost recovery really means and I wonder what extra the permit will be paying for. I saw reference in the impact assessment to a suggestion that inspections would be carried out—ones that perhaps do not currently have to be carried out—to make sure that permits are valid and do the job that they are supposed to do in terms of haulage operators being able to move across the EU 27. In particular, there was a suggestion on the trailer registration scheme that some benefits would accrue through an extra inspection regime. That may well be the case—we will have that argument another day and we have amendments that raise some of those issues—but what does full-cost recovery cover? How much is it likely to cost? What will the impact be on SMEs? What sort of inspection regime will take place? Will it mean an expansion in staff? The Minister suggested that the work will be undertaken by the DVLS, is it?
Lord Bassam of Brighton
Acronyms sometimes get the better of me. So, what will it look like? How will it feel? How will it operate? What additional burdens will it place on the businesses affected? Where will the inspections take place? I picked up the point made by the Minister that they will not necessarily be at ports, but ports may be the best place; I do not know. I have seen lorries subject to customs inspections at ports, which works very well for some operations. We need answers to all these questions.
Lord Campbell-Savours
My Lords, I want to ask a very simple question, which is slightly tangential to the amendment, about fuel dipping. Fuel dipping is where the authorities decide, for whatever reason, to test tanks to see how much diesel they are carrying. Of course, these trucks carry a lot of diesel. I do not know where I heard it, but I heard that some countries on the outer periphery of Europe fuel dip in truck tanks so they can charge duty on diesel coming into their country. During the negotiations, we should be aware of any possibility of fuel dipping by member states and make sure that it is excluded and prohibited.
Earl Attlee
The noble Lord, Lord Campbell-Savours, yet again makes an interesting and important point about fuel dipping. It is a burden on the industry. I have to confess that I made a suggestion to do with the problem of foreign trucks coming into the UK with very large tanks of fuel, running around the UK and then leaving with tanks that are practically empty so that the Treasury gets none of the benefit of the fuel. I suggested that every HGV, UK or foreign, should leave the UK with a nearly full tank of fuel, but that suggestion did not find favour because it was thought to be contrary to EU rules. However, the noble Lord, Lord Campbell-Savours, raises an important point.
The noble Baroness asked why we should charge. I come back to the point that we simply do not know what the negotiations are going to give us. We again hope for a simple system, but if we end up with a more complex system, naturally there will have to be charges—presumably cost recovery only, as it should not be seen as a profit centre. We need to remember that the cost of running a maximum-weight articulated vehicle is quite considerable—I do not know the current figures—so the cost of a permit in the overall cost of the operation will not be that significant. Whether it is an SME or a large operator, the cost per mile of an HGV is very high.
I have what might be a slightly tricky question for the Minister. We are cost recovering, but are we going to use the UK fees that we raise from our own hauliers to cover the cost of inspecting foreign trucks over here to make sure that they have a permit? If there is a 75%/25% split for contingency—where the 25% is the UK operators—25% of operators will be paying a small amount of money in but spending a lot of money on ensuring the compliance of foreign operators. Some people might have something to say about UK operators paying for the policing of foreign operators.
Lord Berkeley
My Lords, the idea is that a lot of foreign trucks are going to be inspected. It does not happen at the moment very much, and if it is going to happen in future, there will have to be a very large increase in the number of inspectors and locations for inspection. The profit margin of most of these operators is very low, so the cost of a permit, which, as the noble Baroness said, may be only £50 to £85, may be quite a lot to some people. I am more concerned that it appears that EU lorries coming into our country will not have to pay anything because they already have a permit from their own country. Are we giving them an £85 advantage just to come here? I assumed that we would be able to charge them to give them a permit, but, as the noble Baroness said earlier, they already have a permit. There is something out of balance here. I do not know what the solution is, but I hope that the Minister can look at this. Perhaps we should have our own permit scheme, or else it should be free for everybody. It does not seem fair at the moment.
Baroness Sugg
My Lords, this clause creates fee-charging powers for administering a permit scheme, which, understandably, is a key concern for the UK haulage industry. I am grateful to the noble Baroness, Lady Randerson, for giving us the opportunity to discuss the issue in detail.
The regulations under this Bill will apply to all the permit schemes that the UK has. Once we have introduced a robust legal framework for permit schemes it would be both necessary and sensible for the regulations to cover all schemes. They would therefore apply to potential permit arrangements for EU member states, existing and future permit arrangements with non-EU countries, and ECMT permits. This means that fees for permits for different countries can be consistent and consolidated in a single set of regulations.
Baroness Randerson
Can the Minister clarify something? In their examples of existing permits where there are bilateral agreements, the Government refer to both single-journey and multiple-journey permits. Multiple-journey permits are clearly a lot less bureaucratic, but single-journey permits are a lot less expensive. Do the Government have an image of which way they are going on this or whether they are going to have single and multiple-journey permits if required?
Lord Campbell-Savours
I am flying blind now—I should really know the answer to this question. When a British haulier travels in France now, I presume they pay a fee on the motorway. French motorways are very expensive. When a French haulier arrives in the United Kingdom, do they pay any charges for the use of our roads? I think not. If that is the case then we might like to raise this issue if we have any trouble with the French—particularly with the hauliers—in the course of the negotiations. It might not only be France; it might be that some other countries in Europe like to charge for the use of their motorways, such as the Italians, and I am sure that there are others as well. The Swiss get their share too—whenever I go through Switzerland they take me for a ride for 40 francs for my car alone.
Baroness Sugg
I thank the noble Lord for that intervention. UK hauliers will pay a charge on a toll road in France in the same way as anyone else.
We are looking into the HGV levy and how to use it better. It may be a method of addressing this issue and I will certainly consider that. I think there is still a toll road on the M6, so obviously that has happened in one case in the UK. However, there are not currently plans for the Government to introduce tolling systems.
On the types of permits, which the noble Baroness, Lady Randerson, raised, there will be many options, including, but not limited to, single journey, annual bilateral—ECMT have both of those—and annual multilateral. Exactly what permits we have will be subject to negotiations.
Returning to the HGV levy, foreign hauliers currently pay the levy and so make a contribution to the roads, but, as I said, we are looking at that in detail and I shall send noble Lords more information on it.
We have aimed for the clause to be clear on what fees may be charged for, which allows us to consolidate all the regulations on existing permit fees in one place rather than them being split across a number of regulations. This will give greater clarity to operators and hopefully will be simpler to follow and allow better scrutiny for Parliament.
We think we need to charge a small application fee to recover the cost of processing the application—that will be payable by all applicants—and an issuing fee to recover the administrative costs of issuing the permit will then be payable by successful applicants only. There should not be a single fee, either for application or issuing, because unsuccessful applicants would bear some of the cost for issuing permits or vice versa. Hauliers should pay for what they use rather than paying the same costs irrespective of whether or not they have a permit—should they be needed, which we all hope they will not.
We want to introduce separate application and issuing fees. There is a precedent within the haulage sector for charging fees in this way as its operator licensing regime has both the application and issuing fees made in the regulations under the Goods Vehicles (Licensing of Operators) Act 1995.
I apologise because at this stage I am not able to provide the Committee with specific figures of what the fees for permits will be. It will depend on the number and types of permits required by hauliers, which journeys are exempt and the cost of administering a permits scheme—if there is a permit scheme, which of course will be subject to the negotiations. We want to keep fees as low as possible and in the region of the existing permit fees. The noble Baroness referred to a few examples. The annual ECMT permit which allows any numbers of journeys costs around £133 and a single journey bilateral permit costs £8. However, as the noble Baroness, Lady Randerson, pointed out, we need to take into account how that will affect small and medium-sized hauliers.
On the capability for the checking of these permits within the UK, there will obviously be a need, should we have a permit system, for them to be checked. As part of the spending statement today, the DfT has received £75.8 million to deliver its EU exit programme. That will include reconfiguring DVSA and looking at that in detail. Again—I apologise for repeating myself—until we know the outcome of the negotiations we are not going to know by how much the capability of DVSA needs to increase and we will have to wait to see the exact costs.
The DfT is working with the Treasury to determine the appropriate level of fees. This will be included in the regulations to allow scrutiny by Parliament. As I say, we are doing everything we can to keep the cost low. It is a key consideration for UK hauliers and we are working closely with them as these plans develop. We will be working closely with small and medium-sized enterprises as well in order to keep these costs as low as possible. I hope that explanation demonstrates why we have a fees clause in the Bill and exactly what we will be using it for. I hope that the noble Baroness will agree that the clause should stand part of the Bill.
Lord Berkeley
If a truck has to be checked statically in a car park somewhere, that will be quite expensive. The DVLA no longer has the system of excise duty licences on cars; that is checked by number plates. Is there a way of adopting a similar system for trucks—even for foreign ones? I know they have different number plates, but it would be much easier and would give a much more comprehensive range of checks.
Earl Attlee
What about the HGV levy system and the technology behind it? It uses ANPR to enforce it, so I should have thought that it would work automatically.
Baroness Sugg
The noble Lord and my noble friend make important points. Of course, we want to use IT systems whenever we can both to minimise the burden for hauliers and for Government to check on these things. The permit system may not be allocated to a specific truck; it could be allocated to a haulage company. That may be difficult, but we are exploring it. The current system is that the DVSA outside the port will pull over a truck and check it on the side of the road. That is one of the options that we are exploring. If there is a way to do it that is less expensive and more efficient, we will certainly do that.
Lord Berkeley
That is very interesting. I thought the permit would be allocated to a truck. If it is not, there seems to be more potential for fraud—by photocopying, for a start.
Baroness Sugg
The reason we do not think the permit will be allocated to a specific truck is to allow for flexibility, should there be a limit on the number of permits. It will enable hauliers to move them between trucks, so they are not restricted to only one truck going back and forth to Europe. On fraud, we are designing a system to try to ensure that it will be allocated to a specific company. It may give us the number of trucks that could use the permit. We could check the licence plates and other things. We are working through the issues on that. I hope that that explanation will satisfy the noble Baroness.
Baroness Randerson
I thank the Minister for the amount of detail she has given on this. Certainly, it is sufficient that I will have to look at the record and quite possibly come back with some more questions. I am very grateful for the amount of further information she has given us.
House of Lords
Railways: East Coast Main Line
(6 years, 1 month ago)
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Lord Beith
To ask Her Majesty’s Government what arrangements they propose for the continuation of train services on the East Coast mainline.
The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)
My Lords, the Government are currently reviewing two options for the continuation of services on the east coast. Our priority is the continued running of the line for passengers. The first option is to allow Stagecoach to continue operating the service under a very strictly designed short-term contract. The second is for the franchise to be directly operated by the Department for Transport through an operator of last resort. We will choose the best option that protects the interests of passengers and offers value for money.
Lord Beith (LD)
My Lords, the fact that we are on the third failed franchise is down to incompetent franchising, fanciful overbidding by operating companies and a failure of the publicly owned Network Rail to deliver the track and overhead improvements on which the bids were based. What is the plan now? Are there only two options or more than that—a rerun franchise competition, a new type of franchise combining track and train operation, a nationalised operator or a sweetheart deal for Stagecoach/Virgin to run the trains without taking the risks? When will we know?
Baroness Sugg
My Lords, we expect to make an announcement on the two options in the coming months. From 2020 there will be a new east coast partnership as part of our reform of track and train to ensure that they work together better to deliver the services that passengers need.
Lord Cormack (Con)
My Lords, my noble friend may know that Lincoln, which has an appalling service from London, has been faithfully promised five direct trains a day as from 2019. Can she give me a confident assurance that that promise will be kept?
Baroness Sugg
My Lords, we are in discussions with Stagecoach to ensure that the needs of passengers and taxpayers will be met in the short term while laying the foundations for the introduction of the east coast partnership in 2020. We expect to provide additional services between Lincoln and Harrogate, Bradford and London from May next year.
Lord Beecham (Lab)
My Lords, as a reluctant passenger on Virgin trains I refer to my interests—doing so, in this case, is almost as slow as the train service. Will the Minister look at the laughably misnamed TransPennine Express and the service it purports to offer between the north-east and the north-west. Will she also look at the need to radically improve the rail connection between the north-east and the north-west and not simply rely on some future date when maybe a new national train line will surface?
Baroness Sugg
My Lords, I will certainly look at that in more detail. We are working closely with Transport for the North to understand the priorities of the north and where best to invest. We are committed to improving journeys on the trans-Pennine route. We are bringing in state-of-the-art trains, longer carriages and more frequent services to give passengers the services they want. We are going further. We plan to spend around £3 billion to upgrade the key route between Manchester, Leeds and York to give passengers faster and more reliable journeys.
Lord Palmer (CB)
My Lords, does the Minister agree that reaching yet another impasse is very worrying for all of the staff who work on the east coast main line? They have now had about half a dozen different employers, and it is very demoralising for them.
Baroness Sugg
My Lords, of course I understand the position of the staff. It is important that they have confidence in their jobs, and that is why we are looking through two options for the continuation of services up to 2020, and why, from 2020, we will be introducing the new public/private partnership.
Lord Shutt of Greetland (LD)
My Lords, we are promised that on 20 May we will have the biggest timetable change in 10 or 15 years—this is a mere 67 days hence. I looked at the east coast website this morning, and there is no detail about this timetable. Is the change dependent on whoever gets the franchise, or will we have the timetable that Virgin Trains may have speculated it could run from 20 May?
Baroness Sugg
My Lords, the timetable is not dependent on the decision made between the two options. I understand there has been a delay to the timetable, for which I apologise. The operator and Network Rail are working through the options and are looking to publish it as soon as they possibly can.
Lord Popat (Con)
My Lords, will the Minister please tell us what will happen to the premium payments from future operators of the east coast franchise?
Baroness Sugg
My Lords, whichever option for running the franchise to 2020 is chosen, the Government will continue to receive premium payments. As I have said, from 2020 there will be a new public/private partnership on the east coast. That will be subject to a competitive process and will include appropriate contributions paid by the private partner to the Government. The Government will continue to receive premium payments but I am afraid I am not able to give an exact figure at this time. It is important to reiterate that this is a successful and profitable line, and it will continue to deliver revenue to the Government.
Lord Snape (Lab)
My Lords, does the Minister accept any responsibility for this latest farce on the east coast main line? Does she not think that accepting an outrageous bid, which suggested an 8% growth in passengers every year of the franchise, was ridiculous to start with? Bearing in mind that the Treasury has frozen fuel duty for coming up for eight years, while insisting that rail fares go up in accordance with the RPI, does the Minister not feel that the Government’s so-called green policy is rather shot to pieces?
Baroness Sugg
My Lords, of course there were some errors in the granting of this franchise, and the suggestion concerning passenger numbers was indeed incorrect. We have learned some lessons and introduced new measures to deter overbidding, and have improved our financial modelling and stress testing. With this added testing, the department can forecast bids which are likely to default and exclude them in the future. On fares, the Secretary of State for Transport has underlined our aspiration to move from RPI to CPI but we must manage this transition properly and take into account staff costs, which are a third of operating costs.
Baroness McIntosh of Pickering (Con)
Will the Minister join me in congratulating the east coast operator on taking brand new trains into service in 2019? These are built locally to a very high specification, and will reduce the journey time to London considerably.
Baroness Sugg
My Lords, I certainly join my noble friend in congratulating east coast on this, which again will not be affected by the decision on who is to run the franchise. As my noble friend has said, the Azuma trains are due to start being introduced on the east coast network from the end of this year, and I am sure that passengers will enjoy the benefits.
Lord Foulkes of Cumnock (Lab)
My Lords, I too am one of the passengers who the Minister referred to in her first Answer. I have travelled on this line when it was run by GNER, now by Virgin, and in between when it was publicly owned. That period produced by far the best service. Would it not be much quicker, cheaper and better for the Government to decide now that the service should continue as a publicly owned, efficient railway?
Baroness Sugg
My Lords, I am afraid that I have to disagree with the noble Lord. We are currently going through the process of analysing which is the best option for passengers going forward. On his point about the service being better under DOR, I am afraid that we received 20% more income when it was run as a franchise, with higher satisfaction rates.
Apprenticeships: Levy
Lord Blunkett
To ask Her Majesty’s Government whether they intend to make adjustments to the Apprenticeship Levy to facilitate the improved working of that programme and to reverse the fall in apprenticeship starts, including the redistribution and effective use of any current underspend.
Lord Blunkett (Lab)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I draw attention to my interest as set out in the register.
Viscount Younger of Leckie (Con)
My Lords, we continue to monitor apprenticeships’ market performance, including levels of starts and spend. We have made radical reforms to the way we develop, deliver and fund high-quality apprenticeships, and further major changes have the potential to be destabilising. However, we are prepared to make adjustments when and where they are required in order to deliver our ambitions and support quality apprenticeships.
Lord Blunkett
I thank the noble Viscount for that Answer, but I am genuinely at a loss as to why the Government are so resistant to the calls being made by those who are committed to the apprenticeship levy and to quality apprenticeships for changes that would reverse the 26% drop in the last quarter in starting apprenticeships and utilise the underspend so that small and medium-sized companies and associated colleges could undertake the necessary work, perhaps in the future top-slicing sufficient funds to reach out beyond the larger enterprises, thereby helping both individuals and our economy.
Viscount Younger of Leckie
I hope that I can reassure the noble Lord that the Government have awarded £490 million to providers across the country to deliver apprenticeship training for smaller businesses from January 2018 to April 2019. Today, we have announced that in April we will be making available an additional £80 million for starts with SMEs which will support up to an extra 40,000 apprenticeships. Also, in terms of flexibility, from April levy-paying employers will be able to transfer up to 10% of the annual value of the funds entering their digital accounts to other employers, including SMEs.
Baroness Redfern (Con)
My Lords, the success of SMEs is critical to the UK economy, as is a thriving apprenticeship system. For our SMEs, a central fund enables the Government to fund 90% of the training programme, which the Minister has alluded to, leaving only 10% of the costs to be covered by businesses themselves. Unfortunately, there is still a poor level of understanding of the levy and how it can be spent among employers. Does the Minister agree that, although there has been a drop in apprenticeship starts, calling the new system a failure is not only a huge simplification but writes off the new apprenticeship system before it has even had a chance to embed? What apprenticeships need right now is positivity and action.
Viscount Younger of Leckie
My noble friend is right to say that we must not lose sight of what we are actually doing here, which is why we have introduced these reforms. It is the largest government reform of apprenticeships that has ever been made. The key point here is that we are putting quality at the heart of our reforms. We need to look at how the system is operating and provide some flexibility in the system, which is the gist of the original Question asked by the noble Lord, Lord Blunkett.
Baroness Garden of Frognal (LD)
My Lords, a recent report showed that the UK skills shortage is leading to an estimated £7.3 billion annual loss in sales to SMEs, equivalent to approximately 250,000 jobs. The Minister has already mentioned some help to be given to SMEs, but what is the apprenticeship levy doing to help SMEs meet the acute skills shortage?
Viscount Younger of Leckie
I have already mentioned the transfer arrangements. Up to 10% can be transferred by employers to SMEs to help them take on apprentices. In addition, we have a marketing programme under way—I highlight the “A” pin on my lapel in support of National Apprenticeship Week which took place last week, and there was a lot going on on the radio also. I think that we will find that the fall we experienced last year will change and that employers will be taking up more apprenticeships.
Baroness Butler-Sloss (CB)
My Lords, are the Government checking the effectiveness of individual apprenticeships to make sure that they are actually working properly for the benefit of the apprentice?
Viscount Younger of Leckie
Absolutely, and I can reassure the noble and learned Baroness that the Institute for Apprenticeships is responsible for quality and standards. It is the institute’s sole job to work closely with employers to ensure that the quality of each apprenticeship is high, which can take some time, and that the apprenticeship itself is what employers want, thus helping to increase skill levels in this country. That is our aim.
Lord Knight of Weymouth (Lab)
My Lords, there has been a 30% year-on-year fall in apprenticeship starts by under-19s. That should be no surprise because, despite this being a great applied qualification, the pipeline is being strangled by the EBacc squeezing out applied learning from the curriculum. STEM is becoming S and M in schools, as technology and engineering are being taken out, leaving only science and maths. When are our schools policy and our skills policy going to align?
Viscount Younger of Leckie
I have mentioned to the House before that we have a National Careers Service up and running. It is essential in giving proper careers advice that employers in particular can go into schools and address, and hopefully garner, the interest of pupils. We are trying to address the skills shortages. STEM skills and occupational sectors, including the digital side, are well represented in our move from frameworks to greater standards and to increasing the skills level in our country.
Lord Forsyth of Drumlean (Con)
My Lords, does my noble friend know that the Economic Affairs Committee has been looking at this issue for almost the last year? We have had employers openly admit that they are using the levy to fund training that they would have done anyway. Is it appropriate that the apprenticeship levy should be used to fund people doing MBAs at business schools and so on? Surely the resources should be concentrated on level 3, and in particular on young people, to give them the skills that they need in the workforce.
Viscount Younger of Leckie
My noble friend is absolutely right. I had not heard about this, and I will certainly follow up on the points that he has raised. The whole point of the apprenticeship scheme is that it is employer driven; it is what employers will need. The standards and quality are set by the Institute for Apprenticeships. We believe it is working well, but I will look into my noble friend’s points.
Lord Watson of Invergowrie (Lab)
My Lords, the noble Viscount the Minister should be aware that young people from low-income families are underrepresented in the apprenticeship programme. Some 13% of school children received free school meals last year; only 10% of young people starting apprenticeships had been on free school meals. One reason for that is that the Government still do not classify apprenticeships as approved education or training, with the result that the families of young apprentices lose the right to claim child benefit and tax credits. Last month at Oral Questions, I highlighted this structural barrier to the noble Viscount and asked him to speak to ministerial colleagues in the Department for Work and Pensions to try to make it more attractive for young apprenticeships to start. Has he done that, and if not why not?
Viscount Younger of Leckie
I can reassure the noble Lord that I have indeed done that. If he has not received a reply, and I am sure he should have, I will follow up immediately and make sure of that. Yes, it is true that some apprenticeships are on the minimum and I have no doubt that is a bit of a struggle. Having said that, many employers are paying more than the average, which is £6.70 an hour, rather than the £3.50 an hour that is now going up to £3.70.
Child Sexual Exploitation: Grooming Gangs
(6 years, 1 month ago)
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Lord Pearson of Rannoch
To ask Her Majesty’s Government what assessment they have made of the national scale of the “grooming gang scandal”, including sexual exploitation of non-Muslim children by Muslim men, as emerged recently in Rotherham, Rochdale, Oxford and elsewhere; and what steps they are taking to enable the prosecution of those in the police and local authorities who have failed to prevent it.
Lord Young of Cookham (Con)
My Lords, the government-funded Centre of Expertise on Child Sexual Abuse is working to build a more informed picture of the scale of these crimes, and preventing them is a priority for the Government. The Independent Office for Police Conduct is currently conducting investigations into 33 police officers of varying ranks for potential criminal offences and breaches of the standards of professional behaviour, linked to the Rotherham case.
Lord Pearson of Rannoch (UKIP)
My Lords, I fear that reply is shamefully inadequate, because these girls are usually raped several times a day. If we accept the views of our lead police officer for child protection, of Rotherham’s MP and of the recent Jay and Quilliam reports, we are looking at millions of rapes of white and Sikh girls by Muslim men, only 222 of whom have been convicted since 2005. Will the Government ask our Muslim leaders whether the perpetrators can claim that their behaviour is sanctioned in the Koran, and to issue a fatwa against it? Secondly, will the Government encourage a national debate about the various interpretations of Islam? Can we talk about Islam without being accused of hate crime?
Lord Young of Cookham
My Lords, child sexual exploitation is a vile crime and it is not exclusive to any one community, culture, race or religion. Political or cultural sensitivities should not get in the way of tracking down offenders and preventing future abuse. I say to noble Lords that we should be careful about our language in this matter, not least because I am about to repeat a Statement on inflammatory letters inciting a “punish a Muslim” day on 3 April. We need to be careful about how we approach this.
There is nothing in the Koran that encourages the sort of activity the noble Lord has referred to. In any case, the Koran would be trumped by the law of the land. Islam, like all world religions, does not support, advocate or condone child sexual exploitation. Indeed, respect for women is inherent in its faith. As my noble friend Lord Ahmad of Wimbledon has just told me, one of Islam’s phrases is, “Paradise lies at the feet of the mother”.
As for encouraging a debate on Islam, the Government are supporting an initiative by British-based Islamic leaders of all denominations to dispel the poisonous interpretations of Islam peddled by al-Qaeda and Daesh. We are taking a number of other initiatives to minimise the exposure of children to sexual abuse from whatever source.
Lord Maginnis of Drumglass (Ind UU)
My Lords, I believe many people will be grateful to the Minister for clarifying that point, but is there not a contradiction in our own society, where we fail? I ask about a questionnaire sent out by Brighton and Hove City Council, asking children as young as six or seven, or their parents, for their gender perception. If we are allowing this type of information to be collected, for what purpose? It is to condition people as they grow up. Will the Minister look at our so-called liberalism, which enables this to happen and prevents the police getting on with their duties?
Lord Young of Cookham
My Lords, that goes slightly wider than the specific Question. I am aware of the debate taking place on transgender issues and the whole debate about at what age, if at all, children should be allowed to express their own sexual preference. This is not a subject on which I am an expert. I am very cautious about entering into it, but I will certainly draw what the noble Lord has just said to the attention of the relevant Ministers at the DfE.
The Lord Bishop of Oxford
My Lords, I am enormously grateful for the Minister’s Answer to the Question. I had the great privilege to be the Bishop of Sheffield for seven years during the child sexual exploitation scandal in Rotherham and I am now the Bishop of Oxford. I spent a great deal of time in Rotherham following Professor Jay’s report and registered the shock across all sections of the community, including, of course, the Muslim community there, who were as deeply appalled by what had happened as the rest of the community. I vividly remember visiting some parents at a mosque in Rotherham and hearing how their children were insulted by the rest of the community in words I will not repeat in this House. Will the Minister affirm the condemnation with which these scandals are greeted across the Muslim communities in each of these towns and cities?
Lord Young of Cookham
There is only one word I can say to the right reverend Prelate: amen.
Lord McConnell of Glenscorrodale (Lab)
My Lords, the experience of these young girls is not to be used to encourage religious intolerance, but it is still extremely serious. Yet again this week there have been calls for a proper investigation into what happened in Telford from the local MP, a Conservative, and from Sarah Champion, who has of course championed the victims in other parts of northern England. Why is an investigation not to be launched into Telford? This seems an extreme case of these extreme violent acts against young girls.
Lord Young of Cookham
I have read the reports of what happened in Telford—disgraceful cases that took place, I think, between 2007 and 2009. The case called Operation Chalice concluded in 2012 with a number of convictions. Since then I understand that both the police and children’s services have improved the way they operate. However, the option is open in this case for the Independent Inquiry into Child Sexual Abuse, chaired by Alexis Jay, to look at what happened in Telford and at the institutional responses to the child sexual exploitation that took place in that borough.
Public Services: Corporate Governance of Businesses
(6 years, 1 month ago)
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Lord Haskel
To ask Her Majesty’s Government what steps they are taking to ensure a high standard of corporate governance at businesses that provide essential public services.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the Government’s corporate governance reform package will strengthen the United Kingdom’s corporate governance framework. Secondary legislation to be brought forward will require reporting on how company directors take their employee, supplier, customer and other stakeholder interests into account when carrying out their duties. It will also require quoted companies to publish and explain the ratio of their CEOs’ pay to the average of their United Kingdom employees.
Lord Haskel (Lab)
My Lords, I hear what the Minister says but this is the second Question we have had this afternoon about public services. Does this not indicate that the system of fines and regulation is just not working? Will the Government introduce a new purpose-driven classification to be adopted by companies which are privately owned but publicly guaranteed, because we have to ensure continuity of their essential public services? It must be a classification that ensures a standard of behaviour that is responsive to the public and ensures that company policy and company metrics are aligned to the public interest and not just to shareholder value.
Lord Henley
My Lords, we have always made it quite clear that the importance of public services will come first. In terms of the affair of Carillion, which I think the noble Lord was alluding to without mentioning its name, my right honourable friend the Secretary of State made the situation clear in his initial responses. We have also made it clear that we need to see some degree of reform of corporate governance. That is why we brought forward that reform package and why the Financial Reporting Council has been consulting on its revisions to the code; when those come forward we will take that on further.
Lord Naseby (Con)
Is my noble friend aware that the current Lord Mayor of London has launched a campaign to restore trust in corporate governance and businesses throughout the United Kingdom? In that context, will he join the Lord Mayor of London and extend it beyond that franchise to possibly involve the Institute of Directors, the CBI, the TUC and trade bodies throughout the United Kingdom? As I am sure my noble friend is aware, there is a problem with public trust in the corporate world. Will he make sure that Her Majesty’s Government are absolutely in the vanguard of ensuring that that trust is restored?
Lord Henley
I am grateful to my noble friend for that response and I am aware of the Lord Mayor’s campaign. In fact, I was present—if I remember the precise event—at the launch of that campaign by the Lord Mayor. My right honourable friend the Prime Minister has also always made her views clear about the importance of corporate governance and reforms thereof. That is why we have brought forward this package and why, as I said, the Financial Reporting Council is consulting on it.
Lord Fox (LD)
My Lords, the role of the shareholder is very important in maintaining corporate governance, but increasingly the share registers of Britain’s companies are dominated by passive shareholders who do not have the capacity to oversee the corporate governance of the companies they own. Will the Minister explain who, in the absence of the shareholder, is the prime overseer of the board to maintain corporate governance?
Lord Henley
My Lords, as I said, the code and its revisions will be important, but it is also important that shareholders play their part in this process. We have considered that and it is why we have already brought forward certain reforms to increase shareholders’ knowledge. For example, shareholders can now see when companies have significant shareholder opposition to directors’ pay. The Investment Association’s public register was launched in December and a number of investors—that is, shareholders—are already using this information as a tool to inform their voting in the upcoming reporting season. If we can improve shareholders’ knowledge, that will improve what they can do in controlling their companies.
Lord Watts (Lab)
My Lords, would it not be a good idea to have representatives from the workforce on these boards to break up the old boys’ network that exists on a lot of boards? That way we would get some proper public accountability.
Lord Henley
My Lords, we think it is very important that the voice of those working for companies should be heard on the board. In the Corporate Governance Reform Green Paper we made it clear that companies should have flexibility to choose how best to engage with their employees, and there are a number of different ways they can do that. They can have an independent director who represents employee views, an employee advisory council or a director directly from the workforce. There are a number of options. It is certainly something that should be looked at.
Lord Stevenson of Balmacara (Lab)
Does the Minister agree that one of the reasons we are now experiencing a bit of a run of scandals on outsourced public services is the lack of information available to public authorities which have to control them? Will the corporate governance changes which the Minister responded to give the Financial Reporting Council greater powers to regulate companies and to take action before things go badly wrong? It asked for those powers after the BHS collapse two years ago. When will we see the results of the lessons learned exercise on Carillion and the actions required by government, according to the Secretary of State, to strengthen,
“the oversight … of the public sector in terms of contractors”?—[Official Report, Commons, 30/1/18; col. 657.]
Lord Henley
The noble Lord is right to draw attention to the role of the Financial Reporting Council. We believe it has a range of powers that allow it to sanction, for example, individual auditors and accountants and to audit firms. In implementing our reforms, we certainly want to give further consideration to whether the FRC has the appropriate powers, resources and status to operate effectively.
Unpaid Work Experience (Prohibition) Bill [HL]
Tuesday 13th March 2018
(6 years, 1 month ago)
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Lord Holmes of Richmond (Con)
My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.
Supply and Appropriation (Anticipation and Adjustments) Bill
Tuesday 13th March 2018
(6 years, 1 month ago)
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Secure Tenancies (Victims of Domestic Abuse) Bill [HL]
Tuesday 13th March 2018
(6 years, 1 month ago)
Lords ChamberRead Full debate Secure Tenancies (Victims of Domestic Abuse) Act 2018 View all Secure Tenancies (Victims of Domestic Abuse) Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 76-R-I Marshalled list for Report (PDF, 65KB) - (2 Mar 2018)
Baroness Lister of Burtersett (Lab)
My Lords, as someone who has been heavily involved in this Bill, I should like to say a few words of thanks. I thank the Bill team and the members of the noble Lord’s private office, who have been unfailingly helpful throughout the process. I suspect that they will not be too unhappy not to be seeing my emails in their inboxes any more.
I thank noble Lords around the House who have been so supportive, particularly my noble friend Lord Kennedy, but also the noble Baroness, Lady Hamwee, and the noble Lord, Lord Shipley. I thank too the noble Baroness, Lady Evans of Bowes Park, whose assurances during the passage of the Housing and Planning Act eventually led to this Bill. She probably had a hand in this Bill seeing the light of day. Last but not least, I thank the Minister and, at the risk of torpedoing his ministerial career, emphasise how he has been a model of an open and engaged Minister committed to making this Bill the best that it can be.
I give the final word to Women’s Aid, which has been briefing us so well at every stage of the Bill. Straight after Report, Women’s Aid emailed me to thank noble Lords for the amendments made then, saying that these had really improved the Bill and ensured that this legislation can work effectively for survivors whose housing security is at risk from an abusive relationship. Thank you. I hope that we can maintain as constructive a relationship when it comes to debating the forthcoming domestic abuse Bill.
Lord Kennedy of Southwark (Lab Co-op)
Before the noble Lord winds up, I should like to pay tribute to my noble friend Lady Lister of Burtersett for her hard work and determination in getting this Bill here today. I thank the noble Lord, Lord Shipley, and others for their work. I also thank the noble Lord, Lord Bourne of Aberystwyth. I always enjoy our exchanges, here and outside the Chamber. He is a very good man who is sincere in what he does and I value our conversations about his work. He played a big role in getting this Bill in. We thank him very much as well.
Lord Shipley (LD)
My Lords, from these Benches, I add our thanks to the Minister for being so helpful in the passage of the Bill. It is a better Bill because of the work that was undertaken both in this Chamber and outside it. I thank the Minister for that. The House should pay tribute to the noble Baroness, Lady Lister of Burtersett, for all her hard work in explaining the background to this and thank too those advising her. We should also pay tribute to my noble friend Lady Hamwee for her hard work in pressing on this Bill.
As the Minister knows, it is one thing to enact a Bill. It is another for it to be implemented smoothly. The Minister has paid close attention to the need for adequate training by local housing authorities. He has also paid close attention to the issue that was raised at Report by the noble Lord, Lord Kennedy of Southwark, in relation to GPs charging victims of domestic abuse for the medical evidence that they need to secure a further tenancy. I am hopeful that that matter will be resolved in guidance.
Finally, to recall Second Reading and Committee, this Bill concerns only the public sector. It does not concern housing associations, which are now in the private sector. I hope that the Minister will ensure that housing associations follow the good practice that is now about to occur with the public housing stock.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, I thank very much the noble Lords who have spoken: the noble Baroness, Lady Lister of Burtersett, and the noble Lords, Lord Kennedy and Lord Shipley. I also thank the members of the Bill team. Often the civil servants do not get their due accolades, but they deserve to. Parwez Samnakay, Frances Walker, Jane Worthington, Jane Everton, Lizzie Clifford and, from my own team, Ed Clark have all worked incredibly hard, engaging with Peers, making things happen and working long hours. I am very grateful.
I pay tribute to the noble Baroness, Lady Lister, whose work this Bill largely is. It was her initiative to raise this with my noble friend Lady Evans of Bowes Park. Certainly my leader—the boss—deserves credit for making sure that this happened but it was the noble Baroness, Lady Lister, who was really pushing and has been pushing in a constructive way ever since. I pay tribute to what she has done.
I also extend thanks to the noble Baroness, Lady Hamwee, and to the noble Lord, Lord Kennedy. I very much enjoy our engagement. He is a model of what an opposition politician should be—if only he did not support Millwall, but nobody is perfect. I thank the noble Lord, Lord Shipley, as well for constructively engaging in this. I hope that these same key people will be there when we look at the next development in relation to domestic abuse. There is much that unites here and very little, if anything, that divides us. I look forward to that.
I also pay tribute to Women’s Aid and, indeed, to everyone working in this sector—Refuge, Imkaan and others—for the work they have done. In short, all parties and all parts of the House can take a bow with this piece of legislation, which has engaged us all in a very positive, sensible and pragmatic way. I am most grateful for that. Thank you.
Hate Crime
(6 years, 1 month ago)
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Lord Young of Cookham (Con)
My Lords, with the leave of the House I will now repeat an Answer to an Urgent Question given by Victoria Atkins in the other place yesterday.
“As you will appreciate, the letters described in the Question are part of an ongoing investigation, and as such I am not in a position to comment on them. However, the Government condemn the content of these letters as clearly abhorrent, with no place in decent society. The Government take hate crime and Islamophobia extremely seriously, and the UK has a robust legislative framework to respond to it.
Freedom of speech, freedom of worship, democracy, the rule of law and equal rights define us as a society. The Government are determined to promote these values actively, working in partnership with and alongside Muslim and indeed all faith communities to demonstrate that what we have in common is the best defence against extremists who would seek to divide us.
Our hate crime action plan, published in 2016, sets out our comprehensive approach to tackling hate crime. We have a strong legislative framework to tackle hate crime, including offences of inciting racial and religious hatred, and racial and religiously aggravated offences. The legislation provides equal protection under the law for all ethnic and religious groups. We have sources of expert advice on the nature and causes of hate crime through the Anti-Muslim Hatred Working Group and the Independent Advisory Group on Hate Crime.
We have committed £2.4 million over three years to help protect places of worship that have been subject to, or are vulnerable to, a hate crime attack. We also committed a further £1 million, following the terrible Finsbury Park terror attack in June last year, to help protect places of worship and associated community centres that are vulnerable to attack on racial, religious or ideological grounds. So far we have funded 45 mosques under both schemes.
We have also funded Tell MAMA to record anti-Muslim hatred incidents and to support victims. From this year, we have made it mandatory for police forces to disaggregate religious hate crime data held by the police to reveal the true scale and nature of the problem, which we are determined to tackle”.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, these disgusting letters have, quite righty, caused revulsion in our communities and been condemned. I pay tribute to community and faith leaders, charities and others for what they have done. They and others will not let us be divided. Domestic extremism needs to be dealt with. Can the noble Lord reassure us that the Anderson review recommendations to the Joint Terrorism Analysis Centre will start to produce the threat assessments for domestic extremism? Can he reassure the House that the police have the resources they need? He will of course be aware that the police got less than half of what they asked for to deal with terrorism.
Lord Young of Cookham
On the first question, of course we want to take those recommendations forward, and perhaps I could write in more detail to the noble Lord on that. On the question of police resources, I am aware of the exchanges that took place in the other place yesterday. After speaking to all forces in England and Wales, the Government have provided a comprehensive funding settlement that will increase total investment in the police system by around £450 million in 2018-19. Overall public investment in policing will grow from £11.9 billion in 2015-16 to around £13 billion in 2018-19. We believe that the settlement enables police and crime commissioners to increase their direct funding by up to £270 million. It is then up to chief constables to decide how best to deploy officers in their force to effectively serve and engage their communities and to build trust and confidence. The Government have made it absolutely clear that this is one of the priorities that police forces must engage in as they deploy those resources.
Lord Paddick (LD)
My Lords, these letters are right-wing terrorism and incitement to terrorism. They are the unlawful use of violence and intimidation, especially against civilians, in pursuit of political aims, and we should call it terrorism. Taking up the point made by the noble Lord, Lord Kennedy, about police resources, in the other place the Minister was asked whether the police had sufficient resources to deal with these incidents. The Minister replied:
“Of course, we have increased them …We ask the police whether they have the resources that they need, and the Home Secretary acts accordingly”.
In this House last week, the noble Baroness, Lady Williams of Trafford, said:
“The police told us last year the number of additional police officers needed to do their job. We feel that in the budget they can attain this year they will have those police numbers—and more—to do the job that they do”.—[Official Report, 8/3/18; col. 1249.]
However, the Police Chiefs’ Council, in response to the most recent budget settlement, said:
“While the extra funding to tackle terrorism is welcomed, counterterrorism policing is considering tough choices as their settlement equates to a less than 2% increase on current spending at a time when demand has grown by 30%”.
Can the Minister say how these statements can be reconciled?
Lord Young of Cookham
My Lords, the noble Lord has been a policeman and is now a politician. He will know that the figures to which he has referred can be looked at from two dimensions. The police have their own perception. The Government have the one that I just set out: that there has been a real-terms increase in resources available to the police. On top of the resources that we are putting into the police, it is also important to put on the record that we are taking forward our plans for tackling hate crime. There are a number of other initiatives that we have taken in order to tackle far and extreme right-wing activism, for example. There is the Anti-Muslim Hatred Working Group and its achievements. We have also funded Tell MAMA, which I mentioned a few moments ago, with £1.9 million. We are putting £1.2 million into Remembering Srebrenica and we are putting £2.4 million over three years into the security of all faith establishments, including mosques. There are a number of other initiatives, including £900,000 to support community projects, so on top of the resources for the police—and we can disagree about what perspective is put on those—there are other initiatives that we are taking to tackle hate crime.
Baroness Warsi (Con)
My Lords, it gives me no comfort or pleasure to say this, but for the sake of completeness I would like to put on record some details of the letter that has now been received by households across the United Kingdom, including those of some Members of Parliament. This is a letter that gives out points for punishing a Muslim. A few examples are: points for verbally abusing a Muslim, pulling the headscarf off a Muslim woman, throwing acid in the face of a Muslim, beating up a Muslim, torturing a Muslim with electrocution, butchering a Muslim with a knife—and it goes on. This needed to be put on record to describe what is happening in 2018.
I received a long message from a friend. At the end of it, she said:
“I urge you, Sayeeda, please do not go out on 3 April. It is Punish a Muslim day”.
I will, along with many other Muslims, be going out on 3 April because we will not be intimidated in this way. The facets of hate crime—children being bullied in playgrounds, women being assaulted on our streets, the media destroying reputations, the low-level and the high levels of Islamophobia that are now prevalent in our society—add up to what I call in my book the Seven Sins of Islamophobia, showing the way in which even the respectable now rationalise bigotry.
Will the Minister urge the Prime Minister to go further on this issue? I am delighted that the initiatives that he referred to—the cross-government Working Group on Anti-Muslim Hatred, Tell MAMA, Remembering Srebrenica—are all initiatives that I spearheaded in government, and which I am grateful are still being run by the Government. At what point, however, are we going to step this up and face down the awful scourge of Islamophobia—which, unfortunately, is increasing year by year?
Lord Young of Cookham
I applaud the courageous words of my noble friend and her statement that she will not be intimidated. She will know better than I do that many of the Muslim community are being intimidated by this leaflet when it arrives; they do not know where it came from or how the sender got their address. That is why there is a serious police investigation to find the source of the leaflets, and I urge anybody who receives one to report it and, as my noble friend suggested, to contact Tell MAMA.
The Government condemn the content of these letters. As I said in the Statement, it is abhorrent and has no place in a decent society. I know that the Prime Minister, who as Home Secretary took a number of initiatives in partnership with my noble friend, will want to reflect on the exchanges in the other place yesterday and today to see whether we can build on some of the other initiatives that my noble friend referred to and whether there is further action that we can take in order to counter hate crime in this country today.
Baroness Hussein-Ece (LD)
My Lords, I also thank the noble Lord for his response and pay tribute to the noble Baroness, Lady Warsi, for all the work that she did. This is deeply tragic and upsetting, and it is clear that it is part of a larger campaign to vilify, divide and terrorise Muslim communities in this country. It is something that we must never give in to. I certainly will not be bowed by threats. I have had death threats purely because I come from Muslim heritage; I was told on social media that my head would be chopped off and put on a spike outside Parliament, and the police were involved. But I will not give in, and I am sure that many people will not. However, there are very vulnerable people in our community.
I say also that the media have to take responsibility for the constant drip-drip of vilification in their headlines and the finger-pointing at Muslims generally that we have seen gradually reaching fever pitch in this country. Programmes give time to peddlers of hate crimes. There are lurid headlines and finger-pointing, which I mentioned. Indeed, the Minister had to correct a Member of this House and point out that the sort of language that we are hearing from politicians has no place in this society.
I have one question. The Government mentioned the Prevent strategy. Do the people who take part in it have the expertise to deal with far-right extremism of this kind? We know that the strategy deals with Islamophobia, but do they have that kind of experience? How confident is he?
Lord Young of Cookham
The hate crime action plan that I referred to a moment ago is going to be refreshed this year, and we will take on board the points that she and other noble Lords have made. I will make one final point: yesterday there was a Commonwealth service in Westminster Abbey, where all faiths were represented and a script from every religion was read out. That is the sort of country that we are and should remain, and we should put the issues that the noble Baroness and others have referred to in the perspective of this broader picture.
The Lord Bishop of Newcastle
My Lords, on behalf of these Benches and, I am sure, on behalf of the Church, I want to say that any attack on a person or community on the basis of their faith or their race is abhorrent and has no place in a decent, civilised society. As a Christian leader I stand in solidarity with my Muslim friends and with all those in and outside this building who have been directly affected or are fearful and anxious. In the light of the Government’s forthcoming integration strategy, will the Minister please comment on what practical action the Government intend to take to strengthen the relationships at grass-roots level, where it matters so much, between Muslim and other religious communities and to reassure us that the necessary resources will be committed to make that meaningful?
Lord Young of Cookham
The Muslim community will be reassured by the words of solidarity that the right reverend Prelate has just outlined. On the question of the integration strategy, if there were to be a Statement on the strategy in the very near future, it would be made by my noble friend sitting next to me—and he will have taken on board the requests as to what should be in its contents.
United States Tariffs: Steel and Aluminium
(6 years, 1 month ago)
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The Minister of State, Department for International Trade (Baroness Fairhead) (Con)
My Lords, with the leave of the House, I shall now repeat a Statement made by my right honourable friend the Secretary of State for International Trade in another place. The Statement is as follows:
“Mr Speaker, on Thursday 8 March, President Trump announced that the United States would impose a tariff of 25% on steel imports and a 10% tariff on aluminium imports after a period of 15 days, with the final day being 23 March. Canada and Mexico, with which the United States is renegotiating the North American Free Trade Agreement, have been exempted from the tariffs, subject to the successful conclusion of the NAFTA negotiations.
For the products within the scope of the investigation, in 2017, the US accounted for 7% of UK steel exports and 3% of UK aluminium exports. In addition, the UK accounted for 1% of US steel imports and 0.1% of US aluminium imports, in tonnage, at a value of £360 million and £29 million respectively. The President outlined that there is scope for further countries and certain products to be exempted from the tariffs.
From a UK perspective, as Members of this House know, the UK and the US are strong partners and allies, and the US-UK economic and security relationship is crucial. The US is our largest single-nation trading partner, accounting for a fifth of all exports, worth more than £100 billion a year. It is also the top destination for outward direct investment by the UK and the single biggest source of inward investment into the UK. We have a long-standing and special relationship with the US. However, that does not mean that if we disagree with something, we will not say so, and we do disagree with the US decision to implement tariffs on steel and aluminium imports based on national security considerations.
Such unilateral trade measures have weak foundations in international law and are not consistent with the Department of Defense’s own judgment in an investigation that was conducted on the basis of national security. There is undoubtedly a problem of overcapacity in the global steel market, but our strong view is that a global problem requires a global solution, not unilateral action. The UK has worked hard to address the issue of overcapacity. The Prime Minister called for a forum of G20 members to tackle this issue, which my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy attended in Berlin in November. The forum agreed comprehensive policy solutions. Most recently, the Prime Minister raised it during her visit to China, which is the world’s leading producer of steel and aluminium products. The UK will continue to work within the rules-based international trade system to tackle this problem.
Since the President asked the Department of Commerce to launch the investigation into the national security impact of steel and aluminium imports last April, the Government have made clear to the Administration on repeated occasions the potentially damaging impact of tariffs on the UK and EU steel and aluminium industries. The Prime Minister has raised her concerns directly with President Trump. I have spoken on several occasions to the Commerce Secretary and to the US Trade Representative about the investigation, including this afternoon. I spoke again today to the director-general of the World Trade Organization, Roberto Azevêdo, and I regularly speak to the EU Trade Commissioner, Cecilia Malmström. Several of my Cabinet colleagues have raised this issue with their opposite numbers. The Government have worked closely with the EU as part of our unified response. In addition, I assure right honourable and honourable colleagues that we have been in regular contact with the UK steel and aluminium industry throughout. I spoke to Gareth Stace at the weekend and again this afternoon.
There are two routes to petition the US for exemptions from the tariffs. The first, overseen by the US Trade Representative, will exempt countries with which the US has a strong national security relationship and which agree alternative means to address the threat to US national security from the relevant imports. The second, overseen by the Department of Commerce, will evaluate product exemptions if it is deemed there is no domestic US alternative and there are national security considerations, but only after a request for exclusion is made by a directly affected party located in the United States.
The Department for Business, Energy and Industrial Strategy will be assisting UK industry in working with US customers to build their cases for the exemption of individual products. I will be travelling to Washington this week for face-to-face meetings with the US Trade Representative, Ambassador Lighthizer and Commerce Secretary Wilbur Ross, as well as leading members of Congress. I will be making the case for the UK, as part of the EU. We have a strong defence and security co-operation relationship. As close allies in NATO, permanent members of the UN Security Council and nuclear powers, close co-operation between the UK and the US is vital to international peace and security.
As the House is aware, our current membership of the European Union means that the European Commission will be co-ordinating the EU response, and we have been clear that we will continue to adhere to the duty of sincere co-operation. The EU response is focused on three possible areas. First, the European Commission is preparing to introduce immediate duties on the US, ahead of a WTO dispute. The EU has shared a draft list of proposed items for duties and we expect it to publish this list early next week. Secondly, the EU can apply a safeguard measure of its own to protect the steel and aluminium industries from being damaged by an influx of exports to the EU caused by the displacing effect of US tariffs. Thirdly, the EU can pursue a dispute at the WTO. We are currently evaluating all aspects of these responses together.
We are clear that it is right to seek to defend our domestic industries from the direct and indirect impacts of these US tariffs, protecting both jobs and industrial capacity. We will also press for any response from the EU to be measured and proportionate. It is important that the UK and the EU response works within the boundaries of the rules-based international trading system. Over the coming days, we will be working closely with British industry and the EU to seek swift clarification and mitigation. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Lord Stevenson of Balmacara (Lab)
My Lords, I thank the noble Baroness, Lady Fairhead, for repeating the Statement. This is my first opportunity to debate her at the Front Bench, and I am looking forward to working with her on the international trade Bill when it reaches your Lordships’ House.
We have, over the past year, heard regular statements about problems affecting our steel industry, although this announcement of tariffs on steel and aluminium imports, blatantly aimed at protecting US producers, must rank as one of the worst because of its implications more widely for free trade.
The House of Commons Library briefing paper on the steel industry in the United Kingdom 2016 suggested that the steel sector accounted for £1.6 billion of UK economic output, which is about 0.1% of the UK economy and 0.7% of our manufacturing activity. It has about 600 businesses, and 32,000 people are employed in the sector. The UK is the 18th-largest steel producer in the world, the fifth-largest in the EU after Germany, Italy, France and Spain. Approximately 15% of 350,000 tonnes of steel was exported directly to the United States in 2017.
We should extend our concern and support to the employees of British steel firms and their communities, which must be very worried about this questionable and ill judged unilateral decision by the USA. What assessment have the Government made of the impact of this decision on jobs in the steel sector and the economic hit that will be felt, particularly in communities outside London?
I have three further questions for the Minister. First, this announcement was not unexpected. It followed a series of pledges from President Trump to take what he calls “tough and decisive action” on perceived threats to the US national interest and to domestic producers as a result of international trade competition from overseas. It is very much in line with his “America first” platform. When did the Government become aware that President Trump was going to impose tariffs on imported steel and aluminium? What representations did the Government make to the White House prior to the announcement, and what assurances were sought that these tariffs would not be applied to UK exports?
Secondly, earlier this year, President Trump announced tariffs on imported washing machines and solar panels to give a boost to US producers in these sectors. President Trump also imposed a 30% tariff on imported solar cells, and last year the Department of Commerce sought to impose tariffs of up to 292% on imported narrow-body, medium-range jets until the US International Trade Commission accepted the arguments made by Bombardier and others and overturned that decision. What other sectors of the economy are the Government concerned about? What representations are they currently making to ensure that the UK will be able to export to the United States in the near term without facing unfair tariffs? For example, the President has mentioned additional protection for intellectual property. Given the strength of our creative industries, have the Government taken up that issue in particular?
Finally, the Secretary of State announced the establishment of a US-UK Trade and Investment Working Group in July last year, a group that has met twice since then. Given that the President has said he would welcome a trade war and thinks America would win it, what discussions have been had about steel, aluminium and the other new tariffs at these meetings? What assurances have been sought from the US Government about exemptions for UK exports in any free trade agreement that might be in consideration post Brexit?
Lord Purvis of Tweed (LD)
My Lords, we too are grateful to the Minister for repeating the Statement. Just at the time that we are loosening our ties with our largest single integrated market in the European Union, we see the next bilateral largest market in the United States moving towards a protectionist tone. Over recent months we have been repeatedly counselled by Ministers that we should look at not just the rhetoric of the United States President but at the actions. Now it is quite clear that there are repeated actions which are contrary to the interests of the British economy. The announcement of the Secretary of State today and of economic advisers last week are clear.
When I was in Buenos Aires as an observer at the ministerial conference of the WTO, the US left without a communiqué being signed. These worrying trends are clear to see. Last year, the Secretary of State, Dr Fox, said, while in the US, referring to the UK/US relationship:
“Firstly, we must lead by example, and work to encourage our trading partners across the world to support, and adhere to, the rules-based global trading system”.
Will the Minister therefore confirm that it is the view of Her Majesty’s Government that this action by the President is clearly contrary not only to how strong allies with a so-called special relationship should act but to international law?
We also know that in the presidential proclamation the President said that there would be a mechanism for reviewing the decision on impairing US national security if the countries concerned showed that their actions would not impair that national security. However, in recent discussions with the US, the EU and Japan could not discern on what basis these issues would be considered. What is Her Majesty’s Government’s view on these blackmail conditions that President Trump would seek to impose on allies for there to be adjustments to, or the removal of, these tariffs?
We have heard reference to the working group, which I have raised in this Chamber before. Did officials on the working group inform us that there was a likelihood of these tariffs being imposed on the United Kingdom? The Secretary of State indicated that he was due to visit the US and had no doubt planned to discuss the progress of the working group. What status does the working group now have given that we are clearly in a trade dispute?
Finally, we and our allies around the world continue to believe in free trade, even if the United States does not. How will we seek redress within the WTO mechanisms? Will the Minister reassure the House that we will be in precisely the same position as the European Union if we appeal for redress under the WTO mechanisms? This trend of protectionism cannot be in the interests of the United Kingdom. Clearly, our interests lie in standing shoulder to shoulder with our European Union allies on this issue.
Baroness Fairhead
My Lords, regarding the core of the problem, which is global excess in steel capacity around the world, we have been clear as a Government, and my right honourable friend the Prime Minister has been absolutely clear, that this is the wrong way to approach a global problem. The right way to approach it is the way we have been encouraging: through summits, where we have discussions about the measures countries will take to manage the problem in a balanced, global, multilateral way. We have been clear that we do not think this decision is in line with our approach, and we do not agree with it.
We are trying as a Government to work as part of the EU—as you know, we have a duty of sincere co-operation, which we fully expect and intend to fulfil. The first aim will be to stop this happening at all, through a process of negotiation and engagement. There have been multiple examples of engagement, from the Prime Minister to the President and the Secretary of State for International Trade, all the way through government. We will also work with the EU to look at the protections we can put in place if our aim cannot be achieved. My difficulty in addressing the comments of the noble Lord, Lord Stevenson of Balmacara, about the effect on jobs, is that we do not know what the state of the negotiations and engagement will be, what exemptions can be achieved and therefore what the effects will be on which products. It is too early to say.
However, we will absolutely be supporting UK steel and aluminium companies, through multilateral bodies, trying to ensure a global playing field, and, through various initiatives, ensuring that the EU is working at the global summit on 28 specific recommendations to address capacity. We believe that that will help our steel and aluminium industries.
We are also working with the steel industry. I mentioned that we have met with Gareth Stace, the director of UK Steel, and we are working within BEIS to ensure that UK steel companies which think they will be affected present their cases as actively as possible in the US, so that companies there ask for exemption for their products. We are encouraging trade unions and industry to work with us; we find that in the US there is significant support from both Republicans and Democrats in Congress for open and free trade.
The noble Lord, Lord Stevenson, asked how much of a heads up we had about this. There have been noises in the press about potential statements. It was broadly mooted before a meeting in Sofia, where my right honourable friend the Minister of State for Trade Policy in the DIT was present. It was discussed in broad terms then but, until an executive order was put in place on 8 March, it was speculation.
Before we leave the EU we clearly cannot be in any formal negotiations, so the trade and investment working group is discussing options only. It has been making progress and is due to meet, as planned, next month, so that work is continuing. I believe the noble Lord, Lord Purvis of Tweed, asked specifically about that. We welcome the US in saying that they look forward to a free trade agreement when the UK is in a position to negotiate one.
In terms of the EU and the safeguards, this Government remain absolutely committed to the WTO. We believe in the principles of free trade but in a rules-based, multilateral environment, and we will continue to support the WTO. We believe that our role here is to make sure that the benefits are seen and that we do not raise the temperature of the debate, and to engage with the EU and industry on behalf of the UK but as part of the EU.
Lord Rooker (Lab)
I remind the Minister that the Secretary of State, whose Statement she has just repeated, has in the past, when talking about trade deals with the United States, mentioned agricultural products. Last week, President Trump—in one of his tweets; not in an official government statement—also linked agricultural products with the very issue of steel and aluminium. Can the Minister give a categoric assurance that the UK Government will not sell out the UK agricultural industry in order to get a deal over steel and aluminium?
Baroness Fairhead
Regarding the idea that this is in the national interest, we have been clear that the EU assessment is a safeguard. We are trying to stop this happening in the first place and trying to get exemptions. We are taking this forward through engagement, and we will need to create a list of measures with the EU that we will take on a proportionate basis if we do not progress. My sense is that the best thing we can do is to work on global steel capacity multilaterally. I think that that was the view of this Government and your Lordships’ House, who believe in that rules-based environment.
Viscount Hailsham (Con)
Does my noble friend agree that our response from within the European Union is more effective than it would be from without the European Union?
Baroness Fairhead
It is difficult to argue that one way or the other. I know that the UK has specific national security relationships with the US. We have had a long and enduring relationship on defence, strategy and economic growth, and therefore we have a significant position on our own. I cannot calibrate the difference but I know that we are part of the EU, and on this matter we will be working alongside the EU and following the duty of sincere co-operation.
Lord Hannay of Chiswick (CB)
Does the Minister accept my view that it is very welcome that the Government are taking such a forthright attitude towards these measures taken by the United States—measures which seem to have no foundation whatever in the rules-based World Trade Organization order under which we have all lived so profitably for the last 70 years? Will she say quite unequivocally that we support all Cecilia Malmström’s efforts to get an exemption both for products and for the European Union as a whole, and that our support for her efforts is unequivocal? When the Secretary of State goes to Washington later this week, will he make it clear that we are supporting Cecilia Malmström’s efforts on our behalf? If the Minister will forgive me for correcting her, it is not only a question of sincere co-operation; we are part of a common commercial policy, and that means working to get an exemption for the whole European Union.
Finally, taking retaliatory measures is obviously extremely unpalatable, and taking a dispute settlement to the World Trade Organization is not something that we would have wished for. We are faced with a President of the United States who seems to think that trade wars are a good thing, but he had better learn some time that they are not.
Baroness Fairhead
I thank the noble Lord, Lord Hannay, for his remarks. We are engaging with the Trade Commissioner, Cecilia Malmström, and the Secretary of State will be acting on behalf of the UK but as part of the EU. We are working to stop this happening—job one will be to stop this happening; job 2 will be to get exemptions where we can—and the Secretary of State will be speaking on behalf of the EU and UK industry. I would welcome help from anyone in the industry and the unions who has an interest in this because there is a real issue here. We need to make sure that the benefits of free trade are fully realised, as we have seen in this country. A rules-based international system has lifted 1 billion people out of poverty and we do not want to set our face against that. The Secretary of State will be speaking to Cecilia Malmström later today ahead of his visit and he will feed back after his visit, so we are connected.
Lord Campbell of Pittenweem (LD)
My Lords, in the light of the events that we have been discussing, how long can the Government credibly advocate an enhanced trade deal with President Trump after Brexit? President Trump is one of the most volatile and capricious presidents in the history of the United States. He has taken actions which are contrary to the rules-based system and even today has sacked Secretary of State Tillerson for his independence of thought and, in particular, for his expressions of sympathy and support for the United Kingdom in relation to the events in Salisbury. How can we possibly put our trust in President Trump?
Baroness Fairhead
I thank the noble Lord. We have had a long and enduring relationship with the US and, in the past, when protectionist measures were applied—for example, in 2002—they were eventually rowed back and the relationship continued. It is important that we continue to demonstrate the benefits of free trade. The number of jobs expected to grow in the UK steel industry versus the number that might be lost in downstream industries indicate that potentially, this is not a good move in the US. A recent think tank report said that there could be a net loss of around 146,000 jobs in the US if this was put in place. We need to argue for free trade. We have a long and enduring relationship and the UK/US economic, national and defensive co-operation will endure long term into the future.
Lord Cormack (Con)
My Lords, I congratulate my noble friend on the way she is handling this delicate and tricky matter. I hope that she will be involved in some of these negotiations and, if she is, that she will reinforce the fact that we are working with friends and neighbours in the European Union and that this ought to be an object lesson to everyone who has the interests of our country at heart.
Baroness Fairhead
I thank my noble friend for his supportive words. Although officially I am not in the Trade Policy Unit—I am concentrating on exports—I obviously have interactions with it. It is likely that I will visit the US in a few weeks’ time and I will continue to represent the importance for us of addressing the excess steel capacity in the world, which is the root cause of the problem. We have made good progress along those lines. Where we see other countries behaving improperly, we are able to initiate anti-dumping or anti-subsidy measures. In the UK alone there are 45, which have proved to be effective. We will continue to fight but it is important that we do so within a rules-based system.
Lord Adonis (Lab)
My Lords, I congratulate the Minister on her appointment, and we wish her well in her trade export work. We commiserate with her, however, for having to repeat that Statement from the Secretary of State for International Trade, which was a catalogue of name calling and impotence. If he had the influence he claims with his great long list of American friends, whom he will be lobbying over the next week or two, we would not have had these tariffs in the first place.
I have two questions. First, is the Minister in any way optimistic that President Trump will lift the tariff he has announced? Secondly, does the Minister not think that this situation gives the complete lie to the argument for leaving the European Union on the basis that Britain’s global trade will somehow compensate for the loss of trade with the European Union that we will suffer? In addition, does the Minister not agree that the Prime Minister’s choice of words in her Mansion House speech—she said that it is now an object of policy on the part of Her Majesty’s Government that we will have less market access to the European Union—looks ever more unwise with each tweet and utterance from President Trump?
Baroness Fairhead
I thank the noble Lord for his welcome. I do not agree with his sense of impotence regarding the Statement. To begin with, there are a whole range of things we are doing for global steel capacity. We are part of the EU and work within that framework. We are engaging on behalf of UK industry with the US and EU, and our hope is that we can negotiate. We are looking at exemptions—I would not like to give you the probability of which, if any, we will get, but we are certainly pushing very hard for that. We need to continue to engage and represent the UK as part of the EU in this regard.
Lord King of Bridgwater (Con)
While the Minister is absolutely right that we must act in full conjunction with the European Union, there is no question but that we have a very special relationship—in whatever way that is described—with the United States. Although the noble Lord, Lord Campbell, has said that we cannot possibly trust the President of the United States, he is the President and it is very important that the Secretary of State makes effective representations to him and his colleagues to ensure that we avoid what could otherwise be an extremely difficult situation.
Baroness Fairhead
I absolutely agree with my noble friend Lord King. Very strenuous representations will be made. We think these tariffs have a very weak legal basis, and the EU deems that this will enable some countermeasures and, possibly, safeguards to be put in place. We need to engage with this very important friend and ally to make sure we get above this and move on to the agenda of building wealth right across the world, and make sure that we have a sensible global approach to global problems.
Viscount Waverley (CB)
My Lords, when the Government consider which debating points to put before the United States, and to President Trump in particular, they might wish to remind him of his policy of putting America first. Will the Minister put on record, with supporting evidence, why these measures are detrimental to all US businesses?
Baroness Fairhead
There are studies available. I mentioned a US trade body which represents downstream industries that think they will be negatively affected and that the net effect on US jobs will also be negative—its study is already a public document. We are trying to avoid protectionist measures that stop the further development of economic trade and of developing countries. The latter could provide a ratchet effect and bring us all up together.
Lord West of Spithead (Lab)
My Lords, the Statement explains at length how the Americans have made an assessment of the strategic requirement for a steel industry. That begs the question of why we have not made such an assessment. Do the Government believe that there is a strategic requirement for a viable steel industry in this country?
Baroness Fairhead
There is a question around whether it is a strategic national interest element, as the noble Lord mentioned, but we would question the President’s argument for it. I think that a lot of people would also question the figure of 80%. In terms of this country, we believe in open and free trade and that we should be protecting our industry to make sure that the sector is not the victim of bad practice, which is what the rules-based regime does. We are also trying to support our industry by making sure that we adjust for any requirements that we put on it. For example, the Government have compensated the UK steel industry to the tune of more than £200 million for the additional costs linked to the climate change levy and the renewables targets. We believe that we should allow open and free trade and that we should protect robustly our businesses so that they are able to compete on a level playing field, and we will support them in any way we can to do so.
Lord Lawson of Blaby (Con)
My Lords, I congratulate my noble friend on her new responsibilities and on the way she has been answering these questions. This action by President Trump should not come as a surprise given that, so far as I recall, it was part of the manifesto, as it were, on which he was elected. Nevertheless, it is wholly deplorable and should be condemned. But is it not the case that we will be able to use the special relationship to which my noble friend Lord King and others have referred only once we leave the European Union? As long as we remain within the European Union, overseas trade is an EU competence and all we can do is support the European Union in the efforts that it is making. After we have left, it will be a different story.
Baroness Fairhead
I agree with my noble friend Lord Lawson that when we are an independent trading nation, we will be able very directly to use the relationship we have with a key ally. That said, given that we believe so strongly in global free trade within an international rules-based system, and given that we are part of the EU and have a duty to co-operate, we will use our special and deep relationship with the US to help the EU overall in progressing this with the US by trying to ensure that we have the best possible chance of eliminating the tariff or getting significant exemptions.
Lord Adonis
My Lords, does the noble Baroness agree that it is a complete fantasy if the noble Lord, Lord Lawson, thinks that we will be in a stronger position to negotiate with the United States when we do not have the weight of Europe behind us and we are acting entirely independently? Further, does she not think that that is a controlled experiment which can only do enormous harm to the country and that we would be better off not engaging in it in the first place?
Baroness Fairhead
We should be happy that we have a long, enduring and strong relationship with a very important partner and all our efforts should be concentrated on addressing where we do disagree, because where that is the case we will say so, and in this case we have done so. Equally, however, the numbers I have seen on our trade with the US show that we have $1 trillion-worth of mutual investment in each other’s economies. We should be taking that forward and using it to make sure that global trade really prospers around the world.
Smart Meters Bill
Tuesday 13th March 2018
(6 years, 1 month ago)
Lords ChamberRead Full debate Smart Meters Act 2018 View all Smart Meters Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 5 February 2018 - (5 Feb 2018)
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the rollout of smart meters is a key enabler for the transformation of our energy system. Smart meters are a critical part of the platform for the development of a smart grid and demand-side measures. Smart meters will facilitate greater flexibility in the production and consumption of energy by providing better information and improving communication between consumers, suppliers and network companies. In particular, they will improve the ability to shift demand to match supply, allowing us to make use of excess renewable electricity when it is available and use less electricity at peak times when it is more expensive. They will also improve distribution network companies’ understanding of and control over the use of their networks, allowing more power to flow through the existing wires without reinforcement, improving reliability and safety as well as reducing costs.
The development of a world-leading smart energy system, which delivers secure, cheaper and cleaner energy, is an important part of our industrial strategy. The vision of a smarter energy system, built on a platform of smart metering, is a prize worth striving for. The smart metering programme is one of the most significant infrastructure projects our country has seen. Over 50 million gas and electricity meters are expected to be installed in over 30 million homes and small businesses. The Government are committed to ensuring that all homes and small businesses are offered smart meters by the end of 2020, and considerable progress has been made. The enduring national data and communications service has been built, tested and launched. The Government have also established much of the regulatory, policy and technical framework necessary for this programme to be a success.
Energy suppliers are now actively installing smart and advanced meters, backed by Smart Energy GB’s national consumer awareness-raising campaigns. By September 2017, over 8.6 million smart and advanced meters were operating in homes and businesses across Great Britain. Rates of installation are also increasing, with around 400,000 being installed each month. Households and small businesses can start saving energy and money as soon as their smart meters are installed. Indeed, smart meters are expected to take £300 million off domestic energy bills in 2020 alone, rising to £1.2 billion a year by 2030. These are not small sums of money, and it is right that the Government continue to oversee and monitor the rollout to ensure that it delivers effectively, bringing benefits to GB consumers.
The costs of the rollout were debated extensively in another place, and the Government have listened to the concerns raised. Along with the regulator Ofgem, we closely monitor progress and costs to ensure that the significant benefit case, estimated at £5.7 billion net benefits, is secured. It is worth highlighting to the House that, following those debates and as part of our broader commitment to transparency, we agreed to publish a further update of the cost-benefit analysis for the programme in 2019. The Bill received broad support at Third Reading in another place, as would be expected for a well-established programme that has its origins in the Energy Act 2008 and was considered further when its powers were amended in the Energy Act 2011. I hope that we can continue the same constructive debate that has characterised the Bill’s passage to date.
Let me turn to the Bill itself, which has three measures. The first measure in the Bill extends by five years the Government’s powers to direct the rollout of smart meters, which are due to expire in November 2018. The most important of these is the power to modify energy licence conditions and industry codes, for the purposes of supporting the smart metering rollout. The Government have used their powers to put in place minimum common technical standards and consumer safeguards, including in relation to data access and privacy. Extending these powers to 1 November 2023 is necessary to maintain coherence in the rollout of smart meters and ensure that relevant activities are co-ordinated. This could include situations where new technical solutions are required to address any residual challenges to full smart meter coverage to ease industry-wide delivery challenges. In addition, the Government will look to take opportunities to maximise benefits from smart meters once installed.
The second measure will enable the establishment of a special administration regime for the smart meter communication licensee—currently the Data Communications Company, or DCC—to ensure the continuity of the smart meter communication service in the unlikely event of the licensee’s insolvency. The DCC is a licensed private sector entity and provides the national communications infrastructure for smart metering. The DCC enables energy suppliers and networks to collect energy consumption data remotely and securely, supporting them in delivering the full benefits of smart metering. Meters operated within the DCC will also be fully interoperable, enabling consumers to switch their energy supplier and keep their smart services. The special administration regime for the smart meter communication licensee is similar to that for energy networks and energy suppliers. The provision of a special administration regime has also been adopted across other sectors, including rail and water. The DCC’s financial arrangements are constructed so as to make the risk of insolvency low. However, the special administration regime is a sensible precaution, with the aim of ensuring continuity of the DCC’s services and so protecting consumers and industry from the impact of any hiatus in service provision.
The third measure relates to the delivery of half-hourly electricity settlement by Ofgem. Half-hourly settlement is a key enabler of the move to a smart energy system and will help deliver benefits to consumers and the energy system by providing incentives on energy suppliers to develop and offer innovations such as time-of-use tariffs, which will enable customers to use energy when it is cheaper, reducing their bills and the costs of the future energy system. This will also help the energy system become more resilient as we move towards an increasingly low-carbon generation mix. Ofgem is currently working with industry and consumer groups to assess the costs, benefits and market design options for market-wide half-hourly settlement. It intends to take a decision on whether and how to implement it, informed by an impact assessment, by the second half of 2019. This third measure will provide Ofgem with new powers that would allow it to deliver these reforms more swiftly and smoothly than under existing processes by allowing it to directly modify relevant industry codes and documents.
In summary, smart meter rollout will deliver a much-needed digital transformation to our energy system, providing the platform for a smarter, more flexible energy system that supports innovation in new, smart products and services. For consumers, smart meters provide the foundation for smarter living, creating opportunities for the emergence of innovative products and services, and taking us to a future where, for example, smart appliances such as dish-washers and fridges use energy when it is cheapest and to help reduce peak demand and energy system costs; energy networks know who has been affected by a power cut; and new tools support assisted living. Access to detailed, accurate energy consumption information will also support the delivery of tangible and immediate benefits to households and small businesses across Great Britain. I beg to move.
Lord Grantchester (Lab)
My Lords, smart meters are a necessary and vital part of national infrastructure to provide secure energy supplies to consumers in a more efficient, cost-effective way. They will allow households to benefit from innovation in the energy market. The measures in the Bill extend the powers of the Secretary of State to amend regulations to roll out smart meters from 2018 to 2023. The Bill introduces a special administrative regime for the Data Communications Company—the DCC—as a precautionary measure to protect consumers in any event from insolvency in the critical DCC infrastructure. The Bill will enable half-hourly electricity readings via smart meters to be used in energy bills, necessary for rewarding consumers and allowing them to use energy in more cost-effective ways, ensuring a more efficient system.
The Minister is correct in saying that it is largely a technical Bill, limited in its scope to issues in the smart meter programme. I thank him and his Bill team for making so much time available to meet me and other Members of your Lordships’ House: it has been extremely helpful. On these Benches, the Bill remains relatively uncontroversial: Labour agrees with the measures in the Bill, agrees with the importance of smart meters and with the need to roll out their use as judiciously as possible. Nevertheless, there are a few buts and a few wider points to be made about the flaws in the smart meter rollout system, the inadequacy of the communications arrangements and the disruption caused between the introduction of SMETS 1 and SMETS 2 meters.
The first point of contention is: why has the programme taken so long? The powers granted to the Secretary of State to implement and direct the rollout of smart gas and electricity meters go back to the Energy Act 2008. They now need extending from 2018 to 2023. Why did the DCC go live only in November 2016? The Minister may contend that everything is on track, the industry is committed and energy suppliers remain legally obliged to complete the rollout by the end of 2020. He may point to the fact that the smart meter data access and privacy framework was introduced in December 2012, which determines the level of access that energy suppliers, networks and authorised third parties can have to energy consumption data and determines the purposes for which these can be used. The Government have committed to concluding a review of this framework by the end of this year.
While it is understood that the Secretary of State needs time beyond 2018 to implement any conclusions from this review, it is nevertheless likely to be understood that the initial end date slipping beyond 2020 to 2023 is the real reason behind this extension. This view is reinforced when we hear of delays brought about by issues concerning the setting up of the DCC and the hesitancy brought about by the muddle between SMETS 1 and SMETS 2 meters, when the Government had to withdraw their early rollout obligation to install 1,500 SMETS 2 meters, or 0.025% of total meter points, whichever was the lower, by 1 February 2017. I believe that only about 100 SMETS 2 meters have been installed to date. Perhaps the Minister can update us.
SMETS 1 meters do not offer the same consumer benefits as SMETS 2 meters, with significant loss of smart functionality on any change in energy supplier by consumers. It is hard to understand why the Minister’s department has taken insufficient account of the consumer perspective around the importance of interoperability of smart meters. In changing suppliers, the consumer is not thrilled to learn that the SMETS 1 meter goes back to being a conventional meter, especially having paid the cost of implementation.
With the provision in the Bill to bring in half-hourly settlement, Ofgem is considering options for access to consumers’ half-hourly data to develop the data access regime and will be consulting on this, supported by a privacy impact assessment. This brings an added challenge to the understanding of what the offer should be in order for the consumer to agree to accept a smart meter.
The extension of powers in the Bill—a further five years from 2018 to 2023—is an indication that the Government fear that they might not meet the deadline of the end of 2020 to complete the rollout. The figures support this conclusion. As of February 2018, only 8 million SMETS 1 smart meters have been installed at homes and businesses. The target is 53 million gas and electricity meters at 30 million domestic and small non-domestic properties, with only two years to go to the deadline. Which?, the consumer organisation, has calculated that suppliers would need to be fitting 250,000 meters a week, equivalent to 24 every minute, around the clock, every day. The Government must state whether the 2020 target is still realistic and whether offers being accepted will lead to fulfilment within the timeframe. What probability has the programme of meeting this objective?
The next issue these delays give rise to concerns costs. Consumers are reminded that, even though most benefit accrues to the industry—of some £8 billion, rather than to consumers, who will benefit by some £6 billion—overall it must be said that there will be a net benefit of some £11 billion. Consumers are fearful that the potential cost impact of delay will wipe out the forecast net benefit. It is necessary that the National Audit Office updates its reports of 2011 and 2014 and reassesses the current economic case for the rollout of smart meters. Furthermore, it should look at whether the Government are on track to achieve their target to roll out smart meters by 2020 and are maximising the chances that smart meters will achieve their intended long-term benefits and advantages.
The main body of the Bill—nine out of 14 clauses—introduces the special administration regime for the DCC to ensure that the service continues should it get into funding or insolvency difficulties. Anxiety is rightly raised by Clause 7, which includes a provision that charges can be raised to make good any shortfall to meet the expenses of the DCC’s administration. It is not clear from the Bill or the Explanatory Notes why customers and users should foot this bill, especially when they have already borne the cost of the rollout in their energy bills. The DCC is a wholly-owned subsidiary of Capita plc which, it must be borne in mind, has recently issued a profit warning. Members of your Lordships’ House will recall that profit warnings were a precursor to the demise of Carillion. In Committee, we may wish to examine and test whether the safeguards in the Bill are adequate. The ownership of the DCC remains a concern.
Several concerns have also been raised about the smart metering implementation programme. I have already mentioned the smart meter problems between SMETS 1 and SMETS 2. Derek Lickorish, director of Secure Meters Limited, has said that as many as 20% of smart meters are operating in “dumb” mode because they have lost their smart functionality as customers have switched energy suppliers. Will the Minister confirm the steps being taken later this year to enable SMETS 1 meters to operate as SMETS 2 meters without a change of meter and an added cost? Does the Minister agree that this would remove the greatest barrier to the uptake of smart meters and greatly enhance the rollout programme?
There are further issues concerning the need to license meter asset providers—MAPs—and possible supply chain issues in the supply of meters. Issues also extend to the impact of half-hour billing options, which are the subject of three clauses in the Bill, allowing Ofgem to modify industry codes. The Government also need to have an answer to the transparency issues around the amount being raised for the rollout programme through customer bills, the monitoring of savings and the benefits being adequately transmitted to consumers. The Government need to be aware of unintended consequences of switching of demand around the clock and the waste issues around the disposal of obsolete meters.
In highlighting some of the issues around the smart meter rollout programme, we must not allow them to cloud the main objective that must be reached, which is that Britain’s energy efficiency and public interaction to achieve this will be enhanced through smart meters and the development of a flexible energy system supporting innovation in smart products and services. We support the Bill.
Lord Teverson (LD)
My Lords, last Sunday evening my family were watching “Call the Midwife”. It was raining outside, as it often is in Cornwall. We have a number of outside sockets. The television suddenly stopped, much to my relief, as I am not a great fan of that programme—I am sorry to offend the Minister. Unfortunately, the further downside for me was that I had somehow to fix the electricity. This became my task, so I went out and I had to search for a torch. Then I had to find my way under the stairs, where there is a cupboard. I had to put the torch on. The meter, a dumb meter, is some two or three feet further away. I had to look at all the switches, and finally I managed to get the electricity back on.
How I wish that I had had a smart meter so that I could have got on to my iPhone and knocked a switch so that light was restored to Thornparks House down near Tregony in Cornwall. Alas, this was not the case. However, this underlined to me how important this programme should be. It is supposed to be an £11 billion programme. That is £11 billion of what I see as upgrading of domestic and commercial infrastructure and communications channels in the United Kingdom. That is why it is important.
How is it that in these days, when we use iPads and smartphones and with all the technical ability that we have, we still have so many people with these dumb electricity meters? My meter has, I think, never been read by anybody apart from me in the past 10 years because no one can get access to it from the outside. How is it that we still have this dumb technology when everything else has changed so much? The Minister will gather that I am a fan of this programme, but from now on the supportiveness of my speech goes downhill.
When I first joined this House 12 years ago in 2006, it happened to be the year that the smart meter operational framework was produced. I have always been interested in energy and one of my first visits—on the way up from Cornwall—was to a smart meter manufacturer in Winchester. They were the people who told me how great this technology was, what a fantastic future it should lead to and how obvious it was that it should be adopted, not just in terms of ease but of information and future distributed energy systems. It was quite clear. I became not just a fan, but a strong advocate. However, where are we now?
The noble Lord, Lord Grantchester, has gone through a little bit of the current position. My numbers may not be exactly the same, because they vary by source, but there are some 47 million meters in this country. There are 27 million properties, so a number, particularly commercial properties, have several meters. We have approximately 9 million SMETS 1 meters, which means that we have 39 million still to do. At 1 million a quarter, which roughly ties up with the Minister’s figure, that takes us to 2028. By that time, I suspect that I shall no longer be a Member of this House, but I sincerely hope that we are able to meet that timetable. We also have about 100 SMETS 2 meters, most of which I understand have been installed on close friends and family of the producers as guinea pigs to see how these meters work. Last time I heard, they do not work particularly well. In fact, in the main they are fairly non-functional.
We should, however, give the Government their due. They have put back the final date for SMETS 1 installation from July this year to October and we have a 2020 target. The noble Lord, Lord Grantchester, maybe with his tongue in his cheek, asked the Minister whether it was possible to meet this target. Clearly it is not, so for goodness’ sake let us admit it, get back from la-la land into the real world and allow the industry, consumers and everybody else, including the Government, to plan this sensibly.
As I said, it is an £11 billion programme. That is massive in terms of future charges to electricity consumers. At the centre of this we have DCC, a Capita organisation. I understand that it has recently changed its management quite substantially. I certainly hope so. I looked through a list of just how late it had been, and I think there had been six postponements since 2014. We finally had it go live in November 2016, some years after it originally happened.
One thing I learned when I was very young was that, as a relative said to me, people who put lots of initials after their names are probably the ones you want to avoid, because they are trying to impress you and probably do not have the substance—I am sure noble Lords keep their peerage title in front of their name but have nothing behind. I stretch that example to reports and projects that are full of acronyms. When I went through all the background work to this, I was concerned: SMETS 1, SMETS 2, DCC, PPMID, CAD, IHD, CGI, SMSO, SMDA, SMOF, GCME, ESME, GBCS, SAR and of course MAPs, which are meter asset providers, which I will come back to later on. It seems to me that this process—this structure—is so difficult to understand and has been put together in such a difficult form, with a mixture of public and private, that it is designed to fail.
So far, I regret to say, it has been unable to deliver, despite in many ways the context being so simple, in that all you need is a bit of technology in your house—not necessarily under the stairs—which tells a monitor what you are doing in terms of electricity and maybe later allows you to participate in smart energy through a distributive grid as well. All that it then has to do is communicate usage in some way to a data hub, and all that data hub has to do is communicate with the electricity or gas supplier. That is all that is required, and yet 12 years later, where are we? We are a small way through a programme that we desperately need.
The Minister mentioned costs to some degree. I think the whole DCC budget to deliver this between 2013 and 2021, which goes on to consumers’ bills, has gone up from £1.3 billion to £2 billion. Its project management costs have gone up from £107 million to £374 million, and its set-up costs for subcontractors from £131 million to £948 million. DCC may be out of control, but government management of the process has clearly also been quite ineffective. In terms of timing, DCC has been late in going live by some two years, while SMETS 1 has been put back from July to October. At the moment, SMETS 2 meters are not working and have no supply chain, so if we stick to the October 2018 date for stopping the installation of SMETS 1 smart meters, can the Minister explain to me what happens to all the installers between October and when we actually get SMETS 2 meters going? We have thousands of skilled people out there fitting 400,000 of these meters a month, but I cannot see how they are not all going to be out of a job in October. We then lose the skills, so how do we get the rest of the programme in, not just by 2020 but by whenever we manage to do it?
One of the things that has to be core to this whole programme is interoperability. I understand SMETS 1 meters are reasonably interoperable, but as I think the noble Lord, Lord Grantchester, said, if you change supplier—which government, we in Parliament and people interested in energy want people to do—there will be instances when you get stuck with a meter which is either dumb or has to be replaced by the new supplier, at an additional overall cost to the consumer, if not individually. That is not right. What will happen to all the SMETS 1 meters? Are they going to be stranded assets? I do not see how that will work.
Turning to meter asset providers, I am not greatly into the argument about whether they should be licenced or not. Again, the noble Lord, Lord Grantchester, brought this up; I am sure that it is an important issue. To me, the real issues relate to energy prices and meter finance. I may have been fairly naive, but I thought that the energy supply companies would probably finance them themselves. How naive can you get? Of course not: they do not do that; they get them off balance sheet and lease them, yet the lease costs of these machines have been extremely high and are still high. That will reflect, once again, on consumer prices. It is something that needs to be considered and possibly changed.
I have many questions to ask the Minister, but first I congratulate the Government on having the half-hour metering to make sure that we can actually push forward much greater use of smart meters for smart grids, and particularly for demand-side management—all of that area. However, they are going to have to be a lot cleverer in terms of explaining to the public that demand-side management is not compulsory but voluntary, so that we do not have the Daily Mail headlines about people being forced to turn their heating off, or whatever.
I have not yet been told that the Government have solved the problems in relation to multi-occupational buildings. Are they anywhere nearer to solving them? On the compatibility and interoperability issues, the north is on a different communications system from the rest of the country and, as I understand it, it is incompatible with the remainder. Are all the 9 million SMETS 1 meters going to end up being stranded assets, and what do we do with them? Is this system now future-proof? I get the impression that it is not; that to really have an intelligent system, we are going to have to upgrade again. When are we going to have to do that? What policy action can we do centrally to bring down that rental cost of meters that is going to affect energy companies and that will inevitably be passed on to consumers? How will that be changed? For goodness’ sake, how are we going to manage DCC better in the future? This seems to be an organisation that started late, has been complacent with public money, has had hugely overshot budgets and just requires much better management for the future. Lastly, the 2020 target date is just not possible. What is the real target date for that, and do we have a chance of actually meeting it?
Lord Broers (CB)
My Lords, I wish to speak only briefly. First, I strongly support the Government’s commitment to offer smart meters to all households and small businesses. I believe that the potential for realising significant reductions in energy use through the use of smart meters will, as claimed by BEIS, be realised. Ultimately, the meters will allow users to monitor how they are using electricity and gas, thereby learning how to minimise their consumption.
Secondly, I urge the Government to press ahead as quickly as possible to ensure the supply of smart meters that are capable of monitoring individual appliances, together with lighting, heating and cooling systems. Batteries and energy sources should, of course, also be included. It should not be necessary to wait for appliances to be fitted with their own transducers to communicate with the smart meters, as they can be connected with existing smart plugs—which are all over the place—that are capable of monitoring the power used by an individual appliance and communicating this to a smart meter. This can be done by using a personal area wireless network such as Zigbee, which is a low-power, low-data-rate proximity wireless network designed especially for small-scale projects such as this. It has been around for a long time.
It will only be after all systems consuming or generating power are monitored that the full benefits of smart meters will be realised, as it will then be possible, for example, to see where power has been used and generated over a month or even a year, and optimise consumers’ own personal situations. I urge the Minister to ensure that meters capable of this extended monitoring are installed as soon as possible, but at the same time recommend that this should not delay the installation of SMETS 1 meters, as these will allow us to realise the gains in efficiency that the ability to monitor consumption on a half-hourly basis allows. In conclusion, I add my support to the noble Lords, Lord Grantchester and Lord Teverson, in calling for the Government to just get on with it, please.
Baroness Manzoor (Con)
My Lords, I strongly support the Bill and I thank the Minister for so elegantly laying out its three aspects. He will be pleased to hear that I will not restate them, but it is worth restating that the purpose of the Bill is that every household and small business in the UK will be offered a smart meter by 2020—although of course there is no obligation for anyone to accept that offer.
I am viewing the Bill through the prism of a consumer. To that end, I was interested to note that, according to research undertaken by comparethemarket.com, one in five people did not want a smart meter. The Government will therefore have to undertake some more effective ways of communicating to the public what smart meters can and cannot do, particularly if they want to hit their target by 2020. As has already been stated, 53 million meters will need to be rolled out and then rolled on to the new national communications network. As the noble Lord, Lord Grantchester, said, that equates to 24 meters a minute. It is also of concern that some of the largest suppliers of energy say that the rising cost of the smart meter programme is one of the main reasons for the rise in customers’ energy bills.
To ensure transparency in bill costs, energy companies should have a duty to further break down their billing costs to the consumer. Billing costs could show what cost is due to energy generation; what proportion of the bill is due to distribution; what proportion is due to overhead costs such as billing, smart meters and customer services; what proportion is for installation and management costs for smart meters; and what proportion is for any data requests from users. I would like the Bill to incorporate such a duty of transparency, thus enabling customers to make more informed choices, aiding competition and helping to bring energy costs further down. If such a duty is not put in the Bill, will the Minister give consideration to including one in regulations?
Consumers’ perceptions have not been aided by the functional issues experienced with the first generation of smart meters—the SMETS 1s, as has been said—which have left some consumers concerned about having a smart meter installed. Users of SMETS 1s have had problems keeping the benefits of their smart meter when they switch energy suppliers. This is because the SMETS 1 meter became defunct, or dumb, as it could not connect to the new national communications network. This meant that SMETS 1s could not talk to the consumer’s new energy supplier.
I understand that the second generation of smart meters, the SMETS 2s, have overcome this problem, but the issue of operability of SMETS 1 meters still needs to be addressed. Will they be replaced, or can they be upgraded to enable compatibility with the new communications network? What action are the Government taking to inform customers that operability problems have now been resolved—if they have—and that the SMETS 1 meters will not be installed by energy suppliers unless they are fully functional on the new communications network? And who will pay for the upgrade?
The Government estimate that smart metering will deliver net benefits to GB of £5.7 billion, equating to £300 million off domestic energy bills in 2020 and £1.2 billion a year by 2030, and the Minister has restated that. Breaking that down, it is expected that individual households will save on average approximately £11 a year on their energy bills by 2020, rising to £47 in 2030.
Smart meters should also address the imbalance in information between suppliers and their customers, because customers will be able to see the level and cost of the energy that they are using in real time and use that knowledge to change to a different tariff or supplier or better plan when they use their energy, thus enabling budgeting. This is particularly important for low-income households and those who use prepayment meters. The smart meter does not need topping up and these customers will no longer have to leave home to buy top-ups for their meter.
As well as allowing consumers to make informed choices, smart meters should put an end to estimated bills because consumers and the energy suppliers know the uptake of usage down to half-hour intervals. To ensure that this benefit is fully realised, it is important that energy suppliers then do not encourage customers to pay via annual payment plans—otherwise, customers receive estimated bills with potentially large credit balances left at the end of the year.
There have also been stories in the press about a few smart meters malfunctioning by sending out the wrong usage readings to their energy supplier. Can my noble friend the Minister say how likely it is for a smart meter to be dysfunctional, and what happens when the usage reading is inaccurate? What redress does the consumer have? There have also been reports that because the smart meter technology works via the internet—we have already heard this from the noble Lord, Lord Teverson—there are connection problems in places such as high-rise flats or in some rural communities where coverage is poor. Despite this, I understand that the Government expect more than 99.25% of premises and homes to be covered by the national communication network. Can my noble friend confirm that this figure is accurate, and are there any plans to ensure that the communications network gives 100% coverage?
Despite some teething problems, the principle behind smart meters is important. Not only does it allow the companies to assess in real time the energy uptake by the nation and plan accordingly for it but it is likely to aid the future development of innovative smart products, as we heard from the Minister, such as dishwashers, smart kettles, fridges, washing machines and indeed other new services. But with such smart technology comes dangers to security. Can my noble friend say a few words on what safeguards have been implemented to ensure that the new communications network is safe from unintended interference and sabotage? How will DCC keep customers’ data safe, and how long will customers’ records be kept?
To conclude, the benefits and flexibility of smart meter usage can be fully realised only if there is effective training of those who install them, and if customers are trained in how to use these meters and the new technology effectively. Smart meters and such technology are our future and we should fully embrace their benefits. The Government need to ensure that customers can access the cheapest tariffs and ensure that smart meters work for everyone: customers, the energy companies and our environment.
Lord Whitty (Lab)
My Lords, like the noble Lord, Lord Teverson, and my noble friend Lord Grantchester, I am a bit schizophrenic about this Bill. On the one hand, I welcome some of its provisions, but on the other I look at the history of the rollout of the smart meters programme with deep depression. It has had mixed results, to put it mildly.
On the other hand again, some of the benefits of smart meters have been realised and a significant proportion of consumers have changed their behaviour as a result, so that gives us some cause for hope. I also have some fairly substantial strands of sorrow and anger about this, some of which goes back to proceedings on the Energy Bill 2008. This, I am afraid, is the “I told you so” bit in my speech. I took quite an active part in those proceedings and told the then Government of my concerns. Some of them have already been mentioned; they relate to the very limited interoperability of the first generation of smart meters, which meant that the ability of consumers to switch was greatly restricted and they were left with stranded assets—and smart meters were pretty dumb in many respects.
I also mentioned the inadequate relationship between this massive £11 billion programme of installing smart meters and actually getting them into every household in the country. That programme should have been accompanied by more general advice, direction and help on installing energy efficiency equipment in the home.
I also was deeply perturbed by the basic premise of the delivery of the smart meters programme: requiring that it be carried out by the supply companies. That led to behaviour based on self-interest and to inefficient delivery. It would have been far better if the state itself—although I could not really have expected this of even the coalition Government, and certainly not this one—or the network companies had proceeded street by street, instead of every building in every area having to have a meter installed by different suppliers.
The way in which different suppliers have done it has varied significantly. I thought at the time that the central strategic decision to give responsibility of delivery to the supply companies was the wrong one, although it is probably too late to change that now. It has also helped to increase consumer distrust in the programme itself, over and above the natural resistance of some consumers to new technology.
I was also perturbed and somewhat baffled by the exact responsibilities and status of DCC. I remember asking the then Minister to explain exactly what this body would be. It was only after we had finished with the Bill that the contract was given to Capita, which alarmed me even more. Following the Carillion collapse, the Bill must ensure that, if Capita similarly collapses, which looked possible a week or two ago—I of course hope it will not—provision is made for dealing with its insolvency. Its performance, as noble Lords have pointed out, has not been that great, but the possibility of its insolvency undermines this whole process. The cost of that is going to fall, once again, on the consumers, who, through their bills, are already paying for the programme as a whole.
That is the end of the “I told you so” part of my speech—but I did tell you so. Some fairly wrong strategic decisions were taken at the beginning of this programme. Partly as a result of that, we are of course behind on the timetable.
On a more positive note, however, we are now moving to the next generation of smart meters. I hope we can do so rapidly, and that there will be no performance problems. The Minister should spell out clearly the timescale. A concomitant point is that we will need at some point to replace the first generation with a second and a third generation. Otherwise, some 8 million to 9 million people will effectively have fairly dumb meters which, although they can induce some change in behaviour, will not do the full job that the cutting-edge technology could deliver. Therefore, we need to speed up the process. I would like the Minister to spell out somewhere in this Bill the process for the retrofitting and replacement of the first generation, as well as the timetable for introducing further metering in the next generation.
More positively, some significant research has shown that even some of the dumber smart meters have enabled people to take a greater interest in their energy consumption and make related decisions on light bulbs, switching off washing machines and changing the time at which they operate appliances, thereby saving energy. So the outcome may well eventually be very positive. The downside, though, is that there has also been some negative reaction to smart meters. I hope we will be able to overcome that.
I very much welcome the move to half-hourly billing. That brings its own problems in terms of privacy and security but I hope that we will find a way to reassure consumers in that respect. Once we move to half-hourly billing, consumers could well get on top of making serious improvements in their energy efficiency behaviour and the energy performance of their homes. I am very much in favour of that so long as the privacy downsides are addressed in the Ofgem regulations.
I still have problems with how this programme is being delivered in premises in multiple occupation that have multiple suppliers, in both the social housing and the private sectors. There has been some progress on the relationship between smart meters and prepayment meters, but the phase we are discussing ought to turn that into something much more positive because some of the most vulnerable consumers are prepayment consumers and smart meters should help them. We have some good examples of that. We need to build on those and make this process more systematic.
I have mentioned the situation with DCC. I recognise that the Government had to move on that. It was a bit of a panic move which did not reflect the original concept of the Bill, but it was probably necessary. However, it underlines what my noble friend Lord Haskel said at Question Time about the reliance on single, near monopolistic outsourcing companies for the delivery of key elements of our infrastructure. I hope that we will address that in broader terms as well as in relation to this specific programme.
I still think that there is an insufficiently close relationship between the installation of smart meters and other energy efficiency measures. However, we should perhaps look at the totality of energy efficiency interventions as we move away from the ECO, as we have known it, and consider all the current programmes so that we can maximise energy efficiency house by house and company by company.
So far there is a very mixed picture with a lot of downsides. We have the opportunity to move to the next stage in a more positive vein. However, while the Bill introduces some useful provisions, in particular half-hourly billing, they are not sufficient to ensure the full delivery of the programme and the full step-change in our energy efficiency performance which those of us who supported the concept in the first place looked for.
Baroness Maddock (LD)
My Lords, the Minister said in his opening comments that this is a small technical Bill and, as is his wont, painted a very rosy picture. As we have heard, some of it is rosy but some of it is not quite so rosy.
It is difficult not to be too repetitive because noble Lords around the House agree that the Bill contains some positive measures and some negative measures. I think that very few people would disagree that smart meters will make a large contribution to our national energy infrastructure. We have heard, and we know, that they can assist consumers and energy suppliers to use energy more efficiently and to reduce costs on both sides. However, as others have said, we somehow fail to carry to fruition many energy and energy efficiency programmes in an efficient, timely and cost-effective way. The smart meters rollout is no exception and that is why we have this Bill before us today.
As others, including the Minister, have said, the Bill extends the Secretary of State’s powers to develop, amend and oversee regulations concerning the licensing of smart meters for gas and electricity usage. Presumably, we are discussing this issue because not everything has gone well in this area. The Bill sets up a new special administrative regime for the national smart meter communications and data service provider—in short, the DCC.
In the event of insolvency, the noble Lord, Lord Whitty, highlighted many moons ago that there was a problem. Was this considered? We now know it was considered in the original discussions in 2008 but, nevertheless, we went along with it. We now have problems, and we have seen recently that dealing with it has been very slow.
The Bill also introduces new powers to modify industry codes and instruments directly to deliver a market-wide, half-hourly settlement that uses the smart meter data. There is agreement around the House that this would be a good thing but only, as my noble friend Lord Teverson said, if the meters work. The clause dealing with this came rather late in the day in another place. Will the Minister explain why? The original plan was that every household and small business in the UK would be offered a smart meter. We have already heard from others that the plan was for 2020; the Government now need proposals in this Bill giving them until 2023, and doubts have been raised this afternoon about whether they can do it by then. We have heard all sorts of statistics about how many meters will have to be put in every week to make this happen. Other concerns raised this afternoon concern data protection and privacy. The noble Lord, Lord Whitty, gave us more detail on that.
We have also heard concerns about the installation and selling of this equipment to consumers. I have a particular gripe—I get rung up about smart meters and I realise that I am also being told we need to switch suppliers. I am not very good at doing this, but my husband has done it. I am concerned that, if I have a smart meter, I might not be able to have SMETS 1 and I may not be able to switch my supplier again; therefore, I am not prepared to say yes to the installation. When you have a conversation about this with someone representing the supplier, trying to persuade you, they do not seem to understand what you are talking about. There is a big issue about how people talk to consumers when they are trying to persuade them to have a smart meter.
We have also heard about costs. We know that around £11 billion will be spent and there have been projections of a net benefit of £5.8 billion. But, as others have highlighted, rollout is happening more slowly, so it is not clear that the cost benefit will work out as projected. The National Audit Office is reviewing the programme and plans to report this summer, looking specifically at whether the programme is on track and whether the economic case is still the same. I will not repeat how many meters have been put into houses; the big issue is that, while SMETS 1 installation has gone ahead, albeit not as fast as we would like, SMETS 2 is very slow. I have not done as much detailed digging as my noble friend Lord Teverson; the figures he put forward this afternoon are pretty frightening.
Good smart meters can play a part in helping those who find it difficult to pay for their energy—as the noble Lord, Lord Whitty, mentioned. I am vice-president of National Energy Action, a charity that campaigns on fuel poverty, and I am grateful for its briefing. It is supportive of the programme, realising that it has good potential for helping people in fuel poverty. One thing it is particularly concerned about is the role of Ofgem in monitoring and enforcing minimum standards under the installation code of practice, because this is fundamental to the successful rollout. At the moment, there is little information about how or when individual suppliers are rolling out this technology or about their approach to engaging with customers, particularly vulnerable customers—I have talked about people like me—to ensure that they capture the benefits of more accurate billing, which the noble Baroness, Lady Manzoor, referred to. Nor is there much information about how they are helping people to get more of a handle on how they use their energy.
NEA would like to see Ofgem publish the annual rollout plans of individual suppliers and details of how many meters are installed annually. This could be broken down between SMETS 1 and SMETS 2 and the number of smart meters operating in pre-payment mode for those who find it really difficult to pay their energy bills. This could be done each quarter in line with other Ofgem E-Serve quarterly reporting. This information is not commercially sensitive and it would enable bodies such as NEA to offer bespoke advice to customers about when they can expect to benefit from their smart meters.
NEA also stresses that data protection should not be a key reason why more geographic-specific information cannot be put in the public domain. There are concerns and questions about data and data protection, which the noble Lord, Lord Whitty, talked about, but we ought to be able to use the information without people’s data being used in the wrong way. If we developed a GIS-based map of where smart meters have been installed, that would be a great help to organisations all around the country—for example, to charities such as NEA. They could follow up the installations, amplifying the benefits and helping people by providing more extensive behaviour-change advice and support. It is clear that not all installers are providing this help—some are but some are not.
There is one acute concern about installations. We need to know that when an engineer leaves after putting in a smart meter, the heating still works. They might have said that a gas appliance was unsafe and turned it off. Obviously we want things to be safe but at the moment no government policy is in place to help people—particularly vulnerable households—to change a boiler, as used to be the case under the ECO. I had an exchange with the Minister about this back in the autumn because people were not able to replace their boilers—a situation that has got even worse during this cold winter. When I asked him about it, the Minister’s answer was, “Well, of course, we really believe in energy conservation now, and that’s where all the money is going”, but that does not help the person whose boiler needs to be replaced in the winter. We need to do both. From a sedentary position my noble friend says that it is more efficient.
NEA spends a lot of time talking to consumers and that is why it is so concerned about some of the issues that are not going as smoothly as they should. There is also an issue around price caps and pre-payment meters. The meter price cap is very closely linked to the smart meter rollout and to SMETS 2, and I hope that the Minister will be able to tell us a little more about that.
We have heard that Clauses 11 to 13 create powers to oversee the smart meter programme, but I have already highlighted that Ofgem is finding this quite difficult. However, it has now been asked to deal also with the half-hourly settlement. As others have said, this is a good thing because not only does it enable suppliers to offer different prices at different times of day—we have heard about other things that can help people to use their electric products more efficiently in the home—but it can assist in developing, nationwide, a more demand-led energy supply system. The noble Lord, Lord Whitty, my noble friend Lord Teverson and I have raised this issue in successive energy Bills in this House. At one time it seemed that the Government did not understand that at all but they have cottoned on to it now and it is a welcome addition to the Bill.
Many people still do not have meters but research has shown that people who have them have changed their behaviour and are quite satisfied. In one survey, 75% of people said that they would recommend the meter to someone else; and 80% claimed that they were saving energy through their behavioural change.
If this is to continue we need to make sure that SMETS 2, the cleverer meter—so called—rolls out properly. People need to be able to change their supplier because we have two government policies working against each other—persuading people to have a meter, persuading them to change—and the two do not go together.
I welcome the Bill, as do many other noble Lords, but I am disappointed because it has highlighted many problems that perhaps could have been avoided. We keep falling into the same trap on several issues: we are bad at cost-benefit analysis and adjusting as time goes along; and we are bad at understanding human behaviour, which I appreciate is difficult. We assume all kinds of things about human behaviour which turn out not to be quite right. We need to be better at handling different scenarios.
I hope the Minister can assure the House that the programme will go forward in a more rosy way—I am sure he will; he usually does—and that he can reassure the House on some of the issues that have been raised today. There is common ground across the House and I look forward to his reply.
Baroness Featherstone (LD)
My Lords, this has been a good debate and a master class in damning the Government with faint praise.
In the future our energy supply, transmission and storage—everything—will change. The future will be different from the past. The big six will no longer be the big six but, we hope, just six among the many. There will be on-grid and off-grid, feed-in and feed-out. The customer will be at the heart of managing their own usage or contribution, and there will be savings of energy and in the energy cost to customers. This is an energy revolution and smart meters are a vital part of that future.
However, as many have said across this House, before they went downhill, smart energy needs to be smart. That is the lament and sorrow of the Bill because things have not happened in the right way: not the smart meter, because the first one was not interoperable—I will be grateful when I do not have to say “interoperable” too often; not the data collection; not the rollout; not the selling; and not the installation. There were delays to completing the rollout; costs which might result from delays to the system; issues around the financial security of DCC and the financial status of its parent company, Capita. It was helpfully pointed out by the noble Lord, Lord Grantchester, that there has been a recent profit warning. There were concerns over whether appropriate data protection and privacy would be provided; connectivity concerns; issues around installation visits; concerns about doorstep selling; problems with the disconnection and disposal of old meters; and problems around inaccessible homes. Between them, Members across the House have raised all those issues.
On the hoped-for benefits, in the other place the Secretary of State, Greg Clark, said that a third of the savings come from potential reductions in the use of energy, just over 40% come from the suppliers’ costs saving—not having to read meters and so on—and that he expects those savings to be passed on to the customers in their bills. I am concerned that this was put as an expectation rather than an instruction. What will the Government do if this expectation is not met? I do not think we should leave this to expectation. We should be able to assure the customer and the client that these savings will be passed on, particularly since, as many across the House have pointed out, they are paying for the whole system.
Another key issue is the extent to which data will be private. We need absolute clarity over who owns that data and for how long, who may have access to it and how it will be protected—and not just clarity but assurances on how such information might be used and by whom, and how an individual can control, with absolute confidence, access to it. Will the proposed review of data usage be widely drawn and will it be published?
Is the Minister aware that some people with disabilities have concerns about this system? As we know, people with disabilities already pay more because of higher fuel consumption, as they are quite often at home all day. I talked to one of my noble friends only today who was very concerned she would be made to feel guilty if she could not use or calibrate a smart meter to use power at a different time of day because her needs were at critical times. Could the Minister speak to that? The Minister also raised the issue of smart energy awareness. Perhaps some of those campaigns could target those with disabilities and the most vulnerable.
Looking outside of that range of issues still needing attention, the Government want the Bill to have a narrow focus on three key things. The first is the extension of existing powers, which of course they want—and need to rectify all the things that have gone wrong. I shall not reiterate all those issues other than to say that 8.5 million first-generation meters have been installed and the Government are hoping to see the rollout of SMETS 2 meters, which do not have the interoperability problems of the older meters. In a private letter to energy companies, the Government said that systems designed to handle the newer meters were not ready and so they moved back the deadline for rolling them out from July to October. That means that more than 1 million extra first-generation smart meters will be fitted in homes, despite, as others have said, the devices being criticised for going dumb when customers switch. With the deadline moving from July to October, hundreds of thousands of people will receive the older devices. Therefore, SMETS 2 and the DCC are critical, and this sort of delay, along with all the issues to do with dealing with the installation of meters in your own home, with variable fitters and information, is damaging.
One of the challenges, as mentioned by my noble friend Lady Maddock, is that the reputation of smart meters is suffering because of all the problems that have arisen, which is damaging people’s willingness to adopt the new system. The extension of the Government’s powers and the delay to the rollout of SMETS 2 are concerning. It appears the Government are extending the period because of original targets being missed and they are worried there will be further issues for which an extension of powers will be required. Will the Minister confirm that this is the rationale for the extension of powers? Will he also confirm that their extension until 2023 is not connected to a potential overrun of the 2020 deadline for the rollout of the new meters—although a number of noble Lords have put a question mark on that deadline?
The second part of the Bill concerns the introduction of,
“a special administration regime for the national smart meter communication and data service provider … ‘DCC’ … in the event of its insolvency”.
I am unsure whether we have 100 SMETS 2 meters installed or 80—or 250, as was discussed in Committee in the other place. If the number is that small, there has to be a question about how robust and how well tested the function of the DCC is at that level. That does not seem an adequate supply of data to test that system. Coming to the DCC itself and the concerns over Capita’s financial status, what checks are the Government carrying out on Capita? In addition, does the role of the special administration regime exist as of the passage of this Bill or only when there has been trouble, or can it kick in in advance of any collapse in the system? What are the protections for the consumer in this event? If a special administration regime has to be put in place because there has been a failure on the part of DCC or Capita, what can official scrutineers and the public expect in the way of transparency and information about what has happened? Can the Minister give an assurance that we parliamentarians and the public at large will not be kept in the dark about why a special administration regime has been put in place? Obviously, a further concern has to be that the costs will be passed on to the consumer. Can the Minister explain why the consumer should be in any way liable for such a failure? Would any of the costs pertaining to such a failure fall to the consumer? Would it be the whole cost or part of it? In responding, it would be helpful if the Minister could set out the costs and savings to consumers and other players so that we can see who is benefiting and who is paying, and whether we think that is fair.
I turn to the provision of new powers for Ofgem to directly modify industry codes and documents to deliver a market-wide half-hourly settlement which uses smart metering data. Noble Lords across the House have welcomed this because it is the future. The idea is that incentives are placed on suppliers to meet their customers’ demands in each half hour of the day, and smart metering is intended to produce accurate half-hourly reports to get a better settlement and thus drive innovation and the efficient use of energy. However, suppliers can already choose to settle with consumers on a half-hourly basis via an elective half-hourly settlement, but Ofgem believes that it will have to make all suppliers do this to get the best results for customers. That, as I understand it, is a decision that Ofgem will take in the second half of 2019 and will be subject to a cost-benefit analysis, which I was pleased to hear the Minister say will be published.
However, the strange part is that it was introduced in the other place through a government amendment. That is of great concern. Why did the Government know only at the end of the process that such an analysis would be needed? One does kind of expect that, given that this is a complex new system, the Government would have known in advance that an analysis was necessary. Perhaps the Minister can explain its late appearance.
Lastly, I want to reflect on the contribution made by my noble friend Lord Teverson. I am glad he will not have to fix the electricity under the stairs any more. He recognises, as have other noble Lords across the House, how important this programme is. He said that the acronyms were suspicious. Perhaps the Minister can allay our suspicions, although I have to say that the acronyms are not as bad as they were when I was a Minister in DfID. My noble friend Lady Maddock pointed out that some of us think that parts of the Bill are rosy, but then referred to the rest of it as having rosacea, or words to that effect. She spoke for those in fuel poverty and expressed her concern about the role of Ofgem under the code of practice and the approach being taken towards vulnerable people. I would welcome it if the Minister could pay special attention to responding to those and other points raised in the debate.
Lord Lennie (Lab)
My Lords, I should start by making a declaration—or perhaps a confession. I am a smart meter user. I accepted the offer made by the company. It is a SMETS 1, so it is not doing me much good in terms of reducing my consumption or the cost—but at least I have one. That, I think, may be unique among Members of this House, but not so much so among the wider public. I also thought until yesterday that we might be able to have a debate which did not involve the European Union. However, having seen E.ON’s and RWE’s proposals, we are reminded that this is not taking place in a vacuum and that E.ON will now become the major provider for the customers of electricity while RWE is getting back into green research and the provision of electricity—reversing a decision that was taken before our decision to come out of the European Union.
I thank all noble Lords who have taken part in the debate. I share with everyone their support for the Bill—with reservations, and unfortunately it is those reservations which are going to take up most of my time. I thank in particular my noble friend Lord Grantchester for his analysis at the start of the debate. It has saved me a lot of time because he has already done the work. I shall try to avoid any repetition during the course of what I have to say. I also thank the Minister for the meetings and briefings we have had about the proposals prior to this debate. They have been very helpful in our preparations.
The Bill has three stated interrelated purposes. The first is extending the powers of the Secretary of State in regulations for smart meters. The second is introducing a special administrative regime, the SAR, with a Data Communications Company, the DCC, to ensure that service continues in the event of their insolvency. The third is to introduce new powers to allow Ofgem to facilitate half-hourly settlements.
First, the extension of powers that are currently due to expire on 1 November 2018. The Bill seeks a further five-year period, until 2023, during which time the completion of the rollout of the smart meters and their claimed benefits will have become evident. That is the plan. What are the chances of this and what benefits will consumers see? The rollout requires companies to have offered every household and small business, and there are 40 million to 50 million of them, a meter by the end of 2020. The offer of the smart meter 1 has been slowed down, while the smart meter 2 is in some kind of preparatory phase and is being tested for workability and interoperability. So the chances of meeting the 2020 deadline are fast receding, unless the Government announce some huge increase of capacity to achieve their intention. The benefits to consumers are deemed to be so positive that they will take little persuasion—but, in this House and in other places, the consumer seems less trusting of the benefits than the Government seem to think. The record tells a different story.
Thus far, the second-generation SMETS 2 have been installed in only 70, perhaps 100, households out of a total of 50 million. If the SMETS 1s can be upgraded to SMETS 2 capability, it will account for some of the increase—but it will still need three times the current rate of approach, interchange and offer of these meters to achieve the 2020 deadline.
The benefit for the customer is that he or she will be in control of their pattern of energy usage, with real-time information being provided and an end to estimated billing. That is true: the smart meter tells you how much you have spent today. At any point in time, it will give you a scare. You have spent £5, £10 or whatever it is you have spent today. It does not tell you anything about what it is that is consuming that money. The DCC will be provided with a half-hour readout of the overall usage of our electricity consumption in order to benefit its purchasing power and allow it to more accurately purchase electricity to meet our needs, each half-hour of the day, as I understand things.
That should lead to a reduction in the price it pays at certain times in the day. That will then be passed on to the consumer in reduced billing. Someone talked about half-hour billings; I do not know if that is going to come about any time soon, but we will certainly know when it is cheaper to run certain types of electricity consumption. In order to make those changes, the customer has to be sure of the benefits or they are not going to change anything. They are going to carry on doing what they do at the time they prefer to do it. The chances of the lower-end pre-paid customer changing their habits, given the other pressures that there are in their life, are more remote than for those who perhaps have more time on their hands, can study these things and can make adjustments to habits that have been ingrained for some years, as they go through life, with family, children who move away and so on.
How will the Government force the energy companies to pass on savings that they will make to the customers? There was some talk in the energy committee in the other place that the Government will make sure that this happens, but how do they intend to enforce it? The Energy Minister in the other place quoted Richard Nixon, who said:
“If you’ve got them by the balls, their hearts and minds will follow”,—[Official Report, Commons, Smart Meters Bill Committee, 23/11/17; col. 73.]
but if you have not, they are not going to. That is about the size of it. I am not sure that the squeeze is happening quite where it needs to happen. Do the Government anticipate a change of heart among the energy companies towards their customers? That is unlikely. They are private businesses; they are in business to make a profit. That is their right and that is what they are set up to do. Their shareholders are their principal guides and they expect a return. It is hard to see where the customer fits into the squeeze there might be on the price of electricity to suppliers. The Government need to think through how the customer benefits are to be realistically delivered.
Another thing concerning the change in our pattern of usage of night-time electricity for white goods is that there are increased risks that the Government should be aware of. Household fires are more likely with unsupervised white goods. Nuisance neighbour noise disputes will be on the increase as energy powers machines at night, particularly in places where people live one on top of another, in blocks of flats and so on. So the attractions of changing patterns of usage of electricity may not lead to the greenfield nirvana the Government seem to believe in.
One of the things that might have been possible—maybe the Minister will comment on this—was the Government taking responsibility for providing the customer with tariff information. Would it have been possible under SMETS 1? Is it possible under SMETS 2? SMETS 3 could possibly, if it has not been thought of before, inform customers about their best possible energy price sources. It is hard enough right now to know exactly where my best deal is, comparing tariffs within one supplier, let alone across a range of suppliers, with six major companies and a number of other minor providers. It is a complicated matter. Could the Government introduce this into the SMETS system and pass on the information to customers? That would be a real benefit and a real selling point for the meters being accepted by more customers.
I turn to the DCC. The Government intend the regime to take back control should the company go into administration. A special administration regime is to be established. The provocation for this lies somewhere between the recent failure of Carillion, an oversight in the original setting up of the DCC and doubts about the performance of Capita, the current DCC operator. If the DCC fails, the customer will foot the bill. The risk of failure is said to be extremely low. However, the impact would be high. Could the Government provide some analysis or report to reassure us that the DCC’s remote chances of failure are so unlikely that no one can see it happening? What happens if the DCC decides to walk away from the contract? Are there penalties? What are they? Might the Government be left high and dry, not by the failure of the company but by the company no longer wishing to provide the service because it does not believe it will meet the 2020 deadline, let alone those beyond it?
These are some of the questions. We support the Bill. It is deficient in some areas and these will be explored more as we go through Committee and Report, but I would be grateful if the Minister could answer some of the questions raised so far.
Lord Henley
My Lords, on the last or second to last point made by the noble Lord, Lord Lennie, he looked forward to a world with a SMETS 3 or 4 that might be able to assist a customer in finding a new supplier and direct him in that way. I think we are already there. I imagine that the noble Lord reads the Guardian more often than I do, but the Guardian of 11 March was talking about one company that is developing some sort of dongle that can be plugged into one’s meter and will automatically switch one to the best supplier according to the programme one puts in. One can put in, “I want the greenest supplier” or “I want the cheapest supplier” and one could find oneself having a different supplier from month to month, possibly two or three times a year. The future is good. I refer the noble Lord to that article to see just what is happening out there and what smart meters, as they are at the moment, could possibly lead to.
I have to say that, listening to the debate, I felt that it was a fairly Eeyoreish performance, even by the standards of this House. The noble Baroness, Lady Featherstone, was politer—she referred to it as a masterclass in faint praise. The noble Baroness, Lady Maddock, was, as always, very kind to me: after making her Eeyoreish speech, along with her colleagues and all other noble Lords, she said that she expected something more optimistic from me, “Because the noble Lord always is very optimistic”. I think there is nothing wrong with being optimistic when one has technical developments that are going to bring great benefits to everyone. They are going to bring benefits to the consumer, as I made clear in my opening speech, but they will also bring benefits in terms of reducing our overall consumption and in many other ways.
Like the noble Baroness, Lady Featherstone, I was very amused by the picture of her noble friend Lord Teverson under the floorboards or somewhere—I am not quite sure where he was; it was rather a confusing picture, but he was in the rain with a torch. All I can do is refer the noble Lord to Hilaire Belloc’s “Lord Finchley”. The noble Lord will remember that Lord Finchley came to an untimely end because he tried to do these things himself. In future, the noble Lord can get someone else to look at these things, but smart meters will solve the problem for him.
Others, such as the noble Lord, Lord Whitty, and me, took us back to 2008. I was very grateful to him for doing that and for saying that back in 2008 he was giving warnings, in his Cassandra-like way, and now he could say, “I told you so”. The great thing is that he can say “I told you so” to everyone here, in that the 2008 Act, as the noble Lord and others on the Benches opposite will remember, was passed under a Labour Government. The 2011 Act that I referred to was passed under the coalition Government. I think that we had a Liberal Democrat in both the business department and the energy department during that time, so their fingers must have touched this at some point. Now, in 2018 we have a Conservative Government, so perhaps, like Peter Simple’s Dr Heinz Kiosk, I can just say, “We are all guilty!”, if something has gone wrong. I think, from the degrees of optimism I have listened to in the course of the debate, that there is a general acceptance that smart meters are going to be able to do something that has not been available before and that, as I said, that will bring great advantages to us.
A very large number of questions of a fairly detailed sort have been raised and I will try to address a number of them. However, I think that what a debate of this sort also shows is that even a Bill such as this—a Bill that is broadly welcomed on all sides, that has been through pre-legislative scrutiny, that has had a very useful trip through another place since that pre-legislative scrutiny and that is now here—will benefit from what your Lordships can do in Committee. I look forward to that Committee and hope that we can tease out just where the problems are so that I can give appropriate assurances on matters that are relevant to noble Lords and, if necessary, make amendments, but I do not think that that will be necessary. As the noble Lord, Lord Grantchester, put it, this is a largely technical Bill dealing with three small matters, but its title allows us to discuss the generality of smart meters, smart metering and how we get the rollout completed. I hope that in the course of this debate, Committee and further stages we can continue that process and provide the proper assurances.
This afternoon, I propose to answer a few of the questions to the best of my ability. I think it would be useful if I write another letter to all noble Lords who have taken part in this debate and place a copy in the Library, setting out a more detailed answer of the sort that one cannot properly give to some of the more detailed questions and very sensible suggestions made by my noble friend Lady Manzoor. I give that assurance that I will send that detailed response to all noble Lords.
In the meantime, I shall answer a few of the questions that have been asked. The first, and most important, is to give some sort of assurance that we believe that it is still possible, despite the numbers which the noble Lord, Lord Grantchester, quoted from Which?. The numbers probably appeared in the Daily Mail as well, for all I know—that was another publication that was mentioned. We believe that we will be able to get there in due course. The rollout to date has been growing. Around 400,000 smart meters are being installed every month. That has to get up to a bigger figure if we are going to get to the end in the three years that are available. I do not think that is representative of the next phase of the programme when most suppliers will be installing smart meters with greater numbers of installers and more types of customers across Britain. We will certainly continue to collect data—this was something that the noble Baroness, Lady Maddock, asked about—on the rollout, getting independent, official, quarterly statistics on progress by the large suppliers, and we will make sure that they are published quarterly, as I think they have been since September 2013. In addition, a summary of the annual rollout progress for the calendar year is published every March, so we should have that in due course. I do not know whether it will be before Committee, as no one has yet given me a suggested date for the next stage of the Bill.
Lord Teverson
As I said, I think it is impossible to get to that. Can I just be clear about the commitment? It is to offer everybody a smart meter. Are the Government clear with the suppliers about what “offer” means and that it is not just an email saying, “Do you want a smart meter”? Are we clear about the target? Not everybody wants one. Is that a potential get-out clause in this target?
Lord Henley
The noble Lord knows that we are not going down the route of saying that everyone will have one, but we hope everyone will see the benefits of them and that everyone will be offered one, and I hope that offer will be more than just the email that the noble Lord suggests. It is difficult to persuade people to change. Some months ago we discussed the ease with which one can change one’s electricity supplier. However, because of inertia, few people do. The easier that it becomes and the more benefits that there are, the more people will switch supplier. The same applies to smart meters: people will adopt them as they see the benefit. We shall continue to push suppliers to do what they can, because of the benefits. That is not only those benefits to consumers that we all recognise, but those to the country through reducing our overall electricity consumption by evening it out and those other benefits identified.
Lord Grantchester
I thank the Minister for giving way. It is the responsibility of Ofgem to report on the companies’ taking all reasonable steps to offer consumers a smart meter.
Lord Henley
The noble Lord is absolutely correct. I apologise for not making that clear. There will be information available from Ofgem.
On rollout, I agree with points made that there is more that we can do to engage with customers in moving to smart metering. This is important and we shall certainly do more. As noble Lords will know, we have required the establishment of Smart Energy GB. This is an independent not-for-profit organisation leading the centralised programme to raise national awareness alongside activities to drive behaviour change and help consumers to benefit from smart working. The situation is changing. I think that the noble Baroness, Lady Maddock, quoted figures about satisfaction rates, but on awareness of smart metering, this has increased from some 40% to over 80% in three years and has driven demand for millions. Research shows—I believe that this is a figure that the noble Baroness quoted—that some 80% of consumers who have smart meters would recommend them to friends and family.
The question of safeguards, safety of data and related issues, is a concern of my noble friend Lady Manzoor, the noble Lord, Lord Whitty, the noble Baroness, Lady Maddock, and others and it is something to which we shall come back in due course. National smart meter infrastructure has been developed from the outset in consultation with experts from industry and government including the National Cyber Security Centre, which is part of GCHQ. The smart meter security model establishes physical, regulatory and operational security controls backed by independent security assurance arrangements. For instance, critical commands will only be accepted by the smart meter if they are issued by the responsible energy supplier and authenticated through strong encryption. Moreover, they have to be countersigned independently by the DCC.
The Government have also put in place a strict data access framework that protects consumers’ privacy. This is important. I think that this was at the heart of some remarks of the noble Baroness, Lady Featherstone. Households will have control over who can access their detailed energy consumption data and for what purposes, except where this is required for regulated purposes—that includes billing.
I am beginning to run out of time. I shall write in greater detail. The final point that I shall address now is that of the noble Lord, Lord Broers. He highlighted the importance of more work to ensure that a promise of a connected home was delivered. The noble Lord will be aware of a joint BEIS-Ofgem smart systems and flexibility plan that was published in July 2017. That reaffirmed that smart meters are the foundation of a smart meter energy system. It included a commitment to work with industry to develop standards for smart appliances that will allow consumers to provide flexibility and benefit from demand-side response.
I appreciate that I was asked many more questions and that there is much detail that will need to be gone into. What I hope to do is to write a letter as soon as possible to all those who took part in the debate detailing all those points that need to be covered. The important point is that we can then sit down—or stand up—and discuss these matters in detail in Committee, make sure we have the Bill right when we send it back to the Commons and make sure that we can look forward to broad, sunlit, happy uplands. As I said, I will continue to be the optimist rather than one of the series of Eeyores I have heard speaking on this occasion. I look forward to a bright future for smart meters, whether that is SMETS 1, SMETS 2 or even SMETS 3 as mentioned by the noble Lord, Lord Lennie.
Northern Ireland Finances
(6 years, 1 month ago)
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The Parliamentary Under-Secretary of State, Northern Ireland Office and Scotland Office (Lord Duncan of Springbank) (Con)
My Lords, with leave of the House, I will now repeat a Statement made by my right honourable friend the Secretary of State for Northern Ireland in the other place. The Statement is as follows:
“With permission, I would like to make a Statement about Northern Ireland finances. Last week, I laid a Written Statement in which I explained that the pressures on public services meant that it was imperative for the Government to take steps to provide clarity to enable planning in Northern Ireland for 2018-19.
With great reluctance, and in spite of my strong preference for a new Executive to set a budget, I set out in this Statement the resource and capital allocations which I considered to be the most balanced and appropriate settlement for Northern Ireland departments. I did this following intensive engagement with the Northern Ireland Civil Service—NICS—and consultation with all of the main Northern Ireland parties.
In the continued absence of an Executive, I have an obligation to take these and any other measures that are necessary to keep Northern Ireland functioning. But I will only take such measures where they are essential and limited in nature, and are part of a clear and consistent approach by the Government. This approach is based on a number of principles. First, we remain steadfast in our commitment to the Belfast agreement. All that we do will be with the purpose of protecting and fulfilling the agreement. But, secondly, we will take those decisions which are necessary to provide good governance and political stability for Northern Ireland, consistent always with restoring the Executive and local decision-making at the earliest possible opportunity. Thirdly, we will continue to implement our obligations under the agreement and its successors where possible, always working for the good of the community as a whole. Finally, we will continue to work with all the Northern Ireland parties, and with the Irish Government as appropriate, to remove the barriers to restoring the Executive and a fully functioning Assembly.
The principles at the core of the agreement and the political institutions it establishes continue to have our full and unreserved support. That means that we will uphold the principle of consent, consistent with this Government’s support for Northern Ireland’s place within the union and with maintaining the constitutional integrity of the United Kingdom. We believe in devolution and the imperative for local decision-making by local politicians. We support power-sharing on a cross-community basis, based on mutual respect and recognition. We will continue to support and facilitate north/south co-operation, including as we leave the EU, while always preserving the economic integrity of the United Kingdom. We will continue to work closely with the Irish Government in full accordance with the three-stranded approach. We will continue to act fairly and govern in the interests of all parts of the community in Northern Ireland.
The necessary steps, which I have taken and will continue to take, are consistent with all of these commitments. In addition to the steps I set out last week, there are several associated measures required to further secure public finances which I will be taking forward. As well as cutting costs, securing efficiencies and beginning to take the steps to transform public services, it is right to look at how income can be increased to protect the public services on which the people of Northern Ireland depend. I will therefore introduce legislation to set a regional rate, which will increase domestic rates by 3% above inflation. This will make an important contribution to sustainable finances in the long run, with the additional funding addressing urgent pressures in health and education. I also intend to act to extend the cost-capping of the current renewable heat incentive scheme in Northern Ireland, which the Assembly had put in place over a year ago. It would not be acceptable to put finances at risk by simply allowing that cap to lapse. I therefore propose to extend it for a further year from 1 April, the minimal possible step to protect the public purse. I will also confirm the final spending totals for the Northern Ireland departments for the 2017-18 financial year in legislation to set supplementary estimates.
I also believe that the time is right to address the ongoing public concern about MLA pay in the absence of a functioning Assembly. I thank Trevor Reaney, who was instructed by my predecessor to produce an independent view and recommended a 27.5% reduction to MLA pay. I will seek to introduce legislation to take a power to vary MLA pay. Further to that, I am minded to reduce pay in line with the Reaney review recommendation, but I would welcome full and final representations from the Northern Ireland parties before I make a final decision.
These measures—which I take reluctantly, but which are necessary in the absence of a functioning Executive and Assembly—will deliver the stability and the decisions to enable forward planning for the financial year ahead. But I am clear that they cannot provide the local input and fundamental decisions which are needed to secure a more sustainable future for Northern Ireland. My powers as Secretary of State for Northern Ireland are limited. The scope of this House to pass legislation on the devolved issues which matter for Northern Ireland is limited. This rightly reflects the devolution settlement which is in place and to which this Government are committed. But it does mean that, in the continuing absence of an Executive, there are fundamental decisions in Northern Ireland which cannot be taken, scrutinised and implemented as they should be.
This has been the situation for 14 months already and, in the continued absence of an Executive, it would be irresponsible for us not to consider how we might provide for different arrangements until such time as the devolved institutions are back up and running. Alongside this I also continue to keep under review my statutory obligation to call an Assembly election.
I would welcome the views and proposals of the Northern Ireland parties and others on how such arrangements—providing for local decision-making and scrutiny on a cross-community basis—might be achieved in the continued absence of an Executive; and how any such arrangements might work alongside the other institutions of the agreement. Let me be clear that this in no way affects my commitment to the Belfast agreement, nor my commitment to continue to work to remove the barriers to the restoration of devolution. As the 20th anniversary of the Belfast agreement approaches, I am clearer than ever that Northern Ireland needs strong political leadership from a locally elected and accountable devolved Government. That remains my firm goal. I commend this Statement to the House”.
Lord Murphy of Torfaen (Lab)
My Lords, I thank the Minister for the Statement, and agree with him on the need to restore the devolved institutions in Northern Ireland, especially as it is about four weeks away from the 20th anniversary of the signing of the Good Friday agreement. The commitment of the Government to the underlying principles of that agreement is very much to be welcomed.
I understand the need to set a budget and agree that it is wholly inadequate for civil servants, however good—and, indeed, they are all good—to decide the spending priorities in Northern Ireland. Can the Minister tell us a little bit more about the consultation process that has occurred with the political parties and others in Northern Ireland, specifically on the regional rate and on the allocation of resources to the different departments in Northern Ireland? In particular, will he tell us about the consultation on the Bengoa proposals on the health service in Northern Ireland, and where we are on that important matter?
The Minister raised the difficult—perhaps even controversial—issue of the salaries of Members of the Legislative Assembly. Does he envisage a time limit on the consultation with the political parties in Northern Ireland? During the course of his Statement, he mentioned that there would be a need for legislation to implement parts of the budget and to vary the salaries of the MLAs. Can he give the House an indication of when such legislation might be before us? Lastly, does he accept that this budget-setting exercise is not a road to direct rule, and that robust and meaningful talks on setting up the institutions in Northern Ireland will begin very shortly?
Baroness Suttie (LD)
My Lords, I too thank the Minister for repeating yesterday’s Statement. However, there is a slightly wearying sense of déjà vu about it, and one cannot help but wonder at what point these sticking-plaster solutions will cease to be viable. Clearly, however, a return to direct rule is something that we all wish to avoid, and we continue to believe firmly that power-sharing devolution is vital to local democracy and representative decision-making. In that regard, the Secretary of State’s reassertion of the Government’s commitment to both the Good Friday Belfast agreement and to re-establishing functioning devolution in Northern Ireland is very much to be welcomed.
We on these Benches recognise the pressures on public services, meaning that these measures are essential to ensuring that the people of Northern Ireland do not suffer in the provision of vital services, and to ensuring that education and healthcare services can function and that peace and stability can be maintained by the PSNI. The Police Federation has warned that the 0.3% increase in the Ministry of Justice budget will inflict real damage on the PSNI. The PSNI is currently spending £125,000 a day on overtime to fill gaps in its workforce capacity. Can the Minister confirm that ensuring that the PSNI is able to carry out its work effectively remains a key priority for the Government? The Civil Service in Northern Ireland, as the noble Lord, Lord Murphy, has said, continues to do sterling service in keeping the system functioning but, without the direct input of Northern Ireland Ministers, much-needed long-term strategic planning for Northern Ireland becomes increasingly difficult.
In the Statement on 20 February, in reply to my question about the introduction of an independent mediator to chair the all-party talks and to attempt to bring new impetus to the drive to re-establish an Executive in Northern Ireland, the Minister said nothing was ruled out. Can he give an update on whether that is still an option that is being actively considered? Can he also outline what other initiatives are being actively considered to break the current impasse in the talks?
I note the ongoing discussions on MLA pay and the Reaney review. What representations has the Secretary of State had on this issue from political parties in Northern Ireland? In the Statement the Secretary of State says,
“it would be irresponsible for us not to consider how we might provide for different arrangements until such time as the devolved institutions are back up and running”.
Can the Minister confirm that this would involve options allowing Members of the Assembly to play an active role in ensuring that Northern Ireland’s voice is heard clearly in the Brexit negotiations?
Lord Duncan of Springbank
I thank the noble Lord and the noble Baroness for their contributions. It is important for us to stress again at the outset that we are all united in our belief that the Belfast agreement itself must be the foundation upon which we build all our progress. I think we are all of the same view. I am aware that we are experiencing a recurring sense of déjà vu—we certainly are with some of my Statements—but it is our ambition to secure the reformation of a functional and sustainable Executive in Northern Ireland.
I think it is important for me to answer the questions directly as they have been raised. On the question from the noble Lord, Lord Murphy, on how we came to the figures within the overall budget, he is right to stress that we have put a great deal of pressure and stress upon the Northern Ireland Civil Service, but it has been very important in determining departmental needs. That has been the first building block. The second is that, as he will be aware, a budget briefing was published just before Christmas. The Northern Ireland Office has reflected very carefully upon the responses that were received in the light of that briefing from the main parties of Northern Ireland, and they have been borne in mind. In addition, my right hon. friend the Secretary of State for Northern Ireland has undertaken a fairly extensive engagement with individual stakeholders —teachers, doctors, nurses, and police officers—to understand the challenges faced on the ground. It is important to reflect on how important that is.
The figures we are talking about are substantial, and I believe they will make a substantial difference. We have £80 million of support for immediate health and education pressures, £30 million to support programmes to address issues of mental health and severe deprivation, £100 million for ongoing work to transform the health service in line with broad-based consensus fostered by the Bengoa report, and a £200 million allocation in capital spending for key infrastructure projects.
That gives a sense of the scale of the investment. There is also a recognition, as we build that budget—we have spoken of this before—of trying to plot a trajectory from the point at which the previous Executive fell, and then trying to plot across. We have had to take that as a basis and build on it, and that is why £4 million has been allocated to prepare the ground for transformation and £100 million set out for health transformation, recognising again that these are part of the critical elements that are identified by departmental heads in the Civil Service and the main political parties.
On the question of MLA pay, I stress again that my right honourable friend the Secretary of State for Northern Ireland would like the views of others to make sure that in her determination and deliberation she can deliver exactly what is required. I am mindful of the point made by the noble Baroness, Lady Suttie, about the potential roles for the MLAs themselves—even without being part of a functional Executive. As I said in a previous Statement on a not dissimilar topic, we have not ruled anything out, and would welcome the thoughts of the noble Baroness, Lady Suttie on that point, to help us in our thinking. As for when we can anticipate the legislation, if I may be slightly non-specific, we will bring forward necessary legislation imminently to deliver against the budget as we have set it out.
The noble Baroness, Lady Suttie, raised the PSNI. Again, I can be very clear and specific and say that it remains a key priority of the Government, and we will do all we can to preserve that and deliver against it.
As to the question of an independent mediator, noble Lords will be aware that we are in an interregnum—the talks have ended but are not over—and that period of reflection has given all of us an opportunity to work out what additional aspects of engagement should be brought to the table. I am becoming a little repetitive, but I will say again that we are ruling nothing out. Anything we can do to take this forward must form part of that.
We also hope that the parties involved in the talks will take advantage of this period to reflect not just on what they wish to deliver for the parties themselves but for the wider communities they represent. That will be essential. If the talks are to deliver an outcome that is sustainable, meaningful and restores local government to Northern Ireland, we need to be able to depend on them. There are too many important issues unfolding right now, not just in our House, but affecting everyone in Northern Ireland. It is time that we heard those voices in an Executive and an Assembly.
Lord Maginnis of Drumglass (Ind UU)
My Lords, I am grateful to the Minister for repeating the Statement, and particularly grateful for the hands-on methodology that he has adopted since he became Northern Ireland spokesman in this House. It is refreshing.
I have two issues. Is the Secretary of State aware of the barely disguised efforts of Taoiseach Varadkar and foreign spokesman Coveney to interfere directly in the internal affairs of Northern Ireland? This callous activity goes as far as encouraging Sinn Féin not to progress the current talks towards a solution or the implementation of an effective power-sharing Executive. I furnished the Minister with that report from the Irish Times previously.
On the need for an urgent interim methodology, if, when an aspect of direct rule is required—and many of us think that it is required—I would press that a considerable number of those who achieved the Belfast agreement sit in this House. There are others here who have, when the Executive was functioning, been effective and experienced there.
I suggest, having been ignored—I might even say boycotted—by previous Secretaries of State, that the current Secretary of State, Secretary Bradley, will not allow herself to be intimidated but will look to those who have years upon years of experience, from 1994 until now. They have 24 years’ experience and may just be able to give some common-sense guidance.
Lord Duncan of Springbank
I thank the noble Lord, Lord Maginnis, very much for his trenchant intervention. The noble Lord is right to point out that, sitting in your Lordships’ House are a number of architects of the Belfast agreement, and that the knowledge contained within these four walls should be drawn on now as we begin to enter this phase of maximum danger, when we need to be able to deliver an outcome that works for the people of Northern Ireland.
I am reminded again of the remarks by the noble Lord, Lord Empey, on these issues the first time I stood here at the Dispatch Box. He said that it is very easy to walk down the steps of Stormont; it is very hard to walk back up. Of course, he was alluding to the challenge of direct rule.
We hope to—and we will do all we can to—bring a rapprochement, by whatever method we can, to the parties who are needful in delivering this particular serious outcome. In addition, I note that the noble Lord, Lord Maginnis, passed me information that I have taken away, and we will certainly look at that in greater detail. I may come back to that on a later occasion.
Lord Reid of Cardowan (Lab)
My Lords, I welcome the very definite commitment in this Statement again to the Belfast Agreement and to the principles that underpin it. It is worth reiterating that at every opportunity in view of some of the voices off, which I do not think have been particularly helpful. I ask the Minister to very much bear that in mind when it comes to the seemingly innocuous phrase:
“It would be irresponsible for us not to consider how we might provide for different arrangements until such times as the Executive is back”.
I am not opposed, nor would any Member of this House be opposed, to discussing how to move things forward, but I think, with the benefit of hindsight—some people, such as the noble Lord, Lord Empey, might say “with foresight”—that some of the changes we have made from time to time to the mechanics of the operations of the Executive have not always been conducive to encouraging the coherence and the spirit of the Good Friday agreement. There are risks and dangers in that innocuous phrase.
Lord Duncan of Springbank
I thank the noble Lord, Lord Reid, very much for again bringing his knowledge to the discussion. He is absolutely right to speak of the voices off and the noises off. We have to turn them off; it is unhelpful right now. We need to focus on what we believe we require, which is securing again the Belfast agreement at the heart of the restored institutions in Northern Ireland. I am happy to emphasise that again whenever I am called on to do so.
Again, it is telling that the noble Lord is willing to reflect on his own time in office. It is rather like lifting the bonnet of a car. I have no idea what happens under there. You start tinkering at your own peril. It is amazing what harm you can do when you have less experience of what is under there. That is not to say that we need not be careful about how we move forward. None the less, we should be progressive. The reason my right honourable friend was very clear in her Statement is that we need to recognise that, at this time of challenge, we must have a means of securing those voices in the essential and ongoing discussions. Noble Lords will be aware that in the next few days we shall return to a number of the devolved elements of the withdrawal Bill. When we talk about these essential issues here in our House, I am again minded of the deafening silence from the Executive, which does not sit, and the Assembly, which cannot speak. I am mindful of the warning from the noble Lord but at this moment we need to find ways to secure progress. As I have said, I do not believe we can take anything off the table.
Lord Bew (CB)
My Lords, I thank the Minister for repeating the Statement and thank him for the trenchant defence he has once again given this afternoon of the 1998 Belfast agreement. It is vital that he does so and that others recognise and listen to what he has to say.
I wish to press him on a point of detail in the Statement. I declare an interest as a former teacher in the two universities in Northern Ireland. The Secretary of State’s Written Statement of 8 March says that there is an increase in real terms in the education budget. However, on the current figures, there is no way of working out what is happening in that regard in the higher education sector as against the rest of the education sector. I do not wish to be churlish about this because this budget is tremendously important. The £10.4 billion is crucial to Northern Ireland and is a clear benefit of the union to the people of Northern Ireland. Tomorrow we will hear a lot about the European Union. I think its contribution is 1% of that, and that quite a lot of that 1% is recycled United Kingdom money.
I am grateful for this budget but we need a little more clarity on it, if possible. The Secretary of State’s Statement says that later in the year there will be more detail on it. I urge against the idea that giving us that kind of detail is a move towards what is now called in the lexicon “full-fat” direct rule. I think this could be done without raising these theoretical or ideological problems. I wish to press the Minister on this as there is great concern about it. For example, as regards higher education, there are many rumours in Northern Ireland that the Government are setting their face against postgraduate funding in the universities in Northern Ireland and envisage introducing major changes there. We cannot tell anything about that from the Secretary of State’s Written Statement. The noble Lord, Lord Murphy, also referred to issues on which the Government could give us a little more information. I hope they will do so later in the year.
Lord Duncan of Springbank
I thank the noble Lord, Lord Bew, very much for his intervention. I am trying to avoid full-fat anything at the moment and am looking for the semi-skimmed approach as far as I can. The noble Lord made a legitimate and appropriate request. I believe we will be able to furnish him with the appropriate information very soon. It is absolutely essential that the people of Northern Ireland are able to see how the money is crafted and allocated. I would much prefer to be wholly scrutinised by an Executive founded and operating sustainably in Belfast but, in the absence of that, I believe your Lordships’ House also needs to be able to scrutinise this issue adequately. I believe information will imminently be provided that will allow us to do that very thing.
Lord Browne of Belmont (DUP)
My Lords, I welcome the budget Statement. It enables the hard-pressed public services in Northern Ireland to continue to operate and gives the Stormont departments certainty for the next financial year. I particularly welcome the £410 million extra new money for Northern Ireland as part of the confidence and supply agreement with the Democratic Unionist Party. It will provide much-needed support for health, education and infrastructure and will benefit all the communities right across the Province.
While I welcome the Secretary of State’s willingness to look at arrangements to provide for local decision-making and scrutiny on a cross-community basis, does the Minister agree that it is vital that the Government intensify their efforts to restore devolved government to Northern Ireland so that decisions can be made by locally elected and locally accountable Ministers?
Lord Duncan of Springbank
I thank the noble Lord for his intervention. The £410 million will do good across the communities. I believe that it will be spent wisely and will address a number of the challenges that have been experienced in Northern Ireland, which will be good to see. However, I want to be very clear that we need to be in a situation where these matters are addressed at a local level—not just in terms of the allocation but, more importantly, in terms of scrutiny. There must be full transparency and full confidence in the manner in which this money is constructed and allocated, and spending overseen. We must have great confidence in that; it will go some way to restoring confidence in governance in Northern Ireland, not just in what we are trying to do to bring about a stable and sustainable Executive.
Baroness Blood (Lab)
My Lords, I will ask the Minister a brief question and a direct one: We welcome the extra money going into Northern Ireland, especially around health and education, but who will make the decision about where that money will go? Last year, in James Brokenshire’s Statement, £50 million of the confidence and supply money was given to mental health. To this day, not one penny of that £50 million has been spent, simply because there is no local Minister to sign it off. Will we be tied by the same regulations, for instance around the infrastructure money? Who will make up their mind who will get the money and where it will go? Will it come direct from Westminster? What is the position?
Lord Duncan of Springbank
I thank the noble Baroness for her intervention. Money allocated and unspent does not do any good. It is as simple as that. We must be in a position to ensure that the money allocated is spent. We believe this is best achieved through the departmental structure that exists in Northern Ireland. The determination of the overall scale of spend has already been achieved through direct consultation with civil servants in Northern Ireland. They will be responsible also for the delivery of that money into the various, clearly set out projects. It will be necessary not only for the money to be spent but for it to be transparent and clear. The people of Northern Ireland must be able to see that and recognise what good the money is doing to meet challenges that are now well established and well recognised. The noble Baroness will be aware of several of these challenges in the areas of health and education. But I stress again that the money and responsibility will rest with the departments. We will ensure that it is spent in a transparent manner that will give confidence to those who see the money and, hopefully, see the good it will achieve.
Lord Empey (UUP)
My Lords, surely the Minister accepts that there is a need to do things differently. We have come to a series of Statements of this nature over the last 14 months and there is little or no prospect of any immediate resumption of devolution. In fact, people are now talking in terms of “post Brexit”. Members will know the effect of a vacuum in Northern Ireland and who is likely to fill that vacuum—and it is not going to be the good guys. The reality is that the principal parties of government—whatever the ebb and flow of the agreement that never was—have run the institutions into the ground. That is the fact. Mention has been made of confidence and supply money. Will the Minister tell us when this will be approved by Parliament? At the moment it is effectively an undated cheque, and the departments need to know when they will be able to take it into account.
A second point raised concerned the RHI cap. While that catastrophe has yet to completely unfold, a lot of people out there legitimately took the Government of Northern Ireland at their word and got these boilers installed, and some are now facing financial ruin. Their bankers were encouraged by ministerial letters from Mrs Foster to lend them money to get these boilers, and now the premiums they were getting on the original business plan have been slashed. So those people are in severe difficulty and I ask the Minister to bear that in mind.
I turn to the alternative arrangements, which I think we were all interested in. I thank the noble Lord, Lord Reid of Cardowan, who I think is the first senior politician even to hint that some tweaks and changes made over the years have not necessarily worked out as planned. Can the Minister tell us exactly to what extent the Government have an open mind on these matters? There are a lot of ideas around the House that could be fashioned and used, and I believe we are willing and able to help in working towards a constructive solution—but I repeat that a vacuum is the worst possible situation. It leaves the pitch open for players to come back on when we thought we had them suppressed. This is a golden opportunity for these people and we should all stand up against them.
Lord Duncan of Springbank
The noble Lord, Lord Empey, has made three useful points. I note again that the noble Lord, Lord Maginnis, spoke about the fact that there are a number of architects of the Belfast agreement in your Lordships’ House—although in some respects they are not architects but mechanics. We have not built an edifice that just has to stand; it is an engine that has to work.
In response to the third point raised by the noble Lord, Lord Empey, we have an open mind and we need to think afresh about anything that can help us to move this matter forward. Of course, we recognise that we are facilitators of the dialogue. We cannot insist on or thrust forward what we wish to see happen—but we hope that, by providing a safe space in which to negotiate, we can bring it about.
In response to the noble Lord’s first question, the confidence and supply component of the budget will be dealt with as part of the overall allocation. As I said in response to the noble Lord, Lord Murphy, that is imminent—so I hope we will be in a position to discuss that seriously very soon.
With regard to the wider question of boilers and the RHI scheme, I stress again that my right honourable friend the Secretary of State for Northern Ireland is very aware of the challenges that it represents and will be very careful in taking the matter forward.
Viscount Brookeborough (CB)
My Lords, perhaps I may ask a question about the policing or Department of Justice budget, which may be £36 million. How much of that will go to front-line policing, bearing in mind what the noble Lord, Lord Empey, said about the various problems with filling a void? There is another point. Policing is not just about crime that is being committed today and nor is it just about terrorism; it affects every community and every person. The fear of crime is a very big issue—but I do not mean simply that individuals are afraid of crime. It is the Government’s responsibility to protect the community. Without a doubt, the level of resources for policing has gone down and that adds to the feeling of hopelessness in the community: “We have not got an Executive—and sometimes local policing is not very effective”. We used to have a lot of community policing, which was all part of the Patten proposals—I declare an interest in that I was on the Northern Ireland Policing Board at the time—but we really do not have that now. We have mobile police stations, but that is not community policing. It is not keeping your finger on everything and it does not reassure the population. The lack of certainty from a government point of view has a very big effect on people’s outlook.
Lord Duncan of Springbank
The noble Viscount, Lord Brookeborough, makes an almost philosophical point about the purpose of a police force and about the fear of crime. In many respects, the best possible police force is the one that you never see because you never need to, as it works so effectively that you are safe, secure and sound without ever seeing any intervention. I stress again that my right honourable friend the Secretary of State for Northern Ireland is very aware of this challenge. I do not know the answer to the noble Viscount’s specific question; if he will forgive me, I will write to him setting out the proportion of the police budget that is for front-line services.
Viscount Younger of Leckie (Con)
My Lords, I regret that the time for Back-Bench questions is over.
Syria: Protection of Civilians in Afrin
(6 years, 1 month ago)
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The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, with the leave of the House, I will repeat a Statement given by my right honourable friend Alistair Burt in the House of Commons yesterday. The Statement is as follows:
“I would like to update the House on the situation in Afrin. We are closely following developments in Afrin and wider north-western Syria. Over the weekend, Turkish and affiliated forces have continued their territorial gains and are now approaching the town of Afrin itself. We are concerned about recent reports of rising civilian casualties.
The Government have called for de-escalation and the protection of civilians, while recognising Turkey’s legitimate interest in the security of its borders. We will continue to push for a reduction in violence and for consideration of the humanitarian needs of the population in the affected areas. The Prime Minister has raised the need for protection of civilians and proper humanitarian access with the President of Turkey and the Foreign Secretary has done so with the Foreign Minister. The Turkish Government have assured the Foreign and Commonwealth Office that they are working to prevent civilian casualties.
UK-funded partners have been delivering humanitarian assistance in Afrin, including health and protection services. Some of these activities have been suspended due to the current hostilities, but our partners continue to meet needs where they are able and are pre-positioning supplies to help meet the needs of those fleeing the area. This includes health supplies, blankets and food. UNICEF, other UN organisations and the World Health Organization have temporarily suspended all activities in Afrin due to the recent military action.
As the Foreign Secretary said in his Statement of 26 February, we are concerned about the humanitarian consequences of the operation in Afrin. We urge all parties to respect the law of distinction between civilian and military targets, facilitate access for life-saving humanitarian aid, and allow freedom of movement for those caught up in the violence, in accordance with international humanitarian law.
The Syria conflict will soon be in its eighth year. The UK continues to make every effort to achieve our goals in Syria: defeating the scourge of Daesh and achieving a political settlement that ends the suffering and provides stability for all Syrians and the wider region. There ultimately needs to be a transition to a new, inclusive, non-sectarian Government that can protect the rights of all Syrians, unite the country and end the conflict. But we are pragmatic about how that might take place. Syria’s future must be for Syrians to decide.
As the second largest bilateral humanitarian donor in Syria since 2011, the UK is at the forefront of the humanitarian response and is providing life-saving support to millions of people. Since 2012, across Syria and the region, UK support has delivered 26 million food rations, 9.8 million relief packages, 8 million vaccines and 10 million medical consultations. Last year alone we provided clean water to over 5 million people, and contributed to the formal primary and secondary education of over 700,000 children affected by the crisis.
However, ultimately the only way to end the conflict is through a negotiated political settlement. The Foreign Secretary has emphasised, including to his Turkish counterpart, the importance of a political solution and the defeat of Daesh. This must continue to be at the forefront of international efforts and we are concerned about the possibility of the diversion of Kurdish fighters from this crucial fight. We remain committed to working closely with Turkey and other allies to find solutions in Syria that provide stability and bring to an end this terrible conflict”.
I commend this Statement to the House.
Lord Collins of Highbury (Lab)
My Lords, I thank the Minister for repeating the Statement.
As we have seen over the weekend, the Kurdish community across the United Kingdom is watching, and it needs to be reassured that the United Kingdom is doing everything it can to try to alleviate the terrible humanitarian crisis that is developing. Time and again, those fighting in Syria are consistently failing to take precautions that protect civilians. As the Secretary-General of the United Nations said to the Security Council on 12 March:
“Syria is bleeding inside and out. There should be only one agenda for all of us: to end the suffering of the Syrian people and find a political solution to the conflict”.
Alistair Burt, the Minister of State for the Middle East, said the best opportunity for peace and security is,
“to support the Geneva process … and to work as hard as we are diplomatically to get the parties to find a better answer to the conflict”.—[Official Report, Commons, 12/3/18; col. 677.]
What is the Government’s latest assessment of the Geneva process? Does the Minister believe that there will be a political solution and that Daesh will be defeated when Turkey sees its priority as stopping the Kurds rather than getting a political solution? The Statement says that the protection of civilians must be balanced with,
“Turkey’s legitimate interest in the security of its borders”.
We must be clear that the incursion is neither legitimate nor justified and has no basis in international law. According to reports—and as the Minister himself said—Turkish forces are right now advancing on Afrin, and there are real concerns that when they enter there will be widespread atrocities as they seek to root out those they call terrorists.
The Government said that although we cannot get close to Afrin, the UK is doing its best to make sure that United Nations agencies and others active in the area have supplies available if people are able to leave. Will the Minister update us on the efforts to work with our allies, especially the EU, to enable people to leave? In addition, can we do more than simply urge all parties to respect the law of distinction between civilian and military targets? Surely one way is to make it clear that no one can act with impunity in breach of international humanitarian law. Human rights monitors can act as one of the greatest deterrents against civilian atrocities and can ensure that perpetrators of abuses are held to account.
Alistair Burt said that the Government intend to hold the Turkish Government to account for the representations they have made about preventing civilian casualties. What specific steps will the Government take to do that—that is, just how do we hold them to account? The Government say Afrin is an area where the UK is not present on the ground, from where it is difficult to get information out, and where UN workers are not able to operate. Therefore, what steps are the Government taking to achieve a more unified multilateral approach with our EU partners in order to urge Turkey to allow access for humanitarian aid and independent monitors? Finally, what steps are the Government taking to quickly restore full humanitarian access to Afrin so that the UK and other partners can get aid in and ultimately save lives?
Baroness Sheehan (LD)
My Lords, I too thank the Minister for repeating the Statement. The UN Security Council Resolution 2401, announced on 24 February, was jointly negotiated with the Russians and was greeted with relief as it allowed for a ceasefire in order to deploy humanitarian aid convoys to all besieged areas, including eastern Ghouta. However, it was apparent straightaway that the Syrian regime’s concession of a five-hour ceasefire window was a mockery of any so-called humanitarian gesture, as it allowed scant time for supplies to be loaded on to lorries, the necessary permissions to be sought and put into place, and for the aid to be delivered where it was needed. On top of that, medical supplies were removed from lorries, leaving civilians without necessary and essential supplies. This has been the appalling situation since 25 February. Finally, yesterday, the US permanent representative to the UN, Nikki Haley, made a statement condemning the action of the regime, adding that the US could be forced to act unilaterally. I am puzzled as to the timing of today’s Statement to both Houses. Is it in response to the US’s statement yesterday, and if so, do the Government share the view that the ceasefire was a failure, and does it imply our acquiescence in the US’s sabre-rattling? Can the Minister at the very least articulate the Government’s view of Nikki Haley’s threat to take action?
We are all shocked by the situation in Afrin. Reports of the shelling of villages and residential areas are deeply troubling. Violence in the Afrin region escalated after the Turkish Government announced on 20 January the start of a military offensive codenamed “Olive Branch”, which in my view is a macabre choice of name. Between 22 January and 21 February the Kurdish Red Crescent reported 93 civilians killed, including 25 children, in attacks by the Turkish military. A further 313 civilians were wounded, including 51 children. Meanwhile, Kurdish YPG forces shelling in Azaz have allegedly killed four people.
The use of artillery and other imprecise explosive weapons in civilian areas is prohibited by international humanitarian law and all parties should cease such attacks immediately. I hope that the Government have conveyed that message to Turkey in the strongest possible terms. The Kurds have been key allies in our fight against Daesh and I think that all noble Lords will be appalled by the attacks that they are now facing. The Minister will be aware of UN Security Council Resolution 2254, in 2015, which states that the only sustainable solution to the current crisis in Syria is through an inclusive and Syrian-led political process that meets the legitimate aspirations of the Syrian people. Does the Minister therefore agree that such a process must involve Kurds in Syria? Finally, the Kurdish region has already accepted around 2 million refugees and internally displaced people. What assessment have Her Majesty’s Government made of the impact that the Turkish military operation will have on this group?
Lord Bates
I thank the noble Lord and the noble Baroness for their questions. Let me start with the Geneva peace process, which has been referred to, as well as UN Security Council Resolution 2254, to which the noble Baroness, Lady Sheehan, referred. It called for inclusive talks which we believe offer the only possible long-term solution. Staffan de Mistura, the UN Secretary-General’s special envoy for Syria, is working hard and effectively against a background of incredible difficulties and complexities to try to get those talks started again. There have been a number of rounds in Geneva and there will be future rounds, but in particular as a result of the Astana and the Sochi processes coming to an end, this is in effect the only show in town. We have to make sure that all of the parties to the conflict become parties to the peace by urging them to progress through the process.
The noble Baroness referred to the statements made yesterday by the US permanent representative to the United Nations, and of course she will be aware that a change of personnel has been announced, with Secretary of State Rex Tillerson being replaced by Mike Pompeo. We now wait to find out whether that will bring about any change in the dynamic here. Both the noble Lord and the noble Baroness were right to point out that this is a global crisis and we need to work multilaterally. We have to be quite honest in these situations about the limitations we face as regards acting independently on the ground. We must work with our EU colleagues, our NATO allies and, crucially in this context, with the UN Security Council.
The noble Lord, Lord Collins, asked what we are doing at the Security Council. Of course, UNSC Resolution 2401, also referred to by the noble Baroness, Lady Sheehan, is for a 30-day ceasefire period from 7 March. We have not given up hope of that and we still want to hold the parties to it. It was agreed so that humanitarian aid could reach millions of people who are in desperate need. In these situations, it is very easy to be frustrated at being powerless in the face of such incredible injustice and human suffering. In such circumstances you need to take every opportunity you have, and we would certainly regard UN Security Council Resolution 2401 as an opportunity. UNSCR 2165, which was very much pushed by the UK at the UN Security Council, also represented an opportunity to allow humanitarian access into Syria to provide relief, without the permission of the Syrian Government.
As I have mentioned, there has already been contact between the Foreign Secretary and the Turkish authorities. We have urged them to embark on de-escalation. We believe it is right that they do, and we can do nothing other than to keep pressing and urging them. We very much recognise what the noble Lord, Lord Collins, said about this diverting attention from the fight against Daesh. For all of those reasons, we must persevere through an incredibly difficult and complex situation, with the lives of the civilians in those benighted areas and our responsibility to them uppermost in our minds.
Lord Robathan (Con)
My Lords, the horror and the tragedy of the situation throughout Syria and in Afrin are beyond speaking about. I should say that I am proud of the British Government’s humanitarian efforts and that we are the second aid donor there, and I hope our aid is successful.
I would like to ask two questions of the Minister. The first is: what, if any, legal basis or excuse do the Turks claim for their invasion of this part of Syria? It seems to be an astonishing, illegal act. Secondly, and perhaps more importantly—and I am not pretending there is an easy answer to this—there is the situation regarding NATO. Throughout the Cold War, Turkey was a stalwart ally against the Soviet Union. We now have difficulties with Russia and yet, for the first time in the 70 years of the alliance’s history, on the one side we have Turkey attacking Afrin and on the other side, looking straight at them, we have American assisting troops. Is that not the case? If it is, we should all be hugely concerned about our future security. I am not pretending it is easy, but what action can NATO take in this situation? The Minister talked about the United Nations. What action can the EU take to support NATO?
Lord Bates
My noble friend is right to point to the complexity of the situation that we face there. He invites me to make the case for Turkey. I do not particularly want to do that but, by way of explanation, it would take a different view of the linkages between the PYD and the YPG to the PKK, the Kurdish terrorist organisation that is proscribed both in the UK and in Turkey. Turkey sees the links there. From that perspective, it also has to be said that Turkey is host to the largest number of refugees from Syria of any country—some 3 million—and all accounts are that the way in which it looks after those refugees is exemplary. We can explore those issues, but we certainly do not believe that there is a justification for this. That is why we have called for the de-escalation, and we will encourage all other NATO allies to do the same.
Lord Soley (Lab)
My Lords, the Minister will have a lot of sympathy because we all recognise the complexity of this and the frustration that we have at the failure of international policy, not least because of the policies of Russia over recent years—a point I have made before. But there is a different issue, which my noble friend Lord Collins raised, about the policy regarding the Kurdish situation and Turkey. It has always been a concern that Turkey, as a close NATO ally, as has been pointed out, has an ongoing problem with the Kurds. It is certainly not helping itself by what it is doing now; it will make it far worse to solve. I ask the Minister again, as my noble friend Lord Collins did: are the Government trying to get a policy on the relationship between Turkey and the Kurds? It is not for us to intervene, but it is for us to say that the problem with the Kurdish minority in Turkey will be made infinitely worse by what is happening now in Syria.
Lord Bates
As I said, we do not draw the parallel that the Turkish Government does between the PYD and the YPG. We believe that they have been courageous fighters against Daesh and have been very effective in that role. We do not recognise the links. Those points have been made. We have made the point that the battle against Daesh, which is crucial for stability in the region, is far from won and that this is a diversion of essential resource from that effort. This might not directly answer the point the noble Lord raised, but in the current context it is probably as far as I am able to go.
Lord Hylton (CB)
My Lords, this Statement is almost two months too late. The Turkish attack began on 20 January, supported by Leopard tanks and by militias containing many members of al-Nusra and ISIS. The attack was completely unprovoked. It has killed and wounded hundreds of people and displaced thousands of civilians. Turkey could have protected its border and its security by negotiations; it did not even attempt such a thing. Will Her Majesty’s Government condemn this brutal and vicious attack, which may well prolong the Syrian civil war? Will they re-examine Turkey’s right to remain a member of NATO and the Council of Europe?
Our Government rightly say that the Syrians must decide their own future. How can they possibly do so when Russia, Iran, Turkey and the USA have their own forces inside Syrian territory, and Israel makes constant air attacks whenever it feels a need to do so? It is surely not enough to boast about our aid for Syria since the war began. Will our Government become more realistic and press for the removal from Syria of all foreign forces, including volunteer fighters, money and weapons?
Lord Bates
I appreciate the noble Lord’s frustration. I know that he has visited the region and seen for himself in Aleppo the horrendous situation on the ground when these sieges take place. But, on the limited options we have as to what we can do, I do not think it is fair to discount the aid effort—the £2.46 billion that has gone there to provide relief. It is important.
We can work in three ways. One is humanitarian, providing emergency relief, and that is what I talked about in the Statement. The second is diplomatically, and I have outlined some of the ways in which we have been trying and continue to try to do that, with Turkey directly, through the UN Security Council and encouraging resumption of the talks. I have to say that there is also a military dimension to this: we have been part of the global coalition which has sought to attack the scourge of Daesh in that area, which is a massive cause of the instability that we see. So it is not just one, it is all. What I am trying to communicate to the noble Lord is that we are, to the best of our ability, trying to exert the maximum leverage we can in each of those areas, with great difficulty.
Lord Roberts of Llandudno (LD)
My Lords, when David Cameron was Prime Minister he made a pledge that by the year 2020 we would accept 20,000 Syrian refugees. The figure I have heard is that by 22 February this year we had welcomed 10,538. So we are half way there but we are also three-quarters of the way since the pledge was made. I ask the Minister whether we can really open that door: we still have nearly 10,000 promises yet to be fulfilled. I suggest also that when that promise—that pledge—was made, nobody envisaged that four years on there would still be this slaughter, this total catastrophe, in Syria. Can we get away from thinking that the 10,000 promise was a target or a ceiling, and work according to need instead, such as in Idlib and all these other places? This past fortnight I believe that about 900 people have been killed, including at least 100 children. Can we somehow spur the Government on to get that pledge fulfilled and if necessary—and it is necessary at the moment—go beyond it?
Lord Bates
I thank the noble Lord, first, for recognising that David Cameron’s pledge, and Her Majesty’s Government’s pledge, of resettling 20,000 refugees is on track to be delivered. Of course, there are other dimensions to this. What we faced when we were having those debates was the equally horrendous situation in the eastern Mediterranean, where people were often being smuggled and exploited by people smugglers into making perilous journeys across into Greece. Through the EU facility for refugees in Turkey, which was a €3 billion facility to which we contributed €328 million, we were trying to help in that area. Of course, again, we are providing help in the areas around Syria—in Jordan and Lebanon as well. So I hope the noble Lord will at least accept that we are working, again, on three different levels: in the region, through the Turkish facility; in the refugee camps with the UNHCR; and fulfilling our obligation to bring refugees here. We will continue to keep that under review.